Akagi v. Turin Housing Development Fund, Co., Inc. et al

Filing 233

OPINION AND ORDER re: 229 LETTER MOTION for Leave to File Sur-Reply to Douglas Elliman Defendants Reply on Motion to Disqualify ALBPC addressed to Judge Katherine Polk Failla from William J. Geller dated October 17, 2016. filed by Angela Faison-Strobe, Harvey Minsky, Victoria Jackson, Richard J. Thomas, Evelyn Rivera, Jacqueline Seidenberg, Martha Miller, Ellen Durant, Veronica Jimenez, Linda Burston, Turin Housing Development Fund, Co., Inc., 225 LETTER MOTION fo r Extension of Time to respond to Plaintiff's letter motion seeking to supplement the record on the pending Rule 56 motions and to re-open discovery (Dkt #223) addressed to Judge Katherine Polk Failla from Thomas J. filed by Dorothy Kern, Douglas Elliman, LLC, Lawrence R. Vitelli, 208 FIRST MOTION to Disqualify Counsel Adam Leitman Bailey, P.C. filed by John Sohei Akagi. Plaintiff's motion to disqualify ALB is GRANTED. The Turin Defendants are ORDERED to re tain new counsel on or before April 22, 2017. This case is STAYED pending the Turin Defendants' retention of new counsel. There are a number of pending motions in this case. (Dkt. #166, 183, 223). Once the Turin Defendants retain new counsel, th ey are ORDERED to submit a letter explaining whether they intend to adopt, in whole or in part, the Turin Defendants' (i) motion for summary judgment (Dkt. #166); (ii) motion to exclude Plaintiff's expert, Andrew A. Beveridge (id.); and/or (iii) opposition to Plaintiff's request to supplement his summary-judgment submissions and conduct additional discovery (Dkt. #224). This letter is due on or before May 1, 2017. (Signed by Judge Katherine Polk Failla on 3/22/2017) (ras)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------------------------------X
:
JOHN SOHEI AKAGI,
:
:
:
Plaintiff,
:
v.
:
:
TURIN HOUSING DEVELOPMENT FUND
:
CO., INC., et al.,
:
:
Defendants. :
:
------------------------------------------------------ X

USDC SDNY
DOCUMENT
ELECTRONICALLY FILED
DOC #: _________________
DATE FILED: ______________
March 22, 2017

13 Civ. 5258 (KPF)
OPINION AND ORDER

KATHERINE POLK FAILLA, District Judge:
In 2013, Plaintiff John Sohei Akagi brought this housing-discrimination
lawsuit, claiming that he had been denied the opportunity to purchase an
apartment because of his race. Plaintiff named several entities and individuals
as defendants, and those defendants fall into two groups: (i) Turin Housing
Development Fund, Co., Inc. (“Turin”), the housing co-operative that owns the
building where the apartment in question is located, and several past and
present members of Turin’s co-op board 1 (together with Turin, the “Turin
Defendants”); and (ii) Turin’s managing agent, Douglas Elliman, LLC a/k/a
Douglas Elliman Property Management (“DE”), former DE employee Dorothy
Kern, and current DE employee Lawrence Vitelli (together with DE, the “DE

1

The Turin board members named as defendants are: Richard J. Thomas, Harvey
Minsky, Ellen Durant, Martha Miller, Linda Burstion, Angela Faison-Strobe, Jacqueline
Seidenberg, Evelyn Rivera, and Veronica Jimenez.

Defendants”). After extensive discovery and failed settlement efforts, the
parties have filed cross-motions for summary judgment.
This Opinion, however, does not resolve the parties’ summary-judgment
motions on their merits. Rather, it addresses an issue that arose only after
summary-judgment briefing concluded: Plaintiff’s motion to disqualify the
Turin Defendants’ counsel, Adam Leitman Bailey, P.C. (“ALB”).
For the balance of this litigation, the Turin Defendants and the DE
Defendants shared counsel. At first, they jointly retained the law firm
Schneider Mitola LLP (“Schneider Mitola”). On May 30, 2014, this Court
granted the Turin Defendants and DE Defendants’ motion to substitute ALB in
place of Schneider Mitola. And ALB continued to represent the Turin
Defendants and the DE Defendants up until last summer, when it filed
summary-judgment briefs on behalf of both groups of defendants.
But on July 21, 2016, Turin, represented by ALB, sued DE in New York
State Supreme Court, alleging that DE negligently mismanaged Turin’s
property and failed to obtain insurance to cover Turin’s legal costs in the
instant case. The Court learned about Turin’s state-court suit against DE (the
“State-Court Action”) on July 29, 2016, when Plaintiff moved to disqualify ALB
from representing any defendant in this case. On September 9, 2016, ALB, on
behalf of the Turin Defendants, submitted a memorandum in opposition to
Plaintiff’s motion to disqualify and simultaneously moved to withdraw as the
DE Defendants’ counsel. After the Court granted ALB’s withdrawal motion, the

2

DE Defendants retained new counsel and joined in Plaintiff’s motion to
disqualify.
By suing DE on Turin’s behalf, Plaintiff and the DE Defendants argue,
ALB has conflicted itself out of this lawsuit. ALB retorts that the DE
Defendants waived their right to object to this very contingency when they
executed a Joint Defense Agreement (the “JDA”) with Schneider Mitola in 2013.
Plaintiff and the DE Defendants have the better arguments. Between
July and September 2016, ALB simultaneously represented and sued the same
client: DE. And because ALB did not cure this concurrent-representation
conflict by obtaining DE’s prior informed consent, ALB cannot represent the
DE Defendants or the Turin Defendants in this case. Accordingly, and for the
reasons set forth below, the Court grants Plaintiff’s motion to disqualify ALB.
BACKGROUND 2
Although the Court will provide a comprehensive overview of the law
governing attorney disqualifications infra, one tenet bears mention at the
outset: Resolving a disqualification motion requires a “painstaking analysis of
the facts” of a case. HLP Props., LLC v. Consol. Edison Co. of N.Y., No. 14 Civ.
1383 (LGS), 2014 WL 5285926, at *5 (S.D.N.Y. Oct. 16, 2014) (quoting Fund of
Funds, Ltd. v. Arthur Andersen & Co., 567 F.2d 225, 227 (2d Cir. 1977)).
With that principle in mind, the Court approaches this part of the
Opinion in two sections. First, the Court will recount the facts relevant to

2

This Opinion draws on facts from Plaintiff’s First Amended Complaint (“FAC” (Dkt.
#16)); the Turin Defendants and DE Defendants’ Answer (“Answer” (Dkt. #118)); the
Turin Defendants and DE Defendants’ Response to Plaintiff’s Local Rule 56.1 Statement

3

Plaintiff’s disqualification motion. The Court will begin by considering the
claims Plaintiff raised in his September 30, 2013 First Amended Complaint (the
“FAC”), the operative complaint in this case (the “Federal Action”). The Court
will then review the terms of the JDA into which Turin, the DE Defendants,
and Schneider Mitola entered. Next, the Court will explain how ALB came to
represent both the Turin Defendants and the DE Defendants, and review the
submissions the parties filed after ALB became involved in this case. And
finally, the Court will describe the complaint ALB filed against DE in the StateCourt Action (the “State-Court Complaint”), which triggered Plaintiff’s
disqualification motion.
Second, the Court will review the procedural history of the
disqualification motion. The Court will focus on the arguments that the parties
have raised in their briefs, and also address ALB’s motion to withdraw as the
DE Defendants’ counsel.

of Additional Facts, which was submitted in connection with the pending summaryjudgment motions (“Def. 56.1 Resp.” (Dkt. #201)); the Declaration of Mark H. Bierman
in support of Plaintiff’s motion for disqualification (“Bierman Decl.” (Dkt. #209)) and the
exhibits attached thereto (“Bierman Decl., Ex [ ]”); and the Declaration of William J.
Geller in Opposition to Plaintiff’s Motion to Disqualify Adam Leitman Bailey, P.C.
(“Geller Decl.” (Dkt. #215)) and the exhibits attached thereto (“Geller Decl., Ex [ ]”). For
ease of reference, the Court refers to Plaintiff’s brief in support of his motion to
disqualify as “Pl. Br.” (Dkt. #210); to the Turin Defendants’ opposition brief as “Turin
Opp.” (Dkt. #214); to Plaintiff’s reply brief as “Pl. Reply” (Dkt. #222); and to the DE
Defendants’ reply brief in support of Plaintiff’s motion to disqualify as “DE Br.” (Dkt.
#228).

4

A.

Factual Background
1.

Plaintiff’s Claims in the FAC

On July 29, 2013, Plaintiff brought his initial Complaint against the
Turin Defendants and the DE Defendants. (Dkt. #1). Plaintiff also named
Emmet Wechsler — the owner of the apartment Plaintiff wished to purchase —
as a Nominal Defendant. (Id.). On September 26, 2013, Schneider Mitola
entered a notice of appearance on behalf of the Turin Defendants and the DE
Defendants. (Dkt. #9). And on September 30, 2013, Plaintiff filed his FAC, the
operative complaint in this case. (Dkt. #16).
In the FAC, Plaintiff alleged the following: Turin is a housing cooperative
that owns a 188-residential-unit apartment building on the Upper West Side of
New York City (the “Property”). (FAC ¶ 9). Since 1997, DE has managed the
Property. (Id. at ¶ 10). 3
To develop the Property, Turin obtained loans from the federal
government pursuant to Section 221(d)(3) of the National Housing Act, 12
U.S.C. § 1715l (d)(3). (FAC ¶ 9). Construction of the Property concluded in
1972, and in that year Turin began selling cooperative shares “allocated to
apartments in the” Property. (Id. at ¶ 25). Because it constructed the Property
with proceeds of a 40-year federal-government mortgage, Turin “was subject to
the regulatory oversight of the United States Department of Housing and Urban
Development (‘HUD’)” between 1972 and 2012. (Id. at ¶¶ 24-26). On March

3

For clarity’s sake, the Court notes that DE ceased managing the Property in 2014 (at
least according to the Turin Defendants and DE Defendants’ representations in their
summary-judgment submissions). (Def. 56.1 Resp. ¶¶ 253-54).

