| Matter of Dream Weaver Realty, Inc. (Poritzky\MDeName) |
| 2010 NY Slip Op 01486 [70 AD3d 941] |
| February 16, 2010 |
| Appellate Division, Second Department |
| In the Matter of Dream Weaver Realty, Inc., Appellant. Herman I.Poritzky, Petitioner-Respondent; Stephen T. DeName,Respondent-Appellant. |
—[*1] Kenneth Gunshor, Mount Kisco, N.Y., for respondent.
In a proceeding pursuant to Business Corporation Law § 1104 for the judicialdissolution of a closely-held corporation, the appeal is from (1) an order of the Supreme Court,Westchester County (Rudolph, J.), entered April 23, 2009, which, without a hearing, inter alia,granted the petition, and (2) an order of the same court, also entered April 23, 2009, whichdenied, as academic, the motion of Stephen T. DeName to disqualify Kenneth Gunshor as theattorney for the petitioner in this proceeding.
Ordered that the first order entered April 23, 2009, is affirmed; and it is further,
Ordered that the second order entered April 23, 2009, is modified, on the law, by deleting theprovision thereof denying, as academic, the motion of Stephen T. DeName to disqualify KennethGunshor as the attorney for the petitioner in this proceeding and substituting therefor a provisiondenying the motion on the merits; as so modified, the second order entered April 23, 2009, isaffirmed; and it is further,
Ordered that one bill of costs is awarded to the petitioner.
The petitioner is a 50% shareholder of a closely-held corporation known as Dream WeaverRealty, Inc. (hereinafter the corporation). Stephen T. DeName also holds a 50% share in thecorporation. The petitioner commenced this proceeding pursuant to Business Corporation Law§ 1104 (a) for the judicial dissolution of the corporation.
The Supreme Court properly granted the petition for judicial dissolution. The evidencebefore the court demonstrated that the dissension between the two shareholders "posed anirreconcilable barrier to the continued functioning and prosperity of the corporation" (Matterof Kaufmann, 225 AD2d 775, 775 [1996]). "In determining whether dissolution is in order,the issue is not who is at fault for a deadlock, but whether a deadlock exists" (id.). "[T]heunderlying reason for the dissension is of no moment, nor is it at all relevant to ascribe fault toeither party. Rather, the critical consideration is the fact that dissension exists and has resulted ina deadlock precluding the successful and profitable conduct of the corporation's affairs"(Matter of Goodman v Lovett, 200 AD2d 670, 670-671 [1994]). Here, the record amplydemonstrates sufficient dissension among the parties, resulting in a deadlock, so as to warrantdissolution (see Matter [*2]of Neville v Martin, 29 AD3d444, 444-445 [2006]; Matter of Goodman v Lovett, 200 AD2d at 670-671; Matter ofSheridan Constr. Corp., 22 AD2d 390, 391-392 [1965]).
Moreover, "[a] hearing is only required where there is some contested issue determinative ofthe application" (Matter of Goodman v Lovett, 200 AD2d at 670; see Matter ofKaufmann, 225 AD2d at 776). Here, the court properly granted the petition without ahearing, as there was no genuine dispute as to the existence of deadlock and dissension (seeMatter of Neville v Martin, 29 AD3d at 445; Matter of Goodman v Lovett, 200AD2d at 670; cf. Matter of Kaufmann, 225 AD2d at 776).
The Supreme Court improperly determined the merits of the petition prior to consideringDeName's motion to disqualify the petitioner's attorney. Accordingly, the Supreme Court shouldhave determined the motion on the merits rather than denying it as academic. "A party'sentitlement to be represented in ongoing litigation by counsel of his or her own choosing is avalued right which should not be abridged absent a clear showing that disqualification iswarranted" (Aryeh v Aryeh, 14 AD3d 634, 634 [2005]). "Disqualification of a party'schosen counsel . . . is a severe remedy which should only be done in cases wherecounsel's conduct will probably 'taint the underlying trial' " (Mancheski v Gabelli GroupCapital Partners, Inc., 22 AD3d 532, 534 [2005], quoting Morin v Trupin, 728 FSupp 952, 957 [1989]). "Therefore, '[a] party seeking to disqualify an attorney or a law firm,must establish (1) the existence of a prior attorney-client relationship and (2) that the former andcurrent representations are both adverse and substantially related' " (Mancheski vGabelli Group Capital Partners, Inc., 22 AD3d at 534, quoting Solow v Grace &Co., 83 NY2d 303, 308 [1994]). Since DeName failed to make the requisite showing in thisregard, the Supreme Court should have denied his motion to disqualify the petitioner's attorneyon the merits. Santucci, J.P., Dickerson, Chambers and Sgroi, JJ., concur.