Lake Scio Holdings, LLC v. Kate Cohen

Code of Civil Procedure section 386.6 provides: A party to an action who follows the procedure set forth in Section 386 or 386.5 may insert in his motion, petition, complaint, or cross complaint a request for allowance of his costs and reasonable attorney fees incurred in such action.

In ordering the discharge of such party, the court may, in its discretion, award such party his costs and reasonable attorney fees from the amount in dispute which has been deposited with the court.

At the time of final judgment in the action the court may make such further provision for assumption of such costs and attorney fees by one or more of the adverse claimants as may appear proper.

Business and Professions Code section 7071.5 provides that a contractor's bond shall be for the benefit of a homeowner contracting for home improvement upon the homeowner's personal family residence damaged as a result of a violation by the licensee. (Bus. & Prof. Code, Sec. 7071.5.)

Here, Merchants deposited LA Solar's bond funds with the Court, and the only adverse claimant, Fontanini, has since been dismissed. Plaintiffs have now prevailed in their action against LA Solar in an amount that exceeds the $20,000 deposited.

CONCLUSION AND ORDER

To the Court's satisfaction, Plaintiffs have demonstrated entitlement to an order releasing the deposited interpleaded funds to them, as partial satisfaction of the judgment entered against LA Solar.

Therefore, the Court grants Plaintiffs' unopposed motion for an order to release the interpleaded funds.

Further, the Court will enter the proposed Order lodged on August 4, 2026 in conformity with the ruling.

Plaintiffs shall provide notice of the Court's ruling/Order and file the notice with a proof of service forthwith.

DATED: September 2, 2026 _______/s/____________________ Michael E. Whitaker Judge of the Superior Court

RULING - NO. 1 DEPARTMENT | 207 | HEARING DATE |

August 3, 2026 - continued to September 2, 2026 | CASE NUMBER |

| MOTIONS | Motions to be Relieved as Counsel | MOVING PARTY | Ashley R. Fickel of Stinson LLP | OPPOSING PARTY | (none) |

MOTIONS

Ashley R. Fickel of Stinson LLP, counsel for Plaintiff/Cross-Defendant Lake Scio Holdings, LLC and Cross-Defendant Marisa Polvino ("Counsel") moves to be relieved as counsel, citing irreconcilable differences with the clients. The motions are unopposed.

LEGAL STANDARD

Code of Civil Procedure section 284 provides "[t]he attorney in an action or special proceeding may be changed at any time before or after judgment or final determination as follows: 1. Upon the consent of both client and attorney, filed with the clerk, or entered in the minutes; 2. Upon the order of the court, upon the application of either client or attorney, after notice from one to the other."

Procedural Requirements

California Rules of Court, rule 3.1362, requires: (1) the motion must be made on form MC-051; (subd. (a)); (2) it must be accompanied by a declaration on form MC-052 stating why the motion is brought under Code of Civil Procedure section 284(2) instead of a consent brought under section 284(1); (subd. (c)); (3) a proposed order on form MC-053 must be lodged with the court, specifying all hearing dates scheduled in the action or proceeding, including the date of trial, if known; (subd. (e)); and (4) The documents must be served on the client and on all parties that have appeared in the case. (subd. (d).)

If the notice is served by mail or electronic service, it must be accompanied by a declaration indicating that the address served is the current address, or in the case of service by mail, that it was served on the last known address and a more current address could not be located after reasonable efforts within 30 days before filing the motion. (Ibid.)

The court may delay the effective date of the order relieving counsel until proof of service of a copy of the signed order on the client has been filed with the court." (Ibid.)

Substantive Requirements

Rules of Professional Conduct, rule 1.16(a) outlines the reasons a lawyer must withdraw from representation of a client: (1) the client is bringing an action, conducting a defense, asserting a position in litigation, or taking an appeal, without probable cause and for the purpose of harassing or maliciously injuring any person; (2) the representation will result in violation of the Rules of Professional Conduct or the State Bar Act; (3) the lawyer's mental or physical condition renders it unreasonably difficult to carry out the representation effectively; or (4) the client discharges the lawyer.

