SLPR v. San Diego Unified Port Dist. CA4/1 ( 2021 )

Filed 5/17/21 SLPR v. San Diego Unified Port Dist. CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or
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purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
SLPR, LLC et al., D077370
Plaintiffs and Appellants,
v. (Super. Ct. Nos. GIC860766-1;
consolidated with Nos. 37-2008-
SAN DIEGO UNIFIED PORT 00079175-CU-OR-CTL;37-2016-
DISTRICT, 00025353-CU-EI-CTL)
Defendant and Respondent.
APPEAL from an order of the Superior Court of San Diego County,
Richard S. Whitney, Judge. Affirmed.
Thorsnes Bartolotta McGuire, Vincent J. Bartolotta, Jr., Karen R.
Frostrom; Beus Gilbert McGroder, Megan Beus, and Thomas A. Gilson, for
Plaintiffs and Appellants.
Daley & Heft; Dean Gazzo Roistacher, Scott Noya, Lee H. Roistacher;
Thomas A. Russell, General Counsel, Ellen F. Gross, Assistant General
Counsel, John Carter, Deputy General Counsel; Liedle & Larson, and
Matthew J. Liedle, for Defendant and Respondent.
I
INTRODUCTION
Plaintiffs SLPR, LLC, Ann Goodfellow, as Trustee of the Survivor’s
Trust Under the Goodfellow Family Trust, and Allan W. Arendsee and
Lyndsey J. Arendsee, as Trustees of the Arendsee Family Trust (collectively,
the Homeowners) appeal an order denying their motion to disqualify the law
firm of Daley & Heft, LLP (Daley & Heft) from representing defendant San
Diego Unified Port District (the Port) in this long-running civil litigation.
The Homeowners filed their disqualification motion after learning that Daley
& Heft employs a non-attorney staff member who used to be an employee of
the law firm representing the Homeowners in this case.
We conclude the trial court did not abuse its discretion in denying the
disqualification motion. Therefore, we affirm the challenged order.
II
BACKGROUND
A
The Litigation
In 2006, the Homeowners filed suit against the Port and the State of
California (the State) alleging that dredging activities in the San Diego Bay
damaged the Homeowners’ bayside properties in the City of Coronado.
In 2011, the trial court granted summary judgment in favor of the Port
and the State. On appeal, we determined there were triable issues of
material fact precluding summary judgment, reversed the judgment entered
on the summary judgment order, and remanded the matter for further
proceedings. (SLPR, LLC v. State Lands Commission (Nov. 29, 2012,
D059913) [nonpub. opn.].)
2
On remand, the trial court bifurcated the case into two phases—
phase I, which concerned quiet title-related claims, and phase II, which
concerned all other pending claims. After a bench trial, the trial court
entered judgment in favor of the Port and the State on the phase I claims.
The Homeowners appealed the phase I judgment and we affirmed. (SLPR,
LLC v. San Diego Unified Port District (2020) 49 Cal.App.5th 284.) There is
no trial date currently scheduled for the claims that are part of phase II.
B
Merel’s Employment with the Corn Firm
The Jon Corn Law Firm (the Corn Firm) has represented the
Homeowners in this case since October 2016. The Corn Firm has one office
located in Cardiff-by-the-Sea. During the relevant timeframe, the Corn Firm
employed two attorneys and one non-attorney staff member named Kristine
Merel.
The Corn Firm employed Merel from September 2013 to June 2018,
including during the phase I trial. Merel worked as a front desk receptionist,
legal secretary, paralegal, file clerk, and office manager. It is undisputed
that Merel learned confidential information concerning the case during her
employment with the Corn Firm.
In June 2018, just before the trial court rendered its phase I judgment,
Merel’s employment with the Corn Firm was terminated.
C
Merel’s Employment with Daley and Heft
Daley & Heft has represented the Port in this case since 2009. Daley &
Heft has three offices including an office in Solana Beach. During the
relevant timeframe, Daley & Heft employed between 24 and 26 attorneys and
21 and 23 non-attorney staff members at the Solana Beach office. The Solana
3
Beach office is about 15,000 square feet in size and it is divided into two
wings (a main wing and a west wing) separated by a reception area. Daley &
Heft stores its files relating to this case in an office in the west wing. The
storage office is marked with a sign that reads “SLPR v. Port of SD,” and the
door to the office is kept closed.
