|IN THE SUPREME COURT|
|STATE OF NORTH DAKOTA|
|Continental Resources, Inc.,|
The Honorable Allan Schmalenberger, Judge of the Bowman County District Court, Southwest Judicial District; McKennett Stenehjem Reierson Forsberg Hermanson, P.C.; Kent Reierson, Individually; James H. Bragg; J. Michael Gleason, d/b/a Gleason Land Co.; and Julie K. McKinley a/k/a Julie K. King,
|Supreme Court No. 20020179|
|RESPONDENTS' BRIEF IN OPPOSITION TO PETITION|
|FOR WRIT OF||MANDAMUS OR SUPERVISORY ORDER|
|Kent Reierson, N.D. Bar ID #03685|
|McKennett Stenehjem Reierson|
|Forsberg & Hermanson, P.C.|
|314 1st Avenue East|
|P.O. Box 1366|
|Williston, North Dakota 58802-1366|
|(701) 577-6771 voice|
|(701) 577-2163 fax|
|ATTORNEYS FOR RESPONDENTS:|
|McKennett Stenehjem Reierson Forsberg & Hermanson, P.C.|
|Kent Reierson, Individually|
|James H. Bragg|
|J. Michael Gleason d/b/a Gleason Land Co.|
|Julie K. McKinley a/k/a Julie K. King|
TABLE OF CONTENTS
Table of Cases, Statutes and Authorities ii
Statement of Grounds for Denying Jurisdiction 1
Statement of Issues Presented 3
Statement of the Case 3
Statement of the Facts 4
Law and Argument 12
Certificate of Service 21
TABLE OF CASES, STATUTES AND OTHER AUTHORITIES
N.D. Cent. Code §32-34-01 1
N.D. Cent. Code §32-34-01.1 1
Rule 1.7 N.D.R.Prof.Conduct 16
Rule 1.9 N.D.R.Prof.Conduct. 9, 12, 13
Allen v. White Drug of Minot,
346 N.W.2d 279, 289 (N.D. 1984) 1
Central Power Electric Cooperative, Inc. v. C-K, Inc.,
512 N.W.2d 711, 715 (N.D. 1994) 2
Clooten v. Clooten,
520 N.W.2d 843, 847 (N.D. 1994) 14
Gottbreht v. State,
1999 ND 159, 598 N.W.2d 794, 798 (N.D. 1999) 1
Heringer v. Haskell,
536 N.W.2d 362 (N.D. 1995) 2, 13, 16, 17
Miller, et al. v. Kloeckner, et al.,
1999 ND 190, 600 N.W.2d 881 (N.D. 1999) 8
Mogaard v. City of Garrison,
182 N.W.2d 758, 761 (N.D. 1921) 1
Sargent County Bank v. Wentworth,
500 N.W.2d 862, 871 (N.D. 1993) 1
STATEMENT OF GROUNDS FOR DENYING JURISDICTION
A. WRIT OF MANDAMUS IS IMPROPER, AS THE COURT HAS ACTED.
The writ of mandamus may be issued by the Supreme Court. N.D. Cent. Code §32-34-01. A writ of mandamus is for the purpose of compelling the performance of an act which the law specifically requires as a duty resulting from the office held. N.D. Cent. Code §32-34-01. The Supreme Court may issue a writ of mandamus to a District Court judge to compel the judge to act upon any judicial matters which have been properly placed before the judge's court. §32-34-01.1 N.D.C.C. The party seeking the writ has the burden of demonstrating a clear, legal right to performance of the act sought to be compelled by the writ. Gottbreht v. State, 1999 ND 159, 598 N.W.2d 794, 798 (N.D. 1999). Mandamus is used to compel the act but does not direct how or in whose favor the act must be done. Id. Mandamus is not available to compel performance of a discretionary act. Id. Mandamus is the appropriate remedy to have a court act but it does not control its actions or direct how that action or discretion shall be exercised. Mogaard v. City of Garrison, 182 N.W.2d 758, 761 (N.D. 1921). In this matter, the District Court has ruled on the issue presented; thus, there are no grounds for issuing a writ of mandamus.
