Estate of Buoni

Filed 10/20/06 Estate of Buoni CA5

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

APPEAL from an order of the Superior Court of Kern County. Louis L. Vega, Commissioner.

Kuhs, Parker & Hughes, Joseph D. Hughes and Robert G. Kuhs for Objector and Appellant.

Law Offices of Young Wooldridge and Larry R. Cox for Petitioner and Respondent.

This appeal presents the issue of whether an attorney can simultaneously represent a client in his capacity as the personal representative of an estate and the same client in his capacity as a creditor of that estate. Appellant, Catherine Viduarreta, contends that such representation violates the attorney’s ethical duty of loyalty. According to appellant, that one person needs separate representation for each capacity.

As discussed below, a violation of the duty of loyalty does not exist in this situation. The attorney represents only one client. Further, the procedure under Probate Code^[1] section 9252 requiring court approval of a personal representative’s creditor’s claim protects both the estate and the beneficiaries from any potential conflict of interest between the client as a personal representative and the client as a creditor. Accordingly, the trial court properly denied appellant’s motion to disqualify counsel. The order will be affirmed.

BACKGROUND

Jennie L. Buoni died testate survived by two children, appellant, Catherine Viduarreta, and respondent, Mario Buoni, Jr. Appellant and respondent are equal beneficiaries of the estate.

Respondent hired the Law Offices of Young Wooldridge (Young Wooldridge) to file a petition for probate. Pursuant to a stipulation between the parties, respondent was appointed administrator of the estate with will annexed. One of the stipulation’s terms was that respondent petition the court under section 9252 for approval of any creditor’s claim held by him.

Thereafter, respondent, represented by Young Wooldridge, filed a petition for approval of a creditor’s claim. In response, through her attorney, appellant filed objections to the petition. Concurrently, appellant filed a motion to disqualify Young Wooldridge based on Young Wooldridge’s representation of respondent in filing the section 9252 petition for approval of creditor’s claim.

The trial court denied appellant’s motion to disqualify Young Wooldridge. This appeal is from that order. To date, no further action has been taken on the section 9252 petition.

DISCUSSION

A trial court’s decision on a disqualification motion is generally reviewed for an abuse of discretion. (Cal West Nurseries v. Superior Court (2005) 129 Cal.App.4th 1170, 1174.) However, where, as here, there are no material factual disputes, the decision is reviewed as a question of law. (Ibid.)

Appellant contends that Young Wooldridge created a conflict for itself by representing one client in two conflicting capacities. Appellant notes that respondent, in his capacity as the personal representative of the estate, owes her a duty as a beneficiary to take all steps reasonably necessary to preserve and protect the assets of the estate. However, as a creditor, respondent will be seeking to be paid from the assets of the estate. Since these two capacities conflict, appellant argues that Young Wooldridge’s representation of respondent is in violation of Rules of Professional Conduct,^[2] rule 3-310(C).

Rule 3-310(C) provides, in part:

“A member shall not, without the informed written consent of each client:

“(2) Accept or continue representation of more than one client in a matter in which the interests of the clients actually conflict .” (23 pt. 5 West’s Ann. Court Rules (2005 ed.) p. 261.)

In cases of such simultaneous or dual representation, the primary value at stake is the attorney’s duty, and the client’s legitimate expectation, of loyalty. (Flatt v. Superior Court (1994) 9 Cal.4th 275, 284.) This principle is not based on any concern with the confidential relationship between attorney and client but rather on the need to assure the attorney’s undivided loyalty and commitment to the client. (Truck Ins. Exchange v. Fireman's Fund Ins. Co. (1992) 6 Cal.App.4th 1050, 1056.) The principle of loyalty is for the client’s benefit and thus the conflict may be waived. (Flatt v. Superior Court, supra, 9 Cal.4th at pp. 285-286, fn. 4.)

In ruling on a disqualification motion, the court may need to balance competing policy considerations. While 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, it must also be kept in mind that disqualification usually imposes a substantial hardship on the disqualified attorney’s innocent client. (Responsible Citizens v. Superior Court (1993) 16 Cal.App.4th 1717, 1725.) Moreover, it is of concern that the disqualification procedure may be abused if it is invoked solely to gain some tactical or strategic litigation advantage. (Ibid.)

