Walton v. Chase Home Fin. LLC, 1:11-cv-00417-JMS-MJD
| Decision Date | 23 April 2012 |
| Docket Number | NO. 1:11-cv-00417-JMS-MJD,1:11-cv-00417-JMS-MJD |
| Parties | DEBORAH WALTON, Plaintiff, v. CHASE HOME FINANCE LLC, EXPERIAN INFORMATION SOLUTIONS, INC., Defendants. |
| Court | U.S. District Court — Southern District of Indiana |
This matter is before the Court on Plaintiff Deborah Walton's ("Walton") Motion to Disqualify the law firm Bose McKinney & Evans LLP ("Bose McKinney") from representing Defendant JPMorgan Chase Bank, N.A. ("Chase") due to a conflict of interest [Dkt. 75]. The parties have fully briefed the Motion and the Court held a hearing on the matter on April 10, 2012. For the reasons discussed below, the Court DENIES the Motion to Disqualify.
On January 18, 2011, Walton filed the present action against Defendant Chase alleging violations of the Fair Credit Reporting Act, 15 U.S.C. §§ 1681, et seq., the Real Estate Settlement Procedures Act, New York's General Business Law § 349, and Indiana's Consumer Protection Sales Act, Ind Code. § 24-5-0.5, et seq. Chase is the current servicer and owner of a mortgage that Walton originally obtained from Washington Mutual Inc. According to Walton, beginning around November 2009, Chase refused to cash her checks for her mortgage payments and reported to Defendant Experian Information Solutions, Inc. that Walton's mortgage was lateor delinquent, which adversely affected Walton's credit. Chase maintains that Walton's mortgage is in default and has indicated it might file a counterclaim to foreclose on Walton's property.
Presently at issue is whether Bose McKinney should be disqualified as counsel for Chase, because of a conflict of interest. In 2003, attorneys from Bose McKinney represented Walton in a different litigated matter, which representation concluded in 2004. Thus, Walton is a former client of Bose McKinney.
The prior matter involved an appeal of a state trial court's issuance of a permanent injunction and restraining order against Walton. At issue was whether Walton's property was subject to her homeowners association's Declaration of Covenants and Restrictions, which contained both an entryway easement and a planting easement. When Walton refused to allow the homeowners association access to her property, the association filed a Complaint for Immediate Restraining Order, or Preliminary Injunction, and Damages. The trial court entered an immediate restraining order against Walton and later issued a permanent injunction and restraining order against Walton. Finding that Walton had sufficient notice of the Declaration of Covenant and Restrictions, the Indiana Court of Appeals affirmed the trial court's decision.
In the current matter, Walton alleges that Bose McKinney used information that it gained from its prior representation of Walton against her during a settlement conference held on January 30, 2012. At the settlement conference, a discussion was had regarding the existence of a lien on Walton's property, which information Walton contends Chase obtained from Bose McKinney's prior representation of her. However, in an affidavit submitted in response to the Motion to Disqualify, Chase's counsel, Theodore J. Nowacki, represented that he learned of the lien through an online public records search. [Dkt. 104 Ex. 1].
Pursuant to Local Rule 83-5(e), the Indiana Rules of Professional Conduct govern the conduct of those practicing in this Court. S.D. Ind. L.R. 83-5(e); Gen-Cor, LLC v. Buckeye Corrugated, Inc., 111 F. Supp. 2d 1049, 1051 (S.D. Ind. 2000). Indiana Rule of Professional Conduct 1.10 provides in relevant part:
While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1.7, 1.9, or 2.2. unless the prohibition is based on a personal interest of the prohibited lawyer and does not present a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm.
Ind. Prof. R. 1.10(a). Because Walton is a former client of Bose McKinney, the Court turns to Rule 1.9, which provides in relevant part:
Ind. Prof. R. 1.9. Under the Indiana Rules of Professional Conduct, matters are "substantially related ... if they involve the same transaction or legal dispute or if there otherwise is a substantial risk that confidential factual information as would normally have been obtained in the prior representation would materially advance the client's position in the subsequent matter." Ind. Prof. R. 1.9 comment 3.
With regard to the specific question of disqualification, Seventh Circuit precedent governs. Gen-Cor LLC, 111 F. Supp. 2d at 1052. The Seventh Circuit cautions that disqualification is "a drastic measure which courts should hesitate to impose except when absolutely necessary." Cromley v. Bd. of Ed. of Lockport Twp. High School Dist. 205, 17 F.3d 1059, 1066 (7th Cir. 1994) (citing Freeman v. Chicago Musical Instrument Co., 689 F.2d 715, 721 (7th Cir. 1982)). The Court should view motions to disqualify with "extreme caution for they can be misused as techniques of harassment." Freeman, 689 F.2d at 722. Under Seventh Circuit precedent, this Court must "determine whether a substantial relationship exists between the subject matter of the prior and present representations." Cromley, 17 F.3d at 1064. In determining whether a substantial relationship exists, the Court first "make[s] a factual reconstruction of the scope of the prior representation." LaSalle Nat. Bank v. Lake County, 703 F.2d 252, 255 (7th Cir. 1983). Next, the Court should determine "whether it is reasonable to infer that the confidential information allegedly given would have been given to a lawyer representing a client in those matters." Id. at 255-56. Lastly, the Court should determine "whether that information is relevant to the issues raised in the litigation pending against the former client." Id. at 256. If a substantial relationship exists, there is a presumption of shared confidences. Cromley, 17 F.3d at 1064.
Walton would have this Court focus on the fact that a presumption of shared confidences exists, which Bose McKinney is not able to rebut. However, before any presumption arises, Walton has the burden of proving a substantial relationship exists between the subject matter of the prior and current matters. In her briefs, Walton glosses over this issue by focusing on the factthat both cases involved Walton's property. In her brief in support of her Motion, the analysis consists entirely of the following, "it seems self-evident that because the prior representation involved Walton's property and the subject matter of the present action is Walton's property and Walton's payment for Chase's loan on the subject property that there is a substantial relationship between the subject matter of the prior and present representations." [Dkt. 77 at 6].
However, a substantial relationship between the subject matters of the prior and current representations is far from self-evident. In fact, at oral argument, Walton's counsel conceded that the fact that both cases involved the same property does not mandate a disqualification. [April 10, 2012 Oral Argument at 9:48 a.m.]. Despite repeated invitations during oral argument to provide any relationship between the prior and current matters, beyond the fact that both involve the same property, Walton's counsel was unable to provide any such relationship. Nonetheless, the Court will consider the Seventh Circuit's three-step analysis for determining whether a substantial relationship exists.
Chase argues that, in the prior case, Bose McKinney attorneys represented Walton in the Indiana Court of Appeals in a matter that involved whether Walton's property was subject to her homeowners association's covenants and easements. [Dkt. 104 at 5]. That appellate matter ended in 2003, while the mortgage that is the subject of this litigation did not come into existence until 2007. Furthermore, the prior matter did not involve any mortgage on Walton's property, nor did it involve any errors in Walton's credit report, or any alleged deceptive conduct by Chase. The scope of the prior representation was limited to the trial court record and the arguments on appeal were legal in nature focusing on whether Walton's property could be subjected to her homeowners association's covenants and easements.
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