Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County No. S.C. 090068. Jacqueline A. Connor, Judge.
Law Offices of Bartolo D. Carrillo, Jr. and Bartolo D. Carrillo, Jr. for Plaintiff and Appellant Shmuel Erde; Shmuel Erde in pro. per.
Leonard, Dicker & Schreiber, Richard C. Leonard and Michael R. Rogers for Defendants and Respondents Theodor Nickolas Bodnar, Mary Louisa Bodnar, and Terrence W. Cooney.
Waxler♦Carner♦Weinreb♦Brodsky, Barry Z. Brodsky and Christopher L. Wong for Defendants, Respondents, and Appellants James Waldorf, John Brink, and Irsfeld, Irsfeld & Younger.
Judge of the Los Angeles Superior Court assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
This case is about Shmuel Erde and his unhappy business deal from the 1980s. Erde is the plaintiff, appellant, and cross-respondent here. Erde struck the business deal in 1983. By 1984, the venture was bankrupt and he had suffered losses. Erde blamed his former business associates and their lawyers.
In 2001, Erde sued his former business associates and their lawyers over the deal. The trial court ruled against him and Division Two of this court affirmed. (Erde v. Bodnar (Sept. 26, 2002, B153588) [nonpub. opn.].) We call that litigation the “Division 2 case.”
Dissatisfied with this ruling, Erde filed a complaint in federal court in 2003. In this complaint, Erde said “the claims and issues . . . in this complaint have been previously submitted for litigation in the State court . . . .” (Italics added.) The district court entered judgment against Erde. The Ninth Circuit affirmed. (Erde v. Bodnar (Feb. 26, 2004, No. 03-56267) [nonpub. opn.].) We call this litigation the “federal case.”
Again dissatisfied with this ruling, Erde filed a new complaint in the Superior Court on June 16, 2006. Erde’s former business associate Theodor Nickolas Bodnar and others were the defendants, as they were in the Division 2 case and in the federal case. These defendants demurred. The trial court sustained the demurrer without leave to amend and dismissed the action. This is the matter before us.
Erde has appealed. We affirm.
Some of Erde’s former business associates also have filed their own cross-appeal. This cross-appeal concerns their special motion to strike under Code of Civil Procedure section 425.16. The trial court denied this motion. We affirm this ruling as well.
We address each appeal in turn.
I
The trial court was right to sustain the demurrer against Erde’s latest complaint. The court sustained the demurrer without leave to amend. Among the court’s reasons was its finding that Erde’s newest complaint was a sham pleading. The trial court found there was a “gross inconsistency” between the version of events Erde gave in the Division 2 case and the version in his 2006 complaint. The trial court observed Erde provided “absolutely no explanation for this gross inconsistency.” On appeal, Erde still gives no legitimate explanation for this gross inconsistency. We set out the pertinent factual background.
A
Erde is still suing about the bad business deal from the 1980s. Erde now says his 2006 complaint slices the 1983 deal in a new way to expose new issues. This is incorrect. To understand why requires an understanding of the cases in 2001 and in 2006.
We begin with the identities of the parties. The lone plaintiff in 2001 is identical to the lone plaintiff in 2006: Shmuel Erde. The defendants also are virtually identical, as the following chart illustrates. This table compares Erde’s 2001 defendants with his 2006 defendants.
Erde sued in 2001
Erde sued in 2006
1. Theodor Nickolas Bodnar
1. Theodor Nickolas Bodnar
2. Mary Louisa Bodnar
2. Mary Louisa Bodnar
3. Terrence Cooney
3. Terrence Cooney
4. Cooney & Cooney
4. Cooney & Cooney
5. James Waldorf
5. James Waldorf
6. John Brink
6. John Brink
7. Irsfeld, Irsfeld & Younger
7. Irsfeld, Irsfeld & Younger
8. American General Resources, Inc.
8. American General Resources, Inc.
9. Ventura Pacific Builders, Inc
9. Ventura Pacific Builders, Inc
10. Bodnar & Sons, Inc.
10. Bodnar & Sons, Inc.
11. Marine Midland Bank
Did not sue Marine Midland Bank in 2006
They are all the same, except one. In 2006, Erde left out defendant number eleven: Marine Midland Bank.
