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  • Galvan Housing Resources Inc. f/k/a Housing Resources of Columbia County,  Inc., Hudson City Housing Development Fund Company, Inc., Hrcc Homes, Llc, individually and derivatively on behalf of HUDSON KTD LIMITED PARTNERSHIP v. Crosswinds Hudson, Llc, Wnc Housing, L.P., Wnc Institutional Tax Credit Fund X New York Series 7, L.P., Hudson Ktd Limited Partnership Nominal DefendantCommercial - Business Entity document preview
  • Galvan Housing Resources Inc. f/k/a Housing Resources of Columbia County,  Inc., Hudson City Housing Development Fund Company, Inc., Hrcc Homes, Llc, individually and derivatively on behalf of HUDSON KTD LIMITED PARTNERSHIP v. Crosswinds Hudson, Llc, Wnc Housing, L.P., Wnc Institutional Tax Credit Fund X New York Series 7, L.P., Hudson Ktd Limited Partnership Nominal DefendantCommercial - Business Entity document preview
  • Galvan Housing Resources Inc. f/k/a Housing Resources of Columbia County,  Inc., Hudson City Housing Development Fund Company, Inc., Hrcc Homes, Llc, individually and derivatively on behalf of HUDSON KTD LIMITED PARTNERSHIP v. Crosswinds Hudson, Llc, Wnc Housing, L.P., Wnc Institutional Tax Credit Fund X New York Series 7, L.P., Hudson Ktd Limited Partnership Nominal DefendantCommercial - Business Entity document preview
  • Galvan Housing Resources Inc. f/k/a Housing Resources of Columbia County,  Inc., Hudson City Housing Development Fund Company, Inc., Hrcc Homes, Llc, individually and derivatively on behalf of HUDSON KTD LIMITED PARTNERSHIP v. Crosswinds Hudson, Llc, Wnc Housing, L.P., Wnc Institutional Tax Credit Fund X New York Series 7, L.P., Hudson Ktd Limited Partnership Nominal DefendantCommercial - Business Entity document preview
  • Galvan Housing Resources Inc. f/k/a Housing Resources of Columbia County,  Inc., Hudson City Housing Development Fund Company, Inc., Hrcc Homes, Llc, individually and derivatively on behalf of HUDSON KTD LIMITED PARTNERSHIP v. Crosswinds Hudson, Llc, Wnc Housing, L.P., Wnc Institutional Tax Credit Fund X New York Series 7, L.P., Hudson Ktd Limited Partnership Nominal DefendantCommercial - Business Entity document preview
  • Galvan Housing Resources Inc. f/k/a Housing Resources of Columbia County,  Inc., Hudson City Housing Development Fund Company, Inc., Hrcc Homes, Llc, individually and derivatively on behalf of HUDSON KTD LIMITED PARTNERSHIP v. Crosswinds Hudson, Llc, Wnc Housing, L.P., Wnc Institutional Tax Credit Fund X New York Series 7, L.P., Hudson Ktd Limited Partnership Nominal DefendantCommercial - Business Entity document preview
  • Galvan Housing Resources Inc. f/k/a Housing Resources of Columbia County,  Inc., Hudson City Housing Development Fund Company, Inc., Hrcc Homes, Llc, individually and derivatively on behalf of HUDSON KTD LIMITED PARTNERSHIP v. Crosswinds Hudson, Llc, Wnc Housing, L.P., Wnc Institutional Tax Credit Fund X New York Series 7, L.P., Hudson Ktd Limited Partnership Nominal DefendantCommercial - Business Entity document preview
  • Galvan Housing Resources Inc. f/k/a Housing Resources of Columbia County,  Inc., Hudson City Housing Development Fund Company, Inc., Hrcc Homes, Llc, individually and derivatively on behalf of HUDSON KTD LIMITED PARTNERSHIP v. Crosswinds Hudson, Llc, Wnc Housing, L.P., Wnc Institutional Tax Credit Fund X New York Series 7, L.P., Hudson Ktd Limited Partnership Nominal DefendantCommercial - Business Entity document preview
						
                                

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FILED: COLUMBIA COUNTY CLERK 01/05/2024 04:24 PM INDEX NO. E012023021189 NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 01/05/2024 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF COLUMBIA --------------------------------------------------------------------X GALVAN HOUSING RESOURCES INC., f/k/a HOUSING RESOURCES OF COLUMBIA COUNTY, INC., HUDSON CITY HOUSING Index No.: E012023021189 DEVELOPMENT FUND COMPANY, INC., and HRCC HOMES, LLC, individually and derivatively on behalf of HUDSON KTD LIMITED PARTNERSHIP, Plaintiffs, -against- CROSSWINDS HUDSON, LLC, WNC HOUSING, L.P., and WNC INSTITUTIONAL TAX CREDIT FUND X NEW YORK