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Home My WebLink About2006-710 Civil WHIRLPOOL CORPORATION, PLAINTIFF IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA V. PENSKE LOGISTICS, INC., PIZZUTI EQUITIES, INC., EXXCEL CONTRACT MANAGEMENT, INC., DEFENDANTS V. FABCON, LLC, tld/b/a FABCON, INC., ADDITIONAL DEFENDANT 06-0710 CIVIL TERM IN RE: MOTION TO DISQUALIFY COUNSEL BEFORE BAYLEY. J. OPINION AND ORDER OF COURT Bayley, J., July 28, 2006:-- On February 3, 2006, plaintiff, Whirlpool Corporation, filed a complaint against defendants, Penske Logistics, Inc., Pizzuti Equities, Inc., and Exxcel Contract Management, Inc. On May 17, 2006, defendant, Exxcel Contract Management, Inc., filed an additional defendant complaint against Fabcon, LLC. The law firm of Rawle & Henderson, LLP, represents defendant Pizzuti Equities, Inc. Penske filed a motion to disqualify Rawle & Henderson from representing Pizzuti. A Rule was entered upon which a hearing was conducted on July 24, 2006. In its complaint, Whirlpool alleges that it entered into an agreement with Pizzuti 06-0710 CIVIL TERM for the construction and lease of a regional distribution warehouse in Cumberland County. On November 6, 1998, Whirlpool entered into a Warehouse and Transportation Service Agreement with Penske which included the removal of snow and ice from the roof of the building. On February 6, 2004, "flaws in the design, construction and materials used in the construction of the Building, combined with the accumulation of ice and snow on the roof, caused a portion of the roof to collapse. . ." Whirlpool seeks recovery for the damages sustained as a result of the roof collapse. Penske's motion to disqualify Rawle & Henderson from representing Pizzuti is based on Rawle & Henderson representing Penske in a considerable amount of litigation in the past, and in three current cases. Penske is in the business of providing logistics and managing transportation facilities. The past and current representation by Rawle & Henderson has involved commercial truck accidents, not claims arising from a collapse of a roof. In this case, where Penske and Pizzuti are defendants in the suit brought by Whirlpool, Penske maintains that Pizzuti is likely to take a position adverse to its interests. Penske further maintains that Rawle & Henderson has learned how it conducts business, its risk management strategy, and its litigation strategy. Both parties have argued their position in the context of Rule 1.9 of the Rules of Professional Conduct, which provides: Duties to Former Clients (a) A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are -2- 06-0710 CIVIL TERM materially adverse to the interests of the former client unless the former client gives informed consent. (b) A lawyer shall not knowingly represent a person in the same or a substantially related matter in which a firm with which the lawyer formerly was associated had previously represented a client (1) whose interests are materially adverse to that person; and (2) about whom the lawyer had acquired information protected by Rules 1.6 and 1.9(c) that is material to the matter; unless the former client gives informed consent. (c) A lawyer who has formerly represented a client in a matter or whose present or former firm has formerly represented a client in a matter shall not thereafter: (1) use information relating to the representation to the disadvantage of the former client except as these Rules would permit or require with respect to a client, or when the information has become generally known; or (2) reveal information relating to the representation except as these Rules would permit or require with respect to a client. (Emphasis added.) The Comment to the Rule provides: [1] After termination of a client-lawyer relationship, a lawyer has certain continuing duties with respect to confidentiality and conflicts of interest and thus may not represent another client except in conformity with this Rule.. . [2] The scope of a "matter" for purposes of this Rule depends on the facts of a particular situation or transaction. The lawyer's involvement in a matter can also be a question of degree. . . a lawyer who recurrently handled a type of problem for a former client is not precluded from later representing another client in a factually distinct problem of that type even though the subsequent representation involves a position adverse to the prior client. . . The underlying question is whether the lawyer was so involved in the matter that the subsequent representation can be justly regarded as a changing of sides in the matter in question. . . . [8] . . . information acquired by the lawyer in the course of representing a client may