                       IN THE SUPREME COURT OF THE STATE OF NEVADA


                PRACTICE MANAGEMENT                                 No. 68901
                SOLUTIONS, LLC, A NEVADA
                LIMITED LIABILITY COMPANY;
                GUADALUPE MEDICAL
                CENTER/OKAMOTO, M.D., P.C., A
                NEVADA PROFESSIONAL
                CORPORATION; CECILIA STRIEBER,
                AN INDIVIDUAL; FREDDY ALDANA,                            FILED
                SR., AN INDIVIDUAL; AND RAFAEL
                OKANIOTO, M.D., AN INDIVIDUAL,                           MAY 1 0 2016
                Petitioners,                                            TRACIE K. UNDEMAN
                                                                     CLERI:SpF,SpPREME COURT
                vs.                                                 BY
                                                                          DEPUTY CLERK
                THE EIGHTH JUDICIAL DISTRICT
                COURT OF THE STATE OF NEVADA,
                IN AND FOR THE COUNTY OF
                CLARK; AND THE HONORABLE
                DOUGLAS SMITH, DISTRICT JUDGE,
                Respondents,
                and
                GUADALUPE MEDICAL
                CENTER/ALVARADO, M.D., P.C., A
                NEVADA PROFESSIONAL
                CORPORATION; AND ISRAEL
                ALVARADO, M.D., AN INDIVIDUAL,
                Real Parties in Interest.




                      ORDER GRANTING PETITION FOR WRIT OF MANDAMUS
                            This original petition for a writ of mandamus or prohibition
                challenges a district court order disqualifying attorney Richard Raskin
                and his firm, Gibbs, Giden, Locher, Turner, Senet & Wittbrodt, LLP, from
                acting as petitioners' counsel.


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                   Facts
                              After working at the Guadalupe Medical Center for several
                   years, real party in interest Dr. Israel Alvarado became the sole owner of
                   the Guadalupe Medical Center. He was also an officer and a director, and
                   the company's name was changed to Guadalupe Medical Center/Alvarado.
                   Guadalupe Medical Center/Alvarado was managed by petitioner Cecilia
                   Strieber and others through their company Practice Management
                   Solutions, LLC (PMS). Strieber and Alvarado later entered into an option
                   agreement, drafted by Haskin, permitting Strieber to purchase all of
                   Alvarado's shares in Guadalupe Medical Center/Alvarado. When drafting
                   the option agreement and other agreements between the parties, Haskin
                   represented Guadalupe Medical Center/Alvarado.
                               Strieber assigned the option agreement to petitioner Dr.
                   Rafael Okamoto, who exercised it, thus acquiring all of the stock of
                   Guadalupe Medical Center/Alvarado. New officers and directors were
                   elected and appointed, and the company was renamed Guadalupe Medical
                   Center/Okamoto. Alvarado and Guadalupe Medical Center/Alvarado then
                   sued, asserting, among other things, that Alvarado was fraudulently
                   induced to enter into the option agreement.
                               Petitioners retained Haskin and Gibbs Giden to defend them,
                   and Alvarado moved to disqualify under RPC 1.6, because Haskin and
                   Gibbs Giden allegedly possess some of Guadalupe Medical
                   Center/Alvarado's and/or Alvarado's confidential information; under RPC
                   1.7, 1.9, and 1.10, because Haskin and Gibbs Giden previously represented
                   Guadalupe Medical Center/Alvarado, giving rise to a conflict of interest;
                   and under RPC 3.7(a), because Haskin and other persons at Gibbs Giden
                   may be witnesses in this matter. The district court disqualified Haskin

