Superior Court of California

County of Los Angeles

Department 26

 

147-151 W. 25TH ST., LLC,

 

Plaintiff,

v.

 

GRG COLLECTIVE, LLC, et al.,

 

Defendants.

 

Case No.:  19STCV07425

(Consolidated with 19STCV39298)

 

Hearing Date:  September 15, 2022

 

  [TENTATIVE] ORDER RE:

PLAINTIFF CJWORLD-LA, CHANG LEE AND ERIC LEE’S MOTION TO DISQUALIFY ALLISON B. MARGOLIN AND MOTION IN LIMINE TO EXCLUDE TESTIMONY OF ALLISON B. MARGOLIN

Procedural Background       

            On March 4, 2019, Plaintiff 147-151 W. 25th St., LLC (“25th Street LLC”) filed the 19STCV07425 action (“Lead Action”).  On December 16, 2019, 25th Street LLC filed the operative First Amended Complaint against Defendants Chang Lee (“Defendant”) and GRG Collective, LLC[1] asserting causes of action for (1) Breach of Written Contract, (2) Vandalism[2], [Violation of Penal Code § 594], (3) Intentional Misrepresentation, and (4) Declaratory Relief.

            On October 31, 2019, Plaintiffs CJWorld-LA (“CJWorld”), Chang Lee, and Eric Lee (collectively “CJWorld Parties”) filed the complaint in and initiated the 19STCV39298 action (“Related Action”).  On January 29, 2021, CJWorld, Chang Lee, and Eric Lee filed the operative Third Amended Complaint asserting claims against Defendants 25th St. LLC, Babak Aframian, Avi Aframian, Downtown Natural Caregivers, Inc., Lex W. Yoo[3]; Christopher James Giordano; Yun T. Kang; Charles Dunn Company, Inc.; William Christopher Steck; and Brent Yoonmoo Koo. The Third Amended Complaint in this action asserts thirteen causes of action for: (1) Fraud; (2) Negligence; (3) Breach of Written Contract; (4) Breach of the Covenant of Good Faith and Fair Dealing; (5) Breach of the Covenant of Quiet Enjoyment; (6) Wrongful Eviction; (7) Trespass to Chattels; (8) Intentional Interference with Contractual Relations; (9) Intentional Interference with Prospective Economic Relations; (10) Specific Performance; (11) Violation of the Unfair Competition Law; (12) Unjust Enrichment; and (13) Return of Security Deposit.[4]

            On December 16, 2019, Cross-Complainants 147-151 W. 25th St., LLC, Babak Aframian, and Avi Aframian (collectively “Landlords”) filed a cross-complaint in the related action against William Christopher Steck, Christopher James Giordano, Charles Dunn Company, Downtown Natural Caregivers, Inc. (“DNC”), Yun T. Kang (“Kang”), Brent Yoonmo Koo, Lex W. Yoo, and Sperry Commercial Global Affiliates.  The cross complaint alleged causes of action for (1) breach of written contract, (2) intentional misrepresentation, (3) fraud in the inducement, (4) professional negligence, (5) breach of fiduciary duty, (6) Violation of Civil Code § 2079.16 et seq., (7) breach of covenant of good faith and fair dealing, (8) implied indemnity, (9) comparative indemnity, (10) equitable indemnity, and (11) declaratory relief.

On October 9, 2020, the Court sustained cross-defendants DNC and Kang’s demurrer to and motion to strike the cross-complaint as to the eighth, ninth, and tenth causes of action without leave to amend and as to the second and eleventh causes of action with leave to amend.  (Order 10/9/20.)

On October 14, 2020, Landlords filed the operative First Amended Cross-Complaint (“FACC”) alleging the same causes of action[5] for (1) breach of written contract, (2) intentional misrepresentation, (3) fraud in the inducement, (4) professional negligence, (5) breach of fiduciary duty, (6) violation of Civil Code § 2079.16 et seq., (7) breach of covenant of good faith and fair dealing, (8) implied indemnity, (9) comparative indemnity, (10) equitable indemnity, and (11) declaratory relief.  Only the first, second, and eleventh causes of action are asserted against cross-defendants DNC and Kang.  On April 7, 2021, the Court sustained DNC and Kang’s demurrer to the second cause of action without leave to amend.  (Order 4/7/21.)

