Gasoline Expwy, Inc. v. Sun Oil Co. of Pennsylvania
| Decision Date | 17 July 1978 |
| Citation | 64 A.D.2d 647,407 N.Y.S.2d 64 |
| Parties | GASOLINE EXPWY, INC., Respondent, v. SUN OIL COMPANY OF PENNSYLVANIA et al., Appellants. |
| Court | New York Supreme Court — Appellate Division |
Fried, Frank, Harris, Shriver & Jacobson, New York City (David E. Weisberg, New York City, of counsel), for appellants.
Ruth Peres, Brooklyn, for respondent.
Before MARTUSCELLO, J. P., and RABIN, GULOTTA and COHALAN, JJ.
MEMORANDUM BY THE COURT.
In an action inter alia for (1) rescission of an agreement between the plaintiff and the corporate defendant, (2) reformation of a portion of said agreement, (3) a declaration as to the rights of the parties under the said agreement and (4) compensatory and punitive damages for false and fraudulent representations made by the defendants to plaintiff and relied upon by it, defendants appeal from an order of the Supreme Court, Kings County, entered March 7, 1978, which denied their motion to disqualify plaintiff's counsel on the ground that she would necessarily be called as a witness to testify in the trial of the action.
Order reversed, without costs or disbursements, and motion granted.
The plaintiff is a close corporation whose sole shareholder is the attorney who is seeking to represent the corporation (see CPLR 321, subd. (a)). The attorney, in her capacity as president of the plaintiff corporation, negotiated and signed the contracts which are the subject of this dispute. It is evident that her testimony will be of primary importance in proving the plaintiff's case. On that basis, the defendants moved to disqualify plaintiff's counsel and thereby avoid the prejudice inherent in the inconsistent roles of witness and advocate. Defendants' position is supported by Disciplinary Rule 5-101 (subd. (B)) of the Code of Professional Responsibility, which provides, in part:
Other than conclusory allegations concerning the cost of obtaining other counsel, no reasons have been set forth why disqualification would work a substantial hardship to the plaintiff. Such allegations are totally insufficient and if the plaintiff corporation consisted of multiple shareholders there would be no hesitation in granting the motion to disqualify plaintiff's counsel (cf. Tru-Bite Labs v. Ashman, 54 A.D.2d 345, 388 N.Y.S.2d 279).
However, this case is complicated by the attorney's argument that such a result improperly denies her the right of appearing pro se. That contention, despite its superficial appeal, must be rejected. Having made the decision to conduct business in a corporate form, thereby reaping the various advantages of the "corporate veil", the attorney may not be permitted to avoid the coexistent encumbrances of that corporate veil. The plaintiff's corporate status must be strictly adhered to and the roles of shareholder and advocate may not be merged. By incorporating, the attorney must be deemed to have waived the right to appear pro se.
Accordingly, under the circumstances of this case, the various considerations underlying Disciplinary Rule 5-101 (subd. (B)) are fully applicable and the motion to disqualify plaintiff's counsel should have been granted.
MARTUSCELLO, J. P., dissents and votes to affirm the order, with the following memorandum:
The motion here is based on Disciplinary Rule 5-101 (subd. (B)) of the Code of Professional Responsibility, which deals with refusing employment when the interests of the lawyer may impair his independent...
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