Judge: Monica Bachner, Case: 22STCV01394, Date: 2022-08-15 Tentative Ruling

Department 71: Attorneys who elect to submit on these published tentative rulings, without making an appearance at the hearing, may so notify the Court by communicating this to the Department's staff at (213) 830-0771 before the set hearing time.  See, e.g., CRC Rule 324(b).   All parties are otherwise encouraged to appear by Court Call for all matters.

Case Number: 22STCV01394    Hearing Date: August 15, 2022    Dept: 71

Superior Court of California

County of Los Angeles

DEPARTMENT 71

TENTATIVE RULING

Defendant’s motion to disqualify counsel is denied.  Defendant’s request for a protective order is also denied.

Defendant City of Irwindale (“Defendant” or “the City”) moves for an order disqualifying Lara R. Leitner (“Leitner”) and her firm Jeffer Mangles Butler & Mitchell (“Jeffer Firm”) (collectively, “Plaintiff’s Counsel”) as attorney of record for Plaintiff Five Points, LP (“Plaintiff”).  Defendant moves for disqualification based on Leitner having served as a former employee Aleshire & Wynder, LLP (“Aleshire” or “Defendant’s Counsel”), Defendant’s counsel, which acts as the City Attorney on behalf of Defendant and during the time Defendant’s Counsel represented Defendant in a legal action at issue in Plaintiff’s complaint, USA Waste of California, Inc. v. City of Irwindale, et al., Case No. KC066276 (“USA Waste”) in violation of California Rules of Professional Conduct (“CRPC”) Rule 1.9 and Business & Professions Code §6068.  (Notice of Motion, pg. 2.)  Defendant also moves for a protective order preventing any employee of the Jeffer Firm from disclosing any information obtained from its representation of Plaintiff to anyone.  (Notice of Motion, pg. 2.)

Evidentiary Objections

Plaintiff’s 8/2/22 evidentiary objection to the Declaration of Dennis La (“La”) are overruled as to No. 12 (Leitner does not dispute Exhibit 1 reflects her billing records, she submits evidence conflicting with Defendant’s interpretation of those records) and sustained as to Nos. 1, (lack of personal knowledge as to whether Leitner “worked… on [USA Waste]”), 2 (only as to “including her direct involvement in the [USA Waste] matter” and otherwise overruled; whether the billing sheets actually show Leitner worked on USA Waste does not affect their admissibility), 3 (conclusory; assertion not supported by exhibit), 4, 5 (Exhibit 1 speaks for itself; the declarant’s assertion that it demonstrates Leitner worked on certain matters for the city is inadmissible), 6, 7, 8, 9, 10, 11 (lack of foundation). 

Plaintiff’s 8/9/22 evidentiary objections to the Supplemental Declaration of La filed in support of Defendant’s reply are overruled as to Nos. 1, 3, 4, 5, 7, 9, 10, 11 and 17 and sustained as to Nos. 2 (only as to “in connection with USA Waste… Declaration” and otherwise overruled), 6, 8, 12 (as to “As reflected …”, otherwise overruled), 13 (as to “As reflected …”, otherwise overruled), 14 (as to “As reflected …”, otherwise overruled), 15 (as to “As reflected …”, otherwise overruled), and 16 (as to “As reflected …”, otherwise overruled).

Background

On January 12, 2022, Plaintiff filed its initial complaint against Defendant alleging causes of action for (1) breach of contract, (2) breach of the covenant of good faith and fair dealing, (3) promissory estoppel, (4) declaratory relief, (5) takings, and (6) civil rights violations of procedural and substantive due process.  Defendant filed the instant motion on April 7, 2022, with an amended version of substantively the same motion on June 2, 2022.  On June 22, 2022, Plaintiff filed the operative first amended complaint (“FAC”) asserting the same first five causes of action as asserted in the complaint, while no longer asserting the sixth cause of action.  The original complaint included the following allegation: “In further reliance on the PSDA and the City’s promises… that it would support and facilitate the Project, Plaintiff also contributed $2 million towards the City’s settlement with Waste Management [in USA Waste,] [funds that] Plaintiff had no obligation to contribute towards the settlement but did so in the spirit of cooperation and partnership given the PSDA.” (Complaint ¶33.)  The FAC omits this allegation entirely.  (Compare Complaint ¶¶32-34 and FAC ¶¶41-42.)