B. A SUPERVISORY ORDER IS NOT REQUIRED, AS THERE IS NO NEED FOR ACTION TO PREVENT HARM.
An order disqualifying counsel is ultimately appealable. Allen v. White Drug of Minot, 346 N.W.2d 279, 289 (N.D. 1989); Sargent County Bank v. Wentworth, 500 N.W.2d 862, 871 (N.D. 1993). Supervisory jurisdiction is a matter of discretion and is rarely and cautiously exercised. Central Power Electric Cooperative, Inc. v. C-K, Inc., 512 N.W.2d 711, 715 (N.D. 1994). "Our superintending control over inferior courts is used to prevent injustice in extraordinary cases where no other remedy is adequate or allowed by law." Id. In the case of Heringer v. Haskell, 536 N.W.2d 362 (N.D. 1995), this Court determined that it was appropriate to issue a supervisory writ. This Court stated, "If the case is allowed to proceed to judgment before presentation of the issue, any divulgence of confidential client information and theories will have occurred, and it will be impossible to return the parties to the status quo." Heringer, supra, 536 N.W.2d at 365, ¶4.
In this case, Continental Resources, the Petitioner, has alleged that Attorney Kent Reierson and the McKennett Law Firm have already breached an obligation and conveyed confidential information to the Respondents Bragg, Gleason and McKinley, allowing them to purchase interests in the same area where Continental (as well as many other companies and individuals) have purchased interests. Hence, under Continental's allegations, the harm has already occurred and there is no future harm which would result. On that basis, the supervisory authority of this Court does not need to be exercised to prevent any harm. It should be noted it is strenuously denied that any information was transferred from Reierson to the Respondents. Furthermore, divulging who owns minerals in a specific area is rather useless, as the ownership is reflected in the public records of the Register of Deed's Office. For purposes of a supervisory writ, Continental Resources cannot show any extraordinary circumstances nor harm which will be prevented by this Court exercising its supervisory writ authority.
STATEMENT OF ISSUES PRESENTED
Kent Reierson and his law firm should not be disqualified from representing the Respondents Bragg, Gleason and McKinley, as the title work Reierson did on one property, the Wallman Well in Section 32-130-104, Bowman County, North Dakota, is not the same or substantially related to his defense of Continental's allegations against Bragg, Gleason and McKinley that they improperly utilized confidential information to take mineral interests in Bowman County. Furthermore, Reierson's representation in doing title work for Continental in one section in which Bragg, Gleason and McKinley happened to have taken an interest before ever retaining or knowing Reierson is not materially adverse to Continental's present position, as the state of the title is not in dispute.
STATEMENT OF THE CASE
The case currently pending before the District Court involves a failure of Continental Resources to pay royalty properly owed the Plaintiffs James H. Bragg and J. Michael Gleason and the Third-Party Defendant Julie K. McKinley revenue that they are owed for production from their mineral interests in Bowman County. The case also involves a counterclaim by Continental Resources alleging that Bragg, Gleason and McKinley improperly bought mineral interests in Bowman County. These allegations are being made even though Bragg, Gleason and McKinley followed usual landman procedures and waited one year after their employment ended to take any interests in areas they had worked for Diamond Resources (the land company doing Continental Resources' work in Bowman County), and did not use any confidential information but rather utilized information from the public records. Basically, Continental seeks to bar a landman who has worked in a project for them, from conducting his trade anywhere in the same county in which Continental buys a mineral interest. This is asserted even though they were never employed by Continental and there was no contract or designation that any confidential information was begin given them.
STATEMENT OF THE FACTS
Continental Resources began doing land work in preparation for drilling oil and gas wells in late 1993 and 1994 in the Bowman County area. (See sealed records, Petitioner's Appendix, p. 159. See page 50, 30(b)(6) Deposition of Continental Resources, Tom Luttrell testifying on behalf of Continental, attached as Exhibit "E" to the Affidavit of Kent Reierson.) Diamond Resources, Inc. was retained by Continental Resources to do much of this title work. (See sealed records, 30(b)(6) Deposition of Continental, p. 61, lines 17-24, as Exhibit "E" to Reierson Affidavit.)
