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Fairwagelaw v. Heurlin

COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION THREE
Nov 9, 2011
G044141 (Cal. Ct. App. Nov. 9, 2011)

Opinion

G044141

11-09-2011

IN RE FAIRWAGELAW, in Voluntary Dissolution FAIRWAGELAW et al., Petitioners and Respondents, v. JOHN M. HEURLIN, Objector and Appellant.

John M. Heurlin, in pro per., for Objector and Appellant. Law Offices of Garrett S. Gregor and Garrett S. Gregor for Petitioners and Respondents.


NOT TO BE PUBLISHED IN OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Super. Ct. Nos. 05CC01320, 06CC04192)

OPINION

Appeals from orders of the Superior Court of Orange County, Franz E. Miller, Judge. Orders affirmed; appeals from nonappealable orders dismissed. John M. Heurlin, in pro per., for Objector and Appellant.

Law Offices of Garrett S. Gregor and Garrett S. Gregor for Petitioners and Respondents.

Appellant John M. Heurlin appeals from orders largely denying his anti-SLAPP motions to strike cross-complaints filed by respondents FairWageLaw, David J. Fuller, Henry P. Schrenker, Fuller & Schrenker, and the Schrenker Law Firm — his former law firm, his former partners, and their new firms.

We affirm the orders. The court correctly found the anti-SLAPP statutedoes not protect the relevant causes of action. Those claims are based on Heurlin's nonprotected conduct of allegedly failing to disclose he had committed misconduct and agreed to be suspended by the State Bar, as well as the parties' dispute over his compensation. Contrary to Heurlin's assertion, the relevant causes of action do not arise from his litigation efforts to recover for his legal work, the State Bar disciplinary hearing itself, or any statements he made in connection with an issue under its review.

Code of Civil Procedure section 415.16. All further statutory references are to the Code of Civil Procedure unless otherwise stated.

Heurlin also purports to appeal from orders overruling his demurrers, denying his discovery motion, and denying his summary judgment motion. Those orders are not reviewable on appeal from the anti-SLAPP orders. We dismiss these appeals.

FACTS

We discussed this litigation in a prior opinion, In re FairWageLaw (2009) 176 Cal.App.4th 279 (FairWageLaw). That opinion supplies some background facts.

Heurlin, Fuller, and Schrenker formed a law firm, FairWageLaw (FairWage), a professional corporation, as one-third shareholders. (FairWageLaw, supra, 176 Cal.App.4th at p. 282.) Fuller and Schrenker voted to voluntarily dissolve FairWage after learning the State Bar was suspending Heurlin for two years. (Ibid.)Heurlin filed notices of attorney liens in two of FairWage's pending suits. (Ibid.)

The court granted FairWage's petition to assume jurisdiction over the voluntary dissolution. (FairWageLaw, supra, 176 Cal.App.4th at p. 282.) Heurlin attempted to appear in the voluntary dissolution, filing discovery motions and a motion for summary judgment on his creditor claim. (Id. at p. 283.) The court denied his motions for lack of standing. (Ibid.)

Meanwhile, Heurlin filed a civil complaint against respondents, seeking to recover for legal work he performed for FairWage. (FairWageLaw, supra, 176 Cal.App.4th at p. 283.) This separate civil action was consolidated with the voluntary dissolution, then stayed. (Ibid.)

The court ratified FairWage's rejection of Heurlin's creditor claim and, after a bench trial, entered a judgment dissolving FairWage. (FairWageLaw, supra, 176 Cal.App.4th at pp. 283-284.) It awarded to Heurlin one-third of FairWage's assets as of the date of his suspension, approximately $140,000. (Id. at p. 284.) It found he was not entitled to any legal fees FairWage earned after his suspension. (Ibid.)And it found Heurlin liable for approximately $160,000 of FairWage's litigation expenses, ordering him to pay the nearly $20,000 deficiency to FairWage. (Ibid.)

