Preovolos v. Preovolos

Filed 2/21/07  Preovolos v. Preovolos CA1/5

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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  This opinion has not been certified for publication or ordered published for purposes of rule 977.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

FIRST APPELLATE DISTRICT

DIVISION FIVE

            A dispute arose between two brothers over the management of a family partnership.  One of the brothers' sons provided legal representation and advice to the partnership and to each of the two brothers.  When one brother sued the other in a partnership dispute, he asked the court to disqualify his nephew's law firm from representing the defendant.  He claimed an attorney-client relationship with the nephew and argued the nephew could not represent a client with interests adverse to his.  The trial court granted the motion.  We affirm.

Background

            The Preovolos Family Limited Partnership was created in 1994 to hold and manage a single family home where the mother of the family, Fofo Preovolos, lived.  In the original partnership agreement, Fofo[1] and Peter Preovolos, her son, were named as the general partners.  The limited partners were Fofo, Peter, and several other relatives, including Peter's brother, Theodore Preovolos, and Peter's son, Athansios (Thanasi) Preovolos.  By the time this action was filed, the only limited partners were Peter, Theodore and the Preovolos Family Children's Trust (Children's Trust). 

            According to letters in the record, Fofo moved to a retirement facility in 2001 and the house was rented to a tenant.  At some point, Theodore began urging the sale of the house and distribution of the proceeds to the limited partners at or before the death of Fofo.  He advocated this course of action in a November  2004 conversation with Peter and in a March  2005 letter to Peter.  According to a letter written by Thanasi in January  2005, Theodore had been advocating the sale of the house for several years.  The partnership agreement prohibited dissolution of the partnership and distribution of its assets until 2043 unless the limited partners unanimously agreed to a dissolution. 

            In January  2005, Peter informed Theodore he was going to evict the tenants and was considering selling the house and investing the proceeds in a storage facility.  On January  11, attorney Martin Goodman wrote to Peter and Thanasi, stating that he was representing Theodore in matters concerning the partnership.  Goodman reminded Peter and Thanasi that unanimous agreement of the limited partners was required to approve a sale of the house and that Theodore had not agreed to the sale.  He requested confirmation that no sale had taken place.  Goodman also raised questions about the stated value of the limited partners' capital accounts and percentage interests in the partnership and requested backup documentation and an accounting.  Thanasi replied on January  18, stating that he was representing Peter and Fofo with respect to all matters concerning the partnership.  He wrote that Peter had explored the possibility of selling the property at Theodore's request, but in light of Theodore's opposition the general partners would not proceed with a sale.  Goodman and Thanasi discussed a possible revision of the partnership agreement, but their negotiations were unsuccessful. 

            In May  2005, the house was sold in an Internal Revenue Code section  1031 exchange for storage facility property.  Thanasi's law firm received an $1,800 escrow fee in the transaction.  In his declaration in support of his motion to disqualify, Theodore averred that neither Peter nor Thanasi provided him with information about the sale or an accounting of the proceeds, despite his requests.  He learned about the sale through his son, a real estate agent who obtained information about the sale through his listing service. 

            In June  2005, Theodore sued Peter and Fofo in their capacities as general partners.  Fofo was dismissed from the action in November and she died in December.  In January  2006, the trial court granted Theodore leave to amend his complaint to name Thanasi and the Children's Trust as additional defendants. 

            Preovolos & Associates represented the defendants.  Thanasi, an attorney, is a principal of the firm.  In October, Theodore filed a motion to disqualify both Thanasi and his firm from representing the defendants based on a preexisting attorney-client relationship between Theodore and Thanasi.  After Theodore moved to amend his complaint in December, he also argued that Thanasi had a conflict of interest due to his personal stake in the lawsuit. 

Evidence of Attorney-Client Relationships

            We set forth in chronological order the evidence of an attorney-client relationship between Thanasi and Theodore, between Thanasi and Peter, and between Thanasi and the partnership. 

            Neither Thanasi nor his firm was involved in the 1994 formation of the partnership.

            Thanasi's firm has represented Peter since 1995.

            In 1997, Thanasi prepared Theodore's estate plan for an $800 fee, and he amended the plan in 2001. 

            In May  2002, Thanasi represented the partnership in landlord-tenant negotiations. 

            On July  1, 2002, Theodore wrote Thanasi a letter seeking information about his rights and interests in the partnership because he suspected improprieties in the management of the partnership, its capital accounts and its finances.  Thanasi responded by letter on August  6, 2002.  Neither of these letters is in the record. 

            On November  23, 2004, Thanasi sent Theodore and his wife a letter regarding their estate plan and asked them to prepare a Schedule of Assets.  Thanasi wrote that he routinely asks his clients to update the schedule once a year.  In context, the statement identified Theodore and his wife as Thanasi's clients.  After describing the financial information he needed, Thanasi wrote, â€