Appeal from the Superior Court of the District of Columbia; (Hon. John H. Suda, Trial Judge)
Before Ferren, Terry, and Sullivan, Associate Judges.
The opinion of the court was delivered by: Ferren
FERREN, Associate Judge: This case presents two important questions: when a law firm that represents a three-member partnership also represents two of the individual partners in matters that pertain to the partnership, may the third partner obtain (1) access to the law firm's files concerning not only its representation of the partnership but also its representation of the individual partners in partnership matters, and (2) disqualification of the law firm from representing the partnership? Seeking affirmative answers to these questions, plaintiff-appellant, Rose Griva -- a minority partner in a small family partnership -- sued five defendant-appellees: the David & Hagner law firm; Dennis A. Davison, Esq., one of the law firm's partners; Ann and Michael Maiatico, appellant's sister and brother; and the Maiatico Family Limited Partnership (MFLP), in which Griva and the Maiaticos were the three general partners. Griva sought declaratory judgments that (1) the individual and law firm defendants had breached their fiduciary duties as lawyers and general partners, respectively, by refusing to disdose MFLP records and files to Griva; (2) these same defendants had conspired to breach their fiduciary duties and were accordingly liable for damages; and (3) David & Hagner (including Davison) should be disqualified from representing MFLP, and MFLP should not have to pay any of the firm's legal fees or expenses. The complaint also sought (4) an injunction to prevent the defendants from refusing to permit Griva to inspect David & Hagner's files pertaining to MFLP and (5) indemnification from MFLP for Griva's legal fees.
The trial court denied Griva's motion for summary judgment, granted summary judgment in favor of the defendants on claims one through four, and granted MFLP's motion to dismiss claim five. Griva appeals summary judgment on the first four claims (but does not appeal the dismissal of claim five), arguing that the trial court should have granted her motion for summary judgment or, alternatively, that the court should have denied defendants' motion because there are genuine issues of material fact requiring a trial. We affirm as to claim two, reverse as to claims one, three, and four, and remand for trial.
This story essentially begins with the fact that Jerry Maiatico, the father of Rose Griva and of Ann and Michael Maiatico, owned 50% of the building located at 1717 H Street, N.W. George Lemm, Sr., through a series of trusts known as the "Lemm Trusts," owned the other 50%. Jerry Maiatico's 50% interest eventually passed to his three children. MFLP presently owns a 40% interest; various Maiatico family trusts own the other 10%. In this opinion, we shall refer to the Lemm Trusts, to MFLP, and to the Maiatico family trusts, collectively, as the "Owners" of the 1717 H Street property.
Appellee Davison and his law firm, appellee David & Hagner, first became involved with Griva and with Ann and Michael Maiatico in 1986, when the Lemm and Maiatico families retained them to represent the families' interests in the "Neideffer litigation" relating to 1717 H Street. In that litigation, Ann and Michael Maiatico were named as defendants, both as individuals and as officers of two defendant corporations. Rose Griva was not a party to the litigation, but she was involved in the matter as the owner of a 10% beneficial interest in the property, which she had received from her father. During the Neideffer litigation, questions arose as to Jerry Maiatico's mental capacity. As a result, Jerry Maiatico's three children asked Davison and his law firm to initiate proceedings to establish a guardianship for their father's property. Griva, however, also independently consulted about the guardianship matter with her own attorney, Barnum Colton, Esq.
In connection with the guardianship proceedings, David & Hagner prepared an estate planning memorandum intended to minimize the estate tax consequences to Griva and to Ann and Michael Maiatico. This memorandum recommended that the family form a limited partnership, with Rose Griva, Ann Maiatico, and Michael Maiatico as the general partners, to own and manage their 40% interest in the 1717 H Street building. Griva consulted with her own attorney, Colton, on the estate tax planning matter. The three siblings then retained David & Hagner to draft the partnership agreement and to handle formation of the partnership.
David & Hagner organized the partnership, MFLP, as a Maryland limited partnership, with Rose Griva, Ann Maiatico, and Michael Maiatico as the general partners. Throughout the period of establishing MFLP, however, Griva consulted with her attorney, Colton, while Ann and Michael Maiatico consulted with David & Hagner, regarding their respective individual interests. Colton contacted another attorney, Jerry O'Conor, Esq., to provide Griva with a second opinion on the advantages and disadvantages of entering into MFLP. In June 1988, Griva retained O'Conor to represent her for all her legal needs. An escrow letter, which outlined the procedures for establishing MFLP, clearly identified O'Conor as counsel to Griva and David & Hagner as counsel to Ann and Michael Maiatico.
