Wednesday, November 5, 2008
Firm Can Represent Developer Against Former Client—C.A.
By SHERRI M. OKAMOTO, Staff Writer
A San Diego law firm was not barred from representing the developers of a commercial property in a dispute with condominium owners in an adjacent residential complex over access to the commercial property by virtue of the firm’s previous representation of one of the owners when she purchased her unit, the Fourth District Court of Appeal ruled yesterday.
Reversing San Diego Superior Court Judge Charles R. Hayes’ order disqualifying the business law firm of Procopio, Cory, Hagreaves & Savitch LLP due to a finding of impermissible successive representation, Div. One held in an unpublished opinion that the developer, Center Associates L.P., was entitled to writ relief to keep the counsel of its choice.
Seeking to develop the commercial property into a parking garage, the developer brought suit in 2006 to obtain a determination of its rights and duties with respect to easement rights held by the condominium owners, whose homeowners’ association had previously owned the commercial property, and whose access to parking and utilities was over the property.
The trial court dismissed the complaint without prejudice due to the developer’s failure to join certain indispensable parties, and the dismissed homeowner defendants appealed the denial of their motion for attorney fees. The appeal in Center Associates v. Altman, No. D051583 is pending, and the Procopio firm substituted in as counsel for Center in that appeal.
In June of 2007, the firm, acting for Center, filed a second complaint against Betty Joan Maly, her husband John C. Meyers, and the other owners of units in the condominium complex.
Maly moved to disqualify Procopio, based on former Procopio attorney Antonia Martin’s representation of Maly in researching title and purchasing her condominium unit in 1985, and Meyers joined in the motion, asserting that confidential information had been obtained from both of them during the law firm’s representation of them in various unrelated business matters from 1990 through 1999.
Relying on evidence that the pair had provided the firm with confidential personal financial information, the trial court determined that Procopio should be precluded from representing Center under Rule 3-310(E) of the Rules of Professional Conduct because the developer was acting in opposition to Procopio’s former clients.
The rule provides that an attorney “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.”
Writing for the appellate court, Justice Richard D. Huffman acknowledged that there was evidence on the record that Maly and Meyers expected continued loyalty from the firm based on the previous representation, but explained that the duty of loyalty “is grounded in confidentiality issues,” and is governed by a practical inquiry into relationship between the former and later representations.
Huffman noted that Procopio’s representation of Maly in the 1985 purchase of the condominium was a transactional matter that dealt with the adequacy of title, research into any history of prior lawsuits and issues regarding structural stability which might affect the value of the property, and, even though title insurance was examined, the justice rejected Maly’s claim that any and all issues about “title,” including rights for utilities, ingress, egress, parking, and use of Center’s property were necessarily covered by the prior representation.
“[N]o one could have foreseen in 1985 that in 1992 , the homeowners would agree to convey Lot 4 to Center’s predecessor, and that disputes would then arise about the different sets of agreements and regulations applicable to this property…, “ Huffman wrote.
Explaining that the issues presented would depend not only upon an interpretation of the documents affecting title and use as they appeared in 1985, but also on whether later declarations and agreements changed those rights, Huffman reasoned that “[t]here is no indication that the 1985 representation could have involved the exchange of any confidential information on all those topics, at that time,” and concluded that the facts and legal questions posed among the two sets of representation were significantly different.
As for the law firm’s later representation of Maly and Meyers on various tax and business matters, Huffman noted it was undisputed that no questions were presented or litigated about the condominium, writing that any factual information previously gained from Maly and Meyers that was confidential in nature would not be germane to the present litigation because the dispute between required judicial interpretation of various land use restrictions on Center’s property.
Cautioning, “this is a close case,” he nonetheless concluded there was no substantial relationship between Procopio’s prior representation of Maly and Meyers and its later representation of Center.
Justices Judith L. Haller and Joan Irion joined Huffman in his opinion.
The case is Center Associates L.P. v. Superior Court (Maly), D053469.
Copyright 2008, Metropolitan News Company