Maruman Integrated Circuits, Inc. v. Consortium Co.

• Decision Date: 29 March 1985
• Citation: 212 Cal.Rptr. 497,166 Cal.App.3d 443
• Court: California Court of Appeals Court of Appeals
• Parties: MARUMAN INTEGRATED CIRCUITS, INC., etc., Plaintiff and Appellant, v. The CONSORTIUM COMPANY, et al., Defendants and Respondents. AO12288.

Page 497

212 Cal.Rptr. 497

166 Cal.App.3d 443

MARUMAN INTEGRATED CIRCUITS, INC., etc., Plaintiff and Appellant, v. The CONSORTIUM COMPANY, et al., Defendants and Respondents.

AO12288.

Court of Appeal, Sixth District, California.

March 29, 1985.

As Modified April 17, 1985.

Kenneth G. Griffin, Peter H. Strong, Law Offices of Kenneth G. Griffin, Los Angeles, for plaintiff and appellant.

Stephen S. Mayne, Raymond M. Taketa, Dinkelspiel, Donovan & Reder, San Francisco, for defendants and respondents.

PANELLI, Associate Justice.

Plaintiff appeals from the denial of its motion to disqualify counsel for defendant H. Dan Izumi. We find this appeal to be without merit and affirm.

Facts

Plaintiff Toshiba Semiconductor Inc. (formerly known as Maruman Integrated Circuits Inc.) is a corporation engaged in the development and manufacture of semi-conductors, with its principal place of business in Sunnyvale, California. From 1975 to February 1980, defendant Izumi was the president, chief executive officer, director and shareholder of plaintiff corporation.

On March 7, 1980, plaintiff filed an action seeking a declaration that a long term lease purportedly executed on its behalf by defendant Izumi was void and had no force or effect. ¹ Plaintiff claimed defendant Izumi had no authority to execute the lease and that by entering into such an agreement he breached his fiduciary duty. ² The law firm of Fenwick, Stone, Davis & West ("Fenwick") was counsel for plaintiff in this action. Defendant Izumi retained the law firm of Dinkelspiel, Donovan and Reder ("Dinkelspiel") to represent him in the matter.

From 1975 to 1980, G. Tipton Canty ("Canty") was employed by plaintiff corporation. In April 1980 she terminated her employment and went to work for defendant Izumi. At the time of her departure from plaintiff, she was an administrator and assistant to the corporate secretary.

In September and October 1981 plaintiff deposed Canty. At the depositions Canty was represented by the Dinkelspiel law firm. In response to plaintiff's questions, she stated that she had dealings with attorneys from the Fenwick law firm during the course of her employment with plaintiff. She specifically identified five Fenwick attorneys with whom she had come into contact. Canty further stated that after the termination of her employment with plaintiff, she spoke with the Dinkelspiel firm two or three times concerning her prior conversations with attorneys in the Fenwick law firm. In addition, Ms. Canty revealed that she delivered two letters, written between the Fenwick law firm and plaintiff, to the Dinkelspiel law firm. ³

On October 23, 1981, plaintiff filed its motion to disqualify the Dinkelspiel law firm, arguing that Canty had disclosed "confidential communications" between plaintiff and its attorneys. In support of its motion, plaintiff submitted a declaration by William Fenwick of the Fenwick law firm, stating that "G. Tipton Canty was personally involved in assisting my firm in the prosecution of this action on behalf of MIC during March and a portion of April 1980 and was a party to confidential communications between my firm and MIC."

In opposition to this motion, defendant Izumi argued (1) the communications were not "confidential" (2) plaintiff waived its privilege; and (3) as a matter of law disclosure by a lay employee did not require disqualification. 65 In support of the waiver argument defendant submitted a declaration from Steven Mayen, an attorney in the Dinkelspiel law firm. Mayen stated that in October 1981 he deposed Donald Davis, an attorney in the Fenwick law firm. Before the deposition, he entered into a stipulation with the Fenwick law firm that certain subjects within the attorney-client privilege would be waived. ⁴ The scope of this waiver included all matters otherwise subject to the privilege but excluding any settlement discussions, litigation strategy and factual developments occurring subsequent to February 29, 1980.

The disqualification motion was heard on November 3, 1981, one day before trial was scheduled to commence. The trial court denied the motion. In reaching this conclusion, the court stated: "I don't think there is any merit in your motion. I think this is just some picky point you picked up at the last minute to delay the trial, so I am going to deny your motion."

Discussion

Claiming that Canty disclosed confidential communications between plaintiff and its attorneys, plaintiff contends the lower court abused its discretion in failing to disqualify the Dinkelspiel law firm from continued representation of defendant. We disagree.

