Malan v. Katto CA4/1

Filed 5/23/22 Malan v. Katto CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
NINUS MALAN, D077602
Cross-complainant and
Respondent,
(Super. Ct. No. 37-2019-
v.
00029739-CU-OR-CTL)
WAFA KATTO,
Cross-defendant and Appellant.
APPEAL from an order of the Superior Court of San Diego County,
Richard S. Whitney, Judge. Affirmed.
Law Offices of Douglas Jaffe and Douglas Jaffe for Cross-defendant and
Appellant.
Noonan Lance Boyer & Banach, James R. Lance, Ethan T. Boyer,
Genevieve M. Ruch; Demergian Law and David Demergian for Cross-
complainant and Respondent.
A lender sued to foreclose on a property over which Wafa Katto and
Ninus Malan disputed each other’s ownership interest and entitlement to
collect rents. Katto and Malan filed cross-complaints against each other
seeking (among other things) to quiet title and obtain an accounting of the
other’s finances. Malan moved to disqualify Katto’s trial counsel, Douglas
Jaffe, on the basis Jaffe had previously represented Malan (individually and
through a company Malan claimed to own) in several prior lawsuits and
acquired confidential information about Malan’s finances and litigation
philosophy. The trial court granted Malan’s motion.
Katto contends the trial court erred by granting Malan’s
disqualification motion because there is not a substantial relationship
between the matters in which Jaffe previously represented Malan and the
present action. We disagree. Although information about a former client’s
general litigation philosophy ordinarily is insufficient to disqualify an
attorney from later representing a party adverse to the former client, Malan
met his burden here by establishing Jaffe obtained confidential information
about Malan’s finances that is material to Katto’s current cause of action for
an accounting.
Accordingly, we affirm the trial court’s order granting Malan’s
disqualification motion.
I. FACTUAL AND PROCEDURAL BACKGROUND
A. The Complaint
In June 2019, lender HS Independence LLC (Lender) sued Katto and
Malan to foreclose on a residential triplex (the Property). Lender alleged
that, in 2017, it loaned $300,000 to Katto to purchase the Property, and Katto
executed a corresponding deed of trust. Lender further alleged that, after
this secured loan transaction, Katto purportedly executed a grant deed
conveying the Property to herself and Malan as joint tenants. Lender
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attached to its complaint copies of the recorded deed of trust and grant deed.1
Lender alleged Katto and Malan were in arrears on the loan, failed to
maintain property insurance, and allowed the Property to fall into disrepair.
B. Malan’s Answer and Cross-complaint
In July 2019, Malan filed an answer to Lender’s complaint. He
admitted the loan was in arrears, but alleged he “was prevented . . . by other
parties” from making payments.
A few days later, Malan filed a cross-complaint against Katto asserting
causes of action for quiet title, accounting, partition, and declaratory relief.
Malan alleged he and Katto purchased the Property together; Malan
provided a $127,000 down payment and Katto obtained a $300,000 loan.
Malan further alleged Katto—“acting as an alter ego, straw, or agent on an
unascertained third party’s behalf”—had assumed “control of the Property
since 2017 and has been receiving 100% of the rents and payments from the
tenants in the Property, even though she does not own the Property, or
alternatively owns only a small portion of it.”
C. Jaffe Appears on Katto’s Behalf
On August 30, 2019, Jaffe filed a declaration in the trial court stating
he had just been retained “to represent Katto in this matter” and seeking an
automatic 30-day extension (Code Civ. Proc., § 430.41) of Katto’s answer
deadline. Malan nevertheless obtained entry of default against Katto. In a
declaration in support of his successful request to vacate the entry of default,
1 Stamps on the deed of trust and grant deed indicate they were both
recorded in the county recorder’s office on June 16, 2017 at 9:58 a.m. The
stamped document numbers indicate the deed of trust was recorded
immediately before the grant deed.
3
Jaffe stated that, “[u]pon the vacating of the default, Katto will file an
Answer and Cross-Complaint against Malan.”
