Hartford Casualty Insurance Company v. American Dairy and Food Consulting Laboratories, Inc., No. 1:2009cv00914 - Document 87 (E.D. Cal. 2010)
Court Description: MEMORANDUM DECISION Regarding Plaintiff's Motion For Reconsideration 75 , signed by Judge Oliver W. Wanger on 9/27/2010. (Gaumnitz, R)
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Hartford Casualty Insurance Company v. American Dairy and Food Consulting Laboratories, Inc. Doc. 87 1 2 3 4 UNITED STATES DISTRICT COURT 5 EASTERN DISTRICT OF CALIFORNIA 6 7 8 9 1:09-cv-0914-OWW-SKO HARTFORD CASUALTY INSURANCE COMPANY, Plaintiff, MEMORANDUM DECISION REGARDING PLAINTIFF’S MOTION FOR RECONSIDERATION (Doc. 75) 10 v. 11 12 13 AMERICAN DAIRY AND FOOD CONSULTING LABORATORIES, INC., Defendants. 14 15 I. 16 17 18 Plaintiff Hartford Casualty Insurance Company (“Plaintiff”) proceeds with an action for declaratory judgment against American Dairy and Food Consulting Laboratories, Inc., (“Defendant”). 19 20 21 22 23 On December 11, 2009, Plaintiff filed a motion to disqualify Defendant’s counsel, James Wilkins (“Wilkins”), on the grounds that Wilkins previously represented Plaintiff and is therefor prohibited by California’s Rules of Professional Conduct from representing Defendant. 24 25 26 27 INTRODUCTION. (Doc. 21). Defendant filed opposition to Plaintiff’s motion to disqualify Wilkins on February 19, 2010. on April 12, 2010. (Doc. 30). Plaintiff filed a reply (Doc. 46). /// 28 1 Dockets.Justia.com 1 The Magistrate Judge conducted a hearing on Plaintiff’s motion 2 to disqualify on June 4, 2010. 3 parties were served with the Magistrate Judge’s order denying 4 Plaintiff’s motion. 5 (Doc. 57). On June 17, 2010, the (Doc. 60). Plaintiff filed the instant motion for reconsideration of the 6 Magistrate Judge’s order on June 1, 2010. 7 filed opposition to Plaintiff’s motion for reconsideration on July 8 12, 2010. 9 opposition on September 13, 2010. (Doc. 82). 10 II. FACTUAL BACKGROUND 11 (Doc. 80). (Doc. 75). Defendant Plaintiff filed a reply to Defendant’s A. Plaintiff’s Claim for Declaratory Relief 12 In March 2007, Defendant acquired properties located at 240 13 State Highway 140 and 220 Third Street in Gustine, California 14 (“Property”). (Complaint at 2). Defendant applied for a policy of 15 insurance with Plaintiff on or about May, 2007. 16 Effective May 23, 2007 through May 23, 2008, Defendant was the 17 named 18 (Complaint 19 physical 20 conditions, limitations, and exclusions. (Complaint at 2). At the 21 time Plaintiff issued the Policy to Defendant, Plaintiff was 22 informed and believed, based on express and implied representations 23 made by Defendant, that the Property was actively used by Defendant 24 for the manufacturing and processing of dairy products. (Complaint 25 at 2). insured on at 2). loss to a policy The the (“Policy”) Policy insured Property, (Complaint at 2). issued by Defendants subject to Plaintiff. for direct various terms, 26 On or about May 28, 2009, Defendant filed a claim with 27 Plaintiff for a vandalism and theft loss that occurred at the 28 Property on May 14, 2008 (“Claim”). 2 (Complaint at 2). Plaintiff 1 conducted an investigation of the Claim under a full reservation of 2 rights. 3 (Complaint at 2). According to the complaint, after taking the depositions of 4 several of Defendant’s officers, Plaintiff learned that the 5 Property was never operated or otherwise occupied by Defendant. 6 (Complaint at 3). 7 occurred on May 14, 2008 based on a vacancy provision within the 8 Policy (Complaint at 4-5). Plaintiff denied coverage for the loss that 9 The complaint seeks a declaration that (1) the Policy does not 10 cover Defendant’s claim due to the vacancy exclusion provided in 11 the Policy; and (2) Plaintiff may rescind the policy based on 12 material misrepresentations Defendant made intentionally in the 13 application for the policy and in presenting the Claim. 14 B. Defendant’s Counter-Claim 15 Defendant asserts a counter-claim alleging breach of contract, 16 breach of the implied covenant of good faith and fair dealing, 17 negligent misrepresentation, fraud, and reformation. 18 contends it relied on the expertise of Plaintiff’s authorized and 19 appointed agents Renaissance Insurance Group, LLC (“Renaissance”) 20 and J. Helzer (“Helzer”) in obtaining the Policy. 21 Defendant alleges that Helzer and Renaissance understood the nature 22 and extent of Defendant’s operations at the Property. 