Judge: Michael E. Whitaker, Case: 22SMCV01121, Date: 2023-11-09 Tentative Ruling

Case Number: 22SMCV01121    Hearing Date: November 9, 2023    Dept: 207

TENTATIVE RULING

MOTION

            Ellyn S. Garofalo and Amir Kaltgrad of Carlton Fields, LLP (“Counsel”), Counsel for Defendants Pali Cap Management 9; Palisades Capital Fund 4; Palisades Capital Fund 8; Palisades Capital Fund 7; Palisades Development Co.; Leslie Gornik; Palisades Capital Management LLC; Palisades Funding; and Patrick McKenna  move to be relieved as counsel for each Defendant. 

            No opposition has been filed, however, Jay R. Stein, Esq., counsel for Plaintiffs, has filed a declaration requesting that the Court impose conditions on the requests to be relieved as Defendants’ counsel.

LEGAL STANDARD

Code of Civil Procedure section 284 provides “[t]he attorney in an action or special proceeding may be changed at any time before or after judgment or final determination as follows: 1. Upon the consent of both client and attorney, filed with the clerk, or entered in the minutes; 2. Upon the order of the court, upon the application of either client or attorney, after notice from one to the other.”

Procedural Requirements

California Rules of Court, rule 3.1362, requires:

(1) the motion must be made on form MC-051; (subd. (a));

(2) it must be accompanied by a declaration on form MC-052 stating why the motion is brought under Code of Civil Procedure section 284(2) instead of a consent brought under section 284(1); (subd. (c));

(3) a proposed order on form MC-053 must be lodged with the court, specifying all hearing dates scheduled in the action or proceeding, including the date of trial, if known; (subd. (e)); and

(4) The documents must be served on the client and on all parties that have appeared in the case. (subd. (d).)

If the notice is served by mail or electronic service, it must be accompanied by a declaration indicating that the address served is the current address, or in the case of service by mail, that it was served on the last known address and a more current address could not be located after reasonable efforts within 30 days before filing the motion.  (Ibid.)  The court may delay the effective date of the order relieving counsel until proof of service of a copy of the signed order on the client has been filed with the court.”  (Ibid.) 

Substantive Requirements

Rules of Professional Conduct, rule 1.16(a) outlines the reasons a lawyer must withdraw from representation of a client:

(1)   the client is bringing an action, conducting a defense, asserting a position in litigation, or taking an appeal, without probable cause and for the purpose of harassing or maliciously injuring any person;

(2)   the representation will result in violation of the Rules of Professional Conduct or the State Bar Act;

(3)   the lawyer’s mental or physical condition renders it unreasonably difficult to carry out the representation effectively; or

(4)   the client discharges the lawyer.

Rules of Professional Conduct, rule 1.16(b) outlines the reasons a lawyer may withdraw from representation of a client:

(1)   the client insists upon presenting a claim or defense in litigation, or asserting a position or making a demand in a non-litigation matter, that is not warranted under existing law and cannot be supported by good faith argument for an extension, modification, or reversal of existing law;

(2)   the client either seeks to pursue a criminal or fraudulent course of conduct or has used the lawyer’s services to advance a course of conduct that the lawyer reasonably believes was a crime or fraud;

(3)   the client insists that the lawyer pursue a course of conduct that is criminal or fraudulent;

(4)   the client by other conduct renders it unreasonably difficult for the lawyer to carry out the representation effectively;

(5)   the client breaches a material term of an agreement with, or obligation, to the lawyer relating to the representation, and the lawyer has given the client a reasonable warning after the breach that the lawyer will withdraw unless the client fulfills the agreement or performs the obligation;

(6)   the client knowingly and freely assents to termination of the representation;

(7)   the inability to work with co-counsel indicates that the best interests of the client likely will be served by withdrawal;

(8)   the lawyer’s mental or physical condition renders it difficult for the lawyer to carry out the representation effectively;

(9)   a continuation of the representation is likely to result in a violation of these rules or the State Bar Act; or

(10)           the lawyer believes in good faith in a proceeding pending before a tribunal that the tribunal will find the existence of other good cause for withdrawal.

DISCUSSION

            Counsel have filed forms MC-051, MC-052, and MC-053 and proofs of service as to each defendant.  The attorney declarations (MC-052) indicate that the motions were filed instead of filing consents because of “a breakdown in the attorney-client relationship.” 

Rule 1.16(b)(4) permits withdrawal where “the client by other conduct renders it unreasonably difficult for the lawyer to carry out the representation effectively[.]”  As such, the motions are substantively proper.

The proofs of service indicate that the clients were served by mail, and the other parties were served both electronically and by mail, in compliance with California Rules of Court, rule 3.1362(d) [“The notice may be by personal service, electronic service, or mail”].  Paragraph 3(b) of the attorney declaration (MC-052) confirms that the clients were each served by mail at the last known address, as confirmed by telephone within the past 30 days, in conformance with California Rules of Court, rule 3.1362(d)(1)(A).  Therefore, the motions are procedurally proper.

Plaintiffs do not deny that the motions are procedurally and substantively proper.  However, Plaintiffs’ counsel has filed a declaration, indicating that certain discovery productions are still outstanding, and requests the Court place the following conditions on Defendants’ counsel’s withdrawal:

1.      Any and all Accountings and/or accounting related documents in the actual possession of the Defendants attorneys of the above properties identified in Paragraphs 2 and 3 from the time of acquisition, sale, and distribution of proceeds should be turned over to Plaintiffs prior to being relieved as counsel of record as those are not privileged documents. Carlton Fields is not required to produce any documents it does not have in its possession, however it must make that representation in writing to the Court prior to any order issued by the Court takes effect.

2.      Since Carlton Fields will no longer be representing Defendants, no IDC will be required prior to the Plaintiffs filing any Motion to Compel Further Documents and for Sanctions if in fact Defendants or their new counsel fail to provide the Accountings documents in their possession and control after relief is granted by this Court.

Plaintiffs have not provided the Court any authority for conditioning the withdrawal of counsel on the production of discovery, especially where, as here, there has been a breakdown in the relationship between Defendants and Counsel, and the terms of any such production by counsel are likely to be inherently fraught with conflict.  Moreover, the Courtroom rules for Department 207 require that the parties schedule an IDC prior to bringing any discovery motion.  The Court sees no reason to create an exemption from this requirement on the basis of Counsel’s withdrawal.  If anything, the Court finds an IDC would be particularly helpful, since new counsel may be involved.

Therefore, the Court declines to impose the requested conditions on Counsels’ withdrawals.

CONCLUSION AND ORDER

            Therefore, the Court grants the Motions to be Relieved as Counsel.

Counsel must serve the signed orders (forms MC-053), which shall include information about all future hearings and proceedings noticed by any party, or ordered by the Court, on all Defendants and all other parties who have appeared in the action, within 10 days of the date of this Order, and file proofs of service of such.  Counsel will remain the attorneys of record for Defendants until Counsel files the requisite proofs of service.  (See Cal. Rules of Court, rule 3.1362(e).) 

DATED:  November 9, 2023                          ___________________________

                                                                  Michael E. Whitaker

                                                                  Judge of the Superior Court