Court Opinion

ID: 9399958
Source: CourtListenerOpinion
Date Created: 2023-06-06 20:03:59.903017+00
Date Added: 2024-06-11T17:19:41.107494
License: Public Domain

Filed 6/6/23 Sakhai v. Tower Select Insurance 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   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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

MORIS SAKHAI et al.,                                               B313051

         Plaintiffs and Appellants,                                (Los Angeles County
                                                                    Super. Ct. Nos. 19STCV03806,
         v.                                                         BC531321)

TOWER SELECT INSURANCE et
al.,

     Defendants and
Respondents.

      APPEAL from an order and judgment of the Superior Court
of Los Angeles County, Lia R. Martin, Judge. Affirmed. The
appeal by California Capital Venture, Inc. is dismissed.
      Moris Sakhai, in pro. per., Nazyar Azadegan, in pro. per.;
George Omoko and Law Office of George Omoko for Plaintiffs and
Appellants.
      No appearance for Plaintiff and Appellant California
Capital Venture, Inc.
     Gordon Rees Scully Mansukhani, Michelle Bernard,
Matthew G. Kleiner for Defendant and Respondent Nationwide
Insurance Company.
     Hinshaw & Culbertson, Robert J. Romero, Edward F.
Donohue and Joseph V. Diestel for Defendant and Respondent
Northfield Insurance Company.

       This is the third appeal arising from a 2018 settlement
agreement resolving a dispute between appellants Moris Sakhai,
Nazyar Azadegan, and California Capital Venture, Inc.
(collectively, appellants) and Peyman Balakhane, Pejman
Balakhane, and L.A. Fashion Hub, Inc. (collectively, the
Balakhanes).1 Under the settlement agreement, entered orally
on the record before the trial court, appellants agreed to pay
$750,000 to the Balakhanes. Of that amount, the parties agreed
that $400,000 would be paid by appellants’ insurers, respondents
Nationwide Insurance Company (Nationwide) and Northfield
Insurance Company (Northfield), after appellants executed a
release of future claims against the insurers.
       When appellants failed to execute the insurance policy
release as agreed, the trial court entered orders enforcing the
portion of the agreement releasing respondents from liability
once they paid their portion of the settlement. Appellants and
respondents subsequently paid the settlement amount in full.
Following an initial appeal by the Balakhanes (Balakhane v.
Sakhai (Aug. 27, 2020, No. B294837) (nonpub. opn.) (Balakhane
I)), appellants sought to vacate the court’s orders releasing

     1   The Balakhanes are not parties to this appeal.

                                2
respondents from liability. They argued that the orders were
void because respondents were not parties to the litigation and
therefore the court lacked jurisdiction over them at the time of
the settlement. The trial court denied the motion and we
affirmed that denial in the second appeal, Balakhane v. Sakhai
(March 23, 2022, No. B307271) (nonpub. opn.) (Balakhane II).
       Appellants filed the instant lawsuit against their former
counsel and several insurance companies, including respondents.
They alleged that the attorneys conspired with respondents to
force appellants to accept the settlement of the underlying
matter, giving rise to claims of malpractice by counsel and aiding
and abetting that malpractice by the insurers. Appellants also
alleged breaches of contract by the insurers.
       In this appeal, appellants challenge three orders by the
trial court: an order sustaining the demurrer without leave to
amend as to all claims against Nationwide and all but one claim
against Northfield, an order granting the motion for judgment on
the pleadings by Northfield as to the remaining cause of action
against it, and an order granting Nationwide’s motion to strike
the three aiding and abetting claims under Code of Civil
Procedure section 425.16, the anti-SLAPP statute.2 Appellants
argue that they could amend their complaint to state that the
settlement release was void under a different theory. They also
contend that they adequately alleged their claims against
respondents and that the anti-SLAPP motion should have been

      2 SLAPP is an acronym for “strategic lawsuits against
public participation.” (FilmOn.com Inc. v. DoubleVerify Inc.
(2019) 7 Cal.5th 133, 139.) All further statutory references are to
the Code of Civil Procedure unless stated otherwise.

                                3
denied because legal malpractice is not protected under the
statute. We find no merit to appellants’ contentions and affirm
the orders of the trial court.

           FACTUAL AND PROCEDURAL HISTORY
I.     Prior Proceedings
       A.    Balakhane Action and Settlement Agreement
       We summarize the underlying facts as detailed in our
opinion in Balakhane II. The Balakhanes filed a complaint
against appellants in December 2013, alleging breach of contract,
fraud, and other claims arising out of a failed partnership
between the parties. This matter was consolidated with an
unlawful detainer complaint filed by appellants against the
Balakhanes (collectively, the Balakhane action).
       The parties participated in a mid-trial settlement
conference on February 2, 2018. Following the conference, with
all parties and their counsel present, the court announced that
the parties had reached a settlement. Counsel for appellants
recited the terms of the agreement on the record, stating that
“[t]he parties have agreed upon a complete settlement of all
claims between and among them, including all of the cases
consolidated before this Court.” He further stated that
appellants agreed to “pay a total settlement amount to [the
Balakhanes] in the amount of $750,000,” including a payment of
$400,000 “by a group of insurance carriers that will be described
separately by the representative, who is here today.” Counsel for
both parties agreed that the settlement agreement was “fully
enforceable under” section 664.6.3 Appellants’ counsel also

     3   Section 664.6, subdivision (a) provides: “If parties to

                                 4
explained the additional terms that respondents would pay
$400,000 once appellants signed a “complete policy release,” after
which appellants would pay the remaining $350,000.
      Counsel for respondents Nationwide and Northfield was
also present at the February 2, 2018 hearing. She informed the
court that “[i]ncluded as part of the settlement agreement” was
the provision that the insurance companies’ contribution was
contingent upon appellants signing a full policy release releasing
respondents “of all obligations under the policies and all possible
present and future extra-contractual liabilities in connection with
the claims involved in this complaint.” The court confirmed with
all parties personally that they had heard and agreed to these
terms “as relayed by both the attorneys as well as the individual
from the insurance company.” Counsel for respondents also
stated that she accepted the terms on behalf of Nationwide and
Northfield. The court accepted the settlement agreement and
stated that it “will retain jurisdiction under 664.6 to settle the
matter.”
      B.     Enforcement of Settlement
      When appellants failed to execute the insurance policy
release, the Balakhanes moved to enforce the settlement
agreement. Respondents filed a notice of special appearance,
including a memorandum of points and authorities regarding the

pending litigation stipulate, in a writing signed by the parties
outside the presence of the court or orally before the court, for
settlement of the case, or part thereof, the court, upon motion,
may enter judgment pursuant to the terms of the settlement. If
requested by the parties, the court may retain jurisdiction over
the parties to enforce the settlement until performance in full of
the terms of the settlement.”

