Judge Lynne M. Hobbs, Case Number: 21STCV00568, Date: 2024-03-22 Tentative Ruling

Judge: Lynne M. Hobbs, Case: 21STCV00568, Date: 2024-03-22 Tentative Ruling

Case Number: 21STCV00568 Hearing Date: March 22, 2024 Dept: 30

BRENDA RUTH NATHAN vs EMELY SERNAS, et al.

TENTATIVE

Defendants’ Emily Sernas and Rolando Sernas’ motion to disqualify counsel is DENIED. Opposing party to give notice.

Legal Standard

California Rule of Professional Conduct Rule 1.7 (“Rule 1.7”) states that a lawyer shall not represent a client “if the representation is directly adverse to another client in the same or a separate matter” unless the lawyer has obtained informed written consent from each client. (Cal. R. Prof. Conduct, rule 1.7(a).) Without obtaining informed written consent from each affected client, a lawyer shall not represent a client if there is a “significant risk the lawyer’s representation of the client will be materially limited by the lawyer’s responsibilities to or relationships with another client, a former client or a third person, or by the lawyer’s own interests.” (Id. at Rule 1.7(b).)

Absent informed written consent from each affected client, a lawyer may not concurrently represent clients who have actual or potential conflicts. (See Cal West Nurseries, Inc. v. Superior Court (2005) 129 Cal. App. 4th 1170.) Attorneys are generally required to avoid the representation of adverse interests. (See Santa Teresa Citizen Action Group v. City of San Jose (2003) 114 Cal. App. 4th 689.) The requirement of informed written consent applies when: (1) an attorney concurrently represents more than one client in a matter in which there is a potential conflict; (2) when an attorney concurrently represents more than one client in a matter in which there is an actual conflict; and (3) when the attorney represents a client in one matter and simultaneously represents another client in a separate matter whose interests are adverse with those of the first client. (See Sharp v. Next Entertainment, Inc. (2008) 163 Cal. App. 4th 410.)

When ruling on a motion to disqualify an attorney, courts weigh the following factors: a party’s right to counsel of their choice; an attorney’s interest in representing a client; the financial burden on a client of having to replace disqualified counsel; and any tactical abuse underlying the motion. (Med-Trans Corp., Inc. v. City of California City (2007) 156 Cal.App.4th 655, as modified, review denied; In re Complex Asbestos Litigation (1991) 232 Cal.App.3d 572, review denied.)

The primary purpose of this rule is to protect the confidential relationship that exists between an attorney and his/her client. (See, e.g., Pound v. DeMera DeMera Cameron (2005) 135 Cal. App. 4th 70, review denied.) The goal of this rule is to prevent dishonest conduct by attorneys as well as to avoid placing the honest practitioner in a position where he/she is forced to choose between conflicting duties or interests. (See Western Continental Operating Co. v. Natural Gas Corp. (1989) 212 Cal. App. 3d 752.)

“Motions to disqualify counsel are especially prone to tactical abuse because disqualification imposes heavy burdens on both the clients and courts: clients are deprived of their chosen counsel, litigation costs inevitably increase and delays inevitably occur. As a result, these motions must be examined ‘carefully to ensure that literalism does not deny the parties substantial justice.’” (Sharp, supra, 163 Cal. App. 4th at 424.) Because motions to disqualify counsel are often brought as a litigation tactic, they are “strongly disfavored” under California law and are “subject to ‘particularly strict judicial scrutiny’.” (See White v. Experian Information Solutions, 993 F.Supp.2d 1154, (C.D. Cal. 2014) as amended, affirmed¿818 F.3d 537, certiorari denied (interpreting California law).)

Discussion

Defendants Emily Sernas and Rolando Sernas (“the Sernas defendants”) move to disqualify Robert Thomas Mackey, Esq., Karen Sarames, Esq., and Veatch Carlson, LLP (“Veatch Carlson”), arguing that their interests and Co-Defendants’ interests are “directly adverse to each other.” On March 17, 2022, Veatch Carlson “inadvertently” filed an Answer to Plaintiff’s complaint on behalf of the Sernas Defendants without their consent and before their insurance company had a chance to answer on their behalf. Thus, the Sernas defendants argue that Veatch Carlson maintained a concurrent adverse representation of the Sernas defendants Co-Defendants from March 17, 2022 until the Sernas defendants filed Substitutions of Attorney and became self-represented on August 23, 2023.

Standing

The Sernas defendants do not have standing to bring this Motion seeking the disqualification of co-Defendants’ counsel, Veatch Carlson.

