Ghilezan v. Huber CA4/1

California Court of Appeal Dec 19, 2025 No. D084588Unpublished

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Holding. The court held that a law firm representing both a partnership and its individual partners in a derivative suit alleging fraud and misappropriation of funds by those partners creates an irreconcilable conflict of interest requiring disqualification. The plaintiff, as a partner with a financial interest in the partnership's assets, has standing to seek such disqualification.

Issues

Whether a law firm may simultaneously represent a partnership and individual partners accused of defrauding that same partnership in a derivative action.
Whether a disassociated partner has standing to move for the disqualification of counsel representing the partnership and the alleged bad actors.

Disposition. Affirmed

Quotations verified verbatim against the opinion

“Current case law clearly forbids dual representation of a corporation and directors in a shareholder derivative suit, at least where, as here, the directors are alleged to have committed fraud.”

“The loyalty the attorney owes one client cannot be allowed to compromise the duty owed another.”

Filed 12/19/25 Ghilezan v. Huber CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

MICHAEL GHILEZAN, D084588

Plaintiff and Respondent,

v. (Super. Ct. No. 37-2023- 00028348-CU-FR-NC) JAMES HUBER et al.,

Defendants and Appellants.

APPEAL from an order of the Superior Court of San Diego County, William Y. Wood, Judge. Affirmed. Tencer Sherman, Philip C. Tencer; Global Legal Law Firm and Joshua J. Herndon for Defendants and Appellants. Cabanday Law Group and Orlando F. Cabanday for Plaintiff and Respondent.

MEMORANDUM OPINION Christopher Dryden, James Huber, Global Legal Resources LLP dba Global Legal Law Firm LLP (Global), Gracehollandcannon, LLC and CRD Legal Services, Inc. (collectively, defendants) appeal from the trial court’s

order granting Micheal Ghilezan’s motion to disqualify Global as counsel for the defendants based on the existence of a conflict of interest. Finding no error, we affirm. I. Background Global is a three-partner limited liability partnership. The three partners were Ghilezan, Dryden and Huber. Four years into the partnership, Ghilezan came to believe Dryden and Huber had committed “bad acts” against the partnership, including “diverting significant amounts of money from [Global] to themselves” and/or Gracehollandcannon, LLC and CRD Legal Services, Inc., companies they allegedly control. On December 12, 2022, Ghilezan gave Dryden and Huber notice of his disassociation from Global. The same day, Ghilezan filed a lawsuit against

the defendants. In his operative complaint,1 Ghilezan asserted causes of action for fraud, breach of fiduciary duty, aiding and abetting of breach of fiduciary duties, and dissolution. He also asserted derivative causes of action on behalf of Global for an accounting, sale of partnership assets (appointment of a receiver), and declaratory relief seeking the return of resources unlawfully diverted by defendants from Global. Global was named both as a nominal plaintiff and a nominal defendant. Defendants retained Global, and its associate Joshua Herndon, to represent them and to prosecute a cross-complaint; this included representing Global as the nominal defendant and nominal plaintiff. Ghilezan moved to disqualify Global (and Herndon) from representing any

Ghilezan v. Huber CA4/1

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COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

MICHAEL GHILEZAN, D084588

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