Kenneally et al v. Clark et al

Filing 38

ORDER denying 26 Motion to Disqualify Counsel. Signed by Jeremiah C. Lynch on 6/1/2011. (TXB, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
BUTTE DIVISION
_____________________________________________
DANIEL J. KENNEALLY,
ROBERTA L. KENNEALLY,
SCOTT R. JOHNSON, and
LORI K. JOHNSON,

CV 10-67-BU-RFC-JCL

ORDER
Plaintiffs,
vs.
JONATHAN B. CLARK, VIGDIS J.
CLARK, JENNIFER LEE CLARK,
JACK OSBORNE CLARK, JONATHAN
EARLING CLARK, JEFFREY B. CLARK, and
THE ESTATE OF JILL ELIZABETH CLARK,
Defendants.
_____________________________________________
Defendants Jonathan and Vigdis Clark (“Clarks”) move to disqualify
Plaintiffs’ counsel based on an alleged conflict of interest arising out of the fact
that Plaintiffs’ counsel formerly represented the Clarks in what the Clarks assert

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was substantially related litigation.1 For the reasons detailed below, the Clarks’
motion is denied.
I.

Background
The Clarks are embroiled in a property dispute with neighboring landowners,

Plaintiffs Daniel and Roberta Kenneally and Scott and Lori Johnson (“Plaintiffs”).
The facts giving rise to the dispute date back to 1978, when the Clarks purchased a
21 acre parcel of land in Butte, Montana from Martin and Rose Lisac (“the
Lisacs”). The Clarks divided their newly acquired 21 acre parcel into seven
smaller tracts pursuant to a family transfer exemption under the Montana
Subdivision and Platting Act and, in August 2010, transferred one tract to each of
their five children. The Clarks also transferred one tract to Vigdis in her name
only, and retained ownership of the final tract in both their names.
Plaintiffs own property that adjoins the Clarks’ 21 acre parcel to the west.
Another entity tangentially related to this litigation – Our Lady of the Rockies, Inc.
– owns property adjoining the 21 acre parcel to the east. To the southwest, the 21
acre parcel is abutted by a parcel of property originally belonging to the Clarks, but
1

Although the motion to disqualify has been filed on behalf of all of the
above-named Defendants, the Clarks are the only ones that claim to have
previously had an attorney-client relationship with Plaintiffs’ counsel. The Court
will thus refer to the Clarks as the moving Defendants, and will tailor the
following discussion accordingly.
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now owned by Lisle and Pauline Woods (“the Woods”).
The Clarks claim they have a right-of-way easement across Plaintiffs’ land to
the west for the purpose of accessing their own property. This alleged easement is
particularly significant because the Clarks have entered into an agreement to sell
the seven individual tracts comprising the 21 acre parcel to third-party Ray Ueland.
If the sale is consummated, Ueland apparently intends to assign the purported
easement rights across Plaintiffs’ property to Our Lady of the Rockies and other
landowners to the east.
Plaintiffs commenced this declaratory judgment action in an effort to prevent
this from happening. Plaintiffs seek a declaratory judgment establishing that the
Clarks do not have an easement across their property. The Clarks counterclaim that
Plaintiffs have improperly filed a lis pendens affecting their property and are
tortiously interfering with the pending sale to Ueland. Additionally, the Clarks
seek a declaration that they do indeed have an easement across the Plaintiffs’
property based on documents of record or, in the alternative, based on the doctrines
of easement by prescription, necessity, implication, or reservation.
Plaintiffs have retained attorneys from the Worden Thane and Christian
Samson & Jones law firms to represent them in this case. The two Worden Thane
attorneys involved are Peter Dayton and Matthew Cuffe. It is undisputed that
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Dayton and another Worden Thane attorney, Shane Vanatta, represented the Clarks
in prior litigation denominated Our Lady of the Rockies v. Peterson et al., 181 P.3d
631, ¶9 (Mont. 2008). In that litigation, Our Lady of the Rockies unsuccessfully
sought to establish a public access easement across the southeastern portion of the
Clarks’ 21 acre property and the adjoining properties of several neighboring
landowners, including the Woods. Had Our Lady of the Rockies prevailed, the
easement would have provided for public access across the Woods and Clark
properties, to its own property immediately to the east.2
The Clarks have moved to disqualify Dayton, Cuffe, and the Worden Thane
firm pursuant to Rule 1.9 of the Montana Rules of Professional Conduct, alleging
that counsel have a conflict of interest based on the fact that they formerly
represented the Clarks in the Our Lady of the Rockies litigation.
II.

