Koslow v. Data Ticket, Inc. CA4/2

Filed 4/13/23 Koslow v. Data Ticket, Inc. CA4/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
DAVID S. KOSLOW,
Plaintiff and Appellant, E078092
v. (Super.Ct.No. CVPS2103087)
DATA TICKET, INC., et al., OPINION
Defendants and Respondents.
APPEAL from the Superior Court of Riverside County. Kira L. Klatchko, Judge.
Affirmed.
David S. Koslow, in pro. per., for Plaintiff and Appellant.
Ferruzzo & Ferruzzo, Gregory J. Ferruzzo and Sean E. Morrissey, for Defendants
and Respondents.
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David S. Koslow brought this action against Data Ticket, Inc. (Data Ticket) and
Steven A. Napolitano, seeking injunctive relief for their alleged violations of laws
regulating lawyer referral services. Koslow moved to disqualify defense counsel, the trial
court denied the motion, and Koslow appealed. We affirm the order denying the
disqualification motion.
BACKGROUND
Koslow’s second amended complaint (SAC) alleges as follows. Data Ticket
provides citation processing services to local governments and other entities. It
contracted with Cathedral City, California, to process administrative citations issued by
the city. The services provided by Data Ticket include administrative hearings at which
citizens may contest their citations. In particular, Data Ticket provides hearing officers to
preside over those administrative hearings. Napolitano is one of the hearing officers and
is an attorney. Data Ticket thus refers Cathedral City to attorneys like Napolitano, but
the State Bar of California has not certified Data Ticket as a lawyer referral service, as
required by Business and Professions Code section 6155, subdivision (a)(1). (Unlabeled
statutory citations refer to the Business and Professions Code.) Moreover, section 6155,
subdivision (a)(1), prohibits Napolitano from accepting referrals from an uncertified
lawyer referral service like Data Ticket.
The SAC seeks an injunction prohibiting Data Ticket and Napolitano from further
alleged violations of section 6155, subdivision (a)(1). (Koslow also brought suit against
Cathedral City, the State Bar of California, and individuals allegedly employed by
Cathedral City, but those defendants are not parties to this appeal.)
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Data Ticket and Napolitano are jointly represented in the trial court. Koslow
moved to disqualify their counsel on the ground that there was an irremediable conflict of
interest between the two defendants, so rules 1.7 and 1.16 of the Rules of Professional
Conduct prohibit defendants’ joint representation. (Undesignated rule references are to
the Rules of Professional Conduct.) Koslow offered evidence that he had filed State Bar
complaints against Data Ticket and Napolitano based on the alleged conduct underlying
the SAC. He argued that Napolitano had an incentive to help the State Bar in its
investigation of Data Ticket and that Napolitano was required by law to cooperate with
the State Bar’s investigation. Koslow claimed that Napolitano was “a rich source of
information” about Data Ticket. According to Koslow, those circumstances gave rise to
the irremediable conflict of interest between Napolitano and Data Ticket.
The trial court denied the motion for disqualification. The court ruled that Koslow
lacked standing to bring the motion, because he was not a client of defense counsel, did
not claim to have ever been a client, did not claim that defense counsel owed him a duty
of confidentiality, and did not set forth any other facts to support standing.
DISCUSSION
I. Motion for Disqualification
Koslow argues that the trial court erred by denying the disqualification motion.
We disagree.
Concurrent or joint representation cases involve the attorney’s duty of loyalty to
each client. (Great Lakes Construction, Inc. v. Burman (2010) 186 Cal.App.4th 1347,
1355 (Great Lakes).) “‘An attorney’s duty of loyalty to a client is not one that is capable
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of being divided . . . .’ [Citations.] Joint representation of parties with conflicting
interests impairs each client’s legitimate expectation of loyalty that his or her attorneys
will devote their “‘entire energies to [their] client’s interests.”’” (Ibid.)
