a “district court does not abuse its 12 discretion by denying further discovery if the movant has failed diligently to pursue 13 discovery in the past.”
How later courts described this case
- a “district court does not abuse its 12 discretion by denying further discovery if the movant has failed diligently to pursue 13 discovery in the past.”
- “the mere existence of a scintilla of evidence in support of the nonmoving party’s 12 position is not sufficient.”
- “a movant cannot complain if it 15 fails diligently to pursue discovery before summary judgment.”
- the privilege applies to individuals that 4 are “merely . . . connected or related to the proceedings.”
Written by the judges who cited it.
The opinion
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8 UNITED STATES DISTRICT COURT
9 SOUTHERN DISTRICT OF CALIFORNIA
10
11 HANDAL & ASSOCIATES, INC., Case No.: 3:18-cv-169-L-AGS
12 Plaintiff,
13 v.
ORDER ON DEFENDANT’S
14
JONATHAN BRUCE SANDLER, MOTION FOR SUMMARY
15 Defendant. JUDGMENT (ECF 101)
16
17 Pending before the Court is Defendant Johnathan Bruce Sandler’s (“Sandler”)
18 motion for summary judgment. (ECF 101). Plaintiff Handal and Associates (“H&A”)
19 opposed, and Sandler replied. (ECFs 102-103). The Court decides the matter without oral
20 argument. See Civ. L. R. 7.1. For the reasons stated below, the Court GRANTS the
21 motion.
22 LEGAL STANDARD
23 Summary judgment is appropriate where the record, taken in the light most
24 favorable to the opposing party, indicates “that there is no genuine dispute as to any
25 material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
26 56(a); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986) (explaining the
27 standard); Celotex Corp. v. Catrett, 477 U.S. 317, 322-324 (1986).
28
1 To meet their burden, the moving party must present evidence that negates an
2 essential element of the opposing party’s case or show that the opposing party does not
3 have evidence necessary to support its case. See Celotex, 477 U.S. at 322-23; Nissan Fire
4 & Marine Ins. Co., Ltd. v. Fritz Companies, Inc., 210 F.3d 1099, 1105-06 (9th Cir. 2000).
5 If the moving party meets this burden, the opposing party must support its
6 opposition by producing evidence to support its claim. Celotex Corp., 477 U.S. at 324;
7 Nissan Fire & Marine Ins., 210 F.3d at 1103. The opposing party cannot defeat summary
8 judgment merely by demonstrating “that there is some metaphysical doubt as to the
9 material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586
10 (1986); see also Triton Energy Corp. v. Square D Co., 68 F.3d 1216, 1221 (9th Cir.
11 1995) (“the mere existence of a scintilla of evidence in support of the nonmoving party’s
12 position is not sufficient.”) (internal citation omitted).
13 Facts are material when, under the substantive law, they could affect the outcome
14 of the case. Anderson, 477 U.S. at 248. Disputes are genuine if “the evidence is such that
15 a reasonable jury could return a verdict for the nonmoving party.” Id.
16 The court must view all inferences from the underlying facts in the light most
17 favorable to the nonmoving party. See Matsushita, 475 U.S. at 587. However, it cannot
18 make credibility determinations or weigh evidence. Anderson, 477 U.S. at 255
19 “Mere allegation and speculation do not create a factual dispute for purposes of
20 summary judgment.” Nelson v. Pima Community College, 83 F.3d 1075, 1081-82 (9th
21 Cir. 1996).
22 “The district court may limit its review to the documents submitted for the purpose
23 of summary judgment and those parts of the record specifically referenced therein.”
24 Carmen v. San Francisco Unified Sch. Dist., 237 F.3d 1026, 1030 (9th Cir. 2001).
25 Therefore, courts are not obligated “to scour the record in search of a genuine issue of
26 triable fact.” Keenan v. Allen, 91 F.3d 1275, 1279 (9th Cir. 1996).
27
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1 BACKGROUND
2 H&A, a law firm, entered into an agreement to represent Wymont Services
3 Limited (“Wymont”), James R. Lindsey, William Buck Johns, and Marc Van Antro
4 (collectively, “Clients”) in a derivative action. (ECF 106). Sandler signed the agreement
5 as Wymont’s representative. Id. The Clients held shares in African Wireless, Inc.
6 (“AWI”). The suit was against AWI’s majority shareholder (among others).
