Civil Procedure – Venue – Motion To Disqualify Counsel

Although the two defendant businesses in these “Chinese drywall” cases are out of business and the houses that allegedly contain defective drywall are in locations outside Norfolk, a Norfolk Circuit Court denies defendants’ motions to transfer venue from Norfolk, and also denies defendants’ motion to disqualify counsel for a conflict of interest.

Venture Supply Inc. and The Porter-Blaine Corporation assert that plaintiffs’ counsel should be disqualified because of a conflict of interest in representing class action and individual plaintiffs seeking a limited fund, in violation of Rule 1:7 of the Virginia Rules of Professional Conduct. The court notes that this identical motion was also submitted to the U.S. District Court for the Eastern District of Louisiana in related multi-district litigation, In re Chinese-Manufactured Drywall Products Liability Litigation, MDL No. 2047, in which Hon. Eldon E. Fallon has heard similar arguments and denied the motion to disqualify. This court concurs with Judge Fallon’s ruling and denies the motions.

Specifically, the court does not find an inherent conflict between representation of a class and representation of individual claimants. Lawyers who represented only entire classes with no responsibility to individual class members would in effect have no clients and no one with whom to consult – a result described by Judge Fallon as “unworkable.” The court agrees.

Further, the court is unable to conclude at this juncture that there is a limited fund, which was the primary basis for the motion to disqualify. There is no basis on the record to conclude that a limited fund exists, so the motion must be denied for that purpose.

The court also has considered the various motions to transfer venue. As of Jan. 6, 2010, this court has approximately 65 cases filed by the same counsel team alleging homeowner problems with imported Chinese drywall. All cases were consolidated for pretrial purposes by court order of Nov. 10, 2009. The cases involve houses located in cities and counties of Southeastern Virginia, including James City County, York County, Newport News, Richmond, Virginia Beach and Norfolk. A number of defendants in these cases filed motions to transfer venue to the jurisdiction where the house in that particular case is located.

While it is true that the houses and, in some cases, the builders and developers are in the requested venues, the court finds that Porter-Blaine and Venture, both of which are defendants in all cases, maintained offices and conducted substantial business in the City of Norfolk, and venue for all cases is proper in Norfolk under Va. Code § 8.01-262(3).

The court does not attribute significance to the current out-of-business status of those two defendants or conclude that such status diminishes the basis by which their presence may support a venue determination.

Venture and Porter-Blaine do not base their motion under § 8.01-265, which would require a showing of good cause to transfer. Rather, they base it on § 8.01-264, and their claim that venue is improperly laid in Norfolk. The court determines venue to be proper in Norfolk.

Other defendants, including builders and developers who do not conduct business in Norfolk, do move to transfer under § 8.01-265. The court does not consider that spreading these cases from this jurisdiction where they have already been consolidated for pretrial purposes to one half-dozen different jurisdictions, would promote the avoidance of substantial inconvenience addressed in Code § 8.01-265.

All the jurisdictions to which transfer is proposed are within easy commuting distances from Norfolk. Although certain jurisdictions may be more convenient for certain purposes than this one, there has been no suggestion that trials in Norfolk present a “substantial inconvenience.”

In re: Chinese Drywall Cases (Hall, J.) No. CL09-3105, et al. Jan. 22, 2010; Norfolk Cir.Ct.; Richard Serpe, E.D. David, Theodore I. Brenner, George J. Dancigers, Richard K. Bennett M. Scott Stein, Kenneth F. Hardt, John Franklin III, William C. Bischoff, W.F. Drewry Gallalee for the parties. VLW 010-8-029, 8 pp.