Carlyle Towers Condo. Ass'n v. Crossland Sav., Fsb
| Citation | 944 F.Supp. 341 |
| Decision Date | 01 July 1996 |
| Docket Number | Civ. No. 95-6554. |
| Parties | CARLYLE TOWERS CONDOMINIUM ASSOCIATION, INC., et al., Plaintiffs, v. CROSSLAND SAVINGS, FSB, et al., Defendants. |
| Court | United States State Supreme Court (New Jersey) |
Stuart James and Saliann Scarpulla, FDIC New York Legal Services Office, New York City, for FDIC, as Receiver for Crossland Savings, FSB, Third-Party Defendant.
Esther S. Widowski, Kessler & Widowski, New York City, for FDIC in its Corporate Capacity.
Edward P. D'Alessio, Loikith, D'Alessio & Kugelman, Fairfield, NJ, for Andrew Marshall, Jr., P.E. & L.S., P.A. Stuart Reiser, Shapiro & Croland, Hackensack, NJ, for Hampshire Management Company, Third-Party Defendant/Fourth-Party Plaintiff.
James Demetrakis, Pro Se.
Robert P. Travers, Edgewater, NJ, for Oliver, McCartney & Holmes, Inc.
Francie E. Joseph, Parsippany, NJ, for St. Paul Fire & Marine Insurance Company.
This matter comes before the Court on the motion of Defendants to disqualify Plaintiffs' counsel. This matter was referred to the undersigned by the Honorable Harold A. Ackerman, U.S.D.J. Oral argument was heard on June 24, 1996. For the reasons stated below, the motion is denied.
This matter arises from the construction and sale of condominium units at Carlyle Towers Condominium. Current counsel for Plaintiff Carlyle Towers Condominium Association, Inc. ("Association" or "Carlyle"), is Greenbaum, Rowe, Smith, Ravin, Davis & Himmel ("Greenbaum Rowe"). This firm was approached in 1992 to represent an ad hoc group of the Carlyle Towers Condominium owners. Subsequently, the Association also retained Greenbaum Rowe.
Defendants claim that Greenbaum Rowe should be disqualified from representing the Association in this matter because of a perceived conflict with another client of Greenbaum Rowe. This other representation began in 1985, when Greenbaum Rowe was retained by Coronet Properties Company, L.P. ("Coronet"), regarding the conversion of apartments at Woodcliff Gardens to co-ops. Coronet's interests in these apartments were subsequently assigned to Woodman 8300 Corp. ("Woodman"), then a subsidiary of Manhattan Savings Bank ("Manhattan Savings"). In 1991, Greenbaum Rowe was specifically retained to continue to perform transactional work for both Woodman and Manhattan Savings regarding the Woodcliff Gardens apartments. The majority of the work involved preparing and filing Public Offering Statements ("POS's") and amendments to such statements.
Through a complex series of mergers and acquisitions over the years, both Woodman and Manhattan Savings have now become corporately related to CrossLand Federal Savings Bank ("CrossLand"), a defendant in the matter before this Court. Defendants allege that Greenbaum Rowe is prohibited under RPC 1.7 from suing CrossLand while representing its corporate relation, Woodman, and must, thus, be disqualified from representing Plaintiffs here. Defendants further allege that even if Woodman and Manhattan Savings are found to be former clients, Greenbaum Rowe is still disqualified under RPC 1.9, because of the substantial relationship between the Woodman condominium conversion matter and the matter now before this Court. The specific facts leading up to the current corporate relationships between the parties are as follows:
When Coronet assigned its interests in the Woodcliff Gardens apartments to Woodman in 1990, Woodman was, as noted above, a subsidiary of Manhattan Savings which was, in turn, a wholly owned subsidiary of Republic New York Corp. ("Republic Holding"), a bank holding company1 that was also the sole owner of Republic National Bank of New York ("Republic National"). Manhattan Savings changed its name to Republic Bank for Savings ("Republic Savings") in 1993. Greenbaum Rowe thus represented both Woodman and Manhattan Savings, turned Republic Savings, regarding the Woodcliff Gardens apartments in transactional matters dealing with converting the apartments to co-ops and with selling those units. This was the state of affairs when Greenbaum Rowe filed suit for Carlyle, its client in this action, against the defendants, including CrossLand, in 1995. No conflicts of interests were present at that time.