SERIES 7, L.P., Defendants, -and- HUDSON KTD LIMITED PARTNERSHIP, Nominal Defendant. ----------------------------------------------------------------------X DEFENDANTS’ MEMORANDUM OF LAW IN SUPPORT OF THEIR MOTION TO DISQUALIFY COUNSEL MCCABE COLEMAN VENTOSA & PATTERSON PLLC Jennifer J. Clark, Esq. 42 Catherine Street Poughkeepsie, New York 12601 Tel. (845) 379-2222 jennifer@mccabecoleman.com 1 of 14 FILED: COLUMBIA COUNTY CLERK 01/05/2024 04:24 PM INDEX NO. E012023021189 NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 01/05/2024 TABLE OF CONTENTS INTRODUCTION ...................... ....................................................................................................1 BACKGROUND ............................................................................................................................1 ARGUMENT ..................................................................................................................................5 CONCLUSION . ............................................................................................................................10 CERTIFICATION ........................................................................................................................11 i 2 of 14 FILED: COLUMBIA COUNTY CLERK 01/05/2024 04:24 PM INDEX NO. E012023021189 NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 01/05/2024 TABLE OF AUTHORITIES Page(s) Cases Benevida Foods, LLC v Advance Mag. Publ’rs Inc., No. 15CV2729 (LTS) (DF), 2016 WL 3453342 (S.D.N.Y. June 15, 2016) .............................. 8 Freedman v. Rakosi, No. 123CV00472ATSDA, 2023 WL 3687783 (S.D.N.Y. May 27, 2023) ................................. 7 Halberstam v Halberstam, 122 AD3d 679 (2d Dept 2014) ................................................................................................... 6 Lilley v Greene Cent. Sch. Dist., 168 AD3d 1180 (3d Dept 2019) ............................................................................................. 7, 9 Matter of Blackman, 165 AD3d 654 (2d Dept 2018) ................................................................................................... 6 Mayers v Stone Castle Partners, LLC, 126 AD3d 1 (1st Dept 2015)....................................................................................................... 6 McCutchen v 3 Princesses and AP Tr. Dated Feb. 3, 2004, 138 AD3d 1223 (3d Dept 2016) ............................................................................. 7, 9, 10 Miness v Ahuja, 762 F. Supp. 2d 465 (E.D.N.Y. 2010) ........................................................................................ 7 ST v LT, 72 Misc 3d 1218(A) (Sup Ct Nassau County 2021) ................................................................... 7 Zalewski v Shelroc Homes, LLC, 856 F. Supp. 2d 426 (N.D.N.Y. 2012) ........................................................................................ 8 Rules MN ST RPC Rule 1.18 ................................................................................................................... 6 New York Rule of Professional Conduct 1.18................................................................................ 5 Regulations 22 NYCRR § 202.8-b(c), I............................................................................................................ 11 ii 3 of 14 FILED: COLUMBIA COUNTY CLERK 01/05/2024 04:24 PM INDEX NO. E012023021189 NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 01/05/2024 Defendants Crosswinds Hudson, LLC, WNC Housing, L.P., and WNC Institutional Tax Credit Fund X New York Series 7, L.P. (“Defendants”), hereby submit this Memorandum of Law in Support of their Motion to Disqualify Counsel. INTRODUCTION Defendants move to disqualify David A. Davenport, Sean M. Zaroogian, and the BC Davenport, LLC firm (“Conflicted Counsel”) from representing Plaintiffs in this matter. Before this matter proceeded to litigation, Defendant Crosswinds Hudson, LLC (“Crosswinds”) consulted with Conflicted Counsel about representing Crosswinds in this very same dispute against the Plaintiffs. The consultation was no fleeting matter: Crosswinds disclosed to Conflicted Counsel a significant amount of