In re Villas at Highland Park Homeowners Ass'n v. Villas at Highland Park, LLC

2017 CO 53, 394 P.3d 1144, 2017 WL 2224369, 2017 Colo. LEXIS 415
CourtSupreme Court of Colorado
DecidedMay 22, 2017
DocketSupreme Court Case 16SA212
StatusPublished
Cited by131 cases

This text of 2017 CO 53 (In re Villas at Highland Park Homeowners Ass'n v. Villas at Highland Park, LLC) is published on Counsel Stack Legal Research, covering Supreme Court of Colorado primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Villas at Highland Park Homeowners Ass'n v. Villas at Highland Park, LLC, 2017 CO 53, 394 P.3d 1144, 2017 WL 2224369, 2017 Colo. LEXIS 415 (Colo. 2017).

Opinions

JUSTICE MÁRQUEZ

delivered the Opinion of the Court.

¶1 This original proceeding arises in a construction-defeet case filed by a homeowners’ association against several real-estate developers. An attorney for the homeowners’ association, Mari Perczak, previously represented one of the real-estate developers, Dale Franceseon, when Francescon was a defendant in other construction-defeet litigation. Based on Perczak’s prior representation of Francescon, the developers in this case (including Francescon) moved to disqualify Perczak and her law firm under Rules 1.9 and 1.10 of the Colorado Rules of Professional Conduct.

¶2 Rule 1.9 provides that an attorney has certain ethical duties to former clients that persist even after the attorney-client relationship has concluded. Relevant here, Colo. RPC 1.9(a) prohibits an attorney from representing a party whose interests are materially adverse to those of a former client if the former and present matters are “substantially related” to one another such that there is a substantial risk that confidential information that normally would have been obtained in the prior representation would materially advance the current client’s position in the present matter. People v. Frisco, 119 P.3d 1093, 1096 (Colo. 2005). If an individual attorney has a disqualifying conflict under Colo. RPC 1.9(a), that conflict may be imputed to the lawyer’s firm and require disqualification of the entire firm. See Colo. RPC 1.10.

¶3 This is not the first time Francescon has sought to disqualify Perczak; indeed, Franceseon has moved to disqualify her under Colo. RPC 1.9(a) in at least two other construction-defect eases in which she brought claims on behalf of a homeowners’ association against Francescon and other real-estate developers. In one of these previous cases, Sawgrass at Plum Creek Community Association, Inc. v. Sawgrass at Plum Creek, LLC, the trial court denied the motion to disqualify because it concluded that the Sawgrass lawsuit was not “substantially related” to the prior matters in which Perczak represented Francescon. No. 2010CV3532 (Douglas Cty. Dist. Court Sept. 5, 2013).

¶4 In the present case, the trial court denied the developers’ disqualification motion without meaningfully analyzing for purposes of Colo. RPC 1.9(a) whether this case is “substantially related” to the prior matters in which Perczak represented Francescon. Instead, the trial court relied on issue preclusion, the doctrine that bars relitigation of an issue that is “identical” to an issue that was previously litigated and decided, Stanton v. Schultz, 222 P.3d 303, 307 (Colo. 2010). Here, the trial court appeared to conclude that the Sawgrass ruling denying the motion to disqualify Perczak in that case had preclusive effect so as to bar the developers’ motion under Colo. RPC 1.9(a) in this case. The developers filed a C.A.R. 21 petition in this court, seeking review of the trial court’s order denying the disqualification motion on the basis of issue preclusion.

¶5 We issued a rule to show cause to determine whether the trial court erred in relying on the doctrine of issue preclusion to deny the developers’ attorney-disqualification motion. The disqualification inquiry under Colo. RPC 1.9(a) asks whether an attorney’s prior representation and current representation are “substantially related.” This inquiry under Colo. RPC 1.9(a) is specific to the particular matter for which disqualification is sought. Therefore, we conclude that a motion to disqualify under Colo. RPC 1.9(a) will rarely, if ever, raise an “identical” issue to a disqualification motion in another case because the analysis under Rule 1.9(a) of whether the prior and current matters are substantially related will differ in each ease.

¶6 The dispositive legal issue in the developers’ attorney-disqualification motion— whether this case is “substantially related” to Perczak’s prior representation of Frances-eon — is specific to the present dispute. Moreover, the nature of the claims asserted in this case differs from the nature of the claims asserted in Sawgrass. Thus, we conclude that [1148]*1148the dispositive issue here is not “identical” to the issue decided in Sawgrass, and therefore, the doctiine of issue preclusion does not apply to the developers’ motion in this case. Accordingly, the tidal court abused its discretion by relying on issue preclusion to deny the developers’ disqualification motion. We therefore make the rule absolute, vacate the trial court’s order denying the developers’ motion to disqualify Perczak and her law firm, and remand this ease for the trial court to analyze the merits of the developers’ motion under Colo. RPC 1.9.

I. Facts and Procedural History

¶7 The attorney at the center of this disqualification dispute, Mari Perczak, filed the present lawsuit (“Villas”) on behalf of Villas at Highland Park Homeowners Association, Inc., in November 2013. The lawsuit named as defendants Villas at Highland Park, LLC; CC Communities, LLC; Century Communities, Inc.; and Horizon Building Services, LLC; as well as six individuals, including Dale Francescon (collectively, the “developers”). Because the developers seek relief from the trial court’s denial of their motion to disqualify Perczak and her law firm, we consider the allegations contained in the motion to disqualify.

¶8 According to the developers, Frances-con has been involved in the residential construction business in Colorado since the 1990s. Francescon and his brother founded a number of companies through which they developed- residential construction projects. Between July 1996 and November 1999, various plaintiffs filed six separate lawsuits against those companies; some of those lawsuits also asserted claims directly against the Francescons,

¶9 Perczak, then a partner at the law firm Godin & Baity, served as lead counsel for the Francescons and the corporate defendants in five of those eases. In those earlier matters, Perczak advised the Francescons and the corporate defendants on various topics, including litigation strategies (particularly the defense of alter-ego and construction-defect claims); the establishment and structure of special-purpose corporate entities for residential construction; settlement strategies and risk tolerance; and the nature and extent of the Francescons’ involvement with the corporate entities. Among the defendants in the earlier eases, only Francescon is a defendant in the present litigation.

¶10 Perczak left Godin & Baity in 2006. In 2007, Perczak became a shareholder in the law firm then named Vanatta, Sandgrund, Sullan & Sullan, P.G. (the “Sullan Firm”), which merged in 2014 with the firm in the present case, Burg Simpson Eldredge Hersh & Jardine PC (the “Burg Firm”). As relevant to this case, Perczak and other attorneys with the Sullan Firm represented homeowners’ associations in two construction-defect lawsuits against Francescon and some of the same corporate defendants in this case.

¶11 First, in December 2010, attorneys with the Sullan Firm filed Sawgrass at Plum Creek Community Association, Inc. v. Sawgrass at Plum Creek, LLC (“Sawgrass”), No. 10CV3532 (Douglas Cty. Dist. Court), and Perczak later appeared as counsel for the homeowners’ association. The Sawgrass litigation alleged construction defects at a planned community in Castle Rock, Colorado.

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Cite This Page — Counsel Stack

Bluebook (online)
2017 CO 53, 394 P.3d 1144, 2017 WL 2224369, 2017 Colo. LEXIS 415, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-villas-at-highland-park-homeowners-assn-v-villas-at-highland-park-colo-2017.