Hudson v. Hudson CA6

Filed 6/16/23 Hudson v. Hudson CA6
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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 This opinion has not been certified for publication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
SIXTH APPELLATE DISTRICT
KENNON HUDSON, H049893
(Santa Clara County
Plaintiff and Appellant, Super. Ct. No. 21CV386623)
v.
DANIEL HUDSON,
Defendant and Respondent.
Appellant Kennon Hudson appeals from an order disqualifying her counsel, the
law firm McManis Faulkner. (See, e.g., Jarvis v. Jarvis (2019) 33 Cal.App.5th 113, 128
(Jarvis) [disqualification orders are directly appealable].) The trial court found that
McManis Faulkner represented respondent Daniel Hudson in a prior criminal matter and
during an initial consultation on that matter received confidential information material to
appellant’s claims against the respondent in this suit. These findings were supported by
declarations from respondent concerning that consultation, which are sufficient to support
them and justify disqualification. Accordingly, we affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
Kennon Hudson (Kennon) married Robert Hudson, the father of Daniel Hudson
(Daniel), in 2001 when Robert Hudson was 75 years old.1 After Robert Hudson died in
2017, Daniel and his stepmother Kennon became embroiled in litigation over his estate.
Attorney James McManis knew Robert Hudson, and his law firm McManis Faulkner has
represented Kennon in two suits against Daniel, including this one. McManis Faulkner,
however, also represented Daniel in a criminal matter, and Daniel contends that during an
initial consultation for that matter he conveyed to Mr. McManis confidential information
material to Kennon’s current suit against him. While Mr. McManis denies receiving this
information, the trial court accepted Daniel’s account of the initial consultation and
disqualified Mr. McManis and his firm.
A. Prior Litigation
1. The Probate Dispute
In 2018, a year after Daniel’s father died, Daniel and his brother became involved
in a probate dispute with their stepmother Kennon. McManis Faulker initially was not
involved in this dispute.
2. The Criminal Matter
In June 2019, Daniel was arrested in connection with a dispute with his then
girlfriend. Daniel approached James McManis for help and, after an initial consultation,
retained McManis Faulkner to represent him in the matter. The case was assigned to a
younger lawyer named James Giacchetti and, after Giachetti left the firm, to Brandon
Rose. Daniel’s criminal matter was successfully concluded in September 2019.
1
Because the parties share a last name, for the sake of clarity and convenience, we
sometimes refer to them by their first names. In doing so, we intend no disrespect. (See,
e.g., In re Marriage of Leonard (2004) 119 Cal.App.4th 546, 550, fn. 2.)
2
3. Counsel’s Appearance in the Probate Dispute
In late 2019 or early 2020, Kennon retained McManis Faulkner in her probate
dispute with Daniel and his brother. Daniel did not seek to disqualify McManis Faulkner
from this dispute because it was technical in nature and was headed to mediation with a
mediator who had personal relationships with both James McManis and Daniel’s counsel.
The probate dispute suit was later resolved in favor of Kennon and was on appeal when
the motion to disqualify was filed.
B. The Current Suit
On August 4, 2021, Kennon sued Daniel for financial elder abuse. She alleged
that Daniel’s father was diagnosed with cancer in 2011 and suffered a stroke shortly
before passing away in 2017. As a result of these maladies, Daniel’s father allegedly
experienced physical, mental, and verbal impairments, and Kennon contends that Daniel
took advantage of these impairments to coerce his father into transferring property and
businesses to him. Even more pertinently, Kennon contends that Daniel improperly
“obtained a $2 million dollar loan from decedent,” which was “at no interest and to be
paid in twenty-five (25) years.”
James McManis and McManis Faulker represented Kennon in suing Daniel for
elder abuse.
C. The Motion to Disqualify
After the elder abuse suit was filed, Daniel’s counsel informed McManis Faulkner
that it had a conflict of interest and should withdraw as counsel for Kennon. McManis
Faulkner declined to do so, and on December 20, 2021, Daniel filed a motion to
disqualify. In the motion, Daniel argued that McManis Faulkner had an irreconcilable
conflict of interest primarily because during his initial consultation on the criminal matter
Daniel confided to James McManis confidential information directly relating to Kennon’s
claim against him in the elder abuse action.
