Preview
INDEX NO. 56683/2012
(FILED:
WESTCHESTER
COUNTY CLERK 0472272013)
NYSCEF DOC. NO. 65 RECEIVED NYSCEF: 04/22/2013
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF WESTCHESTER
X
ME.-RE. HOLDING, LLC, Index No. 56683/2012
Plaintiff,
- against -
JKS NEWBURGH, LLC, and JOHN SCANLAN,
Defendants.
MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’
MOTION TO DISQUALIFY COUNSEL JOSEPH A. STARGIOTTI, ESQ.
FROM FURTHER REPRESENTING THE PLAINTIFF OR ANY OTHER
PARTY IN THIS ACTION PURSUANT TO RULE 3.7(a) OF THE
NEW YORK CODE OF PROFESSIONAL CONDUCT
FELDMAN & ASSOCIATES PLLC
Attorneys for Defendants JES New burgh,
LLC and John Scanlan
33 East 33” Street, Suite 802
New York, New York 10016
Tel: (212) 685-2277
Fax: (212) 725-2798
On the Brief:
Stephanie R. Feldman, Esq.
PRELIMINARY STATEMENT
Defendants JKS Newburgh, LLC (“JKS Newburgh”) and John Scanlan (collectively, “the
Defendants”) by their attorneys Feldman & Associates PLLC, hereby submit this Memorandum
of Law, as well as the accompanying Affirmation of Stephanie R. Feldman, Esq., dated April 17,
2013, (‘Feldman Aff.”), in support of their Motion pursuant to Rule 3.7(a) of the New York
Code of Professional Conduct (22 N.Y.C.R.R. 1200.0) to disqualify attorney Joseph Stargiotti,
Esq., from further representing Plaintiff ME.-R.E. Holding, LLC (“Plaintiff”) in this Action.
This Action commenced through the filing by Plaintiff of a Motion for Summary
Judgment in Lieu of Compalaint. However, the Court denied such Motion in its decision of
February 21, 2013, finding that the evidence submitted “raise triable issues of fact as to the
circumstances surrounding the execution of the amended note and the guaranty, including
whether the amended note and guaranty are supported by consideration, and whether the
defendants signed them under economic duress. . . . [and] . . . concerning the enforceability of
the amended note and guaranty signed by JKS Newburgh, LLC and John Scanlan on July 11,
2011.” (See Feldman Aff., Ex. D.)
The documentary evidence presented to the Court in this matter comprises of numerous
communications initiated by Mr. Stargiotti. In addition, Mr. Stargiotti previously submitted to
the Court testimony of his own accord by his Affirmation of November 2, 2012, wherein he
testified as to the facts and circumstances of this Action—the very facts and circumstances this
Court has ruled constitute material issues in this case. Mr. Stargiotti has identified himself as a
material fact witness in this Action whose deposition and ultimate testimony at trial will be
required.
Mr. Stargiotti must therefore be disqualified from representing Plaintiff—or any other
MEMORANDUM OF LAw -1-
party to this Action—pursuant to the advocate-witness rule, codified under Rule 3.7(a) (22
NY.CR. § 1200.00).
PROCEDURAL HISTORY
This Action was commenced on April 12, 2012, upon the Plaintiff's filing of a Motion
for Summary Judgment in Lieu of Complaint pursuant to CPLR § 3213. Attorney Mr. Stargiotti
and his law firm, Stargiotti & Beatley, P.C., filed such Motion on behalf of Plaintiff and have
appeared as counsel of record since the inception of this Action. A full procedural history is set
forth in the accompanying Affirmation of Stephanie R. Feldman, Esq., dated April 18, 2013
(“Feldman Aff.”)
Rather than outline for the Court the extensive facts and circumstances which underlie
the transactions at the heart of this Action—i.e., the Amended Promissory Note and Guaranty—
the Court is respectfully referred to the Affidavit of John Scanlan, sworn to on October 9, 2012.
(Feldman Aff., Ex. A.)
LEGAL ARGUMENT
L PLAINTIFF’S COUNSEL JOSEPH STARGIOTTI MUST BE
DISQUALIFIED FROM REPRESENTING ANY PARTY IN
THIS ACTION AS HE IS AN UNEQUIVOCAL WITNESS AS
TO MATERIAL ISSUES OF FACT HEREIN.
Under Rule 3.7(a) of the New York Code of Professional Conduct, commonly referred to
as the “advocate-witness rule,” unless the testimony meets one of the criteria in Rule 3.7(a), “a
lawyer is ethically required to withdraw from acting as an advocate if the lawyer is likely to be a
necessary witness on a significant issue of fact.” 4A N.Y. Prac., Com. Litig. § 64.13 (3d ed.
2012). More specifically:
Rule 3.7: Lawyer as witness.
MEMORANDUM OF LAW -2-
(a) A lawyer shall not act as advocate before a tribunal in a matter
in which the lawyer is likely to be a witness on a significant issue
of fact unless:
(1) the testimony relates solely to an uncontested issue;
(2) the testimony relates solely to the nature and value of legal
services rendered in the matter;
(3) disqualification of the lawyer would work substantial hardship
on the client;
(4) the testimony will relate solely to a matter of formality, and
there is no reason to believe that substantial evidence will be
offered in opposition to the testimony; or
(5) the testimony is authorized by the tribunal.
22.N.Y.C.R.R. 1200.0 (McKinney 2013).
While it is acknowledge that “[a] party’s entitlement to be represented in ongoing
litigation by counsel of its choice is a valued right,” (Hudson Val. Mar., Inc. v. Town of
Cortlandt, 54 A.D.3d 999, 1000, 865 N.Y.S.2d 122; see also S & S Hotel Ventures Lid.
Partnership v. 777 S.H. Corp., 69 N.Y.2d 437, 440, 515 N.Y.S.2d 735, 508 N.E.2d 647 (1987);
Wolfson v. Posner, 57 A.D.3d 979, 980, 869 N.Y.S.2d 804 (2d Dep’t 2008)), as recently stated
by the Appellate Division, Second Department, “pursuant to rule 3.7 of the Rules of Professional
Conduct (22 NYCRR 1200.0), unless certain exceptions apply, ‘[a] lawyer shall not act as
advocate before a tribunal in a matter in which the lawyer is likely to be a witness on a
significant issue of fact.’ ” Friia v. Palumbo, 89 A.D.3d 896, 896, 932 N.Y.S.2d 542, 543 (2d
Dep’t 2011) (quoting Rules of Professional Conduct [22 NYCRR 1200.0] rule 3.7) (emphasis
added).
Moreover, in determining whether an attorney’s testimony is necessary, so as to
disqualify attorney under advocate-witness rule, such attomey’s testimony does not need to be
“strictly necessary” but that it is “likely” that it “‘may be relevant and even highly useful, but
MEMORANDUM OF LAw -3-
still not strictly necessary. A finding of necessity takes into account such factors as the
significance of the matters, weight of the testimony, and availability of other evidence. 2»
Sokolow, Dunaud, Mercadier & Carreras LLP v Lacher, 747 N.Y.S.2d 441, 449, 299 A.D.2d 64
(1st Dep’t 2002) (quoting S&S Hotel Ventures, supra, 69 N.Y.2d at 446).
