Securities and Exchange Commission v. James B Duncan et al, No. 2:2008cv01323 - Document 86 (C.D. Cal. 2008)

Court Description: ORDER GRANTING ATTORNEY PAUL RUNES'S MOTION TO WITHDRAW APPEARANCE FOR DEFENDANT MAURICE McLEOD by Judge Virginia A. Phillips, GRANTING MOTION of Paul Runes to Withdraw as Attorney 58 , Attorney Paul Runes terminated. (am)

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Securities and Exchange Commission v. James B Duncan et al Doc. 86 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 SECURITIES & EXCHANGE ) COMMISSION, ) 12 ) Plaintiff, ) 13 ) v. ) 14 ) JAMES B. DUNCAN; HENDRIX ) 15 M. MONTECASTRO; MAURICE ) E. MCLEOD; PACIFIC ) 16 WEALTH MANAGEMENT, LLC; ) STONEWOOD CONSULTING, ) 17 INC.; and TOTAL RETURN ) FUND, LLC; Defendants; ) 18 and CHRISTOPHER J. ) OETTING, dba OETTING ) 19 INDUSTRIES; ANTHONY M. ) CONTRERAS; and ) 20 BIOCYBERNAUT INSTITUTE, ) INC., Relief Defendants, ) 21 ) Defendants. ) 22 ________________________ ) Case No. CV 08-1323-VAP (OPx) [Motion filed on August 6, 2008] ORDER GRANTING ATTORNEY PAUL RUNES'S MOTION TO WITHDRAW APPEARANCE FOR DEFENDANT MAURICE McLEOD 23 Attorney Paul Runes's Motions for Permission to 24 Withdraw Appearance for Defendant Maurice McLeod came 25 before the Court for hearing on September 15, 2008. 26 After reviewing the Court's tentative ruling, counsel 27 for the parties submitted on the ruling without 28 argument. After reviewing and considering all papers Dockets.Justia.com 1 filed in support of the Motion, and in light of the lack 2 of Opposition to it, the Court GRANTS Runes's Motion to 3 Withdraw as counsel for Defendant Maurice McLeod. 4 I. BACKGROUND 5 6 A. Procedural History 7 The Securities and Exchange Commission (SEC) filed a 8 Complaint for Violation of the Federal Securities Laws 9 against several defendants, including Maurice McLeod, on 10 February 27, 2008. It came to this Court through a low- 11 number transfer on March 14, 2008. Attorney Paul Runes, 12 along with co-counsel Lewis Crouse (or perhaps 13 “Krouse”),1 represented defendant Maurice McLeod. 14 (Declaration of Paul Runes attached to Motion to 15 Withdraw “Runes Decl.” at ¶¶ 1-2). 16 17 The Court conducted a scheduling conference on July 18 28, 2008, at which it directed the SEC to file any 19 motion to disqualify McLeod's attorney within 30 days. 20 The SEC has not filed such a motion. 21 22 On August 6, 2008, Runes filed for permission to 23 withdraw from representation of defendant McLeod (Motion 24 25 1 The attorney’s name appears as “Lewis R. Crouse” below his signature on Maurice E. McLeod’s Consent to 26 Judgment of Permanent Injunction, filed August 25, 2008. 27 However, Runes has spelled the name “Krouse” throughout his request to withdraw and supporting documents. 28 “Crouse” is used here. 2 1 by Attorney Paul Runes for Permission to Withdraw 2 Appearance for Defendant Maurice McLeod “Mot.”). The 3 SEC filed a Statement of Non-Opposition on September 2, 4 2008 (“Statement”). Defendant McLeod has filed no 5 opposition or other response to the Motion. 6 7 B. Factual Background 8 The SEC alleges that defendants committed 9 securities fraud, including operating a Ponzi-like 10 scheme. (Complaint “Compl.” ¶¶ 3-4.) As stated above, 11 attorney Runes, along with attorney Crouse, have thus 12 far represented Defendant McLeod. 13 2). (Runes Decl. ¶¶ 1- Attorney Runes has also represented McLeod, as 14 well as Defendants Chris Oetting, Pacific Wealth 15 Management, LLC, and Total Return Fund, LLC, in a 16 related California Superior Court case. (Runes Decl. ¶ 17 1; Joint Report on Fed. R. Civ. P. 26(f) Conference 7 18 “Jt. Rep.”) 19 20 The retainer agreement between Runes and McLeod 21 requires Runes to withdraw from the representation if 22 the SEC entered into communications with Defendant 23 McLeod regarding settlement. (Runes Decl. ¶ 2.) At 24 that point, “Lewis Krouse” was to represent McLeod. 25 (Runes Decl. ¶ 2.) Runes states that settlement 26 discussions have begun. (Runes Decl. ¶¶ 3-4.) 27 28 3 1 Accordingly, Runes now seeks to withdraw from 2 representation of McLeod. 3 4 The SEC does not oppose the motion to withdraw 5 (Statement para. 1.), but notes that it does not 6 endorse or adopt Runes’s suggestion that his withdrawal 7 will eliminate all conflicts of interest. (Statement 8 para. 1.) 9 II. LEGAL STANDARD 10 Rule 83-2.9.2.1 of the Local Civil Rules, Central 11 District of California, requires that an attorney 12 representing an individual to seek leave of the court 13 to withdraw as counsel. Local R. 83-2.9.2.1. The 14 California Rules of Professional Conduct permit 15 permissive withdrawal where “continued employment will 16 result in violation of these rules.” Cal. R. Prof. 17 Conduct 3-700(B)(2). Representation of clients with 18 conflicting interests can lead to a violation of the 19 California Rules. See Cal. R. Prof. Conduct 3- 20 310(C)(1) (attorneys “shall not, without the informed 21 written consent of each client: Accept representation 22 of more than one client in a matter in which the 23 interests of the clients potentially conflict . . .”) 24 25 III. DISCUSSION Attorney Runes represents McLeod in this action and 26 several defendants in a related state court case. 27 (Runes Decl. ¶¶ 1-2; Jt. Rep. 7). 28 4 The SEC has begun 1 settlement discussions with McLeod. (Id. at ¶¶ 3-4.) 2 Representation of more than one party during settlement 3 discussions could lead to a conflict of interest that 4 violates the California Rules of Professional Conduct. 5 See Cal. R. Prof. Conduct 3-310(C)(1). Although Runes 6 does not explain how continued representation will or 7 may constitute a conflict of interest, as the SEC 8 points out, Runes may be forced “to cross examine his 9 current clients . . . as well as his former clients. . 10 . .” (Jt. Rep. 8.) Permission to withdraw is 11 therefore consistent with the California Rules of 12 Professional Conduct. 13 14 According to Runes's representations to the Court, 15 withdrawal in this situation also is consistent with 16 the retainer agreement between Runes and McLeod. 17 ((Runes Decl. ¶ 2) Runes has sought stipulation of co18 counsel Crouse and Defendant McLeod for his withdrawal 19 as counsel of record but has not yet received their 20 signatures. (Runes Decl. ¶ 6, Ex. A.) Both Crouse and 21 McLeod have been served with this motion and have not 22 objected to it. Runes Decl. Ex. A. Runes’s withdrawal 23 is therefore consistent with his retainer agreement 24 with his client and does not leave Defendant McLeod 25 unrepresented. 26 /// 27 /// 28 5 1 2 IV. CONCLUSION For the reasons set forth above, the Motion is 3 GRANTED. 4 5 6 7 Dated: September 17, 2008 8 VIRGINIA A. PHILLIPS United States District Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6

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