Opinion
A160748 A161412
02-09-2022
JEFFREY M. JONES et al., Plaintiffs and Appellants, v. LEVY VINICK BURRELL HYAMS LLP et al., Defendants and Respondents.
NOT TO BE PUBLISHED
Alameda County Super. Ct. No. RG19047015
Rodríguez, J.
Shannon B. Jones and her husband, Jeffrey M. Jones, (collectively, plaintiffs) appeal from orders granting defendants Levy Vinick Burrell Hyams LLP, Jean Hyams, Katherine Smith, and Darci Burrell's (collectively, LVBH) special motion to strike and awarding LVBH attorney fees and costs. (Code Civ. Proc., § 425.16.)
Undesignated statutory references are to the Code of Civil Procedure. We refer to plaintiffs individually by first name for convenience, intending no disrespect. In reciting the procedural background, we refer to this court's unpublished decision in a prior appeal arising out of the underlying litigation, Vella-Andrade v. Shannon B. Jones Law Group, Inc. (Sept. 30, 2019, A153737).
We affirm.
BACKGROUND
Shannon is a licensed California attorney and the owner of Shannon B. Jones Law Group, Inc. (the firm). Sandra J. Vella-Andrade worked as a bookkeeper and controller at the firm. In that role, Vella-Andrade had access to private and confidential information pertaining to Shannon and the firm. During her employment, Vella-Andrade collected 27, 000 pages of documents containing privileged communications between Shannon and her clients, client bills, confidential employee records and payroll information, and plaintiffs' personal financial information.
In January 2016, Vella-Andrade resigned and took the documents with her. She did not have permission to do so. Vella-Andrade hired LVBH and gave that firm the documents she had taken. In August 2016, LVBH filed a lawsuit in Contra Costa County Superior Court against Shannon and the firm for constructive termination and wage and hour violations.
The operative amended complaint alleged Shannon required Vella-Andrade to perform her job in an illegal and unethical manner, including by directing her to use money from the firm's accounts to pay Shannon's personal expenses and to record those transactions as business expenses. Vella-Andrade also alleged Shannon opened a "copy company" in Jeffrey's name, operated the company in her firm's office, and "charged firm clients for services performed by [the copy company]. Despite this, services ostensibly performed by [the copy company] were performed" by the firm's staff using the firm's equipment. Shannon and the firm cross-complained, alleging claims against Vella-Andrade for, among other things, misappropriating plaintiffs' confidential information.
In late December 2016 - during discovery - LVBH produced all 27, 000 pages of the documents Vella-Andrade had taken. Shannon demanded LVBH return the originals. LVBH refused, and Shannon moved for a protective order and to disqualify LVBH. Approximately four months later, LVBH acknowledged some of the documents were not essential to Vella-Andrade's claims; it returned those documents. The trial court subsequently issued a protective order but declined to disqualify LVBH. It determined disqualification was unwarranted and that the court was not empowered to restrict the flow of information between Vella-Andrade and her counsel. Shannon appealed the denial of the disqualification motion. A division of this court affirmed. (Vella-Andrade v. Shannon B. Jones Law Group, Inc., supra, A153737).
This litigation followed. In late 2019, plaintiffs filed a complaint in Alameda County Superior Court against LVBH alleging causes of action for receiving stolen property, conversion, negligence under State Compensation Ins. Fund v. WPS, Inc. (1999) 70 Cal.App.4th 644 (State Fund), trespass, and violation of Business and Professions Code section 17200. Each cause of action is based on LVBH's receipt, review, and retention of the documents Vella-Andrade took from the firm. According to the complaint, Vella-Andrade stole plaintiffs' personal and confidential records, which included documents pertaining to their debt, taxes, and retirement planning. The complaint acknowledged "the documents have been returned" but alleged LVBH had retained copies, and that some of the documents - including those containing Jeffrey's information - were "completely unrelated" to Vella-Andrade's lawsuit against Shannon and the firm.
State Fund defines "a lawyer's ethical obligations upon receiving another party's attorney-client privileged materials." (McDermott Will & Emery, LLP v. Superior Court (2017) 10 Cal.App.5th 1083, 1106; Rico v. Mitsubishi Motors Corp. (2007) 42 Cal.4th 807, 817, 818.) Plaintiffs cite no authority - and we are aware of none - creating a tort remedy for a State Fund violation. (See Cedars-Sinai Medical Center v. Superior Court (1998) 18 Cal.4th 1, 4 [declining to recognize "a separate tort cause of action" for intentional spoilation of evidence].) Rather, the remedy for such a violation is, in an appropriate case, disqualification. (See Rico, at p. 819.)
