Anwyl, Scoffield & Stepp v. Blackhurst

Filed 9/25/08 Anwyl, Scoffield & Stepp v. Blackhurst CA3

NOT TO BE PUBLISHED

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

THIRD APPELLATE DISTRICT

(Sacramento)

----

Defendant and cross-complainant, Regina Blackhurst, appeals from the trial courts order granting the motion of plaintiff and cross-defendant, Anwyl, Scoffield & Stepp (hereafter AS&S or the law firm), to strike Blackhursts cross-complaint. (Code Civ. Proc.,  425.16, subd. (b)(1) (the anti-SLAPP law).)

Blackhurst contends that the motion to strike should have been denied because her cross-complaint against AS&S did not arise from any protected activity by the law firm and, in any event, she demonstrated a probability of success on the merits. We disagree and shall affirm the order striking Blackhursts cross-complaint.^[1]

FACTS

In July 2004, Blackhurst contacted Elisa Ungerman to represent her in a wrongful termination action against her former employer, Trinity Church. Ungerman was an attorney employed by AS&S. The contingency fee agreement provides that Ungerman and the Law Firm of [AS&S] (Attorney), hereby agrees to represent REGINA L. BLACKHURST and/or [her husband] (Clients), in connection with [a] claim for damages or other appropriate relief against [Trinity Church] for the injuries and/or loss suffered by Clients arising out of [its termination of Blackhursts employment] in/or about September 2001. Blackhurst agreed that upon receipt of a settlement or award, Attorney would be reimbursed for costs and would retain 40 percent of the net settlement or award. To secure said payment, the contract grants [an] Attorney lien on Clients claim and any cause of action or lawsuit filed thereon.

In August 2005, Ungerman left her employment with AS&S.

According to AS&S, Ungerman approached the law firms partners and demanded that AS&S pay her 50 percent of any payment it received in the Blackhurst case if the lawsuit were successful; otherwise, she would leave the firm and take Blackhurst with her as a client.

According to Blackhursts husband, Ungerman informed the Blackhursts that she might be leaving AS&S, advised them they had the option of staying as clients of the firm or going with her as clients, and said the choice was up to them, she could not tell them what to do. In response to questions by the Blackhursts, Ungerman told them that AS&S had qualified litigators but no one else had worked on the case. The Blackhursts advised Ungerman that they needed time to think about it and would get back to her with their decision. No one from AS&S contacted the Blackhursts or made any effort to discuss what would happen to them if Ungerman left the firm. Based on this lack of interest and involvement by AS&S, the Blackhursts decided to continue being represented by Ungerman.

Blackhurst then signed a substitution of attorney form, substituting Ungerman as her sole attorney, and also signed a new contingency fee agreement with Ungerman, which is virtually identical to the prior fee agreement, with similar payment terms of costs plus 40 percent of the net recovery.^[2] According to Ungerman, the purpose of the new fee agreement was to reaffirm the terms of the original agreement, except Blackhurst was now represented solely by Ungerman rather than by Ungerman and AS&S. Ungerman assured Blackhurst that the maximum fees she would be obligated to pay to Ungerman and AS&S would be 40 percent of any recovery. The fee agreement does not provide that Blackhurst will owe Ungerman a 40 percent contingency fee in addition to AS&Ss fees.

On December 8, 2005, AS&S filed a notice of lien on the proceeds of any settlement or judgment in Blackhursts federal court case. The lien was for fees in the amount of 40 percent of Blackhursts recovery plus costs of $9,797.19.

Two weeks later, Blackhurst settled her action against Trinity Church for the sum of $230,000. The settlement amount was paid in two checks (one for $105,000, which allegedly represented Blackhursts share, and the other for $125,000, which represented attorney fees). The primary purpose for issuing two checks was to facilitate the release of the $105,000 to Blackhurst.

According to Ungerman, Blackhurst agreed to the settlement based in part on the promise she would receive the unencumbered portion of the settlement within two to three weeks of the date of settlement. The plan was not successful. Trinity Churchs attorney informed Ungerman that he had the settlement checks but AS&S had requested it be a joint payee, and that he would not release the $105,000 check without the approval of AS&S.

