This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1998).
STATE OF MINNESOTA
IN COURT OF APPEALS
Estate of: Charles Janecek, Decedent.
Filed December 5, 2000
Ramsey County District Court
File No. P198167572
William E. Haugh, Jr., Collins, Buckley, Sauntry & Haugh, West 1100 First National Bank Building, 332 Minnesota Street, St. Paul, MN 55101-1379 (personal representative)
Robert Salmon, Katherine A. McBride, Meagher & Geer P.L.L.P., 33 South Sixth Street, 4200 Multifoods Tower, St. Paul, MN 55101-1379 (for appellant William E. Haugh, Jr.)
Brent Wm. Primus, Primus Law Office, P.A., 630 Norwest Midland Building, Minneapolis, MN 55401-2350 (for respondent Robert L. Janecek)
David M. Jacobs, Wold, Jacobs & Johnson, P.A., Barristers Trust Building, 247 Third Avenue South, Minneapolis, MN 55415 (for respondent Robert C. Janecek)
Considered and decided by Toussaint, Chief Judge, Kalitowski, Judge, and Shumaker, Judge.
U N P U B L I S H E D O P I N I O N
In this action regarding the settlement of the estate of Charles Janecek, the estate’s personal representative, appellant William E. Haugh, challenges the district court’s order disqualifying his counsel, Kenneth Rohleder, due to a conflict of interest. Appellant contends (1) the district court misapplied the standard for disqualification in granting respondent Robert L. Janecek’s motion to disqualify Rohleder; and (2) respondent’s motion for disqualification was barred by laches, waiver, and consent. We affirm.
An appellate court independently reviews the district court’s interpretation of the Rules of Professional Conduct. Production Credit Ass’n v. Buckentin, 410 N.W.2d 820, 823 (Minn. 1987). The Minnesota Supreme Court has adopted a three-step approach to disqualification issues:
(a) Considering the facts and the issues involved, is there a substantial, relevant relationship or overlap between the subject matters of the two representations?
(b) If so, then certain presumptions apply: First, it is presumed, irrebuttably, that the attorney received confidences from the former client and he or she will not be heard to claim otherwise. Second, it is also presumed, but subject to rebuttal, that these confidences were conveyed to the attorney’s affiliates.
(c) Finally, at this stage, if reached, the court weighs the competing equities.
Jenson v. Touche Ross & Co., 335 N.W.2d 720, 731-32 (Minn. 1983) (citations omitted). Appellant contends that none of the Jenson steps favor disqualification. We disagree.
1. Relationship or Overlap Between Representations
An attorney should not represent a party “where there is an appearance of a conflict of interest or a possible violation of confidence, even if such may not be true in fact.” National Texture Corp. v. Hymes, 282 N.W.2d 890, 894 (Minn. 1979) (purpose is to ensure attorney’s absolute fidelity and to guard against inadvertent use of confidential information) (citation omitted); see also Jenson,335 N.W.2d at 731 (although attorney may believe no confidences were obtained or used, even the “appearance of professional impropriety” must be avoided) (citation omitted).
The underlying action involves the final accounting of decedent Charles Janecek’s estate, respondent’s objection to it, allegations of financial mismanagement against Rohleder and appellant, and allegations of misappropriation against respondent. It is undisputed that in the past Rohleder and respondent have had dealings in a number of different matters. For example, Rohleder represented the Charles Distributing Company when it gave a $29,000 note to the decedent. Respondent contends that Rohleder labeled the note as uncollectable, and it is still owed to the estate while Rohleder alleges that collateral received by respondent was adequate compensation for the debt. Because the resolution of this dispute is part of the current litigation, Rohleder and respondent are positioned as adversaries.
In addition, although the district court erred in finding that Rohleder represented respondent during his divorce, Rohleder did represent the estate when respondent’s former wife sued the estate attempting to subject certain estate properties to the divorce proceedings. Respondent’s former wife attempted to subordinate a $170,000 note given to the estate by respondent’s corporation, Transportation Management, Inc. (TMI). Rohleder did not represent respondent or TMI in regard to the note, but he did general corporate legal work for TMI. Because TMI subsequently declared bankruptcy, and the note remains unpaid, Rohleder and respondent are again in a potentially adversarial relationship.
