Hart v. Larson

• Citation: 232 F.Supp.3d 1128
• Decision Date: 03 February 2017
• Docket Number: Case No.: 3:16–cv–01460–BEN–MDD
• Court: U.S. District Court — Southern District of California
• Parties: Hoyt HART, Plaintiff, v. Scott R. LARSON, Scott R. Larson, P.C., Does 1–10, inclusive, Defendants.

232 F.Supp.3d 1128

Hoyt HART, Plaintiff,

v.Scott R. LARSON, Scott R. Larson, P.C., Does 1–10, inclusive, Defendants.

Case No.: 3:16–cv–01460–BEN–MDD

United States District Court, S.D. California.

Signed February 3, 2017

Filed February 7, 2017

William R. Fuhrman, Law Offices of William Robert Fuhrman, Encinitas, CA, for Plaintiff.

Roger Cooling Haerr, Law Office of Roger C. Haerr, San Diego, CA, for Defendants.

ORDER:

(1) DENYING DEFENDANTS' SPECIAL MOTION TO STRIKE (ANTI–SLAPP)

(2) DENYING DEFENDANTS' MOTION FOR PARTIAL JUDGMENT ON THE PLEADINGS;

(3) GRANTING PLAINTIFF'S MOTION TO AMEND

HON. ROGER T. BENITEZ, United States District Judge

Before the Court are the Special Motion to Strike (Anti–SLAPP)¹ and the Motion for Partial Judgment on the Pleadings filed by Defendants Scott Larson and Scott Larson, P.C. (hereinafter, "Larson"), and the Motion to Amend Complaint filed by Plaintiff Hoyt Hart. (Docket Nos. 6, 7, 24.) The motions are fully briefed. The Court finds the motions suitable for determination on the papers without oral argument, pursuant to Civil Local Rule 7.1.d.1. For the reasons set forth below, Defendants' Special Motion to Strike and Motion for Partial Judgment are DENIED, and Plaintiff's Motion to Amend is GRANTED.

BACKGROUND²

In or around August 2014, Larson, a Colorado based attorney, contacted Plaintiff, a California based attorney, by telephone "to request local counsel assistance" with a case involving a substantial brain injury to a Colorado resident (the "Storm case"). (Compl. ¶ 5.) Larson indicated that "$5.8 Million had been offered from the latest mediation" with the Storm defendants, and that filing a lawsuit in California was necessary to "effectively prosecute the Storm claims" (Id. ) Larson and Plaintiff agreed that Plaintiff would "file the lawsuit in San Diego Superior Court and work as California counsel on behalf of the Storm plaintiffs." (Id. ) The parties further agreed that Plaintiff would receive, as compensation for his services, forty percent (40%) of "the attorney fees attributable to an award or settlement obtained in excess of $5.8 million, based on the contingency fee" agreement between Larson and the Storm plaintiffs. (Id. )

The day after their initial conversation, Larson telephoned Plaintiff and told him the Storm defendants "had just then raised their [settlement] offer to $8 million, and that [the Storm] plaintiffs would accept $10 million to settle their case." (Id. ) Based on these representations, Plaintiff agreed to modify the original fee splitting agreement. Instead of forty percent (40%) of the attorney fees obtained in excess of $5.8 million, Plaintiff would receive forty-five percent (45%) of the attorney fees obtained in excess of $8 million. Thereafter, Plaintiff filed the Storm case³ and spent over eighteen (18) months litigating it, which ultimately resolved in settlement for the Storm plaintiffs in excess of $10 million.

After Plaintiff began representing the Storm plaintiffs, Larson allegedly concealed from Plaintiff two settlement offers from the Storm Defendants: one for $6.3 million in October 2014, and one for $6.8 million in November 2014. Additionally, on May 18, 2015, Plaintiff attended a mediation in Larson's Denver office, which Larson and one of the Storm plaintiffs also attended. During the mediation, the Storm defendants offered $8 million to settle the case, and Plaintiff complained aloud to the mediator that the Storm defendants "was offering no more than had been offered nine months earlier." (Compl. ¶ 8.) Neither Larson nor the Storm plaintiff corrected Plaintiff's statement to the mediator.

In February 2016, Plaintiff participated in settlement negotiations with counsel for the Storm defendants. It was during these settlement negotiations that Plaintiff learned from defense counsel about Larson's alleged misrepresentation about the timing of the Storm defendants' $8 million offer and Larson's alleged concealment of the October 2014 and November 2014 offers. On or about March 3, 2016, Plaintiff received the settlement checks for the Storm case, which totaled more than $10 million. Due to an inadvertent error, Plaintiff's name was omitted from the settlement checks. At the request of one of the Storm plaintiffs, Plaintiff did not have the checks reissued, and instead sent the checks directly to the Storm plaintiffs. To date, Larson has paid Plaintiff approximately ten percent (10%) of the attorney fees. Larson "agreed to hold another $425,000" in trust pending resolution of the instant action. (Compl. ¶ 10.)

