Marin v. AI Holdings (USA) Corp.

• Decision Date: 17 May 2012
• Docket Number: No. 651224/11.,651224/11.
• Citation: 953 N.Y.S.2d 550,2012 N.Y. Slip Op. 50912,35 Misc.3d 1227
• Parties: Richard A. MARIN, Plaintiff, v. AI HOLDINGS (USA) CORP., AI Properties and Development (USA) Corp., Africa Israel Investments Ltd., Izzy Cohen and Nadav Grinshon, Defendants.
• Court: New York Supreme Court

35 Misc.3d 1227
953 N.Y.S.2d 550
2012 N.Y. Slip Op. 50912

Richard A. MARIN, Plaintiff,
v.
AI HOLDINGS (USA) CORP., AI Properties and Development (USA) Corp., Africa Israel Investments Ltd., Izzy Cohen and Nadav Grinshon, Defendants.

No. 651224/11.

Supreme Court, New York County, New York.

May 17, 2012.

Zukerman Gore Brandeis & Crossman, by John K. Crossman, Esq., Frank C. Welzer, Esq., New York, for Plaintiff.

Morrison Cohen LLP, by Y. David Scharf, Esq., Kristin T. Roy, Esq ., Evan Lupion, Esq., New York, for Defendants.

BERNARD J. FRIED, J.

Plaintiff moves for an order disqualifying Y. David Scharf, Esq. and his law firm, Morrison Cohen LLP, pursuant to Rules of Professional Conduct (RPC) 3.7(a) and (b) (22 NYCRR 1200.00 [previously 1200.21 (DR5–102) ] ), from continuing to represent defendants in this action.

The allegations of the complaint are discussed in detail in my decision on defendants' pre-answer motion to dismiss in this action, which was granted in part, but plaintiff's breach of contract and implied contract causes of action remain. Briefly, plaintiff, Richard A. Marin, was the chairman and chief executive officer of two subsidiary companies (together, AI–USA) of defendant Africa Israel Investments Ltd. (AFI), of which individual defendants Izzy Cohen and Nadav Grinshpon are officers or board members. Plaintiff alleges that Cohen and Grinshpon terminated his employment and denied him bonus and compensation payments because he undertook an investigation into their alleged corporate improprieties, which included the writing off of debt owed to AI–USA and the diversion of AI–USA's business opportunity. Plaintiff contends that, in the fall 2010, he discussed the alleged corporate improprieties with Cohen, his supervisor, who told him to “drop it.” Plaintiff alleges that this incident was part of a larger corporate culture at Africa–Israel aimed at protecting senior executives by covering up their wrongdoing. Plaintiff states that he initiated an investigation at AI–USA regarding improprieties within the company, which he hired an outside law firm to conduct, but that, at AFI's insistence, Scharf was also involved in the investigation.

Plaintiff's employment was terminated at a December 8, 2010, at a meeting with Scharf, who handed plaintiff a letter from AI–USA, signed by Cohen and Grinshpon, stating that plaintiff would not receive additional compensation. Plaintiff alleges that he was not paid promised compensation because Cohen and Grinshpon sought to cover up and punish him for bringing up the alleged corporate improprieties, and that Scharf is a necessary witness, because he was party to, and has unique knowledge of events that transpired both prior to, and including, plaintiff's termination.

Plaintiff argues that, because Scharf's testimony is both necessary to the litigation and expected to be prejudicial to Scharf's clients, the defendants herein, Scharf should be disqualified under RPC Rule 3.7(a), which states that “a lawyer shall not act as advocate before a tribunal in a matter in which the lawyer is likely to be a witness on a significant issue of fact” (RPC 3.7[a] ). Plaintiff asserts that Scharf has unique knowledge concerning: (1) the improprieties which plaintiff investigated; (2) the result of plaintiff's having brought up the improprieties; (3) AFI's alleged corporate culture of covering up improprieties (4); and plaintiff's termination.

Plaintiff contends that Morrison Cohen should be disqualified as well because he will call Scharf as a witness and his testimony will be prejudicial to defendants. RPC 3.7(b) states that “[a] lawyer may not act as advocate before a tribunal in a matter if: (1) another lawyer in the lawyer's firm is likely to be called as a witness on a significant issue other than on behalf of the client, and it is...