23 3). Defendant states that Helzer assured Defendant that the policy 24 he was procuring would provide immediate, full, and complete 25 coverage of the Property notwithstanding the fact that actual 26 operations at the Property would be delayed for a period of months 27 pending efforts to obtain necessary permits and completion of 28 renovation efforts. (Doc. 23 at 3). 3 Defendant (Doc. 23 at 2). (Doc. 23 at Defendant also contends that 1 on April 9, 2009, Plaintiff conducted an inspection of the Property 2 and raised no potential coverage problems based on the condition of 3 the Property. (Doc. 23 at 6). 4 and relied on Plaintiff to raise any coverage concerns based on the 5 April 9 inspection. Defendant alleges that it expected (Doc. 23 at 6.). 6 On April 21, 2008, Plaintiff gave Defendant notice that a 7 renewal policy would be canceled effective July 12, 2008 due to the 8 fact that the Property was vacant. 9 not suggest that the vacancy issue would in any way impair or 10 impact the coverage that would be in effect on the Property through 11 July 12, 2008. 12 Property would be fully insured through July 12, 2008. 13 C. Wilkins’ Past Representation of Plaintiff (Doc. 23 at 7). (Doc. 23 at 7). The notice did Helzer assured Defendant that the 14 From 1985 to 1995, while employed at the law firm McCormick, 15 Barstow, Sheppard, Wayte, & Carruth LLP (“McCormick”), Wilkins 16 provided 17 directly involved in handling legal matters for Plaintiff and 18 directly communicated with Plaintiff’s personnel. (Shingleton Dec. 19 at 20 approximately twenty cases. 18). legal services Wilkins to provided Plaintiff. legal By services 1988, to Wilkins Plaintiff was in 21 Plaintiff’s motion to disqualify Wilkins identifies four cases 22 which Plaintiff contends are substantially similar to the instant 23 action between Plaintiff and Defendant. In connection with a claim 24 referenced by Plaintiff as the “‘087” claim, Wilkins provided an 25 opinion to Plaintiff regarding Plaintiff’s liability under an 26 insurance policy for acts of theft and/or vandalism to an insured’s 27 agricultural equipment. 28 with the adjuster assigned to the ‘087 claim regarding witness Wilkins reviewed Plaintiff’s file, spoke 4 1 statements, and spoke with the insurance agent regarding the 2 insurance contract. 3 involved in Plaintiff’s investigation into the ‘087 claim. Plaintiff avers that Wilkins was actively 4 Wilkins provided advice concerning an insured’s claim for 5 vandalism perpetrated on a radio tower in a claim referenced by 6 Plaintiff as the “‘435 claim”. 7 whether payment should have been made to the named insured, who 8 leased the damaged equipment, or the lessor, who was named as a 9 loss payee.” 10 “At issue in the ‘435 claim was (Motion to Disqualify at 6). Wilkins defended Plaintiff in an action referred to by 11 Plaintiff as “the Brown and Bryant Action” (“Brown Action”). 12 issue in the Brown Action was an insured’s claim that Plaintiff 13 misrepresented pertinent policy provisions, unreasonably delayed 14 action 15 investigation of the claim. 16 action referred to by Plaintiff as the “Duarte Action,” which 17 entailed an insured’s claim that Plaintiff failed to provide a 18 reasonable explanation of the basis of its actions. 19 contends that both the Brown and Duarte Actions involved claims of 20 bad faith. 21 on the insured’s claim, and conducted an At improper Wilkins also defended Plaintiff in an Plaintiff III. LEGAL STANDARD 22 A party may object to a magistrate judge's order within 23 fourteen days of being served with a copy of the order. Fed. R. 24 Civ. P. 72(a); E.D. Cal. Local R. 303(b) (stating that a magistrate 25 judge's order becomes final fourteen days after issuance). 26 district court reviews a motion to reconsider a magistrate judge's 27 ruling under the "clearly erroneous or contrary to law" standard 28 set forth in 28 U.S.C. § 636(b)(1)(A) and Federal Rule of Civil 5 A 1 Procedure 72(a). Under this standard of review, a magistrate's 2 order erroneous 3 evidence, the district court is left with the definite and firm 4 conviction that a mistake has been committed, and the order is 5 contrary to law when it fails to apply or misapplies relevant 6 statutes, case law or rules of procedure. 7 Napa Valley Unif. Sch. Dist., 496 F.3d 932, 943 (9th Cir. 2007). 8 "The reviewing court may not simply substitute its judgment for 9 that of the deciding court." Grimes v. City & County of S.F., 951 10 is clearly after considering all of the R.B., ex. rel. F.B. v. F.2d 236, 241 (9th Cir. 1991). IV. DISCUSSION 11 12 if, A. Governing Law 13 Rule 3-310 (E) of the Rules of Professional Conduct of the 14 State Bar of California prohibits the successive representation of 15 clients in certain circumstances without the informed written 16 consent 17 provides: 18 19 20 of the current client and former client. The rule 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. 