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                and Gibbs Giden on these bases, and this writ petition followed. Real
                parties in interest have filed an answer, and petitioners have filed a reply.
                Discussion
                             A writ of mandamus is available to compel the performance of
                an act that the law requires as a duty resulting from an office, trust, or
                station or to control an arbitrary or capricious exercise of discretion. NRS
                34.160; Int'l Game Tech., Inc. v. Second Judicial Dist. Court, 124 Nev. 193,
                197, 179 P.3d 556, 558 (2008). This court has the discretion to determine
                whether a writ petition will be considered.   Smith v. Eighth Judicial Dist.
                Court, 107 Nev. 674, 677, 818 P.2d 849, 851 (1991). "We have previously
                indicated that a petition for mandamus relief generally is an appropriate
                means to challenge district court orders regarding attorney
                disqualification" because there exists no right to appeal from a
                disqualification order.   Liapis v. Second Judicial Dist. Court, 128 Nev.
                414, 418, 282 P.3d 733, 736 (2012). Therefore, we exercise our discretion
                to consider this writ petition.
                             Initially, the district court's order is unclear regarding which
                standard the court applied. While the order correctly noted that the
                appearance of impropriety standard is no longer applicable to attorney
                disqualification issues and this matter was analyzed for actual violations
                of the rules of professional conduct (RPC), in the end the district court
                found that Haskin's and Gibbs Giden's disqualification was warranted "to
                avoid the appearance of impropriety." An appearance of impropriety is not
                the correct standard.     Id. at 419, 282 P.3d at 737 ("[A]n appearance of
                impropriety by itself does not support a lawyer's disqualification."
                (quotation marks omitted)). Rather, an attorney may be disqualified only
                if an actual RPC violation exists.    See id. It is unclear from the record,
                however, whether, in the unique circumstances of this case, any conflict or
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                  other violations of the RPC warrant Haskin's and Gibbs Giden's
                  disqualification.
                        Prior to analyzing the applicable rules, the district court must first
                        examine whether Alvarado has standing to act for Guadalupe
                        Medical Center /Alvarado and assert RPC violations on its behalf
                              Before considering whether an attorney should be disqualified,
                  a court must address whether a party has standing to seek
                  disqualification.   Id. at 420, 282 P.3d at 737. Standing is generally
                  founded on a current or former attorney-client relationship, and "[t]he
                  party seeking to disqualify bears the burden of establishing that [he] has
                  standing to do so." Id.
                              Alvarado lacks standing because he has been divested of his
                              shares in Guadalupe Medical Center/Alvarado
                              The district court based disqualification on the attorney-client
                  relationship between Guadalupe Medical Center/Alvarado and Haskin and
                  Gibbs Giden, assuming Alvarado's authority to act for Guadalupe Medical
                  Center/Alvarado.' But the amended complaint alleged, and the district
                  court found, that the option agreement effected a share transfer from
                  Alvarado to Okamoto. 2 Thus, Alvarado has been divested of his ownership
                  of Guadalupe Medical Center/Alvarado and is a former, not a current,
                  shareholder, officer and director. As a result, Alvarado lacks authority to


                         It is undisputed that Haskin and Gibbs Giden did not render
                  services to Alvarado in his individual capacity.

                        2 Whether Guadalupe Medical Center/Okamoto is the same entity as
                  Guadalupe Medical Center/Alvarado, is the successor to that entity, or
                  some other relationship between the two entities exists is irrelevant to the
                  current inquiry; the relevant allegation in the amended complaint is that
                  the exercised option agreement transferred 100 percent of the shares of
                  Guadalupe Medical Center/Alvarado from Alvarado to Okamoto.

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                act for Guadalupe Medical Center/Alvarado and, thus, has not
                demonstrated that he currently has standing to protect its allegedly
                confidential information, to assert its conflicts, or to cause it to sue
                petitioners. 3 NRCP 23.1; Cohen v. Mirage Resorts, Inc., 119 Nev. 1, 19, 62
                P.M 720, 732 (2003) ("Because a derivative claim is brought on behalf of
                the corporation, a former shareholder does not have standing to assert a
                derivative claim. A former shareholder does, however, have standing to
                seek relief for direct injuries that are independent of any injury suffered
                by the corporation." (citations omitted)); see also Bottoms v. Stapleton, 706
                N.W.2d 411, 415, 419 (Iowa 2005) (noting that "a court must also be
                vigilant to thwart any misuse of a motion to disqualify for strategic
                reasons," and declining to disqualify counsel representing a limited
                liability company and one of its shareholders in an action by the other
                shareholder that alleged only personal, not derivative, claims); Xavier v.
                Bumbarner & Hubbell Anesthesiologists, 923 S.W.2d 428, 432 (Mo. Ct.
                App. 1996) (noting that a former shareholder of a dissolved corporation did
                not have standing to assert a claim on behalf of the dissolved corporation
                that the other shareholders interfered with the relationships between the
                dissolved corporation and its clients).


