Seeberger et al v. Bank Of America, N.A. et al

Filing 103

ORDER DENYING 89 Motion to Disqualify Counsel. Signed by Judge Kathleen Cardone. (vm1)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
EL PASO DIVISION
RICK J. SEEBERGER and SUSAN C.
SEEBERGER,
Plaintiffs,
v.
BANK OF AMERICA, N.A., BAC
HOME LOANS SERVICING LP,
PRLAP, INC., BANK OF AMERICA
CORPORATION, VENTURES TRUST
2013 I-H-R, and BSI FINANCIAL
SERVICES, INC.,
Defendants,
__________________________________
VENTURES TRUST 2013 I-H-R,
Counter-Plaintiff,
v.
RICK J. SEEBERGER and SUSAN C.
SEEBERGER,
Counter-Defendants.

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EP-14-CV-366-KC

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ORDER
On this day, the Court considered Plaintiffs’ Motion to Disqualify the Firm of James and
Haugland for Conflict of Interest (“Motion to Disqualify”), ECF No. 89. For the reasons set
forth herein, Plaintiffs’ Motion to Disqualify is DENIED.

1

I.

BACKGROUND
A.

Procedural Background

On October 1, 2014, Plaintiffs Rick and Susan Seeberger (“Plaintiffs”) filed a Complaint
in the above-captioned case alleging that Defendants Bank of America, N.A. and BAC Home
Loans Servicing LP committed violations of the federal Truth in Lending Act, 15 U.S.C. § 1601
et seq., breached their duties of good faith and fair dealing, and committed common law fraud in
relation to two mortgages secured against Plaintiffs’ real property. See Original Compl. 24-26,
ECF No. 1. Plaintiffs later filed a First Amended Complaint, adding PRLAP, Inc. and Bank of
America Corporation as defendants to the case and asserting additional causes of action against
all defendants for violations of the federal Fair Debt Collection Practices Act, 15 U.S.C. § 1692
et seq., and the Texas Debt Collection Practices Act, Texas Finance Code § 392.001 et seq. See
Pls.’ First Am. Compl. 1, 31-32, ECF No. 10.
On February 20, 2015, Plaintiffs filed their Motion for Leave to File Second Amended
Complaint and Join Additional Parties (“Motion for Leave”), ECF No. 46, seeking leave to join
Ventures Trust 2013 I-H-R (“Ventures”) and BSI Financial (“BSI”) as additional parties, and to
“combine all related facts, issues, and relevant legal authorities set forth in Plaintiffs’ pleadings.”
See id. at 4. The Court granted the Motion for Leave on March 6, 2015.
On April 17, 2015, Ventures and BSI filed an Answer to Plaintiffs’ Second Amended
Complaint (“Answer”), ECF No. 63. Corey W. Haugland (“Haugland”), an attorney at James &
Haugland, P.C. (“J&H”) signed the Answer as the attorney for Ventures and BSI. See Ventures
and BSI’s Answer to Pl’s Second Am. Compl. 6. On July 17, 2015, Plaintiffs filed their Motion
to Disqualify.

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B.

Factual Background

Plaintiffs’ claims in this case arise from events that ensued after Plaintiffs executed two
notes on their homestead on December 29, 2003. See First Am. Compl. 6-30. Plaintiffs allege,
among other things, that “Defendants willfully closed Plaintiffs[’] mortgage accounts, refused
payments being tendered, created a Default under the terms of the . . . promissory notes, deeds of
trust and related documents, [and] have sold mortgage Notes to Banc of America Mortgage
Securities and to [Ventures].” Second Am. Compl. 4. Plaintiffs allege a series of actions that
Defendant Bank of America took after the notes were executed that damaged the financial
wellbeing of Plaintiffs and Plaintiffs’ business, Pre-Press Express International, Inc. (“PPEI”).
See First Am. Compl. 6-30.
On April 24, 2006, PPEI filed for Chapter 7 bankruptcy (“PPEI Bankruptcy”). See Mot.
to Disqualify Ex. A. Court records in the bankruptcy case indicate that Wiley France James, III
(“James”), an attorney at J&H, represented PPEI.1 See id. In fact, on April 21, 2006, Plaintiffs
had written a check to J&H in the amount of $1,800, with “PRE-PRESS EXPRESS” written in
the memo. See id. Plaintiffs also filed as creditors in the PPEI Bankruptcy. See Ventures and
BSI’s Resp. to Pls.’ Mot. to Disqualify Ex. D-1, ECF No. 92.
On January 18, 2007, Plaintiffs and James executed a retainer agreement regarding a
potential personal Chapter 7 bankruptcy. See Resp. Ex. D-4. A May 21, 2007, billing statement
from J&H to Rick Seeberger included charges in the amount of $3,046.50 for work performed in
January 2007. Mot. to Disqualify Ex. A. The statement does not indicate that Plaintiffs paid a
retainer fee. See id. The statement does demonstrate, however, that James and another

