Spencer v. BMW of North America, LLC et al

Filing 55

ORDER, ( Amended Pleadings due by 9/23/2015, Discovery due by 9/1/2015, Joinder of Parties due by 9/23/2015, Motions due by 9/29/2015), Motions terminated: DENIED AS MOOT 24 Opposed MOTION to Remand to State Court filed by Erin L Spen cer, 27 Opposed MOTION to Exclude filed by BMW of North America, LLC, 45 Opposed MOTION to Dismiss Plaintiff's Lawsuit Due to Spoliation of the Evidence or, in the Alternative, Issue an adverse Inference Instruction Against Plaintiff filed by BMW of North America, LLC, 44 MOTION for Summary Judgment on Strict Liability and Negligence Claims filed by BMW of North America, LLC, 43 MOTION to Compel Discovery Responses filed by Erin L Spencer , 35 MOTION for Extension of Time to Complete Discovery and Pleadings filed by Erin L Spencer, 48 MOTION for Summary Judgment filed by BMW of North America, LLC, GRANTING 39 Opposed MOTION to Disqualify Counsel filed by BMW of North America, LLC. Signed by Judge David A. Ezra. (aej)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
ERIN L. SPENCER,

§
§
Plaintiff,
§
§
vs.
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§
BMW OF NORTH AMERICA, LLC §
AND CARMAX AUTO
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SUPERSTORES, INC.,
§
§
Defendants.
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________________________________ §

CV NO. 5:14-CV-00869-DAE

ORDER: (1) GRANTING DEFENDANT’S MOTION TO DISQUALIFY;
(2) DENYING PENDING MOTIONS AS MOOT WITHOUT PREJUDICE;
(3) AMENDING SCHEDULING ORDER
Before the Court is a Motion to Disqualify (Dkt. # 39) filed by
Defendant BMW of North America, LLC (“BMW” or “Defendant”). On June 25,
2015, the Court held a hearing on the motion. Jason C. Spencer, Esq., represented
Plaintiff Erin L. Spencer (“Plaintiff” or “Spencer”); J. Michael Myers, Esq.,
represented BMW. After careful consideration of the memoranda in support of
and in opposition to the motions, and in light of the parties’ arguments at the
hearing, the Court, for the reasons that follow, GRANTS Defendant’s Motion to
Disqualify (Dkt. # 39).

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BACKGROUND
On September 18, 2012, Plaintiff was attempting to drive her BMW
X5. (Dkt. # 1–4 at 5.) Plaintiff alleges that the BMW X5’s emergency brake is
located at the rear of the vehicle such that a single driver cannot manually
disengage the brake from the driver’s seat. (Id. at 5–6.) Plaintiff alleges that the
emergency brake failed to disengage. (Id.) She further alleges that when she
exited the vehicle to disengage the emergency brake, it unexpectedly disengaged,
causing the BMW to roll backward down an incline, thus crushing her between her
vehicle and another parked car. (Id. at 6.) As a result of the accident, she has
allegedly suffered serious injuries to her legs, left arm, and pelvis, which have
caused disfiguring scars, body contours, and permanent pain that sometimes
prevents her from walking. (Id. at 13.)
On September 10, 2014, Plaintiff filed suit against BMW and Carmax
Auto Superstores, Inc. (“Carmax”) in the 407th District Court of Bexar County,
Texas, alleging fraud, negligence, negligent misrepresentation, and violations of
the Deceptive Trade Practices Act (“DTPA”). (Id. at 8–12.) She sought
compensatory and exemplary damages and attorney’s fees. (Id. at 13–15.) On
September 29, 2014, Plaintiff filed a First Amended Petition, setting forth the same
causes of action and damage requests. (Id. at 29.)