7 The Clients also entered into a common interest agreement. Id; (ECF 102 at
8 Exhibit C). The agreement set forth Sandler’s responsibilities related to the derivative
9 action, including interacting with H&A, coordinating the litigation, and engaging in
10 negotiations. Id. The retainer agreement also set forth that Sandler and Lindsey
11 represented the Clients. (ECF 10, Exhibit A). Sandler and Lindsey, on the Clients’ behalf,
12 had the absolute right (together or acting with the other’s written authority) to accept or
13 reject settlement offers. Id. Similarly, they had the authority to terminate H&A’s
14 representation. Id. H&A was also required to keep Sandler informed about the action and
15 its intended strategies. Id.
16 The court in the derivative action struck the defendants’ answers and entered a
17 default against them. (ECF 102 at 3); (ECF 106). On July 6, 2016, the court held a default
18 prove-up hearing. (ECF 102-1 at 4); (ECF 106). It awarded AWI a constructive trust over
19 shares in other companies. Id. The Clients thereafter sought a new trial and to amend the
20 judgment. (ECF 102 at Exhibit H).
21 On August 5, 2016, the Clients signed an addendum to the common interest
22 agreement that stated Sandler should renegotiate H&A’s contingency fee, from 15% to
23 7.5%. (ECF 102 at Exhibit E). Later, Lindsey asked H&A to waive or reduce its
24 contingency fee. (ECF 102-1).
25 On August 29, 2016, the court amended the judgment to assign a value for the
26 awarded shares. (ECF 102 at 3-4); (ECF 106). But it denied the motion for a new trial.
27 (ECF 102 at Exhibit H).
28
1 On September 4, 2016, William Buck Johns, on the Clients’ behalf, sent H&A a
2 notice of termination. (ECF 102-1 at 5). The notice indicated the Clients would continue
3 to retain H&A as counsel if it agreed to modify the fee arrangement. Id. H&A refused the
4 offer. Id.
5 On September 7, 2016, the Clients entered into another addendum to the common
6 interest agreement that specified Sandler would receive compensation if he successfully
7 negotiated a reduction in H&A’s fee. (ECF 102 at Exhibit K).
8 H&A contends Sandler interfered with its client relationship and its right to a fee
9 under the retainer agreement. It also contends Sandler made statements that H&A
10 committed malpractice and acted unethically. It asserts three claims against Sandler: (1)
11 intentional inducement to breach contract, (2) intentional interference with prospective
12 economic advantage, and (3) defamation. (ECF 10, Amended Complaint).
13 Sandler argues the Court should grant him summary judgment because: (1) the
14 litigation privilege bars the claims, (2) the agent immunity rule applies, (3) there are no
15 cognizable damages, and (4) his conduct did not cause the alleged injury. (ECF 101).
16 DISCUSSION
17 H&A’s Motion to Continue
18 H&A asks the Court to defer ruling on Sandler’s motion. (ECF 102). Under
19 Federal Rule of Civil Procedure 56, “if a nonmovant shows . . . it cannot present facts
20 essential to justify its opposition, the court may . . . defer considering the motion or deny
21 it.”
22 H&A argues it needs to depose more individuals. (ECF 102). It made a similar
23 request after Sandler filed his original summary judgment motion. (ECFs 71 and 77). The
24 Court granted that request and denied Sandler’s motion without prejudice. (ECF 82).
25 H&A argues it must depose James Lindsey and Sandler. (ECF 102). According to
26 the opposition, it has “tried without success to depose” them. (Id. at 10) (emphasis
27 added); (id. at 17) (“a factual question [exists] that cannot be determined without Lindsey
28 [or] Sandler’s . . . depositions.”); (see also id. at 22). Yet, it deposed them over a month
1 before it filed the opposition. (Id. at Exhibits N and O). It also relies on their testimony to
2 oppose Sandler’s motion. Id.1
3 H&A likewise argues it needs more time to depose Rhondi Walsh and Marc Van
4 Antro. (ECF 102 at 10-11).2 The Court granted the prior continuance request on July 9,
5 2020. (ECF 82). H&A’s opposition to the current motion was due on October 19, 2020 –
6 more than three months later. (See ECF 101). But there is nothing in the record to show
7 H&A was diligent after the Court granted its earlier request. (ECF 102). Although it
8 subpoenaed Walsh, his counsel objected. Id. H&A later withdrew the subpoena. (ECF
9 103).
10 For those reasons, the Court denies H&A’s request. Chance v. Pac-Tel Teletrac
11 Inc., 242 F.3d 1151, 1161 n.6 (9th Cir. 2001) (a “district court does not abuse its
12 discretion by denying further discovery if the movant has failed diligently to pursue
13 discovery in the past.”) (internal quotation marks and citation omitted); Mackey v.
14 Pioneer Nat'l Bank, 867 F.2d 520, 524 (9th Cir. 1989) (“a movant cannot complain if it
15 fails diligently to pursue discovery before summary judgment.”)