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James and Haugland appear to have worked together at J&H during all relevant periods. See Ventures and BSI’s
Sur-Reply to Pls.’ Reply to Ventures and BSI’s Resp. to Pls.’ Mot. to Disqualify Ex. D-8, ECF No. 102 (stating that
James and Haugland have worked together for 33 years).

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individual (“ZP”) spent a total of 18.4 hours between January 12 and January 24, 2007, on work
relating to Plaintiffs’ potential personal bankruptcy and the PPEI Bankruptcy. See id. Several
entries refer to both the potential personal Chapter 7 bankruptcy and the PPEI Bankruptcy, while
other entries do not clearly refer to one or the other. See id. (referring solely to the “Chapter 7
Petition”); id. (“1/15/07 Call from Mr. Given regarding Seeberger case . . . . 1/19/07 Review
client schedules”). A January 22, 2007, entry indicates that ZP “[r]eviewed e-mail
correspondence from Mr. Seeberger regarding stopping work on personal bankruptcy.” Mot. to
Disqualify Ex. A.
On January 24, 2007, Plaintiffs filed their personal bankruptcy case pro se under Chapter
11 (“Personal Bankruptcy”). See id.; Resp. Ex. D-5. In their Pro Se Filing Questionnaire, which
Plaintiffs signed the same day, Plaintiffs stated under penalty of perjury that no one assisted them
in completing their petition or schedules, and that they had not paid or promised to pay anyone a
fee for assisting them in completing their petition or forms. See Resp. Ex. D-5.
Court records from their Personal Bankruptcy demonstrate that at some point during the
proceeding, Plaintiffs were represented by attorneys from Loeb & Loeb in Los Angeles, CA, and
Miranda & Maldonado, P.C. in El Paso, TX. Mot. to Disqualify Ex. A. Plaintiffs also stated in
their First Amended Complaint that the firm Beck & Given represented them “[d]uring the
course of their Chapter 11 proceeding.” First Am. Compl. 13.
On May 21, 2007, the same day James sent Rick Seeberger the above-mentioned J&H
billing statement, James also signed a Form B10 as a creditor in Plaintiffs’ Personal Bankruptcy,
asserting a claim in the amount of $3,046.50 for services performed. Mot. to Disqualify Ex. B.

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The PPEI Bankruptcy case was terminated on November 8, 2007. See id. at Ex. A. On
April 22, 2008, Plaintiffs’ Personal Bankruptcy was converted from a Chapter 11 to a Chapter 7
bankruptcy. See id. The Personal Bankruptcy was later terminated, and on March 26, 2009, it
was reopened. See id. It was ultimately terminated on April 9, 2010. See id.
Plaintiffs allege that “as late as June 5, 2012, . . . [J&H was] still trying to collect on a
debt from Plaintiffs for a claim filed by them and then discharged on October 31, 2008 in the
Chapter 7 case .” Mot. to Disqualify 6.
II.

DISCUSSION
A.

Standard

Federal courts in Texas apply federal law when considering motions to disqualify
counsel. In re Am. Airlines, Inc., 972 F.2d 605, 610 (5th Cir. 1992) (citing In re Dresser Indus.,
Inc., 972 F.2d 540, 543 (5th Cir. 1992)). “The Fifth Circuit’s approach to ethical issues has
remained ‘sensitive to preventing conflicts of interest.’” In re ProEducation Intern., Inc., 587
F.3d 296, 299 (5th Cir. 2009) (quoting In re American Airlines, Inc., 972 F.2d at 611). At the
same time, “[d]epriving a party of the right to be represented by the attorney of his or her choice
is a penalty that must not be imposed without careful consideration.” FDIC v. U.S. Fire Ins. Co.,
50 F.3d 1304, 1313 (5th Cir. 1995). Thus, in recognizing “the severity of disqualification, we do
not apply disqualification rules ‘mechanically,’ but we consider ‘[a]ll of the facts particular to
[the] case . . . in the context of the relevant ethical criteria and with meticulous deference to the
litigant’s rights.’” In re ProEducation Intern., Inc., 587 F.3d at 300 (quoting U.S. Fire Ins. Co.,
50 F.3d at 1314).

