IN THE SUPREME COURT OF IOWA

No. 20–0268

Submitted April 14, 2021—Filed May 21, 2021

LIQUOR BIKE, LLC,

Plaintiff,

vs.

IOWA DISTRICT COURT FOR POLK COUNTY,

Defendant.

Certiorari to the Iowa District Court for Polk County, Jeanie Vaudt, 

Judge.

A limited liability company filed a petition for a writ of certiorari 

challenging a district court order to disqualify counsel. WRIT SUSTAINED

AND CASE REMANDED.

McDonald, J., delivered the opinion of the court, in which all justices 

joined.

Billy J. Mallory (argued) of Brick Gentry, P.C., West Des Moines, for 

plaintiff.

William M. Reasoner (argued) and David L. Wetsch of Dickinson, 

Mackaman, Tyler & Hagen, P.C., Des Moines, for defendant.
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McDONALD, Justice.

“A party’s right to select its own counsel is an important public right 

and a vital freedom that should be preserved; the extreme measure of 

disqualifying a party’s counsel of choice should be imposed only when 

absolutely necessary.” Macheca Transp. Co. v. Phila. Indem. Ins., 463 F.3d 

827, 833 (8th Cir. 2006) (quoting Banque Arabe Et Internationale 

D’Investissement v. Ameritrust Corp., 690 F. Supp. 607, 613 (S.D. Ohio 

1988)). Here, notwithstanding the general rule that a legal entity is 

separate and distinct from its owners, the district court disqualified Liquor 

Bike, LLC’s counsel on the ground counsel’s representation of Liquor Bike 

in this matter was directly adverse to a current client of counsel’s law firm 

in another matter. We granted Liquor Bike’s petition for writ of certiorari, 

and we sustain the writ.

I.

In April 2019, Heartland Plastic & Reconstructive Surgery, P.C., 

engaged Douglas Fulton of Brick Gentry, P.C., to represent Heartland with 

respect to an application for a certificate of need to establish an 

ambulatory surgery center. Heartland is a professional corporation owned 

solely by Dr. Eugene Cherny. Dr. Cherny is the only officer of Heartland.

In July 2019, attorney David Wetsch of Dickinson, Mackaman, Tyler 

& Hagen, P.C., sent a demand letter on behalf of Vivone, LLC, to Liquor 

Bike. The demand letter stated the two entities own adjacent properties

and a recent survey found there was a small encroachment of the property 

line. The letter demanded Liquor Bike remove the encroachment or 

contact attorney Wetsch to negotiate an encroachment easement. The 

properties at issue were unrelated to Heartland or Dr. Cherny’s medical 

practice.
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Liquor Bike’s attorney was Billy Mallory of the Brick Gentry firm. 

Mallory and Wetsch tried to resolve the boundary-line dispute but were 

unable to do so. In September 2019, Vivone, represented by attorneys 

Wetsch and William Reasoner of the Dickinson firm, filed a petition for 

injunction in the district court. In the petition, Vivone requested Liquor 

Bike be ordered to remove the encroachment. Reasoner requested Mallory 

accept service for Liquor Bike, and Mallory agreed to do so. On October 

22, Mallory filed an answer, affirmative defenses, and counterclaims on 

behalf of Liquor Bike. 

Three weeks after Liquor Bike asserted counterclaims against 

Vivone, Vivone moved to disqualify Mallory and the Brick Gentry firm from 

representing Liquor Bike in the boundary-dispute litigation. The basis for 

the motion was a purported concurrent conflict of interest. According to 

the motion, Brick Gentry represented Heartland and Dr. Cherny and Brick 

Gentry’s defense of Liquor Bike in the boundary dispute was adverse to 

Dr. Cherny. According to the motion, the representation of Liquor Bike 

was adverse to Dr. Cherny because (1) Dr. Cherny was a member of 

Vivone; (2) the manager of Vivone was another company, JSV Community 

Properties, Inc.; and (3) Dr. Cherny owned 100% of the voting stock of JSV. 

JSV is a holding company for real estate investments.

The motion to disqualify counsel came on for an evidentiary hearing. 

The engagement letter between Brick Gentry and Heartland was admitted 

into evidence. The engagement letter stated, “This letter confirms our 

agreement to represent Heartland Plastic & Reconstructive Surgery, PC, 

with regard to an application for an Iowa Certificate of Need for an 

Ambulatory Surgery Center.” The engagement letter was signed on behalf 

of Heartland by Dr. Cherny. There is no indication in the engagement 

letter that Brick Gentry represented Dr. Cherny in his individual capacity
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in the certificate-of-need matter. The evidence also showed Dr. Cherny 

was not a member of Vivone. Brenda Rowe owned 49% of the membership 

interest in Vivone, and JSV owned the remaining 51%. Dr. Cherny was 

the president, secretary, and treasurer of JSV. He owned 100% of the 

voting stock of JSV and 55% of the outstanding stock of JSV. Joseph, 

Stephen, and Vincent Cherny owned the remaining 45% of the stock of 

JSV, 15% each. 

