Adelman v. Kernbach

43 Va. Cir. 544, 1997 Va. Cir. LEXIS 434

• Court: Norfolk County Circuit Court
• Decided: November 7, 1997
• Docket: Case No. (Law) L96-2317
• Status: Published

Opinion

By Judge Marc Jacobson

Defendants have filed a Motion to Disqualify Counsel in regard to the above captioned action. For the reasons hereinafter set forth, fee Court, at ibis time, overrules Defendants’ Motion to Disqualify.

Ibe Plaintiffs in fee instant action, a group of Portsmouth, Virginia, police flffippw. nrevinmlv fileH a claim Mtwfer the Pair Sfflnrtarafa Act /PLSAIl VUlWlO) lUVvAVUOIJ U1VU S» VlwUBt WIIMW luV X CM1 iWUlltw* WWHIWttvO 4WV J in fee United States District Court for fee Eastern District of Virginia against fee City of Portsmouth (City). The Plaintiffs in this suit were represented by Defendant Michael A. Kernbach who, through fee course of fee litigation, was associated wife different firms. In addition to Kernbach, three firms were named as defendants in fee instant action, but two have since been nonsuited. The remaining defendant other than Defendant Kernbach is Jack T. Burgess & Associates (both jointly hereafter sometimes referred to as Defendants), wife whom Kernbach was associated at fee time fee FLSA case in fee United States District Court for fee Eastern District of Virginia was settled.

In fee instant action, Plaintiffs allege feat Kernbach negligently prepared and delayed bringing their suit and, as a result, Plaintiffs “suffered and continued to suffer significant losses which directly effected [sic] their claims for compensation prior to fee filing of fee lawsuit and directly effected [sic] them after the filing of the lawsuit and after the conclusion of the lawsuit." (Mot J. ¶ 20.) Plaintiffs further allege that they relied to their detriment on Kembach’s erroneous advice that sending a letter to the Portsmouth City Attorney would toll the statute of limitations on their FLSA claims. (Id. ¶¶ 23-25.)

hr fire original suit pending in the United States District Court for the Eastern District of Virginia, the plaintiffs in that action allegedly settled their claim with the City on the eve of trial based on the advice and representations of Defendant Kernbach, and the settlement proposal was submitted to the Court. Subsequently, some of tire plaintiffs expressed disapproval with the settlement and fire City filed a motion to enforce fire settlement agreement The Court required Kernbach to distribute questionnaires approved by fire Court to determine which plaintiffs disagreed with fire settlement and whether those plaintiffs bad authorized Kernbach to enter the settlement agreement on their behalf. (Defs. Mot. to Disqualify Counsel for Pl. ¶ 6.) Before the poll was completed, Plaintiffs retained and began to consult with Jeffrey A. Bieit and Gregory A. Giordano (hereinafter referred to as “Attorneys”) regarding the acceptance or rejection of fire settlement terms. Id. ¶ 8. Attorneys counseled Plaintiffs regarding the questionnaire and added language which, Defendants allege, suggested fire Plaintiffs had not authorized Defendants to settle fire case for fire amount in fire agreement Attorneys secured a new settlement for fire Plaintiffs which was slightly higher tiran the origina! settlement, an amount the Plaintiffs now claim would have been greater but for Defendants' negligence in preparing and delaying fire prosecution of their claims. She Mot. for J. ¶ 30. Attorneys represent fire Plaintiffs in fire instant action, and Defendants have filed a Motion to Disqualify seeking to disqualify Attorneys. Because Attorneys represented Plaintiffs in the underlying FLSA case, Defendants allege, Attorneys may be called as witnesses in fire instant action.

The Court acknowledges that it should question “[t]he propriety of equating fire force of a disciplinary rule with that of decisional or statutory law ... .” Shuttleworth, Ruloff and Giordano, P.C. v. Nutter, 254 Va. 494 (1997) (J. Kinser). However, as fire Supreme Court did in the Shuttleworth case, this Court will consider fire Disciplinary Rules in making its ruling.

A party moving for disqualification has a “high standard of proof to show that disqualification is warranted.” Tessier v. Plastic Surgery Specialists, 731 F. Supp. 724, 729 (E.D. Va. 1990). This high standard is “fitting in light of (a] party's right to freely choose counsel... and the consequent loss of time and money incurred in being compelled to retain new counsel.” Id. (internal quotations and citations omitted); followed in Tolson v. Secor, 35 Va. Cir. 77 (1994). Although a party’s right to choose counsel is a “fundamental principle,” it must be considered in perspective with the rules of ethics and die integrity of die legal system. Personalized Mass Media v. The Weather Channel, Inc., 899 F. Supp. 239, 242 (E.D. Va. 1995); see also Tessier, 731 F. Supp. at 729.