On March 23, 1995, Kent Reierson was contacted by Tod Maleckar, an officer of Diamond Resources, Inc., concerning doing some title work for Continental Resources (see sealed records, Affidavit of Kent Reierson) Reierson worked on three matters for Continental/Diamond. (Note: The following facts are also from the sealed Affidavit of Kent Reierson). Reierson spoke with Drake Smiley from Continental Resources on March 23, 1995, and was sent a fax showing a listing of revenue interests as of March 23, 1995. Reierson was requested to try to confirm the working interest and net revenue interest that Continental Resources would receive under these wells if it completed the purchase from Baloco Petroleum Corporation, which owned the properties.
The closing was going to be attempted on Wednesday, March 29, 1995. Subsequently, the closing was reset for Friday, March 31, 1995. During that time frame, Reierson was provided with additional information from Diamond Resources and Continental Resources concerning the ownership of the working interest and net revenue interest in the well. He was also provided a copy of an ownership report from Koch Oil. (See sealed records, the information provided is attached to the Affidavit of Kent Reierson as Exhibits #A1 - A9.) Based on this information, Reierson provided letters basically confirming that the working interest represented to be owned by Baloco was, in fact, supported by ownership reports from Koch. (See sealed records, the six opinion letters and supplemental letter attached to the Affidavit of Kent Reierson as Exhibits #B1 - B7.) The title records, except for some copies of materials, were picked up from Reierson by Diamond Resources on April 3, 1995 (see sealed records, Exhibit "C" to Affidavit of Kent Reierson).
On April 12, 1995, Reierson was contacted by Diamond Resources concerning the distribution of a mineral interest through intestate succession and whether North Dakota or Oklahoma law would apply. He was given no description of the tracts, nor names of any parties involved. The billing was sent to Continental Resources, Inc.
In July 1995, Reierson was contacted to begin preparing a drilling title opinion on Section 32-130-104, Bowman County, North Dakota. This property contained the existing Wallman #1-32 well. On November 17, 1995, he conveyed the approximate net revenue interests under the well and draft opinions to Continental. In late 1995, the Section 32-130-104 project was put on hold by Continental. On February 29, 1996, Reierson sent a letter to Continental stating he would hold the title opinion for further instructions and received no response. On August 5, 1996, Reierson sent a closing letter to Continental stating that he had held the matter and had no response and, therefore, closed the file. No final drilling title opinion was ever completed by Reierson or the McKennett Law Firm on Section 32-130-104. In fact, no new well was drilled on Section 32-130-104. The only well on that property was the Wallman #1-32 which was apparently purchased by Continental from Baloco Petroleum. However, neither Reierson nor the McKennett Law Firm had any other contact concerning the purchase of the wells from Baloco, nor with the title for the Wallman property. Reierson was contacted by Diamond Resources on December 5, 1996, concerning the status and he sent Diamond Resources the drafts for the title opinions and told them that he had completed the work over a year ago and had never received a request for any follow-up, even though he had contacted Continental several times. On August 14, 1998, Diamond Resources picked up the boxes of title records that had been provided to Reierson.
In August of 1997, Reierson was contacted by James Bragg concerning an Oil and Gas Lease he had taken from Larry White. This Oil and Gas Lease covers property which was not the subject of any work completed by Kent Reierson or the McKennett Law Firm for Continental. On January 20, 1998, a motion was made on behalf of Bragg and Gleason to intervene in an action between the two parties claiming ownership of the minerals. At that time, Continental had provided a division order title opinion to Bragg and Gleason stating that if the White mineral title were resolved, it believed the lease to the Plaintiffs, James Bragg and Michael Gleason, had priority over its (Continental's) White lease. The division order title opinion and payment letter stated Bragg and Gleason simply needed to have the title cleared and the leases ratified by the Contract for Deed owner. A final judgment was entered in the White matter on March 19, 1999, determining that Larry White was the owner of the property. A partial judgment was entered June 9, 1998, determining that the Oil and Gas Lease from White to James Bragg and the Assignment from James Bragg to Michael Gleason covering the White properties in Sections 23 and 24 of 131-105, Bowman County, were free and clear of any lien, security interest or mortgage claimed by Defendant Robert C. Thom, the other party claiming a mineral ownership.
