Opinion
NOT TO BE PUBLISHED
Santa Clara County Super. Ct. No. CV054997
McAdams, J.
At issue in this appeal is an attorney disqualification order. The appellant claims that the trial court abused its discretion in disqualifying his attorney for a conflict of interest. Rejecting that claim, we affirm the challenged order.
BACKGROUND
The parties to this litigation are plaintiff Edgar Julian Phillips (appellant) and defendant George Yapo (respondent). Appellant, described as a “licensed loan agent,” arranged loans for respondent from 1998 to 2002.
Appellant’s attorney in this action is Charles Wagner. Wagner has represented appellants for “some years in a variety of matters.” Wagner defended appellant in a 2002 lawsuit, brought by respondent, which gave rise to this malicious prosecution action. But Wagner also represented respondent for a brief period in 2000. That earlier representation is at the core of the dispute before us.
In 2000, respondent consulted Wagner.
Respondent became Wagner’s client in 2000 as the result of a referral by appellant. In August 2000, Wagner met with respondent twice; “the meetings took place in [Wagner’s] office” with both appellant and respondent present.
As stated in his 2003 declaration, attorney Wagner assisted respondent “in connection with a dispute he had with a swimming pool contractor.” The contractor had obtained a small claims judgment against respondent and had placed a mechanic’s lien against respondent’s real property. As Wagner understood it, respondent’s reason for retaining him “was to remove a cloud on [the] title to his property so he could apply for a loan.”
Wagner made “limited efforts (letters and telephone call) to pressure the contractor to release [the] mechanic’s lien….” In addition, the attorney prepared a document for respondent to present to the court at the small claims appeal, which “also served as an outline of the arguments to be raised at the hearing. [He] also reviewed and helped organize documents to be submitted to the court.”
In 2002, respondent sued appellant for fraud and negligence.
In 2002, respondent filed a complaint naming appellant and several business entities as defendants. In his first amended complaint, filed in March 2003, respondent alleged that the defendants had “deliberately misrepresented facts and information to plaintiff to induce him to enter into loans to his detriment.”
Wagner answered the complaint for all of the named defendants, including appellant. In March 2003, Wagner wrote to respondent’s then attorney, “demanding that the action be dismissed.” Shortly thereafter, Wagner served respondent with requests for discovery. In July 2003, Wagner brought a motion to compel further responses to the discovery requests, which was granted the following month.
In the meanwhile, in May 2003, respondent’s attorney wrote Wagner a letter demanding that he “recuse himself.” Wagner responded with a prompt written refusal. In August 2003, respondent’s attorney sent what Wagner described as a “purported … motion to disqualify” him. Respondent filed a declaration in support of the motion. Wagner filed a declaration in opposition. A hearing was set for October 2003. Citing discrepancies between the declarations submitted by Wagner and by respondent, the court scheduled an evidentiary hearing for December 2003, which was later continued.
Before the evidentiary hearing on the disqualification motion could be held, respondent dismissed the action.
In 2005, appellant sued respondent for malicious prosecution.
In December 2005, represented by attorney Wagner, appellant brought this action against respondent for malicious prosecution. Initially, respondent filed a special motion to strike the complaint, which was denied. In May 2006, appellant served respondent with discovery requests; responses were given the following month.
Meanwhile, in March 2006, respondent’s counsel sent a letter to Wagner, which closed with “a demand that [Wagner] recuse [him]self from this action immediately.” Wagner wrote back immediately, refusing to do so. A motion to disqualify Wagner was brought, with a hearing scheduled for July 2006.
As grounds for his motion to disqualify Wagner, respondent cited “a conflict of interest prohibited by the California Bar Rules, Professional Conduct Rule 3-310, and a violation of the ethical duties of confidentiality and loyalty.” Respondent supported his motion with points and authorities, a request for judicial notice of the files and records of the 2002 fraud action, including specific documents as attached, and his attorney’s declaration. Appellant opposed the motion, likewise submitting points and authorities, a request for judicial notice of the prior action, and a declaration by his attorney, Wagner.
In 2006, the trial court disqualified Wagner.
