Flores v. Emerich & Fike

MEMORANDUM *** Joe and Connie Flores (the “Floreses”) appeal the district court’s dismissal of their claims against the law firm Emerich & Fike PC and individual lawyers (collectively, “Fike”). We have jurisdiction under 28 U.S.C. § 1291 and we affirm. The Floreses sued Fike in connection with Fike’s representation of DDJ, Inc., and DDJ, LLC (the “DDJ entities”) in a lawsuit the Floreses filed against the DDJ entities in 1999 (the “1999 action”). 1 The district court determined that the claims against Fike were not subject to the automatic stay under 11 U.S.C. § 362(a) that had been imposed as a result of the DDJ entities’ filing for bankruptcy. The district court then struck, under California Code of Civil Procedure § 425.16 (the “anti-SLAPP statute”), or dismissed each of the Floreses’ claims against Fike. The district court denied the Floreses’ Rule 60 motion to vacate the judgment in favor of Fike and issued a Rule 54(b) certification to allow the Floreses to appeal. The Floreses contend that the district court erred in: (1) dismissing causes of action that were stayed under § 362(a); (2) denying the Floreses’ motion to vacate judgment under Rule 60(b) based on the suspension of the DDJ entities’ corporate status during Fike’s representation; (3) denying the Floreses’ motion to vacate judgment under Rule 60(b) based on the district court’s failure to continue the anti-SLAPP motion to allow discovery; and (4) striking the Floreses’ malicious prosecution and abuse of process claims. 1. We conclude that the district court did not dismiss any actions that were subject to the automatic stay under 11 U.S.C. § 362(a). In its order regarding the applicability of the automatic stay, the district court recognized that some claims against Fike could implicate the DDJ entities’ bankruptcy estates and imposed its own stay “to afford the [bankruptcy] trustee a limited time to investigate the nature of the claims against the Fike Defendants.” Based on the trustee’s report, 2 *731 the district court then lifted its own stay to enable Fike’s motion to dismiss to proceed. The district court acted within its authority in lifting its own stay, as well as in determining the scope of the automatic stay. See Lockyer v. Mirant Corp., 398 F.3d 1098, 1106-07 (9th Cir.2005) (“[A] district court has jurisdiction to decide whether the automatic stay applies to a proceeding pending before it, over which it would otherwise have jurisdiction.”). 2. We conclude that the district court did not abuse its discretion in denying the Floreses’ motion to vacate judgment based on Fike’s representation of the DDJ entities in the 1999 action while the DDJ entities’ corporate status was suspended. See Casey v. Albertson’s Inc., 362 F.3d 1254, 1257 (9th Cir.2004); SEC v. Coldicutt, 258 F.3d 939, 941 (9th Cir.2001). The Floreses are correct that a party is not permitted to prosecute or defend an action while its corporate status is suspended. See Reed v. Norman, 48 Cal.2d 338, 309 P.2d 809, 812 (1957); Grell v. Laci Le Beau Corp., 73 Cal.App.4th 1300, 87 Cal.Rptr.2d 358, 363 (1999). The Floreses, however, did not establish grounds for vacating the judgment. See Fed.R.Civ.P. 60(b). Rule 60(b)(2), under which a court may vacate a judgment based on “newly discovered evidence,” is inapplicable because the Floreses were aware of the suspension of corporate status during the 1999 litigation. Rule 60(b)(3), under which a court may vacate a judgment based on fraud, is inapplicable because the alleged fraud did not occur in the action that resulted in the judgment the Floreses sought to vacate, but rather in the 1999 action. 3 Moreover, the district court properly determined that the suspension of Fike’s clients’ corporate status did not pre-elude Fike’s use of California’s litigation privilege, see Obos v. Scripps Psychological Assocs., Inc., 59 Cal.App.4th 103, 69 Cal.Rptr.2d 30, 33 (1997) (“[T]he focus of the applicability of [the litigation] privilege lies in whether the publication was connected or related to the underlying proceedings; the focus is not the status of the plaintiff in the subsequent proceeding. Indeed, even lack of standing does not vitiate the privilege.”), or Fike’s use of the anti-SLAPP statute, cf. Flatley v. Mauro, 39 Cal.4th 299, 46 Cal.Rptr.3d 606, 139 P.3d 2, 15 (2006) (holding that anti-SLAPP protection is not available where the “assertedly protected speech or petition activity [is] illegal as a matter of law”). 3. We conclude that the district court did not abuse its discretion in denying the Floreses’ motion to vacate judgment based on its failure sua sponte to continue the anti-SLAPP motion to permit further discovery. See Casey, 362 F.3d at 1257. The Floreses correctly note that Federal Rule of Civil Procedure 56 is in conflict with the discovery provisions of the anti-SLAPP statute. See Metabolife Int’l, Inc. v. Wornick, 264 F.3d 832, 845-46 (9th Cir.2001). The Floreses, however, failed to request a continuance or discovery, raising the issue only as part of their motion to vacate the judgment. Although Metabolife recognized that the party opposing an anti-SLAPP motion need not have “proffer[ed] sufficient facts to show that the evidence sought exists, and that it would prevent summary judgment,” id. at 847 n. 16 (alteration in Metabolife), discovery is still a party-driven process, requiring the Floreses to at least seek discovery. See Four Navy Seals v. AP, 413 F.Supp.2d 1136, 1149 (S.D.Cal.2005) (distinguishing the case in which “[plaintiffs ha[d] not *732 asserted that discovery of any facts within the sole knowledge of Defendants [wa]s essential to meet their burden of production under § 425.16” from Metabolife, in which “the plaintiff company repeatedly argued that it needed to conduct discovery on a particular issue in order to meet its burden in opposing the Anti-SLAPP motion to strike”). 4. Finally, we conclude that the district court did not err in striking the Floreses’ malicious prosecution and abuse of process causes of action. Both of those causes of action are subject to the antiSLAPP statute. See Jarrow Formulas, Inc. v. LaMarche, 31 Cal.4th 728, 3 Cal.Rptr.3d 636, 74 P.3d 737, 741 (2003) (“[E]very [California] Court of Appeal that has addressed the question has concluded that malicious prosecution causes of action fall within the purview of the anti-SLAPP statute.”); Siam v. Kizilbash, 130 Cal.App.4th 1563, 31 Cal.Rptr.3d 368, 374 (2005) (“[A]buse of process is ... subject to the [anti-SLAPP] statute since it arises from the right of petition.”). The district court properly concluded that the Floreses failed to meet their burden under the antiSLAPP statute of demonstrating a likelihood of success on the merits. See Jarrow Formulas, 74 P.3d at 746 (stating that, under the anti-SLAPP statute’s burden-shifting framework, the plaintiff must demonstrate that the claim is “both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited” (internal citation and quotation marks omitted)). The judgment of the district court is AFFIRMED. 4 Footnotes [***] This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3. [1] The Floreses asserted claims against Fike for: (1) alter ego liability; (2) malicious prosecution; (3) malicious use of process, spoliation of evidence, and fraudulent concealment of evidence; (4) violation of the Uniform Fraudulent Transfer Act; (5) violation of the Perishable Agricultural Commodities Act and 21 U.S.C. § 331; (6) fraud, deceit, intentional and negligent fraud, constructive fraud, and breach of fiduciary duty; (7) conversion; (8) RICO violations; (9) interference with contract; (1Ó) conspiracy to defraud and interference with business; and (11) invasion of privacy and defamation. [2] Although only the DDJ, Inc., trustee submitted a report to the district court, the district court did not err in treating his report as speaking for both himself and the DDJ, LLC, trustee, given that the two trustees had agreed to work together on behalf of both estates. [3] The Floreses prevailed in the 1999 action and do not seek to vacate the judgment in that case. [4] All pending motions are denied as moot.