Reimche v. Church CA5 ( 2014 )

Filed 12/18/14 Reimche v. Church CA5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIFTH APPELLATE DISTRICT
LUCY REIMCHE,
Plaintiff and Respondent,
F068384
v.
(Super. Ct. No. 12CECG00719)
JOHN CHURCH et al.,
OPINION
Defendants and Appellants.
APPEAL from a judgment of the Superior Court of Fresno County. Kristi Culver
Kapetan, Judge.
Sagaser, Watkins & Wieland, Howard A. Sagaser and Ian B. Wieland for
Defendants and Appellants.
The Law Offices of Gregory J. Smith, Gregory J. Smith; Campagne, Campagne &
Lerner, Justin T. Campagne and Wiley R. Driskill for Plaintiff and Respondent.
-ooOoo-
Defendants appeal from an order disqualifying their attorney, his associated
cocounsel, and the law firms of both attorneys from representing defendants in this
litigation. The disqualification was based on the associated cocounsel’s prior
consultation with and advice to plaintiff in connection with the same dispute, which the
trial court found gave rise to an attorney-client relationship. Because the cocounsel
accepted employment adverse to plaintiff, his former client, in the same matter in which
he represented her and without her written consent, he and his law firm were disqualified.
Defense counsel and his law firm were also vicariously disqualified. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff joined defendants’ accounting firm in March 2008. She asserts she was
promised a partnership agreement and a salary of at least $250,000 if she joined the firm.
After joining the firm, however, she contended the partnership agreement was never
finalized and executed, and she was not paid as promised. She resigned from the firm
and, in March 2012, sued the partnership (TCA Partners), another partnership (KHJC &
Partners), and several partners (John Church, Rick Jackson, Kelly Hohenbrink, Jerrel
Tucker, and Bobby Church). Initially, defendants were represented by James B. Betts
and his firm, Betts, Rubin & McGuinness. In January 2013, defendants associated
Russell K. Ryan and his firm, Motschiedler, Michaelides, Wishon, Brewer & Ryan, LLP,
as cocounsel with Betts. Plaintiff filed a motion to disqualify Betts, Ryan, and their law
firms from representing defendants in this litigation. Plaintiff asserted she consulted with
Ryan about her claims and he assisted and advised her, which gave rise to an attorney-
client relationship. She contends Ryan’s representation of defendants in this lawsuit,
which arose out of the same dispute about which she consulted him, created a conflict of
interest which justified disqualifying both Ryan and Betts.
In support of her motion, plaintiff presented evidence that, while she worked for
defendants, she consulted Ryan about her partnership and salary claims against
defendants. She asked for his assistance in finalizing a proposed partnership agreement
with TCA Partners; with input from her and from defendant Jackson, Ryan drafted the
agreement. Plaintiff had private conversations with Ryan, and they exchanged e-mails;
2
she conveyed confidential information to him that was material to her claims against
defendants. Plaintiff asserts both of them agreed their conversations would be kept
confidential. On May 18, 2011, she and Ryan met alone at a restaurant and discussed the
dispute about partnership and compensation; she shared her confidential thoughts,
observations, and impressions with Ryan. Ryan advised her about the dispute and
suggested writing a letter to defendants laying out the issues that needed to be resolved.
Plaintiff drafted the letter and Ryan edited it. Ryan did not want her to disclose to
defendants that he had helped with the drafting of the letter. Ryan billed plaintiff directly
for the May 18, 2011, meeting and the revision of the letter to defendants; she paid with
her own funds. On other occasions, Ryan billed TCA Partners, which forwarded the bills
to plaintiff for payment.
In late summer 2011, when it seemed probable the dispute would end in litigation,
Ryan informed plaintiff on multiple occasions that, because of his representation of both
plaintiff and defendants, he would not be able to represent any party in such litigation.
In opposition to plaintiff’s motion, defendants asserted Ryan did not have an
attorney-client relationship with plaintiff because, at all relevant times, he was
representing defendants as their attorney and plaintiff was aware of that. Ryan declared
he had represented TCA Partners as its attorney since Jackson, John Church, and Tucker
started their practice together in 2001 or 2002. Ryan had also represented Jackson,
Tucker and John Church since at least 2002. Beginning in 2009, Ryan worked with these
individuals to draft a partnership agreement to formalize the partnership’s relationship
with contracting accountants, such as plaintiff. The draft agreements were never
finalized.
