Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

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

Hartford Steam Boiler Inspection and Insurance Co. v. International Glass Products, LLC

United States District Court, W.D. Pennsylvania

May 22, 2017

THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY and HARTFORD CASUALTY INSURANCE COMPANY, Plaintiffs,
v.
INTERNATIONAL GLASS PRODUCTS, LLC, and FRANCISCO A. FERNANDEZ, Defendants.

          MEMORANDUM ORDER

          David Stewart Cercone United States District Judge

         AND NOW, this 22nd day of May, 2017, upon due consideration of defendant International Glass Products, LLC's (“IGP”) Motion to Disqualify Counsel and the parties' submissions in conjunction therewith, IT IS ORDERED that [254] the motion be, and the same hereby is, denied.

         The motion presents as little more than a thinly veiled attempt to use the Rules of Professional Conduct to gain a tactical advantage in the litigation. This is clear because the motion fails for at least three reasons.

         First, IGP has failed to raise circumstances that meet the requirements for disqualification. Federal courts have inherent powers over the admission and supervision of the attorneys who appear before them. In re Corn Derivatives Antitrust Litigation, 748 F.2d 157, 161 (3d Cir. 1984), cert. denied sub nom., Cochrane & Bresnahan v. Plaintiff Class Representatives, 472 U.S. 1008 (1985). Within this sphere of authority the "courts have vital interests in protecting the integrity of their judgments, maintaining public confidence in the integrity of the bar, eliminating conflicts of interest, and protecting confidential communications between attorneys and their clients. To protect these vital interests, courts have the power to disqualify an attorney from representing a particular client." Id.

         "Motions to disqualify are viewed with 'disfavor'' and disqualification is considered a 'drastic measure which courts should hesitate to impose except when absolutely necessary.'" Carlyle Towers Condominium Ass's, Inc. v. Crossland Savings, FSB, et al., 944 F.Supp. 341, 345 (D. N.J. 1996) (quoting Alexander v. Primerica Holdings, Inc., 822 F.Supp. 1099, 1114 (D. N.J. 1993) (citing Schiessle v. Stephens, 717 F.2d 417, 420 (7th Cir. 1983)). The United States Court of Appeals for the Third Circuit made clear long ago:

[a court] should disqualify an attorney only when it determines, on the facts of the particular case, that disqualification is an appropriate means of enforcing the applicable disciplinary rule. It 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 her choice and enabling attorneys to practice without excessive restrictions.

United States v. Miller, 624 F.2d 1198, 1201 (3d Cir.1980); accord Spear v. Fenkell, 2014 WL 6676660, *1 (E.D. Pa. Nov. 25, 2014) (Motions to disqualify are an extreme sanction, are not to be taken lightly, are to be granted only when it is absolutely necessary and caution must be taken to assure the Professional Rules of Conduct are not utilized as a procedural weapon) (collecting numerous cases).

         It has long been recognized that "[t]he attempt by an opposing party to disqualify the other side's lawyer [is] part of the tactics of an adversary proceeding." J.P. Foley & Co., Inc. v. Vanderbilt, 523 F.2d 1357, 1360 (2d Cir.1975) (Gurfein, J., concurring). Given this reality, the court's exercise of discretion must be undertaken with due regard for the ethical standards governing the conduct of counsel and careful consideration of specific situation presented. Gould, Inc. v. Mitsui Mining and Smelting, Co., 738 F.Supp. 1121, 1126 (N. D. Ohio 1990). The issues "arising from the application of these standards cannot be resolved in a vacuum, and the ethical rules should not be blindly applied without consideration of relative hardships." Id. Consequently, close scrutiny of the facts is required to prevent unjust results. Id. (citing Smith v. Whatcott, 757 F.2d 1098, 1099-1100 (10th Cir. 1985); and Kalmanovitz v. G. Heileman Brewing Co., Inc., 610 F.Supp. 1319, 1322 (D. De. 1985)); accord J.P. Foley & Co., 523 F.2d at 1360 (care must be taken "to prevent literalism from possibly overcoming substantial justice to the parties.").[1]

         Here, IGP founds its position on the proposition that the court's rulings stripping HSB of the ability to pursue claims as a direct insurer of IGP creates an inherent conflict in the joint representation of both carriers. This purportedly is so because The Hartford continues to have claims to bargain with in the negotiations concerning settlement of the litigation while HSB does not. IGP posits:

As a result of the Court's rulings, HSB has no claims against IGP, but IGP's claims against HSB for tortious interference with contract and negligence remain to be decided by the jury. IGP is seeking damages against HSB for destruction of its business, valued at approximately $15, 000, 000 by IGP's expert witness, as well as punitive damages. Because of the Court's rulings, which are now the law of the case, HSB can no longer argue that the settlement value of those claims must be balanced against the settlement value of HSB's claims against IGP, because HSB has no such claims against IGP.
On the other hand, the Court has held that both IGP's claim of breach of contract against Hartford, and Hartford's claim of breach of contract against IGP, would need to be decided by the jury, along with the other claims between IGP and Hartford. Thus, Hartford has the ability to argue that the settlement value of its claims against IGP must be taken into account when considering the settlement value of IGP's claims against Hartford. Simply stated, Hartford has something to bargain with, and HSB does not. It is obvious that a conflict of interest exists because there are substantially different possibilities of settlement for Hartford as compared with HSB.

IGP's Memorandum in Support (Doc. No. 255) at 9.

         In addition, this perceived conflict supposedly is exacerbated by the potential to recover punitive damages on a finding of bad faith insurance practices, which further inhibits plaintiffs' counsel's ability to carry out Rule 1.7's duty of loyal and diligent representation to each carrier.[2] IGP explains:

In assessing the risk of such an award of punitive damages, Harford's counsel must assume that the financial exposure belongs to Hartford alone, because of Pennsylvania's strong public policy against insurability of punitive damages. Wolfe v. Allstate Prop. &Cas. Ins. Co., 790 F.3d 487. 495 (3d Cir. 2015). Counsel's ethical duties to Hartford require that attorney to seek every opportunity to resolve the claims between IGP and Hartford on the best terms for Hartford. In those negotiations, Hartford has the ability to argue that its triable claims against IGP make its liability exposure different from that of HSB. But joint counsel cannot make that argument without violating his duties of loyalty and impartiality to HSB. Put more directly, counsel's ethical duties to Hartford for "loyal and diligent representation" require that attorney to use the negotiation leverage that Hartford - and only Hartford-possesses to seek a settlement for the benefit of Hartford, regardless of its effects on HSB. So by definition, the interests of Hartford and HSB "cannot be reconciled." Rule 1.7, ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

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