The purpose of the advocate-witness rule “is to avoid the unseemly situation where an
advocate must argue his own credibility before the trier of fact.” See North Shore Neurosurgical
Group, P.C. v. Leivy, 72 A.D.2d 598, 599, 421 N.Y.S.2d 100, 102 (2d Dep’t 1979). Therefore, It
is well-settled that where a question arises as to whether one or more members of a law firm that
is representing a party will be called to testify, the best interests of the client and fairness to all
parties concerned require that all doubts be resolved in favor of the lawyer testifying and against
his continuing as an advocate. Id.
In cases in which the attorney’s knowledge is highly relevant and “peculiarly in his
possession,” it is clear that such attorney must be disqualified. See Wickes v. Ward, 706 F.Supp.
290, 292-93 (S.D.N.Y.1989) (attorney who participated in sidebar conference at issue in current
action between litigants must be disqualified). For example, in Paretti v. Cavalier Label Co.,
722 F.Supp. 985, 986 (S.D.N.Y.1989), the attorney at issue negotiated, executed and
administered the contract at issue in the dispute between the parties. Jd. The District Court held
that such factors made the lawyer “the key witness at trial,” and was therefore disqualified
pursuant to Rule 3.7(a). See also, Kubin v Miller, 801 F. Supp. 1101, 1113 (S.D.N.Y. 1992)
(disqualifying attorney where clear that attorney ought to be called as witness on behalf of
defendants; attorney had “unique knowledge about the parties’ decision to create a shareholders
agreement and [the] alleged repudiation of that agreement,” and had “personally drafted written
agreements among the parties concerning ownership of the various corporations and the
MEMORANDUM OF LAW -4-
proposed mergers which are now contested in this action”)
As also stated by the Second Department in Falk v. Gallo, 73 A.D.3d 685, 686, 901
N.Y.S8.2d 99 (2d Dep’t 2010):
The advocate-witness rules contained in the Code of Professional
Responsibility, which have been superseded by the Rules of
Professional Conduct, provide guidance, but are not binding
authority, for the courts in determining whether a party’s attorney
should be disqualified during litigation (see § & S Hotel Ventures
Lid. Partnership v. 777 S.H. Corp., 69 N.Y.2d 437, 515 N.Y.S.2d
735, 508 N.E.2d 647). Rule 3.7 of the Rules of Professional
Conduct provides that unless certain exceptions apply, “[a] lawyer
shall not act as an advocate before a tribunal in a matter in which
the lawyer is likely to be a witness on a significant issue of fact”
(Rules of Professional Conduct [22 NYCRR 1200.0] rule 3.7).
Here, since the plaintiffs’ attorney was the only person, other than
the parties, who had knowledge of any discussions regarding the
terms of the oral agreement underlying this litigation, he is “likely
to be a witness on a significant issue of fact” (Rules of Professional
Conduct [22 NYCRR 1200.0] rule 3.7; see Matter of Stober v.
Gaba & Stober, P.C., 259 AD.2d 554, 686 N.Y.S.2d 440).
Accordingly, the Supreme Court properly granted the defendants’
motion to disqualify the plaintiffs' attorney (see Matter of Stober v.
Gaba & Stober, 259 AD.2d 554, 686 N.Y.S.2d 440; Rules of
Professional Conduct [22 NYCRR 1200.0] rule 3.7).
Id. (emphasis added); see also see also § & S Hotel Ventures Ltd. Partnership v. 777 S.H. Corp.,
69 N.Y.2d at 445-446, 515 N.Y.S.2d 735, 508 N.E.2d 647).
The First Department case of Warshaw Burstein Cohen Schlesinger & Kuh, LLP v.
Longmire, 82 A.D.3d 586, 920 N.Y.S.2d 23, (1st Dep’t 2011), is particularly applicable: There,
the plaintiff demonstrated that the defendant’s counsel “played a vital role in the final settlement
negotiations flowing from a settlement offer that plaintiff had allegedly previously procured and
that defendant client later accepted, that the negotiations were an important part of the
underlying dispute.” Id, 82 AD.3d at 586. Therefore, the Plaintiff “demonstrated_that
defendant’s counsel was likely to be a key witness at trial, and that his proposed testimony would
be adverse to his client’s interests,” and the defendant’s lawyer was held disqualified. Id. See
MEMORANDUM OF Law -5-
also, e.g., Hillcrest Owners, Inc. v. Preferred Mut. Ins. Co., 234 A.D.2d 269, 269-270, 650
N.Y.S.2d 310 (2d Dep’t 1996); Moses & Singer LLP v. S & S Mach. Corp., 251 A.D.2d 271, 675
N.Y.S.2d 62 (1st Dep’t 1998), Iv. denied 92 N.Y.2d 1024, 684 N.Y.S.2d 486, 707 N.E.2d 441
(1998) (affirming disqualification of defendants’ attorney, who defendants had engaged as co-
counsel in the litigation that gave rise to the bills at issue where attorney’s testimony would
likely be necessary); Kubin v. Miller, 801 F.Supp. 1101, 1113 (S.D.N.Y. 1992) (attomey would
be disqualified from further representation of corporate and individual defendants in action for
fraud, conversion, breach of contract, and breach of fiduciary duty under rule requiring
disqualification if attorney ought to be called as witness; attorney had unique knowledge about
parties’ decision to create shareholders agreement and individual defendant's alleged repudiation
of that agreement, and attorney personally drafted written agreements among parties concerning
ownership of various corporations and proposed mergers which were contested in present
action).
For the myriad of reasons set forth below, the Court should similarly disqualify Mr.
Stargioitti from his representation of Plaintiff, or any other party to this Action, for that matter.
Not only is Mr. Stargiotti likely to be called as a witness, but also, as demonstrated herein, his
participation in the underlying matters at issue in this Action and self-admitted knowledge
submitted in previous testimony to the Court designate him as a material and necessary witness
herein.
A. Documentary Evidence Previously Submitted to the
Court Explicitly Reveals Stargiotti’s Knowledge of and
Role in the Negotiation, Drafting and Execution of
Documents Underlying the Transactions On Which the
Court Found There Exist Triable Issues of Fact.
As this Court held in its Decision and Order of February 21, 2013 (see Feldman Aff., Ex.
D)
MEMORANDUM OF Law -6-
The papers submitted raise triable issues of fact as to the
circumstances surrounding the execution of the amended note and
the guaranty, including whether the amended note and guaranty are
supported by consideration, and whether the defendants signed
them under economic duress. . . . [the papers] raise triable issues of
fact concerning the enforceability of the amended note and
guaranty signed by JKS Newburgh, LLC and John Scanlan on July
11, 2011. Thus, the motion for summary judgment in lieu of
complaint is denied.
Accordingly, the Court has ruled that a full investigation and examination of the facts and
circumstances are required regarding: (1) the circumstances leading up to and surrounding the
execution of the July 2011 Promissory Note and Mr. Scanlan’s Personal Guaranty; (2) whether
there was consideration provided by both parties for such transaction; (3) whether the
Defendants entered into such transactions under economic duress, and thus (4) whether the July
2011 Promissory Note and Personal Guaranty are enforceable. (Id.)
In this Action, Mr. Stargiotti represented Denise Barnett, Michael Barnett and ME.-RE.
