Total Asset Recovery Services LLC v. Huddleston Capital Partners VIII LLC
- Andrew Carter
- 1:21-cv-02466
- U.S. District Court · Southern District of New York
- 7
In Total Asset Recovery Services v. Huddleston Capital Partners, Judge Carter denied Huddleston’s motion to disqualify counsel.
The ruling directly affected James Ferraro and the Ferraro Firm, whose disqualification Huddleston sought, as well as the plaintiffs represented by the firm. Their representation continued at this stage, subject to submitting documentation of informed consent within 30 days.
What happened
Total Asset Recovery Services, its members, and the Ferraro Law Firm sued Huddleston Capital Partners VIII LLC and others. Huddleston asked the court to remove James Ferraro and the Ferraro Firm as counsel, arguing that Ferraro might be a necessary witness and that conflicts existed among the plaintiffs.
The court found that Huddleston offered too little evidence and relied mainly on speculation. Other people and documents could address the relevant factual issues, and the court found no sufficient proof that the plaintiffs’ interests conflicted or that Ferraro’s continued representation would prejudice them.
Judge Carter denied Huddleston’s motion to disqualify counsel. The Ferraro Firm was ordered to provide documentation of its clients’ written informed consent regarding the alleged conflicts within 30 days.
The detailed version
- Total Asset Recovery Services LLC v. Huddleston Capital Partners VIII LLC · No. 1:21-cv-02466
- Andrew Carter
- Apr. 15, 2022
Background
Huddleston Capital Partners VIII LLC moved to disqualify James Ferraro and the Ferraro Law Firm. The Ferraro Firm was both a plaintiff and counsel for Total Asset Recovery Services LLC and five of its members: Gregory Lynam, Scott Knott, Thomas Prescott, Steven Lynam, and RZE Holdings LLC.
Huddleston argued that Ferraro could be a necessary witness on whether a loan-agreement default occurred, the relationship between the Ferraro Firm and Total Asset Recovery Services, and damages from the alleged tortious conduct. Huddleston also argued that Ferraro and the firm had conflicts of interest with the other plaintiffs and that the plaintiffs had conflicting interests among themselves.
Witness-Advocate Arguments
The court applied New York’s professional-conduct rules, including the rule generally restricting a lawyer from acting as an advocate in a matter where the lawyer is likely to testify on a significant factual issue. The party seeking disqualification bears a heavy burden because disqualification interferes with a party’s choice of counsel.
The court held that Huddleston had not shown that Ferraro was a necessary witness. Other witnesses, including the individual member plaintiffs, Kenneth Elder, members of the New York Office of the Attorney General, and former Ferraro Firm attorneys, could address the relevant issues. Documents could establish the contractual relationship between the Ferraro Firm and Total Asset Recovery Services, and testimony from the individual plaintiffs, experts, or firm staff could address damages. The court also found no sufficient showing that Ferraro was likely to testify or that his testimony would prejudice a client.
Alleged Conflicts of Interest
The court also rejected Huddleston’s conflict arguments at this stage of the case. It found insufficient evidence that the plaintiffs’ interests were actually divided because of their relationships with the Ferraro Firm, their different ownership percentages in Total Asset Recovery Services, the possibility of future crossclaims, or the firm’s financial interest in continuing to represent Total Asset Recovery Services in a separate whistleblower case. The court described these arguments as speculation and noted that no plaintiff had filed a crossclaim against another plaintiff.
The court further noted that counsel represented that the Ferraro Firm, Total Asset Recovery Services, and the individual member plaintiffs had considered the potential conflicts and decided that collective representation was in their best interests. The court nevertheless ordered the Ferraro Firm to submit supporting documentation of the clients’ informed consent within 30 days.
Disposition
The court denied Huddleston’s motion to disqualify James Ferraro and the Ferraro Firm. This order addressed counsel disqualification and did not decide the underlying claims in the lawsuit.
Read the full 7-page opinion on CourtListener, the free public archive maintained by the Free Law Project.