California Court of Appeal Jul 6, 2015 No. D067276Unpublished
Filed 7/6/15 Merkin v. Omidi CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
DON MERKIN, D067276
Plaintiff and Respondent,
v. (Super. Ct. No. 37-2014-00028725- CU-FR-CTL) JULIAN OMIDI et al.,
Defendants and Appellants.
APPEALS from an order of the Superior Court of San Diego County, Eddie
Sturgeon, Judge. Reversed and remanded with instructions.
Weiss & Spees, Michael H. Weiss and Laura J. Meltzer for Defendants and
Appellants.
Don Merkin, in pro. per., for Plaintiff and Respondent.
Don Merkin, an attorney, sued his former clients, ASC Capital Management, Inc.
(ASC), San Diego Ambulatory Surgery Center, LLC (SDASC), Julian Omidi (hereafter,
Clients), and Ricky Oxman, an agent of Clients, for fraudulent deceit and other claims in
connection with a settlement agreement over Merkin's unpaid fees. The theory of
Merkin's suit was that Clients had defrauded him of a portion of his fees by
misrepresenting and/or suppressing material information to induce him to sign the
settlement agreement. Defendants made an anti-SLAPP motion to strike, which the trial
court denied. (Code Civ. Proc., § 425.16.)1 Defendants appeal contending that any
alleged misconduct was protected activity under section 425.16, and Merkin cannot
prevail on his claims because settlement communications are covered by the litigation
privilege, Civil Code section 47, subdivision (b). We agree and reverse the order denying
the anti-SLAPP motion.
FACTUAL AND PROCEDURAL BACKGROUND
A
Events Leading Up to the Complaint in This Case
1. Merkin Initiates Lawsuit to Collect Attorney Fees
Between 2012 and 2013, Merkin represented Clients in bankruptcy and other
proceedings involving a property where SDASC operated a surgical center. SDASC was
a tenant in a medical office building owned and operated by LDG Midway Plaza, LLC
(LDG) (the Midway Property). ASC owned a secured note on the Midway Property,
Omidi owned/controlled ASC and SDASC, and Oxman was an agent of Clients.2
1 All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
2 Contrary to Merkin's reference to the collective "Appellants" as his former clients, the record is clear that Oxman was not individually represented by Merkin. !(65)! 2
In May 2013, Merkin terminated his representation of Clients, due in part to their
failure to pay his attorney fees of approximately $66,000. Several months later, Merkin
filed suit against Clients to collect his outstanding fees (Fee Litigation), and from October
to early December 2013, the parties engaged in settlement discussions.
2. Mediation and Settlement of the LDG Bankruptcy Case
Meanwhile, LDG's third amended chapter 11 plan had been approved by LDG's
unsecured creditors and preliminarily approved by the bankruptcy court. The third
amended plan provided for seven years of cash distributions by LDG to ASC. However,
on November 15, 2013, Oxman attended a mediation on behalf of Clients with LDG
(the LDG Mediation). At the LDG Mediation, LDG and Clients reached a settlement
agreement amending the plan. The new plan (Fourth Plan) called for an outright sale of
the Midway Property from LDG to ASC, and ASC would contribute funds to LDG's
bankruptcy estate. Notably, ASC would no longer be receiving cash distributions since it
was purchasing the Midway Property. The settlement agreement and Fourth Plan would
be subject to bankruptcy court approval.
3. Settlement of Fee Litigation
In early discussions to settle the Fee Litigation, Clients negotiated for
approximately one-half of the outstanding Merkin fee balance to be paid upon execution
of a settlement agreement, with the other half to be paid in the future when ASC received
cash distributions from the LDG bankruptcy estate. On December 4, 2013, Merkin
signed a settlement agreement and release with Clients (hereafter, Fee Settlement). The
final payment terms were, in pertinent part, that Merkin would receive $35,000 of his
3
fees immediately on execution of the Fee Settlement, and for the outstanding balance,
"Merkin shall look solely to the distributions from the estate in the LDG Midway Plaza
[c]hapter 11 [c]ase . . . without recourse to the Clients or to any of them."
B
Merkin's Complaint and Defendants' Anti-SLAPP Motion
In August 2014, Merkin filed a complaint for: (1) fraudulent deceit (Civ. Code,
§§ 1709, 1710) against Clients; (2) breach of the implied covenant of good faith and fair
dealing, against ASC and SDASC; and (3) conspiracy to defraud (Civ. Code, § 1709)
against Clients and Oxman (the Complaint). The Complaint described the LDG
Mediation (unknown to Merkin at the time it occurred), the Fee Settlement, Merkin's
subsequent discovery of the LDG settlement agreement when it was publicly filed, and
how, despite assurances Clients would pay Merkin's full fees of $66,000, they knew a
portion of the fees came from a "non-existent" source. The Complaint alleged Clients
concealed and suppressed material information, including the elimination of all LDG
cash distributions to ASC under the Fourth Plan, which they were under a duty to
disclose, and that the nondisclosure was deceitful. The Complaint also alleged that
Clients and Oxman conspired to defraud him of $31,000 in fees through their deceitful
suppression of material information. Oxman's alleged and only role in the conspiracy
was based on his attendance at the LDG Mediation where he negotiated the terms of the
Fourth Plan on behalf of Clients.
