SCHERTZ v. JENKINS (2004)

In this action, Pepi Schertz is seeking to recover unpaid rent and other damages from David Jenkins, who rented an apartment in a building that she owns and occupies at 75 Coleridge Street, Brooklyn. On the first day of trial, the elderly plaintiff was having difficulty being responsive to questioning and her daughter, Bella Flom, who helps her with the building, testified on her behalf.   Well into Ms. Flom's testimony, she noted that Thomas B. Pruzan, Mr. Jenkins's counsel, had represented Ms. Schertz in a Housing Part proceeding against other tenants in the building.   Lee M. Nigen, Ms. Schertz's attorney, moved to disqualify Mr. Pruzan for that reason.   The parties were invited to submit papers on the motion, which they have done.   The Court has concluded that the motion should be denied.

 “A party's entitlement to be represented in ongoing litigation by counsel of his or her own choosing is a valued right which should not be abridged absent a clear showing that disqualification is warranted ․, and the movant bears the burden on the motion.”  (Campolongo v. Campolongo, 2 A.D.3d 476, 476, 768 N.Y.S.2d 498 [2d Dept. 2003];  see also Heim v. Merritt-Meridian Corp., 236 A.D.2d 367, 367-68, 654 N.Y.S.2d 570 [2d Dept. 1997].)  Any doubts must be resolved in favor of disqualification.  (See Sperr v. Gordon L. Seaman, Inc., 284 A.D.2d 449, 450, 727 N.Y.S.2d 456 [2d Dept. 2001];  Stober v. Gaba & Stober, P.C., 259 A.D.2d 554, 555, 686 N.Y.S.2d 440 [2d Dept. 1999].)

Plaintiff bases her motion in Disciplinary Code Rule 5-108, which provides that “a lawyer who has represented a client in a matter shall not, without the consent of the former client after full disclosure ․ [t]hereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client”, nor “[u]se any confidences or secrets of the former client.”  (See DR 5-108[A][1], [A][2];  22 NYCRR 1200.27[A][1], [A][2].)

 “A party seeking disqualification of its adversary's lawyer pursuant to DR 5-108(A)(1) must prove that there was an attorney-client relationship between the moving party and opposing counsel, that the matters involved in both representations are substantially related, and that the interests of the present client and former client are materially adverse.”  (Jamaica Public Service Co. Ltd. v. AIU Ins. Co., 92 N.Y.2d 631, 636, 684 N.Y.S.2d 459, 707 N.E.2d 414 [1998].)  Here, as to DR 5-108(A)(1) the only issue is whether the prior eviction proceeding and this action can be said to be “substantially related.”

The “substantially related” element of conflict of interest analysis apparently finds its roots in Judge Weinfield's decision in T.C. Theatre Corp. v. Warner Bros. Pictures, 113 F.Supp. 265, 268 [S.D.N.Y. 1953].  (See Crawford v. Antonacci, 297 A.D.2d 419, 420, 746 N.Y.S.2d 94 [3d Dept. 2002] [Lahtinen, J., dissenting].)  That decision was based upon former Canon 6 of the Canons of Professional Ethics, which proceeded from “ [t]he obligation to represent the client with undivided fidelity and not to divulge his secrets or confidences.”  (See T.C. Theatre Corp. v. Warner Bros. Pictures, 113 F.Supp. at 268.)   As such, there was an articulated link between the “substantially related” concept and client confidences and secrets.  “[T]he Court must ask whether it can reasonably be said that in the course of the former representation the attorney might have acquired information related to the subject of his subsequent representation.   If so, then the relationship between the two matters is sufficiently close to bring the latter representation within the prohibition of Canon 6.” (Id. at 269.)

On the other hand, “[t]he proscription against taking a case against a former client is predicated ․ on more than the possibility of use in the second representation of information confidentially obtained from the former client in the first representation ․ Irrespective of any actual detriment, the first client is entitled to freedom from apprehension and to certainty that his interests will not be prejudiced in consequence of representation of the opposing litigant by the client's former attorney.”  (Cardinale v. Golinello, 43 N.Y.2d 288, 295-96, 401 N.Y.S.2d 191, 372 N.E.2d 26 [1977].)

