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PLAINTIFF LAW FIRM SHOULD HAVE BEEN ALLOWED TO REPRESENT ITSELF IN ITS SUIT FOR ATTORNEY’S FEES AGAINST A FORMER CLIENT; ALTHOUGH THE ATTORNEYS DIRECTLY INVOLVED WITH THE FORMER CLIENT WERE DISQUALIFIED, DEFENDANT DID NOT DEMONSTRATE THE TESTIMONY OF THE DISQUALIFIED ATTORNEYS WOULD PREJUDICE PLAINTIFF LAW FIRM SUCH THAT DISQUALICATION OF THE ENTIRE FIRM WAS WARRANTED (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined that plaintiff law firm, HoganWillig, could represent itself in a suit seeking payment from defendant volunteer fire company (SFC), a former client. The attorneys who were directly involved in representing the fire company were disqualified from this suit. The defendant argued the testimony of the disqualified attorneys would be prejudicial to HoganWillig, a violation of Rules of Professional Conduct rule 3.7[b][1]:

… [W]e agree with HoganWillig that SFC failed to establish that “it is apparent that the testimony [of the disqualified attorneys] may be prejudicial to [HoganWillig]” (Rules of Professional Conduct [22 NYCRR 1200.0] rule 3.7 [b] [1] … ). “The word ‘apparent’ means that prejudice to the client must be visible, as opposed to merely speculative, conceivable, or imaginable,” i.e., the prejudice “has to be a real possibility, not just a theoretical possibility” … . Consistent therewith, a movant’s “vague and conclusory” assertions are insufficient to establish that an attorney’s testimony may be prejudicial to the client … . * * *

Here, the court erred in failing to “consider such factors as [HoganWillig’s] valued right to choose its own counsel, and the fairness and effect in the particular factual setting of granting disqualification” … . “Disqualification denies a party’s right to representation by the attorney of its choice,” and we conclude under the circumstances of this case that depriving HoganWillig of its right to represent itself in the present action is particularly unwarranted given that counsel and client are one and the same … . As the court properly determined when it first considered the original motion, whether HoganWillig thinks it is desirable, despite the disqualification of three of its attorneys, to continue representing itself is a strategic decision that should be left to HoganWillig. Hoganwillig, PLLC v Swormville Fire Co., Inc., 2022 NY Slip Op 06331, Fourth Dept 11-10-22

Practice Point: Here the plaintiff law firm should have been allowed to represent itself in a suit to recover attorney’s fees from a former client. The fact that the attorneys directly involved in the former client’s case were disqualified did not require disqualification of the law firm itself. It was the defendant’s burden to demonstrate the testimony of the disqualified attorneys would prejudice the law firm (that was the basis for Supreme Court’s disqualification of the entire firm). The defendant was not able show such prejudice.

 

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THE INFORMATION SOUGHT BY DEFENDANT IN THIS SUIT BY THE INSURER TO DISCLAIM COVERAGE WAS PROTECTED BY ATTORNEY-CLIENT PRIVILEGE AS MATERIAL PREPARED IN ANTICIPATION OF LITIGATION (FOURTH DEPT).

The Fourth Department, reversing (modifying) Supreme Court, determined that the information sought by defendant (Charleus) in this insurance coverage dispute was privileged as material prepared in anticipation of litigation. Plaintiff insurance company brought this suit against the defendant, who was injured in a car accident involving its insured, to disclaim coverage because of the insured’s lack of cooperation:

“[A]n insurance company’s claim file is conditionally exempt from disclosure as material prepared in anticipation of litigation” ( … see CPLR 3101 [d] [2]). Nevertheless, material prepared in anticipation of litigation may be subject to disclosure upon “a party’s showing that he or she is in substantial need of the material and is unable to obtain the substantial equivalent of the material by other means without undue hardship” … . Here, we conclude that the materials sought by Charleus and ordered by the court to be disclosed following its in camera review constitute material prepared in anticipation of litigation … and were prepared at a time after plaintiff had already determined to reject and defend against the claim made by Charleus … .

