State of New York
Supreme Court, Appellate Division
Third Judicial Department
Decided and Entered: November 3, 2016 520149
521228
________________________________
DEBORAH J. TAYLOR, Individually
and as Trustee of the
DEBORAH J. TAYLOR REVOCABLE
INTERVIVOS TRUST U/A 3/31/06,
et al.,
Respondents,
v
MEMORANDUM AND ORDER
MARK C. CASOLO,
Respondent,
and
WILDERNESS CAPITAL GROUP, LTD.,
et al.,
Appellants,
et al.,
Defendants.
________________________________
Calendar Date: September 9, 2016
Before: McCarthy, J.P., Egan Jr., Devine, Clark and Aarons, JJ.
__________
Paul D. Jaffe, White Plains, for appellants.
Timothy J. O'Connor, Albany, for Deborah J. Taylor and
others, respondents.
Mark C. Casolo, Hudson, respondent pro se.
__________
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Clark, J.
Appeals (1) from an order of the Supreme Court (Chauvin,
J.), entered May 7, 2014 in Saratoga County, which granted
defendant Mark C. Casolo's motion to disqualify the attorney for
defendants Emilio Locascio, Wilderness Capital Group, Ltd. and
Eagle Capital Group LLC from representing them in the instant
action, and (2) from an order of said court, entered February 11,
2015 in Saratoga County, which settled the record on appeal.
On October 6, 2008, defendants Mark C. Casolo and Emilio
Locascio entered into an agreement memorializing, among other
things, their 50-50 ownership interest in defendant Wilderness
Capital Group, Ltd. (hereinafter Wilderness), a "land holding
company" that they had formed for the purpose of acquiring and
developing certain parcels of real property in the Town of
Schroon, Essex County, known as the Davis Motel Property.
Wilderness subsequently obtained title to that property. In
March 2009, Paul Jaffe – the attorney for Locascio, Wilderness
and defendant Eagle Capital Group LLC (hereinafter Eagle) in the
present action – notified Casolo that, pursuant to the terms of
the October 6, 2008 agreement, as purportedly modified by a
subsequent agreement, he was no longer an officer or director of
Wilderness and that his stock ownership of class A voting shares
had been canceled, revoked and forfeited to Locascio. In
February 2010, title to the Davis Motel Property was transferred
from Wilderness to Eagle, a limited liability company owned by
Locascio.
In this action, plaintiffs assert various causes of action
stemming from the alleged theft, embezzlement or fraudulent
diversion of their respective investment funds. In particular,
plaintiffs Kenneth Wolosoff and Judith Wolosoff assert that they
were defrauded into investing money in Wilderness for the purpose
of acquiring the Davis Motel Property and that they have an
interest in Wilderness. The remaining plaintiffs allege, among
other things, that Casolo caused the unauthorized transfer of
funds from their securities brokerage accounts into the accounts
of defendant Wilderness Partners, LLC or defendant Escalation
Capital Group Limited and that such wrongfully diverted funds
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were used to purchase the Davis Motel Property. Plaintiffs seek,
among other relief, a judicial determination as to their
individual interests in the Davis Motel Property. Wilderness,
Eagle and Locascio (hereinafter collectively referred to as the
Locascio defendants) joined issue, but Casolo, along with several
other defendants, defaulted.
Following extensive discovery and motion practice,
including an order to show cause by plaintiffs to extend the
notice of pendency on the Davis Motel Property and cross motions
for summary judgment,1 Casolo moved to disqualify Jaffe from
representing the Locascio defendants on the basis of various
conflicts of interest and Jaffe's status as a potential witness
in the action. Supreme Court granted the motion and disqualified
Jaffe from representing any party in the action. The Locascio
defendants appealed, and plaintiffs subsequently moved to strike
the record on appeal, arguing that the order to show cause, cross
motions for summary judgment and related exhibits should have
been included. This Court denied the motion and directed the
Locascio defendants to make an application in Supreme Court to
settle the record on appeal. Upon such motion, Supreme Court
ruled that the order to show cause, cross motions for summary
judgment and all affirmations, affidavits and exhibits submitted
therewith were to be included in the record on appeal. The
Locascio defendants also appealed from the order settling the
record on appeal.
