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O Builders & Associates, Inc. v. Yuna Corp.

July 2, 2010


On appeal from the Superior Court of New Jersey, Law Division, Bergen County, L-6905-09.

Per curiam.


Argued June 1, 2010

Before Judges R. B. Coleman and Coburn.

On August 6, 2009, plaintiff filed a complaint against defendant in the Law Division for breach of contract and unjust enrichment. In short, plaintiff alleged that during 2004 defendant had employed it to remodel plaintiff's restaurant on Bergen Avenue in the Borough of Palisades Park. The complaint further alleged that after the work was completed defendant refused to pay the bills submitted by plaintiff, which totaled $221,111. Defendant filed an answer denying liability and a counterclaim alleging that plaintiff had induced defendant to permit the work to proceed by orally representing that the total cost of the project would be substantially less than the amount sought in the complaint. It appears from the counterclaim that defendant is alleging that the work was to cost no more than $155,000. The counterclaim seeks relief based on fraud in the inducement, breach of contract, and consumer fraud.

In September 2009, defendant filed a motion to disqualify plaintiff's attorney on the ground that he had a conflict of interest because of his prior representation of defendant's principal, Kay Kang. Certifications were filed by both sides, and the trial court ultimately denied the motion. Defendant sought leave to appeal, which we permitted. Thus, the sole question is whether the trial court correctly denied defendant's motion to disqualify plaintiff's attorney, Peter Y. Lee.

Kang's initial certification asserted that she consulted with Lee "concerning pending litigation and business matters" around March 2007. She met with Lee and a mutual friend, who had arranged the meeting, at one of her restaurants in Palisades Park. She asserted that "we discussed extensively about my business history and the pending legal disputes" for about three hours. One of the cases discussed was "Gigs, Inv., v. Kyung Hee Park, et al., in which I was sued . . . as well as my late husband, James Park." The suit alleged a breach of a lease extension agreement. The discussions also concerned "the circumstances under which the Palisades location was established[,]" and the history and "then-present state of affairs" of the "Baden Baden business." Kang asserts her belief that the present action "will implicate portions of the information discussed with Mr. Lee previously when he was consulted for legal representation." Kang also asserts that if a judgment is obtained in the pending action and her "company is unable to pay the judgment, other information disclosed by me during the previous consultation may be impinged as well, such as financial information and managerial information." Her second certification added nothing of substance.

Defendant also submitted the certification of Dong Hyun Lee, who was the third person present at the meeting with Lee. He indicates that he was Kang's advisor on legal and business affairs and a close friend of her husband. He asserted that at the meeting with Lee there was discussion of Kang's "business, pending legal disputes, finances and other confidential matters for several hours."

The case that Kang wanted Lee to become involved with was about to go to trial. After reviewing her attorney's file, Lee wrote to her declining to become involved as her attorney. In his certification, Lee denied having received any confidential information regarding Kang's general business practices and asserted that the present case is completely unrelated to the matters discussed in 2007 with Kang.

Motions for disqualification should ordinarily be decided on the certifications and documentary evidence. Dewey v. R.J. Reynolds Tobacco Co., 109 N.J. 201, 222 (1988). Lee properly concedes that even though he decided not to represent Kang, the nature of their meeting was such as to create an attorney-client relationship with respect to the litigation discussed. See, e.g., Herbert v. Haytaian, 292 N.J. Super. 426, 436 (App. Div. 1996). Lee's primary point is that there is no relationship between the case or cases he discussed with Kang in 2007 and the instant litigation commenced two years later.

Disqualification is only required if the two matters are substantially related. City of Atlantic City v. Trupos, _____ N.J. _____, _____ (2010) (slip op. at 14). For these purposes, matters are deemed to be "substantially related" if (1) the lawyer for whom disqualification is sought received confidential information from the former client that can be used against that client in the subsequent representation of parties adverse to the former client, or (2) facts relevant to the prior representation are both relevant and material to the subsequent representation. [Ibid.]

In this case, the two matters are completely unrelated. None of the suits pending when Kang met with Lee had anything to do with the instant dispute. Although Kang asserts that the discussion included "the then-present affairs" of the "Baden-Baden business," she does not claim that those "then-present affairs" had anything to do with the present dispute. Nor does she explain how the allegedly confidential information could be used against her or her company in the instant litigation. Finally, her concerns about some advantage accruing to Lee with respect to collecting a judgment are stated in the vaguest of terms. Thus, she has not demonstrated that facts relevant to the prior representation are both "relevant and material" to the instant case.

Defendant had the burden of persuasion to prove that disqualification was justified. Id. slip op. at 34. Her vague assertions of possible prejudice utterly fail to show that disqualification was justified in this case. ...

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