Court of Appeal:
All Conduct Stemming From Litigation Is Not Protected
Segal Says Controversy Over Lawyer’s Receipt of Funds—Allegedly for Professional Services—Not Subject to Anti-SLAPP Motion in Action by Judgment Creditor Saying Those Funds, Paid by Debtor, Belong to Her
By a MetNews Staff Writer
An action against an attorney based on receipt of funds, allegedly for legal services, does not give rise to an anti-SLAPP motion where the plaintiff, a judgment creditor, claims the funds were fraudulently transferred to keep them beyond her reach, Div. Seven of the Court of Appeal for this district held yesterday.
Justice John L. Segal authored the opinion, which was not certified for publication. It affirms Los Angeles Superior Court Judge Maurice A. Leiter’s denial of a special motion to dismiss pursuant to the anti-SLAPP statute, Code of Civil Procedure §425.16.
The motion was brought by Van Nuys attorney Barry R. Wegman. He has been sued by Valley Village attorney Martina A. Silas.
The fact situation harks to 2003 when Silas was sued by a former client for malpractice. Representing the plaintiff in that action was Glendale lawyer attorney James Ellis Arden.
Silas prevailed, brought a malicious prosecution action against Arden, and won a judgment for $300,756, plus interest and costs. Los Angeles Superior Court Judge Kenneth R. Freeman ordered the assignment to Silas of any moneys owed by third parties to Arden and forbade Arden from disposing of any such funds.
The Court of Appeal upheld the judgment on April 17, 2013 and Wegman, two months later, filed for Chapter 7bankruptcy. The Bankruptcy Court declared Wegman’s debt to her to be nondischargeable; the Bankruptcy Appellate Panel for the Ninth Circuit in July 2015, reversed; the Ninth Circuit in December 2018 affirmed the determination of nondischargeability.
Silas then sued attorney Steven Robert Fox and his law firm, along with Wegman, alleging that Arden fraudulently transferred funds to them, purportedly for legal services, but, she asserted, no such services were provided. She sought $87,252 from Fox and $11,440 from Wegman.
On Feb. 16, 2022, Wegman filed his anti-SLAPP motion.
In an April 8, 2022 ruling, Leiter said:
“At oral argument, Wegman contended he has presented evidence establishing Arden paid him for legal services….But in analyzing the first prong under CCP § 425.16, the Court determines whether the complaint arises from protected activity. Wegman’s participation in legal proceedings is protected activity, but the gravamen of the claim is not that Wegman provided legal services for Arden. The transfer of funds allegedly owned by Plaintiff gives rise to the claimed liability.
“Arden’s transferring funds to his attorney may have evidentiary value; for example, Plaintiff may argue that Wegman was uniquely aware of Plaintiff’s judgment because he acted as Arden’s attorney. But the allegation that Arden transferred funds to evade judgments, to a transferee who was aware of the judgments, forms the basis for recovery. The complaint does not ‘arise from’ Wegman’s protected activity.”
Agreeing with Leiter that no protected conduct was implicated—hence the first prong of the anti-SLAPP statute is not met—Segal said:
“Wegman does not specify which of the four categories in section 425.16, subdivision (e), he contends applies here….Instead, he appears generally to suppose the statute protects all litigation-related activity by an attorney. The law does not support that supposition.”
That subdivision of the statute spells out:
“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.”
“Wegman… had to demonstrate his receiving payment from Arden for litigation services was an act falling within one of the four categories described by section 425.16, subdivision (e). Because Wegman makes no mention of any ‘public issue’ or ‘issue of public interest’ connected with his conduct, subdivision (e)(4) does not apply…Activity protected by the remaining subdivisions is limited to making, in various circumstances, a ‘written or oral statement or writing.’…Wegman, however, has not cited any statement or writing by him as the basis for Silas’s claims.”
“Though it’s unclear, Wegman appears to suggest receiving payment for litigation services is, by itself, a statement or writing that qualifies as protected activity under section 425.16, subdivision (e)(2).”
Wegman quoted the California Supreme Court’s 2006 decision in Rusheen v. Cohen which says that protected conduct under §425.16 includes “communicative conduct such as the filing, funding, and prosecution of a civil action.” Segal responded that the high court did not say that funding, standing alone, is protected, but, in any event, “Wegman did not ‘fund’ anything; he received funds.”
“Even assuming funding litigation, by itself, is protected activity, that does not establish the converse, i.e., that receiving funding for litigation is also protected.”
The case is Silas v. Wegman, B321219.
North Hollywood attorney Debra J. Wegman represented Wegman; Silas represented herself, joined by Los Angeles practitioner June E. Poyourow.
Litigation against Wegman, Fox, and The Fox Law Corporation continues. A hearing is slated for Thursday on Silas’s motion for leave to file a second amended complaint.
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