Perez v. Kouretas

 

 

 

 

 

 

 

 

 

Filed 9/4/13  Perez v. Kouretas

 

 

 

NOT TO BE PUBLISHED

 

 

 

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opinion has not been certified for publication or ordered published for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

THIRD APPELLATE
DISTRICT

(Sacramento)

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>

RAFAEL PEREZ et al.,                           Plaintiffs and Appellants,               v.   JAMES KOURETAS,                           Defendant and Respondent.

C068234   (Super. Ct. No. 34201000086964CUCOGDS)

 

 

 

            Plaintiffs Rafael Perez (Rafael),
Pedro Perez (Pedro), and David Hurley (Hurley) (sometimes collectively,
plaintiffs) appeal the trial court’s order granting defendant James Kouretas’s
special motion to strike under the
anti-SLAPP statute (Code Civ. Proc., § 425.16 (hereafter § 425.16)).  We conclude the court erred in granting the anti-SLAPP
motion and reverse the order and judgment
of dismissal as well as the attorney’s fee award in Kouretas’s favor.

Facts and Proceedings

            The following facts are taken from
plaintiffs’ complaint and the declarations supporting and opposing the motion
to strike.  Faye Stearns, an elderly
woman, owned a card room in Sacramento
called Duffy’s.  She held the gambling
license for the establishment.  In
December 2004, Duffy’s was destroyed by a fire. 
Although Stearns wanted to reopen the business, she did not have the
financial means to do so.  Through
acquaintances at the card room, Rafael learned that Stearns was seeking help to
reopen Duffy’s. 

            Stearns and Rafael met several times
following the fire.  On January 7, 2005, they executed a
written partnership agreement to reopen the card room (Rafael-Stearns
Agreement).  That same day Stearns also
executed a Gambling Control Commission form designating Rafael as her agent to
“represent all of [D]uffy’s future license transactions, Table fees, and
business promotions,” and, as her designated agent, Rafael submitted an
application to the Gambling Commission to renew Stearns’s state gambling
license. 

            The Rafael-Stearns Agreement lists
the nature of the partnership’s business as “Card Room License (Game
Room).”  According to the agreement,
Rafael and Stearns would contribute capital and split profits and losses on a
60-40 percent basis, respectively. 
Rafael was to have sole control over managing the business and was
responsible for paying all start up expenses, including application and
licensing fees and employee salaries. 
The place of business in Sacramento was yet to be determined. 

            The partnership between Rafael and
Stearns was to last five years; Rafael would then become the sole owner of the
business.  The Rafael-Stearns Agreement
was assignable, and Stearns did not object to Rafael securing investors to fund
the project. 

            Rafael contacted his father, Pedro,
and Hurley to invest in the card room. 
By early February, Rafael, Hurley and Pedro executed an agreement
entitled “Duffy’s Card Room Agreement[:] 
Statement to Establish a Business Partnership” (Perez-Hurley Agreement)
to open the poker card room.  The
agreement recites that it was executed “with the full knowledge and consent
from Mrs [sic] Faye Stearn [>sic] and Rafael Perez.” According to
this second partnership agreement, legal counsel would be retained to obtain
all necessary licensing requirements for the card room. 

            Rafael, purportedly with Stearns’s
consent, assigned his 60 percent interest in the Rafael-Stearns partnership to
the Perez-Hurley partnership formed by the three men.  Rafael provided Stearns with a copy of the
Perez-Hurley Agreement. 

            In the middle of February 2005,
Rafael prepared a letter on Stearns’s behalf requesting that the City of
Sacramento (City) renew her card room license at a new location.  That same month, Rafael retained attorney
Robert Tabor on behalf of the four partners to obtain the necessary approvals
to reopen the card room.  Pedro and
Hurley were to pay Tabor’s attorney’s fees; Stearns was not responsible for any
fees.  Tabor submitted applications to
the Gambling Control Commission for Pedro and Hurley to become “key employees”
of the card room.  A “key employee” is
“any natural person employed in the operation of a gambling enterprise in a
supervisory capacity or empowered to make discretionary decisions that regulate
gambling operations . . . .” 
(Bus. & Prof. Code, § 19805, subd. (x).)  Key employees are licensed by the Gambling
Control Commission.  (Bus. & Prof.
Code, §§ 19850, 19854.)

