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Brooks v. Caswell

United States District Court, D. Oregon, Portland Division

March 12, 2015

GRETCHEN BROOKS, an individual, Plaintiff,
v.
HARLON RIP CASWELL, an individual, RIP CASWELL SCULPTURES, INC., an Oregon corporation d/b/a CASWELL GALLERY, an Oregon assumed business name, CASWELL PROPERTIES, INC., a Washington limited liability company, and DOES 1-5, Defendants.

OPINION AND ORDER

JOHN ACOSTA, Magistrate Judge.

Introduction

Plaintiff Gretchen Brooks ("Brooks") seeks an order from the court disqualifying Michael R. Seidl ("Seidl") from continuing to represent defendants Harlon Rip Caswell ("Caswell"); Rip Caswell Sculptures, Inc. d/b/a as Caswell Gallery ("RCS"); and Caswell Properties ("CP") (collectively "Defendants") in this action. Brooks argues Seidl's prior representation of Defendants in two prior lawsuits, and his expected participation as a witness in this trial, necessitates his disqualification under Oregon Rules of Professional Conduct ("Rules") 1.7 and 3.7, and the "unsworn witness" rule.

The court finds Brooks has failed to present evidence Siedl's testimony is or may be prejudicial to Defendants and, therefore, has failed to meet the high standard necessary to successfully support her motion for disqualification. Consequently, Brooks's motion for disqualification is denied.

Preliminary Evidentiary Issues

Defendants offer pages from the deposition transcript of Laura Walker ("Walker"), Brooks's counsel in the underlying litigation, taken on February 16, 2015. The cover page of the Walker deposition identifies the case for which the deposition was taken and the party being deposed. A signature page from the court reporter is not included. Defendant also offers pages from a second deposition, which is identified by a tab, and an index provided to the court but not filed in this action. Neither the cover page nor a signature page is provided. The first page of the second deposition indicates it is an unedited, non-certified rough draft transcript and specifically provides: "This rough draft may NOT be quoted from in any pleadings or used in court to quote from, or for any other purpose, or may not be filed with any court and may not be distributed to any other party." It is impossible to tell who is being deposed, the case for which the deposition was taken, or the parties participating in the deposition.

Defendants' deposition excerpts are not properly authenticated. "The requirement of authentication * * * as a condition precedent to admissibility is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims." FED. R. EVID. 901(a). The Ninth Circuit has instructed that a deposition, or extract therefrom, is properly authenticated when the name of the deponent and the action for which the deposition was taken are identified and the reporter's certification that the deposition is a true record of the testimony of the deponent is included. Orr v. Bank of America, 285 F.3d 764, 774 (9th Cir. 2002). This is generally accomplished by providing the cover page of the deposition as well as the reporter's certification to each deposition extract submitted. Id.

Brooks has offered, and properly authenticated, excerpts from the same depositions. Accordingly, Defendants' deposition transcripts are properly authenticated through Brooks's submissions and will be considered by the court. Orr, 285 F.3d at 776 ("[W]hen a document has been authenticated by a party, the requirement of authenticity is satisfied as to that document with regards to all parties, subject to the right of any party to present evidence to the ultimate fact-finder disputing its authenticity.")

Background

I. Brooks Lititgation

In January 2011, Brooks filed suit against Defendants seeking to recover amounts she provided Caswell to further his sculpture business ("Brooks Litigation"). Defendants hired Seidl to defend them in the action and Seidl associated Phil Nelson as co-counsel. (Hahs Decl. dated Feb. 23, 2015 ("Hahs 2015 Decl.") ¶ 7; Seidl Decl. ¶1.) Following a trial, which clarified but did not resolve all of the issues, the parties entered in to a settlement agreement on September 21, 2011 (the "Agreement"). (Monson Decl. ¶¶ 3, 4.)

Brooks's counsel, Jon Monson ("Monson") and Walker, initiated the settlement discussions by presenting a lengthy and complex settlement proposal to Seidl and Caswell the morning of August 29, 2011.[1] (Seidl Decl. ¶ 4.) Seidl asked Walker to forward the proposal to Andrew Hahs, an attorney retained in November 2009[2] by Caswell to represent his business interests. (Seidl Decl. ¶ 4; Walker Dep. 50:18-51:8[3]; Caswell Decl. ¶ 2.)

The terms of the Agreement were negotiated on August 29 and 30, 2011.[4] (Seidl Decl. ¶¶ 4-5; Hahs Decl. ¶¶ 12, 15.)) Seidl and Hahs represented Defendants in the negotiations and divided responsibilities, with Seidl taking the lead on "litigation-related items, " and Hahs handling the business and transactional aspects, including the Note. (Hahs 2015 Decl. ¶ 3; Seidl Decl. ¶¶ 4, 7.) Monson, Walker, Seidl, and Caswell were present for both days of the settlement negotiations, while Hahs attended the second day only. (Monson Decl. ¶ 6; Hahs 2015 Decl. ¶ 15; Seidl Decl. ¶¶ 4-7.)

Walker remembers discussions about the terms of the Note during the two-day settlement negotiations:

The promissory note under 5(c), I recall there were lots of discussions about the note, but, again, I don't know if it was this particular day or the next day in terms of dollar amount, the payment schedule, the guarantees. Under paragraph C it refers to guarantees, which were not ultimately included in the settlement. So I don't recall if that was something that the parties said no at that particular meeting or at some later date. But I'm sure there were discussions about the note at some point in time.