Ungerman asked AS&S to permit the $105,000 check to be distributed to Blackhurst free of any lien and the remaining $125,000 to be retained to cover attorney fees for AS&S and Ungerman. Blackhurst did not object to AS&S being listed as a joint payee on the $125,000 check. According to Ungerman, the $125,000 was more than enough to cover the 40 percent contingency fee of $92,000, which was the maximum amount of fees owed to AS&S under the terms of the original contract; thus, the law firms refusal to release the $105,000 check was tantamount to punishing Blackhurst for continuing with Ungerman as counsel rather than remaining with AS&S.

Although AS&S calculated that the maximum amount of its fees and costs was less than $98,000, it refused to release any of the settlement money in excess of that amount absent assurances that the $125,000 designated for attorney fees was sufficient to satisfy any and all lien claims, including Ungermans attorney fee claim. AS&S asked Ungerman and Blackhurst to disclose their fee agreement so AS&S would know the sum owed to it for fees was not encumbered by a competing lien. It agreed to release its claim on the settlement proceeds in excess of the $98,000 sum if Blackhurst (1) agreed to deposit this sum in a blocked account accessible only by the joint signature of AS&S and Blackhurst; and (2) agreed that she could dispute the amount of reasonable fees due to AS&S but not claim that an amount otherwise rightfully payable to [AS&S] should be reduced by reason of the fact that she entered into a subsequent fee agreement with [Ungerman] and that the total amount retained (or for that matter paid) is not enough to satisfy her obligations to both counsel. In other words, Blackhurst could not argue that she did not set aside enough money to satisfy the legitimate claims of both law firms. If Blackhurst agreed to this resolution, AS&S would notify Trinity Churchs insurance carrier that it withdrew its lien.

On January 12, 2006, Ungerman told AS&S that she calculated the maximum amount owed to AS&S as $97,857.89 for fees and costs. She did not agree that this represented AS&Ss actual quantum meruit fees, only that it was the maximum sum owed to AS&S. Blackhurst had agreed to tender this sum into a blocked account, but believed that the maximum amount of fees she owed to both attorneys under the contingency fee contract was 40 percent of her net recovery, which would be split between AS&S and Ungerman, who was a party to the initial fee agreement. Unwilling to place the money in an account solely for AS&Ss benefit, she proposed interpleading the funds while the attorneys argued over who was entitled to what portion of the amount.

On January 24, 2006, Blackhurst filed a motion in her federal court action to determine the scope of AS&Ss lien and to compel Trinity Church to release the settlement funds.^[3] The federal court dismissed the motion on January 27, 2006, ruling that it lacked jurisdiction to resolve the fee dispute, and indicating the dispute required separate litigation.

According to an e-mail from AS&Ss attorney, it appears that he negotiated a proposed resolution with Ungerman and sent her a written copy of the agreement for her to review. The terms of the written resolution are not included in the appellate record.

On February 4, 2006, Ungerman e-mailed AS&Ss attorney, questioning two paragraphs of the agreement that seem[ed] to be somewhat opposite of what [Ungerman and AS&Ss attorney] discussed on the phone. Stating she and her client did not understand why this has to be so difficult, Ungerman asked whether they could simply agree on the amount at issue so it could be interpleaded between the two attorneys. According to Ungerman, Blackhurst would release her claim to that amount in full satisfaction of her contractual requirements under the first contingency fee contract with AS&S and Ungerman; any amounts Blackhurst otherwise agreed to pay Ungerman would be dealt with separately.

At some point, AS&S agreed to release the $105,000 check to Blackhurst, and she received the money in March 2006. In an e-mail to Ungerman, AS&Ss attorney stated he was able to obtain AS&Ss agreement to release the $105,000 check based on an assertion that the remaining funds would go into a joint account requiring dual signatures. Asking whether Ungerman was authorized to accept a notice of right to arbitrate on behalf of Blackhurst, AS&Ss attorney observed that Blackhurst could agree to arbitrate the amount she owed in fees or could resolve the matter in a court setting. Ungerman replied that she was amenable to placing the second check in a joint account. As for litigation, she had repeatedly stated that Blackhurst desired to interplead the remaining funds and that Blackhurst did not wish to be involved in further litigation proceedings.

