Hacker v. Fabe

Filed 5/23/08 Hacker v. Fabe CA2/8

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

APPEALS from orders and the judgment of the Superior Court for the County of Los Angeles. Jane L. Johnson, Judge. Reversed and remanded.

Law Offices of Kenneth Lance Haddix and David M. Brandon for Plaintiffs and Appellants.

Jacqueline M. Fabe, in pro. per.; and Marshall A. Lerner for Defendant and Respondent.

_____________________________

SUMMARY

The trial court granted a special motion to strike the complaint in a legal malpractice case. Ron Hacker and 1538 Cahuenga Partners, LLC (collectively 1538) sued Jacqueline Fabe, a lawyer who worked for 1538 for a short time. After Fabe quit, she filed an administrative claim for unpaid wages. 1538 then filed this lawsuit against Fabe alleging breach of contract, breach of the covenant of good faith and fair dealing, fraud, and legal malpractice/negligence. Fabe filed a special motion to strike the complaint under the anti-SLAPP (strategic lawsuit against public participation) statute, Code of Civil Procedure section 425.16. Fabe asserted that 1538s civil action arose from her protected act of filing an unpaid wages claim. The trial court granted the motion, but denied Fabe attorneys fees.

We conclude that 1538s complaint does not arise from Fabes protected activity, as defined by the anti-SLAPP statute. Accordingly, the trial court should have denied the special motion to strike. In light of this conclusion, Fabes cross-appeal about attorneys fees is moot.

FACTUAL AND PROCEDURAL BACKGROUND

In February 2005, Jacqueline Fabe, an attorney, and Ron Hacker, a principal of 1538 Cahuenga Partners, LLC, entered into a written agreement. Under the agreement, Fabe was to provide legal services to 1538 as a salaried temporary employee.[1] The working relationship was short-lived and, in March 2005, Fabe resigned. When she quit, Fabe notified Hacker that 1538 owed her several thousand dollars in unpaid wages. Hacker asserted, however, that Fabes agreement with 1538 required 1538 to pay Fabe only for billable hours. Hacker thus refused to pay for what he claimed were Fabes improperly charged non-billable hours. In June 2005, Fabe filed a claim for unpaid wages with the California Department of Industrial Relations, Division of Labor Standards Enforcement, State Labor Commissioner. On September 28, 2005, the Labor Commissioner issued a Notice of Claim and Conference setting an initial conference on Fabes claim.[2]

The record does not reveal exactly when 1538 began preparing its civil suit against Faber. The complaint is dated September 30, 2005, two days after the Labor Commissioner issued its notice of Fabes claim. 1538 did not file the complaint until October 25, 2005. The complaint asserts four causes of action against Fabe: (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; (3) fraud; and (4) legal malpractice/negligence. The complaint alleges that Fabe entered into an oral agreement with 1538 in which she agreed to provide efficient and effective legal services to [1538], and that she breached the agreement by failing to do so. The complaint also asserts that Fabe misrepresented her experience and legal knowledge in her resume, thereby inducing 1538 to hire her. 1538 further claims that Fabe failed to exercise care and skill in representing 1538 in litigation that was underway when 1538 hired Fabe.

In response to 1538s complaint, Fabe filed a special motion to strike under Code of Civil Procedure section 425.16, the anti-SLAPP statute.[3] Fabe argued that 1538s suit arose from the claim she had filed with the Labor Commissioner for unpaid wages. Fabe also contended that 1538 could not demonstrate a probability of prevailing on any of its causes of action. Among other arguments, Fabe asserted that she was a salaried employee working under a written employment contract, and therefore she could not be liable to 1538 -- her own corporate employer -- for malpractice/negligence. In support of her motion, Fabe submitted copies of the signed letter agreement of February 22, 2005; a W-2 form issued by 1538 that referred to her as an employee and to 1538 as her employer; a paycheck calculator form that reflected Fabes semi-monthly gross pay of $2000; her claim to the Labor Commissioner; and the Labor Commissioners decision finding Hackers testimony to be not credible and often contradictory and awarding Fabe wages, interest, and penalties.

