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MONTGOMERY ACADEMY v. KOHN

May 24, 1999

MONTGOMERY ACADEMY, PLAINTIFF,
v.
CAROLYN KOHN ET AL., DEFENDANTS.



The opinion of the court was delivered by: Chesler, United States Magistrate Judge.

OPINION

I. INTRODUCTION

This matter comes before the Court on the motion of Defendant Carolyn Kohn to disqualify Plaintiff's counsel, Diane K. Weeks, Esq. Oral argument was heard on January 11, 1999 and an evidentiary hearing was conducted on March 15, 1999.

For the reasons stated below, Defendant's motion to disqualify Plaintiff's counsel, Diane K. Weeks, Esq., is granted.

II. BACKGROUND

The following facts are gleaned from the certifications submitted by the parties in support of or opposition to the Defendant's motion to disqualify Plaintiff's counsel and from the transcript of the March 15, 1999 evidentiary hearing held on the matter (hereinafter "Tr.").

Montgomery Academy (the "Academy") is a state-approved private school for emotionally handicapped or disabled children located in the State of New Jersey. See Certification of Defendant Carolyn Kohn (hereinafter "Kohn Cert.") ¶ 2. Defendant Carolyn Kohn ("Ms.Kohn") was the founder of the Academy and served as its Director until February 1997. See Kohn Cert. ¶ 3; Tr. at 7.

Ms. Kohn met Plaintiff's counsel, Diane K. Weeks, Esq. ("Weeks"), sometime in early 1996. See Tr. at 8. They were introduced by Dr. Virginia Murray ("Dr.Murray"), their mutual periodontist, who was also a personal friend of Ms. Kohn and a fairly new Academy Board Member. See Tr. at 8, 160-61; Certification of Diane K. Weeks, Esq. in Opposition to Defendant Carolyn Kohn's Disqualification Motion (hereinafter "Weeks Cert.") ¶¶ 16-17.

In June of 1996, Ms. Kohn needed to hire a lawyer to negotiate the Academy's lease renewal. See Tr. at 7-8. She called Diane K. Weeks, Esq. See Tr. at 8-10. Ms. Weeks and Ms. Kohn met at the Academy on June 17, 1996 and discussed the Academy's lease renewal. See Tr. at 9-12, 84-85. They agreed that Ms. Weeks would negotiate the lease on the Academy's behalf; however, no letter of retention or other written agreement was made to that effect. See Tr. at 11-12, 85-86, 89. According to Ms. Weeks, she informed Ms. Kohn that the Academy's Board of Directors ("the Board") would have to vote to retain her on their behalf before she would be officially retained. See Tr. at 87-88, 154-55.

Shortly after this meeting at the Academy, on June 27, 1996, Ms. Kohn and Dr. Murray attended a meeting of the "Hemlock Investors" at which they discovered that the "Hemlock Investments" were part of a "Ponzi Scheme" and that all the investment monies were probably lost. See Tr. at 13. The Academy Pension Plan had significant investments in Hemlock, as did Ms. Kohn herself. See Tr. at 13-14. Ms. Kohn was also a trustee of the Academy's Plan. See Tr. at 14. After the meeting, Ms. Kohn expressed her concern to Dr. Murray about the investments in Hemlock that both she and the Academy had and they agreed that she should call Ms. Weeks as soon as possible. See Tr. at 13, 59-61, 170-71.

Ms. Kohn called Ms. Weeks when she got home from the meeting that night, anxious to discuss what she had learned with an attorney. See Tr. at 14, 91. Ms. Kohn and Ms. Weeks spoke the following day, June 28, 1996, and Ms. Kohn briefly told Ms. Weeks what had transpired at the Hemlock meeting. See Tr. at 92-93. They met two days later, on June 30, 1996, at Ms. Weeks's house. See Tr. at 16-17, 93. Ms. Kohn apparently shared with Ms. Weeks what she had learned about the Hemlock Investments and they listened to an audio tape which Ms. Kohn had made of the Hemlock Investors meeting on June 27, 1996. See Weeks Cert. ¶ 24.

During the meeting, Ms. Kohn claims that she "shared with [Ms. Weeks] everything that [she] could think of, everything that had gone on and also [her] feelings and [her] concerns and [her] worries . . ." about the Hemlock Investments. See Tr. at 17. According to Ms. Kohn, at this time and in the days to follow she considered Ms. Weeks to be her personal lawyer and thought that Ms. Weeks would protect her. See id. In her certification, Ms. Kohn stated that she "met with Ms. Weeks several times. During those sessions, I told her everything I knew and remembered concerning my role as Trustee and other relevant facts. We examined all documents and audiotapes of meetings together." Kohn Cert. ¶ 11. Ms. Kohn went on to say that she "was always under the impression that Ms. Weeks was representing [her] and had [her] interests in mind when discussing these matters with [her]." See Kohn Cert. ¶ 12. Ms. Kohn testified that she had sought Ms. Weeks's help both for herself and for the school because she was "fearful for the school, [she] was fearful for [her]self, [and she] was fearful for the employees." Tr. at 59-61. Furthermore, Ms. Kohn claims that she discussed with Ms. Weeks the possibility of Ms. Weeks representing both Ms. Kohn and the Academy and that Ms. Weeks said to her, "I could probably do that. I could bill you separately." See Kohn Cert. ¶ 15; Tr. at 19, 61.

Ms. Weeks's version of the June 30, 1996 meeting is quite different. According to Ms. Weeks, she made clear to Ms. Kohn during the meeting that she represented the Academy, that a separate retention letter would have to be issued for Ms. Weeks to handle the Academy's investment problems, and that Ms. Kohn would have to get separate counsel if she had individual liability. See Tr. at 120, 129-30. Ms. Weeks claims that she deflected any attempts by Ms. Kohn to discuss Ms. Kohn's personal investments or involvement. See Tr. at 119-20; Weeks Cert. ¶¶ 25-26.

At the time of the June 30, 1996 meeting between Ms. Weeks and Ms. Kohn, the Academy's Board of Directors had neither voted on nor knew about Ms. Weeks's anticipated representation of the Academy for either the lease renewal or the pension plan. See Tr. at 18. Although Ms. Kohn had told Ms. Weeks that she would be retained to represent the school, the only other person affiliated with the school who was aware of this agreement was Dr. Murray, a fairly new Board member.*fn1 See Tr. at 18, 148-50. On the basis of Ms. Kohn's representation that the Board would vote to retain her for the lease negotiation at their next meeting, Ms. Weeks claims that she considered herself to be the Board's attorney at that time. See Tr. at 120, 148-50, 155-56. Ms. Kohn, however, seemed to believe that Ms. Weeks ...


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