Cone Financial Group Inc v. Employers Insurance Company of Wausau

Filing 42

ORDER granting 34 Motion to Disqualify Counsel. Attorney Harold Wilson Whiteman-INACTIVE, Jr. terminated. Ordered by Judge Hugh Lawson on 8/11/2010. (nbp)

IN THE UNITED STATES DISTRICT COURT F O R THE MIDDLE DISTRICT OF GEORGIA V AL D O S TA DIVISION C O N E FINANCIAL GROUP, INC., P l a i n ti ff, C i v i l Action: 7:09-CV-118 (HL) v. E M P L O Y E R S INSURANCE COMPANY OF W AU S AU , Defendant. ORDER D e fe nd a nt, Employer's Insurance Company of W a us a u, has filed a motion und e r Georgia Rule of Professional Conduct 1.9 to disqualify Plaintiff's co-counsel, H a ro l d W . W hi te m a n Jr., from appearing in this case. For the reasons discussed he re i n, the Court grants Defendant's Motion to Disqualify Counsel. (Doc. 34). I. FACTS D e fe nd a nt issued a W o rk e r's Compensation and Employer's Liability Policy to Plaintiff, Cone Financial Group, Inc., which provided that Defendant "would serve a s the claims administrator and would provide [the necessary personnel, including a tto rne y s ] to defend, adjust and/or administer workers compensation claims filed by P l a i nti ff's employees under the policy." (Doc. 1-2, p. 2). The policy was issued on or a b o ut November 30, 2001 and expired on November 30, 2002. Id. Plaintiff's employee Michelle Lancaster filed a worker's compensation claim re l a t i ng to an injury she suffered on November 29, 2002. (Doc. 34-2, Ex. 1). An a tto rne y employee of Defendant was initially tasked to handle the Lancaster claim.

In July 2006, Plaintiff advised Defendant that it wished to retain independent counsel to handle the Lancaster file, and retained W hi te m a n. (Doc. 35, p. 3).W hi l e Defendant i ni ti a l l y objected to W hi te m a n's retention, as Defendant took the position that it had the sole and exclusive right to select counsel for Plaintiff, on October 10, 2006, D e fe nd a nt advised Plaintiff that "[it would] permit [Plaintiff] to select its own counsel a nd control its defense in this matter." Id. at p. 4. Over the next year, W hi te m a n re p e a te d l y communicated with Defendant's employees regarding settlement values, i s s ue s , and plans for defense of the Lancaster claim. (Doc. 36). The claim was s e ttl e d on July 12, 2007, with W hi te m a n signing the settlement agreement as "A tto rne y for Employer/Insurer." (Doc 34-2, Ex. 1). Plaintiff filed the complaint now before the Court on September 29, 2009, c l a i m i ng damages due to Defendant's failure to "properly manage and administer the w o rk e r's compensation claims filed by Plaintiff's employees under the policy." (Doc. 1 -2 ). Plaintiff, who has retained W hi te m a n as counsel in this matter, "will assert [at tri a l ] that Lancaster['s claim] was mishandled by [Defendant] until [W hi te m a n] was hi re d to bring it to a conclusion." (Doc. 34-3, Ex. 2). Defendant has now moved the C o urt for an order disqualifying W hi te m a n as counsel for Plaintiff in light of his p re v i o us work on the Lancaster file. II. AN AL Y S IS A. S ta n d in g

T he Court must first decide whether Defendant's counsel has standing to bring the present motion. Bernocchi v. Forcucci, 279 Ga. 460, 463, 614 S.E.2d 775, 779
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(2005); Ga. Rules of Prof'l Conduct R. 1.7, cmt. 15. For an attorney to have standing to raise the issue of an opposing lawyer having a conflict of interest, "there must be a violation of the rules which is sufficiently severe to call in question the fair and e ffi c i e nt administration of justice." Bernocchi, 279 Ga. at 463. The Court finds that d e fe ns e counsel has satisfied this requirement. B. Georgia Rule of Professional Conduct 1.9

D e fe nd a nt contends that W hi te m a n should be disqualified pursuant to Georgia R ul e of Professional Conduct 1.9, which provides that "[a] lawyer who has formerly re p re s e nte d a client in a matter shall not thereafter represent another person in the s a m e or a substantially related matter in which that person's interests are materially a d v e rs e to the interests of the former client unless the former client consents after c o ns ul ta ti o n." Determining "whether to disqualify an attorney is a two-step process: (1 ) was there a previous attorney-client relationship and, if so, (2) did that re l a ti o ns hi p involve a matter substantially related to the current proceeding?" Jones v . InfoCure Corp., No. 1:01CV2845, 2003 W L 22149656 at *2 (N.D.Ga. May 13, 2 0 0 3 ). W i th regard to the first prong, Plaintiff claims the existence of an attorneyc l i e nt relationship between W hi te m a n and Defendant to be "unproven by facts or l a w ." (Doc. 35). Plaintiff cites Guillebeau v. Jenkins to support its position. 182 Ga. A p p . 225, 230, 355 S.E.2d 453, 457 (1987). There, the court found that "the record i s devoid of evidence from which the existence of [an attorney-client] relationship c o ul d be found." Defendant argues, however, that W hi te m a n's signing the Lancaster
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settlement agreement as "Attorney for Employer/Insurer" evidences the existence o f an attorney-client relationship between W hi te m a n and Defendant. The Court finds D e fe nd a nt's argument persuasive. W i th regard to the second prong, two cases are "substantially related" when the "subject matter in the latter case [arises] out of the subject matter of the prior c a s e ." Carragher v. Harman, 220 Ga. App. 690, 691, 469 S.E.2d 443, 445 (1996). H e re , Plaintiff's announced case strategy includes arguing that W hi te m a n remedied D e fe nd a nt's alleged mishandling of the Lancaster claim. (Doc. 34-3, Ex. 2). As the s ub j e c t matter of Plaintiff's complaint includes W hi te m a n's past representation of D e fe nd a nt, the two cases are substantially related. In arguing against the substantial re l a ti o n of the two cases, Plaintiff points out that the earlier case dealt with settling a worker's compensation claim and the instant case deals with Defendant's alleged b re a c h of an insurance contract. (Doc. 35). This distinction, however, does not bear up o n whether the subject matter of the instant case arises out of the previous case, w hi c h is the relevant test. Carragher, 220 Ga. App. at 691. The Court finds that both prongs of the disqualification test have been met, a nd concludes that continued representation of Plaintiff would be a violation of G e o rg i a Rule of Professional Conduct 1.9, which protects against conflicts of interest b e tw e e n current and former clients. C. Other Factors

