United States District Court, D. Oregon
Michael J. Vial, Vial Fotheringham LLP, Attorneys for
B. Miller and Ryan M. Tarter, Wood, Smith, Henning &
Berman LLP, Attorneys for Defendants Scott McFerran, Laura
Wilson, and Daron Anderson.
C. Peterson, Kilmer, Voorhees & Laurick pc, Attorneys for
Defendants Decatur Advisors, LLC and Scott McFerran.
S. Pitcher and David C. Campbell, Lewis Brisbois Bisgaard
& Smith LLP, Attorneys for Defendants Decatur Advisors
LLC and Scott McFerran.
R. Beehler and Hal Mark Mersel, Bryan Cave LLP, Eric D.
Lansverk and Joseph A.G. Sakay, HILLIS CLARK MARTIN AND
PETERSON PS Attorneys for Defendants RBC Real Estate Finance,
Klarice A. Benn, Abbott Law Group pc, Attorneys for Defendant
Lamplight Capital & Asset Management LLC.
OPINION AND ORDER
MICHAEL H. SIMON, UNITED STATES DISTRICT JUDGE
Quatama Park Townhomes Owners Association
(“Association”) brings this lawsuit (Quatama
II) against six defendants. Four defendants, Scott
McFerran (“McFerran”), Laura Wilson
(“Wilson”), Daron Anderson
(“Anderson”), and Decatur Advisors LLC
(“Decatur”) (collectively, the “Moving
Defendants”), move to disqualify the law firm of Vial
Fotheringham LLP (“VF”) from continuing to
represent the Association in this action. In an Opinion and
Order, United States Magistrate Judge Stacie F. Beckerman
granted the motion to disqualify the Association's
counsel, and the Association timely objected. After reviewing
the record and hearing oral argument, the Court finds the
Opinion and Order is contrary to law and denies the motion to
Federal Magistrates Act grants district courts the authority
to delegate certain matters to magistrate judges.
See 28 U.S.C. § 636(b)(1). In civil actions, a
district court may designate a magistrate judge to determine
any pretrial matter, except motions for injunctive relief,
for judgment on the pleadings, for summary judgment, to
permit or deny maintenance of a class action, to dismiss for
failure to state a claim, and to involuntarily dismiss an
action. 28 U.S.C. § 636(b)(1)(A). For any of these
excluded motions, a district judge may designate a magistrate
judge to conduct hearings and submit proposed findings of
fact and recommendations for disposition. 28 U.S.C. §
of the Federal Rules of Civil procedure implements the
authority provided by the Federal Magistrates Act. Under Rule
72(a), a magistrate judge may “hear and decide”
all referred pretrial matters that are “not dispositive
of a party's claim or defense.” Fed.R.Civ.P. 72(a).
For pretrial matters referred to a magistrate judge that are
dispositive of a claim or defense, in the absence of consent
by all parties, Rule 72(b) allows the magistrate judge only
to “enter a recommended disposition, including, if
appropriate, proposed findings of fact.” Fed.R.Civ.P.
terms “dispositive” and
“nondispositive” in Rule 72 do not perfectly
coincide with the categories listed in 28 U.S.C. §
636(b)(1). For example, a magistrate judge may not issue a
temporary restraining order or preliminary injunction, even
though such orders are not dispositive. The Ninth Circuit has
held that the motions excluded from determination by a
magistrate judge under § 636(b)(1)(A) “are not an
exhaustive list of all the pretrial matters that are excepted
from the magistrate judge's authority.” United
States v. Rivera-Guerrero, 377 F.3d 1064, 1067 (9th Cir.
2004). As explained by the Ninth Circuit, “magistrate
judges may hear and determine nondispositive matters, but not
dispositive matters[.]” Mitchell v.
Valenzuela, 791 F.3d 1166, 1168 (9th Cir. 2015).
Dispositive matters include those expressly listed in §
636(b)(1)(A), as well as “analogous” matters.
Id. “To determine whether a motion is
dispositive, [the Ninth Circuit has] adopted a functional
approach that looks to the effect of the motion, in order to
determine whether it is properly characterized as dispositive
or nondispositive of a claim or defense of a party.”
Id. at 1168-69.
distinction between a dispositive motion and a nondispositive
matter is significant for the standard of review. When a
party timely objects to a magistrate judge's findings and
recommendations concerning a dispositive motion, the district
judge shall make a de novo determination of those
portions of the magistrate judge's proposed findings and
recommendations to which an objection has been made. 28
U.S.C. § 636(b)(1)(C); Fed.R.Civ.P. 72(b)(3). When a
party timely objects to a magistrate judge's
determination of a nondispositive matter, however, the
district judge may reject that determination only when it has
been shown that the magistrate judge's order is either
clearly erroneous or contrary to law. 28 U.S.C. §
636(b)(1)(A); Fed.R.Civ.P. 72(a).
the extent a district judge is concerned about the
possibility that assigning a nondispositive matter to a
magistrate judge will confine his or her power to revise the
outcome, a reference directing the magistrate judge to make
recommendations is possible.” 12 Charles Alan Wright
and Arthur R. Miller, et al., Federal Practice
and Procedure: Civil § 3069 (3d ed. 2018)
(“Wright & Miller”). As explained by
one district court,
That certain case dispositive matters must always be referred
for recommendations rather than determination does not
mandate the converse, i.e., that nondispositive
matters must always be referred for determination rather than
recommendations. It is evident from the [Federal Magistrates]
Act's legislative history that the purpose of the
Act's referral and review provisions is to define the
limits of the powers which a court may allow a magistrate to
exercise, not to restrict the ultimate authority of an
Article III court over a case pending before it.
