Ex parte Tiffin
Decision Date | 03 October 2003 |
Citation | 879 So.2d 1160 |
Parties | Ex parte Robert A. TIFFIN, Jr., et al. (In re Grady Price et al. v. Tiffin Motor Homes, Inc., et al.). |
Court | Alabama Supreme Court |
C. Lee Reeves, Joseph S. Bluestein and Shaun K. Ramey of Sirote & Permutt, P.C., Birmingham, for petitioners.
Thomas E. Baddley, Jr., and Jeffrey P. Mauro of Baddley & Mauro, LLC, Birmingham; and Daniel McDowell of McDowell, Beason, Russellville, for respondents.
The majority shareholders in, and officers or directors of, Tiffin Motor Homes, Inc. ("TMH"), namely, Robert A. Tiffin, Jr., David Tiffin, Judy Tiffin, Timothy R. Tiffin, Van L. Tiffin, and Alex B. Tiffin (hereinafter collectively referred to as "the Tiffins"), petition this Court for a writ of mandamus directing the trial court to "reinstate Sirote [ & Permutt, P.C.,]" as the law firm representing the Tiffins in an action filed against them by the minority shareholders of TMH, namely, J.M. Page, Darrell Harp, Grady Price, Ann Vincent, David D. Deaton, and Kathryn B. Deaton (hereinafter collectively referred to as the "minority shareholders"). We grant the petition.
The material facts are not in dispute. This action began on August 10, 2001, when the minority shareholders filed a 14-count complaint against the Tiffins and TMH. The first nine counts of the complaint were shareholder-derivative claims, asserted on behalf of TMH, pursuant to Ala. R. Civ. P. 23.1, against the Tiffins in their official capacities. The essence of those claims was that the Tiffins had breached various duties to the corporation by "causing the corporation to pay excessive prices for goods and services to entities connected to the Tiffin family, by usurping business opportunities, and by diverting incomes and profits to other related companies" ("the derivative claims").
The remaining claims were against the Tiffins in their individual capacities. In those claims, the minority shareholders alleged that they had been "individually damaged by the [Tiffins'] actions." More specifically, they averred that they had been "deprived of their just share of the corporate gains"; that the Tiffins had "siphoned off and diverted profits and dividends from [TMH]"; and that the Tiffins had "engaged in a systematic scheme or design to `squeeze out' the minority shareholders of [TMH]" ("the minority-shareholder claims"). Sirote & Permutt, P.C. ("Sirote"), undertook to represent the Tiffins, individually, in the action, while the law firm of Bedford, Rogers & Bowling, P.C., represented TMH in the action. On June 13, 2002, the trial court entered a partial summary judgment for the Tiffins disposing of the derivative claims; that judgment was made final pursuant to Rule 54(b), Ala. R. Civ. P., and is no longer reviewable by appeal.
On July 22, 2002, almost a year after the complaint was filed and more than a month after the entry of the partial summary judgment, the minority shareholders moved to disqualify Sirote from representing the Tiffins. The motion alleged that "[a]t all times relevant ..., [Sirote had] served as general counsel for [TMH]." (Emphasis added.)1 The motion also alleged that "in its capacity as counsel for TMH, [Sirote had] provided legal advice and performed legal services with respect to issues and transactions ... directly at issue." It further alleged that Sirote's "continued representation" of the Tiffins constituted an "irreconcilable conflict of interest" with TMH, as prohibited by Rule 1.7, Ala. R. Prof. Conduct, and Rule 1.9, Ala. R. Prof. Conduct. Those rules provide:
The Tiffins responded to the minority shareholders' motion to disqualify Sirote, arguing that because Sirote was representing only them, individually, in the litigation, the summary judgment on the derivative claims removed any purported conflict of interest. More specifically, they argued:
(Emphasis in original.)
In that response, the Tiffins also argued:
(First emphasis original; other emphasis added.)2
The trial court granted the minority shareholders' motion, and entered an order disqualifying Sirote from representing the Tiffins. Subsequently, the Tiffins filed this mandamus petition, challenging that order.
A petition for a writ of mandamus is the appropriate vehicle by which to review an order disqualifying an attorney from representing a party. Ex parte Lammon, 688 So.2d 836, 838 (Ala.Civ.App. 1996); see Ex parte Intergraph Corp., 670 So.2d 858, 860 (Ala.1995); Ex parte Central States Health & Life Co. of Omaha, 594 So.2d 80 (Ala.1992). "A writ of mandamus will issue where the petitioner has demonstrated `a clear legal right to the relief sought.'" Ex parte Dowdell, 677 So.2d 1158, 1159 (Ala.1996) (quoting Ex parte Clark, 643 So.2d 977, 978 (Ala.1994)).
This Court reviews questions of law de novo. Tipler v. Alabama State Bar, 866 So.2d 1126 (Ala.2003); Alabama Dep't of Transp. v. Price, 854 So.2d 59 (Ala. 2003); Thompson Tractor Co. v. Fair Contracting Co., 757 So.2d 396, 398 (Ala.2000); Ex parte Alabama Real Estate Appraisers Bd., 739 So.2d 14, 16 (Ala.1999). Where there is no dispute as to any fact material to a dispositive element of Rule 1.7 or Rule 1.9, Ala. R. Prof. Conduct, the question is one of law and our review is de novo. Cf. Chrispens v. Coastal Refining & Marketing, Inc., 257 Kan. 745, 761, 897 P.2d 104, 116 (1995) ().
The minority shareholders contend that "Sirote has discarded" the duty of loyalty it owes to TMH as general counsel of TMH "by abandoning representation of the corporation and thereafter undertaking representation of the [Tiffins], who are in an adversarial position relative to the [minority] [s]hareholders." Minority Shareholders' brief, at 13-14. It is the "continued representation" of the Tiffins that the minority shareholders contend constitutes an "irreconcilable conflict of interest" with TMH, as prohibited by Rule 1.7 and Rule 1.9.
The party moving for an attorney's disqualification under Rule 1.7 or Rule 1.9 bears the burden of proving the existence of a conflict of interest. Carlyle Towers Condo. Ass'n, Inc. v. Crossland Sav., FSB, 944 F.Supp. 341 (D.N.J.1996); Barragree v. Tri-County Elec. Coop., Inc., 263 Kan. 446, 950 P.2d 1351 (1997); Walker v. State Dep't of Transp. & Dev., 817 So.2d 57 (La.2002); Rose v. Rose, 849 P.2d 1321 (Wyo.1993); In re Commissioner of Banks & Real Estate, 327 Ill.App.3d 441, 764 N.E.2d 66, 261 Ill.Dec. 775 (2001).
Rule 1.7 governs a lawyer's responsibility with regard to concurrent clients. More specifically, Rule 1.7(a) "prohibits representation of opposing parties in litigation," while Rule 1.7(b) governs "[s]...
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