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When considering a motion to disqualify, courts begin by looking to their own local
rules. Id. at 299. Under the Local Rules of the Western District of Texas (“Local Rules”), the
Court has adopted the standards set out in the Texas Disciplinary Rules of Professional Conduct
(“Texas Rules”). Local Court Rule AT-7(a). The Local Rules also indicate that the Texas Rules
are “not exhaustive of the standards of professional conduct” and that courts should consult the
American Bar Association’s Model Rules of Professional Conduct (“Model Rules”) “[f]or
matters not covered by the Texas [R]ules.” Local Court Rule AT-7(a). Accordingly, the Court
will consider the Texas Rules and the Model Rules in conjunction.
B.

Disqualification Arising from Duties to Former Clients

Plaintiffs invoke Texas Rule 1.09 and Model Rule 1.9 in support of their argument that
opposing counsel, Haugland, should be disqualified from representing Ventures and BSI. Mot.
to Disqualify 1. Plaintiffs argue that J&H previously represented them in the PPEI Bankruptcy
and the Personal Bankruptcy, and that because those cases are “substantially related” to the
instant case, J&H must be disqualified. Mot. to Disqualify 2.
The gist of Plaintiffs’ argument is that actions of Defendant Bank of America caused
Plaintiffs and PPEI to file for bankruptcy, and that because J&H represented Plaintiffs in both
bankruptcies, J&H is aware of information about Plaintiffs that would be relevant to Defendants’
defenses in the present suit. Id. at 5. Plaintiffs argue that they have established a substantial
relationship “between the preparation of its schedules in January 2007 and its claims against the
Defendants in this case” because (1) “[t]he facts and causes of action alleged by Plaintiffs in this
case are based upon actions taken by Bank of America between 2005 and 2014”; (2) “[t]o the
extent Plaintiffs have shown that Ventures and BSI in purchasing the note and/or deed of trust

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from Bank of America are subject to all the defenses of the original note and deed”; and (3) J&H
“represented Plaintiffs during a crucial period of time and have knowledge that other counsel
may not have pursued or been privy to.” Pls.’ Reply to Ventures and BSI’s Resp. to Pls.’ Mot. to
Disqualify, ECF No. 95.
Plaintiffs argue that the facts involved in the present and prior cases are substantially
related because “the causes contributing directly to the [PPEI] and Plaintiffs[’] bankruptcies may
be a focal point of the Plaintiffs[’] playbook.” Mot. to Disqualify 4. Plaintiffs also claim that
J&H has “acquired information which may be confidential and protected by attorney-client
privilege and therefore would have a conflict of interest in representing their current clients.” Id.
Plaintiffs elaborate that from April 2006 through January 2007, J&H “received privileged
knowledge of the facts directly related to the actions and/or breaches by Defendants . . . in
relation to Plaintiffs and provided legal advice to Plaintiffs directly related to the . . .
Defendants[’] actions and breaches.” Id. According to Plaintiffs, “[t]herefore, the material
factual similarities between the current and the former representation are the same.” Id. at 4-5.
In support of their argument that “[t]here are similarities between the core legal questions
posed” in the present representation and the prior representations, Plaintiffs direct the Court’s
attention to the legal claims asserted in Plaintiffs’ Second Amended Complaint in the present
case. Id. at 5. Plaintiffs claim J&H “had full knowledge” of these claims “and provided legal
advice to Plaintiffs.” Id.
1.

Plaintiffs have failed to demonstrate a conflict of interest based upon
J&H’s alleged former representation of them

