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PARAMOUNT COMMUNS., INC. v. DONAGHY

July 15, 1994

PARAMOUNT COMMUNICATIONS, INC. and SIMON & SCHUSTER, INC., Plaintiffs,
v.
PATRICK DONAGHY, Defendant.


SWEET


The opinion of the court was delivered by: ROBERT W. SWEET

Sweet, D.J.

 Plaintiffs Paramount Communications, Inc. ("PCI") and Simon & Schuster, Inc. (together with PCI, "Paramount" or the "Plaintiffs") have moved, pursuant to Canons 5 and 7 of the New York Code of Professional Responsibility (the "Code") for an order disqualifying the law firm of Coffield Ungaretti & Harris ("Coffield") from representing defendant Patrick Donaghy in this action, and denying Coffield's application to appear pro hac vice as co-counsel for Donaghy. For the following reasons, this motion is denied.

 Parties

 PCI is a publicly traded Delaware corporation with its principal place of business in the City and County of New York and is engaged in the communications and entertainment business. Paramount Publishing is an affiliate of PCI, incorporated under the laws of the State of New York, with its principal place of business in the City and County of New York, and is engaged in the business of book publishing.

 Donaghy is a citizen and resident of the State of New Jersey, and was employed by Paramount Publishing beginning August 1, 1981. Coffield Ungaretti & Harris is a law firm with its main office in Chicago, Illinois.

 Facts

 In response to the August Letter, Coffield wrote Paramount Publishing requesting copies of relevant documents so that it could advise its client regarding his Options. Coffield thereafter received certain materials from Paramount, and possibly had additional contacts with Paramount regarding Donaghy's departure.

 According to Paramount, Donaghy had until at least September 30, 1991 to exercise his options. The Plaintiffs claim that Coffield's receipt of the requested documents after the August Letter and before the September 30, 1991 deadline impacts Donaghy's claims of justifiable reliance on the August 1991 letter and his potential modification of contract claims.

 The Plaintiffs conclude from these facts that Coffield must be disqualified from representation of Donaghy in this action because, upon receipt of the materials requested from Paramount, Coffield could have done one of two things. Coffield could have advised Donaghy that he could not rely on the August Letter, in which case Coffield cannot ethically maintain certain of the positions asserted in Donaghy's Answer in this action regarding Donaghy's reliance on the August Letter.

 Alternatively, Coffield could have advised Donaghy that he could rely on the August Letter, which advice could, according to the Plaintiffs, expose Coffield to malpractice liability, which would prevent Coffield from exercising independent judgment in this case. Whichever advice Coffield rendered, the Plaintiffs assert, Coffield attorneys will be called as witnesses by the Plaintiffs, at which time they would necessarily testify to matters substantially likely to be prejudicial to Donaghy.

 The Plaintiffs claim that they notified Donaghy of these potential grounds for disqualification prior to his choosing local counsel in this action, and that this motion has been brought at an early point in these proceedings to minimize any prejudice to Donaghy.

 Prior Proceedings

 The Plaintiffs commenced this declaratory judgment action in November of 1993. Argument was heard on the present motion on May 11, 1994, and on June 23, 1994, Paramount informed the Court by letter that Donaghy is asserting, and not waiving, the attorney client privilege in connection with the advice rendered to him by Coffield, to which letter Coffield responded by letter of June 24, 1994. The motion was considered fully submitted as of June 24, 1994.

 Relevant Code Provisions

 Canon 5 of the Code states: "A lawyer should exercise independent professional judgment on behalf of a client." Disciplinary Rule ("DR") 5-101(A) and (C), promulgated under that Canon, states:

 
DR 5-101 Refusing Employment When the Interests of the Lawyer May Impair Independent Professional Judgment.
 
A. Except with the consent of its client after full disclosure, a lawyer shall not accept employment if the exercise of professional judgment on behalf of the client will be or reasonably may be affected by the lawyer's own financial, business, property, or personal interests.
 
* * *
 
C. Neither a lawyer nor the lawyer's firm shall accept employment in contemplated or pending litigation of the lawyer knows or it is obvious that the lawyer or another lawyer in the lawyer's firm may be called as a witness other than on behalf of the client, and it is ...

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