United States District Court, D. Nevada
J. KOPPE, United States Magistrate Judge
before the Court is Plaintiff's motion to disqualify
Defendant Integrated Systems Improvement Services, Inc.'s
attorneys. Docket No. 28. The Court has considered
Plaintiff's motion, Defendant's response,
Plaintiff's reply, and Plaintiff's supplemental
motion. Docket Nos. 28, 32, 39, 40. The Court finds this
motion properly resolved without a hearing. See
Local Rule 78-1. For the following reasons, the Court
DENIES Plaintiff's motion to disqualify,
and supplemental motion. Docket Nos. 29, 40.
instant case alleges breach of contract for failure to pay
for security services provided by Plaintiff to Defendant.
See generally Docket No. 1. The instant motion to
disqualify Defendant's attorneys is based on an alleged
conflict of interest between Defendant's attorneys'
law firm, Durham Jones & Pinegar, P.C.
(“DJP”), and Plaintiff's sole owner, Leslie
Bruno. See generally Docket Nos. 28, 40. Ms. Bruno
is a current client of DJP. Id. at 2; see
also Docket No. 48 at 11. She retained DJP in August
2010 to perform various estate planning services. Docket No.
47 at 44-63. From August 2010 to the present, DJP has
performed the following services for Ms. Bruno: (1) created
an asset protection trust in October 2010 (Id. at
150-162); (2) created a trust in October 2010 (Id.);
(3) formed a limited partnership in September 2010
(Id. at 163-165); (4) formed a limited liability
company in August 2010 (Id. at 166-186); (5) created
a last will and testament and a living will in October 2010
(Id. at 214-220, 224-225); (6) created a codicil to
said will in November 2010 (Id. at 221-223); (7)
created a power of attorney for health care decisions and
assets (Id. at 226-243); (8) created a prenuptial
agreement in October 2010 (Docket No. 48 at 2-6; see
also Docket No. 28 at 8-9); (9) drafted but did not
complete various documents for another limited liability
company owned by Ms. Bruno (Docket No. 32 at 6; see
also Docket No. 47 at 187-202); (10) served as the
registered agent for service of process for the
aforementioned limited liability company until June 2016
(Docket No. 47 at 10); (11) served as the registered agent
for service of process for Plaintiff until around January
2013 (Id. at 135-136); and (12) currently serves as
the registered agent for service of process for the
aforementioned limited partnership (Docket Nos. 28 at 10,
40-1). In addition, Ms. Bruno has sought legal
advice from DJP regarding various issues such as obtaining
and sending copies of her trust to a third party and
placement of real property into an asset held by her asset
protection trust. Docket No. 48 at 27-41.
an attorney should be disqualified is an issue of state law.
See Tate v. Univ. Medical Center, 2016 WL 520951, at
*1 (D. Nev. Feb. 5, 2016) (internal citation omitted).
Attorneys practicing in this Court must comply with the Model
Rules of Professional Conduct as adopted by the Supreme Court
of Nevada, unless modified by this Court. See Local
Rule IA 11-7. The applicable Nevada Rules of Professional
Conduct are Rules 1.7 and 1.8. In relevant part, Rule 1.7
states: “...a lawyer shall not represent a client if
the representation involves a concurrent conflict of
interest. A concurrent conflict of interest exists if: (1)
[t]he representation of one client will be directly adverse
to another client; or (2) [t]here is a significant risk that
the representation of one or more clients will be materially
limited by the lawyer's responsibilities to another
client, a former client or a third person or by a personal
interest of the lawyer.” In relevant part, Rule 1.8
states: “[a] lawyer shall not use information relating
to representation of a client to the disadvantage of the
client unless the client gives informed consent, except as
permitted or required by these Rules.”
to disqualify counsel are disfavored and are only granted
when “absolutely necessary.” Switch
Comm's Grp. v. Ballard, 2011 U.S. Dist. LEXIS 98308,
*5 (D. Nev. Aug. 31, 2011) (citing United States v. Titan
Pacific Constr. Corp., 637 F.Supp. 1556, 1562 (W.D.
Wash. 1986)); see also United States v. River Irr.
Dist., 2006 U.S. Dist. LEXIS 95342, *17 (D. Nev. Mar.
10, 2006) (disqualifying an attorney is a “drastic
measure”). “Courts are especially vigilant that
such motions not be misused for the purpose of harassment,
delay, or other tactical advantage.” Russell Road
Food & Beverage, LLC v. Galam, 2014 U.S. Dist. LEXIS
104905, *4 (D.Nev. July 31, 2014). “Because of this
potential for abuse, disqualification motions should be
subjected to particularly strict judicial scrutiny.”
