COURT OF APPEALS DECISION DATED AND FILED September 9, 2009 David
R. Schanker Clerk of Court of Appeals |
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NOTICE |
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This opinion is subject to further editing. If published, the official version will appear in the bound volume of the Official Reports. A party may file with the Supreme Court a petition to review an adverse decision by the Court of Appeals. See Wis. Stat. § 808.10 and Rule 809.62. |
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APPEAL from an order of the circuit court for
Before
Fine, Kessler and Brennan, JJ.
¶1 Kessler, J. This is an interlocutory
appeal of a trial court order granting a motion filed by defendants William M.
Judge and U.S. Title & Closing Services, LLC (collectively, “the
Defendants”),[1]
to disqualify plaintiff Gustavo Montalvo’s counsel, William R. Steinmetz, from
this action. Montalvo argues we should
reverse the order on three bases: (1)
the doctrines of waiver and/or laches bar the Defendants from disqualifying
plaintiff’s counsel; (2) SCR 20:1.9 (effective July 1, 2007) does not bar
Steinmetz from representing the plaintiff; and (3) the trial court erred in
disqualifying Steinmetz without holding an evidentiary hearing on disputed
facts. We reverse and remand for
reinstatement of Steinmetz as Montalvo’s counsel because we conclude that
waiver and laches bar the Defendants’ motion to disqualify Steinmetz, which was
not filed for over five months after the case began. Because we decide this case based on
application of the doctrines of waiver and laches, we do not consider Montalvo’s
other arguments.
BACKGROUND
¶2 Montalvo filed this civil action concerning the sale of a home he previously owned with his now-ex-wife, Carmen Rodriguez. Montalvo alleged that Rodriguez conspired with the following people in order to defraud Montalvo: the alleged purchasers of the home (Jose C. Nanez, Rolando Nanez and Nanez Enterprises); U.S. Title; U.S. Title’s President, Judge, who is also an attorney; and Charissa J. Carrier, a U.S. Title employee.
¶3 This action was filed in December 2007 on behalf of Montalvo
by Steinmetz, an attorney at
¶4 In February 2008, the Defendants changed counsel. A scheduling order issued on April 9, 2008, required that pleadings be amended by May 12, 2008; set deadlines for the naming of lay and expert witnesses (July 11, 2008, for the plaintiff and September 12, 2008, for the Defendants); required discovery to be completed by October 31, 2008; and required dispositive pretrial motions to be filed by October 31, 2008.
¶5 Numerous depositions were taken, including those of Judge on May 27, 2008; Jose and Rolando Nanez on June 20, 2008; and Carmen Rodriguez on July 24, 2008.
¶6 On June 26, 2008, the Defendants moved for summary judgment.[2] On that same day, they also moved to disqualify Steinmetz. In the memorandum of law that they subsequently filed on July 21, 2008, the Defendants asserted that Steinmetz should be disqualified because until December 2007, he worked for the law firm of Reinhart Boerner Van Deuren S.C. (“Reinhart”), a firm that represented U.S. Title, and because Judge had communicated with Steinmetz concerning issues related to the sale of the Montalvo/Rodriguez property while Steinmetz was still an attorney at Reinhart.
¶7 Numerous affidavits were filed in support of and in
opposition to the motion for disqualification, including affidavits from
Steinmetz and Judge. Steinmetz’s
affidavit stated the following. In early
2007, he agreed to represent Montalvo, on a pro
bono basis, to challenge a divorce judgment that awarded the family home to
Rodriguez. Steinmetz filed a motion to
modify the divorce judgment, alleging that Montalvo had never been served with
divorce papers, even though Rodriguez knew where Montalvo was living in
¶8 Next, Steinmetz obtained copies of recent transfers of the property. Two quit claim deeds were drafted by Judge and notarized by Carrier. Steinmetz could not locate Carrier but found Judge by looking up his contact information through the State Bar of Wisconsin. He sent Judge a letter on April 17, 2007, seeking information about the transactions.
¶9 When Steinmetz did not hear from Judge, he called Judge at his office, on April 27, 2007. At Judge’s request, Steinmetz faxed him a copy of the letter that Steinmetz had previously sent to him. When Steinmetz again received no response, he called Judge on May 3, 2007. Judge told Steinmetz to come over to pick up some documents, which Steinmetz did. According to Steinmetz, he met with Judge for ten minutes, accepted two documents[3] and listened as Judge tried to convince Steinmetz not to pursue the investigation of the property’s sale because there had been no equity in the home and the original divorce judgment had transferred the home to Rodriguez. Steinmetz did not ask any questions. Steinmetz also claims that Judge never mentioned that Reinhart provided representation to U.S. Title.
