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Malin v. Singer

California Court of Appeals, Second District, Fourth Division

July 16, 2013

MIKE MALIN, Plaintiff and Respondent,
MARTIN D. SINGER et al., Defendants and Appellants.

APPEAL from an order of the Superior Court of Los Angeles County, No. BC466547 Mary M. Strobel, Judge.

Horvitz & Levy, Jeremy B. Rosen, Felix Shafir, and Wesley T. Shih for Defendants and Appellants Martin D. Singer, Lavely & Singer, and Andrew B. Brettler.

Mark Goldowitz and Paul Clifford for Defendants and Appellants Shereene Arazm and Oren Koules.

Law Offices of Barry P. King and Barry P. King for Plaintiff and Respondent.


Defendants appealed from an order denying their special motion to strike plaintiff’s complaint under Code of Civil Procedure section 425.16, the anti-SLAPP statute.[1] The trial court denied the motion under the first step of the statutory analysis on the ground that the claims did not arise from protected speech or petitioning activities. We affirm in part and reverse in part.


Plaintiff Michael Malin[2] and Lonnie Moore[3] own The Dolce Group, a consortium of restaurants and nightclubs that includes the Geisha House restaurant. Malin, Moore, and defendant Shereene Arazm are general partners of Geisha House, LLC (company).

In 2011, Arazm consulted her attorney, defendant Martin Singer, regarding Malin and Moore’s alleged misappropriation of company assets. On Arazm’s behalf, Singer sent Malin a demand letter and draft of Arazm’s proposed complaint. The demand letter contained what Malin contends was an extortionate threat to disclose certain personal information if he did not pay to settle Arazm’s claims. In the disputed portion of the letter, Singer stated that Malin had misused company resources to arrange sexual liaisons with older men, including “Judge [first and last name omitted], a/k/a ‘Dad’ (see enclosed photo).” (We have omitted the judge’s name because the demand letter was filed under seal to protect the judge’s privacy.) In order to place the allegedly extortionate threat in its proper context, we have quoted the letter below and italicized the disputed language:

“I am litigation counsel to Shereene Arazm. I am writing to you with respect to your outrageous, malicious, wrongful and tortious conduct. As a result of your embezzlement, conversion and breach of fiduciary duty, you have misappropriated more than a million dollars from my client. As a result thereof, my client intends to file the enclosed lawsuit against you, Lonnie Moore, and various business entities that you and Mr. Moore control. As alleged in the Complaint, you, Mr. Moore and several of your co-conspirators have been embezzling and stealing money from Ms. Arazm and Geisha House, LLC for years. As set forth in detail in the Complaint, you and Mr. Moore have devised various schemes to embezzle money from the restaurants and clubs which you own and/or manage, including, but not limited to Geisha House and WonderLand. You and Mr. Moore have created a special account or ‘ledger, ’ which allows you to keep tabs on how the stolen funds are divided among you, Mr. Moore and your various co-conspirators. My client intends, as part of the lawsuit, to seek a full-fledged forensic accounting of the books and records for Geisha House, LLC, 2HYPE Productions, Inc., LTM Consulting, Inc., and Malin & Moore Enterprises, LLC, in addition to your personal accounts.

“In addition, as set forth in the Complaint, we have information that you and Mr. Moore have engaged in insurance scams designed to defraud not only the insurers of your establishments, but also the insurers of WonderLand. You have also taken steps to hide your assets from creditors as well as from the taxing authorities. We are aware that you have converted my client’s monies and deposited them in accounts in the Cook Islands. We have also confirmed that you have planned to illegally transfer your shares in Geisha House Los Angeles to Sylvain Bitton in a further attempt to hide from creditors and avoid tax liability.

Because Mr. Moore has also received a copy of the enclosed lawsuit, I have deliberately left blank spaces in portions of the Complaint dealing with your using company resources to arrange sexual liaisons with older men such as ‘Uncle Jerry, ’ Judge [name redacted] a/k/a ‘Dad’ (see enclosed photo), and many others. When the Complaint is filed with the Los Angeles Superior Court, there will be no blanks in the pleading.

“My client will file the Complaint against you and your other joint conspirators unless this matter is resolved to my client’s satisfaction within five (5) business days from your receipt of this Complaint....” (Italics added.)

As indicated above, Singer included with the letter a photograph of the judge and a copy of the draft complaint. The draft complaint did not identify any alleged sexual partners, but contained several blank spaces and redactions that, according to the letter, would be filled in before the complaint was filed. The draft complaint stated in relevant part: “[O]ver the past several months, _______________ has arranged through email and through Internet websites such as to have multiple sexual encounters with [redacted] which include _________________________. Based on information and belief, _______________ used company resources to facilitate these rendezvous and to communicate with various [redacted] including _______________, _______________, and _______________.”

