Preview
FILED: NEW YORK COUNTY CLERK 10/27/2023 03:09 PM INDEX NO. 159110/2023
NYSCEF DOC. NO. 72 RECEIVED NYSCEF: 10/27/2023
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK: COMMERCIAL DIVISION
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In the Matter of JORDAN BARDACH, Index No.: 159110/2023
Assigned: Hon. Jennifer G.
Petitioner, Schecter, J.S.C.
-against-
ANNA MARTYNOVA, JENNIFER MILOSAVELJEVIC,
YOEL HERSHKOWITCH, and ARON WOLOCOWITZ,
Respondents,
-against-
RENTABILITY, INC.,
Nominal Respondent.
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MEMORANDUM OF LAW IN SUPPORT OF RENTABILITY’S EMERGENCY ORDER
TO SHOW CAUSE TO DISQUALIFY PETITIONER’S COUNSEL
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TABLE OF CONTENTS
Page
TABLE OF CONTENTS ................................................................................................................. i
TABLE OF AUTHORITIES .......................................................................................................... ii
ARGUMENT ...................................................................................................................................1
CONCLUSION ................................................................................................................................6
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TABLE OF AUTHORITIES
Cases Page
Gjoni v Swan Club, Inc., 134 A.D.3d 896, 897 (2d Dept 2015) ......................................................2
Albert Jacobs, LLP v. Parker, 94 A.D.3d 919, 919 (2d Dept 2012) ...............................................2
Falk v. Chittenden, 11 N.Y.3d 73, 78 (2008). .................................................................................2
Lammers v. Lammers, 205 A.D.2d 432, 433 (1st Dept 1994) .........................................................2
Campbell v. McKeon, 75 A.D.3d 479, 480 (1st Dept 2010). ...........................................................2
Statutes
22 NYCRR § 1200. ..........................................................................................................................1
New York Rule of Professional Conduction Rule 1.7. ....................................................................1
New York Rule of Professional Conduction Rule 1.9. ....................................................................1
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Nominal Respondent, Rentability, Inc (“Rentability”), by its attorneys, Angelyn Johnson
& Assoc, LLC, respectfully submits this Memorandum of Law in support of the within
Emergency Order to Show Cause (“OSC”) seeking an Order pursuant to 22 NYCRR § 1200 and
Rules 1.7 and 1.9 of the New York Rules of Professional Conduct, disqualifying counsel, Brett
G. Canna, Esq. and Liberman & Canna LLP, from representing petitioner, Jordan Bardach, in
this matter due to Mr. Canna’s clear conflict of interest based on his prior and current
representation of Rentability and non-party City5 Consulting, LLC (“City5”).
As the present application directly implicates Mr. Canna’s ability to continue with his
representation of Bardach in this proceeding, movant respectfully requests that the Court stay all
proceedings in this matter, including all directives in the Court’s Interim Order, dated October 6,
2023, and the upcoming evidentiary hearing scheduled for November 6, 2023, pending the Court’s
hearing and determination of the within motion.
ARGUMENT
THE COURT SHOULD DISQUALIFY CURRENT COUNSEL
FOR PETITIONER DUE TO HIS MATERIAL CONFLICT OF INTEREST
Rule 1.7(a)(1) of the Rules of Professional Conduct (“NYRPC”), 22 NYCRR § 1200,
provides that, “[e]xcept as provided in paragraph (b), a lawyer shall not represent a client if a
reasonable lawyer would conclude that . . . the representation will involve the lawyer in
representing differing interests.” Rule 1.0(f) defines “differing interests” to including “every
interest that will adversely affect either the judgment or the loyalty of a lawyer to a client, whether
it be conflicting, inconsistent, diverse, or other interest.”
In addition, Rule 1.9(a) provides that “a lawyer who has formerly represented a client in a
matter shall not thereafter represent another person in the same or a substantially related matter in
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which that person’s interests are materially adverse to the interests of the former client unless the
former client gives informed consent, confirmed in writing.”
Under prevailing New York case law, “[t]he disqualification of an attorney is a matter that
rests within the sound discretion of the court.” Gjoni v Swan Club, Inc., 134 A.D.3d 896, 897 (2d
Dept 2015); see also Albert Jacobs, LLP v. Parker, 94 A.D.3d 919, 919 (2d Dept 2012).
