Cole Asia Business Center Inc v. Robert D Manning et al
Filing
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ORDER GRANTING DEFENDANT AND COUNTER/THIRD PARTY CLAIMANT DEEBTORWISES MOTION TO DISQUALIFY AURORA TALAVERA AND THE AURORA LAW GROUP AS COUNSEL FOR THIRD PARTY DEFENDANT ACCESS COUNSELING, INC. 57 by Judge Dean D. Pregerson (lc). Modified on 10/30/2012 (lc).
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UNITED STATES DISTRICT COURT
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CENTRAL DISTRICT OF CALIFORNIA
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COLE ASIA BUSINESS CENTER,
INC., a Philippines
corporation,
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Plaintiff,
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v.
ROBERT D. MANNING, an
individual; DEBTORWISE
FOUNDATION, a Delaware
corporation,
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Defendants.
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Case No. CV 12-00956 DDP (Cwx)
ORDER GRANTING DEFENDANT AND
COUNTER/THIRD PARTY CLAIMANT
DEEBTORWISE’S MOTION TO
DISQUALIFY AURORA TALAVERA AND
THE AURORA LAW GROUP AS COUNSEL
FOR THIRD PARTY DEFENDANT ACCESS
COUNSELING, INC.
[Dkt. No. 57]
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Presently before the court is Defendant and
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Counterclaimant/Third Party Claimant DebtorWise Foundation
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(“DebtorWise”)’s Motion to Disqualify Aurora Talavera and the
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Aurora Law Group as Counsel of Record for Third Party Defendant
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Access Counseling, Inc. (“Access”).
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submissions of the parties, including the documents submitted by
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DebtorWise for in camera review, and heard oral argument, the court
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grants the motion and adopts the following order.
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Having considered the
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I. Background
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The following background facts are not in dispute:
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DebtorWise provides online and telephonic credit counseling
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and debtor education courses required by the Federal Courts to
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obtain bankruptcy discharge. In September 2010, DebtorWise entered
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into a written agreement with Cole Asia, who agreed to provide
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credit counseling services to DebtorWise clients through a call
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center in Makati City, Philippines.
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problems with Cole Asia’s performance, including language
DebtorWise alleges a number of
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deficiencies of the counselors and overbilling. (Compl. ¶¶ 13-20.)
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Access became an approved provider of credit counseling
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courses around March 2011.
On December 30, 2011, Cole Asia filed a complaint against
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Manning and DebtorWise for breach of contract, book account,
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account stated, and quantum meruit, claiming that DebtorWise had
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failed to pay for services provided and for an agreed-upon
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termination fee.
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Asia, Cole Group, Inc., Sevan Aslayan, Roes 1-10, and Access
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Counseling.
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Debtorwise alleged that Aslanyan himself had opened the competing
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business Access, which “poached” DebtorWise clients in violation of
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an agreement not to compete and copied some of DebtorWise’s
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materials.
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Aurora Talavera, denied all allegations and denied that Aslanyan is
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or ever has been a corporate officer or Board member of access.
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(Answer by Access Counseling Inc. to Counter Claim, passim.)
DebtorWise filed a counterclaim against Cole
(Counterclaim and Party Complaint (“Counterclaim”)
(Countercl. at ¶ 23.) Access, through its attorney
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Attorney Talavera, principal and sole attorney for The Aurora
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Law Group, represented DebtorWise on two occasions. (Opp. at ¶ 3.)
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First, on May 12, 2011, Talavera signed a letter to Sage Personal
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Finance stating that her firm served as DebtorWise’s California
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counsel.
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Group as Counsel of Record for Third party Defendant Access
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Counseling (“Motion”), Decl. of Robert D. Manning (“Manning
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Decl.”), Exh. A.)
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sent Sage a letter demanding that it cease any wrongful use of the
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DebtorWise name and any trademark violations.
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the cease-and-desist demand and requested confirmation of receipt
(Motion to Disqualify Aurora Talavera and the Aurora Law
The letter stated that the Adair Law Firm had
The letter repeated
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and compliance with the demand.
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Aurora Law Group did not receive a response.
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indicate whether this letter settled the matter in question.
