Pech v. Moghavem CA2/5 ( 2021 )

Filed 9/9/21 Pech v. Moghavem CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
RICHARD PECH, B308593
Plaintiff and Appellant, (Los Angeles County
Super. Ct. No.
v. 20STCV18681)
AFSHIN MOGHAVEM, ET AL.,
Defendants and Respondents.
APPEAL from an order of the Superior Court of Los
Angeles County, Elaine Lu, Judge. Reversed in part.
Richard Pech, in pro. per., for Plaintiff and Appellant.
Doniger / Burroughs, Stephen M. Doniger and Kelsey M.
Schultz for Defendants and Respondents.
_________________________________________________
Plaintiff and appellant attorney Richard Pech, in propria
persona, appeals from part of an order granting a motion to
strike under Code of Civil Procedure section 425.16 (the anti-
SLAPP statute)1 in favor of defendants and respondents Afshin
Moghavem, Afshin Moghavem, Inc. (AMI), and Prodigy Brands,
LLC, (collectively “defendants”) in this action based on an
attorney fees agreement. On appeal, Pech contends: (1) the anti-
SLAPP motion should have been denied as to the cause of action
for breach of contract because the defendants failed to identify
specific allegations to be stricken; (2) the defendants’ refusal to
permit Pech to file a complaint on their behalf was not activity
protected under the anti-SLAPP statute; and (3) the trial court
erred by denying Pech’s oral motion to amend the breach of
contract cause of action. We conclude the conduct alleged to have
breached the parties’ contract was not protected activity in
furtherance of the defendants’ right of petition or free speech.
Because the anti-SLAPP statute does not apply, we reverse the
portion of the order striking the breach of contract claim.
1 SLAPP is an acronym for “Strategic Lawsuits Against
Public Participation.” (Equilon Enterprises v. Consumer Cause,
Inc. (2002) 29 Cal.4th 53, 57, fn. 1.) All further statutory
references are to the Code of Civil Procedure, unless otherwise
stated.
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FACTUAL AND PROCEDURAL BACKGROUND
Allegations of the Complaint
On May 15, 2020, Pech filed an action against Moghavem,
AMI, Prodigy, and Doe defendants for fraud based on
concealment and false promise, interference with contract, breach
of contract, and quantum meruit. The complaint alleged the
following facts: Moghavem contacted Pech in January 2019,
seeking representation for a legal action against a third party.
Pech conducted numerous meetings and reviewed hundreds of
documents. On May 28, 2019, Pech entered into a written
contingency fee agreement with the defendants. The agreement
provided for a contingency fee between 15 and 45 percent based
on the timing of the recovery. Pech would receive 15 percent of
the recovery from the date of filing of the complaint until 60 days
thereafter, limited to a maximum amount of $200,000. The
defendants were obligated to pay all costs and disbursements
advanced by Pech at the time of discharge.
Pech engaged in substantial research and drafted a
complaint. A representative of the defendants provided
comments and suggestions. The complaint included detailed text
of messages between the parties in which the defendants
provided information and directions to Pech for the complaint.
On June 14, 2019, Pech sent a revised version of the complaint to
the defendants, stating that he believed the complaint was
sufficient to file. The representative for the defendants replied
with additional comments and concerns. Pech provided a revised
draft to the representative on June 27, 2019, stating that he
would file the complaint later that day. Within minutes, the
representative for the defendants replied, “Do NOT file the
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Complaint. You may not do so until [Moghavem] authorizes you
in writing to do so.”
Pech suspected the defendants were negotiating
compensation with the third party and repeatedly requested that
Moghavem authorize him to file the complaint. In a telephone
conversation, Moghavem said there was “a disconnect” in the
direction of the case and he did not want to file the complaint.
Moghavem denied negotiating with the third party and declined
to explain how he intended to obtain the compensation owed to
the defendants. He asked Pech to send a bill for his services. On
July 3, 2019, Moghavem sent an email to Pech stating that the
contingency fee agreement was terminated immediately. Pech
believes the defendants negotiated a resolution for payment from
the third party of the amount owed to them, but prevented Pech
from filing the complaint on June 27, 2019, which would have
entitled him to 15 percent of the recovery, up to $200,000.
