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Hillel Chodos v. Dana M. Cole et al

October 25, 2012

HILLEL CHODOS, PLAINTIFF AND APPELLANT,
v.
DANA M. COLE ET AL., DEFENDANTS AND RESPONDENTS.



APPEAL from orders of the Superior Court of the County of Los Angeles, Luis A. Lavin, Judge. (Los Angeles County Super. Ct. No. SC107421)

The opinion of the court was delivered by: Mosk, J.

CERTIFIED FOR PUBLICATION

Reversed.

INTRODUCTION

A cross-complaint was filed against attorney Hillel Chodos (Chodos) and another attorney for malpractice in connection with their representation in, and settlement of, a marital dissolution and related proceedings. Chodos cross-complained against other attorneys for indemnification for any malpractice award against him because, he alleged, those other attorneys had rendered advice concerning, reviewed, and approved the settlement of the dissolution and related proceedings. The attorneys successfully moved to strike Chodos's cross-complaint under Code of Civil Procedure section 425.16--the anti-SLAPP (strategic lawsuit against public participation) statute.*fn1 Chodos appeals from those orders and from the orders awarding attorney fees against him. We reverse the orders striking the cross-complaint. We hold that the claim does not involve activity protected by the anti-SLAPP statute. We also hold that Chodos did not have to supply a reporter's transcript of the argument before the trial court because we review the matter de novo, the trial court said it relied only on the papers submitted, and none of the parties relies on anything that occurred during that argument.

BACKGROUND

Chodos, a lawyer, and his former co-counsel, Hugh John Gibson, sued a former client, Navabeh P. Borman, for fees owing for their representation of her in a marital dissolution proceedings and a related "Marvin" action.*fn2 Chodos and Gibson alleged in their complaint that despite the fact that Ms. Borman became mistrustful of them and their advice, and actually engaged three separate and independent lawyers to review their handling of her cases and to give her independent advice, Chodos and Gibson procured a settlement for Ms. Borman that she accepted. Chodos and Gibson claimed that Ms. Borman's verbal agreement to pay their hourly rate was modified to provide for a contingency fee. Chodos and Gibson alleged Ms. Borman never paid them any attorney fees or costs advanced and refused to pay any attorney fees. They alleged that they did receive $215,000 from Mr. Borman as a result of a court order and credited that amount against attorney fees and costs owed by Ms. Borman. Chodos and Gibson sought unpaid attorney fees in the amount of $3,500,000 or according to proof.

Ms. Borman, represented by Michael D. Dempsey and Dempsey & Johnson (sometimes collectively Dempsey), cross-complained against Chodos and Gibson for attorney malpractice in the handling of the underlying marital dissolution action and the "Marvin" action, including claims that, inter alia, Chodos and Gibson failed to prepare, misrepresented the terms of the proposed settlement prior to the execution, failed to enforce interim court orders, and failed to advise Ms. Borman on various issues. She also alleged conversion of property.

Chodos answered, denying liability, and filed a cross-complaint against Dana M. Cole, Stephen H. Johnson, Michael D. Dempsey, and Dempsey & Johnson for equitable indemnity. Chodos alleged that they acted as Ms. Borman's concurrent, independent advisers and independent counsel while Chodos and Gibson represented her of record in the underlying marital dissolution proceedings and the "Marvin" action. He further alleged that Cole and Dempsey independently reviewed the proposed settlement; recommended to Ms. Borman that she accept it; and that she did so, not in reliance on the advice of Chodos or Gibson, whom she did not trust, but rather in reliance on the advice and recommendation of Cole and Dempsey. Thus, Chodos sought equitable indemnification for any amounts found to be due Ms. Borman on account of his alleged malpractice.

Cole filed a motion under section 425.16 (anti-SLAPP motion) to strike Chodos's cross-complaint for equitable indemnity on the ground the cross-complaint "arose from" protected activity. Dempsey filed a separate but similar anti-SLAPP motion.

The trial court granted both anti-SLAPP motions. Cole then submitted a request for attorney fees and costs totaling $42,622.50, and the trial court awarded Cole $37,935 in attorney fees and costs. Dempsey submitted a separate request for attorney fees and costs totaling $51,069.20, and the trial court awarded to Dempsey $21,500.

