This case was last updated from Los Angeles County Superior Courts on 07/07/2019 at 12:48:22 (UTC).

INTELLIGENT SCM LLC ET AL VS RUSSELL W ROTEN ET AL

Case Summary

On 02/13/2015 INTELLIGENT SCM LLC filed a Contract - Professional Negligence lawsuit against RUSSELL W ROTEN. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are MARK V. MOONEY and TERESA A. BEAUDET. The case status is Pending - Other Pending.

Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    ****2581

  • Filing Date:

    02/13/2015

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Contract - Professional Negligence

  • Court:

    Los Angeles County Superior Courts

  • Courthouse:

    Stanley Mosk Courthouse

  • County, State:

    Los Angeles, California

Judge Details

Presiding Judges

MARK V. MOONEY

TERESA A. BEAUDET

 

Party Details

Plaintiffs and Petitioners

AMERICAN WORLDWIDE AGENCIES

INTELLIGENT SCM LLC

KNOWLES ALEX F.

Defendants and Respondents

DOES 1-200

MORRIS DUANE

ROTEN RUSSELL W

SCOTT ANDREW

Cross Plaintiffs

BURFORD GRAHAM

LAMY PETER

Plaintiff and Cross Defendant

KNOWLES ALEX F.

Interested Party

EILENBERG BEN A.

Attorney/Law Firm Details

Plaintiff and Petitioner Attorneys

ARONSON ROBERT A.

EILENBERG BEN A.

ZELENER HOWARD MARK

ARONSON ROBERT ALAN

Defendant and Respondent Attorneys

BEZEK PETER J. ESQ.

WALKER WILLIAM M. ESQ.

SMITH STEPHEN S. ESQ.

BEHLE ROGER N. ESQ.

DROOKS MARK T. ESQ.

DROOKS MARK THEODORE ESQ.

BEZEK PETER JAMES ESQ.

SMITH STEPHEN SHANNON ESQ.

BEHLE ROGER NEIL JR

Plaintiff and Cross Plaintiff Attorney

ZELENER HOWARD MARK

Plaintiff and Cross Defendant Attorney

EILENBERG BEN A.

 

Court Documents

Ex Parte Application

5/17/2019: Ex Parte Application

NOTICE RE: CONTINUANCE OF HEARING

8/29/2018: NOTICE RE: CONTINUANCE OF HEARING

DEFENDANTS RUSSELL W. ROTEN'S AND DUANE MORRIS LLP'S ANSWER TO FIRST AMENDED COMPLAINT

10/16/2015: DEFENDANTS RUSSELL W. ROTEN'S AND DUANE MORRIS LLP'S ANSWER TO FIRST AMENDED COMPLAINT

DECLARATION OF DOUGLAS A. FRETTY IN SUPPORT OF DEFENDANT DUANE MORRIS LLP'S MOTION TO COMPEL PRODUCTION OF DOCUMENTS

10/30/2015: DECLARATION OF DOUGLAS A. FRETTY IN SUPPORT OF DEFENDANT DUANE MORRIS LLP'S MOTION TO COMPEL PRODUCTION OF DOCUMENTS

DUANE MORRIS LLP'S EX PARTE APPLICATION TO SHORTEN TIME BEFORE HEARING ON MOTION TO QUASH SUBPOENA TO HOWARD ZELENER; MEMORANDUM OF POINTS AND AUTHORITIES

2/25/2016: DUANE MORRIS LLP'S EX PARTE APPLICATION TO SHORTEN TIME BEFORE HEARING ON MOTION TO QUASH SUBPOENA TO HOWARD ZELENER; MEMORANDUM OF POINTS AND AUTHORITIES

DECLARATION OF ANDREW SCOTT

3/10/2016: DECLARATION OF ANDREW SCOTT

Minute Order

4/12/2016: Minute Order

Minute Order

4/25/2016: Minute Order

DECLARATION OF HOWARD ZELENER IN SUPPORT OF PLAINTIFF INTELLIGENT SCM, LLC'S OPPOSITION TO MOTION FOR SUMMARY JUDGMENT

6/6/2016: DECLARATION OF HOWARD ZELENER IN SUPPORT OF PLAINTIFF INTELLIGENT SCM, LLC'S OPPOSITION TO MOTION FOR SUMMARY JUDGMENT

DEFENDANT ANDREW SCOTT'S JOINDER TO DEFENDANTS RUSSELL W. ROTEN AND DUANE MORRIS' REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT

6/10/2016: DEFENDANT ANDREW SCOTT'S JOINDER TO DEFENDANTS RUSSELL W. ROTEN AND DUANE MORRIS' REPLY IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT

PLAINTIFF INTELLIGENT SCM, LLC'S EX PARTE APPLICATION FOR STAY OF ORDER GRANTING SUMMARY JUDGMENT AND STAY OF ENTRY OF JUDGMENT, PENDING JUDGMENT IN UNDERLYING LONG BEACH ACTION, OR FOR ORDER SHORTENI

6/23/2016: PLAINTIFF INTELLIGENT SCM, LLC'S EX PARTE APPLICATION FOR STAY OF ORDER GRANTING SUMMARY JUDGMENT AND STAY OF ENTRY OF JUDGMENT, PENDING JUDGMENT IN UNDERLYING LONG BEACH ACTION, OR FOR ORDER SHORTENI

PLAINTIFF INTELLIGENT SCM, LLC'S REPLY TO OPPOSITION OF DEFENDANT ANDREW SCOTT, TO PLAINTIFF'S MOTION FOR RECONSIDERATION OF ORDER GRANTING SUMMARY JUDGMENT, ETC

7/29/2016: PLAINTIFF INTELLIGENT SCM, LLC'S REPLY TO OPPOSITION OF DEFENDANT ANDREW SCOTT, TO PLAINTIFF'S MOTION FOR RECONSIDERATION OF ORDER GRANTING SUMMARY JUDGMENT, ETC

