Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_18-cv-02066/USCOURTS-caed-2_18-cv-02066-6/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 12:635 Breach of Insurance Contract

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

ZURICH AMERICAN INSURANCE

COMPANY OF ILLINOIS,

Plaintiff,

v.

VFORCE INC.; CORTECH, LLC; and Does

1 to 100, inclusive,

Defendants.

 

VFORCE INC.,

Cross-Claimant,

v.

CORTECH, LLC; BEAN TEAM 

NETWORK 2 LLC; ACCUIRE, LLC; 

CAPSERV, INC.; KAISERKANE

CONSULTING, LLC; MICHAEL

DIMANNO; RICHARD GARDNER; 

CHARLES MUSGROVE; and MELISSA 

OGLESBY,

Cross-Defendants.

///

No. 2:18-cv-02066-TLN-CKD

ORDER

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VFORCE INC.,

Third-Party Plaintiff,

v.

BEAN TEAM NETWORK 2 LLC;

ACCUIRE, LLC; CAPSERV, INC.; 

KAISERKANE CONSULTING, LLC; 

MICHAEL DiMANNO; RICHARD 

GARDNER; CHARLES MUSGROVE; 

MELISSA OGLESBY, and Roes 1 through 

30 inclusive,

Third-Party Defendants.

This matter is before the Court on Defendant/Cross-Claimant/Third-Party Plaintiff VForce 

Inc.’s (“VForce”) Motion to Disqualify Counsel. (ECF No. 74.) Cross-Defendant CorTech, LLC 

(“CorTech”) and Cross-Defendant/Third-Party Defendant Accuire, LLC (“Accuire”)

(collectively, “Cross-Defendants”), both represented by attorney Nathan Hicks (“Hicks”), 

opposed the Motion. (ECF No. 75.) VForce replied. (ECF No. 78.) For the reasons discussed 

herein, the Court GRANTS VForce’s Motion to Disqualify.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Breach of Contract Action

Plaintiff Zurich American Insurance Company of Illinois (“Plaintiff”) initiated this action

against Defendants VForce and CorTech (collectively, “Defendants”) on July 28, 2018, asserting 

a single claim for breach of contract. (ECF No. 1.) The operative First Amended Complaint 

(“FAC”) alleges Plaintiff entered into an agreement to issue a workers’ compensation insurance 

policy (“Policy”) to Defendants (the “Zurich Agreement”). (ECF No. 6 at 3.) Defendants later 

failed to make payments on the Policy and allegedly breached the Zurich Agreement. (Id.) 

On March 11, 2019, Hicks filed an answer to the FAC on VForce’s behalf. (ECF No. 12.) 

On March 12, 2019, attorney Sean Stowers (“Stowers”) also filed an answer to the FAC on 

VForce’s behalf. (ECF No. 14.) That same day, Stowers filed a Crossclaim/Third-Party 

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Complaint on behalf of VForce against CorTech and ten other Third-Party Defendants. (ECF No. 

15.) 

On June 15, 2020, VForce filed the operative First Amended Crossclaim/Third Party 

Complaint (“FACC/3PC”) against Bean Team Network 2, LLC (“Bean Team”) and the other 

Cross-Defendants, all of whom VForce contends are jointly and severally liable for Bean Team’s 

obligations to VForce through an agency/successor-in-interest relationship with Bean Team. 

(ECF No. 68.) 

As relevant to the instant Motion, VForce alleges that, in December 2013, Michael 

DiManno (“DiManno”) (a shareholder in VForce at the time) arranged for VForce and Bean 

Team (both staffing businesses) to enter into a Labor Services Agreement (“LSA”). (Id. at 5.) 

Under the LSA, Bean Team would refer potential staffing hires for its California clients to 

VForce, which would hire the workers (allowing them to become covered by VForce’s California 

workers’ compensation insurance), and then deploy the workers as Bean Team employees to 

Bean Team’s California clients. (Id.) VForce asserts it was represented by Hicks at this time in a 

number of transactions, including the negotiation and execution of the LSA. (ECF No. 74-1 at 3.) 

In December 2014, VForce was in jeopardy of losing its California workers’ 

compensation insurance and therefore breaching the LSA with Bean Team. (See ECF No. 68 at 

5.) Plaintiff’s Policy was the only available alternative for VForce, but VForce could not afford 

the Policy. (Id. at 5–6). These circumstances led VForce and Bean Team to purchase the Policy 

together by entering into a contract dated December 22, 2014 (the “VForce Agreement”). (Id. at 

6.) Under the VForce Agreement, VForce agreed to purchase Bean Team’s 100% interest in 

Accuire and Bean Team agreed to pay the Policy premiums that VForce could not, and to defend 

and indemnify VForce from any liability caused by Bean Team. (Id. at 6–9.) Hicks allegedly 

completed substantial work related to the VForce Agreement as well. (ECF No. 74-1 at 3.) 

