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Vanderbol v. State Farm Mutual Auto Ins. Co.

United States District Court, E.D. Texas, Sherman Division

November 18, 2019

STATE FARM MUTUAL AUTO INS. CO., et al., Defendants.



         Pending before the Court is Plaintiffs John S. Vanderbol III and Erica Quinn's (together, “Plaintiffs”) Motion to Disqualify (the “Motion”) (Dkt. 77). In the Motion, Plaintiffs seek to disqualify attorney Scott Philip Brinkerhoff (“Brinkerhoff”) from representing State Farm Mutual Insurance Company and State Farm Fire and Casualty Company (collectively, the “State Farm Defendants”) and Defendants Michael Tipsord, Jon Charles Farney, Randall Houston Harbert, Paul Joseph Smith, and Stephen Michael Wey (collectively, the “Individual Defendants”) (State Farm Defendants and Individual Defendants collectively “Defendants”), alleging he “actively engaged in patterns of racketeering activity.” See Dkt. 77. Plaintiffs further seek to disqualify attorney W. Neil Rambin (“Rambin”) and the law firm of Drinker Biddle & Reath, LLP (“Drinker Biddle”), from representing the Individual Defendants, as Plaintiffs allege a conflict of interest exists. See id. Defendants State Farm Mutual Automobile Insurance Company, State Farm Fire and Casualty Company, and the Individual Defendants (collectively, “Defendants”) filed a response in opposition (Dkt. 82), and Plaintiffs filed a reply[1] (Dkt. 85). The Court held a hearing during which the Motion was addressed on November 4, 2019 (the “Hearing”). See Dkt. 91. Upon consideration, the Court finds Plaintiffs' Motion (Dkt. 77) is hereby DENIED.

         I. BACKGROUND

         On February 13, 2019, Plaintiff John S. Vanderbol III, acting pro se, filed his Original Complaint (the “Complaint”) (Dkt. 1) against the State Farm Defendants, alleging violations of the Racketeer Influenced and Corrupt Organizations Act, the Hobbs Act, the Clayton Act, the False Claims Act, the Texas Deceptive Trade Practices Act, the Texas Insurance Code, and the Texas Business and Commerce Code.[2]See Dkt. 1. The Complaint arises out of a February 17, 2017, fire loss to Vanderbol's residential property located at 605 Kiowa Drive West, Lake Kiowa, Texas 76240 (the “Property”). See Dkt. 27 at 1. Since initiating this suit, Plaintiffs have filed two amended complaints (Dkts. 15, 39) and-while seeking leave to file a third amended complaint-two “Rule 12.1 Civil RICO Case Statements” (Dkts. 73, 87). In their Second Amended Complaint, Plaintiffs alleged additional claims against the Individual Defendants. See Dkt. 39.

         During the Rule 16 Management Conference on June 12, 2019, the Court admonished Plaintiffs' for their disrespectful communications with Defendants' counsel and reminded both parties that they are expected to be courteous, both to the Court and each other. See Dkt. 30. The Court further warned Plaintiffs against filing documents with the Court containing Defendants' counsels' names and personal attacks in its July 26, 2019, Report and Recommendation regarding Defendants' Motion to Declare Plaintiff a Vexatious Litigant. See Dkt. 47.

         On September 5, 2019, the State Farm Defendants filed the Motion for Sanctions (“Motion for Sanctions”) (Dkt. 67), alleging that Plaintiffs violated Federal Rule of Civil Procedure 11, by filing documents with the Court containing “vexatious personal attacks on Defendants' counsel” and making factual contentions lacking evidentiary support, including allegations that Defendants' counsel engaged in criminal activity. See Dkt. 67. On September 25, 2019, Plaintiffs filed the Motion, which contains additional personal attacks against Defendants' counsel. See Dkt. 77. At the Hearing, the Court addressed the Motion and the Motion for Sanctions, and warned Plaintiffs that unsubstantiated personal attacks against Defendants' counsel would not be tolerated. See Dkt. 91. Plaintiffs agreed to withdraw all derogatory references to Defendants' counsel and/or allegations that Defendants' counsel participated in criminal activity in their case filings, and to refrain from making any such additional filings in this case.[3] See id.


