Judge: Kevin C. Brazile, Case: 22STUD01604, Date: 2022-11-01 Tentative Ruling

Hearing Date: November 1, 2022

Case Name: Craig Fry & Associates, LLC v. Fire Protection Group, et al.

Case No.: 22STCV12328 

Matter: Motion to Disqualify Counsel

Moving Party: Defendants Fire Protection Group and The JBS Group, LLC

Responding Party: Plaintiff Craig Fry & Associates, LLC

Notice: OK

Ruling: The Motion to Disqualify is granted.  

Moving parties to give notice.

If counsel do not submit on the tentative, they are strongly 

encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic. 

This is an action in which Plaintiff Craig Fry & Associates, LLC seeks payment for unpaid consulting services for Defendants Fire Protection Group (“FPG”) and The JBS Group, LLC (“JBS”).  Plaintiff asserts causes of action for (1) account stated, (2) open book account, and (3) account stated. 

FPG and JBS seek to disqualify the Law Offices of Bruce Altschuld and Bruce Altschuld, counsel for Plaintiff Craig Fry & Associates, LLC.  Defendants contend that “Altschuld should be disqualified given that, among other things, Fry is now seeking payment as to projects that were the subject of multi-year litigations where Altschuld previously represented FPG and JBS.”  

Whether an attorney should be disqualified is a matter addressed to the sound discretion of the trial court.  (Comden v. Superior Court (1978) 20 Cal.3d 906, 910-911, 915-916.)  The court’s authority to disqualify an attorney derives from the court’s inherent power to control the proceedings before it.  (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1145 (SpeeDee Oil).)  

Motions to disqualify counsel generally concern a conflict between the client’s right to choose his or her legal representative and the need to maintain ethical standards of professional responsibility.  In assessing disqualification motions, the court’s primary concern is “to preserve public trust in the scrupulous administration of justice and the integrity of the bar,” and in certain circumstances, the client’s right to his or her counsel of choice “must yield to ethical consideration that affect the fundamental principles of our judicial process.”  (SpeeDee Oil, supra, 20 Cal.4th at pp. 1145-1146.)  The purpose of disqualification is not punitive but prophylactic, meaning that the primary issue on any such motion is whether there is a genuine likelihood that permitting the challenged attorney to remain will affect the outcome of the proceedings before the court.  (Kirk v. First American Title Ins. Co. (2010) 183 Cal.App.4th 776, 815 (Kirk).)

Disqualification motions generally arise in two circumstances, each of which involves a conflict of interest.  First, where an attorney concurrently represents parties with conflicting interests, the attorney’s duty of undivided loyalty to each client is placed at issue, since each client is entitled to expect legal counsel’s full devotion to his or her sole interests.  (Great Lakes Const., Inc. v. Burman (2010) 186 Cal.App.4th 1347, 1355-1356 (Great Lakes).)  

Second, where an attorney successively represents clients with adverse interests, the attorney’s duty of confidentiality to the former client is at issue.  Under the substantial relationship test, if the former client can demonstrate a substantial relationship between the subjects of the former and current representations, a presumption arises that the attorney had access to confidential information in the first representation that is relevant to the second representation.  (Flatt v. Superior Court (1994) 9 Cal.4th 275, 283; Kirk, supra, 183 Cal.App.4th at pp. 796-797.)  

Each of the two foregoing circumstances generally warrants disqualification in the absence of informed written consent from each adversely impacted client.  (See Rules Prof. Conduct, rule 3-310(C), (E).)

Here, the substantial relationship test is at issue.  Under this test, “[t]he courts ask whether confidential information material to the current dispute would normally have been imparted to the attorney by virtue of the nature of the former representation. [Citation.]” (Id. at p. 1454.) Noting that the test ‘is “intended to protect the confidences of former clients when an attorney has been in a position to learn them”’ (id. at p. 1455, citing Silver Chrysler Plymouth, Inc. v. Chrysler Mot. Corp. (2d Cir. 1975) 518 F.2d 751, 757, italics added), the court in Ahmanson identified three factors the court should consider in applying the test: (1) factual similarities between the two representations, (2) similarities in legal issues, and (3) the nature and extent of the attorney's involvement with the case and whether he was in a position to learn of the client's policy or strategy. (229 Cal.App.3d at p. 1455, citing Silver Chrysler, supra, at p. 760 (conc. opn. of Adams, J.).)”  (Adams v. Aerojet-Gen. Corp. (2001) 86 Cal.App.4th 1324, 1332.)

