attorney liability fraud, conspiracy, negligent misrepresentation to a third party prosecute for actual fraud.

cc 1572 that is not proscribed within the litigation privilege under CC 47(b) Berg & Berg Enterprises, LLC v. Sherwood Partners, Inc., 131 Cal.App.4th 802, 32 Cal.Rptr.3d 325, 05 Cal. Daily Op. Serv. 6752, 05 Cal. Daily Op. Serv. 7760, 2005 Daily Journal D.A.R. 9234 (Cal.App. 6 Dist.,Jul 29, 2005) 2. The Statutory Exceptions [9] Having so concluded, we proceed to the next step in the analysis, which is ascertaining whether Berg has shown that the pleaded claims fall within either of the statute's exceptions, i.e., whether they allege a viable conspiracy claim against Sulmeyer such that prefiling approval is not required. (Pavicich, supra, 85 Cal.App.4th at pp. 390-396, 102 Cal.Rptr.2d 125.) To refresh, to come within the statute's exceptions and thereby state a viable conspiracy claim against an attorney, the complaint must plead either that (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. ( 1714.10, subd. (c).) **341 [10] These exceptions mirror those carved out from the agent's immunity rule, which, if applicable, otherwise protects Sulmeyer, acting strictly in its official role as counsel, against liability to Berg as a matter of law. The rule generally provides that [a] cause of action for civil conspiracy may not arise ... 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. (Doctors' Co., supra, 49 Cal.3d at p. 44, 260 Cal.Rptr. 183, 775 P.2d 508; see also *825 Applied, supra, 7 Cal.4th at p. 512, 28 Cal.Rptr.2d 475, 869 P.2d 454; Pavicich, supra, 85 Cal.App.4th at p. 394, 102 Cal.Rptr.2d 125.) In other words, an attorney acting only within the scope of his or her official duties who is not personally bound by the duty violated may not be held liable for civil conspiracy even though he or she may have participated in the agreement underlying the injury. (Applied, supra, 7 Cal.4th at p. 512, 28 Cal.Rptr.2d 475, 869 P.2d 454; Mosier v. Southern Cal. Physicians Ins. Exchange (1998) 63 Cal.App.4th 1022, 1048, 74 Cal.Rptr.2d 550.) This requires that the alleged conspirator agent already owe the duty to the plaintiff according to substantive law principles before his or her liability through conspiracy may be established. Berg contends that both statutory exceptions apply to its pleaded allegations while Sulmeyer contends that neither does because it owed no legal duty to Berg and because it was acting entirely within its representative role as Sherwood's counsel and its only alleged financial interest was in the professional fees that it charged its client. A. Did Sulmeyer Owe an Independent Duty to Berg? The proposed complaint here does not allege that Sulmeyer owed any independent duty to Berg or that it had any relationship to the dispute between Sherwood and Berg other than its role as Sherwood's counsel, for which it received excessive professional fees that were paid by Sherwood from Pluris assets. **Nor did Berg's pleading allege that Sulmeyer committed fraud, which attorneys, like anyone else, have an independent duty to avoid. (Pavicich, supra, 85 Cal.App.4th at p. 397, 102 Cal.Rptr.2d 125; Shafer v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone,

supra, 107 Cal.App.4th at p. 69, 131 Cal.Rptr.2d 777 [attorney acting on behalf of client may not knowingly misrepresent facts to third party]; Skarbrevik v. Cohen, England & Whitfield (1991) 231 Cal.App.3d 692, 711, 282 Cal.Rptr. 627 [attorney has personal duty to abstain from harming another by false representation or actual fraud, a duty independent of a client's duty to disclose that may give rise to its own, but not its lawyer's, liability for constructive fraud by concealment]; Kidron v. Movie Acquisition Corp., supra, 40 Cal.App.4th at pp. 1597-1598, 47 Cal.Rptr.2d 752 [lawyer for fiduciary not liable for constructive, as opposed to actual, fraud that springs from duty of disclosure owed only by fiduciary].)
B. Were Sulmeyer's Alleged Conspiratorial Actions Performed Outside of its Duties to its Client and in Violation of a Legal Duty Owed to Berg for Sulmeyer's Personal Financial Advantage? [16] The second exception to the application of section 1714.10 is the circumstance in which 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. ( 1714.10, subd. (c).) This exception has more than one component. First, the lawyer's actions must have been taken in excess of his or her official representative capacity in service to his or her client. Second, they must also have violated a legal duty running to the plaintiff and have been in furtherance of the lawyer's own financial advantage. There is a dearth of case law interpreting or construing the first part of this exception. But we think that by its plain terms, it means that the attorney was acting not merely as an agent for his or her client, but also for his or her own benefit, and that the conduct therefore went beyond the representative role. We find support for this construction not only in its harkening to the next element, that the attorney acted for his or her own financial advantage, but also in Doctors' Co., which spelled out the exceptions to an attorney's liability for conspiracy later incorporated into section 1714.10 as the statute's exceptions. (Pavicich, supra, 85 Cal.App.4th at pp. 391-394, 102 Cal.Rptr.2d 125.) As the high court stated in Doctors' Co., an attorney who conspires to cause a client to violate a statutory duty peculiar to the client may be acting not only in the *834 performance of a professional duty to serve the client but also in furtherance of the attorney's own financial gain. FN15 (Doctors' Co., supra, 49 Cal.3d at p. 46, 260 Cal.Rptr. 183, 775 P.2d 508.) FN15. From this it seems clear that the duty running in favor of the plaintiff referred to in this exception is not an independent one owed by the lawyer as in the statute's first exception, but is instead one peculiarly owed by the client to the plaintiff. [17] Thus, the second part of the exception in a sense defines the first in that it suggests that the attorney's exceptional conduct that is outside the performance of his or her duties to the client are those activities that are taken in furtherance of the attorney's own financial advantage. Cases have interpreted the financial advantage exception to the agent's immunity rule to mean a personal advantage or gain that is over and above ordinary professional fees earned as compensation for performance of the agency. (See, e.g., Evans, supra, 65 Cal.App.4th at pp. 605-607, 76 Cal.Rptr.2d 679 [attorney's own financial gain interpreted as when the attorney has a personal financial interest in the outcome of the litigation separate and apart from customary fees]; Cooper v. Equity Gen. Insurance (1990) 219 Cal.App.3d 1252, 1260-1261, 268 Cal.Rptr. 692 [plaintiff pleaded only attorney's contingent fee interest, which was short of an allegation that the attorney stood to gain anything more than a fee for his work as an attorney,**349 and thus did not plead exception to liability for conspiracy].) FN16 FN16. The rationale for not characterizing a contingency fee agreement as a personal financial interest of the attorney for purposes of applying the statutory exception is

that a contingent fee contract does not transfer to the attorney any rights to the client's cause of action. Rather, it gives the attorney a lien on the client's prospective recovery. (Isrin v. Superior Court (1965) 63 Cal.2d 153, 159, 45 Cal.Rptr. 320, 403 P.2d 728.) Because the client can fire the attorney at any time, and because the attorney has no enforceable rights of his or her own in the action, the attorney whose fee is contingent on the success of the client's lawsuit is merely acting as an agent of the client, notwithstanding his or her contingent fee interest. (Ibid.; Cooper v. Equity Gen. Insurance, supra, 219 Cal.App.3d at pp. 1260-1261, 268 Cal.Rptr. 692.) In Black v. Sullivan (1975) 48 Cal.App.3d 557, 122 Cal.Rptr. 119, which predated the statutory amendment codifying the attorney financial gain exception, the Court of Appeal held that while the receipt of ordinary fees for representation is not sufficient to give an attorney a stake in the wrongdoing, an attorney who receives a beneficial interest in a security interest held by a client can be held liable for conspiring with that client in litigation involving the security interest. The attorneys in Black were assigned a beneficial interest in a deed of trust that was the subject of the litigation as payment for their fees. Their financial gain was from the enhancement of their property interest and not from fees generated by their labors as agents of their client. Accordingly, they had a personal interest, separate and apart from their client's, in preventing the sale of the property in question. (Id. at pp. 568-569, 122 Cal.Rptr. 119.) The Court of Appeal in Skarbrevik v. Cohen, England & Whitfield, supra, 231 Cal.App.3d at page 710, 282 Cal.Rptr. 627, also held that attorneys who *835 received only modest compensation for their services were not acting for their own financial gain for purposes of imposing liability for conspiracy with a client. The purpose of this limitation on the financial advantage test, an exception to the agent's immunity rule, is to protect employees and agents of a principal against the imposition of vicarious liability for aiding and abetting or conspiracy for the mere fact of their paid employment. (Ibid.; see also Neilson v. Union Bank of California, N.A., supra, 290 F.Supp.2d at p. 1122 [California courts uniformly hold that ordinary fees, even fees calculated on the basis of the amount of assets held in an account, do not satisfy the personal gain or financial advantage requirement].) [18] We turn now to the first part of the exception. It seems clear that Berg's allegations regarding Sulmeyer's conduct do not place that conduct beyond Sulmeyer's representation of its client, Sherwood. While the services rendered were alleged to have been unnecessary and not beneficial to the administration of the Pluris assets, they were nonetheless alleged to have been performed on Sherwood's behalf and for its benefit. Thus, we are hard pressed to conclude that Berg has well pleaded the applicability of this exception, no matter how unnecessary Sulmeyer's services or how excessive its billing practices were alleged to have been. Given that the plaintiff bears the burden under section 1714.10, and the statute's purposes, we conclude that the particular allegations made against Sulmeyer here do not bring its conduct within the second exception to section 1714.10 because all of Sulmeyer's conduct was alleged to have been in service of its client and within this representative capacity, even though the conduct generated professional fees that were alleged to have been excessive. **350 Even if we were to conclude that Berg's allegations were sufficient to place Sulmeyer's conduct outside of the representative capacity, we would still conclude that Berg failed to satisfy the financial advantage component of section 1714.10's second exception. We recognize that what Berg alleged here is that Sulmeyer charged not modest or customary-but rather unconscionable-fees. Still, all that is pleaded is that Sulmeyer charged its own client hourly professional fees for services indubitably rendered on behalf of that client. These allegations do not plead that Sulmeyer's conduct was in furtherance of a personal financial advantage or interest, separate and apart from the advancement its client's interests, in the subject matter of the representation. Nor do they plead self-dealing by Sulmeyer. Nor do they suggest that Sulmeyer enjoyed a financial advantage by controlling the distribution of

Pluris's assets in payment of its fees. We do not find it in keeping with the statute's purposes that mere allegations, however egregious, by a third party of an attorney's excessive billing of a client for services *836 rendered satisfy the financial gain requirement of the statute's exception. Such allegations could be made by an adversary in any case, thus significantly weakening the gatekeeping function of the statute. Thus, based on Berg's particular allegations against Sulmeyer here, we conclude that the complaint failed to allege not only that Sulmeyer's acts went beyond the performance of a professional duty to its client, but also that Sulmeyer's alleged activities were in furtherance of its own financial gain as provided in section 1714.10, subdivision (c)(2). We further hold that in furtherance of the attorney's financial gain as used in this subsection means that through the conspiracy, the attorney derived economic advantage over and above monetary compensation received in exchange for professional services actually rendered on behalf of a client. Accordingly, the second statutory exception to the application of section 1714.10 does not apply in this case. It follows that Berg's claims against Sulmeyer fall within the coverage of, rather than the exceptions to, the statute. This being the case, Berg has failed to state a prima facie claim of conspiracy against Sulmeyer, and the pleading in which the claims were alleged is accordingly disallowed. (Pavicich, supra, 85 Cal.App.4th at pp. 394-396, 102 Cal.Rptr.2d 125.)

negligent misrepresentation to a third party (general consideration of duty owed to third party with exceptions) question of malices role in under CC 47(b) Roberts v. Ball and Daly v. Smith However attorney has immunity from civil liability for privilege under 47(b) of the Civil Code. As Daley v. Smith. attorneys have an independent duty not to commit crime to a third party because of their knowledge that they would pervert and obstruct justice to rob property I. LIABILITY FOR NEGLIGENCE AUTHORITY
Donald v. Garry, 19 Cal.App.3d 769, 771-772, 97 Cal.Rptr. 191, 45 A.L.R.3d 1177 (Cal.App. 2 Dist. Aug 31, 1971) [2] Attorney and Client 45 129(1)

45 Attorney and Client 45III Duties and Liabilities of Attorney to Client 45k129 Actions for Negligence or Wrongful Acts 45k129(1) k. In General; Limitations. Most Cited Cases An attorney may be liable for damage caused by his negligence to a person intended to be benefited by his performance irrespective of any lack of privity of contract between the attorney and the party to be benefited.

[2] We reach the same conclusion from an analysis of California decisions. An attorney may
be liable for damage caused by his negligence to a person intended to be benefited by his performance irrespective of any lack of privity of contract between the attorney and the party to be benefited. (Witkin, California Procedure (2d ed.) Attorneys, s 144.) The

liability sounds in tort. ( Heyer v. Flaig, 70 Cal.2d 223, 74 Cal,Rptr. 225, 449 P.2d 161.) The determination of whether the duty undertaken by an attorney extends to a third person not in privity involves the balancing of various factors, among which are the extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm to him, the degree fo certainty that the plaintiff suffered injury, the closeness of the connection *772 between the defendant's conduct and the injury suffered, the moral blame attached to the defendant's conduct, and the policy of preventing future harm. ( Biakanja v. Irving, 49 Cal.2d 647, 650, 320 P.2d 16, 19, 65 A.L.R.2d 1358; see also Lucas v. Hamm, 56 Cal.2d 583, 15 Cal.Rptr. 821, 364 P.2d 685.) In the case at bench, the transaction in which respondent's negligence occurred was intended primarily for the benefit of appellant. Respondent was retained to collect an account due him. Harm to appellant from respondent's negligence in failing diligently to prosecute the litigation was clearly foreseeable. The degree of certainty that appellant sufered injury is unquestioned if, as we must, we assume the allegations of the complaint to be true. On that same assumption, there is a direct connection between respondent's conduct and the injury suffered. There is certainly some moral blame and no virtue whatsoever in respondent's unjustified procrastination. Lastly, there is a policy that lawsuits should be diligently prosecuted which is served by fastening liability upon respondent in the case at bench and which would be frustrated by permitting the dilatory lawyer the luxury of insulation from liability because he was employed by a collection agency serving as an intermediary rather than by the client whose debt he was retained to collect. We thus conclude that the pertinent portion of the complaint at bench states a cause of action. The judgment of dismissal is reversed. Cicone v. URS Corp., 183 Cal.App.3d 194, 227 Cal.Rptr. 887 (Cal.App. 5 Dist.,Jul 10, 1986)

Discusses attorney liability for fraud, deceit, and negligent misrepresentation in the context of an appeal of a trial court granting a demurrer without leave to amend. Reversed trial court granting of demurrer to fraud and deceit counts of cross complaint without leave to amend. And reversed the trial court granting of the demurrer without leave to amend to the negligent misrepresentation count. At p. 202, [*202 In California it is well established that an attorney may not, with impunity, either conspire with a client to defraud or injure a third person or engage in intentional tortious conduct toward a third person. (Ibid.) **[1] Thus, the case law is clear that a duty is owed by an attorney not to defraud another, even if that other is an attorney negotiating at arm's length.] At p. 211, [Finally, it takes more than a negligent misrepresentation to impose liability. **The misrepresentation must be of a material fact, **it must be made with the intent to induce reliance by the opposing party, **it must actually be relied upon reasonably by the opposing party and proof must be made of damages proximately caused by the misrepresentation. All of these elements are present under the allegations here reviewed. We therefore conclude the trial court abused its discretion in sustaining cross-defendants' demurrer to the seventh, eighth and ninth causes of action without leave to amend.]

Law firm which was defendant in malpractice action filed cross complaint against buyer of former clients' business, buyer's president and buyer's counsel. The Superior Court, Kern County, Clarence Westra, Jr., J., sustained demurrer to cross complaint without leave to amend, and law firm appealed. The Court of Appeal, Martin, J., held that demurrer should not have been sustained without leave to amend to assert cross claims for fraud and deceit and for negligent misrepresentation. Reversed and remanded. [1] Attorney and Client 45 32(12)

45 Attorney and Client 45I The Office of Attorney 45I(B) Privileges, Disabilities, and Liabilities 45k32 Regulation of Professional Conduct, in General 45k32(12) k. Relations, Dealings, or Communications with Witness, Juror, Judge, or Opponent. Most Cited Cases Attorney owes duty not to defraud another, even if that other is an attorney negotiating at arm's length. [2] Pleading 302 225(1)

302 Pleading 302V Demurrer or Exception 302k219 Operation and Effect of Decision on Demurrer 302k225 Amendment or Further Pleading After Demurrer Sustained 302k225(1) k. In General. Most Cited Cases Demurrer to law firm's cross complaint for comparative equitable indemnity, damages and punitive damages against buyer of former clients' business, buyer's president and buyer's counsel should not have been sustained without leave to amend to assert cross claims for fraud and deceit, in clients' malpractice action against the law firm; law firm offered amendment to effect that buyer stated that it would deem sellers to be guaranteeing information in their balance sheet only to sellers' best knowledge, and that buyer made the statement knowing of its falsity and intending to rely on strict warranty contained in written agreement, settlement of controversy between buyer and sellers was foreseeable intervening cause rather than superseding intervening cause, and detriment to law firm was inferable from exposure to legal malpractice liability. West's Ann.Cal.C.C.P. 430.10(e); West's Ann.Cal.Civ.Code 1572, subd. 4, 1709, 1710, 1710, subds. 1, 4. [3] Pleading 302 225(1)

302 Pleading 302V Demurrer or Exception 302k219 Operation and Effect of Decision on Demurrer 302k225 Amendment or Further Pleading After Demurrer Sustained 302k225(1) k. In General. Most Cited Cases Demurrer to law firm's cross complaint for comparative equitable indemnity, damages and punitive damages against buyer of former clients' business, buyer's president and buyer's counsel should not have been sustained without leave to amend to assert cross claim for negligent misrepresentation, in clients' malpractice action against the law firm; law firm alleged that buyer's counsel, to induce law firm to advise sellers to close the sale immediately, represented to law firm and sellers, in presence of buyer, that buyer would deem sellers to be guaranteeing information in unaudited balance sheet only to sellers' best knowledge and belief, **that the representation was not true, **that buyer's counsel had no reasonable basis to believe it was true, and **that law firm and sellers relied on the negligent representation with resulting damages.

[4] Indemnity 208

97

208 Indemnity 208V Actions 208k97 k. Pleading. Most Cited Cases (Formerly 208k15(6)) Demurrer to law firm's cross complaint for full equitable indemnity from buyer of former clients' business, buyer's president and buyer's counsel should not have been sustained without leave to amend; law firm was alleged only to have been negligent while cross defendants were alleged to have intentionally deceived law firm and his client. This is an appeal from a judgment of dismissal following the sustaining of a general demurrer to an original cross-complaint without leave to amend. *198 On June 10, 1983, plaintiffs Gerald D. Lucas, Janice H. Lucas, and Lucas Family Trust filed a complaint alleging legal malpractice against defendants Frank J. Cicone and Frank J. Cicone Law Corporation et al. On October 25, 1983, defendants answered the complaint and filed a cross-complaint for comparative equitable indemnity, damages and punitive damages against URS Corporation, Arthur H. Stromberg and Richard W. Canady. Cross-defendants filed general and special demurrers to the cross-complaint and a motion to strike the punitive damage allegations of the cross-complaint on December 23, 1983. The demurrer and motion to strike were argued by counsel and submitted on January 26, 1984. On April 27, 1984, the lower court granted the general demurrer as to **889 all causes of action without leave to amend. On June 26, 1984, the cross-complaint was dismissed with prejudice and judgment was entered in favor of the cross-defendants on June 27, 1984. This appeal followed. FACTS Cicone primarily challenges the trial court's decision to sustain the demurrers without leave to amend. This case involves a legal malpractice suit brought against Cicone, an attorney, **by plaintiffs, his former clients. Plaintiffs alleged Cicone was guilty of malpractice in conducting negotiations for the sale of plaintiffs' business, Advanced Production Service, Inc. (Advanced), to cross-defendant URS Corporation (URS). **Cicone cross-complained against URS, its president and their attorney, Canady, for **fraud, **negligent misrepresentation, breach of good faith and fair dealing and equitable indemnity. Cicone represents the factual allegations upon which the claims of fraud and deceit are based would be amended beyond those currently contained in the present cross-complaint to allege as follows: In early September 1981, URS, through its president, Stromberg, reached a preliminary agreement with Gerald Lucas, President of Advanced, for URS to purchase from Lucas and his family the stock and assets of Advanced for $3.5 million cash. The final agreement was to be prepared by counsel for URS, and, at Stromberg's request, it was to be executed by the parties in as short a period of time as was reasonable. Lucas then engaged Cicone to represent him and his family in consummating the transaction. Shortly after entering into the preliminary agreement, Advanced gave the accountants and other personnel of URS full access to the books and records *199 of Advanced, and the respective corporations' accountants and personnel were in frequent communication about Advanced's financial data.

Prior to October 13, 1981, URS presented Advanced with a proposed final agreement. The agreement provided in part that the sellers warranted the accuracy of an unaudited balance sheet of Advanced as of September 30, 1981, and included a warranty that Advanced had no liabilities other than those shown on the balance sheet. **A number of other warranties in the agreement were stated to be made only to the best knowledge of sellers. At a meeting on October 13, 1981, attended by Gerald Lucas, Cicone, Lucas' personal accountant R. Randall Richardson, Stromberg, and URS' attorney, Canady, Cicone advised Stromberg and Canady the sellers could not and would not guarantee the accuracy of the balance sheet. **Canady, with Stromberg's tacit approval, replied the buyer understood and URS would deem the sellers to be guaranteeing the information in the balance sheet only to sellers' best knowledge. Cicone would further allege that Canady's statement, made on behalf of Stromberg and URS, constituted a promise that URS would accept the balance sheet as correct only to the best of the sellers' knowledge. **As Canady knew, that promise was false and was made without any intention of performing it, for cross-defendants intended to rely on the strict warranty contained in the written agreement. The promise was made for the purpose of inducing Cicone to rely on it and thereby to advise the sellers to follow through with the sale and to sign the final agreement. **Cicone did rely on the promise and did advise the sellers to sign the agreement, and as a result the sellers did sign the agreement. **Cicone's reliance on the promise was justifiable because the circumstances under which it was made gave him reason to believe it would be carried out and Cicone had no reason to disbelieve Canady. The balance sheet was correct to the best of the sellers' knowledge. However, shortly after the transaction had been consummated, URS, through Stromberg, made a claim against the sellers based on a $200,000 understatement in the balance sheet of deferred tax liabilities, of which the sellers had been unaware. The sellers, through **890 counsel other than Cicone, settled the claim without litigation for $125,000 and filed a legal malpractice action against Cicone. As a result, Cicone may incur liability to the sellers, and is required to defend a malpractice action, thereby incurring expense, losing time from his practice, and facing impairment of his professional reputation. In the third, fourth, fifth and sixth causes of action of the cross-complaint, Cicone attempts to allege causes of action for fraud and deceit. Fraud Fraud is an intentional tort, the elements of which are **(1) misrepresentation; **(2) knowledge of falsity; **(3) intent to defraud, i.e., to induce reliance; **(4) justifiable reliance; and **(5) resulting damage. ( Seeger v. Odell (1941) 18 Cal.2d 409, 414, 115 P.2d 977; Nelson v. Gaunt (1981) 125 Cal.App.3d 623, 635, 178 Cal.Rptr. 167.) FN1 FN1. Section 1709 of the Civil Code provides: One who willfully deceives another with intent to induce him to alter his position to his injury or risk, is liable for any damage which he thereby suffers. Section 1710 of the Civil Code provides: A deceit, within the meaning of the last section, is either: 1. The suggestion, as a fact, of that which is not true, by one who does not believe it to be true; 2. The assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true;

3. The suppression of a fact, by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of that fact; or, 4. A promise, made without any intention of performing it. Every element of the cause of action for fraud must be alleged in the proper manner and the facts constituting the fraud must be alleged with sufficient specificity to allow defendant to understand fully the nature of the charge made. ( Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal.App.3d 104, 109, 128 Cal.Rptr. 901.) *201 The lower court determined, inter alia, cross-defendants owed no duty to Cicone and therefore Cicone failed to state a cause of action, citing for this proposition, among others, Groswird v. Hayne Investments, Inc. (1982) 133 Cal.App.3d 624, 184 Cal.Rptr. 123. However, a rehearing was granted in Groswird and the subsequent opinion was not certified for publication. Duty Cross-defendants argue a lack of duty owed to Cicone. **However, this argument appears in relation to the causes of action for negligence and indemnity. **More properly it could be stated, inferentially everyone**891 has a duty to refrain from committing intentionally tortious conduct against another. Thus, a promise material to the contract which is made without any intention of performing it is deemed a misrepresentation of fact. (Civ.Code, 1572, subd. (4), 1710, subd. (4); Jacobs v. Freeman (1980) 104 Cal.App.3d 177, 192, 163 Cal.Rptr. 680.) Cicone alleges cross-defendants made a promise without disclosing they entertained no intention to perform said promise to deem the warranty of the financial statement as only to sellers' best knowledge and belief. Although a duty to disclose a material fact normally arises only where there exists a confidential relation between the parties or other special circumstances require disclosure, where one does speak he must speak the whole truth to the end that he does not conceal any facts which materially qualify those stated. (Ibid.) One who is asked for or volunteers information must be truthful, and the telling of a half-truth calculated to deceive is fraud. ( Goodman v. Kennedy, supra, 18 Cal.3d 335, 346-347, 134 Cal.Rptr. 375, 556 P.2d 737; Rogers v. Warden (1942) 20 Cal.2d 286, 289, 125 P.2d 7.) **The extent of liability an attorney may incur toward third persons, while the attorney is acting on behalf of a client, has been the subject of divergent opinion in various American jurisdictions, the traditional view being that an attorney may not generally be held liable to third persons because he is not in privity with them, and owes them no duty to act with care. (See Attorneys-Liability to Third Parties, 45 A.L.R.3d 1177, 1181.) A typical statement of this approach is that an attorney is not liable to third persons for acts committed in good faith in performance of professional activities as an attorney for his client. **If, however, an attorney is actuated by malicious motives, or shares the illegal motives of his client, he may be personally liable with the client for damage suffered by a third person as the result of the attorney's actions. (Fns. omitted.) (7 Am.Jur.2d, Attorneys, 196, p. 161 (1963).) ( Roberts v. Ball, Hunt, Hart, Brown & Baerwitz, supra, 57 Cal.App.3d 104, 109, 128 Cal.Rptr. 901.) *202 In California it is well established that an attorney may not, with impunity, either conspire with a client to defraud or injure a third person or engage in intentional tortious conduct toward a third person. (Ibid.)

**[1] Thus, the case law is clear that a duty is owed by an attorney not to defraud another, even if that other is an attorney negotiating at arm's length.
Thus, while duty is not an element of fraud in the traditional sense, a duty is owed to others to refrain from intentionally tortious conduct. Therefore, any inference arising from the lower court's decision that the element of duty bars Cicone's causes of action for fraud and deceit is not supported by law. Misrepresentation Cross-defendants assert the alleged misrepresentation is one of law and therefore not actionable. According to this theory, the allegations that Canady made certain assurances and promises that the correct interpretation of the guarantee clause (or clauses) in [the] agreement was that it would be based upon sellers' best information and belief, amounts to nothing more than an allegation that Canady stated a legal opinion of how the terms of the contract would be interpreted in the future. Cicone offers a proposed amendment to the pleading to the effect that Canady, with Stromberg's tacit approval, stated URS would deem the sellers to be guaranteeing the information in the balance sheet only to the sellers' best knowledge. It is true the representation must ordinarily be an affirmation of fact. (Civ.Code, 1710, subd. (1).) A misrepresentation of law is ordinarily not actionable in the absence of a confidential relationship or other special circumstance. (4 Witkin, Summary of Cal. Law (8th ed. 1974) Torts, 447, **892 451, pp. 2712, 2715.) The theory is either that everyone is bound to know the law, or that a statement regarding the law is a mere opinion on which one may not rely. (Ibid.) Wherever a party states a matter which might otherwise be only an opinion, and does not state it as the mere expression of his own opinion, but affirms it as an existing fact material to the transaction, so that the other party may reasonably treat it as a fact and rely and act upon it as such, then the statement clearly becomes an affirmation of fact within the meaning of the general rule, and may be a fraudulent misrepresentation. (2 Pomeroy's Equity Jurisprudence, sec. 878.) ( Crandall v. Parks (1908) 152 Cal. 772, 776, 93 P. 1018.) Predictions or representations as to what will happen in the future are normally treated as opinion; but often they may be interpreted as implying knowledge of facts which *203 makes the predictions probable. If the defendant does not know of such facts, the statement is an actionable misrepresentation. (See Rest.2d, Torts, 539.) Thus, a statement by an architect that a building will not cost more than a certain amount may be regarded as an affirmation of fact. ( Barron Estate Co. v. Woodruff Co. (1912) 163 Cal. 561, 574, 126 P. 351.) The same is true where an agent states his principal will advance money to harvest a crop, or where a corporation agent represents the corporation will lease certain property or locate a plant in a certain city. ( California C. & C. Corp. v. Carpenter (1926) 77 Cal.App. 18, 27, 246 P. 126; see also Eade v. Reich (1932) 120 Cal.App. 32, 35, 7 P.2d 1043.) A statement of what the defendant or some third person intends to do relates to an existing state of mind, and is a representation of fact. (4 Witkin, Summary of Cal. Law, op. cit. supra, 453, p. 2717.) Thus, a promise made without any intention to perform it may constitute fraud. In other words, a promise to do something necessarily implies the intention to perform, and where such intention is absent, there is a misrepresentation of fact, which is actionable fraud. (Civ.Code, 1710, subd. (4).) A trier of fact may be justified in inferring from the circumstances surrounding the subsequent repudiation that defendant never intended to carry out the agreement when it was made. The subsequent repudiation relates back to the original promise. ( Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 30, 216 Cal.Rptr. 130, 702 P.2d 212.)

The proposed allegations of Cicone allege a promise without any intention to perform: Canady's statement, made on behalf of Stromberg and URS, constituted a promise that URS would accept the balance sheet as correct only to the best of the sellers' knowledge. As Canady knew, that promise was false and was made without any intention of performing it, for cross-defendants intended to rely on the strict warranty contained in the written agreement. The promise was made for the purpose of inducing Cicone to rely on it and thereby to advise the sellers to follow through with the sale and to sign the final agreement. Cross-defendants further contend Cicone's proposed amendments to the cross-complaint are barred by his sworn interrogatory answers directly contradicting the proposed allegations. According to cross-defendants, if Cicone's proposed amended pleadings allege a promise made without the intention to perform it, that allegation is inconsistent with Cicone's answers to interrogatories and is, therefore, impermissible.FN2 FN2. Cross-defendants' motion to augment the record filed on April 22, 1985, to include interrogatories propounded by cross-defendants to Cicone and Cicone's responses to said interrogatories was granted on July 2, 1985. *204 Interrogatory No. 12 propounded to Cicone states: If you contend that Richard W. Canady stated that any unaudited accounting in the sales agreement would be based on **893 the seller's best information and belief, please describe the exact statements of Mr. Canady, the date or dates, times, and circumstances under which they were uttered, and your replies to such statements (to the best of your knowledge). Cicone's full response to the interrogatory was as follows: Please see response to Interrogatory No. 9. Further, the specific topic of the unaudited accounting was brought to the attention of Mr. Canady during a meeting on October 13, 1981. Plaintiffs and cross-complainant herein indicated that the unaudited accounting could not be guaranteed, in response to which Mr. Canady represented that this was the exact meaning of the paragraph guaranteeing the accounting, in that any representations as to financial matters would be on the best knowledge of Lucas and that as such, Lucas did not guarantee any such financial information. This response is to the best recollection of crosscomplainant herein, particularly in light of the passage of time since said meeting. (Emphasis added.) Cross-defendants contend the foregoing answer limits the scope of Cicone's allegations to categorizing Canady's statement as an interpretation of the sales agreement, i.e., an unactionable opinion of law. As a general rule in testing a pleading against a demurrer the facts alleged in the pleading are deemed to be true, however improbable they may be. [Citation.] The courts, however, will not close their eyes to situations where a complaint contains allegations of fact inconsistent with attached documents, or allegations contrary to facts which are judicially noticed. [Citations.] Thus, a pleading valid on its face may nevertheless be subject to demurrer when matters judicially noticed by the court render the complaint meritless. In this regard the court passing upon the question of the demurrer may look to affidavits filed on behalf of plaintiff, and the plaintiff's answers to interrogatories [citation], as well as to the plaintiff's response to request for admissions. [Citations.] ( Del E. Webb Corp. v. Structural Materials Co. (1981) 123 Cal.App.3d 593, 604, 176 Cal.Rptr. 824.) Cross-defendants rely primarily on Dwan v. Dixon (1963) 216 Cal.App.2d 260, 30 Cal.Rptr. 749

in which plaintiffs alleged in their original complaint that two of the defendants therein served intoxicating beverages to one Froberg, a third defendant, and then permitted him to drive, knowing he was intoxicated. Because California law at that time did not provide a cause of action based on facts such as those alleged above (id., at p. 264, 30 Cal.Rptr. 749), plaintiffs attempted to amend their complaint by alleging a more *205 active course of conduct by defendants, alleging defendants took an active part in putting Froberg in his car, heading him for the highway, and aiding and assisting him in driving. (Ibid.) Defendants demurred, contending the amendment was improper since it was inconsistent with statements in the sworn affidavit of plaintiffs' attorney and with plaintiffs' interrogatory answers. They argued that to permit appellants to make allegations which are directly contradictory to the facts within their own knowledge is to defeat the rule of truthful pleading. (Ibid.) The Court of Appeal agreed, affirming the lower court's sustaining of defendants' demurrer without leave to amend. However, in Dwan v. Dixon, the written interrogatories requested plaintiffs divulge each and every fact upon which the allegations of the complaint were based. The facts provided by plaintiffs failed to support the allegations of the amended pleading. (Id., at p. 262, 30 Cal.Rptr. 749.) In the instant case, the interrogatory in question fails to make such a comprehensive request. Furthermore, Cicone's response is made based upon his best recollection. Finally, in our view, Cicone's answer to the interrogatory is not so inconsistent with the facts appearing in Cicone's proposed allegations as to render the cross-complaint demurrable. (See **894Del E. Webb. Corp. v. Structural Materials Co., supra, 123 Cal.App.3d 593, 605-606, 176 Cal.Rptr. 824.) Justifiable Reliance Cross-defendants contend the allegation of the word reasonable is insufficient to allege justifiable reliance in this case. Cross-defendants declare: [A]n attorney is not justified in relying on statements of law made by an adverse party or attorney in the course of arm's length negotiations. Cross-defendants urge us to hold any reliance by Cicone on the alleged misrepresentation was unjustifiable as a matter of law. Whether reliance is justified is a question of fact for the determination of the trier of fact. **The issue is whether the person who claims reliance was justified in relying on the representation in light of his own knowledge and experience. ( Gray v. Don Miller & Associates, Inc. (1984) 35 Cal.3d 498, 503, 198 Cal.Rptr. 551, 674 P.2d 253.) As Cicone points out: **Negligence in reliance upon a misrepresentation is not a defense where the misrepresentation was intentionally made to induce reliance upon it. ( Hefferan v. Freebairn (1950) 34 Cal.2d 715, 719 [214 P.2d 386] ...; Smith v. Williams (1961) 55 Cal.2d 617, 620 [12 Cal.Rptr. 665, 361 P.2d 241] ....) Only [i]f the conduct of the plaintiff [in relying upon a misrepresentation] in the light of his own intelligence and information was manifestly unreasonable will he be denied recovery. ( *206Hefferan v. Freebairn, supra, 34 Cal.2d at p. 719 [214 P.2d 386].) ( Winn v. McCulloch Corp. (1976) 60 Cal.App.3d 663, 671 [131 Cal.Rptr. 597], emphasis added.) While the complaint has not been carefully drawn in this regard, it appears there is a reasonable possibility the paucity of facts regarding a justifiable reliance can be cured by amendment and the demurrer should not be sustained without leave to amend on this ground. ( Lingsch v. Savage (1963) 213 Cal.App.2d 729, 739-740, 29 Cal.Rptr. 201.) FN3 FN3. Cross-defendants strongly assert that even taking Cicone's allegation of a promise to perform as true, any reliance by Cicone was unreasonable as a matter of law. To support this argument, cross-defendants rely on their assertion that the

terms of the sales agreement were directly at variance with Canady's alleged representation and the fact that it contained an integration clause expressly providing that the written document supersedes all prior and contemporaneous agreements....' However, the sales agreement was not attached and incorporated into the complaint or the cross-complaint by reference. Cross-defendants attempt to make it a part of the record as an exhibit to cross-defendants' demurrer. It is an elementary rule that the sole function of a demurrer is to test the sufficiency of the challenged pleading. It cannot, properly, be addressed to or based upon evidence or other extrinsic matters. ( Cravens v. Coghlan (1957) 154 Cal.App.2d 215, 217, 315 P.2d 910.) Although the court may take judicial notice of **judicial records and decisions in the same case, this does not mean it may take judicial notice of the truth of factual matters asserted therein. ( Garcia v. Sterling (1985) 176 Cal.App.3d 17, 22, 221 Cal.Rptr. 349. The document attached to the demurrer was not properly before the lower court, nor is it properly before this court. We and the trial court are not permitted to consider it for any purpose in ruling upon the demurrer. Proximate Causation The lower court determined Defendant's statements are not a proximate cause of harm to cross-complainant (assuming damage) as a matter of law. (See Groswird v. Hayne Investments 133 C[al.]A[pp.]3d. 624 [184 Cal.Rptr. 123] ) ... FN4 Cross-defendants assert the settlement of the controversy between Advanced and URS was an intervening cause which removed the possibility of a meritorious defense. Accordingly, cross-defendants argue the alleged damage was not caused by the alleged misrepresentation but by an independent intervening force and claims the fraud causes of action must be dismissed. FN4. As stated previously, a rehearing was granted in Groswird. Ordinarily, forseeability is a question of fact for the jury. It may be decided as a question of law only if, under the undisputed facts there is no room for a reasonable difference of opinion. ( Bigbee v. Pacific Tel. & Tel. Co. (1983) 34 Cal.3d 49, 56, 192 Cal.Rptr. 857, 665 P.2d 947, quoting from Schrimscher v. Bryson (1976) 58 Cal.App.3d 660, 664, 130 Cal.Rptr. 125.) **895 [F]oreseeability is not to be measured by what is more probable than not, but includes whatever is likely enough in the setting of modern life that a reasonably thoughtful [person] would take account of it *207 in guiding practical conduct. (2 Harper & James, Law of Torts [1956] 18.2, at p. 1020.) ( Bigbee v. Pacific Tel. & Tel. Co., supra, 34 Cal.3d at p. 57, 192 Cal.Rptr. 857, 665 P.2d 947.) An actor may be liable if his negligence is a substantial factor in causing an injury, and he is not relieved of liability because of the intervening act of a third person if such act was reasonably foreseeable at the time of his negligent conduct. ( Vesely v. Sager (1971) 5 Cal.3d 153, 163, 95 Cal.Rptr. 623, 486 P.2d 151.) If the act of the third party is not reasonably foreseeable, not a normal consequence in the situation, it is a superseding cause. ( Commercial Standard Title Co. v. Superior Court (1979) 92 Cal.App.3d 934, 944, 155 Cal.Rptr. 393.) Accepting the proposed amended allegations as true, a trier of fact could conclude it is reasonably foreseeable that Advanced, faced with a large monetary demand and a prospect of an expensive defense, would settle the case rather than litigate the issues. If so found, this would be a foreseeable intervening cause, not a superseding cause, and would not relieve cross-defendants of potential liability. Damages Cicone challenges the lower court's finding Cicone has suffered no damage.... The case of Pollack v. Lytle (1981) 120 Cal.App.3d 931, 175 Cal.Rptr. 81 recognizes detriment

to a claimant is inferable from exposure to legal malpractice liability. In that case, the plaintiff was obliged to defend a malpractice action whereby he would incur expenses, lose time from his practice, suffer inconvenience, face professional embarrassment and the impairment of his professional reputation. (Id., at p. 944, 175 Cal.Rptr. 81.) Reaching a similar conclusion upon different facts, the court held in Roberts v. Ball, Hunt, Hart, Brown & Baerwitz, supra, 57 Cal.App.3d 104, 111-112, 128 Cal.Rptr. 901: Such legal expense is neither remote nor speculative, but must of necessity be incurred by plaintiff to make him whole. (Id., at p. 112, 128 Cal.Rptr. 901.) [2] We conclude the lower court abused its discretion in sustaining the demurrer without leave to amend as to the causes of action for fraud and deceit. II. NEGLIGENT MISREPRESENTATION The seventh, eighth and ninth causes of action of the cross-complaint, incorporating various other allegations of the cross-complaint, are based on negligence. Cicone asserts those causes of action state or can be amended to state, a cause of action for negligent misrepresentation. He relies on the proposed factual allegations as set forth in the summary of facts with respect *208 to the fraud and deceit causes of action modified to allege a negligent representation by Canady rather than an intentional misrepresentation. Where a defendant makes false statements, honestly believing them to be true, but without reasonable grounds for such belief, he may be held liable for negligent misrepresentation, a form of deceit. ( Roberts v. Ball, Hunt, Hart, Brown & Baerwitz, supra, 57 Cal.App.3d 104, 111, 128 Cal.Rptr. 901; Muraoka v. Budget Rent-A-Car, Inc. (1984) 160 Cal.App.3d 107, 119, 206 Cal.Rptr. 476.) However, we must reexamine the question of duty owed by cross-defendants to Cicone as it relates to a cause of action for negligent misrepresentation. Cicone concedes, in his negligence argument, an attorney advising his own client has no duty of care to third persons in the absence of an allegation that his advice was foreseeably transmitted to or relied upon by third persons or that he made some affirmative misrepresentation to the third person's attorney. ( Goodman v. Kennedy, supra, 18 Cal.3d 335, 343-345, 134 Cal.Rptr. 375, 556 P.2d 737.) Cicone contends, however, Goodman recognizes that where, as in Roberts, supra, 57 Cal.App.3d 104, 128 Cal.Rptr. 901, the attorney intends his statement to be relied upon by third persons dealing with his client, the attorney owes the third person a **896 duty of care, and argues certainly, where an affirmative negligent misrepresentation is made directly to the third persons and their attorney, there is no sound reason to shield the attorney, or his equally negligent client, from liability for their conduct. A deceit is defined in California law as [t]he assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true ; ... (Civ.Code, 1710, subd. (2), emphasis added.) **Thus, where a defendant makes false statements honestly believing them to be true, but without reasonable grounds for such belief, he may be held liable for negligent misrepresentation, a form of deceit. ( Muraoka v. Budget Rent-A-Car, Inc., supra, 160 Cal.App.3d 107, 119, 206 Cal.Rptr. 476, citing Roberts v. Ball, Hunt, Hart, Brown & Baerwitz, supra, 57 Cal.App.3d at p. 111, 128 Cal.Rptr. 901.) [3] Here, Cicone alleges cross-defendant Canady, an attorney, in his client's presence (the buyer) and in the presence of cross-complainant Cicone, an attorney, and his client (the seller) represented to Cicone and his client that the buyer would deem the seller to be guaranteeing the information in the unaudited balance sheet only to the seller's best knowledge and belief. This representation was made to induce Cicone to advise his client to close the sales transaction immediately, which was done. In an amended cross-complaint, Cicone would further allege that this representation was not true, that Canady had no

reasonable basis for believing it to be true, that Cicone *209 and his client were intended to and did, in fact, rely upon Canady's negligent representation with resulting damages. In Goodman v. Kennedy, supra, 18 Cal.3d 335, 134 Cal.Rptr. 375, 556 P.2d 737, plaintiffs, nonlawyers, sought damages from defendant, an attorney, for losses they incurred on stock purchased from defendant's clients. Plaintiffs alleged defendant negligently advised his clients the stock could be sold by them to third persons without jeopardizing the exempt status of the stock under the Securities Act of 1933. The alleged result of the purchase was an order by the Securities Exchange Commission suspending exemption of the stock with consequent loss in the stock's value to plaintiffs' damage. The trial court sustained a general demurrer to plaintiffs' complaint without leave to amend and entered judgment of dismissal. The Supreme Court affirmed, holding defendant's duty of care in giving legal advice to his client did not extend to plaintiffs with whom defendant's clients, in acting upon the advice, dealt at arm's length, **in the absence of any showing that the legal advice was foreseeably transmitted to or relied on by plaintiffs, or that plaintiffs were intended beneficiaries of a transaction to which the advice pertained. The court stated: The present defendant had no relationship to plaintiffs that would give rise to his owing plaintiffs any duty of care in advising his clients that they could sell the stock without adverse consequences. **There is no allegation that the advice was ever communicated to plaintiffs and hence no basis for any claim that they relied upon it in purchasing or retaining the stock. Nor was the advice given for the purpose of enabling defendant's clients to discharge any obligation to plaintiffs. Thus, there is no allegation that plaintiffs had any relationship to defendant's clients or to the corporation as stockholders or otherwise when the advice was given. (Id., at pp. 343-344, 134 Cal.Rptr. 375, 556 P.2d 737, fn. omitted.) Thus, Goodman is clearly distinguishable on its facts from the instant case. **However, the Supreme Court in Goodman explicitly recognizes that where an attorney intends his advice or statement to his client to be relied upon by third persons dealing with his client, the attorney owes the third person a duty of care. As stated in Goodman: We are therefore not concerned with such cases as Roberts v. Ball, Hunt, Hart, Brown & Baerwitz (1976) 57 Cal.App.3d 104, 110-111 [128 Cal.Rptr. 901], ... in which an attorney gives his client a written opinion with the intention that it be transmitted to and relied upon by the plaintiff in dealing with the client. In that situation the attorney owes the **897 plaintiff a duty of care in providing the advice because the plaintiff's anticipated reliance upon it is the end and aim of the transaction, ( Glanzer v. Shepard (1922) 233 N.Y. 236, 238-239 [135 N.E. 275, 23 ALR 1425] ) ( 18 Cal.3d at p. 343, fn. 4, 134 Cal.Rptr. 375, 556 P.2d 737). In the present case, Cicone's reliance on Canady's alleged misrepresentation was the very purpose of the representation. Canady expected Cicone to advise his client to close the transaction; Cicone did so and the transaction was closed. *210 A duty of care under these facts logically follows from the holding in Roberts. In that case, plaintiff alleged he was the prospective lender of substantial moneys to BBC, a partnership; that defendant attorneys gave a member of the partnership a letter stating that in their professional opinion BBC was a general partnership of 14 general partners; that they knew this letter was to be used to induce plaintiff to make loans to BBC; that they failed to disclose the belief on the part of many of the partners that BBC was a limited partnership and that the limited partners had no personal liability for its obligations; and that, in reliance on the letter, plaintiff made loans and thereafter incurred litigation costs in a still pending attempt to establish liability of the partners as general partners. The Court of Appeal held that a cause of action for negligent misrepresentation was stated under the principles laid down in Lucas v. Hamm (1961) 56 Cal.2d 583, 15 Cal.Rptr. 821, 364 P.2d 685; Donald v. Garry (1971) 19 Cal.App.3d 769, 97 Cal.Rptr. 191 and Restatement Second of Torts section 324A.

The defendants' [attorneys'] opinion concerning the status of the partners was rendered for the purpose of influencing plaintiff's conduct, and harm to him was clearly foreseeable. We have no difficulty, therefore, in determining that the issuance of a legal opinion intended to secure benefit for the client, either monetary or otherwise, must be issued with due care, or the attorneys who do not act carefully will have breached a duty owed to those they attempted or expected to influence on behalf of their clients. ( 57 Cal.App.3d at p. 111, 128 Cal.Rptr. 901, emphasis added.) If the issuance of a legal opinion intended to secure a benefit for a client must be issued with due care towards third persons who the attorneys attempt or expect to influence on behalf of their clients, then a fortiori why should such a duty of care not exist toward the third party's attorney where an affirmative misrepresentation of fact is made directly to the attorney for the purpose of influencing his client? Public policy does not foreclose the imposition of a duty of care by Canady to Cicone under these facts. To the contrary, a majority of the policy factors considered by the courts in determining the question of a duty of care support such a duty. The determination whether in a specific case the defendant will be held liable to a third person not in privity ... involves the balancing of various factors, among which are the extent to which the transaction was intended to affect the plaintiff [clearly present], the foreseeability of harm to him [clearly present in the instant case], the degree of certainty that the plaintiff suffered injury [clearly present], the closeness of the connection between the defendant's conduct and the injury suffered [clearly present], the moral blame attached to the defendant's conduct [arguable in view of the fact defendant's client was also present], and the policy of preventing future harm [clearly present]. ( *211Goodman v. Kennedy, supra, 18 Cal.3d at pp. 342-343, 134 Cal.Rptr. 375, 556 P.2d 737, quoting from Biakanja v. Irving (1958) 49 Cal.2d 647, 650, 320 P.2d 16; see also Note, Attorneys' Liability to Third Parties for Professional Negligence (1978) 66 Cal.L.Rev. 393.) Finally, persons such as Canady have, or can readily obtain, insurance for these risks. Nor do we visualize any legitimate threat to the professional relationship between Canady and his client, the buyer, by imposing on Canady a duty of care toward Cicone under our facts. An attorney must **898 take pains to avoid negligent misrepresentation of material facts in negotiating business transactions with third parties and their attorneys. **All that is required to avoid negligent misrepresentation is that the attorney have some reasonable basis for believing the truthfulness of his or her representations. Imposing possible liability where such a basis is lacking will not prevent an attorney from devoting his entire energies to his client's interest. Neither will it require the attorney to assist opposing counsel in the performance of the latter's duties to his client. Finally, it takes more than a negligent misrepresentation to impose liability. **The misrepresentation must be of a material fact, it must be made with the intent to induce reliance by the opposing party, it must actually be relied upon reasonably by the opposing party and proof must be made of damages proximately caused by the misrepresentation. All of these elements are present under the allegations here reviewed. We therefore conclude the trial court abused its discretion in sustaining cross-defendants' demurrer to the seventh, eighth and ninth causes of action without leave to amend.

