Antelope Valley Groundwater Cases ( 2018 )

Filed 12/20/18
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIFTH APPELLATE DISTRICT
ANTELOPE VALLEY GROUNDWATER CASES
ANTELOPE VALLEY—EAST KERN WATER F078517
AGENCY,
(Super. Ct. No. BC325201)
Cross-complainant and Appellant,
v. (JCCP No. 4408)
LOS ANGELES COUNTY WATERWORKS
DISTRICT NO. 40,
OPINION
Cross-defendant and Respondent.
[And seven other cases.]*
APPEAL from an order of the Superior Court of Los Angeles. Jack Komar,†
Judge.
Banks & Watson and James J. Banks for Cross-complainant and Appellant
Antelope Valley—East Kern Water Agency.
*Los
Angeles County Waterworks District No. 40 v. Diamond Farming Co. (L.A. Super.
Ct. No. BC325201); Los Angeles County Waterworks District No. 40 v. Diamond Farming Co.
(Kern Super. Ct. No. S-1500-CV254348); Wm. Bolthouse Farms, Inc. v. City of Lancaster
(Riverside Super. Ct. No. RIC353840); Diamond Farming Co. v. City of Lancaster (Riverside
Super. Ct. No. RIC344436); Diamond Farming Co. v. Palmdale Water Dist. (Riverside Super.
Ct. No. RIC344668); Willis v. Los Angeles County Waterworks District No. 40 (L.A. Super. Ct.
No. BC364553); Wood v. Los Angeles County Water Works District No. 40 (L.A. Super. Ct.
No. BC391869).
†Retired judge of the Santa Clara Superior Court, assigned by the Chief Justice pursuant
to article VI, section 6 of the California Constitution.
Mary Wickham, County Counsel, Warren R. Wellen, Deputy County Counsel;
Best Best & Krieger, Eric L. Garner, Jeffrey V. Dunn, Wendy Y. Wang; Greines, Martin,
Stein & Richland, and Timothy T. Coates for Cross-defendant and Respondent Los
Angeles County Waterworks District No. 40.
-ooOoo-
Nearly 20 years ago, the first of numerous lawsuits was filed which ultimately
became this consolidated proceeding known as the Antelope Valley Groundwater
Adjudication (AVGA) cases. In 2004, lawyers with the law offices of Best, Best &
Krieger, LLP (BB&K), who were representing another public entity interested in the
AVGA cases, were asked to also undertake prosecuting the interests of respondent Los
Angeles County Water District No. 40 (District No. 40). BB&K agreed and began
representing District No. 40 in 2004 and has continued in that role to the present time.
Appellant Antelope Valley—East Kern Water Agency (AVEK)1 was not a named
party in any of the lawsuits in the early years. AVEK had an existing relationship with
BB&K: AVEK had retained BB&K in 1987 to act as AVEK’s general counsel, and
Michael Riddell, a member of BB&K, acted as general counsel for AVEK from 1987
until January 2016.
Approximately two years after BB&K began representing District No. 40, AVEK
became enmeshed in the AVGA cases. AVEK retained separate attorneys to protect its
interests in that litigation. Ten years later, after the bulk of the AVGA litigation was
completed, AVEK decided to terminate BB&K as its general counsel and, for the first
time, demanded that BB&K voluntarily recuse itself from further representing District
No. 40 in the AVGA cases. BB&K declined AVEK’s demand and, six months later,
AVEK filed its motion seeking an order disqualifying BB&K from further representing
either District No. 40 or any other party to the AVGA cases. The trial court denied the
motion, and the present appeal challenges the order denying the motion.
1Misidentified on appeal as Antelope Valley East—Kern Water Agency.
2.
AVEK’s argument appears to contend the absence of a written consent by AVEK
to BB&K’s representation of District No. 40 is dispositive, and the trial court erred in
considering any circumstances beyond that single fact when it evaluated AVEK’s motion.
From that predicate, AVEK argues automatic disqualification of BB&K from further
representation of District No. 40 was mandatory, and reversal is therefore required.
We conclude there was substantial evidence to support the trial court’s conclusion
AVEK effectively consented to BB&K’s representation of District No. 40, and its
inordinate delay in seeking disqualification estops AVEK from seeking to disqualify
District No. 40’s chosen counsel.
I.
FACTUAL BACKGROUND2
The AVGA cases began with lawsuits filed commencing in 1999; the lawsuits
named numerous public water suppliers as defendants, including Rosamond Community
Services District (RCSD) and District No. 40. AVEK was not named as a defendant in
the early years because AVEK is not a public water supplier. AVEK instead is a state
water contractor that wholesales state project water to public water suppliers, such as
District No. 40, and to a small number of private landowners for their agricultural or
industrial operations.
The Simultaneous Representation from 2004 to 2016
BB&K attorneys Eric Garner and Jeffrey Dunn served as counsel to RCSD when
the initial lawsuits were filed. BB&K attorney Michael Riddell served as AVEK’s
2The parties do not dispute that, when reviewing a trial court’s ruling on a motion to
disqualify counsel, we must defer to any factual determinations made by the trial court if they are
supported by substantial evidence. (Federal Home Loan Mortgage Corp. v. La Conchita Ranch
Co. (1998) 68 Cal. App. 4th 856, 860; In re Complex Asbestos Litigation (1991) 232 Cal. App. 3d
572, 585.) Accordingly, our factual recitation examines the facts in the light most favorable to
the trial court’s ruling to the extent those express or implied factual determinations are supported
by substantial evidence. (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems,
Inc. (1999) 20 Cal. 4th 1135, 1143–1144 (SpeeDee Oil); People v. Jenkins (2000) 22 Cal. 4th 900,
969.)
3.
general counsel. AVEK was not involved in the AVGA cases in those early years.
District No. 40, the largest of the Antelope Valley public water suppliers, was represented
by another law firm in the early years of the AVGA cases.
A “phase 1” trial began in late 2002 seeking to determine the geographic boundary
for the parties’ respective groundwater rights claims, but the trial was not completed.
Instead, the matters were eventually sent to mediation. However, the mediator
determined it would be necessary to have a basin-wide adjudication to achieve a physical
solution to the basin’s overdraft problem and to resolve all parties’ groundwater claims to
the basin, some of whom had not yet been joined in the litigation. District No. 40 then
approached Dunn and Garner about potentially representing District No. 40 in the AVGA
cases. After RCSD agreed to have BB&K represent both itself and District No. 40,
BB&K filed adjudication complaints in late 2004 on behalf of both District No. 40 and
RCSD for declaratory and injunctive relief. Among other things, the complaints alleged
District No. 40 and RCSD had pumped water from the basin and thereby acquired
prescriptive water rights as against private property owners in the basin, and it sought a
physical solution to the basin’s overdraft condition, including a comprehensive
adjudication of groundwater rights.
District No. 40’s 2004 adjudication complaints did not name AVEK as a party.3
Riddell advised AVEK of the adjudication complaints shortly before they were filed.
