Cullen & Dykman kicked off $22 mln estate dispute

Cullen & Dykman kicked off $22 mln estate dispute


1/5/2012

NEW YORK, Jan 5 (Reuters) - New York law firm Cullen & Dykman has been disqualified from acting as counsel in a bitter $22-million-estate feud after a Long Island judge held that the firm's past work for a company accused of withholding payments from the estate amounted to a conflict of interest.

Nassau County Surrogate Court Judge Edward McCarty ruled that Cullen & Dykman could not continue representing the estate of Phebe Baugher, since its prior work for W.S. Wilson Corp gave it access to confidential information.

Cullen & Dykman's representation of the company "triggers a presumption that the firm is in possession of confidences related to the issues in this proceeding," the judge wrote in a ruling issued Wednesday.

In the same decision, McCarty denied a bid to disqualify opposing counsel Katten Muchin Rosenman, which was also alleged to have represented more than one side in the battle over the estate of Baugher, whose father founded Long Island aircraft-parts distributor W.S. Wilson Corp and left shares of the company in a trust for surviving family members.

The Baugher estate alleged in a 2009 lawsuit that W.S. Wilson Corp had been withholding payments to the estate valued at roughly $22 million. But the Baugher family legal feud started years before, when a derivative shareholders' lawsuit was filed in Queens state court and with disputes about the appointment of a trustee for the estate before Baugher passed away in 2008.

From January 2007 to August 2009, Cullen and Dykman represented W.S. Wilson in general business matters. The firm also represented Baugher from May 2005 until August 2008, just a few months before her death.

'SUBSTANTIAL RISK'

In February 2008, members of the Baugher family -- some of whom sit on W.S. Wilson's board of directors -- wrote a letter to the firm objecting to its "simultaneous representation of W.S. Wilson and Phebe Baugher" and asking it to drop W.S. Wilson as a client.

The firm wrote to the company's CEO, Jeffrey Baugher, seeking permission to continue its dual representation of W.S. Wilson and Baugher. Jeffrey Baugher consented to the request, according to the court.

But the company fought back, alleging that the go-ahead from Jeffrey Baugher did not qualify as "informed consent" and saying he could not give his permission because at the time he wrote the letter, he was exploring a potential claim that Phebe Baugher might have intended to revise her estate plan in his favor.

McCarty agreed with the company.

"Unless the affected clients consent, a lawyer may not represent both an organization and a director, officer or shareholder of the corporation if there is a substantial risk that the lawyer's representation of either would materially and adversely affect the lawyer's obligation to each," McCarty wrote.

Cullen and Dykman attorney Paul Golinski declined to comment on the court ruling.
After the company moved to disqualify Cullen and Dykman, the firm filed a motion on behalf of its client, preliminary executor Jonathon Baugher, seeking to disqualify Katten Muchin from representing W.S. Wilson and individual respondents, including members of the Baugher family who sit on the board at W.S. Wilson.

In its motion, the executor argued that Katten Muchin is purporting to represent the company, when it is really looking after the interests of the individuals.

But McCarty found "no facts...which would support disqualification" and denied the motion.

Katten Muchin and the firm representing W.S. Wilson did not return requests for comment.

The case is In the Matter of the Petition of Jonathon Baugher as Preliminary Executor of the Last Will and Testament of Phebe Baugher, in the Surrogate's Court of the State of New York, County of Nassau, No. 353909.

For W.S. Wilson: French & Casey.

For Jonathon Baugher: Paul Golinski of Cullen and Dykman.

For respondents William Baugher, Laraine Baugher Stuek, Ralph Baugher, Richard Baugher, Lisa Bauger Eppley and W.S. Wilson Corp: Katten Muchin Rosenman.

(Reporting by Jessica Dye)

Follow us on Twitter: @ReutersLegal

(A prior version of this story mispelled Katten Muchin Rosenman in the fourth paragraph.)


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Editor's note: Alice R. Gore Estate value about 1 million dollars: Alice R. Gore, deceased, a disabled 99 year old ward of the Probate Court of Cook County, Judge Kawamoto’s courtroom. Katten Law firm  represented Alice's mentally disabled daughter's appointment as Alice's guardian. Lucius Verenus, Schoolmaster, ProbateSharks.com

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