Tetra Tech EC, Inc. v. MK Salvage Venture LLC

Filing 22

ORDER Denying Deft's 12 Motion to Disqualify Counsel by Judge Robert S. Lasnik.(TF)

Download PDF
1 2 3 4 5 6 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 7 8 TETRA TECH, INC., 9 Plaintiff, Case No. C13-0084RSL 10 11 v. MK SALVAGE VENTURE LLC, 12 ORDER DENYING MOTION TO DISQUALIFY COUNSEL Defendant. 13 14 This matter comes before the Court on “Defendant’s Motion to Disqualify 15 16 17 Lane Powell.” Dkt. # 12. Having reviewed the memoranda, declarations, and exhibits submitted by the parties,1 the Court finds as follows: Lane Powell’s client, Peter Kuttel, argues that his relationship with Lane 18 19 20 21 22 23 24 25 26 Powell extends to companies in which he has a direct or indirect ownership interest, such as the defendant in this case, MK Salvage Venture LLC. The governing ethical rules do not support such an expansive view of the attorney-client relationship, however. Comment 34 to Rule of Professional Conduct 1.7 states: A lawyer who represents a corporation or other organization does not, by 1 The Court has considered Mr. Beard’s statements regarding the investigation Lane Powell undertook upon learning of Mr. Kuttel’s objections to its representation of Tetra Tech only to counteract the implication of bad faith defendant raised in its moving papers. ORDER DENYING MOTION TO DISQUALIFY COUNSEL - 1 1 2 3 4 5 6 virtue of that representation, necessarily represent any constituent or affiliated organization, such as a partner or subsidiary. See Rule 1.13(a). Thus the lawyer for an organization is not barred from accepting representation adverse to an affiliate in an unrelated matter, unless the circumstances are such that the affiliate should also be considered a client of the lawyer, there is an understanding between the lawyer and the organization client that the lawyer will avoid representation adverse to the client’s affiliates, or the lawyers’s obligations to either the organizational client or the new client are likely to limit materially the lawyer’s representation of the other client. 7 Mr. Kuttel has chosen to conduct business through a number of limited liability 8 companies. The general rule in Washington, as stated in Comment 34, is that when a law 9 firm represents an individual or entity, its representation is limited to that individual or 10 entity. The attorney-client relationship does not reach affiliated organizations unless one 11 of the three exceptions to the general rule applies. 12 The Court is willing to assume, for purposes of this motion, that the 13 circumstances of Mr. Kuttel’s engagement of Lane Powell, including his use of Bear 14 Enterprises’ business address and the involvement of Bear Enterprises’ chief financial 15 officer, suggest that Bear Enterprises should be considered a client of Lane Powell along 16 with Mr. Kuttel. It is also undisputed that Lane Powell was retained to do work for two of 17 Mr. Kuttel’s other affiliated companies, JK Aviation, LLC, and MK Pacific, LLC. There 18 is, however, no indication that MK Salvage Venture, a separate legal entity, had an official 19 or unofficial attorney-client relationship with Lane Powell. Nor is there reason to believe 20 that the current dispute is in any way related to the transactions in which Lane Powell 21 assisted Mr. Kuttel before, that the parties agreed that Lane Powell would avoid 22 representations adverse to all of Mr. Kuttel’s affiliates (much less the affiliates’ affiliates), 23 or that Lane Powell’s assistance in Mr. Kuttel’s purchase/finance of aircraft will materially 24 limit its ability to represent Tetra Tech in this matter. 25 Defendant’s heavy reliance on GSI Commerce Solutions, Inc. v. 26 ORDER DENYING MOTION TO DISQUALIFY COUNSEL - 2 1 BabyCenter, LLC, 618 F.3d 204 (2nd Cir. 2010), is misplaced. That court identified the 2 focus of the inquiry as “the reasonableness of the client’s belief that counsel cannot 3 maintain the duty of undivided loyalty it owes a client in one matter while simultaneously 4 opposing that client’s corporate affiliate in another.” 618 F.3d at 210. The mere fact that 5 one entity is the wholly-owned subsidiary of another is not enough to justify ignoring the 6 corporate forms for purposes of a conflicts analysis. Other than a vague reference to the 7 fact that Lane Powell may have information regarding Mr. Kuttel’s finances, defendant 8 offers no theory or facts which suggest that Lane Powell’s participation in this litigation 9 against MK Salvage Venture could possibly interfere with its ability to loyally represent 10 Mr. Kuttle, JK Aviation, LLC, and MK Pacific, LLC, in the completely separate 11 transactions for which it had previously been retained. Mr. Kuttle offers nothing but his 12 firm belief that a lawyer who represents him (or, apparently, any of his affiliated 13 companies) is automatically the attorney of his affiliates, disclosed and undisclosed, for all 14 existing and potential matters. While commonality of personnel and financing may 15 support a discretionary finding that the subsequent representation reasonably diminishes 16 the level of confidence and trust in counsel,2 it does not compel such a finding. In the 17 circumstances presented here, the Court finds that Mr. Kuttel’s unilateral and unexpressed 18 belief that all of the companies with which he is affiliated have an attorney-client 19 relationship with Lane Powell is unreasonable. 20 DATED this 23rd day of April, 2013. 21 A Robert S. Lasnik 22 United States District Judge 23 24 25 26 2 Defendant’s account of their intra-company relations is difficult to parse. Although it appears that MK Pacific, LLC, and MK Salvage Venture, LLC, are sister companies, Mr. Kuttel asserts that financing flows entirely from Bear Enterprises, LLC, through MK Pacific, LLC, to MK Salvage Venture, LLC. ORDER DENYING MOTION TO DISQUALIFY COUNSEL - 3

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.


Why Is My Information Online?