Coldren v. Hart, King & ColdrenAnnotate this Case
Plaintiffs Robert Coldren and his wife Brook sued defendants Hart, King & Coldren, Inc. (HKC) and William Hart asserting several causes of action arising out of Coldren’s departure from his law practice at HKC. Defendants appealed an order disqualifying HKC’s counsel, Grant, Genovese & Barratta LLP (Grant Genovese), who had been representing both Hart and HKC. The court held there was an unwaivable actual conflict between the two. The court concluded a conflict existed because Coldren was a 50 percent shareholder of HKC, and HKC would have duties to Coldren that were in conflict with Hart’s interests in defeating the litigation. Accordingly, the court ordered Hart to confer with Coldren on the appointment of “neutral” counsel for HKC. The Court of Appeal reversed: Coldren sued both Hart and HKC directly, "not derivatively," on essentially the same claims. The Court surmised Hart’s interest was perfectly aligned with HKC’s interest in seeing Coldren’s claims defeated. Coldren’s contended he could sue his company and then, because he is a 50 percent shareholder, have a say in its defense. "That is not the law." Moreover, the COurt concluded Grant Genovese’s duty of loyalty, as counsel for HKC, ran to HKC, not its shareholders. HKC was free to defend itself and assert relevant counter claims to the detriment of Coldren.