Opinion
G061203
12-21-2022
AMEZCUA-MOLL & ASSOCIATES, P.C., Plaintiffs and Respondents, v. JOHN DAVID THOMAS, Defendant and Appellant.
Ford & Diulio, Kristopher P. Diulio, Brendan M. Ford and Olivia S. Cannon for Defendant and Appellant. Amezcua-Moll &Associates and Rosemary Amezcua-Moll, Pettit Kohn Ingrassia Lutz & Dolin, Douglas A. Pettit, and Kathryn J. Besch for Plaintiffs and Respondents.
NOT TO BE PUBLISHED
Appeal from an order of the Superior Court of Orange County, No. 30-2017-00927161 Geoffrey T. Glass, Judge. Affirmed. Respondent's motion to dismiss denied.
Ford & Diulio, Kristopher P. Diulio, Brendan M. Ford and Olivia S. Cannon for Defendant and Appellant.
Amezcua-Moll &Associates and Rosemary Amezcua-Moll, Pettit Kohn Ingrassia Lutz & Dolin, Douglas A. Pettit, and Kathryn J. Besch for Plaintiffs and Respondents.
OPINION
MOORE, ACTING P. J.
Strategic Lawsuits Against Public Participation (SLAPP suits) are meritless lawsuits designed to punish people for engaging in protected activities (the right to petition or free speech). A defendant can move to strike a SLAPP suit by filing an anti-SLAPP motion. (Code Civ. Proc., § 425.16.) There is a two-prong test: the defendant must show the lawsuit arises from his or her protected activities; however, the plaintiff can defeat the anti-SLAPP motion by showing the lawsuit has minimal merit. (Gruber v. Gruber (2020) 48 Cal.App.5th 529, 537.)
Here, Amezcua-Moll &Associates, P.C. (the law firm) represented Farrah Modarres in an earlier lawsuit against John David Thomas; however, Modarres and Thomas settled the lawsuit without involving the law firm, allegedly depriving the law firm of its fees. In the instant lawsuit, the law firm is now suing Thomas and others for intentional interference with contractual relations (IICR) and two derivative claims.
Thomas filed an anti-SLAPP motion. The trial court found the law firm's ICCR claim arose from Thomas' protected activities (communications within the context of litigation). However, the court also found the IICR claim had sufficient merit and denied Thomas' anti-SLAPP motion. We agree and affirm the court's order.
I
FACTS AND PROCEDURAL BACKGROUND
Modarres filed the earlier lawsuit against Thomas and other defendants alleging breach of contract and real estate fraud. The law firm represented Modarres on a contingency fee basis. Thomas was sanctioned for multiple discovery violations and the trial court eventually entered a default judgment against him.
Following a trial involving the other defendants, a jury awarded Modarres $272,000 in compensatory and $1 million in punitive damages. Thomas appealed. This court remanded for further proceedings strictly as to the amount of the punitive damage award. (Modarres v. Thomas et al. (Apr. 13, 2016, G048684) [nonpub. opn.].)
After the remand, Modarres was still represented by the law firm. But without its involvement, Thomas and his attorney David Paul Abernathy settled the lawsuit with Modarres, who dismissed the case and assigned her rights to Mission Hills Opportunity Fund, LLC (Mission Hills) for $250,000. Mission Hills agreed to indemnify Modarres for any fees or costs she owed to the law firm.
The law firm filed the instant, ongoing lawsuit against Thomas, Abernathy, Mission Hills, and others alleging IICR and derivative claims (unfair business practices and accounting). The law firm alleges Mission Hills is a shell company formed by Thomas and Abernathy for the purpose of depriving the law firm of its fees.
Abernathy filed an anti-SLAPP motion, which the trial court granted. On appeal, this court found Abernathy engaged in protected activities (settlement talks); however, this court also found the law firm demonstrated its IICR claim had minimal merit. Thus, this court reversed the trial court's ruling. (Amezcua-Moll &Associates, P.C., v. Abernathy (Apr. 29, 2021, G058692) [nonpub. opn.].)
Generally, a party may not cite or rely on an unpublished opinion unless it "is relevant under the doctrines of law of the case, res judicata, or collateral estoppel ...." (Cal. Rules of Court, rule 8.1115 (b)(1).) Relying on the merits of our prior unpublished opinion, the law firm filed a motion to dismiss the instant appeal and requested sanctions against Thomas for filing an allegedly frivolous appeal. But the law firm did not advance an argument as to how this court's unpublished opinion may be cited or relied upon. Therefore, we deny the law firm's motion and its request for sanctions.