Initially, Supreme Court properly settled the record on
appeal to include the order to show cause, the cross motions for
summary judgment and all affirmations, affidavits and exhibits
submitted therewith. As reflected in the trial court's decision,
these documents were expressly considered by the court in
1
Notwithstanding that the brief submitted by the Locascio
defendants contains an argument challenging the notice of
pendency on the Davis Motel Property – which appears to have been
mistakenly included – and plaintiffs' arguments in response, we
note that the notice of pendency is not at issue in either of the
orders appealed from here.
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connection with Casolo's application to disqualify Jaffe and are
relevant to the issues raised by the Locascio defendants on their
appeal from the disqualification order (see CPLR 5526; 22 NYCRR
800.5; Cramer v Englert, 283 AD2d 871, 872 [2001]).
Supreme Court also properly disqualified Jaffe from
representing any of the Locascio defendants.2 Under the so-
called advocate-witness rule (see People v Ortiz, 26 NY3d 430,
437-438 [2015]), subject to certain exceptions not applicable
here, "[a] lawyer shall not act as advocate before a tribunal in
a matter in which the lawyer is likely to be a witness on a
significant issue of fact" (Rules of Professional Conduct [22
NYCRR 1200.0] rule 3.7 [a]). Here, Jaffe is likely to be a
witness on significant issues of fact by virtue of his
involvement in the acquisition of the Davis Motel Property by
Wilderness and then Eagle, the formation of Wilderness and Eagle
and the alleged execution of the agreement amending the October
6, 2008 agreement, all of which he acknowledged in his deposition
testimony. In addition, Jaffe has been subpoenaed to testify at
trial concerning these topics. In view of the foregoing, Supreme
Court did not abuse its discretion in disqualifying Jaffe from
representing the Locascio defendants in this action (see Gould v
Decolator, 131 AD3d 448, 449-450 [2015]; Lauder v Goldhamer, 122
AD3d 908, 910-911 [2014]; Roche v Claverack Coop. Ins. Co., 59
AD3d 914, 919 [2009]; compare Bullard v Coulter, 246 AD2d 705,
706 [1998]). Moreover, even if Jaffe were not disqualified from
2
We are unpersuaded that Casolo, as a party in default,
lacked standing to seek the disqualification of Jaffe. The
record reflects Locascio's and Casolo's divergent positions as to
their respective ownership interests in the Davis Motel Property
and the resolution of such issue may impact the relief ultimately
awarded to plaintiffs, if any. Moreover, "the integrity of the
judicial system and preserv[ation of] the ethical standards of
the legal profession" are matters of public interest (Matter of
Abrams [John Anonymous], 62 NY2d 183, 197 [1984]; accord People v
Liuzzo, 167 AD2d 963, 963 [1990], appeal dismissed 77 NY2d 866
[1991]; see generally S & S Hotel Ventures Ltd. Partnership v 777
S. H. Corp., 69 NY2d 437, 443 [1987]).
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representing the Locascio defendants under the advocate-witness
rule, we would nonetheless find that his disqualification was
warranted based on his representation of Wilderness at a time
when Locascio's and Casolo's interests were aligned and their
respective ownership interests in Wilderness were not in dispute
(see Guiliano v Carlisle, 211 AD2d 757, 758 [1995]; compare
Stilwell Value Partners IV, L.P. v Cavanaugh, 123 AD3d 641, 641-
642 [2014]).
Furthermore, the Locascio defendants' claim of judicial
bias is unpreserved (see Douglas v Kingston Income Partners '87,
2 AD3d 1079, 1082 [2003]; lv denied 2 NY3d 701 [2004]; Matter of
Aaron v Kavanagh, 304 AD2d 890, 891 [2003], lv denied 1 NY3d 502
[2003]) and, in any event, without merit. The remaining
arguments raised by the Locascio defendants, to the extent not
expressly addressed herein, have been considered and rejected.
McCarthy, J.P., Egan Jr., Devine and Aarons, JJ., concur.
ORDERED that the orders are affirmed, with one bill of
costs.
ENTER:
Robert D. Mayberger
Clerk of the Court