Defendants filed an anti-SLAPP motion to strike. To invoke section 425.16, they
argued that petitioning the bankruptcy court, i.e., seeking approval of the Fourth Plan,
4
was protected conduct. They also argued that statements made in settlement negotiations
during the Fee Litigation were protected, and could not form the basis of a complaint due
to their privileged nature. In opposition, Merkin argued that defendants' wrongful,
injury-causing conduct was not grounded in any communicative act required for
protection under the litigation privilege, Civil Code section 47, subdivision (b). Rather,
their deceitful suppression of material information that they knew he was not aware of
had the effect of injuring him. On December 1, 2014, the court denied defendants' anti-
SLAPP motion.
DISCUSSION
A
The Anti-Slapp Statute
A SLAPP suit—a strategic lawsuit against public participation—seeks to chill or
punish a party's exercise of constitutional rights to free speech and to petition the
government for redress of grievances. (Briggs v. Eden Council for Hope & Opportunity
212 [prelitigation illegal recording of confidential telephone conversations]; Smith v.
Adventist Health System/West (2010) 190 Cal.App.4th 40, 60 [suspension of physician's
hospital privileges causing damages]; Mero v. Sadoff (1995) 31 Cal.App.4th 1466, 1479-
1480 [physician's negligent examination of patient causing physical injury].) "The
distinction between communicative and noncommunicative conduct hinges on the
gravamen of the action." (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1058.) "[T]he key
in determining whether the privilege applies is whether the injury allegedly resulted from
an act that was communicative in its essential nature." (Ibid.) Where the gravamen of
the complaint is a privileged communication, the privilege extends to necessarily related
noncommunicative acts. (Id. at p. 1062.)
However characterized, any harm to Merkin originated from Clients' assurances in
the course of negotiating a settlement of the Fee Litigation that he would be paid in
11
exchange for a release, which is undoubtedly communicative conduct. Moreover, the
intent behind Clients' concealment (and any conspiracy to conceal), according to Merkin,
was to persuade him to agree to a settlement unfavorable to him. The gravamen of this
act was also communicative in its essential nature and, thus, privileged. (Silberg, supra,
50 Cal.3d at pp. 210, 220 [alleged failure to disclose a preexisting relationship affecting
neutrality of an agreed upon expert held privileged]; Kupiec v. American International
Adjustment Company (1991) 235 Cal.App.3d 1326, 1333 [concealment of facts regarding
status of the plaintiff's art held communicative in nature and thus privileged]; Pollack v.
Superior Court (1991) 229 Cal.App.3d 26, 29 [representations and omissions made by
attorney in the course of a judicial proceeding held privileged].) Importantly, the alleged
concealment of material information by Clients to obtain the Fee Settlement was
connected with, and had some logical relation to, pending litigation. (Silberg, at pp. 219-
220.) Relevant case law supports that statements and omissions during settlement
negotiations, such as those at issue here, are protected by the litigation privilege.
Consequently, Merkin has not demonstrated a likelihood of prevailing on the merits, and
the Complaint is barred by section 425.16.
12
DISPOSITION
The order denying defendants' motion to strike is reversed, and the trial court is
instructed to enter a new order dismissing the Complaint. Pursuant to section 425.16,
subdivision (c), defendants are entitled to recover their attorney fees and costs, and the
trial court is directed to determine the appropriate amount.
IRION, J.
WE CONCUR:
MCDONALD, Acting P. J.
MCINTYRE, J.
13
AI Brief
AI-generated · verify before citing
Holding. The court held that the plaintiff's claims, which arose from alleged misrepresentations and omissions made during settlement negotiations, were protected by the anti-SLAPP statute and barred by the litigation privilege.
Issues
Whether the defendants' alleged conduct in settlement negotiations constitutes protected activity under the anti-SLAPP statute.
Whether the plaintiff demonstrated a probability of prevailing on the merits given the application of the litigation privilege.
Disposition. reversed and remanded
Quotations verified verbatim against the opinion
“The gravamen of this act was also communicative in its essential nature and, thus, privileged.”
“Relevant case law supports that statements and omissions during settlement negotiations, such as those at issue here, are protected by the litigation privilege.”