Case Title: MT. RUSHMORE BROADCASTING, INC. v. STATEWIDE COLLECTIONS

Citation: 

Docket Number: 01-67

State: wyoming

Court: Wyoming Supreme Court

Date: 2002-03-14T00:00:00Z

Document:
MT. RUSHMORE BROADCASTING, INC. v. STATEWIDE COLLECTIONS2002 WY 3942 P.3d 478Case Number: 01-67Decided: 03/14/2002

OCTOBER TERM, A.D. 2001

 

                                                                                                
   

 

MT. 
RUSHMORE BROADCASTING, INC.,

a 
Delaware corporation, 

Appellant(Defendant),

 

v.

 

STATEWIDE 
COLLECTIONS, a

Wyoming 
corporation, 

Appellee(Plaintiff),

                                                                                                

and

 

RAY 
EBERT, 

Appellee(Third 
Party Defendant).

 

Appeal 
from the District Court of Natrona County

The 
Honorable W. Thomas Sullins, Judge

 

Representing 
Appellant:

            
Jan Charles Gray, Casper, Wyoming.

 Representing 
Appellee Statewide Collections:

John C. 
Hoard, Casper, Wyoming.

 Representing 
Appellee Ray Ebert:

            
Keith Tyler, Casper, Wyoming.

 

Before 
LEHMAN, C.J., and GOLDEN, HILL, KITE, and VOIGT, JJ.

  

            
HILL, Justice. 

[¶1]      Mt. Rushmore 
Broadcasting, Inc. (Mt. Rushmore) appeals from a judgment awarding treble 
damages to Statewide Collections, Inc. (Statewide) for a dishonored check 
pursuant to Wyo. Stat. Ann. § 1-1-115 (LexisNexis 2001).  Jan Charles Gray (Gray), the sole 
shareholder, director and officer of Mt. Rushmore, is an active member of the 
Wyoming State Bar and represented Mt. Rushmore during the bench trial at the 
district court. Mt. Rushmore challenges the district court's refusal to allow 
Gray to testify based on Rule 3.7 of the Wyoming Rules of Professional 
Conduct.  We find no abuse of 
discretion and affirm the district court's decision. 

 

[¶2]      Mt. Rushmore 
raises three issues on appeal:

I.                     
"Whether 
notwithstanding Wyoming Professional Rule of Conduct 3.7, an attorney can 
testify in a case where he is both the attorney and 100% shareholder, sole 
director and sole officer of the Sub-Chapter S Corporation which is the client 
and the client has given consent to the testimony."

II.                   
"Whether 
Section (a)(3) of Wyoming Professional Rule of Conduct 3.7  indicating that the 
lack of testimony by an attorney would work substantial hardship on the client' 
is applicable in this case."

III.                  
"Whether 
there was a violation of the due process of law under the Wyoming and United 
States [sic] Constitution by not allowing a member of the bar to testify 
in a case where he is basically representing himself in pro-per." 

 

Statewide 
condenses the matter to a single issue:

Did the 
district court correctly rule that the attorney for Mount Rushmore Broadcasting, 
Inc., was not allowed to testify at trial?

 

[¶3]      On May 16, 2000, 
Statewide filed a Complaint against Mt. Rushmore seeking damages for a 
dishonored check pursuant to Wyo. Stat. Ann. § 1-1-115.  The dispute arose when Ray Ebert, then 
the manager of Mt. Rushmore's radio stations in Casper, cashed a check for 
$3,099.65 on Mt. Rushmore's account at the Check Cashing Center, a division of 
Statewide.  Mt. Rushmore countered 
the Complaint with a counterclaim for fraud alleging that Ebert's employment had 
been terminated and that Statewide was aware that Ebert did not have authority 
to issue the check.