The parties failed to reach an agreement regarding the remaining funds. Ungerman continued to claim she was entitled to a portion of the maximum of $98,000 in fees to which AS&S was entitled in quantum meruit for its representation of Blackhurst.

On June 29, 2006, AS&S sued Ungerman and Blackhurst, alleging that Ungerman, who is not a party on appeal, (1) intentionally interfered with contractual relations; (2) intentionally and negligently interfered with prospective economic advantage; (3) misappropriated trade secrets; and (4) breached her fiduciary duty. AS&S sued Blackhurst (1) for declaratory relief, asserting AS&S was entitled to $80,000 plus costs for its representation of Blackhurst; (2) in quantum meruit, asserting AS&S was entitled to $90,000 for the reasonable value of costs advanced and services performed on behalf of Blackhurst; and (3) for foreclosure of its lien which, according to AS&S, attached to the entire $230,000 Blackhurst received in settlement of her action against Trinity Church.

Blackhurst cross-complained against AS&S for (1) professional negligence, (2) breach of contract, (3) breach of fiduciary duty, (4) fraud and concealment, (5) conversion, and (6) intentional interference with business opportunity or prospective advantage. The gravamen of her complaint is that AS&S breached its duty to her and its contract with her by exercising dominion and control over all of the settlement monies and by wrongfully refusing to agree to the release of the portion of the settlement that exceeded the maximum fees owed when AS&S knew that Blackhurst needed the funds for financial reasons. This wrongful conduct caused her to incur monetary damages in the form of interest on her credit card bills and the loss of a business opportunity. Blackhurst sought compensatory and punitive damages from AS&S.

A few weeks after filing her cross-complaint, Blackhurst moved for discharge from liability. (Code Civ. Proc.,  386.5.)^[4] By this means, she sought to have released to her the amount in excess of the $97,938.32 that she claimed she owed for attorney fees and costs. In support of the motion, Ungerman filed a declaration stating she was not claiming an entitlement to any amount beyond that owed under the initial contingency agreement. In other words, Ungerman believed that she and AS&S should divide the $97,938.32, which AS&S agreed was the maximum amount owed to it under the fee agreement.

AS&S opposed the motion for discharge, observing that Ungerman had indicated she was entitled to share in the fees due under the original contract in addition to whatever fees were due her under her subsequent contract with Blackhurst. Accordingly, there were too many factual disputes regarding the existence of conflicting liens between Ungerman and AS&S to grant the requested relief.

On February 16, 2007, the trial court denied Blackhursts motion for discharge, ruling it was not apparent that the maximum amount of fees owed to both AS&S and Ungerman was $97,938.32.

Meanwhile, on January 24, 2007, AS&S filed a special motion to strike Blackhursts cross-complaint (Code Civ. Proc.,  425.16, subd. (e)(1) and (4)), contending that all of Blackhursts causes of action were premised on AS&Ss exercise of its lien rights, and that the litigation of its lien as well as its prelitigation conduct were protected activities under the statute. AS&S also asserted that Blackhurst was unable to demonstrate a likelihood of winning on the merits because AS&S did not do anything wrong in protecting its lien rights. Furthermore, AS&S claimed, the firm was immune from liability due to the Noerr-Pennington doctrine (Eastern R.R. Conference v. Noerr Motor Freight (1961) 365 U.S. 127 [5 L.Ed.2d 464]; United Mine Workers v. Pennington (1965) 381 U.S. 657 [14 L.Ed.2d 626]) and the litigation privilege in Civil Code section 47, subdivision (b).

