Elliott v. Elliott, 1:21-cv-00897-SAB
| Decision Date | 17 November 2021 |
| Docket Number | 1:21-cv-00897-SAB |
| Court | U.S. District Court — Eastern District of California |
| Parties | AARON A. ELLIOTT, Plaintiff, v. FRANK T. ELLIOTT, III, et al., Defendants. |
ORDER DENYING PLAINTIFF'S MOTION TO DISQUALIFY COUNSEL (ECF Nos. 30, 33, 34)
Currently pending before the Court is Plaintiff Aaron A. Elliot's ("Plaintiff) motion to disqualify Quail Cardot, LLP ("Quail"), as counsel for Defendants Frank T Elliott, III ("Tokkie" or "Trustee") Wileman Bros. & Elliott Inc. ("WBE"), and Brian Johnson ("Johnson").[1] The Court, having reviewed the motion, opposition, and reply papers, the declarations and exhibits attached thereto, as well as the Court's file shall deny the motion for the reasons explained herein.
On March 26, 2021, Plaintiff instituted this action by filing a petition for accounting and other claims, in the Superior Court of California, County of Tulare. (ECF No. 1 at 8.) The petition brought claims for: (1) Petition for Accounting: (2) Petition to Remove Trustee; (3) Petition for Surcharge; (4) Return of Trust Property and Damages; (5) Aiding and Abetting Fiduciary Breaches and for Return of Wrongful Withholding of Trust Property; (6) Violation of the Perishable Agricultural Commodities Act of 1930 ("PACA"), and the California Food and Agriculture Code; and (7) Conversion. (Id.) On June 4, 2021, Defendants removed this action to this Court, the United States District Court for the Eastern District of California. (ECF No. 1.)
Plaintiffs sole federal claim in the originally filed complaint was an alleged violation of the PACA. (ECF No. 1 at 8-29.) On June 14, 2021, Defendants filed a motion to dismiss, along with an answer and counterclaim. (ECF Nos. 6, 7.) The counterclaim proffers jurisdiction based on the PACA claim. (ECF No. 7.) On June 18, 2021, Plaintiff filed a first amended complaint which retained all the same claims as the original complaint except for the PACA claim. (ECF No. 9.) On June 28, 2021, Plaintiff filed a motion to remand based on the absence of the PACA claim. (ECF No. 10.) On July 9, 2021, Defendants filed an answer to the first amended complaint, and on July 14, 2021, Plaintiff/Counter-Defendant filed an answer to the counterclaim. (ECF Nos. 17, 18.) On July 23, 2021, the case was reassigned to the undersigned pursuant to the parties' consent. (ECF No. 22.) On August 25, 2021, the Court denied Defendants' motion to dismiss as moot and withdrew the motion to remand pursuant to the notice of withdrawal. (ECF No. 25.) On October 1, 2021, the scheduling order issued in this action. (ECF No. 29.)
On October 6, 2021, Plaintiff filed the motion to disqualify counsel that is presently before the Court, setting the hearing for November 10, 2021. (ECF No. 30.) On October 27, 2021, Defendants filed an opposition to the motion. (ECF No. 33.) On November 3, 2021, Plaintiff filed a reply brief. (ECF No. 34.) On November 8, 2021, finding the matter suitable for decision without oral argument pursuant to Local Rule 230(g), the Court vacated the November 10, 2021 hearing on this motion. (ECF No. 35.)
Motions to disqualify counsel are decided under state law. In re Cnty. of L.A., 223 F.3d 990, 995 (9th Cir. 2000); Hitachi. Ltd v. Tatung Co.. 419 F.Supp.2d 1158, 1160 (ND. Cal. 2006). The local rules for this district direct the Court to apply the rules and law of professional conduct of California. See Local Rule 180(e) (); Rodriguez v. W. Publ'g Corp., 563 F.3d 948, 967 (9th Cir. 2009) ().