            Although Tabor secured several
extensions of Stearns’s gambling license, by June 2006 Tabor had missed some
permit filing deadlines or table fee payments necessary to renew the card room
business license.  On June 6, 2006, the
City informed Stearns that her card room license had been automatically revoked
because she failed to reopen Duffy’s within 90 days of the fire as required by
a City ordinance.  According to the City,
the license would be placed in a lottery to be awarded to a member of the
public.  Tabor wrote a letter appealing
the decision, but the City claimed it never received it and concluded its
decision was final. 

            Around July 2006, defendant
Kouretas, a local attorney, contacted Stearns about helping with the gaming
license issue.  Stearns told Rafael about
Kouretas’s call.  Rafael later contacted
Kouretas about representing the four partners in getting the license
renewed.  Kouretas explained that he had
experience in gaming matters and he agreed to meet with the group. 

            In early October 2006, Rafael,
Pedro, Hurley, and Stearns met with Kouretas at his law office.  At the meeting they told Kouretas about their
previously formed partnerships.  Kouretas
requested to review Tabor’s file with everything that had been done to that
point.  Kouretas even recommended the
group consult a malpractice attorney to file an action against Tabor for
missing the filing deadlines. 

            Although Kouretas denies it,
plaintiffs claim Kouretas agreed to represent the partnership and all four
partners in securing the necessary approvals to reopen the card room.  When asked how much he was going to charge
them, Kouretas replied that it could be determined at another time.  According to Kouretas, he later agreed to
represent Stearns only and had decided to invest in the card room with her
alone.  He agreed to represent her for
free. 

            A few weeks later Kouretas again met
with Rafael, Pedro, Hurley and Stearns to discuss the card room licensing
issues.  Kouretas reconfirmed that he
would represent them in obtaining the necessary approvals for reopening the
card room.  Rafael provided Kouretas with
copies of the Rafael-Stearns Agreement and the Perez-Hurley Agreement as well
as other documents relating to the gambling license and card room.  At the end of the meeting, Pedro raised the
issue of a fee agreement.  Like before,
Kouretas said that the fee arrangement could be discussed later. 

            Pedro subsequently terminated Tabor
as the partners’ attorney, retrieved their client file from Tabor’s office, and
delivered it to Kouretas’s law firm. 
Kouretas reviewed the file. 

            Following these initial meetings,
Kouretas met with plaintiffs on several more occasions, with and without
Stearns.  During these subsequent
meetings, Kouretas assured plaintiffs he was working on their behalf to obtain
the necessary approvals to reopen the card room.  Kouretas, however, claimed that due to
complications in the approval process, his name rather than plaintiffs’ would
have to be on the approvals.  Kouretas
told plaintiffs ownership of the gambling establishment would be transferred to
them at a later date. 

            Meanwhile, and unbeknownst to
plaintiffs, Kouretas formed a limited liability company with Stearns and another
investor to own and operate the card room. 
Kouretas was the managing member of the company, holding a 50 percent
interest in the business.  Kouretas also
withdrew Pedro’s and Hurley’s key employee applications without their
knowledge. 

            Ultimately Kouretas successfully
secured the necessary licenses and permits to reopen the card room.  After the City finally issued the card room
license, Kouretas allegedly called Rafael and told him, “[W]e got your casino.”  Yet the city business permit was issued to
Kouretas, Stearns, and the third member of the limited liability company
Kouretas secretly formed with Stearns. 
The state gambling license was issued to Kouretas’s and Stearns’s
limited liability company.  Kouretas
leased the casino’s new location solely in his name.  None of the licenses, permits, or leases were
in the name of plaintiffs or their partnerships. 

            When it later became apparent that
Kouretas did not intend to transfer any interest in the card room to plaintiffs
as partners in either the Rafael-Stearns partnership or the Perez-Hurley
partnership, plaintiffs sued Kouretas. 
The complaint alleged causes of action for legal malpractice, breach of
fiduciary duty, constructive and actual fraud, intentional and negligent
interference with prospective economic relations, intentional and negligent
interference with contract, negligent misrepresentation and for a constructive
trust and preliminary injunction. 
Kouretas filed a special motion to strike under the anti-SLAPP statute,
which the trial court granted.  The trial
court also awarded Kouretas attorneys’ fees and entered a judgment of
dismissal.  Plaintiffs timely
appealed. 