The three general partners executed the MFLP agreement on December 1, 1988. Important in the analysis to follow is the fact that the partnership agreement contains a unanimous consent provision, which Griva had insisted upon at Colton's recommendation. *fn1
After organizing MFLP in 1988, David & Hagner continued as general counsel to the partnership. As such, David & Hagner was involved in many transactions on behalf of MFLP and the other Owners of the property. For example, in 1989, David & Hagner represented all the Owners in connection with the negotiation and documentation of asbestos-removal and related construction contracts for the property. Also in 1989, David & Hagner represented MFLP and the other Owners in the negotiation and documentation of a $40,500,000 renovation loan for the building. In 1990, David & Hagner represented all the Owners in the negotiation of leases with tenants, and, in 1992, David & Hagner handled the negotiation of permanent financing for the 1717 H Street property Because David & Hagner performed all these legal services for the benefit of all the Owners of the 1717 H Street property, all the Owners, including MFLP, paid for the services.
In addition to representing MFLP as an entity, David & Hagner also represented Ann and Michael Maiatico individually, advising them on personal matters as well as on their rights and obligations as partners of MFLP.
David & Hagner also continued to represent all three Maiatico siblings in other family matters. For example, in early 1990, after their father's death, the three Maiaticos, including Rose Griva, retained David & Hagner to advise with regard to their duties as personal representatives of their father's estate. The petition filed by David & Hagner in the Orphans' Court for Prince George's County, Maryland, in the matter of the Estate of Jerry Maiatico identified "David & Hagner, P.C.," as "the law firm retained by Michael A. Maiatico, Rose M. Griva, and Ann T. Maiatico."
After formation of MFLP in 1988, Griva's personal attorneys, Colton and O'Conor, continued to represent her in partnership matters. In a letter dated December 9, 1988, eight days after the partnership agreement had been signed, O'Conor informed David & Hagner that O'Conor's firm, Tucker, Flyer, Sanger & Lewis, was Griva's "sole personal representative in all of her legal affairs." *fn2
During the three years before this lawsuit was filed in October 1991, O'Conor continued to represent Griva, and David & Hagner continued to represent Ann and Michael Maiatico, regarding their respective rights and obligations as MFLP partners, as well as concerning numerous disputes among the partners affecting redevelopment of the 1717 H Street property. Accordingly, during that period, David & Hagner had two related roles: (1) representation of MFLP as such, and (2) representation of two of MFLP's general partners in support of their individual partnership interests. This dual representation by David & Hagner ultimately led Griva, in a letter dated September 16, 1991, to request access to "all of the books, records and files of the in [David & Hagner's] possession" -- a request that eventually resulted in the present litigation.
According to Griva, three incidents led to her demand for the law firm's MFLP files. First, in the summer of 1990, MFLP became involved in negotiations with the World Bank for leasing office space at 1717 H Street. Acting on the advice of Davison and David & Hagner, Ann and Michael Maiatico sought to resurrect an old 1717 H Street lease that once had served as a lease of the entire building to an entity known as Matomic Operating Co. (Matomic), which was owned by the Maiatico and Lemm families. In July 1990, allegedly without any notice or explanation, David & Hagner sent O'Conor a Net Lease dated in 1966, along with a First Amendment to Net Lease, between the Owners of 1717 H Street and Matomic. According to O'Conor, pursuant to the net lease and amendment, the Owners of 1717 H Street would have leased the entire building to Matomic, and Matomic in turn would have had the right to sublease the commercial space to tenants. Griva was a Matomic shareholder, but she had no control over the management of the company because she was not a director (and was later removed as an officer sometime around January 1, 1991). Because of MFLP's unanimous consent provision, Griva had a substantial measure of control -- indeed, veto power -- over the property when MFLP had a management role, but if MFLP's management position were relinquished through the proposed lease to Matomic, Griva would have had no control over the property. According to O'Conor, the effect of this transaction would have been "to deprive of certain management rights" over the building, since the lease would have "conferred broad authority on Matomic as to the operation and management of the property."
The second instance that led to Griva's request for access to all of David & Hagner's files concerning MFLP was a series of entries in the law firm's bills to the Owners. Three entries for June 1989 indicated that David & Hagner had prepared a memorandum, and had had Discussions within the firm -- and presumably with the Maiaticos -- about "dissolution of deadlocked MFLP." *fn3 Griva learned of these activities by reviewing the law firm's bills, addressed to the 1717 H Street Owners, in care of Ann T. Maiatico, Owners Operating Co.
