Mancini & Associates v Schwetz – Opinion

Filed 9/4/19
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
MANCINI & ASSOCIATES,
Plaintiff and Respondent,
v.
JASON SCHWETZ,
Defendant and Appellant.
2d Civil No. B290498
(Super. Ct. No. 56-2016-00485907-
CU-NP-VTA)
(Ventura County)
Of course, on occasion, a client may not fully appreciate the
excellent result achieved by her or his attorney. Such an occasion
provides the background from which this case arises.
An attorney successfully prosecutes an action resulting in a
substantial jury verdict in favor of his client. The retainer
agreement between the attorney and his client provides that the
attorney receive a percentage of the recovery and costs should his
client prevail.
Thereafter, the client, without the attorney’s knowledge or
consent, releases the defendant from the pending judgment,
including attorney fees and costs.
Does this release preclude the attorney from pursuing his
costs and fees from the defendant? Of course not.
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Jason Schwetz appeals a judgment entered in favor of the
law firm Mancini & Associates (Mancini). We affirm.
FACTUAL AND PROCEDURAL HISTORY
This appeal concerns a written settlement and release from
a 2008 judgment awarded Gina Rodriguez, plaintiff in the
underlying lawsuit, Rodriguez v. Schwetz (Super. Ct. Ventura
County, 2008, No. SC046381). But for $40 collected from
defendant Schwetz in a debtor’s exam, the judgment proved to be
uncollectable. Seven years following trial and her favorable
judgment, Rodriguez regretted the lawsuit and sought “to resolve
all the issues” with Schwetz. The settlement and release broadly
releases the attorney fees and costs due Mancini pursuant to the
firm’s retainer agreement with Rodriguez.
Mancini brought this action against Schwetz seeking
attorney fees and costs, plus interest, awarded in the underlying
litigation and incorporated into the 2008 judgment. Following a
court trial, Mancini obtained $409,351 damages on tort theories
of interference with contract and economic advantage. Schwetz
appeals this award.
Underlying Lawsuit and Aftermath
On March 30, 2005, Rodriguez and Mancini agreed in
writing that Mancini would represent Rodriguez in an
employment lawsuit against her former employer NADT, LLC
(NADT), and its principal, Schwetz. The retainer agreement
provided that Mancini’s attorney fees would be 50 percent of any
recovery obtained plus all attorney fees awarded by the trial
court. In addition, the agreement provided that court costs would
be repaid from any recovery and specifically provided for a lien
for Mancini’s fees and costs.
In 2006, Mancini filed a lawsuit against NADT and
Schwetz on behalf of Rodriguez. The complaint alleged causes of
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action for wrongful termination, sexual harassment, sexual
battery, and breach of contract, among other causes of action.
Two years later, the matter proceeded to jury trial on the causes
of action of breach of contract and sexual battery. The jury
awarded $68,650 damages against Schwetz on the breach of
contract claim and no damages against NADT. In 2008, the trial
court then awarded $12,622.46 costs and $136,050 attorney fees
to Rodriguez, and $5,838.81 costs to NADT.
Following the 2008 judgment, Mancini, on behalf of
Rodriguez, sought to collect the damages. Despite the efforts of
Mancini’s collections attorneys, however, the judgment proved
uncollectable. On occasions, however, Schwetz did offer
“nuisance value[]” settlements.
In January 2014, Rodriguez contacted Schwetz on
Facebook, expressing interest in his well-being and asking if he
continued in business. Schwetz responded that he no longer had
his tanning salon business and suggested they have lunch.
Rodriguez responded that she was “single as usual” and agreed to
meet Schwetz for lunch. Following their conversation and lunch,
the two resumed their friendship.
In 2015, Mancini employed Michael Berke, a collections
attorney, to pursue collection of the judgment. In early April
2015, Berke contacted Schwetz by telephone and also subpoenaed
his bank records. In response, on April 5, 2015, Schwetz
contacted Rodriguez and asked if she had hired Berke to collect
the judgment against him. Rodriguez replied that she did not
employ Berke and had no knowledge of him.
