has established this first element of the substantial similarity test.
2. Substantial Relation
This Circuit has applied the "substantially related" prong strictly, requiring the moving party to demonstrate that the relationship between the two actions is "patently clear," or that the actions are "identical" or "essentially the same." Government of India v. Cook Indus., Inc., 569 F.2d 737, 740 (2d Cir. 1978) (disqualifying attorney because he had learned during prior representation about plaintiff's lading procedures, which were in question in instant representation). Cf. Emle, 478 F.2d at 571 (disqualifying plaintiffs' attorney who had previously represented defendants because both act ions dealt with nature and scope of Burlington's control of Pantentex).
In the case at hand, Clark argues that SSS&G's representation of him in 1986 and 1988 is substantially related to the case at hand (i) because it goes to Clark's credibility as to Count One, and (ii) because it goes to damages under Count Three. (Pl. Disqualification Mem. at 3-5) Because I have granted defendant's summary judgment motion as to Count Three, I need not address the latter of these arguments.
As to the former, Clark contends that the 1988 refinancing transaction relates "to a key credibility issue in this case" because defendant, in its motion for summary judgment, has argued that Clark resigned in order to take another job in Chicago, and not because his duties and responsibilities at the Bank had diminished. (Pl. Disqualification Mem. at 4) According to Clark, SSS&G should be disqualified because SSS&G "will be called upon to cross examine Mr. Clark about his reasons for hiring Saiber Schlesinger to represent him in the October 1988 refinancing . . . ." (Id. at 5)
However, Clark has failed to show that his reasons for refinancing his Hanover Square cooperative apartment, much less the actual substance of the refinancing, are substantially related to the case at hand. Clark could have refinanced that apartment for a variety reasons unrelated to his intentions regarding his job at the Bank. Therefore, at most, the substance of Clark's 1988 relationship with SSS&G goes to a collateral credibility issue; certainly, the relationship between the substance of the 1988 attorney-client relationship and the present action is not "patently clear," nor are the two actions "identical" or "essentially the same." Government of India, 569 F.2d at 740.
3. Access to confidential Information
As to this third prong, the Secorid circuit has looked to whether the disputed attorney's involvement in the prior case "was such that he would have had access to relevant privileged information." Government of India, 569 F.2d at 740. Because Clark has failed to satisfy the substantial relation prong, I address this third prong only briefly.
Although defendant argues that Clark shared no confidences with SSS&G, the attorney client relationship between Seid and Burgwinkle, and Clark, established under the first prong of the disqualification test, requires me to assume that Seid and Burgwinkle had access to confidential information. As the Second circuit has held:
It is well established that a court may not inquire into the nature of the confidences alleged to have been revealed to the tainted attorney. To require proof of access to privileged information would "put the former client to the Hobson's choice of either having to disclose his privileged information in order to disqualify his former attorney or having to refrain from the disqualification motion altogether."
Cheng, 631 F.2d at 1056 (quoting Government of India, 569 F.2d at 740.
Because Seid and Burgwinkle had access to confidential information, that access is likewise imputed to all members of SSS&G. Disciplinary Rule 5-106(D) of the code of Professional Responsibility provides: "If a lawyer is required to decline employment or to withdraw from employment under a Disciplinary Rule, no partner, or associate, or any other lawyer affiliated with him or his firm, may accept or continue such employment." Accord Rules of Professional Conduct Rule 1.10(b) ("While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited form doing so by Rule. . . 1.9 . . . ."); see also Schloetter v. Railoc of Indiana, Inc., 546 F.2d 706, 710 (7th Cir. 1976); Westinghouse Electric Corp. v. Kerr-McGee Corp., 580 F.2d 1311, 1318 (7th Cir. 1978).
However, because Clark has failed to prove that there is a substantial relationship between SSS&G's prior representation of him and the current action, his motion to disqualify SSS&G on the basis of that alleged similarity is denied.
