Opinion
16/9472
02-21-2017
N.M.F., Plaintiff, v. S.C., Defendant.
Francis Affronti, Esq. Attorney for Plaintiff Rochester, New York Richard Coia, Esq. Attorney for Defendant Rochester, New York
Francis Affronti, Esq. Attorney for Plaintiff Rochester, New York Richard Coia, Esq. Attorney for Defendant Rochester, New York Richard A. Dollinger, J.
Attorneys are "secret sharers," like the young captain in Joseph Conrad's short story of the same name. But, before disqualifying any attorney for a conflict of interest, courts must be assured that confidential information from a former client is "secret" and that the attorney, who allegedly holds it, may "share" it with a third-party and, as a result, adversely impact his former client's legal claims.
Joseph Conrad, The Secret Sharer, Harper's Magazine, 1910
In this matter, the plaintiff-wife in a divorce matter seeks to disqualify the attorney who represents her defendant-husband because the attorney represented the wife when she purchased the marital residence in her own name. The wife alleges that a conflict of interest precludes the attorney and his law firm from representing her husband in the divorce. At the heart of the dispute is whether the wife imparted confidential information to the attorney during his work on her behalf in purchasing the residence.
Most of the facts are undisputed. When the wife bought the residence, the parties were not yet married, but were looking for a house with the intention of it being the marital residence. The wife retained the husband's relative, the attorney, to represent her and the couple elected to have the wife purchase the home in her name alone. The husband admits that the reason it was purchased in the wife's name was because of his "financial history." During the course of his representation of the wife, the attorney states that he participated in numerous meetings with the wife and that the future husband was present at all or most of those meetings. He argues that the presence of the third party - the future husband - defeats any claim that the wife's disclosures were confidential. People v. Osorio, 75 NY2d 80, 84 (1989) (when a known third party is present, any information exchanged between the client and the attorney is no longer confidential).
The parties married a year after purchasing the house. Prior to that time, the husband alleges that he had been advancing the mortgage payments. In addition, he alleges that he and his father did some house renovations to increase the value of the home prior to the marriage. Only four months after their marriage, the couple separated and the wife filed for divorce the following year. After their separation, the house was sold and now the equitable distribution of the proceeds of sale is in dispute.
This court notes that the property is the wife's separate property, as she purchased it prior to the marriage. The wife argues that the husband's marital interest only accrues when the property increases in value as a result of the efforts of either party — improvements or pay down the mortgage — during the term of the marriage and prior to the date of commencement. In that regard, the wife's argument carries the day. A property purchased prior to marriage and recorded solely in the name of one party is that party's separate property on the date of commencement. Any improvements — or advance payments made by the untitled friend and soon-to-be spouse — are the untitled "friend's" contribution to the wife's acquisition of the property and are characterized as gifts given in contemplation of marriage which are not subject to equitable distribution. As one court has noted, articulating the governing principle, equitable distribution law does not purport to address financial transactions between persons prior to their marriage, which "cannot be considered to have been the product of the marital enterprise." Ceravolo v. DeSantis, 125 AD3d 113, 116-117 (3rd Dept. 2013). The court added:
[the] Supreme Court's finding that the wife made certain substantial contributions of money and effort toward the acquisition and maintenance of the marital residence is amply supported by the record, the effect of such contributions by the wife—particularly those she made before the marriage—is not to transform the husband's premarital, separate property into marital propertyId. at 116. The court continued:
For this same reason, equitable distribution does not afford the wife any remedy with respect to the $30,000 that she contributed towards the down payment of the house or the pre-marriage mortgage payments that she made. Nevertheless, a spouse who makes premarital contributions to an asset titled in the other spouse's name may have other avenues to protect his or her investment, such as a prenuptial or marital agreement (see Domestic Relations Law § 236 [B] [3]) or a transfer of title to reflect joint ownership. Alternatively, as the husband argues, after the breakdown of the marriage, the non-titled spouse could bring a claim for the imposition of a constructive trust and/or for unjust enrichment. However, no such claim was made here.Id. at 117, n.1 (citations omitted). Hosmer v Hosmer, 52 Misc 3d 1215 (A) (Sup. Ct. Monroe County, 2016) (Dollinger J.). See also Cohen v. Cohen, 2017 NY Slip Op 00053 (3rd Dept. 2017) (gift bought by wife, given to husband before marriage is husband's separate property); Ahearn v Ahearn, 137 AD3d 719 (2nd Dept. 2016) (wife's purchase of property in her own name before marriage is her separate property); Macaluso v Macaluso, 124 AD3d 959 (3rd Dept. 2015) (a parcel of real property that is separate property cannot be transformed or transmuted into marital property by the efforts and contributions of the non-titled spouse). Any premarital improvements to the wife's residence are the "sweat equity" equivalent of an engagement ring: a gift in contemplation of marriage that is, as a matter of law, the separate property to the recipient. Nasca v. Nasca, 302 AD2d 906 (4th Dept. 2003).
