                                           No. 01-473

               IN THE SUPREME COURT OF THE STATE OF MONTANA

                                          2002 MT 134


PRO-HAND SERVICES TRUST,
an Irrevocable Trust,

              Plaintiff and Respondent,

         v.

DAVID MONTHEI and MARY GABRIEL-DUNCAN,

              Defendants and Appellants.



APPEAL FROM:         District Court of the Eighteenth Judicial District,
                     In and for the County of Gallatin,
                     The Honorable Mike Salvagni, Judge presiding.


COUNSEL OF RECORD:

              For Appellants:

                     Geoffrey C. Angel, Angel Law Firm, Bozeman, Montana

              For Respondent:

                     J. David Penwell, Attorney at Law, Bozeman, Montana


                                                        Submitted on Briefs: November 29, 2001

                                                                   Decided:   June 18, 2002

Filed:

                     __________________________________________
                                       Clerk
Justice Jim Regnier delivered the Opinion of the Court.

¶1    Mary Gabriel-Duncan (“Duncan”) appeals from the March 13,

2001, Order entered by the Montana Eighteenth Judicial District

Court, Gallatin County, denying her motion to disqualify David J.

Penwell (“Penwell”), attorney for Pro-Hand Services Trust (“Pro-

Hand”).     We affirm.

¶2    The following issue is presented on appeal:

¶3    Did the District Court err in denying Duncan’s motion to

disqualify Penwell?

                                       BACKGROUND

¶4    On    or    about    April   9    and       April    10,   1998,   Duncan   called

Penwell’s office and spoke with Marion Austin (“Austin”), Penwell’s

legal secretary at the time.             Duncan inquired into hiring Penwell

as counsel in this action.             Austin informed Duncan that Penwell was

planning to close his office, was not accepting new cases, and

referred her to contact Parker Leach, another attorney in the

building.        Duncan never personally spoke to Penwell pertaining to

hiring him as counsel.
¶5    Pro-Hand, represented by other counsel, initiated this action

against Duncan and David Monthei for breach of contract in the

District Court on February 25, 1999.                      Pro-Hand then substituted

attorneys and Penwell entered his appearance on Pro-Hand's behalf

on February 24, 2000.

¶6    On July 18, 2000, Duncan filed a motion to disqualify Penwell

as counsel for Pro-Hand.            A pretrial conference was held on July

19,   2000,      wherein    the    parties        agreed    to   conduct   depositions


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regarding the allegations stated in Duncan’s motion.                Subsequently,

Duncan filed a brief in support of her motion to disqualify Penwell

on October 2, 2000.      Therein, Duncan alleged that she disclosed

confidential information concerning this case to Austin during

their phone conversations and such information was thereby imputed

to Penwell creating an attorney-client relationship between herself

and Penwell.

¶7   The   District    Court   heard       the   motion      on   March   6,   2001.

Thereafter, the court denied the motion in its March 13, 2001,

Order   concluding    that   Duncan    failed      to   meet      her   burden   “in

conclusively   establishing     the    existence        of   an   attorney-client

relationship between herself and Penwell.”
¶8   Duncan filed a motion to certify the District Court’s March

13, 2001, Order as final for purposes of appeal pursuant to Rule

54(b), M.R.Civ.P., on March 19, 2001.               On April 30, 2001, the

District Court certified its March 13, 2001, Order in accordance

with Rule 54(b), M.R.Civ.P.      Duncan filed a notice of appeal in the

District Court on May 22, 2001.

                             STANDARD OF REVIEW

¶9   The denial of a motion to disqualify an attorney is within a

district court’s discretionary powers.            See Schuff v. A.T. Klemens

& Son, 2000 MT 357, ¶ 26, 303 Mont. 274, ¶ 26, 16 P.3d 1002, ¶ 26

(citing In re Guardianship of Mowrer, 1999 MT 73, ¶ 24, 294 Mont.

35, ¶ 24, 979 P.2d 156, ¶ 24).             Therefore, we will review such

decision for an abuse of discretion.             See Schuff, ¶ 26.

                                 DISCUSSION



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¶10    Did the District Court err in denying Duncan’s motion to

disqualify Penwell?

¶11         Relying upon In re Johore Investment Co., Inc. (D. Hawaii

1985), 157 B.R. 671, and Westinghouse Electric Corp. v. Kerr-McGee

Corp. (7th Cir. 1978), 580 F.2d 1311, 1319, cert. denied (1978), 439

U.S.    955,    Duncan    asserts   that     an    implied     attorney-client

relationship      may    arise   when       prospective       clients   divulge

confidential information during consultation with an attorney for

the purpose of retaining the attorney in his or her professional

capacity as a legal advisor, even if actual employment does not

result.       Duncan alleges that such an implied attorney-client

relationship was formed between herself and Penwell when she

disclosed confidential information to Austin during their phone

conversation on April 9, 1998, for purposes of hiring Penwell as

legal counsel in this matter.       Duncan further asserts, citing In re

Rules of Professional Conduct and Insurer Imposed Billing Rules and

Procedures, 2000 MT 110, 299 Mont. 321, 2 P.3d 806, that the

confidential information she disclosed to Austin was imputed to

Penwell.       Duncan therefore contends Penwell’s representation of

Pro-Hand in this matter is a conflict of interest in violation of

the Montana Rules of Professional Conduct requiring Penwell’s

disqualification.
¶12    In    response,    Penwell   asserts       that   an    attorney-client

relationship was never established between himself and Duncan since

Duncan did not disclose confidential information to Austin during

their phone conversations on April 9 or April 10, 1998.                 Instead,



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Penwell insists that Duncan merely provided Austin with “basic”

information, such as her name, telephone number, and that she

wished to file a counterclaim.          Penwell contends Austin informed

Duncan during both phone conversations that he was closing his

office and referred her to contact another attorney.           Penwell thus

claims    that   disclosure   of     confidential    information    cannot    be

imputed to him as such disclosure was never made.                   Moreover,

Penwell points out that he never personally spoke or met with

Duncan.
¶13   We have held that a lawyer may be disqualified from appearing

in an action because he or she has previously represented an

adverse party.     See Mowrer, ¶ 20.        Rule 1.9 of the Montana Rules of

Professional Conduct states:

      Conflict of Interest: Former Client. A lawyer who has
      formerly represented a client in a matter shall not
      thereafter:

      (a) represent another person in the same or a
      substantially related matter in which that person’s
      interests are materially adverse to the interests of the
      former client unless the former client consents after
      consultation; or

      (b) use information relating to the representation to the
      disadvantage of the former client except as Rule 1.6
      would permit with respect to a client or when the
      information has become generally known.

Accordingly, we must determine if an attorney-client relationship

was formed between Duncan and Penwell. If an attorney-client

relationship was not formed, there is no conflict of interest.

¶14   An implied attorney-client relationship may result when a

prospective      client   divulges    confidential    information    during    a

consultation with an attorney for the purpose of retaining the


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attorney,   even       if   actual    employment    does    not    result.      See

Westinghouse, 580 F.2d at 1319.          Also see Johore, 157 B.R. at 676.

  In determining whether an implied attorney-client relationship

exists, we will examine whether the alleged client reasonably

believed that such relationship was formed.                See Mowrer, ¶ 21.

¶15   In determining whether an attorney should be disqualified, the

Ninth   Circuit        focuses   on    whether     there    is    a   “reasonable

probability” that confidences were disclosed.                See Trone v. Smith

(9th Cir. 1980), 621 F.2d 994, 998.          The Ninth Circuit stated:
      [T]he underlying concern is the possibility, or
      appearance of the possibility, that the attorney may have
      received confidential information during the prior
      representation that would be relevant to the subsequent
      matter in which disqualification is sought.     The test
      does not require the former client to show that actual
      confidences were disclosed.      That inquiry would be
      improper as requiring the very disclosure the rule is
      intended to protect.

Trone, 621 F.2d at 999 (citation omitted).

¶16   Consequently, we hold that an alleged client should not be

required,   at     a    disqualification      hearing,      to    reveal     actual

confidences that he or she maintains were disclosed to establish an

attorney-client relationship.           Such a procedure would violate the

very disclosure the rule is designed to protect.                  However, simply

making a representation to the court that confidential information

was disclosed offers nothing to assist the court in making a

reasoned judgment.          The alleged client must at least inform the

court of the nature of the confidential information disclosed.                  For

example, the alleged client can testify that she informed the

prospective counsel of the nature of the transaction, her position



                                         6
regarding the claim or defense, witnesses who support or oppose her

claim, the nature and amount of any damages suffered and other

relevant personal information.             This type of testimony, without

getting specific, would alert the court of the possibility that

confidential information had been previously disclosed.

¶17   Here,   Duncan     testified    that    she   disclosed      confidential

information to Austin during their telephone conversation on April

9, 1998, and was then told that Penwell would not represent her.

In contrast,       Austin states that Duncan provided only “basic”

information, such as her name and phone number.                 Further, Austin

asserts that she advised Duncan to contact another attorney since

Penwell was closing his office and was not accepting new cases.               At

no time in her testimony, however, did Duncan ever alert the court

of the type of confidential information she allegedly disclosed to

Austin, but relied on her conclusory statement that what she

disclosed was confidential.        Faced with the dilemma, the District

Court resolved the matter in favor of Penwell, determining that

Duncan   “failed    to   provide     the    Court   with   anymore    than   the

conclusory statement that she provided ‘confidential’ information.”

 Accordingly, we conclude that the District Court did not abuse its

discretion in determining that Duncan “failed to meet her burden in

conclusively   establishing     the    existence     of    an   attorney-client

relationship between herself and Penwell.”
¶18   Additionally, based upon the circumstances presented in this

case, we conclude that Duncan could not have reasonably believed

that an attorney-client relationship was formed between herself and



                                       7
Penwell.     Duncan had two telephone conversations with a legal

secretary which form the basis of her claim.             She never personally

spoke or met with attorney Penwell and was advised that Penwell

could not take her case.

¶19   Finally, we have advised alleged clients of their duty                 to

alert the trial court of        conflict of interest problems “as early

as possible so that a determination may be made that does not

unduly prejudice any party.”            See Mowrer, ¶ 23.       Here, Penwell

filed a notice of entry of appearance on behalf of Pro-Hand on

February 24, 2000.        Thereafter, Duncan litigated the action without

mention of the alleged conflict.            She filed a motion for summary

judgment on March 14, 2000.         Subsequently, she filed her lay and

expert witness disclosure as well as exhibit list on May 15, 2000.

 On May 23, 2000, the court held a hearing on Duncan’s motion for

summary judgment.     It was not until July 18, 2000, some five months

after Penwell entered his appearance, that Duncan filed her motion

to disqualify.
¶20   With the facts presented, we conclude that the District Court

did   not   abuse   its    discretion    in    denying   Duncan’s   motion   to

disqualify Penwell.

¶21   Affirmed.


                                              /S/ JIM REGNIER

We Concur:



/S/ KARLA M. GRAY
/S/ TERRY N. TRIEWEILER
/S/ PATRICIA COTTER


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/S/ JIM RICE




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