Blankenchip et al v. CitiMortgage, Inc. et al

Filing 130

***DISREGARD; DOCKETED IN ERROR***MEMORANDUM and ORDER signed by Senior Judge William B. Shubb on 11/18/2016 DENYING 121 Citimortgage's Motion to Disqualify Phillip Mark Hymanson. (Kirksey Smith, K) Modified on 11/18/2016 (Kirksey Smith, K).

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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RANDY BLANKENCHIP and SUSAN
BLANKENCHIP,

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Plaintiffs,

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CIV. NO. 2:14-02309 WBS AC
MEMORANDUM AND ORDER DENYING
MOTION TO DISQUALIFY

v.
CITIMORTGAGE, INC.; CALWESTERN RECONVEYANCE, LLC;
and DOES 1-50, inclusive,

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Defendants.

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Randy and Susan Blankenchip brought this action against

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CitiMortgage, Inc. (“Citi”) in connection with Citi’s foreclosure

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of their home.

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Philip Mark Hymanson (“Hymanson”) on the ground that Hymanson has

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a conflict of interest.

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I.

Citi now moves to disqualify plaintiffs’ counsel

Factual and Procedural Background
This case was filed and removed to this court in 2014

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and various attorneys at the United Law Center law firm in

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Roseville, California have represented the Blankenchips in this

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case.

On November 2, 2016, the court received the pro hac vice
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application of Hymanson, which it approved on November 4, 2016.

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(Docket Nos. 117, 118.)

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Hymanson attached a letter explaining that 1) he was employed by

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the law firm Greenberg Traurig, 2) he had never represented Citi

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but his firm did represent banks and mortgage lenders, 3) his

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resignation from Greenberg Traurig would be official upon the

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approval of his pro hac vice application, and 4) he was resigning

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from Greenburg Traurig in order to expedite his application and

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remove any issue of conflict so that he could try this case with

In the pro hac vice application,

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his son, who is also counsel of record for plaintiffs.

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No. 117.)

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(Docket

In response to Hymanson’s addition to this case, Citi

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filed a motion to disqualify, noting that Greenburg Traurig

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represents Citi in “a high volume of consumer finance litigation

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matters across the country,” and that Citi did not consent to

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Hymanson’s representation of the Blankenchips.

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the motion that Hymanson’s representation in this case is a

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breach of the duty of loyalty warranting automatic

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disqualification, and that Hymanson cannot avoid this conflict by

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withdrawing from his firm after he had already agreed to

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represent the Hymansons.

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Citi argues in

(Docket No. 121.)

After Citi filed its motion to disqualify, Hymanson

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filed a declaration explaining that he gave his notice of

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resignation to his firm on October 31, 2016; that October 31 was

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his last day of billing at Greenburg Traurig; that his

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resignation was finalized on November 3, 2016; and that he

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performed no work on this case until after the court approved his

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application on November 4, when he participated in a settlement

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conference for this case.

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II.

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(Docket No. 125-1.)

Legal Standard
The power to disqualify an attorney against the wishes

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of his client is within the discretion of the trial court as an

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exercise of its inherent powers.

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F.3d 1110, 1114 (9th Cir. 1996); Visa U.S.A., Inc. v. First Data

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Corp., 241 F. Supp. 2d 1100, 1103-04 (N.D. Cal. 2003).

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to disqualify counsel are decided under state law.

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See United States v. Wunsch, 84

Motions

In re Cty. of

L.A., 223 F.3d 990, 995 (9th Cir. 2000).
Because a motion to disqualify is most often tactically

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motivated and can be disruptive to the litigation process,

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disqualification is considered to be a drastic measure that is

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generally disfavored and imposed only when absolutely necessary.

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Concat LP v. Unilever, PLC, 350 F. Supp. 2d 796, 814 (N.D. Cal.

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2004); see also Optyl Eyewear Fashion Int’l Corp. v. Style Cos.,

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760 F.2d 1045, 1050 (9th Cir. 1985) (requests for

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disqualification “should be subjected to ‘particularly strict

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judicial scrutiny’”) (quoting Rice v. Baron, 456 F. Supp. 1361,

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1370 (S.D.N.Y. 1978)).

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California Rule of Professional Conduct 3-310(C)

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concerns “concurrent” representation, where an attorney or law

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firm represents parties with potentially adverse interests at the

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same time:

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A member shall not, without the informed written
consent of each client:
(1) Accept representation of more than one client in a
matter in which the interests of the clients
potentially conflict; or

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(2) Accept or continue representation of more than one
client in a matter in which the interests of the
clients actually conflict; or
(3) Represent a client in a matter and at the same
time in a separate matter accept as a client a person
or entity whose interest in the first matter is
adverse to the client in the first matter.

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California Rule of Professional Conduct 3–310(E), in

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contrast, concerns “successive” representation, where an attorney

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or firm represents a party with a conflicting interest to a prior

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client.

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the informed written consent of the client or former client,

This section provides that: “A member shall not, without

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accept employment adverse to the client or former client where,

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by reason of the representation of the client or former client,

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the member has obtained confidential information material to the

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employment.”

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III.

