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Nicosia Consulting Int'l, LLC v. Rees

COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION TWO
Jul 23, 2018
A149278 (Cal. Ct. App. Jul. 23, 2018)

Opinion

A149278

07-23-2018

NICOSIA CONSULTING INTERNATIONAL, LLC, Plaintiff and Appellant, v. HARRISON REES, Defendant and Respondent.


NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Alameda County Super. Ct. No. RG15779325)

Plaintiff Nicosia Consulting International, LLC (NCI) sued Harrison Rees, a former employee, for defamation and interference. Rees filed an anti-SLAPP motion to strike. The trial court granted it, striking NCI's complaint, entitling Rees to attorney fees. Rees sought $50,295. Following extensive briefing and argument, the trial court entered a detailed, six-page, single-spaced order awarding Rees $33,759. NCI appeals. We affirm.

BACKGROUND

The Parties and Their Relationship

NCI is a Florida construction and consulting firm specializing in turn-key contracting, construction management, and construction consulting throughout the United States, with a focus on "green" technologies. NCI has performed work in California, including the installation of weld tees in the piping system of natural gas fueling stations.

Weld tees are piping components that connect two lengths of pipe at a right angle to one another, in what is referred to as a "branch connection."

In March 2013, NCI acquired the assets of two companies owned by Rees, as part of which transaction NCI agreed to hire Rees as an employee and Rees agreed that for two years after his employment ended he would not compete with NCI. His employment ended in November 2014, when he voluntarily left NCI. The parties vigorously dispute the reasons the employment ended, a dispute we need not discuss in detail here. Suffice to say that NCI asserts "Rees had become unhappy with NCI for personal reasons," and that he thereafter "defame[d] NCI around the country" "in retaliation for his personal discontent." Rees's position is that he complained of defective weld tees within NCI, to no avail, thereafter talked to Cal/OSHA, and left.

The Proceedings Below

In July 2015, NCI filed a complaint alleging that in the fall of 2014, Rees submitted a false complaint to Cal/OSHA alleging that the weld tees installed throughout California by NCI were not in compliance with industry standards. NCI's complaint alleged two claims; for defamation and interference with contractual relationship.

In October, Rees filed an answer, asserting among other affirmative defenses that any acts, conduct, or statements attributable to him were subject to absolute and/or limited privileges, including those provided by California Civil Code section 47 (section 47).

Subject to exceptions not applicable here, section 47, subdivision (b), provides that a "privileged publication or broadcast is one made" "[i]n any (1) legislative proceeding, (2) judicial proceeding, (3) in any other official proceeding authorized by law, or (4) in the initiation or course of any other proceeding authorized by law and reviewable pursuant to Chapter 2 (commencing with Section 1084) of Title 1 of Part 3 of the Code of Civil Procedure . . . ."

On November 18, Rees filed an anti-SLAPP motion, accompanied by two declarations and a memorandum of points and authorities. His papers made no mention of section 47 or any other privilege.

On December 22, NCI filed an ex parte application seeking leave to conduct limited discovery. Rees filed opposition, arguing that the ex parte application was improper, both procedurally and substantively. NCI filed a reply. On January 5, 2016, the court denied NCI's ex parte application, but deemed it a noticed motion, and continued it for hearing on January 26. Both parties filed further briefs, and on January 28, the court granted NCI's motion, allowing it to conduct limited discovery.

On March 1, NCI filed a motion to compel third-party documents and testimony from Cal/OSHA, set for hearing on March 23. Rees filed opposition, as did Cal/OSHA. As part of his argument in opposition, Rees asserted that the statements allegedly made by him that were the basis for NCI's complaint were absolutely privileged under the official proceedings privilege set forth in section 47, and thus could not serve as the basis for liability. NCI filed a reply.

On March 23, the trial court granted NCI's motion compelling the Cal/OSHA discovery, doing so with one caveat or qualification. That is, the court noted it would not address the section 47 privilege issue because NCI had not had a fair opportunity to respond to it, and because the argument went to the merits of the anti-SLAPP motion rather than the discovery motion at issue. That being said, the court observed: "[B]ased on a very preliminary review, and without the benefit of opposing briefing from Plaintiff, Defendant's argument based on the official-proceedings privilege seems to have significant force and potential to prove dispositive in this action. Accordingly, the court encourages counsel to research and develop their arguments on the issue, as well as to address it in any discussion they may pursue regarding potential settlement of this action."

On May 12 and 17, NCI filed extensive opposition to the anti-SLAPP motion—opposition that, despite the court's observation, did not address the privilege issue.

On May 18, Rees filed a reply which among other things addressed the privilege issue.

