H B & C Associates v. McKenna, Long & Aldridge CA1/1

Filed 12/16/14 H B & C Associates v. McKenna, Long & Aldridge CA1/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FIRST APPELLATE DISTRICT

DIVISION ONE

H B & C ASSOCIATES, LLC, Plaintiff and Respondent, A139302 v. MCKENNA, LONG & ALDRIDGE LLP, (San Francisco City & County Super. Ct. No. CGC-12-517439) Defendant and Appellant.

H B & C Associates, LLC (HBC) sued Luce, Forward, Hamilton & Scripps LLP (Luce Forward) for legal malpractice in connection with disputes that developed among investors in a real estate development. Luce Forward’s successor in interest, McKenna, Long & Aldridge LLP (McKenna), brought a special motion to strike the complaint under Code of Civil Procedure section 425.16.1, 2 The trial court denied the motion on the grounds that legal malpractice claims are not subject to the anti-SLAPP statute. We review the denial of the motion de novo, and affirm the trial court’s ruling.

1 All statutory references are to the Code of Civil Procedure. 2 Section 425.16 is commonly referred to as the “anti-SLAPP statute.” SLAPP is an acronym for “strategic lawsuit against public participation.” (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 732, fn. 1 (Jarrow).) Section 425.16 was enacted in order to discourage the practice of filing retaliatory, meritless lawsuits against opponents on a public issue in order to chill their exercise of free speech. (See legislative findings in § 425.16, subd. (a).)

I. BACKGROUND Airport Boulevard Realty LLC (ABR) was formed in 1995. In 2004, ABR owned a parcel of property in Napa, California, consisting of land ABR had already developed and an adjacent undeveloped parcel. ABR decided to begin the process of developing a new hotel on a portion of the undeveloped parcel, and sought investors to contribute cash and hotel development experience. One of the prospective cash investors was John Challas. Following negotiations with Challas and other investors, the participants in the hotel project agreed to an amended operating agreement for ABR under which the original members of ABR would continue to be members but four new investors, including Challas, would become new members of ABR. At some point before the amended operating agreement became effective in June 2005, Challas indicated he would be executing the agreement on behalf of HBC, a limited liability company owned by members of his family. Philip Jelsma, a Luce Forward partner was retained to draft the amended operating agreement.3 It is disputed in this litigation whether Luce Forward represented ABR in this transaction and in later giving legal advice pertaining to it, or instead represented all of the investors in what HBC alleges was a joint venture to build the hotel. Challas asserts he believed Luce Forward represented the interests of all the members of the joint venture, including HBC. Under the amended operating agreement, the cash investors including HBC were required to make capital contributions over time totaling $3 million. HBC contributed $350,000 cash initially as did the other investors. Beginning in 2007, disputes developed between HBC and ABR over (1) a further $400,000 capital contribution ABR was requesting from HBC for hotel construction; (2) HBC’s demand to see ABR’s books and records to determine whether to make a further investment; and (3) HBC’s rights and obligations if it was in default under the amended operating agreement. In November 2010, HBC through attorney Mark Ellis threatened to sue ABR unless ABR either bought out HBC’s initial investment of $350,000 or allowed HBC to