5

29, 2012, Turin satisfied fully its mortgage obligations, at which point it “was
formally released by HUD from all federal regulatory oversight and statutory
obligations.” (Id. at ¶ 26).
When Turin first offered its apartments for sale in 1972, “four
families … of Asian Ancestry” purchased apartments. (FAC ¶ 34). But at the
time Plaintiff filed the FAC, just two of the Property’s 188 apartments were
“owned by persons of Asian ancestry.” (Id.). Moreover, Plaintiff alleged, “there
ha[d] been no transfers or resales of [apartments] at the [Property] to
individuals or families of Asian or Japanese ancestry or descent since [Turin’s]
creation in 1972 other than to members or relatives of the original Asian
families” who purchased apartments in the Property. (Id. at ¶ 35).
This trend, Plaintiff alleged, was not an accident, but rather was the
product of Turin’s stated preference for increasing the number of Caucasian
residents of the Property while simultaneously decreasing “the number of
shareholders of Asian and Japanese descent and ancestry.” (FAC ¶¶ 37-39).
Turin’s co-op board members (i.e., the Turin Defendants apart from Turin
itself) perpetuated this discrimination through “racist policies, practices,
procedures[,] and rules.” (Id. at ¶ 40). And DE, Plaintiff alleged, was complicit
in this discrimination: Among other alleged misdeeds, DE marketed and sold
Property apartments in a way that maintained a “de minimis percentage of
persons of Asian and Japanese descent.” (Id. at ¶¶ 44, 53, 57-58, 62-69).
Plaintiff additionally alleged that the Turin Defendants and DE
Defendants’ discrimination violated federal housing laws. As a condition of
6

receiving a mortgage from the federal government, Turin was bound to follow
the Fair Housing Act and the National Housing Act for the mortgage’s term
(1972 through 2012). (FAC ¶ 45). And those statutes required Turin to “carry
out an affirmative program to attract buyers or tenants … of all minority and
majority groups,” and to ensure that diversity by “maintain[ing] an affirmative
marketing program … throughout the life of the mortgage.” (Id.). But the
Turin Defendants and DE Defendants failed to follow these housing laws. (Id.
at ¶¶ 47-48). Worse still, “they adopted rules, practices, and/or procedures” in
order “to avoid and circumvent … statutory and regulatory requirements.” (Id.
at ¶ 49).
Plaintiff, an elderly man “of Asian and Japanese descent and ancestry,”
(FAC ¶ 8), alleged that he fell victim to the Turin Defendants and DE
Defendants’ discrimination. In 2012, Plaintiff wished to purchase Apartment
6-I of the Property from Wechsler. (Id. at ¶¶ 74-75). The Turin Defendants and
DE Defendants, however, forbade Wechsler from transferring his cooperative
shares in Apartment 6-I to Plaintiff. (Id. at ¶ 79). And the various “grounds”
that the Turin Defendants and DE Defendants advanced for refusing the sale
were just “pretexts to try to mask their unlawful discriminatory purposes.” (Id.
at ¶ 81). Their goal, Plaintiff alleged, was to ensure that Apartment 6-I would
not be sold to an individual “of Japanese or Asian descent and ancestry.” (Id.
at ¶¶ 87-91).
Plaintiff brought seven causes of action in the FAC, and it appears that
he brought all of them against both the Turin Defendants and the DE
7

Defendants. (FAC ¶¶ 99-150). Plaintiff sought recovery under several federal
housing and civil-rights statutes: the Fair Housing Act, 42 U.S.C. §§ 36013619 (Count One); 42 U.S.C. §§ 1981 and/or 1982 (Count Two); 42 U.S.C.
§ 1985 (Count Three); and 42 U.S.C. § 1986 (Count Four). (Id. ¶¶ at 99-129).
Plaintiff’s remaining claims (Counts Five, Six, and Seven) arose under state or
local law. (Id. at ¶¶ 130-50).
2.

The Turin Defendants and DE Defendants’ JDA with
Schneider Mitola

On September 26, 2013, Schneider Mitola entered a notice of appearance
on behalf of the Turin Defendants and the DE Defendants. (Dkt. #9). Between
September and October 2013 (the parties executed multiple counterparts),
Schneider Mitola, Turin, and the DE Defendants entered into the JDA. (Geller
Decl., Ex. 1). 4 Because the JDA anchors ALB’s argument that it should not be
disqualified in the Federal Action, the Court will review with great care the
JDA’s terms. And in particular, the Court will scrutinize three types of
provisions in the JDA: (i) the JDA’s provision outlining how the parties would

4

Two Douglas Elliman-affiliated entities — “Douglas Elliman, LLC” and “Residential
Management Group, LLC d/b/a Douglas Elliman Property Management” — signed the
JDA. (Geller Decl., Ex. 1 at 1). Only the second of these entities (which the Court refers
to as “DE” throughout this Opinion) is a party to the Federal Action; the Court assumes
that it operates under the aegis of the first entity. And like the Court in this Opinion,
the JDA uses the term “DE Defendants,” although in the JDA the term encompasses (i)
Kern, (ii) Vitelli, (iii) DE, and (iv) Douglas Elliman, LLC. (Id.).
Many entities that are involved — peripherally or directly — with the Federal Action
have names that contain the words “Douglas Elliman.” Because untangling this
particular web is not necessary for the disposition of this Opinion, the Court notes only
that “DE” is: (i) a named defendant in the Federal Action; (ii) a signatory to the JDA; and
(iii) a defendant in the State-Court Action.

8

split the costs of litigating the Federal Action; (ii) the JDA’s provisions about
sharing confidential information; and (iii) the JDA’s conflicts waiver.
By its terms, the JDA “memorialize[d] [an] understanding” between
Turin, Schneider Mitola, and the DE Defendants; although the President of
Turin’s Board of Directors executed the JDA, the JDA does not appear to have
bound any of the Turin Defendants other than Turin itself. (Geller Decl., Ex. 1
at 1, 12). However, the JDA provides that Schneider Mitola would serve as
counsel for Turin “and other Defendants therein,” and the Court assumes that
these “other Defendants” are the individual Turin Defendants. (Id. at ¶ 1).
Pursuant to the JDA, Turin and the DE Defendants agreed that
Schneider Mitola would represent both groups of defendants, with Turin
covering the totality of the legal costs “on the condition that the DE
Defendants … provide all reasonable and customary assistance and
cooperation to [Turin] in connection with the [Federal Action].” (Geller Decl.,
Ex. 1 at ¶ 1). However, the parties agreed that Turin would not “indemnify,
defend[,] and hold harmless the DE Defendants if it is determined, after the
exhaustion of all appellate rights, that the DE Defendants acted in a grossly
negligent manner or perpetrated willful misconduct with respect to the issues
raised in the” Federal Action. (Id. at ¶ 2).
The parties also agreed that they could, but would not be required to,
share confidential information. A section of the JDA titled “Treatment of
Shared Confidential, Privileged[,] or Protected Information” provided:
Each Party, in its sole discretion, may provide
confidential, privileged or other protected information to
9

the other Parties to this Agreement which the providing
Party believes will further the joint and common efforts
in the [Federal Action]. This Agreement permits, but
does not require, the Parties’ outside counsel to share
any information.
(Geller Decl., Ex. 1, ¶ 3). The record in this case does not suggest that either
Turin or the DE Defendants ever retained “outside counsel” beyond Schneider
Mitola, ALB, and the DE Defendants’ current attorney.
Subsequent provisions of the JDA added additional terms and conditions
to this confidentiality provision. Turin and the DE Defendants agreed, for
example,
that
all
past
and
future
information
and
communications which are confidential, privileged or
protected as to any Party will be held in confidence by
all other Parties (unless that information ceases to be
confidential through no violation of this Agreement),
and will remain privileged or protected when
communicated among the Parties.
(Geller Decl., Ex. 1, ¶ 3(a)). But the following provision added an important
caveat to this confidentiality protection:
The Parties agree that all information provided by one
Party to any other Party may be used by counsel for
such other Party solely in connection with the [Federal
Action] unless such information being provided by any
DE Defendant is the property of [Turin] or was obtained
by any DE Defendant during [DE’s] management of
[Turin] and is regarding [Turin] affairs in which event
[Turin] may direct how the document may be utilized or
otherwise[.]
(Id. at ¶ 3(b)).
Finally, the JDA contained a “Waiver of Conflicts” provision, which
stated:
10