Riddell advised AVEK that, while District No. 40 did not intend to name AVEK, it was
possible another party to the litigation might file a cross-complaint naming AVEK as a
cross-defendant, even though AVEK had never pumped water from the basin nor claimed
3Neither District No. 40’s adjudication complaints nor the initial complaints instigating
the AVGA cases named AVEK because it is a State Water Project wholesaler and a public entity
not subject to a claim of prescriptive rights. Additionally, AVEK’s written agreement with
District No. 40’s predecessors in interest, which recognized that “groundwater supplies within
[AVEK] are seriously depleted,” provided that if there was an adjudication involving the
groundwater basin, AVEK would assist District No. 40 in retaining District No. 40’s rights in the
groundwater supply.
4.
any right to water in the basin. However, cautioned Riddell, if AVEK were brought into
the litigation by another party, BB&K would need a “conflict waiver” before it could
appear on AVEK’s behalf in the litigation because BB&K was then representing other
parties in the action.
By the end of 2005, the Judicial Council had entered its order requiring all
pending actions (including the originally filed lawsuits and District No. 40’s adjudication
complaints) be coordinated. The coordinated AVGA cases were then assigned to the
Honorable Jack Komar, judge of the Santa Clara County Superior Court. In a cross-
complaint in the coordinated proceedings filed in early 2006, District No. 40 (along with
the other public water suppliers) alleged that (1) they imported water into the basin via
purchases from the State Water Project, (2) they had the right to store such imported
water in the basin, and (3) they had the sole right to pump or use such stored State Water
Project water as against the named cross-defendants. The public water suppliers also
alleged some of the imported State Water Project water returned to or entered the basin as
“return flows,” which further augmented the basin’s water supply. They further alleged
they had the sole right to “recapture” any return flows attributable to such imported State
Water Project water as against the named cross-defendants. AVEK was not named as a
cross-defendant in this cross-complaint.
At some point thereafter, AVEK was named as a cross-defendant in one of the
coordinated actions by another party.4 By late February 2006, AVEK had retained the
law firm of Brunick, McElhaney & Kennedy (Brunick) to represent AVEK in the AVGA
cases, although AVEK decided to keep BB&K as counsel on other matters unrelated to
the AVGA cases.5 Various parties thereafter filed a series of cross-complaints, and in
4The record in this appeal does not reflect when, or by whom, AVEK was brought into
this proceeding.
5In 2006, AVEK also made the decision to use Brunick for AVEK’s public meetings,
replacing BB&K attorney Riddell. Brunick served in that capacity while also representing
AVEK in the adjudication proceedings until 2009, at which point AVEK returned to the BB&K
5.
late August 2006 AVEK (through its Brunick attorneys) filed its own cross-complaint,
which included District No. 40 as a cross-defendant. AVEK asserted it imported State
Water Project water into the basin, had the right to store such imported water in the basin,
and had the sole right to pump or use such stored State Water Project water as against the
named cross-defendants. AVEK also alleged some of the imported State Water Project
water returned to or entered the basin as return flows, which further augmented the
basin’s water supply. As primary importer of water creating such return flows, AVEK
alleged it had the sole right to recapture any return flows attributable to such imported
State Water Project water.
During the decade of litigation spanning early 2006 and through the entry of
judgment at the end of 2015, BB&K represented District No. 40 and Brunick represented
AVEK in the AVGA litigation. During this period, the court conducted numerous phases
to resolve the competing claims of all of the parties claiming an interest in the basin’s
groundwater, and BB&K was the primary counsel shepherding the litigation for the
public entities.6 At no point did AVEK manifest any objection to BB&K’s simultaneous
attorney Riddell to represent AVEK in public meetings, while keeping Brunick as its counsel in
the adjudication proceedings.
6For example, in phase 1 of the trial (conducted in 2006) to determine the basin
boundaries, BB&K was primarily involved with the presentation of evidence in that phase. In
phase 2 of the trial in late 2008, which tested various parties’ claims they should be excluded
from the adjudication proceedings because their interests were in areas not hydro-geologically
connected to the basin, BB&K was primarily involved in defending against such claims. In
phase 3 of the trial, which evaluated the basin’s “safe yield” and tested the claim (asserted by
both District No. 40 and AVEK) that the basin was and remained in an overdraft condition, the
parties engaged in extensive discovery over a two-year period. At the early 2011 trial on this
issue, BB&K was primarily involved with presenting evidence in support of the joint claims
raised by District No. 40 and AVEK. The three years thereafter involved numerous court
appearances as well as extensive mediation and settlement discussions that were unsuccessful.
The court ultimately scheduled and conducted a phase 4 trial to adjudicate the ground water use
for hundreds of involved parties. BB&K undertook the time-consuming and expensive
responsibility of assimilating and analyzing the data submitted by the parties (as well as the
extensive engineering analysis and satellite imaging review of actual land use over time), and
BB&K’s efforts permitted an expedited evidentiary presentation for the phase 4 trial conducted
in 2013.
6.
representation of both District No. 40 (in the AVGA cases) and AVEK (as general
counsel on unrelated matters). Indeed, AVEK’s acceptance of this simultaneous
representation continued unabated throughout the entire litigation even though AVEK on
occasion posited claims inconsistent with those of District No. 40.7 The trial on phase 5,
which planned to encompass (among other things) resolution of the return flow claims for
those parties asserting such claims (including AVEK and District No. 40), commenced in
February 2014. However, shortly after trial commenced, Brunick (on behalf of AVEK)
and BB&K (on behalf of District No. 40) informed the court that AVEK and District
No. 40 had reached a tentative settlement of their issues inter se, which they thought
could lead to resolution of all claims in the case. The trial court suspended the phase 5
trial and directed the parties to conduct immediate settlement negotiations.
Those settlement negotiations ultimately produced a global settlement agreement
encompassing nearly all the remaining claims.8 In early 2015, both District No. 40 and
AVEK approved the proposed settlement agreement, which included a resolution of all
groundwater disputes between AVEK and District No. 40. During the latter half of 2015,
the trial court conducted various hearings concerning the proposed written settlement,
7Although the trial court noted that “District 40 and AVEK were on the same side of
virtually every issue in the case,” it also noted AVEK was “well aware” its interests were not
necessarily in complete lockstep with District No. 40. For example, in 2011, shortly after the
trial court had preliminarily approved a settlement on behalf of a group known as the “Willis
class,” attorneys for that group moved for attorney fees under Code of Civil Procedure section
1021.5. District No. 40 opposed that motion but argued (in the alternative) that any fee award
should be “apportioned” among other AVGA parties who pump water from the basin based on a
pro rata share of their pumping. AVEK opposed the “apportionment” argument. Nevertheless,
even after this actual rift between AVEK and District No. 40 surfaced, AVEK did not object to
BB&K’s concurrent representation of District No. 40 and AVEK. Moreover, in 2013, AVEK
sought a finding (by summary adjudication motion) that it alone had the right to return flows
from the State Water Project water and District No. 40 had no right to such return flows. BB&K
(on behalf of District No. 40) opposed and successfully defeated AVEK’s summary adjudication
motion. Nevertheless, AVEK still remained silent on BB&K’s simultaneous representation of
District No. 40 and AVEK for another two years.
8The proposedwritten settlement was acceptable to all parties except Phelan Piñon Hills
Community Service District and a small group of landowners.
7.
receiving evidence from both settling and nonsettling parties, and in November 2015 the
trial court approved the physical solution for the basin, including approval of the parties’
settlement agreement. On December 28, 2015, the trial court entered a final judgment in
the adjudication, thus ending years of trial court litigation of the matter.