Defendants filed a special motion to strike. (§ 425.16.) Over plaintiffs' opposition, the trial court granted the motion and dismissed the complaint. It determined LVBH's receipt of documents from Vella-Andrade while acting as her counsel constituted "communicative conduct" protected under section 425.16, subdivisions (e)(1) and (2). The court also concluded the complaint arose from protected activity as plaintiffs were suing LVBH "for receiving potential evidence from their client in the course of representing her." Jeffrey's status as a nonparty in Vella-Andrade's lawsuit did not alter the court's conclusion. As the court observed, Jeffrey was "allegedly involved in the objectionable billing practices giving rise" to the underlying case, and the "improper billing practices" were "a major factor" in Vella-Andrade's constructive termination cause of action. The court determined the documents pertaining to Jeffrey were "potential evidence" in the underlying case.
The trial court also determined plaintiffs could not demonstrate a probability of prevailing as the litigation privilege in Civil Code section 47, subdivision (b) barred plaintiffs' claims. In reaching this conclusion, the court held LVBH's receipt of the documents "constituted communicative conduct by authorized participants in the [underlying] case to achieve the objects of the litigation," and that the documents - including those pertaining to Jeffrey - "had some logical connection" to that case.
Thereafter, the trial court awarded defendants $35,610 in attorney fees and $1,876 in costs as prevailing parties under section 425.16, subdivision (c). Plaintiffs appealed both orders. We consolidated the appeals.
DISCUSSION
Plaintiffs contend the trial court erred by granting LVBH's special motion to strike, and by awarding LVBH statutory attorney fees. Neither argument is persuasive.
I.
Section 425.16 provides a procedure for weeding out, at an early stage, meritless claims "arising from the protected rights of petition or speech." (Baral v. Schnitt (2016) 1 Cal.5th 376, 384; § 425.16, subd. (b)(1).) In ruling on a special motion to strike, the trial court engages in a two-step process. "First, the defendant must establish that the challenged claim arises from activity protected by section 425.16. [Citation.] If the defendant makes the required showing, the burden shifts to the plaintiff to demonstrate the merit of the claim by establishing a probability of success." (Baral, at p. 384.) Our review is de novo. (Flatley v. Mauro (2006) 39 Cal.4th 299, 325.)
We begin with the first step: whether plaintiffs' claims arise from acts in furtherance of LVBH's right of petition or free speech under section 425.16, subdivision (e). (Contreras v. Dowling (2016) 5 Cal.App.5th 394, 404-405.) As relevant here, an" 'act in furtherance of a person's right of petition or free speech . . . in connection with a public issue'" includes "any written or oral statement or writing made before a . . . judicial proceeding" (§ 425.16, subd. (e)(1)) and "any written or oral statement or writing made in connection with an issue under consideration or review by a . . . judicial body." (Id., subd. (e)(2).) We examine the principal thrust or gravamen of plaintiffs' causes of action to determine whether they arise out of protected activity. "The 'gravamen is defined by the acts on which liability is based.'" (Contreras, at p. 405; Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1062 ["claim arises from protected activity when that activity underlies or forms the basis for the claim"].)
" 'Under the plain language of section 425.16, subdivisions (e)(1) and (2), as well as the case law interpreting those provisions, all communicative acts performed by attorneys as part of their representation of a client in a judicial proceeding . . . are per se protected as petitioning activity.'" (Finton Construction, Inc. v. Bidna & Keys, APLC (2015) 238 Cal.App.4th 200, 210 (Finton); Optional Capital, Inc. v. Akin Gump Strauss, Hauer & Feld LLP (2017) 18 Cal.App.5th 95, 113 [protection of section 425.16 "extends to lawyers and law firms engaged in litigation-related activity"].) Such communicative acts include refusing to "unconditionally return . . . potential evidence" during litigation (Finton, at p. 210) and concealing and failing to disclose information during litigation. (Suarez v. Trigg Laboratories, Inc. (2016) 3 Cal.App.5th 118, 123-125.) Plaintiffs concede LVBH's receipt and initial review of the documents were communicative acts.
