Post by thinkaboutgoo on Feb 16, 2015 21:51:31 GMT -5
I got this from the AG site. It is public knowledge so.....
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 2:14-cv-08860-CAS-ASx
Date January 26, 2015
Title MICHAEL MALININ V. JOHN RZEZNIK, ET AL.
Present: The Honorable CHRISTINA A. SNYDER
CATHERINE JEANG LAURA ELIAS N/A
Deputy Clerk Court Reporter / Recorder Tape No.
Attorneys Present for Plaintiffs: Attorneys Present for Defendants
n/a n/a
Proceedings: MOTION TO DISQUALIFY (Dkt. 14, filed December 29, 2014)
I. INTRODUCTION AND BACKGROUND
Plaintiff Michael Malinin (“Malinin”) filed this action on November 14, 2014. See Compl., dkt. 1. Malinin alleges that he was the drummer for the band the Goo Goo Dolls (“GGD,” or “the band”) from January 1995 until December 2013, when he was
terminated from the band. Comp. ¶ 1. Defendants John Rzeznik (“Rzeznik”) and Robert Takac (“Takac”) (together, “defendants”) are members of GGD. Id. ¶¶ 2, 3. Malinin alleges that over the course of his relationship with Rzeznik and Takac, and through his work as GGD’s drummer, he, Rzeznik, and Takac formed an implied partnership in GGD. Id. ¶ 28. Malinin alleges that defendants improperly terminated him from the partnership. Based on the foregoing, Malinin asserts four claims for relief against Rzeznik and Takac: (1) wrongful disassociation from partnership; (2) determination of buyout price of Malinin’s partnership interest in GGD; (3) breach of fiduciary duty; and (4) declaratory judgment for ongoing royalties. Defendants filed their Answer on December 17, 2014. Dkt. 12.
Malinin now moves to disqualify defendants’ counsel Howard King (“King”),BLeslie Frank (“Frank”), and the law firm of King, Holmes, Paterno & Berliner LLP (“KHPB”) (collectively, “KHPB”). See Motion and Supporting Decls. of Michael Malinin and Curtis D. Porterfield, Dkt. 14. Malinin contends that KHPB represented him personally at least once. Malinin also argues that KHPB represented the band, and that therefore, because he was a partner in the band, KHPB also represented him. Malinin claims that in light of the foregoing, he had an attorney-client relationship with KHPB, and that California Rule of Professional Conduct 3-310(E) bars KHPB attorneys from representing defendants in this matter. Defendants filed an opposition and an errata thereto, along with Declarations from Stephen D. Rothschild, Leslie E. Frank, Howard E. King, and Angela DeSimone. Dkt. 18, 19, 15, 16, 17. Malinin filed a Reply and Evidentiary Objections. Dkt. 23, 24.1
The Court heard oral argument on the Motion for Disqualification on January 26,B2015. For the following reasons, the Court DENIES the motion.
II. LEGAL STANDARD
Federal courts generally apply state law in deciding whether to disqualify anattorney. In re County of Los Angeles, 223 F.3d 990, 995 (9th Cir. 2000). Pursuant toLocal Rule 83-3.1.2, this Court has adopted the standards of professional conduct required of members of the State Bar of California and applies those standards to attorneys appearing in the Court. Accordingly, the Court looks to the statutes and decisions governing members of the State Bar of California in determining this motion. A court’s authority to disqualify an attorney derives from the power inherent in every court “‘[t]o control in furtherance of justice, the conduct of its ministerial officers, and of all other persons in any manner connected with a judicial proceeding before it, in every matter pertaining thereto.’” In re Complex Asbestos Litigation, 232 Cal.App.3d 572, 585 (1991) (citing Cal. Code Civ. Proc. § 128(a)(5)). Disqualification motions “involve a conflict between the clients’ right to counsel of their choice and the need to maintain ethical standards of professional responsibility.” Comden v. Superior Court, 20 Cal.3d 906, 915 (1971).
California State Bar Rule of Professional Conduct 3-310(E) protects a client’s right to rely upon the confidentiality of attorney-client communications. People ex rel. Dep’t of Corporations v. SpeeDee Oil Change Sys., Inc., 20 Cal. 4th 1135, 1146 (1999). Rule
3-310(E) states:
1 Defendants included a “Request for Sanctions” in the title of their opposition brief. Merely requesting sanctions in a brief’s title is not an appropriate method for requesting sanctions. Accordingly, the Court does not reach the issue. Pursuant to the its inherent authority, the Court has considered the opposition and the Declarations of Stephen Rothschild and Angela DeSimone, which were filed approximately 14 hours after the filing deadline. The Court also OVERRULES Malinin’s evidentiary objections as unfounded.
A member shall not, without the informed written consent of the
client or former client, accept employment adverse to the client or former client where, by reason of the representation of the client
or former client, the member has obtained confidential information material to the employment.