         The Fifth Circuit has “made clear that ‘disqualification cases are governed by state and national ethical standards adopted by the court.'” FDIC v. U.S. Fire Ind. Co., 50 F.3d 1304, 1311- 12 (5th Cir. 1995) (quoting In re Am. Airlines, Inc., 972 F.3d 605, 610 (5th Cir. 1992)). In the Fifth Circuit, when considering disqualification of an attorney, district courts generally rely upon the following: (1) the local rules in the district; (2) the American Bar Association's (“ABA”) Model Rules of Professional Conduct; (3) the ABA's Model Code of Professional Responsibility; and (4) the state rules of conduct. Horaist v. Doctor's Hosp. of Opelousas, 255 F.3d 261, 266 (5th Cir. 2001); Ayus v. Total Renal Care, Inc., 48 F.Supp.2d 714, 714 (S.D. Tex. 1999). The party seeking to disqualify an attorney bears the burden of proving that disqualification is warranted. See Duncan v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 646 F.2d 1020, 1028 (5th Cir. Unit B June 1, 1981). Beyond the various rules and codes identified above, “[a] court should be conscious of its responsibility to preserve a reasonable balance between the need to ensure ethical conduct on the part of lawyers appearing before it and other social interests, which include the litigant's right to freely chosen counsel.” Woods v. Covington Cty. Bank, 537 F.2d 804, 810 (5th Cir. 1976) (citing Emle Indus., Inc. v. Patentex, Inc., 478 F.2d 562, 564-65 (2d Cir. 1973)).

         In the Eastern District of Texas, “the standards of professional conduct adopted as part of the Rules Governing the State Bar of Texas shall serve as a guide governing the obligations and responsibilities of all attorneys appearing in this court.” Local Rule AT-2. In Texas, disqualification is a “severe remedy.” NCNB Tex. Nat'l Bank v. Coker, 765 S.W.2d 398, 399 (Tex. 1989). Motions to disqualify are subject to an exacting standard both to protect a party's right to counsel of choice as well as to discourage the use of such motions as a “dilatory trial tactic.” Id.

         III. ANALYSIS

         Plaintiffs argue that Brinkerhoff should be disqualified from representing any of the Defendants, alleging that he is “a ‘third-party' employee of an enterprise, ” he “actively engaged in ‘patterns of racketeering activity'” and in Defendant State Farm Mutual Automobile Insurance Company's “entity fraud scheme, ” and that he engaged “in acts of organized crime, as defined by Texas statute.” See Dkt. 77 at 1. Plaintiffs further argue that Rambin and Drinker Biddle should be disqualified from representing the Individual Defendants, since Plaintiffs assert their claims are “derivative in nature, ” and thus, there is a conflict of interest between the State Farm Defendants and the Individual Defendants. See id. at 3. Defendants respond that Plaintiffs' allegations against Brinkerhoff are baseless and a violation of Federal Rule of Civil Procedure 11. See Dkt. 82 at 1- 2. Further, Defendants argue Plaintiffs have not asserted any derivative claims, and thus, there is no conflict in all Defendants being represented by the same counsel. See id. at 1.

         The Court has evaluated the substance of Plaintiffs' allegations, rather than the form. In its findings herein, the Court has been mindful that pro se pleadings are entitled to a liberal construction that includes all reasonable inferences which can be drawn from them. See Haines v. Kerner, 404 U.S. 519, 521 (1972); Tasso v. Onemain Fin., Inc., No. 4:15-cv-484, 2016 WL 410024, at *1 (E.D. Tex. Feb. 3, 2016).


         Plaintiffs allege Defendants used Brinkerhoff in “the execution of the ‘enterprises' fraud schemes” and racketeering activities, and thus Brinkerhoff should be disqualified. See Dkt. 77 at 4. Defendants argue that Plaintiffs have not identified a single instance when Brinkerhoff's actions were ...

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