Response to Motion to Withdraw

CASE CAPTION

RESPONSE TO MOTION TO WITHDRAW

 Introduction

This Court should grant or deny &DependentCounsel&’s motion to withdraw based upon the Court’s determination that &DependentCounsel& has or has not complied with Rule 3-310 of the Rules of Professional Conduct.

As a defendant who is purportedly represented by &DependentCounsel& at the request of my liability insurance company, &InsCo&, I consent to being represented by &DependentCounsel& if this court determines that (he/she) either has no obligation to comply with or has fully complied with Rule 3-310. But I do not consent to being represented by &DependentCounsel& if (he/she) is obligated to comply with Rule 3-310 and has failed to do so.

I do not want to lose my insurance coverage because of confusion about whether &DependentCounsel& can ethically represent me because of &InsCo& has reserved its rights to deny coverage to me.

In Pro Per Status

This Court should be sensitive to the need of a unsophisticated, lay client. “Trial judges must acknowledge that in propria persona litigants often do not have an attorney’s level of knowledge about the legal system and are more prone to misunderstanding the court’s requirements. When all parties are represented, the judge can depend on the adversary system to keep everyone on the straight and narrow. When one party is represented and the other is not, the lawyer, in his or her own client’s interests, does not wish to educate the in propria persona litigant. The judge should monitor to ensure the in propria persona litigant is not inadvertently misled, either by the represented party or by the court. While attorneys and judges commonly speak (and often write) in legal shorthand, when an in propria persona litigant is involved, special care should be used to make sure that verbal instructions given in court and written notices are clear and understandable by a layperson. This is the essence of equal and fair treatment, and it is not only important to serve the ends of justice, but to maintain public confidence in the judicial system.” (Gamet v. Blanchard (2001) 91 Cal.App.4th 1276, 1284.)

Court Permission Is Required For Withdrawal

Code of Civil Procedure § 284 provides: “The attorney in an action . . . may be changed at any time . . . as follows: . . . 2. Upon the order of the court, upon the application of either client or attorney, after notice from one to the other.” “[A]ttorneys do not have an absolute right to withdraw from representation at any time with or without cause.” (Cal. Practice Guide: Professional Responsibility (The Rutter Group 2016) ¶10:21 (Rutter) (emphasis added).) &DependentCounsel& “shall not withdraw from employment until the member has taken reasonable steps to avoid reasonably foreseeable prejudice to the rights of the client.” (Rule 3-700.)

Trial Court Discretion

“The determination whether to grant or deny a motion to withdraw as counsel lies within the sound discretion of the trial court.” (Manfredi & Levine v. Superior Court (Barles) (1998) 66 Cal.App.4th 1128, 1133.) In the exercise of such discretion, “the trial court has the power to control in furtherance of justice, the conduct of its ministerial officers. It is vested with the solemn duty to maintain professionalism and ethics in the matters that are brought before it.” (Id. at 1132 (citations, quotation marks and ellipses omitted).) “The trial court need not ‘accept a sweeping claim of conflict and “rubber stamp” counsel’s request to withdraw.’ . . . [Instead,] the court [has a] duty of inquiry or the attorney’s obligation to provide information about the conflict. . . . The trial court still has a duty to explore the conflict, and counsel has a corresponding duty to respond, and to describe the general nature, as fully as possible but within the confines of privilege.” (Id. at 1133.) The trial court may hold an in camera hearing to protect confidential information at which the client must be given an opportunity to be heard. (Id. at 1136.)

Cumis Conflicts Support Withdrawal

Rule 3-700 makes withdrawal mandatory if the lawyer “knows or should know that continued employment will result in violation of these rules or of the State Bar Act.” (Emphasis added.) “This rule imposes a duty to withdraw where there is a prospective violation of another Rule of Professional Conduct (e.g., rule against representing conflicting interests) or a provision of the State Bar Act.” (Rutter, supra, ¶10:28.) “Conflicts [of interest] come in all shapes and sizes. The following list, by no means exhaustive, illustrates circumstances giving rise to a conflict: . . . (5) there is a conflict between the interest of the insurer and the insured which in turn creates a conflict for counsel hired by the insurer to represent the insured. (San Diego Federal Credit Union v. Cumis Ins. Society, Inc. (1984) 162 Cal. App. 3d 358, 364.)” (Manfredi, supra, 66 Cal.App.4th at 1134-1135 (citations, quotation marks and ellipses omitted).) Insurer-policyholder conflicts are governed by the Cumis rule. “We conclude the Canons of Ethics impose upon lawyers hired by the insurer an obligation to explain to the insured and the insurer the full implications of joint representation in situations where the insurer has reserved its rights to deny coverage. If the insured does not give an informed consent to continued representation, counsel must cease to represent both.” (San Diego Navy Fed. Credit Union v. Cumis Ins. Society, Inc. (1984) 162 Cal.App.3d 358, 375 (Cumis).)

