Krause v. Loeb & Loeb

Filed 3/20/07 Krause v. Loeb & Loeb CA2/4

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

APPEAL from an order of the Superior Court of Los Angeles County, Terry A. Green, Judge. Affirmed.

Jeffer, Mangels, Butler & Marmaro, Robert E. Mangels and Susan Allison for Defendants and Appellants.

Caldwell, Leslie, Proctor & Pettit, Christopher G. Caldwell, Joan Mack and David Zaft for Plaintiffs and Respondents.

introduction

Appellants Loeb & Loeb and Alan Wilken were sued, along with several other defendants, by plaintiffs Bernelle Krause and the Kalman Krause Family Limited Partnership. Appellants moved to compel arbitration pursuant to a contractual arbitration agreement to which they and plaintiffs are parties, but to which the remaining defendants are not. The trial court denied the petition, concluding that under Code of Civil Procedure section 1281.2, subdivision (c), the litigation arises out of a series of related transactions and there is a possibility of conflicting rulings on issues held in common by appellants, who would be subject to the arbitration, and the remaining defendants, who would not. We find no abuse of discretion, and affirm.

factual and procedural background

The following alleged facts are taken from the operative first amended complaint filed by Krause and her family partnership against Loeb & Loeb; Wilken; Harvey A. Bookstein; Harvey A. Bookstein Accountancy Corporation; RBZ, LLP; Ronald C. Pearson; Crosby, Heafy, Roach & May (CHRM); and Reed Smith.[1]

The Prior Niello Lawsuit

For many years, Krause and her family partnership, the Kalman Krause Family Limited Partnership (the family partnership),[2]used the professional services of defendant Harvey A. Bookstein, a certified public accountant.[3] On Booksteins advice, Krause retained attorney Ronald C. Pearson to assist with managing the family partnership. During Pearsons representation of Krause and the partnership, he was a partner first at CHRM, then at Reed Smith, and later at appellant Loeb & Loeb.[4]

During 2002, pursuant to Bookstein and Pearsons advice, Krause entered into a contract to sell property owned by the family partnership. She also entered into a second, backup contract to sell the property to Niello Investments, LLC (Niello).

When the first buyer could not close escrow on time, Bookstein and Pearson negotiated and obtained an extension of time for the first buyers performance of its contract; Krause executed the extension agreement on the advice of Bookstein and Pearson. The sale later closed with the first buyer.

In April 2004, Niello filed a lawsuit against Krause and the family partnership, contending that it had a contractual right to move into first position when the original buyer could not close escrow on time, and that execution of the extension agreement constituted a breach of the implied covenant of good faith and fair dealing. (Niello Investments, LLC v. Lush Velvet, LLC, et al., Sacramento County Superior Court Case No. 04AS01608.)

Loeb and Wilkens Alleged Conflict of Interest

Pearson had become a partner at Loeb & Loeb in August 2003, and at that time Krause executed a contract with Loeb & Loeb for the provision of general legal services on behalf of the family partnership. On the advice of Pearson and Bookstein, Krause retained Loeb & Loeb and appellant Wilken, a partner at Loeb & Loeb, to represent Krause and the family partnership in the Niello lawsuit shortly after it was filed in April 2004. That representation began in May 2004 and continued until March 2006. During that time, Pearson remained a member of Loeb & Loeb. Wilken also represented Pearson, at Krauses expense, in connection with the Niello lawsuit. Loeb & Loeb also provided legal representation to Bookstein in the Niello lawsuit. Wilken and Loeb & Loeb failed, however, to advise Krause of their apparent conflict of interest arising from their concurrent representation of Pearson, Bookstein, and Krause, or to secure from Krause a written waiver of the conflict. Indeed, Wilken and Loeb & Loeb later acknowledged to Krause the existence of the conflict by letter in October 2005, but still did not obtain her informed written consent to the continued representation.

Loeb & Loeb filed a motion for summary judgment in the Niello lawsuit, which was denied in its entirety. Thereafter, Loeb & Loeb informed Krause that it would continue to represent her and the family partnership in the Niello lawsuit only if Krause executed a release of all claims against Bookstein and Pearson arising from their involvement in the Niello lawsuit.

Instead, Krause obtained new counsel in the Niello lawsuit, who then negotiated a settlement of the Niello lawsuit that involved Krauses payment of a significant sum to Niello.[5]Shortly after settling the Niello matter, Krause filed the present action.

