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Cole Asia Business Center, Inc., A Philippines Corporation v. Robert D. Manning

October 30, 2012

COLE ASIA BUSINESS CENTER, INC., A PHILIPPINES CORPORATION, PLAINTIFF,
v.
ROBERT D. MANNING, AN INDIVIDUAL; DEBTORWISE FOUNDATION, A DELAWARE CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Dean D. Pregerson United States District Judge

O

ORDER GRANTING DEFENDANT AND COUNTER/THIRD PARTY CLAIMANT DEEBTORWISE'S MOTION TO DISQUALIFY AURORA TALAVERA AND THE AURORA LAW GROUP AS COUNSEL FOR THIRD PARTY DEFENDANT ACCESS COUNSELING, INC. [Dkt. No. 57]

Presently before the court is Defendant and Counterclaimant/Third Party Claimant DebtorWise Foundation ("DebtorWise")'s Motion to Disqualify Aurora Talavera and the Aurora Law Group as Counsel of Record for Third Party Defendant Access Counseling, Inc. ("Access"). Having considered the submissions of the parties, including the documents submitted by DebtorWise for in camera review, and heard oral argument, the court grants the motion and adopts the following order.

I. Background

The following background facts are not in dispute: DebtorWise provides online and telephonic credit counseling and debtor education courses required by the Federal Courts to obtain bankruptcy discharge. In September 2010, DebtorWise entered into a written agreement with Cole Asia, who agreed to provide credit counseling services to DebtorWise clients through a call center in Makati City, Philippines. DebtorWise alleges a number of problems with Cole Asia's performance, including language deficiencies of the counselors and overbilling. (Compl. ¶¶ 13-20.)

Access became an approved provider of credit counseling courses around March 2011.

On December 30, 2011, Cole Asia filed a complaint against Manning and DebtorWise for breach of contract, book account, account stated, and quantum meruit, claiming that DebtorWise had failed to pay for services provided and for an agreed-upon termination fee. DebtorWise filed a counterclaim against Cole Asia, Cole Group, Inc., Sevan Aslayan, Roes 1-10, and Access Counseling. (Counterclaim and Party Complaint ("Counterclaim") Debtorwise alleged that Aslanyan himself had opened the competing business Access, which "poached" DebtorWise clients in violation of an agreement not to compete and copied some of DebtorWise's materials. (Countercl. at ¶ 23.) Access, through its attorney Aurora Talavera, denied all allegations and denied that Aslanyan is or ever has been a corporate officer or Board member of access. (Answer by Access Counseling Inc. to Counter Claim, passim.)

Attorney Talavera, principal and sole attorney for The Aurora Law Group, represented DebtorWise on two occasions. (Opp. at ¶ 3.)

First, on May 12, 2011, Talavera signed a letter to Sage Personal Finance stating that her firm served as DebtorWise's California counsel. (Motion to Disqualify Aurora Talavera and the Aurora Law Group as Counsel of Record for Third party Defendant Access Counseling ("Motion"), Decl. of Robert D. Manning ("Manning Decl."), Exh. A.) The letter stated that the Adair Law Firm had sent Sage a letter demanding that it cease any wrongful use of the DebtorWise name and any trademark violations. The letter repeated the cease-and-desist demand and requested confirmation of receipt and compliance with the demand. It threatened legal action if the Aurora Law Group did not receive a response. The parties do not indicate whether this letter settled the matter in question.

The second representation appears to have been more sustained. On July 25, 2011, Talavera signed a letter to James David Johnson P.A., stating that the Aurora Law Group was representing DebtorWise Foundation in a licensing agreement dispute with Start Fresh Today Inc. ("Start Fresh"). (Mot., Manning Decl., Exh. B.) On October 26, 2011, Talavera wrote to Manning stating that she had received a letter about arbitration of the Start Fresh dispute in Chicago and requesting additional clarification on the arbitration to "determine what the status of the 'case' is." She stated that she would contact the arbitrator Gilbert Camarena and requested all additional correspondence to be forwarded to her. (Opp., Exh. 7.) On November 22, 2011, Talavera emailed Manning regarding the arbitration. (Mot., Manning Decl. Exh. D; Opp. Exh. 8.) In that email, she stated that she had not received a response to her October 26 letter and that "consequently, [her] office cannot represent [Manning] or DebtorWise at this scheduled arbitration" on November 30 and that "DebtorWise will have to make other arrangements."

On May 14, 2012, Talavera filed a Motion to Quash Service of Process as counsel to Access. Since then, Talavera has represented Access in all proceedings in this case.

II. Legal Standard

"The trial court is vested with the power '[t]o control in furtherance of justice, the conduct of its ministerial officers.'" Henriksen v. Great Am. Sav. & Loan, 14 Cal. Rptr. 2d 184, 186 (Ct. App. 1992). The court's inherent power includes the power to disqualify an attorney. Id. The court applies state law in determining matters of disqualification. In re Cnty. of L.A., 223 F.3d 990, 995 (9th Cir. 2000).

The starting point for the court's analysis is California Rules of Professional Conduct, Rule 3-310(e) ("Avoiding the Representation of Adverse Interests").*fn1 It provides, in relevant part, that "A member shall not, without the informed written consent of the client or former client, accept employment adverse to the client or former client where, by reason of the representation of the client or former client, the member has obtained confidential information material to the employment." "The purpose of [this] rule is to protect the confidential relationship which exists between attorney and client, ...


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