II. LIABILITY FOR FRAUD AUTHORITY

Roberts v. Ball, Hunt, Hart, Brown & Baerwitz, 57 Cal.App.3d 104, 128 Cal.Rptr. 901 (Cal.App. 2 Dist., Apr 06, 1976) While specific facts did not evidence fraud, case recognizes both attorney liability for fraud and negligent misrepresentation SUMMARY In an action against an individual attorney and a law firm seeking damages for intentional and negligent misrepresentation, the complaint alleged that **the law firm had provided a client with a letter describing a particular organization as a general partnership, **knowing it would be shown to plaintiff **from whom that organization hoped to borrow money, but had not revealed therein the existence of the doubt, known to the law firm, as to the status of the partnership as general or limited. Demurrers were sustained with leave to amend, plaintiff chose not to amend, and the court entered a judgment of dismissal. (Superior Court of Los Angeles County, No. C 96179, Robert P. Schifferman, Judge.) **The Court of Appeal reversed. Although holding that the complaints **failure to allege a fraudulent intent with respect to the letter was fatal to any cause of action for **intentional fraud, the court held that a cause for negligent misrepresentation, good against a general demurrer, was stated by the complaint. After noting that under the circumstances, the law firm had a duty to reveal to plaintiff existence of the doubt as to the status of the partnership as a general partnership, the court concluded that all elements essential to a cause of action for negligent misrepresentation had been alleged so as to bring the situation within the rule that an attorney may be liable for damage caused by his negligence to a person intended to be benefited by his performance, irrespective of any lack of privity of contract between the attorney and the party to be benefited.(Opinion by Jefferson (Bernard), J., with Dunn, J., concurring. Separate concurring and dissenting opinion by Kingsley, Acting P. J.)*105 HEADNOTES Classified to California Digest of Official Reports (1) Attorneys at Law 1--Relations With Third Persons. An attorney may not, with impunity, either conspire with a client to defraud or injure a third person, or engage in intentional tortious conduct toward a third person. [See Cal.Jur.3d, Attorneys at Law, 286; Am.Jur.2d, Attorneys at Law, 196.] (2) Fraud and Deceit 25--Pleading. The essential allegations of an action for fraud are a misrepresentation, knowledge of its falsity, intent to defraud, justifiable reliance, and resulting damage. (3) Fraud and Deceit 25--Pleading. A complaint for fraud must allege every element of the tort in the proper manner. The facts constituting the asserted fraud must be alleged with sufficient specificity to allow defendant to understand fully the nature of the charge made. (4) Fraud and Deceit 25--Pleading--Intent. In an action for intentional fraud against a law firm which had provided a client with a letter describing a particular organization as a general partnership, knowing it would be shown to plaintiff from whom that organization hoped to borrow

money, but had not revealed therein the existence of the doubt, assertedly known to the law firm, as to the status of the partnership as general or limited, it was proper to sustain a general demurrer to the complaint in view of its failure to allege that the opinion expressed in the letter was made with a fraudulent intent. (5) Fraud and Deceit 25--Pleading--Misrepresentation. The element of misrepresentation, essential to a cause of action for negligent misrepresentation, was sufficiently pleaded by a complaint against a law firm alleging that the firm had provided a client with a letter describing a particular organization as a general partnership, knowing it would be shown to plaintiff from whom that organization hoped to borrow money, but had not revealed therein the existence of the doubt, known to the law firm, as to the status of the partnership as general or limited.*106 (6a, 6b) Fraud and Deceit 25--Pleading--Damages. In a complaint against a law firm for negligent misrepresentation alleging that the firm had provided a client with a letter describing a particular organization as a general partnership knowing it would be shown to plaintiff from whom that organization hoped to borrow money, but had not revealed therein the doubt, known to the law firm, as to the status of the organization as a general, rather than limited, partnership, damages were pleaded with sufficient specificity to withstand a general demurrer, by allegations indicating that plaintiff is in the position of sustaining substantial damage if his pending litigation establishes the partnership as limited, and that even if it is established as general, he will have incurred, as a result of the alleged misrepresentation, substantial legal expense to obtain the determination. Plaintiff Roberts filed his first amended complaint against various defendants, including those who are parties to this appeal, i.e., Ball, Hunt, Hart, Brown & Baerwitz, a law partnership, and Attorney Harvey Fierstein, alleging that these defendants had committed fraud and had made negligent misrepresentations. These latter defendants demurred to the first amended complaint; the demurrers were*107 sustained with leave to amend; plaintiff chose to stand on the complaint and, accordingly, dismissal was entered (pursuant to Code Civ. Proc., 581d). Plaintiff appeals from the judgment of dismissal. "In our examination of the complaint we are guided by the well settled principles governing the testing of its sufficiency by demurrer: A demurrer admits all material and issuable facts properly pleaded. [Citations.] However, it does not admit contentions, deductions or conclusions of fact or law alleged therein. [Citations.]" (Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713 [63 Cal.Rptr. 724, 433 P.2d 732].) The complaint is cast in 17 causes of action. The first 10 causes of action seek monetary recovery against 14 persons alleged to have been general partners of a partnership known as Burbank Broadcasting Company (BBC), against E. H. Bookasta and against other persons alleged to have acted in concert with BBC; these causes of action seek to recover over $800,000 allegedly loaned by plaintiff to, or advanced on account of BBC. The 11th and 12th causes of action seek recovery from defendant law firm, Ball, Hunt, Hart, Brown & Baerwitz (hereinafter Ball) for alleged fraud and negligence in giving Bookasta a letter hereinafter discussed. The 13th and 14th causes of action seek recovery from attorney Fierstein for fraud and for negligence in making representations to plaintiff; the other causes of action are immaterial to this appeal. (The causes of action against Ball and Fierstein incorporate the allegations of the first four causes of action.) The appeal before us concerns only

those causes of action alleged against defendants Ball and Fierstein. The gravamen of the complaint against Ball is that that firm, at the request of Bookasta and with knowledge that he would show it to plaintiff, a prospective creditor of BBC, gave to Bookasta a letter stating that, in the professional opinion of the firm, BBC was a duly organized general partnership, consisting of 14 individuals who were general partners (also named as defendants in the first amended complaint); that Ball knew and understood that this letter was to be shown to plaintiff in order to induce plaintiff to make loans to BBC. Plaintiff also alleged that Balls knowledge of this use to which said letter would be put imposed upon Ball a duty to plaintiff to state in the letter all facts known to Ball respecting not only the legal nature of BBC*108 and its component members, but also the fact of the beliefs of such component members respecting the legal nature of BBC and their memberships therein; that by failing to disclose the fact of such beliefs, Ball omitted to state material facts necessary in order to make the statements contained in the letter not misleading. Plaintiff then alleged that Ball breached "said duty to, among others, Roberts [the plaintiff], by fraudulently failing to disclose to him in said opinion letter or otherwise Balls knowledge of the fact that a large number of the persons named in the Ball opinion letter as being general partners of BBC: [] (a) Did not believe either that BBC was a general partnership or that they were general partners therein; [] **(b) Believed that BBC was an entity in which their liability would be and was limited to their pro rata share of the indebtedness of BBC to B of A arising out of the acquisition of the stock in GEC; [] **(c) Believed that BBC had been incorporated in or about August 1972 so that thereafter they would have no personal liability for any obligations incurred by BBC thereafter; or [] **(d) Believed that BBC was a limited partnership with Michael Colicigno being the sole general partner therein, with the remainder of the members of BBC named in the Ball opinion letter being limited partners therein." Plaintiff alleged that he lent money to BBC in reliance on the letter given him by Bookasta confirming that BBC was a general partnership; that he would not have made such loans had he been aware of the beliefs of BBC members that BBC was not a general partnership. Plaintiff also alleged that none of the money has been repaid him, and that he has been forced to incur substantial expense to hire counsel and incur litigation costs in an effort to establish the status of the 14 partners of BBC as general partners as a prerequisite for imposing liability upon them. The claim against Attorney Fierstein is based primarily on the allegation that, prior to the time he made his representations to plaintiff concerning BBCs consisting of 14 general partners, the alleged general partners had met and voted to dissolve; that Fierstein not only knew this, but knew that a number of the partners were disputing their status as general partners. Plaintiff also sets forth in his complaint the allegations of negligent, as opposed to willful, misrepresentation by the Ball firm and Fierstein of the true picture of the BBC partnership.*109 Plaintiffs basic argument on appeal is that a complaint states a good cause of action against an attorney for fraud or negligent misrepresentation to a third party where all the elements of those torts have been pled. Defendants contend that plaintiffs complaint fails to allege a cause of action for misrepresentation which damaged plaintiff, and that there exists no duty owed by the defendant attorneys to third persons, including plaintiff, which was breached by defendants.

The extent of liability an attorney may incur toward third persons, while the attorney is acting on behalf of a client, has been the subject of divergent opinion in various American jurisdictions, the traditional view being that an attorney may not generally be held liable to third persons because he is not in privity with them, and owes them no duty to act with care. (See Attorneys - Liability to Third Parties, 45 A.L.R.3d 1177, 1181.) A typical statement of this approach is that "an attorney is not liable to third persons for acts committed in good faith in performance of professional activities as an attorney for his client. **If, however, an attorney is actuated by malicious motives, or shares the illegal motives of his client, he may be personally liable with the client for damage suffered by a third person as the result of the attorneys actions." (Fns. omitted.) (7 A.m.Jur.2d., Attorneys, 196, p. 161 (1963).) ** (1) California has long adopted the view that an attorney may not, with impunity, either conspire with a client to defraud or injure a third person or engage in intentional tortious conduct toward a third person. (Greenwood v. Mooradian (1955) 137 Cal.App.2d 532 [290 P.2d 955]; Atchison, T. & S. F. Ry. Co. v. Hildebrand (1965) 238 Cal.App.2d 859 [48 Cal.Rptr. 339]; Warner v. Roadshow Attractions Co. (1942) 56 Cal.App.2d 1 [132 P.2d 35]; see also, Daly v. Smith (1963) 220 Cal.App.2d 592 [33 Cal.Rptr. 920].) In the instant case, plaintiff has not pleaded that defendants conspired with others to injure him, but has sought to state causes of action against defendants for the torts of deceit and fraud. (See Civ. Code, 1709, 1710.) **(2) The essential allegations of an action for fraud are a misrepresentation, knowledge of its falsity, intent to defraud, justifiable reliance, and resulting damage. (Universal By-Products, Inc. v. City ofModesto (1974) 43 Cal.App.3d 145, 151 [117 Cal.Rptr. 525].) **(3) Every element of the cause of action for fraud must be alleged in the proper manner and the facts constituting the fraud must be alleged with sufficient specificity to allow defendant to understand fully the nature of the charge made. (*110Hills Trans. Co. v. Southwest Forest Industries, Inc. (1968) 266 Cal.App.2d 702, 707 [72 Cal.Rptr. 441].) **(4) It is clear that plaintiff has failed to plead that defendants gave their written opinions concerning the status of the BBC partnership with fraudulent intent; such an allegation was crucial to the statement of any cause of action against defendants for the intentional tort of fraud or deceit. Therefore, as to the 11th and 13th causes of action, the demurrer was properly sustained. The 12th and 14th causes of action, however, allege negligent misrepresentation and, in our view, stated a cause of action against the defendants which was good against a general demurrer. It was, of course, permissible for plaintiff to allege inconsistent theories of recovery, and there is some authority holding that a plaintiff should be able, on information and belief, to plead inconsistent facts as well. (See 3 Witkin, Cal. Procedure (2d ed. 1971) Pleading, 299, pp. 1971-1972.) As to negligent misrepresentation as a form of deceit, Civil Code section 1710 provides, in pertinent part, that a deceit may be "...** (2) The assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true; [] **(3) The suppression of a fact, by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of that fact; ..." Under present California law, an attorney may owe a duty to a third person, and may be liable if the third person who was intended to be benefited by his

performance is injured by his negligent execution of that duty. "An attorney may be liable for damage caused by his negligence to a person intended to be benefited by his performance irrespective of any lack of privity of contract between the attorney and the party to be benefited. [Citation.] The liability sounds in tort. [Citation.] The determination of whether the duty undertaken by an attorney extends to a third party not in privity involves the balancing of various factors, among which are **the extent to which the transaction was intended to affect the plaintiff, the foreseeability of harm to him, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendants conduct and the injury suffered, the moral blame attached to the defendants conduct, and the policy of preventing future harm. [Citations.]" (Donald v. Garry (1971) 19 Cal.App.3d 769, 771-772 [97 Cal.Rptr. 191, 45 A.L.R.3d 1177]; see also, *111Rest.2d Torts, 324 A; Lucas v. Hamm (1961) 56 Cal.2d 583 [15 Cal.Rptr. 821, 364 P.2d685]; Heyer v. Flaig (1969) 70 Cal.2d 223 [74 Cal.Rptr. 225, 449 P.2d 161].) In the instant case, according to plaintiffs allegations, defendants undertook, on behalf of their clients, to assist in securing loans from various persons, including plaintiff, for the benefit of BBC. The defendants opinion concerning the status of the partners was rendered for the purpose of influencing plaintiffs conduct, and harm to him was clearly foreseeable. We have no difficulty, therefore, in determining that the issuance of a legal opinion intended to secure benefit for the client, either monetary or otherwise, must be issued with due care, or the attorneys who do not act carefully will have breached a duty owed to those they attempted or expected to influence on behalf of their clients. (6a) Defendants finally assert that plaintiff has not pled damages with sufficient specificity. It is true that damages must be so pled, rather than alleged in speculative terms. (Ventura County Humane Society v. Holloway (1974) 40 Cal.App.3d 897, 907 [115 Cal.Rptr. 464].)Civil Code section 1709 states that damage recoverable by a plaintiff in a deceit case is "any damage which he thereby suffers" as a result of the deceit. This damage rule for deceit allows for an outof-pocket, i.e., restitutional, loss.*112 Plaintiff has alleged, as one item of out-of-pocket loss, attorneys fees and costs incurred by reason of the necessity of instituting the instant litigation against the partners of BBC in the hope of establishing that the BBC partnership was a general partnership rather than a limited partnership. Plaintiff is in the position of sustaining very substantial damage if the outcome of this suit against the BBC partners establishes that they are limited partners; substantial legal expense will be incurred to secure this determination, even if that determination is favorable to him. Such legal expense is neither remote nor speculative, but must of necessity be incurred by plaintiff to make him whole. (7) It is the general rule that, in the absence of some statutory or contractual provision, attorneys fees must be paid by the party employing the attorney and are not recoverable as damages against the party being sued. (Code Civ. Proc., 1021; Reid v. Valley Restaurants, Inc. (1957) 48 Cal.2d 606 [311 P.2d 473].) But an important exception to the general rule states that "[a] person who through the tort of another has been required to act in the protection of his interests by bringing or defending an action against a third person is entitled to recover compensation for the reasonably necessary loss of time, attorneys fees, and other expenditures thereby suffered or incurred. [Citations.]" (Prentice v. North Amer. Title Guar. Corp. (1963) 59 Cal.2d 618, 620 [30 Cal.Rptr. 821, 381 P.2d 645].) The Prentice exception is clearly applicable to the case at bench. As stated in Vanguard Recording Society, Inc. v. Fantasy Records, Inc. (1972)24 Cal.App.3d 410,

419 [100 Cal.Rptr. 826] with respect to the Prentice exception: "the court held that where the defendants breach of duty to the plaintiff had made it necessary for the plaintiff to sue third persons, the plaintiff was entitled to recover from the defendant the attorneys fees incurred in suing the third persons. Although the plaintiff in Prentice had sued the defendant and the third persons in the same action, the court held that this fact constituted no bar to the plaintiffs right to recover from the defendant the attorneys fees incurred in the prosecution of the counts in the complaint against the third persons." (6b) We conclude, therefore, that plaintiff has alleged damage with sufficient specificity to preclude an attack by general demurrer. The judgment (order of dismissal) appealed from is reversed, as indicated herein.
Greenwood v. Mooradian, 137 Cal.App.2d 532, 290 P.2d 955 (Cal.App. 2 Dist. Dec 06, 1955) Action for damages and an accounting from defendants who were allegedly members of a joint venture which originally included plaintiff and from which he was allegedly excluded through a conspiracy of defendants. The Superior Court, Los Angeles County, Philbrick McCoy, J., entered judgment for nonsuit as to one of the defendants and sustained demurrers to amended complaint without leave to amend and plaintiff appealed. The District Court of Appeal, Ashburn, J. pro tem., held that complaint which alleged that defendants had conspired to appropriate to their own uses, the benefits and profits of joint venture including plaintiff's interest, was sufficient to state a cause of action against defendant without allegations as to overt acts of particular defendant, and where written agreement was signed on behalf of firms or associations without any particularization as to type of entity, it would not be violation of parol evidence rule to introduce evidence as to their identity. Judgments reversed. [7] Torts 379 135

379 Torts 379I In General 379k129 Persons Liable 379k135 k. Joint and Several Liability. Most Cited Cases (Formerly 379k22) Each participant in the wrongful act is responsible as a joint tort-feasor for all damages ensuing from the wrong, regardless of whether or not he was a direct actor and the degree of his activity. [8] Attorney and Client 45 26

45 Attorney and Client 45I The Office of Attorney 45I(B) Privileges, Disabilities, and Liabilities 45k26 k. Liabilities to Adverse Parties and to Third Persons. Most Cited Cases Where action was brought for an accounting of profits and declarations of constructive trust against allegedly fellow joint adventurers and various individuals and corporations that had acquired the assets of the joint adventure, fact that one of the defendants was an attorney for one of the other defendants did not immunize him from liability for torts committed in person or liability for wrongs done pursuant to an alleged conspiracy joined by him. [8] Defendant Murchison's status as attorney for one of the other defendants does not immunize him from liability for torts committed in person or liability for wrongs done

pursuant to conspiracy joined by him. Warner v. Roadshow Attractions Co., 56 Cal.App.2d 1, 7, 132 P.2d 35; *540Hoosac Tunnel Dock & Elevator Co. v. O'Brien, 137 Mass. 424, 427, 50 Am.Rep. 323; First Nat. Bank v. Broder, 107 Conn. 574, 141 A. 861, 864; Haggerty v. Moyerman, 321 Pa. 555, 184 A. 654, 655; Thomas Fruit Co. v. Levergood, 135 Okl. 105, 274 P. 471, 472; In re Cushman, 95 Misc. 9, 160 N.Y.S. 661, 665; 7 C.J.S., Attorney and Client, 52b, p. 834. Atchison, T. & S. F. Ry. Co. v. Hildebrand, 238 Cal.App.2d 859, 48 Cal.Rptr. 339 (Cal.App. 2 Dist.,Dec 20, 1965) Action for alleged conspiracy. The Superior Court, Los Angeles County, Philip H. Richards, J., decreed a permanent injunction in favor of plaintiffs and defendants appealed. The District Court of Appeal, Roth, P. J., held that where plaintiffs and defendants stipulated that they desired to settle as between themselves all disputes arising out of or connected with matters which were subject of described action and plaintiffs gave up all rights to costs and any other relief they might have obtained after trial of the issues, consent decree entered was not appealable. Appeal dismissed. [8] Attorney and Client 45 26

45 Attorney and Client 45I The Office of Attorney 45I(B) Privileges, Disabilities, and Liabilities 45k26 k. Liabilities to Adverse Parties and to Third Persons. Most Cited Cases **Any attorney who engages in conspiratorial acts to detriment of private citizen is subject to liability for his participation in such conspiracy and it is of no consequence that conduct might also be subject of legal or disciplinary action by the state bar. West's Ann.Bus. & Prof.Code, 6030, 6044(d). Respondents' amended complaints (the originals were filed July 23, 1959) allege that appellants Hildebrand, Bills, McLeod **341 and Daggett were attorneys licensed to practice law in the State of California; that the Brotherhood of Railroad Trainmen is an international labor union; and that appellants Dragmire and Bockhold were members of said union. They further allege that a conspiracy existed between all of the appellants to divert improperly the damage claims of injured employees to appellants' attorneys for processing in violation of Rules 2, 3 and 11 of the Rules of Professional Conduct of the State Bar of California; that in furtherance of this conspiracy they improperly solicited hundreds of persons whose names are listed on a separate exhibit; that the acts of appellants were disruptive and destructive of good employer-employee relationships between respondents and their employees and consequently lowered the standard of loyalty to respondents on the part of many of their employees whose names are not known to respondents. [8] Appellants also argue that the 1961 amendments to the Business and Professions Code broadening the investigative powers of the State BarFN2 and empowering the State Bar to enjoin the unlawful practice of law and unlawful solicitationFN3 deprive the superior court from entertaining *863 any private action on these matters. It has always been the law of this state that an attorney who engages in conspiratorial acts to the detriment of a private citizen is subject to liability for his participation in such a conspiracy (see Greenwood v. Mooradian, 137 Cal.App.2d 532, 539, 290 P.2d 955; Warner v. Roadshow Attractions Co., 56 Cal.App.2d 1, 132 P.2d 35.) It is of no consequence that the conduct complained of might also be the subject of legal or disciplinary action by the State Bar. We cannot presume that so major a change in the law was made in such an indirect manner. FN2. B. & P.Code, 6044(d), as amended by Stats.1961, ch. 2033, 2.

FN3. B. & P.Code, 6030, as amended by Stats.1961, ch. 2033, 1. Warner v. Roadshow Attractions Co., 56 Cal.App.2d 1, 132 P.2d 35 (Cal.App. 2 Dist. Dec 08, 1942) Action by Myrtle C. Warner against Roadshow Attractions Company, Dwain Esper and others for damages and an injunction. From a judgment for plaintiff, Dwain Esper and others appeal. Affirmed [1] Copyrights and Intellectual Property 99 87(1)

99 Copyrights and Intellectual Property 99I Copyrights 99I(J) Infringement 99I(J)2 Remedies 99k72 Actions for Infringement 99k87 Damages and Profits 99k87(1) k. Recovery in General; Actual Damages and Profits. Most Cited Cases Where company, after contracting to distribute plaintiff's motion picture, changed title of picture to Forbidden Adventure which became property of plaintiff but after termination of contract the company and its president caused another motion picture to be copyrighted under the title Forbidden Adventure and the president and his attorneys sent telegrams to distributors stating that the picture Forbidden Adventure had been copyrighted and warning against violation of copyright, in plaintiff's action for injunction and damages evidence sustained finding of malice and supported money judgment for compensatory damages against the president and his attorneys and for exemplary damages against the president. Plaintiffs in the court below obtained judgment against defendants Dwain Esper, Arthur A. Desser and Jack L. Rau, the latter as copartners, enjoining said defendants from showing, exploiting or distributing a certain motion picture owned by plaintiff, from representing to anyone that defendants were the owners of a certain copyright on a photoplay of the same title as plaintiff's picture and from representing*3 that defendants were the owners of or had any interest in plaintiff's photoplay, and also awarding plaintiff damages and costs in the matter. The complaint herein was, in general, one for injunctive relief and for damages as the result of certain alleged acts of defendants in interfering with the exhibition and distribution of plaintiff's motion picture entitled Forbidden Adventure, and in making unauthorized distribution and exhibition of the same. After hearing evidence upon the issues presented the trial court found the following facts to be true. At the times mentioned in plaintiff's complaint, and at the time of the trial herein, **plaintiff was the **36 owner of a certain feature motion picture, known and entitled as Ankor, Angkor, The Jungles of Ankor, and The Jungles of Angkor. On or about January 11, 1937, plaintiff entered into a written agreement with Roadshow Attractions Company, a corporation of which defendant Dwain Esper was the president and general manager and defendant E. Mapel was the vice-president. By the terms of this agreement Roadshow Attractions Company was to handle the theatrical distribution of plaintiff's said motion picture. This agreement was amended in certain respects not directly pertinent to the matters here discussed. After the execution of said distribution contract and pursuant to its terms the Roadshow Attractions company changed the title of plaintiff's said motion picture to Forbidden Adventure, and thereafter distributed and roadshowed the motion picture throughout more than one-half of the States of the United States, under the title of Forbidden Adventure. By reason of such exhibition of plaintiff's motion picture under that title, the title of Forbidden Adventure has become identified with plaintiff's photoplay; and under and by virtue of the terms of said distribution contract, said title Forbidden Adventure has now become and is an integral part of said photoplay and the property of

plaintiff, as provided in said contract. The said distribution contract was breached in material respects by Roadshow Attractions Company; and thereafter and on or about May 6, 1937, plaintiff herein instituted an action in the Superior Court of Los Angeles County for an accounting from the defendants in said cause as to the proceeds from the distribution of plaintiff's said picture which were received *4 prior to August 27, 1937. In said action plaintiff also sought a judicial termination of said distribution contract because of the breach thereof, and also sought to enjoin and prevent the further distribution of said motion picture. Thereafter and on or about August 27, 1937, Roadshow Attractions Company and Dwain Esper, by their counsel, stipulated in open court that said distribution contract be terminated; and on or about the same date, in said action, a preliminary injunction was granted restraining and enjoining defendants therein from further distribution and exhibition of plaintiff's said motion picture. At the time of the trial in the case at bar the said preliminary injunction was still in full force and effect. Dwain Esper and Roadshow Attractions Company came into possession of exhibition prints of plaintiff's motion picture in connection with and pursuant to the terms of the distribution contract above mentioned; but said defendants never had any right to possession and never had any possession of said motion picture prior to the inception of said distribution agreement. On or about May 7, 1937, Dwain Esper and Roadshow Attractions Company caused a motion picture other than plaintiff's, and entitled Inyaah, to be copyrighted under the title Forbidden Adventure; but the photoplay Inyaah was never exhibited by any of the defendants under the title Forbidden Adventure. After the termination of the distribution agreement heretofore mentioned plaintiff herein attempted to distribute her motion picture originally entitled Ankor, etc., and subsequently distributed under the title Forbidden Adventure as above outlined. During the period plaintiff was thus attempting to distribute her said motion picture, the defendant Dwain Esper caused to be sent to theatres and theatre circuits telegrams in the following form: To ......................... Manager......................Theatre Informed you have booked and about to play picture Forbidden Adventure in ..... (stating place) ............. Undersigned owns and has copyrighted 1934 Class L Number 7119 this picture and any one playing or using same will be held liable in full accordance of law Dwain Esper Roadshow Attractions *5 These telegrams were in each instance sent out to theatres and theatre circuits with whom negotiations were pending or were about to be opened for the exhibiting and roadshowing of plaintiff's picture. Upon the evidence presented, the trial court found that said telegrams were sent out by the defendant Dwain Esper wrongfully and maliciously and with the intent of injuring the plaintiff herein and of preventing the plaintiff from obtaining contracts and engagements for the exhibition of plaintiff's said photoplay. On or about June 24, 1938, the defendants Arthur A. Desser and Jack L. Rau, attorneys, and copartners under the firm name of Desser and Rau, caused a telegram to be sent to the Avenue Theatre of Detroit,**37 Michigan, in words and figures as follows: June 24, 1938. Avenue Theatre, Detroit Mapel Attractions advise us you are playing picture entitled Forbidden Adventure. Our client Dwain Esper has copyrighted Number L-7119 picture entitled Forbidden Adventure copyrighted nineteen thirty four. Mapel Attractions only one authorized by our client to show picture. To save you harmless under copyright law suggest you hold all receipts this showing intact pending contemplated litigation.

Attorneys Desser and Rau. At the time said telegram was sent out to the Avenue Theatre negotiations were pending with said theatre and other theatre circuits with which said theatre was affiliated, for the exhibiting and roadshowing of the plaintiff's motion picture. The trial court found, upon the evidence, that the defendants Desser and Rau wrongfully sent out the above telegram, and without right so to do; and that by reason of the sending of said telegram the plaintiff's distributors were substantially interfered with in their attempt to exhibit plaintiff's said motion picture in said Avenue Theatre and in their endeavor to exhibit said picture in the chain of theatres of which said Avenue Theatre was a member, and from obtaining bookings and engagements for plaintiff's said photoplay. The court also found that all of the telegrams herein referred to were sent by or pursuant to the advice and with the knowledge of the defendants Desser and Rau, and that *6 since the sending of the telegram of June 24, 1938 the defendants Desser and Rau had asserted that it was their plan and purpose to continue to send out telegrams to the trade in the form above set forth, and that unless restrained by the court the defendants will continue to wrongfully interfere with the distribution by plaintiff of her motion picture photoplay and will continue to wrongfully represent to the trade that the plaintiff herein has no right to distribute her said motion picture photoplay, and to wrongfully represent that the plaintiff herein has no title to her said photoplay, and will continue to do the acts complained of in plaintiff's * * * second amended complaint, and will inflict great and serious losses and damage upon the plaintiff. The trial court specifically found that in sending out telegrams as above mentioned and in performing the other acts in question the defendant Dwain Esper was actuated by malice and by an intent to purposely and wilfully inflict injury and damage upon the plaintiff herein; and that at all times mentioned in plaintiff's complaint the defendants Arthur A. Desser and Jack L. Rau were attorneys at law, duly licensed to practice as such, and that the said Arthur A. Desser and Jack L. Rau represented the defendant Dwain Esper in connection with all of the litigation referred to in plaintiff's complaint, **but that said defendants assisted the defendant Esper in the performance of the wrongful acts herein found to have been done by him, with full knowledge on their part of the wrongful character of said acts, and in such a way as to allow themselves to become actors and participants therein. It should also be mentioned that the court found that defendants were not the owners of said picture on which said copyright had been obtained. [2] Appellants Desser and Rau seek to justify their actions in the matter through application of the proposition that attorneys at law in the exercise of their proper functions as such are not liable for their acts if such acts are made in good faith and pertinent to the matter in question. Whether the attorneys acted in good faith was a question for the trial court to determine; and it should be pointed out that **38 the testimony of the attorneys involved is not conclusive upon the question. It should also be noted that the telegram to the Avenue Theatre did not alone form the basis for the court's findings against the attorneys in question. The findings in that respect were supported by the surrounding circumstances and the connection of the attorneys therewith, as shown by the evidence, coupled with the sending of the telegram in question. In justification of the acts of appellant Esper respondents state that a reading of the testimony should reveal that Mr. Esper was laboring under a sense of gross injustice, and that such sense of injustice was adequately supported by the evidence. A feeling upon the part of Esper that injustice had been done him by plaintiff can furnish no justification for defendants' acts as shown by the record; nor can such a feeling constitute a defense to plaintiff's cause of action herein. A sense of injustice, even if truly felt, would merely constitute defendant's own standard or yardstick, by which he measured his conduct, and could not serve as a measurement of civil liability for the acts committed.

For the foregoing reasons the judgment is affirmed. Daly v. Smith, 220 Cal.App.2d 592, 33 Cal.Rptr. 920 (Cal.App. 5 Dist.,Sep 20, 1963)

Attorney is civilly liable to a third party, without privity, if the attorney participates or conspires with the client in a tortious act in which the attorney has an independent duty to the third party not to engage in the tortuous act. Or having an interest in the outcome
Action to quiet title to mining claims in which the defendant cross-complained to recover damages for trespass. The Superior Court of Kern County, Gordon L. Howden, J., entered an adverse judgment on the cross-complaint from which cross-complainants appealed. The District Court, Conley, P. J., held that evidence sustained finding that trespasses on mining claims were made in good faith, and trespassers were liable for value of minerals extracted less the cost of mining and milling thereof. Judgment on cross-complaint reversed. [5] Mines and Minerals 260 51(1)

260 Mines and Minerals 260II Title, Conveyances, and Contracts 260II(A) Rights and Remedies of Owners 260k51 Recovery for Trespass or Conversion 260k51(1) k. In General. Most Cited Cases While trial court may consider attorney's interest in mining claim on which he gave advice that was relied on by persons committing trespass in order to determine whether attorney and his clients were acting in good faith, it would be wrong to disqualify attorney as a matter of law because he had a technical or actual personal interest in outcome. [12] Trespass 386 30

386 Trespass 386II Actions 386II(A) Right of Action and Defenses 386k30 k. Persons Liable. Most Cited Cases Action for trespass committed by one person does not make another person liable unless he participated by agreement or otherwise. [14] Torts 379 130

379 Torts 379I In General 379k129 Persons Liable 379k130 k. In General. Most Cited Cases (Formerly 379k21) Co-owner of real property is not liable for tort of his co-owner, unless he actively participates in it directly or through an agent, or ratifies tortious acts. [15] Attorney and Client 45 26

45 Attorney and Client 45I The Office of Attorney 45I(B) Privileges, Disabilities, and Liabilities 45k26 k. Liabilities to Adverse Parties and to Third Persons. Most Cited Cases

If evidence on retrial of action for damages for trespasses on mining claims showed that individuals, who signed mining claim relocation notices with others, acted strictly as attorneys and gave legal advice only, without participation in trespasses and without sharing, or intending to share, they could not be held liable for damages for trespasses. CONLEY, Presiding Justice. This is an appeal by the cross-complainants, Nellie E. Daly, individually and as executrix of the estate of her husband, A. D. Daly, from a judgment denying recovery for trespass and the removal and conversion by the trespassers of 4,663 tons of gypsite from mining claims in the Mohave Desert. Originally, V. R. Smith, Helen Smith, H. E. Barnett, Leona Barnett, Pete Cassou, Freda Cassou, Alfred Siemon and Bennett Siemon brought suit to quite their alleged title to the mining claims here involved; they claimed title by reason of having relocated the identical mining claims owned by the Dalys. Mr. Daly died prior to the institution of the suit. The first trial resulted in a judgment for the plaintiffs, but that judgment was reversed by the Fourth District Court of Appeal ( *596Smith v. Daly, 181 Cal.App.2d 154, 5 Cal.Rptr. 176), and it was thereafter retried on all of the issues. Prior to the commencement of the second trial, Harold E. Meyer was substituted in the place and stead of the original plaintiffs. The second trial resulted in an order that judgment be entered in favor of Mrs. Daly and others as to title and that plaintiff Meyer take nothing by his action. On the cross-complaint the evidence showed that 4,663 tons of gypsite had been removed from the Daly claims by all, or at least some, of the cross-defendants, but the court refused to allow any damages on the ground that which the trespass was committed with knowledge of the material facts, it was carried on in the honest though mistaken belief that said claims were open to relocation as a matter of law; said honest but mistaken belief was based upon the legal opinion rendered to said cross-defendants by one Alfred Siemon, an experienced and competent mining attorney; the trial court **922 concluded that as crossdefendants realized no profit from the sale of the 4,663 tons of gypsite taken during the trespass aforesaid, no damages should be allowed. The court below found that neither plaintiff nor his assignors owned the placer mining claims described in the complaint as Gypsy, Buffalo, Chicago, New York and San Francisco mining claims; that notices of location for all of these claims were in fact posted and recorded by plaintiff's predecessors in interest but that the land was not open to location under the mining laws; that A. D. Daly performed labor or improvements as required by law for the year ending July 1, 1957; that the lands were not vacant; that Nellie Daly, executrix of her deceased husband's will and testament, has succeeded to all rights of A. D. Daly, such rights not being subject to the rights of plaintiff; that at the time of his death Daly owned the following placer mining claims: Gypsy, Buffalo, Chicago, New York and San Francisco; that defendant George Arnett owns the Los Angeles placer mining claim; **that claims of the crossdefendants are without foundation and cross-defendants are without any right to the mining claims; that defendants did the assessment work required by law on the claims in 1956-1957; that plaintiff's predecessors in interest and Daly by written contract, through latters, agreed that gypsite was to be purchased at a fixed rate per ton and that plaintiff's predecessors acquired an option to buy the claim for $100,000 on or before June 15, 1956; that during 1956-1957 plaintiff's predecessors removed *597 gypsite ore under the above terms; that after January 1957 Daly was unable to conduct the operations necessary to effectuate f. o. b. delivery of the ore to plaintiff's predecessors; that plaintiff's predecessors in interest conducted the operations themselves; that they knew of Daly's failing health and knew of assessment work done or not done, and knew Daly was living in a home contiguous to the claims; they relied on facts gained under the contractual relationship in 1956-1957 to make the purported relocation of the subject mining claims; that crossdefendants attempted to file new locations over the locations belonging to cross-complainants and exclude cross-complainants from possession and operation of the claims; that entry of cross-defendants on the mining claims constituted a trespass; that cross-defendants removed 4,663 tons of gypsite; the sale price realized by cross-defendants averaged $8 per ton; the average cost of transportation to the customer was $4 per ton; that the f. o. b. sales price

was thus $4 per ton; that cross-defendants committed said trespass with knowledge of the material facts but in the honest or mistaken belief that said claims were open to relocation as a matter of law based upon the legal opinion of Alfred Siemon, an experienced and competent mining attorney. The court also found that cross-defendants realized no profits from the sale of the 4,663 tons of gypsite taken during the trespass. The judgment declared that appellant as executrix of the estate of A. D. Daly, and appellant Nellie Daly and Pancho Barnes owned the Gypsy, Buffalo, Chicago, New York, and San Francisco placer mining claims; that George Arnett owned the Los Angeles placer mining claim; that cross-defendants have no rights in or to said claims; that cross-complainants take nothing by the cross-complaint. An appeal was filed by the plaintiff Meyer from that portion of the judgment on the complaint which held that he should take nothing by his suit. Subsequent to the filing of the appeal, Mr. Meyer's attorneys were substituted out of the case, and he thereafter represented himself in propria persona. As he failed to file his opening brief, the court in due course gave him the 30-day notice prescribed in rule 17(a) of the California Rules of Court; thereafter, two extension of 30 days each were granted to him, and no further extension of time having been secured and no valid excuse having been *598 shown for his failure to comply with the rules, his appeal was dismissed. (Cal.Rules of Court, rule 17(a).) The sole question for consideration by this court therefore,**923 is whether or not the appeal on the crosscomplaint filed by Mrs. Daly is meritorious. The trial court found that the removal of the mineral product from the land owned by the cross-complainants was done in good faith. The question of good faith becomes important if any damages are to be allowed, for the rules applicable to a wilful trespass and a trespass committed in good faith are different. In a note in American Law Reports, volume 7, page 908, it is stated with respect to the rule of damages for an innocent trespass: It is the prevailing rule that a trespasser who encroaches on the land of another, mining and removing minerals, if the taking is inadvertent or under a claim of right or a bona fide belief of title, is liable in damages only for the minerals removed, based on their value as they lay in the mine before being disturbed, or, as is often expressed, their value is situ. And if evidence is not obtainable of the value of the minerals in situ, or if the circumstances of the case make it impracticable to fix their value in this manner, the same result is generally arrived at by proving their value at the mouth of the pit, and deducting therefrom the expense of mining and transporting them to that place. [1] Somewhat differently expressed but to the same effect is the rule set forth in 58 C.J.S. Mines and Minerals 137g(2), page 237: Where the trespass is an innocent one, as it is where a person by mistake, or unintentionally and in the honest belief that he is exercising a right which he has, enters on the property of another, and takes ore, coal, oil, or other mineral therefrom, the rule supported by the weight of authority is that the measure of damages is the value of the mineral in place, or, as sometimes stated, the value of the mineral extracted from the ore, less the cost of mining and milling. (See also Empire Gold Mining Co. v. Bonanza Gold Mining Co., 67 Cal. 406, 7, P. 810; Lightner Mining Co. v. Lane, 161 Cal. 689, 120 P. 771; Quetin v. Caubu, 58 Cal.App.2d 793, 798, 137 P.2d 880; Ehrhart v. Bowling, 36 Cal.App.2d 503, 509, 97 P.2d 1010; Union Oil Co. of California v. Reconstruction Oil Co., 20 Cal.App.2d 170, 185, 66 P.2d 1215.) On the other hand, where there is a wilful trespass the rule *599 is as follows:

* * * if the taking is reckless, wilful, or intentional, or without claim of right or title, the trespasser is liable for the enhanced value of the product when and where it is finally converted to the use of the trespasser, without any deduction for expenses incurred, or for any value he may have added to the mineral by his labor. (7 A.L.R., Wilful Trespass, p. 922.) [2] And it is said in 58 C.J.S. Mines and Minerals 137g(3)(a), page 239: A person who, with knowledge of the right or claim of the owner, wilfully and intentionally enters and takes mineral from the land of another is a willful trespasser, and recovery against him is not confined to royalty value, or to value of the mineral in place, or to the sale price after deductions for expense incurred, but, instead, extends, without deduction of expenses, to the full enhanced value of the mineral at the time and place of severance, taking, or appropriation, or, in other words, the full value at the mouth of the mine, this being the place where, for all practical purposes, the severance and appropriation are completed.' (See Dolch v. Ramsey, 57 Cal.App.2d 99, 134 P.2d 19; Pacific Western Oil Co. v. Bern Oil Co., 13 Cal.2d 60, 73, 87 P.2d 1045; Union Oil Co. of California v. Reconstruction Oil Co., supra, 20 Cal.App.2d 170, 66 P.2d 1215.) In the opinion written by Sanborn, Circuit Judge, in United States v. Homestake Mining Co., 8 Cir., 117 F. 481, 483, 485-486, the common sense reasons for making a distinction as to damages caused by a wilful and an innocent trespasser on mining and forest land are set forth: Every trespasser breaks the law, and to every trespasser the maxim applies that every man knows the law. Notwithstanding all this, the law, in its wisdom, perceives the marked difference in the heinousness of the offenses of those who recklessly, or with actual intention to rob others of their rights, trespass upon their property, and of those who trespass*600 by mistake, and with no evil purpose, no actual, willful intent to commit a wrong; and it declares that the former class shall pay to their victims the full value of the lumber or the ore they take at the time they sell or use it, while the latter class shall be relieved from liability upon restitution of the value of the timber in the trees or of the value of the ore in the mine. The maxim that every man knows the law applies to all the members of both classes alike. It neither differentiates the classes for their members, and it has no more relevancy to the real question which cases of this character present than the proposition that three and three are six. That question is always based on the conceded propositions that the defendant has violated the law and that every man knows the law. **The question, then, is, did the trespasser violate the law, which he constructively knew, recklessly, or with an actual intent to do so, and to take an unconscientious advantage of his victim, or did he violate it inadvertently, unintentionally, or in the honest belief that he was exercising his own right? If the former, he was a willful trespasser, and the value of the manufactured timber or the extracted ore measures his liability. If the latter, he was an innocent trespasser, and the value of the wood in the tree or of the ore in the mine is the limit of his indebtedness. The test to determine whether one was a willful or an innocent trespasser is not his violation of the law in the light of the maxim that every man knows the law, but his honest belief, and his actual intention at the time he committed the trespass; and neither a justification of the acts nor any other complete defense to them is essential to the proof that he who committed them was not a willful trespasser. [4][5] The basis of the relocation of the mines by the cross-defendants was, according to the findings, the legal opinion of Alfred Siemon, an experienced and competent mining attorney. Reliance upon the advice of reputable counsel is proper evidence of good faith. ( Swiss Oil Corp. v. Hupp, 253 Ky. 552, 69 S.W.2d 1037, 1041-1042; Delta Drilling Co. v. Arnett, 6 Cir., 186 F.2d 481, 486; Robinson v. Gordon Oil Co., 266 Mich. 65, 253 N.W. 218; Cooke v. Gulf

Refining Co., 135 La. 609, 65 So. 758, 761; Mason v. United States, 260 U.S. 545, 43 S.Ct. 200, 67 L.Ed. 396.) But the appellants contend that because the name of Mr. Siemon appeared as one of the relocators he was not in a position to give an unbiased opinion relative to the mining law as applicable to the facts in the case, and they lean heavily on the analogy of *601 the effect of the advice of an attorney in a **925 malicious prosecution action. To rebut the element of malice which a plaintiff must prove in support of his cause of action for malicious prosecution, a defendant may effectively show that he acted on the advice of an attorney; the law generally requires that such attorney be disinterested (54 C.J.S. Malicious Prosecution 53, pp. 1018-1019; 81 A.L.R. 518); this rule seems reasonable as applied to malicious prosecution, for if there is malice or a slanted view on the part of an attorney who gives such advice, it would merely reinforce the malice of a defendant in such an action. But in the area of mining law or with respect to commercial transactions generally, counsel for the appellants have not cited any authority supporting their thesis. It may be observed in passing that there are very few large corporations which are advised by attorneys who are not stockholders or under a retainer from the corporation. If the rule here applicable were as stringent as respondents claim, it would disqualify a very large part of the bar from the pursuit of its daily activities. Actually, the trial court may well weigh the question of interest on the part of an attorney in a situation such as this in determining whether he and his client are acting in good faith, but it would be wrong to disqualify a counselor as a matter of law merely because he had a technical or actual personal interest in the outcome. In connection with the inquiry whether the advice of the attorney tended to make the crossdefendants' plea of innocent trespass' sound, consideration should be given the concession made by appellants' counsel during the oral argument that Alfred Siemon was a reputable lawyer of long experience in mining matters, and the evidence produced on behalf of the Siemon family during the trial that the use of their names on the filings was merely a matter of convenience to their clients and that they afterwards quitclaimed their interest in the mining claims to other parties immediately upon demand; this latter fact would not, of course, excuse any failure on their part to comply with the law or permit them to plead innocence of any wrong which they might have done to the owners of the land by joining in the claims, but it would form a basis for a finding relative to the good faith of their clients in following their advice so that the trespass would not be characterized as fraudulent or wilful. **926 And it shocks the conscience of lawyer and layman alike to say that trespassers may convert 9,326,000 pounds of the product of a mine belonging to others and sell it for $8 a ton without being liable in substantial damages. Cross-complainants are entitled to recover. The only question is how much. [8] As is said in 33 California Jurisprudence 2d, Mines and Minerals, section 252, page 294: The measure of damages in an action for trespass on a mining claim, in the absence of oppression, fraud, or malice, is the amount that will compensate for all the detriment proximately caused by the trespass. If the invasion of another's mine is the result of inadvertence or honest mistake, the measure of damages is the value of the mineral extracted, less the cost of mining and milling. (See Lightner Mining Co. v. Lane, supra, 161 Cal. 689, 704, 120 P. 771.) [12][13][14][15] An action for trespass committed by one person does not make another person liable unless he participated by agreement or otherwise. (48 Cal.Jur.2d, Trespass, 31, p. 31). Cotenants of a mine-and that is what the eight people **927 who signed the notices attempted to become-are not necessarily mining partners, for joint participation in the actual working of the mine is the essential element of such a partnership. ( Peterson v. Beggs, 26 Cal.App. 760, 763-764, 148 P. 541.) And it does not follow as a matter of course merely because these eight people attempted to become cotenants of a mine that the Siemons are liable for the trespass of other cross-defendants in removing gypsite from the mine. A

coowner of real property is not liable for the tort of his coowner, unless he actively participates in it directly or through an agent, or ratifies the tortious acts. ( Connor v. Grosso, 41 Cal.2d 229, 230, 259 P.2d 435.) We do not find in the present record unambiguous evidence to establish that the Siemons participated in the trespass. Mr. Smith, one of the original plaintiffs, testified that the partnership, of which the Siemons were not members, consulted Mr. Alfred Siemon as their attorney relative to all phases of their activities and paid him attorney's fees therefor. An attorney acting strictly as such may give advice to a client in the absence of fraud or collusion without rendering himself liable to a third party for damages in a civil action. However, the relationship of these two attorneys to the tortious operations may be amplified and clarified upon retrial; and for that reason we do not affirm the judgment as to the Siemons; if the evidence on retrial shows that they acted strictly and solely as attorneys and gave legal advice only, without participation in the tortious acts and without sharing, or intending to share, in the proceeds, they can not be held liable. The judgment on the cross-complaint is reversed.

III. LIABILITY FOR CONSPIRACY AUTHORITY J.F. Parkinson Co. v. Building Trades Council of Santa Clara County, 154 Cal. 581, 98 P. 1027, 21 L.R.A.N.S. 550, 16 Am.Ann.Cas. 1165 (Cal. Dec 08, 1908) In Bank. Appeal from Superior Court, Santa Clara County; Hiram D. Tuttle, Judge. Action by the J. F. Parkinson Company against the Building Trades Council of Santa Clara County and others. From a judgment for plaintiff, and from an order overruling a motion for a new trial, defendants appeal. Reversed. Injunction 212 12

212 Injunction 212I Nature and Grounds in General 212I(B) Grounds of Relief 212k12 k. Injury Sustained or Anticipated. Most Cited Cases The act of a labor union in sending notices to plaintiffs customers that plaintiff had been declared unfair by defendant is not ground for injunction, where the act complained of had been completed when the action for injunction was commenced, and there is no evidence that defendant threatens to send further notices; plaintiffs remedy being an action for damages. Injunction 212 22

212 Injunction 212I Nature and Grounds in General 212I(B) Grounds of Relief 212k20 Defenses or Objections to Relief 212k22 k. Injunction Ineffectual or Not Beneficial; Mootness. Most Cited Cases Injunctive relief cannot be granted to prevent a labor union from holding out to plaintiff a standing warning that union men will not work for him or handle his material while he remains on the unfair list, since such injunction could not be enforced. Injunction 212 104

212 Injunction 212II Subjects of Protection and Relief 212II(H) Matters Relating to Conspiracies or Criminal Acts 212k104 k. Criminal Conspiracies and Combinations. Most Cited Cases **A conspiracy which will afford ground for injunctive relief is a combination of two or more persons to accomplish by concerted action a criminal or unlawful purpose or a lawful purpose by a criminal or unlawful means. Labor and Employment 231H 1013 231H Labor and Employment 231HXII Labor Relations 231HXII(B) Labor Organizations 231Hk1008 Constitutions, By-Laws and Rules 231Hk1013 k. Particular Regulations. Most Cited Cases (Formerly 232Ak94 Labor Relations) The word unfair, as used in a rule of a labor union to indicate the attitude of employers towards members of the union, does not mean that the employer is guilty of fraud, or dishonest conduct, but only that the employer has refused to comply with the conditions upon which union men will consent to remain in his employ or handle materials produced by him. Labor and Employment 231H 1019

231H Labor and Employment 231HXII Labor Relations 231HXII(B) Labor Organizations 231Hk1015 Membership 231Hk1019 k. Eligibility and Right to Membership. Most Cited Cases (Formerly 232Ak98 Labor Relations) A stockholder in a corporation which employs tinners is not an employer of labor within the meaning of a by-law of a labor union which admits to its membership master tinners, described by such by-law as employers of labor. Labor and Employment 231H 2071

231H Labor and Employment 231HXII Labor Relations 231HXII(L) Injunction 231HXII(L)3 Persons Concerned 231Hk2071 k. In General. Most Cited Cases (Formerly 232Ak811 Labor Relations) In an action to restrain a labor union from interfering with plaintiffs business, an injunction will not be granted on a mere showing of improper acts by individual members of the union. Labor and Employment 231H 2068

231H Labor and Employment 231HXII Labor Relations 231HXII(L) Injunction 231HXII(L)2 Disputes and Concerted Activities 231Hk2068 k. Intimidation. Most Cited Cases (Formerly 232Ak826 Labor Relations) Defendant, a labor union, under one of its rules prohibiting its members from working for or handling the material of an employer who employed nonunion men,

called out its members from plaintiffs establishment, sent notices to persons employing union men and dealing with plaintiff, informing them that plaintiff had been declared unfair, and that union men could not handle material supplied by plaintiff, and presented to plaintiff a written agreement for its signature embodying the terms on which the union men would re-enter its service. Aside from these acts there was no force or intimidation used towards the non-union men employed by plaintiff, and no attempt to obstruct plaintiff in its efforts to secure non-union men. One of defendants business agents informed plaintiffs manager that the union would drive plaintiff out of business, if plaintiff refused to observe its rules. **Held, that defendant was not guilty of unlawful acts, and that its conduct did not amount to coercion or intimidation, entitling plaintiff to an injunction. Torts 379 115

379 Torts 379I In General 379k115 k. Intent or Malice. Most Cited Cases (Formerly 379k4) **Act lawful in itself does not become unlawful because of malicious or wrongful motive. Torts 379 215

379 Torts 379III Tortious Interference 379III(B) Business or Contractual Relations 379III(B)1 In General 379k215 k. Knowledge and Intent; Malice. Most Cited Cases (Formerly 379k10(1)) Torts 379 220

379 Torts 379III Tortious Interference 379III(B) Business or Contractual Relations 379III(B)1 In General 379k220 k. Defense, Justification or Privilege in General. Most Cited Cases (Formerly 379k10(1)) Any injury to a lawful business, whether the result of a conspiracy or not, is prima facie actionable, **but may be defended on the ground that it was merely the result of a lawful effort by defendants to promote their own welfare, and that the act was not inspired by malice to injure plaintiff without benefiting themselves. At p. 593 **A conspiracy is a combination of two or more persons to accomplish by concerted action a criminal or unlawful purpose, or a lawful purpose by criminal or unlawful means, and, to support the conclusion that these defendants were guilty of a conspiracy, it must be held that their purpose was at least unlawful if not criminal, or their purpose being lawful that they proposed to attain it by the employment of some unlawful means. Wilhelm v. Pray, Price, Williams & Russell, 186 Cal.App.3d 1324, 231 Cal.Rptr. 355 (Cal.App. 2 Dist.,Nov 07, 1986)

Bad outcome. Independent consultation with legal representation. Conservator for person and estate of individual brought action against various parties following dismissal of individuals lawsuit on note, including claim of fraud and deceit against attorney for opposing party. After third amended complaint was filed, the Superior Court of Los Angeles County, Norman W. Gordon, J., sustained attorneys demurrer without leave to amend, dismissed attorney from lawsuit, and awarded $500 in sanctions against conservator in his representative capacity, and conservator appealed. The Court of Appeal, Klein, P.J., held that: **(1) complaint failed to state cause of action for fraud or deceit against attorney, and **(2) sanctions were warranted. Affirmed. [2] Fraud 184 41

184 Fraud 184II Actions 184II(C) Pleading 184k41 k. Allegations of Fraud in General. Most Cited Cases Essential allegations for action in fraud or deceit are false representation as to material fact, knowledge of its falsity, intent to defraud, justifiable reliance, and resulting damage; absence of any required element will preclude recovery. [3] Pleading 302 18

302 Pleading 302I Form and Allegations in General 302k18 k. Certainty, Definiteness, and Particularity. Most Cited Cases Fraud must be specifically pleaded; this means general pleading of legal conclusion of fraud is insufficient, and every element of cause of action for fraud must be alleged in full, factually and specifically, and policy of liberal construction of pleading will not usually be invoked to sustain pleading that is defective in any material respect. [4] Pleading 302 18

302 Pleading 302I Form and Allegations in General 302k18 k. Certainty, Definiteness, and Particularity. Most Cited Cases Complaint alleging fraud and deceit failed to plead with sufficient specificity factual basis for how party making representations knew representations were false. Wests Ann.Cal.Civ.Code 1572, 1709, 1710. [5] Fraud 184 46

184 Fraud 184II Actions 184II(C) Pleading 184k46 k. Reliance and Inducement and Action Thereon. Most Cited Cases Allegations of fraud and deceit, as matter of law, precluded showing of actual or justifiable reliance on alleged misrepresentation, necessary to cause of action in fraud or deceit, where allegedly injured party was admittedly represented by counsel at time of alleged misrepresentation. Wests Ann.Cal.Civ.Code 1572, 1709, 1710.

[6] Attorney and Client 45

26

45 Attorney and Client 45I The Office of Attorney 45I(B) Privileges, Disabilities, and Liabilities 45k26 k. Liabilities to Adverse Parties and to Third Persons. Most Cited Cases Partys discussion with her own counsel amounted to independent intervening act, relieving attorney for opposing party of any negligence required for cause of action for negligent misrepresentation on part of counsel for opposing party, even assuming negligence had been alleged and duty necessary for negligent misrepresentation cause of action existed. [7] Costs 102 2

102 Costs 102I Nature, Grounds, and Extent of Right in General 102k1 Nature and Grounds of Right 102k2 k. In General. Most Cited Cases Trial court properly awarded sanctions after third amended complaint, which revealed only superficial amendments, still failed to state cause of action; grounds for demurrer to third amended complaint were precisely same as for previous demurrers, and there was lack of good faith by counsel. Wests Ann.Cal.C.C.P. 128.5. Plaintiff and appellant Frank C. Wilhelm (Wilhelm), conservator for the estate and person of Vona J. Goodman (Goodman), appeals from a judgment sustaining the demurrer without leave to amend to the third amended complaint interposed by defendant and respondent Nellie Cohen (Cohen), granting a motion to strike, and awarding sanctions. Because the complaint does not, and cannot, state a cause of action, the judgment is affirmed. PROCEDURAL AND FACTUAL BACKGROUND
FN1

FN1. The instant facts are garnered from the pleadings. In March 1981, Goodman, who was 87 years old at the time, retained William C. Price, III (Price) and the firm of Pray, Price, Williams & Russell (Firm) to recover $104,000 she loaned Albert S. Leedy (Leedy) and for which she received a note. On or about April 1, 1981, the Firm filed an action against Leedy (Goodman v. Leedy, et al., Super.Ct. No. 61303). The Firm also petitioned the court for a voluntary conservatorship for Goodman. After the initiation of the lawsuit, Goodman, accompanied by Leedy, met with **Leedys attorney, **Cohen, in Cohens office sometime in April 1981. Following Goodmans meeting with Cohen and Leedy, her lawsuit against Leedy was dismissed with prejudice by her counsel on May 19, 1981. *1329 On November 17, 1982, Wilhelm was appointed conservator of the person and estate of Goodman. On November 2, 1983, Wilhelm filed the instant action against Price, the Firm, Leedy and Cohen. In the original complaint, the first cause of action alleged malpractice against Price and the Firm based on the dismissal of the action against Leedy, especially in light of the petition to establish a conservatorship for Goodman filed at the same time as the lawsuit on her behalf. The second cause of action sought damages

from Cohen for deceit under Civil Code section 1710. The third and fourth causes of action were for constructive fraud against Cohen and Leedy under Civil Code section 1573. Cohen interposed successful demurrers to the original, the first and the second amended complaints. The third amended complaint alleged malpractice against the Firm in the first cause of action. **The second cause of action for fraud and deceit against Cohen alleged that when Goodman visited Cohens office with Leedy, Cohen made certain false representations in order to convince Goodman to dismiss the lawsuit against Leedy. The prayer requested general and punitive damages against both the Firm and Cohen. Cohen demurred to the second cause of action, and at the same time, filed a motion to strike both the punitive damages and a paragraph that alleged Cohen arranged the meeting in her office with Goodman without notifying Goodmans attorneys in violation of Rules of Professional Conduct of the State Bar, rule 7-103 (rule 7103). Lastly, Cohen filed a motion for sanctions pursuant to Code of Civil Procedure section 128.5 (section 128.5), alleging Wilhelms failure to make any significant changes in the complaints following the sustaining of three previous demurrers was in bad faith and caused her unnecessary delay and expense. **357 After a hearing on December 20, 1984, the trial court sustained Cohens demurrer without leave to amend to the third amended complaint and granted her motion to strike. It then dismissed Cohen from the instant lawsuit and awarded $500 in sanctions pursuant to section 128.5 against Wilhelm in his representative capacity.FN2 CONTENTIONS Wilhelm contends the trial court erred: (1) in sustaining Cohens demurrer to the third amended complaint; (2) in striking the punitive damages allegation; and (3) granting the motion for sanctions. 2. The complaint does not state a cause of action for either fraud or deceit. Wilhelm contends he adequately stated a cause of action for some form of either fraud or deceit.FN3 FN3. Civil Code section 1572 (section 1572) states: Actual fraud, within the meaning of this Chapter, consists in any of the following acts, committed by a party to the contract, or with his connivance, with intent to deceive another party thereto, or to induce him to enter into the contract: [] 1. The suggestion, as a fact, of that which is not true, by one who does not believe it to be true; [] **2. The positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true; [] 3. The suppression of that which is true, by one having knowledge or belief of the fact; [] 4. A promise made without any intention of performing it; or, [] **5. Any other act fitted to deceive. Civil Code section 1709 (section 1709) defines: Fraudulent deceit. One who willfully deceives another with intent to induce him to alter his position to his injury or risk, is liable for any damage which he thereby suffers. Civil Code section 1710 (section 1710) provides: A deceit, within the meaning of the last section, is either: [] 1. The suggestion, as a fact,

of that which is not true, by one who does not believe it to be true; [] 2. The assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true; [] 3. The suppression of a fact, by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of that fact; or, [] 4. A promise, made without any intention of performing it. *1331 a. No actual or justifiable reliance on Cohens representations. [2] The essential allegations for an action in fraud or representation as to a material fact, knowledge of its falsity, justifiable reliance and resulting damage. ( **358Roberts v. Brown & Baerwitz (1976) 57 Cal.App.3d 104, 109, 128 Cal.Rptr. Hodgson (1951) 38 Cal.2d 91, 100-101, 237 P.2d 656.) deceit are false intent to defraud, Ball, Hunt, Hart, 901; Gonsalves v.

