Three Rivers Provider Network v. Shamoun
Filed 3/22/13 Three Rivers Provider Network v. Shamoun CA4/1
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COURT
OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION
ONE
STATE
OF CALIFORNIA
THREE RIVERS PROVIDER NETWORK,
INC.,
Plaintiff and Appellant,
v.
RONSON SHAMOUN et al.,
Defendants and Respondents.
D062343
(Super. Ct.
No. 37-2012-00090505-CU-BT-CTL)
APPEAL from
an order of the Superior Court
of
County, Ronald S. Prager, Judge. Reversed.
Three
Rivers Provider Network, Inc. (TRPN) appeals from the trial court's order
granting a special motion to strike
its lawsuit against Ronson Shamoun and the Law Office of Ronson J. Shamoun, a
Professional Law Corporation (collectively, Shamoun) as a strategic lawsuit
against public participation under Code of Civil Procedure section 425.16
(commonly known as the anti-SLAPP statute).
did not meet his burden to establish that the claims against him arose from
activity protected by the anti-SLAPP
statute. Accordingly, we reverse the
order granting the special motion to strike.
I
FACTUAL
AND PROCEDURAL BACKGROUND
TRPN —
a company in the healthcare field — became the subject of an investigation
by the Internal Revenue Service's Criminal Investigation Division (IRS-CID),
including a raid on TRPN's offices by IRS-CID that took place in March
2011. According to a declaration filed
by Ronson Shamoun, TRPN corporate officer Todd Breeden retained Shamoun to
represent him in connection with the IRS investigation. Breeden quit his job at TRPN in November
2011, and then sent TRPN a draft complaint alleging that Breeden was
constructively discharged for refusing to participate in "ongoing criminal
violations at TRPN."
name="_ftnref2" title="">[2] TRPN and Breeden participated in settlement
negotiations, in which Shamoun was involved, until January 2012, when TRPN
preemptively filed this action against Shamoun and Breeden.
TRPN's
complaint alleges numerous acts of wrongdoing by Breeden and Shamoun,
consisting generally of stealing from TRPN, engaging in self-dealing, and
continuing to hold privileged and confidential documents that belong to
TRPN.
According
to TRPN's complaint, in March 2011, Shamoun "pitched himself to TRPN as an
experienced, skilled, ethical tax defense attorney, who could and would jointly
defend all parties," and "routinely acted as counsel for the company
and other individuals involved with the company, despite knowing of the
conflict of interest between his client, Breeden, and the company." The complaint alleges that Shamoun used his
role as attorney to "enrich himself personally, using information gathered
. . . for personal self-enrichment
and client embezzlement." More
specifically, according to the complaint, in the time period between March and
November 2011 (1) Shamoun "solicited client confidences from the
company's counsel and other jointly interested individuals connected to
TRPN," which he and Breeden "would then misuse . . . for
their personal enrichment"; (2) "Shamoun and Breeden conspired
to liquidate corporate assets," "buy[ing] up the assets at a severe
discount and manag[ing] the brokering of the sale of such assets for Shamoun's
personal self-enrichment" and the enrichment of his family, friends,
business partners and clients; (3) Shamoun "issued false invoices to
[TRPN] for work never performed for TRPN," and engaged in
"bill-padding or false invoicing"; (4) "Shamoun went into
business with Breeden, including involving Breeden with a business that
competed with [TRPN]"; and (5) Shamoun "prepared incorrect
letters for Breeden whereby Breeden claimed he needed bonuses to cover tax
obligations." In addition, TRPN
alleges that "Breeden and Shamoun continue to have possession of substantial
corporate records and documentation" and "refuse to recognize the
right of privilege over the corporate information they obtained."
TRPN's
complaint asserts eight causes of action against Shamoun: (1) declaratory relief as to "the
proprietary nature of corporate records and privileged nature of information
received by the defendants"; (2) breach of contract, alleging that
Shamoun breached a professional services contract, which benefited TRPN as a
third party, by inducing Breeden to access confidential corporate information
and by arranging for Breeden to work for a competitor of TRPN; (3) breach
of fiduciary duty, alleging that Shamoun published and disseminated
confidential company information to third parties and used it for personal gain;
(4) conspiracy to breach fiduciary duty, alleging that Shamoun aided and
abetted Breeden to breach his fiduciary duty to the company by engaging in
self-dealing; (5) fraud, alleging that Shamoun misrepresented that he was
protecting the company's interest, was invoicing for work performed for the
company rather than for Breeden, and would honor the confidentiality of company
information; (6) conspiracy to convert corporate funds, alleging that
Shamoun obtained payment of $370,000 from TRPN for professional services
provided to Breeden, not to TRPN; (7) conspiracy to convert corporate
property, alleging that Shamoun wrongfully took proprietary and privileged
company information; and (8) professional malpractice, alleging that
Shamoun engaged in conflicted representation and misused TRPN's privileged and
confidential information for personal gain.
