Opinion
B315237
02-24-2023
CURTIS R. OLSON, Plaintiff and Respondent, v. VIDALA AARONOFF, Individually and as Trustee, etc., et al., Defendants and Appellants.
The Appellate Law Firm and Gregg Aaron Myers for Defendants and Appellants. Buchalter, Eric Michael Kennedy and Robert Collings Little for Plaintiff and Respondent.
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County No. 19STCV46503. Teresa A. Beaudet, Judge. Affirmed.
The Appellate Law Firm and Gregg Aaron Myers for Defendants and Appellants.
Buchalter, Eric Michael Kennedy and Robert Collings Little for Plaintiff and Respondent.
LUI, P. J.
This case is an offshoot of the long-running litigation between disputing condominium neighbors Vidala Aaronoff and Curtis Olson that has already come before us. (See related appeal, Aaronoff v. Olson (Jan. 24, 2023, B295388 [nonpub. opn.].) In a separate action, Olson was awarded attorney fees against Aaronoff. Shortly before the fee award, Aaronoff transferred, via a religious trust, her sole asset, the condominium, to her mother, Attorney Gloria Martinez-Senftner, and her mother's law firm, Martinez Law Group, P.C. (MLG). Thereafter, Aaronoff resisted Olson's efforts to enforce his fee award. Olson eventually sued Aaronoff, Martinez-Senftner, MPG, and others for fraudulent conveyance. Olson alleged Aaronoff conspired with Martinez-Senftner to fraudulently transfer Aaronoff's interest in her condominium to evade her debt to Olson. On this basis, Olson alleged causes of action for violations of the Uniform Voidable Transactions Act (Civ. Code, § 3439 et seq.; hereafter UVTA), for conspiracy to defraud, for receiving stolen property, and related claims.
Aaronoff, Martinez-Senftner, and MLG filed a special motion to strike Olson's suit under the anti-SLAPP statute (Code Civ. Proc., § 425.16 ), which the trial court denied. In challenging that order, they point to two constitutionally protected activities they contend are endangered by Olson's suit: (1) litigation funding and (2) religious expression. Because Aaronoff, Martinez-Senftner, and MLG have not made the requisite showing for striking a suit under the anti-SLAPP statute, we affirm the order.
SLAPP is an acronym referring to "strategic lawsuit against public participation." (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 57.)
Undesignated statutory references are to the Code of Civil Procedure.
After Aaronoff filed her notice of appeal from the order denying the anti-SLAPP motion, other defendants in the underlying lawsuit also filed notices of appeal from that order: John Walkowiak and Milder Arroliga, as trustees of the ATW Trust, the Ancient Temple of Wings, and "John Doe." John Walkowiak filed another notice of appeal with Martinez-Senftner and MLG. Because John Walkowiak, Milder Arroliga, the Ancient Temple of Wings, and "John Doe" did not file anti-SLAPP motions, they have no standing to contest the trial court's order. We therefore dismiss their appeals. (See Decker v. U.D. Registry, Inc. (2003) 105 Cal.App.4th 1382, 1390-1391.)
FACTUAL AND PROCEDURAL BACKGROUND
I. Events Leading Up to the Suit for Fraudulent Conveyance
In 2002, Aaronoff and Olson met and began working together to convert an historic apartment building into a condominium complex, where they resided as neighbors. Olson was also the building owner and served as president of the homeowners association.
On January 1, 2012, Aaronoff purportedly created the ATW Trust as a religious trust for the benefit of the Ancient Temple of Wings Church. Aaronoff, John Walkowiak, and Milder Arroliga were the three trustees. In 2015, Aaronoff and Olson had a falling-out and became embroiled in litigation.
Although Olson and at least one trial court sought production of ATW Trust documents in proceedings underlying related appeals, no such documents appear to have been produced and are not part of the record on appeal.
In February 2017, Aaronoff transferred her one-time residence, the condominium at issue, to the ATW Trust with an effective date of January 1, 2012.
In September 2017, the parties filed dueling petitions for a civil harassment restraining order. Both petitions were denied by the trial court in November 2018.
On April 15, 2019, Aaronoff, on behalf of the ATW Trust, recorded a deed of trust against her condominium that secured an $800,000 promissory note to Martinez-Senftner and MLG as payment for legal fees.