D. Lender’s Motion to Appoint a Receiver
1. Lender’s Motion
In October 2019, Lender moved the trial court to appoint a receiver to
manage the Property. Lender asserted the loan remained in arrears, the
property tax was unpaid, neither Malan nor Katto had maintained insurance
on the Property, and Lender had to make significant improvements to restore
the Property to an insurable state.
In support of its motion, Lender submitted a declaration from Katto
stating she “agree[s] that a receiver should be appointed” because “Malan
took control of the property away from” her in November 2018 “and he has
been receiving 100% of the rental income from the property ever since that
date.”
2. Katto’s Response
Katto also filed her own response to Lender’s motion stating she “does
not oppose the appointment of a receiver.” Katto filed a supporting
declaration from her assistant who stated he helped Katto collect rent,
maintain the Property, and submit loan payments to Lender from about July
2017 to November 2018. The assistant further stated that in mid-November
2018, he “observed Malan tell the Property tenants that he was the owner of
the Property,” and they should “stop paying Katto . . . and instead pay the
rents to him” or he would evict them. The assistant concluded Malan “has
been collecting at least $6,000 to $7,000” in monthly rent since that time and
has not been maintaining or repairing the Property.
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3. Malan’s Opposition
Malan opposed Lender’s motion. He explained that, from about 2009 to
2017, he and a business partner, Salam Razuki, had invested in about 40 to
50 properties together. A friend told Malan about the Property, which Malan
saw as an investment opportunity. Razuki wanted to buy the Property
through a “straw buyer”—Katto, who was a tenant at one of Razuki’s
properties—but neither Razuki nor Katto had sufficient funds for the
purchase. According to Malan, he and Razuki agreed “that Malan would
provide $127,000 of his own money as the down payment with the
expectation of 50% ownership, 50% rights to rents and profits, Malan’s name
on title, and his interest not subject to a deed of trust or promissory note.”
This explained why only Katto was listed on the deed of trust, but Katto and
Malan were both listed on the grant deed.
Malan argued in his opposition that it would be inequitable to appoint
a receiver because Lender was “acting as an agent of . . . Razuki, who tried to
hire a hit man to murder Malan to take control of Malan’s assets, including
[the Property].” Malan submitted documents showing Razuki was arrested
and charged in federal court with conspiracy to kill in a foreign country and
conspiracy to kidnap.
As to the merits of Lender’s motion, Malan asserted he had attempted
to pay the arrears on the loan, but Lender kept demanding increasingly
exorbitant reinstatement amounts.
Finally, Malan stated in a declaration that Katto had “collected 100% of
the rent” from the Property “from June 2017 until at least January 2019,” yet
failed to pay Lender and “intentionally excluded [Malan] from receiving
profits from the Property and . . . from enjoying the benefits of ownership.”
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4. Trial Court’s Ruling
On November 8, 2019, the court granted Lender’s motion and
appointed a receiver.
E. Malan’s Motion to Disqualify Jaffe
1. Malan’s Motion
In the meantime, on October 31, 2019 (about one week before the court
granted Lender’s motion), Malan moved to disqualify Jaffe as Katto’s
attorney on the basis Jaffe had previously represented Malan—individually
and as the sole member of American Lending and Holdings, LLC (American
Lending)—in several matters since 2014. Malan asserted that, “[a]s Malan’s
attorney for half a decade, Jaffe received substantial confidential information
from Malan about his attitudes, philosophy, and strategy towards litigation
and settlement, his general business practices, customs, and positions, his
financial strengths and weaknesses, and his attitude and tolerance for
litigation.”
Malan identified two lawsuits in which Jaffe had previously
represented him on an individual basis: Malan v. Sybrandy et al. (Sybrandy)
and Malan v. J. Choo USA, Inc. (Choo).
Malan also identified five lawsuits in which Jaffe represented
American Lending, in which Malan asserted he was the sole member:
American Lending v. Gurfinkiel (Gurfinkiel), American Lending v. Upward
Trend (Upward Trend), Meram v. American Lending (Meram), American
Lending v. Lopez (Lopez), and American Lending v. Title365 Co. (Title365).
Malan did not describe in his moving papers the subject matter of these
lawsuits, but he described the nature of his interactions with Jaffe. Malan’s
declaration and attached exhibits showed numerous communications
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between Malan and Jaffe regarding pleadings, discovery, motion practice,
and settlement of the cases.
