Preview
FILED: ERIE COUNTY CLERK 12/08/2023 04:15 PM INDEX NO. 801061/2023
NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 12/08/2023
December 8, 2023
VIA NYSCEF AND EMAIL
Hon. Emilio Colaiacovo
New York State Supreme Court
92 Franklin Street, Part 4
Buffalo, New York 14202
Re: F. James McGuire v. The Mcguire Group, Inc.
Index No. 801061/2023
Dear Judge Colaiacovo:
The position taken by The Mcguire Group, Inc. (“TMG”) in David Fryman’s October 30,
2023 letter to the Court—that Harter Secrest & Emery LLP, counsel for Plaintiff F. James
McGuire, has a conflict of interest and must be disqualified—is unsupported by the facts and
law.
HSE has never represented TMG in any capacity in the past. It also has never represented
Mr. or Mrs. Farbenblum personally. On the other hand, and as the Court is well aware, HSE has
a long-standing attorney-client relationship with Mr. McGuire that spans years and multiple New
York State litigations. More to the point, HSE has been representing Mr. McGuire in this action
since its inception in January 2023. Much has transpired since then.
In February, counsel for TMG and HSE stipulated to extend TMG’s time to respond to
the complaint. TMG did not, at the time, raise any purported conflict of interest. In March, TMG
answered the complaint and did not allege a conflict of interest. In April, TMG amended its
answer without alleging a conflict of interest. In May, TMG sent the Court a case summary in
advance of the June 6, 2023 preliminary conference and then participated in the conference, all
without even hinting at a supposed conflict of interest. Since then, the parties have exchanged
discovery demands and responses. They have searched for, and Mr. McGuire has gone so far as
to produce, responsive documents. And the Court has issued a scheduling order.
For months, TMG proceeded in this litigation, knowing all of the facts it recites in its
letter to the Court, without taking any action on what it characterizes as an unwaivable conflict
of interest. Now, apparently still not convinced there is a basis for the conflict it alleges, it
threatens to add certain skilled nursing facilities as parties to this action, apparently under the
50 FOUNTAIN PLAZA, SUITE 1000 BUFFALO, NY 14202-2293 PHONE: 716.853.1616 FAX: 716.853.1617
rochester, ny • buffalo, ny • albany, ny • corning, ny • new york, ny
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belief that, by so doing, it will finally have a conflict to complain about. But the “conflict”—
whether the one being alleged by TMG or the one TMG would like leave to try to create—is
nonesuch.
In its October letter, TMG points to the fact that HSE has in the past represented skilled
nursing facilities, including those served by TMG, in challenges to state Medicaid
reimbursements. HSE has also, for years, represented Mr. McGuire individually. Neither fact has
any bearing on Mr. McGuire’s suit to recover the money TMG owes him.
Six months after this action was filed, an entity named Living Legends Health initiated
contact with, and engaged, HSE to represent it in a lawsuit challenging the adequacy of Medicaid
rates (the “Medicaid Suit”). Living Legends, through its representative Edward Farbenblum,
signed a contract to engage HSE as its counsel. During the initial representation discussions with
HSE, Mr. Farbenblum never mentioned concerns about any conflict of interest, even though Mr.
Farbenblum had been aware since January of this litigation and HSE’s representation of Mr.
McGuire.
On the exact same day Mr. Farbenblum signed the Medicaid Suit engagement letter with
HSE, Mr. Farbenblum’s lawyer sent a letter to HSE arguing that, because Mr. Farbenblum had
just engaged HSE in the Medicaid Suit, HSE had an unwaivable conflict of interest in its
representation of Mr. McGuire and must therefore recuse itself from this action. When HSE
offered to withdraw as counsel in the Medicaid Suit, counsel declined to consent to the
withdrawal. (It was unclear which client counsel was representing when he declined HSE’s offer,
but the refusal was clear.) Three months later, and after TMG had already violated this Court’s
scheduling order by refusing to engage in timely document discovery, counsel for TMG filed its
letter seeking disqualification of HSE.
It is clear from the facts and timeline here that the threatened disqualification motion is
gamesmanship, not an effort to protect a client from a conflicted attorney.
First, TMG has no standing to assert a motion to disqualify HSE because it has never had
an attorney-client relationship with HSE. Mr. Fryman does not purport to represent Living
Legends, and Living Legends (HSE’s actual client) has not asked HSE to recuse itself. (Of
course, Living Legends is not a party to this lawsuit, which means any such request would be
nonsensical.)
Second, TMG is not considered a client of HSE simply because HSE represents Living
Legends or nursing facilities serviced by TMG. They are separate legal entities, with TMG
providing services to the skilled nursing facilities and Living Legends managing a group of
skilled nursing facilities. Some of the nursing facilities serviced by TMG and Living Legends
overlap. Some do not. The relevant Facilities are customers of TMG and assets of Living
Legends. Mr. Farbenblum knew about the relationship between TMG and Living Legends when
he signed the engagement letter with HSE, including the portion of that engagement letter which
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explains that HSE’s client was only Living Legends, not any of its officers, directors, employees,
shareholders, or affiliates.
