Friday, January 4, 2013
Court Upholds Injunction Requiring Firm to Notify Clients That Former Lawyer Resigned From Practice
By a MetNews Staff Writer
A preliminary injunction requiring an immigration lawyer and his firm to notify some of its clients that a former lawyer of the firm was no longer authorized to practice law was properly issued, the First District Court of Appeal held yesterday.
Div. Two unanimously ruled that San Francisco Superior Court Judge Peter J. Busch did not err when he found that the San Francisco city attorney was likely to prevail on the claim that the firm was aiding and abetting a disqualified lawyer in the unauthorized practice of law.
Defendant Martin Resendez operated a solo practice originally named “Martin Resendez Guajardo, A Professional Corporation.” In 2008, Guajardo resigned from the State Bar with disciplinary charges pending.
Before he tendered his resignation, however, Guajardo allowed attorney Christopher Stender to assume the practice. The firm changed its name to Immigration Practice Group, P.C., and registered as a law corporation with the State Bar.
Stender replaced Guajardo as president, treasurer and secretary. Stender is a member of the state bars of New York and Connecticut and admitted to practice before the Ninth U.S. Circuit Court of Appeals and other federal courts, but is not a member of the California State Bar.
In November 2010, the city attorney sued Guajardo, Stender and IPG, alleging that they were engaged in unlawful, unfair and deceptive business practices in violation of the Unfair Competition Law, based on Guajardo’s unauthorized practice of law.
The complaint alleged that after his resignation from the State Bar, Guajardo continued his legal practice, aided and abetted by Stender and IPG. It said that the defendants failed to notify clients and other entities of Guajardo’s resignation, and affirmatively led clients to believe Guajardo was in charge of their cases, thereby taking thousands of dollars under false pretenses from vulnerable and desperate immigrants in custody or facing imminent deportation and typically providing no services of value.
The city attorney submitted declarations from a number of clients who worked with Guajardo after his resignation from the State Bar in the belief he was their attorney. They declared that neither Guajardo nor anyone at IPG told them Guajardo was not authorized to practice law.
The defendants countered that Guajardo was not hired as an attorney or authorized to engage in activities that might constitute the practice of law, and that clients were so advised. They said Guajardo did not meet with any client without a qualified attorney being present when any client information was being discussed.
Stender also said that Guajardo was no longer associated with IPG or its clients and that Stender and his associates had no intent to associate with him in any way. As a result, there was no possibility of continuing harm that would justify a preliminary injunction, they argued.
Stender said the notices required by the injunction would “have an irreparable and chilling effect on [clients’] cases, especially in that many would wish not to give any information to any agency that may be able to prosecute them or that might have the ability to forward information to the Department of Homeland Security...”
Finally, the defendants said that they could not “fully respond” to the motion for the injunction without violating attorney-client privilege.
Busch found that a preliminary injunction was necessary “to protect individuals in need of legal advice from seeking assistance from Martin R. Guajardo in the mistaken belief that he is a licensed attorney,” and to “ensure that IPG and Stender no longer aid and abet the unauthorized practice of law by Guajardo.”
The injunction required Stender and IPG to provide notice to all clients stating that Guajardo is not a lawyer, describing the circumstances of his resignation, listing six actions Guajardo is prohibited from taking on the client’s behalf, and advising that the client has the right to fire Guajardo and secure return from him and IPG all unearned fees and the client’s entire case file.
On appeal the defendants argued that the injunction could not be based upon a violation of State Bar rules because neither Stender nor IPG is a member. The panel said, however, that since IPG is a registered California law corporation, it is bound to adhere to the rules an individual member of the bar would be required to follow.
The panel was also not persuaded by the defendants’ claims that since Stender and other IPG attorneys signed all the pleadings, it was irrelevant whether Guajardo gave legal or factual advice to IPG clients.
That argument “misses the point,” Presiding Justice J. Anthony Kline wrote. Based on their declarations, clients were led to believe that Guajardo was their attorney, and there was ample evidence to conclude that Stender and IPG aided and abetted his unauthorized practice of law, he said.
The panel also found no merit in defendants’ suggestion that state laws governing professional conduct could not apply to attorneys and law corporations practicing immigration law in federal courts, pointing out that state courts have the right to prevent fraud against residents of their states.
Nor did they agree that the notice would cast aspersions on Stender and IPG, saying rather that the representations in the notice “are indisputable,” and that as to fees, the mandated notice does not inform clients that there are unearned fees, only that if they fire Guajardo and if there are such fees, the fees must be immediately returned.
Finally, the panel said it was not apparent how any confidential client information would be necessary to defend against the injunction, since it seemed unlikely that any details of the clients’ legal cases or legal advice they were provided would be required. Kline said:
“To allow appellants to avoid liability for permitting and assisting an unlicensed lawyer to provide legal services to their clients by invoking attorney-client privilege would turn the purpose of the attorney-client privilege—to protect clients’ right to legal counsel—on its head.”
Justices James Lambden and James Richman concurred in the opinion.
The case is People ex rel. Herrera v. Stender ; 1 S.O.S. 27.
Copyright 2013, Metropolitan News Company