Judge: Anne Richardson, Case: 23STCV14985, Date: 2023-10-20 Tentative Ruling

DEPARTMENT 40 - JUDGE ANNE RICHARDSON - LAW AND MOTION RULINGS
The Court issues tentative rulings on certain motions.The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) email Dept 40 by 8:30 a.m. on the day of the hearing (smcdept40@lacourt.org) with a copy to the other party(ies) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no email is necessary and all parties should appear at the hearing in person or by Court Call. 

Case Number: 23STCV14985    Hearing Date: October 20, 2023    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Background

Plaintiffs Margaret E. Goldberg (Goldberg)—an individual, and Successor Trustee of the Terry Goldberg Living Trust—the Terry Goldberg Living Trust (Goldberg Trust), and Terry M. Goldberg, A Professional Law Corporation (Goldberg Corporation) sue Defendants Bradley C. Gage (Gage), Bradley C. Gage, A Professional Law Corporation (Gage Corporation), and Goldberg & Gage (G&G) pursuant to an August 15, 2023 First Amended Complaint alleging claims of (1) Breach of Contract, (2) Breach of Implied Covenant of Good Faith and Fair Dealing, (3) Intentional Misrepresentation, (4) Fraudulent Concealment, (5) Intentional Interference with Contract, (6) Negligent Interference with Contract, (7) Conversion, (8) Money Had and Received, (9) Open Book Account, (10) Breach of Fiduciary Duty, (11) Unfair Business Practices, (12) Intentional Interference with Prospective Economic Advantage, (13) Negligent Interference with Prospective Economic Advantage, (14) Accounting, (15) Appointment of Receiver, (16) Temporary Restraining Order, Preliminary and Permanent Injunction, (17) Constructive Trust, and (18) Declaratory Relief.

The claims arise from allegations that Terry Goldberg and (per the opposition, his nephew) Bradley Gage were law partners in G&G up until Terry Goldberg’s death on February 19, 2023, that G&G’s owners are the Goldberg Corporation and the Gage Corporation (respectively owned by Terry Goldberg and Defendants Gage), and that pursuant to the G&G partnership agreement, Terry Goldberg (through the Goldberg Corporation) was entitled to accounting from G&G and distributions of proceeds earned by G&G. Plaintiffs also allege that since Terry Goldberg’s death, Defendants have denied Plaintiff Goldberg—Terry Goldberg’s—spouse and the other Plaintiffs access to accountings for G&G, have improperly billed expenses incurred by Terry Goldberg in connection with G&G’s practice, and have denied release of certain funds to Plaintiffs in connection with a settlement entered by G&G.

On August 22, 2023, Defendants filed a special motion to strike (anti-SLAPP motion) against the FAC’s fifth through ninth, eleventh, and fourteenth to eighteenth causes of action, as well as to certain allegations in the FAC, on the grounds that those claims and allegations arise from protected activity related to settlement activities and that Plaintiffs cannot show a probability of prevailing on those claims and allegations.

On September 8, 2023, Plaintiffs opposed the anti-SLAPP motion.

On September 14, 2023, Defendants replied to the opposition.

On September 15, 2023, Plaintiffs made certain objections in connection with declarations attached to the opposition.

On September 21, 2023, at Plaintiff’s request, the Court continued the hearing on this motion to October 20, 2023 to be heard concurrently with a motion to disqualify made by Defendants on August 22, 2023.

On October 16, 2023, Defendants took their motion to disqualify off calendar in light of a substitution of counsel.

The anti-SLAPP motion is now before the Court.

Request for Judicial Notice

The Court DECLINES to take judicial notice of the documents advanced for notice by Plaintiffs because they are not dispositive of the Court’s below determination.

Evidentiary Objections

The Court does not rule on the parties’ objections because they are not dispositive of the Court’s below determination.

Special Motion to Strike [Anti-SLAPP]

Legal Standard

Anti-SLAPP analysis under Code of Civil Procedure section 425.16 (hereafter sometimes referred to as “section 425.16”) proceeds in two familiar steps. In the first step, the defendant or moving party must make “a threshold showing that the challenged cause of action is one ‘arising from’ protected activity.” (Barry v. State Bar of California (2017) 2 Cal.5th 318, 321, quotations omitted (Barry).) In this context, the term “protected activity” refers to speech or petitioning activities. (Barry, 2 Cal.5th at p. 321.) A claim arises from protected activity when that activity underlies or forms the basis for the claim; otherwise stated, “the defendant’s act underlying the plaintiff’s cause of action [must] itself [be] … an act in furtherance of the right of petition or free speech.” (Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1063, quotations omitted (Park).) “[T]he focus is on determining what ‘the defendant’s activity [is] that gives rise to his or her asserted liability—and whether that activity constitutes protected speech or petitioning.’” (Ibid.) In teasing out whether protected conduct exists, courts should consider the elements of the challenged claim and what actions by the defendant supply those elements and consequently form the basis for liability. (Ibid.)