Because the materials sought by Charleus and ordered to be disclosed by the court’s order were prepared in anticipation of litigation and because Charleus has not made a showing justifying disclosure … , we modify the order by denying the motion in its entirety and granting the cross motion. Merchants Preferred Ins. Co. v Campbell, 2022 NY Slip Op 06370, Fourth Dept 11-10-22

Practice Point: In this suit by an insurer to disclaim coverage of defendant’s injuries stemming from an accident with the insured, the information sought by defendant was prepared in anticipation of litigation and was therefore protected by attorney-client privilege.

 

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DEFENSE COUNSEL STATED DEFENDANT’S PRO SE MOTION TO WITHDRAW THE PLEA WAS WITHOUT MERIT; DEFENSE COUNSEL AND THE COURT INCORRECTLY TOLD THE DEFENDANT THE ISSUES RAISED IN THE MOTION TO WITHDRAW HAD BEEN DECIDED IN A PRIOR APPEAL: DEFENDANT DID NOT RECEIVE EFFECTIVE ASSISTANCE (FOURTH DEPT).

The Fourth Department, remitting the matter to determined defendant’s pro se motion to withdraw his plea, determined defendant did not receive effective assistance of counsel. Counsel stated the pro se motion did not have merit, taking a position adverse to the client’s position. In addition, defense counsel and the court incorrectly told defendant that the issues raised in defendant’s motion to withdraw the plea had been determined in a prior appeal:

When defense counsel takes a position adverse to his or her client, “a conflict of interest arises, and the court must assign a new attorney to represent the defendant on the motion” … .

Here, by stating that there were no grounds for defendant’s pro se motion, defense counsel essentially said that it lacked merit, which constitutes taking a position adverse to defendant … .

It appears from the record that defense counsel advised defendant that the issues raised by defendant in his pro se motion to withdraw his plea had already been decided against him in the prior appeal. The court agreed with defense counsel’s interpretation of our ruling. Both defense counsel and the court were incorrect. People v Hemingway, 2022 NY Slip Op 06356, Fourth Dept 11-10-22

Practice Point: If defense counsel takes a position adverse to defendant’s position, the defendant has not received effective assistance and is entitled to new counsel. Here defense counsel stated defendant’s pro se motion to withdraw the plea was without merit. The matter was remitted for assignment of new counsel and consideration of defendant’s motion.

 

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PLAINTIFF’S FAILURE TO COMPLY WITH DISCOVERY ORDERS WAS WILLFUL AND CONTUMACIOUS BUT DID NOT WARRANT SUPREME COURT’S STRIKING THE COMPLAINT; THE APPELLATE DIVISION IMPOSED EVIDENTIARY SANCTIONS AND ORDERED PLAINTIFF’S COUNSEL TO PAY DEFENDANT $3000 (SECOND DEPT). ​

The Second Department, reversing (modifying) Supreme Court, agreed plaintiff’s failure to comply with discovery orders was willful and contumacious, but determined striking the complaint was too severe a sanction. The appellate division’s sanctions included ordering plaintiff’s counsel to pay defendant $3000:

… [T]he record demonstrates that the plaintiff violated court orders directing her to appear for a continued deposition by a certain date, to provide a full set of copies of photographs that she referenced during her first deposition or provide an affidavit as to the nonexistence of those photographs, and to execute authorizations for certain medical providers, a pattern that supports an inference of willful and contumacious behavior … . Furthermore, the plaintiff’s procedural objection to the defendant’s motion was without merit. However, under the circumstances, we find that the striking of the complaint was too drastic a remedy … . Accordingly, that branch of the defendant’s motion which was pursuant to CPLR 3126 to strike the complaint should have been granted only to the extent of (1) precluding the plaintiff from using at trial any photograph that was not produced in response to the defendant’s discovery demands, (2) directing the plaintiff to provide the defendant with medical authorizations for Jamaica Hospital, and (3) directing the plaintiff’s counsel to personally pay the sum of $3,000 as a sanction to the defendant … . Castillo v Charles, 2022 NY Slip Op 06103, Second Dept 11-2-22

Practice Point: Here the appellate division found plaintiff’s failure to comply with discovery orders willful and contumacious but did not agree with Supreme Court’s striking of the complaint. The appellate court imposed evidentiary sanctions and ordered plaintiff’s counsel to pay defendant $3000.

