Kelly v. Paulsen , 44 N.Y.S.3d 263 ( 2016 )

State of New York
Supreme Court, Appellate Division
Third Judicial Department
Decided and Entered: December 29, 2016 522669
________________________________
LYNN H. KELLY et al.,
Appellants,
v
CHRISTOPHER A. PAULSEN, MEMORANDUM AND ORDER
Respondent,
et al.,
Defendants.
________________________________
Calendar Date: November 15, 2016
Before: Garry, J.P., Egan Jr., Devine, Clark and Mulvey, JJ.
__________
Steven P. Schultz, Gansvoort, for appellants.
Smith, Sovik, Kendrick & Sugnet, PC, Syracuse (Brandon R.
King), for respondent.
__________
Garry, J.P.
Appeal from an order of the Supreme Court (Dowd, J.),
entered November 12, 2015 in Broome County, which granted
defendant Christopher A. Paulsen's motion to disqualify
plaintiffs' attorney.
In 2009, plaintiffs Lynn H. Kelly (hereinafter Kelly) and
Donna Kelly commenced this negligence action alleging that Kelly
was forced to crash his motorcycle when defendant Christopher A.
Paulsen failed to yield the right-of-way at an intersection.
Plaintiffs were represented by the law firm of Hinman, Howard &
Katell, LLP (hereinafter HHK). Steven P. Shultz, a sole
practitioner, later joined plaintiffs' representation as co-
counsel, filing a notice of appearance in June 2013.
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Shortly before the commencement of the trial in January
2015, Paulsen allegedly learned for the first time that HHK was
representing plaintiffs. HHK had also represented Paulsen in
numerous personal and business matters between 1985 and 2015 and,
on the first day of trial, Paulsen moved to disqualify HHK based
upon the conflict of interest created by this representation.
Supreme Court (Tait, J.) initially denied the motion and
permitted jury selection to commence; however, after receiving
additional information about HHK's representation of Paulsen, the
court withdrew its prior ruling, declared a mistrial and recused
itself. Thereafter, HHK withdrew from the representation with
plaintiffs' consent, leaving Shultz as plaintiffs' sole counsel.
Paulsen moved to disqualify Shultz, and Supreme Court (Dowd, J.),
granted the motion. Plaintiffs appeal.
The Rules of Professional Conduct prohibit attorneys who
are "associated in a firm" from representing a client when a
conflict of interest would preclude any one of them from doing so
if he or she were practicing alone (Rules of Professional Conduct
[22 NYCRR 1200.0] rule 1.10 [a]). The Rules of Professional
Conduct do not define the phrase "associated in a firm," but it
is well established that its meaning extends beyond partners and
associates who are employed by the same firm and includes
attorneys with "of counsel" relationships (see Cardinale v
Golinello, 43 NY2d 288, 294-295 [1977]; People v Lynch, 104 AD3d
1062, 1063 [2013]). However, not every lawyer who has any
connection or relationship with a firm is considered to be
"associated" with that firm for the purpose of imputing a
conflict of interest (see e.g. Bison Plumbing City v Benderson,
281 AD2d 955, 955 [2001]; Shelton v Shelton, 151 AD2d 659, 659
[1989]). Whether an attorney is considered to be "associated in
a firm" within the meaning of rule 1.10 (a) is a factual analysis
that turns on whether the attorney's relationship with the firm
is sufficiently "close, regular and personal" (Dietrich v
Dietrich, 136 AD3d 461, 463 [2016] [internal quotation marks and
citations omitted]; see D.B. v M.B., 39 Misc 3d 1205[A], 2013 NY
Slip Op 50502[U], *5-*6 [Sup Ct Westchester County 2013]).
