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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1 UNITED STATES DISTRICT COURT 2 NORTHERN DISTRICT OF CALIFORNIA 3 4 CHARLOTTE B. MILLINER, et al., 5 Plaintiffs, 6 7 8 v. BOCK EVANS FINANCIAL COUNSEL, LTD., Case No. 15-cv-01763-TEH ORDER GRANTING MOTION TO WITHDRAW Defendant. 9 10 This matter is before the Court on Shustak Reynolds & Partners, P.C. (the “Shustak United States District Court Northern District of California 11 Firm”)’s Motion to Withdraw as Counsel for Defendant Bock Evans Financial Counsel, 12 Ltd. (“Bock Evans”). Docket No. 51. The Court found this matter suitable for resolution 13 without oral argument, pursuant to Civil Local Rule 7-1(b), and vacated the hearing set for 14 January 25, 2016. Having carefully reviewed the parties’ written arguments, and good 15 cause appearing, the motion is hereby GRANTED for the reasons set forth below. 16 17 18 LEGAL STANDARD In this district, the California Rules of Professional Conduct govern motions to 19 withdraw as counsel. See Nehad v. Mukasey, 535 F.3d 962, 970 (9th Cir. 2008) (applying 20 California Rules of Professional Conduct to attorney withdrawal). California Rule of 21 Professional Conduct (“Rule”) 3-700(C)(1)(f) allows withdrawal when a client “breaches 22 an agreement or obligation to the [attorney] as to expenses or fees,” and Rule 3- 23 700(C)(1)(d) allows withdrawal where the client “renders it unreasonably difficult for 24 [counsel] to carry out the employment effectively.” Finally, Rule 3-700(A)(2) provides 25 that counsel “shall not withdraw from employment until the member has taken reasonable 26 steps to avoid reasonably foreseeable prejudice to the rights of the client, including giving 27 due notice to the client, allowing time for employment of other counsel, complying with 28 rule 3-700(D) [regarding return of papers], and complying with applicable laws and rules.” 1 The decision to permit counsel to withdraw is within the sound discretion of the 2 trial court. United States v. Carter, 560 F.3d 1107, 1113 (9th Cir. 2009). Courts consider 3 several factors when deciding a motion for withdrawal, including: “(1) the reasons counsel 4 seeks to withdraw; (2) the possible prejudice that withdrawal may cause to other litigants; 5 (3) the harm that withdrawal might cause to the administration of justice; and (4) the extent 6 to which withdrawal will delay resolution of the case.” Deal v. Countrywide Home Loans, 7 No. C 09-01643 SBA, 2010 WL 3702459, at *2 (N.D. Cal. Sept. 15, 2010). 8 9 10 DISCUSSION The Shustak Firm has satisfied Rule 3-700(A)(2)’s notice requirement, providing United States District Court Northern District of California 11 Bock Evans with both verbal and written notice of its intent to withdraw on December 8, 12 2015. Docket No. 51-2 ¶ 13. As to the basis for withdrawal, the Shustak Firm explained 13 that: “[I]t is not, and has not, been paid for its representation of Bock Evans. Moreover, 14 Bock Evans has failed to take critical advice from the Shustak Firm concerning this 15 litigation and the fee agreement between Bock Evans and the Shustak Firm specifically 16 permits the Shustak Firm to withdraw from its representation should Bock Evans breach 17 the agreement, which it has done.” Docket No. 51-1 at 1. 18 As discussed above, failure to pay attorneys’ fees constitutes good cause for 19 withdrawal under Rule 3-700(C)(1)(f). Indeed, there is no objection from any party to the 20 basis for the Shustak Firm’s motion. The only objection to the motion came from 21 Plaintiffs, who agreed that withdrawal is appropriate in this case but requested that the 22 motion be granted with the following conditions: “(a) that all papers from the court and 23 from Plaintiffs continue to be served on Defendant’s current counsel for forwarding 24 purposes until a substitution of counsel is filed as provided by Civil Local Rule 11-5(b); 25 (b) this court retains jurisdiction over Defendant’s current counsel for the purpose of 26 determining sanctions for conduct of that counsel up to the conditional order allowing 27 withdrawal; (c) because corporations may not appear in federal court except by counsel, 28 Defendant has 30 days . . . to find substitute counsel and for that counsel to make an 2 1 appearance and file a request for substitution of counsel; and (d) if Defendant has not filed 2 substitution of counsel by that date, Defendant’s answer shall be stricken and a default 3 entered against Defendant and in favor of Plaintiffs.” Docket No. 54 at 5-6. 4 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) 6 (“When withdrawal by an attorney from an action is not accompanied by simultaneous 7 appearance of substitute counsel or agreement of the party to appear pro se, leave to 8 withdraw may be subject to the condition that papers may continue to be served on counsel 9 for forwarding purposes . . . unless and until the client appears by other counsel or pro 10 se.”). Accordingly, the Shustak Firm shall continue to receive all papers served in this 11 United States District Court Northern District of California 5 action and forward them to the appropriate representative of Bock Evans until substitute 12 counsel is appointed. 13 As to condition (b), this Court need not “retain jurisdiction” over counsel when 14 granting a motion to withdraw. If the members of the Shustak Firm have been responsible 15 for sanctionable conduct, the Court is not stripped of authority to impose sanctions upon 16 them merely by virtue of the Shustak Firm’s withdrawal as counsel of record. See In re 17 Itel Sec. Litig., 791 F.2d 672, 675 (9th Cir. 1986) (holding that a court retains jurisdiction 18 to sanction counsel even after he withdraws from an action). Accordingly, this condition is 19 unnecessary. 20 Finally, as to conditions (c) and (d), the Shustak Firm does not challenge the case 21 law cited by Plaintiffs in support of these requests. And Plaintiffs are correct in arguing 22 both that corporations may not appear in federal court except by counsel (see Civ. L.R. 3- 23 9(b); Rowland v. Cal. Men’s Colony, 506 U.S. 194, 202 (1993)), and that federal courts 24 routinely include, in orders granting motions to withdraw, a directive that corporate parties 25 file a substitution of counsel by a date certain or face default (see United States v. High 26 Country Broad. Co., Inc., 3 F.3d 1244, 1245 (9th Cir. 1993) (holding that default judgment 27 against a corporation was appropriate where the corporation failed to retain counsel, as 28 directed)). Moreover, the Shustak Firm “has informed Bock Evans that if the withdrawal 3 1 is granted, and Bock Evans does not retain new counsel, a judgment may be entered 2 against them.” Docket No. 51-1 at 6. Accordingly, Bock Evans has 30 days, or until 3 March 4, 2016, to find substitute counsel. If Bock Evans has not filed a substitution of 4 counsel by that date, then its answer will be deemed stricken and default will be entered 5 against it. 6 7 8 9 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 11 United States District Court Northern District of California 10 papers served in this action and forward them to the appropriate representative of Bock 12 Evans until substitute counsel is appointed. Bock Evans has 30 days, or until March 4, 13 2016, to find substitute counsel. If Bock Evans has not filed a substitution of counsel by 14 that date, then its answer will be deemed stricken and default will be entered against it. 15 16 IT IS SO ORDERED. 17 18 19 Dated: 02/03/16 _____________________________________ THELTON E. HENDERSON United States District Judge 20 21 22 23 24 25 26 27 28 4

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