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On October 3, 2014, BMW removed the case to this Court, invoking
the Court’s diversity jurisdiction. (Dkt. # 1.) On the same day, BMW filed its
answer and counterclaim, which alleges that Plaintiff’s claims are groundless,
brought in bad faith, or brought for the purpose of harassment. (Dkt. # 2 at 7.) On
November 3, 2014, Carmax filed a consent to removal (Dkt. # 8), and filed its
answer and counterclaim, which mirrors the counterclaim brought by BMW (Dkt.
# 9). On May 12, 2015, pursuant to an agreed motion, the Court dismissed Carmax
from the suit, leaving BMW as the sole defendant. (Dkts. ## 28, 29.)
On June 9, 2015, BMW filed its Motion to Disqualify Counsel (Dkt.
# 39). On June 16, 2015, Plaintiff filed her Response (Dkt. # 46), 1 and on June 22,
2015, BMW filed its Reply (Dkt. # 49).
LEGAL STANDARD
“Motions to disqualify are substantive motions affecting the rights of
the parties and are determined by applying standards developed under federal law.”
In re Dresser Indus., Inc., 972 F.2d 540, 543 (5th Cir. 1992). The Fifth Circuit
considers four legal standards relevant to the resolution of a motion to disqualify:
(1) the Court’s Local Rules; (2) the American Bar Association’s (“ABA”) Model
Rules of Professional Conduct (the “Model Rules”); (3) the ABA’s Model Code of
Professional Responsibility (the “Model Code”); and (4) the state rules of
1

Plaintiff refiled her Response on June 23, 2015, because the original filing was
missing one page. (Dkt. # 50.)
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professional conduct. Horaist v. Doctor’s Hosp. of Opelousas, 255 F.3d 261, 266
(5th Cir. 2001). If the applicable standards conflict, the Court must then “weigh
the relative merits of each of the various competing disqualification rules.”
F.D.I.C. v. U.S. Fire Ins. Co., 50 F.3d 1304, 1312 (5th Cir. 1995). Although “the
relevant local and national ethical canons provide a useful guide for adjudicating
motions to disqualify, they are not controlling.” Id. at 1314.
In evaluating whether disqualification is appropriate, courts are to
weigh the litigant’s rights and the public interest, considering “whether a conflict
(1) has the appearance of impropriety in general, or (2) a possibility that a specific
impropriety will occur, and (3) the likelihood of public suspicion from the
impropriety outweighs any social interests which will be served by the lawyer’s
continued participation in the case.” Horaist, 255 F.3d at 266.
DISCUSSION
In its Motion to Disqualify, BMW argues that the Court should
disqualify Plaintiff’s counsel, Jason Spencer, because he is a material witness in
the case on disputed facts and is Plaintiff’s only witness as to the exact sequence of
events leading to the accident. (Dkt. # 39 at 1–2.) Plaintiff counters that the
applicable standards are a shield for the client rather than a sword for the opposing
party; the standards were not intended for use in procedural disqualification and

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should not bar representation where counsel has obtained the consent of his client
and has properly provided notice to the opposing parties. (Dkt. # 46 at 5–6.)
In the Western District of Texas, the Local Rules adopt the Texas
Disciplinary Rules of Professional Conduct (the “Texas Rules”) as the
nonexhaustive standards of the Court, to be supplemented with the ABA’s Model
Rules of Professional Conduct where applicable. W.D. Tex. Att’y R. 7(a). The
Texas Rules preclude a lawyer from continuing as an advocate “if the lawyer
knows or believes that [he] is or may be a witness necessary to establish an
essential fact,” unless the testimony relates to an uncontested issue, the testimony
is solely a matter of formality, the testimony relates to the nature and value of legal
services rendered, the lawyer is a party to the action and appears pro se, or the
lawyer has promptly notified opposing counsel that he intends to testify and
disqualification will impose substantial hardship on the client. Tex. Disc. R. Prof’l
Conduct § 3.08(a).
The Model Rules and the Model Code are substantially the same. The
Model Rules preclude a lawyer from continuing as an advocate if the lawyer is
“likely to be a necessary witness,” unless the testimony relates to an uncontested
issue, the testimony relates to the nature and value of legal services provided, or
disqualification will result in substantial hardship to the client. Model Rules of
Prof’l Conduct R. 3.7. Similarly, the Model Code states that “[a] lawyer shall not