Texas Rule 1.09(a)(3) prohibits “a lawyer who personally has formerly represented a
client in a matter [from] thereafter represent[ing] another person in a matter adverse to the
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former client . . . if it is the same or a substantially related matter.” Tex. Disciplinary R. Prof’l
Conduct 1.09(a)(3), reprinted in Tex. Gov’t Code Ann., tit. 2, subtit. G app. A (West 2015).
Similarly, Model Rule 1.9(a) prohibits “[a] lawyer who has formerly represented a client in a
matter [from] thereafter represent[ing] 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.” Model Rules of Prof’l Conduct r. 1.9(a). Texas Rule 1.09(b) explains that if one
attorney has a conflict under 1.09(a), the conflict is imputed to all the members of the attorney’s
firm. See Tex. Disciplinary R. Prof’l Conduct 1.09(b);1.09(a) cmt. 7; In re ProEducation Intern,
Inc., 587 F.3d at 300. The Model Rules have an identical rule regarding conflict imputation. See
Model Rules of Prof’l Conduct r. 1.10(a). While Texas Rule 1.09 and Model Rule 1.9 have
some linguistic differences, they are “identical . . . in all important respects.” In re Am. Airlines,
Inc., 972 F.2d at 615 n.2.
Texas Rule 1.09 adopted the common law “substantial relationship” test in determining
what constitutes a “same or a substantially related matter.” See id. at 617. Under the
“substantial relationship” test, the party seeking disqualification must establish “1) an actual
attorney-client relationship between the moving party and the attorney he seeks to disqualify and
2) a substantial relationship between the subject matter of the former and present
representations.” Id. at 614.
a.

Plaintiffs have failed to establish an attorney-client
relationship with J&H arising from either the PPEI
Bankruptcy or the Personal Bankruptcy

Plaintiffs argue that J&H represented them in the PPEI Bankruptcy and in the Personal
Bankruptcy. An attorney-client relationship can be created “either explicitly or implicitly by

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conduct manifesting an intention to create the attorney-client relationship.” City of El Paso v.
Salas-Porras Soule, 6 F. Supp. 2d 616, 622 (W.D. Tex. 1998). See also Perez v. Kirk &
Carrigan, 822 S.W.2d 261, 265 (Tex. App. 1991) (“[T]he [attorney-client] relationship does not
depend upon the payment of a fee . . . .”). When an organization employs or retains a lawyer, the
resulting attorney-client relationship is between the lawyer and the organization. Tex.
Disciplinary R. Prof’l Conduct r. 1.12; Model Rules of Prof’l Conduct r. 1.13. Furthermore, in a
bankruptcy proceeding, an attorney may not simultaneously represent both creditor and debtor.
In re Delta Produce, LP, 521 B.R. 576, 598 (W.D. Tex. 2014) (quoting In re Wilde Horse
Enters., 136 B.R. 830, 843 (Bankr. C.D. Cal 1991)).
Plaintiffs cannot establish an attorney-client relationship with James based on the PPEI
Bankruptcy. While Plaintiffs point out that they wrote a check for $1,800 to J&H, the check
indicates that this was for the PPEI Bankruptcy, and not for the personal representation of
Plaintiffs. See Mot. to Disqualify Ex. A. James represented PPEI as an entity in its bankruptcy
proceeding, and therefore PPEI was James’s client. See Tex. Disciplinary R. Prof’l Conduct
1.12; Model Rules of Prof’l Conduct r. 1.13. Furthermore, because Plaintiffs were creditors in
the PPEI Bankruptcy, see Resp. Ex. D-1, J&H could not have represented both PPEI and
Plaintiffs in that matter. See In re Delta Produce, LP, 521 B.R. at 598. Thus, Plaintiffs cannot
establish an attorney-client relationship with James based on the PPEI Bankruptcy because
James represented only PPEI.
Plaintiffs also cannot establish an attorney-client relationship with J&H based on the
Personal Bankruptcy. Plaintiffs point out that J&H billed them $3,046.50 for 18.4 hours of work
performed in January 2007, that J&H filed as a creditor in Plaintiffs’ Personal Bankruptcy, and

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that as late as June 5, 2012, J&H was trying to collect on a debt from them; therefore, Plaintiffs
assert they established an attorney-client relationship with J&H in the Personal Bankruptcy.
Mot. to Disqualify 2, 6. See also id. Ex. A-B. The Court notes, however, that it is unclear
precisely how much of the 18.4 hours over the course of the twelve days in January were spent
on the PPEI Bankruptcy as opposed to Plaintiffs’ yet-to-be-filed Personal Bankruptcy. See id.
Ex. A.

Furthermore, while Plaintiffs and James executed a retainer agreement, it appears

Plaintiffs did not pay the retainer fee, see id., supporting the notion that Plaintiffs did not
manifest an intention to enter into an attorney-client relationship with J&H.
Although the existence of an attorney-client relationship does not depend exclusively
upon payment of a fee, Perez v. Kirk & Carrigan, 822 S.W.2d at 265, additional facts lead the
Court to conclude that Plaintiffs’ conduct did not manifest an intention to enter into an attorneyclient relationship with J&H.

