Seaport Village v. Glaser Weil etc. CA2/2 ( 2014 )

Filed 10/30/14 Seaport Village v. Glaser Weil etc. CA2/2
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
SEAPORT VILLAGE, LTD., B250474
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. BC499667)
v.
GLASER WEIL FINK JACOBS HOWARD
AVCHEN & SHAPIRO et al.,
Defendants and Appellants.
APPEAL from an order of the Superior Court of Los Angeles County. Conrad R.
Aragon, Judge. Affirmed.
Nemecek & Cole, Jonathan B. Cole, Mark Schaeffer, and Jon D. Robinson for
Defendants and Appellants.
Law Offices of John T. Blanchard and John T. Blanchard for Plaintiff and
Respondent.
Glaser Weil Fink Jacobs Howard Avchen & Shapiro, LLP, Barry E. Fink, and
Amman A. Khan (appellants) appeal from an order of the trial court denying their special
motion to strike the complaint filed by Seaport Village, Ltd. (respondent) pursuant to
Code of Civil Procedure section 425.16 (section 425.16 or anti-SLAPP statute).
We find no error in the trial court’s ruling, therefore we affirm the order.
CONTENTIONS
Appellants contend that the trial court erred in classifying this lawsuit as a “garden
variety” legal malpractice action and concluding that the activity complained of in
respondent’s lawsuit was not protected activity under section 425.16.
Appellants further contend that respondent has not shown a probability of
prevailing in the action.
FACTUAL BACKGROUND
During her lifetime, Janice Taubman (Janice) created the Taubman Trust (trust) to
benefit her two children, Anne and Ricky.1 Janice died on September 5, 1999. U.S.
Bank (USB) became a successor co-trustee, then the sole trustee.
On the date of Janice’s death, the trust owned a leasehold interest in a popular
waterfront shopping center in downtown San Diego known as the Seaport Village. The
trust held the lease through its ownership interest in two business entities: respondent,
and respondent’s general partner San Diego Seaport Village, Inc. (SVI).
Under the terms of the trust, Anne was appointed special trustee of the Seaport
Village assets. Anne was also president of SVI and chairman of its board of directors
until she was removed for breaches of duty and misappropriation in 2003.
Under Anne’s direction, respondent entered into multiple transactions known as
the “GMS transactions,” through which the lease was transferred to a new entity known
as Seaport Village Operating Co. (Operating Co.). Operating Co. was to be held in equal
1 For clarity, we refer to the Taubman family members by their first names. No
disrespect is intended.
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shares by GMS Realty and a broker named Michael Cohen (Cohen). However, Cohen
wrongfully allotted a 25 percent interest in Operating Co. to himself personally.
USB brought an action against Anne for removal as special trustee, breach of
fiduciary duty and damages for conversion of trust assets. Appellants represented USB in
that action, which was successful. USB was appointed the successor special trustee.
Between February 2003 and May 2011, USB acted as trustee of the Seaport Village
assets held by the trust. The bank’s regional manager, Robert Tidemann, was president
of respondent’s general partner and thus held control of respondent.
Following the surcharge proceedings, the trust continued to be burdened by
lawsuits related to the GMS transactions. The trust was required to defend against
lawsuits by individuals who were involved with Anne in the GMS transactions, and filed
suit against those who aided and abetted Anne in the GMS transactions. In particular,
appellants filed on behalf of USB two cross-complaints in two pre-existing interpleader
actions (cross-complaints), Los Angeles Superior Court case Nos. BC344151 (the
Lending Co. Interpleader) and case No. BC347052 (the Operating Co. Interpleader).
Both cross-complaints sought rescission of the purported consulting agreement on which
Cohen based his claim of entitlement to the 25 percent ownership interest in Operating
Co.; an accounting; and imposition of a constructive trust against Cohen.
The parties disagree as to whether the two cross-complaints were ever resolved.
Appellants claim that the parties entered into settlements that encompassed the legal
action between the trustees and Cohen in the Lending Co. interpleader and the Operating
Co. interpleader.
Respondent, on the other hand, contends that appellants failed to take necessary
actions to bring the cross-complaints to trial within five years of their commencement, as
required by Code of Civil Procedure section 583.310. Therefore, according to
respondents, no relief was ever obtained from Cohen.
Beginning in 2011, the trustee requested that the court distribute assets of the trust
and prepare the way for termination of the trust. The court granted the trustee’s request
to distribute the assets of the trust. The court distributed Anne’s share of the Seaport
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Village holdings to Anne. Anne was returned to her role as president of SVI, the general
partner of respondent. Thus, at the time this litigation against appellants was filed in
January 2013, Anne was effectively in control of respondent.
