This case arises out of an aborted real estate transaction for the sale of cooperative apartment 11B (the "Apartment") in a building known as and located at 1148 Fifth Avenue, New York, New York (the "Building"), which is owned by The 1148 Corporation (the "Corporation"). Plaintiffs Michael D. Colacino ("Mr. Colacino") and Deborah Colacino ("Mrs. Colacino") (together, the "Colacinos") move for partial summary judgment on their complaint and seek an order directing Defendant Steven R. Ebert ("Ebert"), as escrowee, to release to them a security deposit of $380,000.00 (the "Security Deposit") which they paid in relation to an agreement for them to purchase the Apartment (the "Agreement") and which remains in an escrow account (the "Escrow Account"). Ebert does not oppose the motion. Defendants Dynda J. Andrews ("Andrews") and John J. Kirby, Jr. ("Kirby") (together, the "Sellers") oppose the motion and cross move to have Henry J. Bergman, Esq. ("Bergman") disqualified from further representation of the Colacinos in this action. For the reasons stated below, the motion and the cross motion are denied.

Background

The Sellers owned 409 shares in the Corporation allocable to the Apartment and had a proprietary lease for the ApartmentThe Sellers retained Debby Solomon ("Solomon"), a Senior Vice-President of Prudential Douglas-Elliman, to act as their real estate agent and market the Apartment. In or around July 2009, Lauren Muss ("Muss"), a real estate broker with the Corcoran Group who was representing the Colacinos, informed Solomon that the Colacinos were [*2]interested in purchasing the Apartment.

The Sellers and the Colacinos entered into the Agreement, which is dated August 7, 2009. Pursuant to the terms of the Agreement, the Sellers agreed to sell, and the Colacinos agreed to purchase from the Sellers, the Apartment for a total purchase price of $3,800,000.00, which includes the Security Deposit of $380,000.00 or 10% of the purchase price. The Agreement consists of a form contract (the "Contract"), a rider added by the Colacinos (the "Colacinos' Rider"), a rider added by the Sellers (the "Sellers' Rider), and a "lead-based paint rider." See Ebert dep. at 13; Exhibit 2 of the Colacinos' moving papers . Paul Giddins ("Giddins") acted as the attorney for the Colacinos, and Ebert was the attorney for the Sellers.

The Agreement specifies that the sale of the Apartment is subject to the unconditional consent of the Corporation. Contract at ¶6.1. The Agreement requires the Colacinos to "in good faith" submit an application to the Corporation containing such documents and information as the Corporation requires, attend one or more personal interviews as requested by the Corporation, and promptly submit to the Corporation such further references, data, and documents as reasonably requested. Contract at ¶6.2.

The date scheduled for the closing on the sale of the Apartment (the "Closing"), upon which the transfer of ownership of the shares and the lease was to occur, was September 1, 2009 (the "Scheduled Closing Date").^[FN1] However, the Contract provides that if the Corporation has not approved the sale of the Apartment to the Colacinos on or before the Scheduled Closing Date, then the Closing shall be adjourned "for 30 business days for the purpose of obtaining such consent. If such consent is not given by such adjourned date [(the "Adjourned Closing Date")], either Party may cancel this Contract by Notice of Cancellation, provided the Corporation's consent is not issued before such Notice of Cancellation is given." Contract at ¶6.3. The parties do not dispute that under this provision that either party may cancel the Contract if the Corporation's consent is not obtained by October 15, 2009, which is 30 business days after September 1, 2009. The Contract also provides that "if the consent is refused, or not given, due to the Purchaser's bad faith conduct, Purchaser shall be in default." Contract at ¶6.4.

The Sellers' Rider provides that, "[t]his sale and [the Colacinos'] obligations under [the Agreement] are expressly not subject to the sale of the [Colacinos'] current residence or any other real property or cooperative owned by [the Colacinos]." Sellers' Rider, ¶20.