In December 2015, VForce declined to renew the Policy and it was terminated. (ECF No. 

68 at 7.) In July 2016, Plaintiff completed an audit of the Policy and billed Defendants for 

$612,669. (See id. at 7–8; ECF No. 6 at 3.) This outstanding premium was never paid by anyone, 

resulting in Plaintiff’s initiation of the instant breach of contract action against Defendants. (See

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id.; see also ECF No. 1.) In turn, VForce asserted contractual and indemnity cross-claims against 

Bean Team and the other Cross-Defendants, on the basis that Bean Team is responsible for the 

outstanding payments on the Policy pursuant to the terms of the VForce Agreement. (See 

generally ECF No. 68.) VForce further contends that Hicks extensively advised it on the drafting 

of an Asset Exchange for Ownership Agreement executed between VForce and Bean Team, 

which VForce argues is closely related to the reason Plaintiff audited the Policy and initiated the 

instant litigation. (ECF No. 74-1 at 3–4.) 

On July 2, 2020, VForce filed the instant Motion to Disqualify Hicks from representing 

Cross-Defendants, on the basis that Hicks’s involvement in the drafting and negotiating of the 

LSA and VForce Agreement on behalf of VForce constitutes an untenable conflict of interest. 

(ECF No. 74.) 

B. Hicks’s Representation

VForce asserts Hicks currently represents CorTech and all eight Cross-Defendants/ThirdParty Defendants — Bean Team; Accuire; CapServ Inc. (“CapServ”); Kaiserkane Consulting, 

LLC (“Kaiserkane”); DiManno; Richard Gardner (“Gardner”); Charles Musgrove (“Musgrove”);

and Melissa Oglesby (“Oglesby”) (collectively, the “Cross-Defendants/Third-Party Defendants”) 

— and seeks to disqualify Hicks from representing each of them. (See ECF No. 74 at 2.) Hicks 

disputes the statement that he represents all of the Cross-Defendants/Third-Party Defendants (see

ECF No. 75 at 3 n.1) but does not expressly identify which parties he currently represents. 

A review of the case reveals attorney Cory Barnwell represented the eight CrossDefendants/Third-Party Defendants until the Court granted his motion to withdraw as counsel 

from all parties (except Accuire) on May 26, 2020. (ECF No. 48; ECF No. 67 at 17 n.4.) The 

Court granted the motion based on Barnwell’s sworn statement that the aforementioned parties 

(except for DiManno) consented to the withdrawal and agreed to be represented by Hicks. (ECF 

No. 48 at 7; ECF No. 67 at 19.) In granting Barnwell’s motion, the Court also ordered the 

aforementioned parties to file a notice of substitution of counsel or status report (if substitution 

was not possible) by June 15, 2020. (See ECF No. 86 at 20.) The parties failed to timely comply 

///

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with the Court’s Order and were therefore proceeding pro se at the time VForce filed the instant 

Motion. 

On July 23, 2020, Hicks concurrently filed a notice of appearance, opposition to VForce’s 

Motion, and answer to the FACC/3PC (ECF No. 68). (ECF Nos. 75, 76, 77.) The notice of 

appearance indicates Hicks represents all nine Cross-Defendants. (ECF No. 76.) The answer to 

the FACC/3PC was also filed on behalf of all nine Cross-Defendants. (ECF No. 77.) The 

opposition to VForce’s Motion, however, appears to be submitted on behalf of CorTech and 

Accuire only. (See ECF No. 75 at 1 (pleading caption).) 

Confusingly, on November 11, 2020, Barnwell — not Hicks — filed an opposition to 

VForce’s pending motion to modify the scheduling order and to amend the SACC/3PC (ECF No. 

80). (See ECF No. 81.) On January 28, 2021, Barnwell filed an unopposed request to withdraw

and substitute Hicks as counsel for Accuire, which the Court granted. (ECF Nos. 86–87.) Thus, 

while representation of CorTech remains somewhat ambiguous, it appears Hicks now represents 

the eight other Cross-Defendants. 