The anti-SLAPP motion came on for hearing on June 2, at which the parties argued at length about the applicability of the privilege. Following that argument, the court granted the anti-SLAPP motion as to the cause of action for interference, but requested supplemental briefing on the privilege as a defense to the defamation cause of action.

On June 16, NCI filed a "Brief re Official Proceedings Privilege," to which Rees filed a reply. The matter came on for hearing on June 29, at which hearing the court granted the motion to strike the defamation cause of action based on the privilege, and dismissed NCI's complaint.

On July 21, Rees filed a motion for attorney fees, seeking $46,415.53.

On August 26, NCI filed opposition, asserting that Rees was only entitled to a fee award of $4,070, the amount incurred for the supplemental brief on the privilege issue and for the June 29 hearing.

On August 31, Rees filed a reply, together with a supplemental declaration seeking additional fees incurred for preparation of the fee motion and attendance at the hearing, for a total claim of $50,295.53.

Rees's motion came on for hearing on September 8. The court heard extensive argument and took the matter under submission. The court thereafter issued a six-page, single-spaced order that awarded Rees $33,759.28, a reduction of $16,536.25.

Meanwhile, on September 6, NCI filed a notice of appeal from the June 29 order granting the anti-SLAPP motion.

Notwithstanding its September 6 notice of appeal from the June 29 order granting the anti-SLAPP motion, NCI's appeal does not challenge that order here. Instead, it challenges only the order granting in part Rees's motion for attorney fees. --------

On October 6, NCI filed a notice of appeal from the "August 8, 2016" order , followed days later by a corrected notice of appeal from the September 8 order awarding attorney fees.

The court thereafter entered judgment in favor of Rees and against NCI, and awarded Rees attorney fees and costs in the amount of $33,759.28.

DISCUSSION

The Law and the Standard of Review

"[A]ny SLAPP defendant who brings a successful motion to strike is entitled to mandatory attorney fees." (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1131; Code Civ. Proc., § 425.16, subd. (c) ["shall be entitled"].) In awarding these fees, the trial court should award "reasonable attorney fees under section 425.16 [to] adequately compensate . . . for the expense of responding to a baseless lawsuit." (Robertson v. Rodriguez (1995) 36 Cal.App.4th 347, 362; accord, Dove Audio, Inc. v. Rosenfeld, Meyer & Susman (1996) 47 Cal.App.4th 777, 785.) As pertinent here, the fees awarded should include those for discovery initiated by the plaintiff directly related to the SLAPP motion. (Tuchscher Development Enterprises, Inc. v. San Diego Unified Port Dist. (2003) 106 Cal.App.4th 1219, 1248 [affirming award of attorney fees including fees incurred in opposing discovery request and motion for reconsideration]; American Humane Assn. v. Los Angeles Times Communications (2001) 92 Cal.App.4th 1095, 1104; see generally Jackson v. Yarbray (2009) 179 Cal.App.4th 75, 92-93.)

As to how the attorney fee award is reviewed here, we confirmed the applicable rules in Calvo Fisher & Jacob LLP v. Lujan (2015) 234 Cal.App.4th 608, 619, as follows:

"We have on many occasions set out the law and the standard of review when the issue is the reasonableness of attorney fees awarded, most recently in Syers Properties III, Inc. v. Rankin (2014) 226 Cal.App.4th 691, 697-698:

" 'The abuse of discretion standard governs our review of the trial court's determination of a reasonable attorney fee. (E.g., Ketchum v. Moses[, supra,] 24 Cal.4th 1122, 1140; PLCM Group, Inc. v. Drexler (2000) 22 Cal.4th 1084, 1096 (PLCM Group); accord, Nemecek & Cole v. Horn (2012) 208 Cal.App.4th 641, 650.)"

Then, after some discussion of the lodestar method, we went on:

"We had earlier described the standard of review in Thayer v. Wells Fargo Bank (2001) 92 Cal.App.4th 819, 832-833: 'Because the sole issue before us . . . is the amount of fees awarded, our review is deferential. " 'The "experienced trial judge is the best judge of the value of professional services rendered in his [or her] court, and while his [or her] judgment is of course subject to review, it will not be disturbed unless the appellate court is convinced that it is clearly wrong"—meaning that it abused its discretion.' " (PLCM Group v. Drexler[, supra,] 22 Cal.4th 1084, 1095, quoting Serrano v. Priest [(1977)] 20 Cal. 3d 25, 49 . . . and citing Fed-Mart Corp. v. Pell Enterprises, Inc. (1980) 111 Cal.App.3d 215, 228 [an appellate court will interfere with a determination of reasonable attorney fees "only where there has been a manifest abuse of discretion"].)' Indeed, our colleagues in Division Four have observed that the 'only proper basis of reversal of the amount of an attorney fees award is if the amount awarded is so large or small that it shocks the conscience and suggests that passion and prejudice influenced the determination.' (Akins v. Enterprise Rent-A-Car Co. (2000) 79 Cal.App.4th 1127, 1134.)" (Calvo Fisher & Jacob LLP v. Lujan, supra, 234 Cal.App.4th at p. 620.)