 

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IN THIS DIVORCE PROCEEDING, IT WAS AN ABUSE OF DISCRETION TO DENY INTERIM ATTORNEY’S FEES TO THE NONMONIED SPOUSE (SECOND DEPT).

The Second Department, reversing (modifying) Supreme Court, determined interim attorney’s fees should have been awarded to the nonmonied spouse:

Supreme Court improperly referred to the trial court that branch of the plaintiff’s cross motion which was for an award of interim counsel fees (see Domestic Relations Law § 237[a] …). “Because of the importance of such awards to the fundamental fairness of the proceedings, . . . an application for interim counsel fees by the nonmonied spouse in a divorce action should not be denied—or deferred until after the trial, which functions as a denial—without good cause, articulated by the court in a written decision” … . Here, the court erred in summarily referring that branch of the plaintiff’s cross motion which was for an award of interim counsel fees to the trial court, which functioned as a denial of that relief, and failed to articulate any reasons, much less good cause, for that determination. The evidence submitted by the plaintiff demonstrates that she is the nonmonied spouse, as the defendant earned five to seven times more income than the plaintiff in recent years … . While the defendant argues that the plaintiff has funds available to her, the plaintiff “cannot be expected to exhaust all, or a large portion, of the finite resources available to her in order to pay her attorneys, particularly when the [defendant] is able to pay his own legal fees without any substantial impact upon his lifestyle” … . Fugazy v Fugazy, 2022 NY Slip Op 06115, Second Dept 11-2-22

Practice Point: Here in this divorce action it was deemed an abuse of discretion to, without explanation, deny interim attorney’s fees to the nonmonied spouse.

 

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IN THIS BREACH OF CONTRACT SUIT CONCERNING SHARING ATTORNEY’S FEES, THE COMPLAINT DID NOT ALLEGE SUFFICIENT FACTS TO STATE A CAUSE OF ACTION AGAINST AN INDIVIDUAL ATTORNEY, AS OPPOSED TO THE ATTORNEY’S FIRM (SECOND DEPT). ​

The Second Department, in this breach of contract action, determined the complaint did not allege sufficient facts to state a cause of action against an attorney (Lefft) as an individual, as opposed to against the attorney’s law firm:

“As a general rule, the law treats corporations as having an existence separate and distinct from that of their shareholders and, consequently, will not impose liability upon shareholders for the acts of the corporation” ( … Business Corporation Law § 1505). “In order for a plaintiff to state a viable claim against a shareholder of a corporation in his or her individual capacity for actions purportedly taken on behalf of the corporation, [the] plaintiff must allege facts that, if proved, indicate that the shareholder exercised complete domination and control over the corporation and ‘abused the privilege of doing business in the corporate form to perpetrate a wrong or injustice'” … .

Here, while the complaint alleged that Leftt had authority to make decisions on behalf of the firm, and that Leftt “ratified” both that the plaintiffs held an “of counsel” position with the firm, as well as the compensation arrangement … , the complaint does not allege that Leftt exercised “complete dominion and control over” the firm, or otherwise “abused the privilege of doing business in the corporate form” that would form the basis for personal liability … . Hymowitz v Hoang Q. Nguyen, 2022 NY Slip Op 05997, Second Dept 10-26-22

Practice Point: To assert that a shareholder is personally liable for the conduct of the corporation (here a law firm), the complaint must allege the shareholder exercised complete dominion and control over the corporation.

 

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THE DEFENDANT WAS REPRESENTED AT TRIAL BUT REPRESENTED HIMSELF IN PRETRIAL PROCEEDINGS; THE JUDGE NEVER ADEQUATELY EXPLAINED THE RISKS OF REPRESENTING ONESELF OR THE DIFFERENCE BETWEEN AN ATTORNEY ACTING AS A “LEGAL ADVISOR” TO THE DEFENDANT AND AN ATTORNEY WHO “REPRESENTS” THE DEFENDANT; CONVICTION REVERSED AND MATTER REMITTED TO REPEAT PRETRIAL PROCEEDINGS (CT APP).

