In Re Wonderland Enchanted Bakery At The Grove Inc

Filing 30

ORDER DENYING DEFENDANTS MOTION TO DISQUALIFY PLAINTIFFS COUNSEL SUSAN HARRISON 14 by Judge Otis D Wright, II . (lc) Modified on 6/11/2012 (lc).

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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In Re:

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WONDERLAND ENCHANTED
BAKERY AT THE GROVE, INC.

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Debtor.

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Case No. 2:11-cv-9515-ODW
USBC Case No. 2:11-bk-13330-ER
ORDER DENYING DEFENDANTS’
MOTION TO DISQUALIFY
PLAINTIFFS’ COUNSEL SUSAN
HARRISON [14]

PETER ADDERTON; FRED
GOLDRING; and WONDERLAND
PARTNERS LLC,
v.

Plaintiffs,

WONDERLAND BAKERY, INC.;
WONDERLAND ENCHANTED
BAKERY AT THE GROVE, INC.;
SONDRA AMES; ALLYSON AMES; and
Does 1 through 20, inclusive,
Defendants.

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I.

INTRODUCTION

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Under California law, an attorney may not represent a new client that is adverse

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to a former client, without a waiver from the former client, if the attorney obtained

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confidential information from the former client that is material to the new client’s

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case. Defendants seek to disqualify Plaintiffs’ counsel Susan Harrison, alleging that

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she obtained Defendants’ confidential information because: (1) she was a former

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Raines Feldman, LLP attorney; and (2) she maintains a relationship with the Raines

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firm. Having carefully considered the papers filed in support of and in opposition to

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the instant Motion to Disqualify, the Court deems the matter appropriate for decision

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without oral argument. Fed. R. Civ. P. 78; L.R. 7-15.
II.

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FACTUAL BACKGROUND

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In 2005, Defendants Sondra and Allyson Ames founded Wonderland Bakery,

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Inc. in Newport Beach, California. (Mot. 5.) In 2009, they formed Wonderland

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Enchanted Bakery at the Grove, Inc. to control their new store in Los Angeles. (Id. at

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5–6.) Thereafter, Plaintiffs Peter Adderton and Fred Goldring proposed a partnership

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with the Ameses and offered to supply all of the capital for the new store. (Id. at 6.)

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On September 21, 2010, Adderton, Goldring, and the Ameses formed Wonderland

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Partners, LLP, dividing the shares equally among the four members. (Id.) They also

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hired the Raines firm to represent Wonderland Partners. (Id.)

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On October 11, 2010, Wonderland Bakery, Inc. retained the Raines firm to

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represent it in a construction litigation. (Mot. 7.) Several days later on October 15,

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2010, Wonderland Partners, Inc.,1 Wonderland Retail Holdings LLC, and Wonderland

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Partners at the Grove LLC finalized an engagement agreement with the Raines firm.

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(Mot. Ex. A.) The engagement agreement expressly identifies these corporate entities

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as the clients, and states that the Raines firm does not represent the individual owners

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or the Ameses’ Wonderland entities. (Mot. Ex. A at 3.)

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Not long after, the parties had a falling out. Because of the growing conflict

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between Adderton and Goldring on one side, and the Ameses on the other, the Raines

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firm prepared a conflict waiver on January 14, 2011 for the parties to execute. (Mot.

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Ex. G.)

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Adderton and or Fred Goldring as individuals and or any corporate entities in

Under the conflict waiver, the Raines firm may not: “represent Peter

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“Wonderland Partners, Inc.” in the engagement agreement appears to refer to Wonderland Partners,
LLC.

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arbitration and or litigation in any and all matters known or unknown against Sondra

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Ames, Allyson Ames and or any Wonderland entities.” (Mot. Ex. G., Addendum C.)

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Harrison worked on two matters as of counsel for the Raines firm—the first for

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two weeks in September of 2010, and the second from late 2010 until January 4, 2012.