On August 25, 2006, the court issued an order announcing that the disqualification motion “is tentatively granted.” The order continues: “Although the court has high regard for Mr. Wagner, under these … facts, the court concludes that it must grant the motion to disqualify plaintiff’s counsel.” The order cites and discusses confidentiality concerns. It closes with these statements: “The court intends to adopt this tentative ruling, but if any party wishes further discussion of this motion, please arrange a hearing on a Monday or Friday morning. The court will hold off adopting this ruling for 10 days after the filing date of this order.”
On September 18, 2006, the court issued an order, which reads: “Having heard nothing from either party within 10 days of August 25, 2006, the court adopts its tentative ruling of that date. [¶] It is ordered that defendant’s motion to disqualify Mr. Wagner as counsel for plaintiff is granted.”
This appeal ensued.
In November 2006, a timely notice of appeal was filed on appellant’s behalf, signed by Wagner.
CONTENTIONS
Appellant challenges the disqualification order as an abuse of discretion, urging the lack of substantial evidence that Wagner obtained confidential information from respondent material to the current dispute. Appellant also claims a waiver of confidentiality, citing the fact of his own presence during respondent’s meetings with the attorney. Appellant further argues that the order disqualifying Wagner imposes an unreasonable burden on him and that respondent’s motives in seeking disqualification are suspect.
In his response brief, respondent first asks us to dismiss the appeal, arguing that Wagner is “incompetent” to sign the notice of appeal. He also defends the disqualification order on the merits, refuting each of appellant’s claims.
DISCUSSION
At the threshold, we consider respondent’s request for dismissal of the appeal, ultimately rejecting it. Turning next to the substantive issues, we first summarize the legal principles that govern attorney disqualification. We then apply those principles to the case at hand.
I. Request for Dismissal
In his appellate brief, respondent asserts that Wagner was “without authority to file the notice of appeal” because he was disqualified from representing plaintiff in this action and because neither he nor his client sought a stay of the disqualification order pending appeal. Respondent asks us to dismiss the appeal on that ground.
We are not persuaded by respondent’s argument for dismissal.
Under the governing rule, “an appellant must serve and file a notice of appeal in … superior court. The appellant or the appellant’s attorney must sign the notice.” (Cal. Rules of Court, rule 8.100(a).) The rule’s “purposes are satisfied when any person, attorney or not, who is empowered to act on appellant’s behalf, signs the notice.” (Seeley v. Seymour (1987) 190 Cal.App.3d 844, 853 [discussing predecessor rule, Cal. Rules of Court, former rule 1].)
Shortly after appellate rules were first promulgated, the California Supreme Court had occasion to discuss the current rule’s predecessor. (Estate of Hultin (1947) 29 Cal.2d 825, 832.) The court said this: “Rule 1(a) of the new Rules on Appeal provides: ‘The notice [notice of appeal] shall be signed by the appellant or his attorney and shall be sufficient if it states in substance that the appellant appeals from a specified judgment or a particular part thereof. A notice of appeal shall be liberally construed in favor of its sufficiency.’ … Nothing is said therein about ‘attorney of record,’ a phrase of recognized meaning. The words, ‘his attorney,’ must mean the appellant’s attorney, whether he appears as such of record or not.” (Ibid.) Like its predecessor, the current rule does not use the phrase “attorney of record.” (See Cal. Rules of Court, rule 8.100(a).)
Under this authority, in cases where the notice of appeal is “signed by appellant’s attorney, it need not be signed by the attorney of record.” (Bell v. Hummel (1982) 136 Cal.App.3d 1009, 1014, disapproved on other grounds Laird v. Blacker (1992) 2 Cal.4th 606, 617.) That is true, even if the attorney signing the notice of appeal has been relieved as attorney of record by the trial court, a point explained in In re Malcolm D. (1996) 42 Cal.App.4th 904. In that juvenile dependency case, at the conclusion of the proceedings, the juvenile court relieved the mother’s trial counsel. Thereafter, he filed a notice of appeal on her behalf, which the reviewing court found effective. Rebuffing the respondent’s request for dismissal of the appeal, the court said this: “In the absence of a satisfactory showing that the mother did not authorize counsel to sign the notice of intent [to appeal], notwithstanding his removal as counsel of record at the hearing, we assume counsel had the necessary authority.” (Id. at p. 910.) In our view, that principle applies with equal force to disqualification.
