Archive for July, 2013

How to bankrupt a corporation

Wednesday, July 31st, 2013

One of the most effective ways to bring a corporation to its financial knees is to put it into the hands of an arrogant, ignorant, and incompetent manager.

That’s exactly what the president of a Berkeley, California, corporation did late in 2012. Almalee Henderson, president of Berkeley Town House Cooperative Corporation (BTH), signed a contract with Bay Area Property Services (BAPS), making BAPS the manager of BTH. Thus began a financial slide into an even more precarious plight than BTH was already in.

At the time that BAPS began managing BTH, BTH had woefully inadequate internal financial controls. Its president and manager had essentially blank checks: They were spending money at their sole discretion. The board of directors, which by law was responsible for approving all expenditures, simply dozed while the corporate officials wrote checks. This regime had already resulted in the loss of an entire year’s corporate operating budget on payments to an unlicensed and uninsured contractor for work that failed so miserably that it will cost almost twice as much to correct it as BTH paid for it.

In stepped BAPS with the promise that it would cure the corporation’s financial ills. But there was no basis for such hope, because BAPS already had a poor reputation and Henderson’s secret contracting process did nothing to assure that only qualified management firms would be considered.

So, not surprisingly, BAPS in a mere nine months has brought BTH even closer to financial ruin than it already was.

Two months ago I sounded the alarm in a memorandum that I read out loud and delivered to the board of directors at a meeting of the board. I described seven financial requirements imposed by law on the corporation. For each of them, I pointed out that BAPS had failed to assure BTH’s compliance.

In the intervening two months:

  • The board of directors has not responded to my memorandum.
  • BAPS has not responded to my memorandum.
  • None of the violations reported in my memorandum has been corrected.

Thus, BAPS has further cemented its credentials as a corporate demolition specialist.

Attorney fields questions on Berkeley co-op lawsuit

Saturday, July 27th, 2013

Almost 40 residents of Berkeley Town House, a senior cooperative involved in a year-long lawsuit, gathered on 24 July for a pair of meetings focusing on how their co-op would be represented in the suit.

President Almalee Henderson began by turning control of the first meeting over to the co-op’s manager, Christopher Stanley of Bay Area Property Services, saying this was because she was a defendant.

Did that recusal make sense? The whole first meeting was organized by the defendants, and all questions were answered only by the defendants’ attorney. So, since it was essentially a campaign event for the defendants, why shouldn’t one of the defendants chair the meeting?

The residents had been told that the first meeting would be “an opportunity to discuss and ask questions”. One might have fantasized that this would be a long-delayed first attempt to get the warring parties and their affected neighbors into a direct conversation about the legal mess they were mired in. As the meeting began, however, Stanley announced that in fact there would be no discussion unless there was time left over (which there wasn’t). Instead, the sole purpose of the meeting was to let the “disinterested members” of the co-op pose questions (not statements) to the attorney for the defendants in the lawsuit. And, in fact, when one member later tried to make a statement, Stanley, Henderson, and about a dozen attendees did their best to drown her out with jeers.

Stanley announced that no minutes of the meeting would be taken and any recording of the meeting was prohibited.

To the best of my knowledge, this claim of a prohibition on recording was bogus. The alleged rule prohibiting the recording of board and membership meetings had not been properly adopted, and this wasn’t even such a meeting, since, if it had been, California law would have required that minutes be taken.

One co-op member then warned everybody that I might be recording the meeting anyway.

The fact that the defendants’ attorney, Fred M. Feller of Berkeley, was there, and was the crucial participant, was a surprise, and one could wonder whether it was appropriate. The issue being deliberated was whether the corporation and the individual defendants should be represented by the same people. Judge Steven A. Brick of the Alameda County Superior Court had determined that this dual representation created conflicts of interest, because, if the claims raised in the suit were correct, then the defendants had damaged the co-op and owed it monetary compensation and other benefits. Brick had ruled that the board and Feller must stop representing the co-op in the suit unless a “disinterested majority” of the members validly consented to waive the conflicts of interest. He had ordered the corporation’s regular attorney, Stephanie J. Hayes of Walnut Creek, to organize the corporation’s request to the members. Under her direction, the co-op’s manager had sent a form and letter to each eligible member. Why, then, wasn’t Hayes there to advise the members about the advantages and disadvantages of a conflict waiver? Why Feller, who had been found disqualified by conflicts of interest? Could Feller advise the co-op members as to whether it is in their best interest to let his clients control the co-op’s response to the suit? And could he do so with the co-op’s attorney and the plaintiff’s attorney both absent?