For purposes of the instant Order and pursuant to its inherent power to control its docket, 

see Ferdik v. Bonzelet, 963 F.2d 1258, 1260 (9th Cir. 1992), the Court construes Hicks’s 

representation to include all nine Cross-Defendants as identified in the instant Motion and will 

address the propriety of Hicks’s representation as to all Cross-Defendants herein. As such, the 

Court notes Cross-Defendants/Third-Party Defendants Bean Team, Capserv, Kaiserkane, 

Gardner, Musgrove, DiManno, and Oglesby have not filed an opposition to VForce’s Motion and 

are therefore deemed to have waived any opposition. VForce’s Motion is therefore GRANTED 

as asserted against the aforementioned Cross-Defendants/Third-Party Defendants.

II. STANDARD OF LAW

“The right to disqualify counsel is within the discretion of the trial court as an exercise of 

its inherent powers.” Visa U.S.A., Inc. v. First Data Corp., 241 F. Supp. 2d 1100, 1103 (N.D. 

Cal. 2003) (citing United States v. Wunsch, 84 F.3d 1110, 1114 (9th Cir. 1996)). In deciding 

motions for disqualification, courts apply the relevant state law. See In re Cnty. of Los Angeles, 

223 F.3d 990, 995 (9th Cir. 2000); see also E.D. Cal. L.R. 180(e) (adopting California’s standards 

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of professional conduct). California Rule of Professional Conduct (“Rule”) 1.7 provides, “[a] 

lawyer shall not, without informed written consent from each client and compliance with 

paragraph (d), represent a client if the representation is directly adverse to another client in the 

same or a separate matter.” Cal. Rule Prof’l Conduct 1.7(a). The Rules also provide, “[a] lawyer 

who has formerly represented a client in a matter shall not thereafter represent another person in 

the same or a substantially related matter in which that person’s interests are materially adverse to 

the interests of the former client unless the former client gives informed written consent.” Id. at

Rule 1.9(a). If an attorney violates these rules, a current or former client may move for 

disqualification. See Lennar Mare Island, LLC v. Steadfast Ins. Co. (Lennar), 105 F. Supp. 3d 

1100, 1107 (E.D. Cal. 2015) (citing E.D. Cal. L.R. 110). 

“The disqualification of counsel is ‘generally disfavored and should only be imposed 

when absolutely necessary.’” Koloff v. Metro. Life Ins. Co., No. 1:13-cv-02060-LJO-JLT, 2014 

WL 2590209, at *3 (E.D. Cal. Jun. 10, 2014) (quoting Concat LP v. Unilever, PLC, 350 F. Supp. 

2d 796, 814 (N.D. Cal. 2004)). Nevertheless, “the paramount concern must be the preservation of 

public trust both in the scrupulous administration of justice and in the integrity of the bar. 

Consequently, the recognizably important right to choose one’s counsel must yield to the ethical 

considerations that embody the moral principles of our judicial process.” Lennar, 105 F. Supp. 

3d at 1108 (internal quotations omitted) (quoting State Farm Mut. Auto. Ins. Co. v. Fed. Ins. Co., 

72 Cal. App. 4th 1422, 1428 (Ct. App. 1999)). “Disqualification is not a punishment for ethical 

transgressions, but a protection of the integrity of the judicial process.” Id. (citing Cargill Inc. v. 

Budine, No. 07-349, 2007 WL 1813762, at *7 (E.D. Cal. Jun. 22, 2007)). In particular, 

disqualification is employed to protect an attorney’s primary duties — “and the client’s legitimate 

expectation” — of confidentiality and loyalty. See Lennar, 105 F. Supp. 3d at 1108. 

When deciding a motion to disqualify:

The court must weigh the combined effect of a party’s right to 

counsel of choice, an attorney’s interest in representing a client, the 

financial burden on a client of replacing disqualified counsel and any 

tactical abuse underlying a disqualification proceeding against the 

fundamental principle that the fair resolution of disputes within our 

adversary system requires vigorous representation of parties by 

independent counsel unencumbered by conflicts of interest.

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Allen v. Acad. Games League of Am., Inc., 831 F. Supp. 785, 789 (C.D. Cal. 1993) (quoting In re 

Lee G., 1 Cal. App. 4th 17, 26 (Ct. App. 1991)). “The district court is permitted to resolve 

disputed factual issues in deciding a motion for disqualification and must make findings 

supported by substantial evidence.” Visa U.S.A., Inc., 241 F. Supp. 2d at 1104 (citing People ex 

rel. Dept. of Corps. v. SpeeDee Oil Change Syst., Inc., 20 Cal. 4th 1135, 1143 (1999)). 

