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Fox Hollow of Turlock Owners' Association v. Sinclair

February 5, 2010

FOX HOLLOW OF TURLOCK OWNERS' ASSOCIATION, ET AL., PLAINTIFFS,
v.
RICHARD SINCLAIR, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Oliver W. Wanger United States District Judge

MEMORANDUM DECISION CONDITIONALLY GRANTING NEUMILLER & BEARDSLEE'S MOTION TO WITHDRAW AS COUNSEL FOR DEFENDANTS (Doc. 333); GRANTING IN PART AND DENYING IN PART DEFENDANT RICHARD SINCLAIR'S MOTION FOR CONTINUANCE OF ALL MATTERS UNTIL MARCH 21, 2010 AND FOR TRIAL POSTPONEMENT (Doc. 340); DENYING WITHOUT PREJUDICE PLAINTIFFS' MOTION FOR LEAVE TO FILE CONSOLIDATED AMENDED AND SUPPLEMENTAL COMPLAINT (Doc. 336); AND DIRECTING DEFENDANTS TO APPEAR ON MONDAY, MARCH 1, 2010 AT 11:00 A.M. AND SHOW CAUSE WHY THEY SHOULD NOT BE REQUIRED TO ENGAGE COUNSEL OF THEIR CHOICE

Before the Court is Neumiller & Beardslee's motion to withdraw as counsel for Defendants, Defendant Richard Sinclair's amended motion for continuance of all matters due to attorney disability, and Plaintiffs' motion for leave to file a consolidated amended and supplemental complaint. No appearance, either personally or telephonically was made at the hearing by Defendant Richard Sinclair or any of the other individual or entity Defendants. This case is a consolidation of three actions: An action commenced by Plaintiff Fox Hollow of Turlock Homeowners' Association against Richard Sinclair, Brandon Sinclair, Gregory Mauchley, Lairtrust, LLC, Capstone, LLC, Mauctrst, LLC, and Stanley Flake as Trustee of Capstone Trust, Case No. CV-F-03-5439 OWW/DLB ("Fox Hollow Action"); an action commenced by California Equity Management Group, Inc. against Mauctrst LLC, Gregory Mauchley, Diana Mauchley, Lairtrust LLC, Richard Sinclair, Deborah Sinclair, Sinclair Enterprises, Inc., Capstone, LLC, Brandon Sinclair, Stanley Flake, and Stanley Flake as Trustee of the F. Hanse Trust and of the Julie Insurance Trust Case No. CVF-03-5774 OWW/DLB ("CEMG Action"); and an action commenced by Lairtrust LLC, Mauctrst LLC, and Capstone LLC against Fox Hollow of Turlock Owners' Association, Andrew Katakis, and California Equity Management Group, Inc. in the Stanislaus County Superior Court, Case No. 322675 ("Lairtrust Action"), removed to this Court and consolidated with the Fox Hollow and CEMG Actions by Order filed on October 6, 2003 ("Consolidated Federal Actions").

Most of the Defendants in the Fox Hollow and CEMG Actions commenced, as Plaintiffs, an action in the Stanislaus County Superior Court, against Fox Hollow and CEMG, Case No. 332233 (the "State Court Action"). This case was stayed to permit trial of the state case with the expectation that the state case would likely resolve the need for trial in the federal case. On August 18, 2009, the Superior Court issued a Statement of Decision, finding for Defendants on the Fifth Amended Complaint and for Cross-Defendants Richard Sinclair, Gregory Mauchley and Mauctrst on the Cross-Complaint for abuse of process. Plaintiffs in the State Court Action have filed an appeal, which is pending. Plaintiffs' motion to file an amended complaint was filed on January 8, 2010 as a counter-motion to the motion to withdraw as counsel. Rule 230(c), Local Rules of Practice, provides:

Any counter-motion or other motion that a party may desire to make that is related to the general subject matter of the original motion shall be served and filed in the manner and on the date prescribed for the filing of opposition. If a counter-motion or other related motion is filed, the Court may continue the hearing on the original and all related motions so as to give all parties reasonable opportunity to serve and file oppositions and replies to all pending motions.