Now we compare the subject matter of the 2001 and the 2006 cases.
The appellate decision in the Division 2 case summarized Erde’s case circa 2001. We are about to italicize several pages from that decision. Before doing so, however, we set forth Division 2’s terminology: “The respondents are James Waldorf (Waldorf), John Brink (Brink), and Irsfeld, Irsfeld & Younger (collectively, the Attorneys), Theodor Nickolas Bodnar (Bodnar) and Mary Louisa Bodnar (collectively, the Bodnars), and HSBC Bank USA (HSBC). HSBC is the successor to Marine Midland Bank, the parent of Marine Midland Realty Credit Corporation. In [Division 2’s] summary of the allegations we refer to HSBC instead of any reference to either Marine Midland Bank or Marine Midland Realty Credit Corporation. [¶] Appellant [Erde] includes within his briefs arguments directed at defendants Terrence W. Cooney and Cooney & Cooney . . . (collectively, Cooney).” (Division 2 Case, page 1 and footnote 1.)
Given this shorthand, the following italicized quotation sets out the+- 2001 background reported by the Division 2 case:
“In 1983, [Erde] and his wife owned an aging apartment building (the building) across the street from the UCLA campus. [Erde] desired to replace the building with a new structure, but he lacked the financial resources. An HSBC employee introduced [Erde] to Bodnar as a potential financial partner in the development project. In turn Bodnar introduced [Erde] to W. Patrick Moriarty (Moriarty) as a strong financial guarantor.
“Thereafter, [Erde] obtained a $250,000 interim loan from Pacific Thrift & Loan to pay off the existing loans secured by the building. To secure the interim loan, [Erde] pledged his residence, three apartment buildings, and a condominium. Moriarty signed a guaranty.
“Because the term on the loan from Pacific Thrift & Loan was short, Bodnar offered to arrange for [Erde] to pay off that obligation with proceeds from a new loan from Long Beach Savings. [Erde] gave Bodnar a $2,000 check to cover the cost of the appraisal and credit report.
“On July 8, 1983, [Erde] and Bodnar formed Westwood Plaza North (the partnership), each holding a 50 percent interest through their individual wholly owned corporations. [Erde] entered into a partnership agreement with Bodnar based on Bodnar's representations of his abilities as a developer and his promise to deliver a guarantor and financing through HSBC. Also, [Erde] relied on HSBC's promise to provide financing for the development project. Cooney, Bodnar's attorney, drafted the partnership agreement.
“On June 30, 1983, Bodnar deposited the $2,000 into his own account instead of delivering it to Long Beach Savings. When [Erde] demanded that Bodnar return the $2,000, Bodnar claimed that he spent the money entertaining potential guarantors for the project.
“Pacific Thrift & Loan's interim loan came due on August 21, 1983. When Pacific Thrift & Loan demanded that Moriarty pay off the loan pursuant to the terms of the guaranty, Moriarty indicated that he was insolvent. Bodnar never notified [Erde] that Moriarty was insolvent. In November 1983, Pacific Thrift & Loan initiated foreclosure proceedings.
“Various lenders were willing to provide [Erde] with a loan, but they wanted the building as security. Subsequently, the Bodnars sued [Erde] for a dissolution and accounting, and filed a lis pendens. The lis pendens prevented [Erde] from obtaining new financing.
“Bodnar hired Waldorf to file a bankruptcy petition on behalf of the partnership. Soon after, Waldorf filed the bankruptcy petition without informing [Erde]. The bankruptcy petition included demands for various payments of more than $750,000 to Bodnar and others. As a result, [Erde] lost the building, his residence, his apartment buildings, his condominium, his cars, his bank accounts and his credit.
“Due to the respondents' conduct, [Erde] was forced to file for bankruptcy protection in 1984.
“On April 25, 2000, [Erde] located Moriarty and learned for the first time that Bodnar knew Moriarty was insolvent when Bodnar represented to [Erde] that Moriarty was a viable guarantor. . . .
“On April 25, 2001, [Erde] sued the respondents.