Discussion
The Court possesses the inherent authority to regulate the conduct of

attorneys appearing before it. In re Snyder, 472 U.S. 634, 645 n.6 (1985); Paul E.
Iacono Structural Engineer v. Humphrey, 722 F.2d 435, 438-39 (9th Cir. 1983). To
that end, Local Rule 83.13 establishes the standards of professional conduct for
2

Plaintiffs’ response brief contains a map depicting the various properties and
alleged easements involved in this case and the Our Lady of the Rockies litigation.
Dkt. 28, at 2.
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attorneys practicing in this Court – standards that incorporate both the American
Bar Association’s Model Rules of Professional Conduct and the Montana Rules of
Professional Conduct.
The prohibition against an attorney representing a new client against a
former client is set forth in Rule 1.9(a) -- both the Montana Rule and the ABA Rule
reading as follows:
(a) A lawyer who has formerly 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.
By its terms, Rule 1.9 requires that three criteria be satisfied as a prerequisite
to disqualification. First, there must have been a past attorney-client relationship
between the party seeking disqualification and the attorney whose disqualification
is sought. Rule 1.9(a); Pro-Hand Services Trust v. Monthei, 49 P.3d 56, 59 (Mont.
2002). Second, the interests of the current and former clients must be “materially
adverse.” Rule 1.9(a). Third, the current and former matters must be the same or
“substantially related.” Rule 1.9(a); Trone v. Smith, 621 F.2d 994, 998 (9th Cir.
1980).
Here, the first two criteria are clearly satisfied. There is no dispute that
Dayton and the Worden Thane firm represented the Clarks in the Our Lady of the
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Rockies litigation. Nor is there any dispute that the Clarks’ interests are materially
adverse to those of the Plaintiffs. The critical question, then, is whether the
pending litigation and the prior Our Lady of the Rockies litigation are
“substantially related.”
The Ninth Circuit has explained Rule 1.9(a)'s “substantially related” standard
for disqualification as follows: “If there is a reasonable probability that confidences
were disclosed [in an earlier representation] which could be used against the client
in [a] later, adverse representation, a substantial relation between the two cases is
presumed.” Trone, 621 F.2d at 998. Because “[b]oth the fact and the appearance
of total professional commitment are endangered by adverse representation in
related cases,” it does not matter “whether confidences were in fact imparted to the
lawyer by the client.” Trone, 621 F.2d at 998-99. In other words, “[i]t is the
possibility of the breach of confidence, not the fact of the breach, that triggers
disqualification.” Trone, 621 F.2d at 999.
In a later case applying these Trone principles, the Ninth Circuit explained
that in order to determine whether two matters are “sufficiently related, [the court]
must decide whether ‘there is a reasonable probability” that the confidences [the
court] presume[s] were disclosed during [the former representation] would be
useful to” the opposing party in the current litigation. In re County of Los Angeles,
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223 F.3d 990, 994 (9th Cir. 2000).

