Khani v. Ford Motor Company

Filed 4/2/13; pub. order 4/25/13 (see end of opn.)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
BEHNAM KHANI et al., B239611
Plaintiffs and Appellants, (Los Angeles County
Super. Ct. No. BC466626)
v.
FORD MOTOR COMPANY et al.,
Defendants and Respondents.
APPEAL from order of the Superior Court of Los Angeles County,
Amy D. Hogue, Judge. Reversed.
Strategic Legal Practices, Payam Shahian, Gielegheim & Associates and
Neil Gielegheim, for Plaintiffs and Appellants.
Baker & Hostetler, Mary L. Arens, Rosslyn Hummer, and Jack Samet for
Defendants and Respondents.
______________________________
Behnam Khani and his trial counsel, Payam Shahian and Strategic Legal Practices,
appeal from an attorney disqualification order. We reverse.
FACTUAL AND PROCEDURAL SUMMARY
On August 11, 2011, Khani, represented by Shahian and his law firm, Strategic
Legal Practices, sued Ford Motor Company (Ford) and its dealer, Galpin Motors, Inc.,
under the Song-Beverly Consumer Warranty Act (Civ. Code, § 1790 et seq., popularly
known as California‘s Lemon Law) for defects in a 2008 Lincoln Navigator. On
September 16, 2011, Ford‘s counsel sent a letter to Shahian, requesting his withdrawal
from the litigation on the ground that he previously had defended Ford in lemon law
cases. On October 4, 2011, Shahian responded, refusing to withdraw.
On December 31, 2011, Ford filed a motion to disqualify Shahian and his law
firm. The motion was accompanied by the declaration of Brian Takahashi, a partner at
the law firm Bowman and Brooke, which employed Shahian between June 2004 and July
2007. Bowman and Brooke was Ford‘s corporate counsel, and during his tenure there
Shahian worked on 150 cases, including California Lemon Law cases. According to
Takahashi, Shahian was ―privy to confidential client communications and information
relating to the defense of‖ such cases, as well as to ―pre-litigation strategies, tactics, and
case handling procedures.‖ Shahian provided unspecified ―input‖ to Ford‘s Office of
General Counsel and Consumer Affairs and communicated regularly with Ford about
lemon law cases.
The court granted the disqualification motion, ruling that the legal issues in lemon
law cases are substantially similar, and presuming that Shahian‘s previous work exposed
him to confidential information about Ford‘s handling of such cases. The court did not
address Shahian‘s argument that Ford had waived its right to seek his disqualification.
This timely appeal followed.
DISCUSSION
―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
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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.‖
(People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999)
20 Cal.4th 1135, 1143–1144.) Since the principal issue in this case is whether the court
applied the correct legal test, we review its determination independently.
In the case of successive representation of clients with adverse interests, a
disqualification motion juxtaposes the client‘s right to be represented by his or her
counsel of choice with the attorney‘s duty to maintain the confidences of his or her
former client. (City and County of San Francisco v. Cobra Solutions, Inc. (2006)
38 Cal.4th 839, 846 (Cobra Solutions).) In a case like this, ―the trial court must balance
the current client‘s right to the counsel of its choosing against the former client‘s right to
ensure that its confidential information will not be divulged or used by its former
counsel.‖ (Ibid.)
In order to disqualify the attorney, the former client must show that the subjects of
the successive representations are substantially related. (Cobra Solutions, supra,
38 Cal.4th. at p. 847.) A substantial relationship exists where ―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. (Jessen v. Hartford Casualty Ins. Co. (2003) 111 Cal.App.4th
698, 710–711 [(Jessen)].) If the former representation involved such a direct relationship
with the client, the former client need not prove that the attorney possesses actual
confidential information. (Id. at p. 709.)‖ (Cobra Solutions, at p. 847.) The attorney is
conclusively presumed to possess confidential information ―if the subject of the prior
representation put the attorney in a position in which confidences material to the current
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representation would normally have been imparted to counsel.‖ (Ibid.; see also Flatt v.
Superior Court (1994) 9 Cal.4th 275, 283; H. F. Ahmanson & Co. v. Salomon Brothers,
Inc. (1991) 229 Cal.App.3d 1445, 1453.)
The trial court in this case was under the impression that Cobra Solutions requires
consideration of only the legal issues involved in successive representations, and it
assumed that all lemon law cases raise similar legal issues. In Cobra Solutions, our
Supreme Court reviewed the legal principles established in Jessen and other cases.
(Cobra Solutions, supra, 38 Cal.4th. at p. 847.) The Jessen court made clear that where
the attorney had a direct relationship with the former client, the substantial relationship
test requires that ―the evidence before the trial court support[] 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. [Citations.]‖ (Jessen, supra, 111 Cal.App.4th at p. 713.)
