O&C Creditors Group, LLC v. Stephens & Stephens XII, LLC ( 2019 )

Filed 11/25/19
CERTIFIED FOR PARTIAL PUBLICATION*
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FOUR
O&C CREDITORS GROUP, LLC, et al.,
Cross-complainants and
Appellants, A151789
v. (San Francisco City & County
STEPHENS & STEPHENS XII, LLC, et Super. Ct. No. CGC-17-556475)
al.,
Cross-defendants and Respondents.
STEPHENS & STEPHENS XII, LLC, et
al.,
Plaintiffs, Cross-defendants and A152002
Appellants,
(San Francisco City & County
v. Super. Ct. No. CGC-17-556475)
O&C CREDITORS GROUP, LLC, et al.,
Defendants, Cross-complainants
and Respondents.
O&C CREDITORS GROUP, LLC, et al.,
Cross-complainants and
Appellants, A152762
v. (San Francisco City & County
AKIN GUMP STRAUSS HAUER & Super. Ct. No. CGC-17-556475)
FELD, LLP, et al.,
Cross-defendants and Respondents.
*
Pursuant to California Rules of Court, rules 8.1105(b) and 8.1110, this opinion is
certified for publication with the exception of parts II.A and II.D.
1
These consolidated appeals arise from an insurance coverage dispute that resulted
in a $5.8 million settlement in favor of the insured. At the center of the dispute is the
enforceability of a lien for attorney’s fees filed by the insured’s former attorney, who is
now deceased. Prior to his death, the attorney for the insured became subject to an
involuntary bankruptcy. The largest creditor of the bankruptcy estate, also an attorney,
purchased the attorney fee claim and received all of the debtor-attorney’s client files,
including the insured’s file. After the insured sought declaratory relief, the attorney-
creditor assigned his interest in the fee claim to a newly formed corporate entity, of which
the attorney-creditor is the sole member.
In these consolidated appeals and cross-appeals, the parties dispute whether the
trial court erred in (1) denying the insured’s motion to disqualify the attorney-creditor
from representing the corporate entity, (2) granting a protective discovery order regarding
the insured’s client file, and (3) granting an anti-SLAPP special motion to strike in favor
of the insurer and awarding attorney fees to the insurer as the prevailing party. Finding
no such errors, we affirm.
I. BACKGROUND
A. Insurance Coverage Dispute
Fireman’s Fund Insurance Company (Fireman’s Fund) issued an insurance policy
covering property damage at an industrial warehouse owned by Stephens & Stephens
XII, LLC and its affiliates1 (collectively, Stephens or the Stephens entities). (Stephens &
Stephens XII, LLC v. Fireman’s Fund Ins. Co. (2014) 231 Cal. App. 4th 1131, 1134–1135
(Stephens XII).) Three days after the policy became effective, Stephens discovered that
burglars stripped the property of all electrical and conductive material. (Ibid.) Stephens
filed a claim with Fireman’s Fund for coverage. The claim was not resolved, prompting
Stephens to file an insurance coverage suit. (Ibid.)
1
The related affiliates are: Stephens & Stephens XII, LLC; D.R. Stephens &
Company, LLC; Don Stephens; and Lane Stephens.
2
B. Stephens Retains Counsel
Stephens retained attorney Terry O’Reilly and his firm O’Reilly & Collins
(O’Reilly) to represent them in the lawsuit with Fireman’s Fund. The two-page retainer
agreement provided that O’Reilly would receive 40 percent of any recovery obtained
after trial, granted a first lien to assure payment of fees, and provided: “In the event that
there is no money recovered, attorneys shall recover nothing for their services.”
O’Reilly, however, did not provide Stephens with a copy of the retainer agreement signed
by counsel.
a. O’Reilly is Defeated at Trial, Abandons the Case, and is Forced into
Bankruptcy
The insurance coverage lawsuit proceeded to trial. The law firm of Akin Gump
Strauss Hauer & Feld, LLP (Akin Gump) represented Fireman’s Fund at all relevant
times. The jury rendered a verdict in favor of Stephens, but the trial court entered
judgment notwithstanding the verdict (JNOV), awarding Stephens nothing. (Stephens
XII, supra, 231 Cal.App.4th at pp. 1139–1142.) Thereafter, O’Reilly withdrew from the
case. On October 25, 2012, Michael Danko, an attorney and former O’Reilly partner,
filed a Chapter 7 (11 U.S.C. § 701 et seq.) involuntary bankruptcy petition against
O’Reilly. Danko was the largest creditor, with a claim of more than $6 million against
the bankruptcy estate.
On November 6, 2012, Credit Management Associates (CMA)—an entity
claiming to be the assignee of O’Reilly—filed a notice of attorney lien in the trial court
docket. CMA asserted that it had a “lien on any recovery in the [insurance coverage
lawsuit].” CMA apparently used the wrong zip code on the service copy for Akin Gump,
however, and the attorney lien was never received.
C. Appeal and Settlement
After the O’Reilly firm’s withdrawal, the Stephens entities retained Nina
Shapirshteyn, a former O’Reilly associate, to represent them in the insurance coverage
lawsuit. In October 2012, Shapirshteyn filed an appeal of the adverse judgment. In
November 2014, our colleagues in Division One of this court reversed the JNOV in favor
3
of Fireman’s Fund. (Stephens XII, supra, 231 Cal.App.4th at pp. 1146–1148, 1151.)
However, the court did not reinstate the jury verdict. Instead, the court interpreted the
jury verdict as a conditional verdict, entitling the Stephens entities to compensation only
if they actually made repairs to the insured warehouse. (Id. at p.1143.) Based on that
interpretation, this court remanded the case for further proceedings. (Id. at p. 1151.)
In December 2015, the Stephens entities and Fireman’s Fund settled their dispute
for $5.8 million.2 The written settlement agreement expressly determined the allocation
of the settlement proceeds—specifically, that the proceeds would be paid solely to the
Stephens entities and Shapirshteyn. The Stephens entities represented during the
negotiations and in the agreement that no one else was entitled to any portion of the
settlement. The Stephens entities further agreed to indemnify and hold Fireman’s Fund
harmless if anyone claimed that they were entitled to any of the proceeds of the
settlement.
D. Stephens and the Bankruptcy Trustee Agree to Hold the Proceeds in Escrow
In February 2016, Shapirshteyn provided a copy of the settlement agreement to the
trustee in the O’Reilly bankruptcy. The trustee claimed that the estate was entitled to 40
percent of the settlement, while Stephens contended that nothing was owed to the estate.
Shapirshteyn stated that she would deposit 40 percent of the settlement funds with the
bankruptcy court and file an interpleader complaint. However, the trustee instead
directed Shapirshteyn to hold the 40 percent in her client trust account until the estate’s
claim was resolved. She agreed to do so.3
E. Danko Obtains Stephens’s Litigation File From the Trustee
In June 2016, Stephens requested the trustee to return “all client papers and
property, including but not limited to all emails and billing records,” to Stephens under
2
Terry O’Reilly died in October 2015.
3
The proceeds ($2.3 million) remain in Shapirshteyn’s account to this day.
4
rule 3-700(D) of the Rules of Professional Conduct4 (Rule 3-700(D)), which then
required the return of all client materials and property upon the termination of
representation. Despite several follow-up requests, the trustee did not return the file to
Stephens or acknowledge that he possessed it.
In August 2016, the trustee gave Danko full access to O’Reilly’s electronic servers
and physical documents, including Stephens’s confidential client file, without notifying
Stephens. Danko then used “specific search criteria” to identify “correspondence related
to the claim against Stephens and the underlying Fireman’s Fund litigation,” including
“emails by O’Reilly [] to outside counsel, internal emails discussing the case, emails with
experts and consultants, as well as emails from the firm to and from Stephens.”5 Danko
“immediately set about reviewing” those documents because they were “the only source
of evidence available” to him regarding the value of the estate’s claim.
F. Danko Purchases the Attorney Fee Claim
In August 2016, Stephens and the trustee reached an $800,000 settlement on the
O’Reilly estate’s attorney fee claim. When the trustee submitted the settlement for
bankruptcy court approval, he explained that the settlement was beneficial because there
was significant uncertainty as to whether the estate could prevail on its claim for fees.
In October 2016, Danko objected to settlement and offered to purchase the claim
for $850,000. In November 2016, counsel for Stephens notified counsel for Danko and
the trustee that Stephens would void the retainer agreement as soon as the bankruptcy
4
At the relevant time, Rule 3-700(D) required an attorney to turn over to a former
client all “ ‘client papers and property.’ ” (Eddy v. Fields (2004) 121 Cal. App. 4th 1543,
1548, citing Rules Prof. Conduct, rule 3-700(D).) Rule 3-700(D) has since been revised
and, as modified, appears in rule 1.16, subdivision (e), effective November 1, 2018. (Cal.
Rules Prof. Conduct, rule 1.16.)
5
Danko is not and has never been attorney for the Stephens entities. Danko’s and
O’Reilly’s business relationship terminated prior to the Stephens entities’ retention of
O’Reilly Collins as their attorneys in 2010. (See, e.g., Danko v. O’Reilly (2014)
232 Cal. App. 4th 732, 736 [“From 1995 to 2009, plaintiff Michael Danko practiced law
with defendant Terry O’Reilly, primarily in the firm of O’Reilly & Collins.”]).
5
stay was no longer applicable “and thereby void any attorney lien on settlement proceeds
from the Fireman’s Fund litigation.” On December 2, 2016, Danko purchased the
bankruptcy estate’s interest in the Fireman’s Fund settlement proceeds on an “as-is”
basis.
G. State Court Litigation Commences
On December 22, 2016, based on O’Reilly’s failure to sign the retainer agreement,
Stephens sent Danko’s counsel a letter voiding the retainer agreement in its entirety,
including that portion of the agreement that provided for an attorney lien. Stephens then
filed a declaratory relief action against Danko to determine whether Stephens owed
money to Danko as the assignee of O’Reilly’s fee claim.
In February 2017, Danko formed a limited liability company, O&C Creditors
Group, LLC (O&C Creditors), with himself as the sole member, manager, organizer, and
agent for service of process. Danko purported to assign his claims against Stephens to
the limited liability company. Stephens then filed a first amended complaint naming both
Danko and O&C Creditors as defendants in the declaratory relief action. On behalf of
O&C Creditors, Danko filed a cross-complaint for $2.32 million against Stephens (for
unpaid legal fees) and against Akin Gump and Fireman’s Fund (for settling the insurance
coverage lawsuit in derogation of the alleged attorney lien).
In their answer to the cross-complaint, the Stephens entities raised an affirmative
defense for offset based on their damages from O’Reilly’s alleged malpractice in the
Fireman’s Fund litigation. That defense was based solely on O’Reilly’s refusal in open
court to introduce evidence of a certain category of damages when given the opportunity
to do so by the trial court.
6
H. Discovery Begins
In early March 2017, Stephens served subpoenas on the trustee and his attorneys
seeking various documents, including the trustee’s communications with Danko. The
subpoenas did not seek the production of Stephens’s client file. Indeed, at that time,
Stephens believed that the trustee did not have the client file based on the trustee’s failure
to return that file to Stephens.
In late March 2017, pursuant to a request for production, Danko produced roughly
170,000 pages of Stephens’s privileged and confidential documents, including Stephens’s
privileged communications with O’Reilly. Prior to this production, neither Stephens nor
their attorneys knew that Danko had any of Stephens’s privileged and confidential
documents.
Danko later responded to written discovery based on his review of Stephens’s
client file. For example, Danko denied a request for admission that O’Reilly Collins
failed to sign the retainer agreement because, according to Danko, “O’Reilly Collins sent
a signed letter, confirming the terms of the retainer agreement . . . to Stephens.”
In April 2017, the trustee served objections to the subpoenas, including
an objection based on attorney-client privilege, and the trustee produced less than 200
unprivileged documents. Eleven days later, in response to inquiries
regarding the location of the client file, the trustee informed Stephens that he had
produced Stephens’s client file to the deposition officer. Stephens demanded that the
trustee stop the production of privileged and confidential documents and, if the
production had already occurred, Stephens demanded that the deposition officer destroy
the production or return it to the trustee unopened.
I. Trial Court Issues Temporary Restraining Order
Upon discovering that Danko possessed their privileged communications and
confidential client file, the Stephens entities immediately demanded that Danko return
them and, when he refused, the Stephens entities obtained a temporary restraining order
preventing Danko from “reviewing, using, or disclosing the documents that Danko
received from the trustee.”
7
After the trial court issued the temporary restraining order, the trustee filed a
“motion to clarify” in the bankruptcy court, seeking an order that the trustee “should
transfer any and all documents that he has or his counsel have regarding Stephens to
counsel for Mr. Danko.” In this motion, the trustee admitted that “most if not all of these
documents were already shared with Danko when the trustee was adverse to Stephens.”