"Because disqualification can affect a party's federal and
state constitutional rights to counsel of his or her own
choosing, the burden is on the party seeking disqualification to
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show that it is warranted" (Dietrich v Dietrich, 136 AD3d at 462
[citation omitted]). We are unpersuaded that this "heavy burden"
was satisfied here (Ullmann-Schneider v Lacher & Lovell-Taylor
PC, 110 AD3d 469, 469-470 [2013]). Shultz has never been an
employee, associate or partner at HHK and is not identified on
the firm's letterhead as having an "of counsel" role (see Rules
of Professional Conduct [22 NYCRR 1200.00] rule 7.5 [a] [4]). He
testified by affidavit that plaintiffs retained him in March 2013
to act as co-counsel in the pretrial and trial phases of the
negligence action with an HHK partner who was the original
attorney of record. Shultz was also engaged to serve as co-
counsel with this HHK partner on four other matters unrelated to
the negligence action, all of which Shultz had originated. He
stated that he acted in the capacity of an independent contractor
in all five cases and that, other than these cases, he never had
discussions with any HHK attorneys regarding HHK's client
affairs.
Shultz does not share office space with HHK, but instead
maintains his own separate office. He did not receive support
services from HHK such as office space, secretarial services or a
computer, nor did HHK supervise his work or instruct him on how
to perform his work. Significantly, he averred that he never had
access to any HHK client files other than that of plaintiffs.
Shultz specifically averred that he never represented Paulsen or
was aware of him or his business affairs before his involvement
in this case, that he never received any confidential information
pertaining to Paulsen from HHK, and that HHK did not give him
access at any time to any files from which he might have obtained
such information.
The HHK partner with whom Shultz acted as co-counsel
confirmed that Shultz was not an employee and that he worked
independently from HHK. She averred that HHK has over 80
attorneys and that, due to the firm's size, multiple office
locations and compartmentalization into various departments, she
had never acquired any information, "confidential or otherwise,"
about Paulsen. She further averred that she had no knowledge of
Paulsen beyond the negligence action and that she met him for the
first time on the first day of trial in January 2015. She
confirmed that Shultz was not provided with support services,
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equipment or an office by HHK and that he never had access to any
HHK client files, nor did he participate in discussions of client
affairs.
Paulsen submitted no evidence contradicting any of these
assertions. His allegation that HHK's "intimate and personal
knowledge of [his affairs] has undeniably been shared with . . .
Shultz" is not based upon record evidence. The claim instead
appears to be founded upon his mere speculation that, because
plaintiffs demanded a high settlement figure, they may have
received confidential information about his finances. Under
these circumstances, we find no basis in the record for
concluding that Shultz and HHK had the "close, regular and
personal type of relationship that could become an association
for purposes of imputing conflicts of interest under rule 1.10"
(Dietrich v Dietrich, 136 AD3d at 463 [internal quotation marks
and citations omitted]). In our view, Shultz's role in the
litigation is more akin to that of a "[c]ontract [l]awyer to whom
a case is referred and who serves in the nature of co-counsel,
working from his or her own office," who, in the absence of other
factors revealing a closer relationship, is not deemed to be
associated with the employing firm for the purpose of
disqualification (NY St Bar Assn Comm on Prof Ethics Op 715
[1999]). Further, in view of HHK's relatively large size and
Shultz's undisputed lack of access to the firm's files,
confidences and secrets, there is no perceivable risk that
Paulsen's interests may "be prejudiced in consequence of
representation of [plaintiffs] by [Shultz]" (Cardinale v
Golinello, 43 NY2d at 296), and no appearance of impropriety
warranting disqualification. To hold otherwise would impose an
unnecessary burden on the freedom of clients to retain the
counsel of their choice and the ability of attorneys from
different firms to work together (see Solow v Grace & Co., 83
NY2d 303, 309-310 [1994]; Dietrich v Dietrich, 136 AD3d at 463).
Accordingly, we find that Shultz was not associated with HHK
within the meaning of the Rules of Professional Conduct. Supreme
Court thus erred in granting Paulsen's motion for
disqualification (see Hempstead Video, Inc. v Incorporated Vil.
of Valley Stream, 409 F3d 127, 136 [2d Cir 2005]; Dietrich v
Dietrich, 136 AD3d at 463; D.B. v M. B., 39 Misc 3d 1205[A], 2013
NY Slip OP 50502[U] at *5-*6; compare Nemet v Nemet, 112 AD2d
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359, 360 [2d Dept 1985], lv dismissed 66 NY2d 759 [1985]).
Egan Jr., Devine, Clark and Mulvey, JJ., concur.
ORDERED that the order is reversed, on the law, with costs,
and motion denied.
ENTER:
Robert D. Mayberger
Clerk of the Court