The Sellers and the Colacinos agree that at the time they negotiated the Agreement, the Colacinos insisted on an early Closing. Mr. Colacino states that it was important for him to have an early Closing because he and his family desired to move into the Apartment towards the beginning of his children's school year. Mr. Colacino further states that,

"[h]aving the ability to get out of the [Agreement] and get our money back if we could not take title and move in [by the Adjourned Closing Date] would allow us to proceed with our fall back plan, which was to move out of our Beach Street home [(the "Beach Street Residence")] into a hotel or an uptown apartment that we would rent, sell the Beach Street [R]esidence and look for [*3]another apartment to buy." Mr. Colacino Aff. at ¶6.

Solomon, the Sellers' broker, states in her affidavit that, after the Agreement was executed, she was in almost constant contact with the Colacinos' broker, Muss in regard to the transaction, mostly about what materials the Colacinos needed to prepare and provide to the Board of Directors of the Corporation (the "Board") in the Colacinos' application to purchase the Apartment (the "Application"). Solomon Aff. at ¶11. Solomon explains that based on her specific experiences with cooperative corporations' boards of directors, she fielded a number of questions from Muss about "what information and presentation form at would be most acceptable to and successful with the Board with a view to expediting closing on the [Agreement]." Id. ¶12. However, it appears that Mr. Colacino rejected at least some of these suggestions, and Solomon states that she considered that the initial documents and information prepared for submission would be insufficient to satisfy the Board, at least as it was described to her by Muss. Id. at ¶13-17.

Audrey Spiegel ("Spiegel"), the President of the Corporation, states that the Application was received on or about August 18, 2009. The Board had concerns about the financial information provided by the Colacinos as it was valued as of December 31, 2008. See Spiegel Aff. at ¶6. Spiegel requested that Tonya Sledge-Goodwine ("Sledge"), an employee of the Building's managing agent, Prudential Douglas Elliman Property Management ("Prudential Management"), convey to the Colacinos that updated information was required for Board approval along with information about the status of the sale of the Beach Street Residence, which they were advised had been scheduled for September 15, 2009. Id.

On September 16, 2009, Mr. Colacino sent an e-mail to Muss ("E-mail No.1"), in which he explains that he has not closed on the Beach Street Residence yet because he is hoping not to have to move twice. He further states in this e-mail that the closing on the Beach Street Residence "is scheduled and will occur on October 14th."

Mr. Colacino states that, after the initial submission of the Application, he heard nothing from the Board until September 17, 2009, when the request for additional information was communicated to him. Colacino Aff. ¶9. Mr. Colacino states that he supplied the requested information to the Board within 48 hours. Id.

Spiegel states that the new information and documentation, which included information that the sale of the Beach Street Residence had been rescheduled for October 14, 2009, was distributed to the Board on September 21, 2009. Id. at ¶7. According to Spiegel, the new information provided by the Colacinos raised concerns with the Board. Id. at ¶8. The Board requested, among others, correction of certain financials containing arithmetical errors, valuations of certain of the Colacinos' real estate holdings, an explanation of the postponement of the closing on the Beach Street Residence, and information concerning any proposed financing for the Apartment. Id.

Solomon states that Mr. Colacino "flatly and repeatedly" refused to respond to the Board's requests for additional information and that she and Muss attempted to address the Board's concerns in a side letter (the "Side Letter") to the Board.^[FN2] On September 29, 2009, Muss [*4]sent a number of e-mails to Mr. Colacino requesting clarification in regard to his financial information. In an e-mail from Muss to Mr. Colacino, date stamped September 29, 2009, 3:37 p.m. (E-mail #2), Muss thanks Mr. Colacino for confirming that he intends to use proceeds from the sale of the Beach Street Residence to finance the purchase of the Apartment. In response to some of the requested clarifications, Mr. Colacino states in an e-mail to Muss, date stamped September 29, 2009, 5:37 p.m. (E-mail #3), "Why are the micro details of my cash management of such major concern here . I am being interrogated by you and [Solomon] like there is some hidden agenda and frankly it is humiliating and unnecessary."

