In re Galardi (Ch 11 Case No. 22-50035, Adv. Case No. 22-05008)

Defendant moved to disqualify Plaintiff’s counsel (Geer) because one of its attorneys (Christy) had allegedly learned confidential information about Defendant while Christy was working as a contract attorney for Defendant’s counsel (McBryan).  While working for McBryan, Christy worked on the Chapter 11 bankruptcy cases of four corporations of which Defendant was sole owner and CEO.  After Christy stopped receiving work from McBryan, McBryan filed an individual Chapter 11 case for Defendant.  Christy never worked on Defendant’s bankruptcy case.  Defendant’s brother then filed an adversary proceeding asserting that Defendant’s debt arising from her actions as trustee of her brother’s trust are non-dischargeable under 11 U.S.C. § 523(a)(2)(A), (a)(4) and (a)(6).  Geer is counsel for the brother and Christy is a contract attorney at Geer.  

Whether Christy learned confidential information about Defendant while working at the McBryan firm on the corporations’ bankruptcy cases was hotly disputed.  The Court applied Rules 1.6(a), 1.7(a), 1.9(a) and 1.13(a) of the Georgia Rules of Professional Conduct and determined that Geer and Christy should not be disqualified.  

When Christy worked for McBryan, McBryan represented the Chapter 11 corporations and not Defendant, individually, who was represented by separate counsel.  Any confidential information Christy learned while representing the corporations belonged to the corporations, not to Defendant.  Furthermore, this adversary proceeding is not “substantially related” to the corporations’ bankruptcy cases.  This adversary proceeding concerns decisions Defendant made in 2014 regarding her brother’s trust, which are not related to Defendant’s financial condition in 2019.  Also, Defendant’s financial information is now public knowledge, having been disclosed in her bankruptcy schedules.

Monday, August 8, 2022