Judge Richard S. Whitney, Case Number: 37-2022-00050490-CU-BC-CTL, Date: 2024-05-10 Tentative Ruling

Judge: Richard S. Whitney, Case: 37-2022-00050490-CU-BC-CTL, Date: 2024-05-10 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - May 09, 2024

05/10/2024 10:30:00 AM C-68 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Richard S. Whitney

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Civil - Unlimited Breach of Contract/Warranty Motion Hearing (Civil) 37-2022-00050490-CU-BC-CTL HAWKINS VS 1ST CHOICE DESIGN & DEVELOPMENT [IMAGED] CAUSAL DOCUMENT/DATE FILED:

TENTATIVE RULING: DEFENDANTS' 1st CHOICE DESIGN & DEVELOPMENT'S and TONY HOLDER'S MOTION TO DISQUALIFY PLAINTIFFS' COUNSEL is DENIED.

Defendants 1st CHOICE DESIGN & DEVELOPMENT and TONY HOLDER ('Defendants') seeks to disqualify Plaintiffs' counsel, the Gappy & Verbick, LLC law firm ('G&V'), because there is a concurrent conflict of interest which should require G&V to be disqualified. Defendants also assert Plaintiffs' counsel has/is violating one or more of the following California Professional Rules of Conduct: Rule 1.1 - Competence; Rule 1.6 - Confidential Information of a Client; Rule 1.7- Conflict of Interest: Current Clients; Rule 1.8.2 - Use of Current Client's Information; Rule 1.10 - Imputation of Conflicts of Interest; Rule 1.16 - Declining or Terminating Representation; and Rule 1.16 – where continuation of the representation is likely to result in a violation of these rules or the State Bar Act.

The disqualification of counsel is within the sound discretion of the trial court, to be made on a case-by-case basis. (In re Complex Asbestos Litigation (1991) 232 Cal.App.3d 572, 601.) A motion to disqualify 'involves a conflict between the clients' right to counsel of their choice and the need to maintain ethical standards of professional responsibility. The paramount concern, though, must be the preservation of public trust in the scrupulous administration of justice and the integrity of the bar.' (Id. at 586.) 'On the other hand, it must be kept in mind that disqualification usually imposes a substantial hardship on the disqualified attorney's innocent client, who must bear the monetary and other costs of finding a replacement. A client deprived of the attorney of his choice suffers a particularly heavy penalty where [] his attorney is highly skilled in the relevant area of the law.' (Gregori v. Bank of America (1989) 207 Cal.App.3d 291, 300.) 'Additionally, as courts are increasingly aware, motions to disqualify counsel often pose the very threat to the integrity of the judicial process that they purport to prevent. [Citation] Such motions can be misused to harass opposing counsel [Citation], to delay the litigation [Citation], or to intimidate an adversary into accepting settlement on terms that would not otherwise be acceptable.' (Id. at 300-301 [Citations omitted].) Defendants assert there is a concurrent conflict of interest.

In contrast, in the concurrent representation context '[t]he principle precluding representing an interest adverse to those of a current client is based not on any concern with the confidential relationship between attorney and client but rather on the need to assure the attorney's undivided loyalty and commitment to the client. [Citations.]' (Civil Service Com. v. Superior Court, supra, 163 Cal.App.3d at p. 78, fn. 1.) This distinction between former representation and concurrent representation, and the distinct concerns at issue, are well recognized: 'In contrast to representation undertaken adverse to a former client, representation adverse to a present client must be measured not so much against the similarities in litigation, as against the duty of undivided loyalty which an attorney owes to each of his clients.' Calendar No.: Event ID: TENTATIVE RULINGS

3098498 68 CASE NUMBER: CASE TITLE: HAWKINS VS 1ST CHOICE DESIGN & DEVELOPMENT [IMAGED] 37-2022-00050490-CU-BC-CTL (Unified Sewerage Agency, etc. v. Jelco Inc. (9th Cir. 1981) 646 F.2d 1339, 1345, italics in original; see also Cinema 5, Ltd. v. Cinerama, Inc. (2d Cir. 1976) 528 F.2d 1384, 1386.) If this duty of undivided loyalty is violated, 'public confidence in the legal profession and the judicial process' is undermined.