Chodos appealed from the orders granting the anti-SLAPP motions and the award of attorney fees. As a result of enforcement proceedings by Cole and Dempsey, Chodos paid the attorney fee awards in full under protest, reserving his claims on appeal.

PROCEDURAL ISSUES

After the court granted the two anti-SLAPP motions and Cole's attorney fees motion, Chodos filed a single notice of appeal. In his notice of appeal, Chodos identified the two anti-SLAPP motion rulings as well as the two rulings on the attorney fees motions. Although the anti-SLAPP motion rulings and the attorney fees award in Cole's favor had been entered before Chodos filed his notice of appeal, the attorney fees award in favor of Dempsey had not been entered as of the time Chodos filed his notice of appeal. As a result, Dempsey filed a motion to dismiss Chodos's appeal as to the attorney fees award because Chodos had failed to file a separate notice of appeal within 60 days after a file-stamped copy of that attorney fees order was served. We denied the motion to dismiss the appeal on this jurisdictional ground.

In addition, Dempsey and Cole argued and also moved that Chodos's entire appeal should be dismissed based on Chodos's failure to present an adequate record on appeal. They argued that Chodos's failure to designate any of the reporter's transcripts for the four motions that are the subject of this appeal precluded this court from examining the record. Although we denied the request to dismiss the appeal, we noted that "the failure to provide an adequate record warrants affirmance." We sent out a request for further briefing as to the adequacy of the record, taking into account the omitted reporter's transcripts and certain pleadings, and as to whether a timely notice of appeal had been filed with respect to the order for attorney fees in favor of Dempsey.

Chodos takes the position that he is not relying on anything that occurred at the hearings or in the missing documents, and therefore there is an adequate record. He also asserts that the notice of appeal sufficiently covered the later-filed orders on attorney fees.

In this case, Chodos's appeal as to the attorney fees awarded Dempsey was based on the amount of the fees. The determination of the amount of the fees was made after the notice of appeal was filed. Whether the notice of appeal encompassed the post judgment determination of attorney fees (compare Silver v. Pacific American Fish Co., Inc. (2010) 190 Cal.App.4th 688 with Grant v. List & Lathrop (1992) 2 Cal.App.4th 993) is an issue we need not reach because we reverse the orders striking the cross-complaint.

DISCUSSION

A. Appealability and Standard of Review

An order granting a special motion to strike under section 425.16 is directly appealable. (§§ 425.16, subd. (i), 904.1, subd. (a)(13).) We review de novo the trial court's order granting an anti-SLAPP motion. (Flatley v. Mauro (2006) 39 Cal.4th 299, 325-326; Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315, 1322-1323.) We do not weigh the evidence; rather, we accept as true evidence favorable to Chodos, and evaluate evidence favorable to the moving parties, to determine whether as a matter of law, it defeats Chodos's evidence. (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 269, fn. 3; Dyer v. Childress (2007) 147 Cal.App.4th 1273, 1279.)

B. Adequacy of Record and Brief

The only submissions to the trial court were the papers filed in support and opposition of the anti-SLAPP motions. There is no indication that witnesses testified or evidentiary issues arose at the hearing. The trial court in its order granting the anti-SLAPP motions stated, "After carefully considering the moving papers, the opposition, the declarations in opposition and in support, the exhibits, the Court grants the respective motions to strike pursuant to Code of [Civil Procedure section] 425.16 . . . ." The legal issue decided was whether Chodos's cross-complaint is covered by the anti-SLAPP statute and whether the claim has sufficient merit to survive the anti-SLAPP motions. We reach only the first issue--whether the claim is protected by the anti-SLAPP statute. We do not reach the issues regarding attorney fees.

