On appeal from the Superior Court, Appellate Division.
For affirmance in part; reversal in part -- Chief Justice Wilentz, and Clifford, Handler, Pollock, O'Hern and Garibaldi. Opposed -- None. The opinion of the Court was delivered by Pollock, J.
[93 NJ Page 404] The issue on this appeal is whether a former Attorney General or the law firm in which he is now a partner, or both, should be disqualified from continuing to represent plaintiffs in a civil suit
because one or more divisions in the Department of Law and Public Safety (Department), during the term of the Attorney General, investigated matters relating to the suit. In an unreported decision, the Appellate Division affirmed the ruling of the Law Division that both the former Attorney General and the law firm were disqualified. We conclude that the law firm may continue to represent the plaintiffs, but that the former Attorney General may not participate in the case.
This matter arises in the context of cross-motions by attorneys to disqualify each other from representing their respective clients in a civil suit. The basic underlying facts are that in 1977 and 1978 plaintiffs, Howard and Theodore Ross and Roy Miller, discussed with defendants James M. Canino and Alvin Raphael the formation of a partnership, H.H.H. Senior Citizens Housing Company (H.H.H.), to build a housing project in Atlantic City. Canino and Raphael allegedly controlled defendant Island City Realty (Island), which owned or was about to acquire the property from Resorts International, Inc. (Resorts). Plaintiffs contend that they have an equitable interest in the property and seek specific performance of an alleged contract to convey the property from Island to H.H.H. Defendants contend that plaintiffs are merely creditors and that the contract is unenforceable under the statute of frauds. N.J.S.A. 25:1-5 et seq.
On April 7, 1980, the law firm of Shanley & Fisher filed the complaint on behalf of plaintiffs. Nearly a year later, on March 9, 1981, John Degnan (Degnan) resigned as Attorney General of New Jersey and joined Shanley & Fisher, a firm of over fifty lawyers, as a partner. Two months later, on May 12, 1981, Shanley & Fisher filed a motion to disqualify the firm of McGahn, Friss, Gindhart & Miller from representing Island because of its earlier representation of other parties to the suit. The McGahn firm cross-moved to disqualify Shanley & Fisher
from continuing representation of plaintiffs. Briefly stated, the basis of the McGahn cross-motion was that the Division of Criminal Justice (Criminal Justice) conducted certain investigations while Degnan was Attorney General and, because Degnan was now a partner in Shanley & Fisher, that firm should not continue as counsel for plaintiffs.
During the fall of 1980, another division in the Department, Gaming Enforcement, was investigating Resorts in connection with its application for renewal of its casino license. Gaming Enforcement forwarded certain information to Criminal Justice, which began an investigation into real estate transactions between Resorts and Island. Deputy Attorney General Gendzel, who was employed in Criminal Justice, caused subpoenas to be served on McGahn and Dr. Eugene Coyle, a principal of Island. McGahn complied with the subpoenas by meeting with Gendzel in McGahn's office and by delivering to Gendzel certain records concerning the subject property. According to Coyle, Gendzel deposed him while using a copy of the complaint in this action as a basis for questioning.
Edwin Stier, the former director of Criminal Justice, recalled notifying Degnan that a subpoena had been issued to McGahn. As Stier stated in his affidavit, this was the usual procedure when Criminal Justice subpoenaed an attorney because "a Subpoena many times triggers either telephone calls to the Attorney General, or publicity." For his part, Degnan had no recollection of the conversation with Stier and noted that it was not recorded in his daily diary. Degnan concluded, "[a]ccordingly, I can state categorically that I did not have substantial responsibility for, or indeed any involvement in, any matter relevant to the subject matter of this litigation."
The trial court granted both motions. In its decision, that court found that Degnan "had no personal involvement" in the investigation and that
he apparently acquired no confidential information as a result of that investigation and has not shared any information with any member of his law firm. In fact, the subpoena previously referred to covered materials that were already in the possession of ...