Three Rivers Provider Network v. Shamoun CA4/1 ( 2013 )

Filed 3/22/13 Three Rivers Provider Network v. Shamoun CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
THREE RIVERS PROVIDER NETWORK, D062343
INC.,
Plaintiff and Appellant,
(Super. Ct. No. 37-2012-00090505-
v. CU-BT-CTL)
RONSON SHAMOUN et al.,
Defendants and Respondents.
APPEAL from an order of the Superior Court of San Diego County, Ronald S.
Prager, Judge. Reversed.
Three Rivers Provider Network, Inc. (TRPN) appeals from the trial court's order
granting a special motion to strike its lawsuit against Ronson Shamoun and the Law
Office of Ronson J. Shamoun, a Professional Law Corporation (collectively, Shamoun)
as a strategic lawsuit against public participation under Code of Civil Procedure section
425.16 (commonly known as the anti-SLAPP statute).1 As we will explain, we conclude
that Shamoun did not meet his burden to establish that the claims against him arose from
activity protected by the anti-SLAPP statute. Accordingly, we reverse the order granting
the special motion to strike.
I
FACTUAL AND PROCEDURAL BACKGROUND
TRPN — a company in the healthcare field — became the subject of an
investigation by the Internal Revenue Service's Criminal Investigation Division (IRS-
CID), including a raid on TRPN's offices by IRS-CID that took place in March 2011.
According to a declaration filed by Ronson Shamoun, TRPN corporate officer Todd
Breeden retained Shamoun to represent him in connection with the IRS investigation.
Breeden quit his job at TRPN in November 2011, and then sent TRPN a draft complaint
alleging that Breeden was constructively discharged for refusing to participate in
"ongoing criminal violations at TRPN."2 TRPN and Breeden participated in settlement
negotiations, in which Shamoun was involved, until January 2012, when TRPN
preemptively filed this action against Shamoun and Breeden.
1 Unless otherwise indicated, all further statutory references are to the Code of Civil
Procedure.
2 According to Breeden's draft complaint, TRPN expected Breeden to "sign
fraudulent documents," "make false statements about various financial transactions" and
"engage in conduct which Mr. Breeden now believes is illegal conduct designed to evade
federal income tax laws."
2
TRPN's complaint alleges numerous acts of wrongdoing by Breeden and
Shamoun, consisting generally of stealing from TRPN, engaging in self-dealing, and
continuing to hold privileged and confidential documents that belong to TRPN.
According to TRPN's complaint, in March 2011, Shamoun "pitched himself to
TRPN as an experienced, skilled, ethical tax defense attorney, who could and would
jointly defend all parties," and "routinely acted as counsel for the company and other
individuals involved with the company, despite knowing of the conflict of interest
between his client, Breeden, and the company." The complaint alleges that Shamoun
used his role as attorney to "enrich himself personally, using information gathered . . . for
personal self-enrichment and client embezzlement." More specifically, according to the
complaint, in the time period between March and November 2011 (1) Shamoun "solicited
client confidences from the company's counsel and other jointly interested individuals
connected to TRPN," which he and Breeden "would then misuse . . . for their personal
enrichment"; (2) "Shamoun and Breeden conspired to liquidate corporate assets,"
"buy[ing] up the assets at a severe discount and manag[ing] the brokering of the sale of
such assets for Shamoun's personal self-enrichment" and the enrichment of his family,
friends, business partners and clients; (3) Shamoun "issued false invoices to [TRPN] for
work never performed for TRPN," and engaged in "bill-padding or false invoicing";
(4) "Shamoun went into business with Breeden, including involving Breeden with a
business that competed with [TRPN]"; and (5) Shamoun "prepared incorrect letters for
Breeden whereby Breeden claimed he needed bonuses to cover tax obligations." In
addition, TRPN alleges that "Breeden and Shamoun continue to have possession of
3
substantial corporate records and documentation" and "refuse to recognize the right of
privilege over the corporate information they obtained."
