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MOTION TO DISQUALIFY JT LEGAL GROUP APC |
BACKGROUND
A. Allegations of the 4AC
Plaintiff Arthur Ambarachyan (“Ambarachyan”) alleges that he is an investor who was defrauded by Defendants Sona Chukhyan (“Chukhyan”) and George Plavjian (“Plavjian”), as well as their co-conspirators KSR Realty, Inc. (“KSR”), Reta Narkaz, Ruzana Badeer (“Badeer”), Kiane Shabazian (“Shabazian”), and Mariam Kakoian (“Kakoian”). Ambarachyan alleges that Kakoian was the owner of property located at 1737 Bel Aire Dr. in Glendale and that Chukhyan and Kakoian took out loans on the property to pay off other investors that Chukhyan scammed or defrauded. In February 2015, Chukhyan and Kakoian approached Plaintiff for a loan in the amount of $355,000.00. Plaintiff lent the money and Kakoian signed a promissory note agreeing to pay the money back with interest, and the note was secured by a deed of trust against the property. However, the property was sold for $935,300.00 in 2017 and Plaintiff was not paid from the proceeds of the sale.
The fourth amended complaint (“4AC”), filed March 17, 2020, alleges causes of action for: (1) fraud and conspiracy against Kakoian; (2) negligent misrepresentation against Kakoian; (3) breach of contract against Kakoian; (4) equitable lien against Kakoian; (5) negligence against Lawyers Title; (6) equitable indemnity against Chukhyan, Plavjian, KSR, Badeer, Shabazian, and Narkaz; (7) comparative indemnity against Chukhyan, Plavjian, KSR, Badeer, Shabazian, and Narkaz; (8) declaratory relief against Chukhyan, Plavjian, KSR, Badeer, Shabazian, and Narkaz; and (9) declaratory relief against Petrosian, Baburyan, and Lawyers Title. In the 4AC, Ambarachyan notes that the Court previously sustained the demurrer without leave to amend as to the 1st, 4th, and 9th causes of action.
B. Motion on Calendar
On June 25, 2020, Ms. Kakoian filed a motion to disqualify JT Legal Group APC.
On December 3, 2020, Plaintiff and Cross-Defendants filed untimely opposition papers and amended opposition papers.
On December 8, 2020, Ms. Kakoian filed a reply brief. Ms. Kakoian requests that the Court disregard the opposition brief, but also addresses the substantive merits of the opposition papers.
Though the opposition papers are untimely, the Court will consider the merits of the amended opposition papers.
LEGAL STANDARD
Under CCP § 128(a)(5), the Court has the power to control, in furtherance of justice, the conduct of its ministerial officers. This permits the Court to issue an order that disqualifies an attorney from representing a party. (Henriksen v. Great Am. Sav. & Loan (1992) 11 Cal.App.4th 109, 113.) In exercising its discretion to disqualify an attorney, the Court is required to make a reasoned judgment which complies with the legal principles and policies applicable to the issue at hand. (Id.)
Motions to disqualify counsel present competing policy considerations. ( Zador Corp. v. Kwan (1995) 31 Cal.App.4th 1285, 1302.) On the one hand, a Court must not hesitate to disqualify an attorney when it is satisfactorily established that the attorney wrongfully acquired an unfair advantage that undermines the integrity of the judicial process and will have a continuing effect on the proceedings before the Court. (Id .) On the other hand, it must be kept in mind that disqualification usually imposes a substantial hardship on the disqualified attorney’s innocent client, who must bear the monetary and other costs of finding a replacement. (Id.) This policy consideration is particularly important because it is widely understood that attorneys now commonly use disqualification motions for purely strategic purposes, e.g., to delay the litigation or to intimidate an adversary into accepting settlement on terms that would not otherwise be acceptable. (Id.)
California Rules of Professional Code (“CRPC”), Rule 1.9 states in relevant part:
(a) A lawyer who has formerly represented a client in a matter shall not thereafter represent another person* in the same or a substantially related matter in which that person’s* interests are materially adverse to the interests of the former client unless the former client gives informed written consent.*
(b) A lawyer shall not knowingly* represent a person* in the same or a substantially related matter in which a firm* with which the lawyer formerly was associated had previously represented a client
(1) whose interests are materially adverse to that person;* and
(2) about whom the lawyer had acquired information protected by Business and Professions Code section 6068, subdivision (e) and rules 1.6 and 1.9(c) that is material to the matter;
unless the former client gives informed written consent.*
(CRPC, Rule 1.9.)
DISCUSSION
Ms. Kakoian moves to disqualify JT Legal Group, APC from representing Plaintiff/Cross-Defendant Ambarachyan and Cross-Defendants Arpi Nazarian, Escrow on Brand, Inc., and National Properties Inc. At issues is an Authorization Form signed by Ms. Kakoian that Ambarachyan served on December 23, 2019, in response to Ms. Kakoian’s Demand for Production of Documents. (J. Kakoian Decl., ¶¶2-4, Ex. 1 [Authorization Form].)