James H. Bragg and J. Michael Gleason made demand upon Continental Resources for payment after completing the requirements as set forth in the division order title opinion they received from Continental. Incredibly, Continental, at this point, refused to recognize the Oil and Gas Lease from White to James H. Bragg and instead claimed that it had a priority lease. (See the Summons, Complaint and Answer in this initial action by James H. Bragg and J. Michael Gleason against Continental Resources, Petitioner's Appendix, p. 30.) The action involving the White lease was begun by Reierson with service upon Continental Resources' Registered Agent on August 5, 1999.
Neither Reierson or the McKennett Law Firm had done any work for Continental Resources concerning the property covered by the Larry White leases or involved in the initial action by James Bragg and Mike Gleason against Continental to confirm their interest in the White leases. That action involved a title dispute between White and Thom, the two claiming ownership of the minerals.
There was also an action in which Michael Gleason and James Bragg were represented by Al Hardy involving the Kloeckner leases. That case made it to the Supreme Court and is Miller, et al. v. Kloeckner, et al., 1999 ND 190, 600 N.W.2d 881 (N.D. 1999). Again, under the Kloeckner leases, neither Kent Reierson or the McKennett Law Firm had done any work for Continental Resources at any time.
On May 17, 2001, the Defendant's Motion to Amend its Answer was granted allowing it to assert a counterclaim against the Plaintiffs asserting a breach of a fiduciary obligation, amongst other claims, and alleged that Continental was entitled to any mineral interests owned by the Plaintiffs in Bowman and Slope Counties, North Dakota. These properties are listed in Continental's Amended and Consolidated Answer and Counterclaim. Subsequently, Continental sought amendment to bring a Third Party Complaint against Third-Party Defendant Julie K. McKinley. In Continental's Amended and Consolidated Answer and Counterclaim was a listing of property disclosed by Mike Gleason in his deposition in the Kloeckner action in which Gleason and the Kloeckner plaintiffs were represented by Al Hardy. Neither Kent Reierson or the McKennett Law Firm had anything to do with the Kloeckner action until the matter was consolidated. At that time, the only information concerning the Wallman property was on page 12 of the Defendant's Counterclaim showing that Gleason, Bragg and McKinley owned an interest in Township 130, Range 104, Section 32. That is the property containing the Wallman well for which Kent Reierson and the McKennett Law Firm did the preliminary title work in 1995.
Reierson did not know Bragg and Gleason owned an interest in the Wallman well when he continued on as counsel for Bragg and Gleason after Hardy withdrew upon the completion of the majority of the Kloeckner action with only the counterclaim remaining. It was not until Kent Reierson obtained a list of wells from Mike Gleason on March 12, 2002, that he realized that Bragg, Gleason and McKinley owned an interest in the Wallman #1-32 located upon Section 32-130-104. It was at that time that Kent Reierson again checked the work that had been done for Continental and discovered that the Wallman #1-32 in which the Plaintiffs and Third-Party Defendant owned an interest was the same well upon which the quick check had been done and the drilling title opinion started in 1995. It was at that time that the matter was discussed with the other partners in the law firm concerning any conflict of interest with Continental. The discussion centered on the conflict of interest contained in Rule 1.9 of the North Dakota Rules of Professional Conduct. That rule states:
"A lawyer who has formerly represented a client in a matter shall not thereafter:
Represent another person in the same matter in which that person's interests are materially adverse to the interests of the former client; or
Represent another person in a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client consents after consultation; or
Use information relating to the representation to the disadvantage of the former client in the same or a substantially related matter except as Rule 1.6 would require or permit with respect to a client."
After reviewing the matter, it was determined by the law firm that having done title work in 1995 concerning the Wallman #1-32 was not the "same matter" nor "substantially related matter" to the allegations of a breach of a fiduciary obligation by Bragg, Gleason and McKinley as being alleged by Continental Resources. Furthermore, it was determined that the interest in which Reierson did the title work was not materially adverse to the defense of Continental's counterclaim against Bragg and Gleason. In addition, it was not material, as the Wallman #1-32 interest owned by Bragg, McKinley and Gleason was a very small, almost insignificant, interest compared to the claims being made in this litigation.
