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Greenwood Land Co. v. Omnicare

August 20, 2009

GREENWOOD LAND COMPANY, PLAINTIFF
v.
OMNICARE, INC.; NCS HEALTHCARE OF NEW YORK, INC., DEFENDANT



The opinion of the court was delivered by: Chief U.S. Magistrate Judge Amy Reynolds Hay

MEMORANDUM OPINION

The Court addresses here the pending, fully briefed Motion filed by Greenwood Land Company ("Greenwood" or "the Plaintiff") (Doc. 7) seeking to disqualify counsel for Defendants, Omnicare, Inc. ("Omnicare") and NCS Healthcare of New York, Inc. ("NCS").*fn1

Counsel for the Plaintiff also seeks discovery to determine whether confidential information has been communicated to the Defendants, and whether sanctions are appropriate. The Court will grant the Motion insofar as it seeks to disqualify Defendants' counsel, and will deny the request for discovery.

I. BACKGROUND

The genesis of the pending Motion is described in a February 25, 2009 letter written by attorney Gregory Pearson ("Pearson") of Buchanan Ingersoll & Rooney ("BI") to John H. Williams ("Williams"), an attorney with Eckert, Seamans, Cherin & Mellott ("ES"). In that letter, Pearson stated that he had enclosed BI's original file on the Greenwood Land Company's Lease. He wrote that in 1998, Greenwood, as landlord, entered into a Lease with tenant, Thrift Drug, Inc., but that some time afterward, the Lease was assigned to NCS. Pearson continued:

Subsequent to that time, it would appear that Omnicare, Inc. acquired the business or the assets of NCS. In 2004, the Lease came up for renewal for a five year term, and no notice was given by the tenant to terminate at the end of the original term. [BI was] involved in discussions with . . . the agent for Omnicare, who indicated that they would not go along with a five year extension of the Lease. After some discussion, a proposal was made and a draft of that was sent [for] . . . execution by Omnicare. To the best of my knowledge, we never received any response to that proposal which would have formally recognized Omnicare as the tenant and extended the Lease for a period of approximately two years. Although it, to my knowledge, never executed the document or discussed it further with the principals of Greenwood, Omnicare continued to occupy the premises and pay an increased rent for a five year period. We are now met with the situation where Omnicare says that it has provided timely notice of its intent to terminate at the end of the originally scheduled Lease, March 31, 2009. Greenwood, however, never received that notice, and based on my online verification with the Post Office, it does not appear that there is any record of the Certified Receipt which Omnicare contends it sent.

Hopefully, you can assist Greenwood in getting this resolved to their satisfaction. If I can answer any more questions about the documents themselves, without providing any legal advice, given that we do have a conflict, I would be pleased to do so. (Doc.7 Ex. Q).

ES filed suit on behalf of Greenwood on June 1, 2009. The Complaint (Doc.1), which named Omnicare as the Defendant, comprised three counts - the first for breach of the Lease, the second for negligence based on failure to maintain and repair the leased premises, and the third seeking punitive damages based on harm caused to the property. Omnicare was served on June 4, 2009.

On or about the same date, Pearson and attorneys at ES exchanged emails concerning the conflict issues raised by ES. In an email dated June 4, 2009, Pearson wrote to Gary Walker ("Walker") at ES, stating that he had reviewed what he believed to be the relevant Rules pertaining to conflicts, Rule 3.7 relating to Lawyers as Witnesses, as well as Rules 1.7 and 1.9, which are referenced in Rule 3.7. Pearson stated, "After reviewing these, I do not see where there is a conflict that would prohibit [BI] from representing Omnicare. . . I wonder whether you would be good enough to send me . . . an email directing me to any specific provisions of the Rules or any case law that we may have failed to consider." (Doc. 7 Ex. T). Later that afternoon, Williams responded: "Without limiting our client in any manner, I would invite your attention to Rules 1.9(a) and 1.10(a), which I think largely cover it. Having reviewed the BI file, I have great difficulty seeing how your firm could take a position adverse to Greenwood and represent Omnicare in this matter. The overlap and symmetry in the cases could hardly be more pronounced." (Id. Ex. U).

On June 11, 2009, Greenwood filed an Amended Complaint (Doc. 3) adding NCS as a Defendant. Communication between ES and BI regarding the alleged conflict of interest resumed on June 22, 2009, when attorney Stanley Parker ("Parker") of BI notified Williams that he intended to enter his appearance as counsel for Omnicare and NCS. Parker also requested a thirty day extension of time in which to answer the Complaint. Williams responded in an email which began, "To ensure that you have a base outline of these matters, I provide the following . . . ." (Doc.7 Ex. X). Williams then summarized prior dealings between Greenwood and Omnicare, noting that in 2004, the parties disputed whether the tenant had provided Greenwood with valid or effective notice of its intention to terminate. (Id.). That dispute also encompassed the identity of the tenant - i.e., was the tenant Omnicare or NCS, and whether either was bound by the Lease terms. According to Williams, during the course of representing Greenwood, BI obtained confidential communications from Greenwood and its representatives dealing with the facts of the case, its confidence in the strength of its case, and its "bottom line" position. BI, in turn, provided Greenwood with advice regarding the terms of the Lease, and negotiated on Greenwood's behalf. "The tenant(s) acquiesced, and returned to paying the rent under the Lease for the first of two 5 year renewal terms." (Id.). BI charged and was paid for this representation.

In the same email, Williams described for Parker similarities in the 2004 dispute and the current litigation writing: "The instant [2009] dispute is so similar to the dispute that arose five years ago, your firm provided its file to [ES] to aid [Greenwood] in this dispute." (Id.).

Williams stated that he would consent to giving Omnicare and NCS an additional thirty days in which to file an Answer, conditioned upon the following terms: (1) Your client must find different counsel at a different firm, with whom you are prohibited from sharing substantive information about this case or the earlier substantially similar matter; (2) You must cease immediately any representation, counseling or services with regard to this matter other than to advise your client regarding conflict issues; (3) Your firm must represent that it has not provided substantive advice or counsel to any defendant or related entity or person, directly or indirectly, regarding the instant lawsuit or the matters underlying same.

If you believe that I am wrong in these positions or my understanding of what transpired, I am willing to entertain any explanation you may have. Otherwise, your client's choices appear to be filing your motion for an extension with the Court, finding other counsel, or filing a timely answer. (Id.). On June 23, 2009, Parker emailed Williams stating: "Based on the information that we have, this law firm does not believe there to be a conflict . . . ." (Id.). Later the same day, Parker filed his appearance on behalf of Omnicare and NCS (Doc. 4) and a Motion for Extension of Time to File an Answer (Doc. 6).*fn2 The pending Motion was filed on June 24, 2009.

II. DISCUSSION

Before the Court turns to the law governing the Motion to Disqualify, it is important that it summarize information set out in the parties' submissions regarding issues confronted in 2004 and ...


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