Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.


United States District Court, Middle District of Pennsylvania

September 16, 1991


The opinion of the court was delivered by: Nealon, District Judge.


On February 15, 1991, the plaintiffs, United Food and Commercial Workers Health and Welfare Fund of Northeastern Pennsylvania (Fund) and its Trustees, Ronald T. Brooks, Mary Ann Dalkiewicz, Thomas Lazur, Maryellen Francke, E.J. Fox, and Paul Chiz, Jr., filed a complaint alleging that the defendants, Darwin Lynch Administrators, Inc. (DLA) and Darwin Lynch (Lynch), personally and in his capacity as an administrator and fiduciary; breached their fiduciary duties under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq. The defendants filed an answer and counterclaims against the plaintiffs on March 26, 1991.*fn1

On April 4, 1991, the defendants filed a motion to disqualify the plaintiffs' counsel, Barry Slevin (Slevin) and Slevin & Hart, P.C. The defendants contend that Slevin participated "in the transactions and occurences [sic] which give rise to the [p]laintiffs' claim and the [d]efendants' defenses thereto, and are necessary witnesses in this action."*fn2 After extensions of time, the defendants submitted their supporting brief on May 2, 1991, and the plaintiffs filed their opposition brief on June 17, 1991. The defendants filed a reply on July 1, 1991. In addition, supplemental briefs were filed by the plaintiffs on July 8, 1991 and the defendants on July 9, 1991.

I. Background*fn3

The Fund is a joint labor and management health and welfare fund established pursuant to § 302(c) of the Labor Management Relations Act (LMRA), 29 U.S.C. § 186(c). DLA is a corporation that is in the business of providing administrative, consulting and related services to health and welfare pension plans. Lynch is the President and majority shareholder of DLA. The plaintiffs state that DLA was named the administrative manager of the Fund on January 1, 1988 in accordance with a contract. In fulfilling its obligations under the contract, DLA was bound by the Plan Documents of the Fund.

Eva Holland (Holland) was entitled to health and welfare benefits from the Fund. On November 17, 1989, Holland suffered a stroke. She was admitted to Mary Imogene Bassett Hospital and subsequently transferred to New Medico Rehabilitation and Skilled Nursing Center (New Medico) on December 12, 1989. The plaintiffs allege that because New Medico is not a hospital, payment for services provided by New Medico is not covered by the Fund. Nevertheless, coverage for New Medico's services to Holland may be provided in order to reduce the Fund's costs for acute care at a hospital. The express approval of the Trustees, however, is required.

The plaintiffs aver that DLA's employees advised New Medico that their services to Holland would be covered by the Fund without obtaining the prior approval of the Trustees. On May 24, 1990, DLA paid $8,694.00 from the Fund to New Medico.*fn4 Hence, the plaintiffs assert that the defendants breached their contractual and fiduciary duties in their handling of Holland's benefits claim.*fn5

II. Discussion

The defendants contend that the plaintiffs' counsel should be disqualified because Slevin, an attorney with Slevin & Hart, P.C., is a necessary witness in the action. Further, the defendants assert that Slevin has an interest adverse to the plaintiffs and that he represented the defendants in a prior civil suit arising from a claim for benefits.

A. Standing

The plaintiffs argue that the Rules of Professional Conduct*fn6 do not give the defendants "any standing to bring this motion."*fn7 The court concludes, however, that the disqualification motion is properly before the court. "One of the inherent powers of any federal court is the admission and discipline of attorneys practicing before it." In re Corn Derivatives Antitrust Litigation, 748 F.2d 157, 160 (3d Cir. 1984). In determining whether disqualification is appropriate, the court looks to the standards and principles promulgated by the American Bar Association in the Rules of Professional Conduct for guidance. See id. at 160-61.*fn8

B. Lawyer as Witness

Rule 3.7 prohibits a lawyer from acting "as advocate at a trial in which the lawyer is likely to be a necessary witness. . . ."*fn9 (Emphasis added). In contrast to the superseded provisions of the Code of Professional Responsibility, Rule 3.7 sets forth a restrictive criterion for disqualification.*fn10 "This standard requires the opposing party to bear a higher burden on a disqualification motion, permits the court to delay ruling until it can determine whether another witness can testify, and precludes disqualification if the lawyer's testimony would merely be cumulative." Cannon Airways, Inc. v. Franklin Holdings Corp., 669 F. Supp. 96, 100 (D.Del 1987) (citations omitted).

The defendants aver that DLA entered into an administrative agreement (1985 Agreement) with the Fund on July 6, 1985. The 1985 Agreement was to terminate on June 1, 1990. The defendants state that it is the plaintiff's contention that the 1985 Agreement was superseded by a subsequent agreement (1988 Agreement) effective on January 1, 1988 and that the plaintiffs' breach of contract claim arises from the 1988 Agreement. While the defendants dispute the effective date of the 1988 Agreement, they maintain that, even if applicable, their actions do not constitute a breach of the latter Agreement.

In seeking disqualification, the defendants argue that Selvin is a necessary witness because evidence, which can be obtained only from Slevin, concerning the construction and interpretation of the Plan Document, 1985 Agreement and 1988 Agreement are at the crux of this dispute. Specifically, they seek Slevin's testimony with respect to the effective date and operation of the 1988 Agreement. The plaintiffs respond that the defendants have not demonstrated that Slevin is "likely to be a necessary witness." After a review of the record, the court concludes that the defendants' have not satisfactorily established, at this time, that Slevin "is likely to be a necessary witness."

