Graphic Process Co. v. Superior Court

• Decision Date: 17 July 1979
• Citation: 95 Cal.App.3d 43,156 Cal.Rptr. 841
• Parties: GRAPHIC PROCESS CO., et al., Petitioners, v. The SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent; Peter Andrew NOTARAS, a Professional Corporation, Real Party in Interest. Civ. 55260.
• Court: California Court of Appeals Court of Appeals

Page 841

156 Cal.Rptr. 841

95 Cal.App.3d 43

GRAPHIC PROCESS CO., et al., Petitioners, v. The SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent Peter Andrew NOTARAS, a Professional Corporation, Real Party in Interest.

Civ. 55260.

Court of Appeal, Second District, Division 1, California.

July 17, 1979.

Fierstein & Sturman Law Corporation, Harvey Fierstein and Edward C. Broffman, Los Angeles, for petitioners

No appearance for respondent.

Peter Andrew Notaras, a Professional Corporation, in pro. per., and Michael Fate, Beverly Hills, for real party in interest.

HANSON, Associate Justice.

INTRODUCTION

Defendants Graphic Process Co., a California corporation (hereinafter Graphic), Color Corporation, a California corporation (hereinafter Color), Salvatore Portaro and William Ziering in superior court civil action number C 258621, petition this court for a writ of mandate seeking to compel In the alternative, defendants seek an order from this court compelling the respondent superior court to permit them to retain their present counsel FSLC for all purposes other than representation at the time of trial.

respondent superior court to vacate its order granting real party in interest/plaintiff law firm Peter Andrew Notaras, a professional corporation, real party in interest (hereinafter plaintiff and/or NPC) motion to disqualify defense counsel Fierstein & Sturman Law Corporation (hereinafter FSLC) and in lieu thereof issue an order denying said motion.

BACKGROUND

NPC, appearing as counsel on its own behalf, is the plaintiff in superior court case number C 258621 seeking recovery of attorney's fees and damages for fraud from its former clients Graphic and Color, petitioners herein.

Defendants Graphic and Color appeared through their present counsel FSLC by serving a first set of interrogatories upon plaintiff NPC, who thereafter filed a notice of motion in the respondent superior court for an order disqualifying FSLC as defendants' trial counsel. ¹

Plaintiff NPC's grounds for disqualification of defense counsel as stated in its moving papers below and in its opposition to defendants' petition for writ of mandate are (1) that plaintiff NPC intended to call attorney Herbert D. Sturman, a member of FSLC, to establish the existence of the underlying contract sued upon and to establish the propriety and reasonableness of the fees charged by the real party in interest, and (2) that a "reasonable probability" exists that plaintiff NPC will name defense counsel (FSLC) as additional defendants in this action.

The statement of facts accompanying plaintiff NPC's motion to disqualify FSLC states, in pertinent part, that NPC had represented defendant corporations for almost four years, that in April 1977, it advised the corporations that regular payments of fees would have to be made, and that defense counsel Sturman of FSLC negotiated a monthly payment plan for defendant corporations. It was also stated that attorney Sturman was a "percipient witness" to the rendering of legal services by NPC, in that in one of the cases (the Andresen case) in which NPC represented Graphic and Color a codefendant Portaro (who was sued as an alter ego of the corporations) was represented by attorney Sturman who had received copies of all the pleadings and some of the correspondence prepared by NPC in that action. Plaintiff and attorney Sturman filed jointly in that action a motion for summary judgment. Attorney Sturman allegedly advised NPC that defendants in the present litigation did not contest the nature, extent or value of the legal services rendered by NPC in the Andresen lawsuit.

The declarations of attorneys Harvey Fierstein and Herbert D. Sturman of FSLC attack each of the grounds listed in the disqualification motion.

