Oasis West Realty v. Goldman , 51 Cal. 4th 811 ( 2011 )

Filed 5/16/11
IN THE SUPREME COURT OF CALIFORNIA
OASIS WEST REALTY, LLC, )
)
Plaintiff and Respondent, )
) S181781
v. )
) Ct.App. 2/5 B217141
KENNETH A. GOLDMAN et al., )
) Los Angeles County
Defendants and Appellants. ) Super. Ct. No. SC101564
____________________________________)
In 2004, defendant Attorney Kenneth A. Goldman agreed to represent
plaintiff Oasis West Realty, LLC (Oasis) in its effort to obtain approval of a
redevelopment project from the Beverly Hills City Council. Goldman terminated
the representation about two years later. In 2008, Goldman became involved in a
campaign to thwart the same redevelopment project by soliciting signatures on a
referendum petition to overturn the Beverly Hills City Council‟s approval of the
project. Shortly after the voters upheld the city council‟s approval by a very
narrow margin, Oasis filed a complaint for breach of fiduciary duty, professional
negligence, and breach of contract against Goldman and his law firm, Reed Smith,
LLP.
1
Defendants filed a special motion to strike the complaint under the anti-
SLAPP statute,1 contending that all of Oasis‟s causes of action arose from
Goldman‟s acts “in furtherance of [his] right of petition or free speech . . . in
connection with a public issue.” (§ 425.16, subd. (b)(1).) The trial court held that
the anti-SLAPP statute did not apply, in that the gravamen of the causes of action
was not Goldman‟s petitioning activity but his breach of the duties of loyalty and
confidentiality, and denied the motion without considering whether Oasis had
demonstrated a probability of prevailing on its claims. The Court of Appeal
reversed, finding both that Oasis‟s claims arose from protected activity and that
Oasis had failed to demonstrate a probability of prevailing on them. Even though
the court found, and the parties agreed, that Goldman had acted adversely to his
former client with respect to an ongoing matter that was the precise subject of the
prior representation, the court declared that there is “no authority for a rule which
would bar an attorney from doing what Goldman did here.”
We disagree. As demonstrated below, we conclude that Oasis has stated
and substantiated the sufficiency of its legal claims against its former attorneys.
BACKGROUND
In early 2004, plaintiff Oasis embarked on a plan to redevelop and
revitalize a nine-acre parcel it owned in Beverly Hills by erecting a five-star hotel
and luxury condominiums. A Hilton hotel was already on the property, and the
1 SLAPP is an acronym for “strategic lawsuit against public participation.”
(Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 57.) In 1992,
the Legislature, finding there had been “a disturbing increase in lawsuits brought
primarily to chill the valid exercise of the constitutional rights of freedom of
speech and petition for the redress of grievances” (Code Civ. Proc., § 425.16,
subd. (a)), enacted Code of Civil Procedure section 425.16 (hereafter section
425.16) to provide a remedy against such lawsuits.
2
project is often referred to as the Hilton project. The Hilton project required the
approval of the Beverly Hills City Council.
On January 26, 2004, Oasis retained defendant Attorney Kenneth A.
Goldman (Goldman) and his law firm, defendant Reed Smith, LLP (Reed Smith),
to provide legal services in connection with the Hilton project. According to the
engagement letter, Goldman was to “have overall responsibility for this matter.”
Oasis has alleged that it hired Goldman “because, among other things, he was an
attorney reputed to be an expert in civic matters and a well-respected, influential
leader who was extremely active in Beverly Hills politics.” Oasis said it believed
that “Goldman‟s statements and opinions on City development matters bore
significant influence on City Council members and the local citizenry,”
particularly on members of the Southwest Homeowners Association, of which he
was the president.
During the representation, Goldman became “intimately involved in the
formulation of the plan for Oasis‟[s] development of the Property, its overall
strategy to secure all necessary approvals and entitlements from the City and its
efforts to obtain public support for the Project. Mr. Goldman was a key Oasis
representative in dealing with Beverly Hills City Officials, including the Planning
Commission and City Council. Throughout the representation, Oasis revealed
confidences to Mr. Goldman, which it reasonably believed would remain forever
inviolate.” Reed Smith, in turn, received about $60,000 in fees. In April 2006,
Goldman advised Oasis that he and Reed Smith would no longer represent Oasis
in connection with the Hilton project.
Oasis‟s development proposal was presented to the city council in June
2006, after the representation had ended. For the next two years, the council and
the city‟s planning commission reviewed thousands of pages of technical studies,
held over 18 hearings, and received input from hundreds of community members.
3
In April 2008, the council certified the environmental impact report and adopted a
General Plan Amendment Resolution and the Beverly Hilton Specific Plan
Resolution with Conditions of Approval, which paved the way for final approval
of the Hilton project.
