Azarkman v. Fux CA2/4 ( 2023 )


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  • Filed 6/6/23 Azarkman v. Fux CA2/4
    NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
    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 This opinion has not been certified for publication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.
    IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
    SECOND APPELLATE DISTRICT
    DIVISION FOUR
    JERRY YORAM AZARKMAN,                                               B312291
    Plaintiff and Appellant,
    (Los Angeles County
    Super. Ct. No. 20STCV23643)
    v.
    MAURICIO JOFFEE FUX,
    Defendant and Respondents.
    APPEAL from an order of the Superior Court of Los Angeles County,
    Robert S. Draper, Judge. Affirmed in part, reversed in part, and remanded
    with instructions.
    Dolan Law Firm, Christopher Dolan, Allison Stone; The Arkin Law
    Firm and Sharon J. Arkin; Doll Amir Eley, Gregory L. Doll and Lloyd Vu for
    Plaintiff and Appellant.
    Winston & Strawn, Jeffrey L. Steinfeld, Kevin P. Simpson for
    Defendant and Respondent.
    Appellant Jerry Azarkman and his brother, Ron Azarkman,1 have a
    long-running dispute over the operation and management of several jointly
    owned entities. Jerry filed an unsuccessful petition seeking appointment of a
    provisional director for one of those entities (the provisional director action).
    Jerry subsequently filed this lawsuit against Ron and respondent Mauricio
    Fux, general counsel for the joint entities, for breach of fiduciary duty and
    other claims relating to the brothers’ dispute. Jerry alleged that Fux
    represented both the joint entities and other entities owned by Ron, creating
    a conflict of interest, and assisted Ron in siphoning money from the joint
    entities to benefit Ron. In the fourth cause of action against Fux for breach of
    fiduciary duty, Jerry also alleged that Fux harmed Jerry and the joint
    entities by helping to defeat the provisional director action, including by
    filing a declaration in opposition to Jerry’s petition.
    Fux filed a special motion to strike the breach of fiduciary duty cause of
    action under the anti-SLAPP statute, Code of Civil Procedure section 425.16.2
    The superior court granted the motion, finding that the cause of action arose
    from Fux’s protected litigation conduct in connection with the provisional
    director action, and that Jerry had not shown a probability of success on the
    merits of his claim.
    Jerry appealed, arguing that the conduct he alleged by Fux was not
    protected activity under the statute, because his claim arose from his
    allegations regarding Fux’s conflict of interest rather than litigation-related
    activity. He also contends that the superior court erred in finding that he
    could not show a probability of prevailing on the merits. We conclude that
    Jerry’s fourth cause of action alleges both protected and unprotected conduct.
    As such, we affirm the trial court as to Jerry’s claim based on Fux’s conduct
    related to the provisional director action. However, Jerry also alleged a claim
    1 We refer to the Azarkmans by first name to avoid confusion. No
    disrespect is intended.
    2 SLAPP is an acronym for “strategic lawsuits against public
    participation.” (FilmOn.com Inc. v. DoubleVerify Inc. (2019) 
    7 Cal.5th 133
    ,
    139.) All further statutory references are to the Code of Civil Procedure
    unless stated otherwise.
    2
    for breach of fiduciary duty based on unprotected conduct by Fux. Thus, the
    trial court erred in striking the fourth cause of action entirely and we reverse
    that portion of the court’s order.
    FACTUAL AND PROCEDURAL HISTORY
    I.     Complaint 3
    Jerry filed the complaint in June 2020 individually and derivatively on
    behalf of the joint entities, DIR, Curacao, Ltd. (Curacao), and 1605-25 W. Oly,
    LLC (Oly). The complaint alleged 17 causes of action4 against Ron and Fux,
    with the joint entities named as nominal defendants. The complaint included
    numerous claims against Ron, including for breach of contract, breach of
    fiduciary duty, and conversion, and four claims against Fux for breach of
    fiduciary duty, professional negligence, waste of assets, and unfair
    competition. Only the fourth cause of action is at issue in this appeal,
    alleging breach of fiduciary duty owed to the joint entities and Jerry, brought
    by Jerry individually and on behalf of Oly and Curacao against Fux.
    The complaint alleged the following facts, as relevant to the issues in
    this appeal. Jerry and Ron opened a department store, Curacao, in Los
    Angeles in 1983, which later became a chain of department stores in
    California and Arizona. The brothers ran their retail business together,
    along with various other businesses. In 1994, the brothers purchased a
    property containing office, retail, and parking space at 1605 West Olympic
    Boulevard in Los Angeles, as well as several adjacent lots. The Curacao store
    was the primary retail tenant at the property; some of Ron’s business entities
    were also tenants there. In connection with the purchase of the property,
    Jerry and Ron formed DIR and Curacao.
    3  We previously granted Jerry’s motion to augment the record on
    appeal with an appellant’s appendix containing his complaint.
    4 The caption of the complaint listing the causes of action does not
    match the causes of action alleged in the body of the complaint. For example,
    the caption lists the fourth cause of action as “abuse of control,” while the
    body alleges that cause of action as a breach of fiduciary duty. The caption
    also lists only 15 causes of action, while the complaint includes 17 claims.
