Wednesday, March 27, 2002
Court of Appeal Limits Vicarious Disqualification of Counsel
Associated Attorney’s Conflict Did Not Require Firm’s Removal, Justices Say
By a MetNews Staff Writer
A law firm should not have been disqualified from litigation solely because the firm of an outside attorney who covered some depositions had a conflict of interest, the Fourth District Court of Appeal ruled yesterday.
Div. Three granted a writ of mandate reinstating Joseph M. Hartley and the firm of Hartley & Hartley as independent, or Cumis, counsel for Jeffrey Frazier, a defendant in more than a dozen consolidated lawsuits regarding the work of the Willed Body Program at University of California-Irvine.
Frazier’s insurer retained the firm of Murchison & Cumming to handle his defense. Frazier, with the Murchison firm’s approval, then retained Hartley as his Cumis counsel.
San Diego Federal Credit Union v. Cumis Ins. Society, Inc. (1984) 162 Cal.App.3d 358, holds that an insured whose counsel may be conflicted between the insured’s interests and those of the insurer may be represented by independent counsel at the insurer’s expense.
In response to highly publicized abuses of the right, the Legislature has established restrictive procedures on the selection of Cumis counsel, codified at Civil Code Sec. 2860.
Depositions in the Frazier suits began in March of last year. Hartley, who was unable to attend some of the depositions, asked Dan Longo of Murchison’s Santa Ana office to cover for him.
A month later, Longo informed Hartley that he had just learned that a Los Angeles-based Murchison partner had discussed possible representation with some of the plaintiffs before they retained other lawyers. As a result, the Murchison firm withdrew from representing the insurer.
The plaintiffs who had spoken to the Murchison partner moved to disqualify Hartley & Hartley, contending there was a presumption that Murchison had divulged confidential information.
Orange Superior Court Judge William McDonald agreed and granted the motion, but the Court of Appeal stayed discovery pending its ruling on Hartley’s writ petition.
The trial judge went too far in attributing Murchison’s conflict to Hartley, Justice Eileen Moore wrote yesterday for the appellate panel.
“In this context, the disqualification of Cumis counsel would require a double imputation of knowledge of confidential information—first from one member of the law firm representing the insurer to another member of that firm, and second from the latter attorney to a different law firm entirely,” Moore wrote. “Case law does not support the double imputation.”
It is well established, the justice explained, that a lawyer’s knowledge about a case is, for purposes of the conflict-of-interest rules, imputed to all members of that lawyer’s firm. But while the Murchison partner’s knowledge tainted all of that firm’s lawyers, the plaintiffs were “seeking an extension of the law” in claiming that the “taint seeped over to Hartley & Hartley as well,.” Moore declared.
Since Hartley & Hartley never represented the plaintiffs, Moore said, the “substantial relationship” test under which all Murchison lawyers are disqualified does not apply to Hartley.
The justice distinguished cases in which an attorney moves from a law firm representing a party in litigation to a firm that represents an adverse party. There, she explained, the second firm is disqualified because the lawyer’s knowledge of confidential information is imputed to the new firm.
But no California case recognizes a “double imputation,” Moore said, adding that the trend in the law is to avoid “the continuing spread of this penumbra of disqualification.” Courts in other states, she noted, have declined to disqualify a law firm merely because it associated outside counsel who turned out to have a conflict, or because it merged with a firm that included a lawyer whose previous firm represented an adverse party while that lawyer was there.
Based on those cases, Moore said, Longo could have left Murchison, gone to work for Hartley, and continued to represent Frazier. Longo’s declaration that he had no prior knowledge of the contact between his firm and the plaintiffs was unrefuted, the justice noted, adding that the partner’s knowledge was unlikely to have been imparted to Longo, who worked in another office.
If Longo would not have been disqualified after leaving Murchison, Moore reasoned, it would make no sense to disqualify Hartley, “imposing an even more stringent standard on a more remote party.”
The case is Frazier v. Superior Court, 02 S.O.S. 1493.
Copyright 2002, Metropolitan News Company