Articles Posted in California Courts of Appeal

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The dispute underlying this appeal was between a contractor (respondent) and subcontractor (appellants). The parties sued each other for alleged damages arising out of a construction project on California State Route 91. Respondent moved to disqualify Pepper Hamilton LLP and its individual attorneys (collectively, Pepper Hamilton) from representing appellants in this action and to issue additional injunctive relief pertaining to confidential documents. Respondent claimed that appellants’ litigation counsel, Pepper Hamilton, had improperly accessed documents made available by respondent solely for mediation sessions that preceded the commencement of the action. The court granted the motion, finding disqualification was appropriate to eliminate the possibility that Pepper Hamilton would exploit the unfair advantage. Appellants filed a petition for writ of supersedeas, arguing: (1) their appeal of the disqualification order resulted in an automatic stay of all trial court proceedings; or (2) if there was no automatic stay, the Court of Appeal court should exercise its discretionary power to stay all trial court proceedings. The Court indeed issued a temporary stay of all trial court proceedings and invited further briefing by the parties on the issue of whether an appeal of an order disqualifying counsel result in an automatic stay pursuant to Code of Civil Procedure section 916? If so, how far does the automatic stay extend: solely to enforcement of the disqualification order or to all trial court proceedings? As a matter of first impression, the Court of Appeal concluded the appeal automatically stayed enforcement of the order disqualifying counsel, but not all trial court proceedings. The Court declined to address appellants’ request for a discretionary stay of all trial court proceedings pursuant to section 923. View "URS Corp. v. Atkinson/Walsh Joint Venture" on Justia Law

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Defendants Steve George and Real Estate Portfolio Management, LLC (REPM) appealed a trial court’s order granting the motion of plaintiffs Angelica Lynn and Angel Lynn Realty, Inc. (ALR) to disqualify counsel. George and REPM were represented by attorney Kevin Spainhour and his law firm, Spainhour Law Group (SLG), who were the subjects of the motion to disqualify. Spainhour represented George for over 15 years and REPM for several years. Lynn and ALR alleged in their complaint that they had formed a partnership with George and REPM for buying and selling real property. Lynn and ALR moved to disqualify Spainhour and SLG on the ground they had represented the alleged partnership and had provided Lynn legal advice relating to a proposed sale transaction. Alternatively, Lynn and ALR asserted they had a confidential non-client relationship with Spainhour and SLG. The trial court expressly found that neither Spainhour nor SLG had represented Lynn or ALR in their individual capacities, nevertheless, the court found there had been a confidential non-client relationship between Lynn and ALR, on the one hand, and Spainhour and SLG, on the other, and a “potential attorney-client relationship with the alleged partnership.” Based on those findings, the court granted the motion to disqualify. The Court of Appeal reversed, finding the evidence did not support the trial court’s finding of a confidential non-client relationship. View "Lynn v. George" on Justia Law

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Defendant Anice Plikaytis appealed an order awarding her attorneys' fees in a breach of contract action brought by plaintiff Debra Roth. In the published portion of its opinion, the Court of Appeal agreed with Plikaytis's contention that the trial court erred when it declined to consider previously filed documents she incorporated by reference as part of her motion. In the unpublished portions of the opinion, the Court discussed Plikaytis's arguments that: (1) the court failed to apply the lodestar method; (2) erroneously denied fees for equitable and cross-claims and for obtaining relief from bankruptcy stays; and (3) substantially reduced her award without explanation. The Court of Appeal concluded the trial court erred by denying fees for obtaining bankruptcy stay relief that related to the breach claim and failing to provide an adequate justification for significantly reducing the number of hours allowed. Accordingly, the trial court was affirmed in part, reversed in part, and the matter remanded with directions. View "Roth v. Plikaytis" on Justia Law

