Opinion
G054440
05-07-2018
KERRY L. SORENSEN, Plaintiff and Appellant, v. STEPHEN A. MADONI, et al., Defendants and Respondents.
Kerry L. Sorensen, in pro. per., for Plaintiff and Appellant. Coverlaw, Stefanie T. Cover; Law Office of Stephen A. Madoni and Stephen A. Madoni, for Defendant and Respondent, Stephen A. Madoni. No appearance for Defendant and Respondent, Charles McHugh.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2016-00860063) OPINION Appeal from an order of the Superior Court of Orange County, Elizabeth Olsen, Temporary Judge. (Pursuant to Cal. Const., art. VI, § 21.) Affirmed in part, and reversed and remanded in part. Kerry L. Sorensen, in pro. per., for Plaintiff and Appellant. Coverlaw, Stefanie T. Cover; Law Office of Stephen A. Madoni and Stephen A. Madoni, for Defendant and Respondent, Stephen A. Madoni. No appearance for Defendant and Respondent, Charles McHugh.
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Believing Charles McHugh and his attorney, Stephen Madoni, conspired to steal his client, Paul Leone, and to convince Leone not to pay outstanding legal bills, appellant and attorney Kerry Sorensen filed suit against the two for intentional interference with contractual relations. Charles and Madoni each filed a special motion to strike the cause of action against them pursuant to Code of Civil Procedure section 425.16 (anti-SLAPP statute). The trial court granted the motions.
Because the factual background of this case involves Charles McHugh, his ex-wife, Connie McHugh, and his father, William McHugh, Jr., we refer to each by their first names to avoid confusion. No disrespect is intended.
All subsequent statutory references are to the Code of Civil Procedure unless otherwise indicated.
The court entered one order with respect to both motions. We shall collectively refer to the motions filed by Charles and Madoni as the motions.
Sorensen appeals. He claims the conduct of Charles and Madoni violates certain rules of professional conduct applicable to attorneys practicing law in this state. He also argues their conduct is subject to criminal punishment pursuant to Business and Professions Code section 6128, subdivision (a), which makes it a misdemeanor for an attorney to, inter alia, engage in "deceit or collusion, or consent[] to any deceit or collusion, with [the] intent to deceive the court or any party." As a result, according to Sorensen, the anti-SLAPP statute does not apply.
We disagree. Although the anti-SLAPP statute is inapplicable when the conduct from which a cause of action arises is criminal as a matter of law, Sorensen has made no such showing here where there are material factual disputes as to what occurred and the timing of such events. Further, Charles and Madoni vehemently deny any wrongdoing. We, therefore, find no error in the trial court's rejection of Sorensen's assertions.
Nevertheless, in applying the requisite de novo standard of review, we conclude the trial court erred in striking the entirety of the intentional interference with contractual relations cause of action. One of the means whereby Charles and Madoni allegedly interfered with the contractual relationship between Leone and Sorensen is by inducing Leone to refuse to pay legal fees he owed to Sorenson for services already rendered at the time Leone elected to change counsel. Unlike the other conduct alleged in the complaint, such conduct, if committed, is not "protected activity" under the anti-SLAPP statute. Since this is a separate and distinct theoretical basis for the intentional interference claim, it must survive the anti-SLAPP motions. Accordingly, we affirm the order in part, and reverse it in part.
FACTS
The factual basis for this litigation is involved. It begins with the divorce of Charles and Connie McHugh. Charles filed a petition for dissolution, seeking to dissolve his marriage to Connie (the dissolution action). Connie responded to the petition.
Roughly one and one-half years later, Connie filed complaints for joinder against Leone, Charles's friend, and William McHugh, Jr., Charles's father. She alleged that during her marriage to Charles, and after their separation, Leone and William each obtained personal property belonging to the marital estate. Among other relief, Connie sought an order prohibiting Leone and William from selling or disposing of that property, and a determination that the property belonged to the marital estate.
Leone retained Sorensen to represent him. Sorensen filed an answer to the complaint for joinder on Leone's behalf, as well as a cross-complaint against Charles and Connie (hereafter, along with the complaint in joinder, the property matter). The cross-complaint alleged Charles and Connie made false representations to Leone with the intent to defraud and deceive him, and as a result, Leone lost possession and ownership of the disputed property—property which he claimed was his. Leone sought rescission of a certain stipulation he had signed at the request of Charles and Connie, along with compensatory and punitive damages.
Charles and Connie each filed an answer to Leone's cross-complaint. A few months later, Madoni substituted in as counsel for Charles. Charles then filed for protection under chapter 7 of the Bankruptcy Code. Purportedly as a result of Charles's bankruptcy case, Leone dismissed his cross-complaint against Charles. However, the cross-complaint remained as to Connie.