For example, Plaintiffs’ own evidence shows that Plaintiffs

apparently contacted James about stopping work on their potential personal bankruptcy four days
after signing the retainer agreement. See Mot. to Disqualify Ex. A. In fact, on January 24, 2007,
two days after Rick Seeberger apparently indicated to J&H that it should stop working on the
potential personal bankruptcy, Plaintiffs filed their own Personal Bankruptcy pro se, declaring
under penalty of perjury that they received no assistance and did not promise anyone a fee for
work performed. See Resp. Ex. D-5. The Court finds it persuasive that court records from
Plaintiffs’ Personal Bankruptcy indicate that Plaintiffs were, at some point during the
proceeding, represented by lawyers from firms other than J&H, while J&H is absent from these
same court documents. See Mot. to Disqualify Ex. A. Additionally, Plaintiffs stated in their
First Amended Complaint that they were represented by Beck & Given during their Personal

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Bankruptcy proceeding, yet Plaintiffs made no mention of being represented by anyone from
J&H until they filed their present Motion to Disqualify. See First. Am. Compl. 13. Thus, the
Court holds that Plaintiffs have failed to establish the existence of an attorney-client relationship
with J&H based on either the PPEI Bankruptcy or their Personal Bankruptcy.
b.

Plaintiffs have failed to demonstrate a substantial relationship
between the present case and the bankruptcy cases

Although Plaintiffs have not established an attorney-client relationship with J&H, even
assuming such a relationship existed, Plaintiffs have not met their burden of establishing a
substantial relationship between the present and prior representations.2
The party seeking disqualification bears the burden of proving that the present and prior
representations are substantially related. In re Am. Airlines, Inc., 972 F.2d at 614; Duncan v.
Merrill Lynch, Pierce, Fenner & Smith, 646 F.2d 1020, 1028 (5th Cir. 1981). The court should
focus its inquiry “on the precise nature of the relationship between the present and former
representations.” Duncan, 646 F.2d at 1029. Thus, “[o]nly when the moving party delineates
with specificity the subject matters, issues, and causes of action presented in the former
representation can the district court determine if the substantial relationship test has been met.”
Id. “Merely pointing to a superficial resemblance between the present and prior representations”
will not suffice. Id. The moving party will fail to meet its burden when it “makes no attempt to
describe the precise issues involved in [the prior case] or to relate those issues to questions raised
in [the present case].” Id.
2

The Court notes that even if Haugland did not personally represent Plaintiffs in either the PPEI Bankruptcy or the
Personal Bankruptcy, any conflict James has based on these representations would be imputed to Haugland because
both James and Haugland worked at the same firm during all relevant times. See supra note 1; Tex. Disciplinary R.
Prof’l Conduct 1.09(b); Model Rules of Prof’l Conduct r. 1.10(a). Additionally, while Plaintiffs allege for the first
time in their Reply that Haugland personally represented them, Plaintiffs have provided no evidence to support this
allegation. See generally Reply. Nonetheless, the Court does not differentiate between James and Haugland’s
conflicts because any conflict that one might have would be imputed to the other in this matter.

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Plaintiffs have not met their burden of “delineat[ing] with specificity the subject matters,
issues, and causes of action presented in the former representation,” nor have they “describe[d]
the precise issues involved in [the prior cases] or . . . relate[d] those issues to questions raised in
[the present case].” Id. Instead, Plaintiffs make vague assertions that J&H is aware of
information relevant to Defendants’ defenses in the present suit, that “the causes contributing
directly to the [PPEI] and Plaintiffs[’] bankruptcies may be a focal point of the Plaintiffs[’]
playbook,” and that J&H “received privileged knowledge of the facts directly related to the
actions and/or breaches by Defendants . . . in relation to Plaintiffs and provided legal advice to
Plaintiffs directly related to the Bank Defendants[’] actions and breaches.” Mot. to Disqualify 4.
Plaintiffs circularly state, without any degree of particularity, and in a conclusory fashion, that
“the material factual similarities between the current and the former representations are the
same.” Id. at 4-5.
In support of their argument that “[t]here are similarities between the core legal questions
posed” in the present and prior cases, Plaintiffs merely restate the legal claims in their Second
Amended Complaint in the present case, without relating them to legal or subject matter issues
involved in the bankruptcy cases. Id. at 5. See also Reply 2-3 (listing questions and asserting
J&H is “dealing with the same legal questions today in this case as they did in the prior
representation,” without explaining how any of the questions pertain to the respective
representations). As a result, the Court is left to speculate as to the “precise nature of the
relationship between the present and former representations.” See Duncan, 646 F.2d at 1029.
Accordingly, because Plaintiffs have failed to specifically delineate the “subject matters, issues,

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and causes of action” in the bankruptcy cases and in the present case, they have failed to meet
their burden of proving that the prior and present cases are substantially related. See id.3
2.