On April 17, 2019, the trial court awarded Aaronoff and Olson attorney fees for having successfully defended against the other's restraining order petition. Olson's award was approximately $80,000, which he thereafter attempted to collect from Aaronoff, without success. Olson then filed the instant suit for fraudulent conveyance to recover the attorney fees.
II. Proceedings Leading up to the Hearing on the Anti-SLAPP Motion
Two things must be said before we summarize the prehearing proceedings: (1) There were three separate anti-SLAPP motions filed, one for each of Olson's pleadings; and (2) as we note below, not all documents pertinent to this appeal are in the record on appeal. (Sutter Health Uninsured Pricing Cases (2009) 171 Cal.App.4th 495, 498 [incomplete record is construed against appellant].)
Olson's complaint for fraudulent conveyance, which he filed in December 2019, is not part of the record. In April of 2020, Olson filed a motion for leave to file a first amended complaint. The motion was unopposed.
In May 2020, Aaronoff, representing herself, filed a demurrer and an anti-SLAPP motion as to the complaint. Aaronoff also filed a "Notice of Errata and/or Amended Notice of Motion and Special Motion To Strike" the complaint.
In July 2020, the trial court granted Olson leave to amend his complaint. Days later he filed the first amended complaint, which the court determined mooted Aaronoff's demurrer.
In August 2020, the trial court signed a stipulation in which the parties agreed to a January 2021 hearing on the anti-SLAPP motion as to the complaint and a yet-to-be-filed anti-SLAPP motion as to the first amended complaint.
In September 2020, the anti-SLAPP motion and a demurrer were filed-both as to the first amended complaint. This second anti-SLAPP motion is not part of the record. Aaronoff noticed the hearing on the demurrer for October 28, 2020.
At the October 28, 2020 hearing, the trial court partially sustained Aaronoff's demurrer to Olson's first amended complaint with leave to amend.
In November 2020, Olson filed a second amended complaint. Aaronoff, Martinez-Senftner, and MLG, represented by counsel, filed an anti-SLAPP motion as to the second amended complaint in December 2020. Only the notice of this third anti-SLAPP motion, not the motion itself, appears in the record on appeal.
At a hearing on May 25, 2021, the trial court clarified the scope of its intended ruling on the anti-SLAPP motions. The court tentatively ruled Olson's filing of amended pleadings mooted the anti-SLAPP motions that were directed to the complaint and first amended complaint pursuant to JKC3H8 v. Colton (2013) 221 Cal.App.4th 468, 477-478 (JKC3H8). Before making its final ruling, the court continued the hearing to allow the parties to file supplemental briefs on this issue. After further continuances, the hearing on the anti-SLAPP motions was set for July 23, 2021.
III. The Hearing on the Anti-SLAPP Motions
A. Denial of the Anti-SLAPP Motions as to the Complaint and First Amended Complaint as Moot
At the July 23, 2021 hearing the trial court ruled first that defendants' supplemental brief failed to show Olson filed the amended complaints to subvert or avoid defendants' anti-SLAPP motions and thus JKC3H8 applied to moot the first and second anti-SLAPP motions. Olson's second amended complaint was the operative pleading.
B. Denial of the Anti-SLAPP Motion as to the Second Amended Complaint
1. Second amended complaint
In the second amended complaint, Olson sued Aaronoff, individually and as an ATW trustee, John Walkowiak and Milder Arroliga as ATW trustees, the Ancient Temple of Wings Church, Martinez-Senftner, and MLG as defendants. Against all of them, Olson alleged three causes of action for violating the UVTA (Civ. Code, §§ 3439.04, 3439.05), and one cause of action for aiding and abetting the violation of the UVTA, for conspiracy to defraud creditors, for declaratory relief, for constructive trust, for cancelation of written instruments, for unjust enrichment, and for receiving stolen property (Pen. Code, § 496).
Olson alleged that Aaronoff together with one or more defendant "co-conspirators" have prevented him from collecting his award of attorney fees against Aaronoff by "most critically, fraudulently transferring her real property [the condominium]- via the ATW Trust-to her mother's law firm, MLG." Olson further alleged that Aaronoff completely controls and operates the ATW Trust, that she uses the Ancient Temple of Wings "to shield her fraudulent activities and her efforts to avoid her creditors," that Aaronoff removed herself as trustee of the ATW Trust and appointed Arroliga and Walkowiak as trustees to distance herself from the trust and to "avoid her obligation to produce trust-related documents and answer trust-related questions in connection" with Olson's collection efforts, and that neither Arroliga nor Walkowiak are "legitimate trustees," but are "purporting to act in that capacity merely to assist [Aaronoff] in avoiding" Olson's enforcement of his attorney fees award.
