No Soul to Damn, No Body to Kick, and No Authority to Hire

Jarvis v. Jarvis, No. H044930 (D6 Mar. 19, 2019)

Interesting DQ question. It’s unusual in that it is about a conflict of authority, not a conflict of interest. 

The case is a limited partnership dispute between two brothers, each of whom is an equal general partner. Under the ULPA, the LP can act only by majority of the GPs. Since 1 out of 2 is not a majority, that creates a de facto unanimity requirement. But the brothers disagree, leading to a situation where the LP can’t do anything. 

So Brother #1 sues for partition of the partnership’s assets. Brother #2 demurs, as does the LP, which is represented by Lawyer, who has been hired and paid by Brother #2, although he claims to be solely acting on behalf of the LP. Brother #1 moved to DQ Lawyer. The trial court granted the motion, and the LP and Brother #2 appeal.

There are lots of cases involving the DQ’ing of attorney in disputes over closely held partnerships. Mostly they involve an attorney representing both the partnership and a partner simultaneously. But that’s the not setup here, because Lawyer only has one client, the LP.

But what does that mean? 

When you represent an entity as a lawyer, you do so though that its controlling authority. Usually that’s a general counsel or some other officer, acting on authority delegated by the company’s board (or for alternative entities, a Manager or GP). But what happens when there is no controlling authority? If one GP can’t act, who gets to hire the lawyer and tell him what to do? The lawyer can’t instruct himself. That would be usurping the role of the client, which would violate Rule 1.13 of the recently renumbered Rules of Professional Conduct. 

So the Court of Appeal holds that the DQ was proper because there was nobody with authority to hire Lawyer. 

But that begs the question: What happens next? With no one to direct its actions, and unable to act pro se, what does the LP do? The Court suggests that it really only needs to be a nominal party in the case, since this is really a dispute between Brothers #1 and #2. But if something develops where the LP can’t sit on the sidelines, the Court suggests that the trial court could use its equitable power under Code of Civil Procedure § 128(a)(5) to appoint a receiver or some other neutral to act as a third GP and break the tie.

Affirmed.