Shortly thereafter, a group of Beverly Hills residents opposed to the
General Plan Amendment formed the Citizens Right to Decide Committee, with
the goal of putting a referendum on the ballot that would allow voters to overturn
the city council‟s approval of the Hilton project. It was at this point that Goldman
engaged in the conduct that is of concern in this proceeding.
According to the complaint, Goldman “lent his support” to the group
opposing the Hilton project; “campaigned for and solicited signatures for a
Petition circulated by said citizen‟s group that sought to abrogate the City
Council‟s approval of the Project and instead place approval in the hands of the
citizenry by proposition vote on November 4, 2008 (Measure „H‟)”; and
“distributed a letter seeking to cause residents of Beverly Hills to sign the Petition
for the purpose of placing a referendum on the ballot, asking Beverly Hills voters
to overturn approval of the Project.” In a declaration filed in support of the special
motion to strike, Goldman confirmed that on or about May 12, 2008, the day the
city council provided final approval to the Hilton project, he and his wife walked
their street to solicit signatures for the petition to overturn the council‟s decision.
Goldman estimated that they spoke to 10 neighbors and collected five or six
signatures over a period of less than an hour and a half, and that he left a note at
four or five homes where there was no response.2 Goldman estimated that through
2 The note read as follows:
“LORI AND KEN GOLDMAN
“Dear Neighbor:
(footnote continued on next page)
4
the couple‟s joint effort on May 12 as well as additional work by his wife, they
managed to collect approximately 20 signatures. Goldman insisted that he at no
time disclosed confidential information acquired during the representation of
Oasis to anyone, and did not believe that he disclosed to anyone that he had ever
represented Oasis in connection with the Hilton project.3
(footnote continued from previous page)
“Sorry we missed you when we stopped by.
“We stopped by to see if you would sign the Referendum Petition to overturn the
City Council‟s recent approval of the Hilton plans. The Council approved an
additional 15-story Waldorf-Astoria Hotel (where Trader Vic[‟]s is now), a new
16-story condo tower on the corner of Merv Griffin Way and Santa Monica and a
new 6-8 story condo tower on the corner of Wilshire and Merv Griffin Way. At
the last minute, the Council also allowed the developer to remove one of the floors
of parking that they had previously agreed to add! And all of this in addition to
the 232 condos that the Council had just finished approving on the Robinson‟s-
May site. And all of this at one of the busiest intersections on the entire Westside!
“And all this is in the name of more and more revenue. And they don‟t even make
any plans to seriously correct the awful intersection and lines of waiting traffic
that will grow and grow.
“So we will sign the Referendum Petition and urge you to do likewise. Please call
us at (310) 552-. . . to figure out a convenient time to sign. We have only 2
weeks!
“Ken and Lori”
3 Goldman also attended a city council meeting on May 6, 2008, to oppose
enforcement, unsuccessfully, of the requirement that persons soliciting signatures
for a referendum petition carry the full text of the resolution, including
voluminous documents that had been incorporated therein. Goldman‟s remarks, in
full, were as follows:
“Good evening members of the Council. I am here to speak on a very
narrow issue concerning the Hilton that has been discussed and alluded to tonight.
It is hard for me to believe that anyone in this Chamber would view it as being
fair, whether you‟re for the Hilton or for the Referendum, to have to carry around
15 1/2 pounds of material from home to home to home to home, whether you‟re
15 years old or 85 years old. It‟s never been done. [¶] We all know it‟s not
necessary to inform anybody to whom a petition is being presented. They don‟t
need to read the entire EIR, the entire draft EIR, never been done. I dare say 99
(footnote continued on next page)
5
In a letter to Reed Smith dated May 14, 2008, Oasis criticized Goldman‟s
conduct as a “manifest violation of both his and your firm‟s fiduciary obligations
as our prior counsel” and demanded that Goldman and Reed Smith “immediately
and unconditionally terminate and withdraw from any and all activities that may in
any manner be construed as adverse to the Project, its approval or Oasis‟[s]
interests.” Reed Smith responded by letter the same day that pending its review of
these allegations, Goldman and the firm had agreed not to “engage in any actions
concerning the referendum petition that is being circulated.” In a letter sent the
next day, Oasis insisted that “remedial action” be taken immediately to minimize
further damage and proposed that Goldman and his wife (“as mutual agents of the
other”) “retract the letter and their support for the petition and referendum.”
The citizens‟ committee collected the necessary signatures to place the
proposed General Plan Amendment on the ballot as Measure H. Measure H,
which ratified the city council‟s decision, was passed by voters on November 2,
2008, by a margin of 129 votes.
(footnote continued from previous page)
percent of the people in this room, whether they are for the Hilton or whether they
are against the Hilton, none of them have read the entire EIR and DEIR. It‟s just
not necessary. You can take the executive summary, you can take the resolution.
