Gong

Jeffrey Gong appeals an order denying his motion to disqualify Dan Lawton and the Lawton Law Firm (together, Lawton) as counsel for defendants David Gong and RFG Oil, Inc. (RFG). Jeffrey asserts that an actual conflict of interest exists between David and RFG and that Lawton must be disqualified from representing RFG, but can remain as counsel for David. We agree and reverse and remand with directions.

FACTUAL AND PROCEDURAL BACKGROUND

RFG, a California corporation and franchisee of the Valvoline Instant Oil Change Stores, is owned by Jeffrey (holding 49 percent of the corporate stock) and David (holding 51 percent of the corporate stock). Jeffrey and David also function as the board of directors for RFG, with David acting as the majority of the board. The brothers executed a buy-sell agreement that provided, in part, that if one party left the business, the other party could purchase his shares at “book value.” In 2001, David suffered a major spinal cord injury that required a three-month hospital stay and a lengthy rehabilitation process. Due to David’s injury, Jeffrey assumed all management duties for RFG. In 2003, David reassumed his duties based on Jeffrey’s…