That almost insignificant interest in this total litigation is shown by Exhibit #1 attached to Kent Reierson Affidavit in Opposition to Petition for Supervisory Writ, showing the producing properties involved in this action and their respective revenues. Total revenues from the producing properties involved in this action total $583,387.55 according to Continental (see Page 2 of 2 of Exhibit "1"). This is exclusive of non-producing ownership interests. The Wallman revenue interest totals $26 compared to a half million dollars involved in the entire action. Hence, upon further review after Continental's demand that the law firm withdraw, it was again determined that the title work completed for Continental by Kent Reierson and the McKennett Law Firm in 1995 was not the same matter nor substantially related to Continental's allegations that Bragg, Gleason and McKinley breached a fiduciary obligation in purchasing, in 1997, a small mineral interest which just happened to be under the Wallman well.
The interests owned by Bragg, Gleason and McKinley were purchased before this litigation ever started and before Reierson and the McKennett Law Firm were contacted by the Plaintiffs to be represented. There is no dispute concerning the title owned of record by Bragg, Gleason and McKinley. The only dispute arises from Continental's claim of constructive ownership arising from its counterclaim allegations.
As the Court can see from the pleadings in this matter, this case has involved contentious litigation with innuendo and personal attacks. An example is set forth on page 21 of Continental's Brief. It states, "To presumably reconcile the conflict, Reierson's Firm filed its own Motion to Resolve Conflict of Interest with the Court." When, in actuality, what truly happened was, in a letter to Bender, Reierson told Bender that he, in fact, did not want to do anything unethical or improper and therefore was going to bring the matter to the Court. That letter was dated April 15, 2002, and faxed that same day. Yet Continental rushed to file their Motion to Disqualify. Now, in its Brief, Continental tries to make it appear that the Motion to Resolve Conflict of Interest which Reierson filed with the Court was an attempt to reconcile the conflict. In actuality, that Motion was an attempt to have the Court address the issue so that if the District Court determined that there was a conflict, the issue would be resolved, and Reierson would be removed from the case. However, desiring to put its own spin on everything, Continental ignored that proposal and took its usual aggressive route in making a Motion to Disqualify Counsel rather than simply participate in asking the District Court to resolve the conflict issue so that counsel could abide by that determination. (See Reierson letter, p. 136, Petitioner's Appendix.)
In addition, on page 22, Continental states that, "Only after extensive negotiations did Reierson's Firm finally agree to the entry of an order by the District Court placing under seal the part of Continental's confidential file Reierson's Firm filed with the District Court without Continental's permission." In actuality, Continental was seeking to force Reierson and the Firm to completely surrender the files, even though they had been made available to Bender and Continental, which would have deprived Reierson and the Firm the ability to defend themselves against Continental's often slanderous allegations. Although Continental protests that there was confidential, proprietary information in the file, the fact of the matter is, all of that information was over six years old and most, if not all, was a matter of public record in the very same Bowman County Courthouse in the Register of Deed's office.
Continental also contends, "Reierson's Firm even went so far as to hold the file 'hostage' in an attempt to extort a release from Continental." As set forth in Reierson's letter of April 15, 2002 (p. 136 of Petitioner's Appendix), the files were always available to Continental and its attorneys. Reierson had, in fact, asked the Court for direction on what to do with those files. (See Respondent's Appendix, p. 29.) Continental was demanding no copies of the files be retained by Reierson and the Firm which were necessary to protect themselves from Continental's allegations. As set out in the transcript at page 38, it is clear that the files were made available to Bender and Continental and, in fact, a copy was made for Mr. Bender. It is the same type of misleading allegations and innuendo upon which Continental bases its claims in the lawsuit and is basing its claims in this Motion to Disqualify Counsel. The District Court has had the opportunity to view these allegations and found that they were not well grounded and denied Continental's Motion to Disqualify Reierson. (See Court Order denying Motion to Disqualify, Petitioner's Appendix, p. 125.)