[¶] I know every single one of you. I know every single one of you is fair and
right and I cannot believe that you would think it is fair and right, whether you‟re
for it or against it, to have someone, to require someone to carry that kind of
material around with them when they are trying to seek whatever they are trying to
seek. We‟ve never done this before in this city, we shouldn‟t do it now. It‟s just
not right; again, whether you‟re for the Hilton or for the Referendum. Don‟t
require it, because it‟s not fair and each of the five of you knows that. It‟s not
right. It‟s not necessary to inform the citizenry. There‟s a lot of material there.
Nobody is going to read through that. Nobody that‟s spoken tonight, I guarantee
you, I haven‟t read through that. Thank you.”
6
On January 30, 2009, Oasis filed the pending lawsuit against Goldman and
Reed Smith for breach of fiduciary duty, professional negligence, and breach of
contract, seeking damages in excess of $4 million. Defendants filed a special
motion to strike under section 425.16 on March 9, 2009. The trial court denied the
special motion to strike, finding that the anti-SLAPP statute did not apply. The
trial court determined that the “gravamen” of this action was Goldman‟s breach of
his duty of loyalty and confidentiality as well as his duty to disclose adverse
interests at the outset of the representation, not his solicitation of signatures for the
referendum petition or speaking at the city council meeting. Because defendants
had failed to make a threshold showing that the causes of action arose from
protected activity, the trial court found no need to address the second step of the
anti-SLAPP inquiry—i.e., whether Oasis had established a probability of
prevailing at trial.
The Court of Appeal reversed in a published opinion. The court
acknowledged our oft-quoted warning in Wutchumna Water Co. v. Bailey (1932)
216 Cal. 564, 573-574—that “an attorney is forbidden to do either of two things
after severing his relationship with a former client. He may not do anything which
will injuriously affect his former client in any manner in which he formerly
represented him nor may he at any time use against his former client knowledge or
information acquired by virtue of the previous relationship”—but decided that
such a “sweeping statement” applied only “in the context of subsequent
representations or employment” and did not govern “the acts an attorney takes on
his or her own behalf.” Although Goldman “unquestionably acted against the
interest of his former client, on the issue on which he was retained,” the Court of
Appeal found that Oasis had not stated a claim for breach of duty or violation of
professional ethics, inasmuch as Goldman had not undertaken a “second attorney-
client relationship or second employment of any kind” with an adverse interest,
7
was no longer representing Oasis as a current client, and had not disclosed
confidential information acquired during the representation. Based on the
foregoing, the court deduced that the challenged causes of action must therefore
have arisen from protected conduct, concluded further that Oasis had failed to
establish a probability of prevailing on its claims, and reversed the order denying
defendants‟ anti-SLAPP motion.
DISCUSSION
Section 425.16, subdivision (b)(1), 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 the 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.” The analysis of an anti-SLAPP motion
thus involves two steps. “First, the court decides 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).) If the court finds such a showing has
been made, it then must consider whether the plaintiff has demonstrated a
probability of prevailing on the claim.” (City of Cotati v. Cashman (2002) 29
Cal.4th 69, 76.) “Only a cause of action that satisfies both prongs of the anti-
SLAPP statute—i.e., that arises from protected speech or petitioning and lacks
even minimal merit—is a SLAPP, subject to being stricken under the statute.”
(Navellier v. Sletten (2002) 29 Cal.4th 82, 89.) We review an order granting or
denying a motion to strike under section 425.16 de novo. (Soukup v. Law Offices
of Herbert Hafif (2006) 39 Cal.4th 260, 269, fn. 3.)
Ordinarily we would proceed to consider the two prongs in order. In light
of this court‟s “inherent, primary authority over the practice of law” (Obrien v.
Jones (2000) 23 Cal.4th 40, 57), however, we will proceed in these particular
8
circumstances directly to the second prong, inasmuch as we have readily found
that Oasis has demonstrated a probability of prevailing on its claims.
To satisfy the second prong, “a plaintiff responding to an anti-SLAPP
motion must „ “state[] and substantiate[] a legally sufficient claim.” ‟ [Citations.]
Put another way, the plaintiff „must demonstrate that the complaint is both legally
sufficient and supported by a sufficient prima facie showing of facts to sustain a
favorable judgment if the evidence submitted by the plaintiff is credited.‟ ”
(Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 821.) “We consider
„the pleadings, and supporting and opposing affidavits . . . upon which the liability
or defense is based.‟ (§ 425.16, subd. (b)(2).) However, we neither „weigh
credibility, [nor] compare the weight of the evidence. Rather, [we] accept as true
the evidence favorable to the plaintiff [citation] and evaluate the defendant‟s
evidence only to determine if it has defeated that submitted by the plaintiff as a
matter of law.‟ ” (Soukup v. Law Offices of Herbert Hafif, supra, 39 Cal.4th at p.
