Risk Update

Disqualification Draw (Denied) — Hotel Heat, Rodeo Rumble & A Six Shooter

Posted Dan Bressler

“Archer Beats Disqualification Bid in Litigation Over NJ Hotel Ownership” —

  • “A federal judge has denied a motion to disqualify New Jersey-based law firm Archer Law from representing the defendants in a dispute among owners of a hotel.”
  • “In his motion for disqualification in the present case, Sam argues that Archer’s past representation of EH Associates and Hospitality present a conflict of interest because Sam has brought derivative claims on behalf of EH Associates and Hospitality as an alleged minority member. He contends that Archer should be disqualified because their representation violates proscriptions in the Rules of Professional Conduct against representation involving a concurrent conflict of interest. He also contends the rules say representation of a client should not be followed by representation of another client with adverse interests in the same matter or a related matter.”
  • “Sam does not claim to have been represented by Archer, but rather that Archer represents and has represented the entities on behalf of which he now seeks to assert derivative claims as an alleged minority member. He cited a 2014 ruling from the Appellate Division, Comando v. Nugiel, in which the court held that Norris McLaughlin could not represent the defendants in a suit brought by one co-owner of a business against the other co-owner.”
  • “But Clark in his Nov. 1 ruling said that the Norris McLaughlin case could be distinguished from the present case because there, the plaintiff’s status as a member of the company on whose behalf she sought to bring derivative claims was established and uncontested. In the present case, the parties dispute whether Sam has any ownership interest in EH Associates through Hospitality, making his argument a disputed litigation position and thus not a basis for disqualifying Archer, Clark ruled, noting that the defendants claim Sam relinquished his interest in Management in 2015, before Archer represented any of the subject entities or individuals, and holds no interest in Hospitality now.”

“Texas Justices Won’t Toss Firm From Rodeo Owners’ Battle” —

  • “The court found that Kelly Hart had no conflict of interest in representing both Billy Bob’s Texas Investments LLC and a group of its owners, even though the suit was filed by another owner, Murrin Brothers 1885 Ltd., on behalf of the company. The company is listed in the lawsuit as both a derivative plaintiff and a defendant.”
  • “Justice James D. Blacklock, who wrote the court’s unanimous opinion, said Murrin Brothers didn’t prove it would be harmed by the decision to keep Kelly Hart in the lawsuit. He brushed aside concerns that allowing the law firm to represent both the company and group of owners would confuse the jurors, saying that could be avoided with the use of a jury instruction.”
  • “‘Gone are the days when a family feud over a dance hall saloon in the Fort Worth Stockyards would be solved by six-shooters,’ Justice Blacklock said. ‘These days, we use lawyers instead of lead. Thank goodness for that. As complicated, expensive, and frustrating as litigation can be, it sure beats a shootout at the stockyards.'”