21 Pursuant to Rule 3-310(E), “[w]here an attorney successively 22 represents clients with adverse interests, and where the subjects 23 of the two representations are substantially related, the need to 24 protect the first client’s confidential information requires that 25 the attorney be disqualified from the second representation.” E.g. 26 People ex rel. Dep’t of Corps. v. SpeeDee Oil Change Sys., Inc., 20 27 Cal. 4th 1135, 1145 (1999). 28 6 1 Whether an attorney should be disqualified in a successive 2 representation case turns on two variables: (1) the relationship 3 between the legal problem involved in the former representation and 4 the legal problem 5 the relationship between the attorney and the former client with 6 respect to the legal problem involved in the former representation. 7 Jessen v. Hartford Casualty Ins. Co., 111 Cal. App. 4th 698, 709 8 (Cal. Ct. App. 2003). 9 and the former client was direct, it is presumed that confidential involved in the current representation, and (2) Where the relationship between the attorney 10 information has passed to the attorney.1 11 may not delve into the specifics of the communications between the 12 attorney and the former client in an effort to show that the 13 attorney did or did not receive confidential information during the 14 course of that relationship. Id. Id. A reviewing court 15 Disqualification depends upon the strength of the similarities 16 between the legal problem involved in the former representation and 17 the legal problem involved in the current representation. Id. The 18 governing test requires that the party moving for disqualification 19 demonstrate a “substantial relationship” between the subjects of 20 the antecedent and current representations. 21 145 Cal. App. 4th 592, 604 (Cal. Ct. App. 2006). 22 representations 23 before 24 information material to the evaluation, prosecution, settlement or 25 accomplishment of the former representation given its factual and the are trial “substantially court supports E.g. Faughn v. Perez, related” a when rational Successive the evidence conclusion that 26 27 1 28 There is no dispute that the relationship between Wilkins and Plaintiff was direct. 7 1 legal issues is also material to the evaluation, prosecution, 2 settlement or accomplishment of the current representation given 3 its factual and legal issues. 4 4th at 713). 5 is essentially the same as the formulation found in section 132 of 6 the Restatement Third of the Law Governing Lawyers, which provides 7 that the present representation will be considered “substantially 8 related” to the prior representation if there is a substantial risk 9 that the Id. (quoting Jessen, 111 Cal. App. California’s definition of “substantially related” present representation will involve the use of 10 confidential information acquired in the course of the prior 11 representation. Id. at 605 (citation omitted). 12 The burden is on the party seeking the disqualification to 13 establish by a preponderance of the evidence that a substantial 14 relationship exists. See H.F. Ahmanson & Co. v. Salomon Bros., 229 15 Cal. App. 3d 1445, 1452 (9th Cir. 1991); see also In re Charlisse 16 C., 45 Cal. 4th 145, 166 n.11 (2008). 17 not disclose confidential information in order to satisfy its 18 burden, evidence that “could be disclosed without defeating the 19 purpose of protecting confidential information” must be presented 20 where it is required to permit the court to determine the existence 21 of a substantial relationship between past representation and the 22 litigation before the court. 23 607. 24 B. Plaintiff’s Claims of Error 25 Although a moving party need See Faughn, 145 Cal. App. 4th at 1. The Magistrate Judge’s Factual Determination Regarding Whether the ‘087 Claim Entailed a Recision Issue 26 27 28 Plaintiff contends that the Magistrate Judge erroneously concluded that recision was not at issue in the ‘087 claim. 8 The 1 motion for reconsideration avers: 2 [T]he Magistrate Judge erroneously concluded that [rescission] was not “at issue in . . . the ’087 Claim[.]” The Magistrate Judge’s conclusion is clearly erroneous. Undisputed evidence in Hartford Casualty’s papers showed that one of the issues in the ’087 Claim was whether Hartford could rescind the policy. Motion to Disqualify, at pp. 5:26-28, 17:11-13, 31:7-9; Reply to Motion to Disqualify, at p. 5:15-16. Hartford Casualty did not use the term “rescind” because it characterized the issue as whether Hartford Casualty would be “bound” (i.e., unable to rescind) by an insurance agent’s factual misrepresentations in an insurance application. Id. Accordingly, Hartford established that rescission based on misrepresentations in an application was at issue in the ’087 Claim. 