Islander East Rental Program v. Ferguson

917 F. Supp. 504, 1996 U.S. Dist. LEXIS 2609, 1996 WL 93513
CourtDistrict Court, S.D. Texas
DecidedMarch 1, 1996
DocketCiv. A. No. G-95-404
StatusPublished
Cited by14 cases

This text of 917 F. Supp. 504 (Islander East Rental Program v. Ferguson) is published on Counsel Stack Legal Research, covering District Court, S.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Islander East Rental Program v. Ferguson, 917 F. Supp. 504, 1996 U.S. Dist. LEXIS 2609, 1996 WL 93513 (S.D. Tex. 1996).

Opinion

ORDER

KENT, District Judge.

Presently before the Court is the Motion of Plaintiff J. Ray Riley seeking to disqualify the law firm of Fulbright & Jaworski (Fulbright), counsel for Defendants Islander East Association and its Board of Directors.1 For the reasons set forth below, the Motion is hereby GRANTED.

I. Background

This case involves a contentious battle over condominium rentals and servicemark rights. The action was initiated by Plaintiffs Islander East Rental Program (IERP), an unincorporated association of owners (IERP participants) of residential condominiums units at the Islander East Condominium in Galveston, and J. Ray Riley, one of the IERP participants. The Defendants are the Islander East Association (the Association), the corporation established to administer the Islander East Condominium regime, as well as the individual condominium owners serving as directors of the Association.

The IERP has existed for approximately seventeen years, developing a base of customers who regularly rent through the IERP. IERP participants give the IERP the exclusive right to rent their condominium units and agree to be bound by the IERP’s organizational rules, which provide that the IERP shall be operated and managed by an executive committee consisting of four participants elected by the IERP participants. Plaintiff J. Ray Riley is the chairman of the IERP executive committee.

The .IERP operated from the Islander East Condominium building, paying rent to the Association for the use of an office and laundry facility constructed by the IERP at its expense. In the past, the Association and the IERP shared the costs of common telephones and the salaries of certain employees, including a joint manager. The manager was hired by the IERP to manage its condominium rental business and by the Association to manage its affairs in the administration of the regime.

According to the Plaintiffs, the IERP extensively promoted and advertised using the names “Islander East” and “Islander East Rental Program” as tradenames and service-marks. As a result, the tradenames and servicemarks became widely recognized and distinguished the services offered by the IERP from similar services offered by others. The IERP contends it has established substantial good will in connection with its services provided under its servicemarks and tradenames.

The Plaintiffs contend that in July 1995, the Defendants abolished the IERP’s executive committee and asserted complete control over the IERP, hiring a professional property manager to run the program and using the IERP servicemarks and tradenames without its consent. The Plaintiffs contend the Defendants appropriated the IERP’s business to coerce the IERP participants to continue paying a disproportionate share of the ex[507]*507penses of the regime.2

Not unexpectedly, the Defendants take a different view of the situation. The Defendants contend that a rental program is mandated by the condominium regime bylaws, and that the IERP and its executive committee, created by the Association in accordance with this mandate, are subject to the authority of the Association and its Board of Directors (Board). According to the Defendants, the Association began using the Islander East servicemark and tradename before the IERP was established, and the IERP used the marks only through the Association’s authorization.

The Defendants contend the Board abolished the IERP when Riley and the other members of the IERP executive committee refused to comply with the Board’s demands for greater accountability. The Board then hired a professional property manager to run the rental program, to improve the efficiency of the program for the benefit of all homeowners. The Defendants contend that Riley has refused to accept the Board’s decision, and that Riley filed this lawsuit without first consulting the IERP Participants.

The Plaintiffs filed this action on July 6, 1995, asserting claims including servicemark and trademark infringement, unfair competition, tortious interference with business relationships, misappropriation of trade secrets, conspiracy, conversion, unjust enrichment, and breach of fiduciary duty. In their counterclaims, the Defendants assert against the Plaintiffs largely the same claims asserted by the Plaintiffs against the Defendants.

During the pendency of this action, pursuant to an order of this Court, neither party is using the name Islander East to market its rental services. Because of the animosity between the parties, the Court was forced to establish elaborate rules governing the use and operation of telephone services and access to rental units. It is against this rancorous backdrop that the Court must consider Riley’s Motion to disqualify Fulbright.

II. Disqualification

Riley’s Motion for disqualification is premised on Fulbright’s representation of Riley in a divorce proceeding in 1987 and 1988. According to Riley, he disclosed confidential financial information to Fulbright during the course of the divorce proceeding, and these confidences are jeopardized by Fulbright’s representation of the Defendants. In support of his motion, Riley points to the Defendants’ discovery request for “[rjecords of all monies paid or transferred by [IERP] from 1977 to the present to any past or present member ’ of the executive committee, to J. Ray Riley or his law firm, or to his past wives or present wife.” Riley contends the discovery request establishes that there is a genuine risk that the confidences he revealed to Fulbright will be revealed to the Defendants.

A.

As a preliminary matter, the Court must first consider the waiver argument asserted by the Defendants. According to the Defendants, because Riley did not raise the disqualification issue for four months after being put on notice of the representation, Riley has waived his right to object to Fulbright’s representation of the Defendants. The Court disagrees.

While courts have found implied waivers when a motion to disqualify was not timely made, these cases generally involve delays much longer than four months, or motions made on the eve of trial. See Central Milk Producers Co-op. v. Sentry Food Stores, Inc., 573 F.2d 988, 991 (8th Cir.1978) (waiver found where disqualification motion brought more than two years after notice of representation and only one month before the scheduled trial date); Trust Corp. of Montana v. Piper Aircraft Co., 701 F.2d 85, 87 (9th Cir.1983) (waiver where disqualification not [508]*508raised for more than two and half years after notice of representation); Employers Ins. of Wausau v. Albert D. Seeno Constr. Co., 692 F.Supp. 1150, 1165-66 (N.D.Cal.1988) (waiver where disqualification motion not made until well over a year after moving party became aware of conflict). Here, the Court concludes the four month period between the initiation of this action and the filing of Riley’s motion in no way amounts to an unreasonable delay; thus, Riley has not waived his right to object to Fulbright’s representation of the Defendants. Cf. Atasi Corp. v. Seagate Technology, 847 F.2d 826

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Bluebook (online)
917 F. Supp. 504, 1996 U.S. Dist. LEXIS 2609, 1996 WL 93513, Counsel Stack Legal Research, https://law.counselstack.com/opinion/islander-east-rental-program-v-ferguson-txsd-1996.