That, then, is the law that governs here, law that requires NCI to demonstrate an abuse of discretion—a demonstration it has not made.

The Attorney Fees Awarded Were Proper

NCI's sole argument on appeal is that the attorney fee award must be reversed. The argument is brief indeed, some four pages, its fundamental basis being that only "reasonable" fees are recoverable. The argument cites several cases for boilerplate propositions, such as: "the factors that may be considered"; "inefficient or duplicative efforts . . . are not compensable"; and "padding . . . is not compensable." And NCI essentially contends, those principles pertain here, because "notably," in his anti-SLAPP motion filed November 16, 2015, "Rees did not raise the official proceedings privilege, the sole basis on which the trial court would ultimately grant his motion. Rees raised the official proceedings privilege in his reply filed seven months after he filed the anti-SLAPP motion."

In the course of its brief argument, NCI quotes two observations by the trial court, one in its order and one at oral argument, saying this:

"The trial court found Rees's litigation conduct unreasonable and inefficient:

" '[R]easonable counsel in Rees's counsel's position would have raised the clearly winning OPP [official proceedings privilege] argument in the opening anti-SLAPP papers and made it the lead argument . . . . Had Rees's counsel done so, the motion would have been resolved with one round of briefing and one hearing. Instead, their unreasonable failure to raise the OPP argument until the briefing on a satellite discovery motion, and then in their anti-SLAPP reply papers, made it necessary for Rees to incur fees for two rounds of briefing and two hearings.

". . . At oral argument, the trial court wondered whether something else was behind Rees' failure to raise the privilege at the outset of the litigation:

" '[S]ome people could look at this as you knew you had a slam dunk and there was a way to turn some fees, you know. I hate to be so crass about it, but that's kind of what's behind all of this. If you know you have a slam dunk, you put it up front and you drive it home. Even, I see many counsel do it, by way of courtesy letter to opposing counsel to begin with.

". . . Nonetheless, rather than award Rees the $4,070.00 in fees expended in connection with his fruitful efforts by way of supplemental briefing, the trial court awarded Rees the fees expended in connection with what it already describes as his unreasonable, inefficient, and questionable efforts." NCI's reply brief goes on to assert that "the court leveled strong criticism of Rees and his counsel for the inefficiency and unreasonableness with which they proceeded below," repeating the first quotation above. We are not persuaded.

NCI's argument is essentially that Rees's attorney did not make his best argument in the initial SLAPP motion, and the argument necessarily runs, had he done so, that would have been that—the motion necessarily and quickly granted. Such a position apparently means that had Rees argued the privilege, NCI would have capitulated, or conceded. This is hard to imagine, given the way NCI has litigated the case, especially as NCI's position includes, as its brief puts it, Rees "defame[d] NCI around the country." In light of this, one is hard-pressed to believe that NCI would have taken Rees at his word. Or to put it slightly differently, would not have requested discovery, just as it did here.

In any event, NCI demonstrated no abuse of discretion, not in light of the trial court's conscientious, detailed order here. As noted, the trial court prepared and filed a six-page, single-spaced order that began with an "overview," followed by the "legal framework" for anti-SLAPP fee motions. The court then went on, item-by-item, to analyze the setting, going on to award some fees for responding to discovery; denying some fees for Rees's unsuccessful attempt to resist discovery; and denying fees for opposing third-party discovery. After all that, the court then provided this thorough analysis:

"REES'S RECOVERY CANNOT BE REDUCED SIMPLY BECAUSE SOME OF HIS LEGAL THEORIES DID NOT SUCCEED. NCI argues forcefully and at length that Rees should not be able to recover fees for the time he devoted to researching and briefing those aspects of the anti-SLAPP motion on which the court's tentative ruling was a denial—i.e., every issue but the relatively narrow, simple, and purely legal defense under the OPP—and should only be able to recover the $4,070 in fees he incurred for the supplemental briefing on the OPP and second hearing. The court concludes that the principle set forth in Sokolow[ v. County of San Mateo (1989)] 213 Cal.App.3d [231], 250, regarding unsuccessful legal theories in support of a fully successful motion, compels it to mostly reject this argument.

