In URS Corporation v. Atkinson/Walsh Joint Venture (No. G055271 filed September 26, 2017), Division Three of the Fourth Appellate District dealt with, for the first time, the question of whether an appeal of an attorney disqualification order results in an automatic stay of the trial proceedings and, if so, how far the automatic stay extends.

The underlying action involved a construction dispute between a contractor and subcontractor. During the pendency of that action, one party’s counsel filed a motion to disqualify another party’s counsel based on an alleged misuse of mediation-privilege protected documents. The trial court granted the disqualification motion and the disqualified counsel promptly filed a notice of appeal. The trial court then denied an application to stay proceedings pending the appeal, rejecting the assertion that the appeal automatically stayed the underlying proceedings.

Appellants filed a petition for writ of supersedeas arguing that the appeal of the disqualification order resulted in an automatic stay of all trial court proceedings. Without addressing the merits of the disqualification order, the appellate court considered only whether an automatic stay applied to an appeal of a disqualification order. The purpose of an automatic stay upon the filing of a notice of appeal of a trial court’s order is to preserve the status quo until a decision on the appeal is reached. Here, the appellate court analyzed whether an order disqualifying an attorney from ongoing participation in civil litigation is a mandatory injunction (requiring affirmative action that changes the status quo) or a prohibitory injunction (restraining parties and attorneys from taking particular actions, consistent with the status quo). The court ultimately determined that an order disqualifying an attorney from continuing to represent a party in ongoing litigation is a mandatory injunction because it requires affirmative acts that upset the status quo at the time the disqualification motion was filed, i.e. ceasing the representation of a client in active litigation. Based on that, the appellate court held that an appeal of an order disqualifying an attorney does automatically stay enforcement of that order.

From there, however, the appellate court turned to whether the automatic stay applied to all underlying proceedings or just those relating to the disqualification order. Because the disqualification order was collateral to the issues in the underlying dispute, the appellate court held that the automatic stay did not extend to all trial court proceedings. Rather, only those issues embraced in or affected by the appeal from the disqualification order were found to be subject to the automatic stay. Ultimately, the court specifically held that ongoing litigation directed toward the resolution of the parties’ respective pleadings is not automatically stayed by an appeal of a disqualification order.

In its decision, the appellate court also offered some advice to other similarly-situated litigants, stating that in future cases parties may stipulate to the terms of a stay of trial court proceedings and file a motion for a stay of trial court proceedings in the underlying action pending the appeal of a disqualification order such as the one in URS Corp.

While disqualification orders and appeals thereof are not common, the Fourth Appellate District here provides a good primer on the implication of such orders on the actual dispute between the parties themselves as well as a reminder that whenever possible a stipulation between the parties will go a long way toward resolving an issue without the necessity of court intervention.