PLAINTIFF'S OPPOSITION TO DEMURRER OF DEFENDANT ANDREW P. SCOTF; MEMORANDUM OF POINTS AND AUTHORITIES

10/24/2016: PLAINTIFF'S OPPOSITION TO DEMURRER OF DEFENDANT ANDREW P. SCOTF; MEMORANDUM OF POINTS AND AUTHORITIES

DUANE MORRIS DEFENDANTS' STATUS REPORT

11/3/2016: DUANE MORRIS DEFENDANTS' STATUS REPORT

INTELLIGENT SCM, LLC'S OPPOSITION TO EX PARTE APPLICATION TO CONTINUE HEARING ON MOTION FOR RECONSIDERATION OF ORDER GRANTING SUMMARY JUDGMENT

12/8/2016: INTELLIGENT SCM, LLC'S OPPOSITION TO EX PARTE APPLICATION TO CONTINUE HEARING ON MOTION FOR RECONSIDERATION OF ORDER GRANTING SUMMARY JUDGMENT

DECLARATION OF ISCM CURRENT MANAGER AND PRESIDENT PETER LAMY

2/14/2017: DECLARATION OF ISCM CURRENT MANAGER AND PRESIDENT PETER LAMY

REPLY TO OPPOSITION TO MOTION OF INTELLIGENT SCM. LLC TO CORRECT CLERICAL ERROR PURSUANT TO CCP ? 473(D); MEMORANDUM OF POINTS AND AUTHORITIES

3/1/2017: REPLY TO OPPOSITION TO MOTION OF INTELLIGENT SCM. LLC TO CORRECT CLERICAL ERROR PURSUANT TO CCP ? 473(D); MEMORANDUM OF POINTS AND AUTHORITIES

Minute Order

10/4/2017: Minute Order

382 More Documents Available

 

Docket Entries

  • 07/03/2019
  • Notice ( OF UNAVAILABILITY OF COUNSEL); Filed by Andrew Scott (Defendant)

    Read MoreRead Less
  • 07/01/2019
  • at 08:30 AM in Department 50, Teresa A. Beaudet, Presiding; Hearing on Ex Parte Application (To File Oversized Memorandum Of Points And Authorities) - Held

    Read MoreRead Less
  • 07/01/2019
  • Order (re ex parte application)

    Read MoreRead Less
  • 07/01/2019
  • Minute Order ( (Hearing on Ex Parte Application To File Oversized Memorandum ...)); Filed by Clerk

    Read MoreRead Less
  • 07/01/2019
  • Declaration (In Support Of Motion To Reset Discovery Deadlines); Filed by Intelligent SCM, LLC (Plaintiff)

    Read MoreRead Less
  • 07/01/2019
  • Motion re: (Resetting Discovery and Pre-Trial Deadlines); Filed by Intelligent SCM, LLC (Plaintiff)

    Read MoreRead Less
  • 07/01/2019
  • Opposition (Opposition to Ex Parte); Filed by Russell W Roten (Defendant); Duane Morris (Defendant)

    Read MoreRead Less
  • 07/01/2019
  • Ex Parte Application (To File Oversized Memorandum Of Points And Authorities); Filed by Intelligent SCM, LLC (Plaintiff)

    Read MoreRead Less
  • 06/25/2019
  • at 08:30 AM in Department 50, Teresa A. Beaudet, Presiding; Hearing on Motion for Attorney Fees (filed by Defendant Andrew Scott) - Held - Continued

    Read MoreRead Less
  • 06/25/2019
  • Notice of Ruling; Filed by Andrew Scott (Defendant)

    Read MoreRead Less
745 More Docket Entries
  • 05/13/2015
  • at 08:30 AM in Department 68; Case Management Conference (Conference-Case Management; Matter continued) -

    Read MoreRead Less
  • 05/13/2015
  • Minute Order

    Read MoreRead Less
  • 05/13/2015
  • Minute order entered: 2015-05-13 00:00:00; Filed by Clerk

    Read MoreRead Less
  • 05/11/2015
  • CASE MANAGEMENT STATEMENT

    Read MoreRead Less
  • 05/11/2015
  • Case Management Statement; Filed by Intelligent SCM, LLC (Plaintiff)

    Read MoreRead Less
  • 04/15/2015
  • Notice of Case Management Conference; Filed by Clerk

    Read MoreRead Less
  • 03/03/2015
  • Notice of Case Management Conference; Filed by Clerk

    Read MoreRead Less
  • 02/13/2015
  • SUMMONS

    Read MoreRead Less
  • 02/13/2015
  • Complaint; Filed by Intelligent SCM, LLC (Plaintiff); Alex F. Knowles (Cross-Defendant)

    Read MoreRead Less
  • 02/13/2015
  • COMPLAINT BY CLIENT AGAINST ATTORNEY AND LAW FIRM FOR SECRETLY REPRESENTING INTERESTS OF CEO OVER INTERESTS OF CLIENT: 1. CONSTRUCTIVE FRAUD; ETC.

    Read MoreRead Less

Tentative Rulings

Case Number: BC572581    Hearing Date: January 31, 2020    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

intelligent scm, llc,

Plaintiff,

vs.

russell w. roten, et al.

Defendants.

Case No.:

BC 572581

Hearing Date:

January 31, 2020

Hearing Time:

8:30 a.m.

[TENTATIVE] ORDER RE:

PLAINTIFF ISCM’S MOTION FOR AN ORDER TO APPLY THE $41,500.25 ATTORNEY’S FEES AWARD GRANTED TO DEFENDANT ANDREW SCOTT TOWARD THE SATISFACTION OF PLAINTIFF ISCM’S PERFECTED JUDGMENT LIEN AGAINST DEFENDANT ANDREW SCOTT

Background

This case was filed on February 13, 2015 by Plaintiff Intelligent SCM, LLC (“ISCM”) against its former counsel, Russell W. Roten and the law firm Duane Morris (jointly the “Firm Defendants”), and one of ISCM’s members, Andrew Scott (“Scott”). The gravamen of the lawsuit is ISCM’s allegation that Scott was committing financial improprieties against the company and that the Firm Defendants favored Scott over ISCM and its other members (Alex Knowles, Graham Burford, and Peter Lamy).