16 H&A also requests leave to amend its complaint. (ECF 102 at 11). But it failed to
17 show good cause. See Fed. R. Civ. P. 16. The Court therefore denies the request.
18 Sandler’s Motion for Summary Judgment
19 Sandler argues H&A’s claims are barred under California Civil Code section 47
20 (known as the litigation privilege). (ECF 101-1). That section provides that a “privileged
21 publication” is one made “in any . . . judicial proceeding.” Cal. Civ. Code § 47. It applies
22 to communications litigants or other authorized participants make in judicial proceedings
23 to achieve the objects of the litigation that have some connection or logical relation to the
24
25
1 H&A’s prior request contained identical statements about the need to depose them.
26
(Compare ECF 77-2 at 2-3 with ECF 102 at 10).
27 2 H&A cites paragraphs 31 and 32 from Mr. Handal’s declaration to support its request
about Walsh and Van Antro. (ECF 102 at 11). But those paragraphs have nothing to do
28
1 action. Silberg v. Anderson, 50 Cal. 3d 205, 212 (1990). “The requirement that the
2 communication be in furtherance of the objects of the litigation is, in essence, simply part
3 of the requirement that the communication be connected with, or have some logical
4 relation to, the action, i.e., that it not be extraneous to the action.” Id. at 219-220.
5 “The breadth of the litigation privilege cannot be understated. It immunizes
6 defendants from virtually any tort liability (including claims for fraud).” Olsen v.
7 Harbison, 191 Cal. App. 4th 325, 333 (2010). It “is absolute and applies regardless of
8 malice.” Jacob B. v. Cnty. of Shasta, 40 Cal. 4th 948, 955 (2007). Even communications
9 that are fraudulent, perjurious, unethical, or illegal might fall within its scope. Id. at 957-
10 959; Kashian v. Harriman, 98 Cal. App. 4th 892, 920 (2002). Doubts are also resolved in
11 its favor. Wang v. Heck, 203 Cal. App. 4th 677, 684 (2012).
12 Its purposes “are to afford litigants and witnesses free access to the courts without
13 fear of being harassed subsequently by derivative tort actions, to encourage open
14 channels of communication and zealous advocacy, to promote complete and truthful
15 testimony, to give finality to judgments, and to avoid unending litigation.” Jacob B., 40
16 Cal. 4th at 955 (internal quotation marks and citation omitted).
17 Sandler argues the privilege applies because he represented a litigant, the
18 statements were made while the derivative action was active, and the topic related to
19 whether the litigant’s counsel was competent or appropriate. (ECF 101-1 at 16-17).
20 H&A does not argue there are genuine issues of material facts as to whether the
21 litigation privilege applies.3 (See ECF 102); Kashian v. Harriman, 98 Cal. App. 4th 892,
22 913 (2002) (“if there is no dispute as to the operative facts, the applicability of the
23
24
25 3 In the section related to the litigation privilege, H&A concludes there is a “great
material dispute over what Sandler did or said as well as when he said it and in what
26
context.” (ECF 102 at 22). However, it does not provide support for that conclusion or
27 explain it. See Hernandez v. Spacelabs Med. Inc., 343 F.3d 1107, 1112 (9th Cir. 2003)
(nonmoving party cannot defeat summary judgment with “unsupported conjecture or
28
1 litigation privilege is a question of law.”) And it does not dispute the claims relate to
2 communications that occurred while the derivative action was active. (See ECF 102 at
3 21-22). It also does not dispute Sandler was an “authorized participant.” Id.4 The Court
4 construes that as a waiver. See Image Technical Service, Inc. v. Eastman Kodak, 903 F.2d
5 612, 615 n.1 (9th Cir. 1990).
6 Regardless, those elements are met. H&A’s claims relate to Sandler’s statements
7 about its performance and compensation. The statements were also made while the
8 derivative action was active.5 In addition, Sandler had a substantial interest in the
9 litigation. He was Wymont’s (a plaintiff to the action) representative. (ECF 102-1 at ¶ 2).
10 In that role, he was authorized to direct and coordinate the action. (ECF 10, Amended
11 Complaint at ¶ 8). And he was able to make strategic decisions about it. (ECF 102-1 at ¶
12 5); (ECF 102, Exhibit C).6 Therefore, he was an “authorized participant.” See Costa v.
13
14
15 4 H&A raises purported genuine disputes about material facts related to Sandler’s
authority as Wymont’s agent. (See ECF 102 at 13-14). But those arguments relate to
16
whether the agent immunity applies to Sandler’s conduct. Id. And, as discussed later, an
17 “authorized participant” under the litigation privilege is not limited to parties or their
agents.