Opposing the motion to strike, Blackhurst argued that the gravamen of her complaint did not contest AS&Ss right to file a notice of lien to protect its right to recover its attorney fees; it concerned AS&Ss failure to promptly agree to release the client funds owed to her that were clearly in excess of the amount of such right to attorney fees. In Blackhursts view, the allegations of her complaint arose from a contractual dispute about the extent of her obligation to AS&S under the attorney fee agreement and AS&Ss contractual lien rights, and involved whether AS&S wrongly withheld funds rightfully belonging to her in violation of the contract and of AS&Ss legal and ethical obligations.

In granting AS&Ss special motion to strike Blackhursts cross-complaint, the trial court ruled that (1) AS&Ss conduct, as alleged in the cross-complaint, arose solely out of AS&Ss assertion of its lien rights, its communications with Blackhursts counsel regarding the lien, and the filing of a lawsuit seeking an adjudication of its rights, and (2) Blackhurst did not have a probability of succeeding on the merits because of the litigation privilege and the Noerr-Pennington doctrine. The court also ruled that because AS&S was only a payee on the checks and never had actual possession of the funds, it did not violate Rules of Professional Conduct, rule 4-100, which requires an attorney, upon a clients request, to promptly pay or deliver funds in its possession that the client is entitled to receive.

LEGAL FRAMEWORK

The anti-SLAPP statute is aimed at curbing lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances. (Code Civ. Proc. 425.16, subd. (a) [further section references are to the Code of Civil Procedure unless otherwise specified]; Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 738-739 (hereafter Jarrow.).) It applies to cross-complaints as well as to complaints. ( 425.16, subd. (h); Jarrow, supra, 31 Cal.4th at p. 735, fn. 2.) As pertinent to this appeal, the statutes protection extends to any written or oral statement or writing made before a . . . judicial proceeding and to any conduct in furtherance of the exercise of the constitutional right of petition. ( 425.16, subd. (e)(1)&(4).) The right of access to courts is an aspect of the First Amendment right of petition. (Jarrow, supra, 31 Cal.4th at p. 736, fn. 5.)

There are two components to a section 425.16 special motion to strike. We review de novo the trial courts ruling on these components. (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1055.) First, the party challenging the lawsuit must make a threshold showing that the claim arises from an act in furtherance of the partys constitutional right to petition or to free speech. (Id. at p. 1056.) Second, if the lawsuit affects a protected right, the court must determine whether there is a reasonable probability the plaintiff will prevail on the claim. ( 425.16, subd. (b)(1); Rusheen v. Cohen, supra, 37 Cal.4th at p. 1056.)

In City of Cotati v. Cashman (2002) 29 Cal.4th 69 (hereafter Cotati), the California Supreme Court explained: [T]he mere fact an action was filed after protected activity took place does not mean it arose from that activity. [] . . . [] To construe arising from in section 425.16, subdivision (b)(1) as meaning in response to, . . . would in effect render all cross-actions potential SLAPPs. (Id. at pp. 76-77.) Just as a cross-complaint often arises out of the same transaction, occurrence, or series of transactions or occurrences as the cause of action which the plaintiff alleges [citations], so may a responsive but independent lawsuit arise from the same transaction or occurrence alleged in a preceding lawsuit, without necessarily arising from that earlier lawsuit itself. [Citation.] (Id. at pp. 77-78.)

Cotati concluded [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. [Citation.] . . . [T]he 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.] A defendant meets this burden by demonstrating that the act underlying the plaintiffs cause fits one of the categories spelled out in section 425.16, subdivision (e) . . . . (Cotati, supra, 29 Cal.4th at p. 78.)

It is the principal thrust or gravamen of the plaintiffs cause of action that determines whether the anti-SLAPP statute applies [citation], and when the allegations referring to arguably protected activity are only incidental to a cause of action based essentially on nonprotected activity, collateral allusions to protected activity should not subject the cause of action to the anti-SLAPP statute. (Martinez v. Metabolife Internat., Inc. (2003) 113 Cal.App.4th 181, 188.)

Conversely, a plaintiff cannot avoid the operation of the anti-SLAPP statute by attempting, through artifices of pleading, to characterize an action as a garden-variety tort or contract claim when in fact the liability claim is predicated on protected speech or conduct. (Navellier v. Sletten (2002) 29 Cal.4th 82, 90-92.) Thus, a plaintiff cannot frustrate the purposes of the SLAPP statute through a pleading tactic of combining allegations of protected and nonprotected activity under the label of one cause of action. (Fox Searchlight Pictures, Inc. v. Paladino (2001) 89 Cal.App.4th 294, 308.)