                                5
Balakhanes’ motion to enforce the settlement agreement.
Respondents noted that they had agreed to indemnify appellants
in the amount of $400,000 in settlement of the action on the
condition that appellants executed a policy release related to the
claims at issue. They argued that the court could enforce the
agreement under section 664.6, including the requirement that
appellants release respondents from liability.
       Appellants did not raise any objection to respondents’ filing
or to the appearance by respondents’ counsel at the March 2018
hearing on the motion to enforce the settlement. The court found
that the settlement was entered “in open court, and pursuant to
CCP § 664.6,” and included the agreement by appellants “to
execute a Full Policy Release relieving their insurance company
of liability” and to pay a total settlement amount to the
Balakhanes of $750,000, with the first $400,000 to be paid “on
the condition that the insurance release was fully executed” by
the payment date. The court granted the motion in part, to
“enforce that part of the agreement granting the carrier a full
policy release on the condition that [respondents] forward the
agreed upon proceeds forthwith to [the Balakhanes].”
       Nationwide subsequently paid its contribution pursuant to
the settlement agreement. Accordingly, on March 14, 2018, the
court entered the following order: “Pursuant to the terms of the
oral settlement agreement set forth before this Court on
February 2, 2018 by and between [the Balakhanes] on the one
hand, and [appellants] on the other hand, through their
respective counsel, and the agreement having been orally agreed
to by the parties, and further, that Nationwide . . . has tendered
its agreed upon proceeds to [the Balakhanes] in accordance with
the terms of the . . . settlement agreement,” the court ordered

                                 6
that “Nationwide . . . is granted a full policy release, releasing
Nationwide . . . of all obligations under its policies and all
possible present and future extra-contractual liabilities in
connection with the claims involved in this complaint.” Northfield
paid its portion of the settlement by early April 2018.4
       In June 2018, appellants filed a motion for enforcement of
the settlement agreement pursuant to section 664.6. They
claimed that the Balakhanes materially breached the settlement
agreement. The court denied this motion and ordered appellants
to pay the remaining $350,000 owed under the settlement
agreement. Appellants paid the $350,000 the same day.
       C.    First Appeal
       In August 2018, the Balakhanes filed a motion for attorney
fees and costs incurred in seeking to enforce the settlement
agreement. In their opposition, appellants again asserted that
the court agreed to retain jurisdiction over the parties pursuant
to section 664.6 to enforce the settlement agreement and that
appellants had paid the full amount owed pursuant to the
agreement. The court denied the motion for attorney fees and
costs and the Balakhanes appealed. In Balakhane I, we affirmed
the trial court’s denial of attorney fees. We also noted that in
their respondents’ brief on appeal, appellants argued that the
settlement agreement was void for noncompliance with section
664.6. We refused to consider this claim, as appellants had not
raised it below and had not appealed from the judgment.
       D.    Motion to Vacate and Second Appeal

      4 Unlike Nationwide, Northfield did not obtain a separate
order from the court granting a policy release.

                                7
       In February 2020, appellants filed a motion to vacate the
trial court’s “void orders” releasing respondents from liability.
They argued that respondents were not parties to the lawsuit and
the court thus had “no jurisdictional basis” to order a release of
their liabilities in connection with the claims at issue. They also
argued that the court lacked jurisdiction to enter the order
granting the policy release because no party had requested that
the court retain jurisdiction under section 664.6 to enforce the
settlement agreement.
       The court denied the motion, rejecting appellants’
argument that the judgment was void and finding that the
agreement as orally entered on the record on February 2, 2018
established “that the Court’s jurisdiction to enforce the
settlement agreement was properly preserved.” The court noted
that counsel for both parties “expressly agreed that this open-
court settlement was being brought pursuant to, and was ‘fully
enforceable’ under,” section 664.6. The court further cited the
personal acknowledgment by the parties on the record on
February 2, 2018 that they had heard, understood, and agreed to
the terms of the agreement, which included the payments and
the insurance policy release, followed by the court’s express
retention of jurisdiction under section 664.6.
       Appellants appealed. In Balakhane II, we concluded that
the trial court’s orders releasing respondents from liability were
not void and therefore the court did not err in denying appellants’
request to vacate them. Specifically, we found that the trial court
had subject matter jurisdiction over the settlement, including
jurisdiction under section 664.6 to enforce the terms of the
settlement agreement. We also rejected appellants’ assertion
that the court lacked personal jurisdiction over respondents

                                8
because they were not parties to the litigation. To the contrary,
we found that the evidence showed that respondents made a
general appearance in the Balakhane action and were therefore
subject to the court’s personal jurisdiction for the purpose of
enforcing the settlement agreement. We also concluded that
appellants had forfeited several other newly raised challenges to
the settlement agreement.
II.     Appellants’ Lawsuit
       A.     Pleadings
       Appellants filed a complaint in February 2019 alleging
breach of contract and bad faith against respondents and several
other insurance companies,5 as well as their former counsel, the
Law Offices of Samini Scheinberg, P.C., Theodore Spanos, and
Bobby Samini (collectively, the attorney defendants). Appellants
filed their first amended complaint (FAC)—the pleading at issue
here—in February 2020. After appellants’ claims arose out of the
purported mishandling of the Balakhane action and settlement
by the attorney defendants, including the contention that the
attorney defendants forced appellants to settle the case, with
assistance by the insurance companies.
       The FAC alleged fourteen causes of action, including four
claims for breach of fiduciary duties, fraud, and related claims
against the attorney defendants. As relevant here, appellants
alleged the following claims against respondents: the second,
fourth, and sixth causes of action for aiding and abetting breach
of fiduciary duties, dual representation of adverse interests, and

      5 We omit discussion of the claims against the insurance
companies other than respondents, as they are not relevant to
this appeal.