The parol evidence rule provides that "[w]hen two parties have made a contract and have expressed it in a writing to which they have both assented as the complete and accurate integration of that contract, evidence, whether parol or otherwise, of antecedent understandings and negotiations will not be admitted for the purpose of varying or contradicting the writing." 3 CORBIN ON CONTRACTS § 573 at 357 (1960) (footnote omitted). Extrinsic evidence however, is admissible to ascertain whether a contract has been made, whether the contract is void or voidable, and whether the parties have assented to a writing as the complete and accurate "integration" of that contract. Id. at 358-60. In addition, parol evidence is admissible to interpret a writing. Id. at § 579 at 412-13.*fn11 Hence, testimony by Slevin, with respect to these issues, may be admissible. Nevertheless, the defendants have not shown that no other witness could testify to these issues.

By affidavit, Lynch states that prior to December 1989 the past practice and policy of the Fund allowed the payment of benefits for participants who were transferred to a rehabilitation facility within seventytwo hours of discharge from a hospital. See Document 14, Affidavit of Darwin Lynch at ¶ 7, of record. Lynch avers that Slevin is the "only other person who has first hand knowledge concerning the meaning" of the subsequently revised Plan Document.*fn12 Further, Lynch asserts that all discussions and negotiations regarding the 1988 Agreement were conducted by Slevin and himself.*fn13 Lynch continues that, even if the 1988 Agreement did become effective, it was his understanding that the 1988 Agreement would not modify what was previously considered by the Trustees to be a covered benefit.*fn14

Although Slevin may be qualified to testify with respect to these issues, the defendants would not be depreived of an opportunity to prove their case if Slevin's testimony is excluded.*fn15 Obviously, Lynch may testify on the defendants' behalf. The defendants may show that the past policy of the Fund authorized the handling of the Holland claim by identifying claims that had been paid in similar circumstances. Finally, testimony may be obtained from the Trustees in and effort to corroborate the defendants' contentions.

C. Conflict of Interest

The defendants cite Rule 1.7 and Rule 1.9 of the Rules of Professional Conduct to establish that Slevin must be disqualified. Rule 1.7 and Rule 1.9 address conflict of interest. Rule 1.7 provides that a "lawyer shall not represent a client if the representation of that client may be materially limited . . . by the lawyer's own interests. . ." The Comment to Rule 1.7 states that "[i]f the probity of a lawyer's own conduct in a transaction is in serious question, it may be difficult or impossible for the lawyer to give a client detached advice."

The defendants contend that the integrity of Slevin's conduct is "in serious question"*fn16 because he may be "held at least partially responsible to the Fund for the poor drafting" of the documents at issue*fn17 and "may have been negligent in the way he represented the Fund" at a meeting of the Board of Trustees.*fn18 Although the defendants' argument has a certain superficial plausibility, the court must reject this contention. The court does not interpret the language of Rule 1.7 to require disqualification of Slevin merely because he drafted the documents or advised the Fund with respect to the subject matter of the litigation.*fn19 Rather, Rule 1.7 is intended to ensure a lawyer's loyalty to his client. The defendants have failed to show at this point that Slevin's loyalty to the Fund is questionable.

Rule 1.9 provides that:

  A lawyer who has formerly represented a client in a matter
  shall not thereafter:

  (a) 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 consents after a full disclosure of the circumstances
  and consultation; or

  (b) use information relating to the representation to the
  disadvantage of the former client except as Rule 1.6 would
  permit with respect to a client or when the information has
  become generally known.

By affidavit, Lynch states that Slevin has represented him, DLA and the Fund in an action for benefits initiated by Hanover Brands, Inc. (Hanover). Lynch declares that "[a]lthough the suit did not concern rehabilitative care, the action did involve a claim made under the same Plan document and [Summary Plan Description] involved in the instant case."*fn20 Further, "[a]s his client, [Lynch] shared various confidences with . . . Slevin on behalf of [himself] and DLA concerning, inter alia, the Plan Document and the [Summary Plan Description] (including the interpretation thereof), claims handling, claims entitlement and fund administration."*fn21

The defendants argue that the pending suit is a "substantially related matter" to the action brought by Hanover against the plaintiffs and the defendants. The court is not persuaded that the Hanover litigation not the instant suite are "substantially related". An examination of Hanover's complaint reveals that the primary issue was the termination of a participant's coverage.*fn22 While the defendants are technically accurate in maintaining that Hanover's "claim did focus on the same Plan Document and [Summary Plan Description] which governed the [Holland] [c]laim[,]"*fn23 the present suit appears to raise different issues. Further, it is "generally accepted . . . that when `the same attorney acts for two or more parties having a common interest, neither party may exercise the [lawyer-client] privilege in a subsequent controversy with the other.'" 2 WEINSTEIN & BERGER, WEINSTEIN'S EVIDENCE ¶ 503(d)(5)[01] at 503-129 (1989). Although Lynch states that, with respect to the Hanover action, he "shared various confidences" with Slevin,*fn24the court cannot determine from this bald assertion whether Lynch may be exempted from the general rule.

III. Conclusion

For the foregoing reasons, the defendants' motion to disqualify the plaintiffs' counsel Slevin and Slevin & Hart, P.C. will be denied. If further proceedings indicate that Slevin should be disqualified, the defendants may submit another motion. The plaintiffs will be granted twenty days from the date of this Memorandum and Order to file a response to the defendants' counterclaims. Further, the plaintiffs and the defendants will be granted twenty days to file supplemental briefs with respect to the discovery proceedings.

Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.