In re Jeffrey Reich

United States Bankruptcy Court, E.D. California·Decided November 19, 2025·No. 25-10499·Unknown

Opinion

In re ) Case No. 25-10499-B-7 ) JEFFREY REICH, ) Docket Control No. MLO-2 ) ) Debtor. ) ) ) )

MEMORANDUM RULING ON PAMELA REICH’S MOTION FOR RECONSIDERATION OF THE COURT’S ORDER AND MEMORANDUM RULING ON MOTION TO DISQUALIFY COUNSEL

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Richard Ryan McMath, MCMATH LAW OFFICE, for Pamela Reich, Movant.

Megan Zavieh, ZAVIEH LAW, for JEFFREY REICH, Respondent.

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RENÉ LASTRETO II, Bankruptcy Judge: Extraordinary remedies are imposed sparingly. Reconsideration of a federal court order is one of those remedies. Often requested but rarely granted, these motions are commonly used to reargue unsuccessful contentions. Here, a creditor and estranged spouse of the debtor wants to invoke the extraordinary remedy so creditor’s disqualified counsel can continue representation in this case. But no manifest error of /// /// law or fact or newly discovered evidence exists here. The motion for reconsideration will be DENIED. 1 I. A. Motion to Disqualify Counsel On September 11, 2025, the court issued an order disqualifying attorney Shane Reich (“Shane”) from representing his mother, Pamela Reich (“Pamela”) in his father, attorney Jeffrey Reich’s (“Jeffrey”) chapter 7 bankruptcy. Pamela and Jeffrey are in the throes of a contentious decade long dissolution case. The court issued a 27-page ruling outlining three independent reasons why Shane was disqualified. First, Shane was employed by Jeffrey’s law firm for twenty years, during which time he directly represented Jeffrey in litigation in which his financial status was a significant issue. Both attorney/client and otherwise confidential communications concerning Jeffrey’s finances require protection from the risk of disclosure. The disqualifying fact here is Shane’s successive representation of Pamela adverse to Jeffrey without Jeffrey’s informed written consent under circumstances where Shane acquired confidential information including attorney/client communications. ///

1 The following is the court’s findings of fact and conclusions of law under Fed. R. Civ. Proc. 52 (Fed. R. Bankr. Proc. 7052). Any finding of fact deemed a conclusion of law is so adopted. Any conclusion of law deemed finding of Second, Shane’s work at Jeffrey’s firm as bookkeeper gave Shane access to confidential information concerning the firm’s finances. The court weighed the conflicting evidence about Shane’s role as bookkeeper and found testimony of Jeffrey’s accountant to tip the persuasive scale in Jeffrey’s favor. Jeffrey has alleged that Shane misappropriated hundreds of thousands of dollars from the firm. Shane strenuously denies that fact. In reply to the opposition to the disqualification motion, Jeffrey stated he would not pursue that claim. Third, even independent of the attorney/client relationship or bookkeeper relationship, the inherent authority of the court to disqualify can be applied when the facts support a finding that a fiduciary or confidential relationship arose such that the continued representation of a party adverse to the one with whom the relationship arose would betray that relationship. Such is the case here. The court found that the facts supported a finding that a fiduciary or confidential relationship arose between Jeffrey and Shane such that representation of Pamela by Shane would betray that relationship. Aside from Shane’s lengthy employment by Jeffrey, Shane is Jeffrey’s son. Confidential information was bound to be shared given the circumstances. The risk of use of confidential information by Shane was sufficient to disqualify Shane as a prophylactic remedy. Fourteen days after the court issued its opinion and order, Pamela (with new counsel) filed this motion for reconsideration. /// /// B. The Parties’ Contentions 1. Pamela’s Contentions. Pamela contends first that she was denied due process. Her theory is that, as the court noted, Jeffrey Reich’s reply declaration in the underlying motion stated that he was not going to pursue his asserted claim that Shane and Pamela allegedly misappropriated funds from the “community property law firm.” Therefore, Pamela argues, she was denied the opportunity to respond to that statement, which she claims is untrue. The purported significance of this is that Jeffrey’s pursuit of the claim amounts to a waiver of confidentiality “associated” to the allegation. Second, Pamela posits that the court did not address that Jeffrey had a fiduciary duty to Pamela to provide information concerning community property assets as required by Cal. Fam. Code. §§ 721(b) and 1100(e). She further posits that any information Shane may have had about Jeffry’s finances was information Jeffrey was legally required to share with Pamela anyway. Pamela argues that Shane represented both her and Jeffrey during the relevant time frame and thus was not disqualified from representing Pamela now. She also argues that no harm to Jeffrey can occur because of Shane’s representation of Pamela because Jeffrey was bound by law to share the information with Pamela anyway. Third, Pamela urges that the information Shane obtained while employed by the “community property law firm” over the /// course of twenty years was not confidential because Jeffrey stopped “trusting” Shane with firm finances after the end of 2016. 2. Jeffrey’s Contentions in Opposition. Jeffrey’s opposition raises five issues. First, motions for reconsideration are not meant to re-litigate issues and are only to be used in extraordinary circumstances. Nothing presented by Pamela, Jeffrey argues, warrants the extraordinary relief requested. Second, Jeffrey urges there is no manifest error of law or fact. Shane, Jeffrey argues, has always been fully aware of his relationship with Jeffrey, whether as his attorney, as his employee, as his bookkeeper, and as his son. No newly discovered evidence was presented. Third, Jeffrey contends that Pamela’s inability to respond to Jeffrey’s statement that he would not pursue the misappropriations claim against Shane is irrelevant. The nature of briefing in court is the reply is the last word. Fourth, Jeffrey argues that the court is not required to respond to every argument presented by a party. Fifth, Jeffrey claims that his marriage to Pamela does not render his rights as Shane’s client moot. Jeffrey is entitled to rely on confidentiality. /// /// /// /// 3. Pamela’s Reply. Pamela’s reply (Doc. #218) repeats the same points as the motion. She now argues the opposition was late.2 Pamela reiterates her complaint that the court considered the reply on Jeffrey’s motion to disqualify denying her due process. Additionally, she reiterates that Jeffrey’s fiduciary duties to Pamela under state law made Shane’s duty to maintain Jeffrey’s confidences “evaporate.” Again, Pamela argues that any remaining confidence that Jeffrey reposed on Shane was merely general business and litigation strategy and not protected.3 C. This court’s jurisdiction arises by reference from the United States District Court for the Eastern District of California under 28 U.S.C. § 157(a). The District Court has jurisdiction under 28 U.S.C. § 1334(b). This court may hear and finally determine this motion as it asks the court to reconsider ///

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