269, fn. 3.) If the plaintiff “can show a probability of prevailing on any part of its
claim, the cause of action is not meritless” and will not be stricken; “once a
plaintiff shows a probability of prevailing on any part of its claim, the plaintiff has
established that its cause of action has some merit and the entire cause of action
stands.” (Mann v. Quality Old Time Service, Inc. (2004) 120 Cal.App.4th 90, 106,
original italics.)
We shall consider the causes of action for breach of fiduciary duty,
professional negligence, and breach of contract together, as all three claims are
based on Goldman‟s alleged breach of his duties as former counsel to Oasis. The
elements of a cause of action for breach of fiduciary duty are the existence of a
fiduciary relationship, breach of fiduciary duty, and damages. (Shopoff & Cavallo
LLP v. Hyon (2008) 167 Cal.App.4th 1489, 1509.) The elements of a cause of
action for professional negligence are (1) the existence of the duty of the
9
professional to use such skill, prudence, and diligence as other members of the
profession commonly possess and exercise; (2) breach of that duty; (3) a causal
connection between the negligent conduct and the resulting injury; and (4) actual
loss or damage resulting from the professional negligence. (Ibid.) And the
elements of a cause of action for breach of contract are (1) the existence of the
contract, (2) plaintiff‟s performance or excuse for nonperformance, (3)
defendant‟s breach, and (4) the resulting damages to the plaintiff. (Reichert v.
General Ins. Co. (1968) 68 Cal.2d 822, 830.)
The complaint identifies a number of acts of alleged misconduct and
theories of recovery, but for purposes of reviewing the ruling on an anti-SLAPP
motion, it is sufficient to focus on just one. Oasis contends that Goldman, as its
lawyer, was “a fiduciary . . . of the very highest character” and bound “to most
conscientious fidelity—uberrima fides.” (Cox v. Delmas (1893) 99 Cal.104, 123.)
Among those fiduciary obligations were the duties of loyalty and confidentiality,
which continued in force even after the representation had ended. (Wutchumna
Water Co. v. Bailey, supra, 216 Cal. at pp. 573-574.) As we have previously
explained, “[t]he effective functioning of the fiduciary relationship between
attorney and client depends on the client‟s trust and confidence in counsel.
[Citation.] The courts will protect clients‟ legitimate expectations of loyalty to
preserve this essential basis for trust and security in the attorney-client
relationship.” (People ex rel. Dept. of Corporations v. Speedee Oil Change
Systems, Inc. (1999) 20 Cal.4th 1135, 1146-1147.) Accordingly, “an attorney is
forbidden to do either of two things after severing [the] relationship with a former
client. [The attorney] may not do anything which will injuriously affect [the]
former client in any matter in which [the attorney] formerly represented [the
client] nor may [the attorney] at any time use against [the] former client
knowledge or information acquired by virtue of the previous relationship.”
10
(Wutchumna Water Co., supra, 216 Cal. at pp. 573-574; see People ex rel.
Deukmejian v. Brown (1981) 29 Cal.3d 150, 155 [quoting Wutchumna Water Co.];
Brand v. 20th Century Ins. Co./21st Century Ins. Co. (2004) 124 Cal.App.4th 594,
602 [same].)
Oasis contends that defendants violated this prohibition in a number of
ways. Oasis asserts in particular that Goldman acquired confidential and sensitive
information relating to the Hilton project through the course of the representation
(see also People ex rel. Deukmejian v. Brown, supra, 29 Cal.3d at p. 156 [a
presumption that confidences were disclosed arises from the existence of the
attorney-client relationship]), particularly during team meetings that discussed
matters of strategy with respect to the city council, other city officials, and civic
organizations, and that Goldman then used this information when he actively
opposed the precise project he had been retained to promote. Although Oasis does
not offer direct evidence that Goldman relied on confidential information in
formulating his opposition or in crafting his plea to his neighbors to join him in
opposing the project, the proper inquiry in the context of an anti-SLAPP motion
“is whether the plaintiff proffers sufficient evidence for such an inference.”
(Drum v. Bleau, Fox & Associates (2003) 107 Cal.App.4th 1009, 1021,
disapproved on another ground in Rusheen v. Cohen (2006) 37 Cal.4th 1048,
1065.) In light of the undisputed facts that Goldman agreed to represent Oasis in
securing approvals for the project, acquired confidential information from Oasis
during the course of the representation, and then decided to publicly oppose the
very project that was the subject of the prior representation, it is reasonable to
infer that he did so. Moreover, inasmuch as Goldman was obligated under rule 3-
310(B) of the State Bar Rules of Professional Conduct to disclose to Oasis any
personal relationship or interest that he knew or reasonably should have known
could substantially affect the exercise of his professional judgment—but never did
11
so—it is likewise reasonable to infer that Goldman‟s opposition to the project
developed over the course of the representation, fueled by the confidential
information he gleaned during it. Oasis further claims that, because of Goldman‟s
overt acts in opposition to the project, it was forced to investigate Goldman‟s
conduct and prepare a letter demanding defendants‟ adherence to their legal and
fiduciary duties, thereby incurring over $3,000 in legal fees. Based on this
showing and the inferences therefrom, we conclude that Oasis has demonstrated a
likelihood of prevailing on each of its three causes of action.
