Stoncor Group, Inc. v. Peerless Insurance Company
- Gabriel Gorenstein
- 1:16-cv-04574-LAK-GWG
- U.S. District Court · Southern District of New York
- 4
In Stoncor Group v. Peerless, Judge Gorenstein denied disqualification and denied without prejudice a deposition request because fee issues would not involve a jury.
The ruling allowed Michael B. Sena to continue representing Stoncor in this matter and did not authorize his deposition under the application then before the court. It affected Stoncor Group, Inc., First Continental Insurance Co., and Peerless Insurance Company’s handling of the defense-cost dispute.
What happened
Stoncor Group, Inc. and First Continental Insurance Co. sued Peerless Insurance Company over insurance coverage and defense costs from an underlying lawsuit. Peerless asked the court to disqualify Michael B. Sena, who represented Stoncor in both matters, and to allow Sena’s deposition because his work and invoices were important to the dispute over defense costs.
Peerless argued that Sena would be a significant fact witness and should not act as both lawyer and witness. Stoncor stated that some invoices concerned the coverage lawsuit but maintained that the claimed deposition and witness-related work could also be used in the underlying lawsuit.
Judge Gabriel W. Gorenstein denied the request to disqualify Sena because the attorney-fee issue would not be decided by a jury. He denied the request to depose Sena without prejudice to a new request that follows the court’s procedures, while directing the parties to try to obtain the needed information another way.
The detailed version
- Stoncor Group, Inc. v. Peerless Insurance Company · No. 1:16-cv-04574-LAK-GWG
- Gabriel Gorenstein
- Feb. 4, 2021
Background
Peerless asked the court to disqualify Michael B. Sena from continuing to represent Stoncor in the insurance-coverage case and sought permission to take Sena’s deposition. Peerless argued that Sena was a significant fact witness because he had been lead counsel in both the underlying action and the coverage action, and because many of the invoices at issue involved his work.
The dispute concerned the amount of defense costs that Stoncor claimed under its duty-to-defend claim. Peerless asserted that Stoncor had initially produced invoices totaling $170,814.20 for the underlying action but later produced a spreadsheet totaling $330,360.70. Peerless said the later production included invoices for work on the coverage action, including depositions and witness-related work. Sena reportedly stated that some invoices had been included by mistake but also maintained that certain work related to witnesses and depositions could be recovered because it could have been used in the underlying action.
Legal Standard and Analysis
The court discussed the lawyer-as-witness rule, which generally prevents a lawyer from acting as an advocate in a matter when the lawyer is likely to testify about an important factual issue, subject to listed exceptions. The court also relied on the distinction between deciding whether attorneys’ fees are owed under a contract and determining the amount of those fees. The former may involve a jury, but the latter is an equitable accounting issue.
The court concluded that there would be no jury trial on the attorney-fee issue. Because the purpose of the lawyer-as-witness rule is largely to prevent a lawyer’s testimony from interfering with a jury’s fact-finding, the court found no real danger that Sena’s continued representation would taint a trial. It therefore denied the application to disqualify counsel.
Ruling
Judge Gabriel W. Gorenstein denied the application to disqualify Michael B. Sena. The court also denied the request to depose Sena without prejudice to a new application, if necessary, that complies with paragraph 2.A of the court’s individual practices. The court directed the parties to try to obtain the needed information in a way other than deposition testimony.
Read the full 4-page opinion on CourtListener, the free public archive maintained by the Free Law Project.