            On December 4, 2019, the Court deemed the cases related and designated 19STCV07425 to serve as the lead action.  (Minute Order 12/4/19.)  On June 1, 2021, the Lead Action and Related Action were consolidated for all purposes.  (Order 6/1/21.)  On June 2, 2022, Plaintiff Landlords dismissed Defendants Christopher James Giordano, Charles Dunn Company, Inc., and William Christopher Steck from their complaint in the lead action.  On June 2, 2022, Cross-Complainants Christopher James Giordano, Charles Dunn Company, Inc., and William Christopher Steck dismissed their cross-complaint filed on December 2, 2020.  On June 2, 2022, CJWorld Parties dismissed Christopher James Giordano from their complaint in the related action.  On June 3, 2022, CJWorld Parties dismissed Brent Koo from their complaint in the related action.

            On June 21, 2022, CJWorld Parties filed the instant motion to disqualify Allison B. Margolin and motion in limine to exclude testimony of Allison B. Margolin.  On August 1, 2022, Landlords filed an opposition.  On August 9, 2022, CJWorld Parties filed a reply.  On August 23, 2022, the Court advanced the instant hearing from November 2, 2022 to September 15, 2022.

Legal Standard

            “When an attorney obtains confidential information from a client, that attorney is prohibited from accepting a representation adverse to the client in a matter to which the confidential information would be material.”  (Kirk v. First American Title Ins. Co. (2010) 183 Cal.App.4th 776, 784.)

“Our Supreme Court has declared that ‘ “an attorney is forbidden to do either of two things after severing his relationship with a former client. He may not do anything which will injuriously affect his former client in any [matter] in which he formerly represented him nor may he at any time use against his former client knowledge or information acquired by virtue of the previous relationship.” … [T]he prohibition is in the disjunctive: [the attorney] may not use information or “do anything which will injuriously affect his former client.” ’ [Citations.]”  (Brand v. 20th Century Ins. Co./21st Century Ins. Co. (2004) 124 Cal.App.4th 594, 602.)

“Where an attorney successively represents clients with adverse interests, and where the subjects of the two representations are substantially related, the need to protect the first client’s confidential information requires that the attorney be disqualified from the second representation.”  (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999) 20 Cal.4th 1135, 1146.)  “[T]he question whether an attorney should be disqualified in a successive representation case turns on two variables: (1) the relationship between the legal problem involved in the former representation and the legal problem involved in the current representation, and (2) the relationship between the attorney and the former client with respect to the legal problem involved in the former representation.”  (Jessen v. Hartford Casualty Ins. Co. (2003) 111 Cal.App.4th 698, 709.)

Disqualification of an expert witness is warranted when the expert “‘possesses confidential attorney-client information materially related to the proceedings before the court.’”  (Western Digital Corp. v. Superior Court (1998) 60 Cal.App.4th 1471, 1487.)  Accordingly, when an attorney was “personally involved in providing legal advice and services to [a former client] in matters substantially related to the instant litigation, [the attorney] is barred from testifying as an expert witness against [the former client].”  (Brand, supra, 124 Cal.App.4th at p.599.)

Discussion

            By way of the instant motion, CJWorld Parties seek to disqualify Allison B. Margolin (“Margolin”) as an expert witness for Landlords and to exclude Margolin’s testimony.

On April 12, 2022, CJWorld Parties served a demand for exchange of expert witness information by electronic service.  (Sadat Decl. ¶ 3, Exh. B.)  On May 5, 2022, Landlords designated Margolin – an attorney – as an expert witness for trial.  (Sadat Decl. ¶ 4, Exh. C.)  The attached expert witness declaration states that Margolin has expertise in “Cannabis licensing and procedural issues, pertaining to various government-levels requirements and processes, for both medical and recreational;  ** Criminal defense and prosecution issues for cannabis-related offenses, violations, and non-licensure.”  (Sadat Decl. ¶ 4, Exh. C.)

            On June 7, 2022, Chang Lee learned that Margolin had been designated as an expert witness and informed CJWorld Parties’ Counsel that Chang Lee on behalf of the CJWorld Parties had met with Margolin in 2018 to obtain legal advice for CJWorld’s application for a commercial cannabis license.  (Sadat Decl. ¶ 8, Exh. G; Chang Lee Decl. ¶ 4.)

