Summarizing, explaining and commenting on legal developments impacting California Lawyers and Judges
The Fourth District holds a shareholder in a non-derivative suit against a corporation does not have standing to disqualify an attorney representing another shareholder and the corporation, and there was no actual conflict of interest between the shareholder and the corporation being represented by the same attorney.
Hart, King & Coldren, Inc. (HKC) had two equal shareholders, Robert Coldren and William Hart. The parties operated under a shareholders’ agreement, and, when Coldren retired, a dissolution agreement. Disputes arose and Coldren sued HKC and Hart asserting causes of action arising out of Coldren’s departure, including an action for involuntary dissolution, and causes of action seeking damages.
After HKC and Hart filed a cross-complaint against Coldren, he obtained an order preventing HKC’s and Hart’s counsel, Grant, Genovese & Barratta LLP (Grant Genovese), from representing HKC based on a conflict of interest. The trial court reasoned it was improper for Hart to direct HKC to sue Coldren, a 50 percent shareholder. The court allowed Grant Genovese to continue representing Hart, but ordered he parties to meet and confer on a neutral attorney for HKC. … Read full Post
The Fourth District holds attorney’s fees for self-representation are recoverable under the Public Records Act.
The Law Offices of Marc Grossman sought, as a member of the public, the amount the school district spent to defend a claim. The Court of Appeal granted Grossman’s writ of mandate, reversing the trial court, and ordered the trial court award fees and costs under Government Code § 6259. The trial court denied fees on the basis that a self-represented attorney cannot recover fees.
The California Public Records Act (CPRA), provides for reasonable fees to a prevailing party, as part of its legislative purpose of providing public access to to information in the possession of public agencies. Given the purpose of the legislation, precedent applicable to contract disputes between attorneys and clients, which held a self-represented attorney does not “incur” fees, did not apply. … Read full Post
The Second District holds the pre-filing gatekeeping statute against civil conspiracy claims alleging an attorney conspired with a client applied to bar non-client claims against an attorney.
Adam Klotz, Richard Spitz, and Stephen Bruce formed SageMill LLC (SageMill) to craft tailored, short-term investment strategies and provide investment advice. SageMill’s operating agreement provided a member could not withdraw without the consent of SageMill’s managers, and prohibited Klotz, Spitz and Bruce from engaging in competitive services.
Klotz and Spitz claimed a lucrative transaction was not consummated because Bruce breached his fiduciary duties to them, aided and abetted by SageMill’s attorney Deborah Festa and her law firm Milbank, Tweed, Hadley & McCloy LLP (“Milbank”). Festa gave Bruce advice about how to terminate his obligations to SageMill, without making disclosures to Klotz and Spitz or obtaining their written consent. … Read full Post
The Fourth District applies the litigation privilege to dismiss a claim a law firm received stolen goods from its clients.
Bidna & Keys, APLC (“B & K”) represented Michael Reeves in a dispute between Reeves and his business partners, John Finton and Daniel Tontini. Reeves, Finton and Tontini owned Finton Construction, Inc. (“FCI”), a custom home builder in Southern California. Reeves sued Finton and Tontini for conspiring to reduce his ownership interest and terminate his involvement with FCI. FCI filed a cross-complaint against Reeves and several former FCI employees who formed a new company. FCI alleged that Reeves and the employees stole FCI’s clients and copied files from FCI’s computers.
When B&K refused to turn over the electronic files it acquired from its client, FCI’s counsel filed a theft report and a State Bar complaint. FCI unsuccessfully sought to disqualify B&K, and depose its attorneys. The trial court ordered the parties to copy and share the files for use in the litigation. … Read full Post
The Second District rules the legal malpractice one-year limitations period was triggered when an attorney missed a deadline, not when the underlying case settled.
Shaoxing City Maolong Wuzhong Down Products, LTD, (“Shaoxing”), a creditor in a bankruptcy proceeding, retained Keehn & Associates (“Keehn”) to challenge another creditor’s lien. Keehn failed to timely challenge the lien. Shaoxing terminated Keehn, and retained Ian Landsberg (“Landsberg”) who facilitated a settlement with the debtor for substantially less than the full debt. Shaoxing sued Keehn for malpractice. The trial court granted Keehn’s motion for summary judgment on statute of limitations grounds.
