H.H.B.K. 45th Street Corp. v. Stern

• Decision Date: 22 February 1990
• Citation: 158 A.D.2d 395,551 N.Y.S.2d 517
• Parties: H.H.B.K. 45TH STREET CORP., Plaintiff-Appellant, v. Stanley E. STERN, et al., Defendants-Respondents.
• Court: New York Supreme Court — Appellate Division

Page 517

551 N.Y.S.2d 517

158 A.D.2d 395

H.H.B.K. 45TH STREET CORP., Plaintiff-Appellant, v. Stanley E. STERN, et al., Defendants-Respondents.

Supreme Court, Appellate Division,

First Department.

Feb. 22, 1990.

D. Rosenberg, for plaintiff-appellant.

E.L. Sadowsky, New York City, for defendants-respondents.

Before MURPHY, P.J., and SULLIVAN, CARRO and ROSENBERGER, JJ.

MEMORANDUM DECISION.

Order, Supreme Court, New York County (Harold Tompkins, J.), entered May 10, 1989, which granted defendants-respondents' motion to disqualify plaintiff-appellant's counsel, unanimously reversed, on the law, and the motion denied, with costs.

Supreme Court erred in granting the motion to disqualify plaintiff's counsel on the ground that two of the lawyers in the firm were involved in negotiations of the lease which plaintiff now seeks to have reformed. As to David Rosenberg, who represented plaintiff in the first of two sets of negotiations, the affirmation of Richard Abelson, former in-house counsel to respondent ICC Realty Corporation ("ICC"), establishes that these negotiations did not result in an agreement between the parties. Mr. Abelson states that "any discussion which concerned the aborted deal can have no relevance to the lease which was actually negotiated and executed by the parties." In September 1986, the parties renewed their discussions which led to execution of the lease that appellant now seeks to have reformed. Jeffrey Diamond of Summit, Rovins & Feldesman represented appellant during the second negotiations.

In June 1988, respondent commenced a non-payment summary proceeding against appellant which sought a temporary restraining order and reformation of the percentage rental term in paragraph 37(b) of the lease on the ground that it did not reflect the parties' true understanding. Mr. Abelson, respondents' counsel, who by then had formed his own law firm, raised no objection to the fact that appellant was represented by Mr. Diamond of Summit, Rovins & Feldesman. Nor was such an objection raised by respondents' substitute counsel who replaced Mr. Abelson. Only in January 1989 did respondents' third set of attorneys seek to have Mr. Diamond, Mr. Rosenberg, and their new law firm of Marcus, Borg, Rosenberg & Diamond disqualified on the ground that the attorneys are potential witnesses.

It is particularly important to note the Court of Appeals' admonition in S & S Hotel Ventures Limited Partnership v. 777 S.H. Corp., that disqualification of a law firm during litigation "implicates not only the ethics of the profession but also the substantive rights of the litigants" and that "in the context of an ongoing lawsuit, disqualification of a plaintiff's law firm can stall and derail the proceedings, redounding to the strategic advantage of one party over another [citations omitted]" (69 N.Y.2d 437, 443, 515 N.Y.S.2d 735, 508 N.E.2d 647 [1987]. Given this danger, the Code of Professional Responsibility must not be "mechanically...