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Fenzel v. Group2 Software, LLC

United States District Court, D. Maryland

December 29, 2014

JERRY FENZEL
v.
GROUP2 SOFTWARE, LLC ET AL.

MEMORANDUM OPINION

DEBORAH K. CHASANOW, District Judge.

Presently pending and ready for resolution in this breach of contract action is the motion of Plaintiff Jerry Fenzel to disqualify Defendants' counsel, the law firm of Shulman, Rogers, Gandal, Pordy & Ecker, P.A ("Shulman Rogers"), and to reopen discovery. The issues have been fully briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, Plaintiff's motion to disqualify Defendants' counsel and reopen discovery will be denied.

I. Background

A. Factual Background

Plaintiff Jerry Fenzel met attorney Larry Shulman in 2006, when Mr. Shulman asked Plaintiff to serve on a non-profit board with him. (ECF No. 73-3 ¶ 3). In June 2010, Plaintiff entered into a retainer agreement with Shulman Rogers and paid a retainer fee of $1, 500 in connection with the collection of monies owed to Plaintiff by Airtime Management, Inc. ("Airtime collection matter"). (ECF No. 73-5). In November 2010, Don Rogers ("Rogers"), a partner with Shulman Rogers, informed Plaintiff about a potential opportunity to work as the Chief Executive officer ("CEO") of Group2 Software, LLC ("Group2"), which is owned by Thomas Bowen ("Bowen") (collectively, "Defendants"). (ECF No. 73-3 ¶ 4).

Several attorneys from Shulman Rogers, including Don Rogers and Robert Bartlett, participated in the negotiation and preparation of an employment contract between Group2 and Plaintiff (the "Consulting Agreement"), which led to Plaintiff accepting the position as a contract CEO of Group2. (ECF No. 73-3 ¶ 4). In April 2011, Shulman Rogers prepared a waiver of conflicts agreement and emailed it to the parties; it stated that Plaintiff and Thomas Bowen of Group2 were waiving any conflicts in order for Shulman Rogers to represent Plaintiff and Group2 in the negotiation and execution of the Consulting Agreement. Neither Plaintiff nor Defendant Bowen signed the conflict waiver agreement, however. Plaintiff did not have assistance from other counsel in connection with the negotiation and execution of the Consulting Agreement.[1]

Plaintiff served as Group2's CEO from 2011 until May 2012, when a dispute arose between Plaintiff and Thomas Bowen and Plaintiff's employment relationship was terminated.

B. Procedural Background

Plaintiff filed his original complaint in the Circuit Court for Prince George's County alleging breach of contract and related claims against both Defendants. On February 4, 2013, Group2 Software, represented by Shulman Rogers, removed this case to the United States District Court for the District of Maryland. (ECF No. 1). On December 23, 2013, after Mr. Bowen was served, Defendant Group2 filed a motion for a preliminary injunction (ECF No. 33), and Defendant Mr. Bowen filed a motion to dismiss. A motions hearing was held on February 12, 2014, at which the motion for a preliminary injunction was denied and the motion to dismiss was deferred. (ECF No. 38). A scheduling order was entered on February 12, 2014, setting the following deadlines: Plaintiff's amended complaint was due by March 7, 2014, discovery was to close on July 25, 2014, and motions were due by August 25, 2014. (ECF No. 39). Extensions of those deadlines subsequently were granted.

Plaintiff's current attorney, Philip Zipin, filed a notice of appearance on September 26, 2014. (ECF NO. 70). On October 14, 2014, after discovery closed, Plaintiff's new counsel filed a motion to disqualify Defendants' counsel, Shulman Rogers, and to reopen discovery in order to depose several Shulman Rogers attorneys.[2] (ECF No. 73). Defendants filed an opposition on October 31, 2014 and requested sanctions against Plaintiff. (ECF No. 76). Plaintiff replied on November 12, 2014. (ECF No. 77). Defendants filed a surreply on December 1, 2014. (ECF No. 79).

II. Standard of Review

As explained in Penn Mutual Life Ins. Co. v. Berck, No. DKC 09-0578, 2010 WL 3294309, at *3 (D.Md. Aug. 20, 2010):

A motion to disqualify is a serious matter, ' Plant Genetic Systems [ N.V. v. Ciba Seeds ], 933 F.Supp. 514, ] at 517 [(M.D. N.C. 1996)], which must be decided on a case-bycase basis. See Buckley v. Airshield Corp., 908 F.Supp. 299, 304 (D.Md. 1995). This is so because two significant interests are implicated by a disqualification motion: the client's free choice of counsel and the maintenance of the highest ethical and professional standards in the legal community.' Tessier [v. Plastic Surgery Specialists, Inc. ], 731 F.Supp. 724] at 729 [(E.D.Va. 1990)]; Buckley, 908 F.Supp. at 304. Nevertheless, the guiding principle in considering a motion to disqualify counsel is safeguarding the integrity of the court proceedings.' Plant Genetic Systems, 933 F.Supp. at 517; see Hull v. Celanese Corporation, 513 F.2d 568, 572 (2d Cir. 1975) (finding that a party's free choice of counsel must yield to considerations of ethics which run to the very integrity of our judicial process.'). Thus, this court must not weigh the competing issues with hair-splitting nicety but, in the proper exercise of its supervisory power over the members of the bar and with a view of preventing an appearance of impropriety, [this Court] is to resolve all doubts in favor of disqualification.' United States v. Clarkson, 567 F.2d 270, 273 n.3 (4th Cir. 1977) (internal quotation marks and citations omitted); Rogers v. Pittston Co., 800 F.Supp. 350, 353 (W.D.Va. 1992); Buckley, 908 F.Supp. at 304.

Id. ( quoting Zachair, Ltd. v. Driggs, 965 F.Supp. 741, 750 (D.Md. 1997)). Because disqualification necessarily results in the drastic result of a party losing its freely-chosen counsel, the movant "bear[s] a high standard of proof to show that disqualification is warranted.'" Franklin v. Clark, 454 F.Supp.2d 356, 364 (D.Md. 2006) ( quoting Buckley, 908 F.Supp. at 304); see also Aetna Cas. & Surety Co. v. United States, 570 F.2d 1197, 1200-01 (4th Cir. 1978) (requiring that the district court find that there is an "actual conflict" not just a speculative conflict before disqualifying counsel). Accordingly, the movant has the burden of proof as to all facts necessary to show the rule of professional conduct that requires the attorney's disqualification. See Pennsylvania Nat'l Mut. Cas. Ins. Co. v. Perlberg, 819 F.Supp.2d 449, 454-55 (D.Md. 2011) (after reviewing movant's evidence in support of its motion to disqualify under Rule 1.9, finding that the movant "has not satisfied the high burden of proof necessary to sustain a disqualification motion in showing it stood in an attorneyclient relationship" with opposing counsel) (emphases added); see also Victors v. Kronmiller, 553 F.Supp.2d 533, 552-53 (D.Md. 2008) (denying movant's motion for disqualification because the ...


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