Sansone v. Garvey, Schubert & Barer

• Decision Date: 12 June 2003
• Parties: Joseph SANSONE, an individual, Plaintiff, and Joseph C. Sansone Company, fka Property Tax Research Company, a Missouri corporation; Property Tax Research Brokerage Company, an Oregon corporation; Property Tax Research Appraisal Company, an Oregon corporation, Respondents, v. GARVEY, SCHUBERT & BARER, a law partnership, Appellant.
• Court: Oregon Court of Appeals

71 P.3d 124

188 Or. App. 206

Joseph SANSONE, an individual, Plaintiff, and Joseph C. Sansone Company, fka Property Tax Research Company, a Missouri corporation; Property Tax Research Brokerage Company, an Oregon corporation; Property Tax Research Appraisal Company, an Oregon corporation, Respondents, v. GARVEY, SCHUBERT & BARER, a law partnership, Appellant.

9810-07633; A110499.

Court of Appeals of Oregon.

Argued and Submitted February 26, 2002.

Decided June 12, 2003.

William B. Crow, Portland, argued the cause for appellant. With him on the briefs were William H. Walters and Miller Nash LLP.

Maureen Leonard, Portland, argued the cause for respondents. With her on the brief were Jan Baisch and Baisch & Coletti, P.C.

Before EDMONDS, Presiding Judge, and LINDER and WOLLHEIM, Judges.

LINDER, J.

This is a legal malpractice action arising out of an employment dispute between plaintiff Joseph C. Sansone Company (Sansone)¹ and two of its employees.

In the underlying employment dispute, Sansone was originally represented by defendant Garvey, Schubert & Barer (Garvey). Garvey later withdrew from the case, however, because its handling of the dispute gave rise to retaliation claims by the employees, thus creating a conflict of interest on its part. Eventually, Sansone and the lawyers who took over Sansone's representation settled the employees' case for $1.25 million after concluding that Garvey's representation had significantly increased Sansone's potential liability. Sansone then brought this malpractice action against Garvey. At trial, among other witnesses, Sansone called the circuit court judge who presided over the underlying trial of the employees' claim against Sansone. The jury returned a verdict in favor of Sansone, and Garvey appeals. On appeal, the significant issues presented are whether a judge may be called as a witness in a legal malpractice action arising out of a trial over which the judge presided and, if so, the appropriate scope of the testimony that the judge may give. As we amplify below, we conclude that there is no legal principle that absolutely prevents a judge from testifying as a witness about matters arising in a former trial over which that judge presided. We further conclude that, in permitting the judge to testify in this case, the trial court exercised sound judgment as to the appropriate limitations to be placed on the scope of any such testimony. We therefore affirm.

I. BACKGROUND

Joseph Sansone is the owner of Joseph C. Sansone Company, a company that represents property taxpayers before various taxing authorities throughout the United States.² Until 1997, Sansone provided those services in Oregon through a company called Property Tax Research (PTR),³ located in Portland. Patricia Rose and Catherine Gunnerson were PTR employees who worked out of the Portland office. In 1996, Rose and Gunnerson became concerned that PTR was permitting out-of-state employees to market the company's services in Oregon without first being licensed by the Oregon Real Estate Agency (REA), a practice they understood to violate Oregon law. Rose was also concerned that the practice jeopardized her real estate license. As a result, Rose and Gunnerson retained attorney Mark Morrell, who, after investigating Rose and Gunnerson's concerns, wrote a letter to Sansone outlining the allegedly unlawful practices. Morrell sent a similar letter to the REA.

Sansone sought counsel from Garvey attorney David Canary, who in the past had represented the company and its clients before taxing authorities in Oregon. On behalf of Sansone, Canary initially responded to Morrell regarding the Rose/Gunnerson matter. He later sought the assistance of his law partner Susan Coskey, whose practice focused on employment matters and who worked out of Garvey's Seattle office.

Following Rose and Gunnerson's report, the REA opened an investigation of PTR's practices. In the course of that investigation, the REA subpoenaed certain of PTR's documents and also subpoenaed PTR employees —including Rose and Gunnerson—for depositions. Canary represented PTR in the REA investigation. To prepare for the depositions and to comply with the REA document request, Canary met with Rose the day before the depositions were scheduled to take place. In the course of that meeting, he asked Rose to provide certain documents from PTR's Portland office, documents that Rose claimed she did not have or could not locate.