 

[¶4]      The dispute 
proceeded to a bench trial before the district court.  Gray, who is the sole director, officer 
and owner of one hundred percent of the stock in Mt. Rushmore, is an active 
member of the Wyoming State Bar.  
Gray represented Mt. Rushmore during the trial.  After Statewide had presented its case, 
Gray sought to testify on behalf of Mt. Rushmore.  After a hearing, the district court 
refused to allow Gray to testify citing Rule 3.7 of the Wyoming Rules of 
Professional Conduct.  The court's 
main concern with allowing Gray to testify related to ethical and conflict of 
interest issues:

 

It seems to me that it is very well 
known.  It's [a] basic rule of 
ethics in every ethics case and class that I've run into.  It is preached time and time again that 
there are going to be problems if you attempt to be an attorney and a witness in 
the case.

            
One of the things pointed out is that you can be put in a pretty 
tentative position if you're both the advocate and a witness in the case and you 
have to urge for your credibility in the case, and that's precisely what you're 
asking to do. You stood up here as an attorney, cross-examined witnesses, 
challenged their credibility as to the underlying facts and now you want to turn 
around and be a witness and vouch for your own credibility and I'm going to 
stand by my ruling.

            
I would also note that my feel [sic] is I would hate to see you 
get into ethical difficulties, and I know that's not of concern to you, but it 
is something that's crossed my mind that I think you would be, absent me making 
a finding there's a clear exception here, putting your ability to practice law 
at question or at least at risk for a potential filing of a grievance.  So I'm going to stand by my ruling and I 
will disallow you to testify in this case.

            
I think, as you said, you early on made a decision to enter an appearance 
as counsel and I think you should have been aware of that potential difficulty 
from the outset.

 

The 
district court ultimately ruled in favor of Statewide and entered judgment 
against Mt. Rushmore pursuant to Wyo. Stat. Ann. § 1-1-115.  Mt. Rushmore now appeals from that 
judgment.

 

[¶5]      The decision 
whether to allow an attorney to testify in a case in which he has made an 
appearance is consigned to the discretion of the district court.  Montez v. State, 573 P.2d 34, 36 
(Wyo. 1977); 81 Am.Jur. 2d Witnesses § 227 (1992).

 

In 
determining whether there has been an abuse of discretion, we focus on the 
"reasonableness of the choice made by the trial court." [Vaughn v. State, 
962 P.2d 149, 151 (Wyo. 1998)]  If 
the trial court could reasonably conclude as it did and the ruling is one based 
on sound judgment with regard to what is right under the circumstances, it will 
not be disturbed absent a showing that some facet of the ruling is arbitrary or 
capricious.

 

Terry v. 
Sweeney, 10 P.3d 554, 557 (Wyo. 2000) (quoting Jordan v. Brackin, 992 P.2d 1096, 1098 
(Wyo. 1999)).

 

 

[¶6]      The focal point 
of this appeal is Rule 3.7 of the Wyoming Rules of Professional Conduct, which 
provides in relevant part:

 

(a)   A lawyer 
shall not act as advocate at a trial in which the lawyer is likely to be a 
necessary witness except where:

(1)   the 
testimony relates to an uncontested issue;

(2)   the 
testimony relates to the nature and value of legal services rendered in the 
case; or

(3)   disqualification 
of the lawyer would work substantial hardship on the 
client.

 

The official comments to Rule 3.7 
shed further light on the purpose and meaning of the rule:

 

Comment.  
[1] Combining the roles of advocate and witness can prejudice the opposing 
party and can involve a conflict of interest between the lawyer and 
client.

[2] The opposing party has proper 
objection where the combination of roles may prejudice that party's rights in 
the litigation. A witness is required to testify on the basis of personal 
knowledge, while an advocate is expected to explain and comment on evidence 
given by others. It may not be clear whether a statement by an advocate-witness 
should be taken as proof or as an analysis of the proof.

[3] Paragraph (a)(1) recognizes that 
if the testimony will be uncontested, the ambiguities in the dual role are 
purely theoretical. Paragraph (a)(2) recognizes that where the testimony 
concerns the extent and value of legal services rendered in the action in which 
the testimony is offered, permitting the lawyers to testify avoids the need for 
a second trial with new counsel to resolve that issue.  Moreover, in such a situation the judge 
has first hand knowledge of the matter in issue; hence, there is less dependence 
on the adversary process to test the credibility of the 
testimony.