Danko joined the motion and argued that the bankruptcy court should grant the requested
relief because the trial court was considering the same or similar issues.
In May 2017, the bankruptcy court issued a tentative ruling denying the motion,
concluding that the “trustee did not purport to sell [Danko] the attorney-client files that
belong to and should be returned to [Stephens] under Cal. Rule of Prof. Conduct 3-
700(D). Those files could not be transferred to (Danko) absent consent of (Stephens).
Nor could the trustee sell Danko the right to control the attorney-client privilege.”
(Italics added.) Two days later, the bankruptcy court denied the motion “for the reasons
stated on the record.”
J. Trial Court Orders Danko to Return Stephens’s Client File and Issues Discovery
Order
In late May 2017, the trial court issued a discovery order preventing Danko’s
review and use of the client file and ordering Danko to return the client file to Stephens.
In so ruling, the trial court explained that “there is no bankruptcy rule that authorized the
bankruptcy trustee to give access to the records at issue in this motion to [Danko]” and,
“except for documents reflecting communications with the trustee, the purchase of the fee
claim against [Stephens] does not give . . . [Danko] . . . the right to retain any of the
documents that [he] received from the bankruptcy trustee.” The trial court further
determined that the “right, if any, of [Danko] to receive and use some or all of” those
documents “must be made on a document by document determination . . . and that, in the
first instance, that determination should be made by [Stephens].” The trial court ordered
Danko “to bates stamp all originals and all copies of all documents they received from
the bankruptcy trustee in the O’Reilly [] bankruptcy case and then produce, without
keeping any originals or copies for themselves or for anyone working in concert with
8
them, all those documents to [Stephens] with verifications stating their full compliance
with this order.”
K. Trial Court Denies Stephens’s Motion to Disqualify Danko Meredith
In June 2017, Stephens filed a motion to disqualify Danko Meredith from
representing O&C Creditors. Stephens argued that Danko Meredith violated the rules
regarding inadvertent discovery by obtaining, reviewing, and using Stephens’s privileged
and confidential documents and that disqualification is warranted because there is a
reasonable probability that Danko Meredith has privileged material it will likely use
against Stephens. It further contended that disqualification is also necessary to maintain
public trust and confidence in the integrity of the adjudicatory process.
In opposing the motion, Danko conceded that Danko Meredith had obtained,
reviewed, and used Stephens’s privileged communications and confidential client file but
argued that Stephens had waived the attorney-client privilege by filing the declaratory
relief action. Danko also argued there was no inadvertent disclosure or prejudice because
he was entitled to review Stephens’s client file to the same extent as the trustee and
O’Reilly.
In July 2017, the trial court issued an order denying the motion to disqualify. The
trial court held: “The Stephens entities have not identified any specific information that
they assert the Danko Meredith firm impermissibly obtained that will be used to the
disadvantage of the Stephens entities. In reaching this conclusion, the court has not made
any explicit or implicit ruling on any issue of privilege or waiver, including the
applicability or scope of Evidence Code 958 to any of the information that the Danko
Meredith firm received from the bankruptcy trustee. The fact that the Danko Meredith
firm impermissibly received the ‘client file’ from the trustee is not, without more,
sufficient to warrant its disqualification.”
L. The Trial Court Grants the Anti-SLAPP Motion and Awards Attorney Fees
In response to O&C Creditors’ cross-complaint, Fireman’s Fund and Akin Gump
filed a special motion to strike under California’s anti-SLAPP statute (Code Civ. Proc.,
§ 425.16). The motion to strike targeted two causes of action in the cross-complaint: a
9
claim for breach of trust against Fireman’s Fund based on the theory that Fireman’s Fund
owed a fiduciary duty to O’Reilly and/or the bankruptcy estate and “breached that trust”
by both failing to advise the bankruptcy court of the Stephens-Fireman’s Fund settlement
and “secretly disbursing” the proceeds of the settlement (sixth cause of action); and a
claim for interference with prospective business advantage against both Fireman’s Fund
and Akin Gump based on the same acts (seventh cause of action).
After extensive briefing and argument, the trial court granted the motion. The trial
court ruled that the settlement of civil lawsuits is petitioning activity protected by the
anti-SLAPP statute. The court then found that O&C Creditors’ claims lacked merit. The
court reasoned that, because attorney liens arise only by contract, a valid attorney lien can
exist only if there is an enforceable contract. And, because O’Reilly did not sign its own
engagement letter, Stephens were able to and did void the contract, thereby voiding the
attorney lien. As all of O&C Creditors’ claims arose from a void lien, the court struck
them from the cross-complaint. The court awarded attorney’s fees to Fireman’s Fund as
the prevailing party on the special motion to strike.
M. Appeals Follow
The Stephens entities appeal from the order denying the motion to disqualify O&C
Creditors’ attorneys. Danko appeals from the protective discovery order granted in the
Stephens entities’ favor. Danko also appeals from the order granting the special motion
to strike and the related order granting attorney fees.
II. DISCUSSION
A. The Trial Court Did Not Err in Denying Stephens’s Motion to Disqualify
1. Applicable Law
“A trial court’s authority to disqualify an attorney derives from the power inherent
in every court ‘[t]o control in furtherance of justice, the conduct of its ministerial officers,
and of all other persons in any manner connected with a judicial proceeding before it, in
every matter pertaining thereto.’ [Citations.] Ultimately, disqualification motions
involve a conflict between the clients’ right to counsel of their choice and the need to
10
maintain ethical standards of professional responsibility. [Citation.] The paramount
concern must be to preserve public trust in the scrupulous administration of justice and
the integrity of the bar. The important right to counsel of one’s choice must yield to
ethical considerations that affect the fundamental principles of our judicial process.”
(People ex rel. Dept. of Corporations v. SpeeDee Oil Change Systems, Inc. (1999)
20 Cal. 4th 1135, 1145 (SpeeDee Oil).) “Deciding whether disqualification is the
appropriate remedy thus involves a delicate balancing of competing policy
considerations.” (City of San Diego v. Superior Court (2018) 30 Cal.App.5th 457, 470
(City of San Diego).)
Attorney disqualification cases typically fall into one of two categories: (1)
successive representation by an attorney of a former and of a current client (e.g., SpeeDee
Oil, supra, 20 Cal.4th at p. 1146; see Lynn v. George (2017) 15 Cal.App.5th 630, 636–
638); and (2) inadvertent disclosure to opposing counsel of privileged or confidential
communications (McDermott Will & Emory LLP v. Superior Court (2017) 10
Cal.App.5th 1083, 1119–1120 (McDermott)).
This is not a successive representation case. Thus, we look to the principles
governing disqualification for inadvertent disclosure to guide our analysis. State Comp.
Ins. Fund v. WPS, Inc. (1999) 70 Cal. App. 4th 644 (State Fund) is the seminal case
regarding an attorney’s obligations in cases of inadvertent disclosure. “[T]he State Fund
rule requires the attorney to review the documents no more than necessary to determine
whether they are privileged, notify the privilege holder the attorney has the documents
that appear to be privileged, and refrain from using the documents until the parties
resolve or the court resolves any dispute about their privileged nature.” (McDermott,
supra, 10 Cal.App.5th at p. 1092.)
“In the context of inadvertently disclosed, attorney-client communications,
‘ “ ‘ “[m]ere exposure” ’ to an adversary’s confidences is insufficient, standing alone, to
warrant an attorney’s disqualification.” ’ [Citations.] ‘ “Protecting the integrity of
judicial proceedings does not require so draconian a rule [because it] would nullify a
party’s right to representation by chosen counsel any time inadvertence or devious design
11
put an adversary’s confidences in an attorney’s mailbox.” ’ [Citations.] Nonetheless,
‘ “ ‘in an appropriate case, disqualification might be justified if an attorney inadvertently
receives confidential materials and fails to conduct himself or herself in [accordance with
his or her State Fund duties], assuming other factors compel disqualification.’ ” ’ ”
(McDermott, supra, 10 Cal.App.5th at p. 1120.)
“ ‘[D]isqualification is proper as a prophylactic measure to prevent future
prejudice to the opposing party from information the attorney should not have possessed’;
an affirmative showing of existing injury from the misuse of privileged information is not
required. [Citation.] A trial court, however, may not order disqualification ‘ “simply to
punish the dereliction that will likely have no substantial continuing effect on judicial
proceedings.” ’ ” (McDermott, supra, 10 Cal.App.5th at p. 1120.)
The critical question posed by the “substantial continuing effect” inquiry is
“ ‘whether there exists a genuine likelihood that the status or misconduct of the attorney
in question will affect the outcome of the proceedings before the court. Thus,
disqualification is proper where, as a result of a prior representation or through improper
means, there is a reasonable probability counsel has obtained information the court
believes would likely be used advantageously against an adverse party during the course
of the litigation. Though such information cannot be unlearned, and the lawyer who
obtained it cannot be prevented from giving it to others, disqualification still serves the
useful purpose of eliminating from the case the attorney who could most effectively
exploit the unfair advantage.’ ” (McDermott, supra, 10 Cal.App.5th at p. 1120, quoting
Gregori v. Bank of America (1989) 207 Cal. App. 3d 291, 309.)
“A trial court’s ruling on a disqualification motion is reviewed under the
deferential abuse of discretion standard. [Citations.] ‘In exercising its discretion, the trial
court must make a reasoned judgment that complies with applicable legal principles and
policies.’ [Citations.] ‘The order is subject to reversal only when there is no reasonable
basis for the trial court’s decision.’ ” (Clark v. Superior Court (2004) 196 Cal. App. 4th
37, 46 (Clark).)
12
“Even under [the abuse of discretion] standard, there is still a substantial evidence
component. We defer to the trial court’s factual findings so long as they are supported by
substantial evidence, and determine whether, under those facts, the court abused its
discretion.” (Tire Distributors, Inc. v. Cobrae (2005) 132 Cal. App. 4th 538, 544 (Tire
Distributors); see Clark, supra, 196 Cal.App.4th at p. 46.) “The trial court’s order is
‘ “presumed correct; all intendments and presumptions are indulged to support [it];
conflicts in the declarations must be resolved in favor of the prevailing party, and the trial
court's resolution of any factual disputes arising from the evidence is conclusive.” ’ ”
(Clark, at pp. 46–47.)
2. Because There is No Reasonable Likelihood That Any Misconduct in This
Case Will Give O&C Creditors an Unfair Advantage, Disqualification of
Danko Meredith Was Not Required
Initially, the Stephens entities contend the standard of review is de novo because
there are no material disputed facts. Not exactly. While it is undisputed that the trustee
gave the Stephens entities’ client file to Danko Meredith, the nature of the information
contained therein and the subsequent use of that information are very much in dispute.
Accordingly, we review the trial court’s disqualification decision for abuse of discretion,
deferring to the court’s factual findings so long as they are supported by substantial
evidence. (Tire Distributors, supra, 132 Cal.App.4th at p. 544.) With the appropriate
standard of review in mind, we turn to the merits.
The Stephens entities contend that the trial court erred in refusing to disqualify
Danko Meredith based on the violation of its State Fund duties. However,
disqualification requires more than mere misconduct. (See McDermott, supra,
10 Cal.App.5th at p. 1120.) In order to warrant disqualification, there must be a
“ ‘genuine likelihood’ ” that the attorneys’ status or misconduct “ ‘will affect the outcome
of the proceedings before the court.’ ” (Ibid.) Here, in denying the motion, the trial court
explained, the mere fact that “the Danko Meredith firm impermissibly received the ‘client
file’ from the trustee is not, without more, sufficient to warrant its disqualification.”
(Italics added.) We agree with this assessment.
13
The Stephens entities insist that the trial court erred because “there is much more
here,” but even assuming that Danko Meredith impermissibly reviewed privileged
information, the record belies any claim of prejudice. This is because even if the Danko
Meredith law firm were disqualified, its client—O&C Creditors—would remain as a
party in the litigation, as would Danko himself. As indicated, Danko is a named partner
in the law firm and is also the principal of O&C Creditors. Danko’s dual role as attorney-
litigant creates a complex overlapping of relationships that ultimately militates against
disqualification.
To put it simply, even if there were grounds to disqualify Danko Meredith, there is
no authority to prevent Danko himself, as the acting principal of O&C Creditors, from
hiring new counsel to represent O&C Creditors (the entity that effectively stands in the
shoes of O’Reilly vis à vis the attorney fee claim). The Stephens entities do not contend
otherwise; indeed, in arguing that Danko Meredith should be disqualified, Stephens assert
that the “paramount concern” should be protection of their client files, not “whether
Danko will have to hire a new attorney.” And again, Danko himself would remain a
defendant in the Stephens entities’ declaratory relief action even if Danko Meredith were
disqualified from representing O&C Creditors. Accordingly, as the trial court noted,
disqualification along the lines the Stephens entities seek would be akin to granting a
“motion to win” that would prevent Danko and O&C Creditors “from even defending this
case.”