confidential information in writing and spent an hour on a conference call discussing Crosswinds’ impressions of the key documents (including exhibits to the complaint), arguments, and the strategies at issue in this case. Conflicted Counsel declined to accept the engagement and then appeared as counsel of record for Plaintiffs upon the initiation of this lawsuit. Absent disqualification, there is the potential for significant harm to Defendants. BACKGROUND This lawsuit involves a dispute between partners of the Hudson KTD Limited Partnership (the “Partnership”). The Partnership was formed in 2007 to develop and maintain 70 affordable housing units at 15 Rogers Lane, Hudson, New York (the “Property”), pursuant to the federal Low- Income Housing Tax Credit (“LIHTC”) program (Levine Aff. ¶ 2). The lawsuit is Plaintiffs’ latest step in their attempt to achieve a windfall by purchasing the Property from the Partnership for less than fair market value, contrary to the terms of the governing partnership documents. The Partnership is a New York State limited partnership “formed for the purpose of acquiring, constructing, owning, and operating the Property.” (Clark Affirm., Ex. 1 at ¶ 15). 1 4 of 14 FILED: COLUMBIA COUNTY CLERK 01/05/2024 04:24 PM INDEX NO. E012023021189 NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 01/05/2024 Plaintiffs are the Partnership’s general partners and their corporate parent (Clark Affirm., Ex. 1 at ¶¶ 8–11, 16). Defendants are the Plaintiffs’ business partners in the Partnership—specifically, its managing general partner and limited partner (Clark Affirm., Ex. 1 at ¶¶ 12–14). At the outset of the Partnership in 2006, Plaintiffs were affiliated with a small, grassroots nonprofit called Housing Resources of Columbia County, Inc. (“HRCC”) (Levine Aff. ¶ 3). In or around 2015, Plaintiff Galvan Housing Resources Inc. (“Galvan”) acquired HRCC (Levine Aff., ¶ 5). Although Galvan claims nonprofit status, it is also one of the largest property owners in Columbia County and has garnered criticism for its development efforts in the Hudson area, 1 aggregating ownership of interests in LIHTC Partnerships such as the Partnership here. The parties’ rights and obligations with respect to the Partnership are governed by, inter alia, the Amended and Restated Agreement of Limited Partnership of Hudson KTD Limited Partnership (“LPA”) and the Amended and Restated Purchase Option and Right of First Refusal Agreement (“POA”), each dated March 12, 2007 (Levine Aff., Ex. 1). The POA gives Galvan (as assignee of HRCC) an option to purchase the Property for the greater of (a) an amount sufficient (i) to pay to pay all debts and liabilities of the Partnership and (ii) to distribute to the partners cash proceeds equal to any federal, state, and local income and other transfer-related taxes or (b) fair market value as appraised for low-income housing (“Purchase Option”) (Levine Aff., Ex. 1 at ¶¶ 1, 3). Separately, the POA grants Galvan a right of first refusal (“ROFR”) in the event the Partnership receives a bona fide offer to purchase the Property (Levine Aff., Ex. 1 at ¶ 2). The 1 See Roger Gilson, Hudson’s biggest property owner, a nonprofit, plans luxury hotel, TIMES UNION (Feb. 2, 2022), https://www.timesunion.com/hudsonvalley/news/article/Hudson-s-biggest- property-owner-a-non-profit-16819564.php (addressing, among other things, the allegation that “Galvan creates artificial inflation [in housing prices] through [] hoarding,” receives “tax breaks from the city” for affordable housing developments, and then seeks to “benefit off the tourism industry”). 2 5 of 14 FILED: COLUMBIA COUNTY CLERK 01/05/2024 04:24 PM INDEX NO. E012023021189 NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 01/05/2024 ROFR purchase price is an amount sufficient to pay all debts, liabilities, and income and transfer taxes of the Partnership and its partners—i.e., an amount invariably less than fair market value (Levine Aff., Ex. 1 at ¶ 4). The POA allows Galvan to exercise the Purchase Option between January 1, 2022, and December 31, 2024 (Clark Affirm., Ex. 1 at ¶ 73). In early 2022, Galvan reached out to the Partnership’s Limited Partners—WNC Housing L.P. and WNC Institutional Tax Credit Fund X New York Series 7, L.P.