3
In support of this motion, Daniel submitted a declaration describing his initial
consultation on the criminal matter, which he stated lasted approximately one hour.
Daniel expressed reluctance to go into specifics of the confidential information disclosed.
However, he stated that during his conversation with Mr. McManis he discussed “the
note that is the basis for Kennon’s elder abuse claim” as well as his concerns about
Kennon’s handling of his father’s finances.
Although this information was unrelated to the criminal charges against him,
Daniel explained that he shared the information with Mr. McManis because at that time
his thoughts and feelings about Kennon, his relationship with her, and her relationship
with his father were “still quite raw” due to the ongoing probate dispute, and also because
he saw parallels between his relationship with his girlfriend and his father’s relationship
with Kennon. According to Daniel, Mr. McManis engaged with him regarding Kennon
in “a sympathetic manner.” In a reply declaration, Daniel added that he felt comfortable
discussing these matters with Mr. McManis because of their shared heritage and because
Mr. McManis knew both his father and his uncle.
Mr. McManis denied that Daniel shared with him any information concerning the
note, Daniel’s concerns about Kennon’s handling of his father’s finances, or his
relationship with Kennon. Indeed, Mr. McManis denied that he engaged with Daniel
sympathetically concerning Kennon or even was aware at the time that Kennon was
Daniel’s stepmother. Instead, Mr. McManis asserted that the initial consultation
concerned only Daniel’s arrest and the events preceding it, and he denied that Daniel said
anything about his stepmother, his concerns about his father, or his father’s finances.
James Giachetti and Brandon Rose, the lawyers who handled the criminal matter,
likewise denied any recollection of Daniel discussing Kennon or knowing that he had a
stepmother.
Although both parties asked to present witnesses in an evidentiary hearing, the
trial court declined to take testimony and only heard argument from the parties.
4
Afterwards, in a written order, the trial court granted the motion to disqualify. It noted
that Daniel had submitted declarations in which he specifically recalled discussing with
Mr. McManis, among other things, “the note at issue in this action,” and that this
communication substantially related to issues in the case before it. Moreover, the court
accepted this testimony, stating that “the Court finds that the Defendant has met his
burden in showing that confidential information was disclosed to Mr. McManis and his
firm during the prior relationship regarding facts and issues that are relevant to the
current action.”
The trial court disqualified McManis Faulkner from further representation of
Kennon in this case. Kennon timely appealed.
II. DISCUSSION
Orders disqualifying counsel are reviewable for abuse of discretion. (See, e.g., In
re Charlisse C. (2008) 45 Cal.4th 145, 159.) Under this standard, a trial court’s factual
findings are reviewed for substantial evidence; its conclusions of law are reviewed de
novo; and its ultimate decision, the application of law to the facts, is reversible only if
arbitrary and capricious. (Jarvis, supra, 33 Cal.App.5th at p. 128.) Nevertheless,
because disqualification raises special concerns, disqualification orders require “careful
review of the trial court’s exercise of direction. [Citation.]” (People ex rel. Dept. of
Corrections v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1144 (SpeeDee
Oil).) After careful review of the disqualification order here, we find no abuse of
discretion. The trial court’s findings support its decision to disqualify McManis Faulkner
based on the actual possession of confidential information, and appellant’s challenges to
those findings are unavailing.
When courts disqualify counsel based on former representation, they typically do
presume possession of confidential information because there is a “substantial
relationship” between the matter in which counsel represented a prior client and the
current claims brought by counsel against that party. (See, e.g., City and County of San
5
Francisco v. Cobra Solutions, Inc. (2006) 38 Cal.4th 839, 847 (Cobra Solutions); Flatt v.
Superior Court (1994) 9 Cal.4th 275, 286.) It is well-settled, however, that where
counsel has “actual knowledge of material confidential information” from a former client,
counsel may be disqualified from representing parties adverse to that former client.