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accept employment in contemplated or pending litigation if he knows or it is
obvious that [he will] be called as a witness,” unless the testimony relates solely to
an uncontested issue, the testimony will relate only to a matter of formality, the
testimony will relate only to the nature and value of legal services provided, or if
the refusal would create a substantial hardship because of the distinctive value of a
particular lawyer or firm. Model Code of Prof’l Responsibility DR 5-101(b).
The seminal Fifth Circuit case on disqualification of an attorney
expected to serve as a necessary witness is F.D.I.C. v. United States Fire Insurance
Company. There, the Court disqualified one of the plaintiff’s attorneys because
the defendant intended to call him as a witness at trial on a point that could have
voided the insurance policy in issue in the suit. 50 F.3d at 1317. The Court
reasoned that disqualification was necessary, despite the plaintiff’s consent to the
dual role, because there would be “a tangible and unavoidable scrambling of roles”
that would compromise the attorney’s effectiveness. Id. The Court concluded that,
because the entire law firm would not be disqualified, the disqualification of the
attorney “would not work such a substantial hardship on the [plaintiff] that their
cause would be unfairly injured.” Id.
Here, Plaintiff concedes that Jason Spencer will be a material witness
in the case. (Dkt. # 46 at 6 (“Plaintiff and her counsel have at every relevant time
during the case maintained that they were aware that Jason C. Spencer[] would

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likely be material witness in this case.”).) Indeed, Jason Spencer is not only a
material witness, but a necessary one. Defendant’s theory of the case, based on
Jason Spencer’s deposition, is that Jason Spencer released the parking brake on the
vehicle that subsequently crashed into Plaintiff without properly securing the
vehicle from rolling backward. (Dkt. # 39 at 1.) Because there is no other party
that can testify to such facts, Jason Spencer is a necessary witness. See Horaist,
255 F.3d at 267 (holding that a party is not necessary when the information is
available from another source).
However, Plaintiff argues that disqualification is nevertheless
improper because Plaintiff has consented to the representation. (Id.) Plaintiff
relies on Comments 9 and 10 to Texas Rule 3.08, which state that the rule “is not
well suited to sue as a standard for procedural disqualification,” but that it “may
furnish some guidance in those procedural disqualification disputes where the
party seeking disqualification can demonstrate actual prejudice to itself resulting
from the opposing lawyer’s service in the dual roles.”
While the Texas Rules and the comments thereto certainly provide
guidance for the Court, they are not controlling; rather, the Court must follow
federal law. U.S. Fire. Ins. Co., 50 F.3d at 1312. Federal law, as set forth by the
Fifth Circuit, has made clear that procedural disqualification is an appropriate
remedy, even where the plaintiff has consented to the representation, if the attorney

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is a necessary witness and the balancing of prejudices weighs against
representation. See id. at 1317; In re Duke Invs., Ltd., 454 B.R. 414, 425–26
(Bankr. S.D. Tex. 2011) (“Because the Fifth Circuit has held that the client-consent
exception does not automatically resolve the Motion to Disqualify in the
nonmovant’s favor, and because this Court is bound by Fifth Circuit precedent,
even though Amegy unequivocally consents to Stohner’s continued representation
despite possible substantially adverse testimony, any decision by this Court
denying the Motion should preferably be made on some other basis.”).
Plaintiff maintains that the balancing of prejudices weighs against
representation because disqualification will subject Plaintiff to an undue hardship, 2
and Jason Spencer’s interest in the litigation, both as the owner of the vehicle in
question and the husband of Plaintiff, will be obvious to the jury and his testimony
will therefore be credited appropriately. (Dkt. # 46.) The Court is sensitive to the
difficulty in securing counsel and the prejudice Plaintiff may suffer from the
disqualification of her counsel. See U.S. Fire Ins. Co., 50 F.3d at 1313
(“Depriving 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.”).

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In Plaintiff’s Notice of Undue Hardship, which Plaintiff attached to her Response
as an exhibit, Plaintiff states that “she attempted to have her case accepted by
numerous attorneys and law firms in San Antonio,” but “was unsuccessful in
obtaining a lawyer who was willing to take her case. (Dkt. # 46, Ex. 4 at 3.)