The absence of any one of these required elements will preclude recovery. ( Gonsalves v. Hodgson, supra, 38 Cal.2d at p. 101, 237 P.2d 656.) Wilhelm alleges in the third amended complaint that at their meeting, Cohen made the following representations to Goodman: **(1) if Goodman would dismiss her action against Leedy, he would pay back the $104,000; **(2) it would be in the best interests of Goodman to dismiss the suit because otherwise it would damage her longstanding and future relationship with Leedy; and **(3) Goodman would save substantial monies in attorneys fees. Wilhelm further alleged Cohen knew these representations were false and that they were made with intent to defraud Goodman, and that Goodman relied on these representations and caused the lawsuit to be dismissed with prejudice against Leedy and was thereby damaged because she no longer had a legal remedy. While Wilhelm is correct that plaintiffs pleading must be taken as true ( Douglas v. E. & J. Gallo Winery (1977) 69 Cal.App.3d 103, 114, 137 Cal.Rptr. 797), the allegations in a fraud action need not be liberally construed. [3] Instead, fraud must be specifically pleaded. This means: **(1) general pleading of the legal conclusion of fraud is insufficient; and **(2) every element of the cause of action for fraud must be alleged in full, factually and specifically, and the policy of liberal construction of pleading will not usually be invoked to sustain a pleading that is defective in any material respect. ( Hall v. Department of Adoptions (1975) 47 Cal.App.3d 898, 904, 121 Cal.Rptr. 223.) It is bad for courts to allow and lawyers to use vague but artful pleading of fraud simply to get a foot in the courtroom door. (Ibid.) [4] Here, the complaint fails to plead with specificity a factual basis for how Cohen knew the representations she communicated to Goodman on behalf of Leedy were false. [5] Moreover, reliance, one of the elements necessary to state a cause of action in fraud or deceit is not adequately pled. Plaintiffs must show *1332 actual reliance, i.e., that the representation was an immediate cause that altered their legal relations. (4 Witkin, Summary of Cal. Law (8th ed. 1974) Torts, 472, p. 2732.) Besides actual reliance, plaintiff must also show justifiable reliance, i.e., circumstances were such to make it reasonable for plaintiff to accept defendants statements without an independent inquiry or investigation. (4 Witkin, supra, 475, p. 2734.) Here, Wilhelms allegations, as a matter of law, preclude a showing of actual or

justifiable reliance. **Wilhelm clearly admits Goodman was represented by counsel at the time of the alleged misrepresentations. In the first cause of action for malpractice against the Firm, Wilhelm alleges the Firm dismissed the lawsuit against Leedy without properly investigating the facts. But in the second cause of action against Cohen, Wilhelm alleges Goodman, relying on Cohens representations, caused the action against Leedy to be dismissed. **Because her counsel prepared and filed the dismissal, she must have consulted with Price and the Firm before hand. Also, it would not be reasonable for Goodman to accept Cohens representations as an adversary without an independent inquiry. Based on the above, the complaint does not, and cannot, show reliance by Goodman on Cohens representations. Therefore, because an element of fraud is missing, recovery is precluded. ( Gonsalves v. Hodgson, supra, 38 Cal.2d at p. 101, 237 P.2d 656.) **359 b. The complaint does not state a cause misrepresentation, nor can it be amended to do so. of action for negligent

[6] Wilhelm contends at length that Cohen had a duty to Goodman as a third party, even though she was not in privity with Goodman. The question of duty is relevant in cases where a cause of action for negligent misrepresentation is alleged. (See 1710, subd. (2).) Both cases cited by the parties discuss **the issue of an attorneys duty to a third party in that context. ( Goodman v. Kennedy (1976) 18 Cal.3d 335, 342, 134 Cal.Rptr. 375, 556 P.2d 737; Roberts v. Ball, Hunt, Hart, Brown & Baerwitz, supra, 57 Cal.App.3d at p. 110, 128 Cal.Rptr. 901.) **However, a scrutiny of the third amended complaint indicates no allegation of a cause of action for negligent misrepresentation. Instead, the complaint alleges only that Cohen knew that said representations were false and untrue when they were made and [s]aid representations were made by ... Cohen, ..., with the knowledge that they were false and *1333 untrue and with the intent to deceive and defraud Vona J. Goodman.... (Italics added.) **Nowhere in the complaint is it alleged that Cohen made these false representations honestly believing they were true but having no reasonable ground for such belief. (See 1710, subd. (2); 4 Witkin, Summary of Cal. Law, supra, 480, p. 2739.) **Thus, as negligence was not alleged, we need not concern ourselves with the question of duty. However, even if we were to permit amendment of the complaint to allege a cause of action for negligent misrepresentation, such cause of action would still not survive a demurrer.FN4 FN4. Apparently, a plaintiff can allege causes of action for both intentional and negligent misrepresentation as there is some authority holding that a plaintiff should be able, on information and belief, to plead inconsistent facts .... ( Roberts v. Ball, Hunt, Hart, Brown & Baerwitz, supra, 57 Cal.App.3d at p. 110, 128 Cal.Rptr. 901, italics added.) This is so because even if duty necessary for a negligent misrepresentation cause of action existed, there remains the problem of proximate cause. As discussed supra in section 2a on reliance, after Goodman heard Cohens representations, she then consulted with her own attorneys, and it was only after this meeting that the action against Leedy was dismissed. **Thus, Goodmans discussion with her own counsel amounts to an independent intervening act, relieving Cohen of any negligence.

Because the complaint fails to state any cause of action, Cohens demurrer was properly sustained, and the prayer for punitive damages was likewise properly stricken.FN5 FN5. Cohens actions may constitute a violation of rule 7-103. Rule 7-103 states in pertinent part: A member of the State Bar shall not communicate directly or indirectly with a party whom he [sic] knows to be represented by counsel upon a subject of controversy, without the express consent of such counsel. While a violation of rule 7-103, does not subject an attorney to civil liability in damages it may subject him or her to State Bar disciplinary proceedings. ( Noble v. Sears, Roebuck & Co. (1973) 33 Cal.App.3d 654, 658659, 109 Cal.Rptr. 269.) (See, e.g., Carpenter v. The State Bar (1930) 210 Cal. 520, 521-523, 292 P. 450 (three-month suspension); Turner v. State Bar (1950) 36 Cal.2d 155, 222 P.2d 857 (three-month suspension); Mitton v. State Bar (1969) 71 Cal.2d 525, 78 Cal.Rptr. 649, 455 P.2d 753 (three-month suspension); Crane v. State Bar (1981) 30 Cal.3d 117, 122-124, 177 Cal.Rptr. 670, 635 P.2d 163 (one-year suspension); Shalant v. State Bar (1983) 33 Cal.3d 485, 489-490, 189 Cal.Rptr. 374, 658 P.2d 737 (public reproval).) Mox, Inc., v. Woods, 202 Cal. 675, 262 P. 302 (Cal. Dec 17, 1927) Facts of the conspiracy to defraud are not exactly on point to the facts of Soon Cheys case. Conspiracy does not have a coconspirator, attorney conspiring in the crime. Create a false land development project.
[1] CONSPIRACY-PLEADING-SUFFICIENCY OF COMPLAINT. In this action for damages alleged to have resulted from a civil conspiracy, it is held that the complaint states a cause of action. [2] ID.-CAUSE OF ACTION-ELEMENTS. **Elements of an action for civil conspiracy are the formation and operation of the conspiracy and **damage resulting to plaintiff from an act or acts done in furtherance of the common design; **the cause of action is the damage suffered. [3] ID.-JOINT TORT-FEASORS-LIABILITY FOR DAMAGES. In such an action, the major significance of the conspiracy lies in the fact that it renders each participant in the wrongful act responsible as a joint tort-feasor **for all damages ensuing from the wrong, irrespective of whether or not he was a direct actor and regardless of the degree of his activity. [4] ID.-LIABILITY OF CONSPIRATORS FOR ACTS OF EACH. The act of one conspirator during the conspiracy is the act of all if done in furtherance thereof, and each conspirator may be held liable although he committed no overt act and gained no benefit therefrom. APPEAL from a judgment of the Superior Court of Los Angeles County. Frank C. Collier, Judge. Reversed. This is an appeal by plaintiff corporation from judgment dismissing from the action certain defendants, following order sustaining general demurrers separately interposed by them, plaintiff having declined to amend. The defendants who had judgment are Frank E. Woods and

Nancy E. Woods, husband and wife, and Bank of America, a corporation. The complaint attempts, and we think successfully, to plead damages as the result of a civil conspiracy, to wit, a conspiracy to inflict damages by wrongful acts. We are not concerned with the question of the ability of the plaintiff to prove the allegations of the complaint, and this would be true even though we could foresee insuperable difficulties in making such proof. We are merely to pass upon the sufficiency of the complaint as a pleading. The conspiracy charged and the damages alleged may be set forth briefly as follows: Defendants Woods and wife were the owners in 1923 of some 1,540 acres of desert lands in San Bernardino County of a market value not to exceed $17,000. Intending to create a false and fictitious value therefor and to thereby cheat and defraud the public in the sale and disposition of these lands in small tracts, a scheme or joint venture of all defendants was planned whereby they were to receive all the proceeds from such venture and yet not be responsible for any of the losses or liabilities that would surely occur on the eventual dissipation of the real estate bubble. Accordingly the properties were named as the Lenwood Estates. Defendant William Barnard, a man known to all the other defendants to be insolvent, was selected as the manager of said Lenwood Estates, although he was to and did operate under the name of Arizona-California Land Company, a corporation, said company being his alter ego.A secret trust agreement was entered into among the defendants by which the lands were to be deeded to defendant Bank of America as trustee, and defendants Woods and wife, former owners of the property, were to be free from liability of any kind in connection with the scheme. Said lands were to be subdivided and prices were fixed for the sale of the various small tracts, which said prices would in the aggregate amount to some $200,000 or more for the entire tract. The whole scheme was from its inception one to cheat and defraud, as *677 it was never the intention of the defendants to do more than create a fictitious value for said properties and then at the most appropriate time abandon the scheme, divide the receipts, and at the same time escape liability for the losses and outlays. As a part of said plan it was the intention of defendants to make a false showing as to their intended development of said tract, and to that end it was their intention to buy building material and supplies and construct a few improvements on a part of said property, to aid in creating a false belief in the public as to said plans and intentions to develop said tract. The scheme of defendants was successfully carried through. The public was cheated out of thousands of dollars and the creditors and investors of the scheme were left to suffer without redress. Plaintiff was one of said sufferers, having furnished to said ArizonaCalifornia Land Company hardware and building material which was used and employed as a part of said scheme. Plaintiff was deceived into believing that the goods were being furnished to a concern which included the owners of the tract and that the owners would be responsible for the Peskin v. Squires, 156 Cal.App.2d 240, 319 P.2d 405 (Cal.App. 2 Dist. Dec 18, 1957) Action for alleged fraud consisting in the failure of defendant to reveal to plaintiff the fact that certain receivables sold by a lumber company to plaintiff and purporting to be debts of the defendant were fictitious and known to be such by the defendant. Judgment of the Superior Court of Los Angeles County, William B. McKesson, J., for the defendant and the plaintiff appealed. The District Court of Appeal, Ashburn, J., held that the case should have been submitted to the jury and that rulings excluding evidence relating to the alleged fraud were error. Judgment reversed. West Headnotes [1] Trial 388 388 Trial 139.1(7)

388VI Taking Case or Question from Jury 388VI(A) Questions of Law or of Fact in General 388k139.1 Evidence 388k139.1(5) Submission to or Withdrawal from Jury 388k139.1(7) k. No Evidence; Total Failure of Proof. Most Cited Cases (Formerly 388k139(1)) Motion for nonsuit may be granted only when, disregarding conflicting evidence and giving to plaintiffs evidence all the value to which it is legally entitled and indulging in every legitimate inference which may be drawn from that evidence, there is no evidence of sufficient substantiality to support a verdict in plaintiffs favor. [2] Fraud 184 4

184 Fraud 184I Deception Constituting Fraud, and Liability Therefor 184k2 Elements of Actual Fraud 184k4 k. Intent. Most Cited Cases In case of wilful suppression of a material fact, the intention existing at the time of the suppression need be the only one of inducing action and subsequent insistence upon the existence of the concealed fact to the damage of plaintiff completes the actual fraud. Wests Ann.Civ.Code, 1572, subd. 3, 1709. [3] Appeal and Error 30 1056.4

30 Appeal and Error 30XVI Review 30XVI(J) Harmless Error 30XVI(J)11 Exclusion of Evidence 30k1056 Prejudicial Effect 30k1056.4 k. Effect of Determination. Most Cited Cases (Formerly 30k1056(4)) In action for alleged fraud in failure of defendant to reveal to plaintiff fact that receivables sold by another to plaintiff and purporting to be debts of defendant were fictitious and known to be such by the defendant evidence of a course of dealing between such other and the defendant was improperly stricken but was not prejudicial where the result would have been the same. Wests Ann.Civ.Code, 1572, subd. 3, 1709. [4] Conspiracy 91 1.1

91 Conspiracy 91I Civil Liability 91I(A) Acts Constituting Conspiracy and Liability Therefor 91k1 Nature and Elements in General 91k1.1 k. In General. Most Cited Cases (Formerly 91k1) A conspiracy is a combination of two or more persons to accomplish by concerted action a criminal or unlawful purpose or a lawful purpose by criminal or unlawful means. [5] Conspiracy 91 13

91 Conspiracy 91I Civil Liability 91I(A) Acts Constituting Conspiracy and Liability Therefor 91k12 Persons Liable 91k13 k. In General. Most Cited Cases Each party to a conspiracy is liable for all acts done in pursuance thereof and his lack of

knowledge of details or an absence of personal commission of overt acts is immaterial. [6] Conspiracy 91 9

91 Conspiracy 91I Civil Liability 91I(A) Acts Constituting Conspiracy and Liability Therefor 91k9 k. Conspiracy to Defraud. Most Cited Cases In action for alleged fraud in failure of defendant to reveal to plaintiff the fact that receivables sold by another to plaintiff and purporting to be debts of defendant were fictitious and known by defendant to be such, where defendant knew that such other was selling receivables to plaintiff which were fictitious and that such other represented them to be valid, there was fraudulent conduct on the part of such other and where it was done pursuant to an agreement with defendant it constituted a conspiracy and it was immaterial whether the suppression of material facts was accomplished through such other or through the defendant. [7] Fraud 184 64(3)

184 Fraud 184II Actions 184II(F) Trial 184k64 Questions for Jury 184k64(3) k. Falsity of Representations and Knowledge Thereof. Most Cited Cases In action for alleged fraud in concealment of failure to reveal to plaintiff fact that receivables sold by another to plaintiff and purporting to be debts of defendant were fictitious and known by him to be such, evidence of defendants wilful concealment of material facts should have been submitted to the jury. [8] Conspiracy 91 17

91 Conspiracy 91I Civil Liability 91I(B) Actions 91k17 k. Parties. Most Cited Cases One conspirator may be sued without the joinder of his co-conspirator. [9] Evidence 157 253(1)

157 Evidence 157VII Admissions 157VII(D) By Agents or Other Representatives 157k253 Conspirators and Persons Acting Together 157k253(1) k. In General. Most Cited Cases Evidence 157 318(1)

157 Evidence 157IX Hearsay 157k315 Statements by Persons Other Than Parties or Witnesses 157k318 Writings 157k318(1) k. In General. Most Cited Cases In action for alleged fraud in failing to reveal to plaintiff fact that receivables sold by another to plaintiff and purporting to be debts of defendant were fictitious, evidence of an agreement between such other and defendant, concerning handling of invoices which established a course of dealing which parties pursued in selling receivables to plaintiff was not

inadmissible as hearsay but was admissible as embracing verbal acts of the parties independently relative evidence of what was done by conspirators in dealing with plaintiff. [12] Fraud 184 56

184 Fraud 184II Actions 184II(D) Evidence 184k51 Admissibility 184k56 k. Reliance on Representations and Inducement to Act. Most Cited Cases In a fraud action plaintiff is not confined to circumstantial proof or presumption of reliance but may testify as to whether he relied upon the false representation or concealment of the defendant. [15] Fraud 184 56

184 Fraud 184II Actions 184II(D) Evidence 184k51 Admissibility 184k56 k. Reliance on Representations and Inducement to Act. Most Cited Cases In action for alleged fraud because of failure of defendant to reveal to plaintiff fact that receivables sold by another to plaintiff and purporting to be debts of the defendant were fictitious, excluding evidence that plaintiff relied upon a confirmation of the receivables which was sent to his accountants and by them relayed to him as was manifestly intended by the defendant was error. Plaintiff appeals from judgment of nonsuit in a fraud action. The complaint contains numerous counts, but the ninth, alleging fraud, is determinative of this appeal. [1] The familiar test of propriety of a nonsuit must be kept in mind. A motion for nonsuit may properly be granted * * * when, and only when disregarding conflicting evidence, and giving to plaintiffs evidence all the value to which it is legally entitled, indulging in every legitimate inference which may be drawn from that evidence, the result is a determination that there is no evidence of sufficient substantiality to support a verdict in favor of the plaintiff. [Citations.] Unless it can be said as a matter of law, that * * * no other reasonable conclusion is legally deducible from the evidence, and that any other holding would be so lacking in evidentiary support that a reviewing court would be impelled to reverse it upon appeal, or the trial court to set it aside as a matter of law, the trial court is not justified in taking the case from the jury. Seneris v. Haas, 45 Cal.2d 811, 821, 291 P.2d 915, 921, 53 A.L.R.2d 124. [2] Appellant relies upon subdivision 3 of 1572, Civil Code, which declares actual fraud to consist of [t]he suppression of that which is true, by one having knowledge or belief of the fact when done with intent to deceive, or to induce him [plaintiff] to enter into the contract. Section 1709, Civil Code, further provides: One who willfully deceives another with intent to induce him to alter his position to his injury or risk, is liable for any damage which he thereby suffers. The Supreme Court explained in a footnote in Gagne v. Bertran, 43 Cal.2d 481, at page 488, 275 P.2d 15 at page 20 that [u]nder this section of the Civil Code the intent required to prove a cause of action for deceit is an intent to induce action. **An intent to deceive is not an *243 essential element of the cause of action, and statements in a number of cases contrary to this section and the cases cited in the text, that such an intent is an essential element of the cause of action, and statements in a number of cases contrary to this section and the cases cited in the text, that such an intent is an essential element of deceit are erroneous and are therefore disapproved.' The body of

the opinion cites in support of the rule, Gonsalves v. Hodgson, 38 Cal.2d 91, 100, 237 P.2d 656; Hobart v. Hobart Estate Co., 26 Cal.2d 412, 422, 159 P.2d 958; Work v. Campbell, 164 Cal. 343, 347, 128 P. 943, 43 L.R.A.,N.S., 581 and other cases. This implies that in case of a willful suppression of a material fact the intention existing at the time of suppression need be only one of inducing action and that subsequent insistence upon the existence of the concealed fact, to the damage of the plaintiff, completes the actual fraud. The alleged concealment consists of failure of defendant to reveal to plaintiff the fact that certain receivables sold by M. E. Wright Lumber Company to plaintiff and purporting to be debts of defendant were fictitious, unenforceable as to defendant and known by him to be such. Applying the quoted rule governing nonsuits, the record at bar by direct evidence and reasonable inferences makes a showing of the following facts. Plaintiff, doing business as Aetna Factors Company, is engaged in factoring accounts receivable in the sense of buying same for its own account from vendors of various commodities. On March 4, 1954, he made a contract with M. E. Wright Lumber Company to buy at the net face amount of invoices all accounts receivable created by its sales' of lumber. Defendant Squires **408 was one of Wright's customers, being engaged in buying and selling of lumber. Before making the contract with the Wright Company plaintiff investigated M. E. Wright and his company as to financial ability and reputation and found same satisfactory. Wright applied to plaintiff for an extension of credit to Squires and he in turn was investigated with satisfactory results; a $25,000 line of credit was approved for him by plaintiff. Wright then tendered to plaintiff for purchase certain schedules of accounts, each of which contained the introductory statement: This Is To Certify, That the parties named below are indebted to the undersigned in the sums set opposite their respective names, for personal property sold and delivered or for work and labor done; names and addresses of debtors, invoice dates, numbers and amounts, with terms and discount were then listed. The *244 document concludes with the words, the undersigned hereby sells, transfers and assigns to Aetna Factors Company, its successors or assigns, all its right, title and interest in and to the accounts receivable, notes, trade acceptances, contracts, merchandise and/or other evidences of indebtedness above named including all monies due or to become due upon the same. With this schedule were submitted invoices in triplicate, attached to each of which were a delivery ticket and a shipper's ticket or trucker's ticket acknowledging receipt of the merchandise by the consignee. Plaintiff in nine instances purchased receivables represented by invoices thus submitted which showed, or purported to show, sales of lumber by the Wright company to defendant Squires. **The first purchase was made on March 10, 1954, and the last on March 29, 1954. **Three of the invoices (Nos. 8020, 8021 and 8081), totaling $3,902.25, were paid by defendant, the lumber covered thereby having been actually delivered to him. **But the other six (Nos. 8022, 8066, 8085, 8093, 8094 and 8101), aggregating $16,594.16, were never paid, the asserted reason being failure of the Wright company to deliver any of the lumber described therein. But there was no real failure of consideration, for there was no such sale as the invoices showed. [3] A course of business had arisen between the Wright company and Squires prior to the time that plaintiff began to buy Wright receivables. The Wright company was in need of money and it was agreed between Wright and Squires that in instances where receivables were sold to Wright's factor (then Gibson Factors, preceded by Industrial Factors), without any delivery of lumber, Squires and Wright would exchange checks when payment of the voucher became due,thus Squires would be out no money and Wright would have the use of the factor's money meantime (for the factor paid Wright as soon as the assignment of the receivable was delivered to it); in other words, Wright was thus given a fictitious credit and an appearance of working capital which it did not possess. It appears at bar that the trucker's tickets purporting to show receipt of the goods by the consignee were signed in the name of D. Young,

but this was done by M. E. Wright, there being no trucker in fact. The Wright company went into bankruptcy but the date of same does not appear in the record.FN1 FN1. This evidence of the course of dealing between the Wright company and Squires seems to have been stricken, which was error. It should have remained in the record. But the result is the same whether this be considered as prejudicial error ( Morrison v. Mutual Life Ins. Co. of New York, 15 Cal.2d 579, 590, 103 P.2d 963) or the evidence be considered as a part of the basis for testing the propriety of the nonsuit. *245 This same emthod of handling fictitious invoices was pursued after plaintiff became the Wright company's factor, but it was not disclosed to plaintiff who believed that the invoices were genuine and that the receivables represented by them had grown out of actual delivery of lumber to defendant. Appellant's counsel insists that defendant was bound to make a disclosure of the **409 fact that the vouchers were fictitious and his failure to do so worked a fraud on appellant. Defendant's attorneys argue that no such duty rested upon defendant, who merely received notices of assignment of invoices, had no inquiries from plaintiff, did not discuss the matter with him or his representative, and therefore did nothing to induce action on plaintiff's part. [4][5][6] It may be conceded arguendo that a debtor who receives notice of assignment of his account may treat it merely as an effort to fix priority as to other assignees, and that ordinarily he is not called upon to do anything other than to respect the notice of assignment when the time for payment arrives or good cause for non-payment accrues. But this is not the ordinary case, for the assignments here under discussion embraced nonexistent debts, fictitious vouchers emanating from an agreement between defendant and Wright company that the latter might sell such nonexistent reecivables to its factor and make good by payment of money to Squires instead of delivery of lumber. While the debtor normally need say or do nothing affirmative when he receives notice of assignment of his debt, it is fair to assume that one who owes nothing and receives notice of an assignment of an alleged debt owing from him will forthwith notify the assignee that there is no such outstanding obligation. **In this instance defendant tacitly agreed to keep quiet in such circumstances, thus assuring success of Wright's imposition upon his factor. Defendant knew that Wright company was engaged in selling re ceivables to plaintiff which were fictitious and that Wright was expressly or impliedly representing them to be valid; that no lumber had been or would be delivered to defendant and that he would not pay the invoice unless Wright exchanged checks with him, thus taking up the invoice himself. **Clearly, this was fraudulent conduct on the part of Wright, and being done pursuant *246 to agreement with defendant it was what the law denominates as a conspiracy. A conspiracy is a combination of two or more persons to accomplish by concerted action a criminal or unlawful purpose, or a lawful purpose by criminal or unlawful means * * *. Parkinson Co. v. Bldg. Trades Council, 154 Cal. 581, 593, 98 P. 1027, 1032, 21 L.R.A.,N.S., 550. Accord: Frost v. Hanscome, 198 Cal. 550, 557, 246 P. 53; Clark v. Lesher, 106 Cal.App.2d 403, 409, 235 P.2d 71. Each party to a conspiracy is liable for all acts done in pursuance thereof and his lack of knowledge of details or an absence of personal commission of overt acts is immaterial. Wells v. Lloyd IV, 6 Cal.2d 70, 82, 56 P.2d 517; Mox Incorporated v. Woods, 202 Cal. 675, 677, 262 P. 302; California Auto Court Ass'n v. Cohn, 98 Cal.App.2d 145, 149, 219 P.2d 511. It thus becomes inconsequential whether the suppression of the material facts was accomplished through Wright or through Squires; in either event defendant is liable for the fraud. [7] But the matter does not stop with imputed knowledge and liability. On March 24, 1954, defendant received from plaintiff's accountants a letter (exhibit 33) saying: We have been authorized to audit the accounts of Aetna Factors Co (Factors for M. E. Wright Lumber Co) as at March 23, 1954 and desire to verify your account as stated below: Mar 10 No. 8020 $1,205.99

1,224.51 2,638.84 $5,069.34 Kindly compare this statement with your records and advise us as to the correctness of the amount indicated.' Defendant, through its bookkeeper, whose authority is not questioned, replied on or about March 25 by postscript added to the letter and reading as follows: The above balance represents the correct amount according to our records, as of the above specified date. Voucher number 8022, one of those covered by this document, is a part of the group which were never covered by shipment of lumber, and defendant now says that it was without consideration. This acknowledgment**410 of its validity was plainly an invitation to plaintiff to continue buying receivables tendered by Wright company as owing by defendant. At this point, if not before, a positive duty rested upon defendant to speak and to disclose the fact that voucher *247 number 8022 was fictitious and that he recognized no obligation to pay the same. Mr. Henson, defendant's bookkeeper, testified that any bona fide invoice would be posted in the invoice record but that would not be done until he knew the lumber had been shipped. Of the six invoices involved in the action, one was purchased on March 25, 1954, the day of defendant's verification of the earlier ones as correct, and the last three were purchased on March 26 and 29, 1954. It thus appears that defendant was guilty of a willful concealment of material facts as to plaintiff's purchase of the last three or four receivables involved in this action, and a nonsuit as to those items was manifestly improper. The judgment of nonsuit must be reversed. In view of the necessity of a new trial certain of the many claims of error in ruling upon evidence and other questions of law will be passed upon. [8] The court held that one conspirator cannot be sued without joinder of his co-conspirator. This was error, as was held in Sayadoff v. Warda, 125 Cal.App.2d 626, 629, 271 P.2d 140. [9] The court initially excluded or later struck most of the evidence of the agreement made between Wright company and defendant concerning the handling of invoices in cases *248 of no delivery of lumber, this because it preceded plaintiff's contract and occurred between other parties. The rejected evidence established a course of dealing which the parties pursued in selling receivables to plaintiff. It was not hearsay within the exclusionary rules, but embraced verbal acts of the parties, independently relative evidence of what was done by the conspirators in dealing with plaintiff. See 19 Cal.Jur.2d 378, p. 109; 31 C.J.S. Evidence 239, p. 988. [10][11] Plaintiff's efforts to show the customary meaning of the word invoice as used in the lumber industry were thwarted by adverse rulings of the trial judge. The following offer of proof was rejected: What we would like to establish by the witness's testimony is that it is generally and customarily understood in the lumber industry in this area that an invoice represents merchandise actually shipped or stored for the purchaser's account, and to **411 which title has been transferred, and that this is the general understanding of the lumber industry; that accordingly, Mr. Squires would have knowledge that anyone dealing with the invoice would assume that the invoice did represent what invoices customarily represent in the lumber industry, namely, merchandise shipped or merchandise to which title has been transferred in the seller's yard. The term invoice is not a technical one and does not have a single settled connotation (48 C.J.S. p. 764). The rule is well established that a custom prevailing in a given industry is binding upon those engaged therein though there be no specific proof of knowledge on the part of the particular party to the litigation. BodySteffner Co. v. Flotill Products, 63 Cal.App.2d 555, 558, 147 P.2d 84, 86: It is a rule of practically universal acceptation in common law jurisdictions that however clear and unambiguous the words of a particular contract may appear on its face it is always open to the parties to the contract to prove that by the general and accepted usage of the trade or business in which both parties are engaged and to which the contract applies the words have

Mar 10 Mar 10

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acquired a meaning different from their ordinary and popular sense. At page 560, of 63 Cal.App.2d, at page 87 of 147 P.2d: Where two parties engaged in the canned goods trade in the same locality, as here, enter into a contract they are bound by a generally accepted usage of the trade in that locality giving to the terms and language actually used in their contract a particular meaning and legal significance, even though that meaning may be at variance with the normal meaning and interpretation which would be given to that language in the *249 absence of proof of the usage of the trade. See also, Covely v. C. A. B. Construction Co., 110 Cal.App.2d 30, 33, 242 P.2d 87; Correa v. Quality Motor Co., 118 Cal.App.2d 246, 251, 257 P.2d 738; California Lettuce Growers v. Union Sugar Co., 45 Cal.2d 474, 482, 289 P.2d 785, 49 A.L.R.2d 496. The rulings on this subject were erroneous. [12][13] Plaintiff was precluded from testifying that he relied upon the confirmation of March 25, 1954 (exhibit 33), which was sent to his accountants and by them relayed to him, as was manifestly intended by defendant. In a fraud action plaintiff is not confined to circumstantial proof or presumption of reliance; he is entitled to testify as to whether he relied upon the false representation or concealment of defendant. See Fagan v. Lentz, 156 Cal. 681, 688-689, 105 P. 951; Luitweiler etc. Co. v.Ukiah etc. Co., 16 Cal.App. 198, 210, 116 P. 707; Harned v. Watson, 17 Cal.2d 396, 403, 110 P.2d 431; Southern Pac. Co. v. Libbey, 9 Cir., 199 F.2d 341, 348-349; 37 C.J.S. Fraud 109b, p. 421. This is true because a witness may always testify to the state of his own mind when it becomes a material fact in the case. See 18 Cal.Jur.2d 151, p. 602; Starck v. Pacific Electric Ry. Co., 172 Cal. 277, 285, 156 P. 51 L.R.A.1916E, 58; Kyle v. Craig, 125 Cal. 107, 114, 57 P. 791. [14][15] Fraud assumes as many and complex forms as the ingenuity of man is able to devise. Rarely can it be proved by direct evidence; usually, as here, the plaintiff must establish his cause of action by circumstantial evidence, if at all. Trial judges should be sensitive to the fact that a trial is a search for the truth and because of the nature of a fraud action liberality in the receipt of evidence should be indulged to a degree commensurate with the difficulties of the proof. Butler-Veitch, Inc. v. Barnard, 77 Cal.App. 709, 714-715, 247 P. 597; Bradley v. Osborn, 86 Cal.App.2d 18, 22, 194 P.2d 53; Dyke v. Zaiser, 80 Cal.App.2d 639, 654, 182 P.2d 344; 37 C.J.S., Fraud 104, p. 410. 24 Am.Jur. 281, p. 126: A court in looking for proof of fraud is not confined to wide open spaces' or to detailed proof of fixed and definite overt acts or conduct. Facts of trifling importance when considered separately, or slight circumstances trivial and inconclusive in themselves, may afford clear evidence of fraud when considered in connection with each other. It has been said that in most cases fraud can be made **412 out only by a concatenation of circumstances,*250 many of which in themselves amount to very little but in connection with others make a strong case. The judgment is reversed. Barney v. Aetna Casualty & Surety Co., 185 Cal.App.3d 966, 230 Cal.Rptr. 215 (Cal.App. 2 Dist.,Sep 23, 1986)

Insurance case with insurance defense attorneys representing Barney for defending Barney from a lawsuit from Yoakum, while Barney was represented by another attorney Milton Phillips in her personal injury action against Yoakum. and insurance defense attorneys entered into settlement agreement and dismissal with prejudice, with Yoakum w/o Barneys knowledge or consent. In this case the insurance defense attorneys violated their duty to the plaintiff, a fiduciary one, as attorney to the plaintiff, and were liable for conspiracy. In that their actions were within the rule of law, set forth in case law, that liability exists for attorneys for conspiracy, when they engage in the offense of conspiracy with their client and their actions violate an independent duty to the victim, plaintiff, or have a financial interest in the outcome. When they and their client conspire to deprive the victim or plaintiff of their rights, (against the plaintiff) to violate a duty to the plaintiff, [engage in a criminal offense that is also prescribed against by

civil law, civilly prescribed,], in the furtherance of the conspiracy, culpable. Question to Wright, Finlay & Zak, Severson & Werson, Alvarado & Associates; did you have an assignement of security interest in the residence of 3741 Avenida Sausalito. Discovery of retainer agreement
Insured brought action against automobile liability insurer and insurance defense counsel for breach of covenant of good faith and fair dealing and civil conspiracy arising out of settlement of driver's claim against insured with prejudice which barred insured's claim for injuries against driver. Insured's executor was substituted as party, and case against defense counsel was settled. The Superior Court, Los Angeles County, Earl F. Riley, J., entered judgment on pleadings in favor of insurer. Executor appealed. The Court of Appeal, Spencer, P.J., held that: **(1) insurer which knew of insured's substantial claim for personal injuries against driver had duty of good faith and fair dealing not to interfere with insured's right to bring counterclaim by settlement of claim against insured; **(2) insured alleged civil conspiracy between insurer and insurance defense counsel; and **(3) insured's dismissal with prejudice of all claims against insurance defense counsel that allegedly was involved in civil conspiracy with insurer to settle driver's claim against insured did not affect liability of insurer for civil conspiracy. Reversed. [1] Appeal and Error 30 170(1)

30 Appeal and Error 30V Presentation and Reservation in Lower Court of Grounds of Review 30V(A) Issues and Questions in Lower Court 30k170 Nature or Subject-Matter of Issues or Questions 30k170(1) k. In General. Most Cited Cases Issue of law presented by undisputed facts could be considered for first time on appeal. [3] Insurance 217 3357

217 Insurance 217XXVII Claims and Settlement Practices 217XXVII(C) Settlement Duties; Bad Faith 217k3346 Settlement by Liability Insurer 217k3357 k. Persons Entitled to Recover; Insurers Liable. Most Cited Cases (Formerly 217k563) Insurance 217 3365

217 Insurance 217XXVII Claims and Settlement Practices 217XXVII(C) Settlement Duties; Bad Faith 217k3358 Settlement by First-Party Insurer 217k3365 k. Persons Entitled to Recover; Insurers Liable. Most Cited Cases (Formerly 217k563) Implied covenant of good faith and fair dealing in insurance policies and duties relative to claim settlement fall upon insurer and not defense counsel. [4] Insurance 217 2931

217 Insurance 217XXIII Duty to Defend 217k2931 k. Bad Faith. Most Cited Cases

(Formerly 217k514.15) Automobile liability insurer which knew of insured's substantial counterclaim against driver who had brought action against insured and which knew that insured intended to pursue rights against driver had duty of good faith and fair dealing, by virtue of fiduciary relationship, not to interfere with right to bring counterclaim which allegedly was impaired by insurer's instructing defense counsel to file answer without counterclaim on behalf of insured and by settling claim against insured with prejudice before insured could bring counterclaim. [5] Conspiracy 91 1.1

91 Conspiracy 91I Civil Liability 91I(A) Acts Constituting Conspiracy and Liability Therefor 91k1 Nature and Elements in General 91k1.1 k. In General. Most Cited Cases (Formerly 91k1) Cause of action for civil conspiracy cannot stand by itself, but must rest upon successful allegation of underlying wrong. [6] Conspiracy 91 18

91 Conspiracy 91I Civil Liability 91I(B) Actions 91k18 k. Pleading. Most Cited Cases Allegations that insurer and insurance defense counsel agreed to settle driver's claim against insured, that insurer and counsel filed request for dismissal with prejudice which resulted in loss of personal injury claim against driver, that insurer and insurance defense counsel did so without communicating with insured's attorney despite knowledge of insured's claim against driver, and that insured suffered damages stated cause of action against insurer for civil conspiracy, even though defense counsel had been dismissed as party. [7] Attorney and Client 45 112

45 Attorney and Client 45III Duties and Liabilities of Attorney to Client 45k112 k. Conduct of Litigation. Most Cited Cases Insurance defense counsel that carries out and consummates bad-faith settlement agreement effected by insurer violates fiduciary duty owed to insured. [8] Attorney and Client 45 102

45 Attorney and Client 45II Retainer and Authority 45k102 k. Liabilities of Client for Injuries to Adverse Party or Third Persons. Most Cited Cases **Insurer may be held liable for participation in tortious acts with attorneys hired on behalf of insured. [10] Pretrial Procedure 307A 518

307A Pretrial Procedure 307AIII Dismissal 307AIII(A) Voluntary Dismissal 307Ak517 Effect 307Ak518 k. Parties and Claims Affected. Most Cited Cases Insured's dismissal with prejudice of all claims against insurance defense counsel that

allegedly was involved in civil conspiracy with insurer to settle driver's claim against insured with prejudice to insured's claim against driver released alleged joint tort-feasor and, therefore, did not affect liability of insurer for civil conspiracy. West's Ann.Cal.C.C.P. 877. Doctors' Co. v. Superior Court, 49 Cal.3d 39, 775 P.2d 508, 260 Cal.Rptr. 183, 58 USLW 2078 (Cal. Jul 17, 1989)

Entered into a scheme, plan and agreement, entered into an agreement scheme and plan to defraud.
Medical malpractice insurer and its attorneys petitioned for writ of mandate to compel trial court to sustain their demurrers to claim brought by claimant seeking to hold insurer, its attorneys and expert witness hired by insurer liable for damages to claimant for conspiracy to violate provision of Insurance Code which makes it unlawful practice for insurer to refrain from attempting to effectuate prompt and fair settlement of claim after liability has become reasonably clear. The Court of Appeal summarily denied issuance of writ, and review was granted. The Supreme Court, Kaufman, J., held that insurer's attorneys and expert witness could not be held liable for conspiracy to violate provision of Insurance Code, as duty was imposed by statute solely upon persons engaged in business of insurance. Peremptory writ of mandate issued. West Headnotes [1] Conspiracy 91 6

91 Conspiracy 91I Civil Liability 91I(A) Acts Constituting Conspiracy and Liability Therefor 91k1 Nature and Elements in General 91k6 k. Damage Caused. Most Cited Cases Civil conspiracy, however atrocious, does not per se give rise to cause of action unless civil wrong has been committed resulting in damage. [2] Conspiracy 91 1.1

91 Conspiracy 91I Civil Liability 91I(A) Acts Constituting Conspiracy and Liability Therefor 91k1 Nature and Elements in General 91k1.1 k. In General. Most Cited Cases (Formerly 91k1) Elements of action for civil conspiracy are formation and operation of conspiracy and damage resulting to plaintiff from act or acts done in furtherance of common design; in such an action, the major significance of conspiracy lies in fact that it renders each participant in wrongful act responsible as joint tort-feasor for all damages ensuing from wrong, irrespective of whether or not he was direct actor and regardless of degree of activity. [3] Conspiracy 91 13

91 Conspiracy 91I Civil Liability 91I(A) Acts Constituting Conspiracy and Liability Therefor 91k12 Persons Liable 91k13 k. In General. Most Cited Cases Cause of action for civil conspiracy may not arise if alleged coconspirator, though a

participant in agreement underlying injury, **was not personally bound by duty violated by wrongdoing and was acting only as agent or employee of party who did have that duty. [4] Attorney and Client 45 26

45 Attorney and Client 45I The Office of Attorney 45I(B) Privileges, Disabilities, and Liabilities 45k26 k. Liabilities to Adverse Parties and to Third Persons. Most Cited Cases Conspiracy 91 13

91 Conspiracy 91I Civil Liability 91I(A) Acts Constituting Conspiracy and Liability Therefor 91k12 Persons Liable 91k13 k. In General. Most Cited Cases Medical malpractice insurer's attorneys and expert witness could not be held liable for damages to claimant for conspiracy to violate section of Insurance Code which makes it an unfair practice under certain circumstances for insurer to refrain from attempting to effectuate prompt and fair settlement of claim after liability has become reasonably clear, as such duty is imposed by statute solely upon persons engaged in business of insurance; **because noninsurer defendants were not subject to that duty and were acting merely as agents of insurer and **not as individuals for their own advantage, they could not be held accountable on theory of civil conspiracy. West's Ann.Cal.Ins.Code 790.03(h)(5). The question presented is whether an insurer, its attorney retained to assist in the defense of an insured against a third party claim, and an expert witness, also retained by the insurer for that purpose, can be held liable for damages to the claimant for a conspiracy to violate Insurance Code section 790.03, subdivision (h)(5) ( 790.03(h)(5)), which makes it an unfair practice under certain circumstances for an insurer to refrain from attempting to effectuate a prompt and fair settlement of a *42 claim after liability has become reasonably clear.FN1 A petition for a writ of mandate, directing the respondent superior court to sustain a demurrer to a complaint's allegations of such a conspiracy, was summarily denied by the Court of Appeal with a citation to Wolfrich Corp. v. United Services Automobile Assn. (1983) 149 Cal.App.3d 1206, 197 Cal.Rptr. 446. We granted review and shall conclude that the conspiracy claim is barred by this court's decision in Gruenberg v. Aetna Ins. Co. (1973) 9 Cal.3d 566, 576, 108 Cal.Rptr. 480, 510 P.2d 1032, and that Wolfrich must be disapproved insofar as it holds otherwise. The complaint, filed by real party in interest Jose Antonio Valencia (hereafter plaintiff), alleges two causes of action. Though the first cause of action is not challenged here, it is essentially incorporated into, and lays the foundation for, the disputed conspiracy claim of the second cause of action. The first cause of action is directed against The Doctors' Company and The Doctors' Management Company (collectively insurer). It alleges substantially as follows: The insurer issued a policy covering the liability of M.F. Osman, M.D., for acts of medical malpractice in connection with plaintiff's birth, complained of in a prior action brought by plaintiff against Dr. Osman and others. Plaintiff offered to settle with Osman for the policy limits of $500,000. The insurer intentionally withheld from its designated expert, Keith Russell, M.D., the deposition of Dr. Osman which revealed the latter's negligence. Without the deposition and without any records prepared by Osman, Russell rendered an opinion that Osman was not negligent, thus giving the insurer a plausible excuse for refusing plaintiff's settlement offer. After that refusal, the action against Osman was tried before a jury, which returned a verdict of $2 million on which judgment was entered and has become final. The

insurer's conduct is alleged to have violated its statutory duty to attempt settlement, imposed by section 790.03(h)(5) (fn. 1, ante). The second cause of action is directed not only against the insurer, but also against Dr. Russell (the insurer's expert) and against a law firm, Rigg, Dean & Mower, and certain of the firm's partners (firm and partners being hereafter referred to as the attorneys). After incorporating all the allegations of the first cause of action by reference, the second cause of action *43 alleges substantially as follows: The insurer hired the attorneys to represent Dr. Osman, who was also represented by separate personal counsel. Despite the demands by Osman and his personal counsel that the insurer settle the case for the policy limit of $500,000,***185 the insurer and its attorneys refused to do so. Defendants, i.e., the insurer, the attorneys, and Dr. Russell, **entered into an agreement, **scheme and plan to deprive [plaintiff] of the benefits of section 790.03(h)(5), which would have been provided by a prompt, fair and equitable settlement.**510 The insurer conspired with the attorneys to locate a local doctor who would agree to only partially review the facts and records and subsequent depositions surrounding the birth of [plaintiff] who [sic] would then give a false medical opinion which provided [insurer] and [attorneys] a plausible sounding excuse to deny [plaintiff's] request for a prompt, fair and equitable settlement of his claims. Dr. Russell conspired with the insurer and the attorneys and agreed with them not to review Dr. Osman's deposition before giving his own opinion under oath at his own deposition. The insurer, the attorneys, and Dr. Russell all filed general demurrers to the complaint. The demurrers were overruled.FN2 The demurring defendants then petitioned the Court of Appeal for a writ of mandate to compel the trial court to sustain their demurrers. The Court of Appeal summarily denied issuance of the writ, and both the insurer and the attorneys sought review by this court. We granted review, consolidated the petition of the attorneys (S003588) with that of the insurer (S003148), and issued alternative writs requiring a showing of cause why the trial court should not be ordered to sustain petitioners' demurrers to the second cause of action without leave to amend.FN3 We also stayed trial of the underlying action pending completion of this writ proceeding. Plaintiff's complaint is based on this court's holding in Royal Globe Ins. Co. v. Superior Court (1979) 23 Cal.3d 880, 153 Cal.Rptr. 842, 592 P.2d 329, that a plaintiff who has obtained judgment on a tort claim against an insured defendant may sue the insurer for violating section 790.03(h)(5), which specifies failure to attempt settlements of claims as an unfair practice in the business of insurance as set forth in footnote 1, ante. In MoradiShalal v. Fireman's Fund Ins. Companies (1988) 46 Cal.3d 287, 305, 250 Cal.Rptr. 116, 758 P.2d 58, that holding was overruled prospectively, thus permitting actions filed before the finality of Moradi-Shalal, such as the one before us, to continue in reliance on Royal Globe. *44 The duty to refrain from violating section 790.03(h)(5) is imposed only on persons engaged in the business of insurance ( 790.01). (See also 790.02.) There is no allegation in the complaint that either the attorneys or Dr. Russell are or were engaged in the insurance business, and plaintiff does not so contend. Accordingly, those defendants, unlike the insurer, are not bound by section 790.03(h)(5). The gravamen of the complaint against those defendants is that they and the insurer conspired to deprive [plaintiff] of the benefits of [section 790.03] and to deny [plaintiff] any sums of money for [his] injuries which would have been provided by a prompt, fair and equitable settlement. Because the complaint does not purport to rely on any duty to settle claims other than that imposed by section 790.03(h)(5) on insurers and persons in the insurance business, the issue before us is whether the insurer, the attorneys and Dr. Russell can be held liable for a conspiracy to violate a duty peculiar to the insurer. [1][2] A civil conspiracy however atrocious, does not per se give rise to a cause of action unless a civil wrong has been committed resulting in damage. [Citations]. (Unruh v. Truck Insurance Exchange (1972) 7 Cal.3d 616, 631, 102 Cal.Rptr. 815, 498 P.2d 1063.) The elements of an action for civil conspiracy are **the ***186 formation and operation of the conspiracy

and damage resulting to plaintiff from an act or acts done in furtherance of the common design.... In such an action the major significance of the conspiracy lies in the fact that it renders each participant in the wrongful act responsible as a joint tortfeasor**511 for all damages ensuing from the wrong, irrespective of whether or not he was a direct actor and regardless of the degree of his activity. [Citations.] (Mox Incorporated v. Woods (1927) 202 Cal. 675, 677-678, 262 P. 302; accord Wyatt v. Union Mortgage Co. (1979) 24 Cal.3d 773, 784, 157 Cal.Rptr. 392, 598 P.2d 45.) [3][4] A cause of action for civil conspiracy may not arise, however, 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. Thus, in Gruenberg v. Aetna Ins. Co., supra, 9 Cal.3d 566, 108 Cal.Rptr. 480, 510 P.2d 1032, the plaintiff alleged that his insurers and their adjusters and attorneys had conspired to deny him benefits for an insured fire loss and in furtherance of the conspiracy had **(1) encouraged criminal charges by falsely implying to an official investigator and at a preliminary hearing that the plaintiff had a motive to commit arson, **(2) used the plaintiff's failure to appear for examination under oath before the insurers' representative (see 2070, 2071) as a pretext for denying liability under the policies even though they knew the plaintiff would not appear during the pendency of the criminal charges, and **(3) refused to accept the plaintiff's offer to appear for examination after the charges were dropped. We held that these allegations stated a cause of *45 action against the defendant insurers for breach of their implied covenant of good faith and fair dealing by refusing, without proper cause, to compensate the plaintiff for a fire loss covered by their insurance policies. (9 Cal.3d at pp. 570-575, 108 Cal.Rptr. 480, 510 P.2d 1032.) We further held, however, that the insurers' adjusters and attorneys were not liable for the alleged conspiracy. We first pointed out that the plaintiff [Gruenberg] contends that these non-insurer defendants breached only **the duty of good faith and fair dealing; therefore, **we need not consider the possibility that they may have committed another tort in their respective capacities as total strangers to the contracts of insurance. **Obviously, the noninsurer defendants were not parties to the agreements for insurance; therefore, they are not, as such, subject to an implied duty of good faith and fair dealing. (9 Cal.3d at p. 576, 108 Cal.Rptr. 480, 510 P.2d 1032, italics added.) We then invoked the rule that **[a]gents and employees of a corporation cannot conspire with their corporate principal or employer where they act in their official capacities on behalf of the corporation and **not as individuals for their individual advantage. [Citations.] (Wise v. Southern Pacific Co. (1963) 223 Cal.App.2d 50, 72, 35 Cal.Rptr. 652.) This rule, as was explained in Wise (at pp. 72-73, 35 Cal.Rptr. 652) derives from the principle that ordinarily corporate agents and employees acting for and on behalf of the corporation cannot be held liable for inducing a breach of the corporation's contract since being in a confidential relationship to the corporation their action in this respect is privileged. (Gruenberg, supra, 9 Cal.3d at p. 576, 108 Cal.Rptr. 480, 510 P.2d 1032.) In the present case, the only duty toward plaintiff claimed to have been breached as a result of the defendants' alleged conspiracy is the statutory duty to attempt in good faith to effectuate prompt, fair, and equitable settlement of claims in which liability has become reasonably clear ( 790.03(h)). That duty is imposed by statute solely upon persons engaged in the business of insurance. ( 790.01.) Because the noninsurer defendants are not subject to that duty and were acting merely as agents of the insurer and not as individuals for their individual advantage (Wise, supra, 223 Cal.App.2d at p. 72, 35 Cal.Rptr. 652), they cannot be held accountable on a theory of conspiracy. (Gruenberg, supra, 9 Cal.3d at p. 576, 108 Cal.Rptr. 480, 510 P.2d 1032.) ***187 In Wolfrich Corp. v. United Services Automobile Assn., supra, 149 Cal.App.3d 1206, 197 Cal.Rptr. 446, however, a complaint was held to have stated a cause of action against

attorneys for conspiring with an insurer, whom they represented, to **512 violate section 790.03(h)(5). The court held that the foregoing holding in Gruenberg did not relieve the attorneys of liability; it reasoned as follows: The Gruenberg- Wise line of authority provides immunity for attorneys against charges of conspiracy based upon advice rendered to clients *46 accused of breach of contract-a situation not present in the instant case. Attorneys may be liable for participation in tortious acts with their clients, and such liability may rest on a conspiracy. [Citations.] (149 Cal.App.3d at p. 1211, 197 Cal.Rptr. 446.) That purported distinction misses Gruenberg's point. The attorneys in Gruenberg were relieved from liability for helping their insurer-clients to violate the latter's duty of good faith and fair dealing not because the duty was contractual but because it was a duty peculiar to the insurers, not shared by their attorneys. The duty invoked here (and in Wolfrich ) is likewise peculiar to the insured because the duty is created by a statute which imposes it only on persons in the insurance business ( 790.01, 790.02, 790.03(h)(5)). Accordingly, Gruenberg precludes holding persons acting solely as the insurer's agents or employees liable for a conspiracy to violate that duty or cause its violation by the insurer.FN4 FN4. Plaintiff argues that the noninsurer defendants here cannot be deemed agents or employees within the meaning of Gruenberg because the complaint alleges they were independent contractors of the insured. It is settled, however, that an independent contractor may or may not be an agent, and that if a person contracts to act on behalf of another (the principal) and subject to the principal's control except with respect to physical conduct, that person is both an agent and an independent contractor. (City of Los Angeles v. Meyers Bros. Parking System, Inc. (1975) 54 Cal.App.3d 135, 138, 126 Cal.Rptr. 545; see Rest.2d Agency (1958) 2, subd. (3), 14N.) Conversely, the agent is not an independent contractor if the principal's control is extended to the physical details of the agent's performance, so as to subject the principal to liability for the agent's negligence. (See Rest.2d Agency, supra, 220, com. (e), 250.) The persons held immune from the conspiracy charge in Gruenberg were an insurance adjusting firm, a law firm, and their respective employees. (9 Cal.3d at p. 576, 108 Cal.Rptr. 480, 510 P.2d 1032.) The two firms were engaged or retained by the defendant insurer (id. at p. 570, 108 Cal.Rptr. 480, 510 P.2d 1032). From these facts and the absence of any contrary indication, it can be fairly inferred that the insurer did not control the details of the firms' manner of performance and that they therefore were independent contractors, as well as agents, of the insurer. It remains true, of course, that under other sets of circumstances [a]ttorneys may be liable for participation in tortious acts with their clients, and such liability may rest on a conspiracy (Wolfrich, supra, 149 Cal.App.3d at p. 1211, 197 Cal.Rptr. 446; see Civ.Code, 1714.10 [setting forth procedural prerequisites for suit on such claims] ). **For example, an attorney who conspires to cause a client to violate a statutory duty peculiar to the client may be acting not only in the performance of a professional duty to serve the client **but also in furtherance of the attorney's own financial gain. **Thus, in Black v. Sullivan (1975) 48 Cal.App.3d 557, 122 Cal.Rptr. 119, the trustors under a deed of trust sued the trust beneficiaries for failing to provide a statement of balance due, as required by Civil Code section 2943, thereby destroying the trustors' opportunity to complete an escrow contract for a profitable sale of the property. **Also joined as defendants were the beneficiaries' attorneys, who had taken assignments of the beneficiaries' *47 interests as security for loans and for past and future attorney's fees. **The attorneys therefore had a personal interest, apart from that of their clients, in regaining the property (which had increased in value) by preventing its sale by the plaintiffs. On these facts, it was held that the attorneys were not personally obligated to provide the statement required by Civil Code section 2943, because their assignments were for security only, but that this lack of individual obligation [did] not prevent their liability for a failure to comply with that section under a theory that they ***188 aided, cooperated and assisted in [the beneficiaries'] noncompliance or conspired to interfere with the escrow contract by preventing the closing of the escrow. [Citations].

