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Filed 9/4/13 Perez v. Kouretas

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or 

ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for 

purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(Sacramento)

----

RAFAEL PEREZ et al.,

Plaintiffs and Appellants,

v.

JAMES KOURETAS,

Defendant and Respondent.

C068234

(Super. Ct. No. 

34201000086964CUCOGDS)

Plaintiffs Rafael Perez (Rafael), Pedro Perez (Pedro), and David Hurley (Hurley) 

(sometimes collectively, plaintiffs) appeal the trial court‟s order granting defendant 

James Kouretas‟s special motion to strike under the anti-SLAPP statute (Code Civ. Proc., 

§ 425.16 (hereafter § 425.16)). We conclude the court erred in granting the anti-SLAPP 

motion and reverse the order and judgment of dismissal as well as the attorney‟s fee 

award in Kouretas‟s favor.
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FACTS AND PROCEEDINGS

The following facts are taken from plaintiffs‟ complaint and the declarations 

supporting and opposing the motion to strike. Faye Stearns, an elderly woman, owned a 

card room in Sacramento called Duffy‟s. She held the gambling license for the 

establishment. In December 2004, Duffy‟s was destroyed by a fire. Although Stearns 

wanted to reopen the business, she did not have the financial means to do so. Through 

acquaintances at the card room, Rafael learned that Stearns was seeking help to reopen 

Duffy‟s. 

Stearns and Rafael met several times following the fire. On January 7, 2005, they 

executed a written partnership agreement to reopen the card room (Rafael-Stearns 

Agreement). That same day Stearns also executed a Gambling Control Commission form 

designating Rafael as her agent to “represent all of [D]uffy‟s future license transactions, 

Table fees, and business promotions,” and, as her designated agent, Rafael submitted an 

application to the Gambling Commission to renew Stearns‟s state gambling license. 

The Rafael-Stearns Agreement lists the nature of the partnership‟s business as 

“Card Room License (Game Room).” According to the agreement, Rafael and Stearns 

would contribute capital and split profits and losses on a 60-40 percent basis, 

respectively. Rafael was to have sole control over managing the business and was 

responsible for paying all start up expenses, including application and licensing fees and 

employee salaries. The place of business in Sacramento was yet to be determined. 

The partnership between Rafael and Stearns was to last five years; Rafael would 

then become the sole owner of the business. The Rafael-Stearns Agreement was 

assignable, and Stearns did not object to Rafael securing investors to fund the project. 

Rafael contacted his father, Pedro, and Hurley to invest in the card room. By early 

February, Rafael, Hurley and Pedro executed an agreement entitled “Duffy‟s Card Room 

Agreement[:] Statement to Establish a Business Partnership” (Perez-Hurley Agreement) 
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to open the poker card room. The agreement recites that it was executed “with the full 

knowledge and consent from Mrs [sic] Faye Stearn [sic] and Rafael Perez.” According to 

this second partnership agreement, legal counsel would be retained to obtain all necessary 

licensing requirements for the card room. 

Rafael, purportedly with Stearns‟s consent, assigned his 60 percent interest in the 

Rafael-Stearns partnership to the Perez-Hurley partnership formed by the three men. 

Rafael provided Stearns with a copy of the Perez-Hurley Agreement. 

In the middle of February 2005, Rafael prepared a letter on Stearns‟s behalf 

requesting that the City of Sacramento (City) renew her card room license at a new 

location. That same month, Rafael retained attorney Robert Tabor on behalf of the four 

partners to obtain the necessary approvals to reopen the card room. Pedro and Hurley 

were to pay Tabor‟s attorney‟s fees; Stearns was not responsible for any fees. Tabor 

submitted applications to the Gambling Control Commission for Pedro and Hurley to 

become “key employees” of the card room. A “key employee” is “any natural person 

employed in the operation of a gambling enterprise in a supervisory capacity or 

empowered to make discretionary decisions that regulate gambling operations . . . .” 

(Bus. & Prof. Code, § 19805, subd. (x).) Key employees are licensed by the Gambling 

Control Commission. (Bus. & Prof. Code, §§ 19850, 19854.)

