Opinion
A100668.
10-24-2003
MARK BORSUK, et al., Plaintiffs and Appellants, v. KEITH RYAN, et al., Defendants and Respondents.
This action arises out of disputes between co-owners (the cotenants) of real property located at 1624-1626 Vallejo Street in San Francisco (the property) and held by them as tenants in common (the cotenancy). Appellants Mark and Liliane Borsuk have appealed from an order denying their motion for (1) an order disqualifying and barring respondents attorneys from representing or assisting them in the underlying actions, and (2) an injunction, an accounting and imposition of a constructive trust. Appellants contend that respondents have wrongly paid their legal expenses from funds of the cotenancy held by appellants and respondents in common; and that respondents counsel previously represented appellants interests in several earlier cotenancy matters, and should therefore be disqualified and barred from representing respondents in arguing positions adverse to the interests of appellants in this matter. Because of superceding events that have occurred since the filing of this appeal, the issues presented are now largely moot. We retain jurisdiction to address the sole material issue remaining: the denial of appellants motion to disqualify respondents attorneys. (Eye Dog Foundation v. State Board of Guide Dogs for the Blind (1967) 67 Cal.2d 536, 541; County of Fresno v. Shelton 1998 66 Cal.App.4th 996, 1006.)
On September 8, 2003, after the appeal was fully briefed and scheduled for oral argument, respondents sent a letter to this Court reporting that arbitration of the underlying consolidated actions from which this appeal arose had already been concluded, and the resulting arbitration award had been confirmed by the trial court below. Based on the receipt of this information, this Court requested that appellants and respondents submit supplemental letter briefs addressing, inter alia, (a) the effect on the jurisdiction of the trial court and the arbitrator of the parties submission to appellate review of the issues outlined above; (b) the effect of the arbitration award and trial court confirmation thereof on the jurisdiction of this Court to rule on these issues; and (c) the respective views of the parties on the resulting status of the issues presented to this Court for appellate resolution.
Respondents supplemental letter brief, filed October 6, 2003, argues that the order at issue on this appeal—in which the trial court denied appellants motions for an injunction barring use of cotenancy funds to pay respondents attorney fees, and for disqualification of respondents attorneys—was appealable because it was collateral to the merits of the substantive issues raised before the trial court and arbitrator below. Because the underlying action was not stayed, respondents contend that the appeal of this collateral interlocutory order did not deprive the trial court, and by extension the arbitrator, of jurisdiction to proceed with, hear and determine the merits of the underlying case. By the same token, once the arbitrator decided the merits of the underlying dispute in respondents favor and awarded them their attorney fees as prevailing parties under the terms of the written cotenancy agreement, the issues on appeal before this Court necessarily became moot.
Not surprisingly, appellants argue otherwise. They urge that "[t]his appeal involves issues different than those that were heard by the arbitrator"; to the extent there was any overlap between the issues presented here and those addressed by the arbitrator, both the trial court and arbitrator exceeded their jurisdiction by going forward to a decision on those issues; and this Court "had and still has proper jurisdiction" over both the issue of the disqualification of respondents attorney and that of the trial courts denial of the requested injunction barring use of cotenancy funds to pay legal fees. Respondents make the better argument.
The arbitration award was issued on April 2, 2003, and subsequently modified on May 19, 2003. As modified, the award determines that: (a) appellants breached the terms of the written cotenancy agreement between the parties by unilaterally withholding payments required thereunder; (b) appellants owed respondents damages in the amount of $11,121.69, based on an accounting of amounts due respondents for unpaid monthly bills and assessments and offsetting credits to which appellants were entitled; (c) respondents were the prevailing parties entitled to attorney fees and costs; (d) respondents did not breach the cotenancy agreement by paying their attorney fees on a monthly basis with funds collected from the cotenants through their monthly cotenancy assessments; and (e) to avoid a double recover of attorney fees by respondents, appellants were awarded a credit in the amount of $7,391.90. This award was confirmed by the trial court by order filed July 24, 2003.
A copy of the arbitrators award is contained in exhibit A to respondents letter brief.
A copy of the trial courts order confirming the arbitration award is contained in exhibit A to respondents letter brief.