LAW AND ARGUMENT
Rule 1.9 of the North Dakota Rules of Professional Conduct prohibits an attorney from representing a client in a matter against a former client in a substantially related matter or the same matter in which that person's interests in the related matter are materially adverse to the interests of the former client. Rule 1.9 N.D.R.Prof.Conduct (emphasis added). Determination as to whether or not an attorney has a conflict requiring them to either withdraw or to be disqualified is a matter which may be decided by the trial court. See Heringer v. Haskell, 536 N.W.2d 362 (N.D. 1995). There are no North Dakota cases concerning how Rule 1.9 of the North Dakota Rules of Professional Conduct is supposed to be applied. However, in the Heringer v. Haskell case, supra, 163 N.W.2d 362, this Court utilized a procedure under Rule 1.10, Imputed Disqualification, in which a lawyer in a firm sought to represent an adverse party when a partner in the firm had previously represented the other party in exactly the same case and claim. In the Heringer case, supra, this Court found that disqualification under Rule 1.10(c) required a three step analysis. (1) Are the new client's interests materially adverse to the old client's interests? (2) Is the matter the same or substantially related to the prior representation? (3) Does any lawyer remaining in the firm have material information? In this case, #3 is not relevant. In the Heringer case, it was conceded that the first two requirements, namely materially adverse and substantially related, were present. Heringer, supra, 536 N.W.2d at 365.
In the present case before the Court, the issue under Rule 1.9(a) or (b) is whether or not it is the same or a substantially related matter and whether the current client's interests, if it is a substantially related matter, are materially adverse to the interests of the former client.
In addressing Rule 1.9 of the North Dakota Rules of Professional Conduct, this Court considered the extent of the attorney's prior representation of the former client. See Clooten v. Clooten, 520 N.W.2d 843, 847 (N.D. 1994). In this case, Reierson and the law firm's prior representation of Continental Resources was concerning what amount of interest Continental Resources would receive in a purchase from a party unrelated to the present action. This occurred in mid-1995, four years before any action involving the present parties. In addition, as the Court can see from the sealed Affidavit and attachments, the matter never involved any breach of a fiduciary obligation by a party. Furthermore, the prior work did not involve the interest of the Plaintiffs or Third-Party Defendant. Reierson's work for Continental was so insignificant that the very person Reierson worked with, Continental's Land Manager, Tom Luttrell, did not remember Reierson had done any work for Continental.
Two years after Continental purchased the Wallman Well property and 18 months after the termination of the attorney/client relationship between Reierson and Continental Resources, the Plaintiffs and Third-Party Defendant obtained an interest in the Wallman #1-32 Well located on Section 32-130-104. There is no relationship between the prior work conducted by Reierson and McKennett Law Firm and the Plaintiffs' purchase of the interest under the Wallman Well. The only connection is that Continental claims that it is entitled to the equitable interest the Third-Party Defendant and Plaintiffs own under the Wallman Well, alleging a breach of a fiduciary obligation and use of confidential information in obtaining that interest. Thus, the work that Reierson and McKennett Law Firm previously did for Continental Resources is not even remotely related to the basis of the litigation between the Plaintiffs and Third-Party Defendant and Continental Resources.
Continental asserts Reierson may have given some information to Bragg, Gleason and McKinley on the Wallman Well. Continental cites no evidence or facts. The facts actually show that Bragg, Gleason and McKinley bought a small undivided mineral interest in Section 32 and eight other sections on May 27, 1997, before they even retained Reierson to represent them in intervening in the White ownership dispute.
This leaves, as the only substantially related or materially adverse issue, Continental's groundless allegation that Reierson provided confidential information to the Plaintiffs in order to allow them to purchase the minerals, which ownership is still not adverse to Continental's working interest ownership in the properties. Reierson agrees that providing confidential information, obtained from Continental, to the Plaintiffs would be improper and a breach of ethics in several respects. Regardless of the lack of any adverse interest, the following facts show that Reierson did not disclose any information to the Plaintiffs. Continental's "logic" would bar Reierson from representing any landman or company who might be interested in purchasing a mineral interest in Bowman County.