[4] 
Apart from these two (2) exceptions, paragraph (a)(3) recognizes that a 
balancing is required between the interests of the client and those of the 
opposing party. Whether the opposing party is likely to suffer prejudice depends 
on the nature of the case, the importance and probable tenor of the lawyer's 
testimony, and the probability that the lawyer's testimony will conflict with 
that of other witnesses.  Even if 
there is risk of such prejudice, in determining whether the lawyer should be 
disqualified due regard must be given to the effect of disqualification on the 
lawyer's client. It is relevant that one (1) or both parties could reasonably 
foresee that the lawyer would probably be a witness.

 

As a 
general rule, an attorney is not disqualified as a competent witness merely 
because of his participation in the proceedings as the legal representative of 
one of the parties.  Burnett v. 
Taylor, 252 P. 790, 795-96 (Wyo. 1927); Montez, 573 P.2d  at 36. 
Notwithstanding that general observation, however, ethical considerations are 
often cited for the proposition that it "is improper or, at the least, a breach 
of professional etiquette for an attorney to testify as a witness in behalf of 
one who is his client in the case in which such testimony is being offered." 81 
Am.Jur. 2d Witnesses § 231 (1992).  
Rule 3.7 was adopted for the purpose of addressing those ethical 
considerations.  ("Virtually all 
difficult ethical problems arise from conflict between a lawyer's 
responsibilities to clients, to the legal system and to the lawyer's own 
interest . . . .  The 
Wyoming Rules of Professional Conduct prescribe terms for resolving such 
conflicts."  Preamble: a Lawyer's 
Responsibilities [8], Wyoming Rules of Professional 
Conduct.)

 

[¶7]      Rule 3.7 
prohibits a lawyer from acting as an advocate during a trial in which the lawyer 
is likely to be a necessary witness.  
There are three exceptions to this general prohibition: (1) The testimony 
is about an uncontested issue; (2) The testimony is about the nature and value 
of legal services rendered in the case; or (3) Disqualification of the lawyer 
would work substantial hardship on the client.  There is no disagreement between the 
parties over the inapplicability of the first two exceptions under the 
circumstances of this case.  
Pursuant to the comments to Rule 3.7, the third exception at subsection 
(a)(3) requires a balancing to determine its applicability.  The comment suggests balancing the 
likelihood of prejudice to the opposing party taking into account the nature of 
the case, the importance and "probable tenor" of the testimony and the extent to 
which that testimony will conflict with that of other witnesses against the 
possible substantial1 hardship disqualification of the 
lawyer would have on his client.  
The comments also note that it is relevant to the balancing under (a)(3) 
if one of the parties could have reasonably2 foreseen the lawyer would probably 
be a witness.

 

[¶8]      In this case, 
Gray is the sole shareholder, director and officer of Mt. Rushmore. 
Unsurprisingly, Mt. Rushmore granted Gray permission to testify, effectively 
waiving any conflict of interest claims it may have as the client.  The trial in this case was before the 
court not a jury.  Under those 
circumstances, Mt. Rushmore argues that Gray should have been allowed to testify 
as a matter of right.  It claims 
that none of the usual ethical considerations apply here because of the 
convergence of Gray's interests with the client's and the district court's 
inherent ability to separate Gray's statements as an advocate from his 
testimony.  In support of its 
position, Mt. Rushmore points to California Rule of Professional Conduct 
California Court Rules Code § 5-210, which allows an advocate to testify with 
the informed, written consent of the client.3  Mt. Rushmore notes that the comments to 
that Rule indicate that it "is not intended to encompass situations in which the 
member is representing the client in an adversarial proceeding and is testifying 
before a judge."  Therefore, Mt. 
Rushmore contends the district court should have allowed Gray to testify.4

 

[¶9]      The answer to Mt. 
Rushmore's contention is simple: Rule 3.7 of the Wyoming Rules of Professional 
Conduct does not make any distinctions between jury or bench trials.  Regardless of any merit in making such a 
distinction, California's rule is not relevant to Wyoming's situation based on 
the obvious differences in the language of the two rules.  The Wyoming Rule requires a balancing 
between the interests of the parties in the proceeding in all situations except 
where the testimony concerns uncontested issues or the value of legal services 
rendered.  Any analysis of a 
decision on whether or not to allow an attorney to appear as a witness in a case 
in which he is an advocate for one of the parties must be made within the 
strictures of Rule 3.7.