Krauses Present Lawsuit

In the present case, Krauses first operative complaint stated causes of action against Bookstein and his related business entities, as well as Pearson, CHRM, and Reed Smith, for professional negligence, breach of fiduciary duty, equitable indemnity, and declaratory relief. The causes of action related to the advice given and professional services rendered to Krause with regard to the sale of the partnership property, which resulted in the lawsuit being brought by Niello. Krause sought damages from these defendants for the cost of defending and settling the Niello suit, and for her emotional distress.

The operative complaint also stated causes of action for negligence, breach of fiduciary duty, and declaratory relief against Wilken and Loeb & Loeb. In addition, it stated causes of action for breach of contract and for money had and received against Loeb & Loeb. These causes of action were based on Wilken and Loeb & Loebs representation of Krause in the Niello lawsuit, and their purported violation of their ethical duties in simultaneously representing Bookstein and Pearson, despite the conflict in interest and their failure to obtain from Krause informed written consent to continue the representation. Krause sought damages from appellants for the cost of settling the Niello suit, and for disgorgement of the legal fees they incurred and paid to Loeb & Loeb in litigating that action.

Loeb and Wilkens Petition to Compel Arbitration

In response, Loeb & Loeb and Wilken filed a petition to compel arbitration on the grounds that the retainer agreements between Krause and Loeb & Loeb contained valid arbitration clauses.

Citing Code of Civil Procedure section 1281.2, subdivision (c),[6]Krause opposed the petition on the grounds that her claims all related to a single set of damages, and arbitration of her claims against Wilken and Loeb & Loeb could result in conflicting rulings on issues of law or fact common to her claims against the other defendants, which were not subject to arbitration.

Wilken and Loeb & Loeb filed a reply to the opposition in which they argued that ordering Krause to arbitrate her claims against them would not result in any potentially conflicting rulings on issues of fact or law.

During the hearing on the petition to compel arbitration, the trial court likened the matter -- quite accurately -- to a bowl of spaghetti, and queried, How do you separate all this stuff out?

Appellants counsel argued that the causes of action against the other defendants relate to whether they did something wrong in the Niello real estate transaction in 2002, while the causes of action against Loeb & Loeb and Wilken relate to whether, two years later, they committed malpractice in representing Krause in the Niello lawsuit, by mishandling the litigation and failing to recognize the existence of a conflict of interest. According to appellants, determining whether there should have been a different evaluation of the conflict issue does not require a ruling that Bookstein or Pearson did anything wrong, and therefore there is no risk of inconsistent rulings. Counsel further argued that this is not a case in which there is a fixed amount of damages that one or another defendant has to be responsible for.

Krauses counsel countered that the liability issues are interrelated: whether the underlying transaction was mishandled, and whether the case was improperly litigated as a result of Loebs conflict of interest. Counsel also argued that the case does indeed involve allocating a single set of damages among multiple defendants.

After hearing argument, the trial court concluded: when you start multiplying this litigation out, you can reach inconsistent factual and legal results. Agreeing with the reasons stated by Krauses counsel, the court denied the petition to compel arbitration.

This appeal followed.

discussion

Section 1281.2, subdivision (c), provides: On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that: [] . . . [] (c) A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact. When a court finds that section 1281.2, subdivision (c), applies, the court has several options. [T]he court (1) may refuse to enforce the arbitration agreement and may order intervention or joinder of all parties in a single action or special proceeding; (2) may order intervention or joinder as to all or only certain issues; (3) may order arbitration among the parties who have agreed to arbitration and stay the pending court action or special proceeding pending the outcome of the arbitration proceeding; or (4) may stay arbitration pending the outcome of the court action or special proceeding. (Ibid.)

The determination whether section 1281.2, subdivision (c) applies, and if so, what course of action to pursue, is within the discretion of the trial court. We may reverse the trial courts decision only if we determine that it exceeded the bounds of reason. (Mercury Ins. Group v. Superior Court (1998) 19 Cal.4th 332, 349; Whaley v. Sony Computer Entertainment America, Inc. (2004) 121 Cal.App.4th 479, 484.) Thus, in resolving this appeal, we must determine whether the trial court reasonably concluded that there was a possibility of conflicting rulings on a common issue of law or fact, within the meaning of section 1281.2, subdivision (c), if it granted appellants petition to compel arbitration.