Mr. Colacino permitted Muss to submit the Side Letter to the Board. It appears that the Side Letter was submitted on September 29, 2009, and was received by the Board on October 2, 2009. Spiegel states that she was not able to review this information until October 7, 2009, when she returned to New York following a trip. Spiegel discussed the responses with others on the Board and a majority wished to interview the Colacinos "despite doubts by certain members of the Board as to [the Colacinos'] financial liquidity especially if the Beach Street [Residence] did not close." Spiegel Aff. at 11.

According to Mr. Colacino, since the beginning of October or before, he began to consider it to be a foregone conclusion that the Board would not give its unconditional approval to the sale of the Apartment on or before October 15, 2009. Mr. Colacino further states that, as a result of this, he began to make arrangements for an uptown rental apartment and instructed his attorney, Giddins, to exercise the termination option under Paragraph 6.3 of the Contract as soon as possible.

On October 13, 2009, Spiegel and two other members of the Board interviewed the Colacinos and determined that the Colacinos should be approved to purchase the Apartment "but that such approval be conditioned upon the sale of the Beach Street [Residence] prior to [C]losing." Spiegel Aff. ¶12. It appears that before or around the time of the interview, Speigel had been told that the closing on the Beach Street Residence had been postponed until October 16, 2009. Spiegel states that she communicated her approval recommendation to the other members of the Board on October 14, 2009, and she also recommended that, as an accommodation to the Colacinos, because the closing on the Beach Street Residence was scheduled for October 16, 2009, that the Colacinos and Sellers be advised of this approval prior to a formal vote on the matter at the regularly scheduled Board meeting on October 22, 2009. Id. at 13. According to Speigel, a majority of the Board agreed and, on October 15, 2009, Spiegel communicated this by telephone to Sledge.

According to Solomon's affidavit, Muss was informed by Sledge, prior to 5:00 p.m. on October 15, 2009, that "Mr. Colacino's Board application had been approved, in accommodation of his expressed scheduling concerns, even before he actually submitted final documentation of the closing." Solomon Aff. at ¶20. Solomon states that she conferred with Muss as to how to explain the terms of this approval, which they considered to be unconditional, to the Colacinos. Id. at ¶22. Muss decided to describe the approval as "contingent" upon the provision of adequate documentation.

On or prior to October 15, 2009, in accordance with Mr. Colacino's instructions, Giddins [*5]drafted a Notice of Cancellation on behalf of the Colacinos, which is dated "October 15, 2009 (5:00 p.m.)." The Notice of Cancellation is addressed to Ebert and states that the Colacinos are exercising their option to cancel the Agreement pursuant to Paragraph 6.3 of the Contract because "[i]t has now been more than 30 business days since September 1 and the Corporation has still not made a decision or issued its consent [to the Colacinos' purchase of the Apartment]." The Notice of Cancellation further states that the Colacinos request the return of the Security Deposit. The Notice of Cancellation was personally delivered to Ebert on October 15, 2009, at "approximate [sic] 5 o'clock plus or minus 15 minutes or so " (Ebert dep. 44) and was also sent via facsimile prior to 5:00 p.m.

By e-mail dated October 15, 2009, 5:10 p.m., Muss informed the Colacinos that their application was approved by the Board contingent upon the sale of the Beach Street Residence. It appears that Muss and Solomon were informed of the Notice of Cancellation within one or two days.

In a letter to Ebert dated October 20, 2009 ("Andrews' Letter"), Andrews writes that "the [Colacinos have] elected to cancel the [Agreement] by a notice dated October 15, 2009," and she requests that Ebert release to her the Security Deposit as liquidated damages based on "the [Colacinos'] willful breach of the terms of, and lack of good faith in timely complying with, the terms and conditions of the [Agreement]."