As explained above, “[w]e do not disqualify a lawyer from representing a client to
punish the lawyer’s mistakes or even bad behavior. [Citations.] . . . Rather,
disqualification of counsel is a prophylactic remedy designed to mitigate the unfair
advantage a party might otherwise obtain if the lawyer were allowed to continue
representing the client.” (City of San Diego, supra, 30 Cal.App.5th at pp. 470–471.) On
this record, and in light of the measures fashioned by the trial court to protect the
Stephens entities’ privileged materials (discussed further below), there is no evidence to
suggest an unfair advantage would inure to O&C Creditors’ benefit if Danko Meredith, as
opposed to another law firm, represented O&C Creditors.
14
In sum, there is no genuine likelihood that O&C Creditors’ continued
representation by Danko Meredith will affect the outcome of the declaratory relief action
in the trial court.
B. The Court Did Not Err in Granting the Discovery Motion
1. Appealability and Standard of Review
Initially, Danko argues that the discovery order is a “preliminary, mandatory
injunction” subject to appeal under Code of Civil Procedure section 904.1, subdivision
(a)(6). The record refutes this claim. The trial court noted that although the request was
“labeled a preliminary injunction motion,” it was, “in substance, a discovery motion” that
did not require analysis of the preliminary injunction factors or the posting of a bond.
Like the trial court, we do not find labels to be dispositive and instead look at the
substance of the motion, which is rooted in the Stephens entities’ desire to prevent any
further use of their privileged information.
Both the civil rules of discovery and case law provide authority to grant a
protective order for misuse of the discovery process. (See Code Civ. Proc., § 2031.060,
subd. (b); State Fund, supra, 70 Cal.App.4th at pp. 656–657.) As we deem the
challenged order to be a protective discovery order rather than a preliminary injunction,
we need not analyze whether the Stephens entities have established the prerequisites for
injunctive relief.
Discovery orders are not directly appealable, and even writ review of such orders
is limited; instead, they are generally challenged by appeal from the final judgment.
(Oiye v. Fox (2012) 211 Cal. App. 4th 1036, 1060; Johnson v. Superior Court (2000) 80
Cal. App. 4th 1050, 1060–1061, disapproved on another ground in Williams v. Superior
Court (2017) 3 Cal.5th 531, 555–556 & fn. 8.) Where, as here, the challenger seeks relief
from an order that could undermine a privilege, writ relief is appropriate. (See Los
Angeles Gay & Lesbian Center v. Superior Court (2011) 194 Cal. App. 4th 288, 299–300;
Raytheon Co. v. Superior Court (1989) 208 Cal. App. 3d 683, 686.) Thus, we exercise our
discretion to treat Danko’s challenge to the discovery order as a writ petition. (See Green
v. GTE California, Inc. (1994) 29 Cal. App. 4th 407, 408.)
15
“ ‘Management of discovery lies within the sound discretion of the trial court.
Consequently, appellate review of discovery rulings is governed by the abuse of
discretion standard. [Citation.] Where there is a basis for the trial court’s ruling and the
evidence supports it, a reviewing court will not substitute its opinion for that of the trial
court. [Citation.]’ [Citation.] The trial court’s determination will be set aside only when
it has been established that there was no legal justification for the order granting or
denying the discovery in question.” (Save Open Space Santa Monica Mountains v.
Superior Court (2000) 84 Cal. App. 4th 235, 245–246, disapproved on another ground in
Williams v. Superior Court, supra, 3 Cal.5th at p. 557, fn. 8.)
2. Legal Principles
The attorney-client privilege prevents disclosure of confidential communications
between a client and attorney. (Evid. Code, § 950 et seq.) The term “ ‘confidential
communication’ ” includes “information transmitted between a client and his . . . lawyer
in the course of that relationship and in confidence.” (Evid. Code, § 952.) If a
“confidential communication between client and lawyer” exists, the client has a privilege
protecting disclosure (Evid. Code, § 954), and the attorney has an obligation to refuse
disclosure unless otherwise instructed by the client (Evid. Code, § 955). While attorney-
client communications are presumed to be confidential (Evid. Code, § 917), the party
claiming the attorney-client privilege as a bar to disclosure has the burden of showing
that the communication sought to be suppressed falls within the parameters of the
privilege. (Alpha Beta Co. v. Superior Court (1984) 157 Cal. App. 3d 818, 825.)
The attorney-client privilege is a legislative creation that courts have no power to
limit unless expressly provided by statute. (Costco Wholesale Corp. v. Superior Court
(2009) 47 Cal. 4th 725, 739 (Costco).) Evidence Code sections 956 through 962 describe
eight exceptions to the attorney-client privilege. (Edwards Wildman Palmer LLP v.
Superior Court (2014) 231 Cal. App. 4th 1214, 1227.) Where none of these exceptions
applies, “ ‘[t]he privilege is absolute and disclosure may not be ordered, without regard to
relevance, necessity or any particular circumstances peculiar to the case.’ ” (Costco, at
p. 732.)
16
Relevant to this appeal is whether the exception set forth in Evidence Code section
958 applies. Pursuant to that exception, “[t]here is no privilege . . . as to a
communication relevant to an issue of breach, by the lawyer or by the client, of a duty
arising out of the lawyer-client relationship.” (Evid. Code, § 958.) However, privileged
communications do not become discoverable merely because they are related to issues
raised in the litigation. (Schlumberger Limited v. Superior Court (1981) 115 Cal. App. 3d
386, 393.) Rather, the privileged communications must be directly at issue. (Ibid.) In
other words, it is “ ‘not merely the initiation of the lawsuit but rather the manner of its
prosecution that constitutes the waiver.’ ” (Ibid.) If tendering the issue of damages in an
action automatically waived the privilege, the exception would swallow the rule and
Evidence Code section 954 would be meaningless. (Ibid.)
3. Waiver
Danko first contends that the Stephens entities waived the attorney-client privilege
by failing to object to the sale of the fee claim and by subpoenaing documents from the
bankruptcy trustee. The trial court rejected these arguments in granting the Stephens
entities’ motion, and so do we.
The attorney-client privilege is retained, even without express assertion thereof,
until the holder voluntarily discloses a substantial part of the privileged communication
or otherwise manifests his or her consent to the disclosure by others. (See Evid. Code,
§ 912; McDermott, supra, 10 Cal.App.5th at p. 1101; State Fund, supra, 70 Cal.App.4th
at p. 653.) Implying a waiver from the Stephens entities’ mere failure to object to the
trustee’s sale of the fee claim would contravene this rule. Similarly, in subpoenaing the
documents from the bankruptcy trustee, the Stephens entities did not disclose any
privileged communication or otherwise manifest consent to the dissemination of their
client file to a third party. Indeed, there was clear evidence that the Stephens entities did
not intend to waive any privilege by subpoenaing the trustee, to wit: (1) the Stephens
entities did not seek production of their client file in the subpoena because they had
previously concluded that the trustee did not possess their client file in light of the
trustee’s failure to return it; (2) the Stephens entities served the subpoenas before Danko
17
produced the client file; (3) upon learning of the unauthorized production of their client
file, the Stephens entities immediately demanded that the trustee stop the production or, if
it had already occurred, inform the deposition officer to destroy the production or return
it unopened; and (4) upon learning that Danko possessed their client file, the Stephens
entities obtained a temporary restraining order preventing Danko from reviewing the
trustee’s unauthorized production. On this record, there is no basis to find a waiver of the
attorney-client privilege based on the Stephens entities’ failure to object to the sale of the
fee claim or their subpoena to the bankruptcy trustee.
4. Statutory Exception
As noted, Evidence Code section 958 creates an exception to the attorney-client
privilege for communications “relevant to an issue of breach, by the lawyer or by the
client, of a duty arising out of the lawyer-client relationship.” (Evid. Code, § 958.)
Danko contends he is entitled to the Stephens entities’ client file because he purchased
the disputed attorney fee claim from the bankruptcy trustee. As the bankruptcy trustee’s
assignee of O’Reilly’s fee claim, Danko asserts that he stands in O’Reilly’s shoes and
thus has the same right to the client file as the trustee and O’Reilly would have in
defending O’Reilly in the declaratory relief action. For its part, the Stephens entities
argue there is no authority equating a client’s former attorney to a “litigation shopper”
like Danko for purposes of the statutory exception set forth in Evidence Code section
958. The parties have presented no authority on this point, and there appears to be no
applicable precedent on the issue.
In this case of apparent first impression, we find guidance in the nature and
purpose of the challenged exception. Evidence Code section 958 is rooted in the
equitable notion that it would be unjust to permit a client to accuse an attorney of a
breach of duty and then to invoke the privilege to prevent the attorney from introducing
evidence in defense of the claim. (Anten v. Superior Court (2015) 233 Cal. App. 4th 1254,
1258 (Anten).) “For example, it would be ‘fundamentally unfair for a client to sue a law
firm for the advice obtained and then to seek to forbid the attorney who gave that advice
from reciting verbatim, as nearly as memory permits, the words spoken by his accuser
18
during the consultation.’ [Citation.] Similarly, a written fee contract between an attorney
and a client is itself a privileged communication [citation], but it would be unfair to allow
the client to invoke the privilege in order to exclude the contract in an action by the
attorney for unpaid fees.” (Ibid.)
“The wording of [Evidence Code] section 958 is broad, but case law has clarified
that the exception is limited to communications between the lawyer charging or charged
with a breach of duty, on the one hand, and the client charging or charged with a breach
of duty, on the other.” (Anten, supra, 233 Cal.App.4th at p. 1259.) The instant case
involves the novel scenario in which a third party purchases a litigation claim and
purports to stand in the shoes of the attorney in defending itself against the client’s claim
of breach of duty.
Setting aside for a moment the third-party purchase aspect, as between O’Reilly
and Stephens, the disputed attorney fee claim falls squarely within the literal terms of
Evidence Code section 958. Had Stephens sued O’Reilly, Stephens would have been
unable to prevent the disclosure of documents relevant to issues of any alleged breach
arising out of the lawyer-client relationship. Similarly, had O’Reilly cross-complained or
raised affirmative defenses regarding the absence of a signed retainer agreement and/or
any malpractice claim, under the plain language of Evidence Code section 958, the
attorney-client privilege would not apply to those communications. Both by disputing
the amount of attorney fees owed to O’Reilly and by claiming malpractice, Stephens put
in issue the validity of the lawyer-client relationship itself. Under these circumstances, it
would be fundamentally unfair for Stephens to invoke the privilege to prevent O’Reilly
from defending himself.
The Stephens entities vigorously argue that Evidence Code section 958 does not
extend to third parties but is limited to those within the lawyer-client relationship.
Broadly speaking, this assertion is consistent with the plain language of the statue and
policy considerations. For example, “a legal malpractice defendant cannot invoke the
exception in order to permit discovery of communications between the plaintiff and the
attorney who represents the plaintiff in the malpractice action. [Citation.] Likewise, a
19
legal malpractice plaintiff cannot invoke the exception in order to permit discovery of
communications between the defendant attorney ‘and other clients of his not privy to the
relationship between’ the defendant and the plaintiff.” (Anten, supra, 233 Cal.App.4th at
p. 1259.)
Strictly speaking, however, Danko is not a third party. Danko purchased the fee
claim and assigned it to O&C Creditors, which effectively stands in the shoes of O’Reilly
with respect to this claim.6 To the extent the declaratory relief action and related cross-
complaint involve issues of breach arising out of the lawyer-client relationship between
O’Reilly and Stephens, those communications are not confidential as to Danko.
However, Danko’s entitlement to otherwise privileged communications between
Stephens and O’Reilly is limited to communications that have been put at issue by the
declaratory relief action and related cross-complaint. In other words, Danko is not
entitled to know all that transpired in the attorney-client relationship between Stephens
and O’Reilly. The trial court’s carefully-crafted order ensures that only information
related to communications that have been put at issue by the underlying litigation will be
disclosed. The trial court did not abuse its discretion in granting the discovery order.
C. The Trial Court Did Not Err in Granting the Special Motion to Strike the Cross-
Complaint
The gist of O&C Creditors’ cross-complaint is that Fireman’s Fund and its
attorneys at Akin Gump (cross-defendants) acted in derogation of a purported attorney
lien by settling the underlying insurance coverage lawsuit and executing a settlement with
Stephens. O&C Creditors contends that the trial court erred in granting the special
motion to strike because its cross-claims against Fireman’s Fund and Akin Gump did not
fall within the ambit of the Code of Civil Procedure section 425.16. We disagree.