If the court finds the defendant or moving party succeeds at the first step, then the burden shifts to the plaintiff to “demonstrate[] a probability of prevailing on the claim.” (Ibid. [quotations omitted].) At the second step, courts “evaluate the defendants’ evidence only to determine if it defeats that submitted by the plaintiff as a matter of law.’ [Citation.] ‘[I]n order to establish the requisite probability of prevailing [citation], the plaintiff need only have “‘stated and substantiated a legally sufficient claim.’” [Citation.] “Put another way, the plaintiff ‘must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited.’”’ [Citation.] … That burden [is] not particularly high.” (Area 51 Productions, Inc. v. City of Alameda (2018) 20 Cal.App.5th 581, 602 (Area 51 Productions, Inc.).) “Claims with the requisite minimal merit may proceed.” (Navellier v. Sletten (2002) 29 Cal.4th 82, 94 (Navallier).) If the cause of action satisfies both prongs of the anti-SLAPP statute, then it is subject to being struck. (Barry, supra, 2 Cal.5th at p. 321.)

As stated by our State’s highest Court: “This is a ‘summary-judgment-like procedure at an early stage of the litigation.’” (Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 192 (Varian Medical Systems, Inc.).)

Anti-SLAPP Motion: DENIED.

I. First Prong, Protected Activity

A defendant meets his burden of showing that a plaintiff’s claim arises from that defendant’s exercise of free speech or petition rights by making a prima facie showing that the act or conduct underlying the plaintiff’s claims falls within one of the four categories found in Code of Civil Procedure section 425.16, subdivision (e). (Navellier, supra, 29 Cal.4th at p. 88.) “Courts should analyze each claim for relief — each act or set of acts supplying a basis for relief, of which there may be several in a single pleaded cause of action — to determine whether the acts are protected [the first prong of the analysis] and, if so, whether the claim they give rise to has the requisite degree of merit to survive the motion [the second prong of the analysis].” (Bonni v. St. Joseph Health System (2021) 11 Cal.5th 995, 1010.) “[W]hen the allegations referring to an arguably protected activity are only incidental to a cause of action based essentially on non-protective 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 (Martinez).)

Code of Civil Procedure section 425.16, subdivision (e) states:

As used in this section, “act in furtherance of a person’s right of petition or free speech under the United States or California Constitution 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 constitutional right of free speech in connection with a public issue or an issue of public interest.

(Code Civ. Proc., § 425.16, subd. (e), italics added.)

In their motion, Defendants argue that the FAC’s fifth through ninth, eleventh, and fourteenth through eighteenth causes of action, as well as other FAC allegations as set forth in a detailed chart in their moving papers, arise from settlement related activities, which have consistently been held to constitute protected activity under the anti-SLAPP statute. (Mot., pp. 2, 8-12.)

In opposition, Plaintiffs argue that the challenged claims and allegations do not arise from protected activity because the conduct complained of is Defendants’ failure to abide by the obligations imposed by G&G’s partnership agreement, which includes duties to permit accounting and distributions from settlements. Plaintiffs also argue that the settlement allegations in the FAC are ancillary to the above referenced conduct and therefore do not trigger anti-SLAPP protections. Plaintiffs frame some of their arguments under the now disapproved gravamen test for anti-SLAPP discussions. (Opp’n, pp. 11-17.)

In reply, Defendants note the inapplicability of the gravamen test, argue that the allegations of protected activity are not incidental to the challenged claims and allegations in the FAC, and that Defendants’ cited authority supports their interpretation that the challenged claims and allegations arise from protected activity. (Reply, pp. 1-6.)

The Court finds in favor of Plaintiffs.

