Bridgepoint Constr. Servs., Inc. v. Newton

237 Cal. Rptr. 3d 598, 26 Cal. App. 5th 966
CourtCalifornia Court of Appeal, 5th District
DecidedSeptember 4, 2018
Docket2d Civ. No. B283239
StatusPublished
Cited by3 cases

This text of 237 Cal. Rptr. 3d 598 (Bridgepoint Constr. Servs., Inc. v. Newton) is published on Counsel Stack Legal Research, covering California Court of Appeal, 5th District primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bridgepoint Constr. Servs., Inc. v. Newton, 237 Cal. Rptr. 3d 598, 26 Cal. App. 5th 966 (Cal. Ct. App. 2018).

Opinion

GILBERT, P.J.

*599An attorney represents more than one client, all of whom seek damages from a pool of money controlled by another party. In addition to multiple other reasons why the attorney here should be disqualified, when more than one client is seeking funds from the same source, the conflict is self-evident. There might not be enough money to satisfy each client's claim.

This is an appeal from an order disqualifying an attorney for a conflict of interest. We affirm.

FACTS

Bridgepoint Construction Services, Inc. (Bridgepoint) was hired by Vista Oceano La Mesa Venture, LLC (Vista) to perform construction services on a project in Santa Barbara. Bridgepoint has two shareholders, Norman Salter, who owns 25 percent, and Martin Newton, who owns 75 percent. Newton also has an interest in Vista. Salter and Dilip Ram are business associates.

Bridgepoint and Salter brought an action against Vista, Newton and others, alleging defendants owed them approximately $2 million for construction services.

Vista cross-complained against Salter, Ram and others, alleging Salter and Ram diverted assets from Bridgepoint, depriving Vista of moneys due to it. In December 2014, Robert Klein became attorney of record for Bridgepoint, Salter and Ram.

In December 2016, Klein designated an expert, Karl Schulze, to review Bridgepoint's financial records. Schulze reviewed Bridgepoint's financial records, including records related to the Vista project, and determined Bridgepoint is owed $2 million.

In January 2017, Newton successfully moved to disqualify Klein from representing Bridgepoint and Salter. The trial court found that Bridgepoint and Salter have conflicts of interest relating to indemnity or other claims against each other. Bridgepoint retained the law firm of Woosley and Porter to represent it.

In February 2017, Klein filed a cross-complaint on behalf of Ram against Vista and Newton. The cross-complaint alleged that Ram advanced money to the Vista project. Ram seeks the return of the money. The money Ram seeks returned is part of the $2 million Bridgepoint and Salter seek in their complaint against Vista and Newton.

In April 2017, Woosley and Porter filed a cross-complaint on behalf of Bridgepoint against Salter and Ram. The cross-complaint alleged causes of action for conversion, self-dealing, breach of fiduciary duty, and failure to allow the inspection of the corporate records reviewed by Schulze.

After Klein filed Ram's cross-complaint, Bridgepoint moved to disqualify Klein from representing Ram. Newton joined in the motion. Klein acknowledged that he represents Bridgepoint and Salter in a "related case" against James Lassiter in the United States District Court in Arizona. The trial court granted the motion, finding that Klein has a conflict arising out of the simultaneous representation of Bridgepoint in the Arizona case and Ram in this case, as well as a conflict arising out of the *600successive representation of Bridgepoint and Ram in this case.

DISCUSSION

Klein contends the trial court erred in disqualifying him.

If an attorney simultaneously represents two clients with adverse interests, disqualification is automatic. ( Blue Water Sunset, LLC v. Markowitz (2011) 192 Cal.App.4th 477, 487, 122 Cal.Rptr.3d 641.) Where an attorney represents a current client against a former client, the attorney will be subject to disqualification if there is a substantial relationship between the subject matter of the two representations. ( Flatt v. Superior Court (1994) 9 Cal.4th 275, 283, 36 Cal.Rptr.2d 537, 885 P.2d 950.) Disqualification is mandatory in the context of successive representation where the attorney obtains confidential information in the course of representing the former client that is relevant to the representation of the current client. ( Ibid. ) We review for an abuse of discretion. ( Rico v. Mitsubishi Motors Corp. (2007) 42 Cal.4th 807, 819, 68 Cal.Rptr.3d 758, 171 P.3d 1092.)

Klein appears to believe there is no conflict of interest because he is not suing Bridgepoint or Salter; instead, Bridgepoint, Salter and Ram are all suing Vista and Newton. What Klein ignores is that Bridgepoint, Salter and Ram are all seeking the same damages from the same $2 million pool. The conflict is obvious. Every dollar that Ram obtains from the pool is a dollar that is not available to Bridgepoint or Salter.

Klein inadvertently admitted to the conflict at oral argument on the disqualification motion when he stated: "Your Honor, what [Bridgepoint] says all these parties with conflicting claims. There really isn't. Because Bridgepoint, Ram and Salter are seeking to recover $2 million for Bridgepoint. The conflicting claims, what he's referring to I believe, is that a lot of these people are claiming that same $2 million. Both parties have a declaratory relief action that says in the event Bridgepoint recovers the money, the Court can determine who's entitled to it."

That the trial court will ultimately decide who recovers the money does not resolve the conflict. The court's decision will be influenced by the representation each party receives.

Here Klein simultaneously represents Bridgepoint in the Arizona action and Ram in the instant action. Thus, disqualification is automatic. If that is not enough, the trial court reasonably concluded that Klein obtained confidential information from Bridgepoint when he retained Schulze as an expert to review Bridgepoint's financial records. Finally, there is a substantial relationship between the subject matter of Klein's former representation of Bridgepoint in this case and his current representation of Ram. The court had multiple independent grounds for disqualifying Klein. The court would have abused its discretion had it not disqualified Klein.

Klein requests that we take judicial notice that an action filed by David Schuman against Bridgepoint and Salter was settled. Klein claims this action was the reason for the initial disqualification. Thus, he argues there is no longer any conflict.

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Cite This Page — Counsel Stack

Bluebook (online)
237 Cal. Rptr. 3d 598, 26 Cal. App. 5th 966, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bridgepoint-constr-servs-inc-v-newton-calctapp5d-2018.