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(Harrison Decl. ¶¶ 5–7.) These two cases did not involve Plaintiffs, Defendants, or

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any Wonderland entities. (See id. ¶¶ 5–12.) During this time, she maintained her own

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office in Rancho Palos Verdes. (Id. ¶ 8.) She did not have an office at the Raines

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firm, did not have access to the Raines firm’s files (except for documents for her two

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cases), and only attended office meetings for her two cases. (Id.)

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Defendants allege that Harrison hid her previous employment with the Raines

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firm and her relationship with its principals. (Mot. 9; Reply 3.) More importantly,

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Defendants claim that Harrison acts under the direction of the Raines firm and

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possesses Defendants’ confidential information that the Raines firm acquired during

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its representation of Wonderland Partners.

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Defendants argue that Harrison breached her ethical duty to them and should be

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disqualified from this litigation.

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III.

(Mot. 13–15.)

For these reasons,

LEGAL STANDARD

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Courts have the power to disqualify attorneys if the attorney’s conduct “actually

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interferes with the integrity of the court, or actually produces an appearance of

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impropriety”; there must be clear impropriety that would be “recognized . . . by all

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reasonable persons.” In re Coordinated Pretrial Proceedings in Petroleum Prods.

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Antitrust Litig., 658 F.2d 1355, 1361 (9th Cir. 1981). To satisfy this burden, it must

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be “satisfactorily established” that an attorney wrongfully acquired an unfair

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advantage that undermines the integrity of the judicial process and will have a

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continuing effect on the proceedings before the court. La Jolla Cove Motel and Hotel

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Apartments, Inc. v. Super. Ct., 121 Cal. App. 4th 773, 791 (2004). Furthermore,

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information that was not confidential to begin with does not become so simply

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because it is conveyed to another attorney. Id.

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For that matter, an attorney cannot be automatically disqualified based on the

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assumption that she received confidential information from another attorney; rather,

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the presumption is a rebuttable one. Kirk v. First Am. Title Ins. Co., 183 Cal. App. 4th

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776, 809–810 (2010). One reason for this is that disqualifying an attorney tends to

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impose a substantial hardship on the disqualified attorney’s client, who is forced to

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bear the time and cost of finding another attorney. La Jolla Cove Motel, 121 Cal.

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App. 4th at 791. Moreover, the right to counsel of one’s choice is critical to the

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judicial process. Id.
IV.

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DISCUSSION

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Defendants allege that Harrison obtained Defendants’ confidential information

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from the Raines firm. Yet, Defendants fail to point to any specific confidential

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information, unknown by Plaintiffs, shared in confidence with the Raines firm. That

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is, because the Raines firm represented Wonderland Partners and not its individual

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owners, any statements the Ameses made to the Raines firm in its capacity as counsel

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for Wonderland Partners, are not confidential to Plaintiffs.

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communications may be shared between the Plaintiffs and Defendants, because they

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are all owners in their joint enterprise. Therefore, since any statements made by

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Defendants to the Raines firm are not confidential to the Plaintiffs,2 these statements

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do not automatically become privileged now that Plaintiffs and Defendants sit on

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opposite sides of the courtroom.3

In fact, these

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Further, Defendants cannot show that Harrison’s continued representation will

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have a detrimental and continuing effect on the proceedings. Defendants allege that

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Harrison has a substantial relationship with the Raines firm and offered evidence that

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she labors under their direction. But Defendants cannot show that Harrison has

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Although Defendants were separately represented by the Raines firm in their construction
litigation, Defendants do not allege that Harrison obtained any confidential information exclusive to
the construction litigation.
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While Plaintiffs are privy to all of Defendants’ confidential information arising from the
Wonderland Partners enterprise, this information still remains confidential as to all third parties.

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obtained or will obtain any confidential information that Plaintiffs are not already

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privy to.
V.

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CONCLUSION

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Defendants’ allegations fail to satisfactorily establish that Harrison acquired an

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unfair advantage, let alone any confidential information. The evidence does not

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demonstrate clear impropriety. Thus, for the reasons discussed above, Defendants’

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Motion to Disqualify is DENIED.

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IT IS SO ORDERED.

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June 11, 2012
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OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

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