Rule 3-310(E) only becomes applicable if an attorney-client relationship has been established. In re Lee G., 1 Cal.App.4th 17, 27 (1991) (the rule “never becomesapplicable where the party seeking the attorney’s disqualification fails to establish that such party was or is ‘represented’ by the attorney ‘in a manner giving rise to an
attorney-client relationship.’”)(citation omitted). If the party establishes an attorney client relationship, where there exists a substantial relationship between the prior and present representation, a presumption may arise that the party shared confidential information with the attorney. See, e.g., Global Van Lines, Inc. v. Superior Court, 144
Cal.App.3d 483 (1983).
III. ANALYSIS
A. Malinin Has Not Established that He Had an Attorney-Client
Relationship with KHPB through which KHPB Obtained Confidential Information.
The party seeking disqualification has the burden of showing it had an attorney-client relationship with the counsel it seeks to disqualify. Koo v. Rubio’s Restaurants, Inc., 109 Cal.App.4th 719, 729 (2003). The question of whether an attorney-client relationship exists is one of law. Responsible Citizens v. Superior Court, 16 Cal.App.4th 1717, 1733 (1993). An attorney-client relationship is not created by the unilateral declaration of one party to the relationship. Fox v. Pollack, 181 Cal.App.3d 954, 959 (1986). Rather, the relationship can only be created by contract, express or implied. Responsible Citizens,16 Cal.App.4th at 1732.
Malinin asserts three bases upon which he established an attorney-client relationship with KHPB and through which KHPB obtained his confidential information.
First, Malinin claims that KHPB represented him with respect to his personal legal needs.
Second, he claims that KHPB gave him legal advice with respect to his dealings with GGD. And third, he claims that, by virtue of his being a partner in GGD, KHPB necessarily represented him when it handled GGD’s legal needs.
1. Malinin Has Not Shown that KHPB Obtained His Confidential
Information When It Handled His Personal Legal Needs.
Malinin identifies one instance in which he “use[d] KHPB for [his] personal legal needs”: he had “legal issues come up regarding [his] personal house in Los Angeles, a matter completely unrelated to anything to do with the band.” Malinin Decl. ¶ 14.
Malinin specifies that King represented him in connection with this issue, id., but is silent as to whether, through this representation, King or KHPB obtained confidential information that would be relevant in any way to this litigation.
King confirmed that he represented Malinin in May and June 2005 in a dispute between Malinin and a potential purchaser of his home, that the matter was resolved without litigation, and that it had nothing to do with GGD. King Decl. ¶ 8. King also states that he obtained no information in that representation that has any relation to the complaint in this case. Id.
It is undisputed that Malinin and KHPB had an attorney-client relationship in 2005 in connection with Malinin’s sale of his home. However, Malinin has not demonstrated that, during that representation, KHPB “obtained confidential information material” to KHPB’s representation of GGD in this case. Indeed, Malinin’s assertion that the 2005 representation had nothing to do with the band supports the conclusion that KHPB obtained no confidential information relevant to this case.
Therefore, KHPB’s 2005 representation of Malinin in connection with the sale of his home provides no basis for disqualifying KHPB from representing Rzeznik and Takac in this case.
2. Malinin Has Not Shown that His Interactions with KHPB
Concerning GGD Business Resulted in the Formation of an
Attorney-Client Relationship with Him.
Malinin also argues that he had an attorney-client relationship with KHPB because he frequently “consulted” with the firm concerning GGD business. Malinin Decl. ¶ 4.
This argument is not persuasive.
Malinin asserts that Frank advised him about his 1995 and 2008 contracts with the band and Warner Brothers, and that she therefore acted as his counsel. Malinin states that “[w]hen he had questions about [the 1995 contract between himself and GGD, he] asked Leslie Frank,” who he claims drafted the agreement. Malinin Decl. ¶ 5. Malinin also states that Frank was “[his] attorney responsible for preparing and advising [him] on the contract issues. [He] sought and obtained the advice of Leslie Frank on numerous issues regarding this contract” before signing it. Id. ¶ 8.2
Finally, Malinin asserts that he “consulted attorneys at KHPB for advice and representation on various issues relating to the band” and that “when general issues came up, [he] asked [Frank] about these issues . .. includ[ing] royalties owed to [him], the band’s finances, and [his] rights and duties as a member of the band.” Id. ¶¶ 4, 12.
Frank effectively rebuts all of these assertions. First, she states that she “never represented Malinin in any capacity and that all of [her] interactions with him, and all legal services she rendered with respect to his relationship with GGD, were in [her] capacity as GGD’s counsel.” Frank Decl. ¶¶ 4, 5. With respect to the 1995 agreement, Frank notes that Malinin was represented by his own counsel; that Malinin’s counsel, and not she, drafted the agreement; and that she and Malinin’s counsel negotiated the terms of the agreement. See id. ¶¶ 11, 12, 22; Exhs. D, E. With respect to the 2008 contract, Frank states that she was not representing Malinin, but rather was ensuring that her client GGD satisfied its obligation under ¶4(d) of the services agreement to arrange for Warner Brothers to directly pay Malinin the royalties due him, instead of having those royalties go though GGD. See id. ¶ 20.
