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Ruling
CITLALI LOPEZ MAYTE MARTINEZ VS WILLIAM ESPINOZA, ET AL.
Jul 11, 2024 |
22STCV40216
Case Number:
22STCV40216
Hearing Date:
July 11, 2024
Dept:
73
07/11/2024
Dept. 73
Hon. Rolf Treu, Judge presiding
MARTINEZ v. FARMERS FINANCIAL SOLUTIONS, LLC, et al.
(
22STCV40216
)
Counsel for Plaintiff/moving party:
Marcelo Dieguez (Diefer Law Group, PC)
Counsel for Defendants/opposing party: Clayton Hix (Hill, Farrer & Burrill LLP)
PLAINTIFFS motion FOR ATTORNEYS FEES
(
filed 05/16/2024)
TENTATIVE RULING
Plaintiffs motion for attorneys fees is DENIED.
I. BACKGROUND
On December 27, 2022, Plaintiff Citlali Lopez Mayte Martinez filed this employment action against Defendants Simplified Labor Staffing Solutions, Inc. (Simplified Labor) and William Espinoza (Espinoza).
The Complaint asserts the following causes of action:
1.
Discrimination in Violation of Cal. Gov. Code §§ 12940
et seq.
(FEHA);
2.
Harassment in Violation of the FEHA;
3.
Retaliation in Violation of the FEHA;
4.
Failure to Prevent Harassment, Discrimination, and Retaliation in Violation of Government Code § 12940(K);
5.
Negligent Supervision and Retention;
6.
Intentional Infliction of Emotional Distress;
7.
Wrongful Termination in Violation of Public Policy; and
8.
Failure to Permit Inspection of Personnel and Payroll Records.
The Complaint alleges the following.
On or about January 11, 2022, Plaintiff began working for Defendants as a laborer at Defendants warehouse in Lynwood, California. Plaintiff was a full-time, non-exempt employee, and performed all of Plaintiffs job duties satisfactorily before Defendants wrongfully terminated Plaintiffs employment on or about April 20, 2022, in retaliation for making protected FEHA complaints about supervisor Espinozas sexual harassment of Plaintiff.
On May 16, 2024,
Plaintiff filed a Motion for Attorney Fees
, arguing:
·
Plaintiff moves for an order awarding her attorney fees and costs incurred on appeal in the amount
$17,094.20 from Defendant and their attorneys, pursuant to the appellate court decision dated May 15, 2024.
·
Defendants filed an unsuccessful motion to compel arbitration. the present sexual harassment case was clearly barred by the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFASASH) and they filed their motion anyways.
·
The appellate court denied the appeal and affirmed the trial court ruling.
·
The appellate court granted costs on appeal to Plaintiff.
·
California public policy supports Defendants paying for the delay they caused by covering Plaintiffs Attorney Fees and costs. SB 365 was later passed in January 2024 to stop attorneys like those from Hill Farrer in this case from strategically bringing frivolous appeals as a delay tactic.
·
Plaintiffs counsels rates and hours billed are reasonable.
On June 27, 2024, Defendant Simplified Labor filed an opposition, arguing:
·
The trial court does not have jurisdiction to entertain or decide the motion. No remittitur has issued and the appellate process is still underway with a petition for review pending before the California Supreme Court.
·
Plaintiff is not entitled to costs because costs must first be awarded in, and claimed after, the remittitur is issued.
·
Here, Plaintiff contends she is entitled to attorneys fees as the prevailing party, pursuant to Government Code section 12965(b). However, Plaintiff cannot avail herself of that statute because the case is still pending and there has been no adjudication of the merits.
Plaintiff did not file a reply.
II. ANALYSIS
A.
Legal Standard
As a general rule, the prevailing party may recover certain statutory costs incurred in the litigation up to and including entry of judgment. [Citations.] These costs may include attorney fees, if authorized by contract, statute . . . or law. [Citation.] . . . attorney fees require a separate noticed motion. [Citations.] (
Lucky United Props. Inv., Inc. v. Lee
(2010) 185 Cal.App.4th 125, 137.) This motion may be brought: (1) after judgment or dismissal, for fees incurred up to and including the rendition of judgment in the trial court--including attorneys fees on an appeal before the rendition of judgment&; and (2) on an interim basis, upon remittitur of appeal, of only fees incurred on appeal. (Cal. Rules of Court, Rules 3.1702(b)-(c).)
Under California Rules of Court, rule 8.278(a)(1), the party prevailing in the Court of Appeal in a civil case (other than a juvenile case) is entitled to costs on appeal.