Based on the FAC, Plaintiff and Defendant (collectively, “the Parties”) entered into an Exclusive Negotiating Agreement (“ENA”) in 2013 for the purpose of negotiating a contract to purchase real property located at 5175 Vincent Avenue (“Property”), a formerly contaminated mining pit, for light industrial or commercial use.  (FAC ¶¶1-6, 12-17.)  Plaintiff alleges in November 2015, the Parties entered into a Purchase, Sale, and Development Agreement (“PSDA”) pursuant to which Plaintiff acquired the Property for $3,058,571.43 for the purpose of developing it with light industrial and/or commercial use.  (FAC ¶¶24-27.)  Plaintiff alleges that in exchange for paying the purchase price, Defendant made promises to Plaintiff with respect to the Property and Plaintiff’s intended development thereon.  (FAC ¶¶28-40.)  Plaintiff alleges after it fully performed on its PSDA obligations, Defendant reneged when, on July 23, 2021, Defendant’s Planning Commission held a public hearing and recommended the City Counsel refuse to certify the Environmental Impact Report (“EIR”) that had been prepared for the project under CEQA, a recommendation the City Council adopted on October 13, 2021 in refusing to certify.  (FAC ¶¶41-65.)  Plaintiff alleges as a direct result of Defendant’s breaches, Plaintiff has suffered tens of millions of dollars in damages including: (1) the $3,058,571.43 Plaintiff spent to acquire the Property in reliance on its contractual right to develop the Property consistent with Scope of Development in the PSDA approved by Defendant; (2) the millions of dollars in additional costs incurred for Site remediation, processing entitlements, architectural/engineering and design costs, legal and consulting fees, which Plaintiff would not have incurred but for the Defendant’s contractual promises in the PSDA; and (3) tens of millions of dollars in lost revenues and profits.  (FAC ¶75; Complaint ¶61.)

Defendant submitted evidence that Leitner was formerly employed by Defendant’s Counsel, which has acted as the City Attorney for Defendant for 26 years.  (Decl. of La ¶¶2-3.)  Defendant submitted copies of Leitner’s time entries reflecting work she billed while employed by Defendant’s Counsel. (Decl. of La ¶3, Exh. 1.)  A review of the billing entries demonstrates a number of matters were billed to “01005 City of Irwindale” under various subheadings including Planning (0005) and Mining (0020).  The only unredacted entries are from the following dates: (1) October 2014, in which USA Waste is not referenced; (2) April 2015 where “(USA WASTE)” is referred to in the description; and (3) March to May 2016 where “(USA WASTE)” is again referred to in the description. In addition, in various time entry descriptions, Leitner notes having conferred with the following individuals: (1) Adrian Guerra (“Guerra”), and (2) William Tam (“Tam”), Defendant’s then City Manager. The Court notes Exhibit 1 redacts the number of hours Leitner purportedly billed for these entries.  

In opposition, Plaintiff submitted evidence as to Leitner’s background at Defendant’s Counsel: (1) after graduating from law school in 2014, and before passing the California State Bar in 2015, she joined Defendant’s Counsel as an associate and performed minor research tasks for the Defendant that were assigned to her by senior attorneys; (2) she recalls Defendant’s Counsel serving as counsel in a lawsuit on behalf of Defendant involving USA Waste; however, she asserts she was never staffed on the case and did not work on the case; (3) her only recollection of USA Waste is a discussion she had with associate Jennifer Ro (“Ro”) who expressed her unhappiness with working on the matter, but Leitner had no substantive discussion of the case with anyone, was not involved in its litigation strategy and made no appearances in the action; (4) Leitner declared that as a young associate she was not assigned to any specific litigation, but given discrete research assignments, in connection with which she would be given a client number and matter number to include in her billing entries such that the phrase “USA WASTE” would be included because she was instructed to do so; (5) she asserts that all the provided billing entries were either billed to the “Planning” (0005) or “Mining” (0020) Matter Numbers, and none were billed to “Litigation” (0003); (6) Leitner believes the fact entries were not billed to the “Litigation” matter number demonstrates the billings may have been related to USA Waste but not to the USA Waste litigation; (7) she contends the 2015 time entries reflect general research assignments that were not lawsuit-specific; (8) she acknowledges one entry indicates conferring with “Tabian re background on the case…” but does not recall ever speaking with Tabian regarding USA Waste or working with him on it and its possible “case” refers to administrative case; (9) she does not believe she acted as a lawyer for Defendant in connection with the litigation between it and USA Waste and even if she had, Defendant has submitted no evidence the USA Waste matter has any relationship to the instant litigation, as Leitner does not believe it does; and (10) Leitner’s work for Defendant involved looking up building codes and the instant action has nothing to do with building codes.  (Decl. of Leitner ¶¶2-3, 5, 9-10, 12-15, 18-19, 21-22.)  Leitner also submitted evidence the conflict list she prepared and provided to Plaintiff’s counsel made no reference to USA Waste. (Decl. of Leitner ¶¶6-7.)  Plaintiff also submitted a declaration of Matthew Hinks (“Hinks”), who also works for Plaintiff’s Counsel, in which he asserts that Defendant contended the instant action and USA Waste were substantially related because of Plaintiff’s allegation in Paragraph 62 of its right to reimbursement of the amount it contributed to Defendant’s settlement of USA Waste; however, Hinks asserts the damages summarized in Paragraph 61 (and FAC ¶75) do not include or refer to amounts spent in settlement and Defendant’s interpretation of such was misplaced.  (Decl. of Hinks ¶¶3-4.) 

