Judge: Virginia Keeny, Case: 20VECV00556, Date: 2023-04-27 Tentative Ruling

Case Number: 20VECV00556    Hearing Date: April 27, 2023    Dept: W

2974 PROPERTIES, INC. V. DAVID DARWISH, ET AL.

DEFENDANTs’ MOTION TO DISQUALIFY PLAINTIFF’S COUNSEL

Date of Hearing:        April 27, 2023                                     Trial Date:       None set.

Department:              W                                                         Case No.:        20VECV00556

Moving Party:            Defendants David Darwish and Barbara Darwish

Responding Party:     Plaintiff 2974 Properties, Inc.

BACKGROUND

This action arises out a dispute involving Plaintiff, 2974 Properties (“Plaintiff”), and Defendant David Darwish (“David”). David and Plaintiff had agreed to a joint venture to purchase foreclosed properties, and, in 2007, the parties purchased the subject Property together, with Plaintiff having a 1/3 interest. (FAC ¶ 10-12.) Plaintiff alleges that David falsely represented to Plaintiff’s agent that Defendants had not been able to find a buyer and offered to buy out Plaintiff’s 1/3 interest, which Plaintiff accepted. (FAC ¶ 17.) In fact, Defendants had found a buyer at that time, and the agreement caused Plaintiff to lose at least $36,366.67. (FAC ¶¶ 16-17.)

This Court initially granted Defendant’s judgment on the pleadings contending that all causes of action were barred by the statute of limitations, but granted Plaintiff leave to amend. (12/24/20 Minute Order.) When Plaintiff amended its complaint, Plaintiff alleged that it had no reason to know the status of the property because there is no business purpose in following the future sales of properties, and no events or facts were brought to Plaintiff’s attention that actually put Plaintiff on notice of the sale until Plaintiff looked into it following a 2016 judgment against Defendants. (FAC ¶¶ 24-28.) The court found these to be sufficient facts to survive a subsequent judgment on the pleadings. (02/22/21 Minute Order.)

Plaintiff’s FAC alleges causes of action for: (1) fraud, intentional misrepresentation and concealment; and (2) breach of fiduciary duty. 

[Tentative] Ruling

Defendants David Darwish and Barbara Darwish’s Motion to Disqualify Counsel is GRANTED.

REQUEST FOR JUDICIAL NOTICE

Defendants request this court take judicial notice of several documents filed with the court including substitution of counsel form, Stipulation and Order staying proceedings, and First Amended Complaint. (RJN, Exhs. 1-3.) The court grants Defendants’ request for judicial notice.

discussion

Defendants David and Barbara Darwish move this court for an order disqualifying and barring attorney Wayne Abb, the law firm Nussbaum APC, and its employees and associated counsel from representing or assisting Plaintiff 2974 Inc. and its principal, William Little in this action. The court previously continued the matter for further briefing.

“[W]here a former client seeks to have a previous attorney disqualified from serving as counsel to a successive client in litigation adverse to the interests of the first client, the governing test requires that the client demonstrate a ‘substantial relationship’ between the subjects of the antecedent and current representations.”  (Flatt v. Superior Court (1994) 9 Cal.4th 275, 283 [emphasis in original].) Rules of Professional Conduct Rule 1.9 has encompassed the substantial relationship test and provides that “[a] lawyer who has formerly represented a client in a matter shall not thereafter represent another person in the same or a substantially related matter in which that person’s interests are materially adverse to the interests of the former client unless the former client gives informed written consent.”  (Cal. Rules of Prof. Conduct, rule 1.9(a).)  