Malinin’s other assertions concerning his relationship with KHPB – that he “consulted with attorneys at KHPB for advice and representation on issues relating to the band such as finances, royalties, etc.,” that “KHPB were [his] attorneys . . . for all other
legal matters,” that Rzeznik encouraged him on numerous occasions to use KHPB for his personal legal needs, and that he “confide[d] [his] personal information, issues and questions” to KHPB attorneys (Malinin Decl. ¶¶ 4, 13, 15) – are simply too vague to show that KHPB was in fact Malinin’s counsel. Furthermore, Malinin maintains that she did not “‘consult’ with [Frank] in any capacity.” Frank Decl. ¶ 20.
Malinin’s assertions are also too vague to satisfy the second condition of disqualification under Rule 3-310(E): that by reason of the representation, KHPB obtained confidential information from him material to this case.
The evidence in the record also indicates that KHPB complied with its obligation under Rule 3-600, “Organization as Client,” to explain to Malinin that the organization (GGD), and not he, is the client, and not to mislead him into believing otherwise. See
Rule 3-600(D) (“In dealing with an organization’s. . . employees . . . or other constituents, a member shall explain the identity of the client for whom the member acts, whenever it is or becomes apparent that the organization’s interests are or may become adverse to those of the constituent(s) . . . The member shall not mislead such a constituent into believing that the constituent may communicate confidential information to the member in a way that will not be used in the organization’s interest if that is or becomes adverse to the constituent.”). Frank states that she regularly reminded Malinin orally and in writing that she did not represent him, and that “on multiple occasions [Malinin] expressly acknowledged that [Frank] was acting on behalf of GGD.” Frank Decl. ¶ 5.
For example, in connection with a 2002 employment agreement (that was never signed), Frank expressly recommended to Malinin that he “have an experienced attorney” review it before he signed it. Id. ¶ 14, Exh. F. Similarly, in connection with the 2009 services agreement, Frank advised Malinin at least twice that the firm did not represent him and suggested that he seek advice of counsel. See id. ¶ 16, 17; Exhs. H, I.
Based on all of the foregoing, the Court finds that Malinin has not shown that he had an attorney-client relationship with KHPB based on his interactions with KHPB relating to GGD.
3. Malinin has Not Shown that He Had An Attorney-Client
Relationship with KHPB By Virtue of KHPB’s Representation of GGD.
The complaint alleges that Malinin, Rzeznik, and Takac were in an implied partnership with respect to GGD. Compl. ¶ 28. Based on that allegation, Malinin claims that he had an attorney-client relationship with KHPB by virtue of KHPB’s representation of the GGD partnership. See Opening Br. 3:3-23. Malinin also argues that KHPB obtained his confidential information in the course of that representation that KHPB could now use to his detriment. Id.; Malinin Decl. ¶¶17-19.
“An attorney for partnership represents all partners in matters of partnership business.” Wortham & Van Liew v. Superior Court, 188 Cal.App.3d 927, 932 (1987).
However, representation of a partnership does not automatically result in the representation of the partners individually. See 1 Witkin, Cal. Proc. 5th (2008) Attys, § 116, p. 164; see also Responsible Citizens,16 Cal.App.4th at 1731 (“representation of individual partners does not automatically flow from representation of the partnership”).
California law recognizes that an “attorney-client relationship may also be formed between counsel for the partnership and an individual partner.” Law v. Harvey, 2007 WL 1280585, at *3 (N.D. Cal. May 1, 2007). Whether an attorney’s representation of a partnership results in an attorney-client relationship with an individual partner turns on a multi-factor, totality-of-the-circumstances test. See Johnson v. Superior Court, 38 Cal.App.4th 463, 477 (1995) (discussing test).
None of the foregoing applies unless Malinin was a partner in GGD. As noted, Malinin alleges that he was an implied partner in the enterprise.
Under California Corporations Code § 16202(a), “the association of two or more persons to carry on as coowners of a business for profit forms a partnership, whether or not the persons intend to form a partnership.” Cal. Corp. Code § 16202(a). “Whether a partnership or joint venture exists is primarily a factual question to be determined by the trier of fact from the evidence and inferences to be drawn therefrom.” Bank of Cal. v. Connolly, 36 Cal.App.3d 350, 364 (1973).
“A . . . partnership may be formed orally or assumed to have been organized from a reasonable deduction from the acts and declarations of the parties.” Weiner v. Fleischman, 54 Cal.3d 476, 482 (1991) (internal citations omitted). A partnership or joint venture “exists where there is an ‘agreement between the parties under which they have a community of interest, that is, joint interest, in a common business undertaking, an understanding as to the sharing of profits and losses, and a right of joint control.’” Connoly, 36 Cal.3d at 364 (citation omitted). “An essential element of a partnership . . . if the right of joint participation in the management and control of the business.” Id. (citation omitted). The existence of a partnership must be established by a preponderance of the evidence. Weiner, 54 Cal.3d at 490, 286.
