On 01/22/2020 FRANKLIN R FRALEY, JR filed a Contract - Other Contract lawsuit against FORD SERVISS. This case was filed in Los Angeles County Superior Courts, Stanley Mosk Courthouse located in Los Angeles, California. The Judges overseeing this case are TERESA A. BEAUDET, LAURA A. SEIGLE and EDWARD B. MORETON. The case status is Disposed - Judgment Entered.
Disposed - Judgment Entered
Los Angeles County Superior Courts
Stanley Mosk Courthouse
Los Angeles, California
TERESA A. BEAUDET
LAURA A. SEIGLE
EDWARD B. MORETON
FRALEY FRANKLIN R. JR. DBA FRALEY & ASSOCIATES
BEITCHMAN DAVID P.
FORD WILLIAM H. III
BEITCHMAN | ZEKIAN P.C
COLLINS MICHAEL D.
SERVISS CLAUDIA J.
FORD & SERVISS LLP
THE DAVID FIRM
COX CAROLY LYNN
WAXLER ANDREW J.
1/19/2021: Appeal - Notice of Appeal/Cross Appeal Filed
1/28/2021: Appeal - Notice of Filing of Notice of Appeal - APPEAL - NOTICE OF FILING OF NOTICE OF APPEAL "U"
4/5/2021: Appeal Document - APPEAL DOCUMENT NOA: 01/19/21-U B309029
12/2/2020: Notice - NOTICE OF ENTRY OF JUDGMENT OR ORDER
11/10/2020: Notice of Filing of Notice of Appeal (Unlimited Civil)
11/16/2020: Objection - OBJECTION PLAINTIFF'S OBJECTIONS TO DECLARATIONS OF ANDREW J. WAXLER AND REBEKAH E. YANNI
10/9/2020: Declaration - DECLARATION OF ANDREW J. WAXLER IN SUPPORT OF THE FORD DEFENDANT'S MOTION FOR ATTORNEY'S FEES PURSUANT TO CODE OF CIVIL PROCEDURE
9/11/2020: Certificate of Mailing for - CERTIFICATE OF MAILING FOR (RULING ON SUBMITTED MATTER) OF 09/11/2020
8/21/2020: Case Management Statement
8/24/2020: Declaration - DECLARATION DECLARATION OF HENRY S. DAVID IN OPPOSITION TO SPECIAL MOTION TO STRIKE
8/24/2020: Proof of Service (not Summons and Complaint)
8/24/2020: Opposition - OPPOSITION PLAINTIFF'S MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO DEFENDANT BEITCHMAN I ZEKIAN, P.C.'S "JOINDER" IN DEFENDANTS FORD SERVISS, ET AL.'S SPECIAL MOTION TO STRIKE
8/28/2020: Objection - OBJECTION DEFENDANTS FORD SERVISS, LLP, COLLINS/FORD, LLP, WILLIAM H. FORD III, CLAUDIA J. SERVISS AND MICHAEL D. COLLINS OBJECTIONS TO THE DECLARATIONS OF FRANKLIN R. FRALEY, JR. AND HEN
7/21/2020: Ex Parte Application - EX PARTE APPLICATION TO CONTINUE HEARING ON DEFENDANTS' ANTI-SLAPP SPECIAL MOTION TO STRIKE
7/21/2020: Opposition - OPPOSITION TO PLAINTIFF'S EX PARTE APPLICATION TO CONTINUE HEARING ON DEFENDANT FORD SERVISS, ET AL'S SPECIAL MOTION TO STRIKE
4/3/2020: Proof of Personal Service
3/12/2020: Amendment to Complaint (Fictitious/Incorrect Name)
1/22/2020: Summons - SUMMONS ON COMPLAINT
DocketNOTICE TO APPELLANT OF PROCEEDINGS NOT REPORTED OR RECORDED; Filed by ClerkRead MoreRead Less
DocketAppeal Document (NOA: 01/19/21-U B309029); Filed by ClerkRead MoreRead Less
DocketAppeal - Notice Court Reporter to Prepare Appeal Transcript (;B309029, NA 11/09/20;); Filed by ClerkRead MoreRead Less
DocketAppeal - Reporter Appeal Transcripts Deposit Paid (Paid by Appellant on "U" Appeal $325.00); Filed by ClerkRead MoreRead Less
DocketAppeal - Reporter Appeal Transcript Process Fee Paid (Paid by Appellant for "U" Appeal); Filed by ClerkRead MoreRead Less
DocketAppeal - Notice of Filing of Notice of Appeal ("U"); Filed by ClerkRead MoreRead Less
Docketat 08:30 AM in Department 48, Laura A. Seigle, Presiding; Case Management Conference - Not Held - Vacated by CourtRead MoreRead Less
DocketNotice (DEPOSIT BY FRANKLIN R. FRALEY, JR., IN LIEU OF BOND/UNDERTAKING FOR STAY ON APPEAL); Filed by Franklin R. Fraley, Jr. (Appellant)Read MoreRead Less
DocketAppeal - Ntc Designating Record of Appeal APP-003/010/103 (For "U" Appeal); Filed by Franklin R. Fraley, Jr. (Plaintiff)Read MoreRead Less
DocketAppeal - Notice of Appeal/Cross Appeal Filed ("U"); Filed by Franklin R. Fraley, Jr. (Appellant)Read MoreRead Less