1. Applicable Law and Standard of Review
“A SLAPP suit—a strategic lawsuit against public participation—seeks to chill or
punish a party’s exercise of constitutional rights to free speech and to petition the
6
Although the Stephens entities argue at length about the evils of so-called
“litigation shopping,” these ethical issues are beyond the scope of the instant appeal.
20
government for redress of grievances. [Citation.] The Legislature enacted Code of Civil
Procedure section 425.16—known as the anti–SLAPP statute—to provide a procedural
remedy to dispose of lawsuits that are brought to chill the valid exercise of constitutional
rights.” (Rusheen v. Cohen (2006) 37 Cal. 4th 1048, 1055–1056.) The statute provides:
“A cause of action against a person 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 shall be subject to a special
motion to strike, unless the court determines that the plaintiff has established that there is
a probability that the plaintiff will prevail on the claim.” (Code Civ. Proc., § 425.16,
subd. (b)(1).) Subdivision (e) delineates the four types of acts that constitute a protected
“ ‘act of that person in furtherance of the person’s right of petition or free speech,’ ”
including, as pertinent here, “(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 . . . .” (Code Civ. Proc.,
§ 425.16, subd. (e).) The Legislature has directed that the language of the statute should
be “construed broadly.” (Code Civ. Proc., § 425.16, subd. (a).)
A court’s consideration of an anti–SLAPP motion involves a two-step process.
“First, the court decides whether the defendant has made a threshold showing that the
challenged cause of action is one arising from protected activity. The moving
defendant’s burden is to demonstrate that the act or acts of which the plaintiff complains
were taken ‘in furtherance of the [defendant]’s right of petition or free speech under the
United States or California Constitution in connection with a public issue,’ as defined in
the statute. ([Code Civ. Proc.,]§ 425.16, subd. (b)(1).) If the court finds such a showing
has been made, it then determines whether the plaintiff has demonstrated a probability of
prevailing on the claim.” (Equilon Enterprises v. Consumer Cause, Inc. (2002)
29 Cal. 4th 53, 67.) In the second step, the plaintiff must only bring forward sufficient
evidence to make out a viable prima facie case at trial, a burden that is “not particularly
high.” (Area 51 Productions, Inc. v. City of Alameda (2018) 20 Cal.App.5th 581, 602.)
21
As we review the trial court’s decision to grant or deny an anti–SLAPP motion de
novo, we conduct an independent review of the entire record. (Flatley v. Mauro (2006)
39 Cal. 4th 299, 325; Terry v. Davis Community Church (2005) 131 Cal. App. 4th 1534,
1544.) In so doing, we consider “the pleadings, and supporting and opposing affidavits
stating the facts upon which the liability or defense is based.” (Code Civ. Proc.,
§ 425.16, subd. (b)(2).) “ ‘However, we neither “weigh credibility [nor] compare the
weight of the evidence. Rather, [we] accept as true the evidence favorable to the plaintiff
[citation] and evaluate the defendant's evidence only to determine if it has defeated that
submitted by the plaintiff as a matter of law.” ’ ” (Flatley, at p. 326.)
2. Protected Activity
Fireman’s Fund and Akin Gump contend that the cross-complaint falls within the
anti-SLAPP statute because the settlement negotiations and written agreement were made
in connection with an issue under consideration or review by a judicial body. (Code Civ.
Proc., § 425.16, subd. (e)(2).) We agree.
Courts “have adopted a fairly expansive view of what constitutes litigation-related
activities within the scope of [Code of Civil Procedure] section 425.16.” (Kashian v.
Harriman (2002) 98 Cal. App. 4th 892, 908.) A settlement agreement executed in the
context of active litigation is “made in connection with an issue under consideration or
review by a . . . judicial body.” (Code Civ. Proc., § 425.16, subd. (e); Navellier v.
Sletten (2002) 29 Cal. 4th 82, 85–86, 87 (Navellier) [finding defendant’s negotiations and
execution of release to be protected activity]; Seltzer v. Barnes (2010) 182 Cal. App. 4th
953, 958, 963–967 (Seltzer) [reversing denial of anti-SLAPP motion in homeowner’s
action for fraud in connection with settlement negotiations in underlying lawsuit];
GeneThera, Inc. v. Troy & Gould Professional Corp. (2009) 171 Cal. App. 4th 901, 908
[affirming grant of anti-SLAPP motion in lawsuit based on firm’s communication of
settlement offer]; Dowling v. Zimmerman (2001) 85 Cal. App. 4th 1400, 1420 [attorney’s
negotiation of stipulated settlement in unlawful detainer action was protected conduct];
see also Monster Energy Co. v. Schechter (2019) 7 Cal.5th 781, 788–789 [“It is
22
undisputed that defendants met their first-step showing” that allegedly breached
settlement agreement involved protected activity].)
O&C Creditors does not dispute that settlements are protected conduct under the
anti-SLAPP statute. The ultimate question, then, is whether O&C Creditors’ cross-claims
“aris[e] from” the protected activity of the settlement of the Stephens-Fireman’s Fund
litigation. (Code Civ. Proc., § 425.16, subd. (b).) O&C Creditors argues that its claims
fall outside the ambit of the anti-SLAPP statutes because there is no protection for the
“wrongful disbursement” of settlement funds to Stephens. But as discussed below, the
challenged cross-claims are founded upon and would not exist in absence of the protected
settlement activity; the cross-claims thus “ ‘arise from’ ” and are “ ‘based on’ ” the
settlement agreement, making them subject to the provisions of the anti-SLAPP statute.
(ValueRock TN Properties, LLC v. PK II Larwin Square SC LP (2019) 36 Cal.App.5th
1037, 1047 (ValueRock), quoting Bergstein v. Stroock & Stroock & Lavan (2015)
236 Cal. App. 4th 793, 804.)
To determine whether a claim meets the “arising from” requirement of the anti-
SLAPP statute, we consider “ ‘the principal thrust or gravamen of a plaintiff’s cause of
action.’ ” (ValueRock, supra, 36 Cal.App.5th 1037 at p. 1047, quoting Ramona Unified
School Dist. v. Tsiknas (2005) 135 Cal. App. 4th 510, 519–520.) The gravamen of O&C
Creditors’ claims is that cross-defendants wrongfully deprived O’Reilly of a 40 percent
contingency fee in the underlying insurance coverage dispute. O&C Creditors argues the
settlement agreement is merely incidental to its claims against cross-defendants.
However, O&C Creditors’ allegations regarding cross-defendants’ allegedly wrongful
conduct stem from cross-defendants’ settlement of the Stephens-Fireman’s Fund
litigation (without acknowledging O’Reilly’s claim to attorney fees), and their
disbursement of the settlement proceeds pursuant to that agreement. For example, in its
sixth cause of action, O&C Creditors alleges that Fireman’s Fund breached a trust by
“failing to advise the bankruptcy court of the settlement, and by secretly disbursing said
proceeds in derogation of the [attorney] lien.” “Said proceeds” obviously refers to
proceeds of the Stephens-Fireman’s Fund settlement, and the alleged attorney lien would
23
not even exist in absence of that settlement agreement. (Little v. Amber Hotel Co. (2011)
202 Cal. App. 4th 280, 293 [when the attorney’s lien is tied to a contingency, attorney
cannot enforce the lien until the contingency occurs]; Kroff v. Larson (1985)
167 Cal. App. 3d 857, 860 [retainer agreement provided that attorney would be reimbursed
for costs out of client’s “recovery”; costs would thus be paid from client’s recovery “by
settlement or judgment,” which “had to occur before the client was obligated” to the
attorney].)
Likewise, in its cause of action for intentional interference with prospective
economic advantage (IIPEA), O&C Creditors alleges the existence of a lienhold interest
in “the proceeds from the Stephens cross-defendants’ litigation against cross-defendant”
Fireman’s Fund. As other allegations of the cross-complaint make clear, those “proceeds
from the Stephens cross-defendants’ litigation” are unquestionably the $5.8 million
“recovered” by Stephens via the “settlement reached between the Stephens cross-
defendants and cross-defendant” Fireman’s Fund. O&C Creditors’ express allegations of
a lienhold interest in the Stephens-Fireman’s Fund settlement proceeds and of Fireman’s
Fund’s and Akin Gump’s purported conspiracy to “secretly pay and disburse the entirety
of said [settlement] proceeds” necessarily demonstrate that the protected settlement
activity “form[s] the basis” of and “ ‘suppl[ies] elements of the challenged’ ” cross-claim.
(Rand Resources v. City of Carson, LLC (2019) 6 Cal.5th 610, 615, 621 (Rand
Resources), quoting Park v. Board of Trustees of California State University (2017)
2 Cal.5th 1057, 1064.) Put another way, Stephens’s and Fireman’s Fund’s protected
settlement activity—both their entry into an agreement that disclaims the existence of any
attorney lien in favor of O’Reilly and the effectuation of that settlement agreement by
paying only Stephens and Shapirsteyn in derogation of the alleged attorney lien—
24
underlie the elements of O&C Creditors’ IIPEA claim.7 The protected settlement activity
thus lies “at the heart of” the claims asserted by O&C Creditors. (Rand Resources, at p.
616.) Accordingly, the trial court correctly concluded that O&C Creditors’ claims arose
from the negotiation and execution of the settlement agreement, which are protected
activities under the anti-SLAPP statute. (Navellier, supra, 29 Cal.4th at p. 90; Applied
Business Software, Inc. v. Pacific Mortgage Exchange, Inc. (2008) 164 Cal. App. 4th
1108, 1118 [entering into a settlement agreement is a protected activity].)
Contrary to O&C Creditors’ contention, cross-defendants’ conduct in disbursing
the settlement proceeds—i.e., carrying out the terms of the settlement agreement—cannot
be neatly cleaved from the indisputably protected activity of negotiating and agreeing to
the settlement itself. O&C Creditors and the dissent cite no authority holding that
payment of settlement proceeds pursuant to a settlement agreement can be separated from
the act of entering into the settlement agreement (without which the allegedly wrongful
payment would not occur, and without which the attorney lien claim would not accrue),
such that the disbursement falls outside the scope of the anti-SLAPP statutes.
The cases on which O&C Creditors primarily relies are distinguishable. The facts
of Old Republic Construction Program Group v The Boccardo Law Firm, Inc. (2014)
230 Cal. App. 4th 859 (Old Republic), are somewhat complicated, but its reasoning
supports our analysis. In that case, Carabello was injured in a car accident while driving
in the course of his employment. (Id. at p. 862.) Old Republic was his employer’s
workers’ compensation insurer; it paid Carabello benefits greater than the policy limits of
7
“An IIPEA claim requires proof of (1) an economic relationship between the
plaintiff and some third party, with the probability of future economic benefit to the
plaintiff; (2) the defendant's knowledge of the relationship; (3) intentional acts on the part
of the defendant designed to disrupt the relationship; (4) actual disruption of the
relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the
defendant.” (Port Medical Wellness Inc. v. Connecticut General Life Insurance Co.
(2018) 24 Cal.App.5th 153, 182–183.) Although O&C Creditors’ cross-complaint is not
a model of clarity, we believe the third and fourth elements of O&C Creditors’ IIPEA
claim depend on and are based on the settlement agreement, which expressly purports to
eliminate O’Reilly’s right to attorney’s fees, in derogation of his alleged lien.
25
the driver who injured him (Casby). (Id. at pp. 862–863.) Old Republic filed a complaint
in intervention in the Carabello-Casby action, asserting a right to reimbursement. (Id. at
p. 863.) Carabello and Casby settled the personal injury case for Casby’s $100,000
policy limits, without resolving Old Republic’s claim to reimbursement. (Ibid.)
Carabello’s lawyer and counsel for Old Republic then signed a written stipulation
providing that the $100,000 would be deposited into an interest-bearing account, with
signatures of both counsel required for any withdrawal. (Ibid.)
Old Republic subsequently filed a notice of lien and a request to dismiss with
prejudice its complaint in intervention. (Old Republic, supra, 230 Cal.App.4th at p. 863.)
Carabello’s lawyer contended that by dismissing the complaint, Old Republic had given
up the right to obtain reimbursement. (Id. at p. 864.) Putting aside various procedural
detours not relevant here, after giving notice to Old Republic’s lawyer, Carabello’s
lawyer disbursed funds to Carabello. (Ibid.)
Old Republic then sued Carabello’s lawyer and law firm, asserting various causes
of action relating to the written stipulation. (Old Republic, supra, 230 Cal.App.4th at
p. 865.) The trial court granted the law firm defendants’ anti-SLAPP motion as to Old
Republic’s fraud claim, which was based on an assertion that defendants fraudulently
induced Old Republic to consent to the stipulation, but denied it as to the remaining
claims. (Id. at pp. 865–866.) In affirming, the Old Republic court first held that the
written stipulation constituted protected conduct under Code of Civil Procedure section
425.16, subdivision (e)(2). (Old Republic, at p. 867, following Navellier, supra,
29 Cal.4th at p. 90 [a release of claims constitutes protected conduct under Code Civ.
Proc., § 425.16, subd. (e)(2)].)
