Monday, October 7, 2002
Court of Appeal Overturns Order That Disqualified Law Firm From Bicycle Club Litigation
By a MetNews Staff Writer
A law firm that formerly represented the Bell Gardens Bicycle Club in employment litigation can represent one faction of the casino’s owners in a dispute with the other faction, this district’s Court of Appeal has ruled.
The justices Wednesday overturned Los Angeles Superior Court Judge Thomas I. McKnew’s disqualification order and reinstated the law firm of Baker, Keener & Nahra as counsel for LCP Associates, Ltd. and the club in their dispute with minority owner Park Place Associates, Ltd.
Presiding Justice Candace Cooper authored the unpublished opinion for Div. Eight.
The club has had a brief, but checkered, history. Organized in 1983 as a joint venture between Park Place and LCP, it became the subject of a forfeiture action after federal prosecutors in Florida alleged in 1987 that drug money was being laundered through the club.
The government eventually concluded that some of the partners, including then-general manager George Hardie, were not chargeable with knowledge of the money laundering and were entitled to keep their shares. The rest of the interests were sold by the government, which distributed more than $100 million in proceeds among various agencies as a result of the forfeiture, according to a government website.
LCP eventually came to own 65 percent of the club, becoming the managing partner, by 1995, when the club had more legal troubles.
State officials accused Hardie of allowing drugs to be sold at the club, fixed games, and willfully misreported cash transactions. Hardie denied the charges, but eventually settled, agreeing to give up management, sell his interests—which amounted to between 15 and 17 percent of the club—within four years, and to pay a fine of $220,000 and leave the industry for three years following the sale.
In 1999, Hardie reached an agreement with LCP to sell his interests to the joint venture for $4 million, payable. According to the complaint later filed by Park Place, the sale breached the Park Place partnership agreement because Hardie was obligated to offer his shares to the other Park Place partners first.
By not doing so, the complaint alleged, Hardie permitted LCP to increase its ownership share to 78 percent of the club. Hardie is a defendant in the lawsuit but is not represented by Baker, Keener & Nahra and was not a party to the appeal.
In granting the plaintiffs’ motion to disqualify Baker, Keener & Nahra, McKnew reasoned that having represented the club in the employment cases, the firm had an attorney-client relationship with Park Place. He further concluded that even if had not represented the club before, it was improper for the firm to represent both LCP and the club in a dispute against an entity that was part-owner of the club.
But Cooper rejected the finding of dual representation with respect to the employment cases and said there was nothing improper about the firm representing the club and its majority owners in a fight with the minority interests.
The firm could not be held to have represented Park Place in connection with the employment cases, the jurist said, because it had no contacts with Park Place concerning those matters and had no access to any confidential information related to Park Place’s interests. The fact that Park Place could potentially have been called upon to satisfy a judgment for the plaintiffs in those cases was insufficient to create an attorney-client relationship between it and the club’s attorneys, Cooper insisted.
The lack of an attorney-client relationship between the firm and Park Place, she went on to say, also requires a finding that its dual representation of the club and LCP is not a representation of conflicting interests. Otherwise, “no lawyer could represent the club in this case,” she reasoned.
“Indeed, a duty to pursue the interests of each member of a partnership could pose an impossible task for any partnership attorney,” Cooper wrote.
Robert C. Baker, Melissa S. Fink and E. Todd Trumper of Baker, Kenner & Nahra handled the appeal, along with David J. Gonzalez and Robert H. Wright of Horvitz & Levy. John R. Pelle, Jason D. Cohn and Colleen M. McCarthy of Ferruzzo & Ferruzzo represented Park Place.
The case is Park Place Associates, Ltd v. Bell Gardens Bicycle Club, B156644.
Copyright 2002, Metropolitan News Company