Southern Union Co. v. Southwest Gas Corp.
| Decision Date | 31 July 2001 |
| Docket Number | No. CV-99-1294-PHX-ROS.,CV-99-1294-PHX-ROS. |
| Citation | 165 F.Supp.2d 1010 |
| Parties | SOUTHERN UNION COMPANY, a Delaware corporation Plaintiff, v. SOUTHWEST GAS CORPORATION, a California corporation, et al, Defendants. |
| Court | Arizona Supreme Court |
N. Warner Lee, William B. McManus, Ryley, Carlock & Applewhite, P.A., Phoenix, AZ, Eric D. Herschmann, Jessica Mann, Wendy L. Mirsky, Michael M. Fay, Adam Hirshfield, Kasowitz, Benson, Torres & Friedman, LLP, New York City, Tom O. Ferguson, Shelly L. Dalrymple, Sam P. Daniel, Jr., Doerner, Saunders, Daniel & Anderson, Tulsa, OK, Christina Carlson Dodds, Daniel W. Bishop, II, P.C., Austin, TX, for Southern Union Co.
Michael J. O'Connor, Richard R. Thomas, Douglas F. Behm, Michael Scott McCoy, Michael J. Farrell, Jennings, Strouss & Salmon, P.L.C., Phoenix, AZ, Seth Aronson, Marc F. Feinstein, Patrick Lynch, Floy E. Andrews, O'Melveny & Myers, Los Angeles, CA, Michael R. Klein, Steven F. Cherry, Howard M. Shapiro, David P. Donovan, Wilmer, Cutler & Pickering, Washington, DC, Michael J. Bowe, Kasowitz, Benson, Torres & Friedman, LLP, New York City, Todd L. Bice, Schreck, Brignone & Godfrey, Las Vegas, NV, Thomas R. Sheets, Southwest Gas Corp., Las Vegas, NV, Paul J. Cleary, Scott R. Rowland, Boone, Smith, Davis, Hurst & Dickman, Tulsa, OK, for Southwest Gas Corp.
Mark M. Deatherage, Michael M. Kennedy, Tom Henze, Gallagher & Kennedy, P.A., Phoenix, AZ, John J. Swenson, Richard Joseph Doren, Thomas E. Holliday, Gibson, Dunn & Crutcher, LLP, Los Angeles, CA, John Henry Rule, Oliver Sterling Howard, Thomas James Kirby, David E. Keglovits, Amelia A. Fogleman, Gable & Gotwals, Tulsa, OK, for ONEOK, Inc.
David J. Damron, Shannon M. Ivanyi, Sanders & Parks, P.C., Phoenix, AZ, for Michael Maffie.
Michael P. Anthony, Carson, Messinger, Elliott, Laughlin & Ragan, PLLC, Phoenix, AZ, Michael W. Sillman, Brian J. Schulman, Kutak Rock, LLP, Scottsdale, AZ, for James M. Irvin.
Michael D. Kimerer, Thomas V. Rawles, Kimerer & Derrick, PLC, Phoenix, AZ, for John Gaberino.
John R. Hannah, Hoidal & Hannah, PLC, Phoenix, AZ, J. Daniel Campbell, III, Daniel J. O'Connor, Zahnie L. Soe Myint, Jason Edward Hunter, Bell, O'Connor & Campbell, Phoenix, AZ, for Jack D. Rose.
Lawrence A. Hammond, John Alan Stookey, Osborn Maledon, P.A., Phoenix, AZ, for Eugene N. Dubay.
David G. Derickson, William Ridgeway Harrison, David G. Derickson, P.C., Phoenix, AZ, for Tiffany & Bosco.
David G. Derickson, P.C., Phoenix, AZ, for Mark Dioguardi.
Keith Ricker, Ricker & Bustamante, LLP, Phoenix, AZ, for Patrick Black.
Gary Allen Fadell, Fadell, Cheney & Burt, PLLC, Phoenix, AZ, for Laura Winawer.
Eino M. Jacobson, Dewey, AZ, pro se.
Diane Loretta Bornscheuer, Green & Baker, Ltd., Scottsdale, AZ, for Jerry Porter.
N. Warner Lee, William B. McManus, Ryley, Carlock & Applewhite, P.A., Phoenix, AZ, Eric D. Herschmann, Michael M. Fay, Kasowitz, Benson, Torres & Friedman, LLP, New York City, Tom O. Ferguson, Shelly L. Dalrymple, Doerner, Saunders, Daniel & Anderson, Tulsa, OK, for Paul, Smith, Susan Bitter-Smith, and Technical Solutions.
Martin Goyette, California Attorney General's Office, Oakland, CA, for California Public Utilities Commission.
Amended Order
At a hearing held May 11, 2001, the Court indicated that it would issue an Order directing the parties to submit briefing on choice of law issues, in particular with respect to Counts Three, Seven, and Eight in the Second Amended Complaint ("SAC") in CV-99-1294-PHX-ROS. The Court issued an Order on May 18, 2001, directing the parties to simultaneously file their briefs on the choice of law issues on June 8, 2001. The parties were also directed to simultaneously file any responses to those briefs on June 15, 2001. On June 8, 2001, the Court issued a further Order stating that it would rule on the choice of law issues and on the Motions to Dismiss by June 21, 2001. This is that ruling.
