COLLICK v. WEEKS MARINE, INC. et al
MEMORANDUM OPINION. Signed by Magistrate Judge Tonianne J. Bongiovanni on 4/19/2011. (gxh)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
Civil Action No. 08-5120 (MLC)
WEEKS MARINE, INC., et al.,
BONGIOVANNI, Magistrate Judge
Currently pending before the Court is Defendant Weeks Marine, Inc.’s (“Weeks”) motion
to disqualify the law firm of Marshall, Dennehey, Warner, Coleman & Goggin (“Marshall
Dennehey”) from representing Defendant Haztek, Inc. (“Haztek”) with respect to insurance
coverage and insurance claim issues in this matter. Haztek opposes Weeks’ motion. The Court
has fully reviewed all arguments made in support of and in opposition to Weeks’ motion. The
Court considers Weeks’ motion without oral argument pursuant to FED .R.CIV .P. 78. For the
reasons set forth more fully below, Weeks’ motion to disqualify is DENIED.
The parties and the Court are all familiar with the facts underlying this litigation. As
such, they are not restated at length herein. Weeks was awarded a contract to build a large,
trident-shaped pier at the Earle Naval Weapons Station (the “Earle Project”). Weeks hired
Haztek as a safety contractor on the Earle Project. Plaintiff Joseph Collick (“Collick”) was
employed by Weeks to work on the Earle Project as a dockbuilder. This matter arises out of an
accident that occurred at the Earle Project, when, on November 17, 2006, Collick allegedly fell
off of a piece of pre-cast concrete seriously injuring his leg. Collick sued Weeks and Haztek,
asserting several claims based on the allegedly hazardous and unsafe work conditions present at
the Earle Project.
After hiring Haztek on September 2, 2005 as a safety contractor with respect to the Earle
Project, Weeks and Haztek entered into a Contractor Indemnification Agreement on November
10, 2005. In pertinent part, the Contractor Indemnification Agreement provides:
Contractor shall indemnify and hold WMI harmless from all
liability, loss, cost or damages, including attorney fees, from claims
for injuries or death from any cause, of Contractor’s employees or
the employees of its subcontractors or agents, or by reason of
claims of any person or persons, including WMI, for injuries to
person or property, from any cause occasioned in whole or in part
by any act or omission of Contractor, its agents, employees,
subcontractors or suppliers, whether or not it is contended WMI
contributed thereto in whole or in part, or was responsible therefor
by reason of non-delegable duty. If, however, this indemnification
is subject to limitation by applicable law, then the indemnification
shall be similarly limited to conform with such law, it being the
intention that this indemnification shall be as broad as permitted by
applicable law. WMI may retain any money due or to become due
for the Work performed, sufficient to indemnify it against such
injuries, claims, suits, actions, costs or damages should any such
claim arise. Contractor shall at WMI’s sole option, assume the
defense in WMI’s behalf of any action or proceeding commenced
against WMI, whether or not Contractor is named as a party, as
part of Contractor’s aforementioned obligation to indemnify and
hold WMI harmless.
Except as otherwise provided herein, the obligation of the
Contractor to indemnify and hold WMI harmless is absolute and is
not dependent upon any question of negligence on its part or on the
part of its agents, officers or employees. The approval of WMI of
the methods of doing the Work or the failure of the WMI to call
attention to improper or inadequate methods or to require a change
in methods or direct the Contractor to take any particular
precautions or to refrain from doing any particular thing shall not
excuse the Contractor in case of any such injury to person or
damage to property.
(Exhibit B to Betancourt Declaration at 1-2).
Further, pursuant to the Contractor Indemnification Agreement, Haztek was obligated to
“procure and maintain and provide WMI Certificates of Insurance . . . evidencing issuance of the
forms of insurance in companies and amounts and deductibles, if any, acceptable to WMI as
stated in Schedule A - Insurance Requirements attached.” (Id. at 2) According to Schedule A of
the Contractor Indemnification Agreement, Haztek was responsible for “procur[ing] and
maintain[ing] in force at its own expense and be[ing] responsible for all premiums, deductibles,
self-insured retentions or other amounts for such insurance coverage in such form and in such
amounts as are required to cover its responsibilities, liabilities and indemnification obligations
under this agreement.” (Id. at 3). Specifically, Haztek was required to obtain commercial
general liability insurance with a $1,000,000 occurrence limit and a $2,000,000 aggregate limit.
