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Barbara L. Magin, As A Trustee of the Barbara L. Magin Trust U/T/A Dated June 30, 1995 v. Solitude Homeowner's Inc.

June 30, 2011

BARBARA L. MAGIN, AS A TRUSTEE OF THE BARBARA L. MAGIN TRUST U/T/A DATED JUNE 30, 1995, APPELLANT (DEFENDANT),
v.
SOLITUDE HOMEOWNER'S INC., A WYOMING NON-PROFIT CORPORATION, APPELLEE (PLAINTIFF). BARBARA L. MAGIN, AS A TRUSTEE OF THE BARBARA L. MAGIN TRUST U/T/A DATED JUNE 30, 1995, APPELLANT (DEFENDANT),
v.
SOLITUDE HOMEOWNER'S, INC., A WYOMING NON-PROFIT CORPORATION, APPELLEE (PLAINTIFF).



Appeal from the District Court of Teton County The Honorable Norman E. Young, Judge

The opinion of the court was delivered by: Kite, Chief Justice.

Before KITE, C.J., and GOLDEN, HILL, VOIGT, and BURKE, JJ.

NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third. Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming 82002, of typographical or other formal errors so correction may be made before final publication in the permanent volume.

[¶1] The district court granted Solitude Homeowners, Inc. (Solitude) summary judgment on its claims that Barbara L. Magin had violated the subdivision's protective covenants by erecting screens, brush, log piles, and fencing. The district court also awarded Solitude attorney fees.

[¶2] On appeal, Ms. Magin challenges the district court's refusal to disqualify Solitude's counsel for having a conflict of interest and its refusal to allow her additional time to respond to Solitude's summary judgment motion. She also claims the district court erred by granting summary judgment to Solitude on the covenant violations and awarding Solitude attorney fees.

[¶3] We conclude that Solitude's counsel had a conflict of interest; however, the district court did not err by refusing to disqualify the firm because Ms. Magin's motion to disqualify was untimely. The district court also did not abuse its discretion by refusing to allow Ms. Magin additional time to respond to Solitude's summary judgment motion and properly granted summary judgment in favor of Solitude and ordered Ms. Magin to bring her property into compliance with the covenants. We conclude, however, that the district court abused its discretion by ordering Ms. Magin to pay the attorney fees generated by her former firm because it failed to segregate the non-recoverable fees associated with clearing the conflict.

[¶4] We, therefore, affirm in part and reverse in part.

ISSUES

[¶5] Ms. Magin presents several issues, which we re-phrase:

1. Did the district court abuse its discretion when it denied Ms. Magin's Motion to Disqualify Solitude's attorney under Rule 1.9 of the Wyoming Rules of Professional Conduct for Attorneys at Law and for a hearing on the matter?

2. Did the district court abuse its discretion by denying Ms. Magin's motion to continue the summary judgment hearing and/or motion for extension of time to respond to Solitude's motion for summary judgment?

3. Did the district court err by granting summary judgment in favor of Solitude on the basis that Ms. Magin had violated the covenants?

4. Did the district court abuse its discretion by awarding Solitude attorney fees?

FACTS

[¶6] In 1997, Ms. Magin purchased Lot 34 in the Solitude subdivision in Teton County, Wyoming. Shortly after she purchased the property, the Solitude Site Committee informed her that pre-existing fences and a "bully" barn were in violation of the subdivision covenants. She retained attorney Joseph Moore, and he contacted the individual from whom Ms. Magin had purchased the property seeking compensation or assistance with bringing the property into compliance with the covenants. Mr. Moore also negotiated with the Solitude Site Committee to avoid litigation over the covenant violations. Ms. Magin objected to Mr. Moore's bill and a proceeding before the Wyoming State Bar Committee for Resolution of Fee Disputes was commenced. Mr. Moore apparently withdrew his bill before the committee issued a decision.

[¶7] On February 4, 2008, Solitude filed a complaint against Ms. Magin alleging different violations of the covenants and seeking to recover the attorney fees it incurred in enforcing the covenants. Solitude's original law firm withdrew and on September 5, 2008, attorney Glenn Ford entered an appearance on Solitude's behalf. Mr. Ford practiced in the same firm as Ms. Magin's original attorney, Mr. Moore. Mr. Moore claimed that he contacted Ms. Magin's current attorney, Gerard Bosch, prior to Mr. Ford agreeing to represent Solitude and he and Mr. Bosch agreed there was no conflict of interest. Mr. Bosch acknowledged they had talked, but stated that Ms. Magin verbally agreed to waive the conflict provided Mr. Moore did not participate in the litigation. No written waiver of conflict was executed as required by Wyoming Rule of Professional Conduct for Attorneys at Law 1.9.

