Matter of Outdoor Products Corp.
| Decision Date | 21 June 1995 |
| Docket Number | Bankruptcy No. 87-1039-8B7. Adv. No. 91-219. |
| Citation | 183 BR 645 |
| Parties | In the Matter of OUTDOOR PRODUCTS CORP., Debtor. Ralph Jay HARPLEY, Trustee, Plaintiff, v. DUCANE INDUSTRIES, Defendant. |
| Court | U.S. Bankruptcy Court — Middle District of Florida |
John D. Goldsmith, Tampa, FL, for plaintiff.
Marsha Griffin Rydberg, Tampa, FL, for defendant.
Ralph J. Harpley, Trustee, Tampa, FL.
ORDER ON MOTION TO DISQUALIFY THE TRENAM, KEMKER LAW FIRM
THIS MATTER came on for consideration upon Ducane Industries' Motion to Disqualify the Professional Association of Trenam, Kemker, Scharf, Barkin, Frye, O'Neill, and Mullins as legal counsel for Ralph Jay Harpley, Trustee. This Court has considered the evidence from the February 9, 1995, evidentiary hearing of Ducane's motion to disqualify, and the record, and finds the facts as follows:
Debtor was brought into bankruptcy by an involuntary petition filed under Chapter 7 of Title 11 United States Code (Bankruptcy Code). This adversary proceeding was filed by Plaintiff/Trustee as an action based upon preference under 11 U.S.C. § 547. This adversary proceeding has had substantial litigation between Plaintiff and Defendant since its inception April 8, 1991. During the pendency of this adversary proceeding, Trustee has retained its individual counsel Trenam, Kemker, Scharf, Barkin, Frye, O'Neill, and Mullins, P.A. (Trenam, Kemker) and Defendant (Ducane) has retained Ryberg, Goldstein, and Bolves, P.A. (RGB).
The impetus for this Motion for Disqualification of Plaintiff's counsel, almost four years after the case was filed, is based upon Trenam, Kemker's employment of an associate which was previously employed with RBG. Both periods of employment have been during the pendency of this adversary proceeding.
RGB employed Laura Prather (Prather) from February 1991 through March 1992. During Prather's employment with RGB, she had various contacts with Ducane's counsel and Ducane's treasurer. Prather signed and served Ducane's witness and document lists, Ducane's request for production, Ducane's answers to interrogatories, Ducane's notice of serving answers to interrogatories, and Ducane's response to request for production.1
Testimony supports a finding the senior partner Marsha Ryberg of RGB delegated responsibilities to Prather which were first level of responsibility in the instant case. Prather's basic duties encompassed the legal research and drafting of Ducane's motion to dismiss. Although Ducane alleges Prather was privy to information protected by the attorney-client privilege and work product doctrine, there is no evidence specific confidences were transferred to Prather, or by her to Trenam, Kemker.
Upon leaving RGB in March 1992, Prather took employment with unrelated law firms for over two and one half years. During this period, neither Prather nor the firms in which she was associated were involved in the present adversary proceeding. In October 1994, Prather became an associate member of the Trenam, Kemker firm.
It is undisputed Trenam, Kemker has been counsel for Trustee since 1990. In addition, it is undisputed there has been substantial litigation between Trustee and Ducane during that time, which included four days of trial beginning in July 1993. The last day of this four day trial was scheduled for March 30, 1995, and both parties agreed the trial would be completed on that date.
Prior to Prather taking employment with Trenam, Kemker, John Goldsmith of Trenam, Kemper, and lead counsel for Trustee, discussed the possibility of conflict from her prior association with RGB. Upon hiring Prather, Trenam, Kemker instituted procedures to insure Prather had no involvement on any matters with Mr. Goldsmith or any involvement in the Ducane matters. Testimony reveals she has not discussed the case with any members of Trenam, Kemker, has not sought any involvement in any of the proceedings of the above-captioned adversary proceeding, and there has been a "Chinese wall" erected to protect Prather and Trenam, Kemker from obtaining any possible information obtained during Prather's association with RGB.
RGB offered testimony alleging Prather acquired confidential information in the form of discovery responses, a motion to dismiss, wire transfer research, and contact with Ducane's counsel and Ducane's treasurer. Finally, Ducane does not attempt to suggest Prather was any more than an associate involved in the initial stages of discovery.
