81 Hawai'i 410, Straub Clinic & Hosp. v. Kochi

• Decision Date: 23 May 1996
• Docket Number: No. 19592,19592
• Citation: 917 P.2d 1284,81 Hawaii 410
• Parties: 81 Hawai'i 410 STRAUB CLINIC & HOSPITAL, Petitioner, v. The Honorable Dan T. KOCHI; KPMG Peat Marwick, aka Peat Marwick Main & Co., fka Peat Marwick Mitchell & Co.; Infotech, a Hawai'i general partnership; Kapiolani Information Systems, Inc., a Hawai'i corporation; Hicord, Inc., a Hawai'i corporation; Kapiolani Health Care System, a Hawai'i non-profit corporation; Kapiolani Medical Center for Women and Children, a Hawai'i non-profit corporation; and Shared Medical Systems Corporation, a Delaware corporation, Respondents.
• Court: Hawaii Supreme Court

Page 1284

917 P.2d 1284

81 Hawai'i 410

STRAUB CLINIC & HOSPITAL, Petitioner, v. The Honorable Dan T. KOCHI; KPMG Peat Marwick, aka Peat Marwick Main & Co., fka Peat Marwick Mitchell & Co. Infotech, a Hawai'i general partnership; Kapiolani Information Systems, Inc., a Hawai'i corporation; Hicord Inc., a Hawai'i corporation; Kapiolani Health Care System a Hawai'i non-profit corporation; Kapiolani Medical Center for Women and Children, a Hawai'i non-profit corporation and Shared Medical Systems Corporation, a Delaware corporation, Respondents.

No. 19592.

Supreme Court of Hawai'i.

May 23, 1996.

Edward A. Jaffe, Ronald I. Heller and Stephanie A. Chin of Torkildson, Katz, Jossem, Fonseca, Jaffe, Moore & Hetherington, on the briefs, Honolulu, for petitioner.

Margaret Jenkins Leong, David J. Dezzani, Jacqueline Earle, and Wilma Sur of Goodsill Anderson Quinn & Stifel, on the briefs, Honolulu, for respondents.

Before MOON, C.J., and KLEIN, LEVINSON, NAKAYAMA and RAMIL, JJ.

PER CURIAM.

In this original proceeding, the plaintiff-petitioner Straub Clinic & Hospital (Straub) petitions this court for a writ directing the respondent Judge Dan T. Kochi, Judge of the Circuit Court of the First Circuit, State of Hawai'i to vacate: (1) the November 1, 1995 order (disqualification order) granting the third-party defendants/respondents InfoTech, Kapiolani Information Systems, Inc., HICORD, Inc., Kapiolani Health Care System, and Kapiolani Medical Center for Women and Children's (collectively, the Kapiolani entities) ¹ motion to disqualify the law firm of Torkildson, Katz, Jossem, Fonseca, Jaffe, Moore & Hetherington (the Torkildson firm) from any further representation of Straub in Straub Clinic & Hospital, Inc. v. KPMG Peat Marwick, Civil No. 93-0646-02; and (2) the February 1, 1996 order denying Straub's motion for reconsideration of the disqualification order. In the alternative, Straub asks us to vacate the disqualification of the entire Torkildson firm and remand with instructions directing the circuit court to limit the disqualification to J. George Hetherington and Roger W. Fonseca, while permitting other attorneys in the Torkildson firm to continue to represent Straub in this action. The Kapiolani entities filed a response to the petition opposing vacation of the disqualification order and contending that the circuit court's order of disqualification was correct.

Based upon the following, we conclude that the circuit court properly granted the motion to disqualify the Torkildson firm and that Straub has failed to demonstrate an indisputable right to the requested relief. Accordingly, the petition is denied.

I. BACKGROUND

In 1986, Straub and the Kapiolani entities were considering various alternatives to meet their computer needs. The two considered a joint venture and engaged the respondent Peat Marwick to identify and determine the cost of the available alternatives. After investigating the potential options, Peat Marwick submitted a study suggesting that the joint venture was feasible and that it provided the least expensive alternative. Relying on Peat Marwick's evaluation, Straub entered into the joint venture with Kapiolani Information Systems and formed a partnership, which the parties named InfoTech. J. George Hetherington, a partner in the Torkildson firm, represented Straub, Kapiolani Information Systems, and InfoTech in connection with the finalization of the InfoTech joint venture agreement. ² In 1987, Hetherington prepared the joint venture agreement and the long-term exclusive services contracts involving Straub, Kapiolani Information Systems, and InfoTech. Two representatives of Straub and two of Kapiolani Information Systems served on the board of InfoTech. Hetherington also participated in later negotiations and drafted contracts between InfoTech and the third-party defendant/respondent Shared Medical Systems Corporation (SMS) for the purchase of computer software.