                                9
fraud (non-disclosure or intentional concealment), respectively;
the eighth and ninth causes of action for breach of insurance
contract against Nationwide and Northfield, respectively; the
eleventh cause of action for bad faith breach of implied covenant
of good faith and fair dealing; and the fourteenth cause of action
for declaratory relief.
       With respect to their claims against respondents,
appellants alleged that they were insured during the relevant
time periods under commercial general liability policies issued by
respondents. As a result, appellants alleged that respondents
had a duty to defend appellants in the Balakhane action and
therefore appointed the attorney defendants. Appellants also
generally alleged that the attorney defendants and respondents
“knew the other’s(s’) conduct constituted breaches of duty and
gave substantial assistance or encouragement to the other(s) to
so act.”
       Appellants alleged three malpractice claims against the
attorney defendants mirroring the aiding and abetting claims
against respondents. In their claim for breach of fiduciary duty
against the attorney defendants, appellants alleged that the
attorney defendants breached their fiduciary duties to appellants
by “pursuing strategies that were contrary to [appellants’]
interests” including “abandon[ing] all the damages (in excess of
$1,000,000) that had been established in favor of Sakhai,”
without appellants’ authorization. Appellants also alleged that
“Spanos and/or Samini lied to the Representatives of Nationwide
and Northfield that Sakhai on his own had reached a settlement
of $750,000 . . . and then proceeded to force [appellants] to accept
the settlement.” Appellants’ second cause of action alleged that
respondents aided and abetted the attorney defendants in such

                                 10
breaches. Appellants alleged that respondents “knew about the
wrongdoings” by the attorney defendants, and that counsel for
respondents was “within hearing distance” of discussions
between appellants and Spanos during the settlement conference
and therefore respondents should have known “from Sakhai’s
strenuous opposition to the proposed settlement” that appellants
had not agreed to it.
       In their claim against the attorney defendants for “dual
representation of adverse interests,” appellants alleged that the
attorney defendants were simultaneously representing
appellants in the Balakhane action and “the interests of the
insurers paying them,” and that those interests “came into actual
conflict” in the litigation. In the fourth cause of action for aiding
and abetting dual representation, appellants alleged that
respondents knew about the attorney defendants’ wrongdoings
and “gave substantial assistance or encouragement.” Appellants
also alleged that respondents “specifically knew or reasonably
should have known” of the attorney defendants’ breaches of
fiduciary duties, but “negligently failed” to take “appropriate
action to avoid the harm” to appellants.
       In the last malpractice claim alleging fraud and deceit,
appellants claimed that the attorney defendants were “unable to
effectively manage the ethical duties of loyalty and confidence
necessary to balance” appellants’ interests in the Balakhane
action with the interests of respondents, who were “paying their
attorney’s fee and costs.” The attorney defendants “threatened”
appellants that they had no choice but to accept the settlement,
and falsely told counsel for respondents that appellants had
“personally reached” that settlement. Appellants also alleged
that counsel for respondents refused to answer appellants’

                                 11
request “to explain the Nationwide policy benefits being
impacted, and failed to disclose to [appellants] that Northfield
was going to be involved in contributing any portion of the
settlement.” In their sixth cause of action for aiding and abetting
fraud, appellants repeated the general allegations that
respondents knew of the wrongdoings, gave substantial
assistance to the attorney defendants, and negligently failed to
take action to avoid the alleged harm to appellants.
      In their eighth and ninth causes of action for breach of
contract, appellants alleged that respondents breached the
insurance agreements by “failing in their duties to defend and
indemnify [appellants] for covered losses.” In their eleventh
cause of action for breach of the implied covenant of good faith
and fair dealing, appellants alleged that respondents breached
the insurance agreements by “failing in their duties to defend and
indemnify [appellants] for covered losses, and/or denying
coverage.”
      In the fourteenth cause of action, appellants sought
“declaratory relief to nullify void orders of 03/05/2018 and
03/14/2018 releasing Nationwide and Northfield.” They alleged
that respondents were not named parties in the Balakhane
action, that “there was no record of any party agreeing for the
Court to retain jurisdiction [under section 664.6] to enforce the
settlement,” and therefore that “any order(s) releasing
[respondents] from claims asserted in this lawsuit is/are void.”
Appellants sought a declaration “that Nationwide and Northfield
are proper parties in this lawsuit notwithstanding the void
Orders releasing them from liabilities.”
      B.     Demurrer

                                12
       In April 2020, Nationwide demurred to the claims alleged
against it in the FAC—the second, fourth, sixth, eighth, eleventh,
and fourteenth causes of action. Northfield filed a joinder to the
demurrer as to the second, fourth, sixth, eleventh, and fourteenth
claims, as those were alleged against both insurers (the eighth
cause of action for breach of contract was alleged only against
Nationwide). Northfield did not file a separate demurrer as to
the breach of contract claim (the ninth cause of action) alleged
against it.
       Nationwide argued that the settlement agreement was
valid and therefore that appellants had released all claims
against it. Nationwide also argued that any alleged professional
negligence by the attorney defendants could not be imputed to an
insurer, such as Nationwide, as a matter of law. Additionally,
Nationwide contended that appellants’ claim for declaratory
relief failed because the court lacked jurisdiction to vacate any
orders from the Balakhane action. Finally, Nationwide argued
that further amendment would be futile.
       Appellants argued in their opposition that the settlement
and release were void because respondents participated as non-
parties. They also noted the then-pending appeal on the same
issue (Balakhane II) and argued that the trial court could declare
the prior court’s orders void. Appellants also argued that they
had adequately alleged their aiding and abetting claims against
respondents under an “independent joint liability theory,” and
thus that respondents’ argument that the attorney defendants’
misconduct could not be imputed to them was irrelevant. They
alleged that the FAC set forth respondents’ own conduct in
“assisting and encouraging” the attorney defendants to engage in
malpractice.

