Morin v. Trupin
| Decision Date | 12 December 1989 |
| Docket Number | 89 Civ. 3102 (RWS).,No. 88 Civ. 5743 (RWS),88 Civ. 5743 (RWS) |
| Parties | Simeon MORIN, et al., Plaintiffs, v. Barry H. TRUPIN, et al., Defendants. Arnold L. PETERSEN, II, et al., Plaintiffs, v. Barry H. TRUPIN, et al., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Adler Hindy Turner & Glasser, New York City, for plaintiffs; Jeremy D. Morley, of counsel.
Manning, Raab, Dealy & Sturm, New York City, for plaintiffs; William Dealy, of counsel.
Summit Rovins & Feldesman, New York City, for defendants/movants; John L. Amabile, Leonard D. Steinman, Howard Weingrad, of counsel.
Various defendants in the consolidated actions Morin v. Trupin and Peterson v. Trupin have moved to disqualify the law firm of Adler Hindy Turner & Glasser and its co-counsel, Manning, Raab, Dealy & Sturm, attorneys for all plaintiffs in these actions, from continuing to represent plaintiffs, and for ancillary relief. The motion is based upon disclosures that were made to plaintiffs' counsel by a defendant, Harvey Haber ("Haber"), who once served as in-house counsel to a number of the defendants. Those disclosures, alleged to breach the confidential attorney-client relationship, were made by Haber in order to obtain his dismissal as a defendant from the lawsuit. For the reasons stated below, the motion to disqualify is denied, and certain ancillary relief is granted.
The plaintiffs in the consolidated action are all investors in one or more series of Rothschild Realty Partnerships (the "Partnerships"). According to the Complaint, the Partnerships owned limited partnership interests in several organizations, which organizations in turn owned various commercial real estate properties (the "Properties"). The Complaint alleges that the plaintiffs have been defrauded in connection with their investment in the Partnerships. Principally, it alleges that the Properties were sold and resold among entities controlled by defendant Barry Trupin ("Trupin") at inflated prices, that the private placement memoranda for the Partnerships contained fraudulent information, that appraisals of the Properties were inflated, that financial forecasts for the Partnerships were fraudulent, that tax opinions were false, and that adverse information concerning the Properties was covered up.
In the summer of 1988, the Morin suit was instituted against more than thirty defendants including the general partner of the Partnerships, the promoters of the offering of Partnership interests and their affiliates, control persons, officers, sales people, successors in interest, known employees, lawyers (both in-house and outside counsel) who worked on the offering memoranda accountants, and appraisal companies. In or about November, 1988 the Blaikie action was instituted against the same defendants, on behalf of other investors in the Partnerships, or in additional similar Partnerships. The defendants in the now consolidated actions are accused, inter alia, of issuing private placement memoranda in a series of real estate tax shelters involving defendant Barry Trupin and others which contained material misstatements and omissions of fact.
Among the defendants named in the original complaints in the Morin and Blaikie actions was Harvey Haber, the central figure in the present disqualification dispute. Haber was identified in the complaints as having acted as "in-house counsel to entities in the Rothschild Group in connection with the transactions" and as the person "responsible for supervising and directing the activities of outside counsel" who were involved in the transactions that were the subject of suit.
Haber had been hired by Trupin in 1981 to become general counsel to one of the Rothschild companies associated with Trupin. From 1981 to 1986 Haber functioned as both an attorney and executive for several companies which were part of the group of companies (the "Rothschild Group") plaintiffs allege were owned or controlled by Trupin. In 1986, Haber ceased working for any of the companies in the Rothschild Group.
Following the filing of the complaints which named Haber as a defendant, Haber's lawyer, Kenneth Schachter ("Schachter"), spoke by telephone with plaintiffs' counsel to seek an extension of the time to respond to the complaints. In the course of his conversations, Schachter proposed that Haber be dropped as a defendant as he contended Haber had engaged in no actions making him liable to plaintiffs. Counsel for plaintiff indicated that Haber might be dropped from the lawsuit if he were willing to meet with counsel to discuss the case. Negotiations ensued that resulted in Haber and his lawyer meeting with plaintiffs' counsel on December 6, 1988.
At that meeting, Haber signed an agreement pursuant to which plaintiffs agreed contingently to dismiss their claims against Haber on the condition that Haber fully cooperate with Adler Hindy by providing the law firm information concerning the matters alleged in the complaints and by testifying, as needed, at depositions, hearings or trials in the action. Although the written agreement does not so indicate, plaintiffs' counsel and Haber have stated for the record that they had discussions as to the scope of the attorney-client privilege and its applications to their chosen course, and agreed that Haber would not be forced to reveal any information which he or his lawyer believed to be covered by the attorney-client privilege.
