Filed 5/28/20 Algorri v. Algorri CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

STEVEN ERNEST ALGORRI,

Petitioner and Appellant,

v.

BORAS IVANKA ALGORRI,

Respondent.

B300615

(Los Angeles County

Super. Ct. No. GD031269)

APPEAL from an order of the Superior Court of Los Angeles County, Harvey A. Silberman, Judge. Affirmed.

Salisbury, Lee & Tsuda, and Lee W. Salisbury for Petitioner and Appellant.

Law Offices of Donald P. Schweitzer, and Donald P. Schweitzer for Respondent.

* * * * * *

In litigation to enforce a former husband’s refusal to pay some of his former wife’s attorney fees and costs, the former wife attached a copy of an email from former husband to a “Mr. Mintz” that appeared to discuss legal matters but which was sent to former wife’s email account. Although former wife’s counsel volunteered not to use the email and dismissed the enforcement motion once the potentially privileged nature of this email was brought to his attention, former husband moved to disqualify former wife’s counsel. The trial court denied the motion. We conclude this was within the court’s discretion, and affirm.

FACTS AND PROCEDURAL BACKGROUND

I. Marriage and Dissolution

Steve Ernest Algorri (Steve) and Boras Ivanka Algorri (Ivanka) married in 1999, and separated in early 2013.

Around the time of their separation, the couple was jointly using two email addresses that used all or part of Steve’s name—an AOL address and a Hotmail address. The couple agreed to divide up the two addresses: Steve would continue to use the Hotmail address, while Ivanka would continue to use the AOL address.

The trial court entered a judgment of dissolution but reserved jurisdiction over a few remaining issues, including attorney fees and costs.

On October 12, 2018, the trial court issued an order on the reserved issues. With respect to attorney fees and costs, the court found that Steve had “caused an unnecessary trial” due to his “unrealistic view of this litigation and its outcome”; that his annual salary (which he under-reported) was “significantly more money than” Ivanka’s; and that he had $1.4 million in assets as well as $850,000 in equity in a residence in Monrovia, California. Based on these findings and pursuant to Family Code sections 2030 and 2032, the court ordered Steve to pay Ivanka’s counsel $175,000 to cover some of her attorney fees and costs, at a rate of $15,000 per month starting on November 1, 2018.

The judgment on these reserved issues, however, was not entered until June 14, 2019.

II. Ivanka’s Efforts to Collect Attorney Fees

Steve did not make the monthly attorney fees and costs payments due on November 1 or December 1, 2018.

On December 28, 2018, Ivanka filed a request for an order to compel Steve to pay the outstanding balance through (1) selling the Monrovia residence or (2) liquidating a portion of Steve’s retirement account with a Qualified Domestic Relations Order.

Steve opposed the request, partly on the ground that title to the house was held by a “Family Limited Partnership” and hence was immune from collection without a charging order.

Ivanka filed a reply. In an accompanying declaration, Ivanka (1) disputed Steve’s characterization of the Monrovia’s residence’s title, providing evidence that the family limited partnership had been revoked and that Steve now held title solely in his own name, and (2) accused Steve of “trying to hide his assets and avoid paying the [attorney] fees he” owed. To substantiate the latter point, Ivanka reported that, on November 4, 2018, Steve had “sent an email to an asset protection attorney” which sought advice, in pertinent part, on how to “update and bolster, as best as we can, the structure of the[] [Family Limited Partnership]/Trust docs to better position [himself] to broach the topic of settlement” (the email or the November 4 email). Along with her declaration, Ivanka included a redacted copy of the email itself, which, as shown in a later-disclosed unredacted copy, was sent from the Hotmail address to the AOL address, but whose content was addressed to a “Mr. Mintz.” The email did not state that it was either “privileged” or “confidential.”

On February 22, 2019, Steve’s lawyer wrote to Ivanka’s lawyer requesting (1) an unredacted copy of the email, (2) an explanation of how Ivanka acquired it, and (3) a stipulation to strike the email, which Steve’s lawyer maintained was an attorney-client privileged document, from the court file.

On February 25, 2019, which was the next business day, Ivanka’s lawyer responded in writing (1) by providing an unredacted copy of the email, (2) by explaining that Ivanka had a copy of the email because Steve had intentionally sent it to her at the AOL address that they had agreed five years earlier was Ivanka’s (thereby waiving any attorney-client privilege), and (3) by nevertheless offering to stipulate to remove the email from the court file.

