In re Weinhold, 8:94-bk-6261-PMG.
| Decision Date | 25 July 2007 |
| Docket Number | No. 8:94-bk-6261-PMG.,8:94-bk-6261-PMG. |
| Parties | In re Wolf Arbin WEINHOLD, Debtor. |
| Court | United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Middle District of Florida |
Russell M. Wain, Stichter, Riedel, Blain Prosser, Tampa, FL, for Debtor.
ORDER ON EMERGENCY MOTION TO DISQUALIFY COUNSEL FOR DEFENDANTS DOUG SMITH AND CPP
THIS CASE came before the Court to consider the Petitioners' Pro Se Emergency Motion to Disqualify Counsel for Defendants Doug Smith and CPP. The Motion was filed by Michael R. Presley, Esq. and Cynthia J. Presley (Presley).
In the Motion, Presley seeks the entry of an order disqualifying and all co-counsel who represent Douglas Smith (Smith) and Carolina Preservation Properties, Inc. (CPP) in their "Defendants' Objections to Compromise Motion,"
On June 27, 1994, the Debtor, Wolf Arbin Weinhold, filed a petition under Chapter 7 of the Bankruptcy Code. A Final Decree was entered, and the case was closed in 1998. The case was reopened in October of 2000 for the purpose of administering assets that allegedly had been concealed from the Chapter 7 Trustee.
On November 28, 2001, the Trustee in the Chapter 7 case filed a Complaint against Smith, CPP, and the Debtor. (Adv. No. 01-872).
Robert L. Rocke, Esquire, (Rocke) has represented Smith and CPP throughout the pendency of the adversary proceeding.
The adversary proceeding is extensive and complex. Three days of trial were held in November of 2003. The trial was continued and the parties attempted on several occasions to reach settlement by mediation. When it appeared that mediation was at an impasse, the trial was scheduled to continue for an eight day period commencing on February 5, 2007.
On February 2, 2007, the Trustee filed an Emergency Motion to. Approve Compromise with Debtor Wolf Arbin Weinhold. (Doe. 215). A copy of the Settlement Agreement was attached to the Motion as Exhibit A. The parties to the Settlement Agreement are the Trustee and the Debtor.
On February 23, 2007, Smith and CPP filed an Amended Objection to the Compromise Motion. (Doc. 219). The Amended Objection was prepared by the law firm of GrayRobinson, PA., on behalf of Smith and CPP.
On February 26, 2007, Presley filed the Emergency Motion to Disqualify Counsel for Defendants Doug Smith and CPP that is currently under consideration. (Doc. 220).
In the Emergency Motion, Presley contends that he had retained GrayRobinson, P.A. (GrayRobinson) to represent him in 2001, that he had engaged in privileged communications with GrayRobinson, and that GrayRobinson's present assertion of the Objection to the Settlement Agreement is "in direct opposition" to Presley's rights.
The following documents are attached to Presley's Emergency Motion:
1. A Proof of Claim in the amount of $840,361.26 signed by Presley. The Claim was filed in the Chapter 7 case on February 26, 2001, and was assigned Claim Number 19. To support the amount asserted, Presley attached to the Claim (1) a letter agreement dated November 26, 1998, between Presley and the Debtor regarding the "Property Known as Wolfs' Lair, Henderson County, North Carolina," and (2) a list of "Overall Expenses of North Carolina Project"
2. A letter from a secretary at GrayRobinson to Presley dated March 1, 2001. The letter stated that, as Presley requested, the Claim had been filed with the Court, and that a file-stamped copy of the Claim was enclosed.
3. A Statement from GrayRobinson to Presley, dated March 6, 2001, for services rendered in the amount of $257.50. According to the Statement, the services were provided on February 25 and February 26, 2001, and included a review of certain documents and a letter agreement provided by Presley, a telephone conference with Presley regarding the documents, a review of the rules regarding administrative claims, review of the case docket, a further review of the claim before filing, and the preparation of a letter to Presley "regarding administrative claimant status."
4. A letter from Presley to GrayRobinson dated March 12, 2001. In the letter, Presley wrote:
On behalf of myself and my wife, Cynthia, I would like to express my sincere thanks for the excellent services that both you and you [sic] firm have provided for us in this matter. Your assistance has been a blessing in helping to secure our rights against the debtor. Of course, I will continue to keep you advised as to the progress of this litigation.
. . . I look forward to the day that we can meet and further discuss the issues, especially the one pertaining to whether these listed items can be reclassified as administrative expenses rather than as a simple claim against the Debtor. . . .
