(Super. Ct. No. 30-2010-00365758) Original proceedings; petition for a writ of mandate to challenge an order of the Superior Court of Orange County, Gail Andrea Andler, Judge. Petition granted.
CERTIFIED FOR PUBLICATION
Litigants have a right to be represented by counsel of their choice, particularly in substantive areas requiring particular expertise. In short, they have the right to hire the best professionals for their team. But they cannot induce their adversary's attorney to switch sides midstream. There is a rule of automatic disqualification where counsel breaches the duty of loyalty by simultaneously representing two current clients with adverse interests.
What does it mean to be a current client? This may not be as obvious as it seems. More than five years ago, petitioner's counsel prepared two identically worded fee agreements with real party for a specific matter, which closed shortly thereafter after minimal legal work. However, the retainer agreements are open-ended, affording counsel and real party the option of creating future engagements without new writings. Counsel never again represented real party. Do these "framework" retainer agreements of themselves create a current attorney-client relationship between counsel and real party?
We conclude the answer is no. Framework retainer agreements are not the same as "classic" retainer agreements, where the client pays a fee to secure the attorney's future time and availability, and where the attorney gives up the right to decline future legal work. We issue a peremptory writ in the first instance to remedy the trial court's error in disqualifying petitioner's counsel based on a nonexistent conflict of interest.
Petitioner Banning Ranch Conservancy (Conservancy) is a nonprofit public benefit corporation under 28 U.S.C. section 501(c)(3), dedicated to preserving Banning Ranch, a 400-acre coastal property, as open space. The Conservancy has objected to the plans by real party in interest City of Newport Beach (City) to build a four-lane divided highway on this land, and critically commented about adverse impacts during the environmental review process under the California Environmental Quality Act. (CEQA; Pub. Resources Code, § 21000 et seq.)
In April 2010, the Conservancy, represented by the law firm of Shute, Mihaly & Weinberger (the Shute firm), filed the underlying CEQA litigation to challenge the project approval because of the allegedly flawed EIR.
In August 2010, the City filed a motion to disqualify the Shute firm based on alleged conflicts of interest. The City had two different theories: First, the City claimed to be the firm's former client on at least eight different matters, all of which were closed some five to 10 years ago. Second, the City claimed to be the Shute firm's current client based on two identically worded letter agreements, drafted and signed in 2005. The 2005 agreements are each entitled "Legal Retainer Agreement, Public Trust Matters."*fn2
The 2005 agreements provide that the Shute firm would provide legal services to the City, on an "as-requested" basis, in connection with "public trust matters of concern to [the City]." The agreements, however, conditioned such representation on the Shute firm's confirmation of its "ability to take on the matter." If such representation was requested and accepted, the agreed-upon rates were to be $250 per hour for partners and $215 per hour for associates. The City's supporting declarations showed the 2005 agreements never had been terminated.
In opposing the disqualification motion, the Shute firm declared that it prepared the 2005 agreements in conjunction with the City's request for representation regarding proposed mooring permit regulations. The Shute firm performed a total of 1.2 hours of work on this matter, and sent the City its final invoice in July 2005. The Shute firm continued doing some minor legal work on another matter, but that matter concluded in early 2006. Other than the initial matter concerning mooring permit regulations, the City never requested that the Shute firm undertake any other legal work pursuant to the 2005 letter agreements.
No attorney from the Shute firm has since communicated with any of the City's attorneys, staff, or council members regarding any legal matter other than in conjunction with the underlying lawsuit. By contrast, the City since has hired at least 10 different law firms other than the Shute firm to represent it on CEQA matters since 2006.
Attorney Amy Bricker, who was assigned by the Shute firm to work on the underlying suit, declared she performed a conflicts check before agreeing to represent the Conservancy, and spoke extensively with the two partners at the Shute firm who were most familiar with its prior work with the City. She confirmed that "none of the prior matters bore any substantial relationship to the [instant] litigation." For example, the John Wayne Airport litigation involved airport noise. The Balboa Village Improvement Project, which ended in 2004, involved a challenge to a project by an arbor society seeking to protect certain ficus trees. The Shute firm declared there were no substantial relationships between any of the prior matters and its current work for the Conservancy.
On September 9, 2010, the trial court held a hearing on the City's motion. The court granted the motion to disqualify, determining that the City remained the Shute firm's current client. "The Court finds that [the Shute firm] is also counsel for [the] City pursuant to the terms of two ongoing retainer agreements. . . . Both agreements are executed by [the Shute firm] and [the City]. . . . [The Shute firm] provides no evidence that either of the retainer agreements was terminated, and the agreements do not provide that it would expire under their own terms."
The trial court recognized that the matter was not a "slam dunk." "Obviously there are important interests - very important interests on both sides, which the court has given due consideration to, and has balanced." The court filed its disqualification order on October 5, 2010.
The Conservancy filed a writ petition, including a request for a peremptory writ in the first instance. (Code Civ. Proc., § 1008; Lewis v. Superior Court (1999) 19 Cal.4th 1232 (Lewis).) The City filed an opposition, and the Conservancy filed a reply. We granted a temporary stay of the disqualification order pending consideration of the writ petition.
We review the trial court's disqualification order for abuse of discretion. (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1143-1144 (SpeeDee Oil).) We do not substitute our judgment about disputed factual issues, where supported by substantial evidence. However, where the material facts are not in dispute, we independently review the disqualification ruling as a question of law, and will reverse where ...