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May 5, 2011

Schimmel v. Levin (May 5, 2011, C.A. 3rd Dist., Case No. C063214)

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The Third District holds a trial court may strike a petition to compel arbitration after it determined the attorney who filed the petition was disqualified due to possession of confidential information adverse to the opposing party.

Leon Schimmel served as medical director for Community Health Associates Medical Group (“Community Health”) from 1995 through 2006.  During that time period, Harris Levin served as president and chairman of the Board of Community Health.  In October 2002, a former employee filed a lawsuit against Community Health, Schimmel and Levin.  Kelli Kennaday and her firm, Wilke, Fleury, Hoffely, Gould & Birney (Wilke Fleury) represented Schimmel in that litigation.

In 2009, Schimmel filed an amended complaint against Community Health alleging suspension and termination from his employment.  Kennaday filed a petition to compel arbitration on Community Health’s behalf.  Schimmel moved to disqualify Kennaday and Wilke Fleury on the ground that they possess confidential information in the context of Kennaday’s successive representation of adverse clients.  He also requested the Court strike the petition to compel arbitration because Kennaday prepared it.  The trial granted both requests.

The Court of Appeal affirmed the decision.  It held that the trial court did not abuse its discretion in striking the petition to compel arbitration after it determined that Kennaday was disqualified from representing Community Health.  Given the court’s finding that Kennaday possessed confidential information, it appropriately struck all pleadings filed by Kennaday on Community Health’s behalf because it was concerned about unfairness to Schimmel in having counsel take an adverse possession while possessing such information.  Under its power to control judicial proceedings in the furtherance of justice, the trial court possessed the authority to minimize any possible injustice to Schimmel by striking these pleadings.

Comment: Attorneys should be aware of this case as it makes clear that a disqualification order is not limited to operating prospectively.  The Court can use it to strike prior pleadings as well.

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