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Charles Virzi Construction, Inc., et al v. G. Kevin Studer et al

December 23, 2010

CHARLES VIRZI CONSTRUCTION, INC., ET AL., PLAINTIFFS, CROSS-DEFENDANTS AND APPELLANTS,
v.
G. KEVIN STUDER ET AL., DEFENDANTS, CROSS-COMPLAINANTS AND RESPONDENTS.



Appeal from an order of the Superior Court of Orange County, Charles Margines, Judge. Affirmed. (Super. Ct. No. 07CC02257)

The opinion of the court was delivered by: Ikola, J.

Virzi Construction v. Studer CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

OPINION

Plaintiff and cross-defendant Charles Virzi Construction, Inc. (CVC), and cross-defendant Charles Virzi (Charles)*fn1 (collectively, Virzi) appeal from an order denying Virzi's motion to disqualify opposing counsel. Virzi contends the court erred by not recognizing that defendants G. Kevin Studer (Studer) and Wells Fargo Bank (WFB) had conflicting interests in the litigation that barred opposing counsel from jointly representing Studer and WFB. But Virzi lacked standing to bring the motion, which in any event lacked merit. We affirm.

FACTS

CVC entered into a written contract with Studer in June 2005 for demolition, removal and improvements to Studer's home. The contract set out an estimated completion date of about one year, but toward the end of this period disputes arose between CVC and Studer regarding delays in the remodeling project, the quality of the work performed, and the total amount due on the contract. The parties' attempts to negotiate a settlement ultimately fell through.

In December 2006, CVC recorded a mechanic's lien against Studer's property, claiming Studer owed the company roughly $90,000. The following month, CVC filed suit against Studer and his lender, WFB. The causes of action against Studer included breach of contract, common counts, and declaratory relief. CVC also asserted causes of action against both Studer and WFB for breach of contract (alleging that CVC was an intended third party beneficiary of the construction loan) and foreclosure of a mechanic's lien (claiming its lien was superior to WFB's deed of trust). Studer filed a cross-complaint against CVC and Charles for breach of contract, common counts, fraud, and general negligence, claiming that work on the home had been negligently performed.

Before trial, Studer and WFB filed several motions in limine, three of which would later form the basis of the motion to disqualify. In these motions, defendants sought to exclude: evidence that CVC was a third party beneficiary of the construction loan; any reference or argument that CVC's mechanic's lien had priority over WFB's deed of trust (or, in the alternative, requesting that WFB's deed of trust be deemed senior to CVC's lien); and evidence that CVC was an owner of the construction loan proceeds or was entitled to a constructive trust over the loan proceeds.

Virzi filed a motion to disqualify Keathley & Keathley LLP (Keathley), counsel for Studer and WFB. Virzi claimed Keathley advanced arguments favoring one client while hurting the other, asserting that Keathley's reliance on the construction loan agreement and requisitions for funds would prevent effective representation of both Studer's and WFB's interests. For example, in these documents Studer appeared to confirm that CVC's work was of acceptable quality, while Studer's cross-complaint alleged the work was negligently performed. Virzi also cited the loan and requisition documents as evidence that Studer had diverted construction loan funds to which CVC was entitled, and that Studer had forged Charles's signature and initials on the construction contract and other documents. Virzi maintained that by presenting the construction loan agreement as an enforceable document, Keathley "placed [WFB] in the spot of having ratified Studer's acts of fraud, forgery and embezzlement." In sum, Virzi stated that Keathley was "locked in multiple irreconcilable conflicts of interest that compel the court to disqualify them as attorneys for both parties." (Italics omitted.) The court heard argument and denied the motion.

DISCUSSION

This appeal presents the issue of whether a party who has no attorney-client, fiduciary, or other confidential relationship with an attorney can nevertheless prevail on a motion to disqualify that attorney. ...


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