On January 2, 1996, subsequent to the filing of this suit, Republic Savings, the parent of Woodman, merged into Republic National. Thus, Woodman became a direct subsidiary of Republic National. The next month, February 1996, Republic Holding (Republic National's parent) acquired Brooklyn Bancorp, Inc. ("Brooklyn Bancorp"), the holding company for Defendant CrossLand. At that point, defendant CrossLand was merged into Republic National and Republic National succeeded to all of CrossLand's assets, rights and liabilities. In fact, on May 7, 1996, Plaintiffs amended their Complaint to substitute Republic National Bank in the place of Defendant, CrossLand.
The relationships can be diagramed as follows:
acquired
Republic Holding --------------> Brooklyn Bancorp
Republic merged into CrossLand
National Thus, Greenbaum Rowe was, indeed, in the unenviable position of representing Woodman, a subsidiary of Republic National regarding one transactional matter, and of suing Republic National, standing in the shoes of CrossLand Federal, in this lawsuit.
On April 16, 1996, Gerald A. Liloia, attorney for Defendant CrossLand/Republic National, wrote a letter to Dennis A. Estis, attorney for Plaintiff at Greenbaum Rowe, indicating that because of Republic National's acquisition of CrossLand, and Greenbaum Rowe's concurrent representation of Woodman, "it appears that RPC 1.7 precludes [Greenbaum Rowe] from acting in a manner adverse to Republic." Furthermore, Mr. Liloia demanded that Greenbaum Rowe "cease activities that are adverse to [Republic], including withdrawal from representing the plaintiffs in the Carlyle Towers matter." (Id.)
Greenbaum Rowe handled this conflict by letter dated May 17, 1996, in which Mr. Kerry Brian Flowers of Greenbaum Rowe indicated to Mr. John S. Pancetti, Jr. of Woodman 8300 Corp, that Greenbaum Rowe asserts that from the sending of this letter, Woodman was no longer its client. (Pl.Br. at 9.)
On May 24, 1996, Defendant CrossLand filed this motion requesting Greenbaum Rowe's disqualification as Plaintiffs' counsel.
The Local Rules for the District of New Jersey provide that
[t]he Rules of Professional Conduct of the American Bar Association as revised by the New Jersey Supreme Court shall govern the conduct of the members of the bar admitted to practice in this Court, subject to such modifications as may be required or permitted by federal statute, regulation, court rule or decision of law.
D.N.J. Gen.R. 6. Thus, to resolve questions of professional ethics, this Court turns to New Jersey's Rules of Professional Conduct. It is clear that the intention is for practitioners in both the state and federal courts in New Jersey to be governed by a single ethical code. Nevertheless, while efforts should be made to avoid inconsistent determinations under the RPCs, and this Court may certainly look for guidance to the decisions of the New Jersey state courts, our Local Rules do not require that this Court be bound by those decisions.2
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...countervailing policy to disqualification). As observed by Magistrate Judge Stanley R. Chesler in Carlyle Towers Condominium Ass. v. Crossland Savings, FSB, 944 F.Supp. 341 (D.N.J.1996): When pondering the proper outcome for a specific case, courts must exercise extreme caution not to act u......
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...to disqualification). As observed by Magistrate Judge Stanley R. Chesler in Carylyle Towers Condominium Ass. v. Crossland Savings, FSB, 944 F. Supp. 341 (D.N.J. When pondering the proper outcome for a specific case, courts must exercise extreme caution not to act under the misguided belief ......
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Ex parte Tiffin
...under Rule 1.7 or Rule 1.9 bears the burden of proving the existence of a conflict of interest. Carlyle Towers Condo. Ass'n, Inc. v. Crossland Sav., FSB, 944 F.Supp. 341 (D.N.J.1996); Barragree v. Tri-County Elec. Coop., Inc., 263 Kan. 446, 950 P.2d 1351 (1997); Walker v. State Dep't of Tra......