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Defendants Beachcomber Management Crystal Cove, LLC (Management) and Douglas Cavanaugh (collectively, Defendants) challenged a trial court’s order disqualifying the law firm of Kohut & Kohut LLP (Kohut) from continuing to represent Defendants in the underlying matter. In March 2016, Plaintiffs filed this lawsuit on behalf of Beachcomber at Crystal Cove, LLC as a shareholder derivative action against Defendants. The complaint named the Company as a nominal defendant and alleged claims for fraud, breach of fiduciary duty, abuse of control, gross negligence and mismanagement, breach of duty of honest services, unjust enrichment, declaratory relief, and accounting. Plaintiffs alleged Defendants abused their position as the Company’s managers by diverting Company funds to other Cavanaugh entities, paying themselves unauthorized management fees, misallocating expenses the Company shares with other entities, and refusing to provide Plaintiffs complete access to the Company’s books and records. Defendants hired Kohut to represent them in this lawsuit, and the Company hired independent counsel, the law firm of Corbin, Steelman & Specter, to represent it in this lawsuit. In May 2016, Plaintiffs filed a motion to disqualify Kohut “from any further participation in this case” based on conflicts of interests arising from its past and present representation of the Company and Defendants. Specifically, Plaintiffs argued disqualification was required based on the conflicts of interest arising from: (1) Kohut’s concurrent representation of the Company and Defendants; (2) Kohut’s successive representation of the Company and Defendants concerning the disputes over the Company’s operations; and (3) the need for Kohut to testify in this lawsuit about the services it provided to the Company and Defendants. Here, the trial court concluded disqualification was mandatory because: (1) Defendants and the Company had conflicting interests because the Company is the true plaintiff in this derivative suit that Plaintiffs brought against Defendants on the Company’s behalf; and (2) Kohut previously represented the Company concerning some of the issues raised in this suit, and a substantial relationship therefore existed between that representation and Kohut’s representation of Defendants in this lawsuit. The Court of Appeal concluded the trial court erred because it failed to apply a more specific line of cases that governed an attorney’s successive representation of clients in a derivative lawsuit brought on a small or closely held company’s behalf against the insiders who run the company. View "Beachcomber Management Crystal Cove v. Super. Ct." on Justia Law

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Nelson, an attorney specializing in asbestos defense, was employed by Tucker Ellis. In 2009, Nelson became a “non-capital partner.” Gradient was retained by Tucker Ellis to assist in litigation. Nelson exchanged emails with Gradient consultants about medical research articles relating to smoking and/or radiation (rather than asbestos) as causes of mesothelioma. After Nelson left Tucker Ellis in 2011, the law firm was served with a subpoena, seeking the production of all communications between Tucker, Ellis and Gradient regarding the research. Tucker Ellis produced the attorney work product emails authored by Nelson. After Nelson was subpoenaed for deposition, he wrote a “clawback” letter to Tucker Ellis, asserting the emails contained his privileged attorney work product and demanding they be sequestered and returned to him. Nelson sought a determination that Tucker Ellis had a legal duty to protect his attorney work product from improper disclosure to third parties Code of Civil Procedure section 2018.030. The court of appeal reversed the trial court, concluding that the holder of the attorney work product privilege is the employer law firm, Tucker Ellis, not Nelson, and had no legal duty to secure Nelson’s permission before it disclosed documents he created in the scope of his employment. View "Tucker Ellis LLP v. Superior Court" on Justia Law

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In 2010, Walton sued Rossdale. Walton, a California attorney, maintained a “litigation factory” by placing dozens of email addresses on the Internet, collecting spam messages sent to those addresses, and then demanding compensation for supposed violations of the Consumer Legal Remedies Act, Civil Code 1750. Walton‘s lawsuit was dismissed with prejudice in 2012. The same day, Rossdale sued Walton, alleging malicious prosecution. Rossdale was a fictitious business name registered in Florida to a Florida limited liability company, Miami Legal. In 2016, Walton argued that the lawsuit should be dismissed because Rossdale was "a fictitious business name registered by a company that has now dissolved.” Miami Legal argued that all of its assets and liabilities had been transferred to Rossdale Delaware, which Miami Legal called its “successor in interest to the causes of action.” The trial court dismissed for lack of standing. The court of appeals reversed. Rossdale was only a fictitious business name; no legitimate standing or jurisdictional issue was raised. This case does not involve an individual seeking to sue under a fictitious name to protect his identity, does not invoke serious privacy concerns, and did not raise any supposed violation of any fictitious name statute. View "Rossdale Group, LLC v. Walton" on Justia Law