That last ruling led us to reverse the dissolution judgment. (FairWageLaw, supra, 176 Cal.App.4th at p. 289.) Heurlin was not a party to the dissolution, and so the court violated his right to due process by adjudicating FairWage's claim against him without giving him notice or an opportunity to be heard. (Id. at pp. 286-288.) We stated: "Before the corporation is wound up, both Heurlin and the corporation should have the opportunity to litigate their respective claims against each other in the normal adversary fashion." (Id. at p. 288.)

The pending appeal arises out of the parties' efforts to litigate their claims on remand. Days after we issued the remittitur, Heurlin filed a motion for summary judgment on his pending complaint against respondents. He also served discovery requests on respondents, later moving to compel responses.

On the hearing date, the court posted a tentative ruling denying the summary judgment motion and granting the motions to compel. At the hearing, the court described the summary judgment motion as "slam-dunk inadequate." But it revealed it was now "leaning towards ruling that discovery was stayed in this confusing way that these two cases were put together," though the stay should be immediately lifted. The court promised to issue "a ruling within the next three days," and took the matter under submission. The docket states the "[m]inutes [were] finalized for Under Submission Ruling" the next day. But the appellate record contains no minute order on Heurlin's motions.

FairWage later filed a cross-complaint against Heurlin; Fuller, Schrenker, and their new firms filed a virtually identical cross-complaint against him. In both cross-complaints, respondents asserted declaratory relief causes of action. They alleged the parties disputed whether Heurlin is entitled to recover only his partnership interest in FairWage at the time of suspension, or whether he is entitled to recover for time billed on FairWage's cases as a creditor or in quantum meruit.

Respondents also asserted fraud, breach of fiduciary duty, and willful misconduct causes of action against Heurlin. They alleged these facts: Fuller and Schrenker discussed forming FairWage with Heurlin in February 2004; at that time Heurlin told them a dispute he had with another lawyer was being worked out informally through the State Bar; Heurlin failed to disclose that the State Bar was conducting a formal disciplinary proceeding against him; Heurlin failed to disclose in May 2004 he had stipulated to being suspended from practicing law for one year; Heurlin failed to disclose in August 2004 he had subsequently stipulated to being suspended from practicing law for two years; and when Fuller and Schrenker confronted Heurlin in December 2004 with rumors of his upcoming suspension, "Heurlin represented that the rumor was false and there were no pending impediments to his practicing law." In addition, respondents asserted a corporate waste cause of action, alleging Heurlin initiated "long, complex, and meritless lawsuits" that depleted FairWage's assets.

Heurlin moved to strike the cross-complaints pursuant to the anti-SLAPP statute. He contended they were based on the State Bar proceeding, which was protected activity, as well as his protected acts of filing attorney liens in FairWage's cases, his creditor claim in the dissolution, and the civil action. He also demurred to the cross-complaints.

The court denied the anti-SLAPP motions, except as to the corporate waste cause of action (respondents do not cross-appeal). It found the declaratory relief causes of action arose from "the fundamental question of the nature of [Heurlin's] entitlement to proceeds of the class action cases," not from the protected acts of filing litigation. It further found the fraud, breach of fiduciary duty, and willful misconduct causes of action "arose from Heurlin's alleged concealment of the nature and extent of his problems with the bar, not the problems themselves or his filing of a claim in the class action matters." It overruled the demurrers.

DISCUSSION

We Dismiss the Appeals from the Nonappealable Orders

Heurlin purports to appeal from the orders denying his discovery motions, denying his summary judgment motion, and overruling his demurrers. These appeals are fatally flawed and must be dismissed.

As a threshold matter, the record lacks any order on the discovery and summary judgment motions. The court issued a tentative ruling on those motions, but at the hearing it took them under submission. That is the last word we have on the motions, as far as the record shows. Heurlin "bears the burden of providing an adequate record affirmatively proving error." (Fladeboe v. American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 58.) That burden includes providing a copy of any appealed order. (Cal. Rules of Court, rule 8.122(b)(1)(C).) Heurlin's failure to secure written orders or minute orders on his discovery and summary judgment motions dooms his effort to appeal from them.