“Against the Bodnars, [Erde] alleged causes of action for breach of contract, breach of fiduciary duty, intentional misrepresentation, concealment, false promise, negligent misrepresentation, conspiracy to defraud, malicious prosecution, abuse of process, intentional infliction of emotional distress, negligent infliction of emotional distress, violation of RICO, conspiracy to violate RICO, conversion (encompassing claims for a constructive trust and accounting), declaratory and injunctive relief, and tolling the statute of limitations.
“Against the Attorneys, [Erde] alleged a cause of action purporting to encompass claims for breach of professional duty of loyalty, fraud, and constructive fraud. Against the individuals Waldorf and Brink, [Erde] alleged causes of action for intentional infliction of emotional distress and negligent infliction of emotional distress. Additionally, Waldorf is named in the final cause of action for tolling the statute of limitations. . . .
“Against Cooney, [Erde] alleged a cause of action for malicious prosecution and abuse of process. Against Terrence W. Cooney alone, [Erde] alleged causes of action for breach of attorney's duty of good faith and honest dealing, intentional infliction of emotional distress, negligent infliction of emotional distress, violation of RICO, conspiracy to violate RICO, and tolling the statute of limitations.
“The respondents filed demurrers to the complaint. The trial court sustained the respondents' demurrers without leave to amend based on the statute of limitations and then entered judgment of dismissal for the Attorneys on September 4, 2001, for the Bodnars on September 20, 2001, and for HSBC on October 5, 2001. . . .” (Division 2 case, pages 1-3.)
In 2001, Division 2 concluded that Erde knew enough facts to make a reasonable person suspect he had been damaged. Erde knew the following:
1. Bodnar improperly deposited Erde’s $2,000 check into his own account.
2. A lender had initiated foreclosure proceedings against Erde’s building.
3. Waldorf filed a bankruptcy petition on behalf of the partnership.
4. Erde lost his building and his assets as a result.
5. Erde filed for his own bankruptcy protection.
6. Moriarty did not honor his guaranty agreement.
Erde’s knowledge charged him with the information a reasonable investigation would have uncovered, Division 2 ruled, and that meant the statute of limitations doomed Erde’s case.
That was 2001. The 2006 complaint is basically the same – with one vital difference. First we review the similarities. Then we explain the vital difference.
First we review the similarities.
The facts are similar. So are the claims.
Factually, Erde’s 2006 complaint is similar to his 2001 complaint. These similarities set out a common account we will call the Failed 1980s Apartment Deal. The Failed 1980s Apartment Deal account goes like this.
The deal began in 1983 and continued through 1984. Erde owned a property. This is the “apartment building across the street from UCLA.” In 1983, Erde decided to develop this property and so entered a partnership with Bodnar. In legal terms, this partnership was between the alter ego corporations for Erde and for Bodnar. Bodnar’s alter ego corporation was American General Resources, Inc. The substance of the deal was the same. Erde was to contribute the apartment building. Bodnar was to contribute his expertise in development and in raising capital. Again things swiftly went wrong. Again there was Bodnar’s lis pendens against the property. Again Bodnar hired attorneys Brink and Waldorf and their law firm Irsfeld, Irsfeld & Younger – collectively, the “Attorneys.” Again these Attorneys were to file a bankruptcy petition on behalf of the partnership in 1984.
In sum, Erde’s 2006 complaint told the same basic story about the Failed 1980s Apartment Deal as did Erde’s 2001 complaint.
Erde’s legal claims were also similar. As Division 2 noted, Erde’s 2001 claims included intentional misrepresentation, concealment, false promise, negligent misrepresentation, conspiracy to defraud, fraud, and constructive fraud. In other words, in 2001 Erde sued for just about every kind of fraud imaginable. In 2006, Erde’s first and main cause of action was fraud – again.
Now, we go to the vital difference between Erde’s 2006 and his 2001 complaint.
This new twist is Erde’s new claim about a supposedly new and different kind of fraud Erde recently detected in the Failed 1980s Apartment Deal.