(48 Cal.App.3d at p. 567, 122 Cal.Rptr. 119.) **513 As this holding illustrates, the **Gruenberg- Wise rule does not preclude the subjection of agents to conspiracy liability for conduct which the agents carry out as individuals for their individual advantage and not solely on behalf of the principal (Wise, supra 223 Cal.App.2d at p. 72, 35 Cal.Rptr. 652). The limited nature of that rule is also consistent with the two cases cited by the Black court in support of its holding: Rosenthal v. Gould (1969) 273 Cal.App.2d 239, 243-244, 78 Cal.Rptr. 244 and Anderson v. Thacher (1946) 76 Cal.App.2d 50, 72, 172 P.2d 533. In each of those cases a plaintiff, defrauded by means of one defendant's violation of a fiduciary duty, was allowed to recover against another defendant who, though not subject to the fiduciary duty, had conspired in the fraud. **Since the nonfiduciary defendants had acted not simply as agents or employees of the fiduciary defendants **but rather in furtherance of their own financial gain, they could not have been relieved from liability under the Gruenberg- Wise rule. **Also to be distinguished from the present case are claims against an attorney for conspiring with his or her client to cause injury by violating the attorney's own duty to the plaintiff. Such a claim was upheld in Barney v. Aetna Casualty & Surety Co. (1986) 185 Cal.App.3d 966, 230 Cal.Rptr. 215. There, the car driven by the plaintiff insured had collided with another car. The insurer retained attorneys to defend the insured against a municipal court action by the driver of the other car, and the insured, through separate counsel, sued the other driver in superior court. Without notice to the insured, the insurerretained attorneys settled the other driver's claim and filed a dismissal with prejudice of the municipal court action; the dismissal operated as a retraxit barring the insured's superior court action. **The insured's conspiracy cause of action against the insurer and the attorneys who had arranged the settlement was upheld since the settlement clearly violated the attorneys' own fiduciary duty to the insured plaintiff (Ivy v. Pacific Automobile Ins. Co. (1958) 156 Cal.App.2d 652, 663, 320 P.2d 140). *48 The same principles apply not only to attorneys but to other persons employed or retained by an insurer to discharge its duties under an insurance policy. Thus, in Younan v. Equifax Inc. (1980) 111 Cal.App.3d 498, 169 Cal.Rptr. 478, the plaintiff alleged a conspiracy among his insurer and **two of the insurer's agents to deprive plaintiff of disability insurance benefits by falsely representing that plaintiff would be examined by a medical doctor who would objectively consider plaintiff's claim for benefits when in fact the examination was to be conducted by a psychiatrist who had agreed, by prearrangement with the insurer, to render a false report to provide a plausible excuse for denying the benefits. (Id. at pp. 504-505, 169 Cal.Rptr. 478.) **The agents were held subject to liability for conspiracy to commit actual fraud since they had **a duty to abstain from injuring the plaintiff through express misrepresentation, **independent of the insurer's implied covenant of good faith and fair dealing. (Id. at p. 511, 169 Cal.Rptr. 478.) **But they were held not liable for constructive fraud since that charge rested on a fiduciary duty of disclosure which was owed plaintiff only by the insurer itself. (Id. at pp. 516-517, 169 Cal.Rptr. 478; see Gibson v. Government Employees Ins. Co. (1984) 162 Cal.App.3d 441, 449-450, 208 Cal.Rptr. 511 [any fiduciary duty existing between an insurer and its insured is governed by the terms of the insurance contract in effect between them].) **Also outside the Gruenberg- Wise rule is the liability of corporate directors and officers who directly order, authorize or participate in the corporation's tortious conduct. **Such persons may be held liable, as conspirators or otherwise, for violation of their own duties towards persons injured by the corporate tort. (See Wyatt v. Union Mortgage Co., supra, 24 Cal.3d 773, 785, 157 Cal.Rptr. 392, 598 P.2d 45.) The Gruenberg- Wise rule, in contrast, precludes only ***189 claims against the principal's subordinate employees and against agents retained by the principal to act as independent contractors (see fn. 4, ante) for conspiring to violate a duty peculiar to the principal. **514 Finally, we anticipate that the impact of our holding, barring liability of employees

or agents for conspiracy to cause their principal to violate a duty that is binding on the principal alone, will be relatively narrow where the violated duty is other than contractual. The duties imposed by section 790.03 are somewhat unusual in that their application is expressly restricted to persons engaged in the business of insurance ( 790.01). The binding effect of many other statutory duties is not subject to such restriction. (See, e.g., Gov.Code, 12940, subd. (f), 12955, subd. (g) [making it unlawful [f]or any person to aid, abet, incite, compel, or coerce the doing of any of the acts forbidden by the Fair Employment and Housing Act]; Health & Saf.Code, 25189, 25189.2 [imposing civil penalties on any person who disposes or causes the disposal of any hazardous or extremely hazardous waste].) *49 Accordingly, we conclude that the second count of the complaint, alleging a conspiracy between the insurer and the attorneys, as well as a conspiracy among the insurer, the attorneys, and Dr. Russell, to deprive plaintiff of the benefits of section 790.03(h)(5), fails to state a cause of action because the attorneys and Russell acted solely as the insurer's agents and did not personally share the statutory duty alleged to have been violated. (Gruenberg v. Aetna Ins. Co., supra, 9 Cal.3d 566, 576, 108 Cal.Rptr. 480, 510 P.2d 1032; Wise v. Southern Pacific Co., supra, 223 Cal.App.2d 50, 72, 35 Cal.Rptr. 652.) The contrary holding of Wolfrich Corp. v. United Services Automobile Assn., supra, 149 Cal.App.3d 1206, 197 Cal.Rptr. 446, is disapproved. Let a peremptory writ of mandate issue, directing the respondent superior court to vacate its order overruling petitioners' demurrers to the second cause of action of the complaint, and to enter a new order sustaining the demurrers, consistent with this opinion. Wyatt v. Union Mortgage Co., 24 Cal.3d 773, 598 P.2d 45, 157 Cal.Rptr. 392 (Cal. Aug 10, 1979)

Corporation directors, officers are liable. Penziner v. West American Finance Co., 133 Cal.App. 578, 24 P.2d 501 (Cal.App. 1 Dist.,Aug 02, 1933) At p. 584 On or about August 16, 1928, defendants combined and conspired to defraud and deprive plaintiff of his title to land and apartment house and of his interest in the proceeds of the sale. Pursuant to the conspiracy, the finance company recorded the above notice of default, caused the above publication of notice of sale, and purportedly assigned the note to the loan company for an unknown consideration, but with the understanding that the latter would bid in the property at the sale, obtain a deed therefor from the trustees, and thereafter convey the same to the former. Also, pursuant to the conspiracy, the trustees offered the property for sale as advertised, the loan company bid therefor $150,000, the trustees accepted this bid, and executed and delivered to the loan company a deed for the property which acknowledged receipt of the bid in gold coin. The loan company on or about March 13, 1929, conveyed to the finance company, and the latter conveyed to a third party for an unknown consideration and without first giving plaintiff an opportunity to redeem. Before the sale plaintiff received from a named person, who was ready, able, and willing so to do, an offer to advance the money *585 necessary to pay the debt or to purchase the property at the sale for their joint account, and advised R. T. Harper of such offer. Thereupon, the latter, in pursuance of the conspiracy, informed him that it would be unwise to sacrifice his equity, and, without an intention of performance, represented that it would be unnecessary to carry out the offer, as the title would be bid in by the finance company, held for

his protection, and reconveyed at any time upon payment of his debt. Relying upon these representations, plaintiff refused the offer, abandoned all attempts to raise the money to pay the debt or to bid, and permitted the sale without any bid on his behalf. In further pursuance of the conspiracy, R. T. Harper falsely represented to prospective bidders, who otherwise would have bid at the sale, that the property was to be bought in by the finance company for the benefit and protection of plaintiff. As part of the conspiracy, the finance company and the trustees agreed with the loan company that it would bid $150,000, and the latter so did. This was the only bid Blair v. Guarantee Title Co. of Long Beach, 103 Cal.App. 260, 284 P. 719 (Cal.App. 3 Dist.,Jan 18, 1930) An analogous case of conspiracy to defraud property. conspirator attorneys. But facts do not involve

The facts, as they existed at the time of the transaction hereinafter related, were briefly these: On June 16, 1925, Helen Wood Blair, the original plaintiff in this action, was residing with her husband at Orange, Cal., but was the owner of a house and lot at the corner of Seventeenth and Rose streets in the city of Long Beach, which she valued at $8,500, and which was incumbered by a mortgage in the sum of $5,000. The defendant A.E. Cronin was a real estate agent residing in Long Beach, and well acquainted with Mrs. Blair, having been her agent in one or two business transactions. Mrs. Blair had implicit faith and confidence in Cronin, and, at the time of the transaction hereinafter related, Mrs. Blair held a note against Cronin for the sum of $1,000, and, as security for the payment of said note, she held a bill of sale and the registration certificate for Cronins automobile. Victor Bellotti was another real estate agent residing at Long Beach and a friend of Cronin, but unacquainted with Mrs. Blair. The defendant and appellant Guarantee Title Company was a corporation engaged in the title and escrow business in Long Beach, Cal. The defendant and appellant I.H. Wright was *263 an employee of said Guarantee Title Company, and was its escrow officer. On said 16th day of June, 1925, Cronin, in company with Bellotti, called upon Mrs. Blair at her home in Orange, and Cronin told her that they could exchange her equity in the Long Beach Property for a ranch of 160 acres at Minot, N.D. Bellotti told her his father was the former owner of this ranch, and that it was a very valuable piece of property, and was clear of all incumbrances. Bellotti and Cronin also stated many details relative to the crops grown on the North Dakota ranch, the lands adaptability, etc., and urged Mrs. Blair to make the exchange. Finally, upon the advice and at the urgent solicitation of Cronin, she agreed to the exchange-that is, she agreed to exchange her equity in the Long Beach property, and the $1,000 note and bill of sale and registration certificate, for a deed and a clear and unincumbered title to the 160-acre ranch in North Dakota. Cronin then presented to her a deed, which he had already prepared, for the Long Beach property with the name of the grantee left blank. Cronin and Bellotti then accompanied Mrs. Blair to a nearby notary public. The notary and Mrs. Blair, seeing there was no grantee named in the deed, insisted that a grantee should be inserted in the deed, but Cronin stated that he did not know the "initials of the owner of the North Dakota ranch," and that it would be all right to execute the deed without naming a grantee; that it was a common practice to leave the grantee blank, etc. Mrs. Blair and the notary apparently accepted Cronins explanation as satisfactory, for she signed and acknowledged said deed and delivered it to Cronin, with the instructions to deposit it in escrow, to be exchanged for a deed and clear title to the North Dakota property. Cronin suggested **721 that the appellant Guarantee Title Company be the escrow holder, and Mrs. Blair consented to this suggestion. Cronin, on the same day, and after leaving Mrs. Blair, inserted his own name in the deed as

grantee. On the same day, to wit, the 16th day of June, 1925, at 4:20 p.m., the deed was recorded in the recorders office of Los Angeles county, at the request of the appellant Guarantee Title Company, and contained printed instructions on the back thereof to return when *264 recorded to the Guarantee Title Company of Long Beach, Cal. On the same day, Cronin executed a trust deed on said Long Beach property to secure a loan of $1,700, in which the appellant Guarantee Title Company was named as trustee for John A. Benell, the beneficiary. This trust deed was acknowledged before a notary public, who was also at the same time an employee of, and in the office of, the Guarantee Title Company. Said trust deed was recorded at the same time as the deed from Mrs. Blair to Cronin, and also at the request of said Guaranty Title Company. Two days later, and on June 18, 1925, Cronin again called at the office of said Guarantee Title Company in Long Beach, and there, in the presence of appellant I.H. Wright, the escrow officer of said title company, and upon a blank form furnished by Wright, prepared what purports to be an escrow agreement between Mrs. Blair and James I. Butterfield, the owner of the North Dakota ranch, which agreement provides in part: "We, the undersigned, buyer and seller, enter into the following agreement and hereby instruct the Guarantee Title Company of Long Beach, to carry out the conditions and agreements hereby entered into within 30 days from this date; and in the event the conditions of this escrow have not been complied with at the expiration of 30 days, you are instructed to complete same at the earliest possible date thereafter unless written demand shall have been made upon you by the party not in default, otherwise the same is automatically extended. Seller James I. Butterfield *** Address, Long Beach City, who agrees to sell the buyer, Helen Wood Blair *** Address, 504 W. Lemon, Orange, California, who agrees to purchase *** 160 acres in North Dakota *** in exchange for house and lot, Cor. 17th and Rose, Long Beach, two lots in Bellflower, and Haynes sedan; subject to mortgage on house and lot of $5,000.00. *** Interest, insurance and rents are to be pro-rated to date, close of escrow. *** The Guarantee Title Company of Long Beach is hereby instructed to draw the usual form of Grant Deed, Bill of Sale, from the Seller to the Buyer, and also as herein required and issue the title *** in the names of new owner on both properties. *** Further instructions are buyer is to deliver to A.E. Cronin pink slip, bill of sale and note and bill of sale Mrs. Blair to *265 Cronin. The seller agrees to pay all of the taxes for the fiscal year of 1924 & 5 through this escrow if not already paid. *** The buyer and seller do each agree to pay their half of the escrow charges and expenses. It is agreed that this escrow and the papers and the funds deposited therein cannot be withdrawn by either party before the close of this escrow, and all charges paid without the written consent of both parties hereto. It is agreed that in case the seller performs his part of this agreement and the purchaser fails to make further deposit as herein required, the escrow deposit herein referred to shall be forfeited to the seller, and the Guarantee Title Company of Long Beach is hereby requested to pay same to the seller. It is also agreed that the Guarantee Title Company of Long Beach shall not be responsible for adjustments in rents, interest, insurance premiums or commissions, unless the correct amounts have been furnished the Guarantee Title Company of Long Beach by the interested parties." To this agreement, Cronin, also in the presence of Wright, signed the name of "Helen Wood Blair, by A.E. Cronin," and forged the name of "James I. Butterfield," the owner of the North Dakota ranch. Wright thereupon filed said purported escrow agreement in said Guarantee Title Companys office, and opened an escrow therein for this transaction, and numbered it 7079. Wright testified, however, that the deed from Mrs. Blair to Cronin was never placed in escrow by Cronin or any one else. The Blair deed bore no escrow number; neither did the trust deed. A few days after delivering this blank deed to Cronin, and after Cronin and Wright

opened the purported escrow above mentioned, Mrs. Blair, accompanied by her husband, went to the office of said title company in Long Beach, and was there advised by Wright "that the exchange had been escrowed and that everything in it was coming along all right," and exhibited to her the purported signature of James I. Butterfield to said escrow agreement, but did not inform her that said name "James I. Butterfield" had been forged to said agreement by Cronin. Thereafter, and on July 6, 1925, Wright wrote the following letter to Mrs. Blair: *266 "Mrs. Helen Wood Blair, 504 North Lemon street, Orange, California. Dear Madam: Re our escrow 7079 "Your escrow on the North Dakota quarter is nearing completion, but in order to finish this escrow, we must have a note of $1,000.00, and bill of sale given to you by Mr. Cronin, **722 also bill of sale from you to him showing that he is the legal owner of his car. "Kindly find bill of sale enclosed which you will please sign. Please return to this office at your earliest convenience. "Yours very truly, "Guarantee Title Company, "By I.H. Wright, Escrow Officer." In response to this letter, Mrs. Blair, in company with her husband, again visited the title companys office and delivered to Wright the said $1,000 note, bill of sale, and registration certificate. On this occasion, Wright informed her "that the exchange was practically completed, and that the only thing that was delaying it was that the deed from Butterfield to her for the North Dakota property had been sent to North Dakota for recording, and as soon as it was returned, the escrow would be completed and the deal finally consummated." Wright, however, knew at that time that this statement was false, that no deed had ever been placed in escrow or procured from Butterfield for the North Dakota ranch, and also knew that Butterfield had not agreed or authorized Cronin to make the exchange, and also knew that Butterfield was entirely ignorant of any negotiations being carried on with Mrs. Blair by Cronin. Thereafter, and before Mrs. Blair had discovered that Wrights statements were false, and on July 23, 1925, A.E. Cronin conveyed the Long Beach property to Evelyn Ferguson, who was an innocent purchaser. This deed was also acknowledged before a notary public, who was at the same time in the employ of the Guarantee Title Company. Thereafter, and in August or September, 1925, Wright was discharged by said title company as its escrow officer and clerk, and was succeeded by one J. Gordon Poe, and *267 on September 3, 1925, Poe wrote Mrs. Blair as follows: "I have just been in conference with your agent, Mr. A.E. Cronin, and I find things are in somewhat of a muddle. I have arranged with Mr. Cronin to come to this office at eleven oclock Tuesday morning September 8th, and meet you and Mr. Blair, if you can possibly come. This is very urgent and I must ask that you make it convenient to be here at that hour. There is nothing we can do until Tuesday, at which time Mr. Cronin has agreed that he will make a justifiable settlement with you." In response to this letter, Mrs. Blair and her husband again called at the office of the title company in Long Beach, and were informed by Poe that Wright was no longer connected with the title company, and that the escrow was incomplete, and in a "mess," and that it contained only the thousand dollar note and the bill of sale

and the registration certificate, and did not contain her deed or the deed from Butterfield for the North Dakota property. Thereupon Mrs. Blair demanded of Poe the return of her deed that she had given Cronin, but was informed by Mr. Poe that the deed was not in the possession of the title company. Poe, however, returned to Mrs. Blair the $1,000 note. **During this conversation, Mrs. Blair was informed by Mr. Poe that the purported signature of Butterfield to the escrow agreement was forged, and that no deed from Butterfield to her was ever procured or placed in escrow, and that Butterfield never had agreed to the exchange and knew nothing of the purported transaction. **Through this information given by Poe, Mrs. Blair discovered for the first time that she had been defrauded out of her Long Beach property and that the title thereto had passed into the hands of an innocent purchaser. Thereafter, and on the 7th day of October, 1925, C.E. Brumwell and Martha V. Brumwell brought an action against Mrs. Blair, Cronin, and the Guarantee Title Company and others to foreclose the $5,000 mortgage on the Long Beach property formerly belonging to Mrs. Blair. Mrs. Blair made no appearance in this action, and the decree of foreclosure and order of sale was finally entered and the property sold pursuant to this decree and order. **Thereafter, and on the 29th day of April, 1926, Mrs. Blair brought this action against Guarantee Title Company, *268 I.H. Wright, A.E. Cronin, and Victor Bellotti, and alleged in her complaint in considerable detail the facts we have enumerated above, by which she claims she was defrauded of her equity in the Long Beach property. She also alleged a conspiracy on the part of Cronin, Wright, and the Guarantee Title Company to defraud her of her property.
Manor Investment Co v. F.W. Woolworth Co., 159 Cal.App.3d 586, 206 Cal.Rptr. 37 (Cal.App. 1 Dist. Aug 24, 1984)

At p. 595
Compare criminal conspiracy which is a separate crime that can be proved by showing a mere combination for an unlawful purpose, or, at most, a combination for an unlawful purpose coupled with some "overt act" in furtherance of the unlawful plan. (Perkins & Boyce, Criminal Law (3d ed. 1982) pp. 682, 685.) Thomason v. Gilliam, 2004 WL 501729 (Cal.App. 5 Dist.,Mar 15, 2004)

At *22
The principles set forth in People v. Zamora (1976) 18 Cal.3d 538 are applicable to both criminal conspiracy and civil conspiracy. ( Livett v. F.C. Financial Associates (1981) 124 Cal.App.3d 413, 418-419.) In Zamora, the Supreme Court held an overt act is an outward act done in pursuance of the crime and in manifestation of an intent or design, looking toward the accomplishment of the crime. Upon successful attainment of the substantive offense which is the primary object of the conspiracy, the period of the statute of limitations for the conspiracy begins to run at the same time as for the substantive offense itself. Acts committed by conspirators subsequent to the completion of the crime that is the primary object of a conspiracy cannot be deemed overt acts in furtherance of that conspiracy. Expressed another way, for purposes of the statute of limitations, an overt act in furtherance of the conspiracy cannot be committed subsequent to the completion of the object which made the conspiracy unlawful in the first instance. ( People v. Zamora, supra, 18 Cal.3d at pp. 549, 559-560.) In the instant case, appellant alleged respondents conspired to fraudulently transfer the

property [described in Exhibit A] to defendant GSI HOMES, Inc. According to exhibit A to the fourth amended complaint, CRT Development Group, a California limited partnership in dissolution, conveyed the Mirage Development property to Gilliam & Sons, Inc., a California corporation, by way of a partnership grant deed recorded April 2, 1993, and re-recorded May 18, 1993. Bill W. Gilliam, as president of Gilliam & Sons, Inc., executed the grant deed on behalf of CRT. On July 16, 1993, Gilliam & Sons, Inc. recorded a corporation grant deed conveying the real property to Bill W. Gilliam, an unmarried man. Gilliam executed that deed in his capacity as president of Gilliam & Sons, Inc.

Criminal liability for officers, managers of BANK OF THE WEST; WELLS FARGO; for attorneys of record WRIGHT, FINLAY & ZAK; BARR; SEVERSON & WERSON; ALVARADO & ASSOCIATES Kashian v. Harriman, attorney liable for criminal violation of BP 6128
People v. Zamora, 18 Cal.3d 538, 557 P.2d 75, 134 Cal.Rptr. 784 (Cal.,Dec 16, 1976)

Definition of elements of criminal conspiracy

Lee v. Folcey, 110 Cal.App. 607, 294 P. 742 (Cal.App. 1 Dist. Dec 23, 1930) Action by Baker P. Lee and wife against Melvin L. Folcey and others. From a judgment for defendants, plaintiffs appeal. Reversed, with directions. West Headnotes [1] Cancellation of Instruments 69 37(6)

69 Cancellation of Instruments 69II Proceedings and Relief 69k36 Pleading 69k37 Bill, Complaint, or Petition 69k37(6) k. Fraud in General. Most Cited Cases Conspiracy 91 18

91 Conspiracy 91I Civil Liability 91I(B) Actions 91k18 k. Pleading. Most Cited Cases Complaint alleging defendants conspired to defraud plaintiffs, of property and seeking cancellation of instruments conveying property and accounting held good against general demurrer.

Howard v. Superior Court, 2 Cal.App.4th 745, 3 Cal.Rptr.2d 575 (Cal.App. 2 Dist.,Jan 09, 1992) Petition for writ of mandate was filed seeking to direct trial court to set aside order overruling demurrer to aiding and abetting count against attorneys contained within multicount complaint against client. The Court of Appeal, Nott, J., held that allegations that attorneys aided and abetted their clients by serving as vehicle for communication of falsehoods during negotiations for acquisition of real property could not be filed until

after court determined that there was reasonable probability that party would prevail as required for civil conspiracy claims. Writ issued. West Headnotes Attorney and Client 26 45k26 Most Cited Cases Complaint claiming that attorneys "aided and abetted" their clients by serving as vehicle for communication of falsehoods during negotiations to acquire real property was within ambit of statute prohibiting filing of civil conspiracy claims against attorneys until after court determines that there is reasonable probability that party would prevail; **although civil action for aiding and abetting may not require defendant to agree to join wrongful conduct **as does civil conspiracy, it necessarily requires defendant to reach conscious decision to participate in tortious activity for purpose of assisting another in performing wrongful act. West's Ann.Cal.Civ.Code 1714.10 Pavicich v. Santucci, 85 Cal.App.4th 382, 102 Cal.Rptr.2d 125, 00 Cal. Daily Op. Serv. 9771, 2000 Daily Journal D.A.R. 13,003 (Cal.App. 6 Dist. Dec 08, 2000)

attorney in the capacity as a partner of a joint venture had an independent duty to a potential investor to tell the truth; and thus the act of misrepresentation by the attorney constituted conspiracy with the other partner(s).
Kashian v. Harriman, 98 Cal.App.4th 892, 120 Cal.Rptr.2d 576, 02 Cal. Daily Op. Serv. 4482, 2002 Daily Journal D.A.R. 5707 (Cal.App. 5 Dist., May 23, 2002)

Privilege against a civil conspiracy action not a criminal prosecution. Statements involving nonjudicial foreclosure are not made in a judicial proceeding?
SUMMARY A businessman brought an action against an environmental organization and its attorney, alleging a cause of action for unfair competition and two causes of action for defamation. The action arose after the attorney delivered a letter to the Attorney General requesting an investigation into plaintiff's business dealings. A local newspaper published an article reporting on the letter and quoting parts of it. Defendants filed a special motion to strike the complaint as a SLAPP suit (strategic lawsuit against public participation) (Code Civ. Proc., 425.16 ), and the trial court granted defendants' motion as to all causes of action. (Superior Court of Fresno County, No. 653781-5, Stephen Joseph Kane, Judge.) The Court of Appeal affirmed. The court held that the trial court did not err in granting defendants' motion to strike plaintiff's cause of action for unfair competition as a SLAPP suit, since defendants made the requisite prima facie showing under Code Civ. Proc., 425.16, that their acts were taken in furtherance of their constitutional rights of petition, and plaintiff failed to establish a probability of prevailing on this claim at trial. **The court further held that plaintiff's cause of action for unfair competition was not foreclosed by the litigation privilege (Civ. Code, 47, subd. (b)). The court held that defendants' delivery of the letter to the Attorney General was absolutely privileged under Civ. Code, 47, subd. (b), as an official proceeding authorized by law, so that plaintiff was unable to meet his burden under Code Civ. Proc., 425.16, to establish a probability of prevailing at trial on the defamation claim based on delivery of this letter. The court held that, with regard to plaintiff's defamation claim for publication of the letter in the newspaper, plaintiff failed to make a sufficient prima facie showing that the attorney was the person responsible for sending the letter to the newspaper. The court also held that the publication of the letter to two other entities (a medical center and a health care organization) was

protected by the common interest privilege. This was enough to shift the burden to plaintiff to show the attorney's delivery of the letter was prompted by malice, which plaintiff failed to do. (Opinion by Buckley, J., with Vartabedian, Acting P. J., and Wiseman, J., concurring.) *893 HEADNOTES (1) Pleading 93--Motion to Strike Pleading as a Whole--Anti-SLAPP Statute--Procedure-Appellate Review. Code Civ. Proc., 425.16, was enacted to provide a procedure by which a trial court can dismiss at an early stage nonmeritorious litigation meant to chill the valid exercise of the constitutional rights of freedom of speech and petition in connection with a public issue. Section 425.16 requires the trial court to undertake a two-step process in determining whether to grant a SLAPP (strategic lawsuit against public participation) motion. **First, the court decides whether the defendant has made a threshold prima facie showing **that the defendant's acts of which the plaintiff complains were ones taken in furtherance of the defendant's constitutional rights of petition or free speech in connection with a public issue. If the court finds the defendant has made the requisite showing, **the burden then shifts to the plaintiff to establish a probability of prevailing on the claim by making a prima facie showing of facts that would, if proved, support a judgment in the plaintiff's favor. **The court also considers the defendant's opposing evidence, but only to determine if it defeats the plaintiff's showing as a matter of law. **That is, the court does not weigh the evidence or make credibility determinations. **Finally, in assessing the probability the plaintiff will prevail, the court considers only the evidence that would be admissible at trial. Whether 425.16 applies, and whether the plaintiff has shown a probability of prevailing, are both questions reviewed independently on appeal. (2) Pleading 93--Motion to Strike Pleading as a Whole--Anti-SLAPP Statute--Prima Facie Showing--Defendant Attorney's Filing Lawsuit on Behalf of Clients. In a businessman's action against an environmental organization and its attorney for unfair competition, in which defendants filed a special motion to strike the complaint as a SLAPP suit (strategic lawsuit against public participation) (Code Civ. Proc., 425.16), **defendants were able to make a prima facie showing that their acts were taken in furtherance of their constitutional rights of petition, and that the statute applied to plaintiff's claim. **Plaintiff's cause of action for unfair competition arose directly from the attorney's acts or statements, or alleged acts or statements, made in connection with environmental litigation he was bringing on behalf of the environmental organization and other organizations. **Filing a lawsuit is an exercise of one's constitutional right of petition, and statements made in connection with or in preparation of litigation are entitled to the protection of 425.16. Since the legality of the attorney's litigation *894 activities was a matter of considerable dispute, the burden shifted to plaintiff to make a prima facie showing sufficient to establish a probability of prevailing. Conduct that would otherwise come within the scope of the SLAPP statute does not lose its coverage simply because it is alleged to have been unlawful or unethical. (3a, 3b) Pleading 93--Motion to Strike Pleading as a Whole--Anti-SLAPP Statute-Plaintiff's Burden to Establish Probability of Prevailing--Unfair Competition Claim. In a businessman's action against an environmental organization and its attorney for unfair competition, in which defendants filed a special motion to strike the complaint as a SLAPP suit (strategic lawsuit against public participation) (Code Civ. Proc., 425.16), plaintiff failed to meet his burden under the statute by presenting sufficient facts to establish a probability of prevailing on the unfair competition claim at trial. Plaintiff alleged that the attorney had a pattern and practice of filing groundless environmental lawsuits on behalf of sham corporations he had created to give the appearance the suits enjoyed more support than was actually the case. Although records from the Secretary of State supported plaintiff's claim, eight of the 10 underlying lawsuits on which plaintiff's claim was based were barred by the four-year statute of limitations for unfair competition claims (Bus. &

Prof. Code, 17208). In the two remaining suits, the attorney appeared on behalf of the environmental organization that was a defendant in the present case. The pleadings identified the organization as a "California non-profit public benefit corporation" or simply as a "California non-profit corporation," which were both correct designations at the time. Even if the allegations in plaintiff's complaint were sufficient to make out a prima facie case of unfair competition, the evidence he submitted in their support did not bear them out. [See 5 Witkin, Cal. Procedure (4th ed. 1997) Pleading, 962 et seq.; West's Key Number Digest, Pleading 360.] (4a, 4b, 4c) Libel and Slander 18--Privileged Communications-- Litigation Privilege-Applicability--Unfair Competition Claim Based on Alleged Filing of Improper Lawsuits. In a businessman's action against an environmental organization and its attorney for unfair competition, in which defendants filed a special motion to strike the complaint as a SLAPP suit (strategic lawsuit against public participation) (Code Civ. Proc., 425.16), plaintiff's cause of action was not foreclosed by the litigation privilege. Plaintiff alleged that the attorney filed complaints on behalf of sham environmental organizations, *895 and to establish that defendants' acts were not privileged, plaintiff sought to show that those acts constituted conduct rather than speech. However, it was essentially communicative conduct, even if it involved noncommunicative acts. **Nor did the communications fall outside the privilege simply because they were alleged to be fraudulent, perjurious, unethical, or even illegal. However, plaintiff was not a party to any of the environmental litigation underlying his unfair competition claim. He was simply a member of the public for purposes of the unfair competition claim, which therefore was not foreclosed by the litigation privilege. (5) Libel and Slander 2--Definitions and Distinctions--Privileges-- Absolute and Qualified. California law recognizes two types of privileged communications-communications that are absolutely privileged and communications that are qualifiedly or conditionally privileged. If absolutely privileged, there is no liability even if the defamatory communication is made with actual malice. If the privilege is only conditional or qualified, a finding of malice will prevent the communication from being found privileged. (6) Libel and Slander 18--Privileged Communications--Absolute Privilege-- Litigation Privilege. Civ. Code, 47, subd. (b), defines the litigation privilege. The privilege applies to any communication **(1) made in judicial or quasi-judicial proceedings, **(2) by litigants or other participants authorized by law, **(3) to achieve the objects of the litigation, and (4) that have some connection or logical relation to the action. The litigation privilege is absolute; it applies, if at all, regardless whether the communication was made with malice or the intent to harm. Although originally applied only to defamation actions, the privilege has been extended to any communication, not just a publication, having some relation to a judicial proceeding, and to all torts other than malicious prosecution. Moreover, the litigation privilege is not limited to the courtroom, but encompasses actions by administrative bodies and quasi-judicial proceedings. The privilege extends beyond statements made in the proceedings, and includes statements made to initiate official action. The absolute privilege exists to protect citizens from the threat of litigation for communications to government agencies whose function it is to investigate and remedy wrongdoing. The privilege is based on the importance of providing to citizens free and open access to governmental agencies for the reporting of suspected illegal activity. If there is no dispute as to the operative facts, the applicability of the litigation privilege is a question of law. Any doubt about whether the privilege applies is resolved in favor of applying it. *896 (7) Libel and Slander 24--Qualified Privilege--Communication to Interested Persons. Civ. Code, 47, subd. (c), codifies the common law privilege of common interest, which protected communications made in good faith on a subject in which the speaker and hearer

shared an interest or duty. This privilege applied to a narrow range of private interests. The interest protected was private or pecuniary; the relationship between the parties was close-a family, business, or organizational interest-and the request for information must have been in the course of the relationship. Thus, the statute does not create a broad public interest privilege protecting publications by the news media to the general public regarding private persons, just because the publications pertain to matters of general public interest. The word "interested" as used in the statute refers to a more direct and immediate concern. That concern is something other than mere general or idle curiosity of the general readership of newspapers and magazines. The scope of the privilege is not capable of precise or categorical definition. Its application in a particular case depends upon an evaluation of the competing interests that defamation law and the privilege are designed to serve. (8) Libel and Slander 24--Qualified Privilege--Communication to Interested Persons-Malice. The common interest privilege is usually described as a qualified or conditional one, meaning it can be overcome by a showing of malice, but this characterization is somewhat misleading. Civ. Code, 47, subd. (c), defines a privileged communication as one made without malice. Thus, if malice is shown, the privilege is not merely overcome; it never arises in the first instance. Malice for purposes of the statute means a state of mind arising from hatred or ill will, evidencing a willingness to vex, annoy, or injure another person. Malice is not inferred from the communication (Civ. Code, 48). **Application of the privilege involves a two-step analysis. The defendant has the initial burden of showing the allegedly defamatory statement was made on a privileged occasion, whereupon the burden shifts to the plaintiff to show the defendant made the statement with malice. The existence of the privilege is ordinarily a question of law for the court. (9) Libel and Slander 20--Privileged Communications--Absolute Privilege-- Official Proceedings--Letter to Attorney General Requesting Investigation. In a businessman's action against an environmental organization and its attorney for defamation, arising from the attorney's delivery of a letter to the Attorney General requesting an investigation into plaintiff's business dealings, in which defendants *897 filed a special motion to strike the complaint as a SLAPP suit (strategic lawsuit against public participation) (Code Civ. Proc., 425.16), delivery of the letter was absolutely privileged under Civ. Code, 47, subd. (b) (official proceedings authorized by law). **Thus, plaintiff was unable to meet his burden under Code Civ. Proc., 425.16, by presenting sufficient facts to establish a probability of prevailing on the defamation claim if his complaint went to trial. Civ. Code, 47, subd. (b), provides for an absolute privilege with regard to statements made in any official proceeding authorized by law. A communication concerning possible wrongdoing, made to an official governmental agency, which communication is designed to prompt action by that entity, is as much a part of an official proceeding as a communication made after an official investigation has commenced. Thus, delivery of the attorney's letter to the Attorney General was absolutely privileged, and plaintiff could not have prevailed on his defamation claim. (10) Pleading 93--Motion to Strike Pleading as a Whole--Anti-SLAPP Statute--Plaintiff's Burden to Establish Probability of Prevailing--Defamation Claim--Evidence of Defendant's Role in Publishing Letter in Newspaper. In a businessman's action against an environmental organization and its attorney for defamation, arising from the attorney's delivery of a letter to the Attorney General requesting an investigation into plaintiff's business dealings, which was ultimately published in a local newspaper, **plaintiff failed to make a sufficient prima facie showing, for purposes of defendants' special motion to strike the complaint as a SLAPP suit (strategic lawsuit against public participation) (Code Civ. Proc., 425.16), that the attorney was the person responsible for sending the letter to the newspaper. While it may have been reasonable to infer the letter was delivered to the newspaper by one of the four people to whom the attorney had sent a copy, it did not follow that this person was acting as the attorney's agent, or that the attorney knew or intended this result. The attorney was only one of at

least five people who had a copy of the letter, and there was no reason suggested by the evidence for the attorney to believe one of the others to whom he sent the letter would forward it to the newspaper. (11a, 11b) Libel and Slander 24--Privileged Communications--Qualified Privilege--Based on Common Interest--Publication of Letter in Newspaper-- Sufficiency of Evidence of Malice. In a businessman's action against an environmental organization and its attorney for defamation, arising from the attorney's delivery of a letter after the attorney delivered a letter to the Attorney General requesting *898 an investigation into plaintiff's business dealings, which was ultimately published in a newspaper, in which defendants filed a special motion to strike the complaint as a SLAPP suit (strategic lawsuit against public participation) (Code Civ. Proc., 425.16), publication of the letter to two other entities (a medical center and a health care organization) was protected by the common interest privilege. It was apparent from the letter that the two subjects (the business practices of the nonprofit corporation of which plaintiff was chairman of the board of trustees, and plaintiff's potential conflict of interest) were sufficiently interrelated that the parties who received the letter shared a common business or professional interest in them. This was enough to shift the burden to plaintiff to show the attorney's delivery of the letter was prompted by malice. Plaintiff's evidence in this regard was based merely on a series of speculative inferences. The evidence was insufficient to support an inference that the attorney acted with a reckless or wanton disregard for the truth when he wrote the letter. Thus, plaintiff failed to meet his burden of establishing a probability that he would have prevailed at trial. (12) Libel and Slander 5--Malice. **Malice may be established by showing that the publisher of a defamatory statement lacked reasonable grounds to believe the statement was true, and therefore acted with a reckless disregard for the rights of the person defamed. However, negligence is not malice. It is not sufficient to show that the statements were inaccurate, or even unreasonable. **Only willful falsity or recklessness will suffice. **It is only when the negligence amounts to a reckless or wanton disregard for the truth, so as to reasonably imply a willful disregard for or avoidance of accuracy, that malice is shown. (13) Libel and Slander 18--Privileged Communications--Absolute Privilege--Judicial Proceedings--Limited Use of Statements to Establish Intent. Statements that are otherwise privileged nonetheless may be used in some circumstances to prove the speaker's state of mind. While Civ. Code, 47, subd. (b), bars certain tort causes of action that are predicated on a judicial statement or publication itself, the section does not create an evidentiary privilege for such statements. Accordingly, when allegations of misconduct properly put an individual's intent at issue in a civil action, statements made during the course of a judicial proceeding may be used for evidentiary purposes in determining whether the individual acted with the requisite intent. Edward M. Kashian brought this action against Richard L. Harriman and Valley Advocates (collectively Harriman) for what he alleged were Harriman's unfair business practices and defamatory statements about him. Harriman filed a special motion to strike Kashian's complaint pursuant to section 425.16 of the Code of Civil Procedure, [FN1] or what is commonly known as the anti-SLAPP statute. (SLAPP is an acronym for strategic lawsuit against public participation.) The trial court granted Harriman's motion as to all causes of action, and Kashian has appealed. **We will affirm. Factual and Procedural History Kashian is a prominent businessman and civic leader in Fresno, who, when this dispute arose, was serving as chairman of the board of trustees of Community Hospitals of Central California (CHCC or Community), a nonprofit, tax-exempt corporation. Harriman is an attorney in Fresno who has filed numerous public interest lawsuits on behalf

of various environmental interests in the San Joaquin Valley, including Valley Advocates. The present controversy arose in an entirely different context, however. In 1999, some local medical providers and advocacy groups became concerned about CHCC's plan to build and operate a for-profit heart hospital in north Fresno in partnership with a group of local physicians. Harriman *900 represented one such provider, Kratzer-Graves Pediatrics (KGP). According to news reports at the time, KGP once had been part of Valley PrimeCare Medical Providers, Inc. (Valley PrimeCare), a physicians group that filed for bankruptcy protection in 1997, and whose assets subsequently were sold to Community. Harriman had been retained by the bankruptcy trustee to serve as special counsel for the bankruptcy estate. In May of 2000, again according to news reports, some of the concerned groups wrote to the division of charitable trusts within the Attorney General's office, seeking an investigation into Community's activities on several grounds, including their concerns that Community's involvement in a for-profit hospital (in direct competition with them) would conflict with its status as a tax-exempt corporation, and would interfere with its completion of a regional medical center in downtown Fresno (under a contract with the county to provide indigent medical care). [FN2] Among the organizations that wrote such letters were Saint Agnes Medical Center (St. Agnes) and the Local Health Care Coalition (LHCC). FN2Section 12598, subdivision (a) of the Government Code provides in part: "The primary responsibility for supervising charitable trusts in California, for insuring compliance with trusts and articles of incorporation, and for protection of assets held by charitable trusts and public benefit corporations, resides with the Attorney General. The Attorney General has broad powers under common law and California statutory law to carry out these charitable trust enforcement responsibilities...." Harriman's Letter On May 22, 2000, Harriman wrote a similar letter on behalf of KGP and Valley Advocates, joining in the request for a formal investigation of Community's tax-exempt status. [FN3] According to the letter, Harriman, in his role as special counsel for the bankruptcy estate of Valley PrimeCare, had for the past two years been conducting his own investigation of CHCC and two related business entities. The information he had uncovered in the course of this investigation, he wrote, had led him to believe "that all three entities have been engaged in unfair business practices since at least 1995, in violation of Business & Professions Code 17200." "Specifically, the facts support an intentional course of conduct and practice by CHCC [and the *901 other two entities], and its counsel of interfering with the professional medical practices of private practitioners, including ... Valley PrimeCare Medical Providers, Inc. (VPC) and Kratzer-Graves Pediatrics (KGP), toward the end of driving them out of business so that CHCC and its related entities could acquire the business of the competing physicians and their medical groups...." FN3 Enclosed with Harriman's letter were copies of news articles that had appeared in the Fresno Bee on May 10 and May 16, 2000. The copy of Harriman's letter attached to Kashian's complaint did not include the two articles (apparently because Kashian had not received them). Harriman now asks us to take judicial notice of them, as well as several other documents. We take notice of the articles only insofar as they help to put the letter into context, and not for the truth of anything stated in them. (See Mangini v. R. J. Reynolds Tobacco Co. (1994) 7 Cal.4th 1057, 1064[31 Cal.Rptr.2d 358, 875 P.2d 73].) We decline to take notice of the other documents because they are not relevant to our discussion. (Id. at. p. 1063.) In his letter, Harriman requested the Attorney General's Office also conduct an investigation into a possible conflict of interest between Kashian's private business interests and his role as chairman of the CHCC board. It is this part of the letter that would precipitate the present lawsuit. Harriman wrote, in part: "My clients and others believe that, although Mr. Kashian has been careful to avoid appearing that he has an actual

or potential pecuniary interest in the transactions of CHCC, a careful investigation will disclose that there are substantial economic advantages which have accrued to Mr. Kashian and/or business entities with which he has an ownership relationship or was involved in forming and/or engaging [sic] other property transactions which included land originally acquired, developed, owned, and/or sold by Mr. Kashian, either through partnerships, joint ventures, silent partnerships, and/or indirect ownership, such as medical offices or other commercial property ventures." On June 1, 2000, the Fresno Bee published a news article reporting on Harriman's letter, under the headline "Hospital official assailed." The article focussed primarily on the accusations about Kashian, and quoted parts of the letter, including the excerpt cited above. Kashian was quoted in the article as saying the accusations were " 'completely false.' " Harriman reportedly refused to comment on the letter when contacted by a Bee reporter. The same article also appeared on the Bee's Internet Web site. Kashian's Lawsuit On June 19, 2000, Kashian, on behalf of himself and members of the public, filed a lawsuit against Harriman and Valley Advocates, asserting three causes of action. **The first was for unfair and deceptive business practices in violation of *902section 17200 of the Business and Professions Code. [FN4] Kashian alleged that Valley Advocates, and some other organizations on whose behalf Harriman had filed environmental lawsuits, were, in fact, one and the same entity, different in name only. Further, he alleged each organization was: "... a mere shell and sham conceived by Harriman and used by Harriman as his alter ego and a device Harriman uses to create the false impression that a public interest group or an environmental group supports and sponsors the numerous lawsuits filed by Harriman in which entities like Valley Advocates appear as a plaintiff being represented by Harriman, when in fact said lawsuits are filed for Harriman's own personal and individual business purposes and used by Harriman as a form of false advertising in order to enable him to recruit unsuspecting clients who are asked to join in the purported public interest cause being pursued by Harriman." Harriman's purpose in filing these lawsuits, according to Kashian, was not to advance the public interest but "to extort settlements and reap the financial benefits to Harriman from the amounts paid by the various named defendants, many of them public entities funded by taxpayers, which named defendants choose to settle such suits in order to avoid the costs inherent in defending such suits." On this basis, Kashian sought an order enjoining Harriman from filing or pursuing such lawsuits in the future, and directing him to account for and repay all funds recovered through the ones filed in the past. FN4Section 17204 of the Business and Professions Code confers standing to bring an action for unfair competition on "any person acting for the interests of itself, its members or the general public." A "person" may include a corporation or other organization. (Bus. & Prof. Code, 17201.) Kashian's second and third causes of action were for defamation, and overlapped one another to some degree. Both alleged Harriman's letter was false and defamatory inasmuch as it "stated or lead [sic] the reader to believe that Mr. Kashian had used his position on the board of Community Medical Centers to advance his own financial interest improperly and in a dishonest, unethical or illegal manner." Both also alleged Harriman had been negligent by failing to verify the truth and accuracy of statements in the letter. The second cause of action was directed primarily at Harriman's delivery of the letter to the Attorney General's Office. The third cause of action was focussed on the letter's appearance in the newspaper, and alleged Harriman, "deliberately and with actual malice, published these false [and defamatory] statements by sending or causing to be sent a copy of this letter to the Fresno Bee ...." Harriman's SLAPP Motion Harriman filed a special motion to strike Kashian's complaint on July 19, 2000. He argued

that both his environmental litigation activities and his *903 letter to the Attorney General were absolutely privileged (Civ. Code, 47, subd. (b)), and failed in any event to constitute a deceptive business practice or an actionable defamation, respectively. In his accompanying declaration, Harriman specifically denied Kashian's allegations about the purposes behind his environmental litigation. As for Kashian's defamation claims, Harriman acknowledged sending his letter to the Attorney General. And he said he also sent copies to his clients (presumably Valley Advocates and KGP) and to the two other organizations with which he was joining to request an investigation of CHCC (presumably St. Agnes and LHCC). **But he declared: "at no time did I provide a copy of the letter, or of its contents, nor did I arrange for the letter to be conveyed, to the Fresno Bee." Kashian's opposition to Harriman's SLAPP motion dealt principally with the first cause of action for unfair competition. Kashian attached declarations by three individuals who had been involved in one way or another with Harriman's previous environmental lawsuits, as well as his own (Kashian's) declaration; evidentiary objections to Harriman's declaration in support of the motion; and a request the court take judicial notice of certain pleadings and other documents related to the earlier suits. He also challenged Harriman's claims of privilege. In reply, Harriman argued **the evidence proffered by Kashian did not support his unfair competition claim, and noted in any case that most of it **related to events that had occurred outside the four-year statutory limitations period for such claims. **He also submitted the declarations of three more individuals involved with the environmental organizations on whose behalf he had filed suit, and another declaration of his own. Kashian again filed written objections to the declarations. The Court's Order The court concluded Harriman had met his initial burden of showing Kashian's action was subject to the anti-SLAPP statute, such that the burden then shifted to Kashian to establish a probability he would prevail if the *904 action were to go to trial. **The court held Kashian had failed to meet this burden. [FN5] FN5 The court took judicial notice of the documents submitted by Kashian (consisting mostly of pleadings filed by Harriman in some of the environmental cases), but declined to take notice of the truth of any facts asserted in them. (See Sosinsky v. Grant (1992) 6 Cal.App.4th 1548[8 Cal.Rptr.2d 552].) The court also noted Kashian's evidentiary objections, and stated it had considered only admissible evidence. (See Biljac Associates v. First Interstate Bank (1990) 218 Cal.App.3d 1410, 1419[267 Cal.Rptr. 819]; but see Sambrano v. City of San Diego (2001) 94 Cal.App.4th 225, 234238[114 Cal.Rptr.2d 151] [disagreeing with Biljac].) As for the first cause of action for unfair competition, **the court found the evidence failed to show that Valley Advocates and the other groups on whose behalf Harriman had filed environmental lawsuits were merely sham corporations he used to pursue meritless litigation for his own benefit. The court made no ruling about whether statements made in connection with the lawsuits were privileged. As for the second cause of action for defamation (as a result of sending the letter to the Attorney General), the court concluded Harriman's statements were privileged under section 47, subdivision (b) of the Civil Code. The court declined to decide whether the privilege was a qualified one (in which case it could be defeated by a showing the statements were made with actual malice), or it was absolute (in which case it applies regardless of malice). This was so, the court explained, because the evidence failed to show Harriman had acted with malice in any event. [FN6]

