Court Opinion

ID: 2809937
Source: CourtListenerOpinion
Date Created: 2015-06-18 23:09:15.500388+00
Date Added: 2024-06-11T11:30:14.893433
License: Public Domain

Filed 6/18/15 Shenoi Koes v. Bank of America CA2/4
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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 This opinion has not been certified for publication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

                                   SECOND APPELLATE DISTRICT

                                                DIVISION FOUR

SHENOI KOES LLP,                                                     B259485

         Plaintiff and Respondent,                                   (Los Angeles County
                                                                      Super. Ct. No. BC543708)
         v.

BANK OF AMERICA, NATIONAL
ASSOCIATION,

         Defendant and Appellant.

         APPEAL from a judgment of the Superior Court of Los Angeles County,
Gregory W. Alarcon, Judge. Affirmed.
         Orrick, Herrington & Sutcliffe, Leah L. Spero, Catherine Y. Lui and
Michael D. Weil for Defendant and Appellant.
         Michael S. Overing, APC and Michael S. Overing for Plaintiff and
Respondent.
      Defendant and appellant Bank of America appeals from the trial court’s
denial of its special motion to strike under Code of Civil Procedure section 425.16
(section 425.16), the so-called anti-SLAPP statute.1 We conclude, as did the trial
court, that the challenged cause of action does not arise from protected activity and
therefore affirm the denial.

              FACTUAL AND PROCEDURAL BACKGROUND
      The underlying complaint in this case arose from Shenoi Koes’ claim that
Eileen Foster, a former executive with Bank of America, did not pay an attorney
fee lien for legal services performed by Shenoi Koes during mediation proceedings
between Foster and Bank of America. Shenoi Koes sued Foster, Bank of America,
and Foster’s other attorneys after Bank of America settled with Foster but did not
pay Shenoi Koes’ attorney fee lien.
      Foster filed a whistleblower complaint with the United States Department of
Labor Occupational Safety and Health Administration (OSHA) in 2008 when she
was fired by Bank of America after reporting mortgage fraud. Foster was
represented in the OSHA proceedings by Matthew L. Tonkovich, but she retained
Shenoi Koes to represent her during mediation with Bank of America. In
December 2010, Shenoi Koes represented Foster during mediation with Bank of
America, but the mediation did not result in a settlement.
      The contingency fee agreement between Foster and Shenoi Koes, which was
signed in October 2010, stated that Foster retained Shenoi Koes to represent her
“only in settlement negotiations and a mediation.” The agreement provided that
Shenoi Koes would be “compensated at 25% of the value of the gross recovery.

1
      SLAPP is an acronym for “strategic lawsuit against public participation.” (Olsen
v. Harbison (2005) 134 Cal. App. 4th 278, 280.)

                                           2
[¶] . . . The gross recovery includes the entire value of any settlement, if there is
one.”
        The agreement further provided that, if Foster terminated Shenoi Koes,
Shenoi Koes “has and continues to maintain a security interest in the case and is
entitled to recover the reasonable value of [Shenoi Koes’] services and costs from
any recovery or award in this matter at any time, whether from an OSHA award or
any other settlement or judgment.” In addition, Foster agreed that Shenoi Koes
“has and will continue to have a lien against any recovery or award in the OSHA
proceeding or any other action whether or not [Shenoi Koes] is still representing
[Foster] at the time such an award is made, and regardless of who is representing
[Foster] when any recovery is had, and that [Shenoi Koes’] security interest will
remain intact even if the attorney Client relationship is terminated.”
        In March 2011, a few months after the unsuccessful mediation, Shenoi Koes
sent Foster an email to ask about the status of their retention. The email stated, in
part: “Once you notified us on February 20th . . . that [Bank of America] had
terminated the mediation . . . it confirmed for us that we are beyond the terms of
our retention, as was carefully laid out in our Contingency Fee Contract . . . . [¶]
We will need to discuss this development, and if we reach agreement to continue to
represent you, to formulate a settlement proposal that is now outside of any
mediation.” The email further stated, “Alternatively, . . . pursuant to the last
sentence of the first full paragraph of the Contingency Fee Contract, our time ‘can
be submitted by [your] current lawyer in the OSHA proceeding, for purposes of
increasing any award of attorneys’ fees in the OSHA proceeding.’” Foster did not
retain Shenoi Koes for any further representation. However, in April 2011, Foster
asked Shenoi Koes to submit information about its legal fees to Tonkovich for
submission in the OSHA proceeding. Foster submitted Allan A. Shenoi’s

