Tolt v. Borselle

Filed 9/28/06 Tolt v. Borselle CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION TWO

APPEAL from a judgment of the Superior Court of Los Angeles County.

Alexander Williams III, Judge. Reversed.

Law Office of Robert F. Cohen, Robert F. Cohen; Law Office of Nikki Tolt,

Nikki Tolt, in pro. per., for Plaintiff and Respondent.

Law Office of Thomas H. Edwards, Thomas H. Edwards, in pro. per., and for Defendant and Appellant Marianne P. Borselle.

___________________________________________________

This is a new installment in the fee dispute between two lawyers, Nikki Tolt and Marianne Borselle. In a prior installment, Borselle sued Tolt to collect payment for legal work Borselle performed at Tolt’s behest. Now, Tolt has sued Borselle--and Borselle’s attorney--for malicious prosecution. Borselle and her attorney attempted to have Tolt’s malicious prosecution action stricken as a Strategic Lawsuit Against Public Participation (SLAPP). (Code Civ. Proc., § 425.16.)^[1] The trial court denied the motion. We reverse.

FACTS

The Underlying Action

Litigation between the parties began in July 2002, when Borselle sued Tolt for breach of contract (the underlying action). The underlying action arose from Tolt’s refusal to pay for work that Borselle did on Tolt’s cases. For the most part, Tolt paid Borselle at a flat rate; however, as to two cases, Borselle alleged the existence of a fee-sharing agreement in which Tolt agreed to pay Borselle half of any attorney fees Tolt received (the fee-split claims).

The underlying action went to trial. At the close of Borselle’s case-in-chief, the trial court granted a nonsuit on Borselle’s fee-split claims. The court found that Borselle could not split fees with Tolt without a signed agreement from the clients. Borselle prevailed at trial on those of her claims that did not arise from fee-splitting, and obtained a judgment against Tolt for $24,841. This Court affirmed the judgment. (Jun. 2, 2005, B171323 [nonpub. opn.].)

The Malicious Prosecution Action

In July 2004, Tolt filed a malicious prosecution against Borselle and Borselle’s attorney, Thomas Edwards. Tolt alleges that she and Borselle agreed to split fees without first obtaining the written consent of Tolt’s clients, in violation of the Rules of Professional Conduct. Despite the absence of client consent to fee-splitting, Borselle sued Tolt in the underlying action to recover a share of the money Tolt received in the fee-split cases. While the underlying action was pending, Tolt advised appellants Borselle and Edwards that the fee-splitting agreements were void and unenforceable; nevertheless, appellants persisted in pressing these claims at trial, where they were nonsuited. Tolt alleges that appellants had no probable cause to bring a lawsuit to recover money on the fee-split cases, given the invalidity of the fee-sharing agreements, and that appellants refused to dismiss these claims “in order to coerce [Tolt] into settling the underlying action.” Appellants denied the allegations in the malicious prosecution complaint.

The Special Motion To Strike Tolt’s Complaint

On December 1, 2004, appellants filed a special motion to strike Tolt’s malicious prosecution action as a SLAPP. Appellants argued that (1) the dismissal of Borselle’s fee-splitting claims on a motion for nonsuit during trial in the underlying action is not a favorable termination; (2) the malicious prosecution action is barred by the doctrine of unclean hands; (3) there was probable cause to pursue the fee-splitting claims in the underlying action; and (4) Tolt cannot prove malice.

Tolt opposed appellants’ motion to strike. She argued that appellants failed to establish that there was any “protected activity in connection with a public issue.” Tolt also asserted that she is likely to prevail on the merits of her malicious prosecution claim.

At the initial hearing on appellants’ motion to strike, Tolt questioned the court’s jurisdiction to proceed, because the 30-day statutory time limit for hearing the motion had expired. Appellants had attempted to set the matter for a timely hearing, but the court clerk informed their legal assistant that the earliest hearing date was nearly 60 days after the motion was filed. The judge noted during the hearing that his courtroom was dark from December 17, 2004, until January 10, 2005. Nonetheless, the court stated, appellants had the burden “to press the issue, and to get to the court one way or another,” whether by way of a telephone conference or an assignment of the matter to another judge. The court continued the case to allow the parties to submit additional briefing addressing the issue of timeliness.

