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contractbreach of contractattorneytrialmotion
attorneytrialmotion

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Blue Water Sunset, LLC v. Markowitz, 192 Cal.App.4th 477, 122 Cal.Rptr.3d 641, 11 Cal. Daily Op. Serv. 1597, 2011 Daily Journal D.A.R. 1923

Facts

Blue Water Sunset, LLC (Blue Water) and Philip Markowitz (Markowitz) are 50 percent members of several LLCs. Blue Water sued Markowitz for various claims, including fraud and breach of contract, alleging that Markowitz misappropriated income and assets of the LLCs. The attorney Gary Kurtz represented both Markowitz and the LLCs during the proceedings, leading Blue Water to file a motion to disqualify him due to the conflict of interest arising from this dual representation.

Blue Water Sunset, LLC (Blue Water) and Philip Markowitz (Markowitz) are 50 percent members of several LLCs.

Issue

Did Blue Water have standing to seek the disqualification of attorney Gary Kurtz, and was Kurtz subject to automatic disqualification due to a conflict of interest?

Did Blue Water have standing to seek the disqualification of attorney Gary Kurtz, and was Kurtz subject to automatic disqualification due to a conflict of interest?

Rule

An attorney representing an organization may also represent its members, but if the organization's consent to dual representation is required and not obtained, a member may have standing to seek disqualification. Automatic disqualification applies when an attorney concurrently represents clients with conflicting interests.

An attorney representing an organization may also represent its members, but if the organization's consent to dual representation is required and not obtained, a member may have standing to seek disqualification.

Analysis

The court determined that Kurtz had an attorney-client relationship with the LLCs due to his preparation of legal documents and appearances on their behalf. This relationship created a conflict of interest when he also represented Markowitz, who had adverse interests to the LLCs. The court concluded that Kurtz's simultaneous representation of both parties rendered his representation of the LLCs less effective, thus mandating his disqualification.

The court determined that Kurtz had an attorney-client relationship with the LLCs due to his preparation of legal documents and appearances on their behalf.

Conclusion

The court reversed the trial court's denial of the motion to disqualify Kurtz from representing the LLCs, affirming that he could continue to represent Markowitz. The ruling emphasized the importance of loyalty and the duty of an attorney to avoid conflicts of interest.

The court reversed the trial court's denial of the motion to disqualify Kurtz from representing the LLCs, affirming that he could continue to represent Markowitz.

Who won?

Blue Water Sunset, LLC prevailed in part as the court ruled that Kurtz was disqualified from representing the LLCs due to the conflict of interest, which Blue Water had standing to challenge.

Blue Water Sunset, LLC prevailed in part as the court ruled that Kurtz was disqualified from representing the LLCs due to the conflict of interest.

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