[¶8] Over a year later, on September 29, 2009, Mr. Moore attended a hearing on pending motions with Mr. Ford. On October 9, 2009, Ms. Magin filed a motion to disqualify Mr. Ford from acting as Solitude's counsel because he had a conflict of interest. Ms. Magin submitted various materials and asked for another judge or magistrate to review them in camera because they were privileged and she was apparently concerned that the presiding judge's consideration of the underlying covenant violation issue may be tainted by the materials. On November 19, 2009, the district court denied the motion to disqualify and the motion for in camera review without holding a hearing and without offering an explanation for its rulings. Ms. Magin filed a motion for reconsideration the following day. On December 18, 2009, the matter was assigned to another district court judge as a result of the retirement of the first judge. On February 22, 2010, the newly appointed judge set all pending matters for a hearing on April 1, 2010.

[¶9] At that hearing, the district court denied Ms. Magin's motion for reconsideration of the denial of her request for disqualification, again without holding an evidentiary hearing but indicating he presumed that the previous judge had reviewed the in camera materials. The court also denied Ms. Magin's motion to continue the summary judgment hearing and her request for additional time to respond to the summary judgment motion and considered the case on the merits. The district court granted summary judgment in favor of Solitude, concluding that Ms. Magin had violated the covenants and Solitude was entitled to attorney fees. Solitude filed its motion for attorney fees, and the district court awarded all of the fees sought by Solitude. Ms. Magin appealed from the order denying her motion for disqualification, the order granting summary judgment in favor of Solitude and the order granting Solitude attorney fees.

DISCUSSION

A. Disqualification/Conflict of Interest

[¶10] A district court's ruling on a motion to disqualify for a conflict of interest is reviewed for abuse of discretion. Carlson v. Langdon, 751 P.2d 344, 350 (Wyo. 1988). Ms. Magin's motion was based upon Rule 1.9(a):

(a) A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client makes an informed decision to waive the conflict, confirmed in writing signed by the client.

Although Mr. Ford did not formerly represent Ms. Magin, another member of his firm, Mr. Moore, did. Rule of Professional Conduct for Attorneys at Law 1.10(a) imputes a conflict of interest to all members of a law firm:

(a) While lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rules 1.7 or 1.9, unless the prohibition is based on a personal interest of the prohibited lawyer and does not present a significant risk of materially limiting the representation of the client by the remaining lawyers in the firm.

Thus, Mr. Ford was disqualified from representing Solitude to the same extent as Mr. Moore.

[¶11] In Simpson Performance Prods., Inc., v. Robert W. Horn, P.C., 2004 WY 69, ¶ 16, 92 P.3d 283, 287 (Wyo. 2004), we identified four elements which must be proven to establish a Rule 1.9 violation:

First, there must have been a valid attorney-client relationship between the attorney and the former client . . . . Second, the interests of the present and former clients must be materially adverse . . . . Third, the former client must not have consented, in an informed manner, to the new representation . . . . Finally, the current matter and the former matter must be the same or substantially related.

Sullivan County Regional Refuse Disposal Dist. v. Town of Acworth, 141 N.H. 479, 686 A.2d 755, 757 (1996).

[¶12] Solitude concedes that all of the elements of the test are met in this case, with the exception of the last element. It contends that the current matter is not the same as or substantially related to the former matter. Comment 3 to Rule 1.9 discusses the definition of "substantially related":

[3] Matters are "substantially related" for purposes of this Rule 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. . . . [For example,] a lawyer who has previously represented a client in securing environmental permits to build a shopping center would be precluded from representing neighbors seeking to oppose rezoning of the property on the basis of environmental considerations; however, the lawyer would not be precluded, on the grounds of substantial relationship, from defending a tenant of the completed shopping center in resisting eviction for nonpayment of rent. . . . Information acquired in a prior representation may have been rendered obsolete by the passage of time, a circumstance that may be relevant in determining whether two representations are substantially related. . . . A former client is not required to reveal the confidential information learned by the lawyer in order to establish a substantial risk that the ...


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