Opinion
71 EDA 2022 J-A21040-22
09-30-2022
JOHN BROWN AND RDS VENDING, LLC v. ALAN SIMONS
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
Appeal from the Order Entered December 13, 2021 In the Court of Common Pleas of Philadelphia County Civil Division at No(s): 190303075
BEFORE: LAZARUS, J., MURRAY, J., and McCAFFERY, J.
MEMORANDUM
McCAFFERY, J.
Alan Simons (Appellant) appeals from the order denying his motion to disqualify the law firm of Buchanan Ingersoll &Rooney, P.C. (Buchanan) from representing John Brown and RDS Vending, LLC (RDS), the plaintiffs in the underlying breach of contract dispute brought against Appellant in the Philadelphia County Court of Common Pleas. After careful review, we affirm.
The trial court set forth the underlying facts and procedural history as follows:
Plaintiff John Brown ("Brown") is an adult individual and a 50% member of Plaintiff RDS Vending, LLC. ("RDS"). RDS is a Delaware limited liability company with its principal place of business at 220 East Washington Street, Norristown, Pennsylvania 19401. RDS is engaged in the business of selling food, beverages, and tobacco products to the public through vending machines at various locations throughout the Philadelphia region. [Appellant] is an adult individual and a 50% member and the manager of RDS. [Appellant] as the manager of RDS controlled daily operations of
RDS, while Brown has not participated in its day-to-day operations.
On January 1, 2007, [Appellant] executed an employment agreement with RDS providing that [he] should serve as the President, CEO, and the manager of RDS. In September 2011, [Appellant] and RDS executed an amended employment agreement. In October 2015, [Appellant] and RDS executed the second amended employment agreement.
In 2012, Brown and [Appellant] formed a limited liability company called "Rite-Vend, LLC" ("Rite Vend"). For the task of forming Rite Vend, in 2012 RDS retained Buchanan. All invoices for Buchanan's legal services were directed to and paid by RDS, and not [Appellant]. Buchanan claimed that it has done no legal work for RDS regarding Rite-Vend, since January 2016.
In 2013, RDS retained Buchanan again, in order to form Regal Vending ("Regal"). On October 16, 2013, Buchanan and RDS executed an agreement, entitled "Engagement Agreement" ("Agreement"). The Agreement provides as follows: "The
Company is our sole client with respect to this engagement. Individuals or entities that are affiliated with the Company, such as its equity owners, members, officers, directors . . . or other affiliates, are not clients of the Firm, unless we otherwise agree in writing[."] Buchanan issued invoices dated November 2013 through March 2015, and the invoices were billed to RDS.
On March 25, 2019, Brown and RDS filed a complaint against [Appellant] for breach of the Employment Agreement, breach of the Operating Agreement, breach of the implied covenant of good faith and fair dealing, conversion, and accounting. On April 16, 2019, [Appellant] fled preliminary objections to the complaint. The preliminary objections were overruled by [the trial] court's order dated October 4, 2019, and docketed October 8, 2019. On October 16, 2019, [Appellant] filed a notice of appeal from the order overruling the preliminary objections. On October 17, 2019, [the trial] court ordered
[Appellant] to file a concise statement of errors complained of on appeal. On November 1, 2019, [Appellant] filed a concise statement of issues on appeal. On December 17, 2019, [Appellant] filed a praecipe to withdraw the notice of appeal.
On July 23, 2019, [Brown and RDS] filed a motion for preliminary injunction. The motion was denied without prejudice by [the trial] court's order dated October 4, 2019, and docketed October 8, 2019. On March 9, 2020, [Appellant] filed an answer with new matter to the complaint.
On April 13, 2020, [Appellant] filed a petition to disqualify Buchanan [pursuant to Pennsylvania Rule of Professional Conduct 1.9]. . . .17 On May 4, 2020, [Brown and RDS] filed the memorandum of law in opposition to [Appellant]'s petition to disqualify. On October 20, 2020, [the trial] court ordered that [Appellant]'s petition to disqualify was withdrawn without prejudice.