    We refer to the claims here as they are identified in the body of the
    complaint.
    3
    DIR is a closely held corporation, incorporated in 1994, with Jerry and
    Ron each owning 50 percent of its stock and serving as its directors. Jerry
    and Ron also formed Curacao, a limited partnership, with DIR as the general
    partner and Jerry and Ron as equal limited partners. Curacao is the sole
    member of Oly, which was formed as a limited liability company in 2012 in
    order “to operate and hold ownership title to the Property.”
    Beginning in 2010, Jerry and Ron began to have “serious personal and
    business disagreements.” At that time, Ron was chief executive officer of the
    joint entities and oversaw operations and accounting, while Jerry was
    “primarily involved in marketing and purchasing.” Jerry became suspicious
    that Ron was allocating greater distributions from the businesses to himself
    than to Jerry. In approximately 2013, Ron also began excluding Jerry from
    “playing any significant role with respect to the management and operations”
    of the property and of the joint entities. In addition, Jerry was unable to
    access financial or operational information for the joint entities. Based on the
    limited information he received, Jerry concluded that the property was “being
    operated and managed in a way that fails to maximize revenue” for Curacao,
    DIR, and Jerry, but instead benefitted Ron and Ron’s entities. As an
    example, Jerry alleged that Ron had entered into lease agreements between
    the joint entities and Ron’s entities, with “free and/or below market rents”
    and other terms highly favorable to Ron’s entities as the tenants. Jerry
    alleged that this conduct breached Ron’s “fiduciary and good faith duties” to
    the joint entities and to Jerry as the “only other partner and/or shareholder.”
    Jerry also contended that Ron gave himself secret distributions of over
    $1,000,000, while telling Jerry that the joint entities had insufficient funding
    to make any distributions. Jerry alleged that Fux “helped [Ron] with his self-
    dealings through these secret distributions.”
    At all relevant times, Fux was the vice president or executive vice
    president (EVP) of DIR, Curacao, and Oly. He also served as general counsel
    for the joint entities, as well as for “numerous other businesses” owned by
    Ron. One of these other businesses was Adir Management Services, for
    which Fux was general counsel and EVP. In a section of the factual
    allegations with the heading “Defendant Fux’s Professional Failure and
    Breach of Fiduciary Duty to Act with Undivided Loyalty and in the Best
    4
    Interest of Oly, Curacao, and DIR” (paragraphs 148-159), Jerry alleged that
    Ron “regularly delegates important material tasks” to Fux on behalf of the
    joint entities in Fux’s capacity as general counsel and/or an officer of those
    entities, that Fux “had the actual and/or apparent authority to act on behalf”
    of those entities, and that the joint entities, through Ron, “ratified the acts” of
    Fux. At the same time, Fux also “held himself out to be” an officer and
    general counsel of several of Ron’s other entities, and Fux’s salary was paid
    by Ron and/or Ron’s entities. Jerry alleged that “[t]his is significant evidence
    of [Fux’s]conflict of interest and breach of his duty of loyalty, his fiduciary
    duty and his obligation to act in good faith and for/in the best interests of the
    partners and shareholders” of the joint entities. Fux, “as an officer and/or
    director and/or employee” of Ron and Ron’s entities, “has taken positions and
    undertaken actions contrary to the best interests” of the joint entities and
    their partners and shareholders. Fux never disclosed any conflict of interest
    and never obtained a waiver from the joint entities or from Jerry. Fux’s
    concurrent representation of the joint entities and Ron’s entities, without
    disclosure of the conflict and written consent from the joint entities,
    “constitutes a breach of his professional duty of undivided loyalty and his
    fiduciary duty owed to [Jerry] and the [joint entities] and their shareholders
    and partners and as a result, [Jerry and the joint entities] have been harmed
    and have suffered damages.”
    Jerry “sought to break the stalemate” created between the brothers in
    the operations of the joint entities by filing the provisional director action in
    Los Angeles Superior Court. In his petition, Jerry requested appointment of
    a neutral provisional director for DIR. Ron, through DIR, with “the legal
    assistance and counsel of” Fux, defeated the petition, “based primarily on the
    fact that Curacao and DIR were making a profit.”