The prevailing party is the respondent if the Court of Appeal affirms the judgment without modification or dismisses the appeal. (Cal. Rules of Court, rule 8.278(a)(2).)
Unless the court orders otherwise, an award of costs neither includes attorneys fees on appeal nor precludes a party from seeking them under rule 3.1702. (Cal. Rules of Court, rule 8.278.)
However, [w]here attorneys fees are authorized by statute they are authorized on appeal as well as in the trial court. (
People ex rel. Cooper v. Mitchell Brothers Santa Ana Theater
(1985) 165 Cal.App.3d 378, 387.)
B.
Whether Plaintiff Can Seek Attorneys Fees
Plaintiff moves
for an order awarding her attorney fees and costs incurred on appeal in the amount
$17,094.20 from Defendant and their attorneys, pursuant to the appellate court decision dated May 15, 2024.
On April 7, 2023, Defendants filed a motion to compel arbitration pursuant to an arbitration agreement purportedly signed by Plaintiff. On July 13, 2023, this Court denied Defendants motion to compel Plaintiffs sex harassment case to arbitration, finding that the case was barred by the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (EFASASH). Defendant appealed the trial courts order. On May 15, 2024, the appellate court denied the appeal and affirmed the trial court ruling. (Avila Decl., Ex. A.)
In opposition, Defendant argues that Plaintiff is not entitled to attorneys fees and costs because no remittitur has issued and the appellate process is still underway with a petition for review pending before the California Supreme Court. Plaintiff did not present an argument in response.
Pursuant to California Rules of Court, Rules 3.1702 and 8.2782,
the Court finds that Plaintiff is not entitled to an award
of attorney fees and costs at this time. Rule 3.1702 allows a motion for attorney fees to be brought upon remittitur of appeal of the fees incurred on appeal. As stated in Rule 8.2782, the clerk/executive officer of the Court of Appeal must enter on the record, and insert in the remittitur, a judgment awarding costs to the prevailing party. Plaintiff has not established that remittitur was issued.
Thus, the Court denies Plaintiffs motion to seek attorneys fees at this time.
III. DISPOSITION
Plaintiffs motion for attorneys fees is DENIED.
Ruling
CHERIFA BELABBAS VS. HASHICORP INC., A CORPORATION ET AL
Jul 12, 2024 |
CGC22602952
Matter on the Law & Motion calendar for Friday, July 12, 2024, Line 8. 2 - PLAINTIFF CHERIFA BELABBAS' Motion To Seal Portions Of Plaintiffs Opposition To Defendant Hashicorp, Inc.S Motion For Sanctions And Plaintiffs Response To The Courts Order To Show Cause. Hearing is required and counsel are ordered to appear. Friday's Law & Motion Calendar will be called out of Dept. 301. Anyone intending to appear in person should report to Dept. 301. However, anyone intending to appear remotely should use the regular Zoom information for Dept. 302's Law & Motion Calendar for 9:30 a.m. To appear remotely at the hearing, go to the court's website at sfsuperiorcourt.org under "Online Services," navigate to "Tentative Rulings," and click on the appropriate link, or dial the corresponding phone number. Any party who contests a tentative ruling must send an email to contestdept302tr@sftc.org with a copy to all other parties by 4pm stating, without argument, the portion(s) of the tentative ruling that the party contests. The subject line of the email shall include the line number, case name and case number. The text of the email shall include the name and contact information, including email address, of the attorney or party who will appear at the hearing. The court no longer provides a court reporter in the Law & Motion Department. Parties may retain their own reporter, who may appear in the courtroom or remotely. A retained reporter must be a California certified court reporter (CSR), for only a CSR's transcript may be used in California courts. If a CSR is being retained, include in your email all of the following: their name, CSR and telephone numbers, and their individual work email address. =(302/RCE)
Ruling
TALIA KENNEDY VS. META PLATFORMS, INC. ET AL
Jul 10, 2024 |
CGC23604370
Matter on the Discovery Calendar for Wednesday, July 10, 2024, line 2, PLAINTIFF TALIA KENNEDY Partially Renewed Notice Of Motion And Motion To Compel Further Responses To Plaintiff'S Request For Production Of Documents (Set One) To Meta Platforms, Inc. And Request For Monetary Sanctions In The Amount Of $5,760.00 Against Said Defendant And Its Counsel, Jointly And Severally; Dec Of William Reed (tentativer ruling part 1 of 2) Pro Tem Judge Scott Borrowman, a member of the California State Bar who meets all the requirements set forth in CRC 2.812 to serve as a temporary judge, has been assigned to hear this motion. Prior to the hearing all parties to the motion will be asked to sign a stipulation agreeing that the motion may be heard by the Pro Tem Judge. If all parties to the motion sign the stipulation, the hearing will proceed before the Judge Pro Tem who will decide the motion with the same authority as a