Shamoun
filed a special motion to strike under the anti-SLAPP statute. He argued that TRPN's claims against him
arose from activity protected by the anti-SLAPP statute because TRPN filed its
complaint as "a preemptive strike against Mr. Breeden and his counsel
for their anticipated petition for redress of grievances in the form of
Mr. Breeden's constructive discharge claim" and the "[c]omplaint
was simply designed to prevent Mr. Breeden from exercising his
constitutional rights of petition and free speech to file his
lawsuit." The trial court granted
the motion, concluding that the causes of action against Shamoun arose from
protected activity and that TRPN had not demonstrated a probability of
prevailing on its claims.
name="_ftnref4" title="">[4] TRPN filed a notice of appeal. (§ 904.1, subd. (a)(13).)
II
DISCUSSION
A. Standard of Review
"Review
of an order granting or denying a motion to strike under section 425.16 is de
novo. [Citation.] We consider 'the pleadings, and supporting
and opposing affidavits . . . upon which the liability or defense is
based.' (§ 425.16,
subd. (b)(2).) However, we neither
'weigh credibility [nor] compare the weight of the evidence. Rather, [we] accept as true the evidence
favorable to the plaintiff [citation] and evaluate the defendant's evidence
only to determine if it has defeated that submitted by the plaintiff as a
matter of law.' " (Soukup
v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 269.)
B. Applicable Legal
Standards
The
anti-SLAPP statute 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 or the 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." (§425.16, subd (b)(1).) "The analysis of an anti-SLAPP motion
thus involves two steps. 'First, the court decides whether the defendant has
made a threshold showing that the challenged cause of action is one
"arising from" protected activity.
(§ 425.16, subd. (b)(1).)
If the court finds such a showing has been made, it then must consider
whether the plaintiff has demonstrated a probability of prevailing on the
claim.' [Citation.] 'Only a cause of action that satisfies both
prongs of the anti-SLAPP statute—i.e., that arises from protected speech or
petitioning and lacks even minimal merit—is a SLAPP, subject to being
stricken under the statute.' " (Oasis
West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 819-820.) "If the defendant does not demonstrate
[the] initial prong, the court should deny the anti-SLAPP motion and need not
address the second step." (
(2009) 177 Cal.App.4th 1264, 1271 (Hylton).)
Section
425.16, subdivision (e) specifies the type of activity protected by the
anti-SLAPP statute: An " 'act in furtherance of a
person's right of petition or free speech . . . 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
connection with a public issue or an issue of public interest." (§ 425.16, subd. (e).)
"[T]he
statutory phrase 'cause of action . . . arising from' means
. . . 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).) " '[T]he mere fact that an
action was filed after protected activity took place does not mean the action
arose from that activity for the purposes of the anti-SLAPP statute. [Citation.]
Moreover, that a cause of action arguably may have been
"triggered" by protected activity does not entail that it is one
arising from such. [Citation.] In the anti-SLAPP context, the critical
consideration is whether the cause of action is based on the defendant's
protected free speech or petitioning activity.'
. . . The additional
fact that protected activity may lurk in the background—and may explain why the
rift between the parties arose in the first place—does not transform a
. . . dispute into a SLAPP suit." (Episcopal
Church Cases (2009) 45 Cal.4th 467, 477-478, citation omitted.)
C.
of Action Against Him Arise from Protected Activity
We now turn
to an analysis of whether Shamoun has met his burden to demonstrate that the
causes of action against him arise from activity protected by the anti-SLAPP
statute.
1.
Against Him Arise from Protected Activity Because They Are Based on Breeden's
Threat to File Suit Against TRPN
Shamoun
first argues that the claims against him fall within the scope of the anti-SLAPP
statute because they arise from Breeden's draft complaint and associated
settlement discussions, in which Shamoun participated. Shamoun contends that the draft complaint and
his activity associated with it constitute protected activity as described in
section 425.16, subdivision (e)(2) because the complaint constitutes a
"written . . . statement or writing made in connection with an
issue under consideration or review by a . . . judicial body." (Ibid.)