For example, regarding Sybrandy, Malan stated, “I worked closely with
Jaffe, provided him confidential information about myself and my finances,
disclosed my litigation strategy and philosophy to him, and what topics or
questions he should ask and which topics, if I am deposed, would be
especially embarrassing to me, and indicated where he should object on the
grounds of privilege or privacy.”
Similarly, in connection with Gurfinkiel, Malan stated, “I worked
closely with Jaffe in drafting my declaration, and gave him confidential
information about the finances of American Lending. Since I am the sole
member of American Lending and provide much of its financial support, the
confidential information necessarily includes confidential, private
information about my own finances, as well.”
Additionally, regarding Lopez, Malan stated, “I worked closely with
Jaffe, providing him confidential information about American Lending, my
interest and desire to litigate, and the financial status of American Lending
and myself, among many other confidential facts.”
Finally, regarding Title365, Malan stated, “To help Jaffe draft [a]
demand letter, I worked closely with Jaffe and gave him confidential
information about American Lending, explained the extent of my interest in
and tolerance for litigation and my litigation strategy and beliefs, and
disclosed American Lending’s and my financial position, among many other
confidential facts.”
In support of his claim to be the sole member of American Lending,
Malan cited several instances in which Jaffe prepared court filings or other
documents that identified Malan as a member of American Lending, and
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showing Jaffe looked to Malan for direction on litigation in which American
Lending was a party.
Malan argued the “confidential information Jaffe learned”—which “was
extensive and concerned every aspect of Malan’s life, including Malan’s
finances”—was “relevant and material to Jaffe’s representation of Katto in
the present case” because “Jaffe’s knowledge of whether Malan has the
finances to litigate, whether Malan is prone to settlement, and what Malan’s
strengths and weaknesses are in litigation (especially in light of Katto’s
Cross-Complaint) are advantages to Katto in having Jaffe represent her and
disadvantages to Malan as Jaffe’s former client.”
Malan concluded that, because “there is a ‘substantial relationship’
between the significant and material confidential information Jaffe received”
in his prior representations and the present case, disqualification is required.
2. Katto’s Cross-complaint Against Malan
On November 15, 2019, before she responded to Malan’s
disqualification motion, Katto—with Jaffe as her counsel—filed a cross-
complaint against Malan asserting causes of action for quiet title, accounting,
declaratory relief, civil theft, conversion, indemnity, and contribution.
Katto alleged she had “not knowingly transferred her interest in the
Property to Malan,” and that the grant deed conveying him a joint tenancy
interest in the Property was a forgery. She further alleged “Malan has been
deriving income from the Property, such as rents and payments from tenants,
without distributing any of it to Katto.” Therefore, Katto asserted she “is
entitled to an account of Malan’s assets and liabilities, bank accounts, rent
accounts, and other accounts to determine how much money he derived from
the Property, and, therefore, how much money he owes to Katto.” She
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expressly asked the “Court to order an accounting to be performed of Malan’s
finances, assets, and properties.”
Katto later amended her cross-complaint in ways not relevant here.
3. Katto’s Opposition
On February 6, 2020, Katto filed an opposition to Malan’s motion to
disqualify Jaffe. Katto raised several challenges.
First, Katto informed the court that another judge in the same court
(Judge Sturgeon) had recently denied “essentially the same” motion by Malan
seeking to disqualify Jaffe in Razuki v. Malan et al. (Razuki), which involved
Malan, American Lending, and Razuki.2
Second, Katto argued there was “no substantial relationship between
the cases where Jaffe previously represented Malan or [American Lending]
and this action.” Katto briefly described the nature of the prior cases:
• Sybrandy “was a case by Malan against two other real estate
agents alleging interference by those real estate agents with a
piece of property Malan was selling as a real estate agent.”
• Choo “was a case by Malan arising from an expensive, and
defective, pair of shoes purchased by Malan for his girlfriend.”
