Court Opinion

ID: 6500033
Source: CourtListenerOpinion
Date Created: 2022-07-14 18:01:39.428973+00
Date Added: 2024-06-11T09:15:19.596261
License: Public Domain

Filed 7/14/22 Rabadi v. Nasrawi CA4/3

                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     FOURTH APPELLATE DISTRICT

                                                DIVISION THREE

 REEM J. RABADI,

      Plaintiff and Respondent,                                        G060602

           v.                                                          (Super. Ct. No. 30-2020-01166905)

 REHAB NASRAWI et al.,                                                 OPINION

      Defendants and Appellants.

                   Appeal from an order of the Superior Court of Orange County, Derek W.
Hunt, Judge. Affirmed.
                   Lysaght Law Group, Brian C. Lysaght and Natasha Riggs for Defendants
and Appellants.
                   Orrick Herrington & Sutcliff, Khai LeQuang and Richard W. Krebs for
Plaintiff and Respondent.
                                      *                  *                  *
                    Rehab Nasrawi, Shadi Nasrawi and Maha Nasrawi (collectively the
Nasrawis) appeal from an order granting respondent Reem Rabadi’s (Reem) motion to
disqualify their attorney Lysaght Law Group (LLG) because LLG represented Reem in a
                1
prior matter. The Nasrawis contend the trial court abused its discretion in granting the
motion to disqualify because it failed to consider whether any information LLG obtained
in the prior matter was material to the issues in the present action. As explained further
below, we conclude the prior and present matters are substantially related and
accordingly, we affirm.
                                                          I
                              FACTUAL AND PROCEDURAL BACKGROUND
A. Complaint
                    On October 22, 2020, Reem filed a declaratory relief action, seeking a
judicial declaration that: (1) she had purchased three life insurance policies issued to her
sister Rehab pursuant to a November 22, 2018 Purchase and Sale Agreement (PSA), and
(2) her nephew and designee, Kameel Reehani, was the sole owner of record of the
policies in accordance with change of ownership forms submitted to the life insurance
companies.2 In her complaint, Reem alleged that in 2015, Rehab and her son Shadi asked
her to purchase life insurance policies insuring Rehab. In exchange for paying all policy
premiums, Reem would receive 80 percent of the death benefits, of the premiums she
paid. Shadi was designated the beneficiary of the remaining 20 percent interest. Rehab
subsequently obtained three life insurance policies, and Reem made various payments to
her, which were used to pay the premiums.
                    The complaint further alleged that in 2017, Rehab and Shadi sought to
renegotiate the parties’ agreement, and in response Reem stopped making payments,

         1
                  For clarity and convenience, we will – as the parties do in their briefing – refer to individuals by
their first name. No disrespect is intended.
           2
                  The insurers also were named as defendants, but because they are not parties to this appeal we will
only refer to them when necessary.

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which resulted in two policies lapsing. Subsequently, in 2018, the parties entered into the
PSA, wherein Reem agreed to reinstate the lapsed policies and continue to pay all
premiums in exchange for a 70 percent interest in the death benefits. Shadi was
designated the beneficiary of the remaining 30 percent interest. In accordance with the
PSA, Rehab executed change of ownership forms for the policies, changing the owner of
record to Reem. But the forms were never submitted to the insurers due to Shadi’s
threats against Reem. During this period, Reem’s daughter, Sandra Rabadi, and Rehab
opened a joint bank account, and Reem began making payments into this account instead
of directly to Rehab.
                The complaint alleged that in 2019, after Rehab was diagnosed with cancer,
Shadi began pressuring Reem to sell the policies so he could cash out. Shadi and his wife
Maha also began contacting the insurers to change the policy information. In response
Reem and Rehab agreed to make Reehani the mediator and new owner of record. In
August 2020, Rehab executed several change of ownership forms changing the record
owner of the policies to Reehani and submitted the forms to the insurers. The complaint
further alleged that Shadi then contacted the insurers, claiming Rehab’s signature on the
change of ownership forms were forged and requesting they reverse any changes to the
record owner. Subsequently, the insurers either refused to confirm whether they have
processed the change of ownership forms or advised Reem they had reversed the change
of ownership.
B. Answer and Cross-Complaint
                Rehab, represented by LLG, filed an answer generally denying the
allegations. She also asserted numerous affirmative defenses, including fraud and duress,
based on allegations that Reem threatened or tricked her to sign the documents.
                On June 22, 2021, the Nasrawis, represented by LLG, filed a cross-
complaint against Reem and her son Salameh Rabadi (collectively the Rabadis), and

