Roy D. Mercer, LLC v. Reynolds

2013 NMSC 2, 2013 NMSC 002, 3 N.M. 213
CourtNew Mexico Supreme Court
DecidedDecember 6, 2012
DocketDocket 33,830
StatusPublished
Cited by17 cases

This text of 2013 NMSC 2 (Roy D. Mercer, LLC v. Reynolds) is published on Counsel Stack Legal Research, covering New Mexico Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Roy D. Mercer, LLC v. Reynolds, 2013 NMSC 2, 2013 NMSC 002, 3 N.M. 213 (N.M. 2012).

Opinion

OPINION

BOSSON, Justice.

{1} In the practice of law, there is no higher duty than one’s loyalty to a client. This duty applies to current and former clients alike. In this case, we are called upon to interpret this duty in light of Rule 16-110(C) NMRA of the Rules of Professional Conduct regarding the imputation of conflicts of interest to law firms. In interpreting and applying the rule to this case, we hold that when an attorney has played a substantial role on one side of a lawsuit and subsequently joins a law firm on the opposing side of that lawsuit, both the lawyer and the new firm are disqualified from any further representation, absent informed consent of the former client. We also specifically conclude under the same rule that screening the new attorney from any involvement in the lawsuit is not an adequate response to the conflict.

BACKGROUND

{2} The underlying case in this matter concerns a property dispute between BNSF Railway (BNSF) and Roy D. Mercer, LLC (Mercer). The case centers on the interpretation of an easement. BNSF constructed large berms, dykes, and channels both on and off Mercer’s property designed to divert water away from BNSF’s railroad tracks and through Mercer’s property. BNSF claimed a right to do so pursuant to a 1936 easement granted to BNSF’s predecessor in interest by Mercer’s predecessor in interest. BNSF hired a firm, Gandy Dancer, LLC (Gandy Dancer), to construct the new berms, dykes, and channel.

{3} Mercer objected and threatened to remove the earthwork dykes and berms installed by Gandy Dancer so as to return the property to its natural state. Relying upon its claim of an easement, BNSF filed suit in state court againstMercer on June 3,2008, seeking to enjoin Mercer from removing the earthworks and requesting damages. Mercer filed a counterclaim against BNSF for tort damages and inverse condemnation. Mercer also joined Gandy Dancer as aparty defendant for trespass, negligence, and prima facie tort.

{4} Once joined as a party, Gandy Dancer, through its attorneys Riley, Shane & Keller, P.C. (Riley Law Firm), removed the matter to federal court, alleging federal question jurisdiction. Upon removal, Mercer hired the W agner Ford Law Firm. At that time, the Law Firm consisted of attorneys Kenneth Wagner and Lisa Ford. Although the Law Firm was named Wagner Ford Law Firm, Ford was apparently only an associate. The original scope of legal work was limited to securing a remand of Mercer’s counterclaims to state court. However, the engagement letter left open the possibility of the Wagner Ford Law Firm assisting further in the state case if it was remanded. Both attorneys Wagner and Ford actively represented Mercer in the federal court proceeding, each entering separate entries of appearance on behalf of Mercer. The Riley Law Firm represented Gandy Dancer throughout all of the proceedings.

{5} The federal court ultimately granted Mercer’s motion to remand to state court. Mercer’s billing records indicate that Ford continued to be actively involved in the case on Mercer’s behalf. While she never entered an appearance in the state court proceedings, Ford was involved in strategy meetings with Mercer and co-counsel and was active in investigative efforts, discovery, and communication with experts, and also attended court hearings on Mercer’s behalf. As one of Mercer’s attorneys, Ford was privy to all strategy and case management decisions, as well as privileged communications from her client.

{6} In January 2010, Mercer added another law firm, Law & Resource Planning Associates, P.C. (the LRPA Law Firm) to represent it in the state court proceeding because of water law issues involved in that case. The Wagner Ford Law Firm ceased representing Mercer in late 2010. In addition, Ford also left the Wagner Ford Law Firm in December 2010.

{7} In late June 2012, while the state court proceeding was ongoing, the LRPA law firm learned via the Riley firm’s website that the Riley firm had hired Ford as a new associate. LRPA promptly sent a letter to Mark Riley of the Riley firm raising Ford’s conflict of interest and stating that the Riley firm could no longer represent Gandy Dancer in the litigation with Mercer, Ford’s former client. The Riley firm then sent a letter to Kerwin Hollowwa, corporate counsel for Mercer, notifying him that Ford would be joining the Riley firm “effective July 2, 2012.” The letter also described the steps the Riley firm would take to screen Ford from any involvement in the Mercer case. In responding to the LRPA letter, the Riley firm attached a copy of its letter to Mr. Hollowwa, stating that the attached letter should “address any concerns you may have regarding a conflict of interest in connection with the Roy D. Mercer, LLC v. Gandy Dancer matter.” LRPA replied that it continued to have concerns about Riley’s representation of Gandy Dancer and that Mercer would not waive the conflict of interest.

{8} The Riley firm then filed a motion in the state case seeking judicial approval of a Rule 16-110(C) screening process for Ford that Riley believed would allow its continued representation of Gandy Dancer. The Riley firm asserted that it had timely put in place a screening process that would shield Ford from any involvement in the Mercer-Gandy Dancer litigation and would protect any confidential information that Ford may have accumulated during her prior representation of Mercer. Riley also argued that Ford had not played a substantial role in the state court case, claiming that her previous involvement was limited to the remand of the federal court case. Riley pointed out that Ford had not entered an appearance on behalf of Mercer in the state court case and had no decision-making authority.

{9} Mercer filed a response to Gandy Dancer’s screening motion and also filed a cross-motion to disqualify the Riley firm. Mercerpointed to billing records showing that Ford had attended meetings to formulate strategy in both the state and federal cases.

{10} After full briefing on the competing motions, oral argument, and supplemental briefing, the district court issued an Order and a Memorandum Decision. The court found that Ford had previously represented Mercer in the same or a substantially similar matter, her role was substantial, and therefore she had a conflict of interest under Rule 16-109(A) NMRA that would prevent her from acting as attorney for Gandy Dancer. The court found that Ford had information protected by Rules 16-106 and 16-109 NMRA that was material to the present litigation and that such information was neither peripheral or tenuous. The court also found that Mercer had not waived the conflict. On the basis of these findings, the district court found that the Riley firm had violated Rule 16-110(C) when it hired Ford while still representing Gandy Dancer.

{11} Nevertheless, the district court found that the equities favored Gandy Dancer and declined to disqualify the Riley firm. The court reasoned that Gandy Dancer was an innocent bystander and would be severely harmed if it had to hire substitute counsel given an imminent trial date. The court found that Mercer’s interest was protected by the Riley firm’s screening process, which kept Ford segregated from the litigation and protected confidential information. The court concluded that Mercer should file a complaint with the Disciplinary Board against the Riley firm.

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Cite This Page — Counsel Stack

Bluebook (online)
2013 NMSC 2, 2013 NMSC 002, 3 N.M. 213, Counsel Stack Legal Research, https://law.counselstack.com/opinion/roy-d-mercer-llc-v-reynolds-nm-2012.