Although Tabor secured several extensions of Stearns‟s gambling license, by June 

2006 Tabor had missed some permit filing deadlines or table fee payments necessary to 

renew the card room business license. On June 6, 2006, the City informed Stearns that 

her card room license had been automatically revoked because she failed to reopen 

Duffy‟s within 90 days of the fire as required by a City ordinance. According to the City, 

the license would be placed in a lottery to be awarded to a member of the public. Tabor 

wrote a letter appealing the decision, but the City claimed it never received it and 

concluded its decision was final. 
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Around July 2006, defendant Kouretas, a local attorney, contacted Stearns about 

helping with the gaming license issue. Stearns told Rafael about Kouretas‟s call. Rafael 

later contacted Kouretas about representing the four partners in getting the license 

renewed. Kouretas explained that he had experience in gaming matters and he agreed to 

meet with the group. 

In early October 2006, Rafael, Pedro, Hurley, and Stearns met with Kouretas at his 

law office. At the meeting they told Kouretas about their previously formed partnerships. 

Kouretas requested to review Tabor‟s file with everything that had been done to that 

point. Kouretas even recommended the group consult a malpractice attorney to file an 

action against Tabor for missing the filing deadlines. 

Although Kouretas denies it, plaintiffs claim Kouretas agreed to represent the 

partnership and all four partners in securing the necessary approvals to reopen the card 

room. When asked how much he was going to charge them, Kouretas replied that it 

could be determined at another time. According to Kouretas, he later agreed to represent 

Stearns only and had decided to invest in the card room with her alone. He agreed to 

represent her for free. 

A few weeks later Kouretas again met with Rafael, Pedro, Hurley and Stearns to 

discuss the card room licensing issues. Kouretas reconfirmed that he would represent 

them in obtaining the necessary approvals for reopening the card room. Rafael provided 

Kouretas with copies of the Rafael-Stearns Agreement and the Perez-Hurley Agreement 

as well as other documents relating to the gambling license and card room. At the end of 

the meeting, Pedro raised the issue of a fee agreement. Like before, Kouretas said that 

the fee arrangement could be discussed later. 

Pedro subsequently terminated Tabor as the partners‟ attorney, retrieved their 

client file from Tabor‟s office, and delivered it to Kouretas‟s law firm. Kouretas 

reviewed the file. 
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Following these initial meetings, Kouretas met with plaintiffs on several more 

occasions, with and without Stearns. During these subsequent meetings, Kouretas 

assured plaintiffs he was working on their behalf to obtain the necessary approvals to 

reopen the card room. Kouretas, however, claimed that due to complications in the 

approval process, his name rather than plaintiffs‟ would have to be on the approvals. 

Kouretas told plaintiffs ownership of the gambling establishment would be transferred to 

them at a later date. 

Meanwhile, and unbeknownst to plaintiffs, Kouretas formed a limited liability 

company with Stearns and another investor to own and operate the card room. Kouretas 

was the managing member of the company, holding a 50 percent interest in the business. 

Kouretas also withdrew Pedro‟s and Hurley‟s key employee applications without their 

knowledge. 

Ultimately Kouretas successfully secured the necessary licenses and permits to 

reopen the card room. After the City finally issued the card room license, Kouretas 

allegedly called Rafael and told him, “[W]e got your casino.” Yet the city business 

permit was issued to Kouretas, Stearns, and the third member of the limited liability 

company Kouretas secretly formed with Stearns. The state gambling license was issued 

to Kouretas‟s and Stearns‟s limited liability company. Kouretas leased the casino‟s new 

location solely in his name. None of the licenses, permits, or leases were in the name of 

plaintiffs or their partnerships. 

When it later became apparent that Kouretas did not intend to transfer any interest 

in the card room to plaintiffs as partners in either the Rafael-Stearns partnership or the 

Perez-Hurley partnership, plaintiffs sued Kouretas. The complaint alleged causes of 

action for legal malpractice, breach of fiduciary duty, constructive and actual fraud, 

intentional and negligent interference with prospective economic relations, intentional 

and negligent interference with contract, negligent misrepresentation and for a 

constructive trust and preliminary injunction. Kouretas filed a special motion to strike 
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under the anti-SLAPP statute, which the trial court granted. The trial court also awarded 

Kouretas attorneys‟ fees and entered a judgment of dismissal. Plaintiffs timely appealed. 