The district court disqualified Mallory and Brick Gentry from 

representing Liquor Bike in the boundary-dispute litigation. The district 

court found, “The bottom line is this: Brick is on both sides of the fence 

here as it relates to Dr. Cherny.” Because of this, the district court 

reasoned, Mallory’s representation of Liquor Bike adverse to Vivone 

violated Iowa Rule of Professional Conduct 32:1.7. In particular, the 

district court relied on comment 6 to the rule:

Loyalty to a current client prohibits undertaking 

representation directly adverse to that client without that 

client’s informed consent. Thus, absent consent, a lawyer 

may not act as an advocate in one matter against a person the 

lawyer represents in some other matter, even when the 

matters are wholly unrelated.

Iowa R. Prof’l Conduct 32:1.7 cmt. [6] (2019). 

II.

A motion to disqualify an attorney is reviewed for abuse of discretion. 

See Killian v. Iowa Dist. Ct., 452 N.W.2d 426, 428 (Iowa 1990). “A district 

court ‘abuses its discretion when its ruling is based on clearly untenable 

grounds.’ ” NuStar Farms, LLC v. Zylstra, 880 N.W.2d 478, 482 (Iowa 

2016) (quoting Bottoms v. Stapleton, 706 N.W.2d 411, 415 (Iowa 2005)). 

The party moving for disqualification bears the burden of proving the 

grounds for disqualification. See Bottoms, 706 N.W.2d at 418. 
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III.

“[O]ur starting point in evaluating a claim that an attorney should 

be disqualified from representing a party is the ethical principles outlined 

in the Iowa Rules of Professional Conduct.” Id. at 415. In evaluating 

whether an attorney should be disqualified, courts should balance the 

right to choose a specific attorney against the need for ethics that preserve 

public trust and integrity in the legal system. See id. “Because of the 

potential for abuse by opposing counsel, ‘disqualification motions should 

be subjected to particularly strict scrutiny.’ ” Macheca Transp. Co., 463 

F.3d at 833 (quoting Harker v. Comm’r, 82 F.3d 806, 808 (8th Cir. 1996)).

The Iowa Rules of Professional Conduct outline when a concurrent 

conflict of interest would prevent representation:

(a) Except as provided in paragraph (b), a lawyer shall 

not represent a client if the representation involves a 

concurrent conflict of interest. A concurrent conflict of 

interest exists if:

(1) the representation of one client will be directly 

adverse to another client; or

(2) there is a significant risk that the representation of 

one or more clients will be materially limited by the lawyer’s 

responsibilities to another client, a former client, or a third 

person or by a personal interest of the lawyer.

(b) Notwithstanding the existence of a concurrent 

conflict of interest under paragraph (a), a lawyer may 

represent a client if:

. . . .

(4) each affected client gives informed consent, 

confirmed in writing.

Iowa R. Prof’l Conduct 32:1.7. Individual attorney conflicts are imputed 

to the entire firm with which they are associated. See id. r. 32:1.10(a) 

(“While lawyers are associated in a firm, none of them shall knowingly 
6

represent a client when any one of them practicing alone would be 

prohibited from doing so by rule 32:1.7 or 32:1.9 . . . .”). 

We hold the district court abused its discretion in concluding

Mallory’s representation of Liquor Bike in the boundary-dispute litigation 

was directly adverse to Dr. Cherny in violation of rule 32:1.7(a)(1). We 

analyzed the issue of directly adverse representation of concurrent clients 

in NuStar Farms, LLC v. Zylstra. See 880 N.W.2d at 484–85. There, we 

held a concurrent conflict justified disqualification. See id. The Zylstras 

consulted with an attorney for estate planning and reviewing manure 

easements in an agreement with NuStar Farms, LLC. See id. at 480. The 

attorney marked the manure easements document but advised the couple 

to seek the advice of a different attorney. See id. Several years passed 

during which the attorney represented the Zylstras in various other 

matters when the attorney also began representing NuStar in a loancovenants matter. See id. at 481. The attorney started contacting the 

Zylstras on behalf of NuStar about the failure to provide a deed. See id. 

After several emails to the Zylstras regarding NuStar’s deed, the attorney 

stated he intended to take legal action against the Zylstras on behalf of 

NuStar and informed the Zylstras that he would cease representing them 

in any matter. See id. We held that the attorney’s “representation of 

NuStar was a directly adverse concurrent conflict of interest” because the 

attorney clearly intended to “pursue a future, adverse action against the 

Zylstras on behalf of NuStar.” Id. at 484.

