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American Safety Casualty Insurance Co. v. Happy Acres Enterprises Co., Inc.

United States District Court, W.D. Washington, Seattle

January 20, 2017

AMERICAN SAFETY CASUALTY INSURANCE COMPANY, Plaintiff,
v.
HAPPY ACRES ENTERPRISES CO., INC., a Washington corporation, et al., Defendants.

          ORDER DENYING MOTION TO DISQUALIFY COUNSEL

          RICARDO S. MARTINEZ CHIEF UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         This matter comes before the Court on Defendants' Amended Motion to Disqualify Plaintiff's counsel from representing Plaintiff in this matter. Dkt. #23. Defendants argue that Plaintiff's counsel, Todd Blischke, is a material witness in this case, and therefore he should be disqualified under Washington's Rule of Professional Conduct (“RPC”) 3.7. Id. Defendants further argue that the entire firm of Williams, Kastner & Gibbs PLLC should be disqualified as well. Id. Plaintiff opposes the motion, asserting that Defendants do not have sufficient evidence to demonstrate the need for disqualification under RPC 3.7 and that exceptions to the Rule are applicable in any event. Dkt. #24. For the reasons discussed below, the Court agrees with Plaintiff and DENIES Defendants' motion. Plaintiff has also sought discovery sanctions against Defendants, which this Court now GRANTS.

         II. BACKGROUND

         This matter arises out of an underlying construction contract dispute. On January 12, 2016, Plaintiff American Safety Casualty Insurance Company (“American”) filed an action for breach of contract, declaratory judgment and unjust enrichment against Defendants Happy Acres Enterprises Co., Inc., Rolf Eriksen and Matilija d/b/a Matilija, Inc. (collectively “Happy Acres”). Dkt. #1. Plaintiff alleges the following facts:

10. American issued surety bonds on behalf of Happy Acres in connection with certain construction projects performed in the State of Washington.
11. As partial consideration for American's agreement to furnish surety bonds on behalf of Happy Acres, on or about September 21, 2010, American and Defendants Happy Acres, Matilija, and Rolf Eriksen, properly and formally executed and entered into a General Agreement of Indemnity (“GAI”). . . .
12. Pursuant to the terms of the GAI, Defendants, jointly and severally, agreed to indemnify American from and against any and all liability for losses, fees, costs, and expenses of whatsoever kind or nature which American incurred as a consequence of issuing bonds on behalf of Happy Acres or as a consequence of a breach of the GAI by Defendants. . . .
. . .
14. After execution of the GAI and at the request of the Defendants, American issued Performance Bond No. OKC607701 naming Doe Bay Water User's Association, Inc. (“Doe Bay”) as obligee for the contract between Happy Acres and Doe Bay, dated November 15, 2010, for the Slow Sand Filter Facility (“Contract”) on or about November 22, 2010, in the penal sum of $664, 632.86 (“Bond”). . . .
15. In approximately March 2013, Happy Acres filed an arbitration demand against Doe Bay relating to Happy Acres' and Doe Bay's disputes under the Contract with the American Arbitration Association in a matter styled In the Matter of the Arbitration between Happy Acres Enterprises Company, Inc. v. Doe Bay Water Users Association, Case No. 75-20-1300-0095 (“Arbitration”). Doe Bay brought a counterclaim against Happy Acres regarding Happy Acres alleged deficiencies in performing the Contract.
16. In late December 2014 and early January 2015, Doe Bay claimed that Happy Acres was in default under the Contract and tendered its claim against the Bond to American. Doe Bay then sought to have American joined as a party in the Arbitration in order to pursue its claims under the Bond and against American.
17. American was joined as a party to the arbitration in approximately March 2015.
18. The Arbitration hearing was held from October 26-30, 2015. An Award of Arbitrator, dated December 16, 2015 (“Award”), was entered in favor of Happy Acres on its claims against Doe Bay. The Award also found in favor of Happy Acres on Doe Bay's counterclaims. Further, the Award ...

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