Stockwalk Group, Inc. and Miller, Johnson, Steichen; Kinnard, Inc., Appellants, vs. Frank Charles Taylor III, Respondent, Taylor Law Office, PLC, Respondent, Amy Kaldor Taylor, Respondent, Kaldor Law Firm, PLLC, Respondent.

Stockwalk Group, Inc. and Miller, Johnson, Steichen; Kinnard, Inc., Appellants, vs. Frank Charles Taylor III, Respondent, Taylor Law Office, PLC, Respondent, Amy Kaldor Taylor, Respondent, Kaldor Law Firm, PLLC, Respondent. A06-1971, Court of Appeals Unpublished, August 28, 2007.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2006).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A06-1971

 

Stockwalk Group, Inc. and Miller, Johnson, Steichen & Kinnard, Inc.,
Appellants,
 
vs.
 
Frank Charles Taylor III,
Respondent,
 
Taylor Law Office, PLC,
Respondent,
 
Amy Kaldor Taylor,
Respondent,
 
Kaldor Law Firm, PLLC,
Respondent.

 

Filed August 28, 2007

Appeal dismissed

Minge, Judge

 

Hennepin County District Court

File No. 27-CV-06-15561

 

 

Geoffrey P. Jarpe, Thomas H. Boyd, William A. McNab, Kyle J. Kaiser, Winthrop & Weinstine, P.A., 225 South Sixth Street, Suite 3500, Minneapolis, MN 55402 (for appellants)

 

Lewis A. Remele, Jr., Charles E. Lundberg, Bassford Remele, 33 South Sixth Street, Suite 3800, Minneapolis, MN 55402 (for respondents Taylor and Taylor Law Office)

 

F. Chet Taylor, Chestnut & Cambronne, P.A., 222 South Ninth Street, Suite 3700, Minneapolis, MN 55402 (for all respondents)

 

Amy Kaldor Taylor, Kaldor Law Firm, P.L.L.C., 225 South Sixth Street, Suite 4300, Minneapolis, MN 55402 (for respondents Amy Kaldor Taylor and Kaldor Law Firm)

 

            Considered and decided by Toussaint, Chief Judge; Kalitowski, Judge; and Minge, Judge.

U N P U B L I S H E D  O P I N I O N

 

MINGE, Judge

 

            Appellants challenge the district court's denial of their motion to temporarily enjoin respondents-attorneys from representing an adverse party in an arbitration matter.  After briefing, respondents filed a motion to dismiss the appeal as moot.  We grant the motion and dismiss the appeal. 

FACTS

 

            Appellant Stockwalk Group, Inc. (Stockwalk) is a privately owned Minnesota corporation.  Appellant Miller Johnson Steichen Kinnard, Inc. (MJSK) is a wholly owned subsidiary of Stockwalk and is engaged in the securities-brokerage business.  Respondent Frank Taylor (Taylor) and respondent Amy Kaldor Taylor (Kaldor Taylor) are licensed Minnesota attorneys.  They are married to each other. 

            The interest of John Feltl in the various firms that make up Stockwalk, and the role of Taylor as an attorney for Feltl, his family, and the various securities firms is complex.  Until August 2000, John Feltl owned R.J. Steichen & Company (Steichen).  In December 1996, Taylor began representing the Feltl family in various matters and Steichen hired him to serve as its general counsel.  In April 1995, John G. Kinnard & Company (Kinnard) had hired Taylor to serve as its deputy general counsel.  In August 2000, Stockwalk, which already owned the securities firm of Miller, Johnson & Kuehn, acquired both Kinnard and Steichen.  Stockwalk merged the various securities firms to form MJSK, and Feltl became the largest shareholder of Stockwalk and a member of its board of directors.  At that time, Taylor became MJSK's chief litigation counsel.  In 2001, Taylor assumed the role of general counsel for Stockwalk.  In 2002, Feltl left Stockwalk to form Feltl and Company. 

