Gregori v. Bank of America, No. A040851

CourtCalifornia Court of Appeals
Writing for the CourtKLINE; McCARTY; BENSON
Citation254 Cal.Rptr. 853,207 Cal.App.3d 291
Parties, 57 USLW 2481 James & Jill GREGORI, et al., Plaintiffs and Respondents, v. BANK OF AMERICA, et al., Defendants and Appellants.
Decision Date20 January 1989
Docket NumberNo. A040851

Page 853

254 Cal.Rptr. 853
207 Cal.App.3d 291, 57 USLW 2481
James & Jill GREGORI, et al., Plaintiffs and Respondents,
v.
BANK OF AMERICA, et al., Defendants and Appellants.
No. A040851.
Court of Appeal, First District, Division 2, California.
Jan. 20, 1989.
As Modified Feb. 17, 1989.
Review Denied April 5, 1989.

Page 855

[207 Cal.App.3d 294] Michael G. Watters, Santa Rosa, for defendant and appellant Davis, et al.

Paul R. Haerle, George W. Coombe, San Francisco, Michael F. O'Donnell, Santa Rosa, for defendant and appellant Bank of America:

[207 Cal.App.3d 295] A. Barry Capello & Thomas G. Foley, Santa Barbara, for plaintiffs and respondents James & Jill Gregori.

KLINE, Presiding Justice.

Appellants, defendants in complex civil litigation, moved to disqualify respondents' (plaintiffs') attorneys because one of them initiated an undisclosed social relationship with a legal secretary familiar with all aspects of the litigation employed by appellants' counsel. In the alternative, appellants sought to compel further discovery regarding the nature of the social relationship and matters the attorney and secretary may have discussed. The trial court denied both the motion to disqualify counsel and the request for further discovery.

STATEMENT OF THE CASE

The litigation underlying this appeal is not relevant to the issue before us. Essentially, the suit is a "lender liability" action brought by members of the Sebastopol Cooperative Cannery (hereinafter the CO-OP), an association of apple growers. Numerous individual apple growers (hereinafter the Growers) sued both the Bank of America, N.T. and S.A. (hereinafter the Bank) and four directors and officers of the CO-OP (hereinafter referred to collectively as the Directors). The Bank acted as the CO-OP's lending institution. On December 13, 1985, the Growers filed a complaint, assertedly similar to that in Kruse v. Bank of America (1988) 202 Cal.App.3d 38, 248 Cal.Rptr. 217 (petn. for cert. filed Nov. 30, 1988) stating causes of action for fraud, breach of fiduciary duty, suppression of fact, breach of the covenant of good faith and fair dealing, constructive fraud, conspiracy, rescission and emotional distress. Appellants are the Bank and the Directors, the defendants below; respondents are the plaintiff Growers.

On June 4, 1987, the Bank moved to stay all proceedings pending discovery regarding disqualification of the Growers' attorney, Thomas G. Foley and his law firm, Cappello & Foley. The Bank alleged that Foley had established an improper social relationship with Jane Doe, 1 the secretary of a partner in O'Brien, Watters, Davis, Malisch & Piasta (hereinafter O'Brien), the law firm representing the Directors. The Bank further alleged that Foley used this relationship to obtain confidential information regarding the litigation. The trial court denied the motion.

On November 5, 1987, the Bank and the Directors moved to disqualify Cappello & Foley. In the alternative, said defendants requested that Jane Doe, who had refused to attend her noticed deposition, be compelled to [207 Cal.App.3d 296] attend and that Foley be required to respond to questions propounded at his deposition he had refused to answer. Defendants also applied for an order in re contempt in response to Jane Doe's refusal to submit to deposition. After a hearing held November 20, 1987, the court denied all relief sought by defendants. This appeal followed.

STATEMENT OF FACTS

The principal players in the drama are: (1) Thomas G. Foley, Jr., a partner in Cappello & Foley, the law firm representing the plaintiff Growers; (2) O'Brien, the law firm representing the defendant Directors; (3) F. Elaine Malisch and Michael G. Watters, the O'Brien partners who were closely involved with the case and for whom Jane Doe worked; and (4) Jane Doe, a secretary at O'Brien.

The facts relevant to the motion to disqualify emerge from Jane Doe's declaration, the declarations of Malisch and Watters, and Foley's deposition, declaration and correspondence.