The breach of contract cause of action alleged Pech
performed each term of the contingency fee agreement, except as
excused by the defendants’ conduct. The defendants’ conduct in
preventing Pech from filing the complaint breached the implied
covenant of good faith and fair dealing by intentionally
frustrating Pech’s rights under the agreement and depriving
Pech of his fees and costs. As a result of the defendants’ refusal
to pay Pech’s fees due under the agreement, Pech suffered
damages of $200,000, plus interest.
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Anti-SLAPP Motion and Supporting Evidence
On July 13, 2020, the defendants filed an anti-SLAPP
motion seeking to strike the complaint “in whole or in part.” The
defendants asserted that they did not enter into a settlement of
their dispute with the third party, but simply selected different
counsel to file a lawsuit on their behalf in an action that was
ongoing. The defendants argued that Pech’s claims were subject
to the anti-SLAPP statute because they were based on protected
activity. Specifically, the claims arose from conduct in
furtherance of the defendants’ rights of petition or free speech in
the form of settlement negotiations and the instruction not to file
the complaint that Pech drafted. The defendants identified the
paragraph of the complaint that alleged they engaged in
settlement negotiations and argued that each of the causes of
action was based on their purported settlement negotiations,
which was protected activity. The defendants also identified the
specific paragraph of the complaint that alleged they instructed
Pech not to file the complaint he had drafted. They argued that
an attorney’s ability to prosecute a client’s claim extends only as
far as the client grants authority, which authority may be
revoked at any time. The instruction not to file a lawsuit was
protected activity.
In addition, the defendants argued that Pech could not
establish a probability of prevailing. They had not
surreptitiously negotiated a settlement with the third party;
there was no recovery upon which Pech could claim to have a
lien. A different attorney filed an action against the third party
on their behalf, which remained pending. The defendants sought
attorney fees as the prevailing party on an anti-SLAPP motion.
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The defendants submitted Moghavem’s declaration in
support of the anti-SLAPP motion. Moghavem declared that
before he filed the complaint received from Pech, he decided to
use the services of another attorney to prosecute the action
against the third party. He instructed Pech not to file the
complaint that Pech had prepared. The claims that the
defendants had retained Pech to prosecute are currently the
subject of a pending lawsuit filed by another attorney on their
behalf. Between retaining Pech and filing the lawsuit,
Moghavem did not engage in any substantive settlement
negotiations with the third party, and no settlement has been
reached.
Opposition and Supporting Evidence
Pech opposed the anti-SLAPP motion on August 28, 2020.
Pech argued that his claims were not based on protected activity.
He stated that the court must determine the gravamen of the
complaint to assess whether it was based on protected activity.
The gravamen of the complaint in this case was the failure to pay
attorney fees pursuant to the written agreement for contingency
and hourly fees. Specifically, the complaint alleged that the
defendants breached the written agreement by preventing Pech
from filing the complaint that he drafted. Failing to pay attorney
fees owed under a fee agreement was not protected activity, or
every claim to collect on an attorney fee agreement would be
subject to an anti-SLAPP motion. Pech noted that he would
delete the cause of action for fraudulent concealment in an
amended complaint, based on facts that he had learned after
filing the original complaint. The fraud causes of action were
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ancillary to the claims for breach of contract and quantum
meruit. Pech emphasized that under the cause of action for
quantum meruit, the defendants were liable for unpaid fees and
costs for the services that Pech rendered. Pech did not argue in
his opposition that the anti-SLAPP motion was defective because
it did not specifically identify allegations of protected activity
that the defendants sought to have stricken.
Pech argued that he could meet his burden of proof to
establish a probability of prevailing as well. Paragraph 7.2 of the
fee agreement provided, “In addition, if Client discharges
Attorney without cause, then Client’s obligation to Attorney will
be the greater of either the hourly rates listed in Paragraph 3.1,
or the contingency fee as would be determined in Paragraph 4
and its subparagraphs, for all time spent in the Matter until the
date of discharge.” Pech argued that at a minimum, the
defendants owed legal fees based on the hourly rates provided in
the agreement. He noted that Moghavem had offered on several
occasions to pay for the legal services that Pech had rendered.