Defendants offer a number of arguments as to why the causes of action are
neither legally or factually sufficient, but none of them is persuasive.
Defendants argue first that the duty we outlined in Wutchumna Water Co. v.
Bailey, supra, 216 Cal. 564 is overbroad and should be read to apply in only two
specific circumstances: (1) where the attorney has undertaken a concurrent or
successive representation that is substantially related to the prior representation
and is adverse to the former client, or (2) where the attorney has disclosed
confidential information. The Court of Appeal explicitly limited the duty to these
two circumstances based solely on the fact that “all the cases which recite this rule
do so in the context of subsequent representations or employment,” and in those
cases the attorney‟s duties to the new client would otherwise conflict with the
attorney‟s duties to the former client. But neither defendants nor the Court of
Appeal offer any justification for limiting an attorney‟s duty to a former client in
this manner, especially where the attorney has used the former client‟s confidential
information to actively oppose the former client with respect to an ongoing matter
that was the precise subject of the prior representation. It is well established that
the duties of loyalty and confidentiality bar an attorney not only from using a
former client‟s confidential information in the course of “making decisions when
representing another client,” but also from “taking the information significantly
12
into account in framing a course of action” such as “deciding whether to make a
personal investment”—even though, in the latter circumstance, no second client
exists and no confidences are actually disclosed. (Rest.3d, Law Governing
Lawyers, § 60, com. c(i), p. 464.)
It is not difficult to discern that use of confidential information against a
former client can be damaging to the client, even if the attorney is not working on
behalf of a new client and even if none of the information is actually disclosed.
For example, an attorney may discover, in the course of the representation of a real
estate developer, that city officials are particularly concerned about the parking
and traffic impacts of a proposed development, or that an identifiable population
demographic is especially disposed to oppose the proposed development. Under
the interpretation proposed by defendants and adopted by the Court of Appeal, the
attorney would be free to terminate the representation of the developer and use this
information to campaign (quite effectively, one would imagine) against the precise
project the attorney had previously been paid to promote. Inasmuch as the harm to
the client is the same, the rule appropriately bars the attorney from both disclosing
or using the former client‟s confidential information against the former client.
(People ex rel. Deukmejian v. Brown, supra, 29 Cal.3d at p. 156.) Indeed, the
same rule prevails in most jurisdictions, as evidenced by the Restatement Third of
the Law Governing Lawyers, section 60: “(1) Except as provided in §§ 61-67,
during and after representation of a client: [¶] (a) the lawyer may not use or
disclose confidential client information . . . if there is a reasonable prospect that
doing so will adversely affect a material interest of the client . . . .” (See also
Rest.3d, Law Governing Lawyers, § 60, com. c(i), p. 464 [“Both use and
disclosure adverse to the client are prohibited”]; Assn. of Bar of City of New
York, Com. on Prof. & Jud. Ethics, Formal Opn. No. 1997-3, Lawyer’s Right to
Engage in Activity or Express a Personal Viewpoint Which Is Not in Accordance
13
with a Client’s Interests [“a lawyer may not, in the course of discussing his or her
view on a public issue, misuse or reveal a client confidence”].)
Santa Clara County Counsel Attys. Assn. v. Woodside (1994) 7 Cal.4th 525,
on which the Court of Appeal relied, is plainly distinguishable. In that case, we
held that attorneys employed in the public sector, who exercise their statutory right
to sue their public agency employer to resolve disputes regarding wages or other
conditions of employment, do not thereby violate their duty of loyalty. (Id. at p.
553.) The attorneys‟ lawsuit on their own behalf, unlike the situation here, did not
present a conflict with the client on matters in which the attorneys represented the
county (id. at p. 546), and we emphasized that “attorneys in such circumstances
are held to the highest ethical obligations to continue to represent the client in the
matters they have undertaken, and that a violation of their duty to represent the
client competently or faithfully, or of any other rule of conduct, will subject those
attorneys to the appropriate discipline, both by the employer and by the State Bar.”
(Id. at p. 553.)