Further, Rohleder represented respondent in his role as the estate’s personal representative when respondent’s former wife objected to respondent serving in that position. Respondent stepped down and appellant was appointed at Rohleder’s recommendation. But respondent continued to manage various estate properties until 1991, when the allegations of misappropriated funds from these properties surfaced. Those same allegations today make Rohleder and respondent adversaries. Moreover, Rohleder has admitted that he is “hardly a neutral observer.” Thus, we conclude the district court properly determined that under Jenson there is a substantial, relevant relationship or overlap between Rohleder’s previous representation of respondent and the current litigation.
2. Presumptions Regarding Confidences
The second Jenson factor presumes irrebuttably that Rohleder received confidences from respondent and presumes rebuttably that the confidences were conveyed to appellant. Appellant argues that because respondent has not specified the confidences shared, appellant’s uncontroverted assertion that no confidences were shared successfully rebuts the presumption. We disagree. When the allegations of misappropriation against respondent were first raised in 1992, appellant petitioned the court for permission to use independent counsel to investigate respondent because there was a conflict of interest between Rohleder and respondent. Notwithstanding appellant’s assertion that this conflict has been resolved, we conclude that appellant’s previous acknowledgment of a conflict gave the district court an adequate factual basis for finding appellant has not rebutted the presumption.
3. Competing Equities
Finally, we consider the equities. In developing the three-step test, the supreme court acknowledged that “disqualification separates the client from his chosen counsel, causes delay, and may subject both the client and the disqualified lawyer to significant economic hardship.” Jenson, 335 N.W.2d at 731 (citation omitted). Here, Rohleder, at the request of respondent, has represented the estate and the estate’s personal representatives since 1989. In 1992 when allegations of misappropriation against respondent surfaced, appellant recognized the need to replace Rohleder with independent counsel. Now that the estate has reached the stage of final accounting, these and other allegations and cross-allegations have resurfaced resulting in at least an appearance of a conflict of interest.
Moreover, appellant’s assertion that no confidences were actually disclosed between Rohleder and respondent, even if true, is not dispositive. See National Texture Corp, 282 N.W.2d at 894. Courts have long been concerned with the appearance of a conflict of interest. While courts have recognized that the proliferation of large law firms and the mobility of attorneys between firms makes the disqualification of an entire firm based on one attorney’s affiliations unnecessarily harsh, see Jenson, 335 N.W.2d at 731, this case does not involve large firms or attorney mobility. We conclude that in balancing the equities the district court did not abuse its discretion in granting respondent’s motion to disqualify Rohleder.
Appellant raises three additional theories that he argues render the disqualification improper: de facto consent, laches, and waiver. First, appellant did not raise the issue of de facto consent before the district court. Generally, appellate courts may only consider “those issues that the record shows were presented and considered by the trial court in deciding the matter before it.” Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (quotations omitted). Because this issue was not presented to the district court we decline to review it on appeal.
Appellant argued laches to the district court. While the court did not specifically address laches in its opinion, at the hearing the district court implicitly addressed the issue when it stated that, “a conflict is a conflict whenever that conflict is discovered, so to argue laches isn’t going to be too persuasive on me * * * .” We review the district court’s decision on the applicability of the defense of laches under an abuse of discretion standard. Opp v. LaBine, 516 N.W.2d 193, 196 (Minn. App. 1994), review denied (Minn. Aug. 24, 1994). We conclude the district court did not abuse its discretion in choosing not to apply laches and deny the disqualification motion based on the court’s determination that there was a conflict of interest.
Finally, while the district court did not rule on appellant’s argument regarding waiver, both appellant and respondent fully briefed the issue, and there is no advantage to either in not having a prior ruling. “A waiver is effective only if there is disclosure of the circumstances, including the lawyer’s intended role [on] behalf of the new client.” Minn. R. Prof. Conduct 1.9 cmt. Appellant argues that by not making a motion for disqualification in 1992, respondent waived his right to assert it in 1998. But because Rohleder did not represent appellant during the 1992 investigation, there was no conflict to be waived at that time. Moreoever, appellant has not met his burden of demonstrating that the required disclosure was ever made so as to support a finding of waiver.