Casey IRACs are produced by an AI that analyzes the opinion’s content to construct its analysis. While we strive for accuracy, the output may not be flawless. For a complete and precise understanding, please refer to the linked opinions above.

Keywords

attorneyappealmotion

attorneydiscoveryappealmotionbad faith

Related Cases

F.D.I.C. v. U.S. Fire Ins. Co., 50 F.3d 1304

Facts

In December 1982, U.S. Fire issued a blanket bond to Irving Savings, covering losses from employee dishonesty. After Irving Savings retained attorneys from LMHT & B to assist with collections, issues arose regarding the handling of a bond claim. U.S. Fire moved to disqualify the attorneys, claiming they would be witnesses in the case, which led to a series of disqualification motions and appeals. The district court initially disqualified the attorneys and their firm, but the FDIC appealed the decision.

In December 1982, U.S. Fire issued a savings and loan blanket bond to Irving Savings. The bond insured against certain losses that the savings and loan might suffer, including those arising from the fraudulent or dishonest conduct of Irving Savings' employees.

Issue

Did the district court err in disqualifying the FDIC's attorneys based on potential conflicts of interest and the appearance of impropriety?

Rule

The court applied ethical standards from the Texas Disciplinary Rules, the American Bar Association Model Rules, and the Model Code of Professional Responsibility regarding attorney conduct and disqualification.

The district court based its analysis of U.S. Fire's disqualification defenses—bad faith, discovery, and takeover—on joint application of three different canons of ethics, the Texas Disciplinary Rules of Professional Conduct (“Texas Rules”), the American Bar Association Model Rules of Professional Conduct (“Model Rules”), and the ABA Model Code of Professional Responsibility (“Model Code”).

Analysis

The court found that while one attorney was likely to be called as a witness, the disqualification of the entire law firm was not warranted. The court emphasized that the potential conflict of interest was too tenuous to justify disqualification and that the FDIC had consented to the representation despite the potential issues.

We find that the remote possibility that Kenney and the FDIC may eventually find themselves at odds is much too tenuous a thread to support the burdensome sanction of law firm disqualification.

Conclusion

The Court of Appeals affirmed the disqualification of one attorney but vacated the disqualification of the law firm, allowing them to continue representing the FDIC.

Accordingly, the FDIC appeals the disqualification of Hurt and LMHT & B. The FDIC does not appeal the disqualification of Kenney on the basis of her status as a possible witness; however, the FDIC challenges the district court's finding of conflict of interest between itself and Kenney, which served as a basis for disqualification of the firm.

Who won?

The FDIC prevailed in part, as the court allowed their law firm to continue representation despite the disqualification of one attorney.

We VACATE the order to the extent that it disqualifies LMHT & B, and we REMAND the matter to the district court with instructions to deny the motion as to LMHT & B.

You must be

Log In to Casey

Sign Up to Casey

Reset Your Password

Keywords

Related Cases

In re International Systems and Controls Corp. Securities Litigation, 693 F.2d 1235, 35 Fed.R.Serv.2d 732, Fed. Sec. L. Rep. P 99,036

Pavelic & LeFlore v. Marvel Entertainment Group, 493 U.S. 120, 110 S.Ct. 456, 107 L.Ed.2d 438, 58 USLW 4038, 15 Fed.R.Serv.3d 1, RICO Bus.Disp.Guide 7378

In re Green Grand Jury Proceedings, 492 F.3d 976

In re Albert T., 144 Cal.App.4th 207, 50 Cal.Rptr.3d 227, 06 Cal. Daily Op. Serv. 10,029, 2006 Daily Journal D.A.R. 14,311

San Diegans for Open Government v. City of San Diego, 247 Cal.App.4th 1306, 203 Cal.Rptr.3d 34, 16 Cal. Daily Op. Serv. 5941, 2016 Daily Journal D.A.R. 5453