“The principle of ‘undivided loyalty’ is embraced in the rules of professional
conduct governing potential and actual conflicts in joint representation cases.” (Great
Lakes, supra, 186 Cal.App.4th at p. 1355.) Under rule 1.7, a lawyer “shall not . . .
represent a client if the representation is directly adverse to another client in the same or a
separate matter,” unless the lawyer obtains informed written consent from each affected
client. (Rule 1.7(a).) Similarly, the lawyer “shall not . . . represent a client if there is a
significant risk the lawyer’s representation of the client will be materially limited by the
lawyer’s responsibilities to or relationships with another client,” unless the lawyer obtains
informed written consent from each affected client. (Rule 1.7(b).)
The trial court has inherent authority to disqualify an attorney (People ex rel.
Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1145
(SpeeDee Oil)), but “[a] ‘standing’ requirement is implicit in disqualification motions”
(Great Lakes, supra, 186 Cal.App.4th at p. 1356). The moving party must show that the
targeted lawyer’s representation harms a “legally cognizable interest” of the moving
party. (Id. at p. 1357.) In cases involving a claimed conflict of interest, the moving party
generally has standing if they have or had an attorney-client relationship with the targeted
lawyer. (Id. at p. 1356.) In the absence of a current or former attorney-client
relationship, the movant may rely on some other confidential or fiduciary relationship
with the target. (Ibid.; DCH Health Services Corp. v. Waite (2002) 95 Cal.App.4th 829,
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832.) In addition, if “‘the ethical breach is “‘manifest and glaring’” and so “infects the
litigation . . . that it impacts the moving party’s interest in a just and lawful determination
of [his or] her claims” [citation], a nonclient might meet the standing requirements to
bring a motion to disqualify based upon a third party conflict of interest or other ethical
violation.’” (Kennedy v. Eldridge (2011) 201 Cal.App.4th 1197, 1204.)
“Generally, a trial court’s decision on a disqualification motion is reviewed for
abuse of discretion” (SpeeDee Oil, supra, 20 Cal.4th at p. 1143), but whether standing
exists is a legal question subject to de novo review (Blue Water Sunset, LLC v.
Markowitz (2011) 192 Cal.App.4th 477, 485).
In this case, the trial court did not err by ruling that Koslow had no standing to
bring the disqualification motion. Assuming for the sake of argument that defense
counsel’s joint representation gave rise to a conflict of interest, Koslow’s motion
involved the duty of loyalty owed to his opponents, Data Ticket and Napolitano. Koslow
did not claim to be a former client of defense counsel whose interests would be harmed
by the current representation, and he did not claim to have some other confidential or
fiduciary relationship with defense counsel that would be harmed. Nor did Koslow claim
that defense counsel’s purported ethical breach was so egregious that it impacted his
interest in a just and lawful determination of his claims. Koslow failed to show any risk
of harm to his legally cognizable interests, instead relying entirely on the claimed harm to
Data Ticket and Napolitano. Accordingly, he lacked standing to seek disqualification of
defense counsel. (In re Marriage of Murchison (2016) 245 Cal.App.4th 847, 852
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[husband had no ‘“personal stake”’ in disqualifying wife’s counsel, so he lacked standing
to bring disqualification motion].)
Koslow acknowledges that the case law imposes a standing requirement for
disqualification motions, but he urges us to abandon the requirement. He argues that the
standing requirement prevents the court from protecting parties who are adverse to each
other and prevents the court from protecting the integrity of its own judicial process. But
parties who have adverse interests and who are harmed by a lawyer’s representation may
move for disqualification on their own behalf. Koslow does not explain why such parties
are incapable of protecting their own interests. Nor does he explain why motions brought
by parties with standing are insufficient to protect the integrity of the judicial process.
His undeveloped argument does not persuade us to abandon the well-established standing
requirement. (Paterno v. State of California (1999) 74 Cal.App.4th 68, 106 [“An
appellate court is not required to examine undeveloped claims, nor to make arguments for
parties”]; see Tuft et al., Cal. Practice Guide: Professional Responsibility (The Rutter
Group 2021) ¶¶ 4:322.10 to 4:322.11f [discussing numerous cases applying the standing
requirement].)