III. ANALYSIS

VForce seeks to disqualify Hicks based on a conflict of interest. California distinguishes 

between two types of conflict of interest — concurrent conflict, based on Rule 1.7, and successive 

conflict, based on Rule 1.9. See Lennar, 105 F. Supp. 3d at 1108. VForce argues Hicks should 

be disqualified based on both types of conflicts. (See ECF No. 74-1 at 6–9.) The Court will 

address each purported conflict in turn. 

A. Concurrent Representations Conflict

Representation under Rule 1.7 is permitted “only if . . . the representation does not involve 

the assertion of a claim by one client against another client represented by the lawyer in the same 

litigation . . .” Cal. Rule Prof’l Conduct 1.7(d)(3). In other words, “an impermissible conflict of 

interest exists when counsel actively represents conflicting interests.” Martinez v. McDonald, 

No. 2:11-cv-2351 JAM CKD, 2012 WL 2203061, at *5 (E.D. Cal. June 14, 2012) (citing Cuyler 

v. Sullivan, 446 U.S. 335, 350 (1980)). When such a concurrent conflict exists, an attorney will 

be automatically disqualified. See Lennar, 105 F. Supp. 3d at 1109. 

VForce argues Hicks concurrently represented VForce and Cross-Defendants in violation 

of Rule 1.7(d)(3) because he answered the FAC on behalf of VForce. (ECF No. 74-1 at 8; see

also ECF No. 12 (answer).) At first glance while this appears to raise a concurrent conflict issue, 

the record does not reflect any concurrent conflict actually exists. In reviewing the facts, it is 

Stowers who currently represents VForce — not Hicks. Indeed, VForce maintains Hicks’s

employment with VForce ended in August 2014. (See id. at 6; ECF No. 74-2 at 2; id. at 26–28 

(email chain in which Hicks acknowledges and agrees to sign severance agreement); see also id.

at 29–32 (unexecuted severance agreement dated August 1, 2014).) VForce additionally

concedes Hicks did not concurrently represent VForce and the Cross-Defendants by asserting the 

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March 11, 2019 answer was filed by Hicks without VForce’s authorization.1(See ECF No. 74-1 

at 4.) Moreover, this assertion is supported by the fact that, the very day after Hicks filed the

purportedly unauthorized answer, Stowers filed a separate answer on VForce’s behalf. (See ECF 

Nos. 12, 14; see also ECF No. 74-1 at 4; ECF No. 74-2 at 5 (Nobili declaration, averring that 

VForce sent a letter to Hicks demanding that he withdraw his filing and rectify the fact that he 

was inaccurately listed as counsel for VForce, but Hicks never responded).) Finally, it is plain

from the docket that all recent filings for VForce have been completed by Stowers. (See, e.g.,

ECF Nos. 68, 74.) Meanwhile, Hicks has filed responses to the FACC/3PC and instant Motion 

on behalf of Cross-Defendants (ECF Nos. 75, 77) and has not submitted any filings on behalf of 

VForce since the initial answer. Absent additional proof that Hicks “actively represents” VForce, 

VForce fails to establish a concurrent conflict exists. See Martinez, 2012 WL 2203061 at *5. 

Thus, disqualification under Rule 1.7(d)(3) is unwarranted.

B. Successive Representations Conflict

When determining whether a successive conflict exists, “the governing test requires that 

the client demonstrate a ‘substantial relationship’ between the subjects of the antecedent and 

current representations.” Flatt v. Superior Court, 9 Cal. 4th 275, 283 (1994). This “substantial 

relationship” test balances “the freedom of the subsequent client to counsel of choice, on the one 

hand, and the interest of the former client in ensuring the permanent confidentiality of matters 

disclosed to the attorney in the course of the prior representation, on the other.” Id.

Evaluation of the substantial relationship test “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 Cas. 

///

1 The Court finds it troubling that neither party provides much of an explanation as to why 

Hicks purported to represent VForce by filing an answer on its behalf in March 2019, despite 

apparently ending his employment with VForce in 2014. Nevertheless, on balance the Court is 

persuaded by the extensive documentation submitted by VForce that disqualification is 

warranted, as further discussed herein. 

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Ins. Co., 111 Cal. App. 4th 698, 709 (2003). The California Supreme Court emphasized the 

significance of the second variable:

To determine whether there is a substantial relationship between 

successive representations, a court must first determine whether the 

attorney had a direct professional relationship with the former client 

in which the attorney personally provided legal advice and services 

on a legal issue that is closely related to the legal issue in the present 

representation. If the former representation involved such a direct 

relationship with the client, the former client need not prove that the 

attorney possesses actual confidential information. Instead, the 

attorney is presumed to possess confidential information if the 

subject of the prior representation put the attorney in a position in 

which confidences material to the current representation would 

normally have been imparted to counsel.