2 Katto acknowledges in her appellate briefing that Judge Sturgeon
reconsidered his ruling about one year later (after the ruling at issue in this
appeal), but she does not reveal the outcome of that reconsideration. Malan
requests that we take judicial notice of Judge Sturgeon’s ruling on
reconsideration. (Evid. Code, § 452, subd. (d) [courts may take judicial notice
of “[r]ecords of . . . any court of this state”].) Katto opposes the request.
While we ordinarily do not take judicial notice of matters occurring after the
challenged ruling (Haworth v. Superior Court (2010) 50 Cal.4th 372, 379,
fn. 2), we will do so here because it appears Katto is alluding to Judge
Sturgeon’s ruling for its persuasive value. On reconsideration, Judge
Sturgeon granted Malan’s motion to disqualify Jaffe, finding Jaffe “was privy
to Malan’s financial information and condition, the litigation strategy
preferences and risk tolerances.”
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• Gurfinkiel and Upward Trend were both filed to enable the filing
of a lis pendens and asserted claims by American Lending that
Gurfinkiel failed to include American Lending as an owner of
properties that were to be jointly acquired.
• Meram was essentially an interpleader action in which funds
owed to American Lending by a defaulted borrower were
deposited with the superior court after the borrower’s bankruptcy
case was dismissed.
• Lopez was an unlawful detainer case in which American Lending
obtained a default judgment against the tenant.
• Title365 “is an ongoing action regarding Title 365’s inaccurate
abstract of title.” Katto asserted this case “would have been
settled but for Title 365’s hesitancy to pay when there is an
ongoing dispute over the ownership of [American Lending].”
Katto asserted “[t]here was nothing in those cases that gave Jaffe
confidential information directly at issue or of critical importance in this
action” because “[t]hose cases had nothing to do with Katto or the [P]roperty.”
Thus, she maintained “[n]one of the issues in the [prior actions] are the same
or substantially related to this action.”
Third, Katto asserted there was a “dispute over ownership of [American
Lending].” Whereas Malan claimed he was the sole member of American
Lending, Katto claimed Razuki was the sole member. In support of her
position, Katto cited a declaration from Jaffe stating, “In my representation
of [American Lending], Salam Razuki would direct litigation strategy, not
Malan, and I would be paid by [American Lending] or personally by . . .
Razuki.” Katto also filed a request for judicial notice attaching two
declarations from other cases. One declaration was from a corporate attorney
who prepared American Lending’s operating agreement to provide that
Razuki was its sole member. The other declaration was from a broker who
loaned money to American Lending who stated “[b]oth Razuki and Malan
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have always represented . . . that Razuki is the sole member of [American
Lending].”3
Fourth, Katto argued “Malan’s motion should be denied due to his
delay in bringing [it].” Katto acknowledged Malan brought the motion within
two months of Jaffe’s appearance in this case. But Katto pointed out that
Malan had not acted diligently in other cases in which Jaffe represented
Razuki or his business interests adversely to Malan. For example, in Razuki,
“Malan waited over five months to file his motion.” And in three other cases,
Malan asserted in 2017 and 2018 that Jaffe had conflicts, yet “never made a
motion to disqualify Jaffe.”
Finally, Katto argued she would “be substantially prejudiced by having
to hire new counsel and bring them up to speed.”
In a supporting declaration, Jaffe stated he “was retained by Katto on
August 30, 2019” and “had never represented [her] before, and had no prior
involvement with the [P]roperty.”
4. Malan’s Reply
Malan argued in reply that Katto had not (1) refuted his evidence
showing that on several occasions “Jaffe received confidential information
about Malan during his representation of Malan and American Lending”;
(2) presented any authority providing that a two-month delay in moving to
disqualify opposing counsel constitutes unreasonable delay; and (3) made a
sufficient showing she would be prejudiced if Jaffe were disqualified.
5. Trial Court’s Ruling
The trial court issued a tentative ruling granting Malan’s motion.4
3 Malan objected to the trial court taking judicial notice of the content of
declarations filed in other actions.
4 The tentative ruling is not in the appellate record.
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At the motion hearing, Jaffe argued that any information he acquired
about Malan’s “general business practices or litigation philosophy” during
prior representations is the type of “playbook” information that does not
warrant disqualification. Malan’s counsel countered that Jaffe “doesn’t deny
that he worked with Malan” and “talk[ed] about finances.” The court took
the matter under submission.
About one week later, the court issued a minute order granting Malan’s
motion. The court concluded disqualification was required because Malan
showed that a substantial relationship existed between the matters in which
Jaffe previously represented him and Jaffe’s current representation of Katto.
In addressing the matters in which Jaffe had previously represented
Malan on an individual basis, the court noted the parties’ conflicting views.
Whereas Malan asserted that in Sybrandy “he disclosed to Mr. Jaffe
confidential information about himself and his finances, including his
litigation strategy and philosophy,” Jaffe countered that “ ‘[t]here was
nothing in that litigation that gave [Jaffe] confidential information directly at
issue or of critical importance in this action.” The court concluded Malan was
“not required to show Mr. Jaffe was given ‘confidential information directly at
issue or of critical importance in this action.’ ”
Turning to the matters in which Jaffe had previously represented
American Lending, the court noted there was a dispute as to whether Malan
or Razuki was the sole member.5 But the court found that, regardless of
whether Malan held an ownership interest in American Lending, Jaffe did
not deny that Malan was involved in the five cases Malan cited in his motion,
or that Jaffe “obtained Malan’s confidential information about his finances
5 The court took “judicial notice of the existence of the pleadings and
papers” filed in other cases, “but not of the factual assertions made therein.”
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and his litigation strategy and philosophy.” The court found “Jaffe’s
subjective statement in his declaration that he did not learn any ‘confidential
information directly at issue or of critical importance in this action’ . . .
insufficient to counter Malan’s evidence that indicates Mr. Jaffe and Malan
had a substantial relationship through direct representation and involvement
in litigation involving [American Lending] in various cases.”
The court reasoned the confidential information Jaffe obtained about
“Malan’s finances could be directly material” to the present case because
“such information could affect settlement discussions and more.”
Regarding Jaffe’s claim that Malan unreasonably delayed in bringing
the disqualification motion, the court found Malan’s two-month delay “was
not an extreme delay” and, in any event, “Katto has not demonstrated some
extreme consequence from the delay.”
II. DISCUSSION
Katto contends the trial court erred by granting Malan’s
disqualification motion because there is not a substantial relationship
between the matters in which Jaffe previously represented Malan and the
present action. We disagree.
A. Legal Principles
“A court may disqualify an attorney upon ‘ “a showing that
disqualification is required under professional standards governing avoidance
of conflicts of interest or potential adverse use of confidential information.” ’ ”
(Havasu Lakeshore Investments, LLC v. Fleming (2013) 217 Cal.App.4th 770,
777.) This authority “derives from the power inherent in every court ‘[t]o
control in furtherance of justice, the conduct of its ministerial officers.’ ”
(People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc.
(1999) 20 Cal.4th 1135, 1145 (SpeeDee), quoting Code Civ. Proc., § 128, subd.
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(a)(5); see City and County of San Francisco v. Cobra Solutions, Inc. (2006) 38
Cal.4th 839, 846 (Cobra Solutions); Beachcomber Management Crystal Cove,
LLC v. Superior Court (2017) 13 Cal.App.5th 1105, 1116.)
As relevant here, an attorney owes a duty of confidentiality to former
clients. (See Cobra Solutions, supra, 38 Cal.4th at p. 846; Bus. & Prof. Code,
§ 6068, subd. (e)(1) [an attorney owes a duty “[t]o maintain inviolate the
confidence, and at every peril to himself or herself to preserve the secrets, of
his or her client”].) To enforce this duty, the Rules of Professional Conduct
prohibit an attorney from representing a new client adversely to a former
client “in the same or a substantially related matter . . . unless the former
client gives informed written consent” to the adverse representation. (Rules
Prof. Conduct, rule 1.9(a);6 see Cobra Solutions, at p. 846 [citing former rule
3-310.) “If there is a substantial relationship between the subject of the
current representation and the subject of the former representation, the
attorney’s access to privileged and confidential information in the former
representation is presumed and disqualification of the attorney from the
current representation is mandatory in order to preserve the former client’s
confidences.” (Fremont Indemnity Co. v. Fremont General Corp. (2006)
143 Cal.App.4th 50, 67 (Fremont); see Cobra Solutions, at p. 847 [“When a
substantial relationship between the two representations is established, the
attorney is automatically disqualified from representing the second client.”].)
