Judge Bruce G. Iwasaki, Case Number: 24STCV26659, Date: 2025-01-07 Tentative Ruling

Responding Party: Defendant Dan Wolfe, as an Individual and as Trustee of the Wolfe Family Trust of 1992

Plaintiff Ernest J. Franceschi, Jr. (Plaintiff) moves for an order disqualifying attorney Guy E. Jamison as counsel for Defendant. Defendant opposes the motion.

Plaintiff’s objections to the Jamison declaration and the Wolfe declaration are overruled. These overly broad objections object to both admissible and inadmissible statements and, thus, must be overruled.

“Ultimately, disqualification motions involve a conflict between the clients’ right to counsel of their choice and the need to maintain ethical standards of professional responsibility.” (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1145.) “The paramount concern must be to preserve public trust in the scrupulous administration of justice and the integrity of the bar.” (Ibid.)

Generally, a motion to disqualify requires a showing of standing, such as present or past attorney-client relationship with a party or that the attorney breached a duty of confidentiality owed to a certain party. (Blue Water Sunset, LLC v. Markowitz (2011) 192 Cal.App.4th 477, 485.)

“Where the potential conflict is one that arises from the successive representation of clients with potentially adverse interests, the courts have recognized that the chief fiduciary value jeopardized is that of client confidentiality. Thus, where a former client seeks to have a previous attorney disqualified from serving as counsel to a successive client in litigation adverse to the interests of the first client, the governing test requires that the client demonstrate a “substantial relationship ” between the subjects of the antecedent and current representations.” (Flatt v. Superior Court (1994) 9 Cal.4th 275, 283.) In the alternative, “a party may obtain the disqualification of an attorney by establishing that the targeted attorney . . . has actual knowledge of material confidential information.” (Faughn v. Perez (2006) 145 Cal.App.4th 592, 603.)

“In simultaneous representation cases, ‘[t]he primary value at stake ... is the attorney's duty—and the client's legitimate expectation—of loyalty, rather than confidentiality.’ ” (In re Charlisse C. (2008) 45 Cal.4th 145, 160.) “ ‘With few exceptions, disqualification [in a case of simultaneous representation] follows automatically,’ ” without any showing that the client's confidential communications are at risk. (Ibid.)

Plaintiff moves to disqualify Attorney Guy E. Jamison as counsel for Dan Wolfe on the grounds that there is a conflict of interest.

This purported conflict arises from Attorney Jamison’s representation of Wolfe and Hawthorne Hangar Operations, LP (HHO) in the pending and ongoing litigation entitled Hawthorne Hangar Operations, L.P. and Dan Wolfe v. Production Capital, LLC, et al. LASC Case No, 21STCV39700 (Hawthorne Hangar Action).

At issue is whether attorney Jamison was acting as the attorney to Plaintiff Franceschi in Plaintiff’s capacity as a limited partner of HHO in the ongoing Hawthorne Hangar Action, such that Plaintiff’s filing this action means Jamison cannot take the adverse position of representing Wolfe against Plaintiff. That is, asserts Plaintiff, Attorney Jamison cannot represent Plaintiff Franceschi in the Hawthorne Hangar Action while taking an adverse position against Plaintiff by representing a defendant in this action brought by Plaintiff.

An attorney may not accept or continue representation of a client if the attorney has a legal relationship with a party or witness in the same matter. (Rules of Prof. Conduct, Rule 1.7.)[1] An attorney may not, without informed written consent, represent more than one client on a matter in which the interests of the clients actually or potentially conflict. (Rules of Prof. Conduct, Rule 1.7.)² A client's right to counsel of his choice must yield to ethical considerations that aim to preserve the integrity of the bar and the scrupulous administration of justice. (Metro–Goldwyn–Mayer, Inc. v. Tracinda Corp. (1995) 36 Cal.App.4th 1832, 1838.)

By way of background, Defendant Wolfe is the sole director and shareholder of Wolfe Air Aviation, Ltd. -- a California corporation that is the manager and controlling member of Hawthorne Hangar Management, LLC, which in turn is the general partner and Manager of HHO. According to the pleadings, Defendant Wolfe offered Plaintiff, a trial attorney, an ownership interest in HHO if he would continue to represent HHO in the anti-trust action.

At its core, this action is an action for fraud arising from the alleged failure to pay for Plaintiff’s legal services. When Defendants were unable to pay for Plaintiff’s legal services, Defendants agreed to provide for payment of the yet unpaid $175,000.00 flat retainer fee together with an immediate transfer of a four percent (4%) limited partnership interest in HHO; Defendants represented that this 4% limited partnership interest in HHO had a present value of $500,000. (FAC ¶ 11.) The FAC alleges that Defendants, thereafter, allowed virtually all of HHO's equity to be converted by third parties, Kevin Robl and Remmington Chase, through their fraud and the fraudulent loan that they procured. (FAC ¶¶ 13-15.)