City & Cnty. of San Francisco v. Cobra Sols., Inc. (Cobra Sols.), 38 Cal. 4th 839, 847 (2006)

(internal citations omitted); see also Jessen, 111 Cal. App. 4th at 709–10. 

Applying the substantial relationship test, the Court will first address the relationship 

between Hicks and VForce, and then turn to the relationship between the legal problems involved 

in the former and current representations.

i. Relationship Between Hicks and VForce

Although not required, some courts analyze the relationship between an attorney and 

former client by reviewing “(1) the nature and extent of counsel’s involvement; (2) the time 

counsel spent on the prior matter; (3) the type of work performed; and (4) the potential that 

counsel was exposed to formulations of policy or strategy.” H.F. Ahmanson & Co. v. Salomon 

Brothers, Inc., 229 Cal. App. 3d 1445, 1454–55 (1991). By these measures, Cross-Defendants

argue Hicks’s involvement was minimal because Hicks “spent a grand total of approximately 8 

hours on legal work for VForce, after early 2014 did not assist VForce and is not alleged to have 

been privy to VForce’s legal or business plans, policies or strategies.” (ECF No. 75-1 at 10.) 

Although the declarations of Hicks, DiManno and Mani Kontokanis (“Kontokanis”), another 

principal of VForce, appear to support this argument, for the reasons stated herein, VForce’s 

substantial evidence illustrates Hicks’s involvement was not minimal and his potential exposure

to VForce’s plans, policies, and strategies was high. As a result, the Court finds Hicks “had a 

///

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direct professional relationship” with VForce in which Hicks “personally provided legal advice 

and services” to VForce. See Cobra Sols., 38 Cal. 4th at 847.

The parties dispute whether Hicks was VForce’s general counsel from 2013 to 2014. (See

ECF Nos. 74-1, 75.) In support of its position, VForce submits an email exchange between Hicks 

and VForce discussing Hicks’s potential compensation package for employment at VForce (ECF 

No. 74-2 at 15–16), an unsigned employment agreement between Hicks and VForce (id. at 8), the 

Declaration of Mark Nobili (“Nobili”), owner and principal of VForce, confirming Hicks was 

VForce’s general counsel (id. at 1–2), and an email exchange between Hicks and VForce in 

which Hicks requests business cards stating his name and position as VForce’s general counsel 

(id. at 24). In opposition, Hicks does not explicitly deny serving as general counsel for VForce 

(see ECF No. 75-1 at 1), but argues neither an executed employment agreement exists, nor did the 

email exchange regarding potential compensation result in any finalized agreement. (ECF No. 75 

at 4–5.) In his own declaration, Hicks states he was not compensated as VForce’s general 

counsel (ECF No. 75-1 at 3), and DiManno avers that VForce generally had little legal work for 

Hicks to perform (ECF No. 75-2 at 2). In the limited excerpt of the Kontokanis deposition 

transcript provided by Cross-Defendants, Kontokanis also states he cannot recall any legal work 

Hicks performed for VForce.2 (ECF No. 75-1 at 10.)

Based on the record presently before it, the Court cannot conclude Hicks served as 

VForce’s general counsel. The emails submitted by VForce and the unexecuted employment 

agreement show VForce and Hicks engaged in extensive negotiations concerning Hicks’s official 

title and position as “General Counsel,” but they fall short of establishing an employment

2 However, the transcript additionally reveals an email exchange between Hicks, 

Kontokanis, and DiManno in December 2013 regarding ongoing negotiations of terms of 

employment for Hicks (in which Hicks contends he should be an owner of VForce) (see ECF No. 

75-1 at 10–11), as well as a business transaction facilitated by DiManno that may pertain to the 

LSA referenced in the FACC/3PC. (See id.; ECF No. 68 at 5.) At a minimum, Hicks’s inclusion 

on this email thread suggests he was privy, to some degree, to VForce’s legal or business plans, 

policies or strategies. Indeed, in a subsequent deposition, Kontokanis discusses meetings and 

correspondences Hicks engaged in with the principals of VForce regarding legal issues related to 

other parties in this case, VForce’s business plans, and related legal documents. (See generally

ECF No. 78-1 (full transcript of January 23, 2020 deposition).) 

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agreement was reached at the end of these discussions. Although Nobili states Hicks was

VForce’s general counsel, his colleagues DiManno and Kontokanis contradict Nobili’s claim, 

which at best illustrates Hicks’s role within VForce was ambiguous. 