Appellants submitted a supplemental brief in an attempt to establish that their motion was timely. Tolt opposed appellants’ supplemental argument, and requested the imposition of sanctions. At the second hearing on the motion to strike, the court found that it lacked jurisdiction to hear the motion because of untimeliness. Further, even if the motion were timely, Tolt had met her burden of establishing a likelihood of prevailing on the merits. The court reserved the issue of attorney fees pending an appeal of its ruling. This appeal was taken 10 days later.

DISCUSSION

1. Appeal and Review

The denial of a special motion to strike is an appealable order. (§ 425.16, subd. (i).) “The court’s ruling on a special motion under section 425.16 is subject to our independent review.” (Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc. (2005) 129 Cal.App.4th 1228, 1245.)

2. Timeliness

There are certain deadlines for bringing a motion to strike under the anti-SLAPP statute. In 2004, the anti-SLAPP statute provided that a special motion to strike “shall be noticed for hearing not more than 30 days after service unless the docket conditions of the court require a later hearing.” (Former § 425.16, subd. (f).) At the time the trial court denied appellants’ motion to strike, the case law imposed a strict obligation upon the defendant to set an anti-SLAPP motion for hearing within 30 days after the motion is served (Decker v. U.D. Registry, Inc. (2003) 105 Cal.App.4th 1382, 1388-1390), and placed on the defendant “the burden of showing that the condition of the court’s docket required a later hearing,” beyond the 30-day statutory limit. (Fair Political Practices Com. v. American Civil Rights Coalition, Inc. (2004) 121 Cal.App.4th 1171, 1175.)

In this case, appellants’ legal assistant declared that she telephoned the court clerk and requested a hearing date within 30 days after December 1, 2004, the day on which appellants anticipated filing their anti-SLAPP motion. The clerk informed the legal assistant “the earliest hearing date available in Department 35 was January 26, 2005, and our motions were calendared on that date based on this information.” Under the case law existing at that time, this was not enough to survive dismissal of an anti-SLAPP motion under former section 425.16, subdivision (f), because it was incumbent upon the defendants to find a way to satisfy the 30-day requirement, usually by pursuing an ex parte motion to specially set a timely hearing. (See Fair Political Practices Com. v. American Civil Rights Coalition, Inc., supra, 121 Cal.App.4th at pp. 1175-1176.)

Effective October 5, 2005, section 425.16 was amended to provide that “[t]he motion shall be scheduled by the clerk of the court for a hearing not more than 30 days after the service of the motion unless the docket conditions of the court require a later hearing.” (§ 425.16, subd. (f).) Tolt asserts that the 2005 amendment to section 425.16 does not apply retroactively to this case. In reply, appellants argue that the amendment demonstrates that their motion is timely.

In making the 2005 amendments to section 425.16, the Legislature expressly indicated that its intent was “to overrule” the Fair Political Practices and Decker decisions. The statute further states, “In order to clarify the law to protect SLAPP targets and avoid chilling petition and speech rights at the earliest time, it is necessary for this act to take effect immediately.” (Stats. 2005, ch. 535, §§ 3, 4. See Historical and Statutory Notes, 14B West’s Ann. Code Civ. Proc. (2006 supp.) foll. § 425.16, pp. 22-23.)

A statutory amendment aimed at abrogating appellate interpretations of a statute applies to pending cases. “If the Legislature acts promptly to correct a perceived problem with a judicial construction of a statute, the courts generally give the Legislature’s action its intended effect.” (Western Security Bank v. Superior Court (1997) 15 Cal.4th 232, 246.) “[W]here a statute provides that it clarifies or declares existing law, ‘[i]t is obvious that such a provision is indicative of a legislative intent that the amendment apply to all existing causes of action from the date of its enactment. In accordance with the general rules of statutory construction, we must give effect to this intention unless there is some constitutional objection thereto.’” (Id. at p. 244; Carter v. California Dept. of Veterans Affairs (2006) 38 Cal.4th 914, 922-923.)