When Steve’s lawyer did not respond, Ivanka’s lawyer called the trial court the very next day, to take Ivanka’s pending request for an enforcement order off calendar.

III. Steve’s Motion to Disqualify Ivanka’s Counsel

On the same day Ivanka’s lawyer withdrew Ivanka’s

request for an enforcement order, Steve filed a motion to disqualify that lawyer as well as for an injunction prohibiting any use of the email, an accounting for all emails sent to the AOL address, and sanctions of $7,440. Ivanka opposed the motion, and Steve filed a reply.

In the declarations accompanying the filings as well as in testimony at the two-day evidentiary hearing Steve requested, the parties set forth very different accounts of how Ivanka obtained the November 4 email.

Steve testified that (1) the November 4 email “was an attorney-client communication” “intended” for “Mintz’s eyes only”; (2) he never sent anything to Ivanka at the AOL address on purpose, that Ivanka had “somehow” “compromised” the accounts by “link[ing]” the AOL address to the Hotmail address Steve was still using in a way he “could not see,” and that Ivanka had “been intercepting and reading [his] private emails . . . for the past [six] years”; and (3) he was thus contemplating moving to “set aside the [dissolution] judgment . . . because it has been tainted by [Ivanka’s] serious misconduct.” He did acknowledge, however, that he was “fat-fingered” and sometimes “bumble[d]” when typing things.

Ivanka testified that (1) she had “never ‘hacked’ nor ‘intercepted’” any of Steve’s emails, (2) Steve had intentionally sent her the November 4 email as part of a general “pattern of sending [her] unsolicited emails” to “harass” and “taunt” her and with the intent to communicate his plan not to pay the attorney fees order and to hide any assets that could be used to pay that order, and (3) she clarified that the statement she previously made characterizing the November 4 as “an email to an asset protection attorney” was “a poor choice of words” because the email had been sent to her even though its content looked to be addressed to an asset protection attorney. To corroborate her second point, Ivanka attached several other emails sent from the Hotmail account to the AOL account, most of which contained links to YouTube videos with song lyrics she viewed as harassing.

The trial court partially granted and partially denied Steve’s motion. The court ruled that Ivanka could not use the November 4 email or any of its fruits and that Ivanka had to grant Steve access to all emails she had received at the AOL address from the Hotmail address. But the court declined to disqualify Ivanka’s counsel. As a threshold matter, the court questioned whether disqualification would be appropriate at all given that there was “no [litigation] pending” after Ivanka had withdrawn her request for an enforcement order, such that disqualifying Ivanka’s counsel would be impermissibly “punitive” rather than permissibly “remedial.” Even if there had been “technically” some litigation pending at the time Steve filed his disqualification motion because the judgment on reserved issues had not yet been entered at that time, the court continued, disqualification would still not be warranted because (1) it was not clear that the November 4 email was privileged because “[t]here’s nothing” in that email “identifying Mr. Mintz as a lawyer,” (2) neither party satisfactorily explained how Ivanka obtained a copy of the email, and (3) even if the email might appear to be privileged and even if Ivanka had obtained the email inadvertently, Ivanka’s lawyer “substantially complied” with the remedial steps that State Comp. Ins. Fund v. WPS, Inc. (1999) 70 Cal.App.4th 644 (State Fund) mandates be followed in such a situation because, “upon being informed” by Steve’s counsel that the November 4 email was privileged, Ivanka’s lawyer “moved to put in remedial protections” by agreeing to remove the email from the file and withdrawing the request for an order.

Steve filed this timely appeal.

DISCUSSION

Steve argues that the trial court erred in denying his motion to disqualify Ivanka’s counsel. We review the denial of such motions for an abuse of discretion, and any subsidiary factual questions for substantial evidence. (McDermott Will & Emery LLP v. Superior Court (2017) 10 Cal.App.5th 1083, 1117, 1121 (McDermott); Rico v. Mitsubishi Motors Corp. (2007) 42 Cal.4th 807, 819 (Rico).)