Soon, Schwetz and Rodriguez prepared a document entitled
“Memorandum of Settlement and Mutual Release”
(Memorandum). The Memorandum refers to the underlying
lawsuit and judgment and releases the parties, and their agents
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and attorneys “from all judgments, fees, costs, claims, damages,
demands, and causes of action, known or unknown, suspected or
unsuspected, arising out of the Action.”1 Schwetz and Rodriguez
executed the document on April 6, 2015, several days after
Berke’s initial contact with Schwetz. By FAX, Schwetz
immediately provided a copy of the Memorandum to Berke, who
then forwarded the document to Mancini.
Mancini’s Lawsuit Against Schwetz
In 2016, Mancini brought this lawsuit against Schwetz
alleging causes of action for intentional interference with
contract, intentional interference with economic relations,
negligent interference with prospective economic relations, and
enforcement of an attorney lien.
At trial, Schwetz testified that he and Rodriguez drafted
the Memorandum because Rodriguez wanted to resolve their
differences. He admitted that he knew there were continuing
efforts to collect the judgment and intended the Memorandum to
resolve all claims, including Mancini’s attorney fees, against him.
Schwetz stated that he provided no consideration to Rodriguez
for the settlement and release. He added that the parties
executed a settlement agreement sometime in 2014, but that he
could not locate the original or a copy.
Following presentation of evidence and argument by the
parties, the trial court decided that Mancini established that
Schwetz intentionally interfered with the retainer agreement and
with Mancini’s economic benefit. The court then entered
judgment for $409,351.81. In ruling, the trial judge commented,
“Something about this [factual situation] doesn’t seem right. It’s
1 Schwetz later testified that NADT may have been defunct
by the time the parties executed the Memorandum.
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inconsistent. Sometimes I see this happen, this sort of resolution
when there is evidence of a kind of romantic relationship that’s
been rekindled . . . .”
Schwetz appeals and contends that: 1) Mancini’s claims
are precluded by the litigation privilege of Civil Code section 47,
and 2) insufficient evidence exists that he intentionally interfered
with Mancini’s contractual relationship with Rodriguez.
DISCUSSION
I.
Schwetz argues that his settlement communications with
Rodriguez were privileged by the litigation privilege of Civil Code
section 47. He acknowledges that the litigation privilege was not
litigated in the trial court, but contends that we may decide the
issue as one of law on uncontroverted facts.
Generally, issues not raised in the trial court may not be
raised for the first time on appeal. (Sea & Sage Audubon Society,
Inc. v. Planning Com. (1983) 34 Cal.3d 412, 417.) A “forgiving
approach” may apply where important issues of public policy
exist and the issue is a pure question of law. (Ibid.) Otherwise,
it is unfair to the trial court and to the opposing litigant for a
party to raise a new and different theory on appeal. (Mattco
Forge, Inc. v. Arthur Young & Co. (1997) 52 Cal.App.4th 820,
847.)
Here Schwetz does not present any singular important
public policy issue raised in the context of this litigation that a
forgiving approach should resolve. Nevertheless, giving Schwetz
the benefit of the doubt, we shall discuss the merits of his
contentions. (Sea & Sage Audubon Society, Inc. v. Planning
Com., supra, 34 Cal.3d 412, 417.)
Civil Code section 47, subdivision (b) codifies a privilege
that applies to a “publication or broadcast” that is part of a
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“judicial proceeding.” The primary purpose of this privilege is to
“afford litigants and witnesses [citation] the utmost freedom of
access to the courts without fear of being harassed subsequently
by derivative tort actions.” (Silberg v. Anderson (1990) 50 Cal.3d
205, 213.) The privilege applies when statements are made in
judicial or quasi-judicial proceedings by litigants or other
participants to achieve the objects of the litigation. (Id. at
p. 212.) The statements must also have some connection or
logical relationship to the litigation. (Ibid.) Judgment
enforcement proceedings are an extension of the judicial process.
(O’Keefe v. Kompa (2000) 84 Cal.App.4th 130, 134-135 [postjudgment collection efforts related to litigation objective].) The
privilege also applies to statements made during settlement
negotiations. (Optional Capital, Inc. v. DAS Corp. (2014) 222
Cal.App.4th 1388, 1404.)
The “threshold issue” in determining the application of the
litigation privilege is whether the defendant’s conduct was
communicative or noncommunicative. (LiMandri v. Judkins
(1997) 52 Cal.App.4th 326, 345.) Civil Code section 47,
subdivision (b) applies only to communicative acts and does not
apply to tortious courses of conduct. (LiMandri, at p. 345.)
Here, although Schwetz’s act of executing the
Memorandum was communicative, it was but one act in a course
of tortious conduct to deprive Mancini of its attorney fees.
Schwetz spoke with collections attorney Berke and learned that
the judgment against him was again the subject of collection.
Schwetz then contacted Rodriguez to learn if she had employed
Berke. Rodriguez confirmed that she was not seeking to enforce
the judgment, had not employed Berke, and did not know that
Berke was seeking to collect the judgment. Schwetz was present
during the underlying trial and admitted that he knew of the
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judgment against him. The judgment specifically awarded
Rodriguez attorney fees as well as damages and costs. Schwetz’s
noncommunicative conduct was not protected by the litigation
privilege. A third party who impairs an attorney’s rights
pursuant to a contractual lien may be subject to liability for
tortious interference with contractual relations or prospective
economic advantage. (Little v. Amber Hotel Co. (2011) 202
Cal.App.4th 280, 291.)
II.
Schwetz contends that there is insufficient evidence that he
knew of Mancini’s attorney fee lien or that he intended to
interfere with Mancini’s collection of its attorney fees and costs.
He relies upon his testimony that he had no knowledge of
Mancini’s fee retainer agreement with Rodriguez: “I didn’t know
what she had or didn’t have. . . . I would have no knowledge of
that.”
In reviewing the sufficiency of evidence to support a
judgment, we view the evidence and draw all reasonable
inferences therein in favor of the judgment. (Beck Development
Co. v. Southern Pacific Transportation Co. (1996) 44 Cal.App.4th
1160, 1203.) We do not reweigh the evidence or reassess witness
credibility. (Id. at pp. 1203-1204.) We discard unfavorable
evidence as not having sufficient verity to be accepted by the trier
of fact. (Little v. Amber Hotel Co., supra, 202 Cal.App.4th 280,
292.)
Sufficient evidence and all reasonable inferences therefrom
establish that Schwetz knew that Mancini had a fee agreement
with Rodriguez and that he intentionally and wrongfully
interfered to avoid paying the attorney fees and costs. Schwetz
was present during trial of the underlying litigation, received the
judgment, and knew that the trial court separately awarded
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$136,050 attorney fees to Rodriguez. Schwetz also knew that
Mancini represented Rodriguez throughout trial.
Post-judgment, Schwetz offered nuisance value settlements
from time to time, paid $40 to Mancini’s counsel in a debtor’s
exam, and acknowledged that he knew Berke was attempting to
collect the judgment. Rodriguez informed Schwetz that she did
not intend to collect the judgment. Within several days of
Berke’s contract, Schwetz executed the Memorandum with
Rodriguez releasing the parties’ attorneys from all judgments,
fees, costs, claims, damages, and demands. Schwetz provided no
consideration for the settlement and release. He testified that
one purpose of the Memorandum was to resolve all the issues,
including Rodriguez’s attorney fees and claims.
Having found the judgment supported by sufficient
evidence of Schwetz’s intentional interference with contract, we
need not discuss his remaining contentions.
The judgment is affirmed. Respondent shall recover costs
on appeal.
CERTIFIED FOR PUBLICATION.
GILBERT, P. J.
We concur:
YEGAN, J.
TANGEMAN, J.
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Kent M. Kellegrew, Judge
Superior Court County of Ventura
______________________________
Greg May for Defendant and Appellant.
Mancini & Associates and Tara J. Licata for Plaintiff and
Respondent.