The declaration of attorney Fierstein states that their firm is general counsel for the corporate defendants and that he is the senior member of FSLC which consists of eight members, five of which are partners and three associates; that he (Fierstein) supervises all litigation matters and attorney Sturman, a certified tax specialist, is involved in the field of taxation and business, corporate, commercial and real estate matters; that the legal fees which were sought by NPC relate, almost exclusively, to legal services rendered in three prior actions, namely: Andresen v. Ziering (Los Angeles Superior Court case number 74190); Graphic Process Co. v. Andresen, et al. (Los Angeles Superior Court case number 704625); and an action entitled May Co. Department Stores v. Graphic Process Co., et al. (United States District Court number Attorney Fierstein stated that he will have the primary responsibility for defending the instant lawsuit brought by NPC seeking damages from its former client; that his primary assistance will come from attorney Edward Broffman of their firm; that he (attorney Fierstein) did Not participate in the prior litigation in any manner whatsoever; that he never met attorney Fate, nor attorney Boyars; that he (attorney Fierstein) had not dealt with defendant Ziering until the instant dispute arose; that he (attorney Fierstein) has met attorney Notaras of NPC on one or two prior occasions which were almost exclusively of a social nature; that the Andresen litigation went to trial in March of 1978, and after four (4) trial days the parties entered into serious settlement negotiations resulting in a settlement; that after the settlement was consummated, FSLC became involved in the existing controversy between NPC and its former clients, defendants and petitioners herein; that he (attorney Fierstein) then learned that the aggregate figures for the services described above amounted to more than $350,000 with NPC charging substantially in excess of $250,000; that because of his litigation experience he was asked to analyze the nature of the services rendered, as represented by the billings, and to make an investigation as to the propriety of the fees that were charged; that as a result of his investigation he came to the conclusion that further investigation was necessary before he could personally determine whether or not the aggregate billings were fair and just and needed additional information from NPC; that on August 31, 1978, he wrote to Mr. Notaras of NPC asking for additional information and received a written response on October 2, 1978, to his letter. Attorney Fierstein stated that after receiving the letter he "came to the conclusion, reluctantly, that many of the charges were suspect"; that "there is now ample justification for the position of the Defendants in this litigation; in fact, it is the position of the undersigned he would be derelict in his duties to his clients, And to the bar of this state, if he failed to make further investigation in this matter." He further stated that "(w)ith respect to all criteria employed in determination of attorneys fees, it is felt that the NOTARAS firm has been more than adequately compensated. If anything, said firm has been over-compensated."

771293-R); that the Andresen action and the Graphic action were consolidated for trial (hereinafter collectively the Andresen action), and involved an intra-corporate dispute between shareholders of the corporations relating to alleged wrongful distributions of corporate assets and matters relating to salary structure; that the May Co. case which involved purported "illegal kick-backs" was litigated in the federal courts and defendants herein were granted summary judgment and that the matter is now on appeal with FSLC representing the corporate defendants herein; that NPC was the fourth law firm to represent defendants in the Andresen action; that prior to the engagement of the services of NPC, the defendants incurred bills for legal services, in the total sum of $40,000; that NPC represented the corporations in the Andresen action while defendant Portaro was represented by FSLC and its predecessors, and Ziering was represented by attorney Boyars; that FSLC played a passive role in the litigation but its role became more active at the time the lawsuits were settled; that NPC billed the aggregate sum of approximately $256,000 to the corporate defendants for the 40-month interval of April 1975 through July 1978, and was paid a sum in excess of $163,000 during that period of time; that in addition there were payments and billings for the period of September 1974, to and including March 1975, from NPC; that in addition approximately $40,000 in attorney's fees were paid to the prior attorneys, and additional attorney's fees incurred to attorney Boyars for representation of the individual defendants which fees exceeded $40,000; that almost the entirety of these fees were related to the Andresen litigation, which litigation commenced as a lawsuit seeking slightly more than $100,000 in compensatory damages.

In addition, attorney Fierstein asserts that FSLC has a familiarity with the underlying litigation, i. e., the May Company lawsuit and the Andresen litigation and his firm has expended many hours and achieved knowledge of the issues raised therein and has been compensated for such services; that FSLC has a relationship with Mr. Portaro and with the remaining defendants and is presently general counsel for the corporate defendant; that attorney Fierstein further alleges that "the purpose of the instant motion is to allow the plaintiff the opportunity to take and procure an unfair advantage over its former clients in this meritless litigation" by seeking "to have its former clients expend substantial sums of money with other counsel so that other counsel can, hopefully, at some future time, acquire and achieve knowledge that present counsel (i. e. FSLC) now possess."

Attorney Sturman in his declaration attacks each of the grounds upon which NPC based its motion to disqualify FSLC by stating that it "is totally incorrect" that he (Sturman) is a "percipient witness and has extensive knowledge with...