Thayer v. Kabateck Brown Kellner LLP

• Citation: 143 Cal.Rptr.3d 17,12 Cal. Daily Op. Serv. 7193,2012 Daily Journal D.A.R. 8619,207 Cal.App.4th 141
• Decision Date: 22 June 2012
• Docket Number: No. A132580.,A132580.
• Court: California Court of Appeals
• Parties: Anne W. THAYER, Plaintiff and Respondent, v. KABATECK BROWN KELLNER LLP et al., Defendants and Appellants.

207 Cal.App.4th 141
143 Cal.Rptr.3d 17
12 Cal. Daily Op. Serv. 7193
2012 Daily Journal D.A.R. 8619

Anne W. THAYER, Plaintiff and Respondent,
v.
KABATECK BROWN KELLNER LLP et al., Defendants and Appellants.

No. A132580.

Court of Appeal, First District, Division 2, California.

May 30, 2012.
As Modified June 22, 2012.

[143 Cal.Rptr.3d 20]

Buchalter Nemer, Los Angeles, Harry W.R. Chamberlain II, Robert M. Dato, for Defendants and Appellants.

Ernest M. Thayer, Oakland, for Plaintiff and Respondent.

RICHMAN, J.

[207 Cal.App.4th 144]Plaintiff sued attorneys who handled a class action in Los Angeles, based on the attorneys' handling of the settlement proceeds in that action—an action in which plaintiff was not a party. Defendants filed an anti-SLAPP motion to strike the complaint, asserting that plaintiff's lawsuit dealt with protected activity and that she could not demonstrate a likelihood of prevailing on the merits. The trial court denied the motion under the first step of the anti-SLAPP analysis, and did not reach step two.

Defendants appeal, and we review the matter de novo, concluding first that plaintiff's lawsuit arose out of protected activity. And we go on to decide step two, and hold that plaintiff has failed to demonstrate a likelihood of prevailing on the merits. We thus reverse, with instructions to enter an order [207 Cal.App.4th 145]granting the motion to strike, and to hold a hearing to determine the amount of attorney fees to which defendants are entitled for their success in having the lawsuit stricken.

BACKGROUND The Parties

According to the allegations of her verified complaint, plaintiff-respondent Anne W. Thayer (Thayer) and “her spouse” were “co-owners of a resort membership.” Thayer's spouse, the alleged “co-owner,” is Ernest M. Thayer (Mr. Thayer). Mr. Thayer is a very experienced attorney, who was admitted to the California State Bar in 1961. And, his declaration would support, Mr. Thayer is apparently quite successful, as “in [his] last year of working as an attorney full-time, [he] earned approximately $3 million.” Mr. Thayer represented his wife below, and represents her on appeal.

Defendants-appellants are Kabateck Brown Kellner LLP, a Los Angeles law firm, and Richard Kellner, a member of the firm (for convenience, usually referred to collectively as Kabateck). Kabateck

[143 Cal.Rptr.3d 21]

(along with another firm whose identity is not pertinent here) filed a class action litigation in Los Angeles involving “resort memberships,” litigation referred to below as the “Abercrombie & Kent litigation.”

The Abercrombie & Kent Litigation

In 2007, Kabateck entered into letter agreements with “members” of luxury destination clubs to provide legal services. The letter agreement provided that it was “between attorneys and client,” and was for this purpose: “2. SERVICES TO BE PROVIDED. The legal services to be provided by Attorneys to Client are as follows: Consultation and advice to Client including representation for claims in a series of mass action lawsuits (the ‘Case’) to be brought against Abercrombie & Kent, Inc., Geoffrey Kent, Andrew Harper Travel, Inc., Intrawest Corporation, Fortress Investment Group and related individuals and entities (‘Defendant’) pertaining to the fraudulent sale of the resort memberships.”

On August 14, 2007, Mr. Thayer signed such a letter agreement, and that same day he signed a “Joint Prosecution Agreement.” No such agreements were ever signed by Thayer.

[207 Cal.App.4th 146]As to the origin of the Joint Prosecution Agreement, the prospective plaintiffs for the “mass action” came through a “steering committee” made up of several individual plaintiffs appointed by the larger group of prospective plaintiffs, which committee was to seek out and retain the best counsel available to represent the group. As part of the process to have the steering committee represent their interests, each client signed a separate agreement with the steering committee, providing it with full authority to make all litigation related decisions, including settlement.

In January 2008, the class action lawsuit was filed, in Los Angeles Superior Court. It named as defendants Abercrombie & Kent and related entities and individuals, and alleged fraud in connection with the sale of memberships in luxury destination clubs.