In December 2018, Merel responded to an advertisement for a legal
assistant/secretarial position with Daley & Heft and was hired, effective
January 2019. Merel stated on her resume that she had been employed by
the Corn Firm’s predecessor law firm. However, the hiring employee at
Daley & Heft was unaware there was any relationship between the
predecessor law firm listed on Merel’s resume and the Homeowners’ lawsuit
against the Port.1 Therefore, Daley & Heft did not establish an ethical
screen around Merel when it hired her.
Merel has a desk in the main wing of Daley & Heft’s Solana Beach
office. Her duties are secretarial in nature and include typing letters and
pleadings, formatting attorney-typed letters and pleadings, and filing and
serving documents and pleadings. Merel provides secretarial support to
three attorneys, one of whom is an associate named Matt Racine.
Merel has performed clerical tasks relating to the Homeowner
litigation three times since she became employed by Daley & Heft. First, in
April 2019, Racine was asked by a partner to prepare a motion to bifurcate
the phase II trial.2 Racine wrote the bifurcation motion and Merel thereafter
formatted, filed, and served the motion. Second, in July 2019, Racine was
asked to prepare a motion for leave to amend the Port’s answer and a related
1 The predecessor law firm was called Axelson & Corn.
2 Prior to April 2019, Racine had never performed legal work for the Port
in the Homeowners’ litigation.
4
ex parte application concerning the briefing schedule for the motion for leave
to amend. Racine wrote the documents and Merel formatted them for filing.
Third, in early October 2019, Racine wrote the Port’s reply brief in support of
its bifurcation motion and Merel formatted, filed, and served the reply brief.
The Corn Firm learned Daley & Heft was employing Merel after she
signed the proof of service for the Port’s reply brief in support of the
bifurcation motion and emailed courtesy copies of the filing to the Corn Firm.
Daley & Heft was notified of the conflict arising from Merel’s prior
employment with the Corn Firm. Shortly after, Daley & Heft circulated a
memorandum to all attorneys and non-attorney staff members screening
Merel from the Homeowners’ litigation and prohibiting discussions with her
about the case.3
3 The Port has filed two motions requesting that we make factual
findings and take additional evidence under Code of Civil Procedure
section 909. In the first motion, which is unopposed, the Port asks us to find
that Daley & Heft no longer employs Merel. In the second motion, the Port
asks us to find that Daley & Heft is no longer the Port’s counsel of record.
The Homeowners oppose the second motion, asserting that the Port’s new
counsel of record is a law firm that consists entirely of former Daley & Heft
attorneys who carried their alleged conflict with them into their new firm.
It is an “elementary rule of appellate procedure that, when reviewing
the correctness of a trial court’s judgment, an appellate court will consider
only matters which were part of the record at the time the judgment was
entered.” (Reserve Insurance Co. v. Pisciotta (1982) 30 Cal.3d 800, 813.) No
party asserts the requested findings would render the appeal moot or fall
within any other exception to the rule of appellate procedure just discussed.
Further, we discern no exceptional circumstances justifying additional
factual findings. (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14
Cal.4th 434, 444, fn. 3.) Accordingly, we deny the Port’s motions.
5
D
The Disqualification Motion
Approximately one month later, the Homeowners filed a motion to
disqualify Daley & Heft based on its employment of Merel and its failure to
establish an ethical screen around her when she began her new employment.
The Port opposed the disqualification motion. It conceded Merel
possessed materially relevant and confidential information from her prior
employment with the Corn Firm. However, it argued Merel had not used the
information or disclosed it to anyone at Daley & Heft. Together with its
opposition brief, the Port filed 11 declarations including declarations from
Merel, Racine, and several other Daley & Heft employees.
