Wild Chang v. Farmers Ins. Co.

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WILD CHANG et al., Plaintiffs and Appellants, v. FARMERS INSURANCE COMPANY, INC. et al., Defendants and Respondents

B317518

California Court of Appeals, Second District, Seventh Division

June 14, 2023

NOT TO BE PUBLISHED

APPEAL from an order of the Superior Court of Los Angeles County. No. BC650876 Teresa A. Beaudet, Judge. Affirmed.

Wild Chang, in pro. per., Kenneth Lo, in pro. per., Wild Chang Jr., in pro. per., for Plaintiffs and Appellants.

Woolls Peer Dollinger & Scher, Gregory B. Scher and H. Douglas Galt for Defendant and Respondent Woolls Peer Dollinger &Scher.

ESCALANTE, J. ^[*]

INTRODUCTION

Plaintiffs Wild Chang, Kenneth Lo, and Wild Chang, Jr. (Chang Jr.) sued the law firm Woolls Peer Dollinger &Scher (Woolls Peer) alleging Woolls Peer engaged in fraud while representing other defendants in this consolidated litigation. Woolls Peer filed a special motion to strike under Code of Civil Procedure section 425.16, which the trial court granted. We affirm.

FACTUAL AND PROCEDURAL HISTORY

These consolidated actions arise out of an insurance claim that plaintiffs submitted for losses caused by a fire in their home on December 16, 2014. On February 16, 2017, plaintiffs Chang and Lo filed their original complaint against Farmers Insurance Company, Inc. (Farmers), Fire Insurance Exchange Stacy Chern Insurance Agency, and Stacy Chern. On August 21 2017, Chang and Lo filed a second amended complaint that substituted Farmers Insurance Group of Companies for Farmers. On January 26, 2018, plaintiffs voluntarily dismissed the action with prejudice as to Farmers Insurance Group of Companies.

On January 28, 2021, plaintiffs Chang, Lo, and Chang Jr. filed a second action against Farmers, Fire Insurance Exchange, Stacy Chern, and Woolls Peer. The actions were consolidated and the operative third amended complaint deemed filed on July 22, 2021.

In the third amended complaint, plaintiffs alleged Farmers and Fire Insurance Exchange, acting in bad faith, made a grossly deficient settlement offer for the claim plaintiffs submitted for their fire loss. Plaintiffs also alleged Farmers, Fire Insurance Exchange, and Chern engaged in a fraudulent scheme to "convert the 'insurance'" plaintiffs allegedly purchased from Farmers "into a mere 'self-owned membership' in an unincorporated association, i.e., [Fire Insurance Exchange] . . . in order to insulate [Farmers] and its agents from all of the legal liabilities arising from the deceptive and non-conforming insurance sold to [p]laintiffs."

Woolls Peer is counsel of record for Farmers, Fire Insurance Exchange, and Chern in the consolidated actions. Plaintiffs alleged Woolls Peer participated in the alleged fraud through actions taken in the litigation, including by representing Fire Insurance Exchange, which plaintiffs characterize as a "nonparty"; moving to dismiss Farmers on the ground that Farmers was not the insurer; and filing various other motions. Plaintiffs alleged that Woolls Peer made false representations in court filings and in communications with opposing counsel and that Woolls Peer failed to conduct sufficient due diligence before agreeing to represent Farmers and Fire Insurance Exchange. Plaintiffs contended Woolls Peer's litigation activities constituted a "form of malicious prosecution."

Plaintiffs purported to assert claims against all defendants for fraud, unfair business practices, professional negligence, and emotional distress. Plaintiffs also asserted claims for breach of contract and breach of the implied covenant of good faith and fair dealing, but plaintiffs did not allege they entered into any contract with Woolls Peer, and it is therefore unclear whether plaintiffs sought to assert these claims against Woolls Peer.

Woolls Peer filed a special motion to strike under Code of Civil Procedure section 425.16 (anti-SLAPP motion). The trial court granted the motion on October 14, 2021. The court concluded that the claims were based on activities protected under section 425.16 because they arose out of Woolls Peer's litigation activities and also concluded that plaintiffs had no probability of prevailing because the claims were barred by the litigation privilege.

This appeal followed.

DISCUSSION

A. Code of Civil Procedure Section 425.16 and Standard of Review

Under Code of Civil Procedure section 425.16,^[1] commonly known as the anti-SLAPP statute, "[a] cause of action against a person arising from any act of that person in furtherance of the person's right of petition . . . 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).)

