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Rymal v. Baergen6/8/2004
ntered on October 10, 2001. In December 2001, Clark terminated Baergen's employment on the basis of Baergen's involvement with MTD.
In July 2002, after the conclusion of plaintiff's and Baergen's depositions, Clark filed a motion for leave to add a counterclaim against plaintiff and a cross-claim against Baergen and MTD. The proposed claims related to Baergen and MTD, which closely mimicked the proposed claims against plaintiff, included breach of implied contract, breach of fiduciary duty, usurpation of corporate business entity, tortious interference with business relations and/or reasonable business expectations, silent fraud, and civil conspiracy. These causes of action were predicated on allegations that in 1989 Baergen was approached about the film distribution idea while he was working in his capacity as a manager for Clark, that Baergen did not tell Clark superiors about the opportunity, that Baergen, without authority, declined the opportunity on behalf of Clark, and that Baergen thereafter, acting in concert with plaintiff, took advantage of the opportunity and formed and began operating MTD to distribute films. Clark alleged that in 1990, Baergen registered MTD as a Michigan corporation. Clark further averred that Baergen and plaintiff, at times, used "on the clock" employees of Clark to conduct MTD business without corporate approval from Clark and utilized Clark's petty cash fund in operating MTD. Clark was adamant that the allegations supporting the proposed cross-claim arose through knowledge solely derived from the depositions of plaintiff and Baergen, which occurred after counsel terminated representation of Baergen and MTD. Leave to amend to add a counterclaim and cross-claim was denied by the trial court on grounds of untimeliness.
Baergen and MTD filed a motion to disqualify Clark's counsel from further representing Clark, arguing that continued representation constituted a conflict of interest. A short evidentiary hearing was conducted on the motion for disqualification. The director of administration and general counsel for Clark testified that Clark wished to retain present counsel because counsel was most familiar with the action and obtaining new counsel would place Clark at a disadvantage in that new counsel would have to be brought up to speed, causing delays and a great deal of extra expenses. On cross-examination, general counsel stated that he played no role whatsoever with respect to the retention agreement between Clark's litigation counsel and Baergen, and that Clark never obtained Baergen's consent to Clark actually taking adverse action against Baergen and MTD.
Baergen testified that he was the sole shareholder of MTD, and that he indeed signed a retainer agreement with Clark's counsel. Baergen asserted that counsel never indicated an intent that an adverse action would be taken against Baergen, that he never consented to allow counsel to take an adverse action against him, that he never consented to counsel's representation of Clark in a manner adverse to Baergen, that he did not now consent to counsel's continued representation of Clark, and that he did not and does not waive a conflict of interest. Baergen stated that he had never met Clark's general counsel. On cross-examination, Baergen acknowledged the meeting in early September 2001 with Clark's CEO and counsel, and that, shortly into the meeting, the CEO stated, "that's a smoking gun," after which Baergen was asked to leave the room and subsequently told that he had to obtain his own attorney. An affidavit by Baergen that was submitted with the motion to disqualify provided that he had confidential discussions with Clark's counsel in preparation for filing the answer, along with subsequent conf
Page 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Michigan Employee Leasing Services
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