On September 29, 2016, a judgment was entered in favor of Mr. Knowles and against Scott in a separate case (filed before the instant case was filed), Case No. NC059525 (the “Long Beach case”). In the Long Beach case, Mr. Knowles brought derivative claims against Scott on behalf of ISCM, and in the judgment, ISCM was awarded $557,236 in damages. (Zelener Decl., ¶ 3, Ex. A.) The Court of Appeal affirmed the judgment in the Long Beach case on February 26, 2019. (3/4/19 Not. of Appellate Ct. Dec.)

On March 3, 2017, a Notice of Judgment Lien was filed with the California Secretary of State. (Zelener Decl., ¶ 4, Ex. B.) On April 26, 2019, a Notice of Lien was filed in this case by ISCM. (Zelener Decl., ¶ 5, Ex. C.)

The operative Fourth Amended Complaint was filed on July 9, 2019. A Supplemental Complaint was subsequently filed on August 26, 2019. On September 20, 2019, the Court awarded Scott $41,500.25 in attorney fees in connection with his successful anti-SLAPP motion against Messrs. Burford and Lamy.

ISCM now moves for an order applying the September 20, 2019 attorney fees award toward satisfaction of ISCM’s judgment lien against Scott pursuant to Code of Civil Procedure section 708.470, subdivision (a). Scott opposes.

Request for Judicial Notice

The Court grants Scott’s request for judicial notice as to Exhibits 1 and 2.

Discussion

As an initial matter, the Court does not find that the stay occasioned by Scott’s and the Firm Defendants’ appeal of the Court’s order denying their joint special motion to strike applies to the instant motion. ((Code Civ. Proc., § 916, subd. (a) [“the trial court may proceed upon any other matter embraced in the action and not affected by the judgment or order”].)

“A judgment creditor who has a money judgment against a judgment debtor who is a party to a pending action or special proceeding may obtain a lien under this article, to the extent required to satisfy the judgment creditor's money judgment, on both of the following: (1) Any cause of action of such judgment debtor for money or property that is the subject of the action or proceeding. (2) The rights of such judgment debtor to money or property under any judgment subsequently procured in the action or proceeding.” ((Code Civ. Proc., § 706.410, subd. (a).)

“To obtain a lien . . . , the judgment creditor shall file a notice of lien and an abstract or certified copy of the judgment creditor's money judgment in the pending action or special proceeding.” ((Code Civ. Proc., § 706.410, subd. (b).)

“If the judgment debtor is entitled to money or property under the judgment in the action or special proceeding and a lien created under this article exists, upon application of any party to the action or special proceeding, the court may order that the judgment debtor's rights to money or property under the judgment be applied to the satisfaction of the lien created under this article as ordered by the court. Application for an order under this section shall be on noticed motion. The notice of motion shall be served on all other parties. Service shall be made personally or by mail.” ((Code Civ. Proc., § 708.470, subd. (a).)

ISCM contends that it has obtained an enforceable lien in this action and therefore has the right to apply for an order that the anti-SLAPP attorney’s fee award be applied to satisfaction of ISCM’s judgment lien. Scott does not dispute that ISCM has complied with the applicable procedural requirements. Nevertheless, Scott opposes ISCM’s motion on the ground that counsel for Scott, Foley Bezek Behle & Curtis, LLP (“FBBC”), has a contractual attorney lien that is superior to ISCM’s judgment lien. (Behle Decl., ¶ 4.)

“Appellate courts have consistently held that the trial court in the underlying action has no jurisdiction to determine the existence or validity of an attorney’s lien on the judgment.” ((Carroll v. Interstate Brands Corp. (2002) 99 Cal.App.4th 1168, 1173.) “After the client obtains a judgment, the attorney must bring a separate, independent action against the client to establish the existence of the lien, to determine the amount of the lien, and to enforce it.” ((Ibid. .) The parties may allow the trial court to adjudicate a contractual lien in the underlying case without objection. ((Brown v. Superior Court (2004) 116 Cal.App.4th 320, 332.) However, “[w]hen a party—be it the plaintiff client or a judgment creditor deemed a party for purposes of an application under the judgment lien statutes—objects to the adjudication of the attorney lien claim in the underlying action, the fundamental rule set forth in Carroll and its predecessors applies: Any order within the underlying action purporting to affect the attorney lien, whether positively or negatively, is void.” ((Id. at pp. 332-333.)

Here, ISCM has objected to any adjudication of FBBC’s contractual attorney lien. (Mot., p. 4: 24-25.) Therefore, this Court has no jurisdiction to make any order that would affect FBBC’s lien, including, whether the anti-SLAPP attorney fee award may be applied toward the satisfaction of ISCM’s judgment lien. ((See Id. at p. 335 [“Here, although the trial court in the VMT action had no power to adjudicate the validity of Brown's lien over Cyclon's objection, the court had the power, not to mention the responsibility, to take Brown's claim of a lien into account in deciding whether to grant or deny Cyclon's application under section 708.470. Although Brown is not a party to the VMT action and therefore was not entitled to file an opposition to Cyclon's application, the court could still take notice that Brown claims an attorney contractual lien against the proceeds of the VMT judgment and could weigh that fact in deciding Cyclon's application. If Brown's lien claim is valid, then his contractual lien has priority over Cyclon's judgment lien by nearly two years. Under these circumstances, it might well constitute a denial of substantial justice and therefore an abuse of discretion for the trial court to direct payment of the judgment proceeds to Cyclon without giving Brown a fair opportunity to first litigate the validity of his lien claim in a separate action.”].)

While ISCM is correct in noting that the Court of Appeal in Brown also stated that an attorney may not hold a judgment “hostage indefinitely” by “deferring, without good cause, a separate action on his lien claim,” it appears from Scott’s opposition that FBBC is taking the position that they, through Scott, may seek adjudication of the validity of their contractual attorney lien. ((Ibid. .) Further, as noted by Scott, a declaratory relief action was not necessary until after September 20, 2019, when the attorney fees at issue were awarded. The present motion was filed on January 8, 2020. Therefore, the Court finds that FBBC has not been given a fair opportunity to litigate the validity of its lien claim in a separate action. In light of the above cited authorities, the Court finds that it would best serve the interests of justice to allow FBBC such an opportunity before any orders are made pursuant to Code of Civil Procedure section 708.470.