Malinin has not met his burden of establishing, for purposes of this motion, by a preponderance of the evidence, that he was a partner in GGD. The only evidence that Malinin presents to support his assertion that he was a partner in GGD is the fact that he worked with GGD for 19 years, and his statement that he was paid one-third of all net profits from touring and that he was responsible for paying one-third of all of the band’s expenses, including its legal fees. See Malinin Decl. (Dkt. 14-1) ¶¶ 2, 16.
This is not enough to establish that Malinin was a partner in GGD.
The 2009 services agreement does provide that Malinin received a portion of GGD’s net profits as compensation. See Services Agreement (Frank Decl. Ex. J.), ¶ 4 (providing that, in exchange for being GGD’s drummer in performance and on recordings, Malinin will be compensated with one third of GGD’s net profits derived from performances and merchandise, and to a royalty from sales of albums on which he performs). Cal. Corp. Code § 16202(c)(3) states that “ person who receives a share of the profits of a business is presumed to be a partner in the business,” but that presumption does not apply if “the profits were received . . . [in] payment for services as an independent contractor of or wages or other compensation to an employee.” Cal. Corp. Code § 16202(c)(3). Whether Malinin was an employee (or independent contractor) is itself an issue that the Court cannot decide based on the present record. Thus, the Court cannot find that the fact that Malinin received profits as compensation gives rise to the presumption that he was a partner.
The 2009 service agreement itself counsels against finding the fact that Malinin received a share of the profits as compensation to be dispositive. The 2009 services
agreement provides that “[n]othing herein is to be construed as creating a joint venture or partnership between Malinin and GGD Entities or granting to Malinin any ownership interest in GGD or any GGD entity.” Services Agreement ¶ 9.
Thus, the service agreement’s disclaimer makes clear that the fact that GGD compensated Malinin with a share of its net profits should not weigh in favor of finding that Malinin was a partner.
Malinin has presented no other facts that support his claim that he is a partner.
Although it is not disputed that Malinin had a lengthy 19-year tenure with GGD, whether he was a partner turns on the nature of the relationship and not its duration. Furthermore, apart from compensating Malinin with a portion of GGD’s net profits, the services agreement does not vest Malinin with any of the other hallmarks of partnership – risk of loss and a right of joint control. Indeed, Malinin granted to GGD “all rights of every kind and nature in and to the results and proceeds of [his] services rendered hereunder and since the expiration” of his prior contract with GGD. Id. ¶ 5(a).
Nor does it appear that Malinin paid one-third of KHPB’s attorneys’ fees. Rather, the service agreement defines “net profits” as “Income received by GGD Entities, less all disbursements (including, without limitation, legal and accounting fees. . .)”. See Services Agreement ¶4(c)(i).
That Malinin received his share of GGD’s net profits after GGD deducted its expenses from its income does not mean that Malinin paid GGD’s expenses. All it means is that GGD calculated its net profits using the familiar formula of deducting its expenses from its income.
Furthermore, the documentary evidence submitted by the parties supports the conclusion that Malinin was not a partner in GGD.
For example, Frank points out that in the course of negotiating the never-executed 2002 employment agreement, Malinin himself secured changes favorable to himself and never disputed the contract’s title of “Employment Agreement.” See Frank Decl. ¶¶ 13-15; Exhs. F, G.
Frank also states that only Rzeznik and Takac, and not Malinin, are parties to GGD’s agreements with third parties, thus reflecting that Malinin is not a partner in GGD. See, e.g., Frank Decl. Exh. A (2010 merchandising agreement between “John Rzeznik and Robby Takac collectively p/k/a ‘The Goo Goo Dolls’” and a merchandising company) and Exh. B (2014 Amendment to recording agreement between “JOHN RZEZNIK and ROBBIE TAKAC (individually and collectively ‘Artist’) p/k/a ‘Goo Good Dolls’” and Warner Brothers Records).
Similarly, GGD’s 2012 filing with the Commissioner of Trademarks defines the “Goo Goo Dolls [as] a partnership comprised of John Rzeznik and Robert C. Takac, Jr., both U.S. citizens. . .” Frank Decl. 9, Exh C.
All of the foregoing tends to show that Malinin was not a partner in the GGD enterprise. Without prejudging the ultimate merits of this case, the Court concludes that at this stage, Malinin has simply not presented evidence sufficient to show that he was in an implied partnership with the members of GGD. The Court emphasizes that it is not deciding that Malinin can never prove that he was a partner, just that the current record is not enough to support a decision in Malinin’s favor. Neither party may use this decision as conclusive on any issue in this case.
IV. CONCLUSION
In accordance with the foregoing, the Court DENIES Malinin’s motion to disqualify KHPB.