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It threatened legal action if the
The parties do not
The second representation appears to have been more sustained.
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On July 25, 2011, Talavera signed a letter to James David Johnson
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P.A., stating that the Aurora Law Group was representing DebtorWise
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Foundation in a licensing agreement dispute with Start Fresh Today
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Inc. (“Start Fresh”). (Mot., Manning Decl., Exh. B.)
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26, 2011, Talavera wrote to Manning stating that she had received a
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letter about arbitration of the Start Fresh dispute in Chicago and
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requesting additional clarification on the arbitration to
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“determine what the status of the ‘case’ is.”
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would contact the arbitrator Gilbert Camarena and requested all
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additional correspondence to be forwarded to her.
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On November 22, 2011, Talavera emailed Manning regarding the
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arbitration.
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email, she stated that she had not received a response to her
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October 26 letter and that “consequently, [her] office cannot
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represent [Manning] or DebtorWise at this scheduled arbitration” on
On October
She stated that she
(Opp., Exh. 7.)
(Mot., Manning Decl. Exh. D; Opp. Exh. 8.) In that
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November 30 and that “DebtorWise will have to make other
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arrangements.”
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On May 14, 2012, Talavera filed a Motion to Quash Service of
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Process as counsel to Access.
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Access in all proceedings in this case.
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II.
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Since then, Talavera has represented
Legal Standard
“The trial court is vested with the power ‘[t]o control in
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furtherance of justice, the conduct of its ministerial officers.’”
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Henriksen v. Great Am. Sav. & Loan, 14 Cal. Rptr. 2d 184, 186 (Ct.
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App. 1992).
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disqualify an attorney.
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determining matters of disqualification.
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F.3d 990, 995 (9th Cir. 2000).
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The court’s inherent power includes the power to
Id.
The court applies state law in
In re Cnty. of L.A., 223
The starting point for the court’s analysis is California
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Rules of Professional Conduct, Rule 3-310(e) (“Avoiding the
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Representation of Adverse Interests”).1
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part, that “A member shall not, without the informed written
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consent of the client or former client, accept employment adverse
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to the client or former client where, by reason of the
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representation of the client or former client, the member has
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obtained confidential information material to the employment.” “The
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purpose of [this] rule is to protect the confidential relationship
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which exists between attorney and client, a relationship which
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continues after the formal relationship ends.
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of that relationship requires the application of strict standards.
It provides, in relevant
The fiduciary nature
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The Central District of California has adopted the Rules
of Professional Conduct of the State Bar of California, and the
decisions construing them, as the governing standards of
professional conduct. See C.D. Cal. L.R. 83-3.1.2.
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For that reason, a former client may seek to disqualify a former
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attorney from representing an adverse party . . . .”
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Cal. Rptr. 2d at 186 (internal citations omitted).
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Henriksen, 14
In order to prevail on a motion to disqualify, the moving
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party and former client must demonstrate either: (1) that the
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former attorney actually possesses confidential information adverse
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to the former client; or (2) that there is a "’substantial
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relationship’ between the former and current representation.”
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Ahmanson & Co. v. Salomon Bros., Inc., 229 Cal. App. 3d 1445, 1452
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(Ct. App. 1991) (“Ahmanson”).
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H.F.
III. Discussion
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A. Actual possession of confidential information
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There is no dispute that Talavera represented DebtorWise on
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two occasions.
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letter to stop Sage Personal Finance from using the DebtorWise name
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and violating its trademark rights.
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2011, Talavera represented DebtorWise in its dispute with Start
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Fresh.
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information was imparted and whether confidentiality was waived.
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First, on May 5, Talavera wrote a cease-and-desist
Second, starting around July
The parties disagree on whether any confidential
Manning and DebtorWise assert that Talavera came into actual
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possession of confidential information adverse to them in the
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current action.
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camera review, the court agrees.
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information about DebtorWise’s business plan, account volume, and
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litigation strategy, all of which is confidential. (Decl. Of Robert
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D. Manning regarding Motion to Disqualify Aurora Talavera and the
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Aurora Law Group as Counsel of Record for Third Party Defendant
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Access Counseling, Inc., Exhs. 1-6.) Talavera is thus in possession
Based on the documents submitted under seal for in
The documents under seal contain
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of confidential information about DebtorWise that is adverse to
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DebtorWise in the current action, while also representing Access,
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an opposing party in the action.