Thomas also filed an anti-SLAPP motion. The trial court found the alleged "causes of action . . . arise from protected activity." However, the court denied the motion because the law firm "has shown [its] claims have minimal merit." The court further found: "No evidence is presented to show Mission Hills is solvent or [the law firm] would be able to collect [its] fees from Mission Hills."
II
DISCUSSION
Thomas appeals from the trial court's denial of his anti-SLAPP motion; our review is de novo. (See Moss Bros. Toy, Inc. v. Ruiz (2018) 27 Cal.App.5th 424, 433.)
Under the anti-SLAPP statute, a defendant has the burden of establishing a plaintiff's claims arise from its protected activity; if the defendant meets its burden, the burden shifts to the plaintiff to establish its claims have minimal merit. (Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1061.)
Here, there is no dispute among the parties that the law firm's claims arise out of Thomas's protected activity (the right to petition).
Once it is established that a defendant's alleged conduct arises out of protected activities, the burden shifts to the plaintiff to demonstrate a probability of prevailing on the lawsuit, but it need only show "'the claim has "minimal merit."'" (Gruber v. Gruber, supra, 48 Cal.App.5th at p. 537.) "[T]he plaintiff 'must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited.'" (Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 821.)
In an anti-SLAPP motion, courts consider the pleadings, the affidavits, and "accept as true all evidence favorable to the plaintiff." (Dixon v. Superior Court (1994) 30 Cal.App.4th 733, 746.) The plaintiff's burden is commensurate with the early stage at which the anti-SLAPP motion is brought and the plaintiff's "'limited opportunity to conduct discovery.'" (Hardin v. PDX, Inc. (2014) 227 Cal.App.4th 159, 166 ["Only a minimal showing of merit is required"].)
Thomas contends this court should reverse the trial court's denial of his anti-SLAPP motion because: A) the law firm did not establish that its IICR claim has minimal merit; B) the law firm's IICR claim is barred by the litigation privilege; and C) purported "ethical issues" with the lawsuit. We shall analyze each contention.
A. The Elements of an IICR Claim
Thomas contends the law firm's IICR cause of action lacks the requisite level of minimal merit. We disagree.
In this part of the discussion, we will review the elements of an IICR claim: 1) a valid contract between plaintiff and a third party; 2) defendant's knowledge of the contract; 3) defendant's intentional acts designed to induce a breach or disruption of the contractual relationship; 4) actual breach or disruption of the contractual relationship; and 5) resulting damages to the plaintiff. (Pacific Gas &Electric Co. v. Bear Stearns &Co. (1990) 50 Cal.3d. 1118, 1126.)
1. A Valid Contract
An IICR claim requires an underlying valid and enforceable contract between the plaintiff and a third party. If there is no enforceable contract, only a claim for interference with prospective advantage may be pleaded. (Pacific Gas &Electric Co. v. Bear Stearns &Co., supra, 50 Cal.3d at p. 1126.)
In its opposition to Thomas' anti-SLAPP motion, the law firm provided a copy of a promissory note signed by Modarres in the amount of $17,999.81, and a copy of an Attorney-Client Fee Arrangement signed by Modarres in which the law firm "agreed to handle this matter on a contingency fee basis."
Thomas does not appear to challenge this element. Thus, the existence of a contract between the law firm and Modarres is sufficiently shown.
2. Knowledge of the Contract
A valid IICR claim requires the defendant to have had knowledge of the contract between the plaintiff and a third party. The defendant's knowledge may be implied through the allegations in the pleadings. (See Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 55-56 (Quelimane).)
In its opposition to the anti-SLAPP motion, the law firm provided copies of e-mails between Abernathy and Modarres in which Abernathy acknowledged the contract between the law firm and Modarres. The e-mails also demonstrate attorney Abernathy was representing Thomas. For instance, in one e-mail with Modarres, Abernathy states: "Good morning, Farah. I apologize for the delay in responding to you. I am waiting for a call back from Dave Thomas on a couple of questions. I did confirm that we will indemnify you for any fees owed to your attorneys ...."
Thomas does not appear to challenge this element. Thus, Thomas' knowledge of the contract between the law firm and Modarres is sufficiently shown.