FN6 Apart from the question of privilege, the court concluded Kashian was a private figure for First Amendment purposes. Thus, but for the privilege, Kashian could have established his claim for defamation without having to prove Harriman acted with actual malice. (See Mosesian v. McClatchy Newspapers (1991) 233 Cal.App.3d 1685, 1697[285 Cal.Rptr. 430].) And, as for the third cause of action for defamation (as a result of the Fresno Bee article), the court found the evidence failed to show it was Harriman who sent the letter to the newspaper. It also ruled Harriman's delivery of the letter to third persons (his clients, again presumably St. Agnes and LHCC) was privileged under Civil Code section 47, subdivision (c). On November 9, 2000, Kashian filed a timely notice of appeal from the court's order granting Harriman's SLAPP motion. (See 425.16, subd. (j), 904.1, subd. (a)(13); Kyle v. Carmon (1999) 71 Cal.App.4th 901, 906-907[84 Cal.Rptr.2d 303] [order granting or denying a special motion to strike under 425.16 is appealable order].) On November 30, the court granted Harriman's motion for costs and attorney fees in the amount of $7,296.15. Kashian appealed from this order, *905 and Harriman cross-appealed. (See 904.1, subd. (a)(2); Norman I. Krug Real Estate Investments, Inc. v. Praszker (1990) 220 Cal.App.3d 35, 46[269 Cal.Rptr. 228] [postjudgment order awarding costs and attorney fees is separately appealable].) We subsequently dismissed Harriman's cross-appeal. Discussion I. The Anti-SLAPP Statute (1) The Legislature enacted section 425.16 in 1992 to provide a procedure by which a trial court can "dismiss at an early stage nonmeritorious litigation meant to chill the valid exercise of the constitutional rights of freedom of speech and petition in connection with a public issue." (Sipple v. Foundation for Nat. Progress (1999) 71 Cal.App.4th 226, 235[83 Cal.Rptr.2d 677].) The statute, as subsequently amended, provides in part: "(a) The Legislature finds and declares that there has been a disturbing increase in lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances. The Legislature finds and declares that it is in the public interest to encourage continued participation in matters of public significance, and that this participation should not be chilled through abuse of the judicial process. To this end, this section shall be construed broadly. "(b)(1) A cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim. "(2) In making its determination, the court shall consider the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based. [] ... [] "(e) As used in this section, 'act in furtherance of a person's right of petition or free speech under the United States or California Constitution in connection with a public issue' includes: (1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law; (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding *906 authorized by law; (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest; (4) or any other conduct in furtherance of the exercise of the constitutional right of petition or the

constitutional right of free speech in connection with a public issue or an issue of public interest." (Italics added.) Thus, section 425.16 requires the trial court to undertake a two-step process in determining whether to grant a SLAPP motion. "First, the court decides whether the defendant has made a threshold prima facie showing that the defendant's acts, of which the plaintiff complains, were ones taken in furtherance of the defendant's constitutional rights of petition or free speech in connection with a public issue." (Paul for Council v. Hanyecz (2001) 85 Cal.App.4th 1356, 1364[102 Cal.Rptr.2d 864] (Paul for Council ).) If the court finds the defendant has made the requisite showing, the burden then shifts to the plaintiff to establish a "probability" of prevailing on the claim by making a prima facie showing of facts that would, if proved, support a judgment in the plaintiff's favor. (Kyle v. Carmon, supra, 71 Cal.App.4th atp. 907.) The court also considers the defendant's opposing evidence, but only to determine if it defeats the plaintiff's showing as a matter of law. (Lafayette Morehouse, Inc. v. Chronicle Publishing Co. (1995) 37 Cal.App.4th 855, 867[44 Cal.Rptr.2d 46].) That is, the court does not weigh the evidence or make credibility determinations. (Church of Scientology v. Wollersheim (1996) 42 Cal.App.4th 628, 654[49 Cal.Rptr.2d 620]; Wilcox v. Superior Court (1994) 27 Cal.App.4th 809, 827-828[33 Cal.Rptr.2d 446].) Finally, in assessing the probability the plaintiff will prevail, the court considers only the evidence that would be admissible at trial. (Church of Scientology v. Wollersheim, supra, at pp. 654-655; Evans v. Unkow (1995) 38 Cal.App.4th 1490, 1497[45 Cal.Rptr.2d 624].) Whether section 425.16 applies, and whether the plaintiff has shown a probability of prevailing, are both questions we review independently on appeal. (ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 999[113 Cal.Rptr.2d 625].) It also noted, on the other hand, that the statute by its terms applies to "causes of action against a person 'arising from any act of that person in furtherance of the person's [constitutional rights]' " (Paul for Council, at p. 1366, quoting 425.16, subd. (b)(1)), and defines such acts to include " 'any written or oral statement or writing,' " or " 'any other conduct' " (Paul for Council, at p. 1366, quoting 425.16, subd. (e)(1)- (3) & (e)(4), respectively). The court concluded that, although it is "technically true" laundering campaign money is an act in furtherance of a protected right (to make campaign contributions), the Legislature could not have intended to include such illegal activity in the scope of section 425.16, i.e., money laundering is not a "valid" exercise of one's constitutional rights. (Paul for Council, supra, 85 Cal.App.4th at pp. 1366, 1367.) Having just reached this conclusion, however, the court then noted its obvious limitations. *910 "In order to avoid any misunderstanding as to the basis for our conclusions, we should make one further point. This case, as we have emphasized, involves a factual context in which defendants have effectively conceded the illegal nature of their election campaign finance activities for which they claim constitutional protection. Thus, there was no dispute on the point and we have concluded, as a matter of law, that such activities are not a valid exercise of constitutional rights as contemplated by section 425.16. However, had there been a factual dispute as to the legality of defendants' actions, then we could not so easily have disposed of defendants' motion. "As we have noted, a defendant need only make a prima facie showing that the plaintiff's suit arises 'from any act of [the defendant] in furtherance of [the defendant's] right of petition or free speech under the United States or California Constitution in connection with a public issue.' ( 425.16, subd. (b)(1).) If the plaintiff contests this point, and unlike the case here, cannot demonstrate as a matter of law that the defendant's acts do not fall under section 425.16's protection, then the claimed illegitimacy of the defendant's acts is an issue which the plaintiff must raise and support in the context of the discharge of the

plaintiff's burden to provide a prima facie showing of the merits of the plaintiff's case. As the court in Wilcox [v.Superior Court, supra, 27 Cal.App.4th 809] put it, this is an additional burden which the plaintiff must address. '[W]e believe this burden should be met in the same manner the plaintiff meets the burden of demonstrating the merits of its causes of action: by showing the defendant's purported constitutional defenses are not applicable to the case as a matter of law or by a prima facie showing of facts which, if accepted by the trier of fact, would negate such defenses.' (Wilcox, supra, 27 Cal.App.4th at p. 824, italics added.)" (Paul for Council, supra, 85 Cal.App.4th at p. 1367.) This is just such a case, where the legality of Harriman's litigation activities is a matter of considerable dispute. [FN10] The burden thus shifted to Kashian to make a prima facie showing sufficient to establish a probability of prevailing. In short, conduct that would otherwise come within the scope *911 of the anti-SLAPP statute does not lose its coverage (or, as we discuss below, the protection of the litigation privilege) simply because it is alleged to have been unlawful or unethical. If that were the test, the statute (and the privilege) would be meaningless. [FN11] FN10 Kashian also refers us to the recent case of Lam v. Ngo (2001) 91 Cal.App.4th 832[111 Cal.Rptr.2d 582].Lam was a tort action by a city councilman (Lam) stemming from a series of sometimes violent political demonstrations held outside his restaurant. Lam sued one of the people (Ngo) who had organized the demonstrations, as well as several unnamed Doe defendants who allegedly had committed acts of violence and intimidation. The appellate court reversed the trial court's order denying Ngo's SLAPP motion, finding there was no evidence he had authorized, directed, or ratified the violence. But it affirmed the order as to the Doe defendants, and remanded the case to permit Lam the opportunity to substitute the names of specific individuals who actually had been involved in the violence. That is, the court concluded Lam had established that someone had committed acts of political violence, which, the court held, were not protected by the First Amendment (and so were not subject to the antiSLAPP statute). (Lam, at p. 851.) Kashian's point appears again to be that section 425.16 applies only to the valid exercise of one's First Amendment rights. But in Lam, as in Paul for Council, there was no question the acts underlying the SLAPP motion were illegal. The same is not true here. (3a) We turn now to the second step of the SLAPP analysis. Kashian argues at some length that the evidence, and the inferences that reasonably might be drawn from it, are sufficient to establish a probability he would prevail if his complaint went to trial. In support of this argument, he urges us to examine the evidence with certain rules in mind. For example, he notes Harriman did not make any formal objections to his (Kashian's) evidence. On this basis, he argues Harriman waived any objections he might have had (Sambrano v. City of San Diego, supra, 94 Cal.App.4th at p. 236), and so the trial court was required to treat all his (Kashian's) otherwise objectionable evidence as competent and admissible (Flood v. Simpson (1975) 45 Cal.App.3d 644, 649[119 Cal.Rptr. 675]). He contends we must do the same. Conversely, Kashian did object to much of Harriman's evidence. Kashian maintains he thereby preserved these objections, and reasserts many of them on appeal. In a similar vein, Kashian also notes Harriman failed to specifically deny many of the assertions made in the declarations submitted by Kashian in opposition to the SLAPP motion, particularly those accusing Harriman of having engaged in a variety of deceptive litigation practices. Harriman's failure to deny the assertions, Kashian urges, should be deemed adoptive admissions to the effect the accusations are true. (See Evid. Code, 1221; People v. Silva (1988) 45 Cal.3d 604, 623[247 Cal.Rptr. 573, 754 P.2d 1070] [hearsay exception].) In sum, Kashian contends the evidence, viewed in this way, is sufficient at least circumstantially to permit a trier of fact to find in his favor on all three causes of action against Harriman. We consider these contentions where appropriate, but first we briefly

review the subject of privilege. Some of the confusion revolves around whether the applicable privilege is an absolute or a qualified one. (5) "California law recognizes two types of privileged communicationscommunications which are absolutely privileged and communications which are qualifiedly or conditionally privileged. If absolutely privileged, there is no liability even if the defamatory communication is made with actual malice. If the privilege is only conditional or qualified, a finding of malice will prevent the communication from being found privileged." (Cruey v. Gannett Co. (1998) 64 Cal.App.4th 356, 367[76 Cal.Rptr.2d 670]; see also Lundquist v. Reusser (1994) 7 Cal.4th 1193, 1206, fn. 12[31 Cal.Rptr.2d 776, 875 P.2d 1279]; 5 Witkin, Summary of Cal. Law (9th ed. 1988) Torts, 498, 519, pp. 585, 609.) A. The Litigation Privilege (6) Civil Code section 47, subdivision (b) defines what is commonly known as the "litigation privilege." "The usual formulation is that the privilege applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and **(4) that have some connection or logical relation to the action." (Silberg v. Anderson (1990) 50 Cal.3d 205, 212[266 Cal.Rptr. 638, 786 P.2d 365].)*913 The litigation privilege is absolute; it applies, if at all, regardless whether the communication was made with malice or the intent to harm. (Wise v. Thrifty Payless, Inc. (2000) 83 Cal.App.4th 1296, 1302[100 Cal.Rptr.2d 437].) Put another way, application of the privilege does not depend on the publisher's "motives, morals, ethics or intent." (Silberg v. Anderson, supra, 50 Cal.3d at p. 220.) Although originally applied only to defamation actions, the privilege has been extended to any communication, not just a publication, having "some relation" to a judicial proceeding, and to all torts other than malicious prosecution. (Rubin v. Green (1993) 4 Cal.4th 1187, 1193-1194[17 Cal.Rptr.2d 828, 847 P.2d 1044]; Edwards v. Centex Real Estate Corp. (1997) 53 Cal.App.4th 15, 29[61 Cal.Rptr.2d 518].) Moreover, "[t]he litigation privilege is not limited to the courtroom, but encompasses actions by administrative bodies and quasi-judicial proceedings. [Citation.] The privilege extends beyond statements made in the proceedings, and includes statements made to initiate official action. [Citation.] [] ... [] "[The] absolute privilege exists to protect citizens from the threat of litigation for communications to government agencies whose function it is to investigate and remedy wrongdoing. [Citation.] The privilege is based on '[t]he importance of providing to citizens free and open access to governmental agencies for the reporting of suspected illegal activity.' [Citation.]" (Wise v. Thrifty Payless, Inc., supra, 83 Cal.App.4th at p. 1303 [holding privilege applies to husband's report to the Department of Motor Vehicles regarding wife's drug use and its possible impact on her ability to drive].) If there is no dispute as to the operative facts, the applicability of the litigation privilege is a question of law. (Rothman v. Jackson (1996) 49 Cal.App.4th 1134, 1139-1140[57 Cal.Rptr.2d 284].) Any doubt about whether the privilege applies is resolved in favor of applying it. (Adams v. Superior Court (1992) 2 Cal.App.4th 521, 529[3 Cal.Rptr.2d 49].) (4b) Kashian argues on the strength of Fenelon v. Superior Court (1990) 223 Cal.App.3d 1476[273 Cal.Rptr. 367], that Harriman's letter to the Attorney General was subject only to a "conditional litigation privilege " under Civil Code section 47, subdivision (b). We will address the merits of this contention later on in our discussion, but mention it here just to point out for the sake of clarity that there is no such thing. The issue in Fenelon, a defamation suit, was whether the defendant's knowingly false police report accusing the plaintiff of a crime was subject to the absolute litigation privilege in subdivision (b) (then subd. (2)), or the qualified " common interest" privilege in subdivision (c) (then subd. (3)). The court disagreed with an earlier decision in Williams v. Taylor (1982) 129 Cal.App.3d 745*914 [181 Cal.Rptr. 423], which had taken the former view, and held instead that only the qualified privilege applied. We discuss this privilege next.

B. The Common Interest Privilege (7) Civil Code section 47, subdivision (c) codifies the common law privilege of common interest, "which protected communications made in good faith on a subject in which the speaker and hearer shared an interest or duty. This privilege applied to a narrow range of private interests. The interest protected was private or pecuniary; the relationship between the parties was close, e.g., a family, business, or organizational interest; and the request for information must have been in the course of the relationship." (Brown v. Kelly Broadcasting Co. (1989) 48 Cal.3d 711, 727[257 Cal.Rptr. 708, 771 P.2d 406]; see also Lunquist v. Reusser, supra, 7 Cal.4th 1193.) Thus, the statute does not create a broad "public interest privilege" protecting publications by the news media to the general public regarding private persons, just because the publications pertain to matters of general public interest. (Brown v. Kelly Broadcasting Co., supra, 48 Cal.3d at p. 738.) "The word ' interested' as used in the statute refers to a more direct and immediate concern. That concern is something other than mere general or idle curiosity of the general readership of newspapers and magazines. One authority explains the statutory interest as follows: (1) The 'interest' applies to a defendant who ' is protecting his own pecuniary or proprietary interest.' (2) The required ' relation' between the parties to the communication is a contractual, business or similar relationship, such as 'between partners, corporate officers and members of incorporated associations,' or between 'union members [and] union officers.' (3) The 'request' referred to must have been in the course of a business or professional relationship. [Citation.]" (Rancho La Costa, Inc. v. Superior Court (1980) 106 Cal.App.3d 646, 664-665[165 Cal.Rptr. 347].) This definition is not exclusive, however, and the cases have taken an " eclectic approach" toward interpreting the statute. (Institute of Athletic Motivation v. University of Illinois (1980) 114 Cal.App.3d 1, 7[170 Cal.Rptr. 411].) "The lesson we deduce from these cases is that the scope of the privilege under section 47, subdivision 3 [now subd. (c)] is not capable of precise or categorical definition, and that its application in a particular case depends upon an evaluation of the competing interests which defamation law and the privilege are designed to serve." (114 Cal.App.3d at p. 11.) (8) The common interest privilege is usually described as a qualified or conditional one, meaning it can be overcome by a showing of malice. But, " [t]his characterization is somewhat misleading. Section 47(3) [now 47, *915 subd. (c)] defines a privileged communication as one made without malice. Thus, if malice is shown, the privilege is not merely overcome; it never arises in the first instance." (Brown v. Kelly Broadcasting Co., supra, 48 Cal.3d at p. 723, fn. 7.) Malice for purposes of the statute means " 'a state of mind arising from hatred or ill will, evidencing a willingness to vex, annoy or injure another person.' " (Id. at p. 723.) " [M]alice is not inferred from the communication." (Civ. Code, 48.) Application of the privilege involves a two-step analysis. The defendant has the initial burden of showing the allegedly defamatory statement was made on a privileged occasion, whereupon the burden shifts to the plaintiff to show the defendant made the statement with malice. (Lundquist v. Reusser, supra, 7 Cal.4th 1193.) The existence of the privilege is ordinarily a question of law for the court. (Institute of Athletic Motivation v. University of Illinois, supra, 114 Cal.App.3d at p. 13, fn. 5.) First Cause of Action (Unfair Competition) As we have already discussed, Kashian's unfair competition claim "arises from " Harriman's litigation activities, and so falls within the scope of the anti-SLAPP statute. ( 425.16, subd. (e)(2).) For much the same reason, the claim concerns communications ordinarily protected by the litigation privilege. (See Dove Audio, Inc. v. Rosenfeld, Meyer & Susman, supra, 47 Cal.App.4th at p. 784 [just as communications preparatory to seeking an investigation by the Attorney General are protected by the litigation privilege, they are also entitled to the benefits of the anti-SLAPP statute].) Nonetheless, Kashian contends the privilege does not apply for three reasons.

First, he argues Harriman's "practice of filing complaints with sham plaintiffs for the purpose of deceiving the target defendants" (fn. omitted) was conduct rather than speech. That is, while the anti-SLAPP statute applies to a cause of action arising from "any act" (i.e., conduct) of a person taken in furtherance of their right to petition or free speech ( 425.16, subd. (b)(1)), the litigation privilege applies only to a "publication or broadcast " (i.e., speech) made in connection with an official proceeding (Civ. Code, 47, subd. (b)). (See Ludwig v. Superior Court, supra, 37 Cal.App.4th at p. 19.)*916 Kashian relies on Kimmel v. Goland (1990) 51 Cal.3d 202[271 Cal.Rptr. 191, 793 P.2d 524] (Kimmel). In Kimmel, residents of a mobilehome park sued the park's owners in a dispute over the residents' right to sell their mobilehomes. In anticipation of the suit, some of the residents surreptitiously taped their conversations with park personnel, without the latter's consent. When the owners learned of the tapes, they filed a cross-complaint against the residents, seeking damages for the illegal recording. (Pen. Code, 632, 637.2.) [FN12] The residents moved for judgment on the pleadings on the ground their actions were protected by the litigation privilege. The trial court granted the motion, and the owners appealed. (Kimmel, supra, 51 Cal.3d at pp. 206-208.) FN12 Penal Codesection 637.2, as then in effect, provided for a minimum recovery of $3,000 notwithstanding the existence of actual damages. The appellate court reversed, and the Supreme Court affirmed the reversal. In so doing, the court distinguished between communicative and noncommunicative conduct. It explained the privilege would apply to a cause of action based on a communication or publication of the content of the illegal recording (if made in connection with litigation), but did not apply to the owners' claim for damages based on the act of recording itself. (Kimmel, supra, 51 Cal.3d at pp. 209-212.) "[O]ur holding that the litigation privilege does not apply is limited to the injury resulting from [the owners'] and [their attorney's] conduct. To the extent the complaint rests on [the attorney's] alleged communicative acts of 'counseling' and 'advising' his clients, the privilege is clearly operative." (Id. at p. 208, fn. 6; see also Mero v. Sadoff (1995) 31 Cal.App.4th 1466, 1480[37 Cal.Rptr.2d 769] [doctor's negligence during examination preparatory to litigation not subject to privilege].) Subsequent decisions have drawn this same distinction, and found the acts in question were a form of communicative conduct and thus absolutely protected by the litigation privilege. In Rubin v. Green, supra, 4 Cal.4th 1187, the owner of (still another) mobilehome park sued a resident and her attorney for assorted tort causes of action on the ground they were unlawfully soliciting other residents to join in an anticipated lawsuit against the owner. The residents later filed the suit, whereupon the owner amended his complaint to add an unfair competition cause of action for injunctive relief. The trial court sustained the residents' demurrer to the owner's amended complaint, ruling the residents' conduct was privileged under Civil Code section 47, subdivision (b). In reliance on Kimmel, the appellate court reversed because, among other reasons, it found the residents' conduct was primarily noncommunicative. (Rubin v. Green, supra, 4 Cal.4th at pp. 1191-1192.) The Supreme Court, in turn, reversed the appellate court and ordered the action dismissed. It concluded the defendants' alleged misrepresentations, whether or not they amounted to wrongful solicitation, "were communicative in their essential nature and therefore within the privilege of *917section 47(b)." (Id. at p. 1196.) And as we will discuss more fully below, the court also held the owner was not entitled to injunctive relief under the unfair competition statute for what was essentially the same conduct. (Id. at p. 1203.) Likewise, in Ludwig v. Superior Court, supra, 37 Cal.App.4th 8, also an action for unfair business practices (see above), the court held the defendant's actions in recruiting and encouraging others to oppose a competing shopping center development, amounted to communicative conduct. "We are at a loss to imagine how Ludwig accomplished the recruiting and encouragement without communication." (Id. at p. 20.) It found the city's reliance on Kimmel for the contrary proposition "remarkably inapposite." (Id. at p. 18.)

In the case before us, Kashian argues Harriman filed meritless lawsuits on behalf of "sham plaintiffs" to deceive the defendants into believing the suits had more support than they did in fact. This alleged deception is essentially communicative conduct, even though it also may have involved noncommunicative acts. (Rubin v. Green, supra, 4 Cal.4th at p. 1195.) Kashian's second argument against application of the litigation privilege is based on Carney v. Rotkin, Schmerin & McIntyre, supra, 206 Cal.App.3d 1513. In that case the defendant law firm was hired to collect a money judgment obtained by its client against Ms. Carney. Carney, an elderly widow, was unable to find transportation and so failed to appear at a courtordered judgment-creditor examination. When she called to explain, the firm told her, falsely, that a bench warrant had been issued and would not be recalled unless she paid $1,000 toward her debt. Since she was unable to pay, Carney stayed in her apartment for several days expecting to be arrested. Once she discovered there was no warrant, she sued the law firm for negligent and intentional infliction of emotional distress, abuse of process, and unfair debt collection practices. The law firm demurred on the ground, among others, that its statements to Carney were absolutely privileged under Civil Code section 47, subdivision (2) (now subd. (b)). The trial court sustained the demurrer without leave to amend, and dismissed the action. Carney appealed. The appellate court reversed. **It concluded the privilege did not apply because the third prong of the four-prong test (see above) was lacking, i.e., the law firm's statements to Carney had not been made "to 'serve the purpose of litigation' " because they were not only false but also arguably a violation of section 6128 of the Business and Professions Code. (Carney v. Rotkin, Schmerin & McIntyre, supra, 206 Cal.App.3d at p. 1522.) Kashian *918 maintains the same is true here with respect to Harriman's statements made in connection with his environmental litigation (in that he claims they violated the same statute). However, the Supreme Court's subsequent decision in Silberg v. Anderson, supra, 50 Cal.3d 205 has raised a question about the continuing validity of Carney. In reaching its conclusion, the Carney court relied on Kinnamon v. Staitman & Snyder (1977) 66 Cal.App.3d 893[136 Cal.Rptr. 321], in which the court held a threatening and misleading letter sent by a law firm to its client's creditor, in violation of the rules of professional conduct, was not privileged because it did not serve the purpose of litigation. (Id. at pp.896-897.)Silberg expressly disapproved Kinnamon and several other cases insofar as they utilized an "interest of justice" requirement, "either linguistically or substantively," as a condition for application of the litigation privilege. (Silberg v. Anderson, supra, 50 Cal.3d at pp. 217, 219.) [FN13] As the Silberg court explained, the "interest of justice" test had originally appeared in Bradley v. Hartford Acc. & Indem. Co. (1973) 30 Cal.App.3d 818[106 Cal.Rptr. 718], where "the court read into the requirement that the [privileged] communication be made 'to achieve the objects of the litigation' the additional requirement that the communication must have also been made for the purpose of promoting the 'interest of justice.' " (Silberg, supra, 50 Cal.3d at p. 217.) However, the Supreme Court said, " while the added moral consideration injected by the Bradley court may seem attractive, on further reflection it is seen to be a drastic departure from precedent and largely destructive of the principal purpose of the litigation privilege. It would permit derivative tort suits in many, if not most, cases on the ground that an *919 otherwise privileged communication was not made for the purpose of promoting justice, a charge easily and quickly made by an adversary." (Ibid.) FN13 Silberg arose from a dissolution proceeding in which the husband and wife agreed they and their children would undergo a psychological evaluation, to be performed by a mutually agreeable and independent psychologist, for the purpose of determining the appropriate visitation and child custody arrangements. The evaluation was performed by a psychologist (Adler) recommended by the wife's attorney (Anderson). The husband later sued Anderson, as well as his ex-wife and his own attorney, alleging Anderson had misrepresented to him that Adler was independent and neutral, when in fact

Anderson and Adler had a preexisting relationship, which relationship in turn had caused Adler's report to be biased against him (the husband). The defendants demurred to the complaint on the ground Anderson's statements to the husband were absolutely privileged under Civil Code section 47, subdivision (2) (now subd. (b)). The trial court sustained the demurrer as to all causes of action without leave to amend, and dismissed the action. The appellate court affirmed the judgment of dismissal except as to the cause of action for "intentional tort." It concluded Anderson's representations were not privileged "if they were made to achieve personal objectives or to gain an advantage for her client through artifice or deceit, reasoning in that case they could not have been made to promote the 'interest of justice.' " (Silberg v. Anderson, supra, 50 Cal.3d atp. 211.) It therefore remanded the matter to the trial court to permit the husband to amend the cause of action to allege Adler had acted with an " ' improper objective.' " (Ibid.) The Supreme Court granted review to determine whether the litigation privilege is subject to an "interest of justice" exception. (Ibid.) The court went on to explain the "interest of justice" test "is wholly inconsistent with the numerous cases in which fraudulent communications or perjured testimony have nevertheless been held privileged." (Silberg v. Anderson, supra, 50 Cal.3d at p. 218.) It continued: "Obviously, such a test would also be contrary to the decisions in which liability for abuse of process is held precluded by the privilege. [Citations.] One of the two necessary elements of that tort is an ulterior purpose. [Citation.] Finally, endorsement of the 'interest of justice' requirement would be tantamount to the exclusion of all tortious publications from the privilege, because tortious conduct is invariably inimical to the 'interest of justice.' Thus, the exception would subsume the rule." (Ibid.) The court recognized that strict application of the privilege to disallow derivative tort actions necessarily means some injuries will go uncompensated. But it said "[t]he salutary policy reasons for an absolute privilege supersede individual litigants' interests in recovering damages for injurious publications made during the course of judicial proceedings." (Silberg v. Anderson, supra, 50 Cal.3d at p. 218.) The court also noted that, in many of the decisions purporting to apply the "interest of justice" test, the court could have reached the same result (i.e., no privilege) based on the absence of one of the privilege's traditionally recognized elements. (Id. at pp. 217- 218.) **In addition, the court observed that remedies other than a derivative tort action will often exist, including, most notably, criminal prosecution under Business and Professions Code section 6128. [FN14] (Silberg, supra, 50 Cal.3d at pp. 218-219.) Finally, the court noted that "republications to nonparticipants in the [underlying] action are generally not privileged under section 47(2) [now 47, subd. (b)], and are thus actionable unless privileged on some other basis." (Silberg, at p. 219.) FN14 Business and Professions Code section 6128 provides in relevant part: "Every attorney is guilty of a misdemeanor who ... [] (a) Is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party." Referring back then to the four traditional elements required for application of the litigation privilege, the court effectively conflated the third and fourth. It said: "The [third] requirement that the communication be in furtherance of the objects of the litigation is, in essence, simply part of the [fourth] requirement that the communication be connected with, or have some logical relation to, the action, i.e., that it not be extraneous to the action.... The 'furtherance' requirement was never intended as a test of a participant's motives, morals, ethics or intent." (Silberg v. Anderson, supra, 50 Cal.3d at pp. 219220.)*920 The Silberg court overruled Kinnamon even though Kinnamon never specifically mentioned the

"interest of justice" test. Thus, the court evidently concluded Kinnamon had applied the test sub silentio by taking account of the defendant's arguably unethical conduct to deny application of the litigation privilege. Carney, in turn, in reliance on Kinnamon, concluded the privilege did not apply because the defendant's conduct was not only unethical, but possibly a criminal violation of Business and Professions Code section 6128. (Carney v. Rotkin, Schmerin & McIntyre, supra, 206 Cal.App.3d at p. 1522.) This is the same statute Kashian contends Harriman violated. It is also one of the alternative remedies the court mentioned in Silberg in lieu of a derivative tort action barred by the litigation privilege. There would, of course, be no need to separately pursue this remedy if conduct violating the statute were, by definition, outside the litigation privilege. We conclude from all this that communications made in connection with litigation do not necessarily fall outside the privilege simply because they are, or are alleged to be, fraudulent, perjurious, unethical, or even illegal. This is assuming, of course, that the communications are "logically related" to the litigation. The communications in this case were not only related to the litigation, they were the litigation, or more accurately the pleadings in the litigation. Cases applying the Silberg "logical relation" test do not lead us to a different result. In Rothman v. Jackson, supra, 49 Cal.App.4th 1134, for example, the court held the litigation privilege does not extend to "litigating in the press." (Id. at p. 1149.) It noted Silberg's dictum that " ' republications to nonparticipants in the action are generally not privileged under section [47, subd. (b)].' " (Id. at p. 1143; see also Susan A. v. County of Sonoma (1991) 2 Cal.App.4th 88, 93-94[3 Cal.Rptr.2d 27] [applying the rule to reach the same result].) The court in Rothman also restated the "logical relation" test this way: "[T]he 'connection or logical relation' which a communication must bear to litigation in order for the privilege to apply, is a functional connection. That is to say, the communicative act ... must function as a necessary or useful step in the litigation process and must serve its purposes. This is a very different thing from saying that the communication's content need only be related in some way to the subject matter of the litigation ...." (Rothman, supra, 49 Cal.App.4th at p. 1146.) And as for furthering "the objects of the litigation," the court said Silberg's test "can be satisfied only by communications which function intrinsically, and apart from any consideration of the speaker's intent, to advance a litigant's case." (*921Rothman v. Jackson, supra, 49 Cal.App.4th at p. 1148.) Notably, it then added: "A party's pleadings obviously satisfy this test." (Ibid.) (12) Malice may be established by showing the publisher of a defamatory statement lacked reasonable grounds to believe the statement was true, and therefore acted with a reckless disregard for the rights of the person defamed. (Cuenca v. Safeway San Francisco Employees Fed. Credit Union (1986) 180 Cal.App.3d 985, 997[225 Cal.Rptr. 852].) However, negligence is not malice. (Cabanas v. Gloodt Associates (E.D.Cal. 1996) 942 F.Supp 1295,1301.) "It is not sufficient to show that the statements ... were inaccurate, or even unreasonable. Only willful falsity or recklessness will suffice. 'It is only when the negligence amounts to a reckless or wanton disregard for the truth, so as to reasonably imply a wilful disregard for or avoidance of accuracy, that malice is shown.' " (Id. at pp. 1301-1302, quoting Roemer v. Retail Credit Co. (1970) 3 Cal.App.3d 368, 372[83 Cal.Rptr. 540].) (13) Statements that are otherwise privileged nonetheless may be used in some circumstances to prove the speaker's state of mind. (Oren Royal Oaks Venture v. Greenberg, Bernhard, Weiss & Karma, Inc. (1986) 42 Cal.3d 1157, 1168[232 Cal.Rptr. 567, 728 P.2d 1202].) "[W]hile section 47(2) *932 [(now 47, subd. (b))] bars certain tort causes of action which are predicated on a judicial statement or publication itself, the section does not create an evidentiary privilege for such statements. Accordingly, when allegations of misconduct properly put an individual's intent at issue in a civil action, statements made during the course of a judicial proceeding may be used for evidentiary purposes in determining whether

the individual acted with the requisite intent. [Citations.]" (Ibid.) (11b) Kashian's bare assertion that many of the statements in Harriman's letter are false does not make it so, much less establish that Harriman made the statements maliciously. For example, Harriman urged the Attorney General to investigate certain of Kashian's business dealings with Community, as follows: "What your investigator(s) will need to do is to obtain property profiles on certain properties, such as the proposed Heart Hospital and Women's Center, in order to trace the ownership and development of the properties with and/or by entities in which Mr. Kashian and/or his partners have been involved, either directly or indirectly, through such entities as 'Federal Properties' and/or the 'Bombay Company, Inc.' " In his declaration in opposition to Harriman's SLAPP motion, Kashian responded in part: "The Harriman allegations implying that I own or have an ownership interest in two companies known as 'Federal Properties' and [']Bombay Company, Inc.' are good examples of Harriman's completely groundless claims. I have no interest in either of the two companies if, indeed, such companies actually exist anywhere other than in the mind of Richard Harriman. Even a cursory review of the true facts would have put anyone, including Richard Harriman, on notice that many of the factual allegations in the letter are false. For example, it is a matter of public record that the property purchased by the Fresno Heart Hospital-which Harriman accused me of profiting from-was sold by River Park Properties approximately 10 years prior to the Heart Hospital's purchase. Neither I nor River Park Properties nor any other entities in which I held any interest had any financial stake in that land sale, and this was made clear in an article which appeared in the Fresno Bee a few days after excerpts from Harriman's letter to the Attorney General were published." The Fresno Bee article that appeared on June 1, 2000, simply reported that "[t]he property purchased by Community [for the heart hospital] was not owned by Kashian." This evidence tends to show at most that Harriman's letter was inaccurate insofar as it suggested Kashian may have had a direct financial interest in Community's purchase of land for a heart hospital. On the other hand, it appears to substantiate the suggestion that Kashian had previously "acquired, developed, owned, and/or sold" the land through one or another of the *933 business entities with which he was involved. We do not believe in any case the evidence is sufficient to support an inference Harriman acted with "a reckless or wanton disregard for the truth" when he wrote the letter. (Roemer v. Retail Credit Co., supra, 3 Cal.App.3d at p. 372.) Consequently, Kashian has failed to meet his burden of establishing a probability he would prevail at trial on the third cause of action. Disposition The judgment is affirmed. Costs are awarded to respondents. Silberg v. Anderson, 50 Cal.3d 205, 786 P.2d 365, 266 Cal.Rptr. 638 (Cal. Feb 26, 1990) Husband brought action against former wife's divorce attorney, alleging professional negligence, breach of contract, and negligent and intentional infliction of emotional distress for allegedly misrepresenting neutrality of psychologist retained to examine parties and their children. The Superior Court, Sonoma County, William L. Bettinelli, J., sustained demurrer without leave to amend and dismissed suit, and husband appealed. The Court of Appeal, Smith, J., 249 Cal.Rptr. 697, reversed and remanded with directions. Review was granted, superseding the opinion of the Court of Appeal. The Supreme Court, Kaufman, J., held that privilege accorded to statements which are made in course of judicial proceedings applies to any publication required or permitted by law in course of judicial proceeding to achieve the objects of litigation, regardless of whether publication is made for purpose of promoting the interest of justice. Judgment of Court of Appeal reversed; directions to reinstate trial court's judgment.

West Headnotes [1] Torts 379 122

379 Torts 379I In General 379k120 Defenses and Mitigating Circumstances 379k122 k. Litigation Privilege; Witness Immunity. Most Cited Cases (Formerly 379k16) Privilege accorded to statements which are made in the course of judicial proceedings applies to any publication required or permitted by law in course of judicial proceeding to achieve objects of litigation, regardless of whether publication is made for purpose of promoting the interest of justice. West's Ann.Cal.Civ.Code 47, subd. 2. [2] Torts 379 122

379 Torts 379I In General 379k120 Defenses and Mitigating Circumstances 379k122 k. Litigation Privilege; Witness Immunity. Most Cited Cases (Formerly 379k16) Privilege accorded to statements which are made in course of judicial proceedings applies to any publication required or permitted by law in course of judicial proceeding to achieve objects of litigation, even though publication is made outside of courtroom, and even though no function of court or its officers is involved. West's Ann.Cal.Civ.Code 47, subd. 2. [3] Torts 379 122

379 Torts 379I In General 379k120 Defenses and Mitigating Circumstances 379k122 k. Litigation Privilege; Witness Immunity. Most Cited Cases (Formerly 379k16) Privilege accorded to statements which are made in course of judicial proceedings applies to any communication made in judicial or quasi-judicial proceedings by litigants or other participants to achieve objects of litigation, and which has some connection or logical relation to action. West's Ann.Cal.Civ.Code 47, subd. 2. [4] Torts 379 122

379 Torts 379I In General 379k120 Defenses and Mitigating Circumstances 379k122 k. Litigation Privilege; Witness Immunity. Most Cited Cases (Formerly 379k16) Privilege accorded to statements which are made in course of judicial proceedings is designed to afford litigants and witnesses the utmost freedom of access to courts without fear of being harassed subsequently by derivative tort actions, to encourage attorneys to zealously protect their clients' interest, and to enhance finality of judgments. West's Ann.Cal.Civ.Code 47, subd. 2. [5] Malicious Prosecution 249 10

249 Malicious Prosecution 249I Nature and Commencement of Prosecution 249k9 Civil Actions 249k10 k. In General. Most Cited Cases

Torts 379

122

379 Torts 379I In General 379k120 Defenses and Mitigating Circumstances 379k122 k. Litigation Privilege; Witness Immunity. Most Cited Cases (Formerly 379k16) Privilege accorded statements which are made in course of judicial proceedings is absolute in nature and applies to all torts save malicious prosecution. West's Ann.Cal.Civ.Code 47, subd. 2. [6] Attorney and Client 45 26

45 Attorney and Client 45I The Office of Attorney 45I(B) Privileges, Disabilities, and Liabilities 45k26 k. Liabilities to Adverse Parties and to Third Persons. Most Cited Cases Torts 379 122

379 Torts 379I In General 379k120 Defenses and Mitigating Circumstances 379k122 k. Litigation Privilege; Witness Immunity. Most Cited Cases (Formerly 379k16) Misstatements allegedly made by wife's attorney regarding impartiality of psychologist retained in marital dissolution proceeding to examine parties and their children were absolutely privileged, and would not support tort action against wife's attorney when, as alleged result of psychologist's recommendations, husband was denied custody and allegedly lost even reasonable visitation with children. West's Ann.Cal.Civ.Code 47, subd. 2. [7] Torts 379 122

379 Torts 379I In General 379k120 Defenses and Mitigating Circumstances 379k122 k. Litigation Privilege; Witness Immunity. Most Cited Cases (Formerly 379k16) Requirement that communication be made in furtherance of objects of litigation in order to qualify for litigation privilege is, in essence, simply part of requirement that communication be connected with, or have some logical relation to, the action; requirement was never intended as test of party's motives, morals, ethics or intent. West's Ann.Cal.Civ.Code 47, subd. 2. **366 *209 ***640 William B. Daniels II, and Laurie Richards Shoch, Sebastopol, for plaintiff and appellant. **367 Moore, Clifford, Wolfe, Larson & Trutner, Peter Dixon, Tammy L. O'Leary, Oakland, Kornblum, Kelly & Herlihy, Los Angeles, Kornblum & McBride and William B. Boone, San Francisco for defendant and respondent. Proskauer, Rose, Goetz & Mendelsohn and Steven G. Drapkin, Los Angeles, as amici curiae on behalf of defendant and respondent. KAUFMAN, Justice.FN*

FN* Retired Associate Justice of the Supreme Court sitting under assignment by the Acting Chairperson of the Judicial Council. We granted review in this case to resolve an apparent conflict in decisions of the Courts of Appeal regarding the nature and scope of the litigation privilege found in Civil Code section 47, subdivision 2. FN1 We conclude that the decision of the Court of Appeal in the instant case, and the line of cases on which it relied in adopting the so-called interest of justice test, are inconsistent with the absolute nature of the litigation privilege and its underlying policy purposes. We therefore disapprove the line of cases employing the interest of justice test and reverse the judgment of the Court of Appeal with directions to reinstate the judgment of dismissal issued by the trial court. Section 47(2) provides in relevant part: A privileged publication or broadcast is one made-[] 2. In any ... **(2) judicial proceeding ... provided, that an allegation or averment contained in any pleading or affidavit filed in an action for divorce ... made of or concerning a person by or against whom no affirmative relief is prayed in such action shall not be a privileged publication or broadcast as to the person making said allegation or averment within the meaning of this section unless such pleading be verified or affidavit sworn to, and be made without malice, by one having reasonable and probable cause for believing the truth of such allegation or averment and unless such allegation or averment be material and relevant to the issues in such action. This action arises from a marital dissolution proceeding in which defendant, Margaret Anderson, was the attorney for the wife of Harry Silberg (hereafter husband), the plaintiff in this action. The following facts are derived from the complaint since, under settled law, we assume the truth of all properly pleaded material allegations of the complaint (Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 170, 164 Cal.Rptr. 839, 610 P.2d 1330; Alcorn v. Anbro Engineering, Inc. (1970) 2 Cal.3d 493, 496, 86 Cal.Rptr. 88, 468 P.2d 216) and give the complaint a reasonable interpretation by reading it as a whole and its parts in their context (Blank v. Kirwan (1985) 39 Cal.3d 311, 318, 216 Cal.Rptr. 718, 703 P.2d 58). During the course of the dissolution proceedings, the husband asked his attorney to obtain an agreement from the wife that all family members would submit to psychological evaluation and counseling to be conducted by a mutually agreeable and independent psychologist for the purpose of determining appropriate visitation and custody arrangements. The parties' attorneys subsequently stipulated to proceed in that fashion and, upon the recommendation of Attorney Anderson and with the approval of husband's attorney, a psychologist, Dr. Robert Adler, was selected to perform the psychological evaluation and counseling. Although the record does not disclose the results of the psychological evaluation, the psychologist's recommendations for custody and visitation arrangements or the court orders resulting from the proceeding, the overall result was apparently adverse to the husband. Subsequently, husband instituted this action against Attorney Anderson (hereafter defendant), as well as his own attorney,FN2 ***641 claiming damages for breach of contract, negligence and intentional tort (apparently intentional infliction of emotional distress or intentional misrepresentation). **Husband's claims are based upon allegations that, contrary to defendant's representation **368 that the psychologist recommended by her was independent and neutral, Dr. Adler was a person with whom she had an unspecified preexisting relationship, the existence and nature of which she allegedly failed to disclose to husband's attorney. **Husband claims defendant subsequently used her undisclosed relationship with Dr. Adler to influence him to the wife's advantage in the psychological evaluation of the Silberg family members. **Husband further alleges that, due to defendant's influence, Dr. Adler produced a report that was biased, wholly inaccurate and defamatory. *211 Husband asserts that defendant's breach of contract, negligence, negligent misrepresentation, and intentional tort caused him the loss of reasonable visitation arrangements with his children, damage to his reputation in the community and emotional distress. He seeks both compensatory and

punitive damages. FN2. Although plaintiff's attorney is named as a defendant in the complaint, he is not a party to this appeal. Only the sufficiency of the allegations against defendant Anderson are at issue here. Defendant demurred to the complaint, urging that husband had failed to state facts sufficient to constitute a cause of action against her because her statements during the litigation were privileged under section 47(2). The trial court sustained the demurrer to all causes of action without leave to amend and entered a judgment of dismissal as to defendant. FN3. The Court of Appeal construed husband's intentional tort claim as being one only for intentional infliction of emotional distress. Although the facts alleged in the complaint would also appear to support a theory of fraud, under our holding in this case that question need not be addressed. Defendant petitioned for review, asserting, in essence, that the privilege delineated in section 47(2) is absolute in nature and applies to all torts save malicious prosecution, and that the Court of Appeal decision, and the line of decisions upon which it relied for its interest of justice test, are inconsistent with the absolute nature of the privilege and its underlying policy purposes. We granted review and now confront the question whether the privilege under section 47(2) is subject to an interest of justice exception. II [1][2] In furtherance of the public policy purposes it is designed to serve, the privilege prescribed by section 47(2) has been given broad application. *212 Although originally enacted with reference to defamation (see Oren Royal Oaks Venture v. Greenberg, Bernhard, Weiss & Karma, Inc. (1986) 42 Cal.3d 1157, 1163, 232 Cal.Rptr. 567, 728 P.2d 1202), the privilege is now held applicable to any communication, whether or not it amounts to a publication (see e.g., ***642Rosenthal v. Irell & Manella (1982) 135 Cal.App.3d 121, 126, 185 Cal.Rptr. 92; Block v. Sacramento Clinical Labs, Inc. (1982) 131 Cal.App.3d 386, 390, 182 Cal.Rptr. 438; Lerette v. Dean Witter Organization, Inc. (1976) 60 Cal.App.3d 573, 577, 131 Cal.Rptr. 592), and all torts except malicious prosecution. (Albertson v. Raboff (1956) 46 Cal.2d 375, 382, 295 P.2d 405; Kilgore v. Younger (1982) 30 Cal.3d 770, 778, 180 Cal.Rptr. 657, 640 P.2d 793; **369Block v. Sacramento Clinical Labs, Inc., supra, 131 Cal.App.3d 386, 390-392, 182 Cal.Rptr. 438; Pettitt v. Levy (1972) 28 Cal.App.3d 484, 489, 104 Cal.Rptr. 650.) Further, it applies to any publication required or permitted by law in the course of a judicial proceeding to achieve the objects of the litigation, even though the publication is made outside the courtroom and no function of the court or its officers is involved. (Albertson v. Raboff, supra, 46 Cal.2d 375, 381, 295 P.2d 405; Rosenthal v. Irell & Manella, supra, 135 Cal.App.3d 121, 126, 185 Cal.Rptr. 92; Pettitt v. Levy, supra, 28 Cal.App.3d 484, 489, 104 Cal.Rptr. 650.) [3] The usual formulation is that the privilege applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action. (See, e.g., Green v. Uccelli (1989) 207 Cal.App.3d 1112, 1124, 255 Cal.Rptr. 315; Carney v. Rotkin, Schmerin & McIntyre (1988) 206 Cal.App.3d 1513, 1521, 254 Cal.Rptr. 478; Walsh v. Bronson (1988) 200 Cal.App.3d 259, 269, 245 Cal.Rptr. 888; Financial Corp. of America v. Wilburn (1987) 189 Cal.App.3d 764, 772-773, 234 Cal.Rptr. 653; Chen v. Fleming (1983) 147 Cal.App.3d 36, 41, 194 Cal.Rptr. 913; Hagendorf v. Brown (9th Cir.1983) 699 F.2d 478, 480.) However, a line of cases decided in the Courts of Appeal would carve out an exception to the privilege prescribed by section 47(2) for those communications not made for the purpose of

promoting the interest of justice. (See Bradley v. Hartford Acc. & Indem. Co. (1973) 30 Cal.App.3d 818, 826, 106 Cal.Rptr. 718; Kinnamon v. Staitman & Snyder (1977) 66 Cal.App.3d 893, 897, 136 Cal.Rptr. 321; Earp v. Nobmann (1981) 122 Cal.App.3d 270, 284, 175 Cal.Rptr. 767; Barbary Coast Furniture Co. v. Sjolie (1985) 167 Cal.App.3d 319, 333, 213 Cal.Rptr. 168; Fuhrman v. California Satellite Systems (1986) 179 Cal.App.3d 408, 421, 231 Cal.Rptr. 113; McKnight v. Faber (1986) 185 Cal.App.3d 639, 649, 230 Cal.Rptr. 57.) In the instant case, the Court of Appeal applied this interest of justice test in holding that the pleadings gave rise to disputed questions of fact. *213 It is, of course, true that justice, in the sense of fairness, is not served where an attorney seeks to deceive a party into relying on an expert by misrepresenting the expert's impartiality. However, the evils inherent in permitting derivative tort actions based on communications during the trial of a previous action are, as we explain below, far more destructive to the administration of justice than an occasional unfair result. Accordingly, we disapprove the decisions announcing or employing the interest of justice rule to the extent they are inconsistent with this opinion. III 1. Policies Furthered by Section 47(2) [4] The principal purpose of section 47(2) is to afford litigants and witnesses (see Pettitt v. Levy, supra, 28 Cal.App.3d at p. 488, 104 Cal.Rptr. 650) the utmost freedom of access to the courts without fear of being harassed subsequently by derivative tort actions. (Albertson v. Raboff, supra, 46 Cal.2d at p. 380, 295 P.2d 405, citing Veeder, Absolute Immunity in Defamation: Judicial Proceedings (1909) 9 Colum.L.Rev. 463, 469; accord Ribas v. Clark (1985) 38 Cal.3d 355, 364-365, 212 Cal.Rptr. 143, 696 P.2d 637.) Section 47(2) promotes the effectiveness of judicial proceedings by encouraging***643 open channels of communication and the presentation of evidence in judicial proceedings. (McClatchy Newspapers, Inc. v. Superior Court (1987) 189 Cal.App.3d 961, 970, 234 Cal.Rptr. 702.) A further purpose of the privilege is to assure utmost freedom of communication between citizens and public authorities whose responsibility is to investigate and remedy wrongdoing. (Imig v. Ferrar (1977) 70 Cal.App.3d 48, 55, 138 Cal.Rptr. 540, Tiedemann v. Superior Court (1978) 83 Cal.App.3d 918, 925, 148 Cal.Rptr. 242.) Such open communication is a fundamental adjunct to the right of access to judicial and quasi-judicial proceedings. ( Pettitt v. Levy, supra, 28 Cal.App.3d at pp. 490-491, 104 Cal.Rptr. 650.) Since the external threat of liability is **370 destructive of this fundamental right and inconsistent with the effective administration of justice ( McClatchy Newspapers, Inc. v. Superior Court, supra, 189 Cal.App.3d at p. 970, 234 Cal.Rptr. 702), courts have applied the privilege to eliminate the threat of liability for communications made during all kinds of truth-seeking proceedings: judicial, quasi-judicial, legislative and other official proceedings. In a decision that applied a similar common law litigation privilege, the United States Supreme Court echoed these policy considerations: the dictates of public policy ... require[ ] that the paths which lead to the ascertainment of truth should be left as free and unobstructed as possible [citation]. *214(Briscoe v. LaHue (1983) 460 U.S. 325, 333, 103 S.Ct. 1108, 1114, 75 L.Ed.2d 96.) Thus, witnesses should be free from the fear of protracted and costly lawsuits which otherwise might cause them either to distort their testimony or refuse to testify altogether. (Ibid.; Pettitt v. Levy, supra, 28 Cal.App.3d at pp. 490-491, 104 Cal.Rptr. 650.) Section 47(2) further promotes the effectiveness of judicial proceedings by encouraging attorneys to zealously protect their clients' interests. [I]t is desirable to create an absolute privilege ... not because we desire to protect the shady practitioner, but because we do not want the honest one to have to be concerned with [subsequent derivative] actions.... (Thornton v. Rhoden (1966) 245 Cal.App.2d 80, 99, 53 Cal.Rptr. 706.)

Finally, in immunizing participants from liability for torts arising from communications made during judicial proceedings, the law places upon litigants the burden of exposing during trial the bias of witnesses and the falsity of evidence, thereby enhancing the finality of judgments and avoiding an unending roundelay of litigation, an evil far worse than an occasional unfair result. (Kachig v. Boothe (1971) 22 Cal.App.3d 626, 640-641, 99 Cal.Rptr. 393; see also Pico v. Cohn (1891) 91 Cal. 129, 25 P. 970, 27 P. 537.) The instant case is an example in point. During the dissolution proceedings, the husband had every opportunity to challenge the validity of Dr. Adler's psychological evaluation and recommendations. He could have engaged another psychologist, attempted to impeach the credibility of Dr. Adler by showing bias, or attacked the evaluation and recommendations in other ways using standard litigation techniques. Having failed to do so during the dissolution proceedings, however, husband now seeks to sue his former wife's attorney for money damages allegedly caused by the use of the assertedly biased and inaccurate report after finality of the dissolution decree. For our justice system to function, it is necessary that litigants assume responsibility for the complete litigation of their cause during the proceedings. To allow a litigant to attack the integrity of evidence after the proceedings have concluded, except in the most narrowly circumscribed situations, such as extrinsic fraud, would impermissibly burden, if not inundate, our justice system. (Briscoe v. LaHue, supra, 460 U.S. 325, 333, 103 S.Ct. 1108, 1114; Pico v. Cohn, supra, 91 Cal. 129, 25 P. 970, 27 P. 537; Kachig v. Boothe, supra, 22 Cal.App.3d 626, 641, 99 Cal.Rptr. 393.) Given the importance to our justice system of ensuring free access to the courts, promoting complete and truthful testimony,***644 encouraging zealous advocacy, giving finality to judgments, and avoiding unending litigation, it is not surprising that section 47(2), the litigation privilege, has been referred *215 to as the backbone to an effective and smoothly operating judicial system. (McClatchy Newspapers, Inc. v. Superior Court, supra, 189 Cal.App.3d at p. 970, 234 Cal.Rptr. 702.) 2. The Absolute Nature of the Litigation Privilege under Section 47(2) [5] To effectuate its vital purposes, the litigation privilege is held to be absolute in nature. (Ribas v. Clark, supra, 38 Cal.3d at p. 364, 212 Cal.Rptr. 143, 696 P.2d 637; Albertson v. Raboff, supra, 46 Cal.2d at p. 381, 295 P.2d 405; Carden v. Getzoff (1987) 190 Cal.App.3d 907, 914, 235 Cal.Rptr. 698; **371Financial Corp. of America v. Wilburn, supra, 189 Cal.App.3d at p. 771, 234 Cal.Rptr. 653; McClatchy Newspapers, Inc. v. Superior Court, supra, 189 Cal.App.3d at p. 971, 234 Cal.Rptr. 702; O'Neil v. Cunningham (1981) 118 Cal.App.3d 466, 475, 173 Cal.Rptr. 422; Thornton v. Rhoden, supra, 245 Cal.App.2d at p. 86, 53 Cal.Rptr. 706.) In Albertson, Justice Traynor, speaking for the court, reasoned that the policy of encouraging free access to the courts was so important as to require application of the privilege to torts other than defamation. (Albertson v. Raboff, supra, 46 Cal.2d at p. 381, 295 P.2d 405; see Oren Royal Oaks Venture v. Greenberg, Bernhard, Weiss & Karma, Inc., supra, 42 Cal.3d at p. 1164, 232 Cal.Rptr. 567, 728 P.2d 1202.) Accordingly, in the years since Albertson, section 47(2) has been held to immunize defendants from tort liability based on theories of abuse of process (Drasin v. Jacoby & Myers (1984) 150 Cal.App.3d 481, 197 Cal.Rptr. 768; Rosenthal v. Irell & Manella, supra, 135 Cal.App.3d 121, 185 Cal.Rptr. 92; Asia Investment v. Borowski (1982) 133 Cal.App.3d 832, 184 Cal.Rptr. 317; Umansky v. Urquhart (1978) 84 Cal.App.3d 368, 148 Cal.Rptr. 547; Twyford v. Twyford (1976) 63 Cal.App.3d 916, 134 Cal.Rptr. 145; Younger v. Solomon (1974) 38 Cal.App.3d 289, 113 Cal.Rptr. 113; Thornton v. Rhoden, supra, 245 Cal.App.2d 80, 99, 53 Cal.Rptr. 706; but see Oren Royal Oaks Venture v. Greenberg, Bernhard, Weiss & Karma, Inc., supra, 42 Cal.3d at p. 1165, 232 Cal.Rptr. 567, 728 P.2d 1202), intentional infliction of emotional distress (Ribas v. Clark, supra, 38 Cal.3d 355, 212 Cal.Rptr. 143, 696 P.2d 637; Rosenthal v. Irell & Manella, supra, 135 Cal.App.3d 121, 185 Cal.Rptr. 92; Lerette v. Dean Witter Organization, Inc., supra, 60 Cal.App.3d 573, 131 Cal.Rptr. 592; Pettitt v. Levy, supra, 28 Cal.App.3d 484, 104 Cal.Rptr. 650; Kachig v. Boothe, supra, 22 Cal.App.3d 626, 99 Cal.Rptr. 393; Agostini v. Strycula (1965) 231

Cal.App.2d 804, 42 Cal.Rptr. 314), intentional inducement of breach of contract (Rosenthal v. Irell & Manella, supra, 135 Cal.App.3d 121, 185 Cal.Rptr. 92; Agostini v. Strycula, supra, 231 Cal.App.2d 804, 42 Cal.Rptr. 314), intentional interference with prospective economic advantage (Rosenthal v. Irell & Manella, supra, 135 Cal.App.3d 121, 185 Cal.Rptr. 92), negligent misrepresentation (Pettitt v. Levy, supra, 28 Cal.App.3d 484, 104 Cal.Rptr. 650), invasion of privacy (Ribas v. Clark, supra, 38 Cal.3d 355, 212 Cal.Rptr. 143, 696 P.2d 637), negligence (Pettitt v. Levy, supra, 28 Cal.App.3d 484, 104 Cal.Rptr. 650) and fraud (Carden v. Getzoff, supra, 190 Cal.App.3d 907, 235 Cal.Rptr. 698; Steiner v. Eikerling (1986) 181 Cal.App.3d 639, 642-643, 226 Cal.Rptr. 694; Portman v. George McDonald Law Corp. (1979) 99 Cal.App.3d 988, 989-990, 160 Cal.Rptr. 505; Pettitt v. Levy, supra, 28 Cal.App.3d 484, 104 Cal.Rptr. 650; Kachig v. Boothe, supra, 22 Cal.App.3d 626, 99 Cal.Rptr. 393). The only exception to application of section 47(2) to tort suits has been for malicious prosecution actions. (Ribas v. Clark, supra, 38 Cal.3d at p. 364, 212 Cal.Rptr. 143; Kilgore v. Younger, supra, 30 Cal.3d at p. 778, 180 Cal.Rptr. 657, 640 P.2d 793; Carden v. Getzoff, supra, 190 Cal.App.3d at p. 913, 235 Cal.Rptr. 698; *216Pettitt v. Levy, supra, 28 Cal.App.3d at p. 489, 104 Cal.Rptr. 650.) Malicious prosecution actions are permitted because [t]he policy of encouraging free access to the courts ... is outweighed by the policy of affording redress for individual wrongs when the requirements of favorable termination,***645 lack of probable cause, and malice are satisfied. (Albertson v. Raboff, supra, 46 Cal.2d at p. 382, 295 P.2d 405.) That the privilege is absolute is also confirmed by the statutory language. As amended in 1927 FN4 by the addition of the divorce proviso, section 47(2) provided that an allegation involving corespondents in pleadings and affidavits filed in divorce actions is not privileged unless stated under oath, without malice, on reasonable grounds. (Stats.1927, ch. 866, 1, p. 1881.) FN5 By negative implication, therefore, **372 statements published in proceedings other than divorce actions may be malicious and still fall within the mantle of protection provided by the privilege. Were it otherwise, the without malice language in the divorce proviso would be mere surplusage. Since we presume that the Legislature does not engage in idle acts (Stafford v. Realty Bond Service Corp. (1952) 39 Cal.2d 797, 805, 249 P.2d 241; General American Transportation Corp. v. State Bd. of Equalization (1987) 193 Cal.App.3d 1175, 1181, 238 Cal.Rptr. 865), it must be concluded that the without malice requirement applies only to those allegations against corespondents published in the pleadings and affidavits filed in dissolution proceedings and that, otherwise the Legislature intended section 47(2) to apply to all publications, irrespective of their maliciousness. 3. The Interest of Justice Test The interest of justice test appears to have originated with Bradley v. Hartford Acc. & Indem. Co., supra, 30 Cal.App.3d 818, 106 Cal.Rptr. 718. The Bradley court stated: [I]n determining whether or not the defamatory publication should be accorded an absolute privilege, special emphasis must be laid on the requirement that it be made in furtherance of the litigation and to promote the interest of justice. Only if this requirement has been satisfied, is it appropriate for the courts to define liberally the scope of the term judicial *217 proceeding and the persons who should be regarded as litigants or other participants. (Id. at p. 826, 106 Cal.Rptr. 718, italics in original.) Thus, the Bradley court read into the requirement that the communication be made to achieve the objects of the litigation the additional requirement that the communication must have also been made for the purpose of promoting the interest of justice. Actually, the Bradley court's announcement of the interest of justice test was wholly unnecessary to its decision. The court had already concluded that both the communicator and the communicatee were strangers to the action (neither parties, prospective witnesses nor attorneys in the action), and that the communication was not reasonably related to the action. Either of these conclusions was ample basis for holding that the communication was not privileged without resort to any interest of justice test.