    The fourth cause of action against Fux for “breach of fiduciary duty
    owed to Oly, Curacao, DIR, and [Jerry],” was brought by Jerry “as a Director
    of DIR, Partner in Curacao, derivatively on behalf of Oly and Curacao, and as
    an individual.” The claim is contained in paragraphs 238 to 261 of the
    complaint. Paragraph 238 incorporated by reference the preceding
    paragraphs. Paragraphs 239 through 252 contained allegations about Fux’s
    roles for the businesses. In paragraphs 239 and 240, Jerry alleged that Fux,
    5
    as general counsel to the joint entities, owed those entities and Jerry “a
    fiduciary duty of utmost good faith and to act in their best interest and with
    complete and undivided loyalty.” Paragraphs 241 to 243 alleged that Fux
    provided legal advice to DIR regarding “partnership business” and to assist
    DIR and Ron in managing Curacao and fulfilling “the fiduciary duties owed
    to the limited partners of Curacao.” In paragraphs 244 through 247, Jerry
    alleged that Fux knew that the advice he was giving to DIR was for the
    benefit of Curacao and its limited partners, including Jerry, and that by
    representing DIR and Curacao, Fux “assumed a duty of care” to both Curacao
    and Jerry as a partner. Jerry further alleged that Fux knew that his “role
    and authority” as general counsel for the joint entities “prohibited him from
    accepting other representation, including Ron and Ron’s entities, “in matters
    adverse to” the interests of the joint entities or Jerry. Paragraph 248 alleged
    that Fux “had an intractable conflict of interest” by serving as “an officer
    and/or, council [sic] and/or general counsel” to the joint entities while also
    serving in the same role for Ron and Ron’s entities. Paragraph 249 alleged
    that Ron’s entities had “business dealings with Curacao and DIR which have
    been manipulated by [Ron], aided and abetted by” Fux, to the benefit of Ron
    and his entities and the detriment of the joint entities. Paragraphs 250 to
    252 alleged that Fux, as attorney to the joint entities, owed a “duty of utmost
    loyalty and good faith” to the joint entities “and their partners and
    shareholders,” including Jerry, that duty was “in direct conflict” with Fux’s
    representation of Ron and Ron’s entities, and that Fux failed to disclose that
    conflict to, or obtain a waiver from, Jerry or the joint entities.
    Paragraphs 253 to 256 focused on Fux’s conduct related to the
    provisional director action. Specifically, Jerry alleged that the appointment
    of a provisional director for DIR “would have been materially beneficial” to
    the joint entities by ending the impasse between Jerry and Ron, which
    “effectively left full and complete control of the [joint entities] in the hands of
    the self-interested” Ron. Fux, acting as general counsel to the joint entities
    and to “numerous other” of Ron’s entities, “played a material role in DIR
    contesting the petition” for provisional director, which was denied “after great
    cost and expense” to Jerry and DIR. Jerry also alleged that DIR and the joint
    entities were harmed based on the denial of the appointment petition.
    6
    Further, Fux’s “participation in the defeat” of the appointment petition
    “demonstrated his . . . lack of independence and impartiality as the
    appointment would have broken the stalemate.”
    The remaining paragraphs of the fourth cause of action broadly alleged
    that Fux breached his “duty of care as a fiduciary and as an attorney” owed to
    the joint entities (paragraph 257), “failed to act as a reasonably careful
    attorney would have acted under the same or similar circumstances”
    (paragraph 258), that the joint entities and Jerry were harmed “as a result”
    (paragraph 259), that Fux’s conduct “was a substantial factor in causing
    harm” to the joint entities and Jerry (paragraph 260), and that Fux acted
    with a conscious disregard such that he is subject to punitive damages
    (paragraph 261).
    II.    Anti-SLAPP Motion
    Fux filed an anti-SLAPP special motion to strike pursuant to section
    425.16. Fux sought to strike the fourth cause of action, as well as related
    allegations in paragraph 281 in the fifth cause of action,5 arguing that the
    claim arose from litigation-related activity by Fux, specifically “providing DIR
    with legal advice and a declaration” in the provisional director action. Fux
    also argued that Jerry could not show a probability of success on the merits of
    his claim because it was barred under the one-year statute of limitations for
    legal malpractice claims and because Jerry could not establish that Fux owed
    or breached any fiduciary duty to him, Oly, or Curacao based on the
    provisional director litigation.
    Fux also filed a request for judicial notice of numerous documents
    related to the provisional director action.6 These documents provided the
    5  The fifth cause of action alleged breach of duties against Ron and
    DIR. Paragraph 281 alleges that Fux “played a material role” in DIR’s
    opposition to the petition for appointment of a provisional director, that the
    petition was denied “after great cost and expense” to Jerry and DIR, and that
    these actions were “not in the best interests” of Curacao, DIR, or Jerry. Jerry
    does not raise any separate arguments regarding this paragraph on appeal.
    6 Fux filed a motion on appeal seeking to augment the record with a
    respondent’s appendix containing his request for judicial notice filed in
    support of his anti-SLAPP motion, as well as two other documents related to
    7
    following evidence. In Jerry’s provisional director petition, filed against DIR
    in 2018, Jerry alleged that he and Ron were the sole directors and
    shareholders of DIR; they were deadlocked and “unable to agree as to the
    management of DIR’s affairs.” Jerry therefore asked the court to appoint a
    provisional director to the board to break the deadlock. Jerry also filed a
    motion to appoint a provisional director, which DIR opposed.
    Fux filed a declaration in support of DIR’s opposition to the provisional
    director appointment, stating that he was the Executive Vice President and
    General Counsel of the Adir group of companies, including DIR, Curacao, and
    Oly; he had worked for these entities since 1999; and his job included
    providing in-house legal services to these entities. Fux detailed the
    background of the business relationship between Ron and Jerry, their
    creation and management of the joint entities, and the purchase and
    operation of the property. He stated that Jerry had waged a “campaign to
    destroy the companies that he and his brother founded,” including calling the
    first ever board meeting for DIR in 2017 and making demands in order to
    create a purported deadlock of the board. Fux also discussed efforts by DIR
    and Ron to cooperate with Jerry and provide the financial information he had
    requested. The superior court denied the motion for a provisional director in
    December 2018. Jerry dismissed the provisional director action without
    prejudice in December 2019.