IT IS SO ORDERED.
UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No. 2:14-cv-08860-CAS-ASx
Date January 26, 2015
Title MICHAEL MALININ V. JOHN RZEZNIK, ET AL.
Present: The Honorable CHRISTINA A. SNYDER
CATHERINE JEANG LAURA ELIAS N/A
Deputy Clerk Court Reporter / Recorder Tape No.
Attorneys Present for Plaintiffs: Attorneys Present for Defendants
n/a n/a
Proceedings: MOTION TO DISQUALIFY (Dkt. 14, filed December 29, 2014)
I. INTRODUCTION AND BACKGROUND
Plaintiff Michael Malinin (“Malinin”) filed this action on November 14, 2014. See Compl., dkt. 1. Malinin alleges that he was the drummer for the band the Goo Goo Dolls (“GGD,” or “the band”) from January 1995 until December 2013, when he was
terminated from the band. Comp. ¶ 1. Defendants John Rzeznik (“Rzeznik”) and Robert Takac (“Takac”) (together, “defendants”) are members of GGD. Id. ¶¶ 2, 3. Malinin alleges that over the course of his relationship with Rzeznik and Takac, and through his work as GGD’s drummer, he, Rzeznik, and Takac formed an implied partnership in GGD. Id. ¶ 28. Malinin alleges that defendants improperly terminated him from the partnership. Based on the foregoing, Malinin asserts four claims for relief against Rzeznik and Takac: (1) wrongful disassociation from partnership; (2) determination of buyout price of Malinin’s partnership interest in GGD; (3) breach of fiduciary duty; and (4) declaratory judgment for ongoing royalties. Defendants filed their Answer on December 17, 2014. Dkt. 12.
Malinin now moves to disqualify defendants’ counsel Howard King (“King”),BLeslie Frank (“Frank”), and the law firm of King, Holmes, Paterno & Berliner LLP (“KHPB”) (collectively, “KHPB”). See Motion and Supporting Decls. of Michael Malinin and Curtis D. Porterfield, Dkt. 14. Malinin contends that KHPB represented him personally at least once. Malinin also argues that KHPB represented the band, and that therefore, because he was a partner in the band, KHPB also represented him. Malinin claims that in light of the foregoing, he had an attorney-client relationship with KHPB, and that California Rule of Professional Conduct 3-310(E) bars KHPB attorneys from representing defendants in this matter. Defendants filed an opposition and an errata thereto, along with Declarations from Stephen D. Rothschild, Leslie E. Frank, Howard E. King, and Angela DeSimone. Dkt. 18, 19, 15, 16, 17. Malinin filed a Reply and Evidentiary Objections. Dkt. 23, 24.1
The Court heard oral argument on the Motion for Disqualification on January 26,B2015. For the following reasons, the Court DENIES the motion.
II. LEGAL STANDARD
Federal courts generally apply state law in deciding whether to disqualify anattorney. In re County of Los Angeles, 223 F.3d 990, 995 (9th Cir. 2000). Pursuant toLocal Rule 83-3.1.2, this Court has adopted the standards of professional conduct required of members of the State Bar of California and applies those standards to attorneys appearing in the Court. Accordingly, the Court looks to the statutes and decisions governing members of the State Bar of California in determining this motion. A court’s authority to disqualify an attorney derives from the power inherent in every court “‘[t]o control in furtherance of justice, the conduct of its ministerial officers, and of all other persons in any manner connected with a judicial proceeding before it, in every matter pertaining thereto.’” In re Complex Asbestos Litigation, 232 Cal.App.3d 572, 585 (1991) (citing Cal. Code Civ. Proc. § 128(a)(5)). Disqualification motions “involve a conflict between the clients’ right to counsel of their choice and the need to maintain ethical standards of professional responsibility.” Comden v. Superior Court, 20 Cal.3d 906, 915 (1971).
California State Bar Rule of Professional Conduct 3-310(E) protects a client’s right to rely upon the confidentiality of attorney-client communications. People ex rel. Dep’t of Corporations v. SpeeDee Oil Change Sys., Inc., 20 Cal. 4th 1135, 1146 (1999). Rule
3-310(E) states:
1 Defendants included a “Request for Sanctions” in the title of their opposition brief. Merely requesting sanctions in a brief’s title is not an appropriate method for requesting sanctions. Accordingly, the Court does not reach the issue. Pursuant to the its inherent authority, the Court has considered the opposition and the Declarations of Stephen Rothschild and Angela DeSimone, which were filed approximately 14 hours after the filing deadline. The Court also OVERRULES Malinin’s evidentiary objections as unfounded.
A member shall not, without the informed written consent of the
client or former client, accept employment adverse to the client or former client where, by reason of the representation of the client
or former client, the member has obtained confidential information material to the employment.