On May 12, 2016, Plaintiff filed the instant action, asserting two claims for relief for fraud and quantum meruit in a California Superior Court. (Docket No. 1.) On June 13, 2016, Defendants removed this action to the federal district court on the basis of diversity jurisdiction pursuant to 28 U.S.C. §§ 1441(b) and 1446. (Id. ) On June 27, 2015, Defendants concurrently filed their Motion to Strike and Motion for Partial Judgment. (Docket Nos. 6, 7.) On October 24, 2016, Plaintiff filed his Motion to Amend. (Docket No. 24.)

DISCUSSION

I. Defendants' Special Motion to Strike (Anti–SLAPP)

Defendants filed a Special Motion to Strike ("anti–SLAPP Motion") seeking dismissal of Plaintiff's fraud claim pursuant to California Code of Civil Procedure section 425.16.⁴ (Docket No. 6.)

A. California's Anti–SLAPP Statute⁵

"California's anti–SLAPP statute authorizes a ‘special motion to strike’ any ‘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 ... in connection with a public issue.’ " Safari Club Int'l v. Rudolph, 845 F.3d 1250, 1256–58 (9th Cir. 2017) (quoting Cal. Civ. Proc. Code § 425.16(b)(1) ). A court evaluating an anti–SLAPP motion first determines whether the defendant has shown the challenged claim "aris[es] from" activity taken "in furtherance" of the defendant's right of petition or free speech. Ibid. "If so, the burden shifts to the plaintiff to show ‘a [reasonable] probability of prevailing on the challenged claims.’ " Safari Club Int'l, supra, (quoting Mindys Cosmetics, Inc. v. Dakar, 611 F.3d 590, 595 (9th Cir. 2010) ).

As used in section 425.16, "an ‘act in furtherance of a person's right of petition or free speech under the United States or California Constitution in connection with a public issue’ includes:"

(1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law,

(2) any written or oral statement or writing 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,

(3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest, or

(4) any other conduct 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.

Cal. Civ. Proc. Code § 425.16(e).

Evaluating the merits of an anti–SLAPP motion requires a court to engage in a two-part inquiry. Doe v. Gangland Prods., Inc., 730 F.3d 946, 953 (9th Cir. 2013) (citing Marijanovic v. Gray, York & Duffy, 137 Cal.App.4th 1262, 1270, 40 Cal.Rptr.3d 867 (2006) ); see also Coretronic Corp. v. Cozen , 192 Cal.App.4th 1381, 1387, 121 Cal.Rptr.3d 254 (2011). First, the defendant, must make a prima facie showing that each claim against him "aris[es] from" activity taken "in furtherance" of his or her right to petition or free speech. Safari Club Int'l, supra, 845 F.3d at 1256–58 (quoting Cal. Civ. Proc. Code § 425.16(b)(1) ). If the defendant meets this initial showing, the burden shifts to the plaintiff to demonstrate "a [reasonable] probability of prevailing on the claims" Id. at 1260–61 (quoting Mindys Cosmetics, Inc., supra, 611 F.3d at 595 ). If the plaintiff fails to demonstrate a probability of prevailing on a claim, the claim is stricken. Doe, supra, at 953, (citing Navellier v. Sletten, 29 Cal.4th 82, 89, 124 Cal.Rptr.2d 530, 52 P.3d 703 (2002) ). In conducting its evaluation of an anti-SLAPP motion, a court must "consider the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based." Id. (quoting Cal. Code Civ. Proc. § 425.16(b)(2) ).

The Court finds Defendants failed to establish the requisite initial showing that Plaintiff's fraud claim arose out of protected activity.

1. "Arising from" Protected Activity

As discussed above, it is the defendant's burden to make an initial showing that one or more claims arise from an act in furtherance of the defendant's constitutional right of petition or free speech in connection with a public issue. Safari Club Int'l, supra, 845 F.3d at 1256–58. "[T]he critical consideration is whether the cause of action is based on the defendant's protected" conduct. Id. (quoting Navellier, supra, 29 Cal.4th at 89, 124 Cal.Rptr.2d 530, 52 P.3d 703 ). More specifically, "the act underlying" the plaintiff's claim or the act "which forms the basis of" the plaintiff's claim "must itself have been an act in furtherance of the right of petition or free speech." Id. (quoting Equilon Enters. v. Consumer Cause, Inc., 29 Cal.4th 53, 66, 124 Cal.Rptr.2d 507, 52 P.3d 685 (2002) (internal citation omitted)).

In the first-step of the anti–SLAPP analysis, arguments about the merits of the claims are irrelevant. Coretronic Corp., supra, 192 Cal.App.4th at 1388, 121 Cal.Rptr.3d 254 (citing Freeman v. Schack, 154 Cal.App.4th 719, 733, 64 Cal.Rptr.3d 867 (2007) (it is irrelevant that defendant might prevail on the merits of the claims where defendant cannot meet the first prong of the analysis)); see also Birkner v. Lam , 156 Cal.App.4th 275, 284, 67 Cal.Rptr.3d 190 (2007) (affirmative defenses, such as the litigation privilege, are not relevant to the first...