In the event of any litigation or other dispute between
or among the Parties, each Party hereby waives any
claim that counsel for any other Party is or should be
disqualified from representing any other Party by
reason of receipt of confidential, privileged or protected
information or documents pursuant to this Agreement
or any work performed or representation in furtherance
of this Agreement.
(Geller Decl., Ex. 1, ¶ 5). Like the JDA’s provision concerning confidential
information, its conflicts waiver was followed by several sub-paragraphs. Turin
and the DE Defendants acknowledged “that there could be a potential or actual
conflict of interest arising out of [Schneider Mitola’s] representation of [Turin]
and the DE Defendants,” but agreed that as of the date of signing the JDA, no
such “potential or actual conflict of interest” existed in the Federal Action and
“the Parties’ interest[s] [were] … fully aligned.” (Id. at ¶ 5(a)). Turin and the DE
Defendants further agreed “that the potential conflict ha[d] been explained to
them, that they underst[ood] such potential conflicts, and that to the extent
such conflicts [were] waivable, they [were] waived.” (Id. at ¶ 5(b)). Importantly,
the JDA provides no explanation of what this “potential conflict” (or “potential
conflicts”) might be.
But the provision of the JDA that bears most directly on Plaintiff’s
disqualification motion planned for a different contingency: What would
Schneider Mitola do if a non-waivable conflict arose? Turin and the DE
Defendants agreed that
[i]n the event that an actual non-waivable conflict arises
as between any of the Parties represented by [Schneider
Mitola] which would render it inappropriate for
[Schneider Mitola] to continue as counsel for all the
Parties or if such conflict could be resolved by one or
11

more of the Parties obtaining separate counsel, the DE
Defendants agree that the DE Defendants will obtain
new counsel, at [Turin’s] expense (subject to [Turin’s]
right to make a good faith claim, that based on the facts,
[Turin] is not obligated to pay the expense of counsel for
the DE Defendants), and [Schneider Mitola] may
continue to represent all of the other Defendants named
in the litigation (other than the DE Defendants).
(Geller Decl., Ex. 1, ¶ 5(c)). Nothing in the JDA defined what type of “nonwaivable conflict” could trigger this provision. But the following sub-paragraph
provided that Schneider Mitola would not advocate a position in the Federal
Action that was adverse to either Turin or the DE Defendants:
It is further agreed by the Parties that, with respect to
any issue that may arise in the [Federal Action] which
you disagree and/or which one of you may wish to
pursue a course that benefits one but is detrimental to
the interest of the other, [Schneider Mitola] cannot
advise or assist any of you in pursuing such course and
cannot advocate for any Parties’ separate interest at the
expense of the other Parties as long as [Schneider
Mitola] is representing you.
(Id. at ¶ 5(d)).
Finally, the JDA’s conflicts waiver contained provisos about Turin and
the DE Defendants exchanging confidential information. And unlike the
earlier, more permissive terms of the JDA, these provisos obligated the parties
to exchange confidential information. One sub-paragraph confirmed that the
parties would “be required to share confidential information … for the common
purpose and benefit of the defense in the [Federal Action] and any and all
third-party claims by the Parties to [the JDA] against any others responsible for
damage alleged in the [Federal Action].” (Geller Decl., Ex. 1, ¶ 5(e)). And it
added that Schneider Mitola “owe[d] an equal duty of loyalty and
12

communication with each” party to the JDA, which required Schneider Mitola
to “share all relevant information as it pertain[ed] to the [Federal Action]” and
forbade Schneider Mitola from “withhold[ing] relevant information from” any
party at any other party’s request. (Id.).
By October 17, 2013, Schneider Mitola, Turin, and the DE Defendants
had all signed the JDA. (Geller Decl., Ex. 1 at 9-12).
3.

ALB’s Representation of the “Turin Defendants” and the
Parties’ Subsequent Submissions

On April 14, 2014, ALB filed a “Consent to Change Attorneys” form on
behalf of the Turin Defendants and the DE Defendants. (Dkt. #52). 5 The form
provided that both groups of defendants wished to substitute ALB in place of
Schneider Mitola. (Id.). On April 29, 2014, ALB (on the Turin Defendants and
DE Defendants’ behalf) filed a letter announcing its intention to move to
disqualify Plaintiff’s counsel and counsel for Wechsler (who was still a Nominal
Defendant at that point). (Dkt. #57).
The Court held a pre-motion conference on the Turin Defendants and DE
Defendants’ motion to disqualify on May 30, 2014. (Dkt. #72). At this
conference, the Court formally substituted ALB in place of Schneider Mitola as
counsel for both groups of defendants. (Id. at 18-19). Following extensive
briefing (see Dkt. #78-82, 86-90, 94-98, 100-01, 103-06), the Court denied the

5

This Consent to Change Attorneys form contains a handwritten notation that refers
collectively to the Turin Defendants and the DE Defendants as “Turin Defendants.”
(Dkt. #52). Although ALB repeated this confusing nomenclature in subsequent filings
(see Dkt. #57), as this case progressed the parties all used the terms “DE Defendants”
and “Turin Defendants” to refer to the two groups of defendants in this case.

13

motion to disqualify in an Order dated February 10, 2015 (Dkt. #115). That
same Order terminated Wechsler as a party to the Federal Action. (Id.).
On March 10, 2015, the Turin Defendants and ALB Defendants filed
their Answer to the First Amended Complaint. (Dkt. #118). They denied flatly
all seven causes of action Plaintiff brought in the FAC. (Id. at ¶¶ 99-150).
Apart from Plaintiff’s disqualification motion, the latest round of briefs in
this case concerned the parties’ cross-motions for summary judgment. On
April 6, 2016, the Turin Defendants and DE Defendants moved for summary
judgment dismissing all seven of Plaintiff’s claims. (Dkt. #166). Plaintiff crossmoved on May 13, 2016, seeking a converse ruling — summary judgment in
favor of his claims. (Dkt. #183). The Turin Defendants and DE Defendants
filed their reply on June 25, 2016 (Dkt. #200), and briefing concluded when
Plaintiff submitted his reply on July 13, 2016 (Dkt. #207).
4.

Turin’s State-Court Complaint Against DE

On July 21, 2016, Turin, represented by ALB, sued DE, several related
Douglas Elliman entities, and Douglas Elliman employee Debora HassellDobies (together, the “DE State-Court Defendants”) in New York State Supreme
Court. (Bierman Decl., Ex. D). 6 Turin raises a number of clams in its StateCourt Complaint, including claims that arise out of the Federal Action.
The thrust of Turin’s State-Court Complaint is that the DE State-Court
Defendants “[i]ntentionally, knowingly, recklessly and/or negligently

6

Apart from DE, the “Douglas Elliman” entities named in Turin’s state-court complaint
are: “Douglas Elliman LLC” and “Douglas Elliman Realty LLC.” (Bierman Decl., Ex. 4).

14

mismanage[ed] the Property.” (Bierman Decl., Ex. 4, ¶ 3(a)). The State-Court
Complaint’s allegations are wide-ranging, and they make specific reference to
two other lawsuits involving Turin.
The first of these suits, Turin HDFC v. Suarez, No. 82366/2012, is a
landlord-tenant suit ostensibly triggered by “[Hassell-]Dobie’s flagrant criminal
conduct.” (Bierman Decl., Ex. 4, ¶¶ 2, 25). The State-Court Complaint
provides an inchoate account of that case, but by Turin’s retelling the DE
State-Court Defendants forcibly (and wrongfully) evicted Suarez from the
Property for nonpayment of rent. (Id. at ¶¶ 25-35). At the time Turin filed the
State-Court Complaint, the court hearing Suarez had scheduled a sanctions
hearing to address Hassell-Dobies’ role in that wrongful eviction. (Id. at ¶ 37).
Compounding Turin’s troubles, Suarez filed a wrongful-eviction suit against
Turin: Suarez, et al. v. Turin HDFC, et al., No. 15037/2014. (Id. at ¶ 40).
Although Turin had insurance to cover its costs in Suarez’s wrongful-eviction
suit, it alleges that the DE State-Court Defendants’ failure to obtain additional
insurance for Turin left it “without coverage” for the sanctions hearing in the
underlying Suarez case. (Id. at ¶ 42).
The second suit the State-Court Complaint addresses is the Federal
Action. (Bierman Decl., Ex. 4, ¶¶ 4, 44). Here too, Turin alleges that the DE
State-Court Defendants’ failure to procure adequate insurance coverage had
exposed Turin and its Board members to liability “for any future
judgment … entered against them.” (Id. at ¶ 4). Further, Turin alleges that the

15

DE State-Court Defendants failed to obtain insurance coverage for Turin’s legal
costs in the Federal Action. (Id. at ¶ 46).
The State-Court Complaint also addresses a different brand of the DE
Defendants’ alleged negligence related to the Federal Action. Turin states that
in the Federal Action, Plaintiff had “allege[d] that the [DE State-Court
Defendants] failed to implement certain affirmative fair housing marketing
schemes, or, that if they did implement such schemes, they did so in a
negligent manner.” (Id. at ¶ 45).
The State-Court Complaint does not bring this negligence allegation
directly. Put another way, Turin does not allege in the State-Court Complaint
that the DE State-Court Defendants negligently failed to obey federal housing
laws. But the State-Court Complaint does contain allegations that could
conceivably encompass this particular type of negligence — Turin alleges that
the DE State-Court Defendants:
(i)

“Intentionally, knowingly, recklessly and/or negligently
fail[ed] to provide routine supervision of Turin’s building
service employees who were charged with properly
maintaining and operating the Property” (Bierman
Decl., Ex. 4, ¶ 3(b));

(ii)

“Intentionally, knowingly, recklessly and/or negligently
staff[ed] the management team, consisting of [the DE
State-Court
Defendants’]
principals,
employees,
representatives and/or agents, in connection with the
maintenance of the Property” (id. at ¶ 3(k)); and

(iii)

“[C]arried out their responsibilities to Turin negligently,
and in at least certain specific instances, criminally,
thereby causing Plaintiff to be saddled with exorbitant
legal fees and potentially exposing Turin to large
judgments, which Turin would be forced to [pay off] at
its sole cost and expense” (id. at ¶ 63).
16

Turin’s requests for damages and equitable relief also appear to address
the DE State-Court Defendants’ alleged misconduct in the Federal Action. In
the State-Court Complaint, Turin asserts that it “is entitled to recover all of its
damages, including, but not limited to, all consequential and incidental
damages suffered in connection with the [Suarez] [s]anctions [h]earing and the
Federal Action.” (Bierman Decl., Ex. 4, ¶ 74). And Turin alleges that it “is
entitled to a [declaratory] judgment … that the [DE State-Court Defendants],
jointly and severally, defend and indemnify Turin in connection with the
[s]anctions [h]earing and Federal Action, as a consequence of the panoply of
[their] wrongful acts.” (Id. at ¶ 108).
B.