Nonetheless, the Court finds VForce has submitted substantial evidence showing Hicks 

indeed played a role within VForce, albeit not with the official title of “General Counsel,” such 

that Hicks had a “direct professional relationship” with VForce in which he “personally provided 

legal advice and services on a legal issue that is closely related to” his current representation of 

Cross-Defendants. See Cobra Sols., 38 Cal. 4th at 847. For example, Hicks helped VForce draft 

and negotiate an agreement substantially related to the VForce Agreement currently at issue in the 

FACC/3PC, the LSA. (See ECF 74-1 at 3.) Hicks avers he only provided VForce “a template of 

a Labor Services Agreement.” (ECF No. 75-1 at 3.) However, the evidence submitted by VForce 

demonstrates Hicks’s contributions to the LSA were much more significant and substantive in 

nature. Importantly, an email exchange involving Hicks and members of VForce and Bean Team 

shows Hicks played a significant role in the LSA contract negotiations.3 (See ECF 74-2 at 66.) 

On December 24, 2013, DiManno emailed Hicks and other VForce employees that Bean Force

(via Musgrove) was pushing to finalize an agreement. (Id.) DiManno emphasized VForce 

“cannot lose this deal considering our cash flow in January.” (Id.) In response, Hicks provided a 

first draft of the LSA and explained, “[i]t should have all of the relevant terms and provisions, so 

please take a look and if no issues then we can forward to [Musgrove] for his review. I should be 

able to clean it up over the next 36 hours.” (Id.) On December 27, 2013, Musgrove and Hicks 

negotiated specific provisions of the LSA, including an indemnity provision, as well as provisions 

related to VForce’s “control over the employees.” (Id. at 111–13.) Hicks also provided 

Musgrove “the Agreement with revisions [Musgrove] requested.” (Id. at 111.) Furthermore, in 

the final and executed version of the LSA, Hicks is listed as VForce’s representative to whom any 

notifications regarding the agreement should be sent. (Id. at 38–39 (“All notices given under this 

3 The emails provided by VForce show Hicks using a VForce email address 

(“nhicks@vforcestaff.com”), another fact which tends to establish Hicks’s direct, professional 

relationship with VForce. (See generally ECF No. 74-2.)

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Agreement shall be addressed as follows: . . . and in the case of Subcontractor: VForce, Inc.[,] 

Nate Hicks . . . .”).) Thus, even if Hicks did not finalize the LSA, the evidence submitted by 

VForce indicates Hicks drafted substantial portions of the LSA and participated in and was privy 

to the negotiations and internal information regarding VForce’s motivation for the deal.

VForce also argues Hicks was meaningfully involved with the Asset Exchange for 

Ownership Interest Agreement between VForce and Bean Team dated April 2014 (“Asset 

Exchange Agreement”). Cross-Defendants claim Hicks “had nothing to do with” the agreement.

(ECF No. 75 at 3; but see id. at 6 (Hicks “recall[ed] providing DiManno a template for a Letter of 

Intent (“LOI”) for VForce to use for its contemplated deal with Bean Team”).) However, the

evidence submitted by VForce again contradicts Cross-Defendants’ claim. A February 26, 2014 

email confirms Hicks provided VForce a draft of the Letter of Intent (“LOI”) for the Asset 

Exchange Agreement. (ECF No. 74-2 at 100.) On March 17, 2014, Hicks also provided VForce

legal advice regarding the structure of the Asset Exchange Agreement. (Id. at 131 (“[W]e 

[VForce] will likely need to see [Bean Team’s] operating agreement and articles of organization 

in order to make sure this [Asset Exchange Agreement] is being done in line with [Bean Team’s] 

corporate governance.”).) On March 23, 2014, Hicks advised DiManno on several points 

regarding the Asset Exchange Agreement, including how to clean up the agreement, how to 

handle old agreements that possibly overlapped with the Asset Exchange Agreement, and how 

much Hicks should receive in reimbursements and compensation when the Asset Exchange 

Agreement was finalized. (Id. at 132–33.) When Hicks inquired about the status of the Asset 

Exchange Agreement negotiations on April 16, 2014, DiManno indicated the deal had fallen 

apart. (Id. at 137.) After Hicks requested to see the agreement draft, DiManno indicated it 

contained information too sensitive to circulate via email (see id.), but that he would review it 

with Hicks in person (see id. at 135). These emails demonstrate Hicks provided significant legal 

advice and services to VForce with respect to the Asset Exchange Agreement. They further 

establish Hicks’s role in negotiating two key agreements for VForce and his exposure to VForce’s 

policy formulations, strategies, and underlying motivations for entering the agreements. 