                                13
      The court issued an order on March 4, 2021, sustaining the
demurrer without leave to amend as to all causes of action
against Nationwide, and all except the ninth cause of action
against Northfield. It noted that the issue of the validity of the
settlement and releases was currently pending on appeal (in
Balakhane II), but that it would exercise its discretion to rule on
the demurrer rather than stay it. The court found that appellants
“do not dispute that they entered into a settlement agreement
that included a policy release in favor of [respondents] in its
terms. And . . . [appellants] cite no authority that supports the
proposition that the parties to the litigation over whom the [court
in the Balakhane action] unquestionably had jurisdiction could
not include terms in their settlement agreement that
contemplated a full release of insurers once certain conditions
were met.” Turning to the individual causes of action, the court
sustained the demurrer without leave to amend as to the second,
fourth, and sixth claims for aiding and abetting, finding that
appellants conceded that they were “represented by independent
counsel retained by [appellants] pursuant to Cal. Civ. Code 2860
rather than by panel counsel appointed by insurers.”
      The court also sustained the demurrer without leave to
amend as to the eighth cause of action for breach of contract
against Nationwide and the eleventh cause of action for breach of
the implied covenant of good faith and fair dealing against both
respondents.6 The court found that the claims “arise out of the
settlement agreement in [the Balakhane action], which no court

      6 The court did not reach the ninth cause of action for
breach of contract against Northfield, finding that Northfield had
not demurred to that claim.

                                14
has yet determined to be void.” Moreover, the court found that
the terms of the settlement “include that the policies and all of
their claims have been released” against respondents. Finally,
the court sustained the demurrer without leave to amend as to
the fourteenth cause of action for declaratory relief, explaining
that appellants “are asking this Court to nullify orders of another
court of equal jurisdiction. This court lacks jurisdiction to do so.
There is no basis for this court to find the orders void on their
face.”
       The court dismissed Nationwide with prejudice from the
FAC on March 4, 2021.
       C.    Motion for Judgment on the Pleadings
       Northfield filed a motion for judgment on the pleadings as
to the remaining ninth cause of action against it on April 1, 2021.
Northfield argued that appellants had released all claims against
it and that such release was effective without an additional court
order releasing it from liability. In opposition, appellants argued
that Northfield had refused to defend appellants in the
Balakhane action and did not obtain an order releasing it from
liabilities. Appellants also repeated their previous argument that
the court lacked jurisdiction and the settlement was void.
       The court issued its order on April 29, 2021, granting the
motion on the same grounds as the demurrer. The court
dismissed Northfield with prejudice from the FAC the same day.
       D.    Anti-SLAPP Motion
       In May 2020, Nationwide filed a motion to strike pursuant
to section 425.16; to which Northfield filed a joinder. Nationwide
sought to strike the aiding and abetting claims (the second,
fourth, and sixth causes of action), on the basis of the litigation
privilege under Civil Code section 47. It argued that these claims

                                15
arose from alleged communications between the attorney
defendants and respondents in furtherance of litigating and
settling the Balakhane action and therefore were protected
activity under the anti-SLAPP statute. It also argued that
appellants could not show a probability of success on the merits
of their claims because defense counsel’s conduct could not be
imputed to the insurers, and because the claims had been
released.
       In opposition, appellants acknowledged that the attorney
defendants acted as “independent counsel aka Cumis[7] counsel”
when representing appellants in the Balakhane action. However,
they argued that the litigation privilege did not apply because
attorney malpractice, on which the aiding and abetting claims
were based, is not protected activity. They also contended that
they could show a probability of success on their claims for the
same reasons set forth in their opposition to the demurrer.
       After a hearing on March 5, 2021, the court adopted its
tentative ruling granting Nationwide’s motion to strike.
However, the court denied Northfield’s request to join the motion
to strike, finding that Northfield’s notice of joinder did “not
support a request for relief.” As for the merits of the motion, the
court found that the allegations against Nationwide in the aiding
and abetting claims were within the scope of the anti-SLAPP
statute, as those allegations “relate to communications regarding
the litigation and settlement.”8

      7 San Diego Federal Credit Union v. Cumis Ins. Society,
Inc. (1984) 162 Cal.App.3d 358 (Cumis).

      8   The court also sustained the majority of Nationwide’s

                                 16
       Turning to the probability of prevailing on the merits, the
court rejected appellants’ argument that the litigation privilege
did not apply because the settlement and orders enforcing the
settlement were void. Moreover, the court reasoned, “even if they
were void, the communications by Nationwide were still made in
the context of the litigation and settlement. [Appellants have]
cited to no authority that a subsequent finding that a court order
was void negates the litigation privilege.” The court further
found that Nationwide was not liable for the actions of
appellants’ independent counsel. As such, the court concluded
that appellants failed to establish a probability of prevailing on
the merits of their claims and granted the motion to strike the
second, fourth, and sixth causes of action against Nationwide.
The court also found that Nationwide was entitled to costs and
attorney fees. The court subsequently granted Nationwide’s
motion for $12,833 in fees and costs incurred in connection with
the anti-SLAPP motion.
       Appellants timely appealed from the judgment following
the court’s March 4, 2021 order sustaining the demurrer and
dismissing Nationwide, and the April 29, 2021 order granting
Northfield’s motion for judgment on the pleadings and dismissing
Northfield. Appellants also appealed from the March 5, 2021
order granting Nationwide’s motion to strike.9

objections to appellants’ evidence. This evidence consisted of
paragraphs from the declaration submitted by appellants’ counsel
reciting certain facts based on his “review of the files and
documents related to the” Balakhane action. Appellants do not
challenge these rulings on appeal.
       9 In December 2022, after appellate briefing had

concluded, we granted the motion of attorney George Omoko to be

                                17
                           DISCUSSION
       Appellants contend the trial court erred in sustaining
Nationwide’s demurrer to all causes of action against it, as well
as all but one cause of action against Northfield. As to all of the
claims, appellants do not contend the court erred in finding that
the claims were released under the settlement agreement.
Instead, they argue the court failed to consider whether they
could amend their complaint, specifically to assert a new
jurisdictional claim that they contend would cure any defects.
Additionally, they argue that the aiding and abetting claims
sufficiently alleged that respondents committed independent
torts in support of the purported legal malpractice by the
attorney defendants. Lastly, they contend that they adequately
alleged a right to declaratory relief.

relieved as counsel for all three appellants. In February 2023, we
granted the request of Sakhai and Azadegan to continue oral
argument so that they could retain new counsel. No counsel has
filed an appearance for appellants since that time and Sakhai
appeared in propria persona at oral argument in May 2023.
While Sakhai and Azadegan may represent themselves on
appeal, corporate appellant California Capital Venture, Inc. may
not proceed without counsel. (See, e.g., CLD Construction, Inc. v.
City of San Ramon (2004) 120 Cal.App.4th 1141, 1145 [“[A]
corporation, unlike a natural person, cannot represent itself
before courts of record in propria persona, nor can it represent
itself through a corporate officer, director or other employee who
is not an attorney. It must be represented by licensed counsel in
proceedings before courts of record.”].) We therefore dismiss the
appeal as to California Capital Venture, Inc.

