Argued October 15, 1999
November 30, 1999
In an action, inter alia, to recover misappropriated corporate funds, the plaintiffs appeal (1), as limited by their brief, from stated portions of (a) an order of the Supreme Court, Suffolk County (Oshrin, J.), dated April 29, 1998, which, inter alia, denied their motion to disqualify the defendants' counsel and granted the defendants' cross motion to disqualify their counsel, and (b) an order of the same court, dated August 3, 1998, which, inter alia, denied that branch of their motion which was for reargument of the prior motion and the cross motion, (2) from an order of the same court, dated August 26, 1998, which, sua sponte, recalled and vacated the order dated August 3, 1998, and (3), as limited by their brief, from stated portions of an order of the same court (Kitson, J.), dated November 30, 1 998, which, inter alia, denied those branches of their motion which were (a), in effect, for reargument of the order dated April 29, 1998, and (b) to disqualify the defendants' new counsel.
Albert V. Bianchi, Hauppauge, N.Y. (Robert A. Bruno of counsel), appellant pro se and for remaining appellants.
Lamb Barnosky, LLP, Melville, N.Y. (Joel M. Markowitz of counsel), for respondents.
Snow Becker Krauss, P.C., New York, N.Y. (Francis V. Imbornone and Paul C. Kurland of counsel), nonparty respondent.
CORNELIUS J. O'BRIEN, J.P., GABRIEL M. KRAUSMAN, ANITA R. FLORIO, SANDRA J. FEUERSTEIN, JJ.
ORDERED that the order dated April 29, 1998, is affirmed insofar as appealed from; and it is further,
ORDERED that the appeal from the order dated August 3, 1998, is dismissed, as that order was vacated by the order dated August 26, 1998; and it is further,
ORDERED that the appeal from the order dated August 26, 1998, is dismissed, as that order was made sua sponte and is not appealable as of right and leave to appeal has not been granted ( see, CPLR 5701); and it is further,
ORDERED that the appeal from so much of the order dated November 30, 1998, as denied that branch of the plaintiffs' motion which was, in effect, for reargument, is dismissed, as no appeal lies from an order denying reargument; and it is further,
ORDERED that the order dated November 30, 1998, is affirmed insofar as reviewed; and it is further,
ORDERED that the respondents are awarded one bill of costs.
The Supreme Court properly granted the defendants' motion to disqualify the plaintiff Albert V. Bianchi from serving as counsel for the plaintiffs in this action and the underlying arbitration proceeding. Bianchi's dual role as corporate counsel for the defendant corporation, Fragrance Systems International, Inc., and counsel for the plaintiffs, the minority shareholders of the defendant corporation, could prevent him from exercising his professional judgment free of compromising influences and loyalties ( see, Code of Professional Responsibility, EC 5-1, DR 5-101[A] [ 22 NYCRR 1200.20(a)]; DR 5-105 [ 22 NYCRR 1200.24]). It is well settled that an attorney must avoid not only the fact, but also the appearance of representing conflicting interests ( see, Heim v. Merrit-Meridian Corp., 236 A.D.2d 367; Matter of Marks v. Prisant, 171 A.D.2d 665; Schmidt v. Magnetic Head Corp., 101 A.D.2d 268.
Nor do we find any error in the denial of the plaintiff's motion to disqualify the law firm of Cahn, Wishod Lamb, n/k/a Lamb Barnosky, LLP, from serving as the defendants' counsel. That firm had obtained an assignment of certain nonvoting preferred stock as collateral security for their clients' fee obligations in lieu of a cash retainer. This fee arrangement would not permit the firm to collect any more than the value of the legal services it provided regardless of the outcome of the litigation. Thus, it cannot be said that the defendants' counsel acquired a "proprietary interest in the cause of action or subject matter of the litigation" (Code of Professional Responsibility DR 5-103[A] [ 22 NYCRR 1200.22(a)]).
The plaintiffs' remaining contentions are without merit.
O'BRIEN, J.P., KRAUSMAN, FLORIO, and FEUERSTEIN, JJ., concur.