Superior Court Judge. If a party appears by telephone, the stipulation may be signed via fax or consent to sign given by email. If not all parties to the motion sign the stipulation, the Pro Tem Judge will hold a hearing on the motion and, based on the papers submitted by the parties and the hearing, issue a report in the nature of a recommendation to the Dept. 302 Judge, who will then decide the motion. If a party does not appear at the hearing, the party will be deemed to have stipulated that the motion will be decided by the Pro Tem Judge with the same authority as a Superior Court Judge. The Pro Tem Judge has issued the following tentative ruling: Motion to compel DENIED without prejudice. The Court of Appeal held in Wellpoint that if a defendant employer seeks to show that "it investigated an employee's complaint and took appropriate action to the findings of the investigation, then it will have put the adequacy of the investigation directly at issue, and cannot stand on the attorney-client privilege or work product doctrine to preclude a thorough examination of its adequacy." 59 Cal.App.4th at 128. However, the conflict-of-interest investigation on which Meta said it based its decision to terminate Plaintiff is different from an investigation into Plaintiff's complaints of harassment that might support such a defense. Rather, it was an investigation into alleged violations of policy akin to the misconduct investigation discussed in Kaiser, where the Court of Appeal upheld an assertion of privilege. 66 Cal.App.4th at 1225-26. The analytical difference is that evaluating the "adequacy of the investigation" is required for a harassment defense but is not required to prove that an employee violated a policy. The first amended privilege log (excluding the color-coded components, which I understand were produced) includes sufficient information (including authors and recipients) for Plaintiff to identify any specific materials for which she challenges the assertion of privilege or protection. However, the current motion and related meet-and-confer correspondence reflect a categorical argument (produce everything because privilege/protection are waived) as opposed to specific challenges to various documents. Because Plaintiff's categorical argument is not persuasive, the motion is denied without prejudice so that the parties can address specific documents. In camera review appears premature. Plaintiff should identify specific documents she believes are discoverable so that Meta can respond to specific documents. Once there is such a record, in camera review may be appropriate. Sanctions are DENIED. (End of part 1 see part 2) = (302/JPT)
Ruling
CHIFFER vs WILLDAN FINANCIAL SERVICES
Jul 11, 2024 |
CVRI2204377
CHIFFER VS WILLDAN
CVRI2204377 FINAL APPROVAL
FINANCIAL SERVICES
Tentative Ruling: No tentative ruling issued. Appearances requested.
Ruling
SALVADOR LOPEZ, JR. VS ADVANCE PIPE BENDING, A BUSINESS ENTITY OF UNKNOWN FORM, ET AL.
Jul 11, 2024 |
23STCV00076
Case Number:
23STCV00076
Hearing Date:
July 11, 2024
Dept:
52
Order to Show Cause Re: Entry of Default Judgment
Plaintiff Salvador Lopez, Jr. brings an action against defendants Advance Pipe Bending, a business entity form unknown, and Mitchell McCray.
Both defendants have defaulted.
California Rules of Court, rule 3.110(h) provides,
When a default is entered, the party who requested the entry of default must obtain a default judgment against the defaulting party within 45 days after the default was entered, unless the court has granted an extension of time.
The court may issue an order to show cause why sanctions should not be imposed if that party fails to obtain entry of judgment against a defaulting party or to request an extension of time to apply for a default judgment within that time.
The clerk entered the defaults of defendants Advance Pipe Bending and Mitchell McCray on March 19, 2024.
More than 45 days have passed.
Plaintiff did not timely request entry of default judgment against defendants.
He filed a declaration in support of a default judgment, a summary of the case, and a proposed judgment on form JUD-100.
But he did not file a request for court judgment by default on mandatory Judicial Council Form CIV-100.
The court will therefore set an order to show cause re: why plaintiff
should not pay $100 in sanctions under rule 3.110(h).
Plaintiffs application for default judgment has several other defects.
First, plaintiff did not request dismissal of defendants Does 1-25.
A plaintiff seeking default judgment must submit [a] dismissal of all parties against whom judgment is not sought or an application for separate judgment against specified parties under Code of Civil Procedure section 579, supported by a showing of grounds for each judgment.
(Cal. Rules of Court, rule 3.1800(a)(7).)
Assuming plaintiff seeks judgment against Does 1-25, the court cannot enter a judgment against someone using a fictitious name.
Second, plaintiffs first amended complaint does not allege sufficient facts to constitute a cause of action against defendant Mitchelle McCray.