According to Erde’s opening brief, here is the new twist in Erde’s 2006 complaint: “Respondent’s willful misrepresentations that the Partnership had not been dissolved, when, in fact, Respondents knew that it had.” (Italics added.) So the new fraud in Erde’s 2006 account of the Failed 1980s Apartment Deal is about the status of the partnership: Erde’s business associates made Erde think his 1983 partnership had not been dissolved. Back in 1983 and 1984, Erde now claims, he thought the partnership continued, but in truth that partnership had been dissolved in 1983.
This new twist is vital for Erde, because he believes it enables him to argue the 2006 complaint raises a new issue – one not settled by his 2001 litigation. Thus Erde maintains on the first page of his opening brief that “[t]his issue has never been litigated before, so there can be no ‘collateral estoppel’ or ‘res judicata.’” So this 2006 complaint supposedly turns on how the Attorneys and the others made Erde believe that Erde’s partnership had not been dissolved, when in fact the partnership had been dissolved.
The fundamental problem with Erde’s effort to avoid the preclusive effect of his own earlier litigation is that Erde has altered his account of the facts to create this supposedly new twist. The trial court took note of Erde’s improper tactical maneuver, and blocked it. The trial court handled this issue correctly.
Erde’s 2006 case fails because Erde has changed his story. He has changed it in a fundamental way. In 2001 Erde alleged that Attorneys Brink, Waldorf, and Irsfeld never contacted Erde. In 2006, however, Erde alleged that Attorneys Brink, Waldorf, and Irsfeld did contact Erde. According to Erde’s 2006 account, these contacts consisted of fraudulent misrepresentations.
Erde’s 2001 account thus contradicts his 2006 account. In 2001, Erde claimed the Attorneys never contacted him. In 2006, he claimed the opposite: the Attorneys did contact him, and the contacts were of a poisonous kind: fraudulent misrepresentation.
The trial court identified precisely this change in Erde’s story when ruling against Erde. The relevant portion of the trial court’s written ruling was as follows:
“Erde is making allegations of fraud in this [2006] action which are materially inconsistent with factual allegations made in the first [2001] action. In the complaint in the first [2001] action, Erde alleged that ‘[Attorney] Waldorf never contacted Erde, never informed Erde that [Attorney] Waldorf was employed to represent the Partnership and accepted the employment job of representing the Partnership, never communicated with Erde in any manner, never consulted Erde, . . . Or since.’ . . . . [¶] . . . [¶] Erde’s allegations that [Attorney] Waldorf, of the Irsfeld firm, never contacted, informed or communicated with Erde during the period that the bankruptcy was filed ‘or since’ is inconsistent with the allegations in this [2006] action that Irsfeld ‘represented to Plaintiff that the Partnership continued to exist . . . .’ In his opposition to the demurrer, Erde provides absolutely no explanation for this gross inconsistency.” (Underlining in original, italics added.)
Since the trial court issued this written tentative ruling, Erde twice has shrunk from explaining this “gross inconsistency”: Erde did not explain to the trial court, and he did not explain to this court.
Before the trial court, Erde remained silent about this “gross inconsistency.” Erde’s counsel read the trial court’s tentative written decision and told the court clerk simply that “we’re submitting on everything . . . .” After the parties had argued about another point, the trial court reiterated its ruling and asked, “I don’t think anything is left at this point, is there?” Erde’s counsel said, “No, Your Honor.” So Erde never explained the factual inconsistency in oral argument to the trial court. The inconsistency apparently defied legitimate explanation.
Just as Erde declined to address the “gross inconsistency” in the trial court, so too has he passed on the point in this court. His opening brief includes a short section on the sham pleading issue. This short section does not attempt factually to square Erde’s 2006 complaint with his 2001 complaint. Rather, Erde makes three other passing suggestions, which all fail.
First, Erde in passing suggests that a factual inconsistency exists but is “irrelevant and immaterial.” This is incorrect. Erde’s 2006 complaint alleges fraud. Whether there were fraudulent misrepresentations is central to a fraud case. Erde’s 2001 complaint says there were no contacts at all from the Irsfeld Attorneys. No contacts necessarily implies no affirmative misrepresentations. That would end the fraud case. That point is material.
