In Re Se. Eye Ctr. (Pending Matters)

2020 NCBC 9
CourtNorth Carolina Business Court
DecidedJanuary 30, 2020
Docket15-CVS-1648
StatusPublished

This text of 2020 NCBC 9 (In Re Se. Eye Ctr. (Pending Matters)) is published on Counsel Stack Legal Research, covering North Carolina Business Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Se. Eye Ctr. (Pending Matters), 2020 NCBC 9 (N.C. Super. Ct. 2020).

Opinion

In re Se. Eye Ctr. (Pending Matters), 2020 NCBC 9.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION WAKE COUNTY 15 CVS 1648

IN RE SOUTHEASTERN EYE ORDER AND OPINION ON KAY CENTER-PENDING MATTERS HARRIS TURNER’S MOTION TO INTERVENE, TURNER’S MOTION TO REMOVE THE $2.1 MILLION JUDGMENT AGAINST JDPW TRUST AND TO REMOVE JDPW TRUST FROM RECEIVERSHIP, AND PLAINTIFFS’ MOTION TO DISQUALIFY DOUGLAS S. HARRIS AS COUNSEL FOR TURNER (OLD BATTLEGROUND V. CCSEA)

1. THIS MATTER is before the Court upon (i) the Motion of the Sole

Beneficiary of JDPW Trust, Kay Harris Turner (“Turner”), to Intervene Pursuant to

Rule 24 of the North Carolina Rules of Civil Procedure (“Motion to Intervene”), (ECF

No. 1182); (ii) Turner’s Motion to Remove the $2.1 Million Judgment Against JDPW

Trust and to Remove JDPW Trust from Receivership Pursuant to Rule 60(b)(4)(5)(6)

(“Rule 60(b) Motion”) (together with the Motion to Intervene, “Turner’s Motions”),

(ECF No. 1176); and (iii) Plaintiffs Old Battleground Properties, Inc. and Nivison

Family Investments LLC’s (collectively, the “Nivison Parties”) Motion to Disqualify

Douglas S. Harris (“Harris”) as Counsel for Turner (“Motion to Disqualify”), (ECF No.

1196), (collectively, the “Motions”).

2. Having considered the Motions, the related briefing, and the arguments of

counsel at the hearing on the Motions, the Court GRANTS the Motion to Disqualify

and STRIKES the Motion to Intervene and Rule 60(b) Motion, including supporting briefs and materials, without prejudice to Turner’s right to refile or renew either

Motion prior to March 16, 2020.

Smith Debnam Narron Drake Saintsing & Myers, LLP, by Byron L. Saintsing, for Plaintiffs Nivison Family Investments, LLC and Old Battleground Properties, Inc. and Third-Party Defendant Arthur Nivison.

Oak City Law LLP, by Robert E. Fields, III, for Receiver Gerald A. Jeutter, Jr., as Receiver for JDPW Trust U/T/A Dated June 8, 2007, Central Carolina Surgical Eye Associates, P.A., HUTA Leasing LLC, Southeastern Eye Management, Inc., Southeastern Cataract Laser Center, PLLC, EMS Partners, LLC, KEPES Newco, LLC, and DRE Newco, LLC.

Wyatt Early Harris Wheeler, LLP, by Scott F. Wyatt and Donavan J. Hylarides, for Defendants Richard A. Harris, Historic Castle McCulloch, LLC, and Castle McCulloch, Inc.

Douglas S. Harris, pro se.

Douglas S. Harris for Kay Harris Turner, in her alleged capacity as the beneficiary of JDPW Trust U/T/A Dated June 8, 2007.

Bledsoe, Chief Judge. I.

BACKGROUND

3. The factual and procedural background of this case is extensive and

complex. A detailed background may be found in In re Se. Eye Ctr.-Pending Matters,

2019 NCBC LEXIS 29 (N.C. Super. Ct. May 7, 2019) (“Summary Judgment Order”).

The Court recites here only the background facts and procedural history relevant to

the Motions.