Under the well pleaded complaint rule, it is error to enter a default judgment on a complaint that fails to state a cause of action against the defaulting defendant.
(
Ferraro v. Camarlinghi
(2008) 161 Cal.App.4th 509, 539.)
Where the liability of the individual defendants relies upon disregard of the corporate entity, a complaints bare conclusory allegation[s] are insufficient for a default judgment against the individuals.
(
Vasey v. California Dance Co.
(1977) 70 Cal.App.3d 742, 748-749.)
The first amended complaint alleges seven causes of action: five for various FEHA violations, wrongful termination, and whistleblower retaliation.
All seven claims are only available against an employer, not an individual who acts on an employers behalf.
(
Jones v. Lodge at Torrey Pines Partnership
(2008) 42 Cal.4th 1158, 1160 [FEHA claims other than harassment];
Miklosy v. Regents of University of California
(2008) 44 Cal.4th 876, 901 [wrongful termination];
Mewawalla v. Middleman
(N.D. Cal. 2022) 601 F.Supp.3d 574, 608 [whistleblower retaliation].)
The first amended complaint alleges plaintiff worked for defendant Advance Pipe Bending.
(FAC, ¶¶ 4, 16.)
The complaint only specifically mentions McCray three times: (1) naming him in the caption, (2)
Defendant MITCHELL MCCRAY, is a managing agent of one or all of the corporate Defendants, as defined in White v. Ultramar, Inc. (1999) 21 Cal.4th 563 (¶ 17), and (3) Plaintiff reported to his supervisor Leo and/or Defendant MITCHELL MCCRAY and requested an accommodation in the form of medical leave (¶ 21).
None of the allegations about McCray suffice to make him liable for plaintiffs claims.
Moreover, though plaintiffs proposed judgment seeks a judgment against McCray, the first amended complaints prayer for relief states all prayers are Against the Non-Individual Defendants Jointly and Severally.
(FAC, p. 26.)
The non-individual defendants does not include individual Mitchell McCray.
Based on the operative pleading, the court cannot enter any judgment against defendant Mitchell McCray.
Finally, a substantial portion of plaintiffs damages arise from a physical injury incurred in the scope of employment.
The superior court does not have jurisdiction over claims covered by the Workers Compensation Act.
(
Hughes v. Western MacArthur Co.
(1987) 192 Cal.App.3d 951, 957.)
That act provides the exclusive remedy for an injury sustained by an employee in the course and scope of employment.
(
Shirvanyan v. Los Angeles Community College District
(2020) 59 Cal.App.5th 82, 105.)
In addition to the physical injury itself, the rule
encompasses injury collateral to or derivative of a compensable workplace injury [citation], such as emotional distress stemming from the experience of a physical injury at work.
(
Ibid.
)
In a civil action, injured employees cannot recover damages for emotional distress suffered because a body part was injured, or because their injury was painful, or because their injury prevented [them] from working.
(
Id.
at pp. 105-106.)
They can, however, recover damages for emotional distress suffered on account of the way the [employer] treated [them] because of their physical limitations.
(
Id.
at p. 106.)
Here, plaintiff seeks recovery for emotional distress caused by the injury.
His declaration in support of this application states:
This accident also caused additional stress in my marriage.
(Lopez Decl., ¶ 16.)
I lost sleep because of the pain and was very agitated and was in [a] bad mood.
(
Id.
, ¶ 17.)
The lasting effects of the injury& have caused me to experience pain.
(
Id.
, ¶ 18.)
Workers compensation is the exclusive remedy for such injuries.
Aside from the rule of workers compensation exclusivity, plaintiff cannot recover such damages because he has not alleged a cause of action for damages based on personal injury.
As discussed above, he alleges causes of action for FEHA violations, unlawful termination, and whistleblower retaliation.
Such violations did not cause his hand injury or the emotional distress deriving from the injury.
The court hereby
continues
the order to show cause re: entry of default judgment to September 6, 2024, at 8:30 a.m.
Plaintiff shall file a complete default judgment application including all documents listed in California Rules of Court, rule 3.1800(a), no later than August 28, 2024.
The court hereby
sets an order to show cause
re: why plaintiff should not pay $100 in sanctions under rule 3.110(h) for September 6, 2024, at 8:30 a.m.