Turning to the question of whether the causes of action on appeal—breach of
contract, negligence, and declaratory relief—“arose from the stipulation,” the court noted
that the claims “refer to, and may depend on, defendants’ having entered into the
stipulation, which was itself protected conduct.” (Old Republic, supra, 230 Cal.App.4th
at pp. 867, 869.) But in contrast to the fraud claim, which “arose from” the stipulation
because the alleged wrongful conduct was “entry into the stipulation” itself, the
26
remaining claims were based on the withdrawal of funds in alleged breach of that
agreement. (Id. at p. 869, italics omitted.) With that understanding of the gravamen of
Old Republic’s remaining causes of action, the court found that the stipulation was only
“incidental” to the claims on appeal. (Ibid.) In so holding, the court reasoned: “If the
protected status of an underlying agreement furnished sufficient ground to invoke the
anti-SLAPP statute against a claim for breach of that agreement, it would follow that
every suit to enforce a settlement agreement would be subject at the threshold to a
SLAPP motion.” (Id. at p. 870, italics added and omitted.)
In this case, by contrast, O&C Creditors is not a party to the settlement agreement
seeking damages for its breach. To the extent Old Republic is relevant to the issues in
this case, its analysis of the fraud claim demonstrates that the trial court here did not err.
Like Old Republic’s fraud claim, the factual underpinning of the cross-claims in this case
is Fireman’s Fund’s purportedly wrongful “entry into” the settlement agreement (in
derogation of O’Reilly’s alleged right to fees), and the effectuation of the settlement by
disbursing the settlement proceeds in accordance with that agreement. (Old Republic,
supra, 230 Cal.App.4th at p. 869.) The settlement agreement is thus in no way merely
“incidental” to the wrongful conduct that underlies the cross-claims; it forms the
fundamental factual basis for the claims. Although the cross-complaint carefully avoids
using the phrase “settlement agreement,” we look past that artful drafting to review the
gravamen of the cross-claims, which arise from and are “based on” Fireman’s Fund’s
allegedly wrongful “negotiation and execution” of the settlement agreement. (Navellier,
supra, 29 Cal.4th at pp. 89–90.) Old Republic is thus inapposite.
We are similarly unpersuaded by O&C Creditors’ reliance on Drell v. Cohen
(2014) 232 Cal. App. 4th 24. There, attorney Cohen represented an injured party in a
personal injury action on a contingency basis. (Id. at p. 26.) When Cohen withdrew from
the representation, the injured party retained plaintiff Drell to take over the case. (Ibid.)
Cohen “asserted an attorney fee lien, informing one of the insurers in the personal injury
case that any payment of funds to [the injured party] was subject to a lien for their fees
incurred during the representation.” (Id. at pp. 26–27.) Drell negotiated the settlement of
27
the personal injury case, and the insurer made the check payable to both Drell and Cohen.
(Id. at p. 27.) Drell filed a declaratory relief action against Cohen and his law firm to
determine the status of the lien; the defendants filed an anti-SLAPP special motion to
strike, contending that the declaratory relief action “arose from their protected activity of
asserting a lien in a demand letter that threatened litigation.” (Ibid.)
In rejecting Cohen’s argument, the Drell court explained: “Defendants are correct
that a demand letter may be protected, but a complaint is not a SLAPP suit unless the
gravamen of the complaint is that defendants acted wrongfully by engaging in the
protected activity. The complaint here did not allege defendants engaged in wrongdoing
by asserting their lien. Rather, the complaint asked the court to declare the parties’
respective rights to attorney fees. The complaint necessarily refers to defendants’ lien,
since their demand letter is key evidence of plaintiff’s need to obtain a declaration of
rights[], but the complaint does not seek to prevent defendants from exercising their right
to assert their lien.” (Drell, supra, 232 Cal.App.4th at p. 30, fn. omitted.) Here,
however, the gravamen of the cross-claims is that Fireman’s Fund engaged in
wrongdoing by settling the Stephens-Fireman’s Fund litigation “around” O’Reilly’s
attorney lien and disbursing proceeds pursuant to the settlement agreement and in
contravention of that lien. Drell, therefore, does not compel reversal.
Far from providing mere evidentiary support for or being incidental to the
challenged claims, the settlement agreement is the crux of cross-defendants’ allegedly
wrongful conduct. O&C Creditors cannot allege its claims without the settlement
agreement—both because the allegedly wrongful “disbursement” of “proceeds” occurred
only because of the settlement agreement and because the alleged attorney lien could not
arise without the settlement. O&C Creditors’ claims are thus based on and arise from a
purportedly wrongful settlement agreement, which constitutes a statement and writing
“made in connection with an issue under consideration or review by a . . . judicial body.”
(Code Civ. Proc., § 425.16, subds. (b), (e); see Seltzer, supra, 182 Cal.App.4th at
pp. 962–964, 968–969 [plaintiff’s claimed injury (non-payment of attorney fees) was a
necessary consequence of allegedly wrongful settlement].)
28
The dissent’s approach would allow O&C Creditors to do an end-run around
established anti-SLAPP precedent such as Navellier and Seltzer by employing an artful
pleading tactic that seeks to divorce the disbursement of settlement proceeds from the
settlement agreement itself. But the protected settlement activity between Stephens and
Fireman’s Fund gave rise to both the allegedly wrongful disbursement and the allegedly
derogated attorney lien “at the heart of” O&C Creditors’ cross-claims. (Rand Resources,
supra, 6 Cal.5th at p. 616.) Although the dissent refers repeatedly to the payment of
“money” as the act that purportedly underlies O&C Creditors’ cross-claims, it is
noteworthy that that generic word appears nowhere in the cross-claims themselves.
Rather, as noted above, although the allegations in the carefully-worded cross-claims do
not include the term “settlement agreement,” those claims are expressly founded upon the
disbursement of “proceeds” from the protected settlement, a disbursement that was made
pursuant to the settlement agreement, which was allegedly wrongful because it is in
derogation of a lien claim that exists only because of the settlement agreement.
(Southern California Gas Co. v. Flannery (2016) 5 Cal.App.5th 476, 494 [cause of action
to enforce attorney lien in a contingency fee contract arises only on occurrence of stated
contingency]; see also Kroff v. Larson, supra, 167 Cal.App.3d at p. 860 [retainer
agreement specifying attorney reimbursement based on “recovery” required “settlement
or judgment” before attorney had right to be reimbursed by client].)
Under the theory advanced by O&C Creditors and espoused by the dissent, a claim
challenging a settlement agreement in derogation of an attorney lien could be subject to
an anti-SLAPP motion, whereas a claim using words that focus on the effectuation of that
same settlement agreement would not. We cannot countenance this attempt to plead
around the above-cited authorities holding that negotiating and executing a settlement
agreement is protected activity under Code of Civil Procedure section 425.16,
subdivision (e)(2). To do so would eviscerate their import and would contravene the
29
Legislature’s directive that the anti-SLAPP statute is to be construed broadly. (Code Civ.
Proc., § 425.16, subd. (a).)8
Nor are we convinced by the dissent’s citation to Optional Capital, Inc. v. DAS
Corp. (2014) 222 Cal. App. 4th 1388. In that case (which involved two separate state
court actions, multiple federal forfeiture proceedings, a criminal case and asset freeze in
Switzerland, and a trip to the Ninth Circuit after a federal civil trial), the court held that
Optional Capital’s conversion and fraudulent transfer claims against DAS Corporation
did not fall within the scope of the anti-SLAPP statute. (Optional Capital, at pp. 1393–
1395, 1400–1401.) The court distinguished Seltzer on the basis that the settlement
agreement between DAS and other parties was merely the “device” by which DAS
allegedly “looted” and converted Optional Capital’s funds. (Id. at pp. 1400–1401.) Here,
by contrast, the settlement agreement between Stephens and Fireman’s Fund is not
merely the vehicle by which those cross-defendants executed a wrongful scheme to
deprive O’Reilly of his right to fees. Instead, the settlement agreement is “at the heart of”
and forms the fundamental factual underpinning of O&C Creditors’ cross-claims. (Rand
Resources, supra, 6 Cal.5th at p. 616.) Notwithstanding O&C Creditors’ wordsmithing,
8
The dissent asserts that our decision “announces a new rule which could easily
subject all attorney lien disputes to the anti-SLAPP law’s ‘procedure for weeding out, at
an early stage, meritless claims arising from protected [speech and petitioning]
activity.’ ” (Dis. opn. post, at pp. 1–2, quoting Baral v. Schnitt (2016) 1 Cal.5th 376,
384.) This opinion makes no such broad pronouncement. Our holding rests on the rather
unique set of facts in this case, where a settlement agreement, by its terms, expressly
purports to eliminate the right of a settling party’s prior attorney to recover fees. And it
bears noting that the anti-SLAPP motion was granted here because of another
(presumably) uncommon factual scenario—specifically, the lack of even minimal merit
in O&C Creditors’ cross-claims, which rested upon an alleged attorney lien that was
ineffective because the Stephens entities were able to void the retainer agreement in light
of O’Reilly’s failure to comply with Business and Professions Code section 6147. (See
Section C.3, infra.) Contrary to the dissent’s concerns, “all attorney lien disputes” will be
unlikely to fall within the factual scenario presented here and thus the ambit of the anti-
SLAPP law. Moreover, filing a baseless anti-SLAPP motion in a case involving a
meritorious attorney lien claim could subject a defendant to an attorney’s fees award in
favor of a plaintiff who defeats such a motion. (See Code Civ. Proc., § 425.16,
subd. (c)(1).)
30
its cross-claims “rely on” and arise from the allegedly wrongful acts of settling the case
without regard to O’Reilly’s lien and thereafter effectuating that settlement by paying
Stephens and Shapirsteyn in accordance with the protected agreement, allegedly in
derogation of the attorney lien. (Ibid.)
We are similarly unpersuaded by O&C Creditors’ additional attempts to place this
protected settlement activity outside the ambit of the anti-SLAPP statute. O&C Creditors
argues on appeal that the anti-SLAPP statute does not apply for two reasons not raised
below: first, because the instant case arises from commercial speech under Code of Civil
Procedure section 425.17, subdivision (c), and second, because its claims are asserted in a
cross-complaint. O&C Creditors failed to assert these arguments below and we will not
consider them here, as we are “ ‘loath to reverse a judgment on grounds that the opposing
party did not have an opportunity to argue and the trial court did not have an opportunity
to consider,’ ” particularly where there was an “extensive record” below and the trial
court analyzed the various issues in considered rulings. (Quiles v. Parent (2018)
28 Cal.App.5th 1000, 1013, quoting Premier Medical Management Systems, Inc. v.
California Ins. Guarantee Assn. (2008) 163 Cal. App. 4th 550, 564.)
Finally, O&C Creditors claims that applying the anti-SLAPP statute to the
settlement agreement abrogates the rule that an insurer can be liable for disbursing funds
in derogation of an attorney lien. (See Siciliano v. Fireman’s Fund Ins. Co. (1976)
62 Cal. App. 3d 745, 759.) By this argument, O&C Creditors conflates the first and
second prongs in the anti-SLAPP analysis. (Jarrow Formulas, Inc v. LaMarche (2003)
31 Cal. 4th 728, 738.) O&C Creditors’ contention is premised on the notion that, for
purposes of the first prong, the court should presume that cross-defendants actually
committed the alleged torts and, as a result, are not protected by the right to petition. If
this were the case, the second prong of the anti-SLAPP motion would be superfluous.
(Navellier, supra, 29 Cal.4th at pp. 94–95.) “[A] court must generally presume the
validity of the claimed constitutional right in the first step of the anti-SLAPP analysis,
and then permit the parties to address the issue in the second step of the analysis, if
necessary.” (Governor Gray Davis Comm. v. American Taxpayers Alliance (2002)
31
102 Cal. App. 4th 449, 458.) O&C Creditors’ argument—that cross-defendants agreed to
an improper settlement—goes to the merits and, thus, is “ ‘an issue which [it] must raise
and support in the context of the discharge of [its] burden to provide a prima facie
showing of the merits of [its] case.’ ” (Navellier, supra, 29 Cal.4th at pp. 94–95, italics
omitted.)
Accordingly, we proceed to the second prong of the anti-SLAPP analysis.
3. Probability of Prevailing on the Merits
“To satisfy the second prong—the probability of prevailing—the plaintiff must
demonstrate that the complaint is legally sufficient and supported by a prima facie
showing of facts to support a favorable judgment if the evidence submitted by the
plaintiff is accepted. The trial court considers the pleadings and evidentiary submissions
of both the plaintiff and the defendant. Although ‘ “the court does not weigh the
credibility or comparative probative strength of competing evidence, it should grant the
motion if, as a matter of law, the defendant’s evidence supporting the motion defeats the
plaintiff's attempt to establish evidentiary support for the claim.” ’ ” (Kenne v.