                      3 "Itis well settled that a corporation can act only through its
                agents." Smith's Food & Drug Ctrs., Inc. v. Bellegarde, 114 Nev. 602, 608,
                958 P.2d 1208, 1212 (1998) (citing Edwards v. Carson Water Co., 21 Nev.
                469, 485, 34 P. 381, 386 (1893)), overruled on other grounds by
                Countrywide Home Loans, Inc. v. Thitchener, 124 Nev. 725, 745-46, 192
                P.3d 243, 256-57 (2008). Aside from alleging that he was an owner, officer
                or director of Guadalupe Medical Center/Alvarado, Alvarado does not
                allege that he was otherwise vested with the authority to assert
                Guadalupe Medical Center/Alvarado's confidential information or
                conflicts.

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                             Alvarado did not provide sufficient factual allegations,
                             evidence, or argument to demonstrate that he has standing
                             based on the option agreement's invalidity
                             We recognize that the validity of the option agreement, and
                 thus the ownership of the Guadalupe Medical Center, is an issue central
                 to the underlying litigation. But the bare allegation, devoid of supporting
                 facts, that the option agreement was fraudulently induced (or, as in the
                 disqualification motion, void ab initio) is insufficient to establish
                 Alvarado's standing to seek Haskin's and Gibbs Giden's disqualification by
                 asserting Guadalupe Medical Center/Alvarado's confidential information
                 or conflicts. In other words, in an attorney disqualification motion, the
                 movant is not entitled to a presumption that he will prevail upon his
                 causes of action because the movant has the burden to provide factual
                 allegations, evidence, or argument sufficient to support disqualification.
                 Waid v. Eighth Judicial Dist. Court, 121 Nev. 605, 611, 119 P.3d 1219,
                 1223 (2005) ("[T]he inquiry into whether an attorney-client relationship
                 has been established is very fact-specific . . ."); Brown v. Eighth Judicial
                 Dist. Court, 116 Nev. 1200, 1205, 14 P.3d 1266, 1270 (2000) ("To prevail on
                 a motion to disqualify opposing counsel, the moving party must first
                 establish at least a reasonable possibility that some specifically
                 identifiable impropriety did in fact occur, and then must also establish
                 that the likelihood of public suspicion or obloquy outweighs the social
                 interests which will be served by a lawyer's continued participation in a
                 particular case." (quotation marks omitted)); see also United States v.
                 Kitchin,   592 F.2d 900, 903 (5th Cir. 1979) ("An attorney may •be
                 disqualified only when there is a reasonable possibility that some
                 specifically identifiable impropriety actually occurred and, in light of the
                 interests underlying the standards of ethics, the social need for ethical
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                practice outweighs the party's right to counsel of his choice." (quotation
                marks omitted)); Nun i v. PRC, Inc., 5 F. Supp. 2d 1299, 1304 (M.D. Ala.
                1998) (collecting applicable cases and noting that "disqualification is
                always a drastic measure, which courts should hesitate to impose except
                when absolutely necessary" and that specific facts must be alleged to
                support disqualification).
                             In the underlying matter, Alvarado alleged in his ninth cause
                of action that the option agreement was fraudulently induced, but he
                alleged minimal factual support for that cause of action. Similarly, in his
                motion to disqualify and his declaration attached thereto, Alvarado did not
                address whether the option agreement was fraudulently induced.
                Therefore, Alvarado did not meet his burden in the district court of
                sufficiently demonstrating the invalidity of the option agreement, which
                would establish his standing to seek disqualification based on Guadalupe
                Medical Center/Alvarado's confidential information and conflicts. While
                Alvarado did argue in his motion that the option agreement was void ab
                initio based on NRS 89.040 and NRS 89.070, the district court did not base
                its order on this argument. We decline to consider whether this argument
                has sufficient merit to warrant a finding that Alvarado does have
                standing, without prejudice to Alvarado's ability to re-raise this issue in
                the district court. 4



