Rudolph Bonetati v. Mario Moran

Filing 50

ORDER DENYING PLAINTIFFS MOTION FOR SUMMARY JUDGMENT 34 AND GRANTING DEFENDANTS MOTIONS TO DISQUALIFY ALL COUNSEL associated with Bonetati, Kincaid & Sobel, Inc. 31 , 35 . The parties are hereby ORDERED to file a status report with the Court no later than Friday, July 17, 2015 by Judge Otis D. Wright, II. (lc). Modified on 6/18/2015 (lc).

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United States District Court
Central District of California

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Plaintiff,

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Case № 2:14-cv-4287-ODW(PJWx)

RUDOLPH BONETATI,
v.

ORDER DENYING PLAINTIFF’S

MARIO MORAN; DOES 1-10, inclusive,
Defendants.

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MOTION FOR SUMMARY
JUDGMENT [34] AND GRANTING

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_________________________________ DEFENDANT’S MOTIONS TO

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MARIO MORAN,
Counterclaim Plaintiff,

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DISQUALIFY COUNSEL [31] [35]

v.

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RUDOLPH BONETATI; DOES 1-10,

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inclusive,

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Counterclaim Defendants.

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I.

INTRODUCTION

The instant action arises from a trademark dispute between Rudolph Bonetati
and former friend and business associate Mario Moran. Bonetati alleges that Moran,
after volunteering at his audio services business, stole the business name and
independently negotiated contracts to provide the same services to many of the same

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clients. Moran contends that he is the senior and continuous user of the name, and

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therefore the rightful owner. Moran moves to disqualify all attorneys associated with

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Plaintiff counsel’s law firm Bonetati, Kincaid & Soble, Inc. For the reasons discussed

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below, the Court DENIES Plaintiff’s Motion for Summary Judgment (ECF No. 34),

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and GRANTS Defendant’s Motions to Disqualify Counsel.1 (ECF Nos. 31, 35.)

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II.

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FACTUAL BACKGROUND

In the 1980s, Mario Moran operated an audio services business with his brother

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under the name “AUDIO TRON” (two words).

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registered the name but never renewed the registration. (Id. ¶ 31.) Around 1989, the

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business dissolved because it was not profitable and Moran’s brother had lost interest.

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(SUF ¶ 28.)

In 1984, Moran

(Id. ¶ 29; Opp’n 8.) From approximately 1989 to 1991, Moran “continued to receive
calls from new and former clients and continued to provide services as AUDIO
TRON. These services primarily comprised studio recording services for various
bands and equipment maintenance services for customers who had previously
purchased equipment.” (Opp’n 4.) By 1991, Moran’s close family friend, Rudolph
Bonetati, had been operating an audio services business for decades under the name

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“Menage a Trois.” (SUF ¶ 40.) Moran suggested that Bonetati change the name of

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his business to AUDIO TRON since Menage a Trois was not family friendly. (Id.

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¶ 39.)

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Since 1991, Bonetati has owned AUDIO TRON, an audio services business that

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provides the installation, operation, maintenance and use of audio and sound system

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equipment to clients. (FAC ¶ 9; SUF ¶ 3.) Services include public announcement and

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disc jockeying for parades, holiday events, and other major gatherings. (FAC ¶ 9.)

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The name AUDIO TRON was most recently registered to Bonetati with the County of

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After carefully considering the papers filed in support of and in opposition to the Motions, the
Court deems the matter appropriate for decision without oral argument. Fed. R. Civ. P. 78; L.R. 715.

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Los Angeles under Legacy Document No. 20110258645, filed February 16, 2011.

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(Id. ¶ 10, Ex. A.) Bonetati has provided services for Cinco de Mayo, Fourth of July,

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and the Long Beach Gay Pride Parade. (Id. ¶ 11.) According to Bonetati, he has

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spent substantial sums building the assets and goodwill of his business, which has

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acquired secondary meaning in the minds of the relevant purchasing public. (Id.

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¶ 12.) AUDIO TRON has achieved a reputation for reliability and quality in the

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industry. (Id. ¶ 13.) Therefore, the name is a significant asset. (Id.)

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From 1991 to the end of 2011, Moran was involved with AUDIO TRON.

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However, the parties dispute the extent of Moran’s involvement and the reason for his

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departure. Bonetati describes Moran as an “independent contractor” who helped out

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“on a simple volunteer basis.” (SUF ¶ 8.) Moran describes his time at AUDIO
TRON as a “period of cooperation” in which “[b]oth parties’ names and telephone
numbers appeared on the business cards, both parties’ names and telephone numbers
appeared on invoices and advertisements, and both parties personally gave clients
quotes and negotiated and executed contracts in the name of AUDIO TRON.” (Opp’n
2.)

