Jacuzzi v. Jacuzzi Bros., Inc.

• Decision Date: 08 July 1963
• Citation: 218 Cal.App.2d 24,32 Cal.Rptr. 188
• Parties: Rodolfo JACUZZI, Rosie Jacuzzi, Rino Marin, Stella Marin, Silviano Marin and George Marin, Plaintiffs and Respondents, v. JACUZZI BROS., INCORPORATED, Candido Jacuzzi, Joseph Jacuzzi, Giocondo Jacuzzi, Dante Jacuzzi and Carmelo Guarneri, Defendants and Appellants. Civ. 20698.
• Court: California Court of Appeals Court of Appeals

Page 188

32 Cal.Rptr. 188

218 Cal.App.2d 24

Rodolfo JACUZZI, Rosie Jacuzzi, Rino Marin, Stella Marin, Silviano Marin and George Marin, Plaintiffs and Respondents, v. JACUZZI BROS., INCORPORATED, Candido Jacuzzi, Joseph Jacuzzi, Giocondo Jacuzzi, Dante Jacuzzi and Carmelo Guarneri, Defendants and Appellants.

Civ. 20698.

District Court of Appeal, First District, Division 3, California.

July 8, 1963.

Hearing Denied Aug. 28, 1963.

Joseph L. Alioto, Walter F. Calcagno, San Francisco, for appellants.

Nathan G. Gray, Richard F. Swisher, Berkeley, for respondents.

SALSMAN, Justice.

This appeal is from an order denying appellants' motion to enjoin Nathan G. Gray and Richard F. Swisher from representing respondents as their attorneys. The action is a stockholders' derivative suit, and its primary purpose is to set aside a transfer of substantial assets of the corporation alleged to have been made for an inadequate consideration.

From the record it appears that appellant Jacuzzi Bros., Incorporated, is a California corporation, and that Candido Jacuzzi is its general manager. Joseph Jacuzzi, Giocondo Jacuzzi, Dante Jacuzzi and Carmelo Guarneri are directors. Also named as a defendant is Jacbros, S. A., Geneva, the latter being a Swiss corporation to which it is alleged the assets formerly owned by Jacuzzi Bros., Incorporated were transferred. Nathan G. Gray was the attorney for Jacuzzi Bros., Incorporated for some 25 years, and during a portion of that time he served as chairman of its board of directors. Gray's services were terminated in May, 1956, although during 1957 he completed the collection of some accounts on which he had previously been engaged. After 1957 Gray had no official connection with the corporation nor did he act thereafter as its attorney. Attorney Richard F. Swisher was made a member of the board of directors of Jacuzzi Bros., Incorporated in early 1961, but resigned from the board in the fall of that year.

The complaint herein was filed October 26, 1961. The plaintiffs are Rodolfo Jacuzzi, Rosie Jacuzzi, Rino Marin, Stella Marin, Silviano Marin and George Marin, and they own a substantial, although minority, interest in Jacuzzi Bros., Incorporated. Together, the stock ownership of respondents consists of approximately 19% of the voting shares and approximately 15% of the non-voting shares. The complaint seeks to set aside the transfer of certain assets owned by Jacuzzi Bros., Incorporated in foreign countries, and transferred by the corporation to Jacbros, S. A., Geneva. It is alleged that the price which Jacuzzi Bros., Incorporated received for its foreign assets did not represent the fair value of the property. Other allegations make the charge that the effect of the transfer of the foreign assets of Jacuzzi Bros., Incorporated to Jacbros, S. A., Geneva was to vest control and management of such assets in Candido Jacuzzi, individually, since he is one of three directors of Jacbros, S. A., Geneva, and it is alleged that the other two directors are mere dummies who have no financial interest in that corporation. The complaint also seeks to annul a royalty agreement between Candido Jacuzzi and Jacuzzi Bros., Incorporated as being an agreement for which the corporation received no consideration. The respondents also request removal of Candido Jacuzzi as a director of Jacuzzi Bros., Incorporated, based upon the charges relating to the sale of foreign assets and the royalty agreement between Candido Jacuzzi and the corporation.

The ground upon which appellants seek removal of Gray as attorney for respondents is that Gray previously represented Jacuzzi Bros., Incorporated in matters referred to in the complaint, and that he thus obtained extensive confidential information concerning the subject matter of the action which he may now use to the detriment of his former client. In his affidavit and declarations Gray admits his employment by Jacuzzi Bros., Incorporated as attorney for the corporation from 1932 until 1956, but denies that he obtained any confidential information relating to the subject matter of the present action. Gray avers: 'That affiant was not informed and did not learn and had no knowledge of any of the acts or omissions of any of the defendants alleged in the complaint until subsequent to the 22nd day of May, 1956; that affiant had no information gained, gathered or assembled on or prior to said date relating to any of the acts or omissions of any of the defendants alleged in said complaint, but on the contrary all said information was obtained subsequently thereto from the plaintiffs and other shareholders of said corporation, and from RICHARD F. SWISHER during the month of November, 1960, who during said month inspected the books and records of said corporation by authority of a writ of mandate issued by the Superior Court of the State of California, in and for the County of Contra Costa.'

The issue of counsel's disqualification was submitted to the trial court solely upon the affidavits and declarations of the parties. The evidence was conflicting and the court necessarily had to decide whether or not Gray had obtained any confidential information relating to the subject of the action while acting as attorney for the corporation, or whether, as Gray's affidavit stated, such information related to matters and events which were subsequent in time to the termination of his employment. After consideration of the various affidavits the trial court found Gray and Swisher not disqualified, and denied appellants' motion. Since this ruling of the trial court was based upon conflicting evidence and resolved a question of fact, the determination of the trial court is conclusive on appeal. (See Doak v. Bruson, 152 Cal. 17, 19, 91 P. 1001; Brainard v. Brainard, 82 Cal.App.2d 478, 480-481, 186 P.2d 990; Wolfson v. Haddan, 105 Cal.App.2d 147, 149, 233 P.2d 145; Small v. Small, 123 Cal.App.2d 870, 874, 268 P.2d 63.) We do not rest our decision entirely upon this ground, however, but proceed to examine other contentions of appellants which it is claimed...