DocketProof of Personal Service; Filed by Franklin R. Fraley, Jr. (Plaintiff)Read MoreRead Less
DocketProof of Personal Service; Filed by Franklin R. Fraley, Jr. (Plaintiff)Read MoreRead Less
DocketAmendment to Complaint (Fictitious/Incorrect Name); Filed by Franklin R. Fraley, Jr. (Plaintiff)Read MoreRead Less
DocketNotice of Related Case (NOTICE BY FRANKLIN R. FRALEY, JR., d/b/a FRALEY & ASSOCIATES, OF RELATED CASES); Filed by Franklin R. Fraley, Jr. (Plaintiff)Read MoreRead Less
DocketNotice of Posting of Jury Fees; Filed by Franklin R. Fraley, Jr. (Plaintiff)Read MoreRead Less
DocketNotice of Case Management Conference; Filed by ClerkRead MoreRead Less
DocketSummons (on Complaint); Filed by Franklin R. Fraley, Jr. (Plaintiff)Read MoreRead Less
DocketComplaint; Filed by Franklin R. Fraley, Jr. (Plaintiff)Read MoreRead Less
DocketCivil Case Cover Sheet; Filed by Franklin R. Fraley, Jr. (Plaintiff)Read MoreRead Less
DocketNotice of Case Assignment - Unlimited Civil Case; Filed by ClerkRead MoreRead Less
Case Number: 20STCV02956 Hearing Date: December 01, 2020 Dept: 48
[TENTATIVE] ORDER RE: DEFENDANTS’ MOTION FOR ATTORNEY FEES
On January 22, 2020, Plaintiff Franklin R. Fraley, Jr. filed this action against Defendants Ford Serviss, Collins Ford, LLP, William H. Ford III, Claudia J, Serviss, and Michael Collins (collectively, “Defendants”), as well as Beitchman K. Zekian, P.C, and David P. Beitchman (collectively, “Beitchman Defendants”). On September 11, 2020, the Court granted Defendants’ special motion to strike under Code of Civil Procedure section 425.16 (“anti-SLAPP motion”), which the Beitchman Defendants had joined. Defendants and the Beitchman Defendants each filed a memorandum of costs on September 25, 2020. On October 9, 2020, Defendants filed this motion for attorney fees.
Any motion to tax costs must be filed and served within 15 days of service of the memorandum of costs. (California Rules of Court, rule 3.1700(b)(1).) The September 25, 2020 memorandums of costs were electronically served on the same date, so any motion to tax costs was due by October 10, 2018. Plaintiff did not file a motion to tax costs.
Defendants are therefore entitled to $3,503.60 in costs pursuant to their September 25, 2020 memorandum of costs. The Beitchman Defendants are entitled to $922.31 in costs pursuant to their September 25, 2020 memorandum of costs.
Plaintiff’s and Defendants’ evidentiary objections are overruled.
As the prevailing party on an anti-SLAPP motion, Defendants are entitled to an award of reasonable attorney fees. (Code Civ. Proc., § 425.16, subd. (c).) California courts apply the “lodestar” approach to determine what fees are reasonable. (See, e.g., Holguin v. DISH Network LLC (2014) 229 Cal.App.4th 1310, 1332.) This inquiry “begins with the ‘lodestar,’ i.e., the number of hours reasonably expended multiplied by the reasonable hourly rate.” (PLCM Group v. Drexler (2000) 22 Cal.4th 1084, 1095.) From there, the “lodestar figure may then be adjusted, based on consideration of factors specific to the case, in order to fix the fee at the fair market value for the legal services provided.” (Ibid.) Relevant factors include “(1) the novelty and difficulty of the questions involved, (2) the skill displayed in presenting them, (3) the extent to which the nature of the litigation precluded other employment by the attorneys, [and] (4) the contingent nature of the fee award.” (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1132.) The party seeking fees has the burden of documenting the appropriate hours expended and hourly rates. (City of Colton v. Singletary (2012) 206 Cal.App.4th 751, 784.)
