Industrial Accident Board of the State of Texas v. Spears

OPINION PER CURIAM. Relator, the Industrial Accident Board of the State of Texas (IAB), seeks a writ of mandamus compelling respondent, the Honorable Carolyn H. Spears,1 to enter an order granting relator’s motion to disqualify the attorney and law firm representing the real party in interest, Jesse Casias, plaintiff in the underlying case. Plaintiff brought suit against the Industrial Accident Board to recover damages for injuries he allegedly sustained while at the IAB San Antonio office September 25, 1985, for the purpose of attending a pre-hearing conference concerning a worker’s compensation claim filed by one of his coworkers. Plaintiff apparently sat on a chair that was broken and he fell over backwards. Bruce Miller and the law firm of Tinsman & Houser represent him in this tort action. Margaret Maisel, a member of the Tinsman & Houser firm since 1971, took a leave of absence from the firm to serve as chairman of the IAB and was serving in that capacity at the time of this occurrence. Her term as chairman expired nine days after the incident involving plaintiff, at which time she returned to work at the law firm. The law firm assigned her to work on plaintiff’s worker’s compensation claim which arose out of this incident, but she did not participate in the case involving his tort action against the IAB. Plaintiff’s original petition was filed November 12, 1986. Trial apparently was set for January 8, 1990. On January 4, 1990, following a hearing, the trial court overruled relator’s motion to disqualify Mr. Miller and the Tinsman & Houser law firm. In its answer to the tort action, relator raised the defense of lack of the notice required to bring a suit under the Texas Tort Claims Act. Since relator denied receiving timely written notice, the question of actual notice became a substantive issue in the case. Relator claims that it was not until after plaintiff took the deposition of the IAB’s executive director in August, 1989, that it became aware that a conflict existed between the IAB employees’ testimony regarding actual notice. The Texas Tort Claims Act requires the plaintiff to notify the state agency of the place the — 57 — incident occurred as well as of any resulting injury within six months of the incident. TEX.CIY.PRAC. & REM.CODE ANN. § 101.101 (Vernon 1986). Relator argues that Tinsman & Houser’s representation of plaintiff violates legal ethical standards because representation of plaintiff entails (1) representing a client whose interests are adverse to a former client (the IAB); (2) representing a client in whose case the attorney is a material fact witness; and (3) representing a client in a case in which the attorney had previously served as relator’s attorney. The Disciplinary Rules under the prior Code of Professional Responsibility were held to be mandatory in character because they stated “the minimum level of conduct below which no lawyer can fall without being subject to disciplinary action.” United Pac. Ins. Co. v. Zardenetta, 661 S.W.2d 244, 249 (Tex.App.—San Antonio 1983, no writ). The Texas Disciplinary Rules of Professional Conduct, which became effective January 1, 1990,2 “are imperatives, cast in the terms ‘shall’ or ‘shall not.’ ” They “define proper conduct for purposes of professional discipline.” SUPREME COURT OF TEXAS, RULES GOVERNING THE STATE BAR OF TEXAS art. X, § 9 (Rules of Professional Conduct) Preamble § 10.3 MAISEL AS FORMER LEGAL COUNSEL TO THE IAB Rule 1.09 of the Texas Rules of Professional Conduct prohibits an attorney who has formerly represented a client in a matter from representing another person in a matter that is adverse to the former client if it is the same or a substantially related matter or if it would reasonably violate Rule 1.05. Rule 1.05 prohibits an attorney from revealing the confidences of a client or former client or to use confidential information of a client to the client’s disadvantage. An attorney or a law firm should be disqualified because of prior legal representation if the party moving for disqualification proves that an attorney-client relationship previously existed and that the factual matters involved in that representation “were so related to the facts in the pending litigation that it creates a genuine threat that” the confidences gained in the former representation will be divulged to the attorney’s present