PRELIMINARY STATEMENT

The Plaintiffs in the second case captioned above seek an order disqualifying

Anthony Galasso was a bookkeeper for the law firm in which his brother was the first-named partner. Pursuant to a scheme conducted over the course of a number of years, he looted an escrow account maintained for a client of the firm, in which the proceeds of a real estate transaction were placed pending a direction from a Court as to the disposition of these funds in conjunction with a matrimonial action. The specifics of Anthony's conduct, which resulted in his plea of guilty to 22 counts of an indictment, including two Class "B" felonies, are set forth in the [*2]Affidavit of Peter J. Galasso at ¶¶ 19 — 30. The substance of the allegations against the five individual Defendants, including Anthony's wife Christine, Matthew and Jeanne Mazella, and Robert and Donna Fresella, is that each of them knowingly received the proceeds of, and benefitted from, Anthony's misappropriation of some $4,000,000 from the firm and its clients. These are set out at ¶¶ 115 — 126 of the Complaint, annexed as Exh. "B" to the Peter J. Galasso affidavit.

The Cross-motion seeks an Order disqualifying the attorney for the Plaintiff and demands summary judgment pursuant to Civil Practice Law and Rules. The latter motion was denied from the bench by the Court during the course of oral argument on January 21, 2009. The remaining portion of the motion is for the disqualification of Mr. Goidell. As set forth at ¶¶ 19 — 20 of the Affidavit of Thomas Liotti in support of the cross-motion, the relationship of Mr. Goidell with the Galasso law firm during Anthony's term of employment makes him a potential witness as to his own conduct during the time in question.

Another matter currently pending before Hon. Daniel Palmieri in this Court bears upon the issues raised by this motion and cross-motion. Justice Palmieri has ruled that there was a waiver of attorney-client privilege between Anthony and Mr. Liotti. As such, at least some of the conversations between them will be subject to inquiry in the course of this proceeding. While the liability of Anthony is hardly a matter of great dispute, his having pled to 22 counts of an indictment alleging his malfeasance, that of his co-defendants, the beneficiaries of his largesse, is less than clear.

As a practical matter, their guilt or innocence of the allegations of the complaint will depend upon their knowledge of the source of the funds to finance a lavish lifestyle, which they may have discussed with Anthony, or with Mr. Liotti before the attorney-client relationship with him blossomed. As such both Anthony and Mr. Liotti have the potential to sink these Defendants' ship.

There is no question but that disqualification motions have been abused in an effort to gain tactical advantage, and, in the absence of a fairly well-documented conflict of interest, they should not be countenanced. But it is equally true that "(t)he mere appearance that an attorney is representing conflicting interests is sufficient to warrant disqualification". Phoenix Elec. Contracting Corp. v. New York Telephone Co., 155 Misc 2d 250, 251 (NY Sup. 1992).

Defense counsel's reference to the financial limitations of the five individuals he has appeared for, and his willingness to represent them for less than it would cost elsewhere, is commendable, but places them in a difficult position. The responsibility of Anthony is attested to by his plea of guilty and subsequent imprisonment. He has very little to gain by a vigorous defense of the civil action. The other individuals, on the other hand, are either responsible or not depending primarily upon what Anthony may have told them about the source of the funds he was expending . To that extent there is certainly, at the very least, the appearance that a conflict may impinge on the representation of the individuals other than Anthony.

The blood marital relationship between Anthony and Christine, and the fact that the two other female Defendants are Christine's siblings can only complicate the issue. There have undoubtedly, in the ordinary course of family life, been numerous conversations among the siblings and their spouses as to Anthony's dilemma, and what they knew of it while he was [*3]perpetrating his deceit. It is also likely that certainly Christine, and perhaps her siblings or their spouses, discussed these issues with Mr. Liotti during his preparation for the defense of Anthony, and before they were his clients in this civil action.

The Disciplinary Rules speak to this issue. 22 NYCRR § 1200.24 (DR 5-105) directs a lawyer to disqualify himself if it would be likely to involve the lawyer in representing different interests. The exception is if a disinterested lawyer would believe that the attorney could competently represent the interests of all of the clients after full disclosure of the implications of simultaneous representations. In this case, where Anthony has been found, in certain respects, to have waived the lawyer-counsel privilege, and where Mr. Liotti may be called as a witness with respect to his discussions with Anthony and some or all of the other five individuals he now represents, there is essentially no likelihood that a disinterested attorney would find that these relationships do not hinder the ability of Mr. Liotti to adequately represent all the parties.

The motion to disqualify Mr. Liotti from representing Christine Galasso, Matthew and Jeanne Manzella, and Robert and Donna Fresella is granted.

The cross-motion for summary judgment was denied on January 21, 2009 from the bench.

The cross-motion to disqualify Mr. Goidell is denied. Mr. Goidell's status as a former member of the Galasso and Langione firm does not disqualify him. He left the Galasso firm seven years before the conduct of Anthony which is the genesis of this proceeding, thus the references to the possibility of his involvement as a witness as to his own supervisory responsibilities are simply specious. There is no rational basis to conclude that Mr. Goidell is, or may reasonably be anticipated to incur a conflict, or require his personal testimony in the action.

This constitutes the Decision and Order of the Court.

Dated: January 29, 2009

J.S.C.