DAVID L. QUINN, individually and derivatively on behalf of SILVERMINE BAY, INC., Plaintiff,
LOUIS YIP; TZE PING NG; ERIC LEUNG; PON-SANG CHAN, M.D.; PUI-O, INC.; TAI-O, INC.; TAI-O ASSOCIATES, L.P.; 501 ROOSEVELT, LLC; 501 LESSEE, LLC; 501 DEVELOPER, LLC; 521 ROOSEVELT AVENUE, LLC; T-O HC, LLC; HONG KONG NEW TERRITORIES, LLC; and E-O, INC., Defendants.
Plaintiff: Jeffrey H. Gladstone, Esq. Steven E. Snow, Esq.
Defendant: Jeffrey B. Pine, Esq.; William J. Lynch, Esq.;
Stephen P. Sheehan, Esq.; Max Wistow, Esq.
Interested Parties: Mark T. Buben, Esq.; Stephen F. DelSesto,
Esq.; James A. Hall, Esq.
of the fourteen Defendants-Tai-O Associates, L.P. (Tai-O),
Louis Yip (Yip), and Tze Ping Ng (Ng) (collectively, the
Movants)-move to disqualify Partridge Snow & Hahn, LLP
(PS&H) from representing the Plaintiff, David L. Quinn,
individually and derivatively on behalf of Silvermine Bay,
Inc. (Plaintiff) in this litigation involving a corporate
ownership dispute. Plaintiff has timely objected to the
filed a Verified Complaint on March 30, 2015 to enforce his
rights as a twenty percent minority shareholder of Silvermine
Bay, Inc. (Silvermine Bay). Verified Pet. for Appointment of
Special Master and Compl. for Damages (Verified Compl.)
¶ 1. He also sued derivatively on behalf of Silvermine
Bay against the remaining shareholders: Yip, Ng, and Eric
Leung (Leung) (collectively, the Shareholder Defendants),
whose combined interest in the company was eighty percent.
Id. Specifically, the action was brought to appoint
a special master to secure and preserve the assets of
Silvermine Bay and, if necessary, appoint a permanent
receiver to liquidate its assets and business pursuant to a
decree of dissolution. Id. at ¶ 5.
Additionally, Plaintiff sought (1) access to and review of
the corporate books and records pursuant to G.L. 1956 §
7-1.2-1502; (2) a full and complete accounting of the
business affairs of Silvermine Bay; (3) restitution of any
and all diverted corporate funds and opportunities; (4)
damages deriving from Yip's alleged wrongful conduct; and
(5) an award of the costs of bringing the litigation
including attorneys' fees. Id.
Plaintiff alleged in his Verified Complaint that the
Shareholder Defendants failed to comply with demands for
information made in 2011 for the purpose of evaluating his
interest in Silvermine Bay and reviewing its past business
activities. Id. at ¶¶ 17-22. Plaintiff
also alleged that the Shareholder Defendants refused to
provide information involving a number of business entities
controlled by Yip and Ng, including but not limited to Tai-O.
Id. at ¶ 19. Furthermore, Plaintiff also
claimed that the information he was able to obtain prior to
filing suit showed that the Shareholder Defendants managed
and controlled the affairs of Silvermine Bay to the advantage
of other various enterprises in which Yip had an ownership
interest, but Plaintiff did not. Id. at ¶ 23.
According to Plaintiff, there also appeared to be money that
was transferred from Silvermine Bay, without Plaintiff's
knowledge or approval, to Yip's other business
organizations with no interest being charged. Id. at
the Shareholder Defendants answered the Verified Complaint
and this Court appointed an examiner of Silvermine Bay, the
Shareholder Defendants elected to purchase Plaintiff's
shares of the company. Discovery then ensued, and Plaintiff,
in or about March 2017, issued a subpoena ducestecum to Tai-O
seeking relevant documents. According to Plaintiff, during
discovery, it was revealed that there was an unauthorized
transfer of $151, 632.72 from Silvermine Bay's accounts
on or about July 31, 2012, allegedly to pay off a tax lien on
a property owned by Tai-O in order to avoid a tax sale.
Steven E. Snow Aff. (Snow Aff.) ¶ 5. There were also two
other transfers from Silvermine Bay to Tai-O: one made on or
about December 23, 2013 for $200, 000; and the other occurred
on or about January 6, 2009 for $46, 350. Id.
this discovery, Plaintiff amended his Verified Complaint on
September 5, 2017, which included a new legal claim that an
implied partnership exists between Plaintiff and the
Shareholder Defendants regarding a real estate development
business under the fictitious name the Tai-O Group.