Here, despite the fact that Wagner was disqualified as attorney of record, there is no evidence to suggest either that he no longer represents appellant or that he lacks appellant’s consent to bring this appeal. Under these circumstances, we conclude, the notice of appeal signed by Wagner is valid and effective.
II. Attorney Disqualification: General Principles
To establish the proper framework for our analysis of the substantive question before us, we set forth the relevant legal principles affecting attorney disqualifications. We do so in three steps. First, we summarize the policy considerations. Next, we discuss conflicts of interest as a ground for attorney disqualification. Finally, we describe the review standard that governs this appeal.
A. Policy Considerations
“A motion to disqualify a party’s counsel may implicate several important interests.” (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1144 (SpeeDee Oil).) Some of those interests mainly affect those involved in the litigation. “Depending on the circumstances, a disqualification motion may involve such considerations as a client’s right to chosen counsel, an attorney’s interest in representing a client, the financial burden on a client to replace disqualified counsel, and the possibility that tactical abuse underlies the disqualification motion.” (Id. at p. 1145.) Beyond considerations affecting the parties, there is a societal interest in avoiding attorney conflicts. For that reason, “determining whether a conflict of interest requires disqualification involves more than just the interests of the parties.” (Ibid.)
“Ultimately, disqualification motions involve a conflict between the clients’ right to counsel of their choice and the need to maintain ethical standards of professional responsibility.” (SpeeDee Oil, supra, 20 Cal.4th at p. 1145.) “The paramount concern must be to preserve public trust in the scrupulous administration of justice and the integrity of the bar. The important right to counsel of one’s choice must yield to ethical considerations that affect the fundamental principles of our judicial process.” (Ibid.)
Nevertheless, courts must guard against the misuse of attorney disqualification motions, which “often pose the very threat to the integrity of the judicial process that they purport to prevent.” (Gregori v. Bank of America (1989) 207 Cal.App.3d 291, 300-301.) For that reason, disqualification is not “necessarily warranted where an attorney violates a specific disciplinary rule.” (Id. at p. 303.) Such rules “are not intended to be used as procedural weapons in disqualification cases.” (Ibid.) To the contrary, “the purpose of a disqualification order must be prophylactic, not punitive.” (Id. at pp. 308-309; accord, Neal v. Health Net, Inc. (2002) 100 Cal.App.4th 831, 844.)
B. Disqualifying Conflicts of Interest
“Two ethical duties are entwined in any attorney-client relationship. First is the attorney’s duty of confidentiality, which fosters full and open communication between client and counsel…. The second is the attorney’s duty of undivided loyalty to the client.” (City and County of San Francisco v. Cobra Solutions, Inc. (2006) 38 Cal.4th 839, 846.) “The interplay of the duties of confidentiality and loyalty affects the conflict of interest rules that govern attorneys.” (Ibid.)
Attorneys are required to avoid the representation of conflicting interests. (See Bus. & Prof. Code, § 6068, subd. (e); Flatt v. Superior Court (1994) 9 Cal.4th 275, 282 (Flatt).) The “well established ethical stricture against attorney conflicts of interest” is “embodied in rule 3-310 of our Rules of Professional Conduct.” (Flatt, at p. 282.)
The prohibition against the representation of conflicting interests protects current clients from simultaneous adverse representation; it also protects former clients from successive adverse representation. (Flatt, supra,9 Cal.4th at pp. 282-283; see Rules Prof. Conduct, rule 3-310(C) & (E).) But because different fiduciary concepts underlie the two types of relationships, different tests for conflict of interest apply to each. (Flatt, at p. 283.)
“The primary value at stake in cases of simultaneous or dual representation is the attorney’s duty—and the client’s legitimate expectation—of loyalty, rather than confidentiality.” (Flatt, supra,9 Cal.4th at p. 284.) Where that value is at stake, a strict test applies. As our high court has said, “in all but a few instances, the rule of disqualification in simultaneous representation cases is a per se or ‘automatic’ one.” (Ibid.)