“[Chang Lee] was introduced to Allison Margolin in 2018 through Tino, the owner of The Hydro Source Hydroponics, located at 11760 Slauson Ave in Los Angeles. In or about November or December 2018, [Chang Lee] met with Ms. Margolin at her office for the purpose of obtaining legal advice. Ms. Margolin and [Chang Lee] were the only people present at the meeting. Specifically, CJ World and [Chang Lee] sought to retain Ms. Margolin to assist it us with licensing issues, including the situation with [their] then-landlord, 147-151 W. 25th St., LLC (‘25th Street LLC’). For approximately an hour, [Chang Lee] candidly discussed with Ms. Margolin CJ World’s licensing status, CJ World’s application to cultivate cannabis at 147-151 W. 25th St., 25th Street LLC’s conduct, and potential legal strategies. Based [on] the information [Chang Lee] provided, Ms. Margolin provided [Chang Lee] advice on these issues. At the end of the meeting, [Chang Lee] paid a partial retainer to Ms. Margolin.”  (Chang Lee Decl. ¶ 2.)

On June 8, 2022, CJWorld Parties’ Counsel emailed Landlords’ Counsel informing them of the potential conflict of interest and asked Landlords to withdraw Margolin as an expert witness.  (Sadat Decl. ¶ 8, Exh. G.)  On June 9, 2022, CJWorld Parties’ Counsel again emailed Landlords’ Counsel regarding Margolin.  However, Landlords failed to respond to either email.  (Sadat Decl. ¶ 8, Exh. G.)

On June 14, 2022, CJWorld Parties took the deposition of Margolin.  (Sadat Decl. ¶¶ 2, 12, Exh. A.)  During the deposition, Margolin confirmed that she met with Chang Lee in her office in 2018.  (Sadat Decl. ¶ 2, Exh. A [Margolin Depo. at p.56:4-16].)  Margolin recalled that the meeting was “something relating to some legal matter” and not a personal matter.  (Sadat Decl. ¶ 2, Exh. A [Margolin Depo. at p.57:11-20].)  Chang Lee paid Margolin for the advice that Margolin provided.  (Sadat Decl. ¶ 2, Exh. A [Margolin Depo. at p.58:6-24].)  Margolin admits that Chang Lee was her client.  (Sadat Decl. ¶ 2, Exh. A [Margolin Depo. at p.60:9-23].)

Margolin is Barred from Testifying as an Expert Witness against her Former Clients

Though Chang Lee attended only a single meeting with Margolin, Chang Lee is clearly a former client of Margolin.  (Kerner v. Superior Court (2012) 206 Cal.App.4th 84, 116–117 [“An attorney-client relationship exists for purposes of the privilege whenever a person consults an attorney for the purpose of obtaining the attorney’s legal service or advice. [Citation.] This is so even if the attorney is never hired.”].)  Margolin directly and personally represented Chang Lee.  Thus, as Chang Lee is a former client, Margolin is barred from testifying against the CJWorld Parties if the subject matter of the former representation is substantially related to the subject matter of the instant action.  (Brand, supra, 124 Cal.App.4th at p.599.)

Here, the prior matter is clearly substantially related to the instant action.  As noted by Chang Lee’s declaration, “CJ World and [Chang Lee] sought to retain Ms. Margolin to assist it us with licensing issues, including the situation with [their] then-landlord, 147-151 W. 25th St., LLC (‘25th Street LLC’). For approximately an hour, [Chang Lee] candidly discussed with Ms. Margolin CJ World’s licensing status, CJ World’s application to cultivate cannabis at 147-151 W. 25th St., 25th Street LLC’s conduct, and potential legal strategies. Based [on] the information [Chang Lee] provided, Ms. Margolin provided [Chang Lee] advice on these issues.”  (Chang Lee Decl. ¶ 2.)  The instant action directly arises from the dispute between CJWorld and Landlords regarding [the] cannabis license at 147-151 W. 25th St. in 2018.  Landlords do not dispute this.  Accordingly, “by virtue of that representation the attorney had necessarily acquired confidential information relevant to issues in the current dispute.”  (H. F. Ahmanson & Co. v. Salomon Brothers, Inc. (1991) 229 Cal.App.3d 1445, 1454.)

