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In re Cushman

Supreme Court of Montana

August 20, 2019

IN THE MATTER OF: JON E. CUSHMAN, An Attorney at Law, Respondent.


         On November 9, 2017, a formal disciplinary complaint was filed in this matter against attorney Jon E. Cushman, who is licensed to practice law in Washington and Oregon and had been admitted to appear pro hac vice in Montana state courts on three occasions. An amended complaint was filed on April 30, 2018. The complaint and amended complaint may be reviewed by any interested person in the office of the Clerk of this Court.

         The Commission on Practice (Commission) held a hearing on the complaint on January 9 and 10, 2019. Both the Office of Disciplinary Counsel (ODC) and Cushman, who appeared without counsel, presented argument and questioned witnesses.

         On May 6, 2019, the Commission submitted to this Court its Findings of Fact, Conclusions of Law, and Recommendation for Discipline. ODC and Cushman each filed objections to the Commission's decision and responses to each other's objections. Cushman further filed a reply to ODC's response to his objections.

         Because many of Cushman's numerous objections stem from his claim that the Commission improperly found facts by taking judicial notice of the litigation underlying ODC's ethics complaint, we recite the facts in some detail from the record developed before the Commission during the hearing.


         This disciplinary matter arose from Cushman's representation of two Montana limited liability companies-Abbey/Land, LLC (Abbey/Land), and Glacier Construction Partners, LLC (GCP). Both entities were formed by real estate developer Donald Abbey, who was also the sole member of each entity. Abbey/Land purchased Shelter Island in Flathead Lake and commenced construction of a residence there. GCP acted as the general contractor for that construction project. Abbey/Land was GCP's only client, and this project was GCP's only activity. Under the terms of the contract between Abbey/Land and GCP- which Abbey signed on May 1, 2006, for both Abbey/Land and GCP-any controversy or claim arising out of it was subject to arbitration, and damages were limited to actual damages, with punitive and consequential damages specifically barred from being awarded in arbitration.

         GCP and one of its subcontractors, Interstate Mechanical, Inc. (IMI), became involved in a dispute over the project. Abbey/Land and GCP commenced litigation against IMI. GCP, recognizing that it might have some liability, asked its comprehensive general liability insurer, James River Insurance, to provide a defense, but James River declined. Arbitration occurred, and the arbitrator awarded both GCP and IMI some recovery against the other. The arbitrator concluded that GCP's own negligence contributed to some of the losses.

         In April 2011, GCP voluntarily dismissed itself from the litigation against IMI. Abbey/Land filed a Second Amended Complaint, naming GCP as a defendant. Montana attorney Michael Black, who had represented both Abbey/Land and GCP, thereafter withdrew his representation of both entities.

         In September 2011, Montana attorney George Best[1] appeared as counsel for GCP and moved for the admission of Cushman pro hac vice. The Eleventh Judicial District Court, Flathead County, granted pro hac vice admission. Cushman also was admitted pro hac vice, upon motion of Montana attorney John Mercer, to represent GCP in a declaratory judgment action filed in Lake County to determine the defense and indemnity obligations of various insurers, including those insuring Abbey/Land and GCP.

         Cushman also worked on Abbey's behalf to resolve a fee dispute which had arisen over Black's work as counsel for Abbey/Land. Cushman informed Black that Abbey/Land could not pay his fees and suggested Black assist in formulating a malpractice claim against himself so that his malpractice insurer would pay Abbey, who would in turn pay Black from the proceeds. Black declined and later filed suit against Abbey/Land to recover his fees.

         In October 2011, GCP again tendered James River for defense, and James River again denied coverage and declined to defend. In February 2012, Montana attorney James Cumming appeared as co-counsel for GCP. He was hired by Continental Insurance Company (Continental), another of GCP's insurers. Cumming testified that he became concerned that GCP was admitting things it should not admit and failing to contest things he believed were contestable. At Cumming's request, Continental authorized him to consult with Mike Herbst, a construction contractor, to explore liability issues. Cumming wanted GCP to raise affirmative defenses in response to the Second Amended Complaint, including the "clear, concise" arbitration clause in the Abbey/Land-GCP contract. However, when Cumming broached the subject with Cushman, Cushman resisted: "He didn't think that it would be good strategy. It was sort of in the realm of this is to be a cooperative litigation; that I was there essentially to look for additional claims, sort of as a co-plaintiff.. .."

         As the case progressed, Cumming became increasingly concerned about unlawful collusion. Cumming stated, "I was concerned that I might be participating in a fraud upon the court."

         Cushman reprimanded Cumming that Cushman had not authorized hiring Herbst. Later, he e-mailed Cumming and stated that he wanted Cumming "to maintain strictest silence on that expert until I decide we want to identify him. Until then I do not want [Continental] or anyone else to get any information about him, or about the project from him." A short time later, a representative of Continental informed Cumming that he was fired from representing GCP at Cushman's request.

