Judge Upinder S. Kalra, Case 20STCV23287 2023-04-28 Tentative Ruling

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MOVING PARTY: Allen B. Felahy, Counsel for Defendants Robert D. Spiro, Cole Harris, 1999 Sycamore, LLC, Capital Stone Holdings Inc., Capitol Stone Management, Inc., 20715 Avalon, LLC, MedCoast Medservices, Inc., and Better 4 You Breakfast, Inc

1. An order relieving Allen B. Felahy/Felahy Employment Lawyers as counsel for (1) Defendants Robert D. Spiro; (2) Cole Harris; (3) 1999 Sycamore, LLC; (4) Capital Stone Holdings Inc.; (5) Capitol Stone Management, Inc.; (6) 20715 Avalon, LLC; (7) MedCoast Medservices, Inc.; and, (8) Better 4 You Breakfast, Inc.

On June 19, 2020, Plaintiff Hakim (Plaintiff) filed a complaint against Defendants Robert D. Spiro, Cole Harris, 1999 Sycamore, LLC, Capital Stone Holdings Inc., Capitol Stone Management, Inc., and 20715 Avalon, LLC (Defendants). The complaint alleged 11 causes of action, based on breach of contract and various labor code violations. Plaintiff alleges that Defendant Spiro fraudulently induced Plaintiff to move to Los Angeles from Dubai to work for Defendants. Plaintiff began working for Defendants and was eventually offered a role as Vice-President. While working for Defendants, Plaintiff was not paid timely on various occasions. When Plaintiff demanded Defendants pay them as required by law, Plaintiff was wrongfully terminated.

On October 13, 2020, Defendants Robert D. Spiro, Cole Harris, 1999 Sycamore, LLC, Capital Stone Holdings Inc., Capitol Stone Management, Inc., and 20715 Avalon, LLC, Better 4 You Breakfast, Inc., and Medcoast Medservices, Inc., filed an Answer. Counsel Randy S. Snyder represented each of the Defendants.

On February 25, 2021, Defense counsel failed to appear at a hearing on a Motion to Strike the Answers of suspended corporate Defendants Capital Stone Holdings Inc., Capitol Stone Management, Inc., 20715 Avalon, LLC. The Court granted the Motion to Strike the Answers.

On September 14, 2021, the Court entered an order vacating the Order Striking the Answers of Defendants Capital Stone Holdings Inc., Capitol Stone Management, Inc., 20715 Avalon, LLC.

On November 5, 2021, the Court granted 13 Motions to compel against the Defendants and imposed monetary sanctions. In relevant part, the Court ruled as follows:

“Despite the discovery being served in April 2021, despite two informal discovery conferences, and multiple representations by Defendants that responses would be served, in their opposition, Defendants have still not served code-compliant responses to the discovery at issue without objection. Further, Defendants have not provided the Court with substantial justification for an over six-month delay in serving responses. The motion is granted, and Defendants are ordered to serve full, complete, code compliant responses to the discovery at issue without objection within 15 days.”

On January 10, 2022, the Court granted four more Motions to Compel against the Defendants and ordered code-complaint responses, without objections, to be filed by January 31, 2022 and imposed monetary sanctions.

On February 7, 2022,counsel Allen B. Felahy of Felahy Employment Lawyers filed a substitution of counsel for Defendants Robert D. Spiro, Cole Harris, 1999 Sycamore, LLC, Capital Stone Holdings Inc., Capitol Stone Management, Inc., and 20715 Avalon, LLC.

On March 2, 2022, counsel Allen B. Felahy of Felahy Employment Lawyers filed a substitution of counsel for MedCoast Medservices, Inc., and Better 4 You Breakfast, Inc.

Defendant Better 4 You Breakfast, Inc., also filed notice of Chapter 11 Bankruptcy.

On November 3, 2022, the Court denied Plaintiff’s Motion for Contempt due to Defendants’ alleged failure to obey the Court’s prior orders to provide discovery. The Court indicated the more appropriate motion is either a Motion to Compel Further or a Motion for Terminating Sanctions.

On December 22, 2022, Plaintiff filed a Motion for Terminating Sanctions due to Defendants alleged failure to comply with the Court’s prior orders to provide discovery.

On January 18, 2023, the Court continued the hearing on the Motion for Terminating Sanctions to March 2, 2023 and ordered supplemental briefing, including a concise outline as required by Rule of Court, rule 3.1345. The Court warned Defendants that if they had in fact not complied with the Court’s prior orders by the next court date that they should expect an appropriate discovery sanction.

On January 24, 2023, the Court vacated future dates and set an OSC re: dismissal pursuant to Rule of Court, rule 3.1385.

On March 27, counsel Allen B. Felahy of Felahy Employment Lawyers filed the current Motion to be Relieved as Counsel alleging “a complete breakdown of the attorney-client relationship.”

On March 30, 2023, the Order to Show Cause re: dismissal was discharged and the matter was placed back on the active calendar.

On April 3, 2023, the Court granted Defense counsel’s Ex Parte Application to advance this motion to April 28, 2023.

The court may order that an attorney be changed or substituted at any time before or after judgment or final determination upon request by either client or attorney and after notice from one to the other. (Code of Civ. Proc., § 284, subd. (b).) An attorney is permitted to withdraw where conflicts between the attorney and client make it unreasonable to continue the representation. (See Cal. Rules of Prof. Conduct 3-700(C)(1).) “The determination whether to grant or deny a motion to withdraw as counsel lies within the sound discretion of the trial court.” (Manfredi & Levine v. Superior Court (1998) 66 Cal.App.4th 1128, 1133.)

