Judge: David Sotelo, Case: 22STCV21326, Date: 2022-10-27 Tentative Ruling
Case Number: 22STCV21326 Hearing Date: October 27, 2022 Dept: 40
MOVING PARTY: Plaintiff Faramarz
Nazmifar.
Plaintiff Faramarz Nazmifar sues Defendants Behzad Ben
Toubian, Brentanita, Inc with claims of (1) Breach of Contract re Homewood, (2)
Breach of Contract re Anita, (3) Breach of Fiduciary Duty, (4) Constructive
Fraud, (5) Negligence, (6) Concealment, (7) Conversion, (8) Unfair Business Practices,
and (9) Promissory Fraud against Toubian, and (10) Constructive Trust against
Toubian and Brentanita, Inc. on the grounds that Toubian falsely represented
himself as a licensed California general contractor and induced Nazmifar into
investing more than a million dollars into two construction projects (the
Homewood and Anita Property projects), with Toubian applying for a number of
permits for these projects under false pretenses, and representing that after
completion and sale (with the Anita Property already being sold), both projects
would experience a considerable shortfall in profits, thus resulting in damages
to Nazmifar.
Nazmifar now brings—an untimely opposed—Motion to Disqualify
Counsel, Joseph Fischbach and His Law Firm Fischbach & Fischbach from this
action on the alternate grounds that (1) Fischbach will be a percipient witness
for the purposes of this lawsuit, (2) Fischbach represents Plaintiff Nazmifar,
and (3) Fischbach has accessed and received confidential information from Nazmifar
during past representation of Nazmifar, meriting disqualification of him and
his law firm.
After review and as elaborated infra, the Court DENIES, Without
Prejudice, Plaintiff Nazmifar’s Motion to Disqualify because Nazmifar has
failed to present sufficient grounds to support disqualification based on the
arguments that Fischbach is a percipient witness to the claims made in
Nazmifar’s Complaint or that Fischbach is serving or has served as Nazmifar’s
counsel, either individually, as a partner in the Homewood Property project, or
as a shareholder in the Anita Property project.
Representations by Toubian
In about early 2018, Defendant Toubian represented to
Plaintiff Nazmifar that Toubian was an experienced and successful builder and
developer of residences, and personally showed Plaintiff Nazmifar several
residences in Los Angeles, California that Toubian alleged to have built and
sold for huge profit. However, Nazfirmar alleges that at no time during the
events described in this matter was Toubian a California-licensed contractor.
The Homewood Property
On May 21, 2019, Toubian and three other persons including
Plaintiff Nazmifar entered the “Brentanita Inc. dba 388 Homewood Road Project”
(referred to as the “Brentanita Partnership”) to develop 388 Homewood Road, Los
Angeles, California 90049 (the “Homewood Property”) and sell such property for
a profit, with the partners to be compensated from the sale pursuant to their
agreed upon capital contributions. (Ex. A to Complaint.)
The owner of the Homewood Property is Defendant Brentanita,
Inc.
Nazmifar alleges that: Toubian or his counsel, Joseph
Fischbach, prepared the Brentanita Partnership Agreement; Fischbach held
himself out as the attorney for the Brentanita Partnership; at the expense of
the Partnership, Fischbach requested and reviewed numerous internal documents
generated by the Partnership and provided legal services regarding the same, with
legal charges incurred by the Brentanita Partnership, including Plaintiff
Nazmifar; and, in or about November 2020, Toubian or Joseph Fischbach, prepared
a first amendment to the Brentanita partnership agreement, which was signed by
both Toubian and Plaintiff Nazmifar (Ex. B to Complaint).
The Partnership Amendment reflected Nazmifar’s agreement to
invest, as a capital contribution, the sum of $1,016,000 for the development
and sale of the Homewood Property, and further reflected that Toubian invested
$250,000.
At all pertinent times, Toubian held himself out to
Plaintiff as the intended builder of the Homewood Property and represented to
his partners that Toubian would hire properly qualified contractors to perform
construction work on this property, would monitor and supervise the contractors’
work, and would manage all required filings for its construction with the local
government (including the Los Angeles Department of Building & Safety).
Further, during the construction project of the Homewood Property, Toubian
acted as the supervisor or general contractor of the project despite lack of
authority to do so.
