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State v. Lundy

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


November 25, 2008

STATE OF NEW JERSEY, PLAINTIFF-APPELLANT,
v.
JOHN R. LUNDY, DEFENDANT-RESPONDENT.

On appeal from the Superior Court of New Jersey, Law Division, Camden County, Indictment No. 06-11-3721.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted October 15, 2008

Before Judges Fuentes, Gilroy and Chambers.

On leave granted, the State appeals from the September 9, 2007 order of the Law Division denying its motion to disqualify attorney Saul J. Steinberg and his law firm, Sufrin, Zucker, Steinberg, Sonstein & Wixted (the Firm), from representing defendant John R. Lundy in this criminal proceeding. We reverse.

On November 2, 2006, a Camden County Grand Jury charged defendant under Indictment No. 06-11-3721 with second-degree healthcare claims fraud, N.J.S.A. 2C:21-4.3c and N.J.S.A. 2C:2-6 (Count One), and with three counts of second-degree attempted theft by deception, N.J.S.A. 2C:20-4 and N.J.S.A. 2C:5-1 (Counts Two, Three and Four). The charges allege that defendant provided healthcare services to individuals injured in automobile accidents and then submitted payment claims for the services to the parties' automobile insurance carriers, although defendant was not licensed in the State of New Jersey to render the healthcare services.

On August 24, 2007, the State served Steinberg with a list of its prospective trial witnesses, which included the names of approximately fifty individuals previously treated by defendant for which services defendant later submitted payment claims to the witnesses' automobile insurance carriers. Three of the prospective witnesses were individuals that other members of the Firm had previously represented in prosecuting personal injury protection (PIP) claims against their automobile insurers. The PIP claims arose from the same injuries treated by defendant. On October 24, 2007, in the course of identifying exhibits for trial, the Division of Criminal Justice found letters dated July 7, 2000, and August 21, 2000, from the Firm to two of the prospective witnesses' automobile insurers. The Division's investigators contacted the two prospective witnesses and verified that members of the Firm had represented them in prosecuting prior PIP claims.

On October 30, 2007, the State filed a motion seeking to disqualify Steinberg and the Firm. After filing the motion, the State discovered that a third prospective witness who was also treated by defendant was represented by the Firm in prosecuting the witness's PIP claim. During the course of oral argument, Steinberg informed the court that there may be a fourth witness similarly situated as the other three. Steinberg stated that the name of another individual contained in the State's list of prospective trial witnesses was identical to that of a client that the Firm had previously represented in prosecuting a PIP claim.

The State's motion was argued on November 1 and 7, 2007. After determining that the prospective witnesses' PIP claims were resolved years prior, the court stated at the November 7, 2007 proceeding:

You can both sit down.

By reason of the fact I really don't find under the circumstances this being a direct conflict. I would feel a lot more relaxed if it was a non-jury, and again I bring up procedurally what we had discussed and this is not [this judge] sitting over you, Mr. Steinberg, or with a wink-wink saying, "Well, if you go non-jury then maybe I can do something for you." You were the one that broached the subject first. I think that's fair to say and this is well in advance of me even knowing this.

If you are going non-jury I am going to deny the application without prejudice and again, that is not putting any pressure on your client. I very well still may deny the motion if he goes jury. I just want that clear.

So at this point in time I'm punting. I am withholding a final decision but I can indicate if it is a non-jury the application will be denied. I feel comfortable that since I'm both sitting as judge and jury that the issue can be controlled where I feel totally comfortable in handling the issues at hand and allowing both of you to present your case freely and it will not have any impact on me and my decision.

If he is going non-jury I feel comfortable proceeding with Mr. Steinberg as counsel. That is a definite. But I caution because I don't want anybody to think or any appellate review of this that I am putting some pressure on Mr. Steinberg to go non-jury. And the reason I put on the record the fact that Mr. Steinberg was the first person well in advance of any of the three of us knowing that this was a potential issue, he's the one that brought up the fact that this is -- I assume, reading between the lines and knowing you as I have for far too many years, that you see this case more of an interpretation of the law than you do of the facts to a point where you feel comfortable that really you would feel more comfortable having a jurist review what I see -- I can't say they're uncontroverted facts, but pretty close to that.

During a trial status conference on November 9, 2007, the Deputy Attorney General inquired as to the court's decision on the State's motion to disqualify counsel. The court replied: "If he's going non-jury, as I assume he is at this point in time, I am denying the motion." After Steinberg confirmed that defendant was going to proceed non-jury, the court entered the order denying the motion.

On appeal, the State argues: that it will suffer irreparable injury if Steinberg and the Firm are not disqualified; a conflict of interest exists because of the Firm's prior representation of the State's material witnesses and Steinberg's and the Firm's present representation of defendant; and the trial court erred in denying its motion "on the irrelevant fact of defendant[] having opted for a bench trial over a jury trial."

Our review of the trial court's decision is plenary. "Where as here the trial judge has no factual disputes to resolve on credibility grounds and only legal conclusions to draw, we are not required to defer to the trial judge's findings." State v. Bruno, 323 N.J. Super. 322, 331 (App. Div. 1999). Appellate review of a trial court's decision, granting or denying a motion to disqualify trial counsel, presents a question of law subject to review de novo. J.G. Ries & Sons, Inc. v. Spectraserv, Inc., 384 N.J. Super. 216, 222 (App. Div. 2006).

A defendant in a criminal proceeding must be provided a "fair opportunity" to be represented by counsel of his or her own choice. State ex rel. S.G., 175 N.J. 132, 140 (2003). However, that right is not unbridled.