In Farris v. Fireman’s Fund Ins. Co. (2004) 119 Cal.App.4th 671 (Farris), the
court clarified that ―the Jessen evaluation of whether the two representations are
substantially related centers precisely upon the factual and legal similarities of the two
representations.‖ (Id. at p. 679, citing Jessen, supra, 111 Cal.App.4th at pp. 709–710.)
The Farris court explained that Jessen did not adopt a ―playbook approach‖ to the
substantial relationship test or create ―a lifetime prohibition against representation
adverse to a former client.‖ (Farris, at p. 680.) The attorney‘s acquisition of general
information about the former client‘s ―‗overall structure and practices‘ 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. [Citation.] The same is true about
information such as the first client‘s ‗litigation philosophy‘ or ‗key decision makers.‘‖
(Farris, at p. 680.) The substantial relationship test requires comparison not only of the
legal issues involved in successive representations, but also of evidence bearing on the
materiality of the information the attorney received during the earlier representation.
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The attorney in Farris had worked as a coverage counsel for an insurance
company for over 10 years. (Farris, supra, 119 Cal.App.4th at p. 677.) He had shaped
the company‘s practices and procedures in handling California coverage claims. (Id. at
p. 688.) Six months after the attorney had stopped working for it, the company denied an
insured‘s request for a defense. (Id. at p. 686.) The court held the attorney was
disqualified from representing the insured in the ensuing bad faith case, reasoning that the
claims processing practices and procedures the attorney shaped would likely be at issue
in the bad faith case, and senior claims personnel with whom the attorney closely worked
would likely be called as witnesses. (Id. at pp. 685, 688.)
The evidence in this case does not establish that any information to which Shahian
was exposed during his representation of Ford would be material to his representation of
Khani in this case. While Ford presented evidence that Shahian represented it in
California Lemon Law cases, it did not establish that any confidential information about
the defense in those cases would be at issue in this case. Neither the allegedly defective
2008 Lincoln Navigator nor its repair history by Galpin Motors was the subject of any
lawsuit in which Shahian represented Ford. Takahashi‘s declaration does not show that
Ford had any policies, practices, or procedures generally applicable to the evaluation,
settlement or litigation of California Lemon Law cases at the time Shahian represented
Ford, or that any such policies, practices, or procedures continued in existence unchanged
between 2007 and 2011. Nor does it show that the same decision makers that were
involved in cases Shahian handled for Ford are involved in this case.
The trial court abused its discretion in concluding that the prior cases were
substantially related to the current case just because they involved claims under the same
statute. The substantial relationship test does not subject an attorney to automatic
disqualification on this ground alone. (See Banning Ranch Conservancy v. Superior
Court (2011) 193 Cal.App.4th 903, 918 [successive representations in cases under
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California Environmental Quality Act not substantially related].)1 The court also
incorrectly assumed that Shahian‘s exposure to playbook information in prior lemon law
cases was sufficient to disqualify him in this case without any showing of its materiality.
(See Farris, supra, 119 Cal.App.4th at p. 680; see also Elliott v. McFarland Unified
School Dist. (1985) 165 Cal.App.3d 562, 572 [conclusory statements insufficient].)
Ford‘s bare-bones evidence in this case is insufficient to establish that Shahian‘s previous
representation of Ford in California Lemon Law cases exposed him to confidential
information that would be material to his current representation of Khani.
Since we conclude that the court abused its discretion in disqualifying Shahian and
his law firm, we do not decide whether Ford impliedly waived attorney disqualification
by not filing its motion in a timely fashion.
DISPOSITION
The order is reversed. Appellants are entitled to their costs on appeal.
EPSTEIN, P. J.
We concur:
WILLHITE, J. SUZUKAWA, J.
1
Similarly, in Hartford Cas. Ins. Co. v. American Dairy and Food Consulting
Laboratories, Inc. (E.D.Cal., June 17, 2010, No. 1:09-CV-0914) 2010 WL 2510999, the
federal district court rejected as overbroad the argument that, since all bad faith insurance
cases share common elements, representing an insurance company in such cases
precludes an attorney from ever representing another client in a bad faith case against the
company. Unpublished federal district court decisions may be persuasive authority.
(Aleman v. Airtouch Cellular (2012) 209 Cal.App.4th 556, 576, fn. 8.)
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Filed 4/25/13
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
BEHNAM KHANI et al., B239611
Plaintiffs and Appellants, (Los Angeles County
Super. Ct. No. BC466626)
v.
FORD MOTOR COMPANY et al.,
Defendants and Respondents.
THE COURT:*
Good cause appearing, it is ordered that the opinion in the above entitled matter,
filed April 2, 2013, be published in the official reports.
________________________________________________________________________
*EPSTEIN, P. J. WILLHITE, J. SUZUKAWA, J.