(Walker Dep. 62:21-63:5.) She considered Seidl to be the lead negotiator with Hahs taking the lead on the documents. (Walker Dep. 73:9-16.) However, she could not remember who negotiated the specific terms of the Note. (Walker Dep. 73:17-74:16; 77:4-78:12.)

Monson remembers Seidl objecting to the identification of Caswell's new entity, rather than RCS, as the maker of the Note based on Caswell's desire to keep a bright line between his new and old corporations, and that change being accepted. (Monson Dep. 32:15-35:14.) He is confident additional negotiations occurred with regard to the terms of the Note, collateral and security agreement, but is not sure what day those discussions took place or who said what. (Monson Dep. 46:6-48:16.) He does remember Seidl raising the "sole-remedy" concept with regard to the Note on August 29, 2011, but is unable to explain why the August 30, 2011, term sheet did not reflect this. (Monson Dep. 55:1-56:10.)

The term sheet distributed by Monson at the close of negotiations memorialized the core terms of the Agreement. (Hahs 2015 Decl. ¶16.) Hahs represented Defendants' interest in drafting, fine tuning, and finalizing the Agreement and related documents, working directly with Monson and Walker, and seeking direction from Seidl on litigation aspects only. (Hahs 2015 Decl. ¶ 17; Walker Dep. 90:18-91:18.)

Pursuant to the terms of the Agreement, Caswell executed a Non-Recourse Promissory Note as President of RCS in the amount of $650, 000 payable to Brooks in monthly installments over a seven-year term (the "Note"). (Hahs 2014 Decl. Ex. B.) The Note was secured by a security interest in various sculpture molds (the "Molds") and reproduction rights as described by the Agreement. (Hahs 2014 Decl. Ex. B at 1.) The Note specifically provided it is:

NON-RECOURSE against RCS, its officers, directors, shareholders or employees, except for the collateral specified in the Settlement Agreement as set forth therein. Brooks shall look only to such collateral for satisfaction and payment of any sums due under the terms of this note in the event of any default by RCS.

(Hahs 2014 Decl. Ex. B at 2.) Seidl made no representations with regard to the value of the collateral. (Seidl Decl. ¶ 12.)

II. Ferris Litigation

In July 2011, Seidl filed a lawsuit on behalf of Defendants against Kimball H. Ferris, the attorney representing Defendants from October 2005 through November 2009 ("Ferris Litigation"). (Hahs 2014 Decl. Ex. A at 4.) Defendants alleged claims for legal malpractice, negligence, and breach of fiduciary duty based on conduct during, and failure to properly document, the funding arrangement between Brooks and Defendants which resulted in the Brooks Litigation, and sought damages relating to the liabilities incurred by Defendants in connection with the Brooks Litigation. (Hahs 2014 Decl. Ex. A at 4.) Once the terms of the Agreement were solidified, Seidl identified the Note, which he valued at $650, 000, as part of the economic damages suffered by Defendants. (Fite Decl. dated February 2, 2015 ("First Fite Decl.") Ex. 1 at 13, Ex. 2 at 3.)

Under the terms of the Agreement, Brooks was awarded an interest in the Ferris Litigation. (Hahs 2014 Decl. Ex. A at 15.) Defendants gave Brooks a legal right to twenty-five percent of the net proceeds of the Ferris Litigation. (Hahs 2014 Decl. Ex. A at 15.) In late June, 2012, Brooks was deposed in the Ferris Litigation. (Compl. ¶ 23.) The parties settled the Ferris Litigation in early August 2012 and Brooks received her share of the settlement. (Compl. ¶25; Answer ¶ 25.)

III. Default on Note

On August 3, 2012, Walker emailed a notice of default on the Note to Seidl. (Hahs 2014 Decl. Ex. D; First Fite Decl. Ex. 4 at 2.) Walker indicated RCS had not paid the $4, 000 due under the Note on August 2, 2012. (Hahs 2014 Decl. Ex. D; First Fite Decl. Ex. 4 at 2.) In response, Hahs advised Walker that RCS would not be making the August payment and Brooks was free to exercise her rights to the collateral. (Hahs 2014 Decl. Ex. E at 1; First Fite Decl. Ex. 4 at 1.) On October 4, 2012, Hahs informed Walker of Caswell's intent to move the sculpture molds he owned from the Parks foundry, where they were stored, to another location, and leave the Molds securing the Note at Parks. (Hahs 2014 Decl. Ex. F at 1.) He recommended Brooks contact Parks to arrange payment for future storage fees. Hahs represented:

Rip has received no interest in castings from the molds in which Gretchen has the security interest and he believes they have little value. However, as a one-time offer, Rip is willing to pay Gretchen $10, 000 to release her security interest in all the molds. Let me know in the next seven days if she is interested in this offer. If not, Rip will proceed to unload the molds and leave them at Parks. We can then finalize the surrender agreement.

(Hahs 2014 Decl. Ex. F at 1; First Fite Decl. Ex. 5.) On April 8, 2013, Brooks rejected the offer, and Walker and Hahs cooperated in preparing a collateral surrender agreement. (Hahs 2014 Decl. Exs. G, H; First Fite Decl. Ex. 4 at 5.) Caswell currently represents the total retail value of the reproductions which could be made from the Molds at $24, 981, 450, but that "the value of the molds is entirely dependent upon the owner's desire ...


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