Procedural Background
This Court learned about the State-Court Action on July 29, 2016, when

Plaintiff filed his motion to disqualify ALB. (Dkt. #208). Plaintiff’s counsel
claims that he learned about the State-Court Action serendipitously, while he
was attending “a compliance conference on an unrelated case.” (Bierman
Decl., ¶ 5).
At the time Plaintiff filed his motion to disqualify, ALB represented both
the Turin Defendants and the DE Defendants in the Federal Action. In his
disqualification motion, Plaintiff urged the Court to disqualify ALB from
representing both groups of defendants. (Pl. Br. 2). By suing DE on Turin’s
behalf, Plaintiff argued, ALB concurrently represented two adverse clients. (Id.
at 9-10). In describing the severity of this conflict, Plaintiff contended: “Turin’s
claims in the [State-Court Action] that DE did engage in wrongdoing in the very
17

same acts asserted by Plaintiff in the [Federal] Action conflicts with or
undermines [the] DE Defendants’ claims in the [Federal] Action.” (Id. at 10).
Plaintiff also argued that ALB’s concurrent representation of Turin and DE
violated multiple New York Rules of Professional Conduct, including Rule 1.7,
which concerns concurrent representations. (Id. at 7-9).
On September 9, 2016, this Court received two submissions in response
to Plaintiff’s motion to disqualify. First, ALB moved to withdraw as counsel to
the DE Defendants. (Dkt. #216). In a declaration accompanying that motion,
ALB wrote that because it had sued the DE Defendants in New York state
court, it could not “appropriately represent the DE Defendants” in the Federal
Action without their consent. (Dkt. #216-1, ¶¶ 15-16). And because the DE
Defendants (through their counsel in the State-Court Action) did not consent to
the concurrent representation, New York Rule of Professional Conduct 1.7
forbade ALB from simultaneously representing the DE Defendants and the
Turin Defendants in the Federal Action. (Id. at ¶¶ 16-18).
Second, the Turin Defendants, through ALB, filed a brief and supporting
declaration opposing Plaintiff’s disqualification motion. (Dkt. #214, 215).
These opposition papers relied heavily on the terms of the JDA between
Schneider Mitola, Turin, and the DE Defendants. (Turin Opp. 1-4; Geller Decl.,
¶¶ 6, 9). The Turin Defendants argued that, in the JDA, Turin and the DE
Defendants “acknowledged that conflicts could arise between the Turin
Defendants and the DE Defendants, and the DE Defendants expressly agreed
that should such a conflict arise, DE [would] obtain separate counsel and
18

Turin’s counsel [could] continue to represent the Turin Defendants.” (Turin
Opp. 3). After substituting ALB in Schneider Mitola’s place, “the DE
Defendants continued to litigate under the JDA without comment or objection.”
(Id. at 4). Consequently, the Turin Defendants argued, the JDA’s terms
continued in full force after ALB joined the case. (Id.). The Turin Defendants
thus urged the Court to allow ALB to continue representing them, just as the
JDA contemplated. (Id. at 11).
On September 22, 2016, this Court issued an Order granting ALB’s
motion to withdraw as counsel for the DE Defendants. (Dkt. #220). That same
day, Plaintiff submitted his reply brief in support of his motion to disqualify
ALB. (Dkt. #222). And on October 14, 2016, the DE Defendants — then
represented by new counsel — filed a motion joining in Plaintiff’s
disqualification motion. (Dkt. #227). The DE Defendants also submitted a
supporting brief of their own, arguing that ALB suffered from a disqualifying
concurrent-representation conflict that the JDA’s conflicts waiver did not cure.
(Dkt. #228).
DISCUSSION
A.

Motions to Disqualify Attorneys in the Second Circuit
“The authority of federal courts to disqualify attorneys derives from their

inherent power to ‘preserve the integrity of the adversary process.’” Hempstead
Video, Inc. v. Inc. Vill. of Valley Stream, 409 F.3d 127, 132 (2d Cir. 2005)
(quoting Bd. of Educ. v. Nyquist, 590 F.2d 1241, 1246 (2d Cir. 1979)). Thus,
“Second Circuit precedent is the ‘only truly binding authority on
19

disqualification issues.’” BT Holdings, LLC v. Vill. of Chester, No. 15 Civ. 1986
(JCM), 2015 WL 8968360, at *3 (S.D.N.Y. Dec. 14, 2015) (quoting HLP Props.,
2014 WL 5285926, at *3). And Second Circuit precedent is clear that courts
should be reluctant to disqualify attorneys. See, e.g., Muniz v. Re Spec Corp.,
— F. Supp. 3d —, No. 16 Civ. 2878 (BCM), 2017 WL 238482, at *4 (S.D.N.Y.
Jan. 19, 2017) (“Disqualification is disfavored because it ‘has an immediate
adverse effect on the client by separating him from counsel of his choice,’ and
because motions to disqualify, ‘even when made in the best of faith ...
inevitably cause delay.’” (quoting Nyquist, 590 F.2d at 1246)).
It should thus come as no surprise that “motions to disqualify opposing
counsel are subject to particularly strict scrutiny,” especially given “their
potential for abuse as a tactical device.” Scantek Med., Inc. v. Sabella, 693 F.
Supp. 2d 235, 238 (S.D.N.Y. 2008). Thus, a court adjudicating a motion to
disqualify may “consider any tactical motivations” the movant might have, as
well as any potential prejudice the non-movant “may suffer in the event their
chosen counsel is disqualified.” HLP Props., 2014 WL 5285926, at *5. To this
end, “federal courts,” including courts in this Circuit, “generally take the view
that any party to a lawsuit may raise a potential conflict.” Muniz, 2017 WL
238482, at *5.
Courts in the Second Circuit disqualify attorneys “only in essentially two
kinds of cases: [i] where an attorney’s conflict of interests ... undermines the
court’s confidence in the vigor of the attorney’s representation of his client, or
more commonly [ii] where the attorney is at least potentially in a position to
20

use privileged information concerning the other side through prior
representation.” Cohen v. Strouch, No. 10 Civ. 7828 (DLC), 2011 WL 1143067,
at *1-2 (S.D.N.Y. Mar. 24, 2011) (quoting Bobal v. Rensselaer Polytechnic Inst.,
916 F.2d 759, 764-65 (2d Cir. 1990)). And these two kinds of cases roughly
match up to two types of conflicts that warrant disqualification in this Circuit:
(i) concurrent-representation conflicts (when an attorney “simultaneously
represent[s]” two adverse parties); and (ii) successive-representation conflicts
(when an attorney represents a client whose interests are adverse to those of a
“former client”). Hempstead, 409 F.3d at 133. The Court will explore the
distinction between these two types of disqualifying conflicts infra.
In any case, a court should disqualify an attorney “only if ‘[his] conduct
tends to taint the underlying trial.’” GSI Commerce Sols., Inc. v. BabyCenter,
L.L.C., 618 F.3d 204, 209 (2d Cir. 2010) (quoting Nyquist, 590 F.2d at 1246). 7
“Consequently, ‘[t]he appearance of impropriety alone does not warrant
disqualification.’” Rothberg v. Phil’s Main Roofing, LLC, No. 14 Civ. 10195 (NSR),

7

At least one Judge in this District has suggested that whether an attorney’s conflict of
interest will cause “trial taint” is not relevant where that conflict is based on the
attorney’s concurrent representation of adverse clients. JPMorgan Chase Bank ex rel.
Mahonia Ltd. & Mahonia Nat. Gas v. Liberty Mut. Ins. Co., 189 F. Supp. 2d 20, 23
(S.D.N.Y. 2002) (“[W]here … there is in effect concurrent representation of two adverse
clients, the potential for conflict is hardly limited to the trial context but can infect,
actually or potentially, a broad spectrum of activities[.]”); see Pfizer v. Stryker Corp., 256
F. Supp. 2d 224, 227 n.11 (S.D.N.Y. 2003) (discussing Mahonia but distinguishing it on
its facts). Although intuitively appealing, this view appears to be idiosyncratic in the
Second Circuit. Courts have cast “trial taint” as a factor relevant to assessing whether
either type of attorney conflict — concurrent or successive — merits disqualification.
See, e.g., Glueck v. Jonathan Logan, Inc., 653 F.2d 746, 748 (2d Cir. 1981); Rothberg v.
Phil’s Main Roofing, LLC, No. 14 Civ. 10195 (NSR), 2016 WL 2344882, at *2 (S.D.N.Y.
May 2, 2016); CQS ABS Master Fund Ltd. v. MBIA Inc., No. 12 Civ. 6840 (RJS), 2013 WL
3270322, at *8 (S.D.N.Y. June 24, 2013); Cohen v. Strouch, No. 10 Civ. 7828 (DLC),
2011 WL 1143067, at *2 (S.D.N.Y. Mar. 24, 2011).