The conflicts rule, therefore, is based on “policies both of maintaining loyalty to the first client and of protecting the client's confidences.”  (See Kassis v. Teacher's Insurance and Annuity Association, 93 N.Y.2d 611, 616, 695 N.Y.S.2d 515, 717 N.E.2d 674 [1999].)  Disciplinary Rule 5-108 reflects these separate “fiduciary duties of loyalty and confidentiality” (see id.) in the structure of provisions (A)(1) and (A)(2).   Thus, the potential conflict should be analyzed separately under each provision (see Jamaica Public Service Co. Ltd. v. AIU Ins. Co., 92 N.Y.2d at 636-38, 684 N.Y.S.2d 459, 707 N.E.2d 414), and disqualification may be required for a “substantially related” matter, even though confidential information is not a factor (see Nationwide Associates, Inc. v. Targee Street Internal Medicine Group, P.C., 303 A.D.2d 728, 729, 758 N.Y.S.2d 108 [2d Dept. 2003];  562 Eglinton, Inc. v. Merlo, 277 A.D.2d 1027, 716 N.Y.S.2d 228 [4th Dept. 2000];  Press v. Lozier, Inc., 239 A.D.2d 879, 659 N.Y.S.2d 648 [4th Dept. 1997];  see also Sperr v. Gordon L. Seaman, Inc., 284 A.D.2d at 450, 727 N.Y.S.2d 456).  Nonetheless, where there is both a “substantial relationship” between the respective subject matters of the former and present engagements, and “it is reasonable to infer that [the attorney] gained some confidential information during [the] former representation which is of some value to [the attorney's] present client” (see Walden Federal Savings and Loan Association v. Village of Walden, 212 A.D.2d 718, 719, 622 N.Y.S.2d 796 [2d Dept. 1995] ), the whole may prove greater then the sum of its parts.

In our case, the papers submitted by the landlord/movant would, in themselves, be insufficient to warrant disqualification under either DR 5-108(A)(1) or (A)(2).   No affidavit of the landlord herself or her daughter was submitted.   All the attorney's affirmation tells the Court about tenant's counsel's prior representation of the landlord is that it related to “another proceeding concerning the subject premises”, “a previous eviction proceeding.”  (Attorney's Affirmation in Support of Motion, ¶¶ 1, 2.)  As to confidentially, the Court is told only that, “[i]n that case, counsel was bound to have learned there were legal issues surrounding the number of units that could be occupied within the confines of the law.”  (Id., ¶ 5.)

In response, tenant's counsel acknowledges the prior representation in “a non-payment case against a different tenant in a different apartment”, and states that “[t]here never was an issue of an illegal apartment” in that proceeding.  (Affirmation in Opposition, ¶ 4.)  As to confidentiality, counsel argues that “there is no evidence that [the landlord] has disclosed any specific confidences” to him;  that the “issue in the case at bar is whether the apartment in question is an illegal apartment”, which is “information of public record and certainly not a confidence at all”, and “clearly something that any party could discover” as part of the disclosure process.  (Id., ¶ 6.)  Counsel also contends that, because the motion to disqualify was made after trial began, it “is clearly a litigation ploy”, and, if granted, will “impose significant hardships” upon the defendant.  (Id., ¶ 5.)

 Were the Court limited to counsel's affirmations, the motion would be decided without a full and fair consideration of the parties' respective interests.   The Court has reviewed in addition the files of two Housing Part proceedings the proceeding in which Mr. Pruzan represented Ms. Schertz against other tenants, Eugene Korolkov aka Guennadijourov and Tanya Yurov, and the proceeding that Ms. Schertz brought against this defendant, David Jenkins.   With limits, the Court may take judicial notice of documents in the file and the course of the proceedings.  (See Ptasznik v. Schultz, 247 A.D.2d 197, 199, 679 N.Y.S.2d 665 [2d Dept. 1998];  Estate of Cagney, 186 Misc.2d 760, 763-64, 720 N.Y.S.2d 759 [Sur. Ct., Dutchess County 2001], aff'd 293 A.D.2d 675, 740 N.Y.S.2d 448 [2d Dept. 2002].)