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Nonetheless, permitting Jason Spencer to continue as trial counsel poses a serious
conflict. As a necessary witness, Jason Spencer will be called to testify as to his
role in the accident that ultimately injured Plaintiff. Moreover, Jason Spencer has
been named as a responsible third party. Any liability attributed to him as a
responsible third party will therefore reduce the award he can secure for Plaintiff. 3
Presumably, Jason Spencer will therefore need to discredit testimony that
Defendant elicits from him regarding his role in the accident, which will
significantly affect his effectiveness at trial and unnecessarily confuse issues to the
detriment of Plaintiff.
This is precisely the circumstance in which the dual roles as witness
and as lawyer conflict and in which courts have concluded that disqualification is
necessary. See U.S. Fire Ins. Co., 50 F.3d at 1317 (holding that participation as an
advocate and witness would compromise the attorney’s effectiveness and
needlessly confuse his role where the defendant would call the plaintiff’s attorney
3

The finding of fault against a person designated as a responsible third party does
not impose liability on that person and cannot be used in any other proceeding as a
basis to impose liability. See Tex. Civ. Prac. & Rem. Code § 33.003(a), (i); JCW
Elecs., Inc. v. Garza, 257 S.W.3d 701, 702 (Tex. 2008). Accordingly, Jason
Spencer’s role does not create the type of conflict that it would have, had he been
named as a third-party defendant. See, e.g., Decker v. Nagel Rice LLC, 716 F.
Supp. 2d 228, 234–35 (S.D.N.Y. 2010) (disqualifying attorney where the attorney
had been named as a third-party defendant because he “could not reasonably be
expected to maintain full candor with the Court and advocate zealously for his
clients when he could be found liable if his clients are successful). Nonetheless,
because Jason Spencer would be in the position of discrediting his own testimony,
the dual roles conflict.
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to prove a defense); Ayus v. Total Renal Care, Inc., 48 F. Supp. 2d 714, 717 (S.D.
Tex. 1999) (disqualifying defendant’s attorney because the attorney had previously
prepared letters, about which Plaintiff required testimony to prove his case).
Accordingly, the Court GRANTS Defendant’s Motion to Disqualify (Dkt. # 39).
CONCLUSION
For the foregoing reasons, the Court GRANTS Defendant’s Motion to
Disqualify (Dkt. # 39). All pending motions (Dkts. ## 24, 27, 35, 43, 44, 45, 48)
are hereby DENIED AS MOOT WITHOUT PREJUDICE. Finally, the
scheduling order is AMENDED to extend deadlines in the case ninety (90) days as
follows:
1. The parties shall complete all discovery on or before September 1, 2015.
Counsel may by agreement continue discovery beyond the deadline, but there
will be no intervention by the Court except in extraordinary circumstances, and
no trial setting will be vacated because of information obtained in post-deadline
discovery.
2. The parties shall file all motions to amend or supplement pleadings or to join
additional parties by September 23, 2015.
3. All parties asserting claims for relief shall file their designation of testifying
experts and shall serve on all parties, but not file, the materials required by Fed.
R. Civ. P. 26(a)(2)(B) by September 23, 2015. Parties resisting claims for
relief shall file their designation testifying experts and shall serve on all parties,
but not file the materials required by Fed. R. Civ. P. 26(a)(2)(B) by October 23,
2015. All designations of rebuttal experts shall be designated within fourteen
(14) days of receipt of the report of the opposing expert.
4. An objection to the reliability of an expert’s proposed testimony under Federal
Rule of Evidence 702 shall be made by motion, specifically stating the basis for
the objection and identifying the objectionable testimony, within thirty (30)
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days of receipt of the written report of the expert’s proposed testimony, or
within thirty (30) days of the expert's deposition, if a deposition is taken,
whichever is later.
5. All dispositive motions shall be filed no later than September 29, 2015.
Dispositive motions as defined in Local Rule CV-7(c) and responses to
dispositive motions shall be limited to twenty (20) pages in length. Replies, if
any, shall be limited to ten (10) pages in length in accordance with Local Rule
CV-7(e). If parties elect not to file dispositive motions, they must contact the
courtroom deputy on or before this deadline in order to set a trial date.
IT IS SO ORDERED.
DATED: San Antonio, Texas, June 26, 2015.

_____________________________________
David Alan Ezra
Senior United States Distict Judge

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