A party seeking disqualification of its adversary’s counsel based on counsel’s purported
prior representation of that party must establish: (1) the existence of a prior attorney-client
relationship; (2) that the matters involved in both representations are substantially related; and (3)
that the interests of the present client and the former client are materially adverse. Falk v.
Chittenden, 11 N.Y.3d 73, 78 (2008).
Furthermore, while “[a] party’s entitlement to be represented in ongoing litigation by
counsel of his or her own choosing is a valued right which should not be abridged absent a clear
showing that disqualification is warranted . . . the right to be represented by counsel of one’s own
choosing will not supersede a clear showing that disqualification is warranted.” In fact, “[a]ny
doubts as to the sufficiency of the showing of an asserted conflict of interest are to be resolved in
favor of disqualification.” Lammers v. Lammers, 205 A.D.2d 432, 433 (1st Dept 1994); see also
Campbell v. McKeon, 75 A.D.3d 479, 480 (1st Dept 2010).
As thoroughly detailed in the accompanying Affidavit of Isaac Katz, counsel Brett G.
Canna, Esq. of Liberman & Canna LLP must be disqualified from representing petitioner Bardach
in this matter due to Mr. Canna’s blatant conflict of interest under Rule 1.7 and Rule 1.9 of the
NYRPC based on his prior and current representation of City5 and Rentability in substantially
related matters, and the materially adverse positions he has taken against City5 and Rentability in
this special proceeding.
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By way of background, Mr. Canna has effectively served as general counsel for City5 since
its creation in 2014 by Katz and Bardash. As of this application, Mr. Canna continues to represent
City5 and has never resigned as its counsel.
In 2018, in his capacity as counsel for City5, Mr. Canna was involved in the creation of
Rentability, which is a not-for-profit corporation approved as an Administering Agent by the New
York City Department of Housing Preservation and Development (“HPD”).
As explained by Mr. Katz, Rentability’s creation was funded by City5 with the explicit
goal of facilitating and expanding City5’s affordable housing compliance business. As such, after
Rentability was approved as an Administering Agent by HPD in April 2020, the company was
highlighted on City5’s sales calls with client and featured in City5’s marketing. Given the
concurrent interests and symbiotic relationship between the entities, in addition to his
representation of City5, Mr. Canna also served as counsel for Rentability.
Moreover, as particularly relevant here, in July 2022, Mr. Canna represented City5 and
Rentability and helped mediate contract negotiations with a prospective client for an affordable
housing project located at 414 & 445 Gerard Avenue in the Bronx. (“Gerard Ave Project”). During
these negotiations, Mr. Canna counseled both Katz and Bardach that it would be advisable to have
Rentability enter into a single agreement with the client for contract purposes with the explicit
understanding that the marketing and lease-up work under the agreement would be performed by
City5 pursuant to the long-standing structure between the companies.
Bardach was in full agreement with this approach and confirmed in email correspondence
on July 5, 2022 that this arrangement would be acceptable as HPA had approved both City5 and
Rentability for their respective roles as a marketing agent and administering agent. Katz likewise
confirmed the respective roles of the companies and the split in fees for the work in email of the
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same date. But for Mr. Canna’s direct involvement as counsel for City5 and Rentability and his
efforts to mediate a solution in the best interests of both entities and the client, the partners would
not have agreed to forego a direct agreement with the client on behalf of City5.
Notwithstanding this clear understanding of how the work and fees were to be split, as set
forth in the Affidavit of Anna Martynova, after Katz commenced a lawsuit against Bardach in
Kings County Supreme Court for alleged breaches of fiduciary duties, and after the Court issued
a preliminary injunction enjoining the partners from making unilateral decisions outside the
ordinary course of business, Bardach sought to prevent City5 from performing its necessary work
on the Gerard Ave Project and further sought to seize complete control of Rentability for his sole
benefit. (See NYSCEF Doc. 41 & NYSCEF Doc. No. 49).
