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Buschmeier v. G&G Investments

November 19, 2007


The opinion of the court was delivered by: Terrence F. McVerry United States District Court Judge


Presently before the Court is the JOINT MOTION TO DISQUALIFY PLAINTIFF'S COUNSEL FOR CONFLICT OF INTEREST INVOLVING A FORMER CLIENT filed by Executive Warehouse, Inc., Today's Express, Inc., Ghaznavi Investments, Inc., Ghaznavi Enterprises, Inc., and John J. Ghaznavi Foundation (the "Subpoenaed Entities") and John J. Ghaznavi ("Ghaznavi") (collectively referred to as "the Movants") (Document No. 160) and the RESPONSE IN OPPOSITION filed by Plaintiff / Judgment Creditor Petra Buschmeier (Document No. 162).

On September 20, 2007, the Court heard testimony and argument on the joint motion. All interested participants were represented by counsel who presented and argued the issues skillfully and effectively. At the hearing, the interests of the law firm of Reed Smith LLP ("Reed Smith") on behalf of Petra Buschmeier were represented by John C. Unkovic, Esquire. The Subpoenaed Entities were represented by Kathleen A. Gallagher, Esquire of Eckert Seamans Cherin & Mellot, LLC ("Eckert Seamans"). John Ghaznavi was represented by William F. Ward, Esquire, and Hugh F. McGough, Esquire, of Ward McGough, LLC. One witness James W. Ummer, Esquire ("Ummer") was presented on behalf of the Movants. Reed Smith submitted Affidavits of Arnd N. von Waldow, Esquire, and Timothy J. Cornetti, Esquire, which were essentially unrebutted.

At the conclusion of the hearing, the attorneys for the parties agreed that no additional briefing was necessary and that the record was sufficiently complete for the Court to rule upon the motion.

For the reasons hereinafter set forth, the Motion to Disqualify will be denied.

Procedural History

The movants, parties, counsel, and the Court are familiar with the extensive background facts of this case and, therefore, the Court will not the recite the facts again. However, the following is a brief recitation of the procedural facts salient to the issues presently before the Court.

Petra Buschmeier ("Buschmeier") commenced this action against G&G Investments, Inc., in September 2003 with the filing of a Writ of Execution. Ghaznavi was not a formal party to the execution proceedings; however, throughout the course of this litigation, he has, through counsel, made numerous filings and other requests of the Court.

In September 2003, Buschmeier first requested information concerning the assets of the "owners, parents, subsidiaries and/or affiliates" of G&G Investments, Inc. It is alleged that G&G has continuously failed, neglected and/or refused to provide such requested information in full and complete fashion; in fact, the failure of G&G and Ghaznavi, as corporate officer of G&G, is the subject of the pending contempt proceedings.

In late 2003, Buschmeier also issued subpoenas upon the Subpoenaed Entities. Those subpoenas sought, inter alia, documents that "list, reflect, refer or relate to any of Your and/or Your partners' (limited and/or general) assets and/or liabilities, from January 1, 1988 to the present." The subpoenas also requested documentation which reflected transactions with, inter alia, Ghaznavi himself and a number of Ghaznavi-related entities. The Subpoenaed Entities, through counsel, objected to the scope of the subpoenas and argued that Buschmeier was not entitled to discover their assets and financial information insofar as they were third-parties to the proceeding.

On November 1, 2004, Buschmeier sought, inter alia, the initiation of contempt proceedings against Ghaznavi and Patrick T. Connelly ("Connelly"), personally, for their respective roles in allegedly (i) permitting the destruction of evidence and (ii) authoring a letter to Hillsboro Glass retirees which misrepresented the current ownership of that entity. See Document 60.

The Court subsequently ordered that "John J. Ghaznavi and Patrick T. Connelly shall show written cause under oath why they should not be held personally liable for civil contempt" for the alleged destruction of documents and also ruled that Ghaznavi and Connelly "shall show written cause under oath why they should not be held personally liable for civil contempt for the above referenced communications and actions regarding the retirees of Hillsboro Glass Co. and Glenshaw Glass." That contempt hearing was scheduled on September 4, 2007.

