Filed 4/20/18 King v. Bighorn Golf Club CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA



ROBERT L. KING,

Plaintiff and Appellant,

v.

BIGHORN GOLF CLUB et al.,

Defendants and Respondents.
D073285



(Super. Ct. No. PSC 1600345)


APPEAL from an order of the Superior Court of Riverside County, David Chapman, Judge. Affirmed.
Sinnott, Puebla, Campagne & Curet, Karen L. Bizzini, and Robert A. Sanders for Plaintiff and Appellant.
Cox, Castle & Nicholson, Edward F. Quigley, Alicia N. Vaz, and Susan S. Davis for Defendants and Respondents.
In February 2015, under the terms of his membership agreement with the Bighorn Golf Club (Club), Robert L. King resigned from the Club and added his name to the Club's resale list with the intent to fully relinquish his membership once it was purchased. Later that year, the Club imposed an assessment of $75,000 on each club member, including King, to finance the construction of a new clubhouse. King objected to the assessment and eventually brought suit against the Club, one of its developers, Bighorn Development, LLC (Bighorn), and Bighorn's controlling member, R.D. Hubbard, alleging the assessment was unlawful. King then moved to disqualify the defendants' joint counsel, Cox, Castle & Nicholson LLP (Cox Castle), based on his assertion that Cox Castle could not simultaneously represent the Club and Bighorn, whose interests King contended were adverse. The trial court denied the motion, concluding King lacked standing to seek disqualification of Cox Castle. We agree and affirm the order.
FACTUAL AND PROCEDURAL BACKGROUND
In 1997, King purchased a residence on the Club's property. The following year, King's golf club membership application was approved and he joined the club as a Golf Club Member, an equity membership that provided King with voting rights. In 2006, King converted his membership to a Dual Golf Membership, which did not carry voting rights.
In 2015, the Club—a California nonprofit mutual benefit corporation—and its administrators determined that the clubhouse servicing its two 18-hole golf courses needed to be replaced. The Club decided to finance the construction of the new clubhouse by two methods. Fifty percent of the cost would be funded by the sale of four penthouse units above the new clubhouse and the remaining 50 percent would be paid by the $75,000 assessment on each club membership.
Cox Castle represented the Club and Big Horn as their corporate counsel for many years prior to the current litigation. Until his death in 2011, the attorney-client relationship was primarily managed by Cox Castle partner John Nicholson. Nicholson was assisted by other attorneys, including Paul J. Titcher, who assumed responsibility for the relationship after Nicholson's death. After King's suit was filed on January 25, 2016, the Club, Big Horn, and Hubbard retained Cox Castle's litigation team to represent them in the matter.
The defendants chose Cox Castle to represent them in the case because of the firm's familiarity with the long, complex history of the Club and its developers. The defendants believed it would be expensive and time-consuming to educate new counsel on that necessary background information. Upon its joint retention by the defendants, Cox Castle informed Carl Cardinalli, the president of the Club and Vice President of Big Horn, as well as others representing the Club, of the risks and benefits of joint representation. Cox Castle also informed these individuals of its ethical obligations under California's Rules of Professional Conduct. On behalf of the Club, Cardinalli provided Cox Castle with informed written consent to the joint representation. The case was assigned to two attorneys, Edward F. Quigley and Karen I. Gold, who were not involved in preparing any of the Club documents at issue in the case. None of Cox Castle's attorneys has ever represented King.
On March 22, 2016, King filed his first amended complaint. The defendants jointly answered on April 21, 2016. On November 18, 2016, King moved the court for an order disqualifying Cox Castle from representing the defendants. In his motion, King asserted that Cox Castle could not proceed as defense counsel because (1) it previously represented Big Horn in a matter adverse to the Club that was related to the present dispute, (2) Cox Castle was a participant in the wrongdoing alleged by King, and (3) the "advocate-witness" rule precluded Cox Castle from representing the defendants.
In response to the motion, the defendants argued that King lacked standing to disqualify Cox Castle, that Cox Castle had not violated any rule of conduct by its joint representation of the defendants, the advocate-witness rule did not apply and, further, that King should not be allowed to disqualify counsel based on his false allegations of wrongdoing. The defendants also objected to King's lengthy supporting declaration. King filed a reply brief and an additional supporting declaration. Before the hearing, the trial court issued a tentative ruling denying the motion on the ground that King lacked standing. At the December 20, 2016 hearing, King requested a stay of the litigation should the court adopt its tentative order. After the conclusion of argument, the court denied the motion and King's request for a stay.
King timely appealed and petitioned the Court of Appeal for a writ of supersedeas seeking a stay of the trial court proceedings pending the determination of the appeal. The Court of Appeal summarily denied King's petition on March 6, 2017. The appeal was subsequently expedited by this court on King's motion.
DISCUSSION
On appeal, King asserts the trial court's order denying his motion to disqualify Cox Castle should be reversed because (1) the case cited by the court in its tentative order does not support its conclusion that King lacked standing and (2) the court failed to consider its duty to disqualify Cox Castle under Code of Civil Procedure section 128, subdivision (a)(5). We reject both arguments.