                                 18
       Appellants also challenge the trial court’s order granting
Northfield’s motion for judgment on the pleadings. They again
argue that the trial court erred by failing to consider whether
they could amend that claim.
       Finally, appellants contend the court should have denied
respondents’ anti-SLAPP motion regarding the second, fourth,
and sixth causes of action alleging aiding and abetting. They
argue that the underlying legal malpractice by the attorney
defendants is not protected conduct under the anti-SLAPP
statute, and furthermore that they have established a probability
of prevailing on their claims.
       We conclude that appellants have failed to establish any
error by the trial court. We therefore affirm the judgment
dismissing Nationwide and Northfield from the FAC, as well as
the order granting the anti-SLAPP motion.
I.     Demurrer
       A.    Legal Standards
       A demurrer tests the legal sufficiency of factual allegations
in a complaint. (Title Ins. Co. v. Comerica Bank–California
(1994) 27 Cal.App.4th 800, 807.) We review de novo the
dismissal of a civil action after a demurrer is sustained without
leave to amend. ( Cantu v. Resolution Trust Corp. (1992) 4
Cal.App.4th 857, 879 (Cantu).) In doing so, “we determine
whether the complaint states facts sufficient to constitute a cause
of action.” (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “‘We
treat the demurrer as admitting all material facts properly
pleaded, but not contentions, deductions or conclusions of fact or
law.’” (Ibid.) “Further, we give the complaint a reasonable
interpretation, reading it as a whole and its parts in their
context.” (Ibid.)

                                 19
       On appeal, a plaintiff bears the burden of demonstrating
that the trial court erroneously sustained the demurrer as a
matter of law. (Rakestraw v. California Physicians’ Service
(2000) 81 Cal.App.4th 39, 43.) To establish that a cause of action
has been adequately pled, a plaintiff must demonstrate he or she
has alleged “facts sufficient to establish every element of that
cause of action. [Citation.]” (Cantu, supra, 4 Cal.App.4th at pp.
879–880.) If the complaint fails to plead any essential element of
a particular cause of action, this court should affirm the
sustaining of a demurrer. (Ibid.)
       We review an order denying leave to amend for an abuse of
discretion. “‘Generally, it is an abuse of discretion to sustain a
demurrer without leave to amend if there is any reasonable
possibility that the defect can be cured by amendment. . . .
However, the burden is on the plaintiff to demonstrate that the
trial court abused its discretion. Plaintiff must show in what
manner he can amend his complaint and how that amendment
will change the legal effect of his pleading.’” (Goodman v.
Kennedy (1976) 18 Cal.3d 335, 349; see also, e.g., Angie M. v.
Superior Court (1995) 37 Cal.App.4th 1217, 1227 [liberality in
permitting a party to amend a pleading is the rule if a fair
opportunity to correct the defect has not already been given and
the pleading’s deficiency can be easily corrected.])
       B.    Analysis
       In their opposition to the demurrer below, appellants
argued that the trial court in the Balakhane action lacked
jurisdiction over the settlement agreement and over respondents
as non-parties, and therefore that the court’s orders enforcing the
agreement—most pertinently the release of claims against
respondents—were void. The trial court rejected that argument

                                20
and sustained the demurrer on the basis that appellants had
released all claims against respondents arising out of the
Balakhane action as part of the valid settlement agreement.
       We rejected this same voidness argument raised by
appellants in Balakhane II. As multiple courts have now found,
the settlement agreement was valid and enforceable; in fact, its
payment terms were complied with by all parties apart from
appellants’ refusal to sign the policy release. The claims asserted
against respondents in this lawsuit arose directly out of the
Balakhane action. Those claims were therefore covered under
the liability release set forth in the settlement agreement.
Indeed, appellants do not contend otherwise. Thus, because
appellants released the claims asserted in this action pursuant to
the terms of the settlement agreement, the FAC fails to state a
claim upon which relief could be granted and the demurrer was
properly sustained in its entirety.
       Appellants now contend that the trial court abused its
discretion in denying leave to amend because they could amend
their complaint with a new claim—that the settlement agreement
and accompanying insurance releases were void for lack of
personal jurisdiction pursuant to section 583.210. Section
583.210, subdivision (a) provides: “The summons and complaint
shall be served upon a defendant within three years after the
action is commenced against the defendant. For the purpose of
this subdivision, an action is commenced at the time the
complaint is filed.”
       Appellants argue that this statute applies to respondents,
and because respondents were not served with the summons and
complaint and they did not make a general appearance within
three years after the Balakhane action commenced in 2013, the

                                21
matter was subject to mandatory dismissal. Moreover, because
the court did not dismiss the action, the subsequent settlement
agreement was void for lack of jurisdiction. However, as
respondents point out, section 583.210 on its face applies only to
service on defendants in an action, whereas here, it is undisputed
that respondents were not parties to the Balakhane action.
Appellants rely on cases applying section 583.210 to parties (see
Dale v. ITT Life Ins. Corp. (1989) 207 Cal.App.3d 495, 503
[dismissing claim where defendant was not served within three
years]; Semole v. Sansoucie (1972) 28 Cal.App.3d 714, 722-723
[same]). They cite no authority relevant to nonparties. Nor do
they provide any support for their suggestion that respondents
“became defendants” when they made a general appearance at
the time of the settlement in February 2018.10
      To the contrary, the record reflects that respondents,
through counsel, appeared in February 2018 in order to
participate in the settlement as insurers to appellants, not as
parties to the Balakhane action. They then paid the agreed-upon
settlement amount to the Balakhanes in compliance with that
agreement. Appellants’ contention, four years later, that the trial
court should have dismissed the Balakhane action because the
Balakhanes did not serve respondents with a summons and
complaint within three years of the commencement of that action
in 2013 is nonsensical.

