Weshler v. Rosensweig

WINNIE WESHLER, as Trustee, etc., Plaintiff and Appellant, v. LINDA ROSENSWEIG, as Executor, etc., et al., Defendants and Appellants.

B287099

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION THREE

October 31, 2019

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Los Angeles County Super. Ct. Nos. BP138677, BP039256)

APPEALS from an order of the Superior Court of Los Angeles County, Lesley C. Green, Judge. Affirmed in part and reversed in part with directions.

Pettler & Miller and Mark A. Miller; Randall S. Rothschild for Plaintiff and Appellant.

Oldman, Cooley, Sallus, Birnberg, Coleman & Gold and David Coleman for Defendants and Appellants.

Lewis Brisbois Bisgaard & Smith, Kenneth C. Feldman, David D. Samani, and Allison A. Arabian for Defendant and Appellant Linda Rosensweig.

____________________

Winnie Weshler, as successor trustee of family trusts established by Robert and Betty Lee, brought a motion to disqualify two law firms—Oldman, Cooley, Sallus, Birnberg & Coleman, LLP (Oldman Cooley) and Lewis Brisbois Bisgaard & Smith LLP (Lewis Brisbois)—from representing interests adverse to the trusts. The trial court granted the motion to disqualify Oldman Cooley, but denied the motion to disqualify Lewis Brisbois.

As we discuss more fully below, we affirm the order as to Oldman Cooley, reverse it as to Lewis Brisbois, and order the trial court on remand to disqualify Lewis Brisbois from continued participation in this matter.

FACTUAL AND PROCEDURAL BACKGROUND

I.Background

A. The Lee Trusts

The Lee Family Trust. Robert and Betty Lee established the Lee Family Trust (Family Trust) in 1976. Betty Lee died in 1979, and Robert Lee died in 1991. Upon Robert's death, the Family Trust was divided into two separate trusts for the benefit of Robert and Betty's sons, Ronald Lee and Steven Lee.¹

When Ronald died in 2006, the assets of his one-half share were divided among his surviving children, Diana Rothschild,Michele Lee, and Robinne Zeliznat. Steven's share remained in trust until his death in 2014.

The 1977 Trust. Separately, Betty and Robert created the Robert and Betty Lee 1977 Trust (the 1977 Trust). The 1977 Trust was an irrevocable trust held for the benefit of Steven.

B. William Rosensweig's Appointment and Alleged Breaches of Fiduciary Duty

Until his death, William Rosensweig (William), an attorney, was the trustee of the Family Trust and the 1977 Trust (collectively, the trusts or the Lee trusts).

In 2013, William entered into an agreement to sell an interest in real property owned by the Family Trust. The sale price was $11 million, as memorialized in a promissory note. Under the terms of the note, the buyer was required to make interest-only payments to the Family Trust for 10 years. Interest for the first year was to be prepaid immediately in the amount of $660,000; thereafter, interest was to be paid in monthly installments of $55,000.

Steven Lee died in October 2014. Thereafter, between December 2014 and August 2015, William paid himself approximately $550,000 from the Family Trust, ostensibly as a trustee's fee for negotiating the sale of the real property.

C. The Oldman Cooley Firm's Representation of William

For many years, William was represented, both individually and in his capacity as trustee, by James Birnberg and David Coleman of Oldman Cooley. As relevant to this appeal, between November 2014 and August 2015, Oldman Cooley assisted William with various legal issues relating to distribution of the trust assets after Steven Lee's death. In this capacity, Oldman Cooley had privileged communications withWilliam regarding the administration of the Lee trusts. During approximately the same period of time, Oldman Cooley helped William and his wife draft their own estate plan, including by creating a family trust, and drafted a durable power of management for William's law practice.

D. The Breach of Trust Action

William died in August 2015. After his death, Weshler was appointed successor trustee of the Lee trusts.

In July 2016, Weshler filed petitions against Marilyn Rosensweig (Marilyn), trustee of William's family trust, and Linda Rosensweig (Linda), personal representative of William's estate (collectively, the Rosensweigs), alleging breach of trust by William in his management of the Lee trusts. Among other things, Weshler sought to recover from the Rosensweigs the $550,000 William paid himself from the Family Trust. Oldman Cooley appeared as counsel for Marilyn and Linda in their representative capacities, and Lewis Brisbois appeared for Linda with respect to the defense of claims that implicated William's law firm, Mathon & Rosensweig, P.C.