DISCUSSION

I

Blackhurst contends the trial court erred in determining the gravamen of her cross-complaint arose from AS&Ss filing of a notice of lien and litigation activity. She asserts that her causes of action against AS&S did not arise from any written or oral statement or writing made before a . . . judicial proceeding or to any conduct in furtherance of the exercise of the constitutional right of petition . . . . ( 425.16, subd. (e)(1)&(4).) In her view, the cross-complaint concerns nothing more than a dispute about a business transaction, i.e., the amount of fees owed to AS&S for its efforts toward obtaining her settlement, and whether it wrongfully delayed the release of the excess settlement proceeds to Blackhursts detriment. The complaint does not challenge AS&Ss right to file a notice of lien or claim that the filing was wrongful; it challenges only AS&Ss conduct in continuing to hold up the release of the portion of the settlement in excess of the agreed-upon maximum amount of fees owed to AS&S.

Blackhurst recognizes that even though she discharged AS&S, the firm had the right to assert a quantum meruit claim against any subsequent recovery she received. (Fracasse v. Brent (1972) 6 Cal.3d 784, 792; Rus, Miliband & Smith v. Conkle & Olesten (2003) 113 Cal.App.4th 656, 671.) However, it was entitled to a lien against the recovery only to the extent of fees and costs due for its services. (Epstein v. Abrams (1997) 57 Cal.App.4th 1159, 1170 [[a] contingent fee agreement vests the attorney with an equitable interest in that part of the clients cause of action which is agreed upon as the contingent fee]; Siciliano v. Firemans Fund Ins. Co. (1976) 62 Cal.App.3d 745, 752 [contingent fee contract with creation of a lien in favor of counsel gives counsel a lien upon the recovery, and the attorney is regarded as an equitable assignee of the judgment or settlement to the extent of fees and costs which are due him for services rendered].) The contract price provided the upper limit on the amount that AS&S could recover in quantum meruit. (Cazares v. Saenz (1989) 208 Cal.App.3d 279, 289-290; Spires v. American Bus Lines (1984) 158 Cal.App.3d 211, 216.) And [w]here a contingent fee is insufficient to meet the quantum meruit claims of both discharged and existing counsel, courts must distribute the fee among all discharged and existing attorneys in proportionto the time spent on the case by each attorney. Each attorney is thus compensated in accordance with work performed and the client pays only a single contingency fee. (Vapnek et al., Cal. Practice Guide: Professional Responsibility (The Rutter Group 2007) 5:1050, p. 5-127, orig. italics, citing Matter of Van Sickle (Rev. Dept. 2006) 4 Cal. State Bar Ct. Rptr. 980, 988-989; Spires v. American Bus Lines, supra, 158 Cal.App.3d at p. 216.)

Thus, according to Blackhurst, AS&S wrongfully refused to release her portion of the settlement when it knew that the maximum quantum meruit or contingency fees owed to AS&S and Ungerman were $98,000, which was to be split between them. It is this wrongful conduct that forms the basis of her cross-complaint.

AS&S counters that when successive attorneys represent a client, the discharged attorney generally must file a quantum meruit action to determine the validity and scope of his or her lien and entitlement to fees. The amount of fees to be split between counsel is not necessarily limited to the contingency fee provided for in the original fee agreement. This is so because the new attorney is not precluded from seeking a contingency fee in addition to the former attorneys fee, as long as counsel fully discloses this fact to the client and obtains the clients informed consent. (Vapnek et al., Cal. Practice Guide: Professional Responsibility, supra,  5:1060.1, p. 5-128.) AS&S sought to avoid litigation by determining if the proffered $98,000 was free of competing liens or was sufficient to cover the lien claims of AS&S and Ungerman. Because Blackhurst refused to provide such assurances, AS&S resorted to filing an action for declaratory relief.