A. This Case Involves a Series of Related Transactions

Appellants contend on appeal, as they did in the trial court, that the present lawsuit concerns two different transactions, separated by time, each involving different defendants and different claims, and relating to different facts. As they stated in their reply to the opposition to the petition to compel arbitration: The first transactionwhich predates any involvement by the Loeb Defendantspleads various claims of alleged wrongdoing against Plaintiffs former accountant and transaction attorneys with respect to the negotiation, documentation and sale of a parcel of real property in 2002. On the other hand, Plaintiffs claims against the Loeb Defendants, which are the subject of the Petition and do not implicate any of the Other Defendants, relate solely to the Loeb Defendants later representation of Plaintiffs as defense counsel in a lawsuit filed in 2004 that resulted from the sale transaction.

However, the language of section 1281.2, subdivision (c), merely requires that [a] party to the arbitration agreement is also a party to a pending court action . . . with a third party, arising out of the same transaction or series of related transactions. (Italics added.) Krause undoubtedly meets this requirement: she is a party to the arbitration agreement and also a party to the present action with the third party defendants, which aris[es] out of the same transaction or series of related transactions. To wit, Krause retained Pearson at Booksteins recommendation, and thereafter, Pearson represented both Bookstein and Krause. Pearsons allegedly wrongful conduct occurred while he was a partner at CHRM, which became Reed Smith, and also while he was a partner at Loeb & Loeb. Pearson recommended to Krause that she retain appellants to represent her in the Niello lawsuit. The alleged conflict of interest arose from the fact that appellants also represented the interests of Pearson and Bookstein in the Niello lawsuit, even though their interests were conflicting. In order to show their interests were adverse, Krause would demonstrate that Bookstein and Pearson were integrally involved in advising Krause regarding the underlying property sale, and that their advice and actions were negligent and wrongful. As a result, Loeb & Loeb could not ethically represent Krause, Pearson, and Bookstein simultaneously without obtaining Krauses informed written consent.[7] Thus, as argued by Krause in the opposition to arbitration filed in the trial court, even in litigating claims against Loeb, Krause [would] seek factual determinations involving whether Bookstein and Pearson acted improperly in the underlying transaction. These same facts will have to be determined in resolving [Krauses] claims against Bookstein and Pearson.[8]

The allegations against Loeb & Loeb and Wilken undoubtedly aris[e] out of the same transaction or series of related transactions as the allegations against the other defendants. ( 1281.2, subd. (c).) Furthermore, we conclude that the potential for conflicting rulings on common issues of law or fact is apparent.

B. The Possibility of Conflicting Rulings Does Not Mean Binding Rulings

Appellants contend that, as a matter of law, there is no possibility of binding, inconsistent rulings on any common issues. This is so, they argue, because of the limitations on the arbitrators authority. The scope of an arbitration is a matter of agreement between the parties, and the powers of an arbitrator are circumscribed by the arbitration agreement. (Vandenberg v. Superior Court, 21 Cal.4th 815, 830 (1999). As a result, if the Trial Court did sever and send to arbitration the claims alleged only against Appellantsclaims Respondents voluntarily agreed with Loeb to arbitratethe arbitrator would be empowered to decide only whether Appellants were professionally negligent as alleged, whether Appellants breached any fiduciary duty or contractual obligations to [Respondents] as alleged, whether Appellants alleged conduct caused Respondents to incur any of the liability Respondents elected to pay to settle the Niello Lawsuit, and whether Appellants alleged conduct obligated them to disgorge any of the legal fees Respondents paid to Loeb to represent them in the Niello Lawsuit. [] Since none of the Other Defendants agreed to arbitrate their claims, and because none of the Other Defendants would be parties to the arbitration, the arbitrator would have no power to issue any rulings affecting the Other Defendants liability to Respondents. As a matter of law, an arbitrator cannot make findings that are binding on non-parties. Seee.g., Vandenberg v. Superior Court, 21 Cal.4th at 834 . . . ; Cuevas v. Truline Corp., 118 Cal.App.4th 56, 62 (2004). (Emphasis in original.)