—to express interest in exercising its Purchase Option. Although the LPA provides the Managing General Partner— Crosswinds—with complete and exclusive control over the management of the Partnership, and although the POA requires notice to the Partnership and all of its partners to exercise the Purchase Option, Galvan did not initially include Crosswinds in these discussions (Levine Aff., ¶ 8). On March 17, 2022, Galvan notified Defendants that it was exercising its Purchase Option (Levine Aff., Ex. 2). Although the POA calls for the Partnership’s Managing General Partner to select an appraiser to determine the Property’s fair market value, Galvan said that it had already engaged its own appraiser, Novogradac, to determine the Property’s fair market value (Levine Aff., Ex. 2 at ¶ 3(b); Clark Affirm., Ex. 1 at ¶¶ 100–04). On November 28, 2022, Galvan sent the Novogradac appraisal to the Limited Partners—once again failing to inform Crosswinds (Levine Aff., ¶ 11). The Novogradac appraisal amounted to $2,900,000, and thus, below fair market value (Levine Aff., ¶ 11). Through the end of 2022, Galvan continued to communicate with the Limited Partners, without Crosswinds, in an attempt to execute on Galvan’s Purchase Option. Then Galvan changed course and informed the Limited Partners (again without notifying Crosswinds) that Galvan intended to invoke its ROFR under the POA, which Galvan said would allow it to purchase the Property for even less than the Novogradac appraisal (Levine Aff., ¶ 12). When the Limited 3 6 of 14 FILED: COLUMBIA COUNTY CLERK 01/05/2024 04:24 PM INDEX NO. E012023021189 NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 01/05/2024 Partners notified Galvan that the ROFR would only become available in the event of a bona fide purchase offer from a third party, Galvan manufactured a sham offer (see Levine Aff., ¶¶ 12–14). On January 17, 2023—a mere six days later, and without the Partnership ever putting the Property up for sale—Galvan sent the Limited Partners (yet again excluding Crosswinds) a purported Letter of Intent to Purchase the Property from Lantern Organization, Inc. (“Lantern”), an entity closely affiliated with Galvan 2 (Levine Aff. ¶ 13 & Ex. 3). Galvan continued to communicate only with the Limited Partners in an improper attempt to get them to approve a transaction that Crosswinds, the Managing General Partner, was unaware of. (Levine Aff., ¶ 14). On February 7, 2023—when Galvan sent Defendants a formal notice of Galvan’s purported invocation of the ROFR—Crosswinds became aware of Galvan’s efforts (Levine Aff., ¶ 14). Perceiving itself under siege by a well-funded entity with a reputation for litigiousness, Crosswinds sought legal counsel (Levine Aff., ¶ 15). Crosswinds directed its outside transactional counsel— Jeremy Root with Cannon Heyman & Weiss—to interview potential attorneys to advise Crosswinds on its rights under the LPA, the POA, and applicable law (Levine Aff., ¶ 16). On March 3, 2023, Mr. Root and a colleague reached out to David Davenport and Alex Hagstrom of the BC Davenport law firm, explaining they had a matter that might “benefit from some consulting with [Davenport’s] team.” (Levine Aff., Ex. 4). Mr. Davenport responded that same day and invited a follow up email with additional facts (Levine Aff., Ex. 4). Mr. Root followed with a lengthy email explaining the genesis of the dispute, impressions of how the parties 2 The Letter of Intent was signed by Dan Kent, Lantern’s President and CEO—who also happens to be an officer of Galvan. Lantern’s Co-Founder and President, T. Eric Galloway, is also Galvan’s Co-Founder and President. See GALVAN, DAN KENT, https://galvan.org/dan_kent; GALVAN, ERIC GALLOWAY, https://galvan.org/eric_galloway/. 4 7 of 14 FILED: COLUMBIA COUNTY CLERK 01/05/2024 04:24 PM INDEX NO. E012023021189 NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 01/05/2024 might be perceived in litigation, impressions of the Novogradac appraisal, and impressions of possible arguments pursuant to the LPA and POA (Levine Aff., Ex. 4). 