According to Malisch, Jane Doe was employed by the firm for about four years and gained her employers' trust and confidence.

Page 856

Due to the complex nature of the CO-OP litigation, the firm decided to put Jane Doe in charge of administering the case. In this capacity she received and reviewed all correspondence, typed pleadings and research memoranda, scheduled depositions, and attended most of the weekly staff meetings at which the case was discussed. Thus, as stated by the trial court, Jane Doe became "intimately familiar with virtually every aspect of the case."

Jane Doe provided little information directly to the court. In a declaration she stated that she and Foley met "after business hours on a purely social basis." 2 Some of their conversation centered on "personalities involved in the litigation." However, they never "discuss[ed] any matter having to do with any facet of the lawsuit itself. [p] At no time was there any information of a confidential nature exchanged, including but not limited to defense strategies, client confidences, and confidential information received from the Bank of America or its attorneys."

Declarations of Jane Doe's employers provide different and more detailed information. Malisch declared that late in 1986 she learned that Jane Doe and Foley met after work for a drink. Malisch told Jane that the date was [207 Cal.App.3d 297] inappropriate and, from her past experience with Jane, assumed Jane understood she should not see Foley socially again. At this time, Jane Doe reported that Foley claimed to have obtained divorce files on Malisch and another attorney working on the case. Watters also admonished Doe about socializing with Foley and expressed his concern that Foley was trying to improperly obtain information regarding the case.

Malisch declared that Jane Doe came to her office on the morning of April 28, 1987, after being uncharacteristically late for work, and reported that she had dined with Foley the prior evening and had too much to drink. She told Malisch that although the case had not been the main topic of conversation, "certain aspects of the case had been discussed including the lawyers involved, Foley's views on liability, including that the O'Brien law firm clients were 'evil' people who would shortly be put in jail. (Later Doe volunteered that Foley isn't really after our clients, so much as the Bank of America. ...)" Jane Doe disclosed to a friend that Foley told her an O'Brien client, one of the defendants, could face a jail term based on Foley's information about him.

The dinner date took place while Foley was in Santa Rosa to depose an O'Brien client, one of the Directors, whom Foley had described as being a key witness. Malisch reported her conversation with Jane Doe to Watters, and before the deposition of their client recommenced, the two talked to Doe about the dates with Foley. When told she should not have social contact with Foley, Jane Doe said her time after work was her own business, said she would date Foley behind her employers' backs, and left the room. Doe then telephoned Foley to warn him that Watters would arrive late at the deposition and was angry.

When Watters arrived at the deposition, he announced that he had just learned about the dinner date and felt he must disclose it to his clients; he asked Foley "to avoid the appearance of impropriety." When pressed, Foley said "I will make sure I have no social contact with any members of your firm for the pendency of this litigation." Watters later learned that Jane Doe spoke with Foley on the phone on May 1 and 5, after Foley promised to end social contact, and received flowers from him on her birthday, May 2. Foley confirmed this information. Malisch terminated Jane Doe's employment on May 4, 1987. Several months later, two women who had worked with Jane Doe at the O'Brien firm executed declarations stating that Jane Doe told them that "after the dinner date

Page 857

...[I] went to [Foley's] hotel room and had sexual intercourse with him."

Subsequently, Watters asked Foley to stipulate that he would have no further social contact with Jane Doe or any other members of the O'Brien [207 Cal.App.3d 298] firm. Foley agreed he would maintain no such contacts, but "reserve[d] the right to discuss with [Jane Doe] any potential causes of action [she may have] for wrongful discharge, slander and infliction of emotional distress." He signed a stipulation along the lines suggested by Watters, and the court approved it on May 13, 1987.

Foley filed a declaration in which he denied discussing the case with Jane Doe, except with respect to the personalities of lawyers. During his lengthy deposition, Foley's attorney, his law partner A. Barry Cappello, frequently instructed him not to answer questions relating to the nature of his relationship with Jane Doe, often on privacy grounds. Resting on the work product privilege, Foley also refused to respond to questions relating to his interest in the personal lives of O'Brien attorneys; his possible interest in "insider information;" his knowledge about legal problems O'Brien clients might encounter; and any discussions he may have had about Jane Doe's rights against O'Brien. Foley frequently said he could not remember what he and Jane Doe had said to one another and could neither confirm nor deny that certain topics relating to the case were discussed.

