in Re Dawn Gayken

• Court: Court of Appeals of Texas
• Decided: June 16, 2005
• Docket: 09-05-00169-CV
• Status: Published

Opinion

In The

Court of Appeals

Ninth District of Texas at Beaumont

____________________

NO. 09-05-169 CV

IN RE DAWN GAYKEN

Original Proceeding

MEMORANDUM OPINION

In this mandamus proceeding, Dawn Gayken challenges an order denying her motion to disqualify opposing counsel, a lawyer who was in a firm that formerly represented her in this case. The trial court found that the motion was filed for dilatory purposes and that Gayken previously consented to the appearance. The facts of this case establish neither informed consent by Gayken after adequate disclosure of the conflict of interest, nor waiver of the right to seek disqualification of opposing counsel. We hold that, though counsel Thomas Fountain proceeded in good faith, he is disqualified from representing the real party in interest, Ann D. Ewton. We conditionally grant the relator's petition for writ of mandamus.

The underlying litigation arises from Gayken's purchase of the dental practice of Merle Clement Ewton, D.D.S. See Ewton v. Gayken, 130 S.W.3d 382, 383 (Tex. App.--Beaumont 2004, pet. denied). Gayken sued Merle Ewton and his wife, Ann D. Ewton, for deceptive trade practices, and the Ewtons sued Gayken on the promissory note she executed in connection with the purchase. Id. After Dr. Ewton's death, his widow prosecuted the suit individually and in a representative capacity. Id. Information provided to the FBI by Gayken resulted in Ewton's conviction on federal criminal charges. Id. The trial court dismissed the civil case for want of prosecution. Id. at 384.

Ewton filed a bill of review in 2001. Craig Welscher, of the firm Bair & Welscher, and an associate named Marc Krasney represented Gayken on the bill of review. The firm dissolved, and Gayken's file remained with Bair, who formed the firm Bair & Fountain P.C. with Thomas M. Fountain. Krasney appeared in the case while associated with Bair & Fountain and for several months Bair & Fountain represented Gayken in the bill of review proceeding. Fountain performed no work in the case. Bair & Fountain got in a billing dispute with Gayken, and Welscher substituted in as counsel for Gayken in 2002. The trial court ruled for Gayken on Ewton's bill of review, and Ewton appealed. On appeal from the denial of the bill of review, we held that Ewton established a prima facie claim in support of her bill of review, reversed the trial court's judgment, and remanded the cause to the trial court for a trial on the merits of the bill of review. Ewton v. Gayken, 130 S.W.3d at 385.

In November 2004, Fountain telephoned Welscher and asked if he would object to Fountain joining Ted Cox as co-counsel of record for Ewton. Welscher told Fountain he had no objection. Fountain entered an appearance and designation as lead counsel for Ewton on November 18, 2004, and discovery commenced. While reviewing discovery with Gayken in late January or in February, 2005, Welscher informed his client that Fountain was Ewton's lawyer. Gayken recalled that Fountain had been her lawyer and inquired how a lawyer could represent both sides. She filed a motion to disqualify Fountain on February 23, 2005. At the first hearing, conducted March 17, 2005, Fountain argued that he was not disqualified because he had personally performed no work on the case at Bair & Fountain. At a second hearing conducted April 7, 2005, Fountain argued that the motion was filed to delay the May trial setting, that Welscher "is presumptively aware of the things in his file" and that in his capacity as agent for Gayken, Welscher had consented to Fountain's appearance in the case. Welscher responded that a long period of time elapsed between the time Bair & Fountain had the file and the time Fountain entered the case as counsel for Ewton, and he had forgotten that Fountain had been with the firm while it had the file. The trial court denied the motion to disqualify Fountain.

Rule 1.09 of the Texas Rules of Professional Conduct provides the guiding rule and the relevant considerations for the trial court in determining whether an attorney's representation of a party in a case presents a conflict of interest with a former client. National Med. Enters., Inc. v. Godbey, 924 S.W.2d 123, 132 (Tex. 1996); Tex. Disciplinary R. Prof'l Conduct 1.09, reprinted in Tex. Gov't Code Ann. tit. 2, subtit. G app. A (Vernon 2005) (Tex. State Bar R. art. X, § 9). The relator contends Fountain's representation of Ewton constitutes a violation of Rule 1.09 in that Fountain is attempting to represent the opposing party in the same suit in which he was once directly associated with the firm representing the relator. "Without prior consent, a lawyer who personally has formerly represented a client in a matter shall not thereafter represent another person in a matter adverse to the former client . . . if it is the same or a substantially related matter." Tex. Disciplinary R. Prof'l Conduct 1.09(a)(3). There is an irrebuttable presumption that an attorney gains confidential information on the cases at the firm where he works. In re Mitcham, 133 S.W.3d 274, 276 (Tex. 2004). ⁽¹⁾ The Rules of Professional Responsibility prohibit Fountain from representing Ewton unless Gayken consented to the representation. See Tex. Disciplinary R. Prof'l Conduct 1.09(a)(3).