    Jerry filed an opposition to the motion to strike, arguing that the fourth
    cause of action arose from Fux’s actions in his “dual capacity” as EVP and
    general counsel, rather than the declaration he provided for DIR in the
    provisional director action. Jerry argued that Fux was not acting as counsel
    for DIR in the provisional director action and Fux submitted the declaration
    based on his personal knowledge of loan and lease documents in his capacity
    as EVP and general counsel. Jerry also asserted that Fux’s declaration was
    “immaterial” and collateral to Jerry’s fourth cause of action, because the
    Fux’s second anti-SLAPP motion, which was filed in response to Jerry’s first
    amended complaint. The first amended complaint and second anti-SLAPP
    motion are at issue in this appeal. We therefore grant Fux’s motion to
    augment the record only as to the first document, Fux’s request for judicial
    notice.
    8
    principal thrust of the claim was contained in paragraphs 248 to 249 of the
    complaint, namely, that Fux had a conflict of interest by serving as general
    counsel and an officer for the joint entities and also for Ron and Ron’s
    entities. Jerry also argued that Fux’s conduct was not protected because it
    was illegal.
    Turning to the second prong, Jerry contended that his claim was not
    time-barred because the continuous representation exception applied, as Fux
    was still representing the entities. Jerry also argued that he had established
    a probability of success on the merits of his claim by showing that Fux
    breached his fiduciary duties by representing both sides despite clear and
    unwaived conflicts of interest.
    Jerry included multiple exhibits with his opposition, including a copy of
    the Fux declaration filed in opposition to the provisional director petition.
    In reply, Fux argued that the protected activity related to the
    provisional director action was the only wrongful conduct alleged in the
    fourth cause of action and that Jerry had not alleged any other breaches of
    any duty. As for the second prong, he argued that the claim was untimely
    under the one year statute of limitations for malpractice, section 340.6. He
    stated that the continuing representation exception was inapplicable, as it
    only applied where the representation continued on the same subject matter.
    III. Hearing and Ruling
    At the January 2021 hearing on the motion to strike, the court asked
    whether Jerry had alleged any conduct by Fux in support of the fourth cause
    of action other than his participation in the defense of the provisional director
    action. Jerry’s counsel responded that the complaint alleged that Fux
    engaged in business dealings representing both the joint entities and Ron,
    including entering into leases that were advantageous to Ron. The court also
    asked whether there was evidence that Fux ever represented Jerry
    personally. Jerry’s counsel said he believed so, but that the evidence was not
    included in the record on the motion. The court took the matter under
    submission.
    In response to the court’s questions at the hearing, Jerry submitted a
    declaration on February 2, 2021, “regarding Mauricio Fux advising plaintiff
    about legal matters.” In the declaration, he listed matters in which he
    9
    claimed to have received personal legal advice from Fux, including his
    divorce, personal tax issues, his individual ownership rights, and dissolution
    of a business entity. Fux submitted a responsive declaration, stating that
    Jerry’s assertions regarding legal advice were vague, inaccurate, and
    irrelevant to the DIR dispute.
    The court held a second hearing on February 22, 2021. 7 Following
    argument by the parties, the court adopted its written tentative ruling
    granting the motion to strike.
    In its written ruling, the court granted Fux’s request for judicial notice.
    Turning to the first prong of the anti-SLAPP analysis, whether the cause of
    action arose from protected activity, the court noted that the fourth cause of
    action contained broad allegations regarding Fux owing a fiduciary duty and
    having a conflict of interest. However, the court found that “the only injury
    Plaintiff alleges is that Fux assisted Ron Azarkman in contesting” the
    petition for provisional director appointment and failed “‘to act as a
    reasonably careful attorney,’ which resulted in harm to” Jerry and the joint
    entities.
    The court found that the fourth cause of action “alleges two general
    types of conduct by Fux: (1) advice and counsel to DIR regarding ‘partnership
    business’ of DIR and Curacao”; and (2) contesting the petition in the
    provisional director action. The court noted that Fux had provided evidence
    showing that “the relevant ‘advice and counsel’ regarding ‘partnership
    business’ all relate to the filing of” the provisional director action. The court