3 After reviewing this first set of confidential information in writing, and instead of declining further consultation, Mr. Davenport then convened a call with Crosswinds to discuss the matter in further depth (Levine Aff., Ex. 4 and ¶ 23). On March 10, 2023, Mr. Davenport convened a conference call with Mr. Root and Bruce Levine, a member of Crosswinds (Levine Aff., Ex. 4 and ¶ 23). The call lasted approximately one hour (Levine Aff., Ex. 4 and ¶ 23). During the conference, Mr. Levine and Mr. Root went into additional detail on Crosswinds’ impressions and concerns, including views and impressions of potential litigation, thoughts on the strengths and weaknesses of the parties’ respective positions, and opinions and impressions of the relevant documents and facts (Levine Aff., Ex. 4 and ¶ 23). At the conclusion of the call, Mr. Davenport said that while he was sympathetic to Crosswinds’ situation, he could not take on the matter because it would cause him to take positions contrary to his firm’s arguments in other cases. (Levine Aff., ¶ 25). Seven months later, Mr. Davenport and Mr. Zaroogian appeared as counsel of record for Plaintiffs when they filed their Complaint against Defendants (Clark Affirm., Ex. 1). ARGUMENT An attorney’s duties to a prospective client are codified in New York Rule of Professional Conduct 1.18. See N.Y. Comp. Codes R. & Regs. tit. 22, § 1200.01.18. That Rule states: 3 To avoid disclosing the same confidences that underpin this Motion to Disqualify, Defendants are filing redacted versions of Mr. Levine’s affidavit and Exhibit 4 to that affidavit. Defendants will submit fully unredacted versions of these documents for in camera inspection at the Court’s convenience. 5 8 of 14 FILED: COLUMBIA COUNTY CLERK 01/05/2024 04:24 PM INDEX NO. E012023021189 NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 01/05/2024 (a) Except as provided in Rule 1.18(e), a person who consults with a lawyer about the possibility of forming a client-lawyer relationship with respect to a matter is a prospective client. (b) Even when no client-lawyer relationship ensues, a lawyer who has learned information from a prospective client shall not use or reveal that information, except as Rule 1.9 would permit with respect to information of a former client. (c) A lawyer subject to paragraph (b) shall not represent a client with interests materially adverse to those of a prospective client in the same or a substantially related matter if the lawyer received information from the prospective client that could be significantly harmful to that person in the matter, except as provided in paragraph (d). If a lawyer is disqualified from representation under this paragraph, no lawyer in a firm with which that lawyer is associated may knowingly undertake or continue representation in such a matter, except as provided in paragraph (d). Id. 4 Pursuant to this rule, “where a prospective client consults an attorney who ultimately represents a party adverse to the prospective client in matters that are substantially related to the consultation, the prospective client is entitled to obtain the attorney’s disqualification only if it is shown that the information related in the consultation ‘could be significantly harmful’ to him or her in the same or substantially related matter.” Mayers v Stone Castle Partners, LLC, 126 AD3d 1, 7 (1st Dept 2015). The disqualification of an attorney under Rules of Professional Conduct “is a matter that rests within the sound discretion of the court.” Matter of Blackman, 165 AD3d 654, 655 (2d Dept 2018). In exercising such discretion, “the court must consider the totality of the circumstances and carefully balance the right of a party to be represented by counsel of his or her choosing against the other party’s right to be free from possible prejudice due to the questioned representation.” 4 Paragraph (d) of Rule 1.18 allows a lawyer otherwise disqualified pursuant to paragraph (c) to represent a client only if the attorney obtains informed written consent from the prospective client, among other conditions. Minnesota, where Mr. Davenport is licensed, has enacted a similar version of Rules of Professional Conduct 1.18. See MN ST RPC Rule 1.18. Neither Mr. Davenport nor his firm sought consent from Crosswinds for waiver of the conflict at issue here. (Levine Aff., ¶ 26). 