Defendants‟ contention that they were somehow relieved of their duties of
loyalty and confidentiality by section 125 of the Restatement Third of the Law
Governing Lawyers is mistaken. A comment to that provision explains that “[i]n
general, a lawyer may publicly take personal positions on controversial issues
without regard to whether the positions are consistent with those of some or all of
the lawyer‟s clients. . . . For example, if tax lawyers advocating positions about
tax reform were obliged to advocate only positions that would serve the positions
of their present clients, the public would lose the objective contributions to policy
making of some persons most able to help. [¶] However, a lawyer‟s right to
freedom of expression is modified by the lawyer‟s duties to clients. . . . The
requirement that a lawyer not misuse a client’s confidential information (see § 60)
similarly applies to discussion of public issues.” (Rest.3d, Law Governing
14
Lawyers, § 125, com. e, p. 315, italics added; see also id., § 33(2), p. 240
[“Following termination of a representation, a lawyer must:[¶] . . . [¶] (d) take no
unfair advantage of a former client by abusing knowledge or trust acquired by
means of the representation”].)
An illustration in the Restatement discussion of section 125 demonstrates
the distinction: “Lawyer represents Corporation in negotiating with the Internal
Revenue Service to permit Corporation to employ accelerated depreciation
methods for machinery purchased in a prior tax year. At the same time, Lawyer
believes that the accelerated depreciation laws for manufacturing equipment
reflect unwise public policy. Lawyer has been working with a bar-association
committee to develop a policy statement against the allowance, and the committee
chair has requested Lawyer to testify in favor of the report and its proposal to
repeal all such depreciation allowances. Any new such legislation, as is true
generally of such tax enactments, would apply only for current and future tax
years, thus not directly affecting Corporation‟s matter before the IRS. Although
the current legislation would be against Corporation‟s economic interests, Lawyer
may, without Corporation‟s consent, continue the representation of Corporation
while working to repeal the allowance.” (Rest.3d, Law Governing Lawyers,
§ 125, com. e, illus. 6, p. 316.) Defendants‟ alleged conduct here is not analogous
to “Lawyer‟s” efforts to repeal depreciation allowances in the future. What Oasis
alleges here, in the terms of the analogy above, is that Lawyer, after obtaining IRS
approval of the depreciation allowance, withdrew and then, on Lawyer‟s own
behalf, sought to have “Corporation‟s” depreciation allowance for that prior tax
year overturned and used confidential information to make that case. Defendants
have not identified any authority to countenance such conduct, and our own
research has uncovered none.
15
Defendants complain that a “broad categorical bar on attorney speech”
would lead to a parade of horribles. They warn that a lawyer would be prevented
even from voting in an election against the former client‟s interest and that the
prohibition would necessarily extend to every attorney in an international law
firm. It seems doubtful that a single vote in a secret ballot in opposition to a
client‟s interest would offer “a reasonable prospect” of “adversely affect[ing] a
material interest of the client.” (Rest.3d, Law Governing Lawyers, § 60(1)(a).) In
any event, we are not announcing a broad categorical bar here, nor are we
presented with a situation requiring us to articulate how imputed disqualification
rules would apply in this context. Our task is solely to determine whether any
portion of Oasis‟s causes of action have even minimal merit within the meaning of
the anti-SLAPP statute. A claim that Goldman used confidential information
acquired during his representation of Oasis in active and overt support of a
referendum to overturn the city council‟s approval of the Hilton project, where the
council‟s approval of the project was the explicit objective of the prior
representation, meets that low standard.
The absence of a “broad categorical bar on attorney speech” also disposes
of defendants‟ attempt to interpose a First Amendment defense. Defendants assert
that “preventing client suspicions that their former attorneys will use confidential
information . . . is not a compelling state interest.” But the claim before us, under
the second step of the anti-SLAPP analysis, does not propose a “broad
prophylactic prohibition[] of political speech” to guard against a mere “suspicion
without proof” that Goldman may have used confidential information. Rather, as
demonstrated above, Oasis has presented a prima facie case that Goldman did use
confidential information, to the detriment of his former client, with respect to the
precise subject of the prior representation. Defendants have cited no authority to
suggest the First Amendment would protect such duplicity. (See generally Gentile
16
v. State Bar of Nevada (1991) 501 U.S. 1030, 1081-1082 (conc. opn. of O‟Connor,
J.) [“Lawyers are officers of the court and, as such, may legitimately be subject to
ethical precepts that keep them from engaging in what otherwise might be
constitutionally protected speech”]; cf. American Motors Corp. v. Huffstutler
(Ohio 1991) 575 N.E.2d 116, 120 [“ „[t]here is no constitutional bar to the
issuance of an injunction against unlawful use of confidential business
information‟ ”].)