Conclusion

Based on the foregoing, ISCM’s motion is denied without prejudice; if FBBC fails to file and serve the separate action discussed above by __________, 2020, ISCM may renew it motion.

Scott is to provide notice of this ruling.

DATED: January 31, 2020 ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court

Case Number: BC572581    Hearing Date: January 10, 2020    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

intelligent scm, llc,

Plaintiff,

vs.

russell w. roten, et al.

Defendants.

Case No.:

BC 572581

Hearing Date:

January 10, 2020

Hearing Time:

8:30 a.m.

PLAINTIFF ISCM’S MOTION TO REOPEN DISCOVERY AND TO RE-SET PRE-TRIAL DEADLINES

The Court notes that Defendants Duane Morris LLP (“Duane Morris”), Russell W. Roten (“Roten”), and Andrew Scott (“Scott”) (collectively, “Defendants”) have filed Notices of Appeal of the Court’s December 20, 2019 order denying Defendants’ joint special motion to strike the Supplemental Complaint and Fourth Amended Complaint of Plaintiff Intelligent SCM, LLC (“ISCM”). Pursuant to Code of Civil Procedure section 916, subdivision (a), “the perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order, but the trial court may proceed upon any other matter embraced in the action and not affected by the judgment or order.” ((See also Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 195 [holding that “an appeal from the denial of an anti-SLAPP motion automatically stays further trial court proceedings on the merits”].)

The gravamen of the Fourth Amended Complaint is ISCM’s allegation that Scott was committing financial improprieties against the company and that Duane Morris favored Scott over ISCM and its other members (Alex Knowles, Graham Burford, and Peter Lamy). The Fourth Amended Complaint asserts causes of action against Duane Morris and Roten for constructive fraud/breach of fiduciary duty, legal malpractice, negligence, fraud, tort of another, intentional interference with contractual relationship, negligent interference with contractual relationship, intentional interference with prospective economic advantage, negligent interference with prospective economic advantage, negligent supervision, and conversion. The only cause of action asserted against Scott is the twelfth cause of action for aiding and abetting. The Supplemental Complaint against Duane Morris and Roten alleges that Duane Morris and Roten breached their fiduciary duties to ISCM by secretly working on Scott’s behalf to ISCM’s detriment.

ISCM contends that the stay does not apply to the claims against Duane Morris/Roten in the Fourth Amended Complaint. The Court disagrees. The matters in the Supplemental Complaint are embraced or affected by the matters in the Fourth Amended Complaint. They involve the same parties, are based on the same or similar conduct, and implicate the same legal duties and obligations. The aiding and abetting cause of action against Scott is similarly embraced and/or affected by the remaining causes of action against Duane Morris/Roten. Therefore, the Court finds that the automatic stay applies now that appeals have been taken.

Based on the foregoing, the Court orders that all matters in this action are stayed pending resolution of the appeals taken by Duane Morris/Roten and Scott of the Court’s December 20, 2019 order denying Defendants’ joint special motion to strike.

ISCM’s motion to reopen discovery is ordered off calendar.

Duane Morris is ordered to give notice of this ruling.

DATED: January 9, 2020 ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court

Case Number: BC572581    Hearing Date: December 20, 2019    Dept: 50

THE COURT HAS MODIFIED ITS TENTATIVE (SET FORTH BELOW) ONLY TO INCLUDE THE FOLLOWING PARAGRAPH FROM THE RECENT MILLER CASE:

The very recent anti-SLAPP case of Miller v Zurich American Ins. Co. (2019) 41 Cal. Pp. 5th 247, 256 (“Miller”) emphasized that “[if] the substance, or gravamen, of the complaint does not challenge the defendant’s acts in furtherance of the right of free speech or petition, the court does not consider whether the complaint alleges a cognizable wrong or whether the plaintiff can prove damages.” The Miller court noted that “‘[n]ot all attorney conduct in connection with litigation, or in the course of representing clients, is protected by section 425.16’ [Citation].” (Id. at 257.) In the Miller case, the court did not afford anti-SLAPP protection where there were “communications between the parties’ respective counsel” in a Cumis context and “the communications concern[ed] procedural matters regarding ‘discovery,’ [and] ‘correspondence with Zurich’s claims handlers. . . .’” (Id. at 258.)

Superior Court of California

County of Los Angeles

Department 50

intelligent scm, llc,

Plaintiff,

vs.

russell w. roten, et al.,

Defendants.

Case No.:

BC 572581

Hearing date:

Hearing Time:

December 20, 2019

8:30 a.m.

[TENTATIVE] ORDER RE:

JOINT SPECIAL MOTION TO STRIKE: (1) PLAINTIFF’S SUPPLEMENTAL COMPLAINT (BY DUANE MORRIS DEFENDANTS) AND (2) PLAINTIFF’S FOURTH AMENDED COMPLAINT (BY DEFENDANT ANDREW SCOTT)

AND RELATED CROSS-ACTION

Background

This action was brought by Intelligent SCM, LLC (“ISCM”), against its former counsel, Russell W. Roten (“Roten”) and the law firm Duane Morris (jointly, the “Firm Defendants”), and one of ISCM’s members, Andrew Scott (“Scott”) on February 13, 2015. The operative Fourth Amended Complaint (“4AC”) was filed on July 9, 2019, and asserts causes of action against the Firm Defendants for constructive fraud/breach of fiduciary duty, legal malpractice, negligence, fraud, tort of another, intentional interference with contractual relationship, negligent interference with contractual relationship, intentional interference with prospective economic advantage, negligent interference with prospective economic advantage, negligent supervision, and conversion. The only cause of action asserted against Scott is the twelfth cause of action for aiding and abetting. A Supplemental Complaint (“SC”) against the Firm Defendants was filed on August 26, 2019, and asserts causes of action for breach of duty of loyalty and breach of fiduciary duty.