Development, LLC in the negotiation, drafting and execution of both the April 2011 original
Promissory Note and Purchase Agreement, a well as the July 2011 Amended Promissory Note
and Personal Guaranty of Mr. Scanlan. (Stargiotti Aff., f{] 21-28.) Furthermore, Mr. Stargiotti
drafted and transmitted many of the numerous letters forwarded to JKS Newburgh’s mortgage
lender, surety and the Department of Housing and Urban Development, on behalf of these
clients. (See Scanaln Aff., Exs. L, N, P, T-X, JJ-LL.) These letters, in turn, contained a plethora
of factual allegations, accusations and representations conceming the underlying Amended
Promissory Note and Purchase Agreement executed by JKS Newburgh to buy shares in the DJ
Orchard entity. Included in these letters are, inter alia, the following:
1 Letter of June 7, 2011 — Feldman Aff., Ex. B; Scanlan Aff., Ex. N.) A
letter from Mr. Stargiotti addressed to Metropolitan Funding Corporation, JKS
Newburgh’s mortgage lender, alleging that “my clients Denise Bamet[sic] and ME
MEMORANDUM OF Law -7-
Development Group, LLC are shareholders in DJ Orchard, LLC . . . [and] Denise Barnet
is still the Managing Member, not John Scanlan.”
Mr. Stargiotti’s statements are directly contradicted by the clear language
of the Purchase Agreement:
Until the debt evidenced by the Notes is paid in full, John Scanlan
individually, will retain majority voting rights and shall be and
remain the manager of JKS Newburgh, LLC and either John
Scanlan, individually, or JKS Newburgh, LLC, shall retain
majority voting rights and shall be and remain the managing
member of Orchard Hills of Newburgh, LLC. (See Scanlan
Aff., Ex. D, Section 2, page 2.)
Thus, the factual assertions made by Mr. Stargiotti in his letter of June 7”
go to the material issues of the parties’ intent on entering into the original Purchase
Agreement, executed by JKS Newburgh, ME Development Group and Denise Barnett in
April 2011 (Scanlan Aff., Ex. D), whether such agreement was supported by
consideration on all sides, and whether there was in fact duress employed—all of these
issues were identified by the Court as material issues of fact. (See Decision and Order at
pp. 2-4.)
2. Ju ine 9, 2011 ~ (Feldan Aff., Ex. C; Scanlan Aff., Ex. P.) A letter from
Mr. Stargiotti also addressed to Metropolitan Funding. Mr. Stargiotti alleges that the
Purchase Agreement for the shares of DJ Orchard “has not yet closed” because “although
JKS Newburgh LLC has signed and delivered the Promissory Notes,” the Barnetts and
their company, ME Development, “have not yet signed the assignments of shares” of DJ
Orchard and delivered such certificates to JKS Newburgh.
These assertions are also contradicted by evidence that Denise Barnett had
in_fact_issued_the membership certificates to JKS Newburgh one month prior to
Stargiotti’s letter, having signed such share certificates May 10, 2011. (Scanlan Aff., {]
MEMORANDUM OF Law -8-
81-85 and Ex. TT.) Once again, Mr. Stargiotti’s statements in written correspondence as
an advocate on behalf of ME Development Group and Denise Barnett go to his direct
knowledge of the material issues of fact in this Action identified by the Court.
2
3 Lett er_of June 16, 2011 — (Feldman Aff., Ex. D; Scanlan Aff, Ex. T.)A
letter to JKS Newburgh’s then counsel, the law firm of Hinckley, Allen & Snyder, LLP,
making allegations of fact regarding the duress placed upon Mr. Scanlan to execute the
Personal Guaranty and refusal of ME Development and Denise Barnett to tum over
shares of DJ Orchard unless and until Mr. Scanlan executes documents in connection
with a completely different development, Highland Square.
Neither I nor my clients had demanded that Mr. Scanlan personally
guaranty the Promissory Notes resulting from this transaction. My
clients have consistently demanded that this transaction close
simultaneously with the Highland square share sale agreement . . .
Consequently my clients are not prepared to close the DJ Orchard
transaction. In an effort to avoid that stalemate, my clients have
suggested that they would wait to close the Highland Square
transaction at a later date if your client would personally guarantee
the Promissory Notes to them on the DJ Orchard transaction.
dd)
These assertions by Mr. Stargiotti directly evidence his knowledge as a
witness and participation in the extortion of the July Amended and Restated Promissory
Note and the economic duress placed upon Mr. Scanlan and JKS Newburgh.
4 Lett er_of June 17, 2011 - (Feldman Aff., Ex. E; Scanlan Aff., Ex. W.) A
letter from Mr. Stargiotti to JKS Newburgh’s and Mr. Scanlan’s counsel, Hinckley, Allen
& Snyder, once again asserting that the April 2011 transaction had not been “a closing”
and that the Promissory Notes executed by the Defendants were of no effect:
There has been no assignment of shares. Your client has not been
issued shares. No security agreement has been prepared or signed.
No escrow agreement has been prepared or signed. The parties
MEMORANDUM OF LAW -9-
clearly, plainly and simply have not closed and no matter how
many time[sic] you say that they have, it will not be true until they
actually close . . . . I say again, these transactions have not closed.
My clients are ready, wiling and able to close both, however they
will not close the Orchad Hills transaction without closing the
Highland transaction. . . . If your client fails or refused to close the
Highland Square transaction, my client will not close the Orchard
Hills Transaction.
(ia.)
Once again, these assertions by Mr. Stargiotti directly evidence his
knowledge as a witness conceming the original April 2011 transaction of the Purchase
Agreement and Promissory Note executed by JKS Newburgh for the purchase of shares
in DJ Orchard, as well as his clients’ and his personal participation in and perpetration of
the extortion of the July Amended and Restated Promissory Note and the economic
duress placed upon Mr. Scanlan and JKS Newburgh.
5 Letter r of June 20, 2011 — (Feldman Aff., Ex. F; Scanlan Aff., Ex. X.) A
letter from Mr. Stargiottti once again to Defendants’ counsel, asserting that his clients,
ME Development and Denise Barnett, shall refuse to sign over the membership
certificates of DJ Orchard unless and until Mr. Scanlan agreed to its terms in regard to the
separate transaction involving JKS Highland:
There has been no closing of the DJ Orchard transaction or the
Highland Square transaction between my clients, Denise Barnett
and ME Development, LLC and your client, JKS Newburgh, LLC;
My clients have not yet delivered their shares to the respective
companies for cancellation;
Your client, JKS Newburgh, does not yet own my clients’ shares
[in] DJ Orchard, LLC;
Should your client, JKS Highland, fail or refuse to close the
Highland Square transaction, my clients will not close the DJ
Orchard Transaction. . . .
MEMORANDUM OF LAW -10-
My clients want both transactions closed because it is not in their
financial interest to close the DJ Orchard transaction without
closing the Highland Square transaction and because they are
entitled to close both.
dia)
These letters set forth only a few of the numerous letters, e-mails and other
correspondence which go to the very material facts at issue in this Action, as noted by the
Court’s Decision: (1) the nature and circumstances underlying Defendants’ execution of the
original, April 2011 Purchase Agreement and Promissory Note; (2) the multitude of facts
underlying the transaction leading up to the entrance into the July 2011 Amended Promissory
Note and Mr. Scanlan’s Guaranty; and (3) the extortion and duress alleged by Defendants to
have taken place at the hands of ME Development and its principals, as well as via their counsel,
Mr. Stargiotti and Mr. Paul Slaney. (See generally, Scanlan Aff., Exs. L-LL.)
