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Akerly v. Red Barn System Inc.

argued: January 3, 1977.

LEON F. AKERLY
v.
RED BARN SYSTEM, INC., HARRISBURG BARNS INC., WILLIAM LAPITSKY, AND DENNY WILLIS HARRISBURG BARNS, INC., WILLIAM LAPITSKY AND DENNEY WILLIS, APPELLANTS



ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA Civil No. 72-429.

Van Dusen and Adams, Circuit Judges, and Teitelbaum, District Judge.*fn*

Author: Adams

Opinion OF THE COURT

ADAMS, Circuit Judge.

The present appeal poses two independent questions. We must determine whether this Court has jurisdiction over an appeal from a denial of a motion to dismiss a complaint, when the motion has been premised on the allegedly unethical character of the representation by the attorneys for the plaintiff. Also, we are obliged to decide whether the district court abused its discretion in refusing to disqualify plaintiff's lead counsel, after having disqualified his local co-counsel.

I.

When plaintiff Akerly initially contemplated commencing this litigation, he retained Robert Woodside, Esquire, of the Harrisburg law firm of Woodside, Woodside & Zwally. Mr. Woodside researched the matter and composed a rough draft of a complaint sounding in assumpsit. The assumpsit complaint, however, was never filed and was not utilized in any way by counsel who was later retained by Akerly.

In 1971, Akerly turned to Louis Koerner, Jr., Esquire, of New Orleans, for assistance with his claim. Mr. Koerner prepared an entirely new complaint, grounded on alleged violations of the antitrust and securities laws. The pleading drafted by Mr. Koerner was the one eventually used. It appears that in the course of his work Mr. Koerner spoke with Mr. Woodside about the filing of the new complaint. Since the time he had first been contacted by Akerly, Mr. Woodside had become a partner in the firm of Shearer, Mette, Hoerner & Woodside, an entity which was the result of a merger between his old partnership and another Harrisburg law firm.*fn1

During their exchange, Mr. Woodside suggested that Mr. Koerner enlist Thomas Beckley, a lawyer in his firm, as local counsel, on the basis that Mr. Beckley was more actively engaged in litigation at that time. Mr. Koerner agreed, and Mr. Beckley proceeded to serve as local counsel.

Mr. Beckley had become associated with Mr. Woodside by way of the merger of the Shearer and Woodside firms.*fn2 From 1969 until 1972, Mr. Beckley was employed by the old Shearer firm. And prior to 1969, Mr. Beckley had been associated with yet another law office, Rhoads, Sinon & Reader.

Among the clients of the Rhoads firm during Mr. Beckley's tenure there were defendant Lapitsky, and Camp Hill Restaurant, Inc., a corporation that is related to defendant Harrisburg Barns, Inc. Although most of the services for these clients were rendered by Merrill Yohe, Jr., Esquire, and Howell Mette, Esquire,*fn3 it also appears that Mr. Beckley performed incidental tasks for them.

On August 7, 1973, the defendants filed a motion in the district court seeking the dismissal of Akerly's complaint on account of an alleged conflict of interest by plaintiff's counsel or, in the alternative, the disqualification of attorneys Beckley and Koerner for the same reason. After extensive hearings, Judge Sheridan disqualified Mr. Beckley, but denied all other relief.

Judge Sheridan's memorandum opinion, written in response to the motion, discussed only the issue of the disqualification of the attorneys. In the course of the opinion, the trial judge made a finding that, while the representation by the Rhoads firm of Mr. Lapitsky and Camp Hill Restaurant was "substantially related" to the subject matter of the present suit, Mr. Beckley's work was not so related. Nor, Judge Sheridan concluded, were any confidences directly placed by Mr. Lapitsky and Camp Hill Restaurant with Mr. Beckley during the years Mr. Beckley had been at the Rhoads firm. Disqualification of Mr. Beckley was found by the district judge to be warranted, nonetheless, since there was some chance - albeit a small one - that Mr. Beckley was privy to some confidences while a lawyer with Rhoads. But Judge Sheridan found that there was no possibility that confidences of Mr. Lapitsky and Camp Hill Restaurant had found their way to Mr. Koerner, and that the removal of Mr. Beckley would prevent any disclosures from happening in the future.

Plaintiff Akerly has not appealed from the order disqualifying his local counsel, Mr. Beckley. Defendants, however, have sought review of the denial by the district court of their motion to dismiss and ...


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