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Defazio v. Wallis

August 11, 2006


The opinion of the court was delivered by: Lindsay, Magistrate Judge


Before the court is the defendant Kevin Wallis' motion to disqualify plaintiffs' counsel. By order dated March 13, 2006, Judge Spatt referred the motion to the undersigned to issue an order resolving all questions of law and fact pursuant to Fed. R. Civ. P. 72(a). A hearing was held on May 18, 2006, at the close of which the parties were granted the opportunity to submit post-hearing submissions. The defendant Wallis supplemented his motion by letter dated June 7, 2006, and the plaintiffs' counsel supplemented their opposition to the motion by letter dated June 14, 2006.*fn1 For the reasons stated herein, the defendant's motion is denied.


The plaintiffs commenced this action on December 8, 2005, alleging, among other things, violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961, et seq. On January 6, 2006, Kevin Wallis ("Wallis") moved to disqualify Dinerstein & Lesser, P.C. and Robert J. Dinerstein (collectively "Dinerstein") from representing the plaintiffs in this action.

Wallis contends that Dinerstein had previously represented his company, Regional Medical Transport ("RMT"), in connection with its application to acquire an ambulance license from Admiral Ambulance Services, Inc. Wallis Aff. at ¶ 4. Wallis further contends that as a result of that relationship, Dinerstein obtained confidential information concerning Wallis' background, health, and finances, which is now being used against Wallis in this action. Id. at ¶ 5. Although Dinerstein acknowledges that he did render legal services for RMT, Dinerstein argues that he did not render legal services for Wallis, nor did the services he rendered for RMT entail the disclosure of confidential information. Dinerstein Aff. at ¶¶ 25, 35-38.

It is undisputed that, in 1999, Dinerstein was retained by RMT*fn2 in connection with an administrative proceeding before the Regional Emergency Medical Services Council of the City of New York ("Medical Services Council"). Dinerstein Aff. at ¶ 38.*fn3 The engagement "involved the completion of an application for the approval of the desired transfer of ambulance operating authority" from Admiral Ambulance Services, Inc. to RMT. Id. at ¶¶ 37-38. Although Dinerstein takes issue with Wallis' characterization of the procedure as a "due diligence," the evidence is clear that Dinerstein assisted RMT in completing the application used by the Medical Services Council to evaluate an applicant's fitness and competency before the complete application is submitted to the New York State Department of Health for its final approval. Id. at ¶¶ 37, 38, 49, 50.

Dinerstein's involvement in the procedure, however, remains disputed. According to Wallis, Dinerstein attended meetings, spoke with members of the Medical Services Council, and answered question related to the ability of Wallis and RMT's owners to operate the business. Wallis Aff. at ¶ 5. In his moving papers, Wallis contends that as a result of his involvement in the process, "Dinerstein came to have intimate knowledge of every aspect of [his] business, of [his] background, of [his] health, of [his] finances, and the like." Id. At the hearing, however, Wallis clarified that the "confidential information" imparted to Dinerstein involved only his mental, employment and educational background, which he had misrepresented on the resume submitted as part of the application.*fn4 5/18/06 Tr. at 10-15, 64-65. Wallis stated that he wanted to be forthcoming with the Medical Services Council and that he asked Dinerstein to correct the information in the pending application. Id. at 24, 65.

Wallis also testified that Dinerstein assisted him when a former employee from North Shore Hospital began extorting him. Id. at 23. Wallis stated that the former employee threatened to expose the errors in the resume and that RMT paid him "because [they] didn't want anybody to go before the Regional [Medical] Council and upset [their] application for licensure for the company." Id. at 24. Although the court questioned why Wallis would have paid someone to keep that information quiet if he intended to be forthcoming with the Medical Services Council, Wallis insisted that RMT gave money to Dinerstein to give to a private investigator who would handle the problem. Id. at 22.

Dinerstein has a contrary account of the events. Dinerstein testified that Wallis never apprised him of the "truthful information" before he filed RMT's application. 5/18/06 Tr. at 44. Dinerstein stated all he did, in connection with the application, was attach whatever resume his clients gave him, without questioning its accuracy. Id. at 43, 51. Dinerstein did state, however, that had Wallis told him that his resume was false, he would have corrected the information. Id. at 51-52. He indicated that as an officer of the court, and because of his reputation with the Medical Services Council and the Department of Health, he would have been obliged to correct the official record, but that he did not learn of the inaccuracies until after Regional Health Group filed for bankruptcy. Id. at 52.

Dinerstein further testified that any of the information used in the instant complaint came from a false resume submitted in connection with RMT's later application to transfer ambulance operating authority from National Emergency, Inc., an application submitted without Dinerstein's assistance. 5/18/06 Tr. at 31, 44. In fact, Dinerstein claims that he first became aware that faulty information may have been submitted to the Medical Services Council in connection with the Admiral Ambulance application was when he received copies of the National Emergency application. Id. at 50.

With respect to the extortion issue, Dinerstein testified that Wallis did contact him to discuss a phone call he had received from a man who Wallis had defrauded with mob affiliations. Id. at 46. Dinerstein stated that he put Wallis in touch with a private investigator because it wasn't a legal matter, but that he agreed to bill the investigator's fees through Dinerstein & Lesser. Id. at 46-47.


It is generally accepted that "an attorney may not knowingly reveal a confidence of his client or use a confidence of his client to the disadvantage of the client." Evans v. Artek Sys. Corp., 715 F.2d 788, 791 (2d Cir. 1983)(citing Canon 4-101(B) and DR 4-101(B)). It is equally well-settled that a client has a right to freely choose his counsel. See Hempstead Video, Inc. v. Inc. Vill. of Valley Stream, 409 F.3d 127, 132 (2d Cir. 2005). To balance these principles, the courts in this circuit have adopted a three-prong test to resolve disqualification motions. An attorney will be disqualified in situations involving successive representation where a moving party can show that (1) he is "a former client of the adverse party's counsel;" (2) "there is a substantial relationship" between the issues in the present lawsuit and the subject matter of the counsel's prior representation of the movant; and (3) "the attorney . . . had access to, or was likely to have access to, relevant privileged information in the course of his representation of the client." Id. at 133. ...

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