Page 1
Court of Appeal:
Materiality for Disqualification Is Measured When Raised
Opinion Says Whether Adverse Confidential Information Is Shared by Prospective Client, Such That Attorney Will Be Barred from Representing Adverse Party in Later Litigation, Is Not Determined at Time of Disclosure
By Kimber Cooley, associate editor
|
|
|
ADAM STREISAND attorney |
Div. Eight of this district’s Court of Appeal held yesterday that the question of whether a prospective client shared material confidential information, such that the lawyer should be disqualified from representing adverse parties in the future, will be determined at the time the conflict is raised, not at the time of disclosure.
The question arose in litigation over the estate of the once-prolific Southern California landlord Sam Menlo, who, together with his wife Vera Menlo, established multiple trusts for their children, grandchildren, and future generations.
After Sam Menlo died in 2018, his son-in-law, Jeffrey Winter (referred to in the opinion as “Jeffrey”), filed a petition in 2022 against the decedent’s son, Franklin Menlo (referred to in the opinion as “Frank”), alleging undue influence over Vera Menlo. Both parties were co-trustees of one of the trusts.
Franklin Menlo retained Adam Streisand, a partner in the Century City office of Sheppard, Mullin, Richter & Hamilton LLP to represent him in the trust litigation.
However, in March 2021, Winter had emailed Streisand inquiring as to whether the attorney would be precluded from representing him on an undisclosed matter due to any past legal relationship with Franklin Menlo.
Streisand, unaware that Winter was contemplating suing his brother-in-law, assured him that there would be no conflict. Winter then shared his theories of the case against Franklin Menlo, documents supporting his assertions of undue influence, and his understanding of his mother-in-law’s health condition.
Realizing Winter’s intention, Streisand informed him that Sheppard Mullin would be precluded from pursuing an action against Franklin Menlo, a former client.
Motion to Disqualify
In March 2023, Winter moved to disqualify Steisand and Sheppard Mullin under Rule of Professional Conduct 1.18, which provides that “[e]ven when no lawyer-client relationship ensues, a lawyer who has communicated with a prospective client shall not use or reveal” confidential information.
Subdivision (c) specifies that “[a] lawyer…shall not represent a client with interests materially adverse to those of a prospective client in the same or a substantially related matter if the lawyer received from the prospective client” confidential information “that is material to the matter,” unless he complies with certain additional precautions.
Franklin Menlo opposed the motion, arguing that the determination of whether any information “material to the matter” had been disclosed must be evaluated at the time a party moves for disqualification.
Based on this interpretation of the rule, he contended that Winter’s disclosures in the 2021 email exchange could not be seen as material confidential information after the filing of his petition, which contained the same allegations.
Los Angeles Superior Court Judge Ana Maria Luna granted the motion for disqualification, finding that the petitioner had communicated information to Streisand “which would be the basis for [his] litigation strategy.”
In an opinion, authored by Justice Victor Viramontes and joined in by Acting Presiding Justice Elizabeth A. Grimes and Justice John Shepard Wiley Jr., the court agreed that the materiality standard must be analyzed at the time the motion is filed, but found that the disqualification of Streisand and Sheppard Mullin was proper even under that standard.
Time of Motion
Viramontes looked to the language of the rule, which describes materiality in the present tense. That factor, case law, and commentary by the State Bar, he said, each lends support to the proposition that “materiality must be evaluated at the time a party moves to disqualify counsel.” He opined that public policy concerns also support such a reading, saying:
“By requiring courts to evaluate materiality at the time of the disqualification, parties will be further discouraged from using disqualification motions to gain an unfair advantage over their opponents where a prospective client disclosed once material information that no longer has any bearing on the case.”
The jurist also noted that, before the standard could be applied to the present case, the court must determine what qualifies as “material.”
Franklin Menlo contends that disqualification under Rule l.18 is only warranted where the information disclosed is materially harmful to the prospective client. Winter argues that the term refers to information directly at issue in the case.
Noting that “there is no California decision that expressly defines materiality under Rule 1.18,” Viramontes concluded that “material to the matter” means “materially harmful.”
Specific Information
Applying the standard, the justice wrote:
“Jeffrey disclosed not only his intention to sue Frank, but also his theory of the case along with specific statements and documents supporting that theory….He supported that theory with his own statements as well as a document evidencing Frank’s alleged misconduct. This evidence is at the heart of Jeffrey’s petition and the basis for the allegations that Frank exercised improper influence over Vera with respect to the trusts in light of Vera’s declining health.”
Rejecting Franklin Menlo’s assertion that any disclosure was harmless because the information revealed to Streisand in 2021 was eventually included in publicly filed pleadings or would be revealed in discovery, Viramontes pointed to the fact that a document that was not included in the petition was emailed to Streisand.
Without revealing the nature of the emailed paper, he reasoned:
“While the document may not be directly contested, it may be proof of the claims made in Jeffrey’s petition…over the alleged scheme by Frank to exercise control over trust assets.”
Viramontes continued:
“Jeffrey’s petition never alleges the exact basis for his belief that Vera was subject to undue influence or lacked capacity whereas the e-mails have more specific information. We find this information constitutes confidential material information as undue influence over Vera and her mental capacity are directly at issue.”
Future Discovery
As to the possibility of future discovery disclosing the revealed information, he commented:
“[W]e find that the preliminary disclosure of certain information by a prospective client could give the opposing side an advantage in discovery. For example, here, Frank can use the document disclosed by Jeffrey during his consultation with Streisand to obtain additional information that might not necessarily be available as it was never disclosed in the pleadings. Frank could also use Jeffrey’s claim about Vera’s health to obtain additional information regarding that statement, which again, was not disclosed in the pleading.”
Weighing the equities at issue in the disqualification motion, Viramontes declared that, “since this case is still at its inception,” the factors favor the relief as “disqualification here will maintain ethical standards of professional responsibility.”
The case is Winter v. Menlo, 2025 S.O.S. 923.
In 1997, Sam Menlo was cited by the City of Anaheim for 34 criminal violations of the building code, based on allegations that he neglected a 368-unit apartment complex and made shoddy repairs. After he pled no contest to three counts and paid a $75,000 fine, he was found in violation of his probation after numerous substandard conditions were noted at the building, including unsecured units littered with drug paraphernalia, human waste, and mold.
Then-Orange Superior Court Judge Michael Hayes (now retired) ordered Menlo to stay in one of his dilapidated units for a period of 60 days.
Copyright 2025, Metropolitan News Company