OLIVARES v. LIBERTY COCA COLA BEVERAGES LLC JOHN DOE (2026)

The following e-filed documents, listed by NYSCEF document number (Motion 1) 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 were read on this motion to/for OTHER RELIEF.

Defendants, Liberty Coca-Cola Beverages LLC moves to disqualify plaintiffs' counsel, Klafter Law Group (“the Klafter Firm”), because the firm simultaneously represents the driver and the two passengers involved in the alleged motor vehicle accident. Plaintiffs, Kelvin Olivares, Ceila Martinez, and Ledell Hodge oppose the motion and cross-move to dismiss defendants' fraud counterclaims pursuant to CPLR 3211(a)(7) and for an award of sanctions under 22 NYCCR 130-1.1.

This negligence action arises from a motor vehicle collision that allegedly occurred on November 9, 2023 (“the accident”)(NYSCEF Doc No. 1, summons and complaint). Olivares was operating the vehicle (“the plaintiff driver”), while Martinez and Hodge were passengers (“the plaintiff passengers”) (Id.). Plaintiffs allege that defendants' truck struck the rear of plaintiffs' vehicle (Id.).

In contrast, defendants assert that the plaintiff driver abruptly changed lanes immediately in front of defendants' truck and stopped suddenly, deliberating causing the collision. In the answer, defendants set forth counterclaims alleging, in essence, that plaintiffs knowingly participated in a fraudulent scheme and intentionally caused the accident for the purposes of commencing a fraudulent personal injury lawsuit. In addition, defendants allege a counterclaim for indemnity and contribution as against the driver of plaintiffs' vehicle.

Defendants argue that if the plaintiff driver is found liable, in whole or in part, for the collision, or if fraud on the part of plaintiffs is established, the Klafter Firm cannot represent both the plaintiff driver and the passenger plaintiffs. In contrast, plaintiffs contend that no actual conflict exists because all plaintiffs maintain a common position that defendants caused and are fully liable for the accident. The Klafter Firm also submits affidavits, executed by passengers Martinez and Hodge, purportedly waving any conflict in their legal representation.

The disqualification of an attorney is a matter that rests within the sound discretion of the trial judge (Diaz v Gomez, 247 AD3d 979 [2d Dept 2026]). A party's entitlement to be represented by counsel of his or her choice is a valued right which should not be abridged absent a clear showing that disqualification is warranted (see Matter of Abrams, 62 NY2d 183 [1984]). Hence, on a motion to disqualify an attorney, the moving party bears the burden of showing that disqualification is warranted (Diaz v Gomez, supra). Doubts as to the existence of a conflict of interest, however, must be resolved in favor of disqualification (USA Recycling, Inc. v Baldwin Endico Realty Associates, Inc., 147 AD3d 697 [1st Dept 2017]; Justinian Capital SPC v WestLB AG, NY Branch, 90 AD3d 585 [1st Dept 2011]). “With few exceptions, courts prohibit lawyers from representing both the driver and passengers of the same automobile involved in an accident” (Jimenez v Future Equiment, Inc., 2026 WL 1906493 [S.D.NY 2026], citing Diaz v Gomez, supra; see Shelby v Blakes, 129 AD3d 823 [2d Dept 2015]).

In addition, Rule 1.7[a] of the Rules of Professional Conduct prohibits a lawyer from representing a client when a reasonable lawyer would conclude that the lawyer represents clients with differing interests (Rules of Professional Conduct [22 NYCRR 1200.0] rule [1.7]). Specifically, Rule 1.7 [a] provides, in pertinent part, with respect to conflicts of interests involving current clients, that a lawyer shall not represent a client if a reasonable lawyer would conclude that the representation will involve the lawyer in representing differing interests (Rules of Professional Conduct [22 NYCRR 1200.0] rule 1.7 [a] [1]). Although Rule 1.7[b] permits certain conflicts to be waived after the clients give informed written consent, informed consent does not make every conflict waivable (LaRusso v Katz, 30 AD3d 240 [1st Dept 2006]; see Khidirnazarov v United Parcel Service General Services, Co., 88 Misc 3d 1233 [A] [Sup. Ct. Kings County 2026]). In LaRusso, the Court explained that representing both the passenger and driver in an automobile accident is fraught with the potential for irreconcilable conflict and will rarely be sanctioned merely because the clients have consented (Id; see generally Greene v Greene, 47 NY2d 447 [1979]).