      10  Notably, this claim is directly contrary to every other
jurisdictional challenge appellants have made throughout this
litigation, in which appellants repeatedly argued that the
settlement was void because respondents were not parties.

                                 22
       We also note that appellants acknowledge that they did not
make this argument before the trial court when opposing
Nationwide’s demurrer.11 Thus, their contention that the trial
court erred by failing to consider it is meritless. We conclude that
the trial court did not abuse its discretion in denying leave to
amend the FAC.
       Appellants challenge the demurrer ruling as to the aiding
and abetting claims (the second, fourth, and sixth causes of
action) on an additional basis. They argue that the FAC alleged
“ratification and other acts by Nationwide endorsing or
approving” the actions of the attorney defendants, and that those
allegations were sufficient to establish claims for aiding and
abetting by respondents.
       The trial court found, and appellants concede, that they
were represented in the Balakhane action by independent
counsel retained pursuant to Civil Code section 2860, rather than
by counsel appointed and controlled by respondents. As codified
in Civil Code section 2680, “[i]f the provisions of a policy of
insurance impose a duty to defend upon an insurer and a conflict
of interest arises which creates a duty on the part of the insurer
to provide independent counsel to the insured, the insurer shall
provide independent counsel to represent the insured.” (Civil
Code, § 2680, subd. (a); see also Kroll & Tract v. Paris & Paris
(1999) 72 Cal.App.4th 1537, 1543 [“The Cumis doctrine requires
‘complete independence of counsel,’ who represents ‘solely the
insured.’”].) As such, respondents cannot be held liable for the

      11 Appellants previously attempted to raise this argument
during oral argument in Balakhane II. We found it was untimely
and declined to consider it.

                                23
purported misconduct by the attorney defendants in their
representation of appellants during the Balakhane action. (See,
e.g., Merritt v. Reserve Ins. Co. (1973) 34 Cal.App.3d 858, 880
[“independent counsel retained to conduct litigation in the courts
act in the capacity of independent contractors, responsible for the
results of their conduct and not subject to the control and
direction of their employer over the details and manner of their
performance”]; accord, Channel Lumber Co. v. Porter Simon
(2000) 78 Cal.App.4th 1222, 1229-1230; Lynn v. Superior Court
(1986) 180 Cal.App.3d 346, 349.)
       Appellants do not dispute these circumstances. Rather,
they contend that they alleged independent tortious conduct by
respondents that amounted to aiding and abetting the attorney
defendants’ breach of fiduciary duties (second cause of action),
dual representation of adverse interests (fourth cause of action),
and fraud (sixth cause of action). The allegations of the FAC do
not support these contentions.
       “A defendant is liable for aiding and abetting another in the
commission of an intentional tort, including a breach of fiduciary
duty, if the defendant ‘“knows the other’s conduct constitutes a
breach of duty and gives substantial assistance or encouragement
to the other to so act.”’” (Nasrawi v. Buck Consultants LLC
(2014) 231 Cal.App.4th 328, 343 (Nasrawi), quoting Casey v. U.S.
Bank Nat. Assn. (2005) 127 Cal.App.4th 1138, 1144 (Casey).)
“The elements of a claim for aiding and abetting a breach of
fiduciary duty are: (1) a third party’s breach of fiduciary duties
owed to plaintiff; (2) defendant’s actual knowledge of that breach
of fiduciary duties; (3) substantial assistance or encouragement
by defendant to the third party’s breach; and (4) defendant’s
conduct was a substantial factor in causing harm to plaintiff.”

                                24
(Nasrawi, supra, 231 Cal.App.4th at p. 343, citing American
Master Lease LLC v. Idanta Partners, Ltd. (2014) 225
Cal.App.4th 1451, 1478 (American Master Lease).) Liability for
aiding and abetting “depends on proof the defendant had actual
knowledge of the specific primary wrong the defendant
substantially assisted.” (Casey, supra, 127 Cal.App.4th at p.
1145.) The aider and abettor must make “‘“a conscious decision
to participate in tortious activity for the purpose of assisting
another in performing a wrongful act.”’” (American Master Lease,
supra, 225 Cal.App.4th at p. 1477.)
       Reading the allegations of the complaint as a whole and in
context, they fail to show that respondents had any actual
knowledge of the underlying wrongs that they purportedly aided
and abetted. Appellants include the conclusory allegation that
respondents “knew about the wrongdoings” by the attorney
defendants and “gave substantial assistance or encouragement to
the other(s) to so act.” But they fail to plead any facts to support
the assertion that respondents had actual knowledge of the
tortious conduct by the attorney defendants. To the contrary, the
FAC alleged that the attorney defendants lied to respondents,
telling them that appellants had agreed to the settlement. The
FAC also alleged that respondents’ counsel was “within hearing
distance” of one of the attorney defendants “threatening”
appellants during the settlement conference and therefore
respondents should have known “from Sakhai’s strenuous
opposition to the proposed settlement” that appellants had not
agreed to it. These allegations fail to state sufficient facts to
establish that respondents had actual knowledge of the purported
misconduct by the attorney defendants. (See Casey, supra, 127
Cal.App.4th at p. 1154; see also Schulz v. Neovi Data Corp. (2007)

