California
Appeals
Standard of Review
Statutory Construing

Standard of Review-authority to disqualify an attorney-Gong v. RFG Oil, Inc.  

 

DISCUSSION

I.  Standard of Review and Legal Principles

            A trial court's authority to disqualify an attorney derives from its inherent power to "control in furtherance of justice, the conduct of its ministerial officers, and of all other persons in any manner connected with a judicial proceeding before it, in every matter pertaining thereto."  (Code Civ. Proc., § 128, subd. (a)(5); Oaks Management Corp. v. Superior Court (2006) 145 Cal.App.4th 453, 462.)  The issue of disqualification centers on the conflict between a client's right to counsel of their own choosing and the need to maintain ethical standards of the legal profession.  (City and County of San Francisco v. Cobra Solutions, Inc. (2006) 38 Cal.4th 839, 846.)

            We review the trial court's grant or denial of a disqualification motion for an abuse of discretion, viewing the evidence in a light most favorable to the prevailing party and accepting as correct all of the express and implied findings of the trial court supported by substantial evidence.  (City National Bank v. Adams (2002) 96 Cal.App.4th 315, 322.)  If there is no material disputed factual issue, we review the trial court's exercise of discretion as a question of law.  (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1144.)

            Rule 3-310(C) of the California Rules of Professional Conduct prohibits the concurrent representation of clients in certain circumstances without the informed written consent of each client.  (All rule references are to the California Rules of Professional Conduct.)  That rule provides in pertinent part:  "(C) A member shall not, without the informed written consent of each client:  (1) Accept representation of more than one client in a matter in which the interests of the clients potentially conflict; or (2) Accept or continue representation of more than one client in a matter in which the interests of the clients actually conflict[.]"  In evaluating alleged conflicts, a court first looks to whether the representation at issue is simultaneous or successive.  Where an attorney successively represents one client following the prior representation of another client, the concern is to enforce the duty of confidentiality owed to the former client.  (Flatt v. Superior Court (1994) 9 Cal.4th 275, 282-284 (Flatt).)  In contrast, where the same attorney simultaneously represents potentially conflicting parties, the primary interest at stake is the attorney's duty of loyalty.  (Id. at p. 284.)  A corporation's legal advisor must abstain from taking part in controversies among the corporation's directors and shareholders "to avoid placing the . . . practitioner in a position where he may be required to choose between conflicting duties or attempt to reconcile conflicting interests.  [Citations.]"  (Woods v. Superior Court (1983) 149 Cal.App.3d 931, 936.)

            When the duty of loyalty applies, courts have found the conflict to require "per se, or automatic disqualification, in all but a few instances."  (Metro-Goldwyn-Mayer, Inc. v. Tracinda Corp. (1995) 36 Cal.App.4th. 1832, 1840.)  "The strict proscription against dual representation of clients with adverse interests thus derives from a concern with protecting the integrity of the attorney-client relationship rather than from concerns with the risk of specific acts of disloyalty or diminution of the quality of the attorney's representation."  (Forrest v. Baeza (1997) 58 Cal.App.4th 65, 74.)

            For example, in a derivative suit, the organization named as a defendant is actually a plaintiff and case law forbids dual representation in a derivative suit alleging fraud by the principals, because the principals and the organization have adverse, conflicting interests.  (Forrest v. Baeza, supra, 58 Cal.App.4th at p. 74; see also, La Jolla Cove Motel & Hotel Apartments, Inc. v. Superior Court (2004) 121 Cal.App.4th 773, 785-786 (La Jolla Cove) [suggesting disqualification is appropriate where shareholder seeks dissolution and corporate counsel also represents corporate management]; but see Jacuzzi v. Jacuzzi Brothers, Inc. (1966) 243 Cal.App.2d 1, 35-36 [holding that "prior to an adjudication that the corporation is entitled to relief against its officers, or directors, the same attorney may represent both"].)  A potential conflict, however, does not warrant automatic disqualification of joint counsel.  (See, e.g., Fox Searchlight Pictures, Inc. v. Paladino (2001) 89 Cal.App.4th 294, 302 [no disqualification "when only a hypothetical conflict exists"]; Federal Home Loan Mortgage Corp. v. La Conchita Ranch Co. (1998) 68 Cal.App.4th 856, 862 [mandatory disqualification is not justified by "some hypothetical possibility" of adversity between mortgagee and mortgagors].)

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