Moreover, the discovery and summary judgment orders are not directly appealable — neither are the demurrer orders. "A reviewing court has jurisdiction over a direct appeal only when there is (1) an appealable order or (2) an appealable judgment." (Griset v. Fair Political Practices Com. (2001) 25 Cal.4th 688, 696 (Griset).)"An appealable judgment or order is essential to appellate jurisdiction, and the court, on its own motion, must dismiss an appeal from a nonappealable order." (Art Movers, Inc. v. Ni West, Inc. (1992) 3 Cal.App.4th 640, 645.) An "order denying the motion to compel [discovery] is not an appealable order." (Datig v. Dove Books, Inc. (1999) 73 Cal.App.4th 964, 984.) "An order denying a motion for summary judgment or summary adjudication is not an appealable order." (Federal Deposit Ins. Corp. v. Dintino (2008) 167 Cal.App.4th 333, 343 (Dintino).)"[A]n order overruling a demurrer is not directly appealable . . . ." (San Diego Gas & Electric Co. v. Superior Court (1996) 13 Cal.4th 893, 912 (San Diego Gas))

Heurlin wrongly asserts Dintino allowed a direct appeal from an order denying summary judgment. To the contrary, it reviewed that order "on direct appeal from a final judgment entered after a trial." (Dintino, supra, 167 Cal.App.4th at p. 343.)

Heurlin suggests these orders are reviewable on appeal from the anti-SLAPP order. He notes anti-SLAPP orders are appealable pursuant to section 904.1, subdivision (a)(13). And he notes that "[u]pon an appeal pursuant to Section 904.1 . . . the reviewing court may review . . . any intermediate . . . order or decision which involves the merits or necessarily affects the judgment or order appealed from or which substantially affects the rights of a party . . . ." (§ 906.) Heurlin concludes his anti-SLAPP appeal opens the door for reviewing all prior orders. Not so, for three reasons.

First, Heurlin fails to show the intermediate orders "involve[] the merits or necessarily affect[]" the anti-SLAPP order. (§ 906.) He does not explain how the validity of the anti-SLAPP order depends in any way upon the validity of the other orders. To the contrary, we are able to review the anti-SLAPP order and determine whether the challenged causes of action arise out of protected activity without first opining on the demurrers, the discovery motion, or the summary judgment motion. Their merits have no bearing on the anti-SLAPP order.

Second, Heurlin fails to show how the intermediate orders "substantially affect[] the rights of a party." (§ 906.) Whether they substantially affected his rights cannot be known until final judgment — does he win or lose? (See, e.g., Johnson v. Holmes Tuttle Lincoln-Merc. (1958) 160 Cal.App.2d 290, 301 [overruled demurrer "did not affect the defendant's substantial rights in any way"].) Heurlin's desire to obtain discovery or avoid trial does not warrant an immediate appeal from nonappealable orders. If the orders are erroneous and final judgment is entered against him, an appeal from that judgment will protect his substantive rights. (Cf. San Diego Gas, supra, 13 Cal.4th at pp. 912-913 [order overruling demurrer "may be reviewed on an appeal from the final judgment," which "is normally presumed to be an adequate remedy at law"].)

Most basically, Heurlin undermines "the 'one final judgment' rule." (Griset, supra, 25 Cal.4th at p. 697.) This is "a fundamental principle of appellate practice that prohibits review of intermediate rulings by appeal until final resolution of the case. 'The theory is that piecemeal disposition and multiple appeals in a single action would be oppressive and costly, and that a review of intermediate rulings should await the final disposition of the case.'" (Ibid.) Heurlin's overly ambitious reading of section 906 would mock this rule, allowing review of all intermediate orders made before any order made appealable by section 904.1 — like an attachment order (§ 904.1, subd. (a)(5)) or an order appointing a receiver (§ 904.1, subd. (a)(7)). We reject this absurd construction.

