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Hunt Construction Group, Inc. v. Hun School of Princeton

April 28, 2010

HUNT CONSTRUCTION GROUP, INC., PLAINTIFF,
v.
THE HUN SCHOOL OF PRINCETON, DEFENDANT/THIRD-PARTY PLAINTIFF,
v.
G.R. MURRAY INSURANCE AND MICHAEL SABBAGH, THIRD-PARTY DEFENDANTS.
HUNT CONSTRUCTION GROUP, INC., FOURTH-PARTY PLAINTIFF
v.
INTERSTATE INDUSTRIAL CORP., ET AL., FOURTH-PARTY DEFENDANTS



The opinion of the court was delivered by: Arpert, U.S.M.J.

MEMORANDUM OPINION

This matter comes before the Court on Plaintiff Hunt Construction Group, Inc.'s ("Hunt") Motion to disqualify Drinker Biddle & Reath, LLP ("DBR") as counsel for Defendant The Hun School of Princeton ("Hun School" or "Defendant") [dkt. entry no. 54]. The Court has fully reviewed the parties' written submissions and conducted oral argument on April 15, 2010. For the reasons set forth below, Hunt's Motion is denied.

I. BACKGROUND

Hunt was engaged by the Hun School to serve as the general contractor for the construction of the school's new athletic facility, which was completed in 2007. The new athletic facility was built adjacent to the Hun School's existing athletic facility, which was to remain in place and undergo only minor renovations. Replacement of the gym floor in the old athletic facility was not contemplated nor included as part of the construction project.

The instant litigation arises from the Hun School's refusal to make the final payment due to Hunt under the prime construction contract ("Contract") based on damages the Hun School claims to have incurred as a result of having to replace the gym floor in the old athletic facility following a flood in July 2006 and subsequently repairing damage to the new floor caused by a second flood in July 2007. Hunt denies any liability to the Hun School and argues, among other things, that the Contract required the Hun School to obtain builder's risk insurance against hazards such as the floods that underlie the school's counterclaims. The Hun School contends that its insurance obligations under the Contract were satisfied by the policy that was procured on its behalf by its broker, GR Murray Insurance ("Murray"). The Hun School has joined Murray as a third-party defendant seeking indemnification in the event the Court determines the Hun School's damages should have been covered by the policy Murray obtained.

A. Hunt's Motion to Disqualify

Hunt argues that DBR should be disqualified because its representation of the Hun School violates the Rules of Professional Conduct (the "RPCs"). Specifically, Hunt argues RPC 1.7(a)(2) requires disqualification on the grounds of a concurrent conflict of interest based upon its contention that "DBR [specifically, DBR partner Dorothy Bolinksy] negotiated and drafted the Contract with representatives of Hunt and assisted the Hun School in procuring the insurance policy that is now central to this litigation." (Hunt's Br. at 2.) Hunt argues that "there is certainly a concurrent conflict of interest because DBR cannot represent Hun School in a matter in which its own liability to Hun School may be an issue, especially since the negligence claim against the Agent is the same as a negligence claim against DBR." Id. at 7. Hunt contends that DBR should be a co-defendant in the Hun School's third-party complaint against Murray, thus DBR is clearly in violation of RPC 1.7(a)(2). Id.

Hunt also cites RPC 3.7(a), under which a lawyer cannot be an advocate at trial if the lawyer is likely to be a necessary witness, and contends that DBR worked together with Murray and Mr. Sabbagh to advise the Hun School regarding the insurance it should procure and, therefore, DBR must withdraw from its current representation of the Hun School because Ms. Bolinksy is a potential witness to the dealings between the Hun School and the Agent. Id. at 2. Hunt asserts that third-party defendants Murray and Mr. Sabbagh identified "professionals retained by the Hun School" in their initial disclosures as individuals with information bearing on the claims. Id. at 8. Hunt emphasizes that Murray and Mr. Sabbagh also state that "'[t]hese asyet-to-be-identified individuals may include professionals such as accountants, attorneys and/or insurance professionals who provided information and/or input concerning the insurance necessary under the construction contract.'"

Finally, Hunt cites RPC 1.10(a), Imputed Disqualification, as grounds for disqualifying DBR because the conflict of interest of one of its attorneys is imputed to all DBR attorneys. Id. at 6.

B. The Hun School's Opposition to Hunt's Motion

The Hun School opposes Hunt's Motion arguing, (1) disqualification is unwarranted because Hunt has failed to satisfy its burden to prove the existence of a conflict that requires disqualification; (2) Hunt's Motion was filed for tactical reasons to gain an advantage in the litigation; and (3) the balance of hardship between Hunt and the Hun School weighs against disqualification.

The Hun School argues that there is not a conflict of interest because DBR did not procure the policy at issue. Contrary to Hunt's interpretation of the CFO of the Hun School, Mr. Fleck's statements to mean that the Hun School relied on DBR to procure insurance, the Hun School contends that Hunt's "interpretation of Mr. Fleck's testimony is contradicted by the testimony of GR Murray's witness, and is also illogical -- DBR is a law firm, not an insurance agent." (The Hun School's Opp'n Br. at 9.) The Hun School further contends that "[a]t no time did Mr. Fleck testify, as Hunt Construction argues, that DBR and GR Murrary 'worked in concert' to procure insurance, or that DBR 'advised Hun School on what insurance it should procure...'" Id. at 9-10. Moreover, the Hun School asserts that Mr. Sabbagh admitted that he was expected by the Hun School to secure the insurance required by the contract. Id. at 9. The Hun School argues that Hunt is improperly "asking the Court to hold that there is a potential claim against counsel requiring disqualification where an attorney is involved in a contract negotiation, an insurance agent procures the insurance required by the contract, and the client simply says the agent looks at it and the attorney looked at it, and 'we felt we were covered.'" Id. at 10.

Additionally, the Hun School argues that "any claim by the Hun School against DBR would have to be based on DBR's role at the time of negotiation of the contract -- of which Hunt Construction has been aware since 2004 and its current counsel has been aware of since at least 2007." Id. at 12. Hunt's Motion to disqualify was filed two years after the commencement of this lawsuit, sixteen months after Murray identified the DBR lawyer involved in the contract negotiations as potential witnesses, four months after the deposition testimony cited by Hunt in support of the Motion, and after three separate mediation/settlement sessions among the parties. The Hun School contends that the instant Motion was filed as a tactical means to distract it from focusing on expert issues and Hunt's pending motion for summary judgment, and the Court should deny it accordingly. Id. at 13-14 (citing Resolution Trust Corp. v. Fidelity and Deposit Co. of Md., 1997 U.S. Dist. LEXIS 22177, slip op at *12-13 (D.N.J. Sept. 2, 1997)) (finding, based upon three-year delay, that the court may reasonably infer that no legitimate justification for the disqualification motion exists and that motion is motivated by tactical considerations).

Lastly, the Hun School argues that the instant Motion should be denied because disqualification of DBR would significantly prejudice it. The Hun School explains that DBR has been its counsel since the outset of this litigation and, therefore, maintains that it would be unfair and prejudicial to require the Hun School to retain new counsel to represent it at this stage (a pretrial conference is to be held in May or early June, with trial in the Fall), because new "counsel ...


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