Defendants’ counsel states that their reasonable hourly rates are $650 for Andrew J. Waxler (“Waxler”) and $550 for Rebekah E. Yanni (“Yanni”). (Waxler Decl. ¶ 6; Yanni Decl. ¶ 3.) Plaintiff contends that Defendants are concealing counsel’s actual rates and provide weak evidence of their market rates. (Opposition at pp. 8-9.) However, “‘[t]he reasonable market value of the attorney’s services is the measure of a reasonable hourly rate. [Citations.] This standard applies regardless of whether the attorneys claiming fees charge nothing for their services, charge at below-market or discounted rates, represent the client on a straight contingent fee basis, or are in-house counsel. [Citations.]’” (Chacon v. Litke (2010) 181 Cal.App.4th 1234, 1260.) Defendants’ counsel’s declarations, which explain their education and experience (Waxler Decl. ¶¶ 3-5; Yanni Decl. ¶¶ 2-3), are evidence supporting a conclusion that their rates are reasonable.
Plaintiff also contends that Defendants’ reference to the Laffey Matrix is not appropriate for determining fees in this action, as it is intended for use in complex litigation with the federal government in the Washington-Baltimore area. (Opposition at pp. 9-11.) An adjusted Laffey Matrix can be used to support a trial court’s determination of reasonable attorney fees in California cases. (See Syers Properties III, Inc. v. Rankin (2014) 226 Cal.App.4th 691, 695-696, 702 [legal malpractice and breach of fiduciary duty action].) Here, Defendants refer to the Laffey Matrix’s hourly rates of $914 for attorneys with Waxler’s 20 or more years of experience and $759 for attorneys with Yanni’s 11-19 years of experience, but they then request fees at lower hourly rates. (Motion at pp. 4-5; Waxler Decl. ¶ 6; Yanni Decl. ¶ 3.) The Laffey Matrix is not the entire basis for the requested rates, and Defendants’ references to it are not inappropriate.
Plaintiff also contends that the Real Rate Report’s rates of $228 and $140 for “Insurance Defense-Litigation Only” attorneys should apply because Waxler and Yanni list “Professional Liability/Errors and Omissions” as their first/primary practice areas on their firm’s website. (Motion at pp. 11-12.) Plaintiff provides no further basis for this proposition. Further, this anti-SLAPP motion was more complicated than a typical insurance defense case where attorneys bill at those very low rates.
Plaintiff argues that Yanni performed work that could be done by a junior associate, not a thirteenth-year attorney, and “the Court should look at the market rate for the work, not for the attorney.” (Opposition at p. 12.) Plaintiff notes that Yanni did “junior associate work of factual investigation, legal research, and drafting.” (Ibid.) Plaintiff provides no further basis for why these tasks require a lower hourly rate. Also, the legal and factual issues here were more complicated that many tasks undertaken by junior associates, such as discovery motions and demurrers.
Finally, based on the Court’s experience evaluating requests for discovery sanctions and attorney fee motions, the Court finds the stated rates are reasonable based on counsel’s qualifications, skills, and experience and the complicated issues presented in the motion.
Defendants’ counsel state that they spent 155.73 hours in connection with the anti-SLAPP motion, including review of the complaint, investigation of the factual background of the case and the cases from which this one arose, research on various issues, review of Plaintiff’s opposition and more than 200 pages of exhibits, and anticipated time for the reply and hearing. (Motion at pp. 6-7.) At counsel’s respective billing rates, Defendants request $89,071.50 in fees. (Id. at p. 7.)
Plaintiff argues that defense counsel’s hours are grossly excessive. (Opposition at p. 13.) Specifically, (1) Yanni spent more than 56 hours drafting the anti-SLAPP motion and exhibits; (2) Yanni spent 14.03 hours drafting a three-page declaration in support of the motion; (3) counsel spent nearly 15 hours drafting an opposition to Plaintiff’s ex parte application to continue the hearing on the anti-SLAPP motion; and (4) counsel spent more than 25 hours drafting the reply. (Ibid.)
First, Plaintiff’s complaint is 57 pages long including exhibits and involves two prior cases, making this a complicated motion. Considering the complexity of the issues in the anti-SLAPP motion, the Court finds that the time is not excessive.
Second, the declaration of Michael D. Collins in support of Defendants’ anti-SLAPP action is three pages long and describes the underlying actions that gave rise to Plaintiff’s causes of action in this case. It also attaches two exhibits -- the complaint in this action and a spreadsheet create by Plaintiff. Fourteen hours in drafting three pages is excessive, especially because counsel did not create the two exhibits as part of drafting the declaration. A reasonable amount is three hours, for a reduction of $6,050.00 (11 hours at $550).