In light of this evidence, the Court concludes Hicks had a direct professional relationship 

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with VForce in which he provided legal advice and services to VForce that are related to his 

current representation of Cross-Defendants. Therefore, it is presumed, and need not be proven, 

that Hicks possesses confidential information of VForce. Cobra Sols., 38 Cal. 4th at 847; see 

also Jessen, 111 Cal. App. 4th at 709.

ii. Relationship Between the Legal Problems Involved in Hicks’s

Former and Current Representations 

Having established Hicks’s direct relationship with VForce, the Court now turns to 

whether the legal issues in Hicks’s past representation of VForce are substantially related to the 

legal issues involved in his current representation of Cross-Defendants. Cobra Sols., 38 Cal. at 

847. As previously established, Hicks worked on the LSA and Asset Exchange Agreement for 

VForce. VForce contends that Hicks’s prior representation is substantially related to his current 

representation of Cross-Defendants because the LSA and Asset Exchange Agreement laid the 

foundation for the VForce Agreement, which is “one of the most important document[s] in this 

case and the origin of VForce’s claims for indemnity and breach of contract.” (ECF No. 74-1 at 

7.) Cross-Defendants argue Hicks’s work for VForce has “nothing to do with whether VForce 

breached its contractual duties to Zurich in this lawsuit” and that it “did not imbue Hicks with any 

‘material’ information” because his work product merely consisted of drafts and templates. (ECF 

No. 75 at 8–9.) The Court finds VForce has the better argument.

The Jessen court provided that successive representations are substantially related when 

“the evidence before the trial court supports a rational conclusion that information material to the 

evaluation, prosecution, settlement or accomplishment of the former representation given its 

factual and legal issues is also material to the evaluation, prosecution, settlement or 

accomplishment of the current representation given its factual and legal issues.” Jessen, 111 Cal. 

App. 4th at 713; see also Foster Poultry Farms v. Conagra Foods Refrigerated Foods Co., Inc., 

No. F 04-5810 AWI LJO, 2005 WL 2319186, at *5 (E.D. Cal. Sept. 22, 2005) (evaluation of 

relationship must be “wide ranging and flexible”). “Material” means “the information acquired 

during the first representation . . . must be found to be directly at issue in, or have some critical 

importance to, the second representation.” Fremont Indem. Co. v. Fremont Gen. Corp.

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(Fremont), 143 Cal. App. 4th 50, 69 (2006) (citations omitted). Cross-Defendants’ arguments 

regarding both the LSA and the Asset Exchange Agreement fall short under these considerations.

VForce, and specifically Hicks on VForce’s behalf, negotiated information pertaining to 

indemnification that was directly at issue in the LSA. (ECF No. 74-2 at 111–13.) Furthermore, 

VForce’s “control over the workers” and workers’ compensation matters were important enough 

to the LSA that they were included in the executed version of the contract. (Id.; see also id. at 

36–37, 44.) Similarly, the main issues of the FACC/3PC involve indemnification and workers’ 

compensation in the VForce Agreement, and these in turn affect Plaintiff’s claims against 

VForce. (See ECF No. 68.) Therefore, the Court can rationally conclude information pertaining 

to indemnification and workers’ compensation policies and preferences between VForce and 

Bean Team was material to the LSA, and such information is also material to settling the 

contractual issues regarding indemnification and workers’ compensation raised in the instant 

litigation. See, e.g., W. Sugar Coop. v. Archer Daniels Midland Co., 98 F. Supp. 3d 1074, 1086–

88 (C.D. Cal. 2015) (attorney’s prior legal advice to plaintiffs regarding marketing of high 

fructose corn syrup was substantially related to the attorney’s subsequent representation involving 

defendants’ claims of fraud and false advertising against plaintiffs for its high fructose corn 

syrup); Fiduciary Tr. Internat. of Cal. v. Superior Court, 218 Cal. App. 4th 465, 474–75, 479–81

(2013) (attorney’s prior drafting of plaintiffs’ wills was substantially related to the attorney’s 

subsequent representation of defendants in litigation concerning interpretation of plaintiffs’ wills). 

Additionally, in negotiations over the Asset Exchange Agreement, VForce and Bean 

Team discussed a transaction by which VForce would acquire a controlling interest in Bean 

Team, with a right to repurchase. (ECF No. 74-2 at 126.). The VForce Agreement closely 

mirrored this transaction, as it provided for VForce to purchase Accuire, while Bean Team 

retained (and later exercised) the right to repurchase Accuire. (ECF No. 68 at 6.) Nobili also 

avers the Asset Exchange Agreement involved the conveyance of the business name “VForce 

Staffing Solutions.” (See ECF No. 74-2 at 3.) VForce argues this conveyance is of particular 

importance to the instant litigation because it supports a legal defense based on the contention that 

Plaintiff “confused ‘VForce Inc.’ and ‘VForce Staffing Solutions’” to improperly audit the 

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Policy. (Id.) The Court concludes these transactions, too, were material to the Asset Exchange 

Agreement and the execution of the VForce Agreement at issue in the instant litigation. See 

Fremont, 143 Cal. App. 4th at 69.

