| Kalish v Lindsay |
| 2008 NY Slip Op 00658 [47 AD3d 889] |
| January 29, 2008 |
| Appellate Division, Second Department |
| Lee S. Kalish, Appellant, v Shelton C. Lindsay, Defendant,and Rock City Sound, Inc., Respondent. Gary E. Bashian et al., NonpartyRespondents. |
—[*1] White Fleischner & Fino, LLP, New York, N.Y. (Gil M. Coogler and Evan A. Richman ofcounsel), for nonparty respondents.
In an action for specific performance of a shareholder's agreement, the plaintiff appeals (1)from so much of an order and judgment (one paper) of the Supreme Court, Dutchess County(Dolan, J.), dated August 11, 2006, as denied those branches of his motion which were to holdGary E. Bashian and the law firm of Bashian & Farber, LLP, in civil contempt pursuant toJudiciary Law § 753 (A), and for the disgorgement of an attorney's fee paid to them by thedefendant Rock City Sound, Inc., and (2), as limited by his brief, from so much of an order of thesame court, also dated August 11, 2006, as denied, as academic, that branch of his motion whichwas for summary judgment against the defendant Rock City Sound, Inc.
Ordered that the order and judgment is modified, on the law, by deleting the provisionthereof denying that branch of the plaintiff's motion which was to hold Gary E. Bashian, and thelaw firm of Bashian & Farber, LLP, in civil contempt pursuant to Judiciary Law § 753 (A);as so modified, the order is affirmed insofar as appealed from, and the matter is remitted to theSupreme Court, Dutchess County, for a hearing on that branch of the plaintiff's motion whichwas to hold Gary E. Bashian and the law firm of Bashian & Farber, LLP, in civil contemptpursuant to Judiciary Law § 753 (A), and thereafter for a new determination of that branchof the plaintiff's motion; and [*2]it is further,
Ordered that the order is reversed insofar as appealed from, on the law, and that branch of theplaintiff's motion which was for summary judgment against the defendant Rock City Sound, Inc.,is granted; and it is further,
Ordered that one bill of costs is awarded to the appellant payable by the respondent andnonparty respondents.
The plaintiff Lee Kalish and the defendant Shelton Lindsay each owned 50% of the shares ofthe defendant Rock City Sound, Inc. (hereinafter RCS), pursuant to a shareholder's agreement(hereinafter the agreement) dated January 9, 1998. In 2004 the plaintiff attempted to withdraw asa shareholder. The terms of the agreement provided that RCS was to purchase the shares for the"Established Value" as calculated in the agreement. The sale never took place because, accordingto the plaintiff, among other things, Lindsay set an established value that was too low.
The plaintiff brought this action seeking specific performance of the agreement, and movedfor a preliminary injunction restraining the disposition of his shares. In an order dated December10, 2004, the court granted a preliminary injunction, inter alia, enjoining Lindsay from exercisingany dominion or control over the plaintiff's shares in RCS. Thereafter, in June 2005, Lindsay, assole director of RCS, among other things, authorized himself to vote all of the plaintiff's shares.
In March 2006 the plaintiff moved to hold Lindsay and his then counsel Gary E. Bashian andthe law firm of Bashian & Farber, LLP (hereinafter B & F), in civil contempt pursuant toJudiciary Law § 753 (A), for violating the order dated December 10, 2004. In his motion,the plaintiff also sought the return of attorney's fees paid by RCS to Bashian and B & F, arguingthat Bashian and B & F had violated certain ethical rules, including Code of ProfessionalResponsibility DR 5-105 (22 NYCRR 1200.24), by representing both Lindsay and RCS.
In May 2006 the plaintiff moved for summary judgment, inter alia, requiring Lindsay andRCS to purchase his shares for the sum of $1,145,580, plus interest at 9% from August 20, 2004(the plaintiff's "Withdrawal Date" under the agreement).