B. Simultaneous Representation
Ethical Consideration 5-1 of the Code of Professional Responsibility requires that, "The professional judgment of a lawyer should be exercised . . . solely for the benefit of his client and free from compromising influences and loyalties." A corollary of this prescription is Ethical Consideration 5-14's proscription of a lawyer's "acceptance or continuation of employment that will adversely affect his judgment on behalf of or dilute his loyalty to a client." In Cinema 5, Ltd. v. Cinerama, Inc., 528 F.2d 1384 (2d Cir. 1976), the Second Circuit held that, pursuant to these Ethical Considerations, it is prima facie improper for a lawyer to undertake employment against an existing client. In order to rebut that prima facie impropriety, the lawyer whose disqualification is sought must show, "at the very least, that there will be no actual or apparent conflict in loyalties or diminution in the vigor of his representation." Id. at 1387 (emphasis in original).
Clark argues that Canon 5 and Cinema 5, Ltd. require SSS&G's disqualification because SSS&G still represented him with respect to the 1991 closing on his purchase of the Central Park West condominium at the time it began representing defendant in the case at hand. The closing on Clark's Central Park West condominium took place on March 4, 1991, and Clark received his closing book and paid SSS&G in April 1991. (Clark Aff. P 4) Clark avers that he last spoke with SSS&G in April or May of 1991. (Id.)
However, Clark argues that SSS&G continued to represent him past that time. He asserts that he "spoke with Saiber, Schlesinger in April or May, 1991 about a dispute with the lending bank [East River Savings Bank] over ongoing escrow payments and was advised not to pay the claimed escrow charge." (Id.) Moreover, he claims to have told "Saiber Schlesinger that [he] would talk to the bank and get back to [SSS&G] if [he] was unable to resolve the issue." Allegedly, that issue -- the dispute with East River Savings Bank -- still has not been resolved. (Clark Rep. Aff. PP 2-3)
By contrast, defendant unequivocally denies that it continued to represent Clark past April or May, 1991. Alice M. Stinebaugh, Esq., under Seid's supervision, handled the 1991 closing on the Central Park West condominium for Clark. She claims that, in late March, 1991, Clark discussed with her "an issue concerning a security deposit he had in escrow with the landlord when he was a tenant prior to conversion." (Stinebaugh Aff. P 5) Stinebaugh further asserts that:
In late April 1991, Clark called me and questioned the amount of disbursements on SSS&G's bill for the closing. . . . At that time, he told me that he would resolve the security deposit [escrow] issue by himself. He further indicated that he certainly was not going to pay any more for the closing. At that time, I fully understood our representation to be concluded and, pursuant to Clark's instructions, neither I nor anyone else at SSS&G had any conversations or performed any further services concerning the escrow issue or any other matters on his behalf.
(Stinebaugh Aff. P 5) Moreover, SSS&G claims that defendant did not contact it about the case at hand until mid-June of 1991, almost two months after defendant alleges SSS&G completed its representation of Clark.
As is evident from the foregoing, the affidavits of the parties regarding SSS&G's representation of Clark on the 1991 closing are irreconcilable, and the supporting documents neither prove nor disprove definitively plaintiff's or defendant's allegations. Therefore, a hearing is necessary in order to determine whether SSS&G still represented Clark at the time it began representing defendant in this case. Accordingly, decision on this portion of Clark's motion to disqualify SSS&G will await the outcome of such a hearing.
Defendant moves for sanctions pursuant to Rule 11, Fed. R. Civ. P., and 28 U.S.C. § 1927, claiming that plaintiffs' disqualification motion is frivolous. Because I am withholding judgment on that portion of Clark's disqualification motion relating to SSS&G's allegedly contemporaneous representation of Clark and the Bank, efficiency counsels that I also withhold judgment on defendant's sanctions motions until I have decided Clark's disqualification motion in its entirety.
* * * * *
For the above reasons, defendant's motion for summary judgment as to Count One is denied, as is defendant's motion to dismiss Clark's and Vincent's claims pursuant to Fed. R. Civ. P. 37; however, defendant's motion for summary judgment as to Counts Two, Three, and Four is granted. Plaintiffs' cross-motions are denied in their entirety, except as to that portion of Clark's disqualification motion that relates to SSS&G's 1991 representation of him, on which a hearing is to be held. Lastly, I will withhold judgment on defendant's motion for sanctions until I have decided both portions of Clark's disqualification motion.
Michael B. Mukasey,
U.S. District Judge
Dated: New York, New York
August 25, 1992