Every cause of action in plaintiffs' complaint is based on LVBH's receipt, review, and retention of the documents Vella-Andrade took from the firm, conduct that occurred while LVBH represented Vella-Andrade in her lawsuit against Shannon and the firm. (Finton, supra, 238 Cal.App.4th at p. 210.) In her lawsuit, Vella-Andrade alleged Shannon and the firm engaged in illegal and unethical behavior, and that Shannon required Vella-Andrade to participate in that behavior. The documents Vella-Andrade took from the firm - and that LVBH used and produced during discovery - were potential evidence supporting those allegations. And the propriety of LVBH's examination and retention of the documents was a key part of Vella-Andrade's lawsuit, as it generated a cross-complaint, significant motion practice in the trial court, and an appeal before this court.
LVBH's conduct falls squarely within the definition of protected activity under section 425.16, subdivisions (e)(1) and (2). (Finton, supra, 238 Cal.App.4th at p. 210 [defendants were "being sued for representing their clients"].) Several cases support our conclusion. For example, in Bergstein v. Stroock & Stroock & Lavan LLP (2015) 236 Cal.App.4th 793, the appellate court held counsel's receipt and use of the plaintiffs' privileged and confidential information during litigation was protected activity under section 425.16. (Bergstein, at p. 811.) As that court explained, the "factual basis for [the] allegedly tortious activity" centered on the "defendants' conduct in receiving and using confidential information to prepare for and prosecute litigation against plaintiffs." (Id. at pp. 811, 813; see also MMM Holdings, Inc. v. Reich (2018) 21 Cal.App.5th 167, 178-179 [attorney's receipt and use of confidential and proprietary information during litigation filed on client's behalf was protected activity]; Optional Capital, Inc. v. Akin Gump Strauss, Hauer & Feld LLP, supra, 18 Cal.App.5th at p. 114 [conversion and fraudulent transfer claims arose out of protected activity; transfer of funds would not have occurred but for law firm's representation of its client in litigation].)
Under the weight of this authority, plaintiffs concede Shannon's claims arise out of protected activity. But they argue Jeffrey's claims do not because he is "a stranger" - rather than a party - to Vella Andrade's lawsuit. This argument misses the point. Plaintiffs concede the gravamen of the claims in their current lawsuit is LVBH's allegedly improper review and retention of the documents. As discussed above, that conduct occurred while LVBH represented Vella-Andrade in her lawsuit against Shannon and the firm. Thus, the basis for LVBH's liability in plaintiffs' lawsuit arises out of protected activity, irrespective of whether Jeffrey was a party to Vella-Andrade's lawsuit.
Plaintiffs' reliance on Gerbosi v. Gaims, Weil, West & Epstein, LLP (2011) 193 Cal.App.4th 435 (Gerbosi) does not compel a contrary conclusion. There, a Hollywood executive was embroiled in litigation with his former girlfriend, and his attorneys hired a private investigator to investigate the girlfriend. The investigator wiretapped the former girlfriend's phone and, in doing so, intercepted her private conversations with a neighbor. (Id. at pp. 440-441.) The neighbor filed a lawsuit against the law firm, alleging claims for, among other things, unlawful wiretapping and eavesdropping. (Id. at p. 441.)
The Gerbosi court concluded the complaint did not arise out of protected activity under section 425.16 because the neighbor was a "stranger" to the litigation between the executive and his former girlfriend. (Gerbosi, supra, 193 Cal.App.4th at p. 444.) As Gerbosi observed, the neighbor "had no connection" to the law firm's representation of the executive "except happenstance." Accordingly, the appellate court held the law firm's status as the legal counsel - "unrelated to any representation of any client in relationship" to the neighbor - did not bring the firm "under the protective umbrella for acts in furtherance of protected 'petitioning' activity." (Ibid.) In resolving other issues raised on appeal, the Gerbosi court concluded the claimed illegal wiretapping was not "protected by the constitutional guarantees of free speech and petition." (Id. at p. 446.)
Gerbosi is distinguishable. Here and in contrast to the neighbor in Gerbosi, who had only a "happenstance" connection to the underlying litigation, Jeffrey has a marital relationship with Shannon, who is a party to Vella-Andrade's lawsuit, and he is alleged to have been enmeshed in the unethical billing practices at issue in that lawsuit. Though plaintiffs deny that allegation, they concede Jeffrey may be a "critical" witness in Vella-Andrade's lawsuit. Moreover, the conduct at issue here - LVBH's handling of potential evidence while representing a client - bears little resemblance to the illegal wiretapping in Gerbosi.