Bonetati claims that Moran left the business around 2010 after misusing a

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business credit card for personal expenses. (FAC ¶¶ 19–21.) Moran claims that he

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left because the parties started having issues when “clients suggested that they would

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prefer to do business directly” with him. (Opp’n 3.)

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After leaving AUDIO TRON, Moran registered the business name

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“AUDIOTRON” (one word) with the County of Los Angeles under County Document

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No. 2012008832, filed January 17, 2012. (FAC ¶ 24.) Moran continues to do

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business as AUDIOTRON, providing nearly identical services, in the same market,

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and for certain former clients. (Id. ¶¶ 26–27.)

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On June 4, 2014, Bonetati (“Plaintiff’) filed suit. (ECF No. 1.) On December

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19, 2014, Plaintiff filed a First Amended Complaint. (ECF No. 24.) The FAC

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alleges: (1) Unfair Competition and False Designation of Origin under the Lanham

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Act, 15 U.S.C. section 1125(a); (2) Trade Name Infringement under California

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Common Law; (3) Unfair Competition under California Business and Professions

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Code section 17200 et seq.; (4) Unfair Competition under California Common Law;

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and (5) Declaratory Relief.

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Counterclaim seeking damages for: (1) Infringement of Common Law Trademark; (2)

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Federal Unfair Competition; (3) Common Law Trademark Infringement; (4) Common

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Law Unfair Competition; and (5) California Unfair Competition. (Counter Compl.)

(FAC.)

On December 15, 2014, Defendant filed a

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On March 23, 2015, Plaintiff filed a Motion for Summary Judgment as to

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Plaintiff’s Complaint and Defendant’s Cross-Complaint. (ECF No. 34.) On March 9

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and 23, 2015, Defendant filed Motions to Disqualify Marilyn L. Bonetati, Matthew A.

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Arigo and all attorneys associated with Bonetati, Kincaid & Soble, Inc. (ECF Nos.
31, 35.)

Disqualify Counsel are before the Court for decision.
III.

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Plaintiff’s Motion for Summary Judgment and Defendant’s Motions to

A.

LEGAL STANDARD

Motion for Summary Judgment
Summary judgment is appropriate if, viewing the evidence and drawing all

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reasonable inferences in the light most favorable to the nonmoving party, there are no

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genuine disputed issues of material fact, and the movant is entitled to judgment as a

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matter of law. Fed. R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. 317, 322

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(1986). A fact is “material” if it “might affect the outcome of the suit under the

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governing law,” and a dispute as to a material fact is “genuine” if there is sufficient

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evidence for a reasonable trier of fact to decide in favor of the nonmoving party.

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Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “If the evidence is merely

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colorable, or is not significantly probative,” the Court may grant summary judgment.

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Id. at 249–50 (citation omitted). At the summary judgment stage, the Court “does not

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assess credibility or weigh the evidence, but simply determines whether there is a

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genuine factual issue for trial.” House v. Bell, 547 U.S. 518, 559–60 (2006).

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The moving party has the burden of demonstrating the absence of genuine issue

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of fact for trial. Celotex, 477 U.S. at 323. To meet its burden, “the moving party must

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either produce evidence negating an essential element of the nonmoving party’s claim

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or defense or show that the nonmoving party does not have enough evidence of an

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essential element to carry its ultimate burden of persuasion at trial.” Nissan Fire &

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Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102 (9th Cir. 2000) (citation omitted).

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Once the moving party satisfies its initial burden of production, the burden shifts to

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the nonmoving party to show that there is a genuine issue of material fact. Id. at 1103.

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B.

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Motion to Disqualify Counsel
Motions to disqualify counsel are governed by state law. See Rodriguez v. W.

Publ’g Corp., 563 F.3d 948, 967 (9th Cir. 2009) (“By virtue of the district court’s
local rules, California law controls whether an ethical violation occurred.”) The
Central District applies the California State Bar Act, the California Rules of
Professional Conduct, and related judicial decisions in assessing the standards of
professional conduct. See C.D. Cal. L.R. 83-3.1.2.
The decision to disqualify counsel is within the trial court’s discretion and

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limited by applicable legal principles. See Trone v. Smith, 621 F.2d 994, 999 (9th Cir.

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1980); People ex rel Dep’t of Corp. v. SpeeDee Oil, 20 Cal. 4th 1135, 1143 (1999).