18 5 H&A argues it is logical to assume the Clients began to discuss reducing its fee since
19 August 5, 2016, when they entered into an addendum to their common interest
agreement. (ECF 102 at 18; Exhibit E). The addendum indicates Wymont retained co-
20
counsel. Id. It set forth a proposal that H&A’s contingency rate be reduced from 15% to
21 7.5%. Id. In August 2016, the Clients also filed a motion for a new trial (related to the
original default judgment). (ECF 102 at Exhibit H). On August 29, 2016, the court denied
22
that motion. Id. The proceedings in the derivative action continued through at least
23 December 16, 2016. Id.; (see also ECF 102 at 6) (discussing that, in June 2019, the
sheriff put up for sale the shares obtained in the derivative action); (ECF 106).
24 6 The Clients entered into a common interest agreement. (ECF 102 at Exhibit C). The
25 agreement set forth Sandler’s responsibilities related to the derivative action. (Id. at 3)
(“Sandler shall . . . directly interface with [H&A] and coordinate the litigation.”); (id.)
26
(“Sandler . . . shall have responsibility for handling any negotiations with the
27 Defendants.”); (id. at 8) (“Sandler [agrees] to use [his] best judgment in making decisions
pertaining to the Litigation for the [Clients’] benefit.”) The retainer agreement also set
28
1 Superior Court, 157 Cal. App. 3d 673, 678 (1984) (non-litigants with a “substantial
2 interest in the outcome of the litigation” are “authorized participants.”); Adams v.
3 Superior Court, 2 Cal. App. 4th 521, 529 (1992) (the privilege applies to individuals that
4 are “merely . . . connected or related to the proceedings.”); GetFugu, Inc. v. Patton Boggs
5 LLP, 220 Cal. App. 4th 141, 152 (2013).
6 H&A’s arguments on the litigation privilege concern the last two elements.
7 Specifically, it argues Sandler’s statements were not made to achieve the objects of the
8 litigation because the objects were “largely achieved.” (ECF 102 at 21). H&A relies on
9 the judgment entered in the action. Id. But it does not cite authority to support the
10 proposition that the privilege is inapplicable if the communication occurs after the objects
11 are “largely achieved.” Again, the privilege is expansive. It applies to communications
12 made in “judicial proceedings.” That encompasses communications that occur post-
13 judgment. See Rusheen v. Cohen, 37 Cal. 4th 1048 (2006) (the privilege “is not limited to
14 statements made during a trial or other proceedings, but may extend to steps taken . . .
15 afterwards.”); see, e.g., Ritchie v. Sempra Energy, 703 F. App'x 501, 505 (9th Cir. 2017)
16 (litigation privilege “extends to post-judgment acts necessarily related to the enforcement
17 of an order procured by an allegedly wrongful communicative act.”) And the
18 “furtherance” element is met if the communication has a “logical relation” to the action.
19 Silberg, 50 Cal. 3d at 219-220. Also, as discussed above, the Clients sought a new trial
20 and to alter the judgment. That transpired while the Clients were discussing a reduction in
21 H&A’s fee, etc. (ECF 102 at 18).7
22
23
absolute right – together or acting with the other’s written authority – to accept or reject
24
settlement offers on the Clients’ behalf. Id. And they had the ability to discharge H&A on
25 the Clients’ behalf. Id. H&A was also required to keep Sandler informed about the action
and its intended strategies. Id.
26 7 H&A contends Sandler’s statements caused the Clients to seek a reduction in its fees.
27 And the Clients entered into an addendum to the common interest agreement in August
2016, which stated they would seek to reduce H&A’s contingency fee in half (from 15%
28
1 Here, the communications were about H&A’s competency/conduct in the
2 derivative action and what to do about it. The communications therefore were logically
3 related to the action. See, e.g., Grant & Eisenhofer, P.A. v. Brown, 2017 U.S. Dist.
4 LEXIS 204184, at *17-20 (C.D. Cal. 2017) (litigation privilege applied to claims that
5 were based on an alleged conspiracy between a client and an attorney to deny a former
6 attorney their fees); see also Williams & Cochrane, LLP v. Quechan Tribe of the Fort
7 Yuma Indian Reservation, 2018 U.S. Dist. LEXIS 141031, at *10, 18 (S.D. Cal. 2018)
8 (litigation privilege would bar intentional interference claim against counsel that
9 interfered with a prior attorney-client relationship); Olsen, 191 Cal. App. 4th at 336.