            On July 31, 2002, Taylor left MJSK to return to private practice as a part of a new law firm known as Meikle and Taylor, P.A.  As a member of the law firm, Taylor continued to represent appellants on a regular basis.  Appellants deposited a retainer with the firm.  In October 2005, Taylor left Meikle and Taylor, P.A. to form the Taylor Law Office.  The Taylor Law Office leased its office space from Feltl and Company.  Shortly thereafter, appellants requested and received the return of the balance of their retainer from Meikle and Taylor.  When Taylor formed the Taylor Law Office in the fall of 2005, the only matter in which he was representing appellant was one arbitration proceeding.  That arbitration settled on February 17, 2006.  Since that date, Taylor has not served as an attorney for appellants. 

            In March 2005, Kaldor Taylor opened the Kaldor Law Firm, P.L.L.C., a solo-practitioner law firm.  Less than a year later, Kaldor Taylor's firm began sharing office space with the Taylor Law Firm.  The two law firms maintained separate building signs, records, and door signs, but shared a facsimile machine. 

            In June 2006, following John Feltl's death, Mary Jo Feltl, as personal representative of John Feltl's estate (the estate), requested that Taylor represent the estate in a claim against MJSK.  Taylor informed appellants that he would be bringing a claim against them on behalf of the estate.  Appellants' attorney responded, contending that this adverse representation was prohibited because appellants were Taylor's current clients.  Taylor denied that he had a current attorney-client relationship with appellants, denied the existence of any conflict, and commenced the arbitration with the National Association of Securities Dealers (NASD).  Kaldor Taylor and the Taylor Law Office joined Taylor as a signatory on the statement of claim. 

            Appellants brought an action for injunctive relief in the district court, seeking to disqualify and enjoin respondents from representing the Feltl estate in the arbitration action against MJSK.  The district court denied the injunction and this interlocutory appeal follows.  After this appeal was filed, an arbitration award was entered against MJSK, the award was paid, and the decision of the arbitrator became final.  Respondents then moved to dismiss this appeal as moot.

D E C I S I O N

 

            The threshold issue is whether this appeal should be dismissed as moot.  The determination of whether a cause of action is moot presents a question of law.  Isaacs v. Am. Iron & Steel Co., 690 N.W.2d 373, 376 (Minn. App. 2004), review denied (Minn. Apr. 4, 2005). 

            Generally, an appeal is dismissed as moot if, pending appeal, an event occurs making a decision on the merits unnecessary or an award of effective relief impossible.  In re Application of Minnegasco for Auth. to Increase Its Rates for Natural Gas Serv., 565 N.W.2d 706, 710 (Minn. 1997).  We address whether a decision on the merits is necessary or an award of effective relief is possible by comparing the relief demanded with the circumstances of the case at the time of the decision.  Id.  Exceptions to the mootness doctrine exist where the issue in question is capable of repetition but evades review or where collateral consequences attach to the challenged decision.  In re McCaskill, 603 N.W.2d 326, 327 (Minn. 1999).  Mootness is "a flexible discretionary doctrine, not a mechanical rule that is invoked automatically."  Kahn v. Griffin, 701 N.W.2d 815, 821 (Minn. 2005) (quotation omitted). 

            Here, after briefing, respondents moved to dismiss the appeal as moot, noting that the arbitration had concluded, the decision went unchallenged, and the arbitration award had been paid in full.  The parties acknowledge that it is now impossible to grant appellants relief from the specific arbitration proceeding.  But appellants argue that Taylor is using and will continue to use the confidential knowledge he gained while serving as their in-house counsel in currently pending and imminently pending matters.  Therefore, according to appellants, the matter is capable of repetition, but likely to evade review and is an important public issue of statewide significance requiring appellate consideration. 

            Determining whether a controversy is moot requires an analysis of the nature of the underlying questions.  This case is an appeal from the denial of a motion for a temporary injunction.  Appellant claims that Taylor's representation of the estate constitutes a current conflict of interest under Rule 1.7 of the Minnesota Rules of Professional Conduct and a former-client conflict of interest under Rule 1.9.  We note that a party seeking an injunction must establish that the injunction is necessary to prevent irreparable harm and that the legal remedy is inadequate.  Cherne Indus., Inc. v. Grounds & Assocs., Inc., 278 N.W.2d 81, 92 (Minn. 1979).  In evaluating whether the district court properly exercised its discretion to grant injunctive relief, we consider the following five factors: (1) the nature and history of the parties' relationship; (2) the harm suffered as a result of the grant of an injunction compared to that resulting from the denial of such relief; (3) the likelihood of success on the merits; (4) public-policy considerations; and (5) the administrative burdens to supervise and enforce the injunctive relief.  Dahlberg Bros. v. Ford Motor Co., 272 Minn. 264, 274-75, 137 N.W.2d 314, 321-22 (1965). 