PROCEDURAL HISTORY
Respondent filed its complaint for legal malpractice against appellants on January
22, 2013. On May 28, 2013, appellants filed their anti-SLAPP motion. Appellants
argued that respondent’s cause of action for legal malpractice falls within the ambit of the
anti-SLAPP statute as a retaliatory action filed by Anne, who is now in control of
respondent. Specifically, appellants argued that “this action is at the behest of Anne who
now controls [respondent]. Anne was never a client of [appellants], and was, in fact,
always adverse to the position of [USB], [appellants’] client.” Appellants urged the trial
court to accept their view that the case should be seen as “Anne’s vindictive attempted
retaliation for years of litigation, including court approved settlements and resulting
judgments.”
Appellants also argued that respondent could not prevail on the malpractice action.
On June 25, 2013, the trial court filed its order denying appellants’ anti-SLAPP
motion. In sum, the trial court concluded that the lawsuit falls outside of the protection of
the anti-SLAPP statute. The court noted its position that this is a “‘garden variety’” legal
malpractice action. As to appellants’ arguments that Anne was behind the filing of the
action, the court noted that “there is . . . no claim asserted by [Anne] in this action, at
least not in her individual capacity. If she is ‘present’ in this complaint it is only by
virtue of her status as trustee. The only alleged injury is to [respondent], and has to do
with the loss of the value of the 25 [percent] share claimed by Mr. Cohen.” The trial
court cited Chodos v. Cole (2012) 210 Cal. App. 4th 692 for the proposition that “the anti-
SLAPP statute does not apply to claims of attorney malpractice.”
Because the trial court concluded that the matter fell outside of the protection of
the anti-SLAPP statute, it did not reach the question of respondent’s probability of
prevailing on its claims.
On August 2, 2013, appellants filed their notice of appeal.
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DISCUSSION
I. Applicable law and standard of review
A special motion to strike under section 425.16, also known as the anti-SLAPP
statute, allows a defendant to seek early dismissal of a lawsuit involving 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.” 2 (§ 425.16, subd. (b)(1).)
Actions subject to dismissal under section 425.16 include those based on any of
the following acts: “(1) any written or oral statement or writing made before a
legislative, executive, or judicial proceeding, or any other official proceeding authorized
by law, (2) any written or oral statement or writing made in connection with an issue
under consideration or review by a legislative, executive, or judicial body, or any other
official proceeding authorized by law, (3) any written or oral statement or writing made
in a place open to the public or a public forum in connection with an issue of public
interest, or (4) any other conduct in furtherance of the exercise of the constitutional right
of petition or the constitutional right of free speech in connection with a public issue or
an issue of public interest.” (§ 425.16, subd. (e).)
“A SLAPP is 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.’ (§ 425.16, subd. (b)(1).) Thus, evaluation of an anti-SLAPP motion requires a
two-step process in the trial court. ‘First, the court decides whether the defendant has
made a threshold showing that the challenged cause of action is one “arising from”
protected activity. (§ 425.16, subd. (b)(1).) If the court finds such a showing has been
made, it then must consider whether the plaintiff has demonstrated a probability of
prevailing on the claim.’ [Citations.]” (Nygard, Inc. v. Uusi-Kerttula (2008) 159
Cal. App. 4th 1027, 1035 (Nygard).) “Only a cause of action that satisfies both prongs of
2 “SLAPP is an acronym for ‘strategic lawsuit against public participation.’”
(Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal. 4th 728, 732, fn. 1.)
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the anti-SLAPP statute -- i.e., that arises from protected speech or petitioning and lacks
even minimal merit -- is a SLAPP, subject to being stricken under the statute.” (Navellier
v. Sletten (2002) 29 Cal. 4th 82, 89.)
“‘Review of an order granting or denying a motion to strike under section 425.16
is de novo. [Citation.] We consider “the pleadings, and supporting and opposing
affidavits . . . upon which the liability or defense is based.” (§ 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.” [Citation.]’ [Citations.]” (Nygard, supra, 159 Cal.App.4th
at p. 1036.)
II. The anti-SLAPP motion was properly denied
The threshold question in evaluating appellants’ anti-SLAPP motion is whether
respondent’s complaint arises from protected activity. The trial court found that it did
not. In sum, the trial court found that this matter is a garden variety legal malpractice
action, and the anti-SLAPP statute does not apply to claims of attorney malpractice.
Appellants argue that the trial court was wrong. Appellants claim that this lawsuit
has been filed to punish appellants for their previous litigation against respondent.
