United States District Court, W.D. North Carolina, Statesville Division
DANZIG LTD. AND BRETT BERTOLAMI, Plaintiffs,
INCEPTION MINING INC., MICHAEL AHLIN AND TRENT D'AMBROSIO, Defendants.
MEMORANDUM AND ORDER
S. Cayer, United States Magistrate Judge
MATTER is before the Court on the
“Plaintiffs' Motion to Disqualify Defendants'
Counsel Barbara Polich and Antczak Polich Law LLC”
(document # 8) filed April 28, 2017 and the parties'
associated briefs and exhibits (documents #11 and 14).
matter has been referred to the undersigned Magistrate Judge
pursuant to 28 U.S.C. § 636(b)(1), and this Motion is
now ripe for consideration.
fully considered the arguments, the record, and the
applicable authority, the Court denies
Plaintiffs' Motion to disqualify counsel as discussed
FACTUAL AND PROCEDURAL BACKGROUND
dispute centers on an Asset Purchase Agreement dated February
25, 2013, which together with related agreements resulted in
the issuance of 16, 000, 000 shares in Gold American Mining
Corporation. Gold American would later change its name to
Inception Mining Incorporated, and is a Defendant herein. Per
the Agreement, Plaintiffs received 1, 565, 894 shares in Gold
American. Defendant's Counsel Antczack Polich Law LLC
(“Antczack”) received 300, 000 shares.
allege that Defendants made material omissions and
misrepresentations regarding a $1, 000, 000 capital
commitment to fund the Company post-merger and their
intention to register Plaintiff's shares within ninety
days of executing the Agreement. Doc. 1 at ¶¶ 5, 8,
7-10; 27. Plaintiffs seek damages arising out of their
reliance on these material omissions and misrepresentations,
and further allege that Defendants violated their fiduciary
duty by breaching some of the promises, warranties and
representations made around the time of the merger.
Id. at ¶¶ 8, 29, 32, 34.
Motion, Plaintiffs allege that Defendants' counsel should
be disqualified because they have violated Rules 3.7 and 1.7
of the North Carolina Rules of Professional Conduct. They
argue that Antczak was at the center of the negotiations and
privy to the representations made by the individual
Defendants to prospective shareholders. According to
Plaintiffs, Antczak's principals are therefore material
witnesses in this litigation and have a conflict of interest
in representing Defendants.
considering a motion to disqualify, “[t]he guiding
principle . . . is safeguarding the integrity of the court
proceedings” and “the purpose of granting such
motions is to eliminate the threat that the litigation will
be tainted.” Plant Genetic Sys., N.V. v. Ciba
Seeds, 933 F.Supp. 514, 517 (M.D. N.C. 1996). The court
must balance (1) a party's right to his choice of counsel
and the potential substantial hardship resulting from
disqualification against (2) the importance of safeguarding
the public trust in the judicial system. Johnson v. Brock
& Scott, PLLC, No. 5:11- cv-474-F, 2012 WL 4483916,
at *7 (E.D. N.C. Sept. 26, 2012). However, “the moving
party has a very high standard of proof in moving to
disqualify an opposing party's counsel. It follows that a
court should not disqualify a party's chosen counsel on
imagined scenarios of conflict.” Capacchione v.
Charlotte-Mecklenburg Bd. Of Educ., 9 F.Supp.2d 572, 579
(W.D. N.C. 1998).
to Rule 3.7 of the North Carolina Revised Rules of
Professional Conduct, a lawyer may not be an advocate at
trial if he is a necessary witness. Rule 3.7 provides:
(a) A lawyer shall not act as 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