Pech submitted a declaration and a supplemental
declaration. He declared that the metadata for the complaint
filed by different counsel for the defendants revealed the
document was based on the complaint that Pech drafted. He
attached his email communications with the defendants and
stated that he had demanded payment. In response, the
defendants’ representative requested Pech’s bills in order to
provide payment. Prior to filing his complaint, Pech was
unaware that the defendants had filed a complaint against the
third party. He stated that he would delete allegations about a
settlement between the defendants and the third party.
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Pech attached the “Agreement for Contingency and Hourly
Fee Legal Services” executed by the parties, as well as versions of
the complaint that he drafted. He submitted a comparison
document showing that certain material in the complaint that he
drafted was identical to words, phrases, and sentences in the
complaint that was filed, although the vast majority of the two
documents was different. He also attached copies of his
communications with the defendants, including a letter dated
March 26, 2020, in which he demanded a wire transfer of
$250,000 within a week, and multiple email messages from an
intermediary requesting that Pech send bills showing the hours
that he worked on the matter in order to negotiate payment from
the defendants. Pech submitted letters that he sent to the third
party, including copies of the complaint that was not filed,
instructions to preserve evidence, and an invitation to contact
him to discuss any aspect of the letter.
Pech submitted a letter dated May 29, 2020, that he
received from the defendants’ new counsel, informing Pech that
the defendants’ claims against the third party had not settled and
were in litigation. The new counsel stated his clients claimed
that Pech had been asked to provide the bills for his services on
multiple occasions and Pech had never provided his bills. If that
was incorrect, counsel asked Pech to send a copy of his bills. In
addition, counsel expressed deep concern that Pech had included
substantial attorney-client communications in a public filing that
could prove harmful to the defendants’ case against the third
party. He requested Pech confirm that he had taken steps to
have the complaint filed under seal to protect the client
communications. If Pech refused, the defendants would seek ex
parte relief.
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Reply and Trial Court Ruling
The defendants filed a reply. They argued that the
gravamen of Pech’s complaint was the defendants’ protected
activity in the selection of a lawyer and litigation choices. They
noted the evidence was undisputed that the defendants asked
Pech for a billing statement. Even in opposition to the anti-
SLAPP motion, Pech had not submitted a billing statement. He
could not withhold his billing statement, then institute a lawsuit
asserting nonpayment. Pech had also not shown that he could
support his claims for fraud or interference with contract.
A hearing was held on September 11, 2020. No reporter’s
transcript of the hearing has been included in the record on
appeal. The trial court took the matter under submission. On
September 30, 2020, the trial court issued an order granting the
anti-SLAPP motion in part. The trial court granted the motion
as to the cause of action for interference with contract without
leave to amend. The court determined that the complaint alleged
the defendants had interfered with the contract by preventing
Pech from filing the complaint on their behalf. The trial court
reasoned that since filing a complaint is an act in furtherance of
the right to petition, by analogy, controlling the claims asserted
through litigation by instructing counsel not to file a complaint at
a certain time was in furtherance of the right to petition. Pech
had not demonstrated that the claim had minimal merit, because
the defendants, as signatories to the contract, could not be liable
for interference with the contract as a matter of law.
The trial court also granted the motion as to the cause of
action for breach of contract without leave to amend. The court
found there were no allegations that the defendants breached any
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express term of the contract. Instead, the cause of action
asserted a claim for breach of the implied covenant of good faith
and fair dealing. The allegation that the defendants stopped and
prevented Pech from filing the compliant met the requirement of
frustrating Pech’s right to receive benefits under the agreement.
Therefore, the gravamen of the breach of contract claim was the
defendants’ acts in preventing Pech from filing the complaint,
which the court had already determined to be protected activity.
