NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

In re: HELLER EHRMAN LLP, 

Debtor, 

______________________________ 

PARAVUE CORPORATION, 

Plaintiff-Appellant, 

 v. 

HELLER EHRMAN LLP, 

Defendant-Appellee.

No. 16-15385 

D.C. No. 3:14-cv-03887-CRB 

MEMORANDUM*

Appeal from the United States District Court

for the Northern District of California

Charles R. Breyer, District Judge, Presiding

Argued and Submitted September 14, 2017

San Francisco, California

Before: GOULD and WATFORD, Circuit Judges, and SANDS,** District Judge.

Paravue Corporation (“Paravue”) appeals from the district court’s order 

 

* This disposition is not appropriate for publication and is not precedent 

except as provided by Ninth Circuit Rule 36-3.

** The Honorable W. Louis Sands, United States District Judge for the 

Middle District of Georgia, sitting by designation.

FILED

MAR 5 2018

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS
2 16-15385 

affirming the bankruptcy court’s grant of summary judgment for Heller Ehrman, 

LLP (“Heller”). Paravue argues the bankruptcy court erred in finding Paravue’s 

claim for legal malpractice was barred by California’s one-year statute of 

limitations. We agree and reverse.1

We have jurisdiction under 28 U.S.C. § 158(d). We review de novo a 

bankruptcy court’s grant of summary judgment. Gladstone v. U.S. Bancorp, 811 

F.3d 1133, 1138 (9th Cir. 2016). We view the evidence in the light most favorable 

to the non-moving party and determine whether there are any genuine issues of 

material fact and whether the bankruptcy court correctly applied substantive law. 

Id. 

California’s continuing representation rule provides that a claim for legal 

malpractice is tolled so long as “[t]he attorney continues to represent the plaintiff 

regarding the specific subject matter in which the alleged wrongful act or omission 

occurred.” Cal. Civ. Proc. Code § 340.6(a)(2) (Deering 2010). However, § 340.6 

does not expressly state a standard to determine when an attorney’s representation 

of a client regarding a specific subject matter has ended. Gonzalez v. Kalu, 43 Cal. 

Rptr. 3d 866, 870 (Ct. App. 2006). In Gonzalez, the California Court of Appeal 

held that “in the event of an attorney’s unilateral withdrawal or abandonment of the 

 

1 Heller’s Motion to Strike is GRANTED. Accordingly, the submissions are 

STRICKEN from the record in this case. However, Heller’s Motion for Sanctions 

is DENIED. 
3 16-15385 

client, the representation ends when the client actually has or reasonably should 

have no expectation that the attorney will provide further legal services.” Id. at 

872. “[C]ontinuous representation should be viewed objectively from the client’s 

perspective.” Id. at 873. However, “[w]hether the client actually and reasonably 

believed that the attorney would provide further legal services regarding a specific 

subject matter is predominantly a question of fact for the trier of fact.” Id. The 

court further stated that the determination of whether the relationship terminated 

may be decided as a question of law “if the undisputed facts can support only one 

conclusion.” Id. (citing Jordache Enterprises, Inc. v. Brobeck, Phleger & 

Harrison, 958 P.2d 1062, 1071 (Cal. 1998)). 

Using the standard articulated in Gonzalez, the bankruptcy court found that 

an email thread from July 3, 2007 to July 7, 2007 between Dr. Barghout and a 

Heller attorney had conclusively terminated Heller’s representation of Paravue as a 

matter of law. We believe this case involves a fundamental application of the 

principles concerning the continuing representation rule in the context of summary 

judgment. We find that the evidence in the record creates genuine issues of 

material fact and, therefore, the bankruptcy court erred in granting summary 

judgment. Viewing the emails in the light most favorable to Paravue, we find the 

emails do not irrefutably terminate the attorney-client relationship in this case. 

Genuine issues of material fact exist as to whether Heller’s substantive 
4 16-15385 

representation of Paravue terminated with the email thread. Further, a reasonable 

fact-finder could conclude that Heller’s representation had not terminated by July 

11, 2007. 

On May 10, 2007, Acuity sued Paravue and Dr. Barghout. On June 27, 2007, 

Acuity demanded Paravue assemble its assets for public sale. On July 3, 2007, and 

through the course of several days and various emails, Dr. Barghout and her 

personal counsel demanded Heller take action to prevent the sale. An attorney for 

Heller responded that Heller was unable to and would not act at Dr. Barghout’s 

direction. The attorney further stated to Dr. Barghout that she lacked authority to 

speak for Paravue and that the attorney expected Heller would seek to withdraw as 

early as the following week.

On July 10, 2007, Heller notified counsel for Dr. Barghout that Heller was 

moving to withdraw. Paravue’s director and Chief Executive Officer (“CEO”) had 

resigned effective July 9, 2007, leaving Dr. Barghout as the sole remaining director 

of Paravue. After Dr. Barghout learned of the CEO’s resignation, she appointed 

herself CEO, effective immediately. On July 10, 2007, Heller also emailed Dr. 