Plaintiffs assert that the motion to amend is a counter-motion to Neumiller's motion to withdraw because the motion to withdraw "will directly impact Plaintiffs' ability to obtain leave to file a Consolidated Amended and Supplemental Complaint as it impermissibly contemplates leaving several of the entity defendants without representation" and because Mr. Sinclair's request for continuance requests that the current trial date be postponed and the Counter-Motion "substantively address[es] any adjustment of the schedule for this Action." By opposition filed on January 19, 2010, Neumiller, acting on behalf of Defendants, argues that the motion to amend is not a counter-motion to Neumiller's motion to withdraw:

The entity defendants being without representation following a granting of the Motion for Leave to Withdraw could not preclude Katakis and his entities, who are represented by counsel, from filing a new pleading with leave of court or otherwise proceeding in this litigation. Second, the fact that Mr. Sinclair filed an Ex Parte Application for Continuance and Trial Postponement does not present grounds for Katakis to bring a counter-motion as against the Motion for Leave to Withdraw, which is distinct from the Ex Parte Application.

Third, and finally, the inclusion of a proposed schedule adjustment in the Counter-Motion is not sufficient to create a relationship between the Counter-Motion on the one hand and the Motion for Leave to Withdraw and Ex Parte Application on the other hand. The primary purpose of the Counter-Motion is to obtain leave to file a new pleading, and not to obtain a schedule adjustment.

No opposition to the substantive merits of the motion to amend has been filed. Neumiller is correct that the motion to amend is not related or counter to the motion to withdraw, as it addresses the continuing claims asserted while the withdrawal motion concerns only the legal representation of the defendants. Further, the briefing on the motion is not complete and, even if Defendants had filed a substantive opposition to the motion to amend, the reply brief would not be filed until the day of the hearing. Richard Sinclair, who seeks to be substituted as counsel, moves for a continuance of all matters until late March, 2010. Plaintiffs' motion to amend is DENIED WITHOUT PREJUDICE. Plaintiffs may re-notice the motion for hearing on March 1, 2010 at 11:00 a.m. On December 21, 2009, the law firm of Neumiller & Beardslee ("Neumiller") filed a motion for leave to withdraw as counsel for Defendants in the Consolidated Federal Actions. Neumiller's motion is supported by the Declaration of Lisa Blanco Jimenez that Defendants have breached their retainer agreement by failing to pay fees and costs. (Doc. 333-3). Ms. Jimenez further avers:

3. Neumiller has been unable to make contact with Richard Sinclair or Brandon Sinclair since early November 2009, except through the legal assistant to Richard Sinclair. It was earlier agreed that Richard Sinclair, who is a practicing attorney, would assume the representations of all Defendants in this case and on the appeal of Case No. 332233. Thus, the recent inability to communicate with Richard Sinclair has made it difficult to continue with the representation of all Defendants.

At the hearing, Ms. Jimenez represented that she has been unable to communicate with any of the other individual Defendants or the Entity Defendants.

The motion to withdraw was noticed for hearing on January 25, 2009. On January 12, 2009, Richard Sinclair lodged a proposed Substitution of Attorney, substituting himself as counsel of record in lieu of Neumiller & Beardslee. On January 14, 2010, Plaintiffs and Defendants Fox Hollow of Turlock Owners' Association and California Equity Management Group, Inc., and Defendant Andrew Katakis (collectively "Fox Hollow") filed an opposition to the motion to withdraw, based on the assertion that Richard Sinclair, although a licensed attorney, cannot represent the entity defendants because of a potential conflict of interest. The Order substituting Richard Sinclair as counsel of record was signed and filed on January 15, 2010. (Doc. 347). The Order substituting Richard Sinclair as counsel of record lists only his name; none of the other Defendants are listed. The Order substituting Richard Sinclair as counsel of record was vacated by Order filed on January 19, 2010 because of Fox Hollow's objections to Neumiller's motion to withdraw.

Fox Hollow opposes Neumiller's motion to withdraw. Fox Hollow asserts that granting Neumiller's motion will leave the Entity Defendants, Lairtrust, LLC, Capstone, LLC, Mauctrst LLC, and Sinclair Enterprises, without representation. Richard Sinclair, who is a licensed attorney, cannot represent the Entity Defendants, Fox Hollow contends, because he was involved in the formation of Fox Hollow and previously represented Fox Hollow, that are now adverse parties, and because of the potential for a conflict of interest between Mr. Sinclair and the Entity Defendants.

Neumiller correctly responds that the prohibition on corporate self-representation does not preclude the granting of a motion to withdraw. See Vang v. Home Loan Funding, Inc., 2008 WL 3286825 (E.D.Cal.2008), ruling that an attorney may be allowed to withdraw without offending the rule against corporate self- representation, citing Ferruzzo v. C. & D. Enterprises, Inc., 104 Cal.App.3d 501, 504 (1980).

As to Fox Hollow's contention that the motion to withdraw be denied because of Mr. Sinclair's conflicts of interest, Neumiller asserts that Fox Hollow has put the cart before the horse because neither Neumiller nor any other party has yet to seek ...


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