¶10 Steinmetz met with Montalvo’s daughter later that day to show her the documents.[4] Steinmetz said she and Montalvo were upset that Steinmetz had not secured more documents and immediately terminated the legal representation.
¶11 Steinmetz’s affidavit indicates that in November 2007, he received an email from someone at Reinhart asking whether he had ever represented Montalvo, who had recently filed a complaint against Judge with the Office of Lawyer Regulation (OLR).[5] According to Steinmetz, that was the first time he learned that U.S. Title was a client of Reinhart. Steinmetz’s affidavit also indicated that he had never obtained client confidences of U.S. Title while he worked as an attorney at Reinhart.
¶12 Steinmetz left Reinhart in December 2007. When Montalvo sought representation from Steinmetz again, Steinmetz agreed to the representation based on his examination of SCR 20:1.9 (effective July 1, 2007). In his argument to the trial court opposing the motion to disqualify him, Steinmetz asserted that, consistent with SCR 20:1.9, Reinhart’s prior representation of U.S. Title did not bar Steinmetz, now working at a different firm, from representing Montalvo in a suit against U.S. Title and Judge.
¶13 Steinmetz also argued that the disqualification motion should be denied based on application of the doctrines of waiver and laches. He asserted that Montalvo would be prejudiced because Steinmetz had already completed substantial work preparing the case for trial, including participating in scheduling proceedings before the trial court and providing requisite disclosures. Steinmetz contended that Montalvo would be prejudiced if Steinmetz were disqualified because Steinmetz had agreed to represent him on a contingency-fee basis and the representation is “difficult and demanding” given that Montalvo speaks only Spanish and Steinmetz, who does not speak Spanish, must communicate through Montalvo’s daughter, Maria. Finally, Steinmetz argued that the Defendants could have brought the disqualification motion at any time because Judge “had all the knowledge necessary the day he was served with [the] complaint to move to disqualify” Steinmetz. Steinmetz explained:
[T]hey waited and filed the motion to disqualify simultaneously with the summary judgment motion, and I think that’s a waiver and I think that’s [] laches and I think it results … [in] severe prejudice to my client, and for that reason alone the motion should be denied.
¶14 In support of his motion to disqualify Steinmetz, Judge submitted testimony from his deposition and an affidavit. According to Judge, Reinhart represented U.S. Title from 2003 through 2007. Judge said he spoke with an attorney at Reinhart (J. Bushnell Nielsen) on March 12, 2007,[6] concerning a problem he was having with an employee, Carrier, but did not discuss the Montalvo/Rodriguez property.[7] Judge’s affidavit said that discussion included “alleged claims of dishonesty, attendance and misappropriation of funds” and that he received legal advice concerning “employment misconduct and later termination of employment.” Judge received the letter from Steinmetz requesting to review U.S. Title’s files concerning the Montalvo/Rodriguez property. Judge claims he was aware Steinmetz worked at Reinhart but never sought legal advice from him directly.
¶15 Judge’s affidavit stated that he contacted Steinmetz regarding the letter and made copies of the U.S. Title files as requested, providing to Steinmetz the “Unrecorded Land Contract for the Subject Property” and “a Settlement Statement for the transfer of the Subject Property from Nanez to Rodriguez.” Judge’s affidavit contradicts Steinmetz’s assertion that Steinmetz was unaware Reinhart represented U.S. Title. Judge’s affidavit states:
It was my understanding that Mr. Steinmetz was aware of the fact that U.S. Title was a client of Reinhart and I brought that fact to his attention when Mr. Steinmetz appeared at U.S. Title’s offices. I was under the impression that I was merely providing documents to assist in a dispute between Gustalvo Montalvo and his wife/former wife…. I was not aware of any potential claims that could be asserted against Carrier, U.S. Title, or myself.
¶16 In a supplemental affidavit, Judge said that he met with Nielsen on November 9, 2007, regarding Montalvo’s OLR complaint. Judge said he provided Nielsen with detailed information concerning “the [home] refinances by Ms. Rodriguez, the sale of the Subject Property and the role of Ms. Carrier.”