B. By His Affirmation, Previously Submitted to This
Court, Stargiotti Identified Himself as a Key Witness as
to Material Issues of Fact in This Action.
Even more, in this very Action, Mr. Stargiotti has previously submitted a swom statement
in which he explicitly asserted factual allegations aimed at the material issues identified by this
Court based upon his own, alleged personal knowledge.
On November 2, 2012, in support of Plaintiffs Motion for Summary Judgment in Lieu of
Complaint, Mr. Stargiotti submitted to the Court an Affirmation of the same date. (Feldman
Aff., Ex. G (hereinafter, “Stargiotti Aff.”).) In this Affirmation, Mr. Stargiotti submits a
number of factual assertions based on his alleged own personal knowledge regarding the same
material issues of fact as identified by the Court in its February 21" Decision. These assertions
include, but are not limited to, inter alia, the following:
MEMORANDUM OF Law -11-
1 That Mr. Stargiotti represented Michael and Denise Barnett and ME
Development Group, LLC in the initial negotiation of the April 2011 Purchase
Agreement and Promissory Note, and that he himself drafted the initial proposed
contracts and Promissory Note which were executed in April 2011:
Starting in mid-March, 2011 contracts and proposed promissory
notes were drawn by your deponent and provided to MR.
SCANLAN, in accordance with the instructions provided you your
deponent by the various sellers of shares, namely Denise Barnett,
through her husband, Michael Barnett, ME Development Group,
LLC by Bill Fonte, and John O’Donnell.
(Stargiotti Aff., 421.)
2 That Mr. Stargiotti was peronsally present at and has first-hand knowledge
of the meeting which took place on or about April 13, 2011 during which the Purchase
Agreement and Promissory Note were executed, and he asserts from his alleged first-
hand knowledge that the April 13, 2011 transaction date is inaccurate and which other
parties were present at such meeting:
The meeting of April 13, 2011 was scheduled by MR. SCANLAN
and the sellers.
That meeting took place at Vineyard Commons in the staff offices,
which is another residential project created by the Barnetts and
built by JOHN SCANLAN.
Present at that meeting were your deponent with Mark Fonte, Bill
Fonte and Michael Barnett; John O’Donnell with his independent
attorney Rick Duvall; and [John] SCANLAN and his colleague,
Andrew Baker.
I note that several documents bear the date of April 13, 2011, but
that is not correct. That was a typographical error on some
documents.
(Id., 19-24-27)
3 That Mr. Stargiotti asserts his knowledge of the “intent” of both his clients
and the Defendants in regards to the April 2011 meeting and in regards to his alleged
MEMORANDUM OF Law -12-
intent regarding the failure to have present the corporate books of DJ Orchard, LLC for
the intended transfer of shares:
Your deponent did not “forget” to bring those corporate books.
Your deponent did not bring those corporate books because they
were not needed. Your deponent’s clients advised me that it was
going to be a contract negotiation and possible signing. Shares
were not going to be delivered that day under any circumstances.
Your deponent was advised by the Fontes and Mr. Barnett that the
meeting had been scheduled to negotiate the deal and to hopefully
sign contracts. That meeting was never intended to be a closing of
any kind.
dd., 19 31-32.)
Mr. Stargiotti has thus unabashedly identified himself as a key and material witness as to
material issues of fact underlying this Action. These assertions by Mr. Stargiotti are no less than
explicit factual allegations regarding the quintessential material issues of fact in this case
identified by this Court on which this Action turns: (1) the circumstances leading up to and
surrounding the execution of the July 2011 Promissory Note and Mr. Scanlan’s Personal
Guaranty; (2) whether there was consideration provided by both parties for such transaction; (3)
whether the Defendants entered into such transactions under economic duress, and thus (4)
whether the July 2011 Promissory Note and Personal Guaranty are enforceable. (See Decision at
p. 2.)
As stated by the Appellate Division, “in the circumstances presented, ‘the best interests
of the client and fairness to all the parties concerned require that all doubts be resolved in favor
of the lawyer testifying and against his continuing as an advocate. 2” Emerald Green
Homeowners Ass'n Inc., v Aaron, 90 A.D.2d 628, 456 N.Y.S.2d 219, 221 (3d Dep’t 1982)
(quoting North Shore Neurosurgical Group v. Leivy, 72 A.D.2d 598, 599, 421 N.Y.S.2d 100 (2d
Dep’t 1979)).
MEMORANDUM OF Law -13-
In accordance with Rule 3.7a of the Ethical Code, Mr. Stargiotti must therefore be
disqualified from representing any of the parties in this Action. See S & S Hotel Ventures Lid.
Partnership v. 777 S.H. Corp., 69 N.Y .2d 437, 440, 515 N.Y.S.2d 735, 508 N.E.2d 647 (1987);
Friia v. Palumbo, 89 A.D.3d 896, 896, 932 N.Y.S.2d 542, 543 (2d Dep’t 2011); Hillcrest
Owners, Inc. v. Preferred
Mut. Ins. Co., 234 A.D.2d 269, 269-270, 650 N.Y.S.2d 310 (2d Dep’t
1996).
CONCLUSION
For all of the foregoing reasons, and upon those reasons, facts and documents set forth in
the Affirmation of Stephanie R. Feldman, submitted herewith, it is respectfully submitted that the
Court must disqualify Joseph Stargiotti, Esq. from further representing Plaintiff, or any other
party to this Action, pursuant to Rule 3.7(a) (22 N.Y.C.R.R. 1200.0) of the of the New York
Code of Professional Conduct since he has acknowledged himself as a key witness to material
issues of fact in this Action previously identified by this Court, and grant such other and further
relief as this court may deem just, proper and equitable.
Dated: April 17, 2013
Respectfully submitted,
FELDMAN & ASSOCIATES PLLC
Attorneys for Defendants JKS Newburgh,
LLC and John Scanlan
wy bh hpi
Stephanie R. Feldman
33 East 33” Street, Suite 802
New York, New York 10016
Tel: (212) 685-2277
Fax: (212) 725-2798
MEMORANDUM OF LAw -14-
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF WESTCHESTER Index No . 56683/2012
ME. -RE. HOLDING, LLC,
Plaintiffs,
- against -
JKS NEWBURGH, LLC, and JOHN SCANLAN,
Defendants.
MEMORANDUM OF LAW IN SUPPORT OF
DEFENDANTS’ MOTION TO DISQUALIFY COUNSEL
JOSEPH A. STARGIOTTI, ESQ. PURSUANT TO
RULE 3.7(a) OF THE NEW YORK CODE OF
PROFESSIONAL CONDUCT
FELDMAN & ASSOCIATES PLLC
Attorneys for Defendants JKS Newburgh, LLC
and John Scanlan
33 East 33 Street, Suite 802
New York, NY 10016-5364
Tel: 212-685-2277
Pursuant to 22 NYCR 130-1.1, the undersigned, an attorney admitted to practice in the courts of New York State, certifies that, upon
information and belief and reasonable inquiry, the contentions contained in the annexed dpcuments are not frivolous.