TRPN's complaint asserts eight causes of action against Shamoun: (1) declaratory
relief as to "the proprietary nature of corporate records and privileged nature of
information received by the defendants"; (2) breach of contract, alleging that Shamoun
breached a professional services contract, which benefited TRPN as a third party, by
inducing Breeden to access confidential corporate information and by arranging for
Breeden to work for a competitor of TRPN; (3) breach of fiduciary duty, alleging that
Shamoun published and disseminated confidential company information to third parties
and used it for personal gain; (4) conspiracy to breach fiduciary duty, alleging that
Shamoun aided and abetted Breeden to breach his fiduciary duty to the company by
engaging in self-dealing; (5) fraud, alleging that Shamoun misrepresented that he was
protecting the company's interest, was invoicing for work performed for the company
rather than for Breeden, and would honor the confidentiality of company information;
(6) conspiracy to convert corporate funds, alleging that Shamoun obtained payment of
$370,000 from TRPN for professional services provided to Breeden, not to TRPN;
(7) conspiracy to convert corporate property, alleging that Shamoun wrongfully took
proprietary and privileged company information; and (8) professional malpractice,
4
alleging that Shamoun engaged in conflicted representation and misused TRPN's
privileged and confidential information for personal gain.3
Shamoun filed a special motion to strike under the anti-SLAPP statute. He argued
that TRPN's claims against him arose from activity protected by the anti-SLAPP statute
because TRPN filed its complaint as "a preemptive strike against Mr. Breeden and his
counsel for their anticipated petition for redress of grievances in the form of
Mr. Breeden's constructive discharge claim" and the "[c]omplaint was simply designed to
prevent Mr. Breeden from exercising his constitutional rights of petition and free speech
to file his lawsuit." The trial court granted the motion, concluding that the causes of
action against Shamoun arose from protected activity and that TRPN had not
demonstrated a probability of prevailing on its claims.4 TRPN filed a notice of appeal.
(§ 904.1, subd. (a)(13).)
3 With respect to Breeden, the complaint alleges that, among other things, Breeden
"routinely diverted money from TRPN to himself" between 2005 and 2011,
misrepresented his professional qualifications, "falsified tax returns" and "precipitated an
IRS inquiry." The complaint alleges causes of action against Breeden for declaratory
relief, conversion, intentional misrepresentation and conspiracy to commit conversion.
4 TRPN filed an untimely opposition in the trial court, which — at Shamoun's
request — the trial court "refuse[d] to consider." However, the trial court's minute order
also explained its reasons for granting the special motion to strike "[e]ven if the Court
had considered the opposition," concluding, without analysis, that the causes of action
against Shamoun arose from activity protected by the anti-SLAPP statute because TRPN
had not disputed that point in its opposition. In our de novo review, because moving
parties in a special motion to strike have the initial burden to establish that the causes of
action alleged against them arise from protected activity, we do not follow the trial court's
approach of relying on TRPN's failure to oppose. (Dowling v. Zimmerman (2001) 85
Cal.App.4th 1400, 1417 ["On a special motion to strike under the anti-SLAPP statute,
'[t]he moving party bears the initial burden of establishing a prima facie showing the
5
II
DISCUSSION
A. Standard of Review
"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.' " (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 269.)
B. Applicable Legal Standards
The anti-SLAPP 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 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."
(§425.16, subd (b)(1).) "The analysis of an anti-SLAPP motion thus involves two steps.
'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
plaintiff's cause of action arises from the defendant's free speech or petition activity.' "].)
Instead, we focus on whether Shamoun has met his initial burden.
6
whether the plaintiff has demonstrated a probability of prevailing on the claim.'
[Citation.] 'Only a cause of action that satisfies both prongs of 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.' " (Oasis West Realty, LLC v.
Goldman (2011) 51 Cal.4th 811, 819-820.) "If the defendant does not demonstrate [the]
initial prong, the court should deny the anti-SLAPP motion and need not address the
second step." (Hylton v. Frank E. Rogozienski, Inc. (2009) 177 Cal.App.4th 1264, 1271
(Hylton).)