The Court of Appeal cited Johnston v. Koppes (9th Cir. 1988) 850 F.2d
594, but the case is not helpful to defendants. In Johnston, an attorney employed
by the State Department of Health Services attended a legislative committee
hearing on the subject of the use of state funds for abortion. The attorney, whose
views on that subject diverged from those of the office that employed her, did not
speak at the hearing or communicate her views in any manner, but the department
nonetheless demoted her and transferred her to another section. (Id. at p. 595.) In
the course of upholding the denial of the department‟s motion for summary
judgment as to the attorney‟s cause of action under 42 United States Code section
1983, the Ninth Circuit stated that “[l]oyalty to a client requires subordination of a
lawyer‟s personal interests when acting in a professional capacity. But loyalty to a
client does not require extinguishment of a lawyer's deepest convictions; and there
are occasions where exercise of these convictions—even an exercise debatable in
professional terms—is protected by the Constitution.” (Johnston, supra, 850 F.2d
at p. 596.) Inasmuch as there was no allegation that the attorney acted in any way
against the department as to a specific and ongoing matter on which she was then
representing or had previously represented the department, nor was there any
allegation that she had used or disclosed confidential information acquired by
virtue of her employment, Johnston does not suggest that the conduct alleged by
Oasis would be protected by the Constitution.
17
Finally, we conclude that Oasis has set forth a prima facie case of actual
injury and entitlement to damages. Oasis asserts that because of Goldman‟s active
and overt opposition to the Hilton project, it was compelled to protect its rights by
retaining legal counsel to prepare a letter demanding that Goldman cease and
desist from further misconduct. The cost of this remediation exceeded $3,000. It
is “the established rule that attorney fees incurred as a direct result of another‟s
tort are recoverable damages.” (Jordache Enterprises, Inc. v. Brobeck, Phleger &
Harrison (1998) 18 Cal.4th 739, 751.) In particular, recoverable damages include
“the expense of retaining another attorney” when reasonably necessary to “attempt
to avoid or minimize the consequences of the former attorney‟s negligence.” (3
Mallen & Smith, Legal Malpractice (2011 ed.) § 21:6, p. 23; see also id., § 21:10,
p. 34 [“A client may incur attorneys‟ fees and litigation expenses in attempting to
avoid, minimize, or reduce the damage caused by attorneys‟ wrongful conduct”].)
Based on the respective showings of the parties, we conclude that Oasis‟s
claims for breach of fiduciary duty, professional negligence, and breach of
contract possess at least minimal merit within the meaning of the anti-SLAPP
statute. On this ground, we therefore reverse the judgment of the Court of Appeal.
18
DISPOSITION
The judgment of the Court of Appeal is reversed.
BAXTER, J.
WE CONCUR:
CANTIL-SAKAUYE, C. J.
WERDEGAR, J.
CHIN, J.
CORRIGAN, J.
19
CONCURRING OPINION BY KENNARD, J.
Plaintiff Oasis West Realty, LLC (Oasis), hired attorney Kenneth A.
Goldman and his law firm to assist Oasis in obtaining local government approval
for a redevelopment project. About two years later, Goldman terminated the
representation, and about two years after that, Goldman became involved in a
public campaign opposing the very same redevelopment project. Specifically,
Goldman solicited signatures for a petition to overturn the local government‟s
approval of the project. Oasis then sued Goldman and his law firm for breach of
fiduciary duty, professional negligence, and breach of contract. Defendants
moved to strike the complaint under Code of Civil Procedure section 425.16,
which establishes a special procedure for early dismissal of SLAPP lawsuits,
which are suits based on the defendant‟s exercise of the right of petition or speech
in connection with a public issue. SLAPP is an acronym for “strategic lawsuit
against public participation.” (Equilon Enterprises v. Consumer Cause, Inc.
(2002) 29 Cal.4th 53, 57.) The trial court denied defendants‟ anti-SLAPP motion,
and the Court of Appeal reversed.
I concur in the majority‟s decision to reverse the judgment of the Court of
Appeal, and I agree with most of the majority‟s reasoning. Unlike the majority,
however, I would not bypass the first step of the anti-SLAPP analysis.
The majority correctly explains: “The analysis of an anti-SLAPP
motion . . . involves two steps. „First, the court decides whether the defendant has
1
made a threshold showing that the challenged cause of action is one “arising from”
protected activity. ([Code Civ. Proc.,] § 425.16, subd. (b)(1).) If the court finds
such a showing has been made, it then must consider whether the plaintiff has
demonstrated a probability of prevailing on the claim.‟ (City of Cotati v. Cashman
(2002) 29 Cal.4th 69, 76.)” (Maj. opn., ante, at p. 8.) The majority, however,
skips the first step of that analysis. The majority states: “Ordinarily we would
proceed to consider the two prongs in order. In light of this court‟s „inherent,
primary authority over the practice of law‟ (Obrien v. Jones (2000) 23 Cal.4th 40,
57), however, we will proceed in these particular circumstances directly to the
second prong, inasmuch as we have readily found that Oasis has demonstrated a
probability of prevailing on its claims.” (Maj. opn., ante, at pp. 8-9.)