In making this determination, the Court’s

inquiry is “restricted to the scope of the representation engaged in by the attorney.”
Trone, 621 F.2d at 999. This inquiry “calls for a careful comparison between the
factual circumstances and legal theories of the two cases.” In re County of Los
Angeles, 223 F.3d 990, 994 (9th Cir. 2000). “Substantiality is present if the factual
contexts of the two representations are similar or related.” Trone, 621 F.2d at 998.
While the Ninth Circuit has thus provided ample guidance on what is meant
by the “substantially related” standard of Rule 1.9, issues of attorney
disqualification like the one at hand are governed by state law. In re County of Los
Angeles, 223 F.3d 990, 995 (9th Cir. 2000). This means that the Court “must follow
the reasoned view of the [Montana Supreme Court] when it has spoken on the
issue.” In re County of Los Angeles, 223 F.3d 990, 995 (9th Cir. 2000). The
Montana Supreme Court has not yet had occasion to interpret Rule 1.9(a)'s
“substantially related” standard. It has, however, twice cited various portions of
the Ninth Circuit’s Trone decision with apparent approval. Pro-Hand Services
Trust v. Monthei, 49 P.3d 56, 59 (Mont. 2002); In re Guardianship of Mowrer, 979
P.2d 156, 159 (Mont. 1999). This Court is thus confident that the Montana
Supreme Court would follow Trone and adopt the Ninth Circuit’s construction of
the “substantially related” standard set forth in Rule 1.9(a).
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Although the Montana Supreme Court has not specifically defined this
“substantially related” standard, it has addressed the proof required of a party
seeking attorney disqualification based on an alleged conflict of interest. Schuff v.
A.T. Klemens & Son, 16 P.3d 1002 (Mont. 2000). According to Schuff, “the
gravamen of a motion to disqualify is not that an attorney or firm violated one of
the conflict of interest rules,” such as Rule 1.9; “rather, a motion to disqualify must
offer sufficient proof that the continued representation of one party by the attorney
or firm will prejudice or adversely impact the rights of another party in the matter
pending before the court.” Schuff, 16 P.3d at 1011.
When the Schuff Court articulated this standard, it did so retrospectively.
The defendant in Schuff was appealing an adverse final judgment and argued,
among other things, that the trial court had erred by denying its motion to
disqualify plaintiffs’ counsel based on a concurrent conflict of interest. Schuff, 16
P.3d at 1014. From that retrospective perspective, the Schuff Court determined that
reversal was not warranted absent some showing by the defendant that it had been
prejudiced, or that its rights had been adversely impacted by the continuing
representation. Schuff, 16 P.3d at 1014-15.
Unlike the defendant in Schuff, the Clarks have timely moved for
disqualification under Rule 1.9(a) based on an alleged conflict of interest early in
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the pending litigation. Nevertheless, as the party seeking disqualification it falls
upon the Clarks even at this early juncture to “offer sufficient proof that the
continued representation” will likely prejudice or adversely impact their rights as
this litigation progresses. Schuff, 16 P.3d at 1011. This burden is consistent with
Trone’s “substantial relationship” standard, which requires that the party seeking
disqualification show there “is a reasonable probability that confidences were
disclosed which could be used against the [party] in the later, adverse
representation.” Trone, 621 F.2d at 998.
The Clarks have not met that burden here. Although the Clarks maintain that
“the parties, the land, [and] the legal dispute”3 in both cases are the same, a careful
comparison between the factual circumstances and legal theories of the two cases
shows otherwise. In Our Lady of the Rockies, for example, the Clarks were
defending against efforts by Our Lady of the Rockies to burden their estate by
establishing a public right of way easement across the southeastern portion of their
property. In this case, however, it is the Clarks who seek to establish a private
access easement across neighboring property for the benefit of their own estate.
And unlike the easement alleged in Our Lady of the Rockies, which would have
traversed the southeastern portion of the Clarks’ property, the easement alleged
3