5. A copy of a check from Cynthia Presley to, GrayRobinson dated March 12, 2001, in the amount of $257.50 in payment of the March 6 statement for services rendered.
6. A Statement from GrayRobinson to Presley dated July 16, 2001, for services and expenses in the total amount of $26.34.
7. A check from Presley to GrayRobinson dated July 30, 2001 in the amount of $26.34, in payment of the July 16 statement.
In view of its prior representation of Presley, as demonstrated by the documents described above, Presley contends that GrayRobinson's current representation of Smith and CPP is prohibited, by the Rules Regulating the Florida Bar, and that GrayRobinson should be disqualified from further representation in this case.
On March 13, 2007, GrayRobinson filed a Verified, Response to Disqualification Motion, (Doc. 224).
In the Response, GrayRobinson acknowledges its prior representation of Presley. It acknowledges, for example, that "the Firm formerly' maintained a representation (the `Former Representation') of the Presleys for the purpose of reviewing a proof of claim. . . ." (Doc. 224, ¶¶ 11-12).
In the Response, GrayRobinson further asserts that at the time their representation of CPP commenced, the attorneys at the firth had' no' recollection of the former representation, and a this time, apart from their review of the material filed by the Presleys, they continue to have no personal knowledge or recollection regarding the former representation. (Doc. 224, ¶ 12). According to' GrayRobinson, the scope of the representation was "extraordinarily-limited," and the attorneys spent a total of only two hours on the case. (Doc. 224, ¶ 13).
Finally, GrayRobinson contends that:
Neither [the attorneys] nor the Firm as a whole, have any information, documentation, personal knowledge, or other resources in their possession, ownership, or control that could in any way be utilized from the Former Representation in furtherance of the representation of the Clients (Smith and CPP]. Moreover, the review of a proof of claim many years ago is not, relevant in any respect to the scope of work being done by the Firm for the Clients at this time.
(Doc. 224, ¶ 16). Consequently, GrayRobinson contends that it should not be disqualified from representing Smith and CPP, since it did not receive any confidential information from Presley in the prior representation, since it does not possess any advantage in the current litigation as a result of the prior representation, and since its current representation will not prejudice Presley. (Doc. 224, pp. 6-7).
Presley filed a Reply to GrayRobinson's Response on April 4, 2007. (Doc. 231).
The record in this case clearly establishes that GrayRobinson represented Presley in 2001 in connection with the filing of a Proof of Claim in the Chapter 7 case of Wolf Arbin Weinhold. The record includes copies of statements issued by GrayRobinson to Presley, copies of correspondence between GrayRobinson and Presley, and copies of checks written by Presley in payment for GrayRobinson's services. (Doc. 220).
GrayRobinson does not dispute the existence of the attorney-client relationship. On the contrary, GrayRobinson acknowledges that it previously represented Presley by assisting him with his Proof of Claim in the bankruptcy case. (Doc. 224, ¶¶ 11-13).
The conduct of attorneys appearing in this Court is governed by the Rules of Professional Conduct and other ethical limitations or requirements then governing the professional behavior of members of The Florida Bar. (Local Rule 2090-2). Rule. 4-1.9 of the Rules Regulating the Florida Bar governs conflicts arising from the prior representation of a client:
Rule 4-1.9. Conflict of Interest; Former Client
A lawyer who has formerly represented a client in a matter shall not thereafter:
(a) represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client gives informed consent; or
(b) use information relating to the representation to the disadvantage of the former client except as rule 4-1.6 would permit with respect to a client or when the information has become generally known.
R. Regulating Fla. Bar 4-1.9.
The Florida Supreme Court has addressed the standards to be used in evaluating whether an attorney or firm should be disqualified on the basis of this rule. A person seeking the disqualification of an attorney under Rule 4-1.9 is required to show "that (1) an attorney-client relationship existed, thereby giving rise to an irrefutable presumption that confidences were disclosed during the relationship, and (2) the matter in which the law firm subsequently represented the interest adverse to the former client was the same or substantially related to the matter in which it represented the former client." State Farm Mutual Automobile Insurance Company v. K.A.W., 575 So.2d 630, 633 (Fla.1991). See also Anderson Trucking Service, Inc. v. Gibson, 884 So.2d 1046 (Fla. 5th DCA 2004).
Pursuant to the first prong of the test set forth in K.A.W., therefore, a person seeking the disqualification of an attorney under Rule 4-1.9 must show the existence of a prior...
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