T he presence of a conflict alone does not necessarily require that the attorney b e disqualified. The Court approaches a disqualification motion with caution.
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W o rl d s p a n, L.P. v. Sabre Group Holdings, Inc., 5 F.Supp.2d 1356, 1361 (N.D.Ga. 1 9 9 8 ); Glover v. Libman, 578 F.Supp. 748, 761 (N.D.Ga. 1983). Thus, when d e te rm i ni ng whether disqualification is appropriate, the court should also consider: (1 ) whether the conflict might affect the pending litigation; (2) at what stage of the l i ti g a ti o n the disqualification issue was raised; (3) the appearance of impropriety; (4) w he the r other counsel can handle the matter; (5) and the costs of disqualification. W o rl d s p a n, 5 F.Supp.2d at 1361-62. C o ns i d e ri ng the first factor, given the claims at issue in this case, Defendant w i l l likely have to depose W hi te m a n and call him as a witness at trial. Such an event w o ul d complicate this case and affect the pending litigation. In addition, the case m a y be affected as issues may arise with regard to potential use of confidential i nfo rm a ti o n by W hi te m a n. C o ns i d e ri ng the second factor, Plaintiff claims that Defendant's Motion should b e denied because Defendant "unreasonably delayed bringing the matter to the a tte nti o n of the court." (Doc. 35). In Head v. CSX Transp., Inc., 259 Ga. App. 396, 3 9 8 , 577 S.E.2d 12,14 (2003), however, the court considered a motion to disqualify c o uns e l "reasonably prompt" when a case had been in discovery for less than a year (fo ur months) after filing and "no prejudice result[ed] from cost or delay." Plaintiff's a rg um e nt that the "reasonable promptness standard is not based upon knowledge o f a party's counsel ­ it is based upon knowledge of the party" (Doc. 35, pg. 12), l a c k s citation to authority. Therefore, as Defendant's Motion to Disqualify was filed

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less than a year after removal of the case to this Court, and during the discovery p ha s e of the case, the Court finds the Motion timely. Considering the third factor, Defendant's argument that requiring W hi te m a n to perform the dual functions of advocate and witness would "confuse the jury and c re a te an appearance of impropriety," has support in Georgia case law. See Malley M o to rs , Inc. v. Davis, 183 Ga. App. 599, 600, 359 S.E.2d 394, 396 (1987) ("Counsel s ho ul d not have been permitted to act in both the role of a witness and the role of the p l a i nti ff's counsel in the case.") Considering the fourth factor, the Court sees no reason why new counsel c a nno t enter the case and provide Plaintiff with competent and effective re p re s e nta ti o n without undue delay. This case is still in discovery and no trial date ha s been set. Finally, considering the fifth factor, the Court finds that the costs of d i s q ua l i fi c a ti o n are less than the costs which will be incurred by not disqualifying W hi te m a n. Plaintiff claims that if the Court were to disqualify W hi te m a n, it would be s e v e re l y prejudiced in having to retain replacement counsel with potentially only w e e k s remaining in discovery while the parties are actively conducting depositions. (D o c . 35, p. 12). However, when considering the course of events preceding this d i s q ua l i fi c a ti o n motion's filing, Plaintiff appears to have had ample opportunity to a v o i d these problems. Defendant brought the conflict issue to W hi te m a n's attention i n April of 2010, (Doc. 34-3, Ex. 2), within a month of its claimed date of discovering the conflict. (Doc. 34). W hi te m a n's reply, that "he had not received any confidential
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information of W a us a u's ," (Doc. 35, p. 10), did little to resolve the issue: when an a tto rne y has represented a party in a substantially related matter, the attorney "is c ha rg e d with the virtually unrebuttable presumption that he has received confidential i nfo rm a ti o n." Cox v. Am. Cast Iron Pipe Co., 847 F.2d 725, 728 (11th Cir. 1988). In re p l y , Defendant informed W hi te m a n that his argument did not dispose of the conflict i s s u e and expressed willingness to "manage the conflict" without moving for W hi te m a n's disqualification. (Doc. 36-2, Ex. 3A). Defendant allowed a month to pass w i tho ut further reply from W hi te m a n before moving for his disqualification. (Doc. 34, E x. 3). A movant's raising the disqualification issue prior to moving has been found to weigh in favor of disqualification. Adkins v. Hosp. Auth. of Houston County, G e o rg i a , No. 5:04-CV-80, 2009 W L 3428788 at *13 (M.D.Ga. Oct. 20, 2009). III. C O N C L U S IO N F o r the reasons discussed herein, Defendant's Motion to Disqualify Harold W . W hi te m a n Jr. from acting as counsel in this case is granted. This disqualification i m p ute s to all lawyers associated in a firm with Mr. W hi te m a n.

SO ORDERED, this the 11 th day of August, 2010. s / Hugh Lawson HUGH LAWSON, SENIOR JUDGE w e f/m b h

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