After he received the demand letter, Malin sued Singer and Arazm[4] for civil extortion, violation of civil rights, and intentional and negligent infliction of emotional distress. (Malin v. Singer (Super. Ct. L.A. County, No. BC466547).) In turn, Arazm sued Malin[5] for conversion, breach of contract, breach of fiduciary duty, accounting, and civil conspiracy.[6] (Arazm v. Carri (Super. Ct. L.A. County, No. BC466696).) Both actions were assigned to the same trial court as related cases.

I. Malin’s Complaint Against Arazm and Singer

In his complaint’s preliminary fact allegations, Malin alleged that at Arazm and Singer’s behest, unknown individuals had retrieved his private communications and emails through illegal computer hacking and wiretapping activities. Malin’s complaint alleged causes of action for: (1) civil extortion based on the demand letter (Pen. Code, §§ 519, 523) (first cause of action); (2) violation of civil rights based on the illegal wiretapping and computer hacking activities (Pen. Code, § 502, subd. (c)(1), (2); 18 U.S.C. § 2510 et seq.) (second cause of action); and (3) intentional and negligent infliction of emotional distress (third and fourth causes of action).

II. Arazm and Singer’s Special Motion to Strike Malin’s Complaint

Arazm and Singer moved to strike Malin’s complaint as a SLAPP suit arising from the exercise of Arazm’s constitutionally protected rights of speech or petition. The moving parties argued that because all of Malin’s causes of action were based on protected statements made in contemplation of litigation, his complaint was subject to dismissal under the anti-SLAPP statute.

Arazm and Singer contended that Malin’s claims were based on their protected: (1) statements made before a judicial proceeding (§ 425.16, subd. (e)(1)); (2) statements made in connection with an issue under consideration or review in a judicial proceeding (§ 425.16, subd. (e)(2)); and (3) “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)).

Arazm and Singer denied any involvement in the computer hacking and wiretapping activities alleged in Malin’s complaint. Alternatively, they argued that even if the “allegations of computer hacking and wiretapping were true (they are not), it is evident from the context of Malin’s allegations that he is complaining about pre-litigation information-gathering..., which are clearly protected activities.”

Finally, Arazm and Singer argued that Malin was incapable of establishing a probability of success on the merits under the second prong of section 425.16. They claimed that because all of their alleged activities were covered by the litigation privilege (Civ. Code, § 47, subd. (b)), it was impossible for Malin to prevail on his claims.

In opposition, Malin argued that Flatley v. Mauro (2006) 39 Cal.4th 299 (Flatley) was “effectively identical” to this case. Malin urged the court to apply the Flatley exception and deny the motion to strike the extortion claim because Singer’s demand letter constituted criminal extortion as a matter of law. Malin also urged the court to follow Gerbosi v. Gaims, Weil, West & Epstein, LLP (2011) 193 Cal.App.4th 435 (Gerbosi), and deny the motion to strike the claims arising from the alleged wiretapping and computer hacking activities because Arazm and Singer’s liability for those alleged criminal activities was “a question of fact for the jury subject to discovery.”

In reply, Singer and Arazm sought to distinguish Flatley. They argued “the Flatley exception only applies if ‘either the defendant concedes, or the evidence conclusively establishes, that the assertedly protected speech or petition activity was illegal as a matter of law.’ ([39 Cal.4th]at p. 320.)” The Flatley exception does not apply here, they argued, because they “have not conceded, and Malin has not conclusively shown, that the Letter was illegal as a matter of law.”

III. Order of Denial

The trial court denied the anti-SLAPP motion under the first step of the section 425.16 analysis based on Flatley and Gerbosi. It concluded that because the activities targeted by Malin’s complaint—wiretapping, computer hacking, and extortion—were illegal as a matter of law, the complaint was not subject to early dismissal under the anti-SLAPP statute. The court stated in relevant part: “1. Defendants’ Special Motion to Dismiss the Complaint on file herein as an unmeritorious SLAPP lawsuit is DENIED pursuant to Flatley v. Mauro (2006) 39 Cal.4th 299 and Gerbosi v. Gaims, Weil, West & Epstein (2011) 193 Cal.App.4th 435. On the cause of action alleging wiretapping and computer hacking, under Gerbosi v. Gaims, allegations of this type of activity that is illegal as a matter of law are not covered by Code of Civil Procedure § 425.16. Because the other causes of action in Plaintiff’s Complaint are based on the same activity alleged in [these] two causes of action, the Court similarly finds that those causes of action are not covered by § 425.16.

“2. In so ruling, the Court makes the following findings:

“(a) The allegations of sexual misconduct contained in the demand letter in this case are very tangential to the causes of action in Defendants’ complaint, which have to do with a ...

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