Moreci v. Scaffold Solutions, Inc.

• Decision Date: 27 September 2021
• Docket Number: A161193
• Citation: 285 Cal.Rptr.3d 315,70 Cal.App.5th 425
• Parties: Vince MORECI, Plaintiff, v. SCAFFOLD SOLUTIONS, INC., Defendant and Respondent; Starstone National Insurance Company, Intervener and Appellant.
• Court: California Court of Appeals Court of Appeals

70 Cal.App.5th 425

285 Cal.Rptr.3d 315

Vince MORECI, Plaintiff,

v.SCAFFOLD SOLUTIONS, INC., Defendant and Respondent;

Starstone National Insurance Company, Intervener and Appellant.

A161193

Court of Appeal, First District, Division 2, California.

Filed September 27, 2021

England Ponticello & St.Clair; Barry W. Ponticello, Renee C. St.Clair, San Diego, for Plaintiff-in-Intervention and Appellant

Joseph A. Hearst, Gary Roth, Oakland, for Defendant and Respondent.

Richman, Acting P.J. Vince Moreci sustained work-related injuries assertedly caused by his use of a scaffolding stairwell constructed by Scaffold Solutions, Inc. (Scaffold). Moreci received workers’ compensation benefits that were paid by Starstone National Insurance Company (Starstone). Moreci, while represented by Boxer and Gerson, LLP (Boxer Gerson), filed a personal injury action against third party defendants, including Scaffold. Moreci settled the case. As part of the settlement, Moreci agreed to assume the defense of Scaffold for claims arising from Moreci's accident and pay any resulting judgment.

Prior to the dismissal of Moreci's action, Starstone intervened, seeking reimbursement from the defendants for the amount of benefits it had paid to Moreci. Boxer Gerson became associated co-counsel for Scaffold, who then filed an answer to Starstone's complaint in intervention. Starstone moved to disqualify Scaffold's attorneys on the ground they created a conflict of interest by representing Moreci in the underlying action against Scaffold, obtaining a settlement of that action, and then assuming the defense of Scaffold to Starstone's claims in intervention. The trial court held Starstone had no standing to seek the disqualification of counsel and denied the motion. Starstone appeals, asserting essentially the same arguments in support of standing it had raised below. We reject its claims of error, and we affirm.

BACKGROUND

The Parties and the Pleadings

In June 2015, Moreci, while employed by Hydra Ventures, Inc. as a plumber, fell and injured himself at a construction project site when he descended a scaffolding staircase with uneven stair risers. Fulton Street Construction, Inc. (Fulton) and Erik Liu were the general contractor of the construction project and an executive of Fulton, respectively. Fulton subcontracted with Stockham Construction, Inc. (Stockham) to install exterior framing for the project. Stockham, in turn, subcontracted with Scaffold to construct sets of temporary scaffolding stairs for the project.

Starstone was the workers’ compensation carrier for Moreci's employer and paid Moreci $236,945.97 in benefits.

In May 2017, Moreci, represented by Boxer Gerson and Gary Roth, a member of the law firm, filed a personal injury complaint against Fulton and Liu. Fulton and Liu filed a cross-complaint for indemnification and contribution, eventually amending the cross-complaint to add Scaffold as a cross-defendant. Scaffold, in turn, filed a cross-complaint against Stockham for indemnification and contribution. Moreci did not immediately serve Starstone with a copy of the complaint.

In October 2019, Boxer Gerson gave Starstone notice of the November mediation date and copies of the underlying pleadings in the case, along with a request for further information concerning the workers’ compensation benefits it had paid to Moreci. Starstone's attorneys attended the mediation on November 19.

On November 21, a notice of settlement of the entire case was filed.

In January 2020, Starstone filed a complaint in intervention against Scaffold and Stockham seeking reimbursement for workers’ compensation benefits it had paid to Moreci.

On February 25 and March 11, the trial court entered the dismissals of the complaint and cross-complaints.

On June 2, Scaffold filed a notice that its attorneys, Wolfe and Wyman, LLP, were associating attorneys Gary Roth and Eric Ritigstein of Boxer Gerson as co-counsel. Scaffold then filed an answer to Starstone's complaint in intervention, asserting numerous affirmative defenses including the contributory negligence of Moreci's employer.

On June 29, Stockham filed a cross-complaint against Moreci for breach of written contract, express indemnity, and declaratory relief. The claims were based on a term in the settlement agreement, whereby Moreci agreed he "will fully satisfy and obtain the release of, and indemnify, defend and hold harmless Defendants [CROSS-COMPLAINANT] from, any lien, claim, loss, demand or cause of action, by any parties, agencies, insurers (including but not limited to medical insurers and workers’ compensation insurers such as Starstone), governmental entities, or others claiming to have suffered damage, loss or expense by reason of the matters at issue in the Subject Action ..." (usually referred to herein as "indemnification provision").¹ Moreci, through his counsel Boxer Gerson, filed an answer to Stockham's cross-complaint.

