This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2000).
STATE OF MINNESOTA
IN COURT OF APPEALS
Mid-States Building Services, Inc.,
Richfield Senior Housing, Inc., et al.,
XYZ Corporation, et al.,
Isaac Brown Builders, Inc.,
Filed September 17, 2002
Hennepin County District Court
File No. LN011524
William D. Hull, John A. Markert, Coleman, Hull & Van Vliet, PLLP, Suite 2110, 8500 Normandale Lake Boulevard, Minneapolis, MN 55437 (for appellant)
John C. Holper, Karl E. Robinson, Winthrop & Weinstine, P.A., 3200 Minnesota World Trade Center, 30 East Seventh Street, St. Paul, MN 55101 (for respondent Weis Builders, Inc.)
Considered and decided by Anderson, Presiding Judge, Lansing, Judge, and Kalitowski, Judge.
O P I N I O N
In a mechanic’s lien foreclosure action, the district court granted a general contractor’s motion to disqualify the adverse subcontractor’s attorney. Because the subcontractor’s attorney had previously represented the contractor in mechanic’s lien actions that are not wholly distinct from this action and because he assisted the contractor in developing procedures and policies that are at issue in this litigation, we affirm the disqualification.
F A C T S
Mid-States Building Services, Inc., is a Minnesota corporation engaged in the business of carpentry and building construction services. Weis Builders, Inc., is a Minnesota corporation that acts as a general contractor on commercial construction projects. On January 18, 2000, Weis subcontracted with Mid-States for carpentry and building construction services on the Towneplace apartment and hotel project in Minneapolis. A month later, Weis subcontracted with Mid-States for carpentry and building construction services on the Mainstreet Village senior housing project in Richfield. Although the projects are related, the specific project at issue in this litigation is the Mainstreet project.
By late summer of 2000, substantial problems had developed in the working relationship between Weis and Mid-States. Mid-States contends that Weis failed to pay timely and Weis contends that Mid-States failed to meet the project schedule, refused to complete its work in a workmanlike manner, and abandoned the project in late September. Weis contends that on or about October 16, 2000, it provided Mid-States with a 48-hour notice and demand to complete the remaining work, and that Mid-States refused to comply.
Mid-States filed a mechanic’s lien against the property in October 2000 claiming that Weis owed it $337,040 for its work on the project. In February 2001, Mid-States brought this action to foreclose the lien. In its answer, Weis denied that it owed Mid-States any money and, in a counterclaim, alleged damages of over $546,000 for breach of contract, indemnity and contribution, and recoupment and setoff.
In the initial stages of the litigation, Gregory J. Collins and Elizabeth A. Olney Arms represented Mid-States. During discovery Collins and Olney Arms withdrew as counsel for Mid-States. Shortly thereafter, William D. Hull filed a notice of appearance informing the court he had been retained to represent Mid-States. Two weeks later Weis moved to disqualify Hull from representing Mid-States. Weis had previously moved successfully to disqualify Hull from representing Mid-States in the parallel litigation involving the Towneplace apartment and hotel project. That case was assigned to a different Hennepin County judge. Hull contested the disqualification motion and both Weis and Hull submitted affidavits.
At the disqualification hearing and in his affidavit, Hull admitted that he had represented Weis from the mid-to-late 1980’s through June 1998; that he or his firm had represented Weis in sixteen separate litigation matters involving disputes with public owners, private owners, subcontractors, and material suppliers; and that he had provided advice on labor relations and general advice on construction issues. In a supplemental affidavit Hull stated that he was the attorney in his firm responsible for Weis’s representation; that his representation had ended over a year and a half before the contract between Weis and Mid-States was signed; that he had reviewed his files and found no indication that he had participated in revising and updating Weis’s form subcontract agreement; that the subcontract form that he used during his representation of Weis was the Associated General Contractor’s standard subcontract agreement; that the documents Weis alleged that he had drafted as a notice to subcontractors essentially incorporated general provisions from the Associated General Contractor’s subcontract form; that no 48-hour notice was issued to Mid-States; and that, to the best of his knowledge, Weis did not have internal polices and procedures for dealing with subcontractors in the event of disputes.
Jay Weis, president of Weis, stated in his affidavit that Hull and his firm were Weis’s primary litigation counsel from the mid-to-late 1980’s through 1998; that during that time Hull assisted in revising and updating the contract that is at issue between Weis and Mid-States; that Hull counseled Weis on many of Weis’s internal policies and procedures for handling disputes with subcontractors; that Hull helped develop the 48-hour notice Weis provides to subcontractors that fail to perform; and that Hull represented Weis in matters involving many of the same issues that are in dispute in the litigation between Weis and Mid-States.
The district court granted Weis’s motion to disqualify Hull. The court incorporated in its order the memorandum issued by the other Hennepin County judge in the parallel litigation on the Towneplace apartment and hotel project. The memorandum observes that Hull’s representation of Mid-States against Weis “would not normally trigger disqualification in a garden variety mechanic’s lien case, [but] this case is far from garden variety.” The memorandum noted that the allegations in the litigation “will require far more discovery into Weis’s business practices and the development of the instant construction contract than would be the case in a typical mechanic’s lien case.” The memorandum concluded that because Hull may possess confidential information relevant to the litigation, he must be disqualified from representing Mid-States on its adverse claim against Weis.
On appeal, Mid-States argues that (1) the district court applied the wrong legal standard to the disqualification motion and (2) under the correct legal standard, no substantial, relevant relationship exists between Hull’s prior representation of Weis and the current litigation between Weis and Mid-States.
D E C I S I O N
Minnesota Rule of Professional Conduct 1.9 governs when an attorney may represent a client in an action against a former client. This rule provides that
[a] lawyer who has formerly represented a client in a matter shall not thereafter:
(a)represent another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interest of the former client unless the former client consents after consultation; or
(b)use information relating to the representation to the disadvantage of the former client except as Rule 1.6 would permit with respect to a client or when the information had become generally known.