Moreover, while the added moral consideration injected by the Bradley court may seem attractive, on further reflection it is seen to be a drastic departure from precedent and largely destructive of the principal purpose of the litigation privilege. It would permit derivative tort suits in many, if not most, cases on the ground that an otherwise privileged communication was not made for the purpose of promoting justice, a charge easily and quickly made by an adversary. The interest of justice test, as adopted in Bradley, has been criticized and indeed rejected in a number of decisions by sister Courts of Appeal. (ITT Telecom Products Corp. v. Dooley (1989) 214 Cal.App.3d 307, 262 Cal.Rptr. 773; Green v. Uccelli, supra, 207 Cal.App.3d 1112, 255 Cal.Rptr. 315; Financial Corp. of America v. Wilburn, supra, 189 Cal.App.3d 764, 234 Cal.Rptr. 653; ***646 McClatchy Newspapers, Inc. v. Superior Court, supra, 189 Cal.App.3d 961, 234 Cal.Rptr. 702; O'Neil v. Cunningham, supra, 118 Cal.App.3d 466, 173 Cal.Rptr. 422.) Nevertheless, a number of Court of Appeal decisions appear to have embraced the interest of justice requirement, either linguistically or substantively. (See Kinnamon v. Staitman & Snyder, supra, 66 Cal.App.3d at p. 897, 136 Cal.Rptr. 321; Earp v. Nobmann, supra, 122 Cal.App.3d at pp. 284-285, 175 Cal.Rptr. 767; Barbary Coast Furniture Co. v. Sjolie, supra, 167 Cal.App.3d at p. 334, 213 Cal.Rptr. 168; McKnight v. Faber, supra, 185 Cal.App.3d at p. 650, 230 Cal.Rptr. 57; Fuhrman v. California Satellite Systems, supra, 179 Cal.App.3d at p. 421, 231 Cal.Rptr. 113.) We also observe, however, that in many of the decisions purporting to utilize the **373 interest of justice test, the court could have reached the same result, no privilege, on the basis of the absence of one of the traditionally recognized factors. (See, e.g. McKnight v. Faber, supra, 185 Cal.App.3d at p. 650, 230 Cal.Rptr. 57 [the immunity of section 47(2) does not apply to conduct but is *218 limited to communications]; Fuhrman v. California Satellite Systems, supra, 179 Cal.App.3d at p. 421, 231 Cal.Rptr. 113 [communication not made in the course of a judicial proceeding]; Earp v. Nobmann, supra, 122 Cal.App.3d at p. 285, 175 Cal.Rptr. 767 [factual question existed as to whether the potential lawsuit was actually contemplated].) **We conclude that the well-intentioned addition of the interest of justice test must be rejected. A rule that an otherwise privileged communication is not privileged under section 47(2) unless made for the purpose of promoting the interest of justice is wholly inconsistent with the numerous cases in which fraudulent communications or perjured testimony have nevertheless been held privileged. (E.g., Carden v. Getzoff, supra, 190 Cal.App.3d at p. 915, 235 Cal.Rptr. 698; Steiner v. Eikerling, supra, 181 Cal.App.3d 639, 642-643, 226 Cal.Rptr. 694; Portman v. George McDonald Law Corp., supra, 99 Cal.App.3d 988, 989-990, 160 Cal.Rptr. 505; Pettitt v. Levy, supra, 28 Cal.App.3d 484, 104 Cal.Rptr. 650; Kachig v. Boothe, supra, 22 Cal.App.3d 626, 99 Cal.Rptr. 393.) Obviously, such a test would also be contrary to the decisions in which liability for abuse of process is held precluded by the privilege. (Drasin v. Jacoby & Myers, supra, 150 Cal.App.3d 481, 197 Cal.Rptr. 768; Rosenthal v. Irell & Manella, supra, 135 Cal.App.3d 121, 185 Cal.Rptr. 92; Asia Investment v. Borowski, supra, 133 Cal.App.3d 832, 184 Cal.Rptr. 317; Umansky v. Urquhart, supra, 84 Cal.App.3d 368, 148 Cal.Rptr. 547; Twyford v. Twyford, supra, 63 Cal.App.3d 916, 134 Cal.Rptr. 145; Younger v. Solomon, supra, 38 Cal.App.3d 289, 113 Cal.Rptr. 113.) One of the two necessary elements of that tort is an ulterior purpose. (Templeton Feed & Grain v. Ralston Purina Co. (1968) 69 Cal.2d 461, 72 Cal.Rptr. 344, 446 P.2d 152.) Finally, endorsement of the interest of justice requirement would be tantamount to the exclusion of all tortious publications from the privilege, because tortious conduct is invariably inimical to the interest of justice. Thus, the exception would subsume the rule. It is thus clear that the Court of Appeal in the instant case lacked persuasive authority to hold defendant's communications unprivileged on the theory they may not have been made for the purpose of advancing the interest of justice. The salutary policy reasons for an absolute privilege supersede individual litigants' interests in recovering damages for

injurious publications made during the course of judicial proceedings. We recognize, as have applicable precedents, that the disallowance of derivative tort actions based on communications of participants in an earlier action necessarily results in some real injuries that go uncompensated. But, as stated in Kachig v. Boothe, supra, 22 Cal.App.3d at page 641, 99 Cal.Rptr. 393, quoting Prosser, Law of Torts (3d ed. 1964) page 797, that is the price that is paid for witnesses who are free from intimidation by the possibility of civil liability for what they say.

[In discussing privilege under the authorization of section 47 paragraph 2 the court stated,; In discussing privilege accorded to statements which are made in the course of judicial proceedings, the court stated; In discussing privilege accorded to statements made by an attorney to a party which are made in the course of judicial proceedings, the court stated,]
We observe, however, that in a good many cases of injurious communications, ***647 other remedies aside from a derivative suit for compensation will exist *219 and may help deter injurious publications during litigation. Examples of these remedies include criminal prosecution for perjury (Pen.Code, 118 et seq.) or subornation of perjury (Pen.Code, 653f, subd. (a)); criminal prosecution under Business and Professions Code, section 6128; FN6 and State Bar disciplinary proceedings for violation of Business and Professions Code, section 6068, subdivision (d).FN7 Finally, republications to nonparticipants in the action are generally not **374 privileged under section 47(2), and are thus actionable unless privileged on some other basis. FN6. Business and Professions Code section 6128 provides in relevant part: Every attorney is guilty of a misdemeanor who ... is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive ... any party. FN7. That section and subdivision impose a duty on attorneys to employ ... such means only as are consistent with truth, and never to seek to mislead the judge or any judicial officer by any artifice or false statement of fact or law. To the extent inconsistent with this opinion, those decisions employing the interest of justice test are disapproved. These decisions include: Bradley v. Hartford Acc. & Indem. Co., supra, 30 Cal.App.3d at p. 826, 106 Cal.Rptr. 718; Kinnamon v. Staitman & Snyder, supra, 66 Cal.App.3d at p. 897, 136 Cal.Rptr. 321; Earp v. Nobmann, supra, 122 Cal.App.3d at pp. 284-285, 175 Cal.Rptr. 767; Barbary Coast Furniture Co. v. Sjolie, supra, 167 Cal.App.3d at p. 334, 213 Cal.Rptr. 168; McKnight v. Faber, supra, 185 Cal.App.3d at p. 650, 230 Cal.Rptr. 57; and Fuhrman v. California Satellite Systems, supra, 179 Cal.App.3d at p. 421, 231 Cal.Rptr. 113. IV [6] It remains only to apply the usual four-part test to husband's fifth cause of action, to determine if defendant's statements as to the psychologist's neutrality and independence were privileged under section 47(2). As alleged in the complaint, the stipulation to retain a psychologist, and the discussion as to the specific psychologist to retain, occurred in the course of the marital dissolution proceeding. Defendant's statements regarding Dr. Adler's suitability were made by a participant, i.e., the attorney for a party. They were reasonably related to the action because custody and visitation arrangements are integral to all marital dissolution proceedings in which children are involved. (See 4600 et seq.) Moreover, where custody and visitation arrangements are contested issues, the state requires that mediation be conducted by a qualified counselor ( 4607; Code Civ.Proc., 1745) who is directed to perform an

evaluation and formulate recommendations if not sought voluntarily by the parties to the dissolution. furtherance of the objects of the litigation is, in essence, simply part of the requirement that *220 the communication be connected with, or have some logical relation to, the action, i.e., that it not be extraneous to the action. A good example of an application of the principle is found in the cases holding that a statement made in a judicial proceeding is not privileged unless it has some reasonable relevancy to the subject matter of the action. (E.g. Washer v. Bank of America (1943) 21 Cal.2d 822, 136 P.2d 297; Carpenter v. Ashley (1906) 148 Cal. 422, 83 P. 444; Irwin v. Newby (1929) 102 Cal.App. 110, 282 P. 810, 283 P. 370.) The furtherance requirement was never intended as a test of a participant's motives, morals, ethics or intent. (See Financial Corp. of America v. Wilburn, supra, 189 Cal.App.3d at p. 777, 234 Cal.Rptr. 653; Thornton v. Rhoden, supra, 245 Cal.App.2d at pp. 93-94, 53 Cal.Rptr. 706.) Accordingly, it is clear that defendant's statements furthered the objects of the litigation and fall within the scope of the litigation privilege. The statements were made in the context of a judicial proceeding, were logically related to the action, played an integral role in the proceeding, and were made by one of the participants ***648 about an authorized participant. The privilege of section 47(2) plainly applies. (Green v. Uccelli, supra, 207 Cal.App.3d at p. 1124, 255 Cal.Rptr. 315; Walsh v. Bronson, supra, 200 Cal.App.3d at p. 269, 245 Cal.Rptr. 888.) V For the foregoing reasons, the judgment of the Court of Appeal is reversed as to the fifth cause of action with directions to reinstate the order of dismissal issued by the trial court as to all causes of action asserted against defendant Anderson. Action Apartment Ass'n, Inc. v. City of Santa Monica, 41 Cal.4th 1232, 163 P.3d 89, 63 Cal.Rptr.3d 398, 07 Cal. Daily Op. Serv. 9186, 2007 Daily Journal D.A.R. 11,793 (Cal.,Aug 02, 2007) Background: Landlords filed an action to enjoin enforcement of a city's "tenant harassment" ordinance that addressed a landlord's malicious efforts to terminate a tenancy through legal proceedings, and provided penalties therefor. The Superior Court, Los Angeles County, No. BC274036, Ray L. Hart, J., sustained the city's demurrer without leave to amend and entered judgment for the city. Landlords appealed. The Court of Appeal reversed. The Supreme Court granted review, superseding the opinion of the Court of Appeal. Holdings: The Supreme Court, Moreno, J., held that: (1) ordinance provision allowing suit for landlord's bringing action to recover possession of rental unit was entirely preempted by litigation privilege, and (2) provision authorizing a suit based on a landlord's "serving any notice to quit or other eviction notice" was preempted to extent it prohibited eviction notices where litigation was contemplated in good faith and under serious consideration. Judgment of the Court of Appeal affirmed in part and reversed in part, and matter remanded. Corrigan, J., filed a dissenting opinion in which Werdegar, J., joined. Opinion, 19 Cal.Rptr.3d 742, superseded. [17][18] Second, the City contends that the privilege does not apply to criminal prosecutions, whether brought pursuant to state statute or local ordinance. We disagree. The City correctly notes that on more than one occasion we have treated **it as obvious that the litigation privilege does not bar certain government actions, including criminal prosecutions and regulatory actions brought pursuant to state statutes. (Hagberg v. California Federal

Bank (2004) 32 Cal.4th 350, 361, 7 Cal.Rptr.3d 803, 81 P.3d 244 (Hagberg ); Rubin, supra, 4 Cal.4th at p. 1198, 17 Cal.Rptr.2d 828, 847 P.2d 1044; Silberg, supra, 50 Cal.3d at pp. 218219, 266 Cal.Rptr. 638, 786 P.2d 365.) However, these exceptions to the privilege have all involved suits brought under state laws, each of which makes clear that the Legislature did not intend its enforcement to be barred by the litigation privilege. Local governments do not have the same authority to create exceptions to the litigation privilege. ***410 [19] *1246 **We have observed that the litigation privilege does not apply to the following crimes: perjury (Pen.Code, 118 et seq.); subornation of perjury (id., 127); **criminal prosecution under Business and Professions Code section 6128; false report of a criminal offense (Pen.Code, 148.5); and "attorney solicitation through the use of 'runners' or 'cappers' " (Rubin, supra, 4 Cal.4th at p. 1198, 17 Cal.Rptr.2d 828, 847 P.2d 1044 quoting Bus. & Prof.Code, 6152-6153). (Silberg, supra, 50 Cal.3d at pp. 218-219, 266 Cal.Rptr. 638, 786 P.2d 365; Hagberg, supra, 32 Cal.4th at p. 361, 7 Cal.Rptr.3d 803, 81 P.3d 244.) State Bar discipline of attorneys who engage in solicitation and enforcement of the antisolicitation statute is also excepted from the litigation privilege. (Rubin, supra, 4 Cal.4th at p. 1198, 17 Cal.Rptr.2d 828, 847 P.2d 1044.) **Our recognition that prosecutions of these crimes and specified State Bar actions are not barred by the litigation privilege does not reflect that an exception for criminal prosecutions is inherent in the litigation privilege itself. Instead, our recognition of these exceptions to the litigation privilege has been guided by the "rule of statutory construction that particular provisions will prevail over general provisions." (In re James M. (1973) 9 Cal.3d 517, 522, 108 Cal.Rptr. 89, 510 P.2d 33; Code Civ. Proc., 1859.) Each of the above mentioned statutes is more specific than the litigation privilege and would be significantly or wholly inoperable if its enforcement were barred when in conflict with the privilege. The crimes of perjury [FN3] **99 and subornation of perjury [FN4] would be almost without meaning if statements made during the course of litigation were protected from prosecution for perjury by the litigation privilege. **The misdemeanors established by Business and Professions Code section 6128 evince a legislative intent that certain attorney conduct not be protected from prosecution by the litigation privilege: "Every attorney is guilty of a misdemeanor who either: [] (a) Is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party. [] (b) Willfully delays his client's suit with a view to his own gain. [] (c) Willfully receives any money or allowance for or on account of any money which he has not laid out or become answerable for." Although tort liability may not be imposed when a person contacts law enforcement to report suspected criminal activity, the Legislature has provided that a person may be prosecuted for a misdemeanor for reporting to a *1247 peace officer, deputy attorney general, district attorney, or other specified official "that a felony or misdemeanor has been committed, knowing the report to be false." (Pen.Code, 148.5, subd. (a); Hagberg, supra, 32 Cal.4th at p. 361, 7 Cal.Rptr.3d 803, 81 P.3d 244.) Similarly, while attorney solicitation may not ***411 be the basis for tort liability, the Legislature has specified that certain attorney solicitation in or near prisons, hospitals, courts and other designated locations is a crime. (Bus. & Prof.Code, 6152-6153; Rubin, supra, 4 Cal.4th at p. 1198, 17 Cal.Rptr.2d 828, 847 P.2d 1044.) As we observed in Rubin, the Legislature has also charged the State Bar with disciplining attorneys who engage in solicitation and enforcement of the antisolicitation statute. (Rubin, supra, 4 Cal.4th at p. 1198, 17 Cal.Rptr.2d 828, 847 P.2d 1044.) FN3. "Every person who, having taken an oath that he or she will testify, declare, depose, or certify truly before any competent tribunal, officer, or person, in any of the cases in which the oath may by law of the State of California be administered, willfully and contrary to the oath, states as true any material matter which he or she knows to be false, and every person who testifies, declares, deposes, or certifies under penalty of perjury in any of the cases in which the testimony, declarations, depositions, or certification is permitted by law of the State of California under penalty of perjury and willfully states as true any material matter which he or she knows to be false, is guilty of perjury." (Pen.Code, 118, subd. (a).)

FN4. "Every person who willfully procures another person to commit perjury is guilty of subornation of perjury, and is punishable in the same manner as he would be if personally guilty of the perjury so procured." (Pen.Code, 127.) Hagberg v. California Federal Bank FSB, 32 Cal.4th 350, 81 P.3d 244, 7 Cal.Rptr.3d 803, 02 Cal. Daily Op. Serv. 75, 2004 Daily Journal D.A.R. 99 (Cal.,Jan 05, 2004)

At p. 361 Section 47(b), of course, does not bar a criminal prosecution that is based on a statement
or communication, when the speaker's utterance encompasses the elements of a criminal offense. (See, e.g., Pen.Code, 118 [perjury], 148.5 [false report of criminal offense].) Rubin v. Green, 4 Cal.4th 1187, 847 P.2d 1044, 17 Cal.Rptr.2d 828, 61 USLW 2658 (Cal.,Apr 05, 1993) It is not difficult to imagine the consequences likely to follow in the wake of a rule permitting the defendant in a civil action to institute parallel *1198 litigation seeking to impose liability on the attorney for the adverse party based on the circumstances surrounding the formation of the attorney-client relationship that led to the filing of the original suit. Apart from provoking yet another round of litigation, all of the evils identified in our prior cases as accompanying retaliatory suits based on litigation-related communications would be promoted by such a tactic. The impairment of colorable claims by disrupting access to counsel, the intimidating effect on attorneys of facing an almost certain retaliatory proceeding, the distractions inherent in requiring counsel to deal with defending a personal countersuit as well as the predicate action and, in general, the dampening effect on the unobstructed presentation of claims which we have identified as the central value supporting limitations on other derivative tort actions, apply with equal force to this suit. (See, e.g., Silberg, supra, 50 Cal.3d at p. 214, 266 Cal.Rptr. 638, 786 P.2d 365; Sheldon Appel, supra, 47 Cal.3d at p. 873, 254 Cal.Rptr. 336, 765 P.2d 498; Bear Stearns, supra, 50 Cal.3d at p. 1131, 270 Cal.Rptr. 1, 791 P.2d 587.) On the other hand, given the regulatory and prosecutorial sanctions available to remedy attorney solicitation, together with those available to litigants within the scope of the predicate action itself, the utility of a proceeding such as this one is marginal. As noted, attorney solicitation through the use of runners or cappers is a crime, punishable as a misdemeanor. (Bus. & Prof.Code, 6152-6153; FN5 see, e.g., Hutchins v. Municipal Court (1976) 61 Cal.App.3d 77, 132 Cal.Rptr. 158.) Attorneys who engage in solicitation also are subject to discipline by the State Bar. Rule 1-400 of the Rules of Professional Conduct of the State Bar imposes substantial limitations on the content and timing of communications by or on behalf of attorneys concerning availability for professional employment and explicitly prohibits solicitation that is not constitutionally protected. (See rule 1-400(C), Rules Prof. Conduct of State Bar.) Under its rulemaking power, the State Bar has adopted specific standards***835 **1051 for communications that presumptively violate the proscription on attorney solicitation. (See Drafter's Note, Deering's Ann. Rules of Court (1993 pocket supp.) Rules Prof. Conduct of State Bar, foll. rule 1-400; stds. adopted May 27, 1989.) In addition, the State Bar is charged by statute with the enforcement of the anti-solicitation statute and empowered to seek injunctive relief. (Bus. & Prof.Code, 6030.) Ewing v. Title Trust Deed Service Co., 2009 WL 1709304 (Cal.App. 1 Dist.,Jun 18, 2009) D. Conspiracy to Defraud Plaintiff alleges that TTD and Litton conspired with other defendants to defraud plaintiff and deprive her of her alleged one-half interest in the Property. Civil conspiracy is not an

independent tort; rather, it is a legal doctrine that imposes liability on persons who, although not actually committing a tort themselves, share with the immediate tortfeasors a common plan or design in its perpetration. ( Kidron v. Movie Acquisition Corp. (1995) 40 Cal.App.4th 1571, 1581 (Kidron ).) To plead a claim for conspiracy, plaintiff was required to allege: (1) the formation and operation of the conspiracy, (2) wrongful conduct in furtherance of the conspiracy, and (3) damages arising from the wrongful conduct. (Ibid.) A defendant is liable as a coconspirator only if the defendant knew of the planned tort and intentionally joined the conspiracy with the intent to aid in the commission of the tort. (Id. at p. 1582.) Here, plaintiff alleges that the underlying wrongful act that defendants conspired to commit was fraud. The elements of fraud are: (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or scienter); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage. ( Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 173.) Fraud must be alleged with particularity- the facts constituting the fraud must be alleged with sufficient specificity to allow defendant to understand fully the nature of the charge made. ( Tarmann v. State Farm Mut. Auto. Ins. Co. (1991) 2 Cal.App.4th 153, 157 (Tarmann ).) A plaintiff must plead specific facts that show how, when, where, to whom, and by what means the representations were tendered. ( Stansfield v. Starkey (1990) 220 Cal.App.3d 59, 73.) When the defendant is a corporation or business entity, a plaintiff must also allege the names of the persons who made the allegedly fraudulent representations, their authority to speak, to whom they spoke, what they said or wrote, and when it was said or written. ( Tarmann, supra, 2 Cal.App.4th at p. 157.) *6 Here, in describing the alleged conspiracy to defraud, plaintiff makes only general allegations that defendants engaged in improper conduct. She does not allege that specific persons made specific false representations on which plaintiff relied. Plaintiff thus has failed to plead the alleged fraud with particularity. As a result, she has not stated a claim (1) that TTD and Litton themselves engaged in fraud, or (2) that other defendants engaged in specific fraudulent conduct that could comprise the object of a conspiracy. More generally, plaintiff has not alleged facts that would establish that TTD or Litton committed, or knowingly joined a conspiracy with the intent to commit, any wrongful act. The factual allegations underlying plaintiff's cause of action for conspiracy to defraud are the same allegations she made in her other claims against TTD and Litton, i.e., the alleged lack of notice and other irregularities in connection with the 2002 sale. As discussed above, these allegations do not support a claim that the 2002 sale was improper.

counseling a violation of the law.

Shafer v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone, 107 Cal.App.4th 54, 131 Cal.Rptr.2d 777, 03 Cal. Daily Op. Serv. 2402, 2003 Daily Journal D.A.R. 3059 (Cal.App. 2 Dist.,Mar 18, 2003)

Pierce v. Lyman interpreting cc 1714.10 before latest amendment. Fraud to the probate court Review keycite of Wyatt v. Union Mortgage (1979) 24 Cal.3d 773, 598 P.2d 45, 157 Cal.Rptr. 392; Younan v. Equifax (1980) 111 Cal.App.3d 498, 169 Cal.Rptr. 478 Jette v. Orange County Financial Inc. 2008 wl 51113785

is wrongly decided because on subject of fraud, party has an independent duty not to commit fraud against a third party. This opinion holds that there must be a fiduciary relationship. Clear up distinction between agent and employee liability [Black v. Bank of America (1994) 30 Cal.App.4th 1, 5, 35 Cal.Rptr.2d 725, 728 corporation must act through agent and employees and cannot conspire with itself] for conspiracy, there is exists a disagreement in case authority? This statement misrepresents law and misrepresents fact. 11 U.S.C. 362 provides, cite Rutter Group authority that acts in violation of the stay are void.
**g. [8:35] Acts in violation of stay "void": The Ninth Circuit follows the majority view in holding that acts in violation of the automatic stay are void (not merely voidable). [See In re Gruntz (9th Cir. 2000) 202 F3d 1074, 1081- 1082; Hillis Motors, Inc. v. Hawaii Auto. Dealers' Ass'n (9th Cir. 1993) 997 F2d 581, 586; In re Schwartz (9th Cir. 1992) 954 F2d 569, 571-572] "Void" acts have no force or effect and cannot be cured or ratified. As a result, the debtor/estate does not have to take any action to "undo" the act. [In re Schwartz, supra, 954 F2d at 571]

This againt constitutes a misstatement of the clerical exception. John M. Sorich and WELLS FARGO in response to Opposition to Motion of Soon Chey did not state any case law which overruled the authorities stating that the judicial act of signing an order is not a ministerial exception. And accordingly constitutes a violation of Business Professions Code 6128 and Business and Proffessions Code 6068, fraud upon the court and the opposing party. Nor has he shown that any judgment was signed before the Notice of Stay Cites out of circuit opinions. Out of circuit opinions are not controlling authority. And when controlling authority exists in the circuit that conflict the court is bound by controlling, mandatory authority. Statutory construction applied to case law. This issue is settled. Remington v. Kadency (1996) 930 F.Supp. 446, 451
C. Sanctions [10] Plaintiff moves the Court to issue an Order to Show Cause regarding Rule 11 sanctions against defendants for bringing the instant motion to dismiss. Rule 11 requires that an attorney warrant that the papers she files with the court are (1) not filed for an improper purpose; (2) warranted by existing law or a nonfrivolous argument for a change of law; and (3) have, or are likely to have, evidentiary support. Fed.R.Civ.P. 11(b). [11] Plaintiff contends that defendants' motion has no basis in existing law. However, a legal claim for which no mandatory authority exists does not present good grounds for sanctions because the law of the jurisdiction is unsettled. See Hudson v. Moore Business Forms, Inc., 836 F.2d 1156, 1160-61 (9th Cir.1987). The above discussion indicates that the law in the Ninth Circuit is not settled on the issue raised by defendants' motion. Consequently, the Court DENIES plaintiff's request for sanctions.

Equitable Grounds are exceptions such as equitable estoppel, judicial estoppel, they are not to be exercised in when they statutory law applies and the rare grounds for the exception does not apply. Kelley v. MERS 2009 wl 2475703 Conspiracy count must allege predicate substantive cause of action on which it is based.
Marsh v. San Diego County, 432 F.Supp.2d 1035 (S.D.Cal.,May 05, 2006)

At p. 1056,
[35][36] Defendants further argue that they are immune from Plaintiff's IIED claim under California Civil Code section 47 subdivision (b)(2), which makes privileged any communicative acts made in the course of judicial proceedings. Cal. Civ.Code 47, subd. (b)(2) (West 2006). Section 47 applies to all torts except malicious prosecution and applies to any communication (1) made in a judicial or quasijudicial proceeding, (2) by litigants or other participants authorized by law, in or out of court, (3) to achieve the objects of litigation and (4) has some connection or logical relation to the action. Silberg v. Anderson, 50 Cal.3d 205, 212, 266 Cal.Rptr. 638, 786 P.2d 365 (1990). [37] Section 47(b) privileges communications, not tortious conduct. Kimmel v. Goland, 51 Cal.3d 202, 205, 271 Cal.Rptr. 191, 793 P.2d 524 (1990). In Kimmel, the court found the damages sought were not based on the disputed communications, but on the underlying violation of the party's right to privacy and found it inappropriate to extend 47 protection to unlawful conduct. Id. at 212, 271 Cal.Rptr. 191, 793 P.2d 524. Defendant relies on *1057Block v. Sacramento Clinical Labs., 131 Cal.App.3d 386, 387-88, 182 Cal.Rptr. 438 (1982), where the district attorney relied on a toxicologist's erroneous report, to prove the autopsy and medical reports issued by Children's Hospital, Chadwick, Williams, and Murphy were privileged. However, Plaintiff does not merely allege that Defendants made mistakes in their reports, but that they conspired to falsify evidence that caused Plaintiff damages and a deprivation of his constitutional rights. Therefore, at this stage of the proceedings, the Court finds it inappropriate to extend Defendants 47 immunity.

Pc 182 Subdivision 5 Elements a)agreement b) specific intent c) two or more persons d) unlawful object or means and e) overt act. misstatement of laws, misstatement of applicable case law; misrepresentation of facts, ie that title was determined in the unlawful detainer. Because it is the attempt to change the statute without the authority, It is the perversion and obstruction of justice and the due administration of the law ,which an attorney is not vested, but only the Legislature is vested with under the Constitution or Laws of the United States. Which an attorney is not vested with authorization, but only the Legistlar under the C

And to present a position that is unsupported in fact or law (Rutter Group, Professional Responsibility, 17:86, p. 17-12) John M. Sorich and WELLS FARGO made the representation as true, stated as true the position that Soon Chey of had filed and that it was a scheme, which were not based on fact which only the Legislature is vested with under the Constitution or Laws of the United States Because it is not a mere mistake but a particular conscious selection to pervert the law, of acts Specific intent is shown by conscious choice to misstate, The opposition and reply briefs cited the mandatory authority, that have not been repealed or determined to be unconstitutional interpreting the rules of law, under the principle of stare decisis, false statement of law. This is established by the circumstantial evidence. **Each case listed below provides an interpretation of pc 182 public offenses elements and in the standard of proof of the criminal offense the application of circumstantial evidence
People v. Jones, 180 Cal.App.3d 509, 225 Cal.Rptr. 697 (Cal.App. 2 Dist. Apr 29, 1986) [2] Conspiracy 91 23.1

91 Conspiracy 91II Criminal Responsibility 91II(A) Offenses 91k23 Nature and Elements of Criminal Conspiracy in General 91k23.1 k. In General. Most Cited Cases (Formerly 91k23) Elements of conspiracy are agreement to commit crime and overt act done in furtherance of agreement. West's Ann.Cal.Penal Code 182, 184. [7] Conspiracy 91 47(1)

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k44 Evidence 91k47 Weight and Sufficiency 91k47(1) k. In General. Most Cited Cases To sustain conspiracy conviction, there must be proof of specific intent to commit offense which is subject of conspiracy. [8] Conspiracy 91 47(2)

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution

91k44 Evidence 91k47 Weight and Sufficiency 91k47(2) k. Circumstantial Evidence. Most Cited Cases Existence of conspiracy may be shown by direct or circumstantial evidence that parties positively or tacitly came to mutual understanding so as to accomplish act and unlawful design. People v. Danser, 2006 WL 459357 (Cal.App. 1 Dist.,Feb 27, 2006)

it is sufficient that the evidence shows an intent to do the acts constituting the elements of an obstruction of justice as they are described in the charging allegations of the accusatory pleading. ( People v. Backus (1979) 23 Cal.3d 360, 390; 182, subd. (a)(5).)

Look up bankruptcy fraud on keycite By the offending actor WELLS FARGO, this constitutes a flat mischaracterization of the law in the circuit misrepresentation of the law in the circuit WELLS FARGO and John M. Sorich have blatantly and falsely stated, it is not truthful to
Premier Commercial Corp. Ltd. v. FMC Corp., 139 F.R.D. 670 (N.D.Cal. Nov 21, 1991) People v. Pekin, 2006 WL 3412337 (Cal.App. 6 Dist.,Nov 28, 2006) (NO. H029229)

Obstruction of justice guilty Function: adjective 1 : justly chargeable with or responsible for a usually grave breach of conduct or a crime 2 obsolete : justly liable to or deserving of a penalty 3 a : suggesting or involving guilt b : aware of or suffering from guilt <guilty consciences> Conspiring to obtain money and property by fraudulent scheme U.S. v. Rutland 372 F.3d 543, 64 Fed Rules Evid Serv 833
Robles v. U.S., 279 F.2d 401 (9th Cir.(Ariz.),Jun 07, 1960)

**[7][8] It is well settled that * * * an expert in handwriting may testify and state his
opinion as to whether different documents or signatures were written by the same person or are similar or dissimilar in respect of handwriting *405 * * * or whether a particular handwriting is genuine or disguised. * * * 23 C.J.S. Criminal Law 863, p. 72; Neall v. United States, 9 Cir., 1902, 118 F. 699; Rinker v. United States, 8 Cir., 1907, 151 F. 775; Fuston v. United States, 9 Cir., 1927, 22 F.2d 66. The procedure followed by the court below being proper, there was no error in the admission of this evidence. U.S. v. Prime, 431 F.3d 1147, 68 Fed. R. Evid. Serv. 1288, 2005 Daily Journal D.A.R. 14,358 (9th Cir.(Wash.),Dec 14, 2005)

Following the Daubert hearing, the district court issued a brief order concluding that the proposed forensic document examination*1153 testimony was reliable. After the conclusion of the trial, the district court issued a more detailed Order Regarding Defendant's Motion in Limine, which thoroughly and specifically analyzed the reliability of Storer's testimony with respect to each of the Daubert factors. See Prime, 220 F.Supp.2d 1203. 1. Whether the theory or technique can be or has been tested [8] Handwriting analysis is performed by comparing a known sample of handwriting to the document in question to determine if they were written by the same person. The government and Storer provided the court with ample support for the proposition that an individual's handwriting is so rarely identical that expert handwriting analysis can reliably gauge the likelihood that the same individual wrote two samples. The most significant support came from Professor Sargur N. Srihari of the Center of Excellence for Document Analysis and Recognition at the State University of New York at Buffalo, who testified that the result of his published research was that handwriting is individualistic. With respect to this case in particular, the court noted that Storer's training credentials in the Secret Service as well as her certification by the American Board of Forensic Document Examiners were impeccable. The court also believed that Storer's analysis in this case was reliable given the extensive 112 pages containing Prime's known handwriting. 2. Whether the technique has been subject to peer review and publication The court cited to numerous journals where articles in this area subject handwriting analysis to peer review by not only handwriting experts, but others in the forensic science community. Additionally, the Kam study, see infra, which evaluated the reliability of the technique employed by Storer of using known writing samples to determine who drafted a document of unknown authorship, was both published and subjected to peer review. The court also noted that the Secret Service has instituted a system of internal peer review whereby each document reviewed is subject to a second, independent examination. 3. The known or potential rate of error In concluding that the type of handwriting analysis Storer was asked to perform had an acceptable rate of error, the court relied on studies conducted by Professor Moshe Kam of the Electrical and Computer Engineering Department at Drexel University. Professor Kam's studies demonstrated that expert handwriting analysts tend to be quite accurate at the specific task Storer was asked to perform-determining whether the author of a known writing sample is also the author of a questioned writing sample. When the two samples were in fact written by the same person, professional handwriting analysts correctly arrived at that conclusion 87% of the time. On the other hand when the samples were written by different people, handwriting analysts erroneously associated them no more than 6.5% of the time. While Kam's study demonstrates some degree of error, handwriting analysis need not be flawless in order to be admissible. Rather, the Court had in mind a flexible inquiry focused solely on principles and methodology, not on the conclusions that they generate. Daubert, 509 U.S. at 595, 113 S.Ct. 2786. As long as the process is generally reliable, any potential error can be brought to the attention of the jury through cross-examination and the testimony of other experts. 4. The existence and maintenance of standards controlling the technique's operation The court recognized that although this area has not been completely standardized, *1154 it is moving in the right direction. The Secret Service laboratory where Storer works has maintained its accreditation with the American Society of Crime Laboratory Directors since 1998, based on an external proficiency test. Furthermore, the standard nine-point scale used to express the degree to which the examiner believes the handwriting samples match was established under the auspices of the American Society for Testing and Materials (ASTM).

The court reasonably concluded that any lack of standardization is not in and of itself a bar to admissibility in court. 5. General acceptance The court recognized the broad acceptance of handwriting analysis and specifically its use by such law enforcement agencies as the CIA, FBI, and the United States Postal Inspection Service. Given the comprehensive inquiry into Storer's proffered testimony, we cannot say that the district court abused its discretion in admitting the expert handwriting analysis testimony. The district court's thorough and careful application of the Daubert factors was consistent with all six circuits that have addressed the admissibility of handwriting expert testimony, and determined that it can satisfy the reliability threshold. See United States v. Crisp, 324 F.3d 261, 269-70 (4th Cir.2003); United States v. Mooney, 315 F.3d 54, 63 (1st Cir.2002); United States v. Jolivet, 224 F.3d 902, 906 (8th Cir.2000); United States v. Paul, 175 F.3d 906, 911 (11th Cir.1999); United States v. Jones, 107 F.3d 1147, 1161 (6th Cir.1997); United States v. Velasquez, 64 F.3d 844, 850-52 (3d Cir.1995).

Find authority for opinion evidence, forensic expert forgery state law Conspiracy, elements circumstantial evidence for combination, specific intent, Opinion evidence, mental capacity. Object to claim brought by ECMC student loan before October 30, 2009. 18 usc 401 criminal contempt 18 usc 1503 obstruction of justice
Catrino v. U.S., 176 F.2d 884 (9th Cir.(Mont.) Aug 19, 1949)

Description of policy of 18 usc 1503

[6] Obstructing Justice 282 1

282 Obstructing Justice 282k1 k. Nature and Elements of Offenses in General. Most Cited Cases Any corrupt endeavor to influence, intimidate or impede any party or witness, commissioner, or any grand or petit juror, etc., whether successful or not, constitutes obstruction of justice prohibited by statute. 18 U.S.C.A. 1503. [7] Criminal Law 110 3

110 Criminal Law 110I Nature and Elements of Crime 110k2 Power to Define and Punish Crime 110k3 k. In General. Most Cited Cases Society has inherent right to protect itself and its innocent members from vicious acts which imperil proper administration of justice. [8] Obstructing Justice 282 282 Obstructing Justice 1

282k1 k. Nature and Elements of Offenses in General. Most Cited Cases The obstruction of justice statute is designed to protect witnesses in federal courts and also to prevent a miscarriage of justice by corrupt methods. 18 U.S.C.A. 1503. sage.FN6 [6] Any corrupt endeavor whatsoever,FN7 to influence, intimidate, or impede any party or witness, * * * commissioner, or any grand or petit juror, etc., whether successful or not, is proscribed by the obstruction of justice statute. Craig v. United States, supra. [7] The obstruction of justice statute is an outgrowth of Congressional recognition of the variety of corrupt methods by which the proper administration of justice may be impeded or thwarted, a variety limited only by the imagination of the criminally inclined. The concept of justice upon which the foundations of our society rest and which courts and judges are sworn to uphold encompasses not only the right of an accused to a fair trial, but it also calls for punishment if the accused is found guilty. This concept merely recognizes the inherent right of society to protect itself and its innocent members from vicious acts which imperil one of the most vital safeguards of our system of law. It is well to emphasize this wholesome idea as we contemplate the mounting waves of crime. [8] We agree fully with the statement in Samples v. United States, supra, 121 F.2d at page 265 that: The (obstruction of justice) statute is one of the most important laws ever adopted. It is designed to protect witnesses in Federal courts and also to prevent a miscarriage of Justice by corrupt methods. Appellant's evil acts clearly and properly fall within the interdiction of the statute. U.S. v. Rasheed, 663 F.2d 843, 852, 62 A.L.R. Fed. 284, 9 Fed. R. Evid. Serv. 360 (9th Cir.(Cal.),Oct 05, 1981) [11] Obstructing Justice 1 282k1 Most Cited Cases Word "corruptly" as used in obstruction of justice statute means that act must be done with purpose of obstructing justice. 18 U.S.C.A. 1503. Our statement in Metcalf that section 1503 "would ordinarily seem to be limited to intimidating actions" does not compel the conclusion that section 1503 does not encompass concealment of documents. First, the entire statement appears to be dicta. We were focusing upon whether a "judicial *852 proceeding" was involved. Second, we did not consider in Metcalf the "specified type of impeding act" on which the jury was instructed in this case. Indeed, in our statement in Metcalf, we did not even discuss the statutory alternative of impediment to due administration of justice by corruption. In contrast, in the case before us the district judge, quoting from section 1503, instructed the jury that Phillips could be found guilty for "corruptly" influencing, obstructing or impeding the due administration of justice or endeavoring to do so. The use of the word "corruptly" in the statute is a clear indication that not every violation of section 1503 involves threats or intimidation. For example, bribing a witness would certainly be a corrupt method of obstructing justice, but would involve no threat or intimidation. **We have observed that the obstruction of justice statute was designed to proscribe all manner of corrupt methods of obstructing justice. Catrino v. United States, 176 F.2d 884, 887 (9th Cir. 1949). U.S. v. Cohen, 202 F.Supp. 587 (D.Conn. Mar 01, 1962) [1] Obstructing Justice 282 1

282 Obstructing Justice 282k1 k. Nature and Elements of Offenses in General. Most Cited Cases Corruptly is capable of different meanings in different connections, and in obstructing

justice statute, includes any endeavor to influence a witness or to impede and obstruct justice. 18 U.S.C.A. 1503. [2] Obstructing Justice 282 1

282 Obstructing Justice 282k1 k. Nature and Elements of Offenses in General. Most Cited Cases Administration of justice, within obstructing justice statute, means performance of acts or duties required by law in discharge of a duty. 18 U.S.C.A. 1503. [3] Obstructing Justice 282 1

282 Obstructing Justice 282k1 k. Nature and Elements of Offenses in General. Most Cited Cases Latter part of obstructing justice statute is all-inclusive, is designed to meet any corrupt conduct in an endeavor to obstruct or interfere with due administration of justice, and covers any act, committed corruptly, in an endeavor to impede or obstruct due administration of justice. 18 U.S.C.A. 1503. [4] Obstructing Justice 282 5

282 Obstructing Justice 282k5 k. Suppression or Falsification of Evidence. Most Cited Cases Obstruction of justice may include concealing from authorized tribunal information germane to its functions. 18 U.S.C.A. 1503. [5] Obstructing Justice 282 11

282 Obstructing Justice 282k10 Indictment or Information 282k11 k. Requisites and Sufficiency in General. Most Cited Cases Allegations that defendant presented false statements to federal grand jury and caused to be presented a falsely signed lease contract stated offense under obstructing justice statute, although they may also have alleged perjury. Fed.Rules Crim.Proc. rule 12 (b) (2), 18 U.S.C.A. 1503, 1621. [6] Obstructing Justice 282 1

282 Obstructing Justice 282k1 k. Nature and Elements of Offenses in General. Most Cited Cases Obstructing justice statute is designed to protect witnesses in federal courts, and also to prevent miscarriage of justice by corrupt methods. 18 U.S.C.A. 1503. [1] The word corruptly is capable of different meanings in different connections,' Bosselman v. United States, 239 F. 82, 86 (2d Cir. 1917), and as used in Section 135 of the Criminal Code, (now 1503), any endeavor to influence a witness or to impede and obstruct justice falls within the connotation of the word. United States v. Polakoff, 121 F.2d 333, 335 (2d Cir. 1941), cert. denied Polakoff v. United States, 314 U.S. 626, 62 S.Ct. 107, 86 L.Ed. 503 (1941).

**[2] The term administration of justice means the performance of acts or duties required
by law in the discharge of a duty. Rosner v. United States, 10 F.2d 975 (2d Cir. 1926).(sic)[Rosner v. United States 10 F.2d 675] The latter part of 1503 is an all-inclusive provision and provides in part: Whoever corruptly * * * obstructs, or impedes, or endeavors to influence, obstruct, or impede, the due administration of justice, shall be fined * * * or imprisoned * * *. Ethridge v.

United States, 258 F.2d 234 (9 Cir. 1958). [3] This latter provision, under which the defendant has been indicted, is all-embracing and designed to meet any corrupt conduct in an endeavor to obstruct or interfere with the due administration of justice. United States v. Solow, 138 F.Supp. 812, 814 (S.D.N.Y.1956). * * *, a reading of the section in its entirety makes clear that the purpose of the statute is to render illegal interference with the judicial functions of the United States, and that the final clause was added in order to cover those means of interference the draftsmen were not prescient*589 enough to enumerate. Thus, while 1503 might not apply to the correctional or investigatory arms of the government, see Haili v. United States, supra (260 F.2d 744 (9 Cir. 1958)); * * *, certainly obstruction of grand jury functions is within the purview of the statute. United States v. Siegel, D.C.S.D.N.Y.1957, 152 F.Supp. 370; * * * United States v. Bonanno, 177 F.Supp. 106, 114 (S.D.N.Y.1956), rev. on other grounds United States v. Bufalino, 285 F.2d 408 (2d Cir. 1960). The statute is broad enough to cover any act, committed corruptly, in an endeavor to impede or obstruct the due administration of justice. Samples v. United States, 121 F.2d 263, 266 (5 Cir. 1941). U.S. v. Polakoff, 121 F.2d 333 (C.C.A.2 (N.Y.) Jun 28, 1941) [1] Obstructing Justice 282 7

282 Obstructing Justice 282k7 k. Obstructing or Interfering with Performance of Duties of Ministerial Officers. Most Cited Cases Where defendant had for a price offered to procure a light sentence for one who had been convicted and was endeavoring to persuade assistant district attorney to be lenient for reasons falsely assigned, defendant's endeavor was corrupt because it was a fraud, and because defendant was actually working for himself when in appearance he was working for person awaiting sentence, it being as corrupt to persuade a public officer by lies as by bribes, and to influence by fraud is not far afield from influencing by threats or force also prohibited by the statute. Cr.Code 135, 18 U.S.C.A. 1503. [2] Conspiracy 91 47(13)

91 Conspiracy 91II Criminal Responsibility 91II(B) Prosecution 91k44 Evidence 91k47 Weight and Sufficiency 91k47(3) Particular Conspiracies 91k47(13) k. Obstructing Justice, Bribery, and Perjury. Most Cited Cases (Formerly 91k47) In prosecution for conspiring corruptly to obstruct justice, evidence sustained conviction. Cr.Code 37, 135, 18 U.S.C.A. 371, 1503. [1] We think the wording of the statute is significant. It is not alone the corrupt obstruction which is defined as a crime, though that is in terms also covered (corruptly * * * shall influence, obstruct, or impede, or endeavor to, etc.). But the corrupt endeavor alone is twice forbidden. Here Polakoff was endeavoring to persuade the Assistant District Attorney to be lenient with Kafton, for reasons falsely assigned. That endeavor was corrupt because it was a fraud. Actually he was working for himself when in appearance he was working for Kafton. It is as corrupt to persuade a public officer by lies as by bribes; indeed, to

influence him by fraud is not far afield from influencing him by threats or force, also prohibited by the statute. To misrepresent one's motives in such an effort is really a fraud. Marshall v. Baltimore & Ohio Railroad Co., 16 How. 314, 335, 57 U.S. 314, 14 L.Ed. 953. Kafton's promise to pay for the effort, while here an important link in the chain of evidence, only led to, but was not itself, the ultimate criminal act. That occurred when the false persuasion was attempted. [2][3] If the statute applies, proof of a conspiracy to its violation by Albert and Polakoff was clear; and we see no reason why a conspiracy to make the prohibited endeavor is not within the terms of the conspiracy statute, 18 U.S.C.A. 88. See United States v. Potash, supra. The defense of entrapment was for the jury, which found against the accused. Sorrells v. United States, 287 U.S. 435, 53 S.Ct. 210, 77 L.Ed. 413, 86 A.L.R. 249; Meyer v. United States, 9 Cir., 67 F.2d 223; Wall v. United States, 5 Cir., 65 F.2d 993. Affirmed. U.S. v. Margoles, 294 F.2d 371 (7th Cir.(Wis.),Jun 29, 1961) [4] Bribery 63 1(2)

63 Bribery 63k1 Nature and Elements of Offenses 63k1(2) k. Bribery of Jurors and Particular Classes of Officers. Most Cited Cases Federal district judge was officer in or of federal district court within statute prohibiting corruptly influencing, impeding, or intimidating any officer in or of any federal court in discharge of his duty. 18 U.S.C.A. 1503. [4] The issue as to whether the indictment under which defendant was convicted charges acts which constitute a violation of 18 U.S.C.A. 1503 is premised on defendant's contention that a judge of a United States District Court is not an officer in or of any court of the United States' within the meaning of that language as used in 1503. We have considered the historical derivation of the section and related provisions, the inferences defendant seeks to draw therefrom, as well as the other arguments advanced by defendant, but find them unconvincing. We perceive no reason why Congress would have intended to exclude a corrupt endeavor to influence the judge from the scope of 1503 and rely upon the more limited sphere of the contempt section (18 U.S.C.A. 401) to reach such offenses. And, a district judge is a judicial officer of the United States and as such an officer indispensable to the court's performance of its judicial functions. We are of the opinion that the judge is an officer in or of the court within the meaning of 1503.

U.S. v. Gray 809 F.2d 579, (9th Cir.(Mont.), Feb. 3, 1987) A federal judge is an officer of the court within the meaning of section 1503. United States v. Margoles, 294 F.2d 371, 373 (7th Cir.) cert. denied, 368 U.S. 930, 82 S.Ct. 367, 7 L.Ed.2d 193 (1961)
Falk v. U.S., 370 F.2d 472 (9th Cir.(Cal.),Dec 27, 1966) This latter language of Section 1503 is a broad catch-all phrase in the statute. In United States v. Solow, 138 F.Supp. 812 (S.D.N.Y.), the Court found a violation when the defendant prevented the production of four letters before the grand jury. After distinguishing the different divisions of Section 1503, the Court further stated: But there is a further portion of the statute, an omnibus provision, directed towards whoever * * * corruptly * * * obstructs, or impedes, or endeavors to influence, obstruct, or impede, the due administration of justice * * *. This latter provision * * * is all-

embracing and designed to meet any corrupt conduct in an endeavor to obstruct or interfere with the due administration of justice.' The obstruction of justice statute is an outgrowth of Congressional recognition of the variety of corrupt methods by which the proper administration of justice may be impeded or thwarted, a variety limited only by the imagination of the criminally inclined. Catrino v. United States, 176 F.2d 884 (9th Cir. 1949). Following Catrino, it has been held: Any corrupt endeavor to influence any party or witness, whether successful or not, constitutes obstruction of justice prohibited by said section. See Catrino v. United States, 9 Cir., 1949, 176 F.2d 884. **The obstruction of justice statute is broad enough to cover the attempted corruption of a prospective witness in a civil action in a Federal District Court. Here the evidence discloses that appellant corruptly endeavored to influence, obstruct and impede the due administration of justice in his attempt to induce Mrs. Dutcher to give false testimony at the trial. Wilder v. United States, 4 Cir., 1906, 143 F. 433. Roberts v. United States, 239 F.2d 467 (9th Cir. 1956). See also: United States v. Cohen, 202 F.Supp. 587 (D.Conn.). Roberts v. U.S., 239 F.2d 467 (9th Cir.(Cal.),Dec 17, 1956) [5][6] Any corrupt endeavor to influence any party or witness, whether successful or not, constitutes obstruction of justice prohibited by said section. See Catrino v. United States, 9 Cir., 1949, 176 F.2d 884. The obstruction of justice statute is broad enough to cover the attempted corruption of a prospective witness in a civil action in a Federal District Court. Here the evidence discloses that appellant corruptly endeavored to influence, obstruct and impede the due administration of justice in his attempt to induce Mrs. Dutcher to give false testimony at the trial. Wilder v. United States, 4 Cir., 1906, 143 F. 433. Judgment affirmed. [5] Obstructing Justice 282 5

282 Obstructing Justice 282k5 k. Suppression or Falsification of Evidence. Most Cited Cases Any corrupt endeavor to influence any party or witness, whether successful or not, constitutes obstruction of justice prohibited by statute respecting the influencing or injuring of an officer, juror or witness. 18 U.S.C.A. 1503. [6] Obstructing Justice 282 5

282 Obstructing Justice 282k5 k. Suppression or Falsification of Evidence. Most Cited Cases Obstruction of justice statute is broad enough to cover attempted corruption of a prospective witness in a civil action in a federal District Court. 18 U.S.C.A. 1503. **Finding of specific intent to interfere with witness inpending judicial proceeding is essential element of offense of obstructing justice, and this specific intent may be established by circumstantial evidence. United States v White (CA10 Okla) 557 F2d 233.