Rule 3-310(E) only becomes applicable if an attorney-client relationship has been established. In re Lee G., 1 Cal.App.4th 17, 27 (1991) (the rule “never becomesapplicable where the party seeking the attorney’s disqualification fails to establish that such party was or is ‘represented’ by the attorney ‘in a manner giving rise to an
attorney-client relationship.’”)(citation omitted). If the party establishes an attorney client relationship, where there exists a substantial relationship between the prior and present representation, a presumption may arise that the party shared confidential information with the attorney. See, e.g., Global Van Lines, Inc. v. Superior Court, 144
Cal.App.3d 483 (1983).
III. ANALYSIS
A. Malinin Has Not Established that He Had an Attorney-Client
Relationship with KHPB through which KHPB Obtained Confidential Information.
The party seeking disqualification has the burden of showing it had an attorney-client relationship with the counsel it seeks to disqualify. Koo v. Rubio’s Restaurants, Inc., 109 Cal.App.4th 719, 729 (2003). The question of whether an attorney-client relationship exists is one of law. Responsible Citizens v. Superior Court, 16 Cal.App.4th 1717, 1733 (1993). An attorney-client relationship is not created by the unilateral declaration of one party to the relationship. Fox v. Pollack, 181 Cal.App.3d 954, 959 (1986). Rather, the relationship can only be created by contract, express or implied. Responsible Citizens,16 Cal.App.4th at 1732.
Malinin asserts three bases upon which he established an attorney-client relationship with KHPB and through which KHPB obtained his confidential information.
First, Malinin claims that KHPB represented him with respect to his personal legal needs.
Second, he claims that KHPB gave him legal advice with respect to his dealings with GGD. And third, he claims that, by virtue of his being a partner in GGD, KHPB necessarily represented him when it handled GGD’s legal needs.
1. Malinin Has Not Shown that KHPB Obtained His Confidential
Information When It Handled His Personal Legal Needs.
Malinin identifies one instance in which he “use[d] KHPB for [his] personal legal needs”: he had “legal issues come up regarding [his] personal house in Los Angeles, a matter completely unrelated to anything to do with the band.” Malinin Decl. ¶ 14.
Malinin specifies that King represented him in connection with this issue, id., but is silent as to whether, through this representation, King or KHPB obtained confidential information that would be relevant in any way to this litigation.
King confirmed that he represented Malinin in May and June 2005 in a dispute between Malinin and a potential purchaser of his home, that the matter was resolved without litigation, and that it had nothing to do with GGD. King Decl. ¶ 8. King also states that he obtained no information in that representation that has any relation to the complaint in this case. Id.
It is undisputed that Malinin and KHPB had an attorney-client relationship in 2005 in connection with Malinin’s sale of his home. However, Malinin has not demonstrated that, during that representation, KHPB “obtained confidential information material” to KHPB’s representation of GGD in this case. Indeed, Malinin’s assertion that the 2005 representation had nothing to do with the band supports the conclusion that KHPB obtained no confidential information relevant to this case.
Therefore, KHPB’s 2005 representation of Malinin in connection with the sale of his home provides no basis for disqualifying KHPB from representing Rzeznik and Takac in this case.
2. Malinin Has Not Shown that His Interactions with KHPB
Concerning GGD Business Resulted in the Formation of an
Attorney-Client Relationship with Him.
Malinin also argues that he had an attorney-client relationship with KHPB because he frequently “consulted” with the firm concerning GGD business. Malinin Decl. ¶ 4.
This argument is not persuasive.
Malinin asserts that Frank advised him about his 1995 and 2008 contracts with the band and Warner Brothers, and that she therefore acted as his counsel. Malinin states that “[w]hen he had questions about [the 1995 contract between himself and GGD, he] asked Leslie Frank,” who he claims drafted the agreement. Malinin Decl. ¶ 5. Malinin also states that Frank was “[his] attorney responsible for preparing and advising [him] on the contract issues. [He] sought and obtained the advice of Leslie Frank on numerous issues regarding this contract” before signing it. Id. ¶ 8.2
Finally, Malinin asserts that he “consulted attorneys at KHPB for advice and representation on various issues relating to the band” and that “when general issues came up, [he] asked [Frank] about these issues . .. includ[ing] royalties owed to [him], the band’s finances, and [his] rights and duties as a member of the band.” Id. ¶¶ 4, 12.
Frank effectively rebuts all of these assertions. First, she states that she “never represented Malinin in any capacity and that all of [her] interactions with him, and all legal services she rendered with respect to his relationship with GGD, were in [her] capacity as GGD’s counsel.” Frank Decl. ¶¶ 4, 5. With respect to the 1995 agreement, Frank notes that Malinin was represented by his own counsel; that Malinin’s counsel, and not she, drafted the agreement; and that she and Malinin’s counsel negotiated the terms of the agreement. See id. ¶¶ 11, 12, 22; Exhs. D, E. With respect to the 2008 contract, Frank states that she was not representing Malinin, but rather was ensuring that her client GGD satisfied its obligation under ¶4(d) of the services agreement to arrange for Warner Brothers to directly pay Malinin the royalties due him, instead of having those royalties go though GGD. See id. ¶ 20.