In reply, Defendant submitted further evidence contending it did not expect Leitner to dispute the authenticity of her own billing entries or that they reflect work she performed in USA Waste. (Reply-Decl. of La ¶2.)  Defendant submitted evidence disputing Leitner’s assertion as to whether entries billed to a “Mining” matter number rather than a “Litigation” matter number indicates the work performed was not for litigation given all attorney time and all legal pleadings for “(USA Waste)” were stored under the Defendant’s general “Mining” account and not the litigation account.  (Reply-Decl. of La ¶¶4-7.)  Defendant also submitted exhibits of its court filings in USA Waste demonstrating that they were prepared and/or filed by attorneys Leitner referred to having worked with including Tabian, Tucker, and Ro.  (Reply-Decl. of La ¶8, Exhs. B-J.) 

Legal Standard

“‘A trial court’s authority to disqualify an attorney derives from the power inherent in every court [t]o 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. [Citations.]’ [citation] ‘. . . The paramount concern must be to preserve public trust in the scrupulous administration of justice and the integrity of the bar. The important right to counsel of one’s choice must yield to ethical considerations that affect the fundamental principles of our judicial process.’ [citation]” (Kirk v. First American Title Ins. Co. (2010) 183 Cal.App.4th 776, 791-792; citing C.C.P. §128(a)(5).) 

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. (Mills Land & Water Co. v. Golden West Refining Co.  (1986) 186 Cal.App.3d 116, 126.) 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.)

“Disqualification in cases of successive representation is based on the prohibition against ‘employment adverse to a… former client where, by reason of the representation of the… former client, the [attorney] has obtained confidential information material to the employment.’”  (See H.F. Ahmanson & Company v. Salomon Brothers, Inc. (1991) 229 Cal.App.3d 1445, 1451; see also Flatt v. Superior Court (1994) 9 Cal.4th 275, 283 (Flatt)[“ Where the potential conflict is one that arises from the successive representation of clients with potentially adverse interests, the courts have recognized that the chief fiduciary value jeopardized is that of client confidentiality”].) 

“A former client may seek to disqualify a former attorney from representing an adverse party by showing the former attorney actually possesses confidential information adverse to the former client.  However, it is well settled actual possession of confidential information need not be proved in order to disqualify the former attorney.  It is enough to show a ‘substantial relationship’ between the former and current representation.  If the former client can establish the existence of a substantial relationship between representations, the courts will conclusively presume the attorney possesses confidential information adverse to the former client.”  (See H.F. Ahmanson & Company, supra, 229 Cal.App.3d at 1452.)  The substantial relationship test creates a conclusive presumption that during the former representation the attorney obtained knowledge of confidential information that may be used against the former client.  The function of the conclusive presumption is to avoid “disclosing the former client’s confidences and secrets through an inquiry into the actual state of the lawyer’s knowledge and [to make] clear the legal profession’s intent to preserve the public’s trust over its own self-interest.”  (See id. at 1453.)  “Thus, the rule followed in California is that the attorney’s possession of confidential information will be presumed only when ‘a substantial relationship has been shown to exist between the former representation and the current representation, and when it appears by virtue of the nature of the former representation or the relationship of the attorney to his former client confidential information material to the current dispute would normally have been imparted to the attorney.’”  (See ibid.; See also City National Bank v. Adams (2002) 96 Cal.App.4th 315, 326 (2002).)  