3 4 5 6 7 8 9 10 (Motion to Reconsider at 3) (emphasis added). 11 Plaintiff concedes that it did not identify recision as an 12 issue in the ‘087 in the motion to disqualify. (Id.). Contrary to 13 Plaintiff’s assertion, the issue of whether an insurer is “bound” 14 by the representations of an insurance agent is not necessarily the 15 same as the issue of whether the insurer is entitled to recision. 16 For example, an insurer would not be “bound” by the representations 17 of an insurance agent who lacked actual or apparent authority; in 18 such an instance, no contract is formed with the principal insurer, 19 and the legal concept of recision is irrelevant. 20 California Indemnity Ins. Premium Finance Co. v. Fireman’s Fund 21 Ins. Co., 40 Cal. App. 4th 1633, 1638 (Cal. Ct. App. 1995) (“a 22 signature on behalf of another person would require authorization 23 by the party who is purportedly being bound, in order to create a 24 valid legal obligation”). 25 identify recision as an issue in the ‘087 claim in it’s motion to 26 disqualify, the Magistrate Judge’s finding that recision was not at 27 issue in the ‘087 claim is not clearly erroneous. 28 /// See, e.g., In light of Plaintiff’s failure to 9 1 Further, because California law provides for recision in a 2 wide range of circumstances, simply stating that recision was at 3 issue in the ‘087 claim is not sufficient to establish substantial 4 similarity between the ‘087 claim and the instant action in any 5 event. See CAL . CIV . CODE § 1689 (setting forth grounds for recision 6 for wide range of issues including failure of consideration, fraud, 7 unlawfulness, and public interest). 8 specifically identify recision as an issue in the ‘087 action, 9 Plaintiff also failed to provide sufficient factual information to 10 establish that the purported recision claim at issue in the ‘087 11 claim was substantially related to the recision claim at issue 12 between Plaintiff and Defendant. Accordingly, the Magistrate Judge 13 did not err in making the factual determination that the ‘087 14 action did not implicate the type of recision issue raised in this 15 case. 16 from which the Magistrate Judge could infer that, due to the 17 similarities between ‘087 claim and this case, Wilkins should be 18 presumed to have received confidential information related to the 19 instant action. In addition to failing to Plaintiff failed to meet its burden of presenting evidence 2. The Magistrate Judge’s Alleged Failure to Consider Similarities between the ‘087 Claim and the Instant Action 20 21 22 Plaintiff contends that the Magistrate Judge failed to 23 consider the following alleged similarities between the ‘087 claim 24 and the instant action: whether an insurance agent’s knowledge is 25 imputed to Hartford Casualty; whether Hartford Casualty is bound by 26 an insurance agent’s alleged misrepresentation regarding the scope 27 of 28 allegedly is inconsistent with the policy’s terms prevents Hartford coverage; whether Hartford Casualty’s 10 prior conduct that 1 Casualty from relying on the written terms of the policy; and 2 whether the insured may reform the policy based upon the insured’s 3 unilateral mistake. 4 contends that “[t]he Magistrate Judge’s failure to consider these 5 additional legal issues is contrary to law.” 6 are garden variety issues of fact and law raised by any recision 7 claim based on unilateral mistake and do not implicate any special 8 knowledge. (Motion for Reconsideration at 4). Plaintiff (Id. at 5).2 These 9 A review of the Magistrate Judge’s order reveals that she 10 considered the legal similarities between the ‘087 claim and the 11 instant action: 12 Hartford explains that the similarities between the '087 and '435 claims (with loss dates in 1989) and this case include the fact that those claims arose from events relating to “property damage caused by theft/vandalism.” (Pl.’s Mot. at 17, 20.)...Hartford asserts that the prior matters and the present matter involved an analysis of issues relating to imputation of the agent’s knowledge to the insurance company, the insurer’s potential liability for the agent’s misrepresentations, estoppel and waiver issues arising from an insurer’s allegedly inconsistent conduct, and issues relating to reformation based on the insured’s unilateral mistake. 