Opinion No. 120
from the District Court of the First Judicial District of the
State of Idaho, Kootenai County. Hon. John T. Mitchell,
orders of the district court are affirmed.
Law, PLLC, Post Falls, for appellant. Jonathan Frantz argued.
Hamblen, LLP, Spokane, Washington, for respondent. John C.
JONES, Chief Justice
for appellant Martin Frantz ("Frantz") hired
attorney Merlyn Clark as an expert witness in an unrelated
matter in 2009. Clark was and is a partner with respondent
law firm Hawley Troxell Ennis & Hawley LLP ("Hawley
Troxell"). In 2010, Frantz' creditor, Idaho
Independent Bank ("Bank"), hired Hawley Troxell to
represent it in a contract action against Frantz. In 2011,
while that matter was pending, Frantz filed for bankruptcy.
Hawley Troxell continued to represent the Bank as a creditor
in the bankruptcy, including in an adversary proceeding the
Bank filed against Frantz in 2013.
alleged in the adversary proceeding that Clark's
interactions with Frantz in the 2009 matter created an
attorney-client relationship and that it was therefore a
conflict of interest for Clark's firm to represent the
Bank against Frantz. Frantz also alleged that Hawley Troxell
improperly used confidential information Clark acquired in
the 2009 matter. The bankruptcy court concluded that there
was no attorney-client relationship between Clark (or Hawley
Troxell) and Frantz. The adversary proceeding was later
dismissed as moot.
subsequently brought the instant case against Hawley Troxell
in Idaho district court, alleging legal malpractice and
breach of fiduciary duty. The district court denied pro hac
vice admission to attorney Jeffrey Katz, Frantz' chosen
counsel. The district court also dismissed the complaint on
the grounds of judicial estoppel, lack of standing, and
abatement. Finally, it awarded Hawley Troxell attorney fees
under Idaho Code sections 12-120(3) and 12-121. Frantz
appealed the denial of pro hac vice admission, the dismissal
of his complaint, and the award of attorney fees. By
stipulation, the Court subsequently dismissed the appeal as
to the award of attorney fees.
AND PROCEDURAL BACKGROUND
2008, Frantz hired Bruce Owens and Regina McCrea of Owens
& Crandall, PLLC, to represent him in an unrelated legal
malpractice action against the firm of Witherspoon,
Kelley.Clark was retained as an expert witness in
the case in 2009. Frantz alleged that Clark's role was
"to provide consultation and expert testimony." He
further alleged that "Clark reviewed the record in the
fraud case, which included documents regarding financial
information for Mr. Frantz' business entity . . . . Clark
prepared a 21-page preliminary report . . . . Clark also
provided oral advice on the matter." Additionally,
Frantz asserted that "Frantz paid Hawley Troxell's
bill for Clark's services in the case, which included
reviewing documents, preparing the report, and providing
advice." The 2009 malpractice claim settled without
Clark issuing a final written report, being deposed, or
testifying. Frantz argues in this appeal that because Clark
"consulted on areas of the case outside of [his] expert
testimony, " his "role morphed from that of a
testifying expert to that of consulting expert thereby
forming an attorney-client relationship with Mr.
2010, the Bank retained Hawley Troxell to sue Frantz for his
failure to pay off a loan that had matured. Clark did not
participate in that action. In 2011, while that action was
pending, Frantz petitioned for bankruptcy. Hawley Troxell
continued to represent the Bank in Frantz' bankruptcy
case. The bank filed a claim for $6, 400, 000 against
Frantz' bankruptcy estate. In 2013, the Bank filed an
adversary proceeding against Frantz in the bankruptcy,
alleging that Frantz had fraudulently represented the value
of his assets, including the assets at issue in the case in
which Clark had served as an expert witness.
adversary proceeding, Frantz moved to disqualify Hawley
Troxell from representing the Bank, alleging that Frantz was
a former client of the firm and that the firm possessed
confidential information based on its prior representation of
Frantz. Frantz hired Jefferey Katz, an Illinois attorney, as
an expert witness in the disqualification hearing, but the
bankruptcy court did not allow expert testimony at the
hearing. Frantz also hired Katz to represent him "in any
future litigation" charging Hawley Troxell with
malpractice related to the alleged prior representation.
December 2014, U.S. Bankruptcy Judge Terry Myers denied the
motion to disqualify Hawley Troxell, finding and concluding
that Clark's "role in the malpractice litigation was
solely that of a testifying expert witness" and that no
attorney-client relationship was formed. In May 2015, Frantz
sought, and the bankruptcy court granted, a waiver of
discharge as to all creditors and debts, including the Bank
and its loan. This apparently mooted the adversary
proceeding. However, the record on appeal does not include a
final judgment from either the adversary proceeding or the
broader bankruptcy case.
by Katz, Frantz filed the instant malpractice case against
Hawley Troxell in February 2015. The next month, Katz
directly contacted Mr. Jack Gustavel, the Bank's CEO,
regarding this malpractice case. Gustavel did not respond to
Katz' email. Frantz also contacted Gustavel, describing a
proposal to end the suit the Bank had filed against him in
2010. It appears that Frantz and Katz wanted the Bank to join
Frantz' malpractice case against Hawley Troxell as a
co-plaintiff. Any settlement proceeds would be paid first to
the Bank in the amount necessary to extinguish Frantz'
debt to the Bank and the rest would go to Frantz. The Bank
did not accept Frantz' offer.
April 2015, Frantz moved for pro hac vice admission of Katz.
Hawley Troxell opposed the motion, arguing that Katz had
violated Idaho Rule of Professional Conduct
("I.R.P.C.") 4.2 by making unauthorized contact
with the Bank, a party represented by Hawley
Troxell. The opposition was based on the idea that
a foreign attorney who either does not know ...