In opposition to Fabes special motion to strike, 1538 asserted that the complaints causes of action did not arise from any protected activity by Fabe and that the complaint asserted legally sufficient claims. 1538 submitted the declaration of Ron Hacker. Hacker stated that he was tricked into signing the letter agreement Fabe drafted and that Fabe had agreed to work as an independent contractor; Fabe misrepresented her legal experience; Fabe did not complete the legal projects assigned to her; Fabe billed Plaintiffs for non-billable hours and insisted on receiving payment thereon, including by filing a complaint with the Labor Commissioner; Fabe made decisions about deposition scheduling that prejudiced 1538s position in ongoing litigation; and, due to Fabes incompetence, 1538 had to settle a lawsuit that otherwise would have resulted in a $1,000,000 award in 1538s favor.

Fabe filed a supplemental reply attaching 1538s section 998 offer to compromise for $12,500.

The trial court granted Fabes special motion to strike and awarded costs. However, the court declined to award attorneys fees to Fabe. 1538 filed a timely notice of appeal from the trial courts entry of judgment dismissing the complaint in its entirety. Fabe filed a notice of cross-appeal from the trial courts order denying attorneys fees.

DISCUSSION

1. Section 425.16: The Anti-SLAPP Statute

A strategic lawsuit against public participation (SLAPP) seeks to chill or punish a partys exercise of constitutional rights to free speech and to petition the government for redress of grievances. [Citation.] (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1055 (Rusheen).) Section 425.16 provides, in part:

A cause of action against a person arising from any act of that person in furtherance of the persons right of petition or free speech under the Untied States or California Constitution in connection with a public issue shall be subject to a special motion to strike . . . . []  As used in this section, act in furtherance of a persons 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; (4) or 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. (b)(1), (e).)

A court must undertake a two-step process in evaluating an anti-SLAPP motion. First, the court must determine whether the defendant has made a threshold showing that the challenged cause of action arises from protected activity. . . .  []  If the court finds the defendant has made the threshold showing, it determines then whether the plaintiff has demonstrated a probability of prevailing on the claim. [Citation.] (Rusheen, supra, 37 Cal.4th at p. 1056.) We independently review de novo the trial courts ruling on a special motion to strike. (Id. at p. 1055.)

2. 1538s causes of action do not arise from protected activity by Fabe

The threshold issue is whether 1538s causes of action arise from Fabes protected activity.[4] [T]he statutory phrase cause of action . . . arising from means simply that the defendants act underlying the plaintiffs cause of action must itself have been an act in furtherance of the right of petition or free speech. [Citations.] In the anti-SLAPP context, the critical point is whether the plaintiffs cause of action itself was based on an act in furtherance of the defendants right of petition or free speech [citations]. (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78 (Cotati).) To make this determination, a court will consider  the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.  (Cotati, supra, 29 Cal.4th at p. 79; Code Civ. Proc., 425.16, subd. (b)(2).)

Although a court considering a special motion to strike will consider the plaintiffs causes of action, the focus of the courts analysis is on the defendants activity that gives rise to his or her asserted liabilityand whether that activity constitutes protected speech or petitioning, rather than on the form of a particular cause of action itself. (Navellier v. Sletten (2002) 29 Cal.4th 82, 92 (Navellier); Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP (2005) 133 Cal.App.4th 658, 671 (Peregrine Funding).)