The Authorization Form expressed that on January 26, 2015, Ms. Kakoian granted JT Legal Group, APC (now counsel for Ambarachyan and other Cross-Defendants) her signed authorization to negotiate and correspond with mortgage companies, Capital Benefit Bank and Chase Bank. (Id., ¶3, Ex. 1 [Authorization Form].) The Authorization Form stated:
I/WE hereby authorize JT LEGAL GROUP, APC, its associates, agents, or representatives, to act as my representative in negotiations and correspondence with my mortgage company or mortgage servicer listed above, and all other liens and judgments on the subject property listed above, and all Homeowner’s Association and Property Management Companies. This will include but is not limited to presenting and/or requesting any and all information pertaining to my loan above, including, but not limited to all payment records, loan documents, disclosures, records, life of loan history, letters of explanation and any other asset balances to help process a loan workout/modification, forensic loan audit or real estate transaction audit. The information “JT LEGAL GROUP” obtains is only to be used in the processing of my loan workout/modification and/or forensic loan document review.
(Authorization Form.)
Jack Kakoian (counsel for. Ms. Kakoian) states that the time period and Capital Benefit Bank are exactly the same as the bank and loan alleged in Ms. Kakoian’s cross-complaint. (J. Kakoian Decl., ¶4.) Mr. Kakoian states that in May 2020, he attempted to meet and confer with David Martin of JT Legal Group, APC to understand why opposing counsel had the Authorization Form, and how it was still opposing counsel in this matter while being privy to confidential information it may and/or could have obtained from using the Authorization Form. (Id., ¶¶6-7, Ex. 2 [5/7/20 Letter].) Mr. Martin responded that it somehow appeared in the escrow file and stated: “[a]s best I can piece together this is another element of the clandestine operations with Reta (note the two different handwriting). In any event, I certainly intend to ask your client about it, and although it should have been produced in the initial production, I wanted to ensure it had been and also bring it to your attention.” ( Id., ¶7, Ex. 3 [5/18/20 Email].) Mr. Kakoian states that Mr. Martin did not question Ms. Kakoian about the Authorization Form during her 8-hour deposition. (Id., ¶¶8-10.) Mr. Kakoian met and conferred with Mr. Martin in June 2020 via telephone, but Mr. Martin maintained his position that the document was fake and likely created by the Escrow Office Reta Narkaz. (Id., ¶11; Ex. 4 [6/22/20 Letter]; Ex. 5 [6/23/20 Email].)
In opposition, Plaintiff and Cross-Defendants provide the declaration of Mr. Martin. Mr. Martin states, under the penalty of perjury, that he has repeatedly confirmed that he knew nothing about the Authorization Form and that the document was never used by anyone for any purpose. (Martin Decl., ¶¶7, 10.) He also states that Ms. Kakoian has testified that many of the signatures on loan-related documents were not hers. (Id., ¶¶6, 8.) Mr. Martin states that the Authorization Form was voluntarily provided to Ms. Kakoian in December 2019, but Ms. Kakoian and her counsel held onto the document for months without taking action and would only occasionally ask about the document’s origin. (Id., ¶9.)
Plaintiff and Cross-Defendants argue that there was no attorney-client relationship between Ms. Kakoian and JT Legal Group and thus there are no grounds for disqualifying counsel. They argue that Ms. Kakoian has not provided any evidence in support of her motion showing that she signed the document or that the document was in fact used during her loan transactions.
In reply, Ms. Kakoian provides her declaration. She states that she recalls meeting 5 or 6 law firms in 2015 to look for assistance with her property. (M. Kakoian Decl., ¶2.) She states that after signing for the Penway loan on February 6, 2020 and not receiving funds, she contacted the FBI on May 20, 2020 and made a statement. (Id., ¶3.) She states that after she contacted the FBI, she informed Reta Narkaz (escrow officer; Plaintiff’s employee at Escrow on Brand), and the next day Escrow on Brand forwarded the reconveyance for the Penway Note to Stewart Title for recording. (Id., ¶4.) Most significantly, she states that “I do not recall meeting with or hiring a Law Firm called JT Legal Group APC in January 2015.” (Id., ¶2.)
Based on Ms. Kakoian’s own testimony, she does not recall a relationship of any significance with JT Legal Group. Whatever the disputed documents represent, they do not prove an attorney-client relationship of significance enough for a motion for disqualification.
CONCLUSION AND ORDER
The motion to disqualify counsel JT Legal Group APC is denied.
Ms. Kakoian shall provide notice of this order.