In opposition, Margolin does not dispute CJ World and Chang Lee’s evidence.  Instead, Margolin merely states that she does not have any notes from the 2018 meeting with Chang Lee and does not recall the meeting.  (Margolin Decl. ¶¶ 4, 6.)  However, Margolin’s knowledge of the 2018 meeting and her lack of notes are irrelevant.  “[W]hen ruling upon a disqualification motion in a successive representation case, the trial court must first identify where the attorney’s former representation placed the attorney with respect to the prior client. If the court determines that the placement was direct and personal, this facet of Ahmanson is settled as a matter of law in favor of disqualification and the only remaining question is whether there is a connection between the two successive representations, a study that may not include an ‘inquiry into the actual state of the lawyer’s knowledge’ acquired during the lawyers’ representation of the former client.”  (Jessen v. Hartford Casualty Ins. Co. (2003) 111 Cal.App.4th 698, 710–711.)  As the subject matter of the Margolin’s representation of Chang Lee directly involves the same issues as the instant action, Margolin’s knowledge of confidential information must be presumed.  (Brand, supra, 124 Cal.App.4th at p.606.)

Despite having no recollection of the meeting with Chang Lee, Margolin “very strongly believes that, another person was privy to all communications between [herself] and Mr. Chang Lee – including the purported meeting.”  (Margolin Decl. ¶ 6.)  Margolin also asserts that during her June 14, 2022 deposition, she “mentioned the distinct possibility of the presence of another person at the purported[6] meeting with Mr. Chang Lee.”  (Margolin Decl. ¶ 5.)  Thus, Landlords contend that Chang Lee waived attorney client privilege.  Margolin’s only basis for this belief is a screen shot of a text message between Margolin and Emmanuel Jae, who served as CJ World’s real estate agent.  (Sadat Decl., Exh. G [Email Exchange Containing Picture of Text Message Exchange].)  The cited text message merely notes that Chang Lee paid Margolin half the retainer.  (Sadat Decl., Exh. G [Email Exchange Containing Picture of Text Message Exchange].)  There is nothing indicating that a third party attended the meeting between Chang Lee and Margolin.  Moreover, Emmanuel Jae states, under penalty of perjury, that he never attended any meeting between Chang Lee and Margolin.  (Jae Decl. ¶ 2.)  Similarly, Chang Lee states under penalty of perjury that only Chang Lee and Margolin were privy to the meeting.  (Chang Lee Decl. ¶ 2.)

In light of Margolin’s claimed lack of recollection of the meeting with Chang Lee, the Court finds Margolin’s asserted belief that another individual attended the meeting lacks any credibility whatsoever.  Given that Margolin formerly represented CJWorld Parties in the subject matter that involves this specific case, it would be an abuse of discretion to deny the instant motion to disqualify.  (Brand, supra, 124 Cal.App.4th at p.607.)

CONCLUSION AND ORDER

Based on the forgoing, Plaintiffs CJWorld-LA, Chang Lee, and Eric Lee’s motion to disqualify Allison B. Margolin and motion in limine to exclude testimony of Allison B. Margolin is GRANTED.

Moving Parties are to give notice and file proof of service of such.

DATED: September 15, 2022                                                ___________________________

                                                                                          Elaine Lu

                                                                                          Judge of the Superior Court

[1] On July 13, 2020, 25th Street LLC dismissed GRG Collective, LLC.

[2] On July 23, 2020, the Court sustained Chang Lee and Eric Lee’s demurrer as to the vandalism cause of action without leave to amend.  (Lead Action Order 7/23/20.)

[3] On February 10, 2021, the CJWorld Parties dismissed the action as to Lex Yoo without prejudice.

[4] On June 17, 2022, the CJWorld Parties dismissed the tenth cause of action for specific performance.

[5] Cross-Defendants DNC and Kang are no longer alleged as part of the eighth, ninth, and tenth causes of action.

[6] The Court finds Margolin’s use of the term “purported” to describe the meeting with Chang Lee to be curious in that it suggests that Margolin is unsure whether such a meeting ever occurred at all.  Yet, at the same time, Margolin “now very strongly believe[s] that . .  another person was privy to all communications between [herself] and Mr. Chang Lee – including the purported meeting.”  (Margolin Decl. ¶ 6 [italics added].)  These inconsistencies within Margolin’s declaration lead the Court to draw negative inferences as to her credibility.