Believing that a prior judgment entered in the dissolution action required Charles to indemnify and defend her concerning the assets at issue in the property matter, Connie eventually filed a separate indemnity action against Charles. Charles, by way of his counsel, Madoni, filed an answer to the complaint. Three weeks after filing an answer in the indemnity action, Charles relieved Madoni as his counsel of record in the dissolution action and the property matter. Madoni continued to represent Charles in the indemnity action.
As all of these events unfolded, Sorensen continued to represent Leone in the property matter. This changed, however, following a meeting between Leone, Charles and Madoni—a meeting that Sorenson claims to have had no knowledge of prior to its occurrence. At that meeting, the three men allegedly discussed the dissolution action, the property matter, and a settlement. Following the meeting, Leone replaced Sorenson with Madoni as his counsel in the property matter. Soon thereafter, the parties reached a global settlement of all claims and cross-claims related to the property at issue.
Apparently frustrated by an alleged lack of communication from Leone, and Leone's failure to pay his outstanding bills for legal services rendered, Sorensen filed suit against Leone, Charles, and Madoni. The sole cause of action against Charles and Madoni was for intentional interference with contractual relations. Sorensen alleged they improperly "induc[ed] [Leone] to enter into a settlement agreement" and "to refuse to pay [Sorensen's] bills," and "induced [Leone] to substitute [Madoni] . . . as his attorney" in the property matter.
Charles and Madoni each filed a special motion to strike this cause of action pursuant to the anti-SLAPP statute. They argued the statute applied because the cause of action against them arose "directly out of communications with [Leone]" in connection with then-pending litigation. In addition, they contended Sorensen would not be able to demonstrate a likelihood of succeeding on the merits because the purportedly wrongful acts were subject to the litigation privilege set forth in Civil Code section 47, subdivision (b).
Sorensen opposed the motions. He asserted the anti-SLAPP statute did not apply under the circumstances because Madoni's alleged actions violated the California Rules of Professional Conduct by which all attorneys practicing law in the state are bound. Relying entirely on that argument, Sorensen was silent about his likelihood of prevailing on the merits of the cause of action.
Following a hearing, the trial court granted the anti-SLAPP motions in full. It found the alleged acts which formed the basis of Sorensen's cause of action were "protected activities" pursuant to the anti-SLAPP statute. The trial court also concluded Sorensen would not be able to show a probability of prevailing on the merits because the conduct was "protected by the litigation privilege set forth in [Civil Code section] 47." Sorensen timely appealed.
DISCUSSION
"The anti-SLAPP statute . . . provides a procedure for weeding out, at an early stage, meritless claims arising from protected activity. Resolution of an anti-SLAPP motion involves two steps. First, the defendant must establish that the challenged claim arises from activity protected by section 425.16. [Citation.] If the defendant makes the required showing, the burden shifts to the plaintiff to demonstrate the merit of the claim by establishing a probability of success. [The Supreme Court has] described this second step as a 'summary-judgment-like procedure.' [Citation.] The court does not weigh evidence or resolve conflicting factual claims. Its inquiry is limited to whether the plaintiff has stated a legally sufficient claim and made a prima facie factual showing sufficient to sustain a favorable judgment. It accepts the plaintiff's evidence as true, and evaluates the defendant's showing only to determine if it defeats the plaintiff's claim as a matter of law. [Citation.] '[C]laims with the requisite minimal merit may proceed.' [Citation.]" (Baral v. Schnitt (2016) 1 Cal.5th 376, 384-385, fn. omitted (Baral).)
"'"An order denying a special motion to strike under section 425.16 is immediately appealable. [Citations.] Our review is de novo; we engage in the same two-step process as the trial court to determine if the parties have satisfied their respective burdens. [Citations.] If the defendant fails to show that the lawsuit arises from protected activity, we affirm the trial court's ruling and need not address the merits of the case under the second prong of the statute."'" (Dual Diagnosis Treatment Center, Inc. v. Buschel (2016) 6 Cal.App.5th 1098, 1103.)
Sorensen argues the anti-SLAPP statute has no application here because the acts by Madoni that give rise to the alleged liability are violations of the legal profession's rules of conduct. Specifically, he claims Madoni violated Rules 1-120 and 2-100 of the Professional Rules of Conduct by doing the following without Sorensen's knowledge and permission: (1) communicating directly with Leone about the property matter despite knowing Leone was represented by Sorensen in that matter; (2) giving advice to Leone concerning settlement of the property dispute while simultaneously representing a person with adverse interests—i.e., Charles; and (3) "conspiring with [Charles] . . . to give . . . legal advice to [] Leone." Sorensen contends such violations categorically fall outside the scope of the anti-SLAPP statute.