Second, Erde would shift the focus away from his own gross inconsistency to focus on claims others made. What others said, however, is irrelevant to whether Erde’s own pleadings are inconsistent. This effort to divert attention from the sham pleading issue does not assist Erde.
Third, Erde suggests his 2006 complaint was about fraudulent concealment. Erde’s characterization of his 2006 complaint as about “concealment” is insupportable according to the language of that complaint, which alleged the Irsfeld Attorneys “all represented to [Erde] that the Partnership continued to exist . . . .” Erde’s 2006 complaint was not about concealment – not that Attorneys failed to speak to him when they should have – but rather that those Attorneys did speak, and their words were lies. As the trial court correctly noted, Erde’s 2001 complaint factually and fatally contradicted Erde’s 2006 theory of recovery. Moreover, in oral argument to the trial court, Erde maintained that his case was based on “affirmative misrepresentations,” and added the case had been filed “for one thing only, Your Honor, and that’s for the willful misrepresentations.” Affirmative misrepresentations occur when people speak and lie. Concealment is when people fail to speak and thereby hide the truth. Erde’s “concealment” characterization cannot shield his 2006 complaint from the contradictory and governing claims that Erde made in 2001.
In Erde’s reply brief, Erde takes up this issue. Erde waives the point, however, for to reserve such an argument for a reply brief is an unfair appellate tactic. It is unfair because it seeks to avoid giving the other side notice and an opportunity to respond in the opposition brief. So Erde’s argument in reply is too little and too late. Even were we to entertain Erde’s argument on the merits, moreover, we would reject it. Erde’s 2001 complaint alleged that the Attorneys “never communicated with Erde in any manner . . . .” Erde verified this assertion under penalty of perjury. It is a flat contradiction for Erde now to claim the Attorneys indeed were communicating with him in some manner.
Erde’s 2006 complaint consequently was a sham pleading.
The legal consequence is straightforward. Erde correctly cites Owens v. Kings Supermarket (1988) 198 Cal.App.3d 379. In Owens, “[p]laintiff offered no explanation for [a pleading] inconsistency to the court below or on appeal. The conclusion is inescapable that this amendment was made solely for the purposes of avoiding a demurrer.” (Id. at p. 384.) Courts disregard sham pleadings. Once this new twist is gone from Erde’s 2006 suit, the 2006 case becomes indistinguishable from his 2001 suit, which Erde lost. Therefore Erde loses this suit too, by virtue of that earlier judgment. The trial court correctly sustained the demurrer without leave to amend.
II
Attorneys Waldorf, Brink, and Irsfeld responded to Erde’s complaint with a special motion to strike under Code of Civil Procedure section 425.16. The trial court denied this special motion to strike. This ruling was correct.
Before getting to the merits, we note that the Attorneys already have won this case, by virtue of our analysis about the demurrer in the first section of this decision. We surmise this issue about the special motion to strike is not moot because the Attorneys seek an award of fees for the lawyers they have retained, which the special motion can make available but the demurrer does not. So we take up the issue of the section 425.16 special motion to strike.
Section 425.16 sets out two steps of analysis. “First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. . . . If the court finds such a showing has been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim.” (See Taus v. Loftus (2007) 40 Cal.4th 683, 712, citation omitted.)
The trial court decided this case on the first step: that Erde’s case was not one “arising from” the Attorneys’ protected activity. “Arising from” means “based on.” (Briggs v. Eden Council for Hope and Opportunity (1999) 19 Cal.4th 1106, 1114.) We likewise decide this case on this first step, because Erde’s case was not one “arising from” the Attorneys’ protected activity. Therefore the special motion to strike had no application to this case, and the trial court was right to deny the Attorneys’ special motion.
We begin our analysis with the language of Section 425.16:
“A cause of action against a person arising from any act of that person in furtherance of the person's right of petition . . . shall be subject to a special motion to strike . . . .” (Code Civ. Proc., § 425.16, subd. (b)(1).) An “‘act in furtherance of a person's right of petition . . .’ includes: (1) any . . . writing made before a . . . judicial proceeding . . . .” (Code Civ. Proc., § 425.16, subd. (e), italics added.)
