Judge: John J. Kralik, Case: 21BBCV00971, Date: 2023-04-07 Tentative Ruling

Case Number: 21BBCV00971    Hearing Date: April 7, 2023    Dept: NCB

Superior Court of California

County of Los Angeles

North Central District

Department B

BACKGROUND

A.   Allegations

Plaintiff Amy R. Amira (“Ms. Amira”), Trustee of The Cynthia L. Amira Family Trust (“Plaintiff” or “Amira Trust”) alleges that it entrusted professional business management, financial planning, and tax services to Defendant CMM, LLP (“CMM”) and its partner Defendant Gregory A. Mogab (“Mogab”), but that they breached the fiduciary duty they owed to the Amira Trust by conspiring with other Defendants to fraudulently induce the Amira Trust to enter into a limited partnership investment controlled by Defendants as the general partner.  The deal involved the real estate development at a property located at 6142-6144 Hazelhurst Place in North Hollywood.  The Hazelhurst L.P. Agreement’s terms were that Defendant Hazelhurst Place Properties, L.P. (“Hazelhurst LP”) would acquire the property with the following limited partners: (1) $100 contribution by Defendant OMG Construction Management, LLC (“OMG”) for 1% ownership; (2) $100 contribution by Mogab for 20% ownership; (3) $100 contribution by Defendant Anthony Olmedo (“Olmedo”) for 20% ownership; (4) $100 contribution by Defendant Agustin Gonzalez (“Gonzalez”) for 20% ownership; and (5) $1,400,000 contribution by Amira Trust for 39% ownership. 

Ms. Amira executed the Hazelhurst L.P. Agreement and the Amira Trust provided all the capital.  Plaintiff alleges that Defendants engaged in self-dealing through fraud, undue influence, and deception, and wrongfully converted millions of dollars from the Amira Trust for their sole financial gain. 

         The First Amended Complaint (“FAC”), filed April 14, 2022, alleges causes of action for: (1) breach of fiduciary duty; (2) fraud; (3) conversion; (4) negligence; (5) accounting; (6) quiet title; (7) breach of contract; and (8) professional negligence.  The 1^st, 2^nd, 3^rd, and 5^th causes of action are alleged against CMM, Mogab, Gonzalez, Olmedo, OMG, HTD, and Hazelhurst LP.  The 4^th cause of action is alleged against Mogab, Olmedo, Gonzalez, OMG, HTD, and Hazelhurst LP.  The 6^th cause of action is alleged Mogab, Olmedo, Gonzalez, OMG, Ira J. Boren, and Hazelhurst LP.  The 7^th cause of action is alleged against CMM and Mogab.  The 8^th cause of action is alleged against CMM and Mogab.

         On February 2, 2023, Plaintiffs filed an Amendment to Complaint naming Robert L. Schreiber as Doe 1 (as to the 1^st, 2^nd, 3^rd, 4^th, and 7^th causes of action). 

B.    Motion on Calendar and Relevant Background

On May 20, 2022, Plaintiff filed a motion to disqualify CMM’s counsel, Joseph Kibre, Esq. and Kibre & Neman, LLP. 

On June 6, 2022, CMM filed an opposition. 

On June 10, 2022, Plaintiff filed a reply brief.

DISCUSSION RE MOTION TO DISQUALIFY COUNSEL

A.   Evidentiary Objections

         With the reply brief, Plaintiff submitted objections to the declaration of Joseph Kibre, which CMM submitted in support of the opposition brief.  Plaintiff objected to Mr. Kibre’s statements, arguing they were irrelevant and on the basis of the attorney-client privilege.  The Court overrules the objections.  In her own declaration, Ms. Amira states that she disclosed certain information with Mr. Kibre in the past while she claims they were in an attorney-client relationship.  Thus, she has partially waived the privilege by disclosing such information herself in her own declaration, as well as putting the subject of their communications at issue in this motion to disqualify counsel. 

