The opinion of the court was delivered by: Jones, J.
Before the court is Plaintiff/Counterclaim Defendants' Motion to disqualify Ira Silverstein, Esq. and Thorp Reed & Armstrong, P.C. as counsel for Gretchen Hutto Castellano (Doc. No. 127) and Defendant/Counterclaim Plaintiff's Response in Opposition thereto (Doc. No. 133). For the reasons set forth below, the court will deny the Motion to Disqualify Counsel.
In his April 12, 2005, Memorandum denying Mrs. Castellano's motion to disqualify counsel for Counterclaim Defendants, the late Judge Clifford Scott Green summarized the background of this case as follows:
Plaintiff/Counterclaim Defendant Regional Employers' Assurance Leagues Voluntary Employees' Beneficiary Association Trust ("REAL VEBA") initiated this action by filing a Praecipe for Writ of Summons in the Court of Common Pleas of Montgomery County of Pennsylvania. Plaintiff then filed its Complaint for declaratory relief under the Pennsylvania Declaratory Judgment Act, 42 Pa. C.S.A. § 7532 et seq. and sought monetary damages regarding death benefits allegedly payable to Defendant Gretchen Hutto Castellano ("Mrs. Castellano"). Mrs. Castellano subsequently removed this action to federal court based on its federal subject matter, i.e., ERISA. This matter is essentially a contract dispute over the interpretation of provisions in trust and plan documents relating to the death benefits payable to Mrs. Castellano upon the death of her husband, Dominic M. Castellano ("Dr. Castellano"). These benefits are payable out of the REAL VEBA welfare benefit plan and are administrated by PennMont Benefit Services, Inc. ("PennMont").
Dr. Castellano died on June 17, 2003. Mrs. Castellano notified the Counterclaim Defendants of her husband's death on July 7, 2003. In response to Mrs. Castellano's claim, Counterclaim Defendants mailed Mrs. Castellano a Settlement Agreement in which they gave Mrs. Castellano two options: 1) she could accept the $750,000 in death benefits in annual payments over the course of ten years; or (2) she could accept the death benefits in a lump sum discounted to present value ($597,560.14). Plaintiff required Mrs. Castellano to sign a release as a condition of receiving any benefits. Mrs. Castellano's counterclaim is based on the contention that she is entitled to a lump sum payment of $750,000 under the Plan's terms. (Mem. & Order, Apr. 12, 2005, 1-3.)
Today the court addresses another motion to disqualify counsel -- this time filed by Plaintiffs/Counterclaim Defendants who seek disqualification of counsel for Mrs. Castellano. The instant Motion to Disqualify Counsel was filed on August 15, 2007. (Doc. No. 127.) Mrs. Castellano filed her Response on August 29, 2007. (Doc. No. 133.) The Motion to Disqualify Counsel and the parties' cross-motions for summary judgment, which also were filed in August 2007, were set aside while the parties attempted settlement. Judicial officers have made several unsuccessful attempts to help the parties reach an amicable resolution of this matter, which is currently in its sixth year of litigation and which shows no sign of resolution. The court soon will turn to the pending cross-motions for summary judgment.
A district court should grant a motion to disqualify counsel "only when it determines, on the facts of the particular case, that disqualification is an appropriate means of enforcing the applicable disciplinary rule." United States v. Miller, 624 F.2d 1198, 1201 (3d Cir. 1980). In making such a determination, the district court "should consider the ends that the disciplinary rule is designed to serve and any countervailing policies, such as permitting a litigant to retain the counsel of his choice and enabling attorneys to practice without excessive restrictions." Id. Even if the court finds that an attorney violated a disciplinary rule, "disqualification is never automatic." Id.
In this district, motions to disqualify are an "extreme sanction" that should not be imposed lightly. Shade v. Great Lakes Dredge & Dock Co., 72 F.Supp.2d 518, 520 (E.D. Pa. 1999). "The party seeking to disqualify opposing counsel bears the burden of clearly showing that continued representation would be impermissible. Vague and unsupported allegations are not sufficient to meet this standard." Cohen v. Oasin, 844 F.Supp. 1065, 1067 (E.D. Pa. 1994).
A. Conflict of Interest with STEP
The moving parties argue that Mrs. Castellano's counsel should not represent Mrs. Castellano and STEP Plan Services, Inc. ("STEP") concurrently. Mrs. Castellano's counsel represent STEP in cases pending in other courts against the Counterclaim Defendants. (See Mot. to Disqualify Counsel 6-7 (referring to STEP Plan Services, Inc. v John Koresko, V, (Civ. No. 2004-7718), which is pending in the Philadelphia County Court of Common Pleas, and Sanchez and Daniels v. STEP Plan Services, Inc., (Civ. No. 03-1550) (N.D. Ill.)).) The moving parties allege that Mr. Silverstein has compromised his loyalty to Mrs. Castellano to further the interests of his other client, STEP.
The Local Rules of the United States District Court for the Eastern District of Pennsylvania incorporate the Pennsylvania Rules of Professional Conduct, which the Supreme Court of Pennsylvania has adopted. See E.D. Pa. Local R. ...