Thursday, October 8, 2009

First Department Refers Attorney's Conduct to Disciplinary Committee

In a highly unusual development, at the conclusion of its opinion affirming a judgment entered in the Supreme Court, New York County, a unanimous Appellate Division, First Department, today referred to its Disciplinary Committee the conduct of one of the attorneys involved in the litigation.

The case, Osowski v. AMEC Construction Management, Inc., involves a serious injury suffered by a workman during the construction of the New York Times Building in Manhattan. The appeal addressed the liability insurance policy for the construction site and a third-party action for indemnification and contribution brought by the defendants.

During the course of the litigation the injured plaintiff entered into a confidential settlement agreement with the defendants who are the plaintiffs in the third-party action. The defendant in the third-party action sought disclosure of the confidential agreement; the trial court ordered the disclosure, and the Appellate Division agreed that disclosure was required in order for the third-party defendant to defend itself.

The Appellate Division concluded that attempts by an attorney to resist disclosure of the agreement "cannot be viewed as anything but a clear attempt to perpetuate a fraud on the [trial] court....Moreover, counsel...appears to have acted in disregard of well-established discovery rules and demonstrated a lack of forthrightness and candor to the court by failing to come forward with the terms of the settlement agreement which directly concerned [the defendant's] defense in the third-party action. We believe that counsel's continued prosecution of the third-party action against [the third-party defendant] after [the defendants in the principal action] entered into the settlement agreements raises substantial questions under the Code of Professional Responsibility." The decision can be found here.

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