These ethical questions should have been raised at the illegal secret board meeting the previous Friday, attended by Hayes, when the decision to invite Feller had been made. But they remained unanswered.

Feller claimed that he was cheaper than Hayes, because he was being paid by the co-op’s insurance company, Travelers, while Hayes, had she been present, would have sent her bill to the co-op.

Feller’s reasoning seemed to be that it’s a better deal to get free advice from an opposing party’s lawyer than to pay for advice from one’s own. I have commented already on this doctrine.

Feller acknowledged his conflicted situation and stated an intent to present “both” sides and be impartial. He said he didn’t expect me to be satisfied, since I claim that everything he says is rubbish.

That is not true. I said that only about Feller’s argument claiming that conflict-free legal counsel for the co-op would cost more money. In fact, Feller often says things that I agree with, and at this meeting I found him more evenhanded, and less vituperative, than he has sometimes been. But he didn’t manage to avoid partisan and false claims entirely.

Asked to explain the conflicts of interest, Feller acknowledged that his dual-representation role inherently involved a potential conflict of interest. Any defendant could, indeed, ask for selfish representation. But he claimed no defendant had done so, and instead every defendant had asked him to do whatever was best for the corporation. Were it otherwise, Feller’s firm would not wait for a challenge but would on its own initiative declare a conflict and exit from its representation of the corporation. Feller admitted, however, that there is debate about what it means to do what is best for the corporation.

Feller also made a stab at explaining what a derivative lawsuit is, and how it would differ if subject to British law. He pointed out that any shareholder could file a suit for the benefit of a corporation, and it would be the court that decided on the merits.

Then Feller introduced an interpretation of the conflict-waiver decision as being all about me, not about the defendants. In Feller’s story, when the members consent to a conflict waiver, they are really expressing the opinion that this suit doesn’t benefit the corporation and that I should not represent the corporation. Replying to a member’s question as to what the members could do to help get the suit settled, Feller admitted that he was not objective or neutral, and then recommended consenting to the conflict waiver as the best answer. That, he said, would show the court that this is not a lawsuit supported by the members, and that was what this waiver was really about.

On its face, the waiver of conflicts is a decision about whether the defendants can represent the corporation. Feller is saying that in reality it’s the exact opposite: about whether the plaintiff can represent the corporation. This is illogical.

Feller was asked to explain the decision to set a deadline of 5 August, far earlier than the court-imposed deadline of 30 September. He pointed out that the court had told him he could ask for an earlier hearing date if the requisite consents were collected earlier. He also stated that he didn’t know why anybody would need till 30 September to make a decision.

I had explained why in a memo distributed at the meeting.

Feller did, however, predict that a majority consent to a waiver would be challenged in court. He made a sharp distinction between the conflict waivers that the individual defendants had already agreed to and those now being sought from the corporate membership. The former, he said, were based on elaborate and lengthy written disclosures to the defendants. But informed consent, he claimed, is hard to reconcile with a vote of the membership, and it is impractical to consult the entire membership about logistics. Moreover, it is normally the board, not the membership, that manages litigation. So, he said, the Board decided, on Stephanie Hayes’s advice, to distribute as much information as possible and then ask the disinterested members (those other than plaintiff or defendants) to consent or withhold consent to a conflict waiver.

This was false. The board did not decide to distribute as much information as possible. Other information could have been distributed, but was not. See my statement about that.

One member claimed that the information given to the members, including what she described as a biased presentation by Feller at this meeting, was no basis for the members’ informed consent.

Questions were also raised about the decision to require signatures on waiver consent forms, instead of using a secret ballot. Some argued that this had been poor judgment.  Stanley claimed that Hayes’s advice, or decision, had been based on the fact that California law doesn’t require a secret vote on this matter, but opponents argued that the option was still there and should have been chosen. Conflicting opinions were then expressed about whether the choice made by each member was going to be made public. No authoritative answer emerged.

Feller’s claim to have met with the board many times drew a doubtful remark from one of the directors, who said that he had never met Feller before.

Some attendees asked about the effects of a majority consent to a waiver, or a failure to obtain such a consent. Manager Stanley demonstrated his distance from the facts (and his willingness to violate his own rules of procedure) by asserting that a nonwaiver would force each defendant to get his or her own attorney. Feller corrected him. Otherwise, however, Feller expressed uncertainty as to the effects. He said that an independent litigation committee might be appointed to manage the corporation’s participation in the suit. As he had before, he expressed doubt that Travelers would agree, or could be required, to pay for a separate corporation attorney. And he expressed confidence that any separate legal representation of the corporation would be expensive, because of the complexity of the case. One resident warned later that the corporation’s expenses would grow enormously once discovery begins.

