Opinion
303479-2009.
Decided March 15, 2010.
Edward R. Hall, Esq., for Plaintiffs.
Geovanny Fernandez, Esq., for Defendants.
Plaintiffs Uribe Bros. Corp. and Rafael Uribe (hereinafter "Uribe") seek declaratory judgment and damages for breach of contract, unjust enrichment, and conversion against Defendants 1840 Washington Avenue Corp., Pedro Hernandez, individually, and Sonia Hernandez, individually (hereinafter "landlords") in this case involving a lease and an "Amendment to Agreement of Lease" (hereinafter "Amendment to Lease") covering the first floor of commercial property located at 1840 Washington Avenue, Bronx County. Uribe seeks damages of $360,000 and counsel fees of $15,000.
The dispute centers on the effect of Uribe's failure to obtain a certificate of occupancy when that certificate was a condition precedent to a ten-year lease term. In this regard, the amendment to lease provides that if Uribe failed to obtain a certificate of occupancy prior to September 30, 2006, it owed no rent until the first month it obtained the occupancy certificate. Uribe claims Defendants interfered with efforts to obtain the certificate and leased other building spaces in violation of Uribe's right of first refusal negotiated in the lease amendment.
Uribe did not pay rent because of the condition precedent, and, as a result, Defendants filed several nonpayment rent actions, including a currently pending eviction proceeding. Defendants claim Uribe owes more than $154,919.30 for rent through November 30, 2009.
By order to show cause, Defendants seek, among other things, disqualification of Bernard A. Weintraub, Esq., and related law firm because Weintraub (as Uribe's counsel) prepared and witnessed the original lease and the August 1, 2006 lease amendment now in issue. According to Defendants, Weintraub will likely be called to testify as to circumstances surrounding the lease agreement and the parties' intentions involved in agreeing to the amendment. Defendants also seek the Court's permission to amend the answer and declare the Amendment to Lease null and void as unconscionable and contrary to the parties' intent, or, in the alternative, as not sufficiently definite in terms and/or signed through mutual mistake. Defendants also seek summary judgment concerning Defendants' first and second counterclaims, and an order declaring the amended agreement null and void on various grounds including unconscionability and being insufficiently definite as to material terms.
Attorney Disqualification
Attorney Bernard Weintraub and his "of counsel" law firm (Rosenblum, Bianco, Ciurcina, LLP) represent Uribe Brothers Corporation and Rafael Uribe in this litigation. According to Defendants, Weintraub negotiated the "amended agreement" on Uribe's behalf. For that reason, Defendants want Weintraub disqualified as Uribe's counsel because he is a "necessary witness" concerning the amendment.
According to Defendants, Weintraub's credibility is in issue concerning the parties' intent when the lease and the amended agreement were negotiated, especially concerning the first refusal issue and the existence of possible collusion between the management company and Uribe allegedly at Defendants' expense. "Collusion" involves the provision in the amendment which allegedly gave Uribe a right of first refusal to the sale or lease of any units in the building. As the grounds of their motion, Defendants invoke the canons of ethics as requiring Weintraub to withdraw because his credibility is in issue (see generally, Tru-Bite Labs, Inc. v. Ashman, 54 AD2d 345 [1st Dept. 1976]; North Shore Neurosurgical Group, PC v. Leivy, 72 AD2d 598 [2nd Dept. 1979]). Defendants say it is critical that Weintraub be disqualified and they would be prejudiced if disqualification is not granted. Weintraub is a necessary witness because, according to Defendants, the Court needs to determine the validity of the lease amendment, especially concerning the right of first refusal and any collusion between Uribe and the management company in entering into the amended agreement that inexplicably gave away certain significant rights of the Defendants.
The Court is concerned that Defendants raise issues concerning the ethics cannons ( i.e., New York Code of Professional Responsibility (Rule 5-102[a]) while not discussing current New York Rules of Professional Conduct [Rule 3.7(2)] which replaced all prior rules effective April 1, 2009.
The American Bar Association promulgated the "Canons of Professional Ethics" as the first national code of legal ethics in 1908. It was superseded by the ABA's Model Code of Professional Responsibility in 1970 (see, Altman, Considering the ABA's 1908 Canons of Ethics, 71 Fordham L. Rev. 2395 [2003]). The Model Code was superseded by the "Model Rules of Professional Conduct" adopted by the ABA in August, 1983 (see, House of Delegates Proceedings, 108 A B A Rep. 763 (1983). The original "Canons of Professional Ethics" considered the issue of advocate/witness in the context of situations where the attorney testifies for his client (see, Canon 19, Canons of Professional Ethics of the American Bar Association [1961]) (see generally, Siefring v. Marion, 22 AD2d 765 [1st Dept. 1964]).
