Full Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited . R. 1:36-3. SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-2426-25 ASCEND CAPITAL GROUP INTERNATIONAL, LLC, ASCEND RE PARTNERS, LLC, ASCEND RE PARTNERS II, LLC, DSE FAMILY INVESTMENTS II, LLC, DSE FAMILY INVESTMENTS IV, LLC, DSE FAMILY INVESTMENTS V, LLC, DSE FAMILY INVESTMENTS VII, LLC, DSE FAMILY INVESTMENTS IX, LLC, LENOX W109TH, LLC, LENOX EDISON, LLC, LENOX GRAND, LLC, and ASCEND COLUMSTERDAM LLC, Plaintiffs-Respondents, v. BRIAN HAIMM and TAYKU ADVISORS LLC, Defendants-Appellants, and SETH LEVINE, MEYER ORBACH, THE ORBACH GROUP LLC, 955 AMSTERDAM HOLDINGS LLC, WEST 109TH PORTFOLIO LLC, LIGHTHOUSE WEST 115TH LLC, 170-172 WEST 107TH STREET LLC, 933 AMSTERDAM HOLDINGS LLC, 963 AMSTERDAM HOLDINGS LLC, PALAMSTERDAM LLC, LIGHTHOUSE COLUMSTERDAM LLC, COLUMBIA SOUTH LLC, MORNINGSIDE PARK PORTFOLIO HOLDINGS LTD, ROOSEVELT PARTNERS LP, 63 WEST 104TH STREET HOLDINGS LLC, LIGHTHOUSE EDISON LLC, LIGHTHOUSE BROOKLYN LLC, 700 HENNEPIN HOLDINGS LLC, LIGHTHOUSE CITY LINE LLC, LIGHTHOUSE MIRY RUN LLC, WEST 107TH PORTFOLIO LLC, 50 MANHATTAN AVENUE LLC, LIGHTHOUSE PALISADE PARK LLC, 120 W105TH HOLDINGS LLC, 165 MANHATTAN AVE HOLDINGS LLC, COLUMBUS NYC HOLDINGS LLC, MICHAEL KESSEL, ANDREW TURK, ANDREW SELEVAN, LIGHTHOUSE REALTY CAPITAL LLC, LIGHTHOUSE REALTY CAPITAL II LLC, LIGHTHOUSE REALTY CAPITAL III LLC, BEACON 109 MANAGER LLC, MPPH GP LLC, LIGHTHOUSE ROOSEVELT LLC, 63 WEST 104TH STREET MANAGER A-2426-25 2 LLC, 700 HENNEPIN MANAGER LLC, and LH CITY LINE MM LLC, Defendants. Argued October 21, 2026 – Decided November 5, 2026 Before Judges Currier, Puglisi and Jacobs. On appeal from an interlocutory order of the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-1692-20. Bruce D. Greenberg argued the cause for appellants (Lite DePalma Greenberg & Afanador, LLC, Adam J. Stein (Stein Adler Dabah & Zelkowitz LLP) and Matteo J. Rosselli (Stein Adler Dabah & Zelkowitz LLP) of the New York Bar, admitted pro hac vice, attorneys; Adam J. Stein and Matteo J. Rosselli, on the briefs). Daniel R. Benson (Herschmann Benson Bowen LLP) of the New York bar, admitted pro hac vice, argued the cause for respondents (Herschmann Benson Bowen LLP, attorneys; Eric D. Herschmann, Daniel R. Benson, and Michael Paul Bowen (Herschmann Benson Bowen LLP) of the New York bar, admitted pro hac vice, on the brief). PER CURIAM On leave granted, defendants Brian Haimm and Tayku Advisors LLC appeal from a February 6, 2026 order denying their motion to disqualify Eric D. Herschmann and Herschmann Benson Bowen LLP (HBB) as plaintiffs' counsel. A-2426-25 3 For the following reasons, we vacate and remand the matter for further proceedings. Plaintiff Moshael Straus owned SKS Holdings LLC, where Haimm was employed as its chief financial officer. Haimm was a third-party defendant in a prior lawsuit, SKS Holdings LLC v. Kaplan, No. BER-L-6124-17 (the SKS litigation). In January 2018, Haimm signed an engagement letter confirming the retention of Kasowitz Benson Torres LLP (KBT) to represent him in the SKS litigation. At the time, Herschmann and Bowen were attorneys with KBT. The engagement letter stated: As you know, we also represent your co-plaintiffs Moshael Straus, Herbert Seif, SKS Holdings LLC ("SKS") and MJS Family Investments LLC ("MJS") in the above-referenced action. In any joint representation, there is a possibility that a conflict of interest between the represented parties may arise over the course of the representation. You have informed us that you will waive any such conflicts. Specifically, by signing this letter you agree and consent that KBT may concurrently represent you, Moshael Straus, Herbert Seif, MJS and SKS and that it may share confidential information among such clients. Should any actual conflicts arise in the future, you agree that KBT can continue to represent Mr. Straus, SKS and MJS and can withdraw from representing you. In such a situation, we will, of course, advise you of, and help you retain, new counsel[.] A-2426-25 4 According to Haimm, at some point in the summer of 2019, he learned the Federal Bureau of Investigation raided the office of defendant Seth Levine, who had conducted real estate transactions with Straus. As a result, Straus retained KBT to investigate whether his investments were still secure. In August 2019, Haimm telephoned Herschmann to advise he had accepted payments from Levine without informing Straus. Herschmann then passed the information to Straus, who fired Haimm the next day. By email, Bowen notified Haimm KBT was withdrawing as his counsel in the SKS litigation, effective immediately. In September 2019, Haimm, represented by different counsel, and Straus, represented by KBT, entered into a settlement agreement for repayment of funds Haimm accepted from various individuals without Straus's knowledge, in exchange for a release of claims by Straus. On November 25, 2019, plaintiff Ascend Capital Group International, LLC (Ascend), represented by Herschmann, Bowen, and two other attorneys at KBT, filed a four-count complaint against Haimm based on allegations he violated the settlement agreement. The next day, Ascend