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Family Code section 271 does not authorize the court to award sanctions to non-parties, but rather is intended to promote settlement of family law litigation through shifting fees between the parties to the litigation. In this case, the Court of Appeal agreed that the trial court was without authority to award sanctions to respondents because they were not parties to this action. The court reasoned that sanctions may not be awarded under section 271 to a party's attorney when it was that attorney who was requesting the sanctions for the sole benefit of the attorney. Accordingly, the court reversed the order for sanctions. View "Webb v. Webb" on Justia Law

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IAR believed that defendant, its former CEO, had embezzled money. IAR, represented by Valla, sued defendant. Valla, on behalf of IAR, reported the crimes to the Foster City Police. The district attorney charged defendant with felony embezzlement. In response to defendant’s subpoena, Valla produced over 600 documents and moved to quash other requests on attorney-client privilege grounds. Defendant filed another subpoena, seeking documents relating to an email from the district attorney to Valla, discussing the need for a forensic accountant. Valla sought a protective order. Defendant asserted Valla was part of the prosecution team, subject to the Brady disclosure requirement. Valla and deputy district attorneys testified that Valla did not conduct legal research or investigate solely at the request of the police or district attorney, take action with respect to defendant other than as IAR's attorneys, nor ask for assistance in the civil matter. IAR retained a forensic accountant in the civil action, who also testified in the criminal matter, after being prepared by the district attorney. IAR paid the expert for both. There were other instances of cooperation, including exchanges of legal authority. The court found Valla to be a part of the prosecution team. The court of appeals reversed. The focus is on whether the third party has been acting under the government’s direction and control. Valla engaged in few, if any, activities that would render it part of the prosecution team. View "IAR Systems Software, Inc. v. Superior Court" on Justia Law

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Attorney filed suit, seeking payment of unpaid fees. Client filed an answer and, one year later, asked for arbitration pursuant to his retainer agreement. The court compelled arbitration that resulted in no recovery by either side. Six days after the award, Client asked the arbitrator to award him costs under Code of Civil Procedure section 998 because Attorney’s recovery was less favorable than an offer that Client made two months before demanding arbitration. When the arbitrator responded that he no longer had jurisdiction, Client asked the court to confirm the award, with Section 998 costs. The court confirmed the arbitration award but determined that Client failed to make a timely section 998 claim to the arbitrator and denied Client’s request for costs. The court of appeals reversed, rejecting Attorney’s suggestion that Client should have presented his section 998 request for costs to an arbitrator before the arbitration award was rendered. An offer which is not accepted “cannot be given in evidence upon the trial or arbitration.” In his request to confirm the award, Client established that the arbitrator had refused to hear any evidence of Attorney’s rejection of Client’s section 998 offer; Client timely presented his claim to the arbitrator, who should have reached the merits of that claim. View "Heimlich v. Shivji" on Justia Law

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Plaintiff filed suit against its former attorneys for legal malpractice and breach of fiduciary duty arising from defendants' representation of plaintiff in an earlier breach of contract action. In the published portion of this opinion, the court affirmed the trial court's grant of nonsuit on plaintiff's breach of fiduciary claim because plaintiff did not adduce any evidence in support of that claim beyond the evidence offered in support of its malpractice claim for professional negligence. The court affirmed in all other respects. View "Broadway Victoria, LLC v. Norminton, Wiita & Fuster" on Justia Law