Summary
disqualifying law firm which advised on agreement "closely intertwined" with agreement at issue in case
Summary of this case from Bessemer Tr. Co. v. HartOpinion
1538N
July 2, 2002.
Order, Supreme Court, New York County (Richard Lowe, III, J.), entered on or about April 12, 2002, which, in an action for breach of contract, insofar as appealed from, granted plaintiff's motion to disqualify the law firm representing defendants, unanimously affirmed, with costs.
C. WILLIAM PHILLIPS, for plaintiff-respondent.
STEPHEN RACKOW KAYE, for defendants-appellants.
Before: Tom, J.P., Mazzarelli, Rosenberger, Ellerin, Rubin, JJ.
The law firm representing defendants was properly disqualified upon a record showing that plaintiff's majority shareholder was a current client of the firm when the firm first appeared in the action, and that the shareholder is personally involved in the litigation even though he is not a named party (Code of Professional Responsibility DR 5-105 [ 22 NYCRR 1200.24]). In the latter regard, we note the letters that defendants wrote to the shareholder, after the firm's appearance on their behalf, suggesting that claims might be brought directly against him. In addition, the action is substantially related to at least one matter on which the firm represented the shareholder in the past, namely, the drafting of an operating agreement for plaintiff's predecessor. Such relationship also warrants the firm's disqualification (Code of Professional Responsibility DR 5-108 [ 22 NYCRR 1200.27]), regardless of whether the past representation gave it access to confidential information potentially adverse to plaintiff in this action (see, Forest Park Assocs. Ltd. Partnership v. Kraus, 175 A.D.2d 60, 62). We have considered defendants' other arguments, including that plaintiff unduly delayed in moving for disqualification, and find them unavailing.
Motion seeking leave for preference and for other related relief denied.
THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.