Trial courts have the power to disqualify counsel as part of their inherent authority to control the proceedings before them. (In re Complex Asbestos Litigation (1991) 232 Cal.App.3d 572, 585.) Among other instances, disqualification of counsel may be warranted if (1) counsel does not comply with the procedures set forth in State Fund, which are also now codified in rule 4.4 of the California Rules of Professional Conduct, for what to do if counsel inadvertently receives privileged documents, and (2) “‘other factors compel disqualification.’” (State Fund, supra, 70 Cal.App.4th at p. 657; Rico, supra, 42 Cal.4th at pp. 817, 819.) The procedures set forth in State Fund apply when a lawyer “inadvertent[ly]” receives materials that objectively “appear to be subject to an attorney-client privilege” or to be otherwise “confidential and privileged” (State Fund, at pp. 656-657; Rico, at p. 818), but those procedures vary depending on the degree to which the privileged or confidential nature of the materials is obvious (McDermott, supra, 10 Cal.App.5th at pp. 1108-1109): “[W]hen an attorney receives materials that obviously or clearly appear to be privileged . . .,” the attorney must “refrain from examining them any more than . . . necessary,” must notify the privilege holder, and must try to resolve the situation by agreement or, failing that, by resort to the court (Id. at p. 1108; State Fund, at pp. 656-657); however, when the materials received are “not obviously or clearly privileged,” the attorney’s duties are “more limited” and he or she need only “notify the privilege holder,” who at that point has the “onus” of “tak[ing] appropriate steps to protect the materials if the holder believes [they] are privileged and were inadvertently disclosed” (McDermott, at pp. 1108-1109; see Great Am. Assur. Co. v. Liberty Surplus Ins. Corp. (N.D. Cal. 2009) 669 F.Supp.2d 1084, 1093-1094).

The trial court did not abuse its discretion in declining to disqualify Ivanka’s lawyer. That is because Steve did not carry his burden of showing either prerequisite to disqualification. (State Fund, supra, 70 Cal.App.4th at p. 657 [party seeking disqualification has burden of proof].)

Steve did not prove that Ivanka’s lawyer failed to comply with State Fund’s procedures. It was neither “obvious” nor “clearly apparent” that the November 4 email was a privileged document because (1) the email at no point identified Mr. Mintz as an attorney, (2) the email was not labeled “privileged” or “confidential,” and (3) the email on its face looked to be sent to Ivanka at the AOL address she had been using for years, such that the privilege holder (that is, Steve) had waived any privilege by disclosing it to a third party (that is, Ivanka). (McDermott, supra, 10 Cal.App.5th at p. 1101 [intentional disclosure by privilege holder to a third party constitutes waiver]; Evid. Code, § 912, subd. (a); cf. State Fund, supra, 70 Cal.App.4th at p. 654 [inadvertent disclosure is not a waiver].) As a result, and only if we assume that the email was sent inadvertently, Ivanka’s lawyer was at most required to “notify the privilege holder” that he had the email. Although Ivanka’s lawyer did not do so prior to filing Ivanka’s reply declaration because he had reviewed it “real[ly] fast” upon returning from vacation, Ivanka’s lawyer willingly acceded to Steve’s requests to no longer use the email and went a step further by withdrawing Ivanka’s request for an order entirely. Given that “the onus” in this situation is on Steve to “take appropriate steps to protect the materials” (McDermott, at pp. 1108-1109), Ivanka’s lawyer arguably complied with his duties under State Fund. The trial court thus did not abuse its discretion in finding that, by willingly agreeing to withdraw both the email and his motion upon being notified of Steve’s claim of privilege, he “substantially complied” with those duties. (Accord, Assembly v. Deukmejian (1982) 30 Cal.3d 638, 649 [“‘[[S]ubstantial] compliance . . . means actual compliance in respect to the substance essential to every reasonable objective of the statute.’”].)

Steve also did not prove that, even if Ivanka’s lawyer had not followed State Fund’s procedures, “other factors compel[led] disqualification.” (State Fund, supra, 70 Cal.App.4th at pp. 656-657.) Disqualification of counsel “‘“is proper as a prophylactic measure to prevent future prejudice”’ [citations]” that arises when an attorney’s knowledge of the adversary’s privileged communications is “‘“likely [to] have [a] substantial continuing effect on future judicial proceedings.”’ [Citation].” (McDermott, supra, 10 Cal.App.5th at p. 1120.) Where, as here, there are no “future judicial proceedings,” disqualification of counsel is by definition not prophylactic; it is instead punitive, and thus inappropriate. (Accord, Machado v. Superior Court (2007) 148 Cal.App.4th 875, 880-881 [“‘A motion to disqualify . . . counsel cannot be brought where there is no pending litigation . . .’”].) At a minimum, disqualification is not compelled.