Minn. R. Prof. Conduct 1.9.
The Minnesota Supreme Court has established a three-part test to determine whether an attorney may represent a client in an action against the attorney’s former client. The test is:
(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 * * * . 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); see also Lennartson v. Anoka-Hennepin Sch. Dist. 11, 638 N.W.2d 494, 496-97 (Minn. App. 2002) (the three-part Jenson test is the applicable standard to evaluate motions to disqualify counsel), review granted (Minn. Apr. 23, 2002).
Mid-States contends that the district court failed to apply the Jenson test to determine the disqualification motion and, instead, applied Minn. R. Prof. Conduct 1.6 and 1.9. We see no error. The court refers to rule 1.6 in its foundational statement that confidential communications are protected by the Minnesota Rules of Professional Conduct. The court states in its conclusion of law that a lawyer’s representing a new client on matters substantially similar to matters in which he previously represented an adverse former client may violate Minn. R. Prof. Conduct 1.9(a) and (b). This is a correct statement of law. The Jenson test and Minn. R. Prof. Conduct 1.9 are integrated, not mutually exclusive standards. See Prod. Credit Ass’n v. Buckentin, 410 N.W.2d 820, 825 (Minn. 1987) (explaining that the Jenson test is codified in rule 1.9). Furthermore, the incorporated memorandum is a careful application of the Jenson factors. We reject Mid-State’s claim that the district court applied the wrong legal standard to the disqualification motion.
Mid-States contends that on the undisputed facts no substantial, relevant relationship exists between Hull’s past representation of Weis and the current litigation between Weis and Mid-States. We independently review the district court’s interpretation of the Minnesota Rules of Professional Conduct. See Buckentin, 410 N.W.2d at 823 (stating that to ensure uniform application, the reviewing court must retain the final, independent interpretive authority to define the scope of the application of those rules).
To meet the substantial relationship test, “the moving party must establish that the relationship between issues in the prior and present cases is patently clear * * * [and] the issues involved [are] essentially the same.” Fed. Deposit Ins. Corp., v. Amundson, 682 F. Supp. 981, 988 (D. Minn. 1988) (quotation omitted). The test essentially measures the quantum of evidence required for proof of the existence of the professional obligation. Westinghouse Elec. Corp. v. Gulf Oil Corp., 588 F.2d 221, 224 (7th Cir. 1978).
Identical legal issues need not be shown once it is established that the previous representation is akin to the present action “in a way reasonable persons would understand as important to the issues resolved.” In re Corrugated Container Antitrust Litig., 659 F.2d 1341, 1346 (5th Cir. 1981); see also Buckentin, 410 N.W.2d at 824 (stating that disqualification is called for when it is established that attorney provided agency or advice on matters “so closely related to subject matter of present suit that it is readily apparent that it is substantially and essentially akin to the pending matter”) (emphasis added). This is especially true when the attorney’s “former engagement was that of general counsel, or sole attorney on numerous matters.” In re Graff marketing Corp., 42 B.R. 801, 807 (Bankr. S.D.N.Y. 1984); See also Global Van Lines, Inc. v. Superior Court, 144 Cal. App. 3d 483, 489 (Cal. Ct. App. 1983) (“A corporate general counsel is the legal advisor to the firm’s top management and in the absence of proof to the contrary it must be presumed that * * * [he] acquired substantial knowledge of the policies, attitudes and practices of * * * management * * * .”).
It is undisputed that Hull represented Weis as its primary litigation counsel for over ten years. Hull acknowledges that he represented Weis on 16 separate litigation matters involving disputes with subcontractors, and provided advice on labor relations and general advice on construction issues. Although Hull’s supplemental memorandum seeks to disavow any specific work on the contract, procedures, or policies at issue, the district court attached greater weight to Weis’s affidavit setting forth Hull’s participation in these matters because the client is more likely to remember the attorney’s specific activities with respect to the representation. Weis’s affidavit states that Hull assisted in revising and updating the contract that is at issue between Weis and Mid-states, that Hull counseled Weis on many of Weis’s internal policies and procedures for dealing with subcontractors in the event of disputes, that Hull helped develop the 48-hour notice Weis provides to subcontractors that fail to perform, and that Hull represented Weis in many of the same issues that are in dispute in the litigation between Weis and Mid-States.
In the parallel action on the Towneplace apartments and hotel project, the court concluded that even if Hull did not draft the contract at issue and even if the 48-hour notice is not relevant to the current litigation, the evidence demonstrates that over the course of Hull’s representation of Weis, Hull advised Weis on internal procedures relating to subcontractor relations and that this advice is sufficient to trigger disqualification in mechanic’s lien litigation that involves allegations of breach of contract, indemnification and contribution, and recoupment and setoff because these claims will require far more discovery into Weis’s business practices and the development of the construction contract.
The reasoning of the court in the Towneplace project applies equally to this action between Weis and Mid-States. The interpretation of the contract between Weis and Mid-States, the parties’ rights and duties under that contract, and Mid-States’s performance or lack of performance under the contract are all at issue in this litigation. Although Hull seeks to diminish the relevancy of Weis’s internal policies and procedures, Mid-States in its discovery documents has sought information on these very policies and procedures.
The facts demonstrate a substantial, relevant relationship between the subject matter of Hull’s representation of Weis and the subject matter of the litigation between Weis and Mid-States. Under the Jenson test it is, therefore, irrebuttably presumed that Hull received confidences from Weis and, in the absence of Weis’s consent or strong competing equities, may not represent Mid-States’s adverse interest in this litigation. The district court properly disqualified Hull from representing Mid-States.