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Due to the potential for abuse, motions to disqualify are subject to strict judicial

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scrutiny. Optyl Eyewear Fashion Int’l Corp. v. Style Cos., Ltd., 760 F.2d 1045, 1050

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(9th Cir. 1985).

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including “a client’s right to chosen counsel, an attorney’s interest in representing a

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client, the financial burden on a client to replace disqualified counsel, and the

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possibility that tactical abuse underlies the disqualification motion.” SpeeDee Oil, 20

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Cal. 4th at 1145.

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A court should examine the implications of disqualification,

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IV.

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A.

DISCUSSION

Plaintiff’s Motion for Summary Judgment

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Plaintiff moves for summary judgment on the grounds that Defendant

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abandoned use of the trademark AUDIOTRON (with or without a space) due to

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approximately 25 years of continuous non-use, starting when Defendant’s business

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with his brother dissolved.

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compensation “for lost goodwill and contracts, for an accounting of the monies

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wrongfully made by Defendant by stolen contracts, and for declaratory relief to settle

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which party has the right to continue to do business under the AUDIO TRON

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(Mot. 5.)

Plaintiff requests that the Court grant

moniker.” (Id.)
Defendant concedes that the parties’ concurrent use of the trademark “creates a
high likelihood of confusion as the services are virtually identical for the purposes of
trademark law.”

(Opp’n 1.)

However, he contends that he has been using the

trademark continuously since going into business with his brother around 1984 and
denies that he ever intended to stop using it when the business dissolved or when he
became involved with Plaintiff’s business. (Id.) Defendant requests the Court find

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that he is the senior, continuous user and lawful owner of the trademark, or, in the

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alternative, that Plaintiff failed to show the absence of genuine dispute as to any

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material fact. (Id. at 5.)

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To show abandonment of a mark by nonuse, the party claiming abandonment

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must prove the trademark owner’s: (1) discontinuance of trademark use and (2) intent

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not to resume such use. Grocery Outlet v. Albertson’s Inc., 497 Fed.3d 949, 951 (9th

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Cir. 2007) (citing Electro Source, LLC v. Brandess-Kalt-Aetna Group, Inc., 458 Fed

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931, 935 (9th Cir. 2006) (citing 15 U.S.C. Section 1127)). For purposes of assessing

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abandonment, “use” means “the bona fide use of a mark in the ordinary course of

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trade, and not made merely to reserve a right in the mark.” Electro Source, LLC, 458

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Fed at 933. Three years of nonuse is prima facie evidence of abandonment. 15

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U.S.C. § 1127. A concrete “intent to use” is required to rebut a prima face case of

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abandonment. Grocery Outlet Inc. v. Albertsons, Inc., C06-02173 JSW, 2008 WL

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5245962, at *8 (N.D. Cal. Dec. 17, 2008) (quoting Unuson Corp. v. Built

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Entertainment Group, Inc., 2006 WL 194052, at *6 (N.D. Cal. Jan. 23 2006)).

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“[A]s a threshold matter, abandonment requires complete cessation or

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discontinuance of trademark use.”

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U.S.C. Section 1127). Even a “single instance of use is sufficient against a claim of

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abandonment of a mark if such use is made in good faith.” Wells Fargo & Co. v. ABD

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Ins. & Fin. Servs., Inc., 758 F.3d 1069, 1072 (9th Cir. 2014) (quoting Carter–Wallace,

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Electro Source, LLC, 458 F.3d at 938 (citing 15

Inc. v. Procter & Gamble Co., 434 F.2d 794, 804 (9th Cir.1970)).
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Post-Dissolution of Business (1989-1991)

Plaintiff concedes that Defendant performed equipment maintenance services—
after the business dissolved—for a restaurant called “El Mercadito” that previously
purchased equipment from AUDIO TRON.

(Mot. 10)

Nevertheless, Plaintiff

concludes that Defendant abandoned the trademark because Defendant was not paid
for his equipment maintenance services.

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During Defendant’s deposition, he explained that El Mercadito has remained a

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client for over twenty-five years and that, as part of their arrangement, he “never

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charge[s] them for services.” (Comp of Exs., Ex. 5, p. 46, line 19 to p. 47 line 22.)

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He charges them for other work and was last paid in 2014. (Id.) Plaintiff does not

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address Defendant’s business arrangement with El Mercadito or cite any authority

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which states that providing some free services cannot constitute “use” for purposes of

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trademark law. Accordingly, the Court finds no basis upon which to conclude that

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Defendant discontinued use of the trademark prior to working with Plaintiff.

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2.

