SIMONS, J. —
In City and County of San Francisco v. Cobra Solutions, Inc. (2006) 38 Cal.4th 839 [43 Cal.Rptr.3d 771, 135 P.3d 20] (Cobra I), our Supreme Court held the entire city attorney's office (City Attorney's Office) was vicariously disqualified from representing the City and County of San Francisco (City) in this lawsuit against a City contractor, Cobra Solutions,
In 1998, the City entered into a contract with a joint venture comprised of Cobra and other entities; during the periods relevant here, only Cobra remained a party to the joint venture. Under the contract (the master contract), Cobra was one of a number of prequalified vendors of information technology goods and services to the City as part of the City's "Computer Store." This prequalification program had been established through the City's committee on information technology (Technology Committee) to expedite the procurement of information technology goods and services for City agencies. Use of Computer Store vendors was not mandatory. City departments could choose to get information technology goods and services through a Computer Store vendor or by submitting a request for proposals and soliciting bids from other vendors. A little less than half of the City's information technology purchases were made through Computer Store vendors.
In 1999 and 2000, Cobra submitted five invoices to the City based on invoices submitted to Cobra from one of its subcontractors, Monarch Enterprises (Monarch). Monarch had not performed the work identified in the invoices. Instead, Monarch was a sham corporation run by Marcus Armstrong, the then manager of information technology for a City agency. There was evidence at trial Cobra had done nothing to verify that Monarch had in fact performed the work for which Cobra was billing the City. The City paid Cobra the full amount of the invoices: the amount Cobra owed Monarch for the purportedly performed work plus an additional profit markup for Cobra.
In February 2003, after the City discovered a separate scheme involving Armstrong and a different Computer Store vendor, the City filed the instant
Around the time the amended complaint was filed, the City received complaints from subcontractors that Cobra had not paid them for completed work for which the City had paid Cobra. The City requested Cobra submit to an audit pursuant to the master contract.
Shortly thereafter, Cobra filed a motion to disqualify the City Attorney's Office in the instant litigation. The basis of the motion was that Dennis Herrera, the City Attorney, represented Cobra on matters including City contracts when he was in private practice. When the City Attorney's Office became aware of the conflict, Herrera had personally been screened off from all matters related to Cobra. However, other staff members in the City Attorney's Office continued to work on these matters and represented the City in this litigation. In July 2003, the trial court granted Cobra's motion and ordered the City to retain independent counsel in this lawsuit. The City appealed the order and the trial court stayed trial court proceedings pending appellate review.
Although the litigation was stayed during the appeal, other matters proceeded. First, the City reviewed outstanding invoices from Cobra and determined that the City owed approximately $2.3 million to Cobra for work performed by Cobra's subcontractors. In December 2003, the City filed an interpleader action to determine the lawful distribution of the funds. The interpleader action was eventually resolved through a stipulated order. Second, the City reviewed bids for a new Computer Store contract. In December 2003, the Technology Committee decided not to award Cobra a second master contract.
In June 2006, the California Supreme Court issued an opinion affirming the trial court's disqualification order. (Cobra I, supra, 38 Cal.4th 839.) The Supreme Court held an ethical screen is not sufficient protection where, as here, the conflicted attorney is the head of a government law office. (Id. at pp. 853-854.) Accordingly, the court held the entire City Attorney's Office
Trial began in January 2012. The City contended Cobra breached the master contract by billing the City for work that had not been performed; failing to properly supervise its subcontractor, Monarch; failing to timely pay subcontractors; and refusing to submit to an audit. The City also asserted claims for intentional and negligent misrepresentation and for violation of state and local false claims acts (Gov. Code, § 12650 et seq.; S.F. Admin. Code, § 6.80 et seq.) based on Cobra's invoices for work purportedly performed by Monarch. Cobra counterclaimed for breach of contract and for violation of 42 United States Code section 1983, alleging the City debarred Cobra without due process in connection with the City's decision not to award Cobra a second master contract.