An application to be relieved as counsel must be made on Judicial Counsel Form MC-051 (Notice of Motion and Motion) (Cal. Rules of Court 3.1362(a)), MC-052 (Declaration) (Cal. Rules of Court 3.1362(c)), and MC-053 (Proposed Order) (Cal. Rules of Court 3.1362(e)).

Further, the requisite forms must be served on the client and all other parties who have appeared in the case. (Cal. Rules of Court 3.1362(d).) The court may delay 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. (Cal. Rules of Court 3.1362(e).)

The Court may take judicial notice of the existence of the records, but not the truth of matters asserted in such records. (Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1565). As a result, although the court may take judicial notice that the documents exists, the Court may not take judicial notice of the truth of the facts in the documents.

Additionally, Evidence Code only allows the Court to take judicial notice of certain types of documents. The court may take judicial notice of “official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States,” “[r]ecords of (1) any court of this state or (2) any court of record of the United States or of any state of the United States,” and “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Evid. Code § 452, subds. (c), (d), and (h).) The Evidence Code does not allow the Court to take judicial notice of discovery responses or parts of cases, such as depositions.

1. Exhibit A – is a true and correct copy of the docket for J.E. Group, LLC, et al. v CSM Sycamore, LLC, Capital Stone Management, Cole Harris and Robert Spiro, Case No. 20STCV48660.

2. Exhibit B – is a true and correct copy of the docket in In re Better 4 You Breakfast, Inc., Case No. #: 2:22-bk-10994-BB.

3. Exhibit C – is a true and correct copy of the docket in Ariana Builders vs. 1999 Sycamore, LLC, et al., 20STCV30039.

Defendants’ counsels Allen B. Felahy/Felahy Employment Lawyers move with withdraw as counsel of record.

In the Declaration of Support of Attorney’s Motion to be Relieved as Counsel, counsel indicates that there has been a complete breakdown of the attorney-client relationship between counsel and Defendants.

In response, Plaintiff argues that this Court should deny the request to be relieved as counsel contending that this is another tactic to delay the case. First, the state reason “a complete breakdown of the attorney-client relationship” does not provide sufficient grounds for withdrawal. Even more, granting this motion would leave the corporate entities without counsel. Second, counsel Felahy continues to represent Defendants Capital Stone Management, Inc., Cole Harris and Robert Spiro, in 20STCV48860 and Defendant Better 4 Your Breakfast, Inc. in Bankruptcy Court. Second, even if the reason for withdrawal was “mandatory,” Defendant’s counsel failed to adhere to California Rules of Professional Conduct, Rule 3-700(B)[1]. Given counsel’s “extensive involvement in this case,” it is near impossible to believe that a fundamental conflict arose on March 27, 2023. Plaintiff also argues that Defense counsel cannot be relieved for lack of payment. Further, Plaintiff argues that granting the motion would cause prejudice to Plaintiff as it would delay and “Defendants will no doubt seek to continue a hearing on Plaintiff’s motion for terminating sanctions indefinitely under the guise of seeking “replacement counsel.”” (Opp. 9: 24-28.)

First, the Court finds that Defense counsel has failed to comply with California Rules of Court 3.1362(e), as Defense counsel has failed to properly complete forms MC-052, and neglected to file form MC-053 or proof of service to the clients, which are required for this motion. Second, the reasoning provided by Defense counsel is minimal and does not provide the court with any specifics as to why there has been a breakdown. “The trial court need not “accept a sweeping claim of conflict and ‘rubber stamp’ counsel's request to withdraw.” (citation omitted.) “Uhl does not abrogate the court's duty of inquiry or the attorney's obligation to provide information about the conflict. It simply limits the range of inquiry to prevent the required disclosure of communications that are confidential but form the factual basis of the conflict. The trial court still has a duty to explore the conflict, and counsel has a corresponding duty to respond, and to describe the general nature, as fully as possible but within the confines of privilege.” (Manfredi & Levine v. Superior Court (1998) 66 Cal.App.4th 1128, 1134.) For example, in Aceves, the Court of Appeal determined that withdrawal was proper based on a conflict because counsel “(1) was confined to Abreu and the office of the public defender, (2) did not involve threats to witnesses or third parties, (3) did not relate to other cases and (4) had resulted in a complete breakdown in the attorney-client relationship…” (Aceves v. Superior Court (1996) 51 Cal.App.4th 584, 592.) Here, Defendant’s counsel did not provide any other detail, merely stating there was a breakdown in the attorney-client relationship. Even still, counsel could have included a statement that any further information could be provided in an in-camera hearing. (See Manfredi, supra, 66 Cal.App.4^th at p. 1136.)[2] This is particularly troublesome in light of the serious allegations of tactical delay leveled against Defendants and Defense counsel and supporting corroborative evidence that has been presented by Plaintiff.

[1] Rule 3-700 States:

A member representing a client before a tribunal shall withdraw from employment with the permission of the tribunal, if required by its rules, and a member representing a client in other matters shall withdraw from employment, if:

(1) The member knows or should know that 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; or

(2) The member knows or should know that continued employment will result in violation of these rules or of the State Bar Act; or

(3) The member's mental or physical condition renders it unreasonably difficult to carry out the employment effectively.

[2]In fact, the Court warned counsel at the April 3, 2023 Ex Parte Hearing to advance this case that this may be likely in light of the contentions by Plaintiff’s counsel that Defense counsel continues to represent these same Defendants in various other civil actions in the Los Angeles Superior Court.