The Defendants assert that die Attorneys’ representation of the Plaintiffs violates D.R. 5-102 of die Virginia Code of Professional Responsibility. D.R. 5-102 states as follows:

(A) If... a lawyer learns or it is obvious that he or a lawyer in his firm ought to be called as a witness on behalf of his client, he shall withdraw from the conduct of the trial and his firm, if any, shall not continue representation in the trial [unless the testimony relates to an uncontested matter, the testimony relates to the value of legal service, or the itisquatifiatrinn would place “substantial hardship” on the client because of the distinctive value of the lawyer or firm to the particular case].

(B) If... a lawyer learns or it is obvious that he or a lawyer in his firm may be called as a witness other than on behalf of his client, he may continue die representation until it is apparent that his testimony is or may be prejudicial to his client

Virginia Code of Professional Responsibility, Rule 5-102 (1997) (emphasis added). The Defendants argue that the Attorneys’ continued representation of the Plaintiffs violates both subparts of this rule.

Virginia has not specifically defined when counsel “ought to be called” as a witness for a client. However, it has ruled that an attorney is "competent" to testify under D.R. 5-102(A) if “die testimony is important and no other witness would be able to supply it.” United States v. Nyman, 649 F.2d 208, 211 (4th Cir. 1980). Virginia has also acknowledged that the judge should defer to die best judgment of counsel and client:

[T]he attorney and client are in die best position to determine the necessity of counsel’s testimony.... [TJf it is counsel's and client’s best judgment that they can get by without testimony from counsel, then it is certainly not up to defendants to urge upon them a different plan of presentation that would necessitate disqualification.

Hirst v. Siegfried, 35 Va. Cir. 166, 169-170 (1994) (citation omitted).

Other states have defined when counsel “ought to be* a witness for his own client Some courts have required withdrawal when counsel’s testimony “could be significantly useful to [a] client” MacArthur v. Bank of New York, 524 F. Supp. 1205, 1208 (S.D. N.Y. 1981). Other courts require withdrawal only if counsel is an “indispensable witness.” Universal Athletic Sales v. American Gym, Recreational & Athletic Equipment, 546 F.2d 530, 539, n. 21 (3d Cir. 1976), cert. denied, 430 U.S. 894 (1977); see also, Clinton Mills, Inc. v. Alexander & Alexander, 687 F. Supp. 226 (D. S.C. 1988).

In the instant case, Defendants claim that Attorneys ought to testify on behalf of their own clients regarding the “terms of the settlement, the Flaintiffs’ acceptance of the settlement, the Plaintiffs’ failure to object to or withdraw from the settlement, and the Plaintiffs’ understanding of tire terms of file settlement,” (Def. Mem. in Resp. to Plaintiffs' Contention That Motion to Disqualify is Moot, at 4), as well as file “valuation of file settlement” (Id. at 6) and the reasonableness of the final settlement (Id. at 10.) They also encourage the Attorneys to testify regarding file substantive claim of negligence and the Plaintiffs’ damages in the current action. Id. at 9.

Some of these areas, file Defendants suggest, might help to ¡nove whether file Defendants’ negligence proximately caused the Plaintiffs’ injuries and what their damages might have been. Assuming Plaintiffs’ plan to present evidence addressing these areas, at this time, it is not clear to the Court that such evidence could not be provided by sources other than the Attorneys.

The terms of the final settlement, for instance, might be available from the face of the settlement agreement and, in fact, might not be disputed. Moreover, it is not clear to the Court that Attorneys' testimony is or is not necessary to establish the reasonableness of the final settlement. Any lawyer who is familiar with FLSA work might be able to establish filis. The same might also be true for the alleged substantive claim of negligence against the Defendants. As in any malpractice action, parties may present experto to testify about what a responsible professional would have done under a given set of circumstances. Furthermore, it is not clear whether the Attorneys are “uniquely qualified" to testify about the Plaintiffs' understanding of either file initial settlement or the final settlement (see Def. Mem. of Law in Support of Def's. Mot. to Disqualify Counsel for the Plaintiffs, at 15), rather than the Plaintiffs themselves. Similarly, it is not clear whether Plaintiffs will be able to testify about the extent of their damages or whether experts or other witnesses might support or refute their evaluations.

Further, it is possible Plaintiffs themselves or independent witnesses will explain the valuation of the settlement. For example, the Plaintiffs or independent witnesses could testify about the amount of award they might have expected from the litigation of the FLSA claim and fee advantages they saw of early settlement. The Plaintiffs themselves perhaps are fee best situated to testify about their reasons for accepting fee final settlement In addition, Attorneys might claim any recommendations they gave Plaintiffs as privileged. Furthermore, this Court must presume fee decision to accept or reject fee settlement and fee reasons supporting that decision were ultimately those of fee Plaintiffs. Thus, fee testimony or evidence of fee Plaintiffs might address this issue.

Similarly, Plaintiffs might present their reasons for accepting the final settlement m reply to fee defense of estoppel. This is a matter of evidence presumably to be presented and/or developed at fee time of trial.