Steve resists this conclusion with what reduces down to two arguments.

First, he contends that a court abuses its discretion when it fails to exercise that discretion (Sanford v. Rasnick (2016) 246 Cal.App.4th 1121, 1133), and the court never exercised its discretion to disqualify in this case because its finding that Ivanka’s lawyer substantially complied with State Fund obviated any need for the court to exercise its discretion. This error warrants reversal, Steve continues, because the court’s substantial compliance finding is inconsistent with the court’s other findings and with Ivanka’s admission in her declaration that the November 4 email was “sent . . . to an asset protection attorney.”

We reject this contention for several reasons. To begin, the court offered two reasons for denying Steve’s motion to disqualify—namely, that (1) Ivanka’s lawyer had substantially complied with State Fund and (2) the circumstances did not otherwise compel disqualification because no further proceedings were pending. These were independent findings and, as noted above, either finding is sufficient by itself to support the denial of a motion for disqualification. (State Fund, supra, 70 Cal.App.4th at pp. 656-657.) Thus, Steve is incorrect to argue that the trial court never exercised its discretion or that any error in its finding regarding compliance with State Fund warrants reversal.

Further, the trial court’s finding of substantial compliance does not suffer from either of the defects Steve identifies. Steve asserts that the court’s finding of “substantial compliance” with State Fund necessarily rests on a finding that State Fund is applicable, which necessarily rests on a finding that Ivanka’s acquisition of the November 4 email was inadvertent. But even if we accept this chain of inferences, the trial court’s implicit finding of inadvertent disclosure is distinct from its finding that the email was not “obviously” or “clearly” privileged. The latter finding is why Ivanka’s counsel’s duties were “more limited” under State Fund and why the court was able to find substantial compliance with those “more limited” requirements. Steve also asserts that Ivanka’s declaration that the November 4 email was “sent . . . to an asset protection attorney” not only constitutes an admission that she intercepted that email that precludes the trial court’s finding to the contrary, but also a conclusive admission that binds the trial court under the doctrine of judicial estoppel. This assertion is wrong on both counts. After considering all the evidence, including the testimony presented at two days’ worth of evidentiary hearings, the trial court found that neither party had established how Ivanka acquired the email. Where a party bears the burden to prove a fact, a trial court errs in not finding that fact only if “the evidence compels a finding in favor of” that party “as a matter of law.” (In re I.W. (2009) 180 Cal.App.4th 1517, 1528.) Here, Steve bore the burden of proving all of the facts supporting disqualification, and a finding of surreptitious acquisition is not compelled as a matter of law in this case because Ivanka later explained that she only surmised the email was intended for a lawyer, the email was sent to her, and Steve admitted that he had “fat fingers” (such that he may have sent it to her by accident). And judicial estoppel is inapplicable because (1) Steve waited until his reply brief to mention it (Raceway Ford Cases (2016) 2 Cal.5th 161, 178), and (2) the doctrine does not apply to statements just because they are made in sworn declarations (Jogani v. Jogani (2006) 141 Cal.App.4th 158, 176).

Second, Steve posits that once an attorney fails to obey State Fund’s dictates, disqualification is automatic if the lawyer to be disqualified sought to use the privileged material in the litigation. This position fails for several reasons. To begin, and as discussed above, the trial court’s finding that Ivanka’s lawyer substantially complied with State Fund’s dictates is amply supported by the record. Moreover, Ivanka’s lawyer “used” the email for less than a week; once Steve asserted that Ivanka should not have received the email—notwithstanding that it was addressed to her AOL address—Ivanka’s counsel immediately agreed not to use it and withdrew Ivanka’s request for an order in which the email had first been cited. Lastly, although an attorney’s use of privileged information may counsel in favor of disqualification (O’Gara Coach Co., LLC v. Ra (2019) 30 Cal.App.5th 1115, 1127; Clark v. Superior Court (2011) 196 Cal.App.4th 37, 54), that use does not trump all other considerations, such as the non-existence of any further proceedings for which disqualification would be a reasonable prophylactic measure.

* * *

In light of our analysis, we have no occasion to reach the alternative grounds for affirmance advanced by Ivanka or by Steve’s responses thereto.

DISPOSITION

The order is affirmed. Ivanka is entitled to her costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

______________________, J.

HOFFSTADT

We concur:

_________________________, P.J.

LUI

_________________________, J.

ASHMANN-GERST