Malinin’s other assertions concerning his relationship with KHPB – that he “consulted with attorneys at KHPB for advice and representation on issues relating to the band such as finances, royalties, etc.,” that “KHPB were [his] attorneys . . . for all other
legal matters,” that Rzeznik encouraged him on numerous occasions to use KHPB for his personal legal needs, and that he “confide[d] [his] personal information, issues and questions” to KHPB attorneys (Malinin Decl. ¶¶ 4, 13, 15) – are simply too vague to show that KHPB was in fact Malinin’s counsel. Furthermore, Malinin maintains that she did not “‘consult’ with [Frank] in any capacity.” Frank Decl. ¶ 20.
Malinin’s assertions are also too vague to satisfy the second condition of disqualification under Rule 3-310(E): that by reason of the representation, KHPB obtained confidential information from him material to this case.
The evidence in the record also indicates that KHPB complied with its obligation under Rule 3-600, “Organization as Client,” to explain to Malinin that the organization (GGD), and not he, is the client, and not to mislead him into believing otherwise. See
Rule 3-600(D) (“In dealing with an organization’s. . . employees . . . or other constituents, a member shall explain the identity of the client for whom the member acts, whenever it is or becomes apparent that the organization’s interests are or may become adverse to those of the constituent(s) . . . The member shall not mislead such a constituent into believing that the constituent may communicate confidential information to the member in a way that will not be used in the organization’s interest if that is or becomes adverse to the constituent.”). Frank states that she regularly reminded Malinin orally and in writing that she did not represent him, and that “on multiple occasions [Malinin] expressly acknowledged that [Frank] was acting on behalf of GGD.” Frank Decl. ¶ 5.
For example, in connection with a 2002 employment agreement (that was never signed), Frank expressly recommended to Malinin that he “have an experienced attorney” review it before he signed it. Id. ¶ 14, Exh. F. Similarly, in connection with the 2009 services agreement, Frank advised Malinin at least twice that the firm did not represent him and suggested that he seek advice of counsel. See id. ¶ 16, 17; Exhs. H, I.
Based on all of the foregoing, the Court finds that Malinin has not shown that he had an attorney-client relationship with KHPB based on his interactions with KHPB relating to GGD.
3. Malinin has Not Shown that He Had An Attorney-Client
Relationship with KHPB By Virtue of KHPB’s Representation of GGD.
The complaint alleges that Malinin, Rzeznik, and Takac were in an implied partnership with respect to GGD. Compl. ¶ 28. Based on that allegation, Malinin claims that he had an attorney-client relationship with KHPB by virtue of KHPB’s representation of the GGD partnership. See Opening Br. 3:3-23. Malinin also argues that KHPB obtained his confidential information in the course of that representation that KHPB could now use to his detriment. Id.; Malinin Decl. ¶¶17-19.
“An attorney for partnership represents all partners in matters of partnership business.” Wortham & Van Liew v. Superior Court, 188 Cal.App.3d 927, 932 (1987).
However, representation of a partnership does not automatically result in the representation of the partners individually. See 1 Witkin, Cal. Proc. 5th (2008) Attys, § 116, p. 164; see also Responsible Citizens,16 Cal.App.4th at 1731 (“representation of individual partners does not automatically flow from representation of the partnership”).
California law recognizes that an “attorney-client relationship may also be formed between counsel for the partnership and an individual partner.” Law v. Harvey, 2007 WL 1280585, at *3 (N.D. Cal. May 1, 2007). Whether an attorney’s representation of a partnership results in an attorney-client relationship with an individual partner turns on a multi-factor, totality-of-the-circumstances test. See Johnson v. Superior Court, 38 Cal.App.4th 463, 477 (1995) (discussing test).
None of the foregoing applies unless Malinin was a partner in GGD. As noted, Malinin alleges that he was an implied partner in the enterprise.
Under California Corporations Code § 16202(a), “the association of two or more persons to carry on as coowners of a business for profit forms a partnership, whether or not the persons intend to form a partnership.” Cal. Corp. Code § 16202(a). “Whether a partnership or joint venture exists is primarily a factual question to be determined by the trier of fact from the evidence and inferences to be drawn therefrom.” Bank of Cal. v. Connolly, 36 Cal.App.3d 350, 364 (1973).
“A . . . partnership may be formed orally or assumed to have been organized from a reasonable deduction from the acts and declarations of the parties.” Weiner v. Fleischman, 54 Cal.3d 476, 482 (1991) (internal citations omitted). A partnership or joint venture “exists where there is an ‘agreement between the parties under which they have a community of interest, that is, joint interest, in a common business undertaking, an understanding as to the sharing of profits and losses, and a right of joint control.’” Connoly, 36 Cal.3d at 364 (citation omitted). “An essential element of a partnership . . . if the right of joint participation in the management and control of the business.” Id. (citation omitted). The existence of a partnership must be established by a preponderance of the evidence. Weiner, 54 Cal.3d at 490, 286.