In the Hawthorne Hangar Action, the pleadings allege a fraudulent scheme by Defendants to obtain and convert excess loan proceeds for their personal benefit and to foreclose upon valuable real property owned by Plaintiffs Dan Wolfe (Wolfe) and Hawthorne Hangar Operations, LP (HHO). Defendant Kevin Robl (Robl), authorized to act on behalf of Wolfe and HHO solely for the purpose of obtaining a $5.5 million loan at 2.75% interest rate to refinance the Hawthorne Hangar Property and limited by the requirement of Wolfe’s written approval of the resulting loan, instead, fraudulently obtained a $7.3 million loan at a 10% interest rate without Wolfe’s written consent and thereafter converted and embezzled the excess proceeds in the amount of $2,939,616.35. The operative complaint further alleges that each of the Defendants played a key role in the fraudulent scheme, facilitated the fraudulent loan transaction and reaped substantial benefit from the conspiracy to defraud Wolfe and HHO.

Relevant to this motion to disqualify, Defendant Wolfe argues that Plaintiff Franceschi lacks standing to bring this disqualification motion because he cannot prove a present or past attorney-client relationship between himself and Jamison. Even assuming Plaintiff can make this showing, Defendant also argues Plaintiff cannot show that Attorney Jamison possesses any confidential information relevant to the present controversy obtained from Plaintiff, his purported former client.[2]

“The burden is on the party seeking disqualification to establish the attorney-client relationship. [Citation.]” (Shen v. Miller (2012) 212 Cal.App.4th 48, 56–57.)

An attorney “represents a client—for purposes of a conflict of interest analysis—when the attorney knowingly obtains material confidential information from the client and renders legal advice or services as a result.” (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1148; accord, Med-Trans Corp., Inc. v. City of California City (2007) 156 Cal.App.4th 655, 667.) “An attorney-client relationship can only be created by contract, express or implied.” (Shen v. Miller, supra, 212 Cal.App.4th at 57; see Koo v. Rubio's Restaurants, Inc. (2003) 109 Cal.App.4th 719, 729.) Therefore, “ ‘[i]ntent and conduct are critical to the formation of an attorney-client relationship.’ ” (Shen, at p. 57; see Canton Poultry & Deli, Inc. v. Stockwell, Harris, Widom & Woolverton (2003) 109 Cal.App.4th 1219, 1228.) The relationship “is not created by the unilateral declaration of one party to the relationship.” (Koo, supra, 109 Cal.App.4th at p. 729.)

As a preliminary matter, Attorney Jamison’s representation of HHO and its general partner, Wolfe, does not automatically create an attorney-client relationship between HHO’s limited partners, including Plaintiff Franceschi, and HHO’s attorney. (Johnson v. Superior Court (1995) 38 Cal.App.4th 463, 477, [“[M]ere representation of a partnership does not per se constitute representation of the individual partners.”].)

Courts have identified several factors to consider when determining whether counsel for the partnership has an implied attorney-client relationship with the individual partners; the factors include: (1) the “size of the partnership,” because a partnership of few members may suggest individual representation of the members while a partnership with hundreds of members may not; (2) whether the attorney's engagement is for routine partnership business unrelated to the individual interests of a partner, thereby negating an implication of individual representation; (3) the “kind and extent of contacts between the attorneys and the individual partners;” (4) the “attorney's access to financial information relating to the individual partner's interests;” and (5) whether the totality of the circumstances “ ‘implies an agreement by the partnership attorney not to accept other representations adverse to the individual partner's personal interests.’ “ (Johnson v. Superior Court, supra, 38 Cal.App.4th at pp. 476–477 [ applying the Responsible Citizens's multifactor test]; Responsible Citizens v. Superior Court (1993) 16 Cal.App.4th 1717, 1732–1733.)

Plaintiff Franceschi does not address any of the factors the Court is required to consider when determining whether counsel for the partnership has an implied attorney-client relationship with the individual limited partners. Moreover, although there appears to be fewer than ten partners to the partnership, the remaining factors do not appear to weigh in favor of finding an attorney client relationship. Specifically, the only evidence of any contact between Plaintiff Franceschi and Attorney Jamison submitted by Plaintiff is a single email wherein Jamison asked Plaintiff to review a court filing in the Hawthorne Hangar Action. (Franceschi Decl., ¶ 4, Ex. 3.) Moreover, there is no evidence that Jamison had any access to financial information relating to any of the partner's interests. Finally, there is no other evidence that, in considering the totality of the circumstances, would imply an “agreement by the partnership attorney not to accept other representations adverse to the individual partner's personal interests.” In fact, Defendant’s evidence suggest that these factors do not weigh in Plaintiff’s favor. (Jamison Decl., ¶ 15.)