The Non-Payment Petition against tenants Korolkov and Yurov (L & T No. 108966 / 99), which is signed by Mr. Pruzan as attorney, describes the premises as “apt., 3 room(s), floor top in building known as 75 Coleridge Street”, and states that the premises are not subject to rent regulation “in that the premises are located in a building containing less than six families, said premises being a 2 family dwelling * tenant occupying 3 furnished rooms, same being a non-house keeping unit within landlord's apt.”

Neither of the tenants answered the Petition, and a Judgment of Possession was entered on February 3, 2000.   On the same day, a warrant issued to Marshall John F. Marchisotto.   Mr. Pruzan's statement in his affirmation, therefore, that “[t]here never was an issue of an illegal apartment” in the non-payment proceeding is technically correct;  the legality of the “non house keeping unit” was not raised by the tenants or the court.   It is apparent, however, from the face of the Petition that Mr. Pruzan must have anticipated that the legality of the unit might be questioned.

The Hold Over Petition against Mr. Jenkins (L & T No. 74823 / 02) was filed on May 29, 2002, and sought possession of the “first floor rear apartment.”   Mr. Jenkins appeared, but filed no answer.   On July 2, a Stipulation was executed in which, in effect, Mr. Jenkins agreed to vacate by August 31, and Ms. Schertz waived any claims for arrears or use and occupancy if he did so.   In the Stipulation, Mr. Jenkins “waive[d] all defenses, including defense of illegal multiple dwelling.”   A Judgment of Possession was entered on July 3, and a warrant issued to Marshall Norman Katz on September 13.   In a statement dated October 29, submitted in connection with a motion, Mr. Jenkins alleged that there were three illegal apartments in the “2 family dwelling.”

The Complaint in this action alleges breach of contract and damage to property.   The breach of contract claim seeks unpaid rent that constituted the arrears and use and occupancy that were referenced in the Stipulation.   Mr. Jenkins filed an Answer in Person, also asserting a counterclaim, that states “renting illegal apartment to me.”   A subsequent Notice of Appearance and Verified Answer, prepared by Mr. Pruzan's firm, alleges a number of affirmative defenses and counterclaims, including that the premises “were a de facto multiple dwelling”, that “plaintiff failed to obtain a multiple dwelling registration number and therefore no rent is due.”  (Second Affirmative Defense, ¶ 3.)  Based upon Ms. Flom's testimony on the first day of trial, the “2 family dwelling” may be configured to serve as five separate units.

Starting with DR 5-108(A)(1), the Court cannot say that this action is clearly a “substantially related matter” to the non-payment proceeding on which Mr. Pruzan represented Ms. Schertz.   This Court is unaware of any court-articulated standards or guidelines for determining whether two matters are “substantially related” for purposes of the rule.   Clearly, though, a similarity of “issues” is an important factor.  (See 562 Eglinton, Inc. v. Merlo, 277 A.D.2d at 1027, 716 N.Y.S.2d 228;  American Psych Systems, Inc. v. Options Independent Practice Association, Inc., 168 Misc.2d 582, 585-86, 643 N.Y.S.2d 901 [Sup. Ct., Westchester County 1996];  see also T.C. Theatre Corp. v. Warner Bros. Pictures, 113 F.Supp. at 269-71.)

When an attorney had represented a landlord “in the negotiation and execution of [a] lease ․, personally drafting it”, he was disqualified from representing the tenant in an action seeking judgment that the tenant breached the lease.  (See Kheel v. Continental Baking Co., 219 A.D.2d 846, 846, 631 N.Y.S.2d 952 [4th Dept. 1995].)  And when an attorney had represented a tenant in a prior summary proceeding, he was disqualified from representing the landlord in a later summary proceeding against the tenant.  (See Revelstoke Properties, Inc. v. Beaumont Neckwear, Inc., 114 Misc.2d 545, 548-49, 451 N.Y.S.2d 996 [Civ. Ct., N.Y. County 1982].)  But those cases presented stronger facts for disqualification than ours, because in Kheel the same parties were clearly involved in both matters, and in Revelstoke Properties it presumably was so.

