Peat, Marwick, Mitchell & Co. v. Los Angeles Rams Football Co., No. 10

CourtCourt of Appeals of Maryland
Writing for the CourtArgued before MURPHY; DIGGES
Citation394 A.2d 801,284 Md. 86
Decision Date27 November 1978
Docket NumberNo. 10

Page 86

284 Md. 86
394 A.2d 801, 5 A.L.R.4th 1238
No. 10.
Court of Appeals of Maryland.
Nov. 27, 1978.

[394 A.2d 802]

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Stephen H. Sachs, Baltimore (Robert B. Levin and Frank, Bernstein, Conaway & Goldman, Baltimore, on brief), for appellant.

Douglas D. Connah, Jr., Baltimore (Francis D. Murnaghan, Jr. and Bayard Z. Hochberg, Baltimore, on brief), for appellee.

Argued before MURPHY, C. J., and SMITH, DIGGES, ELDRIDGE, ORTH and COLE, JJ.

DIGGES, Judge.

Here, as referee, we are called upon to decide a preliminary dispute that has arisen just prior to the opening kickoff in what portends to be a hard-fought legal spectacle. Although the main contest concerns the alleged negligence of petitioner Peat, Marwick, Mitchell & Company (Peat & Co.) in preparing a financial statement relied on by respondent Los Angeles Rams Football Company (Rams) when it entered into a 1972 franchise exchange agreement with the Baltimore Football Club, Inc., this underlying cause of action has been benched pending settlement of the scrimmage now before us. Instead, the issue that is presented on this appeal is the propriety of permitting the well-known Baltimore law firm of Venable, Baetjer and Howard (Venable) to continue to serve as counsel for the Rams when one of its partners may be called upon to testify in the negligence action. Peat & Co.'s motion to require withdrawal of Venable as respondent's counsel was denied by the Circuit Court for Baltimore County (MacDaniel, J.) and it noted an appeal, but the Court of Special Appeals, acting pursuant to Maryland Rule 1035 b 1, dismissed it as "not allowed by law." We granted certiorari and, likewise having

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reached the conclusion that the circuit court's decision is not appealable at this time, affirm the judgment of the Court of Special Appeals.

The circumstances that form the backdrop for this case, concerning as they do the financial intricacies involved in the exchange of the two professional football franchises, are quite complex; however, in order to resolve the narrow issue presented by this appeal we are here required to relate only a skeletal outline of the facts. In 1967, Johnny Unitas, the legendary quarterback of the Baltimore Colts, negotiated an agreement with Baltimore Football, Inc., the entity that then owned the Colts professional football team, whereby Unitas was to receive the sum of $25,000 per year for a period of ten years beginning immediately after the end of his active playing career. This contract and another amending it in 1970 were allegedly negotiated and drafted to a substantial degree by Jacques T. Schlenger, Esq., a partner in Venable. Following, but not directly related to the execution of the various agreements with Unitas, Baltimore Football, Inc., entered into negotiations with Nine to Eleven, Inc., the owner of the Los Angeles Rams professional football team, concerning the possibility of a franchise exchange. An agreement for such an exchange was reached in 1972, also allegedly negotiated and drafted to a considerable extent by Mr. Schlenger, through which each corporate entity contracted to acquire the other's assets and assume its liabilities. As the basis for determining the assets and liabilities of Baltimore Football, Inc., the exchange agreement incorporated by reference a financial report that was prepared and certified by Peat & Co. at the instance of Baltimore. The report, however, did not list the Unitas deferred compensation contract as a liability, or otherwise mention it. As a consequence of this [394 A.2d 803] claimed neglect, Baltimore Football, Inc., which has been renamed the Los Angeles Rams Football Company, concluded it was prohibited from insisting that its obligation under the contract with Unitas was transferred to the new Colt owners. 1 Thus, in

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September 1973 the Rams, represented by Venable, filed a $300,000 damage suit in the Circuit Court for Baltimore County against Peat & Co. alleging that it was negligent in omitting the Unitas obligation from the financial report. 2

Although the parties engaged in extensive discovery and other pretrial activities over a three-year period following the institution of the suit, it was not until July 1977, just six months before the date trial was scheduled to commence, that Peat & Co. filed its motion to prohibit any member of Venable from acting as counsel to the Rams in the pending litigation. Peat & Co. contended that Mr. Schlenger, who has not appeared as attorney of record or otherwise formally participated in the case, would in all probability be called as a witness which, in turn, required that he and each of the members of his law firm be disqualified in accordance with the dictates of DR 5-102 of the Code of Professional Responsibility. 3 The circuit court found that "substantial hardship" would result for the Rams if Venable was removed at this late date, and, therefore, as authorized by DR 5-101(B)(4), declined to grant Peat & Co.'s disqualification

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motion. 4 It is the appealability of this order to which we now turn our attention.

