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Integrity National Corp. v. DSS Services, Inc.

United States District Court, D. Maryland, Southern Division

June 29, 2017

INTEGRITY NATIONAL CORPORATION, Petitioner,
v.
DSS SERVICES, INC., Respondent.

          MEMORANDUM OPINION AND ORDER

          PAUL W. GRIMM UNITED STATES DISTRICT JUDGE.

         Petitioner Integrity National Corporation (“Integrity”) has filed an application for confirmation of an arbitration award issued against Respondent DSS Services, Inc. (“DSS”) on December 15, 2016. Pet., ECF No. 1. In its Answer, DSS argued that the application could not be brought by Integrity's counsel, Janice Davis, because she had previously represented DSS in related proceedings. Answer 3-4, ECF No. 9. At a telephone conference held pursuant to Fed.R.Civ.P. 16, I ordered DSS to file a Motion to Disqualify Counsel. ECF No. 20. Thereafter, DSS filed its Motion, ECF No. 21, which is fully briefed, Resp't's Mem., ECF No. 21-1; Pet'r's Opp'n, ECF No. 22; Resp't's Reply, ECF No. 24. No hearing is necessary, Loc. R. 105.6 (D. Md.). While Davis represented DSS-Integrity, LLC (“DSS-Integrity”), a joint venture between DSS and Integrity, DSS has not established that she ever represented DSS itself. I will therefore deny DSS's Motion to Disqualify, and Integrity may proceed by filing a Motion to Confirm Arbitration Award.

         Background

         The Small Businesses Administration's Business Development Program (also known as the “8(a) program”) provides assistance to firms owned and controlled by socially and economically disadvantaged individuals. 15 U.S.C. § 637(a). Among the forms of assistance available under the program, participating firms can form joint ventures with mentor firms for the purpose of jointly competing for federal government contracts. 13 C.F.R. § 124.520. In January 2012, Integrity-a janitorial services contractor and a “graduate” of the 8(a) program- agreed to partner with DSS-a general construction company and participant in the program- and form a joint venture for the purpose of participating in the 8(a) program's mentor-protégé program. Hines Decl. ¶ 4, Pet'r's Opp'n Ex. 2, ECF No. 22-1. A Joint Venture Agreement signed by the two company's principals established DSS-Integrity as the corporate manifestation of the joint venture and assigned 51% of profits and losses from the venture to DSS and 49% to Integrity. Joint Venture Agreement 1-2, Resp't's Mot. Ex., ECF No. 21-4.[1] Pursuant to the Agreement, the Parties secured several government contracts. Hines Decl. ¶¶ 6, 12, 19, 22.

         In August or September 2013, DSS-Integrity submitted a bid in response to a solicitation for proposals issued by the U.S. Department of Defense, Enterprise Facilities and Construction Division, Washington Headquarters Acquisition Directorate for clinical custodial services to be provided at the DiLorenzo TRICARE Health Clinic. Resp't's Mot. ¶ 5. DSS-Integrity failed to secure the contract and submitted a bid protest to the Government Accountability Office (GAO). Id. ¶ 7; Hines Decl. ¶ 9. Davis, who has represented Integrity in various legal matters over the past seventeen years, represented DSS-Integrity in the bid protest. Hines Decl. ¶¶ 2, 9; Davis Decl. ¶ 2, 5, Resp't's Opp'n Ex. 1, ECF No. 22-1. The arbitration that is the subject of this case dealt with another unrelated prime-sub contract between the two companies that Integrity alleges DSS breached. Pet. ¶¶ 6-17.

         Standard of Review

         As explained in Jarallah v. Thompson, 123 F.Supp.3d 719 (D. Md. 2015):

A motion to disqualify is a serious matter, which must be decided on a case-by-case basis. 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. Nevertheless, the guiding principle in considering a motion to disqualify counsel is safeguarding the integrity of the court proceedings. 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.

Id. at 731 (quoting Penn Mut. Life Ins. Co. v. Berck, No. DKC 09-0578, 2010 WL 3294309, at *3) (D. Md. Aug. 20, 2010) (alterations in original)). In light of this balance, the movant bears “a high standard of proof, ” Franklin v. Clark, 454 F.Supp.2d 356, 364 (D. Md. 2006), to demonstrate that the attorney has violated “a rule of professional conduct that requires disqualification, ” Jarallah, 123 F.Supp.3d at 732; see also Loc. R. 704 (making applicable the Maryland Lawyer's Rules of Professional Conduct (MLRPC) established by the Maryland Court of Appeals).

         Discussion

         DSS moves for Davis to be disqualified pursuant to MLRPC 1.9, which governs an attorney's obligation to a former client; MLRPC 1.7, which addresses conflicts of interest as they pertain to current clients; and MLRPC 3.7, which restricts a lawyer's ability to serve as a witness in his client's case. Resp't's Mem. 3-4; Resp't's Reply 7-8.

         MLRPC 1.9

         MLRPC 1.9 prohibits an attorney from representing a client “in the same or a substantially related matter” in which she has represented a former client, if the current and former clients' interests are “materially adverse, ” absent informed consent from the former client. MLRPC 1.9(a). For MLRPC 1.9 to come into play in this case, Davis must have represented DSS.

The Maryland Court of Appeals has “acknowledge[d] that determining ‘what constitutes an attorney-client relationship is a rather elusive concept.' ” Attorney Grievance Comm'n v. Shoup, 979 A.2d 120, 135 (Md. 2009) (quoting Attorney Grievance Comm'n v. Shaw, 732 A.2d 876, 883 (Md. 1999)) Such a relationship may arise through an explicit agreement or “by implication from a client's reasonable expectation of legal representation and the attorney's ...

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