13 14 15 16 17 18 19 (Order Denying Plaintiff’s Motion at 6). 20 the Magistrate Judge’s decision recognized alleged similarities of 21 fact and law between the ‘087 claim and the instant action but 22 complains that “the June 17, 2010 Order includes no analysis of 23 these legal issues in the context of the substantial relationship 24 test.” 25 Magistrate (Motion to Reconsider at 4). Judge’s analysis Plaintiff concedes that Plaintiff is incorrect. acknowledged general The similarities 26 27 28 2 Although Plaintiff advances this argument under the section of its brief pertaining to the Magistrate Judge’s alleged erroneous factual determinations, Plaintiff’s argument in this section is in fact a claim of legal error. 11 1 between the ‘087 action and the instant case: 2 [W]hile the prior coverage opinion work Mr. Wilkins performed in relation to the '087 and '435 matters and the work performed in the current litigation may involve general issues related to the insurer’s liability, that does not make the former and the current representations legally similar. Although the '087 and '435 coverage matters involved claims for property damage due to theft/vandalism, the issues in the present case involve determinations whether the vacancy limitation applies to preclude coverage, which was not at issue in either the '087 or '435 claims, and whether Hartford is entitled to rescind the policy on the basis of its insured’s alleged misrepresentations at the time of the purchase of the policy, which does not appear to have been at issue in either the '087 or '435 matters... 3 4 5 6 7 8 9 10 General legal issues about the scope of coverage and the mutual understanding of the parties regarding the terms of the policy will be at issue in virtually every insurance claim dispute. In fact, such issues will be encountered in nearly every contract dispute. That generality does not, ipso facto, mean all insurance coverage cases are substantially related. Given the factual and legal differences between the '087 and '435 matters and the present. 11 12 13 14 15 (Order Denying Plaintiff’s Motion at 7-8). Although the Magistrate 16 Judge’s order does not include detailed analysis of each of the 17 alleged similarities between the ‘087 claim and the instant action, 18 the order does contain reasoned analysis of the critical 19 differences between the ‘087 claim and the Plaintiff’s claims 20 against Defendant. It is clear that the Magistrate Judge fully 21 considered the general similarities identified by Plaintiff. 22 Accordingly, Plaintiff’s contention that the Magistrate Judge 23 committed legal error by failing to consider the similarities 24 between the ‘087 claim and the instant action lacks merit. 25 26 3. The Magistrate Judge’s Conclusion that Plaintiff’s Policies and Procedure’s have changed 27 Plaintiff contends that the Magistrate Judge’s analysis is 28 12 1 contrary to California law because the Magistrate Judge “denied 2 Hartford Casualty’s Motion to Disqualify because Hartford Casualty 3 did not compare its present policies and procedures to the policies 4 and procedures that were in place while Mr. Wilkins represented 5 Hartford Casualty.” (Motion to Reconsider at 6-7). Plaintiff notes 6 that “when adjudicating motions to disqualify, courts should not 7 consider the confidential information obtained by counsel during 8 prior representation.” 9 (Id. at 6) (citations omitted). Plaintiff’s argument reflects a misunderstanding of both the 10 Magistrate Judge’s analysis and of California law. 11 Judge did not deny Plaintiff’s motion because Plaintiff failed to 12 “delve into the specifics of the communications between the 13 attorney and the former client.” 14 (citation omitted). Rather, the Magistrate Judge found that 15 Plaintiff meet 16 relationship test, a burden that does not require a client to 17 disclose confidential information. 18 Disqualify at 6). 19 Plaintiff’s motion, the Magistrate Judge correctly noted that 20 “there is no evidence that Hartford’s practices and procedures from 21 1985 to 1992, or even 1995, were in place when Hartford denied 22 American Dairy’s claim in 2009.” (Id. at 12). 