State Of West Va. Ex Rel. Bluestone Coal Corp. v. Mazzone

• Decision Date: 23 June 2010
• Docket Number: No. 35516.,35516.
• Citation: 226 W.Va. 148,697 S.E.2d 740
• Court: West Virginia Supreme Court
• Parties: STATE of West Virginia ex rel. BLUESTONE COAL CORPORATION and Bluestone Coal Sales Corporation, Petitioners,v.Honorable James P. MAZZONE, Judge of the Circuit Court of Ohio County, and Mountain State Carbon, LLC, Respondents.

226 W.Va. 148

697 S.E.2d 740

West Virginia.

STATE of West Virginia ex rel. BLUESTONE COAL CORPORATION and Bluestone Coal Sales Corporation, Petitioners,v.Honorable James P. MAZZONE, Judge of the Circuit Court of Ohio County, and Mountain State Carbon, LLC, Respondents.

No. 35516.

Supreme Court of Appeals of

Submitted June 1, 2010.

Decided June 23, 2010.

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Syllabus by the Court

1. A party aggrieved by a lower court's decision on a motion to disqualify an attorney may properly challenge the lower court's decision by way of a petition for a writ of prohibition.

2. “A circuit court, upon motion of a party, by its inherent power to do what is reasonably necessary for the administration of justice, may disqualify a lawyer from a case because the lawyer's representation in the case presents a conflict of interest where the conflict is such as clearly to call in question the fair or efficient administration of justice. Such motion should be viewed with extreme caution because of the interference with the lawyer-client relationship.” Syllabus point 1 Garlow v. Zakaib, 186 W.Va. 457, 413 S.E.2d 112 (1991).

3. “Under the Code of Professional Responsibility, a lawyer may be disqualified from participating in a pending case if his continued representation would give rise to an apparent conflict of interest or appearance of impropriety based upon that lawyer's confidential relationship with an opposing party.” Syllabus point 2 State ex rel. Taylor Associates v. Nuzum, 175 W.Va. 19, 330 S.E.2d 677 (1985).

4. “Rule 1.9(a) of the Rules of Professional Conduct, precludes an attorney who has formerly represented a client in a matter from representing another person in the same or a substantially related matter that is materially adverse to the interest of the former client unless the former client consents after consultation.” Syllabus point 2 State ex rel. McClanahan v. Hamilton, 189 W.Va. 290, 430 S.E.2d 569 (1993).

5. To disqualify an attorney pursuant to Rule 1.9(a) of the West Virginia Rules of Professional Conduct, five criteria must be satisfied: (1) the existence of an attorney-client relationship between the attorney and the former client; (2) the existence of an attorney-client relationship between the attorney and the subsequent client; (3) the subject matter of the subsequent client's representation either is the same as or is substantially related to the subject matter of the former client's representation; (4) the subsequent client's representation is materially adverse to the interests of the former client; and (5) the former client has not consented, after consultation, to the subsequent representation.

6. “As soon as a client has expressed a desire to employ an attorney and there has been a corresponding consent on the part of the attorney to act for him in a professional capacity, the relation of attorney and client has been established; and all dealings thereafter between them relating to the subject of the employment will be governed by the rules applicable to such relation.” Syllabus point 1 Keenan v. Scott, 64 W.Va. 137, 61 S.E. 806 (1908).

7. “Under Rule 1.9(a) of the Rules of Professional Conduct, determining whether an attorney's current representation involves a substantially related matter to that of a former client requires an analysis of the facts, circumstances, and legal issues of the two representations.” Syllabus point 3, State ex rel. McClanahan v. Hamilton, 189 W.Va. 290, 430 S.E.2d 569 (1993).

8. “Under West Virginia Rule of Professional [Conduct] 1.9(a), a current matter is deemed to be substantially related to an earlier matter in which a lawyer acted as counsel if (1) the current matter involves the work the lawyer performed for the former client; or (2) there is a substantial risk that representation of the present client will involve the use of information acquired in the course of representing the former client, unless that information has become generally known.” Syllabus point 1, State ex rel. Keenan v. Hatcher, 210 W.Va. 307, 557 S.E.2d 361 (2001).

9. “Rule 1.9(a) of the Rules of Professional Conduct recognizes that even though an attorney may have a conflict of interest with regard to a former client, the attorney may continue the representation if the former client, after consultation, consents to the representation. During this consultation, the attorney must make a full disclosure to the former client so that an intelligent decision may be made on the consent.” Syllabus point 5, State ex rel. McClanahan v. Hamilton, 189 W.Va. 290, 430 S.E.2d 569 (1993).

David S. Givens, Flaherty, Sensabaugh & Bonasso, PLLC, Wheeling, WV, Jared M. Tully, Frost Brown Todd LLC, Charleston, WV, Barry D. Hunter, Pro Hac Vice, Rebekah G. Ballard, Pro Hac Vice, Frost Brown Todd LLC, Lexington, KY, for the Petitioners.