21

2016 WL 2344882, at *2 (S.D.N.Y. May 2, 2016) (quoting Bangkok Crafts Corp.
v. Capitolo di San Pietro in Vaticano, 376 F. Supp. 2d 426, 428 (S.D.N.Y. 2005)).
Local rules of professional conduct also play a limited role in the
attorney-disqualification calculus. “Federal courts adjudicating questions
involving the ethics of attorneys,” including questions concerning
disqualification, “look to the local rules of professional conduct for guidance.”
AVRA Surgical, Inc. v. Dualis MedTech GmbH, No. 13 Civ. 7863 (DLC), 2014 WL
2198598, at *2 (S.D.N.Y. May 27, 2014). But rules of professional conduct
“merely provide” just that: “general guidance.” Hempstead, 409 F.3d at 132.
And in turn, “not every violation of a disciplinary rule will necessarily lead to
disqualification.” Id.; accord GSI, 618 F.3d at 209; see also Rothberg, 2016 WL
2344882, at *2 (“Recognizing the serious impact of attorney disqualification on
the client’s right to select counsel of his choice, [the Second Circuit has]
indicated that such relief should ordinarily be granted only when a violation of
the Canons of the Code of Professional Responsibility poses a significant risk of
trial taint.” (quoting Glueck v. Jonathan Logan, Inc., 653 F.2d 746, 748 (2d Cir.
1981))). 8
8

As of April 1, 2009, New York courts have followed the New York Rules of Professional
Conduct, not the Canons of the Code of Professional Responsibility. See N.Y. R. Prof’l
Conduct Refs. & Annos. But “[c]ase authority interpreting the old canons continues to
be probative on issues that are analyzed under the new rules, especially where … the
new rule generally incorporates the substance of the old canons.” Gurvey v. Cowan,
Liebowitz & Latman, P.C., No. 06 Civ. 1202 (LGS) (HBP), 2014 WL 6491281, at *4 n.6
(S.D.N.Y. Nov. 20, 2014) (quoting Finkel v. Frattarelli Bros., 740 F. Supp. 2d 368, 372
n.1 (E.D.N.Y. 2010)). Such is the case here. For example, the Second Circuit’s
canonical concurrent-representation case — Cinema 5, Ltd. v. Cinerama, Inc., 528 F.2d
1384 (2d Cir. 1976) — analyzed this type of conflict under then-governing Canon 5. Id.
at 1386-87. And “Canon 5 … is substantially similar to … Rule 1.7 of the New York
Rules of Professional Conduct,” which the Court cites throughout this Opinion. All Star
Carts & Vehicles, Inc. v. BFI Canada Income Fund, No. 08 Civ. 1816 (AKT), 2010 WL

22

All this should make plain that a party seeking to disqualify an attorney
faces a difficult task. “Nonetheless, ‘any doubt is to be resolved in favor of
disqualification.’” John Wiley & Sons, Inc. v. Book Dog Books, LLC, 126 F.
Supp. 3d 413, 419 (S.D.N.Y. 2015) (quoting Hull v. Celanese Corp., 513 F.2d
568, 571 (2d Cir. 1975)).
B.

Plaintiff’s Motion to Disqualify ALB
This has been an uncommonly hard-fought case. Even a cursory review

of the docket confirms that the relationship between Plaintiff’s counsel and ALB
has been acrimonious. And the Court cannot escape the conclusion that at
least part of Plaintiff’s motivation in moving to disqualify ALB (and perhaps the
DE Defendants’ motivation in joining that motion) is tactical. Given the
duration of this litigation and the fact that there are pending cross-motions for
summary judgment, the Court recognizes that disqualifying ALB will further
complicate what is already a complicated case.
That said, ALB suffers from a disqualifying conflict of interest. Second
Circuit Law and New York’s Rules of Professional Conduct point in the same
direction: ALB’s decision to sue DE in state court disqualifies it from
representing any defendant in the Federal Action.
The Court’s resolution of Plaintiff’s disqualification motion, however, is
complicated by the fact that the parties’ briefs largely talk past each other.

2243351, at *3 (E.D.N.Y. June 1, 2010); see also Papanicolaou v. Chase Manhattan
Bank, N.A., 720 F. Supp. 1080, 1083 n.5 (S.D.N.Y. 1989) (“Canon 5 has been
reconstituted as Rule 1.7.”). Indeed, Cinema 5 is still cited approvingly by the Second
Circuit. See, e.g., GSI, 618 F.3d at 209-10.

23

Plaintiff and the DE Defendants argue correctly that ALB suffers from a
concurrent-representation conflict of interest. ALB appears to concede this in
a declaration accompanying its motion to withdraw as the DE Defendants’
counsel, where it states that New York Rule of Professional Conduct 1.7 forbids
it from continuing that representation. (Dkt. #216-1, ¶ 16). However, in their
opposition brief, the Turin Defendants have responded to Plaintiff’s motion
under the apparent belief that ALB suffers from a successive-representation
conflict of interest. In turn, the Turin Defendants have addressed very few of
the factors this Court must consider to determine whether ALB can remain as
their counsel.
Nonetheless, in this Opinion the Court will endeavor to undertake a
wholesale, probing analysis of Plaintiff’s disqualification motion. That analysis
proceeds in three steps. First, the Court will explain why ALB suffers from a
conflict of concurrent, not successive, representation, which conflict renders its
representation of the Turin Defendants and the DE Defendants “prima facie
improper.” E.g., GSI, 618 F.3d at 209 (quoting Cinema 5, Ltd. v. Cinerama, Inc.,
528 F.2d 1384, 1387 (2d Cir. 1976)). Second, the Court will address why the
JDA does not cure ALB’s conflict. And finally, the Court will analyze why ALB
has not, and cannot, overcome Plaintiff’s prima facie case for disqualification.
1.

ALB’s Concurrent Representation of the Turin Defendants and
the DE Defendants Is Prima Facie Improper

The first step in deciding this Opinion is definitional: What is the type of
conflict from which ALB suffers? Without addressing the distinction between
concurrent- and successive-representation conflicts, the Turin Defendants’
24

brief relies heavily on case law considering the disqualifying effect of successive
adverse representations. (See Turin Opp. 5-11). But Second Circuit precedent
makes plain that ALB’s conflict is one of concurrent, not successive,
representation. And as the Court will explain, that conflict renders ALB’s
representation of the DE Defendants and the Turin Defendants prima facie
improper.
a.

Applicable Law

“The standard for disqualification varies depending on whether the
representation is concurrent or successive.” Hempstead, 409 F.3d at 133.
Understanding these two standards turns on two questions. First, at what
point in a case should a court assess whether an attorney’s conflict is
successive or concurrent? Second, how do these two standards differ? Ample
precedent supplies clear answers to both questions.
First, the temporal component: To determine the nature of an attorney’s
conflict of interest, a court should look to “[t]he status of the [attorney’s]
relationship” with his client “at the time that the conflict arises.” Merck Eprova
AG v. ProThera, Inc., 670 F. Supp. 2d 201, 209 (S.D.N.Y. 2009) (quoting
Anderson v. Nassau Cty. Dep’t of Corrs., 376 F. Supp. 2d 294, 298-99 (E.D.N.Y.
2005)). “And, indeed, where counsel have simultaneously represented clients
with differing interests, the standard for concurrent representation applies
even if the representation ceases prior to the filing of a disqualification motion.”
Id. This approach “prevent[s] attorneys from manipulating their commitments
‘merely by firing the disfavored client, dropping the client like a hot potato, and
25

transforming a continuing relationship to a former relationship by way of client
abandonment[.]’” CQS ABS Master Fund Ltd. v. MBIA Inc., No. 12 Civ. 6840
(RJS), 2013 WL 3270322, at *9 n.5 (S.D.N.Y. June 24, 2013) (internal
quotation marks omitted) (quoting Universal City Studios, Inc. v. Reimerdes, 98
F. Supp. 2d 449, 453 (S.D.N.Y. 2000)).
This approach also reflects a significant difference in the standards
courts apply to assess successive, versus concurrent, conflicts of interest.
Courts in this Circuit follow a three-part test to determine whether an attorney
should be disqualified for taking on successive adverse representations — such
a conflict “may” disqualify an attorney if:
[i] [T]he moving party is a former client of the adverse
party’s counsel; [ii] there is a substantial relationship
between the subject matter of the counsel’s prior
representation of the moving party and the issues in the
present lawsuit; and [iii] the attorney whose
disqualification is sought had access to, or was likely to
have had access to, relevant privileged information in
the course of his prior representation of the client.
Hempstead, 409 F.3d at 133 (quoting Evans v. Artek Sys. Corp., 715 F.2d 788,
791 (2d Cir. 1983)).
In contrast, concurrently representing adverse parties “is ‘prima facie
improper.’” GSI, 618 F.3d at 209 (quoting Cinema 5, 528 F.2d at 1387).
Importantly, a court will consider an attorney who “represents two clients with
adverse interests in the same matter, albeit in different courts,” to be
concurrently representing those clients. Strouch, 2011 WL 1143067, at *5; see
also Pergament v. Ladak, No. 11 Civ. 2797 (MDG), 2013 WL 3810188, at *6

26

(E.D.N.Y. July 23, 2013) (“A conflict due to concurrent representation
can … occur where an attorney represents clients in two separate actions.”).
To rebut a prima facie disqualification case, “it is incumbent upon the attorney
to ‘show, at the very least, that there will be no actual or apparent conflict in
loyalties or diminution in the vigor of his representation.’” GSI, 618 F.3d at
209 (quoting Cinema 5, 528 F.2d at 1387). In other words, this Circuit’s “per
se[] rule” against concurrent adverse representations “shifts the burden to the
attorney opposing disqualification.” Brown & Williamson Tobacco Corp. v.
Pataki, 152 F. Supp. 2d 276, 281 (S.D.N.Y. 2001). And “this is ‘a burden so
heavy that it will rarely be met.’” GSI, 618 F.3d at 209 (quoting Glueck, 653
F.2d at 749).
b.

Analysis

Defining the nature of ALB’s conflict of interest turns, in the first
instance, on whether that conflict is concurrent or successive. Explaining why
that conflict prima facie disqualifies ALB from representing both the DE
Defendants and the Turin Defendants requires the Court to consider the
nature of the adversity between these two groups of defendants.
To start, ALB’s conflict is one of concurrent, not successive,
representation. On July 21, 2016, ALB filed the State-Court Complaint against
DE. On that date, ALB represented both the Turin Defendants and the DE
Defendants in the Federal Action. In other words, ALB concurrently
represented a party — DE — that it sued in a related state-court case. And

27

ALB sued DE on behalf of another party — Turin — that it also represented in
both the Federal Action and the State-Court Action.
That ALB no longer represents the DE Defendants is of no moment. This
Court is concerned with ALB’s conflict “at the time that [it] … ar[ose].”
ProThera, Inc., 670 F. Supp. 2d at 209 (internal quotation mark and citation
omitted). And at the latest, ALB’s conflict arose when it filed the State-Court
Complaint: July 21, 2016, a date on which ALB represented all defendants in
the Federal Action.
ALB’s decision to sue DE makes plain that its representation of the DE
Defendants in the Federal Action is prima facie improper. ALB cannot
simultaneously represent and sue the same party, even in two separate cases.
But this Court has no need to disqualify ALB from representing the DE
Defendants: They have already retained new counsel. A better question is why
ALB’s act of filing the State-Court Complaint against DE makes its
representation of the Turin Defendants prima facie improper.
The answer lies in the adversity of interests between the Turin
Defendants and the DE Defendants in the Federal Action. Although ALB sued
DE in state court, many of the State-Court Complaint’s allegations arise
directly out of the Federal Action. In particular, Turin there alleges that DE’s
negligence — in failing to procure adequate insurance and in managing the
Property — has forced Turin to pay out-of-pocket legal costs, and may force it
to shoulder a judgment, in the Federal Action.

