Soukup v. Law Offices of Herbert Hafif

• Decision Date: 27 July 2006
• Docket Number: No. S126864.,No. S126715.,S126715.,S126864.
• Citation: 139 P.3d 30,39 Cal.4th 260,46 Cal.Rptr.3d 638
• Court: California Supreme Court
• Parties: Peggy J. SOUKUP, Plaintiff and Respondent, v. LAW OFFICES OF HERBERT HAFIF et al., Defendants and Appellants; Peggy J. Soukup, Plaintiff and Respondent, v. Ronald C. Stock, Defendant and Appellant.

46 Cal.Rptr.3d 638

39 Cal.4th 260

139 P.3d 30

Peggy J. SOUKUP, Plaintiff and Respondent, v. LAW OFFICES OF HERBERT HAFIF et al., Defendants and Appellants;

Peggy J. Soukup, Plaintiff and Respondent, v. Ronald C. Stock, Defendant

and Appellant.

No. S126715.

No. S126864.

Supreme Court of California.

July 27, 2006.

Ronald C. Stock, in pro. per., for Defendant and Appellant.

Law Offices of Herbert Hafif, Greg K. Hafif, Jeanne A. Sterba, Claremont; Law Offices of James J. Moneer, James J. Moneer; Aitken Aitken & Cohn, Darren O. Aitken and Wylie A. Aitken, Santa Ana, for Defendants and Appellants Law Offices of Herbert Hafif et al.

Peggy J. Soukup, in pro. per.; Law Offices of Gary L. Tysch, Gary L. Tysch; Dell'Ario & LeBouef and Alan Charles Dell'Ario, Oakland, for Plaintiff and Respondent.

MORENO, J.

[139 P.3d 268]

In this case, we determine whether a litigant whose action was dismissed under the anti-SLAPP statute (Code Civ. Proc., § 425.16) may, in turn, invoke that statute as a defense to a subsequent action for malicious prosecution and abuse of process.¹ Peggy J. Soukup was sued by her former employers. She obtained dismissal of their action under the anti-SLAPP statute and then sued them for malicious prosecution and abuse of process. Her former employers moved to strike Soukup's action as a SLAPP. The superior court denied the motion on the ground that the anti-SLAPP statute did not apply under these circumstances. The Court of Appeal reversed and we granted review.

While this case was pending, the Legislature amended the anti-SLAPP statute to add section 425.18, which defines "any cause of action for malicious prosecution or abuse of process arising from the filing or maintenance of a prior cause of action that has been dismissed pursuant to a special motion to strike under Section 425.16" as a "SLAPPback." (§ 425.18, subd. (b)(1).) The Legislature declared that SLAPPbacks "should be treated differently . . . from an ordinary malicious prosecution action because a SLAPPback is consistent with the Legislature's intent to protect the valid exercise of the constitutional rights of free speech and petition by its deterrent effect on SLAPP . . . litigation and by its restoration of public confidence in participatory democracy." (§ 425.18, subd. (a).) Section 425.18 exempts SLAPPbacks from certain procedures otherwise applicable to motions to strike under the anti-SLAPP statute and sets forth special procedures that apply only to SLAPPbacks. Additionally, subdivision (h) of the new section precludes the use of the anti-SLAPP statute to dismiss SLAPPbacks "by a party whose filing or maintenance of the prior cause of action from which the SLAPPback arises was illegal as a matter of law." (§ 425.18, subd. (h).)

As we explain, section 425.18 applies to pending cases like the one before us. We must determine, therefore, the effect of the amendment, and particularly subdivision (h), on this case.² We conclude that the filing and maintenance of defendants' underlying action cannot be characterized as "illegal as a matter of law" so as to exempt Soukup's malicious prosecution

[139 P.3d 269]

action from the anti-SLAPP statute. We further conclude that because, as demonstrated by its enactment of section 425.18, subdivision (h), the Legislature has decided against a categorical rule exempting SLAPPbacks from the anti-SLAPP statute, we are not at liberty to read such a broader exemption into the statute. However, while we conclude that defendants are not barred from using the anti-SLAPP statute to attempt to strike Soukup's action, there remains the question of whether Soukup has nonetheless demonstrated a probability of prevailing on her malicious prosecution claim so as to defeat defendants' motion. (See Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67, 124 Cal.Rptr.2d 507, 52 P.3d 685.) On this question, we conclude, contrary to the Court of Appeal, that she has demonstrated a probability of prevailing. Accordingly, we reverse the Court of Appeal.

I. FACTS AND PROCEDURAL HISTORY³

A. Events Leading to the Filing of the Underlying Action

1. Pension Plan Controversy

Defendant Law Offices of Herbert Hafif (LOHH) is a professional corporation whose sole stockholder is defendant Herbert Hafif (Hafif). Soukup was employed at LOHH from September 1989 until June 1993, first as a legal secretary and then as a paralegal.

