Case Name: Julie Pavlina San Giorgio vs Stephen Pavlina, Jr. et al
Case No.: 17CV310026

Plaintiff Julie Pavlina San Giorgio (“Julie”) has filed a motion to disqualify the firm of Farella Braun & Martel (“Farella”), counsel for Defendant and Cross-complainant Stephen Pavlina, Jr. (“Stephen”).

“A trial court’s authority to disqualify an attorney derives from the power inherent in every court ‘[t]o control in furtherance of justice, the conduct of its ministerial officers, and of all other persons in any manner connected with a judicial proceeding before it, in every matter pertaining thereto.’” (People ex rel. Dept. of Corp. v. SpeeDee Oil Change Systems, Inc. (“SpeeDee”) (1999) 20 Cal.4th 1135, 1145, quoting Code Civ. Proc., § 128, subd. (a)(5).) A motion to disqualify tests whether the opposing party’s right to counsel of his or her choice, which is an important right, “must yield to ethical considerations that affect the fundamental principles of our judicial process.” (SpeeDee, supra, 20 Cal.4th at pp. 1145–46.)

“[D]isqualification motions involve a conflict between the clients’ right to counsel of their choice and the need to maintain ethical standards of professional responsibility [Citation.] The paramount concern must be to preserve public trust in the scrupulous administration of justice and the integrity of the bar. The important right to counsel of one’s choice must yield to ethical considerations that affect the fundamental principles of our judicial process.’” (Great Lakes Construction, Inc. v. Burman (2010) 186 Cal.App.4th 1347, 1355.)

“A conflict arises when the circumstances of a particular case present a substantial risk that the lawyer’s representation of the client would be materially and adversely affected by the lawyer’s own interests or by the lawyer’s duties to another current client, a former client, or a third person. If competent evidence does not establish such a conflict, the attorney is not disqualified for a conflict.” (Sharp v. Next Entertainment, Inc. (2008) 163 Cal.App.4th 410, 425-426, internal citations and quotation marks omitted.)

Standing

Only a party who has (or has had) a fiduciary relationship with a lawyer has standing to disqualify the lawyer. Thus, the opposing party has no standing to disqualify counsel who represents parties with conflicting interests. (Great Lakes Const., Inc. v. Burman (2010) 186 CA4th 1347, 1356; In re Marriage of Murchison (2016) 245 CA4th 847, 851.) Although a party may move to disqualify counsel for the opposing party on grounds recognized by law, including mandatory disqualification for conflict of interest based on a prior, successive, or concurrent representation, Julie has not established that there are facts to support any prior or concurrent representation that would support disqualification. Farella represents Stephen in this case, even as managing partner of the Entities, and not the Entities themselves. The Court makes an initial finding that Julie has no standing to seek to disqualify opposing counsel, and this motion presents an entirely different situation than with Mr. Skaggs.

Analysis of Julie’s arguments

Julie claims that the Farella firm should be disqualified for the following reasons. 1) The Farella firm refused to confer to select neutral counsel after the Court indicated it intended to grant Julie’s motion to disqualify Jason Skaggs, counsel for the Entities; 2) The Farella firm stepped in to complete a document production for the parties’ jointly owned entities, even though the Court directed Mr. Skaggs to do to, and then allegedly refused to provide information needed to access the documents; 3) the Farella firm negotiated with a potential buyer of the entities without Julie’s knowledge or consent; and 4) the Farella firm used a summary judgment motion originally prepared by the disqualified Entity counsel.

Ruling on the motion requires the court to weigh: the party’s right to counsel of choice; the attorney’s interest in representing a client; the financial burden on a client of changing counsel; any tactical abuse underlying a disqualification motion; and the principle that the fair resolution of disputes requires vigorous representation of parties by independent counsel. (Mills Land & Water Co. v. Golden West Refining Co. (1986) 186 CA3d 116, 126.)