“Where the potential conflict is one that arises from the successive representation of clients with potentially adverse interests,” – as is the case here – “the courts have recognized that the chief fiduciary value jeopardized is that of client confidentiality. Thus, where a former client seeks to have a previous attorney disqualified from serving as counsel to a successive client in litigation adverse to the interests of the first client, the governing test requires that the client demonstrate a ‘substantial relationship’ between the subjects of the antecedent and current representations.” (Flatt, supra,9 Cal.4th at p. 283.)
C. Appellate Review
An order disqualifying counsel is appealable. (See, e.g., Strasbourger Pearson Tulcin Wolff Inc. v. Wiz Technology, Inc. (1999) 69 Cal.App.4th 1399, 1402, fn. 1.)
Appellate courts generally review the trial court’s grant or denial of a disqualification motion for an abuse of discretion. (SpeeDee Oil, supra, 20 Cal.4th at pp. 1143-1144; Med-Trans Corp., Inc. v. City of California City (2007) 156 Cal.App.4th 655, 663.) If the material facts are not in dispute, the trial court’s exercise of discretion is reviewed as a question of law. (SpeeDee Oil, at p. 1144.) But if the trial court resolved factual disputes, the substantial evidence rule applies. (Ibid.; Strasbourger Pearson Tulcin Wolff Inc. v. Wiz Technology, Inc., supra, 69 Cal.App.4th at p. 1403.) In such cases, the reviewing court defers to the trial court’s “express or implied factual findings if substantial evidence supports” them. (Fremont Indem. Co. v. Fremont General Corp. (2006) 143 Cal.App.4th 50, 63.) Whether the order presents a question of fact or law, “the trial court’s discretion is limited by the applicable principles of law.” (Ibid.) The reviewing court thus must “ensure that the trial court has made a reasoned judgment that complies with the applicable legal standard.” (City National Bank v. Adams (2002) 96 Cal.App.4th 315, 323.)
“The burden is on the complaining party to establish an abuse of discretion. The showing on appeal is insufficient if it presents a state of facts which simply affords an opportunity for a difference of opinion.” (Gilbert v. National Corp. for Housing Partnerships (1999) 71 Cal.App.4th 1240, 1250.) “We will reverse the trial court’s ruling only where there is no reasonable basis for its action.” (City National Bank v. Adams, supra, 96 Cal.App.4th at p. 323.) We nevertheless remain cognizant that “a disqualification motion involves concerns that justify careful review of the trial court’s exercise of discretion.” (SpeeDee Oil, supra, 20 Cal.4th at p. 1144.) We undertake that careful review now.
III. Analysis
In this case, the dispute arises out of the successive representation of adverse parties, which implicates confidentiality concerns. In this context, “disqualification occurs because of the possibility that information obtained by the attorney in his earlier professional employment may now be used by him against his former employer-client.” (Cooke v. Superior Court (1978) 83 Cal.App.3d 582, 590.) A disqualification order thus operates “to protect a relationship of confidence and entrustment.” (Id. at p. 591.) “ ‘Protecting the confidentiality of communications between attorney and client is fundamental to our legal system.’ ” (Fremont Indem. Co. v. Fremont General Corp., supra, 143 Cal.App.4th at p. 66.)
A. Substantial Relationship Test
As explained above, former clients seeking to disqualify counsel are required to “demonstrate a ‘substantial relationship’ between the subjects of the antecedent and current representations.” (Flatt, supra,9 Cal.4th at p. 283.) “When a substantial relationship between the two representations is established, the attorney is automatically disqualified from representing the second client.” (City and County of San Francisco v. Cobra Solutions, Inc., supra, 38 Cal.4th at p. 847.)
“To determine whether there is a substantial relationship between successive representations, a court must first determine whether the attorney had a direct professional relationship with the former client in which the attorney personally provided legal advice and services on a legal issue that is closely related to the legal issue in the present representation.” (City and County of San Francisco v. Cobra Solutions, Inc., supra, 38 Cal.4th at p. 847.) That determination subsumes two interrelated issues: the nature of the attorney’s contact with the former client and the relationship between the legal issues in the former representation and those in the current one. (See Jessen v. Hartford Casualty Ins. Co. (2003) 111 Cal.App.4th 698, 709; cf., Med-Trans Corp., Inc. v. City of California City, supra, 156 Cal.App.4th at p. 666 [beyond those two issues, “further analysis is necessary” where “the prior meeting was apparently in the nature of a preliminary consultation which did not result in professional employment of the attorney”].)