The Court Correctly Decided the Anti-SLAPP Motions

Unlike the other orders, the orders deciding Heurlin's anti-SLAPP motions are directly appealable. (§§ 425.16, subd. (i), 904.1, subd. (a)(13).) They are subject to our independent review. (Flatley v. Mauro (2006) 39 Cal.4th 299, 325.)

The anti-SLAPP statute "'is designed to protect citizens in the exercise of their First Amendment constitutional rights of free speech and petition. It is California's response to the problems created by meritless lawsuits brought to harass those who have exercised these rights.'" (Rosenaur v. Scherer (2001) 88 Cal.App.4th 260, 273.) It provides, "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 the California Constitution in connection with a public issue shall be subject to a special motion to strike . . . ." (§ 425.16, subd. (b)(1).)

Heurlin bears the initial burden of establishing the causes of action in the cross-complaints arise from his protected activity. "[T]he statutory phrase 'cause of action . . . arising from' means simply that the defendant's act underlying the plaintiff's cause of action must itself have been an act in furtherance of the right of petition or free speech." (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78 (Cotati).)"In the anti-SLAPP context, the critical point is whether the plaintiff's cause of action itself was based on an act in furtherance of the defendant's right of petition or free speech." (Ibid.)

To meet this burden, Heurlin must show the conduct underlying the causes of action "'fits one of the categories spelled out in section 425.16, subdivision (e).'" (Navellier v. Sletten (2002) 29 Cal.4th 82, 88.) If Heurlin meets this burden, respondents bear the burden to "establish[] that there is a probability that [they] will prevail on the claim[s]." (§ 425.16, subd. (b)(1).)

Section 425.16, subdivision (e), provides, "As used in this section, 'act in furtherance of a person's right of petition or free speech under the United States or California Constitution in connection with a public issue' includes: (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."

Heurlin failed to meet his initial burden. He did not show the relevant causes of action in the cross-complaints arise from protected activity.

The declaratory relief causes of action do not arise from any protected activity. They arise from the parties' dispute over how, if at all, to compensate Heurlin for his legal work for FairWage in light of his suspension. It is this dispute that underlies the cause of action, not the State Bar proceeding that triggered the dispute. (See Cotati, supra, 29 Cal.4th at p. 80 [declaratory relief cause of action not protected because it arose from an "actual controversy," not prior litigation concerning the dispute].) It is immaterial whether respondents sought declaratory relief to "punish and intimidate" Heurlin, to use his words. The anti-SLAPP analysis turns "on the substance of [the] lawsuit," not respondents' "subjective intent." (Id. at p. 78)

Nor do the fraud, breach of fiduciary duty, and willful misconduct causes of action arise from protected activity. Heurlin unsuccessfully tries to shoehorn them into the "official proceeding" categories of protected conduct. But none of the causes of action arise from statements "made before [an] official proceeding . . . ." (§ 425.16, subd. (e)(1).) To be sure, the cross-complaints mention Heurlin's attorney liens, creditor claim, complaint, and the State Bar proceeding. But the challenged causes of action do not arise from them. Heurlin's court filings and statements made before the State Bar are not themselves the very acts that constitute the alleged fraud, breach of fiduciary duty, or willful misconduct. "[C]ollateral allusions to protected activity should not subject the cause of action to the anti-SLAPP statute." (Martinez v. Metabolife Internal., Inc. (2003) 113 Cal.App.4th 181, 188.)