In their reply brief, plaintiffs cite several cases for the first time, including Paul v. Friedman (2002) 95 Cal.App.4th 853. Paul is distinguishable. In Paul, the alleged conduct giving rise to liability was counsel's "harassing investigation" into personal matters extending far beyond the scope of the issues subject to arbitration. In contrast to Paul, LVBH is being sued for its handling of potential evidence in Vella-Andrade's lawsuit.
In sum, we conclude the complaint arises out of protected activity. Having reached this result, we turn to the second step: whether plaintiffs can demonstrate a probability of prevailing on the merits, i.e., that the complaint is legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if plaintiffs' evidence is credited. (Contreras v. Dowling, supra, 5 Cal.App.5th at p. 415.) Plaintiffs cannot satisfy this burden because the litigation privilege bars their claims. (Ibid.; Malin v. Singer (2013) 217 Cal.App.4th 1283, 1300.)
"The litigation privilege applies 'to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action.' [Citation.]' "The privilege 'is not limited to statements made during a trial or other proceedings, but may extend to steps taken prior thereto, or afterwards.' [Citations.]" The litigation privilege is interpreted broadly in order to further its principal purpose of affording litigants and witnesses the utmost freedom of access to the courts without fear of harassment in derivative tort actions. [Citation.] The privilege is absolute and applies regardless of malice.'" (Malin v. Singer, supra, 217 Cal.App.4th at p. 1300, fn. omitted.)
The litigation privilege precludes liability here. First, "[t]ransmitting potential evidence in pending litigation between a client and an attorney is a communicative act." (Finton, supra, 238 Cal.App.4th at p. 212.) So, too, are the acts of "receiving and retaining" potential evidence before turning that evidence over pursuant to a court order. (Id. at pp. 212-213.) Plaintiffs admit LVBH's receipt and initial review of the documents Vella-Andrade took from the firm were communicative acts, but they insist LVBH's "subsequent behavior" - e.g., LVBH's refusal to return "confidential personal and financial documents" - "was not communicative."
Plaintiffs' attempt to parse LVBH's conduct is unconvincing, as is their reliance on Susan S. v. Israels (1997) 55 Cal.App.4th 1290 (Susan S.). There, a defense attorney representing his client in a criminal proceeding issued a subpoena for the victim's mental health records. The mental health facility mistakenly sent the records directly to the attorney who, "knowing the private and confidential nature of the documents, read them, transmitted them to the defense psychiatrist and used them in cross-examining" the victim. (Id. at p. 1294.)
The plaintiff victim sued the attorney and his client for invasion of privacy, abuse of process, and infliction of emotional distress. (Susan S., supra, 55 Cal.App.4th at p. 1294.) The appellate court held the complaint stated a claim for invasion of privacy because the attorney's act of reading and disseminating the confidential mental health records without the plaintiff's consent invaded her constitutional right of privacy. (Id. at pp. 1294, 1297-1299.) Susan S. also held the litigation privilege did not shield the defendants from liability. (Id. at p. 1301.) In reaching this result, Susan S. reasoned that the plaintiff's invasion of privacy cause of action did not depend on "the 'publication' or 'broadcast' of her mental health records" but rather on the attorney's conduct in reading and disseminating to his expert witness the "highly sensitive mental health records of a victim in a criminal matter." (Id. at p. 1299.) But the Susan S. court also held the plaintiff's abuse of process and emotional distress claims - based on the attorney's act of delivering the records to the defense expert and using the records during cross-examination - were barred by the litigation privilege. (Id. at pp. 1303-1304.)
Susan S. is distinguishable. In that case, the attorney reviewed the victim's private and confidential records, shared them with an expert witness, and used the documents at trial, all with the intent "to intimidate, embarrass and humiliate" the victim. (Susan S., supra, 55 Cal.App.4th at p. 1294.) Here, by contrast, there is no evidence LVBH disseminated the documents to a third party, nor any indication that LVBH used the documents for any purpose other than to prepare discovery responses in the course of representing Vella-Andrade in her lawsuit against Shannon and the firm.