Unlike NuStar, here there is no direct adversity between existing 

clients. First, the Brick Gentry firm did not represent Dr. Cherny in the 

certificate-of-need matter, and the district court abused its discretion in 

finding otherwise. The Brick Gentry firm represented Heartland in the 

certificate-of-need matter. Heartland is a professional corporation 
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separate and distinct from Dr. Cherny. See Iowa Code § 490.622(2) 

(“Unless otherwise provided in the articles of incorporation, a shareholder 

of a corporation is not personally liable for the acts or debts of the 

corporation.”); id. § 496C.3 (stating the business corporation act applies 

to professional corporations); Briggs Transp. Co. v. Starr Sales Co., 262 

N.W.2d 805, 809 (Iowa 1978) (“Central to corporate law is the concept a 

corporation is an entity separate from its owners. The separate corporate 

personality ordinarily enables corporate stockholders to limit their 

personal liability to the extent of their investment.”). “A lawyer employed 

or retained by an organization represents the organization acting through 

its duly authorized constituents.” Iowa R. Prof’l Conduct 32:1.13(a) 

(emphasis added). Contrary to the district court’s conclusion, a lawyer’s 

representation of an organization does not necessarily mean the lawyer 

also represents the owners, employees, or other constituents of the 

organization. See id. r. 32:1.7 cmt. [34] (“A lawyer who represents a 

corporation or other organization does not, by virtue of that 

representation, necessarily represent any constituent or affiliated 

organization, such as a parent or subsidiary.”); Terre Du Lac Prop. Owners’

Ass’n v. Shrum, 661 S.W.2d 45, 48 (Mo. Ct. App. 1983) (“A corporation is 

a legal entity, separate and apart from the person or persons who are 

stockholders and directors of the corporation and counsel who represents 

a corporation is not ordinarily precluded from acting as counsel in suing 

a director. . . . Representing a closely held corporation does not inherently 

mean that counsel is acting as counsel to the individual directorshareholders.”). 

There are circumstances, however, in which the evidence could 

establish an attorney–client relationship between the lawyer and the 

organization’s owners, employees, or constituents. See generally Glueck 
8

v. Jonathan Logan, Inc., 653 F.2d 746 (2d Cir. 1981) (discussing vicarious 

or attenuated clients); Colorpix Sys. of Am. v. Broan Mfg. Co., 131 F. Supp.

2d 331 (D. Conn. 2001) (same); First Republic Bank v. Brand, 51 Pa. D. & 

C.4th 167, 177–79 (2001) (reviewing cases that have addressed the issue 

of whether an attorney for a closely-held corporation also represents the 

closely-held corporation’s stockholders). But that evidence is lacking here. 

The engagement letter in the certificate-of-need matter clearly expressed 

Brick Gentry represented Heartland. While Dr. Cherny testified he viewed 

Brick Gentry as his lawyers in the certificate-of-need proceeding, there is 

no evidence Brick Gentry represented Dr. Cherny in his personal capacity

in the certificate-of-need matter. Vivone, as the party seeking 

disqualification, had the burden of production and persuasion to establish 

the existence of an attorney–client relationship, and it failed to carry those 

burdens. See, e.g., Terre Du Lac Prop. Owners’ Ass’n, 661 S.W.2d at 48 

(“Don Shrum chose to adopt the advantages of the corporate form of doing 

business with respect to the enterprise that was involved in the litigation 

in which the corporation was represented by the Roberts firm. There is no 

evidence that the law firm ever represented Don Shrum individually.”); 

Jesse v. Danforth, 485 N.W.2d 63, 69 (Wis. 1992) (holding representation 

was not directly adverse where lawyer represented professional 

corporation and not physician shareholders).

Second, Dr. Cherny was not an adverse party in the boundarydispute litigation. Brick Gentry represented Liquor Bike in the boundarydispute litigation. The adverse party in that litigation was Vivone and not 

Dr. Cherny. As a limited liability company, Vivone is “an entity distinct 

from its members.” Iowa Code § 489.104(1). Further, Dr. Cherny was not 

even a member of Vivone. The evidence showed Vivone was owned 51% 

by JSV and 49% by Brenda Rowe. Dr. Cherny owned 55% of JSV, and 
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three other Chernys owned the remainder. JSV is a legal entity distinct 

from its shareholders. See id. § 490.622(2); Briggs Transp. Co., 262 

N.W.2d at 809. Brick Gentry has never represented Vivone, Rowe, JSV, 

Dr. Cherny, or the other owners of JSV. The district court abused its 

discretion in disregarding the separate legal status of Vivone and JSV to 

find Liquor Bike was actually adverse to Dr. Cherny in the boundarydispute litigation. 