Thirteen (13) days before the contempt hearing was to commence, Ghaznavi and the Subpoenaed Entities filed the instant motion in which they request that the Court disqualify Reed Smith from its representation of Buschmeier in this proceeding. Ghaznavi and the Subpoenaed Entities argue that the representation by Reed Smith, which began in January 2006, violates Rules 1.9 and 1.10(c) of the Pennsylvania Rules of Professional Conduct due to the fact that Ummer provided estate planning counseling to Ghaznavi during the time period during which Ummer was employed by Reed Smith, specifically from January 2000 to May 2003.

Testimony of James W. Ummer, Esquire

In 1972, Ummer began the practice of law with the law firm of Buchanan Ingersoll, in Pittsburgh, Pennsylvania. His specialty was, and continues to be, estate planning, especially for "entrepreneurial-type people" who own their own business.

Ummer testified that he first met Ghaznavi in the late 1970's. Early on, Ummer wrote wills for Ghaznavi and his wife, and eventually set up trusts for the Ghaznavi family and related entities. In 1984, Ummer created for Ghaznavi a "Consolidated Trust a/k/a The Ghaznavi Family Trust," which was a separate legal entity that was designed to expand with the "Ghaznavi Empire." In creating the Ghaznavi Family Trust, Ummer worked with David Gutowski and Patrick Connelly, both of whom were employees of Ghaznavi, and C. Kent May, Esquire, the corporate counsel for many of the corporate entities that were created on behalf of Ghaznavi and his business interests.

Ummer also testified that the following attorneys at Buchanan Ingersoll worked on or assisted him on Ghaznavi matters: Gregory A. Pearson, Robert A. King (business litigation), R. Douglas DeNardo (estate planning); John Schmerling (estate planning); Leonard J. Marsico, and Fran Maroka (tax matters).

In January 1991, Ummer left Buchanan Ingersoll and became a solo practitioner. However, after Ummer left Buchanan Ingersoll, he continued to work with R. Douglas DeNardo, Esquire, and Robert A. King, Esquire, and would on occasion discuss Ghaznavi matters.

On December 15, 1992, Ummer joined the law firm of Babst, Calland, Clements, and Zomnir, P.C. ("Babst Calland").*fn1 In January 2000, Ummer, along with a group of fifteen (15) to seventeen (17) attorneys, left Babst Calland and joined Reed Smith. R. Douglas DeNardo, Esquire, and Robert A. King, Esquire, were among the attorneys who left Babst Calland and transferred to Reed Smith. Ummer took a number of clients with him to Reed Smith, including Ghaznavi.

When Ummer joined Reed Smith, he opened two files for new business: John Ghaznavi and John Ghaznavi - Estate Planning. Ummer testified that he had no recollection of opening a separate file for the Ghaznavi Family Trust. Ummer further testified that he did not open a new business memorandum for any of the Subpoenaed Entities as C. Kent May, Esquire, with Eckert Seamans continued to represent those entities.

While at Reed Smith, Ummer's main assignment for the Ghaznavi Family Trust was a matter which involved the proposal that the Glenshaw Glass Pension Fund be taken over by the Pension Plan Guaranty Corporation ("PPGC'), a federal insurance program that exists to insure the integrity of existing pension plans. The role of Ghaznavi and the Ghaznavi Family Trust and the other related business entities came under scrutiny by the PPGC. Ummer testified that this investigation was very significant for Ghaznavi and his various businesses. The Eckert Seamans law firm took the lead on the significant ERISA aspect of the PPGC investigation. Ummer confirmed that he was the only Reed Smith attorney involved in the PPGC investigation; no one from the ERISA group at Reed Smith was involved in the PPGC investigation or billed any time for work on the PPGC investigation.

Ummer testified that all payments for legal fees made by Ghaznavi for services rendered by Ummer for the time period during which Ummer was with Reed Smith were made to directly to the firm. Also, Ummer utilized Reed Smith paralegals and the word processing center for all of his professional representation on Ghaznavi matters.

Ummer also testified that he received faxes from Patrick Connelly via the Reed Smith fax machine, as he did not have his own personal fax machine. In particular, he identified a September 4, 2001 fax he received from Connelly, which identified the "family tree" of the Ghaznavi Business Empire, which was sent to him in preparation for his response to the PPGC. Ummer had been asked by the PPGC to summarize the history and provisions of the ...

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