NCNB Texas Nat. Bank v. Coker
| Decision Date | 22 February 1989 |
| Docket Number | No. C-7801,C-7801 |
| Citation | 765 S.W.2d 398 |
| Parties | NCNB TEXAS NATIONAL BANK, Relator, v. The Honorable Bill F. COKER, Judge, Respondent. |
| Court | Texas Supreme Court |
The relator, NCNB Texas National Bank (NCNB), filed a petition for writ of mandamus seeking to compel the Honorable Bill Coker to rescind his order of disqualification of the law firm of Vial, Hamilton, Koch & Knox (Vial Hamilton). NCNB asserts that Judge Coker abused his discretion by applying an incorrect standard of law in considering the motion to disqualify. We agree.
NCNB is the assignee of the receiver of First RepublicBank Dallas, N.A. (First Republic). First Republic was formed as a result of the merger between InterFirst Bank Dallas, N.A. (InterFirst) and RepublicBank Dallas, N.A., effective June 8, 1987. Approximately four months before the merger, Western Fire & Casualty Insurance Company (Western Fire) developed a master insurance policy designed to insure equipment leases to the named insured, InterFirst. After the merger, First Republic bought the equipment leases and requested Western Fire to issue certificates of insurance upon the leases pursuant to the master policy. Subsequently, a large number of the equipment leases insured by Western Fire for First Republic went into default.
First Republic filed suit in district court alleging that Western Fire, through co-defendants Walker General Agency, Inc. (Walker General), Mortgage Insurance Services, Inc. and D.R. Hawkins, foreclosed upon equipment which was collateral to the leases and collected funds due from the lessees in default. First Republic, now NCNB, alleges, however, that Western Fire failed to remit the proceeds of these collections to First Republic. Thus, the suit pending in district court is a suit by NCNB on credit insurance policies, and wrongful collection and retention of funds gained by the defendants as a result of selling equipment which was collateral for the leases now in default.
The controversy presented within this mandamus proceeding arose when Western Fire and Walker General filed a motion to disqualify counsel for First Republic, now NCNB. It is undisputed that for a period of approximately five months the law firm of Vial Hamilton represented Western Fire and Walker General in a prior suit filed against Republic Insurance Company. The issue in that case was whether Republic Insurance Company could unilaterally terminate the reinsurance treaties it had executed with the plaintiffs of that suit. Vial Hamilton's representation in that matter, alleges Western Fire and Walker General, gave access to confidences and secrets which would be violated by Vial Hamilton representing First Republic in an adversarial proceeding.
The potential of intentional or inadvertent revelation of a former client's confidences exists each time an attorney undertakes representation of a client against a former client. Canon 9 of the Texas Code of Professional Responsibility mandates that lawyers, through the exercise of their personal, professional and ethical judgment, avoid any activity that might give rise to an appearance of impropriety. Canon 4 imposes the duty to preserve the confidences and secrets of clients, both current and former. In this day of merging law firms and consolidating businesses, however, to allow Canon 9, or Canon 4, or a combination of both, to dictate a complete bar to any representation of a former client would not be practical. On the other hand, to allow unrestrained representation of new clients against former clients would stifle the attorney-client communication that was meant to be encouraged by the adoption of Canon 4 and destroy the public confidence in the legal profession meant to be fostered by Canon 9. The trust necessary in any attorney-client relationship is destroyed if the client must be concerned that any information given the attorney may reappear later in an adversarial proceeding in which his former attorney represents his opponent.
The preservation of clients' secrets and confidences is not an option. The Texas Code of Professional Responsibility DR 4-101(B) mandates that a lawyer shall not knowingly reveal a confidence or secret...
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...before analyzing attorney's duty to preserve confidences based on nature of prior relationship with movant); NCNB Texas National Bank v. Coker, 765 S.W.2d 398, 399-400 (Tex.1989). In order to prove a substantial relationship between two matters, the movant must produce "evidence of specific......
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