    found that Fux “has established that his alleged conduct is protected
    activity,” reasoning that the “gravamen [of] Paragraphs 253-2[5]6 and
    paragraph 281 of the Complaint is clearly that in representing and giving
    advice to DIR in connection with the petition for appointment of an
    independent director, Fux violated his fiduciary duty” to Jerry.8
    7 There was no court reporter present for this hearing.
    8 The court’s order states that Fux “violated his fiduciary duty to Ron
    Azarkman,” but in context, it is clear that this is an error and the court
    intended to reflect the complaint’s allegations that Fux violated his fiduciary
    duty to plaintiff Jerry, not defendant Ron. We similarly assume inadvertent
    10
    Turning to the second prong, probability of success on the merits, the
    court found that the one-year statute of limitations under section 340.6
    applied, as the fourth cause of action depended “on proof th[at] Fux violated a
    professional obligation and that the only claim of ‘injury’ supported by any
    evidence is Fux’s participation” in the provisional director action. The court
    further found that the statute of limitations began running “at the latest, on
    November 21, 2018,” when Fux filed the declaration in the provisional
    director action. Because Jerry did not file his complaint until June 2020, it
    was untimely. The court rejected Jerry’s reliance on the continuous
    representation rule, noting that for the rule to apply, Jerry “would need to
    prove two things: (1) that Fux personally represented him and, (2) that this
    representation continued after Fux filed his declaration and was
    ‘substantially related’ to that prior representation.” However, the court
    found that there was “no evidence at all that Fux ever personally
    represented” Jerry, and that Fux’s representation of closely held corporations
    owned by Jerry and Ron could not establish a duty to Jerry individually.
    The court also rejected Jerry’s argument that Fux’s actions were not
    protected because they were illegal, noting that the exception applied only
    where the alleged conduct was criminal, and that no such allegations were
    made here. The court thus concluded that Jerry had not established a
    probability of prevailing on the merits, and granted Fux’s special motion to
    strike.
    In a minute order on March 1, 2021, the court made supplemental
    findings regarding the anti-SLAPP motion, but noted that these findings did
    not affect the prior ruling on the motion. The court noted that Jerry’s
    declaration “appeared to studiously avoid discussion of the time frame during
    which these legal services were allegedly rendered.” The court continued, “It
    is not surprising that over a long period of time the General Counsel to
    corporations jointly owned by the Azarkman brothers would discuss legal
    matters with them.” But the relevant issue for Jerry’s continuing
    representation contention was whether Fux ever represented Jerry
    error where the complaint alleges claims, for example, on behalf of “Plaintiff
    RSA [Ron Sahar Azarkman],” instead of Jerry.
    11
    personally after filing the declaration in the provisional director action. “The
    fact that [Jerry] did not identify any such representation proved perhaps
    more clearly than silence the fact that there was none and therefore no
    ‘continuing representation’ which would toll the statute of limitations.”
    The court also responded to Jerry’s counsel’s argument at the first
    hearing that the fourth cause of action was based on more than the
    provisional director action. The court found that the complaint paragraphs
    cited by counsel “make broad and sweeping allegations regarding duties Fux
    allegedly owed to the corporations and limited partnership for which he was
    serving as general counsel. Causes of action are based upon acts which cause
    injury, not simply allegations that a duty is owed. . . . [T]he only ‘act’ that
    meets this criterion is Fux’s protected activity in connection with the prior
    litigation.”
    Jerry timely appealed.
    DISCUSSION
    Jerry contends the trial court erred in granting the special motion to
    strike. Specifically, he contends that none of Fux’s conduct is protected under
    the anti-SLAPP statute. Alternatively, he argues that the court read the
    allegations of the fourth cause of action too narrowly as a claim arising only
    out of Fux’s litigation conduct related to the provisional director action.
    Instead, he contends that the claim was based on broader allegations
    regarding the harm suffered from Fux’s conflict of interest in providing legal
    advice to both the joint entities and Ron and Ron’s entities, and that such
    conduct is not protected under section 425.16.
    We conclude that the claim for breach of fiduciary duty by Fux is based
    on both protected and unprotected conduct. Thus, with respect to the
    protected conduct—Fux’s litigation activities in opposition to the provisional
    director action—we agree with the trial court in granting the motion to strike
    as to the claim based on that conduct. However, with respect to the alleged
    breach of fiduciary duty based on other conduct, we find that Fux has not
    established that his conduct was protected. We therefore affirm in part and
    reverse in part the order granting the motion to strike.
    I.     Section 425.16 and Standard of Review
    12
    “A cause of action arising from a person’s act in furtherance of the
    ‘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 claim will prevail.” (Monster
    Energy Co. v. Schechter (2019) 
    7 Cal.5th 781
    , 788, citing § 425.16, subd.
    (b)(1).) Section 425.16, subdivision (e) describes four categories of acts “‘in
    furtherance of a person’s right of petition or free speech’”: “(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).)
    “Anti-SLAPP motions are evaluated through a two-step process.
    Initially, the moving defendant bears the burden of establishing that the
    challenged allegations or claims ‘aris[e] from’ protected activity in which the
    defendant has engaged.” (Park v. Board of Trustees of California State
    University (2017) 
    2 Cal.5th 1057
    , 1061 (Park).) “If the defendant carries its
    burden, the plaintiff must then demonstrate its claims have at least ‘minimal
    merit.’” (Ibid.)
    “We review de novo the grant or denial of an anti-SLAPP motion.
    [Citation.] We exercise independent judgment in determining whether, based
    on our own review of the record, the challenged claims arise from protected
    activity. [Citations.] In addition to the pleadings, we may consider affidavits
    concerning the facts upon which liability is based. [Citations.] We do not,
    however, weigh the evidence, but accept plaintiff's submissions as true and
    consider only whether any contrary evidence from the defendant establishes
    its entitlement to prevail as a matter of law.” (Park, supra, 2 Cal.5th at p.