Mark R. Hornak, Buchanan Ingersoll & Rooney LLP, Pittsburgh, PA, David B. Cross, David F. Cross, Wellsburg, WV, for the Respondent, Mountain State Carbon, LLC.

DAVIS, Chief Justice:

The petitioners herein, Bluestone Coal Corporation (hereinafter “Bluestone Coal”) and Bluestone Coal Sales Corporation (hereinafter “Bluestone Coal Sales”),¹ request this Court to issue a writ of prohibition to prevent the Circuit Court of Ohio County from enforcing its November 20, 2009, order. By that order, the circuit court denied the Bluestone companies' motion to disqualify Buchanan Ingersoll & Rooney LLP (hereinafter “Buchanan Ingersoll”) as counsel for Mountain State Carbon, LLC (hereinafter “Mountain State”), which company is the opposing party in the underlying litigation and a respondent to the instant original jurisdiction proceeding. Before this Court, the Bluestone companies contend that Mountain State's counsel should be disqualified from representing Mountain State in the underlying proceedings because such continued representation violates Rules 1.7(a), 1.7(b), 1.9, and 1.10 of the West Virginia Rules of Professional Conduct. Upon the record before us, the parties' arguments, and the pertinent authorities, we grant the requested writ of prohibition. Accordingly, we conclude that the law firm of Buchanan Ingersoll & Rooney LLP is disqualified and barred from representing Mountain State Carbon, LLC, adverse to the interests of Bluestone Coal Corporation or Bluestone Coal Sales Corporation in the underlying litigation in Civil Action No. 08-C-360 (AR) in the Circuit Court of Ohio County, West Virginia.

I.FACTUAL AND PROCEDURAL HISTORY

A brief review of the nature of the parties and their relationship to one another is instructive to appreciate the context of the instant proceeding. Bluestone Coal and Bluestone Coal Sales, the petitioners herein, are companies engaged in the production and sale of coal. Both Bluestone companies are part of a conglomerate of twenty-nine affiliated closely-held companies owned and operated by James C. Justice, II (hereinafter “Mr. Justice”).² These affiliated companies share one common General Counsel, Mr. Stephen W. Ball (hereinafter “Mr. Ball”), and the majority of these companies, including the two Bluestone companies involved in this case, are headquartered in the same office building in Beckley, West Virginia.

Mountain State, one of the respondents herein, owns and operates a coke plant in Follansbee, West Virginia, and purchases coal to convert into coke; Mountain State's principal place of business is in Wheeling, West Virginia. On October 5, 2007, Mountain State and Bluestone Coal Sales entered into a coal supply agreement whereby Bluestone Coal Sales agreed to supply all of the coal required by Mountain State's Follansbee coke operations. Bluestone Coal served as the guarantor for Bluestone Coal Sales' obligations under this agreement. When Bluestone Coal Sales failed to deliver the requisite amount of coal in accordance with the agreement's terms, Mountain State filed suit against both Bluestone Coal Sales and Bluestone Coal in the Circuit Court of Ohio County on September 9, 2008.

The law firm representing Mountain State in the underlying litigation, whose disqualification the Bluestone companies seek, is Buchanan Ingersoll. Buchanan Ingersoll is a large, nationwide, law firm, whose principal place of business is in Pittsburgh, Pennsylvania. At various times, Buchanan Ingersoll has been retained as counsel for certain of Mr. Justice's companies, including Dynamic Energy, Inc.; Harlan Development Corporation; James C. Justice Companies LLC; and Sequoia Energy, LLC, for which representations engagement letters were signed. Buchanan Ingersoll also has either directly represented or provided legal counsel to both Bluestone Coal and Bluestone Coal Sales; however, the exact nature of the relationship between Buchanan Ingersoll and the Bluestone companies, as well as whether there currently exists an attorney-client relationship between these entities, is disputed by the parties and will be discussed in further detail in Section III.B. of this opinion. See Section III.B. infra. It appears that Buchanan Ingersoll began providing legal services for both Mountain State and Mr. Justice's companies in approximately 2005.

Following Buchanan Ingersoll's institution of Mountain State's Ohio County lawsuit, the Bluestone companies moved the circuit court to disqualify Buchanan Ingersoll from continuing its representation of Mountain State. In support of their motion, the Bluestone companies variously contended that they were current clients of Buchanan Ingersoll such that continued representation of Mountain State in an adverse capacity would violate Rule 1.7 of the West Virginia Rules of Professional Conduct; that they were former clients of the law firm such that continued representation would violate Rule 1.9; and that, because certain, individual attorneys had formerly represented the Bluestone companies, their disqualification should be imputed to the entire law firm in accordance with Rule 1.10. By order...