Sperr v. Gordon L. Seaman, Inc., 284 A.D.2d 449, 727 N.Y.S.2d 456 “involve [d] a law firm which, even if for a relatively brief time, represented a client in one personal injury case while simultaneously opposing relief sought by that same client in a separate personal injury case involving the same premises” (id., at 450, 727 N.Y.S.2d 456.)   The court disqualified the firm, finding “a more serious risk of an appearance of impropriety than in the case of a lawyer who later adopts a position which is adverse to that of a former client in a substantially related matter.”  (Id.)  Our case, of course, is more like the latter, but the suggestion in the opinion is that personal injury actions involving the same premises would be considered “substantially related.”

Other state courts and various federal courts have used different “ approaches regarding the substantial relationship test” (see Chrispens v. Coastal Refining & Marketing, Inc., 257 Kan. 745, 751-53, 897 P.2d 104, 111-12 [1995] ), and have considered various factors in reaching a determination:

“(1) The case involved the same client and the matters or transactions in question are relevantly interconnected or reveal the client's pattern of conduct ․;  (2) the lawyer had interviewed a witness who was key in both cases ․;  (3) the lawyer's knowledge of a former client's negotiation strategies was relevant ․;  (4) the commonality of witnesses, legal theories, business practices of the client, and location of the client were significant ․;  (5) a common subject matter, issues and causes of action existed ․;   and (6) information existed on the former client's ability to satisfy debts and its possible defense and negotiation strategies.”  (257 Kan. at 753-54, 897 P.2d at 112.)

 Here, again, Mr. Jenkins has asserted the illegality of units in Ms. Schertz's building as a basis for both his defense to her claim for rent and his counterclaim.   In the prior proceeding against other tenants, the Petition signed and presumably prepared by Mr. Pruzan suggested on its face a possible issue as to illegality, but the respective time periods of Mr. Jenkins's tenancy and that of the other tenants were not overlapping.   Had the other tenants appeared, or the judge who reviewed the file on the application for a default judgment chosen to raise it, the issue as to illegality would likely have been addressed.   But that did not happen.

The issue as to illegality is relevant as well to DR 5-108(A)(2), but the Court cannot say that Mr. Pruzan will “[u]se any confidences or secrets” of Ms. Schertz in his defense of Mr. Jenkins.  “While a movant need not actually spell out the claimed secrets and confidences in order to prevail, it must at a minimum provide the motion court with information sufficient to determine whether there exists a reasonable probability that DR 5-108(A)(2) would be violated ․ [G]eneralized allegations ․ are insufficient to justify disqualification.”  (Jamaica Public Service Co. Ltd. v. AIU Ins. Co., 92 N.Y.2d at 638, 684 N.Y.S.2d 459, 707 N.E.2d 414;  see also Schneider v. Saiber Schlesinger Satz & Goldstein, LLC, 260 A.D.2d 321, 321, 689 N.Y.S.2d 66 [1st Dept. 1999] [movant “failed to show the nature and substance of the confidential information [movant] imparted to the attorneys”].)

Neither Ms. Schertz nor her daughter submitted an affidavit on the motion, and so there is no evidence that any confidences or secrets were imparted to Mr. Pruzan in connection with the former representation.   The most that is alleged is Mr. Nigen's supposition that Mr. Pruzan “was bound to have learned that there were legal issues surrounding the number of units that could be occupied within the confines of the law.”  (Attorney's Affirmation in Support of Motion,¶ 5.)