17 [Appellant] filed a motion to disqualify Buchanan two times. On April 13, 2020, he filed the first motion, which he withdrew on the ground of insufficient evidence in support of the motion. On April 29, 2021, he filed the second motion to disqualify Buchanan, which was denied by [the trial] court's order dated December 13, 2021. [In that order, the court stated:
This motion to disqualify counsel is, as [Brown and RDS] point[ ] out, nearly identical to the motion to disqualify initially filed by [Appellant] in April 2020, for which [he] sought discovery and which, upon being denied discovery, [he] voluntarily withdrew. In the months that followed, no further information has been added to the motion to show why disqualification is necessary. Moreover, the initial motion to disqualify was filed significantly after Rite-Vend was brought into the case, as Rite-Vend was actually first involved when subpoenas were served upon it in September 2019, seven months prior to the filing of the motion.
[Appellant] argues that the involvement of the Buchanan Ingersoll law firm in the creation of Rite-Vend creates a conflict of interest so extreme as to make a fair trial impossible. The [trial c]ourt cannot agree. "[A] former client seeking to disqualify a law firm representing an adverse party on the basis of its past relationship with a member of the law firm has
the burden of proving: (1) that a past attorney/client relationship existed which was adverse to a subsequent representation by the law firm of the other client; (2) that the subject matter of the relationship was substantially related; (3) that a member of the law firm, as attorney for the adverse party, acquired knowledge of confidential information from or concerning the former client, actually or by operation of law." [ Estate ] of Pew, 655 A.2d 521, 545-46 (Pa. Super. 1994). [Appellant] has not provided the court with persuasive evidence of any of these three prongs.
Order, 12/13/21, at 1 n.1 (unpaginated).] [Appellant] appealed from the order denying the second motion.
On May 14, 2020, [Brown and RDS] filed a renewed motion for preliminary injunction. On June 3, 2020, [Appellant] filed a response in opposition to [Brown's and RDS's] renewed motion. On December 31, 2020, [the trial] court denied the renewed motion. On April 29, 2021, [Appellant] filed both the motion to disqualify Buchanan . . . ("Motion") and a memorandum of law in support of the motion. On May 19, 2021, [Brown and RDS] filed both the response in opposition to [Appellant]'s second motion to disqualify ("Response") and the memorandum of law in opposition to [Appellant]'s second motion to disqualify and in support of cross-motion for sanctions ("Memo"). On November 18, 2021, a hearing on the motion was held. On December 13, 2021, [the trial] court entered the order denying the motion.Trial Ct. Op., 3/21/22, at 1-4 (some footnotes and capitalization omitted). This timely appeal followed.
The trial court did not order Appellant to file a concise statement of errors complained of on appeal pursuant to Pa.R.A.P. 1925(b). The court did issue a Pa.R.A.P. 1925(a) opinion on March 21, 2022.
Appellant raises the following issues:
1. Whether the trial court erred in denying [Appellant's] motion to disqualify opposing counsel, where opposing counsel had represented [Appellant] in a related matter under and then asserted claims against [Appellant] directly related to that matter and opposing counsel's own representation of [Appellant?]
2. Whether the trial court erred in dismissing without [a] decision the motion to compel discovery of [Appellant] concerning documents and testimony relevant to the issue of disqualification[?]Appellant's Brief at 5 (some capitalization omitted).
Preliminarily, we observe that an order denying a motion to disqualify a law firm based on conflict of interest is immediately appealable as a collateral order. Dougherty v. Phila. Newspapers, LLC, 85 A.3d 1082, 1086 (Pa. Super. 2014); see also Pa.R.A.P. 313 (governing collateral orders).
Furthermore:
When reviewing a trial court's order on disqualification of counsel, we employ a plenary standard of review. Courts may disqualify attorneys for violating ethical rules. On the other hand, courts should not lightly interfere with the right to counsel of one's choice. Thus, disqualification is appropriate only when both another remedy for the violation is not available and it is essential to ensure that the party seeking disqualification receives the fair trial that due process requires.
E.R. v. J.N.B., 129 A.3d 521, 526 (Pa. Super. 2015) (citation omitted).Rudalavage v. PPL Elec. Utils. Corp., 268 A.3d 470, 478 (Pa. Super. 2022) (footnoted omitted).
Pennsylvania Rule of Professional Conduct 1.9 addresses attorney duties to former clients and provides, in pertinent part, as follows:
(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 gives informed consent.
(c) A lawyer who has formerly represented a client in a matter or whose present or former firm has formerly represented a client in a matter shall not thereafter:
(1) use information relating to the representation to the disadvantage of the former client except as these Rules would permit or require with respect to a client, or when the information has become generally known; or
(2) reveal information relating to the representation except as these Rules would permit or require with respect to a client.Pa.R.P.C. 1.9(a), (c)(1) - (2).
