discovery demands. On March 9, 1993, Chief Magistrate Judge A. Simon Chrein, to whom all discovery disputes had been referred, stayed all discovery until this court decided whether to disqualify Haight Gardner or to lift the stay.
Plaza contends that Haight Gardner should be disqualified because (1) Haight Gardner represented Plaza and Lagoven concurrently, (2) the issues involved here bear a substantial relationship to the subject matter of Haight Gardner's prior representation of Plaza, and (3) Haight Gardner's current representation of Lagoven creates an appearance of impropriety.
A.Canon 5 and concurrent representation
Plaza contends that, at the time Haight Gardner began to represent Lagoven in this matter, Plaza was an existing client of Haight Gardner.
Canon 5 of the American Bar Association Code of Professional Responsibility (the Code) provides that "[a] lawyer should exercise independent judgment on behalf of a client" and generally forbids an attorney from representing a person with interests different from or adverse to an existing client. Hartford Accident and Indemnity Co. v. RJR Nabisco, Inc., 721 F. Supp. 534, 538 (S.D.N.Y. 1989).
The papers do not support Plaza's contention. Haight Gardner represented Plaza on four distinct matters between 1989 and early 1991: (i) a claim for oil spill liability, (ii) legal advice regarding the in rem rights against a vessel, (iii) the cancellation of a supply contract, and (iv) an effort to collect payment on unpaid invoices for the sale of marine fuel oil. The last of these matters was completed by March 30, 1991. On May 1, 1991 Haight Gardner issued an invoice labelled "Final Statement," wording it used in concluding each of the four matters.
Plaza has made no showing that it had entered into a retainer agreement whereby Haight Gardner would provide legal assistance on an as-requested basis or that Plaza had requested or received legal assistance from Haight Gardner after March 30, 1991.
To the contrary, the papers show that Plaza had failed to pay a January 27, 1991 invoice for legal services; that Plaza had retained a different law firm in late 1990 to pursue the matter billed in the January 27, 1991 invoice; and that on August 2, 1991, Plaza had instructed New York attorneys other than Haight Gardner to investigate the collection dispute.
These facts show that Haight Gardner had reasonable grounds upon which to believe Plaza was not an existing client, and that Plaza did not conduct itself in a manner consistent with its purported belief that it was a Haight Gardner client.
In a sworn affidavit, Peter A. Proscia, the President of Plaza, stated that he was "shocked" to receive a letter from Haight Gardner in June 1992 seeking payment of the obligation owed to Lagoven. This is puzzling, since Mr. Proscia engaged in an exchange of letters with Haight Gardner regarding this matter some ten months before. Moreover, Mr. Proscia did not object in August 1991, or at any time during the next ten months, to Haight Gardner's representation of Lagoven. The papers suggest that Mr. Proscia's purported surprise was pretextual and that, by failing to indicate in August 1991 that he thought he was represented by Haight Gardner in such matters, he consented to Haight Gardner's representation of Lagoven.
Plaza contends that, because Haight Gardner sent a letter on March 4, 1992 demanding payment for legal services billed on January 27, 1991, Plaza was an existing client in March 1992. This letter merely suggests that Plaza makes a habit of refusing to honor its obligations.
Plaza next contends that the papers do not dispel the possibility that Haight Gardner represented Lagoven in early 1991, when this purported sale occurred. This is irrelevant. Haight Gardner could have represented Lagoven for a decade. The issue posed by Canon 5 is whether Plaza was an existing client of Haight Gardner at the time Haight Gardner agreed to assist Lagoven in a matter adverse to Plaza.
This court concludes that, at that time, Plaza was not an existing client of Haight Gardner.
B. Canon 4 and the "substantial relationship" test
Canon 4 provides that "[a] lawyer should preserve the confidences and secrets of a client." Ordinarily an attorney may not knowingly reveal a confidence of a former client or use a confidence of his client to the disadvantage of the client. Evans v. Artek Systems Corp., 715 F.2d 788, 791 (2d Cir. 1983).
To ensure faithful adherence to this principle, an attorney may be disqualified from representing a client in a particular case if:
(1) the moving party is a former client of the adverse party's counsel;
(2) there is a substantial relationship between the subject matter of the counsel's prior representation of the moving party and the issues in the present lawsuit; and