CHRISTOPHER NANCE v. JOHN SY (2011)

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

Plaintiff and appellant Christopher Nance appeals from the order striking and dismissing his complaint alleging wrongful use of the civil process against defendants and respondents John Sy, H.G. Robert Fong, Nicholas Hornberger, Leonard Lyons, GBM Logistics Services, Inc. (GBM), Sy, Lee & Chen LLP, Ku & Fong, Hornberger & Brewer LLP, Moss Adams LLP, White, Zuckerman, Warsavsky, Luna, Wolf & Hunt LLP, FMV Opinions, Inc., and Stonefield Josephson, Inc.¹ The trial court ordered the complaint stricken on the ground that it was filed against attorneys without court approval, as required by Civil Code section 1714.10, subdivision (d).²

It is unclear exactly what issues Nance seeks to raise on appeal, as his disorganized brief fails to comply with the California Rules of Court.³  From what we can piece together from the brief, Nance makes the following arguments:  (1) the trial court erred when it ordered the complaint stricken on the basis of section 1714.10;  (2) the court did not participate in the hearings of April 26 and July 20, 2010;  (3) the court did not read authorities cited by Nance;  and (4) the court erred in sustaining the demurrer to the first amended complaint.   We hold the complaint was properly stricken because Nance failed to file a petition seeking leave to file the complaint.   Nance's complaints about the conduct of the court are completely devoid of merit.   Issues pertaining to the ruling on the demurrer are not before this court, as no appeal was taken from that ruling.   We therefore affirm the judgment.

Background

A. The 2003 Action Against Y–USA and the 2004 Fraudulent Transfer

Actions

In March 2003, GBM filed an unlimited civil action against Y–USA, Inc., an entity represented by Nance, who was at that time a licensed attorney.   In March 2004, Hornberger & Brewer associated with Ku & Fong as attorneys for GBM. In April 2004, GBM filed a complaint against Y–USA, Nance, and others alleging fraudulent transfers to defraud a creditor.

Following a jury trial in GBM's fraudulent transfer action, judgment was entered in favor of Nance, although GBM was awarded $4.375 million against another defendant.

B. Nance's Petition and Non–Petition Complaints

At an ex parte hearing on May 7, 2009, Judge Glennon, over Nance's objection, ordered the petition transferred to the downtown civil courthouse, where the fraudulent transfer action had been tried.   On May 15, 2009, defendants in the petition action filed a notice of related cases in Department 1 in compliance with Judge Glennon's order.

On November 3, 2009, Judge Ralph Dau, sitting in the central civil courthouse, ruled that the petition action was not related to the fraudulent transfer action.   The petition action was transferred back to Judge Glennon in Van Nuys. At a hearing on January 12, 2010, Judge Glennon began to orally express the opinion that the fraudulent transfer action had been filed with probable cause.   Before Judge Glennon completed his ruling, Nance moved to dismiss the petition action, stating that it was superseded by another action that had been filed in Van Nuys and was pending before Judge Michael Latin.   Judge Glennon dismissed the petition action with prejudice.

The other action to which Nance referred had been filed on July 10, 2009, in case No. LC086143 (the non-petition action,) and is the subject of this appeal.   Nance's new case was filed without a petition seeking leave to file the action against attorneys, but otherwise essentially repeated the allegations in the petition action.   Nance did not move to dismiss the petition action when he filed the later complaint.

On August 10, 2009, defendants in the non-petition action filed a motion to strike Nance's complaint.   The motion argued the non-petition complaint was filed in defiance of Judge Glennon's order transferring the case downtown, and the complaint alleged attorney-client conspiracy without obtaining leave of court under section 1714.10.   At a hearing on April 6, 2010, Judge Latin ordered further briefing on whether section 1714.10 applied only to Nance's conspiracy allegation, or to the entirety of his complaint.   On April 26, 2010, Judge Latin orally granted the motion to strike the non-petition complaint in its entirety for failure to comply with section 1714.10.   The court signed the order striking the complaint on May 10, 2010.

Nance filed a first amended complaint on May 4, 2010.   Defendants filed a demurrer to the first amended complaint on June 7, 2010.   The demurrer was sustained without leave to amend on July 20, 2010.

Nance filed a notice of appeal on July 26, 2010, from the order entered May 11, 2010, striking his complaint with prejudice.