Third, even if TMG and Living Legends are considered the same entity for conflict-of-
interest purposes, the engagement contract required Living Legends to waive any conflict of
interest HSE may have with its other healthcare clients and consent to HSE’s withdrawal from
representation of Living Legends if a conflict does present. This is especially relevant because
only a client or former client has standing to assert a conflict of interest; and the only client has
knowingly waived its ability to do so.
Fourth (and again, only if TMG is considered a “client” of HSE because of its
relationship with Living Legends), a conflict of interest exists only if HSE’s representation of
Living Legends in the Medicaid Suit and Mr. McGuire in this action “will adversely affect either
the judgment or the loyalty of a lawyer to a client.” N.Y. Rules of Prof. Conduct 1.7. If this were
really a legitimate concern, Living Legends would have consented to HSE’s withdrawal from
representing it in the Medicaid Suit. But it is not a real concern because the subject matter,
relevant issues, and relevant documents in the respective litigations have nothing to do with one
another, a fact of which Messrs. Farbenblum and Fryman are well aware. The Medicaid Suit
involves a challenge to the adequacy of Medicaid reimbursement for skilled nursing facilities,
and this litigation involves TMG’s breach of an employment contract with Jim McGuire.
In its letter, TMG appears to argue that a conflict may occur in the future if (1) TMG
itself chooses to bring the Facilities as parties in this action; (2) the Facilities have relevant
documents; or (3) HSE, in the future, asks to depose anyone from the Facilities. Obviously, none
of these are present concerns; they’re future “what-if” scenarios. They’re also illogical. If TMG
is concerned about a conflict of interest arising if it brings in the Facilities as parties, it can
initiate a new action on behalf of the Facilities (assuming it even has the right to do so) or choose
not to bring them into this action. As for documents, HSE has not sought any from the Facilities
through a third-party subpoena, nor has it noticed any representative depositions of the Facilities.
Instead, HSE has issued document demands to TMG for documents within its own custody and
control, and TMG has responded that it has and will produce such documents, though it has yet
to do so. HSE does not even have any confidential, material information from Living Legends;
none has been requested by HSE or provided by Living Legends in the Medicaid Suit. Again, the
question in this action is straightforward: did Mr. McGuire leave TMG for “good cause”? If so,
he is entitled to a severance payment under his employment agreement with TMG. This has no
overlap whatsoever with the issues in the Medicaid Suit: was Living Legends properly
compensated by the government?
As for TMG’s heavy and misplaced reliance on GSI, that case only applies if there is an
adverse “[e]ffect on the judgment or loyalty of a lawyer to a client,” as described above. Rule
1.7; Hempstead Video, Inc. v. Inc. Vill. of Valley Stream, 409 F.3d 127, 132 (2d Cir. 2005)
(internal quotation marks and citations omitted) (“disqualification is only warranted where an
attorney’s conduct tends to taint the underlying trial” even if ABA or state rules have been
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December 8, 2023
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violated). That is not the case here. In fact, in a post-GSI decision, the Second Circuit held that a
motion to disqualify should be denied when there is no “evidence that Plaintiffs’ litigation team
obtained any material information from the [client’s] litigation team.” See Victorinox AG v. B&F
Sys., 709 F. App’x 44, 53 (2d Cir. 2017).1 As another important distinction, GSI did not involve
the clear waiver language that we have in Living Legends’ engagement contract.
In sum, there are abundant reasons the Court should deny a motion to disqualify if TMG
files one: HSE has never represented TMG; the Medicaid Suit and this action involve non-
overlapping issues; HSE has no confidential and material information from Living Legends or
TMG; and HSE has offered to withdraw from representing Living Legends, which offer has been
refused. Rather than presenting a cognizable ethical question for the Court, TMG’s alleged
conflict and threatened motion are nothing more than litigation gamesmanship, designed to
achieve a tactical advantage to which it is not entitled. In the event TMG files a motion to
disqualify, HSE and Mr. McGuire reserve all rights to seek attorneys’ fees and costs.
We look forward to speaking with the Court further on this matter at our December 11,
2023 conference.
Very truly yours,
Harter Secrest & Emery LLP
John G. Horn
DIRECT DIAL: 716.844.3728
EMAIL: JHORN@HSELAW.COM
1
Counsel is not aware of any New York State Court using GSI to disqualify an attorney based on a conflict of
interest.