Because the Court can rationally conclude that information material to Hicks’s past 

representation of VForce pertaining to the LSA and Asset Exchange Agreement is also material 

to Hicks’s current representation of Cross-Defendants, Hicks’s successive representations are

substantially related. Jessen, 111 Cal. App. 4th at 713; Foster Poultry Farms, 2005 WL 2319186, 

at *5. Consequently, because a direct professional relationship existed between Hicks and 

VForce, and because “a substantial relationship between the two representations is established,” 

Hicks “is automatically disqualified from representing” Cross-Defendants. Cobra Sols., 38 Cal. 

4th at 847. 

C. Waiver

Alternatively, Cross-Defendants argue VForce waived its right to disqualify counsel

because it delayed bringing this Motion for two years. (ECF No. 75 at 11.) This argument is

unpersuasive. 

A former client may expressly or impliedly waive his right to disqualify counsel if he 

knowingly refrains from asserting it promptly. Trust Corp. v. Piper Aircraft Corp., 701 F.2d 85, 

87 (9th Cir. 1983). To establish waiver, however, a party must “demonstrate prima facie 

evidence of unreasonable delay in bringing the motion causing prejudice to the present client . . .” 

W. Cont’l Co. v. Nat. Gas Corp., 212 Cal. App. 3d 752, 763 (1989). Moreover, “the delay and 

the ensuing prejudice must be extreme.” Id. at 764 (citing River W., Inc. v. Nickel, 188 Cal. App. 

3d 1297, 1311 (1987)).

Cross-Defendants’ argument incorrectly focuses on the age of litigation, not the stage of 

litigation. See Ontiveros v. Constable, 245 Cal. App. 4th 686, 701–02 (2016) (finding delay was 

not extreme because pleadings were not yet final, discovery was still in progress, and no trial date 

was set). Here, the litigation is in its nascent stages, as the FACC/3AP was filed on June 15, 

2020 (ECF No. 68), and discovery is still open (see ECF No. 90). VForce could not have moved 

to disqualify Hicks two years ago because Hicks did not come to represent Cross-Defendants 

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until — at earliest — after the Court granted Barnwell’s motion to withdraw as counsel on May 

26, 2020. (See ECF Nos. 48, 67; see also ECF No. 78 at 9 (VForce was not made aware of the 

instant litigation until February 5, 2019, when it was served).) Further, VForce asserts it did not 

discover a conflict of interest until Nobili’s deposition on June 19, 2020. (ECF No. 78-1 at 2.) 

The filing of the instant Motion less than two weeks later hardly constitutes “extreme delay.”

Finally, to the extent Cross-Defendants argue they will be prejudiced because they would have to 

spend substantial time and money “getting new counsel up to speed” (ECF No. 75 at 11), the 

Court cannot conclude this concern outweighs the “paramount concern” of preserving public trust 

in the “scrupulous administration of justice and in the integrity of the bar.” Lennar, 105 F. Supp. 

3d at 1108; see also In re Complex Asbestos Litig., 232 Cal. App. 3d 572, 599 (1991) (loss of 

knowledgeable counsel and the necessity of seeking new counsel are not forms of prejudice that 

warrant preventing disqualification of counsel). Therefore, Cross-Defendants’ waiver argument 

fails. 

IV. CONCLUSION

For the foregoing reasons, the Court hereby GRANTS Defendants’ Motion to Disqualify 

Nathan Hicks as Counsel for Cross-Defendant CorTech and Cross-Defendants/Third-Party 

Defendants Accuire, Bean Team, Capserv, KaiserKane, DiManno, Gardner, Musgrove, and 

Oglesby. (ECF No. 74.) The aforementioned Cross-Defendant and Cross-Defendants/ThirdParty Defendants are hereby ordered to file a notice of substitution of counsel — or, if such a 

substitution is not possible — file a status report not more than 30 days from the date of 

electronic filing of this Order.4 

IT IS SO ORDERED.

DATED: March 29, 2021

4 The parties are additionally reminded that any corporation or entity cannot represent itself 

pro se and must be represented by counsel pursuant to Local Rule 183(a). 

Troy L. Nunley

United States District Judge

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