U.S. v. Bufalino 285 F.2d 408 (2nd Cir.(N.Y.) Nov 28 1960) 18 USC 1621 perjury, 18 USC 371 conspiracy, 18 usc 1503 obstruction of justice 18 USC 1623 false declarations before grand jury or court.
1623. False declarations before grand jury or court (a) Whoever under oath (or in any declaration, certificate, verification, or statement under

penalty of perjury as permitted under section 1746 of title 28, United States Code) in any proceeding before or ancillary to any court or grand jury of the United States knowingly makes any false material declaration or makes or uses any other information, including any book, paper, document, record, recording, or other material, knowing the same to contain any false material declaration, shall be fined under this title or imprisoned not more than five years, or both. (b) This section is applicable whether the conduct occurred within or without the United States. (c) An indictment or information for violation of this section alleging that, in any proceedings before or ancillary to any court or grand jury of the United States, the defendant under oath has knowingly made two or more declarations, which are inconsistent to the degree that one of them is necessarily false, need not specify which declaration is false if-(1) each declaration was material to the point in question, and (2) each declaration was made within the period of the statute of limitations for the offense charged under this section. In any prosecution under this section, the falsity of a declaration set forth in the indictment or information shall be established sufficient for conviction by proof that the defendant while under oath made irreconcilably contradictory declarations material to the point in question in any proceeding before or ancillary to any court or grand jury. It shall be a defense to an indictment or information made pursuant to the first sentence of this subsection that the defendant at the time he made each declaration believed the declaration was true. (d) Where, in the same continuous court or grand jury proceeding in which a declaration is made, the person making the declaration admits such declaration to be false, such admission shall bar prosecution under this section if, at the time the admission is made, the declaration has not substantially affected the proceeding, or it has not become manifest that such falsity has been or will be exposed. (e) Proof beyond a reasonable doubt under this section is sufficient for conviction. It shall not be necessary that such proof be made by any particular number of witnesses or by documentary or other type of evidence. 57. ---- Inconsistent declarations, oath, elements of offense For defendant to be convicted under statutory subsection governing inconsistent declarations, both inconsistent declarations must be made under oath; Congress specified that such subsection covered statements made under oath, omitting language used in second statutory subsection prohibiting false declarations under oath or in any declaration, certificate, verification, or statement under penalty of perjury. U.S. v. Jaramillo, C.A.9 (Cal.) 1995, 69 F.3d 388. Perjury 10

Prosecution for conspiracy to commit perjury and obstruct justice by giving false and evasive testimony.

Us v. Thoreen 653 F.2d 1332

Bad case Misstatement of fact law as criminal contempt Mail fraud scheme to defraud property Fraudulent scheme John M. Sorich states, Debtors reliance on In re Conejo Enterprises., 96 F.3d 346 (9th Cir. 1996), actually supports Movants position that the state court action should be remanded because doing so would be a clear promotion of judicial economy and efficiency. This is so because the state court already granted judgment in favor of. This statement constitutes a misstatement of fact. California Forms Of Pleading And Practice, Ch 374, Section 374.15, A minute order granting a motion for summary judgment is an interim order subject to a motion to reconsider [see George Ball Pacific, Inc. v. Coldwell Banker & Co. (1981) 117 Cal.App.3d 248, 252-253, 172 Cal.Rptr.597 (prior law of CCP 1008); see also Stratton

v.First Nat.Life Ins. Co. (1989) 210 Cal.App.3d 1071, 1081-1082, 258 Cal.Rptr.721 (prior law of CCP 1008; criticized on another ground in Passavanti v. Williams (1990) 225 Cal.App.3d 1602, 1608 n.5, 275 Cal.Rptr. 887)] The order was not a judgment. 18 usc perjury of Duarte, as an officer of the court, in stating that title was determined
Business and Professions Code Section 6068. Duties of attorney provides: It is the duty of an attorney to do all of the following: (d) To employ, for the purpose of maintaining the causes confided to him or her those means only as are consistent with truth, and never to seek to mislead the judge or any judicial officer by an artifice or false statement of fact or law. In Silberg v. Anderson, (1990) 50 Cal.3d 205, 218, [786 P.2d 365, 373, 266 Cal.Rptr. 638, 646] the court stated, We observe, however, that in a good many cases of injurious communications, ***647 other remedies aside from a derivative suit for compensation will exist *219 and may help deter injurious publications during litigation. Examples of these remedies include criminal prosecution for perjury (Pen.Code, 118 et seq.) or subornation of perjury (Pen.Code, 653f, subd. (a)); criminal prosecution under Business and Professions Code,

section 6128; FN6 and State Bar disciplinary proceedings for violation of Business and Professions Code, section 6068, subdivision (d).FN7 Finally, republications to nonparticipants in the action are generally not **374 privileged under section 47(2), and are thus actionable unless privileged on some other basis. FN6. Business and Professions Code section 6128 provides in relevant part: Every attorney is guilty of a misdemeanor who ... is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive ... any party. FN7. That section and subdivision impose a duty on attorneys to employ ... such means only as are consistent with truth, and never to seek to mislead the judge or any judicial officer by any artifice or false statement of fact or law.

Business and Profession Code 6068 provides: Business and Professions Code Section 6128 provides: Section 182. Definition; punishment; venue; evidence necessary to support conviction, of the Penal Code of the State of California provides: (a) If two or more persons conspire: (1) To commit any crime. (2) Falsely and maliciously to indict another for any crime, or to procure another to be charged or arrested for any crime. (3) Falsely to move or maintain any suit, action, or proceeding. (4) To cheat and defraud any person of any property, by any means which are in themselves criminal, or to obtain money or property by false pretenses or by false promises with fraudulent intent not to perform those promises. (5) To commit any act injurious to the public health, to public morals, or to pervert or obstruct justice, or the due administration of the laws. (6) To commit any crime against the person of the President or Vice President of the United States, the Governor of any state or territory, any United States justice or judge, or the secretary of any of the executive departments of the United States. They are punishable as follows: When they conspire to commit any crime against the person of any official specified in paragraph (6), they are guilty of a felony and are punishable by

imprisonment in the state prison for five, seven, or nine years. When they conspire to commit any other felony, they shall be punishable in the same manner and to the same extent as is provided for the punishment of that felony. If the felony is one for which different punishments are prescribed for different degrees, the jury or court which finds the defendant guilty thereof shall determine the degree of the felony the defendant conspired to commit. If the degree is not so determined, the punishment for conspiracy to commit the felony shall be that prescribed for the lesser degree, except in the case of conspiracy to commit murder, in which case the punishment shall be that prescribed for murder in the first degree. If the felony is conspiracy to commit two or more felonies which have different punishments and the commission of those felonies constitute but one offense of conspiracy, the penalty shall be that prescribed for the felony which has the greater maximum term. When they conspire to do an act described in paragraph (4), they shall be punishable by imprisonment in the state prison, or by imprisonment in the county jail for not more than one year, or by a fine not exceeding ten thousand dollars ($10,000), or by both that imprisonment and fine. When they conspire to do any of the other acts described in this section, they shall be punishable by imprisonment in the county jail for not more than one year, or in the state prison, or by a fine not exceeding ten thousand dollars ($10,000), or by both that imprisonment and fine. When they receive a felony conviction for conspiring to commit identity theft, as defined in Section 530.5, the court may impose a fine of up to twenty-five thousand dollars ($25,000). All cases of conspiracy may be prosecuted and tried in the superior court of any county in which any overt act tending to effect the conspiracy shall be done. b) Upon a trial for conspiracy, in a case where an overt act is necessary to

constitute the offense, the defendant cannot be convicted unless one or more overt acts are expressly alleged in the indictment or information, nor unless one of the acts alleged is proved; but other overt acts not alleged may be given in evidence. Section 118a. False affidavit as to testimony as perjury; subsequent contrary testimony, of the Penal Code of the State of California provides, Any person who, in any affidavit taken before any person authorized to administer oaths, swears, affirms, declares, deposes, or certifies that he will testify, declare, depose, or certify before any competent tribunal, officer, or person, in any case then pending or thereafter to be instituted, in any particular manner, or to any particular fact, and in such affidavit willfully and contrary to such oath states as true any material matter which he knows to be false, is guilty of perjury. In any prosecution under this section, the subsequent testimony of such person, in any action involving the matters in such affidavit contained, which is contrary to any of the matters in such affidavit contained, shall be prima facie evidence that the matters in such affidavit were false. In the People v. Agnew (1947) 77 Cal.App.2d 748, 753, 176 P.2d 724, the court stated, it is perjury for one to make a false statement in a pleading filed in a judicial proceeding. (People v. Godines, 17 Cal.App.2d 721, 724 [62 P.2d 787]. See People v. Fink, 118 Cal.App. 631, 634 [5 P.2d 641].) In People v. Martin (1982) 135 Cal.App.3d 710, 713 [185 Cal.Rptr. 556], Appellant William Martin was a judge in the Citrus Municipal Court. Waldo Brown was an attorney at law. (Id. at p.713, 6) Appellant

Upon an indictment

returned by a grand jury for having engaged in the commission of the offense of charges a conspiracy to pervert and obstruct justice and the due administration of the law. And a court trial appellant William Martin and appellant Waldo Brown were found guilty of conspiracy to obstruct justice. appellant Brown appealed. Appellant Martin and

Appellant William Martin based his appeal on (1) the

error of law that Penal Code section 182 subdivision 5 is void for vagueness and uncertainty. (Id. at p. 714, 4) (2) there was insufficient evidence to

establish that he was guilty of conspiracy to obstruct justice; (3) he was wrongly deprived of a postindictment hearing; and (4) the court should not have sentenced him to state prison. (Id. at p.714, 4)

Appellant Waldo Brown based his appeal on that there was insufficient evidence to establish that he was guilty of conspiracy to obstruct justice, because none of his or Martins actions constituted criminal conduct. (People v. Martin, supra, 135 Cal.App.3d 714) The evidence, (which was shown) from which the trial court convicted appellant William Martin and appellant Waldo Brown consisted of a failure to comply with the policies generally observed by the Citrus Municipal Court , by the District Attorney of Los Angeles County, and the normal practices (Id. at p.714, 6) of Judge Martin himself, in cases involving Attorney Waldo Brown and his clients. The evidence was divided into five categories to show that in cases involving appellant Waldo Brown and his clients appellant William Martin deviated from complying with the policies generally observed by the Citrus Municipal Court , by the District Attorney of Los Angeles County, and the normal practices of Judge Martin himself, including; the dispositions of these cases without the consent, or knowledge of the district attorneys office. v. Martin, supra, 714) Upon the filing of a complaint charging the public offense of driving under the influence a misdemeanor. It was the policy of the Los Angeles County District (People

Attorneys Office to file the charge of a second count of reckless driving to provide the capacity of the misdemeanor defendant to enter a guilty plea to the second count and then dismiss the drunk driving charge. supra, 714) (People v. Martin,

It was also the policy of the Los Angeles County District Attorneys

Office where a defendant charged with a blood alcohol level over .15 percent or where the defendant refused to submit to a blood alcohol test for the deputy district attorney assigned to a courtroom to have no discretion to agree to a reduction. A reduction having to be approved by a head deputy, with approval (Id. at p. 715, 1) In cases with these factual

rarely granted.

circumstances, the District Attorney of Los Angeles County would oppose the reduction, yet in cases involving the appellants they showed that the reduction had been agreed to by the deputy district attorney assigned to do justice on the matter. The deputies named on the docket sheets testified that they either had

not participated in the cases or that they did not, and would not have approved the reductions. (Id at p. 715, 1) Other deviations from complying with the

policies generally observed by the Citrus Municipal Court, by the District Attorney of Los Angeles County, and the normal practices (Id. at p. 714, 6) of Judge

Martin himself, were the purported approval of a deputy who was on vacation at the time, two deputies appearing on the same case on the same day, or the absence of pretrial settlement of constitutional waiver forms normally required by Judge Martin. (Id. at p. 715, 1)

The second group of evidence were complaints filed by the District Attorney of Los Angeles County with a count alleging that the defendant had been convicted for driving under the influence within five years, which the statute authorized basis for an enhanced penalty. Judge Martin declared the prior convictions unconstitutional and struck them from the complaints. In a challenge to the constitutionality of a prior

conviction it was Judge Martins policy in a hearing to provide the deputy district attorney -- the Los Angeles County District Attorney assigned Arthur Godinez to litigate matters in Judge Martins courtroom from May 1976 to September 1977, (People_v_Martin, supra, 135 Cal.App.3d 715) to allow him to examine and the

docket sheets and argue the validity of the prior convictions before the judge ruled on whether the priors should be stricken. (Id. at p. 715, 5) But in

cases involving representation by appellant Brown and clients of Brown Godinez did not argue against Brown, even though his name appeared on the docket sheets as having participated in the disposition of the cases. He testified that he could

not have participated in the disposition of the cases because all of them involved unquestionably valid priors. (Id. at p. 715, 5) The third group of evidence was the deviation consisted of a failure to comply with the policies and the normal practices (Id. at p. 714, 6) of Judge

Martin himself, in cases involving Attorney Waldo Brown and his clients. During proceedings involving the acceptance of a guilty plea, the requirement to ascertain whether the plea is competently and knowingly made without threat or inducement; that there is an advisement and understanding to the accused of the nature of the charges; that as a citizen or inhabitant of the

United States and the State of California and under the Constitution or laws of the United States and the Constitution or laws of the State of California of the entitlement to right to trial by jury, right against self incrimination, right to confrontation, right to representation; the requirement on a plea of guilty to a

crime or public offense the act in commission or omission is defined by the laws of the State of California as a felony of an inquiry of the accused and of the factual basis of the record that a factual basis exists for the plea; and the

requirement that there be an advisement and understanding to the accused of the direct consequences of a plea so that an accused can make a plea knowingly and voluntarily. Testimony was made by several deputy district attorneys and defense attorneys on Judge Martins customary procedures in the approval of guilty pleas. In cases involving Browns clients, Martin struck as unconstitutional guilty pleas

which he himself had accepted. (People v. Martin, supra, 135 Cal.App.3d 716) The fourth group of evidence was the deviation consisted of a failure to comply with the policies and the normal practices (Id.at p. 714, 6) of Judge Martin himself, in cases involving attorney Waldo Brown and his clients. deviation is from the failure to comply with Vehicle Code Section 23536. Vehicle Code Section 23152 provides: (a) It is unlawful for any person who is under the influence of any alcoholic beverage or drug, or under the combined and drug, to drive a vehicle. (b) It is unlawful for any person who has 0.08 percent or more, by weight, of alcohol in his or her blood to drive a vehicle. For purposes of this article and Section 34501.16, percent, by weight, of alcohol in a persons blood is based upon grams of alcohol per 100 milliliters of blood or grams of alcohol per 210 liters of breath. In any prosecution under this subdivision, it is a rebuttable presumption that the person had 0.08 percent or more, by weight, of alcohol in his or her blood at the time of driving the vehicle if the person had 0.08 percent or more, by weight, of alcohol in his or her blood at the time of the performance of a chemical test within three hours after the driving. (c) It is unlawful for any person who is addicted to the use of any drug to drive a vehicle. This subdivision shall not apply to a person who is participating in a narcotic treatment program approved pursuant to Article 3 (commencing with Section 11875) of Chapter 1 of Part 3 of Division 10.5 of the Health and Safety Code. (d) It is unlawful for any person who has 0.04 percent or more, by weight, of alcohol in his or her blood to drive a commercial motor vehicle, as defined in Section 15210. influence of any alcoholic beverage The

In any prosecution under this subdivision, it is a rebuttable presumption that the person had 0.04 percent or more, by weight, of alcohol in his or her blood at the time of driving the vehicle if the person had 0.04 percent or more, by weight, of alcohol in his or her blood at the time of the performance of a chemical test within three hours after the driving. (e) This section shall become operative on January 1, 1992, and shall remain operative until the director determines that federal regulations adopted pursuant to the Commercial Motor Vehicle Safety Act of 1986 (49 U.S.C. Sec. 2701 et seq.) contained in Section 383.51 or 391.15 of Title 49 of the Code of Federal Regulations do not require the state to prohibit operation of commercial vehicles when the operator has a concentration of alcohol in his or her blood of 0.04 percent by weight or more. (f) The director shall submit a notice of the determination under subdivision (e) to the Secretary of State, and this section shall be repealed upon the receipt of that notice by the Secretary of State. Vehicle Code Section 23536 provides: (a) If a person is convicted of a first violation of Section 23152, that person shall be punished by imprisonment in the county jail for not less than 96 hours, at least 48 hours of which shall be continuous, nor more than six months, and by a fine of not less than three hundred ninety dollars ($390), nor more than one thousand dollars ($1,000). This also was the normal policy of Judge Martin. However, in Browns

cases, the docket sheets indicated that the defendants were given credit for having served 48 hours in county jail, when in fact they had served much less. In all

but two cases, the defendants spent only four to six hours in jail; of the remaining two, one spent approximately twelve hours, and the other spent less than one day. (People v. Martin, supra, 135 Cal.App.3d 716)

The fifth group of evidence was the deviation which consisted of a failure to comply with the policies and the normal practices (Id. at p. 714, 6) of

Judge Martin himself, in cases involving attorney Waldo Brown and his clients [for persons who on a plea or verdict of guilty who had violated Vehicle Code Section 23152 of the State of California, on a first time. Judge Martin had a standard sentence that he imposed for first offenders: 30 days in county jail, suspended summary probation of one year, a fine of $190.50 and required attendance at a D&A (drug and alcohol) or DUI (driving under the influence) school. $315.50. If no school was required, the fine would be increased to

In Browns cases, the fine was reduced to $150 without a requirement (People v. Martin, supra, 135 Cal.App.3d 716)

that the defendant attend school.

The Court in response to Appellant Martins contention that Penal Code Section 182, subdivision 5, is unconstitutionally vague, cited Lorenson v. Superior Court (1950) 35 Cal.2d 49 [216 P.2d 859], In Lorenson, a police captain and 12 other persons were indicted for conspiracy to commit robbery, to commit assault with a deadly weapon, and to pervert or obstruct justice or the due administration of the laws. In rejecting Lorensens[misspelling] argument that Penal Code

section 185[misspelling], subdivision 5, was unconstitutionally vague, the court stated that conduct which constitutes an offense against public justice, or the administration of the law includes both malfeasance and nonfeasance by an officer in connection with the administration of his public duties (People v. Martin, supra, 135 Cal.App.3d 720) Appellant Brown contended that the facts of this case do not support a conviction for conspiracy to obstruct justice because none of his or Martins actions constituted criminal conduct. (People v. Martin, supra, 135 Cal.App.3d 714) The Court held This argument is contrary to the holding in Davis v.

Superior Court (1959) 175 Cal.App.2d 8 [345 P.2d 513], in which the court, interpreting Lorenson, stated: The reference to Crimes against Public Justice does not necessarily exclude a crime not defined within the four corners of that Part I, title VII, of the Penal Code The [Lorenson] courts reference to such crimes was illustrative, rather than exclusionary. (175 Cal.App.2d at p.16.) One illustration given by the Davis court is appropriate here: certain types of corrupt conduct by attorneys, constituting a perversion or obstruction of justice, were formerly set forth in title 7 of the Penal Code but are now contained in the Business and Professions Code under the State Bar Act. Such acts are no less an

obstruction of justice simply because the statutes prohibiting them were removed from one code to another. (People v. Martin, supra, 135 Cal.App.3d 720) [ 18 U.S.C. Section 1503 Influencing or injuring officer or juror generally proscribes, (a) Whoever... corruptly..., endeavors to obstruct, or impede the due administration of justice shall be punished as provided in subsection (b) In U.S. v. Rasheed, 663 F.2d 843, 852, 62 A.L.r. Fed 284, 9 Fed. R.

Evid. Serv. 360 (9th Cir.(Cal.),Oct 5, 1981) the court stated, We have observed that the obstruction of justice statute was designed to proscribe all manner of corrupt methods of obstructing justice. 176 F.2d 884, 887 (9th Cir. 1949). In U.S. v. Cohen, 202 F.Supp. 587 (D.Conn. March 1, 1962), the court stated, [1] The word corruptly is capable of different meanings in different connections, Bosselman v. United States, 239 F. 82, 86 (2d Cir. 1917), and as used in Section 135 of the Criminal Code, (now 1503), any endeavor to influence a Catrino v. United States,

witness or to impede and obstruct justice falls within the connotation of the word. United States v. Polakoff, 121 F.2d 333, 335 (2d Cir. 1941), cert. denied Polakoff v. United States, 314 U.S. 626, 62 S.Ct. 107, 86 L.Ed. 503 (1941). [2] The term administration of justice means the performance of acts or duties required by law in the discharge of a duty. Rosner v. United States, 10 F.2d 975 (2d Cir. 1926). The latter part of 1503 is an all-inclusive provision and provides in part: Whoever corruptly * * * obstructs, or impedes, or endeavors to influence, obstruct, or impede, the due administration of justice, shall be fined * * * or imprisoned * * *. Ethridge v. United States, 258 F.2d 234 (9 Cir. 1958).: In U.S. v. Polakoff, 121 F.2d 333, 335, (C.C.A.2 (N.Y.) Jun 28, 1941) the court stated, [1] We think the wording of the statute is significant. It is not alone the corrupt obstruction which is defined as a crime, though that is in terms also covered (corruptly * * * shall influence, obstruct, or impede, or endeavor to, etc.). But the corrupt endeavor alone is twice forbidden. Here Polakoff was endeavoring to persuade the Assistant District Attorney to be lenient with Kafton, for reasons falsely assigned. That endeavor was corrupt because it was a fraud. Actually he was working for himself when in appearance he was working for Kafton. It is as corrupt to persuade a public officer by lies as by bribes; indeed, to influence him by fraud is not far afield from influencing him by threats or force, also prohibited by the statute. To misrepresent ones motives in such an effort is really a fraud. Marshall v. Baltimore & Ohio Railroad Co., 16 How. 314, 335, 57 U.S. 314, 14 L.Ed. 953. Kaftons promise to pay for the effort, while here an important link in the chain of evidence, only led to, but was not itself, the ultimate criminal act. That occurred when the false persuasion was attempted. In U.S. v. Gray 809 F.2d 579, 584 (9th Cir.(Mont.), Feb. 3, 1987) the court stated,

A federal judge is an officer of the court within the meaning of section 1503. United States v. Margoles, 294 F.2d 371, 373 (7th Cir.) cert. denied, 368 U.S. 930, 82 S.Ct. 367, 7 L.Ed.2d 193 (1961)

18 U.S.C. Section 1621. Perjury generally, proscribes, Whoever-(1) having taken an oath before a competent tribunal, officer, or person, in any case in which a law of the United States authorizes an oath to be administered, that he will testify, declare, depose, or certify truly, or that any written testimony, declaration, deposition, or certificate by him subscribed, is true, willfully and contrary to such oath states or subscribes any material matter which he does not believe to be true; or (2) in any declaration, certificate, verification, or statement under penalty of perjury as permitted under section 1746 of title 28, United States Code, willfully subscribes as true any material matter which he does not believe to be true; is guilty of perjury and shall, except as otherwise expressly provided by law, be fined under this title or imprisoned not more than five years, or both. This section is applicable whether the statement or subscription is made within or without the United States. 18 U.S.C. Section 1623. False declarations before grand jury or court, proscribes, (a) Whoever under oath (or in any declaration, certificate, verification, or statement under penalty of perjury as permitted under section 1746 of title 28, United States Code) in any proceeding before or ancillary to any court or grand jury of the United States knowingly makes any false material declaration or makes or uses any other information, including any book, paper, document, record, recording, or other material, knowing the same to contain any false material declaration, shall be fined under this title or imprisoned not more than five

years, or both. Penal Code Section 118a. False affidavit as to testimony as perjury; subsequent contrary testimony, proscribes, Any person who, in any affidavit taken before any person authorized to administer oaths, swears, affirms, declares, deposes, or certifies that he will testify, declare, depose, or certify before any competent tribunal, officer, or person, in any case then pending or thereafter to be instituted, in any particular manner, or to any particular fact, and in such affidavit willfully and contrary to such oath states as true any material matter which he knows to be false, is guilty of perjury. In any prosecution under this section, the subsequent testimony of such person, in any action involving the matters in such affidavit contained, which is contrary to any of the matters in such affidavit contained, shall be prima facie evidence that the matters in such affidavit were false. In the People v. Agnew, (1947) 77 Cal.App.2d 748, 176 P.2d 724, the court stated, it is perjury for one to make a false statement in a pleading filed in a judicial proceeding. (People v. Godines, 17 Cal.App.2d 721, 724 [62 P.2d 787]. See People v. Fink, 118 Cal.App. 631, 634 [5 P.2d 641].) In U.S. v. Ambrose, 108 U.S. 336, 341, 2 Sct. 682 (U.S. Ohio, Apr 23, 1883) the court stated, the perjury in all such cases consists in the oath by which the party indicted swears to the truth of some matter, and this oath may be said to be the false statement of the statute. Or, in another sense, it may be said that the written statement and the oath of the party that it is true, all constitute the declaration or certificate of the statute, for the falsity of which he is chargeable with perjury and liable to punishment. In U.S. v. Jaramillo ,69 F.3d 388, 390, 95 Cal. Daily Op. Serv. 8505, 95 Daily Journal D.A.R. 14,675 (9th Cir.(Cal.),Nov 02, 1995) the court stated,

[6] The language of 1623(a), as amended in 1976, differs from the language of 1623(c) in that the former expressly covers statements made under oath (or in any declaration, certificate, verification, or statement under penalty of perjury as permitted under [28 U.S.C. 1746] ) ...
Silberg v. Anderson, 50 Cal.3d 205, 786 P.2d 365, 266 Cal.Rptr. 638 (Cal.,Feb 26, 1990) We observe, however, that in a good many cases of injurious communications, ***647 other remedies aside from a derivative suit for compensation will exist *219 and may help deter injurious publications during litigation. Examples of these remedies include criminal prosecution for perjury (Pen.Code, 118 et seq.) or subornation of perjury (Pen.Code, 653f, subd. (a)); criminal prosecution under Business and Professions Code, section 6128; FN6 and State Bar disciplinary proceedings for violation of Business and Professions Code, section 6068, subdivision (d).FN7 Finally, republications to nonparticipants in the action are generally not **374 privileged under section 47(2), and are thus actionable unless privileged on some other basis. FN6. Business and Professions Code section 6128 provides in relevant part: Every attorney is guilty of a misdemeanor who ... is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive ... any party. FN7. That section and subdivision impose a duty on attorneys to employ ... such means only as are consistent with truth, and never to seek to mislead the judge or any judicial officer by any artifice or false statement of fact or law.

In Kashian v. Harriman, (2002) 98 Cal.App.4th 892, 912, 120 Cal.Rptr.2d 576 (6) Civil Code section 47, subdivision (b) defines what is commonly known as the litigation privilege. The usual formulation is that the privilege applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action. (Silberg v. Anderson (1990) 50 Cal.3d 205, 212[266 Cal.Rptr. 638, 786 P.2d 365].)*913 And the court stated that in Silberg v. Anderson, the court observed that remedies other than a derivative tort action will often exist, including, most notably, criminal prosecution under Business and Professions Code section 6128.
[FN14] (Silberg, supra, 50 Cal.3d at pp. 218-219.) Finally, the court noted that

republications to nonparticipants in the [underlying] action are generally not privileged under section 47 (2) [now 47, subd. (b)], and are thus actionable unless privileged on some other basis. (Silberg, at p. 219.) FN14 Business and Professions Code section 6128 provides in relevant part: Every attorney is guilty of a misdemeanor who ... [] (a) Is guilty of any deceit or collusion, or consents to any deceit or collusion, with intent to deceive the court or any party. (Kashian v. Harriman, supra, 98 Cal.App.4th at p. 919.) In Action Apartment Assn Inc. v. City of Santa Monica, (2007) 41 Cal.4th 1232, 163 P.3d 89, 63 Cal.Rptr.3d 398 the court stated,
***410 [19] *1246 We have observed that the litigation privilege does not apply

to the following crimes: perjury (Pen.Code, 118 et seq.); subornation of perjury (id., 127); criminal prosecution under Business and Professions Code section 6128;

the existence of the conspiracy is evidenced by the numerous overt acts committed during the campaign of harassment and intimidation in which the defendant participated none of which happened by coincidence, accident or mistake. These statements are admissible against him as admissions under the Federal Rule of Evidence 801(d)(2). In other words, the jury makes a credibility determination while the Court determines whether, assuming the truth of the witnesses testimony, the government has met its burden as a matter of law. Therefore the evidence will be sufficient to establish as a matter of law that the Cue N Spirits is a place of public accomodation. Willfully engaged, committed acts during the course of the conspiracy. An act is willfully done if it is done voluntarily and purposely. Specific intent may be established from all the facts and cirmstances surrounding the case. Soon Chey will seek to admit evidence of prior bad acts committed by the WELLS FARGO. The evidence is admissible to prove animus, an element of each of the counts. The prior bad acts are admissible pursuant Federal Rule of Evidence 404(b) to prove intent, motive, and absence of mistake or accident.

For the unlawful purpose Proof of Conspiracy It is sufficient for the Government to establish that two or more persons, including one or more of the accused, agreed to accomplish at least one of the charged objectives of conspiracy. In this case the evidence outlined in the preceding section, will show that the defendants were a tightly knit group of police officers who deliberately distanced themselves from the rest of the OHA police force so that they could carry out their nefarious campaign of theft, deception and crime. The evidence establishes that the defendants engaged in the crime of perversion of and obstruction of justice to pervert or obstruct justice, or the due administration of the laws in order to defraud Soon Chey of her property. WELLS FARGO and its attorney of record repeatedly misstated the laws and misstated the facts. The results of their collective efforts demonstrate. Object of s Authority in the Ninth Circuit has established conditions to warrant a preliminary injunction are to be analyzed under two tests. The evidence shows that Duarte mad false material statements that were intended, to improperly increase the apparent weight of the evidence against the arrestee. Duarte knew that these false affidavits were to be relied on by a judicial officer, In addition the evidence shows that Duarte knowingly made false material statements in declarations, in that he himself was present at the hearings and argued and heard the court state, Reporters Transcript. And yet in the Declaration in the Motion For Relief From Stay page , line with the object of perverting and obstructing justice made false material statements under the penalty of perjury that title was litigated Conscious volitional act The requisite intent need not be expressed but may be inferred from all the circumstances attendant to the act. United States v. ODell, 462 F.2d 224, 232 n.10 (6th Cir. 1972); It is not within the bounds of advocacy Elements of perjury making a false statement The second essential element of a perjury offense is that the defendant must have made a false statement. The indictment should set forth the precise falsehoods alleged and the factual basis of their falsity, such that the jury can determine their veracity and allow meaningful judicial review. United States v. Reilly, 33 F.3d 1396, 1417 (3d Cir. 1994). In determining the falsity of the defendants statement, neither the court nor the trial jury must accept the defendants interpretation; instead, the statement should be examined in context. Bronston v. United States 409 U.S. 352, 355 (1973) Words clear on their face are to be understood in their common sense and usage unless the context makes it clear that a different sense or usage was intended. United States v. Fullbright 804 F.2d 847,

851 (5th Cir. 1986) See also United States v. Robbins, 997 F.2d 390, 395 (8th Cir..) cert. denied, 510 U.S. 948 (1993) specific intent The third element of perjury offense is proof of specific intent, that is, that the defendant made the false statement with knowledge of its falsity, rather than as a result of confusion, mistake or faulty memory. United States v. Dunnigan, 507 U.S. 87, 94 (1993). Section 1621 requires that the defendant have acted willfully; the section 1623 requirement is to act knowingly. In practice these standards are virtually identical, although the government need not prove both willfulness and knowledge to sustain a section 1623 prosecution. United States v. Fornaro, 894 F.2d 508, 512 (2d Cir. 1990). Under either statute, the government must demonstrate the defendant voluntarily made the false statement with knowledge of its falsity. If the defendant believed his or her statement to be true when it was made, even though it was false, this essential element will not have been proven. See this Manual at 1753. Did not cite statutes or case law, Rule 9011. Signing of Papers; Representations to the Court; Sanctions; Verification and Copies of Papers (a) Signing of papers Every petition, pleading, written motion, and other paper, except a list, schedule, or statement, or amendments thereto, shall be signed by at least one attorney of record in the attorney's individual name. A party who is not represented by an attorney shall sign all papers. Each paper shall state the signer's address and telephone number, if any. An unsigned paper shall be stricken unless omission of the signature is corrected promptly after being called to the attention of the attorney or party. (b) Representations to the court By presenting to the court (whether by signing, filing, submitting, or later advocating) a petition, pleading, written motion, or other paper, an attorney or unrepresented party is certifying that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances,-- [FN1] (1) it is not being presented for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation; (2) the claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law; (3) the allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery; and (4) the denials of factual contentions are warranted on the evidence or, if

specifically so identified, are reasonably based on a lack of information or belief. (c) Sanctions If, after notice and a reasonable opportunity to respond, subdivision (b) has been violated, the court may, subject below, impose an appropriate sanction upon the attorneys, that have violated subdivision (b) or are responsible for Misstatement of Law. A minute order granting a motion for summary judgment is an interim order subject to a motion to reconsider (even in federal summary judgment motion order on motion is an interim order, Rutter Group Federal, Civil Procedure Before Trial) Order, notice of ruling, signed judgment, notice of judgment
George Ball Pacific, Inc. v. Coldwell Banker & Co., 117 Cal.App.3d 248, 253, 172 Cal.Rptr. 597 (Cal.App. 1 Dist.,Mar 25, 1981) [2] Judgment 228 186 228 Judgment 228V On Motion or Summary Proceeding 228k182 Motion or Other Application 228k186 k. Hearing and Determination. Most Cited Cases **As trial court's minute order granting summary judgment was clearly procedural interim order motion to reconsider such order by party against whom order was entered was properly made and considered by trial court, even though rule of civil procedure governing applications to reconsider and modify or revoke prior orders in effect at time motion was made provided no statutory authority permitting nonmoving party to order to file motion for reconsideration. West's Ann.Code Civ.Proc. 1008 (Repealed). **As the court's minute order granting the summary judgment was clearly such an interim order,FN4

the court determines that to the conditions stated law firms, or parties the violation.

Stratton v. First Nat. Life Ins. Co., 210 Cal.App.3d 1071, 1081, 258 Cal.Rptr. 721 (Cal.App. 2 Dist.,May 23, 1989)

Not is as ninth circuit opinion **[3] Here the trial court awarded defendants CP Life and CARE summary judgment in a minute
order on December 14, 1987. **The court's ruling was an interim order, and not an appealable judgment, because the minute order expressly directed counsel for CP Life and CARE to prepare a judgment. Counsel for CP Life and CARE served notice of ruling on Stratton and FN Life, but had not prepared a judgment when FN Life filed its motion for reconsideration. Vaughn v. Municipal Court of Los Angeles Judicial Dist., 252 Cal.App.2d 348, 60 Cal.Rptr. 575 (Cal.App. 2 Dist., Jul 06, 1967) (3) Contempt 15--Acts Constituting Contempt--Misconduct of Attorneys.

An attorney's misrepresentation of a fact to a court for the purpose of obtaining a continuance which was a deliberate deceit and a wilful obstruction of the orderly processes of the court amounted to an intentional violation of his duties as a member of the Bar and officer of the court, and constituted contempt. (4) Attorneys at Law 5--Duties to Court. Under Bus. & Prof. Code, 6068, subd. (d), imposing on an attorney at law a duty "to employ, for the purpose of maintaining the causes confided to him such means only as are consistent with truth, and never to seek to mislead the judge of any judicial office by an artifice or false statement of fact or law," the presentation to a court of a statement of fact known to be false presumes an intent to secure a determination based on it and is a clear violation of the statute. (5) Attorneys at Law 5--Duties to Court. The conduct denounced by Bus. & Prof. Code, 6068, subd. (d), is not the act of an attorney by which *349 he successfully misleads the court, but the presentation of a statement of fact, known by him to be false, which tends to do so. It is the endeavor to secure an advantage by means of falsity which is denounced. (6) Contempt 8--Acts Constituting. Deceit, whether negative or affirmative in nature, may form the basis of a charge for contempt. (3) Appellant's misrepresentation of a fact to respondent Court for the purpose of obtaining a continuance was a deliberate deceit and a wilful obstruction of the orderly processes of respondent Court; an intentional violation of his duties as a member of the Bar and officer of the court, his conduct is denounced by law and constitutes contempt. Among others, the following acts in respect to a court are contempts of the authority of the court: "Misbehavior in office, or other wilful neglect or violation of duty by an attorney, counsel, clerk, sheriff, coroner, or other person, appointed or elected to perform a judicial or ministerial service" and "Any other unlawful interference with the process or proceedings of a court." ( 1209, subds. 3, 8, Code Civ. Proc.) (4) Further, the law imposes upon an attorney at law a duty "(d) To employ, for the purpose of maintaining the causes confided to him such means only as are consistent with truth, and never to seek to mislead the judge of any judicial office by an artifice or false statement of fact or law." ( 6068, subd. (d), Bus. & Prof. Code.) "The presentation to a court of a statement of fact known to be false presumes an intent to secure a determination based upon it and is a clear violation of the quoted provision. [ 6068, Bus. & Prof. Code.] ... (5) The conduct denounced by the Business and Professions Code is not the act of an attorney by which he successfully misleads the court, but the presentation of a statement of fact, known by him to be false, which tends to do so. It is the endeavor to secure an advantage by means of falsity which is denounced." (Pickering v. State Bar, 24 Cal.2d 141, 144-145 [148 P.2d 1].) (6) Deceit, whether negative or affirmative in nature, may form the basis of a charge for contempt. (Daily v. Superior Court, 4 Cal.App.2d 127, 131-133 [40 P.2d 936].)

Datig v. Dove Books, Inc., 73 Cal.App.4th 964, 980, 87 Cal.Rptr.2d 719, 99 Cal. Daily Op. Serv. 5697, 99 Cal. Daily Op. Serv. 5989, 1999 Daily Journal D.A.R. 7261 (Cal.App. 2 Dist. Jul 15, 1999) (3a) Business and Professions Code section 6068 provides, in relevant part: It is the duty of an attorney to do all of the following: [] ... [] (b) To maintain the respect due to the courts of justice and judicial officers.[] (c) To counsel or maintain such actions, proceedings, or defenses only as appear to him or her legal or just, except the defense of a person charged with a public offense. [] (d) To employ, for the purpose of maintaining the causes confided to him or her such means only as are consistent with truth, and never to seek

to mislead the judge or any judicial officer by an artifice or false statement of fact or law. (Italics added.) Further, the Rules of Professional Conduct require that a member of the State Bar [s]hall not seek to mislead the judge, judicial officer, or jury by an artifice or false statement of fact or law. (Rules Prof. Conduct, rule 5-200(B).) (4) 'Honesty in dealing with the courts is of paramount importance, and misleading a judge is, regardless of motives, a serious offense.' (Paine v. State Bar (1939) 14 Cal.2d 150, 154 [93 P.2d 103], italics added; see also Di Sabatino v. State Bar (1980) 27 Cal.3d 159, 162-163 [162 Cal.Rptr. 458, 606 P.2d 765]; Garlow v. State Bar (1982) 30 Cal.3d 912, 917 [180 Cal.Rptr. 831, 640 P.2d 1106].) Counsel should not forget that they are officers of the court, and while it is their duty to protect and defend the interests of their clients, the obligation is equally imperative to aid the court in avoiding error and in determining the cause in accordance with justice and the established rules of practice. (Furlong v. White (1921) 51 Cal.App. 265, 271 [196 P. 903], italics added.)

L.R. 83-3.1.2 Standards of Professional Conduct - Basis for Disciplinary Action . In order to maintain the effective administration of justice and the integrity of the Court, each attorney shall be familiar with and comply with the standards of professional conduct required of members of the State Bar of California and contained in the State Bar Act, the Rules of Professional Conduct of the State Bar of California, and the decisions of any court applicable thereto. These statutes, rules and decisions are hereby adopted as the standards of professional conduct, and any breach or violation thereof may be the basis for the imposition of discipline. The Model Rules of Professional Conduct of the American Bar Association may be considered as guidance.
Trust Corp. of Montana v. Piper Aircraft Corp., 701 F.2d 85 (9th Cir.(Mont.),Mar 08, 1983) [1][2] The district court has the responsibility for controlling the conduct of attorneys practicing before it. In re Coordinated Pretrial Proceedings, etc., 658 F.2d 1355, 1358 (CA9 1981), cert. denied, 455 U.S. 990, 102 S.Ct. 1615, 71 L.Ed.2d 1850 (1982) Kaiser Steel Corp. v. Frank Coluccio Const. Co., 785 F.2d 656 (9th Cir.(Wash.),Jan 28, 1986) Bad outcome.

(h) [17:259] Lack of factual candor: Misstatements or nondisclosure of material facts to the court are sanctionable under Rule 11 [Pipe trades Council of Northern Calif., U.A. Local 159 v. Underground Contractors Assn of Northern Calif. (9th Cir. 1987) 835 F.2d 1275, 1280-1281 (4) [17:260] Same standard where sanctions sought against client: The same standard applies where sanctions are sought against a represented, rather than counsel. The counsels prefiling inquiries are judged according to the objective reasonable person standard, not a subjective good faith standard. [Business Guides, Inc. v. Chromatic Communications Enterprises, Inc. (1991) 498 US 533, 549550, 111 S.Ct. 922, 932-933] At p. 17-40

b. [17:282] Not warranted by law: Sanctions may also be proper for violation of of the certification that the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law... [FRCP 11(b)(2)] (1) [17:283] Nonfrivolous argument required: Rule 11 is violated where the claim is not warranted by existing law or a nonfrivolous argument for change of that law. [FRCP 11(b)(2) Such violation is shown where it is patently clear that a claim has absolutely no chance of success under the existing precedents, and no reasonable argument can be advanced to extend, modify or reverse the law as it stands.. [Eastway Construction Corp. v. City of New York (2nd Cir. 1985) 762 F.2d 243, 254 (emphasis added) Or stated differently, the standard is violated if no plausible, good faith argument can be made by a competent attorney to the contrary. Rule 11(b)(2) establishes an objective standard that is designed to eolinate any empty-head pure heart justification for patently frivolous arguments. [Zaldivar v. City of Los Angeles (9th Cir. 1986) 780 F.2d 823, 829, 833; Margo v. Weiss (2nd Cir. 2000) 213 F.3d 55, 64] At p. 17-43 utilize misstatement of law (b) [17:297] Claims contrary to controlling authority: Claims directly contrary to controlling precedents may violate Rule 11. For example, a complaint that ignored the controlling Supreme Court decisions, rather than acknowledging their effect, was held sanctionable as a matter of law: If (plaintiff) were trying to get the Supreme Court to reconsider (controlling precedents) we would not be keen to impose sanctions; a party is free to ask for reconsideration even where the court is unlikely to respond favorably ... But (t)he ostrich-like tactic of pretending that potentially dispositive authority against a litigants contention does not exist is sanctionable. [Szabo Food Service, Inc. v. Canteen Corp. 7th Cir. 1987 823 F.2d 1073, 1081 error to deny sanctions (parentheses added)] 1 [17:298] Authority from other circuits: Frivolousness is measured under the law of the local circuit. Thus, adverse authority from another circuit, even if directly in point, would not necessarily render an argument frivolous. [United States v. Stringfellow (9th Cir. 1990) 911 F.2d 225, 226] Conversely, supporting authority from another circuit does not insulate a claim against sanctions where local circuit law is clearly to the contrary. [In re Hawaii Federal Asbestos Cases (9th Cir. 1989) 871 F.2d 891, 897 (2) [17:299] Compare-failure to cite adverse authority: At least in the 9th Circuit, Rule 11 sanctions cannot be imposed simply for failure to cite adverse authority: [Neither Rule 11 nor any other Rule imposes a requirement that the lawyer step first into the shoes of opposing counsel to find all potentially contrary authority, and finally iinto the robes of the judge to decide wheter the authority is indeed distinguishable. [Golden Eagle Distributing Corp. v. Burroughs Corp. (9th Cir. 1986) 801 F.2d 1531, 1542] Rutter Group

Vapnek, Tuft, Peck, Wiener, Professional Responsibility, Rutter Group, Section 17:727; p. 17-95 (c) [17:726] Fraud on court: Sanctions under the courts inherent power are particularly appropriate for fraud practiced upon the court. [See Chambers v. NASC0, Inc., supra, 501 US at 54, 111 S.Ct. at 2138, fn 17] 1) [17:727] Defined: Fraud on the court occurs when an officer of the court perpetrates a fraud that affects the ability of the court or jury to judge the case impartially. It must involve an unconscionable plan or scheme which is designed to improperly influence the court in its decision. [Pumphrey v. K.W. Thompson Tool Co. (9th Cir. 1995) 62 F.3d 1128, 1131 (internal quotes omitted: see also Hull v. Municipality of San Juan (1st Cir. 2004) 356 F.3d 98
Pumphrey v. K.W. Thompson Tool Co., 62 F.3d 1128, 64 USLW 2178, 32 Fed.R.Serv.3d 332, 95 Cal. Daily Op. Serv. 5998, 95 Daily Journal D.A.R. 10,301 (9th Cir.(Idaho), Aug 01, 1995) Plaintiffs in products liability action against handgun manufacturer filed independent action seeking to set aside defense verdict on grounds of fraud on the court in connection with defendant's presentation of videotaped product tests. The United States District Court for the District of Idaho, Edward J. Lodge, Chief Judge, granted motion, and defendant appealed. The Court of Appeals, Skopil, Senior Circuit Judge, held that: **(1) individual who was defendant's vice president and general counsel served as officer of the court in litigation even though he did not enter appearance; **(2) failure to disclose existence of videotape of unfavorable tests amounted to fraud on the court; (3) plaintiffs' failure to uncover fraud did not bar instant action; and (4) plaintiffs were entitled to new trial on all issues. Affirmed. [1] Federal Civil Procedure 2654 170Ak2654Most Cited Cases One species of fraud on the court that will justify setting aside judgment occurs when officer of the court perpetrates fraud affecting ability of court or jury to impartially judge case. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. [2] Federal Civil Procedure 2654 170Ak2654Most Cited Cases In context of motion to set aside judgment in products liability action for fraud on the court in presentation of videotaped product tests, individual who was vice president and general counsel of defendant was "officer of the court" in litigation; although individual did not enter appearance, was not admitted pro hac vice, and did not sign any documents filed with court, he attended trial on defendant's behalf, gathered information in response to discovery requests, and participated in videotaping. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. [3] Federal Civil Procedure 2654 170Ak2654Most Cited Cases Conduct of products liability defendant, through individual who was its vice president and general counsel, with respect to videotaped tests of product in question amounted to fraud on the court, thus justifying setting aside defense verdict; individual was present when two videotapes were made, one favorable to defendant and one unfavorable, and individual had possession of both videotapes after they were made but failed to disclose existence of unfavorable one to defendant's trial counsel or to plaintiffs despite discovery request; moreover, individual drafted answer to interrogatories that mischaracterized tests and was present during trial when witness testified that he had never seen product malfunction during tests. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A.

[4] Federal Civil Procedure 2654 170Ak2654Most Cited Cases Failure by plaintiffs in products liability action to uncover alleged fraud on the court in presentation of defense videotape of product tests did not bar plaintiffs' action to have defense judgment set aside; while defendant claimed that plaintiffs should have uncovered alleged fraud after receiving interrogatory answers, defendant's conduct during discovery assured that plaintiffs would have no reason to pursue discovery regarding product tests. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. [5] Federal Civil Procedure 2654 170Ak2654Most Cited Cases Even if plaintiffs in products liability action were not diligent in uncovering fraud on the court by defendant, district court could set aside verdict based on fraud inasmuch as court itself was victim. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. [6] Federal Civil Procedure 2314.1 170Ak2314.1Most Cited Cases After defense judgment in products liability action was set aside based on fraud on the court, plaintiffs were entitled to new trial on all issues, despite defendant's contention that fraud did not relate to issue of damages; plaintiffs were entitled to opportunity to present complete case, unhampered by defendant's fraud. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. [1][2]Federal Rule of Civil Procedure 60(b) provides that a judgment may be set aside for fraud upon the court. One species of fraud upon the court occurs when an "officer of the court" perpetrates fraud affecting the ability of the court or jury to impartially judge a case. See In re Intermagnetics America, Inc., 926 F.2d 912, 916 (9th Cir.1991); Alexander v. Robertson, 882 F.2d 421, 424 (9th Cir.1989). [3] Thompson next contends that Bartlett's actions do not constitute fraud upon the court. [FN1] We disagree. **"[F]raud upon the court includes both attempts to subvert the integrity of the court and fraud by an officer of the court." Intermagnetics, 926 F.2d at 916. **Furthermore, it "must involve an unconscionable plan or scheme which is designed to improperly influence the court in its decision." Abatti v. Commissioner, 859 F.2d 115, 118 (9th Cir.1988) (internal quotation omitted). Based upon the following undisputed facts, we agree with the district court's conclusion that Thompson, through Bartlett, perpetrated fraud upon the court. FN1. Thompson argues that the district court erred by granting summary judgment on the issue of fraud upon the court, as Sparks did not specifically move for summary judgment on this ground. Thompson, however, raised the issue of fraud upon the court in its own motion for summary judgment, and fully aired its position on the issue. Moreover, Thompson fails to indicate a single argument or piece of evidence that it did not have the opportunity to present. Accordingly, the district court did not err by considering summary judgment on this issue. See United States v. Grayson, 879 F.2d 620, 625 (9th Cir.1989). Thompson made two videotapes approximately two months before trial. During the filming of the "original" video, while the Contender's internal safety was being tested, the gun fired after it was dropped. During the filming of the "trial" video, while the internal safety was being tested, the gun did not fire when dropped. The trial video was made because the test shown on the original video did not turn out as planned. French and Bartlett were present at the filming of these videos. Bartlett had possession of these videos after they were made, yet he never disclosed the existence of the original video to trial counsel for Thompson.

Prior to filming the videos, Thompson answered a request for production by stating that "defendant is not presently aware of any records relating to the testing of the Thompson Contender handguns. If records are later discovered, they will be made available pursuant to this request." Contrary to that statement, however, the original video was never disclosed to Sparks at any time, despite the fact that Bartlett participated in filming the video, had possession of the video, and drafted later discovery responses. *1132 Barely one month after the drop-tests were conducted, Bartlett drafted an answer to Sparks' interrogatories which mischaracterized the drop-tests. The answer admitted that during one test the Contender fired when dropped, but misstated that the drop was from five feet rather than three feet. The answer further misstated that both safeties were intentionally disengaged, when in fact the internal safety was unintentionally disengaged. The answer also misstated that there was no record of the test. Bartlett attended the trial at which French testified several times, without qualification, that he had never seen the Contender fire when dropped during tests. Additionally, French was deposed in two cases subsequent to Sparks involving the same gun. Bartlett was present at both depositions. In one case, French stated that he had never been able to engage the internal safety, disengage the external safety, and then drop the gun and have it fire. In another case, French stated that he had been able to jar the safety out of place when dropping the gun but had not been able to make it fire. These undisputed facts reveal that Thompson, through Bartlett, engaged in a scheme to defraud the jury, the court, and Sparks, through the use of misleading, inaccurate, and incomplete responses to discovery requests, **the presentation of fraudulent evidence, and the failure to correct the false impression created by French's testimony. **The end result of the scheme was to undermine the judicial process, which amounts to fraud upon the court. Cf. Hazel-Atlas Glass Co. v. Hartford Empire Co., 322 U.S. 238, 245-46, 250, 64 S.Ct. 997, 1001, 1003, 88 L.Ed. 1250 (1944) (**deliberately planned scheme to present fraudulent evidence constitutes fraud upon the court), overruled on other grounds, Standard Oil Co. of Cal. v. United States, 429 U.S. 17, 97 S.Ct. 31, 50 L.Ed.2d 21 (1976); Abatti, 859 F.2d at 118 (fraud upon the court involves unconscionable plan or scheme to improperly influence the court). Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 64 S.Ct. 997, 88 L.Ed. 1250, 61 U.S.P.Q. 241 (U.S.Pa.,May 15, 1944) And in cases where courts have exercised the power the relief granted has taken several forms: setting aside the judgment to permit a new trial, altering the terms of the judgment, or restraining the beneficiaries of the judgment from taking any benefit whatever from it.FN3 But whatever form the relief has taken in particular cases, the net result in every case has been the same: where the situation has required the court has, in some manner, devitalized the judgment even though the term at which it was entered had long since passed away. FN1 See, e.g., Art Metal Works, Inc., v. Abraham & Strauss, Inc., 2 Cir., 107 F.2d 940 and 944; Publicker v. Shallcross, 3 Cir., 106 F.2d 949, 126 A.L.R. 386; Chicago, R.I. & P. Ry. Co. v. Callicotte, 8 Cir., 267 F. 799; Pickens v. Merriam, 9 Cir., 242 F. 363; Lehman v. Graham, 5 Cir., 135 F. 139; Bolden v. Sloss-Sheffield Steel & Iron Co., 215 Ala. 334, 110 So. 574, 49 A.L.R. 1206. For a collection of early cases see Note (1880) 20 Am.Dec. 160. FN2 See Arnold, Federal Am.Dec. Whiting v. Bank of the United States, 13 Pet. 6, 13, 10 L.Ed. 33; Dexter v. Fed.Cas.No.3,856, 5 Mason 303, 308-315. See, also, generally, 3 Ohlinger's Practice pp. 814-818; 3 Freeman on Judgments (5th ed.) s 1191; Note (1880) 20 160, supra.

FN3 See 3 Freeman on Judgments (5th ed.) ss 1178, 1779. Every element of the fraud here disclosed demands the exercise of the historic power of equity to set aside fraudulently begotten judgments. **This is not simply a case of a judgment obtained with the aid of a witness who, on the basis of after-discovered evidence, is believed possibly to have been guilty of perjury. **Here, even if we consider nothing but Hartford's sworn admissions, we find a deliberately planned and carefully executed scheme to defraud not only the Patent Office but the Circuit Court of Appeals.*246

I would like to be able to raise issues of fraud on the court.