Third, regarding the ex parte application: On June 30, 2020, Plaintiff filed an ex parte application to continue the anti-SLAPP hearing on June 30, 2020. That application contained 57 pages, including the application, declaration, and exhibits. Plaintiff withdrew the application on the same day. Plaintiff filed another ex parte application on July 21, 2020, this time containing 54 pages. The two ex parte applications and attached declarations are nearly identical.
Defendants’ records reflect Waxler and Yanni spent time preparing oppositions to both applications. Because the two ex part applications were almost identical, the work spent opposing the first application was applicable to the second ex parte application and did not need to be repeated. The issue presented – whether to continue the anti-SLAPP hearing date – was not complicated. Defendants’ opposition to the July 21, 2020 ex parte application is 7 pages long, including the caption page and signature page, includes a 10-paragraph declaration from counsel setting forth a timeline of this action, and attaches the complaint, anti-SLAPP motion, and notice of hearing as exhibits. Accordingly, the Court finds that the hours billed in connection with the opposition to the ex parte application are excessive, and a reasonable reduction is $4,200.00 (7 hours at $600 average rate).
Fourth, Defendants’ reply addressed Plaintiff’s competing case law and his 44 pages of declarations and 220 pages of exhibits. The issues were complicated. The time spent was reasonable.
Plaintiff also contends that time reflected in Defendants’ redacted records should be excluded because the Court cannot ascertain whether these entries relate to the anti-SLAPP motion. (Opposition at pp. 14-15.) Defense counsel redacted some descriptions in the time records “for confidentiality or privilege concerns.” (Waxler Decl. ¶ 8, fn. 2.) The partially redacted entries still contain enough context to show that they reasonably relate to the anti-SLAPP motion. However, the Court reduces the attorney fees by $1,325.00 (0.6 hours at $650 and 1.7 hours at $550) for a few redacted entries where it is not clear they represent time related to the anti-SLAPP motion. Likewise, the Court excludes time related to preparing the retainer agreement, for a reduction of $195.00. (See Jackson v. Yarbray (2009) 179 Cal.App.4th 75, 92 [“[O]nly those attorney fees and costs related to the special motion to strike, not the entire action, may be recovered under section 425.16, subdivision (c).”].)
Plaintiff also contends that Defendants improperly block-billed and over-billed for phone calls and emails. (Opposition at pp. 15-16.) The Court finds that the challenged hours are reasonable.
The Court declines to award fees for Walxer’s anticipated 3 hours preparing for and attending the hearing on this motion and reduces the attorney fees by $1,950.00 as that amount is excessive and reduces the amount by $650.00 (1 hours at $650).
Defendants are therefore entitled to $76,651.50 in attorney fees ($89,071.50 minus $12,420.00).
Accordingly, the motion for attorney fees is GRANTED. The Court awards Defendants $76,651.50 in attorney fees. In addition, Defendants are entitled to $3,503.60 in costs, and the Beitchman Defendants are entitled to $922.31 in costs.
Moving party to give notice.
Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. Parties intending to appear are STRONGLY encouraged to appear remotely.
Case Number: 20STCV02956 Hearing Date: September 04, 2020 Dept: 48
[TENTATIVE] ORDER RE: DEFENDANTS’ SPECIAL MOTION TO STRIKE COMPLAINT
On January 22, 2020, Plaintiff Franklin R. Fraley, Jr., doing business as Fraley & Associates (“Plaintiff”) filed this action against Defendants Ford Serviss, Collins Ford, LLP, William H. Ford III, Claudia J, Serviss, Michael Collins, Beitchman K Zekian, P.C, and David P. Beitchman (collectively, “Defendants”). Plaintiff alleges Defendants (1) converted settlement proceeds; (2) intentionally interfered with Plaintiff’s contract with its former client, including Plaintiff’s attorney lien; (3) intentionally interfered with Plaintiff’s business relationship with its former client and the lien; and (4) aided and abetted the former client’s fraudulent transfers of settlement proceeds.
On April 29, 2020, Defendants Ford Serviss, Collins Ford, LLP, William H. Ford III, Claudia J, Serviss, and Michael Collins (collectively, “Ford Defendants”) filed a special motion to strike under Code of Civil Procedure section 425.16 (“anti-SLAPP motion”). On April 30, 2020 and July 22, 2020, Defendants Beitchman K. Zekian, P.C, and David P. Beitchman (collectively, “Beitchman Defendants”) joined the motion.
