O Builders & Associates Inc. v. Yuna Corp.

19 A.3d 966, 206 N.J. 109, 2011 N.J. LEXIS 615
CourtSupreme Court of New Jersey
DecidedMay 25, 2011
DocketA-34 September Term 2010. No. 066490
StatusPublished
Cited by20 cases

This text of 19 A.3d 966 (O Builders & Associates Inc. v. Yuna Corp.) is published on Counsel Stack Legal Research, covering Supreme Court of New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
O Builders & Associates Inc. v. Yuna Corp., 19 A.3d 966, 206 N.J. 109, 2011 N.J. LEXIS 615 (N.J. 2011).

Opinions

Justice RIVERA-SOTO

delivered the opinion of the Court.

This appeal requires that we consider, as a matter of first impression, the scope and application of RPC 1.18. That Rule of Professional Conduct was adopted in 2004 in order to “clarify a lawyer’s obligations arising from preliminary consultations with a prospective client[,]” and it “allows that preliminary consultations may not result in a lawyer-client relationship, but nevertheless may in certain circumstances preclude the lawyer from accepting some subsequent representations adverse to the prospective client.” Kevin H. Michels, New Jersey Attorney Ethics—The Law Of New Jersey Lawyering § 13.6 at 261 (2011).

In this appeal, an attorney met with a then-prospective client;1 although both agree that they discussed whether the lawyer would [113]*113assume the representation of the client in respect of one specific pending case, their accounts of what else was discussed vary considerably. In any event, the attorney did not undertake that or any other representation on behalf of the now former prospective client. Some time later, and on behalf of a different client, the lawyer filed suit against a corporate entity wholly owned by the former prospective client. Alleging that the lawyer had become privy to confidential information during the earlier consultation, the entity owned by the former prospective client moved to disqualify the lawyer.

RPC 1.18 seeks to strike a delicate balance between a client’s right to protect communications made in the context of a consultation precedent to the actual retention of a lawyer, and the lawyer’s right to be free to represent clients without being unduly restricted by the yoke of short-lived consultations that do not ripen into an attorney-client relationship. It therefore recognizes, as a general rule, that “[a] lawyer who has had discussions in consultation with a prospective client shall not use or reveal information acquired in the consultation, even when no client-lawyer relationship ensues,” save as otherwise permitted under the RPC’s governing communications from former clients. RPC 1.18(a). Even assuming its application, however, the tension created by that general rule is relieved in part by a significant limitation on its reach: a lawyer who has consulted with a former prospective client “shall not represent a client with interests materially adverse to those of a former prospective client in the same or a substantially related matter if the lawyer received information from the former prospective client that could be significantly harmful to that person in the matterf.]” RPC 1.18(b).

Thus, in the context of an application to disqualify a lawyer based on a consultation with a former prospective client, two [114]*114factors must coalesce: the matter of the consultation and the matter then adverse must be “the same or [ ] substantially related,” and the information the lawyer received during the consultation must be “significantly harmful” to the former prospective client in the current adverse matter. Moreover, as with all applications for the disqualification of counsel, the initial burden of going forward or of production—that is, that the two matters are the same or substantially related and that the information imparted in the consultation is significantly harmful to the former prospective client—rests on the party seeking disqualification. If that burden is satisfied, the lawyer for whom disqualification is sought may seek to rebut those allegations. In the end, however, the burden of persuasion and proof remains on the party seeking disqualification. We also reaffirm strongly the preference that applications seeking attorney disqualification be presented in writing, and that disqualification decisions should be made on the papers presented, except, of course, when an evidentiary hearing is needed because the court is unable to determine the matter on the written record before it.

I.

As with many attorney disqualification/confliet of interest questions, the relevant facts arise in a context different from and collateral to the one giving rise to the alleged conflict. In that respect, this appeal is typical. The case on which this appeal is taken arises in connection with an August 2009 complaint filed by plaintiff O Builders & Associates, Inc. seeking payment for construction renovation and remodeling work performed in a restaurant owned by defendant Yuna Corp. of NJ, a/k/a “Baden Baden Restaurant.” Defendant moved to disqualify plaintiffs counsel, Peter Y. Lee, Esq. (Attorney Lee) because, eighteen months earlier, the principal of defendant, Mrs. Kay Kang (formerly Park), had consulted with Attorney Lee. What follows are the facts relevant to defendant’s disqualification motion, as developed before the Law Division.

[115]*115On February 4, 2008,2 at the request of a then-client, Dr. Dong Hyun Lee (Dr. Lee), Attorney Lee met with Mrs. Kang and Dr. Lee at Mrs. Kang’s restaurant, the Baden Baden, in Palisades Park; since the death of Mrs. Kang’s husband, Dr. Lee had acted as her unofficial business affairs advisor. According to Mrs. Kang, she consulted Attorney Lee “concerning pending litigation and business matters.” She explained that “[t]here were several litigation matters left behind by my late husband, James Park, relating to two restaurants operating under the ‘Baden Baden’ trade name.” She noted that one of the restaurants, located in Fort Lee, had closed in 2006, and that she met Attorney Lee at the remaining Palisades Park restaurant, in “one of the lower level party rooms.” Her entire description of the substance of that consultation was scant: “At that time, we discussed extensively about my business history and the pending legal disputes____We discussed various aspects of the Baden Baden business, including its history and its then-present state of affairs, confidentially.”

Attorney Lee recalls that consultation differently. He states that “Mrs. Kang, Dr. Lee and [he] met at [Mrs. Kang’s Palisades Park restaurant] to be introduced for the first time and discuss problems she was then having with present defense counsel, Michael S. Kimm, Esq., in connection with his handling of and representation in [a specific matter, titled the Koryeo Corp. case].” According to Attorney Lee, Mrs. Kang asked that he substitute for Kimm as her counsel in the Koryeo Corp. case, which was scheduled for trial in the Superior Court in one week. Attorney Lee “insisted that [he] could not make any decision until [he] [116]*116reviewed the files and the [c]ourt adjourned the trial date for at least 30 days.” He adamantly asserts that, at the February 4, 2008 meeting, “Mrs. Kang shared no privileged or confidential information with [him] concerning her or defendant’s ‘business history,’ other ‘pending legal disputes,’ ‘financial information’ or ‘then-present state of affairs[.]’ ” He reasons that the limitations on their discussions were “perhaps because all communications admittedly took place in the presence of our mutual friend and third-party, Dr. Lee, and the purpose of our meeting—my representation of M[r]s. Kang in the [Koryeo Corp. case]—did not require such information.” After describing how and when he came to review the file in the Koryeo Corp. case, the very next day, on February 5, 2008, Attorney Lee wrote to Mrs. Kang and declined to represent her in the Koryeo Corp.

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O Builders & Associates Inc. v. Yuna Corp.
19 A.3d 966 (Supreme Court of New Jersey, 2011)

Cite This Page — Counsel Stack

Bluebook (online)
19 A.3d 966, 206 N.J. 109, 2011 N.J. LEXIS 615, Counsel Stack Legal Research, https://law.counselstack.com/opinion/o-builders-associates-inc-v-yuna-corp-nj-2011.