Rules of Professional Conduct, rule 1.16(b) outlines the reasons a lawyer may withdraw from representation of a client: (1) the client insists upon presenting a claim or defense in litigation, or asserting a position or making a demand in a non-litigation matter, that is not warranted under existing law and cannot be supported by good faith argument for an extension, modification, or reversal of existing law; (2) the client either seeks to pursue a criminal or fraudulent course of conduct or has used the lawyer's services to advance a course of conduct that the lawyer reasonably believes was a crime or fraud; (3) the client insists that the lawyer pursue a course of conduct that is criminal or fraudulent; (4) the client by other conduct renders it unreasonably difficult for the lawyer to carry out the representation effectively; (5) the client breaches a material term of an agreement with, or obligation, to the lawyer relating to the representation, and the lawyer has given the client a reasonable warning after the breach that the lawyer will withdraw unless the client fulfills the agreement or performs the obligation; (6) the client knowingly and freely assents to termination of the representation; (7) the inability to work with co-counsel indicates that the best interests of the client likely will be served by withdrawal; (8) the lawyer's mental or physical condition renders it difficult for the lawyer to carry out the representation effectively; (9) a continuation of the representation is likely to result in a violation of these rules or the State Bar Act; or (10) the lawyer believes in good faith in a proceeding pending before a tribunal that the tribunal will find the existence of other good cause for withdrawal.

DISCUSSION

Counsel has filed forms MC-051, MC-052 and MC-053. The attorney declarations (MC-052) indicate that the motions were filed instead of filing consents because of "irreconcilable differences" arising between counsel and the clients. (MC-052 at P. 2.) As such, the Court finds that the motions comply with the Rules of Professional Conduct, rule 1.16(b)(4).)

The proofs of service indicate each of these forms were served electronically on counsel for the other parties to the action, and electronically and by mail to the clients. However, the attorney declarations (forms MC-052) indicate the clients' addresses were confirmed current by: "Client was served by mail at client's last known mailing address. Client was also served by electronic service at the client's current electronic service address." (MC-052 at P. 3.)

The statement that the clients were served at their last known physical and electronic addresses does not answer the question of whether Counsel confirmed any of these addresses as current within the past 30 days, or whether Counsel has been unable to confirm the addresses are current, despite the efforts listed.

The Court continued the hearing to afford counsel an opportunity to cure this procedural deficiency. Counsel subsequently filed supplemental declarations, indicating:

3. Within 30 days prior to filing the Motion to Be Relieved as Counsel of Record for Marisa Polvino, my office confirmed Marisa Polvino's current mailing and e-mail address by the following means: a. Searching LexisNexis Public Records for Marisa Polvino's current mailing address. My office conducted another LexisNexis Public Records search on August 3, 2026 confirming Marisa Polvino's current mailing address. b. In addition, my office had a video conference with Marisa Polvino on June 18, 2026 during which she confirmed her current mailing address. c. Additionally, Marisa Polvino communicated with my office via the [email protected] e-mail address provided on the [Proposed] Order Granting Attorney's Motion to be Relieved as Counsel within 30 days prior to filing the Motion to Be Relieved as Counsel.

4. Within 30 days prior to filing the Motion to Be Relieved as Counsel of Record for Lake Scio Holdings, LLC, my office confirmed Lake Scio Holdings, LLC's current mailing and email address by the following means: a. Searching LexisNexis Public Records for Lake Scio Holding LLC's current mailing address. My office conducted another LexisNexis Public Records search on August 3, 2026 confirming Lake Scio Holding LLC's current mailing address. b. Additionally, Lake Scio Holding, LLC's principal and registered agent, Anthony Polvino, communicated with my office via the [email protected] e-mail address provided on the [Proposed] Order Granting Attorney's Motion to be Relieved as Counsel within 30 days prior to filing the Motion to Be Relieved as Counsel. (Supp. Fickel Decl. P.P. 3-4.)

While it is not possible for Counsel to "confirm" the addresses "with the client" via LexisNexis, Counsel has nonetheless demonstrated that she confirmed Polvino's mailing address via video conference, and she has confirmed both clients' email address electronically within 30 days prior to filing the motions. As such, the Court finds the motions procedurally proper.

