Meehan v. Hopps
| Decision Date | 04 September 1956 |
| Citation | 301 P.2d 10,144 Cal.App.2d 284 |
| Court | California Court of Appeals Court of Appeals |
| Parties | Thomas J. MEEHAN, Receiver of Rhode Island Insurance Company, and F. Britton McConnell, substituted for John R. Maloney, Insurance Commissioner of the State of California, as Liquidator of Rhode Island Insurance Company, Plaintiffs and Respondents, v. Stewart B. HOPPS, Geraldine R. Hopps, U. S. Marine and Foreign Securities, Ltd., a Delaware corporation, et al., Defendants and Appellants. Civ. 16627. |
J. W. Ehrlich, Lloyd W. Dinkelspiel, Eugene S. Clifford, Heller, Ehrman, White & McAuliffe, San Francisco, for appellants Stewart B. Hopps, Geraldine R. Hopps, and U. S. Marine and Foreign Securities, Limited.
Edmund G. Brown, Atty. Gen., Harold B. Haas, Deputy Atty. Gen., San Francisco, McCutcheon, Thomas, Matthew, Griffiths & Greene, San Francisco, for respondent F. Britton McConnell, Ins. Commissioner of the State of California, as Liquidator of Rhode Island Ins. Co.
Freitas, Allen, McCarthy & Bettini, San Rafael, McCutcheon, Thomas, Matthew, Griffiths & Greene, San Francisco, for respondent Thomas J. Meehan, as Receiver of Rhode Island Ins. Co.
This is an appeal from a certain order in an action brought by respondents as plaintiffs, against appellants as defendants for an accounting and other relief on behalf of the policyholders, creditors and stockholders of the Rhode Island Insurance Company, in which it is charged that Stewart B. Hopps, former director, member of the executive committee and chairman of the board of the company, dominated and managed the company's affairs for his own personal gain in violation of his fiduciary duties. Defendants moved the trial court to restrain and enjoin the Providence, Rhode Island, law firm of Edwards & Angell, its partners, associates 1 and other counsel (to the extent that their knowledge of the subject matter of the action was derived from that firm) from further participation in the case and from disclosing information pertaining thereto. The motion was based upon the alleged dual relationship of Edwards & Angell towards Hopps and a claim that Hopps had turned over to that firm as his lawyers certain files, documents and other information which plaintiffs have used and have threatened to use against him in the present action. After a hearing 2 the motion was denied. Defendants appeal. 3
Questions Presented.
(1) Does the evidence support the court's implied finding that counsel were never Hopps' personal attorneys, and (2) where an attorney represents a corporation dominated by one of its officers whose personal interests to a considerable extent are coincident with the interests of the company, does an attorney-client relationship exist beteeen the attorney had the officer, depriving the attorney of the right to represent the receiver of the company in litigation against the officer?
The Law.
With legislative authority the Board of Governors of the State Bar of California have formulated rules of professional conduct approved by the Supreme Court. These rules are binding upon all members of the State Bar. Bus. and Prof.Code § 6077. 4 Applicable here are Rule 5: 'A member of the State Bar shall not accept employment adverse to a client or former client, without the consent of the client or former client, relating to a matter in reference to which he has obtained confidential information by reason of or in the course of his employment by such client or former client'; Rule 7: 'A member of the State Bar shall not represent conflicting interests, except with the consent of all parties concerned.' Section 6068, Business and Professions Code, provides: It is the duty of an attorney '(e) To maintain inviolate the confidence, and at every peril to himself to preserve the secrets, of his client.'
As the law is clear, we deem it unnecessary to cite the many cases holding that an attorney who attempts to use against the interests of his former client information gained while the attorney-client relationship existed, may be enjoined from so doing.
The question first to be determined is:
1. Had There Been an Attorney-Client Relationship Between Counsel and Hopps?
The determination of that question is one of law. De Long v. Miller, 133 Cal.App.2d 175, 178, 283 P.2d 762. However, where there is a conflict in the evidence the factual basis for the determination must first be determined, and it is for the trial court to evaluate the evidence. Id., 133 Cal.App.2d at page 179, 283 P.2d at page 764.
On the question of whether counsel ever represented Hopps as his attorney, the evidence is directly conflicting. Concededly the film never charged nor received payment from Hopps for any services whatever. The services which Hopps claims were for him personally were paid for by Rhode Island. Soon after Hopps became connected with the company, counsel ceased to act as general counsel for it. Thereafter they were employed on special matters from time to time. At the time counsel first met Hopps they were working for Rhode Island on a merger of the Merchants Insurance Company into the former. Rhode Island's chairman asked counsel to draw a contract for the employment of Hopps, which was done. Hopps claims that the attorney drawing the contract advised him as well as the company. The attorney denied this and claimed that Hopps consulted his own lawyer, Farber, exclusively concerning the contract. Hopps testified that he confided in and was advised by counsel concerning his personal involvement in the affairs of Rhode Island; that he turned over to counsel his personal files; that Attorney Winsor of the firm was a friendly advisor and legal confidant and familiar with Hopps' personal affairs; that the firm undertook to represent Hopps' personal interest in the California controversy 5 and in a number of other matters. We deem it unnecessary to detail the evidence concerning the matters testified to by Hopps as showing a personal attorney and client relationship between him and counsel. Suffice it to say that evidence to the contrary on all matters was presented by Edwards & Angell. The question is primarily one of credibility. The trial court obviously disbelieved Hopps. 6
There are four matters in which appellants particularly claim that counsel acted personally for Hopps.