Foley testified that he and Jane Doe met after work. Though he knew she was Watters' secretary, he did not know she had such an important role in the firm's management of the case. According to Foley, Jane Doe told him she had disclosed the date to Malisch, who had not objected. Four months later, during the deposition of an O'Brien client, Foley invited Jane Doe to dinner because, unlike others at the O'Brien firm, she had been "very gracious." He explained that the receipts for the drinks and dinner were marked "P.R." to reflect a draw on...

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134 practice notes
  • In re Charlisse C., No. B194568.
    • United States
    • California Court of Appeals
    • April 23, 2007
    ...of impropriety arises in connection with a tangible dereliction'" (italics added) ], quoting Gregori v. Bank of America (1989) 207 Cal.App.3d 291, 306, 254 Cal.Rptr. 853.) Contrary to the juvenile court's suggestion, "an appearance of impropriety by itself does not support a lawyer's disqua......
  • People v. Baylis, No. A106217.
    • United States
    • California Court of Appeals
    • May 24, 2006
    ...939.) 12. Of course, not all violations of ethical rules mandate disqualification of counsel. (See Gregori v. Bank of America (1989) 207 Cal. App.3d 291, 303, 254 Cal.Rptr. 853; Hetos Investments, Ltd. v. Kurtin (2003) 110 Cal. App.4th 36, 47, 1 Cal.Rptr.3d ** See footnote *, ante. --------......
  • M'Guinness v. Johnson, No. H040614
    • United States
    • California Court of Appeals
    • December 30, 2015
    ...Corp. (2012) 205 Cal.App.4th 329, 335, 140 Cal.Rptr.3d 32.)196 Cal.Rptr.3d 680 Johnson also relies on Gregori v. Bank of America (1989) 207 Cal.App.3d 291, 254 Cal.Rptr. 853 ( Gregori ) to support his position that disqualification motions are disfavored. But that case did not involve a con......
  • O'Gara Coach Co. v. Ra, B286730
    • United States
    • California Court of Appeals
    • January 7, 2019
    ...future prejudice to the opposing party from information the attorney should not have possessed"]; Gregori v. Bank of America (1989) 207 Cal.App.3d 291, 309, 254 Cal.Rptr. 853 ["disqualification is proper where, as a result of a prior representation or through improper means, there is a reas......
  • Request a trial to view additional results
133 cases
  • In re Charlisse C., No. B194568.
    • United States
    • California Court of Appeals
    • April 23, 2007
    ...of impropriety arises in connection with a tangible dereliction'" (italics added) ], quoting Gregori v. Bank of America (1989) 207 Cal.App.3d 291, 306, 254 Cal.Rptr. 853.) Contrary to the juvenile court's suggestion, "an appearance of impropriety by itself does not support a lawyer's disqua......
  • People v. Baylis, No. A106217.
    • United States
    • California Court of Appeals
    • May 24, 2006
    ...939.) 12. Of course, not all violations of ethical rules mandate disqualification of counsel. (See Gregori v. Bank of America (1989) 207 Cal. App.3d 291, 303, 254 Cal.Rptr. 853; Hetos Investments, Ltd. v. Kurtin (2003) 110 Cal. App.4th 36, 47, 1 Cal.Rptr.3d ** See footnote *, ante. --------......
  • M'Guinness v. Johnson, No. H040614
    • United States
    • California Court of Appeals
    • December 30, 2015
    ...Corp. (2012) 205 Cal.App.4th 329, 335, 140 Cal.Rptr.3d 32.)196 Cal.Rptr.3d 680 Johnson also relies on Gregori v. Bank of America (1989) 207 Cal.App.3d 291, 254 Cal.Rptr. 853 ( Gregori ) to support his position that disqualification motions are disfavored. But that case did not involve a con......
  • O'Gara Coach Co. v. Ra, B286730
    • United States
    • California Court of Appeals
    • January 7, 2019
    ...future prejudice to the opposing party from information the attorney should not have possessed"]; Gregori v. Bank of America (1989) 207 Cal.App.3d 291, 309, 254 Cal.Rptr. 853 ["disqualification is proper where, as a result of a prior representation or through improper means, there is a reas......
  • Request a trial to view additional results

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