Disqualification of counsel; laches; necessary witness
By: Douglas Ma | Staff Writer
Plaintiff and defendant shareholders agreed to dissolve defendant company pursuant to Business Corporation Law §1104(a). Thereafter, the court ordered a trial to determine the value of the corporate entity and monies owed by shareholders.
Due to withdrawal of plaintiff’s original counsel and plaintiff’s failure to appear ready to continue trial as pro se, the trial was delayed and the action was dismissed after plaintiff failed to submit opposition to the court’s conditional order dismissing the action. However, plaintiff retained new counsel and successfully vacated the order and, by order to show cause dated August 20, 2015, moved to disqualify defendants’ counsel on the grounds that counsel had previously represented plaintiff in drafting a pre-nuptial agreement, an immigration application, and the Shareholders’ Agreement of Defendant Company. Plaintiff alleged that defendants’ counsel obtained personal and private information while representing plaintiff in the pre-nuptial agreement and immigration application. Additionally, plaintiff alleged that defendants’ counsel would be a necessary witness at trial because plaintiff was unaware of the contents of the Shareholder’s Agreement, which was not translated into his native language.
To disqualify opposing counsel, plaintiff must prove: (1) the existence of a prior attorney-client relationship between the moving party and opposing counsel, (2) that the matters involved in both representations are substantially related, and (3) that the interests of the present client and former client are materially adverse. Furthermore, to disqualify and call counsel as a necessary witness at a trial, plaintiff must demonstrate that: (1) the testimony of the opposing party’s counsel is necessary to his or her case, and (2) such testimony would be prejudicial to the opposing party.
The court found that plaintiff failed to prove a substantial relationship between prior representations involving a pre-nuptial agreement and immigration application and this instant action concerning the value of defendant company and monies owed by shareholders. Also, plaintiff had not demonstrated any record indicating that defendant’s counsel represented plaintiff with regard to the drafting of Shareholders’ Agreement. Furthermore, the court recognized that disqualifying defendant’s counsel would cause a further delay, which would severely prejudice the defendant shareholder. Finally, the court found that plaintiff failed to demonstrate that defendant’s counsel was necessary because there was no evidence that he had any first-hand knowledge of the value of the defendant company or any monies owed by shareholders. Therefore, plaintiff’s motion to disqualify defendant’s counsel was denied.