         GCP's answer to Abbey/Land's Second Amended Complaint, signed by Cushman, contained none of the affirmative defenses Cumming had suggested. Rather, in the words of the Commission, GCP "rolled over and played dead." The Commission elaborated:

Despite the arbitrator's findings that Abbey/Land and Donald Abbey had played a role in causing the claimed damages, that some types of damages were not legally recoverable under the contract and that certain actions of IMI had actually improved the quality of the project, the GCP Answer admitted each allegation in the Second Amended Complaint and did not raise the provision in the General Contract precluding all but actual damages. The sole affirmative "defense" GCP raised was that all of Abbey/Land's damages were caused by the conduct of others. Though obvious to virtually any capable litigator, GCP did not raise common affirmative defenses that would have limited, if not eliminated, GCP's liability to Abbey/Land. These include failure to mitigate damages, comparative/contributory negligence, the arbitration requirement, the provision limiting damages, seriatim legal proceedings, the 2-year Statute of Limitations for damage to real property, or the preclusive effect of the arbitration award itself.

         In April 2012, Cushman invited Montana attorney Terry Trieweiler to meet with Cushman and Abbey to discuss becoming counsel for Abbey/Land. Trieweiler became counsel of record for Abbey/Land in the Flathead County litigation on July 5, 2012. Trieweiler testified that initially, he did not understand the relationship between the parties. He believed Cushman represented Abbey, not GCP, and that Cushman was acting on Abbey's behalf in getting Trieweiler up to speed on the case.

         Soon after Trieweiler appeared for Abbey/Land, an insurer that was part of related litigation in Oregon requested both Abbey/Land and GCP to designate representatives for Rule 30(b)(6) depositions. Cushman suggested William "Bill" Matteson, a former Abbey/Land employee, to Trieweiler. Cushman later sent an e-mail to Trieweiler, Abbey, and others, which explained that Cushman had contacted Matteson and gotten his agreement to be the designee. He added, "I told him we would prepare him for each subject," and suggested that they meet with Matteson and Nathan Steinbeck, the Rule 30(b)(6) designee for GCP, "together to go over this stuff at the same time." Trieweiler countered that he was willing to prepare Matteson, and he was opposed to preparing Steinbeck and Matteson at the same meeting. He testified that he believed preparing the designees together would not be appropriate.

         After Steinbeck's Rule 30(b)(6) deposition, Cushman wrote an e-mail to Trieweiler, Abbey, and others in which he stated that he had met with Matteson for eleven hours, during which time they "covered many documents which may be presented to [Matteson] at deposition." Cushman again recommended meeting with both Matteson and Steinbeck to "set both of these witnesses on a compatible course." Trieweiler resisted Cushman's efforts to have a joint meeting. As the deposition date approached, Cushman expressed a desire to meet with Trieweiler and Matteson. Trieweiler disagreed, opining this would waive privilege; Cushman insisted his conversations with Matteson remained privileged because Matteson was a former vice president of GCP. Cushman then e-mailed Matteson and informed him, "every communication we have ever had is in your capacity as a Glacier VP" and that Matteson was prohibited from disclosing those conversations to anyone. He added, "If they asked who you met with in preparation for this deposition as a 30(b)(6) designee of Abbey/Land, that was [Trieweiler]." Trieweiler testified that during Matteson's deposition, Matteson was asked who had prepared him for the deposition, and Matteson responded that Trieweiler had done so. Matteson was further asked who he had met with and he responded that he had met with Trieweiler; he did not mention Cushman's name.

         As part of his representation of Abbey/Land, Trieweiler worked with accountant Paul Pederson to develop damage estimates. Pederson provided Trieweiler with a report of estimated damages, and Trieweiler forwarded that report to Cushman. After discussing the matter with Cushman, however, Pederson increased his estimate, including adding an estimate for increased electricity usage totaling $767, 000.

         Conflicts arose between Trieweiler and Cushman over how to proceed with the case. On numerous occasions, Trieweiler expressed frustration with Cushman overstepping the bounds of his role as counsel for GCP and attempting to dictate Trieweiler's course of action for Abbey/Land. By March 2013, the conflict reached a boiling point. Trieweiler explained in his testimony that after he questioned Cushman's valuation of the case, Cushman began to undermine Trieweiler's advice to Abbey, and Trieweiler wanted to ensure that Abbey was aware of the lack of factual support for the damages Cushman was alleging. Trieweiler testified that he was never able to document more than about $300, 000 in damages.

         On March 22, 2013, Trieweiler provided Abbey with a memorandum in which Trieweiler reported that Abbey/Land's documented damages were between approximately $225, 000 and $300, 000, but if the residence's drain field was not functional, it was possible that Abbey/Land could claim an additional $4.2 million in damages. On March 29, 2013, Cushman demanded that Abbey terminate Trieweiler as Abbey/Land counsel immediately, adding, "GCP will immediately, today after [Trieweiler] is fired, stipulate to judgment in favor of A/L." Cushman sent Abbey a draft e-mail to send to Trieweiler, terminating his services. Abbey sent Trieweiler the termination e-mail later that day.

         In May 2013, Abbey entered into contingent fee agreements with Best and Cushman which provided they would receive compensation for their services in the amount of 50% of net recovery "on any judgment or settlement entered in favor of Abbey/Land or GCP" in the pending litigation. (Emphasis added.) Shortly thereafter, Abbey/Land and GCP settled Abbey/Land's claims against GCP. In exchange for Abbey/Land agreeing not to execute against GCP, GCP agreed to confess judgment in the amount ...

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