Opinion
B229604
12-08-2011
KHOSROW SETAREH, Plaintiff and Respondent, v. KAMRAN SETAREH et al., Defendants and Appellants.
Law Offices of Richard Weiss and Richard Weiss for Defendants and Appellants. Law Offices of Armen M. Tashjian, Armen M. Tashjian and Daniel Setareh, for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. BC436401)
APPEAL from an order of the Superior Court of Los Angeles County, Kenneth R. Freeman, Judge. Affirmed.
Law Offices of Richard Weiss and Richard Weiss for Defendants and Appellants.
Law Offices of Armen M. Tashjian, Armen M. Tashjian and Daniel Setareh, for Plaintiff and Respondent.
I. INTRODUCTION
Defendants, Kamran Setareh and Simindokht Danialfar, appeal from a December 10, 2010 order denying their motion to disqualify the Law Offices of Armen M. Tashjian (the law firm) as counsel for plaintiff, Khosrow Setareh. Defendants argue Daniel Setareh, an attorney with the law firm, who is defendants' nephew and plaintiff's son, acted as a mediator or intermediary between the parties prior to the lawsuit's filing. Defendants contend Mr. Setareh obtained confidential information during the mediation process. We find the trial court did not abuse its discretion in denying defendants' disqualification motion. Accordingly, we affirm the denial of defendants' attorney disqualification motion.
II. BACKGROUND
A. Complaint
On April 22, 2010, plaintiff filed a complaint against defendants asserting claims for: fraud; contract breach; fiduciary duty breach; conversion; constructive trust; accounting; money had and received; declaratory relief; restitution; specific performance; unlawful business practices under Business and Professions Code section 17200 et seq.; civil conspiracy; emotional distress intentional infliction; dependent adult financial abuse; and unlawful sale of security. In 1994, plaintiff, Kamran and their brother, Mehrdad Setareh, allegedly reached an agreement to purchase commercial property located at 3200 Imperial Highway, Lakewood, California. The brothers agreed to the following interests: Mehrdad would own 40 percent; Kamran would own 35 percent; and plaintiff would own 25 percent of the property. The property was purchased for $410,000, with each brother paying their respective pro-rata share of the purchase price. In 1995, the brothers agreed to form 3200 Imperial Highway Corporation and placed the property into the corporation as the sole corporate asset. After incorporating 3200 Imperial Highway Corporation, Kamran allegedly issued stock. The stock was only issued to Kamran and Mehrdad. But no stock was issued to plaintiff. According to the complaint, plaintiff lacked "English communicative skills" and "was a physically and mentally disabled" individual. As a result, Kamran was to act as plaintiff's trustee. Kamran communicated this fact to plaintiff.
For purposes of clarity, Mehrdad and Kamran Seterah will be referred to by their first names.
B. Kamran's Disqualification Motion
On November 16, 2010, Kamran moved to disqualify the law firm as plaintiff's counsel. Kamran argued the law firm should be disqualified because his nephew, Mr. Setareh, an associate, had acted as an intermediary and mediator in the dispute. Kamran submitted a declaration in support of the disqualification motion: "[¶] 2. Approximately three years ago, Daniel told me that his father, Khosrow, is not competent in business matters, he did want to spend the money on attorneys and litigation, and that Daniel wanted to act as a go-between and intermediary to resolve any alleged claims Khosrow had regarding the real estate located at 3200 Imperial Highway, Lakewood, CA ("The Property"), the primary asset of defendant 3200 Imperial Highway Corporation. [¶] 3 Thereafter, I had several private conversations with Daniel regarding The Property, both over the phone and in person. Throughout these conversations I told Daniel, in confidence as my nephew and as an intermediary/mediator, private information that is substantially related to the lawsuit that Khosrow has filed against me, including but not limited to, my position on the existence or non-existence of any alleged agreement(s) between Khosrow and me related to The Property, and my position regarding any alleged rights that Khosrow had or did not have in The Property. [¶] 4. I expected that the information that I disclosed to Daniel would remain private and confidential. I based this expectation on the fact that he offered to act as an unbiased and neutral intermediary to help resolve our dispute, coupled with his being my nephew. Daniel never told me that he would reveal any of the confidential information I shared with him to Khosrow. [¶] 5. I would NOT have disclosed such information to Daniel had I known that Khosrow would gain access to it. [¶] 6. I would NOT have disclosed such information to Daniel if I had known that he or Khosrow would have the ability to use it against me. [¶] 7. I would NOT have disclosed such information to Daniel had I known that he would later be an attorney representing Khosrow in a matter substantially related to the discussions that I had with him before this lawsuit, and thereby in a position of great unfair advantage over me."
Defense counsel also submitted a declaration identifying correspondence with Daniel concerning the law firm's pretrial recusal from the litigation. In response to defendants' disqualification request, Mr. Setareh wrote: "In your letter, you state that I participated in several communications with your client in hopes of mediating the matter and that I have confidential information which is adverse to your client. [¶] First, even if these alleged communications ever existed, they would have occurred many years ago, long before I was admitted to practice law. I have not had any communication whatsoever with Kamran since I became a licensed attorney. If you have documents or facts to the contrary, please share it with me. However, my brother, Sepehr Setareh, did have several meetings in the past year with Kamran until the matter reached an impasse. Perhaps your client is mistaking our identities. [¶] Next, even if I had met and discussed the subject matter with your client, which I never did, it would have been in an adversarial manner because my interests are aligned with my father's and not your client. I have never acted, nor could I act as your client's attorney." As noted, Mr. Setareh denied any conversations occurred.
In opposition, plaintiff argued Mr. Setareh never acted as a mediator between the parties. Instead, Mr. Setareh was present at a family meeting with other relatives where plaintiff attempted to obtain an accounting from Kamran. Plaintiff also argued Kamran failed to prove confidential information was disclosed to Mr. Setareh.
Declarations were filed by Mehrad, plaintiff, Sepehr and Mr. Setareh. According to Mr. Setareh, he attended a family meeting. Mr. Setareh was not yet an attorney—he was first licensed to practice law in December 2007. Mr. Setareh declared: "Acting on behalf of my father [only], and before I was licensed as an attorney, I attended a family meeting to support my father in getting accounting from [Kamran] in relation to the subject property. At the time, there was no lawsuit pending, Kamran had not denied plaintiff's 25% interest in the property, nor was there any anticipation that a lawsuit would be filed and neither side was represented by [c]ounsel." Seven family members were present. Mr. Setareh explained: "[T]his was a familial gathering and an attempt to obtain accounting from [Kamran] in relation to the subject corporation. This was in no shape or form mediation or any form of other alternative resolution. I never acted as a mediator or an intermediary, but instead was merely there to support my father. I neither gave, nor could I have legally given any legal advice to Kamran. There were no attempts to mediate and no confidential information was provided by Kamran to myself." All of the conversations were in the presence of the other participants. Mr. Setareh denied any ex parte conversations occurred or that any retainer agreement was entered into with Kamran. Mr. Setareh's declaration was confirmed by plaintiff, Sepehr and Mehrdad.
In reply, Kamran argued his motion was based upon numerous confidential discussions, not just one meeting. Kamran contended Mr. Setareh did not deny that there had been confidential communications after December 2007. Kamran also argued he was not required to disclose the detail of the confidential communications. No declaration concerning the merits of the disqualification motion was filed with the reply.
C. The Trial Court's Ruling
On December 10, 2010, the trial court denied Kamran's disqualification motion. The trial court started the hearing by summarizing both parties' arguments: "So the moving party's position is that approximately three years ago [Mr.] Setareh . . . the nephew of the defendant, he's not a plaintiff, acted as an intermediary surrounding the dispute between plaintiff and defendant. Daniel advised defendant that he would be impartial. On several occasions, [defendant] spoke privately with Daniel to discuss plaintiff's alleged ownership in the property, including the existence or non-existence of any agreements related to whether plaintiff has any interest in the property. [¶] Again this is the argument and position of the moving party. [¶] [Defendant] also told Daniel confidentially his views, defenses or positions on plaintiff's claims on these issues. The [law] firm . . . to which Daniel is a member, subsequently filed a lawsuit against defendant, including causes of action for rights to an ownership interest in the property and for breach of contract regarding the rights plaintiff allegedly has in the property, the same issues which defendant previously discussed with Daniel. [¶] The responding party's position is that Daniel became licensed to practice law in December 2007. Acting on behalf of his father, the plaintiff only, and before he was a licensed attorney, Daniel attended a family meeting to receive accounting from defendant in relation to the subject corporation. At the time, according to the argument, there was no lawsuit pending or anticipated. [¶] The meeting took place at the residence of Ferdos Enayati, plaintiff and defendant's mother. Present at the meeting were Mehrdad Setareh, the brother of plaintiff and defendant, Sepehr Setareh, plaintiff's son, and Daniel. This was a family meeting it was argued, not a mediation. Non-legal advice was given, it's argued, to defendant and there were no attempt to mediate and no confidential information was provided to plaintiff or Daniel. [¶] And it is argued that there's a complete lack of evidence in defendant's motion showing that confidential information was disclosed. All that has been provided is conjecture, it is argued. [¶] Finally, the opposing party argues that even if the court were to entertain defendant's claim, the defendant has waived any confidentiality that may have existed because other non-parties were present at the meeting."
The trial court ruled: "So the issue is what constitutes a 'substantial relationship'? . . . . Well, the nature and extent of the attorney's involvement with the two cases, including such matters as the time spent by the attorney in the earlier case, the type of work performed and the attorney's possible exposure to formulation of policy and strategy. There also needs to be similarities between the two factual situations and between the legal questions posed. Whether a fee was paid or not is irrelevant. . . . [¶] Now, defendant declares approximately three years ago Daniel approached defendant to act as an intermediary to try to resolve the claims between him and the plaintiff. Thereafter, defendant declares he had several private conversations, both over the phone and in person, with Daniel regarding the property. [¶] And defendant declares he discussed private information related to the lawsuit, including his position on the existence or non-existence of any alleged agreements between plaintiff and himself related to the property, and his position regarding any alleged rights that plaintiff had or did not have in the property. Defendant declares that he would not have shared this information if he would have known that plaintiff would gain access to it. [¶] But in Daniel's declaration, he asserts that the mediation was in fact a family meeting, not a mediation. That he never gave legal [advice] to defendant and he did not receive confidential information. [¶] And defendant has not provided evidence that would show that an attorney-client relationship existed between him and Daniel. In fact, it does not appear that Daniel was licensed as an attorney at this 'mediation/family meeting,' although he became an attorney thereafter in 2007. [¶] So he couldn't represent . . . as an attorney because he wasn't an attorney. And because no substantial relationship existed, nor could it if he's not an attorney, and these are family members, and in front of other people. [¶] So while it's true defendant declares he discussed private information related to the lawsuit, including his position on the existence or non-existence of any alleged agreements between plaintiff and himself related to the property, and his position regarding any alleged rights that plaintiff had or did not have in the property. [¶] But while defendant engages in confidential communications dealing with [the] subject matter of this case, he does not explain how those communications would prejudice his case. And the right of a party to be represented by counsel of his or her own choosing should not be abrogated in the absence of a showing that the integrity of the judicial process would be injured, or that the opposing party will be unfairly disadvantaged by use of confidential information. [¶] [] So you have a family meeting with others present. And everyone bears their soul. The defendant bears his soul to this person who's a family member, not a lawyer. He may be a law student who will notoriously have an opinion on everything and know everything. [¶] So I just don't see how you have established what you need to establish in order to allow me to deprive the plaintiff of representation."
At the hearing, the trial court inquired of defense counsel about any telephone conversations between Kamran and Mr. Setareh. The trial court asked whether these conversations occurred after Mr. Setareh became an attorney in December 2007. Defense counsel responded: "My client doesn't recall, I will say this: my client doesn't recall specifically if [Mr. Setarah] has told him 'I'm now a licensed attorney. I can do more' or not. He knows the time frame."
The trial court found there was no attorney-client privilege because Mr.Setareh was not a lawyer at the time of the communications: "You're trying to disqualify someone who had a communication with someone who wasn't even a lawyer. And how can there be a conflict of interest if someone wasn't even a lawyer? He wasn't giving legal advice; wasn't allowed to give legal advice. There was no attorney-client privilege."
Defendants filed a timely notice of appeal on December 17, 2010.
III. DISCUSSION
A. Standard of Review
We review a ruling on a disqualification motion for an abuse of discretion. (City and County of San Francisco v. Cobra Solutions, Inc. (2006) 38 Cal.4th 839, 848; People ex. Rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1143.) Our Supreme Court has stated: "If the trial court resolved disputed factual issues, the reviewing court should not substitute its judgment for the trial court's express or implied findings supported by substantial evidence. [Citations.] When substantial evidence supports the trial court's factual findings, the appellate court reviews the conclusions based on those findings for abuse of discretion. [Citation.] However, the trial court's discretion is limited by the applicable legal principles. [Citation.] Thus, where there are no material disputed factual issues, the appellate court reviews the trial court's determination as a question of law. [Citation.]" (Id. at pp. 1143-1144; City and County of San Francisco v. Cobra Solutions, Inc., supra, 38 Cal.4th at p. 848.)
B. Attorney Disqualification
The trial court's authority to disqualify an attorney derives from the inherent power to control in furtherance of justice, the conduct of lawyers. (City and County of San Francisco v. Cobra Solutions, Inc., supra, 38 Cal.4th at p. 846; People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc., supra, 20 Cal.4th at p. 1145.) Our Supreme Court has explained, "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." (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc., supra, 20 Cal.4th at p. 1145; accord City and County of San Francisco v. Cobra Solutions, Inc., supra, 38 Cal.4th at p. 846.) The party seeking disqualification has the burden of establishing the existence of the attorney-client relationship. (Med-Trans Corp. v. City of California City (2000) 156 Cal.App.4th 655, 668, fn. 8; Koo v. Rubio's Restaurants, Inc. (2003) 109 Cal.App.4th 719, 729; In re Lee G. (1991) 1 Cal.App.4th 17, 27.)
Defendants argue the disqualification motion should have been granted. Defendants assert there is a reasonable inference that Mr. Setareh was a licensed attorney when confidential information was disclosed to him. Defendants contend the numerous communications with Mr. Setareh took place over a span of time. This they assert supports an inference Mr. Setareh was licensed to practice law during his conversations with Kamran. This contention is meritless when reviewed under the abuse of discretion standard of review. This speculative contention of a conflict of interest does not justify disqualification of Mr. Setareh and the law firm. (See DCH Health Services, Corp. v. Waite (2002) 95 Cal.App.4th 829, 833; accord Fox Searchlight Pictures, Inc. v. Paladino (2001) 89 Cal.App.4th 294, 302.) Mr. Setareh denied any such conversations occurred. The trial court accepted Mr. Setareh's under oath denial he ever represented Kamran. Given the conflicting declarations, we must defer to the trial court's findings that Mr. Setareh was not an attorney for Kamran during any conversations they had concerning the property. (City and County of San Francisco v. Cobra Solutions, Inc., supra, 38 Cal.4th at p. 848; People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc., supra, 20 Cal.4th at p. 1143; Rosenfeld Construction Co. v. Superior Court (1991) 235 Cal.App.3d 566, 572-573 ["The resolution of factual issues arising from competing declarations is conclusive on the reviewing court, and conflicts in the declarations are resolved in favor of the prevailing party"].)