Moreover, it merits repeating that pursuant to Estate of Pew,
a former client seeking to disqualify a law firm representing an adverse party on the basis of its past relationship with a member of the law firm has the burden of proving: (1) that a past attorney/client relationship existed which was adverse to a subsequent representation by the law firm of the other client; (2) that the subject matter of the relationship was substantially related; (3) that a member of the law firm, as attorney for the adverse party, acquired knowledge of confidential information from or concerning the former client, actually or by operation of law.Estate of Pew, 655 A.2d at 545-46.
Appellant first complains that he did establish the first prong of the Estate of Pew test (the existence of a past attorney-client relationship), and that the trial court erred in denying his motion to disqualify Buchanan because it failed to find that he had an implied attorney-client relationship with Buchanan. Appellant's Brief at 22. Moreover, he claims the court failed to examine the evidence [presented] at the hearing on the second motion for disqualification, which he alleges "makes it clear that Buchanan represented not RDS, but also Brown and [Appellant.]" Id. at 22. Relying primarily on an April 19, 2013, letter from Alfred J. D'Angelo, Jr., Esq. of Buchanan to Robert Gleason, Jr., a field examiner for the National Labor Relations Board, Appellant states: "Buchanan represented him, specifically and personally, by its own admission, because Buchanan represented to the U.S. government that [he] and [Brown], not RDS, were the interested parties in the Rite-Vend transaction." Id., citing R.R. at 2505a-06a. In support, Appellant points to the following statement in the letter: "RDS and Rite-Vend are owned by common users. When the owners of RDS sought to purchase assets from Canteen [Vending Services], they decided to set up a separate corporation for the purchase. That was done to address liability and tax issues." R.R. at 2505a-06a. Appellant maintains that because Buchanan set up the new corporation, Rite-Vend, and told him how to run its operations and how to take a salary from it, "[t]here could be no clearer statement of who exactly Buchanan represented in the Rite-Vend transaction: not RDS, but the owners of RDS, including [Appellant], who set up a 'separate corporation' for tax and liability reasons." Appellant's Brief at 25.
Appellant's reproduced record indicates the April 19, 2013, letter was submitted as an exhibit for the November 18, 2021, argument on the motion to disqualify.
Moreover, he asserts there was evidence of an imputed attorney-client relationship:
Buchanan . . ., in a written communication, referred to [Appellant] as a client to a third party, going so far as to include [him] as a joint client with Brown in that communication. [Appellant] was included in emails discussing revisions to deal documents for Rite-Vend on an equal basis with Brown. Buchanan . . . directly communicated primarily with [Appellant] on labor issues by email and telephone - consistent with its later representation to the NLRB about the Rite-Vend transaction. These facts, and the other incontrovertible evidence submitted in the petition to disqualify as well as the evidence submitted at argument on the motion, make it apparent that there is at least an imputed attorney-client relationship between [Appellant] and Buchanan....Appellant's Brief at 25 (emphasis omitted). Appellant also relies on Kirschner v. K &L Gates LLP, 46 A.3d 737 (Pa. Super. 2012) to support his implied attorney-client relationship argument.
Appellant also addresses the second and third prongs of the Estate of Pew test in his argument. See Appellant's Brief at 29-32. As will be discussed below, because we agree with the analysis set forth by the trial court that Appellant did not demonstrate the first prong of the test, and therefore adopt it as our own, we need not address these assertions further.