(Id.) In addition, Schedule A of the parties’ agreement provided that “[a]ll insurance policies
required . . . be endorsed to name WMI and its subsidiary companies as an additional insured
inclusive of acts or omissions. (Id.) Haztek obtained the requisite insurance from Evanston
Insurance Company (“Evanston”), and, as required, Weeks is listed as an additional insured on
the policy. (Exhibit C to Betancourt Declaration at 1).
After Collick initiated the instant suit against Weeks and Haztek, Weeks presented its
defense to Haztek pursuant to the aforementioned Contractor Indemnification Agreement.
Haztek, however, refused to defend Weeks in this matter. Weeks also tendered its defense to
Evanston as an additional insured under Haztek’s policy with Evanston. Evanston, however,
likewise refused to defend Weeks. In light of their refusal to provide it with a defense, Weeks
(1) filed cross-claims against Haztek for breach of its contractual duties to defend and indemnify
weeks and for failure to procure and maintain insurance coverage pursuant to the Contractor
Indemnification Agreement and (2) filed a third-party claim against Evanston for failing to
provide Weeks with coverage as an additional insured under Haztek’s policy.
Haztek is represented in this matter by Marshall Dennehey. Evanston appointed Marshall
Dennehey to represent Haztek with respect to the allegations raised in this case and is paying for
the cost of Haztek’s defense. Weeks claims that in addition to representing Haztek with respect
to the liability issues involved in this case, Marshall Dennehey is also representing Haztek with
regard to insurance coverage and insurance claims “between and among the parties, including
Weeks’ third-party suit against Evanston for insurance coverage.” (Weeks Br. at 7). As a result,
Weeks now seeks to disqualify Marshall Dennehey from representing Haztek with respect to any
insurance coverage and insurance claim issues that have arisen between and among Weeks,
Haztek and Evanston.
Weeks claims that Marshall Dennehey should be disqualified from representing Haztek
with respect to insurance coverage and insurance claim issues based on New Jersey’s Rule of
Professional Conduct (“RPC”) 1.7(a)(1), which prohibits a lawyer from representing a client if
that representation would be directly adverse to another client. Weeks claims that such a conflict
exists between Haztek, the insured, and its insurer, Evanston. Specifically, Weeks argues that
“the interests of Haztek are directly and blatantly adverse to those of Evanston” because
“Evanston has denied coverage to Weeks” and if Evanston prevails on this issue “Haztek will be
required to indemnify Weeks from its own funds.” (Weeks Br. at 10). Weeks also argues that it
is clear that Haztek and Evantson’s interests are adverse because “Evanston’s failure to provide
coverage to Weeks as an additional insured has resulted in Weeks’ assertion of a claim for failure
to procure insurance as required by the indemnification agreement between Weeks and Haztek.”
(Id. at 10-11).
Weeks therefore argues that “Evantson’s failure to give Haztek the full benefit of the
insurance policy that it purchased clearly presents an issue of coverage between Haztek and
Evanston.” (Weeks Reply Br. at 5). Weeks further contends that “[u]nder these circumstances,
Haztek should be asserting a claim against Evanston to provide cover to Weeks and should have
submitted papers in opposition to Evanston’s motion for summary judgment.” (Weeks Br. at
11). Weeks also contends that Haztek, which “contracted with Evanston to provide coverage to
Weeks as an additional assured” and which “paid premiums to Evanston for such coverage[,]”
has a “justiciable interest” in Weeks’ coverage issue. (Weeks Reply Br. at 6).