                                             3
Reehani. The cross-complaint alleged causes of action for false impersonation and elder
abuse, and sought restitution, quiet title and declaratory relief.
              The cross-complaint alleged that in 2015, the Rabadis enticed Rehab, who
does not read or speak English, to apply for life insurance. She agreed to allow Salameh
to apply for life insurance on her behalf and “to fund all insurance premiums to repay
prior debts owed to Rehab by his family.” Rehab would be the insured and sole owner,
and Shadi would be the sole beneficiary.
              In May 2017, Salameh informed Shadi he had a buyer for one of the
policies, but Rehab refused to sell. In retaliation, Salameh stopped paying premiums on
two policies, causing them to lapse. During the following years, defendants or their
agents began impersonating Rehab and contacting the various life insurance companies to
change the owner of record or beneficiary. On Thanksgiving evening in 2018, Reem’s
daughter and another member of Reem’s family fraudulently induced Rehab to sign the
PSA.
              The cross-defendants filed an answer, generally denying the allegations and
raising numerous affirmative defenses.
C. Motion to Disqualify Attorney
              On July 16, 2021, Reem moved to disqualify LLG from representing the
Nasrawis because LLG previously had represented Reem on an allegedly substantially
related matter. The motion alleged that LLG represented Reem, her husband Josef, her
daughter Sandra and her son Nidal from April 2013 through April 2014. In that matter,
LLG prepared a complaint asserting causes of action relating to their interests in life
insurance policies of others, including misappropriation of commission, attempting to sell
the policies without the Rabadis’ consent and misappropriation of the interests of others
in the policies. The motion to disqualify alleged the prior matter involved similar factual
allegations including: “(1) misappropriation of commissions in connection with the sale
of life insurance policies, (2) the secret selling of life insurance policies without the

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owners’ consent, (3) impersonating other parties in efforts to deceive insurers and other
owners of interests in life insurance policies, (4) false reports, misrepresentations, and
forgeries of life insurance documentation presented to insurers of policies in which the
Rabadis hold an interest, (5) the financing of premiums on life insurance policies owned
by the Rabadis, (6) elder abuse, (7) the inability to speak or understand English, (8)
solicitations of other Jordanians in Orange County to invest in life insurance, (9)
misappropriating others’ interests in life insurance policies, (10) taking advantage of
unsophisticated elderly middle easterners through trickery and deceit by using their
family members as agents and accomplices, and (11) conspiracies between Jordanian
insureds and brokers to defraud those holding contractual interests in life insurance
policies of others.”
               The motion to disqualify further alleged that during the year-long
representation, LLG’s attorneys exchanged more than 1,100 e-mails with Sandra and
Nidal, who were the primary client contact due to Reem’s limited English; participated in
50 conference calls with Sandra and Reem; and met in person with the Rabadis numerous
times. The motion asserted that LLG obtained confidential information from Reem and
her family, including the Rabadis’ strategies for acquiring and financing life insurance
policies and their settlement and litigation strategies. In a supporting declaration, Reem
stated she “shared private information with Brian Lysaght and Natasha Riggs [of LLG],
through Sandra and Nidal, about our family relationships, finances, business pursuits,
litigation and settlement approaches, financial resources, banking information, my
ownership interests in life insurance policies and strategies for life insurance policy
investment.”
               The verified Fourth Amended Complaint filed in 2011, prepared by LLG,
alleged that Abraham Khader, a licensed life settlement broker and life insurance agent,
“engaged in an affinity fraud scheme targeting fellow Middle Eastern citizens,
particularly seniors who had limited English language skills. . . .” It further alleged that

