Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-89-08054/USCOURTS-ca10-89-08054-0/pdf.json

Parties Involved:
Floyd R. King
Appellee
Maurice E. Miles
Not Party
The Jackson State Bank
Appellant

Document Text:

FI LED 

United States Court of Appeals 

UNITED STATES COURT OF APPEALS Tenth Circuit 

TENTH CIRCUIT UEC ... ~ 1990 

THE JACKSON STATE BANK, a Wyoming 

Banking Corporation, 

Plaintiff-Appellant, 

and MAURICE E. MILES, 

Plaintiff, 

v. 

FLOYD R. KING, 

Defendant-Appellee. 

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ORDER AND JUDGMENT* 

ROBERT L. HOECKER 

Clerk 

No. 89-8054 

(D.C. No. C-86-0238J) 

(D. Wyo.) 

Before LOGAN, and TACHA, Circuit Judges, and GREENE, District 

Judge.** 

Plaintiff-appellant Jackson State Bank (the Bank) appeals 

from the district court's grant of summary judgment in favor of 

defendant-appellee Floyd King on its claims for breach of 

fiduciary duty and breach of contract. We reverse and remand for 

trial. 

Defendant's relationship with the Bank began in 1963 and 

continued until 1985. During most of that period, he served as 

the Bank's general counsel. Defendant also served on the Bank's 

* This Order and Judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

** Honorable J. Thomas Greene, United States District Judge for 

the District of Utah, sitting by designation. 

Appellate Case: 89-8054 Document: 010110093933 Date Filed: 12/03/1990 Page: 1 
Board of Directors and the Trust Advisory Committee during that 

time. 

Rosemary Miles died February 26, 1973, leaving as survivors 

her husband, Maurice Miles, and her son from a previous marriage, 

William Hutson. The principal asset of the probate estate was 

100% of the stock in Meadowbrook Lodge, Inc., which in turn owned 

undeveloped land in Jackson, Wyoming. Mrs. Miles' will divided 

her property into two parts. The first portion passed directly to 

Mr. Miles. The other portion passed into a testamentary trust for 

the benefit of the Hutsons. Mr. Miles was appointed executor. 

Defendant was retained to represent Mr. Miles as executor. 

In 1977, during the pendency of the probate estate, Mr. 

Miles, in his capacity as president of Meadowbrook Lodge, began 

developing the land. Defendant represented plaintiff in several 

matters related to this project. 

The probate court entered its Order Approving Accounting and 

Decree of Distribution in April 1979. The court's order 

designated Jackson State Bank as the trustee and directed the 

assets of the estate be distributed. The estate was closed in 

October 1979. 

In July 1986 the Hutsons sued Mr. Miles for breach of his 

fiduciary duty as executor and the Bank for breach of its 

fiduciary duty as trustee. 1 The Bank subsequently filed a thirdparty complaint against defendant, alleging breach of fiduciary 

duty and breach of contract. Defendant moved for summary judgment 

1 The claims asserted by the trust beneficiaries were eventually 

settled. 

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Appellate Case: 89-8054 Document: 010110093933 Date Filed: 12/03/1990 Page: 2 
on ooth claims. The Bank moved for partial summary judgment, 

asserting that liability arising out of defendant's failure to 

disclose his conflict of interest had been established as a matter 

of law. The district court granted defendant's motion. The Bank 

filed a timely notice of appeal. 

In reviewing a summary judgment order, we apply the same 

standard employed by the trial court under Rule 56(c) of the 

Federal Rules of Civil Procedure. Osgood Y..!.. State Farm Mut. Auto. 

Ins. Co., 848 F.2d 141, 143 (10th Cir. 1988). We will review the 

record in a light most favorable to the non-moving party to 

determine whether a material issue of fact remains. See Ewing Y..!.. 

Amoco Oil Co., 848 F.2d 141, 143 (10th Cir. 1988). The district 

court's conclusions of law are subject to de novo review. In re 

Ruti-Sweetwater, Inc., 823 F.2d 1432, 1437 (10th Cir. 1987). 