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declaration detailing attorney fees and costs of $182,014.75 in her OSHA
proceeding.
      In August 2011, Shenoi Koes sent a letter to Bank of America’s counsel,
stating that Shenoi Koes “hereby claims contractual and equitable liens in presently
unliquidated amounts on any sums or other consideration recovered in the OSHA
or any related or other actions by Eileen Foster, whether by settlement or
judgment.” Also in August 2011, Foster asked Shenoi Koes to “accept a cap of
$200,000 in attorneys’ fees and costs as [Shenoi Koes’] lien,” but Shenoi Koes
refused.
      In September 2011, OSHA completed its investigation and issued its
findings, ordering Bank of America to pay Foster back wages, compensatory
damages, and attorney fees. Bank of America objected to the findings and
requested a hearing before an Administrative Law Judge (ALJ). (See 29 C.F.R.
§ 1980.106, subd. (a).) In December 2012, the ALJ approved a confidential
settlement agreement between Foster and Bank of America.
      In March 2014, Shenoi Koes sent an email to Tonkovich, stating that Shenoi
Koes “ha[d] a lien in the case” and asking for an update on the status of the case.
Tonkovich referred Shenoi Koes to Foster’s new counsel, Thad Guyer, who
informed Shenoi Koes that it did not have a “meritorious lien.”
      Shenoi Koes filed a complaint against Foster, Bank of America, Tonkovich,
Guyer, and various Does. Shenoi Koes asserted causes of action against Bank of
America for conversion, intentional interference with contractual relations,
negligent interference with prospective economic relations, quantum meruit, and
constructive trust.
      Bank of America filed an anti-SLAPP motion arguing, inter alia, that Shenoi
Koes’ claims arose from protected activity pursuant to section 425.16 because the

                                          4
claims were based on Bank of America’s conduct related to the settlement
agreement. In its opposition to the motion, Shenoi Koes argued that its claims
were not based on Bank of America’s protected activity in judicial proceedings,
but on its failure to include Shenoi Koes as a payee on the settlement check despite
its knowledge of Shenoi Koes’ lien.
      The trial court found that the anti-SLAPP statute did not apply because the
gravamen of the complaint was the nonpayment of an attorney fee lien, not
protected activity such as entering into a settlement agreement. The court further
stated that, assuming the statute did apply, “[p]laintiff’s declaration and exhibits
evidence at least minimal merit.” The court therefore denied the anti-SLAPP
motion.

                                    DISCUSSION
      Bank of America contends that the trial court erred in denying its motion to
strike because Shenoi Koes’ complaint is based on Bank of America’s conduct in
the settlement proceedings with Foster. Shenoi Koes contends, and the trial court
found, that the gravamen of the complaint was not Bank of America’s conduct in
the settlement proceedings, but the “nonpayment of an attorney fee lien.” We
agree with the trial court.

I.    Legal Standards
      “Section 425.16 provides an expedited procedure for dismissing lawsuits
that are filed primarily to inhibit the valid exercise of the constitutionally protected
rights of speech or petition. [Citations.]” (Albanese v. Menounos (2013) 218
Cal. App. 4th 923, 928 (Albanese).) “Section 425.16 provides, inter alia, that ‘A
cause of action against a person arising from any act of that person in furtherance