By letter dated October 20, 2009 ("Giddins' Letter"), Giddins informed Ebert that the Security Deposit had not been released to the Colacinos despite due demand for it, and that if it was not returned immediately, the Colacinos would commence an action for the return of the Security Deposit.^[FN3]

By letter dated October 22, 2009 ("Ebert's Letter"), Ebert informed Giddins that the Notice of Cancellation was untimely and improper. However, Ebert does not explain the grounds for his assertion that the Notice of Cancellation was untimely and improper either in Ebert's Letter or in Ebert's subsequent deposition in respect to the present action. In Ebert's Letter, Ebert informs Giddins that Andrews had made demand for the amount of the Security Deposit.

At some time after the Notice of Cancellation was served, the Colacinos requested that the Sellers renegotiate terms for a sale of the Apartment at a lower price, and they conveyed that such renegotiation would enable the parties to avoid litigation as to the Security Deposit. Around this time, the Colacinos retained Bergman as litigation counsel. It appears that Bergman and Giddins engaged in certain discussions with Ebert concerning a contract renegotiation, but no agreement was reached.

On or about December 17, 2009, the Colacinos commenced this action against the Sellers and Ebert seeking the return of the Security Deposit or a judgment that the Sellers remain obligated to perform in accordance with the Agreement. The Sellers filed an Answer which included various counterclaims against the Colacinos.

At sometime after the Notice of Cancellation was served, Andrews requested that Solomon relist the Apartment and try to sell it. The Sellers eventually received another offer for [*6]$3,700,000.00, which Andrews accepted. The sale was closed on May 3, 2010. In addition to receiving a lower purchase price, the Sellers also had to pay maintenance and carrying charges prior to the sale of the Apartment to the third-party purchaser.

The Colacinos now move for partial summary judgment on the issue of their entitlement to the return of a Security Deposit and seek an order directing Ebert to pay over the Security Deposit to them. The Colacinos argue that they are entitled to the return of the Security Deposit under the terms of the Agreement because they timely and properly exercised their option to cancel the Agreement upon the failure of the Board to timely and unconditionally issue consent to their purchase of the Apartment, "much less issue a consent letter." They also maintain that the Adjourned Closing Date was the deadline for Closing on the Apartment to occur, not merely the issuance of consent by the Board.

The Colacinos argue that the Board's requirement that they provide proof of the sale of the Beach Street Residence prior to closing on the Apartment was an impermissible condition, allowing them to cancel the Agreement under Paragraph 6.1 of the Contract. They also assert that Paragraph 20 of the Sellers' Rider, which states that the Colacinos' obligations under the Agreement are not subject to the sale of any property owned by the Colacinos, shows that the sale of the Beach Street Residence was not a permissible condition of the Board's consent.

Alternatively, the Colacinos argue that if the Notice of Cancellation was ineffective, the Sellers were required to offer to close and attempt to schedule a "time of the essence" closing in order to be entitled to keep the Security Deposit. The Colacinos assert that any right the Sellers had to reject the Notice of Cancellation was waived by Andrews' Letter in which she wrote, "Purchaser having elected to cancel the Contract by a notice dated October 15, 2009, I hereby request that you release to me the [Security Deposit], as liquidated damages based on the Purchasers' willful breach of the Contract." The Colacinos assert that such waiver was made irreversible when the Sellers sold their Apartment to another party. The Colacinos further assert that the liquidated damages clause is an illegal, unenforceable penalty and has no relation to probable actual damages.

The Sellers oppose the motion, arguing that while the Notice of Cancellation did terminate the Contract, and the cancellation occurred under conditions which entitle the Sellers to the Security Deposit.