Stennis (2014) 230 Cal. App. 4th 953, 962–963.) The party defending against an anti-
SLAPP motion need only show that the claim has “minimal merit” to survive an anti-
SLAPP motion. (Navellier, supra, 29 Cal.4th at pp. 93–94.)
The parties to a retainer agreement can create a lien in favor of the attorney upon
the proceeds of a client’s prospective recovery. (Saltarelli & Steponovich v. Douglas
(1995) 40 Cal. App. 4th 1, 6.) The form and content of attorney fee agreements are
regulated by statute. (See Bus. & Prof. Code, § 6146 et seq.) The Legislature enacted
these statutes to protect clients and ensure that fee agreements are fair and understood by
clients. (Leighton v. Forster (2017) 8 Cal.App.5th 467, 483.) A written fee agreement is
required in contingent fee cases. (Bus. & Prof. Code, § 6147.) “An attorney . . . shall, at
the time the contract is entered into, provide a duplicate copy of the contract, signed by
both the attorney and the client . . . to the plaintiff . . . .” (Bus. & Prof. Code, § 6147,
subd. (a), italics added.) “Failure to comply with any provision of this section renders the
32
agreement voidable at the option of the plaintiff, and the attorney shall thereupon be
entitled to collect a reasonable fee.” (Id., subd. (b).)
It is undisputed that the Stephens entities elected to void the retainer agreement
because it was not signed by O’Reilly.9 Nevertheless, O&C Creditors insists that the
retainer agreement is not void because: (1) the agreement substantially complied with
Business and Professions Code section 6147; and (2) the Stephens entities unreasonably
delayed in their attempt to void the retainer agreement. Neither contention is supported
by the plain language of Business and Professions Code section 6147.
Business and Professions Code section 6147, subdivision (a), unambiguously
states that contingent fee cases require a written agreement “signed by both the attorney
and the client.” (Italics added.) “The preeminent canon of statutory interpretation
requires us to ‘presume that [the] legislature says in a statute what it means and means in
a statute what it says there.’ ” (BedRoc Ltd., LLC v. U.S. (2004) 541 U.S. 176, 183–184.)
We think the terms “signed by both” make clear that the Legislature did not intend that a
single signature would suffice.
Nevertheless, O&C Creditors spends considerable time arguing that because the
Stephens entities signed the agreement they were aware of its provisions and, as such, the
legislative goal of protecting clients has been met. According to O&C Creditors, there is
no unfairness “[i]f the client is fully aware of the agreement’s provisions and understands
them . . . .” O&C Creditors further posits that “there is simply no reason not to enforce
the agreement. The client will have received everything for which it bargained.” This
argument is directly contrary to the plain language of the statute. As discussed, a
contingency fee agreement must be “signed by both the attorney and the client . . . .”
9
O&C Creditors argue that the actual argument is that O’Reilly failed to provide
Stephens with a duplicate copy signed by both the attorney and client. For our purposes,
this is a distinction without a difference. The gist of Stephens’s claim is that O’Reilly
never signed the retainer agreement. The record reflects that all of the copies of the
retainer agreement lack a signature by O’Reilly. As the trial court noted, if anyone had a
copy of the retainer agreement signed by O’Reilly, “it is highly likely that it would have
surfaced by now.”
33
(Bus. & Prof. Code, § 6147, subd. (a), italics added.) Adopting O&C Creditors’
substantial compliance argument would render the dual signature requirement mere
surplusage. This we may not do. “[I]nterpretations which render any part of a statute
superfluous are to be avoided.” (Wells v. One2One Learning Foundation (2006)
39 Cal. 4th 1164, 1207.)
Accepting O&C Creditors’ substantial compliance argument would also nullify
the client’s ability to void the agreement. Such a result would contravene the express
statutory language making a non-conforming agreement “voidable at the option” of the
client. (Bus. & Prof. Code, § 6147, subd. (b).) Again, where, as here, the statutory
language is clear we presume that the Legislature meant what it said—i.e., in contingency
fee cases there must be a written agreement signed by both the attorney and the client.
And if the agreement fails to comply with these and other requirements not relevant here,
the client may elect to void the contract. (Bus. & Prof. Code, § 6147, subds. (a)(1)–(5) &
(b).) Had the Legislature intended for substantial compliance to be sufficient to satisfy
the statutory requirements it could and would have said so. We will not “insert missing
terms into the statute or adopt an interpretation precluded by the plain [statutory]
language.” (Yamada v. Snipes (9th Cir. 2015) 786 F.3d 1182, 1188; see People v.
Gonzalez (2017) 2 Cal.5th 858, 871.)
Equally without merit is O&C Creditors’ claim that Stephens did not attempt to
exercise its option under Business and Professions Code section 6147, subdivision (b)
until it was too late to do so and that its attempt to rescind the agreement was untimely
and thus ineffective. O&C Creditors cites no authority for grafting rescission
requirements onto Business and Professions Code section 6147. We decline to insert a
timeliness component into Business and Professions Code section 6147 where none
exists.
In sum, O&C Creditors failed to establish a probability of prevailing on the merits,
and the trial court did not err in granting the special motion to strike.
34
D. The Trial Court Did Not Err in Awarding Attorney Fees
After its success on the anti-SLAPP motion, Fireman’s Fund moved for attorney
fees in the amount of $122,798.17 under Code of Civil Procedure section 425.16,
subdivision (c)(1), which entitles the party prevailing on a special motion to strike to
recover fees and costs. Finding that the attorneys’ hourly rates and time spent on the
anti-SLAPP motion were “excessive,” the trial court reduced the fees to $55,884.17.
O&C Creditors challenges the amount awarded.
An order granting attorney fees is generally reviewed for abuse of discretion, in
particular with respect to the amount of fees awarded. (PLCM Group, Inc. v. Drexler
(2000) 22 Cal. 4th 1084, 1095 (PLCM Group).) The amount of an attorney fees award
under the anti-SLAPP statute is computed by the trial court in accordance with the
familiar “lodestar” method—multiplying the number of hours reasonably expended by
the reasonable hourly rate prevailing in the community for similar work. (Cabral v.
Martins (2009) 177 Cal. App. 4th 471, 491.) The lodestar “may be adjusted by the court
based on factors including, as relevant herein, (1) the novelty and difficulty of the
questions involved, (2) the skill displayed in presenting them, (3) the extent to which the
nature of the litigation precluded other employment by the attorneys, (4) the contingent
nature of the fee award.” (Ketchum v. Moses (2001) 24 Cal. 4th 1122, 1132 (Ketchum).)
An experienced trial judge is in the best position to evaluate these factors and to value
professional services rendered in court. (Ibid.)
O&C Creditors attacks the attorney fees award here on four grounds: (1) the trial
court erred in awarding Fireman’s Fund the fees incurred by Akin Gump in representing
itself; (2) the trial court used an incorrect hourly rate; (3) the court failed to apportion fees
unrelated to the anti-SLAPP motion; and (4) the fee statements were vague and block-
billed. None of these contentions warrants reversal.
1. Apportionment of Fees
O&C Creditors contends that Fireman’s Fund was not entitled to fees for the time
spent by Akin Gump in representing itself in the anti-SLAPP motion. We disagree. The
35
fact that Akin Gump was also named in the SLAPP suit does not preclude Fireman’s
Fund from recovering its attorney fees.
In Trope v. Katz (1995) 11 Cal. 4th 274, 292 (Trope), our Supreme Court held that
a law firm suing in propia persona to recover unpaid fees could not recover fees for that
litigation because it represented itself. In Taheri Law Group v. Evans (2008)
160 Cal. App. 4th 482 (Taheri), the Court of Appeal denied fees to a defendant-attorney
who successfully litigated an anti-SLAPP motion on his own behalf. The court reasoned:
“Since Trope, the Supreme Court and other courts have made clear that Trope did not
preclude the recovery of attorney fees in other circumstances where the litigant did not
actually incur fees, such as for work performed by in-house counsel, pro bono work, and
the like. But a necessary predicate for obtaining fees is the existence of an attorney-client
relationship. (See PLCM Group, [supra,] 22 Cal.4th [at p.] 1092 [‘by definition, the term
“attorney fees” implies the existence of an attorney-client relationship, i.e., a party
receiving professional services from a lawyer’]; Ramona Unified School Dist. v. Tsiknas
(2005) 135 Cal. App. 4th 510, 524 (Ramona Unified) [‘[w]here an attorney-client
relationship exists, the courts uniformly allow for the recovery of attorney fees under
Civil Code section 1717’].)” (Taheri, at p. 494, italics added.)
“The same principle applies to attorney fees under the anti-SLAPP statute.
(Ramona Unified, supra, 135 Cal.App.4th at p. 524 [‘[c]ases that have allowed the
recovery of attorney fees under the anti-SLAPP statute are similarly marked by the
existence of an attorney-client relationship’]; see also Dowling v. Zimmerman, supra,
85 Cal.App.4th at p. 1425.) In short, ‘the commonly understood definition of attorney
fees applies with equal force to [Civil Code of Procedure] section 425.16 and a prevailing
defendant is entitled to recover attorney fees if represented by counsel.’ (Ramona
Unified, supra, 135 Cal.App.4th at p. 524.) Under Trope and its progeny, it necessarily
follows that a party, whether or not he is an attorney, who is not represented by counsel
and who litigates an anti-SLAPP motion on his own behalf may not recover attorney fees
under the statute.” (Taheri, supra, 160 Cal.App.4th at p. 494.)
36
Here, Akin Gump represented Fireman’s Fund in the cross-action. The
circumstances are akin to those in Ramona Unified, supra, 135 Cal. App. 4th 510, in which
the court upheld an attorney fee award to a defendant-attorney under the anti-SLAPP
statute because she had an attorney-client relationship with her nonattorney codefendants.
(Id. at pp. 523–524.) Observing that the Supreme Court had itself recognized the
centrality of the existence of an attorney-client relationship to the attorney fee issue in
PLCM Group, supra, 22 Cal.4th at page 1092, the appellate court in Ramona Unified
rejected the same argument made here, that insofar as the award encompassed fees for the
time spent by a named defendant-attorney assisting in litigating the anti-SLAPP motion,
it was erroneous under Trope. (Ramona Unified, at pp. 523–524.) The Court of Appeal
reasoned: “Where an attorney-client relationship exists, the courts uniformly allow for
the recovery of attorney fees under Civil Code section 1717. (PLCM, supra, 22 Cal.4th
at p. 1093 [party represented by in-house lawyers]; Mix v. Tumanjan Development Corp.
(2002) 102 Cal. App. 4th 1318, 1321 [successful pro per litigant can recover attorney fees
under Civil Code section 1717 for legal services of assisting counsel even though they
did not appear as attorneys of record]; Gilbert v. Master Washer & Stamping Co. (2001)
87 Cal. App. 4th 212, 220 [attorney represented by other members of his or her own law
firm entitled to recover contractual attorney fees].) [¶] Cases that have allowed the
recovery of attorney fees under the anti-SLAPP statute are similarly marked by the
existence of an attorney-client relationship.” (Ramona Unified, at p. 524.)
Because an attorney-client relationship existed between Fireman’s Fund and Akin
Gump, Trope does not preclude the award of attorney fees merely because Akin Gump
was a codefendant with the client to whom it provided legal assistance. (Ramona
Unified, supra, 135 Cal.App.4th at pp. 524–525.)
2. Hourly Rate
O&C Creditors next argues that the trial court abused its discretion in adopting a
$600 hourly rate for Robert Humphreys, an attorney with over 20 years of complex civil
litigation experience, who handled the anti-SLAPP motion on his own. Humphreys
provided a declaration establishing his expertise and experience, explaining that his $740
37
hourly rate was commensurate with other attorneys in this geographic area with
comparable skills, education, and experience. O&C Creditors’ assertion that any local
attorney would charge no more than $425 an hour does not establish that the trial court
abused its discretion by crediting Humphrey’s declaration but reducing the rate by
roughly 20 percent to reflect that some of the work could have been performed by more
junior attorneys. (See Raining Data Corp. v. Barrenechea (2009) 175 Cal. App. 4th 1363,
1375 [declarations of counsel providing services can prove reasonableness of billing
rates]; Wershba v. Apple Computer, Inc. (2001) 91 Cal. App. 4th 224, 255 [“An
experienced trial judge is in a position to assess the value of the professional services
rendered in his or her court.”], disapproved on another ground in Hernandez v.
Restoration Hardware, Inc. (2018) 4 Cal.5th 260, 274, fn. 4.)