In an order and judgment dated August 11, 2006, the court granted that branch of theplaintiff's contempt motion which sought to hold Lindsay in contempt, and imposed a fineagainst Lindsay in the amount of $1,145,580, but denied that branch of the motion which soughtto hold Bashian and B & F in contempt and sought the return of legal fees that RCS had paidthem. In a separate order also dated August 11, 2006, the court denied the plaintiff's motion forsummary judgment as academic, because the order and judgment determining his contemptmotion awarded to him the $1,145,580 he sought in his summary judgment motion.
To prevail on a motion to punish a party for civil contempt, the movant must demonstratethat the party so charged violated a clear and unequivocal court order (see Judiciary Law§ 753 [A] [3]; Obadiah v Shaw, 266 AD2d 520, 521 [1999]), and that prejudiceresulted (see Giorgini v Goldfield,22 AD3d 800 [2005]). Contempt must be proven by clear and convincing evidence (see Gloveman Realty Corp. v Jefferys,29 AD3d 858 [2006]). An attorney who assists his or her client in perpetrating a civilcontempt is likewise guilty of contempt (see Fass & Wolper, Inc. v Burns, 177 Misc 430[1941]). Under the circumstances presented, there are factual issues presented by the plaintiff's[*3]contempt motion against Bashian and B & F, and theiropposition thereto, that should be resolved at a hearing. Accordingly, we remit the matter to theSupreme Court, Dutchess County, for such a hearing, and thereafter for a new determination ofthat branch of the plaintiff's motion which was to hold Bashian and B & F in civil contemptpursuant to Judiciary Law § 753 (A) (see City Wide Sewer & Drain Serv. Corp. v Carusone, 39 AD3d687 [2007]).
As to the return of legal fees, a party who is neither a present nor a former client of anattorney has no standing to complain about the attorney's representation (see Vanarthros v St.Francis Hosp., 234 AD2d 450 [1996]; see also A.F.C. Enters., Inc. v New York City School Constr. Auth., 33AD3d 736 [2006]). An attorney does not represent a coshareholder simply by reason of hisor her representation of the corporation, unless he or she affirmatively assumes that duty (seeWalker v Saftler, Saftler & Kirschner, 239 AD2d 252 [1997]; Kushner v Herman,215 AD2d 633 [1995]). Here, Bashian and B & F were retained to represent Lindsay and RCSonly, and the plaintiff was, at all times relevant herein, represented by other counsel. Bashian andB & F never affirmatively assumed any duty to represent the plaintiff. Thus the plaintiff has nostanding to complain of Bashian and B & F's simultaneous representation of Lindsay and RCS(see Vanarthros v St. Francis Hosp., 234 AD2d at 450). Moreover, the plaintiff'scontentions that Bashian and B & F violated other ethical rules are without merit.
However, we disagree with the Supreme Court's conclusion that the branch of plaintiff'smotion which sought summary judgment against RCS was academic. A matter is academic whena determination is sought which, if rendered, could not have any practical effect on the existingcontroversy (see Wisholek v Douglas, 97 NY2d 740, 742 [2002]; SOS Oil Corp. vNorstar Bank of Long Is., 152 AD2d 223 [1989], affd 76 NY2d 561 [1990]). Here, inhis summary judgment motion, the plaintiff sought, inter alia, an order directing Lindsay andRCS to purchase his shares for the principal amount of $1,145,580. Since the court's contemptorder and judgment specifically directed Lindsay to pay that amount, and not RCS, the motionwas not academic with regard to RCS. Inasmuch as RCS is also a named defendant, a moneyjudgment against it would have the practical effect of allowing the plaintiff to recover against thecorporation, as well as against Lindsay (cf. Wisholek v Douglas, 97 NY2d at 740).Consequently, the court should not have denied as academic that branch of the plaintiff's motionwhich sought summary judgment against RCS. Since the record demonstrates that the plaintiffmade a prima facie showing of entitlement to judgment as a matter of law, in opposition whichRCS failed to raise a triable issue of fact (see generally Alvarez v Prospect Hosp., 68NY2d 320 [1986]), that branch of the plaintiff's motion which was for summary judgmentagainst RCS should have been granted. Skelos, J.P., Ritter, Miller and Covello, JJ., concur.