(Faughn v. Perez (2006) 145 Cal.App.4th 592, 603 (Faughn); see Costello v. Buckley
(2016) 245 Cal.App.4th 748, 757 (Costello); Pound v. DeMera DeMera Cameron (2005)
135 Cal.App.4th 70, 76 (Pound.) As the Supreme Court has recognized, “[p]rotecting the
confidentiality of communications between attorney and client is fundamental to our
legal system.” (SpeeDee Oil, supra, 20 Cal.4th at p. 1146). Indeed, attorneys are
required by statute as well as ethical rules “[t]o maintain inviolate the confidence” of
their clients (Bus. & Prof. Code, § 6068, subd. (e); see Rules of Prof. Conduct, rule 1.6,
subd. (a)), and this duty to preserve client confidences “survives the termination of the
attorney’s representations.” (Cobra Solutions, supra, 38 Cal.4th at pp. 846-847.)
Consequently, to maintain public trust in the administration of justice and the integrity of
the bar, courts may disqualify an attorney (and the attorney’s firm) from representing a
new client bringing claims against a former client if the former client disclosed to the
attorney confidential information material to those claims. (Id. at p. 846; SpeeDee Oil,
supra, 20 Cal.4th at pp. 1145-1146; see also Cobra Solutions, supra, 38 Cal.4th at p. 847
[“Normally, an attorney’s conflict is imputed to the law firm as a whole . . . .”].)
The trial court’s findings bring appellant’s counsel squarely within this rule. The
court accepted the description in Daniel’s declarations of his initial consultation with Mr.
McManis in the criminal matter. In particular, the court credited Daniel’s averment that
he discussed “the note at issue in this action” and therefore inferred that Daniel disclosed
to Mr. McManis information “related to the current action.” This inference was
reasonable: the complaint alleges that after his father’s stroke in September 2017 Daniel
improperly obtained “a $2 million dollar loan from decedent at no interest and to be paid
in twenty-five (25) years,” and promissory notes frequently accompany loans and
6
embody their terms. (See, e.g., Rest.3d Suretyship and Guaranty, § 1, com. g., illus. 7
[discussing loan “evidenced by a promissory note”]; see also 5 Miller & Starr, Cal. Real
Est. Forms (2d ed. 2022) § 3:8, p. 38 [“The primary instrument used in a real property
secured loan is the promissory note.”]; id., § 3:14, p. 165 [“The primary instrument used
in a construction loan is the promissory note.”].) As appellate courts applying the
substantial evidence standard must accept the trial court’s credibility determinations and
reasonable inferences (see, e.g., In re Marriage of Mix (1975) 14 Cal.3d 604, 614 (Mix)),
we conclude that during his initial consultation with Daniel Mr. McManis received
information concerning a promissory note connected with the very loan challenged in this
case and thus is in actual possession of material confidential information. As noted
above, actual possession of such information warrants disqualification.2 (See, e.g.,
SpeeDee Oil, supra, 20 Cal.4th at p. 1146; Faughn, supra, 145 Cal.App.4th at p. 603
Costello, supra, 245 Cal.App.4th at p. 757; Pound, supra, 135 Cal.App.4th at p. 76.)
Appellant asserts that the trial court failed to resolve the dispute between the
declarations submitted by Daniel and Mr. McManis about the information discussed
during the initial consultation. In fact, the trial court resolved this conflict by accepting
Daniel’s account of the consultation. It recognized that Daniel and Mr. McManis
disputed whether confidential information concerning this suit was disclosed during the
consultation, but found “that the Defendant has met his burden in showing that the
confidential information was disclosed to Mr McManis and his firm.”
Appellant also argues that the trial court should have rejected Daniel’s
declarations and accepted Mr. McManis’ declaration instead. According to appellant, in
addition to being “controverted” and “specifically refuted by Mr. McManus as ‘false,’ ”
2
Because disqualification is justified by counsel’s possession of information
concerning the note at issue in this case, we do not consider whether possession of other
confidential information, such as Daniel’s arrest in the criminal matter, justified
disqualification. For the same reason, we deny as moot Daniel’s motion to augment the
record to include a transcript in which Mr. McManis mentioned the arrest.