Malinin has not met his burden of establishing, for purposes of this motion, by a preponderance of the evidence, that he was a partner in GGD. The only evidence that Malinin presents to support his assertion that he was a partner in GGD is the fact that he worked with GGD for 19 years, and his statement that he was paid one-third of all net profits from touring and that he was responsible for paying one-third of all of the band’s expenses, including its legal fees. See Malinin Decl. (Dkt. 14-1) ¶¶ 2, 16.
This is not enough to establish that Malinin was a partner in GGD.
The 2009 services agreement does provide that Malinin received a portion of GGD’s net profits as compensation. See Services Agreement (Frank Decl. Ex. J.), ¶ 4 (providing that, in exchange for being GGD’s drummer in performance and on recordings, Malinin will be compensated with one third of GGD’s net profits derived from performances and merchandise, and to a royalty from sales of albums on which he performs). Cal. Corp. Code § 16202(c)(3) states that “ person who receives a share of the profits of a business is presumed to be a partner in the business,” but that presumption does not apply if “the profits were received . . . [in] payment for services as an independent contractor of or wages or other compensation to an employee.” Cal. Corp. Code § 16202(c)(3). Whether Malinin was an employee (or independent contractor) is itself an issue that the Court cannot decide based on the present record. Thus, the Court cannot find that the fact that Malinin received profits as compensation gives rise to the presumption that he was a partner.
The 2009 service agreement itself counsels against finding the fact that Malinin received a share of the profits as compensation to be dispositive. The 2009 services
agreement provides that “[n]othing herein is to be construed as creating a joint venture or partnership between Malinin and GGD Entities or granting to Malinin any ownership interest in GGD or any GGD entity.” Services Agreement ¶ 9.
Thus, the service agreement’s disclaimer makes clear that the fact that GGD compensated Malinin with a share of its net profits should not weigh in favor of finding that Malinin was a partner.
Malinin has presented no other facts that support his claim that he is a partner.
Although it is not disputed that Malinin had a lengthy 19-year tenure with GGD, whether he was a partner turns on the nature of the relationship and not its duration. Furthermore, apart from compensating Malinin with a portion of GGD’s net profits, the services agreement does not vest Malinin with any of the other hallmarks of partnership – risk of loss and a right of joint control. Indeed, Malinin granted to GGD “all rights of every kind and nature in and to the results and proceeds of [his] services rendered hereunder and since the expiration” of his prior contract with GGD. Id. ¶ 5(a).
Nor does it appear that Malinin paid one-third of KHPB’s attorneys’ fees. Rather, the service agreement defines “net profits” as “Income received by GGD Entities, less all disbursements (including, without limitation, legal and accounting fees. . .)”. See Services Agreement ¶4(c)(i).
That Malinin received his share of GGD’s net profits after GGD deducted its expenses from its income does not mean that Malinin paid GGD’s expenses. All it means is that GGD calculated its net profits using the familiar formula of deducting its expenses from its income.
Furthermore, the documentary evidence submitted by the parties supports the conclusion that Malinin was not a partner in GGD.
For example, Frank points out that in the course of negotiating the never-executed 2002 employment agreement, Malinin himself secured changes favorable to himself and never disputed the contract’s title of “Employment Agreement.” See Frank Decl. ¶¶ 13-15; Exhs. F, G.
Frank also states that only Rzeznik and Takac, and not Malinin, are parties to GGD’s agreements with third parties, thus reflecting that Malinin is not a partner in GGD. See, e.g., Frank Decl. Exh. A (2010 merchandising agreement between “John Rzeznik and Robby Takac collectively p/k/a ‘The Goo Goo Dolls’” and a merchandising company) and Exh. B (2014 Amendment to recording agreement between “JOHN RZEZNIK and ROBBIE TAKAC (individually and collectively ‘Artist’) p/k/a ‘Goo Good Dolls’” and Warner Brothers Records).
Similarly, GGD’s 2012 filing with the Commissioner of Trademarks defines the “Goo Goo Dolls [as] a partnership comprised of John Rzeznik and Robert C. Takac, Jr., both U.S. citizens. . .” Frank Decl. 9, Exh C.
All of the foregoing tends to show that Malinin was not a partner in the GGD enterprise. Without prejudging the ultimate merits of this case, the Court concludes that at this stage, Malinin has simply not presented evidence sufficient to show that he was in an implied partnership with the members of GGD. The Court emphasizes that it is not deciding that Malinin can never prove that he was a partner, just that the current record is not enough to support a decision in Malinin’s favor. Neither party may use this decision as conclusive on any issue in this case.
IV. CONCLUSION
In accordance with the foregoing, the Court DENIES Malinin’s motion to disqualify KHPB.
IT IS SO ORDERED.