Mooney, et al. v. Diversified Business Communications, et al. (Lawyers Weekly No. 09-015-17)

This lawsuit was instituted in December 2016. Sullivan and Worcester, LLP (S&W), long-time counsel for the defendant Diversified Business Communications (Diversified) and its subsidiary Pri-Med, LLC (Pri-Med), filed an appearance on behalf of Diversified, Pri-Med and the three individual defendants. Seven months later and well into discovery in this case, the plaintiff John Mooney filed a Motion to Disqualify S&W on the grounds that he has been and remains an S&W client, so that the firm’s representation of the defendants in this litigation violates Rule 1.7 of the Massachusetts Rules of Professional Conduct. S&W denies any ethical violation and contends that the Motion is a “transparent and unacceptable litigation tactic.” After hearing, this Court concluded that there was no reason to disqualify S&W and on September 13, 2017, entered a margin endorsement on the Motion stating that it was denied. This Memorandum sets forth the reasons for that decision.
In reaching its decision, this Court considered affidavits, with attached exhibits, submitted by both parties. Those submissions reflect the following facts that this Court views as material to resolution of the Motion before it.
In 1999, Mooney’s business partner Jack Connors suggested that Mooney should engage in sophisticated estate planning and recommended that Mooney work with Lisa Mingolla, an attorney in S&W’s trusts and estates department. Mooney took this suggestion and in 2002, retained the firm to represent him in connection with preparing a prenuptial agreement and estate planning documents. An August 29, 2002 engagement letter signed by both Mingolla and Mooney reflects the limited nature of that representation. Mingolla was paid a flat fee of $ 10,000 for Mingolla’s services. The letter stated that S&W would discard certain items from the file once work was completed but would retain Mooney’s estate planning documents in its vault for Mooney’s convenience.
Three years later in 2005, Mooney asked Mingolla if she would update his will and his estate plan, which she did. Mooney paid her approximately $ 20,000 for her work, which concluded in 2006. Mingolla did not perform any additional work for Mooney until September 2010, when she again updated Mooney’s estate planning documents at his request. Since July 2014, Mooney has not sought any legal advice from Mingolla. Over the twelve year period (2002-2014), Mooney paid Mingolla a total of $ 75,000.
During this same period of time, Carol Wolff, an S&W partner, was providing legal representation to Diversified. When Diversified formed Pri-Med as its wholly-owned subsidiary in November 2011, Wolff became Pri-Med’s primary outside counsel. Shortly after this, Diversified decided to hire as part of Pri-Med’s management team certain founders and former
managers of Pri-Med’s predecessor entity, among them Mooney. In connection with this effort, Diversified, Mooney and others negotiated and entered into an Amended and Restated Limited Liability Agreement (LLC Agreement) signed in October 2012. Wolff represented Diversified and Pri-Med in the preparation of the LLC Agreement, while Mooney was represented by the firm of Schlossberg LLC. As a result of this transaction, Mooney acquired an equity interest in Pri-Med and became a member of Pri-Med’s Board of Managers.
In late 2016, disputes arose between Pri-Med and Mooney over the purchase price for his minority shares and Diversified’s conduct in the management of Pri-Med, including the impact of that conduct on Pri-Med’s value. Morgan Wheelock, another minority member, shared Mooney’s concerns. Both Mooney and Wheelock retained Jeffrey Robbins, an attorney with Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (Mintz Levin). On September 22, 2016, attorney Robbins sent a letter to Diversified’s Chairman of the Board, Daniel Hildreth, and its President and CEO, Ted Wirth, in which he raised these concerns. The letter described various ways in which Diversified had violated the LLC Agreement, accused the company of taking these actions to “deflate” Pri-Med’s value so as to reduce the amount of any payout due to Pri-Med’s shareholders, and urged Diversified’s counsel to contact Robbins immediately.