                                25
152 Cal.App.4th 86, 97 [rejecting as conclusory allegations that
the defendant acting with the “knowing intent to aid and abet”].)
       Appellants’ three aiding and abetting claims are similarly
bereft of any facts supporting their conclusory claim that
respondents “gave substantial assistance or encouragement” to
the attorney defendants, and contradict appellants’
acknowledgment that the attorney defendants acted as
independent counsel for appellants. As such, the trial court did
not err in sustaining the demurrer to these causes of action
against respondents.
       Finally, appellants contend that the trial court erred in
sustaining the demurrer as to the fourteenth cause of action for
declaratory relief. They argue that the FAC sufficiently alleged
facts showing an actual controversy between the parties. We
disagree. The FAC sought a declaration that the settlement
agreement was void because the trial court lacked personal
jurisdiction over respondents as non-parties. We rejected that
claim in Balakhane II. Accordingly, there remains no “actual
controversy relating to the legal rights and duties of the
respective parties” sufficient to maintain an action for
declaratory relief. (Ludgate Ins. Co. v. Lockheed Martin Corp.
(2000) 82 Cal.App.4th 592, 605.)
II.    Motion for Judgment on the Pleadings
       “‘A motion for judgment on the pleadings, like a general
demurrer, challenges the sufficiency of the plaintiff’s cause of
action and raises the legal issue, regardless of the existence of
triable issues of fact, of whether the complaint states a cause of
action.’ The standard of review for a motion for judgment on the
pleadings is the same as that for a general demurrer. . . . ‘“We
review the complaint de novo to determine whether [it] alleges

                                26
facts sufficient to state a cause of action under any legal theory.”’”
(Ellerbee v. County of Los Angeles (2010) 187 Cal.App.4th 1206,
1213-1214.)
       Appellants make a single claim of error as to Northfield’s
motion for judgment on the pleadings. They argue that the trial
court erred by failing to consider appellants’ “demonstrated
ability to cure the pleading defect and allege that the release of
Northfield was void” under section 583.210. We again note that
appellants did not make this argument before the trial court.
Obviously, the court could not fail to consider an argument never
raised. Moreover, we have rejected appellants’ argument
regarding section 583.210. The challenge to the motion for
judgment on the pleadings thus fails for the same reasons.
III. Anti-SLAPP Motion12
       Appellants contend that respondents failed to make the
required step one showing that the challenged conduct is
protected under the anti-SLAPP statute. They assert that their
aiding and abetting claims against respondents arise out of the
purported legal malpractice by the attorney defendants, rather
than from protected litigation activity. They argue that
respondents cannot raise the litigation privilege in step two for
the same reason. We disagree with appellants and affirm the
trial court’s order granting the motion to strike.13

      12  Although we have affirmed the order dismissing all
claims against Nationwide, we reach the merits of appellants’
challenge to the anti-SLAPP motion because Nationwide was
awarded fees and costs as the prevailing party under section
425.16.
       13 Appellants do not challenge the order awarding fees and

costs to Nationwide as prevailing parties under section 425.16,

                                 27
       A.     Section 425.16 and Standard of Review
       “A cause of action arising from a person’s act in furtherance
of the ‘right of petition or free speech under the United States
Constitution 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 claim will prevail.” (Monster Energy Co.
v. Schechter (2019) 7 Cal.5th 781, 788 (Monster Energy), citing
§ 425.16, subd. (b)(1).) Thus, “[a]nti-SLAPP motions are
evaluated through a two-step process. Initially, the moving
defendant bears the burden of establishing that the challenged
allegations or claims ‘aris[e] from’ protected activity in which the
defendant has engaged.” (Park v. Board of Trustees of California
State University (2017) 2 Cal.5th 1057, 1061 (Park).) “If the
defendant carries its burden, the plaintiff must then demonstrate
its claims have at least ‘minimal merit.’” (Ibid.)
       “We review de novo the grant or denial of an anti-SLAPP
motion. [Citation.] We exercise independent judgment in
determining whether, based on our own review of the record, the
challenged claims arise from protected activity. [Citations.] In
addition to the pleadings, we may consider affidavits concerning
the facts upon which liability is based. [Citations.] We do not,
however, weigh the evidence, but accept plaintiff's submissions as
true and consider only whether any contrary evidence from the
defendant establishes its entitlement to prevail as a matter of
law.” (Park, supra, 2 Cal.5th at p. 1067.)
       B.     Step One: Protected Activity

except to say that if we reverse the order granting the motion to
strike, we should reverse the fee award as well.

                                28
       “A claim arises from protected activity when that activity
underlies or forms the basis for the claim.” (Park, supra, 2
Cal.5th at p. 1062.) “[I]n ruling on an anti-SLAPP motion, courts
should consider the elements of the challenged claim and what
actions by the defendant supply those elements and consequently
form the basis for liability.” (Id. at p. 1063.) Thus, “a claim may
be struck only if the speech or petitioning activity itself is the
wrong complained of, and not just evidence of liability or a step
leading to some different act for which liability is asserted.” (Id.
at p. 1060.)
       A defendant meets its step one burden “‘by demonstrating
that the act underlying the plaintiff’s cause [of action] fits one of
the categories spelled out in section 425.16, subdivision (e)’.”
(Hunter v. CBS Broadcasting, Inc. (2013) 221 Cal.App.4th 1510,
1519.) Claims that arise out of the filing of a lawsuit arise from
protected activity for purposes of the anti-SLAPP statute. (Bonni
v. St. Joseph Health System (2021) 11 Cal.5th 995, 1024.)
“Settlement negotiations while a suit is pending are likewise
protected; they involve communications in connection with a
matter pending before or under consideration by an official body,
and so fall within the scope of section 425.16, subdivision (e)(2).”
(Ibid.) “Recognized petitioning activities thus include not only
the conduct of litigation but also acts and communications
reasonably incident to litigation.” (Id. at p. 1025.)
       Appellants contend their claims arise out of the malpractice
conduct alleged against the attorney defendants, such as forcing
appellants to accept the settlement over their “vehement
objection,” “pursuing strategies contrary to their client’s
[appellants’] interests,” and fraudulently failing to inform
appellants of significant developments relating to the