I agree that Oasis has demonstrated a probability of prevailing on its
claims. But I do not share the majority‟s view that simply because Oasis‟s lawsuit
concerns Goldman‟s duties as an attorney and this court has “inherent, primary
authority over the practice of law” (Obrien v. Jones, supra, 23 Cal.4th at p. 57),
this court can readily dispense with the first step of the anti-SLAPP analysis and
proceed directly to the second step. The majority‟s approach would not be
available to a Court of Appeal or a superior court, neither of which has primary
authority over the practice of law.
The majority‟s approach is particularly surprising here, because defendants
have easily made the necessary showing that the action by Oasis is based on
Goldman‟s exercise of his constitutional right to free speech in connection with a
public issue. Subdivision (e) of Code of Civil Procedure section 425.16 defines
the phrase “ „act in furtherance of a person‟s right of . . . free speech . . . in
connection with a public issue‟ ” to include “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
2
by law.” Here, Goldman solicited signatures for a petition to overturn a local
government‟s approval of a redevelopment project. It is hard to imagine conduct
that more squarely fits the definition set forth in subdivision (e), and Oasis‟s
lawsuit is based directly on that conduct. If Goldman had not exercised his free
speech rights in support of the petition — if instead he had kept his views to
himself — the alleged injury to Oasis would not have occurred, and Oasis would
have had no basis for a lawsuit against Goldman and his law firm.
This is not to suggest that constitutional protections of speech permitted
Goldman to speak against the Oasis project with impunity. As an attorney,
Goldman‟s right to free speech was restricted insofar as it was adverse to a former
client and concerned the same subject matter as the former representation. (See
maj. opn., ante, at pp. 16-17.) But the fact remains that Oasis‟s lawsuit is based on
Goldman‟s exercise of the right of speech, and therefore the anti-SLAPP statute
applies. To invoke that statute, a defendant need not go so far as to establish that
the relevant speech or petition activity is constitutionally protected as a matter of
law; if that were the rule, “ „then the [secondary] inquiry as to whether the plaintiff
has established a probability of success would be superfluous.‟ ” (Navellier v.
Sletten (2002) 29 Cal.4th 82, 95, quoting Fox Searchlight Pictures, Inc. v.
Paladino (2001) 89 Cal.App.4th 294, 305.) Rather, the defendant need only show
the existence of a legitimate issue as to whether the speech or petition activity is
constitutionally protected. (Flatley v. Mauro (2006) 39 Cal.4th 299, 311-320.)
I conclude that defendants here made the showing necessary to satisfy the
first inquiry in the anti-SLAPP analysis, a step bypassed by the majority.
Regarding the second inquiry, however, I agree with the majority that Oasis has
shown a probability of prevailing, and therefore the trial court was correct to deny
3
defendants‟ anti-SLAPP motion. Accordingly, I concur in the majority‟s
judgment.
KENNARD, J.
I CONCUR:
TODD, J.*
* Associate Justice, Court of Appeal, Second Appellate District, Division
Two, assigned by the Chief Justice pursuant to article VI, section 6 of the
California Constitution.
4
See next page for addresses and telephone numbers for counsel who argued in Supreme Court.
Name of Opinion Oasis West Realty, LLC v. Goldman
__________________________________________________________________________________
Unpublished Opinion
Original Appeal
Original Proceeding
Review Granted XXX 182 Cal.App.4th 688Rehearing Granted
__________________________________________________________________________________
Opinion No. S181781
Date Filed: May 16, 2011
__________________________________________________________________________________
Court: Superior
County: Los Angeles
Judge: Norman P. Tarle
__________________________________________________________________________________
Counsel:
Akins Gump Strauss Hauer & Feld, Rex S. Heinke, Jessica M. Weisel; Fairbank & Vincent, Dirk L.
Vincent and Michael B. Norman for Defendants and Appellants.
Rosoff, Schiffres & Barta, Robert M. Barta, Howard L. Rosoff, H. Steven Schiffres; Esner & Chang, Esner,
Chang & Boyer, Stuart B. Esner and Andrew N. Chang for Plaintiff and Respondent.
Lawrence J. Fox as Amicus Curiae on behalf of Plaintiff and Respondent.
Counsel who argued in Supreme Court (not intended for publication with opinion):
Rex S. Heinke
Akins Gump Strauss Hauer & Feld
2029 Century Park East, Suite 2400
Los Angeles, CA 90067-3012
(310) 229-1000
H. Steven Schiffres
Rosoff, Schiffres & Barta
11755 Wilshire Boulevard, Suite 1450
Los Angeles, CA 90025
(310) 479-1454