Dated: 4[{# />0(3 A,
stephanie R. Feldman, Esq.
PLEASE TAKE NOTICE: To:
{ ] NOTICE OF ENTRY
that the within is a true copy of an duly entered in the office of the clerk of the within named court on the day of
[ ] NOTICE OF SETTLEMENT
that an order
of which the within is a true copy will be presented for settlement to the Hon. one of the judges
of the within named court, at
b on the day of AM.
Dated,
Yours, etc.
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INDEX NO. 56683/2012 (FILED: WESTCHESTER COUNTY CLERK 0472272013) NYSCEF DOC. NO. 65 RECEIVED NYSCEF: 04/22/2013 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF WESTCHESTER X ME.-RE. HOLDING, LLC, Index No. 56683/2012 Plaintiff, - against - JKS NEWBURGH, LLC, and JOHN SCANLAN, Defendants. MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISQUALIFY COUNSEL JOSEPH A. STARGIOTTI, ESQ. FROM FURTHER REPRESENTING THE PLAINTIFF OR ANY OTHER PARTY IN THIS ACTION PURSUANT TO RULE 3.7(a) OF THE NEW YORK CODE OF PROFESSIONAL CONDUCT FELDMAN & ASSOCIATES PLLC Attorneys for Defendants JES New burgh, LLC and John Scanlan 33 East 33” Street, Suite 802 New York, New York 10016 Tel: (212) 685-2277 Fax: (212) 725-2798 On the Brief: Stephanie R. Feldman, Esq. PRELIMINARY STATEMENT Defendants JKS Newburgh, LLC (“JKS Newburgh”) and John Scanlan (collectively, “the Defendants”) by their attorneys Feldman & Associates PLLC, hereby submit this Memorandum of Law, as well as the accompanying Affirmation of Stephanie R. Feldman, Esq., dated April 17, 2013, (‘Feldman Aff.”), in support of their Motion pursuant to Rule 3.7(a) of the New York Code of Professional Conduct (22 N.Y.C.R.R. 1200.0) to disqualify attorney Joseph Stargiotti, Esq., from further representing Plaintiff ME.-R.E. Holding, LLC (“Plaintiff”) in this Action. This Action commenced through the filing by Plaintiff of a Motion for Summary Judgment in Lieu of Compalaint. However, the Court denied such Motion in its decision of February 21, 2013, finding that the evidence submitted “raise triable issues of fact as to the circumstances surrounding the execution of the amended note and the guaranty, including whether the amended note and guaranty are supported by consideration, and whether the defendants signed them under economic duress. . . . [and] . . . concerning the enforceability of the amended note and guaranty signed by JKS Newburgh, LLC and John Scanlan on July 11, 2011.” (See Feldman Aff., Ex. D.) The documentary evidence presented to the Court in this matter comprises of numerous communications initiated by Mr. Stargiotti. In addition, Mr. Stargiotti previously submitted to the Court testimony of his own accord by his Affirmation of November 2, 2012, wherein he testified as to the facts and circumstances of this Action—the very facts and circumstances this Court has ruled constitute material issues in this case. Mr. Stargiotti has identified himself as a material fact witness in this Action whose deposition and ultimate testimony at trial will be required. Mr. Stargiotti must therefore be disqualified from representing Plaintiff—or any other MEMORANDUM OF LAw -1- party to this Action—pursuant to the advocate-witness rule, codified under Rule 3.7(a) (22 NY.CR. § 1200.00). PROCEDURAL HISTORY This Action was commenced on April 12, 2012, upon the Plaintiff's filing of a Motion for Summary Judgment in Lieu of Complaint pursuant to CPLR § 3213. Attorney Mr. Stargiotti and his law firm, Stargiotti & Beatley, P.C., filed such Motion on behalf of Plaintiff and have appeared as counsel of record since the inception of this Action. A full procedural history is set forth in the accompanying Affirmation of Stephanie R. Feldman, Esq., dated April 18, 2013 (“Feldman Aff.”) Rather than outline for the Court the extensive facts and circumstances which underlie the transactions at the heart of this Action—i.e., the Amended Promissory Note and Guaranty— the Court is respectfully referred to the Affidavit of John Scanlan, sworn to on October 9, 2012. (Feldman Aff., Ex. A.) LEGAL ARGUMENT L PLAINTIFF’S COUNSEL JOSEPH STARGIOTTI MUST BE DISQUALIFIED FROM REPRESENTING ANY PARTY IN THIS ACTION AS HE IS AN UNEQUIVOCAL WITNESS AS TO MATERIAL ISSUES OF FACT HEREIN. Under Rule 3.7(a) of the New York Code of Professional Conduct, commonly referred to as the “advocate-witness rule,” unless the testimony meets one of the criteria in Rule 3.7(a), “a lawyer is ethically required to withdraw from acting as an advocate if the lawyer is likely to be a necessary witness on a significant issue of fact.” 4A N.Y. Prac., Com. Litig. § 64.13 (3d ed. 2012). More specifically: Rule 3.7: Lawyer as witness. MEMORANDUM OF LAW -2- (a) A lawyer shall not act as advocate before a tribunal in a matter in which the lawyer is likely to be a witness on a significant issue of fact unless: (1) the testimony relates solely to an uncontested issue; (2) the testimony relates solely to the nature and value of legal services rendered in the matter; (3) disqualification of the lawyer would work substantial hardship on the client; (4) the testimony will relate solely to a matter of formality, and there is no reason to believe that substantial evidence will be offered in opposition to the testimony; or (5) the testimony is authorized by the tribunal. 22.N.Y.C.R.R. 1200.0 (McKinney 2013). While it is acknowledge that “[a] party’s entitlement to be represented in ongoing litigation by counsel of its choice is a valued right,” (Hudson Val. Mar., Inc. v. Town of Cortlandt, 54 A.D.3d 999, 1000, 865 N.Y.S.2d 122; see also S & S Hotel Ventures Lid. Partnership v. 777 S.H. Corp., 69 N.Y.2d 437, 440, 515 N.Y.S.2d 735, 508 N.E.2d 647 (1987); Wolfson v. Posner, 57 A.D.3d 979, 980, 869 N.Y.S.2d 804 (2d Dep’t 2008)), as recently stated by the Appellate Division, Second Department, “pursuant to rule 3.7 of the Rules of Professional Conduct (22 NYCRR 1200.0), unless certain exceptions apply, ‘[a] lawyer shall not act as advocate before a tribunal in a matter in which the lawyer is likely to be a witness on a significant issue of fact.’ ” Friia v. Palumbo, 89 A.D.3d 896, 896, 932 N.Y.S.2d 542, 543 (2d Dep’t 2011) (quoting Rules of Professional Conduct [22 NYCRR 1200.0] rule 3.7) (emphasis added). Moreover, in determining whether an attorney’s testimony is necessary, so as to disqualify attorney under advocate-witness rule, such attomey’s testimony does not need to be “strictly necessary” but that it is “likely” that it “‘may be relevant and even highly useful, but MEMORANDUM OF LAw -3- still not strictly necessary. A finding of necessity takes into account such factors as the significance of the matters, weight of the testimony, and availability of other evidence. 