DISCUSSION

Issues Not Before This Court

Two of the issues raised by Nance in his opening brief—the trial court's sustaining of the demurrer without leave to amend and the court's purported failure to read Nance's papers and participate in the hearing on the demurrer—are not properly before this court, as they are not encompassed in the notice of appeal.   Nance's notice of appeal specifies that his appeal is taken from the “Written Order Dismissing Plaintiff Christopher Nance's Complaint with Prejudice;  signed May 10, 2010;  entered May 11, 2010;  Served May 26, 2010.”   The notice of appeal makes no reference to the demurrer, which was heard on July 20, 2010.

“ ‘Our jurisdiction on appeal is limited in scope to the notice of appeal and the judgment or order appealed from.’  (Polster, Inc. v. Swing (1985) 164 Cal.App.3d 427, 436.)”  (Soldate v. Fidelity National Financial, Inc. (1998) 62 Cal.App.4th 1069, 1073.)   We have no jurisdiction over an order not mentioned in the notice of appeal.  (Norman I. Krug Real Estate Investments, Inc. v. Praszker (1990) 220 Cal.App.3d 35, 46–47.)  “Despite the rule favoring liberal interpretation of notices of appeal, a notice of appeal will not be considered adequate if it completely omits any reference to the judgment being appealed.”  (Shiver, McGrane & Martin v. Littell (1990) 217 Cal.App.3d 1041, 1045.)  “As the cases demonstrate, a notice of appeal which specifies a portion of a judgment may not be stretched beyond its logical limits to include other parts of the judgment.”  (Id. at p. 1046.)

Nance's notice of appeal is unambiguously limited to a challenge to the trial court's May 10, 2010 written order granting the motion to strike his non-petition complaint in its entirety.   This is an appealable order. (§ 1714.10, subd. (d);  Berg & Berg Enterprises, LLC v. Sherwood Partners, Inc. (2005) 131 Cal.App.4th 802, 818–819 (Berg & Berg ).)   The notice of appeal makes no mention of the subsequent order sustaining the demurrer or the trial court's conduct at the hearing on the demurrer.   Those issues are not before this court.

The Motion to Strike the Non–Petition Complaint Pursuant to Section 1714.10

The only substantive issue presented in this appeal is whether the trial court properly ordered Nance's non-petition complaint stricken under section 1714.10 on the basis that it was not supported by a verified petition establishing probable cause.   Because defendants did not owe Nance an independent duty, the court correctly ordered the complaint stricken.

A. Allegations in the Non–Petition Complaint

The non-petition complaint alleged Nance was entitled to compensatory and punitive damages from defendants.   Nance represented Y–USA in an action brought by GBM in 2004.   In April 2004, defendants filed a civil action alleging that Nance conspired and participated in a complicated scheme to defraud GBM. A judgment was entered in favor of Nance on GBM's fraudulent transfer claim after a jury found in his favor in 2008.

The non-petition complaint set forth a single cause of action, entitled “Wrongful Use of Civil Proceeding,” alleging that defendants' 2004 fraudulent transfer complaint was not filed in good faith or with probable cause, but instead was maliciously instituted for the purpose of causing Nance economic, financial, and emotional hardship.   Each defendant had notice of the acts, errors, and omissions of the others and intentionally joined in the litigation against Nance with the intent of causing injury to him.   No reasonable attorney would have thought there was probable cause for the fraudulent transfer action against Nance.   Defendants initiated and pursued the action in concert with other defendants, with a common design, plan, agreement, and goal.   Defendants actively participated, cooperated, aided, encouraged, agreed, and ratified the acts of each other in initiating and pursuing the action.   Defendants intended to create a conflict between Nance and Y–USA, disrupt GBM's trial against Y–USA, force a settlement, and influence the trial court.   The action caused damage to Nance's standing as an attorney and subjected him to ridicule as he had to defend against fabricated allegations that were part of the public record.

B. Section 1714.10⁴ and the Standard of Review

Section 1714.10, subdivision (a) imposes a prefiling requirement of court approval of actions alleging conspiracy between an attorney and a client.   Under subdivision (b), the failure to obtain the court approval required in subdivision (a) is a “defense” to the action.   Subdivision (c) sets out two statutory exceptions to the prefiling requirement—subdivision (a) does “not apply to a cause of action against an attorney for a civil conspiracy with his or her client, where (1) the attorney has an independent legal duty to the plaintiff, or (2) the attorney's acts go beyond the performance of a professional duty to serve the client and involve a conspiracy to violate a legal duty in furtherance of the attorney's financial gain.”

