Cordier v. Holder CA2/2 ( 2014 )

Filed 1/7/14 Cordier v. Holder CA2/2
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
SHYLA M. CORDIER, B244150
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No. GP016054)
v.
RICHARD L. HOLDER,
Defendant and Respondent.
APPEAL from an order of the Superior Court of Los Angeles County.
Mary Thornton House, Judge. Affirmed.
David A. Cordier for Plaintiff and Appellant.
Mehta & Mann, Michele Mann and Jill P. McDonell for Defendant and
Respondent.
_________________________
This is an appeal from an order disqualifying attorney David A. Cordier (Cordier)
from representing his wife, appellant Shyla M. Cordier (Shyla), with respect to her
petition to remove her brother, respondent Richard L. Holder (Richard),1 as a successor
cotrustee of their parents’ trust.2 Shyla contends there is insufficient evidence to support
the probate court’s finding that Cordier should be disqualified. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Shyla and Richard are siblings who were named as successor cotrustees of The
Richard E. Holder and Mary A. Holder Trust, executed on February 11, 2009 (the trust).
Richard E. Holder died on February 26, 2009. Mary A. Holder, who became the
surviving trustee following her husband’s death, resigned as trustee in August 2009, and
died on July 19, 2010. Upon her resignation, Shyla and Richard became cotrustees of the
trust.
On June 20, 2011, Shyla filed a verified petition in the probate court to remove her
brother as cotrustee of the trust. The petition alleges that Richard has failed to perform
his duties as cotrustee by failing to cooperate with Shyla, and by mismanaging the assets
of the trust by failing to pay debts and real property taxes, failing to secure proper
insurance on the trust’s real properties, failing to make needed repairs to the real
properties, and by engaging in “self-dealing” or alternatively disposing of trust assets as
though they were his own. Richard filed a verified objection to the petition.
On November 4, 2011, Richard filed a motion to disqualify Cordier from
representing Shyla in connection with her petition for removal. The motion was based on
the grounds that Cordier had previously acted as an attorney for Richard regarding the
formation of a corporation and had acted as an attorney for both cotrustees in the course
of administering the trust. Richard submitted his own declaration, the declaration of his
1
For the sake of convenience and not out of disrespect, we refer to the parties in the
probate court proceeding by their first names.
2
An order granting or denying a motion to disqualify counsel is appealable as an
injunction order under Code of Civil Procedure section 904.1, subdivision (a)(6).
(Machado v. Superior Court (2007) 148 Cal. App. 4th 875, 882.)
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attorney, and documentary evidence. Shyla opposed the motion, and submitted her
declaration, Cordier’s declaration, their son Brian Cordier’s (Brian) declaration, and
documentary evidence. The parties’ evidence sharply conflicts. Shyla also submitted
evidentiary objections to Richard’s evidence, which the probate court partially sustained.
The probate court granted the motion to disqualify, finding “there is sufficient evidence
to establish that David A. Cordier was Respondent’s attorney and/or privy to confidential
information relevant to this litigation.” Shyla timely filed this appeal.
DISCUSSION
I. Standard of Review
“On review of an order granting or denying a disqualification motion, we defer to
the trial court’s decision, absent an abuse of discretion. [Citations.] The trial court’s
exercise of this discretion is limited by the applicable legal principles and is subject to
reversal when there is no reasonable basis for the action. [Citations.]” (In re Complex
Asbestos Litigation (1991) 232 Cal. App. 3d 572, 585.) “If the trial court resolved
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 trial court’s factual findings, the appellate court reviews
the conclusions based on those findings for abuse of discretion. [Citation.] . . . [W]here
there are no material disputed factual issues, the appellate court reviews the trial court’s
determination as a question of law. [Citation.]” (People ex rel. Dept. of Corporations v.
SpeeDee Oil Change Systems, Inc. (1999) 20 Cal. 4th 1135, 1143–1144 (SpeeDee Oil),
citing In re Complex Asbestos Litigation, supra, 232 Cal. App. 3d 572; Cho v. Superior
Court (1995) 39 Cal. App. 4th 113, 119.)