In October 2010, the steering committee agreed to settle the litigation for some $53,170,000. The settlement was approved by the Honorable Peter Lichtman, who ordered that he would retain jurisdiction over the matter to enforce the terms and conditions of the settlement agreement if necessary.

Kabateck prepared and delivered to all plaintiffs a memorandum explaining the basis for the settlement and the distribution method of the settlement proceeds. Shortly thereafter, Kabateck sent an “FAQ” to all plaintiffs, including Mr. Thayer, explaining the distribution and allocation of the settlement proceeds as established by the special master appointed by the steering committee. The “FAQ” also explained how a plaintiff could appeal an allocation determined by the special master.

On January 14, 2011, Mr. Thayer signed a general release in consideration of the settlement of the Abercrombie & Kent litigation. The release provides that it is signed “on my own behalf and on behalf of my spouse, agents, representatives, heirs, assigns and any entity....” Mr. Thayer also signed a “Disbursement Authorization” of the settlement proceeds for his portion.

While Mr. Thayer was signing those documents in January 2011, he did so having already filed the lawsuit involved here.

The Subject Lawsuit

On December 21, 2010, Mr. Thayer filed a complaint naming as plaintiff “Thayer, on behalf of herself and all others similarly situated.” The complaint [207 Cal.App.4th 147]was verified by

[143 Cal.Rptr.3d 22]

Thayer, and it named six defendants, including, as pertinent here, Kabateck and Kellner. It purported to allege eight causes of action, styled as follows: (1) commission of fraud and deceit; (2) tortious interference with protected property interest; (3) violation of the Consumers Legal Remedies Act; (4) violation of Business & Professions Code section 17500; (5) violation of Business & Professions Code section 17200; (6) declaratory relief; (7) conversion; and (8) breach of trust. With two exceptions,¹ all causes of action are essentially based on the so-called “General Allegations” in the first 25 paragraphs. We thus focus on the essential charging allegations in those paragraphs, which include the following:

“2. Thayer and her spouse are co-owners of a resort membership. On August 14, 2007, Thayer's spouse entered into a written contract with Kabateck ... concerning that membership.... Thayer's spouse entered into a written contract with Steering Committee ... concerning that membership....

“3. Defendants entered into identical written contracts with more than 500 other owners of resort memberships.

“4. Thayer's spouse and defendants intended their contracts ... to affect Thayer, and she is a third-party beneficiary of those contracts.

“5. Each of those contracts requires defendants to prosecute group or mass actions on behalf of the above mentioned owners, excluding Thayer but including her spouse, against the same named entities ‘and related individuals and entities ... pertaining to the fraudulent sale [to those owners] of the resort memberships.’

“6. Defendants prosecuted actions on behalf of Thayer's spouse and the other owners, excluding Thayer, pertaining to the fraudulent sale to them of their resort memberships. Defendants prosecuted those actions against some, but not all, of the entities that are named in the contracts ... as being entities against which defendants would bring suit. Defendants also prosecuted those actions against other entities that are not so named in the contracts.... Thus, defendants [ sic ] representation of their clients required them to exclude from [207 Cal.App.4th 148]the lawsuits entities named in the contracts that had no liability, and to include in the lawsuits entities not named in the contracts that nevertheless might have liability.

“7. Thayer's spouse called to defendants' attention an entity, Rob McGrath, who had probable liability and whom defendants had not named. Defendants replied that their contracts ‘specifically limited’ them to suing only the entities named in the contracts as proposed defendants, that they had not sued McGrath, and that they did not know whether or not an action against McGrath would be time-barred.

“8. Defendants' contracts provided that Thayer's spouse and the other owners would have the right to make ‘substantive decisions in the handling’ of these actions. However, defendants gave Thayer's spouse no opportunity to do so. Defendants settled the action as to those entities that were named therein as defendants, and notified Thayer's spouse of the amount recovered, and of the amounts that defendants would deduct from that recovery for attorneys' fees and costs. Thayer's spouse called to defendants' attention, in writing,

[143 Cal.Rptr.3d 23]

an error in the computation of costs, but defendants made no response.”

The complaint then goes on to allege that “Thayer's spouse” asked for a breakdown of the disbursements, and then alleges this:

“10. Following defendant's collection of the proceeds of the settlement, ... [d]efendants have prepared and sent to each owner for signature and return, a “Disbursement Authorization” dated November 19, 2010.... According to that document, defendants have volunteered to donate a portion of each owner's share of those proceeds to a ‘Fraud Fund.’ Defendant Steering Committee previously had provided a ‘Confidential Memorandum’ dated October 29 concerning, among other things, this ‘Fraud Fund.’ Thayer's spouse has not agreed to any requirement of confidentiality concerning this memorandum....

“11. A substantial portion of the 521 owners who, according to defendants, ‘are participating in the Fraud...