1. Client Relationship
Here, it is undisputed that Wagner had a direct professional relationship with respondent. He was “personally involved in providing legal advice and services” to respondent, his former client. (Fremont Indem. Co. v. Fremont General Corp., supra, 143 Cal.App.4th at p. 67.) That being so, “the former client need not prove that the attorney possesses actual confidential information. [Citation.] Instead, the attorney is presumed to possess confidential information if the subject of the prior representation put the attorney in a position in which confidences material to the current representation would normally have been imparted to counsel.” (City and County of San Francisco v. Cobra Solutions, Inc., supra, 38 Cal.4th at p. 847; accord, Fremont Indem. Co. v. Fremont General Corp., at pp. 67-68; see also, e.g., Med-Trans Corp., Inc. v. City of California City, supra, 156 Cal.App.4th at p. 665.)
2. Subject Matter
“The subject of a current representation is substantially related to the subject of a prior representation only if the issues are sufficiently similar to support a reasonable inference that the attorney in the course of the prior representation was likely to have obtained confidential information material to the current representation.” (Fremont Indem. Co. v. Fremont General Corp., supra, 143 Cal.App.4th at p. 67.) In other words, “successive representations will be ‘substantially related’ when the evidence before the trial court supports a rational conclusion that information material to the evaluation, prosecution, settlement or accomplishment of the former representation given its factual and legal issues is also material to the evaluation, prosecution, settlement or accomplishment of the current representation given its factual and legal issues.” (Jessen v. Hartford Casualty Ins. Co., supra, 111 Cal.App.4th at p. 713.) Thus, “disqualification will depend on the strength of the similarities between the legal problem involved in the former representation and the legal problem involved in the current representation.” (Id. at p. 709.)
Here, the trial court implicitly determined that a substantial relationship exists between the former and current representations. Its August 2006 tentative ruling includes a self-described “brief discussion of the court’s thoughts.” One of the “issues of concern” identified by the court was the attorney’s “confidential communication with [respondent] which included discussions of his assets and possibly his mental limitations….” The court observed: “Mr. Wagner acknowledged that to some degree he discussed [respondent’s] property. This may be important in a malicious prosecution action where [appellant] seeks punitive damages.”
The evidentiary record supports the court’s determination.
That evidence includes respondent’s September 2003 declaration, which was the subject of both parties’ requests for judicial notice. In that declaration, respondent stated: “On the first meeting with Mr. Wagner I discussed with him my financial situation to include my resources, where money was coming from and the property that I owned at that point in time.” Respondent continued: “During those discussions it was made clear to Mr. Wagner that I had some medical difficulties that impacted [m]y thought processes. In addition, I discussed with Mr. Wagner the position that [appellant] had with respect to my financial affairs and how I relied upon him to perform certain tasks and assist me in certain ways.” Respondent further declared: “The very information that I have discussed with Mr. Wagner regarding my medical problems, my financial affairs and my reliance upon [appellant’s] activities are now being used against me by Mr. Wagner to benefit [appellant].”
The evidentiary record also contains a June 2006 declaration, submitted by respondent’s counsel in support of the disqualification motion. The exhibits to that declaration include counsel’s letter of March 31, 2006, which demands Wagner’s recusal. Addressing the subject matter of respondent’s August 2000 consultation with Wagner, that letter states: “The mechanic’s lien came up as [appellant] coordinated the Investment Grade Loans loan of $275,000 for [respondent]. Prior to the loan’s funding in October 2000, the lender required [respondent] to clear title. … That is the same loan that is the subject of this, and the underlying Yapo v. Phillips action.”
In addition, the record also includes respondent’s discovery responses in the current action for malicious prosecution, which were attached to Wagner’s July 2006 declaration. Those discovery responses contain these statements: “Wagner assisted in the procurement of a disputed loan for [respondent]. … Wagner obtained information relating to [respondent’s] finances and cognitive limitations.”