28

These claims from Turin’s State-Court Complaint are in substance, if not
form, cross-claims related to the Federal Action. They “arise[] out of the”
Federal Action, and they “relate[] to [the] property that is the subject matter of
the [Federal Action].” Fed. R. Civ. P. 13(g). And the State-Court Complaint
alleges that DE is “liable to [Turin] for all or part of [the] claim[s]” that Plaintiff
has asserted against the Turin Defendants. (Id.). To be sure, the mere
“existence of potential cross-claims” does not automatically prohibit an
attorney from jointly representing two parties. See, e.g., Muniz, 2017 WL
238482, at *6 (collecting cases). But “no one could conscionably contend that”
an attorney may “simultaneously represent both the cross claim plaintiff[] and
the cross claim defendant[] in” a single action. Rice v. Baron, 456 F. Supp.
1361, 1374 (S.D.N.Y. 1978) (internal quotation marks and citation omitted). So
too here. Turin may have chosen to litigate its suit against DE in a different
forum. But the basis of that suit concerns this Federal Action. And Turin’s
decision to pursue that suit against DE renders the parties’ relationship in the
Federal Action adverse.
New York Rule of Professional Conduct 1.7, which governs concurrentrepresentation conflicts, helps explain why this is so. Under Rule 1.7(a), “a
lawyer shall not represent a client if a reasonable lawyer would conclude
that … the representation will involve the lawyer in representing differing
interests[.]” N.Y. R. Prof’l Conduct 1.7(a). And Comment Eight to Rule 1.7
defines “differing interests” as follows: “Differing interests exist if there is a
significant risk that a lawyer’s exercise of professional judgment in considering,
29

recommending or carrying out an appropriate course of action for the client will
be adversely affected or the representation would otherwise be materially
limited by the lawyer’s other responsibilities or interests.” Id. cmt. 8.
For much of ALB’s joint representation of the Turin Defendants and the
DE Defendants, those defendants’ interests were aligned. They jointly denied
all of the claims in the FAC. And they jointly sought summary judgment
dismissing all of those claims. But this alignment of interests ended when
Turin filed the State-Court Complaint. At that point, it was in the Turin
Defendants’ interest for this Court to find that DE negligently mismanaged the
Property.
The Court has considered what could result if, in the process of granting
Plaintiff’s motion for summary judgment, the Court determined that DE
negligently violated HUD regulations. If the New York court adjudicating the
State-Court Complaint gave preclusive effect to that determination, Turin
would be well on its way to recovering (from DE) its legal costs from the Federal
Action and obtaining (from DE) indemnity against a judgment in the Federal
Action.
The JDA raises a related concern. Under the JDA, Turin agreed to pay
the legal costs of the Turin Defendants and the DE Defendants. (Geller Decl.,
Ex. 1, ¶ 1). But Turin also agreed that it would not cover the DE Defendants’
legal costs “if it is determined, after the exhaustion of all appellate rights, that
the DE Defendants acted in a grossly negligent manner or perpetrated willful
misconduct with respect to the issues raised in the” Federal Action. (Id. at ¶ 2).
30

These are the very allegations Turin brings against DE in the State-Court
Complaint. While the Court imagines that Turin would prefer to succeed in the
Federal Action, the fact remains that Turin has a significant financial incentive
to ensure that DE loses in the Federal Action and the State-Court Action. And
at the time this incentive materialized — the date Turin filed the State-Court
Complaint — ALB represented both Turin and DE.
The consequence of these differing interests is clear: ALB concurrently
represented two adverse parties in the Federal Action. On the date that ALB’s
conflict of interest arose, July 21, 2016, ALB simultaneously represented two
clients, Turin and DE, whose interests in the Federal Action were opposed.
Thus, like its representation of the DE Defendants, ALB’s representation of the
Turin Defendants is prima facie improper.
2.

The JDA Does Not Cure ALB’s Concurrent-Representation
Conflict

The Turin Defendants resist Plaintiff’s disqualification motion by relying
heavily on the JDA between and among Schneider Mitola, Turin, and the DE
Defendants. There, the Turin Defendants argue, the DE Defendants waived
their right to object to ALB suing DE while simultaneously representing Turin.
The Court disagrees. The Turin Defendants’ reliance on the JDA has
many pitfalls — chief among them, that ALB was not a party to that agreement.
But in any case, the JDA does not confirm that the DE Defendants knowingly
waived or cured ALB’s conflict through informed consent. In turn, the JDA
does not diminish Plaintiff’s prima facie case for disqualifying ALB.

31

a.

Applicable Law

Assessing the JDA’s effect on ALB’s conflict of interest requires the Court
to answer two questions. First, what principles of law govern the Court’s
reading of the JDA? Second, what effect does a valid conflicts waiver have on
an attorney’s concurrent representation of two adverse clients?
This first question is straightforward. The JDA is a contract, and this
Court should apply standard principles of contract interpretation when reading
it. See GSI, 618 F.3d at 209, 213-14. Thus, the Court’s “construction” of the
JDA “is a question of law unless the agreement’s meaning is ambiguous.” Id.
at 209. And “[a]n agreement is ambiguous only if it is ‘capable of more than
one meaning when viewed objectively by a reasonably intelligent person who
has examined the context of the entire … agreement.’” Id. (quoting Walk–In
Med. Ctrs., Inc. v. Breuer Capital Corp., 818 F.2d 260, 263 (2d Cir. 1987)).
Second, in many instances, clients can waive or cure their attorney’s
concurrent-representation conflicts by giving informed written consent. See
HLP Props., 2014 WL 5285926, at *3 (“In many cases [of concurrent adverse
representation], such a conflict can be cured by written consent from all
affected parties.”); Lee v. Charles, No. 12 Civ. 7374 (JFK), 2013 WL 5637658, at
*2 (S.D.N.Y. Oct. 16, 2013) (“Where a concurrent conflict of interest exists, the
attorney should disclose the conflict to the clients and obtain their informed
written consent before the representation begins.”).
Comment 18 to New York Rule of Professional Conduct 1.7 defines
“informed consent,” in relevant part, as follows:
32

Informed consent requires that each affected client be
aware of the relevant circumstances, including the
material and reasonably foreseeable ways that the
conflict could adversely affect the interests of that
client. … When representation of multiple clients in a
single matter is undertaken, the information must
include the implications of the common representation,
including possible effects on loyalty, confidentiality and
the attorney-client privilege, and the advantages and
risks involved.
N.Y. R. Prof’l Conduct 1.7 cmt. 18.
But in New York, informed written consent, standing alone, does not
cure an attorney’s concurrent-representation conflict of interest:
Even when “both affected clients have provided
affidavits stating that each has been fully informed by
counsel of the implications of the simultaneous
representation, and each consents,” New York law “also
requires a belief under a reasonable lawyer standard ...
that the attorney will be able to provide competent and
diligent representation to each affected client.”
Strouch, 2011 WL 1143067, at *5 (quoting Paladino v. Skate Safe, Inc., 958
N.Y.S.2d 62 (Table), 2010 WL 3359550, at *2 (Sup. Ct. Aug. 16, 2010)); accord
Almonte v. City of Long Beach, No. 04 Civ. 4192 (JO), 2007 WL 951863, at *5
(E.D.N.Y. Mar. 27, 2007) (“Clients may waive the conflicts of interest that arise
from concurrent representation by giving informed consent to the ongoing
representation, if a disinterested lawyer would perceive no impairment of
professional judgment stemming from the joint representation.”); see also N.Y.
R. Prof’l Conduct 1.7(a) (“[A] lawyer shall not represent a client if a reasonable
lawyer would conclude that … the representation will involve the lawyer in
representing differing interests[.]” (emphasis added)). And “[w]hen one party’s

33

interest could adversely affect the other, a court may conclude that ‘such a
belief would not be reasonable.’” Strouch, 2011 WL 1143067, at *5 (quoting
Paladino, 2010 WL 3359550, at *3). Put another way: “[C]lient consent that is
given is not valid if the objective test of a disinterested lawyer is not met.” Id.
(quoting Shaikh ex rel. Shaikh v. Waiters, 710 N.Y.S.2d 873, 876 (Sup. Ct.
2000)).
New York Rule of Professional Conduct 1.7(b) reflects the view that an
attorney who wishes to represent concurrently two adverse parties needs more
than those parties’ informed consent. It provides:
Notwithstanding the existence of a concurrent conflict
of interest …, a lawyer may represent a client if:
[i] the lawyer reasonably believes that the lawyer will be
able to provide competent and diligent representation to
each affected client;
[ii] the representation is not prohibited by law;
[iii] the representation does not involve the assertion of
a claim by one client against another client represented
by the lawyer in the same litigation or other proceeding
before a tribunal; and
[iv] each affected client gives informed consent,
confirmed in writing.
N.Y. R. Prof’l Conduct 1.7(b); see Kriss v. Bayrock Grp. LLC, No. 10 Civ. 3959
(FM), 2014 WL 2212063, at *8 (S.D.N.Y. May 29, 2014) (characterizing Rule
1.7(b) as setting forth “an exception to th[e] rule” that “[a]bsent consent, an
attorney ordinarily may not simultaneously represent parties whose interests
are materially adverse”).

