Henry Filters, Inc. v. Peabody Barnes, Inc.

Citation611 N.E.2d 873,82 Ohio App.3d 255
Decision Date04 September 1992
Docket NumberNo. 91WD114,91WD114
PartiesHENRY FILTERS, INC., Appellant, v. PEABODY BARNES, INC., Appellee.
CourtUnited States Court of Appeals (Ohio)

Drew A. Hanna, Bowling Green, for appellant.

Thomas W. Mack, Cincinnati, Martin Kimel, Washington, DC, and Daniel T. Spitler, Bowling Green, for appellee.

SHERCK, Judge.

This is an appeal from the order of the Wood County Court of Common Pleas disqualifying the law firm of Brooks and Kushman from representing appellant, Henry Filters, Inc. Because we find that substantial evidence supports the conclusion that appellant's attorneys, Brooks and Kushman, had an existing attorney-client relationship with appellee when this litigation commenced, we affirm the order of the trial court.

Appellee, Peabody Barnes, Inc., f.k.a. Barnes Pump, is in the business of supplying motors and pumps for various uses. Appellant, Henry Filters, Inc., is in the business of manufacturing machine tool coolant filtration and recovery systems which employ pumps and motors such as those supplied by appellee. In May 1988, appellant's president, Stephen McEwen, began discussions with appellee's chief engineer concerning the possibility of the companies' entering into a project for the purpose of developing a unique pump to be known as the "Henry pump." In September 1988, appellant ordered from appellee a prototype of the submersible seventy-five horsepower motor to be used in the Henry pump.

In November 1988, appellant and appellee tested the Henry pump prototype. The prototype incorporated the motor produced by appellee. In the course of the testing, engineers from appellant and appellee discovered that a certain bearing arrangement resulted in improved motor cooling. Both parties felt that the improvement was significant; as a result, the companies decided to seek a joint patent on the improved design.

Appellant and appellee decided to work together in the preparation and prosecution of the joint patent application. The parties agreed that appellant's counsel, Brooks and Kushman, would prepare and prosecute the application. Appellee agreed to reimburse appellant one half the cost of seeking the patent.

During the contractual negotiations which took place concerning the sharing of the invention's benefits, each party was represented by separate counsel; appellant was represented by Brooks and Kushman, while appellee was represented by other counsel.

In the course of the preparation of the patent application, an attorney from Brooks and Kushman consulted with engineers from both appellant and appellee. Among the various documents associated with the patent application was a declaration form prepared by Brooks and Kushman. That document, signed by both parties, included the statement: "I hereby appoint the following attorney(s) and/or agents to prosecute this application and to transact all business in the Patent and Trademark Office connected therewith." 002cents= That clause then listed members of the firm of Brooks and Kushman. Thus, appellee, on a form supplied by Brooks and Kushman, expressly appointed Brooks and Kushman as its attorney to prosecute the patent application.

During the preparation of the patent application, employees of appellee gave extensive information to Brooks and Kushman that appellee considered confidential. Appellee's engineer was later to testify that, at the time and although it was not discussed, he had no objection to sharing the information with appellant. It is clear, however, that appellee expected that Brooks and Kushman would not use the information to appellee's detriment.

In January 1991, Brooks and Kushman abandoned the patent application after the Patent Office determined that the application contained nothing new or patentable. However, Brooks and Kushman never notified appellee that the application was no longer being pursued.

The present lawsuit commenced three months prior to Brooks and Kushman's abandonment of the patent application. On September 28, 1990, appellant filed suit against appellee, alleging that the motors and pump assemblies sold by appellee to appellant were defective goods. The alleged defective goods incorporated the devices that were described in the patent application.

On May 13, 1991, appellee filed its motion to disqualify appellant's counsel, Brooks and Kushman. Appellant opposed the motion. The trial court, Judge Donald DeCessna, heard oral arguments and ordered additional briefing. Shortly thereafter, Judge DeCessna recused himself from the case due to a potential conflict of interest, and Judge Randall L. Basinger assumed responsibility for the litigation.

At a pretrial conference, Judge Basinger invited even more briefing of the issues. The parties declined, indicating that the motion was ripe for decision. Accordingly, on October 29, 1991, the trial court made extensive findings of fact and granted the motion to disqualify Brooks and Kushman. Appellant filed this timely appeal, asserting the following sole assignment of error:

"The court erred in granting defendants' motion for disqualification of the law firm of Brooks & Kushman because (i) there was no attorney-client relationship between defendant and Brooks & Kushman, and (ii) by defendants' own admission, the information disclosed to Brooks & Kushman by defendants was never intended to be kept confidential from Henry."

Disqualification of a lawyer is a serious matter. The right of a litigant to select counsel of choice should be limited only when representation poses a significant risk of a violation of the Canons of the Code of Professional Responsibility. Mentor Lagoons, Inc. v. Rubin (1987), 31 Ohio St.3d 256 259-260, 31 OBR 459, 461-463, 510 N.E.2d 379, 381-382. The Disciplinary Rule which is pertinent to this matter is DR 5-105, which states:

"(A) A lawyer shall decline proffered employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by the acceptance of the proffered employment, except to the extent permitted under DR 5-105(C).

"(B) A lawyer shall not continue multiple employment if the exercise of his independent professional judgment in behalf of a client will be or is likely to be adversely affected by his representation of another client, except to the extent permitted under DR 5-105(C).

"(C) In the situations covered by DR 5-105(A) and (B), a lawyer may represent multiple clients if it is obvious that he can adequately represent the interest of each and if each consents to the representation after full disclosure of the possible effect of such representation on the exercise of his independent professional judgment on behalf of each.

"(D) If a lawyer is required to decline employment or to withdraw from employment under DR 5-105, no partner or associate of his or his firm may accept or continue such employment."

Generally, the decision of the trial court to disqualify an attorney based on a conflict of interest will be sustained absent an abuse of discretion. Sarbey v. Natl. City Bank, Akron (1990), 66 Ohio App.3d 18, 583 N.E.2d 392. We note at the outset that a motion to disqualify an attorney gives rise to two areas of examination: (1) the nature of the relationship between the litigants; and (2) the nature of the relationship between the attorney's past and present duties, as those duties relate to the litigants. The court must first scrutinize the relationship that existed between the moving party and the attorney that the moving party seeks to disqualify. If there is no current or past attorney-client relationship, then the motion should be denied. On the other hand, if the court determines that there is, or has been, an attorney-client...

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