Velzen v. Willis

Filed 1/27/09 Velzen v. Willis CA2/5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

APPEAL from a judgment of the Superior Court of the County of Los Angeles, Margaret Oldendorf, Judge. Affirmed and Dismissed.

Jeffrey L. Willis, in pro. per. for Defendant and Appellant Jeffrey L. Willis, and as counsel for Trailer Nation USA, Inc.

Richard H. Perlman, in pro. per. for Defendant and Appellant Richard H. Perlman.

William L. Maragno, in pro. per. for Defendant and Appellant William L. Maragno.

Elliot Berkowitz, in pro. per. for Defendant and Appellant Elliot Berkowitz.

Law Offices of Alana B. Anaya, Alana B. Anaya and Jonathan Malek for Plaintiffs and Respondents Richard Velzen and Marianne Velzen.

INTRODUCTION

Plaintiffs Richard Velzen and Marianne Velzen (plaintiffs) sued, inter alia, defendants Jeffrey C. Willis (Willis), Richard H. Perlman (Perlman), William L. Maragno, Elliot Berkowitz and Trailer Nation USA, Inc. (Perlman, Berkowitz and Trailer Nation USA, Inc. are collectively Perlman defendants) alleging a number of causes of action. Defendants moved to dismiss causes of action under Code of Civil Procedure section 425.16 (anti-SLAPP statute). The trial court dismissed the cause of action against Willis for conspiracy to commit fraud, but denied the motion as to the cause of action against Willis for unjust enrichment. The trial court dismissed the cause of action against the Perlman defendants for conspiracy to commit fraud but otherwise denied the motion as to the Perlman defendants. We affirm.^[1]

BACKGROUND

Plaintiffs in their first amended complaint allege a variety of causes of action against a number of defendants. Essentially, plaintiffs allege that defendants conspired to defraud plaintiffs by inducing plaintiffs to invest money in business ventures, and then the money was misappropriated, and by inducing plaintiffs to invest in properties and then mismanaging the properties so that defendants were unjustly enriched.

Specifically, plaintiffs allege that the Perlman defendants induced plaintiffs to invest in a corporation that allegedly had a profitable powder and metal business. Berkowitz was involved with that business, which had transactions with Trailer Nation USA, Inc., a company run by Maragno. The alleged powder and metal business supplied products to Trailer Nation, USA, Inc. but did not get paid for it. According to plaintiffs, Perlman defendants and others all conspired to funnel plaintiffs investment into Trailer Nation USA, Inc., and this was done in order to deceive plaintiffs. Perlman represented he would manage plaintiffs real estate properties by obtaining tenants, collecting rents, converting the properties to condominiums and selling them. But he defrauded plaintiffs because he never had any intention to perform such duties. He rented the properties to people such as Willis and made no attempt to collect rent. He also rented properties to others in return for their performing tasks, and Perlman embezzled plaintiffs monies. Plaintiffs allege a breach of the implied covenant of good faith and fair dealing arising out of a contract with the Perlman defendants. Plaintiffs allege that Perlman gave Willis, an attorney, a lease in plaintiffs property rent free and that Willis worked with Perlman to harass plaintiffs with a frivolous ex parte motion to have plaintiffs added as judgment debtors in an action against a corporate entity and to intimidate plaintiffs so they would not prosecute those involved in the schemes against plaintiffs. Plaintiffs also alleged that Perlman and others were unjustly enriched.

Willis is named in the sixth and eighth causes of action. The sixth cause of action for conspiracy to commit fraud contains allegations that Willis worked with Perlman as an attorney to draft a pleading to harass plaintiffs and to maintain Perlmans fraudulent scheme. Plaintiffs, in their eighth cause of action allege Willis was unjustly enriched by the wrongful retention of one of plaintiffs apartment units, rent free, without plaintiffs authorization.

Berkowitz, Trailer Nation USA, Inc. and Maragno are named in the first cause of action for conspiracy to commit fraud and the fifth cause of action for breach of the implied covenant of good faith and fair dealing in connection with defendants actions regarding obtaining plaintiffs monies and funneling them into Trailer Nation USA, Inc. The California Secretary of States records show that as of January 1, 2010, Trailer Nation USA Inc. is a suspended corporation and therefore may not defend the action against it nor appeal from the judgment. (4 Witkin, Cal. Procedure (5th ed. 2008) Pleading,  89, pp. 151-152.) Thus, its appeal is dismissed. Berkowitz is named in the eighth cause of action for retaining monies and assets out of the scheme of transferring assets. Perlman is named in the third cause of action for fraud in connection with his duties for plaintiffs, the fourth cause of action for breach of his employment contract with plaintiffs, the fifth cause of action for breach of the implied covenant of good faith and fair dealing, the sixth cause of action for conspiracy to commit fraud to file a pleading to pressure plaintiffs in order to maintain the fraudulent scheme, the seventh cause of action for breach of fiduciary duty in connection with obligations to plaintiffs, and the eighth cause of action for unjust enrichment for the retention and embezzlement of funds.