B.    Legal Standard

         California Rules of Professional Conduct, Rule 1.9 states in relevant part:

(a) A lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client gives informed written consent.

…

(c) A lawyer who has formerly represented a client in a matter or whose present or former firm has formerly represented a client in a matter shall not thereafter:

(1) use information protected by Business and Professions Code section 6068, subdivision (e) and rule 1.6 acquired by virtue of the representation of the former client to the disadvantage of the former client except as these rules or the State Bar Act would permit with respect to a current client, or when the information has become generally known; or

(2) reveal information protected by Business and Professions Code section 6068, subdivision (e) and rule 1.6 acquired by virtue of the representation of the former client except as these rules or the State Bar Act permit with respect to a current client.

(Cal. Rules of Prof. Conduct, Rule 1.9(a), (c) [asterisks and footnotes omitted].)  “The former client need only prove that (1) a substantial relationship exists between the former and present matters, and (2) the nature of the employment was such that confidential information material to the case would normally be imparted to the attorney. Once the former client establishes these foundational facts, the attorney's knowledge of material confidential information is conclusively presumed and disqualification is mandatory absent the client's informed written consent.”  (Costello v. Buckley (2016) 245 Cal.App.4th 748, 756, fn.4.) 

         Business & Professions Code, § 6068(e)(1) states it is the duty of an attorney to “maintain inviolate the confidence, and at every peril to himself or herself to preserve the secrets, of his or her client.” 

C.    Discussion

         Plaintiff moves for an order disqualifying CMM’s counsel, Joseph Kibre of Kibre & Neman, LLP.  Plaintiff argues that counsel had the opportunity to learn about Ms. Amira’s personal disposition along with her fiduciary relationship with CMM and Mogab as her then-personal financial advisors.  In August/September of 2017, CMM arranged for counsel to represent Ms. Amira to prepare her premarital agreement. Ms. Amira claims that in the course of this representation, counsel obtained private and confidential information about hers and the Amira Trust which are matters rationally linked to CMM and Mogab’s placement and handling of the Hazelhurst Place Property investment at issue in this litigation.  Plaintiff believes that this supports a rational conclusion that counsel obtained information materially beneficial to CMM’s evaluation, prosecution, settlement, and litigation strategy in this action because this action involves Plaintiff’s allegations that CMM and Mogab negligently managed millions of dollars that were misappropriated. 

         Ms. Amira provides her declaration in support of the motion.  She states that she became the trustee of the Amira Trust following her mother’s passing in 2011.  (Amira Decl., ¶3.)  She states that her father passed in 2013 and, at the time of both parents’ passing, she was financially unsophisticated.  (Id.)  She states that her mother used Mogab as her accountant and so Ms. Amira too retained CMM and Mogab (partner) to provide accounting, business management, and personal financial services to her and the family trust.  (Id., ¶4.)  In 2016, Ms. Amira was engaged to be married and CMM/Mogab recommended she obtain a premarital agreement and arranged for Mr. Kibre to draft the agreement.  (Id., ¶5.)  She states that Mogab became heavily involved in the preparation of the premarital agreement as well.  (Id., ¶¶6, 11.)  She states that she paid about $18,000 for Mr. Kibre’s legal services, which included many hours of talking on the phone with Mr. Kibre about her financials, investments, financial plans, personal life, and confidential information about the Amira Trust.  (Id., ¶¶7-9, 11.)  She includes CMM’s invoice of the work performed by Mogab concerning her premarital agreement, which also references the interactions with Mr. Kibre.[1]  (Id., ¶¶13-14, Ex. 1.)  Ms. Amira states that she is concerned that counsel can use this information in favor of his client CMM and against Plaintiff and that as trustee of the Amira Trust, she has not consented to Mr. Kibre’s representation of CMM in this matter.  (Id., ¶¶9, 10, 12.) 