Following execution of the agreement that day, plaintiffs' counsel questioned Haber in Schachter's presence. Haber answered questions put to him, except in one or two instances, in which he indicated the subject was one he did not feel at liberty to discuss. The next day, December 7, plaintiffs' counsel prepared and served a notice of dismissal dropping without prejudice its claims against Haber.
John Amabile, counsel for moving defendants, spoke to Haber about the dismissal notice shortly thereafter and was told that the dismissal had been conditioned on Haber's commitment to meet with plaintiffs' counsel and answer questions about the lawsuit. Amabile warned Haber of his responsibilities under the Code of Professional Responsibility at that time and advised Haber by letter on December 15, 1988, that his former clients (some of whom Amabile was representing in the litigation) did not intend to waive the attorney/client privilege or work product immunity. In the letter, Amabile also advised Haber that the Code of Professional Responsibility protected his former clients against disclosure of not only confidential, but also secret information, i.e., any information which Haber had gained in his professional relationship with his clients.
On at least three occasions subsequent to December 6, 1988, plaintiffs' counsel met or spoke with Haber without the presence of his lawyer Schachter and without notice to the lawyers for Haber's former clients to ask Haber additional questions relating to the subject matter of the lawsuits. Information obtained from Haber in these meetings and the December 6 meeting was referred to in an affidavit of one of plaintiffs' lawyers, Jeremy D. Morley, filed with the court in early July, 1989, in opposition to a motion by defendants Continental Realty and Emanuel Organik for summary judgment. That affidavit makes several factual allegations which are attributed to Haber and which Morley states were disclosed by Haber at meetings on December 6, December 18 and other occasions.
Shortly after the filing of that affidavit, defendants' motion to disqualify was brought on by order to show cause. A hearing was held on July 31, 1989, at which testimony was heard from Haber and Schachter.
Haber testified as to his recollection of the information he communicated at these meetings. He stated that he did not believe that he had disclosed to plaintiffs' counsel any information protected by the attorney-client privilege and further indicated that at the meetings (including the December 6 meeting) there were five or six instances in total in which he refrained from answering questions because he had attorney-client privilege concerns. Haber's testimony also revealed that he had not refrained from discussing with plaintiffs' lawyers facts or information learned at his employment with the Rothschild Group of companies, unless he directly related those facts to a conversation or communication with his former clients.
Following the hearing, detailed notes of these meetings taken by plaintiffs' counsel were produced to the court for in camera inspection. The matter was taken on submission following filing of post-hearing briefs.
This disqualification motion requires a determination, in the first instance, whether Haber has wrongly communicated to plaintiffs' counsel information that was protected by the attorney-client relationship he formerly had with certain of the defendants, and, if so, whether plaintiffs' counsel, by virtue of their receipt of such information, should be disqualified from continuing with their representation.
The former question demands examination of Haber's duties to his former clients. The principles of confidentiality that govern the relationship between attorney and client are the subject of two distinct bodies of law:
the attorney-client privilege (which includes the work-product doctrine) in the law of evidence and the rule of confidentiality established in professional ethics. The attorney-client privilege applies in judicial and other proceedings in which a lawyer may be called as a witness or otherwise required to produce evidence concerning a client. The rule of client-lawyer confidentiality applies in situations other than those where evidence is sought from the lawyer through compulsion of law.
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Morin v. Trupin
...familiarity with which is assumed. See, e.g., Morin v. Trupin, 711 F.Supp. 97 (S.D.N.Y.1989) (filed April 13, 1989); Morin v. Trupin, 728 F.Supp. 952 (S.D.N.Y. 1989) (filed December 13, 1989); Morin v. Trupin, 738 F.Supp. 98 (S.D.N.Y.1990) (filed May 4, 1990); Morin v. Trupin, 747 F.Supp. 1......
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Morin v. Trupin
...issued by this Court, familiarity with which is assumed. See, e.g., Morin v. Trupin, 711 F.Supp. 97 (S.D.N.Y.1989); Morin v. Trupin, 728 F.Supp. 952 (S.D.N.Y.1989); Morin v. Trupin, 738 F.Supp. 98 (S.D.N.Y.1990); Morin v. Trupin, 747 F.Supp. 1051 (S.D.N.Y.1990); Morin v. Trupin, 778 F.Supp.......
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Morin v. Trupin, 88 Civ. 5743 (RWS)
...parties in these actions is assumed. See, e.g., Morin v. Trupin, 711 F.Supp. 97 (S.D.N.Y.1989) (filed April 13, 1989); Morin v. Trupin, 728 F.Supp. 952 (S.D.N.Y.1989) (filed December 13, 1989); Morin v. Trupin, 738 F.Supp. 98 (S.D.N.Y. 1990) (filed May 4, 1990); Morin v. Trupin, 747 F.Supp.......
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Morin v. Trupin
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