Commercial Division Blog

Posted: February 22, 2016 / Categories Commercial, Law Firms and Professional Ethics

Court Denies Disqualification Motion Where Prior Representation Unrelated to New Action

On January 21, 2016, Justice Platkin of the Albany County Commercial Division issued a decision in Concord Development Co. LLC v. Amedore Concord, LLC, 2016 NY Slip Op. 50152(U), denying a motion for disqualification.

In Concord Development, the plaintiff moved to disqualify the defendants' counsel on the ground that counsel, while at a different law firm, had represented a company ("QDG") of which Plaintiff's principal ("Myers") was a one-third owner. The court denied the motion, explaining:

[A] party seeking disqualification of its adversary's lawyer must prove: (1) the existence of a prior attorney-client relationship between the moving party and opposing counsel, (2) that the matters involved in both representations are substantially related, and (3) that the interests of the present client and former client are materially adverse. In this connection, settled law holds that attorney for a business entity represents only the entity, not the owners or employees of the entity, unless such representation is specifically requested and agreed upon.

Myers avers that Attorney Siegel successfully represented QDG in its bid to remove deed restrictions on a certain property parcel and in the subsequent sale of that parcel to Amedore. Myers also avers that he discussed ongoing land-development matters with Attorney Siegel during his representation of QDG and is concerned that any confidential financial, business, and proprietary information revealed to Mr. Siegel may be used in this current action. Further, Myers complains that several attorneys from Siegel's old practice came with him to the Firm, and he expresses concern that the cross-over of personnel from one firm to the other will give the Firm insight to otherwise confidential information about his business dealings.

For his part, Attorney Siegel explains that he was retained by QDG to represent it in litigation seeking to remove certain deed restrictions on a parcel of real property entirely unrelated to this action. Attorney Siegel further avers that he did not represent Concord or Myers in any capacity, much less with respect to Amedore Concord, the Parcel or the instant dispute concerning capital contributions. Attorney Siegel does acknowledge that he covered for another attorney at the 2008 closing on the sale of QDG's property to Amedore, but maintains that this appearance, which was subsequent to execution of the Agreement and the formation of Amedore Concord, was his only involvement in the transaction with Amedore. Finally, Attorney Siegel denies that Myers disclosed to him any confidential information regarding Concord or his other business endeavors, averring that he was not even privy to information about the general business affairs of QDG. The foregoing averments are supported by the affidavit of Paul Harding, who also was a one-third owner of QDG at pertinent times.

Concord's disqualification motion is entirely lacking in merit. There has been no showing that Attorney Siegel's representation of QDG gave rise to an attorney-client relationship with Myers or Concord. Nor has there been any showing that Attorney Siegel's legal work for QDG — litigation concerning the removal of deed restrictions attached to an unrelated parcel and his attendance at the closing on the sale — is substantially related to this litigation, the joint venture, the Parcel or the members' capital contributions. And notwithstanding Myers' concerns regarding the protection of his confidential financial, business and proprietary information, there has been no persuasive showing that any such confidential information was imparted to Attorney Siegel during his representation of QDG or that any such confidential information has any bearing on the instant controversy. Finally, the Court rejects Concord's contention that disqualification is necessary to avoid the appearance of impropriety.

(Internal quotations and citations omitted) (emphasis added).