During the decade of litigation in which BB&K represented AVEK and District
No. 40, AVEK never asserted BB&K could not simultaneously represent District No. 40
in the AVGA cases while providing counsel to AVEK on other matters.
The Post-judgment Disqualification Motion in 2016
Approximately one month after the court entered judgment, AVEK terminated its
legal services agreement with BB&K. Shortly thereafter, AVEK sent a letter to BB&K
demanding that it stop representing District No. 40 in the AVGA litigation. For the first
time in more than 10 years of concurrent representation, AVEK asserted BB&K had a
conflict of interest which required its immediate disqualification from representing
District No. 40. Seven months later, AVEK filed its motion to disqualify BB&K. AVEK
argued BB&K had concurrently represented parties with potential or actual conflicting
interests without AVEK’s written consent and that this required automatic
disqualification of BB&K from any further representation of District No. 40.
District No. 40 opposed the motion, noting the question of whether to disqualify
counsel rests on equitable principles and equity compelled denial of the motion under all
of the relevant circumstances. These circumstances included that (1) AVEK delayed a
decade before raising the issue, (2) District No. 40’s interests (as well as the interest of
the other parties and the court) would be compromised if BB&K were disqualified at this
late date, (3) BB&K had received no confidential information from AVEK concerning
the AVGA litigation, and (4) BB&K was no longer counsel for AVEK in any matter.
The matter was heard by Judge Komar, who had presided over this matter since
the 2005 coordination order. The court, citing Flatt v. Superior Court (1994) 9 Cal. 4th
275 (Flatt), acknowledged that simultaneous representation of parties with adverse
8.
interests, if promptly objected to, almost always requires automatic disqualification. The
court also recognized, however, the Flatt caveat that the clients (for whose benefit the
rule against such simultaneous representation exists) can agree to waive that conflict.
The court also noted, citing SpeeDee Oil, supra, 20 Cal. 4th 1135, that a motion to
disqualify counsel is a motion in equity and requires consideration of numerous factors,
including a client’s right to counsel of its choice, an attorney’s interest in representing a
client, the financial burden on the client to replace counsel, and interests beyond the
interest of the parties. The court further observed delay in raising a disqualification issue
was relevant to determining whether disqualification was appropriate.
With these principles of governing law in mind, the court specifically found:
(1) When District No. 40 initially retained BB&K, there was no actual conflict and
AVEK publicly stated it was maintaining a neutral stance on the issues. However, an
actual conflict of interest did arise when AVEK, in response to being sued by a third
party, named District No. 40 in AVEK’s cross-complaint (although District No. 40 did
not countersue AVEK) and claimed return flow rights to water sold to parties such as
District No. 40. From this point and for the ensuing decade, AVEK was represented by
separate counsel in the AVGA litigation, and BB&K never represented AVEK in
connection with the AVGA litigation.
(2) During the AVGA litigation, and notwithstanding the cross-complaint, AVEK
acted cooperatively with District No. 40 and was on the same side of virtually every
issue, with the sole exceptions of (a) whether to apportion to AVEK any part of the
attorney fees and costs sought by the Willis and Wood classes attorneys, and (b) whether
AVEK was entitled to return flows from District No. 40’s and other public water
producers’ retail customers’ water use.
(3) All claims (apart from several claims of small nonsettling landowners) were
settled by a written agreement, stipulation, and judgment, approved by the court on
December 23, 2015, and this settlement and judgment resolved the conflicts between
9.
AVEK and District No. 40 over apportioning class attorney fees and the return flow
rights. It was only after the judgment was entered and all issues were resolved that
AVEK terminated and sought to disqualify BB&K.
(4) BB&K’s concurrent representation of AVEK and District No. 40 ended almost
one year earlier. There was no evidence BB&K acquired or used any confidential
information from AVEK germane to the AVGA in the litigation or that Riddell has
provided any confidential information to District No. 40 or its legal team.
Based upon these findings, the court concluded AVEK impliedly consented to
BB&K’s representation of District No. 40 throughout the 10-plus years of litigation.
Because AVEK knew of the conflict but elected to take no action until after the judgment
had been entered, the motion was also deemed “untimely and extremely prejudicial to
District 40 and to the court system.” The court found disqualification would serve no
useful purpose and would instead harm all parties who support the stipulation for
judgment and the physical solution approved by the court, and the unique facts here
justified departing from the rote application of the per se disqualification rule ordinarily
applicable to concurrent conflicts cases. Accordingly, the court denied AVEK’s motion
to disqualify BB&K from continuing to represent District No. 40. AVEK timely
appealed from that order.
II.
LEGAL ANALYSIS
A. Standard of Review
A trial court’s decision on a disqualification motion is ordinarily reviewed for
abuse of discretion. (SpeeDee Oil, supra, 20 Cal.4th at p. 1143; Federal Home Loan
Mortgage Corp. v. La Conchita Ranch Co., supra, 68 Cal.App.4th at p. 860.) When a
trial court’s ruling rests on its resolution of disputed factual issues, “the reviewing court
should not substitute its judgment for the trial court’s express or implied findings
supported by substantial evidence. [Citations.] When substantial evidence supports the
10.
trial court’s factual findings, the appellate court reviews the conclusions based on those
findings for abuse of discretion. [Citation.]” (SpeeDee Oil, supra, at pp. 1143–1144.)
The deference we accord to the court’s factual findings extends not only to its
express findings but also to any implicit findings for which there is substantial
evidentiary support. (SpeeDee Oil, supra, 20 Cal.4th at p. 1143; Federal Home Loan
Mortgage Corp. v. La Conchita Ranch Co., supra, 68 Cal.App.4th at p. 860 [“even where
there are no express findings, we must review the trial court’s exercise of discretion
based on implied findings that are supported by substantial evidence”]; McDermott Will
& Emery LLP v. Superior Court (2017) 10 Cal.App.5th 1083, 1110.) The abuse of
discretion standard requires that we affirm the ruling unless “there is no reasonable basis
for the trial court’s decision.” (Federal Home Loan Mortgage Corp., supra, at p. 860.)
A trial court’s discretion is of course limited by the applicable legal principles, and
the courts also recognize “a disqualification motion involves concerns that justify careful
review of the trial court’s exercise of discretion.” (SpeeDee Oil, supra, 20 Cal.4th at p.
1144; see In re Complex Asbestos Litigation, supra, 232 Cal.App.3d at p. 585.)
Accordingly, we must examine the applicable legal principles before evaluating AVEK’s
claim that there was no reasonable basis for the trial court’s denial of AVEK’s motion to
disqualify BB&K.
B. Governing Legal Principles
A motion to disqualify a party’s counsel for an alleged conflict of interest
implicates several important interests. (SpeeDee Oil, supra, 20 Cal.4th at p. 1144.)
When considering a disqualification motion, courts have considered such factors as the
clients’ right to counsel of their choice, the attorney’s interest in representing a client, the
financial burden on the client if required to replace disqualified counsel, and the potential
11.
that tactical abuse underlays the disqualification proceeding.9 (In re Complex Asbestos
Litigation, supra, 232 Cal.App.3d at p. 586.)
“Nevertheless, determining whether a conflict of interest requires
disqualification involves more than just the interests of the parties. [¶] 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.’