In line with these objectives, in July 2023, Bardach directed Ms. Martynova to cease all
work on the Gerard Ave Project and disconnected the email address City5 was using for the
project’s lottery, thereby jeopardizing the contract. After Ms. Martynova refused to carry out these
directives, which were in direct conflict with City5 and Rentability’s mutual interests, and in clear
violation of Bardach’s fiduciary duties, Bardach sought to have Ms. Martynova removed from
Rentability’s board of directors in retaliation. (See NYSCEF Doc. No. 41, ⁋ 17 & 24).
Moreover, in spite of his long-standing role as counsel for Rentability and City5 and his
direct representation of City5 in the Gerard Ave Project, Mr. Canna is now attempting to represent
Bardach in his individual capacity to pursue a judgment in this special proceeding that is materially
at odds with the interests of City5, Rentability, and the numerous applicants who have already
applied for housing through City5’s lottery and screening process.
For example, Bardach’s petition seeks to nullify all resolutions adopted by Rentability’s
board of directors at the Regular Annual Meeting held on September 1, 2023. (See NYSCEF Doc.
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No. 1 [Prayer for Relief]). This includes resolution #3, which provides that “[t]he Board hereby
formally ratifies the agreement wherein City5 Consulting, LLC. shall undertake the marketing of
affordable housing and leasing of affordable units at Estela Development, also known as 414 &
445 Gerard Avenue project. This arrangement encompasses the transfer of fees collected by
Rentability, Inc. to City5 Consulting LLC, while the responsibilities for monitoring and re-rentals
shall remain with Rentability.” (See Ex. G, NYSCEF Doc. No. 48).
Furthermore, resolution #4 likewise instructs Rentability’s board to “execute a new written
agreement with City5 Consulting, LLC for the marketing and leasing of affordable units at Estela
Development (referred to as AKA 414 & 445 Gerard Avenue project) no later than September 15,
2023.” (Id.).
There can be no doubt that Bardach’s efforts to remove Ms. Martynova from Rentability’s
board and his present efforts to nullify the foregoing resolutions are part of his ongoing feud with
Katz and his personal interest in blocking City5 from being paid for the work performed on the
Gerard Ave Project. Mr. Canna’s involvement in the proceeding, at the very least, creates the
appearance that he is assisting Bardach to the detriment of City5 and Rentability.
Your Affirmant previously raised the issue of Ms. Canna’s conflict of interest in
correspondence to Your Honor, dated September 19, 2023 (NYSCEF Doc. No. 25), and in
opposition to petitioner’s order to show cause and petition. (See NYSCEF Doc. No. 57). In a
further good-faith effort to have Mr. Cannon voluntarily withdraw in favor of substitute counsel
for Bardash, the conflict of interest was thoroughly addressed by counsel for Respondents in
correspondence dated October 25, 2023. (Ex. A). Mr. Canna has steadfastly refused to
acknowledge his thoroughly conflicted position in this matter and has dismissed any calls for him
to seek to withdraw in favor of substitute counsel.
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Regardless, Mr. Canna, as counsel for City5 and Rentability, is not free to assist Bardach
in pursuing his personal objectives in this special proceeding given the direct and materially
adverse impact on City5 and Rentability’s respective roles. The Court should therefore exercise
its discretion to disqualify Mr. Canna and Liberman & Canna LLP from serving as counsel for
Bardach in this action.
CONCLUSION
WHEREFORE, the undersigned respectfully requests that the Court grant the within
motion in its entirety and issue an Order: (a) pursuant to 22 NYCRR § 1200 and Rules 1.7 and 1.9
of the New York Rules of Professional Conduct, disqualifying counsel Brett G. Canna, Esq. of
Liberman & Canna LLP from representing petitioner is this matter due to a clear and irreconcilable
conflict of interest; (b) and granting the Nominal Respondent such other and further relief as the
Court deems just, proper and equitable.
Dated: Brooklyn, New York
October 27, 2023
ANGELYN D. JOHNSON, ESQ.
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PRINTING SPECIFICATION STATEMENT
Pursuant to Rule 17 of the Commercial Division Rules, I, Angelyn Johnson, Esq., hereby
certify that this Memorandum of Law in Support was prepared on a computer using Microsoft
Word; Times New Roman typeface; 12-point size font; double line spacing; and consists of a total
of 1,571 words, excluding the caption and signature block.
Dated: Brooklyn, New York
October 27, 2023
ANGELYN D. JOHNSON, ESQ.
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