Conflicts and the Pretend Partnership

Lynn v. George, No. G053563 (D4d3 Sept. 21, 2017)

This case presents an interesting quandary about how to deal with a scenario where the facts relevant to a motion to disqualify a lawyer substantially overlap with the merits of the case where the DQ motion is brought.

Lawyer has represented Client and his real estate investment Company in many matters over fifteen years. Plaintiff claims that she formed a common law partnership with Client and Company to sell real estate. (Client contends that Plaintiff was just its broker.) Plaintiff further claims that, as part of the partnership arrangement, Lawyer advised the alleged “partnership” in a real estate transactional matter. 

Plaintiff moved to disqualify Lawyer on the grounds that she, through the alleged partnership, was a former client who shared confidential info with Lawyer. The trial court found that Lawyer had only a potential attorney-client relationship with the alleged partnership. But it disqualified Lawyer nonetheless, based on the potential relationship as well as a finding that there was a confidential non-client relationship sufficient to merit disqualification. Client appealed.

Conflicts analyses basically come down to two issues. Concurrent client conflicts implicate loyalty—without a good waiver, a Lawyer just can’t be adverse to a current client. Former client conflicts, on the other hand, implicate confidentiality. While a lawyer doesn’t owe any duties to not act adversely to a former client’s interests, he does maintain an ongoing duty to preserve client confidences that survives the termination of the relationship.

There’s no issue of a concurrent conflict here, so the question comes down to confidentiality interests. And here, that depends on whether Lawyer actually owed any duty of confidentiality to Plaintiff. For a duty to arise, Plaintiff must prove one of two things: (1) Plaintiff actually had an attorney-client relationship with Lawyer; or (2) the facts were such that, even without an attorney-client relationship, Lawyer owed some extrinsic duty of confidentiality to Plaintiff as a non-client. 

The Court of Appeal starts with (2). The problem with that theory, however, is that all of the communications between Plaintiff and Lawyer were consistent with communications between a lawyer and his client’s real estate broker. Plaintiff never disclosed any information or sought any advice on any issues that were unique to her, outside of the scope of her role as a broker. Although communications with a client’s broker might stay under the tent of the attorney-client privilege if the broker is included to further the client’s interests, see Evid. Code § 952, that privilege still belongs only to the client. So there was no basis to find that Lawyer owed any duty of confidence personally to Plaintiff.

Issue (1) is a little harder. The court expressly declined to find an attorney client relationship between Lawyer and the “partnership,” likely out of some discomfort with predetermining jury-triable issues at the heart of the case in the context of a procedural motion. But it purported to grant DQ on this ground as well. While ordinarily, an appellate court will imply findings in support of a trial court’s order, it declines to do so here. That’s because a finding wouldn’t really be consistent with the facts underlying (2)—that any representation was in the capacity of advising a client’s broker. And because it seems stupid to imply a finding that the trial court went out of its way to expressly say it wasn’t making.

Reversed.