​The Court of Appeals, in a full-fledged opinion by Judge Troutman, reversing the appellate division, determined the judge never adequately explained to the defendant the risks associated with representing himself, and the judge did not explain the difference between an attorney who acts as a “legal advisor” to the defendant as opposed to an attorney who “represents” the defendant. Although the defendant was represented at trial, he was not represented during much of the pretrial proceedings. The matter was remitted to repeat the pretrial proceedings:

… [T]he court’s record exploration of the issue did not warn defendant of the risks of proceeding pro se or apprise him of the importance of a lawyer in the adversarial system, nor does the record as a whole demonstrate that defendant effectively waived his right to counsel. Initially, the court conducted no discussion whatsoever of these issues before stating that defendant was representing himself … . Although the court later told defendant that it was “not a great idea” to represent himself, that defendant was putting himself “in a very bad position,” and that a lawyer would have knowledge of criminal procedure that defendant did not, these brief, generalized warnings do not satisfy the requirement for a searching inquiry … . * * *

… [W]hen the court, in its discretion, permits standby counsel … , it should explain to the defendant the court’s rules regarding the role of a legal advisor or standby counsel and how that role differs from representation by an attorney. People v Baines, 2022 NY Slip Op 05919, CtApp 10-24-22

Practice Point: When a defendant seeks to represent himself, the judge must adequately explain the associated risks, as well as the difference between an attorney who acts as a “legal advisor” to the defendant and an attorney who “represents” the defendant. Here the defendant was represented at trial but not during some of the pretrial proceedings. The matter was remitted to repeat the pretrial proceedings.

 

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THE INDEMNIFICATION CLAUSE IN THE PARTNERSHIP AGREEMENT DID NOT INCLUDE “UNMISTAKABLY CLEAR” LANGUAGE INDICATING THE WAIVER OF THE “AMERICAN RULE” REQUIRING EACH PARTY TO PAY THAT PARTY’S OWN ATTORNEY’S FEES; PLAINTIFF WAS NOT ENTITLED TO ATTORNEY’S FEES ASSOCIATED WITH DEFENDANT’S UNSUCCESSFUL DISSOLUTION ACTION (CT APP).

​The Court of Appeals, in a full-fledged opinion by Judge Rivera, reversing the appellate division, determined the indemnification clause in the partnership agreement did not serve to waive the “American Rule” that each party is responsible for that party’s own attorney’s fees. The indemnification clause states: “The Partnership and the other Partners shall be indemnified and held harmless by each Partner from and against any and all claims, demands, liabilities, costs, damages, expenses and causes of action of any nature whatsoever arising out of or incidental to any act performed by a Partner which is not performed in good faith or is not reasonably believed by such Partner to be in the best interests of the Partnership and within the scope of authority conferred upon such Partner under this Agreement, or which arises out of the fraud, bad faith, willful misconduct or negligence of such Partner.” Here defendant had brought an unsuccessful dissolution action and plaintiff argued defendant was obligated to pay plaintiff’s attorney’s fees because the indemnification clause waived the American Rule:

Under the American Rule, “attorney’s fees are incidents of litigation and a prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties, statute or court rule” … . The American Rule is intended to increase “free access to the courts” for those who would otherwise be discouraged from seeking “judicial redress of wrongs” for fear of having to pay a defendant’s attorney’s fees … . …

The Rule is straightforward enough, but in the context of private agreements to avoid the Rule, courts have had to determine the intent of vague fee-shifting language and broad indemnification provisions that do not explicitly allow for the prevailing party in an action between contracting parties to collect attorney’s fees … .. To the extent that some of these decisions presume that broadly worded indemnification provisions by their nature are intended to cover attorney’s fees in direct party actions, they deviate from this Court’s exacting standard that the agreement must contain “unmistakably clear” language of the parties’ intent to encompass such actions … . * * *

Here, the indemnification provision makes no explicit mention that partners may recoup attorney’s fees in an action on the contract. Nor is there any basis to infer the provision is limited to actions between the partners.  Sage Sys., Inc. v Liss, 2022 NY Slip Op 05918, CtApp 10-20-22

Practice Point: Unless “unmistakably clear” language in a contract indicates an one party’s agreement to pay another party’s attorney’s fees, the American Rule applies and each party pays that party’s own attorney’s fees.