A. The principal thrust of 1538s complaint concerns unprotected activities.

Fabe asserts that 1538s causes of action arise from her protected activity: the claim she filed with the Labor Commissioner.[5] But the complaint, when examined, does not support this assertion. 1538s first cause of action for breach of contract alleges that Fabe did not complete her assigned work; that she abandoned her work without giving 1538 time to look for a replacement; that she left 1538s employ without providing a written summary of the status of her assignments; and that she improperly billed 1538 for her work. 1538s second cause of action for breach of the covenant of good faith and fair dealing incorporates by reference these same allegations. The third cause of action for fraud alleges that Fabe falsely represented her legal experience and knowledge, as well as the way in which she would provide services to 1538. The fourth and final cause of action for legal malpractice/negligence alleges that Fabe failed to exercise care and skill in representing [1538] in at least one ongoing civil action.

These alleged acts and omissions - - Fabes failure to complete projects, her alleged misrepresentations about her experience, and her alleged negligence in representing 1538 - - are not acts in furtherance of Fabes right of petition or free speech. (See Freeman v. Schack (2007) 154 Cal.App.4th 719 [contract and tort action against attorney for representing adverse interests in litigation not subject to the anti-SLAPP statute]; Benasra v. Mitchell Silberberg & Knupp LLP (2004) 123 Cal.App.4th 1179 [action against attorney for breach of duty of loyalty arising from representation of clients with conflicting interests not subject to anti-SLAPP statute]; Jespersen v. Zubiate-Beauchamp (2003) 114 Cal.App.4th 624 [malpractice lawsuit alleging attorneys negligent omissions was not based on activity protected under anti-SLAPP statute].)

1538s cause of action for breach of contract contains only one line that appears to refer to Fabes petition to the Labor Commissioner. Among several other allegations, 1538 asserts that Fabe breached her contract with 1538 in that she billed Plaintiffs for non-billable hours and insisted payment thereon [sic] (emphasis added). In contrast, Hackers declaration in support of 1538s opposition to Fabes special motion to strike explicitly refers several times to Fabes claim for unpaid wages.[6] But it is the gravamen of 1538s causes of action that we must consider in determining whether the claims arise from Fabes protected activity. As explained in Scott v. Metabolife Internat., Inc. (2004) 115 Cal.App.4th 404, 414, if the allegations of protected activity are only incidental to a cause of action based essentially on unprotected activity, the mere mention of protected activity does not subject the cause of action to an anti-SLAPP motion. [Citation.] (See also Peregrine Funding, supra, 133 Cal.App.4th at pp. 672-673.) 1538s veiled reference in the complaint to Fabes unpaid wages claim, and Hackers express but brief references to Fabes petition to the Labor Commissioner in his declaration, do not represent the principal thrust of 1538s claims for breach of contract and attorney malpractice. (Indeed, how Hacker intends his statements in his declaration about Fabes claim for unpaid wages to support or relate to any of the complaints causes of action is unclear.)

In sum, despite 1538s references to Fabes protected activity in its complaint and the Hacker declaration, the complaint primarily addresses Fabes alleged failure to perform competently as a lawyer and to complete her work - - activities that do not fall within the anti-SLAPP statutes protections. (See Gallanis-Politis v. Medina (2007) 152 Cal.App.4th 600, 613-615 [cause of action alleging both protected and unprotected activity will be subject to section 425.16 unless the protected conduct is merely incidental to the unprotected conduct]; Kajima Engineering & Construction, Inc. v. City of Los Angeles (2002) 95 Cal.App.4th 921, 929-931 [cross-complaint alleging causes of action arising from defendants bidding and contracting practices was not based on acts in furtherance of the right to petition].)

B. Common issues alone do not satisfy the arising from prong of

the anti-SLAPP statute.

Fabe argues that 1538s complaint arises in large part out of the same issues pursued in the Labor Claim, that is the issue of employer/employee relationship verses independent contractor status. However, the fact that this underlying issue must be addressed in both actions does not mean that 1538s action arises from Fabes complaint to the Labor Commissioner. Cotati illustrates this point. In Cotati, the owners of mobile home parks sued in federal court to challenge a city rent-control ordinance as an unconstitutional taking. (Cotati, supra, 29 Cal.4th at p. 72.) The City of Cotati then sued the owners for declaratory relief to determine the ordinances constitutionality. (Ibid.) The owners responded with an anti-SLAPP motion. (Id. at pp. 72-73.) Our Supreme Court concluded that although both actions shared the same underlying controversy and common issues - - the validity of a particular ordinance - - the citys suit did not arisefrom the action the owners had instituted. Rather, the gravamen of both actions was the same. (Id. at pp. 79-80.)