Our review of the record convinces us the district court 

erred in concluding there was no material issue of fact remaining 

on plaintiff's claim for breach of fiduciary duty. The Bank 

asserts defendant "was confronted with an actual and continuing 

conflict of interest between Mr. Miles, in his various capacities, 

and Jackson State Bank, as Trustee." It claims defendant breached 

the fiduciary duty he owed the Bank as its general counsel by 

failing to adequately disclose the existence and consequences of 

this conflict. The Bank also argues defendant breached the 

fiduciary duty he owed as a member of the Board of Directors and 

the Trust Advisory Board. 

An attorney may represent parties with conflicting interests 

only if the attorney believes he can properly represent both 

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Appellate Case: 89-8054 Document: 010110093933 Date Filed: 12/03/1990 Page: 3 
parties and the parties consent after consultation. See Model 

Code of Professional Responsibility Canon 5 (1980). The district 

court found the scope of defendant's representation of the Bank in 

relation to the Rosemary Miles' Trust was limited. It therefore 

concluded defendant did not breach any fiduciary duty by not 

disclosing the details of his representation of Mr. Miles because 

defendant was not representing conflicting interests. The court 

relied heavily on the court's holding in Fitch Y-.!. Midland Bank~ 

Trust Co., 737 S.W.2d 785, 789 (Tenn. App. 1987): 

The mere existence of an inter-relationship between two 

clients does not in and of itself create a conflict of 

interest disqualifying a law firm. Rather, a firm may 

limit its representation so as to avoid conflicts of 

interest .... The evidence establishes [the law firm] 

did not simultaneously represent conflicting interests. 

The firm's representation of the bank was limited to 

specific legal tasks of a routine nature which it was 

requested to perform. The firm did not represent the 

bank in any manner wherein an actual conflict of 

interest arose. 

In reaching its conclusion, the district court attached a 

great deal of importance to the testimony of bank officials 

indicating defendant was only expected to respond to specific 

questions raised by these officials and was under no obligation to 

determine what legal services the bank needed and call them to the 

officials' attention. These officials also testified defendant 

was never asked to render any legal opinion concerning the Bank's 

role as trustee of the Rosemary Miles Trust. 

The record, however, contains evidence indicating the scope 

of defendant's representation of the Bank was much broader. For 

example, the Affidavit of Richard Scarlett, the Bank's president 

since 1981, revealed that bank officials did expect defendant to 

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Appellate Case: 89-8054 Document: 010110093933 Date Filed: 12/03/1990 Page: 4 
advi se them about legal matters on which he was not specifically 

retained. Because there is disputed testimony concerning the 

scope of defendant's representation of the Bank in relation to the 

Rosemary Miles Trust, the district court improperly concluded 

defendant was not representing conflicting interests and thus had 

no duty to disclose details of his representation of Mr. Miles to 

the Bank. There was also conflicting testimony concerning the 

duties defendant was expected to perform as a member of the Board 

of Directors and the Trust Advisory Board. Summary judgment on 

the Bank's claim for breach of fiduciary duty was thus improper. 

The district court also erred in granting summary judgment on 

the grounds that defendant's conduct was not the proximate cause 

of the Bank's damages. There are disputed issues of fact 

regarding whether defendant's alleged breach of fiduciary duty 

caused harm to the Bank. The record contains expert testimony 

indicating defendant's actions were directly related to the Bank's 

losses in the lawsuit brought by the Hutsons. This evidence 

precludes summary judgment on this question. 

Our review of the record also reveals the district court 

erred in granting summary judgment in favor of defendant on the 

Bank's breach of contract claim. As discussed above, there was 

conflicting testimony concerning the scope of defendant's 

representation of the bank. Because there is a material issue of 

fact concerning the nature and extent of defendant's contractual 

obligations, summary judgment cannot be entered on this issue. 

Finally, we find the district court did not err in denying 

the Bank's motion for partial summary judgment. As discussed 

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Appellate Case: 89-8054 Document: 010110093933 Date Filed: 12/03/1990 Page: 5 
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' above, there is conflicting evidence on the question of whether 

defendant breached any fiduciary duties he owed to the Bank. We 

REVERSE the district court's grant of summary judgment in favor of 

defendant and REMAND for trial. 

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ENTERED FOR THE COURT 

Deanell Reece Tacha 

Circuit Judge 

Appellate Case: 89-8054 Document: 010110093933 Date Filed: 12/03/1990 Page: 6