Showing posts with label conflict of interst. Show all posts
Showing posts with label conflict of interst. Show all posts

Thursday, June 30, 2011

Summary 2011 WY 102

Summary of Decision June 30, 2011


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Summaries are prepared by Law Librarians and are not official statements of the Wyoming Supreme Court

Case Name: Magin v. Solitude Homeowner’s Inc.

Citation: 2011 WY 102

Docket Number: S-10-0166, S-10-0177

URL: http://wyomcases.courts.state.wy.us/applications/oscn/DeliverDocument.asp?CiteID=463609

Appeal from the District Court of Teton County, Honorable Norman E. Young, Judge

Representing Appellant in case S-10-0166 (Defendant): Gerard R. Bosch and Mark J. Longfield of Law Offices of Jerry Bosch, Wilson, Wyoming.

Representing Appellee in case S-10-0166 (Plaintiff): Glenn M. Ford of Garland Ford & Potter, Jackson, Wyoming.

Date of Decision: June 30, 2011

Facts: The district court granted Appellee summary judgment on its claims that Appellant had violated the subdivision’s protective covenants by erecting screens, brush, log piles, and fencing. The district court also awarded Appellee attorney fees. On appeal, Appellant challenges the district court’s refusal to disqualify Appellee’s counsel for having a conflict of interest and its refusal to allow her additional time to respond to Appellee’s summary judgment motion. She also claims the district court erred by granting summary judgment to Appellee on the covenant violations and awarding Appellee attorney fees.

Issues: Whether the district court abused its discretion when it denied Appellant’s Motion to Disqualify Appellee’s attorney under Rule 1.9 of the Wyoming Rules of Professional Conduct for Attorneys at Law and for a hearing on the matter. Whether the district court abused its discretion by denying Appellant’s motion to continue the summary judgment hearing and/or motion for extension of time to respond to Appellee’s motion for summary judgment. Whether the district court erred by granting summary judgment in favor of Appellee on the basis that Appellant had violated the covenants. Whether the district court abused its discretion by awarding Appellee attorney fees

Holdings: Although the attorney representing Appellee did not formerly represent Appellant, another member of his firm did. Rule of Professional Conduct for Attorneys at Law 1.10(a) imputes a conflict of interest to all members of a law firm the representation of the client by the remaining lawyers in the firm. Four elements need to be proven to establish a Rule 1.9 violation: 1. there must have been a valid attorney-client relationship between the attorney and the former client; 2. the interests of the present and former clients must be materially adverse; 3. the former client must not have consented, in an informed manner, to the new representation; and 4. the current matter and the former matter must be the same or substantially related. Appellee concedes that all of the elements of the test are met in this case, with the exception of the last element.

Matters are “substantially related” for purposes of this Rule if they involve the same transaction or legal dispute or if there otherwise is a substantial risk that confidential factual information as would normally have been obtained in the prior representation would materially advance the client’s position in the subsequent matter. A former client is not required to reveal the confidential information learned by the lawyer in order to establish a substantial risk that the lawyer has confidential information to use in the subsequent matter. A conclusion about the possession of such information may be based on the nature of the services the lawyer provided the former client and information that would in ordinary practice be learned by a lawyer providing such services.

In the present action, the materials submitted by Appellant establish that the genesis of the first dispute was a claim by Appellee and her neighbors that certain structures and fences constructed on her property by her predecessor violated the covenants. Appellant’s submissions showed that Appellee’s attorney advised her with regard to interpretation of some of the same covenants at issue here and negotiated with Appellee with regard to the covenant violations. However, Appellant surrendered her right to disqualify Appellee’s attorney because she did not file a motion to disqualify within a reasonable time after she discovered the conflict. Appellant did not file her motion for disqualification until over a year after representation began. During that time, the parties performed significant work on the case, including conducting discovery, locating expert witnesses and filing dispositive motions. An order by the district court requiring withdrawal at that late date would have wasted judicial resources and prejudiced Appellee by requiring it to find new counsel costing additional time and money and unnecessarily delaying resolution of the matter. Therefore, the district court did not abuse its discretion by denying the motion or refusing to reconsider its denial.

A district court has broad discretion to grant or deny a motion for continuance and absent a manifest abuse of discretion, its ruling will not be disturbed. In the present action, Appellee filed its motion for summary judgment in August 2009. Appellant filed motions for extension of time to respond to the summary judgment motion in August and September 2009, citing Appellee’s failure to comply with her discovery requests. At a hearing on September 29, 2009, the district court ordered Appellee to produce the documents requested by Appellant and make its board members and experts available for depositions. Appellee produced documents to Appellant in October 2009. The record contains no evidence that Appellant made any effort to depose the Appellee board members and experts following the district court’s ruling that she was entitled to do so. If she did and was refused by Appellee, Appellant filed no motion to compel. Additionally, after Appellee produced the documents in October 2009, the record contains no evidence that Appellant requested additional information or used the documents produced to prepare a response to Appellee’s motion for summary judgment.