Plaintiff has not met his burden of showing an attorney client relationship with Jamison that creates a conflict of interest through concurrent conflicting representations.

Plaintiff also argues that Jamison must be disqualified because he will be required to provide testimony pertaining to his handling of the Hawthorne Hangar Action and, thus, will be required to be act as both advocate and witness in this matter. (Mot., 5:22-25.)

A disqualification motion may be based on an attorney’s dual roles as an advocate and a witness. “The ‘advocate-witness rule,’ which prohibits an attorney from acting both as an advocate and a witness in the same proceeding, has long been a tenet of ethics in the American legal system....” (Kennedy v. Eldridge (2011) 201 Cal.App.4th 1197, 1208.)

Further, under California Rule of Professional Conduct 3.7 (a), which provides in pertinent part: “A lawyer shall not act as an advocate in a trial in which the lawyer is likely to be a witness unless: (1) the lawyer's testimony relates to an uncontested issue or matter; (2) the lawyer's testimony s relates to the nature and value of legal services rendered in the case; or (3) the lawyer has obtained informed written consent from the client.”

It is worth noting that the purpose of this rule is to protect the client. (In re Marriage of Murchison (2016) 245 Cal.App.4th 847, 853 fn. 4; Smith, Smith & Kring v. Superior Court (Oliver) (1997) 60 Cal.App.4th 573, 580 [“ ‘[T]he fact that the client has consented to the dual capacity must be given great weight.’ ”]; Reynolds v. Superior Court (1986) 177 Cal.App.3d 1021, 1028.)

Defendant Wolfe has not objected on this ground. Admittedly there is no client consent filed. However, since the filing of the motion to disqualify, Plaintiff has filed a First Amended Complaint that now names Jamison as a defendant, alleging that he breached his fiduciary duty to Plaintiff and the limited partners. Although the moving papers referenced a possibility of malpractice against Jaminson that might also warrant disqualification, it was not until the filing of the FAC that Jaminson became a party to the litigation. Given the recent filing of the FAC and the more focused argument being made only on reply, the absence of this client consent is not suspicious.

Moreover, as the FAC was not filed until after the filing of this motion, this basis is not a proper grounds for disqualification because it was not fully at issue in the moving papers. For Plaintiff to raise it now on reply deprives Defendant of the ability to directly address Plaintiff’s argument with respect to the new allegations.

Further, even assuming that Jamison’s conduct as a testifying witness while acting as an advocate would constitute an ethical violation, a “violation of a rule of the State Bar Rules of Professional Conduct does not necessarily compel disqualification.” (Hetos Investments, Ltd. v. Kurtin (2003) 110 Cal.App.4th 36, 47) Moreover, in In re Marriage of Murchison (2016) 245 Cal.App.4th 847—where the attorney was joined as a necessary party— the court explained:

“In fact, we found no case which permits a court to disqualify a lawyer for ethical violations when the nonmoving party wishes to continue the representation and the representation does not harm the opposing party's interest. A court is not powerless to act, however, in the face of such possible ethical violations; it has the option to report an attorney it believes has acted unethically to the bar for discipline. Although others in Wife's position may have acted differently, we must respect Wife's choice to retain Lawyer. (See San Francisco, supra, 38 Cal.4th at p. 851, 43 Cal.Rptr.3d 771, 135 P.3d 20 [“clients have a right to retain their chosen counsel”]; see also Sharp v. Next Entertainment Inc. (2008) 163 Cal.App.4th 410, 430, 78 Cal.Rptr.3d 37 [recognizing “ ‘the autonomy of individuals to make reasoned judgments about the trade-offs that are at stake’ ” after they are informed of counsel's potential conflict].)”

Ultimately, the Murchison court concluded that given husband’s lack of standing to challenge his wife’s choice of attorney by disqualification, the lack of authority requiring disqualification under these circumstances and the importance of a client’s right to choose his or her counsel, the Court of Appeals reversed the trial court’s decision disqualifying the attorney.

Lastly, and importantly, Plaintiff has failed to demonstrate any specific prejudice would result from this dual capacity – aside from mere speculation. (Reply 10:5-14.)

The motion to disqualify counsel is denied. Additionally, Plaintiff is ordered to file a Notice of Related Cases in this action and in the Hawthorne Hangar action, LASC No. 21STCV39700, on or before January 24, 2025.

[1] Following a 2018 amendment, former rule 3-310 continues as part of current rule 1.7.

[2] Because the issue here is concurrent representation, this confidential information argument is not relevant except as to determine whether an attorney client relationship may have existed under Responsible Citizens's multifactor test applied in Johnson v. Superior Court (1995) 38 Cal.App.4th 463.

Judge Bruce G. Iwasaki

Department 58