(Code Civ. Proc., § 128, subd. (a)(5); [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.” (SpeeDee Oil, supra, 20 Cal.4th at p. 1145.)
Importantly, observed the SpeeDee Oil court, “judges must examine these motions
carefully to ensure that literalism does not deny the parties substantial justice.” (Id. at p.
1144.)
The restrictions on an attorney’s ability to represent clients with interests that are
potentially or actually adverse are designed to protect two distinct values: to assure the
attorney represents his or her client with undivided loyalties, and to assure the attorney
will preserve confidential information conveyed by the client to the attorney. (Sharp v.
Next Entertainment, Inc. (2008) 163 Cal. App. 4th 410, 427 (Sharp); accord, Flatt, supra,
9 Cal.4th at pp. 282–284.10) Both values can be undermined when the attorney
undertakes simultaneously to represent clients with potentially or actually adverse
interests, while only the latter interest is implicated when the attorney seeks to represent a
9The courts have recognized the concerns associated with disqualification motions can be
magnified when the impacts of disqualification are not limited to just the private litigants
involved in the motion but would extend to an extensive group of other litigants interested in the
litigation. (In re Complex Asbestos Litigation, supra, 232 Cal.App.3d at p. 586.)
10AlthoughFlatt’s synthesis of the governing concepts provides a helpful distillation of
some of the relevant principles, we recognize its discussion is only of marginal assistance
because Flatt was not evaluating the propriety of a ruling on a disqualification motion, but was
instead examining whether a malpractice action was viable. (Flatt, supra, 9 Cal.4th at pp. 278–
279.)
12.
new client whose interests are potentially or actually adverse to the interests of a former
client. Consequently, the courts have segregated the two separate interests and
formulated distinct tests to determine the circumstances under which disqualification is
required. (Flatt, supra, at pp. 282–283.)
“Where the potential conflict is one that arises from the successive representation
of clients with potentially adverse interests, the courts have recognized that the chief
fiduciary value jeopardized is that of client confidentiality.” (Flatt, supra, 9 Cal.4th at p.
283.) A motion brought under these circumstances, in which the former client seeks to
disqualify his former attorney from serving as counsel to a successive client in litigation
adverse to the interests of the former client, requires that “the [former] client demonstrate
a ‘substantial relationship’ between the subjects of the antecedent and current
representations.” (Ibid.) This “substantial relationship” ensures the new client will only
be deprived of his counsel of choice where necessary to protect the former client’s
interest in ensuring the confidentiality of matters disclosed to the attorney in the course of
the prior representation. (Ibid.; accord, Sharp, supra, 163 Cal.App.4th at p. 428.)
In contrast, “[b]oth the interest implicated and the governing test are different …
where an attorney’s potentially conflicting representations are simultaneous.… The
primary value at stake in cases of simultaneous or dual representation is the attorney’s
duty—and the client’s legitimate expectation—of loyalty, rather than confidentiality.”
(Flatt, supra, 9 Cal.4th at p. 284.) Flatt observed “[e]ven though the simultaneous
representations may have nothing in common, and there is no risk that confidences to
which counsel is a party in the one case have any relation to the other matter,
disqualification may nevertheless be required. Indeed, in all but a few instances, the rule
of disqualification in simultaneous representation cases is a per se or ‘automatic’ one.”
(Ibid.)
However, because the right to nonconflicted counsel belongs to the client (People
v. Rocco (1930) 209 Cal. 68, 73), the client may consent to an attorney undertaking
13.
simultaneous representation of another client with potential (or even actual) adverse
interests.
“Not all conflicts of interest require disqualification. In some situations,
the attorney may still represent the client if the client’s consent is obtained.
[Citations.] ‘Giving effect to a client’s consent to a conflicting
representation might rest either on the ground of contract freedom or on the
related ground of personal autonomy of a client to choose whatever
champion the client feels is best suited to vindicate the client’s legal
entitlements.’” (Zador Corp. v. Kwan (1995) 31 Cal. App. 4th 1285, 1295
[allowing informed consent to concurrent representation acknowledges that
“‘for the sake of convenience or economy, the parties may well prefer to
employ a single counsel’”].)
Permitting a client to give informed consent to a conflicting representation “‘is a
sensible feature of the law, for it recognizes the autonomy of individuals to make
reasoned judgments about the trade-offs that are at stake.’” (Sharp, supra, 163
Cal.App.4th at p. 430 [“Once the client has been provided with sufficient information
about the situation, the client can make a rational choice … based upon full disclosures as
to the risks of the representations, the potential conflicts involved, and the alternatives
available as required by the particular circumstances”].)
C. Substantial Evidence Supports the Finding AVEK Consented to
BB&K’s Representation of District No. 40
The trial court found “AVEK impliedly consented to BB&K’s representation of
District 40 throughout the 10 plus years of litigation.” There is substantial evidentiary
support for the finding of “consent.”11 The evidence was undisputed that AVEK was
aware (since 2004) that BB&K had undertaken to represent District No. 40. The
evidence also showed AVEK acceded to (and accepted the benefits provided by)
11The issue of an implied agreement or consent is ordinarily a factual question to be
resolved by the trier of fact. (Cf. Foley v. Interactive Data Corp. (1988) 47 Cal. 3d 654, 677
[whether parties’ conduct created an implied agreement is generally a question of fact]; Kashmiri
v. Regents of University of California (2007) 156 Cal. App. 4th 809, 829 [same]; People v. Gibbs
(1971) 16 Cal. App. 3d 758, 764 [on motion to suppress “whether there was an implied consent
was primarily one of fact for the trial court to determine”].)
14.
BB&K’s representation of District No. 40 in the AVGA for over a decade, and AVEK
only raised its objection after reaping those benefits. There is also substantial evidence
supporting the implied finding AVEK’s years of consent to the conflicting representation
was an informed decision. (Sharp, supra, 163 Cal.App.4th at p. 430 [informed consent
exists when client has sufficient information about “risks of the representations, the
potential conflicts involved, and the alternatives available as required by the particular
circumstances”]; accord, Anderson v. Eaton (1930) 211 Cal. 113, 116 [attorney may not
undertake adverse representation without client’s “free and intelligent consent given after
full knowledge of all the facts and circumstances”].) Specifically, AVEK engaged
separate counsel for the AVGA litigation in early 2006 and thereafter has been
continuously represented by that independent counsel for the ensuing 10 years; AVEK’s
separate counsel almost immediately interposed a claim (i.e., to return flow rights)
revealing AVEK knew of at least one potentially conflicting interest between AVEK and
District No. 40; in 2011, AVEK’s separate counsel interposed another argument (i.e.,
asserting AVEK was not obligated to pay any share of the fees sought by certain class
attorneys, see fn. 7, ante) revealing AVEK knew of a second potentially conflicting
interest between AVEK and District No. 40; AVEK nevertheless continued to accept the
benefits provided by BB&K’s representation of District No. 40 in the AVGA for many
years while cognizant of these conflicts and while being advised by independent counsel.
When a client has made an informed decision to consent to an attorney’s
concurrent representation of themselves as well as another client with potentially adverse
interests, courts will not grant a subsequent motion to disqualify that attorney. (Cf.