Defendants maintain that allowing Weintruab to remain as Plaintiff's counsel and to be unavailable to testify will cause significant prejudice to their case. Likewise, Defendants maintain, among other things, that Weintraub is needed to testify concerning other aspects of the negotiations, including whether the terms were translated so that Defendant Pedro Hernandez could understand the agreement.
Plaintiffs' Opposition
Stated simply, Plaintiff says Defendants offered nothing showing why Weintraub's testimony is necessary. Further, Plaintiffs would be severely prejudiced if Defendants dictate who is their attorney in this litigation. In this regard, Plaintiffs point out that when a lawyer invokes the need to call an opposing attorney as witness and then acts to disqualify the witness as counsel, such motions are subject to strict scrutiny because of the likelihood for abuse and use as a tactical device (see, S S Hotel Ventures Ltd. Partnership v. 777 S H Corp., 69 NY2d 437).
Legal Discussion
The New York Code of Professional Responsibility (now the New York Rules of Professional Conduct) serves as a general guide (see, NCK Organization Ltd. v. Bregman, 542 F.2d 128 (2d Cir. 1976); S S Hotel Ventures Ltd. P'ship v. 777 S H Corp., 69 NY2d 437 [recognizing that the disciplinary rules are only guidance and not mandatory]). Thus, a Court, in determining whether to disqualify an attorney upon the grounds that he/she will likely be a witness, is guided, but not bound in discretion, by the basic standards therein set forth, more specifically Rule 3.7 (see, Jews for Jesus, Inc. v. Town of Oyster Bay, 2010 US Dist. Lexis 4655 [ED NY 2010]).
Rule 3.7 of the New York Rules of Professional Conduct provides that:
(a) A lawyer shall not act as an advocate before a tribunal in a matter in which the lawyer is likely to be a witness on a significant issue of fact. Unless: (1) the testimony relates solely to an uncontested issue; (2) the testimony relates solely to the nature and value of legal services rendered in the matter; (3) disqualification of the lawyer would work substantial hardship on the client; (4) the testimony will relate solely to a matter of formality, and there is no reason to believe that substantial evidence will be offered in opposition to the testimony; or (5) the testimony is authorized by the tribunal.
(see, 22 NYCRR § 1200.29)
A party's entitlement to be represented in ongoing litigation by counsel of its own choosing is a valued right which does not lend to abridgement absent a clear showing, on which the party seeking disqualification carries the burden, that counsel's removal is warranted (see generally, Goldstein v. Held , 52 AD3d 471 [ 2nd Dept. 2008]). In this regard, federal and state courts recognize that Rule 3.7 and predecessor rules ( e.g., Rule 5-102[a]) lend themselves to opportunistic abuse (see, Murray v. Metropolitan Life Ins. Co., 583 F3d 173 [2nd Cir 2009]; S S Hotel Ventures Ltd. Partnership v. 777 S H Corp., supra.). Further, because of such potential abuse, a Court must guard against the advocate/witness rule's tactical use to disqualify counsel, and must subject disqualification motions to strict scrutiny (see generally , Lamborn v. Dittmer, 873 F2d 522 (2d Cir. 1989). Clearly, the movant bears the burden of demonstrating specifically how and as to what issues prejudice may occur and that the likelihood of "prejudice" occurring is substantial (see, Murray v. Metropolitan Life Ins. Co., supra.). Disqualification is appropriate only if proven by clear and convincing evidence that (1) the witness will provide testimony prejudicial to the client and (2) the integrity of the judicial system will suffer as a result (see, Ross v. Blitzer, 2009 US Dist. Lexis 119014 [SD NY 2009]). The same standard applies to disqualification of a law firm under these conditions (see generally, Talvy v. American Red Cross, 205 AD2d 143 [1st Dept. 1994]).
The Court focuses first upon whether Weintraub's involvement in drafting the amended lease agreement necessitates that he be disqualified at this stage of the litigation. The essence here is whether Weintraub simultaneously can function as witness and attorney, and whether the need to obtain counsel's testimony will place Defendants at a disadvantage if Weintraub continues as Plaintiffs' counsel. As the Court understands, Weintraub and his associates represented Plaintiffs during both negotiations and litigation in this case. Further, Defendants maintain that Weintraub will be needed to testify concerning the "circumstances and intentions" of the Amendment to Lease and the translations that took place because Defendant Pedro Hernandez cannot speak English (see, Affirmation in Support, page 9). Defendants point out that Mr. Hernandez states that, as translated to him, Plaintiffs were to pay two months rent ($8,240) and if Plaintiffs' did not obtain the Certificate of Occupancy then they would pay $1,000 monthly rent. This version contradicts Plaintiffs' position, and the factual dispute is insufficient by itself to deprive Plaintiffs of Weintraub's legal services and provides no grounds for disqualifying the firm.