(See In re Yarn Processing Patent Validity Litigation (5th Cir. 1976) 530 F.2d 83, 89.) (Truck Ins. Exchange v. Fireman's Fund Ins. Co. (1992) 6 Cal.App.4th 1050, 1056–1057.) A potential attorney-client relationship with an alleged partnership is not enough, however, to justify attorney disqualification. ''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.'' (Koo v. Rubio's Restaurants, Inc., supra, 109 Cal.App.4th at p. 729, 135 Cal.Rptr.2d 415.) (Lynn v. George (2017) 15 Cal.App.5th 630, 641–642.) Defendants ask this Court to make a finding that is 'the factual and legal question upon which the case rests' as Defendants' motion hinges on whether Defendant TONY HOLDER was and/or is a member of 4329 Allott Ave LLC (the 'LLC'), which G&V now represents. (Lynn, supra, 15 Cal.App.5th at 642.) 'A conflict arises when the circumstances of a particular case present 'a substantial risk that the lawyer's representation of the client would be materially and adversely affected by the lawyer's own interests or by the lawyer's duties to another current client, a former client, or a third person.' (Rest.3d Law Governing Lawyers [ (1998), Conflicts of Interest,] § 121, italics added.) If competent evidence does not establish such a conflict, the attorney is not disqualified for a conflict.' (In re Jasmine S. (2007) 153 Cal.App.4th 835, 843–844, 63 Cal.Rptr.3d 593.) (Sharp v. Next Entertainment, Inc. (2008) 163 Cal.App.4th 410, 426.) As in Lynn, this Court declines to make a factual and legal finding upon which the case rests.

Determining at this juncture whether Defendant TONY HOLDER was and/or is a member of the LLC would effectively be a summary adjudication of core issues in this matter. Defendants assert that if this Court finds that the Promissory Note is invalid and/or unenforceable then Defendant TONY HOLDER must still be a member/manager of the LLC. The Court agrees there would be a conflict for G&V if Defendant TONY HOLDER is in fact still a member/manager of the LLC. However, the Court believes that the conflict is merely a potential conflict and does not actually exist until it is legally and factually determined that Defendant TONY HOLDER is still a member/manager of the LLC. This determination is based on the undisputed facts that G&V did not have any communications with Defendants until after G&V decided to represent Plaintiffs and after G&V reviewed the documentary evidence provided by Plaintiffs that Plaintiffs' assert support Plaintiffs' position that Defendant TONY HOLDER's interest in the LLC was terminated by the LLC before G&V was contacted by Plaintiffs as to representation.

The Court believes in can only determine G&V's loyalties will be conflicted if and only if it is determined that Defendant TONY HOLDER is a member/manager of the LLC. The determination as to whether Defendant TONY HOLDER is a member/manager of the LLC has not and will not be made at this time. If Defendants bring a motion for summary adjudication which finally determines that issue, then a conflict would arise. This Court cannot conclude G&V will have divided loyalties until such determination is made and G&V is forced to confront the determination that Defendant TONY HOLDER is a member/manager of the LLC. Until that time, the conflict is only potential. While the Court understands Defendants believe G&V should feel conflicted based on Defendant TONY HOLDER being a member/manager of the LLC, it is clear G&V will not feel conflicted unless it is legally and factually determined that Defendant TONY HOLDER is a member/manager of the LLC. Defendants will not suffer prejudice as G&V did not learn any attorney-client privileged information that would provide Plaintiffs with an advantage. Even if G&V had been exposed to come confidences, '[m]ere exposure to the confidences of an adversary does not, standing alone, warrant disqualification.' (State Compensation Ins. Fund v. WPS, Inc. (1999) 70 Cal.App.4th 644, 657 [Citation omitted].) Given the analysis above, the Court denies the motion. However, the Court notes that Plaintiffs run the risk of needing to replace their counsel if Defendants do successfully obtain a legal and factual determination that Defendant TONY HOLDER is a member/manager of the LLC. While unnecessary, the Court notes the delay in bringing this motion could be construed as support for the assertion that the motion is merely a delay and/or litigation tactic rather than a legitimate concern over conflicts. The motion is denied without prejudice.

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