Wednesday, October 1, 2014
Lawyer’s Suit Against Former Firm No SLAPP—Court of Appeal
Action by Ex-Partner Who Was Thrown Out by Nixon Peabody Did Not Arise From Protected Activity, Panel Says
By KENNETH OFGANG, Staff Writer
A suit by a suspended lawyer who claims he was “thrown under the bus” by his former firm in the face of a federal securities investigation did not implicate protected activity for purposes of the anti-SLAPP statute, the Court of Appeal for this district ruled yesterday.
Div. Two affirmed a Los Angeles Superior Court judge’s ruling in favor of David Tamman, who has pled causes of action against Nixon Peabody LLP that include breach of contract, breach of fiduciary duty, and intentional interference with business relations. The appellate panel agreed with Los Angeles Superior Court Judge Maureen Duffy-Lewis that those claims arose from the firm’s alleged breach of the partnership agreement, not from its protected activity of responding to the federal probe.
Tamman is currently appealing his conviction and seven-year prison sentence on 10 criminal counts. Following a two-week bench trial in 2012, Tamman was found guilty by Judge Philip Gutierrez of the Central District of California of one count of conspiring to obstruct justice, five counts of altering documents, one count of being an accessory after the fact to his client’s mail and securities fraud crimes, and three counts of aiding and abetting the client’s false testimony before the SEC.
The client, John Farahi, had earlier pled guilty to running a Ponzi scheme, selling unregistered securities, bank fraud, and conspiring with Tamman to obstruct justice.
Prosecutors said that when the SEC made a surprise inspection of Farahi’s business, Tamman began altering and backdating documents to create the illusion that Farahi had been disclosing to investors that Farahi was himself taking the majority of investors’ funds. They also said that Tamman created and backdated promissory notes.
Tamman, a partner at Nixon Peabody from 2007 to 2009, alleged in his complaint that he came to the firm with a $1.5 million-to-$2 million-a-year book of business. He said that he lost about 75 percent of that business when the firm terminated him after the SEC started serving subpoenas as part of the Farahi investigation.
The firm, he claimed, was trying to distance itself from him, even as it was profiting off business brought in by his clients. Nixon Peabody, he alleged, refused to defend or indemnify him in connection with the investigation, even though it was required to do so under the partnership agreement.
After the firm filed its special motion to strike under the anti-SLAPP law, Duffy-Lewis stayed the proceedings pending the outcome of the criminal case. After the stay was lifted—following sentencing—Tamman filed opposition to the motion.
He argued that his claims have nothing to do with constitutionally protected petitioning activity. Citing the Fifth Amendment, he declined to offer evidence regarding the likelihood of prevailing on the merits.
The trial judge acknowledged that the anti-SLAPP statute may be applied to claims of “client stealing” or “declining indemnification.” But in this case, she said, the motion was “insufficiently pled and not supported by case law.”
Trial Judge Upheld
Los Angeles Superior Court Judge Edward Ferns, sitting on assignment and writing in an unpublished opinion for the Court of Appeal, said the trial judge was correct.
The essence of Tamman’s claims, Ferns said, is that Nixon Peabody stole or destroyed 75 percent of his “Book of Business,” and failed “to act as a fiduciary” and to defend and indemnify him, as required by the partnership agreement.
“Although those claims were preceded or triggered by the SEC investigation, they did not arise from it,” Ferns wrote.
He distinguished Tuszynska v. Cunningham (2011) 199 Cal.App.4th 257, where the appellate court reversed the denial of a special motion to strike a complaint filed by an attorney against the administrator of a sheriffs’ association legal defense fund. The attorney claimed she had been discriminated against, on the basis of gender, in the assignment of cases by the administrator.
The Court of Appeal held that the claim arose from the protected activities of attorney selection and litigation funding, which the court said constituted “statements or writings” related to judicial proceedings within the meaning of the statute.
Nixon Peabody’s argument that its refusal to defend Tamman was a “litigation funding decision” in the sense used in Tuszynska, Ferns wrote, “focuses on the motive for its actions (the SEC investigation) while ignoring that the basis for Tamman’s defense and indemnification request stemmed from a pre-existing contractual obligation.”
Attorneys on appeal were Kevin H. Brogan, Dean E. Dennis, and William A. Meyers of Hill, Farrer & Burrill for the defendant and James P. Whol for the plaintiff.
The case is Tamman v. Nixon Peabody LLP, B252332.
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