The Sellers argue in part that the Colacinos were not entitled to cancel the Agreement under Paragraph 6.3 of the Contract as the Board provided timely unconditional approval of the sale of the Apartment. They characterize the Board's requirement that the Colacinos provide proof of the sale of the Apartment as a contingency or accommodation, rather than a condition. The Sellers also argue that the requirement was made in accommodation of the Colacinos' schedule and was in the nature of a reminder that proof of the sale of the Beach Street Residence had to be supplied to the Board, as the Colacinos had represented to the Board that the sale of the Beach Street Residence was essentially a fait accompli and that the proceeds from the sale would be used to finance the purchase of the Apartment.^[FN4] [*7]

The Sellers also assert that the Board's approval was timely provided. They note that the Board's approval was given on the Adjourned Closing Date and communicated to the parties on that day, and they assert that the option to cancel the Agreement under Paragraph 6.3, by reason of the Board's failure to provide the requisite approval of the transaction, could not be exercised until the day after the Adjourned Closing Date.

The Sellers also argue that the Colacinos violated their obligations of good faith under the Agreement and that at sometime after entering into the Agreement, the Colacinos began "scheming to create a colorable excuse to cancel the [Agreement] at an opportune moment" and renegotiate the contract on more favorable terms to them in the declining real estate market. The Sellers argue that the evidence shows that the Colacinos were not cooperative during the Board approval process and that their actions obstructed and delayed this process, as such they argue that the Colacinos were not entitled to exercise the cancellation option under Paragraph 6.3 and be entitled to the return of their security deposit. The Sellers maintain that the Notice of Cancellation effectively terminated the Agreement under circumstances in which the Sellers were entitled to the Security Deposit. The Sellers further assert that the relevant facts and law do not support the Colacinos' contention that the liquidated damages clause constitutes an illegal penalty.

The Sellers also cross move to have Bergman disqualified from further representation on the grounds that he is likely to be called as a witness on significant issues of fact regarding the alleged failure of the Plaintiffs' to act in good faith.

In reply, the Colacinos argue that the requirement imposed by the Board upon its consent, i.e. proof of the sale of the Beach Street Residence, was an impermissible condition under the terms of the Agreement, and that the Board's issuance of such consent, conditioned on the sale of the Beach Street Residence, gave the Colacinos an immediate right of cancellation as it made it impossible for the Sellers to fulfill their obligations under Paragraph 20 of the Sellers' Rider.

The Colacinos further argue that the "consent" that had to have been obtained from the Board by the Adjourned Closing Date was actually a written letter and that, since no such letter was issued on the Adjourned Closing Date, they were entitled to cancel the Agreement.

The Colacinos also argue that their cancellation option under Paragraph 6.3 of the Contract could be validly exercised as of the close of business on the Adjourned Closing Date and that, in any event, unconditional Board approval could not be obtained prior to the closing of the Beach Street Residence scheduled for October 16, 2009, much less a Closing on the Apartment which was to occur on or before the Adjourned Closing Date according to the terms of the Agreement.^[FN5]

The Colacinos further argue that, contrary to the Sellers' arguments that they delayed the [*8]approval process in bad faith, their actions actually hastened the approval process whereas the delays occasioned by the travels of various Board members and the slowness of Sledge in transmitting information were the cause of 81% of the delay over the allocated 48 days.

Additionally, the Colacinos argue that the cross motion to disqualify Bergman must be denied as any testimony that Bergman can provide as to the issue of bad faith is either (i) irrelevant because the contract was terminated before settlement negotiations began, (ii) inadmissible based on attorney-client privilege, or (iii) unnecessary because Bergman's did not play an active role in the "contract negotiations." Bergman also submits his own affidavit expressing similar arguments.

In sur-reply, with respect to the issue of good faith, the Sellers rely on a number of e-mails, including E-mails #1, #2, and #3 (the "sur-reply e-mails"), which they allege reflect the Colacinos' impermissible dilatory actions. With respect to the cross motion, the Sellers argue that the replies show that Bergman had one-on-one conversations with Ebert with respect to the contract renegotiations and that they are entitled to cross examine him.