On February 22, 2010, the district court sua sponte set a hearing on all pending motions for April 1, 2010. Appellant still took no action to prepare a response to the summary judgment motion and on March 26, 2010, filed a motion to continue the hearing on Appellee’s summary judgment motion. The district court denied the motion to continue on March 30, 2010. On the day of the hearing, Appellant filed a memorandum requesting additional time to respond to Appellee’s summary judgment motion under W.R.C.P. 56(f), citing among other reasons, the need to depose several witnesses. The district court denied the request and granted summary judgment on the merits in favor of Appellee.

The fact that a district court has not set deadlines for discovery or filing responses to dispositive motions does not mean the parties can allow a matter to languish. Wyoming Rule of Civil Procedure 6(b) and (c) set forth the time for responding to motions when the district court has not set other deadlines and a means for seeking an order from the district court establishing different deadlines. If Appellant wanted different deadlines set, she should have filed a motion asking for them. In addition, nearly six weeks passed between the February 22, 2010, order setting the summary judgment hearing and the actual hearing on April 1, 2010, during which Appellant could have prepared a response to Appellee’s summary judgment motion.

Appellant also claimed she was entitled to additional time to conduct discovery under W.R.C.P. 56(f). However, a litigant cannot use Rule 56(f) to excuse his failure to move forward with discovery, etc. and forestall summary judgment when he has had ample time to conduct discovery and respond to a summary judgment motion. Appellant did not establish that she had insufficient time to obtain the necessary discovery or that she had a valid reason for being unable to present facts essential to her position. She had over six months from the time the district court granted her discovery requests until the summary judgment hearing was held. Even after the denial of her motion for disqualification, she had four months to prepare. Appellant simply ignored her obligations to move forward with discovery and present a response to Appellee’s summary judgment motion. Thus, the district court acted well within its discretion and consistent with the letter and spirit of the rules and did not abuse its discretion by denying the motion for a continuance or refusing Appellant additional time to respond to the summary judgment motion under Rule 56(f).

The party requesting a summary judgment bears the initial burden of establishing a prima facie case for summary judgment. If he carries his burden, “the party who is opposing the motion for summary judgment must present specific facts to demonstrate that a genuine issue of material fact exists. In the present action. Appellee’s submissions established a prima facie case that the conditions on Appellant’s property violated the covenants. Appellant filed no substantive response to Appellee’s motion for summary judgment, and, thus, failed to raise any genuine issue of material fact regarding the violations of the covenants. The district court properly granted Appellee’s motion for summary judgment under Rule 56 and ruled that Appellant must bring her property into compliance with the covenants.

Wyoming follows the American rule regarding recovery of attorney fees, meaning that each party is generally responsible for its own attorney fees. Nevertheless, a prevailing party may be reimbursed for its attorney fees under a contractual or statutory provision which allows for fee shifting. The award in this case was based upon an amendment to the subdivision covenants which provides for payment of the Appellee’s attorney fees in actions it takes to enforce the covenants. The district court properly ruled as a matter of law that Appellee was entitled to recover its attorney fees for enforcing the covenants.

However, the attorney fees provision only allows Appellee to recover fees for enforcing the covenants. The attorney fees associated with clearing the conflict of interest were not “incurred in enforcing” the covenants. Segregation of fees allowed by the contract from those that are not is required, if possible. A party must show segregation is impossible before he may recover for claims for which there is no authorization for fee shifting. When segregation is possible but is not done, the entire fee award is subject to reversal. In the present circumstances, segregation was obviously possible and, yet, was not done.

There are also equitable reasons to deny Appellee’s request that Appellant reimburse it for Mr. Ford’s attorney fees. Wyo. Stat. 1-14-126(b) (2009) states that the court may award attorney fees “in its discretion.” Forfeiture of attorney fees is recognized as one of the remedies for violating Rule 1.9’s prohibition against conflicts of interest. It is hard to imagine a circumstance where this principle would apply with greater force than here. Appellee requested that Appellant pay the fees generated by an attorney who had an obvious conflict of interest. It would certainly be inequitable to require her to pay his fees under these circumstances.

The same rationale does not, however, apply to the award of fees for the work done by the first law firm that represented Appellee. The district court did not abuse its discretion by awarding Appellee fees for the first firm, and that portion of the award is affirmed. The remainder of the award is reversed.

Appellee’s counsel had a conflict of interest; however, the district court did not err by refusing to disqualify the firm because Appellant’s motion to disqualify was untimely. The district court also did not abuse its discretion by refusing to allow Appellant additional time to respond to Appellee’s summary judgment motion and properly granted summary judgment in favor of Appellee and ordered Appellant to bring her property into compliance with the covenants. However, the district court abused its discretion by ordering Appellant to pay the attorney fees generated by her former firm because it failed to segregate the non-recoverable fees associated with clearing the conflict.

Affirmed in part and reversed in part.


C.J. Kite delivered the opinion for the court.

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