Delco Wire & Cable, Inc. v. Weinberger, 109
F.R.D. 680, 685 (E.D. Pa. 1986), quoted in Wright &
Miller, supra, § 3069. “Thus, when a
district court judge refers a nondispositive matter to a
magistrate judge specifically for recommendation-even though
the matter could have been referred for determination-review
is plenary . . . .” Howe Inv., Ltd. v. Perez Y Cia.
de Puerto Rico, Inc., 96 F.Supp.2d 106, 113 (D. P.R.
2000); see also Trone v. Smith, 621 F.2d 994, 997-98
(9th Cir. 1980) (noting that the magistrate judge only
“recommended” that a motion to disqualify counsel
be denied, which the district court then reviewed de
pending lawsuit, the Association urges the Court to treat
Magistrate Judge Beckerman's Opinion and Order as
findings and recommendations on a dispositive matter and,
thus, provide de novo review. Defendants, however,
argue that a motion to disqualify counsel is a nondispositive
matter and that the Magistrate Judge's decision should
only be rejected if its factual findings are clearly
erroneous or its conclusions are contrary to law. The Court
agrees with Defendants. If the Magistrate Judge's
decision is upheld, the Association may continue to prosecute
all of its claims against each of the Defendants, after
obtaining new counsel. Thus, there is nothing in the pending
motion to disqualify Plaintiff's counsel that is
analogous to any of the motions expressly identified in
§ 636(b)(1)(A). See also Howe Inv., Ltd., 96
F.Supp. at 113 (holding that a motion to disqualify is a
nondispositive matter that a magistrate judge may determine
unless the district court referred the matter only for a
report and recommendation). Accordingly, the Court will
evaluate the Magistrate Judge's factual findings to
determine if any are clearly erroneous. More relevant to the
pending dispute, however, the Court also will evaluate the
Magistrate Judge's legal conclusions to determine if any
are contrary to law, which involves a de novo review
of those issues.
company owned by James Standring (“Standring”)
developed a planned residential community in Washington
County, Oregon known as “Quatama Park Townhomes”
(“Quatama Park”). Other companies owned by
Standring provided construction and other services for
Quatama Park. The construction lender was RBC Real Estate
Finance, Inc. (“RBC”). In 2011, RBC foreclosed on
the Quatama Park project and became the successor declarant
for that development. RBC then hired Decatur to manage the
completion of the development.
and Anderson worked for Decatur. RBC appointed Wilson and
Anderson as the sole members of the Association's Board
of Directors (the “Board”) until control of
Quatama Park would be turned over to the lot owners. In July
2013, Lamplight Capital & Asset Management, LLC
(“Lamplight”) purchased RBC's interest in the
project. Lamplight reappointed Wilson and Anderson as the
Association's sole directors.
2015, the Board hired VF to provide legal services to the
Association as outside general counsel. VF's
representation agreement was addressed to the Board, which
then consisted of only Wilson and Anderson. There were no
other officers or managers of the Association, whose
activities were solely directed by Wilson and Anderson.
Wilson signed VF's representation agreement as the
“Authorized Representative” of the Association.
In August 2015, Anderson resigned from the Board, and
Lamplight appointed McFerran to replace him. McFerran also
worked for Decatur.
November 2015, the Association engaged VF on a contingent fee
basis to file a lawsuit for money damages against
Standring's companies and other contractors and
sub-contractors, seeking money damages for repairs related to
various construction defects. McFerran signed the contingent
fee agreement with VF as the “Authorized
Representative” of the Board. At that time, Wilson and
McFerran were the only directors of the Board. Before filing
this lawsuit, attorney Ryan Harris (“Harris”)
from VF asked both Wilson and McFerran to provide Harris with
“any other documents showing other potential
during this time period, Wilson and McFerran were consulting
with attorney Eugene Grant of Davis Wright Tremaine LLP
(“Davis Wright”). In response to a request to
Wilson and McFerran from VF sent on November 2, 2015, Eugene
Grant of Davis Wright responded to VF as follows:
Thanks for your advice and assistance. I will be consulting
with Scott [McFerran] and Laura [Wilson] and the other
members of the Lamplight team today and will get back to you
ASAP today regarding the assessment allocation method. We
understand there are risks whichever way we allocate and
assess the unit repair costs, ...