Similarly, while Fabes claim for unpaid wages and 1538s civil suit may share common underlying issues, Fabe may not prevail on her anti-SLAPP motion unless she makes a threshold showing that 1538s claims arise from her protected activities. As explained above, Fabe has not met this burden.

C. Neither a retaliatory motive nor an intent to chill protected

conduct necessarily brings a lawsuit within the anti-SLAPP statute.

Finally, Fabe contends that 1538 intended to chill her rights to petition and free speech and that it filed its complaint to retaliate against her for her unpaid wages claim. Fabe points to the timing of the preparation of 1538s complaint, among other things. But timing alone will not render an action subject to the anti-SLAPP statute. [T]he mere fact an action was filed after protected activity took place does not mean it arose from that activity. The anti-SLAPP statute cannot be read to mean that any claim asserted in an action which arguably was filed in retaliation for the exercise of speech or petition rights falls under section 425.16, whether or not the claim is based on conduct in exercise of those rights. [Citations.] (Cotati, supra, 29 Cal.4th at pp. 76-77; accord, Navellier, supra, 29 Cal.4th at p. 89.) Moreover, a claim filed in response to, or in retaliation for, threatened or actual litigation is not subject to the anti-SLAPP statute simply because it may be viewed as an oppressive litigation tactic. [Citation.] That a cause of action arguably may have been triggered by protected activity does not entail that it is one arising from such. (Cotati, supra, 29 Cal.4th at p. 78.) Nor is a plaintiffs intent to chill the defendants right to petition or free speech a factor in the determination of whether the anti-SLAPP statute applies to a challenged action. (Id. at p. 74 [the question of [the plaintiffs] subjective intent is not relevant]; Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 58-67.)

Even if protected activity is the trigger that causes a plaintiff to file suit or assert a particular cause of action, to prevail on an anti-SLAPP motion the defendant still must show that the gravamen of the retaliatory complaint (or cause of action) itself arises from the defendants protected activity. Because the principal thrust of 1538s complaint is not Fabes claim filed with the Labor Commissioner, but instead is Fabes alleged failure to meet her contractual duties as well as her alleged attorney negligence and fraud, we conclude that 1538s complaint does not arise from conduct that falls within the anti-SLAPP statutes definition of protected activity. The trial court therefore should have denied Fabes special motion to strike. Because Fabe has not met her burden to show that 1538s complaint arises from her protected activity, we do not consider whether 1538 established a probability it will prevail on its claims.

This ruling does not mean that a defendant has no recourse when confronted with a meritless, retaliatory suit. If a [defendant or] cross-defendant believes that a [responsive complaint or] cross-complaint has been filed for an improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation, or that the claims against it are frivolous or lacking in evidentiary support, then it may move for sanctions, including attorney fees and other expenses, to be awarded in the trial courts discretion. [Citations.] (Cotati, supra, 29 Cal.4th at p. 78, fn. 4.) A defendant also may challenge a meritless action by other appropriate means, such as a demurrer or motion for summary judgment, and she may sue the plaintiff for malicious prosecution after she prevails.