REQUEST FOR JUDICIAL NOTICE
The Ford Defendants request that the Court take judicial notice of three documents from Fraley v. Travelers Property and Casualty Company of America et al., Case No. 18-00722-AB-JPR, United States District Court, Central District of California. The Court denies the request, as the documents are not relevant to deciding this motion.
Plaintiff’s objections to the Declaration of Michael D. Collins are overruled. The Ford Defendants’ objections to the Declaration of Franklin R. Fraley, Jr. are overruled. The Ford Defendants’ objections to the Declaration of Henry S. David are overruled.
Plaintiff alleges DK Art Publishing, Inc. and Drita Kessler (collectively, “DK/K”) retained Plaintiff to represent them in various litigation from January 2007 through December 2013, including a case against City Art, Inc. and an insurance coverage case against Travelers Property Casualty Company of America and Fidelity and Guaranty Insurance Underwriters, Inc. (“Travelers Action”). (Complaint ¶¶ 2-5.) DK/K agreed to pay for Plaintiff’s services at hourly rates and granted Plaintiff a lien on the proceeds of all matters in which Plaintiff represented DK/K to secure the amount owed to Plaintiff. (Id. at ¶ 3.)
DK/K disputed the fees owed and fired Plaintiff. (Id. at ¶ 9.) DK/K then hired Defendants to represent them in the Travelers Action. (Id. at ¶ 10.) On or about October 29, 2013, Plaintiff served Defendants with notices of his lien. (Id. at ¶ 11.) In January 2015, DK/K, City Art, and Defendants entered into a written agreement to settle the case against City Art and the Travelers Action. Defendants “negotiated and closed” the settlement. (Id. at ¶ 13.) On about February 13, 2015, the insurance companies paid $6,460,000 to Defendants pursuant to the settlement agreement. (Id. at ¶ 13.) After February 13, 2015, Defendants distributed substantial portions of the settlement proceeds to DK/K and Defendants. (Id. at ¶ 13.) Even though Defendants knew about Plaintiff’s attorney lien, Defendants did not notify Plaintiff about the settlement and did not deliver any part of the settlement proceeds to Plaintiff. (Id. at ¶ 14.)
The settlement agreement states that Plaintiff filed and served an “attorney fee lien on October 29, 2013 against any recovery by the parties,” and that the lien “has not been declared valid nor the amount of said lien been determined.” (Agreement at p. 2.) The $6,460,000 in settlement proceeds were to be paid by depositing $1,300,000 into an escrow account to satisfy Plaintiff’s lien and paying $5,160,000 to the Ford & Serviss. (Id. at p. 3.) In addition, DK Art was to cause to be paid an additional $500,000 into the escrow account to satisfy Plaintiff’s lien. DK Art agreed that it was responsible for resolving Plaintiff’s lien. (Ibid.)
On April 18, 2016, Plaintiff filed a demand for arbitration of its fee dispute with DK/K. Plaintiff and DK/K arbitrated their dispute about the amount of fees owed for the Travelers Action and two other actions, and the arbitrator entered a final award in favor of Plaintiff on January 23, 2018. (Complaint ¶¶ 17-18.) On July 9, 2018, the Court entered judgment confirming the award. (Id. at ¶¶ 19-20.) Plaintiff has collected only $797,917.62 of the $2,677,604.83 due as of the date this action was filed. (Id. at ¶¶ 22-23.)
“A cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States Constitution or California Constitution in connection with a public issue shall be subject to a special motion to strike unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.” (Code Civ. Proc., § 425.16, subd. (b)(1).) “A court’s consideration of an anti-SLAPP motion involves a two-step process. ‘First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. The moving defendant’s burden is to demonstrate that the act or acts of which the plaintiff complains were taken “in furtherance of the [defendant]’s right of petition or free speech under the United States or California Constitution in connection with a public issue,” as defined in the statute. [Citation.] If the court finds such a showing has been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim.’ [Citation.] In the second step, the plaintiff must only bring forward sufficient evidence to make out a viable prima facie case at trial, a burden that ‘is not particularly high.’ [Citation.]” (O&C Creditors Group, LLC v. Stephens & Stephens XII, LLC (2019) 42 Cal.App.5th 546, 565-566 (O&C Creditors Group).)
“The question whether a cause of action arises from specified conduct for purposes of the statute depends on ‘ “the principal thrust or gravamen of the plaintiff’s cause of action.” ’ [Citation.]” (Old Republic Constr. Program Group v. The Boccardo Law Firm, Inc., 230 Cal.App.4th 859, 867 (Old Republic).) A “cause of action arises from protected conduct if the wrongful, injurious act(s) alleged by the plaintiff constitute protected conduct.” (Id. at p. 868.) “[A] cause of action can only be said to arise from protected conduct if it alleges at least one wrongful act – conduct allegedly breaching a duty and thereby injuring the plaintiff – that falls within the act’s definition of protected conduct.” (Id. at p. 869.)