The trial court has discretion to determine that &DependentCounsel& has a disqualifying conflict of interest. “The paradigm case requiring independent counsel is one in which the way counsel retained by the insurance company defends the action will affect an underlying coverage dispute between the insurer and the insured.” (Golden Eagle Ins. Co. v. Foremost Ins. Co. (1993) 20 Cal.App.4th 1372, 1395.) &DependentCounsel&’s conflicts of interest should “be determined without forcing the insured to litigate issues that may arise in the third party action.” (Montrose Chemical Corp. v. Superior Court (1993) 6 Cal.4th 287, 305 (Montrose).)

&DependentCounsel& Represents &InsCo& and Is Not Exempt From Rule 3-310

See attached articles: Dependent Counsel Always Represents the Insurer and Dependent Counsel Is Not Exempt From Rule 3-310. Rule 3-310 put on &DependentCounsel& the burden of analyzing potential conflicts of interest and explaining them to me. As a non-lawyer, I do not know how to analyze ethical conflicts of interest. I am relying on &DependentCounsel& to tell me. I do not think I should have to explain conflicts of interest to &DependentCounsel&.

Adequacy of Court Order

The trial court’s order must take care that the final order satisfies the requirements of Code of Civil Procedure § 284, Rules of Court, Rule 3.1362, and Rule 3-700. A failure to enter an adequate order may invalidate later proceedings in the action. (Urethane Foam Experts, Inc. v. Latimer (1995) 31 Cal.App.4th 763, 766-767.) When the appropriateness of withdrawal of dependent counsel[1] turns on whether a disqualifying Cumis conflict exists, the trial court should take evidence regarding the nature of the conflict (perhaps in camera), evaluate whether the insurer’s reservation of rights raises any issue which is related to any issue of fact or law raised in the liability lawsuit, and issue a clearly worded order stating that dependent counsel does or does not have a disqualifying conflict. The court of appeal has specified the content of proper judicial analysis. “The trial court can obtain and review the evidentiary claims and supporting affidavits and exhibits in order to make its decision. In doing so it should determine: (1) what is the exact nature of the claims asserted in the underlying action, (2) what defenses to coverage are asserted by the insurers, and to what extent, if at all, are they logically related to the liability issues raised in the underlying action, (3) what factual questions have to be resolved in order to sustain or defeat such defenses, (4) what is the likely nature of the available evidence, [and] (5) to what extent, if at all, will [the policyholder] suffer prejudice by . . . the evidence which tends to support or defeat its claim of coverage or the defenses raised by the insurers.” (Haskel, Inc. v. Superior Court (1995) 33 Cal.App.4th 963, 980.)

&Date&               Respectfully submitted:

___________________________

&Client&


                                                       DECLARATION OF &Client&

I am &Client&. I am __ years old, am married and have __ children. I have never been involved in a lawsuit before. I know from my own personal knowledge that everything I say in this declaration is true. I found a draft of this declaration, the foregoing pleading and the attached documents on the internet.

1.   I bought liability insurance from &InsCo&. Attached as Exhibit 1 is a true and correct copy of my policy of insurance.

2.   Attached as Exhibit 2 is a true and correct copy of letter I received from &InsCo& agreeing to defend me under a reservation of rights and advising me that &InsCo& hired &DependentCounsel& to represent me.

3.   Attached as Exhibit 3 is a true and correct copy of letters I exchanged with &InsCo& asking that it clarify its coverage position.

4.   Attached as Exhibit 4 is a true and correct copy of letters I exchanged with &DependentCounsel& asking them to comply with Rule 3-310.