Barghout and her counsel requesting immediate consent to withdraw. 

On July 11, 2007, Heller notified Dr. Barghout and her counsel that it would 

appear before the court for an ex parte hearing on its application to withdraw as 

counsel for Paravue and requested that they provide notice of any opposition. In 
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response, Dr. Barghout’s counsel requested information concerning Heller’s fees 

and stock as a condition of withdrawal.2 Heller was not willing to provide the 

information or refund a portion of its fees.

Dr. Barghout alleges that on July 13, 2007, with the advice of Heller,3she 

appointed a director to the Board of Directors and the Board then confirmed her as 

CEO. The Parties dispute when Dr. Barghout’s role as CEO became effective and 

what authority she had prior to being confirmed by the Board. Heller’s application 

to withdraw as counsel for Paravue was granted on July 17, 2007.

Though not a complete recitation of all the pertinent evidence, the facts 

noted clearly establish that numerous genuine issues of material fact exist as to 

whether Heller’s relationship with Paravue ended with the email thread, as found 

by the bankruptcy court. Paravue argues that the bankruptcy court conflated Dr. 

Barghout with Paravue, the corporation. We agree. It appears the bankruptcy court 

viewed the facts from the perspective of Heller, the attorney, and as though Dr. 

Barghout was the client, not Paravue. The evidence does not show that Paravue, 

 

2 The basis on which Dr. Barghout withheld consent to withdraw, i.e., the 

disgorgement of fees, was deemed improper by the bankruptcy court.

3 We note that this fact was not raised below before either the bankruptcy court or 

the district court. We also note that Paravue’s citation to the record does not 

support their assertion that Dr. Barghout’s confirmation was done with the 

assistance of Heller. Therefore, we decline to include this assertion in our review. 

Nonetheless, it does appear that Dr. Barghout officially became CEO on July 13, 

2007.
6 16-15385 

the client, “actually and reasonably believed” that Heller would provide no further 

legal services. Gonzalez, 43 Cal. Rptr. 3d at 873. 

In GoTek Energy v. SoCal IP Law Group, LLP, 208 Cal. Rptr. 3d 428 (Ct. 

App. 2016), a law firm emailed its client, a corporation, on November 7, stating 

that it “must withdraw” and “[c]onsequently, the firm’s attorney-client relationship 

with [client] is terminated forthwith, and we no longer represent [it] with regard to 

any matters.” Id. at 431. The next day on November 8, the client responded by 

letter stating that the firm should make all necessary preparations to deliver its files 

to other counsel and thanked the firm for its services. Id. On November 15, the law 

firm sent a letter confirming that the attorney-client relationship was terminated 

and that it was transferring all files to designated counsel. Id. The client’s CEO 

testified that he believed the relationship terminated on November 15. Id. The 

California Court of Appeal held that the law firm had unilaterally withdrawn 

without client consent and the firm’s representation had ended on November 7, the 

date of the initial email. Id. at 433. 

Here, however, the emails were not directed to the CEO or any other officer 

of Paravue that Heller believed at the time was authorized to act for the 

corporation.4 Heller sent the emails to Dr. Barghout and her personal attorney, 

 

4 California Rules of Professional Conduct (“CRPC”) state that a lawyer who 

represents an organization or entity, including a corporation, is counsel for the 

organization itself, acting through its highest officer, employee, body or constituent 
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Russo. Dr. Barghout was then only the Chief Science Officer and one of two 

directors for Paravue, and there is no evidence that her personal attorney was 

counsel for Paravue or authorized to act for the corporation. During the course of 

the email thread from July 3 to July 7, Mr. Hootnick was still CEO of Paravue. At 

that time, Heller by its own statement believed Dr. Barghout had no authority to 

instruct the law firm. When asked by Dr. Barghout to take legal action on behalf of 

Paravue, the Heller attorney refused to do so and asserted Dr. Barghout had no 

authority to direct Heller on behalf of Paravue. Therefore, the bankruptcy court 

incorrectly concluded that there was no genuine issue of material fact as to whether 

these emails provided sufficient notice to Paravue, a corporation, that Heller was 

terminating the attorney-client relationship. 

Rather than simply identify the relevant evidence and determine whether 

they created a genuine issue of material fact, the bankruptcy court improperly 

weighed the evidence and implicitly made credibility determinations to conclude 

that no genuine issue of material fact existed as to the meaning and effect of the 

emails. Accordingly, the bankruptcy court erred in granting summary judgment on 

Claim 1019 because there are genuine issues of material fact regarding whether the 

attorney-client relationship terminated with the email thread, whether the 

 

overseeing the particular engagement. CRPC 3-600(A); La Jolle Cove Motel & 

Hotel Apts., Inc. v. Superior Court, 17 Cal. Rptr. 3d 467, 475 (Ct. App. 2004). 
8 16-15385 

relationship continued thereafter and, if so, for how long.

REVERSED and REMANDED.