¶17 The Defendants also argued that their motion to disqualify should not be denied based on waiver or laches. Counsel for the Defendants responded to the assertion that the Defendants unnecessarily delayed moving to disqualify Steinmetz, stating:
We were substituted in in February of [2008]…. [I]mmediately Mr. Steinmetz served discovery, and we discussed for some periods of weeks getting that information together according to the local rules in a manner that worked for both of us. We provided that within a month.
In the course of going through those documents and discussing with my client, we learned that there was this contact. Mr. Judge’s deposition was taken….
So when Mr. Judge’s deposition was taken, I questioned him at the end of the deposition under oath. I wanted to make a record of what transpired in March of ’07 to form the basis for a motion if his testimony reflected what we had talked about.
Counsel also noted in his affidavit and at the motion hearing that he had contacted Steinmetz in early June to let him know he planned to file a motion to disqualify him. Counsel said he delayed filing the motion to accommodate Steinmetz’s vacation plans.
¶18 At the hearing on the Defendants’ motion to disqualify
Steinmetz, the trial court did not take testimony or make findings of fact
resolving the inconsistencies in the affidavits. The trial court expressed concern about the
prior contacts between Judge and Steinmetz and said: “[T]hat’s the problem and … that’s the risk,
that I can’t take a chance on.” The
trial court concluded that “under the totality of the record in this case, I
have no choice but to remove” Steinmetz from the case. The court explained that Steinmetz had a
conflict because he was a member of the Reinhart firm that was representing
U.S. Title and the “knowledge of the firm is imputed to you as a member of that
firm.”
¶19 The trial court also briefly addressed Montalvo’s argument that the Defendants’ motion was barred by laches, implicitly finding that the time needed for the Defendants’ counsel to gather information, get transcripts of Judge’s deposition and make a determination “that there was a basis for the motion in question” was a reasonable delay.
¶20 The trial court granted the motion disqualifying Steinmetz and gave Montalvo sixty days to find new counsel. Montalvo (still represented by Steinmetz) filed a petition for leave to appeal and for temporary relief from the court’s order. We granted interlocutory review and stayed the trial court’s disqualification order pending further order of this court. This appeal follows.
DISCUSSION
¶21 Montalvo argues we should reverse the order on three
bases: (1) the doctrines of waiver
and/or laches bar the Defendants from disqualifying plaintiff’s counsel;
(2) SCR 20:1.9 (effective July 1, 2007) does not bar Steinmetz from
representing the plaintiff; and (3) the trial court erred in disqualifying
Steinmetz without holding an evidentiary hearing on disputed facts. We conclude the first argument is dispositive
and, therefore, we do not address the other two. See
Blalock,
150
¶22 Our conclusion that the Defendants’ claim is barred by the
doctrines of waiver and laches is based on our decision in Batchelor v. Batchelor,
213
Waiver of an attorney
disqualification claim has not been addressed in
Additionally, the related but
distinct equitable doctrine of laches has been held to apply to an attorney
disqualification claim because it is “an equitable, not a legal, matter.” In applying the doctrine of laches, our
supreme court has held that for laches to arise there must be unreasonable
delay, knowledge of the course of events and acquiescence therein, and
prejudice to the party asserting the defense.
See
Batchelor, 213
¶23 Batchelor was a divorce case.
Three months after the divorce action began, the wife objected to having
a particular law firm represent her husband.
See id. at 253-54. The basis for her objection was the fact that
before the divorce case began, she had a fifteen-minute telephone conversation
with an attorney at that law firm concerning her relationship with her
husband. See id. at 254-55. The trial
court granted the motion, and we granted the husband’s petition for leave to
appeal the disqualification order.
¶24 Our analysis began with the first
¶25 Next, we considered “the second prong of the
¶26 Finally, we considered
We are satisfied upon this record that substantial preparation was done on [the husband’s behalf by the firm] prior to [the wife’s] belated disqualification motion. There were multiple court appearances, motions filed, motions responded to, witnesses subpoenaed, documents drafted (including the divorce pleadings) and consultations with [the wife] and her counsel…. We conclude that [the wife’s] failure to file a timely objection to [the firm’s representation of the husband] is prejudicial to him in terms of time and money.