“The subject of a current representation is substantially related to the
subject of a prior representation . . . if the issues are sufficiently similar to
support a reasonable inference that the attorney in the course of the prior
representation was likely to have obtained confidential information material
6 Further undesignated rule references are to the Rules of Professional
Conduct.
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to the current representation.” (Fremont, supra, 143 Cal.App.4th at p. 67.)
In other words, “[t]wo matters are ‘the same or substantially related’ . . . if
the lawyer normally would have obtained [confidential] information in the
prior representation . . . and the lawyer would be expected to use or disclose
that information in the subsequent representation because it is material to
the subsequent representation.” (Rule 1.9, cmt. 3.)
“[T]he substantial relationship test is broad and not limited to the
‘strict facts, claims, and issues involved in a particular action.’ ” (Knight
v. Ferguson (2007) 149 Cal.App.4th 1207, 1213, quoting Jessen v. Hartford
Casualty Ins. Co. (2003) 111 Cal.App.4th 698, 711 (Jessen).) It is satisfied
“whenever the ‘subjects’ of the prior and the current representations are
linked in some rational manner.” (Jessen, at p. 711, quoting Flatt v. Superior
Court (1994) 9 Cal.4th 275, 283.) This breadth protects the former client
because, “[d]epending upon the nature of the attorney’s relationship with the
former client, in the office or in the courtroom, the attorney may acquire
confidential information about the client or the client’s affairs which may not
be directly related to the transaction or lawsuit at hand but which the
attorney comes to know in providing the representation to the former client
with respect to the previous lawsuit or transaction.” (Jessen, at p. 712.)
“Thus, successive representations will be ‘substantially related’ when
the evidence before the trial court supports a rational conclusion that
information material to the evaluation, prosecution, settlement or
accomplishment of the former representation given its factual and legal
issues is also material to the evaluation, prosecution, settlement or
accomplishment of the current representation given its factual and legal
issues.” (Jessen, supra, 111 Cal.App.4th at p. 713, italics added.)
15
This materiality requirement also applies to so-called “ ‘playbook’
information”—that is, information about a “ ‘former client’s settlement
strategy and philosophy, or what sequence of demands or other tactics the
former client uses in negotiating business deals, how the former client
generally conducts its business, how the client deals with the stresses of
litigation, what quirks of personality the client possesses or suffers from, or,
in general, what “hot buttons” can be pushed to cause panic or confusion to
the former client.’ ” (Wu v. O’Gara Coach Co., LLC (2019) 38 Cal.App.5th
1069, 1082; see Fremont, supra, 143 Cal.App.4th at p. 69; Khani v. Ford
Motor Co. (2013) 215 Cal.App.4th 916, 921 (Khani).) Thus, an “attorney’s
acquisition [of playbook information] during the first representation . . .
would not of itself require disqualification unless it were found to be
‘material’—i.e., directly in issue or of critical importance—in the second
representation.” (Farris v. Fireman’s Fund Ins. Co. (2004) 119 Cal.App.4th
671, 680 (Farris), citing SLC Ltd. V v. Bradford Group West (10th Cir.1993)
999 F.2d 464, 467-468 [finding playbook information consisting of former
client’s financial information substantially related to issues in current
action]; accord, Fremont, at p. 69; see Khani, at p. 922 [lawyer’s acquisition of
general playbook information while defending auto manufacturer against
“Lemon Law” claims was not substantially related to the lawyer’s subsequent
prosecution of Lemon Law claims against the manufacturer where the cases
involved different vehicles, and the moving party’s “bare-bones evidence”
failed to show that any previous litigation policies remained in effect or that
the same decision makers were involved in both cases].)
Although disqualification is ordinarily “automatic[ ]” when the
substantial relationship test is satisfied (Cobra Solutions, supra, 38 Cal.4th
at p. 847), a “narrow exception” applies when the “present client . . . offers
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prima facie evidence of an unreasonable delay by the former client in making
the motion and resulting prejudice to the current client” (River West, Inc. v.