Weeks, however, claims that Haztek has not brought a claim against Evanston based on
Evanston’s “apparent instructions” to Haztek’s counsel, Marshall Dennehey, to forebear from
asserting same. Weeks claims that Marshall Dennehey cannot avoid the clear conflict of interest
between Haztek and Evanston by simply choosing not to act, i.e., “by failing to argue on behalf
of Haztek that Evanston should provide cover to Weeks, and by failing to assert claims against
Evanston and its broker.” (Id.) Indeed, Weeks argues that Marshal Dennehey’s failure to assert
claims against Evanston based on its failure to cover Weeks “exacerbates, not alleviates, the
conflict of interest, in that counsel is not acting in the best interest of their client.” (Id.) Further,
Weeks argues that even if an actual conflict does not exist between Haztek and Evanston,
Marshall Dennehey should nevertheless be disqualified from representing Haztek in connection
with insurance coverage issues because said representation creates the appearance of impropriety,
which Weeks claims is impermissible under RPC 1.7(c).
Haztek opposes Weeks motion to disqualify counsel. While Haztek acknowledges that
“it would clearly create a conflict of interest” for Marshall Dennehey “to represent Haztek in
connection with any coverage related issues[,]” Haztek denies that any coverage related issues
exist between Haztek and Evanston. (Haztek Opp. Br. at 6). In this regard, Haztek argues that
“Evanston has not withdrawn coverage from Haztek in this matter and has not indicated in any
way that it is intending to withdraw coverage for any reason.” (Id. at 6-7). As such, Haztek
contends that “there are no coverage issues between Haztek and Evanston.” (Id. at 7).
Haztek notes that there are coverage issues between Weeks and Evanston: Weeks
believes that it is entitled, as an additional insured, to coverage under the commercial general
liability insurance policy that Haztek obtained from Evanston. Haztek, however, maintains that
“that is Weeks’ coverage issue with Evanston” and argues that “[j]ust because Weeks has a
coverage issue with Evanston and has filed a third-party complaint against Evanston for
coverage, does not make that Haztek’s issue.” (Id. at 8). Indeed, Haztek contends that it lacks
standing “to make a claim against Evanston that Weeks is entitled to coverage under the policy.”
Further, Haztek argues that the fact that Weeks claims it is entitled to indemnification for
Collick’s claims against it from Haztek and Evanston does not create a coverage issue between
Haztek and Evanston. Haztek claims that whether Haztek is obligated to indemnify Weeks is an
open issue “that will require both factual findings and legal interpretation of the contractual
language.” (Id. at 9). Haztek additionally claims that “[u]ntil that issue is resolved, it will be an
open issue as to whether Weeks will be entitled to coverage under Evanston’s policy as an
insured contract.” (Id.) However, irrespective of how that issue is ultimately determined, Haztek
claims that “[t]he fact that Weeks may or may not be entitled to indemnification does not create a
coverage issue between Haztek and Evanston.” (Id.)
Simply put, Haztek argues that Evanston appointed Marshall Dennehey to represent it
with respect to the liability issues in this case and those are the issues for which counsel is
representing Haztek. Haztek claims that Marshall Dennehey is not representing it with respect to
any coverage issues or insurance claim issues involving Evanston and, in fact, denies that any
such issues exist. Haztek argues that “[o]ther than assigning th[is] case to [Marshall Dennehey],
Evanston has not ordered or directed the defense of the case in any way.” (Id. at 6). Haztek
argues that Weeks’ allegations regarding the existence of a conflict of interest are “spurious” and
“fanciful[.]” (Id. at 2, 6). As a result, Haztek requests that Weeks’ motion to disqualify Marshall
Dennehey be denied.
In this District, questions of professional ethics are governed by L.Civ.R. 103.1(a), which
provides that the RPCs are to be used to resolve same. See Carlyle Towers Condo. Ass’n v.
Crossland Sav., 944 F.Supp. 341, 345 (D.N.J. 1996). In interpreting the RPCs, the Court looks
to New Jersey’s state courts’ interpretations of them as primary authority and modifies that
interpretation when required or permitted by federal law. L.Civ.R. 103.1(a); see Steel v. General
Motors, 912 F.Supp. 724 (D.N.J. 1995).