Discussion

On a motion for summary judgment, the proponent "must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to eliminate any material issues of fact from the case " Winegrad v. New York Univ. Med. Center, 64 NY2d 851, 852 (1985). Once the proponent has made this showing, the burden of proof shifts to the party opposing the motion to produce evidentiary proof in admissible form to establish that material issues of fact exist which require a trial. Alvarez v. Prospect Hospital, 68 NY2d 320, 324 (1986).

The threshold issue here is whether the Colacinos were entitled to terminate the Agreement on October 15, 2009. Pursuant to Paragraph 6.3 of the Contract, "[i]f the Corporation has not made a decision on or before the Scheduled Closing Date, the Closing shall be adjourned for 30 business days [until the Adjourned Closing Date, October 15, 2009] ." Furthermore, Paragraph 6.3 of the Contract provides that "[i]f [the Corporation's] consent [to the Colacinos' purchase of the Apartment] is not given by the [Adjourned Closing Date], either Party may cancel [the Agreement]." Furthermore, under Paragraph 6.1 of the Agreement the sale of the Apartment is subject to the unconditional consent of the Board. Here, it is uncontroverted that the Corporation did not give unconditional consent to the purchase before the adjourned closing date of the October 15, 2009, since it required the sale of the Beach Street Residence prior to its approval.

In fact, it is evident from Spiegel's affidavit that the requirement that the Colacinos sell the Beach Street Residence (and provide proof thereof) was a condition on the Board's approval. Spiegel states in her affidavit that she and the other members of the Board who interviewed the Colacinos agreed that the Colacinos "should be approved to purchase the [Apartment] but that such approval be conditioned upon the sale of the [Beach Street Residence] prior to closing." This statement along with Spiegel's statement that she advised Sledge-Goodwine that the Colacinos' application was approved "subject to the sale of the [Beach Street Residence] prior to the closing of [the Apartment]" demonstrate that the Board's approval was dependent upon a future occurrence of significance, the sale of the Beach Street Residence. As such, it was a condition on the Board's consent, and the Seller's attempt to re-label this condition as a [*9]contingency or accommodation is unavailing.

Additionally, the Sellers have failed to raise an issue of fact as to the validity of the Notice of Cancellation because it was issued at or around 5:00 p.m. on the Adjourned Closing Date, after the Board had already made its decision on the Colacinos' Application. It is irrelevant that the Colacinos issued the Notice of Cancellation prior to learning of the Board's conditional approval as the Colacinos were not obligated to determine the status of the Application prior to exercising their option to cancel, and the Board had already made its determination.

Thus, assuming that the Colacinos were not otherwise prohibited from cancelling the Agreement, their cancellation of the Agreement by the Notice of Cancellation would have been valid because the Board did not provide unconditional approval of the sale of the Apartment on or prior to the Adjourned Closing Date. However, it is well established that a party to a contract cannot rely on the nonoccurrence of a condition precedent where that party has frustrated or prevented the occurrence of the condition. See Creighton v. Milbauer, 191 AD2d 162, 165 (1st Dep't 1993); Garber v. Giordano, 16 AD3d 454 (2nd Dep't 2005); Kapur v. Stiefel, 264 AD2d 602, 603 (1st Dep't 1999); Moustakas v. Noble, 259 AD2d 602 (2nd Dep't), lv app dism 93 NY2d 958 (1999). Here, there are questions of fact as to whether the failure of the parties to obtain the Corporation's unconditional approval by the Adjourned Closing Date was a circumstance of the Colacinos' own making.

Paragraph 6.2 of the Agreement requires the Colacinos to submit their Application to the Corporation in good faith, and Paragraph 6.4 of the Agreement provides that if the Corporation fails or refuses to give its unconditional consent due to the Colacinos' bad faith conduct, then the Colacinos were in default. A prospective purchaser of real property who breaches his obligations of good faith may not cancel a contract for the sale of such property and receive his down payment back. See Lipshy v. Sabbeth, 134 AD2d 409 (2nd Dep't 1987); Moustakas v. Noble at 603.