Nickel (1987) 188 Cal.App.3d 1297, 1309 (River West)). However, “ ‘mere
delay’ in making a disqualification motion is not dispositive. The delay must
be extreme in terms of time and consequence.” (Id. at p. 1311.)
“Generally, a trial court’s decision on a disqualification motion is
reviewed for abuse of discretion. [Citations.] 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.] However, the trial
court’s discretion is limited by the applicable legal principles. [Citation.]
Thus, where there are no material disputed factual issues, the appellate
court reviews the trial court’s determination as a question of law. [Citation.]
In any event, a disqualification motion involves concerns that justify careful
review of the trial court’s exercise of discretion.” (SpeeDee, supra, 20 Cal.4th
at pp. 1143-1144; see Cobra Solutions, supra, 38 Cal.4th at p. 848.)
B. Analysis
Because the trial court resolved factual disputes about the extent to
which Jaffe acquired Malan’s confidential information during prior
representations, we will “careful[ly] review” the trial court’s ruling for an
abuse of discretion. (See SpeeDee, supra, 20 Cal.4th at pp. 1143-1144.) On
the record before us, we find no abuse of discretion.
We agree with Katto that much of the confidential information on
which Malan based his disqualification motion is general playbook
information that ordinarily does not warrant disqualification. This includes
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information Jaffe acquired during prior representations about Malan’s
“attitudes, philosophy, and strategy towards litigation and settlement, his
general business practices, customs, and positions, . . . and his attitude and
tolerance for litigation.” Malan did not meet his burden to show this general
information is “ ‘material’—i.e., directly in issue or of critical importance”
(Farris, supra, 119 Cal.App.4th at p. 680)—to the present case. (See Khani,
supra, 215 Cal.App.4th at p. 922 [finding general playbook information not
substantially related even when the underlying causes of action were the
same].) Indeed, Malan did not even address the nature of the cases in which
Jaffe acquired the information.
But Malan did meet his burden as to one category of material
information: his finances. (See Farris, supra, 119 Cal.App.4th at p. 680.)
Malan stated in his supporting declaration that Jaffe acquired confidential
information about Malan’s personal finances while representing Malan
individually in Sybrandy, and while representing American Lending in
Gurfinkiel, Lopez, and Title365. The trial court acted within its discretion
when it found this information “directly material as such information could
affect settlement discussions and more.”7 (Italics added.)
The trial court’s “and more” finding is particularly compelling in light
of Katto’s cause of action for “an account of Malan’s assets and liabilities,
bank accounts, rent accounts, and other accounts.” As the trial court
properly observed, “For Mr. Jaffe to be a zealous advocate, it would be
expected that he would use this information [about Malan’s finances] in his
representation of Katto.” (See rule 1.9, cmt. 3 [matters are substantially
7 The trial court’s materiality finding refutes Katto’s claim that the trial
court misapplied the substantial relationship test by not “requir[ing] Malan
to meet his burden of demonstrating materiality.”
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related where “the lawyer would be expected to use or disclose . . . in the
subsequent representation” confidential information “obtained . . . in the
prior representation”].)
We thus conclude the trial court acted within its discretion in finding
Malan met his burden of showing Jaffe acquired confidential information
about Malan that is material to Jaffe’s adverse representation of Katto in this
case.
We likewise conclude the court acted within its discretion in finding
Katto failed to establish Malan unreasonably delayed in bringing his
disqualification motion. As in the trial court, Katto has cited no authority
finding a two-month delay unreasonable or extreme. (See River West, supra,188 Cal.App.3d at p. 1311.) We are unpersuaded by Katto’s reference to
other cases in which Malan claimed Jaffe was representing parties adverse to
him yet failed to seek disqualification. Katto has not provided sufficient
context about the claims, parties, or confidential information in those cases to
support a finding that Malan’s failure to seek disqualification of Jaffe there
should bar him from doing so here.
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III. DISPOSITION
The trial court’s order granting Malan’s motion to disqualify Jaffe is
affirmed. Katto to pay Malan’s costs on appeal.
HALLER, J.
WE CONCUR:
HUFFMAN, Acting P. J.
DO, J.
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