34

To be sure, some conflicts of interest are “non-waivable.” Strouch, 2011
WL 1143067, at *5. Rule 1.7(b) reflects this: It states that a lawyer may
concurrently represent adverse clients only if “the representation does not
involve the assertion of a claim by one client against another client represented
by the lawyer in the same litigation or other proceeding before a tribunal.” N.Y.
R. Prof’l Conduct 1.7(b)(iii); see Strouch, 2011 WL 1143067, at *5 (drawing
same conclusion from Rule 1.7(b)); Big Brows LLC v. Devitt, 936 N.Y.S.2d 57
(Table), 2011 WL 3557061, at *2-3 (Sup. Ct. Aug. 12, 2011) (disqualifying
attorney from jointly representing two plaintiffs despite attorney’s avowed
compliance with Rule 1.7(b), where defendant raised counterclaim seeking
contribution that would “necessarily require[] plaintiffs … to defend themselves
against their fellow plaintiffs’ claims,” and noting that plaintiffs’ conflicting
“pecuniary interests” created an “irreconcilable conflict in the professional
allegiance of counsel” that could not “be waived”). But to the extent that a
concurrent-representation conflict is waivable, an attorney must do more than
obtain every affected client’s informed consent before taking on that
representation.
b.

Analysis

The Turin Defendants argue that two types of provisions in the JDA allow
ALB to remain as their counsel. First, they contend that the JDA’s conflicts
waiver prevents the DE Defendants from moving to disqualify ALB. Second,
they argue that because the JDA expressly contemplated that Turin and the
DE Defendants would exchange confidential information, the DE Defendants
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cannot now cry foul at the prospect of ALB sharing their confidential
information with the Turin Defendants.
Both of these arguments fail. To the extent the JDA governs ALB’s
relationship with the Turin Defendants and the DE Defendants — and the
Court harbors serious doubts that it does — nothing in the JDA suggests that
the DE Defendants waived their right to object to the concurrentrepresentation conflict from which ALB now suffers. And the Turin
Defendants’ argument concerning confidential information is inapposite,
because it relies on law interpreting successive-representation conflicts. In
turn, the JDA does not cure ALB’s conflict of interest.
i.

The JDA’s Conflicts Waiver, to the Extent It Still
Applies, Does Not Cure ALB’s ConcurrentRepresentation Conflict of Interest

Before considering the effect of the JDA’s conflicts waiver, the Court
addresses two major gaps in the Turin Defendants’ brief. Even overlooking
these gaps, the Court concludes that the JDA unambiguously does not cure
ALB’s conflict of interest.
First, the Turin Defendants have not established that the JDA governs
ALB’s attorney-client relationship between the Turin Defendants and the DE
Defendants. Schneider Mitola signed the JDA; ALB did not. The Turin
Defendants contend that after ALB entered this case, “the DE Defendants
continued to litigate under the JDA without comment or objection.” (Turin
Opp. 4). They then claim, without citing to any legal authority, that “the
provisions of the JDA with respect to the parties[’] predecessor counsel,
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[Schneider Mitola], should be equally applicable to their current representation
by [ALB].” (Id.).
The closest legal analogue to the Turin Defendants’ argument would be a
claim that ALB, the Turin Defendants, and the DE Defendants entered into a
novation once ALB replaced Schneider Mitola. But that claim would fail. “New
York courts have set a stringent standard for novation.” Ruso v. Morrison, 695
F. Supp. 2d 33, 53 (S.D.N.Y. 2010) (quoting Abuelhija v. Chappelle, No. 08 Civ.
3679 (HB), 2009 WL 1883787, at *6 (S.D.N.Y. June 29, 2009)). “Under New
York law, in order to establish a novation, ‘four elements must be present: [i] a
previously valid obligation; [ii] agreement of all parties to a new contract;
[iii] extinguishment of the old contract; and [iv] a valid new contract.’” Long
Side Ventures, LLC v. Adarna Energy Corp., No. 12 Civ. 6836 (LTS), 2014 WL
4746026, at *4 (S.D.N.Y. Sept. 24, 2014) (quoting In re Balfour MacLaine Intern.
Ltd., 85 F.3d 68, 82-83 (2d Cir. 1996)). True, “[c]onsent to a novation need not
be express but may be implied from all the facts and circumstances.” TransOrient Marine Corp. v. Star Trading & Marine, Inc., 736 F. Supp. 1281, 1283
(S.D.N.Y. 1990). But apart from their conclusory claim that the DE Defendants
did not “comment or object[]” to the JDA after ALB began representing them,
the Turin Defendants have introduced no evidence suggesting that the parties
agreed to, let alone entered into, a new JDA. In turn, the Turin Defendants
have given the Court no reason to conclude that the JDA continued in force
after ALB replaced Schneider Mitola.

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Assuming that the JDA governed ALB’s relationship with the DE
Defendants and the Turin Defendants, the Turin Defendants also have not
established that ALB’s conflict is waivable. Rule 1.7(b) forbids an attorney from
representing two clients if one of those clients “assert[s] … a claim” against the
other “in the same litigation or other proceeding before a tribunal.” N.Y. R.
Prof’l Conduct 1.7(b)(iii). Strictly speaking, ALB has not run afoul of this rule:
It has not asserted, in the Federal Action, a claim against the DE Defendants
on the Turin Defendants’ behalf. But in substance, that is precisely what ALB
has done, “albeit in [a] different court[].” Strouch, 2011 WL 1143067, at *5.
And more to the point, on the date ALB filed the State-Court Complaint, it
represented two groups of defendants in the Federal Action, the DE Defendants
and the Turin Defendants, whose “pecuniary interests” were opposed. Devitt,
2011 WL 3557061, at *3. This all suggests that the DE Defendants could not
consent to ALB’s current conflict, which arose after ALB sued its own client.
And even if the Court were to overlook these deficiencies in the Turin
Defendants’ brief, the crux of their argument fails: The JDA does not cure
ALB’s conflict of interest. The JDA’s conflicts waiver begins:
In the event of any litigation or other dispute between
or among the Parties, each Party hereby waives any
claim that counsel for any other Party is or should be
disqualified from representing any other Party by
reason of receipt of confidential, privileged or protected
information or documents pursuant to this Agreement or
any work performed or representation in furtherance of
this Agreement.

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(Geller Decl., Ex. 1, ¶ 5 (emphasis added)). That provision is not ambiguous.
Pursuant to the JDA’s conflicts waiver, the DE Defendants waived their right to
object to Schneider Mitola’s (or perhaps ALB’s) representation on the grounds
that it had received confidential information. But this consideration — an
attorney’s possession of a client’s confidential information — is a factor courts
consider when assessing the propriety of successive representations of adverse
clients. See, e.g., Hempstead, 409 F.3d at 133; see also Glueck, 653 F.3d at
748 (drawing distinction between cases such as Cinema 5 in which “an
attorney represents one client in a suit against another,” and those cases
where an attorney “might benefit a client in a lawsuit by using confidential
information about an adverse party obtained through prior representation of
that party”); Nyquist, 590 F.2d at 1246 (same).
In contrast, whether an attorney may concurrently represent adverse
clients turns on whether he can demonstrate “at the very least, that there will
be no actual or apparent conflict in loyalties or diminution in the vigor of his
representation.” GSI, 618 F.3d at 209 (quoting Cinema 5, 528 F.2d at 1387).
And by the JDA’s terms, the DE Defendants did not waive their right to argue
that Schneider Mitola (or perhaps ALB) should be disqualified on the basis of
these concerns.
Put simply, the DE Defendants waived their right to object if Schneider
Mitola sued them in a matter subsequent to the Federal Action (at least on the
basis that Schneider Mitola possessed the DE Defendants’ confidential

39

information). The DE Defendants did not waive their right to object if
Schneider Mitola concurrently sued and represented them.
Other parts of the JDA underscore this conclusion. A sub-paragraph of
the JDA’s conflicts waiver provides that if “an actual non-waivable conflict
ar[o]se,” Schneider Mitola would continue representing every defendant in the
Federal Action except the DE Defendants. (Geller Decl., Ex. 1, ¶ 5(c)). The
Turin Defendants urge this Court to give effect to this “valid waiver” and allow
ALB to remain as their counsel. (Turin Opp. 11). In order to endorse that
view, the Court would need to conclude that the “actual non-waivable conflict”
to which the JDA refers encompasses ALB’s conflict: suing its own client. But
the sub-paragraph of the JDA that immediately follows this “actual nonwaivable conflict” clause confirms that Schneider Mitola never intended to
follow that course of action:
It is further agreed by the Parties that, with respect to
any issue that may arise in the [Federal Action] which
you disagree and/or which one of you may wish to
pursue a course that benefits one but is detrimental to
the interest of the other, [Schneider Mitola] cannot
advise or assist any of you in pursuing such course and
cannot advocate for any Parties’ separate interest at the
expense of the other Parties as long as [Schneider
Mitola] is representing you.
(Geller Decl., Ex. 1, ¶ 5(d)). This provision explicitly exempts ALB’s current
conflict of interest from the universe of “actual non-waivable conflict[s]”
referenced in the JDA. Schneider Mitola pledged that it would not assert a
claim that was adverse to either the Turin Defendants’ or the DE Defendants’
interests. ALB, however, did just that.
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The Turin Defendants cite a number of federal and New York state-court
cases wherein courts enforced waiver agreements that the Turin Defendants
claim are similar to the JDA’s. (Turin Opp. 9-10). As the DE Defendants note
in their brief, all of these cases concerned successive-representation conflicts of
interest. (DE Br. 7). See Estate of Hogarth v. Edgar Rice Burroughs, Inc.,
No. 00 Civ. 9569 (DLC), 2001 WL 515205, at *5-6 (S.D.N.Y. May 15, 2001);
GEM Holdco, LLC v. Changing World Techs., L.P., 7 N.Y.S.3d 242 (Table), 2015
WL 120843, at *4 (Sup. Ct.), aff’d in part, appeal dismissed in part sub nom.
Gem Holdco, LLC v. Ridgeline Energy Servs., Inc., 14 N.Y.S.3d 14 (1st Dep’t
2015); Grovick Properties, LLC v. 83-10 Astoria Boulevard, LLC, 990 N.Y.S.2d
601, 603-04 (2d Dep’t 2014); St. Barnabas Hosp. v. N.Y. City Health & Hosps.
Corp., 775 N.Y.S.2d 9, 10-11 (1st Dep’t 2004). And more importantly, the
Turin Defendants have not explained why this Court should read into the
JDA’s conflicts waiver a class of conflicts — concurrent-representation
conflicts — that the waiver expressly exempts.
The upshot of the Court’s textual analysis is this: Even assuming that
(i) the JDA survived Schneider Mitola’s departure and (ii) ALB’s conflict is
waivable, ALB did not obtain the DE Defendants’ informed consent before filing
the State-Court Complaint. That is because nothing in the JDA addresses the
concurrent-representation conflict from which ALB suffers. To be sure, even if
the DE Defendants had consented to this conflict, the Court would still have
good reason to disqualify ALB. It is unlikely that “a reasonable lawyer” would
believe that ALB could (i) defend the Turin Defendants and the DE Defendants
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in the Federal Action while (ii) suing DE on Turin’s behalf in the State-Court
Action. Strouch, 2011 WL 1143067, at *5 (quoting Paladino, 2010 WL
3359550, at *2). But the Court need not reach this issue. The JDA
unambiguously does not cure ALB’s concurrent-representation conflict of
interest.
ii.