                                           5
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).)
‘As used in this section, “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 . . . .’ (Id., subd. (e).)”
(Navellier v. Sletten (2002) 29 Cal. 4th 82, 87-88 (Navellier).)
      “A special motion to strike a complaint under section 425.16 involves two
steps. First, the moving party has the initial burden of making a threshold showing
that the challenged cause of action is one arising from a protected activity.
(§ 425.16, subd. (b)(1).) In order to meet this burden, the moving party must show
the act underlying the challenged cause of action fits one of the categories
described in section 425.16, subdivision (e). [Citation.] [¶] Once the moving
party has made the threshold showing, the burden in step two shifts to the opposing
party. Under step two of the statutory analysis, the opposing party must
demonstrate a probability of prevailing on the claim. (§ 425.16, subd. (b)(1).) A
cause of action is subject to dismissal under the statute only if both steps of the
anti-SLAPP analysis are met.” (Albanese, supra, 218 Cal.App.4th at p. 928.)
      “In deciding whether the initial ‘arising from’ requirement is met, a court
considers ‘the pleadings, and supporting and opposing affidavits stating the facts
upon which the liability or defense is based.’ [Citation.]” (Navellier, supra, 29

                                            6
Cal.4th at p. 89.) “The principal thrust or gravamen of the claim determines
whether section 425.16 applies. [Citation.]” (Premier Medical Management
Systems, Inc. v. California Ins. Guarantee Assn. (2006) 136 Cal. App. 4th 464, 472.)
“The ‘critical consideration is what the cause of action is ‘based on.’ [Citation.]”
(Thayer v. Kabateck Brown Kellner LLP (2012) 207 Cal. App. 4th 141, 153-154
(Thayer).)
      “In an appeal from an order granting or denying a motion to strike under
section 425.16, the standard of review is de novo. [Citation.] In considering the
pleadings and supporting and opposing declarations, we do not make credibility
determinations or compare the weight of the evidence. Instead, we accept the
opposing party’s evidence as true and evaluate the moving party’s evidence only to
determine if it has defeated the opposing party’s evidence as a matter of law.
[Citation.]” (Albanese, supra, 218 Cal.App.4th at pp. 928-929.)
      According to Bank of America, Shenoi Koes’ claims are based solely on the
allegations that Bank of America submitted a settlement agreement to the ALJ, hid
the settlement from Shenoi Koes, and compromised its dispute with Foster. Bank
of America then states, with no explanation, that all of its alleged activities are
protected by the anti-SLAPP statute. We disagree.
      The fact that the complaint refers to the settlement agreement does not
establish that it is based on protected activity. “[T]he mere fact that an action was
filed after protected activity took place does not mean the action arose from that
activity for the purposes of the anti-SLAPP statute. [Citation.] Moreover, that a
cause of action arguably may have been ‘triggered’ by protected activity does not
entail that it is one arising from such. [Citation.]” (Navellier, supra, 29 Cal.4th at
p. 89; see also Optional Capital, Inc. v. DAS Corp. (2014) 222 Cal. App. 4th 1388,
1399 [“The mere fact that a lawsuit was filed after the defendant engaged in

                                           7
protected activity does not establish the complaint arose from protected activity
under the statute because a cause of action may be triggered by protected activity
without arising from it. [Citation.]”] (Optional Capital).) Despite Bank of
America’s efforts to characterize Shenoi Koes’ claims as arising out of protected
activity during the settlement negotiations, the pleadings and supporting and
opposing declarations establish that Shenoi Koes’ claims are not based on
protected activity relating to the settlement agreement but on the nonpayment of
Shenoi Koes’ alleged attorney fee lien.
      The causes of action against Bank of America are based on the following
allegations in the complaint. Foster retained Shenoi Koes and created an attorney
lien through the fee agreement she signed. Foster “judicially admitt[ed] and
reaffirm[ed] the existence and validity of [Shenoi Koes’] lien” by requesting and
submitting to OSHA a declaration detailing Shenoi Koes’ fees and costs of
$182,014.75. Foster again acknowledged the existence of the lien by asking
Shenoi Koes to accept a cap of $200,000 in attorneys’ fees and costs, but Shenoi
Koes refused and subsequently “gave formal notice of its lien to [Bank of
America].” The complaint further alleged that “OSHA issued an award in favor of
. . . FOSTER and ordered [Bank of America] to pay FOSTER ‘attorney fees in the
amount of $229,364.00.” In addition, Bank of America knew that Shenoi Koes’
“recovery was tied to FOSTER’s contingent recovery, but hid from [Shenoi Koes]
the occurrence of that contingency” by submitting a proposed confidential
settlement agreement with Foster to the ALJ. In sum, the complaint alleges that
Shenoi Koes performed legal services for Foster, resulting in an attorney fee lien
which Foster acknowledged she owed. Shenoi Koes told Bank of America about
the lien, but when Bank of America settled Foster’s claim, it did not pay Shenoi

