SANTA ANA, Calif. (Legal Newsline) - The California Court of Appeals's Fourth Appellate District, Division Three, granted in part and denied in part a petition for writ of supersedeas, or suspension, in a case over construction site damages.

The court issued its opinion Sept. 26. URS Corp. and AECOM, defendants and appellants, and Atkinson/Walsh Joint Venture filed lawsuits against each other in March for alleged damages at a construction site.

On June 26, Atkinson/Walsh filed a motion to disqualify attorneys at Pepper Hamilton LLP from representing URS and AECOM.

According to the order, Atkinson/Walsh contended the companies’ counsel "had improperly accessed documents that they had made available for mediation sessions ahead of legal action."

URS and AECOM opposed the motion to dismiss Pepper Hamilton, maintaining their counsel didn’t cross any line with the parties’ confidentiality agreement when it accessed the documents or by filing a complaint on their behalf while it held the documents.

The Orange County Superior Court granted the motion, noting that information in the documents most likely would be used against Atkinson/Walsh as the case made its way through the legal process.

“Disqualification is therefore appropriate to eliminate the possibility that Pepper Hamilton would exploit the unfair advantage,” the lower court wrote in its July 31 order.

URS and AECOM appealed the superior court decision.

On Aug. 3, the trial court rejected their ex parte application to stay proceedings pending the appeal.

The next day, on Aug. 4, URS and AECOM filed a petition for writ of supersedeas, which orders the suspension or superseding of a previously issued writ. The defendants maintained that the order of disqualification should result in a stay of all trial court proceedings. They also argued that if there was no automatic stay, the appeals court should instead stay all trial court proceedings.

Atkinson/Walsh opposed the petition. 

The appeals court pointed out in its opinion that orders regarding attorney disqualification are appealable in California.

“The order disqualifying Pepper Hamilton cannot be enforced pending this appeal, eliminating appellants’ primary argument for irreparable harm,” the court wrote. “But appellants may be leery of continuing to litigate the case with Pepper Hamilton because an affirmance of the disqualification order will mean they need to switch counsel at a later point in the litigation.”

Going forward, the appeals court also noted Atkinson/Walsh must determine whether it is better for them to move forward with a portion or all of the trial court proceedings, or exclude Pepper Hamilton from any involvement pending outcome of the appeal.

"The best outcome in this case (and future similarly situated cases) will be for the parties to stipulate to the terms of a stay of trial court proceedings,” the court wrote in the opinion. “Trial courts will undoubtedly be receptive if cooperation proves feasible.”

Ultimately, the appeals court ruled that Pepper Hamilton could continue to represent its clients while the appeal is considered.

“The petition for writ of supersedeas is denied to the extent it requests a discretionary stay of all trial court proceedings,” the court concluded. “The partial denial of the petition is without prejudice to further proceedings in the trial court or in this court as discussed in this opinion.”

Moreover, the appeals court determined that the temporary stay it imposed in August would be modified to be limited to the enforcement of the disqualification order.

The appeals court also rejected Atkinson/Walsh’s motion for judicial notice.

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