Appellants contend that this lawsuit thus arises from appellants’ prior “written or oral
statement[s] or writing[s] made before a . . . judicial proceeding” and their “written or
oral statement[s] or writing[s] made in connection with an issue under consideration or
review by a . . . judicial body.” (§ 425.16, subd. (e)(1), (2).) For the reasons set forth
below, we decline to accept appellants’ position.
A. Appellants have failed to make a threshold showing that the complaint arises
from protected activity
The complaint on its face is a legal malpractice claim brought by respondent,
appellants’ former client. Respondent, a corporate entity, alleges that appellants failed to
consummate essential terms of a settlement agreement regarding the cross-complaints,
and allowed its meritorious claims against Cohen to expire by not bringing the claims to
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trial within five years. Respondent alleges that as a result of appellants’ negligence, it
has lost the right to recover from Cohen the 25 percent interest that Cohen wrongfully
allotted to himself.
“In determining whether the anti-SLAPP statute applies, the court must focus on
the act which defines the ‘principal thrust or gravamen’ of the cause of action [citation]”
that is the basis for the cause of action. (Chodos v. Cole, supra, 210 Cal.App.4th at p.
705.) Here, respondent alleges that appellants breached their duty to respondent by the
acts of malpractice described above. Thus, the gravamen of the complaint is professional
negligence. It does not concern a right of petition or free speech. Instead, “‘the lawsuit
concerns a breach of duty that does not depend on the exercise of a constitutional right.’
[Citations.]” (Id. at p. 702.) “Even though the ‘petitioning activity is part of the
evidentiary landscape within which [claimant’s] claims arose, the gravamen of
[claimant’s] claims is that [the former attorney] engaged in nonpetitioning activity
inconsistent with his fiduciary obligations owed to [claimant] . . . .’ [Citation.]” (Ibid.)
As such, the claim falls outside of the protection of the anti-SLAPP statute. (Ibid.
[“‘California courts have held that when a claim [by a client against a lawyer] is based on
a breach of the fiduciary duty of loyalty or negligence, it does not concern a right of
petition or free speech’”].)
B. Appellants’ arguments do not change the result
Appellants characterize this dispute as a SLAPP masquerading as a legal
malpractice claim. Appellants cite Simpson Strong-Tie Co., Inc. v. Gore (2010) 49
Cal. 4th 12, 21, for the proposition that “‘“SLAPP suits masquerade as ordinary
lawsuits.”’” Rather than take the complaint on its face as a legal malpractice action,
appellants argue, we must look further. “The anti-SLAPP statute’s definitional focus is
not the form of the plaintiff’s cause of action but, rather, the defendant’s activity that
gives rise to his or her asserted liability -- and whether that activity constitutes protected
speech or petitioning.” (Navellier v. Sletten, supra, 29 Cal.4th at p. 92, original italics.)
Appellants urge that section 425.16 must be “‘construed broadly’” to protect freedom of
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speech and petition. (Digerati Holdings, LLC v. Young Money Entertainment, LLC
(2011) 194 Cal. App. 4th 873, 883.)
Appellants point out that a company such as respondent is controlled and governed
by people. (De Albergaria v. American Trust Co. (1932) 126 Cal. App. 59, 61.) During
the time that appellants represented respondent, they reported to Tidemann, who acted as
president of respondent. At all relevant times, Anne was respondent’s adversary. When
Tidemann controlled respondent, there were no grievances expressed regarding
appellants or their representation of respondent.
Anne -- a former adversary of respondent in litigation -- has since taken control of
respondent. Thus, appellants argue, this is “anything but a garden variety legal
malpractice case.” Instead, it is “Anne’s effort to extract revenge against [appellants] for
their years of successful litigation against her.” Under the circumstances, appellants
argue, an anti-SLAPP motion is appropriate. (Neville v. Chudacoff (2008) 160
Cal. App. 4th 1255, 1262, fn. 6 [“An attorney has standing to bring a special motion to
strike a cause of action arising from petitioning activity undertaken on behalf of the
attorney’s client”].)
Appellants argue that an exception should be recognized to the general rule that
legal malpractice suits are not subject to the anti-SLAPP statute in the unusual situation
where, as here, attorneys are sued by their client’s adversary who has taken over control
of the client.3
We decline to adopt appellants’ interpretation of Anne’s motivations. As
described below, Anne’s alleged personal incentive to get back at appellants is irrelevant
to the anti-SLAPP analysis in this matter; furthermore, no such malice has been proven.