                                          8
Koes’ lien. The principal thrust of the claim accordingly is the nonpayment of
Shenoi Koes’ lien.
      The causes of action alleged against Bank of America confirm that the
gravamen of Shenoi Koes’ claim is not protected activity but the nonpayment of
the attorney fee lien. The conversion cause of action alleged that Bank of America
(and the other defendants)2 “have converted, and continue to convert, to their own
use property belonging to [Shenoi Koes], including, but not limited to, attorney
fees and costs. . . . [Shenoi Koes] demanded, before commencing this action, that
[Bank of America] deliver this property and other benefits to [Shenoi Koes]. To
date, [Bank of America] ha[s] refused to deliver each and every one of the items.”
      The intentional interference with contractual relations cause of action
alleged that Bank of America knew about Shenoi Koes’ contract with Foster and
that Bank of America’s conduct “impaired [Shenoi Koes’] rights under its lien
and/or intentionally induced a breach of contract and/or intentionally interfered
with and/or prevented performance and/or made performance of [Shenoi Koes’]
contract with FOSTER more expensive or difficult.” The negligent interference
with prospective economic relations cause of action alleged that Shenoi Koes and
Foster “had been in an economic relationship that probably would have resulted in
a future economic benefit to [Shenoi Koes],” and that Bank of America interfered
with that relationship.
      The complaint further alleged that Bank of America wrongfully detained
Shenoi Koes’ compensation within the meaning of Civil Code sections 2223 and
2224. Shenoi Koes therefore sought “a constructive trust encompassing . . .
[Shenoi Koes’] unpaid compensation and unpaid expenses necessarily incurred in

2
     All these causes of action are alleged as to the other defendants as well as Bank of
America.

                                            9
connection with services rendered to FOSTER.” Finally, Shenoi Koes alleged
unjust enrichment by Bank of America, stating that Bank of America “unjustly
benefited, and continue[s] to unjustly benefit, from labor, efforts, and services
provided by [Shenoi Koes] because [Bank of America] failed to pay [Shenoi Koes]
compensation and reimbursement for expenses necessarily incurred in connection
with services rendered to FOSTER.” All the causes of action are based on Shenoi
Koes’ failure to receive payment for its legal services.
      The supporting and opposing declarations similarly establish that the
complaint is not based on protected activity.3 In support of its anti-SLAPP motion,
Bank of America submitted a declaration from Foster. Foster’s declaration merely
set forth the facts regarding her retention of Shenoi Koes for mediation, which did
not result in a settlement, and the OSHA proceedings. Her only statements
regarding the settlement negotiations were the following: “I did not re-engage in
settlement discussions with the Bank until a few weeks prior to a scheduled
October 2012 trial before the [ALJ]. My then current lawyer and the Bank’s
lawyer engaged in direct settlement negotiations that did not arise from any
mediation or follow-up to any mediation.”
      Shenoi Koes submitted a declaration from Allen A. Shenoi in support of its
opposition to the anti-SLAPP motion.4 Similar to Foster’s, Shenoi’s declaration