Defendants have met their burden.  Altschuld represented FPS and JBS for years.  Notably, as Defendants point out, “Fry is now seeking payment for projects Altschuld previously represented Defendants in related litigations. Id. (last 2 invoices, 1836 Sichel and Hatteras). Mr. Altschuld represented JBS from at least October 23, 2017 to July 28, 2021 in JBS GROUP, LLC vs. KETTER DESIGN, INC., Case number BC680705 with respect to the same Sichel and Hatteras projects. RJN Exs. 1-8; see also Alon Decl. ¶ 3, 9, Exs. 44 (last photograph), 51 (JBS’ responses), 52 (Altschuld took deposition), 53 (Altschuld defended Saadian deposition), and 54 (February 28, 2019 letter from Craig Fry of Craig Fry & Associates to Altschuld). In addition, one of the invoices at issue includes a line item for the very property that is the subject of that companion litigation that remains pending before this Court wherein Mr. Altschuld represented FPG, which engaged Fry as an expert in that matter. Alon Decl. ¶ 8, Ex. 50 (see 1st entry of 1 st invoice (‘940 S. Figueroa Street’) attached to responses).”  

Defendants further provide, “on June 6, 2018, Altschuld filed a motion to compel that included a declaration from Altschuld attesting that he propounded a demand for inspection of documents for JBS and that he bills this client at $400 per hour. RJN Ex. 3 (Altschuld Decl., ¶¶ 3, 8). As Altschuld declared, ‘The lawsuit involves two buildings –one a 27 unit apartment complex [Hatteras] and the other a 28 unit apartment complex [Sichel].’ RJN Ex. 3 (Altschuld Decl. 2). That motion included a declaration from George Saadian that ‘JBS Group LLC, is the developer of two projects, Hatteras and Sichel,’ ‘On behalf of JBS I retained the architectural services of Ketter Design, Inc.,’ and ‘In response to Ketter’s failure to perform its contractual obligations I retained Craig Fry to complete the services that had not been performed by Ketter Design. I have requested all communication between Ketter and Fry in JBS’ Demand . . . .’ Id. (George Saadian Declaration, ¶¶ 2, 3 and 6 (emphasis added)); see also RJN Ex. 4. According to Altschuld’s Notice of Ruling, the court ordered the production of all documents identified as ‘(4) All documents between defendant and Craig Fry and Associates re: project.’ RJN Ex. 5. Altschuld defined ‘Project’ as ‘the Hatteras project and the Sichel project.’ RJN Ex. 3 (Demand for Production, p. 3:25).”

The Opposition does not specifically address these contentions, but instead speaks in generalities—that Altschuld did not know Fry well as outside litigation counsel and that counsel never dealt with the invoices at issue in this lawsuit.  This is contrary to the above cited evidence, and also, counsel billed the Saadian Estate on behalf of Defendants for “call with Fry re his bills” (Suppl. Decl. Barkohanai, Exhibit 55), amongst other calls to Fry.  The Court concludes that Altschuld has a conflict of interest based on his former representation of Defendants with regard to the Hatteras and Sichel projects.  

Plaintiff argues that defense counsel, Alon LLP, is not registered with the Secretary of State and, thus, cannot practice.  This is false.  Alon LLP has come forth with its certificate of registraston with the State Bar of California.  (Alon Decl., Exhibit 58.)  

Plaintiff lastly argues that “Defendants waived their right to seek disqualification. Defendants were on notice of the alleged conflict the day they were served with the summons and complaint and no later than June 2, 2022”.  

JBS, however, filed the instant Motion on the same day that it filed its Answer.  Further, the Court cannot find that FPG’s minimal conduct in this matter is tantamount to a waiver.  

 In sum, the Motion to Disqualify is granted.  The Requests for Judicial Notice are granted.  The objections are overruled.  

Moving parties to give notice.

If counsel do not submit on the tentative, they are strongly encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic.