Opinion
G061049
03-14-2023
ACE FOODS, LLC, et al., Plaintiffs and Appellants, v. SLATER'S 50/50 FRANCHISE, LLC et al., Defendants and Respondents.
Mirch Law Firm, Marie C. Mirch and Kevin Mirch for Plaintiffs and Appellants. Gordon Rees Scully Mansukhani and Kimberly D. Howatt for Defendants and Respondents Slater's 50/50 Franchise, LLC and Elite Restaurant Group, Inc.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
Appeal from an order of the Superior Court of Orange County, Super. Ct. No. 30-2021-01183532, Stephanie George, Judge.
Mirch Law Firm, Marie C. Mirch and Kevin Mirch for Plaintiffs and Appellants.
Gordon Rees Scully Mansukhani and Kimberly D. Howatt for Defendants and Respondents Slater's 50/50 Franchise, LLC and Elite Restaurant Group, Inc.
OPINION
MOTOIKE, J.
Ace Foods, LLC and Seth Lindauer (collectively, Ace Foods) appeal from an order granting a motion to disqualify their counsel, the Mirch Law Firm and its attorneys (the Mirch Firm), from representing Ace Foods in their lawsuit against Slater's 50/50 Franchise, LLC, Slater's 50/50 Restaurant Group (Slater's), Elite Restaurant Group (Elite), Elias Nakhleh and Michael Nakhleh (collectively, the Elite parties) and others.
As Michael and Elias share the same surname, we sometimes use their first names to avoid confusion. No disrespect is intended.
The Mirch Firm represents multiple franchisees of the Slater's brand in lawsuits against Slater's (the franchisor), Elite (its parent company), and Elias and Michael Nakhleh (the principals for Slater's and Elite). In this case, the Mirch Firm represents franchisee Ace Foods. The claims made in this case are similar to those alleged in a complaint filed in federal court where the Mirch Firm was representing franchisee Zia Abhari in a civil action against the Elite parties (Abhari litigation).
In the Abhari litigation, the Elite parties successfully moved to disqualify the Mirch Firm based on the firm's communications with and connections to Martin Reiner. Reiner was disbarred by the State Bar of California in 2017. But that did not stop him from acting as if he were a licensed attorney. Abhari referred to Reiner as his "attorney" and recommended him to Michael to handle a legal issue Slater's and Elite were experiencing. Michael met with Reiner and after discussing his companies' trademark infringement matter, Michael signed an "Assignment of Claim" (capitalization omitted). Whether an attorney-client relationship was thus formed between Reiner and the Elite parties was a contested issue in the Abhari litigation and here.
The trial court found the Elite parties "reasonably believed they had an attorney-client relationship with Martin Reiner in [their] trademark infringement lawsuit." The court also found that during this attorney-client relationship, Michael disclosed to Reiner sensitive information concerning Slater's and Elite's "business operations, assets, and proprietary procedures" and provided Reiner "with confidential information concerning" the companies' "other legal disputes and transactions." The court found the information and documentation Michael gave to Reiner was material to Ace Foods' claims concerning the value of the Slater's 50/50 franchise. Reiner, however, did not remain loyal to the Elite parties.
After obtaining this privileged information, Reiner represented Abhari in a dispute with the Elite parties. When the Mirch Firm started representing Abhari in his case against the Elite parties, Reiner remained involved. Reiner appeared with Abhari during a mediation hearing in the Abhari litigation. At the hearing, the Mirch Firm told Slater's counsel Reiner was a "'lawyer with licensing problems.'" When questions arose concerning Reiner's involvement in the Abhari litigation, Reiner admitted to the federal court he communicated with the Mirch Firm "as a witness." Reiner also directly contacted the Elite parties' counsel to attempt to dissuade them from filing a disqualification motion in the Abhari litigation. But he was unsuccessful. The federal court granted the Elite parties' motion to disqualify the Mirch Firm.
In the Abhari litigation and the instant matter, there are allegations the Elite parties misrepresented the value of the Slater's 50/50 franchise. Here, the trial court found the Elite parties had established they gave Reiner privileged information during the trademark infringement lawsuit and this information was material to allegations against them in the case brought by Ace Foods. The court found the Mirch Firm had not rebutted the presumption Reiner communicated to them privileged attorney-client information, and the court granted the motion disqualifying the Mirch Firm from representing Ace Foods.
Ace Foods contend the trial court erred in granting the disqualification motion because: (1) there was no attorney-client relationship between Reiner and the Elite parties; (2) even if there was an attorney-client relationship, there was a joint representation relationship with Abhari and communications made during the joint representation are not privileged; (3) Slater's waived the attorney-client privilege when it filed e-mails between Michael and Reiner as exhibits in its motion to disqualify counsel in the Abhari litigation; (4) because the attorney-client relationship between Reiner and the Elite parties ended in January 2020, the court erred by relying on communication between Reiner and Michael after this date as evidence the Mirch Firm obtained confidential information; and (5) the Elite parties failed to establish the Mirch Firm received any information or documents from Reiner. We reject each contention and affirm the court's order.
FACTUAL AND PROCEDUAL BACKGROUND
I.
FRANCHISE PURCHASES
In February 2019, Abhari and his company Donya Entertainment, Inc. (Donya) purchased the Slater's 50/50 Rancho Cucamonga restaurant. A few months later in April 2019, Ace Foods purchased the Slater's 50/50 Anaheim restaurant.
II.
REINER
In 2019, Michael was a principal for Slater's and Elite. In June of that year, he had a meeting with Abhari, during which they discussed "certain legal issues" Slater's and Elite were "encountering relative to the 'Slater's 50/50' branding." Abhari recommended his "attorney" Reiner as potential counsel for Michael's companies.
Michael met privately with Reiner. During the meeting, Reiner told Michael about his litigation work on other matters. Reiner informed Michael a $10,000 retainer fee would be required if Slater's and Elite wanted to retain his services, and after payment, they would be his client and he could start working on their trademark infringement lawsuit.
Reiner gave Michael an Assignment of Claim document for signature and a cover letter. The header on these documents indicated they were from "Hill Collections, Inc." Both documents were signed by Reiner. The Assignment of Claim stated Michael, as agent for Elite, "hereby assigns to, and authorizes, Hill Collections, Inc. ('Assignee'), to do all things legally necessary for[ ] a claim for trademark infringement, and/or other legal theories, adverse to Frontiere Natural Meats, LLC, and/or other parties involved in that infringement, and to obtain and enforce a judgment, or for other compromise resolution, which in the Assignee's opinion is satisfactory." The Assignment of Claim indicated Hill Collections would retain 30% of the amount collected and the remaining 70% would be disbursed to Michael for Elite. The Assignment of Claim specified a $10,000 "commencing fee" was "to be paid by the Assignor for all attorney fees, court filing fee costs, and process serving costs." Elite was also responsible for other litigation costs, including depositions and expert fees. The cover letter directed Michael to pay the "commencement fee" to Reiner personally.
In the cover letter, Reiner explained the assignment contract capped attorney fees and court filing fees for pursuing a trademark infringement claim and advised Michael he would "save a substantial amount of money by having the claim prosecuted through [an] assignment." Reiner also cautioned Michael, "Time is of the essence because trademark infringement claims can be subject to such defenses as laches, and waiver, so we want to get started as very soon as is possible."
Michael signed the Assignment of Claim document and provided Reiner a $10,000 check from Slater's, "for what [he] understood was, and intended to be, an attorney retainer fee."
After signing the Assignment of Claim document and paying Reiner's fee, Michael believed he, as principal for Elite and Slater's, had an attorney-client relationship with Reiner. Based on this belief, Michael disclosed to Reiner sensitive information concerning "the business operations, assets, and proprietary procedures relative to Elite and Slater's Franchise, including their business practices and how they operate, the franchise agreements, and specific business transactions." At Reiner's request, Michael provided "documents and information about 'Slater's 50/50', including the operations and inner workings of Elite and Slater's Franchise, and various contracts and related documents." Michael also provided Reiner "confidential internal information about Elite and Slater's Franchise's other disputes and transactions." Michael provided this information to Reiner because he believed it was protected by attorney-client privilege.
In August 2019, Hill Collections filed a trademark infringement action in the Superior Court of California, County of Los Angeles, acting as the assignee of Elite's claims. The complaint and other documents filed in the action identified Christopher Weston as the attorney for Hill Collections. Reiner's name does appear on the documents as he signed the proof of service for the summons and complaint to the named defendants.
The trademark infringement case was removed to federal court, and the defendants moved to dismiss it. Reiner e-mailed Michael and requested certain documents for the opposition to the motion to dismiss. Michael forwarded the request to a colleague, explaining his "attorney" needed the information for the lawsuit. The federal court dismissed the case in December 2019.
During the trademark infringement litigation, Michael believed Reiner was his attorney. Michael was unaware Weston was listed as counsel on the superior court filing. Michael received no communication from Weston; all the communication he received regarding the status of the litigation came from Reiner.
After the trademark infringement case was dismissed, Reiner offered to refile the lawsuit. He also requested Michael provide a conflict waiver to enable him to pursue Abhari's legal claims against Elite and Slater's. Michael refused. Michael ended the relationship with Reiner, stating in an e-mail sent on January 28, 2020, "Hill Street Collections no longer represents Slater's in the trademark case ...." In the e-mail, Michael referenced an unresolved issue with Abhari and stated "[u]ntil there is a resolution on another matter there is a conflict of interest in this Slater's [t]rademark case."
Without a waiver, Reiner began pursuing Abhari's claims against Elite and Slater's, acting as the legal representative for Abhari and Abhari's company Donya. Reiner engaged in settlement discussions with Michael's business counsel regarding the claim. He also e-mailed a settlement offer to the insurance company concerning the claim. Reiner's e-mails with the insurance company and business counsel were sent from his e-mail address "martinreinerlaw@yahoo.com."
Shortly thereafter (March 2020), Michael and his business counsel realized Reiner had been disbarred by the State Bar of California and was not a licensed attorney. When Michael questioned Reiner about this, Reiner denied his license had been suspended or that he had been disbarred. Reiner asserted: "Any order to either effect is legally null and void. Furthermore, I have never represented myself to you as acting as an attorney. I am here in the capacity as the office manager. If anyone represented anything different about me, they were incorrect. Respectfully, your misperceptions about me should not interfere with your need to communicate your consent to the claim made with [the insurance company]." In response, Michael stated Reiner had represented to him that he was an attorney. Michael also sent a screen shot of Reiner's profile on the State Bar of California's website, which showed Reiner was disbarred and prohibited from practicing law. Reiner claimed the "State Bar's representation" was not "the official word" and was "fake news."
Michael repeated his claim Reiner had represented to him that he was an attorney. Michael's business counsel stated he believed Reiner had been acting as counsel for Abhari and Donya during their discussions, and he suggested Reiner change his e-mail address to avoid misleading others.
III.
THE MIRCH FIRM, THE ABHARI LITIGATION, AND REINER
In May 2020, Abhari retained the Mirch Firm to file a lawsuit against the Elite parties for "misrepresentations" made to him to induce him to purchase two Slater's restaurants. The following month, the Mirch Firm filed a complaint in the federal district court on behalf of Abhari and his company against the Elite parties and other defendants, alleging several causes of action. The Elite parties were represented in the litigation by the law firm of Gordon Rees Scully Mansukhani (Gordon Rees). The parties and their attorneys participated in mediation, which was conducted virtually. Reiner attended the mediation with Abhari. The Mirch Firm attorneys attended from their office. At the meditation, they represented to opposing counsel that Reiner was a "'lawyer with licensing problems.'"
A Gordon Rees attorney subsequently communicated with the Mirch Firm about Reiner's role with the Mirch Firm. The attorney stated she recently learned Reiner had served as counsel for Slater's and Elite in the trademark infringement litigation and during this representation he had obtained privileged attorney-client information. She believed the Mirch Firm's involvement with Reiner required the Mirch Firm withdraw from the Abhari litigation or be disqualified.
The Mirch Firm responded there was no basis for disqualification. It denied Reiner worked with the firm and that he was "acting in any capacity" in the case. The Mirch Firm represented Reiner did clerical work for Abhari and was present at the mediation to assist Abhari "with the language barrier."
In a subsequent letter to opposing counsel, the Mirch Firm stated that at the mediation, Reiner "was introduced as a lawyer with licensing problems . . . acting as an assistant to Mr. Abhari and Donya Entertainment." The Mirch Firm indicated it was shocked to learn Reiner had been retained by Michael. One of the attorneys at the Mirch Firm stated she had never met Reiner face to face and had only limited conversations with him. She expressed her understanding he was "an unlicensed attorney fighting a disciplinary matter and acting as an employee for Donya Entertainment."
Informed about Gordon Rees's concerns, Reiner e-mailed the Gordon Rees attorneys representing the Elite parties from his "martinreinerlaw@yahoo.com" e-mail address and copied attorneys at the Mirch Firm. In the e-mail, he denied serving as counsel for Michael, Slater's, or Elite. He stated he had "communicated" with the Mirch Firm "as a witness" and he worked for Abhari and Abhari's businesses "in a nonprofessional capacity." He cautioned the Gordon Rees attorneys, "[t]he only way in which you can proceed with your proposed motion [for disqualification] is by Michael Nakhleh committing the crime of perjury, which would necessitate [Gordon Rees] committing the crime of suborning Michael Nakhleh's perjury. Respectfully, do not do that."
The Elite parties moved to disqualify the Mirch Firm from the Abhari litigation in federal court. Reiner submitted a declaration in support of the Mirch Firm's opposition. In his declaration, Reiner admitted he was disbarred in 2017 but stated he contests his disbarment as "null and void for being premised upon a wrongful deprivation of his [p]rocedural [d]ue process." He declared he worked for Abhari's companies as an office manager and not as an attorney. Reiner averred he met with Michael and had him sign the Assignment of Claim form, but Reiner denied presenting himself as an attorney for Elite and Slater's and stated it was unreasonable for Michael to claim Reiner was an attorney for those companies. Reiner also denied receiving any confidential or attorneyclient privileged information from Michael, Slater's, or Elite. He asserted the information he received from them was public information and had no relevance to the Abhari litigation. He denied providing to or discussing with the Mirch Firm any information or documents he received in the trademark infringement litigation.
To support its opposition to the disqualification motion, the Mirch Firm submitted e-mails between Michael and Reiner it claimed had been provided by Abhari. Abhari, however, had not been included as a recipient in several of these e-mails. The Mirch Firm also submitted an e-mail it received from Reiner explaining Michael "wired" the "litigation expenses" for the trademark infringement litigation to Reiner's bank account because Hill Collections had been recently formed and did not have a corporate bank account at that time.
We note the record indicates Michael wrote a check to Reiner; he did not "wire" money to Reiner's account.
During the Abhari litigation, the Mirch Firm sent correspondence to the Elite parties' counsel regarding an argument made in the trademark infringement case- the "argument that Slater's 50/50 is not a proper trademark/tradename because it is a 'non-famous generic name' not eligible for such action." The Mirch Firm claimed Abhari would not have purchased the franchise if he had known the legitimacy of the trademark/tradename was at issue. The Mirch Firm further asserted the Nakhlehs and Slater's did not disclose these trademark/tradename problems. With the letter, the Mirch Firm sought the names of witnesses to depose "to determine the time of Nakhleh Defendants' knowledge that Slater's 50/50 franchises [were] worthless."
The federal district court granted the Elite parties' motion to disqualify the Mirch Firm as Abhari's counsel. The federal court found Reiner falsely represented to the Elite parties he was their attorney and obtained privileged information relevant to the Abhari litigation. The court further found the Mirch Firm was using that privileged information "to gain a tactical advantage in [the] case." Based on Reiner's admission he had communicated with the Mirch Firm as a witness and Reiner's attendance at the mediation, the court found there was a legal presumption the Mirch Firm "'possesses confidential attorney-client information materially related to the proceedings before the court,' and that this information 'has been used or disclosed.' [Citation.]" The district court found the Mirch Firm failed to rebut this presumption and concluded disqualification was the appropriate remedy.
The following month, Reiner filed a lawsuit against the Elite parties, their counsel, and numerous others, alleging they conspired together to intimidate him for the purpose of deterring him from testifying as a witness on behalf of Abhari. In the complaint, Reiner alleged Abhari would win the litigation with Reiner's testimony concerning an admission of liability by Michael.
IV.
THE ACE FOODS LITIGATION
After being disqualified from the Abhari litigation, the Mirch Firm filed a complaint in the instant case on behalf of Ace Foods, alleging causes of action against the Elite parties and others for violations of the California Franchise Law, breach of contract, breach of the covenant of good faith and fair dealing, intentional infliction of emotional distress, fraudulent inducement, negligent inducement, unfair business practices, and negligence. All of these claims were alleged in the Abhari litigation as well. Factual allegations in the two complaints also overlapped.
The Elite parties moved to disqualify the Mirch Firm as counsel for Ace Foods on the same grounds they raised in the Abhari litigation. They argued there was evidence establishing: (1) the existence of an attorney-client relationship with Reiner, (2) during which Slater's and Elite transmitted confidential information to Reiner, and (3) Reiner communicated material information to the Mirch Firm.
The Mirch Firm opposed the motion, asserting the Elite parties had not established the materiality of the attorney-client information. The Mirch Firm contended none of the allegations in the Ace Foods' complaint came from information provided by Reiner and information the Elite parties claimed was privileged came from public documents. The Mirch Firm asserted the Elite parties knew Reiner was disbarred and worked as Abhari's office manager. The Mirch Firm further argued there was no evidence its attorneys had obtained or used attorney-client protected information or documents.
After a hearing, the trial court adopted its tentative ruling as its final order and granted the motion to disqualify the Mirch Firm. In its order, the court found Reiner acted as if he was a licensed attorney and convinced people of such. Considering the evidence before it, the court found Elite and Slater's "reasonably believed they had an attorney-client relationship with Martin Reiner in the trademark infringement lawsuit," and based on this belief, they disclosed to Reiner sensitive information concerning their business operations, which the Mirch Firm admitted was relevant to Ace Foods' claims concerning the value of the franchise.
Assessing whether there had been an ethical breach, the court noted Reiner admitted in his declaration in the Abhari litigation he communicated with the Mirch Firm about the Slater's franchisee's case as a witness. Given Reiner's admission, the court found the Mirch Firm's claim Reiner was only acting as a translator for Abhari not credible. The court noted "[t]he Mirch Firm introduced several emails between [Michael] and Reiner that the Mirch Firm claimed had been provided by Abhari - though it was evident that they initially came from Reiner." The court also noted an attorney with the Mirch Firm admitted having "'limited conversations' with Reiner," but did not indicate what those conversations disclosed. The court concluded the Elite parties had presented evidence establishing the presumption Reiner was given privileged information that he communicated to the Mirch Firm and Ace Foods had failed to rebut this presumption.
V.
APPELLATE MOTIONS
Ace Foods appealed from the trial court's order. We subsequently granted Ace Foods' motion for a stay of the trial court proceedings pending resolution of this appeal.
When Ace Foods filed their opening brief, they requested we take judicial notice of numerous documents: (1) two documents in Hill Collections v. Safeway, et al., United States District Court, Central District of California, case number 2:19-cv-09750-MWF-(JEMx); (2) multiple documents in Karma Capital, Inc. v. Victory Park Advisors, LLC, et al., California Superior Court, County of San Diego, case number 37-2021-00001088-CU-FR-CTL; (3) multiple documents in Seyed Zia Eddin Ahmadi Abhari v. Elias Nakhleh, Michael Nakhleh, et al., United States District Court, Central District of California, case number 2:20-cv-05734; (4) two documents in Mirch Law Firm, LLP, et al. v. Elias Nakhleh, et al., United States Court of Appeals, Ninth Circuit, case number 20-56207; (5) one document in In Re Karma Capital, Inc., United States Bankruptcy Court, Southern District of California, case number 19-01962-LA11. All of these documents total more than 300 pages.
The Elite parties opposed the request for judicial notice of these documents. They point out the request does not comply with California Rules of Court, rule 8.252(a)(2), which sets forth the requirements for seeking judicial notice in a reviewing court. Ace Foods do not explain why the matters to be noticed are relevant to the appeal (id., rule 8.252(a)(2)(A)); whether the matters were presented to the trial court and judicial notice was taken by that court (id., rule 8.252(a)(2)(B)) (the Elite parties assert they were not); why the matters are subject to judicial notice under the Evidence Code (id., rule 8.252(a)(2)(C)); and whether they relate to proceedings occurring after the disqualification order (id., rule 8.252(a)(2)(D)). Ace Foods make no showing the documents to be noticed were before the trial court when it considered the disqualification motion, and our review of the appellate record does not indicate they were. Generally, reviewing courts "'do not take judicial notice of evidence not presented to the trial court.'" (Haworth v. Superior Court (2010) 50 Cal.4th 372, 379, fn. 2.) Accordingly, Ace Foods' request for judicial notice is denied.
The Elite parties filed a motion to augment or correct the record concerning the reporter's transcript of the hearing on their disqualification motion. We deny this motion as moot because it appears we received the corrected reporter's transcript with a reporter's certification page dated May 17, 2022, after the correction. The reporter's statement at the end of the transcript certifies the copy was a true, full, and correct statement of the proceedings in the matter.
The Elite parties filed an unopposed motion for judicial notice. They requested we take judicial notice of documents in two other cases involving the Mirch Firm: (1) a memorandum decision in Mirch Law Firm, LLP, et al. v. Elias Nakhleh, et al., United States Court of Appeals, Ninth Circuit, case number 20-56207; and (2) a notice of ruling and orders in Karma Capital, Inc. v. Victory Park Capital Advisors, LLC, et al., California Superior Court, County of San Diego, case number 37-2021-00001088-CU-FR-CTL. The Elite parties also requested we take judicial notice of certain documents in this case: (3) the trial court's procedural order concerning the disqualification motion; (4) the trial court's order vacating a hearing on demurrers pending appeal; and (5) exhibits of which judicial notice was requested in the trial court. We grant this request in part and deny it in part.
We deny the request to take judicial notice of other courts' decisions in analogous cases involving the Mirch Firm (Nos. 1 &2). These rulings were issued after the trial court's order disqualifying the Mirch Firm and therefore were not considered below. "'It is an elementary rule of appellate procedure that, when reviewing the correctness of a trial court's judgment, an appellate court will consider only matters which were part of the record at the time the judgment was entered. [Citation.]'" (Haworth v. Superior Court, supra, 50 Cal.4th 372, 379, fn. 2.)
We grant the request to take judicial notice of the trial court's procedural orders in the instant matter (Nos. 3 &4). (Evid. Code, § 452, subd. (d)(1).) We also grant the request for judicial notice of the exhibits considered by the trial court (No. 5).
All further statutory references are to the Evidence Code unless otherwise stated.
DISCUSSION
Ace Foods contend the trial court erred by disqualifying their counsel, the Mirch Firm. We disagree.
I.
STANDARD OF REVIEW
"'Generally, a trial court's decision on a disqualification motion is reviewed for abuse of discretion. [Citations.]' [Citation.] As to disputed factual issues, a reviewing court's role is simply to determine whether substantial evidence supports the trial court's findings of fact; 'the reviewing court should not substitute its judgment for . . . express or implied [factual] findings [that are] supported by substantial evidence. [Citations.]' [Citation.] As to the trial court's conclusions of law, however, review is de novo; a disposition that rests on an error of law constitutes an abuse of discretion. [Citations.] The trial court's 'application of the law to the facts is reversible only if arbitrary and capricious.' [Citation.]" (In re Charlisse C. (2008) 45 Cal.4th 145, 159.)
II.
APPLICABLE LAW CONCERNING ATTORNEY DISQUALIFICATION
"'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.]' [Citation.]" (In re Charlisse C., supra, 45 Cal.4th at p. 159.) "Ultimately, disqualification 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.]" (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1145 (SpeeDee Oil).)
"It is well established that an attorney, after severing his or her relationship with a client, 'may not do anything which will injuriously affect his former client in any matter in which he formerly represented him nor may he at any time use against his former client knowledge or information acquired by virtue of the previous relationship.' [Citations.]" (O'Gara Coach Co., LLC v. Ra (2019) 30 Cal.App.5th 1115, 1124.) This prohibition is based on governing case law and rule 1.9(a) of the State Bar Rules of Professional Conduct, which prohibits "[a] lawyer who has formerly represented a client in a matter" from representing "another person in the same or a substantially related matter in which that person's interests are materially adverse to the interests of the former client unless the former client gives informed written consent."
III.
ATTORNEY-CLIENT RELATIONSHIP
The trial court found the Elite parties "reasonably believed they had an attorney-client relationship with Martin Reiner in the trademark infringement lawsuit." Ace Foods contend there was no attorney-client relationship. We disagree and conclude the court's finding is supported by substantial evidence.
"California's attorney-client privilege is embodied in section 950 et seq. and protects confidential communications between a client and his or her attorney made in the course of an attorney-client relationship. [Citations.]" (Edwards Wildman Palmer LLP v. Superior Court (2014) 231 Cal.App.4th 1214, 1224.) "Section 951 defines 'client,' for purposes of the privilege, as 'a person who, directly or through an authorized representative, consults a lawyer for the purpose of retaining the lawyer or securing legal service or advice from him in his professional capacity ....' [Citation.] Section 950 defines 'lawyer' as 'a person authorized, or reasonably believed by the client to be authorized, to practice law in any state or nation.' [Citation.]" (Id. at p. 1225, italics added.) Section 952 defines "'confidential communication between client and lawyer'" as "information transmitted between a client and his lawyer in the course of that relationship and in confidence ...." Section 954 states a client "has a privilege to refuse to disclose, and to prevent another from disclosing, a confidential communication between client and lawyer ...."
An "attorney-client relationship is created by some form of contract, express or implied, formal or informal. [Citations.]" (Fox v. Pollack (1986) 181 Cal.App.3d 954, 959.) A party's subjective belief an attorney-client relationship exists is insufficient, standing alone, to create such a relationship or a duty of care owed to the party by the attorney. (Zenith Ins. Co. v. O'Connor (2007) 148 Cal.App.4th 998, 1010.) A party "cannot unilaterally establish an attorney-client relationship, and its hindsight 'beliefs' that such a relationship existed are thus legally irrelevant. [Citation.] Instead, it is the intent and conduct of the parties that control the question as to whether an attorneyclient relationship has been created. [Citation.]" (Ibid.)
With these principles in mind, we evaluate whether the trial court's finding of an attorney-client relationship is supported by substantial evidence. The Elite parties' motion to disqualify the Mirch Firm included Michael's declaration. In it, he declared he believed an attorney-client relationship was formed with Reiner after Michael signed the Assignment of Claim document and paid Reiner the $10,000 fee required to commence the trademark infringement litigation. This belief was reasonable but is insufficient by itself to establish the existence of an attorney-client relationship. (Zenith Ins. Co. v. O'Connor, supra, 148 Cal.App.4th at p. 1010.) However, there are additional facts concerning Michael's and Reiner's conduct that reflect on their intent. After Michael mentioned his companies had a legal issue, Abhari recommended his attorney Reiner to Michael. When Michael met him, Reiner presented himself as an attorney and told Michael about his litigation work on other matters. At times, Reiner used the e-mail address of "martinreinerlaw@yahoo.com," suggesting he was an attorney. These facts establish Reiner presented himself as an attorney and Michael reasonably believed Reiner was authorized to practice law.
Reiner presented Michael with an Assignment of Claim document and demanded a fee before he would begin working on the Elite parties' trademark infringement lawsuit. Michael declared Reiner stated Slater's and Elite would be his clients after payment of the fee. The Assignment of Claim and the cover letter with it, both signed by Reiner, are reasonably understood by a layperson as creating an attorneyclient relationship. In the cover letter, Reiner explained the assignment contract capped "attorney fees" for pursuing the trademark infringement claim. It was reasonable for Michael to believe an attorney-client relationship was formed when he signed the Assignment of Claim document and paid Reiner's fee. Moreover, during the trademark litigation, Reiner contacted Michael regarding the status of the case and requested Michael provide documents from Elite to support the trademark infringement claim. Thus, there was sufficient evidence an attorney-client relationship was created between Reiner and the Elite parties.
Arguing there was no attorney-client relationship, Ace Foods attack the validity of the Assignment of Claim document. They assert it was altered and was not signed by Reiner. There is no evidence in the record the document was altered and the record contains one copy signed only by Reiner and a second copy signed by both Michael and Reiner.
Ace Foods rely on Fink v. Shemtov (2012) 210 Cal.App.4th 599 (Fink) and assert an assignment of claim does not create an attorney-client relationship. They read the holding in Fink too broadly. In Fink, a panel of this court concluded assignment "arrangements are legal in collection cases and do not create an attorney-client relationship between the assignor and the assignee." (Id. at p. 603, italics added.) Here, the assignment agreement was not in a collection case. Moreover, the assignment agreement in this case was substantially different from the assignment agreement in Fink. (Id. at p. 604.)
The court properly found an attorney-client relationship existed between Reiner and the Elite parties. Therefore, confidential communications made during the course of this relationship are protected by attorney-client privilege. (§ 952.)
IV.
JOINT REPRESENTATION
Ace Foods alternatively argue even if there was an attorney-client relationship between Reiner and the Elite parties, the "relationship was a joint representation relationship with Abhari and Hill Collections" and the court should have recognized the joint representation exception to the attorney-client privilege under 4 section 962.
Section 962 states "[w]here two or more clients have retained or consulted a lawyer upon a matter of common interest, none of them . . . may claim a privilege under this article as to a communication made in the course of that relationship when such communication is offered in a civil proceeding between one of such clients . . . and another of such clients ...."
Ace Foods did not make this argument in the trial court, and we will not consider it for the first time on appeal. Because the issue was not raised below, the trial court did not have an opportunity to consider evidence as to whether there was a joint representation of "two or more clients" with a "common interest." (§ 962.) Thus, Ace Foods forfeited this argument. (In re N.R. (2017) 15 Cal.App.5th 590, 598 [claim involving "issue of fact rather than a pure question of law," is forfeited by failure to raise it below].)
Even if Ace Foods had not forfeited this argument, we would not reverse the trial court's disqualification order on this ground. The possibility that some of Michael's communications with Reiner might be unprotected under the joint-client exception (§ 962) does not negate the requirement of disqualification in this case.
Disclosure of client communication is not the only concern; there are also broader interests at play. (Western Continental Operating Co. v. Natural Gas Corp. (1989) 212 Cal.App.3d 752, 761-762 ["Our courts have distinguished the rule against representing conflicting interests from the attorney-client evidentiary privilege noting that the former is broader than the latter"].) "The California Supreme Court has . . . repeatedly held that the disqualification rules are not merely intended to protect client confidences or other 'interests of the parties'; rather, '[t]he paramount concern . . . [is] to preserve public trust in the scrupulous administration of justice and the integrity of the bar.' [Citation.] In light of these significant public interests, we do not agree that matters of disqualification should be determined solely by reference to evidentiary rules." (Fiduciary Trust Internat. of California v. Superior Court (2013) 218 Cal.App.4th 465, 485-486, fn. omitted.) As to the issue of attorney disqualification, joint representation is not dispositive. (Id. at pp. 482-486.)
V.
WAIVER
Ace Foods contend the trial court erred by failing to recognize the Elite parties "waived the attorney[-]client privilege when [they] filed protected documents in federal court in the Abhari litigation." We disagree.
Ace Foods assert the Elite parties included certain e-mails between Reiner and Michael in the disqualification motion in the Abhari litigation, and by doing so, the Elite parties waived attorney-client privilege as to all of their communications with and information provided to Reiner. The Elite parties argue there was no waiver of their attorney-client privilege. The Elite parties have the better argument.
"'Once the proponent makes a prima facie showing of a confidential attorney-client communication, it is presumed the communication is privileged and the burden shifts to the opponent to establish waiver, an exception, or that the privilege does not for some other reason apply.' [Citations.]" (McDermott Will & Emery LLP v. Superior Court (2017) 10 Cal.App.5th 1083, 1101.) Ace Foods have failed to establish the Elite parties waived their privilege. The only authority Ace Foods cite to support their waiver argument is rule 502 of the Federal Rules of Evidence (28 U.S.C.), but it does not apply in this situation as there was no intentional waiver (id., rule 502(a)(1)) nor inadvertent disclosure (id., rule 502(b)(1)).
Under section 912, subdivision (a), "[a] waiver results when the holder, without coercion, (1) has disclosed a significant part of the communication, or (2) has consented to the disclosure made by anyone else. [Citations.]" (McDermott Will &Emery LLP v. Superior Court, supra, 10 Cal.App.5th at p. 1101.) Ace Foods showed neither. Thus, the Elite parties did not waive their attorney-client privilege as to either communications with Reiner or information provided to him. Moreover, any waiver by the Elite parties of their attorney-client privilege in the disqualification motion did not absolve Reiner of his breach of his duty of loyalty to Elite, which took place prior to the filing of the disqualification motion, or his obligation to maintain his client's confidences.
VI.
TRIAL COURT'S RELIANCE ON COMMUNICATIONS AFTER THE TERMINATION OF THE ATTORNEY-CLIENT RELATIONSHIP
The trial court found: "The Mirch Firm introduced several emails between [Michael] and Reiner that the Mirch Firm claimed had been provided by Abhari - though it was evident that they initially came from Reiner. (Exh. 23, ¶¶ 14-15, 18-20.)" Ace Foods contend the trial court erred by relying on these communications to find there was an attorney-client relationship. Ace Foods argue these communications "are not attorney[-]client privileged communications because as of January 28, 2020, [Michael] had terminated Reiner as his attorney" and these communications occurred after that date. We see no error in the trial court's discussion of these e-mails.
Ace Foods misunderstand the import the trial court placed on these e-mails. The court relied on these communications as evidence Reiner was providing information to the Mirch Firm, albeit channeling it through Abhari. The trial court's finding these communications came from Reiner, not Abhari, is supported by substantial evidence. Each communication was between Reiner and Michael; Abhari was not included in them. Thus, it is evident Reiner was the source of these communications. And they are evidence Reiner was transmitting communications he had with his former client, privileged or not, to counsel for the adversary of his former client.
VII.
PRESUMPTION MATERIAL CONFIDENTIAL INFORMATION WAS TRANSMITTED TO THE MIRCH FIRM
Ace Foods contend the trial court should have denied the disqualification motion because the Elite parties failed to satisfy their burden of showing the privileged attorney-client information Reiner received in the trademark infringement litigation was material to the current matter. Ace Foods also assert they rebutted the presumption the Mirch Firm received privileged communication from Reiner as the firm's attorneys attested they received the information in their complaint from sources other than Reiner.
When deciding the disqualification motion, the trial court used the analysis in Shadow Traffic Network v. Superior Court (1994) 24 Cal.App.4th 1067 (Shadow Traffic). In Shadow Traffic, the court held once the party moving for disqualification has established its counsel transmitted confidential information to the potential expert, "'a rebuttable presumption arises that the information has been used or disclosed in the current employment. The presumption is a rule by necessity because the party seeking disqualification will be at a loss to prove what is known by the adversary's attorneys and legal staff. [Citation.]' [Citation.]" (Id. at p. 1085.) "As the purpose of this presumption is to implement the public policy of protecting confidential communications, the presumption is one affecting the burden of proof. [Citation.] The effect of this type of presumption 'is to impose upon the party against whom it operates the burden of proof as to the nonexistence of the presumed fact.' [Citation.]" (Ibid.) In Shadow Traffic, the trial court found plaintiff's attorneys had transmitted confidential information to an expert subsequently retained by the defendant's attorneys, giving rise to the presumption the expert used or disclosed this confidential information in its employment with the defendant's attorneys. The burden then shifted to the defendant's attorneys to persuade the court by a preponderance of the evidence it had not received the confidential information. (Ibid.)
Employing this analysis in the instant matter, the trial court found the Elite parties had demonstrated they provided privileged information to Reiner during the trademark infringement litigation. The court found the information and documentation conveyed to Reiner was materially relevant to the Ace Foods litigation. This finding is supported by substantial evidence. During the litigation, the Mirch Firm sent a letter to counsel for the Elite parties, acknowledging information in the trademark infringement litigation was relevant to Ace Foods' claims concerning the value, or lack thereof, of the Slater's franchise. The trial court's findings triggered the presumption Reiner disclosed material confidential information to the Mirch Firm in his communications with them. (Shadow Traffic, supra, 24 Cal.App.4th at p. 1085.)
"When a judicially created presumption affecting the burden of proof is triggered, the question of whether the party who has the burden of establishing the nonexistence of the presumed fact has carried its burden of persuasion is an issue for the trier of fact to decide, not a reviewing court. [Citation.] Thus, we may not reweigh the evidence or substitute our deductions for those of the trial court. [Citations.]" (Shadow Traffic, supra, 24 Cal.App.4th at p. 1087.) Here, the trial court found the Mirch Firm's declarations stating they had no relationship with Reiner were insufficient to rebut the presumption, given the other evidence showing Reiner was providing information to them and Reiner's declaration stating he had communicated with the firm as a witness in the Abhari litigation. The trial court also found not credible the Mirch Firm's claim Reiner was only acting as a translator for Abhari at the mediation hearing. We will not reweigh the evidence or substitute our deductions for those of the trial court. As Ace Foods failed to rebut the presumption Reiner disclosed material confidential information to the Mirch Firm, the trial court properly disqualified the Mirch Firm.
DISPOSITION
The trial court's order disqualifying the Mirch Firm is affirmed. Respondents shall recover their costs on appeal.
WE CONCUR: O'LEARY, P. J., BEDSWORTH, J.