2. Third anti-SLAPP motion
Aaronoff, Martinez-Senftner, and MLG (collectively defendants) moved to strike the entirety of Olson's second amended complaint. As this anti-SLAPP motion is missing from the record, we rely on the trial court's recitation of defendants' arguments in the minute order of the July 23, 2021 hearing.
According to the minute order, defendants asserted Olson was suing them for using the ATW Trust's only asset, the condominium, "to fund litigation of a public issue against [Olson]," which constitutes protected activity under section 425.16.
The trial court rejected this argument, concluding defendants failed to establish that Olson was suing them for litigation funding decisions. "Rather, [Olson's] claims involve Aaronoff conspiring with Martinez-Senftner and MLG to move Aaronoff's [condominium] in a way to protect it against [Olson's] collection efforts. This is not protected activity under the anti-SLAPP statute."
The trial court was also unpersuaded by defendants' additional "arguments regarding [Olson's] motivations to spend disproportionately to collect a lower judgment that 'makes no economic sense.'" The court observed a party's use of a purported "aggressive or possibly oppressive" litigation tactic is not relevant to anti-SLAPP analysis.
The trial court found defendants failed to demonstrate Olson's claims were based on protected activity within the meaning of section 425.16, subdivision (e) and denied the anti-SLAPP motion. The court awarded attorney fees to Olson. Defendants timely appealed from the denial of their anti-SLAPP motion.
DISCUSSION
I. First Anti-SLAPP Motion Was Properly Dismissed
Defendants contend the trial court erroneously relied on JKC3H8, supra, 221 Cal.App.4th 468 to dismiss Aaronoff's anti-SLAPP motion as to Olson's complaint. That case held when a plaintiff files an amended complaint before the defendant files an anti-SLAPP motion-even by a few hours-the amended complaint is effective and the defendant has no right to a hearing on the anti-SLAPP motion directed to the original complaint. (JKC3H8, at pp. 475, 478.) The JKC3H8 court added a "caveat: A plaintiff or cross-complainant may not seek to subvert or avoid a ruling on an anti-SLAPP motion by amending the challenged complaint or cross-complaint in response to the motion." (Id. at pp. 477-478.) Defendants argue JKC3H8 does not apply here because Aaronoff's anti-SLAPP motion was filed before Olson filed his first amended complaint, asserting that Olson was improperly permitted to "plead around" the anti-SLAPP motion.
The trial court properly dismissed Aaronoff's first anti-SLAPP motion. Although the motion was brought before Olson filed his first amended complaint, the court had already granted Olson's earlier motion for leave to file a first amended complaint, which was unopposed. Further, as the court found, the nature of the amendments did not suggest that Olson was attempting to subvert or plead around Aaronoff's anti-SLAPP motion. He merely added defendant Walkowiak and a cause of action for violating Penal Code section 496.
II. Anti-SLAPP Procedure and Standard of Review
"A cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim." (§ 425.16, subd. (b)(1).) "The anti-SLAPP statute does not insulate defendants from any liability for claims arising from the protected rights of petition or speech. It only provides a procedure for weeding out, at an early stage, meritless claims arising from protected activity." (Baral v. Schnitt (2016) 1 Cal.5th 376, 384.)
"Litigation of an anti-SLAPP motion involves a two-step process. First, 'the moving defendant bears the burden of establishing that the challenged allegations or claims "aris[e] from" protected activity in which the defendant has engaged.' [Citation.] Second, for each claim that does arise from protected activity, the plaintiff must show the claim has 'at least "minimal merit."' [Citation.] If the plaintiff cannot make this showing, the court will strike the claim." (Bonni v. St. Joseph Health System (2021) 11 Cal.5th 995, 1009.)
On appeal, we apply the same two-step process in reviewing de novo the trial court's ruling on an anti-SLAPP motion. (Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1067.)
III. Defendants Failed to Show Protected Activity
As we have stated, defendants have identified two protected activities: (1) litigation funding, as protected petitioning activity, and (2) religious expression, as protected speech. We discuss each in turn, and our analysis begins and ends with whether defendants have shown that either activity is protected. Defendants' briefing is also limited to that issue.