This case is unlike Susan S. for the additional reason that plaintiffs have alleged property-based claims, not a violation of their right to privacy. Moreover, in contrast to the claim for invasion of privacy in Susan S., plaintiffs' claims here do not rest solely on LVBH's mere act of reviewing the documents Vella-Andrade took from the firm. Instead, plaintiffs' causes of action are premised on LVBH's alleged "improper retention" and use of confidential documents in Vella-Andrade's lawsuit against Shannon and the firm. Indeed, plaintiffs' counsel conceded at oral argument that LVBH used the documents to prepare discovery responses in the course of representing Vella-Andrade in litigation. For these reasons, Susan S. does not assist plaintiffs.
Next, LVBH's communicative conduct was made during "or in anticipation of judicial proceedings, . . . 'to achieve the objects of the litigation.'" (Bergstein v. Stroock & Stroock & Lavan LLP, supra, 236 Cal.App.4th at p. 815.) There is no dispute that when LVBH received the documents, Vella-Andrade contemplated litigation; when LVBH refused to return the documents, Vella-Andrade's lawsuit against Shannon and the firm was pending. Finally, LVBH's conduct associated with the documents had" 'some connection or logical relation to the action.'" (Ibid.) LVBH examined and retained the documents to advance Vella-Andrade's legal position in her lawsuit.
That LVBH ultimately determined some of the documents were unnecessary to prosecute Vella-Andrade's claims does not render the litigation privilege inapplicable. When assessing whether the privilege applies, the question is whether LVBH's communicative conduct had a "legitimate" and "logical relation" to the litigation. (See Dziubla v. Piazza (2020) 59 Cal.App.5th 140, 156; Neville v. Chudacoff (2008) 160 Cal.App.4th 1255, 1266 [communication "must be 'reasonably relevant' to pending or contemplated litigation"].) For the reasons discussed above, the answer is yes.
Plaintiffs offer several additional arguments in an attempt to circumvent the litigation privilege. None are persuasive. That LVBH violated the State Fund rule does not vitiate the litigation privilege. (GeneThera, Inc. v. Troy & Gould Professional Corp. (2009) 171 Cal.App.4th 901, 910, fn. omitted [communication "substantively at variance with the Rules of Professional Conduct" would be protected by litigation privilege]; Scalzo v. Baker (2010) 185 Cal.App.4th 91, 102 [assertion that conduct was" 'fraudulent' or illegal" did not render privilege inapplicable].) Nor does Jeffrey's status as a nonparty in the underlying case preclude application of the privilege. (Action Apartment Assoc., Inc. v. City of Santa Monica (2007) 41 Cal.4th 1232, 1247 [declining to recognize an "exception to the litigation privilege for any party who did not participate in the underlying litigation"]; People ex rel. Gallegos v. Pacific Lumber Co. (2008) 158 Cal.App.4th 950, 961 & fn. 5 [rejecting argument that an unfair competition claim "survives the litigation privilege so long as the plaintiff is not a party to the earlier litigation"].) Finally, public policy does not, as plaintiffs assert, militate against application of the privilege. The litigation privilege" 'promotes the effectiveness of judicial proceedings by encouraging attorneys to zealously protect their clients' interests'" without fear of being subjected to derivative tort actions. (Finton, supra, 238 Cal.App.4th at p. 211.) Applying the privilege here furthers that purpose.
In sum, the trial court properly granted LVBH's special motion to strike because plaintiffs' complaint arises out of protected petitioning activity and they failed to show a probability of prevailing.
II.
A prevailing defendant on a special motion to strike is entitled to recover attorney fees and costs, including those incurred on appeal. (§ 425.16, subd. (c)(1); Wanland v. Law Offices of Mastagni, Holstedt & Chiurazzi (2006) 141 Cal.App.4th 15, 21.) Our decision upholding the order on the motion to strike dooms plaintiffs' perfunctory challenge to the attorney fees and costs order. LVBH is also entitled to attorney fees incurred on appeal. (Wanland, at p. 21; GeneThera, Inc. v. Troy & Gould Professional Corp., supra, 171 Cal.App.4th at p. 910.)
DISPOSITION
The orders granting LVBH's special motion to strike, and awarding LVBH attorney fees and costs, are affirmed. LVBH is entitled to costs on appeal (Cal. Rules of Court, rule 8.278(a)(2)) and to an award of attorney fees incurred on appeal, the amounts of which shall be determined by the trial court.
WE CONCUR: Tucher, P. J., Petrou, J.