Sharp, supra, 163 Cal.App.4th at p. 431 [effective written waivers preclude
disqualification]; accord, Unified Sewerage Agency, etc. v. Jelco Inc. (9th Cir. 1981) 646
F.2d 1339, 1346, fn. 6 [where client has given informed consent to concurrent
representation, client is “estopped from revoking its consent by everyone’s reliance on its
long-standing position”].) AVEK argues that, notwithstanding the trial court’s finding
15.
AVEK consented to BB&K’s representation of District No. 40 (with full knowledge of
all the relevant circumstances while being represented and counseled by an independent
law firm) and reaped the benefits thereof for 10 years, AVEK was entitled to wait until a
time of its choosing and nevertheless have its disqualification motion granted because
there was no written consent by AVEK as contemplated by California Rules of
Professional Conduct, former12 rule 3–310 (former rule 3–310).13 Certainly, numerous
cases have cited the lack of written consent under former rule 3–310 when concluding the
client’s disqualification motion should be granted. (See, e.g., Gilbert v. National Corp.
for Housing Partnerships (1999) 71 Cal. App. 4th 1240, 1255–1256; Flatt, supra, 9
Cal.4th at p. 284 [dicta].) However, we are cited no authority holding that, when a client
by his conduct manifests an informed consent to concurrent representation of an adverse
party, the absence of a writing complying with former rule 3–310 is dispositive (and any
other form of consent is irrelevant) when considering a motion to disqualify the attorney.
There is some authority acknowledging a court can find implied consent, thereby
barring a client from seeking to disqualify an attorney, even without a written waiver
complying with former rule 3–310. For example, in Elliott v. McFarland Unified School
12California’s Rules of Professional Conduct underwent comprehensive amendments that
took effect November 1, 2018. (Sheppard, Mullin, Richter & Hampton, LLP v. J-M
Manufacturing Co., Inc. (2018) 6 Cal.5th 59, 85, fn. 7.) However, because the former rules were
in effect at all relevant times, and the parties have relied on the former rules both below and in
this appeal, we will address the issues with reference to the former Rules of Professional
Conduct.
13Former rule 3–310(C) provided: “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; or [¶] (3)
Represent a client in a matter and at the same time in a separate matter accept as a client a person
or entity whose interest in the first matter is adverse to the client in the first matter.” Former rule
3–310 defined “informed written consent” to mean a “written agreement to the representation
following written disclosure” (former rule 3–310(A)(2)), and defined “disclosure” to mean
“informing the client or former client of the relevant circumstances and of the actual and
reasonably foreseeable adverse consequences to the client or former client” (former rule 3–
310(A)(1)).
16.
Dist. (1985) 165 Cal. App. 3d 562, a client (McFarland) moved to disqualify a law firm
from representing another client (Kern) which had interposed a claim against McFarland.
McFarland asserted the law firm, which was continuing to represent McFarland on other
matters, was barred from representing Kern because it had not obtained an informed
written consent from McFarland as required by the governing Rules of Professional
Conduct. (Elliott, supra, at pp. 566–568.) The court ruled the relevant informed consent
could be inferred from a joint powers agreement, signed by McFarland, which
contemplated that if parties to the joint powers agreement became engaged in a legal
dispute resulting in a lawsuit, the party contesting the position “to that of legal counsel
employed as set forth herein … shall secure [its own] separate legal counsel at its/their
own expense.” (Id. at p. 568.) In People v. Johnson (1980) 105 Cal. App. 3d 884, the
court again applied the concept of implied consent to an attorney undertaking a
representation adverse to a former client, albeit in a different context.14 In Johnson, the
defendant argued his guilty plea should be reversed because he had not consented to
being prosecuted by a district attorney’s office which employed his former attorney.
Noting the “‘established exception’ to the general rule … that the former client may
‘expressly or impliedly’ consent to the adverse representation” (People v. Johnson, supra,
at p. 892), the court observed the defendant was aware of the facts but elected to raise no
14In Health Maintenance Network v. Blue Cross of So. California (1988) 202 Cal. App. 3d
1043, the court also employed the concept of implied consent to an attorney undertaking a
representation adverse to a former client, albeit in a context divorced from a disqualification
motion. There, the plaintiff obtained an injunction barring the defendant from interfering with
the plaintiff’s operations. (Id. at pp. 1048–1049.) The defendant asserted the plaintiff was
barred from equitable relief since it had unclean hands because, among other things, the
plaintiff’s attorney had formerly represented the defendant and violated his fiduciary obligations
to the defendant by taking actions on behalf of the plaintiff that were adverse to the defendant.
The court rejected the argument in part because “a client or former client may consent to an
attorney’s acceptance of adverse employment and such consent may be implied by conduct” (id.
at p. 1064, italics added), and the court found the defendant’s conduct constituted implicit
consent to any adverse representation. (Ibid.) Federal courts have reached analogous
conclusions. (See, e.g., Rossworm v. Pittsburgh Corning Corp. (N.D.N.Y. 1979) 468 F. Supp.
168, 175.)
17.
objection and instead negotiated a favorable plea agreement and concluded that “in the
circumstances of this case, the defendant impliedly consented to the adverse
representation.” (Ibid.)
Finally, in River West, Inc. v. Nickel (1987) 188 Cal. App. 3d 1297, a former client
moved to disqualify the attorney from representing the current client in litigation against
the former client. The current client, although conceding the attorney’s representation of
the former client was on a matter “substantially related” to the current litigation, asserted
the delay in bringing the disqualification motion was so excessive that the former client
impliedly waived any conflict. (Id. at pp. 1300–1301.) The court concluded that, when
the facts show the former client unreasonably delays in bringing the disqualification
motion and such delay causes great prejudice to the current client, a court may find “an
implied waiver of the right to disqualify [the attorney] … [¶] [and] an implied consent to
[the attorney] proceeding on behalf of [the current client].” (Id. at p. 1313, italics added.)
AVEK argues the cases applying or recognizing implied consent involved
successive representations and hence have no application where, like the present case, the
law firm concurrently represented clients possessing adverse interests. Instead, citing
former rule 3–310 and the mentions of that rule by the courts in SpeeDee Oil, State Farm
Mutual Automobile Ins. Co. v. Federal Ins. Co. (1999) 72 Cal. App. 4th 1422 (State Farm)
and Blue Water Sunset, LLC v. Markowitz (2011) 192 Cal. App. 4th 477 (Blue Water),
AVEK argues the “automatic” rule of disqualification applies in concurrent
representation cases absent written consent complying with former rule 3–310.15 We are
unpersuaded by AVEK’s arguments. Insofar as AVEK asserts noncompliance with the
“writing” element of former rule 3–310 is itself dispositive, we reject that assertion.
15AVEK also relies on the statement in Flatt, supra, 9 Cal.4th at page 284, that “in all but
a few instances, the rule of disqualification in simultaneous representation cases is a per se or
‘automatic’ one.” However, because Flatt did not evaluate the propriety of a ruling on a
disqualification motion (see fn. 10, ante), much less evaluate whether only written consent
provided adequate grounds to deny a disqualification motion in a concurrent representation
context, Flatt provides little illumination for our analysis.
18.