Working With Plaintiff (1991-2011)

Plaintiff’s entire argument that Defendant abandoned the trademark when he
suggested that Plaintiff change the name of his business from Menage a Trois to

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AUDIO TRON rests on the proposition that Defendant was an “independent

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contractor” who helped out “on a simple volunteer basis.” (SUF ¶ 8.) Defendant’s

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Opposition rests on the proposition that he and Plaintiff “conducted themselves as co-

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owners” and used the trademark in partnership. (Opp’n 4.)

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While the Court agrees that Plaintiff’s assertion that Defendant volunteered for

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twenty years is highly-unbelievable and “attempts to marginalize Defendant’s

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contribution and involvement,” at this stage, the Court must decide matters of law, not

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fact. Celotex Corp., 477 U.S. at 322; House, 547 U.S. at 559–60. As demonstrated by

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the parties’ briefing, the nature of the business relationship between Plaintiff and

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Defendant is very much in dispute, and requires the resolution of numerous genuinely

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disputed issues of material fact to determine whether Defendant abandoned or
continued to use the trademark from 1991 to 2011. Therefore, the Court DENIES
Plaintiff’s Motion for Summary Judgment.
B.

Defendant moves to disqualify the law firm Bonetati, Kincaid & Soble, Inc.

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Defendant’s Motions to Disqualify Counsel

(“BKS”) “for accepting employment adverse to a former client after receiving

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confidential information material to such employment.” (Mot. 3.) Defendant argues

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that Marilyn L. Bonetati, a partner at Plaintiff counsel’s firm, BKS, directly

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represented him in litigation involving a real estate transaction and gained access to

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confidential information.2 (Id.) Defendant requests that the Court disqualify BKS to

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prevent the confidences he imparted on her from being used against him in the instant

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action. (Id.)

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Plaintiff counsel contends that she never learned any confidential information

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about Defendant’s finances because she only drafted a less-than-two-page letter

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“commonly sent in real estate scenarios for a failure to disclose a defect in the

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property.” (Opp’n 3.) She also contends that Defendant deliberately delayed moving

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Plaintiff counsel is Plaintiff’s mother-in-law. (Id. at 5.)

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for disqualification and allowed her firm to incur almost $10,000 in expenses to date.

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(Id.)

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instruments of pure delay and harassment. (Id. at 1.)

She requests the Court find that Defendant’s arguments are baseless and

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“Because [federal courts] apply state law in determining matters of

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disqualification, we must follow the reasoned view of the state supreme court when it

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has spoken on the issue.” In re Cnty. of Los Angeles, 223 F.3d 990, 995 (9th Cir.

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2000). A “[t]rial court’s authority to disqualify an attorney derives from the power

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inherent in every court ‘[t]o control in furtherance of justice, the conduct of its

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ministerial officers, and of all other persons in any manner connected with a judicial

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proceeding before it, in every matter pertaining thereto.’” SpeeDee Oil, 20 Cal. 4th at

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1145 (citations omitted).

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The rules regarding successive representation of clients with adverse interests
focus on an attorney’s duty of confidentiality.3 If an attorney represents a client
adverse to a former client without obtaining informed consent, the former client may
disqualify the attorney by showing a “substantial relationship” between the subjects of
the prior and current representations. Flatt v. Super. Ct., 9 Cal. 4th 275, 283 (1994);

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In re Charlisse C., 45 Cal. 4th 145, 166 n.11 (2008). This protects the enduring duty

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to preserve client confidences that survives the termination of the attorney’s

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representation. City & Cnty. of San Francisco v. Cobra Solutions, Inc., 38 Cal. 4th

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839, 846 (2006). When a substantial relationship between the representations is

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established, the attorney is automatically disqualified from the subsequent

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representation. Id. at 847.

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In determining whether there is a “substantial relationship,” a court should first

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California Rule of Professional Responsibility 3–310(E) governs successive representation of
clients with adverse interests and provides that, “[a] member shall not, without the informed written
consent of the client or former client, accept employment adverse to the client or former client
where, by reason of the representation of the client or former client, the member has obtained
confidential information material to the employment.”

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analyze whether there was a direct relationship with the former client and whether the

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relationship touched on issues related to the present litigation.

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Messaging Tech., Inc. v. EasyLink, 913 F. Supp. 2d 900, 907 (C.D. Cal. 2012). The

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substantial relationship test requires evidence supporting a rational conclusion that

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“information material to the evaluation, prosecution, settlement or accomplishment of

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the former representation given its factual and legal issues is material to the

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evaluation, prosecution, settlement or accomplishment of the current representation

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given its factual and legal issues.” Khani v. Ford Motor Co., 215 Cal. App. 4th 916,

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921 (2013) (citations omitted).

