Epstein vs. Hanford Kibou Investments LLC

Defendant Wenqiang Bian’s Motion to Disqualify is GRANTED.

Defendant Bian brings this motion to disqualify Kristopher Diulio and the Diulio Law Firm PC from representing Plaintiffs in this action.

“To protect the confidentiality of the attorney-client relationship, the California Rules of Professional Conduct bar an attorney from accepting ‘employment adverse to a client or former client where, by reason of the representation of the client or former client, the [attorney] has obtained confidential information material to the employment except with the informed written consent of the client or former client.’” (In re Complex Asbestos Litigation (1991) 232 Cal.App.3d 572, 587; Rule 1.9 Rules of Prof. Conduct.) “For these reasons, an attorney will be disqualified from representing a client against a former client when there is a substantial relationship between the two representations. Id. When a substantial relationship exists, the courts presume the attorney possesses confidential information of the former client material to the present representation.” (Id.)

A “standing” requirement is implicit in disqualification motions. (Coldren v. Hart, King & Coldren, Inc. (2015) 239 Cal.App.4th 237, 247.) Generally, before disqualification of an attorney is proper, the complaining party must have or must have had an attorney-client relationship with that attorney. The burden is on the party seeking disqualification to establish the attorney-client relationship. (Id.)

Attorney-client relationship

A prior attorney-client relationship exists between Kristopher P. Diulio of The Diulio Firm PC and defendant Bian. Diulio previously represented defendant Bian in a prior action known as the Cashera Lawsuit.

On May 20, 2019, a lawsuit entitled Khodadad v. Banuelos, et. al, Case No. 19C0195 (the “Cashera Lawsuit”), was filed in Kings County Superior Court by plaintiffs Tony Khodadad and Cashera Plaza, LLC (the “Cashera Claimants”) against Bian, Bian’s wife, their family trust, and Rene “Ray” Francis LaTreill (“LaTreill”), Bian’s real estate broker (the “Cashera Respondents”). In that case, LaTreill arranged a loan for Bian to make to the Cashera Claimants, as borrowers. When the borrowers failed to repay the loan, LaTreill handled the foreclosure process against the property securing the loan. The Cashera Claimants filed the Cashera Lawsuit claiming Bain, LaTreill and others failed to fund the loan and wrongfully foreclosed on real property.

LaTreill and John David Thomas arranged for joint legal representation of Bain, his wife, their trust, and La Treill by Diulio and the law firm of Ford & Diulio PC, who continued to represent them in the Cashera Lawsuit for three years. Plaintiff David Epstein was also co-counsel to the defendants.

In this action, plaintiff Epstein and Thomas allegedly approached Bian through LaTreill about lending them $487,000 to be used as a construction loan for a property located on Shadylane in Laguna Beach.

A deed of trust securing the $487,000 loan was recorded against the Shadylane property in Laguna Beach. When Shadylane failed to repay the loan, Bian commenced foreclosure proceedings against the property securing the loan. Shadylane filed bankruptcy to avoid foreclosure, but on November 7, 2025, Bian obtained an order from the Bankruptcy Court granting relief from automatic stay and allowing the foreclosure proceeding to move forward. In late November of 2025, Shadylane borrowed funds from another source and paid off Bian’s loan. Bian then executed a reconveyance of his deed of trust against the Shadylane property, which was recorded on December 18, 2025.

On November 19, 2025, Shadylane and Epstein filed the complaint in the instant lawsuit asserting claims for cancellation of Bian’s loan instruments and foreclosure documents with Shadylane and for financial elder abuse. Plaintiffs are represented by Diulio and his law firm in this action.

Based on the foregoing, there is no dispute that Diulio directly represented Bian in a prior action. Bian also states he has not waived the conflict of interest created by Diulio’s prior representation of him and has not consented to Diulio’s representation of Plaintiffs in this case. Therefore, the next issue to be addressed is whether the Cashera Lawsuit was “substantially related” to the present action.

“Substantially Related”

In assessing whether there is a “substantial relationship” between two matters, courts should focus on the similarities between the two factual situations, the legal questions posed, and the nature and extent of the attorney’s involvement with the cases. (Acacia Patent Acquisition, LLC, supra, 234 Cal.App.4th at 1097-1098 (internal quotation marks omitted).)

“If the relationship between the attorney and the former client is shown to have been direct—that is, where the lawyer was personally involved in providing legal advice and services to the former client— then it must be presumed that confidential information has passed to the attorney and there cannot be any delving into the specifics of the communications between the attorney and the former client in an effort to show that the attorney did or did not receive confidential information during the course of that relationship. As a result, disqualification will depend upon the strength of the similarities between the legal problem involved in the former representation and the legal problem involved in the current representation.” (Jessen v. Hartford Casualty Ins. Co. (2003) 111 Cal.App.4th 698, 709.)

A “substantial relationship” exists whenever the “subjects” of the prior and current representations are linked in some rational manner. (Id. at 711.) The “subjects” of a representation includes information material to the evaluation, prosecution, settlement or accomplishment of the litigation or transaction given its specific legal and factual issues. “Thus, successive representations will be “substantially related” when the evidence before the trial court supports a rational conclusion that information material to the evaluation, prosecution, settlement or accomplishment of the former representation given its factual and legal issues is also material to the evaluation, prosecution, settlement or accomplishment of the current representation given its factual and legal issues.” (Id. at 713.)

In this case, it is apparent there is a “substantial relationship” between Diulio and his firm’s representation of Bian in the Cashera Lawsuit and this action. The subject of the prior and current representation involve the issue of Plaintiff’s real estate lending practices, foreclosure of the loans made by Bian, and loans arranged by LaTreill. Such information is material to the factual and legal issues in this case.

Plaintiff argues the cases are not related because the Cashera Lawsuit concerned a different borrower, a different property, different instruments, and different alleged misconduct, namely whether the borrower received the loan proceeds and whether the foreclosure was properly noticed. Whereas this case involves the accuracy of the default figures in the foreclosure notices and whether Defendants obstructed a refinance by refusing to provide payoff information in response to a beneficiary demand, which also constitutes elder abuse. (Complaint, ¶¶ 10-27.) But the facts and issues are not required to be the same to be considered “substantially related.” Both cases involve loans made by Bian and allegations of wrongful foreclosure. Bian’s lending and foreclosure practices were material to the Cashera Lawsuit and are material to the evaluation, prosecution, and settlement of this action.

Once it has been established that there is a “substantial relationship” between the Cashera Lawsuit and this action, it is presumed that Diulio and his firm possess confidential information. Contrary to Plaintiffs’ argument, the Court takes the position Bian does not need to identify the specific confidential information that was exchanged during the prior representation.

Accordingly, the motion to disqualify Diulio and The Diulio Firm as to their representation of Plaintiffs in this action is GRANTED.

MOTION TO SEAL

Defendant Wenqiang Bian’s Motion to Seal is GRANTED.

Defendant seeks to seal the order issued by the arbitrator, the Hon. Judith Ryan, ret., in JAMS Case No. 5240002186, on Bian’s motion to disqualify attorney Kristopher Diulio from representing the respondents in that proceeding adverse to Bian. (See ROA 46.)

The motion is unopposed and Bian has identified an overriding interest in maintaining the confidentiality of the arbitration proceedings. (Cal. Rules of Court, rule 2.550(d).)

Accordingly, the motion to seal is GRANTED.