CONCLUSION AND ORDER

Having found the Motions both procedurally and substantively proper, the Court Grants Counsel's Motions to be Relieved as Counsel.

Counsel must serve the signed orders (forms MC-053), which shall include information about all future hearings and proceedings noticed by any party, or ordered by the Court, on the clients and all other parties who have appeared in the action, within 10 days of the date of this Order, and file the proofs of service of such.

Counsel will remain the attorney of record for Plaintiff/Cross-Defendant Lake Scio Holdings, LLC and Cross-Defendant Marisa Polvino until Counsel files the requisite proofs of service. (See Cal. Rules of Court, rule 3.1362(e).)

Further, to ensure that the Court's records are updated following the filing of the proofs of service, Counsel shall contact the Court to advise that the proofs of service has been filed.

DATED: September 2, 2026 ______/s/_____________________ Michael E. Whitaker Judge of the Superior Court

TENTATIVE RULING - NO. 2 DEPARTMENT | 207 | HEARING DATE | September 2, 2026 | CASE NUMBER |

| MOTION | Demurrer to Kate Cohen and Little Fire Corporation's First Amended Cross-Complaint | MOVING PARTIES | Cross-Defendants Taylor Duma LLP and Anthony Polivno | OPPOSING PARTIES | Cross-Complainants Kate Cohen and Little Fire Corporation |

BACKGROUND

This case arises from a dispute concerning an outstanding debt. On September 23, 2025, Plaintiff Lake Scio Holdings, LLC ("Plaintiff" or "Lake Scio") filed suit against Defendant Kate Cohen ("Cohen") alleging two causes of action for (1) breach of contract and (2) breach of personal guaranty stemming from a loan Plaintiff allegedly made Straight Up Impact, LLC ("SUI"), an entity to which Cohen and Cross-Defendant Marisa Polvino ("Marisa") are allegedly joint managers and members.

Cohen and her company, Little Fire Corporation ("Little Fire"), cross-complained, alleging the attorney who drafted the promissory note had a personal stake in the underlying loan and therefore a conflict of interest. Accordingly, to the extent any repayment is due, Cohen and Little fire contend Marisa is equally responsible for repaying the loan.

Cohen's and Little Fire's operative First Amended Cross-Complaint ("FAXC") is alleged against Plaintiff and Cross-Defendants Anthony Polvino ("Anthony"); Taylor Duma LLP ("Duma"); and Marisa Polvino ("Marisa") as well as nominal cross-defendant SUI.

The FAXC alleges seven causes of action as follows: (1) breach of fiduciary duty (against Anthony and Duma) (2) professional negligence (against Anthony and Duma) (3) declaratory relief (against Anthony, Duma, and Lake Scio) (4) contractual indemnity (against SUI) (5) equitable contribution (against Marisa) (6) declaratory relief (against Marisa) (7) breach of fiduciary duty (against Anthony)

Marisa cross-complained against Cohen for defamation stemming from statements Cohen allegedly made that Marisa had embezzled funds. On June 9, 2026, the Court sustained Marisa's demurrer to the sixth cause of action for declaratory relief without leave to amend.

Anthony and Duma now jointly demur to the first, second, third, and seventh causes of action on the grounds that they fail to state facts sufficient to constitute a cause of action, pursuant to Code of Civil Procedure section 430.10, subdivision (e). Cohen and Little Fire oppose the demurrer and Anthony and Duma reply.

ANALYSIS

1. DEMURRER

"It is black letter law that a demurrer tests the legal sufficiency of the allegations in a complaint." (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.)

In testing the sufficiency of a cause of action, a court accepts "[a]s true all material facts properly pled and matters which may be judicially noticed but disregard contentions, deductions or conclusions of fact or law. [A court also gives] the complaint a reasonable interpretation, reading it as a whole and its parts in their context." (290 Division (EAT), LLC v. City & County of San Francisco (2022) 86 Cal.App.5th 439, 450 [cleaned up]; Hacker v. Homeward Residential, Inc. (2018) 26 Cal.App.5th 270, 280 ["in considering the merits of a demurrer, however, "the facts alleged in the pleading are deemed to be true, however improbable they may be"].)