We also conclude disqualification is not warranted under rule 

32:1.7(a)(2). That rule provides that even where a lawyer’s representation 

of one client is not directly adverse to another client, there may 

nonetheless be a concurrent conflict of interest if “there is a significant 

risk that the representation of one or more clients will be materially limited 

by the lawyer’s responsibilities to another client.” Iowa R. Prof’l Conduct. 

32:1.7(a)(2). 

The mere possibility of subsequent harm does not itself 

require disclosure and consent. The critical questions are the 

likelihood that a difference in interests will eventuate and, if 

it does, whether it will materially interfere with the lawyer’s 

independent professional judgment in considering 

alternatives or foreclose courses of action that reasonably 

should be pursued on behalf of the client.

Id. r. 32:1.7 cmt. [8]. Here, Vivone failed to prove there is a “significant 

risk” that Brick Gentry’s representation of Liquor Bike or Heartland will be 

materially limited in any respect. Id. r. 32:1.7; Bottoms, 706 N.W.2d at 

417 (“[I]f there is a significant risk that representation of one client will 

materially limit the representation of another client, a conflict of interest 

actually exists . . . .”). 

There is no risk the Brick Gentry firm could take advantage of 

confidential information. The certificate-of-need matter is a regulatory

proceeding in which all information filed in support of the application is 
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accessible to the public. All of the financial information Heartland

provided to Brick Gentry in support of the application became public 

information. Further, there is no evidence Dr. Cherny provided Brick 

Gentry with information related to Vivone that might potentially raise an 

issue. See, e.g., Castillo v. St. Paul Fire & Marine Ins., 938 F.2d 776, 778 

(7th Cir. 1991) (affirming denial of motion to disqualify where information 

provided by physician during course of representation “gave the 

defendants no advantage or insight into his professional corporate affairs 

of any consequence”); Terre Du Lac Prop. Owners’ Ass’n, 661 S.W.2d at 48 

(“There is no contention that plaintiff’s counsel may have learned anything 

of a confidential nature in its representation of the corporation in the 

pollution case that would be helpful to his present client.”). 

Vivone failed to prove that Brick Gentry’s representation of Liquor 

Bike in the boundary dispute litigation would be materially limited. The 

boundary-dispute litigation between Liquor Bike and Vivone is not related 

to Heartland or Dr. Cherny’s medical practice. Based upon Dr. Cherny’s 

testimony at the disqualification hearing, he will not be a witness in the 

boundary-dispute litigation because he lacks personal knowledge of the 

encroachments at issue, which arose prior to Vivone acquiring the 

property: 

Q. And you had stated as part of this case you had 

directed David Wetsch to engage in negotiations with the 

neighboring property related to an alleged encroachment by a 

couple feet related to a fence; correct? A. Yes.

Q. And you don’t have any personal knowledge as to 

the events as a creation of this fence and the trash enclos[ure] 

and the concrete wall or anything like that, do you? A. That 

was before I owned the property.

. . . . 

Q. You have no personal knowledge, do you, related to 

anything that occurs on the Vivone property on the south side, 
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do you? A. Oh, no. I know all the time who’s renting it, where 

the vacancy is, what repairs are needed, are being done 

because I am the manager.

Q. Post 2014; correct? A. Yes.

Q. Nothing prior to 2014; correct? A. No.

Vivone has not articulated any theory supported by competent 

evidence showing a significant risk the Brick Gentry firm’s representation 

of Liquor Bike will materially interfere with its representation of any its 

clients. See, e.g., McCarthy v. John T. Henderson, Inc., 587 A.2d 280, 285

(N.J. Super. Ct. App. Div. 1991) (“[T]here is simply no basis in the record 

to conclude that any information was conveyed to [the law firm] of the 

nature that could be used to defendants’ disadvantage in the present case 

which involves wholly unrelated issues.”).

IV.

“Attorney disqualification is a drastic measure because it destroys 

the attorney–client relationship by prohibiting a party from representation 

by counsel of his or her choosing.” Schwartz v. Cortelloni, 685 N.E.2d 871, 

877 (Ill. 1997). Motions to disqualify opposing counsel are thus disfavored 

and “should be subjected to particularly strict scrutiny.” Macheca Transp. 

Co., 463 F.3d at 833 (quoting Harker, 82 F.3d at 808). Here, the district 

court did not subject this motion to strict scrutiny and instead found a 

concurrent conflict of interest where none exists. We sustain the petition 

for writ of certiorari, vacate the district court’s order disqualifying counsel, 

and remand this matter for further proceedings.

WRIT SUSTAINED AND CASE REMANDED.