client. Evidence of specific similarities must be presented. Once such proof is made, “the moving party is entitled to a conclusive presumption that confidences and secrets were imparted to the former attorney.”4 NCNB Texas Nat’l Bank v. Coker, 765 S.W.2d 398, 400 (Tex.1989). As chairman of the IAB, Ms. Maisel was the statutory legal advisor to the IAB. TEX.REV.CIV.STAT.ANN. art. 8307, § 2(a) (Vernon Supp.1990). The existence of the attorney-client relationship has been established. Relator has produced evidence establishing that the factual matters involved in the prior representation are substantially related to the facts in the pending litigation and that there is a genuine threat that the prior confidences will be divulged to the new client. The issue of whether the IAB — 58 — received actual notice of the accident and injury is vital to the IAB’s defense of lack of notice. As legal advisor, Ms. Maisel obtained knowledge of the notice issue. This clearly establishes “specific similarities” since it shows identity of factual matters. Once relator established that Ms. Maisel had been the Board’s legal advisor and that the factual matters were, substantially related, the conclusive presumption arose that Ms. Maisel did know the facts. NCNB Texas Nat’l Bank v. Coker, 765 S.W.2d at 400; Enstar Petroleum Co. v. Mandas, 773 S.W.2d 662, 664 (Tex.App.—San Antonio 1989, no writ); Hoggard v. Snodgrass, 770 S.W.2d 577, 583 (Tex.App.—Dallas 1989, no writ). The presumption is conclusive and irrebuttable. NCNB Texas Nat’l Bank v. Coker, 765 S.W.2d at 400; Hoggard v. Snodgrass, 770 S.W.2d at 583; Petroleum Wholesale, Inc. v. Marshall, 751 S.W.2d 295, 299 (Tex.App.—Dallas 1988, no writ). Ms. Maisel admitted that she does have actual knowledge which may be relevant to the IAB’s defense of no notice. She testified that William Treacy (the IAB’s executive director) telephoned her and informed her that there had been an incident but that he did not know the extent of the injuries. Since it has been shown that she has actual knowledge, the imputation of that knowledge to the law firm is presumed. Once Ms. Maisel becomes disqualified, her entire firm is disqualified. J.K. & Susie L. Wadley Research Inst. & Blood Bank v. Morris, 776 S.W.2d 271, 281-82 (Tex.App. —Dallas 1989, no writ); Enstar Petroleum Co. v. Mandas, 773 S.W.2d at 664; Petroleum Wholesale, Inc. v. Marshall, 751 S.W.2d at 300-01; Rule 1.09(b). Thus, relator established that there is a reasonable probability that the subsequent representation will involve either the unauthorized disclosure of confidential information or an improper use of that information to the disadvantage of the former client pursuant to Rules 1.09(a) and 1.05(a) and (b). The former and current representations involve substantially related matters. The trial court clearly abused its discretion by refusing to disqualify the law firm. MAISEL AS POTENTIAL MATERIAL WITNESS The Texas Rules of Professional Conduct prohibit an attorney from accepting or continuing employment in an anticipated or pending adjudicatory proceeding if he knows or believes he is or may be a material witness. Rule 3.08(a). The rule is not applicable if the testimony relates to an uncontested issue, a matter of uncontested formality, the nature and value of legal services, the lawyer is appearing pro se as a party, or the lawyer has promptly notified opposing counsel that he expects to testify and that his disqualification would work a substantial hardship to the client. Rule 3.08(a)(1)-(5). Further, a lawyer may not continue to represent a client if he believes that he will be forced to testify adversely to his client, unless the client has given his informed consent. Rule 3.08(b). If a lawyer in the firm is prevented from accepting or continuing employment under this rule, his law firm is similarly disqualified. Rule 3.08(c). Ms. Maisel is a member of the plaintiff’s law firm. If she is disqualified as a potential witness, her law firm is disqualified. Failure to give the notice required by section 101.101 of the Texas Tort Claims Act is a defense for the government agency in a lawsuit. Relator specifically pleaded that it did not timely receive the required notice of the incident and injury. Plaintiff alleges that Ms. Maisel, while chairman of the Board, was told of the incident by one of relator’s employees. Since the question of whether she knew of the injury at that