Certainly, courts analyzing questions of disqualification may obtain guidance from the
Rules of Professional Conduct, but “the California State Bar’s Rules of Professional
Conduct govern attorney discipline; they do not create standards for disqualification in
the courts.” (Kirk v. First American Title Ins. Co. (2010) 183 Cal. App. 4th 776, 792;
accord, Hetos Investments, Ltd. v. Kurtin (2003) 110 Cal. App. 4th 36, 47 [“a violation of a
rule of the State Bar Rules of Professional Conduct does not necessarily compel
disqualification”]; see Gregori v. Bank of America (1989) 207 Cal. App. 3d 291, 303
[violation of disciplinary rule does not necessarily warrant disqualification because
“disciplinary rules promulgated by bar associations are not intended to be used as
procedural weapons in disqualification cases”].) Indeed, the former Rules of Professional
Conduct expressly cautioned the rules “are intended to regulate professional conduct of
members of the State Bar through discipline … [¶] … [¶] [and n]othing in these rules
shall be deemed to create, augment, diminish, or eliminate any substantive legal duty of
lawyers or the non-disciplinary consequences of violating such a duty.” (Former rule 1–
100(A); accord, San Francisco Unified School Dist. ex rel. Contreras v. First Student,
Inc. (2103) 213 Cal. App. 4th 1212, 1230 [the “‘propriety of punishment for violation of
the Rules of Professional Conduct is a matter within the purview of the State Bar, not of a
court presiding over the affected case. [Citations.] Instead, what the court must do is
focus on identifying an appropriate remedy for whatever improper effect the attorney’s
misconduct may have had in the case before it’”].)
AVEK’s reliance on SpeeDee Oil, State Farm, and Blue Water for the proposition
that implied consent can never apply to concurrent representations is equally
unpersuasive. The SpeeDee Oil court, while it did examine a disqualification motion
where there had been a brief period of concurrent representation, had no occasion to
determine whether the client seeking to disqualify the attorney had impliedly consented
19.
to that attorney concurrently representing another party with an adverse interest.16
Moreover, the SpeeDee Oil court specifically admonished that “judges must examine
these motions carefully to ensure that literalism does not deny the parties substantial
justice … [and d]epending on the circumstances, a disqualification motion may involve
such considerations as a client’s right to chosen counsel, an attorney’s interest in
representing a client, the financial burden on a client to replace disqualified counsel, and
the possibility that tactical abuse underlies the disqualification motion.” (SpeeDee Oil,
supra, 20 Cal.4th at pp. 1144–1145, italics added.) Indeed, the court immediately
thereafter observed such concerns “are almost entirely absent in this case” (id. at p. 1145,
fn. 2), noting the moving client (1) was unaware of the law firm’s contacts with the
adverse party, (2) objected immediately to the law firm’s involvement in the case, and (3)
such objection was sufficiently timely that there had not been any substantial amounts of
time or resources invested into the relationship between the law firm and the adverse
party. The SpeeDee Oil court carefully noted that “[t]his case is not one where, despite
knowing the pertinent facts, a party unreasonably delayed seeking disqualification and so
caused its opponent significant prejudice. ([Citing] River West, Inc. v. Nickel, supra, 188
16The SpeeDee Oil court’s principal focus was twofold: first, whether the particular
attorney’s preliminary consultations with the client’s representatives about the subject matter of
the pending case gave rise to an attorney-client relationship between that attorney and the client
for purposes of a conflict of interest analysis; second, assuming an attorney-client relationship
was created between that attorney and the client, whether the law firm for whom that attorney
was “of counsel” could be disqualified by imputing the “of counsel” attorney’s conflict of
interest to the law firm. (SpeeDee Oil, supra, 20 Cal.4th at p. 1143.) It answered the first
question in the affirmative because, while the attorney’s preliminary consultations with the
client’s representatives occurred over a very brief time period, the attorney obtained a substantial
amount of material confidential information. (Id. at pp. 1148–1152.) It then answered the
second question in the affirmative because an “of counsel” designation requires the attorney to
enjoy “close, personal, continuous, and regular relationships with their affiliated firms” who
“frequently will have occasion to share client confidences in the course of exchanging advice and
performing legal services for those clients.” (Id. at p. 1155.) Under these circumstances,
concluded the SpeeDee Oil court, the same “need to protect client confidences [which] can cause
one attorney’s conflict of interest disqualification to be imputed to other attorneys in the same
firm” (id. at p. 1153) had equal application when such information is acquired by an “of counsel”
attorney. (Id. at 1155–1156.)
20.
Cal.App.3d at pp. 1311–1313.) There was no basis for concern here that one party, by
belatedly moving to disqualify opposing counsel, was attempting to disrupt a case at a
critical juncture. Similarly, this case was not one where a party tried to increase an
opponent’s litigation burdens by seeking disqualification only after the challenged
counsel performed a substantial amount of work. Consequently, we do not comment on
the relative weight these concerns might deserve in deciding a disqualification motion
based on a conflict of interest.” (Ibid., italics added.)
For these reasons, we are unpersuaded by AVEK’s argument that SpeeDee Oil,
which did examine a disqualification motion involving a brief period of concurrent
representation, supports the proposition that implied consent or implied waiver can never
apply to concurrent representations. Instead, the SpeeDee Oil caveats described above
suggest the majority opinion would permit implied consent or implied waiver to be a
factor in considering a disqualification motion in a concurrent representation context.17
We are equally unconvinced by AVEK’s reliance on State Farm, supra, 72
Cal. App. 4th 1422 for the proposition implied consent can never be applied to concurrent
representations. Certainly, the State Farm court noted there was a federal district court
decision holding implied consent was unavailable in a concurrent representation context.
(Id. at pp. 1434–1435.) However, State Farm ultimately concluded the facts relied on to
17Our conclusion that SpeeDee Oil’s caveats permit a court to examine facts giving rise
to an implied consent or implied waiver when addressing a disqualification motion in a
concurrent representation context is buttressed by the fact that Justice Mosk wrote a concurring
opinion that (while agreeing with the result) opined, contrary to the majority, that “this matter
involves a straight-forward question of law, not of fact.” (SpeeDee Oil, supra, 20 Cal.4th at p
1157 (conc. opn. of Mosk, J.).) Justice Mosk explained he wrote separately because “[t]he
majority suggest, in my view incorrectly, that it matters how long the conflict herein lasted, how
promptly [the client] sought to disqualify [the attorney], and whether attorneys from the
[attorney’s] firm actually had access to [the client’s] confidences. The precise details of the
interactions between [the attorney] and the [attorney’s] firm and their clients are not the point.…
Regardless whether any attorneys in the [attorney’s] firm apart from [the attorney] were actually
exposed to [the client’s] confidences or instituted any formal ‘ethical screen’ to preserve
confidentiality, disqualification in these circumstances was automatic, as a breach of the twin
duties of loyalty and confidentiality owed by an attorney to his client.” (Ibid.)
21.
support the claimed implied consent provided “no basis for finding that [the client]
impliedly consented to the adverse representation” (id. at p. 1435) because (1) the client
was not actually aware of any conflict until the adverse action was filed and (2) the client
did not unreasonably delay seeking disqualification. (Id. at pp. 1432–1434.) Thus, State
Farm rejected implied consent on its facts rather than as a matter of law. Moreover,
Justice Dibiaso’s concurring opinion in State Farm specifically cautioned he was “not
convinced the concept of implied consent is of relevance solely to cases involving
successive representation. At least one court (In re Lee G. (1991) 1 Cal. App. 4th 17, 27)
has not foreclosed the application of the theory where concurrent representation is in
issue. I realize that a federal district court, applying its view of California law, has held
that implied consent (based upon inaction and delay) may be raised only when the
representation is successive (Blecher & Collins, P.C. v. Northwest Airlines, Inc.
