Russakoff v. State, Dept. of Ins., 98-642.
| Decision Date | 21 October 1998 |
| Docket Number | No. 98-642.,98-642. |
| Citation | 724 So.2d 582 |
| Parties | Sheldon RUSSAKOFF, Petitioner, v. STATE of Florida, DEPARTMENT OF INSURANCE, as receiver for Sunrise Healthcare Plan, Inc., Respondent. |
| Court | Florida District Court of Appeals |
Raoul G. Cantero, III and Jeffrey W. Blacher, of Adorno & Zeder, P.A., Miami, for Petitioner.
Dennis K. Threadgill and C. Timothy Gray, State of Florida, Department of Insurance, Division of Rehabilitation and Liquidation, for Respondent.
Appellant challenges the order of the trial court disqualifying his legal counsel because of a conflict of interest. Finding that the record does not support the decision, and thus departs from the essential requirements of law, we reverse, but without prejudice for the trial court to reconsider the matter at a later time after creation of a fuller factual record. Appellant was the chief executive officer and sole shareholder of a health maintenance organization called Sunrise Healthcare Plan, Inc. (Sunrise). When Sunrise encountered severe financial difficulties, appellant took out a loan in his own name and paid $1.6 million into the corporation. Not long thereafter, and shortly before the Department of Insurance formally commenced receivership proceedings against Sunrise, its board of directors voted to pay appellant a salary of $780,000 annually, to pay him $250,000 retroactively in addition to the salary, and to permit him to take up to $400,000 out of the corporation.
After the Department took control of Sunrise as receiver, it commenced this proceeding against appellant to recover $612,500 on behalf of the corporation, which it alleged was paid by Sunrise to appellant. Appellant hired as his legal counsel a lawyer from the firm of Adorno & Zeder, who also had been outside counsel for Sunrise. The department moved to disqualify counsel, arguing that Adorno & Zeder could not represent a new client, appellee, in an action against its former client, Sunrise.
Appellant countered that the lawyer representing him in this matter was not one of the three who had represented Sunrise, and that, as sole stockholder of the corporation, any lawyer he hired would have the same insiders' perspective as previous counsel from Adorno & Zeder. In addition, appellant argued that the Adorno & Zeder lawyers would have no relevant testimony to give that appellant himself could not also give. Moreover, he noted that the Sunrise that is in receivership is a different entity than it had been when it was a going concern, and exists presently not as an HMO, but only to pay off creditors. Finally, appellant urged that Adorno & Zeder had never represented Sunrise in this matter, which was brought by the Department.
The trial court granted the Department's motion, finding that the law firm had represented Sunrise in a related matter, and that, moreover, the Department would certainly call as witnesses the lawyers who had advised Sunrise regarding this matter.
We believe that the trial court was premature in its ruling, in that certain crucial facts have not yet been established that would determine whether appellant should be required to hire new counsel. Thus, the order departs from the essential requirements of law. See Ford Motor Co. v. Edwards, 363 So.2d 867 (Fla. 1st DCA 1978).
Disqualification of a lawyer for conflict of interest is an extraordinary remedy to be resorted to only sparingly. Fleitman v. McPherson, 691 So.2d 37 (Fla. 1st DCA 1997). When the claim is that an individual lawyer has a conflict of interest, the moving party must first show that there was an attorney-client relationship; if this fact is established, an irrefutable presumption arises that confidences were disclosed to the attorney during the course of that relationship. If the moving party then shows that the current subject matter is the same, or is substantially related to, the matter in which the lawyer represented the former client, the lawyer should be disqualified. Zarco Supply Co. v. Bonnell, 658 So.2d 151 (Fla. 1st DCA 1995).
Disqualification of an entire law firm is a somewhat less straight-forward proposition, however, and it appears that even when a lawyer will have to testify in a trial regarding a former client, the law firm will not necessarily be disqualified. For example in Fleitman this court permitted a law firm to represent a client even though a member of the firm would have to testify at trial. 691 So.2d at 38.
Rule 4-3.7 of the Rules Regulating the Florida Bar states, in pertinent part:
A lawyer may act as advocate in a trial in which another lawyer in the lawyer's firm is likely to be called as a witness unless precluded from doing so by rule 4-1.7 or 4-1.9.
Rule 4-1.9 of the Rules Regulating the Florida Bar, states:
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...and that under applicable case law an irrefutable presumption arose that confidences were disclosed.4 See Russakoff v. Dep't of Ins., 724 So.2d 582 (Fla. 1st DCA 1998); Simon DeBartolo Group, Inc. v. Bratley, 741 So.2d 1254 (Fla. 1st DCA 1999). The only remaining inquiry is whether the form......
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Key Largo Restaurant, Inc. v. TH Old Town Associates, Ltd., 5D99-2025.
...subject matter or is substantially related to the matter in which the lawyer represented the moving party. See Russakoff v. State, Dept. of Ins., 724 So.2d 582 (Fla. 1st DCA 1998); see also Lee v. Florida Dept. of Ins. Treasurer, 586 So.2d 1185, 1190 (Fla. 1st DCA 1991). In that regard, Rul......
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Simon DeBartolo Group, Inc. v. Bratley, 99-776.
...an irrefutable presumption arises that confidences were disclosed during the course of the relationship. Russakoff v. Dep't. of Insur., 724 So.2d 582, 583 (Fla. 1st DCA 1998). However, before an attorney can be disqualified, the former client must show that the current subject matter is the......