It is the obligation of every attorney in this state "to maintain inviolate the confidence, and at every peril to himself, to preserve the secrets of his clients." (Bus. & Prof.Code, § 6068, subd. (e); In re Charles L. (1976) 63 Cal.App.3d 760, 763, 132 Cal.Rptr. 840.) In implementing this duty, it is well established that when confidential communications are obtained in the course of an attorney-client relationship, the client can prevent the attorney from using this information by representing an adverse party. (Graphic Process Co. v. Superior Court (1979) 95 Cal.App.3d 43, 53, 156 Cal.Rptr. 841.) However, it is the general rule that before this rule may be invoked to disqualify an attorney, there must have been an attorney-client relationship between the complaining party and the attorney during which the confidential information was imparted. (Cooke v. Superior Court (1978) 83 Cal.App.3d 582, 590, 147 Cal.Rptr. 915; Earl Scheib, Inc. v. Superior Court (1967) 253 Cal.App.2d 703, 707, 61 Cal.Rptr. 386; In re Charles L., supra, 63 Cal.App.3d at p. 763, 132 Cal.Rptr. 840.)

In Cooke v. Superior Court, supra, 83 Cal.App.3d 582, 147 Cal.Rptr. 915 the court declined to extend the general rule to the situation where confidential information is communicated by a third party, outside the attorney-client relationship. In that case, a dissolution proceeding, the family butler eavesdropped on a conversation between the husband and his attorneys. (Id., at p. 586, 147 Cal.Rptr. 915.) He also obtained copies of the husband's legal documents relating to the upcoming property settlement. (Ibid.) The butler subsequently sent this information to the wife who in turn delivered it to her attorney. (Ibid.) The husband argued the trial court erred in refusing to disqualify the wife's attorney due to his receipt of the confidential information imparted during an attorney-client relationship. (Ibid.)

In rejecting the husband's contention, the court stated: "The issue before us is simply whether exposure of an attorney to confidential and privileged information requires, as a matter of law, the disqualification of that attorney and his associates. We have found no cases, and we are cited to none, that establish so broad a rule. We have examined the cases wherein trial counsel was disqualified because of exposure to confidential or privileged information. In each of those cases, the attorney sought to be disqualified had been in a confidential relationship as an attorney for the party seeking the disqualification or the attorney had been in such a relationship to another attorney with whom the confidential relationship had existed that there existed a rational suspicion that the confidentially acquired information might have been passed along to the trial attorney." (Cooke v. Superior Court, supra, 83 Cal.App.3d at p. 590, 147 Cal.Rptr. 915, fn. omitted.) The Cooke court concluded "In short, we know of no case where disqualification of an attorney of his firm was imposed purely as a punitive or disciplinary measure, and where there was no prior representation or confidential professional relationship between the complaining party and the attorney or law firm who sought to be disqualified." (Id., at p. 592, 147 Cal.Rptr. 915.)

In addition, the Cooke court found the policies underlying the rule protecting confidential communications did not warrant an extension of the rule. The rule is designed to protect "a relationship of confidence and entrustment" between client and attorney. (Cooke v. Superior Court, supra, at p. 591, 147 Cal.Rptr. 915; accord Goldstein v. Lees (1975) 46 Cal.App.3d 614, 120 Cal.Rptr. 253; Graphic Process Co. v. Superior Court, supra, 95 Cal.App.3d 43, 53, 156 Cal.Rptr. 841.) " '[A] client should be encouraged to reveal to his attorney all possible pertinent information.... A client should not fear that confidences conveyed to his attorney in one action will return to haunt him in a later one.' " (Cooke v. Superior Court, supra, 83 Cal.App.3d at p. 591, 147 Cal.Rptr. 915, quoting Richardson v. Hamilton International Corporation (3rd Cir.1972) 469 F.2d 1382, 1384.) Therefore, "it is confidences acquired in the course of an attorney-client relationship which are protected by preventing the recipient of those confidences from representing an adverse party." (Cooke v. Superior Court, supra, 83 Cal.App.3d at p. 591, 147 Cal.Rptr. 915.

We find the reasoning in Cooke to be both reasonable and persuasive. We believe it is fully applicable to the instant case. Here, Canty dealt with Fenwick attorneys during the course of her employment. After her employment ended, she spoke with the Dinkelspiel law firm two or three times about her prior conversations with Fenwick attorneys. However, here, as in Cooke, the communications at issue were not acquired by the Dinkelspiel law firm during the course of an attorney-client relationship with plaintiff. There was no prior representation of plaintiff by the Dinkelspiel firm. Plaintiff cannot complain that the Dinkelspiel firm breached its duty to maintain its confidences, where the attorney-client privilege never existed between them.

Notwithstanding Cooke, appellant argues there is ample authority for requiring disqualification of an attorney despite the absence of prior representation. For this contention appellant cites Hull v....