Pursuant to Code of Civil Procedure section 425.16, the Firm Defendants now move to strike the Supplemental Complaint in its entirety. Scott moves to strike the twelfth cause of action of the Fourth Amended Complaint. ISCM opposes.

Request for Judicial Notice

The Court grants ISCM’s request for judicial notice as to Exhibits A, B, C, and D.

Discussion

The anti-SLAPP statute is “a mechanism through which complaints that arise from the exercise of free speech rights can be evaluated at an early stage of the litigation process and resolved expeditiously.” ((Simmons v. Allstate Ins. Co. (2001) 92 Cal.App.4th 1068, 1073 [internal quotations omitted].) Courts use a two-step process for determining whether an action is a strategic lawsuit against public participation, or a SLAPP. First, the court determines whether the defendant has established that the challenged claim arises from protected speech. ((Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) If such a showing has been made, the court “determines whether the plaintiff has demonstrated a probability of prevailing on the claim.” (Ibid.)

The Supplemental Complaint

In April 2012, Scott was a manager of ISCM. (SC, ¶ 6.) From and after February 13, 2014, the other managers were Alex Knowles, Peter Lamy, and Graham Burford. (SC, ¶ 7.) Scott, on behalf of ISCM, engaged the Firm Defendants to be legal counsel for ISCM. (SC, ¶ 6.)

On May 20, 2014, Mr. Knowles, on behalf of ISCM, filed a derivative action against Scott for embezzlement (the “Long Beach Action”). (SC, ¶ 8.) Scott brought counterclaims against ISCM and the other three managers. (SC, ¶ 8.) The Firm Defendants acted as ISCM’s counsel until July 3, 2014, when they resigned. (SC, ¶ 9.)

After a bench trial, judgment in the Long Beach Action was entered in favor of

Mr. Knowles and against Scott on the embezzlement claims, and against Scott and in favor of ISCM and the other three managers on Scott’s counterclaims. (SC, ¶ 11.)

This lawsuit against the Firm Defendants was filed on February 13, 2015 (the “Malpractice Action”). (SC, ¶ 10.) On April 27, 2017, Scott filed a Cross-Complaint against ISCM and the other three managers (“Scott’s Cross-Complaint”). (SC, ¶ 25.) Messrs. Lamy and Burford filed a cross-complaint in this action against Scott on May 3, 2017 (the “Lamy and Burford’s Cross-Complaint”). (SC, ¶ 19.)

ISCM alleges that the Firm Defendants breached their duty of loyalty and their fiduciary duty to ISCM, their former client, through acts and omissions that were materially adverse to the interests of ISCM, and in particular, by the following conduct:

  1. With regard to the Long Beach Action, beginning sometime between February 13, 2015 and February 2017, the Firm Defendants “secretly acted as Scott’s attorneys[,] secretly represented Scott, secretly provided advice and strategy to Scott, secretly used and disclosed confidential knowledge of ISCM’s affairs and ISCM’s confidential information to benefit Scott, and secretly prepared, and participated in the preparation of, pleadings filed by Scott.” (SC, ¶ 13.)

  2. With regard to Lamy and Burford’s Cross-Complaint, beginning in March 2017 and continuing through April 2019, the Firm Defendants “secretly acted as Scott’s attorneys, secretly represented Scott, secretly provided advice and strategy to Scott, secretly used and disclosed confidential knowledge of ISCM’s affairs and ISCM’s confidential information to benefit Scott, and secretly prepared, and participated in the preparation of, pleadings filed by Scott.” (SC, ¶ 19.)

  3. With regard to Scott’s Cross-Complaint, beginning in June 2017, the Firm Defendants “secretly acted as Scott’s attorneys, secretly represented Scott, secretly provided advice and strategy to Scott, secretly used and disclosed confidential knowledge of ISCM’s affairs and ISCM’s confidential information to benefit Scott, and secretly prepared, and participated in the preparation of, pleadings filed by Scott.” (SC, ¶ 25.)

  4. With regard to the 4AC (and going back to the May 2015 First Amended Complaint), beginning in March 2016 and continuing through April 2019, the Firm Defendants “secretly acted as Scott’s attorneys, secretly represented Scott, secretly provided advice and strategy to Scott, secretly used and disclosed confidential knowledge of ISCM’s affairs and ISCM’s confidential information to benefit Scott, and secretly prepared, and participated in the preparation of, pleadings filed by Scott.” (SC, ¶ 31.)

  1. Prong One – Arising from Protected Conduct

“[T]he only thing the defendant needs to establish to invoke the protection of the SLAPP statute is that the challenged lawsuit arose from an act on the part of the defendant in furtherance of her right of petition or free speech.” ((Fox Searchlight Pictures, Inc. v. Paladino (2001) 89 Cal.App.4th 294, 307.)

An act in furtherance of a person’s right of petition or free speech includes the following:

(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.

((Code Civ. Proc., § 425.16, subd. (e).)

In determining whether a cause of action arises from protected conduct, the court focuses on “the allegedly wrongful and injury-producing conduct that provides the foundation for the claims.” ((Castleman v. Sagaser (2013) 216 Cal.App.4th 481, 490-491.) “[T]he critical consideration is whether the cause of action is based on the defendant’s protected free speech or petitioning activity.” ((Navellier v. Sletten (2002) 29 Cal.4th 82, 89.) In making this determination, the Court considers “the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.” (Ibid.) “The anti-SLAPP statute should be broadly construed and a plaintiff cannot avoid operation of the anti-SLAPP statute by attempting, through artifices of pleading, to characterize an action as a garden variety tort claim when in fact the liability claim is predicated on protected speech or conduct.” ((Ramona Unified School Dist. v. Tsiknas (2005) 135 Cal.App.4th 510, 519 [internal citations omitted].)