Defendants contend Plaintiff’s causes of action arise from protected activity because the principal thrust is that Defendants deprived Plaintiff of settlement proceeds by settling the Travelers Action and disbursing the settlement funds. (Motion at p. 12.) The negotiation and execution of a settlement agreement generally are protected activities within the scope of section 425.16. (See Seltzer v. Barnes (2010) 182 Cal.App.4th 953, 963-964 [collecting cases].)
Defendants rely extensively on O&C Creditors Group. In that case, the plaintiff claimed the defendant attorneys had settled an insurance coverage lawsuit in derogation of the plaintiff’s alleged attorney lien. (O&C Creditors Group, supra, 42 Cal.App.5th at p. 556.) The settlement agreement determined the allocation of the settlement proceeds, stated that no one else was entitled to any portion of the settlement, and did not include Plaintiff among the recipients. (Id. at p. 555.) The plaintiff sued the defendant attorneys for interference with prospective business advantage. (Id. at p. 559.) The trial court granted a special motion to strike. The Court of Appeal affirmed. It held that “[a] settlement agreement executed in the context of active litigation is ‘made in connection with an issue under consideration or review by a . . . judicial body.’ [Citations].” (Id. at p. 566.) That the plaintiff’s claim was based on wrongful disbursement of settlement funds did not change that conclusion because that claim arose from the protected settlement activity. (Id. at p. 567.) The court explained that the allegedly wrongful conduct of disbursing funds to the exclusion of the plaintiff stemmed from the settlement agreement and would not have occurred without the settlement agreement. (Id. at pp. 567-568.) The plaintiff only had a lienhold interest because the settlement agreement resulted in settlement proceeds against which the plaintiff could assert the lien. (Id. at p. 568.) “Put another way, [the] protected settlement activity – both [the] entry into an agreement that disclaims the existence of any attorney lien in favor of [the plaintiff] and the effectuation of that settlement agreement by paying only [other parties] in derogation of the alleged attorney lien – underlie the elements of [the plaintiff’s] claim.” (Id. at p. 568.) “The protected settlement activity thus lies ‘at the heart of’ the claims asserted by” the plaintiff. (Ibid.)
In opposition, Plaintiff relies on two cases that he contends “better comport with the policy and the text of section 425.16.” In Old Republic, an individual was injured in a car accident while acting in the course and scope of his employment, and he filed an action for damages. (Old Republic, supra, 230 Cal.App.4th at p. 863.) His employer’s workers’ compensation insurer filed a complaint in intervention for reimbursement. (Id. at pp. 862-863.) After the underlying case settled, but the worker’s compensation insurer claim remained unresolved. (Id. at p. 863.) Counsel for the individual and the worker’s compensation insurer signed a stipulation that the settlement funds would be deposited in defense counsel’s client trust account and any withdrawal would require signatures of both parties. (Ibid.) The insurer then filed a notice of lien and dismissed its complaint in intervention. (Id. at p. 863.) The individual’s attorney informed the insurer that he planned to distribute the settlement funds. After hearing nothing from the insurer, he did so. (Id. at p. 864.)
The insurer then filed a complaint against the individual’s counsel alleging breach of the stipulation, fraudulent inducement to enter into the stipulation, and negligence, and seeking declaratory relief. (Id. at p. 865.) The defendants filed a special motion to strike. (Id. at pp. 865-866.) The trial court granted the motion as to the fraud cause of action and denied it as to breach of contract, negligence, and declaratory relief. (Id. at p. 866.) The Court of Appeal affirmed. The fraud cause of action depended on and arose from the parties’ having entered into the stipulation, “which was itself protected conduct.” (Id. at p. 869.) The underlying wrongful conduct in that cause of action was the entry into the stipulation without the intention to be bound by it. (Ibid.) But the other causes of action did not allege anything wrongful about the stipulation itself. Rather the wrongful conduct was the “withdrawal of the funds that were the subject matter of the stipulation” in violation of the terms of the agreement. (Ibid.)
In Drell v. Cohen (2014) 232 Cal.App.4th 24 (Drell), the defendants filed an attorney fee lien after being relieved as counsel in an insurance action. (Id. at p. 27.) Following settlement of that action, the client’s new counsel filed an action for declaratory relief to determine the status of the defendant’s lien. (Ibid.) The defendants filed a special motion to strike, arguing that the complaint flowed entirely from the defendants’ asserting their lien rights and that their assertion of their lien was protected activity in anticipation of litigation. (Id. at p. 28.) The Court of Appeal held that while a demand letter may be protected activity, “a complaint is not a SLAPP suit unless the gravamen of the complaint is that defendants acted wrongfully by engaging in the protected activity,” and the complaint did not allege any wrongdoing by asserting the lien. (Id. at p. 30.)