Further, in ruling on a demurrer, a court must "liberally construe" the allegations of the complaint "with a view to substantial justice between the parties." (See Code Civ. Proc., Sec. 452.)

"This rule of liberal construction means that the reviewing court draws inferences favorable to the plaintiff, not the defendant." (Perez v. Golden Empire Transit Dist. (2012) 209 Cal.App.4th 1228, 1238.)

In summary, "[d]etermining whether the complaint is sufficient as against the demurrer on the ground that it does not state facts sufficient to constitute a cause of action, the rule is that if on consideration of all the facts stated it appears the plaintiff is entitled to any relief at the hands of the court against the defendants the complaint will be held good although the facts may not be clearly stated, or may be intermingled with a statement of other facts irrelevant to the cause of action shown, or although the plaintiff may demand relief to which he is not entitled under the facts alleged." (Gressley v. Williams (1961) 193 Cal.App.2d 636, 639.)

A. FAILURE TO STATE A CAUSE OF ACTION

As indicated above, this case arises from a loan made from Lake Scio (owned by Anthony, an attorney for Duma) to SUI (jointly owned by Cohen/Little Fire and Marisa/Makdoone). Anthony is also Marisa's brother. When SUI defaulted on the loan, Lake Scio initiated collection proceedings against Cohen, but not Marisa. Cohen/Little Fire then cross-complained against Anthony/Duma and Marisa, alleging a breach of fiduciary duty and violations of Rules of Professional Conduct, rule 1.8, for effectively being on both sides of the loan deal.

i. Attorney-Client Privilege

Cohen/Little Fire's cross-claims against Anthony/Duma are premised on allegations that Anthony owns Lake Scio, and Duma previously represented SUI in preparing SUI's operating documents and drafting the promissory note in question. Anthony/Duma first demur on the grounds that when a non-client plaintiff asserts claims against an attorney that cannot be defended without divulging attorney-client privileged communications, the claims must be dismissed as a matter of law.

In support, Anthony/Duma cite to McDermott, Will & Emery v. Superior Court (2000) 83 Cal.App.4th 378 (hereafter McDermott) and Solin v. O'Melveny & Myers, LLP (2001) 89 Cal.App.4th 451 (hereafter Solin).

In McDermott, shareholders brought a derivative action against the corporation's outside counsel, alleging that counsel committed malpractice on an underlying business transaction. The trial court had denied counsel's motion for judgment on the pleadings. But the Court of Appeal issued a writ directing the trial court to reverse and grant the motion on the ground that because the action raised attorney-client privilege issues, counsel could not mount a meaningful defense to the action. It noted that while the shareholders stand in the shoes of the corporation for purposes of the lawsuit, they could not stand in the corporation's shoes for purpose of waiving the attorney-client privilege.

Similarly, in Solin, an attorney brought suit against a law firm, alleging the firm misadvised him concerning his representation of two clients involved in criminal proceedings. The trial court dismissed the action (and the appellate court affirmed) on the grounds that the law firm could not defend itself without revealing information plaintiff told it about his clients that was protected by the attorney-client privilege.

Anthony/Duma argue that the subject cross-action is most analogous to McDermott insofar as Cohen/Little Fire are suing derivatively on behalf of SUI concerning Anthony's/Duma's representation of SUI. But the critical distinction between the cross-complaint, and McDermott (or Solin for that matter) is the nature of the underlying claims. While claims for malpractice cannot be defended without revealing attorney-client privileged communications, the same cannot be said for conflict of interest-based alleged breaches of fiduciary duty and violation of the Rules of Professional Conduct.

Whether Anthony and/or Duma personally benefitted from both sides of the transaction and whether Anthony/Duma made the requisite disclosures to all parties and obtained the necessary consents are not protected by the attorney-client privilege. Therefore, the Court overrules Anthony/Duma's demurrer on the grounds that their defenses will necessarily violate SUI's attorney-client privilege.

ii. Statute of Limitations

The statute of limitations for legal malpractice is one year after the plaintiff discovers, or should have discovered the facts constituting the negligent act or omission, or four years from its occurrence, whichever occurs first. (Code Civ. Proc., Sec. 340.6, subd. (a).)