                                 29
representation, including that “Northfield was now a participant
in the underlying lawsuit” by paying for a portion of the
settlement. They argue that this conduct is not protected under
section 425.16, and that any litigation-related activity is “merely
the setting in which the claims arose.” To this end, appellants
cite Sprengel v. Zbylut (2015) 241 Cal.App.4th 140 (Sprengel), for
the proposition that “numerous cases have held that ‘actions
based on an attorney’s breach of professional and ethical duties
owed to a client’ are generally not subject to section 425.16 ‘even
though protected litigation activity features prominently in the
factual background.’” (Id. at p. 151, quoting Castleman v.
Sagaser (2013) 216 Cal.App.4th 481, 490.)
       Appellants’ reliance on Sprengel is unpersuasive. In
Sprengel, supra, 241 Cal.App.4th at p. 155, the court denied an
anti-SLAPP motion brought by defendant attorneys, finding that
the activities giving rise to the defendants’ asserted liability were
not their litigation activities, but included the defendants’ acts of
“undertaking a representation in which they had an
irreconcilable conflict of interest; failing to competently represent
Sprengel’s interests in the underlying litigation; and failing to
obtain Sprengel’s permission before using her funds to pay for the
litigation.” Appellants ignore the distinction between their
claims against their former counsel and the claims against
respondents at issue here. We look to the alleged conduct by
respondents that gives rise to the claims of aiding and abetting
malpractice in order to assess whether the activity is protected
under the anti-SLAPP statute. That conduct includes purported
discussions between respondents and the attorney defendants
during the settlement negotiations, after which the attorney
defendants improperly pressured appellants to accept the

                                 30
settlement; it also includes the allegation that respondents failed
to disclose certain information to appellants during the
settlement discussions. This conduct falls within the ambit of
litigation and settlement-related activities that are protected by
section 425.16, regardless of whether those activities were
improper. (See Bonni, supra, 11 Cal.5th at p. 1025 [finding that
claim arose from settlement negotiations and that “[a]lthough
Bonni alleges fraud in the course of those negotiations, that
allegation does not remove them from the definition of protected
activity”].) As such, we conclude that respondents met their
burden to establish that the second, fourth, and sixth causes of
action arose out of activity protected under the anti-SLAPP
statute.
       C.      Step Two: Likelihood of Success
       Once a defendant satisfies the first step of the anti-SLAPP
analysis, “the burden shifts to the plaintiff to demonstrate that
each challenged claim based on protected activity is legally
sufficient and factually substantiated. The court, without
resolving evidentiary conflicts, must determine whether the
plaintiff's showing, if accepted by the trier of fact, would be
sufficient to sustain a favorable judgment. If not, the claim is
stricken.” (Baral v. Schnitt (2016) 1 Cal.5th 376, 396.) “The
showing must be made through ‘competent and admissible
evidence.’” (Gilbert v. Sykes (2007) 147 Cal.App.4th 13, 26.) A
plaintiff “‘cannot simply rely on the allegations in the complaint.’”
(Alpha & Omega Development, LP v. Whillock Contracting, Inc.
(2011) 200 Cal.App.4th 656, 664.)
       Respondents contend, and the trial court found, that
appellants could not meet their burden on this step because the

                                 31
statements at issue were protected by the litigation privilege. We
agree.
       The litigation privilege is codified in Civil Code section 47,
subdivision (b) (section 47(b)). As relevant here, section 47(b)(2)
defines a “privileged publication or broadcast” as one made in
“any judicial proceeding.” “[T]he privilege applies to any
communication (1) made in judicial or quasi-judicial proceedings;
(2) by litigants or other participants authorized by law; (3) to
achieve the objects of the litigation; and (4) that have some
connection or logical relation to the action.” (Silberg v. Anderson
(1990) 50 Cal.3d 205, 212 (Silberg).) The privilege applies “‘to
any publication required or permitted by law in the course of a
judicial proceeding to achieve the objects of the litigation, even
though the publication is made outside the courtroom and no
function of the court or its officers is involved.’” (Rusheen v.
Cohen (2006) 37 Cal.4th 1048, 1057 (Rusheen), quoting Silberg,
supra, 50 Cal.3d at p. 212.) The privilege is not limited to
statements made during trial or other proceedings, “but may
extend to steps taken prior thereto, or afterwards.” (Rusheen,
supra, 37 Cal.4th at p. 1057.)
       The privilege “is ‘an “absolute” privilege, and it bars all tort
causes of action except a claim of malicious prosecution.’”
(Flatley, supra, 39 Cal.4th at p. 322.) “Any doubt as to whether
the privilege applies is resolved in favor of applying it.” (Adams
v. Superior Court (1992) 2 Cal.App.4th 521, 529.) While the
protections under the litigation privilege and the anti-SLAPP
statute are not identical (see Flatley, supra, 39 Cal.4th at pp.
324-325), cases construing the scope of the litigation privilege
have read the reasonable relevancy requirement of section 47 as
analogous to the “in connection with” standard of section 425.16,

                                  32
subdivision (e)(2). (See, e.g., Neville v. Chudacoff (2008) 160
Cal.App.4th 1255, 1266). The litigation privilege is “relevant to
the second step in the anti-SLAPP analysis in that it may present
a substantive defense a plaintiff must overcome to demonstrate a
probability of prevailing.” (Flatley, supra, 39 Cal.4th at p. 323.)
       Appellants again focus on their contention that malpractice
claims are not barred by the litigation privilege, ignoring the
distinction between those claims and the ones at issue here, for
aiding and abetting malpractice. As discussed above, the
communications that allegedly constituted aiding and abetting by
respondents occurred during litigation and settlement
negotiations, and are thus protected by the litigation privilege.
       Appellants also acknowledge Nationwide’s argument that
they could not show a probability of success on the merits
because their claims had been released. They do not challenge
this assertion directly, instead contending the court need not
reach this issue because Nationwide could not prevail on the first
step. But we have concluded that Nationwide met its burden on
the first step, and further agreed with Nationwide regarding the
valid release of the claims alleged in the FAC. Accordingly, we
find no error in the trial court’s conclusion that appellants failed
to meet their burden on the second step of the anti-SLAPP
motion to show a probability of prevailing on their claims.
                           DISPOSITION
       The judgment is affirmed. We also affirm the order
granting Nationwide’s motion to strike. The appeal by California
Capital Venture, Inc. is dismissed. Respondents are entitled to
their costs on appeal.
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                33
                           COLLINS, J.

We concur:

CURREY, ACTING, P.J.                       ZUKIN, J.

       Judge of the Los Angeles County Superior Court,
assigned by the Chief Justice pursuant to article VI, section 6 of
the California Constitution.

                                34