                                              5
Khader solicited and sold to Reem a fractionalized interest in securities in life insurance
policies of others; Reem made payments directly to the insured, which the insured used to
pay premiums; and some underlying policies were sold without Reem’s approval or
knowledge.
D. Opposition to Motion to Disqualify
              The Nasrawis opposed the motion to disqualify LLG, arguing there was no
substantial similarity between the prior matter and the instant matter “other than the fact
that both the former and present action involve life insurance. In the former action
[Reem] alleged fraud by third persons in connection with policies in which she had an
interest. Here it is [Reem] who is charged with orchestrating a fraud concerning the
rights of her sister Rehab in the subject policies.” The motion further asserted that LLG
never received any confidential information from Reem that was material, i.e., directly at
issue or of critical importance to the present action. It noted LLG attorneys had no
contact with Reem after the initial client intake, citing supporting declarations from Brian
Lysaght and Natasha Riggs.
              The Lysaght and Riggs Declarations both stated the attorneys had minimal
contact with Reem, mainly exchange of greetings. They did not have direct
communications with Reem, and did not know whether she had limited English skills.
The attorneys also stated that in the prior action, Khader’s attorney reached a clandestine
settlement with the Rabadis that would deny LLG its contingency fee, resulting in LLG’s
withdrawal from the case.
              The Nasrawis also objected to the statement in Reem’s declaration that she
shared private information with LLG through Sandra and Nidal for lack of foundation,
relevance, hearsay, and improper legal opinion. They also argued the declaration was not
credible and “at best attest to a non-issue.” “The sole commonality [between the prior
and instant matter] is that Reem and her children (Nidal and Sandra) learned enough from

                                             6
their former opponent . . . in the former case [that] they were able to use against Rehab in
this case.”
E. Reply
              In her reply to the Nasrawis’ opposition, Reem argued she presented
evidence of critical or unique confidential information LLG obtained in the prior matter,
including, inter alia, the Rabadis’ strategies for acquiring and financing life insurance
policies of others for investment. She noted her motion to disqualify LLG stated the
confidential information was conveyed through Sandra and Nidal, who acted on her
behalf due to her limited English skills. Reem further argued that LLG should be
presumed to have obtained confidential information because the two matters are
substantially related. Finally, Reem denied that the settlement in the prior matter
involved a clandestine payment that denied LLG its contingency fee.
F. Ruling on Motion to Disqualify
              At the hearing on the motion to disqualify, the trial court stated it took
attorney disqualification motions “very seriously because the challenge of this sort to any
attorney has to be extremely painful.” The court noted that in the motion, Reem alleged
LLG had access to her private information and that LLG has used that information to
prepare and file the cross-complaint. The court found the prior and present matters
substantially related because they both involved the families’ interest in life insurance
policies of others. It noted that the motion claimed the LLG attorneys became privy to
“legal strategies common to all of the Rabadi family members and specifically, in
reference to these multiple life insurance policies in the changing [of] beneficiaries.”
Finally, the court noted the LLG attorneys had some animosity against Reem related to
fees in the prior matter. For all these reasons, the court stated it would grant the motion
to disqualify LLG.