Pech also failed to show any minimal merit to his claim to have
suffered damages as a result of breach of the contract. There was
no evidence that the defendants negotiated a resolution of their
litigation with the third party. Pech’s entitlement to a
contingency fee had not vested because the defendants had not
received any recovery.
The court denied the anti-SLAPP motion as to the
remaining causes of action. With respect to fraud based on
concealment, the court found the gravamen of the claims was the
defendants’ concealment of settlement negotiations, rather than
the defendants’ participation in settlement negotiations.
Therefore, the claim was not based on protected activity.
The court concluded that Pech’s cause of action for fraud
based on a false promise alleged two separate false promises: a
promise to pay Pech on an hourly or contingent basis, and a
promise to file a complaint against a third party. The first
promise did not implicate participation in settlement negotiations
or the defendants’ decision not to institute litigation, and was
therefore not protected activity. The court found the fact that the
second promise involved filing a complaint did not alter the
nature of the claim, which was based on making a false promise,
and therefore, the claim based on promising to file a complaint
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was also not based on protected activity. Even if the promise to
file a complaint was protected activity, however, the court lacked
authority to strike the allegations about the second promise
because defendants had not specifically identified these
allegations of protected activity as the subject of the motion to
strike as required to strike allegations of a “mixed cause of
action” under Baral v. Schnitt (2016) 1 Cal.5th 376, 396 (Baral).
Pech’s quantum meruit claim was not based on the purported
settlement negotiations or the decision not to initiate litigation by
filing the complaint prepared by Pech.
The court noted that at the hearing on the anti-SLAPP
motion, Pech requested leave to amend the breach of contract
action for the first time. The court denied the request based on
the applicable case law. Pech filed a timely notice of appeal.
DISCUSSION
Pech’s complaint alleged that the defendants’ conduct in
preventing Pech from filing a complaint breached the implied
covenant of good faith and fair dealing in the parties’ fee
agreement. On appeal, Pech contends that the defendants’ right
to control their litigation activities by preventing him from filing
the complaint is not activity protected by the anti-SLAPP statute.
We agree.
A. Statutory Scheme and Standard of Review
The Legislature enacted the anti-SLAPP statute to protect
defendants from meritless lawsuits brought primarily for the
purpose of chilling the exercise of the defendants’ constitutional
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rights to speak and petition on matters of public significance. (§
425.16, subd. (a); Bonni v. St. Joseph Health System (2021) 11
Cal.5th 995, 1008–1009 (Bonni).) To accomplish this purpose, the
statute authorizes a special motion to strike a claim against a
defendant “arising from any act of that person in furtherance of
the person’s right of petition or free speech under the United
States Constitution or the California Constitution in connection
with a public issue . . . unless the court determines that the
plaintiff has established that there is a probability that the
plaintiff will prevail on the claim.” (§ 425.16, subd. (b)(1).)
“‘Resolution of an anti-SLAPP motion involves two steps.
First, the defendant must establish that the challenged claim
arises from activity protected by section 425.16. [Citation.] If the
defendant makes the required showing, the burden shifts to the
plaintiff to demonstrate the merit of the claim by establishing a
probability of success. We have described this second step as a
“summary-judgment-like procedure.” [Citation.] The court does
not weigh evidence or resolve conflicting factual claims. Its
inquiry is limited to whether the plaintiff has stated a legally
sufficient claim and made a prima facie factual showing sufficient
to sustain a favorable judgment. It accepts the plaintiff’s
evidence as true, and evaluates the defendant’s showing only to
determine if it defeats the plaintiff’s claim as a matter of law.
[Citation.] “[C]laims with the requisite minimal merit may
proceed.”’ [Citation.] The grant or denial of an anti-SLAPP
motion is reviewed de novo. (Park v. Board of Trustees of
California State University (2017) 2 Cal.5th 1057, 1067 [(Park)].)”
(Monster Energy Co. v. Schechter (2019) 7 Cal.5th 781, 788.)