DISCUSSION

I

Standard and Scope of Review

The question of whether a trial court properly granted a motion to strike under the 

anti-SLAPP statute is reviewed de novo. (ComputerXpress, Inc. v. Jackson (2001) 93 

Cal.App.4th 993, 999 [“Whether section 425.16 applies and whether the plaintiff has 

shown a probability of prevailing are both reviewed independently on appeal”].) 

Under the anti-SLAPP statute, the court engages in a two-step analysis. First, the 

court considers 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).) The 

defendant bears the burden of showing the plaintiff‟s cause of action arises from the 

defendant‟s exercise of free speech or petition rights as defined in the statute. (§ 425.16, 

subd. (e).) If the defendant makes this threshold showing, the burden shifts to the 

plaintiff to make a prima facie showing of facts which, if credited by the trier of fact, 

would sustain a favorable judgment. (Equilon Enterprises v. Consumer Cause, Inc.

(2002) 29 Cal.4th 53, 61; Navellier v. Sletten (2002) 29 Cal.4th 82, 88.)

The court considers the pleadings and evidence submitted by both sides, but does 

not weigh credibility or compare the weight of the evidence. Rather, the court‟s 

responsibility is to accept as true the evidence favorable to the plaintiff (Nagel v. Twin 

Laboratories, Inc. (2003) 109 Cal.App.4th 39, 45-46), and to evaluate the defendant‟s 

evidence only to determine if it has defeated that submitted by the plaintiff as a matter of 

law. (Kashian v. Harriman (2002) 98 Cal.App.4th 892, 906.) With these concepts in 

mind, we turn to plaintiffs‟ contentions on appeal. 
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II

Anti-SLAPP Motion

The trial court found Kouretas made a threshold showing that plaintiffs‟ suit arises 

from Kouretas‟s protected activities under section 425.16. The court concluded 

plaintiffs‟ complaint arose from Kouretas‟s written and oral statements to governmental 

agencies to obtain the gambling license and permits as well as to withdraw Pedro‟s and 

Hurley‟s key employee applications. Our independent review of the record does not 

support this finding.

According to the complaint, Kouretas, while acting as their attorney and 

purportedly on their behalf, fraudulently or negligently usurped plaintiffs‟ business 

opportunity in the card room. By doing so, plaintiffs allege Kouretas breached his 

fiduciary duties to them and committed legal malpractice. 

While it is true that Kouretas petitioned governmental agencies when seeking to 

revive the card room and its licenses, it is Kouretas‟s alleged misdeeds as plaintiffs‟ 

attorney--and not his underlying petitioning activity--that is the thrust, or gravamen, of 

plaintiffs‟ complaint. (PrediWave Corp. v. Simpson Thacher & Bartlett LLP (2009) 179 

Cal.App.4th 1204, 1219 [“When a pleading contains allegations regarding both protected 

and unprotected activity, „it is the principal thrust or gravamen of the plaintiff‟s cause of 

action that determines whether the anti-SLAPP statute applies‟ ”].) Although a cause of 

action may be associated with a protected act, it does not follow that the cause of action 

always arises from that act. (Kolar v. Donahue, McIntosh & Hammerton (2006) 145 

Cal.App.4th 1532, 1537 [“A claim „arises from‟ an act when the act „ “ „forms the basis 

for the plaintiff‟s cause of action‟ . . . . ” ‟ ”]; Robles v. Chalilpoyil (2010) 181 

Cal.App.4th 566, 574 [“ „that a cause of action arguably may have been “triggered” by 

protected activity does not entail that it is one arising from such‟ ”].) Thus, simply 

because plaintiffs‟ causes of action are tangentially associated with petitioning 
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governmental agencies to obtain the necessary gambling approvals does not mean that 

their complaint against Kouretas as their attorney “arises from” such petitioning activity. 

