Jaeger et al v. HSBC Bank USA, N.A. et al

Filing 31

ORDER: An Evidentiary Hearing on the Motion to DisqualifyKeith A. Gantenbein, Jr. as Counsel of Record for Plaintiffs [# 26 ] is SET for 5/22/2013 at 1:30 p.m. in Courtroom C-204, Second Floor, Byron G. Rogers United States Courthouse, 1929 Stout Str eet, Denver, Colorado. The parties shall provide to each other and to the Court a list of exhibits each expects to submit and of witnesses each expects to call at the hearing no later than 5/15/2013. By Magistrate Judge Kristen L. Mix on 4/19/2013. (klyon, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 12-cv-01736-REB-KLM
LAWRENCE E. JAEGER, and
AMY P. JAEGER,
Plaintiffs,
v.
HSBC BANK USA, N.A., as Trustee for Wells Fargo Asset Securities Corporation,
Mortgage Pass-Through Certificate Series 2006-AR14, and
WELLS FARGO BANK, N.A.,
Defendants.
_____________________________________________________________________
ORDER
_____________________________________________________________________
ENTERED BY MAGISTRATE JUDGE KRISTEN L. MIX
This matter is before the Court on Defendants’ Motion to Disqualify Keith A.
Gantenbein, Jr. as Counsel of Record for Plaintiffs [Docket No. 26; Filed February 14,
2013] (the “Motion”). On March 7, 2013, Plaintiffs filed a Response [#28] in opposition to
the Motion. On March 25, 2013, Defendants filed a Reply [#30]. The Motion is now ripe
for resolution.
I. Background
This lawsuit arises from the foreclosure and sale of Plaintiffs’ real property pursuant
to Colorado Rule of Civil Procedure 120 (“Rule 120"). Compl. [#7]. Defendants removed
this matter from the District Court of Douglas County, Colorado, on July 7, 2012 [#1]. In
the instant Motion [#26], Defendants ask that the Court disqualify Keith A. Gantenbein, Jr.
(“Attorney Gantenbein”) from acting as counsel for Plaintiffs. In support, they provide the
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following rendition of relevant facts:
1. On May 20, 2011, [Defendant] HSBC filed a Verified Motion for Order
Authorizing Sale Pursuant to Rule 120, Colorado Rules of Civil Procedure
(“Motion for Order Authorizing Sale”) in the District Court for Douglas County,
Colorado, Case No. 2011-cv-1284 (the “Foreclosure Case”). The Motion for
Order Authorizing sale was filed by Castle Stawiarski, LLC and sought to
foreclose on Plaintiffs’ property because Plaintiffs were in default under the
terms of their mortgage loan.
2. The “Attorneys for Petitioner” in the caption of the Foreclosure Case
included Mr. Gantenbein.
3. The court in the Foreclosure Case granted HSBC’s Motion, the property
was sold, and the court issued an Order Approving Sale on February 9,
2012.
4. On June 5, 2012, Plaintiffs filed their Verified Complaint for Declaratory
Judgment and Injunction of Possession of Proeptry [sic] Following
Foreclosure Sale (“Complaint”) in this action. Among other things, Plaintiffs
seek to vacate the Order Authorizing Sale in the Foreclosure Case. The
Complaint was filed by Greg J. Ortiz, of Ham & Ortiz, LLC, on behalf of the
Jaegers.
5. Defendants removed the case to this Court on July 5, 2012, and filed an
Answer and Partial Motion to Dismiss on August 2, 2012.
6. On September 10, 2012, Mr. Gantenbein, now of The Gantenbein Law
Firm, entered his appearance on behalf of Plaintiffs, and filed Plaintiffs’
Response to Partial Motion to Dismiss under his signature.
Motion [#26] at 3-5 (citations omitted). Defendants further assert in the Reply that
Defendant Wells Fargo, as the servicer of the loan, hired Attorney Gantenbein and his
former firm to prosecute the Foreclosure Case. Reply [#30] at 3.
Attorney Gantenbein responds, in short, that he, “in no way, participated or assisted
[Defendants] in obtaining the very [Rule] 120 order that [Plaintiffs] now seek to do undo.”
Response [#28] at 3. He further asserts that, “Any perceived conflict by the sole fact that
the name of undersigned counsel was contained on a pre-printed, auto-merged, mass-2-

produced, administratively-produced pleading does not exist.” Id. at 2.
II. Legal Standard
“A motion to disqualify counsel is addressed to the sound discretion of the district
court.” World Youth Day, Inc. v. Famous Artists Merch. Exch., Inc., 866 F. Supp. 1297,
1301 (D. Colo.1994). “When ruling on a motion for disqualification of counsel, [the Court]
must make specific findings and conclusions.” Id. at 1299 (citation omitted). The Court
should evaluate motions to disqualify with suspicion, and it must be aware that such
motions may be used to “secure a tactical advantage in the proceedings.” Pappas v. Frank
Azar & Assoc., P.C., No. 06-cv-01024-MSK-BNB, 2007 WL 4224196, at *6 (D. Colo. Nov.
27, 2007) (citing Religious Tech. Ctr. v. F.A. C.T. Net, Inc., 945 F. Supp. 1470, 1478 (D.
Colo.1996)). Thus, the moving party bears the burden of establishing grounds for the
disqualification. World Youth Day, 866 F. Supp. at 1299.
Pursuant to D.C.COLO.LCivR 83.4, this District applies the Colorado Rules of
Professional Conduct as its standards for professional responsibility. However, “motions
to disqualify counsel in federal proceedings are substantive motions affecting the rights of
the parties, [and thus] are decided by applying standards developed under federal law.”
United States v. Stiger, 413 F.3d 1185, 1195-96 (10th Cir. 2005) (quoting Cole v. Ruidoso
Mun. Sch., 43 F.3d 1373, 1383 (10th Cir. 1994)).
III. Analysis
A.