It appears undisputed that Oldman Cooley has turned over a copy of its "trust files" to Weshler, but has refused to turn over notes of meetings and telephone conferences between William and Oldman Cooley attorneys.

II.Motion to Disqualify Counsel

In June 2017, Weshler moved to disqualify Oldman Cooley and Lewis Brisbois from representing the Rosensweigs in the breach of trust action. Weshler asserted that a party may seek to disqualify a former attorney from representing an adverse party if there is a "substantial relationship" between the former andcurrent representations. Here, Weshler said, Oldman Cooley had initially represented the former trustee, and then "switched sides and began representing clients directly adverse to the trustee of the exact same trusts on matters arising from their previous representation." Further, as the attorney for William individually and as trustee, Oldman Cooley had access to confidential information, including William's state of mind when he made the distributions at issue, and to confidential communications "regarding various legal maneuvers it directly participated in on behalf of the former trustee." Finally, Oldman Cooley attorneys might be material witnesses at trial. Thus, Weshler urged, the Oldman Cooley firm should be disqualified. Lewis Brisbois should also be disqualified because "[t]hey represent the same parties as [Oldman Cooley], jointly making court filings and propounding discovery on behalf of the same parties, and can be presumed to be 'working together' and sharing 'each other's, and their clients', confidential information.' "

The Rosensweigs opposed the motion to disqualify Oldman Cooley. They urged that Oldman Cooley had never represented Weshler, and thus Weshler lacked standing to seek the firm's disqualification. On the merits, the Rosensweigs urged that where an attorney's representation of opposing parties is successive, not simultaneous, disqualification is warranted only if the attorney learned something from the prior client that could be used against him in the subsequent litigation. In the present case, Oldman Cooley's and William's knowledge of private information was coextensive, and all privileged documents in Oldman Cooley's possession had already been turned over to Weshler. Thus, Oldman Cooley's continued participation in thelitigation did not threaten the attorney-client privilege. Finally, the Rosensweigs urged Weshler had waived any conflict by failing to raise it in a timely fashion.

Linda also opposed the motion to disqualify Lewis Brisbois. She urged that Lewis Brisbois never represented William; any confidentiality or privilege associated with the information in question had been waived by placing confidential information at issue through litigation; and Weshler waived the issue by failing to timely raise it.

The trial court granted the motion to disqualify Oldman Cooley, but denied the motion to disqualify Lewis Brisbois. It explained as follows.

First, the court concluded that Weshler had standing to bring the disqualification motion. Although it was undisputed that Weshler, individually, was not a former client of Oldman Cooley, pursuant to Moeller v. Superior Court (1997) 16 Cal.4th 1124, 1131 (Moeller), the powers of a trustee are not personal to any particular trustee, but rather are inherent in the office of trustee. Accordingly, Weshler had standing as the successor trustee of the Lee trusts to disqualify Oldman Cooley and Lewis Brisbois.

Next, on the merits, the court concluded that Oldman Cooley had conflicts of interest that required its disqualification. The court explained: "Oldman Cooley admit[s] that [it] represented William concurrently in his role as trustee and as an individual. Particularly where, as here, William was purportedly double dealing and breaching his fiduciary duties to the trust, the dual representation is untenable and places Oldman Cooley in a conflict situation which requires [its] disqualification. Indeed, Weshler contends that Oldman Cooley assisted William bydelaying providing information to beneficiaries which could have alerted them to his malfeasance."

Finally, the court said there was insufficient evidence of a basis to disqualify Lewis Brisbois. It said: "Lewis Brisbois never represented William as trustee. Indeed it never represented him in any capacity. Rather, it was hired by Linda as a representative of William's estate. . . . Weshler seeks to disqualify Lewis Brisbois solely on the ground that it has acted as co-counsel with Oldman Cooley and thus may have access to confidential information known to that firm. While this argument has some merit, in view of the policy considerations cited above in favor of allowing a party to choose its own counsel, the Court does not find this sufficient to disqualify Lewis Brisbois."

The Rosensweigs timely appealed from the order granting the motion to disqualify Oldman Cooley, and Weshler timely appealed from the order denying the motion to disqualify Lewis Brisbois.²

STANDARD OF...