Id. at ¶ 4. The Amended Verified Complaint also
added a number of related business entities comprising the
Tai-O Group as named parties, as well as one additional
individual Defendant, Pon-Sang Chan, M.D. (Chan).
Id. On November 2, 2017, the Movants then filed the
instant motion to disqualify PS&H from this matter.
Movants argue in their motion to disqualify that PS&H
previously represented them in real estate transactions and
other matters concerning Tai-O and Defendant 521 Roosevelt
Avenue, LLC (521), including the acquisition of the same real
estate in which Plaintiff is now claiming an interest in his
Amended Verified Complaint. Specifically, Plaintiff is now
seeking a twenty-five percent interest in, inter
alia, Tai-O and 521 at the expense of the Movants, each
of whom effectively owns a one-third interest in these two
in 2004, Defendants Yip and Ng consulted and hired Attorney
John Boehnert (Attorney Boehnert), a partner at PS&H at
the time. According to Attorney Boehnert, PS&H provided
(1) legal services in preparing agreements and preparing and
submitting corporate filings to the Secretary of State; (2)
legal services regarding the purchase, sale, financing, and
development of real estate; (3) legal services in assisting
with environmental issues and compliance; and (4) legal
services regarding the creation of a land condominium. John
M. Boehnert Aff. (Boehnert Aff.) ¶ 6. Specifically, in
2004, PS&H represented Yip and Ng in acquiring and
developing the real property located at 521 Roosevelt Avenue,
Pawtucket, Rhode Island. Id. at ¶ 8. According
to the Movants, in June and July of 2005, PS&H then
advised Yip and Ng regarding the appropriate business
structure for this project and advised the creation of three
entities: Tai-O General Partner, Inc., Tai-O Limited Partner,
Inc., and Tai-O Associates, L.P. (the Tai-O Entities).
Id. at ¶ 9. Yip and Ng were owners and
shareholders of all three entities. On December 22, 2006,
while PS&H was still representing the Movants, Tai-O
purchased the real estate located at 521 Roosevelt Avenue,
Pawtucket, Rhode Island, as well as real estate located at
555 Roosevelt Avenue, Pawtucket, Rhode Island. Id.
at ¶ 10. Then, on May 18, 2007, PS&H represented
Tai-O at a closing of loans from Cathay Bank. This
transaction consisted of a construction loan of $6, 547, 500,
as well as a bridge loan of $1, 468, 871, which were used to
develop the property located on 555 Roosevelt Avenue.
Id. at ¶ 11. At this closing, Yip, Ng, their
wives, and Chan's wife each executed personal guaranties
in connection with the loans from Cathay Bank. Id.
Boehnert represented the Movants through August 2009, and
left PS&H that same month. Id. at ¶¶
3, 7. However, he has continued to represent the Movants
through this present date. Id. at ¶ 6. The
Movants also allege that PS&H-through attorneys other
than Attorney Boehnert-continued to represent Tai-O through
September 2010. Defs.' Mot. to Disqualify (Defs.'
Mot.), Ex. B.
crux of the Movants' motion to disqualify PS&H from
representing Plaintiff hinges on the following claims from
Plaintiff's Amended Verified Complaint: (1) that Yip, Ng,
and Chan allegedly did not include Plaintiff as a shareholder
in Tai-O and a participant in the purchase and development at
the 521 Roosevelt Avenue property; and (2) that the loans
were allegedly made by Silvermine Bay to Tai-O and to another
entity, Pui-O-where Yip, Ng, and Chan were also
shareholders-which in turn lent money to Tai-O. With respect
to the first claim, the Movants argue that PS&H's
representation of the Movants included creating Tai-O and
financing, purchasing, and developing Tai-O's
property-the same property in which Plaintiff seeks an
ownership interest. Regarding the second claim, the Movants
contend that many of the loans which form the basis for
Plaintiff's claims against the Movants and 521 occurred
while PS&H was representing and advising the Movants
regarding the purchase, development, and financing of the
property at issue. According to the Movants, they have not
consented to PS&H's representation of Plaintiff in
the instant action.
the Rhode Island Supreme Court has not expressly adopted a
standard of review for a motion to disqualify an attorney
from a case, it has expressed on numerous occasions that the
proponent of a motion to disqualify has a high burden to
meet. See, e.g., In re Yashar, 713 A.2d
787, 790 (R.I. 1998) (party seeking disqualification of a
judge based on alleged prejudice carries a substantial burden
of establishing that the actions of the judge were affected
by facts and events which were not pertinent nor before the
court); Olivier v. Town of Cumberland, 540 A.2d 23,
27 (R.I. 1988) (quoting Sellers v. Superior Court,
154 Ariz. 281, 289, 742 P.2d 292, ...