But what, then, was Feller’s firm doing for the corporation, it was asked? If it was defending the corporation for free, then why was the corporation paying large amounts for legal services? Feller replied that he was not responsible for the corporation’s decisions on retaining additional legal services from Hayes. Moreover, he said, his services didn’t extend to governance issues and Travelers had no obligation to pay for the corporation’s defense on those issues (or anything else, for that matter; Travelers defends corporations as a courtesy when it suits Travelers’s interest to do so). Those governance issues, said one member, were, however, the core issues in the lawsuit. Thus, the financial impact of a failure of a majority to consent to a conflict waiver was left speculative.

Questions arose about the effects of a waiver or nonwaiver on the corporation’s cross-complaint against contractors Garry Secrest and Esteban Cardiel. Feller wasn’t sure what the effects would be, but at one point asserted that the corporation would have to start paying for representation in the cross-complaint, or drop it, if the waiver failed.

He did not mention that in light of court discussions it was not clear that there would be any conflict allegation over Feller’s firm handling the cross-complaint.

He added that a successful settlement of the case would likewise create questions about the cross-complaint, including how it would be paid for. He said, however, that a deal was being discussed with the attorney handling it to keep it going in case the main case were settled. In response to one question, Feller stated that it had been the corporation’s decision to launch the cross-complaint, not something demanded by me. Feller also reassured the members that their co-op wasn’t unusual in suing contractors; in fact, he said, according to a knowledgeable source almost every residential community association has at some time sued a contractor.

A couple of members expressed hostility toward me in their questions to Feller. Grace Feuerverger asked a question for her husband Andrey: What could Mr. Feller could do help the co-op put a stop to this scheming idiot, Jonathan Pool, who has been holding all of us hostage for a very long time? Chrys Chrys said that I am an actor who wants to be on center stage and won’t agree to anything, so why not just go to court? A few sympathizers chimed in at that point. Feller kept his cool and stated that the case could end through a court judgment, a decision by me to drop the suit, or a voluntary settlement. He added that the defendants have been seeking the earliest possible trial date.

One member paraphrased a letter from absent member Mary Dean, stating that she had read all the court documents, had consented to a conflict waiver, and considered it “imperative” for the other members to do so. She described my motion to disqualify the current corporate representatives as probably “tactical” and predicted that, in the end, there will turn out to have been no conflict of interest. She pointed to what she called the member-initiated campaign to recall me from the board of directors as evidence that members did not want me representing the corporation.

Defendant Charles Tuggle advised the members to follow the money. He said that I had spent thousands of dollars of my own money on the case, that the corporation didn’t have that kind of money, and it therefore had no alternative but to accept such free representation as Travelers might offer.

This story omits one fact: Henderson and Stanley, with the tolerance of the board of directors, which includes Tuggle’s wife, have spent by now roughly $100,000 of the corporation’s money on extra legal fees billed by Hayes for the benefit of Tuggle and his co-defendants, in violation of the corporation’s bylaws.

Tuggle predicted that I had so much at stake that I would take this case “to the mat” and stated that I had the right to do so. But his and the members’ wish, said Tuggle, was to get the case settled.

If so, then why have the defendants consistently refused to discuss most of the claims raised by the suit? Doesn’t one settle issues by talking them over?

Feller offered his previously stated interpretation of the history of attempts to settle the case. As he recounted it, the insurance company committed itself to put up an unlimited amount of money to rectify the Secrest work, and then the parties spent months arguing over minor details. During that time the claim worked its way to higher levels in the insurance company, where it was concluded that there was no applicable coverage, so Travelers withdrew the commitment to pay.

Feller has never provided any evidence that Travelers Property Casualty Company of America has ever obligated itself to pay to correct the Secrest work. There was merely an oral statement that an adjuster would recommend such a payment to Travelers. Travelers has not written or signed any such offer. Furthermore, the delay after the tentative oral agreement was not due only to arguments between plaintiff and defendants. It was also due to several months going by when Travelers failed to undertake the estimating job that was necessary if Travelers was ever going to know, and tell the co-op, how much it would cost to correct the work. Thus, it appears that Travelers was stalling, perhaps deliberately, in order to give itself time to re-examine its tentative offer.