The decision to grant a motion to disqualify counsel due to a conflict of interest is within the trial court's discretion. Lennar Mare Island, LLC v. Steadfast Ins. Co., 105 F.Supp.3d 1100, 1108 (E.D. Cal. 2015). "Under California law the starting point for deciding a motion to disqualify counsel is the recognition of interests implicated by a motion." Hitachi, 419 F.Supp.2d at 1160. Disqualification motions involve such considerations as a client's right to chosen counsel, an attorney's interest in representing a client, and the financial burden on a client to replace disqualified counsel. Id. at 1161 (citing People ex rel. Department of Corporations v. SpeeDee Oil Change Systems, Inc., 20 Cal.4th 1135, 1145 (1999); Lennar Mare Island, 105 F.Supp.3d at 1108 ( court must weigh same factors, as well as "any tactical abuse underlying a disqualification proceeding against the fundamental principle that the fair resolution of disputes within our adversary system requires vigorous representation of parties by independent counsel unencumbered by conflicts of interest.") (quoting In re Lee G. 1 Cal.App.4th 17, 26 (1991)).
"Disqualification is a blunt tool meant to encourage wide berth of ethical grey areas, its ruthlessness warranted only after a clear showing of conflict." Lennar Mare Island, 105 F.Supp.3d at 1107. Because "disqualification is a drastic measure, it is generally disfavored and should only be imposed when absolutely necessary." Id. (quoting Concat LP v. Unilever, PLC, 350 F.Supp.2d 796, 814 (N.D. Cal.2004). " Id. at 1108 (quoting State Farm Mut. Auto. Ins. Co. v. Fed. Ins. Co.. 72 Cal.App.4th 1422, 1428 (1999)).
California law distinguishes two types of conflict: a successive conflict of interest involves a conflict of interests between a current client and a former client, whereas a concurrent conflict places the interests of two current clients at odds. Lennar Mare Island, 105 F.Supp.3d at 1108 (citations omitted). Where successive, the primary concern is that of confidentiality. Id. Where concurrent, the primary concern is the attorney's duty, and the client's legitimate expectation, of loyalty. Id. Nonetheless, both duties apply in both types of cases. Id. However, different standards govern the two types of conflicts. If successive, the court determines whether the representations are substantially related, and if so, "an attorney's access to adverse confidential information is presumed and he or she must be disqualified." Id
"The rule against concurrent conflicts is less forgiving [and an] attorney will be automatically disqualified from simultaneously representing two clients with adverse interests without both clients' informed, written consent, even if the two matters have nothing in common." Id. (citations omitted). "It is immaterial whether the lawyer possesses confidential information that could be misused to the prejudice of either client." Id. (quoting Cal. W. Nurseries, Inc. v. Superior Court, 129 Cal.App.4th 1170, 1175 (2005)). The Lennar Mare Island court further distinguishes between successive and concurrent conflicts:
A client who learns that his or her lawyer is also representing a litigation adversary, even with respect to a matter wholly unrelated to the one for which counsel was retained, cannot long be expected to sustain the level of confidence and trust in counsel that is one of the foundations of the professional relationship. All legal technicalities aside, few if any clients would be willing to suffer the prospect of their attorney continuing to represent them under such circumstances. Flatt, 9 Cal.4th at 285, 36 Cal.Rptr.2d 537, 885 P.2d 950 (emphasis in original). "Ethical walls" or "screens," which may prevent a conflict of interest from arising in a successive representation, "do nothing to mitigate conflict arising from concurrent adverse client relationships, since the purpose of the prohibition against such relationships is to preserve the attorney's duty of loyalty, not confidentiality, to his client." Concat, 350 F.Supp.2dat822.
Lennar Mare Island, 105 F.Supp.3d at 1109.
The California Rules of Professional Conduct ("CRPC") provide the following guidance for where clients with potential or actual conflicting interest may provide informed written consent to concurrent representation in the same matter and counsel may properly continue representation, and where such representation would be forbidden even with informed written consent:
To continue reading
Request your trial