A. Litigation Funding
The theory behind defendants' anti-SLAPP motion is that Olson is, in essence, challenging their payment of legal fees to prevent defendants from engaging in further litigation against him. Specifically, defendants argue, without supporting citations to the record, that because the $800,000 secured by the deed of trust was "necessary to maintain their current actions and appeals and to perfect new actions against Olson," the transfer of the condominium to Martinez-Senftner and MLG is protected as litigation funding. "Gathering the money was inseparable from Aaronoff and [the] ATW Trust" for existing and future litigation, they argue. Defendants' thinking is flawed for two reasons: First, the $800,000 payment secured by the conveyance did not constitute litigation funding. Second, Olson's claims do not arise from the payment.
In civil cases, funding the services of an attorney to prosecute or defend a lawsuit is an act in furtherance of petitioning activity that is protected under the anti-SLAPP statute. (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1056.) This makes sense in the arena of civil litigation, where there is no right to counsel, and the ability to retain private counsel for litigation can affect its course and outcome. As a result, the funding of litigation has been found to be petitioning activity when the money spent was to ensure a party could commence and maintain a legal action.
Anti-SLAPP motions have been granted when the opposing party's response is to contest such protected activity. For example, in Takhar v. People ex. rel. Feather River Air Quality Management Dist. (2018) 27 Cal.App.5th 15 (Takhar), a landowner filed a cross-complaint against an air quality management district asserting its action to enforce his abatement of pollutants emanating from his property was a waste of public funds. (Id. at p. 21.) In reversing the trial court's denial of the district's anti-SLAPP motion, the appellate court held, in part, the district's filing of the civil enforcement action against Takhar and the expenditure of funds to initiate and prosecute the action amounted to protected petitioning activity. (Id. at p. 28.)
In Sheley v. Harrop (2017) 9 Cal.App.5th 1147 (Sheley), a dispute involving control of a decedent's corporation, his daughters and the corporation sued the decedent's second wife. A cross-complaint filed by the second wife alleged the daughters breached their fiduciary duty by wrongfully obtaining and using corporate assets to fund the "frivolous" litigation against her. (Id. at pp. 1155, 1166.) The appellate court concluded the wife's allegations were related to the filing and funding of a lawsuit as protected activity. (Id. at p. 1166.) The daughters' act of obtaining the money was in furtherance of their free speech and petitioning rights because the acquired money enabled them to file suit. (Id. at pp. 1167-1168.)
The instant case is unlike Takhar and Sheley. Here, contrary to defendants' unsubstantiated arguments in their briefs, the purported funding was not obtained for the purpose of litigation. Instead, the conveyance of the condominium was structured as payment to Martinez-Sentner and MLG for legal fees that Aaronoff and/or the ATW Trust had accumulated over previous years. In her declaration in support of the anti-SLAPP motion, Martinez-Sentner averred, "Since May of 2015, MLG and I have been and are on-going legal consultants and counsel for Aaronoff and ATW Trust." Martinez-Senftner then detailed the substantial legal work she and her firm had performed for Aaronoff and the ATW Trust since that time. According to Martinez-Senftner, the work included different legal actions both related and unrelated to Olson. In short, the transfer of the condominium was solely to satisfy an outstanding debt to attorneys for past legal services. (See Salma v. Capon (2008) 161 Cal.App.4th 1275, 1286 [courts can examine declarations in making first-step assessment]; accord, Bel Air Internet, LLC v. Morales (2018) 20 Cal.App.5th 924, 938, fn. 5.) Any statements in Martinez-Sentner's declaration that could be construed as indicating that the funding was for future litigation were stricken by the trial court, and defendants have waived any challenges to those evidentiary rulings by not raising any such arguments on appeal. (Lopez v. Baca (2002) 98 Cal.App.4th 1008, 1014-1015 [waiver of evidentiary rulings not challenged on appeal]; Salas v. Department of Transportation (2011) 198 Cal.App.4th 1058, 1074 [same].)
Defendants adopted these statements from Martinez-Senftner's declaration in their opening brief as part of the "Statement of Facts."
It is significant that Olson filed this suit following a court-ordered award of attorney fees and unsuccessful efforts to enforce that award. Rather than challenge defendants' payment of their own past legal fees, Olson is merely attempting to collect the attorney fees that defendants have been ordered to pay him. We have found no authority for the proposition that payment of outstanding legal fees to a litigant's own counsel is protected activity in the context of a subsequent suit against that litigant for the collection of an attorney fees award. As the trial court astutely observed, if that were the case, litigants could avoid their obligation to pay an opposing party's award of attorney fees based on unpaid legal fees to their own counsel.
