Hi kiddies, it’s a special pre-4th of July edition of those wacky folks down south, drinking coffee, wearing robes, making rulings and taking names, yes, it’s 3d DCA Watch:
The Event Firm v. Augustin:
Ok, say you’re a trial judge. You have an LLC consisting of three managing members, and the organizational documents for the LLC were prepared by Adorno & Yoss, in particular none other than Alan Rosenthal. The LLC gets sued, and is again represented by Adorno & Yoss.
Now, a dispute arises among the members and the LLC sues one of the three. Guess who represents the LLC in its suit against the one member on the outs — yes, Adorno & Yoss.The odd guy out files a motion to disqualify, saying there is a conflict of interest between representing the LLC and suing one of its members. Does the motion hold water? Yes, holds Judge Sigler, who granted the motion without an evidentiary hearing.Wrong, says a PCA opinion by a troika that includes Senior Judge Schwartz.First, the 3d holds that pretty much every disqualification order should be reviewed by a writ of cert. More work for everyone!Second, Judge Sigler committed a “procedural misstep” by ruling without an evidentiary hearing:
Here, there was a clear dispute as to whether the attorneys represented Augustin. TEF claimed the attorneys represented only the business. Augustin alleged that he was led to believe otherwise. The trial court relied on the court file and the parties’ argument, which were insufficient to resolve the attorney-client relationship dispute. Thus, the trial court should have held an evidentiary hearing before disqualifying TEF’s counsel.
OK, I understand that and probably think that’s the right ruling. But should the issue be simply the state of mind of the member being sued, or rather whether representing a closely-held LLC against one of its members gives rise to a per se perception of a conflict of interest? It will be interesting to see Judge Sigler does with this on remand.
I’m off to parts unknown for the long weekend — have a safe and happy 4th everyone!