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Jarrell v. Shelter Mutual Insurance Co.

United States District Court, S.D. Mississippi, Eastern Division

August 26, 2019

LYNDA B. JARRELL and TERRY D. JARRELL PLAINTIFFS
v.
SHELTER MUTUAL INSURANCE COMPANY DEFENDANT

          ORDER

          MICHAEL T. PARKER UNITED STATES MAGISTRATE JUDGE.

         THIS MATTER is before the Court on Defendant's Motion [55] to disqualify William H. Jones, one of Plaintiffs' attorneys. Having considered the parties' submissions, the record, and the applicable law, the Court finds that the Motion [55] should be granted.

         On January 17, 2018, Plaintiffs' house was damaged by a fire. Plaintiffs filed this action in state court on September 19, 2018, [1] asserting breach of contract and bad faith claims against Shelter Mutual Insurance Company (“Shelter”). Plaintiffs allege that Shelter wrongfully refused to pay the full amount owed under Plaintiffs' insurance policy.

         Before suit was filed, Plaintiffs' counsel, William H. Jones, [2] and Shelter's claim adjuster, Earl Haines, exchanged written correspondence on several occasions. Jones and Haines also had multiple telephone conversations. These conversations took place on April 17, 2018, June 19, 2018, and August 20, 2018. As previously mentioned, Plaintiffs filed suit on September 19, 2018.

         In the instant Motion [55], Shelter argues that, as a result of the telephone conversations between Jones and Haines, Jones is a necessary witness and, therefore, must be disqualified from serving as Plaintiffs' counsel. As a substantive motion, Shelter's disqualification motion must be decided under federal law. See F.D.I.C. v. U.S. Fire Ins. Co., 50 F.3d 1304, 1312 (5th Cir. 1995). “‘[D]isqualification cases are governed by state and national ethical standards adopted by the court.'” Id. (quoting In re American Airlines, Inc., 972 F.2d 605, 610 (5th Cir. 1992)). Federal courts consider ethical standards set forth in the local rules, state rules, model rules, and model code. Id. “All of the facts particular to a case must be considered, in the context of the relevant ethical criteria and with meticulous deference to the litigant's rights.” Id. at 1314.

         The Rules of the Southern District of Mississippi specifically adopt the Mississippi Rules of Professional Conduct. The Mississippi Rules of Professional Conduct are identical to the American Bar Association's Model Rules of Professional Conduct in all relevant aspects. United States v. Starnes, 157 Fed. App'x. 687, 693-94 (5th Cir. 2005). Mississippi Rule of Professional Conduct 3.7 provides as follows:

(a) A lawyer shall not act as advocate at a trial in which the lawyer is likely to be a necessary witness except where:
(1) the testimony relates to an uncontested issue;
(2) the testimony relates to the nature and value of legal services rendered in the case; or
(3) disqualification of the lawyer would work substantial hardship on the client.

Miss. R. Prof. Conduct 3.7.

         Shelter asserts that after its inspection of Plaintiffs' house, it determined that the January 17, 2018, fire partially destroyed the house and that there remained portions of the house which were usable-“usable remnants.” Along with a letter dated April 13, 2018, Shelter tendered a payment to Plaintiffs covering the partial loss. Plaintiffs, however, did not accept this payment. They maintained that the house was a total loss and that Shelter should have tendered policy limits.

         On September 19, 2018, Plaintiffs filed their Complaint [1-2], asserting breach of contract and bad faith claims. Shortly thereafter, Shelter tendered a payment in excess of the policy limits. See Defendant's Brief [56] at 4; Plaintiffs' Brief [62] at 15. Thus, Plaintiffs have been paid the full amount under their contract claims. Plaintiffs, however, also seek extra-contractual damages.

         Shelter argues, inter alia, that Plaintiffs have placed at issue the questions of what information about the house's usable remnants was conveyed to Plaintiffs by Shelter and when that information was conveyed. Shelter argues that this is a critical issue and observes that Plaintiffs allege that they repeatedly requested information concerning the house's usable remnants, but Shelter refused to provide such information. See Complaint [1-2] at 5, 7, 10, 11. As an example, Plaintiffs allege the following: “Defendants have failed and refused to identify what parts of the remaining ruins of their home are susceptible to reasonable repair. This request has been made numerous times without response.” Id. at 11.

         Shelter asserts that, contrary to Plaintiffs' allegations, Haines conveyed information about the house's usable remnants to Jones during their conversations. Shelter asserts that Plaintiffs' claims require proof that Shelter failed to respond to Plaintiffs' pleas for information concerning usable remnants and Shelter's defense requires proof that Haines conveyed this information to Jones. Shelter argues that Jones must provide testimony concerning his conversations with Haines.

         Shelter points out that, during his deposition, Haines rebutted Plaintiffs' allegations. During Haines's ...


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