Reierson and his firm did not even know James Bragg, Julie McKinley or Mike Gleason prior to the first contact with James Bragg on May 8, 1997. (See Affidavit of Kent Reierson, Petitioner's Appendix, p. 144.) The first contact had to do with property owned by Mr. Bragg which was going to be drilled. He had not been contacted concerning participation in the well and was concerned about his interest.
Even after this litigation commenced, Reierson and Bragg, Gleason, and McKinley never discussed any ownership interest in the Wallman Well property until March 2002 when a list of wells, in which the Plaintiffs owned an interest, was provided to Reierson. (See Affidavit of Kent Reierson, Petitioner's Appendix, p. 145). The only prior reference to the Wallman property was in the disclosure to Continental by Mike Gleason that the Plaintiffs owned an interest in Section 32-130-104 but did not refer to the "Wallman Well".
The only discussion concerning the fact that Reierson had worked for Continental was when the Wallman Well was provided by Gleason on a list of wells. Reierson advised the Plaintiffs and Third-Party Defendant that Reierson had previously done work for Continental. No other information was shared with the Plaintiffs or Third-Party Defendant. (See Affidavits of Kent Reierson, sealed affidavit and Petitioner's Appendix, pp. 144-145, and Gleason Affidavit.)
Even if the matter had been substantially related, Continental fails on the second prong that the interest is materially adverse. The total revenue from the producing properties Continental owes Bragg, Gleason and McKinley in this action is over half a million dollars. The revenues attributable to the Wallman well are $26. The Wallman property is, at best, a minuscule part of the conflict between Continental Resources and the Plaintiffs and Third-Party Defendant. This is simply an attempt by Continental Resources to increase harassment and expense of litigation for the Plaintiffs and Third-Party Defendant. When an opposing party alleges conflict, that allegation should be viewed with caution, however, for it can be misused as a technique of harassment. (See comment to Rule 1.7 of the North Dakota Rules of Professional Conduct.)
In Heringer v. Haskell, supra, 536 N.W.2d 362, this Court required the District Court to consider the appearance of impropriety. Although that standard has been abandoned by the Rules of Professional Conduct, this Court believed it is still a principal which requires consideration. Heringer, supra, 536 at 367. In that case, this Court stated, "From our prospective, however, we believe that 'person on the street' would view a law firm 'switching sides' in the middle of a dispute to be highly objectionable.". Heringer, supra. In Heringer, the representation was on exactly the same matter. In this case, Reierson and the McKennett Law Firm did not represent Continental in one side of this litigation and then switch sides. Rather, Reierson and the McKennett Law Firm had completed some title work regarding the property two years before the Plaintiffs and Third-Party Defendant obtained any interest in the property. The work Reierson and the Law Firm did for Continental had nor has anything to do with the claim by Continental that the Plaintiffs and Third-Party Defendant are required to convey that interest under the Wallman Well to Continental pursuant to Continental's allegations that the Plaintiffs and Third-Party Defendant obtained it improperly. There simply is no title dispute.
The manner in which this alleged conflict came about also needs to be considered in looking at the appearance of impropriety. Reierson and the Law Firm represented Continental in 1995. Its last active representation of Continental was in December of 1995. The Law Firm closed any files concerning the matter on August 5, 1996, and ended its representation of Continental. (See sealed records, Exhibit D3 attached to the Affidavit of Kent Reierson.) In 1998, Reierson and the Law Firm undertook representation of James Bragg and Mike Gleason concerning the White leases and intervened in an action between the two parties claiming the minerals. Continental was not a party to that litigation and, from Continental's prior division order title opinion, appeared to concede that Bragg and Gleason owned the interest in the White lease. (Gleason Affidavit in Support of Motion to Amend, Respondent's Appendix, pgs. 6-9.)