4. After the Summary Judgment Order was entered on July 26, 2019, the

Court noticed a jury trial of all remaining issues in this action for December 9, 2019. (ECF No. 1171.) A few weeks later, on August 13, 2019, Turner, in her purported

capacity as the beneficiary of JDPW Trust U/T/A Dated June 8, 2007 (“JDPW Trust”

or the “Trust”) and through her counsel Harris, filed the Rule 60(b) Motion, by which

she sought to remove the Nivison Parties’ $2.1 million allowed claim against the

Trust and remove the Trust from the current receivership. 1 (Mot. Remove $2.1

Million J. JDPW Trust & Remove JDPW Trust Receivership Pursuant Rule

60(b)(4)(5)(6), ECF No. 1176.) The $2.1 million claim had been allowed and the Trust

placed into receivership through this Court’s orders dated April 28, 2016. (ECF Nos.

471, 472.)

5. Because the Rule 60(b) Motion potentially impacted the scope of the issues

for trial, the Court continued the jury trial to January 27, 2020. (ECF No. 1181.)

Thereafter, on August 22, 2019, Turner, again purporting to act in her capacity as

the beneficiary of the Trust, moved to intervene for the limited purpose of making the

Rule 60(b) Motion. (Mot. Sole Beneficiary JDPW Trust, Kay Harris Turner, Intervene

Pursuant Rule 24 N.C. R. Civ. P., ECF No. 1182.) The Court permitted limited

discovery concerning Turner’s Motions, (ECF No. 1190), and set a briefing and

hearing schedule on the then-pending Motions, (ECF No. 1191).

1 Gerald A. Jeutter, Jr. (“Receiver”) has been appointed to serve as receiver over the following

entities: Central Carolina Surgical Eye Associates, P.A. (“CCSEA”), EMS Partners, LLC, Southeastern Cataract Laser Center, PLLC, Southeastern Eye Management, Inc., HUTA Leasing, LLC, Kepes Newco, LLC, DRE Newco, LLC, and JDPW Trust (collectively, the “Receivership Entities”). See Se. Eye Ctr., 2019 NCBC LEXIS 29, at *19, n. 4, *20; Old Battleground Props. v. Cent. Carolina Surgical Eye Assocs., P.A., 2015 NCBC LEXIS 19, at *24 (N.C. Super. Ct. Feb. 25, 2015). 6. On September 20, 2019, the Nivison Parties moved to disqualify Harris as

counsel for Turner under Rules 1.7 and 3.7 of the North Carolina Rules of

Professional Conduct. (Pls.’ Mot. Disqualify Douglas S. Harris Counsel Kay Harris

Turner [hereinafter “Mot. Disqualify”], ECF 1196.)

7. The Court held a hearing on the Motions on January 8, 2020, at which all

parties were represented by counsel and Harris appeared pro se. The Motions are

ripe for resolution.

II.

ANALYSIS

A. Motion to Disqualify

8. Although last filed, the Court concludes that the Motion to Disqualify should

be determined before Turner’s Motions. As explained more fully below, Plaintiffs

allege that Harris has conflicts of interest that preclude his representation of Turner

in this litigation, including that he will be a material witness offering testimony in

conflict with Turner at trial and that he has economic interests in the outcome of the

litigation directly opposed to Turner’s interests. Because there is an obvious risk that

Turner’s Motions have been prepared by conflicted counsel, the Court concludes that

justice and fairness require that the Motion to Disqualify be decided first, with

Turner’s Motions decided only if the Motion to Disqualify is denied.

9. Numerous courts around the country have followed this approach under

similar circumstances. See, e.g., Grimes v. District of Columbia, 794 F.3d 83, 90 (D.C.

Cir. 2015) (“[A] plausible claim of conflict must be resolved before allegedly conflicted counsel or the court takes further action in the case[,]” as “a conflict of interest could

affect the fairness and impartiality of the proceeding[.]”); id. (“Resolving asserted

conflicts before deciding substantive motions assures that no conflict taints the

proceeding, impairs the public’s confidence, or infects any substantive motion

prepared by or under the auspices of conflicted counsel.”); Bowers v. Ophthalmology

Grp., 733 F.3d 647, 654 (6th Cir. 2013) (“A [trial] court must rule on a motion for

disqualification of counsel prior to ruling on a dispositive motion because the success

of a disqualification motion has the potential to change the proceedings entirely.”);

Sumpter v. Hungerford, No. 12-717, 2013 U.S. Dist. LEXIS 71119, at *12 (E.D. La.

May 20, 2013) (A “motion to disqualify must . . . be resolved first in the interest of

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2020 NCBC 9, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-se-eye-ctr-pending-matters-ncbizct-2020.