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California Court Rules That Anti-SLAPP Statute Does Not Apply to Legal Malpractice.

Source: LOANVEST I, LLC v. Utrecht, 235 Cal. App. 4th 496 – Cal: Court of Appeal, 1st Appellate Dist., 3rd Div. 2015 – Google Scholar

The plaintiff sued its former attorneys for legal malpractice. The attorneys then moved to dismiss under the provisions of California’s Anti-SLAPP statute. The Anti-SLAPP statute allows the defendant to file a motion to dismiss where the complaint arises from activity exercising the rights of petition and free speech. The trial court agreed and dismissed the lawsuit.

On appeal, the lawsuit was reinstated by the California Court of Appeals.

First, the legal malpractice case involved a real estate deal gone bad.

Second, the court held that the lawsuit was not a challenge to the exercise of free speech rights or petitioning activity because the plaintiff was suing the law firm for alleged negligence not for petitioning activity.

The court explained its interpretation of the statute as follows:

(5) Where, on the other hand, a legal malpractice action is brought by an attorney’s former client, claiming that the attorney breached fiduciary obligations to the client as the result of a conflict of interest or other deficiency in the representation of the client, the action does not threaten to chill the exercise of protected rights and the first prong of the anti-SLAPP analysis is not satisfied. This is made clear by PrediWave and by numerous other decisions. (6) (See, e.g.,Kolar v. Donahue, McIntosh & Hammerton (2006) 145 Cal.App.4th 1532, 1540 [52 Cal.Rptr.3d 712] [“A malpractice claim focusing on an attorney’s incompetent handling of a previous lawsuit does not have the chilling effect on advocacy found in malicious prosecution, libel, and other claims typically covered by the anti-SLAPP statute. In a malpractice suit, the client is not suing because the attorney petitioned on his or her behalf, but because the attorney did not competently represent the client’s interests while doing so. Instead of chilling the petitioning activity, the threat of malpractice encourages the attorney to petition competently and zealously. This is vastly different from a third party suing an attorney for petitioning activity, which clearly could have a chilling effect.”]; Chodos v. Cole(2012) 210 Cal.App.4th 692, 702 [148 Cal.Rptr.3d 451] [quoting an authoritative text: “`California courts have held that when a claim [by a 505*505 client against a lawyer] is based on a breach of the fiduciary duty of loyalty or negligence, it does not concern a right of petition or free speech, though those activities arose from the filing, prosecution of and statements made in the course of the client’s lawsuit. The reason is that the lawsuit concerns a breach of duty that does not depend on the exercise of a constitutional right.'”]; Jespersen v. Zubiate-Beauchamp (2003) 114 Cal.App.4th 624, 632 [7 Cal.Rptr.3d 715] [rejecting attorneys’ “attempt to turn garden-variety attorney malpractice into a constitutional right”].)

The claim in the present case falls squarely within this latter category. Loanvest is not a third party allegedly harmed by Utrecht’s representation of another client, but Utrecht’s former client that allegedly was harmed as the result of his “egregiously breaching the duty of loyalty” that was owed to Loanvest. The fact that the complaint refers to Cresson as Utrecht’s “true client” and Loanvest as his “purported client” does not alter the admitted fact that Utrecht was the attorney for Loanvest and Loanvest is claiming that Utrecht breached its duty of loyalty by taking steps that were not in its interests but in the interests of Cresson and his other entities. The fact that the complaint “focus[es] specifically on particular statements or positions taken in connection with matters under review by a court,” as the trial court noted, does not alter the fact that the claim is not for injuries suffered by a third party caused by the attorney’s advocacy but is based on the alleged breach of loyalty owed to Loanvest. (See, e.g., Coretronic Corp. v. Cozen O’Connor (2011) 192 Cal.App.4th 1381, 1392 [121 Cal.Rptr.3d 254] [anti-SLAPP statute does not apply to malpractice claim against attorney where “it was the breach of the duty of loyalty owed to the clients that gave rise to liability, not protected speech or petitioning activity”]; Freeman v. Schack (2007) 154 Cal.App.4th 719, 729, 732 [64 Cal.Rptr.3d 867] [although legal malpractice action had “as a major focus” the attorney’s actions in representing former client, anti-SLAPP statute did not apply because “principal thrust of the conduct underlying [the] causes of action is … [attorney’s] … undertaking to represent a party with interests adverse to plaintiffs, in violation of the duty of loyalty he assertedly owed them in connection with the [prior] litigation”]; United States Fire Ins. Co. v. Sheppard, Mullin, Richter & Hampton LLP (2009) 171 Cal.App.4th 1617 [90 Cal.Rptr.3d 669]; Benasra v. Mitchell Silberberg & Knupp LLP (2004) 123 Cal.App.4th 1179 [20 Cal.Rptr.3d 621].)

This is a case worth considering as the Anti-Slapp statute is as unusual of a defense to a legal malpractice case as you could imagine. The court’s discussion is thoughtful.

Edward X. Clinton, Jr.

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