(1) The preparation of the employment contract between Rhode Island and Hopps. While Hopps does not claim that he employed counsel in this behalf but that Gilman, of counsel, advised him personally, Gilman denied this. Gilman had been handling for Rhode Island a proposed merger of Merchants Insurance Company with it. Watson, Rhode Island's chairman, asked Gilman to draw the employment contract. Gilman conferred with both Hopps and Watson, sending copies of the contract when prepared to both. In the letter to Hopps accompanying the proposed contract Gilman stated that if it was not satisfactory to Hopps Gilman would take up with Watson any proposed changes. It frequently happens that one retained by a client to draft an agreement between him and another, will send such agreement to the other, asking for the latter's suggestions concerning it, which suggestions the drafter will take up with his client. This statement did not convert Gilman's relationship from attorney for Rhode Island to attorney for Hopps in any respect. The agreement was not to become effective unless the merger was made, and provided that Hopps was to have the right to be interested in the Merchants Insurance Company's deadling with Rhode Island and was only required to give part of his time to the latter. Winsor, of counsel, called on Hopps in New York in connection with the merger. None of these matters changed counsel's relationship as attorney for Rhode Island into attorney for Hopps as well. In his deposition Hopps stated that the work done by counsel on the employment contract was done for Rhode Island. At the trial he retracted that statement. This contract was later amended, apparently to Hopps' advantage. Counsel had nothing to do with the change. No attack is made upon the validity, propriety or effect of the employment contract.
(2) Approximately nine years after the contract was drawn, counsel were employed by Rhode Island in connection with a controversy with Cuban interests. It involved nine companies and individuals including Hopps and Rhode Island on the American side, and seven on the Cuban side. It was actually a fight for control. Although the controversy had been going on for approximately seven years, counsel had nothing to do with it until approximately three months prior to its settlement. At Watson's request, counsel were employed to represent Rhode Island. At counsel's request Hopps prepared and gave them data concerning the background and history of the controversy and his interest in it. One of the most important problems was whether a proxy held by Hopps or those held by the Cuban interests should prevail. Hopps prepared memoranda concerning these, sending copies to Rhode Island's executive committee as well as to counsel. Counsel advised Rhode Island that only Hopps' proxy could be considered. The fact that counsel so advised, and the other matters they did in connection with the controversy, did not make them attorneys for Hopps.
(3) The Pioneer Equitable Settlement. This involved a dispute between Rhode Island on one side, the Pioneer Equitable and other companies and an individual on the other. Hopps had interests on both sides. There were a number of lawyers representing Rhode Island in this matter including counsel, who were employed by Rhode Island as special counsel in connection with a suit over custodian funds included in the controversy. Counsel denied Hopps' assertion that their special duty in the controversy involved any consideration by them of Hopps' personal interests nor any advice to...
To continue reading
Request your trial
-
Kapelus v. State Bar
...partnership against individual limited partners who were allegedly attempting to defraud or destroy it. (Accord Meehan v. Hopps (1956) 144 Cal.App.2d 284, 290, 301 P.2d 10.) Further, the evidence fails to support the State Bar's finding that petitioner was privy to confidential information ......
-
U.S. v. Troutman
...from prosecution by the state attorney general of public employees charged with misuse of public funds); see also, Meehan v. Hopps, 144 Cal.App.2d 284, 301 P.2d 10 (1956). The common thrust of the Government's authority is that a state attorney general has a primary responsibility to protec......
-
EF Hutton & Company v. Brown
...moving for disqualification does not need to urge the broader rule against representing conflicting interests. 56 Meehan v. Hopps, 144 Cal.App.2d 284, 301 P.2d 10 (1956); Almon v. American Carloading Corp., 312 Ill.App. 225, 38 N.E.2d 362 (1941), rev'd on other grounds, 380 Ill. 524, 44 N.E......
-
Rallis v. Cassady
...113 Cal. Rptr. 561 (American Mut); Kraus v. Davis (1970) 6 Cal.App.3d 484, 491, 85 Cal.Rptr. 846 (Kraus); Meehan v. Hopps (1956) 144 Cal.App.2d 284, 287, 301 P.2d 10 (Meehan); DeLong v. Miller (1955) 133 Cal.App.2d 175, 178, 283 P.2d 762 (DeLong).) It is our view that none of these authorit......
-
Mcle Article: What Transactional Lawyers Should Know About Conflicts of Interest
...energies to his client's interests."); Oasis W. Realty, LLC v. Goldman, 106 Cal. Rptr. 3d 539 (Cal. Ct. App. 2010).9. Meehan v. Hopps, 301 P.2d 10, 16 (Cal. Ct. App. 1956).10. See, e.g., Hecht v. Super. Ct., 237 Cal. Rptr. 528, 531 (Cal. Ct. App. 1987)11. See Upjohn Co. v. U.S., 449 U.S. 38......
-
The Ethical Landmines of Dual Service: United States v. Holmes
...that representing a corporation does not mean also acting as attorney to individual directors or shareholders); Meehan v. Hopps, 144 Cal. App. 2d 284, 290 (1956) (finding the attorney for a corporation does not represent corporate officers personally). 19. See Hechler, supra note 18. 20. Id......