Here, Plaintiff’s claims are more like those in O&C Creditors Group – the protected activity is at the heart of the claims. The complaint alleges Defendants accomplished each of the wrongful acts of conversion, interference, and aiding and abetting by “enabling DK/K to enter into the Travelers Settlement without regard to [Plaintiff’s] Attorney’s Lien against the Travelers Settlement Proceeds” and “without compensating [Plaintiff] for [Plaintiff]s services in violation of [Plaintiff’s] Attorney’s Lien.” (Complaint ¶¶ 27, 34, 42, 53.) This is “artful drafting” (O&C Creditors Group, supra, 42 Cal.App.5th at 570) to avoid expressly alleging that Defendants negotiated and drafted the settlement agreement – clearly protected activity – without regard to the lien and without including terms for Plaintiff to receive compensation. The complaint also alleges that Defendants accomplished each of the wrongful acts by “obtaining more favorable terms for the Travelers Settlement, including, but not limited to, reducing the settlement amount in exchange for circumventing [Plaintiff’s] Attorney’s Lien against the Travelers Settlement Proceeds.” (Complaint ¶¶ 27, 34, 42, 53.) In other words, Defendants negotiated settlement terms intentionally to exclude Plaintiff’s lien on the settlement proceeds. These allegations of wrongful conduct are specifically based on the negotiation and content of the settlement agreement.
The complaint further alleges that Defendants accomplished each wrongful act by “taking possession, custody, and control of the Travelers Settlement Proceeds,” “distributing substantial portions of the Travelers Settlement Proceeds,” and not withholding sufficient proceeds to cover Plaintiff’s lien, all “without regard to [Plaintiff’s] Attorney’s Lien against the Traveler’s Settlement Proceeds and without compensating [Plaintiff] for [Plaintiff’s] services in violation of [Plaintiff’s] Attorney’s Lien.” (Complaint ¶¶ 27, 34, 42, 53.) As in O&C Creditors Group, these acts would not have been possible without the negotiation, drafting, and execution of the settlement agreement. Thus, the settlement agreement is not “merely ‘incidental’” to the wrongful conduct. (O&C Creditors Group, supra, 42 Cal.App.5th at p. 570.) The entry into, and effectuation of, the settlement agreement form “the fundamental factual basis for the claims.” (Ibid.)
The claims here are not at all similar to those in Drell, which simply sought a determination of the status of the lien and did not allege wrongdoing. Nor is Old Republic dispositive here. In that case, the wrongful conduct (except for the fraud claim) was not the negotiation, execution, and effectuation of a settlement agreement, or anything else about the contents of the settlement agreement. Rather the wrongful conduct was the breach of the agreement, which is not protected activity. Here, in contrast, Plaintiff alleges that the substance of the settlement agreement – that the parties intentionally drafted it to circumvent Plaintiff’s lien and prevent Plaintiff from recovering on the lien – is the basis of Plaintiff’s claims.
Plaintiff argues that the fact that the settlement agreement partially protected Plaintiff’s lien rights makes O&C Creditors Group inapposite, but it is unclear why. Even though Plaintiff received some of the settlement funds, Plaintiff alleges that the negotiation, drafting, execution, and effectuation of the settlement agreement deprived it of its complete lien rights.
In sum, Defendants have satisfied their burden of showing that the acts complained of are protected activity.
Probability of Prevailing on the Claim
Defendants contend the litigation privilege bars Plaintiff’s claims. “The litigation privilege of Civil Code section 47, subdivision (b) ‘applies to any publication required or permitted by law in the course of a judicial proceeding to achieve the objects of the litigation . . . .’ [Citation].” (Optional Capital, Inc. v. DAS Corporation 222 Cal.App.4th 1388, 1404 (“Optional I”).) Negotiating a settlement agreement is litigation-related conduct protected by the litigation privilege. (Optional Capital, Inc. v. Akin Gum Strauss, Hauer & Feld LLP (18 Cal.App.5th 95, 114, 118 (Optional II).)