As a preliminary matter, the Court will address Dioguardi's Motion to Dismiss. Dioguardi is named as a Defendant with respect to Counts Three (Fraudulent Inducement), Seven (Tortious Interference with Business Relationship), and Eight (Tortious Interference with Contractual Relationship), and though the Court has not yet resolved the complex choice of law issues with respect to these claims, the Court finds that ruling on Dioguardi's Motion to Dismiss does not require a preliminary decision on the choice of law.
Dioguardi claims that he cannot be liable on Counts Three, Seven, or Eight, because his only acts were as an attorney for ONEOK, and Southern Union does not specifically allege that Dioguardi personally participated in any fraudulent inducement.1 Southern Union responds that Dioguardi cannot escape liability simply because he served as ONEOK's counsel and argues that attorneys who engage in fraudulent and intentional misconduct are not shielded from liability. Southern Union also asserts that Dioguardi's "involvement in this conspiracy began no later than the week of February 15, 1999, when Rose recommended that ONEOK retain Dioguardi."
Several courts have held that an attorney, as the client's agent, is not distinct from the client and therefore cannot engage in a conspiracy with the client. See Macke Laundry Service Limited Partnership v. Jetz Service Co., Inc., 931 S.W.2d 166, 176 (Mo.App.1996) ("Macke"); Skarbrevik v. Cohen, England & Whitfield, 231 Cal.App.3d 692, 709, 282 Cal. Rptr. 627, 638 (1991); Doctors' Co. v. Superior Court of Los Angeles County, 49 Cal.3d 39, 45, 260 Cal.Rptr. 183, 775 P.2d 508 (1989); Salaymeh v. InterQual, Inc., 155 Ill.App.3d 1040, 108 Ill.Dec. 578, 508 N.E.2d 1155, 1158 (1987); Fraidin v. Weitzman, 93 Md.App. 168, 611 A.2d 1046, 1079 (1992).2 However, an attorney may be liable for conspiracy if the attorney "acts out of a self-interest which goes beyond the agency relationship." Macke, 931 S.W.2d at 176; Skarbrevik, 231 Cal. App.3d at 709, 282 Cal.Rptr. 627 (); Doctors', 49 Cal.3d at 45, 260 Cal.Rptr. 183, 775 P.2d 508 () (internal quotes and cite omitted); Fraidin, 611 A.2d at 1079 (). Likewise, "an attorney may be liable to a third person for acts arising out of the attorney's representation of a client, if the attorney is guilty of `fraud, collusion, or a malicious or [intentionally] tortious act.'" Macke, 931 S.W.2d at 177-78 (cites omitted); Skarbrevik, 231 Cal.App.3d at 711, 282 Cal.Rptr. 627; Engel v. CBS Inc., 981 F.2d 1076, 1080 (9th Cir.1992) (applying New York law); Fraidin, 611 A.2d at 1080. If a complaint alleges that an attorney is guilty of fraud or collusion, such fraud or collusion must be pled with particularity. Fed. R.Civ.P. 9(b).
A Report and Recommendation issued by Special Master Eino Jacobson on March 7, 2001, ("First R & R") concludes that the SAC fails to state any claims for relief against Dioguardi. Specifically, the First R & R finds:
The Second Amended Complaint does not allege any personal misrepresentation to Southern Union by Dioguardi, nor does it allege that Dioguardi was acting outside of the scope of his legal employment or for his own, rather than his client's benefit. The counts for fraudulent inducement and tortious interference rest solely on theories of conspiracies by the defendants, which would be precluded by Dioguardi's agency with ONEOK.
(First R & R at 4-5) (emphasis added). The First R & R also noted that at the hearing before the Special Master on Dioguardi's Motion, "Southern Union conceded that it does not allege that Dioguardi personally benefitted from his actions." (Id. at 5 n. 2).
In its Objections to the First R & R, Southern Union asserts that the cases relied upon in the First R & R actually support Southern Union's position. Southern Union does not dispute the First R & R's determination that the SAC fails to allege that Dioguardi personally made misrepresentations to Southern Union, but rather, Southern Union contends that the cases "do not require that attorney-defendants be the actual voice for the misrepresentation at issue." (Southern Union's Objections at 3). Southern Union also does not dispute that the SAC fails to allege that Dioguardi was acting outside the scope of his employment or that he was acting for his personal benefit.
The Court finds that the First R & R correctly determined that the allegations contained in the SAC are insufficient to state claims for relief against Dioguardi. First, Southern Union failed to allege that Dioguardi was acting outside the scope of his employment as counsel for ONEOK or that he was acting in furtherance of his own financial gain. See Macke, 931 S.W.2d at 176; Skarbrevik, 231 Cal.App.3d at 709, 282 Cal.Rptr. 627; Doctors', 49 Cal.3d at 45, 260 Cal.Rptr. 183, 775 P.2d 508; Fraidin, 611 A.2d at 1079. Second, Southern Union failed to plead fraud against Dioguardi with sufficient particularity. Fed.R.Civ.P. 9(b). Nowhere in Counts III, VII, or VIII does Southern Union set forth any allegations specifically involving Dioguardi. Moreover, the allegations in the SAC do not support a determination that Dioguardi fraudulently induced Southern Union to enter into the Agreement, because Dioguardi did not allegedly serve as ONEOK's counsel until Gaberino called him four days after the alleged fraudulent inducement was completed.3 (SAC at ¶ 87); see also discussion infra at n. 19.
In Count Three, Southern Union alleges that "all...
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