A statement or writing is “in connection with” litigation if it “relates to the substantive issues in the litigation and is directed to persons having some interest in the litigation.” ((Neville v. Chudacoff (2008) 160 Cal.App.4th 1255, 1266); (see also Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1056 [anti-SLAPP statute protects “communicative conduct such as the filing, funding, and prosecution of a civil action”].) It need not be shown that the litigated matter is of public interest. ((Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1123.) Communications preparatory to or in anticipation of litigation are equally entitled to the benefits of section 425.16. ((Id. at p. 1115.) To be protected, the prelitigation statements must be “made in connection with a proposed litigation that is contemplated in good faith and under serious consideration.” ((A.F. Brown Electrical Contractor, Inc. v. Rhino Electric Supply, Inc. (2006) 137 Cal.App.4th 1118, 1128 [internal quotations omitted].) Section 425.16 is construed broadly and protects communications that have “some relation” to judicial proceedings. ((Contemporary Services Corp. v. Staff Pro Inc. (2007) 152 Cal.App.4th 1043, 1055.)

The Firm Defendants contend that the claims in the Supplemental Complaint arise from protected activity, and that the alleged acts constitute statements made (1) before a judicial proceeding, (2) in connection with an issue under consideration by a judicial body, or (3) in furtherance of the exercise of the constitutional right of petition.

As an initial matter, the Court notes that in order for “conduct in furtherance of the exercise of the constitutional right of petition” to be protected under the statute, the conduct must be “in connection with a public issue or an issue of public interest.” ((Code Civ. Proc., § 425.16, subd. (e)(4).) Here, there is no argument that the issues involved in any of the underlying actions are public or of public interest.

Distilled to its essence, ISCM’s claims against the Firm Defendants are based on the fact that the Firm Defendants ostensibly took Scott’s side in the embezzlement dispute and thereafter, helping him by sharing confidential ISCM information with his attorneys and drafting[1] pleadings on Scott’s behalf. The Firm Defendants argue that pursuant to Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP, the act of drafting pleadings and providing legal advice constitutes “statements” that are protected under section 425.16, subdivision (e)(1) and (2).

In Peregrine Funding, the plaintiffs sued a law firm, Sheppard Mullin, for legal malpractice and aiding and abetting a breach of fiduciary duty. ((Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP (2005) 133 Cal.App.4th 658, 668.) Sheppard Mullin had represented a corporation and its officers who had bilked investors to the tune of $300 million in a Ponzi scheme. ((Id. at pp. 666-667.) After the Ponzi scheme collapsed, the corporation declared bankruptcy, and the bankruptcy trustee and a group of defrauded investors sued Sheppard Mullin for giving securities advice that helped the corporation evade scrutiny from regulators and for defending one of the officers in an SEC action to the detriment of the corporation (and by extension, its investors). ((Id. at pp. 667-668.) In finding that prong one of the anti-SLAPP analysis had been satisfied, the Court of Appeal for the First District found that a “significant” portion of the plaintiffs’ claims arose from protected activity. ((Id. at p. 675.) For example, the plaintiffs alleged that they were injured by “specific communications Sheppard made in the SEC action opposing temporary restraining orders and opposing the appointment of a receiver.” ((Id. at p. 673.) The Court of Appeal also highlighted the allegations that Sheppard stopped a deposition of a key officer and threatened to put the corporation into bankruptcy if the SEC continued to seek his testimony, orchestrated the bankruptcies of certain entity-plaintiffs, and withheld documents in discovery that would have been harmful to the key officer. (Id. at pp. 671-672.) In reaching its conclusion, the Court of Appeal urged a focus on “the specific acts of wrongdoing” alleged by the plaintiff rather than the principal thrust or gravamen of the plaintiff’s claims in making a prong one determination (Id. at p. 671; see also id. p. 674 [“Moreover, our interpretation finds support in the language of section 425.16 itself, which provides that the statute applies to a cause of action ‘arising from any act’ of the defendant in furtherance of the right to petition or free speech.” (emphasis in original)].)

Peregrine Funding has since been called into question, most notably in PrediWave Corp. v. Simpson Thacher & Bartlett LLP.[2] In PrediWave, the Court of Appeal for the Sixth District distinguished Peregrine Funding by holding that where a client’s cause of action against his or her attorney is based upon the attorney’s acts on behalf of the client, the anti-SLAPP statute offers no protection. (PrediWave Corp. v. Simpson Thacher & Bartlett LLP (2009) 179 Cal.App.4th 1204, 1227.) The Court of Appeal reasoned that “clients do not bring [lawsuits against their own attorneys] to deter the speech and petitioning activities done by their own attorneys on their behalf but rather to complain about the quality of their former attorneys’ performance.” (Ibid.) The Court of Appeal recognized that the statutory language of section 425.16 had been “interpreted broadly to protect qualifying statements made or conduct undertaken by a person on another person’s behalf against a cause of action by a third person,” nevertheless, it concluded that it was “unreasonable to interpret this language to include a client’s causes of action against the client’s own attorney arising from litigation-related activities undertaken for that client.” (Id. at p. 1228.)

While the Firm Defendants acknowledge PrediWave as authority, the Firm Defendants seize on a point made in PrediWave to argue that both Peregrine and PrediWave support their position. In PrediWave, the Court of Appeal expressed its opinion that a distinction existed among (1) the garden-variety legal malpractice claims at issue there, (2) “clients’ causes of action against attorneys based upon statements or conduct solely on behalf of different clients,” and (3) “nonclients' causes of action against attorneys.” (Id. at p. 1227.) From this statement, the Firm Defendants derive the conclusion that actions in the second category (clients’ causes of action against attorneys based upon statements or conduct solely on behalf of different clients) are actions subject to the anti-SLAPP statute. The Firm Defendants argue that the Supplemental Complaint is such an action and is therefore subject to being stricken as a SLAPP.

The Court notes that there is no language in PrediWave explicitly stating that causes of action against attorneys based on conduct undertaken on behalf of different clients are subject to the anti-SLAPP statute. In any event, the Court finds that more recent cases compel the opposite conclusion.