In this case, there is evidence sufficient to raise a triable issue of fact as to whether Colacino's actions induced the Board to impose a condition on its approval of the Colacinos' Application which would not be fulfilled prior to the Adjourned Closing Date due to the actions of the Colacinos. The Colacinos represented to the Board that they would purchase the Apartment with funds from the sale of the Beach Street Residence; however, it appears from E-mail #1 that the Colacinos, rather than the prospective purchasers of the Beach Street Residence, chose to postpone the sale of the Beach Street Residence from September to October. In E-mail #1, Mr. Colacino explains to Muss that the closing on the Beach Street Residence was postponed because he was "hoping not to have to move twice" and that after the closing on the Beach Street Residence, he would be putting his furniture into storage and moving his family "into a furnished apartment or hotel;" however, these statements could be viewed as inconsistent with an intention to close on the Apartment. Furthermore, Mr. Colacino's statement in his affidavit that he realized during or prior to October that the Board was unlikely to approve the sale of the Apartment until the closing on the Beach Street Residence, together with the multiple postponements of that transaction and Mr. Colacino's representation to the Board that he would use funds from the sale of the Beach Street Residence to finance the purchase of the Apartment, raise issues of fact as to whether the Colacinos frustrated the Board's approval process.

The Colacinos' argument that they were entitled to cancel the Agreement and to the return [*10]of the Security Deposit by virtue of Paragraph 20 of the Sellers' Rider is contrary to the plain meaning of the provision, and is rejected. Paragraph 20 of the Sellers' Rider states that "[t]his sale and [the Colacinos'] obligations under [the Agreement] are expressly not subject to the sale of [the Beach Street Residence] or any other real property or cooperative owned by Purchaser." A plain reading of this provision, which is part of the Seller's Rider, shows that it was intended to protect the Sellers in the event that Colacinos had not sold the Beach Street Residence or other piece of property prior to the Closing Date. In other words, the purpose of the provision was to clarify that the Sellers' obligations under the Agreement were not contingent on the sale of the Beach Street Residence or other property.^[FN6]

Furthermore, the Sellers were not compelled to move forward with the sale of the Apartment if the failure the Board to unconditionally approve the sale was the result of the Colacinos' bad faith conduct. If the Colacinos ceased performance under the Agreement but were not entitled to do so, then they were in material breach of their obligations. Under the doctrine of anticipatory breach, a wrongful and unequivocal repudiation of a contract prior to the time for performance entitles the non-breaching party to immediately claim damages for total breach, and the non-repudiating party need not tender performance nor provide proof of its ability to perform the contract in the future. See American List Corp. v. U.S. News and World Report, Inc., 75 NY2d 38, 44 (1989); Conant v. Alto 53, LLC, 21 Misc 3d 1147(A) (1st Dep't 2008). Thus, to the extent it is found that Colacinos acted in bad faith in connection with their cancellation of the Agreement, the Sellers were not required to offer further performance in order to be entitled keep the deposit as liquidated damages.^[FN7]

The Colacinos have also failed to sustain their burden of showing that the liquidated damages clause of the Agreement is unenforceable. It is well settled that a vendee who defaults on a real estate contract without lawful excuse, cannot recover the down payment. Maxton Builders, Inc. v. LoGalbo, 68 NY2d 373, 378 (1986). Although "[l]iquidated damages clauses have traditionally been subject to judicial oversight to confirm that the stipulated damages bear a reasonable proportion to the probable loss real estate down payments have been subject to limited supervision." Uzan v. 845 UN Ltd. Partnership, 10 AD3d 230, 237 (1st Dep't 2004). Furthermore, courts have consistently enforced provisions in real estate contracts permitting sellers to retain a 10% down payment as liquidated damages. See Id.; Chateau D'If Corp. v. City [*11]of New York, 219 AD2d 205 (1st Dep't 1996), lv app den 88 NY2d 811 (1996). In consideration of the above, the Colacinos have failed to show that the circumstances in this case merit a departure from established standards.