Feller described the current settlement situation as one in which Travelers was still willing to pay something, and the parties had only 2 major and 2 minor issues left to settle. One of the issues, he said, was reimbursement of my attorney fees.

Some members offered more pejorative comments about settlement efforts. Stanley and Henderson claimed that I had reneged on what I had agreed to.

I await specifics. Given this allegation, I consider it legitimate to state that in all of the negotiations so far there have been only three major retreats from initial tentative offers: one by Travelers and two by the defendants. Those retreats have vastly interfered with progress in negotiating a settlement, but, even so, they are not violations of any obligations, because their original offers were never binding.

As he prepared to depart, Feller made an offer. He said he was available to answer additional questions from any of the members, including questions that they might have been unwilling to ask in such a public forum. He said he would simply bill Travelers for the time he spent talking with interested members. A member asked him whether he had any trouble getting Travelers to pay his bills, and he replied that so far in this case all his bills had been paid.

Defendant Rita Zwerdling and several other members expressed confidence in the advice offered by Feller.

And what, finally, was not discussed? Most obviously, the substance of the case: What claims had been made in the complaint, what refutations of those claims had been offered by the defendants, what evidence existed for and against the claims, and what compromises or other agreements on these claims would be in the corporation’s interest. This omission was fundamental, because, as Judge Brick said, one decides whether there is a conflict of interest by pretending that the claims are true. Would the claims, if true, pit the corporation against the defendants? This primary question was never asked. Substance, it appeared, was still taboo.

This is a summary. Please let me know if you have a reason to want detailed notes on the discussions.

Attorney claims to offer free advice to Berkeley co-op in suit

Monday, July 22nd, 2013

Today allies of 7 defendants in a suit that I have filed on behalf of Berkeley Town House Cooperative Corporation have been in the halls canvassing for signatures.

They want co-op members to sign a waiver that will allow Fred M. Feller, the attorney representing the defendants, to represent the co-op at the same time, and will also allow the board of directors, which is controlled by defendants, to manage the corporation’s position in the lawsuit.

In support of their campaign, they are circulating an excerpt from a memo by Feller. In the memo, Feller admits that there are conflicts but doesn’t describe them. He gives only one reason to sign the waiver: saving money. Feller says he is now representing the co-op for free, but, if he stops representing it, the co-op will probably have to pay out of its own funds for another attorney.

Feller’s allegation is rubbish, and here’s why.

1. The co-op is not getting legal services for free in this litigation. During the last 2 fiscal years, co-op president Almalee Henderson, ex-manager Pamela Oettel, and current manager Christopher Stanley paid $66,000 for excess legal services, practically all for advice and representation related to this lawsuit. It’s excess in two ways: (1) It is the amount in excess of what was spent during the 2 prior years; (2) it is legal advice from an additional attorney, on top of the advice that Feller is providing. This splurge led to a 16% increase in assessments this year, and as the case goes to trial “you ain’t seen nothin’ yet” will probably apply. The reason is simple. As the court said in its ruling disqualifying Feller, “Town House is controlled by the Director Defendants”. The defendants dominate the board of directors and occupy the presidency. So, not surprisingly, the board is giving defendant Henderson and manager Stanley a blank check. They spend as much as they want, without even requesting the board’s OK, and they are raiding the corporate treasury to get legal advice that is purportedly for the corporation, but is kept secret by the defendants and benefits the defendants. This is a blatant violation of various provisions of state law and the corporate bylaws. The bottom line is this: The defendants are misusing BTH’s treasury as a bottomless personal-legal-defense piggy-bank. Consenting to a conflict waiver will let them keep right on doing that. Conversely, rejecting the conflict waiver will take control of the corporation’s legal position in this case away from the defendants and stop them from (mis)spending the co-op’s money on their personal defense.

2. The corporation needs only a minor amount of legal representation in this case. Feller tried to persuade the court that his dual role was saving the co-op a lot of money, but the court didn’t buy Feller’s argument. The ruling said that “defendants have not explained why Town House will need to engage in a robust defense or otherwise expend significant amounts in participating in this action”. This follows naturally from the fact that I, as plaintiff, am making the case against the defendants for the benefit of the corporation. The corporation doesn’t need to do that. Therefore, if a waiver were denied, and the defendants therefore weren’t abusing the co-op treasury for their personal defense, the corporation’s legal expenses would be drastically decreased.