In addition, defendants contend the trial court failed to consider whether Mr. Setareh's role as a mediator or intermediary established an attorney-client relationship with Kamran. Defendants assert that Mr. Setareh's role as a mediator required the disqualification motion be granted. This contention has no merit because there is substantial evidence to support the finding that Mr. Setareh was not a mediator or intermediary. Plaintiff, Mr. Setareh, Sepehr and Mehrdad submitted declarations stating that no mediation in fact occurred. They declared they attended a family meeting to discuss accounting issues between plaintiff and Kamran in connection with the property. They declared under oath everything Kamran said was in the presence of all the other family members. Mr. Setareh explicitly denied ever acting as a mediator. There is no merit to defendants' mediation contentions.
Defendants also argue the trial court erred in concluding because Mr. Setareh was not a licensed attorney during the conversations, the disqualification motion should be denied. Defendants contend courts have looked beyond the formal title of the attorney-client relationship in determining the existence of a conflict of interest. Defendants rely on Woods on Behalf of T.W. v. New Jersey Dept. of Education (D.J.N. 1993) 858 F. Supp. 51, 52-55. In Woods, the district court held that the attorney-client privilege protected communications between parents and a lay advocate who represented them in special education disputes before the New Jersey Office of Administrative Law. Defendants also argue courts have extended attorney-client relationships to situations in which a party was never represented by a lawyer. Defendants rely on: In re Mortgage & Realty Trust (Bankr. C.D. Cal. 1996) 195 B.R. 740, 745-746, 754-755 [law firm disqualified from representing defendant against debtor where one of its lawyers served on the debtor's board of trustees]; William H. Raley Co. v. Superior Court (1983) 149 Cal.App.3d 1042, 1047-1048 [law firm disqualified from representing plaintiff against defendant where partner was bank director who was trustee of 100 percent of defendant's common stock]; and State Farm Mutual Automobile Ins. Co. v. K.A.W. (Fla. 1991) 575 So.2d 630, 631-634 [granting insurers' disqualification motion of law firm that had earlier represented insured and now represented policyholder's wife and minor child]. Defendants argue these cases demonstrate that they did not need to establish the existence of a formal attorney-client relationship in order to prevail on the disqualification motion. Defendants further contend rule 3-310 of the Rules of Professional Conduct applies because Mr. Setareh acted as a mediator which created an attorney-client relationship.
None of the cases relied on by defendants is controlling. Mr. Setareh, plaintiff, Sepehr and Mehrdad denied any mediation occurred. Mr. Setareh denied he acted on defendants' behalf. Again, we defer to the trial court's finding that there was no mediation and resolve conflicts in the declarations in favor of the prevailing party. (City and County of San Francisco v. Cobra Solutions, Inc., supra, 38 Cal.4th at p. 848; People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc., supra, 20 Cal.4th at p. 1143; Rosenfeld Construction Co. v. Superior Court, supra, 235 Cal.App.3d at p. 572-573.)
Finally, defendants argue the trial court erred in disregarding the "appearance of impropriety" in Mr. Setareh's representation of plaintiff. The Court of Appeal has stated, "'[A]n appearance of impropriety by itself does not support a lawyer's disqualification.'" (In re Jasmine S. (2007) 153 Cal.App.4th 835, 843; Hectos Investments, Ltd. v. Kurtin (2003) 110 Cal.App.4th 36, 47; DCH Health Services, Corp. v. Waite, supra, 95 Cal.App.4th at p. 833.) We need not address the parties' remaining contentions.
IV. DISPOSITION
The December 10, 2010 order denying the disqualification motion is affirmed. Plaintiff, Khosrow Setareh, is to recover his appeal costs from defendants, Kamran Setareh and Simindokht Danialfar.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
TURNER, P. J. We concur:
MOSK, J.
KRIEGLER, J.