5.   Attached as Exhibit 5 is a true and correct copies of vaious Memoranda of Law entitled:

Attorney Client Relationship

Binding Effect of Liability Suit on Coverage Dispute

Client May Fire Attorney

Compendium of Attorney Duties

Compendium of Insurer Duties

Cumis Rule

Cumis Rule Is Based on Attorney Ethics

Cumis Test

Dependent Counsel Always Represents the Insurer

Dependent Counsel Conflicts Arise When the Insurer Reserves Rights

Dependent Counsel Is Beholden to the Insurer

Dependent Counsel Is Not Exempt from Rule 3-310

Disqualifying Conflicts of Interest

Distinction Between Potential and Actual Conflicts of Interest

Duty of Competent Representation

Duty of Confidentiality

Duty of Disclosure

Duty of Good Faith and Fair Dealing

Duty of Undivided Loyalty

Duty to Advise

Duty to Advise Regarding Settlement

Duty to Analyze Conflicts

Duty to Comply with Rule 3-310

Duty to Respond to Inquiry

Limited Scope of Representation

Reservation of Rights

Reservation of Rights Changes Traditional Relationships

There Is No Deadline to Deny Coverage

Three Way Relationship – Harmony or Dissonance

9.   On a personal level, I like &DependentCounsel&. We have no personality conflict. I am confident that we can work together well if I can be assured that &DependentCounsel& has no disqualifying conflicts of interest. I can be satisfied that &DependentCounsel& has no disqualifying conflicts of interest if &DependentCounsel& complies with Rule 3-310 or a final court order is entered that adjudicates that &DependentCounsel& has not disqualifying conflict. Until then, I remain concerned that &DependentCounsel& is in a position to do me harm in my defense in this action because &DependentCounsel& is beholden to &InsCo&, but not to me.

10. I believe that &nsCo& has reserved its rights to deny coverage to me for this matter on grounds that are related to issues to be resolved in this matter.

11. I believe that &nsCo& may reserve its rights to deny coverage to me for this matter on additional grounds at any time.

12. I believe that &DependentCounsel& has a legal, business, and financial relationship with &InsCo& that would be affected substantially by resolution of this lawsuit.

13. I believe that &DependentCounsel& represents the interests &InsCo& at the same time that they purport to represent me as a party in this matter.

14. I believe that my interests and the interests &InsCo& potentially or actually conflict in ths matter.

15. I believe that &DependentCounsel& is required to follow litigation guidelines imposed upon them by &InsCo&.

16. I believe that &DependentCounsel& has accepted compensation from &InsCo& for representing me in this matter without my informed written consent.

17. I believe that &DependentCounsel& has analyzed the relevant circumstances and the actual and reasonably foreseeable adverse consequences to me of representing me and the interests of &InsCo& in this matter.

18. &DependentCounsel& has not informed me in writing of the relevant circumstances and of the actual and reasonably foreseeable adverse consequences to me of their relationship with &InsCo&.

19. &DependentCounsel& does not have my informed written consent to represent me in this matter.

I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed this __th day of __, 2016 at Los Angeles, California.

________________________

&Client&

 

CASE CAPTION

(Proposed Order)

 

The hearing on the motion by &DependentCounsel& came on regularly for hearing on &Date& in Dept. __ of this court. &DependentCounsel& and &Client& appeared and gave oral argument. The court held an in camera hearing to examine confidential documents and to hear the oral argument of &DependentCounsel& and &Client&.

Based upon the moving and responding papers filed and the oral argument, the court finds as follows:

1.       &InsCo& issued a policy of liability insurance to &Client&.

2.       &InsCo& agreed to defend &Client& in this action

3.       &InsCo& reserved its rights to later deny coverage to &Client& in this action on grounds specified by it in letters and has further reserved its rights to deny coverage to &Client& on additional grounds not previously stated by it. &InsCo&’s reservation of rights has created conflicts of interest between &Client& and &InsCo& in that &Client& seeks to secure and &InsCo& seeks to deny coverage in this matter.