3. Examination of Hours Billed
O&C Creditors also argues that the trial court erred in compensating Fireman’s
Fund for 32.5 hours of work10 unrelated to the anti-SLAPP motion. We disagree.
Fireman’s Fund initially sought fees covering 190.6 hours of work. The trial court
awarded fees for 90 hours of work: 50 hours for the anti-SLAPP motion, 20 hours for the
attorney fees motion, and 20 hours for the ex parte applications and discovery motion
related to the anti-SLAPP motion. The court thus cut more than 100 hours from the fee
request in an order that by its terms covers only the fees associated with the anti-SLAPP
litigation. Where, as here, the trial court substantially reduces a fee or cost request, we
infer the court has determined the request was inflated. (Levy v. Toyota Motor Sales,
U.S.A., Inc. (1992) 4 Cal. App. 4th 807, 817.) An attorney fee dispute is not exempt from
generally applicable appellate principles: “The judgment of the trial court is presumed
correct; all intendments and presumptions are indulged to support the judgment; conflicts
in the declarations must be resolved in favor of the prevailing party, and the trial court’s
resolution of any factual disputes arising from the evidence is conclusive.” (In re
Marriage of Zimmerman (1993) 16 Cal. App. 4th 556, 561–562.) Moreover, the trial court
10
In opposing the motion for attorney fees, O&C Creditors submitted an expert
declaration with an accompanying chart referencing each purported improper entry.
38
was not required to specify the hours it found to be compensable. (Ketchum, supra,
24 Cal.4th at p. 1140 [“The superior court was not required to issue a statement of
decision with regard to the fee award” after an anti–SLAPP win].) O&C Creditors offers
only speculation that the court improperly included in the substantially reduced fee award
32.5 hours O&C Creditors claims were non-compensable. O&C Creditors’ contention
that the court should have further slashed the fee request by an additional 32.5 hours fails
to demonstrate an abuse of discretion.
4. Block-Billing
Finally, O&C Creditors contends that Akin Gump submitted “vague, block-billed”
time sheets in which all the work for each day was lumped together with no indication of
how much time was allegedly spent on each task. In California, “detailed timesheets are
not required” and “[t]he court may award fees based on time estimates for attorneys who
do not keep time records.” (Chavez v. Netflix, Inc. (2008) 162 Cal. App. 4th 43, 64.) Trial
courts retain discretion to penalize block billing when the practice prevents them from
discerning which tasks are compensable and which are not. (Christian Research Institute
v. Alnor (2008) 165 Cal. App. 4th 1315, 1324–1325; Bell v. Vista Unified School
Dist. (2000) 82 Cal. App. 4th 672, 689 [trial court may “exercise its discretion in assigning
a reasonable percentage to the entries, or simply cast them aside”].) The trial court
identified no such problem here. Nor do we discern any.
III. DISPOSITION
The order denying Stephens’s motion to disqualify Danko Meredith from
representing O&C Creditors is affirmed. The order granting the anti-SLAPP motion in
favor of Fireman’s Fund and Akin Gump is affirmed. The order granting attorney fees to
Fireman’s Fund is affirmed. With respect to O&C Creditors’ challenge to the discovery
order, we deny writ relief. Each party shall bear its own costs on appeal.
39
_________________________
BROWN, J.
I CONCUR:
_________________________
STREETER, ACTING P. J.
O&C Creditors Group, LLC et al. v. Stephens & Stephens XII, LLC et al. (A151789); Stephens & Stephens XII, LLC
et al. v. O&C Creditors Group, LLC et al. (A152002); O&C Creditors Group, LLC et al. v. Akin gump Straus Hauer
& Feld, LLP (A152762)
40
TUCHER, J., CONCURRING and DISSENTING
On only one of the many issues raised by these consolidated appeals do I disagree
with the majority. I believe that the anti-SLAPP statute does not protect the activity of an
insurer disbursing funds allegedly in derogation of an attorney lien, even if the insurer
promised to do so in a settlement agreement.
The law governing enforcement of attorney liens is well established. An attorney
lien is created “by an attorney fee contract with an express provision regarding the lien or
by implication in a retainer agreement that provides the attorney will be paid for services
rendered from the judgment itself.” (Mojtahedi v. Vargas (2014) 228 Cal. App. 4th 974,
977 (Vargas).) Only after the client has obtained a judgment may the attorney “ ‘ “bring
a separate, independent action against the client to establish the existence of the lien, to
determine the amount of the lien, and to enforce it.” ’ ” (Id. at pp. 977–978.) If a third
party, such as an insurer, acts to impair an attorney’s rights under such a lien, the attorney
may have a cause of action against that third party for tortious interference with
contractual relations or prospective economic advantage. (Little v. Amber Hotel Co.
(2011) 202 Cal. App. 4th 280, 291; Siciliano v. Fireman’s Fund Ins. Co. (1976) 62
Cal. App. 3d 745, 752–753 (Siciliano).) In that context, “it is the act of payment in
derogation of the lienholder’s rights that creates [the third party’s] liability.” (Levin v.
Gulf Ins. Group (1999) 69 Cal. App. 4th 1282, 1287, italics omitted (Levin).)
Thus, as the present case illustrates, claims based on an attorney lien cannot be
asserted until after litigation is resolved. After settling insurance coverage litigation,
Stephens filed this declaratory relief action challenging the validity of O&C Creditors’
attorney lien, and O&C Creditors responded with cross-claims asserting its rights as the
alleged lien holder. Fireman’s Fund and Akin Gump (cross-defendants) are named in
causes of action to impose a constructive trust and to recover damages for intentional
interference with prospective business advantage, on the pleaded theory that they
knowingly disbursed settlement funds in derogation of an attorney lien. This sort of
attorney lien litigation has nothing to do with free speech or petitioning activity. And yet
the majority announces a new rule which could easily subject all attorney lien disputes to
1
the anti-SLAPP law’s “procedure for weeding out, at an early stage, meritless claims
arising from protected [speech and petitioning] activity.” (Baral v. Schnitt (2016)
1 Cal.5th 376, 384, italics omitted.)
Under the anti-SLAPP statute, “[a] cause of action against a person 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 shall be subject to a special motion to strike” unless the plaintiff shows the claim
has merit. (Code of Civ. Proc., § 425.16, subd. (b)(1), italics added.) As pertinent here,
an act in furtherance of a person’s right of petition or free speech includes “any written or
oral statement or writing” that is made “before a . . . judicial proceeding” or “in
connection with an issue under consideration or review by a . . . judicial body.” (Id.,
subd. (e).) Negotiating and executing a settlement agreement are, accordingly, protected
activities. (Seltzer v. Barnes (2010) 182 Cal. App. 4th 953, 963–964.)
However, to establish that O&C Creditors’ claims arise from protected settlement
activity, cross-defendants would have to demonstrate that each cause of action alleged
against them in this case is based on their negotiation and/or settlement of the underlying
insurance coverage litigation. (City of Cotati v. Cashman (2002) 29 Cal. 4th 69, 78 (City
of Cotati).) “[A] claim does not ‘arise from’ protected activity simply because it was
filed after, or because of, protected activity, or when protected activity merely provides
evidentiary support or context for the claim. [Citation.] Rather, the protected activity
must ‘supply elements of the challenged claim.’ ” (Rand Resources, LLC v. City of
Carson (2019) 6 Cal.5th 610, 621 (Rand Resources).) In other words, “ ‘the defendant’s
act underlying the plaintiff’s cause of action must itself have been an act in furtherance of
the right of petition or free speech.’ ” (Park v. Board of Trustees of California State
University (2017) 2 Cal.5th 1057, 1063 (Park).)
These principles compel the conclusion that the claims against cross-defendants do
not arise out of protected activity because the cross-defendants’ act that gave rise to these
causes of action was the disbursement of money in derogation of an attorney lien. Such
conduct is not speech or petitioning activity in any sense. Cross-defendants’ contention
2
that these claims arise out of their settlement agreement with Stephens is not sustainable
because the cross-complaint does not explicitly or implicitly accuse cross-defendants of
injuring O&C Creditors by settling the underlying insurance coverage action. To the
contrary, the injury alleged was the disbursement of the entire fund of money paid to
resolve the underlying case, without regard to attorney O’Reilly’s claim to a portion of
the proceeds. Whether the underlying case resolved by judgment or by settlement was
immaterial for purposes of O&C Creditors’ claims. Similarly immaterial was whether
the settlement agreement did, or did not, specify to whom the funds would be delivered.
The gravamen of O&C Creditors’ claims was that cross-defendants paid others money
that should have gone to them under the lien.
The majority follows cross-defendants in the mistaken view that these claims
could not have arisen if not for the settlement agreement, and that this fact is dispositive.
(Maj. opn. ante, at p. 23–25.) On both points, I disagree. A simple thought experiment
proves the first error in the factual premise that these claims depend on there being a
settlement agreement: If, instead of settling, Stephens had re-tried his insurance coverage
action against Fireman’s Fund and secured a money judgment, and then Fireman’s Fund
and Akin Gump had paid the amount of that judgment entirely to Stephens, O&C
Creditors could allege essentially the same causes of action against these parties. The
settlement is therefore incidental to O&C Creditors’ claims, in that the obligation to pay
on the attorney’s lien could have been triggered instead by a contested judgment. As for
the majority’s legal conclusion, it mistakenly reduces the “arising from” element of the
anti-SLAPP statute to mere but-for causation. That “[a] cause of action may be
“ ‘triggered by’ ” or associated with a protected act . . . does not necessarily mean the
cause of action arises from that act.” (Kolar v. Donahue, McIntosh & Hammerton (2006)
145 Cal. App. 4th 1532, 1537, italics omitted [garden variety legal malpractice action did
not arise from protected activity]; accord City of Cotati, supra, 29 Cal.4th at p. 77.)
Instead, the protected activity must itself be the injury-causing act upon which the cause
of action is based. The injury-causing conduct in this case is the disbursement of
settlement funds, not the protected act of settling a lawsuit.
3
As our Supreme Court explained in Park, regardless whether a claim was filed
“because of protected activity,” the claim does not arise out of protected activity for
purposes of the anti-SLAPP law unless the specific elements of the plaintiff’s cause of
action depend upon the protected activity. (Park, supra, 2 Cal.5th at p. 1064.) Protected
activities must “supply elements of the challenged claim.” (Ibid.) That is simply not the
case here, as demonstrated by the elements of C&O Creditors’ claim for intentional
interference with business advantage, which are: “(1) the existence, between the plaintiff
and some third party, of an economic relationship that contains the probability of future
economic benefit to the plaintiff; (2) the defendant’s knowledge of the relationship; (3)
intentionally wrongful acts designed to disrupt the relationship; (4) actual disruption of
the relationship; and (5) economic harm proximately caused by the defendant's action.”
(Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc. (2017) 2 Cal.5th 505, 512.)
The fact that cross-defendants negotiated a settlement with Stephens does not establish
any of these elements. Instead, the allegedly intentional and wrongful act that disrupted
O&C Creditors’ relationship with Stephens was cross-defendants’ payment of money that
they knew was subject to an attorney lien.
On this point, City of Cotati, supra, 29 Cal.4th at pp. 77–79, is instructive. In that
case, a city filed a declaratory relief action regarding the constitutionality of a rent-
control ordinance for mobile-home parks. Defendants, who owned mobile-home parks,
argued the city’s complaint was a SLAPP because it arose out of a federal action that
defendants previously filed to challenge the rent ordinance. Rejecting this claim, the City
of Cotati court explained that although the city’s complaint may have been triggered by
the defendants’ federal action, it did not arise out of that protected activity. The
gravamen of the declaratory relief action was a controversy about the constitutionality of
the rent ordinance, not a controversy about the filing of the prior federal action. Thus,
while the prior lawsuit “informed” the city of the existence of an actual controversy about
the validity of the ordinance, and although evidence of an actual controversy is
fundamental to establishing a right to declaratory relief, the city’s lawsuit did not arise
out of the defendants’ protected activity of filing that prior lawsuit. (Id. at p. 79.) The
4
same reasoning applies here. The settlement of the insurance coverage litigation may
have triggered the present lawsuit, but the causes of action against these cross-defendants
do not arise out of their act of settling the insurance case. Instead, the gravamen of the
cross-claims is the allegedly wrongful disbursement of money that followed, in
derogation of a lien.
The majority concludes that the conduct of disbursing settlement proceeds cannot
be “neatly cleaved” from the protected activity of negotiating a settlement in the first
place. (Maj. opn. ante, at p. 25.) However, that is precisely what the law requires.