Ruling
ALBRIK LEVICK GHARIBIAN VS LOS ANGELES COUNTY
Jul 11, 2024 |
20STCV49938
Case Number:
20STCV49938
Hearing Date:
July 11, 2024
Dept:
50 THE MINUTE ORDER DATED JUNE 17, 2024 ORDERED THE PARTIES TO DELIVER A COURTESY COPY OF THE JOINT STATEMENT REGARDING OBJECTIONS THAT WAS TO BE FILED ON OR BEFORE JUNE 21, 2024. NO COURTESY COPY WAS DELIVERED TO THE DEPARTMENT. ADDITIONALLY, IT APPEARS THAT THE JOINT STATEMENT THAT WAS FILED WAS NOT FINAL IN THAT THE PARTIES INDICATED THAT THEY WERE CONTEMPLATING WITHDRAWING OBJECTIONS OR THEY BOTH AGREED THE INFORMATION WAS IMMATERIAL. ADDITIONALLY, THERE HAS BEEN NO REDUCTION IN THE NUMBER OF OBJECTIONS. THE JOINT STATEMENT DOES NOT COMPLY WITH THE COURT'S ORDER. AT THE HEARING, THE COURT WILL DISCUSS A NEW DATE FOR A COMPLIANT JOINT STATEMENT.
Ruling
JULIA MALDONADO VS. DELTA DENTAL OF CALIFORNIA ET AL
Jul 10, 2024 |
CGC23607772
Matter on the Discovery Calendar for Wednesday, July 10, 2024, line 3, PLAINTIFF JULIA MALDONADO Motion To Compel Further Responses To Form Interrogatories Employment-Law, Set One, To Defendant Delta Dental Of California Pro Tem Judge Scott Borrowman, a member of the California State Bar who meets all the requirements set forth in CRC 2.812 to serve as a temporary judge, has been assigned to hear this motion. Prior to the hearing all parties to the motion will be asked to sign a stipulation agreeing that the motion may be heard by the Pro Tem Judge. If all parties to the motion sign the stipulation, the hearing will proceed before the Judge Pro Tem who will decide the motion with the same authority as a Superior Court Judge. If a party appears by telephone, the stipulation may be signed via fax or consent to sign given by email. If not all parties to the motion sign the stipulation, the Pro Tem Judge will hold a hearing on the motion and, based on the papers submitted by the parties and the hearing, issue a report in the nature of a recommendation to the Dept. 302 Judge, who will then decide the motion. If a party does not appear at the hearing, the party will be deemed to have stipulated that the motion will be decided by the Pro Tem Judge with the same authority as a Superior Court Judge. The Pro Tem Judge has issued the following tentative ruling: Motion to compel GRANTED in part and DENIED in part. Section 1(c) of the Instructions to Form Interrogatories makes clear that an answering party retains the right to make any objection to form interrogatories. Considering the proffer on the scope of Defendant's operations in California, the objection based on scope is sustained. However, Defendant must still answer the interrogatory to the extent possible - including the extent to which it does not object. CCP 2030.220(b). Thus, Defendant must provide complete information for those actions to which it does not object. If Plaintiff remains unsatisfied with the response, Plaintiff may meet and confer and then file another motion to compel. Any such motion after amendment will allow the Court to evaluate whether the limited response is sufficient. Sanctions DENIED. Further meet and confer could have resolved this dispute. For the 9:00 a.m. Discovery calendar, all attorneys and parties are required to appear remotely. Hearings will be conducted by videoconference using Zoom. To appear at the hearing, go to the court's website at sfsuperiorcourt.org under "Online Services," navigate to "Tentative Rulings," and click on the appropriate link (DISCOVERY, DEPARTMENT 302 DAILY AT 9:00 A.M.), or dial the corresponding number and use the meeting ID, and password for Discovery Department 302. Any party who contests a tentative ruling must send an email to sborrowman@gmail.com with a copy to all other parties by 4pm stating, without argument, the portion(s) of the tentative ruling that the party contests. The subject line of the email shall include the line number, case name and case number. If the tentative ruling is not contested, the parties are deemed to have stipulated to the Pro Tem hearing the motion and the Pro Tem will sign an order confirming the tentative ruling. The prevailing party is required to prepare a proposed order repeating verbatim the substantive portion of the tentative ruling and must e-mail it to the Judge Pro Tem. The court no longer provides a court reporter in the Discovery Department. Parties may retain their own reporter, who may appear remotely. A retained reporter must be a California certified court reporter (CSR), for only a CSR's transcript may be used in California courts. If a CSR is being retained, include in your email all of the following: their name, CSR and telephone numbers, and their individual work email address. = (302/JPT)
Ruling
CRISTINE YEM, AN INDIVIDUAL VS FLOR MORA, AN INDIVIDUAL, ET AL.
Jul 15, 2024 |
23STCV15639
Case Number:
23STCV15639
Hearing Date:
July 15, 2024
Dept:
58
Judge Bruce G. Iwasaki
Department 58
Hearing Date:
July 15, 2024
Case Name:
Cristine Yem v. Flor Mora
,
et al
.