I
Legal Standard
" 'A trial court's authority to disqualify an attorney derives from the power inherent in every court "[t]o control in furtherance of justice, the conduct of its ministerial officers, and of all other persons in any manner connected with a judicial proceeding before it, in every matter pertaining thereto." [Citations.]' [Citations.][ ] '[D]isqualification motions involve a conflict between the clients' right to counsel of their choice and the need to maintain ethical standards of professional responsibility. [Citation.] The paramount concern must be to preserve public trust in the scrupulous administration of justice and the integrity of the bar. The important right to counsel of one's choice must yield to ethical considerations that affect the fundamental principles of our judicial process. [Citations.]' " (Great Lakes, supra, 186 Cal.App.4th at p. 1355.)
"In concurrent or joint representation cases, we are concerned with the attorney's duty of loyalty to each client. (Flatt v. Superior Court (1994) 9 Cal.4th 275, 282 [36 Cal.Rptr.2d 537, 885 P.2d 950] (Flatt).) 'An attorney's duty of loyalty to a client is not one that is capable of being divided . . . .' (Ibid.; see Truck Ins. Exchange v. Fireman's Fund Ins. Co. (1992) 6 Cal.App.4th 1050, 1056 [8 Cal.Rptr.2d 228].) Joint representation of parties with conflicting interests impairs each client's legitimate expectation of loyalty that his or her attorneys will devote their ' "entire energies to [their] client's interests." ' " (Great Lakes, supra, 186 Cal.App.4th at p. 1355.)
This principle of undivided loyalty is expressed in Rule 3-310 of the State Bar Rules of Professional Conduct, which provides attorneys "shall not, without the informed written consent of each client: [¶] (1) Accept representation of more than one client in a matter in which the interests of the clients potentially conflict; or [¶] (2) Accept or continue representation of more than one client in a matter in which the interests of the clients actually conflict . . . ." "Unless there is informed written consent, an attorney cannot represent two or more clients at the same time whose interests conflict. In cases where an attorney concurrently represents two clients with conflicting interests, the automatic-disqualification rule applies." (Great Lakes, supra, 186 Cal.App.4th at pp. 1355-1356.)
"Generally, a trial court's decision on a disqualification motion is reviewed for abuse of discretion." (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1143.) " 'In deciding whether the trial court abused its discretion, "[w]e are . . . bound . . . by the substantial evidence rule. [Citations.] . . . The judgment of the trial court is presumed correct; all intendments and presumptions are indulged to support the judgment; conflicts in the declarations must be resolved in favor of the prevailing party, and the trial court's resolution of any factual disputes arising from the evidence is conclusive. [Citations.]" [Citation.]' " (Koo v. Rubio's Restaurants, Inc. (2003) 109 Cal.App.4th 719, 728.)
II
Standing
King claims the court erred in concluding he did not have standing to seek disqualification of his opposing parties' counsel. The concept of "[s]tanding generally requires that the plaintiff be able to allege injury, that is, an invasion of a legally protected interest. [Citation.] A 'standing' requirement is implicit in disqualification motions. Generally, before the disqualification of an attorney is proper, the complaining party must have or must have had an attorney-client relationship with that attorney." (Great Lakes, supra, 186 Cal.App.4th at p. 1356.) "[I]mposing a standing requirement for attorney disqualification motions protects against strategic exploitation of the rules of ethics and guards against improper use of disqualification as a litigation tactic." (Id. at p. 1358.) When the underlying facts are not in dispute, standing is a legal question this court reviews de novo. (Id. at p. 1354.)
King has never had an attorney-client relationship with Cox Castle or any of its attorneys. Instead, he challenges their representation of the defendants based on an exception to the general rule that non-clients do not have standing. Relying on Great Lakes—the case cited by the trial court in its tentative order—King asserts that "a non-client can have standing to bring a disqualification motion if he establishes: (1) a 'personal stake' in the duty of loyalty that the attorney owed to his or her client; (2) he suffered an 'invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical'; and (3) 'the ethical breach . . . so "infects the litigation . . . that it impacts the moving party's interest in a just and lawful determination of [his] . . . claims." ' "
In Great Lakes, the Court of Appeal agreed with the appellant, Hampton Builders, that the trial court improperly disqualified its attorney based on the exception King relies on here. (Great Lakes, supra, 186 Cal.App.4th at p. 1351.) Hampton brought breach of contract and libel claims against homeowners (Jim and Maartje Burman) who failed to pay for services rendered by Hampton to remodel their home. (Ibid.) The Burmans and a subcontractor (Ted Kipers) countersued and were jointly represented. (Id. at p. 1352.) When it was revealed in discovery that Kipers had a contractual agreement to indemnify Hampton, Hampton moved to disqualify Kipers's counsel because of Kipers's potential conflict with the Burmans. Hampton argued that if the Burmans were successful in their cross-claims against Hampton, "Kipers will lose because he has to indemnify Hampton. . . ." (Id. at p. 1358.)