Plaintiffs have failed to demonstrate that J&H’s representation of
Ventures and BSI involves a reasonable probability that J&H will
violate a rule of confidentiality

Texas Rule 1.09(a)(2) prohibits “a lawyer who personally has formerly represented a
client in a matter [from] thereafter represent[ing] another person in a matter adverse to the
former client . . . if the representation in reasonable probability will involve a violation of Rule
1.05 [Confidentiality of Information].” Tex. Disciplinary R. Prof’l Conduct 1.09(a)(2). Rule
1.05, in turn, prohibits lawyers from, among other things, “[using] confidential information of a
former client to the disadvantage of the former client after the representation is concluded.”
Id.1.05(b)(3). Confidential information includes both privileged and unprivileged information.
3

Plaintiffs also invoke Texas Rule 1.09, Comment 4A in their argument that J&H “previously acquired information
which may be confidential and protected by attorney-client privilege and therefore would have a conflict of interest
in representing their current clients.” Mot. to Disqualify 4.
Comment 4A states:
The “same” matter aspect of this prohibition prevents a lawyer from switching sides and representing a
party whose interests are adverse to a person who disclosed confidences to the lawyer while seeking in
good faith to retain the lawyer. The prohibition applies when an actual attorney-client relationship was
established even if the lawyer withdrew from the representation before the client had disclosed any
confidential information.
Tex. Disciplinary R. Prof’l Conduct 1.09 cmt. 4.
This comment, however, is inapposite to the facts of the present case. J&H did not “switch sides” in the Personal
Bankruptcy after Plaintiffs approached J&H about representing them by representing Plaintiffs’ creditors instead,
nor do Plaintiffs appear to allege as much. Contra In re Gerry, 173 S.W.3d 901, 902, 904 (Tex. App. 2005)
(invoking Comment 4A where wife consulted with an attorney about possible legal representation in a divorce
action, and husband later attempted to hire an attorney from the same firm to represent him in the same divorce
action); In re Roseland Oil & Gas, Inc., 68 S.W.3d 784, 788 (Tex. App. 2001) (noting that pursuant to Texas Rule
1.09, Comment 4A, “[t]he ‘same’ matter generally prohibits an attorney from switching sides in a lawsuit and
representing another whose interests are in conflict with those of the former client”). Instead, Plaintiffs allege that
J&H represented them in prior bankruptcy cases, and that based on those prior representations, J&H should be
disqualified from the present case. See Mot. to Disqualify 2, 5-6. Accordingly, Plaintiffs have failed to establish
Texas Rule 1.09, Comment 4 as a basis for disqualifying J&H as counsel for Ventures and BSI.
To the extent Plaintiffs are reiterating, by reference to Comment 4, their concern that J&H acquired confidential
information in the bankruptcy cases that may be used against them in the present case, the Court addresses that
concern below with regard to Texas Rule 1.09(a)(2).