Case No.:
23STCV15639
Motion:
Motion to Disqualify Counsel
Moving Party:
Plaintiff Cristine Yem
Responding Party:
Defendant Flor Mora, and Defendants and Cross-Complainants Spring River Palliative Care, Inc. and Ocean Breeze Hospice & Palliative Care, Corp.
Tentative Ruling:
The Motion to Disqualify the Law Offices of Robert E. Williams and Mr. Williams as Counsel for Defendants Spring River Palliative Care, Inc. and Ocean Breeze Hospice & Palliative Care, Corp. is granted.
Background
This action arises from the alleged wrongful termination of Plaintiff Cristine Yem (Plaintiff) as well as alleged wrongful actions pertaining to the management of three corporate entities. On July 5, 2023, Plaintiff filed a Complaint against Defendants Flor Mora (Mora), Spring River Palliative Care, Inc. (Spring River), Ocean Breeze Hospice & Palliative Care, Corp. (Ocean Breeze), Genesis Health Services, Inc. (Genesis), and Does 1 through 100, inclusive, alleging causes of action for: (1) Retaliation in Violation of Lab. Code § 1102.5; (2) Wrongful Termination in Violation of Public Policy; (3) Involuntary Dissolution; (4) Involuntary Dissolution; (5) Involuntary Dissolution; (6) Appointment of a Receiver; (7) Accounting; (8) Breach of Fiduciary Duty; (9) Misappropriation and Diversion of Corporate Funds; (10) Misappropriation of Corporate Opportunities; (11) Unjust Enrichment/Quasi Contract; (12) Declaratory Relief; (13) Violation of Labor Code section 2802
et seq
.; (14) Constructive Trust; and (15) Unfair Competition.
This motion concerns legal representation with respect to two of the entities: Spring River and Ocean Breeze.
The Complaint alleges, in part, the following: Plaintiff has been in the healthcare industry for over 20 years. (Complaint, ¶ 10.) In or about 2021, Plaintiff founded Defendant Spring River and Defendant Mora wanted to own 50 percent of such entity. (Complaint, ¶ 12.) A deal was worked out and, in addition to being an owner, each was an employee of the entity. (Complaint, ¶ 12.) In 2022, Plaintiff and Defendant Mora decided to co-own Defendant Ocean Breeze and, in addition to being an owner, each was an employee of the entity. (Complaint, ¶ 13.) The Complaint and Plaintiffs moving papers do not specify the respective percentage ownership interests of either Plaintiff Yem or Defendant Mora.
In 2023, Plaintiff and Defendant Mora began having disputes about each other. (Complaint, ¶ 18.) Plaintiff alleges that Defendant Mora was engaged in illegal conduct. (Complaint, ¶ 18.) Defendant Mora terminated Plaintiff from her positions with the entities and began diverting funds and assets from the entities to deprive Plaintiff of the funds to which she was entitled. (Complaint, ¶ 21.) Plaintiff and Defendant Mora are the only two owners of Defendants Spring River and Ocean Breeze and they are each the two directors of such entities. (Complaint, ¶ 25.) Defendant Mora has a fiduciary duty to Plaintiff including as a minority shareholder. (Complaint, ¶ 26.) Apart from other relief, Plaintiff moves for the involuntary dissolution of Defendants Spring River and Ocean Breeze due to the internal dissention between Plaintiff and Defendant Mora. (Complaint, ¶¶ 45-50.)
After the Complaint was filed, each of the defendants filed respective Answers. On September 13, 2023, entity Defendants Spring River, Ocean Breeze, and Genesis filed a Cross-Complaint against Plaintiff and North River Palliative Care Consulting LLC, alleging 10 causes of action for, including but not limited to, damages for conversion, breach of fiduciary duty, and treble damages.
On October 23, 2023, a Substitution of Attorney was filed indicating that Matthew English was no longer representing Defendant Mora and that Robert E. Williams was the new counsel for Defendant Mora.
On February 16, 2024, Substitution of Attorney forms were filed as to Defendants Spring River and Ocean Breeze, which indicated that Robert E. Williams was their new counsel replacing Jeremy J. Alberts.
On March 28, 2024, after hearing oral argument, the Court granted the Motion to be Relieved as Counsel filed by Jeremy J. Alberts of BWA Law Group APC as to Defendant Genesis. (03/28/24 Minute Order.)
On May 15, 2024, Plaintiff Yem filed and served the instant Motion to Disqualify the Law Offices of Robert E. Williams and Mr. Williams as Counsel for Defendants Spring River and Ocean Breeze. The motion is made on the grounds that Defendant Moras counsel cannot also represent Defendants Spring River and Ocean Breeze when there is a dispute between the owners of those entities.