It is undisputed that Gayken never personally consented to Fountain's representation of Ewton. Likewise, it is not clear Fountain mentioned the prior representation to Welscher when he asked Welscher if he would object to the appearance. Welscher says he did not recall Fountain's prior association with the case when he and Fountain spoke. It is undisputed that Welscher did not consult his client before giving his assent. To establish consent, Ewton relies upon Welscher's authority to act for his client, Welscher's forgotten knowledge of Fountain's prior association with the case, and a presumption that Welscher should be familiar enough with the file that he would recall that some of the documents in the file were signed by Krasney of Bair & Fountain, P.C. and realize that the canons of ethics would prohibit Fountain from entering the case without consent.

In support of her argument regarding consent, Ewton relies on Davis v. Stansbury, 824 S.W.2d 278, 280-81 (Tex. App.--Houston [1^st Dist.] 1992, orig. proceeding). In Davis, the wife retained an attorney, Foster, to represent her in a divorce. The couple reconciled, then separated. The husband approached Foster's partner, Orsak, with whom the husband has a social relationship, about representing him in the divorce. The husband did not tell Orsak that Foster represented the wife in the prior proceeding, and retained Orsak after a second meeting in which no privileged information was imparted. When Orsak gave his secretary the retainer check, he learned of the prior representation and withdrew from the case. The husband then moved to disqualify Foster from representing the wife. The court of appeals held the trial court abused its discretion by disqualifying Foster. Id. at 284. The court reasoned that Orsak had followed the relevant rules of professional conduct and thereby eliminated the conflict. Id. at 283. We fail to see how this case informs the issue of consent. Moreover, Davis distinguished a case in which the attorney was disqualified from representation of a subsequent client based on confidential information obtained from the prior client. Id. at 282, n.2 (distinguishing Clarke v. Ruffino, 819 S.W.2d 947 (Tex. App.--Houston [14th Dist.] 1991, orig. proceeding [writ dism'd w.o.j.])). That is the situation we face.

This case bears more similarity to In re Posadas USA, Inc., 100 S.W.3d 254, 256 (Tex. App.--San Antonio 2001, orig. proceeding), a case in which attorneys representing multiple parties recognized a conflict under Rule 1.06, Texas Rules of Professional Conduct, and sought to withdraw from representing one of the parties. The real parties in interest argued that the parties must have considered the possibility of a conflict when they agreed to be represented by one attorney. Id. at 257. There was, however, no evidence that the parties consented after the conflict arose. Id. at 258. Counsel's action in filing the motion to withdraw indicated the client did not consent. Id. In our case, Ewton essentially argues that Welscher must have realized Fountain might have a conflict of interest because he should have recalled that Fountain was with his former firm while it represented Gayken. Although Welscher admits he did not object to Fountain handling the case, it is not clear the issue of prior representation was expressly addressed at that time. Gayken did not consent to Fountain's representation of Ewton after disclosure of the relevant circumstances.

Comment 10 to Rule 1.09 informs us that "[t]his Rule is primarily for the protection of clients and its protections can be waived by them. A waiver is effective only if there is consent after disclosure of the relevant circumstances, including the lawyer's past or intended role on behalf of each client, as appropriate." Tex. Disciplinary R. Prof'l Conduct 1.09 cmt. 10. Informed consent is required. During the second hearing, Fountain suggested Welscher "knew Krasney handled the case after [Bair & Welscher dissolved] for a couple of months under the name Bair & Fountain, and that's the reason I called him." In his affidavit, however, and elsewhere in the course of the two hearings, Fountain said that he, Fountain, was unaware that Bair & Fountain had been involved in the case. His affidavit says he first became aware of the case in October, 2004. The affidavit does not say when he learned of his firm's previous representation in the case, nor does the affidavit say he mentioned that representation when he asked if Welscher had an objection. Welscher denies he was actually aware of the conflict when he spoke with Fountain.