Optyl Eyewear Fashion Int'l Corp. v. Style Cos.,
Ltd., 760 F.2d 1045, 1050 (9th Cir. 1985) (internal
quotations and citations omitted). The party seeking
disqualification bears the burden of proof. See,
e.g., Colyer v. Smith, 50 F.Supp.2d 966, 974 (C
D. Cal. 1999).
to Nevada law, the moving party bears the burden to prove
that: (1) there is a reasonable possibility that some
specifically identifiable impropriety occurred and (2)
“the likelihood of public suspicion or obloquy
outweighs the social interests which will be served by a
lawyer's continued participation in a particular
case.” Brown v. Eighth Judicial Dist. Court,
14 P.3d 1266, 1269-70 (Nev. 2000).
determining the first factor, the Court analyzes whether or
not the relevant rules of professional conduct were violated.
See United States ex rel. Luke, 2017 U.S. Dist.
LEXIS 186894, at *9-13; see also United States v.
Fuechtener, 2016 U.S. Dist. LEXIS 153338, at *5-12. In
determining the second factor, the Court looks for a
reasonable probability that the attorney against whom the
motion to disqualify is made acquired any privileged or
confidential information relevant to the litigation. See
Brown, 14 P.3d 1266 at 1260.
instances where confidential or privileged information has
been obtained by the challenged attorney, the Court may
consider “a host of other considerations, including the
flagrancy of the attorney's conduct; [and] the
sensitivity of the information and its relevance to the
particular proceedings...” Rebel Communs., LLC v.
Virgin Valley Water Dist., 2011 U.S. Dist. LEXIS 21489,
at *35-36 (D. Nev. Feb. 15, 2011).
instant motion, Plaintiff submits that, as a result of
DJP's representation of Ms. Bruno regarding her estate
planning, prenuptial agreement, and other services, DJP
obtained privileged and confidential information such as Ms.
Bruno's net worth, her assets and their financial
standing, the corporate structures of her various entities,
and the distribution of her assets. Docket No. 28 at 2-3, 6,
8; see also Docket No. 47 at 3, 8-9. Plaintiff
submits that such information “creates a conflict
[under Rules 1.7, 1.8, and 1.10] and an unfair advantage for
Defendant” because Defendant can use the information
“to its advantage tactically during the litigation to
form a strategy or defense in this matter.”
Id. at 2-3. A possible advantage, Plaintiff submits,
would arise if Defendant asserts a counterclaim against
Plaintiff, prevails, and Plaintiff has insufficient assets to
pay Defendant, subsequently creating the opportunity for
Defendant to assert claims for alter ego against Plaintiff
and, thereby, exposing Ms. Bruno and her other assets to
liability. Id. at 16, n.12. Plaintiff further
submits that it is DJP's client because it is an asset of
a trust created by DJP and because Ms. Bruno sought legal
advice regarding Plaintiff. Id. at 11-15.
submits that DJP did not obtain confidential information
regarding Plaintiff during the course of its representation
of Ms. Bruno that is relevant to the instant case. Docket No.
32 at 2. Defendant submits that the potential for a conflict
is a “multi-step speculation, ” as it has not
asserted and is not aware of any counterclaims that could
lead to exposing Ms. Bruno or her assets to liability.
Id. at 3, 13-14. Defendant further submits that
Plaintiff is not now and never was DJP's client by virtue
of being an asset held in a trust created by DJP, and that
DJP did not provide legal advice directly to or regarding
Plaintiff. Id. at 9-13.
preliminary matter, the Court does not analyze whether or not
Plaintiff is or was DJP's client. The Court acknowledges
Plaintiff's submissions that Plaintiff is or was a
client: (1) by virtue of its status as an asset held in a
trust created by DJP, for which Ms. Bruno sought advice; (2)
because DJP served as a registered agent for Plaintiff at
some point; or (3) by virtue of Ms. Bruno's subjective
belief that DJP represented “her, her companies, her
Trusts, and her assets.” Docket No. 28 at 11-15. The
Court also acknowledges Defendant's submissions that
Plaintiff is not, and never was, DJP's client because it
never sought legal advice from DJP and, even if Plaintiff was
considered a client based on DJP's service as its
registered agent, “that service ended years ago.”
Docket No. 32 at 9-13. The resolution of this ...