Section 425.16 is a procedural statute, and has been applied to lawsuits filed before its effective date. (Robertson v. Rodriguez (1995) 36 Cal.App.4th 347, 356.) Likewise, amendments to the anti-SLAPP statute apply to pending litigation. (Brenton v. Metabolife Internat., Inc. (2004) 116 Cal.App.4th 679, 689-690.) With respect to one of the changes made to the anti-SLAPP statute, the court wrote, “[T]he fact that a party acted in an authorized manner at the time he or she invoked the former version of [section 425.16] is no impediment to the appellate court applying the current version of that procedural or remedial statute when evaluating the appeal from the trial court’s ruling.” (Id. at p. 691; Metcalf v. U-Haul International, Inc. (2004) 118 Cal.App.4th 1261, 1266.)

The October 2005 amendment to section 425.16 applies here. Although the amendment took effect after the trial court ruled in this case, the Legislature intended to abrogate the appellate decisions that the trial court relied upon when it found that appellants’ motion was untimely. The Legislature has now clarified that the onus is on the court clerk to promptly schedule an anti-SLAPP motion for hearing; it did not intend the moving party to be deprived of its day in court merely because the court’s docket was full or the judge was on vacation. Appellant’s motion cannot be denied on the grounds of untimeliness.

3. Overview of the Anti-SLAPP Statute

The anti-SLAPP statute is aimed at curbing “lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances.” (§ 425.16, subd. (a).) Protection is extended to “any written or oral statement made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law.” (§ 425.16, subd. (e)(2).) The statute also covers any “conduct in furtherance of the exercise of the constitutional right of petition . . . .” (§ 425.16, subd. (e)(4).) The Legislature commands that the provisions of the anti-SLAPP statute “be construed broadly.” (§ 425.16, subd. (a); Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 735.)

There are two components to a motion to strike brought under section 425.16. First, the defendant must make a threshold showing that the lawsuit arises from an act in furtherance of his or her constitutional right to petition or to free speech. (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) Second, if the lawsuit affects protected speech, the court determines whether there is a reasonable probability that the plaintiff will prevail on the claim. (§ 425.16, subd. (b)(1); City of Cotati v. Cashman (2002) 29 Cal.4th 69, 76; Zamos v. Stroud (2004) 32 Cal.4th 958, 965.)

4. Application of the Anti-SLAPP Statute

a. Threshold Showing That The Lawsuit Arises From Protected Activity

The threshold showing is readily satisfied in this case. Malicious prosecution actions are subject to scrutiny under the anti-SLAPP statute: such suits may “‘chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances.’” (Jarrow Formulas, Inc. v. LaMarche, supra, 31 Cal.4th at pp. 738-739.) “By definition, a malicious prosecution suit alleges that the defendant committed a tort by filing a lawsuit.” (Id. at p. 735; HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 212-213.) Tolt’s malicious prosecution action arises from appellants’ exercise of their First Amendment rights in the underlying action.

b. Probability Of Prevailing

Once the first component of an anti-SLAPP motion is satisfied, the burden shifts to the plaintiff to establish a probability of prevailing. (HMS Capital, Inc. v. Lawyers Title Co., supra, 118 Cal.App.4th at p. 213.) This means that the court must examine the pleadings, and that the plaintiff must demonstrate that the complaint is both legally sufficient and supported by sufficient prima facie evidence. (Jarrow Formulas, Inc. v. LaMarche, supra, 31 Cal.4th at p. 741; Major v. Silna (2005) 134 Cal.App.4th 1485, 1498.)

