Florida Realty Inc. v. GENERAL DEVELOP. CORP.
| Decision Date | 20 October 1978 |
| Docket Number | No. 76-1809-Civ-CF.,76-1809-Civ-CF. |
| Parties | FLORIDA REALTY INC., Plaintiff, v. GENERAL DEVELOPMENT CORPORATION, Defendant. |
| Court | U.S. District Court — Southern District of Florida |
R. W. Miller, Kevin Glynn of Miller, Simmons, Moore & Jung, Kansas City, Mo., and Jack F. Weins of Abrams, Anton, Robbins, Resnick, Schneider & Mager, P. A., Hollywood, Fla., for plaintiff.
George Feldmiller of Stinson, Mag & Fizzell, Kansas City, Mo., and Joseph Z. Fleming of Fleming & Neuman, Miami, Fla., for defendant.
This action for breach of contract and conversion was filed by Florida Realty against General Development Corporation (GDC) in Missouri State Court on July 24, 1975. On December 3, 1975 it was removed to the United States District Court in Missouri, and on December 5th defendant sought removal of the action to the Southern District of Florida. That matter was contested by the parties. On October 8, 1976 an Order was entered transferring the case to the Southern District of Florida. At the time of transfer defendant's motion to disqualify plaintiff's attorneys was pending. The case was assigned to Judge Aronovitz, who on December 29, 1977 recused himself, and the case was referred to the undersigned shortly thereafter. A hearing on the pending motion was scheduled for February 27, 1978, which had to be postponed due to more urgent matters on the criminal calendar. A hearing was held on October 12, 1978, at which time both parties were represented by Missouri counsel, appearing pro hac vice.
The dispute as to whether plaintiff's counsel, R. W. Miller, of the firm of Miller, Simmons, Moore & Jung, should be permitted to represent his client on this action arises out of prior litigation in which both plaintiff and defendant participated. In order to fully comprehend the rationale of defendant's motion to disqualify Mr. Miller, the circumstances surrounding that prior litigation must be set out in full.
In June of 1968 the parties to this action allegedly entered into a contract whereby plaintiff would sell homesites for defendant. One provision of that agreement stated that the parties would abide by all applicable State or Federal regulations. On January 1, 1969 an amended definition of the term "security" in the Missouri Uniform Securities Act (§ 409.101) became effective, which expanded the definition of a security to include certain transactions in real estate. On April 8, 1968, defendant GDC filed a request for an exemption with the Missouri Securities Commissioner. On April 15, 1968, defendant was advised by the Commissioner that the exemption was not applicable and that registration would be required. GDC filed with the Commissioner, under protest, on May 23, 1968.
Florida Realty was not as willing to accede to registration. On December 23, 1968, Mr. Miller wrote the Commissioner stating that "we do not understand why our client is being required to register." On December 31, 1968, Mr. Miller wrote to GDC and first raised the possibility of resolving the question of registration in court. In his letter to GDC Mr. Miller stated:
it seems to us that this a holding that registration was not required would be of extreme benefit to you, and that General Development would want to join in this procedure.
On June 13, 1969 the Commissioner informed the parties that they were both in violation of the Act. On July 3, 1969 GDC registered certain land transactions with the Commissioner, and Florida Realty registered as a broker-dealer. These registrations were allegedly made with assurances by both parties that certain purchasers of lots would be offered refunds on their purchases, upon entry of a final judgment in an action initiated by Florida Realty challenging the applicability of the Securities Act. At this point Florida Realty initiated that lawsuit in the Missouri Courts challenging the applicability of the Act. On January 17, 1972 the Missouri Circuit Court upheld the interpretation of Commissioner that registration was required, and that decision was affirmed by the Supreme Court of Missouri in 1974.
Defendant claims that it participated in this litigation to the extent of paying 50% of the litigation costs. The record is unclear as to the precise dollar amount GDC paid in connection with this litigation. The procedure was apparently one whereby Florida Realty would pay the law firm of Miller and O'Laughlin (predecessor to firm of Miller, Simmons, Moore & Jung), for its services and then seek reimbursement from GDC. During that early course of the litigation the parties appear to have enjoyed a harmonious relationship. As the litigation proceeded, however, the record indicates a deteriorating relationship. Ultimately, the attack on the applicability of the Securities Act proved unsuccessful and the parties were faced with the spectre of paying significant reimbursements to purchasers with interest accruing from 1969 to 1974. A dispute also exists as to commissions due plaintiff for those reimbursed sales. The Court makes no findings whatsoever as to the liabilities of either party on this question. It is pointed out simply to demonstrate the relationship between the prior litigation in Missouri and the case presently pending before this Court.
In addition to GDC's role in financing the litigation arising out of the Securities Commissioner's adverse ruling, GDC also retained the firm of Miller and O'Laughlin in connection with the registration of land parcels under the Missouri Security Code from February through June of 1970. In that regard the firm of Miller and O'Laughlin spent 101.8 billing hours on GDC's behalf and billed the firm a total of $4,477.79 including cash advances.
Finally, defendant attaches great significance to a letter written by Mr. Miller to David Doheny of GDC after the adverse ruling of the Missouri Supreme Court in which Mr. Miller states:
We will represent neither Florida Realty or GDC in any litigation that may ensue, but we probably cannot avoid testifying if either party should call us as a witness.
It is more than four years since this letter was written and, notwithstanding Mr. Miller's remarks, the firm is representing Florida Realty in this litigation and GDC has indicated that it intends to call Mr. Miller as a witness.
The question before this Court is whether the law firm of Miller, Simmons, Moore & Jung of Kansas City, Missouri and local counsel, Abrams, Anton, Robbins, Resnick, Schneider & Mager, of Hollywood, Florida, should be permitted to represent Florida Realty in this litigation. The parties are in agreement that the Code of Professional Responsibility as adopted by the Supreme Court of Florida governs this question.
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