    13
    1067.) The appellant bears the burden of affirmatively demonstrating error.
    (Balla v. Hall (2021) 
    59 Cal.App.5th 652
    , 671.)
    II.    Step One: Arising From Protected Activity
    In the first step under the anti-SLAPP analysis, the court determines
    whether the plaintiff’s claims arise from protected activity. (Bonni v. St.
    Joseph Health System (2021) 
    11 Cal.5th 995
    , 1009 (Bonni).) “A claim arises
    from protected activity when that activity underlies or forms the basis for the
    claim.” (Park, 
    supra,
     2 Cal.5th at p. 1062.) “[I]n ruling on an anti-SLAPP
    motion, courts should consider the elements of the challenged claim and what
    actions by the defendant supply those elements and consequently form the
    basis for liability.” (Id. at p. 1063.) Thus, “a claim may be struck only if the
    speech or petitioning activity itself is the wrong complained of, and not just
    evidence of liability or a step leading to some different act for which liability
    is asserted.” (Id. at p. 1060.)
    A defendant meets its step one burden “‘by demonstrating that the act
    underlying the plaintiff’s cause [of action] fits one of the categories spelled
    out in section 425.16, subdivision (e)’.” (Hunter v. CBS Broadcasting, Inc.
    (2013) 
    221 Cal.App.4th 1510
    , 1519; see also Bonni, supra, 11 Cal.5th at p.
    1009 [“defendant’s burden is to identify what acts each challenged claim rests
    on and to show how those acts are protected under a statutorily defined
    category of protected activity”].) Claims that arise out of the filing of a
    lawsuit arise from protected activity for purposes of the anti-SLAPP statute.
    (Bonni, supra, 11 Cal.5th at p. 1024.) “Recognized petitioning activities thus
    include not only the conduct of litigation but also acts and communications
    reasonably incident to litigation.” (Id. at p. 1025.)
    Jerry does not dispute that Fux’s actions taken on behalf of DIR during
    the provisional director action constituted litigation conduct. Instead, he
    argues at length that none of Fux’s conduct is protected because Jerry alleged
    claims derivatively on behalf of DIR. Thus, where “a client (i.e., DIR) sues its
    own attorney (i.e., Fux) for malpractice and/or breach of the duty of loyalty
    and . . . fiduciary duty, as here, even the attorney’s litigation conduct is not
    protected under the anti-SLAPP statute.” Fux contends that this argument
    14
    has been forfeited because Jerry did not raise it below. Jerry acknowledges
    the potential forfeiture, but asks that we exercise discretion to “decide this
    very important issue.”
    We agree with Fux that this argument has been forfeited. (See
    Kashmiri v. Regents of University of California (2007) 
    156 Cal.App.4th 809
    ,
    830 [“‘“[I]t is fundamental that a reviewing court will ordinarily not consider
    claims made for the first time on appeal which could have been but were not
    presented to the trial court.”’”]; Newton v. Clemons (2003) 
    110 Cal.App.4th 1
    ,
    11, fns. omitted [“we ignore arguments, authority, and facts not presented
    and litigated in the trial court”].) Moreover, we decline to consider it for the
    first time on appeal. “Although appellate courts have discretion to consider
    an issue in the first instance if it raises a question of law on undisputed facts,
    our Supreme Court has cautioned that such discretion should be exercised
    rarely and only in cases presenting an important legal issue.” (Wisner v.
    Dignity Health (2022) 
    85 Cal.App.5th 35
    , 44–45,citing In re S.B. (2004) 
    32 Cal.4th 1287
    , 1293, superseded by statute on unrelated grounds as stated in
    In re S.J. (2008) 
    167 Cal.App.4th 953
    , 962; see also Saville v. Sierra College
    (2005) 
    133 Cal.App.4th 857
    , 872–873 [“[i]t would be manifestly unjust to the
    opposing parties, unfair to the trial court, and contrary to judicial economy to
    permit a change of theory on appeal”].) Jerry has provided no explanation for
    his failure to raise the argument below, nor has he supported his contention
    that this case presents an important legal issue warranting the rare exercise
    of discretion. We find no basis to consider this issue in the first instance on
    appeal.
    In addition, the record does not support Jerry’s argument that a
    derivative claim by DIR would be outside the scope of section 425.16. As Fux
    points out, the fourth cause of action was not alleged derivatively on behalf of
    DIR. Instead, that claim was alleged by Jerry individually and derivatively
    only on behalf of Curacao and Oly.
    No doubt recognizing these issues, in his reply brief Jerry turns his
    focus to his argument that his fourth cause of action was a “mixed” claim that
    15
    was based on both protected and unprotected conduct.9 Our Supreme Court
    has addressed how to proceed “when a plaintiff has pleaded what is
    sometimes loosely referred to as a ‘mixed cause of action’ — that is, a cause of
    action that rests on allegations of multiple acts, some of which constitute
    protected activity and some of which do not.” (Bonni, supra, 11 Cal.5th at p.