Plaintiff argues the litigation privilege does not apply because Defendant’s wrongful acts were noncommunicative, citing Optional I. That case held that the litigation privilege did not apply to acts by the defendant to transfer fund out of the plaintiff’s reach. (Optional I, supra, 222 Cal.App.4th at p. 1405.) The defendant had allegedly used a settlement “as a device to permit [the defendant] to persuade the Swiss government to release the funds, thereby depriving [the plaintiff] of funds to satisfy its judgment.” (Id. at p. 1401.) The wrongful conduct did not focus on the negotiating, drafting, or contents of the settlement. Plaintiff also cites Mancini & Assoc. v. Schwetz (2019) 39 Cal.App.5th 656. In that case, the execution of the settlement agreement was one act in a series of acts. (Id. at p. 661.)
Here, as set out in more detail above, Plaintiff alleges Defendants negotiated, drafted, and executed the settlement agreement to exclude Plaintiff’s lien and prevent Defendant from recovering on his lien. This is similar to Optional II, where the plaintiff sued the defendant attorneys for conversion, fraudulent transfer, and aiding and abetting based on a settlement agreement. (Optional II, supra, 18 Cal.App.5th at p. 101.) The plaintiff contended the attorney had drafted the settlement agreement to deprive the plaintiff of its opportunity to pursue its claims. (Id. at p. 104.) The court held that this conduct was protected by the litigation privilege. (Id. at p. 118.) Likewise, here, the claims based on Defendants’ negotiating, drafting, and executing the settlement agreement are protected by the litigation privilege.
To the extent that Plaintiff is now limiting its claims to the wrongful disbursement of funds, Plaintiff has not submitted sufficient evidence to make out a viable prima facie case at trial. Plaintiff acknowledges in the opposition that at the time of the settlement in February 2015, the settlement agreement set aside $1.8 million in an escrow to protect Plaintiff’s lien. (Opposition at p. 5.) Two and half years later, Plaintiff obtained an interim arbitration award in the amount of $1,868,180 in unpaid fees and costs, plus an award of interest from February 2015 through May 2017. (Fraley Decl., Ex. 11.) The final award added daily interest from June 1, 2017 and attorney fees and costs for the arbitration. (Fraley Decl., Ex. 12.) But at the time of the settlement agreement in February 2015, the interest and arbitration fees and costs did not exist.
Defendants present evidence that in December 2014, Plaintiff provided a spreadsheet showing he was owed slightly less than $1.9 million in attorney fees. (Collins Decl., ¶ 11.) Plaintiff does not dispute this. And the number is in line with the arbitration award of $1,868,180. The settlement agreement set aside $1.8 million, almost the full amount Plaintiff claimed he was owed at the time, to cover Plaintiff’s fees. (Collins Decl., ¶ 12.) Plaintiff has not submitted evidence showing that he was owed more than $1,868,180 in February 2015. In February 2015, the additional settlement funds were disbursed to other parties. (Collins Decl., ¶ 13.) This evidence shows that at the time of the settlement agreement and disbursement of funds in February 2015, Defendants did not distribute the settlement funds without regard to the lien and did not fail to withhold a sufficient amount to discharge the vast majority of the lien. In sum, Plaintiff has not shown the probability of prevailing on his claims that Defendants converted his property, interfered with his ability to collect on the lien, or aided and abetting fraudulent transfers.
Plaintiff opposes the Beitchman Defendants’ notice of joinder because they provide no analysis and seek attorney fees. Plaintiff relies on Decker v. U.D. Registry, Inc. (2003) 105 Cal.App.4th 1382, in which the court analogized to a motion for summary judgment and found that a defendant who only joined a special motion to strike, without presenting his own evidence or argument, did not have standing to appeal. (Id. at pp. 1390-1391.) But “[a] special motion to strike differs significantly from a motion for summary judgment in one procedural aspect. . . . When a party merely joins in a motion for summary judgment without presenting its own evidence, the party fails to establish the necessary factual foundation to support the motion. In order to trigger a response from a plaintiff in a special motion to strike, a moving defendant need only demonstrate that the action arises out of protected First Amendment activity.” (Barak v. The Quisenberry Law Firm (2006) 135 Cal.App.4th 654, 661 (Barak).)
Here, the Beitchman Defendants explain why a ruling on the Ford Defendants’ motion also applies to them: Plaintiff alleges that all Defendants deprived Plaintiff of the settlement proceeds from the Travelers Action, all Defendants are being sued in connection with their engagement as attorneys in the Travelers Action, and all Defendants were involved in the same settlement activities that give rise to this action. The Beitchman Defendants therefore request affirmative relief in the form of an order striking Plaintiff’s complaint and awarding them costs and attorney fees. Because the purported protected activity is the same as to the moving Ford Defendants and the joining Beitchman Defendants, joinder is proper. (See Barak, supra, 135 Cal.App.4th at p. 661.)
The special motion to strike is GRANTED.
Moving party to give notice.
Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. Parties intending to appear are STRONGLY encouraged to appear remotely.
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