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Nov. 29 — Lawyers can’t be sanctioned under California ethics rules or statutes for misrepresentations to a third party, a federal magistrate judge ruled Nov. 21 ( Cakebread v. Berkeley Millwork & Furniture Co. , 2016 BL 387290, N.D. Cal., No. 16-cv-00083-RS (DMR), 11/21/16 ).
No cases applying California law have come close to stating that a lawyer owes a general duty of candor to third parties, according to Magistrate Judge Donna M. Ryu of the U.S. District Court for the Northern District of California.
The decision casts California as an outlier in regard to lawyers’ duties to deal honestly with third parties. All states but California have enacted some version of Model Rule 4.1(a), which forbids lawyers to knowingly make a false statement of material fact to a third person.
The dispute developed during litigation over a contract for custom cabinetry and furniture for the Cakebread Ranch in Thane, Wyo.
Technology veteran Steve Cakebread and his wife Jill claim that Berkeley Millwork & Furniture Co. owes them a partial refund for a canceled order. Berkeley Mills claims they didn’t return copies of its designs and used its designs in building furniture in their home.
Melvin D. Honowitz, an attorney for Berkeley Mills, contacted a real estate broker about the ranch, which was for sale. Honowitz falsely told her that he represented an interested buyer, and obtained various documents and photos.
The magistrate judge described the lawyer’s conduct as “troubling,” “questionable” and “misguided.” However, Honowitz didn’t violate any California professional conduct rule that would allow the court to sanction him for violating its rules, the magistrate said.
The Northern District’s local rules require lawyers to comply with California ethics rules and the state bar act, along with decisions interpreting those standards.
California has rules and statutes governing an attorney’s duty of honesty to clients, opposing counsel and the court, the magistrate said. But the few rules that govern a lawyer’s professional responsibility to unrepresented third parties deal with specific factual contexts unlike those here, Ryu said.
Ryu also said that Cal. Bus. & Prof. Code §6068(d), which requires lawyers to use means consistent with truth, addresses only a lawyer’s duty of candor toward the court.
There isn’t any California authority saying there’s a general duty of candor towards third parties, the magistrate said.
Ryu noted that Model Rule 1.4(a) imposes a duty of truthfulness to third parties, and Model Rule 8.4(c) forbids dishonesty. However, the Model Rules don’t provide a basis for sanctioning Honowitz because California hasn’t adopted the Model Rules, she said.
The Northern District of California’s local rules, in contrast to those of the Southern and Central Districts, don’t make reference to the Model Rules, the magistrate said.
The magistrate also concluded that the court couldn’t sanction Honowitz its inherent powers. His conduct didn’t amount to a clear ethical violation, much less one made in bad faith, Ryu said.
Covington & Burling LLP represented Steve and Jill Cakebread. Weyand Law Firm represented Berkeley Millwork & Furniture Co.
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