The fact that the fiancé may have intended to be a titled owner, or even if he and his wife agreed that he would be a titled owner, does not defeat the wife's claim that the house, bought before marriage in her own name, is her separate property. As a result, given the fact that the marital residence and its proceeds are her separate property, except for any improvements or pay down of the mortgage during the marriage, the issues related to disqualification of the husband's counsel are mooted. The facts of whether the husband's attorney heard confidential information from the wife during the process of buying the house are irrelevant. There is no confidential information that could have been disclosed to the attorney that would change the characterization of the residence as the wife's separate property. Any information, disclosed by the wife, about any personal or mutual intention regarding the status of the property after it was purchased by the wife, would not defeat its status as the wife's separate property. Any disclosures, confidential or otherwise, would not change the nature of the property as separate property.
The court notes that the husband alleges that he "put down half the down payment" for the house. The wife disputes this fact, alleging that she "came up with $10,888.63 to cover the down payment." The husband's attorney, in his affidavit, makes no representations on the source of the down payment. He never alleges that the wife told him anything about the source of the down payment funds. This factual dispute - whether the husband gave the funds to his wife or contributed them directly to the down payment - is an issue left to trial. In addition, the husband argues that the increase in value of the house derived from improvements that he made, but there is no evidence whether those improvements were made before or after the marriage. While the difference in legal treatment based on the timing of the improvements or who actually "wrote the check and who cashed it" may seem like nit-picking to some, the difference is legally significant, as the prior-to-marriage household improvements or any cash transfer directly to the future bride would not be considered marital property to which the husband has any claim. The timing and nature of the husband's alleged "down payment" is also an issue left to trial.
In a prior opinion, this court explored at length the criteria for disqualification of counsel. Lyons v. Lyons, 50 Misc 3d. 876 (2015). The attorney should be disqualified if he had access to "confidential information which would be disclosed or could be used against the former client in the current litigation". Lyons v. Lyons, 50 Misc 3d. at 879. However, to disqualify an attorney, who previously represented a party, the aggrieved party must demonstrate a "clear showing" that confidential information was obtained. 50 Misc 3d at 886. In this case, the wife has not made a "clear showing" that any "confidential information" was imparted to her husband's attorney during the house purchase. There is no "clear showing" that any confidential information would be used against the wife's interest. The wife does not even present a "reasonable probability" that confidential information will be disclosed. Narel Apparel v American Utex Intl., 92 AD2d 913, 914, (2nd Dept. 1983) (a reasonable probability of disclosure [is] sufficient to justify disqualification). Furthermore, this court acknowledged in Lyons v. Lyons that a court may infer the "reasonable probability of disclosure of confidences" from the particular nature of the past and present representations at issue. Forbush v Forbush, 107 AD2d 375, 379-380, 485 NYS2d 898 (4th Dept. 1985) (courts will infer the "reasonable probability of disclosure of confidences" from the particular nature of the past and present representations at issue).
However, there is no evidence that a 'reasonable probability of a confidential disclosure" exists in these circumstances. The underlying representation of the wife by her husband's current attorney involved a run-of-the-mill purchase of a home. The wife's counsel cannot point to any "confidential information" disclosed during that representation. This court finds it hard to imagine what "confidential information" might be disclosed by a buyer of a home to her then-counsel that would be considered "confidential," nearly two years later, in a divorce action. The disclosures in a real estate transaction - the income of the purchaser, the source of funds for the down payment, the mortgage disclosures to the financing agency - are not inherently confidential and, given the broad scope of disclosure available in a matrimonial action, all of those facts would be required to be disclosed during the pending proceeding. While this court is cognizant of the wife's "freedom of apprehension and to certainty that her interests will not be prejudiced in consequence of representation of the opposing litigant by the client's former attorney," those interests are not implicated in this case. Cardinale v. Golinello, 43 NY2d 288 (1977).The motion to disqualify the husband's counsel is denied without prejudice. Dated February 21, 2017 Richard A. Dollinger, A.J.S.C.
The wife's counsel moved to disqualify the husband's counsel on the conflict of interest created by confidential disclosures made by the wife to her former counsel. Even if no confidential disclosure occurred, the husband's current attorney, if called to testify to any conversations between the husband and wife, would run afoul of the attorney-as-witness rules. Stock v Schnader Harrison Segal & Lewis LLP, 142 AD3d 210, 214 (1st Dept 2016); 22 NYCRR 1200.0] [RPC] rule 3.7. At this time, the Court declines to apply the "attorney-as-witness" rule because it is unclear whether the husband's counsel will testify regarding the conversations overheard between the couple. --------