Discussion

I

Standard
and Scope of Review

            The question of whether a trial
court properly granted a motion to strike under the anti-SLAPP statute is
reviewed de novo.  (ComputerXpress,
Inc. v. Jackson (2001) 93 Cal.App.4th 993, 999 [“Whether section 425.16
applies and whether the plaintiff has shown a probability of prevailing are
both reviewed independently on appeal”].) 


            Under the anti-SLAPP statute, the
court engages in a two-step analysis. 
First, the court considers whether the defendant has made a threshold
showing that the challenged cause of action is one arising from protected
activity. (§ 425.16, subd. (b)(1).)  The
defendant bears the burden of showing the plaintiff’s cause of action arises
from the defendant’s exercise of free speech or petition rights as defined in
the statute. (§ 425.16, subd. (e).)  If
the defendant makes this threshold showing, the burden shifts to the plaintiff
to make a prima facie showing of facts which, if credited by the trier of fact,
would sustain a favorable judgment.  (>Equilon Enterprises v. Consumer Cause, Inc.
(2002) 29 Cal.4th 53, 61; Navellier v.
Sletten (2002) 29 Cal.4th 82, 88.)

            The court considers the pleadings
and evidence submitted by both sides, but does not weigh credibility or compare
the weight of the evidence.  Rather, the
court’s responsibility is to accept as true the evidence favorable to the
plaintiff (Nagel v. Twin Laboratories,
Inc. (2003) 109 Cal.App.4th 39, 45-46), and to evaluate the defendant’s
evidence only to determine if it has defeated that submitted by the plaintiff
as a matter of law.  (>Kashian v. Harriman (2002) 98
Cal.App.4th 892, 906.)  With these concepts
in mind, we turn to plaintiffs’ contentions on appeal.  

II

Anti-SLAPP Motion

            The trial court found Kouretas made
a threshold showing that plaintiffs’ suit arises from Kouretas’s protected
activities under section 425.16.  The
court concluded plaintiffs’ complaint arose from Kouretas’s written and oral
statements to governmental agencies to obtain the gambling license and permits
as well as to withdraw Pedro’s and Hurley’s key employee applications.  Our independent review of the record does not
support this finding.

            According to the complaint,
Kouretas, while acting as their attorney and purportedly on their behalf,
fraudulently or negligently usurped plaintiffs’ business opportunity in the
card room.  By doing so, plaintiffs allege
Kouretas breached his fiduciary duties to them and committed legal
malpractice. 

            While it is true that Kouretas
petitioned governmental agencies when seeking to revive the card room and its
licenses, it is Kouretas’s alleged misdeeds as plaintiffs’ attorney--and not his
underlying petitioning activity--that is the thrust, or gravamen, of
plaintiffs’ complaint.  (>PrediWave Corp. v. Simpson Thacher &
Bartlett LLP (2009) 179 Cal.App.4th 1204, 1219 [“When a pleading contains
allegations regarding both protected and unprotected activity, ‘it is the >principal thrust or gravamen of the plaintiff’s cause of action that determines whether
the anti-SLAPP statute applies’ ”].) 
Although a cause of action may be associated with a protected act, it
does not follow that the cause of action always arises from that act.  (>Kolar v. Donahue, McIntosh & Hammerton
(2006) 145 Cal.App.4th 1532, 1537 [“A claim ‘arises from’ an act when the act ‘
“ ‘forms the basis for the plaintiff’s cause of
action’ . . . . ” ’ ”]; Robles
v. Chalilpoyil (2010) 181 Cal.App.4th 566, 574 [“ ‘that a cause of action
arguably may have been “triggered” by protected activity does not entail that
it is one arising from such’ ”].)  Thus,
simply because plaintiffs’ causes of action are tangentially associated with
petitioning governmental agencies to obtain the necessary gambling approvals
does not mean that their complaint against Kouretas as their attorney “arises
from” such petitioning activity. 