In Merel’s declaration, which was prepared with the assistance of
outside legal counsel, Merel averred she had not shared any substantive
information regarding the Homeowners’ litigation with anyone at Daley &
Heft and no one at Daley & Heft had questioned her seeking information
concerning the case. She asserted that since she began her employment with
Daley & Heft, the full extent of her involvement with the litigation was
formatting line spacing, implementing spelling and grammar edits, and
conducting filing and service for the three previously-discussed case filings.
Racine averred in his declaration that he never asked Merel to
contribute, and Merel did not contribute, to the content of any of the
previously-discussed case filings. He stated he briefly discussed the case with
Merel to facilitate the completion and filing of the documents, but he did not
recall her saying anything about the case of which he was not previously
aware. Racine averred he had not communicated with Merel about the case
since he learned of her prior employment with the Corn Firm.
6
After a hearing, the trial court denied the disqualification motion. It
noted there was no dispute that Merel possessed confidential attorney-client
information relating to the case, thus triggering a rebuttable presumption
that the information was used or disclosed during Merel’s employment with
Daley & Heft. However, the court found the Port rebutted the presumption of
use or disclosure.
In particular, the court found, by a preponderance of the evidence, that
“Merel did not share any confidential information prior to October 2019 and
… has been screened as of October 2019 ….” In support of this finding, the
court cited the declarations filed by the Port, which showed: (1) Merel “did
not share any confidential information” with persons at Daley & Heft and
“they did not seek any confidential information” from her, (2) Merel’s
“involvement in the case was limited” at both the Corn Firm and Daley &
Heft, (3) Merel “merely performed formatting work” on briefs and “served
some of the pleadings” at Daley & Heft, and (4) Daley & Heft “maintained,
and does maintain, files for this case separate from other cases in its own
room where the door is labeled and is always closed.” The court also noted
there was no indication that Merel is talkative or dishonest, or that she
“volunteered confidential information or that she lied ….”
After finding that Merel did not use or share confidential information,
the court determined “the Port’s right to counsel of its choice, [which] has
expended a significant number of years becoming familiar with the issues [in
the case], outweighs the concerns of preserving the public trust in the
administration of justice and the integrity of the bar in this case.” According
to the court, “[t]he public and bar should not be concerned that Port’s counsel
has or will taint fair administration of justice in this case by virtue of the fact
Port’s counsel hired Ms. Merel.”
7
The Homeowners appeal the order denying their disqualification
motion.
III
DISCUSSION4
A
Standard of Review
“ ‘Generally, a trial court’s decision on a disqualification motion is
reviewed for abuse of discretion.’ ” (City and County of San Francisco v.
Cobra Solutions, Inc. (2006) 38 Cal.4th 839, 848.) “We do not substitute our
judgment about disputed factual issues, where supported by substantial
evidence. However, where the material facts are not in dispute, we
independently review the disqualification ruling as a question of law, and will
reverse where [the ruling is] taken without a reasonable basis.” (Banning
4 The Port urges us to affirm the order denying the disqualification
motion on grounds that the Homeowners furnished the court with an
incomplete appellant’s appendix, which failed to include numerous crucial
documents such as the disqualification motion, the notice of appeal, and
many of the declarations the Port filed with its brief in opposition to the
disqualification motion. In response, the Homeowners filed a motion for
leave to file a “supplemental appendix” consisting of these and other critical
documents. We construe the Homeowners’ motion as a motion to augment
the record, grant the motion and, on that basis, we decline to resolve this
appeal based on the incomplete appellate record.
However, in granting the Homeowners’ motion, we by no means
condone their inexcusable failure to provide us a complete appellate record.
Further, although the issue was not raised by the Port, we note that
numerous statements of fact in the Homeowners’ appellate briefs are
unsupported by references to the appellate record. We admonish the
Homeowners and their counsel that unsupported portions of briefs may be
stricken or disregarded (Cal. Rules of Court, rule 8.204(e); Duarte v. Chino
Community Hospital (1999) 72 Cal.App.4th 849, 856), and augmentation
motions may be denied where, as here, relief is requested to fix a deficient
appellate record. (Cal. Rules of Court, rule 8.155(a)(1); Russi v. Bank of
America Nat. Trust & Savings Ass’n (1945) 69 Cal.App.2d 100, 102.)
