Newton v. Stoneridge Apartments
Newton v. Stoneridge Apartments
Opinion
¶ 1 The district court disqualified a law firm from representing the appellants in this case, finding that a substantial relationship existed between this and an earlier case. Prior to the law firm's participation and removal in the present case, it represented, in the earlier case, Tyler Lloyd Peterson-a key witness in this case. Because that finding was erroneous, we vacate the district court's order and remand this case for further proceedings.
BACKGROUND
¶ 2 Peterson was a tenant of Stoneridge Apartments. 1 In exchange for reduced rent, Peterson performed various managerial duties such as collecting rent, handing out furnace filters, and cleaning the exterior of the building. In 2011, Peterson pled guilty to sexually assaulting 2 a member of the Newton family; 3 the Newtons were tenants of Stoneridge at the time. In 2012, the Newtons filed the present action against Peterson and Stoneridge as a result of the assault, alleging that Stoneridge should be held liable for the intentional tortious actions of Peterson.
¶ 3 While originally represented by a different attorney, the Newtons eventually retained D. David Lambert (Lambert) of the *1089 law firm Howard, Lewis & Petersen PC (the Firm), who entered his appearance as counsel for the Newtons in September 2014. Another attorney at the Firm (Attorney) had previously represented Peterson in a 2002 custody and support case. Roughly two and a half months after Lambert appeared in the case, Peterson moved to disqualify Lambert and the Firm due to Attorney's previous representation.
¶ 4 Attorney filed a declaration stating that he had not received any information about Peterson in the 2002 case that could possibly be of use in the instant case. Lambert also filed a declaration, stating that he had not received any information from Attorney or from any files held by the Firm regarding the 2002 case that was relevant to the instant case. Both attorneys stated that screening measures had been implemented to ensure that Lambert would not learn any confidential information Attorney might have received. Nevertheless, the district court granted Peterson's motion to disqualify both the Firm and Lambert. The district court explained that the Firm had "acquired personal, private information regarding [Peterson] which is protected by Rules 1.6 and 1.9(c) [of the Utah Rules of Professional Conduct], [and] which is material to the present case." The court also noted that the Firm "has not demonstrated that [Peterson] waived the disqualification of [the Firm] in this case."
¶ 5 Shortly after the disqualification of the Firm, the Newtons stipulated to the dismissal of Peterson from the case with prejudice. And four months after his dismissal, the Newtons filed a motion "to determine issues regarding disqualification now that ... Peterson has been dismissed with prejudice." 4 They argued that Stoneridge had not moved for disqualification and lacked standing to do so, and that the disqualification only prevented the Firm from representing a party opposed to Peterson. Consequently, the Newtons asked the district court to partially vacate the order of disqualification.
¶ 6 The district court declined to vacate its previous order. It noted that the advisory ethics opinion on which the Newtons had relied concluded "that the cross-examination of a former client by an attorney does not create a per se disqualifying conflict of interest, but advises that the evaluation of the conflict must go further to include the specific facts and circumstances of the case." The district court then explained that the order of disqualification had not been "conditional, provisional, or limited to whether or not ... Peterson is a party in the present action ... [the interests of the Newtons] are adverse to ... Peterson's interests even though he is not a party in the present case."
¶ 7 The Newtons timely requested leave to take an interlocutory appeal from the district court's decision not to vacate its order of disqualification. We granted the request.
ISSUES AND STANDARD OF REVIEW
¶ 8 The Newtons first contend that Stoneridge had no standing to bring a motion to disqualify Lambert or the Firm. The Newtons next contend that the district court erred in determining that the 2002 custody and support case was substantially related to the instant case. The Newtons also contend that the district court failed to properly reconsider its determination that disqualification was required after Peterson was dismissed from the case. Finally, the Newtons contend that the district court abused its discretion by failing to "weigh the beneficial and harmful effects of disqualification." "The proper standard of review for decisions relating to disqualification is abuse of discretion. However, to the extent [an appellate court] has a special interest in administering the law governing attorney ethical rules, a trial court's discretion is limited."
Snow, Christensen & Martineau v. Lindberg
,
ANALYSIS
¶ 9 We disagree with the Newtons that traditional standing requirements demand reversal of the district court's order. But we agree that the district court improperly applied *1090 our disqualification rules to the case at hand.
I. Standing
¶ 10 The Newtons first contend that the district court abused its discretion by "disqualifying [the Newtons'] counsel for the benefit of a party that had never moved for disqualification and which had never been a prior client of the firm." They argue that Stoneridge did not have standing to file such a motion, pursuant to Rule 1.9 of the Utah Rules of Professional Conduct, which provides that a duty to a former client is owed when there is an attorney-client relationship upon which the prior representation was based. Here, the Newtons allege that Stoneridge lacked standing because the only attorney-client relationship that was formed between Lambert or the Firm was with Peterson-not Stoneridge.