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Tex. Disciplinary R. Prof’l Conduct 1.05(a). Unprivileged information includes “all information
relating to a client or furnished by the client . . . acquired by the lawyer during the course of or
by reason of the representation of the client.” Id. If an attorney has a conflict under 1.09(a)(2), it
is imputed to the members of the attorney’s firm. See id. at 1.09(b); id. at 1.09(b) cmt. 7; In re
ProEducation Intern, Inc., 587 F.3d at 300. Likewise, Model Rule 1.9(b) prevents “[a] lawyer
who has formerly represented a client in a matter or whose present or former firm has formerly
represented a client in a matter [from] thereafter: . . . (1) us[ing] information relating to the
representation to the disadvantage of the former client . . . or (2) reveal[ing] information relating
to the representation .” Model Rules of Prof’l Conduct r. 1.9(b). Texas Rule 1.09(a)(2) and
Model Rule 1.9(b) are “identical . . . in all important respects.” In re Am. Airlines, Inc., 972 F.2d
at 615 n.2.
Comment 4 explains that whether there is a “reasonable probability” that the
representation will involve a violation of Rule 1.05 is a question of fact. Tex. Disciplinary R.
Prof’l Conduct 1.09 cmt. 4. The movant can demonstrate this probability by “pointing to
specific instances” where it revealed confidential information to opposing counsel, and by
explaining how that information is relevant to the present matter. Duncan, 646 F.2d at 1032.
See also id. (“Merrill Lynch cannot have Smathers & Thompson disqualified simply by stating
that the firm has knowledge of Merrill Lynch’s ‘practices and procedures.’ Instead, it must
prove that Smathers & Thompson has knowledge of the particular practices and procedures
which are the subject matter of [the] suit.”); id. at 1031 (analyzing how in one case, the moving
party succeeded on a disqualification motion “by specifying the kinds of confidential information
that it had revealed to its former counsel and by describing how that information related to the

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matters raised in [the present suit]”). A court may also consider the length and nature of the
lawyer’s previous representation of the former client in determining whether the attorney
possesses confidential information. See id. at 1032 (noting firm’s claims that “it has never been
general counsel to its former client but instead has represented [the former client] in a limited
number of local matters and only for the duration of each matter . . . . [and i]t has not had . . . [a]
pervasive, day-to-day relationship with its client”).
Plaintiffs have failed to establish a reasonable probability that J&H’s representation of
Ventures and BSI will result in a breach of confidentiality owed to Plaintiffs based on J&H’s
alleged representation of Plaintiffs in the Personal Bankruptcy.4 Instead of “pointing to specific
instances” where Plaintiffs revealed confidential information to J&H, Plaintiffs make vague
allegations that J&H “represented Plaintiffs during a crucial period of time and have knowledge
that other counsel may not have pursued or been privy to,” that J&H has “acquired information
which may be confidential and protected by attorney-client privilege,” and that J&H “received
privileged knowledge of the facts directly related to the actions and/or breaches by Defendants
. . . in relation to Plaintiffs and provided legal advice to Plaintiffs directly related to the Bank
Defendants[’] actions and breaches.” Mot. to Disqualify 4. Furthermore, only four days elapsed
from the time Plaintiffs and James signed a retainer agreement in contemplation of a personal
bankruptcy filing to the time Plaintiffs apparently told J&H to stop working on the case. See
Resp. Ex. D-4; Mot. to Disqualify Ex. A. Shortly thereafter, Plaintiffs filed for bankruptcy,
declaring under penalty of perjury that they received no assistance in filing their pro se Personal
Bankruptcy. Resp. Ex. D-4.

4

For purposes of analysis, the Court assumes that James represented Plaintiffs in their Personal Bankruptcy. The
Court again does not differentiate between James and Haugland’s conflicts, because any conflict James may have as
a result of representing Plaintiffs would be imputed to Haugland. See supra note 2.

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In light of these facts, the Court is not in a position to conclude that Plaintiffs provided
J&H with confidential information. See Duncan, 646 F.2d at 1032. Even had Plaintiffs
demonstrated that they provided J&H with confidential information, Plaintiffs fail to explain
how any confidential information provided is relevant to the precise issues in the case at hand.
See id. at 1031-32.
Plaintiffs have failed to demonstrate a substantial relationship between their prior
bankruptcy cases and the present case, and have failed to demonstrate that J&H’s representation
of Ventures and BSI poses a reasonable probability that J&H will violate a duty of
confidentiality owed to Plaintiffs. Accordingly, Plaintiffs have failed to establish a ground for
disqualifying J&H based on duties owed to Plaintiffs as former clients.5
III.

CONCLUSION
For the foregoing reasons, Plaintiffs’ Motion to Disqualify, ECF No. 89, is DENIED.
SO ORDERED.
SIGNED this 6th day of October, 2015.

KATHLEEN CARDONE
UNITED STATES DISTRICT JUDGE

5

Plaintiffs also cite In re Basco, 221 S.W.3d 637, 638-39 (Tex. 2007) in support of their argument that J&H should
be disqualified due to a conflict of interest. In re Basco, however, addressed a situation in which a party seeks to
disqualify opposing counsel, because opposing counsel would be required to question the work product of his
former law partner in the course of the present representation. See id. at 638. Thus, it is not apparent how In re
Basco is apposite to the facts of the case at hand.

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