On the basis of the record before us and the information brought to our attention since the close of formal briefing, we conclude that at least one of the issues presented in this appeal is now partially or wholly moot. In the first place, the trial courts original "Order re Motion for Disqualification, Injunction and Constructive Trust" was in fact appealable. (Code Civ. Proc., § 904.1, subd. (a)(6) [an appeal may be taken "[f]rom an order granting or dissolving an injunction, or refusing to grant or dissolve an injunction"]; Valley Casework, Inc. v. Comfort Construction, Inc. (1999) 76 Cal.App.4th 1013, 1019, fn. 4; McLellan v. McLellan (1972) 23 Cal.App.3d 343, 357; Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2002) ¶ 2:128, pp. 2-58 to 2-59.) Orders granting or denying a motion to disqualify counsel due to conflict of interest are themselves appealable as the grant or denial of an injunctive order. (Meehan v. Hopps (1955) 45 Cal.2d 213, 215-217; Reed v. Superior Court (2001) 92 Cal.App.4th 448, 452-454; Federal Home Loan Mortgage Corp. v. La Conchita Ranch Co. (1998) 68 Cal.App.4th 856, 860; Metro-Goldwyn-Mayer, Inc. v. Tracinda Corp. (1995) 36 Cal.App.4th 1832, 1838; Eisenberg et al., supra, ¶ 2:133.1, pp. 2-58 to 2-59.)
Because the trial courts order denying appellants motion to disqualify and for an injunction was collateral to the merits of the underlying consolidated action, the proceedings relating to the merits below were not automatically stayed. (Reed v. Superior Court, supra, 92 Cal.App.4th at p. 453.) It appears from the record that appellant never asked that the proceedings below be stayed pending the decision of this appeal. Certainly, appellant never sought a writ in this Court directing the trial court to stay further trial or arbitration of the cause until this appeal was decided. To the contrary, appellants proceeded with their petition to compel arbitration of the parties disputes. It follows that the trial court retained jurisdiction of the underlying matter; and consequently that it did not err either in permitting the matter to proceed, or in agreeing with appellants request that matter be submitted to an arbitrator for decision. By extension, the arbitrator had jurisdiction to decide the issues presented by the parties in the arbitration proceedings. (Cf. Id. at pp. 452-457.)
The arbitrators decision in this matter is necessarily dispositive of one of the issues presented here. The central issue in the underlying litigation has been whether appellants were in breach of the terms of the cotenancy agreement by withholding payment of their monthly cotenancy assessments pending resolution of other disputes between the parties. The arbitrator determined that appellants had breached the cotenancy agreement and that respondents were the prevailing parties entitled to attorney fees. In awarding attorney fees to respondents, the arbitrator took account of offsetting credits owed appellants, including credits for amounts already paid to respondents attorneys from cotenancy funds. In connection with that accounting, the arbitrator determined that respondents were justified in paying their attorneys on a monthly basis using monies paid to the cotenancys assessment fund by all the cotenants. Thus, the entire issue of respondents right to use cotenancy funds to pay their attorneys fees has necessarily been mooted by the arbitrators accounting and award. We therefore decline further to address that issue on this appeal.
The only remaining issue for decision is whether the trial court erred in denying appellants motion to disqualify respondents attorneys. To the extent this issue has not also inferentially been disposed of by the arbitrators determination that respondents were justified in retaining their attorneys, we conclude that it is meritless. The record shows that attorney James T. Johnson, Esq. (Johnson) and the law firm Johnson & Pardini (the Johnson firm) have represented respondents in their ongoing disputes with appellants since at least May 1998. During this time period, appellants never hired or retained Johnson or the Johnson firm, and were never represented by them. Instead, appellants have been represented by their own separate attorneys in taking positions adverse to those of respondents. Prior to the filing of the subject motion, appellants never objected to Johnsons representation of the other cotenants at any point in the parties ongoing litigation. In short, appellants had no attorney-client relationship with Johnson or the Johnson firm at any point upon which to base any claim of conflict of interest; and to the extent there ever was any such claim, it has been effectively waived by appellants failure to raise it earlier. (River West, Inc. v. Nickel (1987) 188 Cal.App.3d 1297, 1313; Fox v. Pollack (1986) 181 Cal.App.3d 954, 959.)
Contrary to appellants assertion, the Johnson firm did not represent their interests at the time of the creation of their cotenancy in the Property. Instead, at that time Johnson and his firm represented only respondent Kraehe, who in turn negotiated with each of the prospective cotenants separately as they joined the group purchasing the property in cotenancy. Appellants themselves had their own attorney advising them and representing their interests in these negotiations. Neither did the Johnson firm represent appellants interests after the initial creation of the tenancy-in-common. In all the disputes between the cotenants thereafter—concerning threatened foreclosure on the cotenancy property, splitting the cotenancy lot, and refinancing the property—appellants were represented by their own separate counsel.
We note that for part of this period, four of the present respondents (Diane and William Goldrick, Mark Gonzales and Nell Washington) did join with appellants in the latters action to resolve the lot split dispute. However, since those issues were resolved in earlier arbitration, appellants have sued all the cotenants, including these four individuals, who have consequently joined with the other respondents in opposing appellants continued litigation.
DISPOSITION
The order denying the motion of appellants to disqualify respondents attorneys is affirmed. Respondents request for sanctions is denied. In all other respects, we decline to address the issues raised on this appeal as having been mooted by the intervening decision in arbitration.
We concur: Corrigan, J., and Parrilli, J.