The foregoing evidence adequately supports the trial court’s finding of a substantial relationship between the former and current representations, notwithstanding appellant’s attempts to characterize his August 2000 consultation with respondent as unrelated to this litigation. To the extent that appellant’s declarations raise a factual dispute, we disregard them. “We presume the trial court found for the prevailing party on all disputed factual issues.” (City National Bank v. Adams, supra, 96 Cal.App.4th at p. 323.) That is so even where there is no live testimony, since “declarations in favor of the prevailing party must be taken as true….” (Id. at p. 322.)
In sum, on this record, the trial court acted properly in finding a substantial relationship between the former and current representations and in disqualifying Wagner as a result.
B. Client Confidences
Appellant nevertheless insists that his attorney received no client confidences from respondent in August 2000. The attorney-client privilege was waived, appellant asserts, because he was present during Wagner’s meetings with respondent. Respondent disagrees. He cites Evidence Code section 951, which defines the word “client” for purposes of the attorney-client privilege as “a person who, directly or through an authorized representative, consults a lawyer for the purpose of retaining the lawyer or securing legal service or advice from him in his professional capacity….” (Evid. Code, § 951, italics added; see, e.g., Moeller v. Superior Court (1997) 16 Cal.4th 1124, 1129; Hyon v. Selten (2007) 152 Cal.App.4th 463, 469.)
In its tentative ruling, the trial court expressed its concern about “confidential communications in the presence of [appellant].” It stated: “While ordinarily the presence of a stranger to an attorney-client conference would constitute a waiver of the privilege, the court cannot rule out the possibility that [appellant] was present to assist [respondent] during the discussions with Mr. Wagner.”
Both the facts and the law support the court’s determination. According to respondent’s 2003 declaration, he had cognitive difficulties and relied on appellant concerning his financial affairs. Under those circumstances, the trial court did not err in implicitly finding appellant to be respondent’s authorized representative for purposes of the attorney-client privilege. “By including ‘authorized representative’ in the definition of ‘client,’ the statute extends the privilege to cover not only communications directly between the client and the attorney but also communications between the client’s agents and the attorney.” (Hyon v. Selten, supra, 152 Cal.App.4th at p. 469.)
C. Prejudice
In his final argument on appeal, appellant asserts prejudice from the disqualification order, citing the cost of changing attorneys and respondent’s delay in bringing the motion. Appellant’s claim of undue burden is not persuasive.
“If a substantial relationship is established, the discussion should ordinarily end. The rights and interests of the former client will prevail. Conflict will be presumed; disqualification will be ordered.” (River West, Inc. v. Nickel (1987) 188 Cal.App.3d 1297, 1308; see also, e.g., City and County of San Francisco v. Cobra Solutions, Inc., supra, 38 Cal.4th at p. 847.) “However, it is not in the interests of justice to make the ‘substantial relationship’ rule so unyielding as to permit the former client to inexcusably postpone objections without penalty.” (River West, Inc. v. Nickel, at p. 1309.) “The trial court must have discretion to find laches forecloses the former client’s claim of conflict.” (Ibid.) But “ ‘mere delay’ in making a disqualification motion is not dispositive. The delay must be extreme in terms of time and consequence.” (Id. at p. 1311.)
Here, the record supports the trial court’s implicit determination that any delay in seeking disqualification was not “extreme in terms of time [or] consequence.” (River West, Inc. v. Nickel, supra, 188 Cal.App.3dat p. 1311.) Concerning the timing, conflict of interest claim was first claimed during the 2002 litigation, in correspondence dating back to May 2003. In the current case, the claim was raised initially in a March 2006 letter, which predated respondent’s answer to the 2005 complaint. Three months later, in June 2006, respondent filed the disqualification motion. As this chronology demonstrates, there was no excessive delay. Nor are the attendant economic consequences so extraordinary as to warrant departure from the usual rule, which requires disqualification where a substantial relationship exists between the former and current relationships. (Id. at pp. 1308-1309.)
CONCLUSION
It was appellant’s burden to demonstrate an abuse of discretion by the trial court. (Gilbert v. National Corp. for Housing Partnerships, supra, 71 Cal.App.4th at p. 1250.) He failed to carry that burden here. On this record, the court was fully justified in disqualifying Wagner.
DISPOSITION
The September 2006 order disqualifying appellant’s counsel is affirmed.
WE CONCUR: Bamattre-Manoukian, Acting P.J., Mihara, J.