UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

DALLAS DIVISION

SENIOR LIVING PROPERTIES LLC

TRUST,

Plaintiff,

VS.

CLAIR ODELL INSURANCE AGENCY

LLC d/b/a CLAIR ODELL GROUP,

ET AL.,

Defendants.

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)

)

) CIVIL ACTION NO.

)

) 3:04-CV-0816-G

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)

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MEMORANDUM OPINION AND ORDER

Before the court is the motion of the plaintiff, Senior Living Properties, L.L.C.

Trust (“SLP” or the “SLP Trust”), to disqualify the law firm of Wilson, Elser,

Moskowitz, Edelman & Dicker, LLP (“WEMED”) from its representation of the

defendants Clair Odell Insurance Agency, LLC d/b/a Clair Odell Group and Mellon

Insurance Agency, Inc. (collectively, “COG”). For the reasons discussed below, SLP’s

motion to disqualify is granted.

I. BACKGROUND

The SLP Trust is the successor-in-interest and assignee of certain claims arising

from the SLP bankruptcy. Plaintiff’s Motion to Disqualify [WEMED] and Brief in

 

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Support (“Motion to Disqualify”) at 2. Among the claims assigned to the SLP Trust

are some arising from various personal injury and insurance litigation. Id. Prior to

SLP’s bankruptcy filing, WEMED -- through its Dallas office -- defended SLP against

those personal injury claims. Id. The SLP Trust paid WEMED over $32,000.00 for

its work on these claims. Id. at 3. Additionally, WEMED was paid for services

rendered prior to the creation of the trust, and the SLP Trust seeks recovery of those

payments in this action. Id. Finally, WEMED itself has filed an unsecured claim in

the SLP bankruptcy. Id. Some of this claim has been paid by the SLP Trust, but the

SLP Trust intends to satisfy WEMED’s claim with any proceeds from a judgment in

this action. Id.

Michael Cawley (“Cawley”) is counsel of record for COG in this action. Id. at

4. Cawley has represented COG for over ten years. [WEMED’s] Amended Response

and Brief in Opposition to Plaintiff’s Motion to Disqualify (“Response”) at 2. 

Cawley became a partner at WEMED -- in its Philadelphia office -- on April 1, 2005. 

Id. 

On April 8, 2005, SLP filed this motion to disqualify WEMED from its

representation of COG in this action, based upon Cawley’s representation of COG

and his recent association with WEMED. Motion to Disqualify at 1, 4. SLP will not

consent to WEMED’s representation of COG in this action. Id. at 5.

 

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II. ANALYSIS

A. Relevant Ethical Canons

In determining whether disqualification of an attorney is appropriate, this

court should consider the following ethical canons: (1) the ABA Model Rules of

Professional Conduct (the “Model Rules”), (2) the Texas Disciplinary Rules of

Professional Conduct (the “Texas Rules”), and (3) the local rules of the Northern

District of Texas (the “Local Rules”). Federal Deposit Insurance Corporation v. United

States Fire Insurance Company, 50 F.3d 1304, 1312 (5th Cir. 1995); Advanced Display

Systems, Inc. v. Kent State University, No. 3-96-CV-1480-BD, 2001 WL 1524433 at

* 4 (N.D. Tex. Nov. 29, 2001) (Kaplan, Magistrate J.). The Model Rules embody

“the national standards utilized [in] this circuit in ruling on disqualification motions.” 

United States Fire Insurance Company, 50 F.3d at 1312. Consideration of the Texas

Rules is relevant because the Local Rules and the Texas Rules are virtually identical. 

See United States Fire Insurance Company, 50 F.3d at 1312.

Model Rule 1.7(a) provides, in relevant part:

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 [or] a former

client . . . . 

 

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Model Rule of Professional Conduct 1.7(a). In certain circumstances, a client may

consent to representation even though a conflict of interest exists. Model Rule

1.7(b). According to the Model Rules,

[a] lawyer who has formerly represented a client in a

matter shall not thereafter represent another person in the

same or a substantially related matter in which that

person’s interests are materially adverse to the interests of

the former client unless the former client gives informed

consent, confirmed in writing.