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Id.; Advanced

If the former representation involved a direct relationship with the client—
where the lawyer was personally involved in providing legal advice and services to
the former client on a legal issue that is closely related to the legal issue in the present
representation —the former client need not prove that the attorney possesses actual
confidential information; instead, the attorney is presumed to possess confidential
information.4 Cobra Solutions, 38 Cal. 4th at 847. The presumption that an attorney
has access to confidential information relevant to the subsequent representation and

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resulting disqualification extends vicariously to the entire firm. In re Charlisse, 45

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Cal. 4th at 161; Flatt, 9 Cal. 4th at 283.

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In 2005, Marilyn L. Bonetati represented Defendant in a dispute that arose

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between him and a third party regarding a potential mold problem in a home he had

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recently purchased. (Mot. 4.) Defendant states that he provided Bonetati “with

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confidential information including but not limited to confidential financial information

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that is typically associated with the procurement of real estate,” and shared “his

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opinions of litigation and resources available to him for litigation.” (Id. at 4–5.)

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When the attorney’s contact with the prior client was not direct, then the court examines both the
attorney’s relationship to the prior client and the relationship between the prior and the present
representation. Cobra Solutions, 38 Cal. 4th at 847 (citations omitted).

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During her representation of Defendant, Bonetati drafted a letter in which she stated

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“Please consider this a letter of representation of Mario Moran.” (Moran Decl., Ex.

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A.) Defendant argues that even though an associate at BKS, Matthew A. Arigo, is

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assigned to handle the instant action, Bonetati is “still with the small firm in a position

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of authority” and Defendant is unaware “of any attempts made to ethically screen”

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Bonetati’s knowledge of his confidential information from the rest of the firm. (Mot.

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5.)

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Bonetati states that she had “all but forgotten about” the letter she wrote on

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Defendant’s behalf until it was produced during the course of litigation. (Opp’n 2.)

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As a long-time real estate lawyer, she claims that “there was no reason to review

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financial documents” when she represented Defendant. (Id. at 3.) She contends that
the prior matter is unrelated to the instant action and that her firm has not found “any
record whatsoever of any documents, communications, or information related” to her
representation of Defendant. (Id.) She also concludes that Defendant deliberately
delayed moving for disqualification because he “was in possession of the basis for his
motion since 2005, yet has allowed Plaintiff’s Counsel’s firm to incur 238.1 hours of

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attorney time without taking any action on that information, costing Plaintiff

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$9,628.15 in expenses to date.5 (Id. at 1.)

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Bonetati does not dispute that she drafted a letter on Defendant’s behalf that

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expressed his legal concerns regarding a potential mold problem in a home he had

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recently purchased. (Id. at 3.) The Court is not persuaded that Bonetati drafted this

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letter without any knowledge of his financial situation. Furthermore, the Court agrees

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that knowledge of Plaintiff and Defendant’s personal finances during the time they

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“collected and distributed revenue generated through their [allegedly] collective

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Like Plaintiff counsel, the Court does not know when Defendant discovered that his former
attorney is representing Plaintiff in the instant action. The Court will not speculate or hold
Defendant responsible for counsel’s failure to adhere to her professional responsibility and keep
track of clients and potential conflicts.

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endeavor” is “highly material to adjudicating the instant dispute.”

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Accordingly, the Court finds that Bonetati was personally involved in providing legal

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advice and services on a legal issue that is closely related to the legal issue in the

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present representation. Cobra Solutions, 38 Cal. 4th at 847. As a result, Defendant

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need not prove that Bonetati possesses actual confidential information. Id. She is

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presumed to possess the confidential information, and the presumption that she has

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access to confidential information extends vicariously to all of BKS.

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Charlisse, 45 Cal. 4th at 161; Flatt, 9 Cal. 4th at 283. Therefore, the Court GRANTS

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Defendant’s Motions to Disqualify Counsel.

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V.

For the reasons discussed above, the Court DENIES Plaintiff’s Motion for
Summary Judgment (ECF No. 34), and GRANTS Defendant’s Motions to Disqualify
all attorneys associated with Bonetati, Kincaid & Sobel, Inc. (ECF Nos. 31, 35.) The
parties are hereby ORDERED to file a status report with the Court no later than
Friday, July 17, 2015.
IT IS SO ORDERED.
June 18, 2015

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Id.; In re

CONCLUSION

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(Mot. 3.)

____________________________________
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

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