Turner v. AIG Domestic Claims, Inc.

823 F. Supp. 2d 899, 2011 U.S. Dist. LEXIS 120626, 2011 WL 4946726
CourtDistrict Court, D. Nebraska
DecidedOctober 18, 2011
DocketNo. 4:10CV3159
StatusPublished
Cited by3 cases

This text of 823 F. Supp. 2d 899 (Turner v. AIG Domestic Claims, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Nebraska primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Turner v. AIG Domestic Claims, Inc., 823 F. Supp. 2d 899, 2011 U.S. Dist. LEXIS 120626, 2011 WL 4946726 (D. Neb. 2011).

Opinion

MEMORANDUM AND ORDER

RICHARD G. KOPF, District Judge.

This matter is before me on an appeal from and objection to Magistrate Judge Zwart’s decision granting a motion to disqualify counsel for Paula Turner (“Turner”), the plaintiff. Deciding that Judge Zwart’s decision was premature, I reluctantly reverse the order of disqualification.

I. NOTICE

Ryan Cooper is one of my law clerks. He shares a position as one of my chambers clerks. For that position, he is a term employee — meaning that he can work no more than four years. He also has a half-time position as one of the pro se staff attorneys. That position is a permanent position so long as there is funding available. In addition to my normal duties, I manage the pro se staff attorneys.

Mr. Cooper resides with Patricia L. Vannoy, one of Turner’s lawyers. For ethical purposes, I analogize Mr. Cooper’s relationship to Ms. Vannoy as similar to marriage.

Consistent with the Code of Conduct for Judicial Employees, Mr. Cooper has had no dealings with this case, and he will have none in the future. He has been and will be shielded from discussions related to this case.1

Despite Mr. Cooper’s relationship with Ms. Vannoy,, I need not recuse myself. See, e.g., Compendium of Selected Opinions § 3.5(d) (last accessed October 12, 2011) (“judge need not recuse where the spouse of the judge’s law clerk ... appears as counsel, but must ensure that ... the law clerk [does not do] any work on the case.”).2 However, “[i]t is advisable not only to isolate the current law clerk from that case, but also to inform the parties that this is being done.” Id. I therefore provide the parties with this notice.

II. BACKGROUND

So as not to unduly extend my opinion, I assume that the reader is somewhat familiar with this case. In any event, I simplify the record for the sake of clarity.

Turner, who had worked in the securities industry, sued Saretsky, Hart, Michaels & Gould, P.C., (“Defendant Law Firm”), an insurance company (“AISLIC”), and a claims-processing firm (“AIG”) that worked for AISLIC. Turner claims that she was covered by an “errors and omissions” policy issued by AISLIC. She asserts that multiple arbitration actions were brought against her, and pursuant to [902]*902a reservation of rights, AISLIC and AIG retained Defendant Law Firm to represent Turner. When the policy limits were exhausted, Turner claims that Defendant Law Firm withdrew. Turner asserts that Defendant Law Firm was controlled by AISLIC and AIG. After Defendant Law Firm withdrew, Turner alleges that she was forced to defend the arbitrations and eventually negotiate a settlement. She now sues the defendants for breach of contract, bad faith, fraudulent misrepresentation, negligent misrepresentation, negligence and legal malpractice.

The Mattson, Ricketts Law Firm and Compass Legal represented some of the claimants in the arbitrations. J.L. Spray, with the Mattson Ricketts Law Firm, and David Gaba, with Compass Legal, were among the primary lawyers for the arbitration claimants. Those same firms and lawyers now represent Turner.

Turner entered into a settlement with some of the arbitration claimants entitled “Settlement Agreement[,] Covenant Not to Sue and Covenant Not to Execute.” (Filing No. 30-9.) The agreement does not appear to be dated.

Without intending to precisely characterize the exact nature of the agreement, it is fair to state (1) that Turner agreed to the entry of arbitration awards against her in the total sum of $4.5 million; (2) that Turner agreed to cooperate in the prosecution of suits against AISLIC and Defendant Law Firm under the insurance policy and otherwise; and (3) that Turner agreed to assign her policy and suit rights to the claimants. In exchange, the claimants agreed not to execute on Turner’s assets in order to satisfy the arbitration awards. The agreement called for the “laws of the State of Nebraska” to “apply to any questions concerning the interpretation and enforcement of this agreement.”

The settlement agreement was signed by Turner. There is no indication in the agreement that she was separately represented by counsel. The agreement was also signed by Compass Law Group and David Gaba and the Mattson Ricketts Law Firm and J.L. Spray. In addition, a third law firm and one of its members, James B. Cavanagh, signed the agreement. All of these lawyers were acting for the claimants.

The Defendant Law Firm filed a motion to disqualify Compass Legal, Gaba, the Mattson Ricketts Law Firm and Spray. Applying “public policy concerns” regarding the possibility for collusion when an attorney represents a former litigation adversary in a subsequent malpractice action, Judge Zwart granted the motion, reasoning that it “is not clear Turner had any reasonable opportunity to decide who would represent her.” (Filing No. 44 at CM/ECF p. II.3)

Separately, Judge Zwart also ruled there were “[a]dditional concerns under relevant ethical rules” in that “Spray’s and Gaba’s testimony is certainly material as it provides a complete picture of the events” related to Turner’s allegations that the Defendant Law Firm failed to take reasonable steps to settle the arbitrations, failed to communicate Turner’s desire to settle the cases and failed to advise Turner of settlement offers. {Id. at CM/ECF pp. 12, 14.)

Judge Zwart added:

[903]*903Furthermore, Turner makes no mention of the fact the Saretsky Firm asserts as an affirmative defense that the Settlement Agreement and this case are the result of collusion between Spray, Gaba, and Turner .... it is difficult to imagine Turner addressing the affirmative defense without offering some sort of evidence from Spray and Gaba regarding the negotiations and execution of the Settlement Agreement.

(Id. at CM/ECF p. 14.)

In connection with Judge Zwart’s last point, the Defendant Law Firm asserts as affirmative defenses, among others, the following:

Alleges, specifically, that the real parties in interest are the underlying claimants in the Arbitrations who were (or purport to be) the beneficiaries of an underlying collusive agreement with Plaintiff that resulted in Plaintiffs acquiescence to the amount of the Award referenced at paragraph 117 of Plaintiffs Complaint in exchange for Plaintiffs agreement to pursue the present legal action and to provide the proceeds of such pursuit to the Arbitration claimants and/or the attorneys of record who represented those claimants and who presently represent Turner in this action.
Alleges that the collusive agreement referenced at paragraphs 131 and 134 constitutes an illegal or impermissible attempt to assign a legal malpractice claim. Specifically, if the collusion between or amongst the Plaintiff, the Arbitration claimants and/or her present attorneys is determined to be a valid agreement, the agreement nevertheless constitutes an impermissible assignment of a malpractice claim and that even though Turner remains the Plaintiff in name, she is not the real party in interest, however, the real parties in interest to whom the claim is purportedly assigned would be barred by law from bringing the present claim.

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Bluebook (online)
823 F. Supp. 2d 899, 2011 U.S. Dist. LEXIS 120626, 2011 WL 4946726, Counsel Stack Legal Research, https://law.counselstack.com/opinion/turner-v-aig-domestic-claims-inc-ned-2011.