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Preview
FILED: ERIE COUNTY CLERK 12/08/2023 04:15 PM INDEX NO. 801061/2023 NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 12/08/2023 December 8, 2023 VIA NYSCEF AND EMAIL Hon. Emilio Colaiacovo New York State Supreme Court 92 Franklin Street, Part 4 Buffalo, New York 14202 Re: F. James McGuire v. The Mcguire Group, Inc. Index No. 801061/2023 Dear Judge Colaiacovo: The position taken by The Mcguire Group, Inc. (“TMG”) in David Fryman’s October 30, 2023 letter to the Court—that Harter Secrest & Emery LLP, counsel for Plaintiff F. James McGuire, has a conflict of interest and must be disqualified—is unsupported by the facts and law. HSE has never represented TMG in any capacity in the past. It also has never represented Mr. or Mrs. Farbenblum personally. On the other hand, and as the Court is well aware, HSE has a long-standing attorney-client relationship with Mr. McGuire that spans years and multiple New York State litigations. More to the point, HSE has been representing Mr. McGuire in this action since its inception in January 2023. Much has transpired since then. In February, counsel for TMG and HSE stipulated to extend TMG’s time to respond to the complaint. TMG did not, at the time, raise any purported conflict of interest. In March, TMG answered the complaint and did not allege a conflict of interest. In April, TMG amended its answer without alleging a conflict of interest. In May, TMG sent the Court a case summary in advance of the June 6, 2023 preliminary conference and then participated in the conference, all without even hinting at a supposed conflict of interest. Since then, the parties have exchanged discovery demands and responses. They have searched for, and Mr. McGuire has gone so far as to produce, responsive documents. And the Court has issued a scheduling order. For months, TMG proceeded in this litigation, knowing all of the facts it recites in its letter to the Court, without taking any action on what it characterizes as an unwaivable conflict of interest. Now, apparently still not convinced there is a basis for the conflict it alleges, it threatens to add certain skilled nursing facilities as parties to this action, apparently under the 50 FOUNTAIN PLAZA, SUITE 1000 BUFFALO, NY 14202-2293 PHONE: 716.853.1616 FAX: 716.853.1617 rochester, ny • buffalo, ny • albany, ny • corning, ny • new york, ny 1 of 4 FILED: ERIE COUNTY CLERK 12/08/2023 04:15 PM INDEX NO. 801061/2023 NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 12/08/2023 December 8, 2023 Page 2 belief that, by so doing, it will finally have a conflict to complain about. But the “conflict”— whether the one being alleged by TMG or the one TMG would like leave to try to create—is nonesuch. In its October letter, TMG points to the fact that HSE has in the past represented skilled nursing facilities, including those served by TMG, in challenges to state Medicaid reimbursements. HSE has also, for years, represented Mr. McGuire individually. Neither fact has any bearing on Mr. McGuire’s suit to recover the money TMG owes him. Six months after this action was filed, an entity named Living Legends Health initiated contact with, and engaged, HSE to represent it in a lawsuit challenging the adequacy of Medicaid rates (the “Medicaid Suit”). Living Legends, through its representative Edward Farbenblum, signed a contract to engage HSE as its counsel. During the initial representation discussions with HSE, Mr. Farbenblum never mentioned concerns about any conflict of interest, even though Mr. Farbenblum had been aware since January of this litigation and HSE’s representation of Mr. McGuire. On the exact same day Mr. Farbenblum signed the Medicaid Suit engagement letter with HSE, Mr. Farbenblum’s lawyer sent a letter to HSE arguing that, because Mr. Farbenblum had just engaged HSE in the Medicaid Suit, HSE had an unwaivable conflict of interest in its representation of Mr. McGuire and must therefore recuse itself from this action. When HSE offered to withdraw as counsel in the Medicaid Suit, counsel declined to consent to the withdrawal. (It was unclear which client counsel was representing when he declined HSE’s offer, but the refusal was clear.) Three months later, and after TMG had already violated this Court’s scheduling order by refusing to engage in timely document discovery, counsel for TMG filed its letter seeking disqualification of HSE. It is clear from the facts and timeline here that the threatened disqualification motion is gamesmanship, not an effort to protect a client from a conflicted attorney. First, TMG has no standing to assert a motion to disqualify HSE because it has never had an attorney-client relationship with HSE. Mr. Fryman does not purport to represent Living Legends, and Living Legends (HSE’s actual client) has not asked HSE to recuse itself. (Of course, Living Legends is not a party to this lawsuit, which means any such request would be nonsensical.) Second, TMG is not considered a client of HSE simply because HSE represents Living Legends or nursing facilities serviced by TMG. They are separate legal entities, with TMG providing services to the skilled nursing facilities and Living Legends managing a group of skilled nursing facilities. Some of the nursing facilities serviced by TMG and Living Legends overlap. Some do not. The relevant Facilities are customers of TMG and assets of Living Legends. Mr. Farbenblum knew