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Singer v. Primesource Health Group LLC

United States District Court, N.D. Illinois, Eastern Division

June 19, 2018

ELLIOT SINGER, RACHEL SINGER, and DANIEL SINGER, Plaintiffs,
v.
PRIMESOURCE HEALTH GROUP, LLC, SENIORSURE HEALTH PLANS, INC., ADVANTAGE CAPITAL HOLDINGS, LLC, PRIMEHEALTH GROUP, LLC, and DAVID FLEMING, Defendants. DAVID FLEMING, Cross-Plaintiff,
v.
ADVANTAGE CAPITAL HOLDINGS, LLC, PRIMEHEALTH GROUP, LLC, KENNETH KING, and ANNIE ELLIOT, Cross-Defendants.

          MEMORANDUM OPINION AND ORDER

          Robert W. Gettleman United States District Judge

         Plaintiffs Elliot, Rachel and Daniel Singer sued defendants PrimeSource Health Group, LLC (“PrimeSource”), SeniorSure Health Plans, Inc., (“SeniorSure”), Advantage Capital Holdings, LLC (“Advantage”), PrimeHealth Group, LLC (“PrimeHealth”) and David Fleming seeking, among other things not related to the instant matter, to collect on three promissory notes issued to plaintiffs by PrimeSource and one promissory note issued to plaintiffs by SeniorSure, all guaranteed by defendant Fleming. The counts seeking to collect on the notes also named PrimeHealth and Advantage, alleging that those companies had assumed PrimeSource's and SeniorSure's liabilities, including the notes, under an Asset Purchase Agreement (“APA”) with PrimeSource and a Stock Purchase Agreement (“SPA”) with SeniorSure.

         Attorney Brianna Golan of Golan, Christie, Taglia, LLP (“GCT”) appeared for and filed an answer on behalf of both PrimeHealth and Advantage. Fleming also answered. After efforts to settle failed, Fleming filed cross-claims against PrimeHealth, Advantage, and its President Kenneth King and Chief Risk Officer Annie Elliot, asserting claims for breach of the APA, SPA, fraud, fraudulent inducement and breach of fiduciary duty.

         After some extensions, attorney Michael O'Brien and Leslie Bleifuss of O'Brien Law Offices (“O'Brien”) appeared for King and Elliot. After all defendants settled with plaintiffs on the counts seeking to collect on the notes (I and II), PrimeHealth and Advantage, and King and Elliot moved to dismiss the crossclaims, arguing that the court should deCLINE supplemental jurisdiction. The court denied those motions. At the same time, Fleming moved (Doc. 86) to disqualify both the GCT and O'Brien law firms, arguing that by defending Fleming's crossclaims for PrimeHealth and Advantage (GCT) and for King and Elliot (O'Brien) these lawyers would be forced to take legal positions adverse to PrimeSource, which each of those firms represents in other litigation.

         Both GCT and O'Brien have denied that they are in any sort of conflict, arguing that they do not currently nor have they ever represented Fleming. Fleming has argued that that begs the question, because he is now back in control of PrimeSource (the Management Oversight Agreement that had transferred management to PrimeHealth as a result of the APA has expired), and any position adverse to him is necessarily adverse to PrimeSource.

         While the motion to disqualify was pending, attorneys Thadford Felton, David Goodman and Elizabeth Austermuechle of Greenfelder, Hemker & Gale, P.C. appeared for and received leave to file a crossclaim for PrimeSource against PrimeHealth. The court then ordered responsive pleadings to all crossclaims.

         GCT, on behalf of PrimeHealth and Advantage, filed answers and affirmative defenses to both Fleming's and PrimeSource's crossclaims. In addition, GCT sought and received leave to file counterclaims for PrimeHealth and Advantage against PrimeSource and Fleming. On behalf of King, O'Brien filed an answer to Fleming's crossclaim, and on behalf of Elliot moved to dismiss the crossclaim. The battle lines having now been fully drawn, Fleming's motion to disqualify GCT and O'Brien is ripe for decision.

         DISCUSSION

         As Fleming acknowledges, “disqualification is a drastic measure which courts should hesitate to impose except when absolutely necessary.” Schiessle v. Stephens, 717 F.2d 417, 420 (7th Cir. 1983). In ruling on a disqualification motion, the court must balance “the sacrosanct privacy of the attorney-client relationship (and the professional integrity implicated by that relationship) and the prerogative of a party to proceed with counsel of its choice.” Id. “Because disqualification causes a disruptive, immediate, and measurable effect on one party in pending litigation, courts view such motions ‘with extreme caution.'” alphaCTP Systems, Inc. v. Nierman, 2016 WL 687281 *4 (N.D. Ill. Feb. 19, 2016) (quoting Freeman v. Chicago Musical Instrument Co., 689 F.2d 715, 719 (7th Cir. 1982)).

         The court uses a two-step analysis to resolve a motion to disqualify counsel. Id. First, the court must determine whether an ethical violation has occurred. Next, if the court finds a violation, the court then determines whether disqualification is appropriate. Id.

         Under Local Rule 83.50, this court applies the Model Rules of Professional Conduct of the American Bar Association. Model Rule 1.7, addressing attorney's conflicts of interest in concurrent representation provides in relevant part:

(a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if:
(1) the representation of one client will be directly adverse to another client; . . ..

         In the instant case, there is no dispute that both GCT and O'Brien are each currently representing PrimeSource in other litigation. Brianna Golan and GCT originally represented PrimeSource in Pfefferkorn v. PrimeSource, No. 17 C 1223, a Fair Labor Standard Act action pending before Judge Blakely in this court. That representation arose out of obligations under the APA. The Golan lawyers and GCT ...


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