Next we review how the Attorneys say their special motion fits this language. To restate their claim, the Attorneys say something like the following. Erde sued us (again) on June 16, 2006. Erde’s (latest) complaint (again) charges us with defrauding him. Our only role in this Failed 1980s Apartment Deal, however, was to file a bankruptcy petition on behalf of the Apartment Deal partnership in 1984. We filed that bankruptcy petition on May 24, 1984. A bankruptcy petition is a “writing made before a . . . judicial proceeding.” Erde’s complaint against us therefore arises from activity protected by the special motion to strike statute. And therefore the trial court’s contrary ruling was error. In a nutshell, that is the Attorneys’ position on this issue.
The Attorneys’ position is factually incorrect, however, according to Erde’s 2006 complaint. That complaint alleges that “Bodnar, Ms. Bodnar, Cooney, and Irsfeld, all represented to Plaintiff that the partnership continued to exist, and continued their action in accord with these representations. The representations of all of the Defendants[,] however, were in fact false. The true facts were that the Partnership was dissolved and ceased to exist in 1983, and the actions which the Defendants had taken on behalf of the Partnership were based on fraud and deception. [¶] . . . At the time Irsfeld and Bodnar filed the Bankruptcy Petition on behalf of the Partnership, Irsfeld and Bodnar knew that the Partnership ceased to exist prior to their filing. Despite their knowledge of the falsity and fraudulent nature of their actions, Irsfeld and Bodnar took these actions and made the representations that the Partnership did exist with the willful and malicious intention to deceive and defraud Plaintiff in their endeavor to wrongfully take the Property from Plaintiff.” (Italics added.)
This last sentence is crucial. Erde’s complaint is about a joint endeavor wrongfully to take Erde’s apartment property. That is the central theme of Erde’s complaint: the fraudulent joint endeavor to take his property. Factually, then, Erde’s complaint alleges that the Irsfeld Attorneys were part of a larger scheme, and that these Attorneys did more than simply file a bankruptcy petition. They took part in the fraudulent lies: “Bodnar, Ms. Bodnar, Cooney, and Irsfeld, all represented” false things to Erde, who believed them and lost his property, according to his complaint.
The Attorneys’ position is also legally incorrect. The law requires that “the act underlying [Erde’s] cause or the act which forms the basis for [Erde’s] cause of action must itself have been an act in furtherance of the right of petition or free speech.” (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 66, quotation marks and citation omitted; see also, Navellier v. Sletten (2002) 29 Cal.4th 82, 89; Midland Pacific Bldg. Corp. v. King (2007) 157 Cal.App.4th 264, 275-276; Marlin v. Aimco Venezia, LLC (2007) 154 Cal.App.4th 154, 160-162.)
The action underlying Erde’s case was not itself petitioning or free speech action. The crux of Erde’s case was business fraud: fraud in the Failed 1980s Apartment Deal. The underlying act was trickery that Erde says the Attorneys (and everyone else Erde sued) perpetrated on him to get his UCLA apartment building. The bankruptcy petition was but an incidental step, peripheral to Erde’s underlying fraud suit. The main thing is that they all lied to him to get his property, according to his complaint.
The trial court’s analysis of this issue was exactly right, and we incorporate it:
“[T]his action is based upon purported affirmative misrepresentations made by [the Attorneys] regarding the continued existence of the Partnership. While [Erde’s] fraud claims are not substantively viable for the reasons indicated [elsewhere], there is simply nothing to show that the allegations ‘arise from’ the filing of the bankruptcy petition or any other free speech rights. Therefore, the anti-SLAPP motion is DENIED.”
The Attorneys say that Erde has changed his story on appeal in his briefing, and Erde now is claiming in essence that the Attorneys’ role was more limited: that all the Attorneys did was to file the bankruptcy petition, and that the Attorneys did not directly communicate with Erde. We must evaluate the trial court’s conduct on the basis of the trial court record. The appellate briefs are not in the trial court record.
III
The judgment is affirmed in all respects. Each side shall bear its own costs.
We concur: WOODS, Acting P.J. ZELON, J.