Wednesday, July 28, 2010
C.A. Rejects Attempt to Disqualify Opposing Counsel for Conflicts
By a MetNews Staff Writer
This district’s Court of Appeal yesterday reversed a trial court’s order granting a motion to disqualify opposing counsel because the parties the attorney represented jointly held conflicting interests.
Div. Three said that a homebuilding company lacked standing because it failed to show that allowing counsel to represent both its former clients and a subcontractor who might be called on to indemnify the company harmed a concrete and particularized interest.
Los Angeles Superior Court Judge Joseph R. Kalin granted Hampton Builders’ request to disqualify Calabasas firm Graham & Associates and firm member Bruce N. Graham from jointly representing homeowners Jim and Maartje Burman and subcontractor Ted Kipers.
The Burmans hired Hampton to remodel their residence, and the company subcontracted some of the work to Kipers under a contract containing a provision by which Kipers agreed to indemnify Hampton for claims arising from his work.
Hampton sued the Burmans for libel after Maartje Burman posted critical comments on the Internet, and sought recovery of the balance due under the contract and payment for work performed. The Burmans and Kipers cross-complained, alleging that Hampton and its co-plaintiffs abandoned the project and then failed to pay Kipers, who placed a lien on the project and stopped work.
Hampton then cross-complained against Kipers and moved to disqualify Graham, arguing that responses Kipers gave in a deposition revealed that he was unaware that Graham had a potential conflict representing both Kipers and the Burmans.
Hampton conceded the general rule that a non-client lacks standing to disqualify counsel, but argued that an exception set forth by the U.S. District Court for the Central District of California in Colyer v. Smith (1999) 50 F.Supp.2d 966 applied.
Kalin granted the request, despite Graham’s statement that he had acquired prophylactic waivers of the conflict by his clients.
The Court of Appeal, however, reversed in an opinion by Justice Richard D. Aldrich. He wrote that no exception to the general rule existed permitting a non-client without a legally cognizable interest to disqualify opposing counsel, and concluded that Hampton lacked such an interest because it had no prior confidential relationship with Graham.
In Colyer, the district court recognized a minority view that a non-client might have standing to bring a disqualification motion if the non-client established a “personal stake” in the motion sufficient to satisfy constitutional standing requirements.
But the district court, Aldrich explained, did not invoke that rule. Instead, it denied the disqualification motion, ruling that the objecting party had no personal stake and would suffer no harm by a breach. The district court also concluded that the conflict, if it existed, did not “rise to the level where it infects the proceedings and threatens Colyer’s individual right to a just determination of his claims.”
“Our reading of Colyer v. Smith…recognizes a minority view inasmuch as it permits a non-client to move to disqualify opposing counsel. But the non-client must meet stringent standing requirements, that is, harm arising from a legally cognizable interest which is concrete and particularized, not hypothetical….
“Hampton has no legally cognizable interest in the duty of loyalty owed to Kipers and the Burmans. Only they will be harmed by any breach of the duty of loyalty. If either party is getting bad advice in connection with their joint representation, then the issue is between Graham and his clients.”
Presiding Justice Joan D. Klein and Justice Patti S. Kitching joined Aldrich in his opinion.
The case is Great Lakes Construction, Inc. v. Burman, 10 S.O.S. 4260.
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