3 Appellants also suggest that this suit is akin to an assignment of a legal
malpractice claim, and that such claims are not assignable as a matter of law. (Musser v.
Provencher (2002) 28 Cal. 4th 274, 285.) The evidence supports the trial court’s
conclusion that there was no assignment here. The legal malpractice claim has always
belonged to respondent -- it was never transferred. The law regarding assignment of
legal malpractice claims is irrelevant.
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1. Anne is not a party to the case
Respondent, a corporate entity, is the plaintiff in this litigation against appellants.
“Normally, a corporation is a legal person or entity which has a separate existence from
that of its shareholders or officers.” (Say & Say, Inc. v. Ebershoff (1993) 20 Cal. App. 4th
1759, 1767.) Appellants ask that, instead of treating respondent as a corporate entity, we
analyze the personal motivation of the individual in control of that entity. However,
appellants cite no authority suggesting that it is appropriate to disregard the corporate
form in the context of an anti-SLAPP motion.4
As the trial court noted, there is no cause of action asserted by Anne, and she is
not a party to this litigation. Appellants provide no authority suggesting that the court
may consider and determine the subjective motivations of a non-party to the case in
deciding an anti-SLAPP motion. We decline to create new law suggesting that such a
complex factual analysis is appropriate at this stage of the litigation.
2. No improper purpose has been proven
Even if Anne were a party to the case, we decline to indiscriminately accept
appellants’ interpretation of Anne’s personal motivation in filing this legal malpractice
claim. Appellants admit that there may be situations where a new owner’s scrutiny, upon
acquisition of a corporation, may result in a determination that a lawyer’s prior
performance for the corporation was substandard. However, appellants ask us to blindly
accept that this is not the case here.
4 We note that in making this argument, appellants ask that we engage in an analysis
similar to that which is undertaken when there is a question of alter ego liability. (Mesler
v. Bragg Management Co. (1985) 39 Cal. 3d 290, 300 [“The alter ego doctrine arises
when a plaintiff comes into court claiming that an opposing party is using the corporate
form unjustly”].) When individuals abuse the corporate structure, it may be disregarded,
and the court may hold individuals liable for actions taken by the corporation. (Ibid.)
The question is “whether in the particular case presented and for the purposes of such
case justice and equity can best be accomplished and fraud and unfairness defeated by a
disregard of the distinct entity of the corporate form.” (Kohn v. Kohn (1950) 95
Cal. App. 2d 708, 718.) Appellants have not directly raised the concept of alter ego, nor
did the trial court make any findings that application of the doctrine was appropriate here.
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The difficult factual question of a plaintiff’s undisclosed motivation for filing a
case is not properly decided in the context of an anti-SLAPP motion. (JSJ Ltd.
Partnership v. Mehrban (2012) 205 Cal. App. 4th 1512, 1521 [“The subjective intent of a
party in filing a complaint is irrelevant in determining whether it falls within the ambit of
section 425.16”].) Instead, the analysis is restricted to a determination of whether the
stated allegations reveal that the complaint arises from protected activity. Here, they do
not.
Appellants are not without recourse if their theory as to respondent’s motivation is
accurate. Generally, a defendant’s remedy for being subjected to a lawsuit initiated for
an improper purpose is to bring a claim for malicious prosecution. (Sheldon Appel Co. v.
Albert & Oliker (1989) 47 Cal. 3d 863, 871.) To prevail on such a claim, the plaintiff
must demonstrate: “‘that the prior action (1) was commenced by or at the direction of the
defendant and was pursued to a legal termination in his, plaintiff’s, favor [citations]; (2)
was brought without probable cause [citations]; and (3) was initiated with malice
[citations].’ [Citations.]” (Ibid.) “The malice element of the malicious prosecution tort
goes to the defendant’s subjective intent in initiating the prior action. [Citation.]”
(Sycamore Ridge Apartments LLC v. Naumann (2007) 157 Cal. App. 4th 1385, 1407.)
Any inquiry regarding the subjective intent of the plaintiff (or the plaintiff’s alter ego) in
filing the claim is properly fleshed out in a subsequent proceeding for malicious
prosecution.
Because we have concluded that the complaint does not arise from protected
activity, we need not address the second prong of the analysis regarding respondent’s
probability of prevailing on the claim. (Equilon Enterprises v. Consumer Cause, Inc.
(2002) 29 Cal. 4th 53, 67.)
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DISPOSITION
The order is affirmed. Each side to bear their own costs of appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
____________________________, J.
CHAVEZ
We concur:
__________________________, Acting P. J.
ASHMANN-GERST
__________________________, J.
HOFFSTADT
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