about the relationship between TMG and Living Legends when he signed the engagement letter with HSE, including the portion of that engagement letter which 2 of 4 FILED: ERIE COUNTY CLERK 12/08/2023 04:15 PM INDEX NO. 801061/2023 NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 12/08/2023 December 8, 2023 Page 3 explains that HSE’s client was only Living Legends, not any of its officers, directors, employees, shareholders, or affiliates. Third, even if TMG and Living Legends are considered the same entity for conflict-of- interest purposes, the engagement contract required Living Legends to waive any conflict of interest HSE may have with its other healthcare clients and consent to HSE’s withdrawal from representation of Living Legends if a conflict does present. This is especially relevant because only a client or former client has standing to assert a conflict of interest; and the only client has knowingly waived its ability to do so. Fourth (and again, only if TMG is considered a “client” of HSE because of its relationship with Living Legends), a conflict of interest exists only if HSE’s representation of Living Legends in the Medicaid Suit and Mr. McGuire in this action “will adversely affect either the judgment or the loyalty of a lawyer to a client.” N.Y. Rules of Prof. Conduct 1.7. If this were really a legitimate concern, Living Legends would have consented to HSE’s withdrawal from representing it in the Medicaid Suit. But it is not a real concern because the subject matter, relevant issues, and relevant documents in the respective litigations have nothing to do with one another, a fact of which Messrs. Farbenblum and Fryman are well aware. The Medicaid Suit involves a challenge to the adequacy of Medicaid reimbursement for skilled nursing facilities, and this litigation involves TMG’s breach of an employment contract with Jim McGuire. In its letter, TMG appears to argue that a conflict may occur in the future if (1) TMG itself chooses to bring the Facilities as parties in this action; (2) the Facilities have relevant documents; or (3) HSE, in the future, asks to depose anyone from the Facilities. Obviously, none of these are present concerns; they’re future “what-if” scenarios. They’re also illogical. If TMG is concerned about a conflict of interest arising if it brings in the Facilities as parties, it can initiate a new action on behalf of the Facilities (assuming it even has the right to do so) or choose not to bring them into this action. As for documents, HSE has not sought any from the Facilities through a third-party subpoena, nor has it noticed any representative depositions of the Facilities. Instead, HSE has issued document demands to TMG for documents within its own custody and control, and TMG has responded that it has and will produce such documents, though it has yet to do so. HSE does not even have any confidential, material information from Living Legends; none has been requested by HSE or provided by Living Legends in the Medicaid Suit. Again, the question in this action is straightforward: did Mr. McGuire leave TMG for “good cause”? If so, he is entitled to a severance payment under his employment agreement with TMG. This has no overlap whatsoever with the issues in the Medicaid Suit: was Living Legends properly compensated by the government? As for TMG’s heavy and misplaced reliance on GSI, that case only applies if there is an adverse “[e]ffect on the judgment or loyalty of a lawyer to a client,” as described above. Rule 1.7; Hempstead Video, Inc. v. Inc. Vill. of Valley Stream, 409 F.3d 127, 132 (2d Cir. 2005) (internal quotation marks and citations omitted) (“disqualification is only warranted where an attorney’s conduct tends to taint the underlying trial” even if ABA or state rules have been 3 of 4 FILED: ERIE COUNTY CLERK 12/08/2023 04:15 PM INDEX NO. 801061/2023 NYSCEF DOC. NO. 17 RECEIVED NYSCEF: 12/08/2023 December 8, 2023 Page 4 violated). That is not the case here. In fact, in a post-GSI decision, the Second Circuit held that a motion to disqualify should be denied when there is no “evidence that Plaintiffs’ litigation team obtained any material information from the [client’s] litigation team.” See Victorinox AG v. B&F Sys., 709 F. App’x 44, 53 (2d Cir. 2017).1 As another important distinction, GSI did not involve the clear waiver language that we have in Living Legends’ engagement contract. In sum, there are abundant reasons the Court should deny a motion to disqualify if TMG files one: HSE has never represented TMG; the Medicaid Suit and this action involve non- overlapping issues; HSE has no confidential and material information from Living Legends or TMG; and HSE has offered to withdraw from representing Living Legends, which offer has been refused. Rather than presenting a cognizable ethical question for the Court, TMG’s alleged conflict and threatened motion are nothing more than litigation gamesmanship, designed to achieve a tactical advantage to which it is not entitled. In the event TMG files a motion to disqualify, HSE and Mr. McGuire reserve all rights to seek attorneys’ fees and costs. We look forward to speaking with the Court further on this matter at our December 11, 2023 conference. Very truly yours, Harter Secrest & Emery LLP John G. Horn DIRECT DIAL: 716.844.3728 EMAIL: JHORN@HSELAW.COM 1 Counsel is not aware of any New York State Court using GSI to disqualify an attorney based on a conflict of interest. 4 of 4