                                              7
                                              II
                                         DISCUSSION
              “A trial court’s authority to disqualify an attorney derives from the power
inherent in every court ‘[t]o control in furtherance of justice, the conduct of its ministerial
officers, and of all other persons in any manner connected with a judicial proceeding
before it, in every matter pertaining thereto.’ [Citations.] Ultimately, disqualification
motions involve a conflict between the clients’ right to counsel of their choice and the
need to maintain ethical standards of professional responsibility. [Citation.] The
paramount concern must be to preserve public trust in the scrupulous administration of
justice and the integrity of the bar. The important right to counsel of one’s choice must
yield to ethical considerations that affect the fundamental principles of our judicial
process.” (People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc.
(1999) 20 Cal.4th 1135, 1145 (SpeeDee Oil).)
              We review a trial court’s ruling on a disqualification motion for abuse of
discretion. “If the trial court resolved disputed factual issues, the reviewing court should
not substitute its judgment for the trial court’s express or implied findings supported by
substantial evidence. [Citations.] When substantial evidence supports the trial court’s
factual findings, the appellate court reviews the conclusions based on those findings for
abuse of discretion. [Citation.] However, the trial court’s discretion is limited by the
applicable legal principles. [Citation.] Thus, where there are no material disputed factual
issues, the appellate court reviews the trial court’s determination as a question of law.
[Citation.] In any event, a disqualification motion involves concerns that justify careful
review of the trial court’s exercise of discretion.” (SpeeDee Oil, supra, 20 Cal.4th at
pp. 1143-1144.)
              This case presents an issue of “successive representation,” which occurs
when an attorney serves “as counsel to a successive client in litigation adverse to the
interests of the first client.” (Flatt v. Superior Court (1994) 9 Cal.4th 275, 283.)

                                              8
“[W]hen ruling upon a disqualification motion in a successive representation case, the
trial court must first identify where the attorney’s former representation placed the
attorney with respect to the prior client.” (Jessen v. Hartford Casualty Ins. Co. (2003)
111 Cal.App.4th 698, 710 (Jessen).) “[A] direct attorney-client relationship is inherently
one during which confidential information ‘would normally have been imparted to the
attorney by virtue of the nature of [that sort of] former representation,’ and therefore it
will be conclusively presumed that the attorney acquired confidential information
relevant to the current representation if it is congruent with the former representation.”
(Id. at p. 709.) “If the court determines that the placement was direct and personal, this
facet . . . is settled as a matter of law in favor of disqualification and the only remaining
question is whether there is a connection between the two successive representations, a
study that may not include an ‘inquiry into the actual state of the lawyer’s knowledge’
acquired during the lawyers’ representation of the former client.” (Id. at pp. 710-711.)
              Where the prior representation was direct, “the only issue before the trial
court was whether there was a substantial relationship between what [LLG] did for
[Reem] [in the prior matter] and what [LLG] seeks to do for [the Nasrawis] [in the
present action].” (Farris v. Fireman’s Fund Ins. Co. (2004) 119 Cal.App.4th 671, 679
(Farris).) “Successive representations will be ‘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,
supra, 111 Cal.App.4th at pp. 713.) “To create a conflict requiring disqualification, . . .
the information acquired during the first representation must be ‘material’ to the second;
that is, it must be found to be directly at issue in, or have some critical importance to, the
second representation.” (Farris, supra, 119 Cal.App.4th at p. 680.)

                                               9
              In determining whether disqualification is required, the specific task the
attorney performed is not dispositive. For example, “[a]n attorney who, in the former
representation of an insurance company, prepared a form of insurance policy for the
company’s use cannot in the second representation sue the insurance company for a
breach of that policy on behalf of a person to whom a form of the policy was
subsequently issued. . . . Though the services are distinct, the representations are
substantially related because they both center on the terms and conditions of the single
policy form which was the handiwork of the lawyer.” (Farris, supra, 119 Cal.App.4th at
p. 682.) Similarly, “[c]overage disputes are substantially related to bad faith actions for
the purpose of attorney disqualification because they both turn on the same issue—
whether or not there is coverage under the terms of the policy.” (Id. at p. 684.) Thus,
an attorney who was privy to the insurer’s decision-making process to accept or deny
coverage or to settle or litigate coverage disputes due to a prior representation cannot
later represent an insured suing the insurer for bad faith or breach of contract because
“the critical evidentiary inquiry into [the insurer]’s actions in investigating and coming to
a decision on [the insured]’s claim for benefits will necessarily include an assessment of
[the insurer]’s internal claims and coverage policies and practices, in general and with
respect to all comparably-placed insureds.” (Id. at pp. 684-685.)
              The Nasrawis argue the trial court abused its discretion in granting the
disqualification motion because it “failed to properly consider and make findings on the
dispositive question of whether there exists a ‘substantial relationship’ between the
successive representations such that information presumptively received in [the prior
matter] could even be theoretically be used against the former client in [the present
matter].” They argued the trial court never considered any evidence in the moving
papers, but relied solely on the declarations of Lysaght and Riggs plus the fact that the
two cases involved life insurance to make its substantial relationship finding. We
disagree.