Rule 1-120 of the California Rules of Professional Conduct provides, in relevant part: "A member shall not knowingly assist in, solicit, or induce any violation of these rules or the State Bar Act."
Rule 2-100 of the California Rules of Professional Conduct provides, in relevant part: "(A) While representing a client, a member shall not communicate directly or indirectly about the subject of the representation with a party the member knows to be represented by another lawyer in the matter, unless the member has the consent of the other lawyer." --------
The converse is true. Although "illegal" activity is not protected under the statute, this only encompasses criminal acts. (Flatley v. Mauro (2006) 39 Cal.4th 299, 317 (Flatley); Mendoza v. ADP Screening & Selection Services, Inc. (2010) 182 Cal.App.4th 1644, 1654; see, e.g., Lefebvre v. Lefebvre (2011) 199 Cal.App.4th 696, 703 [making false police report]; Novartis Vaccines & Diagnostics, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc. (2006) 143 Cal.App.4th 1284, 1296 [vandalism]; Paul for Council v. Hanyecz (2001) 85 Cal.App.4th 1356, 1363 [political campaign money laundering], disapproved on another point in Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 68, fn. 5.) Unethical conduct which does not rise to the level of criminality may be protected if it falls within the statutorily defined criteria. (Fremont Reorganizing Corp. v. Faigin (2011) 198 Cal.App.4th 1153, 1169.)
Sorensen cites Business and Professions Code section 6128, subdivision (a) (section 6128(a)), which makes it a misdemeanor for an attorney to be "guilty of . . . deceit or collusion, or consent[] to any deceit or collusion, with [the] intent to deceive the court or any party." But, in order for the Flatley illegality rule to apply, the conduct must be "illegal as a matter of law." (Flatley, supra, 39 Cal.4th at p. 320; Mendoza, supra, 182 Cal.App.4th at p. 1654.) In the absence of a defendant conceding as much, this may only be established through "uncontroverted and conclusive evidence." (Flatley, supra, 39 Cal.4th at p. 320.)
Here, Sorensen does not make any connection between section 6128(a) and the alleged actions by Madoni and Charles. Moreover, we fail to find any evidence of an "intent to deceive the court or any party." Sorensen, the subject of the alleged deception, was an attorney handling the property matter on Leone's behalf, not a "party" to the pending litigation.
There are factual disputes here about what occurred and when. While Sorensen alleges Madoni and Charles induced Leone to do certain things, Madoni's and Leone's declarations state otherwise. They claim it was Leone who approached Madoni because he was unhappy with the legal representation he was receiving from Sorensen. Likewise, they say it was Leone who requested Madoni to replace Sorensen as his attorney; Madoni never solicited Leone's business. Although Sorensen alleges a conspiracy between Charles and Madoni, Charles declares he simply gave Madoni's contact information to Leone when it was requested and later accompanied Leone to meet Madoni because Leone asked him to do so. When relevant facts are disputed, it has not been demonstrated that the defendant's alleged conduct is "illegal as a matter of law." (City of Montebello v. Vasquez (2016) 1 Cal.5th 409, 424; Flatley, supra, 39 Cal.4th at p. 316; Seltzer v. Barnes (2010) 182 Cal.App.4th 953, 965-967.)
Turning to the first step of the anti-SLAPP analysis, the inquiry is whether Sorensen's claims arise from protected conduct: speech or petitioning activity in connection with a public issue. (Talega Maintenance Corp. v. Std. Pacific Corp. (2014) 225 Cal.App.4th 722, 727-728.) Our focus here is on the conduct being challenged, not on "'"whether the conduct is actionable."'" (Id. at p. 728.) We consider the pleadings, as well as declarations filed in support of, and in opposition to, the anti-SLAPP motions. (§ 425.16, subd. (b)(2).)
The anti-SLAPP statute lists four categories of protected activity. In light of Madoni's arguments and Sorensen's allegations, we need focus on only one of the four categories: "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[.]" (§ 425.16, subd. (e)(2).)
Describing all of the alleged acts as "communications between [Madoni and Charles, on one side,] and [] Leone[, on the other,] in relat[ion] to [Leone's] lawsuit[,]" Madoni takes the position that these communications are protected because they occurred "'in connection with' civil litigation." Although we agree communications made to an interested party in connection with litigation generally are considered "protected speech" under the anti-SLAPP statute (Optional Capital, Inc. v. Akin Gump Strauss, Hauer & Feld LLP (2017) 18 Cal.App.5th 95, 113-114 (Optional Capital), Madoni oversimplifies the wrongful conduct alleged by Sorensen.