For these reasons, the court did not err by denying Koslow’s disqualification
motion.
II. Sanctions Requests and Requests for Judicial Notice
In their respondents’ brief, Data Ticket and Napolitano ask us to impose sanctions
on Koslow on our own motion. They assert that Koslow’s appeal is frivolous. They have
not filed a motion for sanctions, and the time for doing so has passed. (Cal. Rules of
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Court, rule 8.276(b)(1) [motion for sanctions must be filed no later than 10 days after
appellant’s reply brief is due].) We decline to excuse Data Ticket and Napolitano’s
procedurally improper request for sanctions by imposing sanctions on our own motion.
(Symmonds v. Mahoney (2019) 31 Cal.App.5th 1096, 1114 [“a request for sanctions on
appeal must be raised in a separate motion; ‘[s]anctions cannot be sought in the
respondent’s brief’”].)
Data Ticket and Napolitano have also asked us to take judicial notice of a letter
from the State Bar to Napolitano. The letter states that the State Bar investigated
Koslow’s complaint against Napolitano, determined that it did not warrant further action,
and closed the matter. We deny the request for judicial notice because the letter is
irrelevant and unnecessary to our resolution of this appeal. (County of San Diego v. State
of California (2008) 164 Cal.App.4th 580, 613, fn. 29 (County of San Diego).)
In Koslow’s opposition to the request for judicial notice, he requests that we issue
an order to show cause why Data Ticket and Napolitano’s counsel should not be held in
contempt for claimed violations of the Rules of Professional Conduct. Koslow argues
that counsel violated the rules by misrepresenting that the State Bar had concluded its
proceedings against Napolitano, given that Koslow is seeking review of the State Bar
investigator’s decision. We decline to issue an order to show cause. The request for
judicial notice did not misrepresent anything—it stated that the investigation was closed,
attached the letter from the State Bar, and quoted the letter, which does state that “the
matter is closed.” The letter also states that the “decision to close the matter is without
prejudice to further proceedings” under the State Bar’s Rules of Procedure, which permit
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further review. (Rules Proc. of State Bar, rule 2603(a), (b) [permitting the reopening and
review of the “closures of inquiries, investigations and complaints”].) But the request for
judicial notice did not attempt to conceal that part of the letter or misrepresent it.
Koslow additionally asks us to take judicial notice of his accusation against
Napolitano filed in the Supreme Court. The accusation seeks review of the State Bar’s
decision to close his complaint against Napolitano. We deny his request for judicial
notice because the accusation is irrelevant and unnecessary to our resolution of this
appeal. (County of San Diego, supra, 164 Cal.App.4th at p. 613, fn. 29.)
Finally, in Koslow’s reply brief, he asks us to impose sanctions on Data Ticket and
Napolitano for statements in their respondents’ brief. Koslow relies on Code of Civil
Procedure section 128.7 as authority for those sanctions. This request is also without
merit. Even if the statements were objectionable, and even if Code of Civil Procedure
section 128.7 applied in appellate proceedings—issues we need not decide—Koslow’s
request would be procedurally improper. Requests for sanctions under the statute must
be brought by separate motion, not in a reply brief. (Code Civ. Proc., § 128.7, subd.
(c)(1).) Moreover, the moving party must serve the motion before filing it and give the
offending party a 21-day safe harbor period during which the offending party may
withdraw the challenged papers. (Ibid.) Koslow has not filed a motion for sanctions or
given Data Ticket and Napolitano the mandatory safe harbor period to withdraw their
brief.
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DISPOSITION
The order denying the motion for disqualification is affirmed. Data Ticket and
Napolitano shall recover their costs of appeal. (Cal. Rules of Court, rule 8.278(a)(1).)
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
MENETREZ
J.
We concur:
MILLER
Acting P. J.
CODRINGTON
J.
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