Hart v. Larson
232 F. Supp. 3d 1128
S.D. Cal.2017Background
- Larson (Colorado attorney) asked Hart (California attorney) to serve as local counsel in the "Storm" brain-injury case and agreed to a fee-split: Hart would receive a percentage of attorney fees above a stated settlement threshold.
- Larson later told Hart the defendants had raised a prior offer to $8 million and that Hart’s share would be based on fees above $8 million; Hart filed and litigated the case and the case ultimately settled for over $10 million.
- Hart alleges Larson concealed earlier settlement offers ($6.3M and $6.8M) and misrepresented the timing/amounts to induce Hart to join under the negotiated fee split.
- Hart received only ~10% of fees; he sued Larson for fraud and quantum meruit in California state court; defendants removed to federal court based on diversity.
- Defendants moved to strike under California’s anti‑SLAPP statute and for partial judgment on the pleadings asserting the litigation privilege; Hart moved to amend to add two defendants.
- The court denied the anti‑SLAPP motion and the Rule 12(c) motion (litigation privilege), and granted leave to amend (proposed FAC to be filed nunc pro tunc).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether fraud claim "arises from" protected activity under Cal. Civ. Proc. Code § 425.16 (anti‑SLAPP prima facie) | Hart: statements were false inducements to a fee agreement, not protected petition/speech in settlement negotiations | Larson: statements were settlement communications and therefore protected under anti‑SLAPP | Court: Defendants failed to show the claim arose from protected activity; anti‑SLAPP denied |
| Whether Hart showed a reasonable probability of prevailing under anti‑SLAPP second step | Hart: pleadings sufficiently allege fraudulent inducement (no need analyzed because first step failed) | Larson: argued merits and privileges would defeat claim | Court: did not reach second step because defendants failed initial burden |
| Whether California litigation privilege (Cal. Civ. Code § 47(b)) bars Hart's fraud claim (12(c)) | Hart: communications were fee negotiations and not functionally necessary to litigation; privilege should not apply | Larson: privilege protects attorney communications about settlement and fees, so fraud claim is barred | Court: privilege inapplicable here because communications were fee‑split negotiations, not communications functioning as a necessary/useful step in the litigation; 12(c) denied |
| Whether leave to amend should be granted to add defendants to quantum meruit claim | Hart: seeks to add two defendants; amendment is timely and not futile | Larson: proposed amendment is futile | Court: Leave to amend granted under Rule 15(a); no undue prejudice or futility shown |
Key Cases Cited
- Safari Club Int’l v. Rudolph, 845 F.3d 1250 (9th Cir. 2017) (anti‑SLAPP two‑step framework and definition of protected activity)
- Mindys Cosmetics, Inc. v. Dakar, 611 F.3d 590 (9th Cir. 2010) (anti‑SLAPP burden shifting to plaintiff to show probability of prevailing)
- GeneThera, Inc. v. Troy & Gould Prof. (Troy & Gould), 171 Cal.App.4th 901 (Cal. Ct. App. 2009) (attorney settlement communications can be protected when made in course of settlement between opposing parties)
- Navellier v. Sletten, 29 Cal.4th 82 (Cal. 2002) (communications implicating right to petition are subject to anti‑SLAPP)
- Silberg v. Anderson, 50 Cal.3d 205 (Cal. 1990) (elements and scope of California litigation privilege)
- Jacob B. v. County of Shasta, 40 Cal.4th 948 (Cal. 2007) (public policy purposes behind litigation privilege)
- Olsen v. Harbison, 191 Cal.App.4th 825 (Cal. Ct. App. 2010) (communications between counsel about co‑counseling and fee arrangements found to be privileged in the case’s context)
- Rothman v. Jackson, 49 Cal.App.4th 1134 (Cal. Ct. App. 1996) (litigation privilege requires functional connection to litigation; courts balance public and private interests)