6 9 of 14 FILED: COLUMBIA COUNTY CLERK 01/05/2024 04:24 PM INDEX NO. E012023021189 NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 01/05/2024 Lilley v Greene Cent. Sch. Dist., 168 AD3d 1180, 1183 (3d Dept 2019) (internal citations omitted). Even when a party fails to demonstrate that disqualification is mandated by the Rules of Professional Conduct, “disqualification nonetheless may be warranted depending upon the particular facts and circumstances of a given case.” McCutchen v 3 Princesses and AP Tr. Dated Feb. 3, 2004, 138 AD3d 1223, 1227 (3d Dept 2016). Disqualification may be warranted, for example, “based on a mere appearance of impropriety.” Halberstam v Halberstam, 122 AD3d 679, 680 (2d Dept 2014). Moreover, “[a]ny doubts as to the existence of a conflict of interest must be resolved in favor of disqualification.” McCutchen, 138 AD3d at 1226 (quoting Halberstam, 122 AD3d at 679); see also ST v LT, 72 Misc 3d 1218(A) (Sup Ct Nassau County 2021) (“[A]ny doubts about the existence of a conflict of interest must be resolved in favor of disqualification, and . . . the mere appearance of impropriety is sufficient to warrant disqualification.”). Freedman v. Rakosi, No. 123CV00472ATSDA, 2023 WL 3687783 (SDNY May 27, 2023), is particularly instructive. In Freedman, partners in real estate partnerships asked their outside counsel to assist them in interviewing attorneys to assess the viability of a lawsuit against a third partner and the partnerships’ manager. Id. at *1. The partners’ representative had a 45- minute phone call with potential litigation counsel, during which the representative discussed with the attorney “the structure of the Partnerships; prior litigations filed in the Supreme Court, New York County, involving the Partnerships; the written agreements for the Partnerships; and the written management agreement.” Id. One day later, the representative sent potential litigation counsel a five-paragraph email addressing the agreements and the partners’ impressions of the manager. Id. at *2. Unbeknownst to the representative, the client had already retained separate litigation counsel, ending the representative’s discussions with the potential litigation attorney. Id. 7 10 of 14 FILED: COLUMBIA COUNTY CLERK 01/05/2024 04:24 PM INDEX NO. E012023021189 NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 01/05/2024 When the same attorney and his partner appeared as counsel of record for the defendants in subsequent litigation, the plaintiffs moved to disqualify. Id. Applying Rule 1.18, the trial court held that the attorney’s receipt of confidential information from outside counsel required disqualification. The key question was not whether the information was immediately harmful, opined the court, but whether its disclosure could be significantly harmful to the plaintiffs. Id. at *7 n.13. The disclosure of the clients’ “views and impressions” of the key partnership documents met that standard. “[I]n order to preserve the integrity of the adversary process,” the attorney and others at his firm had to be disqualified. Id. (quoting Zalewski v Shelroc Homes, LLC, 856 F Supp 2d 426, 437 (NDNY 2012)). Other courts have likewise found the disclosure of similar information to constitute good grounds for disqualification. See, e.g., Benevida Foods, LLC v Advance Mag. Publ’rs Inc., No. 15CV2729 (LTS) (DF), 2016 WL 3453342, at *11 (SDNY June 15, 2016) (disqualifying counsel and finding that “views and impressions of [the] litigation,” “thoughts on the . . . strengths and weaknesses of the parties’ respective positions,” and “opinions and impression of even public documents and facts” can constitute “significantly harmful” material) (citing Zalewski, 856 F Supp 2d at 435). As in Freedman, Crosswinds (through designated counsel) disclosed to Conflicted Counsel numerous confidences regarding the structure of the Partnership, the prior relationship between the partners, and counsel’s mental thoughts and impressions regarding interpretation of the LPA and POA (Levine Aff., Ex. 4). But here the consultations went a step further. Unlike in Freedman, where the prospective client did not participate in