Dkt. 30, at 2.
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here is in an entirely different location and would traverse Plaintiffs’ land, which
lies to the west of the Clarks’ property.
The two cases are also distinct because the easement alleged in Our Lady of
the Rockies called upon counsel to construe a very different set of historical
documents, including 19th century mining patents and survey documents. Those
documents have nothing to do with the parties’ respective claims in this case. As
the pleadings reflect, the property dispute at issue here will instead require that
counsel evaluate more recent property records, including the 1995 plat of the
Christiaens Minor Subdivision where Plaintiffs’ property is located, and a 1990
document recorded by Plaintiffs’ predecessors that purportedly grants the Clarks an
easement. Dkt. 2 & 3.
Contrary to the stance taken by the Clarks, this case is thus distinguishable
from Our Lady of the Rockies litigation in all material respects. This case arises
from a dispute between the Clarks and a different party, over a different easement
across different land, involving different legal issues. As these differences
illustrate, the factual context and scope of counsel’s representation in Our Lady of
the Rockies was substantively different from the context and scope of their
representation here. Because the two cases are so distinguishable, there is no
reasonable probability that any of the confidences the Court presumes the Clarks
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disclosed to counsel during the Our Lady of the Rockies litigation could be used
against them in this litigation.
In an effort to show otherwise, the Clarks point to the fact that they had
“originally contemplated providing Our Lady of the Rockies access across the very
easement in dispute in this case.” Dkt. 26-2, at 2. At the recent evidentiary
hearing, Jonathan Clark testified that he had independently negotiated with Our
Lady of the Rockies to provide the entity with access across the Plaintiffs’ property
by way of the easement at issue here. The Clarks would have in turn allowed Our
Lady of the Rockies to access its own property to the east by traversing their 21
acre parcel. Those negotiations fell through, however, and Our Lady of the
Rockies ultimately filed suit against the Clarks in an effort to provide for public
access to its property by way of an entirely different route.
By Jonathan Clark’s own testimony, any discussions he had with Our Lady
of the Rockies regarding access across Plaintiffs’ property took place before the
Our Lady of the Rockies litigation began, and before any involvement by Worden
Thane or its attorneys. There is nothing in the record to suggest that the easement
the Clarks now claim to have across Plaintiffs’ property played any part whatsoever
in the Our Lady of the Rockies litigation or otherwise fell within the scope of
counsel’s representation in that matter. In fact, Jonathan Clark testified to the
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contrary, agreeing on cross examination that he never discussed that alleged
easement with his counsel and never asked for legal advice on the question of
whether or not he and his wife had access across Plaintiffs’ property. This
testimony simply confirms what the record otherwise shows, which is that the Our
Lady of the Rockies litigation had nothing to do with the easement alleged in this
case.
The Clarks also maintain that the two matters are substantially related
because the road at issue in Our Lady of the Rockies may be implicated as a
potential alternative to their alleged easement over Plaintiffs’ property. In this
regard, the Clarks allege as one of many theories in support of their counterclaim
that they have an easement by necessity across Plaintiffs’ property.4 Dkt. 2, at 5.
In defense to that counterclaim, Plaintiffs specifically assert that the “Defendants
are not entitled to an easement by necessity across Plaintiffs’ property because
there was no strict necessity when [the Lisacs] sold the Defendants’ property to
[the Clarks] in 1978, because the Lisacs had legal access to the Defendants’
property via a prescriptive easement along the road up Reese Canyon, which was
the historical access route to the Defendants’ property.” Dkt. 20, at 4. That
4

The Clarks’ Answer and Counterclaim identifies their claim of easement by
necessity as an alternative defense. But the Court views the claim, by its nature,
to be a counterclaim.
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historical access route was the same road over which Our Lady of the Rockies
sought to establish an easement in the prior litigation.
Fully apprised of the Plaintiffs’ specific defense to their claim of easement
by necessity, the Clarks respond with the general conclusory statement that “[t]he
success of Dayton and his law firm in the prior case have a profound effect on the
fight in this case because there may not be effectively usable alternative access to
the Clark land as a result.” Dkt. 27, at 5. Importantly, the Clarks have not disputed
either in briefing or at hearing, that they have a historical right of private access to
their property. Nor have they specifically explained how their access over that road
may be placed in dispute in this litigation.
The Court is thus satisfied that the scope and factual context of the two
representations are entirely different. The Clarks have not presented any plausible
argument as to how any confidences they presumably shared with their former
counsel could potentially be used against them in this litigation. The Montana
Supreme Court has cautioned that litigants “must not be lightly separated from
[their] counsel of choice.” In re Guardianship of Mowrer, 979 P.2d 156, at 160
(Mont. 1999). Because the Clarks have not shown that there is a reasonable
probability that the confidences they presumably disclosed to their former counsel
could now be used to their disadvantage, the Clarks have not met their burden of
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proving that allowing Plaintiffs’ counsel to remain on the case will likely prejudice
or adversely impact their rights as this litigation progress.
III.

CONCLUSION
Based on the foregoing,
IT IS ORDERED that the Clarks’ Motion to Disqualify Counsel and Law

Firm is DENIED.
DATED this 1st day of June, 2011.

/s/ Jeremiah C. Lynch
Jeremiah C. Lynch
United States Magistrate Judge

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