Thus, according to AS&S, the record plainly establishes that the acts upon which the cross-complaint was based consisted of the filing of the Notice of Lien, asserting legal positions preparatory to or in connection with a matter pending before a court of law, and/or failing to retract those positions as demanded by [Blackhurst]. That is, Blackhurst sued AS&S for pursuing its right to litigate its fee claim.

Given the nature of a discharged attorneys lien for fees, AS&S has the better argument.

An attorneys lien upon the fund or judgment which he has recovered for his compensation as attorney in recovering the fund or judgment . . . is denominated a charging lien. [Citation.] (Fletcher v. Davis (2004) 33 Cal.4th 61, 66.) In California, an attorneys lien is generally created only by contract, not by the mere fact an attorney has performed services in a case. (Ibid.) A contractual lien survives the discharge of the attorney, and the attorney, although no longer entitled to the fees contracted for, remains entitled to recover from the judgment the reasonable value of services actually performed. (Carroll v. Interstate Brands Corp. (2002) 99 Cal.App.4th 1168, 1172, fn. 3.) The attorney cannot recover fees in the pending action; his or her lien claim must be litigated in a separate action. (Id. at p. 1177.)

An attorneys charging lien is a security interest in the proceeds of the litigation. (Fletcher v. Davis, supra, 33 Cal.4th at p. 67, orig. italics.) Although the lien is created without the necessity of filing a notice of lien, it is a common practice to file a notice of lien, which practice is permissible and even advisable because it assists a discharged attorney in preventing the former client from settling around the lien. (Carroll v. Interstate Brands Corp., supra, 99 Cal.App.4th at pp.1173, 1176.)

[A] charging lien does not grant an attorney the power to summarily extinguish the clients interest in any recovery, but it can significantly impair the clients interest by delaying payment of the recovery or settlement proceeds until any disputes over the lien can be resolved. For example, when there is a dispute over the existence or amount of an attorneys charging lien, the attorney can prevent the judgment debtor or the settling party from remitting the recovery to the client until the dispute is resolved. [Citations.] Alternatively, when the settlement draft is made jointly payable to the client and the attorney, the attorney may refuse to endorse the check until the dispute is resolved. [Citation.] (Fletcher v. Davis, supra, 33 Cal.4th at pp. 68-69, fn. omitted, orig. italics.) Indeed, the attorney must do so in order to preserve the charging lien. (Id. at p. 69, fn. 2, orig. italics, citing In the Matter of Feldsott (Review Dept. 1997) 3 Cal. State Bar Ct. Rptr. 754, 758.) Even when the proceeds have been deposited in the clients trust account, the attorney may withhold an amount equivalent to the disputed portion. [Citations.] In each of these instances when the charging lien is disputed, the clients recovery will be tied up until everyone involved can agree on how the money should be divided . . . or until one or the other brings an independent action for declaratory relief. [Citations.] (Fletcher v. Davis, supra, 33 Cal.4th at p. 69.)

In sum, a charging lien grants the attorney considerable authority to detain all or part of the clients recovery whenever a dispute arises over the liens existence or its scope. (Fletcher v. Davis, supra, 33 Cal.4th at p. 69.)

Here, AS&S filed its notice of lien in Blackhursts action against Trinity Church. Trinity Church settled with Blackhurst for $230,000, and the settlement was paid in two checks of $105,000 and $125,000. Due to the notice of lien, Trinity Church refused to release either settlement check without AS&Ss approval; and AS&S refused to agree to release any settlement proceeds, including Blackhursts $105,000, without an assurance that the remaining $125,000 would cover AS&Ss fees and costs as well as Ungermans fees and costs. Blackhurst and Ungerman were not forthcoming about the nature of their fee agreement despite AS&Ss requests for information. AS&S eventually released the $105,000, but the parties were unable to resolve their dispute regarding the remaining $125,000. Thus, AS&S filed a declaratory relief action, as it was required to do in order to obtain its quantum meruit fees. Blackhurst cross-complained, alleging AS&S wrongfully exerted dominion and control over her portion of the settlement proceeds and prevented the timely release of the settlement monies in excess of her fee obligation, which AS&S agreed was a maximum of $98,000.