10 H&A also argues the litigation privilege does not apply because Sandler made the
11 statements for his own benefit. But it fails to cite support for the proposition that self-
12 interested communications are not protected under the litigation privilege.8 Notably, “the
13 ‘furtherance’ requirement was never intended as a test of a participant’s motives, morals,
14 ethics or intent.” Silberg, 50 Cal. 3d at 220. Again, the inquiry is whether the
15 communications had a logical relation to the action. Id. The Court therefore rejects that
16 argument.
17 Ultimately, “the question of whether the litigation privilege should, or should not,
18 apply to particular communications has always depended upon a balancing of the public
19 interests served by the privilege against the important private interests which it
20 sacrifices.” Rothman v. Jackson, 49 Cal. App. 4th 1134, 1146-47 (1996). “The
21 disallowance of derivative tort actions based on communications of participants in an
22 earlier action necessarily results in some real injuries that go uncompensated.” Silberg, 50
23 Cal. 3d at 218. But, in some cases, “other remedies aside from a derivative suit for
24
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26 8 That proposition – if adopted – would significantly limit the privilege. For instance,
27 litigants are self-interested (i.e., plaintiffs seek compensation while defendants seek to
avoid liability). The same applies to counsel (i.e., they seek to prevail in the suit and
28
1 compensation [might] exist and may help deter injurious publications during litigation.”
2 Id. at 218-19.
3 H&A is not without recourse. It seeks to recover from Sandler what it contends is
4 owed under the retainer agreement. And it has the potential to assert a quantum meruit
5 claim against the Clients.9 See Olsen, 191 Cal. App. 4th at 342; Fracasse, 6 Cal. 3d at
6 790. Also, the potential for principals to file civil suits against their agents (e.g., for
7 breaching their duties) acts as a deterrent in situations like this.10 Whereas, to permit this
8 case to proceed would have an adverse effect: it would discourage representatives of
9 parties to an action from discussing their counsel’s conduct or suggesting the parties
10 retain new counsel. And “it is desirable to create an absolute privilege . . . not . . . to
11 protect the shady practitioner, but . . . [so] the honest one . . . [is not] concerned with
12 subsequent derivative actions.” Silberg, 50 Cal. 3d at 214.
13
14
15
16
9 H&A asserts an inducement to breach contract claim against Sandler. To succeed on
17 that claim, a breach must have occurred. See Pacific Gas & Electric Co. v. Bear Stearns
& Co., 50 Cal.3d 1118, 1129 (1990) (“while the tort of inducing breach of contract
18
requires proof of a breach, the cause of action for interference with contractual relations
19 is distinct and requires only proof of interference.”); id. at 1126-27 (cause of action for
intentional interference with contractual relations may be viable where an individual
20
induced a party to a contract to terminate it according to its terms). But here, the Clients
21 terminated the contract per its terms. (ECF 102, Exhibit J); see Fracasse v. Brent, 6 Cal.
3d 784, 790 (1972) (“the client’s power to discharge an attorney, with or without cause, is
22
absolute.”) Moreover, upon termination, the contract required H&A and the Clients to
23 reach an agreement (i.e., negotiate) as to the value of the services provided. (See ECF 10,
Retainer Agreement, Article VI). Also, “an attorney employed under a contingent fee
24
contract and discharged prior to the occurrence of the contingency is limited to quantum
25 meruit recovery [i.e., an equitable remedy] for the reasonable value of services rendered
up to the time of discharge, rather than the full amount of the agreed contingent fee.”
26
Joseph E. Di Loreto, Inc. v. O'Neill, 1 Cal. App. 4th 149, 156 (1991) (internal quotation
27 marks and citation omitted).
10 Mr. Handal communicated with Wymont’s director during the derivative action and
28
l Based on the above, the litigation privilege applies. See, e.g., Grant & Eisenhofer,
2 2017 U.S. Dist. LEXIS 204184 at *17-20; see also Williams & Cochrane, LLP,
3 U.S. Dist. LEXIS 141031 at *10, 18; Olsen, 191 Cal. App. 4th at 336. H&A’s
4 || claims are barred under it.!' Even viewing all inferences in H&A’s favor, Sandler is
5 || entitled to judgment as a matter of law.'? The Court GRANTS the motion for summary
6 || judgment.
7 CONCLUSION
8 For the reasons stated above, the Court GRANTS the motion for summary
9 judgment. The Clerk is instructed to enter judgment in Sandler’s favor and close this
10 || case.
11 IT IS SO ORDERED.
12 Dated: August 3, 2021
pee ep?
14 H . James Lorenz,
15 United States District Judge
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28 H&A did not argue its claims survive even if the litigation privilege applies.
The Court will therefore not address Sandler’s other arguments.