2» Sokolow, Dunaud, Mercadier & Carreras LLP v Lacher, 747 N.Y.S.2d 441, 449, 299 A.D.2d 64 (1st Dep’t 2002) (quoting S&S Hotel Ventures, supra, 69 N.Y.2d at 446). The purpose of the advocate-witness rule “is to avoid the unseemly situation where an advocate must argue his own credibility before the trier of fact.” See North Shore Neurosurgical Group, P.C. v. Leivy, 72 A.D.2d 598, 599, 421 N.Y.S.2d 100, 102 (2d Dep’t 1979). Therefore, It is well-settled that where a question arises as to whether one or more members of a law firm that is representing a party will be called to testify, the best interests of the client and fairness to all parties concerned require that all doubts be resolved in favor of the lawyer testifying and against his continuing as an advocate. Id. In cases in which the attorney’s knowledge is highly relevant and “peculiarly in his possession,” it is clear that such attorney must be disqualified. See Wickes v. Ward, 706 F.Supp. 290, 292-93 (S.D.N.Y.1989) (attorney who participated in sidebar conference at issue in current action between litigants must be disqualified). For example, in Paretti v. Cavalier Label Co., 722 F.Supp. 985, 986 (S.D.N.Y.1989), the attorney at issue negotiated, executed and administered the contract at issue in the dispute between the parties. Jd. The District Court held that such factors made the lawyer “the key witness at trial,” and was therefore disqualified pursuant to Rule 3.7(a). See also, Kubin v Miller, 801 F. Supp. 1101, 1113 (S.D.N.Y. 1992) (disqualifying attorney where clear that attorney ought to be called as witness on behalf of defendants; attorney had “unique knowledge about the parties’ decision to create a shareholders agreement and [the] alleged repudiation of that agreement,” and had “personally drafted written agreements among the parties concerning ownership of the various corporations and the MEMORANDUM OF LAW -4- proposed mergers which are now contested in this action”) As also stated by the Second Department in Falk v. Gallo, 73 A.D.3d 685, 686, 901 N.Y.S8.2d 99 (2d Dep’t 2010): The advocate-witness rules contained in the Code of Professional Responsibility, which have been superseded by the Rules of Professional Conduct, provide guidance, but are not binding authority, for the courts in determining whether a party’s attorney should be disqualified during litigation (see § & S Hotel Ventures Lid. Partnership v. 777 S.H. Corp., 69 N.Y.2d 437, 515 N.Y.S.2d 735, 508 N.E.2d 647). Rule 3.7 of the Rules of Professional Conduct provides that unless certain exceptions apply, “[a] lawyer shall not act as an advocate before a tribunal in a matter in which the lawyer is likely to be a witness on a significant issue of fact” (Rules of Professional Conduct [22 NYCRR 1200.0] rule 3.7). Here, since the plaintiffs’ attorney was the only person, other than the parties, who had knowledge of any discussions regarding the terms of the oral agreement underlying this litigation, he is “likely to be a witness on a significant issue of fact” (Rules of Professional Conduct [22 NYCRR 1200.0] rule 3.7; see Matter of Stober v. Gaba & Stober, P.C., 259 AD.2d 554, 686 N.Y.S.2d 440). Accordingly, the Supreme Court properly granted the defendants’ motion to disqualify the plaintiffs' attorney (see Matter of Stober v. Gaba & Stober, 259 AD.2d 554, 686 N.Y.S.2d 440; Rules of Professional Conduct [22 NYCRR 1200.0] rule 3.7). Id. (emphasis added); see also see also § & S Hotel Ventures Ltd. Partnership v. 777 S.H. Corp., 69 N.Y.2d at 445-446, 515 N.Y.S.2d 735, 508 N.E.2d 647). The First Department case of Warshaw Burstein Cohen Schlesinger & Kuh, LLP v. Longmire, 82 A.D.3d 586, 920 N.Y.S.2d 23, (1st Dep’t 2011), is particularly applicable: There, the plaintiff demonstrated that the defendant’s counsel “played a vital role in the final settlement negotiations flowing from a settlement offer that plaintiff had allegedly previously procured and that defendant client later accepted, that the negotiations were an important part of the underlying dispute.” Id, 82 AD.3d at 586. Therefore, the Plaintiff “demonstrated_that defendant’s counsel was likely to be a key witness at trial, and that his proposed testimony would be adverse to his client’s interests,” and the defendant’s lawyer was held disqualified. Id. See MEMORANDUM OF Law -5- also, e.g., Hillcrest Owners, Inc. v. Preferred Mut. Ins. Co., 234 A.D.2d 269, 269-270, 650 N.Y.S.2d 310 (2d Dep’t 1996); Moses & Singer LLP v. S & S Mach. Corp., 251 A.D.2d 271, 675 N.Y.S.2d 62 (1st Dep’t 1998), Iv. denied 92 N.Y.2d 1024, 684 N.Y.S.2d 486, 707 N.E.2d 441 (1998) (affirming disqualification of defendants’ attorney, who defendants had engaged as co- counsel in the litigation that gave rise to the bills at issue where attorney’s testimony would likely be necessary); Kubin v. Miller, 801 F.Supp. 1101, 1113 (S.D.N.Y. 1992) (attomey would be disqualified from further representation of corporate and individual defendants in action for fraud, conversion, breach of contract, and breach of fiduciary duty under rule requiring disqualification if attorney ought to be called as witness; attorney had unique knowledge about parties’ decision to create shareholders agreement and individual defendant's alleged repudiation of that agreement, and attorney personally drafted written agreements among parties concerning ownership of various corporations and proposed mergers which were contested in present action). For the myriad of reasons set forth below, the Court should similarly disqualify Mr. Stargioitti from his representation of Plaintiff, or any other party to this Action, for that matter. Not only is Mr. Stargiotti likely to be called as a witness, but also, as demonstrated herein, his participation in the underlying matters at issue in this Action and self-admitted knowledge submitted in previous testimony to the Court designate him as a material and necessary witness herein. A. Documentary Evidence Previously Submitted to the Court Explicitly Reveals Stargiotti’s Knowledge of and Role in the Negotiation, Drafting and Execution of Documents Underlying the Transactions On Which the Court Found There Exist Triable Issues of Fact. As this Court held in its Decision and Order of February 21, 2013 (see Feldman Aff., Ex. D) MEMORANDUM OF Law -6- The papers submitted raise triable issues of fact as to the circumstances surrounding the execution of the amended note and the guaranty, including whether the amended note and guaranty are supported by consideration, and whether the defendants signed them under economic duress. . . . [the papers] raise triable issues of fact concerning the enforceability of the amended note and guaranty signed by JKS Newburgh, LLC and John Scanlan on July 11, 2011. Thus, the motion for summary judgment in lieu of complaint is denied. Accordingly, the Court has ruled that a full investigation and examination of the facts and circumstances are required regarding: (1) the circumstances leading up to and surrounding the execution of the July 2011 Promissory Note and Mr. Scanlan’s Personal Guaranty; (2) whether there was consideration provided by both parties for such transaction; (3) whether the Defendants entered into such transactions under economic duress, and thus (4) whether the July 2011 Promissory Note and Personal Guaranty are enforceable. (Id.) In this Action, Mr. Stargiotti represented Denise Barnett, Michael Barnett and ME.