Reid v. Knickerbocker

Filed 10/11/07 Reid v. Knickerbocker CA2/5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FIVE

APPEAL from a judgment of the Superior Court of Los Angeles County, John L. Segal, Judge. Reversed.

Lewis, Brisbois, Bisgaard & Smith, Raul L. Martinez; Reback, McAndrews & Kjar, James J. Kjar and Cindy A. Shapiro for Defendants and Appellants.

Daniels, Fine, Israel, Schonbuch & Lebovits, Mark R. Israel; Tourtelot & Butler and Robert H. Tourtelot for Plaintiff and Respondent.

_____________________________

After plaintiff and respondent Merrilee Reid (Merrilee)^[1]sued Elaine Featherstone^[2]and defendants and appellants Richard Knickerbocker and the Knickerbocker Law Corporation (collectively, Knickerbocker) for malicious prosecution, Featherstone filed a motion to dismiss the action under Code of Civil Procedure section 425.16 (the anti-SLAPP statute).^[3] Knickerbocker joined the anti-SLAPP motion. The trial court initially granted the motion; however, it subsequently denied the motion after finding Merrilee was entitled to relief under section 473, subdivision (b), based on the mistake, inadvertence, surprise, or excusable neglect of her attorney. In Knickerbockers timely appeal, it is contended the trial court erred in granting the section 473 motion because (1) Merrilee was jurisdictionally limited to seeking relief via a motion for reconsideration under section 1008, and Merrilee failed to establish an entitlement to relief under that section, and (2) even if the trial court had authority to grant relief under section 473, it exceeded its discretion in doing so. Alternatively, Knickerbocker contends the denial of the anti-SLAPP motion was erroneous.

We agree with the second contention and, therefore, have no occasion to reach the others: Although the evidence supported the trial courts finding that counsels error was caused by the emotional strain he was suffering during the time, the discretionary relief provision of section 473, subdivision (b) does not afford relief for the kind of mistakes in legal advocacy that was made in this case. Accordingly, we reverse.

STATEMENT OF FACTS AND PROCEDURAL BACKGROUND

The Underlying Lawsuit: Featherstones Wrongful Eviction Action

Knickerbocker represented Featherstone in a lawsuit alleging wrongful eviction and related claims against Merrilee, her son Ryan, and the business entity Peak Fitness. In essence, Featherstone alleged health club operator Peak Fitness had entered into an agreement making her a tenant with the right to conduct her business as a fitness instructor within the club premises, but Merrilee, Ryan, and Peak Fitness wrongfully prevented her from entering the club. Merrilee moved for summary judgment on the ground that she had transferred her entire interest in Peak Fitness, a Beverly-Killea Limited Liability Company, to Ryan in December 2003, prior to the alleged eviction, and that she had no significant involvement in the operations of the club. Featherstone countered that Merrilee was liable on alter ego grounds, she was listed as the owner of Peak Fitness on its city business license, and she maintained a de facto management role at the time of the eviction. The trial court denied the summary judgment on procedural grounds pursuant to section 437c, subdivision (h),^[4]finding that Merrilee failed to produce requested discovery concerning the structure and ownership of Peak Fitness, which prevented plaintiff from presenting facts essential to her opposition.

During the wrongful eviction trial, however, Merrilees motion for directed verdict was granted on the grounds she had previously asserted in her summary judgment motion. The trial court found it uncontroverted that Merrilees entire interest in Peak Fitness had been transferred to Ryan on December 23, 2003, and she had no management role after that date. Moreover, the trial court found no evidence to support her liability under an alter ego theory.

The Malicious Prosecution Lawsuit

Merrilee sued Featherstone and Knickerbocker for instituting and maintaining the wrongful eviction lawsuit against her maliciously and without probable cause. Merrilee alleged in her complaint that [o]n January 19, 2005, Knickerbocker approached Robert H. Tourtelot, Esq., newly-engaged counsel for [Merrilee], outside the courtroom of Department SBA 11[,] and stated that he wanted to discuss the case with [Tourtelot]. Knickerbocker then stated to said counsel: The only reason we named Merrilee is because she is the only one with any money. [Tourtelot] replied something to the effect that Merrilee had absolutely nothing to do with the matter and never should have been named as a defendant. Knickerbocker then replied that the case could go away by a payment of $5,000 from plaintiff or[] plaintiff could spend thousands of dollars fighting the matter.

The exhibits to the complaint included a February 8, 2005 letter from Tourtelot to Knickerbocker in which the former stated: Based upon the facts as I know them, I view the naming of [Merrilee] as a defendant as being without probable cause and malicious. In this connection, it seems apparent that this was done for the sole purpose of achieving a settlement in this case since, as you said to me after court when I first appeared in the case, it would be cheaper for her to settle than to incur the legal fees required to defend the allegations.