The operation of section 1714.10 was explained as follows in Berg & Berg, supra, 131 Cal.App.4th at page 815:  “Section 1714.10 prohibits the unauthorized filing of an action for nonexempt civil conspiracy against an attorney based on conduct arising from the representation of a client that is in connection with any attempt to contest or compromise a claim or dispute.   It requires a plaintiff who desires to pursue such an action to first commence a special proceeding by filing a verified petition naming the attorney as respondent;  the trial court then orders service upon the attorney, who is thereby given the opportunity to appear and contest the petition.   If the petition is granted, the plaintiff is permitted to file the complaint in the main action, subject to the attorney's right to appeal the order.   If, on the other hand, the petition is denied, the plaintiff is foreclosed from filing the complaint, likewise subject to his or her right to appeal that determination.   As an alternative to the petition procedure, if a plaintiff files a nonexempt action against an attorney based on conspiracy with a client without first commencing the special proceeding as provided under section 1714.10, the attorney may effectively initiate the proceeding that will result in an appealable order by demurring or moving to strike the pleading for the plaintiff's failure to have complied with the prepleading statute.

“ ‘Section 1714.10 was intended to weed out the harassing claim of conspiracy that is so lacking in reasonable foundation as to verge on the frivolous.  [Citations.]  The weeding tool is the requirement of prefiling approval by the court, which must be presented with a verified petition accompanied by a copy of the proposed pleading and “supporting affidavits stating the facts upon which the liability is based”;  the pleading is not to be filed until the court has determined “․ the party seeking to file the pleading has established that there is a reasonable probability that the party will prevail in the action.”  [Citation.]’  (Evans v. Pillsbury, Madison & Sutro (1998) 65 Cal.App.4th 599, 604.)”

“The exceptions in subdivision (c)(1) and (2) of section 1714.10 mirror the limits on an attorney's liability for conspiracy established by our Supreme Court in Doctors' Co. v. Superior Court (1989) 49 Cal.3d 39.   The Supreme Court explained a cause of action for conspiracy cannot lie ‘if the alleged conspirator, though a participant in the agreement underlying the injury, was not personally bound by the duty violated by the wrongdoing and was acting only as the agent or employee of the party who did have that duty.’  (Id. at p. 44.)”  (Central Concrete Supply Co., Inc. v. Bursak (2010) 182 Cal.App.4th 1092, 1099–1100.)

We review the application of section 1714.10 de novo on appeal.  (Berg & Berg, supra, 131 Cal.App.4th at p. 822.)

C. Analysis

Judge Latin properly granted the motion to strike Nance's non-petition complaint under section 1714.10.   As noted by Judge Latin in granting the motion to strike, Nance's non-petition complaint did not allege or identify an independent duty owed to him by defendants.   We have carefully reviewed the entirety of Nance's brief before this court, and it contains not a single word attempting to identify the independent duty owed to him or a factual basis for such a duty.   Without any allegation of a specific duty in the complaint and in the absence of any argument on the subject in Nance's brief on appeal, we have no hesitation affirming the challenged order.

Moreover, Nance was wrong on the law when he argued to the trial court that defendants owed him an independent duty.   As explained in Berg & Berg, an attorney for a creditor (such as defendants here on behalf of their client GBM) owes no duty of care to others involved in the creditor's claim “absent allegations of fraud or a financial interest in the assigned assets beyond as a source for payment of fees earned in the course of that representation.”   (Berg & Berg, supra, 131 Cal.App.4th at p. 810.)   Counsel for a creditor “owes no such independent duty to these third parties as a matter of law.  [The exception in subdivision (c)(2) of section 1714.10], which allows the filing of an action for conspiracy without prefiling approval where ‘the attorney's acts go beyond the performance of a professional duty to serve the client and involve a conspiracy to violate a legal duty in furtherance of the attorney's financial gain,’ means that the economic benefit derived by the attorney is over and above monetary compensation received in exchange for professional fees earned for the representation of his or her client.”  (Ibid.)

