In re Foistner
Decision Date | 31 May 2018 |
Docket Number | Bk. No. 17-10796-BAH |
Citation | 2018 BNH 005 |
Parties | In re: Joseph A. Foistner, Debtor |
Court | U.S. Bankruptcy Court — District of New Hampshire |
Note: This is an unreported opinion. Refer to LBR 1050-1 regarding citation.
The matter before the Court is the "Debtor's Motion and Memorandum to Support Debtor's Motion to Vacate Judgment or Order Due to Fraud, Misrepresentation, or Misconduct by an Opposing Party"1 (the "Motion to Vacate") filed by the debtor Joseph A. Foistner ("Foistner") and the objection thereto2 filed by Antonia Shelzi ("Shelzi"). Through the Motion to Vacate, Foistner seeks relief from the Court's order dated February 14, 2018 overruling his objection to the appearance of Attorney James F. Laboe ("Attorney Laboe") and his firm, Orr & Reno, P.A., on behalf of Shelzi (the "Order Regarding Disqualification"), asserting that it entered as a result offraud and/or misrepresentations made to the Court by Attorney Laboe. For the reasons set forth below, the Court will deny the Motion to Vacate.
This Court has authority to exercise jurisdiction over the subject matter and the parties pursuant to 28 U.S.C. §§ 157(a), 1334, and U.S. District Court for the District of New Hampshire Local Rule 77.4(a). This is a core proceeding under 28 U.S.C. § 157(b)(2)(A).
In December, 2002, Shelzi became a member of an entity managed by Foistner known as Seff Enterprises & Holdings, LLC ("Seff"), which was previously established for the purpose of developing a twenty lot subdivision known as Waldorf Estates in New Boston, New Hampshire. The homes, in turn, were to be constructed by two entities known as New Boston Estates, LLC ("New Boston Estates") and Waldorf Estates Builders, LLC ("Waldorf Builders"). It is fair to say that things did not go to plan, as the parties have been embroiled in litigation in both the state and federal courts arising from their failed partnership since 2005, with each asserting multimillion dollar claims against the other.
The acrimony between the two is further fueled by the fact that Shelzi has been represented by Attorney Laboe and Orr & Reno in all litigation against Foistner. As implied by the matter now before the Court, Foistner asserts that Orr & Reno, and by imputation Attorney Laboe, cannot represent Shelzi due to a disqualifying conflict of interest arising from Foistner's prior relationship with Orr & Reno. He alleges that he twice consulted Orr & Reno—once in 1995, and again in2003—regarding the New Boston real estate project, producing "a wealth" of confidential information necessary for the representation.3 As such, Foistner contends, an attorney-client relationship was established in 1995 that continued beyond 2003.4
The present dispute is further framed by certain events that have taken place during the exceptionally protracted litigation among the parties, including Orr & Reno. Specifically, both Foistner and Shelzi point to orders entered by different state court judges to support their positions with respect to whether Attorney Laboe and Orr & Reno should or should not be disqualified from representing Shelzi before this Court. Therefore, a brief summary of the litigation history, which can be cobbled together from the uncontested record now before the Court, is necessary for context. To be clear, this summary is expressly limited to providing a comprehensible framework to discuss the matters brought before this Court and is in no way meant to be complete or exhaustive.
The primary litigation between Foistner and Shelzi consists of two consolidated civil actions now pending in the Hillsborough County Superior Court (the "Primary Litigation"). The first was commenced in November, 2005, by Shelzi against Seff, Foistner, and his wife Laurie.5 The second was initiated in February, 2007, by Foistner, on behalf of himself, New Boston Estates, Waldorf Builders, and Seff, against Shelzi.6 The specific allegations asserted in the Primary Litigation are not germane to this dispute, but suffice it to say that both place the blame of the failure of the development at the foot of the other. Although the parties' respective claims haveyet to be tried, the Court understands that there has been substantial activity over the years relating to the disposition of the subdivision itself.
On February 19, 2008, Foistner, on his own and on behalf of New Boston Estates and Seff, filed suit against Orr & Reno and Attorney Laboe in the Hillsborough County Superior Court (the "2008 Litigation").7 The thrust of the 2008 Litigation is that Orr & Reno and Attorney Laboe violated their fiduciary duties to him, New Boston Estates, and Seff by representing Shelzi against them in the Primary Litigation. On September 12, 2013, Judge David A. Garfunkel granted in part and denied in part a motion for summary judgment filed by the defendants in the 2008 Litigation asserting that the breach of fiduciary duty claims were barred by collateral estoppel (the "Garfunkel Order").8 Given the emphasis that Foistner places on the Garfunkel Order, the Court will quote the relevant passages of Judge Garfunkel's reasoning rather than summarizing his ruling:
The Garfunkel Order is notable in two respects. First, it indicates that, by September, 2013, Foistner twice sought to disqualify Attorney Laboe and Orr & Reno in the Primary Litigation to no avail.10 Second, despite the fact that the disqualification issue had been raised and rejected twice in the Primary Litigation, Judge Garfunkel concluded that those proceedings did not constitute "an opportunity to litigate the issue of whether the defendants violated their fiduciary duty."11 To put a finer point on it, Judge Garfunkel found that the issue of whether Attorney Laboe and Orr & Reno should be disqualified from representing Shelzi in the Primary Litigation was simply not the same issue as whether they breached any fiduciary duties to Foistner and/or Seff.
Ultimately, the 2008 Litigation was never tried. Instead, Foistner, Orr & Reno, and Attorney Laboe entered into the following stipulation (the "Stipulation"):
The state court signed the Stipulation on August 13, 2014, with the notation "case closed."13 Thus, the only remaining plaintiff in the 2008 Litigation is...
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