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Cole Mechanical Corp. v. National Grange Mutual Insurance Co.

September 7, 2007


The opinion of the court was delivered by: Pitman, United States Magistrate Judge


I. Introduction

Non-party Cyan Contracting, Inc. ("Cyan") moves for an Order: (1) permitting Cyan to intervene as a defendant in this litigation pursuant to Fed.R.Civ.P. 24(a); (2) disqualifying Thomas Czik, Esq. and his law firm Cullen and Dykman LLP ("C&D") from representing plaintiff Cole Mechanical Corp. ("Cole"); and (3) granting a protective order preventing any further discovery of Cyan pending resolution of this motion, pursuant to Fed.R.Civ.P. 26(c). Plaintiff Cole cross-moves to compel discovery.

For the reasons set forth below, Cyan's motions to intervene and to disqualify Mr. Czik and C&D are granted. Cyan's motion for a stay of discovery is granted for a period of thirty (30) days. Cole's cross motion to compel discovery is denied.

II. Facts

Plaintiff Cole commenced this action against defendant National Grange Mutual Insurance Company ("National Grange") to recover payment for services it alleges it performed pursuant to a written contract with Cyan. According to Cole's complaint, Cyan contracted with the Dormitory Authority of the State of New York ("DASNY") to perform construction work for two public improvement projects in New York County -- the Forensic Biology Lab Project and the Bellevue Hospital Project (Complaint ("Compl.") ¶ 8, 18). As required by its contract with DASNY, Cyan secured a payment bond from National Grange by which National Grange agreed to pay for any labor and/or materials provided in connection with the projects for which Cyan failed to pay (Compl. ¶¶ 9-10, 19-20). Cole further alleges that it sub-contracted with Cyan to perform certain mechanical work for both projects, it performed its obligations under the sub-contract with Cyan, and Cyan failed to pay it for its work (Compl. ¶¶ 11-13, 21-23). Cole claims that after Cyan failed to make payment, Cole demanded on payment from National Grange pursuant to the payment bond, but that National Grange has also failed to pay Cole (Compl. ¶¶ 14-15, 24-25).

The motion to disqualify Mr. Czik and C&D arises out of the fact that both had previously represented Cyan. On an unspecified date prior to November 2005, Mr. Czik was introduced to Cyan's principal -- Mr. Leonard O'Connor -- by Cole's principal (Declaration of Thomas D. Czik in Opposition to Motion to Disqualify and in Support of Motion to Compel, dated Dec. 8, 2006 ("Czik Decl."), ¶ 5). As a result of that introduction, Cyan retained Mr. Czik and C&D to represent it in connection with a personal injury claim brought by an individual who claimed he was injured while working on the Bellevue Hospital Project (Czik Decl. ¶ 7). That matter was ultimately settled without contribution from Cyan (Czik Decl. ¶ 8). In addition, on November 11, 2005, Cyan retained C&D to pursue "delay and inefficiency" claim*fn1 against DASNY (Czik Decl. ¶ 9 and Ex. A thereto). The contemplated delay and inefficiency claim was, however, never filed. According to Mr. Czik, Cyan never provided sufficient information to enable Mr. Czik and C&D to commence the action (Czik Decl. ¶ 10). Mr. Czik spent a total of 10.3 hours working on the contemplated delay and inefficiency claim (Czik Decl. ¶ 12 and Ex. B thereto).

In the fall of 2006, Mr Czik, as counsel for Cole, sought both documents and testimony from Cyan. Cyan's current law firm, King & King LLP ("K&K"), produced the documents sought by Cole but advised Mr. Czik that it believed C&D had a conflict of interest and could not represent Cyan if Cole were involved and that Cyan would not produce the witness sought by Cole.*fn2

Because Mr. Czik disagreed that there was a conflict of interest, plaintiff sought an Order from Judge Kaplan compelling the deposition. On November 28, 2006, Judge Kaplan stayed the deposition pending Cyan's filing of a motion for a protective order (Docket Item 19).

III. Analysis

A. Cyan's Motion to Intervene

Rule 24(a) provides:

Upon timely application anyone shall be permitted to intervene in an action . . . (2) when the applicant claims an interest relating to the property or transaction which is the subject of the action and the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant's ability to protect that interest, unless the applicant's interest is adequately represented by the existing parties.

The Court of Appeals for the Second Circuit has held that intervention as a matter of right requires an applicant to satisfy four elements: "(1) file a timely motion; (2) show an interest in the litigation; (3) show that its interest may be impaired by the disposition of the action; and (4) show that its interest is not adequately protected by the parties to the action." In re Holocaust Victim Assets Litig., 225 F.3d 191, 197 (2d Cir. 2000); accord D'Amato v. Deutsche Bank, 236 F.3d 78, 84 (2d Cir. 2001); Arista Records, Inc. v. Dalaba Color Copy Ctr., Inc., 05-CV-3634 (DLI)(MDG), 2007 WL 749737 at *3 (E.D.N.Y. Mar. 7, 2007); Buxbaum v. Deutsche Bank AG, 216 F.R.D. 72, 76 (S.D.N.Y. 2003). "Substantially the same factors [analyzed under Fed.R.Civ.P. 24(a)(2)] are considered in determining whether to grant an application for permissive intervention pursuant to Fed.R.Civ.P. 24(b)(2)." In re Bank of New York Derivative Litig., 320 F.3d 291, 300 n.5 (2d Cir. 2003). While a failure to satisfy any one of these four criteria is sufficient for a court to deny a motion to intervene, In re Bank of New York Derivative Litig., supra, 320 F.3d at 300, "the test is a flexible and discretionary one, and courts generally look at all four factors as a whole rather than focusing narrowly on any one of the criteria." Tachiona ex rel. Tachiona v. Mugabe, 186 F. Supp.2d 383, 394 (S.D.N.Y. 2002), citing United States v. Hooker Chems. & Plastics, 749 F.2d 968, 983 (2d Cir. 1984); accord LaSala v. Needham & Co., 04 Civ. 9237 (SAS), 2006 WL 1206241 at *3 (S.D.N.Y. May 2, 2006); Long Island Trucking, Inc. v. Brooks Pharmacy, 219 F.R.D. 53, 55 (E.D.N.Y. ...

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