Merrilee also alleged that the continued prosecution of the lawsuit, including having her deposition taken twice, caused her to suffer extreme stress resulting in two debilitating strokes.

The Anti-SLAPP Motion and Ruling

Featherstone filed her section 425.26 motion on April 24, 2006, arguing that Merrilees malicious prosecution action was a SLAPP because the filing of lawsuits is an act in furtherance of free speech rights, and Merrilee could not demonstrate a reasonable probability of success in her lawsuit because she could not establish the three elements of malicious prosecution.^[5] Knickerbocker filed a notice of joinder in the anti-SLAPP motion on May 10, 2006.

Specifically, Featherstone argued (1) the fact that her lawsuit had survived a summary judgment motion defeated the favorable termination element; (2) Merrilee could not prove a lack of probable cause to prosecute the lawsuit because at the time the lawsuit was filed, Merrilee was listed on Peak Fitnesss business license and was also listed as the entitys chief executive officer in the 1998 articles of incorporation; and (3) as to the malice element, Featherstone argued Merrilee could present no evidence to support a reasonable inference of ill will or ulterior purpose in prosecuting and maintaining the action.

Tourtelot filed the anti-SLAPP opposition on May 22, 2006. The opposition contended that Merrilee established a prima facie case for malicious prosecution because her motion for directed verdict was granted on the merits, while her summary judgment motion had been denied merely on procedural grounds. On the probable cause element, Merrilee argued that through the course of discovery leading up to the summary judgment motion in the wrongful eviction lawsuit, Featherstone and Knickerbocker learned that they had no grounds for maintaining the claims against her because they had been presented with evidence that (1) Peak Fitness was properly formed and in good standing; (2) Merrilee had transferred her entire interest to sole owner Ryan prior to the eviction; (3) Ryan was publicly listed with the California Secretary of State as the sole member, manager, and partner of Peak Fitness; and (4) Merrilee had no substantial involvement with the management of Peak Fitness or with Featherstones eviction. The opposition contained supporting evidence for those arguments, including Tourtelots declaration which attached deposition testimony and other documentary support.

At the June 2, 2006 hearing, the trial court granted the anti-SLAPP motion. The trial court found Merrilees malicious prosecution motion was subject to section 425.16 and Merrilee had established a prima facie case as to the favorable termination and the lack of probable cause elements, but that she had failed to demonstrate a prima facie case for success because of an inadequate evidentiary showing on the malice element. Most significantly for this appeal, the trial court explained that the alleged statement by Knickerbocker to Tourtelot during the pendancy of the wrongful eviction lawsuit would have been sufficient to show malice, but there was no admissible evidence the statement had been made. The opposition memorandum of points and authorities contained a reference to a statement by Knickerbocker to Tourtelot, in which Knickerbocker admitted he knew Merrilee had no liability in the underlying action and had only included her because she had deep pockets.^[6] However, the trial court found there was no evidentiary support for that allegation, not even in a declaration from counsel for plaintiff. The oppositions reference to Tourtelots February 8, 2005 letter did not suffice because the letter was not only hearsay, but merely contained Tourtelots inference that Knickerbocker believed Merrilee was not liable. Accordingly, the motion was granted.

The Section 473, subdivision (b) Motion and Ruling

Merrilee filed her section 473 motion on June 15, 2006, seeking relief from the granting of the anti-SLAPP motion and requesting leave to file a declaration to remedy the evidentiary defalcation on which the trial court had based its ruling. Based primarily on the declarations of Tourtelot, Merrilee argued that her counsel had intended to include Knickerbockers alleged admission in his declaration, but excusably neglected to do so because he was extremely preoccupied by his nephews serious medical condition following a helicopter accident. The motion included a declaration from Tourtelot in which he offered the testimony that he had inadvertently omitted from his section 426.16 opposition declarationthat Knickerbocker made the deep pockets statement to him on January 19, 2005, outside the courtroom, along with authenticating testimony concerning his February 8 and March 3, 2005 letters to Knickerbocker.

In a separate declaration, Tourtelot explained that he had prepared Merrilees anti-SLAPP opposition papers, filed on May 22, 2006. Approximately one month before that date, his 24-year-old nephew fell from a helicopter during a Marine Corps training session in Hawaii, leaving him comatose and in critical condition. Tourtelot visited his nephew in the intensive care facility of the military hospital on March 24 and May 18. Tourtelot was constantly preoccupied and suffering from extreme emotional distress because of his nephews condition during the time period of late March through the end of May. While preparing the opposition papers, Tourtelot was aware of Knickerbockers deep pockets statement in which he had admitted that Merrilee had no liability. However, when he finalized [his] declaration, [he] completely over looked [sic] the fact that [he] had not included in [his] declaration the existence of the referenced Knickerbocker statements . . . and also forgotten to attach . . . the two letters [he] had written to [Knickerbocker]. Tourtelot further explained that when he referenced the Knickerbocker statement in the conclusion section of his memorandum, he had intended to include that statement in his supporting declaration and, indeed, thought he had done so.