In applying the above standards here, the identity of the client must first be determined. Only one individual is involved, i.e., respondent. However, does respondent, as personal representative and creditor, become two clients for purposes of rule 3-310(C)?

The attorney for a personal representative represents the fiduciary alone, not the estate. An estate is neither a legal entity nor a natural or artificial person. (Borissoff v. Taylor & Faust (2004) 33 Cal.4th 523, 529; Estate of Bright v. Western Air Lines (1951) 104 Cal.App.2d 827, 828.) Only a person can be a “client.” (Moeller v. Superior Court (1997) 16 Cal.4th 1124, 1130, fn. 2.) Accordingly, respondent, as a personal representative and as a creditor, is only one client. As respondent’s attorney, Young Wooldridge does not represent either the estate or appellant as a beneficiary. (Borissoff v. Taylor & Faust, supra, 33 Cal.4th at p. 529.)

Nevertheless, there still remains the question of whether the representation of one client in these two capacities violates rule 3-310(C). In other words, is Young Wooldridge disloyal to respondent as the personal representative by also representing respondent as a creditor of the estate and vice versa? The answer clearly is “no.” Logically, where only one person is the client, the attorney is not dividing his or her loyalty between two or more clients. Young Wooldridge remains in a position to be loyal to respondent’s interests alone. Thus, this case is distinguishable from the situation where an attorney for a corporation, who as corporate counsel represents the corporation’s officers in their representative capacity, also attempts to represent a corporate officer personally. In that case, the attorney acquires a conflict of interest with the corporation, a separate legal entity to whom the attorney owes a separate duty of loyalty. (Borissoff v. Taylor & Faust, supra, 33 Cal.4th at p. 534.)

This is not to say that no conflict of loyalties may exist in this case. However, it is respondent who has the conflict, i.e., a personal interest in a claim against the estate that he is administering, not his attorneys. As noted by appellant, the California Supreme Court made the general observation, in dicta, that “the law ‘requires a trustee to distinguish, scrupulously and painstakingly, his or her own interests from those of the beneficiaries .’ [Citation.] Obviously, an attorney representing a fiduciary must observe the same distinction.” (Borissoff v. Taylor & Faust, supra, 33 Cal.4th at p. 534.) However, even if this general principle were applicable here, any potential conflict is cured by section 9252.

Section 9252 provides:

“(a) If the personal representative or the attorney for the personal representative is a creditor of the decedent, the clerk shall present the claim to the court or judge for approval or rejection. The court or judge may in its discretion require the creditor to file a petition and give notice of hearing.

“(b) If the court or judge approves the claim, the claim is established and shall be included with other established claims to be paid in the course of administration.

“(c) If the court or judge rejects the claim, the personal representative or attorney may bring an action against the estate. Summons shall be served on the judge, who shall appoint an attorney at the expense of the estate to defend the action.”

The required involvement of the court when the personal representative is a creditor of the estate safeguards the interests of the estate and its beneficiaries. In fact, independent counsel must be appointed for the estate if the personal representative brings an action against the estate on the creditor’s claim. This procedure, which in other forms has been part of California law since 1851, acknowledges and resolves the conflict faced by an estate administrator who is personally interested in a claim against the estate. (Silva v. Superior Court (1948) 83 Cal.App.2d 521, 528.)

In light of this statutory scheme, no purpose would be served by disqualifying respondent’s attorney. In litigating the creditor’s claim, all parties, including the estate, will be represented by counsel. Young Wooldridge will not acquire an unfair advantage and the integrity of the judicial process will not be impugned. Further, there is no justification for requiring respondent to bear the hardship and expense of finding a replacement. In fact, if it were concluded that Young Woodridge was disqualified, respondent would be in the untenable position of having to employ two separate attorneys to avoid the identical situation.

In sum, in representing respondent, Young Wooldridge represents only one client. Further, the interests of the estate and the beneficiaries are protected by the section 9252 procedure. Accordingly, disqualification of Young Wooldridge is not required.

DISPOSITION

The order is affirmed. Costs on appeal are awarded to respondent.

_________________________

Levy, Acting P.J.

WE CONCUR:

_______________________________

Gomes, J.

_______________________________

Kane, J.

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^[1] All further statutory references are to the Probate Code.

^[2] All further rule references are to the Rules of Professional Conduct.