 

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DEFENDANT WAIVED THE LACK-OF-PERSONAL-JURISDICTION DEFENSE BY COUNSEL’S FILING A NOTICE OF APPEARANCE WITHOUT RAISING THE JURISDICTION OBJECTION (SECOND DEPT).

​The Second Department, reversing Supreme Court, determined the defendant waived a lack-of-personal-jurisdiction defense by counsel’s filing a notice of appearance without raising the jurisdictional objection:

“‘By statute, a party may appear in an action by attorney (CPLR 321), and such an appearance constitutes an appearance by the party for purposes of conferring jurisdiction'” … . Here, the defendant appeared in the action by its counsel’s filing of the notice of appearance … , and neither the defendant nor its attorney moved to dismiss the complaint for lack of personal jurisdiction at that time or asserted lack of personal jurisdiction in a responsive pleading. Thus, the defendant waived any objection based on lack of personal jurisdiction by failing to move to dismiss the complaint on this ground at the time its counsel filed a notice of appearance in the action or to serve an answer which raised this jurisdictional objection … . Capital One N.A. v Ezkor, 2022 NY Slip Op 05829, Second Dept 10-19-22

Similar issue and result in: HSBC Bank USA N.A. v Mohammed, 2022 NY Slip Op 05843, Second Dept 10-19-22

Practice Point: Counsel’s filing a notice of appearance without raising a lack-of-personal-jurisdiction objection waives the objection.

 

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DEFENSE COUNSEL WAITED UNTIL AFTER THE PROSECUTOR MADE SEVERAL ARGUABLY IMPROPER REMARKS IN SUMMATION BEFORE OBJECTING “TO ALL OF THIS;” THE OBJECTION WAS DEEMED UNTIMELY, VAGUE, AMBIGUOUS, GENERAL AND NONSPECIFIC; THEREFORE THE ISSUES RAISED BY THE PROSECUTOR’S REMARKS WERE NOT PRESERVED FOR APPEAL (SECOND DEPT). ​

The Second Department, in a full-fledged opinion by Justice Dillon, over an extensive two-justice dissent, determined defense counsel did not make timely objections to remarks made by the prosecutor in summation. After several arguably improper comments by the prosecutor, defense counsel objected “to all of this.” The judge struck the only last of the prosecutor’s remarks. After the jury was charged and deliberating, defense counsel raised objections to several other remarks made by the prosecutor which were denied as untimely. The Second Department agreed the objections were not timely or specific and affirmed defendant’s conviction:

The objection of defense counsel most relevant to this appeal was to “all of this,” which was interposed only after the prosecutor likened a hypodermic needle to a dangerous instrument. The objection, as interposed, suffers from a number of problems in failing to preserve the issues now raised on appeal. First, the objection was vague and ambiguous. Second, it was untimely. Third, its language was general and nonspecific. The preservation rules … , requiring that objections be timely and specific rather than untimely and general, are basic, well-understood, and time-tested concepts, which should prompt no dispute in their application to this appellate record.

… The prosecutor had been speaking at some length, for a total of 28 uninterrupted sentences, before defense counsel interposed the objection at issue here. …

… As to [the] objection and its timing, the Supreme Court understandably treated it as applying to the last occurring statement of the prosecutor … . …

… For preservation, the defendant’s objection was … general, as it did not identify to the Supreme Court any particular argument or remark by the prosecutor or any specific basis. The basis for the objection was not explained, rendering the entire objection general and insufficient for preservation purposes … . …

Defense counsel initiated further colloquy with the Supreme Court about the subject objection after the jury had been charged and after the jury had begun its deliberations. By then, counsel’s objection was clearly untimely, as there was no longer an opportunity for the court to promptly make a curative ruling to the jury, had one even been indicated. People v Adorno, 2022 NY Slip Op 05856, Second Dept 10-19-22

Practice Point: The Second Department used this case to explain that, in order to preserve issues for appeal, objections must be timely and specific such that the trial court has the opportunity to address them. Here the prosecutor made several arguably improper remarks in summation before defense counsel objected “to all of this.” Defense counsel didn’t specify the nature of the objections until after the jury started deliberations. That was too late.

 

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