Section 425.16, subdivision (e) specifies the type of activity protected by the anti-
SLAPP statute: An " 'act in furtherance of a person's right of petition or free speech . . . in
connection with a public issue' includes: (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).)5
5 When the first two subparts of section 425.16, subdivision (e) are at issue (i.e.,
speech or petitioning before a legislative, executive, judicial or other official proceeding;
or statements made in connection with an issue under review or consideration by an
7
"[T]he statutory phrase 'cause of action . . . arising from' means . . . that 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.' " (City of Cotati v. Cashman (2002) 29
Cal.4th 69, 78 (Cotati).) " '[T]he mere fact that an action was filed after protected activity
took place does not mean the action arose from that activity for the purposes of the anti-
SLAPP statute. [Citation.] Moreover, that a cause of action arguably may have been
"triggered" by protected activity does not entail that it is one arising from such.
[Citation.] In the anti-SLAPP context, the critical consideration is whether the cause of
action is based on the defendant's protected free speech or petitioning activity.' . . . The
additional fact that protected activity may lurk in the background—and may explain why
the rift between the parties arose in the first place—does not transform a . . . dispute into
a SLAPP suit." (Episcopal Church Cases (2009) 45 Cal.4th 467, 477-478, citation
omitted.)
C. Shamoun Has Not Established that the Causes of Action Against Him Arise from
Protected Activity
We now turn to an analysis of whether Shamoun has met his burden to
demonstrate that the causes of action against him arise from activity protected by the anti-
SLAPP statute.
official body), the moving party is not required to independently demonstrate that the
matter is a "public issue" within the statute's meaning. (Briggs v. Eden Council for Hope
& Opportunity (1999) 19 Cal.4th 1106, 1113 (Briggs).)
8
1. Shamoun Has Not Established that the Claims Against Him Arise from
Protected Activity Because They Are Based on Breeden's Threat to File Suit
Against TRPN
Shamoun first argues that the claims against him fall within the scope of the anti-
SLAPP statute because they arise from Breeden's draft complaint and associated
settlement discussions, in which Shamoun participated. Shamoun contends that the draft
complaint and his activity associated with it constitute protected activity as described in
section 425.16, subdivision (e)(2) because the complaint constitutes a "written . . .
statement or writing made in connection with an issue under consideration or review by a
. . . judicial body." (Ibid.)
The initial premise of Shamoun's argument is sound. It is well-settled that
prelitigation conduct, such as the preparation of a draft complaint, can constitute free
speech or petitioning activity protected by the anti-SLAPP statute. (Aguilar v. Goldstein
(2012) 207 Cal.App.4th 1152, 1162 ["There is no question that 'a prelitigation statement
falls within clause (1) or (2) of section 425.16, subdivision (e) if the statement
" 'concern[s] the subject of the dispute' and is made 'in anticipation of litigation
"contemplated in good faith and under serious consideration" ' " ' "].) "This includes
qualifying acts committed by attorneys in representing clients in litigation." (Rusheen v.
Cohen (2006) 37 Cal.4th 1048, 1056.)
The problem with Shamoun's argument, however, is that he must establish the
claims against him arise from the protected activity that he has identified. (§425.16, subd
(b)(1).) Case law establishes that a lawsuit does not arise from threatened litigation for
the purpose of the anti-SLAPP statute merely because it is filed in anticipation of
9
threatened litigation. "[A] claim filed in response to, or in retaliation for, threatened or
actual litigation is not subject to the anti-SLAPP statute simply because it may be viewed
as an oppressive litigation tactic." (Cotati, supra, 29 Cal.4th at p. 78.) "California courts
rightly have rejected the notion 'that a lawsuit is adequately shown to be one "arising
from" an act in furtherance of the rights of petition or free speech as long as suit was
brought after the defendant engaged in such an act, whether or not the purported basis for
the suit is that act itself.' " (Id. at p. 77.) The proper inquiry is not what triggered or
motivated the lawsuit, but " 'whether the cause of action is based on the defendant's
protected free speech or petitioning activity.' " (Episcopal Church Cases, supra, 45
Cal.4th at p. 477.)
