ITT
Industries, Inc. v. Rayonier, Inc.

 

 

 

 

 

Filed 1/29/07  ITT Industries, Inc. v. Rayonier, Inc. CA2/3

 

 

 

 

NOT
TO BE PUBLISHED IN THE OFFICIAL REPORTS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  This opinion has not been certified for
publication or ordered published for purposes of rule 977.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

SECOND
APPELLATE DISTRICT

DIVISION
THREE

 

ITT INDUSTRIES, INC., et al.,               Plaintiffs and Respondents;   RAYONIER INC., et al.,               Plaintiffs and Appellants,               v.   PACIFIC EMPLOYERS INSURANCE COMPANY et al.               Defendants;   MORGAN, LEWIS & BOCKIUS et al.,               Objectors and Respondents.	B187238               (Los Angeles County             Super. Ct. Nos. BC037585             & BC185311)
RAYONIER INC., et al.,               Petitioners,               v.   THE SUPERIOR COURT OF LOS ANGELES COUNTY,               Respondent;   ITT INDUSTRIES, INC., et al.,               Real Parties in Interest.	B187829               (Los Angeles County             Super. Ct. Nos. BC037585             & BC185311)

            APPEAL from an order of
the Superior Court of Los Angeles County,
and ORIGINAL PROCEEDINGS in mandate.  Peter D. Lichtman, Judge.  Order affirmed,
and petition denied.

            Pillsbury Winthrop Shaw
Pittman, Robert L. Wallan, Richard S. Ruben, John M. Grenfell and
Kimberly L. Buffington for Plaintiffs, Appellants and Petitioners.

            No appearance for Respondent
Superior Court of Los Angeles County.

            Paul, Hastings,
Janofsky & Walker, Ronald M. Oster and Belinda K. Orem for Plaintiffs,
Respondents and Real Parties in Interest.

            Gibson, Dunn &
Crutcher, James P. Fogelman, Sarah Wetzstein and
J. Christopher Jennings for Objectors and Respondents.

 

_____________________________________________

 

 

 

 

 

 

 

 

 

 

            Rayonier
Inc., Southern Wood Piedmont Inc. (Southern Wood), ITT Industries, Inc., and ITT
Fluid Technology Corporation (ITT Fluid) are plaintiffs in an action against
several insurers seeking to establish duties to defend and indemnify relating
to the investigation and remediation of environmental
contamination.[1]  Rayonier
formerly was a wholly-owned subsidiary of ITT.  Southern Wood is a subsidiary
of Rayonier.  ITT Fluid is a wholly-owned subsidiary of ITT.  The same counsel
represented Rayonier, Southern Wood, ITT, and ITT Fluid in this litigation for
many years.  After counsel moved to be relieved as counsel for Rayonier and
Southern Wood, Rayonier and Southern Wood moved to disqualify the same
attorneys as counsel for ITT and ITT Fluid.  The court granted the motion to be
relieved as counsel but denied the motion to disqualify counsel, based on
laches and other grounds.  Rayonier and Southern Wood challenge the latter order
and a subsequent order sustaining objections to evidence submitted in support
of their motion.  They have filed both an appeal (case No. B187238) and a
petition for a writ of mandate (case No. B187829).

            This insurance litigation
so far has resulted in over $112 million in settlements for the plaintiffs and
may result in further recoveries through settlement or judgment.  Rayonier and
Southern Wood, on the one hand, and ITT and ITT Fluid, on the other, have disputed
the division of settlement proceeds and entered into agreements providing for
binding arbitration to resolve their dispute.  Rayonier and Southern Wood contend
the plaintiffs had and continue to have conflicting interests with respect to
the division of settlement proceeds, despite their agreements with each other and
their common interests vis-à-vis the defendants.  Rayonier and Southern Wood contend
disqualification is required because counsel (1) concurrently represented clients
with conflicting interests without having obtained the clients' informed
written consent and (2) improperly counseled and acted on behalf of ITT
and ITT Fluid in connection with the settlement division dispute.  Rayonier and
Southern Wood also contend the court had no jurisdiction to sustain objections
to evidence submitted in support of their motion to disqualify after they had
filed a notice of appeal from the denial of their motion.

            We conclude that the trial
court properly found that Rayonier and Southern Wood unreasonably delayed their
motion to disqualify counsel and are barred by laches.  As a result their
challenge to the order sustaining evidentiary objections is moot.  We therefore
affirm the order denying the motion to disqualify and deny the petition for
writ of mandate.

FACTUAL AND
PROCEDURAL BACKGROUND

            1.         Complaint
and First Amended Complaint

            ITT and ITT Fluid filed
a complaint against several insurers in September 1991 (Super. Ct. L.A. County,
No. BC037585) for declaratory relief, seeking to establish duties to
defend and indemnify in relation to the compelled investigation and remediation
of environmental contamination on property owned by ITT.  The investigation and
remediation were compelled by the California
Regional Water Quality Control Board.  The plaintiffs filed a first amended
complaint in May 1993 naming Rayonier, then a wholly-owned subsidiary of ITT, and
Southern Wood as additional plaintiffs and adding counts for breach of
contract.  The first amended complaint identified additional sites in several
states where the plaintiffs allegedly were compelled to investigate and
remediate environmental contamination.  Attorneys Paul A. Zevnik and Michel Y. Horton
represented all of the plaintiffs jointly.

            2.         Distribution
Agreement

            Rayonier and ITT
entered into a Distribution Agreement on February 11, 1994.  The agreement stated that ITT would distribute to its shareholders its shares of stock
in Rayonier, and that Rayonier would change its name from ITT Rayonier Incorporated
to Rayonier Inc.  Section 2.09(b) of the agreement stated:  â€