As the appellate jurisdiction of the courts of this State in both civil actions and criminal causes is at this time delimited by statute, 5 See, e. g., Jolley v. State, 282 Md. 353, 355, 384 A.2d 91, 93 (1978); Warren v. State, 281 Md. 179, 182, 377 A.2d 1169, 1171 (1977); Criminal Inj. Comp. Bd. v. Gould, 273 Md. 486, 500, 331 A.2d 55, 64 (1975), our analysis of the appealability of the circuit court's order must begin with an examination of the applicable legislative enactment, found in Md. Code (1974), § 12-301 of the Courts Article. In pertinent part it provides:

(A) party may appeal from a final judgment entered in a civil or criminal case by a circuit court. The right of appeal exists from a final judgment entered by a court in the exercise of original, special, limited, statutory jurisdiction, unless in a particular[394 A.2d 804] case the right of appeal is expressly denied by law.

Our primary task here is to determine whether the order refusing to disqualify Venable from further participation in this case is a "final judgment" within the meaning of section 12-301. 6 The General Assembly has defined a final judgment as "a judgment, decree, sentence, order, determination, decision, or other action by a court . . . from which an appeal, application for leave to appeal, or petition for certiorari may be taken," Md. Code (1974), § 12-101(f) of

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the Courts Article; but, as this definition implies, it is ultimately for this Court to decide which judgments or orders are final and therefore appealable under section 12-301. Warren v. State, supra, 281 Md. at 183, 377 A.2d at 1171.

In our prior attempts at determining if a given trial court action is appealable, this Court has found that the question of "(w)hether a judgment is final is not always readily capable of delineation." United States Fire Ins. v. Schwartz, 280 Md. 518, 521, 374 A.2d 896, 898 (1977). Nonetheless, guided by the principle that piecemeal appeals are to be scorned, E. g., Jolley v. State, supra, 282 Md. at 356, 384 A.2d at 93; Warren v. State, supra, 281 Md. at 183, 377 A.2d at 1171; United States Fire Ins. v. Schwartz, supra, 280 Md. at 524, 374 A.2d at 900, we have stated as a general rule that in order to be appealable a "judgment must be so final as to determine and conclude rights involved, or deny the appellant means of further prosecuting or defending his rights and interests in the subject matter of the proceeding." United States Fire Ins. v. Schwartz, supra, 280 Md. at 521, 374 A.2d at 899 (citation omitted). In applying this rule to the present case, it should be remembered that the subject matter of the litigation before the circuit court is the liability, if any, of Peat & Co. emanating from its preparation of the financial report used in the franchise exchange agreement. Certainly, the trial court's refusal to disqualify respondent's counsel has in no way precluded Peat & Co. from fully defending its interest in the pending law suit or concluded the question of its liability and thus in this context is not a final judgment. See Almon v. American Carloading Corporation, 380 Ill. 524, 44 N.E.2d 592, 596 (1942); Middleberg v. Middleberg, 427 Pa. 114, 233 A.2d 889, 890 (1967); Knox v. Long, 228 S.W.2d 367, 368 (Tex.Civ.App.1950).

Peat & Co., however, asserts that this determination does not end the matter because the circuit court's order is appealable under the so-called " collateral order exception" appended to the final order requirement. This doctrine, recently applied in the criminal context by this Court in Stewart v. State, 282 Md. 557, 571, 386 A.2d 1206, 1213 (1978),

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and Jolley v. State, supra, 282 Md. at 357, 384 A.2d at 94, was first articulated by the United States Supreme Court in Cohen v. Beneficial Industrial Loan Corp.,337 U.S. 541, 545-47, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), in dealing with the appealability of an order denying a motion for the posting of security for costs under the federal appeals statute that is similar to section 12-301. The concept is narrow in scope, however, for, as the Supreme Court has articulated, if the order is to come within the "small class" of cases included in the final judgment rule under Cohen it must meet four requirements: "(T)he order must ((1)) conclusively determine the disputed question, ((2)) resolve an important issue(, (3) be) completely separate from the merits of the action, and ((4)) be effectively unreviewable on appeal from a final judgment." Coopers & Lybrand v. Livesay, 437 U.S. 463, 468, 98 S.Ct. 2454, 2458, 57 L.Ed.2d 351 (1978) (footnote omitted); See Cohen v. Beneficial Industrial Loan Corp., supra, 337 U.S. at 546, 69 S.Ct. 1221.

Supporting Peat & Co.'s contention that the circuit court's determination was a "collateral[394 A.2d 805] order" final...

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