As illustrated by our discussion of attorney fee liens, AS&S was entitled to file a notice of lien in the underlying action to protect its lien claim, and it also was entitled to litigate its claim for fees. Blackhurst attempts to portray her action as one involving a private contractual dispute.^[5] However, the gravamen of her cross-complaint arises from AS&S (1) filing a notice of lien; (2) engaging in pre-litigation negotiations; and (3) filing a declaratory relief action, all of which delayed her receipt of her settlement proceeds. In other words, AS&S exerted dominion and control over the settlement proceeds by prosecuting its lien claim. Therefore, Blackhursts complaint arises from AS&Ss protected petitioning activity within the meaning of section 425.16. (Premier Medical Management Systems, Inc. v. California Ins. Guarantee Assn. (2006) 136 Cal.App.4th 464, 477 (hereafter Premier Medical) [litigating medical lien claims and communications preceding the litigation are protected activities under section 425.16]; Kolar v. Donahue, McIntosh & Hammerton (2006) 145 Cal.App.4th 1532, 1537 [anti-SLAPP protection applies not only to the filing of lawsuits, but extends to conduct that relates to . . . litigation, including statements made in connection with or in preparation of litigation]; cf. Action Apartment Assn., Inc. v. City of Santa Monica (2007) 41 Cal.4th 1232, 1251 [communications that are made to prepare for good faith litigation under serious consideration at the time of the communications are protected by the litigation privilege].)

Blackhurst intimates that AS&Ss conduct was not protected activity because, in her view, the amount of fees owed to AS&S was indisputably established, such that its refusal to release the remaining money was wrongful and unethical. However, there is no indisputable evidence that AS&Ss conduct was wrongful or unethical as a matter of law, particularly given the competing lien claims. [C]onduct that would otherwise come within the scope of the anti-SLAPP statute does not lose its coverage . . . simply because it is alleged to have been unlawful or unethical. (Kashian v. Harriman (2002) 98 Cal.App.4th 892, 910-911, orig. italics.) Where a factual dispute exists about the legitimacy of the defendants conduct, it cannot be resolved within the first step but must be raised by the plaintiff in connection with the plaintiffs burden to show a probability of prevailing on the merits. (Flatley v. Mauro (2006) 39 Cal.4th 299, 316.)

Because Blackhursts cross-complaint arises from AS&Ss protected petitioning activity, we proceed to the next step of whether there is a reasonable probability that Blackhurst will prevail on her claims. ( 425.16, subd. (b)(1); Rusheen v. Cohen, supra, 37 Cal.4th at p. 1056.)

II

AS&S contends that Blackhurst cannot establish a reasonable probability of prevailing because she failed to submit evidence supporting each element of her causes of action. AS&S also raises two affirmative defenses to Blackhursts cross-complaint; her claims are barred by the litigation privilege set forth in Civil Code section 47, subdivision (b) and the Noerr-Pennington doctrine (Eastern R.R. Conference v. Noerr Motor Freight, supra, 365 U.S. 127 [5 L.Ed.2d 464]; United Mine Workers v. Pennington, supra, 381 U.S. 657 [14 L.Ed.2d 626]), which is broader than the litigation privilege. (Premier Medical, supra, 136 Cal.App.4th at p. 479.)

Where a defendant moving to strike a complaint ( 425.16) invokes affirmative defenses, the defendant bears the burden of establishing a probability of prevailing on those defenses. (Premier Medical, supra, 136 Cal.App.4th at p. 478.) AS&S has met its burden; its Noerr-Pennington defense is dispositive.