voluntarily dismissed the complaint without prejudice. A-2426-25 5 In March 2020, Ascend, now represented by Nagel Rice LLP, filed substantially the same complaint against Haimm.1 In November 2021, Bowen and three other attorneys with Glenn Agre Bergman & Fuentes LLP (GABF) entered a notice of appearance as additional counsel on behalf of plaintiffs. The Nagel Rice attorneys remained as trial co-counsel. On July 15, 2025, Herschmann, now with HBB, filed a notice of appearance as "additional counsel of record" on behalf of plaintiffs. The next day, Bowen filed a notice of change of firm affiliation from GABF to HBB. On January 7, 2026, defendants moved to disqualify Herschmann and HBB as plaintiffs' counsel. After considering argument, the trial court issued an oral opinion denying the motion. In considering the relevant rules of professional conduct, the court recognize[d] that there [wa]s a colorable potential conflict of interest that arose at the time plaintiffs' counsel, . . . pursuant to their ongoing representation of both Straus and Haimm, received confidential information from Haimm and subsequently acted in accordance with the interests of Straus in the wake of that disclosure. 1 The complaint has since been amended four times to its current iteration. A-2426-25 6 Because that conduct "may be grounds for disqualification" under RPC 1.7 and 1.9, the court examined the waiver clause in the engagement letter to determine whether Haimm waived the conflict: The record does not show that Haimm was told before he divulged potentially damaging information about the Levine payments that he was unrepresented by Herschmann in the [SKS] investigation. Even if the engagement letter or warnings were before the conflict emerged, the waiver language cited in the SKS engagement [letter] is vague and open-ended, merely referencing future conflicts without explicitly warning Haimm that Herschmann could take an adverse position and represent Straus against him, or use his confidences for Straus's benefit. "Notwithstanding this potential, or technical, or arguable conflict," the court denied the motion because it found Haimm "waived the right to seek disqualification by virtue of his unjustifiable and lengthy delay." The court reasoned: For more than six years of litigation, Herschmann and Bowen have represented Ascend and Straus in this matter. It is only now, on the eve of trial and over six years after becoming aware of the facts forming the basis of the alleged conflict, that . . . Haimm moves to disqualify plaintiffs' counsel for alleged violations of the Rules of Professional Conduct relating to concurrent and former client conflicts. In reaching its conclusion, the court noted defendants "knew or should have known of the facts giving rise to the alleged conflict more than six years ago A-2426-25 7 when litigation started." It further found "disqualification at this stage would cause substantial prejudice to . . . plaintiffs, including disruption of plaintiffs' longstanding relationship with counsel, increased costs, and potential loss of preparation of trial." On appeal, defendants contend: the court erred in denying the motion because Herschmann has a conflict under RPC 1.7 and 1.9; Haimm did not delay in moving to disqualify; and the prejudice to Haimm of permitting Herschmann to try the case outweighs the prejudice to plaintiffs if Herschmann were disqualified. When a motion to disqualify counsel is decided on procedural grounds, appellate courts review that decision under an abuse of discretion standard. See Chattin v. Cape May Greene, Inc., 243 N.J. Super. 590, 609 (App. Div. 1990) (holding court's denial of motion to disqualify counsel was not an abuse of discretion because of undue delay in raising issue). An abuse of discretion "arises when a decision is 'made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis.'" Flagg v. Essex Cnty. Prosecutor, 171 N.J. 561, 571 (2002) (quoting Achacoso-Sanchez v. Immigr. & Naturalization Serv., 779 F.2d 1260, 1265 (7th Cir. 1985)). A-2426-25 8 Having reviewed the record, we are persuaded the trial court misapplied its discretion in finding Haimm waived his right to disqualify counsel based on undue delay. The operative fact on which the court relied—Herschmann had been counsel in this matter for six years—was erroneous. Although Herschmann represented Ascend in its prior complaint against Haimm in 2019, that complaint was voluntarily dismissed the following day. Herschmann did not enter an appearance in this matter until July 2025. Therefore, defendants did not knowingly wait six years without taking any action to seek his disqualification. Defendants did not waive their right to assert a conflict regarding Herschmann. On remand, the trial court must consider and determine defendants' motion to disqualify Herschmann and HBB. We have no opinion as to the ultimate merits of the motion. Because we vacate the order on the court's determination regarding waiver, we decline to address the other points of error raised by defendants. Vacated and remanded for further proceedings in accordance with this opinion. We do not retain jurisdiction. A-2426-25 9