>GREAT LAKES >
CONSTRUCTION v. BURMAN



















Filed 7/27/10











CERTIFIED FOR PUBLICATION



IN THE COURT OF
APPEAL OF THE STATE OF CALIFORNIA



SECOND APPELLATE
DISTRICT



DIVISION THREE


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GREAT LAKES CONSTRUCTION, INC. et al., Plaintiff, Cross-Defendants, Cross-Complainants and Respondents, v. JIM BURMAN et al., Defendants, Cross-Complainants, Cross-Defendant and Appellants. __________________________________ THE DRAFTSMAN PLANNING AND DESIGN et al., Cross-Defendants and Respondents.

B220034 (Los Angeles County Super. Ct. No. BC397732)

APPEAL from
an order of the Superior Court
of Los Angeles
County, Joseph R. Kalin, Judge. Reversed and remanded.



Graham
& Associates and Bruce N. Graham for Defendants, Cross-Complainants,
Cross-Defendant and Appellants.



Law Offices
of Harvey Stern and Harvey I. Stern for Plaintiff, Cross-Defendants,
Cross-Complainants and Respondents.



Liner Grode
Stein Yankelevitz Sunshine Regenstreif & Taylor, David M. Cohen, and Susan
A. Swingle for Cross-Defendants and Respondents.

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INTRODUCTION

Attorneys who
jointly represent clients in the same action owe a duty of undivided loyalty to
each of their clients and are subject to disqualification if an unwaivable
conflict exists arising from the joint representation. We address whether a non-client may enforce
this duty of loyalty and move to disqualify opposing counsel. In this case, the parties seeking disqualification
were not present clients, former clients, or prospective clients, and they had
no prior confidential relationship with opposing counsel. They moved to disqualify opposing counsel
Graham & Associates, and Bruce N. Graham, a member of the firm (Graham),
from jointly representing their adversaries, appellants Jim and Maartje Burman
(the Burmans) and Ted Kipers. The moving
parties acknowledge that their motion is not based upon California law, but rather on what they
refer to as a minority view in Colyer v.
Smith (C.D.Cal. 1999) 50 F.Supp.2d 966, permitting a non-client to move to
disqualify opposing counsel. While the
decision of a federal district court is not binding on this Court, we do not
read Colyer's minority rule as
dispensing with the standing requirements.
Here, the non-client, moving parties have no legally cognizable interest
in Graham's undivided loyalty to his clients.
Therefore, the moving parties lacked standing to bring this motion to disqualify. We reverse the disqualification order.

FACTUAL
AND PROCEDURAL BACKGROUND

This
is a contractor-homeowner dispute that began on the Internet when homeowner
Maartje Burman posted comments criticizing Great Lakes Construction, Inc. She later retracted her comments but
redirected her Internet criticism to Hampton Builders, Inc., the contractor
hired to remodel the Burmans' residence.
The dispute moved from the Internet to the courts and expanded to
several parties directly and indirectly involved in the Burmans' remodeling
project.

1.
Background
Giving Rise To The Disqualification Motion

The
Burmans hired The Draftsman Planning and Design, Mike Trifunovich, and Scott
Christiansen to prepare drawings and engineering specifications for their
remodeling project. Based upon these
prepared plans, the Burmans hired Hampton Builders. Hampton Builders hired Kipers as a
subcontractor. Kipers' subcontract
contains an indemnification provision, which is the basis of the disqualifying
motion.[1]

a.
The
Complaint

Hampton Builders
and Great Lakes filed suit against the Burmans, alleging
libel in connection with Maartje Burman's Internet postings; breach of contract
for the balance due under the contract; and on common counts to recover for
Hampton Builders' services on the remodeling project.

b.
The
Burmans' And Kipers' Cross-Complaint

The Burmans filed
a cross-complaint against Great Lakes, as the alter ego
of Hampton Builders, Hampton Builders, Mike Ross, Faramarz Moshfegh, and Harvey
Stern. The Burmans alleged that Hampton
Builders failed to perform the terms of the contract, abandoned the project,
and failed to pay Kipers who placed a lien on the project and stopped work. The Burmans further alleged that the project
was plagued with numerous building code violations arising from the design and
substandard workmanship. The Burmans
asserted causes of action against Hampton Builders and Great Lakes
for breach of contract, negligence, and fraud. They also sought to rescind the contract with
Hampton Builders.

The Burmans
asserted causes of action for breach of contract and negligence against The
Draftsman Planning and Design, Alisha Spears, Mike Trifunovich, and Scott
Christiansen, based upon the allegedly defective plans.

Kipers asserted
causes of action in the cross-complaint against Hampton Builders for breach of
an oral contract, and against both Hampton Builders and Great Lakes
for common counts. He did not bring a
contract cause of action.

c.
Hampton
Builders' Cross-Complaint

Hampton Builders
then filed a cross-complaint against Kipers, alleging breach of contract,
interference with contract, express contractual indemnity, equitable indemnity,
and declaratory relief. Hampton Builders
alleged that pursuant to the subcontract, Kipers agreed to supervise the
project, obtain all permits, schedule and be present for inspections, and
guarantee all subcontractor work, labor, and materials for a period of one year
from the date of completion.

Hampton Builder's
express contractual indemnity cause of action against Kipers is based upon the
indemnification provision in the subcontract.
The indemnification provision states:
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