In this action, defendants demonstrate that the Klafter Firm's representation of both the plaintiff driver and the passengers created a conflict of interest. The passenger plaintiffs may possess viable claims against the driver plaintiff, and counsel cannot simultaneously defend the driver from liability while preserving the passengers' right to pursue recovery against him (Diaz v Gomez, supra; Sanyang v Davis, 198 AD3d 522 [1st Dept 2021] affd 205 AD3d 493 [1st Dept 2022]; Ganiev v Nazi, 189 Misc 2d 83 [App. Term 2d Dept 2001];see LaRusso v Katz, supra; Casstillo v Martinez, 2022 WL 2388072 [Sup. Ct. Bronx County 2022]). Moreover, the counterclaims based in fraud expose all of the plaintiffs to potential liability, and the diverse interests and different potential liability of the driver verses passengers for fraud creates additional conflicts of interest. Certainly, once defendants alleged the counterclaims, the pecuniary interest of the driver conflicted with those of the passengers (Diaz v Gomez, supra; Shelby v Blakes, supra; see Alcantera v Mendez, 303 AD2d 337 [2d Dept 2003]; Khidirnazarov v United Parcel Service General Services Co., supra). Those interests are directly adverse, regardless of the passenger plaintiffs' present agreement regarding liability.

Moreover, based on the record, because this dual representation is fraught with the potential for irreconcilable conflict, it is not sanctionable even after full disclosure has been made and the consent of the clients is obtained (LaRusso v Katz, supra; see Greene v Greene, 47 NY2d 447 [1979]).

Furthermore, even assuming that this conflict in representation may be waived, the record does not show that plaintiffs gave the necessary informed consent to waiver as required by Rule 1.7[b][4] (Hotel 237, LLC. v G.M. Canmar Residence Corp., 235 AD3d 447 [1st Dept 2025]; see Ganiev v Nazi, 189 Misc 2d 83 [App. Term 2d Dept 2001]). The purported “written waivers of conflict” submitted by plaintiffs' attorney are scant, bare bones affidavits executed by the passengers that lack the required details to reflect a knowing waiver of plaintiffs' interests (see Rule 1.7, Rule 1.0 [j]; Diaz v Gomez, supra). Although in the affidavits the plaintiff passengers acknowledge that a potential claim may exist against the plaintiff driver and that they are waiving the legal right to sue the plaintiff driver, the statements do not demonstrate a full understanding of the conflict arising from the Klafter Firm's representation of all of the plaintiffs.

Specifically, the affidavits do not show, among other things, that the passenger plaintiffs were made aware that they may ultimately be able collect damages from the defendant driver, that the Klafter Firm would be unable to advocate fully for one plaintiff without compromising another, and that the plaintiffs have very diverse and conflicting interests and personal exposure in terms of the counterclaims which the Klafter Firm cannot defend without conflict. Nor is there any allegation that plaintiffs were advised of their right to seek the advice of new counsel as to the matter. In fact, there is no showing that counsel explained the conflict in terms of their legal representation and the material risks arising from their joint representation in the detail necessary to show a full, informed waiver of the conflict by the clients. Based on the record, therefore, the generalized acknowledgment by the passenger plaintiffs of the right to sue the defendant driver and the waiver thereof falls far short of a knowing waiver of the serious potential conflicts arising from the Klafter Firm's representation and does not constitute informed consent under Rule 1.7 [b][4] (see generally, Diaz v Gomez, supra; Khidirnazarov v United Parcel Service General Services, Co., supra).

Hence, under these circumstances, defendants demonstrate that the Klafter Firm's concurrent representation of plaintiffs involves directly adverse interests and the written waivers do not establish informed waiver by consent sufficient to satisfy Rule 1.7[b][4].