Nazmifar alleges that during the course of the building of the
Homewood Property, Toubian repeatedly applied for inspections and permits from
the Los Angeles Department of Building and Safety (“LADBS”) (Exs. C to F of
Complaint), holding himself out as the owner/builder of the Homewood Property
and making false affirmations as to Toubian’s use of licensed contractors on
the construction project and Toubian’s intent to live at/not immediately sell
this Property after its completion and permitting, neither of which were true.
Toubian has informed Plaintiff that upon the sale of the
Homewood Property, there will be a considerable shortfall in the sale proceeds
after expenses are paid off. The expenses include amounts Toubian will seek for
his alleged unlicensed and unlawful construction services in connection with
this Homewood Property. As a result, Toubian has stated, Brentanita, Inc. will
not be able to pay Plaintiff Nazmifar the amount owed to him based on his investment
monies.
The Anita Property
On about April/May 2018, Defendant Toubian obtained investors
in his construction project with respect to 21 South Anita, Los Angeles,
California 90049 (“the Anita Property”).
The owner of the Anita Property before sale was Brentwood
Flats, Inc.
Nazmifar alleges that in order to confirm the deal, Toubian or
his counsel, Joseph Fischbach, prepared the “Anita Agreement.” (Ex. G to
Complaint). (While Plaintiff Nazmifar’s wife signed the Anita Agreement on his
behalf based on Nazmifar’s temporary absence, she later assigned any
contractual rights and obligations under this Agreement to Nazmifar.)
During the construction project of the Anita Property,
Toubian acted as the supervisor or general contractor of the project despite
lack of authority to do so.
Plaintiff Nazmifar invested $500,000 into the Anita Property
project based upon Toubian’s alleged experience in building residences, the
terms of the Anita Agreement, and Plaintiff’s belief that Toubian would act
lawfully in the building of the property.
Nazmifar alleges that during the course of the building of
the Anita Property, Toubian repeatedly applied for inspections and permits from
the LADBS (Exs. H to K of Complaint), holding himself out as the owner/builder
of the Anita Property and again making false affirmations as to Toubian’s use
of licensed contractors on the construction project and Toubian’s intent to
live at/not immediately sell this Property after its completion and permitting,
neither of which were true.
On or about March 30, 2022, Toubian had Brentwood Flats,
Inc. sell the Anita Property. Upon the sale of the Anita Property, there was a
considerable shortfall in the sale proceeds after expenses were paid off. The
expenses included amounts Toubian obtained for his unlicensed and unlawful
construction services in connection with this property.
Motion to Disqualify
On September 15, 2022, Plaintiff Nazmifar brought a Motion
to Disqualify Counsel, Joseph Fischbach and His Law Firm Fischbach &
Fischbach from this action on the alternate grounds that (1) Fischbach will be
a percipient witness for the purposes of this lawsuit, (2) Fischbach represents
Plaintiff Nazmifar, and (3) Fischbach has accessed and received confidential
information from Nazmifar during past representation of Nazmifar, meriting
disqualification of him and his law firm.
Preliminary Matters: The Court DOES NOT CONSIDER Defendants
Toubian and Brentanita, Inc.’s untimely October 21, 2022 Opposition because this
filing was made within nine court days of the present hearing. (See Code Civ.
Proc., § 1005, subd. (b).) The Court further finds that the reasons advanced by
Defendants Toubian and Brentanita, Inc. for consideration of their late filing
are not convincing. (Opp’n, Fischbach Decl., ¶ 3; cf. Reply, 2:10-25; Reply,
Berkowitz Decl., ¶¶ 2-5.)
The Court ALSO DOES NOT CONSIDER Plaintiff Nazmifar’s Reply
submitted October 25, 2022, particularly where many of there matters raised
therein were raised for the first time on See Reply, 3:1-7:19.)
Legal Standard: Code of Civil Procedure section 128,
subdivision (a)(5) authorizes the Court to control in furtherance of justice,
the conduct of its ministerial officers, and of all other persons in any manner
connected with a judicial proceeding before it, in every matter pertaining
thereto. (Code Civ. Proc., § 126, subd. (a)(5).) This authority necessarily
includes disqualifying an attorney. (Metro-Goldwyn Mayer, Inc. v. Tracinda
Corp. (1995) 36 Cal.App.4th 1832, 1837-38.) The issue of
disqualification ultimately involves a conflict between the client’s right to
counsel of their choice and the need to maintain ethical standards of
professional responsibility. (Ibid.)