In 1991, Straub sought to withdraw from InfoTech. Kapiolani Information Systems opposed the withdrawal. After informal settlement efforts failed, Hetherington advised Straub, Kapiolani Information Systems, and InfoTech to engage separate counsel, other than the Torkildson firm, and to attempt to arbitrate the dispute regarding Straub's withdrawal. During the arbitration, Straub and Kapiolani Information Systems reached a settlement that was finalized in a settlement agreement and mutual release, signed on June 5, 1992. One aspect of the settlement was that Straub would withdraw its fifty percent ownership of InfoTech, resulting in one hundred percent ownership by the Kapiolani entities. The Kapiolani entities would pay Straub a cash settlement and relieve Straub of any further payments owed to InfoTech. Neither the settlement agreement nor the mutual release contained an indemnification provision.

On February 17, 1993, Straub, through the Torkildson firm, filed a complaint against Peat Marwick, alleging that Peat Marwick had intentionally misrepresented the benefits of the joint venture as compared to an in-house computer system. Straub alleged that the motive for the misrepresentation was that Peat Marwick was aware that it would earn more than one million dollars a year in consulting fees if the joint venture were formed. No claims were asserted against the Kapiolani entities.

Although the trial was scheduled to begin in July 1995, on December 23, 1994, Straub and Peat Marwick stipulated that Peat Marwick could file a third-party complaint against the Kapiolani entities and SMS, the supplier of the computer software purchased by InfoTech. On January 4, 1995, Peat Marwick filed the third party complaint for indemnification and contribution against the Kapiolani entities and SMS. Thereafter, the case was designated as complex litigation and assigned to Judge Kochi.

On July 6, 1995, SMS counterclaimed against Peat Marwick, asserting that the filing of the third party complaint was abusive because it was motivated by the improper objective of delaying the scheduled trial date. The Kapiolani entities moved to dismiss the third party complaint, alleging that Peat Marwick had no viable claim for which relief could be granted against the Kapiolani entities because Straub had released the Kapiolani entities from any and all liability arising from the joint venture when it signed the settlement and mutual release. The motion was denied.

On July 19, 1995, the Kapiolani entities moved to disqualify the Torkildson firm from continuing to represent Straub on the ground that the Torkildson firm had formerly represented the Kapiolani entities and had been counsel for the Kapiolani entities in matters substantially related to the subject matter of the present lawsuit. In particular, the Kapiolani entities argued that the Torkildson firm had done all of the legal work for InfoTech, had given business advice regarding its formation and structure, had drafted the joint venture and all other necessary legal documents, and had continued to represent InfoTech after it had been established as a separate partnership. The Kapiolani entities submitted that Straub's actions established adversity between the parties. When the Kapiolani entities were served with the third party complaint, the Kapiolani entities had asked Straub to hold it harmless by virtue of the settlement agreement. According to the Kapiolani entities, Straub had refused to hold it harmless unless it paid substantial monetary consideration to Straub. ³ When the Kapiolani entities filed its motion seeking dismissal from the action, Straub filed a statement of no position. Finally, in its status conference and discovery conference statement, Straub complained that the Kapiolani entities had objected to Straub's first request for production of documents regarding financial information pertaining to the joint venture and the identity of key witnesses. ⁴

Straub opposed the motion to disqualify the Torkildson firm on the grounds that: (1) Straub and the Kapiolani entities were not adverse and could not be adverse because of the settlement and mutual release; (2) because the Kapiolani entities had agreed to the former concurrent representation of Straub, Kapiolani Information Systems, and InfoTech, the Kapiolani entities could not claim that any information obtained by the Torkildson firm was confidential as to Straub; and (3) disqualification after two years of litigation would be extremely prejudicial to Straub.

Following a hearing, Judge Kochi took the matter under advisement, but subsequently granted the motion for disqualification based upon findings of fact and conclusions of law set forth in a minute order appended to the order of disqualification. ⁵ Judge Kochi determined that the present action--initiated by the Torkildson firm on behalf of Straub against Peat Marwick, which in turn named the Kapiolani entities as third-party defendants--was substantially related to the former matter in which the Torkildson firm had represented Kapiolani and that the interests of the Torkildson firm's present client were materially adverse to those of its former client. Thus, the court concluded that disqualification was required pursuant to Otaka v. Klein, 71 Haw. 376, 791 P.2d 713 (1990). A subsequent motion for reconsideration was denied on February 1, 1996.

Straub filed the instant petition, which seeks either to vacate the disqualification order or to limit the disqualification to Hetherington and Fonseca, thereby permitting other attorneys associated with the Torkildson firm to continue to represent Straub in this matter.

II. STANDARD FOR DISPOSITION

A writ of mandamus is an extraordinary remedy that will not issue unless the petitioner demonstrates: (1) a clear and indisputable right to relief; and (2) a lack of other means adequately to redress the alleged wrong or obtain the requested action. Tanaka v. Nagata, 76 Hawai'i 32, 35, 868 P.2d 450, 453 (1994). Such writs are not...