Under the Noerr-Pennington doctrine, [t]hose who petition government for redress [via the Legislature, administrative agencies, or the courts] are generally immune from antitrust liability. (Real Est. Investors v. Columbia (1993) 508 U.S. 49, 56 [123 L.Ed.2d 611, 621]; California Transport v. Trucking Unlimited (1972) 404 U.S. 508, 510 [30 L.Ed.2d 642, 646].) However, the principle is not limited to antitrust liability; it applies to virtually any tort, including unfair competition and interference with contract. [Citation.] Obviously, the principle of constitutional law that bars litigation arising from injuries received as a consequence of First Amendment petitioning activity [should be applied], regardless of the underlying cause of action asserted by the plaintiffs. [Citation.] [T]o hold otherwise would effectively chill the defendants First Amendment rights. [Citation.] (Ludwig v. Superior Court (1995) 37 Cal.App.4th 8, 21, fn. 17; accord, Premier Medical, supra, 136 Cal.App.4th at pp. 478-479.) [U]nlike Civil Code section 47, the Noerr-Pennington doctrine extends to conduct in exercise of the right to petition, as well as to communications. (Premier Medical, supra, 136 Cal.App.4th at p. 479.)

As we explained in part I of this opinion, the gravamen of Blackhursts cross-complaint is AS&Ss conduct in litigating its lien claim and seeking redress before the courts. All of the challenged actions occurred in anticipation of litigation and involved AS&Ss First Amendment right to petition. Blackhursts sole argument as to why the defense does not apply is to reiterate her position that her cross-complaint is not based on AS&Ss petitioning activity. This position is not persuasive. Hence, Blackhursts action is barred by the Noerr-Pennington doctrine, and the trial court properly granted AS&Ss section 425.16 motion to strike Blackhursts cross-complaint.

DISPOSITION

The order striking Blackhursts cross-complaint is affirmed. The parties shall bear their own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(5).)

SCOTLAND, P.J.

We concur:

DAVIS , J.

ROBIE , J.

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^[1] Blackhursts notice of appeal also purports to appeal from the trial courts ruling that AS&S is entitled to attorney fees and costs under the mandatory provisions of Code of Civil Procedure section 425.16, subdivision (c). Even if we were to construe the notice of appeal as applying to the trial courts subsequent order awarding attorney fees and costs to AS&S, Blackhurst does not challenge that award other than by asserting it must be reversed if we reverse the order striking her cross-complaint. Since we shall affirm that order, her challenge to the award of attorney fees and costs fails.

^[2] Blackhursts husband did not sign the substitution of attorney form, did not sign the new contingency fee agreement, was not a party to the underlying actions, and thus is not a party in this appeal.

^[3] At AS&Ss request, we take judicial notice of the federal court order dismissing Blackhursts motion. (Evid. Code, 452, subds. (c)&(d).)

^[4] Code of Civil Procedure section 386.5 states: Where the only relief sought against one of the defendants is the payment of a stated amount of money alleged to be wrongfully withheld, such defendant may, upon affidavit that he is a mere stakeholder with no interest in the amount or any portion thereof and that conflicting demands have been made upon him for the amount by parties to the action, upon notice to such parties, apply to the court for an order discharging him from liability and dismissing him from the action on his depositing with the clerk of the court the amount in dispute and the court may, in its discretion, make such order.

^[5] For example, Blackhurst relies on Garretson v. Post (2007) 156 Cal.App.4th 1508 (hereafter Garretson) for the proposition that a private contractual dispute is not a protected activity within the meaning of section 425.16. Although the legal principle is correct, Garretson is distinguishable factually. There, the plaintiffs action alleged the defendant wrongfully used nonjudicial foreclosure proceedings after the plaintiff defaulted on a promissory note. The defendant moved to strike the complaint under section 425.16. (Id. at p. 1512.) Garretson explained that nonjudicial foreclosure does not involve legislative, executive, or judicial proceedings; it is a private, contractual proceeding that does not involve pursuing a remedy afforded by a branch of government. (Id. at pp. 1520-1524.) Thus, Garretson affirmed the denial of defendants anti-SLAPP motion because the plaintiffs action did not arise out of any protected petitioning or free speech activity; rather, it arose from a purely private transaction--i.e., initiating nonjudicial foreclosure. (Id. at p. 1524.) In contrast, Blackhursts cross-complaint arose from AS&Ss petitioning activity in which it sought a judicial adjudication of its lien claim.