Furthermore, once an actual conflict of interest has arisen, a lawyer who undertakes the joint representation of two parties in a lawsuit should not continue as counsel for either one (Roche v Hochfelder, 244 AD3d 566 [1st Dept 2025]; Sidor v Zuhoski, 261 AD2d 529 [2d Dept 1999]; see Diaz v Gomez, supra). This is because continued representation of either or both parties would result in a violation of the ethical rule requiring an attorney to preserve a client's confidences or the rule requiring an attorney to represent a client zealously (Sidor v Zuhoski, supra). Even if the lawyer never obtained confidential information from the discontinued client, the conflict of interest remains in continuing to represent the other client as the discontinued client is entitled to freedom from apprehension and to certainty that his interests will not be prejudiced as a consequence of the representation of the retained client by the discontinued client's former attorney (Roche v Hochfelder, supra; see USA Recycling, Inc. v Baldwin Endico Realty Assoc., Inc., 147 AD3d 697 [1st Dept 2017]; Cooke v Laidlaw Adams & Peck, 126 AD2d 453 [1st Dept 1987]; Gabri v Niagra Cty., 137 Misc 2d 623 [Sup. Ct. Niagara County 1985]). The Klafter Firm is therefore disqualified from representing any of the plaintiffs in this action (see Roche v Hochfelder, supra; Sanyang v Davis, supra; Justinian Capital SPC v WestLB AG, NY Branch, supra). The motion is therefore granted.

In light of this conclusion, the cross-motion to dismiss by plaintiffs is denied with leave to renew. Plaintiffs shall be awarded time to obtain new legal representation, if desired, and substitute counsel shall be granted the opportunity to appear and to determine the appropriate litigation strategy.

The Court has considered the remaining contentions of the parties. To the extent that a contention is not addressed, it is rejected.

Accordingly, it is hereby

ORDERED that the motion of defendant Liberty Coca-Cola Beverages LLC [Mot. Seq. 1] to disqualify the Klafter Law Group as counsel for plaintiffs is GRANTED; and it is further

ORDERED that the Klafter Law Group is disqualified from further representing Kelvin Olivares, Ceila Martinez, and Ledell Hodge in this action; and it is further

ORDERED that the Klafter Law Group shall fulfil their ethical obligation to serve the individual plaintiffs, by overnight mail and email, with a copy of this order with notice of entry by September 15, 2026, and upload an affidavit of service by September 30, 2026; and it is further

ORDERED that the Klafter Law Group shall serve a copy of this decision with notice of entry by overnight mail and email (if known) on the plaintiff driver Olivare's insurer by September 15, 2026, and upload an affidavit of service by September 30, 2026; and it is further

ORDERED that the action shall be stayed for 60 days following the e-filing of the affidavit of service on the individual plaintiffs to permit plaintiffs to obtain new, separate legal representation; and it is further

ORDERED that, upon the expiration of the stay, the action shall proceed as usual and if plaintiffs appear by new attorneys, said attorneys shall immediately file the required appearance information in NYSCEF; and it is further

ORDERED that if no new attorney appears to represent a plaintiff, said plaintiff shall be appearing pro-se (without an attorney) and all further proceedings shall be on notice to the plaintiff pro-se by hard copy served by regular mail, and for each such service on pro se plaintiff, an affidavit of service showing service on pro-se plaintiff shall be uploaded to NYSCEF within 10 days of the service; and it is further

ORDERED that plaintiffs' cross-motion to dismiss defendants' counterclaims and for sanctions is DENIED WITH LEAVE TO RENEW after the expiration of the stay; and it is further

ORDERED that all parties, including any pro se party, will appear before the court for an IN-PERSON appearance on November 24, 2026, at 9:30 a.m., for a status conference before the court. This is a calendar call and there is no check-in. Attendance is mandatory. All parties, including any pro-se plaintiff, are required to appear. Parties must be fully familiar with the outstanding discovery and any discovery issue not raised at the conference that could have been raised will be deemed waived. Failure to appear at 9:30 a.m. will be deemed a default under Uniform Rule 202.27 and may result in the imposition of sanctions, striking of a pleading or dismissal under CPLR 3404. The appearance cannot be adjourned absent exceptional circumstances and written court approval; and it is further

ORDERED that the Note of Issue shall be filed by April 1, 2027, and said date may not be altered without written court approval; and it is further

ORDERED that the Clerk shall mark motion sequence 1 decided in all court records.

This constitutes the Decision and Order of the Court.

Veronica G. Hummel, J.