Monday, October 18, 2010
C.A. Rebukes Attorney for ‘Frivolous’ Anti-Slapp Motion
By a MetNews Staff Writer
The Fourth District Court of Appeal on Friday rebuked Tustin attorney David J. Hartner for filing a frivolous special motion to strike under Code of Civil Procedure Sec. 425.16 and meritless appeal of the denial of the motion which arose in the context of a business dispute between partners in the adult entertainment industry.
In her opinion for Div. Three, Justice Eileen C. Moore remarked that Hartner—who did not return a call seeking comment—had submitted “one of the weakest anti-SLAPP motions this court has reviewed in some time, which is not an inconsiderable achievement.”
Moore emphasized that “any reasonable attorney should be aware that a business dispute that simply mentions incidental protected activity is not subject to the anti-SLAPP statute,” and concluded the motion to strike was properly denied because the complaint filed by Akbar Baharian-Mehr against his business partners and SGRL Investments Inc. was based on the defendants’ alleged mismanagement and wrongful expenditures of corporate funds, not any protected activity.
Since the challenge to Orange Superior Court Judge Kazuharu Makino’s rejection of the anti-SLAPP motion was properly before the appellate court, Moore said the panel could also review Makino’s grant of attorney fees on interlocutory appeal.
Justices Kathleen O’Leary and Raymond J. Ikola joined Moore in her decision upholding the $1,500 attorney fee award to Baharian-Mehr and ordering the defendants to pay Baharian-Mehr’s attorney fees and costs on appeal.
According to his complaint, Baharian-Mehr signed a general partnership contract to establish an adult entertainment business with Glenn and Leroy Smith, making them each fiduciaries of the others. Under the terms of this agreement, Leroy Smith was responsible for keeping accurate accounting records and making those available to Baharian-Mehr at his request.
SGRL Investments was formed to conduct the business, and the corporation adopted the partnership agreement between the men. Glenn and Leroy Smith were also named as SGRL’s corporate officers.
Baharian-Mehr said he did not inspect the accounting records for the five years Leroy Smith managed the business. After Leroy Smith quit in 2007, Baharian-Mehr alleged that he was given access to only a portion of the accounting records, which were “a mess.”
After inspecting the records, Baharian-Mehr said he discovered that funds had been paid to a private investigator to watch former employees who had sued SGRL for wage and hour violations; Leroy Smith had continued to receive his salary after he left the company; receipts had not been deposited in SGRL’s corporate bank account; a corporate credit card and cash had been used for non-business expenses; employees had not received all wages and overtime due to them, which resulted in litigation; political consultants had been hired for Glenn Smith’s personal gain; payments had been made to Glenn Smith’s personal attorney; and capital investments were incorrectly reflected as loans.
Baharian-Mehr filed suit against SGRL, Leroy Smith, Glenn Smith and another Smith family member in 2009, asserting causes of action for accounting, preliminary and permanent injunctions, breach of fiduciary duty, constructive fraud, constructive trust, and declaratory relief, among others. Glenn Smith filed a special motion to strike these claims, contending they arose from constitutionally protected activities.
Makino denied the motion, finding “the gravamen of this case is a business dispute between owners and not activity protected by…the anti-SLAPP statute” and that the anti-SLAPP motion was frivolous.
Moore agreed, noting that Glenn Smith “cherry-picked four allegations from the many in the complaint” which “related to hiring attorneys and a private investigator in connection with wage and hour litigation,” but ignored the remaining claims.
She reasoned that the allegations which Glenn Smith addressed were not the focus of the complaint, but merely examples of the alleged mismanagement, and so the anti-SLAPP statute’s protections did not apply.
Since the issue of whether the anti-SLAPP motion should have been granted was properly before the appellate court, the justice posited that “it would be absurd to defer the issue of attorney fees until a future date, resulting in the probable waste of judicial resources,” and concluded appellate jurisdiction over the issue of attorney fees was appropriate.
The justice opined that the award of attorney fees was not an abuse of the trial court’s discretion in light of the frivolous motion, and that the appellate brief, though “an improvement,” was “equally devoid of merit,” and so Baharian-Mehr was entitled to recover his costs on appeal as well.
The case is Baharian-Mehr v. Smith, G043068.
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