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Sheveland v. Wells Fargo Bank, N.A.

Supreme Court of Hawaii

March 18, 2019

STEPHANIE SHEVELAND, Plaintiff-Appellant,
v.
WELLS FARGO BANK, N.A., Defendant-Appellee, and MASOOD M. FOADI; FAHI S. FOADI; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC.; CIT BANK, N.A., formerly known as ONEWEST BANK, FSB; OWB REO LLC, and DOE DEFENDANTS 1-50, Defendants-Appellees.

          APPEAL FROM THE CIRCUIT COURT OF THE SECOND CIRCUIT (CAAP-17-0000325; CIV. NO. 16-1-02 62(1))

          James J. Bickerton, Stanley H. Roehrig, and Bridget G. Morgan Bickerton Dang, LLLP

          John F. Perkin Perkin & Faria, LLLC

          Van-Alan H. Shima Affinity Law Group, LLLC for plaintiff-appellant Stephanie Sheveland

          Michael C. Bird and Summer H. Kaiawe for defendant-appellee Wells Fargo Bank, N.A.

          Charles A. Price Koshiba Price & Gruebner for defendants-appellees Masood M. Foadi and Fahi S. Foadi

          Judy A. Tanaka, Pamela W. Bunn, and Meredith G. Miller Dentons U.S. LLP

          Julie B. Strickland Stroock & Stroock & Lavan LLP (admitted pro hac vice) for defendants-appellees CIT BANK, N.A., f/k/a OneWest Bank, FSB, and OWB REO LLC

          Steven M. Egesdal, Tom E. Roesser, and Daniel J. Padilla Carlsmith Ball LLP for amicus curiae

          RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.

          OPINION

          MCKENNA, J.

         I. Introduction

         Dentons represents itself as the world's largest law firm. Dentons U.S. LLP maintains offices throughout the United States, including, as of July 2018, an office in Hawai'i comprising the former partners (and other employees) of the former Hawai'i law firm Alston Hunt Floyd & Ing ("AHFI"). Prior to joining Dentons U.S. LLP as partners, the AHFI partners incorporated themselves into separate lawyers' professional business organizations. See Declaration of Paul Alston ("[T]he lawyers who were to become partners in Dentons U.S. LLP form[ed] their own individual law corporations and ha[d] those corporations become partners in Dentons.").

         Dentons U.S. LLP represents Defendant-Appellee CIT Bank in this appeal, through two former AHFI partners who are Hawai'i-licensed. During the course of the appeal, Dentons U.S. LLP, through these two partners, filed a motion for admission pro hac vice of a California attorney with a different law firm. Counsel for Plaintiff-Appellant Stephanie Sheveland ("Sheveland") opposed the motion, alleging that Dentons U.S. LLP, as a firm, was engaged in the unauthorized practice of law in Hawai'i, in violation of Hawai'i Revised Statutes ("HRS") § 605-14 (2016), which provides the following, in relevant part:

It shall be unlawful for any person, firm, association, or corporation to engage in or to attempt to engage in or to offer to engage in the practice of law, or to do or attempt to do or offer to do any act constituting the practice of law, except and to the extent that the person, firm, or association is licensed or authorized so to do by an appropriate court, agency, or office or by a statute of the State or of the United States. . . .

         This court is the "appropriate court" authorizing the practice of law in this state. See Haw. Const, art. VI, § 7 ("The supreme court shall have power to promulgate rules and regulations in all civil and criminal cases for all courts relating to process, practice, procedure and appeals, which shall have the force and effect of law.").

         The specific court rule governing the organized practice of law in Hawai'i is Rule 6 of the Rules of the Supreme Court of Hawai'i ("RSCH"), titled "Lawyer's Professional Business Organizations," which provides, in relevant part, as follows:

(a) Compliance with this rule and applicable statutes. Any person or persons seeking to practice law as a corporation, a company, an association, in partnership, or in some other lawful organizational form (hereafter, lawyers' professional business organization) shall comply with the provisions of this rule and[, ] if applicable [, ] statutes .
(d) Shares; ownership and transfer.
(1) Shares or interests in a lawyers' professional business organization may be owned only by a lawyers' professional business organization or by one or more persons licensed to practice law in this state by this court. . . .
(e) Directors. Notwithstanding any statutory provisions, each director of a lawyers' professional business organization shall be licensed to practice law in this state by this court. . . .
(f) Officers. Notwithstanding statutory provisions, each officer of a lawyers' professional business organization shall be licensed to practice law in this state by this court. . . .

RSCH Rule 6 (2001). Sheveland contends that the language of RSCH Rule 6 requires every partner of Dentons U.S. LLP to be Hawai'i-licensed. Sheveland argues that, without such a requirement, non-Hawai'i-licensed attorneys could direct the activities of Hawai'i-licensed attorneys in a Hawai'i firm without regulation or oversight by this court or the Office of Disciplinary Counsel. She asserts that Dentons U.S. LLP is "majority owned by persons not licensed to practice law in Hawai'i," in violation of the rule. Sheveland asserts that the Hawai'i-licensed attorneys appearing in this appeal "should be barred from stating or representing that they are practicing or appearing as part of 'Dentons U.S. LLP.'"

         CIT Bank counter-argues that Sheveland's interpretation of RSCH Rule 6 contradicts the rule's plain text, purpose, and history. As to Rule 6(d)(1)'s plain language, CIT Bank asserts that shares or interests in a law firm can be owned either by another lawyer's ...


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