In Battle Over Control of Energy Company, Judge Refuses to Disqualify Sills Cummis
Sills Cummis was accused of being conflicted out of representing Pristec Refining Technologies.
March 18, 2020 at 03:47 PM
4 minute read
A Superior Court judge has rejected a motion to disqualify Sills Cummis & Gross from representing the plaintiff in a battle over control of an oil-refining technology company.
Sills Cummis was accused of being conflicted out of representing Pristec Refining Technologies because of the law firm's concurrent duties to defendants in the case, who are part owners of that company. But Judge Katie Gummer noted that a "nearly identical" motion to disqualify Sills Cummis from a related case was denied by Judge Joseph Quinn, also of Monmouth County Superior Court, in 2018.
The only difference between that case and the present one was a 2019 decision relied on by the defendants in an arbitration involving some of the same parties, she said. And the defendants in the present case mischaracterized the substance of the arbitration ruling.
"Counsel for defendants at oral argument repeatedly referenced the arbitration decision as confirming a fraud committed by Sills Cummis and [its clients] the Earle entities," Gummer said. "In fact, the arbitrator made no such finding as to Sills Cummis or the Earle entities. In fact, Sills Cummis was not a party to the arbitration and the Earle entities were not a party to the arbitration.
"Given that Judge Quinn's ruling was rendered in a different case, it would appear to the Court that the law of the case doctrine does not apply, but the Court sees no reason to render a different decision on the same issue based on an arbitration decision that does not bind this Court and did not include as parties any of the plaintiffs or Sills Cummis, and did not contain the findings as to those plaintiffs as represented to the Court by defendants," Gummer said.
The case concerns a battle between two factions seeking to control a proprietary process for refining crude oil that promises to reduce waste and carbon emissions. That process has an estimated value of approximately $540 million, according to a court document.
Sills Cummis' William Tellado represents Pristec Refining Technologies USA, the holding company for the new technology, as well as Thomas Earle and his company, Earle Refining, which owns 21% of PRT. They sued two other part owners, Anthony Sichenzio and Joseph Laura, as well as business entities owned by Sichenzio and Laura that control 75% of PRT, claiming they breached a licensing agreement. Earle seeks to sever his agreement with Sichenzio and Laura, and enter into a new operating agreement with another party.
Sichenzio and Laura claim Sills' representation of PRT mandates duties to its constituent members, and that their relationship poses a conflict of interest in violation of the Rules of Professional Conduct.
Kevin O'Connor of Peckar & Abramson in River Edge, who represents Sichenzio and Laura and their companies, said he filed a motion for leave to appeal the disqualification ruling. O'Connor called Gummer's decision from the bench "rambling and very unintelligible," and said it does not discuss how Sills Cummis could bring a suit that would lead to the breakup of its own client, PRT.
"It's really simple: Sills Cummis, on behalf of one client, is seeking to dissolve its other client, Pristec Technologies. Earle is a 21% member of Pristec Technologies. My client, Pristec America, owns 75% of Pristec Technologies. Earle's suit seeks to control the company. Sills can't represent Pristec," said O'Connor.
Richard Epstein, co-chairman of the litigation department at Sills Cummis, welcomed the decision rejecting the disqualification motion.
"We appreciate the trial court's ruling, which is consistent with the ruling of Judge Quinn, which denied the first motion to disqualify. We also appreciate that the trial court rejected some of the misleading statements made by the defendants' counsel. We hope the case can now move forward," Epstein said.
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