On May 3, 2024, the Fourth Department issued a decision in Consumers Beverages, Inc. v. Kavcon Dev. LLC, 2024 NY Slip Op. 02397, holding that a motion to disqualify counsel failed because of an insufficient connection between the matters in which counsel was engaged, explaining:
As a preliminary matter, we note the seriousness of a motion to disqualify a party’s counsel of choice. Disqualification of a law firm during litigation implicates not only the ethics of the profession but also the substantive rights of the litigants. Disqualification denies a party’s right to representation by the attorney of its choice. When the Rules of Professional Conduct are invoked in ongoing litigation rather than in a disciplinary proceeding to punish a lawyer’s alleged misconduct, disqualification of a party’s law firm can stall and derail the proceedings, redounding to the strategic advantage of one party over another. Thus, disqualification is a severe remedy which should only be done in cases where counsel’s conduct will probably taint the underlying trial.
Nevertheless, a motion to disqualify another party’s attorney is addressed to the sound discretion of the trial court. A party bringing a disqualification motion has the burden of making a clear showing that disqualification is warranted. To meet that burden, the moving party must establish: (1) the existence of a prior attorney-client relationship between the moving party and opposing counsel, (2) that the matters involved in both representations are substantially related, and (3) that the interests of the present client and former client are materially adverse.
CBI correctly concedes that Kavcon established the first and third elements of the disqualification test, i.e., that Barclay Damon represented CBI at the time the Demand Note was executed and that the interests of CBI and Kavcon are materially adverse. Thus, the only issue before this Court is whether Kavcon established that the matters involved in both representations are substantially related.
To demonstrate that the matters are substantially related, Kavcon had to establish that the issues in the present litigation are identical to or essentially the same as those in the prior representation or that Barclay Damon received specific, confidential information substantially related to the present litigation. We note that, despite Kavcon’s references to confidential information as part of its summary of rule 1.9 of the Rules of Professional Conduct (22 NYCRR 1200.0) in its main brief, Kavcon does not explicitly contend in that brief that Barclay Damon received specific confidential information that was substantially related to this litigation. We thus deem any contention related thereto abandoned. To the extent that Kavcon advances its confidential information argument for the first time in its reply brief, that contention is not properly before this Court and we therefore do not address its merits.
We reject Kavcon’s contention that the court erred in determining that the current and former litigations are not identical to or essentially the same as those in the prior representation. In this action, CBI is seeking to collect on a debt purportedly owed by Kavcon to CBI. The earlier actions involved either a purported breach of fiduciary duty by Neil or Neil’s alleged improper purchase of shares from his siblings. Inasmuch as Kavcon failed to demonstrate that the former and current representations were substantially related, it failed to meet its burden of demonstrating that disqualification is warranted.
(Internal quotations and citations omitted).