Milliner et al v. Bock Evans Financial Counsel, Ltd.

Filing 57

ORDER Granting 51 Motion to Withdraw as Attorney. Signed by Hon. Thelton E. Henderson on 2/3/2016. (tehlc2, COURT STAFF) (Filed on 2/3/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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CHARLOTTE B. MILLINER, et al.,

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Plaintiffs,

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v.
BOCK EVANS FINANCIAL
COUNSEL, LTD.,

Case No. 15-cv-01763-TEH
ORDER GRANTING MOTION TO
WITHDRAW

Defendant.
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This matter is before the Court on Shustak Reynolds & Partners, P.C. (the “Shustak

United States District Court
Northern District of California

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Firm”)’s Motion to Withdraw as Counsel for Defendant Bock Evans Financial Counsel,

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Ltd. (“Bock Evans”). Docket No. 51. The Court found this matter suitable for resolution

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without oral argument, pursuant to Civil Local Rule 7-1(b), and vacated the hearing set for

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January 25, 2016. Having carefully reviewed the parties’ written arguments, and good

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cause appearing, the motion is hereby GRANTED for the reasons set forth below.

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LEGAL STANDARD
In this district, the California Rules of Professional Conduct govern motions to

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withdraw as counsel. See Nehad v. Mukasey, 535 F.3d 962, 970 (9th Cir. 2008) (applying

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California Rules of Professional Conduct to attorney withdrawal). California Rule of

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Professional Conduct (“Rule”) 3-700(C)(1)(f) allows withdrawal when a client “breaches

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an agreement or obligation to the [attorney] as to expenses or fees,” and Rule 3-

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700(C)(1)(d) allows withdrawal where the client “renders it unreasonably difficult for

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[counsel] to carry out the employment effectively.” Finally, Rule 3-700(A)(2) provides

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that counsel “shall not withdraw from employment until the member has taken reasonable

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steps to avoid reasonably foreseeable prejudice to the rights of the client, including giving

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due notice to the client, allowing time for employment of other counsel, complying with

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rule 3-700(D) [regarding return of papers], and complying with applicable laws and rules.”

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The decision to permit counsel to withdraw is within the sound discretion of the

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trial court. United States v. Carter, 560 F.3d 1107, 1113 (9th Cir. 2009). Courts consider

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several factors when deciding a motion for withdrawal, including: “(1) the reasons counsel

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seeks to withdraw; (2) the possible prejudice that withdrawal may cause to other litigants;

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(3) the harm that withdrawal might cause to the administration of justice; and (4) the extent

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to which withdrawal will delay resolution of the case.” Deal v. Countrywide Home Loans,

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No. C 09-01643 SBA, 2010 WL 3702459, at *2 (N.D. Cal. Sept. 15, 2010).

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DISCUSSION
The Shustak Firm has satisfied Rule 3-700(A)(2)’s notice requirement, providing

United States District Court
Northern District of California

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Bock Evans with both verbal and written notice of its intent to withdraw on December 8,

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2015. Docket No. 51-2 ¶ 13. As to the basis for withdrawal, the Shustak Firm explained

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that: “[I]t is not, and has not, been paid for its representation of Bock Evans. Moreover,

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Bock Evans has failed to take critical advice from the Shustak Firm concerning this

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litigation and the fee agreement between Bock Evans and the Shustak Firm specifically

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permits the Shustak Firm to withdraw from its representation should Bock Evans breach

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the agreement, which it has done.” Docket No. 51-1 at 1.

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As discussed above, failure to pay attorneys’ fees constitutes good cause for

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withdrawal under Rule 3-700(C)(1)(f). Indeed, there is no objection from any party to the

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basis for the Shustak Firm’s motion. The only objection to the motion came from

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Plaintiffs, who agreed that withdrawal is appropriate in this case but requested that the

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motion be granted with the following conditions: “(a) that all papers from the court and

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from Plaintiffs continue to be served on Defendant’s current counsel for forwarding

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purposes until a substitution of counsel is filed as provided by Civil Local Rule 11-5(b);

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(b) this court retains jurisdiction over Defendant’s current counsel for the purpose of

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determining sanctions for conduct of that counsel up to the conditional order allowing

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withdrawal; (c) because corporations may not appear in federal court except by counsel,

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Defendant has 30 days . . . to find substitute counsel and for that counsel to make an
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appearance and file a request for substitution of counsel; and (d) if Defendant has not filed

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substitution of counsel by that date, Defendant’s answer shall be stricken and a default

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entered against Defendant and in favor of Plaintiffs.” Docket No. 54 at 5-6.

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The Shustak Firm agreed to condition (a), and in an event, such condition is proper
under the Northern District of California’s Civil Local Rules. See Civ. L.R. 11-5(b)

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(“When withdrawal by an attorney from an action is not accompanied by simultaneous

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appearance of substitute counsel or agreement of the party to appear pro se, leave to

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withdraw may be subject to the condition that papers may continue to be served on counsel

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for forwarding purposes . . . unless and until the client appears by other counsel or pro

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se.”). Accordingly, the Shustak Firm shall continue to receive all papers served in this

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United States District Court
Northern District of California

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action and forward them to the appropriate representative of Bock Evans until substitute

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counsel is appointed.

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As to condition (b), this Court need not “retain jurisdiction” over counsel when

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granting a motion to withdraw. If the members of the Shustak Firm have been responsible

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for sanctionable conduct, the Court is not stripped of authority to impose sanctions upon

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them merely by virtue of the Shustak Firm’s withdrawal as counsel of record. See In re

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Itel Sec. Litig., 791 F.2d 672, 675 (9th Cir. 1986) (holding that a court retains jurisdiction

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to sanction counsel even after he withdraws from an action). Accordingly, this condition is

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unnecessary.

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Finally, as to conditions (c) and (d), the Shustak Firm does not challenge the case

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law cited by Plaintiffs in support of these requests. And Plaintiffs are correct in arguing

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both that corporations may not appear in federal court except by counsel (see Civ. L.R. 3-

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9(b); Rowland v. Cal. Men’s Colony, 506 U.S. 194, 202 (1993)), and that federal courts

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routinely include, in orders granting motions to withdraw, a directive that corporate parties

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file a substitution of counsel by a date certain or face default (see United States v. High

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Country Broad. Co., Inc., 3 F.3d 1244, 1245 (9th Cir. 1993) (holding that default judgment

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against a corporation was appropriate where the corporation failed to retain counsel, as

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directed)). Moreover, the Shustak Firm “has informed Bock Evans that if the withdrawal
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is granted, and Bock Evans does not retain new counsel, a judgment may be entered

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against them.” Docket No. 51-1 at 6. Accordingly, Bock Evans has 30 days, or until

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March 4, 2016, to find substitute counsel. If Bock Evans has not filed a substitution of

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counsel by that date, then its answer will be deemed stricken and default will be entered

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against it.

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CONCLUSION
The Shustak Firm, and all of its members, are hereby permitted to withdraw, as
counsel of record in the above-captioned action for Defendant Bock Evans, effective
immediately upon issuance of this Order. The Shustak Firm shall continue to receive all

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United States District Court
Northern District of California

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papers served in this action and forward them to the appropriate representative of Bock

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Evans until substitute counsel is appointed. Bock Evans has 30 days, or until March 4,

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2016, to find substitute counsel. If Bock Evans has not filed a substitution of counsel by

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that date, then its answer will be deemed stricken and default will be entered against it.

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IT IS SO ORDERED.

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Dated: 02/03/16

_____________________________________
THELTON E. HENDERSON
United States District Judge

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