Upon receipt of this letter, Hildreth and Wirth contacted Wolff, who in turn sought assistance from Laura Steinberg, a litigation partner at S&W and presently the lead defense counsel in this case. On September 30, 2016, attorney Steinberg wrote a letter to Robbins denying any wrongdoing by Diversified. The letter began:
Sullivan & Worcester represents DBC Pri-Med, LLC . . . and, accordingly, John J. Mooney in his capacity as one of the five Managers of the Company. I have been asked to respond on the Company’s behalf to your September 22, 2016 letter. . . .
Robbins replied to Steinberg’s letter on October 5, 2016 (the October 5 Letter). His letter stated, among other things:
[A]s John Mooney’s counsel, I must inform you that you do not represent John, in any capacity whatsoever. Indeed, I understand that you have never represented him. Accordingly, it is my duty to tell you that he intends to hold you accountable for any actions that you have purported to take on his behalf.
At that time, Steinberg had no knowledge that S&W had ever represented Mooney other than in his capacity as a member of Pri-Med’s Board of Managers. Mooney received a copy of the letter but apparently made no attempt to correct Robbins and inform him that S&W had indeed represented him on his estate planning matters.
On December 5, 2016, Robbins filed the present action in this Court on behalf of both Mooney and Wheelock and emailed Steinberg a courtesy copy of the Complaint. Steinberg forwarded the Complaint to Wolff, who promptly ran a conflicts check in order to open a new litigation matter. The conflict report revealed that Mingolla had earlier represented Mooney in connection with some estate planning work. Upon learning this, Wolff spoke with Mingolla and consulted with S&W’s internal ethics counsel, who reviewed, among other things, Robbins’ October 5 Letter. Wolff concluded that Mooney was a former S&W client and that, because there was no ongoing relationship, there was no impediment to S&W’s representation of the defendants in the instant action. Steinberg filed an Answer on behalf of the defendants that asserted counterclaims against Mooney and Wheelock for breach of fiduciary duty (specifically, usurpation of corporate opportunity) and negligent misrepresentation.
The deposition of Wheelock was scheduled for June 20, 2017 and Mooney’s deposition was to take place two days later. On the morning of June 20, as Steinberg was conducting Wheelock’s deposition, Robbins sent her an email that for the first time raised the issue of
S&W’s disqualification. That email stated that, contrary to Robbins’ statement in his October 5 Letter, S&W did represent Mooney, and not just in his capacity as a member of Pri-Med’s Board of Directors. Robbins asserted that this relationship appeared to be ongoing and that it was “imperative” that S&W provide him with certain information – “preferably today” – so that he could “try to understand the basis on which Sullivan and Worcester believes that there is not a conflict.” Later that same day, Robbins informed Steinberg that he was cancelling Mooney’s deposition. Two days later, S&W produced Mooney’s client files with a cover letter from Steinberg explaining why she did not believe disqualification was warranted. This Motion followed.
Conflicts of interest between attorneys and clients are governed by Mass. R. Prof. C. 1.7 and 1.9. Resolution of this dispute turns largely on which rule applies to the circumstances here. Rule 1.7 governs conflicts of interest between current clients and prohibits the representation of one client “directly adverse to another client” unless: (1) the lawyer reasonably believes that he or she will be able to provide competent and diligent representation to the affected clients; and (2) the affected clients give informed written consent. Mass. R. Prof. C. 1.7 (a). Rule 1.9, in contrast, governs conflicts of interest between former clients. It prohibits the representation of a client whose interests are “materially adverse” to a former client “in the same or substantially related matter” unless the attorney obtains consent from the former client. Mass. R. Prof. C. 1.9 (a). The rule also prohibits, regardless of whether a conflict of interest arises, the unauthorized use of a former client’s confidential information to the detriment of the former client or the advantage of a third party. Mass. R. Prof. C. 1.9 (c) (1).
In moving to disqualify S&W, Mooney relies on Rule 1.7. Specifically, he contends that S&W continues to be his estate planning counsel and that, because he has not given his written consent, the firm cannot represent the defendants, whose interests in this litigation are clearly adverse to his. S&W argues that Rule 1.9 applies because any attorney-client relationship between S&W and Mooney terminated well before the inception of this litigation, which bears no relationship to the estate planning services provide to Mooney by Mingolla. This Court agrees with S&W.