Our independent review of the section 1714.10 issue satisfies us that the exceptions in subdivision (c) are inapplicable to Nance's non-petition complaint.   The motion to strike was properly granted.

Failure of Judge Latin to Participate in Proceedings or Read Nance's Papers

Nance argues Judge Latin refused to participate in the proceedings and did not read his moving papers leading up to the granting of the motion to strike.   The contention is contrary to the record and completely frivolous.

Judge Latin's written tentative ruling, dated April 6, 2010, sets forth the procedural history of the petition and non-petition actions.   The court detailed the applicable law and indicated Nance did not provide any facts demonstrating defendants owed him an independent duty, nor did his complaint allege the existence of such a duty.   The tentative ruling was to grant the motion to strike.

Oral argument on the motion was heard on April 6. The hearing consumes 16 pages of reporter's transcript.   The trial court indicated it had read defendants' request for judicial notice of the other actions between the parties.   Nance's objection to portions of the reporter's transcript of the January hearing in front of Judge Glennon was sustained.   The court allowed Nance to be heard in response to the tentative ruling.   Nance argued defendants had a duty to refrain from causing injury to him.   He also argued that even if he were required to obtain prefiling approval, that requirement applied only to the conspiracy allegation of the non-petition complaint.   Judge Latin asked counsel for defendants to address Nance's argument that section 17141.0 applied only to the conspiracy allegations.   Discussion then turned to why Nance had filed the non-petition case when the petition action was pending before Judge Glennon.   Concerned over whether the statute applied only to the conspiracy cause of action, Judge Latin ordered further briefing from the parties and continued the matter to April 26, 2010.

Judge Latin prepared a tentative ruling for April 26, again indicating his intention to grant the motion to strike the entire complaint.   At the hearing on the motion which consumed nine pages of reporter's transcript, Judge Latin stated he had “considered” Nance's arguments, “I've read the briefs, and I've relooked at the argument, and I respectfully disagree․”  When Nance inappropriately questioned whether Judge Latin agreed that Nance had no duty in the fraudulent transfer action, the judge responded that he did not usually subject himself to cross-examination on his rulings and the tentative opinion was self-explanatory.   Nance accused the court of reissuing the same tentative opinion, and section 1714.10 had no application to his non-petition complaint.   Nance engaged in a lengthy oral argument explaining why he believed the statute was not applicable to his case.   Judge Latin explained that he went over all the issues and reread all the papers Nance had filed to satisfy himself that he was properly striking the non-petition complaint and terminating the action.   When Nance again questioned the court regarding the ruling, Judge Latin reminded Nance not to cross-examine the court.   Nance made additional argument.   Judge Latin adopted the tentative ruling as the ruling of the court.

Given this record, there is obviously no merit whatever to Nance's argument that Judge Latin “refused to participate in the hearing on April 26, 2010․”  There is no basis for Nance's contention the court did not read his papers or the pertinent authorities.   The record is unmistakably clear that Judge Latin was thoroughly prepared on the case, including being familiar with Nance's arguments and the pertinent law.

Defendants on appeal ask this court to impose sanctions on Nance for filing a frivolous appeal.   Because defendants have not filed a separate motion for sanctions, the request is denied.  (Cal. Rules of Court, rule 8.276.)   Our determination that sanctions may not be awarded should not be viewed, however, as condoning the inappropriate tone of Nance's appellate brief or the unjustified attack on Judge Latin.

DISPOSITION

The judgment is affirmed.   Christopher Nance is ordered to pay costs on appeal to defendants and respondents.

KRIEGLER, J.

We concur:

ARMSTRONG, J.

KUMAR, J.^*

FOOTNOTES

FN1. Moss Adams LLP, White Zuckerman, Warsavsky, Luna, Wolf & Hunt LLP, FMV Opinions, Inc., and Stonefield Josephson, Inc., were not listed in the judgment and are not parties to this appeal..  FN1. Moss Adams LLP, White Zuckerman, Warsavsky, Luna, Wolf & Hunt LLP, FMV Opinions, Inc., and Stonefield Josephson, Inc., were not listed in the judgment and are not parties to this appeal.

FN2. All statutory references are to the Civil Code, unless otherwise indicated..  FN2. All statutory references are to the Civil Code, unless otherwise indicated.