It was only after the White mineral interest was quieted in Mr. White that it became apparent that Continental was still not going to recognize Gleason and Bragg's interest. Hence, Gleason and Bragg brought an action against Continental in 1999 to have their interest in the White lease quieted. It was then that Continental counterclaimed, alleging Bragg and Gleason breached a fiduciary obligation to Continental. Even at that point, it was not until 2001 when the Kloeckner case and the White case were consolidated and Continental was allowed to amend its Answer and bring a third-party action against Julie McKinley, that the small Wallman Well interest even entered into the litigation.
In this case, the two main issues in contention are (1) which lease on the White mineral interest is the valid lease and (2) whether the Plaintiffs used confidential or proprietary information to take mineral interests to the detriment of Continental. There is no dispute as to ownership in the Wallman property, it is just a matter of Continental believing it has a constructive ownership because of its allegations. The question that needs to be answered is: Of what use is the title completed by Reierson when there is no title dispute? Continental seems to want this Court to ignore the Rules of Professional Conduct and simply find that because Reierson had previously represented Continental in 1995, that he is automatically prohibited from representing clients against Continental four years later.
Continental also frivolously alleges to this Court that Reierson is a necessary witness. Its allegation is libelous in that it is trying to represent to this Court that there is an issue as to whether or not Reierson provided information to the Plaintiffs or Third-Party Defendant concerning title. As the Affidavits of Reierson and Gleason show, there was never any information concerning title which was shared with the Plaintiffs or Third-Party Defendant. The law requires Continental to have some basis for its allegation, not mere speculation. There are other witnesses concerning this issue, Bragg, Gleason and McKinley. Continental does not have any support for its allegation and, hence, the matter cannot be considered legally disputed, unless baseless accusations can "create" a factual dispute. In his Affidavit, Gleason confirms he did not receive any ownership reports from Reierson. Gleason confirms he only received title information from Diamond Resources or as a result of his review of public records.
Neither Continental nor Bender can provide this Court with one shred of evidence that Reierson shared any information concerning title work with Bragg, Gleason or McKinley. In the absence of providing at least some prima facie evidence that would make the issue relevant, it can hardly be said that Reierson is a necessary witness.
Continental makes a leap in logic from the fact that Reierson had done title work to facilitate a purchase of a working interest and for the purposes of drilling a well (which was never drilled and which opinion was never completed at Continental's request) and the fact that the Plaintiffs bought minerals in the same area to conclude there is a conflict. In this case, under step one of the analysis, the issues before the Court are neither the same nor substantially related.
At this late stage in the litigation, it is apparent that Continental is attempting to harass and further burden the Plaintiffs and Third-Party Defendant. Not only have they deprived them of revenues by withholding all money from the properties based simply upon Continental's whim, but they are also now attempting to remove counsel for the Plaintiffs and Third-Party Defendant. This will increase the costs of litigation, delay the matter further, and result in unnecessary expenses.
Kent Reierson and the McKennett Law Firm, however, obviously have no desire to breach the North Dakota Rules of Professional Conduct. They have carefully reviewed the matter and do not believe they have violated any of the North Dakota Rules of Professional Conduct. After careful review, it was not believed that the work completed in 1995 by Reierson was substantially related, nor was it the same matter presently before the Court in this litigation. In addition, the interest involved under the Wallman well is de minimis and can hardly be considered material to the litigation between these parties. The District Court is in the best position to judge the real issues in dispute. The District Court determined that Reierson's representation of Continental in title work was not substantially related to the issues being litigated. Therefore, the Respondents respectfully request this Court to deny the Petition for a Supervisory Writ.
Dated this _ day of August, 2002.
|McKENNETT STENEHJEM REIERSON FORSBERG & HERMANSON, P.C.|
|Attorneys for the Respondents|
|314 First Avenue East|
|P.O. Box 1366|
|Williston, North Dakota 58802-1366|
|KENT REIERSON, #03685|
|A Member of the Firm|
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of (1) Brief in Opposition to Petition For Writ of Mandamus or Supervisory Writ, (2) Affidavit of J. Michael Gleason, and (3) Affidavit of Kent Reierson in Opposition to Petition for Supervisory Writ were on the _ day of August, 2002, mailed to the following:
|PEARCE & DURICK|
|P.O. Box 400|
|Bismarck, ND 58502-0400|
|KENT REIERSON, #03685|