On June 20, 2024, Defendants Mora, Spring River, and Ocean Breeze filed an opposition to the motion to disqualify, to which Plaintiff replied on July 8, 2024.
Legal Standard
The issue of disqualification ultimately involves a conflict between the clients right to counsel of their choice and the need to maintain ethical standards of professional responsibility. The paramount concern, though, must be the preservation of public trust in the scrupulous administration of justice and the integrity of the bar. The recognized and important right to counsel of ones choosing must yield to considerations of ethics that run to the very integrity of our judicial process. (
Forrest v. Baeza
(1997) 58 Cal.App.4th 65, 73.) [A]n attorney representing a corporation may also represent any of its officers, directors, employees, members, shareholders, or other constituents. (
Gong v. RFG Oil, Inc.
(2008) 166 Cal.App.4th 209, 215.) [W]here the same attorney represents potentially conflicting parties, the primary interest at stake is the attorneys duty of loyalty. (
Id
. at p. 214.)
As an attorney for a corporation, counsels first duty is to [the corporation]. (
Metro-Goldwyn-Mayer, Inc. v. Tracinda Corp.
(1995) 36 Cal.App.4th 1832, 1842.) Corporate counsel should of course, refrain from taking part in any controversies or factional differences among shareholders as to control of the corporation, so that he or she can advise the corporation without bias or prejudice. (
Ibid
.) [C]orporate counsels direct duty is to the client corporation, not to the shareholders individually, even though the legal advice rendered to the corporation may affect the shareholders. (
Ibid
.) Conflicts of interest between a corporation and its officers, directors and shareholders are particularly problematic for corporate counsel where . . . the corporation is a closely held one, with few shareholders. (
La Jolla Cove Motel & Hotel Apartments, Inc. v. Superior Court
(2004) 121 Cal.App.4th 773, 785.) [O]nce a conflict has arisen between a corporation and one or more of its officers, directors or shareholders, corporate counsel
may not
simultaneously represent the corporation and the adverse officer, director, or shareholder. (
Ibid
., emphasis added.)
Accordingly, where a shareholder has filed an action questioning its management or the actions of individual officers or directors, such as in a shareholder derivative or . . . [a] dissolution action, corporate counsel cannot represent both the corporation and the officers, directors or shareholders with which the corporation has a conflict of interest. (
Id
. at p. 785-86.)
Discussion
Evidence in Support of the Motion
While Plaintiff Yem and Defendant Mora both claim ownership rights in three entities Spring River, Ocean Breeze, and Genesis they appear to dispute the percentage share. No documents that might shed light on this dispute appear to exist. Plaintiff argues that the only two owners of Defendant Spring River are herself and Defendant Mora; however, Defendant Mora argues that Kevin Romana owns 15% of the company. As to Defendant Ocean Breeze, Plaintiff argues that she owns 40% of the company and Defendant Mora owns 50% while Defendant Moras niece owns 10%. (Wagner Decl., ¶ 2(e).) Yems attorney Wagner states that Defendant Mora argues otherwise, but does not clarify what that means or offer any evidence on the point. Wagner also declares that Yem, Mora, and a Marc Molina own Genesis, but does not indicate what the ownership shares are.
He states that Molina is suing Genesis and there is a dispute over the composition of its board.
In 2023, Plaintiff and Defendant Mora started having disputes and accused the other of wrongdoing and hurting the company and, after no resolution could be reached, Plaintiff thereafter filed this lawsuit against Defendants. (Wagner Decl., ¶¶ 3-4.) Eventually, Defendant Mora hired BWA Law (BWA) to represent all three corporate defendants and then she hired Mr. Williams and his firm to represent herself, individually. (Wagner Decl., ¶ 4.) In September 2023, BWA, on behalf of Defendants Genesis, Spring River, and Ocean Breeze filed the Cross-Complaint. (Wagner Decl., ¶ 8.)
Mr. Wagner also describes the claims alleged in the Complaint; the procedural history prior to the filing of the Cross-Complaint including the fact that the filing of the Cross-Complaint was not discussed with Plaintiff or approved by Plaintiff; and, the allegations of the Cross-Complaint. (Wagner Decl., ¶¶ 7-9.) Wagner states without foundation that Defendant Mora was independently pushing for vengeance with the filing of the Cross-Complaint. (Wagner Decl., ¶ 12; Ex. F.) Mr. Wagner then sets forth instances of Defendant Mora reaching out to corporate counsel, BWA, to represent her in the instant action. (Wagner Decl., ¶¶ 13-14; Exs. G-I.) In February 2024, Defendant Mora unilaterally terminated BWA and that is when Mr. Williams, who is Defendant Moras personal counsel, was substituted in as counsel for Defendants Spring River and Ocean Breeze. (Wagner Decl., ¶ 16; Ex. K.)
