Dorit v. Noe

49 Cal.App.5th 458

263 Cal.Rptr.3d 98

J. Niley DORIT, Plaintiff and Respondent,

v.Jack NOE, Defendant and Appellant.

A157433

Court of Appeal, First District, Division 4, California.

Filed May 26, 2020

Morris & Stone LLP, Aaron P. Morris, Tustin, for Defendant and Appellant.

Dorit Law Firm, J. Niley Dorit, San Francisco, for Plaintiff and Respondent.

BROWN, J.

Jack Noe appeals from the denial of his special motion to strike under Code of Civil Procedure section 425.16, which was aimed at the malicious prosecution claim brought by his former attorney, J. Niley Dorit. Dorit's claim is based on Noe's initiation of arbitration of a fee dispute under the mandatory fee arbitration act (MFAA) ( Bus. & Prof. Code, § 6200 et seq. ).¹ Noe contends that a malicious prosecution claim cannot be based on an MFAA arbitration and that Dorit failed to establish the other elements of the tort. We agree that a malicious prosecution cause of action cannot rest on an MFAA arbitration and shall reverse the trial court's order.

BACKGROUND

In January 2018, Noe hired Dorit to evaluate the medical records of Noe's deceased mother for a potential medical malpractice suit against her doctors. The parties signed a fee agreement in which Noe agreed to pay Dorit a $10,000 non-refundable retainer fee. This sum was intended to cover Dorit's time spent evaluating the claim, as well as "the costs of additional medical records and/or expert medical review if indicated." The agreement contained an arbitration clause, which stated, "Should there arise any disagreement as to the amount of attorneys fees and/or costs, Client agrees to enter into binding arbitration of such issue or dispute before the Bar Association of San Francisco [ (BASF) ]."

On March 19, 2018, Dorit called Noe on the phone to present his analysis of the records. Noe cut Dorit off soon after Dorit began his presentation. Noe asked Dorit simply to provide his ultimate conclusion about the potential malpractice claim. Dorit said he did not think a malpractice claim was viable.

Noe later said he was dissatisfied with Dorit's evaluation because Dorit did not consult a medical expert and because Noe did not believe Dorit seriously evaluated the case. Shortly after the call, Noe asked Dorit to return some or all of the retainer fee. Dorit refused, so Noe filed a request for MFAA arbitration with the BASF in July 2018.

Following a hearing, the arbitrator awarded Noe nothing and allocated him the entire filing fee. Pursuant to the MFAA and the BASF's arbitration rules, the award was initially non-binding and either party could have requested a trial de novo in superior court. Because neither party requested a trial de novo, the award became binding by operation of law. (§ 6203, subd. (b).)²

A few months later, Dorit sued Noe in San Francisco Superior Court, alleging a single claim of malicious prosecution. Noe responded by filing a special motion to strike under Code of Civil Procedure section 425.16, commonly known as the anti-SLAPP statute. ( Wilson v. Cable News Network, Inc. (2019) 7 Cal.5th 871, 880, 249 Cal.Rptr.3d 569, 444 P.3d 706 ( Wilson ).) The trial court denied the motion. Noe timely filed a notice of appeal.

DISCUSSION

I. Legal background and standard of review

A. Anti-SLAPP law

The anti-SLAPP statute is designed to prevent meritless lawsuits from chilling individuals’ exercise of their rights of petition or free speech. ( Wilson , supra , 7 Cal.5th at pp. 883–884, 249 Cal.Rptr.3d 569, 444 P.3d 706.) "To that end, the statute authorizes a special motion to strike a claim ‘arising from any act of that person in furtherance of the person's right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue.’ ( [Code Civ. Proc.,] § 425.16, subd. (b)(1).)" ( Id. at p. 884, 249 Cal.Rptr.3d 569, 444 P.3d 706.) "Anti-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. [Citations.] If the defendant carries its burden, the plaintiff must then demonstrate its claims have at least ‘minimal merit.’ " ( Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1061, 217 Cal.Rptr.3d 130, 393 P.3d 905 ( Park ).) "If the plaintiff fails to meet that burden, the court will strike the claim. Subject to certain exceptions not relevant here, a defendant that prevails on a special motion to strike is entitled to attorney fees and costs. ( [Code Civ. Proc.,] § 425.16, subd. (c).)" ( Wilson , supra , 7 Cal.5th at p. 884, 249 Cal.Rptr.3d 569, 444 P.3d 706.)

We review the trial court's ruling on an anti-SLAPP motion de novo. ( Flatley v. Mauro (2006) 39 Cal.4th 299, 325, 46 Cal.Rptr.3d 606, 139 P.3d 2.)