time is crucial, she is a material witness.5 See TEX.CIV.PRAC. & REM. CODE ANN. § 101.101(c) (Vernon 1986). Her testimony could establish that she was told of the incident and injury, — 59 — thus establishing an essential fact in her client’s behalf. Conversely, were she to testify that she was never informed of the injury, her testimony would establish an essential fact adverse to her client. No consent was given by the firm’s client (plaintiff) or by the former client (relator) concerning the potential conflict. Ms. Maisel and the law firm were aware of the conflict due to her prior position with the IAB at the time they undertook to represent plaintiff in his tort claim. Ms. Maisel was representing plaintiff in a worker’s compensation claim he had against his employer arising out of the incident at relator’s office. She questioned Mr. Tinsman about it and another lawyer from the firm was assigned to represent plaintiff in his tort claim against relator. The law firm knew since at least 1986, when the issue of notice was raised, that Ms. Maisel was a potential material witness. It was their burden to notify relator of Ms. Maisel’s involvement. As this Court pointed out in United Pac. Ins. Co. v. Zardenetta, 661 S.W.2d at 248 (citations omitted): When it becomes apparent to trial counsel that the possibility exists that his continued representation of his client may fall within the prohibition of Rules 5-102(A) OR 5-102(B)6 because he or a member of his firm ought to testify on behalf of such client at trial or as a witness other than on behalf of his client and his testimony is or may be prejudicial to his client, counsel should resolve any doubt in favor of preserving the integrity of his testimony and againstliis continued participation as trial counsel. If counsel fails to voluntarily withdraw as trial counsel in such a situation the trial court is vested with broad discretion to order withdrawal. [[Image here]] When the client’s right to counsel of his choice and the need to maintain ethical standards of professional responsibility clash “[T]he preservation of public trust both in the scrupulous administration of justice and in the integrity of the bar is paramount ...” and “[The client’s recognizably important right to counsel of his choice] must yield, however, to considerations of ethics which run to the very integrity of the judicial process.” The importance of preserving the public trust in the scrupulous administration of justice and the integrity of the law requires that, under the facts of this case, we hold that the law firm of Tinsman & Houser had a duty to voluntarily withdraw as trial counsel and the trial court’s refusal to order their disqualification in the absence of their voluntary withdrawal constitutes a clear abuse of discretion. MAISEL AS FORMER GOVERNMENT REPRESENTATIVE Rule 1.10(a) prohibits an attorney from representing “a private client in connection with a matter in which the lawyer participated personally and substantially as a public officer or employee” without the government agency’s informed consent. As relator’s legal advisor, Ms. Maisel is presumed to have participated personally and substantially in the case. Relator never gave its consent to Ms. Maisel to represent plaintiff in the matter occurring during her tenure with the Board. CLAIMS OF REAL PARTY IN INTEREST Plaintiff, the real party in interest, asserts that relator has waived its claim of conflict of interest by failing to request the disqualification sooner than mere days before trial. He claims that relator had three years in which to demand the disqualification. We do not agree that relator’s delay supports a finding of waiver. Turner v. Turner, 385 S.W.2d 230 (Tex.1964) does not support plaintiff’s claim that the disqualification issue is waived. In that case the supreme court found that the motion for disqualification came too late and that no privileged information was elicited. Thus, there was nothing in the record to support a reversal of the judgment because of the trial court’s refusal to disqualify the attor — 60 — ney who had previously represented one of the parties. Turner v. Turner, 385 S.W.2d at 236. The issue of no notice became apparent after Mr. Treacy’s deposition. Plaintiff argues that relator knew of the conflict far enough in advance to have taken appropriate action. At the disqualification hearing, relator’s counsel stated: And that