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Zelda Enterprises, LLLP v. Guarino

Court of Appeals of Georgia, Fourth Division

October 4, 2017

ZELDA ENTERPRISES, LLLP et al.
v.
GUARINO et al.

          DILLARD, C. J., RAY, P. J., and SELF, J.

          Dillard, Chief Judge.

         Zelda Enterprises, LLLP, Tony Lamar McCall, and Gene Arlon McCall, Sr. ("appellants") appeal from the trial court's grant of a motion to disqualify counsel, which was filed by Tracy McCall Guarino, Angie McCall Sumpter, and Charles Wesley McCall, Jr. ("appellees") in the underlying action between the parties. The appellants argue that the trial court committed reversible error in granting the motion by (1) applying Rule 1.6 and Rule 1.7 (c) (2) of the Rules of Professional Conduct to find that there was a conflict of interest between the appellants' counsel and the appellees; (2) failing to assess whether the appellees waived the opportunity to move for disqualification of counsel; (3) failing to consider the harm that the appellants would suffer by the disqualification of counsel; and (4) adopting the facts as presented by the appellees' proposed order, and admitting evidence that was presented in the context of a proposed settlement. Because the trial court failed to first assess whether the appellees waived the opportunity to move for disqualification of counsel before granting the motion, we vacate the trial court's order and remand for further proceedings consistent with this opinion.

         This Court attempted to transfer this case to the Supreme Court of Georgia consistent with what was, at the time, that court's jurisdiction over cases in equity.[1]But our Supreme Court determined that jurisdiction was more properly in this Court and returned the case.[2] And on the question of jurisdiction, at the outset, we reject the appellees' assertion that we lack jurisdiction to consider this appeal because the appellants obtained a certificate of immediate review ex parte when the appellees did not receive a copy of the proposed certificate until after receiving the signed certificate. The appellees provide no citation to authority in support of their contention that this occurrence deprives us of jurisdiction.[3] Furthermore, the appellees did not file a separate motion to dismiss.[4] Given these particular deficiencies, we decline to dismiss this appeal for any alleged lack of jurisdiction.

         Turning to the issues on appeal, in July 2012, some of the appellees met with Richard Calhoun of Gregory, Doyle, Calhoun & Rogers ("GDCR"), formerly Brock, Clay, Calhoun & Rogers, to discuss responding to a demand letter that they had received from the appellants' now-former counsel, Sams, Larkins & Huff. The letter concerned distribution of property and corporate assets between numerous family members following a death. And in order to assist Calhoun, the appellees provided a detailed memorandum that assessed the requests and allegations of the demand letter and provided insight into their positions, paragraph by paragraph. Calhoun then forwarded these items to his associate, Michael Goode, on August 2, 2012. Thereafter, according to emails exchanged between Goode and Calhoun, dated August 6 and August 7, 2012, Goode began looking into the matters raised by the demand letter.[5] Additionally, Calhoun contacted the appellants' former counsel to request an extension of time in which to respond to the letter, informed the appellees of same on August 7, and notified them that Goode would call them to gather more information to formulate a response to the letter.

         On August 9, 2012, the appellees informed Calhoun via email that they had decided not to retain GDCR to represent them in the matter, and they subsequently retained Tim Bailey as counsel. At some point after the appellees informed Calhoun/GDCR that they would not be retaining the firm, Melissa Gilbert, another attorney at GDCR, began representing the appellants in the underlying action. And on February 28, 2013, Michael Goode sent a letter to Bailey to inform him of the firm's representation of the appellants and make certain demands. This letter addressed issues with some of the same property and corporate assets that were the subject of the earlier demand letter from Sams, Larkins & Huff, and which issues form the substance of a dispute in the underlying litigation now between the parties. Thereafter, written communication about these matters was ongoing between Bailey and Goode. But ultimately, in September 2014, Bailey filed a petition on behalf of the appellees, seeking equitable relief and damages.

         In September 2015, the appellees discontinued their representation by Bailey and retained their current counsel, Moore, Ingram, Johnson & Steele ("MIJS"). MIJS claims that the firm became aware of the appellees' prior consultation with GDCR when reference was made to such consultation in a proposed-settlement letter from the appellants, seeking a waiver of any alleged conflict. Thus, MIJS requested and received a copy of the file that GDCR opened upon consulting with the appellees in 2012, and MIJS then moved to disqualify GDCR from representing the appellants. GDCR asserted in response that no objectionable conflict existed regarding the 2012 consultation with the appellees and that MIJS was moving for disqualification at the last minute as a means of tactical delay.

         After hearing oral argument on the motion for disqualification, the trial court granted it. The appellants then sought and were granted a certificate of immediate review, and this Court granted their application for interlocutory appeal, which follows.

         The appellants make numerous arguments as to why the trial court erred in granting the motion to disqualify counsel, as discussed supra, but because we agree that the trial court should have assessed the issue of whether there was a waiver of the opportunity to move for disqualification before granting the motion, we vacate the trial court's order and remand for further proceedings consistent with this opinion.

         First, we recognize that the right to counsel is "an important interest which requires that any curtailment of the client's right to counsel of choice be approached with great caution."[6] Indeed, disqualification has "an immediate adverse effect on the client by separating him from counsel of his choice, " which inevitably causes delay.[7]Furthermore, when an attorney is disqualified, the client "may suffer the loss of time and money in finding new counsel and may lose the benefit of its longtime counsel's specialized knowledge of its operations."[8] Thus, because of "the right involved and the hardships brought about, disqualification of chosen counsel should be seen as an extraordinary remedy and should be granted sparingly."[9] We review a court's decision on a motion to disqualify counsel for an abuse of discretion.[10]

         Because of the importance of the right to counsel and the hardships that ensue in the event of disqualification, we have previously held that motions to disqualify should be "made with reasonable promptness after a party discovers the facts which lead to the motion."[11] The failure to make a "reasonably prompt" motion to disqualify counsel can result in waiver.[12] In considering if a waiver to file a motion to disqualify has occurred, the trial court must consider four factors: (1) the length of the delay in light of the circumstances of the case, including when the movant learned of the conflict; (2) whether the movant had counsel during the delay; (3) the cause of the delay; and (4) whether disqualification would cause prejudice to the nonmoving party.[13] Additionally, the court must "weigh these factors against the seriousness of the conflict alleged and the extent to which the public's confidence in the administration of justice would be eroded if the motion was denied."[14]

          Here, before concluding that the appellants' counsel should be disqualified, the trial court did not first consider whether the appellees waived the opportunity to move for disqualification, despite the appellants arguing below that the appellees had indeed waived the opportunity to move for disqualification by failing to do so in a reasonably prompt amount of time.[15] And without findings of fact and conclusions of law on this potentially dispositive question, [16] we cannot determine whether the trial court abused its discretion in granting the motion to disqualify.[17] Accordingly, we vacate the order of disqualification and remand to the trial court for it to conduct the waiver analysis discussed supra.[18]

         Judgment vacated and case ...


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