Model Rule 1.9(a). The Model Rules impute conflicts under both Rules 1.7 and 1.9

to all lawyers associated in a firm with the conflicted attorney. Model Rule 1.10(a). 

In most circumstances, a client may consent to representation by the firm,

notwithstanding the existence of a conflict. Model Rule 1.10(c). 

Similarly, the Texas Rules provide:

a lawyer shall not represent a person if the representation

of that person:

(1) involves a substantially related matter in

which that persons interests are materially

and directly adverse to the interests of

another client of the lawyer or the lawyers

firm; or

(2) reasonably appears to be or become

adversely limited by the lawyers or law firm’s

responsibilities to another client. . . .

Texas Rule 1.06(b). Further, “a lawyer who personally has formerly represented a

client in a matter” may not, without prior consent, represent another person in “the

 

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* In its reply brief, SLP also argues that WEMED’s representation of

COG has not terminated, and thus a concurrent conflict also exists. Reply Brief

Supporting Plaintiff’s Motion for Disqualification at 1-3. Because the court

concludes that disqualification is required by virtue of WEMED’s former

representation of SLP, it need not reach this latter argument. 

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same or a substantially related matter.” Texas Rule 1.09(a)(3). Like the Model

Rules, the Texas Rules provide that conflicts are imputed to lawyers associated in a

firm. Texas Rules 1.06(f), 1.09(b).

B. Is Disqualification Appropriate?

In its motion to disqualify, SLP asserts that “because of WEMED’s former

representation of the SLP Trust, all lawyers at WEMED now are prohibited from

representing a different client adverse to the SLP Trust in the same or a substantially

related matter.” Motion to Disqualify at 6. SLP further argues that this prohibition

applies equally to Cawley -- due to his representation of COG -- even though he

joined the firm after its representation of SLP.*

 Id.

1. Standard for Disqualification due to Former Representation

“A party seeking to disqualify opposing counsel on the ground of former

representation must establish two elements: 1) an actual attorney-client relationship

between the moving party and the attorney [it] seeks to disqualify and 2) a

substantial relationship between the subject matter of the former and present

representations.” In re American Airlines, Inc., 972 F.2d 605, 614 (5th Cir. 1992)

(citing Johnston v. Harris County Flood Control District, 869 F.2d 1565, 1569 (5th Cir.

 

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1989)), cert. denied sub nom., Northwest Airlines, Inc. v. American Airlines, Inc., 507 U.S.

912 (1993). “[A] substantial relationship may be found only after ‘the moving party

delineates with specificity the subject matters, issues and causes of action’ common to

prior and current representations and the court engages in a ‘painstaking analysis of

the facts and precise application of precedent.’” Id. (citing Duncan v. Merrill Lynch,

Pierce, Fenner & Smith, 646 F.2d 1020, 1029 (5th Cir.), cert. denied, 454 U.S. 895

(1981)). The burden of establishing the substantial relationship between the prior

and current representations is on the party moving for disqualification. Id. A

movant’s successful establishment of a substantial relationship between the current

and prior representation creates an irrebuttable presumption that relevant

confidential information was disclosed during the prior representation. Id.

2. Relationship between WEMED’s Former Representation of SLP

 and its Current Representation of COG

In this instance, neither party disputes that there was an actual attorney-client

relationship between WEMED and SLP. See generally Motion to Disqualify;

Response. Accordingly, the success of SLP’s motion to disqualify turns on whether

Cawley’s current representation of COG is substantially related to WEMED’s former

representation of SLP. In its motion to disqualify, SLP states: 

In this case, the SLP Trust seeks damages occasioned by

COG’s breach of fiduciary duties, breach of contract and

violations of the duty of good faith and fair dealing. The

SLP Trust believes evidence in this case will demonstrate

that COG’s misrepresentations and malfeasance as SLP’s

 

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designated broker caused SLP’s insurers to deny coverage

and seek rescission of SLP’s insurance policies. In the SLP

bankruptcy, SLP sued its insurers to obtain coverage for

numerous personal injury claims filed against SLP. SLP’s

insurers hired WEMED to represent SLP in the defense of

those claims. Because of the insurers’ position regarding

coverage, however, SLP was required to pay WEMED for

those defense expenses. The SLP Trust seeks, among other

things, recovery of defense expenses it paid to WEMED as

an element of damage in this case. By producing invoices

and other documents, WEMED has cooperated with the

SLP Trust in its quest for those damages. In contrast,

COG pursues an active interest in precluding the SLP

Trust from recovering those damages or in attacking the

amount of damages. 