discussions with the conflicted counsel, Crosswinds’ member Bruce Levine (who will be deposed in this action by Mr. Davenport absent disqualification) disclosed directly to Mr. Davenport his concerns and impressions regarding the relationships between the parties, the interpretation and application of the key partnership 8 11 of 14 FILED: COLUMBIA COUNTY CLERK 01/05/2024 04:24 PM INDEX NO. E012023021189 NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 01/05/2024 documents, and Crosswinds’ likelihood of success in any resulting litigation with Galvan (Levine Aff., ¶ 23). The disclosure of this information about Crosswinds’ perceptions, beliefs, and motivations gives rise to a particular risk of harm in this case given Plaintiffs’ allegations in the Complaint that Crosswinds breached its fiduciary duties to the Co-General Partners and the Partnership by subverting its interests to Crosswinds’ own interests (Clark Affirm., Ex. 1 at ¶¶ 169–74). Conflicted Counsel’s knowledge of Crosswinds “intimate thoughts and actions” poses a risk of, among other things, an “unfair cross-examination” if this matter proceeds to arbitration or litigation. See Miness v Ahuja, 762 F Supp 2d 465, 481 (EDNY 2010) (looking to Rule 1.18 for guidance in disqualifying attorney). As in Freedman, applying Rule 1.18 to the facts of this matter should result in the disqualification of Conflicted Counsel. While the possibility of significant harm to Defendants and the resulting need to disqualify under Rule 1.18 is clear, the Court may—and should—exercise its inherent discretion to disqualify Conflicted Counsel even if not mandated by that rule. To avoid even the appearance of impropriety, any doubt as to the extent of harm Defendants could face “must be resolved in favor of disqualification.” McCutchen, 138 AD3d at 1226. Balancing Defendants’ right to be free from prejudice against Plaintiffs’ right to counsel of their choosing leads to the same result as an analysis under Rule 1.18. See Lilley, 168 AD3d at 1183. In contrast to the significant harm Defendants will face if Conflicted Counsel continues to represent Plaintiffs, the risk of harm to Plaintiffs resulting from the disqualification is low. Plaintiffs are represented by two firms in this case, and the non-conflicted firm—Whiteman, Osterman & Hanna LLP—has sufficient talent and resources to adequately represent Plaintiffs’ interests. Therefore, even in the absence of mandatory disqualification under Rule 1.18, disqualification would be an appropriate exercise of this Court’s 9 12 of 14 FILED: COLUMBIA COUNTY CLERK 01/05/2024 04:24 PM INDEX NO. E012023021189 NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 01/05/2024 discretion in order to “avoid not only the fact, but even the appearance, of [Conflicted Counsel] representing conflicting interests.” McCutchen, 138 AD3d at 1226. CONCLUSION For the reasons discussed above, the Court should grant Defendants’ motion to disqualify counsel. Dated: Poughkeepsie, New York January 5, 2024 Respectfully submitted, MCCABE COLEMAN VENTOSA & PATTERSON PLLC _________________________ Jennifer J. Clark, Esq. Attorney for Defendants 42 Catherine Street Poughkeepsie, New York 12601 Tel. (845) 379-2222 jennifer@mccabecoleman.com BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, PC Steven F. Griffith, Jr., Esq. Laura M. Carlisle, Esq. Riley T. Svikhart, Esq. 201 St. Charles Avenue, Suite 3600 New Orleans, LA 70170 Telephone: (504) 566-5200 sgriffith@bakerdonelson.com lcarlisle@bakerdonelson.com rsvikhart@bakerdonelson.com Matthew S. Mulqueen, Esq. 165 Madison Avenue, Suite 2000 Memphis, TN 38103 Telephone: (901) 577-8234 mmulqueen@bakerdonelson.com Of Counsel 10 13 of 14 FILED: COLUMBIA COUNTY CLERK 01/05/2024 04:24 PM INDEX NO. E012023021189 NYSCEF DOC. NO. 24 RECEIVED NYSCEF: 01/05/2024 CERTIFICATION In accordance with 22 NYCRR § 202.8-b(c), I certify that this document complies with 22 NYCRR § 202.8-b(a), as it contains less than 7,000 words, exclusive of the caption and signature block. Specifically, this document contains 2,972 words, as established using the word count feature available on the word processing software used to prepare it. Jennifer C. Clark 11 14 of 14