Finally, Griva noticed a David & Hagner billing entry for April 4, 1991, referring to a conversation between Davison and Ann Maiatico "re dissolving MFLP." *fn4 At that point, Griva began to take steps to learn details about what David & Hagner was doing for her brother and sister concerning MFLP. In a letter dated September 16, 1991, another lawyer for Griva, William Alden McDaniel, Esq., Griva's counsel in
the present litigation, requested on Griva's behalf that David & Hagner "make arrangements for and her counsel to review all of the books, records and files of the in [David & Hagner's] possession."
In a series of letters responding to Griva's request, David & Hagner: (1) asked the purpose of Griva's request; (2) asserted that Griva and her attorney, O'Conor, had copies of all documents and correspondence relating to MFLP; and (3) replied that David & Hagner could not respond to Griva's request in light of MFLP's unanimous consent provision and of Ann and Michael Maiatico's letter to Griva refusing consent to Griva's review of the files.
By letter of September 30, 1991, McDaniel told Davison that "Mrs. Griva, as of this day . . ." does not consent to the representation by David & Hagner, of the ." A week and a half later, on October 10, 1991, Griva filed suit to obtain access to David & Hagner's records pertaining to MFLP and to have David & Hagner removed as partnership counsel. *fn5 Griva sought declaratory judgments that the defendants (1) had breached their fiduciary duties as lawyers and general partners by refusing to disclose MFLP records; (2) had conspired to breach their fiduciary duties, entitling Griva to damages; and (3) no longer could retain David & Hagner as MFLP counsel or pay any of David & Hagner's legal fees or expenses. Griva also sought (4) an injunction to prevent the defendants from refusing her request to inspect David & Hagner's files relating to MFLP and (5) indemnification from MFLP for Griva's legal fees.
Represented by David & Hagner, MFLP immediately moved to dismiss claim five, the only one naming MFLP as a defendant. MFLP asserted that, under Maryland law, Griva could seek indemnity from MFLP only in the context of a final partnership accounting, which had not yet occurred. The trial court granted MFLP's motion and dismissed claim five with prejudice. Griva does not challenge that dismissal on appeal. MFLP itself, therefore, is no longer a party to this litigation.
After the close of discovery, Griva moved for summary judgment on claims one, three, and four. Defendants filed a Joint Motion To Dismiss And/Or For Summary Judgment, seeking summary judgment as to claims one, three, and four and dismissal for failure to state a claim as to claim two. The trial court denied Griva's motion and granted summary judgment for defendants on claims one, two, three, and four.
On appeal, Rose Griva challenges the trial court's denial of her motion for summary judgment and argues, alternatively, that summary judgment in defendants' favor was improper because there are genuine issues of material fact requiring a trial as to claims one through four.
In order to decide whether Griva is entitled to see David & Hagner's files on its representation of the Maiaticos on MFLP matters and whether that firm must be disqualified from representing MFLP, we must resolve several related issues.
1. David & Hagner's (including Davison's) dual representation of MFLP and the Maiaticos began in 1988, when the Code of Professional Responsibility was in effect. The dispute between Griva and the Maiaticos also began in 1988 and continued until October 1991, when suit was filed, and thereafter. In the meantime, effective January 1, 1991, new Rules of Professional Conduct, replacing the Code, began to apply to the lawyers' conduct. We therefore have to consider, both under the Code and under the Rules -- as applied to the facts here -- whether a law firm for a partnership may also represent some of its partners, individually, in matters related to the partnership.
2. If such dual representation is ever permissible, what sort of disclosure by the law firm to the other partners, and what kind of consent by those partners, will be required?
3. If a law firm violates the Code of Professional Responsibility or the Rules of Professional Conduct in representing both the partnership and some individual partners with respect to partnership matters, what remedies, if any, are available to a Dissenting partner against the lawyers? Against the other partners?
B. Criteria for Summary Judgment
Super. Ct. Civ. R. 56 (c) requires the trial court to grant summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to material fact and that the moving party is entitled to a judgment as a matter of law." The moving party has the burden of demonstrating clearly the absence of any genuine issue of material fact and entitlement to judgment as a matter of law. See Holland v. Hannan, 456 A.2d 807, 815 (D.C. 1983). To survive a summary judgment motion, "the opposing party need only show that there is sufficient evidence supporting the claimed factual dispute to require a jury or Judge to resolve the parties' differing versions of the truth at trial." Nader v. de Toledano, 408 A.2d 31, 42 (D.C. 1979) (quoting International Underwriters, Inc. v. Boyle, 365 A.2d 779, 782 (D.C. 1976), cert. denied, 444 U.S. 1078 (1980)). If the offered evidence and related inferences would permit the factfinder to find for the nonmoving party under the appropriate burden of proof, the motion for summary judgment must be denied. See id. "Our ...