                      4While  we have held that doubts about an attorney's disqualification
                "should generally be resolved in favor of disqualification," Brown, 116 Nev.
                at 1205, 14 P.3d at 1270, this assumes that the moving party has
                presented sufficient facts demonstrating that disqualification is a close
                call. See Waid, 121 Nev. at 610-11, 119 P.3d at 1223; see also Plant
                Genetic Sys., N.V. v. Ciba Seeds, 933 F. Supp. 514, 517 (M.D.N.C. 1996)
                (indicating that while "the moving party has a high standard of proof to
                                                                     continued on next page...
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                            The district court did not base its order on Alvarado's
                            alternative arguments
                            Alvarado also argues, among other things, that even if he
                lacks standing to seek Haskin's and Gibbs Giden's disqualification by
                asserting Guadalupe Medical Center/Alvarado's confidential information
                and conflicts, Alvarado himself has standing to seek to disqualify Haskin
                and Gibbs Giden based on either (a) the fact that he was the sole
                shareholder of Guadalupe Medical Center/Alvarado when Haskin and
                Gibbs Giden represented it, or (b), under Liapis, Haskin's and Gibbs
                Giden's "breach of ethics so infects the litigation in which disqualification
                is sought that it impacts the nonclient moving party's interest in a just
                and lawful determination of [his] claims." 128 Nev. at 420-21, 282 P.3d at
                737-38 (quotation marks omitted). And, while the district court found that
                Haskin and Gibbs Giden did not represent Alvarado, it did not make any
                findings as to whether they possess confidential information belonging
                solely to Alvarado, such that RPC 1.6 requires their disqualification. We
                decline to consider these arguments without prejudice to Alvarado's ability
                to raise them in the district court, because the district court did not make
                any findings of fact or conclusions of law concerning these arguments.




                ...continued
                meet in order to prove that counsel should be disqualified[,] . . . in a close
                case the trial court should . . . resolve all doubts in favor of
                disqualification." (citation omitted)). This matter is not a close case
                because Alvarado has been divested of his shares of Guadalupe Medical
                Center/Alvarado and did not provide in his motion to disqualify specific
                facts establishing "at least a reasonable possibility" that his contentions
                that the option agreement was invalid have merit. Brown, 116 Nev. at
                1205, 14 P.3d at 1270 (quotation marks omitted).

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                            Alvarado's failure to demonstrate that he has standing to seek
                disqualification under RPC 1.6, 1.7, 1.9, and 1.10 based on Guadalupe
                Medical Center/Alvarado's confidential information and conflicts warrants
                writ relief and vacation of the district court's order. This lack of standing
                does not affect RPC 3.7(a), however, and we address that rule separately.
                      RPC 3.7 does not warrant disqualification for pretrial proceedings
                            RPC 3.7(a) provides, in relevant part, that "[a] lawyer shall
                not act as advocate at a trial in which the lawyer is likely to be a
                necessary witness." Because Haskin is likely to be a witness in the
                underlying matter, Alvarado has standing to assert RPC 3.7(a) and seek
                Haskin's disqualification. We have previously held, however, that RPC
                3.7(a) "does not mandate complete disqualification of an attorney who may
                be called as a witness"; rather, it merely prevents the lawyer "from
                appearing as trial counsel." DiMartino v. Eighth Judicial Dist. Court, 119
                Nev. 119, 121, 66 P.3d 945, 946 (2003) (quotation marks omitted); see also
                Liapis, 128 Nev. at 423, 282 P.3d at 739. The concern is that the lawyer's
                appearance as a witness and as an advocate may confuse the jury, and
                this concern is not present in pretrial proceedings, even where the
                attorney is giving sworn statements to the district court. DiMartino, 119
                Nev. at 122, 66 P.3d at 947 (qualifying the lawyer's ability to represent a
                client in pretrial proceedings by noting that "the lawyer may not appear in
                any situation requiring the lawyer to argue his own veracity"). Because
                this conflict is personal to an attorney, it generally "does not mandate the
                vicarious disqualification of the lawyer's firm."   F.D.I.C. v. U.S. Fire Ins.
                Co., 50 F.3d 1304, 1313 (5th Cir. 1995). Thus, this conflict does not




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                      warrant Haskin's disqualification from pretrial proceedings and does not
                      warrant Gibbs Giden's disqualification. Accordingly, we
                                   ORDER the petition GRANTED AND DIRECT THE CLERK
                      OF THIS COURT TO ISSUE A WRIT OF MANDAMUS instructing the
                      district court to vacate its September 9, 2015, Order Granting Plaintiffs'
                      Motion to Disqualify Defendants' Counsel and to reconsider the motion to
                      disqualify in light of this order.°


                                                    /L-L-e-a-43t,




                      Saitta                                                7              ,J.




                      cc: Hon. Douglas Smith, District Judge
                           Gibbs Giden Locher Turner Senet & Wittbrodt LLP
                           Hutchison & Steffen, LLC
                           Eighth District Court Clerk




                             Because the district court was acting within its jurisdiction when it
                               5
                      granted the motion to disqualify, we deny petitioners' alternative request
                      for a writ of prohibition. NRS 34.320.

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