GREENLEAF MUTUAL BENEFITS ASSOC. v. OH, ET AL.

Case No.:  1-14-CV-261230

DATE:  August 14, 2014

TIME:  9:00 a.m.

DEPT.: 3

Defendants’ two identical requests for judicial notice of four documents, copies of minute orders from case no. 1-12-CV-234143, are both GRANTED pursuant to Evid. Code §452(d).

Defendants’ Special Motion to Strike Plaintiff’s Complaint in this action is DENIED. Defendants have failed to meet their initial burden to show that the allegations that constitute the thrust or gravamen of the Complaint arise from protected activity.

The Complaint alleges that the moving attorney Defendants, on behalf a certain faction of the Greenleaf membership, filed an action in case no. 1-12-CV-234143 styled as an interpleader action brought on behalf of Greenleaf, for the purpose of seizing control of accounts belonging to Greenleaf and used to fund its ongoing legal actions, and improperly distributed those funds solely to the individuals in that faction of its membership, approximately 15 individuals.  Defendants maintain they were in an attorney-client relationship with Greenleaf; while Plaintiffs deny this and assert that by no later than Greenleaf’s Feb. 23, 2012 membership meeting Defendants could not have reasonably believed this.  In either case this action is not the proper subject of a special motion to strike.

If, as Defendants maintain, they were Greenleaf’s attorneys, then the motion clearly fails.  A client’s action against his or her former attorney, “whether pleaded as a malpractice claim, a breach of fiduciary duty claim, or any other theory of recovery,” is not subject to the anti-SLAPP statute “merely because some of the allegations refer to the attorney’s actions in court.”  Hylton v. Frank E. Rogozienski (2009) 177 Cal App 4^th 1264, 1275.  See also Castleman v. Sagaser (2013) 216 Cal App 4^th 481, 491 (“Actions based on an attorney’s breach of professional and ethical duties owed to a client are not SLAPP suits, even if protected activity features prominently in the background.”)  The rationale for this has been stated as follows: “A malpractice claim focusing on an attorney’s incompetent handling of a previous lawsuit does not have the chilling effect on advocacy found in malicious prosecution, libel and other claims typically covered by the anti-SLAPP statute.”  PrediWave Corp. v. Simpson Thatcher & Bartlett LLP (2009) 179 Cal App 4^th 1204, 1222 (internal quotes omitted); See also Jespersen v. Zubiate-Beacuchamp (2003) 114 Cal App 4^th 624, 632; Kolar v. Donahue, McIntosh & Hammerton (2006) 145 Cal App 4^th 1532, 1537-1540.

Plaintiff here does not allege malpractice as it denies that Defendants were its attorneys when they committed the acts alleged in the Complaint.  If, as Plaintiff maintains, Defendants were never Greenleaf’s attorneys and were simply conspiring with a faction of its membership to misappropriate funds, this action still clearly does not arise from protected activity.  Courts have also found that claims that an attorney breached a fiduciary duty or duty of loyalty to a client, or otherwise violated ethical rules do not involve protected speech or petitioning activity.  See Freeman v. Schack (2007) 154 Cal App 4^th 719, 732; Bensara v. Mitchell Silberberg & Knupp LLP (2004) 123 Cal App 4^th 1179, 1186. It would be nonsensical for attorneys who were indisputably in an attorney-client relationship to be unable to bring anti-SLAPP motions against suits from former clients accusing them of unethical conduct while allowing such motions from attorneys who are accused of fraudulently misrepresenting that such a relationship even existed. Assuming for purposes of argument that Plaintiff’s allegations are true, the moving Defendants have clearly violated ethical rules, including their ethical obligations as members of the bar and officers of the Court, and their actions cannot qualify as protected activity.

As Defendants have failed to meet their burden to show that the Complaint arises from protected activity, the burden never passes to Plaintiff and it is unnecessary for the Court to consider either Plaintiff’s objections to Defendants’ evidence filed with the opposition to the motion or Defendants’ objections to Plaintiff’s evidence filed with the Reply.

Defendants’ Demurrer to the entire Complaint and each cause of action therein (Defendants’ “Renotice” of Demurrer at 2:9) on the ground that it fails to state sufficient facts because of the collateral estoppel effect of the allegedly fraudulently obtained judgment in case no. 1-12-CV-234143 is OVERRULED.  “Collateral estoppel bars a party to an action, or one in privity, from subsequently relitigating issues actually litigated and finally decided against it in the earlier action.  A corollary of the rule that collateral estoppel is confined to issues ‘actually litigated’ is the requirement that the issue decided previously be ‘identical’ with the one sought to be precluded.  Thus, a nonparty may invoke collateral estoppel against a party to a prior action only if three conditions are met: (1) the issue necessarily decided in the prior action is identical to the issue sought to be relitigated in the current action; (2) there was a final judgment on the merits in the previous action; and (3) the party against whom collateral estoppel is asserted was a party, or in privity with a party, to the previous suit.” United States Golf Assn. v. Arroyo Software Corp. (1999) 69 Cal.App.4^th 607, 615-616, internal citations omitted.  See also Direct Shopping Network, LLC v. James (2012) 206 Cal. App. 4^th 1551, 1559 (quoting United States Golf Assn.).  Defendants were not a party to the prior action; the issue of whether Defendants conspired to defraud Greenleaf was not raised much less decided in the prior interpleader action, and Plaintiff alleges that the “Greenleaf” in the prior action was not the true association but rather than a faction thereof falsely claiming to be the entire association.  Therefore it cannot be established on demurrer that Greenleaf was a party or in privity with a party in the prior lawsuit.

Defendants’ Demurer to the entire Complaint and each cause of action on the ground that it fails to state sufficient facts because it is barred by the litigation privilege set forth in Civ. Code is OVERRULED.  The usual formulation is that the litigation privilege applies to any communication (1) made in judicial or quasi-judicial proceedings, (2) by litigants or other participants authorized by law, (3) to achieve the objects of the litigation, and (4) that have some connection or logical relation to the action.  See Action Apartment Assn., Inc. v. City of Santa Monica (2007) 41 Cal. 4^th 1232, 1241, citing Silberg v. Anderson (1990) 50 Cal.3d 205, 212.  Plaintiff’s allegation that these Defendants were not its counsel and were not authorized to file pleadings on its behalf is accepted as true on demurrer.  Furthermore the Supreme Court in Action Apartment Assn. at 1246-1347 noted that the litigation privilege does not apply to perjury, subordination of perjury, or violations of Bus. & Prof. Code §6128 (“Every attorney is guilty of a misdemeanor who . . .  (a) Is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party.”)

Defendants’ Demurrer to the entire Complaint and each cause of action on the ground that it fails to state sufficient facts in that each cause of action is barred by the Noerr-Pennington doctrine is OVERRULED.  Defendants fail to support this ground for demurrer with any argument.  Again, the Complaint alleges that these Defendants had no right to take action on Plaintiff’s behalf.

Defendants’ Demurrer to the entire Complaint and each cause of action on the ground that it fails to state sufficient facts because tort claims arising from the filing of an interpleader are barred is OVERRULED.  This rule presupposes a valid interpleader action. Once again, the Complaint’s allegations that these Defendants and the individual defendants conspired to fraudulently file an unauthorized action in Greenleaf’s name are accepted as true on demurrer.

Finally, Defendants’ Demurrer to the entire Complaint and each cause of action on the ground that the entire Complaint is barred by the agent’s immunity rule is OVERRULED.  Plaintiff denies that these Defendants were the authorized agents of Greenleaf and that allegation is accepted as true on demurrer.