NYK Line (North America) Inc. v. Mitsubishi Bank, Ltd.

• Citation: 567 N.Y.S.2d 409,171 A.D.2d 486
• Parties: NYK LINE (NORTH AMERICA) INC., Plaintiff-Respondent, v. The MITSUBISHI BANK, LTD., Defendant. American Motorists Insurance Company, Defendant-Intervenor-Appellant.
• Decision Date: 14 March 1991
• Court: New York Supreme Court Appellate Division

Page 409

567 N.Y.S.2d 409

171 A.D.2d 486

NYK LINE (NORTH AMERICA) INC., Plaintiff-Respondent, v. The MITSUBISHI BANK, LTD., Defendant American Motorists Insurance Company, Defendant-Intervenor-Appellant.

Supreme Court, Appellate Division First Department.

March 14, 1991.

Before MILONAS, J.P., and ELLERIN, ROSS, KASSAL and RUBIN, JJ.

MEMORANDUM DECISION.

Order of the Supreme Court, New York County (William J. Davis, J.), entered on August 24, 1990, which, inter alia, granted the motion by plaintiff NYK Line (North America) Inc. to disqualify the law firm of Christy & Viener from acting as counsel of record for defendant-intervenor American Motorists Insurance Company, is unanimously reversed on the law to the extent appealed from and the motion denied, without costs or disbursements.

Plaintiff NYK Line (North America) Inc., a shipping company, commenced this action in an effort to enjoin payment by defendant The Mitsubishi Bank, Ltd. on its letter of credit in favor of defendant-intervenor American Motorists Insurance Company (Amico). Amico's right to draw on this instrument, to the extent that it exists at all, derives from its business dealings with NYK. Indeed, the underlying dispute herein is between NYK and Amico, and The Mitsubishi Bank is merely an incidental party. In that regard, it is plaintiff's contention that no valid obligation arose in connection with the letter of credit, and, therefore, Amico's attempt to obtain funds from the Bank is fraudulent. Amico, however, insists that it is entitled to draw on the letter of credit to collect attorneys' fees incurred on behalf of NYK in an unsuccessful prior related litigation against the United States Customs Service. Amico, which underwrites the surety bonds required by the Customs Service for shipping firms such as NYK, had instituted the federal action in apparent response to pressure by the Customs Service against NYK for its alleged violations of Customs' regulations and the attendant peril to Amico's license for its purported delinquency in paying outstanding claims. NYK was not a party to the federal lawsuit nor did it participate in any way in that proceeding.

The attorneys of record for Amico in the Court of International Trade were Russotti & Barrison, with Christy & Viener on the brief. On appeal to the Circuit Court, both firms were listed as being of record (American Motorists Insurance Company v. Villanueva, 706 F.Supp. 923, affd., Fed.Cir., 880 F.2d 409). Accordingly, plaintiff moved to disqualify Christy & Viener from representing Amico in the instant state litigation, arguing that the firm would be a crucial witness concerning Amico's claim that the federal action was brought for the benefit of NYK and that, in addition, since Christy & Viener asserts that it acted on behalf of NYK in the Customs proceeding, it is precluded from representing Amico against NYK in the present matter. The Supreme Court, in granting plaintiff's motion for disqualification, determined that "a substantial relationship does exist between the issues of this litigation and the subject of the prior litigation for, at the very least, the office records of C & V for which the law firm must vouch for, would be introduced into evidence in this litigation.... It is obvious that the law firm of C & V 'ought to be called as a witness,'...."

Amico states that Christy & Viener took no part in initiating the customs proceeding or in the negotiations that preceded the commencement of that lawsuit and simply advised Russotti & Barrison until the former assumed primary responsibility for representing Amico on its appeal. Additionally, defendant-intervenor claims that Christy & Viener never functioned as NYK's attorney notwithstanding that NYK did, in fact,...