¶27 We summarized our application of the doctrines of waiver and laches:
In sum, we conclude that [the wife] waived her right to raise the conflict of interest issue because: (1) she had knowledge of [the husband’s] divorce counsel [when the action was filed] in May, (2) her objection in August was untimely, (3) the delay in objecting was unreasonable, (4) her failure to object earlier resulted in an inferred acquiescence to [the firm’s] involvement, and (5) [the husband] would be prejudiced by the disqualification of the … firm. Because [the wife’s] waiver of her right is supported by both the application of the legal requirements for a finding of waiver and under the doctrine of laches, we reverse and remand for reinstatement of [the husband’s law firm].
¶28 The Defendants urge us not to be guided by Batchelor. They attempt to limit the application of the Batchelor
analysis to cases where the court also concludes that the attorney need
not be disqualified under the substantial relationship test, which has been
established as the test for analyzing conflict of interest claims on their
merits. See Berg v. Marine Trust Co., 141
¶29 The Defendants also argue that State v. Medina, 2006 WI
App 76, 292 Wis. 2d 453, 713 N.W.2d 172, mandates that a court consider whether
there was an actual conflict of interest before deciding if a party waived his
or her right to move to disqualify opposing counsel. We disagree.
In
[W]hen the defendant knew who the prosecutor was and that the prosecutor had previously represented the defendant; whether and when the prosecutor realized he or she had previously represented the defendant; applicable time periods established in scheduling orders; at what stage in the proceeding the motion is brought; reasons why the motion was not brought sooner; prejudice to the State because of the timing of the motion if the motion is granted; and prejudice to the defendant if the motion is denied.
¶30 In analyzing the potential prejudice to the defendant if the
disqualification motion were to be denied, we recognized that “the district
attorney could not remember anything from the prior representation and
¶31 We are unconvinced that
¶32 Having rejected the Defendants’ interpretations of Batchelor
and
¶33 Judge was aware as of at least May 2007 that Steinmetz was
representing Montalvo. Judge met briefly
with Steinmetz in May 2007 and gave him two documents related to the
Montalvo/Rodriguez home. These same two
documents were attached to the complaint filed against the Defendants, and Steinmetz
was the attorney of record filing the lawsuit.
Judge has submitted no evidence that he had any doubt that Steinmetz was
representing Montalvo. Judge—himself a
lawyer—did not raise this issue with the trial court through his first
counsel. Rather, he participated in
discovery and, represented by his second counsel, gathered enough information
to file a substantive summary judgment motion at the same time as the
disqualification motion. Judge had all
the information available to him to raise the issue of disqualification much
earlier; the fact he may not have immediately shared that information with his
second attorney does not justify a delay in bringing a disqualification
motion. We conclude the first prong of
the
¶34 The second
¶35 Finally, we consider the third
¶36 For the foregoing reasons, applying the three-prong analysis from Batchelor, we conclude that the Defendants are barred from seeking Steinmetz’s disqualification, based on application of the doctrines of waiver and laches. Accordingly, we reverse the order disqualifying Steinmetz and remand for further proceedings consistent with this opinion.
By the Court.—Order reversed and cause remanded for further proceedings consistent with this opinion.
Not recommended for publication in the official reports.
[1] Only defendants William M. Judge and U.S. Title & Closing Services, LLC, filed a brief in response to Montalvo’s interlocutory appeal. Because only their actions are relevant to this appeal, we do not discuss the other defendants.
[2] Although the Defendants filed a memorandum of law in support of their motion for summary judgment on July 21, 2008, and the plaintiff filed his response on August 7, 2008, the summary judgment motion was deferred pending resolution of the disqualification motion and this appeal.
[3] One was a land contract between Rodriguez and Rolando Nanez and the other was a loan settlement statement from the December 2006 sale of the home to Jose Nanez.
[4] Montalvo does not speak English. Thus, throughout the representation, his daughter translated for him and worked with Steinmetz.
[5] Based on Steinmetz’s representation of Montalvo, Reinhart declined to represent Judge in the disciplinary action.
[6] Subsequently, after Nielsen filed an affidavit indicating that he spoke with Judge on April 17, 2007, Judge filed a supplemental affidavit stating that the advice was received “sometime between March 12 and April 17, 2007.”
[7] Carrier is the same individual that Montalvo named in the complaint in this case.
[8] As noted, counsel for the Defendants has asserted that he delayed bringing the disqualification motion until the end of June 2008 in order to accommodate Steinmetz’s vacation plans. We will accept that assertion as true for purposes of this opinion; it does not change our analysis.