Plaintiffs brought two unlawful detainer actions in the Los Angeles Superior Court against the defendants in this action and others to recover possession of two apartment units and for damages for unpaid rent. The trial court consolidated those actions, gave plaintiffs possession of the properties and awarded no monetary damages. Perlman subsequently brought an action against the plaintiffs alleging he and plaintiffs had entered into a settlement agreement that precluded plaintiffs from maintaining the causes of action in this case.

Willis moved to strike under the anti-SLAPP statute on the ground that the only causes of action against him arose out of his alleged litigation activity and prior litigation and that plaintiffs cannot demonstrate a probability of prevailing. Willis also asserts that plaintiffs failed to obtain prior court approval of their cause of action of conspiracy to commit fraud by an attorney with a client. (Civ. Code,  1714.10, subd.(a).)

The trial court granted Williss special motion to strike as to the sixth cause of action for conspiracy to commit fraud and denied it as to the eighth cause of action for unjust enrichment. The trial court granted the special motion to strike by the Perlman defendants only as to the sixth cause of action for conspiracy to commit fraud and otherwise denied the motion. Each of the defendants filed a notice of appeal.

DISCUSSION

A. Plaintiffs Failure to File Cross Appeal

Plaintiffs state that because review is de novo, this court can determine that the motions should have been denied in their entirety. The order granting a special motion to strike is appealable (Code Civ. Proc.,  425.16, subd. (i)). By not filing a notice of cross appeal, plaintiffs have not preserved their appeal rights. (See 1 Eisenberg, et al., California Practice Guide: Civil Appeals and Writs (The Rutter Group 2009)  8:195, p. 8-143.)

B. SLAPP

A SLAPP suita strategic lawsuit against public participationseeks to chill or punish a partys exercise of constitutional rights to free speech and to petition the government for redress of grievances. [Citation.] The Legislature enacted Code of Civil Procedure section 425.16known as the anti-SLAPP statuteto provide a procedural remedy to dispose of lawsuits that are brought to chill the valid exercise of constitutional rights. [Citation.] (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1055-1056 [39 Cal.Rptr.3d 516, 128 P.3d 713].) (Rohde v. Wolf (2007) 154 Cal.App.4th 28, 34.)

In considering the application of the anti-SLAPP statute, courts engage in a two-step process. First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. . . . If the court finds such a showing has been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim. (Taus v. Loftus (2007) 40 Cal.4th 683, 712 [54 Cal.Rptr.3d 775, 151 P.3d 1185], ellipsis in original, quoting Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67 [124 Cal.Rptr.2d 507, 52 P.3d 685] (Equilon).) The defendant has the burden on the first issue, the threshold issue; the plaintiff has the burden on the second issue. [Citation.] [Citation.] [Citations.] (Rohde v. Wolf, supra, 154 Cal.App.4th at pp. 34-35.) As to the first prong, defendants must show that the acts of which plaintiffs complain were in furtherance of the [defendants] right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue as set forth in the statute. (Code Civ. Proc., 425.16, subd. (b)(1).)

The plaintiffs showing of facts must consist of evidence that would be admissible at trial. [Citation.] The court cannot weigh the evidence, but must determine whether the evidence is sufficient to support a judgment in the plaintiffs favor as a matter of law, as on a motion for summary judgment. [Citations.] If the plaintiff presents a sufficient prima facie showing of facts, the moving defendant can defeat the plaintiffs evidentiary showing only if the defendants evidence establishes as a matter of law that the plaintiff cannot prevail. [Citation.] (Hall v. Time Warner, Inc. (2007) 153 Cal.App.4th 1337, 1346.)

[]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. [Citation.] (Governor Gray Davis Com. v. American Taxpayers Alliance (2002) 102 Cal.App.4th 449, 456 [125 Cal.Rptr.2d 534].) Our review of the denial of a motion to strike under the anti-SLAPP statute is de novo. (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 269, fn. 3 [46 Cal.Rptr.3d 638] [Soukup]; Flatley v. Mauro (2006) 39 Cal.4th 299, 325 [46 Cal.Rptr.3d 606] (Flatley).) (Rohde v. Wolf, supra, 154 Cal.App.4th at p. 35.)

