Verio Healthcare, Inc. v. Superior Court of Orange County
3 Cal. App. 5th 1315
| Cal. Ct. App. | 2016Background
- SG Homecare sued former employees (Schrier, Frederick, Martinez) and their new company Verio for breach of fiduciary duty, contract, trade secret misappropriation, unfair competition, and related claims after the employees abruptly left and allegedly deleted files and pursued SG clients.
- Schrier and his wife cross-complained against SG owner Rowley for constructive termination and intentional infliction of emotional distress, represented by attorney Donald Wagner of Buchalter Nemer.
- SG moved to disqualify Buchalter Nemer, alleging the firm had recently executed an engagement letter to represent SG on related matters.
- Defendants sought a nine-month stay of all proceedings under CCP §§ 595 and 1054.1 because Wagner is a state legislator; the trial court denied the ex parte stay and (separately) denied the disqualification motion in chambers.
- Defendants petitioned for writ relief; after summary denial and review by the California Supreme Court, the Court of Appeal issued an order to show cause and ultimately denied the writ.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court abused discretion by denying a legislator-attorney’s requested nine-month stay of the entire litigation under CCP §§ 595 and 1054.1 | Denying the stay was proper because plaintiffs had a right to seek provisional relief (e.g., preliminary injunction) and had a pending disqualification motion; a stay would abridge those rights. | The statutes make granting a continuance/extension mandatory for legislator-attorneys; the court therefore must grant the requested stay absent specified provisional-relief exceptions. | The court did not abuse discretion: it reasonably concluded the stay would abridge provisional remedies and was therefore properly denied. |
| Whether the 1968 amendments to CCP §§ 595 and 1054.1 made the statutes constitutionally mandatory, removing trial-court discretion | N/A (plaintiffs argued the court retains discretion and the statutes remain directory in practical effect). | The legislative amendment makes continuances/extension mandatory for legislator-attorneys except where provisional remedies would be defeated. | The court held the amendments did not cure the constitutional problem identified in Thurmond; the statutes remain directory and are applied subject to trial-court discretion. |
| Whether a stay that suspends discovery would improperly abridge the right to invoke provisional relief (e.g., preliminary injunction) | A stay that precludes discovery and motion practice can effectively prevent invocation of provisional remedies and thus may be denied. | Defendants argued a legislator-attorney is entitled to delay and could obtain the stay despite discovery needs. | The court agreed a broad stay would abridge the right to pursue provisional relief (discovery necessary for injunctions) and thus could be denied. |
| Whether a pending disqualification motion constitutes provisional relief for purposes of §§ 595 and 1054.1 exception | Plaintiffs: a disqualification motion is in the nature of preliminary injunctive relief and thus is covered by the statutes’ exception. | Defendants: a disqualification ruling is not literally a preliminary injunction and should not justify denying the mandatory stay. | The court accepted that disqualification motions are akin to provisional relief and may justify denying a stay under the statutory exception. |
Key Cases Cited
- Thurmond v. Superior Court, 66 Cal.2d 836 (directory treatment of continuance statute; separation-of-powers concerns)
- Lorraine v. McComb, 220 Cal. 753 (statute construed as directory to avoid constitutional infirmity)
- People v. Engram, 50 Cal.4th 1131 (analysis of statutory mandates vs. judicial discretion and constitutional limits)
- Meehan v. Hopps, 45 Cal.2d 213 (motion to disqualify counsel is appealable as denial of injunction)
- Reed v. Superior Court, 92 Cal.App.4th 448 (citing Meehan re: disqualification as injunction-like)
- Benasra v. Mitchell Silberberg & Knupp, 96 Cal.App.4th 96 (order on disqualification is in the nature of a preliminary injunction)