Here, even though TRPN may have been motivated to preemptively file suit
against Shamoun and Breeden because Breeden threatened to file a draft complaint for
constructive discharge, the causes of action asserted in TRPN's complaint are not based
on the content or existence of Breeden's draft complaint. Instead, as we have explained,
the claims against Shamoun focus on alleged wrongdoing between March and November
2011, consisting primarily of alleged self-dealing, breaches of loyalty, and taking of
confidential documents. Shamoun's participation in Breeden's settlement negotiations
concerning the draft complaint does not constitute " '[t]he allegedly wrongful and injury-
producing conduct . . . that provides the foundation for the claim[s]' " asserted in TRPN's
lawsuit. (Hylton, supra, 177 Cal.App.4th at p. 1272.) At most Breeden's draft complaint
"lurk[s] in the background" and " ' "triggered" ' " TRPN's lawsuit (Episcopal Church
Cases, supra, 45 Cal.4th at pp. 477-478), but TRPN's lawsuit is not based on the
10
existence or content of Breeden's draft complaint, and thus the lawsuit does not, for the
purpose of the anti-SLAAP statute, arise out of the petitioning and free speech activity
associated with Breeden's draft complaint.6
To the extent that Shamoun is arguing that TRPN's claims against him arise from
protected activity because they allege breaches of professional duties committed in the
context of a threatened litigation or an official proceeding associated with the IRS-CID
investigation, that claim fails as well. A claim against an attorney for malpractice or
other misconduct does not qualify as protected activity merely because it was committed
against the backdrop of petitioning activity. "[T]he anti-SLAPP statute does not apply to
a client's claim against his or her former attorney for breach of fiduciary duty . . . or for
malpractice . . . merely because the client's claim against the former attorney followed or
was associated with petitioning activity by the attorney on the client's behalf." (Hylton,
supra, 177 Cal.App.4th at p. 1273.) Thus for example, in a legal malpractice action,
"[t]hat the malpractice allegedly occurred in the course of petitioning activity does not
mean the claim arose from the activity itself." (Kolar v. Donahue, McIntosh &
6 We also reject any argument that Shamoun is being sued based on protected
activity insofar as, in the course of representing Breeden during the IRS-CID
investigation, he made a statement or writing "before" or in "connection with" an
"executive . . . proceeding, or any other official proceeding authorized by law."
(§ 425.16, subd. (e)(1), (2).) Although certain official proceedings conducted by an
agency such as the IRS might qualify as an official proceeding (see Briggs, supra, 19
Cal.4th at p. 1115 [statements made in connection with seeking administrative action,
civil litigation, and a Department of Housing and Urban Development
investigation]),TRPN's complaint does not identify any statement or writing made by
Shamoun in any official IRS proceeding.
11
Hammerton (2006) 145 Cal.App.4th 1532, 1535.) Instead, the moving party " 'must
demonstrate that the substance of the plaintiff's cause of action was an act in furtherance
of the right of petition or free speech.' " (Benasra v. Mitchell Silberberg & Knupp LLP
(2004) 123 Cal.App.4th 1179, 1185.) Shamoun cannot meet this burden here, because —
as we have explained — TRPN's claims are based on Shamoun's alleged acts of self-
dealing and professional malpractice, and are not based on any activity undertaken by
Shamoun in the furtherance of the right to petition or to exercise the right to free speech.
2. Shamoun Has Not Established that the Claims Against Him Fall Under the
Anti-SLAPP Statute on the Ground that They Arise from Free Speech or
Petitioning Activity in Connection with an Issue of Public Interest
Shamoun's final argument invokes section 425.16, subdivision (e)(4), which states
that protected activity under the anti-SLAPP statute includes "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)(4).)
According to Shamoun, the "[c]omplaint pertains to statements, writing and other
conduct by [Shamoun] which relate to a topic that could affect . . . a large number of
TRPN's clients, customers and employees, that is the IRS-CID criminal investigation of a
prominent local company . . . and its founder . . . for tax fraud."
"The 'public interest' component of section 425.16, subdivision (e)(3) and (4) is
met when 'the statement or activity precipitating the claim involved a topic of widespread
public interest,' and 'the statement . . . in some manner itself contribute[s] to the public
debate.' " (Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc.
(2005) 129 Cal.App.4th 1228, 1246 (Huntingdon).) The public interest requirement is
12
met in cases where "(1) the subject of the statement or activity precipitating the claim was
a person or entity in the public eye; (2) the statement or activity precipitating the claim
involved conduct that could affect large numbers of people beyond the direct participants;
or (3) the statement or activity precipitating the claim involved a topic of widespread
public interest." (Mann v. Quality Old Time Service, Inc. (2004) 120 Cal.App.4th 90, 111
(Mann).) "[C]ourts have . . . construed ' "public interest" ' 'to include not only
governmental matters, but also private conduct that impacts a broad segment of society
and/or that affects a community in a manner similar to that of a governmental entity.' "
(Cross v. Cooper (2011) 197 Cal.App.4th 357, 372.)