In ruling on a motion to disqualify, the court should weigh:
(1) the party’s right to counsel of choice; (2) the attorney’s interest in
representing a client; (3) the financial burden on a client of change of
counsel; (4) any tactical abuse underlying a disqualification motion; and (5)
the principal that the fair resolution of disputes requires vigorous representation
of parties by independent counsel. (William H. Raley Co. v. Superior Court
(1983) 149 Cal.App.3d 1042, 1048.)
Whether an attorney should be disqualified is a matter
addressed to the sound discretion of the trial court. (Henriksen v. Great
American Savings & Loan (1992) 11 Cal.App.4th 109, 113.) In exercising
that discretion, the trial court is required to make a reasoned judgment that
complies with the legal principles and policies applicable to the issue at
hand. (Ibid.) The paramount concern must be the preservation of public
trust in the scrupulous administration of justice and the integrity of the bar
and the recognized and important right to counsel of one’s choosing must yield
to considerations of ethics that run to the very integrity of our judicial
process. (Metro-Goldwyn Mayer, Inc., supra, 36 Cal.App.4th at pp.
1837-38.)
Grounds for Disqualification: Nazmifar bases this on
three grounds: (1) Fischbach will be a percipient witness for the purposes of
this lawsuit (Mot., 8:5-9:17); (2) Fischbach represents Plaintiff Nazmifar
(Mot., 9:18-10:7); and (3) Fischbach has accessed and received confidential
information from Nazmifar during past representation of Nazmifar, meriting
disqualification of him and his law firm (Mot., 10:8-12:11).
Percipient Witness: California Rule of Professional
Conduct 3.7 commands at subdivision (a) that “[a] lawyer shall not act as an
advocate in a trial in which the lawyer is likely to be a witness,” subject to
three exceptions: (1) testimony relating to an uncontested issue; (2) testimony
relating to the nature and value of legal services rendered; or (3) the lawyer
has obtained informed written consent from the clients. (Cal. Rules Prof.
Conduct, rule 3.7, subds. (a)-(b).) “Whenever an adversary declares his intent
to call opposing counsel as a witness, prior to ordering disqualification of
counsel, the court should determine whether counsel’s testimony is, in fact,
genuinely needed.” (Smith, Smith & Kring v. Superior Court (1997) 60
Cal.App.4th 573, 581.) “[T]he court should consider the significance of the
matters to which he might testify, the weight his testimony might have in
resolving such matters, and the availability of other witnesses or documentary
evidence by which these matters may be independently established.” (Ibid.)
Plaintiff Nazmifar argues that “Fischbach’s testimony as a
witness would necessarily relate to his knowledge of the general
contractor-management construction duties expressed to him by Toubian, as justification
for Toubian’s compensation regarding the Homewood Property; whether Fischbach
was aware that the Homewood Property was intended for sale immediately after
completion of its construction; and whether Fischbach warned Toubian and other
partners, including Plaintiff, that Toubian, as a builder, was in violation of
the Contractor’s State License Law” and that, “if Fischbach was aware that
Toubian intended to violate the Contractor’s License Law, and failed to take
any corrective action despite being the partnership’s attorney, that may result
in him being named as a defendant in this litigation.” (Mot., 9:5-13.)
The Court finds none of these arguments convincing as
presented in this Motion to Disqualify.
These arguments are presented to the Court with little
elaboration on why this supposed testimony is necessary to the instant action
where Fischbach is not a party to this action (see Complaint generally [all ten
causes of action are alleged only against Defendants Toubian and Brentanita,
Inc.]), where the nature of the causes of action hingers on misrepresentations
and concealments by Toubian that are fairly self-evident without recourse to
testimony as to how the Homewood Partnership Agreement and Amendment and the
Anita Agreement were drafted (see, e.g., Complaint, ¶¶ 24a-d, 25-31 [1st COA],
42a-d, 43-51 [2d COA]), where the requested information may reasonably be
obtained through other sources (e.g., discovery from Toubian himself), and
where Fischbach is only mentioned five times in the Complaint in the context of
Fischbach (or perhaps Toubian) drafting the Homewood Partnership Agreement and
Amendment and the Anita corporate Agreement (Complaint, ¶¶ 18-19, 39) and not
in the context of aiding or abetting the alleged misrepresentations and
concealments of Toubian.