7
Daniel’s declarations contained “unsupported self-serving allegations” that were “highly
improbable” and, indeed, “unreasonable, incredible, and devoid of solid value.” These
arguments cannot be entertained on appeal. In reviewing a trial court’s findings for
substantial evidence, appellate courts “ ‘have no power to judge of the effect or value of
the evidence, to weigh the evidence, to consider the credibility of the witnesses, or to
resolve conflicts in the evidence or in the reasonable inferences that may be drawn
therefrom.’ ” (Leff v. Gunter (1983) 33 Cal.3d 508, 518; see also In re Caden C. (2021)
11 Cal.5th 614, 640 [“In reviewing factual determinations for substantial evidence, a
reviewing court should ‘not reweigh the evidence, evaluate the credibility of witnesses, or
resolve evidentiary conflicts.’ ”).
Moreover, even if we were able to consider appellant’s factual arguments, we
would see no reason to second guess the trial court. Daniel provided a plausible
explanation for bringing up the promissory note and the dispute with his stepmother
during his consultation on the criminal matter: among other things, the dispute was on his
mind because of the probate action filed the year before and he felt comfortable
unburdening himself to Mr. McManis because Mr. McManis knew his father.
Appellant raises several legal challenges, but none of them are persuasive. For
example, appellant asserts that the trial court could not have made “any meaningful
findings of fact” because “no hearing was ever held.” Ordinarily, however, trial courts
do not hold evidentiary hearings in resolving motions. The Rules of Court state that
“[e]vidence received at a law and motion hearing must be by declaration . . . without
testimony or cross-examination, unless the court orders otherwise for good cause shown.”
(Cal. Rules of Court, rule 3.1306(a), italics added.) Moreover, the Supreme Court has
expressly rejected the notion that evidentiary hearings are required to resolve evidentiary
conflicts: “There is,” the Court observed, “simply no authority for the proposition that a
trial court necessarily abuses its discretion, in a motion proceeding, by resolving
8
evidentiary conflicts without hearing live testimony.” (Rosenthal v. Great Western
Financial Securities Corp. (1996) 14 Cal.4th 394, 414.)
Indeed, there is a strong reason to not hold evidentiary hearings in connection with
disqualification motions. As courts have long recognized, testimony (and cross
examination) concerning confidential communications could have “the ironic result of
disclosing the former client’s confidences and secrets.” (H.F. Ahmanson & Co. v.
Salomon Brothers, Inc. (1991) 229 Cal.App.3d 1445, 1453; see also In re Complex
Asbestos Litigation (1991) 232 Cal.App.3d 572, 583, fn. 5 [“[A] motion to disqualify
normally should be decided on the basis of the declarations submitted by the parties,” and
evidentiary hearings “should be rare”].). Accordingly, in considering motions to
disqualify, trial courts frequently resolve conflicts in declarations without conducting
evidentiary hearings. (See, e.g., Victaulic Co. v. American Home Assurance Co. (2022)
80 Cal.App.5th 485, 511; Capra v. Capra (2020) 58 Cal.App.5th 1072, 1087-1092;
Ochoa v. Fordel, Inc. (2007) 146 Cal.App.4th 898, 910; Pound, supra, 135 Cal.App.4th
at pp. 74, 76; Gregori v. Bank of America (1989) 207 Cal.App.3d 291, 309.) The trial
court did not abuse its discretion in doing the same here.
Appellant argues that the trial court lacked substantial evidence that Mr. McManis
received confidential information concerning her elder abuse claims. The substantial
evidence standard, however, requires only that evidence be “ ‘of ponderable legal
significance,’ ‘reasonable in nature, credible, and of solid value,’ and ‘ “substantial”
proof of the essentials which the law requires in a particular case.’ ” (Conservatorship of
O.B. (2020) 9 Cal.5th 989, 1006.) As Daniel personally participated in the initial
consultation with Mr. McManis, he was an eyewitness to the consultation, and his
testimony concerning what happened during it satisfies the substantial evidence standard.