3. It is possible that, if the waiver were rejected, BTH’s legal expenses on this case would not just decrease, but sink from $33,000 per year to zero. How zero? BTH has legal-defense rights under its insurance policy with Travelers Property Casualty Company of America. That is a huge and complex policy, running some 145 pages long. If the court affirms its order to Feller to stop representing BTH, BTH will ask Travelers to pay for a separate attorney, just as Travelers is now paying for Feller. Travelers will reply. That inquiry has not occurred, because the court order has not yet become permanent. My own guess is that Travelers will not be able to escape from an obligation to pay for a separate attorney. One reason is that my suit is partly a claim for $2,000 in penalties against the corporation itself. Feller slyly writes “The indication from the insurer is that they will not pay for separate representation.” “The indication”? What’s that? Probably some phone call in which Feller and his insurance-company buddy (Feller basically works for insurance companies) agree that it’s OK for Feller to say “the indication is”. Don’t forget, when Feller talks, he is saying what his defendant clients want him to say, and they desperately want to remain in control of the corporation-funded personal-defense piggy-bank.

4. It is pure propaganda to say, as Feller does, that he “represents” the co-op. He actually represents the people who have wasted the co-op’s assets, endangered the co-op members’ lives and property, and denied the co-op members’ democratic rights, and who therefore owe the co-op hundreds of thousands of dollars in compensation. My lawsuit aims to get that compensation paid to the co-op and the other acts of misconduct stopped. I seek a judgment against the defendants, which Travelers will indemnify them for. It is a fundamental principle of the law and the legal profession that an attorney cannot represent two parties with conflicting interests. It’s hard to imagine a more serious conflict than the one between BTH and those who have grievously damaged it. If Feller is willing to give BTH “free” representation, the reason is obvious. By doing that, he prevents the co-op from having truly competent and loyal counsel. He can assure that BTH doesn’t act in its own best interest, but instead remains a captive of those who have wronged it. What a great deal for Feller. I’m sure he’d be happy to represent me for free, too.

We have all heard the adage, “He who acts as his own attorney has a fool for a client.” Feller would have BTH members believe that “He who lets an opposing party’s attorney represent him for free is an intelligent client.” Try that one out on the nearest 6-year-old, and see what reaction you get.

Security questions worse than passwords

Sunday, July 21st, 2013

Unless you never forget, you know the frustration of choosing questions from a list for supplementary authentication. Why does my financial institution think it knows the questions that I, and only I, know the answers to? Perhaps because it never bothered to ask me.

The longest question list I have seen so far comes from First Republic Bank. Here are its questions:

  • What city were you in when you met your spouse or significant other?
  • What city were you in for the millennium [sic]?
  • What is the last name of your first grade teacher?
  • What is your dream job?
  • What city did you visit last on your honeymoon?
  • What city would you like to retire to?
  • What is the last name of the athlete you admire most?
  • What was the first company you worked for?
  • What city was your wedding reception held in?
  • What was your manager’s last name at your first job?
  • What is the last name of the teacher that influenced you most as a child?
  • What is the most unusual job you ever had?
  • What was the last name of your childhood doctor?
  • What was your favorite TV show as a child?
  • What date did you meet your current spouse (mmddYYYY)?
  • What was your most memorable gift as a child?
  • What was the last name of your kindergarten teacher?
  • What was the first concert you went to?
  • What was the name of your first stuffed animal?
  • What was the name city or town where your parents first met?
  • Where were you when you had your first kiss?
  • What was the last name of the first boy or girl that you kissed?
  • What was the name of a college that you applied to but didn’t attend?
  • Name something that you’ve always wanted to do but haven’t done yet.
  • What food do you hate the most?
  • What was the last name of your high school prom date?
  • What was the last name of your best friend in high school?
  • What is the last name of your favorite actor?
  • What is the last name of your grade school principal?

First Republic insists that I choose 4 of these questions, but I can confidently answer only the first of them. I remember the city, and there’s only one way to write its name.

All the others suffer from one of these defects:

  1. I don’t know the answer.
  2. I don’t remember it any longer.
  3. There are more than one, so I can’t count on remembering later which one I choose now.
  4. I can remember the answer, but there are multiple ways to express it, so my later answer may differ.
  5. There simply aren’t or weren’t any.

Even for the one that I remember, there’s no guarantee that I’ll continue remembering it as long as I live, or even that the correct answer will remain unchanged.