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by the California Rules of Professional Conduct.
This is a conflict and is barred
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B. Waiver of Confidentiality
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Talavera argues that Manning waived confidentiality because
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“everything was shared with business associates who are now
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involved in the case herein.”
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Sevan Aslanyan, owner of Cole Asia, was present for all her
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conversations with Manning and was copied on all their email
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correspondence.
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(Opp. at ¶ 9.)
She states that
(Opp. at ¶¶ 4-5).
Manning denies that all communications between himself and
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Talavera were made in the presence of or copied to Aslanyan.
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Manning declares that they did speak directly without Aslanyan and
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that “some email messages were just between her and I, as
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exemplified in the moving papers.” (Reply, Manning Decl. ¶¶3-4).
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Manning offered as an exhibit one such email, in which Talavara
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informed Manning that she could not represent DebtorWise in the
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Start Fresh arbitration. (Mot., Manning Decl., Exh.E)
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declares that if Aslanyan participated on all phone calls, it was
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unbeknownst to Manning. (Reply, Manning Decl. ¶ 3.)
He further
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Typically, communications disclosed to third parties are not
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considered to be confidential communications between attorney and
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client.
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for the presence of certain third parties; it considers as
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confidential all information transmitted “in confidence by a means
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which, so far as the client is aware, discloses the information to
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no third parties other than those who are present to further the
Nonetheless, the California Evidence Code makes allowances
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interest of the client in the consultation or those to whom
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disclosure is reasonably necessary for the transmission of the
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information or the accomplishment of the purpose for which the
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lawyer is consulted.” Cal. Evid. Code § 952.
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to a lawyer is nonetheless confidential even though it is made in
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the presence of another person--such as a spouse, parent, business
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associate, or joint client--who is present to further the interest
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of the client in the consultation.”
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Review Commission Comments).
Thus “a communication
Cal. Evid. Code § 952 (Law
If Aslanyan can be considered a
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business associate, then even if he was involved in all
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communications between Talavera and Manning, those communications
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would remain confidential.
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California courts have been strict about how far the business
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associate exception may be extended.
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officer of a wholly owned subsidiary will not destroy
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confidentiality, Ins. Co. of N. Am. v. Superior Court, 108 Cal.
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App. 3d 758, 771 (Ct. App. 1980), communications within a “sellers
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group” that were also shared with an attorney were not subject to
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attorney-client privilege.
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234 (N.D. Cal. 1990).
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representatives of different entities which were apparently
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associated with each other only through a contractual relationship.
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Absent additional facts, the court finds that Aslanyan was not a
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business associate and that Manning did waive confidentiality when
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communicating with his attorney in Aslanyan’s presence.
While the presence of an
McCaugherty v. Siffermann, 132 F.R.D.
Here, Aslanyan and Manning were
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Although Manning waived confidentiality of all communications
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that he shared with Aslanyan, he has provided evidence of at least
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one instance of an apparently private communication with his
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attorney.
The court finds that, lacking evidence to the contrary,
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it is unlikely that Aslanyan was involved in all other
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communications.
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Debtorwise did not waive confidentiality with respect to all their
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communications with their attorney Talavera.
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if an attorney wishes to involve a third party in all
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communications with her client, that attorney would best fulfill
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her duty of loyalty to the client by obtaining the client’s express
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consent and by explaining to the client any resulting waiver of
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The court notes that
confidentiality.
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The court therefore finds that Manning and
IV. Conclusion
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The court finds that Talavera was in possession of
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confidential information adverse to a former client.
The court
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finds further that Manning and DebtorWise did not waive
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confidentiality with respect to all his communications with
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Talavera.
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Aurora Talavera and The Aurora Law Group are disqualified and must
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be withdraw from representing Access or any other party in the
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current action.
Therefore, DebtorWise’s motion is hereby GRANTED.
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IT IS SO ORDERED.
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Dated:October 30, 2012
DEAN D. PREGERSON
United States District Judge
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