We fully appreciate the trial courts impression here that 1538s lawsuit appears to be retaliatory. Serious questions abound about the ultimate merit of 1538s complaint, given -- for example -- the W-2 form, the signed letter agreement for employment, the Labor Commissioners decision, and 1538s section 998 offer to settle this case for almost the exact amount the Commissioner ordered 1538 to pay Fabe. Moreover, the Labor Commisioners finding that Fabe was an employee - - not an independent contractor - - may be binding in this later civil action. (Noble v. Draper (2008) 160 Cal.App.4th 1, 11-12 [citing Johnson v. City of Loma Linda (2000) 24 Cal.4th 61, 65 and Labor Code, 98, 98.2].) As noted, Fabes demurrer remains to be decided, and the trial court may take judicial notice of the Labor Commisioners decision in considering that demurrer. (Code Civ. Proc., 430.30(a).) But the anti-SLAPP statute -- even given the required liberal construction -- does not stretch so far as to permit the dismissal of an admittedly dubious lawsuit that does not arise from the defendants protected activity.

3. Attorneys fees

In light of our ruling on Fabes special motion to strike, Fabe is not the prevailing party and therefore she is not entitled to attorneys fees under Code of Civil Procedure section 425.16, subdivision (c). Fabes cross-appeal therefore is moot.

DISPOSITION

The trial courts order granting Fabes special motion to strike under Code of Civil Procedure section 425.16 is reversed, and the cause is remanded to the trial court with instructions to vacate the order and subsequent judgment of dismissal, and to enter a new order denying the motion. The trial courts order denying attorneys fees to Fabe is dismissed as moot. Each party shall bear its own costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

EGERTON, J.*

We concur:

RUBIN, Acting P. J.

FLIER, J.

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[1] 1538 contends that it entered into an oral agreement with Fabe several days later under which she was to serve as an independent contractor. As noted, the written letter agreement in the record - - signed by both Fabe and Hacker - - describes Fabes status as that of a salaried temporary employee. In an administrative proceeding, the Labor Commissioner found that Fabe was an employee of 1538, not an independent contractor.

[2] In May 2006, the Labor Commissioner held a hearing on Fabes claim for unpaid wages. The Commissioner found that Fabe was an employee of 1538, not an independent contractor. The Commissioner awarded Fabe her past due wages and penalties totaling $12,824.66.

[3] Fabe also filed a demurrer and a motion to strike parts of the complaint. Because it granted the anti-SLAPP motion, the trial court did not decide the demurrer or the motion to strike parts of the complaint.

[4] Fabe contends that both Hacker and 1538 Cahuenga Partners, LLC are ineligible for appellate relief. First, Fabe argues that she never worked for Hacker and never entered into any agreement with him to provide legal services; thus Hacker failed to state a claim for relief and he cannot appeal the trial courts ruling. However, Hacker is a named plaintiff in this case and the trial court entered judgment against him. Whether Hacker is a proper plaintiff in this action is not before us. Fabe also argues that 1538 failed to file a brief on appeal and therefore is not entitled to relief. The cover page and signature block on appellants brief lists the appealing parties as Hacker and an entity called L&J Assets, LLC. However, the text of appellants brief correctly identifies 1538 Cahuenga Partners as one of the two appealing parties. Appellants have filed a motion asking that we accept their nonconforming briefs, which did not comply with California Rules of Court, rule 8.204 (requiring that the cover of an appellate brief state the names of the parties each attorney represents). Fabe did not oppose appellants motion. We therefore grant the motion and treat appellants brief as having been filed by 1538 Cahuenga Partners as well as Hacker.

[5] 1538 essentially concedes that Fabes complaint to the Labor Commissioner was an act in furtherance of the right of petition or free speech.

[6] In addition to repeating the allegation that Fabe insisted on being paid for non-billable hours, Hacker claims that when he refused to pay Fabe for contested charges, she threatened to take [him] to the Labor Board if [he] would not pay her. She later followed up on her threats and took [him] to the Labor Board. Hacker also declares that Fabe tricked him, because he did not realize the letter agreements description of Fabe as a temporary employee would allow her to conduct forum shopping involving her unscrupulous billing standard by being able to go to the Labor Board, and to make a compensation disputes [sic]. She took to the offensive by making a claim for the monies that I held back for unethical and disputed charges on her bill by filing a Labor Board dispute.

* Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.