California Rules of Court, rule 8.120(b) requires a reporter's transcript on appeal only if "an appellant intends to raise any issue that requires consideration of the oral proceedings in the superior court." California Rules of Court, rule 8.130(a)(4) provides that an appellant may "elect to proceed without a reporter's transcript."*fn3 None of the parties relies upon the oral argument before the trial court, and we decide a pure legal issue based on the filings before the trial court--as did the trial court. And, as noted, we review that trial court decision de novo. If we did determine that a reporter's transcript was necessary "to prevent a miscarriage of justice," we could, on our own, order the record augmented with a reporter's transcript, with the cost to be borne by the appellant. (Cal. Rules of Court, rule 8.130(a)(4), rule 8.155.)*fn4

In Martin v. Inland Empire Utilities Agency, supra, 198 Cal.App.4th 611, the court held that the defendant's failure to supply a reporter's transcript on appeal resulted in an inadequate record on the attorney fees issue. Here, we do not reach the issue of attorney fees. Other cases concerning the inadequacy of the record on appeal are not applicable to this case. For example, in Maria P. v. Riles (1987) 43 Cal.3d 1281, our Supreme Court said that a reporter's transcript on appeal or settled statement was required with regard to an attorney fees award because the court could not determine "whether the trial court based its award on the lodestar adjustment method." (Id. at p. 1295.) Similarly, in Vo v. Las Virgenes Municipal Water District (2000) 79 Cal.App.4th 440, a transcript of the proceedings was necessary to review a trial court's determination of the reasonableness of an attorney fees order. (Id. at p. 447.) And In re Kathy P. (1979) 25 Cal.3d 91, the court held that a juvenile defendant failed to provide an adequate record on appeal in order to determine if she had been advised of her right to counsel. (Id. at p. 102.)

We do not believe existing Supreme Court authority requires a transcript of the hearing in connection with whether the anti-SLAPP statute applies to a specific pleading. The cases do not challenge the above-quoted California Rules of Court.

Cole asserts that Chodos has not in his opening brief set forth an adequate summary of the facts. (Cal. Rules of Court, rule 8.120(a)(1)(C).) Chodos, however, has set forth facts sufficient for the issue we decide.

C. Legal Principles With Regard to Anti-SLAPP Motions

"'A SLAPP suit--a strategic lawsuit against public participation--seeks to chill or punish a party's 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 425.16--known as the anti-SLAPP statute--to 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 1038, 1055-1056 [39 Cal.Rptr.3d 516, 128 P.3d 713].)" (Rohde v. Wolf (2007) 154 Cal.App.4th 28, 34.) "The goal [of section 425.16] is to eliminate meritless or retaliatory litigation at an early stage of the proceedings." (Seelig v. Infinity Broadcasting Corp. (2002) 97 Cal.App.4th 798, 806.)

Section 425.16, provides that "[a] cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, 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).) 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.' [Citation.]" (Taus v. Loftus (2007) 40 Cal.4th 683, 712.) "'"'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.) "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." (Navellier v. Sletten (2002) 29 Cal.4th 82, 89; Governor Gray Davis Com. v. American Taxpayers Alliance (2002) 102 Cal.App.4th 449, 456.)

"To demonstrate a probability of prevailing on the merits, the plaintiff must show that the complaint is legally sufficient and must present a prima facie showing of facts that, if believed by the trier of fact, would support a judgment in the plaintiff's favor. [Citations.] The plaintiff's 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 plaintiff's favor as a matter of law, as on a motion for summary judgment. [Citations.]" (Hall v. Time Warner, Inc. (2007) 153 Cal.App.4th 1337, 1346; see College Hospital Inc. v. Superior Court (1994) 8 Cal.4th 704, 719, fn. 5; 1-800 Contacts, Inc. v. Steinberg (2003) 107 Cal.App.4th 568, 585.)

In this case, Chodos claims indemnity for an attorney malpractice claim based on the representation of Ms. Borman by Cole and Dempsey. Specifically, Chodos asserts that if the settlement he negotiated was the result of attorney malpractice, the malpractice was not committed by him or Gibson, but rather by one or both of the cross-defendants Cole and Dempsey, who "independently reviewed and approved" the settlement and "concurred in the propriety of said settlement and its benefit to defendant [Ms. Borman], and advised her to accept it, and on whose advice she relied in deciding to accept it." Chodos's indemnity claim does not seek relief specifically based on the substitution of Cole or Dempsey as counsel for Ms. Borman or any of their filings. The only relief Chodos seeks is a determination that if he is liable for attorney malpractice in connection with Ms. Borman's settlement agreement, Cole and Dempsey, by virtue of their review and approval of the settlement agreement in issue, should indemnify him for any amount he is found obligated to pay Ms. Borman. Chodos asserts that his claims are limited strictly to the issue of his, Dempsey's, and Cole's alleged attorney malpractice.