The FAXC alleges Anthony/Duma executed the Note on February 27, 2024. (FAXC P.P. 16, 18.) On or about November 7, 2024, Anthony/Duma filed a UCC-1 with the Delaware Secretary of State, perfecting Lake Scio's security interest in SUI's assets. (FAXC P. 17.) Yet the initial cross-complaint was not filed until more than a year later, on December 17, 2025.

But the FAXC also alleges that Anthony has continued to represent Marisa in disputes adverse to Cohen concerning SUI's management, finances, assets, and obligations, while causing Lake Scio to sue Cohen alone on the defaulted Note. (FAXC P. 24.) Further, the FAXC alleges Anthony acted as counsel for SUI through at least January 2025. (FAXC P. 42.)

Notwithstanding, Anthony/Duma argue that because the FAXC does not allege Anthony/Duma continued to represent SUI regarding the same subject matter, Cohen/Little Fire have failed to allege that the continuing representation doctrine tolled their claims. The Court disagrees.

Read in whole and in context, paragraphs 24 and 42 adequately allege that Anthony/Duma continued to represent SUI's interests through at least January 2025, but in a way that benefited only Anthony and Marisa, but not Cohen or SUI. Whether Anthony/Duma actually represented SUI through January 2025 is a factual question to be determined at later stages of the litigation. Therefore, the Court overrules Anthony/Duma's demurrer premised on the statute of limitations.

iii. Standing

Anthony argues that Cohen lacks standing to pursue the seventh cause of action for breach of fiduciary duty in her individual capacity against Anthony in his individual capacity. In support, Anthony cites to Skarbrevik v. Cohen, England & Whitfield (1991) 231 Cal.App.3d 692 (hereafter Skarbrevik), which explained: An attorney representing a corporation does not become the representative of its stockholders merely because the attorney's actions on behalf of the corporation also benefit the stockholders; as attorney for the corporation, counsel's first duty is to the corporation.

Corporate counsel should, of course, refrain from taking part in any controversies or factional differences among shareholders as to control of the corporation, so that he or she can advise the corporation without bias or prejudice. Even where counsel for a closely held corporation treats the interests of the majority shareholders and the corporation interchangeably, it is the attorney-client relationship with the corporation that is paramount for purposes of upholding the attorney-client privilege against a minority shareholder's challenge.

These cases make clear that corporate counsel's direct duty is to the client corporation, not to the shareholders individually, even though the legal advice rendered to the corporation may affect the shareholders. (Skarbrevik, supra, 231 Cal.App.3d at pp. 703-704 [cleaned up].)

But, as noted above, Skarbrevik points out that corporate counsel should refrain from taking part in any controversies or factional differences among shareholders as to control of the corporation, so that [he] can advise the corporation without bias or prejudice. Further, as Cohen/Little Fire indicate, Skarbrevik also explains that an attorney owes a duty not to harm shareholders "in furtherance of [his] own financial gain" and not to conspire with one client to injure another. (Skarbrevik, supra, 231 Cal.App.3d at pp. 709-710.)

Here, Anthony allegedly did both. Not only did he allegedly enter into a loan transaction in which he personally stood to benefit financially, vis-à-vis his ownership of Lake Scio, but he also favored Marisa in the collection proceedings by suing only Cohen. Whether Anthony actually violated his fiduciary duties to Cohen by personally benefiting from the loan transaction and favoring Marisa in collection proceedings without first obtaining the requisite conflict disclosures are factual issues to be determined at later stages of the litigation. As such, the Court overrules Anthony's demurrer to the seventh cause of action.

CONCLUSION AND ORDER

For the reasons stated, the Court overrules Anthony's and Duma's demurrer to the First, Second, Third, and Seventh causes of action.

Anthony and Duma shall file and serve an Answer or Answers to the FAXC on or before September 16, 2026.

Counsel for Anthony/Duma shall provide notice of the Court's ruling and file the notice with a proof of service forthwith.

DATED: September 2, 2026 _______/s/____________________ Michael E. Whitaker Judge of the Superior Court | Home -->)" -->