The Turin Defendants’ Arguments Concerning the
JDA’s Confidentiality Provisions Are Inapposite

The Court’s conclusion that the JDA’s conflicts waiver does not cure
ALB’s conflict should end its analysis of the JDA. But for the sake of
thoroughness, the Court will also address the Turin Defendants’ arguments
about the JDA’s confidentiality provisions. Those arguments are predicated on
the Turin Defendants’ incorrect assumption that ALB suffers from a
successive-representation conflict of interest. They are thus inapposite.
By the Turin Defendants’ reading of the JDA, “the DE Defendants could
have [had] no expectation that any information they provided in the litigation
would be kept confidential from the Turin Defendants.” (Turin Opp. 8). Thus,
they claim, the DE Defendants cannot state a claim for disqualification under
Allegaert v. Perot, 565 F.2d 246 (2d Cir. 1977). (Turin Opp. 8; see also id. at 12, 5-6 (citing Allegaert)).
The problem for the Turin Defendants is that Allegaert considered a
successive-representation conflict. Allegaert, 565 F.2d at 250. Indeed, the
Turin Defendants’ brief includes a lengthy block quotation from Allegaert that
cites to Canon 4 of the Code of Professional Responsibility, which dealt with

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successive, not concurrent, adverse representations. Glueck, 653 F.2d at 748;
see Wai Hoe Liew v. Cohen & Slamowitz, LLP, No. 14 Civ. 4868 (KAM) (MDG),
2015 WL 5579876, at *9 (E.D.N.Y. Sept. 22, 2015) (“[T]he rule against
successive representation [w]as codified … previously as Canon 4[.]”). Here too,
the Turin Defendants have misconstrued the nature of ALB’s conflict. And
here again, they have given the Court no reason to conclude that ALB should
not be disqualified.
3.

ALB Has Not Carried Its “Heavy” Burden of Rebutting
Plaintiff’s Prima Facie Case for Disqualification
a.

Applicable Law

This Court has already concluded that ALB’s representation of the Turin
Defendants “is ‘prima facie improper.’” GSI, 618 F.3d at 209 (quoting Cinema
5, 528 F.2d at 1387). To rebut Plaintiff’s prima facie case, ALB must
demonstrate, “at the very least, that there will be no actual or apparent conflict
in loyalties or diminution in the vigor of [its] representation.” Strouch, 2011 WL
1143067, at *5 (citation omitted). “[T]his is ‘a burden so heavy that it will
rarely be met.’” GSI, 618 F.3d at 209 (quoting Glueck, 653 F.2d at 749).
Further, in resolving Plaintiff’s motion for disqualification, this Court is
mindful that “[d]isqualification is only warranted in the rare circumstance
where an attorney’s conduct ‘poses a significant risk of trial taint.’” Book Dog
Books, 126 F. Supp. 3d at 419 (quoting Decker v. Nagel Rice LLC, 716 F. Supp.
2d 228, 231 (S.D.N.Y. 2010)). The Court notes that in many cases, courts
appear to assume that a concurrent adverse representation itself “poses a
significant risk of trial taint.” See, e.g., Glueck, 653 F.2d at 748; BT Holdings,
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2015 WL 8968360, at *3 (“A significant risk of trial taint is encountered when
an attorney represents one client in a suit against another client[.]” (internal
quotation mark omitted) (quoting Glueck, 653 F.2d at 748)); cf. Pfizer v. Stryker
Corp., 256 F. Supp. 2d 224, 227 (S.D.N.Y. 2003) (“[A] risk of trial taint inheres
in circumstances that could impair the ability of the court to reach a fair and
just result as, for example, impairment of the attorney’s incentive to act
vigorously on behalf of the client[.]” (citing Glueck, 653 F.2d at 750)).
And given the history of this case, the Court also thinks it prudent “to
consider any tactical motivations” Plaintiff may have for moving to disqualify
ALB, as well as “the prejudice that [the Turin Defendants] may suffer in the
event” that [ALB] “is disqualified.” HLP Props., 2014 WL 5285926, at *5.
b.

Analysis

By failing to define correctly the nature of ALB’s conflict, the Turin
Defendants have not addressed whether ALB can carry its nearinsurmountable burden of rebutting Plaintiff’s prima facie case for
disqualification. Nevertheless, the Court is confident that ALB could not make
this showing. The Court is equally confident that ALB’s concurrent
representation of the Turin Defendants poses a severe risk of trial taint. And
because the extent of ALB’s conflict outweighs any prejudice to the Turin
Defendants, the Court must disqualify ALB in spite of Plaintiff’s potential
tactical motivations for bringing this motion.
The Court begins with the Cinema 5 factors, mindful that it is assessing
ALB’s conflict at the time it arose. There can be no question that on July 21,
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2016, ALB at minimum suffered from an “apparent conflict in loyalties.”
Cinema 5, 528 F.2d at 1387. In the State-Court Complaint, Turin announced
its intention to seek damages and indemnity from DE for its alleged
negligence — including its negligence in managing the Property. And if this
Court were to find that DE was negligent, that would appear to be a boon for
Turin in the State-Court Action. Put simply, the Turin Defendants’ and the DE
Defendants’ interests diverged sharply with the filing of the State-Court
Complaint. By playing both sides of this schism, ALB inserted itself in the
middle of an irreconcilable conflict of interest.
For similar reasons, the Court concludes that ALB’s representation of the
Turin Defendants poses a significant risk of trial taint (or would have posed
such a risk, prior to ALB’s withdrawal). It would seem that this conclusion
flows naturally from the former: ALB’s concurrent representation of the Turin
Defendants and the DE Defendants, whose interests have in large part become
opposed, is an untenable conflict. To the extent that “trial taint” is a
standalone component of a claim for disqualification, the Court concludes that
it is satisfied amply here. The Turin Defendants now have a major financial
incentive to ensure that this Court finds that the DE Defendants acted
negligently. In other words, the Turin Defendants may conceivably wish for at
least part of Plaintiff’s lawsuit to succeed. Allowing ALB to represent both
groups of defendants would imperil any defense the DE Defendants might hope
to mount. That is an eventuality this Court cannot entertain.

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Turning to Plaintiff’s motivations for bringing this motion, the Court has
little trouble concluding that they are at least in part tactical. This case is at
the summary-judgment stage, and the parties’ road here has been a
contentious one. Surely, Plaintiff is motivated at least partially by the prospect
of dealing the Turin Defendants a setback. And indeed, the Court recognizes
that granting Plaintiff’s motion will likely prejudice the Turin Defendants, who
will need to find new counsel after ALB has led them through discovery and
dispositive motions.
But the ethical quagmire in which ALB finds itself is too dire to ignore,
and attributable in significant measure to decisions by ALB. ALB entered this
case, officially, in May 2014. At no time thereafter did it execute its own joint
defense agreement with the two groups of defendants it elected to represent. At
no time did it attempt to revivify those defendants’ existing JDA. Less than a
month after filing its final summary-judgment brief, ALB initiated a lawsuit
against one of its clients, DE, on behalf of another, Turin. It filed the StateCourt Complaint, which at least intimated that DE had committed the
misconduct Plaintiff alleged in his FAC. And ALB did not move to withdraw as
the DE Defendants’ counsel until one month after Plaintiff filed his
disqualification motion.
Before the Court is an attorney-client conflict that Second Circuit law
and New York’s Rules of Professional Conduct unquestionably deem
disqualifying. That conflict has vitiated the Court’s confidence in ALB’s ability
to represent faithfully, and competently, any defendant in this case.
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CONCLUSION
For the reasons set forth above, Plaintiff’s motion to disqualify ALB is
GRANTED. The Turin Defendants are ORDERED to retain new counsel on or
before April 22, 2017. This case is STAYED pending the Turin Defendants’
retention of new counsel.
There are a number of pending motions in this case. (Dkt. #166, 183,
223). Once the Turin Defendants retain new counsel, they are ORDERED to
submit a letter explaining whether they intend to adopt, in whole or in part, the
Turin Defendants’ (i) motion for summary judgment (Dkt. #166); (ii) motion to
exclude Plaintiff’s expert, Andrew A. Beveridge (id.); and/or (iii) opposition to
Plaintiff’s request to supplement his summary-judgment submissions and
conduct additional discovery (Dkt. #224). This letter is due on or before
May 1, 2017.
The Clerk of Court is ORDERED to terminate Docket Entries 208, 225,
and 229.
SO ORDERED.
Dated:

March 22, 2017
New York, New York

__________________________________
KATHERINE POLK FAILLA
United States District Judge

47