It is well-settled that “ ‘[t]he testimony of a witness, even the party himself, may be
sufficient’ ” (Mix, supra, 14 Cal.3d at 614, quoting 6 Witkin, Cal. Procedure (2d ed.) §
248, p. 4240) and thus “constitute[s] substantial evidence’ ” (Chase v. Wizmann (2021)
9
71 Cal.App.5th 244, 257; see also DeNike v. Matthew Enterprises, Inc. (2022) 76
Cal.App.5th 371, 381 [“The testimony of a single witness may constitute substantial
evidence as long as it is not physically impossible or inherently improbable.”]).
Moreover, this is true where, as here, the witnesses’ testimony is in the form of
declarations. (See, e.g., In re Internet Lending Cases (2020) 53 Cal.App.5th 613, 626;
City of Crescent City v. Reddy (2017) 9 Cal.App.5th 458, 466; Consolidated Irrigation
Dist. v. City of Selma (2012) 204 Cal.App.4th 187, 201.)
Appellant contends that the trial court erred by not weighing five factors identified
in In re Zimmerman (1993) 16 Cal.App.4th 556, 564. Zimmerman, however, did not use
the factors in question to determine whether counsel was in actual possession of
confidential information because the movant did not assert actual disclosure of specific
confidential information. (Id. at p. 565.). Instead, Zimmerman applied the “ ‘substantial
relationship’ test” in determining whether to presume possession of confidential
information (id. at p. 563), and it used the five factors in question—the nature and extent
of the attorney’s involvement, the factual and legal similarity of the case, the time spent
by the attorney, the type of work performed, and the attorney’s possible exposure to the
formulation of policy and strategy—in applying the substantial relationship test. (Ibid).
Neither the substantial relationship test nor the factors Zimmerman used in applying it
need be employed where, as here, disqualification is sought based on actual rather than
presumed possession of confidential information.
Observing that there is no mention of a “note” in the complaint, in her reply brief
appellant questions whether the “note” that Daniel contends he disclosed is material to
her elder abuse claims. As appellant did not dispute that her elder abuse claims involved
a note in either her briefing in the trial court or her opening brief, this objection has been
forfeited. (See, e.g., People v. Ng (2022) 13 Cal.5th 448, 568, fn. 13 [“ ‘It is axiomatic
that arguments made for the first time in a reply brief will not be entertained because of
the unfairness to the other party.’ ”]; Hewlett-Packard Co. v. Oracle Corp. (2021) 65
10
Cal.App.5th 506, 548 [“ ‘ “As a general rule theories not raised in the trial court cannot
be asserted for the first time on appeal” ’ ”].) Application of this restriction is especially
appropriate here, as in the trial court it would have been relatively easy to determine
whether a promissory note was issued in connection with the loan that appellant contends
Daniel improperly obtained.
Finally, appellant notes that disqualification motions are often filed for improper
tactical reasons that threaten the integrity of the judicial process and that the order
disqualifying McManis Faulkner, which has represented her for more than three years in
the family disputes underlying this case, will impose an emotional as well as a financial
toll on her. As the Supreme Court has recognized, these are legitimate and important
concerns. (SpeeDee Oil, supra, 20 Cal.4th at p. 1145.) However, where, as here, a
former client seeks disqualification based on counsel’s violation of the duty of
confidentiality, more than just the interests of the parties to the case are at stake. The
legal system’s need to maintain ethical standards is also implicated, and the Supreme
Court has determined that “[t]he paramount concern must be to preserve public trust in
the scrupulous administration of justice and the integrity of the bar.” (Ibid.)
Consequently, “[t]he important right to counsel of one's choice must yield to ethical
considerations that affect the fundamental principles of our judicial process.” (Ibid.) We
therefore conclude that the trial court did not abuse its discretion in ordering
disqualification.
III. DISPOSITION
The disqualification order is affirmed.
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____________________________
BROMBERG, J.
WE CONCUR:
____________________________
GREENWOOD, P.J.
_____________________________
DANNER, J.
Hudson v. Hudson
H049893