Tracy v. Emigration Improvement, 17-4062

Relator Mark Tracy filed a qui tam suit under the False Claims Act against Emigration Improvement District (EID). Early in the case, Tracy directed his attorney Phillip Lowry (firm Christensen & Jensen, C&J) to record a lis pendens on EID property.
EID moved for release of the lis pendens and for attorney fees and statutory damages; the district court granted relief and invited a proposed judgment.
C&J (through Lowry) filed an objection that sought to avoid making C&J liable, a position that favored C&J over Tracy and prompted the court to issue a show-cause order about possible conflict of interest.
The district court disqualified C&J and Lowry, struck the objection, ordered Tracy to obtain new counsel, and entered judgment against Tracy and C&J on the lis pendens sanctions; C&J later withdrew its objection and offered to pay the judgment.
Tracy, after failing to retain replacement counsel despite contacting many firms, sought reconsideration and reinstatement of C&J; the district court denied reconsideration and dismissed the qui tam complaint (pro se relators cannot proceed).
On appeal, the Tenth Circuit affirmed the initial disqualification but reversed the denial of reconsideration and the dismissal, remanding for further proceedings because the conflict had been resolved and reinstatement may avoid severe prejudice to Tracy.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether district court abused discretion by disqualifying counsel for conflict of interest	Tracy argued disqualification was unwarranted/too drastic and no hearing or findings required	EID argued disqualification was proper because counsel advanced their own interests against Tracy	Court: Affirmed disqualification as not an abuse of discretion
Whether district court had to hold evidentiary hearing before disqualification	Tracy argued hearing and factual findings were required	EID argued hearing not required; issue not preserved	Court: Not reviewed on appeal (issue forfeited)
Whether denial of motion to reconsider was proper after C&J withdrew objection and offered to pay judgment	Tracy argued conflict was resolved/waived, no continuing prejudice, and reinstatement necessary to avoid severe prejudice	EID argued prior conduct tainted the case; withdrawal insufficient to cure taint	Court: Denial of reconsideration was an abuse of discretion; reversed and remanded
Whether dismissal for failure to obtain new counsel was proper	Tracy argued he tried and could not find counsel; dismissal prejudicial	EID argued dismissal appropriate given non-waivable conflict and need for independent counsel	Court: Dismissal reversed because reconsideration improperly denied and dismissal caused severe prejudice

Cole v. Ruidoso Mun. Sch., 43 F.3d 1373 (10th Cir. 1994) (attorney-conduct and disqualification reviewed under district court’s supervisory discretion)
Chavez v. New Mexico, 397 F.3d 826 (10th Cir. 2005) (motions to disqualify counsel reviewed for abuse of discretion)
Van Skiver v. United States, 952 F.2d 1241 (10th Cir. 1991) (motions for reconsideration reviewed for abuse of discretion)
Bylin v. Billings, 568 F.3d 1224 (10th Cir. 2009) (definition of abuse of discretion)
Servants of Paraclete v. Does, 204 F.3d 1005 (10th Cir. 2000) (standards for reconsideration and ‘manifest injustice’ test)
Parkinson v. Phonex Corp., 857 F. Supp. 1474 (D. Utah 1994) (nonexhaustive factors for disqualification analysis)
Smith v. Whatcott, 774 F.2d 1032 (10th Cir. 1985) (right to retain counsel of choice)
Archuleta v. Turley, 904 F. Supp. 2d 1185 (D. Utah 2012) (ethical violations requiring disqualification: conflicts preventing zealous advocacy or misuse of privileged information)
Richison v. Ernest Grp., Inc., 634 F.3d 1123 (10th Cir. 2011) (plain error review when raising new arguments on appeal)
Singleton v. Wulff, 428 U.S. 106 (1976) (federal appellate courts generally do not consider issues not raised below)