(C.D.Cal. 1994) 858 F. Supp. 1442, 1455) but I would be prepared in a proper case to
critically examine the district court’s conclusion.” (State Farm, supra, 72 Cal.App.4th at
p. 1436 (conc. opn. of Dibiaso, Acting P.J.).) Thus, while Justice Dibiaso viewed the
question as moot, specifically citing the absence of evidence the client either had taken
any actions while actually aware of the conflict or had unreasonably delayed its motion to
disqualify the conflicted counsel, he clearly left open the possibility that appropriate facts
could support application of implied consent in a concurrent representation context. (Id.
at pp. 1436–1437.)
The final case relied on by AVEK, Blue Water, supra, 192 Cal. App. 4th 477,
nowhere holds a court considering a disqualification motion in a concurrent
representation context must disregard evidence of implied consent to the conflicting
representation. Instead, Blue Water merely cited Flatt and State Farm for the generic
proposition that when an attorney “simultaneously represents two clients with adverse
interests, automatic disqualification is the rule in all but a few instances” (Blue Water,
supra, at p. 487), but it neither described what those “few instances” might be nor
22.
(contrary to AVEK’s appellate claim) stated that those “few instances” required strict
compliance with former rule 3–310.
The foregoing survey of the relevant authorities convinces us that, where there is
substantial evidence supporting the factual determination that the client made an
informed decision to agree to a law firm’s concurrent representation of themselves as
well as another client with potentially adverse interests, no authority precludes a court
from denying a subsequent motion to disqualify that attorney based on implied consent or
holds (as AVEK contends) that the absence of a written confirmation of that consent is
dispositive. The SpeeDee Oil court admonished that “judges must examine these motions
carefully to ensure that literalism does not deny the parties substantial justice.” (SpeeDee
Oil, supra, 20 Cal.4th at p. 1144.) Where a party’s course of conduct under all of the
circumstances reflects a knowing, informed choice to permit continued concurrent
representation notwithstanding potential or actual adverse interests, we conclude that
requiring a writing as the sine qua non of effective consent would celebrate literalism and
elevate form over substance to the detriment of substantial justice for the other parties.
We therefore conclude a trial court may deny a disqualification motion when it
finds the moving party by its conduct gave knowing and informed consent to the
concurrent representation of themselves and another client. Because we have previously
explained there is substantial evidence to support the finding AVEK impliedly gave such
consent to the concurrent representation, the trial court’s denial of AVEK’s motion must
be affirmed.
D. The Trial Court Did Not Abuse Its Discretion in Denying the
Disqualification Motion Based on Unreasonable Delay
Even if implied consent were not a legally sufficient basis for denying AVEK’s
disqualification motion, it is clear that “attorney disqualification can be impliedly waived
by failing to bring the motion in a timely manner.” (Liberty National Enterprises, L.P. v.
Chicago Title Ins. Co. (2011) 194 Cal. App. 4th 839, 844 (Liberty); accord, Trust Corp. of
Montana v. Piper Aircraft Corp. (9th Cir. 1983) 701 F.2d 85, 87–88.) SpeeDee Oil
23.
recognized as much when it noted that “[d]epending on the circumstances” (SpeeDee Oil,
supra, 20 Cal.4th at p. 1145, italics added), a disqualification motion permits a trial court
to consider such things as the financial burden that would accompany requiring a client to
replace a disqualified counsel after the challenged counsel performed a substantial
amount of work, and whether “despite knowing the pertinent facts, a party unreasonably
delayed seeking disqualification and so caused its opponent significant prejudice.” (Id. at
fn. 2.)
“[T]o result in a waiver, the ‘delay [and] … the prejudice to the
opponent must be extreme.’ [Liberty, supra, 194 Cal.App.4th at p. 845.]
Factors relevant to the reasonableness of a delay include the ‘stage of
litigation at which the disqualification motion is made’ and the complexity
of the case. (Id. at p. 846.) Delay can also be ‘an indication that the alleged
breach of confidentiality was not seen as serious or substantial by the
moving party,’ and can suggest ‘the possibility that the “party brought the
motion as a tactical device ….”’ (Id. at p. 847.) ‘If the opposing party
makes a prima facie showing of extreme delay and prejudice, the burden
then shifts to the moving party to justify the delay.’ (Fiduciary Trust
Internat. of California v. Superior Court (2013) 218 Cal. App. 4th 465,
490.)” (Ontiveros v. Constable (2016) 245 Cal. App. 4th 686, 701.)
The trial court concluded all of the relevant factors militated in favor of finding
AVEK was estopped18 from seeking to disqualify BB&K: AVEK waited 10 years to
raise the issue; AVEK reaped substantial benefits from BB&K’s representation of
District No. 40 for those years; District No. 40 would suffer substantial financial cost if
required to replace BB&K; the parties (as well as the courts and other parties interested in
the AVGA cases) would be harmed if this ongoing litigation were deprived of BB&K’s
knowledge and experience; and, there was no evidence that disqualification was
necessary as a prophylactic measure to protect AVEK’s confidential communications
18Although courts such as Liberty, supra, 194 Cal. App. 4th 839 have used the
nomenclature of “waiver” (id. at p. 845), we believe that “estoppel” more accurately describes
the operative principles. (See City of Hollister v. Monterey Ins. Co. (2008) 165 Cal. App. 4th 455,
486–487 [discussing distinction between “waiver” and “estoppel” and noting latter involves
prejudicial reliance by the party asserting estoppel].)
24.
from being conveyed to District No. 40. Moreover, AVEK’s disqualification motion
made no effort to carry its burden of showing justification for the delay. (Ontiveros v.
Constable, supra, 245 Cal.App.4th at p. 701.) These facts provide ample justification for
the implied finding the delay was unreasonable and extremely prejudicial. (McDermott
Will & Emery LLP v. Superior Court, supra, 10 Cal.App.5th at p. 1110.)
AVEK does not argue on appeal that any of the findings on the relevant factors
supporting estoppel are lacking substantial evidentiary support. Instead, AVEK asserts
that delay in bringing a disqualification motion is only relevant in a successive
representation context and cannot be considered when the disqualification motion is
brought asserting automatic disqualification based on a concurrent representation. There
is no definitive California case on whether unreasonable delay with resulting prejudice
can result in estoppel outside of the successive representation context.19 (See Ontiveros
v. Constable, supra, 245 Cal.App.4th at p. 701 & fn. 9 [noting apparent conflict between
Blue Water, supra, 192 Cal. App. 4th 477 and Forrest v. Baeza (1997) 58 Cal. App. 4th 65
but finding it was unnecessary to decide question].) In Forrest v. Baeza, the court
examined a motion to disqualify counsel in a concurrent representation context. The
court evaluated whether delay barred relief by the moving party rather than summarily
rejecting any consideration of delay. (Forrest v. Baeza, supra, at pp. 77–78.) Other
courts have also considered whether delay barred relief by the moving party in a
concurrent representation context. (See, e.g., Miller v. Alagna (C.D.Cal. 2000) 138
F. Supp. 2d 1252, 1256–1260.) In contrast, Blue Water contains language suggesting the
rule of automatic disqualification applicable to concurrent representations obviates
consideration of delay. (Blue Water, supra, at p. 490 [challenged attorney had
19AVEK quotes a federal district court case, In re Jaeger (Bankr. C.D.Cal. 1997) 213
B.R. 578, stating a concurrent representation of clients “in effect gives a wild card to each of the
clients. At any time thereafter … any of the clients can play the card and require the
withdrawal.” (Id. at p. 586.) We are not persuaded In re Jaeger correctly evaluated California
law and therefore disregard it. (Cf. Whiteley v. Phillip Morris, Inc. (2004) 117 Cal. App. 4th 635,
690 [federal court decisions on state law issues not controlling].)