¶ 11 In typical motion practice, a party can only oppose a motion if that party has a dog in the fight.
See e.g.
,
Packer v. National Service Indus., Inc.
,
¶ 12 There is no indication in the language of rule 1.9 that standing is required to file a motion to disqualify; even though the rule 1.9 issues were brought to the district court's attention by motion, the district court took on the task of enforcement itself, which is proper. Trial courts wield the power to correct violations on their own initiative or in response to a motion from a party.
See
Featherstone
,
II. Disqualification
¶ 13 While we disagree with the Newtons' contentions regarding Stoneridge's lack of standing, we agree that the district court erred in ultimately concluding that the Firm should be disqualified. To begin, we clarify that the district court made its order under subsection (b) of rule 1.9 of the Utah Rules of Professional Conduct, which discusses duties to former clients. Then, reaching the merits of the Newtons' challenges, we conclude that the district court abused its discretion by erroneously finding that a substantial relationship existed between this and the earlier case. That revelation requires reversal of the district court's order.
A. The District Court's Order Applying Rule 1.9
¶ 14 We begin by discussing the district court's framework for our analysis. In its brief, Stoneridge repeatedly refers to subsections (a) and (c) of rule 1.9 to argue that the district court's disqualification order should stand. Of particular note is Stoneridge's conclusion that despite Peterson's dismissal from the case, under subsection (c), "Lambert is still forbidden from us[ing] information relating to the representation [of Peterson] to the disadvantage of [Peterson], or, more broadly, from even representing a client-such as [the Newtons]-whose interests are materially adverse to his former client's interests." (Quoting Utah R. Prof'l Conduct 1.9(c)(1).) But the district court actually disqualified the Firm and Lambert under subsection (b).
¶ 15 Subsection (b) of rule 1.9 mandates:
(b) A lawyer shall not knowingly represent a person in the same or a substantially related matter in which a firm with which the lawyer formerly was associated had previously represented a client *1091 (b)(1) whose interests are materially adverse to that person; and
(b)(2) about whom the lawyer had acquired information protected by Rules 1.6 and 1.9(c) that is material to the matter; unless the former client gives informed consent, confirmed in writing.
Utah R. Prof'l Conduct 1.9(b). The district court ordered the disqualification of the Firm for four reasons, which track the language of subsection (b) almost exactly:
1. A member of [the Firm] has formerly represented [Peterson] in a substantially related matter.
2. The interests of [the Firm's] current client are materially adverse to the interests of [Peterson].
3. [The Firm] acquired personal, private information regarding [Peterson] which is protected by Rules 1.6 and 1.9(c), an[d] which is material to the present case.
4. [The Firm] has not demonstrated that [Peterson] waived the disqualification of [the Firm] in this case.
¶ 16 Subsection (b)'s mere reference to subsection (c) cannot convert the district court's disqualification under subsection (b) to a disqualification under subsection (c). Thus, we are tasked with determining whether the district court properly ordered disqualification under subsection (b). It did not.
B. The District Court's Substantial-Relationship Finding
¶ 17 In its order, the district court determined that the Firm had "formerly represented [Peterson] in a substantially related matter." This determination is a factual finding.
5
See
Roderick v. Ricks
,
¶ 18 This is essentially what we have in this case. In challenging the district court's substantial-relationship finding, the Newtons assert, "There is no factual overlap between the custody case and the current tort case." And given the district court's failure to provide any support for its finding, the Newtons' challenge is well taken for two reasons.
See
Woodward v. Fazzio
,
¶ 19 First, the district court provided no explanation for its ultimate finding that the two matters are substantially related. It merely stated the conclusory fact that they are. But a review of the record before us-which was also before the district court-shows that there is insufficient evidentiary support for a finding of substantial relationship. The record provides little information regarding any possible factual link between the two cases. Instead, the district court seems to have rested its finding on the sole fact that Peterson was involved in both the prior and the current case. But the mere *1092 existence of a common party or player is not enough for disqualification under rule 1.9 of the Utah Rules of Professional Conduct ; if it were, the rule would be much shorter and would make no mention of substantially related matters, materially adverse interests, or acquisition of protected information.
¶ 20 Here, we know only that in 2002, the Firm represented Peterson in a domestic matter. The case involved custody and support issues, and the matter was resolved by agreement of the parties in May of that year. The present case, for which the Firm entered an appearance in 2014, rests on allegations that Peterson committed a sexual assault in August 2011, more than nine years after the domestic matter concluded, against a victim wholly unrelated to the prior matter. As our supreme court concluded in
Cheves v. Williams
,
¶ 21 Second, given the facts available in the record, there appears to be no factual nexus-much less a substantial one-between the Newtons' claims and the earlier representation.