1) The Court finds nothing improper and no conflict by Farella’s completion of the document production by the Entities. Although the Court requested (but did not order) that Mr. Skaggs complete the document production that was needed to permit the parties to mediate the case (at the Court’s urging), Julie’s counsel vociferously objected to Mr. Skaggs’ involvement. Mr. Skaggs understandably chose not to further participate in light of the Court’s intended order to disqualify and the strong objections raised by Julie’s attorneys. Like it or not, Stephen remains the manager of most of the Entities involved and the validity of his termination has not yet been resolved in this case, even if another judge has concluded there is a good faith dispute. In the void created by the lack of effective Entity counsel, Stephen and his attorneys may need to participate in order to comply with the Entities’ obligations in this litigation. Farella has billed Stephen and not the Entities for this work. Nor does Julie’s complaints about issues with the document production lead to a disqualifying event, it is merely a discovery dispute.

2) Julie also argues that Farella has refused to meet and confer over selection of neutral Entity counsel. However, the Court has not yet issued an order that requires that the parties do so, as this was an element of the Court’s tentative ruling on the motion to disqualify Mr. Skaggs and an order has not yet been issued. The fact that Farella has not complied with an order not yet entered, and that may not have a viable enforcement mechanism in the event of an appeal, does not create any type of conflict as claimed. Moreover, even after an order is issued the Court is not confident that Julie will agree to any neutral counsel that Stephen agrees to, and vice versa. The Court cannot require the parties to reach agreement, and an appeal will likely stay enforcement of the order.

3) Julie also claims that Stephen’s counsel “negotiated” with a potential buyer for the Entities without consent. Such negotiation likely would be necessary in order to reach a settlement. Julie does not claim that Stephen reached a final agreement without Julie’s consent, but only negotiated. In fact, at some point in this case Julie had demanded that Stephen take steps to sell the Entities. It appears that the potential buyer was one originally identified by Julie, and she initially refused to show a proposed Letter of Intent to Stephen and his attorneys. As argued by Stephen, as managing partner he is authorized to negotiate sale of the entities. No evidence has been presented to suggest that he has taken steps to actually sell the property without consent, and the Court finds that no conflict arises from this conduct.

4) Finally, Julie argues that Stephen’s refiling of the Skaggs motion for summary judgment creates a conflict. The Court disagrees. The Court specifically stated that Stephen could refile the motion. Who should properly pay for the work originally done by Mr. Skaggs to draft that motion will be resolved when the Court considers the disgorgement issues. The Court finds no conflict arises from Stephen’s filing a motion that the Court concluded had originally been filed to further Stephen’s interests and not the Entities.

Policy Considerations.

In the case of Gregori v. Bank of America ((1989) 207 Cal.App.3d 291, 301), the court called attention to abuses in the use of a motion to disqualify and the need for caution in exercise of the discretion to grant.

“Motions to disqualify counsel present competing policy considerations. On the one hand, a court must not hesitate to disqualify an attorney when it is satisfactorily established that he or she wrongfully acquired an unfair advantage that undermines the integrity of the judicial process and will have a continuing effect on the proceedings before the court. … On the other hand, it must be kept in mind that disqualification usually imposes a substantial hardship on the disqualified attorney’s innocent client, who must bear the monetary and other costs of finding a replacement. A client deprived of the attorney of his choice suffers a particularly heavy penalty where, as appears to be the case here, his attorney is highly skilled in the relevant area of the law. (207 C.A.3d 300.)

“Additionally, as courts are increasingly aware, motions to disqualify counsel often pose the very threat to the integrity of the judicial process that they purport to prevent. … Such motions can be misused to harass opposing counsel … , to delay the litigation … , or to intimidate an adversary into accepting settlement on terms that would not otherwise be acceptable. … In short, it is widely understood by judges that ‘attorneys now commonly use disqualification motions for purely strategic purposes.’ ” (207 Cal.App.3d at 300, 301.)

The motion to disqualify is DENIED. Monetary sanctions requested by Stephen based on Code of Civil Procedure section 128.5 are also DENIED. Such a motion must be brought as a separate motion, and requires providing a 21 day safe harbor period to withdraw before it is filed. (Section 128.5(f)(1)(A) and (B).)