In essence, appellants argue that all of the claims against them belong in arbitration as a matter of law because rulings made in arbitration would not have collateral estoppel effect as to the other defendants, and therefore there would not be conflicting rulings within the contemplation of section 1281.2. The fallacy in appellants analysis is the notion that rulings must be binding in order for them to be inconsistent. Section 1281.2, subdivision (c) contains no such requirement. The Legislature included section 1281.2, subdivision (c) in the statutory scheme governing arbitration so that common issues of fact and law will be resolved consistently, and only once. (Mount Diablo MedicalCenter v. Health Net of California, Inc. (2002) 101 Cal.App.4th 711, 727.) The concept of conflicting rulings as used in the statute is not limited to rulings that would have collateral estoppel effect in the related matter. Rather, it extends more broadly to duplicative and inconsistent rulings in proceedings arising out of the same transaction or series of related transactions. (See, e.g., Whaley v. Sony Computer Entertainment America, Inc., supra, 121 Cal.App.4th at p. 483.) In fact, it is precisely because each forum is not bound by the others rulings that the possibility of inconsistent rulings arises.

Appellants reliance on Vandenberg v. Superior Court, supra, 21 Cal.4th 815 (Vandenberg) and Cuevas v. Truline Corp., supra, 118 Cal.App.4th 56 (Cuevas) is misplaced. In Vandenberg, the Supreme Court merely held that a private arbitration award, even if judicially confirmed, can have no collateral estoppel effect in favor of third persons unless the arbitral parties agreed, in the particular case, that such a consequence should apply. (Vandenberg, supra, 21 Cal.4th at p. 834.)

Indeed, in a footnote, the Vandenberg court addressed the criticism leveled in the concurring and dissenting opinion that the majoritys holding would enhance the dangers of inconsistent arbitral and judicial rulings, improperly hinder the arbitration of arbitrable disputes, encourage procedural gamesmanship (conc. & dis. opn. of Brown, J., post, at p. 844), and offer arbitral parties unfair second bite[s] at the apple (ibid.), particularly in complex cases where arbitrable disputes are closely related to broader litigation that includes arbitral nonparties. (Id. at p. 836, fn. 10.) The majority responded that this states arbitration statutes give courts specific and ample means of assuring that private arbitrations will not impact unfairly on judicial decisionmaking, or on third party rights, when a party to an arbitration agreement is also a litigant against a third person in closely related court proceedings involving a common issue of law or fact, (Code Civ. Proc.,  1281.2, subd. (c)) [court may deny arbitration, impose forced joinder of some or all parties or issues in a single proceeding, and use stay power to determine whether arbitration or court litigation will proceed first]. (Ibid.) Thus, the court indicated that section 1281.2, subdivision (c), is applicable in situations where there is a risk of inconsistent arbitral and judicial rulings, where the arbitral rulings do not have collateral estoppel effect on nonparties to the arbitration.

In Cuevas, supra, 118 Cal.App.4th 56, the court was not construing the language of section 1281.2, or indeed any statutory language that would inform our understanding of that section. There, plaintiff was injured in a car accident when a big rig tractor trailer collided with the car in which she was a passenger. She sued the driver of the car and the owners of the car (the car defendants). She also sued the driver of the big rig and the owner of the big rig (the big rig defendants). Plaintiff and the car defendants arbitrated the matter, resulting in an award finding the driver 99 percent responsible for the accident. Plaintiff then litigated her claims against the big rig defendants in superior court. They filed a motion for summary judgment, relying on the arbitrators finding as to the allocation of fault, and the trial court granted summary judgment.

On appeal, the court reversed, concluding that the arbitrators finding as to the allocation of fault did not bind the trial court. In so doing, the court of appeal stated: The courts dismissal of the [plaintiffs] complaint appears to have been motivated by its fear of an inconsistent verdict. The arbitrator found [the big rig defendants] were one percent responsible for the [plaintiffs] injuries. The trial court believed any future trial against [the big rig defendants] was almost certain not to reach the same apportionment of fault, creating an inconsistent verdict. [] We deem the courts fear illusory. First, the arbitrators finding of one percent fault did not bind the court. (Vandenberg v. Superior Court, supra, 21 Cal.4th at pp. 836-837 . . . .) Indeed, the trial courts adoption of the arbitrators award as its judgment assigned liability only to [the car defendants]the judgment did not mention [the big rig defendants]. Thus, the arbitrators finding of one percent liability was a nullity as to [the big rig defendants] and did not risk havoc if a jury found a different amount of responsibility. (Cuevas, supra, at pp. 61-62.)