In February, the jury returned verdicts against Cobra on the City's contract claims and claim for intentional misrepresentation. The jury found the City's damages on these claims to be $24,498, equivalent to the amount of Cobra's profit on the Monarch invoices. The jury found Cobra not liable on the City's claims for negligent misrepresentation and for violation of the false claims acts. The jury rejected all of Cobra's counterclaims against the City.
After the jury verdict, the trial court issued a statement of decision on the City's equitable claims against Cobra. The trial court found for the City on its claims under Business and Professions Code section 17200, Government Code section 1090, and unjust enrichment. The trial court awarded the City $24,498 on each of these claims, not to be added to the amount already awarded the City on the legal claims. This appeal followed.
On January 18, 2012, five days before trial was scheduled to start, Cobra filed a motion in limine seeking to preclude the admission of evidence "tainted" by the City Attorney's Office's involvement in matters related to Cobra during the time between the trial court's 2003 order disqualifying the office from representing the City in this litigation and the Supreme Court's 2006 affirmance, after which the City retained independent counsel. Specifically, Cobra pointed to participation by the City Attorney's Office in the City's investigation of unpaid invoices to Cobra for work performed by
In its opposition, the City argued the City Attorney's Office's participation in matters related to Cobra after the trial court's 2003 order was limited, and Cobra had failed to prove any evidence was tainted. The City also challenged the timing of Cobra's motion, arguing: "The proper time for Cobra to have brought this motion was in 2006, immediately after the Supreme Court issued its opinion rather than on the eve of trial after [the City] and its private counsel had expended significant resources on this case."
The trial court denied the motion on the ground that, inter alia, it was "untimely in view of the lapse of time." The court stated it might still impose a sanction "for what the defendant characterizes as a violation of" the trial court's order disqualifying the City Attorney's Office after hearing the evidence. In its posttrial statement of decision, the trial court found insufficient evidence to show the City Attorney's Office disobeyed the court order.
The parties have cited no California case addressing motions to exclude evidence tainted by the involvement of disqualified counsel. Instead, Cobra cites decisions from other jurisdictions considering, after an order disqualifying counsel, whether successor counsel can have access to disqualified counsel's work product and whether pleadings filed by disqualified counsel should be stricken. (See First Wisconsin Mortgage Trust v. First Wisconsin Corp. (7th Cir. 1978) 584 F.2d 201; In re George (Tex. 2000) 28 S.W.3d 511 (George).)
In George, the Texas Supreme Court discussed the timeliness of a motion to restrict access to disqualified counsel's work product. The McKool and the Pennington law firms were disqualified from representing a party because attorneys at those firms had previously worked at the firm representing the opposing parties. (George, supra, 28 S.W.3d at p. 512.) On the day McKool and Pennington withdrew, the Hartnett firm entered an appearance. (Ibid.) Counsel for the opposing parties "immediately notified Hartnett of their position that new counsel should not receive, review or use any of McKool and Pennington's work product.... When Hartnett advised that it did not agree, ... Motions for an Order Prohibiting Turnover of Work Product and Related Material" were filed by the opposing parties. (Id. at pp. 512-513.) The Supreme Court concluded, "As a rule, `[a] party who fails to file its motion to disqualify opposing counsel in a timely manner waives the complaint.' [Citation.] This rule applies equally to motions to restrict access to work product." (Id. at p. 513.)
Applying this test, we first find Cobra's delay unreasonable. Cobra did not raise the issue until more than five years after successor counsel was retained.
We also find the prejudice to the City to be extreme. The in limine motion, related to the use of what Cobra argues would be most or all of the City's evidence, was filed only days before trial. Years had passed since the challenged conduct took place. Cobra itself acknowledged the prejudice in its in limine motion, noting identification of any tainted evidence would be "extremely difficult, if not impossible," in part because of "the inability of witnesses to remember" events "nearly a decade after the fact." Further, the unjustified delay effectively lulled retained counsel into failing to develop evidence unconnected to that developed by the City Attorney's Office.
II.-VII.
The judgment is reversed as to the City's claims for intentional misrepresentation, negligent misrepresentation, and violation of the false claims acts,
Jones, P. J., and Bruiniers, J., concurred.