The rules themselves do not assist the Court in determining whether Mooney is a current or former client, since neither provides any explicit guidance. Nor is this Court aware of any Massachusetts appellate decision which attempts to define when an attorney-client relationship ends. However, in a decision rendered when he was a Superior Court judge sitting in the BLS, Justice Ralph Gants looked to “logic, reason, experience, and basic principles of law” to set out a useful framework for making this determination. National Med. Care, Inc. v. Home Med. of Am., Inc., 2002 Mass. Super. LEXIS 342 at *11 (Sept. 12, 2002). Justice Gants observed that clients generally retain law firms for one of three purposes: (1) to act as “a general counsel” for them and handle all legal matters that arise; (2) to represent them in all matters regarding a specific practice area, e.g., litigation, tax, or employment matters; or (3) to represent them only as to a specific matter or matters. Id. at *12. As to the first two categories, the attorney-client relationship continues even without a pending matter “because the reasonable expectation remains that the law firm will handle matters in the future for that client as they arise.” As to the third category, however:
[T]he attorney-client relationship ends when the matter is concluded, because the representation was limited to that matter. Indeed, if the attorney were to continue to perform work for that client after the matter has been concluded, the client would be justified in refusing to pay for that work because it fell outside the
scope of their agreement. Consequently, one measure of whether the attorney-client relationship has ended is whether the attorney needs to obtain permission from the client to continue to perform work on the client’s behalf.
Id. at *12-13. Applying this framework, the Court concludes that Mooney’s relationship with S&W ended well before December 2016, when the plaintiffs filed the present lawsuit.
Mingolla provided estate planning services to Mooney during three discrete periods: 2002, 2005-2006, and 2010-2014. Their relationship was limited to a particular matter: once Mingolla performed the services requested and Mooney paid for them, the relationship was, for all practical purposes, over. Between each period, Mingolla and Mooney had little or no contact, nor is there any credible evidence to suggest that Mingolla was expected to perform any work for Mooney (and bill him for it) until and unless he specifically requested it. Accordingly, this Court concludes that their relationship fell into the third category laid out by Justice Gants, terminating in 2014 when Mingolla completed the last round of estate planning services that Mooney had requested.
Even assuming the relationship extended beyond 2014, however, Robbins’ October 5 Letter left no doubt that any such relationship was over as of the fall of 2016. Although Robbins was replying to Steinberg’s statement that, by virtue of S&W’s representation of Pri-Med, S&W also represented the Board of Directors, including Mooney, his letter was quite clear: “you do not represent John, in any capacity whatsoever.” As if that were not enough, he added: “it is my duty to tell you that he [Mooney] intends to hold you accountable for any actions that you have purported to take on his behalf.” As a matter of law, Robbins’ statements are imputed to Mooney and thus, S&W was entitled to rely on Robbins’ statement. See Restatement of Law Governing Lawyers, §§ 26 and 27, Cmt. a and b; One-O-Six Realty, Inc. v. Quinn, 66 Mass. App. Ct. 149, 154-155 (2006); Burt v. Gahan, 351 Mass. 340, 342.
Because Mooney is a former client, disqualification is appropriate only if Mooney can show that the present litigation is substantially related to the estate planning services Mingolla provided, or that S&W in fact used Mooney’s confidential information in connection with the litigation. See Mass. R. Prof. C. 1.9 (a), (c) (1). In seeking to disqualify S&W on this basis, Mooney takes on a heavy burden. The SJC has cautioned: “[A]court should not lightly interrupt the relationship between a lawyer and her client. ‘[D]isqualification, as a prophylactic device for protecting the attorney-client relationship, is a drastic measure which courts should hesitate to impose except when absolutely necessary.’” Adoption of Erica, 426 Mass. 55, 58 (1997), quoting Freeman v. Chicago Musical Instrument Co., 689 F.2d 715, 721 (7th Cir. 1982). With that in mind, this Court concludes that Mooney has not demonstrated that this litigation is substantially related to the estate planning work provided by Mingolla or that S&W has used confidential information acquired as a result of that earlier attorney-client relationship.