Thus, in Cuevas the appellate courts reference to an inconsistent verdict was not made in the context of section 1281.2, subdivision (c), or any other related statute. Rather, the court of appeal was responding to the defendants assertion that plaintiff split her cause of action by arbitrating her claim against the car defendants, resulting in the one judgment rule barring any judgment against the big rig defendants. (Cuevas, supra, at p. 60.) The courts statements in Cuevas are therefore entirely inapposite for our purposes.

We conclude that the trial court correctly found that Krause demonstrated the existence of third party claims which would create a possibility of conflicting rulings on a common issue of law or fact. (Cf. Bos Material Handling, Inc. v. Crown Controls Corp. (1982) 137 Cal.App.3d 99, 112 [mere inclusion of unnamed third party Does in some causes of action was insufficient grounds to deny enforcement of the arbitration agreement].)

C. The Nature of the Damages Sought Do Not Preclude Application of

Section 1281.2, Subdivision (c)

Appellants seek to impose a further limitation on the applicability of section 1281.2, subdivision (c). They contend that it applies only to matters in which plaintiffs have an established right to be fully indemnified for the alleged injuries they claim against the defendantsthe allegations do not involve damages that Respondents are legally entitled to recover or to be indemnified for from any of the defendants. [T]he mere fact that Respondents seek to recover the same alleged damages against all defendants also does not establish a possibility of conflicting rulings on any common issue of law or fact. This is true because in this case, unlike the cases on which Respondents relied, Respondents have no right to be fully indemnified for the alleged injuries they claim against the defendants. The cases to which appellants refer are Prudential Property & Casualty Ins. Co. v. Superior Court (1995) 36 Cal.App.4th 275 (Prudential), and C.V. Starr & Co. v. Boston Reinsurance Corp. (1987) 190 Cal.App.3d 1637 (C.V. Starr).

In Prudential, the plaintiffs were in two car accidents, which occurred on separate occasions, within several weeks of each other. Plaintiffs filed a civil action against the driver who rear-ended the plaintiffs car in the first accident, and brought an uninsured motorist claim as to the second accident against their automobile insurer. Plaintiffs petitioned to compel joinder of the uninsured motorist arbitration proceeding and the civil action under section 1281.2, subdivision (c). Plaintiffs automobile insurer contended that the provisions of Insurance Code section 11580.2, subdivision (f), regarding arbitration of uninsured motorist claims, deprived the court of jurisdiction to join the arbitration claims with the lawsuit. The trial court granted the petition on the ground that separate proceedings might result in inconsistent rulings regarding the two drivers comparative fault. (Prudential, supra, at pp. 277, 279.) The Prudential court affirmed the trial court ruling, noting that Section 1281.2(c) specifically gives the superior court the authority to order joinder of an arbitration proceeding and a civil action to avoid the possibility of conflicting rulings. . . . [W]e perceive no legislative intent to abrogate the overarching power of the superior court to stay or join arbitration in its discretion under the various conditions set forth in section 1281.2, including the potential of inconsistent rulings. (Id. at pp. 278-279.)

While the case before us is factually distinguishable in that it does not involve the liability of insurers, that is a distinction without a difference. Nothing in the language or history of section 1281.2 requires that the damages at issue arise as a result of an indemnity obligation on the defendants part.

Appellants also take issue with the Prudential courts citation with approval of comments made in The Rutter Group arbitration practice guide, that section 1281.2 may be an important tool where an auto accident victim has claims against several defendants, one of whom is uninsured: Plaintiffs own insurance carrier is likely to demand arbitration of any claim for uninsured motorist coverage . . . . But piecemeal arbitration could be dangerous for plaintiff . . . because the insurance carrier may attempt to shift responsibility to the other (insured) defendants; and later, at trial, they are likely to blame the uninsured motorist! (Knight et al., Cal. Practice Guide: Alternative Dispute Resolution (The Rutter Group 1994) 4:328, p. 4-70.) (Prudential, supra, at p. 279.) The court noted that, to avoid this dilemma, section 1281.2 relief may be available. (Ibid.)