On appeal Shaoxing argued the statute of limitations, CCP § 340.6, was tolled under subsection (a)(1) because it had not sustained “actual injury” until it settled with the debtor for less than the full value of its claim. The Court of Appeal disagreed, and held missing the lien-challenge deadline, not the settlement, was “actual injury” that triggered the statute of limitations. Once the bankruptcy judge denied the extension, it was definitively confirmed that Shaoxing lost its right to challenge the lien. … Read full Post
The Second District concludes a firm is disqualified if one of its members previously received confidential information as a volunteer settlement officer, even if the firm establishes screening procedures.
Jesus Castaneda sued his employer for wrongful termination and related claims. He participated in a mandatory settlement conference where Elsa Bañuelos, senior counsel at the law firm of Ballard Rosenberg Golper & Savitt (“Ballard”), served as a volunteer. Subsequently, Linda Miller Savitt, a Ballard partner, substituted in to represent the employer. Castaneda moved to disqualify Ballard.
Plaintiff argued Bañuelos received confidential information during the settlement conference, and all Ballard attorneys should be disqualified. Ballard argued no confidential information was disclosed. Bañuelos was screened from the litigation. … Read full Post
The Fourth District orders a new trial based on attorney misconduct.
Donn Martinez filed a personal injury suit against the State of California, represented by Karen Bilotti Prior to trial, the court granted a motion in limine limiting references to Martinez’s affiliation with ministry catering to potential motorcycle gang members, and his termination of employment from a school district years before. The court also prohibited evidence of CalTrans’s allegedly strapped financial condition.
Bilotti violated the court’s in limine orders numerous times throughout the trial. Martinez requested a mistrial after Bilotti suggested his ministry’s logo utilized a Nazi symbol. Although Bilotti admitted she had made the reference to attack Martinez’s character, the trial judge denied the mistrial motion, and took no action to control Bilotti. In closing, Bilotti repeated arguments about Caltrans’s financial condition, and suggested Martinez was a Nazi himself. … Read full Post
The Second District holds a non-client’s complaint that a law firm aided and abetted his former attorney’s breach of fiduciary duty involves constitutionally protected petitioning activity subject to the anti-SLAPP statute. Despite causes of action labeled as various torts, all the conduct alleged involved communicative conduct protected by the litigation privilege. The statute of limitations applicable to attorneys’ conduct in their professional capacity applies to all claims by clients and non-clients.
David Bergstein and affiliated business entities (“Bergstein”) acquire, produce, and distribute motion pictures which require outside financing. Susan Tregub was the attorney for Bergstein, serving as his general counsel. When they had a falling out over fees, Tregub threatened to “bring him down.”
David Molner and his “Aramid” entities loaned money to Bergstein’s film production and distribution businesses. Stroock & Stroock & Lavan LLP(“Strook”) sued Bergstein on behalf of Aramid over Bergstein’s personal guarantees. Levene Neale Bender Yoo & Brill LLP (“Levene”) filed involuntary bankruptcy petitions on behalf of Aramid and others against Bergstein’s entities. … Read full Post
The Second District concludes misappropriation claims against attorneys filed 15 years after an aggregate settlement were untimely.
In Prakashpalan v. Engstrom, Lipscomb & Lack (2014) 23 Cal App 4th 1105 the Second District held an attorney’s responsibility to account for settlement proceeds was governed by the fiduciary provisions of the Probate Code. The statute of limitations for a clients’ fraud-based claims arising out of an attorney’s failure to properly distribute aggregate settlement proceeds was governed by Probate Code § 16040, and was tolled for over 15 years because the client had never received an accounting. In Britton, the same Division of the Second District concluded similar claims were untimely because the clients were on inquiry notice.
Plaintiffs sued three law firms that represented them in litigation against State Farm arising from the 1994 Northridge Earthquake. They alleged the firms failed to obtain Plaintiffs’ consent to an aggregate settlement, misappropriated funds, and failed to account for settlement funds. … Read full Post