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B. Instruction Not to File Complaint
The first step of the anti-SLAPP analysis requires
determining whether the breach of contract claim in this case
arises from protected activity. “At this first step, courts are to
‘consider the elements of the challenged claim and what actions
by the defendant supply those elements and consequently form
the basis for liability.’ (Park, supra, 2 Cal.5th at p. 1063.) The
defendant’s burden is to identify what acts each challenged claim
rests on and to show how those acts are protected under a
statutorily defined category of protected activity. (Wilson[ v.
Cable News Network, Inc. (2019)] 7 Cal.5th [871,] 884
[(Wilson)].)” (Bonni, supra, 11 Cal.5th at pp. 1009.)
The anti-SLAPP statute identifies four categories of
protected activity: “(1) any written or oral statement or writing
made before a legislative, executive, or judicial proceeding, or any
other official proceeding authorized by law, (2) any written or oral
statement or writing made in connection with an issue under
consideration or review by a legislative, executive, or judicial
body, or any other official proceeding authorized by law, (3) any
written or oral statement or writing made in a place open to the
public or a public forum in connection with an issue of public
interest, or (4) any other conduct in furtherance of the exercise of
the constitutional right of petition or the constitutional right of
free speech in connection with a public issue or an issue of public
interest.” (§ 425.16, subd. (e).) “We determine de novo whether
any of the acts from which challenged claims arise are protected
under these provisions. (Wilson, supra, 7 Cal.5th at p. 884.)”
(Bonni, supra, 11 Cal.5th at p. 1009.)
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“‘The right to petition for redress of grievances is
the right to complain about and complain to the government.’
[Citation.] ‘The right includes the right to petition the executive
or legislative branches directly’ and also encompasses ‘the
right to petition the judicial branch for resolution of legal
disputes.’ [Citation.]” (Chorn v. Workers’ Comp. Appeals
Bd. (2016) 245 Cal.App.4th 1370, 1385 (Chorn).) “The
constitutional right of petition encompasses ‘“‘the basic act of
filing litigation.’”’ [Citation.]” (Navellier v. Sletten (2002) 29
Cal.4th 82, 90.)
We conclude that the conduct alleged to give rise to liability
in this case is not protected speech or petitioning activity. Pech
alleged the defendants breached the fee agreement by preventing
him from filing the complaint that he had drafted on their behalf.
The anti-SLAPP statute protects a defendant’s exercise of the
right of petition or speech, but here the defendants did not
exercise their speech or petitioning rights in their dealings with
Pech. In withholding the filing of a complaint, the defendants did
not make a statement before a judicial body, in connection with
an issue under review by a judicial body, or in a public forum.
The instruction not to file the complaint was not conduct in
furtherance of the exercise of their rights of petition or free
speech. The defendants may have been entitled to control their
litigation activities by instructing Pech not to file a lawsuit, but
their instruction to refrain from filing the complaint did not
exercise their right to petition. Therefore, the conduct at issue
was not the type protected by the anti-SLAPP statute. The
portion of the order granting the anti-SLAPP motion as to the
cause of action for breach of contract must be reversed. Because
we agree that the order must be reversed as to the breach of
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contract cause of action, we need not address Pech’s other
contentions which challenge the same ruling. Pech has not
raised any contention on appeal concerning the portion of the
order striking his cause of action against his former clients for
interference with contract, and therefore, that portion of the
order must be affirmed.
In the respondents’ brief, they contend the trial court
should have granted the anti-SLAPP motion as to the fraud
causes of action, but they did not file a cross-appeal. “As a
general matter, ‘“a respondent who has not appealed from the
judgment may not urge error on appeal.”’ [Citation.] ‘To obtain
affirmative relief by way of appeal, respondents must
themselves file a notice of appeal and become cross-appellants.’”
(Preserve Poway v. City of Poway (2016) 245 Cal.App.4th 560,
585.) Because the respondents did not file a cross-appeal from
the trial court’s order on the anti-SLAPP motion, they have
forfeited their issues seeking affirmative relief.
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DISPOSITION
The portion of the September 30, 2020 order striking the
cause of action for breach of contract is reversed and the
remainder of the order is affirmed. Appellant Richard Pech is
awarded his costs on appeal.
MOOR, J.
We concur:
RUBIN, P.J.
KIM, J.
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