25.
“knowingly agreed to represent conflicting interests at the demurrer hearing. He
therefore cannot avoid the rule of automatic disqualification. Consequently, we need not
reach the issue of delay”].)
We conclude the “automatic disqualification” standard applicable to concurrent
representations is not incompatible with estoppel considerations. The SpeeDee Oil court,
addressing a disqualification motion arising because of a brief period of concurrent
representation, expressly left open whether unreasonable delay could make estoppel
principles relevant to the disqualification motion.20 (SpeeDee Oil, supra, 20 Cal.4th at
pp. 1144–1145 & fn. 2.) The Blue Water court made no effort to reconcile its language
with the SpeeDee Oil court’s caveat. Moreover, the Blue Water court is factually inapt,
because it addressed a delay of just over one year (Blue Water, supra, 192 Cal.App.4th at
pp. 483–484) and appears to have lacked the other indicia (such as the late stage of the
litigation at which the motion was made or the investments made by the opposing party
in the challenged counsel) which have supported other applications of estoppel principles.
(See, e.g., River West, Inc. v. Nickel, supra, 188 Cal.App.3d at p. 1313.) Thus, AVEK
has cited no relevant case law barring consideration of estoppel principles in a concurrent
representation context.
20AVEK seeks to avoid the SpeeDee Oil caveat by asserting it is limited to a law firm’s
simultaneous representation of clients on separate matters and argues the caveat does not extend
to “[t]he most egregious conflict of interest [which] is representation of clients whose interests
are directly adverse in the same litigation.” (SpeeDee Oil, supra, 20 Cal.4th at p. 1147.) AVEK
argues BB&K should have been disqualified because BB&K’s conflict of interest fell under the
“most egregious” rationale. However, that argument was not asserted below, nor was it raised in
AVEK’s opening brief on appeal, but appears to have been raised for the first time in its reply
brief on appeal. “Arguments raised for the first time in the reply brief are considered untimely
and may be disregarded by the reviewing court.” (Hernandez v. Vitamin Shoppe Industries, Inc.
(2009) 174 Cal. App. 4th 1441, 1461, fn. 10.) Moreover, even if this claim were not forfeited, the
record does not support the assertion BB&K represented both District No. 40 and AVEK in the
“same litigation.” Instead, AVEK was represented by separate counsel in the AVGA litigation
while Riddell provided services to AVEK on other matters. Accordingly, the factual predicate
for AVEK’s untimely appellate argument appears absent.
26.
AVEK also presents no logical reason why the same estoppel principles that courts
apply in the successive representation context should not have equal application in the
concurrent representation context. Certainly, nothing in former rule 3–310 suggests a
basis for treating successive and concurrent representations differently; to the contrary,
because former rule 3–310 requires the same written waiver of the conflict of interest
regardless of whether the conflict exists between concurrently represented clients (see
former rule 3–310(C)) or involves successively represented clients (former rule 3–
310(E)), the estoppel principles would apparently also have equal application to both
contexts.
AVEK instead appears to argue that, because the disqualification standard applied
in a concurrent representation context is described as “automatic,” that standard is
necessarily antithetical to estoppel principles. However, this argument appears to
conflate two distinct concepts. The first concept is what standards are to be employed
when examining whether a conflict of interest requires disqualification. The second
concept is, having identified the appropriate standard for testing disqualification in an
otherwise timely motion to disqualify, what principles apply to determine whether a
client who unreasonably delays in invoking that standard is barred from relief. In timely
motions to disqualify, the courts have adopted one type of standard (the “substantial
relationship” standard) when the conflict arises between a present client and a formerly
represented client, which places on the moving client the burden of demonstrating the
requisite “‘“substantial relationship” between the subjects of the antecedent and current
representations.’” (M’Guinness v. Johnson (2015) 243 Cal. App. 4th 602, 614.) However,
no similar burden is imposed in concurrent representation cases, and the courts have
instead described the standard as “automatic” even though the concurrent representations
may have nothing in common and there is no risk of harm to the interests of client
confidentiality. (See, e.g., Flatt, supra, 9 Cal.4th at p. 284.)
27.
The descriptors of the appropriate standard to be applied when a timely motion to
disqualify is filed has no logical nexus to assessing the impact of an unreasonably
delayed motion. Whether the appropriate standard is “substantial relationship” or
“automatic,” we believe that the question of whether a client’s delay estops it from
invoking either standard is unconnected to which substantive standard will be applied.
As previously noted, the majority in SpeeDee Oil left open “the relative weight [estoppel]
concerns might deserve in deciding a disqualification motion” (SpeeDee Oil, supra, 20
Cal.4th at p. 1145, fn. 2) rather than adopting Justice Mosk’s approach urging that
disqualification was automatic regardless of “how long the conflict … lasted [or] how
promptly [the client] sought to disqualify [the attorney].” (Id. at p. 1157 (conc. opn. of
Mosk, J.).) In addition, we perceive no logical reason estoppel principles developed to
assess disqualification motions in the successive representation context would not have
equal relevance in the concurrent representation context. Accordingly, we conclude the
same estoppel principles apply with equal force whether the representation is concurrent
or successive.
We cannot conclude the trial court’s decision to apply estoppel was either an
abuse of discretion or lacked substantial evidentiary support. (Toyota Motor Sales,
U.S.A., Inc. v. Superior Court (1996) 46 Cal. App. 4th 778, 782.) SpeeDee Oil allows a
trial court to consider such things as the client’s right to keep his or her chosen counsel,
the financial burden that would accompany requiring a client to replace a disqualified
counsel after the challenged counsel performed a substantial amount of work, whether the
moving party unreasonably delayed in bringing the motion “despite knowing the
pertinent facts” (SpeeDee Oil, supra, 20 Cal.4th at pp. 1144–1145 & fn. 2), and (where
the concurrent representation has ended) whether there is a threat to client confidential
information if disqualification is not granted. (Id. at p. 1147.) The trial court below
concluded disqualification would deprive District No. 40 of its chosen counsel, that
District No. 40 (as well as many other parties) would suffer serious detriment from
28.
disqualification, and that AVEK unreasonably delayed seeking disqualification. The
court also noted the concurrent representation had ended and there was no evidence to
create a concern that AVEK’s confidential information would be endangered if
disqualification was not granted. The trial court’s decision to estop AVEK from
disqualifying BB&K is supported by substantial evidence and was not an abuse of
discretion.
DISPOSITION
The order is affirmed. Costs on appeal are awarded to respondent.
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PEÑA, Acting P.J.
WE CONCUR:
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SMITH, J.
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SNAUFFER, J.
29.