"[A] criminal defendant has the right to counsel 'whose representation is unimpaired and whose loyalty is undivided.'" State v. Alexander, ___ N.J. Super. ____, ____ (App. Div. 2008) (quoting State v. Murray, 162 N.J. 240, 249 (2000)). A "defendant's right to effective assistance of counsel includes both adequate representation and right to attorney's conflict-free, undivided loyalty." S.G., supra, 175 N.J. at 139 (citing U.S. v. Moscony, 927 F.2d 742, 748 (3d Cir. 1991)). Accordingly, when a conflict of interest is found, a defendant's right to counsel of his or her own choice must yield to the Sixth Amendment right to effective assistance of counsel. Id. at 139-40; State v. Lasane, 371 N.J. Super. 151, 161 (App. Div. 2004), certif. denied, 182 N.J. 628 (2005).

Moreover, in addition to a client's interest in being represented by an attorney free of any conflicts of interest, the court has an interest in assuring that the proceeding is free of any appearances of impropriety or unfairness. See In re Cohn, 46 N.J. 202, 213 (1966) (stating that an attorney's dual representation of a defendant in a liquor license revocation proceeding and of a State's witness testifying against that defendant "would not be conducive to respect for law, order, and the judicial process. Public knowledge of those relationships could and probably would engender, at the least, a serious doubt about the integrity of the proceeding."); see also State v. Davis, 366 N.J. Super. 30, 38 (App. Div. 2004) (holding that "the court maintains an independent interest in assuring that conflict-free representation occurs, since the existence of conflict undermines the integrity of the court").

In determining whether a conflict exists, we are guided by the Rules of Professional Conduct (RPC).

RPC 1.7 provides in pertinent part:

(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:

(2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client, or a third person or by a personal interest of the lawyer. [RPC 1.7(a)(2) (emphasis added).]

RPC 1.9 provides in pertinent part:

(a) A lawyer who has represented a client in a matter shall not thereafter represent another client in the same or a substantially related matter in which that client's interests are materially adverse to the interests of the former client unless the former client gives informed consent confirmed in writing.

(c) A lawyer who has formerly represented a client in a matter or whose present or former firm has formerly represented a client in a matter shall not thereafter:

(1) use information relating to the representation to the disadvantage of the former client except as these Rules would permit or require with respect to a client, or when the information has become generally known; or

(2) reveal information relating to the representation except as these Rules would permit or require with respect to the client. . . . [RPC 1.9.]

Accordingly, a conflict may arise from an attorney's duty owed to a former client. Moreover, where an attorney is prohibited from representing a client pursuant to RPC 1.7 or RPC 1.9, the prohibition applies to all members of the attorney's firm "unless the prohibition is based on a personal interest of the prohibited [attorney] and does not present a significant risk of materially limiting the representation of the client by the remaining [attorneys] in the firm." R.P.C. 1.10(a). If a conflict of interest is determined to exist, the appropriate remedy is disqualification of the attorney. State v. Loyal, 164 N.J. 418, 430 (2000) (upholding a mistrial after determining an appearance of a conflict of interest because defense counsel had previously represented a material witness of the State).

Here, defendant is charged with healthcare claims fraud and attempted theft by deception based on allegations that defendant not only provided healthcare services to individuals injured in automobile accidents, but also submitted claims for payment of the services to their automobile insurance carriers, notwithstanding that defendant was not licensed in New Jersey to render the services provided. At least three and possibly four of the State's prospective witnesses are individuals who were treated by defendant and were represented by members of the Firm in prosecuting PIP claims against the same automobile insurance carriers that were billed by defendant. Because the issues of the witnesses' injuries and treatment are substantially similar in the present proceeding as they were in the PIP claim matters, a presumption exists that defense counsel, through other attorneys in the Firm who represented the witnesses on the PIP claims, received confidential information from those witnesses concerning their injuries and treatment. Reardon, supra, 83 N.J. at 473; State v. Catanoso, 222 N.J. Super. 641, 645 (Law Div. 1987).

This court recently held that "an attorney should not represent a client if there is a significant risk that the representation will be materially affected by some duty of loyalty or responsibility to himself or to a third person [including a former client]." Lasane, supra, 371 N.J. Super. at 161-62. We are satisfied that such "a significant risk" exists here. The State's witnesses are subject to cross-examination and if cross-examined, defense counsel could unintentionally use information the Firm received from its prior representations of those witnesses in order to benefit defendant. The opposite is also true. If defense counsel has received confidential information concerning defendant's treatment of the witnesses' injuries from the Firm's former clients, counsel is limited in representing defendant because he cannot then use that confidential information to cross-examine the witnesses. Such restraint in cross-examining witnesses because of counsel's divided loyalty would deprive defendant of his Sixth Amendment right to effective assistance of counsel. S.G., supra, 175 N.J. at 139-40. Moreover, counsel's continued representation of defendant could open the court to "a serious doubt about the integrity of the proceeding." Cohn, supra, 46 N.J. at 213.

Accordingly, we determine that the trial judge mistakenly exercised his discretion in denying the State's motion to disqualify Steinberg and the Firm. We reverse and remand to the trial court to enter an order granting the State's motion for disqualification of counsel. Because we reverse, determining that a conflict of interest exists because of the Firm's prior representation of the State's material witnesses, we do not address the State's alternative argument that the trial court erred in denying the motion "on the irrelevant fact of defendant[] having opted for a bench trial over a jury trial," other than to state that we agree. A conflict of interest is a conflict of interest, whether the proceeding is tried to a jury or to the court.

Reversed and remanded for further proceedings consistent with this opinion.

20081125

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