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DeBolt v. Parker

Decided: December 14, 1988.


Haines, A.j.s.c.


This opinion considers the propriety of counsel fee allowances in circumstances governed by our Rule of Professional Conduct ("RPC") 1.8(i). That rule permits spouses to represent "directly adverse" consenting interests after "consultation regarding the relationship." The opinion points to the risks involved in undertaking that representation, risks which may result in the disallowance of all fees. It suggests that threshold requirements of full disclosure and informed consent are not attainable. Nevertheless, despite somewhat less than adequate proofs, it concludes that counsel here are entitled to fees. That conclusion is reached because (1) no interpretation of RPC 1.8(i) has been provided in any published opinion in this state, and (2) because our cases thus far cling to the belief that full disclosure-informed consent requirements can be satisfied.

Ann Bernice Segal and Robert I. Segal are lawyers, practicing in different firms. They are married. Ernest Crain and his wife, Mary Ella Crain, a passenger in a car driven by him, were killed in an automobile accident. They left two minor children surviving. Their deaths occurred when their automobile, stopped and waiting to make a left turn, was struck in the rear by a cement mixer, the driver of which admitted that he had been adjusting his mirror at the time of the accident. He said that Ernest Crain had failed to signal his intention to turn. The

accident also involved a third vehicle, the occupants of which were injured.

Both Ann and Robert Segal had represented members of the Crain family in the past and were asked to represent them in connection with claims arising from the accident. In accordance with the family's wishes, Ann Segal represented the Mary Ella Crain estate and Robert Segal the Ernest Crain estate. By stipulation, the facts concerning the representation were submitted to the Court by way of affidavits.

Ann Segal believed, as a matter of strategy, that liability was so clear and insurance coverage on the cement mixer so high that the Ernest Crain estate should not be sued notwithstanding the decedent's claimed failure to signal. Ernest Crain had only $30,000 of insurance coverage on his car; if he were found to have been comparatively negligent, his estate would have been responsible for part of any verdict recovered, thereby adversely affecting the total recovery of the estates, the assets of which belonged entirely to the children of the Crains. Ann Segal states that, after a full discussion of the possibility of suing the Ernest Crain estate, she was requested by Charlene DeBolt not to sue. Consequently, she named only the owner of the cement mixer and its driver in her complaint. Robert Segal filed a separate action on behalf of the Ernest Crain estate, naming the same defendants.

Shortly after Ann Segal instituted her suit, she became involved in a dispute with Charlene DeBolt, the Administratrix ad prosequendum, concerning the disposition of personal injury protection monies collected as a result of the accident. Another attorney, Mark Kancher, was therefore retained by the Administratrix and substituted as counsel in the accident suit over Ann Segal's opposition. In the course of the substitution proceedings, claims were made that Ann Segal and Robert Segal had conflicts of interest in connection with their representation of the decedents' estates. The court therefore advised the Segals that their right to fees in connection with their

representations was in question, that the questions involved would be answered in such further proceedings as might be necessary. Independent counsel, Robert Edwards, was appointed to represent the interests of the minor Crain children as their guardian ad litem. He was requested to investigate all aspects of the controversy, to advise the court as to the claimed conflicts of interest and to act on behalf of the minors throughout the litigation.

Edwards advised the court that the Segals had no conflict of interest when they first undertook the representation of both estates so long as their marital relationship was revealed, as in fact, it was. He was also of the opinion that the strategic decision not to sue the Ernest Crain estate was acceptable at the time suit was commenced. He learned however, that four people occupying two other automobiles involved in the Crain accident had commenced two independent suits (later consolidated) naming, among others, the Ernest Crain estate as a defendant. One suit was filed 19 days after Ann Segal filed her suit, the other 5 months later. Edwards correctly anticipated the consolidation of all suits arising from the accident and recommended the immediate joinder of the Ernest Crain estate as a defendant in the suit brought by the Mary Ella Crain estate. Since Ann Segal was no longer involved in the litigation, he saw no reason for objecting to Robert Segal's continued representation of the proposed defendant. The court accepted Edwards's advice, directed joinder of the Ernest Crain estate as a defendant and authorized Robert Segal's continued representation, subject to the court's further ruling on fee questions.

The claims of both Crain estates were settled for substantial sums shortly after joinder of the Ernest Crain estate as a defendant. Both Segals have applied for the allowance of fees by the court. Those applications are addressed in this opinion.

A. The General Husband-Wife Rule For Attorneys.

Our Rules of Professional Conduct became effective September 10, 1984. Among them was RPC 1.8(i) which permits a

lawyer-wife to represent a person whose interests are adverse to those of another person represented by her lawyer-husband. The adoption of this rule of conduct reflects a substantial change in the law relating to husbands and wives. A milestone on the road to recognition of their independent rights was In re Gaulkin, 69 N.J. 185 (1976), in which the Supreme Court said:

We focus . . . upon the trend of modern law which reflects society's realistic appreciation of the independence of both spouses in marriage and more specifically represents modern awareness and sensitivity to individual freedoms, rights, responsibilities and development. [at 193.]

The New Jersey Supreme Court Advisory Committee on Professional Ethics ("Committee") has given only modest consideration to questions involving conflicts between husband and wife attorneys. In Opinion No. 434, it addressed the propriety of an attorney's practice of criminal law when one of his associates was married to an assistant prosecutor in the same county. The Committee found no impropriety in his continued criminal practice. It said:

On one level, the public has come to recognize that married partners are independent individuals fully capable of pursuing separate professional careers. See In re Gaulkin, 69 N.J. 185 (1976). Hence it is unlikely that either spouse here would be regarded as the alter ego of the other for purposes of establishing an improper alliance between their respective offices.

See also the Committee's Opinion No. 508.

Our courts and the Advisory Committee have not addressed RPC 1.8(i). The courts of two foreign jurisdictions, however, have considered that rule. Blumenfeld v. Borenstein, 247 Ga. 406, 276 S.E. 2d 607 (Sup.Ct.1981), dealt with a trial in which an associate of the firm representing one party was married to a partner in the firm representing the other party. A challenge to the trial decision based upon the conflict allegedly caused by the relationship was unsuccessful. The Georgia court refused to reverse the decision. It said:

We find that the court disqualified the law firm solely on the basis of Mr. McClure's marital status. We further find that per se disqualification based on marital status is neither mandated nor ...

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