In the instant case, appellants label these comments by the court as dictum, and argue that in any event the notion that a defendant will use an empty chair defense is merely a tactical choice and does not in itself justify a courts denial of arbitration pursuant to section 1281.2, subdivision (c). In our view, the likelihood that a defendant seeking arbitration in a case involving third parties who are not subject to arbitration will use the empty chair defense is undoubtedly one of the concerns underlying the Legislatures adoption of section 1281.2. Here, the courts recognition of that possibilitycoupled with the fact that there exists the potential for conflicting rulings on common issues of law or factwas entirely relevant to its determination, and was fully justified.

Similarly, C.V. Starr, supra, 190 Cal.App.3d 1637, was an insurance coverage lawsuit in which the plaintiff insurer had committed to making a multi-million dollar settlement to its insured, and brought the court action against eleven reinsurers to determine the share to be allocated to each of them. Only one reinsurer was subject to an arbitration agreement. Appellants correctly point out that in upholding the trial courts reliance on section 1281.2, subdivision (c) to deny arbitration, the Court of Appeal identified the potential for conflicting rulings in terms of the parties indemnity obligations. The court noted the possibility that an arbitrator could find that one reinsurer was responsible for a percentage of the settlement that was inconsistent with the courts findings as to the remaining reinsurers, leaving the plaintiff overindemnified or not fully indemnified. (C.V. Starr, supra, at p. 1641.) However, the courts rationale does not mean that applicability of section 1281.2, subdivision (c), depends on the existence of an established indemnity obligation on the part of the defendant. It does not. (See, e.g., Whaley v. Sony Computer Entertainment America, Inc., supra, 121 Cal.App.4th 479 [wrongful termination action].)

Finally, we briefly mention appellants argument that there is no risk of Krause being overcompensated if arbitration is ordered because an injured party who recovers damages from one party cannot recover twice for the same injury from another defendant. Appellants cite Dodds v. Bucknum (1963) 214 Cal.App.2d 206, 212, for that proposition. While that rule is applicable to parties in a court action, arbitrators can and often do act in equity and may do whatever they find appropriate in a given case, regardless of other constraints of law. (See Vandenberg, supra, 21 Cal.4th at pp. 831-832 [parties in private arbitration trade safeguards and formalities of court litigation for expeditious, sometimes roughshod means of resolving disputes; traditionally, [a]rbitrators, unless specifically required to act in conformity with rules of law, may base their decision upon broad principles of justice and equity, and in doing so may expressly or impliedly reject a claim that a party might successfully have asserted in a judicial action. [Citations.]], italics omitted.)

In summary, we conclude that the trial court did not abuse its discretion in denying appellants petition to compel arbitration in order to avoid the possibility of inconsistent rulings.

disposition

The order denying the petition to compel arbitration is affirmed. Costs on appeal are awarded to respondents.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

WILLHITE, J.

We concur:

EPSTEIN, P. J.

SUZUKAWA, J.

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[1] Defendants Harvey A. Bookstein; Harvey A. Bookstein Accountancy Corporation; RBZ, LLP; Ronald C. Pearson; Crosby, Heafy, Roach & May; and Reed Smith are not parties to this appeal.

[2] The Kalman Krause Family Limited Partnership is the successor in interest to Lush Velvet, LLC. Both entities are referred to herein as the family partnership. For simplicity, we refer to plaintiffs collectively as Krause, unless the context requires otherwise.

[3] Harvey A. Bookstein Accountancy Corporation and RBZ, LLP are business entities associated with Bookstein.

[4] Defendants Pearson; Crosby, Heafy, Roach & May; and Reed Smith, LLP, are not parties to this appeal.

[5] In a declaration filed by Krauses counsel in support of the opposition to the petition to compel arbitration, the amount paid in settlement of the Niello lawsuit was stated to be $1 million, which was a small fraction of the total damages sought by the Niellos.

[6] All undesignated section references are to the Code of Civil Procedure.

[7] Indeed, as Krause has noted, if she were forced to arbitrate her claims against Loeb & Loeb and Wilken, she would have to litigate facts involving Pearson in both forums.

[8] Appellants contended below that [t]his argument is flawed principally because no such proof would in fact be required in order to evaluate the alleged conflict of interest on the Loeb Defendants part. Appellants do not specifically repeat that argument on appeal; they argue more generally that the claims against each set of defendants are distinct in time and in the nature of the claims. In any event, we readily conclude that the advice given and actions taken by Pearson and Bookstein certainly would be highly relevant to show that the concurrent representation was adverse.