3
       Bank of America argues repeatedly that Shenoi Koes is bound solely by the
allegations in the pleadings. However, this is not accurate. As stated above, in deciding
whether the challenged causes of action arise from protected activity, we consider not
only the pleadings, but the supporting and opposing declarations. (Navellier, supra, 29
Cal.4th at p. 89; Albanese, supra, 218 Cal.App.4th at p. 928.)
4
       We disagree with Bank of America’s contention that the trial court erroneously
relied on Shenoi Koes’ “recasting of its claims in its opposition to the anti-SLAPP
motion.” There is no evidence in the record of this alleged error. Rather than “recasting”
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reiterated the facts that were alleged in the complaint: the contingency fee contract
between Foster and Shenoi Koes; the legal services Shenoi Koes performed for
Foster; Foster’s submission of Shenoi Koes’ fees in the OSHA proceeding;
Foster’s request that Shenoi Koes accept a cap of $200,000 in attorney fees and
costs; Shenoi Koes’ written notice of its lien to Bank of America; and OSHA’s
order that Bank of America pay Foster $229,364 in attorney fees. In addition,
Shenoi stated that Tonkovich informed him that the majority of the attorney fees
ordered by OSHA were for Shenoi Koes’ time.
       Bank of America relies on Thayer, supra, but that case is distinguishable. In
Thayer, the plaintiff sued attorneys who handled a class action (in which the
plaintiff was not a party) based on the attorneys’ handling of the settlement
proceeds. In contrast to the instant case, where the complaint is based solely on
Shenoi Koes’ claim that its attorney fee lien was not paid as part of the settlement
agreement, the complaint in Thayer made allegations regarding the defendant
attorneys’ conduct during litigation and settlement of the class action. For
example, the complaint alleged that, during the litigation, the plaintiff’s spouse (a
“very experienced attorney”) informed the defendant attorneys of an entity whom
they had not named. (Thayer, supra, 207 Cal.App.4th at p. 145.) The complaint
further alleged that the plaintiff’s spouse was not given the right to make
“‘“substantive decisions in the handling” of the[] actions,’” and that he asked for
but did not receive either a breakdown of the disbursements and costs or a list of
owners who had not approved the settlement. (Id. at pp. 148-149.) The plaintiff
further complained of decisions to hold the settlement funds in trust and to require
clients to affirmatively opt out of a “Fraud Fund” to be used in related criminal

Shenoi Koes’ claims, the declaration submitted in support of the opposition to the anti-
SLAPP motion reiterates the facts alleged in the complaint.
                                           11
proceedings. (Id. at p. 150.) The gravamen of the complaint therefore was not
merely the plaintiff’s failure to receive payment as a result of the settlement.
Instead, the complaint was “‘based on’” how the defendant attorneys conducted the
settlement proceedings. (Id. at p. 154.)
      The facts of this case thus are analogous to California Back Specialists
Medical Group v. Rand (2008) 160 Cal. App. 4th 1032 (California Back
Specialists), in which the plaintiff medical group provided medical treatment to the
defendant attorney’s clients pursuant to liens on their personal injury actions.
After the personal injury actions were resolved, the attorney disbursed the proceeds
without informing the medical group or satisfying the medical liens. The medical
group sued, alleging that the attorney “failed to notify it when the personal injury
cases were complete, and disbursed the proceeds from those cases without
withholding the funds owed to [it], in violation of the liens.” (Id. at p. 1035.) The
defendant filed a special motion to strike, contending that his conduct was
protected activity because he disbursed the funds as an attorney and was
representing his clients. On appeal, the court affirmed the trial court’s denial of the
anti-SLAPP motion, stating that “[n]ot all attorney conduct in connection with
litigation, or in the course of representing clients, is protected by section 425.16.
[Citations.]” (Id. at p. 1037.)
      Optional Capital presented a similar situation. In that case, after “an
extremely tangled thicket of legal proceedings in both state and federal court, as
well as in Switzerland,” the plaintiff corporation and its attorneys sued the
defendant to recover money the defendant allegedly looted from the corporate
plaintiff. (Optional Capital, supra, 222 Cal.App.4th at p. 1392.) The trial court
granted the defendant’s special motion to strike, on the basis that the complaint for
conversion and fraudulent transfer arose from a settlement agreement that resulted