    1010, citing Baral v. Schnitt (2016) 
    1 Cal.5th 376
    , 382 (Baral).) As the court
    explained, “[a]nalysis of an anti-SLAPP motion is not confined to evaluating
    whether an entire cause of action, as pleaded by the plaintiff, arises from
    protected activity or has merit. Instead, courts should analyze each claim for
    relief — each act or set of acts supplying a basis for relief, of which there may
    be several in a single pleaded cause of action — to determine whether the
    acts are protected and, if so, whether the claim they give rise to has the
    requisite degree of merit to survive the motion.” (Bonni, supra, 11 Cal.5th at
    p. 1010, citing Baral, 
    supra,
     1 Cal.5th at pp. 393-395.)
    Thus, “to the extent [Jerry] has alleged various acts as a basis for relief
    and not merely as background, each act or set of acts must be analyzed
    separately under the usual two-step anti-SLAPP framework.” (Bonni, supra,
    11 Cal.5th at p. 1012.) Here, as the trial court recognized, the complaint
    alleged two types of conduct by Fux in support of his breach of fiduciary duty
    claim: (1) advice and counsel to DIR and Curacao regarding “partnership
    9  Although Jerry’s contention that he alleged a mixed claim is
    discussed in detail in his reply, he did raise it quickly in his opening brief on
    appeal. He also argued more generally that the trial court erred in
    construing his fourth cause of action too narrowly and thus ignored other
    allegations of misconduct. Fux responded to these arguments in his
    respondent’s brief on appeal. We therefore find that Jerry did not forfeit the
    issue. During oral argument, Fux also urged us to find forfeiture because
    Jerry had not raised the “mixed claim” argument below. Fux has forfeited
    this argument. Despite expressly acknowledging Jerry’s “mixed claim”
    argument in his respondent’s brief, Fux did not assert therein that Jerry had
    failed to raise the argument below. Fux has not shown good cause for his
    failure to timely raise this argument; we therefore deem it forfeited and will
    not consider it. (See, e.g., Kinney v. Vaccari (1980) 
    27 Cal.3d 348
    , 356, fn. 6
    [“An appellate court is not required to consider any point made for the first
    time at oral argument.”].)
    16
    business” of those entities; and (2) actions supporting DIR’s opposition to the
    petition in the provisional director action. The court went on to find that the
    first category collapsed into the second, because all the purported “advice and
    counsel” related to Fux’s assistance with the provisional director action.
    We agree with Jerry that the court’s interpretation reads the
    allegations of the complaint too narrowly. The fourth cause of action
    expressly incorporated the complaint’s earlier paragraphs, which included
    allegations that Fux violated his duty of loyalty and breached fiduciary duties
    owed to the joint entities by concurrently representing Ron and Ron’s entities
    despite a conflict of interest. The complaint further alleged that as a result of
    his dual representation, Fux “has taken positions and undertaken actions
    contrary to the best interests” of the joint entities and their partners and
    shareholders, including assisting in business deals that allowed Ron to drain
    money from the joint entities. Jerry also alleged that he and the joint entities
    were harmed as a result of Fux’s breaches. Moreover, within the fourth cause
    of action, Jerry alleged that Fux’s duty of loyalty to the joint entities was in
    direct conflict with his representation of Ron and Ron’s entities, that Fux
    aided Ron in business dealings with Curacao and DIR to the detriment of the
    joint entities, and that the joint entities and Jerry were harmed as a result of
    Fux’s conduct. These allegations reflect conduct separate from Fux’s actions
    in the provisional director action.
    Fux has argued, and the trial court found, that the allegations of
    “advice and counsel” were too broad to support a claim for relief apart from
    the litigation-related conduct. We disagree. As detailed above, Jerry alleged
    that Fux advised and assisted Ron with various business dealings,
    purportedly as general counsel for both the joint entities and Ron’s entities,
    in breach of his fiduciary duties, and that Jerry and the joint entities were
    harmed as a result. These allegations supply, albeit broadly, the elements of
    a cause of action for breach of fiduciary duty. (See Charnay v. Cobert (2006)
    
    145 Cal.App.4th 170
    , 182 [“To establish a cause of action for breach of
    fiduciary duty, a plaintiff must demonstrate the existence of a fiduciary
    relationship, breach of that duty and damages.”].) We therefore are not
    persuaded by Fux’s argument that the breach of fiduciary duty claim arose
    only from the protected litigation conduct.
    17
    Conversely, we reject Jerry’s contention that the fourth cause of action
    arose only from Fux’s unprotected conduct, and that the litigation-related
    activity was simply “evidence” supporting that claim. “‘If the core injury-
    producing conduct upon which the plaintiff's claim is premised does not rest
    on protected speech or petitioning activity, collateral or incidental allusions
    to protected activity will not trigger application of the anti-SLAPP statute.’”
    (Area 51 Productions, Inc. v. City of Alameda (2018) 
    20 Cal.App.5th 581
    , 594.)
    Here, however, the complaint alleged that Fux’s protected conduct—his filing
    of a declaration and other assistance in opposing the provisional director
    action—was a substantial cause of the purported injury Jerry and the joint
    entities incurred when the petition was denied. As such, Fux’s protected
    conduct was a basis for the claim of breach of fiduciary duty, not merely “a
    step leading to some different act for which liability is asserted.” (Wong v.