In ruling on an anti-SLAPP motion, the court engages in a two-step process. "First, the defendant must establish that the challenged claim arises from activity protected by section 425.16. [Citation.] If the defendant makes the required showing, the burden shifts to the plaintiff to demonstrate the merit of the claim by establishing a probability of success." (Baral v. Schnitt (2016) 1 Cal.5th 376, 384, accord, Bonni v. St. Joseph Health System (2021) 11 Cal.5th 995, 1009.) "Only a cause of action that satisfies both prongs of the anti-SLAPP statute-i.e., that arises from protected speech or petitioning and lacks even minimal merit-is a SLAPP, subject to being stricken under the statute." (Navellier v. Sletten (2002) 29 Cal.4th 82, 89, italics omitted.)

We review an order granting an anti-SLAPP motion de novo. (Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1067 (Park).)

B. Protected Activity

We first consider whether the claims against Woolls Peers "arise[] from any act of that person in furtherance of the person's right of petition." (§ 425.16, subd. (b)(1).) An "'act in furtherance of a person's right of petition' . . . includes: (1) any written or oral statement or writing made before a . . . judicial proceeding . . ., [or] (2) any written or oral statement or writing made in connection with an issue under consideration or review by a . . . judicial body," among other things. (§ 425.16, subd. (e).)

"'A cause of action "arising from" defendant's litigation activity'" falls within those categories. (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1056.) The protected acts "include[] communicative conduct such as the filing, funding, and prosecution of a civil action. [Citation.] This includes qualifying acts committed by attorneys in representing clients in litigation." (Ibid.; see Coretronic Corp. v. Cozen O'Connor (2011) 192 Cal.App.4th 1381, 1388 ["[t]he anti-SLAPP statutes protect not only the litigants, but also their attorneys' litigation-related statements"].) "[A]ll communicative acts performed by attorneys as part of their representation of a client in a judicial proceeding or other petitioning context are per se protected as petitioning activity by the anti-SLAPP statute." (Optional Capital, Inc. v. Akin Gump Strauss, Hauer & Feld, LLP (2017) 18 Cal.App.5th 95, 113, quotation marks omitted.)

"A claim arises from protected activity when that activity underlies or forms the basis for the claim." (Park, supra, 2 Cal.5th at pp. 1062-1063.) This standard is met "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." (Wilson v. Cable News Network, Inc. (2019) 7 Cal.5th 871, 884 (Wilson), quotation marks omitted; accord, Park, at p. 1060.) "To determine whether a claim arises from protected activity, courts must 'consider the elements of the challenged claim and what actions by the defendant supply those elements and consequently form the basis for liability.'" (Wilson, at p. 884; accord, Park, at p. 1063.) "'If the core injury-producing conduct upon which the plaintiff's claim is premised does not rest on protected speech or petitioning activity, collateral or incidental allusions to protected activity will not trigger application of the anti-SLAPP statute.'" (Area 51 Productions, Inc. v. City of Alameda (2018) 20 Cal.App.5th 581, 594 (Area 51).)

Here, the claims against Woolls Peer arose solely out of the firm's litigation activity. Plaintiffs alleged Woolls Peer attempted to "'judicialize'" and "perpetuate" an alleged "fraudulent conversion" scheme through "malicious" and "untenable" "litigation maneuvers." The alleged wrongful acts include filing a demurrer, a special motion to strike, a motion to dismiss, motions for protective orders, and motions for sanctions, and serving inadequate discovery responses. Plaintiffs alleged Woolls Peer made false statements in those documents, including false representations that the insurer was Fire Insurance Exchange, not Farmers. Plaintiffs alleged the false representations and other actions gave rise to "wrongful rulings and sanctions" against plaintiffs and led plaintiffs' former counsel to voluntarily dismiss Farmers as a party.

Plaintiffs did not allege any wrongful acts by Woolls Peer other than litigation activities. For example, plaintiffs did not allege Woolls Peer was involved in handling the claim or in selling plaintiffs any insurance. Since no other wrongful acts were alleged, Woolls Peer's litigation activities necessarily constituted the "'core injury-producing conduct upon which the plaintiff's claim[s] [were] premised.'" (Area 51, supra, 20 Cal.App.5th at p. 594.)

In sum, the trial court correctly concluded plaintiffs' claims against Woolls Peer arose out of activity protected under section 425.16.

C. Probability of Success on the Merits

Because Woolls Peer met its initial burden of showing that plaintiffs' claims...