8
Ranch Conservancy v. Superior Court (2011) 193 Cal.App.4th 903, 910–911;
see Antelope Valley Groundwater Cases (2018) 30 Cal.App.5th 602, 615 [“The
abuse of discretion standard requires that we affirm the ruling unless ‘there
is no reasonable basis for the trial court’s decision.’ ”].)
B
Legal Standards Governing Disqualification
“A trial court’s authority to disqualify an attorney derives from the
power inherent in every court ‘[t]o 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.’ [Citations.] Ultimately, disqualification motions involve a conflict
between the clients’ right to counsel of their choice and the need to maintain
ethical standards of professional responsibility. [Citation.] The paramount
concern must be to preserve public trust in the scrupulous administration of
justice and the integrity of the bar.” (People ex rel. Dept. of Corporations v.
SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1145 (SpeeDee).)
An attorney or law firm’s hiring of a non-attorney employee previously
employed by “opposing counsel is not, in and of itself, sufficient to warrant
disqualification of [the] attorney or law firm. However, when the former
employee possesses confidential attorney-client information, materially
related to pending litigation, the situation implicates ‘ “... considerations of
ethics which run to the very integrity of our judicial process.” [Citation.]’
[Citations.] Under such circumstances, the hiring attorney [or firm] must
obtain the informed written consent of the former employer, thereby
dispelling any basis for disqualification.” (In re Complex Asbestos Litigation
(1991) 232 Cal.App.3d 572, 592–593, fns. omitted (Asbestos).)
9
If written consent is not obtained, disqualification of the hiring firm
may be warranted. “The party seeking disqualification must show that its …
former employee possesses confidential attorney-client information
materially related to the proceedings before the court.” (Asbestos, supra, 232
Cal.App.3d at p. 596.) “Once this showing has been made, a rebuttable
presumption arises that the information has been used or disclosed in the
current employment. The presumption is a rule by necessity because the
party seeking disqualification will be at a loss to prove what is known by the
adversary’s attorneys and legal staff. [Citation.] To rebut the presumption,
the challenged [firm] has the burden of showing that the practical effect of
formal screening has been achieved. The showing must satisfy the trial court
that the employee has not had and will not have any involvement with the
litigation, or any communication with attorneys or coemployees concerning
the litigation, that would support a reasonable inference that the information
has been used or disclosed. If the challenged [firm] fails to make this
showing, then the court may disqualify the attorney and law firm.” (Ibid.)
“A presumption is an assumption of fact that the law requires to be
made from another fact or group of facts found or otherwise established in the
action.” (Evid. Code, § 600, subd. (a).) “A presumption is either conclusive or
rebuttable. Every rebuttable presumption is either (a) a presumption
affecting the burden of producing evidence or (b) a presumption affecting the
burden of proof.” (Id., § 601.) As noted, the presumption that arises in a
disqualification proceeding involving a non-attorney employee is rebuttable.
(Asbestos, supra, 232 Cal.App.3d at p. 596.) Because it is intended to
implement the public policy of protecting confidential attorney-client
information, it is a presumption affecting the burden of proof. (Shadow
Traffic Network v. Superior Court (1994) 24 Cal.App.4th 1067, 1085 (Shadow
10
Traffic); see In re Marriage of Hein (2020) 52 Cal.App.5th 519, 538 [“A
presumption affecting the burden of proof is a rebuttable presumption
‘established to implement some public policy other than to facilitate the
determination of the particular action in which the presumption is
applied.’ ”], quoting Evid. Code, § 605.) “The effect of this type of
presumption ‘is to impose upon the party against whom it operates the
burden of proof as to the nonexistence of the presumed fact.’ ” (Shadow
Traffic, at p. 1085, quoting Evid. Code, § 606.)