“Although litigation-related activities constitute protected activity, ‘it does not follow that
any claims associated with those activities are subject to the anti-SLAPP statute. To
qualify for anti-SLAPP protection, the moving party must [also] demonstrate the claim
“arises from” those activities.’ ” (ValueRock TN Properties, LLC v. PK II Larwin Square
SC LP (2019) 36 Cal.App.5th 1037, 1046, italics omitted.) Specifically, a defendant
must “demonstrate that the defendant’s conduct by which plaintiff claims to have been
injured falls within one of the four categories described in subdivision (e)” of Code of
Civil Procedure section 425.16. (Park, supra, 2 Cal.5th at p. 1063.) Here, the activity by
cross-defendants that allegedly injured O&C Creditors was the failure to honor its
attorney lien; the cross-complaint does not seek to impose liability on anybody for
settling the insurance coverage litigation, nor for agreeing to certain terms in that
settlement. The only act that gave rise to these cross-claims was the payment of money
to Stephens to the exclusion of his original attorney. The majority’s contrary conclusion
is inconsistent with pertinent authority involving liens secured by money judgments.1
1
The majority’s conclusion also rests on an exaggerated reading of the settlement
agreement as “expressly purport[ing] to eliminate O’Reilly’s right to attorney’s fees, in
derogation of his alleged lien.” (Maj. opn. ante, at p. 25, fn. 7.) The settlement
agreement cannot and does not eliminate that right. Instead, the agreement contains a
representation and warranty by Stephens that no other person or entity has a right to be
named as a payee on the settlement check, and an indemnification provision in favor of
Fireman’s Fund if anybody, including O’Reilly, should claim otherwise. These
provisions contemplate that there may be future proceedings to resolve collateral disputes
over who is entitled to the settlement funds, and they allocate associated risks to
5
Take, for example, California Back Specialists Medical Group v. Rand (2008) 160
Cal. App. 4th 1032. In that case, a group of medical service providers sued an attorney for
violating medical liens that plaintiffs had obtained against the defendant’s personal injury
clients. Plaintiffs alleged defendant was liable for failing to notify them that he settled
the underlying personal injury litigation and for disbursing the settlement proceeds
without withholding funds to pay off the liens. The defendant responded with an anti-
SLAPP motion to strike the complaint, which was denied. Affirming the ruling on
appeal, the California Back Specialists court reasoned that the lien holders’ action arose
out of a controversy about the validity and satisfaction of the liens, which was not
protected activity because it was a controversy between private parties that was never
under consideration in any court or judicial proceeding before the challenged action was
filed. The anti-SLAPP law did not apply simply because the attorney’s conduct with
respect to the liens was part of his representation of his personal injury clients in the
underlying action. (Id. at p. 1038.)
So, too, here. O&C Creditors’ claims do not arise out of protected activity
because they are based on the cross-defendants’ alleged failure to honor the attorney lien.
This is a controversy among private parties involving an issue that was not under
consideration in any judicial proceeding until Stephens filed the present action for
declaratory relief. It is insufficient to assert, as this anti-SLAPP motion does, that the
challenged conduct was “ ‘ “in connection with” an official proceeding.’ [Citation.]
Instead, ‘[t]here must be a connection with an issue under review in that proceeding.’ ”
(Rand Resources, supra, 6 Cal.5th at p. 620.) This controversy arose after cross-
defendants settled the underlying action and as a result of their having done so, but these
facts do not change the nature of the current dispute (i.e., the failure to honor an attorney
lien), which was not an issue under review in the underlying litigation.
Stephens. This reading of the settlement agreement confirms that the attorney lien
dispute in the case before this court is ancillary to, rather than arising out of, any
protected petitioning activity in the prior insurance litigation.
6
To similar effect is Drell v. Cohen (2014) 232 Cal. App. 4th 24 (Drell), a post-
litigation dispute over an attorney lien. After settling a personal injury action on behalf
of his client, an attorney named Drell received a settlement check made out jointly to him
and to his client’s former attorney, Cohen, who had filed a notice of his attorney lien in
the personal injury case. When Drell filed a declaratory relief action to determine the
status of Cohen’s attorney lien, Cohen responded with a special motion to strike,
claiming the assertion of his lien in the underlying action was protected litigation activity.
The SLAPP motion was properly denied, the Drell court said, because the gravamen of
Drell’s cause of action was not that Cohen acted wrongfully by filing his lien. The
gravamen of Drell’s claim was the dispute about whether Cohen was entitled to
attorney’s fees. The fact that Cohen had asserted his right to an attorney lien during the
underlying litigation was evidence of an actual controversy about fees, but the fee dispute
itself did not arise out of that protected activity. (Id. at p. 30.)
Like Drell, this case involves a dispute about the validity of an attorney lien,
specifically about an attorney’s claim to fees after a case settles. The fact that in this case
the parties to the settlement agreement specified a distribution of funds inconsistent with
that lien does not alter the fundamental nature of this dispute. Drell teaches that the
provision in the settlement agreement that requires proceeds to go to Stephens and
Shapirshteyn (but not O’Reilly) is incidental to the anti-SLAPP analysis, just as Cohen’s
protected activity in filing an attorney lien was incidental to his assertion of a right to
fees. In each case, the protected activity was evidence of a dispute ripe for judicial
determination but was not itself the gravamen of the dispute.
The majority makes much of the fact that settlement in this case triggered
O’Reilly’s right to attorney’s fees, in that he could not have asserted his lien before there
was a settlement. (Maj. opn. ante, at pp. 28–29.) But the same could be said of Cohen in
Drell, and indeed of any attorney seeking to enforce a lien on settlement proceeds. An
attorney lien claim is necessarily triggered by settlement of, or judgment in, the
underlying litigation, but that fact does not convert the fee dispute into a SLAPP suit. As
our Supreme Court admonishes, “[t]hat a cause of action arguably may have been
7
triggered by protected activity does not entail that it is one arising from such,” for
purposes of the anti-SLAPP statute. (City of Cotati, supra, 29 Cal.4th at p. 78.) In an
attorney’s lien claim, the allegedly wrongful conduct is the settling parties’ failure to
honor the lien, which is neither speech nor petitioning activity. The payment of
settlement proceeds in derogation of an attorney lien does not fit within the statutory
language requiring a statement “in connection with an issue under consideration or
review by a . . . judicial body” (Code Civ. Proc., § 425.16, subd. (e)), both because such
conduct is not a statement of any kind, and because an attorney’s entitlement to fees is
not an issue before the court in the underlying litigation. (Vargas, supra, 228
Cal.App.4th at pp. 977–978.) Indeed, the trial court in the earlier action does not have
jurisdiction to determine the rights of such a lien holder. (Brown v. Superior Court
(2004) 116 Cal. App. 4th 320, 328.)
The majority attempts to narrow the reach of its holding by distinguishing the
settlement agreement in this case from ostensibly normal agreements that do not spell out
who is to receive the settlement proceeds. (Maj. opn. ante, at p. 30, fn. 8.) I question the
empirical assumption, but more fundamentally challenge the notion that parties who
would violate an attorney lien may secure the protections of the anti-SLAPP law simply
by describing their allocation of funds in the settlement agreement. The purposes of the
anti-SLAPP statute “would [not] be served by elevating [this sort of] fee dispute to the
constitutional arena.” (Drell, supra, 232 Cal.App.4th at p. 30; see also Siciliano, supra,
62 Cal.App.3d at p. 758 [“Even though the law favors voluntary settlements or
compromises, it does not favor the making thereof in derogation of the rights of those
having a lien on the moneys or to whom other obligations are owing in connection
therewith”].)
The majority’s flawed approach leads them to misconstrue Old Republic
Construction Program Group v. The Boccardo Law Firm, Inc. (2014) 230 Cal. App. 4th
859 (Old Republic). In that case, a workers’ compensation insurer sued attorneys for an
injured employee, alleging they had wrongfully distributed to the injured man settlement
funds they were supposed to hold in their trust account. Plaintiff Old Republic alleged
8
that the distribution violated a stipulation, executed during the underlying personal injury
action, that defendants would not disburse settlement funds without first resolving Old
Republic’s claim for reimbursement of workers’ compensation benefits paid to the
injured employee. The trial court granted a special motion to strike Old Republic’s cause
of action for fraud, but it concluded that other claims against defendants for breach of
contract, negligence and declaratory relief did not arise out of protected activity.
Affirming the order on appeal, the Old Republic court found that the fraud claim arose
from the protected act of executing a stipulation in the prior case: “The underlying
wrongful conduct was defendants’ alleged entry into the stipulation without the intention
to be bound by it, thereby inducing Old Republic to do likewise and depriving it of
control over the settlement funds.” (Id. at p. 869, italics omitted.) By contrast, the other
causes of action—for breach of contract, negligence and declaratory relief—“did not
arise from the parties’ stipulation” because “[i]t was the withdrawal of funds that was the
wrongful conduct constituting the gravamen of these causes of action.” (Id. at p. 870.)
The majority contends that Old Republic supports its analysis because O&C
Creditors’ claims against cross-defendants are analogous to the Old Republic fraud claim.
I disagree. The allegedly fraudulent conduct in Old Republic was the act of entering into
the stipulation. But here, O&C Creditors does not claim that cross-defendants’ entry into
a settlement with Stephens caused its injury; it contends that cross-defendants injured it
by thereafter disbursing settlement funds they knew were subject to its attorney lien. In
other words, these cross-defendants are charged with violating a duty alleged to derive
from their notice of the attorney lien, an obligation that is independent of the settlement
agreement they executed with Stephens.
Instead, this case is analogous to the non-fraud causes of action analyzed in Old
Republic. Like those causes of action, O&C Creditors’ claims “refer to, and may depend
on, [cross-]defendants’ having entered into” an agreement, which “was itself protected
conduct.” (Old Republic, supra, 230 Cal.App.4th at p. 869.) But O&C Creditors’ claims
do not, as the non-fraud claims in Old Republic did not, allege that there was anything
wrongful about entering into the agreement itself. Instead, the gravamen of the non-fraud
9
claims in Old Republic was the “withdrawal of the funds that were the subject matter of
the stipulation” (ibid.), just as in this case it is the wrongful payment of settlement funds.
The payment was allegedly wrongful not because it was the subject of a settlement but
because it was made with notice of the lien and in derogation of the lienholder’s rights.
(Levin, supra, 69 Cal.App.4th at pp. 1286–1287.)
The gravamen of these causes of action is the wrongful distribution of money, and
the settlement agreement was merely the vehicle that created the funds to which the
attorney lien attached. (See, e.g., Optional Capital, Inc. v. DAS Corp. (2014) 222
Cal. App. 4th 1388, 1398–1401 [the arising from protected activity requirement is not
satisfied when only connection between settlement and plaintiff’s claims was that
settlement was device defendant used to secure the allegedly wrongful release of funds].)
In reaching a contrary conclusion, my colleagues fail to “respect the distinction between
activities that form the basis for a claim and those that merely lead to the liability-
creating activity or provide evidentiary support for the claim.” (Park, supra, 2 Cal.5th at
p. 1064.) The settlement that cross-defendants negotiated with Stephens led to and
provided evidentiary support for O&C Creditors’ claims, but these causes of action do
not arise from that settlement agreement.
Because I conclude cross-defendants failed to make a threshold showing that the
cross-claims arise from activity the anti-SLAPP law protects, I express no view on the
merits of these cross-claims.
I CONCUR in the majority’s opinion except to the extent it affirms the orders
granting Fireman’s Fund and Akin Gump’s anti-SLAPP motion and awarding them
attorney’s fees, as to which I respectfully DISSENT.
_________________________________________________
TUCHER, J.
10
Trial Court: City & County of San Francisco Superior Court
Trial Judge: Hon. Harold J. Kahn
Counsel:
Danko Meredith, Michael S. Danko, Claire Y. Choo; Law Office of Gary Sims, Gary L. Simms
for Cross-complainants and Appellants in No. A151789.
Lubin Olson & Niewiadomski, Jonathan E. Sommer, Kyle A. Withers for Cross-defendants and
Respondents Stephens & Stephens XII, LLC, et al. in No. A151789.
Akin Gump Strauss Hauer & Feld, LLP, Robert B. Humphreys, Rex S. Heinke for Cross-
defendants and Respondents Fireman’s Fund et al. in No. A151789.
Lubin Olson & Niewiadomski, Jonathan E. Sommer, Kyle A. Withers for Plaintiffs, Cross-
defendants and Appellants in No. A152002.
Danko Meredith, Michael S. Danko, Claire Y. Choo; Law Office of Gary Sims, Gary L. Simms
for Defendants, Cross-complainants and Respondents in No. A152002.
Danko Meredith, Michael S. Danko, Claire Y. Choo; Law Office of Gary Sims, Gary L. Simms
for Cross-complainants and Appellants in No. A152762.
Akin Gump Strauss Hauer & Feld, LLP, Robert B. Humphreys, Rex S. Heinke for Cross-
defendants and Respondents in No. A152762.
11