It's Not Scandalous to Plead A Conflict of Interest

Sometimes, but rarely a defendant will move to strike pleadings that are "scandalous and prejudicial" under CPLR 3024(b).  Sometimes it just does not work.  In those instances, as in Armstrong v Blank Rome LLP  2014 NY Slip Op 30570(U)  March 6, 2014  Sup Ct, NY County
Docket Number: 651881/2013  Judge: Anil C. Singh, the court disagrees and finds the pleadings to be necessary and proper.  Defendants get to dismiss a GBL cause of action, but not the main claims.

Plaintiff commenced divorce proceedings against Michael Armstrong in June of 2009. On or about November 17, 2009, plaintiff retained the services of the defendants to represent her in these proceedings. Defendants undertook review of an extensive file generated by plaintiff's prior Counsel, and consented to a scheduling order obliging the parties to exchange documents by December 31, 2009, and sworn net worth statements by January 9, 2010. On April 7, 2010, defendants hired Martin I. Blaustein, C.P .A. to advise on marital spending and lifestyle, the value of Mr. Armstrong's professional licenses and components of the latter's income. Defendants, allegedly based on the strategic advice of their expert, Mr. Blaustein, advised plaintiff to waive valuation, for distributive purposes, of Mr. Armstrong's professional securities licenses. In waiving this valuation on counsel's advice, the plaintiff complains that she improvidently deprived herself of her marital share of an asset valued by her own expert, Mr. Blaustein, at $16,167,000.00.
The gravamen of plaintiffs conflict-of-interest allegations is the professional relationship between defendant Blank Rome and her ex-husband's employer, Morgan Stanley, for which Blank Rome was engaged in lucrative transactional representation in Pennsylvania. Plaintiff contends that the desire to maintain and augment Blank Rome's billings to Morgan Stanley, motivated the individual partners, defendants Norman Heller and Dylan Mitchell, as well as Blank Rome as an entity, to "throw her under the bus."

Plaintiff maintains that the position of her ex-husband, Mr. Armstrong, is so exalted at Goldman Sachs, and that his interests and his company's were so intertwined, as to lend credibility to her allegations. In any event, it is undisputed that no disclosure of this concμrrent professional engagement with Morgan Stanley was ever made to plaintiff, nor was any waiver thereof obtained from her. "In general, we may conclude that 'unnecessarily' pleaded means 'irrelevant.' We should test this by the rules of evidence and draw the rule accordingly .... (I)f the item would be admissible at trial under the evidentiary rules of relevancy, its inclusion in the pleading, whether or not it constitutes ideal pleading, would not justify a motion to strike under CPLR 3024."
(David D. Siegel, Practice Commentaries, McKinney's Cons Laws of N Y, Book 7B, CPLR C:3024:4 at 323 as cited in Soumayah v. Minelli, 41 AD3d 390, 393 [1st Dept 2007], app. withdrawn 9. NY3d 989) "'Where evidence of the facts pleaded in the allegations has any bearing on the subject matter of the litigation and is a proper subject of proof, the presence of such matter involves no prejudice and the allegations are not irrelevant to the cause of action pleaded' [citation omitted.]" Tomasello v Trump, 30 Misc 2d 643, 649 [Sup Ct, Queens County, 1961].) Measured by these standards, defendants have failed to show that the paragraphs complained of lack evidentiary relevance, apparent necessity, or have demonstrated any prejudice resulting from their inclusion. Accordingly, this branch of the motion to strike them is denied."
 

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