Wednesday, September 21, 2011

Information Learned As Counsel For Adversary In Case Precluded Adverse Representation In Different Case

In Frye v. Ironstone Bank (2D11-905), the Second District granted certiorari and held that the attorneys for the respondent were disqualified from representing the bank. The court's fourteen page opinion began:
Mr. Frye for an alleged breach of a loan guaranty. The question presented is whether the Bank's counsel should be disqualified from representing the Bank in the action on the guaranty where the Bank's counsel also represents Mr. Frye's former lawyer in a legal malpractice action. Mr. Frye's action for legal malpractice includes claims for matters directly related to his former lawyer's representation of Mr. Frye in the defense of the Bank's claims against him. Because the Bank's counsel has access to confidential communications between Mr. Frye and his former lawyer concerning the action on the guaranty by virtue of its representation of the former lawyer in the malpractice action, we conclude that the Bank's counsel is disqualified from representing the Bank in the action on the guaranty. Accordingly, we grant the petition for a writ of certiorari.
Ultimately, the court held that the circuit court departed from the essential requirements of the law by applying the test stated in Kaplan v. Divosta Homes, L.P., 20 So. 3d 459 (Fla. 2d DCA 2009). Instead of relying on Kaplan, the circuit court should have relied upon Adelman v. Adelman, 561 So. 2d 671 (Fla. 3d DCA 1990). The court summarized the problem with relying on Kaplan as follows:
Here, the circuit court applied the conflict of interest analysis in this court's decision in Kaplan to conclude that Mr. Frye had failed to meet the requirements for the disqualification of Henderson Franklin. The circuit court reasoned that because Mr. Frye was not a current or former client of Henderson Franklin, no irrefutable presumption arose that confidential information was disclosed between Mr. Frye and Henderson Franklin. The court also stated that Mr. Frye had failed to make an evidentiary showing that the Bank's action on the guaranty was the same or substantially the same as the legal malpractice matter in which Henderson Franklin is representing Mr. Frye's former counsel.
Unlike in Kaplan, Mr. Frye is not seeking to disqualify Henderson Franklin based upon a claimed conflict of interest. Thus Mr. Frye need not establish that he had an attorney-client relationship with Henderson Franklin and that the Bank's action on the guaranty and the legal malpractice claim are the same or are substantially related. Instead, Mr. Frye is seeking the disqualification of Henderson Franklin based on the unfair informational advantage it derives from its access to his confidential communications to Mr. Trupp through its representation of Mr. Trupp and the Arnstein firm in the legal malpractice action. Here, the conflict of interest analysis in Kaplan is not applicable.
Based upon the reliance on Kaplan, the court granted certiorari and stated:
By relying on the conflict of interest analysis in Kaplan, the circuit court applied the wrong legal rule to Mr. Frye's motion for disqualification. The circuit court's application of the wrong law in deciding Mr. Frye's motion to disqualify is a departure from the essential requirements of the law. Moreover, the Third District's analysis in Adelman is applicable here. The circuit court should have granted Mr. Frye's motion to disqualify Henderson Franklin under the reasoning in Adelman. Accordingly, we grant the petition for a writ of certiorari, quash the order under review, and remand this case for further proceedings.
The court also included a footnote stating:
In fairness to the circuit court, we note that neither Mr. Frye nor the Bank directed the circuit court's attention to the Adelman decision. However, Mr. Frye's argument for the disqualification of the Henderson Franklin firm was consistent with the reasoning in Adelman.


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