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Steven Volkswagen, Inc. v. Zurich Agency Services, Inc.

United States District Court, D. Kansas

December 9, 2019

STEVEN VOLKSWAGEN, INC. d/b/a Steven Infiniti, Plaintiff,



         This matter comes before the court on Defendant's Motion to Disqualify Greg Andersen (ECF No. 73), who is Plaintiff Steven Volkswagen, Inc.'s (“Steven”) in-house counsel and one of its attorneys of record. Defendant Zurich American Insurance Company (“Zurich”) asks the court to disqualify Mr. Andersen on the grounds that he is a fact witness. Steven opposes the motion, arguing that Mr. Andersen's only possible factual testimony concerns the fact that he handwrote the insurance claim at issue and faxed it to Zurich, and that counsel for Zurich elicited the remainder of his deposition testimony about his opinions on the insurance claim given his status as an attorney, not a fact witness. The present record does not establish that Mr. Andersen is a necessary fact witness. Zurich's motion is therefore denied without prejudice.

         I. BACKGROUND

         Steven is an automobile dealership that made an insurance claim to Zurich for damages to its vehicle inventory caused by a windstorm in 2019. Steven claims Zurich breached its insurance policy and the implied covenant of good faith by using an improper method to adjust Steven's claims. In particular, Steven contends that Zurich should have adjusted the 2019 claim using the same methodology it used to adjust a prior wind-damage claim in 2018. This case concerns the extent of the vehicle damage and the proper method under the policy for adjusting the claims.

         Mr. Andersen is Steven's in-house counsel. He was responsible for making the insurance claim that is the subject of this lawsuit. Steven disclosed Mr. Anderson in its Fed.R.Civ.P. 26(a)(1) initial disclosures as an individual likely to have discoverable information “of the claims for damage to the inventory of Volkswagen and Infiniti.” (ECF No. 74-1, at 1.) He entered his appearance as counsel of record on October 21, 2019. (ECF No. 52.)

         On October 31, Zurich deposed Mr. Andersen. He testified-in response to questioning from Zurich's counsel-about Steven's 2019 wind-damage claim and the prior 2018 wind-damage claim. He also testified about his understanding of federal safety regulations and whether Zurich's proposed repairs would comply with regulations and vehicle warranties.

         Zurich asks the court to disqualify Mr. Andersen because he is likely to be a necessary fact witness at trial. Steven opposes the motion on the basis that Mr. Andersen's testimony relates only to submitting the insurance claim and that Steven believes the parties will ultimately stipulate that Mr. Andersen was the individual who filed the initial claim forms.

         II. ANALYSIS

         When faced with a motion to disqualify counsel, the court must consider both the local rules of the court in which the attorney appears, and “because motions to disqualify counsel in federal proceedings are substantive motions affecting the rights of the parties, they are decided by applying standards developed under federal law.” United States v. Stiger, 413 F.3d 1185, 1195 (10th Cir. 2005) (overruled on other grounds) (citing Cole v. Ruidoso Mun. Schools, 43 F.3d 1373, 1383 (10th Cir. 1994)). The court retains discretion to determine whether disqualification is warranted, but it must be mindful that a motion to disqualify can be used as a litigation strategy. Smith v. Whatcott, 757 F.2d 1098, 1100 (10th Cir. 1985). An ethical violation does not necessarily trigger disqualification. Koch v. Koch Indus., 798 F.Supp. 1525, 1531 (D. Kan. 1992). Rather, the court must consider whether disqualification serves the purpose behind the rule in question. Id.

         This district has adopted the Kansas Rules of Professional Conduct (“KRPC”). See D. Kan. Rule 83.6.1(a) (stating that the Kansas rules apply “except as otherwise provided by specific rule of this court”). KRPC 3.7 prohibits a lawyer from acting “as an advocate at a trial in which the lawyer is likely to be a necessary witness” unless:

(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.

KRPC 3.7. The rule's purpose is to prevent jury confusion if a lawyer were to appear in a dual role as an advocate and a witness. Id. at cmt. 2. The rule applies to advocacy at trial and but does not apply to a lawyer's ability to perform pretrial activities, except ...

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