First, in Loanvest, the Court of Appeal for the First District reversed a trial court’s order granting an anti-SLAPP motion brought by attorneys sued for malpractice. (Loanvest I, LLC v. Utrecht (2015) 235 Cal.App.4th 496, 499.) The plaintiff corporation had sued its former attorney based on the attorney’s conduct in successfully opposing a motion for preliminary injunction in a prior action involving the corporation and its adversarial members. (Id. at pp. 499-500.) The plaintiff corporation alleged that, in opposing the motion, the attorney was not representing the corporation’s interests but was instead secretly aiding his “true client,” one of the other members. (Id. at p. 500.) In distinguishing Peregrine Funding, the Court of Appeal noted that the causes of action in Peregrine included those by third parties who had invested in the Ponzi scheme but who were not clients of the defendant attorneys. (Id. at pp. 503-504.) The Court of Appeal then referenced the three categories set out in PrediWave and juxtaposed categories one and two against category three and concluded that “[w]here . . . a legal malpractice action is brought by an attorney’s former client, claiming that the attorney breached fiduciary obligations to the client as the result of a conflict of interest or other deficiency in the representation of the client, the action does not threaten to chill the exercise of protected rights and the first prong of the anti-SLAPP analysis is not satisfied.” (Id. at p. 504.) The significance of this holding is that, in contrast to the Firm Defendants’ characterization of PrediWave, the Court of Appeal in Loanvest explicitly found that the anti-SLAPP statute does not apply categorically to clients’ causes of action against attorneys based upon statements or conduct solely on behalf of different clients.

Next, in Sprengel v. Zbylut, the Court of Appeal for the Second District noted that “numerous cases have held that actions based on an attorney’s breach of professional and ethical duties owed to a client are generally not subject to section 425.16 even though protected litigation activity features prominently in the factual background.” (Sprengel v. Zbylut (2015) 241 Cal.App.4th 140, 151.) There, the plaintiff alleged that the defendant attorneys had violated the duty of loyalty owed to her when the attorneys, who had been retained to represent the company of which the plaintiff was part-owner in a lawsuit brought by the plaintiff against the other part-owner, primarily devoted their services to the other part-owner. (Id. at pp. 145-146.) The Court of Appeal stated, after recounting the facts of a number of similar cases, “[s]everal other cases have followed the reasoning set forth in [those cases], concluding that section 425.16 is generally inapplicable to claims seeking to impose liability based on an attorney’s violation of the conflict of interest rules set forth in the Rules of Professional Conduct or other attorney actions taken on behalf of a client.” (Id. at p. 154.) Notably, the Court of Appeal did not distinguish between those cases where the conflict of interest rules at issue involved concurrent representation and those that involved successive representation. Indeed, United States Fire Insurance Company v. Sheppard, Mullin, Richter & Hampton LLC is cited as an example of a successive representation case where section 425.16 was found to be inapplicable. (Ibid.)

United States Fire Insurance Company involved a lawsuit by an insurance company to enjoin its former law firm from representing certain third parties in a different action. (United States Fire Ins. Co. v. Sheppard, Mullin, Richter & Hampton LLC, supra, 171 Cal.App.4th at pp. 1620-1621.) The gravamen of the complaint was on the attorney-client relationship between the insurance company and the law firm and sought relief based on a claim of successive representation conflict of interest in violation of rule 3-310(E) of the then-current Rules of Professional Conduct. (Id. at p. 1628.) The Court of Appeal found that “the principal thrust of the misconduct averred in the underlying complaint” was the acceptance by the law firm of representation adverse to the plaintiff. (Ibid.) The Court of Appeal distinguished Peregrine Funding by noting that Peregrine Funding “did not involve a claim of liability based on a professional conflict of interest” but was instead about the specific conduct by the attorney defendants during the representation. (Id. at p. 1629.) A breach of a duty related to a conflict of interest is tied to the mere “act of entering into an attorney-client relationship,” and therefore, protected speech or petitioning activity performed in the course of the relationship necessarily becomes incidental. (Ibid.) The very recent anti-SLAPP case of Miller v Zurich American Ins. Co. (2019) 41 Cal. Pp. 5th 247, 256 (“Miller”) emphasized that “[if] the substance, or gravamen, of the complaint does not challenge the defendant’s acts in furtherance of the right of free speech or petition, the court does not consider whether the complaint alleges a cognizable wrong or whether the plaintiff can prove damages.” The Miller court noted that “‘[n]ot all attorney conduct in connection with litigation, or in the course of representing clients, is protected by section 425.16’ [Citation].” (Id. at 257.) In the Miller case, the court did not afford anti-SLAPP protection where there were “communications between the parties’ respective counsel” in a Cumis context and “the communications concern[ed] procedural matters regarding ‘discovery,’ [and] ‘correspondence with Zurich’s claims handlers. . . .’” (Id. at 258.)

Accordingly, the Court finds that the allegations on which the Supplemental Complaint is based do not arise from protected activity. While it is true that ISCM alleges conduct that could fairly be characterized as written or oral statements made in connection with judicial proceedings, the gravamen or principal thrust of the claims have to do with the breach of the duty of loyalty owed by the Firm Defendants to ISCM. In other words, ISCM’s claims that it was injured by virtue of the Firm Defendants’ disloyalty. That one of the ways that the Firm Defendants was disloyal was the drafting of pleadings on behalf of an adverse party does not confer anti-SLAPP protection on the claims.

  1. Prong Two – Probability of Prevailing

Because the Court finds that the Firm Defendants have failed to establish that the challenged claims arise from protected activity, the burden does not shift to Plaintiff to establish that there is a probability of prevailing on the claims.

The Fourth Amended Complaint – 12th Cause of Action (Aiding and Abetting)

On May 27, 2014, Scott was removed from his positions as a manager and CEO of ISCM. (4AC, ¶ 111.) By letter dated May 27, 2014, ISCM terminated the Firm Defendants as counsel for ISCM. (4AC, ¶ 112.) The Firm Defendants refused to withdraw as counsel and refused to return ISCM’s client file, despite multiple and repeated requests by the other three members of ISCM, on the grounds that Scott refused to consent. (4AC, ¶¶ 112-113.) Although Duane Morris knew that Scott was no longer a manger and his consent was not required for Duane Morris to return the ISCM client file, Duane Morris had “secretly agreed with Scott and his other personal attorneys, that Scott should continue to resist the return of the ISCM client file to aid and abet Duane Morris in their efforts to cover up evidence of their breaches of fiduciary duties to ISCM.” (4AC, ¶ 113.)