“Matters are ‘substantially related’ … if they involve the same transaction or legal dispute or if there otherwise is a substantial risk that confidential factual information as would normally have been obtained in the prior representation would materially advance the client’s position in the subsequent matter.” See Rule 1.9, comment 3. Here, Mooney’s claims concern actions allegedly undertaken by Diversified and the other defendants in 2015 and/or 2016 to manipulate the value of Mooney’s Pri-Med shares; defendants’ counterclaims concern Mooney’s alleged misrepresentation and usurpation of corporate opportunities. In contrast, the estate planning work that Mingolla performed—completed in 2014—did not involve any of these alleged actions. There is also no substantial risk that any confidential information Mooney provided to Mingolla would be useful to the defendants in connection with this litigation. The litigation does not concern Mooney’s personal assets.
As to whether S&W has already used Mooney’s confidential information, Steinberg has submitted an affidavit stating under the pains and penalties of perjury that, other than to collect Mingolla’s files in order to transmit them to attorney Robbins on June 21, 2017, she has not had any access to Mingolla’s files, nor has she reviewed their contents.1 In a direct attack on this claim, Mooney argues that Steinberg did access the files, arguing that she admitted as much in her June 21 cover letter transmitting the files to Mintz Levin. Having reviewed the letter together with attorney Steinberg’s explanation of it, this Court concludes this is an unfair characterization of what the letter actually says. Taking this argument a step further in plaintiff’s Memorandum in support of the Motion, counsel contends that “the reason Ms. Steinberg reviewed Mr. Mooney’s client files was because she knew that its discussion of his assets, liabilities and business investments were particularly valuable to Diversified, her client” and that “any doubt on this subject is removed” by the fact that, after she received Mr. Robbins’ demand for the file on June 20, she spent much of that day examining Mr. Wheelock about Mr. Mooney’s assets. As explained by Steinberg in her affidavit, however, the materials that were the subject of questioning at the deposition were acquired through public corporate records databases and from emails found on Pri-Med’s email server. She had inquired about this information because it appeared to indicate that plaintiffs were engaged in other corporate ventures while working with Pri-Med, in breach of their duty of loyalty. This Court credits her explanation.
Indeed, plaintiff’s counsel’s attempts to paint a different picture—and thus implicitly attack attorney Steinberg’s honesty and integrity—raises a question of whether Mintz Levin has itself complied with the Rules of Professional Conduct. Before the instant motion was filed,
1 As to the possibility of any future use, S&W has set up an ethical screen within the firm to ensure that lawyers in the instant litigation do not communicate with Mingolla or have access to her files.
S&W brought a motion seeking to disqualify Mintz Levin from acting as Mooney’s lawyer in any effort to disqualify S&W. The grounds for this request was that S&W is a client of Mintz Levin on unrelated immigration matters, and that Rule 1.7 prevented the firm from acting in a manner adverse to its current client (S&W). In support, S&W relied on ABA Formal Opinion 97-406, which states that, although Rule 1.7 does not as a general rule prevent a lawyer who represents one client from representing another client with interests adverse to the first, such representation would not be appropriate if it “requires the representing lawyer to attack the credibility or integrity of its opponent in the third party matter, when the opponent is also his client.” In opposing that earlier motion, Mintz Levin assured this Court that the motion to disqualify S&W would not involve any attack on the credibility or integrity of S&W lawyers. With these assurances, this Court refused to disqualify Mintz Levin. See Memorandum of Decision and Order dated July 25, 2017. Had this Court known that the firm would adopt the approach that it has on the instant motion, it might well have ruled differently.
For all the foregoing reasons and for other reasons articulated in S&W’s Opposition, the Plaintiff’s Motion to Disqualify S&W is DENIED.
Janet L. Sanders
Justice of the Superior Court
Dated: September 28, 2017

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