Thursday, March 4, 2010
C.A. Upholds Lawyer’s Right to Oppose Former Client’s Project
By SHERRI M. OKAMOTO, Staff Writer
This district’s Court of Appeal yesterday threw out a former client’s lawsuit against Reed Smith LLP and one of its partners based on the attorney’s actions opposing the client’s proposed development project after the representation ended.
Div. Five explained that a lawyer does not forfeit his constitutional right to speak on matters of public interest involving a former client so long as he does not misuse confidential information garnered from the attorney-client relationship.
Reversing the decision of Los Angeles Superior Court Judge Norman P. Tarle, the panel concluded that Oasis West Realty Inc.’s claim against attorney Kenneth Goldman and his firm was a strategic lawsuit against public participation and therefore subject to a special motion to strike.
Oasis owned the property where the Beverly Hilton stands on Wilshire Boulevard in Beverly Hills. It retained Reed Smith in 2004 to help it redevelop the property with a new hotel, luxury condominiums, and other improvements.
This project required the approval of the Beverly Hills City Council, and Oasis alleged that it specifically sought Goldman’s assistance because he was an expert in civic matters and “a well-respected, influential leader who was extremely active in Beverly Hills politics.”
Reed Smith represented Oasis in connection with the Hilton project until April 2006, and during that time Oasis claimed that Goldman “was intimately involved” in the formulation of the development plan and Oasis’ “overall strategy to secure all necessary approvals and entitlements from the City and its efforts to obtain public support for the Project.”
Oasis averred that “Goldman was a key Oasis representative in dealing with Beverly Hills City Officials,” and that it had “revealed confidences to Mr. Goldman, which it reasonably believed would remain forever inviolate.”
The development proposal was put before the council in June 2006, and the council passed an ordinance approving a development agreement in April 2008.
Shortly thereafter, a political action committee called Citizens’ Right to Decide Committee was formed, with the stated goal of putting a referendum on the ballot which would leave approval of the project up to the voters.
Oasis contended that Goldman “switched sides” and “engaged in acts of treachery and disloyalty” by lending his support to the committee’s efforts.
Goldman said that he addressed the council to oppose a rule which required individuals seeking signatures on the referendum petition to carry the 15 pounds of documents related to the project and spent about 90 minutes soliciting signatures for the referendum petition over two years after Reed Smith’s relationship with Oasis was terminated.
He denied ever disclosing confidential information to anyone and said he did not believe he ever disclosed that he had worked for Oasis in connection with the Hilton project.
Approved at Ballot
The committee was successful in forcing a referendum, but the project, designated as Measure H on the November 2008 ballot, was approved with 50.41 percent of the vote.
Oasis sued Goldman and Reed Smith for breach of fiduciary duty, professional negligence, and breach of contract in January 2009.
Goldman and his firm filed a special motion to strike, but Tarle found the anti-SLAPP law inapplicable because the gravamen of Oasis’ action was breach of an attorney’s duties of loyalty and confidentiality.
Writing for the appellate court, Justice Orville A. Armstrong noted “a substantial line of cases” which hold that the anti-SLAPP provisions do not apply to litigation about an attorney’s breach of the duty of loyalty, but differentiated them from the current situation.
“In each case, the holding is that the case arose from the lawyer’s act in accepting the second representation, rather than the litigation activities the attorney undertook on behalf of the second client,” he said, rejecting the proposition that Rule 3-310 of the Rules of Professional Conduct could be violated “if there is no second attorney-client relationship or second employment of any kind.”
Armstrong reasoned that Goldman would have violated Business and Professions Code Sec. 6068—which imposes a duty on lawyers to preserve the secrets of his clients—if the attorney had “even hinted, or had by his conduct implied, that his opposition to the project was based on information obtained while he represented Oasis,” but concluded that Goldman had not done so.
“[A] lawyer may take positions adverse to a client, as long as current representation is not compromised…and as long as confidentiality is not compromised,” he explained.
Presiding Justice Paul Turner and Justice Sandy R. Kriegler joined Armstrong in his decision.
Dirk L. Vincent and Michael B. Norman of Fairbank & Vincent represented Goldman and his firm while H. Steven Schiffres and Robert M. Barta of Rosoff, Schiffres & Barta represented Oasis.
Goldman said he was “very pleased with such a sweeping opinion that vindicates everything that I knew I did right,” and that it “feels pretty good to have the court completely and unanimously concur.”
Vincent added that he was “always confident” his client’s activities related to the Hilton project amounted to protected activity and did not breach any fiduciary duty owed to Oasis.
Schiffres said Oasis was planning to appeal. He predicted that the Supreme Court would not adopt the position that “a party’s former lawyer can publicly and openly criticize and seek to undermine the position of his former client that he was previously hired to advance, all with impunity, and even though the case is still pending.”
He insisted that once a lawyer is hired, he should owe “an absolute duty of loyalty to his client as long as that case is pending” and should not be able to oppose the interests of that client “regardless of if that opposition is on behalf of another client or on his own behalf.”
The case is Oasis West Realty, LLC v. Goldman, 10 S.O.S. 1097.
Copyright 2010, Metropolitan News Company