Soukup was a participant in the firm's employee pension plan. In October 1992, she and other employees of LOHH were informed that the plan was being terminated and its assets would be distributed. A portion of the distribution was to be in the form of nonregistered privately-held stock. Soukup was advised by her stockbroker that this stock could not be deposited into her individual retirement account because it was not publicly traded and the value placed on the stock by the plan administrator could not be verified. She refused to sign the documentation for the transfer of the stock. This led to a confrontation with Hafif in which, according to Soukup, he told her "that

[139 P.3d 270]

if I did not sign . . . in the next two minutes, he would come across the desk and kick my ass. I refused to sign the documentation and left Herbert Hafif's office shaking and returned to my office downstairs."⁴

In June 1993, six weeks after her confrontation with Hafif, Soukup voluntarily terminated her employment with LOHH. On August 31, 1993, she met with an investigator from the United States Department of Labor and explained her concerns about the distribution of the LOHH employee pension assets. She provided the investigator with documents regarding the pension plan. The Department of Labor launched an investigation into LOHH's pension plan but ultimately no action was taken against LOHH.

In September 1995, Soukup filed an action in federal district court under the Employment Retirement Income Security Act (ERISA) (29 U.S.C, § 1140) for recovery of pension benefits. Similar actions were filed by other former LOHH employees. LOHH filed motions to dismiss the actions, which the district court then converted into summary judgment motions and granted. On appeal, however, the Ninth Circuit reversed the summary judgment for LOHH on claims by Soukup and other employees for plan benefits. Soukup and LOHH eventually settled the federal action.

2. Phillip Benson's Departure From LOHH and His Subsequent Wrongful Termination Claim

Phillip Benson was employed at LOHH as an associate attorney during much of the time that Soukup worked there. Soukup and Benson spoke on almost a daily basis. Soukup became aware that Benson was concerned about certain business practices at the firm. Soukup, too, was starting to question some of the firm's procedures, including the billing of costs and fees. She and Benson shared their concerns.

In March or April 1993, Benson left LOHH, taking some clients with him. Relations between Benson and Hafif quickly deteriorated after he left the firm. In January 1994, Benson telephoned Soukup and told her he had filed a cross-complaint against Hafif alleging wrongful termination in violation of public policy in litigation Hafif had brought against him. He said his cross-complaint referred to two cases that Soukup had worked on while employed at LOHH. Soukup became extremely upset with him because there were confidentiality agreements in those cases that, if breached prematurely,

[139 P.3d 271]

could put the settlements in jeopardy. Benson assured her that he had not disclosed any of the confidential terms of the settlements. It was not until January 1995 that Soukup became aware of the actual contents of Benson's complaint. She was upset to discover that he had named the clients in two cases and stated there had been settlements. However, to her knowledge, there were no repercussions from Benson's disclosure of this information.

Soukup was served with a deposition subpoena by Hafif in connection with Benson's wrongful termination claim. She attended the deposition and answered Hafif's questions regarding her knowledge of misconduct committed by Hafif or his son, Gregory Hafif, an attorney employed by LOHH.

3. Actions Against Hafif by His Former Clients

Between June 1993 and February 1994, a number of former clients of Hafif filed a series of State Bar complaints and lawsuits against him generally alleging that Hafif had charged the former clients excessive costs and fees. Among these former clients was Terrie Hutton, whom Hafif had represented in a sex discrimination case against GTE. In June 1993, represented by a lawyer named Sasson Sales, Hutton sued Hafif, LOHH and others alleging causes of action for breach of fiduciary duty, fraud and professional negligence. Sales also filed actions against Hafif on behalf of Leo Barajas and Max Killingsworth, whom Hafif had represented in whistleblower suits against Northrup Corporation. Terry Schielke and Clyde Jones, whom Hafif had represented in wrongful termination actions against Lockheed Corporation, also sued Hafif. Schielke and Jones were not represented by Sales, but by another attorney.⁵

On November 20, 1993, two newspaper articles appeared in the Orange County Register about Hafif. One article was about the State Bar complaints and lawsuits. It noted that the complaints and suits were based on allegations that Hafif had overcharged his former clients, and it reported Benson's

[139 P.3d 272]

allegation that he had left the firm for that reason. The article also noted that Hafif vehemently rejected the allegations. The second article reported the Department of Labor's investigation into LOHH's employee pension plan. The pension plan article quoted Soukup's version of her confrontation with Hafif and Hafif's denial that he had ever threatened Soukup.

B. The Underlying Action

1. Hafif Files an Action for Malicious Prosecution and Other Claims Against Soukup and Others

In July 1994, LOHH and Hafif filed an action in ...