When considering a motion to disqualify counsel, the movant bears the burden of proving
that disqualification is appropriate because the RPCs were violated. See Maldonado v. New
Jersey, 225 F.R.D. 120, 136-37 (D.N.J. 2004). Further, the movant’s burden is a heavy one as
“[m]otions to disqualify are viewed with ‘disfavor’ and disqualification is considered a ‘drastic
measure which courts should hesitate to impose except when absolutely necessary.’” Alexander
v. Primerica Holdings, Inc., 822 F.Supp. 1099, 1114 (D.N.J. 1993) (quoting Schiessle v.
Stephens, 717 F.2d 417, 420 (7th Cir. 1983) (internal quotation marks and citation omitted)). As
a result, in determining whether to disqualify counsel, the Court must closely and carefully
scrutinize the facts of each case to prevent unjust results. See Montgomery Acad. v. Kohn, 50
F.Supp.2d 344, 349 (D.N.J. 1999). Further, given the fact sensitive nature of motions to
disqualify counsel, the Court cannot blindly apply the RPCs without any consideration of the
parties’ relative hardships. Id. (citing Gould, Inc. v. Mitsui Mining & Smelting Co., 738 F.Supp.
1121, 1126 (N.D. Ohio 1990)). Instead, the Court must “balance the need to maintain the highest
standards of the [legal] profession against a client’s right to freely choose his counsel.” Steel,
912 F. Supp. at 733 (internal quotation marks and citations omitted). However, if there is any
doubt as to the propriety of an attorney’s representation of a client, such doubt must be resolved
in favor of disqualification. Maldonado, 225 F.R.D. at 137.
Here, Weeks claims that Marshall Dennehey should be disqualified from representing
Haztek with respect to insurance coverage and insurance claim issues pursuant to RPC 1.7(a) and
1.7(c). As an initial matter, the Court notes that in 2003, the RPCs were amended to strike the
“appearance of impropriety” provision. (RPC 1.7(c)(2) (repealed Nov. 17, 2003, effective Jan. 1,
2004)). As a result, for over 7 years the “appearance of impropriety” standard has not provided a
basis for attorney disqualification. Both the New Jersey Supreme Court and the District of New
Jersey have recognized the repeal of the “appearance of impropriety” provision from the RPCs
and have consequently been unwilling to disqualify lawyers on this ground. See In re Opinion
697, 188 N.J. 549, 552 (2006) (holding that “appearance of impropriety standard no longer
retains any continued validity.”); Pallon v. Roggio, Civil Action Nos. 04-3625 (JAP), 06-1068
(FLW), 2006 WL 2466854, *8 (D.N.J. Aug. 24, 2006) (noting that 2004 revisions of RPCs
“eliminated the appearance of impropriety doctrine.”) Consequently, to the extent Weeks argues
that Marshall Dennehey should be disqualified based on the appearance of impropriety doctrine,
that argument is wholly without merit. Indeed, the Court notes that RPC 1.7(c), the provision
cited by Weeks in support of this argument, no longer exists. As a result, the Court declines to
disqualify Marshall Dennehey on this ground.
With respect to RPC 1.7(a)(1), that Rule provides:
(a) Except as provided in paragraph (b), a lawyer shall not
represent a client if the representation involves a concurrent
conflict of interest. A concurrent conflict of interest exists if:
(1) the representation of one client will be directly adverse
to another client[.]
Weeks essentially claims that a concurrent conflict of interest has arisen given Marshall
Dennehey’s representation of Haztek on insurance coverage and insurance claim issues. The
parties all agree that if insurance coverage and insurance claim issues existed between Haztek
and Evanston, then it would be a conflict of interest for Marshall Dennehey, who was hired by
Evanston to represent its insured, Haztek, on liability issues raised in this litigation, to represent
Haztek on the insurance coverage and insurance claim matters. This is true because “(i)nsurance
defense counsel routinely and necessarily represent two clients: the insurer and insured.”