Motion to Disqualify at 5. SLP asserts that the current and former representations

are substantially related, because:

the SLP Trust seeks damages for the difference between the

liquidated value of the . . . claims and the amount of

insurance the debtors actually received for those same

claims. WEMED’s advice to the SLP Trust regarding the

resolution of the . . . claims contributed to the ultimate

amount at which the claims were liquidated. The

bankruptcy court ultimately approved all of the liquidated

values. Because the liquidated values form part of the

damage analysis for the SLP Trust in this case, WEMED’s

involvement in those valuations demonstrates that its

advice is important to the issues involved in a way that

reasonable persons would understand.

Motion to Disqualify at 8. 

In response, WEMED argues that SLP has failed to meet its burden because it

“wholly failed to specifically delineate common subject matters, issues, and causes of

action.” Response at 6. WEMED argues that no commonality exists between the

 

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causes of action in this case and the causes of action in the prior representation. Id.

at 6-7. 

In this case, SLP has alleged the following causes of action: (1) breach of

fiduciary duty, (2) breach of contract, and (3) violations of the duty of good faith and

fair dealing. Id. at 6; Motion to Disqualify at 5. WEMED asserts that none of these

causes of actions was included in the prior representation. To buttress its argument,

WEMED contends that the use of the word “and” in the Fifth Circuit’s analysis

above -- that a substantial relationship may be found only after the a specific

delineation “the subject matters, issues and causes of action common to [prior and

current] representations” -- necessitates identical causes of action before a court can

determine that disqualification is appropriate. Id. at 7 (citing Abney v. Wal-Mart, 984

F. Supp. 526, 529 (E.D. Tex. 1997)).

The court finds WEMED’s argument unpersuasive. The former representation

and the current representation need not involve identical causes of action. Such a

strict requirement would undermine the policy underlying the rules against conflicting

representations -- the preservation of the attorney-client relationship and the

protection of a client’s confidential information. See American Airlines, 972 F.2d at

619. The two causes of action “need only involve the same ‘subject matter’ in order

to be substantially related.” Id. at 625 (citing In re Corrugated Container Antitrust

Litigation, 659 F.2d 1341 (5th Cir. 1981); Duncan, 646 F.2d 1020). 

 

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SLP has delineated several reasons why WEMED’s representation of COG in

this action is substantially similar to the WEMED’s representation of SLP in the

personal injury actions in the bankruptcy. It is likely that WEMED attorneys

acquired knowledge of the valuation of the injury settlements for which SLP seeks

recovery from COG in this action. Furthermore, SLP’s motion for disqualification

finds support in the fact that WEMED’s attorneys’ fees originating from the prior

representation may be at issue in this action. The court therefore concludes that

WEMED’s former representation of SLP and its current representation of COG are

substantially related. 

In its final argument in response to SLP’s motion to disqualify, WEMED

asserts that the “sheer distance and physical separation of the [Philadelphia and

Dallas offices] indicates that there is absolutely no reasonable probability that

confidential information in possession of WEMED-Dallas will be sued against SLP

Trust by WEMED-Philadelphia in this litigation.” Response at 9. This argument is

also unpersuasive. Neither the Model Rules nor the Texas Rules, in imputing

conflicts, make an exception for a firm with multiple offices. See In re ESM

Government Securities, Inc., 66 B.R. 82, 84 (S.D. Fla. 1986) (imputation of conflicts is

applicable “regardless of the size of the firm [or] how many separate offices it may

maintain. . .”).

 

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The court finds that WEMED’s former representation of SLP and its

representation of COG in this action are substantially related. Accordingly, WEMED

is disqualified from representing COG in this matter.

III. CONCLUSION

For the reasons stated above, SLP’s motion to disqualify is GRANTED. 

Accordingly, WEMED is disqualified from further representation of COG in this

action. 

SO ORDERED.

May 12, 2005.

 

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