-RE. Development, LLC in the negotiation, drafting and execution of both the April 2011 original Promissory Note and Purchase Agreement, a well as the July 2011 Amended Promissory Note and Personal Guaranty of Mr. Scanlan. (Stargiotti Aff., f{] 21-28.) Furthermore, Mr. Stargiotti drafted and transmitted many of the numerous letters forwarded to JKS Newburgh’s mortgage lender, surety and the Department of Housing and Urban Development, on behalf of these clients. (See Scanaln Aff., Exs. L, N, P, T-X, JJ-LL.) These letters, in turn, contained a plethora of factual allegations, accusations and representations conceming the underlying Amended Promissory Note and Purchase Agreement executed by JKS Newburgh to buy shares in the DJ Orchard entity. Included in these letters are, inter alia, the following: 1 Letter of June 7, 2011 — Feldman Aff., Ex. B; Scanlan Aff., Ex. N.) A letter from Mr. Stargiotti addressed to Metropolitan Funding Corporation, JKS Newburgh’s mortgage lender, alleging that “my clients Denise Bamet[sic] and ME MEMORANDUM OF Law -7- Development Group, LLC are shareholders in DJ Orchard, LLC . . . [and] Denise Barnet is still the Managing Member, not John Scanlan.” Mr. Stargiotti’s statements are directly contradicted by the clear language of the Purchase Agreement: Until the debt evidenced by the Notes is paid in full, John Scanlan individually, will retain majority voting rights and shall be and remain the manager of JKS Newburgh, LLC and either John Scanlan, individually, or JKS Newburgh, LLC, shall retain majority voting rights and shall be and remain the managing member of Orchard Hills of Newburgh, LLC. (See Scanlan Aff., Ex. D, Section 2, page 2.) Thus, the factual assertions made by Mr. Stargiotti in his letter of June 7” go to the material issues of the parties’ intent on entering into the original Purchase Agreement, executed by JKS Newburgh, ME Development Group and Denise Barnett in April 2011 (Scanlan Aff., Ex. D), whether such agreement was supported by consideration on all sides, and whether there was in fact duress employed—all of these issues were identified by the Court as material issues of fact. (See Decision and Order at pp. 2-4.) 2. Ju ine 9, 2011 ~ (Feldan Aff., Ex. C; Scanlan Aff., Ex. P.) A letter from Mr. Stargiotti also addressed to Metropolitan Funding. Mr. Stargiotti alleges that the Purchase Agreement for the shares of DJ Orchard “has not yet closed” because “although JKS Newburgh LLC has signed and delivered the Promissory Notes,” the Barnetts and their company, ME Development, “have not yet signed the assignments of shares” of DJ Orchard and delivered such certificates to JKS Newburgh. These assertions are also contradicted by evidence that Denise Barnett had in_fact_issued_the membership certificates to JKS Newburgh one month prior to Stargiotti’s letter, having signed such share certificates May 10, 2011. (Scanlan Aff., {] MEMORANDUM OF Law -8- 81-85 and Ex. TT.) Once again, Mr. Stargiotti’s statements in written correspondence as an advocate on behalf of ME Development Group and Denise Barnett go to his direct knowledge of the material issues of fact in this Action identified by the Court. 2 3 Lett er_of June 16, 2011 — (Feldman Aff., Ex. D; Scanlan Aff, Ex. T.)A letter to JKS Newburgh’s then counsel, the law firm of Hinckley, Allen & Snyder, LLP, making allegations of fact regarding the duress placed upon Mr. Scanlan to execute the Personal Guaranty and refusal of ME Development and Denise Barnett to tum over shares of DJ Orchard unless and until Mr. Scanlan executes documents in connection with a completely different development, Highland Square. Neither I nor my clients had demanded that Mr. Scanlan personally guaranty the Promissory Notes resulting from this transaction. My clients have consistently demanded that this transaction close simultaneously with the Highland square share sale agreement . . . Consequently my clients are not prepared to close the DJ Orchard transaction. In an effort to avoid that stalemate, my clients have suggested that they would wait to close the Highland Square transaction at a later date if your client would personally guarantee the Promissory Notes to them on the DJ Orchard transaction. dd) These assertions by Mr. Stargiotti directly evidence his knowledge as a witness and participation in the extortion of the July Amended and Restated Promissory Note and the economic duress placed upon Mr. Scanlan and JKS Newburgh. 4 Lett er_of June 17, 2011 - (Feldman Aff., Ex. E; Scanlan Aff., Ex. W.) A letter from Mr. Stargiotti to JKS Newburgh’s and Mr. Scanlan’s counsel, Hinckley, Allen & Snyder, once again asserting that the April 2011 transaction had not been “a closing” and that the Promissory Notes executed by the Defendants were of no effect: There has been no assignment of shares. Your client has not been issued shares. No security agreement has been prepared or signed. No escrow agreement has been prepared or signed. The parties MEMORANDUM OF LAW -9- clearly, plainly and simply have not closed and no matter how many time[sic] you say that they have, it will not be true until they actually close . . . . I say again, these transactions have not closed. My clients are ready, wiling and able to close both, however they will not close the Orchad Hills transaction without closing the Highland transaction. . . . If your client fails or refused to close the Highland Square transaction, my client will not close the Orchard Hills Transaction. (ia.) Once again, these assertions by Mr. Stargiotti directly evidence his knowledge as a witness conceming the original April 2011 transaction of the Purchase Agreement and Promissory Note executed by JKS Newburgh for the purchase of shares in DJ Orchard, as well as his clients’ and his personal participation in and perpetration of the extortion of the July Amended and Restated Promissory Note and the economic duress placed upon Mr. Scanlan and JKS Newburgh. 5 Letter r of June 20, 2011 — (Feldman Aff., Ex. F; Scanlan Aff., Ex. X.) A letter from Mr. Stargiottti once again to Defendants’ counsel, asserting that his clients, ME Development and Denise Barnett, shall refuse to sign over the membership certificates of DJ Orchard unless and until Mr. Scanlan agreed to its terms in regard to the separate transaction involving JKS Highland: There has been no closing of the DJ Orchard transaction or the Highland Square transaction between my clients, Denise Barnett and ME Development, LLC and your client, JKS Newburgh, LLC; My clients have not yet delivered their shares to the respective companies for cancellation; Your client, JKS Newburgh, does not yet own my clients’ shares [in] DJ Orchard, LLC; Should your client, JKS Highland, fail or refuse to close the Highland Square transaction, my clients will not close the DJ Orchard Transaction. . . . MEMORANDUM OF LAW -10- My clients want both transactions closed because it is not in their financial interest to close the DJ Orchard transaction without closing the Highland Square transaction and because they are entitled to close both. dia) These letters set forth only a few of the numerous letters, e-mails and other correspondence which go to the very material facts at issue in this Action, as noted by the Court’s Decision: (1) the nature and circumstances underlying Defendants’ execution of the original, April 2011 Purchase Agreement and Promissory Note; (2) the multitude of facts underlying the transaction leading up to the entrance into the July 2011 Amended Promissory Note and Mr. Scanlan’s Guaranty; and (3) the extortion and duress alleged by Defendants to have taken place at the hands of ME Development and its principals, as well