Both Featherstone and Knickerbocker filed oppositions contending in part that the discretionary relief provision of that section did not apply because Tourtelots error amounted to a failure in legal judgment, and it was well established that section 473 did not apply to remedy attorney mistakes in the nature of attorney malpractice. In Merrilees opposition brief, she made it clear that she was solely relying on the discretionary relief provision for relief for excusable neglect.

The trial court granted the motion, finding credible Tourtelots declaration testimony as to the reasons for not including evidence of the Knickerbocker statement in his opposition papers. Therefore, the court found the error was not a mistake of law, but rather something akin to a word processing or typographical error. Review of the opposition papers showed them to be consistent with Tourtelots explanation that he had intended to put the statement in his declaration.

DISCUSSION

The Section 473 Motion^[7]

Initially, Knickerbocker argues the trial court lacked jurisdiction to consider Merrilees section 473 motion because she could only seek relief pursuant to section 1008, governing motions for reconsideration. We need not reach this issue because reversal is mandated based on the trial courts ruling under section 473.

We defer to the trial courts findings of credibility and historical fact. A ruling on a motion for discretionary relief under section 473 shall not be disturbed on appeal absent a clear showing of abuse. [Citation.] [T]hose affidavits favoring the contention of the prevailing party establish not only the facts stated therein but also all facts which reasonably may be inferred therefrom, and where there is a substantial conflict in the facts stated, a determination of the controverted facts by the trial court will not be disturbed. [Citations.] (Zamora v. Clayborn Contracting Group, Inc. (2002) 28 Cal.4th 249, 257-258 (Zamora).) That is, [o]n matters of credibility, we defer to the trial court. (Ayala v. Southwest Leasing & Rental, Inc. (1992) 7 Cal.App.4th 40, 44.)

The legal standard applicable to this appeal is well established: A party who seeks relief under section 473 on the basis of mistake or inadvertence of counsel must demonstrate that such mistake, inadvertence, or general neglect was excusable because the negligence of the attorney is imputed to his client and may not be offered by the latter as a basis for relief. [Citation.] In determining whether the attorneys mistake or inadvertence was excusable, the court inquires whether a reasonably prudent person under the same or similar circumstances might have made the same error. (Bettencourt v. Los Rios Community College Dist. (1986) 42 Cal.3d 270, 276, italics added.) In other words, the discretionary relief provision of section 473 only permits relief from attorney error fairly imputable to the client, i.e., mistakes anyone could have made. (Garcia v. Hejmadi (1997)] 58 Cal.App.4th [674,] 682 [(Garcia)].) Conduct falling below the professional standard of care, such as failure to timely object or to properly advance an argument, is not therefore excusable. To hold otherwise would be to eliminate the express statutory requirement of excusability and effectively eviscerate the concept of attorney malpractice. (Ibid.) (Zamora, supra, 28 Cal.4th at p. 258.) By the same token, however, our Supreme Court has recognized an exception where the attorneys neglect was so extreme as to amount to positive misconduct, and the person seeking relief is relatively free from negligence. The exception is premised upon the concept the attorneys conduct, in effect, obliterates the existence of the attorney-client relationship, and for this reason his negligence should not be imputed to the client. [Citations.] (Carroll v. Abbott Laboratories, Inc. (1982) 32 Cal.3d 892, 898.) This case does not involve anything approaching positive misconduct.

In contrast, counsel error is deemed excusable where it is clerical or ministerial in nature. (Zamora, supra, 28 Cal.4th at p. 259.) Thus, in Zamora the Supreme Court affirmed the trial courts finding that a typographical error in a section 988 settlement offerthe substitution of the word against for in favor of so that offers terms were invertedwas the kind of error that anybody could have made. (Ibid.) Analogous ministerial errors include an attorneys checking the with prejudice box instead of the without prejudice box in a form pleading, an associate attorneys misinterpretation of a lead attorneys instructions, and a legal secretarys loss of a pleading. (Ibid.)