As other courts have recognized, suits like plaintiffs‟ alleging legal malpractice 

and breaches of the duty of loyalty against former counsel are not subject to a special 

motion to strike. (Kolar v. Donahue, McIntosh & Hammerton, supra, 145 Cal.App.4th at 

p. 1535 [“Legal malpractice is not an activity protected under the anti-SLAPP statute”]; 

Benasra v. Mitchell Silberberg & Knupp LLP (2004) 123 Cal.App.4th 1179, 1181 [antiSLAPP statute does not apply to claim for attorney‟s breach of duty of loyalty]; 

PrediWave Corp. v. Simpson Thacher & Bartlett LLP, supra, 179 Cal.App.4th at p. 1228 

[court improperly granted anti-SLAPP motion to complaint alleging causes of action 

against the plaintiff‟s former counsel for breach of fiduciary duty, constructive fraud, 

legal malpractice and unfair business practices].) Similarly, like plaintiffs‟ claims of 

fraud and negligence here, a complaint against a former attorney alleging negligence and 

conspiracy to commit fraud does not involve the exercise of protected petitioning activity 

even though the attorney‟s adverse business relationship was formed following litigation 

on the plaintiff‟s behalf. (Robles v. Chalilpoyil, supra, 181 Cal.App.4th at p. 580 [antiSLAPP statute inapplicable where “[t]he central subject of the complaint against 

appellant is not an exercise of free speech or petition but the negligence or fraud inherent 

in his act of entering into a business relationship to respondents‟ detriment”].)

That Kouretas allegedly breached his duty of loyalty and committed malpractice 

and fraud in the course of petitioning certain governmental agencies for the gambling and 

card room licenses does not mean plaintiffs‟ claims arose from the petitioning activity 

itself. It is not, as respondent urges, that Kouretas merely petitioned to have the card 

room permits and licenses reinstated which gives rise to the complaint. Instead, as 

plaintiffs‟ argue, it is that Kouretas, as their attorney, lead plaintiffs to believe that he was 

engaging in such activities on their behalf and then surreptitiously did so to advance his 

own personal interests rather than those of his clients. Kouretas‟s alleged failure to 
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faithfully and loyally pursue the casino and business opportunities for plaintiffs is the real 

basis of the complaint. 

And, at least at this stage of the proceedings, Kouretas‟s claim that he never 

represented plaintiffs is irrelevant. The court is bound to accept as true all evidence 

favorable to plaintiffs unless Kouretas‟s evidence defeats it as a matter of law. (Nagel v. 

Twin Laboratories, Inc., supra, 109 Cal.App.4th at pp. 45-46; Kashian v. Harriman, 

supra, 98 Cal.App.4th at p. 906.) As the trial court acknowledged, and we agree, the 

evidence submitted by Kouretas falls far short of showing that he was not plaintiffs‟ 

attorney. Because the declarations and exhibits submitted by Kouretas do not, as a matter 

of law, demand a finding of the absence of an attorney-client relationship between 

Kouretas and plaintiffs, we must accept plaintiffs‟ contentions that such a professional 

relationship did exist. (Nagel, at pp. 45-46.) 

In light of the above, we find plaintiffs‟ claims are not subject to the anti-SLAPP 

statute. Since Kouretas did not satisfy the threshold showing under section 425.16, we 

need not address plaintiffs‟ remaining contentions on appeal, including whether plaintiffs 

showed a probability of prevailing on their claims. (ComputerXpress, Inc. v. Jackson, 

supra, 93 Cal.App.4th at p. 1004.) Because we do not reach plaintiffs‟ remaining 

contentions, we deny plaintiffs‟ request for judicial notice of legislative materials relating 

to Corporations Code section 16307 as irrelevant.

III

Attorney’s Fees

Since defendant did not show that plaintiffs‟ complaint arose out of protected 

petitioning activity under section 425.16, the attorney‟s fee award to Kouretas must be set 

aside. Pursuant to section 425.16, subdivision (c), plaintiffs are entitled to attorney‟s fees 

if Kouretas‟s anti-SLAPP motion was frivolous or was solely intended to cause 

unnecessary delay. Upon remand, the trial court shall determine whether plaintiffs are 

entitled to recover attorney‟s fees, including attorney‟s fees on appeal. (Evans v. Unkow 
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(1995) 38 Cal.App.4th 1490, 1499 [“A statute authorizing an attorney fee award at the 

trial court level includes appellate attorney fees unless the statute specifically provides 

otherwise”].)

DISPOSITION

The judgment and the orders (1) striking the complaint and (2) awarding 

attorney‟s fees to Kouretas are reversed. The matter is remanded for a determination of 

whether plaintiffs are entitled to recover attorney‟s fees. Plaintiffs are awarded their 

costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1).) 

 HULL , J.

We concur:

 RAYE , P. J.

 ROBIE , J.