In fee instant rase, Attorneys and clients have decided that, at this time, they ran “get by without testimony from counsel.” Hirst, 35 Va. Cir. at 170. The Court at this time has no basis to conclude that this decision was not made according to their “best judgment” Id. At this stage of fee proceedings, that fee Attorneys should testify on behalf of their clients and that their decision not to was a misjudgment is not so “obvious” feat this court should substitute its own determination for feat of fee Attorneys and Plaintiff.

Accordingly, at this time, fee Court concludes feat in light of the foregoing and fee available alternate soñera of evidence, Defendants have not shown feat Attorneys “ought to be railed” as witnesses for their clients. They certainly have not shown feat fee Attorneys are “indispensable witnesses].” Universal Athletic Sales, 546 F.2d at 539, n. 21. Although their testimony might be useful, it might be merely corroborative. If their testimony is only corroborative, it will not be “significantly useful." MacArthur, 524 F. Supp. at 1208.

In addition, Defendants claim feat a person currently wife fee Attorneys’ firm, attorney Michael Imprevento, ought to testify on behalf of the Plaintiffs because he had appeared as counsel at one of fee settlement meetings. Imprevento had worked for a law firm, unrelated to this case, representing a similar group of plaintiffs in fee same claim against fee city. The Defendants claim that Imprevento could testify about whether fee Defendants negligently relied on fee preparations of his firm. See, Def. Mem. of Law in Supp. of Def's Mot. to Disq. Counsel for the Plaintiffs, at 10.

At this time, it is not known if ImpreVMto’s testimony is relevant, indispensable, and/or even significantly useful. Attorneys and plaintiffs know better than fee Defendants or this Court fee content and strength of Imprevento’s testimony, and, at this time, it is proper for fee Court to defer to fee counsel-client decision regarding fee necessity of counsel’s testimony. Moreover, fee Court cannot at this time conclude that counsel and client have not used their best judgment in determining that Imprevento’s testimony is not necessary for die Plaintiffs case. The Court declines, at this time, to disqualify Attorneys on the basis of imprevento’s association or connection with Attorneys.

Defendants have also raised the issue of whether or not Attorneys may be called to testify on behalf of die Defendants. As with D.R. 5-102(A), B.R. 5-102(B) places die burden of proof on the moving party to Show that disqualification is warranted. See Tessier, supra, D.R. 5-102(B) additionally requires die moving party to prove that the anticipated testimony will be prejudicial to the counsel’s client. This requirement guards against parties filing motions merely to obtain a tactical advantage. See Personalized Mass Media, 899 F. Supp. at 242. See also Clinton Mills, 687 F. Supp. at 230. Therefore, “the threat by an opposing counsel to call an attorney as a witness is not per se sufficient to require the attorney’s withdrawal from the case.” Tolson, 35 Va. Cir. at 78 (citing L.E.O. No. 1517). In addition, die testimony must be “relevant” and “necessary’* to the moving party’s case (Personalized Mass Media, 899 F. Supp. at 243), as well as “genuinely needed” (Clinton Mills, 687 F. Supp. at 230), before a court may require disqualification.

hi die instant case, Defendants have stated an intent to call the Attorneys to testify for the defense. Specifically, they allege that the Attorneys’ testimony is necessary to show that die Plaintiffs are estopped from bringing this legal malpractice claim.

The mere assertion or allegation that the Attorneys’ testimony will be prejudicial to the Plaintiffs does not necessarily mean that such testimony, in feet, will be prejudicial. The Defendants do not explain how die testimony will prejudice the Plaintiffs; they merely state their belief that it will support their estoppel defense. Def. Mem. in Resp. to Plaintiffs’ Cont. That Mot. to Disq. is Moot, at 15. If the Attorneys’ testimony actually advances the Defendants’ case, it might be prejudicial to the Plaintiffs’ case; but, at this time, die Court cannot conclude that this is “apparent." hi addition, Defendants have not shown that the Attorneys’ testimony is “relevant,” “necessary," and “genuinely needed,” for the alleged estoppel defense of the Defendants could or might be presented by witnesses other than the Attorneys.

Furthermore, Defendants allege that Attorneys “are potentially liable to the Plaintiffs and potential third-party Defendants.” Def. Mem. in Resp. to Plaintiffs’ Cont. That Mot. to Disq. is Moot, at 16. At this juncture in the proceedings, the circumstances present merely a potential conflict of interest which should not result in the Attorneys’ disqualification at this time. An actual conflict of interest must arise before withdrawal is required. See Richmond Hilton Assoc. v. Richmond, 690 F.2d 1086, 1089 (4th Cir. 1982). "[T]he disqualification of a party’s chosen counsel is a serious matter which cannot be based on imagined scenarios of conflict." Tessier, 731 F. Supp. at 729 (emphasis added).