First, the Court determines that the challenged claims arise from breaches of the G&G partnership agreement by Defendants, not from protected activity. (See, e.g., FAC, ¶¶ 67-68 [fifth cause of action (COA) arising from Defendants’ knowledge and breach of obligations to Plaintiffs pursuant to the G&G partnership agreement and certain contracts through disruption of the performance of G&G’s contractual obligations], 72-75 [incorporation of conduct alleged previously in the FAC to support sixth COA], 78-79 [seventh COA involving terms of the partnership agreement relating to the split of proceeds earned by law firm and conversion of share of proceeds owed to Plaintiffs by Defendants from fees earned through litigation of an action resulting in settlement, in contravention of the G&G partnership agreement], 83 [eighth COA alleging entitlement to share of fees earned from a settlement per G&G partnership agreement], 87-91 [same for ninth COA], 102-103 [eleventh COA involving unfair practices in diversion of shares of proceeds owed to Plaintiffs following a settlement in an action handled by G&G, as well as need for injunctive relief to mitigate Defendants’ sole control of G&G’s financial affairs], 118-119 [fourteenth COA involving need for accounting of G&G’s transactions and basis in G&G’s partnership agreement], 124 [fifteenth COA involving need for appointment of receiver based on violations of the G&G partnership agreement through failure to pay out fees owed to trust/successors of deceased law partner], 133 [sixteenth COA involving need for injunction to prohibit Defendants from injurious conduct related to partnership of G&G], 137 [seventeenth COA involving need for constructive trust through incorporated allegations], 140 [eighteenth COA seeking declaration of rights to share in fees earned through the settling of a lawsuit for a client, a right to accounting, and other benefits pursuant to the G&G partnership agreement].)

In sum, these claims are premised on enforcing the terms of a partnership agreement, through which Plaintiffs are entitled to an accounting into G&G’s financials and payment of what would have been Terry Goldberg’s share of the fees earned through G&G’s involvement in one or more actions resulting in settlement.

To the extent that Defendants cite to authority finding that settlement activities involve protected activity benefitting from anti-SLAPP protections, the Court finds those cases distinguishable. Defendants rely on a comparison to O&C Creditors Group, LLC v. Stephens & Stephens XII, LLC (2019) 42 Cal.App.5th 546 (O&C) and Thayer v. Kabateck Brown Kellner LLP (2012) 207 Cal.App.4th 141 (Thayer). (Mot., pp. 10-12.) Unlike here, however, the protected activity in O&C involved allegations relating to the settlement activity itself. As described by the Court, the allegations stemmed from certain attorneys’ “settlement of the . . .  litigation (without acknowledging [another attorney’s] claim to attorney fees) and their disbursement of the settlement proceeds pursuant to that agreement,” as well as a breach of trust by “failing to advise the bankruptcy court of the settlement and by secretly disbursing said proceeds in derogation of the [attorney] lien.”  (O&C, supra, at p. 567.) Thayer is also distinguishable, where the protected activity in Thayer involved the complaining party (Mrs. Thayer’s) challenge to the disbursement of a class action settlement involving her husband (Mr. Thayer). Ms. Thayer’s complaint was premised on the attorney’s notification to his class clients that, based on a decision of the steering committee (made up of members of the class), unless they affirmatively opted out of a “Fraud Fund” to be used in a related criminal prosecution, the attorney would deduct 2.5 percent in the settlement proceeds. (Thayer, supra, at pp. 146, 150, 154-155.) The court lost little time concluding that in this content, Mrs. Thayer’s claims arose from the lawyer’s settlement activity undertaken on behalf of his clients represented in the class litigation. (Id. at p. 155.)

Here, by contrast, the relevant causes of action and supporting allegations arise from alleged failure to abide by the partnership agreement in not disbursing to Plaintiffs their proper share of fees earned by G&G in connection with one or more actions that G&G handled, concluded, and which resulted in settlement. They do not arise from settlement-related activities, such as the act of settlement in a particular way, a dispute as to a settlement’s terms, the manner of disbursement to clients, or decisions by the clients.

To the extent that allegations in the FAC mention potentially protected activity—e.g., allegations relating to settlement activity—the Court deems such allegations as incidental or collateral, and not subject to section 425.16. (Bonni v. St. Joseph Health System (201) 11 Cal.5th 995, 1012; see also Personal Court Reporters, Inc. v. Rand (2012) 205 Cal. App. 4th 182, 190 [“notwithstanding plaintiff’s allegations regarding arguably protected activity . . . those allegations are only incidental to the causes of action for breach of contract and common counts, which are based essentially on nonprotected activity – the nonpayment of overdue invoices”].)

Because Defendants fail to carry their burden, the Court need not reach the second prong of the anti-SLAPP analysis. (See Young v. Tri-City Healthcare Dist. (2012) 210 Cal.App.4th 35, 59 [Noting that because the action did not arise from protected activity, the reviewing appellate “court need not reach the second portion of the statutory test under the anti-SLAPP statute”].)

Defendants’ motion is thus DENIED. 

Conclusion

Defendants Bradley C. Gage, Bradley C. Gage, A Professional Law Corporation, and Goldberg & Gage’s Motion to Strike Plaintiffs’ First Amended Complaint, Causes of Action, and Allegations Arising from Protected Activity is DENIED.