Calif. court denies company's motion to disqualify firm

Jessica M. Karmasek Jul. 7, 2011, 10:49am


SANTA ANA, Calif. (Legal Newsline) - A California appeals court has upheld a trial court's order denying an engineering company's motion to disqualify a law firm from representing the Orange County Water District in a dispute.

The California Court of Appeal, Fourth Appellate District, Division Three concluded in its June 23 opinion that the Orange County Superior Court "correctly determined" that the water district's lawsuit is "essentially an action seeking to recover the costs to investigate and remediate the contaminated groundwater."

The defendants, the Arnold Engineering Company et al., appealed the trial court's order denying their motion to disqualify the Sacramento firm of Miller, Axline & Sawyer from representing the water district.

The defendants point to the decisions in County of Santa Clara v. Superior in 2010 and People ex rel. Clancy v. Superior Court in 1985.

They contend the two decisions require disqualification because the water district agreed to pay the Miller Firm a contingency fee for prosecuting the public nuisance abatement action on the public's behalf.

The defendants argue that the Miller Firm's financial interest in this litigation conflicts with the heightened duty of neutrality Santa Clara and Clancy impose on any attorney prosecuting a public nuisance action for the public's benefit.

The trial court denied the defendants' motion after finding the water district did not bring the action on the public's behalf, but rather to recover compensatory damages allegedly caused by the defendants' contamination of certain groundwater aquifers.

Justice Richard M. Aronson authored the appeals court's opinion.

In it, the justices said they found no abuse of discretion and affirmed the trial court's order.

"Here, unlike Clancy and Santa Clara, the water district did not bring this action on the public's behalf seeking only an order requiring defendants to abate a public nuisance. Rather, the water district brought this action in its own name to recover compensatory damages it suffered from the groundwater contamination defendants allegedly caused," the appeals court wrote.

"The water district's pleading makes clear that, as the trial court found, this is an action to recover remediation costs. The nominal public nuisance cause of action is only one of six claims and specifically alleged the nuisance 'specially and adversely affected' the water district and caused it injury 'separate and distinct from that of the public.'"

The defendants, the appeals court said, also argue that the action is prosecuted on the public's behalf because the water district represents the water users in its service area.

"According to defendants, the water district merely exercises sovereign powers to regulate and protect groundwater for its users' benefit and therefore seeks to protect the public's rights by bringing this action. This argument, however, misses the mark," it wrote.

"Although the water district represents the water users in its service area, and may bring litigation on their behalf, the water district did not bring this action in a representative capacity or on its users' behalf. This action does not seek to enforce any rights the water district's users may have in the groundwater or to recover any damages its users may have suffered from the contamination."

The court said the defendants base their argument on the assumption the water district can only act in a representative capacity when it is carrying out its duties to manage, regulate, replenish and protect the groundwater within its service area.

"Defendants, however, fail to cite any authority to support that assumption," it wrote.

And if it were true, all public entities could act in a representative capacity only and could never hire a contingent-fee attorney, the appeals court noted.

However, both Clancy and Santa Clara recognize that public entities can bring litigation in their own name to recover damages and hire contingent counsel to prosecute the litigation.

"The public always benefits when a public entity is able to obtain monetary damages from a defendant that injured the public entity's property or interests. Indeed, any time a public entity recovers damages through litigation the public is benefited because the public entity has additional funds to carry out its public purpose," the court concluded.

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