After a thorough review of the record, the parties' briefs, the relevant law, and the well-reasoned opinion of the trial court, we conclude there is no merit to Appellant's first issue, and we affirm on the basis of the court's opinion. See Trial Ct. Op. at 5-10 (finding that Appellant did not meet the first prong of the Estate of Pew test based on the following: (1) Appellant failed to establish an express attorney-client relationship between Buchanan and himself existed where (a) there was no express agreement indicating that Appellant retained Buchanan at the time when the law firm provided legal services for the formation of Rite-Vend and (b) while there was an express agreement for the formation of Regal - it was RDS, not Appellant, that retained Buchanan; (2) when Buchanan sent RDS a letter about the Regal Agreement, the law firm explicitly averred that it accepted the request of RDS for legal representation and it would provide legal services to the business;(3) the Regal Agreement provided that RDS was Buchanan's "sole client" and any "[i]individuals or entities that are affiliated with [RDS], such as its equity owners, members, officers . . . are not clients of the Firm, unless [the parties] otherwise agree in writing[,]" thereby, expressly precluding the firm's representation of Appellant since he was both a manager and owner of RDS; (4) Appellant failed to establish an implied attorney-client relationship between Buchanan and himself existed where (a) there was no fee arrangement entered into between Buchanan and Appellant, (b) Buchanan's bills were not billed to Appellant individually but rather, were directed to RDS, (c) there was no evidence that Appellant paid fees to Buchanan for the firm's legal services, (d) the fact that Appellant, as RDS manager, worked toward the goal of forming Rite-Vend and Regal did not give rise to an attorney-client relationship; and (e) Appellant failed to demonstrate that Buchanan" agreed to provide legal services to him in addition to and separate from Buchanan's already existing duties to RDS[;]" and (5) Kirschner is distinguishable because there, an implied attorney-client relationship was established since the purpose of retaining counsel was to investigate fraud on behalf of the company and serve its interests whereas here, the purpose of retaining Buchanan was to service the interests of RDS and not Appellant). Accordingly, we do not disturb the trial court's determination as Appellant's first argument is unavailing.
See Brown's and RDS's Memorandum of Law in Opposition to Appellant's Petition to Disqualify and in Support of Cross-Motion for Sanctions (Brown's and RDS's Opposition to Appellant's Petition to Disqualify), 5/4/20, Exhibit 9 at 1 (unpaginated) (October 11, 2013, Letter from Buchanan to Appellant regarding "Engagement Agreement - RDS Vending, LLC").
See Brown's and RDS's Opposition to Appellant's Petition to Disqualify, Exhibit 9 at 2 (unpaginated).
In Appellant's second issue, he claims the court erred in denying his motion to compel the deposition and discovery of Buchanan. See Appellant's Brief at 32. He alleges that he sought to depose Jonathan Goldsmith, an attorney for Buchanan, and "obtain records related to" Buchanan's "representation of" him. Id. He then states:
At argument on the first motion to disqualify, the trial court agreed that [he] could withdraw the motion to disqualify in order to allow his motion to compel to be heard. Instead, the trial court marked [his] discovery motion moot without decision or notice under [Pa.R.C.P.] 236. The trial court abused its discretion as it failed to even rule on the discovery motion, without notice to the parties under Rule 236, which states that notice of decisions shall be provided by the court. Furthermore, the failure of the trial court to consider [his] motion to compel is contrary to the record made on September 30, 2020, when the procedure of withdrawal
of the disqualification motion and then ruling on the discovery motion was not only contemplated by the court, but offered by the court and induced action by [Appellant].Id. at 33 (some capitalization omitted).
Appellant's second issue fails for several reasons. First, it merits mention that Appellant's notice of appeal was limited to the December 13, 2021, order denying his disqualification motion, and does not discuss a mooted discovery motion. As Buchanan points out, the trial court "would have had neither the reason nor the opportunity to address the mooting of [Appellant]'s motion in its Rule 1925(a) opinion. . . . Brown will be prejudiced if this Court considers the mooting of the motion without the benefit of the trial court's explanation as to its use of its discretion to moot the motion." Buchanan's Brief at 39-40 (some capitalization omitted). Second, a discovery order is generally interlocutory and non-appealable. See Robec, Inc. v. Poul, 681 A.2d 809, 811 (Pa. Super. 1996) (absent unusual circumstances, this Court will not review discovery orders prior to final judgment in the main action). Appellant presents no argument that the mooting of his discovery motion qualifies as a collateral order pursuant to Pa.R.A.P. 313(b). See In re Bridgeport Fire Litigation, 51 A.3d 224, 230 n.8 (Pa. Super. 2012) (a collateral order is defined as one that: "1) is separable from and collateral to the main cause of action; 2) involves a right too important to be denied review; and 3) presents a question that, if review is postponed until final judgment in the case, the claim will be irreparably lost."). Third, Appellant fails to cite to any case law that is relevant to his claim and thus, it amounts to a mere bald assertion. Accordingly, Appellant's second issue fails.
We direct that a copy of the trial court's March 21, 2022, opinion be filed along with this memorandum and attached to any future filings in this case.
Order affirmed.
Judgment Entered.