“‘When a finding of fact is attacked on the ground that there is not any substantial
evidence to sustain it, the power of an appellate court begins and ends with the
determination as to whether there is any substantial evidence contradicted or
uncontradicted which will support the finding of fact.’ [Citations.]” (Foreman & Clark
Corp. v. Fallon (1971) 3 Cal. 3d 875, 881.) We must view the evidence in the light most
favorable to the prevailing party, giving it the benefit of every reasonable inference and
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resolving all conflicts in its favor. (Lenk v. Total-Western, Inc. (2001) 89 Cal. App. 4th
959, 968.) Thus, in making our determination, we generally look only at the evidence
and reasonable inferences supporting the successful party. (Howard v. Owens Corning
(1999) 72 Cal. App. 4th 621, 631.)3
II. Applicable Law
“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.’” (In re Complex Asbestos Litigation, supra,
232 Cal.App.3d at p. 585.) “[D]isqualification motions involve a conflict between the
clients’ right to counsel of their choice and the need to maintain ethical standards of
professional responsibility.” (SpeeDee Oil, supra, 20 Cal.4th at p. 1145.) To this end,
the State Bar Rules of Professional Conduct, rule 3-310 provides: “(C) A member shall
not, without the informed written consent of each client: [¶] (1) Accept representation of
more than one client in a matter in which the interests of the clients potentially conflict;
or [¶] (2) Accept or continue representation of more than one client in a matter in which
the interests of the clients actually conflict; . . . [¶] . . . [¶] (E) A member shall not,
without the informed written consent of the client or former client, accept employment
adverse to the client or former client where, by reason of the representation of the client
or former client, the member has obtained confidential information material to the
employment.”
In cases of successive representation of clients with adverse interests, a former
client who wishes to disqualify an attorney must show that the subjects of the successive
representations are substantially related. (City and County of San Francisco v. Cobra
Solutions, Inc. (2006) 38 Cal. 4th 839, 847.) “To determine whether there is a substantial
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Richard argues that Shyla’s failure to include a reporter’s transcript of the initial
and continued hearings on his motion to disqualify is fatal to her appeal. While such a
transcript is generally helpful to our review and we ordinarily expect to see one, we
cannot conclude that its absence here is fatal to the appeal, since there is no indication
that any additional evidence was offered or that any evidentiary hearing was conducted.
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relationship between successive representations, a court must first determine whether the
attorney had a direct professional relationship with the former client in which the attorney
personally provided legal advice and services on a legal issue that is closely related to the
legal issue in the present representation.” (Ibid.)
III. The Motion to Disqualify Was Properly Granted
A. Cordier’s Prior Representation re Formation of Business
One of the bases on which Richard asserts disqualification is that Cordier
previously represented Richard in connection with the formation of a business entity. In
his supporting declaration, Richard states that in 2001, he and his wife contacted Cordier
“and asked for his legal assistance with regard to how we should form the business entity
(ultimately DMH Construction, Inc.) that would be providing construction services to our
company The Dennis Company.” Richard states that he acted as the general business
person while his wife possessed a contractor’s license. He also states: “We paid David
Cordier for his legal services. He advised us on how to set up the corporation and
prepared the paperwork, as well as providing us advice on additional tax matters. We
provided David Cordier with our confidential and private financial and tax information
during that time.” Richard attaches to his declaration a December 27, 2004, letter from
the California State Franchise Tax Board “regarding our company DMH and the Tax
Amnesty Application which it sent to Cordier, as our representative, and about which
Cordier provided us legal advice.”
In his opposing declaration, Cordier disputes most of these statements, asserting
that he only rendered services in connection with the formation of DMH to Richard’s
wife, that he never prepared any tax returns for DMH or Richard, and that he never
acquired any confidential information, whether financial or otherwise, relating to
Richard, his wife, or any of their companies. We must nevertheless disregard this
evidence in determining whether substantial evidence supports the probate court’s
finding.
Shyla argues that Cordier’s prior representation of Richard with respect to the
formation of Richard’s business is not substantially related to her current petition for his
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removal as cotrustee. She asserts that, even assuming Cordier obtained Richard’s
confidential financial information, her petition has nothing to do with Richard’s finances,
only the trust’s finances and assets, and that the petition does not suggest that Richard
would be personally liable for the trust’s debts. But the petition alleges that Richard has
mismanaged the trust’s assets, has failed to pay the trust’s debts, and has engaged in
unspecified “self-dealing.” In his declaration in opposition to the petition for removal,
Richard states that he had to pay in full one of the trust’s loans in the amount of $14,000,
without indicating whether he used his own finances or was reimbursed by the trust, and
that he had to provide a utility company with his personal social security number to keep
utilities running on the trust’s properties. We cannot say that as a matter of law Richard’s
personal finances, which were obtained by Cordier in his prior representation, are not
material to the issues raised by the petition for removal, which concern Richard’s ability
to pay and resolve trust liabilities. When a substantial relationship exists, the courts
presume the attorney possesses confidential information of the former client material to
the present representation. (Western Continental Operating Co. v. Natural Gas Corp.
(1989) 212 Cal. App. 3d 752, 759–760.) “It is the possibility of the breach of confidence,
not the fact of an actual breach that triggers disqualification.” (In re Marriage of
Abernethy (1992) 5 Cal. App. 4th 1193, 1197, fn. 3.)
B. Cordier’s Involvement with the Trust
Richard asserts that Cordier’s involvement with the trust and his simultaneous
representation of both cotrustees provide additional grounds for Cordier’s
disqualification. We agree.
The evidence shows that Cordier drafted the trust executed in 2009, which
supersedes a trust he also drafted in 1993.4 The trust provides that the family residence in
Glendale (the Glendale property) is to be distributed to Shyla and that, to the extent
4
Although the probate court sustained the objection to Richard’s statement in his
declaration that Cordier drafted the trust, Shyla submitted an e-mail she wrote to Richard,
in which she stated: “In fact, you acknowledge that [Cordier] prepared the trusts. . . .
Moreover, if you read the trusts carefully, you will see that [Cordier] had effectively
written himself out as a beneficiary of the trust.”
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necessary to equalize the division of trust assets, an equalizing payment must be made
from one cotrustee to the other. Clearly, Cordier represented the settlors in drafting the
trust. It is also true that an attorney who undertakes to fulfill the testamentary
instructions of a client assumes a relationship not only with the client, but also with the
client’s beneficiaries. (Heyer v. Flaig (1969) 70 Cal. 2d 223, 228.)
Cordier also drafted Mary A. Holder’s resignation as surviving trustee, a durable
power of attorney for health care naming Shyla as agent, and a durable power of attorney,
naming both Richard and Shyla as agents. But his involvement did not stop there.
Richard presented evidence that while Mary A. Holder was still alive but no
longer living at the Glendale property, he set up an appointment with a realtor to lease the
residence. He informed Shyla of the meeting and Cordier also attended. The realtor
calculated that the Glendale property could be rented for $2,000 a month. This amount
would cover the cost of caring for Mary A. Holder. Cordier argued with the realtor and
would not allow Shyla to sign the rental agreement. Richard declared that after that
meeting, “I began to understand that although my sister and I were supposed to be
Successor Co-Trustees, as well as cobeneficiaries, that we would not be able to rent the
property without David Cordier’s involvement and approval.”
Richard also presented evidence that in June 2010, Cordier contacted him to say
that Cordier, Shyla, and their son Brian had worked out an arrangement for the trust to
sell the Glendale property to Shyla, who would in turn sell it to Brian. On June 14, 2010,
Richard received two sales agreements prepared by Cordier. The first agreement
provided for the sale of the Glendale property to Shyla as the “Buyer,” and identified the
“Seller” as Richard and Shyla, as cotrustees (the sales agreement). The second
agreement provided for the sale of the Glendale property from Shyla to Brian. The sales
agreement provided that the trust would sell the Glendale property to Shyla for $390,000
at 4 percent interest, with an upfront payment. The sales agreement represented that each
of the parties “has received independent legal advice from attorneys of his choice with
respect to the advisability of making the settlement and releases provided for herein, and
with respect to the advisability of executing this Agreement, and prior to the execution of
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this Agreement by each party, that the party’s attorney reviewed this Agreement at
length, made all desired changes.” The sales agreement included an indemnification
clause in favor of Shyla and Brian, but not Richard. The sales agreement also provided
that copies of all notices served with respect to the agreement be sent to Cordier.
Richard declared that he had no negotiations regarding the sale of the Glendale
property before receiving the sales agreement. According to Richard, Cordier did not
suggest that Richard seek his own legal advice regarding the sales agreement. Instead,
Cordier urged Richard to just sign the sales agreement to effectuate the intent of the trust
and to provide for Mary A. Holder’s care. Richard used a rudimentary online mortgage
calculator to determine that the monthly mortgage payment would be less than the $2,000
recommended rental amount. Richard “refused to take Cordier’s advice” to sign the sales
agreement, and subsequently retained his own attorney.
“No precise formula can be stated for the determination of whether an attorney is
representing conflicting interests. The cases construing this and other rules of
professional conduct largely turn on the individual facts of the relationships between the
parties and the nature of the disputes involved.” (Vivitar Corp. v. Broidy (1983) 143
Cal. App. 3d 878, 882.) Thus, the totality of the circumstances must be considered, and
here Cordier took on multiple and overlapping roles as attorney with respect to the trust.
In sum, we conclude there was sufficient evidence for the probate court to find
that Cordier represented Richard regarding his business and received confidential
financial information from him; Cordier represented and advised the settlors in creating
the trust; Cordier represented both cotrustees in preparing the sales agreement and urging
Richard to just sign the agreement; and Cordier assisted his son Brian and his wife Shyla
in a manner adverse to Richard, as the cobeneficiary of the trust.
Accordingly, the probate court did not abuse its discretion in granting Richard’s
motion to disqualify Cordier.
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DISPOSITION
The probate court’s order granting the motion to disqualify Cordier is affirmed.
Richard is entitled to recover his costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
______________________________, J.
ASHMANN-GERST
We concur:
_______________________________, P. J.
BOREN
_______________________________, J.
CHAVEZ
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