The Sellers' cross motion to disqualify Bergman on the grounds that he is likely to be called as a witness is denied. It is well-settled that "the disqualification of an attorney is a matter that rests within the sound discretion of the court." Flores v. Willard J. Price Associates, LLC, 20 AD3d 343, 344 (1st Dept. 2005). The Rules of Professional Conduct (formerly the New York Code of Professional Responsibility) serve as a general guide in considering disqualification motions. S & S Hotel Ventures Limited Partnership v 777 S. H. Corp., 69 NY2d 437 (1st Dept 1987). Under the advocate witness rule contained in the Rule 3.7 of The Rules of Professional Conduct, an attorney is prohibited from acting as an advocate before a tribunal where he or another attorney from his firm is likely to be called as a witness on a significant issue other than on behalf of its client, where it is apparent that the testimony may be prejudicial to the client.

"Disqualification during litigation implicates not only the ethics of the profession but also the substantive rights of the litigants [and] denies a party's right to representation by the attorney of its choice." S & S Hotel Ventures Limited Partnership v 777 S. H. Corp., 69 NY2d at 443 (citations omitted)." The right to counsel is "a valued right [and] any restrictions must be carefully scrutinized." Id. Furthermore, where the rules relating to professional conduct are invoked not at a disciplinary proceeding but "in the context of an ongoing lawsuit, disqualification...can create a strategic advantage of one party over another" Id. ; see also, Broadwhite Associates v. Truong, 237 AD2d 162, 163 (1st Dept 1997)(noting that unless movant meets heavy burden of showing disqualification is warranted, such a motion should be considered as an effort to obtain strategic advantage).

Thus, the party seeking disqualification "carries a heavy burden of identifying projected testimony of the advocate-witness and demonstrating how it would be so adverse to the factual assertions or account of the events offered on behalf of the client as to warrant his disqualification.'" Broadwhite Associates v. Truong, 237 AD2d 162, 163 (1st Dept 1997), quoting, Martinez v. Suozzi, 186 AD2d 378, 379 (1st Dept 1992). In addition, "[u]nder New York law, the mere fact that an attorney was involved in the transaction at issue, or that his proposed testimony would be relevant or highly useful is insufficient to warrant disqualification; rather, the crucial inquiry is whether the subject testimony is necessary, taking into account such factors as the significance of the matter, the availability of other evidence and the weight of the testimony." Brooks v. Lewin, 48 AD3d 289 (1st Dept), lv dismissed in part and denied in part, 11 NY3d 826 (2008).

Under this standard, the Sellers have not met their burden of showing that Bergman should be disqualified as counsel for the Colacinos under the advocate-witness rule as the record shows that Bergman had no part in the underlying controversy prior to the issuance of the Notice of Cancellation which is the time period relevant to questions of fact relating to whether the Colacinos acted in bad faith. Furthermore, even if it could be argued that Bergman might have some knowledge of relevant facts, the Sellers have not shown that his testimony would be adverse to his clients or necessary in light of the other evidence available concerning such facts. Conclusion

In view of the above, it is [*12]

ORDERED that the motion for summary judgment by plaintiffs Michael D. Colacino and Deborah Colacino (motion seq. no. 001) is denied; and it is further

ORDERED that the cross motion by defendants Dynda J. Andrews and John J. Kirby, Jr. to disqualify Henry J. Bergman, Esq., as counsel for the Colacinos is denied; and it is further

ORDERED that the parties shall appear for a preliminary conference in Part 11, room 351, 60 Centre Street on July 28, 2011 at 9:30 am.

DATED: July, 2011

J.S.C.