as via their counsel, Mr. Stargiotti and Mr. Paul Slaney. (See generally, Scanlan Aff., Exs. L-LL.) B. By His Affirmation, Previously Submitted to This Court, Stargiotti Identified Himself as a Key Witness as to Material Issues of Fact in This Action. Even more, in this very Action, Mr. Stargiotti has previously submitted a swom statement in which he explicitly asserted factual allegations aimed at the material issues identified by this Court based upon his own, alleged personal knowledge. On November 2, 2012, in support of Plaintiffs Motion for Summary Judgment in Lieu of Complaint, Mr. Stargiotti submitted to the Court an Affirmation of the same date. (Feldman Aff., Ex. G (hereinafter, “Stargiotti Aff.”).) In this Affirmation, Mr. Stargiotti submits a number of factual assertions based on his alleged own personal knowledge regarding the same material issues of fact as identified by the Court in its February 21" Decision. These assertions include, but are not limited to, inter alia, the following: MEMORANDUM OF Law -11- 1 That Mr. Stargiotti represented Michael and Denise Barnett and ME Development Group, LLC in the initial negotiation of the April 2011 Purchase Agreement and Promissory Note, and that he himself drafted the initial proposed contracts and Promissory Note which were executed in April 2011: Starting in mid-March, 2011 contracts and proposed promissory notes were drawn by your deponent and provided to MR. SCANLAN, in accordance with the instructions provided you your deponent by the various sellers of shares, namely Denise Barnett, through her husband, Michael Barnett, ME Development Group, LLC by Bill Fonte, and John O’Donnell. (Stargiotti Aff., 421.) 2 That Mr. Stargiotti was peronsally present at and has first-hand knowledge of the meeting which took place on or about April 13, 2011 during which the Purchase Agreement and Promissory Note were executed, and he asserts from his alleged first- hand knowledge that the April 13, 2011 transaction date is inaccurate and which other parties were present at such meeting: The meeting of April 13, 2011 was scheduled by MR. SCANLAN and the sellers. That meeting took place at Vineyard Commons in the staff offices, which is another residential project created by the Barnetts and built by JOHN SCANLAN. Present at that meeting were your deponent with Mark Fonte, Bill Fonte and Michael Barnett; John O’Donnell with his independent attorney Rick Duvall; and [John] SCANLAN and his colleague, Andrew Baker. I note that several documents bear the date of April 13, 2011, but that is not correct. That was a typographical error on some documents. (Id., 19-24-27) 3 That Mr. Stargiotti asserts his knowledge of the “intent” of both his clients and the Defendants in regards to the April 2011 meeting and in regards to his alleged MEMORANDUM OF Law -12- intent regarding the failure to have present the corporate books of DJ Orchard, LLC for the intended transfer of shares: Your deponent did not “forget” to bring those corporate books. Your deponent did not bring those corporate books because they were not needed. Your deponent’s clients advised me that it was going to be a contract negotiation and possible signing. Shares were not going to be delivered that day under any circumstances. Your deponent was advised by the Fontes and Mr. Barnett that the meeting had been scheduled to negotiate the deal and to hopefully sign contracts. That meeting was never intended to be a closing of any kind. dd., 19 31-32.) Mr. Stargiotti has thus unabashedly identified himself as a key and material witness as to material issues of fact underlying this Action. These assertions by Mr. Stargiotti are no less than explicit factual allegations regarding the quintessential material issues of fact in this case identified by this Court on which this Action turns: (1) the circumstances leading up to and surrounding the execution of the July 2011 Promissory Note and Mr. Scanlan’s Personal Guaranty; (2) whether there was consideration provided by both parties for such transaction; (3) whether the Defendants entered into such transactions under economic duress, and thus (4) whether the July 2011 Promissory Note and Personal Guaranty are enforceable. (See Decision at p. 2.) As stated by the Appellate Division, “in the circumstances presented, ‘the best interests of the client and fairness to all the parties concerned require that all doubts be resolved in favor of the lawyer testifying and against his continuing as an advocate. 2” Emerald Green Homeowners Ass'n Inc., v Aaron, 90 A.D.2d 628, 456 N.Y.S.2d 219, 221 (3d Dep’t 1982) (quoting North Shore Neurosurgical Group v. Leivy, 72 A.D.2d 598, 599, 421 N.Y.S.2d 100 (2d Dep’t 1979)). MEMORANDUM OF Law -13- In accordance with Rule 3.7a of the Ethical Code, Mr. Stargiotti must therefore be disqualified from representing any of the parties in this Action. See S & S Hotel Ventures Lid. Partnership v. 777 S.H. Corp., 69 N.Y .2d 437, 440, 515 N.Y.S.2d 735, 508 N.E.2d 647 (1987); Friia v. Palumbo, 89 A.D.3d 896, 896, 932 N.Y.S.2d 542, 543 (2d Dep’t 2011); Hillcrest Owners, Inc. v. Preferred Mut. Ins. Co., 234 A.D.2d 269, 269-270, 650 N.Y.S.2d 310 (2d Dep’t 1996). CONCLUSION For all of the foregoing reasons, and upon those reasons, facts and documents set forth in the Affirmation of Stephanie R. Feldman, submitted herewith, it is respectfully submitted that the Court must disqualify Joseph Stargiotti, Esq. from further representing Plaintiff, or any other party to this Action, pursuant to Rule 3.7(a) (22 N.Y.C.R.R. 1200.0) of the of the New York Code of Professional Conduct since he has acknowledged himself as a key witness to material issues of fact in this Action previously identified by this Court, and grant such other and further relief as this court may deem just, proper and equitable. Dated: April 17, 2013 Respectfully submitted, FELDMAN & ASSOCIATES PLLC Attorneys for Defendants JKS Newburgh, LLC and John Scanlan wy bh hpi Stephanie R. Feldman 33 East 33” Street, Suite 802 New York, New York 10016 Tel: (212) 685-2277 Fax: (212) 725-2798 MEMORANDUM OF LAw -14- SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF WESTCHESTER Index No . 56683/2012 ME. -RE. HOLDING, LLC, Plaintiffs, - against - JKS NEWBURGH, LLC, and JOHN SCANLAN, Defendants. MEMORANDUM OF LAW IN SUPPORT OF DEFENDANTS’ MOTION TO DISQUALIFY COUNSEL JOSEPH A. STARGIOTTI, ESQ. PURSUANT TO RULE 3.7(a) OF THE NEW YORK CODE OF PROFESSIONAL CONDUCT FELDMAN & ASSOCIATES PLLC Attorneys for Defendants JKS Newburgh, LLC and John Scanlan 33 East 33 Street, Suite 802 New York, NY 10016-5364 Tel: 212-685-2277 Pursuant to 22 NYCR 130-1.1, the undersigned, an attorney admitted to practice in the courts of New York State, certifies that, upon information and belief and reasonable inquiry, the contentions contained in the annexed dpcuments are not frivolous. Dated: 4[{# />0(3 A, stephanie R. Feldman, Esq. PLEASE TAKE NOTICE: To: { ] NOTICE OF ENTRY that the within is a true copy of an duly entered in the office of the clerk of the within named court on the day of [ ] NOTICE OF SETTLEMENT that an order of which the within is a true copy will be presented for settlement to the Hon. one of the judges of the within named court, at b on the day of AM. Dated, Yours, etc.