Lieberman v. Employers Ins. of Wausau, 84 N.J. 325, 338 (1980) (internal quotation marks and
citation omitted). As a result, where coverage issues exist, the insured “must have independent
counsel” with respect to same. N.J. Supreme Court Advisory Committee on Professional Ethics,
Op. 502, 110 N.J.L.J. 349, 1982 WL 117860, *3 (1982). Haztek, however, denies that any
insurance coverage or claim issues exist between it and Evanston.
Weeks argues that the alleged coverage and claim issues between Haztek and Evanston
stem from “Evantson’s failure to give Haztek the full benefit of the insurance policy that it
purchased[,]” i.e., Evanston’s failure to cover Weeks in this matter, coverage that Haztek
contracted with Evanston to provide and for which Haztek paid Evanston premiums. (Weeks
Reply Br. at 5). Weeks claims that Haztek should be pursuing claims against Evanston and its
brokers for failing to cover Weeks and contends that Marshall Dennehey’s failure to assert such
claims against Evanston results from and is evidence of its conflict of interest.
Haztek argues that the insurance coverage and insurance claim issues identified by Weeks
are not Haztek’s issues with Evanston, but Weeks’. Haztek further argues that it lacks standing
to assert a claim against Evanston that Weeks is entitled to coverage under the insurance policy.
In addition, Haztek similarly claims that Weeks’ argument that it is entitled to indemnification
from Haztek and Evanston does not create a coverage issue between Haztek and Evanston.
In support of its motion for disqualification Weeks relies on cases and ethics opinions
(collectively, “cases”) that stand for the general proposition that where insurance coverage and
insurance claim issues arise, counsel appointed by an insurer to represent an insured is conflicted
out of representing either the insurer or insured with respect to any and all insurance coverage
and insurance claim issues. However, none of the cases relied on by Weeks involve facts similar
to those at issue here: none address an additional insured’s contention that a conflict exists
between the other insured and the insurer based on the other insured’s failure to assert claims
against the insurer based on the insurer’s failure to provide coverage to the additional insured.
Further, while Weeks argues that Haztek, which “contracted with Evanston to provide coverage
to Weeks as an additional assured” and which “paid premiums to Evanston for such coverage[,]”
has a “justiciable interest” in Weeks’ coverage issue, Weeks does not cite a single case to support
its argument that Haztek has standing to pursue the claims it contends Haztek should be making.
(Id. at 6)
Under these circumstances, the Court finds that Weeks has not met its very heavy burden
of proving that the drastic, disfavored measure of disqualification is necessary. Simply put,
Weeks has not established that any insurance coverage or insurance claim issues exist between
Haztek and Evanston. There is simply no evidence that Evanston has refused to provide
coverage for Haztek or that it intends to withdraw the coverage provided.
Absent some precedent, which Weeks has not furnished, establishing that courts have
determined that a conflict exists under facts analogous to those present here or that Haztek has a
justiciable interest sufficient to provide it with standing to pursue the claims suggested by Weeks,
the Court cannot find that Marshall Dennehey should be disqualified. To be clear, given the fact
sensitive nature of motions to disqualify, by “analogous,” the Court means a case involving an
additional insured’s claim that coverage issues exist between the other covered insured and
insurer because the insurer refuses to cover the additional insured. See Bals v. Metedeconk Nat.
Golf Club, Inc., Civil Action No. 09-4861 (MLC), 2010 WL 1373558, *2 (D.N.J. March 31,
2010) (noting that motions to disqualify counsel are fact sensitive in nature). Citations to cases
like those relied upon by Weeks, which generally hold that a conflict exists when insurance
coverage and insurance claim issues arise between an insured and its insurer, are not sufficient.
Nor would be citations to cases that generally define what qualifies as a justiciable interest.
For the reasons stated above, Weeks’ motion to disqualify Marshall Dennehey from
representing Haztek with respect to insurance coverage and insurance claim issues in this matter
is DENIED. An appropriate Order follows.
Dated: April 19, 2011
s/Tonianne J. Bongiovanni
HONORABLE TONIANNE J. BONGIOVANNI
UNITED STATES MAGISTRATE JUDGE
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