Developments of Interest

New Cases of Interest - April 20, 2016

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04/20/2016

Ontiveros v. Constable (2016) 245 Cal.App.4th 686.  In this case a minority shareholder sued the majority shareholder and the corporation asserting both direct and derivative causes of action relating to a dispute over the management of the corporation.  The corporate counsel represented both the corporation and the majority shareholder.  The minority shareholder brought a motion to disqualify the corporation's counsel.

The court held that counsel should be disqualified as to the corporation, but could continue to represent the majority shareholder.  The claims by the minority shareholder that were derivative in nature created a conflict between the majority shareholder's interest and the corporation's interest and the majority shareholder could not by consent cure that conflict on behalf of the corporation.  The attorney's ability to represent the majority shareholder however did not pose a threat to counsel's continuing duty of confidentiality to the corporation in that there were only the two shareholders involved.  There was no confidential information that counsel could have received from the corporation that was any different from the information that he received from the majority shareholder who also was the president of the corporation. 

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