In their answer to Tolt’s malicious prosecution complaint, and in their anti-SLAPP motion, appellants assert the equitable defense of unclean hands. Application of this defense prevents a party from obtaining relief “if he has engaged in any unconscientious conduct directly related to the transaction or matter before the court.” (DeRosa v. Transamerica Title Ins. Co. (1989) 213 Cal.App.3d 1390, 1395.) The defense may be deployed to bar a malicious prosecution action. (Id. at p. 1397 [unclean hands defense applies in a malicious prosecution suit to a plaintiff who acted dishonestly before the underlying action was instituted]; Pond v. Insurance Co. of North America (1984) 151 Cal.App.3d 280, 292.) In the context of an anti-SLAPP motion, a lawsuit may be stricken when “a plaintiff’s own pleadings contain admissions that establish the basis of an unclean hands defense,” without the need for a further evidentiary hearing. (Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP (2005) 133 Cal.App.4th 658, 681.)

In this case, Tolt alleges that “Plaintiff and Borselle entered into oral fee splitting agreements with regard to two of Plaintiff’s clients” without the written consent of Tolt’s clients. Tolt further alleges that Borselle violated the Rules of Professional Conduct by neglecting to obtain the consent of Tolt’s clients to the fee splitting.^[2] Appellants compounded the misdeed by suing Tolt in the underlying action to enforce the fee-splitting agreements.

Tolt’s own pleading establishes the basis of an unclean hands defense, as a matter of law. Tolt cannot prevail in this litigation because she engaged in unconscionable conduct directly related to the matter before the court. The complaint admits that Tolt entered a fee-splitting agreement without the consent of her clients, a violation of the Rules of Professional Conduct. Willful violations of the Rules of Professional Conduct are sanctionable events. (Rules Proc. of State Bar, rule 2.10.) Tolt is the “member” at whom rule 2-200 is directed. The purpose of rule 2-200 is “‘to protect the public and to promote respect and confidence in the legal profession’” by “‘impress[ing] upon the client the importance of his or her consent, and of the right to reject the fee sharing.’” (Chambers v. Kay (2002) 29 Cal.4th 142, 157-158.)

It must be emphasized that these are Tolt’s clients, not Borselle’s, as alleged in Tolt’s complaint. It was as much Tolt’s responsibility to secure her clients’ consent as it was Borselle’s duty to do so. As this Court has observed, attorneys who fail to obtain client consent to fee splitting are “each equally culpable.” (Altschul v. Sayble (1978) 83 Cal.App.3d 153, 164.) This responsibility remains with Tolt, even if Borselle could not recover on the fee-splitting agreements. (Chambers v. Kay, supra, 29 Cal.4th at pp. 155-162.)^[3] Given that Tolt patently failed to protect her clients by securing their consent, she cannot capitalize on her wrongdoing by using it as a sword against Borselle. There is no reason for the courts to reward Tolt for her participation in an ethical violation by permitting this lawsuit to proceed.

DISPOSITION

The judgment is reversed. The case is remanded to the trial court to determine an appropriate award of attorney fees and costs to appellants as the prevailing parties, pursuant to section 425.16, subdivision (c). Respondent Tolt is to bear all costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

BOREN, P.J.

We concur:

DOI TODD, J. ASHMANN-GERST, J.

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Analysis and review provided by La Mesa Property line Lawyers.

^[1] All further statutory references are to the Code of Civil Procedure. Section 425.16 is referred to in this opinion as the anti-SLAPP statute.

^[2] Rule 2-200 of the Rules of Professional Conduct states that “A member shall not divide a fee for legal services with a lawyer who is not a partner of, associate of, or shareholder with the member unless: (1) The client has consented in writing thereto after a full disclosure has been made in writing that a division of fees will be made and the terms of such division; and (2) The total fee charged by all lawyers is not increased solely by reason of the provision for division of fees and is not unconscionable . . . .”

^[3] Borselle could not sue on the contract, but could recover in quantum meruit for the reasonable value of her services. (Huskinson & Brown v. Wolf (2004) 32 Cal.4th 453, 456.)