Metropolitan News-Enterprise


Thursday, March 24, 2011


Page 1


C.A. Rejects Conflict-of-Interest Claim in Environmental Case

‘Framework’ Retainer Agreement Did Not Create Ongoing Relationship, Panel Says


By SHERRI M. OKAMOTO, Staff Writer


A San Francisco-based environmental and land use law firm which had an open-ended retainer agreement with the city of Newport Beach did not engage in simultaneous representations of adverse clients by agreeing to serve as counsel for a nonprofit group which had sued the city for alleged violations of the California Environmental Quality Act, the Fourth District  Court of Appeal has ruled.

In a per curiam decision Tuesday, Div. Three explained that so-called “framework” retainer agreements, which afford lawyer and client the option of creating future engagements, do not create an ongoing relationship and such an arrangement Shute, Mihaly & Weinberger LLP and Newport Beach did not bar the firm from representing the Banning Ranch Conservancy.

The conservatory is a nonprofit public benefit corporation dedicated to preserving a 400-acre coastal property known as Banning Ranch as open space. It retained the Shute firm last April to challenge the sufficiency of the city’s environmental review for a plan to build a four-lane divided highway on this land.

Counsel for the city moved to disqualify the firm based on an alleged conflict of interest arising from its prior representation of Newport Beach in at least eight different manners and the existence of two identically worded retainer agreements, drafted and signed in 2005.

No Specific Representation

The 2005 agreements stated that the Shute firm would provide legal services to the city, on an “as-requested” basis, in connection with “public trust matters of concern to [the city],” subject to the firm’s “ability to take on the matter.”  If such representation was requested and accepted, the agreed-upon rates were to be $250 per hour for partners and $215 per hour for associates. 

According to declarations filed by the city, these agreements had never been terminated even though the firm had not represented it on any specific matter since 2006.

Orange Superior Court Judge Gail Andrea Andler granted the city’s motion to disqualify the firm, finding Newport Beach was a current client “pursuant to the terms of two ongoing retainer agreements.”

Justices William W. Bedsworth, Richard D. Fybel and Raymond J. Ikola, however, disagreed.  They said  “none of the language in the 2005 agreements is reasonably susceptible to the…interpretation that the City remains a current client of the Shute firm.”

The justices reasoned these agreements “provid[ed] a structure for establishing future attorney-client relationships” in order to expedite the process, but “did not create an attorney-client relationship absent an actual request, and acceptance, for representation on a particular matter.”

“These clearly-stated qualifiers in the 2005 agreements belie the City’s contention that the agreements created an ongoing, open-ended attorney-client relationship,” the justices said.

Extrinsic Evidence

Extrinsic evidence that the Shute firm performed a total of 1.2 hours of work after the 2005 agreements were executed and never provided the city with any other legal services, coupled with the fact the city retained at least ten other law firms to represent it on environmental and land use matters that arose in the ensuing years further supported their conclusion the 2005 agreements called for representation on a matter-by-matter basis, the justices added.

The Shute’s firm prior representation of the city also posed no impermissible conflict of interest, since none of the earlier matters bore any relation to the current CEQA litigation brought by the Conservancy, the justices concluded.

The case is Banning Ranch Conservancy v. Superior Court (City of Newport Beach),  G044223.


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