In January, 2011, Ryan met with Jackson, Church, Tucker and other professionals
they worked with to discuss the draft agreement; plaintiff attended the meeting. In April,
2011, Jackson asked Ryan to meet directly with plaintiff to discuss questions or concerns
3
she might have about the draft agreement and her relationship with defendants. Shortly
after, plaintiff sent Ryan an April 15, 2011, e-mail asking him for help finalizing the
agreement because it was holding things up. Ryan asserted that, in drafting the
agreement and discussing it with plaintiff, he was at all times acting in his capacity as
legal counsel for TCA Partners, and not for plaintiff. He stated he did not recall telling
plaintiff that her comments would remain confidential, or that he could or would act as
her legal counsel; he told her, and she knew at all times, that he was legal counsel for
TCA Partners.
Ryan asserts he met with plaintiff on May 18, 2011, at Jackson’s express
direction; he agreed to look over the draft letter plaintiff was preparing to send to Jackson
and Church and give her his thoughts, in an effort to work through the issues for TCA
Partners, not as her attorney. Ryan asserted he never expressly agreed to keep plaintiff’s
communications confidential, and never led her to believe he was acting as her legal
counsel or could represent her in her dealings with TCA Partners. He acknowledges
saying in telephone conversations with plaintiff and her attorney and in e-mails that he
would not be able to represent anyone in litigation, “but that statement was made strictly
because of my personal feelings about the individuals involved at the time. It was not
because I thought there had been an attorney-client relationship created between Plaintiff
and me.” Both Ryan and Betts denied that Ryan disclosed any confidential information
obtained from plaintiff to Betts.
The judge who initially heard the matter directed Ryan to provide a declaration
explaining why he failed to advise plaintiff that he was not her counsel and explaining the
circumstances of his accepting payment for alleged legal services provided. He directed
plaintiff and her attorney to file a declaration under seal “containing a recitation of the
actual confidential communications that were passed between Plaintiff Reimche and
attorney Ryan.” That judge was subsequently disqualified pursuant to Code of Civil
4
Procedure section 170.1. The parties filed the additional declarations and the newly
assigned judge heard and granted the motion, disqualifying Ryan, Betts, and their
respective law firms. Defendants appeal.
DISCUSSION
I. Appealability and Standard of Review
“[A]n order granting or denying a motion to disqualify an attorney is appealable,
either as a denial of injunctive relief or as a final order upon a collateral matter unrelated
to the merits of the underlying litigation.” (Truck Ins. Exchange v. Fireman’s Fund Ins.
Co. (1992) 6 Cal. App. 4th 1050, 1052, fn. 1; Roush v. Seagate Technology, LLC (2007)
150 Cal. App. 4th 210, 218.)
In reviewing an order granting disqualification of counsel, “the judgment of the
lower court is presumed correct and all intendments and presumptions are indulged to
support it on matters as to which the record is silent. [Citation.] Conflicts in the
declarations are resolved in favor of the prevailing party and the trial court’s resolution of
factual issues arising from competing declarations is conclusive on the reviewing court.
[Citations.]” (H.F. Ahmanson & Co. v. Salomon Brothers, Inc. (1991) 229 Cal. App. 3d
1445, 1451.)
“Generally, a trial court’s decision on a disqualification motion is reviewed for
abuse of discretion. [Citations.] If the trial court resolved disputed factual issues, the
reviewing court should not substitute its judgment for the trial court’s express or implied
findings supported by substantial evidence. [Citations.] When substantial evidence
supports the trial court’s factual findings, the appellate court reviews the conclusions
based on those findings for abuse of discretion. [Citation.] However, the trial court’s
discretion is limited by the applicable legal principles. [Citation.] Thus, where there are
no material disputed factual issues, the appellate court reviews the trial court’s
5
determination as a question of law. [Citation.]” (People ex rel. Dept. of Corporations v.
SpeeDee Oil Change Systems, Inc. (1999) 20 Cal. 4th 1135, 1143-1144 (SpeeDee Oil).)
II. Disqualification of Ryan and His Firm
“A trial court’s authority to disqualify an attorney derives from the power inherent
in every court ‘[t]o control in furtherance of justice, the conduct of its ministerial officers,
and of all other persons in any manner connected with a judicial proceeding before it, in
every matter pertaining thereto.’ (Code Civ. Proc., § 128, subd. (a)(5) .…) Ultimately,
disqualification motions involve a conflict between the clients’ right to counsel of their
choice and the need to maintain ethical standards of professional responsibility.
[Citation.] The paramount concern must be to preserve public trust in the scrupulous
administration of justice and the integrity of the bar. The important right to counsel of
one’s choice must yield to ethical considerations that affect the fundamental principles of
our judicial process. [Citations.]” (SpeeDee Oil, supra, 20 Cal.4th at p. 1145.)
Plaintiff’s motion to disqualify Ryan was based on rule 3-310(E) of the Rules of
Professional Conduct of the State Bar of California (rule 3-310(E)) which provides: “A
member shall not, without the informed written consent of the client or former client,
accept employment adverse to the client or former client where, by reason of the
representation of the client or former client, the member has obtained confidential
information material to the employment.” “The rule implements the ethical imperative of
Business and Professions Code section 6068, subdivision (e), which states that it is the
obligation of every attorney ‘[t]o maintain inviolate the confidence, and at every peril to
himself or herself to preserve the secrets, of his or her client.’” (Adams v. Aerojet-
General Corp. (2001) 86 Cal. App. 4th 1324, 1334 (Adams).) Rule 3-310(E) generally has
been invoked in two situations: “where the attorney successively represents clients with
potential or actual adverse interests and where the attorney simultaneously represents
clients with potential or actual adverse interests.” (Jessen v. Hartford Casualty Ins. Co.
6
(2003) 111 Cal. App. 4th 698, 705 (Jessen).) We are concerned here with a question of
successive representation: whether Ryan accepted employment adverse to plaintiff, his
former client, in an action arising out of the same dispute about which she had previously
consulted him and obtained his advice.
A. Existence of attorney-client relationship
Defendants contend the trial court erred in disqualifying Ryan, because plaintiff
failed to demonstrate that an attorney-client relationship existed between her and Ryan.
Defendants contend Ryan was at all times acting as counsel for TCA Partners; he met
with plaintiff at the direction of Jackson, and plaintiff was aware he represented TCA
Partners. Under these circumstances, defendants contend plaintiff could not reasonably
have believed Ryan was representing her to the exclusion of TCA Partners. Essentially,
defendants are asking this court to reweigh the facts and reach a conclusion contrary to
that reached by the trial court. This we cannot do. If there is substantial evidence in the
record, contradicted or uncontradicted, supporting the trial court’s factual findings, we
cannot substitute our own findings for those of the trial court. (Bowers v. Bernards
(1984) 150 Cal. App. 3d 870, 873-874.)
“‘Except for those situations where an attorney is appointed by the court, the
attorney-client relationship is created by some form of contract, express or implied,
formal or informal. [Citation.]’ [Citations.]” (Responsible Citizens v. Superior Court
(1993) 16 Cal. App. 4th 1717, 1732 (Citizens).) “An express contract is one, the terms of
which are stated in words.” (Civ. Code, § 1620.) “An implied contract is one, the
existence and terms of which are manifested by conduct.” (Civ. Code, § 1621.) “‘The
distinction between express and implied in fact contracts relates only to the manifestation
of assent; both types are based upon the expressed or apparent intention of the parties.’
[Citation.]” (Citizens, at pp. 1732-1733.) There is no contention in this case that an
attorney-client relationship between plaintiff and Ryan was created by appointment of
7
counsel or express contract. Consequently, the question is whether an implied in fact
contract was created by their conduct.
An attorney who represents a partnership does not automatically have an attorney-
client relationship with an individual partner. (Citizens, supra, 16 Cal.App.4th at
p. 1731.) Here, however, plaintiff is not claiming an attorney-client relationship arose
between her and the partnership’s attorney by virtue of her position as a partner in the
partnership. Rather, she is claiming an attorney-client relationship arose as a result of
interactions between Ryan and plaintiff individually.
The trial court found an attorney-client relationship existed between plaintiff and
Ryan. In support of that finding, it noted plaintiff sought advice and counsel from Ryan
about the partnership agreement and her claim for additional compensation on multiple
occasions. They privately discussed her claims; she asked that he keep their
communications confidential, and he did not tell her he would not do so. Ryan did not
tell plaintiff that he did not represent her or that he represented only TCA Partners; he did
not advise her to seek independent counsel to represent her in her dispute with TCA
Partners. Ryan advised plaintiff about her dispute with defendants and helped her draft a
demand letter setting out her claims against defendants. Plaintiff reimbursed TCA
Partners for work Ryan did for her, and Ryan directly billed plaintiff for his legal services
on one occasion. Finally, Ryan stated in e-mails that he could not represent either side in
the event of litigation between them because he had represented them both. The trial
court described this evidence as “[p]articularly damning,” and rejected as unconvincing
Ryan’s attempt to explain those statements as being based on the relationships of the
people involved and not on the existence of an attorney-client relationship.
The trial court’s findings are supported by substantial evidence. Plaintiff joined
TCA Partners in 2008. In 2009, Ryan began drafting a partnership agreement to
formalize the relationship between TCA Partners and the professionals who worked for
8
it, including plaintiff. In April 2011, plaintiff asked Ryan for assistance in finalizing her
proposed partnership agreement with TCA Partners. Ryan had private meetings with
plaintiff during which they discussed matters plaintiff asked Ryan to keep confidential; in
e-mails, she expressed her appreciation that he was keeping the information confidential.
Plaintiff declared she and Ryan “both agreed that these conversations should be kept
completely confidential.” Although the evidence was conflicting, there was evidence
Ryan did not tell plaintiff he did not represent her, did not tell plaintiff he represented
only TCA Partners, and did not tell plaintiff he would not keep her information
confidential.
On May 18, 2011, Ryan and plaintiff met privately at a restaurant and discussed
plaintiff’s dispute with defendants over the partnership agreement and compensation.
Plaintiff discussed with Ryan her confidential thoughts, observations, and impressions of
the dispute with defendants. In a declaration filed under seal, plaintiff explained the
nature and content of the confidential information she disclosed to Ryan. Ryan advised
her and suggested drafting a letter to defendants setting out the issues that needed to be
resolved. He subsequently reviewed and made extensive changes to the letter she
drafted. Plaintiff denied Ryan’s claim that he met with her on May 18, 2011, at
Jackson’s request or with Jackson’s knowledge. She also denied his claim he merely
looked over her draft letter “in an effort to work through the issues on the part of TCA
Partners and not as her attorney.” Plaintiff stated she and Ryan discussed reasons they
should keep their meetings confidential, including her fear that Church and other
defendants would retaliate against her for standing up to them. Ryan understood her
concerns and agreed to meet away from TCA Partners’ office on May 18, to hide the
meeting from defendants. Further, Ryan told her he did not want anyone at TCA Partners
to know he was involved in drafting her letter to defendants; when he e-mailed the
revisions to her, he instructed her to save his draft as a new file.
9
Plaintiff declared that she believed Ryan was acting as her attorney and providing
her with legal advice regarding how to resolve her dispute with defendants. Ryan met
with plaintiff, discussed with her the dispute with defendants, and advised her how to
proceed. Plaintiff offered to either reimburse TCA Partners for the time Ryan spent with
her or be billed directly. For some of his work, Ryan billed TCA Partners, and TCA
Partners forwarded the bill to plaintiff. For the May 18, 2011, meeting and the revision
of the demand letter, plaintiff was billed directly. Ryan’s law firm sent her a bill on its
letterhead, charging her for “[p]rofessional services rendered”; the services were itemized
as a May 18, 2011, conference with plaintiff and reviewing and revising correspondence
regarding partnership issues. Plaintiff paid Ryan for his services with her personal funds.
It can be reasonably inferred from their conduct that both parties understood plaintiff was
consulting Ryan in his capacity as an attorney and Ryan was rendering advice and
counsel in that capacity.
In an e-mail to plaintiff dated August 5, 2011, Ryan stated: “As I mentioned in
our past conversations, because of my relationship with you, on the one hand, and John
and Rick, on the other, I would not be able to represent anyone in any litigation, but I
would certainly do my best to facilitate a resolution and settlement if I can.” In another
e-mail to plaintiff, dated two days later, after expressing a wish that Church would “come
to his senses and work through issues with you soon,” Ryan stated: “However, and as we
discussed, I cannot be involved in any representation of anyone if the matters escalate to
litigation due to my representation of both of you.” Thus, Ryan himself referred to his
“representation” of plaintiff and implicitly recognized the conflict in representing both
TCA Partners and plaintiff.
Both express and implied in fact contracts are based on agreement of the parties.
(Caron v. Andrew (1955) 133 Cal. App. 2d 412, 417.) Agreement to an express contract is
manifested in words, either oral or written. (Id. at p. 416.) Agreement to an implied in
10
fact contract must be “inferred from the conduct, situation, or mutual relation of the
parties.” (Id. at p. 417.) Mutual assent to a contract is based upon objective and outward
manifestations of the parties; subjective intent is irrelevant. (Stewart v. Preston Pipeline,
Inc. (2005) 134 Cal. App. 4th 1565, 1587.) We conclude the evidence of Ryan’s objective
manifestations of agreement with plaintiff was sufficient to support the trial court’s
conclusion that plaintiff and Ryan entered into an implied in fact contract for Ryan to
provide legal advice and counsel to plaintiff in connection with her dispute with TCA
Partners and to keep her information confidential.
B. Substantial relationship between prior and current representations
“A per se or automatic disqualification rule applies when counsel’s representation
of one client is adverse to the interests of another current client. [Citation.] When the
current representation is adverse to the interests of a former client, though,
disqualification may be necessary only if the attorney, by reason of the former
representation, obtained confidential information material to the current representation.
If there is a ‘substantial relationship’ between the two representations, courts presume
that confidences which may have value in the current representation were disclosed in the
first representation. [Citations.]” (Citizens, supra, 16 Cal.App.4th at p. 1724.)
Accordingly, even in the absence of proof the attorney actually possesses confidential
information obtained from the former client in the prior representation, the court will
presume the attorney obtained confidential information if the substantial relationship test
is met. (Adams, supra, 86 Cal.App.4th at p. 1331.) In that event, disqualification of the
attorney from representation of the current client is mandatory. (Jessen, supra, 111
Cal.App.4th at p. 706.) The test avoids an inquiry into the actual extent of the attorney’s
knowledge acquired from the prior representation. “‘The conclusive presumption …
avoids the ironic result of disclosing the former client’s confidences and secrets through
an inquiry into the actual state of the lawyer’s knowledge and it makes clear the legal
11
profession’s intent to preserve the public’s trust over its own self-interest. [Citations.]’
[Citation.]” (Jessen, at p. 706.)
There are two variables in the substantial relationship test: “(1) the relationship
between the legal problem involved in the former representation and the legal problem
involved in the current representation, and (2) the relationship between the attorney and
the former client with respect to the legal problem involved in the former representation.”
(Jessen, supra, 111 Cal.App.4th at p. 709.) “If the relationship between the attorney and
the former client is shown to have been direct—that is, where the lawyer was personally
involved in providing legal advice and services to the former client—then it must be
presumed that confidential information has passed to the attorney and there cannot be any
delving into the specifics of the communications between the attorney and the former
client in an effort to show that the attorney did or did not receive confidential information
during the course of that relationship.… This is so because a direct attorney-client
relationship is inherently one during which confidential information ‘would normally
have been imparted to the attorney by virtue of the nature of [that sort of] former
representation,’ and therefore it will be conclusively presumed that the attorney acquired
confidential information relevant to the current representation if it is congruent with the
former representation.” (Ibid.) In this situation, whether disqualification is warranted
“will depend upon the strength of the similarities between the legal problem involved in
the former representation and the legal problem involved in the current representation.”
(Ibid.)
“On the other hand, where the former attorney-client relationship is peripheral or
attenuated instead of direct, then the presumption will not be applied in the absence of an
adequate showing that the attorney was in a position vis-a-vis the client to likely have
acquired confidential information material to the current representation.” (Jessen, supra,
111 Cal.App.4th at p. 710.) In that situation, the court must consider both whether that
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the attorney’s relationship with the former client was such that it was reasonably likely he
would have acquired confidential information material to the representation of the
subsequent client, and whether there was a substantial relationship between the legal
problem involved in the former representation and the legal problem involved in the
current representation. (Ibid.)
The relationship between plaintiff and Ryan was direct; Ryan personally
communicated with plaintiff and provided legal advice and services to her. Thus, we
must presume plaintiff imparted confidential information to Ryan in the course of their
relationship and we cannot delve into the specifics of their communications to allow
Ryan to attempt to rebut that presumption. Ryan’s arguments that plaintiff was just
“venting” or gossiping when she spoke with him and did not discuss confidential
information, and that the letter he helped her draft was to be sent to defendants, so it
could not have been confidential, invite this court to delve into the specifics of their
attorney-client communications. Where the relationship between attorney and former
client was direct, however, the presumption that confidential information was shared is
conclusive and we will not inquire into the nature or actual content of the
communications between attorney and former client. (Jessen, supra, 111 Cal.App.4th at
p. 709.)
Thus, the only remaining question is whether the subjects of the prior
representation and the current representation were the same or substantially related.
(Farris v. Fireman’s Fund Ins. Co. (2004) 119 Cal. App. 4th 671, 683.) The trial court
found they were and substantial evidence supports that conclusion. Both representations
involved the same matter: plaintiff’s claims against defendants arising out of defendants’
alleged promise to enter into a partnership agreement with plaintiff and their alleged
underpayment for her services. Consequently, defendants have not demonstrated that the
13
trial court abused its discretion by disqualifying Ryan from representing defendants in
this matter.
When, in a case of successive representation, the subjects of the two
representations are substantially related, and the attorney is disqualified, the need to
protect the former client’s confidential information requires that the “presumption that an
attorney has access to privileged and confidential matters relevant to a subsequent
representation extends the attorney’s disqualification vicariously to the attorney’s entire
firm.” (SpeeDee Oil, supra, 20 Cal.4th at p. 1146.) Accordingly, because the subjects of
the two representations were the same and Ryan was disqualified, it was proper to also
disqualify Ryan’s law firm. We find no abuse of discretion in the trial court’s
disqualification of Ryan and his law firm.
III. Disqualification of Betts and His Firm
The trial court concluded it was bound to follow this court’s decision in Pound v.
DeMera DeMera Cameron (2005) 135 Cal. App. 4th 70 (Pound), apparently because it
was the decision of its own district, even though it found Kirk v. First American Title Ins.
Co. (2010) 183 Cal. App. 4th 776 (Kirk) to be better reasoned.1 Following Pound, the trial
court disqualified Betts and his firm because they associated as cocounsel an attorney,
Ryan, who had consulted with the opposing party in the same matter. Although Kirk may
1 We note that, if the decisions in Pound and Kirk were conflicting, the trial court was not
bound to follow the Pound decision simply because it was a decision of this court, but was free
to follow the decision it determined to be better reasoned. “Decisions of every division of the
District Courts of Appeal are binding … upon all the superior courts of this state.” (Auto Equity
Sales, Inc. v. Superior Court (1962) 57 Cal. 2d 450, 455.) Where there is more than one appellate
court decision and those decisions are in conflict, the court exercising inferior jurisdiction can
and must make a choice between the conflicting decisions. (Id. at p. 456.) “As a practical
matter, a superior court ordinarily will follow an appellate opinion emanating from its own
district even though it is not bound to do so. Superior courts in other appellate districts may pick
and choose between conflicting lines of authority.” (McCallum v. McCallum (1987) 190
Cal. App. 3d 308, 315, fn. 4.)
14
be well reasoned, it would have been error to follow it in this case, because its reasoning
and decision do not apply to the situation presented in this case.
In Pound, the plaintiffs, represented by attorney Andrew B. Jones, sued their
employer and later added the employer’s two controlling shareholders as defendants.
The shareholders, seeking counsel to represent them individually, had the employer’s
attorney, Michael J. F. Smith, interview candidates. Smith interviewed attorney Peter S.
Bradley for approximately one hour, discussing specifics of the case, “including issues,
personalities, vulnerabilities, and other topics properly described as attorney work
product.” (Pound, supra, 135 Cal.App.4th at p. 74.) The shareholders did not retain
Bradley. Three years later, the plaintiffs’ attorney Jones consulted with Bradley because
of his experience in corporate matters, and they discussed the case, but only the facts and
issues provided by Jones. Bradley told Jones he had met with Smith about a case in
which Jones was opposing counsel, but he did not know if it was the same case. (Ibid.)
Bradley associated in as the plaintiffs’ counsel with Jones. The defendants moved to
disqualify both Bradley and Jones. The trial court disqualified only Bradley. The
defendants appealed the denial of the motion to disqualify Jones. (Id. at p. 75.) We
reversed.
The defendants contended the trial court abused its discretion because Smith
communicated privileged information to Bradley, and Bradley subsequently consulted
with Jones, so there was a possibility Bradley, intentionally or unintentionally, disclosed
privileged information to Jones. (Pound, supra, 135 Cal.App.4th at p. 75.) Jones denied
receiving any of the defendants’ confidential information from Bradley. (Ibid.) The trial
court had determined Bradley entered into an attorney-client relationship with the
shareholders when he interviewed with Smith, who disclosed confidential information to
him. (Id. at p. 76.) Accordingly, we analyzed the case as one involving successive
representation and applied the substantial relationship test. (Id. at pp. 75-76.) When
15
Bradley associated with Jones as counsel for the plaintiffs, he entered into representation
adverse to his former clients; he switched sides, the “‘most egregious conflict of
interest.’” (Id. at p. 76.) Thus, Bradley was properly disqualified.
Regarding disqualification of Jones, we viewed the matter as “essentially identical
to those cases involving attorneys changing law firms, from one side (plaintiffs) to the
other (defendants), during the pendency of a case.” (Pound, supra, 135 Cal.App.4th at
p. 76.) We cited Henriksen v. Great American Savings & Loan (1992) 11 Cal. App. 4th
109, where an attorney who worked for the firm representing the defendant and who was
actively involved in the litigation became employed by the firm representing the plaintiff,
which constructed an “ethical wall” to isolate him from the case. (Pound, at pp. 76-77.)
The Henriksen court upheld the order disqualifying the firm that represented the plaintiff,
stating: “‘[W]e believe the rule to be quite clear cut in California: where an attorney is
disqualified because he formerly represented and therefore possesses confidential
information regarding the adverse party in the current litigation, vicarious disqualification
of the entire firm is compelled as a matter of law. [Citations.]’ [Citation.]” (Pound, at
p. 77.)
In Pound, we were not concerned with ethical wall issues, because there was no
ethical wall attempted in that case. “Indeed, the very purpose Bradley was hired by
plaintiffs was to assist in the trial of the case.” (Pound, supra, 135 Cal.App.4th at p. 77.)
We applied the substantial relationship test for successive representation, and the rule
that, in order to protect the client’s confidential information, the presumption the
disqualified attorney had access to confidential information “‘extends the attorney’s
disqualification vicariously to the attorney’s entire firm. [Citation.]’ [Citation.]” (Id. at
p. 78.) We applied the rule even though Bradley merely associated with the plaintiff’s
attorney, rather than being hired by his firm. “The distinction between hiring Bradley as
an associate or partner, on the one hand, and associating him as counsel, on the other
16
hand, does not change the need to protect defendants’ confidences. The only effective
method to protect defendants’ confidences from the possibility of inadvertent disclosure
is also to disqualify Jones.” (Ibid.)
Here, as in Pound, the trial court found an attorney-client relationship existed
between the first client and the tainted attorney prior to that attorney’s association as
counsel for the opposing party. As in Pound, the tainted attorney later associated into
litigation involving the very dispute about which the first client had previously consulted
him. As in Pound, the tainted attorney and the attorney with whom he associated denied
any confidential information from the first representation was disclosed between them.
As in Pound, there was no ethical wall issue, because the tainted attorney was associated
with opposing counsel specifically to assist in the litigation against the first client. Thus,
there was no way the tainted attorney could be isolated from the attorneys conducting the
litigation on behalf of the plaintiff; he was retained to work with them. Because of the
strong similarities between this case and the Pound case, the trial court did not abuse its
discretion by following Pound and concluding it required the vicarious disqualification of
Betts and his firm.
Kirk presented a significantly different factual situation. In Kirk, First American
was a defendant in four related class actions. (Kirk, supra, 183 Cal.App.4th at p. 785.) It
was represented in those cases by three attorneys from Bryan Cave LLP, who had
defended it in 80 class actions nationwide. The three attorneys had unique familiarity
with First American’s personnel, products, and operations. (Ibid.)
The plaintiffs’ counsel sought the services of attorney Gary Cohen as a consultant
and disclosed confidential information to him about the class actions; Cohen declined the
consulting position. (Kirk, supra, 183 Cal.App.4th at p. 786.) Cohen later joined
Sonnenschein Nath & Rosenthal LLP. (Id. at p. 787.) Within a month, the three
attorneys representing First American also joined the Sonnenschein firm. (Ibid.) The
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plaintiffs objected to the Sonnenschein firm’s representation of First American due to the
plaintiffs’ prior confidential consultation with Cohen. The Sonnenschein firm established
an ethical wall around Cohen to isolate him from contact with the class actions. (Id. at
p. 788.)
The plaintiffs moved to disqualify the Sonnenschein firm from representing First
American in the class actions. The trial court granted the motion, finding the plaintiffs’
attorney had disclosed confidential information to Cohen and interpreting case law to
provide that, “when an attorney possesses disqualifying confidential client information,
vicarious disqualification of the law firm is automatic, regardless of any ethical screening
wall created.” (Kirk, supra, 183 Cal.App.4th at p. 790.) The reviewing court disagreed,
concluding “vicarious disqualification is not automatic, but may be rebutted by a proper
ethical wall.” (Id. at p. 791.)
The Kirk court traced the history of vicarious disqualification cases and concluded
they did not establish an absolute rule of vicarious disqualification. Vicarious
disqualification is imposed because “conflict is normally imputed to the tainted attorney’s
entire firm on the rationale that attorneys practicing together generally share each other’s,
and their clients’, confidential information. [Citation.]” (Kirk, supra, 183 Cal.App.4th at
p. 799.) The Kirk court criticized the imputation of the tainted attorney’s conflict to the
entire firm as outdated and not consistent with the nature of today’s large law firms,
where one attorney may not know or have contact with members of the same firm
working in a different department either across the hall or across the globe. (Id. at
pp. 801-802.)
Based on its historical review, the court concluded: “We do not doubt that
vicarious disqualification is the general rule, and that we should presume knowledge is
imputed to all members of a tainted attorney’s law firm. However, we conclude that, in
the proper circumstances, the presumption is a rebuttable one, which can be refuted by
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evidence that ethical screening will effectively prevent the sharing of confidences in a
particular case.” (Kirk, supra, 183 Cal.App.4th at p. 801.) Kirk addressed a situation in
which an attorney changed firms and joined a firm that represented a client adverse to a
former client the attorney represented in his prior employment. At the new firm, the
attorney was screened from contact with the attorneys actually representing the adverse
client. The court essentially determined that, when such a screen is adequate to protect
the prior client’s confidential information, disqualification of the entire firm may not be
necessary.
Here, in contrast, Ryan associated into a case to represent parties adverse to his
former client in litigation of the very dispute about which he previously advised plaintiff,
his former client. There was no question of building an ethical wall to screen Ryan out of
the case. Ryan was associated directly into it. The purpose of his association was to
obtain his participation in representing the defendants in this action. When the tainted
attorney is actively participating in the representation of a party adverse to the former
client, no ethical wall can be erected to protect the former client’s confidences and the
firm must be vicariously disqualified. Additionally, “if the tainted attorney was actually
involved in the representation of the first client, and switches sides in the same case, no
amount of screening will be sufficient, and the presumption of imputed knowledge is
conclusive.” (Kirk, supra, 183 Cal.App.4th at p. 814.)
Even if we were to follow the Kirk case, we would reach the same result. Defense
counsel made no attempt at all to screen Ryan, the tainted attorney, from contact with this
case. Adequately screening Ryan and isolating him from the case would have required
disassociating him from the representation of defendants before he had an opportunity to
communicate any confidential information, intentionally or inadvertently, to Betts or any
other attorney participating in the defense. This did not occur. The evidence indicates
Ryan and Betts engaged in “substantive discussions” while jointly representing
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defendants at an all-day mediation session, although they denied discussing any
information provided by plaintiff.
Defendants contend the difference between Pound and this case is that the trial
court in Pound found there was actual disclosure of the client’s confidential information
to the tainted attorney (Pound, supra, 135 Cal.App.4th at p. 76), but here the trial court
did not make such an express finding. The significance of the finding of actual disclosure
in Pound was that Bradley, the tainted attorney, was never retained by the defendants and
never actively represented them. In the absence of actual disclosure to him of the
defendants’ confidential information, there would have been no basis for a finding that
Bradley had an attorney-client relationship with the defendants that would have required
his disqualification from representing the plaintiffs or would have imposed on him an
obligation to keep the defendants’ information confidential.2 Here, the trial court found
there was an attorney-client relationship between plaintiff and Ryan. Where the attorney
was directly and personally involved in providing legal advice and services to the former
client, it is presumed confidential information passed between the two, and the court
cannot delve into specific communications to determine whether the attorney actually
received any confidential information during the course of the relationship. (Jessen,
supra, 111 Cal.App.4th at p. 709.) This is true whether the court is contemplating
disqualification of the individual attorney or of the firm he joined or associated with in
representation of the current client.
The trial court did not abuse its discretion by following the decision in Pound and
disqualifying Betts and his firm on that basis.
2 The same is true of Kirk. Cohen was never retained to represent the plaintiffs, and the
only basis for finding an attorney-client relationship between Cohen and the plaintiffs was the
disclosure of confidential information to Cohen when plaintiffs’ counsel approached him about
acting as a consultant.
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DISPOSITION
The order is affirmed. Plaintiff is entitled to her costs on appeal.
_____________________
HILL, P. J.
WE CONCUR:
_____________________
LEVY, J.
_____________________
DETJEN, J.
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