McMahon v. West
| Decision Date | 01 October 2003 |
| Docket Number | B154225. |
| Parties | BRIAN McMAHON, Plaintiff and Respondent, v. DAVID WEST et al., Defendants and Appellants. |
| Court | California Court of Appeals Court of Appeals |
APPEAL from orders of the Superior Court of Los Angeles County, Super. Ct. No. BC250918, Richard C. Hubbell and Robert L. Hess, Judges. Reversed and remanded.
Law Offices of Manuel S. Klausner and Manuel S. Klausner; Patrick J. Manshardt, in pro. per., and for Defendants and Appellants.
No appearance for Plaintiff and Respondent.
David West, Manuel Klausner and Patrick Manshardt (collectively "individual defendants") appeal from the trial court's orders denying their special motions to strike under Code of Civil Procedure section 425.16.1 We reverse.
The Individual Rights Foundation (IRF) is a public interest law project of the Center for the Study of Popular Culture (Center), a public benefit corporation organized under section 501(c)(3) of the Internal Revenue Code. The mission of the Center is "to strengthen the cultural foundations of a free society." The purpose of the IRF is to further the First Amendment rights of college administrators and government officials. The IRF refers potential clients to attorneys in its national network of lawyers who volunteer their time for the organization and then, if legal action is pursued, pays litigation expenses and provides media support and fundraising efforts.
Brian McMahon contacted the IRF because he believed he had been terminated from his position at El Camino Community College in retaliation for reporting that the college was enrolling "phantom students" to receive additional funding. McMahon had filed suit in state court against El Camino in propria persona and wanted the IRF to sponsor his case. The IRF agreed and referred the case to Manshardt, an attorney affiliated with the IRF, who undertook representation of McMahon in the pending state court action and also filed a federal civil rights action against the college on McMahon's behalf. McMahon signed an engagement letter prepared by Manshardt, which outlined the terms of their attorney-client relationship. Klausner, another lawyer affiliated with the IRF, associated in as counsel for McMahon; and a similar engagement letter was signed by Klausner and McMahon.
McMahon's federal court action was dismissed on statute of limitations grounds. After a bench trial in the state court action, the trial court ruled against McMahon, finding his allegations were not credible.
Subsequently, McMahon contacted Klausner and asserted that he and Manshardt had failed to disclose that West, another lawyer affiliated with the IRF, was a partner in the law firm of Gibson, Dunn & Crutcher, which had represented El Camino, and that, as a result, Manshardt and Klausner had a conflict of interest in representing McMahon. Klausner responded that West's role with the IRF had been limited to providing tax advice, serving on the advisory board and reviewing proposed cases for IRF to support and that West had received no communication on, or been involved in, McMahon's case other than general descriptions contained in memoranda reporting on all IRF matters. McMahon also called West to discuss his conflict of interest allegations. West explained that neither he nor Gibson, Dunn had represented McMahon or El Camino in any matters related to McMahon's claims against the college, that West personally had never represented El Camino and that other Gibson, Dunn lawyers had represented El Camino only on matters completely unrelated to McMahon's claims. West later confirmed no Gibson, Dunn lawyer had performed legal services for El Camino for more than 16 months before McMahon had engaged Manshardt as his counsel.
At the time McMahon asserted his conflict of interest claim, the due date was approaching for a petition for writ of certiorari in McMahon's federal action. Klausner informed McMahon that, based on his assertions of a conflict of interest, neither Klausner nor Manshardt could continue to represent McMahon without a waiver of the alleged conflict for the limited purpose of filing the petition. McMahon did not waive the conflict, and the petition was never filed.
McMahon filed suit against the Center, David Horowitz, the president of the Center, the IRF, Klausner, Manshardt and West, alleging causes of action for: (1) accounting against the Center, IRF and Horowitz to determine the amount of funds that were collected on McMahon's behalf yet improperly diverted for other purposes; (2) conversion against Horowitz on the ground he personally directed the improper use of funds collected on McMahon's behalf; (3) fraud against the Center, IRF and Horowitz on the grounds they falsely represented the IRF as a law firm, entered an illegal side agreement to split fees with Manshardt and Klausner and intended to convert money raised for McMahon's benefit; (4) fraud and breach of fiduciary duty against West, Klausner and Manshardt on the grounds they improperly represented McMahon and El Camino simultaneously without disclosing the conflict to McMahon, they intentionally concealed from McMahon the IRF was found to have been practicing law without a license, they raised funds under false pretenses, Klausner and Manshardt secretly entered an illegal side agreement to split fees with Horowitz, and Klausner and Manshardt failed to argue equitable tolling to avoid dismissal of McMahon's federal suit on statute of limitations grounds, file the petition for writ of certiorari in his federal case unless he waived the conflict of interest, timely request leave to amend the complaint in his state court action, adequately prepare for and conduct the trial in his state court action and preserve a record for appeal; (5) conspiracy to commit fraud against all defendants; (6) breach of the covenant of good faith and fair dealing against all defendants; (7) conspiracy to commit breach of fiduciary duty against all defendants; and (8) intentional infliction of emotional distress against all defendants on the ground that Klausner and Manshardt threatened to withhold the filing of the petition for writ of certiorari unless McMahon waived the conflict of interest created when West simultaneously represented both McMahon and El Camino.2
Two special motions to strike McMahon's complaint as a SLAPP (strategic lawsuit against public participation) suit under section 425.16 were filed, one by West and one by Klausner and Manshardt, arguing McMahon's allegations arise from their exercise of their rights to petition and free speech. The trial court (Judge Richard C. Hubbell) denied the motions on August 29, 2001 on the ground the threshold showing required for application of the anti-SLAPP statute had not been made because McMahon's allegations of misappropriating and converting funds, unlawful fee splitting and undertaking conflicting representation did not involve conduct in furtherance of First Amendment rights.
The IRF filed a section 170.6 peremptory challenge to Judge Hubbell, which was accepted, and the case was transferred to Judge Robert L. Hess. The IRF then filed its own special motion to strike, and West, Klausner and Manshardt filed a renewed special motion to strike. Judge Hess denied the IRF's motion on October 19, 2001 and the individual defendants' renewed motion on October 26, 2001. As to both motions, the court again found the threshold showing of conduct in furtherance of the right of free speech or petition had not been satisfied.3
The individual defendants appealed from the trial court's orders of August 29, 2001 and October 26, 2001. (§ 425.16, subd. (j).) Although the appellants' opening brief4 also addresses the October 19, 2001 order denying the IRF's motion, no separate notice of appeal was filed by the IRF, and the October 19, 2001 order is not identified in the notice filed by the individual defendants. Accordingly, the propriety of the trial court's ruling as to the IRF's motion is not before us. (DeZerega v. Meggs (2000) 83 Cal.App.4th 28, 43 []'")
The individual defendants contend the trial court erred by denying their special motions to strike under section 425.16 because McMahon's lawsuit against them arises from their acts in furtherance of the rights of free speech and petition and, therefore, the anti-SLAPP statute applies.
Section 425.16 — the anti-SLAPP statute — provides, "A 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 under the United States or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim." (§ 425.16, subd. (b)(1).) Under the statute 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; (4) or any other...
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