For his part, Mr. Pruzan doesn't expressly deny having receiving any confidence or secret, arguing primarily that any relevant information would have been subject to disclosure.  (See Affirmation in Opposition, ¶ 5.)  Mr. Pruzan is correct that courts do consider whether the information alleged to be confidential or secret would be available through disclosure.  (See Crawford v. Antonacci, 297 A.D.2d at 420, 746 N.Y.S.2d 94;  Ima Search, Inc. v. Locasio, 2001 N.Y. Slip Op. 40214[U], *4, 2001 WL 1422873 [Sup. Ct., Nassau County 2001].)  But he provides no specifics to support the argument, which, in any event, does not take into account “intangible factors gleaned about a client” (see Crawford v. Antonacci, 297 A.D.2d at 421, 746 N.Y.S.2d 94 [Lahtinen, J., dissenting] ) that could prove helpful to the client's adversary in the subsequent representation.

The argument based on the discovery process, though, does suggest that determinations about disqualification should be made with a sensitivity to the practice context in which the question arises.   A summary proceeding in the Housing Part, particularly one that is resolved on default, and a plenary action in Civil Court are different from each other, and are different from antitrust, securities and other large-scale commercial litigation that often generate motions to disqualify counsel and court opinions.   Among those differences are the relationship between attorney and client, and the nature and extent of pre-trial preparation, assuming that the matters ever come close to trial.

And those differences call into play, in perhaps a more significant way, the “public policies favoring client choice and ․ an attorney's ability to practice law.”  (See Solow v. W.R. Grace & Co., 83 N.Y.2d 303, 310, 610 N.Y.S.2d 128, 632 N.E.2d 437 [1994].)  The landlord/tenant bar is both specialized and sub-specialized, and economics require that the residential practice rely on volume.   But, it is no exaggeration to note that the overwhelming majority of tenants and a fair percentage of landlords, in both the Housing Part and Civil Court, are unrepresented by any attorney.   The Court must be concerned that too strict application of rules developed in other contexts not further restrict the availability of representation, without providing any real benefit to the fortunate few who are able to find and afford it.

Moreover, courts are suspicious of disqualification motions made “in the midst of litigation” (see Voss v. 87-10 51st Ave. Owners Corp., 292 A.D.2d 622, 624, 740 N.Y.S.2d 371 [2d Dept. 2002] ), or on “the eve of trial” (see Natiello v. Natiello, 209 A.D.2d 389, 389, 619 N.Y.S.2d 600 [2d Dept. 1994] ), because the timing suggests that the motion was made “in bad faith, in order to delay the proceedings, or to secure a tactical advantage” (id.;   see also Lucci v. Lucci, 150 A.D.2d 650, 652, 541 N.Y.S.2d 994 [2d Dept. 1989];  Thomas Supply & Equipment Co., Ltd. v. White Fathers of Africa, Inc., 53 A.D.2d 607, 383 N.Y.S.2d 652 [2d Dept. 1976].)

As previously noted, this motion was made after the trial began, during the testimony of Ms. Schertz's daughter, when she noted Mr. Pruzan's prior representation of her mother.   The Court believes that it is likely that Mr. Nigen did not know of the prior representation until then.   But that suggests that neither Ms. Schertz nor her daughter were sufficiently concerned about Mr. Pruzan's representation of Mr. Jenkins to tell Mr. Nigen.   In any event, there is still reason to suspect that the motion was designed to achieve a tactical advantage.   At an earlier stage in this action, Mr. Jenkins submitted a Request for Adjournment, explaining that he had been “trying to obtain legal counsel (which has been difficult due to financial reasons).”  As just indicated, if this motion is granted, Mr. Jenkins may again have that difficulty.   Moreover, Ms. Schertz as a plaintiff seeking damages would not appear to otherwise benefit from the delay resulting from disqualification.

“When all significant interests are balanced, and the totality of the circumstances considered” (Heim v. Merritt-Meridian Corp., 236 A.D.2d at 368, 654 N.Y.S.2d 570), the Court concludes that Ms. Schertz has not carried her burden of making “a clear showing that disqualification is warranted” (see Campolongo v. Campolongo, 2 A.D.3d at 476, 768 N.Y.S.2d 498.)

JACK M. BATTAGLIA, J.