Maritrans GP, Inc. v. Pepper, Hamilton & Scheetz - 529 Pa. 241, 602 A.2d 1277 (1992)

Rule:

Long before the Code of Professional Responsibility was adopted, and before the Rules of Professional Conduct were adopted, the common law recognized that a lawyer could not undertake a representation adverse to a former client in a matter substantially related to that in which the lawyer previously had served the client. A fiduciary or confidential relationship can arise when confidence is reposed by persons in the integrity of others, and if the latter voluntarily accept or assume to accept the confidence, they cannot act so as to take advantage of the others' interests without their knowledge or consent. The attorney/client relationship is a fiduciary one, binding the attorney to the most conscientious fidelity.

Facts:

Appellants were Maritrans GP Inc., Maritrans Partners L.P. and Maritrans Operating Partners L.P. (collectively, Maritrans) was a Philadelphia-based public company in the business of transporting petroleum products along the East and Gulf coasts of the United States by tug and barge. Appellees were the Philadelphia law firm of Pepper, Hamilton & Scheetz and one of the partners, J. Anthony Messina, Jr. Appellants brought an action for preliminary and permanent injunctive relief, as well as for compensatory and punitive damages, against appellees, its former attorneys of more than ten years. Appellant’s action arose out of appellees representation of appellant’s competitors in matters substantially related to matters in which they had represented appellants. The trial court granted the preliminary injunction against appellees. But the superior court reversed, holding that an attorney's conflict of interest in representing a subsequent client whose interests were materially adverse to a prior client in a substantially related matter was not actionable in Pennsylvania.

Issue:

Was the conduct of Appellee-attorneys actionable for violation of the Code of Professional Responsibility?

Answer:

Yes.

Conclusion:

The court held that while they agree that violations of the Code do not per se give rise to legal actions that may be brought by clients or other private parties, the court, nevertheless, conclude that the record supported the finding that appellees' conduct constituted a breach of common law fiduciary duty owed to appellant. Contrary to appellees' argument that they cannot be prevented from representing a former client's competitors, the court reinstated the injunction issued by the trial court against them and reversed the superior court’s order. The court emphasized that an attorney's common law fiduciary duties were independent of an attorney's duties under the Pennsylvania Rules of Professional Conduct. The court stated that the common law had long recognized that a lawyer could not undertake a representation adverse to a former client in a matter substantially related to that in which the lawyer had previously served the client. The court held that such conduct was actionable in Pennsylvania.