The complaint alleges Madoni and Charles acted with the specific intent to induce Leone to breach his agreement with Sorensen. The alleged acts include: (1) "inducing [Leone] to enter into a settlement agreement without [Sorensen's] knowledge or consent[;]" (2) "inducing [Leone] to refuse to pay [Sorensen's] bills for services rendered and for costs[;]" and (3) "inducing [Leone] to substitute [Madoni] into the [civil] action as his attorney of record."
These activities are protected by section 425.16, with the exception of the alleged conduct related to paying Sorensen's bills. (Optional Capital, supra, 18 Cal.App.5th at p. 114 [settlement negotiations]; Taheri Law Group v. Evans (2008) 160 Cal.App.4th 482, 489 [communications concerning potential legal representation].) Subject to certain exceptions not applicable here, advising a client not to pay his or her attorney's earned fees is not a communication "in connection with an issue under consideration or review by . . . a judicial body." (§ 425.16, subd. (e)(2).) And there are no facts to suggest that providing such advice falls into any other category of conduct protected under the anti-SLAPP statute.
Though at one time, the existence of both protected and unprotected conduct may have required that an anti-SLAPP motion be denied in its entirety (see Mann v. Quality Old Time Service, Inc. (2004) 120 Cal.App.4th 90, 105-106), the Supreme Court in Baral clarified the issue. (Baral, supra, 1 Cal.5th at p. 393 ["[A]n anti-SLAPP motion, like a conventional motion to strike, may be used to attack parts of a count as pleaded"].) "When relief is sought based on allegations of both protected and unprotected activity, the unprotected activity is disregarded at [the first] stage. If the court determines that relief is sought based on allegations arising from activity protected by the statute, the second step is reached. There, the burden shifts to the plaintiff to demonstrate that each challenged claim based 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." (Id. at p. 396.)
Applying these principles, we conclude it was error for the trial court to grant the anti-SLAPP motions with respect to the entire cause of action for intentional interference with contractual relations. Though pled as a single cause of action, because the "actionable wrong [for intentional interference of contractual relations claim] lies in the inducement to break the contract" (Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1127), each means whereby Madoni and Charles allegedly induced Leone to break his contract with Sorensen is a stand-alone claim. Thus, the alleged wrongful, but unprotected, act of inducing Leone not to pay the amount he was contractually obligated to pay Sorensen for legal services already rendered may be separated from the remaining allegations, and that claim remains viable.
We then must proceed to the second prong of the anti-SLAPP analysis for what we have identified as protected activity. (Baral, supra, 1 Cal.5th at p. 396.) Sorensen fails to meet his burden of demonstrating that these claims have the requisite merit. Apparently choosing to rely on his argument that the anti-SLAPP statute does not apply because of the Flatley rule, Sorensen makes no attempt on appeal, and made none below, to demonstrate any probability of succeeding on the merits. Accordingly, the trial court appropriately granted the anti-SLAPP motions as to the intentional interference with contractual relations claims grounded in the alleged inducement of Leone to (1) enter into a settlement agreement without Sorensen's knowledge or consent and (2) to substitute Madoni into the civil action as his attorney of record. (See Contreras v. Dowling (2016) 5 Cal.App.5th 394, 405 ["'[T]he prima facie showing of merit must be made with evidence that is admissible at trial'"].)
Madoni asks us to award him attorney fees concerning the appeal pursuant to the anti-SLAPP statute, and to leave it to the trial court to determine the reasonable amount. We believe the issue of attorney fees to be a proper matter for the trial court in the first instance. Accordingly, the trial court will determine Madoni's rights to attorney fees based on his partial success in this appeal. (Accord, Fremont Reorganizing Corp., supra, 198 Cal.App.4th at pp. 1177-1178.)
DISPOSITION
The order granting the special motions to strike is affirmed in part and reversed in part. It is reversed with respect to Sorensen's cause of action for intentional interference with contractual relations based on Madoni's and Charles's alleged inducement of Leone not to pay Sorensen's bills for legal services rendered and costs. In all other respects, the order is affirmed. On remand, the trial court shall determine whether Madoni is entitled to an attorney fee award related to this appeal, as well as the reasonable amount of any award. In the interest of justice, because both parties prevailed in part on appeal, the parties shall bear their own costs on appeal.
GOETHALS, J. WE CONCUR: BEDSWORTH, ACTING P. J. ARONSON, J.