C Williss Motion

Willis obtained a dismissal of the sixth cause of action against him. As noted, because plaintiffs did not appeal that dismissal, we do not review the dismissal. We discuss the dismissal because Willis asserts that it is relevant to his appeal.

Plaintiffs allege in the sixth cause of action that Willis, a licensed attorney, would work in conjunction with Perlman to draft and feed an Ex Parte Application to David Palmer, Esq. to file as attorney for Perlman to strongarm and harass Plaintiffs with frivolous litigation in order to keep Perlmans fraudulent the fraudulent scheme going. . . . Willis [was] aware that there existing [sic] probable cause for such

suits . . . . Defendants attach a Notice of Ex Parte Application against plaintiffs to be named as judgment debtors in an action involving other parties, by piercing the corporate veil of the corporation in which plaintiffs were shareholders.

When a party to a lawsuit engages in a course of oppressive litigation conduct designed to discourage the opponents right to utilize the courts to seek legal redress, the trial court may properly apply section 425.16. (Church of Scientology v. Wollersheim (1996) 42 Cal.App.4th 628, 648, disapproved on another ground in Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 68, fn. 5.) An attorneys activity in connection with litigation is covered by section 425.16. (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1056 [anti-SLAPP statute protects communicative conduct such as the filing, funding, and prosecution of a civil action included when committed by attorneys in representing clients in litigation]; Neville v. Chudacoff (2008) 160 Cal.App.4th 1255; Fox Searchlight Pictures, Inc. v. Paladino (2001) 89 Cal.App.4th 294.) That is so even if the protected activity of the lawyer is alleged to have been unlawful or unethical. (Cabral v. Martins (2009) 177 Cal.App.4th 471.) In connection with the sixth cause of action Willis has established that the allegation involving his participation in the preparation of pleadings involves protected activity, and he has therefore satisfied the first prong of the anti-SLAPP statute.

Plaintiffs have not made a sufficient showing of a probability of prevailing on the claim in the sixth cause of actionthe second prong of the anti-SLAPP statute. Willis has denied having any role in the litigation alleged involving plaintiffs. Plaintiffs offer no factual material in support of their allegations against Willis in the sixth cause of action and hence have not set forth a prima facie case. While the threshold to defeat an anti-SLAPP motion is lowa plaintiff need only establish that his or her claim has minimal merit to avoid being stricken as a SLAPP (Soukup, supra, 39 Cal.4th at p. 291)plaintiffs here have not met that standard. Therefore the trial court properly granted the special motion to strike the sixth cause of action against Willis.

Willis claims that the eighth cause of action against him should be treated the same as the sixth cause of action. The eighth cause of actioncontains the allegation that Willis was unjustly enriched by the wrongful retention of one of Plaintiffs apartment units, rent free, without Plaintiffs authorization and at Plaintiffs expense. Such an allegation is not the type of conduct covered by the anti-SLAPP statute. Williss contention that the issues were resolved in an unlawful detainer action has no bearing on the applicability of the anti-SLAPP statute. Willis asserts that because the eighth cause of action incorporates the allegations of the sixth cause of action, it should be treatedin the same manner as the sixth cause of action. But the eighth cause of action is only for unjust enrichment. And there is no allegation that directly connects the unjust enrichment with the alleged actions taken in connection with litigation as alleged in the sixth cause of action. Thus, the trial court correctly refused to strike the eighth cause of action against Willis.

D. Perlman Motion

Again, the dismissal of the sixth cause of action against Perlman has not been appealed, and therefore we do not review that dismissal. The allegations in the sixth cause of action against Perlman involve the same claims made against Willis in that cause of action. Even though it is not alleged that Perlman acted as an attorney, the essence of the allegations is that Willis helped prepare the offending pleadings for Perlman. Thus, Perlmans activities as a litigant are likewise protected by the anti-SLAPP statute. Perlman asserts that he had a right to seek redress through his pleadings. Plaintiffs submitted no facts related to the claims against Perlman in the sixth cause of action and therefore have not set forth a prima facie case. None of the other causes of action has any relationship to the type of activity protected by the anti-SLAPP statute. That there may have been prior litigation on matters related to litigation does not automatically result in a protected activity for purposes of a SLAPP motion. (See City of Cotati v. Cashman (2002) 29 Cal.4th 69, 79-81; City of Riverside v. Stansbury (2007) 155 Cal.App.4th 1582, 1590; Department of Fair Employment & Housing v. 1105 Alta Loma Road Apartments, LLC (2007) 154 Cal.App.4th 1273, 1283-1288.) That the sixth cause of action is incorporated by reference into other causes of action does not affect the fact that the other causes of action are not based on the conduct involved in litigation alleged in the sixth cause of action. The trial court properly granted the special motion to strike against Perlman as to the sixth cause of action and properly denied Perlmans motion to strike as to all other causes of action.