“Before an attorney may be disqualified from representing a party in litigation because his representation of that party is adverse to the interest of a current or former client, it must first be established that the party seeking the attorney’s disqualification was or is ‘represented’ by the attorney in a manner giving rise to an attorney-client relationship.” (Civil Serv. Com. v. Superior Court (1984) 163 Cal. App. 3d 70, 76–77; Koo v. Rubio’s Restaurants, Inc. (2003) 109 Cal. App. 4th 719.) Standing to bring a motion to disqualify counsel “arises from a breach of the duty of confidentiality owed to the complaining party, regardless of whether a lawyer-client relationship existed.” (DCH Health Servs. Corp. v. Waite (2002) 95 Cal. App. 4th 829, 832, holding that “[a]bsent the existence of a lawyer-client relationship or other relationship imposing a duty of confidentiality, neither [plaintiff] [was] entitled to seek [the attorney’s] disqualification.”)

“An attorney-client relationship is not created by the unilateral declaration of one party to the relationship. (See Fox v. Pollack (1986) 181 Cal.App.3d 954, 959 [individuals cannot unilaterally create an attorney-client relationship without the agreement of the attorney].) Rather, the relationship can only be created by contract, express or implied. (Responsible Citizens v. Superior Court (1993) 16 Cal.App.4th 1717, 1732.)” (Koo v. Rubio's Restaurants, Inc. (2003) 109 Cal.App.4th 719, 729.)

The parties’ intent and conduct are critical to formation of an implied-in-fact attorney-client relationship. (Hecht v. Superior Ct. (1987) 192 Cal.App.3d 560, 565.) The following factors are relevant in determining whether an attorney-client relationship has been created by implied agreement:

· Whether the attorney volunteered his or her services to the prospective client;

· Whether confidential information has been disclosed by the prospective client;

· Whether the prospective client reasonably believed he or she was consulting the attorney in the attorney's professional capacity;

· Whether the attorney acted or indicated by statements that he or she was representing the prospective client;

· The amount of contact between attorney and the prospective client;

· Whether the prospective client sought legal advice from the attorney and whether the attorney provided advice;

· Whether the attorney previously represented the prospective client, particularly where the representation occurred over a period of time or in several matters or without an express agreement;

· Whether the prospective client paid fees or other consideration in the matter in question; and

· Whether the prospective client consulted the attorney in confidence.

(Weil & Brown, Cal. Practice Guide: Prof. Resp. & Liability, Formation of Relationship (The Rutter Group), Ch. 3-B, ¶ 3:45, citing to Cal. State Bar Form. Opn. 2003-161; Lister v. State Bar (1990) 51 Cal.3d 1117, 1126 [relationship found where client asked attorney to file lawsuit, delivered documents, understood attorney was working on case and attorney commenced work]; Davis v. State Bar (1983) 33 Cal.3d 231, 237 [relationship demonstrated by attorney’s conduct in obtaining medical bills, sending letters and referring client to evaluating physician]; Kane, Kane & Kritzer, Inc. v. Altagen (1980) 107 Cal.App.3d 36, 40 [relationship implied from long-standing course of dealing between attorney and client].)

“[O]ne of the most important facts involved in finding an attorney-client relationship is the expectation of the client based on how the situation appears to a reasonable person in the client’s position.” (Responsible Citizens v. Sup.Ct. (Askins) (1993) 16 Cal.App.4th 1717, 1733 [internal quotes omitted]; see also, Hall v. Sup.Ct. (Lindrum) (2003) 108 Cal.App.4th 706, 713-715 [a person's expectation that an attorney-client relationship exists is not reasonable where he or she has not met or sought advice from the attorney.].)

Here, Veatch Carlson asserts that they mistakenly and inadvertently included the Sernas’ name on the Answer. On January 28, 2022, Veatch Carlson filed an Answer to Plaintiff’s Complaint on behalf of Defendants Muraya and ASC only. Thereafter, it was confirmed that Defendant Houn was the registered owner of the vehicle operated by Muraya, and the intention was to then file an Answer on behalf of Houn only. (Mackey Decl., ¶ 3.) However, on March 17, 2022, counsel mistakenly filed an Answer on behalf of Houn and the Sernas defendants. (Mackey Decl., ¶ 3.)

When the clerical error was discovered, Veatch Carlson filed an ex parte application for a nunc pro tunc order to withdraw the Answer filed on behalf of the Sernas only. The Sernas were served with the ex parte application for relief via FedEx overnight delivery. However, on July 20, 2023, the Court denied the ex parte application and stated that the Sernas must be served with a properly noticed motion. At that time, trial was set for September 28, 2023. As it appeared that there was insufficient time for a properly noticed motion and sufficient time to ensure the Sernas were given sufficient time to retain new counsel, Veatch Carlson attempted to determine whether the Sernas would agree to substitute into the case instead. (Nervez Decl., ¶ 3.)

