United States District Court, D. New Jersey
SANDADI V. REDDY, Plaintiff,
ATUL K. PATEL, et al., Defendants.
OPINION AND ORDER
B. CLARK, III UNITED STATES MAGISTRATE JUDGE
MATTER comes before the Court on a motion by Defendant and
Third-Party Plaintiff Ghanshyam Patel (“Sam”) to
disqualify Archer & Greiner, P.C. (“Archer
Law”) from the representation of Defendant Atul K.
Patel (“Atul”) and Defendant Dharmendra Barot
(“Barot”) (collectively herein
“Defendants”) [Dkt. No. 40]. Additionally,
Sam's motion requests that the Court restrain Defendants
from using company assets to pay their attorneys [Dkt. No.
40]. Atul and Barot oppose Sam's motion [Dkt. No. 46].
For the reasons set forth below, Sam's motion [Dkt. No.
40] is DENIED.
Sandadi Reddy (“Plaintiff”) initiated this action
against Defendants and Sam by filing a Verified Complaint in
Supreme Court of the State of New York, Queens County, which
was later removed to the Eastern District of New York
pursuant to 28 U.S.C. § 1441 and subsequently
transferred to this District [Dkt. Nos. 1, 5]. On January 31,
2019, Sam filed an Answer to the Amended Complaint,
Cross-Claims and Third-Party Complaint asserting individual
and derivative claims against Defendants, and also asserting
cross-claims against East Hanover Hotel and Conference
Hospitality LLC (“Hospitality”). See
Dkt. No. 32. Sam's claims include breach of contract,
membership oppression, breach of fiduciary duties and fraud
regarding the ownership and management of the subject hotel
business. Dkt. No. 32. On or about February 15, 2019,
Hospitality filed its Answer to Sam's crossclaims, which
denied all claims and stated that Sam “is not a member
of Hospitality.” Dkt No. 36. On or about February 28,
2019, Defendants answered Sam's Crossclaims and
Third-Party Complaint and denied all claims by Sam [Dkt. No.
ownership structure of the subject hotel business can be
described as follows: Hospitality holds 100%-member interest
in East Hanover Associates LLC (“EH Associates”),
which owns the subject hotel and leases the subject hotel
premises. See Dkt. No. 40-2 at p. 2; Dkt. No. 46-3,
¶ 3(a)-(b). In turn, East Hanover Hotel and Conference
Management LLC (“Management”) held a fifty
percent (50%) ownership interest in Hospitality. Dkt. No.
40-2 at p. 2; Dkt. No. 46-3, ¶ 3(c). The parties do
not dispute that initially Atul, Barot, and Sam each held 1/3
member interest in Management. Dkt. No. 40-2 at p. 2; Dkt.
No. 46-3, ¶¶ 3(d), 4. It is Atul and Barot's
position that Sam relinquished and surrendered his ownership
interest in Management in 2015, and Management was later
dissolved in or about August 2017 with Atul and Barot
assuming its membership interest in equal shares. Dkt. No.
46-3, ¶ 3(d). Sam, however, contends that he was a
member of Management at its dissolution and now holds an
interest in EH Associates through Hospitality. Dkt. No. 40-2
at pp. 4-5.
Law's Representation of Hotel Business Entities and
the subject hotel business, it is undisputed that Archer Law
has represented certain entities and individuals as discussed
Law's Representation of Hospitality
Law represented Hospitality in an eviction action filed on or
about August 29, 2016 captioned Eric-Richard, LLC and
East Hanover Ramada Addition v. East Hanover Hotel and
Conference Hospitality, LLC d/b/a Fairbridge Inn,
Superior Court of New Jersey, Law Division, Morris County,
Special Part, Landlord/Tenant Division, No. LT-1957-16. Dkt.
No. 46-3, ¶ 5. On or about December 9, 2016, the court
granted Hospitality's motion to dismiss with respect to
one claim, and the remainder of the action was resolved by
way of a Stipulation of Dismissal and Stipulation of
Settlement dated January 9, 2017. Dkt. No. 46-3, ¶¶
6-7, Exs. F-H.
Law's Representation of EH Associates
Law represented EH Associates in a civil action filed on or
about September 19, 2016 captioned AIMS Capital
Investments, LLC v. EH Associates, LLC, Eric-Richard, LLC and
East Hanover Ramada Addition, Superior Court of New
Jersey, Chancery Division, Morris County, No. C-108-16. Dkt.
No. 40-2 at p. 6 n.2; Dkt. No. 46-3, ¶ 8, Ex. I. AIMS
Capital Investments, LLC later amended its complaint naming
Atul and Barot as individual defendants. Dkt. No. 46-3,
¶ 12. On or about May 18, 2018, Archer Law withdrew from
representation of EH Associates, but continued to represent
Barot and Atul. Dkt. No. 46-3, ¶ 13, Ex. L. The lawsuit
thereafter ended in a confidential settlement agreement with
a Stipulation of Dismissal filed on or about June 19, 2018.
Dkt. No. 46-3, ¶ 14, Ex. M.
Law's Involvement in the EHR10 Action
about December 20, 2016, EHR10 and its members filed an
action against Management, Atul, Barot and Sam captioned
East Hanover Route 10 LLC, et al v. East Hanover Hotel
and Conference Management, LLC, et al, Superior Court of
New Jersey, Morris County, No. L-2787-16. Dkt. No. 46-3,
¶ 17. On or about June 19, 2018, the parties entered
into a confidential settlement agreement. Dkt. No. 46-3,
¶ 21, Ex. P. Archer Law did not enter an appearance in
this action but states it did have limited involvement in
negotiating the settlement agreement on behalf of Atul and
Barot. Dkt. No. 46-3, ¶ 22. At the time of the
settlement, it is Defendants' position that Management no
longer existed as an entity and Sam had already relinquished
his interest. Dkt. No. 46-3, ¶¶ 3(d), 22. As a