Discussion

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“Attorneys have a duty to maintain undivided loyalty to

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their clients to avoid undermining public confidence in the legal

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profession and the judicial process.”

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Corps. v. SpeeDee Oil Change Sys., Inc., 20 Cal. 4th 1135, 1146

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(1999).

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firm may be barred from representing clients with potentially

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conflicting interests at the same time without both parties’

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consent.

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vicarious disqualification, where a conflict of interest

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disqualifies an attorney from a matter, “the disqualification

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normally extends vicariously to the attorney’s entire law firm,”

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whether or not the attorneys at the firm personally worked on

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matters involving that client’s matters.

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because Greenburg Traurig represents Citi in consumer finance

People ex rel. Dept. of

Pursuant to this duty of loyalty, an attorney or law

Id. at 1147.

Moreover, under the principle of

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Id. at 1139.

Here,

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litigation, Hymanson’s representation of the Blankenchips against

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Citi in this wrongful foreclosure action, a consumer finance

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case, presents a concurrent conflict, assuming Hymanson’s

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representation of the Blankenchips began before his employment

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with Greenburg Traurig ended.

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However, based on Hymanson’s declaration, he performed

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no work for the Blankenchips until after his resignation from

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Greenburg Traurig was final and after the court approved his pro

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hac vice application.

Thus, this situation is more appropriately

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categorized as a successive representation scenario rather than a

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concurrent conflict of interest warranting Hymanson’s automatic

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disqualification.1

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client relationship with the Blankenchips before his resignation

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from Greenburg Traurig was complete, the court finds that the de

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minimis nature of his representation up to that point does not

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warrant the court exercising its discretion to disqualify

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Hymanson based on a concurrent conflict of interest.

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84 F.3d at 1114; Visa U.S.A., 241 F. Supp. 2d at 1103.

Even assuming Hymanson formed an attorney-

See Wunsch,

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Citi contends that Hymanson cannot avoid automatic
disqualification “by dropping one client in favor of another,”
relying on Truck Insurance Exchange v. Fireman’s Fund Insurance
Co., 6 Cal App. 4th 1050, 1059 (1st Dist. 1992); Pour le Bebe,
Inc. v. Guess? Inc., 112 Cal. App. 4th 810, 822 (2d Dist. 2003);
and Western Sugar Cooperative v. Archer-Daniels-Midland Co., 98
F. Supp. 3d 1074, 1084 (C.D. Cal. 2015). (Def.’s Mot. 6; Mot.
Reply 3.) However, those cases appear inapplicable as Hymanson
never performed any work on behalf of Citi, and Greenburg Traurig
apparently continues to represent Citi. It cannot be said here
that either Hymanson or Greenburg Traurig “jettisoned” or
“discarded” Citi “in contemplation of taking a more profitable,
conflicting relationship” with a more preferred client. See
Truck Ins. Exch., 6 Cal. App. 4th at 1059; Pour Le Bebe, 112 Cal.
App. 4th at 823.
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The court next proceeds to examine whether

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disqualification is appropriate based on a successive conflict of

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interest.

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seeks to disqualify its former counsel from representing an

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adverse party in a current proceeding pursuant to California Rule

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of Professional Conduct 3-310(E), the party must show a

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“substantial relationship” between the two representations.

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Montgomery v. Super. Ct., 186 Cal. App. 4th 1051, 1056 (4th Dist.

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2010).

In successive representation cases, where a party

A “substantial relationship” exists when “information

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material to the evaluation, prosecution, settlement or

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accomplishment of the former representation given its factual and

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legal issues is also material to the evaluation, prosecution,

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settlement or accomplishment of the current representation given

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its factual and legal issues.”

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111 Cal. App. 4th 698, 713 (5th Dist. 2003).

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relationship test balances two interests, “the freedom of the

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subsequent client to counsel of choice, on the one hand, and the

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interest of the former client in ensuring the permanent

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confidentiality of matters disclosed to the attorney in the

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course of the prior representation, on the other.”

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Super. Ct., 9 Cal. 4th 275, 283 (1994).

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Jessen v. Hartford Cas. Ins. Co.,
The substantial

Flatt v.

Citi has failed to demonstrate any relationship, much

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less a substantial relationship, between Hymanson’s prior work at

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Greenburg Traurig and the current litigation.

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explained in his declaration, among other things, that 1) he has

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never worked on any cases for Citi and has no knowledge of Citi’s

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loan modification processes or procedures; 2) he was never

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exposed to any information about Citi, much less any confidential
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Indeed, Hymanson

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information; 3) he never had any conversation with any Greenburg

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Traurig employee about any confidential Citi information, and 4)

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he never overheard any discussions regarding Citi while working

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for Greenburg Traurig.

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a Greenburg Traurig attorney does not create a conflict requiring

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his disqualification, notwithstanding Greenburg Traurig’s

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representation of Citi in similar matters.

Accordingly, Hymanson’s former status as

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Because Citi has provided no reason why Hymanson should

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be disqualified from representing plaintiffs, the court will deny

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Citi’s motion to disqualify.

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IT IS THEREFORE ORDERED that defendant’s motion to

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disqualify attorney be, and the same hereby is, DENIED.

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Dated:

November 18, 2016

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