The initial
premise of Shamoun's argument is sound.
It is well-settled that prelitigation conduct, such as the preparation
of a draft complaint, can constitute free speech or petitioning activity
protected by the anti-SLAPP statute. (
Cal.App.4th 1152, 1162 ["There is no question that 'a prelitigation
statement falls within clause (1) or (2) of section 425.16, subdivision (e) if
the statement " 'concern[s]
the subject of the dispute' and is made 'in anticipation of litigation
"contemplated in good faith and under serious consideration" ' " ' "].) "This includes qualifying acts committed
by attorneys in representing clients in litigation." (Rusheen
v. Cohen (2006) 37 Cal.4th 1048, 1056.)
The problem with Shamoun's
argument, however, is that he must establish the claims against him
he has identified. (§425.16, subd
(b)(1).) Case law establishes that a
lawsuit does not arise from
threatened litigation for the purpose of the anti-SLAPP statute merely because
it is filed in anticipation of threatened litigation. "[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." (Cotati, supra,
the notion 'that a lawsuit is adequately shown to be one "arising
from" an act in furtherance of the rights of petition or free speech as long
as suit was brought after the defendant engaged in such an act, whether or not
the purported basis for the suit is that act itself.' "
(Id. at p. 77.) The proper inquiry is not what triggered or
motivated the lawsuit, but " 'whether
the cause of action is based on the defendant's protected free speech or
petitioning activity.' " (Episcopal Church Cases, supra, 45 Cal.4th at
p. 477.)
Here, even
though TRPN may have been motivated to
preemptively file suit against Shamoun and Breeden because Breeden threatened
to file a draft complaint for constructive discharge, the causes of action
asserted in TRPN's complaint are not based
on the content or existence of Breeden's draft complaint. Instead, as we have explained, the claims
against Shamoun focus on alleged wrongdoing between March and November 2011,
consisting primarily of alleged self-dealing, breaches of loyalty, and taking
of confidential documents. Shamoun's
participation in Breeden's settlement negotiations concerning the draft
complaint does not constitute " '[t]he allegedly wrongful and injury-producing conduct
. . . that provides the foundation for the claim[s]' " asserted in TRPN's
lawsuit. (Hylton, supra, 177
Cal.App.4th at p. 1272.) At most
Breeden's draft complaint "lurk[s] in the background" and " ' "triggered" ' " TRPN's lawsuit (
Breeden's draft complaint, and thus the lawsuit does not, for the purpose of
the anti-SLAAP statute, arise out of the petitioning and free speech activity
associated with Breeden's draft complaint.
To the
extent that Shamoun is arguing that TRPN's claims against him arise from
protected activity because they allege breaches of
context of a threatened litigation or an official proceeding associated with
the IRS-CID investigation, that claim fails as well. A claim against an attorney for malpractice
or other misconduct does not qualify as protected activity merely because it
was committed against the backdrop of petitioning activity. "[T]he anti-SLAPP statute does not
apply to a client's claim against his or her former attorney for breach of
fiduciary duty . . . or for malpractice . . . merely
because the client's claim against the former attorney followed or was
associated with petitioning activity by the attorney on the client's
behalf." (Hylton, supra, 177
Cal.App.4th at p. 1273.) Thus for
example, in a legal malpractice action, "[t]hat the malpractice allegedly
occurred in the course of petitioning activity does not mean the claim arose
from the activity itself." (
(2006) 145 Cal.App.4th 1532, 1535.)
Instead, the moving party " 'must demonstrate that the substance of the plaintiff's
cause of action was an act in furtherance of the right of petition or free
speech.' " (Benasra
v. Mitchell Silberberg & Knupp LLP (2004) 123 Cal.App.4th 1179,
1185.) Shamoun cannot meet this burden
here, because — as we have explained — TRPN's claims are based on Shamoun's
alleged acts of self-dealing and professional malpractice, and are not based on
any activity undertaken by Shamoun in the furtherance of the right to petition
or to exercise the right to free speech.
2.
Against Him Fall Under the Anti-SLAPP Statute on the Ground that They Arise
from Free Speech or Petitioning Activity in Connection with an Issue of Public
Interest
Shamoun's
final argument invokes section 425.16, subdivision (e)(4), which states that
protected activity under the anti-SLAPP statute includes "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."
