Opinion
Civil No. CV 02-818-HA
December 5, 2002.
Beth Skillern and Sheila Potter, Bullivant Houser Bailey, Attorneys for Plaintiff.
Michael Simon, Stephen Feldman and Perkins Coie, Attorneys for Defendants.
OPINION AND ORDER
BACKGROUND
This litigation arises from a professional liability insurance policy issued to defendants by plaintiff. In 2000 and 2001, Mason, Bruce Girard, Inc. (MBG), Zane, and Vroman were defendants in state court litigation arising from professional timber appraisal services provided by MBG. The state court litigation was settled in early 2002 with plaintiff's payment of $1 million plus defense fees. Plaintiff brings this lawsuit seeking reimbursement for payments allegedly made in excess of its policy limits.
Robert Carson is vice-president, director, and shareholder of MBG, a closely-held corporation based in Oregon. Carson is a close friend to Loren Podwill, a partner at the law firm of Bullivant Houser Bailey ("the Bullivant firm"). Carson's wife, Diane Polscer, is a former partner at the Bullivant firm. Carson and Polscer have received personal legal advice from Podwill over the last 20 years.
In the spring of 2002, Carson contacted Podwill in anticipation of plaintiff's filing a lawsuit against MBG for reimbursement. According to defendant, Carson sought legal advice from Podwill regarding MBG's exposure and Carson's personal liability. Carson states that he discussed MBG's positions and strategies with Podwill because he believed that he and Podwill shared an attorney-client relationship. According to defendants, some time after Carson's initial conversation with Podwill, Carson again contacted Podwill to confirm that the Bullivant firm would not represent plaintiff in any action against MBG. Podwill assured Carson that the Bullivant firm would not undertake any such representation. On June 7, 2002, Podwill told Carson that he had entered the appropriate information in the Bullivant firm's conflicts system to ensure that the firm would not represent plaintiff.
Plaintiff filed this action on June 19, 2002. Two days later, Carson learned of the litigation while attending a weekend golf trip with Podwill. According to defendant, Carson then informed Podwill that plaintiff had retained the Bullivant firm. Podwill assured Carson that he would correct the situation.
Plaintiff concedes that the Bullivant firm represented Carson on three personal matters between 1993 and 2001. Podwill recalls that Carson discussed the underlying litigation, the possibility that plaintiff would bring the present action, and potential coverage issues on several occasions. Podwill believes that these matters were discussed in "a general way." Podwill never considered Carson to be a client of the Bullivant firm. Podwill states that Carson never disclosed anything he considered to be a confidence or secret.
DISCUSSION
A. Presence of an attorney-client relationship
A conflict of interest between a lawyer and his or her former client can only exist if such a relationship was established in the first instance. Therefore, as a threshold matter, the court must determine whether Carson and Podwill's interactions constituted an attorney-client relationship. An attorney-client relationship may be inferred from the conduct of the parties; a formal agreement is not required. See In re Hassenstab, 325 Or. 166, 172, 934 P.2d 1110, 1114 (1997); In re Bristow, 301 Or. 194, 202, 721 P.2d 437, 441 (1986); In re Robertson, 290 Or. 639, 648, 624 P.2d 603, 608 (1981). In order to establish an attorney-client relationship, the putative client must hold a subjective belief that the relationship exists, coupled with an objectively reasonable basis for the belief. In re Wittemyer, 328 Or. 448, 456, 980 P.2d 148, 154 (1999). The objective basis is evaluated in light of the attorney's conduct. "The evidence must show that the lawyer understood or should have understood that the relationship existed, or acted as though the lawyer was providing professional assistance or advice on behalf of the putative client." In re Weidner, 310 Or. 757, 770, 801 P.2d 828, 837 (1990).
Defendants have provided sufficient evidence to establish that Carson subjectively believed he and Podwill shared an attorney-client relationship. Carson contends that he and Podwill discussed Carson's personal exposure, and Carson spoke openly and candidly about MBG's positions and strategies. According to Carson, Podwill listened to confidential and personal information and dispensed legal advice on the matter.