“The [] circumstance [of] concurrent (or dual) representation of multiple clients resulting in a conflict of interest (hereafter, concurrent representation), in which ‘[t]he primary value at stake... is the attorney’s duty—and the client’s legitimate expectation—of loyalty, rather than confidentiality.’” (M’Guinness v. Johnson (2015) 243 Cal.App.4th 602, 613.) “In instances of concurrent representation, ‘[b]ecause a conflict involving an attorney’s duty of loyalty is “[t]he most egregious” kind of conflict,’ a ‘ “more stringent” ’ test is applied. (Citation.)  Even if the dual representations ‘may have nothing in common, and there is no risk that confidences to which counsel is a party in the one case have any relation to the other matter, disqualification may nevertheless be required. Indeed, in all but a few instances, the rule of disqualification in simultaneous representation cases is a per se or “automatic” one. [Citations.]’ (Citation; see also Cobra Solutions (2006) 38 Cal.4th 839, 846 [‘attorney who seeks to simultaneously represent clients with directly adverse interests in the same litigation will be automatically disqualified’].) This per se rule is appropriate because ‘[a] client who learns that his or her lawyer is also representing a litigation adversary, even with respect to a matter wholly unrelated to the one for which counsel was retained, cannot long be expected to sustain the level of confidence and trust in counsel that is one of the foundations of the professional relationship.’ (Citation.)” (Id. at 614–615.)  

Defendants argue Counsel Abb must be disqualified from the matter as Abb serves as legal counsel for Defendants in a separate matter and has not given notice terminating the relationship; Defendants have not consented to waive the conflict of interest arising from Abb’s concurrent representation of Plaintiffs and Defendants; and even if the relationship was terminated, Abb provided legal services having substantial relationship to the issues in the present litigation and actually received confidential information from Defendants in the course of his representation. Moreover, because Abb should be disqualified, Defendants contend Nussbaum is disqualified as well. After the April 11, 2023 hearing, Defendants submitted further supporting evidence of Abb’s attorney-client relationship with the Darwish Defendants. Both Defendants attest Counsel Abb has known the Darwish family for over ten years and has worked with every member of the Darwish family. (Eden Darwish Decl. ¶2; David Darwish Decl. ¶4; Barbara Darwish Decl. ¶2; see also Sofris Decl. ¶4.)

In opposition, Plaintiff argues attorney Wayne Abb does not and never has represented any Defendants in this case and therefore, should not be disqualified. Plaintiff first contends Abb did not substitute in on this case. Plaintiff’s counsel, Nussbaum APC, inadvertently listed Wayne Abb on the October 31, 2022 Notice of Deposition when using a template.  Moreover, plaintiffs argue Wayne Abb did not represent Barbara Darwish or David Darwish in the Crestmont matter. Plaintiff contends neither Barbara Darwish nor David Darwish were parties in the Crestmont case and were only called as witnesses. Because Counsel Abb did no more than prepare Defendants’ witness testimony at trial, Plaintiff contends Wayne Abb and his firm should not be disqualified. (See Wu v. O’Gara Coach Co. LLC (2019) 38 Cal.App.5th 1069, 1083 holding “[u]nder California law a law firm is not subject to disqualification because one of its attorneys possesses information concerning an adversary's general business practices or litigation philosophy acquired during the attorney's previous relationship with the adversary.”)

Plaintiff has not submitted additional evidence. Moreover, the court agrees with Defendants that the instant matter is different than the facts from Wu. Unlike Wu, Defendants have demonstrated Abb possesses more than information about general business practices. Barbara Darwish and David Darwish were present for every meeting Attorney Wayne Abb had with Eden Darwish acting as counsel for Eden during the Crestmont Trial. (Eden Darwish Decl. ¶3; David Darwish Decl. ¶5; Barbara Darwish Decl. ¶2; see also Sofris Decl. ¶5.) The Darwish Defendants also attest Attorney Lane Nussbaum represented all of the owners of Lindbergh Property during an unlawful detainer proceeding and the Lindbergh property’s ownership interests are described in a Civil Complaint involving the property and its owners entitled Barbara and David Darwish, as Trustees v. Dennis Angel, et. al., LASC Case No. 19STCV12452. (David Darwish Decl. ¶P6-7; Barbara Darwish Decl. ¶4.) Finally, the court notes that Mr. Abb admitted at the initial hearing on this motion to disqualify that he practices out of the Nussbaum firm and handles all of their unlawful detainer work; even if he had not formally substituted into this case, the fact that he is an integral member of the Nussbaum firm, makes his prior relationship with the defendants here critical and ultimately disqualifying.  Thus, even if Counsel’s Abb name appeared on the Notice of Deposition as a mistake, the court finds the firm must additionally must be disqualified. 

Accordingly, Defendants’ Motion to Disqualify is GRANTED.