Rule 1.9(a)
Defendants premise their request on Colorado Rule of Professional Conduct 1.9

(“Rule 1.9”). In pertinent part, Rule 1.9(a) prescribes that: “A lawyer who has formerly

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represented a client in a matter shall not thereafter represent another person in the same
or a substantially related matter in which that person's interests are materially adverse to
the interests of the former client unless the former client gives informed consent, confirmed
in writing.” The Tenth Circuit’s test for disqualification of a lawyer due to an attorney-client
relationship is based on Rule 1.9(a) of the ABA Model Rules of Professional Conduct,
which is identical to Rule 1.9(a) of the Colorado Rules of Professional Conduct. Helmer v.
Goodyear Tire & Rubber Co., No. 12-cv-00685-RBJ-MEH, 2012 WL 6953341, at *3 (D.
Colo. Aug. 31, 2012).
Under Rule 1.9, a party seeking to disqualify opposing counsel must
establish that: “(1) an actual attorney-client relationship existed between the
moving party and the opposing counsel; (2) the present litigation involves a
matter that is ‘substantially related’ to the subject of the movant’s prior
representation; and (3) the interests of the opposing counsel’s present client
are materially adverse to the movant.” . . . . If the movant establishes the first
two prongs, an irrebuttable “presumption arises that a client has indeed
revealed facts to the attorney that require his disqualification.”
Stiger, 413 F.3d at 1196 (quoting Smith v. Whatcott, 757 F.2d 1098, 1100 (10th Cir. 1985)).
The Court first must consider whether an actual attorney-client relationship existed
between Attorney Gantenbein and Defendants. To do so, Defendants must demonstrate
that they submitted confidential information to Attorney Gantenbein and that they did so
with the reasonable belief that he was acting as their attorney. Cole, 43 F.3d at 1384.
There is no need to show that they executed a formal contract with or paid fees to attorney
Gantenbein. Stiger, 413 F.3d at 1196.
Tenth Circuit case law is clear that, “If the moving party makes a non-frivolous
allegation that he has had an attorney-client relationship in a substantially related matter,
a district court must investigate the allegation further through an evidentiary hearing before
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denying a motion to disqualify.” United States v. LaVallee, 439 F.3d 670, 681-82 (10th Cir.
2006). Further, “[f]ailure to do so constitutes an abuse of discretion.” Id. at 682. Based
on Defendants’ rendition of facts as recited above, the Court finds that Defendants have
adequately made non-frivolous allegations that Defendants and Attorney Gantenbein could
have had attorney-client relationships in a substantially related matter based on Attorney
Gantenbein’s connection with the underlying Rule 120 foreclosure proceedings while a
member of his former law firm. Accordingly, as detailed below, the Court will hold an
evidentiary hearing on this matter.1
B.

Rule 1.9(b)
In the Reply, Defendants assert for the first time that Attorney Gantenbein must also

be disqualified pursuant to Rule 1.9(b). Reply [#30] at 7-9. Rule 1.9(b) essentially
determines whether a lawyer should be disqualified from a matter based on his former
firm’s representation of a particular party, even if he did not have an actual, personal
attorney-client relationship with that party.2 Defendants assert that they may address this
argument in the Reply for two reasons: (1) Defendants mentioned Rule 1.9(b) in the
Motion, and (2) Plaintiffs mentioned Rule 1.9(b) in the Response.
The Court finds Defendants’ arguments to be rather disingenuous. Nevertheless,
1

To be clear, the Court notes that Tenth Circuit case law does not mandate an evidentiary
hearing when the written briefing and attached evidence demonstrate that a motion to disqualify an
attorney should be granted. See, e.g., Helmer, 2012 WL 6953341, at *3. The filings before the
Court do not necessarily require such a conclusion here. The Court emphasizes that it has not
made a finding that Attorney Gantenbein actually had an attorney-client relationship with either or
both Defendants or that Defendants' contentions that he did have any merit whatsoever. The Court
merely finds that the allegations meet the relatively low standard of being "non-frivolous" and that
an evidentiary hearing must be held.
2

Rule 1.9(b) of the Colorado Rules of Professional Conduct is identical to Rule 1.9(b) of
the ABA Model Rules of Professional Conduct.

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in light of the fact that the law requires the Court to hold an evidentiary hearing prior to
ruling on the Motion, the Court will permit Plaintiffs’ counsel to respond to the Rule 1.9(b)
argument at the hearing.
IV. Conclusion
Based on the foregoing,
IT IS HEREBY ORDERED that an Evidentiary Hearing on the Motion to Disqualify
Keith A. Gantenbein, Jr. as Counsel of Record for Plaintiffs [#26] is SET for May 22, 2013
at 1:30 p.m. in Courtroom C-204, Second Floor, Byron G. Rogers United States
Courthouse, 1929 Stout Street, Denver, Colorado. The purpose of the hearing will be for
the parties to present live testimony regarding the facts surrounding Defendants’ request
to disqualify Attorney Gantenbein.
IT IS FURTHER ORDERED that the parties shall provide to each other and to the
Court a list of exhibits each expects to submit and of witnesses each expects to call at the
hearing no later than May 15, 2013.

Dated: April 19, 2013

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