once it becomes evident — and we may be at fault, Your Honor, for not bringing this to your attention sooner. I would say that Mr. Treacy’s deposition was taken in August. Ms. Phillips immediately went on maternity leave until just the first of this month. Plaintiff claims that Ms. Phillips did not go on maternity leave for fifty days after that deposition. He relies on a letter, dated October 18, 1989, from Ms. Phillips’ legal assistant which states: Lynette Phillips will be out on maternity leave until the end of December, 1989. I have informed Ms. Phillips of your request and she will gladly look into your request when she returns to the office. This letter does not indicate that Ms. Phillips was not on maternity leave at the time counsel stated she was. Ms. Phillips returned to work at the end of December, 1989. Her motion to disqualify was filed and acted on by January 4, 1990. Under these circumstances, this is not an undue delay. The real party claims that substantial hardship will result to him if his attorney is disqualified. However, this contention was not raised in the trial court and no evidence is in the record to show substantial hardship. Plaintiff suggests that relief should be denied to relator for its failure to include certified or sworn copies of necessary documents in the petition for writ of mandamus. See Stocking v. Biery, 677 S.W.2d 792, 794 (Tex.App.—San Antonio 1984, no writ); TEX.R.APP.P. 121(a)(2)(C), 121(a)(4). The certified record before us, which includes the order denying relator’s motion to disqualify and the statement of facts from the hearing on that motion, is sufficient for us to determine this petition. In Stocking, no certified copies of any instruments, other than the order itself, were tendered and no record was made of the hearing; thus this Court was unable to determine whether the trial court clearly abused its discretion. CONCLUSION Because the representation of the IAB by Ms. Maisel and the subsequent representation of plaintiff against relator involve substantially related matters; because Ms. Maisel may be a witness to a material fact issue; and because Ms. Mai-sel was a former government attorney and had no permission to represent relator’s adversary, the law firm of Tinsman & Houser is disqualified to continue its representation of plaintiff in his suit against relator. The trial court abused its discretion in refusing to order the disqualification of Bruce Miller and the law firm of Tinsman & Houser. The petition for writ of mandamus is conditionally granted. Judge Spears is directed to enter the appropriate order disqualifying Mr. Miller and Tinsman & Houser. Footnotes [1] Judge Spears, judge of the 224th Judicial District Court of Bexar County, was sitting as judge of the 131st Judicial District Court of Bexar County, Texas. [2] Relator relies on the Texas Code of Professional Responsibility, DR 5-102. However, the Code of Professional Responsibility was replaced with the Texas Disciplinary Rules of Professional Conduct effective January 1, 1990. ”[A]11 Professional conduct on and after the effective date of this order, of all attorneys licensed to practice law in this state, [shall] be governed by the Texas Disciplinary Rules of Professional Conduct.” Order of the Supreme Court, Oct. 17, 1989. Relator’s motion for disqualification apparently was filed in January, 1990, and acted on by the court on January 4, 1990. [3] The Rules Governing the State Bar of Texas will be referred to as "Rule_” or the Texas Rules of Professional Conduct. [4] Two irrebuttable presumptions exist: 1) that a client gives confidential information to an attorney who is actively handling the client’s case and 2) that an attorney who obtains such confidences shares them with the other members of the attorney’s law firm. Enstar Petroleum Co. v. Mandas, 773 S.W.2d 662, 664 (Tex.App.—San Antonio 1989, no writ); Petroleum Wholesale, Inc. v. Marshall, 751 S.W.2d 295, 301 (Tex.App.—Dallas 1988, no writ); see NCNB Texas Natl Bank v. Coker, 765 S.W.2d 398, 400 (Tex.1989). [5] Neither party designated Ms. Maisel as a witness. However, at the hearing on relator’s motion to disqualify, relator’s attorney stipulated that plaintiff would not call Ms. Maisel to testify and would not object if the IAB called her. The IAB stated at the hearing that it did intend to call Ms. Maisel to testify regarding her knowledge of notice. [6] See now Rule 3.08.