3. Intent to Induce a Breach or to Interfere
In an IICR cause of action, the defendant must either intend to induce a breach of the contract or intend to interfere with contractual relations. The defendant's primary purpose need not be disruption of the contract, it is sufficient if the interference is a necessary consequence of the defendant's actions. (Quelimane, supra, 19 Cal.4th at pp. 55-56 ["it is not necessary that the defendant's conduct be wrongful apart from the interference with the contract itself"]; Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1154 ["specific intent is not a required element of the tort"].)
The law firm alleges Thomas, through his attorney Abernethy, did the following: 1) negotiated a monetary settlement with Modarres; 2) knew of Modarres' contract with the law firm; 2) induced Modarres to take less money than she would have otherwise recovered in the judgment; 3) induced Modarres to execute an assignment of her rights to the judgment without the assistance of the law firm; 4) lied to Modarres by representing to her that Mission Hills would pay the monies she owed to the law firm; 5) created a shell entity (Mission Hills) through which money could be funneled from Thomas to Modarres as settlement for the underlying lawsuit; and 6) provided $250,000 to Modarres without the assistance of her counsel.
As to the element of intent in the law firm's IICR cause of action, it appears there is "'a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited.'" (Wilson v. Parker, Covert &Chidester, supra, 28 Cal.4th at p. 821.) That is, the pleadings make at least a prima facie showing that Thomas: (a) intended to induce a breach of the actual contract between the law firm and Modarres (the attorney-fee arrangement), or (b) intended to interfere with contractual relations between the law firm and its client, and/or "knew that the interference was certain or substantially certain to occur as a result of its action." (Korea Supply Co. v. Lockheed Martin Corp., supra, 29 Cal.4th at p. 1154.)
Thomas argues at length that he had no intent to interfere with the law firm's contract with Modarres. But this is simply a disputed issue of fact that we must presume at this stage is true. (See Dixon v. Superior Court, supra, 30 Cal.App.4th at p. 746.) And again, the law firm is not required to show Thomas specifically intended to interfere with the contract, it is sufficient to show the interference was a predictable consequence of Thomas' actions. (See Quelimane, supra, 19 Cal.4th at p. 56.)
Thomas also distinguishes his conduct from that of his attorney: "Abernathy's conduct of negotiating a settlement with Modarres was wrongful because attorneys are prohibited from communicating with represented parties under the California Rules of Professional Conduct, Rule 2-100(a). In contrast, Thomas is not an attorney." (Italics added.) Thomas also argues: "Abernathy's wrongful act of impermissibly communicating with a represented party . . . was outside the scope of any agency relationship between Thomas and Abernathy." (Italics added.)
But the law firm is not required to show Thomas' actions (or Abernathy's actions for that matter) were separately wrongful in order to sustain its IIAC claim. (See Quelimane, supra, 19 Cal.4th at p. 55 ["it is not necessary that the defendant's conduct be wrongful apart from the interference with the contract itself"].) And whether Abernathy may have been acting on his own behalf without Thomas's approval is simply another disputed question of fact for the trier of fact.
Thus, we find the law firm has established the element of intent with the requisite minimal merit sufficient to defeat Thomas' anti-SLAPP motion.
4. Breach or Disruption of the Contract
Generally, a plaintiff must allege a defendant caused a breach or disruption of its contract with a third party in order to sustain an IICR claim. However, a "plaintiff need not allege an actual or inevitable breach of contract .... We have recognized that interference with the plaintiff's performance may give rise to a claim . . . if plaintiff's performance is made more costly or more burdensome." (Pacific Gas &Electric Co. v. Bear Stearns &Co. (1990) 50 Cal.3d 1118, 1129 ["while the tort of inducing breach of contract requires proof of a breach, the cause of action for interference with contractual relations is distinct and requires only proof of interference"].)
Here, the law firm alleges Modarres actually breached her contract (as well as the promissory note). Thomas does not appear to challenge this element on appeal. Further, although Mission Hills agreed to indemnify Modarres, the court found no evidence Mission Hills is solvent. So, it is reasonable to presume it will be more burdensome (or perhaps impossible) for the law firm to seek reimbursement from Mission Hills rather than collecting its fees from Modarres on a contingency basis. Thus, the breach or disruption element of the law firm's IIRC claim is sufficiently shown.
5. Damages Incurred by the Plaintiff
In an IICR claim, a defendant may be "liable for damages for the pecuniary loss of the benefits of the contract or the relation. In the case in which a third person is prevented from performing a contract with the plaintiff, the plaintiff may recover for the loss of profits from the contract." (Rest. 2d Torts, § 774A com. b.)