The Firm Defendants finally resigned on July 3, 2014. (4AC, ¶ 114.) Thereafter, the Firm Defendants secretly acted as Scott’s personal attorney in the Long Beach Action by secretly assisting in the drafting of Scott’s cross-complaint against ISCM and the preparation of other pleadings filed by Scott. (4AC, ¶ 114.) Scott accepted this assistance knowing that it would aid and abet Duane Morris’s efforts to cover up its wrongdoing. (4AC, ¶ 114.)

Beginning March 2016 through April 2019, Duane Morris secretly acted as Scott’s personal attorneys in this Malpractice Action by participating in or preparing all or nearly all of the pleadings filed by Scott. (4AC, ¶ 116.) Scott accepted this assistance knowing that it would aid and abet Duane Morris’s efforts to cover up its wrongdoing. (4AC, ¶ 116.) ISCM alleges that as a result of Scott’s conduct (in aiding and abetting the Firm Defendants’ wrongdoing), ISCM’s legal fees in this Malpractice Action increased. (4AC, ¶ 117.)

  1. Prong One – Arising from Protected Conduct

First, the Court notes that what is alleged in the 4AC as to the aiding and abetting claim is that Scott “accepted [the Firm Defendants’] assistance” and “provided substantial assistance and encouragement to [the Firm Defendants’ breach of duty].” (4AC, ¶¶ 114, 116-117.) The conduct underlying the aiding and abetting claim includes the allegation that Scott accepted the Firm Defendants’ assistance in drafting pleadings in this Malpractice Action. In Bergstein v. Stroock & Stroock & Lavan LLP (2015) 236 Cal.App.4th 793, the “specific acts of wrongdoing” alleged in support of, among other things, an aiding and abetting cause of action included enlisting defendants, using confidential, privileged information, carrying out a litigation attack, working with defendants to coordinate and organize bankruptcy proceedings, using assistance in devising legal strategy, exchanging drafts of pleadings, and working together to draft multiple lawsuits. (Id. at p. 811.) Although the Court of Appeal did not make a distinction between statements and noncommunicative conduct, it concluded that prong one was established because the activity giving rise to the defendants’ asserted liability was the “defendants’ conduct in receiving and using confidential information to prepare for and prosecute litigation against plaintiffs.” (Id. at p. 813.)

Although Plaintiff attempts to distinguish Bergstein, the Court finds Plaintiffs’ argument unpersuasive. Plaintiff contends that Bergstein is inapplicable because the defendants were opposing counsel and not opposing parties in the prior litigation. Here, Plaintiff argues that Scott is an opposing party, not an opposing attorney. This appears to be a merely superficial distinction, as it does not change the analysis under prong one. Regardless of who is doing the aiding and abetting, if the specific conduct alleged falls within the confines of section 425.16, then prong one is satisfied.

Plaintiff also argues that the aiding and abetting claim is premised on derivative liability, and should thus be treated like a claim for equitable indemnity by an attorney against another attorney. (See Chodos v. Cole (2012) 210 Cal.App.4th 692, 703-704 [finding that anti-SLAPP protection does not apply to “a claim by an attorney against other attorneys for equitable indemnity in connection with a claim of attorney malpractice” because it is “not distinguishable from a client’s claim against an attorney for malpractice”].) “Liability based on an aiding and abetting or conspiracy theory is . . . derivative, i.e., liability is imposed on one person for the direct acts of another.” (Richard B. LeVine, Inc. v. Higashi (2005) 131 Cal.App.4th 566, 579 [internal quotations omitted].) “[O]ne [] aids and abets the commission of an intentional tort if the person (a) knows the other’s conduct constitutes a breach of duty and gives substantial assistance or encouragement to the other to so act or (b) gives substantial assistance to the other in accomplishing a tortious result and the person’s own conduct, separately considered, constitutes a breach of duty to the third person.” (Id. at p. 574.) “The unifying principle under . . . [the theory of] aiding and abetting is that the [aider and abettor’s] liability depends upon the actual commission of a tort.” (Ibid.) Here, Scott’s asserted liability is premised on the former theory – that he knew that the Firm Defendants’ conduct constituted a breach of their fiduciary duties to ISCM and gave the Firm Defendants substantial assistance to so act. In particular, it is alleged that Scott happily accepted the assistance from the Firm Defendants in the Long Beach Action and in this Malpractice Action. Thus, the Court finds that, pursuant to Chodos, liability for Scott’s substantial assistance to the Firm Defendants in furtherance of their breach of fiduciary duty is indistinguishable from liability for the Firm Defendants’ own breach of fiduciary duty. Because the Court finds that the claims in the Supplemental Complaint against the Firm Defendants do not arise from protected activity, the Court also finds that the aiding and abetting claims against Scott do not arise from protected activity.

  1. Prong Two – Probability of Prevailing

Because the Court finds that Scott has failed to establish that the challenged claim arises from protected activity, the burden does not shift to Plaintiff to establish that there is a probability of prevailing on the claim.

Conclusion

Based on the foregoing, the Firm Defendants and Scott’s joint special motion to strike is denied.

Plaintiff is ordered to give notice of this ruling.

DATED: December 20, 2019 ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court


[1] Though not elaborated upon in the Supplemental Complaint, based on the argument and the sparse evidence presented by the parties, it can be inferred that the allegation is that the Firm Defendants enlisted their own counsel (Bird Marella) to basically “ghostwrite” legal filings even though Scott was represented by his own counsel.

[2] See also United States Fire Ins. Co. v. Sheppard, Mullin, Richter & Hampton LLP (2009) 171 Cal.App.4th 1617, 1628-1629 (like Peregrine Funding, emanating from the Court of Appeal for the First District, but a different division, and criticizing aspects of the Peregrine Funding opinion).