                                             10
               At the hearing on the disqualification motion, the trial court found that the
prior and present representations are substantially related and did not limit itself solely to
the Lysaght and Riggs declarations. As summarized above, the trial court explained its
substantial relationship finding was based on the claims in the motion including: (1)
Reem’s claim that LLG obtained “private” information which it had used to prepare the
cross-complaint against her and (2) the general claim that as a result of the prior
representation LLG attorneys became privy to “legal strategies common to all of the
Rabadi family members and specifically, in reference to these multiple life insurance
policies in the changing [of] beneficiaries.” The court did rely on the Lysaght and Riggs
declarations for certain facts, such as the existence of the attorney-client relationship and
the general nature and subject of the prior representation, but it never stated it relied
solely on those declarations to make its substantial relationship finding, and nothing in
the record suggests that to us. The court’s comments about the claims in the moving
papers and its subsequent ruling belie any inference the Lysaght and Riggs declarations
were all it considered in granting the disqualification motion.
              In their reply brief, the Nasrawis argued LLG’s representation was not
direct or personal because of the lack of direct contact between LLG’s attorneys and
Reem. This argument is forfeited because it was raised for the first time in the reply
brief. (See American Indian Model Schools v. Oakland Unified School Dist. (2014) 227
Cal.App.4th 258, 276 [“Fairness militates against allowing an appellant to raise an issue
for the first time in a reply brief because consideration of the issue deprives the
respondent of the opportunity to counter the appellant by raising opposing arguments
about the new issue”].) But even if it were not forfeited, the trial court’s finding of a

                                              11
direct relationship is supported by Reem’s statement in her declaration that she conveyed
                                                                                                                 3
private information to LLG via her children, which the trial court noted at the hearing.
                  The Nasrawis also argue that any information LLG acquired was “classic
playbook information” or mere general knowledge of a former client’s general business
practices or litigation philosophy, which was not material to the issues in the second
representation. We disagree that information about Reem’s acquisition of interest life
insurance policies of others would not be material to the present action. The parties
dispute whether the Nasrawis solicited Reem to purchase life insurance for Rehab (as
alleged in Reem’s complaint) or Reem and Salameh induced Rehab to purchase life
insurance for herself (as alleged in the cross-complaint). Knowledge about Reem’s
acquisition of interests in the life insurance policies of others would be directly relevant
to – and of some critical importance for – a fact finder trying to resolve these disputes.
For example, if Reem did not solicit others to purchase life insurance policies, but only
purchased those policies after being solicited herself, it would bolster Reem’s claim that
the Nasrawis solicited her to purchase an interest in Rehab’s life insurance policies.
Thus, any knowledge of the regularity of Reem’s acquisition of life insurance of others
would be “material to the evaluation, prosecution, settlement or accomplishment of the
current representation given its factual and legal issues.” (Jessen, supra, 111 Cal.App.4th
at pp. 713.) In sum, the trial court did not abuse its discretion in granting the
disqualification motion because the prior and present matters are substantially related.

         3
                   The Nasrawis’ objected to Reem’s statement below, but on appeal do not challenge the trial
court’s consideration of that statement in granting the disqualification motion. Moreover, they fail to persuade us
that the statement lacked foundation, relevancy or constituted inadmissible hearsay or improper legal opinion.

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                                           III
                                      DISPOSITION
             The order is affirmed. Respondent is entitled to her costs on appeal.

                                                 BEDSWORTH, ACTING P. J.

WE CONCUR:

SANCHEZ, J.

MARKS, J.*

*Judge of the Orange County Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.

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