Ewton contends disqualification is improper because Fountain never personally worked on the case. Her sole authority for that proposition is a 2002 unpublished case of the Dallas Court of Appeals. See COC Servs., Ltd. v. CompUSA, Inc., No. 05-01-00865-CV, 2002 WL 1792479 (Tex. App.--Dallas 2002, pet. filed). Unpublished cases have no precedential value, though they may be cited. Tex. R. App. P. 47.7. The case in question found a violation of Rule 1.09 but held disqualification to be inappropriate because the conflicted firm was employed on appeal only; consequently, the Court reasoned, any information acquired from the former client was no longer confidential. COC Servs., 2002 WL 1792479, at *4. Our case has yet to be tried in the court below, so the irrebuttable presumption of shared confidences cannot be disregarded. The trial court could not deny the motion to disqualify on the grounds that Gayken consented to Fountain's appearance as her counsel, because Gayken did not express her consent to the appearance after informed disclosure of the resulting conflict of interest.

The trial court found that Gayken's motion to disqualify was filed for dilatory purposes. In considering whether a party waived disqualification, courts consider the length of time elapsed from when the conflict became apparent to when the motion was filed. In re Butler, 987 S.W.2d 221, 224-25 (Tex. App.--Houston [14^th Dist.] 1999, orig. proceeding) (two week delay). A party who fails to move to disqualify counsel in a timely manner waives its complaint. Grant v. Thirteenth Court of Appeals, 888 S.W.2d 466, 468 (Tex. 1994). Fountain entered the case in November, but the conflict did not become apparent until January or February, and Gayken filed her motion February 23. Courts addressing various periods of delay have found motions filed within a few months of discovery to be timely. See Turner v. Turner, 385 S.W.2d 230, 236 (Tex. 1964) (eighteen month delay waived disqualification); Wasserman v. Black, 910 S.W.2d 564, 569 (Tex.App.--Waco 1995, orig. proceeding) (two month delay did not waive complaint) (citing Syntek Fin. Corp. v. Metropolitan Life Ins. Co., 880 S.W.2d 26, 34 (Tex. App.--Dallas), rev'd on other grounds, 881 S.W.2d 319 (Tex. 1994) (six week delay did not waive complaint)); Insurance Co. of North America v. Westergren, 794 S.W.2d 812, 815 (Tex. App.--Corpus Christi 1990, orig. proceeding [leave denied]) (motion timely where filed two months after issue raised); compare HECI Exploration Co. v. Clajon Gas Co., 843 S.W.2d 622, 628-29 (Tex. App.--Austin 1992, writ denied) (eleven month delay supported conclusion that issue was being used as a negotiating tool); Conoco Inc. v. Baskin, 803 S.W.2d 416, 420 (Tex. App.--El Paso 1991, orig. proceeding) (eleven month delay from initial alert to potential Rule 1.06 conflict sufficient to support finding of waiver).

Ewton argues "it was not the matter of time which passed between knowledge of the conflict, the consent given, and the filing of the motion that makes it dilatory and without merit, but rather, the timing of the trial which indicates Relator is solely trying to keep [Ewton] from her day in court." When Gayken filed her motion, the trial setting was more than two months away. See Vaughan v. Walther, 875 S.W.2d 690, 691 (Tex. 1994) (six and one half month delay waived complaint raised on day of final hearing); Enstar Petroleum Co. v. Mancias, 773 S.W.2d 662, 664 (Tex. App.--San Antonio 1989, orig. proceeding [leave denied]) (although mandamus issued as to vicariously disqualified attorney, motion filed on day of trial was untimely as to disqualification of new firm, where conflict discovered four months earlier). Although Ewton claims Gayken filed her motion "on the eve of trial," we do not accept this characterization of the circumstances presented here. The record does not support the finding that the motion was filed for dilatory purposes.

Mandamus relief is available to correct a trial court's error in failing to order disqualification of counsel. In re Epic Holdings, Inc., 985 S.W.2d 41, 54 (Tex. 1998). We hold the trial court abused its discretion by denying the relator's motion to disqualify. Because we find the petition to have merit, the real party in interest's request for sanctions is denied. See Tex. R. App. P. 52.11 (court may impose sanctions for filing a petition that is clearly groundless).

We conditionally grant mandamus relief. We will issue the writ only if the trial court does not comply with this Opinion.

WRIT CONDITIONALLY GRANTED.

PER CURIAM

Submitted on May 6, 2005

Opinion Delivered June 16, 2005

Before McKeithen, C.J., Gaultney and Horton, JJ.

1.

We find the case cited by Ewton to be inapposite. Anderson Producing Inc. v. Koch Oil Co., 929 S.W.2d 416, 424 (Tex. 1996), concerned the issue of a firm's disqualification when a member of the firm was disqualified from acting as an advocate at trial because he became a fact witness. See Tex. Disciplinary R. Prof'l Conduct 3.08. The considerations are quite different where the attorney has changed roles in litigation, as opposed to changing sides on the case. Of course, the client was not the party seeking disqualification in Anderson Producing, as the former client is doing in this case. Anderson Producing, 929 S.W.2d at 418-20.