These causes of action also do not arise from statements "made in connection with an issue under consideration or review by [an] official proceeding . . . ." (§ 425.16, subd. (e)(2).) The causes of action arise out of Heurlin's alleged fraud and breach of fiduciary duty in not disclosing the material facts he had committed misconduct and would be suspended from practicing law. Neither the fraud nor the breach was "itself. . . an act in furtherance of the right of petition or free speech." (Cotati, supra, 29 Cal.4th at p. 78; accord Coretronic Corp. v. Cozen O'Connor (2011) 192 Cal.App.4th 1381, 1392 [client's complaint arose from its counsel's concealment of adverse representation, not that representation itself].) "Any assertedly protected activity is not the root of the [cross-]complaint[s]; it is merely the setting in which the claims arose." (Coretronic, at p. 1392.)

(Cf. Freeman v. Schack (2007) 154 Cal.App.4th 719, 732 [client's malpractice claim arose from lawyer's breach of loyalty; the "filing and settlement of the [adverse] litigation are incidental to the allegations of breach of contract, negligence in failing to properly represent their interests, and breach of fiduciary duty arising from his representations of clients with adverse interests"]; Kolar v. Donahue, McIntosh & Hammerton (2006) 145 Cal.App.4th 1532, 1540 ["In a malpractice suit, the client is not suing because the attorney petitioned on his or her behalf, but because the attorney did not competently represent the client's interest while doing so"].)

Moreover, no statements were made "in connection with an issue" being reviewed. (§ 425.16, subd. (e)(2).) Heurlin allegedly concealed, then denied, the very existence of any formal State Bar review of his professional conduct. We recognize the right to free speech generally includes the freedom not to speak. But concealing a proceeding is not the same as speaking out on the issues being considered. The issues under review in the State Bar disciplinary proceeding did not include whether the proceeding itself was taking place.

Heurlin also unpersuasively invokes the litigation privilege. (Civ. Code, § 47, subd. (b)(2).) He claims he concealed his forthcoming suspension on the advice of counsel, which brings the concealment within the litigation privilege, which makes them protected by the anti-SLAPP statute. He did not assert advice of counsel below, and on appeal cites no evidence of any such advice. In any event, "statements protected by the litigation privilege are not necessarily protected by the anti-SLAPP statute. '[T]he litigation privilege and the anti-SLAPP statute are substantively different statutes that serve quite different purposes . . . .'" (Century 21 Chamberlain & Associates v. Haberman (2009) 173 Cal.App.4th 1, 10.) Thus, a statement "may be privileged," yet "not automatically protected by the anti-SLAPP statute. [Heurlin] 'must thus affirmatively show that [his] conduct qualifies as constitutionally protected activity under section 425.16.'" (Ibid.)Even if we assume Heurlin's failure to disclosure was protected by the litigation privilege — we do not hold it was — he still must show it warrants protection by the anti-SLAPP statute. This, he has failed to do.

In their brief, respondents asked us to sanction Heurlin for bringing a frivolous appeal. But parties must file a separate motion to seek sanctions. (Kajima Engineering and Construction, Inc. v. Pacific Bell (2002) 103 Cal.App.4th 1397, 1402; Cal. Rules of Court, rule 8.276(a)(1), (b)(1).) In any event, "[a]n appeal that is simply without merit is not by definition frivolous and should not incur sanctions." (In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650.) No sanctions will be issued.
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DISPOSITION

The anti-SLAPP orders are affirmed. The purported appeals from the nonappealable orders are dismissed. Respondents shall recover their costs on appeal.

IKOLA, J.

WE CONCUR:

RYLAARSDAM, ACTING P. J.

O'LEARY, J.


Summaries of

Fairwagelaw v. Heurlin

COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION THREE
Nov 9, 2011
G044141 (Cal. Ct. App. Nov. 9, 2011)
Case details for

Fairwagelaw v. Heurlin

Case Details

Full title:IN RE FAIRWAGELAW, in Voluntary Dissolution FAIRWAGELAW et al.…

Court:COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION THREE

Date published: Nov 9, 2011

Citations

G044141 (Cal. Ct. App. Nov. 9, 2011)