There is no universal prohibition against compelling a party's counsel to testify (see generally, 305-7 West 128th Street Corp. v. Gold, 178 AD2d 251 [1st Dept. 1991] [assistant general counsel deposed where he participated in negotiations of a lease] and Planned Industrial Centers, Inc. v. Eric Builders, Inc., 51 AD2d 586 [2nd Dept. 1976] [when attorney functions as agent/negotiator in commercial venture he may be examined]). As it appears to the Court, Defendants' request is centered upon the issue of translation, disqualification is based upon the disadvantage arising from Defendants' inability to question the drafter of the lease amendment. Since case law allows counsel's testimony in precisely this situation, the branch of Defendants' motion seeking to disqualify Plaintiffs' counsel is denied. Further, Defendants have not been persuasive that they have more than conjecture concerning the issue of collusion. Certainly the facts, as presented, do not — without more — require disqualification. Mere presence at the negotiations does not prove Defendants' point. Finally, Defendants failed in their burden to show that disqualification of the lawyer would not work substantial hardship upon his clients (see, Rule 3.7 [a][3]).
The Court notes that courts often permit attorneys who are potential witnesses to represent clients throughout pretrial proceedings including discovery and dispositive proceeding before considering disqualification (see generally, AV by Versace, Inc. v. Gianni Versace, S P A, 160 F. Supp. 2d 657 [SD NY 2001]). At this stage of the litigation, where the pleadings are incomplete, doubt remains that Attorney Weintraub in fact needs to be called as a witness. As a result, this motion can be viewed as premature (see generally, Giampa v. Marvin L. Shelton, MD, PC, 18 Misc 3d 1119A [Sup. Ct. 2008]). Likewise, Defendants failed to show adequate grounds for disqualifying the law firm in issue (see generally, Davin v. JMAM, LLC , 27 AD3d 371 [1st Dept. 2006]; Talvy v. American Red Cross, supra.).
Amended Answer
Concerning Defendants' request for leave to file an amended answer, Uribe raises no objection. Based upon the lack of opposition, the branch of Defendants motion seeking leave to file an amended answer is granted.
Summary Judgment
The branch of Defendants' motion seeking summary judgment upon Defendants' first and second counterclaims, or in the alternative, for a judgment for ongoing use and occupancy during Defendants' defense of the instant proceeding, is denied as premature. The request is premature because Defendants concurrently request leave to file an amended answer containing the counterclaims for which they seek summary judgment. As such, the demand for summary judgment is premature. Uribe is permitted to file an appropriate reply or other answering paper or to move in response to the newly filed amended answer that includes the counterclaims (see, CPLR § 3011).
Similarly, the branches of Defendants' motion, seeking an order declaring the Amendment to Lease null and void as unconscionable and contrary to the intent of the parties and their conduct, or, in the alternative, as void as insufficiently definite as to terms, are denied because the Court views this request as in fact a motion for summary judgment. For the same reason that branch of Defendants' motion treating with counterclaims, summary judgment is unwarranted because Plaintiff acted prematurely (see generally, Castillo v. County of Suffolk, 307 AD2d 305 [2nd Dept. 2003]).
Because pleadings are outstanding and CPLR Rule 3212 (b) requires that a motion for summary judgment be supported by complete pleadings, these summary judgment branches of Defendants' motion are procedurally defective. Accordingly, denial is required (see, Roach v. AVR Realty Co., LLC , 41 AD3d 821 [2nd Dept. 2007]) (see generally, Gonnerman v. Huddleston, 48
AD3d 516 [2nd Dept. 2008] and Wider v. Heller , 24 AD3d 433 [2nd Dept. 2005]).
Based upon the foregoing, it is
ORDERED that the branch of Defendant 1840 Washington Avenue Corporation's and Defendants Hernandez's motion, seeking to disqualify Plaintiff Uribe Corporation and Rafael Uribe's counsel, Bernard Weintraub and Markowitz Roshco, LLP, from further representing Defendant in this matter, is DENIED, and it is
ORDERED that the unopposed branch of Defendant 1840 Washington Avenue Corporation's and Defendants Hernandez's motion, seeking leave to file an amended answer, is GRANTED, and it is further
ORDERED that the branch of Defendants' motion seeking summary judgment as to Defendants' first and second counterclaims and seeking an order declaring the Amendment to Lease null and void as unconscionable and contrary to the intent of the parties and their conduct, or, in the alternative, as void as insufficiently definite as to terms, are DENIED.
The foregoing constitutes the decision and order of this Court.