The next day, Canary, Rose, Gunnerson, and Morrell all gathered for the REA depositions. Based on an earlier conversation with an REA administrator, Canary expected to sit in on the depositions as PTR's attorney. When he learned that Gunnerson's deposition had begun without him, he forced his way into the hearing room, interrupted the proceedings, and demanded to participate. The assistant attorney general conducting the depositions refused to let Canary sit in on Gunnerson's or Rose's deposition. Canary returned to the waiting area where he later angrily confronted Rose without her lawyer present, calling her a thief and a liar. REA personnel eventually intervened and asked Canary to leave the area so that he would not disrupt REA business. According to one witness, that confrontation became "one of the best pieces of evidence to show retaliation" against Rose for reporting her concerns to the REA. Another witness acknowledged that the confrontation was a "huge component" of Rose's claims for emotional distress and reputational damages. Meanwhile, Rose and Gunnerson's relationships with Sansone began to deteriorate. They both eventually took medical leave due to stress. While on leave, Rose and Gunnerson received memoranda from David Smith, a manager at Sansone, which had been drafted by Canary's law partner, Coskey. The memoranda questioned the reasons for their continued absence, warned them about their performance, and sought medical verification of their respective conditions. One memorandum accused both Rose and her attending physician of lying about Rose's medical condition. Another one asked Rose to attend a meeting with Smith and other Sansone managers to discuss each party's concerns regarding the employment relationship. On Coskey's advice, Smith also told Rose that her attorney could not accompany her to that meeting.

Eventually, Rose and Gunnerson resigned from their positions at PTR and filed complaints seeking damages based on whistleblower claims and actions for libel, intentional infliction of emotional distress, and common-law wrongful discharge. The claims were based, in part, on Canary's conduct at the REA depositions and Coskey's role in drafting the memorandum alleging that Rose and her doctor lied about her medical condition. Soon after filing the complaints, Rose and Gunnerson's trial lawyer, Steve Rizzo,⁴ informed Garvey attorney Eric Lindenauer by letter that Garvey's continued representation of Sansone in the employment action violated applicable disciplinary rules because Canary was likely to be called as a witness in Rose and Gunnerson's case against Sansone. In response, Garvey repeatedly denied that a conflict existed and refused to withdraw.

The litigation progressed and, as it did, the discovery phase became increasingly contentious. Garvey refused to comply with Rizzo's requests for production of PTR documents. In fact, Garvey resisted discovery requests to such a degree that Judge Charles Guinasso, who was overseeing discovery, intervened and ordered Garvey to produce nearly 40 boxes of documents immediately. Judge Guinasso took the extraordinary step of having the furniture removed from his office to store the large number of boxes, and considered dismissing Sansone's answer as a sanction for Garvey's discovery abuses.

The trial date was set for May 1998. In March, Garvey acknowledged the conflict of interest about which Rizzo had complained and, seven weeks before trial, withdrew from the case. Mark Wagner was substituted to represent Sansone. The case went to trial as scheduled, with Judge Ellen Rosenblum presiding, but not before plaintiffs turned down settlement offers of $300,000, $400,000, and $1,000,000. The trial ended up focusing principally on the conduct of the Garvey attorneys, with Canary's testimony, pursuant to subpoena, figuring foremost in the employees' case-in-chief.

Sansone's attorney, Wagner, estimated that the whistleblower case, in and of itself, had a core value of $50,000. But Wagner was convinced that, because of the evidence of the Garvey attorneys's conduct, Sansone "faced a huge exposure": "I knew we were going to lose. I knew there was a potential to lose very big." Wagner watched the trial unfold "just as [the plaintiffs' attorney] had hoped and planned," and he saw Sansone's "defense getting narrower and narrower." The problem was compounded by the demeanor of the witnesses on the stand. Mr. Sansone described the employees as presenting themselves as "very sincere and convincing." On the other hand, Canary appeared to him during the trial to be "arrogant, lecturing to the jury, objecting to what the lawyers were asking, confront[ational] with the Judge," as well as "sullen" and unapologetic. The employees' attorney, Rizzo, had a similar impression, describing Canary as an "attacking witness" whose testimony marked a "turning point in the trial." According to Wagner, who on behalf of Sansone, tried to rehabilitate Canary on cross-examination, Canary was "a terrible witness" who was hostile and not contrite. After the trial, while the jury deliberated, the parties reopened settlement discussions and sought the advice of Judge Rosenblum. In particular, they solicited her views on the progress of the trial, the likely verdict, and the reasonableness of their proposed settlement amount. After that consultation, the parties agreed to settle the case for $1.25 million.

Sansone then filed this legal malpractice action against Garvey, alleging that, as a result of...