In support of the reply brief, Mr. Wagner declares that the Court permitted BWA to leave the case as it concerns Defendant Genesis. (Wagner Reply Decl., ¶ 2.) Plaintiff presents evidence that she was an officer and director of Defendant Ocean Breeze. (Wagner Reply Decl., ¶ 4; Ex. A.)
In a terse and unilluminating declaration accompanying the reply, Plaintiff Yem states that she has no interest in Defendants Spring River or Ocean Breeze being defaulted and/or bankrupted as she would lose her money/interest. (Yem Decl., ¶ 2.) Plaintiff attests to being the owner of Defendant Ocean Breeze and states that she has always had an ownership interest in it. (Yem Decl., ¶ 3.) Yem does not say what that ownership interest is.
Evidence in Opposition to the Motion
Vague and unsatisfactory as Plaintiffs evidence is, it is substantial compared to Defendant Moras submission. In opposition to the disqualification motion, Defendant offers no legal authority and no evidence whatsoever.
Defendant Mora submitted no declaration.
Attorney Williamss declaration fails to support the assertions in the opposition. He merely claims with little detail that he has attempted to secure documentation of the corporate proceedings of Defendant Ocean Breeze from Defendant Mora and the website of the California Secretary of State. (Williams Decl., ¶ 2; Ex. A.) All of the documents presented as Exhibit A are unsigned. Moreover, Exhibit B has not been authenticated as it is not referenced in Williamss declaration. Defendants opposition to the motion is risible.
Appropriateness of Disqualification
Defendant Mora argues in the opposition to the motion that Plaintiff is not a shareholder of Ocean Breeze and therefore lacks standing to bring the motion on behalf of Defendant Ocean Breeze. First, Mora has offered no evidence at all about the ownership of Ocean Breeze. Williamss declaration lacks foundation, is based entirely on hearsay, and is wholly self-serving. Second, the disqualification motion is not brought on behalf of Ocean Breeze but rather is brought by Plaintiff.
Mora also appears to argue that there is no actual conflict warranting disqualification and that the motion is concerned with BWAs representation of Defendants Spring River and Ocean Breeze. The acts of BWA in representing Defendants Spring River and Ocean Breeze have no bearing on whether the instant motion should be granted, the Court does find that Mr. Williams and his firm are disqualified from representing Defendants Spring River and Ocean Breeze.
Plaintiffs suit is against Defendants Mora, Spring River, and Ocean Breeze. Moreover, Defendants Spring River and Ocean Breeze have filed a Cross-Complaint against Plaintiff. There is an issue in the instant action as to the ownership and control of the two entities. As such, Mr. Williams and his firm should refrain from taking part in any controversies or factional differences among shareholders as to control of the corporation. (
Metro-Goldwyn-Mayer, Inc. v. Tracinda Corp., supra,
36 Cal.App.4th 1832, 1842.)
Additionally, given that Plaintiff has alleged that Defendant Mora diverted assets of Defendants Spring River and Ocean Breeze and Plaintiff also seeks to involuntary dissolve Defendants Spring River and Ocean Breeze, the Court finds that the interests of Defendant Mora on one hand and that of Defendants Spring River and Ocean Breeze diverge. (See
Gong
,
supra
, 166 Cal.App.4th 209, 216 [holding that where dissolution of a corporation was sought, the interests of the shareholder and corporation diverged, and disqualification was appropriate].) Moreover, as was the case in
Gong
,
supra
, 166 Cal.App.4th 209, 216, there is a concern here that Defendant Mora is using Defendants Spring River and Ocean Breeze as a pawn in [her] dispute with Plaintiff. (
Ibid.
) Plaintiffs counsel has attested to the Cross-Complaint being filed in the name of Defendants Ocean Breeze and Spring River as an act of personal vengeance. (Wagner Decl., ¶ 12; Ex. F.) Accordingly, based on a review of the pleadings, an actual conflict exists. (
Gong
,
supra
, 166 Cal.App.4th 209, 215 [a court reviews the pleadings to determine whether the interests of an owner/shareholder and corporation diverge].)
As such, the Court finds that the Law Offices of Robert E. Williams and Mr. Robert Williams, who is counsel for Defendant Mora, is disqualified from representing Defendants Spring River and Ocean Breeze in this action.
Conclusion
The motion for disqualification is granted.