            Several of the Dahlberg factors are fact-specific and our interlocutory review of the district court's factual determinations based on the Dahlberg factors is deferential.  See Prod. Credit Ass'n v. Buckentin, 410 N.W.2d 820, 822 (Minn. 1987).  We will not disturb a district court's ruling on a motion for a temporary injunction unless the district court has abused its discretion.  Oxford Dev. Minn., Inc. v. County of Ramsey, 428 N.W.2d 434, 437 (Minn. App. 1988).  On review, we consider the facts in the light most favorable to the prevailing party.  Bud Johnson Constr. Co. v. Metro. Transit Comm'n, 272 N.W.2d 31, 33 (Minn. 1978).

            Here, the district court's analysis of the request for a temporary injunction was very fact-specific and any review of the district court's denial of a temporary injunction would be based on the unique facts in the proceeding.  In this regard, we note that Taylor's representation of the Feltl family in this arbitration is complete.  The passage of time has resolved any ambiguity over whether Taylor continues to represent Stockwalk under Rule 1.7 of the Minnesota Rules of Professional Conduct.  Clearly he does not.  The fact-specific nature of this inquiry, the passage of time, and the fact-related deference we accord the district court combine to support the conclusion that mootness precludes our consideration of the current-representation (Rule 1.7) part of this appeal.

            The other basis for Stockwalk's claim of a conflict is Taylor's obligation to a former client.  Rule 1.9 of the Minnesota Rules of Professional Conduct regulates an attorney's ability to undertake representation that is adverse to a former client.  In pertinent part, it provides:

            A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client gives informed consent, confirmed in writing. 

 

Minn. R. Prof. Conduct 1.9(a) (emphasis added).  The purpose of disqualification under this rule "is to ensure the attorney's absolute fidelity and to guard against inadvertent use of confidential information."  Nat'l Texture Corp. v. Hymes, 282 N.W.2d 890, 894 (Minn. 1979). 

            "The scope of a ‘matter' for purposes of this rule depends on the facts of a particular situation or transaction."  Minn. R. Prof. Conduct 1.9 cmt. 2.  Matters are "‘substantially related'" when "they involve the same transaction or legal dispute or if there otherwise is a substantial risk that confidential factual information as would normally have been obtained in the prior representation would materially advance the client's position in the subsequent matter."  Minn. R. Prof. Conduct 1.9 cmt. 3.  When the client is an organization, "general knowledge of the client's policies and practices ordinarily will not preclude a subsequent representation," but "knowledge of specific facts gained in a prior representation that are relevant to the matter in question ordinarily will preclude such a representation."  Id.  The lawyer has the burden to prove that he or she did not have access to confidential information.  Restatement (Third) of the Law Governing Lawyers § 132 cmt. h (2000).  

            Resolution of the Rule 1.9 issue is based on the particular facts in the proceeding.  It is highly unlikely that the facts in this Feltl claim would be sufficiently similar to another proceeding so that any determination on the merits by this court would be helpful.  We conclude that, under these fact-specific circumstances, the matter is not one that is so important as to require appellate consideration. 

            Finally, appellant contends that the district court should have disqualified Kaldor Taylor due to an imputed conflict.  Rule 1.10(a) of the Minnesota Rules of Professional Conduct governs imputed conflicts.  Part (a) provides that "while lawyers are associated in a firm, none of them shall knowingly represent a client when any one of them practicing alone would be prohibited from doing so by Rule 1.7 or 1.9 . . . ."  Minn. R. Prof. Conduct 1.10(a).  Because an imputed conflict is dependent on the finding of a conflict under either the current- or former-client theories as applied to respondent Taylor and because we conclude that the doctrine of mootness is applicable, we grant respondent's motion to dismiss and do not address the merits of the appeal. 

            Appeal dismissed.

 

Dated: