Wednesday, June 1, 2005
Appeals Court Limits Lawyers’ Ability to Avoid Disqualification
Partial Withdrawal From Representation Does Not Obviate Conflict Between Clients, Court Rules
By DAVID WATSON, Staff Writer
A law firm that agrees to handle a suit against another of the firm’s clients may not resolve the conflict by agreeing to partially withdraw from the new case, the Fourth District Court of Appeal ruled yesterday.
Writing for Div. Three, Justice William F. Rylaarsdam said an Orange Superior Court judge erred in denying a motion made by a Lewis Brisbois Bisgaard & Smith client to disqualify the firm in litigation against it. The client, Cal West Nurseries, Inc., was the object of a cross-complaint for equitable indemnity and contribution by the defendants in a personal injury action arising out of an automobile accident.
Lewis Brisbois joined the litigation as co-counsel for the defendants, Brongo Construction and A.J. West Ranch, LLC, after they and the plaintiffs had already reached a settlement agreement. Cal West was not a party to the settlement, which did not resolve the cross-complaint.
Cal West objected to the participation of the Lewis Brisbois firm, noting that the firm represented it in unrelated litigation. In response, the firm agreed to withdraw from the portion of the case involving Cal West, but said it would continue to represent Brongo and A.J. West as cross-complainants and cross-defendants against two other parties involved in the action.
Judge Thomas N. Thrasher, noting that Cal West had not shown Lewis Brisbois had obtained any “material confidential information” from it, ruled that was good enough and denied the disqualification motion. But Rylaarsdam said Thrasher had misinterpreted the ethical standards involved.
“Because this case involves concurrent representation, the absence of a violation of confidentiality is irrelevant,” the justice explained.
The question of whether confidential information has been disclosed, or should be presumed to have been disclosed under the “substantial relationship” test, arises only in cases of successive representation, Rylaarsdam observed.
Citing Truck Ins. Exchange v. Fireman’s Fund Ins. Co. (1992) 6 Cal.App.4th 1050, the justice declared:
“Absent informed written consent, a lawyer may not concurrently represent clients who have actual or potential conflicts; nor may a lawyer represent one client against another in an unrelated matter....It is immaterial whether the lawyer possesses confidential information that could be misused to the prejudice of either client.”
In Truck Ins. Exchange, Rylaarsdam noted, the appellate panel rejected a claim that a lawyer could avoid disqualification by dropping its representation of the first client while continuing to represent the second. But no case, the justice said, appears to have addressed the question presented by Lewis Brisbois’ situation.
“Here Lewis partially substituted out as counsel for Ranch in the present action rather than substituting out as counsel for Cal West in the other action,” Rylaarsdam pointed out. “Although the law firm no longer represented Ranch insofar as the litigation involved causes of action between Ranch and Cal West, it remained in the action to represent Ranch against other parties. Lewis argues this cures any conflict because Ranch and Cal West are no longer adverse to each other in the current action. We are not persuaded.”
The firm’s partial withdrawal “does not eliminate the adverse relationship between” its two clients, the justice reasoned. The firm, he said, is still “representing two clients who are opponents in the same action.”
Rylaarsdam said the Fourth District panel, which also included Justices Eileen C. Moore and Richard D. Fybel, was not convinced by Lewis Brisbois’ reliance on an ethics opinion issued by the New York City Bar Association and on a comment to Sec. 121 of the Restatement Third of Law Governing Lawyers for the proposition that limiting the scope of representation is a valid method of avoiding a conflict in concurrent representation cases.
“[D]ictum in Flatt [v. Superior Court (1994) 9 Cal.4th 275] is more persuasive,” Rylaarsdam asserted. “It provides that there are exceptions to the per se rule against concurrent representation under certain circumstances: ‘[M]ost courts thus permit an attorney to continue the simultaneous representation of clients whose interests are adverse as to unrelated matters provided full disclosure is made and both agree in writing to waive the conflict....But this class of cases is a rare circumstance,...and overcoming the presumption of ‘prima facie impropriety’ is not easily accomplished....’....Here, of course, if nothing else, there has been no written waiver by Cal West.”
“Granted, this is an unusual set of facts. But on balance, in this context, the duty of undivided loyalty Lewis owes Cal West prevails....This overrides Ranch’s right to retain counsel of its choice.”
The appellate panel declined, however, to bar Lewis Brisbois from representing any party in the action. The firm had argued that disqualifying it from representing Ranch would not help Cal West, since it would continue to represent Brongo.
Rylaarsdam noted that the request for a disqualification beyond that affecting A.J. West, the real party in interest in the underlying litigation, was only made in Cal West’s reply brief.
“We will not consider a request made for the first time in the reply,” the justice commented.
Among the attorneys representing A.J. West Ranch on appeal were Cary Linn Wood of the Los Angeles office of Lewis Brisbois and Daniel A. Berman of the downtown Los Angeles office of Wood, Smith, Henning & Berman.
The case is Cal West Nurseries, Inc. v. Superior Court (A.J. West Ranch, LLC), G034437.
Copyright 2005, Metropolitan News Company