E. Motions of Other Defendants

As noted, Trailer Nation USA Inc. may not, as a suspended corporation, prosecute this appeal. None of the allegations against the defendants other than Willis and Perlman involves any activity protected by the anti-SLAPP statute. Those otherdefendants do not point to any allegations against them that arguably would be covered by the anti-SLAPP statute. They refer to the unlawful detainer actions, but nothing about those actions are alleged in the first amended complaint. The trial court correctly denied the special motion to strike against those other defendants.

DISPOSITION

The appeal of Trailer Nation USA Inc. is dismissed. The orders of the trial court granting the motions to dismiss as to the sixth cause of action against Willis and Perlman and denying the motions to dismiss as to all other causes of action, are otherwise affirmed. Plaintiffs shall recover their costs. The matter is remanded to the trial court for further proceedings, including a determination as to whether attorney fees under Code of Civil Procedure section 425.16, subdivision (c) should be awarded in connection with the appeal and the amount of any such fees.

MOSK, J.

I concur:

ARMSTRONG, J.

I concur in the judgment. This is where I come down on the attorney fee issue. Code of Civil Procedure section 425.16, subdivision (c) states: In any action subject to subdivision (b), a prevailing defendant on a special motion to strike shall be entitled to recover his or her attorneys fees and costs. If the court finds that a special motion to strike is frivolous or is solely intended to cause unnecessary delay, the court shall award costs and reasonable attorneys fees to a plaintiff prevailing on the motion, pursuant to Section 128.5. And if a statute provides for fees in the trial court, it applies equally to cases on appeal: A statute authorizing an attorney fee award at the trial court level includes appellate attorney fees unless the statute specifically provides otherwise. (Morcos v. Board of Retirement (1990) 51 Cal.3d 924, 927-929; Grade-Way Construction Co. v. Golden Eagle Ins. Co. (1993) 13 Cal.App.4th 826, 837-838.) (Evans v. Unkow (1995) 38 Cal.App.4th 1490, 1499-1500prevailing defendant in a special motion to strike litigation entitled to fees on appeal.)

As I see it, defendants conduct is frivolous. Defendants only challenged the order denying their special motion to strike the eighth cause of action for unjust enrichment. The gravamen of the eighth cause of action for unjust enrichment of action has nothing to do with free expression or petition rights. The fact there may have been litigation that preceded the filing of the initial complaint is irrelevant. And it is now frivolous to assert otherwise. (City of Cotati v. Cashman (2002) 29 Cal.4th 69,79-81; City of Riverside v. Stansbury (2007) 155 Cal.App.4th 1582, 1590, 1594; Department of Fair Employment & Housing v. 1105 Alta Loma Road Apartments, LLC (2007) 154 Cal.App.4th 1273, 1283-1288; Freeman v. Schack (2007) 154 Cal.App.4th 719, 727-733; Visher v. City of Malibu (2005) 126 Cal.App.4th 364, 370; Benasra v. Mitchell Silberberg & Knupp LLP (2004) 123 Cal.App.4th 1179, 1185; Moore v. Shaw (2004) 116 Cal.App.4th 182, 194-197; Jespersen v. Zubiate-Beauchamp (2003) 114 Cal.App.4th 624, 630; Beach v. Harco Nat. Ins. Co. (2003) 110 Cal.App.4th 82, 94; State Farm General Ins. Co. v. Majorino (2002) 99 Cal.App.4th 974, 977.) Upon remittitur issuance, I would direct that plaintiffs recover their fees for defendants frivolous appeals. (Foundation for Taxpayer & Consumer Rights v. Garamendi (2005) 132 Cal.App.4th 1375, 1394-1395.) The fees issue can be litigated pursuant to California Rules of Court, rules 3.1702 and 8.278(c), (d)(2).

TURNER, P. J.

Publication Courtesy of San Diego County Legal Resource Directory.

Analysis and review provided by San Diego County Property line attorney.

San Diego Case Information provided by www.fearnotlaw.com

^[1] As discussed, we dismiss the appeal of Trailer Nation USA Inc.