Here, the law firm pleaded, it "has not been paid for services rendered" to Modarres. Thomas does not appear to challenge this element on appeal. In sum, we find the law firm has made a sufficient showing as to each element of its IICR claim and therefore we affirm the trial court's denial of Thomas' anti-SLAPP motion.
It is not necessary for us to analyze the other two causes of action (unfair business practices and accounting) as they are derivative of the law firm's IICR claim.
B. The Litigation Privilege
Thomas contends the law firm's IICR cause of action is barred by the litigation privilege. (Civ. Code, § 47, subd. (b).) We disagree.
Generally, the litigation "'"privilege applies to "any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action."'" (Holland v. Jones (2012) 210 Cal.App.4th 378, 381, italics added.) The litigation privilege applies to communications made during settlement negotiations. (Mancini &Associates v. Schwetz (2019) 39 Cal.App.5th 656, 661 (Mancini).)
"The 'threshold issue' in determining the application of the litigation privilege is whether the defendant's conduct was communicative or noncommunicative. [Citation]. Civil Code section 47, subdivision (b) applies only to communicative acts and does not apply to tortious courses of conduct." (Mancini, supra, 39 Cal.App.5th at 661.)
The litigation privilege does not apply where a communicative act is "but one act in a course of tortious conduct." (Mancini, supra, 39 Cal.App.5th at p. 661.) In Mancini, a law firm successfully litigated claims on behalf of its client against her former employer. (Id. at p. 658.) But the employer and the client later rekindled their social relationship, and eventually executed a memorandum releasing the employer from his payment obligations to the law firm. The law firm brought an IIRC claim against the former employer, who claimed his communications were protected by the litigation privilege. (Id. at p. 660.) The Court of Appeal disagreed. "A third party who impairs an attorney's rights pursuant to a contractual lien may be subject to liability for tortious interference with contractual relations or prospective economic advantage." (Id. at p. 661.) The court noted that "although [the employer's] act of executing the Memorandum was communicative, it was but one act in a course of tortious conduct to deprive [the law firm] of its attorney fees." (Ibid.)
Here, it is alleged Thomas and Abernathy engaged in a course of conduct to deprive the law firm of its attorneys' fees, which involved noncommunicative acts such as setting up a shell company (Mission Hills) for that purpose. Similar to Mancini, the settlement agreement between Modarres and Thomas was arguably a communicative act; however, it was allegedly "but one act in a course of tortious conduct to deprive [the law firm] of its attorney fees." (See Mancini, supra, 39 Cal.App.5th at 661.) In short, we do not find that the litigation privilege applies to Thomas' alleged tortious conduct.
C. Purported Ethical Issues
Thomas argues the law firm's IICR claim "raises significant ethical issues. Thomas's actions in furtherance of settlement . . . cannot amount to a tort because that would mean any client deciding to settle their case without consulting her attorney (or receiving her attorney's approval) would give rise to a tort claim! That is contrary to well-established law that it is the client, not the attorney, who has the sole authority to accept or reject a settlement offer." We disagree.
Thomas has not cited any legal authority or made a cogent argument as to how this "ethical" issue establishes an error by the trial court when it denied his anti-SLAPP motion (the sole issue on appeal). To the extent Thomas may be making that argument, it is forfeited. (See, e.g., In re Marriage of Falcone &Fyke (2008) 164 Cal.App.4th 814, 830 [absence of cogent legal argument or citation to authority forfeits the contention; "[w]e are not bound to develop appellants' arguments for them"].)
In any event, Thomas' slippery slope argument seems to ignore the required elements in an IICR claim. That is, the law firm is not merely alleging Thomas and Modarres settled the underlying case without its involvement. Rather, the law firm is alleging: 1) there was a contingency fee agreement between it and Modarres; 2) Thomas knew of the contract; 3) Thomas' intentional acts induced a breach or a disruption of that contingency fee agreement; 4) an actual breach or disruption of the contractual relationship occurred; and 5) there were resulting damages to the law firm. (See Pacific Gas &Electric Co. v. Bear Stearns & Co., supra, 50 Cal.3d. at p. 1126.)
To reiterate and conclude, having found the requisite minimal evidence to support each element of the law firm's IICR claim, we affirm the trial court's denial of Thomas's anti-SLAPP motion.
III
DISPOSITION
The trial court's order is affirmed. Thomas is ordered to reimburse the law firm for the costs it incurred in this appeal (minus the costs it incurred in filing the separate motion to dismiss and the request for sanctions).
WE CONCUR: GOETHALS, J., SANCHEZ, J.