23 Plaintiff’s whether 24 policies and practices have changed does not require comparison of 25 the substance of any Plaintiff’s past policies to its current 26 policies; a competent declaration containing general statements may 27 suffice. See Faughn, 145 Cal. App. 4th at 607-09 (discussing types 28 of evidence which could be presented without divulging confidential failed to its The Magistrate (Motion to Reconsider at 8) burden under the substantial (See Order Denying Motion to In explaining the evidentiary deficiencies of assertion, determining 13 or not Contrary to Plaintiff’s 1 information).3 2 Plaintiff could have presented evidence within its control 3 “without defeating 4 information” in order to satisfy the evidentiary burden identified 5 by the Magistrate Judge to show substantive similarities of alleged 6 confidential information about polices and practices. 7 145 Cal. App. 4th at 607. 8 reveal the substance of any of Plaintiff’s policies, practices, or 9 communications during Wilkin’s representation, Plaintiff could at a the of protecting confidential See Faughn, Although Plaintiff did not have to 10 have, 11 Plaintiff’s current policies and practices are similar in material 12 respects to the policies to which Wilkins was privy during his 13 representation and could have disclosed in camera the confidential 14 information which remains unidentified. See id. at 608 (failure of 15 moving party to submit declarations containing general allegations 16 that policies relevant to attorney’s previous representation of 17 client 18 representation rendered motion deficient). 19 analysis in Faugh is instructive: would minimum, purpose be provided relevant and a declaration material to describing current how adverse The Court of Appeal’s 20 The declarations submitted do not state that the “Defense Counsel Procedures” referenced in the Hale and VanKoll letters are the procedures that will be applied to plaintiffs' case. Thus, we have no direct evidence helpful in determining if the procedures and practices used in the prior matters involving Attorney Silberberg overlap (in whole or in part) with the procedures and practices that will be used in plaintiffs' case. Further, even assuming that the same “Defense Counsel Procedures” referenced in VanKoll's letter will be used, the record 21 22 23 24 25 26 3 27 28 Depending on the facts contained in such a declaration, a conclusory assertion of material similarity may not be sufficient. In Faugh, the Court of Appeal noted the propriety of conducting an in camera review of confidential information. Id. at 602 . 14 1 does not show that the information contained in that document is material to the present litigation in a way that gives plaintiffs an advantage. The document may refer only to matters that are obvious or mundane. Indeed, Bakersfield Memorial Hospital has not specifically argued that the documents are material to the present litigation. 2 3 4 5 Id. at 608-609. The Faugh Court’s analysis also reveals that 6 merely alleging similarity between legal issues implicated in past 7 and present cases is insufficient to satisfy a moving party’s 8 burden: 9 Bakersfield Memorial Hospital also contends that plaintiffs' action is substantially related to the prior representations because the prior matters [like the current action, also] involved claims of negligence in connection with the delivery of an infant and the prior cases concerned allegations of nursing negligence... 10 11 12 13 This contention is not supported with evidence establishing that the training, practices, or procedures relevant to the care given at the facilities sued in the prior cases is the same as or similar to the training, practices, or procedures relevant to the care given by Bakersfield Memorial Hospital. Again, without evidence on this point, any finding by this court that the relationship exists would have to be based on inference. Without evidence to connect the care given at Bakersfield Memorial Hospital to that involved in the prior cases, we are unwilling to infer it exists, particularly because evidence establishing that connection would not have been difficult for Bakersfield Memorial Hospital to present and would not have disclosed confidential information. 14 15 16 17 18 19 20 21 Id. at 609. Here, Plaintiff failed to produce any evidence which 22 indicates that the insurance policies Wilkins advised Plaintiff on 23 are similar to the insurance policy at issue in this action;4 such 24 evidence could have been produced without revealing any 25 4 27 In fact, the only evidence on the record regarding this point is to the contrary. (See Order Denying Plaintiff’s Motion to Disqualify at 1011)(discussing Plaintiff’s concession that insurance policies are based on existing statutory and decisional law in place at the time the policy is 28 rendered). 26 15 1 confidential attorney-client information. 