The authorities have established that the anti-SLAPP statute does not apply to claims of attorney malpractice. As stated in one authoritative work, "California courts have held that when a claim [by a client against a lawyer] is based on a breach of the fiduciary duty of loyalty or negligence, it does not concern a right of petition or free speech, though those activities arose from the filing, prosecution of and statements made in the course of the client's lawsuit. The reason is that the lawsuit concerns a breach of duty that does not depend on the exercise of a constitutional right." (4 Mallen and Smith (2012 ed.) Legal Malpractice, § 37:11, fn. omitted; see 1 Weil et al., Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2012) ¶ 7:644, p. 7(II)-15 to 7(II)-16.) Even though the "petitioning activity is part of the evidentiary landscape within which [claimant's] claims arose, the gravamen of [claimant's] claims is that [the former attorney] engaged in nonpetitioning activity inconsistent with his fiduciary obligations owed to [claimant]." (Hylton v. Frank E. Rogozienski, Inc. (2009) 177 Cal.App.4th 1264, 1272.)

In Kolar v. Donahue, McIntosh & Hammerton (2006) 145 Cal.App.4th 1532, the plaintiffs retained a law firm to file suit against their neighbors for constructing property improvements in violation of covenants, conditions, and restrictions. The plaintiffs lost the case and then filed an attorney malpractice action against the firm. The firm filed an anti-SLAPP motion, which the trial court denied. The Court of Appeal affirmed, stating, "Our interpretation of the 'arising from' requirement of section 425.16, subdivision (b), is consistent with the anti-SLAPP statute's express purpose: 'The Legislature finds and declares that there has been a disturbing increase in lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances. The Legislature finds and declares that it is in the public interest to encourage continued participation in matters of public significance, and that this participation should not be chilled through abuse of the judicial process. To this end, this section shall be construed broadly.' [¶] A malpractice claim focusing on an attorney's incompetent handling of a previous lawsuit does not have the chilling effect on advocacy found in malicious prosecution, libel, and other claims typically covered by the anti-SLAPP statute. In a malpractice suit, the client is not suing because the attorney petitioned on his or her behalf, but because the attorney did not competently represent the client's interests while doing so. Instead of chilling the petitioning activity, the threat of malpractice encourages the attorney to petition competently and zealously. This is vastly different from a third party suing an attorney for petitioning activity, which clearly could have a chilling effect." (Id. at pp. 1539-1540, citation omitted.)

Other cases come to the same conclusion. In Benasra v. Mitchell, Silberberg & Knupp LLP (2004) 123 Cal.App.4th 1179, the court held that the anti-SLAPP statute did not apply to a client's action against a law firm for breach of loyalty. In Freeman v. Schack (2007) 154 Cal.App.4th 719, the court held that the anti-SLAPP statute did not apply to an alleged breach of fiduciary duty of a law firm to its client. (See also Robles v. Chalilpoyil (2010) 181 Cal.App.4th 566 [anti-SLAPP statute did not apply to claim against attorney and expert for pressuring and deceiving plaintiff into settlement so they could market a new safety device]; PrediWave Corp. v. Simpson Thacher & Bartlett LLP (2009) 179 Cal.App.4th 1204 (PrediWave) [anti-SLAPP statute does not apply to client's claim against attorneys for a conflict of interest and negligence]; Hylton v. Frank E. Rogozienski, Inc., supra, 177 Cal.App.4th at p. 1274 ["claims allude to [the attorney's] petitioning activity, but the gravamen of the claim rests on the alleged violation of [the attorney's] fiduciary obligations to Hylton by giving Hylton false advice to induce him to pay an excessive fee to [the attorney]"]; Jespersen v. Zubiate-Beauchamp (2003) 114 Cal.App.4th 624 (Jespersen) [malpractice by failing to respond to discovery requests and comply with court orders not covered by anti-SLAPP statute]; cf. Wang v. Wal-Mart Real Estate Business Trust (2007) 153 Cal.App.4th 790, 809 [claims of sellers ...


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