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Mid-States Building Services, Inc. v. Richfield Senior Housing

September 17, 2002

MID-STATES BUILDING SERVICES, INC., APPELLANT,
v.
RICHFIELD SENIOR HOUSING, INC., ET AL., RESPONDENTS, XYZ CORPORATION, ET AL., DEFENDANTS, AND ISAAC BROWN BUILDERS, INC., RESPONDENT.



Hennepin County District Court File No. LN011524

Considered and decided by Anderson, Presiding Judge, Lansing, Judge, and Kalitowski, Judge.

The opinion of the court was delivered by: Lansing, Judge

Affirmed

OPINION

In a mechanic's lien foreclosure action, the district court granted a general contractor's motion to disqualify the adverse subcontractor's attorney. Because the subcontractor's attorney had previously represented the contractor in mechanic's lien actions that are not wholly distinct from this action and because he assisted the contractor in developing procedures and policies that are at issue in this litigation, we affirm the disqualification.

FACTS

Mid-States Building Services, Inc., is a Minnesota corporation engaged in the business of carpentry and building construction services. Weis Builders, Inc., is a Minnesota corporation that acts as a general contractor on commercial construction projects. On January 18, 2000, Weis subcontracted with Mid-States for carpentry and building construction services on the Towneplace apartment and hotel project in Minneapolis. A month later, Weis subcontracted with Mid-States for carpentry and building construction services on the Mainstreet Village senior housing project in Richfield. Although the projects are related, the specific project at issue in this litigation is the Mainstreet project.

By late summer of 2000, substantial problems had developed in the working relationship between Weis and Mid-States. Mid-States contends that Weis failed to pay timely and Weis contends that Mid-States failed to meet the project schedule, refused to complete its work in a workmanlike manner, and abandoned the project in late September. Weis contends that on or about October 16, 2000, it provided Mid-States with a 48-hour notice and demand to complete the remaining work, and that Mid-States refused to comply.

Mid-States filed a mechanic's lien against the property in October 2000 claiming that Weis owed it $337,040 for its work on the project. In February 2001, Mid-States brought this action to foreclose the lien. In its answer, Weis denied that it owed Mid-States any money and, in a counterclaim, alleged damages of over $546,000 for breach of contract, indemnity and contribution, and recoupment and setoff.

In the initial stages of the litigation, Gregory J. Collins and Elizabeth A. Olney Arms represented Mid-States. During discovery Collins and Olney Arms withdrew as counsel for Mid-States. Shortly thereafter, William D. Hull filed a notice of appearance informing the court he had been retained to represent Mid-States. Two weeks later Weis moved to disqualify Hull from representing Mid-States. Weis had previously moved successfully to disqualify Hull from representing Mid-States in the parallel litigation involving the Towneplace apartment and hotel project. That case was assigned to a different Hennepin County judge. Hull contested the disqualification motion and both Weis and Hull submitted affidavits.

At the disqualification hearing and in his affidavit, Hull admitted that he had represented Weis from the mid-to-late 1980's through June 1998; that he or his firm had represented Weis in sixteen separate litigation matters involving disputes with public owners, private owners, subcontractors, and material suppliers; and that he had provided advice on labor relations and general advice on construction issues. In a supplemental affidavit Hull stated that he was the attorney in his firm responsible for Weis's representation; that his representation had ended over a year and a half before the contract between Weis and Mid-States was signed; that he had reviewed his files and found no indication that he had participated in revising and updating Weis's form subcontract agreement; that the subcontract form that he used during his representation of Weis was the Associated General Contractor's standard subcontract agreement; that the documents Weis alleged that he had drafted as a notice to subcontractors essentially incorporated general provisions from the Associated General Contractor's subcontract form; that no 48-hour notice was issued to Mid-States; and that, to the best of his knowledge, Weis did not have internal polices and procedures for dealing with subcontractors in the event of disputes.

Jay Weis, president of Weis, stated in his affidavit that Hull and his firm were Weis's primary litigation counsel from the mid-to-late 1980's through 1998; that during that time Hull assisted in revising and updating the contract that is at issue between Weis and Mid-States; that Hull counseled Weis on many of Weis's internal policies and procedures for handling disputes with subcontractors; that Hull helped develop the 48-hour notice Weis provides to subcontractors that fail to perform; and that Hull represented Weis in matters involving many of the same issues that are in dispute in the litigation between Weis and Mid-States.

The district court granted Weis's motion to disqualify Hull. The court incorporated in its order the memorandum issued by the other Hennepin County judge in the parallel litigation on the Towneplace apartment and hotel project. The memorandum observes that Hull's representation of Mid-States against Weis "would not normally trigger disqualification in a garden variety mechanic's lien case, [but] this case is far from garden variety." The memorandum noted that the allegations in the litigation "will require far more discovery into Weis's business practices and the development of the instant construction contract than would be the case in a typical mechanic's lien case." The memorandum concluded that because Hull may possess confidential information relevant to the litigation, he must be disqualified from representing Mid-States on its adverse claim against Weis.

On appeal, Mid-States argues that (1) the district court applied the wrong legal standard to the disqualification motion and (2) under the correct legal standard, no substantial, relevant relationship exists between Hull's prior representation ...


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