            As other courts have recognized,
suits like plaintiffs’ alleging legal malpractice and breaches of the duty of
loyalty against former counsel are not subject to a special motion to
strike.  (Kolar v. Donahue, McIntosh & Hammerton, supra, 145 Cal.App.4th
at p. 1535 [“Legal malpractice is not an activity protected under the anti-SLAPP
statute”]; Benasra v. Mitchell Silberberg
& Knupp LLP (2004) 123 Cal.App.4th 1179, 1181 [anti-SLAPP statute does
not apply to claim for attorney’s breach of duty of loyalty]; >PrediWave Corp. v. Simpson Thacher &
Bartlett LLP, supra, 179 Cal.App.4th at p. 1228 [court improperly granted
anti-SLAPP motion to complaint alleging causes of action against the
plaintiff’s former counsel for breach of fiduciary duty, constructive fraud,
legal malpractice and unfair business practices].)  Similarly, like plaintiffs’ claims of fraud
and negligence here, a complaint against a former attorney alleging negligence
and conspiracy to commit fraud does not involve the exercise of protected
petitioning activity even though the attorney’s adverse business relationship was
formed following litigation on the plaintiff’s behalf.  (Robles
v. Chalilpoyil, supra, 181 Cal.App.4th at p. 580 [anti-SLAPP statute
inapplicable where “[t]he central subject of the complaint against appellant is
not an exercise of free speech or petition but the negligence or fraud inherent
in his act of entering into a business relationship to respondents’
detriment”].)

            That Kouretas allegedly breached his
duty of loyalty and committed malpractice and fraud in the course of
petitioning certain governmental agencies for the gambling and card room
licenses does not mean plaintiffs’ claims arose from the petitioning activity
itself.  It is not, as respondent urges,
that Kouretas merely petitioned to have the card room permits and licenses
reinstated which gives rise to the complaint. 
Instead, as plaintiffs’ argue, it is that Kouretas, as their attorney,
lead plaintiffs to believe that he was engaging in such activities on their
behalf and then surreptitiously did so to advance his own personal interests rather
than those of his clients.  Kouretas’s
alleged failure to faithfully and loyally pursue the casino and business
opportunities for plaintiffs is the real basis of the complaint.

            And, at least at this stage of the
proceedings, Kouretas’s claim that he never represented plaintiffs is
irrelevant.  The court is bound to accept
as true all evidence favorable to plaintiffs unless Kouretas’s evidence defeats
it as a matter of law.  (>Nagel v. Twin Laboratories, Inc., supra, 109
Cal.App.4th at pp. 45-46; Kashian v.
Harriman, supra, 98 Cal.App.4th at p. 906.) 
As the trial court acknowledged, and we agree, the evidence submitted by
Kouretas falls far short of showing that he was not plaintiffs’ attorney.  Because the declarations and exhibits
submitted by Kouretas do not, as a matter of law, demand a finding of the
absence of an attorney-client relationship between Kouretas and plaintiffs, we
must accept plaintiffs’ contentions that such a professional relationship did
exist.  (Nagel, at pp. 45-46.)  

            In light of the above, we find
plaintiffs’ claims are not subject to the anti-SLAPP statute.  Since Kouretas did not satisfy the threshold
showing under section 425.16, we need not address plaintiffs’ remaining
contentions on appeal, including whether plaintiffs showed a probability of
prevailing on their claims.  (>ComputerXpress, Inc. v. Jackson, supra, 93
Cal.App.4th at p. 1004.)  Because we do
not reach plaintiffs’ remaining contentions, we deny plaintiffs’ request for
judicial notice of legislative materials relating to Corporations Code section
16307 as irrelevant.

III

Attorney’s
Fees

            Since defendant did not show that
plaintiffs’ complaint arose out of protected petitioning activity under section
425.16, the attorney’s fee award to Kouretas must be set aside.  Pursuant to section 425.16, subdivision (c),
plaintiffs are entitled to attorney’s fees if Kouretas’s anti-SLAPP motion was
frivolous or was solely intended to cause unnecessary delay.  Upon remand, the trial court shall determine
whether plaintiffs are entitled to recover attorney’s fees, including
attorney’s fees on appeal.  (Evans v.
Unkow (1995) 38 Cal.App.4th 1490, 1499 [“A statute authorizing an attorney fee
award at the trial court level includes appellate attorney fees unless the
statute specifically provides otherwise”].)

Disposition

            The judgment and the orders (1)
striking the complaint and (2) awarding attorney’s fees to Kouretas are
reversed.  The matter is remanded for a
determination of whether plaintiffs are entitled to recover attorney’s fees.  Plaintiffs are awarded their costs on
appeal.  (Cal. Rules of Court, rule
8.278(a)(1).) 

 

 

 

                                                                                              HULL                           ,
J.

 

 

 

We concur:

 

 

 

          RAYE                           ,
P. J.

 

 

 

          ROBIE                          ,
J.