The Court of Appeal rightly rejected Hampton's assertion that it had a legally cognizable interest in the duty of loyalty owed to the Burmans and Kipers by their attorney, which was potentially divided by Kipers's indemnity agreement with Hampton. Rather, "only [the Burmans and Kipers would] be harmed by any breach of the duty of loyalty." (Great Lakes, supra, 186 Cal.App.4th at p. 1359.) The court also rejected Hampton's assertion that a breach in the duty of loyalty by joint counsel for Hampton's opposing parties would affect a just determination of its claims. (Ibid.)
King claims that unlike Hampton, he has a legally cognizable interest in Cox Castle's joint representation of the defendants because as a member of the Club, Cox Castle owes him an independent duty of loyalty. Based on this premise, King claims that he does have standing to challenge Cox Castle. King's legally unsupported assertion, however, is not well-taken. As the defendants point out, it is well-settled that "[i]n representing a corporation, an attorney's client is the corporate entity, not individual shareholders or directors, and the individual shareholders or directors cannot presume that corporate counsel is protecting their interests." (La Jolla Cove Motel & Hotel Apartments, Inc. v. Superior Court (2004) 121 Cal.App.4th 773, 784, italics omitted.) This principle is applicable to the Club, a nonprofit mutual benefit corporation established under the Corporations Code. King has not brought his claims on behalf of the Club and, therefore Cox Castle does not owe him a duty of loyalty. (Cf. Ontiveros v. Constable (2016) 245 Cal.App.4th 686, 696 [" 'Current case law clearly forbids dual representation of a corporation and directors in a shareholder derivative suit, at least where, as here, the directors are alleged to have committed fraud.' "].)
King next argues that he has standing to challenge Cox Castle's representation of his opposing parties because as corporate counsel for the Club, the firm had access to confidential information. Standing to challenge an opposing party's counsel may arise from " 'a breach of the duty of confidentiality owed to the complaining party, regardless of whether a lawyer-client relationship existed.' " (Dino v. Pelayo (2006) 145 Cal.App.4th 347, 352.) However, "some sort of confidential or fiduciary relationship must have existed before a party is entitled to prevail on a motion to disqualify an attorney predicated on the actual or potential disclosure of confidential information." (Id. at p. 353.) King points to no confidential information Cox Castle obtained in its prior representation of the defendants as their corporate counsel that could be prejudicial to him. Indeed, in his briefing King concedes that he has "not disclosed confidential information" to Cox Castle.
The only basis discernable in his briefing for King's contention that he has suffered an actual, concrete invasion of a legally protected interest are his recitations of the allegations of wrongdoing contained in his complaint. These allegations, however, are not tethered to any personal stake that King has in the duty of loyalty or confidentiality that Cox Castle owes to its clients. Rather, they largely concern his allegations that Cox Castle was involved in the wrongful conduct King alleges. As the trial court concluded, without any breach of a duty of loyalty or confidentiality owed to King, King lacked standing to challenge Cox Castle's representation of his litigation opponents. (See Dino, supra, 145 Cal.App.4th at p. 353.) King has not shown Cox Castle's joint representation of the defendants might result in an invasion of his legally protected interests. The trial court's conclusion that King lacked standing was not error.
III
Section 128, subdivision (a)(5)
Lastly, King argues that the informed consent Cox Castle obtained from its clients should have been independently reviewed by the trial court and the court's failure to do so constitutes reversible error. Specifically, King asserts that "the trial court's refusal to consider the circumstances of the purported waiver of the conflicting interests of Developers and the Club was an abnegation of its responsibilities under . . . section 128(a)(5) to assure that the waiver was done properly and in furtherance of justice." There is no basis in the law for this contention.
The trial court was under no obligation to inspect the conflict waiver provided by the defendants to Cox Castle to satisfy the firm's ethical responsibilities under Rule 3-310 of the State Bar Rules of Professional Conduct. Section 128, subdivision (a)(5) gives courts authority to grant a disqualification motion only if the moving party has standing. (Great Lakes, supra, 186 Cal.App.4th at p. 1357.) The statute does not require the court to conduct an independent evaluation of a potential conflict if the parties that would be affected by the potential conflict agree to the joint representation. As discussed, without any invasion of King's legally cognizable interests, he has no standing to challenge the representation. (Ibid.) Absent a showing by King that the potential conflict between the defendants has any potentially adverse impact on him, the conflict waiver is not relevant and the trial court was under no obligation to review it.
In sum, "[w]ithout any legally cognizable interest, we are left with [King's] perception of a conflict arising from [his] adversaries' joint representation by [Cox Castle]. Joint representation alone simply does not trigger an ethical violation requiring automatic disqualification." (Great Lakes, supra, 186 Cal.App.4th at p. 1359.)
DISPOSITION
The order is affirmed. Respondents are entitled to their costs on appeal.


GUERRERO, J.

WE CONCUR:




BENKE, Acting P. J.




AARON, J.