Court Opinion

ID: 6016150
Source: CourtListenerOpinion
Date Created: 2022-01-13 11:20:09.434653+00
Date Added: 2024-06-11T08:50:33.497014
License: Public Domain

Mikoll, J. P. (dissenting).
I respectfully dissent. Supreme Court properly disqualified McNamee, Lochner, Titus & Williams, P. C. from representing defendants. The party seeking disqualification of an attorney or a law firm must establish the existence of a prior attorney-client relationship and that the former and current representations are both adverse and substantially related (see, Solow v Grace & Co., 83 NY2d 303, 308; see also, Code of Professional Responsibility DR 5-108 [22 NYCRR 1200.27]). Plaintiff satisfied his burden of proof (cf., Matter of Schachenmayr v Town of N. Elba Bd. of Assessors, 221 AD2d 884, 886).
It is undisputed that Beverly Mitchell and McNamee Lochner acted as counsel for the Micheli enterprises for many years. It is undisputed that Mitchell, as an attorney with McNamee Lochner, incorporated M.C.M. Land Developers, Inc. in 1987 and provided legal services for the corporation. Mitchell’s husband shared an ownership interest in M.C.M. with plaintiff, Salvatore Clemente and defendants Elio Micheli and Joseph Micheli. This corporation was formed to purchase an 89-lot subdivision, known as Hillcrest, in the Town of Colonie, Albany County, from Bonded Concrete, Inc. for development purposes. Mitchell’s husband was president of Citation Builders, Inc., the corporation which would purchase the lots and construct townhouses thereon. It is undisputed that Mitchell, on M.C.M.’s behalf, applied for a purchase-money loan. She also provided legal services for M.C.M., including drafting documents in connection with the sale of the Hillcrest lots, reviewing purchase and sales agreements and updating the corporate books. In addition, for several years, Mitchell personally contracted with M.C.M to provide it with legal services. Plaintiff had a 162/s% ownership interest in M.C.M.
Mitchell acknowledged that while working for McNamee Lochner she updated the corporate records of the Micheli enterprises in each of which plaintiff had an ownership interest. She reviewed loan renewal documents for Green Heights Developers, Inc. and Albany Land Development Corporation *614(plaintiff had a 161/s% ownership interest in each of these corporations). She also represented Country Acres Associates (in which plaintiff had a 33V3% ownership interest) before the Planning Board of the Town of Pittstown in Rensselaer County. An attorney-client relationship was established by plaintiff between McNamee Lochner and the Micheli enterprises and, later, between Mitchell and the Micheli enterprises.
The representations were unquestionably adverse and inextricably intertwined. It is clear that plaintiff is a shareholder in the Micheli enterprises on whose behalf he brings this action against Elio Micheli and Joseph Micheli, his brothers, for diversion of business and assets to defendant E.J. Builders, Inc. and Period Classics, Inc. by Mitchell for his two brothers. It follows that McNamee Lochner, as counsel for the Micheli enterprises, may not defend against plaintiff’s claims.
Plaintiff alleges that via the new corporations, defendants misappropriated funds and corporate business opportunities from the Micheli enterprises. It is apparent that McNamee Lochner formed the new corporations and provided them with a variety of legal services. Mitchell admitted that she represented Elio Micheli and Joseph Micheli, individually, in connection with the purchase of several townhouses in another development project. She stated that part of the consideration for the purchases was an offset against indebtedness owed by that development project to Micheli Contracting Corporation and believed an entry would be made in the corporate books to offset money defendants had previously loaned to Micheli Contracting.
Plaintiff commenced this action on behalf of M.C.M., which McNamee Lochner formed and for which the firm did other legal work, some in a confidential capacity such as updating corporate books and records, and other Micheli enterprises. In addition, plaintiff stated that he intended to call Mitchell as a witness to an illegal fee arrangement involving the Micheli enterprises and the Hillcrest lots. It is undisputed that Mitchell entered an agreement by which she received $4,000 for the sale of each Hillcrest lot. Plaintiff planned to subpoena Mitchell to testify as to this arrangement to determine whether the payments made by the Micheli enterprises were improper and designed to prevent money from reaching Citation’s creditors (Mitchell’s husband was the president of Citation).
There is evidence that, if an actual conflict of interest did not exist, then at least an appearance of impropriety was present so that McNamee Lochner was properly disqualified from representing defendants in this action (see, Chang v Chang, *615190 AD2d 311, 319); Code of Professional Responsibility DR 9-101 [22 NYCRR 1200.45]).
I would affirm Supreme Court’s order. Ordered that the order is reversed, on the law, without costs, and matter remitted to the Supreme Court for further proceedings not inconsistent with this Court’s decision.