Present Client: Rule 1.13 of the Rules of
Professional Conduct provides that “[a] lawyer representing an organization may
also represent any of its constituents, subject to the provisions of rules 1.7,
1.8.2, 1.8.6, and 1.8.7” and that “[i]f the organization’s consent to the dual
representation is required by any of these rules, the consent shall be given by
an appropriate official, constituent, or body of the organization other than
the individual who is to be represented, or by the shareholders.” (Cal. Rules
Prof. Conduct, rule 1.13(g).) Rule 1.7(d)(3) prohibits concurrent
representation that involves the assertion of a claim by one client against
another client represented by the lawyer in the same litigation. (Cal. Rules
Prof. Conduct, rule 1.7(d)(2), (3).)
On Motion, Plaintiff Nazmifar argues that “the preparation
of the partnership agreement and minutes of a meeting, as well as Fischbach’s
review of all correspondence and agreements of Plaintiff and other partners,
only pertained to Brentanita and the partners, regarding their investments and
the construction project, i.e., solely pertained to ‘partnership business’” and
that “Fischbach was paid by the partnership for his services, as expressly
acknowledged by Toubian in his emails” included as Exhibit B to the Motion, for
which reason “there can be no dispute that Fischbach represented the plaintiff
while he was a general partner of Brentanita in 2020 and, perhaps thereafter.”
(Mot., 9:18-10:7.)
The Court finds none of these alleged facts or the evidence
to support such positions in any way advance the notion that Fischbach
undertook individual representation of Plaintiff Nazmifar during his Fischbach’s
association with the Homewood Property and Anita Property projects.
Representation of individual partners does not automatically
flow from attorney’s representation of partnership; rather, something more is
required to create attorney-client relationship with partner. (Responsible
Citizens v. Superior Court (1993) 16 Cal.App.4th 1717, 1731.)
Similarly, an attorney representing a corporation does not
become the representative of its stockholders merely because the attorney’s
actions on behalf of the corporation also benefit the stockholders; as attorney
for the corporation, counsel’s first duty is to the corporation. (Sprengel
v. Zbylut (2019) 40 Cal.App.5th 1028, 1042.) Rather, in determining whether
an implied attorney-client relationship existed between a corporate attorney
and the corporate entity’s individual members, a court must assess whether the
parties conducted themselves in a way that would reasonably cause a shareholder
to believe the attorney would protect the shareholder’s individual interests. (Id.
at p. 1047.)
The unverified Complaint merely alleges that Fischbach may
have drafted partnership and business agreements for the Homewood Property and
the corporate agreement for the Anita Property projects (Complaint, ¶¶ 18-19,
39) without alleging that any further association took place between Fischbach
and Plaintiff Nazmifar, either as a partner in the Homewood Property project,
as a shareholder in the Anita Property projects, or individually.
Successive Representation, Access and Review of
Confidential Information: “[W]here 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 [emphasis in original].)
The Court has determined that Fischbach did not represent
Nazmifar individually, as a partner in the Homewood Property project, or as a
shareholder in the Anita Property Project. (See Present Client
discussion supra.) As such, there is no grounds for an analysis as to former
representation of Nazmifar by Fischbach.
Raley Co. Factors: The Raley Co. factors are not
analyzed here where the Court finds that no client-attorney relationship has
been established by Nazmifar between himself and Fischbach, either
individually, as a partner in the Homewood Property project, or as a
shareholder in the Anita Property Project.
Plaintiff Nazmifar’s Motion to Disqualify is thus DENIED,
Without Prejudice.
Plaintiff Faramarz Nazmifar’s Motion to Disqualify Counsel,
Joseph Fischbach and His Law Firm Fischbach & Fischbach is DENIED, Without
Prejudice, because Plaintiff Nazmifar has failed to present sufficient grounds
to support disqualification based on the arguments that Fischbach is a
percipient witness to the claims made in Nazmifar’s Complaint or that Fischbach
is serving or has served as Nazmifar’s counsel, either individually, as a
partner in the Homewood Property project, or as a shareholder in the Anita
Property project.