FN3. Under rule 8.204 of the California Rules of Court, each brief must state each point under a separate heading or subheading and the point with argument and citation to authority.   Nance's brief contains no headings or subheadings separately setting forth his arguments..  FN3. Under rule 8.204 of the California Rules of Court, each brief must state each point under a separate heading or subheading and the point with argument and citation to authority.   Nance's brief contains no headings or subheadings separately setting forth his arguments.

FN4. Section 1714.10 provides as follows:  “(a) No cause of action against an attorney for a civil conspiracy with his or her client arising from any attempt to contest or compromise a claim or dispute, and which is based upon the attorney's representation of the client, shall be included in a complaint or other pleading unless the court enters an order allowing the pleading that includes the claim for civil conspiracy to be filed after the court determines that the party seeking to file the pleading has established that there is a reasonable probability that the party will prevail in the action.   The court may allow the filing of a pleading claiming liability based upon such a civil conspiracy following the filing of a verified petition therefor accompanied by the proposed pleading and supporting affidavits stating the facts upon which the liability is based.   The court shall order service of the petition upon the party against whom the action is proposed to be filed and permit that party to submit opposing affidavits prior to making its determination.   The filing of the petition, proposed pleading, and accompanying affidavits shall toll the running of any applicable statute of limitations until the final determination of the matter, which ruling, if favorable to the petitioning party, shall permit the proposed pleading to be filed.“(b) Failure to obtain a court order where required by subdivision (a) shall be a defense to any action for civil conspiracy filed in violation thereof.   The defense shall be raised by the attorney charged with civil conspiracy upon that attorney's first appearance by demurrer, motion to strike, or such other motion or application as may be appropriate.   Failure to timely raise the defense shall constitute a waiver thereof.“(c) This section shall not apply to a cause of action against an attorney for a civil conspiracy with his or her client, where (1) the attorney has an independent legal duty to the plaintiff, or (2) the attorney's acts go beyond the performance of a professional duty to serve the client and involve a conspiracy to violate a legal duty in furtherance of the attorney's financial gain.“(d) This section establishes a special proceeding of a civil nature.   Any order made under subdivision (a), (b), or (c) which determines the rights of a petitioner or an attorney against whom a pleading has been or is proposed to be filed, shall be appealable as a final judgment in a civil action.“(e) Subdivision (d) does not constitute a change in, but is declaratory of, the existing law.”.  FN4. Section 1714.10 provides as follows:  “(a) No cause of action against an attorney for a civil conspiracy with his or her client arising from any attempt to contest or compromise a claim or dispute, and which is based upon the attorney's representation of the client, shall be included in a complaint or other pleading unless the court enters an order allowing the pleading that includes the claim for civil conspiracy to be filed after the court determines that the party seeking to file the pleading has established that there is a reasonable probability that the party will prevail in the action.   The court may allow the filing of a pleading claiming liability based upon such a civil conspiracy following the filing of a verified petition therefor accompanied by the proposed pleading and supporting affidavits stating the facts upon which the liability is based.   The court shall order service of the petition upon the party against whom the action is proposed to be filed and permit that party to submit opposing affidavits prior to making its determination.   The filing of the petition, proposed pleading, and accompanying affidavits shall toll the running of any applicable statute of limitations until the final determination of the matter, which ruling, if favorable to the petitioning party, shall permit the proposed pleading to be filed.“(b) Failure to obtain a court order where required by subdivision (a) shall be a defense to any action for civil conspiracy filed in violation thereof.   The defense shall be raised by the attorney charged with civil conspiracy upon that attorney's first appearance by demurrer, motion to strike, or such other motion or application as may be appropriate.   Failure to timely raise the defense shall constitute a waiver thereof.“(c) This section shall not apply to a cause of action against an attorney for a civil conspiracy with his or her client, where (1) the attorney has an independent legal duty to the plaintiff, or (2) the attorney's acts go beyond the performance of a professional duty to serve the client and involve a conspiracy to violate a legal duty in furtherance of the attorney's financial gain.“(d) This section establishes a special proceeding of a civil nature.   Any order made under subdivision (a), (b), or (c) which determines the rights of a petitioner or an attorney against whom a pleading has been or is proposed to be filed, shall be appealable as a final judgment in a civil action.“(e) Subdivision (d) does not constitute a change in, but is declaratory of, the existing law.”

FOOTNOTE.  FN*.  Judge of the Los Angeles Superior Court assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.