Ducane asserts the Florida Bar rules establish an absolute prohibition as to attorneys representation of a party in litigation where the attorney represented an adverse party in the same litigation. In other words, there is an absolute disqualification to "switching sides" during a pending matter, without regard to other factors. Florida Bar Rule 4-1.10 is central to the legal argument raised in Ducane's motion to disqualify.2 That rule provides:
Rule 4-1.10(b) incorporates information that is protected by Rule 4-1.6 and Rule 4-1.9(b). Under Rule 4-1.6, a lawyer shall not reveal information relating to representation of a client, except as stated in subdivisions (b), (c), and (d), of that rule. This prohibition may be waived after disclosure to the client, and the client consents. Rule 4-1.6 has been held as a fundamental principal in the client-lawyer relationship, encouraging communication fully and frankly with a lawyer. As the comment to Rule 4-1.6 states, this fundamental principal encourages the public to seek legal counsel and to be confident that their communications will not be revealed.
Rule 4-1.9(b), which is also incorporated into Rule 4-1.10(b), precludes a lawyer from using information related to the representation of a former client to the disadvantage of that former client. Exceptions to this rule are to prevent a client from committing a crime, to prevent death or bodily harm, to serve the client's interest, as a defense to an action of a former client, or to comply with the rules of professional conduct. There is no question in the instant matter the exceptions to Rule 4-1.9(b) do not apply. In addition, there is no question an attorney must have acquired confidential information that is material to the matter, or necessarily used confidential information, to be governed by the rules set out above. See Rule 4-1.10(b).
The Florida Supreme Court has ruled "a lawyer's ethical obligations to former clients generally require disqualification of the lawyer's entire firm where any potential conflict arises." Brotherhood Mutual Insurance Co. v. Nat'l Presto Industries, Inc., 846 F.Supp. 57, 59 (M.D.Fla.1994) (Citing Castro v. State, 597 So.2d 259, 260 (Fla.1992)).
Upon a showing there is an attorney-client relationship, there is a presumption there was a confidential relationship and confidential information was transferred to all members of a firm by the client. This is the first aspect of loyalty to a client.
The Eleventh Circuit Court of Appeals has applied a similar Alabama rule on professional conduct, and determined this presumption is irrebuttable. Cox v. American Cast Iron Pipe Company, 847 F.2d 725 (11th Cir.1988). This Court believes under similar circumstances, Florida law would require a similar finding. Brotherhood Mutual, 846 F.Supp. at 59. Thus, once the attorney-client relationship is established, there is an irrebuttable presumption the members of the firm have obtained confidential knowledge from the relationship.4Id.
From an analysis of Rule 4-1.10(b), the rule requires the client's matter handled by the initial law firm to be "substantially related" to the matter being dealt with by the receiving law firm. At this point in the analysis, a distinction should be noted. The instant matter is not a "substantially related" matter, it is the "same" adversary proceeding. Therefore, evidence establishes or rebuts the matters were substantially related.5 Evidence for or against an assertion a matter is "substantially related" is not a prerequisite where the matter is the same. Cf. State Farm Mutual Automobile Ins. Company v. K.A.W., 575 So.2d 630 (Fla.1991); Junger Utility & Paving Company v. Myers, 578 So.2d 1117 (Fla. 1st DCA 1989); Kenn Air Corp. v. Gainesville-Alachua County Regional Airport Authority, 593 So.2d 1219 (Fla. 1st DCA 1992); see also Sears, Roebuck and Co. v. Stansbury, 374 So.2d 1051 (Fla. 5th DCA 1979) (two separate lawsuits). The instant case is a preference action in which Trenam, Kemker represents the Trustee, and is the same preference action Prather worked on while at RGB.
Equally as important, and consistently glossed over by others, is the requirement under Rule 4-1.10(b) that the matter which taints an associate attorney is adverse to the former client. If there is no adversity, there is no policy consideration. The need to protect the integrity of loyalty to a client is predicated upon removing instances which would cause apprehension in a client's expectation of confidences. If the associate having an attorney-client relationship with a particular client, which is now an adverse client to the associate's new firm, the expectation of confidences is significantly diminished....
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