4.       &InsCo& hired &DependentCounsel& to represent &Client& as a defendant and to protect the interests of &InsCo& in this action. &InsCo& has imposed litigation guidelines to manage &DependentCounsel&’s conduct of the defense of &Client& in this action. &InsCo& and &DependentCounsel& have a legal, business, and financial relationship. &DependentCounsel& knows that &InsCo& could be affected substantially by resolution of this action. &InsCo&’s reservation of rights created a risk that their common lawyer’s representation of the one may be rendered less effective by reason of the lawyer’s representation of the other. &DependentCounsel& has a duty to &Client& and to &InsCo& to initiate analysis of potential conflicts of interest, make disclosure to both clients, and obtain their informed written consent. &DependentCounsel& did not make the required disclosure nor obtain the required informed written consent.

5.       Instead, &DependentCounsel& entered an appearance in this action as counsel of record for &Client&. &DependentCounsel& also represents the interests of &InsCo& in the defense of this action.

6.       Disputed issues of fact and law in this action are related to disputed issues of fact and law upon which &InsCo& has or may in the future reserve its rights to deny coverage to &Client&. The conduct of the defense of this action could result in conclusions of fact or law that may bind &Client& adversely regarding the coverage contest with &InsCo&.

7.       After &Client& asked &DependentCounsel& to comply with Rule 3-310, &DependentCounsel& continued to fail to make written disclosure to &Client& of the relevant circumstances and of the actual and reasonably foreseeable adverse consequences to &Client& of representing &Client& while also representing the interests of &InsCo& in this action.

8.       &DependentCounsel& accepted representation of &Client& and &InsCo& in this matter in which the interests of these two clients potentially or actually conflict without &Client&’s informed written consent.

9.       &DependentCounsel& accepted compensation from &InsCo& for representing &Client& in this action without &Client&’s informed written consent.

10.     &DependentCounsel& has unresolved disqualifying conflicts of interest in representing the interests of &InsCo& and representing &Client& as a defendant in this action.

11.     This court has considered the nature of the claims asserted in this action, &InsCo&’s coverage defenses as they relate to the liability issues raised in this action, the factual questions to be resolved in order to sustain or defeat such defenses, the likely nature of the available evidence, the prejudice &Client& may suffer by the evidence which tends to support or defeat its claim of coverage or the defenses raised by &InsCo&.

12.     Pursuant to Code of Civil Procedure § 284, and Rule 3-700 recusal of &DependentCounsel& is mandatory because continued representation of &Client& by &DependentCounsel& will result in the continue violation of Rule 3-310.

13.     The motion by &DependentCounsel& to withdraw is granted. &DependentCounsel& is recused. &InsCo& may not seize control of this action from &Client&. &InsCo&’s agreement to defend &Client& in this action obligates it to pay for ethical counsel who comply with Rule 3-310.  &DependentCounsel& is hereby ordered to take all reasonable steps to protect the interests and confidentiality of &Client&.

14.     Service of papers in this matter shall be made upon &Client& at Address, Telephone, Fax, until further notice by &Client& or this court.

IT IS SO ORDERED.

______________________

Judge of the Superior Court

 


[1] The succinct phrase “dependent counsel” describes the counterpart to “independent counsel.” This moniker acknowledges that “[a]s a practical matter . . . in reality, the insurer’s attorneys may have closer ties with the insurer and a more compelling interest in protecting the insurer’s position, whether or not it coincides with what is best for the insured” (Purdy v. Pacific Automobile Ins. Co.(1984) 157 Cal.App.3d 59, 76), “[i]nsurance companies hire relatively few lawyers and concentrate their business. A lawyer who does not look out for the Carrier’s best interest might soon find himself out of work.” (San Diego Navy Fed. Credit Union v. Cumis Ins. Society, Inc. (1984) 162 Cal.App.3d 358, 364), and “defense counsel and the insurer frequently have a longstanding, if not collegial, relationship” (Gulf Ins. Co. v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone (2000) 79 Cal.App.4th 114, 131). “In California, an attorney may usually, under minimum standards of professional ethics, represent dual interests as long as full consent and full disclosure occur.” (Lysick v. Walcom (1968) 258 Cal.App.2d 136, 147; See, also Ishmael v. Millington (1966) 241 Cal.App.2d 520, 528; Industrial Indem. Co. v. Great American Ins. Co. (1977) 73 Cal.App. 3d 529, 537.)


 

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