Shamoun contends that the IRS-CID investigation of TRPN was a matter of public
interest because TRPN is allegedly a "high-profile" company. Without even addressing
whether Shamoun has established that the IRS-CID investigation of TRPN is an issue of
public interest, we reject Shamoun's attempt to use the public interest component of the
anti-SLAPP statute to establish that the causes of action against him arise from protected
activity. Shamoun's argument fails for the fundamental reason that TRPN does not base
Shamoun's purported liability on any statement he made about the IRS-CID investigation
or any petitioning activity by Shamoun during the IRS-CID investigation. Although the
wrongdoing alleged by TRPN was purportedly committed against the backdrop of the
IRS-CID investigation, Shamoun is not being sued because of anything he said about the
IRS-CID investigation or any official act that he took during that investigation that could
be described as petitioning activity. (See Mann, supra, 120 Cal.App.4th at p. 111
[concluding that statements did not concern a public issue because they were made about
13
a company's "specific business practices," not about the specific issue of public interest
identified by the moving party]; Hylton, supra, 177 Cal.App.4th at p. 1274 [lawsuit
against attorney was not based on his petitioning activity even though the lawsuit
"allude[d] to [his] petitioning activity" as relevant background facts].)7
Shamoun also contends that TRPN's claims against him arose from statements he
made about another matter of public interest, namely "[Shamoun's] right to vigorously
defend its clients and safeguard attorney-client communications." We reject this
argument because TRPN's causes of action against Shamoun are not based on any
statements he made about his right to defend his client or preserve the confidentiality of
attorney client communications. On the contrary, the complaint is based on allegations
that Shamoun violated TRPN's confidence, committed malpractice and engaged in self-
dealing.
Finally, Shamoun contends that TRPN's claims against him are based on
statements about matters of public interest because, in the course of his alleged self-
dealing in profiting from the sale of TRPN's assets, he "[d]iscuss[ed] the assets to be sold
with potential interested purchasers." He claims that such discussions were in connection
7 Shamoun also argues that to the extent the public has an interest in the IRS-CID
investigation of TRPN, Shamoun's activity associated with the draft complaint constitutes
"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)(4)) in that the draft complaint references the IRS-CID
investigation. We need not decide whether there is any merit to this theory because, as
we have explained, TRPN's causes of action do not arise from the draft complaint or any
of Shamoun's conduct related to the draft complaint merely because the draft complaint
may have motivated TRPN to file this action against Shamoun and Breeden.
14
with an issue of public interest because they concerned "the proper disposition of assets
following the IRS-CID raid at TRPN." We reject this argument because such discussions
clearly do not constitute discussions on an issue of public interest. Instead of involving
" 'a topic of widespread public interest' " and " 'in some manner itself contribut[ing] to the
public debate,' " as is required to constitute protected activity (Huntingdon, supra, 129
Cal.App.4th at p. 1246), the complaint describes Shamoun's statements as offers to
clients, family, friends and business partners to buy TRPN's assets at discount prices,
which are statements about purely personal business arrangements.
In sum, Shamoun has failed to satisfy his burden to demonstrate that the claims
against him arise from activity protected by the anti-SLAPP statute.8 The trial court
accordingly erred in granting Shamoun's special motion to strike.
8 Because Shamoun did not meet his burden on the first prong of the anti-SLAPP
analysis, we need not, and do not, consider the second prong of the analysis, namely
whether TRPN demonstrated a probability of prevailing on its claims against Shamoun.
(Hylton, supra, 177 Cal.App.4th at p. 1271 [court does not consider second prong of anti-
SLAPP analysis when the defendant does not carry its burden on first prong].)
15
DISPOSITION
The order granting Shamoun's special motion to strike is reversed, and this action
is remanded for further proceedings.
IRION, J.
WE CONCUR:
MCCONNELL, P. J.
NARES, J.
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