"Although it is likely that, had Rees's counsel immediately recognized the irresistible force of the OPP argument and made it the centerpiece of his anti-SLAPP moving papers, the motion would likely have taken less time to prepare and litigate, and a round of supplemental briefing would not have been necessary, the fact remains that the non-OPP arguments are ultimately unsuccessful legal theories in support of a single request for relief—namely, dismissal of the complaint—on which Rees prevailed entirely. The court cannot say that, had Rees's counsel recognized the wisdom of including the OPP in the anti-SLAPP moving papers, and making it the lead argument, it would have been wasteful or improper for counsel to nonetheless have included, as additional, alternative arguments, all the arguments that he in fact included in the moving papers as filed (though presumably in a shorter, simpler form). Although the court ultimately tentatively ruled that those arguments were not successful, they were not frivolous or improper.

"Thus, it appears highly likely that, even had Rees's counsel immediately hit upon the winning OPP argument, Rees still would have incurred many of the same fees he now seeks in order to develop and present, as backups to the OPP argument, all the arguments and evidence included in his anti-SLAPP moving papers as filed. Had Rees's counsel made the OPP argument the centerpiece of his opening papers (as they should have done) and included the arguments actually made in the opening papers as backups to the OPP argument, there could at this point be no serious question that Rees would be entitled to recover all the fees incurred to prepare such a hypothetical, OPP-plus-other-arguments version of the moving papers. Given the motion's complete ultimate success, the court could not apportion out the fees incurred on the unsuccessful legal theories.

"The actual sequence by which counsel only belatedly asserted the OPP argument cannot justify a radically different substantive outcome. Counsel's imperfection caused the litigation of the anti-SLAPP motion to last longer than was necessary, but it did not cause Rees to assert defenses and arguments that he should not have asserted. Requiring NCI to pay for some or most of the costs asserting those unsuccessful arguments is thus not inconsistent with the policy behind the anti-SLAPP fees provision or with basic fairness.

"That said, reasonable counsel in Rees's counsel's position would have raised the clearly winning OPP argument in the opening anti-SLAPP papers and made it the lead argument (and presumably therefore devoted somewhat less space, and less research and briefing time, to the other arguments, which would have been alternative, backup arguments). Had Rees's counsel done so, the motion would have been resolved with one round of briefing and one hearing. Instead, their unreasonable failure to raise the OPP argument until the briefing on a satellite discovery motion, and then in their anti-SLAPP reply papers made it necessary for Rees to incur fees for two rounds of briefing and two hearings."

Following that, the court then reduced the fees Rees requested by another $4,070, the fees incurred for the second round of briefing and second hearing. As is apparent, the court went over the fee request with the proverbial fine-tooth comb, and reduced the amount sought by almost one-third. The award hardly shocks the conscience. It was not an abuse of discretion.

Finally, a brief comment about NCI's reliance on what the trial court said, which NCI calls the "strong criticism of Rees and his counsel for the inefficiency and unreasonableness." Passing over whether NCI accurately describes the court's observations, they have no significance here. As was confirmed in In re Marriage of Bodo (2011) 198 Cal.App.4th 373, 392: "Because we review the correctness of the order, and not the court's reasons, we will not consider the court's oral comments or use them to undermine the order ultimately entered." Or, as our Division One colleagues noted long ago: "No antecedent expression of the judge, whether casual or cast in the form of an opinion, can in any way restrict his [or her] power to declare his [or her] final conclusion in the only manner authorized by law, to wit, by filing the 'decision' . . . ." (Oldis v. La Societe Francaise de Bienfaisance Mutuelle (1955) 130 Cal.App.2d 461, 472; see Wilshire Ins. Co. v. Tuff Boy Holding, Inc. (2001) 86 Cal.App.4th 627, 638, fn. 9 [trial court's "tentative comments" had "no relevance on appeal"].)

DISPOSTION

The judgment and order are affirmed. Rees shall recover his costs on appeal.

/s/_________

Richman, Acting P.J.

We concur:

/s/_________

Stewart, J.

/s/_________

Miller, J.


Summaries of

Nicosia Consulting Int'l, LLC v. Rees

COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION TWO
Jul 23, 2018
A149278 (Cal. Ct. App. Jul. 23, 2018)
Case details for

Nicosia Consulting Int'l, LLC v. Rees

Case Details

Full title:NICOSIA CONSULTING INTERNATIONAL, LLC, Plaintiff and Appellant, v…

Court:COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION TWO

Date published: Jul 23, 2018

Citations

A149278 (Cal. Ct. App. Jul. 23, 2018)