    Wong (2019) 
    43 Cal.App.5th 358
    , 365.)
    In sum, we conclude that Fux met his burden to establish that Jerry
    alleged a claim for breach of fiduciary duty arising out of Fux’s protected
    litigation activity. On the other hand, Jerry also alleged a claim for breach of
    fiduciary duty arising out of non-protected activity. The trial court’s order
    striking the fourth cause of action in its entirety was therefore error. (Bonni,
    supra, 11 Cal.5th at p. 1012 [“to the extent any acts are unprotected, the
    claims based on those acts will survive”].) We turn to the second step of the
    analysis for the portions of the fourth cause of action for which Fux met his
    step one burden.10
    III. Step Two: Likelihood of Success
    Once defendant satisfies the first step of the anti-SLAPP analysis, “the
    burden shifts to the plaintiff to demonstrate that each challenged claim based
    10  Fux asserted during oral argument on appeal that his actions
    outside of the scope of the provisional director action (i.e., his non-protected
    conduct) were nevertheless barred by the one-year statute of limitations
    because he was acting as an attorney. Fux failed to raise this argument prior
    to oral argument and has therefore forfeited it. (Kinney v. Vaccari (1980) 
    27 Cal.3d 348
    , 356, fn. 6.) Moreover, we do not proceed to step two, including
    examining the application of the statute of limitations, for non-protected
    activity.
    18
    on protected activity is legally sufficient and factually substantiated. The
    court, without resolving evidentiary conflicts, must determine whether the
    plaintiff's showing, if accepted by the trier of fact, would be sufficient to
    sustain a favorable judgment. If not, the claim is stricken.” (Baral, 
    supra,
     1
    Cal.5th at p. 396.) “The showing must be made through ‘competent and
    admissible evidence.’” (Gilbert v. Sykes (2007) 
    147 Cal.App.4th 13
    , 26.) A
    plaintiff “‘cannot simply rely on the allegations in the complaint.’” (Alpha &
    Omega Development, LP v. Whillock Contracting, Inc. (2011) 
    200 Cal.App.4th 656
    , 664.)
    Setting aside the unprotected conduct and looking only at the claim
    based on the allegations of Fux’s involvement in the provisional director
    action, Jerry must show that he has a probability of prevailing on the merits
    of that claim.11 The trial court found that Jerry could not satisfy this burden
    because his claim was barred under the one-year statute of limitations. We
    agree.
    Section 340.6 provides a one-year statute of limitations for actions
    against an attorney for professional malpractice. Jerry’s claim for breach of
    fiduciary duty based on the provisional director action alleged that he was
    damaged by the denial of that action. Thus, the statute of limitations began
    to run when the court denied his petition for appointment of a provisional
    director in December 2018; at that point, he knew of Fux’s allegedly wrongful
    conduct in filing the declaration, and he had allegedly suffered injury when
    his petition was denied. (See Jordache Enterprises, Inc. v. Brobeck, Phleger
    & Harrison (1998) 
    18 Cal.4th 739
    , 743 [“Actual injury occurs when the client
    suffers any loss or injury legally cognizable as damages in a legal malpractice
    action based on the asserted errors or omissions.”].) Jerry’s complaint, filed
    in June 2020, was therefore untimely.
    Jerry contends that the limitations period was tolled while Fux
    continued to represent the joint entities, which continued even after the
    11 Because we focus only on the allegations of protected conduct, we
    need not reach Jerry’s argument that a four-year statute of limitations
    applies because the complaint alleged a claim based on Fux’s actions as a
    corporate officer, not as an attorney. We also note that this argument was
    not raised in Jerry’s opening brief.
    19
    complaint was filed. That exception applies only while the attorney
    “continues to represent the plaintiff regarding the specific subject matter in
    which the alleged wrongful act or omission occurred.” (§ 340.6, subd. (a)(2).)
    Here, the specific subject matter at issue was Fux’s assistance in opposing
    the petition to appoint a provisional director. That assistance ended when
    the court denied the petition in December 2018. (See Nguyen v. Ford (2020)
    
    49 Cal.App.5th 1
    , 12 [“‘[t]he inquiry is not whether an attorney-client
    relationship still exists but when the representation of the specific matter
    terminated’”].) Jerry’s argument that his claim involved Fux’s representation
    of the joint entities and Jerry in broader business matters cannot square with
    his contention, and our finding above, that the claim was mixed, and
    therefore that we disregard the unprotected conduct and look only at the
    protected conduct in step two of the anti-SLAPP analysis. Accordingly, we
    find that Jerry failed to establish a probability of prevailing on his claim
    arising out of Fux’s acts in connection with the provisional director action.
    DISPOSITION
    The order granting the motion to strike is affirmed in part, reversed in
    part, and remanded for further proceedings consistent with this opinion. The
    parties are to bear their own costs on appeal.
    NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
    COLLINS, ACTING P.J.
    We concur:
    MORI, J.
    20
    ZUKIN, J.
     Judge of the Los Angeles County Superior Court, assigned by the
    Chief Justice pursuant to article VI, section 6 of the California Constitution.
    21