                                           12
in the release of funds from a Swiss bank. The appellate court reversed, reasoning
that the plaintiffs were not suing because of the settlement, but in order to recover
money wrongfully obtained by the defendant. (Id. at pp. 1400-1401.) The court
found that the complaint was not based on the protected activity of the settlement
agreement because “[t]he only connection between the settlement . . . and [the
plaintiffs’] claims . . . is that the settlement was used as a device to permit [the
defendant] to persuade the Swiss government to release the funds, thereby
depriving [the corporate plaintiff] of funds to satisfy its judgment.” (Id. at p.
1401.)
      Similarly, in Coretronic Corp. v. Cozen O’Connor (2011) 192 Cal. App. 4th
1381 (Coretronic), the plaintiffs sued their former law firm after discovering that
the law firm was representing the plaintiffs’ adversary in an unrelated lawsuit. The
plaintiffs alleged claims arising from the law firm’s improperly obtaining
confidential information from the plaintiffs that would benefit their adversary. The
defendant law firm filed a motion to strike, arguing that the claims arose from its
representation of its other clients. However, the trial court denied the motion, and
the appellate court affirmed, finding that the complaint did not arise from protected
activity. (Id. at p. 1385.) The court agreed with the plaintiffs that the basis of their
claims was “the fact of this conflicting representation, and not any litigation-
related statements or conduct.” (Id. at p. 1389.) The court thus concluded that “the
complaint does not target litigation-related activity.” (Ibid.)
      As in California Back Specialists, Optional Capital, and Coretronic, the
allegations in Shenoi Koes’ complaint may have been “triggered by protected
activity” (the settlement between Bank of America and Foster). (Optional Capital,
supra, 222 Cal.App.4th at p. 1399.) However, the complaint does not target the
protected activity, but only the nonpayment of Shenoi Koes’ lien. (Coretronic,
13
supra, 192 Cal.App.4th at p. 1389.) The claims therefore do not arise from the
protected activity within the meaning of the anti-SLAPP statute.
      We acknowledge the statement in Thayer that “legal advice and settlement
made in connection with litigation are within section 425.16, and may protect
defendant attorneys from suits brought by third parties on any legal theory or cause
of action ‘arising from’ those protected activities. [Citations.]” (Thayer, supra,
207 Cal.App.4th at p. 154.) However, “[p]rotected conduct which is merely
incidental to the claims does not fall within the ambit of section 425.16.
[Citations.]” (Coretronic, supra, 192 Cal.App.4th at p. 1388.)
      Here, the settlement agreement was merely the “device” that permitted
Foster, but not Shenoi Koes, to be paid. (Optional Capital, supra, 222 Cal.App.4th
at p. 1401.) The settlement agreement itself and the conduct related to the
settlement are incidental to Shenoi Koes’ claim that its lien was unpaid. Thus,
contrary to Bank of America’s contentions, “[a]ny assertedly protected activity is
not the root of the complaint; it is merely the setting in which the claims arose.”
(Coretronic, supra, 192 Cal.App.4th at p. 1392.)
      “[T]he moving defendant in a SLAPP action has the initial burden of
showing the plaintiff’s challenged cause of action arose from an act by the
defendant in furtherance of its right of petition or free speech. [Citation.]”
(Kashian v. Harriman (2002) 98 Cal. App. 4th 892, 907.) Bank of America’s
payment to Foster without paying Shenoi Koes is not an act in furtherance of Bank
of America’s right of petition or free speech. (See Navellier, supra, 29 Cal.4th at
p. 92 [“The anti-SLAPP statute’s definitional focus is not the form of the plaintiff’s
cause of action but, rather, the defendant’s activity that gives rise to his or her
asserted liability – and whether that activity constitutes protected speech or

                                           14
petitioning.”].) Bank of America therefore has not met its initial burden of
showing the complaint arose from protected activity.
      Because we conclude that Bank of America has failed to make a threshold
showing that the claims arise from protected activity, we need not consider
whether Shenoi Koes has demonstrated a probability of prevailing on the claim.
(City of Cotati v. Cashman (2002) 29 Cal. 4th 69, 80-81; Coretronic, supra, 192
Cal.App.4th at p. 1393; California Back Specialists, supra, 160 Cal.App.4th at p.
1037.)

                                  DISPOSITION
             The judgment is affirmed. Respondent is entitled to costs on appeal.
             NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                              WILLHITE, J.

             We concur:

             EPSTEIN, P. J.                   MANELLA, J.

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