There is a solution to this problem, however. You can treat these questions and their answers the way I treat passwords, recording them in a password-protected, encrypted file along with your regular passwords. Don’t remember the name of your first stuffed animal? No sweat. Just answer “Socrates” and write this in your password file for later retrieval. Your bank won’t know that you cheated.

Judge confirms order in Berkeley co-op suit

Tuesday, July 16th, 2013

An Alameda County Superior Court judge on 10 July made final a ruling giving a Berkeley senior housing cooperative’s board of directors and corporate attorney three months to legitimize the way in which the co-op has conducted itself in an ongoing lawsuit over construction contracting, earthquake preparedness, and governance procedures.

In confirming his tentative ruling issued a week earlier, Judge Steven A. Brick acknowledged plaintiff Jonathan Pool’s claim that attorney Stephanie J. Hayes of the Walnut Creek law firm Hughes Gill Cochrane had a conflict of interest in representing Berkeley Town House Cooperative Corporation while also siding with the corporation’s officials being sued by Pool. Brick stated, however, that Pool’s attorney had not shown a conflict of interest involving Hayes. In contrast, Brick agreed with Pool’s conflict-of-interest claim against Fred M. Feller of the Berkeley law firm Buresh, Feller, Kaplan & Chang, since Feller is on record as representing both the co-op and the defendant individuals from whom Pool is seeking compensation to be paid to the co-op.

In barring Feller from continuing to play his conflicting roles until the co-op can show that a majority of its disinterested members are willing to waive the conflicts, Brick refused to tell Hayes how to organize this showing. Pool’s attorney, David H. Schwartz of San Francisco, asked Brick to require that the members be told whether the co-op’s insurance company, Travelers Property Casualty Company of America, would agree to fund the costs of the corporation’s legal defense with a new attorney independent of the individual defendants. Brick replied that he was intentionally giving Hayes the freedom to determine what a valid informed waiver by the co-op’s members would entail, and the court would decide, when the co-op submitted the members’ signatures or votes, whether they were valid. Feller stated that Hayes’s job would be difficult, since it was not obvious whether a mere gathering of signatures would suffice or a vote of the membership under the procedures specified in the Civil Code would be necessary. Brick said he believed Hayes could figure that out.

Feller also stated that he was going to meet with the co-op’s board of directors that afternoon. Feller did not mention that the co-op’s members had not been notified of that meeting, despite the Civil Code’s requirement that members be given at least two days’ notice of any board meeting in executive session.

In response to a question from Concord attorney Franklin C. Aghassi, representing Galt flooring contractor Esteban Cardiel, implicated along with Garry Secrest of Danville in the construction-waste claim of Pool’s complaint, Brick stated that while the co-op is collecting waivers of Feller’s conflicts of interest the entire case will be stayed, including the litigation among the co-op, Cardiel, and Secrest.

Judge proposes rank-and-file consultation in Berkeley co-op suit

Thursday, July 4th, 2013

An Alameda County Superior Court judge issued a tentative ruling yesterday calling for the members of a Berkeley senior housing cooperative to be consulted on who should represent the co-op in a lawsuit over construction contracting, earthquake preparedness, and governance procedures.

Judge Steven A. Brick’s ruling stated that, because of potential conflicts of interest between Berkeley Town House Cooperative Corporation and seven individual defendants in the suit, the law firm that represents the individuals must not also represent the corporation until a “disinterested majority” of the corporation’s members give their informed consent to the dual representation. Similarly, the ruling called for the membership to be consulted on whether the corporation’s board of directors, which the ruling said is controlled by defendants, may manage the corporation’s participation in the litigation. But the ruling rejected plaintiff Jonathan Pool’s request to disqualify the corporation’s regular law firm, stating he had not shown that this firm ever represented the individual defendants. In explaining the ruling, Brick evaluated the arguments in Pool’s motion, the defendants’ opposing brief, and Pool’s reply to that brief, agreeing with some and disagreeing with some arguments from each side. The ruling postponed the next case-management conference in the suit until 7 October to give the corporation and its attorney time to seek approvals from the rank and file.

The tentative ruling will become final unless any party contests it by 9 July.

Meanwhile, a Galt, California, contractor sued by the co-op answered the cross-complaint on 20 June by enumerating 36 legal bases for his defense and filing his own cross-complaint against the co-op and the individual defendants. Among the bases, Esteban Cardiel, also doing business as Cardiel Floor Covering, claimed that the co-op had drafted an unconscionable contract between them (Pool’s complaint claims there was no contract) and that any defects in the construction were due to acts of God, such as “preexisting ancient landslide”.