C
The Trial Court Did Not Abuse its
Discretion in Denying the Disqualification Motion
In the proceedings below, it was undisputed that Merel possesses
confidential information regarding this case due to her prior employment
with the Corn Firm. Thus, the basic fact giving rise to the presumption
(Merel’s possession of confidential information) was established and the trial
court was required to find the presumed fact (Merel’s use or disclosure of
confidential information), unless it was persuaded, by a preponderance of the
evidence, of the nonexistence of the presumed fact. The court found the Port
did establish the nonexistence of the presumed fact—i.e., it found “Merel did
not share any confidential information” with others at Daley & Heft—and
therefore denied the disqualification motion.
On appeal, the Homeowners claim that a party opposing
disqualification can rebut the presumption of use or disclosure only if it
presents evidence that it implemented a formal screening or its equivalent at
the outset of the tainted employee’s new employment. Because the Port did
not present such evidence, the Homeowners assert the trial court erred in
determining that the Port rebutted the presumption of use or disclosure.
11
As explained in Asbestos, an employer should, as a matter of routine,
determine during the hiring process whether a new employee should be
screened from involvement with litigation. (Asbestos, supra, 232 Cal.App.3d
at pp. 593–594.) When a screening is warranted, it should be timely
implemented “before undertaking the challenged representation or hiring the
tainted individual.” (Id. at p. 594.) The implementation of a timely screening
reduces the likelihood that confidences will be disclosed on a prospective
basis. (Ibid.) Because a timely screening protects against the disclosure of
confidential information, an employer may also rely on evidence of a timely
screening, such as a screening memorandum, to rebut the presumption of use
or disclosure that may arise in a later disqualification proceeding. (Ibid.)
However, contrary to the Homeowners’ argument, evidence of a
screening is not a prerequisite to rebut the presumption of use or disclosure.
The Asbestos decision itself makes this clear. “ ‘Screening is a prophylactic,
affirmative measure to avoid both the reality and appearance of impropriety.
It is a means, but not the means, of rebutting the presumption of shared
confidences.’ ” (Asbestos, supra, 232 Cal.App.3d at p. 594, quoting 1 Mallen &
Smith, Legal Malpractice (3d ed. 1989) § 13.19, p. 794; id. at p. 593 [“The
most likely means of rebutting the presumption is to implement a procedure,
before the employee is hired, which effectively screens the employee from any
involvement with the litigation ….’ ”], italics added; Western Digital Corp. v.
Superior Court (1998) 60 Cal.App.4th 1471, 1488 (Western Digital) [“In re
Complex Asbestos Litigation does not require formal screening.”]; accord
Shadow Traffic, supra, 24 Cal.App.4th at pp. 1086–1087 [opining the trial
court reasonably could have found the presumption of shared confidences
rebutted, even though there was no evidence of an ex ante screening].)
12
Here, the Port did not produce evidence that a formal screening was
instituted at the outset of Merel’s employment. But it did present other
competent evidence that there was no improper use or disclosure of
confidential information, as Asbestos permits. As noted, the Port presented
evidence in the form of declarations from Merel and other Daley & Heft
employees stating that Merel did not disclose confidential information to the
employees, the employees did not ask Merel to disclose such information,
Merel had minimal involvement in the case limited to formatting, filing, and
serving previously-prepared documents, and the case files were kept in a
clearly-marked office with a closed door in a different wing than the wing in
which Merel’s desk is located. Additionally, it presented evidence that Daley
& Heft circulated a memorandum screening Merel from involvement on the
case in October 2019 after it learned of her employment with the Corn Firm.
A court has broad discretion to find the presumption of shared
confidences rebutted if it is convinced “the practical effect of formal
screening” was achieved. (Asbestos, supra, 232 Cal.App.3d at p. 596, italics
added.) In view of the declarants’ statements that confidential information
was not shared, the evidence that Merel’s involvement in the case was both
minimal and clerical in nature, and the lack of evidence casting doubt on
Merel’s veracity, we conclude the trial court did not exceed the bounds of
reason in finding the practical effect of a screening was achieved because
there was no use or disclosure of information. (See Western Digital, supra, 60
Cal.App.4th at pp. 1484–1488 [presumption of shared confidences rebutted by
declarations averring, among other things, that confidential information was
not discussed]; North Pacifica, LLC v. City of Pacifica (N.D. Cal. 2004) 335
F.Supp.2d 1045, 1052 [presumption of shared confidences rebutted by
declarations averring no confidential information was shared]; accord
13
Asbestos, at p. 583, fn. 5 [“a motion to disqualify normally should be decided
on the basis of the declarations and documents submitted by the parties”].)