Finally, not only is the $800,000 payment secured by the conveyance not protected as litigation funding, it also does not give rise to Olson's claims. Instead, Olson's claims arise from Aaronoff s conduct in conspiring with Martinez-Senftner, MLG, and the two trustees to fraudulently place her primary asset, the condominium, out of reach of Olson's collection efforts.
B. Religious Expression
Defendants contend Olson's claims arise from protected activity because the Ancient Temple of Wings is a religious entity. They do not, however, coherently describe the basis for this theory. As stated, section 425.16 protects the “right of petition or free speech.” (§ 425.16, subd. (b)(1).) That protection “does not extend to claims against a person arising from any act of that person in furtherance of the person's right of free exercise of religion." (Castillo v. Pacheco (2007) 150 Cal.App.4th 242, 252.)
Defendants do not identify any protected speech activity by Aaronoff and/or the ATW Trust that Olson's complaint challenges. Defendants seem to suggest their 2012 donation of the condominium to the Ancient Temple of Wings Church was protected speech, but they do not explain why that is so. While a donation to a religious institution might be an example of the free exercise of religion, it is not in itself an act 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" (§ 425.16, subd. (e)(4)), the category of protected activity that defendants appear to argue is applicable here.
Defendants cite this court's decision in Save Westwood Village v. Luskin (2014) 233 Cal.App.4th 135, but that case is inapposite. In Luskin, we held in part that a donation to UCLA was itself conduct in furtherance of free speech because it was "an expression of support for the university" concerning the construction of a conference center, "a matter of public interest." (Id. at p. 145.) Defendants have not identified any issue of public interest that the 2012 donation to the Ancient Temple of Wings Church allegedly supported.
Indeed, the only alleged speech or petitioning conduct by Aaronoff and/or the ATW Trust that defendants identify is the recording the deed of trust against Aaronoffs and/or ATW's asset, the condominium, as security for the payment of defendants' attorney fees. As discussed in the previous section, that was not protected conduct under section 425.16.
IV. Our Decision in Aaronoff v. Olson, supra, B295388, Has No Bearing on This Appeal
In our decision in Aaronoff v. Olson, supra, B295388, a related case, we concluded the trial court exceeded its jurisdiction by amending an earlier order awarding attorney fees to Olson after Aaronoff had timely appealed from that order. The court violated the automatic stay provisions of section 916 when it granted Olson's ex parte request to amend the order by adding the ATW Trust and its trustees as judgment debtors. Consequently, we held the order amending the attorney fees award was void.
To the extent they can be understood, defendants' contentions are that our B295388 decision means Olson cannot name the ATW Trust as a defendant in his second amended complaint and, without the Trust, Olson cannot allege a conspiracy theory.
Defendants' position fails for two reasons.
To begin, defendants hold a marked misperception of our B295388 decision and the law. As set forth in our opinion, our limited authority was to reverse the trial court's void order that was made after Aaronoff perfected her appeal in violation of the automatic stay provision of section 916, subdivision (a). (Aaronoff v. Olson, supra, B295388; Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 200.) The provision must be enforced to protect our appellate jurisdiction by preserving the status quo until we render a decision. (Varian Medical Systems, at p. 189.) Our decision thus has no bearing on whether substantively or procedurally the attorney fees order could or should be amended once we decide the appeal. Moreover, our decision does not affect whether any related actions may proceed, like the second amended complaint naming Aaronoff, Arroliga, and Walkowiak as trustees of the ATW Trust as defendants. The allegations of fraudulent conveyance against them are still viable. (§ 916, subd. (a) ["but the trial court may proceed upon any other matter embraced in the action and not affected by the judgment or order"].)
More important, and as they conceded at oral argument, whether our prior appeal has any impact on Olson's claims is relevant only to the second prong of the anti-SLAPP analysis- that is, whether the claims have minimal merit. We, like the trial court, are not reaching that issue because defendants failed to meet their burden of establishing that Olson's claims arise from any protected activity by defendants.
DISPOSITION
The order is affirmed. The appeals filed by John Walkowiak, Milder Arroliga, the Ancient Temple of Wings, and "John Doe" are dismissed. Respondent Curtis R. Olson is entitled to recover his costs on appeal.
We concur: CHAVEZ, J., HOFFSTADT, J.