not subsequently be used or revealed by the lawyer to the disadvantage of the client. However, the fact that a lawyer has once served a client does not preclude the lawyer from using generally known information about that client when later representing another client. -3- 06-0710 CIVIL TERM [9] The provisions of this Rule are for the protection of former clients and can be waived if the client gives informed consent. .. (Emphasis added.) We do not have to examine the facts under Rule 1.9 because Rawle & Henderson currently represents Penske in three unrelated cases. Rule 1.7 of the Rules of Professional Conduct provides: Conflict of Interest: Current Clients (a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if: (1) the representation of one client will be directly adverse to another client; or (2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer. (b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if: (1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client; (2) the representation is not prohibited by law; (3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and (4) each affected client gives informed consent. (Emphasis added. ) The Comment to the Rule provides: Identifying Conflicts of Interest: Directly Adverse [6] Loyalty to a current client prohibits undertaking representation directly adverse to that client without that client's informed consent. Thus, absent consent, a lawyer may not act as an advocate in one matter against a person the lawyer represents in some other matter, even when the matters are wholly unrelated. The client as to whom the representation is directly adverse is likely to feel betrayed, and the resulting damage to the client-lawyer -4- 06-0710 CIVIL TERM relationship is likely to impair the lawyer's ability to represent the client effectively. In addition, the client on whose behalf the adverse representation is undertaken reasonably may fear that the lawyer will pursue that client's case less effectively out of deference to the other client, i.e., that the representation may be materially limited by the lawyer's interest in retaining the current client. Similarly, a directly adverse conflict may arise when a lawyer is required to cross-examine a client who appears as a witness in a lawsuit involving another client, as when the testimony will be damaging to the client who is represented in the lawsuit. On the other hand, simultaneous representation in unrelated matters of clients whose interests are only economically adverse, such as representation of competing economic enterprises in unrelated litigation, does not ordinarily constitute a conflict of interest and thus may not require consent of the respective clients. (Emphasis added.) This case is in the early stages of proceedings. While Pizzuti has an interest in retaining its chosen counsel, Rawle & Henderson owes a duty of loyalty to Penske as it represents the company in three current cases. There is a risk to Penske that Pizzuti, in an effort to shift any responsibility for Whirlpool's roof collapse away from itself, may assert that if there is responsibility, it is on others, and that could include Penske. That would be adverse to the interests of Penske. It is in the interest of this court to protect the integrity of the proceedings and maintain public confidence in the judicial system. See International Longshoremen's Association, Local Union 1332 v. International Longshoremen's Association, 909 F.Supp. 287 (1995). Pursuant to Rule 1.7, Rawle & Henderson is disqualified from representing Pizzuti. ORDER OF COURT AND NOW, this day of July, 2006, the motion of Penske Logistics, Inc., to disqualify Rawle & Henderson, LLP from representing Pizzuti Equities, Inc., IS -5- 06-0710 CIVIL TERM GRANTED. -6- 06-0710 CIVIL TERM Timothy J. Nieman, Esquire Kelly H. Decker, Esquire Rhoads & Sinon, LLP One South Market Square 1 ih Floor P.O. Box 1146 Harrisburg, PA 17108-1146 Eric J. Sharon, Esquire Barnes & Thornburg, LLP 100 N. Michigan Street 600 1 sl Source Bank Center South Bend, IN 46601-1632 For Plaintiff David S. Senoff, Esquire Billet & Connor, P.C. 2000 Market Street Suite 2803 Philadelphia, PA 19103-3201 For Penske Logistics, Inc. Thomas A. Kuzmick, Esquire Michael P. Dorsey, Esquire Rawle & Henderson, LLP 25 N. Front Street 1 sl Floor Harrisburg, PA 17101 For Pizzuti Equities, Inc. Kate J. Fagan, Esquire Wayman, Irvin & McAuley, LLC 437 Grant Street 1624 Frick Building Pittsburgh, PA 15219 By the Court, Edgar B. Bayley, J. -7- 06-0710 CIVIL TERM For Exxcel Contract Management, Inc. Gregory S. Hirtzsel, Esquire Post & Schell, P.C. 1857 William Penn Way P.O. Box 10248 Lancaster, PA 17605-0248 For Fabcon, LLC, tld/b/a Fabcon, Inc. :sal -8-