The Disqualification Motion

On July 16, Starstone filed a motion to disqualify all of Scaffold's attorneys of record. The motion was based on the indemnification provision. Specifically, Starstone argued Moreci and Boxer Gerson "switch[ed] sides" in the same lawsuit by "alleg[ing] fault and liability against [Scaffold] to obtain settlement," and then, once Starstone filed its complaint-in-intervention, aligned themselves with Scaffold to use "intimate ... case knowledge and possibly privileged information" gained by counsel in an "attempt to defeat [Starstone's] recovery claim (and thus keep settlement funds and achieve a double recovery specifically denounced by the Legislature) ...." Starstone asserted counsel's "switching sides attempt has infected .. the litigation," which Starstone claimed was sufficient to give it standing as a non-client, pursuant to a Federal District Court case, Colyer v. Smith (C.D.Cal. 1999) 50 F.Supp.2d 966 ( Colyer ).

Moreci and Scaffold separately opposed the motion. Moreci argued Starstone lacked standing because Starstone had no "attorney-client, confidential, or fiduciary relationship with counsel." Moreci and Scaffold each maintained Starstone also failed to establish the standing requirements under the exception in Colyer.

Starstone replied to the opposition, refuting the contention it lacked standing based on its right under the workers’ compensation statutes ( Lab. Code, § 3850 et seq. ) to seek reimbursement for compensation benefits it had paid to Moreci. According to Starstone, it had standing because its reimbursement right constitutes "a clear, concrete and particularized interest" that would be invaded by Boxer Gerson's continued participation.

After conducting a hearing on August 11, the trial court denied Starstone's motion to disqualify opposing counsel for lack of standing. The trial court explained Starstone had failed to show it had an attorney-client relationship with Scaffold's attorneys. It further found Starstone had no standing even under the "minority view" recognized in Colyer and cited by Starstone, because Starstone failed to show an "invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical." At most, Starstone alleged merely a generalized interest in "the court's obligation to ensure the fair administration of justice," an interest insufficient "to give a non-client standing."

Starstone appeals.

DISCUSSION

The Law on Standing and Standard of Review

A trial court's authority to disqualify an attorney derives from the power inherent in every court "[t]o control in furtherance of justice, the conduct of its ministerial officers, and of all other persons in any manner connected with a judicial proceeding before it, in every matter pertaining thereto." ( Code Civ. Proc., § 128, subd. (a)(5) ; City and County of San Francisco v. Cobra Solutions, Inc. (2006) 38 Cal.4th 839, 846, 43 Cal.Rptr.3d 771, 135 P.3d 20.)

"A ‘standing’ requirement is implicit in disqualification motions." ( Great Lakes Construction, Inc. v. Burman (2010) 186 Cal.App.4th 1347, 1356, 114 Cal.Rptr.3d 301 ( Great Lakes ).) A party moving to disqualify counsel must have a legally cognizable interest that would be harmed by the attorney's conflict of interest. ( Id. at p. 1357, 114 Cal.Rptr.3d 301.) Courts have found an attorney-client relationship between the complaining party and the attorney sought to be disqualified is a prerequisite to seeking disqualification. ( Id. at p. 1356, 114 Cal.Rptr.3d 301 ; Strasbourger Pearson Tulcin Wolff Inc. v. Wiz Technology, Inc . (1999) 69 Cal.App.4th 1399, 1404, 82 Cal.Rptr.2d 326 ["An attorney-client relationship must have existed before disqualification is proper"].)

"Other courts, however, have slightly broadened the scope of that general rule," holding that a non-client may bring a disqualification motion based on an attorney's breach of a duty of confidentiality owed to the non-client. ( Dino v. Pelayo (2006) 145 Cal.App.4th 347, 352, 51 Cal.Rptr.3d 620, citing DCH Health Services Corp. v. Waite (2002) 95 Cal.App.4th 829, 832, 115 Cal.Rptr.2d 847 ( DCH Health Services ) ["Standing arises from a breach of the duty of confidentiality owed to the complaining party, regardless of whether a lawyer-client relationship existed"].)

As it did below, Starstone relies on Colyer , supra , 50 F.Supp.2d 966, which recognized what California courts have described as the "minority" view for standing to bring a disqualification motion.² (See Great Lakes , supra , 186 Cal.App.4th at p. 1357, 114 Cal.Rptr.3d 301 ; In re Marriage of Murchison , supra , 245 Cal.App.4th at p. 852, 199 Cal.Rptr.3d 800.) Colyer addressed the question of when a party has standing to move to disqualify opposing counsel based on that counsel's breach of its duties of loyalty and confidentiality to a third party. ( Colyer , at p. 969.) The court noted standing to bring a disqualification motion in federal court that is based on a conflict of interest ordinarily is limited to clients or...