The remaining inquiry, therefore, is whether there are objectively reasonable facts establishing the existence of an attorney-client relationship. Although Podwill does not believe that the conversations constituted an attorney-client relationship, a lawyer's subjective belief in the nonexistence of a relationship is irrelevant. The key inquiry is whether Podwill (1) should have known that the relationship existed; or (2) acted as though he was providing professional advice to Carson and MBG. There is some factual dispute about the scope and nature of the conversations between Podwill and Carson. For example, plaintiff submits that the "only conversations between Podwill and Carson were casual discussions during a bicycle ride." Plaintiff's response at 8. In contrast, Carson contends that a series of conversations occurred over the telephone and in person.
Notwithstanding the factual differences, the parties agree on the core fact that Podwill and Carson shared several conversations about the underlying litigation and the possibility that plaintiff might sue MBG. Additionally, Podwill's affidavit fails to dispute Carson's allegation that on June 7, 2002, Podwill assured Carson that he had entered the information in the Bullivant firm's conflicts system to ensure that the firm would not represent plaintiff in any subsequent litigation against MBG. Podwill's failure to deny this allegation is enlightening given that Podwill had an opportunity to respond to the charge in his own affidavit, which was taken several weeks after defendants filed Carson's affidavit with the court.
An objective basis for the existence of an attorney-client relationship is established through the agreed-upon facts. Podwill should have known that an attorney-client relationship existed after he engaged in discussions with the vice-president, director, and shareholder of a closely-held corporation about potential litigation that could seriously impair the financial well-being of Carson and MBG. Further, Carson's version of the facts — which Podwill fails to dispute — suggests that Podwill went so far as to enter information in the Bullivant firm's conflicts system. This demonstrates Podwill not only should have known of the attorney-client relationship, but in fact did know that such a relationship had been created such that the Bullivant firm would be precluded from representing plaintiff in this litigation.
B. Bullivant's relationship with MBG
The relationship established between Podwill and Carson extends to MBG. A corporation can only act through its directors and officers. Throughout the several conversations between Podwill and Carson, Podwill was aware that he was advising the vice-president, director, and shareholder of MBG. Further, the two men discussed MBG's litigation positions and strategies regarding the very issues now in dispute. Therefore, Podwill acted as the advisor to Carson and MBG. The corporation is entitled to protection from all conflicts created by the Bullivant firm's present representation of an adverse party.
C. Conflict of interest
This court's local rules require every attorney practicing before it to comply with the Oregon State Bar's standards of professional conduct. LR 83.7(a). The Oregon Code of Professional Responsibility requires that a lawyer decline representation of a client when an actual or likely conflict with a former client is present. Disciplinary Rule ("DR") 5-105. A conflicted attorney may not accept representation without a former client's informed consent if the matter involving the former client is significantly related to the present litigation . DR 5-105(C). The matters discussed by Podwill and Carson are significantly related to this litigation because the men discussed potential coverage issues and MBG's positions and tactics. Because neither Carson nor MBG consented to the Bullivant firm's representation of plaintiff, the firm must be disqualified.
The only possible mechanism for resolving the conflict short of disqualification would be to screen Podwill from the present litigation. However, DR 5-105(G) is quite clear that except in circumstances not present here, when a member of a law firm is required to withdraw from representation because of a conflict, no other member of the firm may accept or continue representation, absent the client's waiver. Further, Podwill contends in his affidavit that Carson revealed no confidences during their conversations. It would be difficult to screen an attorney from divulging confidential information if he does not consider any of the information he received to be confidential. The most prudent course, therefore, is to disqualify the Bullivant firm altogether.
CONCLUSION
For the reasons stated above, defendant's motion (Doc. #17) to disqualify plaintiff's counsel is granted.
IT IS SO ORDERED