Even if we were to accept that the court abused its discretion in
misapplying the presumption standards discussed in Asbestos, the
Homeowners have not demonstrated how the alleged error produced a
miscarriage of justice. The rebuttable presumption is a framework through
which a specific factual issue is to be resolved in the trial court—that is, the
issue of whether a non-lawyer employee used or disclosed confidential
information. (Evid. Code, § 600, subd. (a); see People v. McCall (2004) 32
Cal.4th 175, 182 [“ ‘[P]resumptions are a staple of our adversary system of
factfinding.’ ”], italics added.) But the Homeowners do not dispute any of the
trial court’s factual findings. On the contrary, they unequivocally disavow
any notion that they are challenging the court’s factual findings.
Thus, it is uncontroverted for purposes of this appeal that: (1) Merel
“did not share any confidential information prior to October 2019,” (2) Merel
“has been screened as of October 2019,” and (3) “others did not seek
[confidential information] from her.” Because the factual findings themselves
are uncontested, any purported error in the method by which the trial court
reached these factual findings is harmless. (See S.Y. v. Superior Court (2018)
29 Cal.App.5th 324, 340 [court abused its discretion in relying on improper
fact to find presumption was rebutted, but error was harmless]; Orange
County Water Dist. v. MAG Aerospace Industries, Inc. (2017) 12 Cal.App.5th
229, 244 [court’s alleged misapplication of causation standards was harmless
due to unchallenged factual findings pertaining to causation].)
We are left with addressing one final question: did the trial court
abuse its discretion in denying the disqualification motion, even though it is
14
undisputed that Merel has not used or disclosed materially relevant
confidential information? We conclude the court did not abuse its discretion.
“[D]isqualification is a ‘drastic remedy’ that should only be ordered
where attorney misconduct has a ‘ “substantial continuing effect on future
judicial proceedings.” ’ ” (Big Lots Stores, Inc. v. Superior Court (2020)
57 Cal.App.5th 773, 782.) “We do not disqualify a lawyer from representing a
client to punish the lawyer’s mistakes or even bad behavior. ... Rather,
disqualification of counsel is a prophylactic remedy designed to mitigate the
unfair advantage a party might otherwise obtain if the lawyer were allowed
to continue representing the client.” (City of San Diego v. Superior Court
(2018) 30 Cal.App.5th 457, 470–471.) “[J]udges must examine
[disqualification] motions carefully to ensure that literalism does not deny
the parties substantial justice.” (SpeeDee, supra, 20 Cal.4th at p. 1144.)
Because Merel has not used or disclosed confidential information
obtained from her prior employment, and there is no indication she will do so
in the future, we discern no threat to the public trust if the disqualification
motion is denied. For the same reasons, we do not believe disqualification is
necessary to prevent the Port from obtaining an unfair benefit. While Daley
& Heft could have—and certainly should have—screened Merel from the case
when she began her employment, it appears disqualification at this juncture
would accomplish little more than to punish Daley & Heft for its delay in
screening her. This is not a sufficient basis upon which to order
disqualification of counsel. Further, disqualification would impose
substantial hardship on the Port by requiring it to replace its chosen legal
counsel, which has represented the Port for the past 12 years in this drawn-
out 15-year litigation. Considering all these factors, we conclude the trial
15
court did not abuse its discretion in denying the Homeowners’
disqualification motion.
IV
DISPOSITION
The order denying the disqualification motion is affirmed. The San
Diego Unified Port District is entitled to its costs on appeal.
McCONNELL, P. J.
WE CONCUR:
BENKE, J.
O’ROURKE, J.
16