See
Houghton v. Department of Health
,
¶ 22 In Houghton , our supreme court explained:
In construing Utah's Rule 1.9(a), 8 the federal courts and the Utah Court of Appeals have referred to the necessity for a distinct, factual link between the former and present representations. In SLC Ltd. V v. Bradford Group West, Inc. ,999 F.2d 464 , 467 (10th Cir. 1993), the United States Court of Appeals for the Tenth Circuit stated that Utah's requirement "focus[es] on the factual nexus between the prior and current representations rather than a narrower identity of legal issues."
Houghton
,
¶ 23 Like the court in
Houghton
, we conclude that "[t]he adjudication of" the claims against Stoneridge "[do] not involve any factual information arising out of [the Firm's] prior representation[ ]."
See
¶ 24 In other words, we agree with the Newtons that "even if it were assumed that in the 2002 custody case [the Firm] had to deal with ... Peterson's character, misconduct, abusive behavior, or criminal history," there is no distinct factual link between that representation and the present case, which turns on what Stoneridge knew or should have known when it entrusted Peterson with access to the Newtons' apartment. "Although there may be some factual overlap between the prior and current representation, it is not the type of overlap that can be regarded as changing sides in the matter or as creating a risk that confidential factual information would materially advance any party's position in this current litigation."
See
Ironshore Specialty Ins. v. Callister Nebeker & McCullough
, No. 2:15-cv-677-RJS-BCW,
III. Motion to Determine
¶ 25 We also conclude that the district court erred when it refused to alter its ruling-which rested on the existence of an attorney-client relationship-after the client was removed from the picture. It declined to amend that ruling because "[n]othing in the court's order of disqualification indicated it was conditional, provisional, or limited to whether or not ... Peterson is a party in the present action." We acknowledge that the original disqualification order contained no such condition, provision, or limitation; however, when exercising its discretion in deciding the motion, the district court could not rely upon a faulty legal premise.
Kilpatrick v. Bullough Abatement, Inc.
,
¶ 26 Again, rule 1.9(b) requires disqualification only if Peterson's interests are "materially adverse to" the Newtons' interests. See Utah R. Prof'l Conduct 1.9(b)(1). Part of the Newtons' appeal rests on the following assertion: "If, as the trial court has ruled, there were grounds to disqualify [Lambert] when [Peterson] was a party to this case, those grounds no longer applied to disqualify [Lambert] once [Peterson] was no longer a party and had been dismissed with prejudice." We agree.
¶ 27 Subsection (b)(1) speaks in the present tense, considering whether a former client's "interests
are
materially adverse to" a current client's interests.
See
CONCLUSION
¶ 28 The district court clearly erred in finding that there was a substantial relationship between the present case and Peterson's 2002 case and, thus, in disqualifying the Firm based on that erroneous finding. Furthermore, it abused its discretion by relying on an erroneous legal premise in declining to alter or vacate the disqualification order. We therefore reverse and remand this case to the district court.
Stoneridge Apartments is an appellee in this case, as are the owners of Stoneridge Apartments and their related business entities. We refer to the appellees collectively as Stoneridge.
Peterson pled guilty in the resulting criminal case against him.
All of the appellants are members of the Newton family. We refer to them collectively as the Newtons.
The Newtons brought this motion citing only rule 7 of the Utah Rules of Civil Procedure. That rule sets forth the general process and requirements for making motions. See Utah R. Civ. P. 7(b). For ease of reference and for purposes of our analysis, we refer to the Newtons' motion as the Motion to Determine. See infra Part III.
The Newtons seem to believe-and Stoneridge does not take issue with the belief-that the determination of substantial relationship is a conclusion of law that should be reviewed for an abuse of discretion. However, in
Roderick v. Ricks
,
Further, our supreme court has also recognized that the misuse of "disqualification motions based on very slight appearances of impropriety" for "tactical advantage in litigation" will not be tolerated.
Margulies ex rel. Margulies v. Upchurch
,
Houghton
interpreted an earlier version of rule 1.9.
See
Houghton v. Department of Health
,
Houghton
references subsections (a) and (b) of the earlier version of rule 1.9.
See
We are not blind to the fact that information Peterson may have provided Attorney might still be off limits at trial under rule 1.9(c), but that was not the basis for the district court's ruling.
In light of our resolution of this issue, there is no need to address the district court's failure to weigh the effects of disqualification. Because the Firm should not have been disqualified, there is nothing to weigh.
Reference
- Full Case Name
- Chelsie Gwen NEWTON, Jerricko Robert Newton, Ronald Preston Isaacson, and Suzie Gwen Newton, Appellants, v. STONERIDGE APARTMENTS, Chris Edward Wall, Tara Cohan Wall, Wall Brothers Real Estate Limited Partnership, and Wall Brothers Inc., Appellees.
- Cited By
- 2 cases
- Status
- Published