Monday, August 20, 2018
Court of Appeal:
Lawyer’s Disbursement of Settlement Funds Was Not Protected Activity
By SHANE PATRICK ETCHISON, Staff Writer
A lawyer who paid his client the total proceeds from a settlement should not have been granted his anti-SLAPP motion against a conversion and fraudulent misrepresentation action by the client’s ex-wife who had a 50 percent interest in the settlement, because the disbursement of funds was not protected activity, the Court of Appeal for this district has held.
The opinion, filed Thursday and not certified for publication, was written by Orange Superior Court Judge Kim G. Dunning, sitting on assignment to Div. Eight. It reverses orders by Los Angeles Superior Court Judge Gregory Keosian striking the complaint and awarding attorney fees to Christopher Cella, and his Walnut Creek law firm, Cella, Lange & Cella.
The appellant, Kristin Simmons, had been awarded a one-half interest in a joint venture project when she and her ex-husband divorced. Cella later represented her ex-husband and his company in a lawsuit against defendants who had breached the project’s joint venture agreement, which settled for $1.8 million.
Cella, who claimed to have no knowledge of Simmons’ interest in the project, deducted his firm’s fees from the settlement amount and paid the rest to the ex-husband. Simmons brought her suit against the attorney years later, when she learned of the settlement, claiming that Cella had known she was entitled to half the funds and should have sought her approval before disbursing them.
Keosian found that the conversion and fraudulent concealment causes of action were protected activity under the first prong of the anti-SLAPP statute, Code of Civil Procedure §425.16, because the disbursement of the funds was necessarily related to the prosecution of the underlying case (Simmons v. Mariash, denominated in Thursday’s opinion, “Heritage.”) Dunning disagreed.
“Here, plaintiff alleges she was entitled to half of the Heritage settlement proceeds and seeks to hold defendants liable for conversion and fraudulent concealment based on Cella’s disposition of those proceeds in a manner inconsistent with her right to receive a share. Cella’s conduct in filing, prosecuting and settling the Heritage action is protected activity….But Cella’s burden does not stop there; to invoke anti-SLAPP protection, Cella also must demonstrate the conversion and fraudulent concealment claims arose from that protected litigation activity….Cella failed to do so.”
The jurist distinguished between the litigation of the case itself and what happened after that litigation. She explained:
“Prosecuting and settling the Heritage action constituted protected activity. The decision not to pay plaintiff a share was not made in conjunction with any issue before the Heritage court or in connection with an issue being considered by the Heritage court. Nor can that decision be analogized to a postjudgment activity necessarily related to the litigation. The conduct was not protected activity within the meaning of section 425.16.”
“With this finding, the burden never shifted to plaintiff to establish a probability of succeeding on the merits. The question of whether Cella has potentially successful defenses to plaintiff’s claims is not before us. We decide only that the conversion and fraudulent concealment claims are not SLAPP suits that can be stricken via an anti-SLAPP motion. Because we reverse the order granting the anti-SLAPP motion, the order awarding Cella attorney fees also falls.”
Keosian had granted the anti-SLAPP motion after moving to the second prong of the analysis and determining that Simmons’s suit was barred by the litigation privilege, Civil Code §47(b).
The case is Simmons v. Cella, B283513 and B285390.
Simmons was represented by Jeffrey S. Benice of Benice Law in Costa Mesa. Counsel for Cella was Edmund G. Farrell III of Murchison & Cumming in Los Angeles.
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