 

[¶10]   In support of its decision to deny 
Gray the opportunity to testify, the district court cited the importance of 
witness credibility in the case.  
The court had concerns about Gray challenging the credibility of 
Statewide's witnesses and, simultaneously, vouching for his own 
credibility.  The court also noted 
that it was reasonably foreseeable Gray would be a witness but, nevertheless, he 
chose to proceed as an advocate in the matter.  The district court concluded these 
factors weighed in favor of not allowing Gray to testify as a witness while 
maintaining his representation of Mt. Rushmore.  The factors relied upon by the district 
court in making its decision are specifically cited in the comment to Rule 3.7 
as appropriate considerations for determining whether to allow an advocate to 
testify.  The district court is in 
the best position to determine the effect an attorney would have on the 
proceedings if he testified while remaining an advocate.  The court felt that Gray's testimony 
would adversely impact the fairness of the trial.  We cannot say that conclusion was 
unreasonable under the circumstances.

 

[¶11]   It was obvious from the inception 
of this dispute that Gray was a potential factual witness for Mt. Rushmore.  As an attorney, Gray is presumed to be 
cognizant of the Rules of Conduct and is responsible for observance of 
them.  Gray should have notified the 
district court before trial of the potential conflict under Rule 3.7.  Before the trial started, a solution 
would have been easy  Mt. Rushmore simply had to hire different counsel.  Once the trial started and Gray had 
assumed the role of an advocate, however, it was too late for him to become a 
witness in this case.  The district 
court's decision denying Gray an opportunity to testify as a fact witness was 
not unreasonable under the circumstances.

 

[¶12]   Mt. Rushmore further contends that 
denying Gray an opportunity to testify deprived it of due process.  This claim, which consists of less than 
one page of Mt. Rushmore's brief, is not supported by any citation to legal 
authority or argument.  We do not 
consider issues unsupported by cogent argument.  Basolo v. Gose, 994 P.2d 968, 970 
(Wyo. 2000).

 

CONCLUSION

[¶13]   The district court did not abuse 
its discretion in denying Mt. Rushmore's attorney the opportunity to testify as 
a witness while maintaining his legal representation.  Accordingly, the judgment against Mt. 
Rushmore is affirmed.

 

FOOTNOTES

  1The Rules of 
Professional Conduct define the term "substantial" to be "when used in reference 
to degree or extent" it "denotes a material matter of clear and weighty 
importance."  Terminology [10], 
Wyoming Rules of Professional Conduct.

 

  
2The Rules define 
the term "reasonably" to be "when used in relation to conduct by a lawyer" it 
"denotes the conduct of a reasonably prudent and competent lawyer."  Terminology [7], Wyoming Rules of 
Professional Conduct. 

 

3  
California Rule of Professional Conduct 5-210 (West 1996) 
provides:

 

A member shall not act as an advocate 
before a jury which will hear testimony from the member unless: 

(A)     The testimony relates to an uncontested matter; 
or

(B)     The testimony relates to the nature and value of 
legal services rendered in the case; or

(C)     The member has the informed, written consent of the 
client.  If the member represents 
the People or a governmental entity, the consent shall be obtained from the head 
of the office or a designee of the head of the office by which the member is 
employed and shall be consistent with principles of 
recusal.

 

  
4Mt. Rushmore 
also contends that Gray is being treated differently than a pro se 
plaintiff.  They argue that a pro 
se plaintiff would be able to testify but Gray was prohibited simply because 
he was a member of the Wyoming State Bar.  
This contention is incorrect because a non-lawyer could not represent a 
corporate client in court.  Wyo. 
Stat. Ann. § 33-5-117 (LexisNexis 2001).