In applying the “substantial relationship” test, the court should consider three factors: “(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.” (See Adams v. Aerojet-General Corp. (2001) 86 Cal.App.4th 1324, 1332.)  “The subject of a current representation is substantially related to the subject of a prior representation only if the issues are sufficiently similar to support a reasonable inference that the attorney in the course of the prior representation was likely to have obtained confidential information material to the current representation.”  (See Fremont Indemnity Co. v. Fremont General Corp., 143 Cal.App.4th 50, 67 (2006) [court concluded that disqualification “based on the prior representation of a party in a substantially related matter is not warranted”].) “Thus, successive representations will be “substantially related” when the evidence before the trial court supports a rational conclusion that information material to the evaluation, prosecution, settlement or accomplishment of the former representation given its factual and legal issues is also material to the evaluation, prosecution, settlement or accomplishment of the current representation given its factual and legal issues.” (Jessen v. Hartford Casualty Ins. Co. (2003) 111 Cal.App.4th 698, 713.)

CRPC Rule 1.9(a) provides that a lawyer who has formerly represented a client in a matter shall not thereafter represent another entity in the same or substantially related matter in which that entity’s interests are materially adverse to the interests of the former client unless the former client gives informed written consent. 

CRPC Rule 1.9(b) provides that a lawyer shall not knowingly represent an entity in the same or substantially related matter in which a firm with which the lawyer formerly was associated had previously represented a client whose interests were adverse to that entity and about which the lawyer acquired information protected by B&P §6068(e) and CRPC Rules 1.6 and 1.9(c) that is material to the matter unless the former client gives informed written consent.

Analysis

Defendant has not sustained its burden of establishing that even if Leitner represented Defendant in USA Waste, that such representation was substantially related to her representation of Plaintiff in the instant action for the purposes of warranting disqualification of her and vicarious disqualification of her firm. 

There is no evidence suggesting a substantial relationship exists between the instant matter and USA Waste, aside from both actions involving the City as a defendant.  Even in reply, Defendant does not submit evidence that the actions involve similar underlying issues or facts, or how Leitner’s research into building codes is material to her representation of Plaintiff in a breach of contract action against Defendant. Defendant did not submit evidence demonstrating that Leitner’s current representation of Plaintiff involves any work she previously performed for Defendant in USA Waste.  The evidence suggests there is no substantial risk that Leitner’s representation of Plaintiff will involve the use of information acquired in the course of her prior representation of Defendant in USA Waste, which is no longer at issue in this action given the FAC removes any reference to USA Waste and the damages sought do not involve or relate to Defendant’s settlement with USA Waste.  There is no showing that the information acquired during the first representation is material to the second, either that it is at issue or has some critical importance in the second representation.  Notably, given the redacted nature of the billing entries, it is not even clear how many total hours Leitner spent on work for which she assigned the billing code “USA Waste.”  Defendant did not meet its burden of demonstrating the existence of a substantial relationship between Leitner’s former representation of Defendant and any work she performed in connection with USA Waste and her current representation of Plaintiff as there has been no showing that either by virtue of the nature of her former representation (a young associate performing assigned research tasks) or the relationship of Leitner to Defendant that confidential information material to the current dispute would normally have been imparted to Leitner.  As to the three factors for determining a substantial relationship, Defendant did not submit sufficient evidence supporting the first factor that there are factual similarities between Leitner’s representation in USA Waste and Leitner’s representation of Plaintiff here.  Defendant also did not submit evidence supporting the second factor, as to the similarities in legal issues between the two actions.  Finally, Defendant’s evidence is not sufficient to support the third factor, that the nature and extent of Leitner’s involvement with the case (based on time entries for which hours have been redacted that refer to USA Waste and “discussions” with various attorneys who worked on USA Waste) and whether Leitner was in a position to learn Defendant’s policy or strategy so as to use such knowledge in the instant action. 

Based on the foregoing, Defendant’s motion to disqualify Plaintiff’s Counsel is denied. Defendant’s request for a protective order is also denied.

Dated:  August _____, 2022

Hon. Monica Bachner

Judge of the Superior Court