KORFMANN v. KEMPER NATIONAL INSURANCE COMPANY (1999)

In an action to recover compensatory and punitive damages based upon breach of an agreement to mediate, bad faith, and unfair claim settlement practices, the defendant appeals from an order of the Supreme Court, Suffolk County (Gerard, J.), entered January 14, 1998, which denied its motion to disqualify the attorney for the plaintiffs pursuant to Code of Professional Responsibility DR 5-101 and DR 5-102 (22 NYCRR 1200.20;  1200.21).

ORDERED that the order is reversed, with costs, the motion is granted, and the plaintiffs' attorney is disqualified from any further representation of the plaintiffs in this action, and no further action shall be taken against the plaintiffs, without leave of court, until the expiration of 30 days after service upon them personally of a copy of this decision and order, which shall constitute notice to appoint another attorney pursuant to CPLR 321(c).

At the heart of the instant litigation are certain negotiations conducted between the plaintiffs' attorney and the defendant insurance company.   Since it is clear that the plaintiffs' attorney is an essential witness in this bad faith action and ought to be called as a witness, it was an improvident exercise of discretion to deny the defendant's motion to disqualify counsel (see, Crawford v. Hospital of Albert Einstein Coll. of Medicine, 159 A.D.2d 304, 552 N.Y.S.2d 582;  Zweig v. Safeco Ins. Co. of Am., 125 A.D.2d 205, 509 N.Y.S.2d 320).

MEMORANDUM BY THE COURT.