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Mooney v. Diversified Business Communications

Superior Court of Massachusetts, Suffolk, Business Litigation Session

September 28, 2017

John J. Mooney et al.
v.
Diversified Business Communications et al

          Filed September 29, 2017

          MEMORANDUM OF DECISION ON PLAINTIFF'S MOTION TO DISQUALIFY THE FIRM REPRESENTING THE DEFENDANTS IN THIS ACTION

          Janet L. Sanders, Justice of the Superior Court.

         This lawsuit was instituted in December 2016. Sullivan and Worcester, LLP (S& W), long-time counsel for the defendant Diversified Business Communications (Diversified) and its subsidiary Pri-Med, LLC (Pri-Med), filed an appearance on behalf of Diversified, Pri-Med and the three individual defendants. Seven months later and well into discovery in this case, the plaintiff John Mooney filed a Motion to Disqualify S& W on the grounds that he has been and remains an S& W client, so that the firm's representation of the defendants in this litigation violates Rule 1.7 of the Massachusetts Rules of Professional Conduct.. S& W denies any ethical violation and contends that the Motion is a " transparent and unacceptable litigation tactic." After hearing, this Court concluded that there was no reason to disqualify S& W and on September 13, 2017, entered a margin endorsement on the Motion stating that it was denied. This Memorandum sets forth the reasons for that decision.

         BACKGROUND

         In reaching its decision, this Court considered affidavits, with attached exhibits, submitted by both parties. Those submissions reflect the following facts that this Court views as material to resolution of the Motion before it.

         In 1999, Mooney's business partner Jack Connors suggested that Mooney should engage in sophisticated estate planning and recommended that Mooney work with Lisa Mingolla, an attorney in S& W's trusts and estates department. Mooney took this suggestion and in 2002, retained the firm to represent him in connection with preparing a prenuptial agreement and estate planning documents. An August 29, 2002 engagement letter signed by both Mingolla and Mooney reflects the limited nature of that representation. Mingolla was paid a flat fee of $10, 000 for Mingolla's services. The letter stated that S& W would discard certain items from the file once work was completed but would retain Mooney's estate planning documents in its vault for Mooney's convenience.

         Three years later in 2005, Mooney asked Mingolla if she would update his will and his estate plan, which she did. Mooney paid her approximately $20, 000 for her work, which concluded in 2006. Mingolla did not perform any additional work for Mooney until September 2010, when she again updated Mooney's estate planning documents at his request. Since July 2014, Mooney has not sought any legal advice from Mingolla. Over the twelve-year period (2002-2014), Mooney paid Mingolla a total of $75, 000.

         During this same period of time, Carol Wolff, an S& W partner, was providing legal representation to Diversified. When Diversified formed Pri-Med as its wholly-owned subsidiary in November 2011, Wolff became Pri-Med's primary outside counsel. Shortly after this, Diversified decided to hire as part of Pri-Med's management team certain founders and former managers of Pri-Med's predecessor entity, among them Mooney. In connection with this effort, Diversified, Mooney and others negotiated and entered into an Amended and Restated Limited Liability Agreement (LLC Agreement) signed in October 2012. Wolff represented Diversified and Pri-Med in the preparation of the LLC Agreement, while Mooney was represented by the firm of Schlossberg, LLC. As a result of this transaction, Mooney acquired an equity interest in Pri-Med and became a member of Pri-Med's Board of Managers.

         In late 2016, disputes arose between Pri-Med and Mooney over the purchase price for his minority shares and Diversified's conduct in the management of Pri-Med, including the impact of that conduct on Pri-Med's value. Morgan Wheelock, another minority member, shared Mooney's concerns. Both Mooney and Wheelock retained Jeffrey Robbins, an attorney with Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. (Mintz Levin). On September 22, 2016, attorney Robbins sent a letter to Diversified's Chairman of the Board, Daniel Hildreth, and its President and CEO, Ted Wirth, in which he raised these concerns. The letter described various ways in which Diversified had violated the LLC Agreement, accused the company of taking these actions to " deflate" Pri-Med's value so as to reduce the amount of any payout due to Pri-Med's shareholders, and urged Diversified's counsel to contact Robbins immediately.

         Upon receipt of this letter, Hildreth and Wirth contacted Wolff, who in turn sought assistance from Laura Steinberg, a litigation partner at S& W and presently the lead defense counsel in this case. On September 30, 2016, attorney Steinberg wrote a letter to Robbins denying any wrongdoing by Diversified. The letter began:

Sullivan & Worcester represents DBC Pri-Med, LLC . . . and, accordingly, John J. Mooney in his capacity as one of the five Managers of the Company. I have been asked to respond on the Company's behalf to your September 22, 2016 letter . . .

         Robbins replied to Steinberg's letter on October 5, 2016 (the October 5 Letter). His letter stated, among other things:

[A]s John Mooney's counsel, I must inform you that you do not represent John, in any capacity whatsoever. Indeed, I understand that you have never represented him. Accordingly, it is my duty to tell you that he intends to hold you accountable for any actions that you have purported to take on his behalf.

         At that time, Steinberg had no knowledge that S& W had ever represented Mooney other than in his capacity as a member of Pri-Med's Board of Managers. Mooney received a copy of the letter but apparently made no attempt to correct Robbins and inform him ...


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