We in no way denigrate the trial courts findings as to the grief and anxiety counsel Tourtelot was suffering or that counsels error was caused by that emotional turmoil. Nevertheless, in Zamora our Supreme Court instructed that it is the kind of mistakenot the excusethat is determinative: Professional errors such as the failure to timely object or to properly advance an argument are not excusable under section 473, subdivision (b)s discretionary relief provision. (Zamora, supra, 28 Cal.4th at p. 258.) In so holding, the Zamora court endorsed the reasoning of the court in Garcia. In that appellate court decision, our colleagues in the First District recognized: The advancement of arguments is the very essence of the professional responsibilities assumed by attorneys; failure to timely make an argument cannot, therefore, be considered a mistake permitted to an untrained reasonably prudent person within the meaning of section 473. (Garcia, supra, 58 Cal.App.4th at p. 684.)

The kind of error committed by Tourtelot was materially indistinguishable from that in Garcia. There, counsel argued that his original [summary judgment] opposition papers, through inadvertence and time pressure, had not correctly identified all evidence creating triable issues and that his supplemental brief correcting this shortcoming had not been filed in time for consideration, presumably also through inadvertence. (Garcia, supra, 58 Cal.App.4th at p. 679.) As the Garcia court explained, this amounted to the late recognition of inadequate briefing and failure to cite more specifically to a paragraph in a declaration. (Id. at p. 684.) While we are cognizant that Tourtelots excuse was far more compelling than the stress admittedly attending modern legal practice, (ibid.), the fact remains that the kind of error he made was quintessentially within his professional capacity. (Zamora, supra, 28 Cal.4th at p. 258; Garcia, supra, 58 Cal.App.4th at p. 684.)

As in Garcia, therefore, [t]he inescapable conclusion is that the court abused its discretion in vacating the summary judgment under section 473. The type of mistake, inadvertence, surprise or excusable neglect which might have permitted the original order to have been vacated is simply not present in this record. (Garcia, supra, 58 Cal.App.4th at p. 685.)

DISPOSITION

The trial courts granting of Merrilee Reids section 473 motion as the basis for its subsequent denial of the anti-SLAPP motion are reversed. The Knickerbocker defendants are awarded their costs on appeal.

KRIEGLER, J.

We concur:

TURNER, P. J.

MOSK, J.

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^[1] Due to the fact that Reid shares the same last name as her son, Ryan, we refer to them by their first names for clarity and not out of disrespect.

^[2] Featherstone is not a party to this appeal.

^[3] SLAPP is an acronym for strategic lawsuit against public participation. (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 732, fn. 1.) An order granting or denying a special motion to strike under Code of Civil Procedure section 425.16 is appealable, as is ruling pursuant to section 473. (Code Civ. Proc.,  904.1, subd. (a)(13); Garcia v. Hejmadi (1997) 58 Cal.App.4th 674, 680 [An order granting a motion to vacate under section 473 is itself appealable, and thus reviewable only by direct appeal, where the order it vacates was an appealable final judgment].) All further statutory references are to the Code of Civil Procedure, unless noted otherwise.

^[4] If it appears from the affidavits submitted in opposition to a motion for summary judgment or summary adjudication or both that facts essential to justify opposition may exist but cannot, for reasons stated, then be presented, the court shall deny the motion, or order a continuance to permit affidavits to be obtained or discovery to be had or may make any other order as may be just. The application to continue the motion to obtain necessary discovery may also be made by ex parte motion at any time on or before the date the opposition response to the motion is due. ( 437c, subd. (h).)

^[5] To establish a cause of action for the malicious prosecution of a civil proceeding, the plaintiff must plead and prove that the prior action: (1) was commenced by or at the direction of the defendant and was pursued to a legal termination in the plaintiffs favor; (2) was brought without probable cause; and (3) was initiated or maintained with malice. (See Zamos v. Stroud (2004) 32 Cal.4th 958, 965.) The tort of malicious prosecution also includes continuing to prosecute a lawsuit that has been discovered to lack probable cause. (Id. at p. 966.)

^[6] Additionally, in the memorandums CONCLUSION section, it was stated that the malice element was supported by Knickerbockers statement to Tourtelot that he was aware that Merrilee Reid was not liable for the matters alleged in the first amended complaint but that he was, nevertheless, going to continue to prosecute the action against her and that if she was smart, she would settle for $5,000 because that would be a lot less expensive than having to pay to defend the action. The memorandum did not offer any evidentiary citation for that allegation.

^[7] Merrilee argues the trial court erred in exercising its discretion to consider Knickerbockers late-filed joinder in Featherstones anti-SLAPP motion. The trial court relied on Barak v. Quisenberry Law Firm (2006) 135 Cal.App.4th 654, 661 in making its discretionary ruling. In finding no abuse of discretion, we believe that decision is directly on point: (1) Proceeding by joinder was appropriate under the circumstances because there was no need for Knickerbocker to present affirmative evidence to shift the burden to plaintiff on the anti-SLAPP motion; (2) the law firms interests and arguments were aligned with Featherstones; and (3) Merrilee presented no evidence of prejudice. (Id. at pp. 661-662.)