(§ 425.16, subd. (e)(4).)
According to Shamoun, the "[c]omplaint pertains to statements,
writing and other conduct by [Shamoun] which relate to a topic that could
affect . . . a large number of TRPN's clients, customers and
employees, that is the IRS-CID criminal investigation of a prominent local
company . . . and its founder . . . for tax
fraud."
"The 'public interest'
component of section 425.16, subdivision (e)(3) and (4) is met when 'the
statement or activity precipitating the claim involved a topic of widespread
public interest,' and 'the statement . . . in some manner itself
contribute[s] to the public debate.' " (
Huntingdon Animal Cruelty USA, Inc. (2005) 129 Cal.App.4th 1228, 1246 (
cases where "(1) the subject of the statement or activity precipitating
the claim was a person or entity in the public eye; (2) the statement or
activity precipitating the claim involved conduct that could affect large
numbers of people beyond the direct participants; or (3) the statement or
activity precipitating the claim involved a topic of widespread public
interest." (Mann v. Quality Old Time Service, Inc. (2004) 120 Cal.App.4th 90,
111 (Mann).) "[C]ourts have . . . construed
' "public
interest" ' 'to
include not only governmental matters, but also private conduct that impacts a
broad segment of society and/or that affects a community in a manner similar to
that of a governmental entity.' " (Cross
v. Cooper (2011) 197 Cal.App.4th 357, 372.)
Shamoun
contends that the IRS-CID investigation of TRPN was a matter of public interest
because TRPN is allegedly a "high-profile" company. Without even addressing whether Shamoun has
established that the IRS-CID investigation of TRPN is an issue of public
interest, we reject Shamoun's attempt to use the public interest component of
the anti-SLAPP statute to establish that the causes of action against him arise
from protected activity. Shamoun's
argument fails for the fundamental reason that TRPN does
not base Shamoun's purported liability on any statement he made about the
IRS-CID investigation or any petitioning activity by Shamoun during the IRS-CID
investigation. Although the wrongdoing
alleged by TRPN was purportedly committed against the backdrop of the IRS-CID investigation, Shamoun is not being sued
because of anything he said about the IRS-CID investigation or any official act
that he took during that investigation that could be described as petitioning
activity. (See Mann, supra,
[concluding that statements did not concern a public issue because they were
made about a company's "specific business practices," not about the
specific issue of public interest identified by the moving party];
was not based on his petitioning activity even though the lawsuit
"allude[d] to [his] petitioning activity" as relevant background
facts].)
Shamoun
also contends that TRPN's claims against him arose from statements he made
about another matter of public interest, namely "[Shamoun's] right to
vigorously defend its clients and safeguard attorney-client
communications." We reject this
argument because TRPN's causes of action against Shamoun are not based on any
statements he made about his right to defend his client or preserve the
confidentiality of attorney client communications. On the contrary, the complaint is based on
allegations that Shamoun violated TRPN's confidence, committed malpractice and
engaged in self-dealing.
Finally,
Shamoun contends that TRPN's claims against him are based on statements about
matters of public interest because, in the course of his alleged self-dealing
in profiting from the sale of TRPN's assets, he "[d]iscuss[ed] the assets
to be sold with potential interested purchasers." He claims that such discussions were in
connection with an issue of public interest because they concerned "the
proper disposition of assets following the IRS-CID raid at TRPN." We reject this argument because such
discussions clearly do not constitute discussions on an issue of public
interest. Instead of involving " 'a topic of widespread
public interest' "
and " 'in some
manner itself contribut[ing] to the public debate,' " as is required to constitute protected
activity (Huntingdon,
Shamoun's statements as offers to clients, family, friends and business
partners to buy TRPN's assets at discount prices, which are statements about
purely personal business arrangements.
In sum,
Shamoun has failed to satisfy his burden to demonstrate that the claims against
him arise from activity protected by the anti-SLAPP statute.
Shamoun's special motion to strike.
DISPOSITION
The order granting Shamoun's special motion to strike is
reversed, and this action is remanded for further proceedings.
IRION, J.
WE CONCUR:
McCONNELL, P. J.
NARES,
J.
statutory references are to the Code of Civil Procedure.
name="_ftn2" title="">[2] According to Breeden's draft complaint, TRPN expected
Breeden to "sign fraudulent documents," "make false statements
about various financial transactions" and "engage in conduct which
Mr. Breeden now believes is illegal conduct designed to evade federal
income tax laws."