         Plaintiff argues that a substantial relationship exists between the prior legal matter involving Ms. Amira’s premarital agreement and this current action involving Ms. Amira and the Amira Trust.  She argues that to prepare a premarital agreement, attorneys must interview their client and determine the breadth of the confidential matters.  (Mot. at pp.12-13, citing to Family Code, § 1612.)  Also, Ms. Amira states that she disclosed confidential information to Mr. Kibre, including her personal and family financials about, identified her financials and investments, and developed financial plans for her up-and-coming marriage.  (Amira Decl., ¶¶8-9.) 

         In opposition, CMM argues that Plaintiff converts the “substantial relationship” standard to a reduced finding of a “rational conclusion” for disqualification.  CMM also argues that CMM and Mr. Kibre did not participate in Mogab’s self-dealings.  (Mr. Kibre represents CMM only in this action and not Mogab.)  In his declaration, Mr. Kibre states that he has a long-standing relationship with CMM, but that he does not have any relationship with Mogab and has never worked with Mogab on any matter other than the Amira Premarital Agreement.  (Kibre Decl., ¶3.)  Mr. Kibre states that he met with Ms. Amira and Mogab at his office on August 4, 2017 for 2 hours, explained the various types of terms and provisions that one could include in a premarital agreement, and the principal issues they discussed were a waiver of community property and limits on spousal support in the event of a divorce.  (Id., ¶4.)  He states that he prepared a draft of the agreement and made several revisions after receiving Mogab’s input via telephone.  (Id., ¶5.)  Mr. Kibre states that he requested and Mogab sent him a summary form of estimated values of Ms. Amira’s income and assets, which he included as an exhibit to the premarital agreement.  (Id.)  He states that he then negotiated with counsel regarding the premarital agreement, which was eventually executed on October 6, 2017.  (Id.)  Contrary to Ms. Amira’s statements, Mr. Kibre states that he spent a total of 3 hours (one in-person meeting and two phone calls) in speaking with Ms. Amira, solely on the issue of her premarital agreement.  (Id., ¶6.)  He states that he does not know any details of her personal life, her investments, investment strategies or attitudes, or her investment in the Hazelhurst Property (which was an investment that was initiated in July 2018—i.e., 10 months after the Amira Premarital Agreement was concluded).  (Id., ¶¶6, 8.) 

         Based on the papers and record before the Court, the Court grants the motion to disqualify CMM’s counsel, Mr. Kibre.  While there are conflicts between Ms. Amira’s account of her relationship with Mr. Kibre and Mr. Kibre’s representation of Ms. Amira on her premarital agreement, there is no doubt that Mr. Kibre represented Ms. Amira in preparing and drafting her premarital agreement.  The preparation of such documents ordinarily involves an understanding on the part of the attorney of the client’s financial dealings and position.  Family Code, § 1612 states what parties to a premarital agreement may contract, which would involve a detailed understanding by Mr. Kibre of Ms. Amira’s financial circumstances to draft a premarital agreement.  Further, though Mr. Kibre states that he was hardly involved with Ms. Amira, he charged her $18,000 for his drafting services, which indicates that substantial and substantive work was done. Based on the facts before the Court, the Court finds that Plaintiff has established that Mr. Kibre’s representation of Ms. Amira in drafting her premarital agreement in 2017 bears a substantial relationship to this action involving Plaintiff Amira Trust’s allegations that Defendants mismanaged and wrongfully converted Amira Trust’s funds based on the Hazelhurst Property project and investment.  Thus, Plaintiff has established that Mr. Kibre’s prior and limited representation of Ms. Amira involved the same or a substantially related matter as the matters and issues in this action. 

         Accordingly, the motion to disqualify counsel is granted.

CONCLUSION AND ORDER

         Plaintiff Amy R. Amira, Trustee of The Cynthia L. Amira Family Trust’s motion to disqualify Defendant CMM, LLP’s counsel, Joseph Kibre Esq. and Kibre & Neman, LLP is granted.  

Plaintiff shall provide notice of this order.