2 As Faugh makes clear, Plaintiff’s constrained view of its 3 evidentiary burden is erroneous. The Magistrate Judge correctly 4 applied California law, which requires the moving party to present 5 competent evidence in support of a motion to disqualify counsel. 6 See id. 7 Plaintiff also contends that the evidence does not support the 8 Magistrate Judge’s finding that Plaintiff’s policies and procedures 9 substantially changed in relevant 10 representation of Plaintiff ceased. 11 Plaintiff complains that: 12 part after Wilkins’ (Motion to Reconsider at 8). The only evidence before the Magistrate Judge regarding Hartford Casualty’s confidential information was in the form of a declaration provided by Mr. Wilkins....Notably, Mr. Wilkins did not state in his declaration that the 1997 “‘Best Practices’ claims manual” reflected policies and procedures substantially different than those in place when he represented Hartford Casualty. See Wilkins Decl. 13 14 15 16 17 (Id. at 8-9). Plaintiff’s contention fails for at least two 18 reasons. First, the Magistrate Judge’s conclusion that Plaintiff’s 19 policies and procedures have substantially changed since Wilkins 20 last 21 inferences drawn from the record. 22 Motion to Disqualify at 10-11)(discussing Plaintiff’s concession 23 that 24 decisional law in place at the time the policy is rendered). 25 importantly, even if the record did not contain sufficient evidence 26 to support the notion that Plaintiff’s policies and procedures are 27 substantially different now than they where during the 1980's and 28 1990's, the record is also devoid of evidence that Plaintiff’s represented insurance Plaintiff policies are in 1995 based on reasonable (See Order Denying Plaintiff’s based 16 is on existing statutory and More 1 current policies and procedures 2 policies and procedures Wilkins was privy to. 3 declarations Plaintiff submitted in support of its motion are dated 4 either 2002 or 2003 and thus cannot possibly bear any relevance to 5 the critical issue of whether Plaintiff’s current policies and 6 procedures 7 Wilkins’ representation. 8 threshold burden under the substantial relationship test, the 9 Magistrate (2008-2010) Judge did similar substantially to similar to In fact, each of the those in place during Because Plaintiff failed to carry its not err in inference procedures have that 11 substantially over time. 12 (court may draw inferences from conspicuous absence of supporting 13 evidence 14 confidential information). could and the Plaintiff’s that policies, drawing 10 15 practices, are are changed See Faugh, 145 Cal. App. 4th at 607 have been provided without revealing 4. Magistrate Judges Assessment of the Significance of the Passage of Time 16 17 Plaintiff represents that “the Magistrate Judge erroneously 18 concluded, contrary to California law, the passage of time may 19 eliminate 20 Reconsideration at 9) (quotation omitted). 21 is directly contrary to the Magistrate Judge’s express analysis. 22 (See Order Denying Motion to Disqualify at 10) (“Although time does 23 not overcome or rebut a substantial relationship once it arises, 24 Brand does not preclude the passage of time from factoring into the 25 determination whether a substantial relationship exists in the 26 first place”) (citing Brand v. 20th Century Insurance Co./21st 27 Century Insurance Co., 124 Cal. App. 4th 594 (2004)). Accordingly, 28 Plaintiff’s argument lacks merit as it misrepresents the Magistrate a prior substantial 17 relationship.” (Motion for Plaintiff’s contention 1 Judge’s finding. 5. Relationship Between Coverage Disputes and Bad Faith Litigation 2 3 4 Plaintiff’s final contention does not clearly identify any 5 specific error 6 Plaintiff merely restates arguments presented in its motion to 7 disqualify concerning the relationship between coverage disputes 8 and bad faith litigation. 9 It is hard to conceive that any California insurance coverage 10 attorney practicing in California since 1990 would not encounter a 11 bad faith claim in a wrongful denial of coverage case. 12 discussed above, Plaintiff failed to carry its burden under the 13 substantial relationship test because there is no evidence on the 14 record 15 procedures with those in place during Wilkins’ representation of 16 Plaintiff. linking committed by the Magistrate Judge. Instead, (Motion for Reconsideration at 10-11). Plaintiff’s current policies, practices, As and ORDER 17 18 For the reasons stated, Plaintiff’s motion for reconsideration 19 is DENIED. 20 IT IS SO ORDERED. 21 Dated: hkh80h September 27, 2010 /s/ Oliver W. Wanger UNITED STATES DISTRICT JUDGE 22 23 24 25 26 27 28 18
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