B. Mandatory Fee Arbitration Act

The MFAA was enacted to eliminate a disparity in bargaining power between attorneys and clients attempting to resolve disputes about attorney's fees. ( Schatz v. Allen Matkins Leck Gamble & Mallory LLP (2009) 45 Cal.4th 557, 564–565, 87 Cal.Rptr.3d 700, 198 P.3d 1109 ( Schatz ).) The Legislature recognized that many clients were infrequent consumers of legal services and would need to hire separate lawyers to litigate fee agreement disputes. ( Id. at p. 564, 87 Cal.Rptr.3d 700, 198 P.3d 1109.) Proponents of the legislation at the time observed that the cost of a second lawyer was prohibitive because it would often equal or exceed the value of the fees in dispute. ( Liska v. The Arns Law Firm (2004) 117 Cal.App.4th 275, 282, 12 Cal.Rptr.3d 21 ( Liska ).) This in turn drove many clients to add malpractice claims to their fee disputes, which increased lawyers’ malpractice insurance rates. ( Ibid. )

In response to these concerns from both clients and lawyers, the Legislature instructed the State Bar to establish and administer an effective, inexpensive system of arbitration for fee disputes before local bar associations. ( Schatz , supra , 45 Cal.4th at pp. 564–565, 87 Cal.Rptr.3d 700, 198 P.3d 1109 ; Liska , supra , 117 Cal.App.4th at pp. 281–282, 12 Cal.Rptr.3d 21.) In addition to avoiding the need for counsel by making proceedings simple and informal, the MFAA also "strictly limits the scope of the arbitration that the client may demand to the amount of the reasonable fees (or costs) to which the attorney is entitled." ( Liska , supra, 117 Cal.App.4th at p. 282, 12 Cal.Rptr.3d 21.) Only fee disputes are subject to MFAA arbitration; arbitrators cannot award affirmative relief or damages against attorneys for negligence or professional misconduct except for a refund of unearned fees or costs. ( Ibid. ; §§ 6200, subds. (a) & (b)(2), 6203, subd. (a).) Arbitrators also cannot award either party attorney's fees or costs related to the arbitration, regardless of any provisions in the parties’ contract, although they can allocate the filing fee between the parties. ( § 6203, subd. (a).)

" ‘The nature of the obligation to arbitrate under the MFAA differs from that under standard arbitration in two important ways. First, the obligation to arbitrate under the MFAA is based on a statutory directive and not the parties’ agreement. Thus, a client may invoke the MFAA and proceed to arbitration despite the absence of any prior agreement to do so.... [¶] Second, section 6200, subdivision (c) provides: "[A]rbitration under this article shall be voluntary for a client and shall be mandatory for an attorney if commenced by a client." In other words, whereas a client cannot be forced under the MFAA to arbitrate a dispute concerning legal fees, at the client's election an unwilling attorney can be forced to do so.’ " ( Schatz , supra , 45 Cal.4th at p. 565, 87 Cal.Rptr.3d 700, 198 P.3d 1109.)

An award in MFAA arbitration is presumed to be non-binding, and either party can request a trial de novo in superior court unless the party willfully failed to appear at the arbitration. (§ 6204, subd. (a).) However, the parties may agree after a dispute has arisen that the arbitrator's award will be binding. (Ibid. ) Additionally, if neither party requests a trial de novo within 30 days of the award, the arbitrator's award becomes final and binding. ( § 6203, subd. (b).) In any event, section 6204, subdivision (e) states, "Except as provided in this section, the award and determinations of the arbitrators shall not be admissible nor operate as collateral estoppel or res judicata in any action or proceeding."

II. Analysis

The trial court below ruled that Dorit's claim arose from Noe's protected petitioning activity but that Dorit had demonstrated his claim had more than minimal merit. Noe contends the trial court erred in the second portion of its analysis because his MFAA arbitration claim cannot support a malicious prosecution claim and Dorit failed to establish the other elements of the tort. Dorit disagrees and argues in addition that if an MFAA proceeding cannot support a malicious prosecution claim, then it also cannot qualify as protected activity for the purposes of the first step of the anti-SLAPP analysis. Accordingly, we will examine both steps of the anti-SLAPP analysis.

A. Step One: Claims arising from protected activity

A suit is subject to an anti-SLAPP motion if it arises from "any act of that person in furtherance of the person's right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue." ( Code Civ. Proc., § 425.16, subd. (b)(1).) Such acts include "any written or oral statement or writing made before a legislative, executive, or judicial body, or any other official proceeding authorized by law" and "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)(1) & (e)(2).) When interpreting this...