On or about July 28, 2023, Veatch Carlson sent substitutions of attorneys to Resolute Investigators to contact Emily Sernas and Rolando Sernas for signature. Counsel informed the investigator, John Hougan, that Veatch mistakenly appeared for the Sernas and that they now require them to sign the substitution of attorneys. Hougan was also asked to determine whether the Sernas’ vehicle was insured so that Sernas’ insurer could be immediately placed on notice of the action. (Nervez Decl., ¶ 4.)

On or about August 9, 2023, Emily Sernas’ signed substitution of attorney was sent to Veatch Carlson; however, it was discovered that Rolando Sernas spent significant time in Mexico and could not personally sign the substitution of attorney. Hougan was asked to inquire whether Mr. Sernas would be able to use DocuSign and, if so, what email address to use. (Nervez Decl., ¶ 5.)

After Hougan obtained a viable email address for Rolando Sernas, one of Veatch Carlson’s legal assistants sent the substitution of attorney via DocuSign to Mr. Sernas. (Nervez Decl., ¶ 6.)

On or about August 21, 2023, Veatch received Rolando Sernas’ executed substitution of attorney. (Nervez Decl., ¶ 7.)

Beyond this clerical mistake, there has been no substantive communications or interactions whatsoever that could cause either Veatch Carlson or the Sernas to reasonably believe that an attorney-client relationship existed between the defendants and the Veatch Carlson. (Nervez Decl., ¶¶ 4-10.)

Veatch Carlson never volunteered its services to the Sernas; instead, Veatch Carlson was retained by John Muraya, Administrative Services Cooperative, and Rous Houn’s insurance company to provide a defense to ASC in connection with the plaintiffs’ personal injury action. (Mackey Decl., ¶¶ 4-8.)

Veatch Carlson never received any confidential information from the Sernas. (Nervez Decl., ¶ 9, Mackey Decl. ¶ 7, Sarames Decl. ¶ 6.)

The Sernas never sought Veatch Carlson out for a consultation regarding plaintiff’s personal injury action, and Veatch Carlson did not communicate with the Sernas except on the limited basis of making arrangements of securing a substitution of attorney, as explained in the Declarations of Robert Mackey, Karen Sarames, and Serena Nervez. (Nervez Decl., ¶¶ 2-11, Mackey Decl. ¶¶ 4-8, Sarames Decl. ¶¶ 3-7.)

Veatch Carlson never informed the Sernas that they were represented by any attorney at the law firm of Veatch Carlson. Veatch Carlson never offered legal advice to the Sernas, and the Sernas never sought legal advice from Veatch Carlson. (Nervez Decl., ¶¶ 2-11, Mackey Decl. ¶¶ 4-8, Sarames Decl. ¶¶ 3-7.)

In reply, the Sernas argue that if it was simply a “clerical error” there is no explanation how they came to file an entirely separate answer on behalf of the Sernas Defendants (as opposed to inadvertently including their name on a filed answer). They also argue that Veatch Carlson has not explained how, over the course of nearly a year and a half, no one at the office so much as reviewed the file to identify the “clerical error.” Even if inadvertence did exist in this case, they argue, intent should be imputed on Veatch as 17 months was enough time that they reasonably should have known that an attorney-client relationship existed.

However, Veatch Carlson has already explained that the separate answer was filed because they meant to file it for Houn when they discovered he was the owner of the vehicle. The Sernas defendants point to no authority for their assertion that intent should be imputed because 17 months was enough time that they reasonably should have known that an attorney-client relationship existed. The fact remains that the Sernas defendants have not met their burden to show an attorney-client relationship existed.

In the reply, after Veatch Carlson pointed out that the Sernas failed to present evidence to show they had a reasonable belief that attorney-client relationships were formed between them and Veatch Carlson, the Sernas defendants submitted the declaration of Emily Sernas. However, the general rule of motion practice is that new evidence is not permitted with reply papers. Specifically, points raised for the first time would deprive the respondent an opportunity to counter the argument. (Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537.) Here, Veatch Carlson has not had an opportunity to respond to the new evidence in the reply, and as such, the Court cannot consider this evidence. Even if the Court were to consider this evidence, all Emily states is that her and her father understood that they were represented by Veatch Carlson in this matter, and that she recalls contacting someone named Robert who was an attorney, even though she could not recall the substance of the phone call. (Emily Decl., 3-4.) The Court finds that without evidence of the substance of the phone call, Emily’s declaration is not enough. A person's expectation that an attorney-client relationship exists is not reasonable where he or she has not met or sought advice from the attorney. (Hall v. Sup.Ct. (Lindrum), supra, 108 Cal.App.4th at 714.) Emily does not say she sought advice from the attorney; that he gave her advice; that she consulted him in confidence; that he volunteered his services to her; that there was a lot of contact between them; or that she paid for his services. Further, the phone call appears to have been related to Veatch Carlson’s attempt to have the Sernas defendants to sign the substitution of attorney.

Thus, the motion is DENIED.