Later oral advocacy of positions set forth in prior pleadings is sanctionable if those positions are known or should have been known to be unsupported in fact or law.
In re Lowerree, 157 F.2d 831. 831, (C.C.A.2 (N.Y.), Nov 06, 1946) Proceeding in the matter of Elton Lowerree and Philip R. Marshall, individually and as co-partners doing business under the firm name and style of mar-Low Sports Shop, bankrupts. From an ex parte order of the United States District Court for the Northern District of New York setting aside the order of referee in bankruptcy denying discharge of the bankrupts, and from denial of a motion to vacate such ex parte order, Ski Sport, Inc., a judgment creditor, appeals. Reversed. *832 Appeal from the District Court of the United States for the Northern District of New York. Proceeding in the matter of Elton Lowerree and Philip R. Marshall, individually and as co-partners doing business under the firm name and style of Mar-Low Sports Shop, bankrupts. From an ex parte order of the United States District Court for the Northern District of New York setting aside the order of referee in bankruptcy denying discharge of the bankrupts, and from denial of a motion to vacate such ex parte order, **Ski Sport, Inc., a judgment creditor, appeals. Reversed. This appeal is brought by the judgment-creditor, Ski Sport, Inc., from two orders of the District Court, one, an ex parte order setting aside the order of the Referee in Bankruptcy denying discharge of the petitioners, Elton Lowerree and Philip R. Marshall, referring the proceedings generally to a different referee and staying all proceedings by creditors against the bankrupts, and the second, an order denying appellant's motion to vacate the aforesaid order. The facts are as follows: The bankrupts, Lowerree and Marshall, conducted a sporting goods ship in Albany, New York. On March 28, 1942, they were adjudicated bankrupt on an involuntary petition. Specifications of objection to their discharge were filed by the trustee on the ground that they had failed to explain satisfactorily a discrepancy of assets or deficiencies of assets to meet their liabilities under Sec. 14, sub. c of the Bankruptcy Act, 11 U.S.C.A. 32, sub. c. The bankrupt, Lowerree, was examined at a meeting of creditors in regard to a financial statement given by him the year previously as one of the partners

operating the business. It was this statement which formed the basis for the objections and for the referee's decision. A date was set for a hearing upon the objections. At the hearing, bankrupts were not present, but were represented by their counsel, Glenn A. Frank. The referee denied the discharge on September 26, 1942, on the grounds that no satisfactory explanation had been given by the bankrupts for the absence of the partnership property. The estate was closed and the trustee discharged on January 26, 1943. No appeal was taken from the order denying the discharge. On January 26, 1943, Ski Sport, Inc., which had previously participated in the bankruptcy dividend, reduced to judgment the remainder of its claim against the bankrupts. On February 15, 1943, garnishee execution issued against the wages of the bankrupt, Lowerree. Lowerree was drafted into the Army in September 1943, and Marshall, in April 1944. The former was discharged from the armed forces in May 1945, the latter, in November of the same year. During the period of their service, Glenn A. Frank died. On May 20, 1946, the district judge, on petition by the bankrupts, granted the ex parte order involved in this appeal. The petition states, in effect, that the petitioners were never advised by their attorney, Frank, that their presence might be required at the haring, and that their failure to appear had been taken into consideration by the referee in denying the discharge. **It further states that the bankrupts could, at that time, and still can, explain the discrepancy that prevented their discharge, but that they were prevented from doing so by the mistaken notion of their lawyer that it was not necessary for them to appear at the hearing. Lucas v. City of Juneau, 20 F.R.D. 407, 17 Alaska 75 (D.Alaska Terr., Apr 03, 1957) Proceedings on motion for reinstatement of suit dismissed for lack of prosecution. The District Court, Kelly, J., held that actions of attorneys in abandoning case of client under medical care outside jurisdiction, without notice to client, and in permitting order dismissing case to be entered without client's knowledge or consent, would justify exception to rule making conduct of attorneys imputable to client and would justify vacation of order of dismissal. Order accordingly.

Mackey v. Hoffman, 682 F.3d 1247, 82 Fed.R.Serv.3d 1317, 12 Cal. Daily Op. Serv. 7121, 2012 Daily Journal D.A.R. 8680 (9th Cir.(Cal.), Jun 25, 2012) Frcp 60(b)(6) relief from timely filing notice of appeal because of attorney abandonment
Background: State prisoner petitioned for writ of habeas corpus after he had been convicted of attempted murder and other crimes, and he had been denied relief on direct appeal, 2006 WL 1120536, and in post-conviction proceedings. The United States District Court for the Northern District of California, Susan Illston, J., denied petition, but granted certificate of appealability. Prisoner appealed. Holdings: The Court of Appeals, Garbis, District Judge, sitting by designation, held that: (1) remand was warranted and (2) relief from judgment under catch-all clause was warranted if attorney's abandonment caused petitioner to not timely file notice of appeal. Reversed and remanded.

[1] Habeas Corpus 197

795(1)

197 Habeas Corpus 197III Jurisdiction, Proceedings, and Relief 197III(C) Proceedings 197III(C)5 Determination and Disposition; Relief 197k794 Proceedings by State Prisoners in Federal Courts 197k795 Conditional Relief; New Trial or Other Proceeding 197k795(1) k. In general. Most Cited Cases A district court may grant an incarcerated habeas petitioner relief from judgment under the catch-all clause of the governing Federal Rule of Civil Procedure if his attorney's abandonment causes him to fail to timely file a notice of appeal. 28 U.S.C.A. 2254; Fed.Rules Civ.Proc.Rule 60(b)(6), 28 U.S.C.A. [2] Habeas Corpus 197 795(1)

197 Habeas Corpus 197III Jurisdiction, Proceedings, and Relief 197III(C) Proceedings 197III(C)5 Determination and Disposition; Relief 197k794 Proceedings by State Prisoners in Federal Courts 197k795 Conditional Relief; New Trial or Other Proceeding 197k795(1) k. In general. Most Cited Cases Remand of indigent state prisoner's federal habeas petition was warranted for district court to make finding as to whether action or inaction of his attorney of record had constituted abandonment and, if so, whether to exercise its discretion to grant relief from judgment, where prisoner had alleged with documentary support that he had been wholly unaware that court had denied his petition and that he had been misled by his attorney to believe that his attorney was continuing to represent him, and attorney had not observed court's rule requiring him to seek permission to withdraw as attorney of record. 28 U.S.C.A. 2254; Fed.Rules Civ.Proc.Rule 60(b)(6), 28 U.S.C.A. [3] Federal Civil Procedure 170A 2651.1

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2651.1 k. In general. Most Cited Cases Gross negligence by an attorney, defined as neglect so gross that it is inexcusable, vitiates the agency relationship that underlies the general policy of attributing to the client the acts of his attorney, and thus can be a valid basis for a relief on a motion to vacate a judgment under the catch-all clause of the governing Federal Rule of Civil Procedure. Fed.Rules Civ.Proc.Rule 60(b)(6), 28 U.S.C.A. [5] Habeas Corpus 197 795(1)

197 Habeas Corpus 197III Jurisdiction, Proceedings, and Relief 197III(C) Proceedings 197III(C)5 Determination and Disposition; Relief 197k794 Proceedings by State Prisoners in Federal Courts 197k795 Conditional Relief; New Trial or Other Proceeding 197k795(1) k. In general. Most Cited Cases

When a federal habeas petitioner has been inexcusably and grossly neglected by his counsel in a manner amounting to attorney abandonment in every meaningful sense that has jeopardized the petitioner's appellate rights, a district court may grant relief from judgment under the catch-all clause of the governing Federal Rule of Civil Procedure. 28 U.S.C.A. 2254; Fed.Rules Civ.Proc.Rule 60(b)(6), 28 U.S.C.A. Cashner v. Freedom Stores, Inc., 98 F.3d 572, 36 Fed.R.Serv.3d 660 (10th Cir.(N.M.) Oct 16, 1996)

Cashner v. Freedom Stores, Inc., 98 F.3d 572, 36 Fed.R.Serv.3d 660 (10th Cir.(N.M.) Oct 16, 1996) Ground for setting aside a judgment under the authorization of F.R.C.P. 60(b)(1) is when an attorney acts without authority
Former employee brought action against his former employers for breach of employment contract and defamation. The United States District Court for the District of New Mexico, James A. Parker, J., granted relief to former employers from orders incorporating parties' settlement agreement and enforcing settlement order, and former employee appealed. The Court of Appeals, Ebel, Circuit Judge, held that: (1) party's misunderstanding of meaning of term in stipulation for settlement that he entered into with advice of counsel was not party litigation mistake contemplated by rule allowing relief from final judgment because of mistake; (2) to extent his motion for relief from judgment because of mistake asserted judicial mistake, it was not filed within a reasonable time; (3) impossibility of performance did not warrant relief under rule providing for relief from judgment for any other reason justifying relief from the operation of the judgment; and (4) district court improperly awarded attorney fees under rule providing for relief from judgment. Reversed; vacated and remanded. [4] Federal Civil Procedure 170A 2656

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2656 k. Mistake; Inadvertence; Surprise; Excusable Neglect. Most Cited Cases Party's misunderstanding of meaning of term in stipulation for settlement, that he consciously entered into with advice of counsel, was not party litigation mistake contemplated by rule allowing relief from final judgment because of mistake; relief could not be obtained for mistakes made in negotiation of stipulation. Fed.Rules Civ.Proc.Rule 60(b)(1), 28 U.S.C.A. [5] Federal Civil Procedure 170A 2656

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2656 k. Mistake; Inadvertence; Surprise; Excusable Neglect. Most Cited Cases As general proposition, mistake provision in Rule of Civil Procedure allowing relief

from final judgment provides for reconsideration of judgments only where party has made excusable litigation mistake or **attorney in litigation has acted without authority from party, or **where judge has made substantive mistake of law or fact in final judgment or order. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. [6] Federal Civil Procedure 170A 2656

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2656 k. Mistake; Inadvertence; Surprise; Excusable Neglect. Most Cited Cases Relief from final judgment or order because of mistake is not available for party who simply misunderstands legal consequences of his deliberate acts. Fed.Rules Civ.Proc.Rule 60(b)(1), 28 U.S.C.A. [7] Federal Civil Procedure 170A 2656

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2656 k. Mistake; Inadvertence; Surprise; Excusable Neglect. Most Cited Cases Rule providing for relief from final judgment because of mistake is not available to allow party merely to reargue issue previously addressed by court when reargument merely advances new arguments or supporting facts which were available for presentation at time of original argument. Fed.Rules Civ.Proc.Rule 60(b)(1), 28 U.S.C.A. [8] Federal Civil Procedure 170A 2656

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2656 k. Mistake; Inadvertence; Surprise; Excusable Neglect. Most Cited Cases Kinds of mistakes by party that may be raised by motion for relief from judgment or order are litigation mistakes that party could not have protected against, such as **party's counsel acting without authority of party to that party's detriment. Fed.Rules Civ.Proc.Rule 60(b)(1), 28 U.S.C.A. [9] Federal Civil Procedure 170A 2656

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2656 k. Mistake; Inadvertence; Surprise; Excusable Neglect. Most Cited Cases Rule providing for relief from judgment because of mistake is not available to provide relief when party takes deliberate action upon advice of counsel and simply misapprehends

consequences of action. Fed.Rules Civ.Proc.Rule 60(b)(1), 28 U.S.C.A. [10] Federal Civil Procedure 170A 2658

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2657 Procedure 170Ak2658 k. Time for Instituting Proceedings. Most Cited Cases To extent that party's motion for relief from judgment because of mistake asserts judicial mistake, it was not filed within a reasonable time, though he filed timely notice of appeal from district court's ruling, where he later withdrew it and appeal was dismissed. Fed.Rules Civ.Proc.Rule 60(b)(1), 28 U.S.C.A. [11] Federal Civil Procedure 170A 2658

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2657 Procedure 170Ak2658 k. Time for Instituting Proceedings. Most Cited Cases When rule providing for relief from judgment because of mistake is used to challenge substantive ruling by district court, motion must be filed within time frame required for filing of notice of appeal; requirement that the motion shall be filed within a reasonable time is contemporaneous with time constraints for taking direct appeal. Fed.Rules Civ.Proc.Rule 60(b)(1), 28 U.S.C.A. [12] Federal Civil Procedure 170A 2651.1

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2651.1 k. In General. Most Cited Cases Impossibility of performance of agreement as matter of contract law did not warrant relief under rule providing for relief from judgment for any other reason justifying relief from the operation of the judgment; unanticipated intervening change of circumstances that district court would disagree with parties' proffered interpretation of settlement agreement was not kind of intervening event contemplated by rule. Fed.Rules Civ.Proc.Rule 60(b)(6), 28 U.S.C.A. [13] Federal Civil Procedure 170A 2651.1

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2651.1 k. In General. Most Cited Cases District court may grant relief from judgment under rule providing for relief from judgment for any other reason justifying relief from the operation of the judgment only in extraordinary circumstances and only when necessary to accomplish justice. Fed.Rules Civ.Proc.Rule 60(b)(6), 28 U.S.C.A.

[14] Federal Civil Procedure 170A

2651.1

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2651.1 k. In General. Most Cited Cases Broad power granted by rule providing for relief from judgment for any other reason justifying relief from the operation of the judgment is not for purpose of relieving party from free, calculated and deliberate choices he has made; party remains under duty to take legal steps to protect his own interests. Fed.Rules Civ.Proc.Rule 60(b)(6), 28 U.S.C.A. Before BRORBY, EBEL, and HENRY, Circuit Judges. EBEL, Circuit Judge. Thomas Cashner appeals the district court's order granting relief to Defendants under Fed.R.Civ.P. 60(b) from orders incorporating the parties' settlement agreement and enforcing the settlement order. The district court granted the Defendants' Rule 60(b) motion on the grounds of mistake and impossibility, but nevertheless ordered Defendants to pay Cashner's attorney fees in the amount of $10,000. Cashner appeals the grant of the Defendants' Rule 60(b) motion, and Defendants cross-appeal the award of attorneys' fees to Cashner. We hold that no grounds were stated to support Rule 60(b) relief and accordingly we REVERSE the district court's order granting the Rule 60(b) motion. We VACATE the award to Cashner of attorneys' fees and REMAND for further proceedings. I. Thomas Cashner initiated a diversity suit in federal district court against **Leonard Melley, Sr., Leonard Melley, Jr., John Melley, Freedom Stores, Inc. and Educational Enterprises (hereinafter Defendants) for breach of employment contract and defamation. On April 29, 1993, the parties filed a Stipulation for Settlement. The Stipulation provided that Defendants would pay Cashner $6,500 within ten days and deliver to Cashner collectible accounts receivable that Defendants had generated through their retail store operations under the name of **Freedom Stores, Inc. (FSI). The principal amount of the accounts receivable was to total $1,000,000 and the accounts receivable were to be delivered in four installments of $250,000 each. The installments were to be made every four months, beginning within ten days of the entry of the stipulation. Paragraph 2.D of the stipulation provided as follows: The accounts receivable delivered to Plaintiff shall be aged similarly to those accounts that are turned over, in a normal business practice, to the internal collection department of FSI and shall not have been previously turned over to any other collection department within any enterprise operated by Defendants or any outside collection agency. It is the intent of the parties that the accounts receivable being so turned over to Plaintiff for collection shall be those accounts which FSI has previously, in its normal business practice, delivered to its own internal collection department, from its retail store operations, after such accounts have become delinquent; the same typically being approximately ninety (90) days after default of the *575 agreed payment schedule.... It is the intent of the parties that Plaintiff receives accounts that are no worse or no better than those received by the internal collectors of FSI. The stipulation for settlement was incorporated into an order and judgment by the district court which was filed on May 5, 1993. Within ten days, the defendants paid the $6,500 and delivered accounts receivable to Cashner. On July 15, 1993, Cashner moved for an order to show cause why Defendants should not be held in contempt, claiming that the accounts receivable delivered to him were not in compliance with the settlement agreement as incorporated into the order and judgment.

Specifically, Cashner alleged that none of the accounts delivered had been delinquent for 90 days or less, with some accounts having been delinquent for eight years. FN1 Defendants responded that they had complied with the settlement agreement. FN1. Cashner also alleged noncompliance because the accounts had previously been turned over to Defendants' internal collection department. However, both the magistrate and the district judge found that such action was not inconsistent with the agreement. The district court referred the matter to a magistrate judge, who, after an evidentiary hearing, filed his proposed findings and recommended disposition on September 17, 1993. The magistrate found that the stipulation was unambiguous, and that FSI full[y] complied with its obligations and is not in violation of the Stipulation for Settlement. In finding full compliance, the magistrate found that [t]he accounts turned over to Cashner were of the same kind and quality as those retained by FSI for its own collection purposes. Accordingly, the magistrate recommended that Cashner's motion to hold FSI in contempt be denied, and that Cashner be ordered to reimburse FSI for costs. Cashner timely objected to the proposed findings and recommendation. The district court, concluding that it had erred in referring the matter to a magistrate, engaged in a de novo review of the magistrate's findings. In an order entered on November 19, 1993, the district court rejected the magistrate's conclusions, and found that Defendants were in violation of the settlement agreement. The district court found that under the agreement, Defendants were required to give Cashner accounts which were approximately 90 to 180 days past due. Although the court found the language of the agreement to be ambiguous, it relied on the language and evidence presented before the magistrate to determine the parties' intent. The court also agreed with Cashner that Defendants had violated the stipulation by delivering accounts worth only $250,000 where that amount included both principal and interest, as the stipulation undisputably called for $250,000 in principal amount. Defendants filed a notice of appeal on December 15, 1993. However, they subsequently withdrew the appeal, which accordingly was dismissed on January 31, 1994. On January 18, 1994, Defendants filed in the district court a motion pursuant to Fed.R.Civ.P. 60(b) for relief from the court's earlier orders incorporating and then enforcing the settlement agreement. **Rule 60(b) provides that the court may relieve a party from a final judgment or order for any one of five enumerated grounds, including mistake, or for any other reason justifying relief from the operation of the judgment. Fed.R.Civ.P. 60(b). On August 30, 1994, the district court granted Defendants' motion on two grounds. **First, it found that the motion should be granted for mistake because defendant Leonard Melley, Sr., was mistaken as to the terms of the Stipulation for Settlement and never intended to agree to the interpretation of Paragraph 2.D. that I have given to the language of paragraph 2.D. The court found that Melley had misunderstood the meaning of the paragraph. **Second, the court found that the motion should be granted on the ground of impossibility of performance. It found that the defendants simply do not generate sufficient accounts receivable to enable the defendants to comply with my interpretation of paragraph 2.D. of the stipulation of settlement. The court noted that it earlier had found plaintiff entitled to attorneys' fees and costs incurred with respect to enforcing the agreement, and invited plaintiff to file again for such relief. Cashner accordingly*576 moved for attorneys' fees, and the court awarded him $10,000 in attorneys' fees and costs incurred in connection with the motions to enforce and to vacate the settlement agreement. After the stipulation was set aside, the case was tried and a judgment was entered in favor of the Defendants on all counts. Cashner now appeals the district court's action in setting aside the settlement agreement under Rule 60(b). Defendants cross-appeal the award of attorneys' fees to Cashner.

And the court stated at p. 576,

A. Rule 60(b)(1) [4] The district court granted relief under Rule 60(b)(1) mistake on the grounds that defendant Leonard Melley, Sr. was mistaken as to the terms of the Stipulation for Settlement and never intended to agree to the interpretation of paragraph 2.D. that I have given to the language of paragraph 2.D. Melley, the court found, had misunderstood the meaning of the paragraph and believed that he had agreed to an entirely different manner of settling the plaintiff's claims. Cashner protests that such a mistake is not of the sort contemplated by Rule 60(b)(1).**We agree. Rule 60(b)(1) provides: On motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment, order, or proceeding for the following reasons: (1) Mistake, inadvertence, surprise, or excusable neglect; Although earlier versions of this rule limited mistake to mistake of a party, the 1946 Amendment removed that restrictive qualification so that judicial mistakes are included within the scope of Rule 60(b). See Fed.R.Civ.P. 60(b) advisory committee notes; 7 Moore, Federal Practice 60.22[3], pg. 60-186. [5] However, Rule 60(b) is not intended to be a substitute for a direct appeal. Morris v. Adams-Millis Corp., 758 F.2d 1352, 1356-57 (10th Cir.1985). Thus, as a general proposition, the mistake provision in Rule 60(b)(1) provides for the reconsideration of judgments only where: (1) a party has made an excusable litigation mistake or **an attorney in the litigation has acted without authority from a party, or **(2) where the judge has made a substantive mistake of law or fact in the final judgment or order. 7 Moore, Federal Practice 60.22[2], pgs. 60-175-179 (listing some of the litigation mistakes which are appropriate for Rule 60(b)(1) relief); see also Thompson v. Kerr-McGee Refining Corp., 660 F.2d 1380, 1384-85 (10th Cir.1981) (trial court did not abuse its discretion in vacating, pursuant to Rule 60(b)(1), dismissal *577 for want of prosecution when plaintiff's failure timely to obtain attorney of record was in reliance on attorney's statement that this would not be necessary), cert. denied, 455 U.S. 1019, 102 S.Ct. 1716, 72 L.Ed.2d 137 (1982); Security Mut. Cas. Co. v. Century Cas. Co., 621 F.2d 1062, 1067 (10th Cir.1980) (recognizing that Rule 60(b)(1) can be used to correct judicial error of substantive law on a theory of mistake of law but holding that a 115 day delay in filing such a motion was unreasonable); Rocky Mountain Tool & Machine Co. v. Tecon Corp., 371 F.2d 589, 597 (10th Cir.1966) (allowing court to modify interest award under Rule 60(b) even though such relief would have been untimely under Rule 59). [6] If the mistake alleged is a party's litigation mistake, we have declined to grant relief under Rule 60(b)(1) when the mistake was the result of a deliberate and counseled decision by the party. Generally speaking, a party who takes deliberate action with negative consequences ... will not be relieved of the consequences [by Rule 60(b)(1) ] when it subsequently develops that the choice was unfortunate. 7 Moore, Federal Practice 60-22 [2], p. 60-182. Similarly, Rule 60(b)(1) relief is not available for a party who simply misunderstands the legal consequences of his deliberate acts. In Otoe County Nat'l Bank v. W & P Trucking, 754 F.2d 881, 883-84 (10th Cir.1985), a defendant failed to answer a complaint because he mistakenly believed that further proceedings against him had been stayed. He attempted to challenge the resulting default judgment entered against him on the basis of mistake. We held that the district court did not abuse its discretion when it held that the defendant had failed to show mistake for purposes of Rule 60(b)(1) because the defendant's failure to answer was an informed choice based on the advice of his co-defendant's counsel. Id. at 883. Similarly, in Cessna Finance Corp. v. Bielenberg Masonry, 715 F.2d 1442 (10th Cir.1983), we held that the trial court did not abuse its discretion in denying a Rule 60(b)(1) motion to set aside a default judgment when the defendant, a guarantor of a

corporation's debt, erred, as an error of law, in concluding without the assistance of independent counsel that he would not be liable because his co-defendant, the corporation, had filed bankruptcy proceedings. We concluded that the defendant's decision not to defend was a conscious decision which precluded him from relief under Rule 60(b)(1). See also Andrulonis v. United States, 26 F.3d 1224, 1235 (2d Cir.1995); Hoffman v. Celebrezze, 405 F.2d 833, 837 (8th Cir.1969). [7] We also have held that Rule 60(b)(1) is not available to allow a party merely to reargue an issue previously addressed by the court when the reargument merely advances new arguments or supporting facts which were available for presentation at the time of the original argument. Van Skiver v. United States, 952 F.2d 1241, 1243 (10th Cir.1991) (revisiting the issues already addressed is not the purpose of a motion to reconsider and advancing new arguments or supporting facts which were otherwise available for presentation when the original summary judgment motion was briefed is likewise inappropriate.), cert. denied, 506 U.S. 828, 113 S.Ct. 89, 121 L.Ed.2d 51 (1992). Rather, those kinds of arguments must be addressed within the context of a Rule 59 motion. For other examples of the kinds of party mistakes that have been held not to state a claim under Rule 60(b)(1), see 11 Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure, 2858 at pp. 278-291. [8] By contrast, the kinds of mistakes by a party that may be raised by a Rule 60(b)(1) motion are litigation mistakes that a party could not have protected against, **such as the party's counsel acting without authority of the party to that party's detriment. See Thompson v. Kerr-McGee Refining Corp., 660 F.2d 1380, 1384-85 (10th Cir.1981) (granting relief under Rule 60(b)(1) when litigation had previously been dismissed because of reliance upon attorney's advice that no appearance was necessary); Surety Insur. Co. of Calif. v. Williams, 729 F.2d 581, 582-83 (8th Cir.1984) ([A] judgment entered upon an agreement by the attorney may be set aside on affirmative proof that the attorney had no right to consent to its entry) (internal quotation marks omitted). *578Rule 60(b)(1) relief has also been granted upon a showing of a party's excusable failure to comply with procedural rules. Wallace v. McManus, 776 F.2d 915, 917 (10th Cir.1985) (per curiam) (finding excusable neglect under Rule 60(b) when a pro se prisoner let an appeal deadline lapse after notice of the entry of judgment was sent to her former attorney rather than to her).FN2 FN2. When a party asserts an excusable failure to comply with procedural requirements, we have often imposed an additional requirement for Rule 60(b)(1) relief that the party demonstrate that his or her claim is meritorious. Otoe County Nat'l Bank v. W & P Trucking, 754 F.2d at 883 (10th Cir.1985) (quoting Cessna, 715 F.2d at 1445). We need not address that issue here because Melley has failed to meet the threshold requirements for Rule 60(b)(1) relief. Here, it is not at all clear that Melley is truly arguing party litigation mistake as defined above. Although the district court stated that Melley was mistaken when he entered into the Stipulation because he did not intend to agree to the interpretation subsequently given by the court, that is not the kind of mistake contemplated under Rule 60(b)(1). Rather, that kind of mistake pertains to the New Mexico contract doctrine of allowing rescission of a contract where the parties enter into the contract under a mutual mistake where there is no meeting of the minds. Jacobs v. Phillippi, 102 N.M. 449, 697 P.2d 132, 134-35 (1985).FN3 Rule 60(b) does not provide relief for mistakes made in the negotiation of a contract or a stipulation (which is treated like a contract). Rather, Rule 60(b)(1) deals with mistakes that occur in the judicial process of enforcing whatever rights might arise from the historic facts. Here, Melley's mistake arose in connection with negotiating the underlying stipulation and not in connection with the subsequent enforcement of the stipulation by the court. FN3. The district court found only unilateral mistake by Melley. Of course, Melley's mistake as to the interpretation on the contract could not even satisfy New Mexico's contract doctrine of allowing rescission upon unilateral mistake unless Melley could

show that Cashner knew or should have known of Melley's mistake during contract negotiations yet did nothing. Jacobs, 697 P.2d at 134-35. [9] In any event, it is undisputed that Melley consciously entered into this stipulation with advice of counsel. Rule 60(b)(1) is not available to provide relief when a party takes deliberate action upon advice of counsel and simply misapprehends the consequences of the action. 7 Moore, Federal Practice, 60-22[2], p. 60-182; Otoe County Nat'l Bank, 754 F.2d at 883-84. See also Thompson v. Kerr-McGee Refining Corp., 660 F.2d. at 1385; Surety Insur. Co. of Calif. v. Williams, 729 F.2d at 583. [10][11] We turn, then, to the possibility that Melley is arguing that the district court's interpretation of the Stipulation is a mistaken substantive ruling and that the mistake, therefore, is a judicial one rather than a mistake by the parties. The Tenth Circuit has made it clear that certain substantive mistakes in a district court's rulings may be challenged by a Rule 60(b)(1) motion. See Security Mut. Cas., 621 F.2d at 1067; Van Skiver v. U.S., 952 F.2d at 1244; Rocky Mountain Tool, 371 F.2d at 597. However, when Rule 60(b)(1) is used to challenge a substantive ruling by the district court, we have required that such a motion be filed within the time frame required for the filing of a notice of appeal. That is, we have construed the requirement in Rule 60(b)(1) that the motion shall be filed within a reasonable time in this situation to be contemporaneous with the time constraints for taking a direct appeal. Van Skiver v. U.S., 952 F.2d 1241, 1244 (10th Cir.1991) (relief may be granted under Rule 60(b)(1) on a theory of mistake of law, when ... the Rule 60(b) motion is filed before the time to file a notice of appeal has expired.) (citing Morris v. AdamsMillis Corp., 758 F.2d 1352, 1358 (10th Cir.1985)). See, also Thompson v. Kerr-McGee Refining Corp., 660 F.2d at 1385 (indicating that Rule 60(b) motions to vacate mistakes of law are governed by the thirty day appeals deadline). Here, Melley faces several obstacles in seeking Rule 60(b)(1) relief for judicial mistake. **First, the district court never concluded that it had made a judicial mistake in interpreting the Stipulation as it did. When it addressed mistake, it was referring to the contract doctrine of mistake which, as noted *579 above, is doctrinally separate from the kind of litigation mistake contemplated under 60(b)(1). However, in any event, to the extent that Melley's Rule 60(b)(1) motion asserts judicial mistake, it was not filed within a reasonable time. Although Melley timely filed a notice of appeal from the district court's rulings, he subsequently withdrew it and the appeal was dismissed.FN4 The Rule 60(b)(1) motion was not filed within the 30 day appeal time; thus, Melley's Rule (60)(b)(1) motion asserting judicial mistake was not timely filed. See Van Skiver, 952 F.2d at 1244. FN4. Notwithstanding some ambiguous dicta in Morris v. Adams-Millis Corp., 758 F.2d at 1358, we have not previously ruled on whether filing a notice of appeal tolls the time in which a Rule 60(b) motion may be filed, although the clear language in Van Skiver and Thompson suggest that a Rule 60(b) motion alleging judicial mistake must meet the same time restraints of an appeal. We agree with Professor Moore when he suggests that an appeal from the final judgment does not enlarge the time within which to move for relief under 60(b). 7 Moore, Federal Practice 60.30[1], pg. 60-330. And, of course, a Rule 60(b) motion does not toll the time for taking a direct appeal. Hawkins v. Evans, 64 F.3d 543, 546 (10th Cir.1995). Therefore, a litigant who wishes to pursue both avenues simultaneously should file both a notice of appeal and a Rule 60(b) motion within 30 days of the final judgment. **We have held that such a dual filing is allowed, and that the district court may deny a 60(b) motion without seeking leave from us even though the case was then on appeal. Aldrich Enterprises v. U.S., 938 F.2d 1134, 1143 (10th Cir.1991). **However, the district court must notify us if it intends to grant the Rule 60(b) motion and seek a remand for that purpose. Id.; Calva Products v. Beal, Bridgeforth & Beal, 1995 WL 681484 ----1,2 (10th Cir.1995) (Unpublished Disposition). Upon such notification, we will ordinarily grant leave because the trial court will most likely be in a better position initially to assess the merits of the Rule 60(b) motion. See Spence v. Allstate Ins. Co., 883 S.W.2d 586, 596 (Tenn.1994).

Therefore, however Melley's Rule 60(b)(1) motion is interpreted, he has failed to state a claim for relief under that rule. B. Rule 60(b)(6) [12] Clause (6) of Rule 60(b) provides that relief may be granted for any other reason justifying relief from the operation of the judgment. The district court invoked this provision as an alternate basis for relief based on its conclusion that the defendants do not generate sufficient accounts receivable to comply with the stipulation as interpreted by the court. The parties dispute whether, under New Mexico law, there was impossibility of performance of the agreement. We need not reach this question, however, because even assuming that Defendants' performance is impossible as a matter of contract law, such impossibility does not, without more, warrant relief under Rule 60(b)(6). See Greenspahn v. Joseph E. Seagram, 186 F.2d 616 (2d Cir.1951) (denying 60(b)(6) relief upon defendant's claim of impossibility where the defendant could have discovered its impossibility problem during the negotiation of the consent decree, and where the district court had the ability to fashion a remedy that avoided any impossibility problems). [13][14] Rule 60(b)(6) has been described as a grand reservoir of equitable power to do justice in a particular case. Pierce v. Cook & Co., 518 F.2d 720, 722 (10th Cir.1975) (en banc) (internal quotation marks omitted), cert. denied, 423 U.S. 1079, 96 S.Ct. 866, 47 L.Ed.2d 89 (1976). However, a district court may grant a Rule 60(b)(6) motion only in extraordinary circumstances and only when necessary to accomplish justice. Lyons v. Jefferson Bank & Trust, 994 F.2d 716, 729 (10th Cir.1993). We have sometimes found such extraordinary circumstances to exist when, after entry of judgment, events not contemplated by the moving party render enforcement of the judgment inequitable. See, e.g., Zimmerman v. Quinn, 744 F.2d 81, 82-83 (10th Cir.1984) (upholding 60(b)(6) modification of stipulated judgment to allow the receiving party to escape tax liability for the transferred amount for a one year period when both parties had expected funds transfer to occur within sixty days and it did not occur for almost eighteen months); State Bank v. Gledhill (In re Gledhill), 76 F.3d 1070, 1081 (10th Cir.1996) (upholding 60(b)(6) relief and agreeing with bankruptcy court's conclusion that the circumstances of the case had changed significantly since the judgment). Here, however, there has been no showing of an unanticipated intervening change of circumstances. The only event not contemplated by Defendants was that the *580 district court would disagree with their proffered interpretation of the settlement agreement, and that is not the kind of intervening event contemplated by Rule 60(b)(6). **[T]he broad power granted by clause (6) is not for the purpose of relieving a party from free, calculated and deliberate choices he has made. A party remains under a duty to take legal steps to protect his own interests. 11 Charles A. Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure 2864, p. 359 (citing Ackermann v. United States, 340 U.S. 193, 198, 71 S.Ct. 209, 211-12, 95 L.Ed. 207 (1950)). In Ackermann, Ackermann failed to appeal from a judgment canceling his naturalization because he had been advised by an attorney that he would need to sacrifice his home in order to file the appeal. When Ackermann's brother, in the same case, did appeal from the judgment and succeeded in having the complaint against him dismissed, Ackermann argued he was entitled to relief under Rule 60(b)(6). The Supreme Court held that Ackermann had made a considered and free choice not to appeal, and cannot be relieved from such a choice because hindsight seems to indicate to him that his decision not to appeal was probably wrong.... There must be an end to litigation someday. 340 U.S. at 198, 71 S.Ct. at 211-12. Like Ackermann, Defendants made a free, counseled, deliberate choice whose consequences in hindsight are unfortunate. Relief under Rule 60(b)(6) is appropriate when circumstances are so unusual or compelling that extraordinary relief is warranted, or when it offends justice to deny such relief. Pelican Prod., 893 F.2d at 1147. We find nothing sufficiently unusual or compelling about making a bad bargain to warrant relief under Rule 60(b)(6). See Schwartz v. United States, 976 F.2d 213, 218 (4th Cir.1992) (affirming district court's refusal to grant Rule 60(b)(6) relief on grounds of mutual mistake from judgment entered pursuant to settlement

agreement; We find no meaningful distinction from a motion asking for relief from a decision not to appeal, as in Ackermann, and one that asks for relief from a decision to settle.), cert. denied, 507 U.S. 919, 113 S.Ct. 1280, 122 L.Ed.2d 673 (1993). We recognize that [t]he district court has substantial discretion in connection with a Rule 60(b) motion. Pelican Prod., 893 F.2d at 1146. However, it is an abuse of discretion to grant relief where no basis for that relief exists. Defendants have alleged only a unilateral mistake as to the meaning of the stipulation terms that led to their entering into an improvident bargain. Stipulated judgments negotiated in open courts are not to be easily set aside. Such judgments are as final as those entered following trial. V.T.A., Inc. v. Airco, 597 F.2d 220, 226 (10th Cir.1979). Were we to affirm the grant of Rule 60(b) relief here, we would upset the delicate balance between the finality of judgment and justice that Rule 60(b) seeks to maintain. Id. The district court's grant of Defendants' Rule 60(b) motion is therefore reversed.

Thompson v. Kerr-McGee Refining Corp., 660 F.2d 1380, 1384, 32 Fed.R.Serv.2d 1010, 1981-2 Trade Cases P 64,320 (10th Cir.(Okla.), Sep 24, 1981) Thompson filed his complaint on August 31, 1978. The following day, the action was removed to federal court. On October 10, 1978, Thompson's attorney withdrew, and the court, by minute order, gave Thompson twenty days during which to obtain new counsel. Twenty-four days later, on November 3, Kerr-McGee filed a motion to dismiss for failure to comply with that order. An ex parte hearing was held on that same day and the motion was granted. On December 19, 1978, Thompson filed a motion to vacate under Rule 60. The court granted this motion on the ground of excusable neglect. See, Rule 60(b) (1), F.R.Civ.P.[FN3] *1385 **Thompson had taken the file to James Mitchell, another attorney. Mitchell had told Thompson that he was hopeful of negotiating a settlement with Kerr-McGee in which event it would be unnecessary to obtain an attorney of record. On November 6, after negotiations had apparently failed, he informed Thompson that he would be unable to represent him because of other commitments. FN3. Rule 60(b) provides, in part: On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other conduct of an adverse party; ... The motion shall be made within a reasonable time, and for reasons (1), (2), and (3) not more than one year after the judgment, order, or proceeding was entered or taken. Kerr-McGee claims that the trial court should not have granted Thompson's motion to vacate the dismissal for failure to prosecute. It claims that the motion should have been treated as a motion to alter or amend a judgment, under Rule 59(e). Such a motion must be served not later than ten days after the entry of judgment. Alternatively, Kerr-McGee claims that the motion must be filed within a reasonable time and that case law has established a reasonable time as being the time in which notice of appeal must be filed (the thirty-day rule). See, Gila River Ranch, Inc. v. United States, 368 F.2d 354 (9th Cir. 1966); Hoffman v. Celebrezze, 405 F.2d 833 (8th Cir. 1969). Whether we would consider this as excusable neglect is not the issue on appeal. This is because a motion to vacate under Rule 60(b) is directed to the discretion of the court

entering the judgment, not to the discretion of the Court of Appeals. Our review is limited to determining whether the district court abused its discretion. Appleton Electric Co. v. Graves Truck Line, Inc., 635 F.2d 603, 611 (7th Cir. 1980). Rule 60(b) gives the court a grand reservoir of equitable power to do justice in a particular case. That rule should be liberally construed when substantial justice will thus be served. Pierce v. Cook & Co., 518 F.2d 720, 722 (10th Cir. 1975) (en banc ). The trial judge was furnished with an affidavit describing how the plaintiff had relied on his attorney's statement that negotiations were in progress. The affidavit further related that Thompson had been present during some of the negotiations and had seen Attorney Mitchell acting in his behalf. We believe that the district court showed sound judgment in vacating the dismissal for want of prosecution, especially considering the short period of time, less than five months, during which the case had been on file.

David Lilly acted as a representative of an adverse party

Klapprott v United States (1949) 335 US 601, 93 L Ed 266, 69 S Ct 384, relief under Rule 60(b)(6) was granted. In this case, the Supreme Court applied Rule 60(b) to a petition to have a default judgment of denaturalization set aside, petitioner alleging that the complaint in the proceeding to revoke his certificate of naturalization 4 years earlier was served upon him at a time when, weakened and impoverished by illness, he was without means to hire a lawyer; that before the time to answer expired he was arrested on a charge of conspiracy and imprisoned because unable to furnish bail; that a letter which he had drafted asking the American Civil Liberties Union to represent him without fee was taken from him and never mailed; **that the lawyer appointed to defend him on the conspiracy charge promised to help him in the cancellation proceeding, but failed to do so;

David Lilly promised that he would hire a lawyer to represent him in the bankruptcy petition, but failed to do so? David Lilly promised that he would consolidate the cases. Timothy (must) have been misinformed on what Jonah King was going to do about the filing of the Bankruptcy Petition 18608-MW King must have utilized Lilly to attempt to escape misconduct. What is the timeline between the cases where King brought Hirou v. Countrywide and 19608? King had Lilly doing things which were illegal under the Rules Of Professional Conduct King must have acted wthout Timothy Hirous knowledge or consent. King had Lily have Timothy fill out petitions without listing a case number on the petitions. The petition was filed without Timothys knowledge or consent.
7Federal Procedure, Lawyers Edition s 51:147, Misconduct must be that of opposing party (2012) HN: 1 (F.2d)

F.R.C.P. Rule 60. Relief from a Judgment or Order (b) Grounds for Relief from a Final Judgment, Order, or Proceeding.On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons:

(3) fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party; (6) any other reason that justifies relief. (d) Other Powers to Grant Relief. This rule does not limit a court's power to: (3) set aside a judgment for fraud on the court. From fed proc le ch51 judgm orders VI relief from judgm orders B relief by motion under 60b c fraud misrep other misc of opposing party 51 147 misc must be that of opposing party.doc As a general rule, Fed. R. Civ. P. 60(b)(3) does not cover fraud, misrepresentation, or misconduct by the moving partys own attorney.4 However, it may do so where fraud is furthered by a movants attorney whose interests are actually adverse to the movant, since the attorney may then have effectively worked a fraud on the movant in his role as an adverse party, and since it would be unrealistic in such a case to impute the attorneys conduct to the movant. 5 Federal Procedure, Lawyers Edition Database updated September 2012 Chapter 51. Judgments and Orders Karl Oakes, J.D. VI. Relief from Judgments or Orders C. Actions under Savings Clauses 2. Fraud Upon the Court a. Basis for and Extent of Relief (2) What Constitutes Fraud Upon the Court? Summary Correlation Table References 51:200. Involvement of officer of the court Fraud upon the court is brought under F.R.C.P. Rule 60(b)(6)
U.S. v. Denham, 817 F.2d 1307, 8 Fed.R.Serv.3d 151 (8th Cir.(Ark.) May 06, 1987) Action was brought to foreclose on mortgaged property securing note. The United States District Court for the Western District of Arkansas, H. Franklin Waters, Chief Judge, entered judgment on stipulation and subsequently denied motion for relief from judgment and appeal was taken. The Court of Appeals, Heaney, Circuit Judge, held that: (1) allegations attorney performed as defendants attorney to work fraud on them and to enrich himself in role of adverse party, if true, could serve as basis for relief from judgment, and (2) if attorney involved in representation of defendants worked fraud upon them, finding that motion for relief from judgment was untimely was error. Reversed and remanded. [1] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases

While as general rule, rule providing for relief from final judgment if court finds fraud, misrepresentation or other misconduct of adverse party is not intended to cover acts by attorney for parties, general rule should not be interpreted so broadly as to prohibit recovery if fraud is furthered by attorney's representation of client whose interest is also adverse to attorney's interest as party to case. Fed.Rules Civ.Proc.Rule 60(b)(3), 28 U.S.C.A. [2] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases In action foreclosing on mortgaged property securing note, defendants' claim that attorney was involved throughout lawsuit, either directly or indirectly with their representation and that attorney's involvement resulted in fraud by which settlement read into record unjustly enriched attorney at defendants' expense,**if true, could serve as basis for relief from final judgment under rule providing for relief if court finds fraud, misrepresentation, or other misconduct of adverse party or any other reason justifying relief from operation of judgment. Fed.Rules Civ.Proc.Rule 60(b)(3), 28 U.S.C.A. [3] Federal Civil Procedure 170A 2658

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2657 Procedure 170Ak2658 k. Time for Instituting Proceedings. Most Cited Cases If defendants' allegations that attorney was involved throughout lawsuit, either directly or indirectly, with their representation and that his involvement resulted in fraud by which settlement read into record unjustly enriched attorney at defendant's expense took place, district court erred in finding motion for relief from final judgment untimely because defendants' primary and most trustworthy source of information concerning settlement was their attorney, so that it was improper to impute defendants' attorney's knowledge to them if attorney's withholding of such knowledge would have furthered fraud alleged. Fed.Rules Civ.Proc.Rule 60(b)(3), 28 U.S.C.A Before HEANEY, FAGG and BOWMAN, Circuit Judges. HEANEY, Circuit Judge. Elam and Mary Denham appeal the district court's denial of their motion for relief from judgment pursuant to rule 60(b) of the Federal Rules of Civil Procedure. We reverse and remand the case for a hearing. BACKGROUND As a result of their default on a note in the original amount of $215,000, **the Small Business Administration (SBA) brought an action, on October 17, 1985, against the Denhams to obtain a judgment and to foreclose on mortgaged property securing the note. Other creditors of the Denhams with various interests in the mortgaged property were also named as defendants in the action. Among these creditors was the Denhams' attorney, Julian Streett. Since Streett was a co-defendant and creditor, as a result of liens he placed on the Denhams' property securing attorney's fees owed for past work, he advised the Denhams that he could not

represent them in the matter and referred them to another attorney, James Kennedy. On March 28, 1986, the Denhams learned that the matter was set for trial on May 21, 1986. They allege that their lawyers did nothing to prepare for trial from March 28 to May 21, informing them that they had no defenses to the suit and that they should settle it. They allege they were told that if they agreed to settle, the SBA would agree to release their residence from the suit and would be held to a strict accounting, that any judgment would not take effect until sixty days after it was entered, and that should the Denhams find a buyer for any of the property prior to the foreclosure sale, the SBA would release the property for a specified amount. On the morning of May 21, 1986, (the date on which the trial was scheduled) Mary Denham met with her attorney and was informed that the SBA would not agree to release the residence from the suit, but would agree to sell commercial property first, undeveloped property second, and the residence last. **The Denhams allege they agreed to this arrangement only because they knew their attorneys had done nothing to prepare for trial. Also on the morning of May 21, a settlement conference was held and a settlement was read into the record of the district court. The Denhams were not present either for the conference or when the record was made. As a result of the settlement, the SBA obtained a judgment in the amount of $243,852.96, McIlroy Bank, another of the Denhams' creditors, obtained a judgment in the amount of $11,726.14, and Streett obtained a judgment in the amount of $14,183.63. The settlement also provided for a foreclosure sale sixty days after the hearing at which time undeveloped property would be sold first, commercial property second, and the residence last. A judgment was entered on June 12, 1986, in conformity with the agreement and was modified on July 17, 1986. The district court, in a letter memorandum, denied the motion. The court found the Denhams' motion was not timely because it was filed slightly more than one week before the scheduled foreclosure sale in an apparent last ditch attempt to hold off the sale. The court also found the Denhams' filings had not met any of the substantive requirements for a rule 60(b) motion. It stated that the Denhams came closest to alleging fraud or misrepresentation, see Fed.R.Civ.P. 60(b)(3), but that the rule is not intended to cover acts by the attorneys for the parties and, in any event, because any excess after satisfaction of the judgments of the SBA and McIlroy would be paid into the registry of the court subject to further orders of the court, any fraud in the action did not result from the actions of an adverse party as required by rule 60(b)(3). Finally, the district court held that the Denhams had not sufficiently alleged defenses to the SBA's claims insofar as the allegations were nothing more than conclusions, unsupported by any claimed facts. The Denhams appeal. ANALYSIS The provisions of Federal Rule of Civil Procedure 60(b) relevant to this case provide for relief from a final judgment if a court finds **fraud, misrepresentation, or other misconduct of an adverse party or **any other reason justifying relief from the operation of the judgment. Fed.R.Civ.P. 60(b)(3) and (6). The movant must establish its right to such relief by clear and convincing evidence. E.F. Hutton & Co. v. Berns, 757 F.2d 215, 217 (8th Cir.1985). Nonetheless, in considering a rule 60(b) motion, a court is entitled to assume that the movant's factual allegations are true, as on a motion to dismiss. See Ervin v. Wilkinson, 701 F.2d 59, 61 (7th Cir.1983). Ultimately, the determination whether such a showing has been made rests within the trial court's sound discretion and on review will be overturned only if there has been an abuse of that discretion. E.F. Hutton & Co., 757 F.2d at 217. Accepting the Denhams' factual allegations as true, we find that the district court erred in denying the motion as untimely and not brought against an adverse party. In essence, the Denhams' claim, as we understand it, is that Streett was involved throughout the lawsuit, either directly or indirectly, with their representation and that this involvement resulted

in a fraud by which the settlement read into the record unjustly enriched Streett at their expense. The Denhams point out that the settlement proposed to them was only agreed to as a result of their lawyers' lack of preparation and on the basis of legal advice that was given in furtherance of the fraud. Moreover, they also point out that even this settlement was more favorable than the one actually read into the record. [1][2] While we agree with the district court that, as a general rule, rule 60(b)(3) is not intended to cover acts by an attorney for the parties, the general rule should not be interpreted so broadly as to prohibit recovery if the fraud is furthered by an attorney's representation of a client whose interest is also adverse to the attorney's interest as a party to the case. In alleging that Streett performed as their attorney to work a fraud upon them and to enrich himself in the role of adverse party, the Denhams state a claim which, if true, could serve as a basis for relief from judgment. The other parties to the case should not be able to use Streett's alleged role as attorney for the Denhams as a shield against relief from a judgment obtained by fraud. [3] Additionally, if the fraud took place as the Denhams allege, the district court erred in finding the motion untimely because the Denhams' primary and most *1310 trustworthy source of information concerning the settlement was their attorney. It is unrealistic to impute the Denhams' attorneys' knowledge to them if withholding such knowledge would have furthered the fraud alleged.FN1 Thus, we remand the case to the district court for further proceedings consistent with this opinion. FN1. Although we venture no opinion whether, on remand, the Denhams will actually be able to prove the fraud they allege and damages proximately resulting therefrom, a review of the record suggests several points on which they should be allowed to present evidence. First, the lawyer to whom Streett referred the Denhams, James Kennedy, was a member of the law firm of Streett & Kennedy. In its brief, the United States assures us that Julian Streett is not a member of that firm and that the Streett in the firm is Alex Streett. The United States, however, also admits that this information is not apparent from the record and that the record does not show the relationship, if any, between Alex and Julian Streett. A familial relationship between Alex and Julian Streett would constitute some evidence of the fraud the Denhams claim. Second, although the district court, in its letter opinion, states that the Denhams were represented by counsel during the pre-trial settlement conference, a transcript of the proceeding in which the settlement was read into the record raises some questions. Despite listing James Kennedy as appearing for the defendants, presumably for the Denhams, the transcript reveals that Kennedy did not utter one word during the entire proceeding. In fact, even though judgments totaling almost $270,000 were obtained against his clients, Kennedy, if he was present, did not indicate his client's assent to the settlement. Moreover, although a reading of the transcript reveals that Julian Streett appeared pro se and obtained a judgment against the Denhams in the amount of $14,183.63, he is not listed as appearing at the hearing. These facts are sufficiently probative of the claim the Denhams attempt to raise to warrant further consideration. In re M/V Peacock on Complaint of Edwards, 809 F.2d 1403, 1987 A.M.C. 1587 (9th Cir.(Cal.), Feb 09, 1987)

When a motion under Rule 60(b)(3) is based on negligent misrepresentation, it is important that the moving party be required to demonstrate that the misrepresentation prevented it from presenting its case.
Following entry of judgment exonerating shipowners from liability for death of technician

employed on oceanographic research vessel as member of scientific personnel, wife of technician filed motion for relief from judgment. The United States District Court for the Northern District of California, Stanley A. Weigel, J., denied motion, and wife appealed. The Court of Appeals, Kennedy, Circuit Judge, held that wife failed to establish that shipowners' misrepresentations prevented her from fully and fairly presenting her case. Affirmed. [1] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases To prevail under Rule 60(b)(3), moving party must establish that judgment was obtained by fraud, misrepresentation, or misconduct, and that conduct complained of prevented moving party from fully and fairly presenting case. Fed.Rules Civ.Proc.Rule 60(b)(3), 28 U.S.C.A. [2] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases Following judgment for shipowners in plaintiff's action arising out of death of plaintiff's husband, plaintiff failed to establish that shipowners' misrepresentations regarding status of ship as research vessel prevented her from discovering ship's true status or from fully presenting her case to warrant relief under Rule 60(b)(3); shipowners did not make misrepresentations regarding ship's status until two years after litigation commenced, and plaintiff had access to information during that time to establish ship's true status. Fed.Rules Civ.Proc.Rule 60(b)(3), 28 U.S.C.A. Before KENNEDY, TANG and THOMPSON, Circuit Judges. KENNEDY, Circuit Judge: We visit again a case that was before us earlier on appeal from a judgment on the merits. Craig v. M/V PEACOCK on Complaint of Edwards, 760 F.2d 953 (9th Cir.1985). **Appellant Dianne Craig challenges the magistrate's order denying her motion for relief from judgment under *1404 Rule 60(b)(3) of the Federal Rules of Civil Procedure. We affirm. This action arises out of the death of Craig's husband, Larry Lewis, who was lost at sea on December 23, 1979, after falling overboard from the PEACOCK, a vessel engaged in seismographic oil exploration off the coast of California. The PEACOCK was owned by **appellees Oskco Edwards and Harry Tompkins (the Shipowners). In April of 1980, Craig brought an action against the Shipowners in the Southern District of Texas. The locus of the action shifted to the Northern District of California after the Shipowners, in June 1980, filed a petition for exoneration from or limitation of liability under 46 U.S.C. 185-86. The case was heard before a magistrate on October 18, 1982. The principal issue at trial was whether or not Lewis, a seismographic technician, was a seaman entitled to special duties of care from the Shipowners. The parties litigated with great vigor the question of the effect of the Oceanographic Research Vessels Act (ORVA), 46 U.S.C. 441-44, on Lewis'

possible status as a seaman. The magistrate ruled in favor of the Shipowners, and Craig appealed. By a divided decision, we upheld the magistrate's decision that Lewis was not a seaman, but was instead a member of the scientific personnel aboard the PEACOCK, and was therefore not entitled to the heightened standard of care available to seamen. 760 F.2d at 956. Throughout the proceeding, the parties and magistrate assumed that the PEACOCK was an oceanographic research vessel under the provisions of ORVA, and that it had complied with ORVA's formal registration requirements. The Shipowners made representations regarding the PEACOCK's ORVA registration in their trial brief, filed on June 21, 1982; in their post-trial brief of February 14, 1983; and in their reply brief of March 28, 1983. In October of 1983, Craig's counsel encountered a Coast Guard official who commented that the PEACOCK might not have been formally registered as an oceanographic research vessel under ORVA. After contacting various Coast Guard offices, Craig's attorney determined that there was no evidence of the PEACOCK's ORVA registration and thus the applicability of ORVA to the case was called into question. It appears in fact the PEACOCK had not complied with ORVA's registration requirements. Craig sought relief from the magistrate's judgment on the ground that the PEACOCK's ORVA status was essential to the judgment because ORVA limited the applicability of certain Coast Guard regulations which might have entitled Craig to relief. The magistrate declined to hear Craig's motion pending the outcome of Craig's appeal. We held that the magistrate's disposition of Craig's motion under Rule 60(b) was interlocutory in nature and therefore not appealable. 760 F.2d at 955 n. 1. We then stated, in the majority opinion: [Craig's] challenge to the seaworthiness finding asserts error in the magistrate's finding of compliance with Coast Guard regulations on the basis of a distinction between ORVA vessels and non-ORVA vessels. The issues raised by this contention are relevant to the Rule 60(b) motion; consequently, arguments in support thereof are not properly before the court for decision at this time although they may still be raised in the district court. Id. at 956. Craig's Rule 60(b) motion was referred back to the trial court, and after due consideration, it was denied. We review the denial of a motion under Rule 60(b) for abuse of discretion. Lafarge Conseils et Etudes, S.A. v. Kaiser Cement & Gypsum Corp., 791 F.2d 1334, 1338 (9th Cir.1986); Hoptowit v. Spellman, 753 F.2d 779, 782-83 (9th Cir.1985). [1] Craig presses her appeal solely under Rule 60(b)(3), which states that the court may relieve a party of a final judgment by reason of fraud ..., misrepresentation, or other misconduct of an adverse party. Fed.R.Civ.P. 60(b)(3). To prevail under the cited portion of the Rule, the moving party must establish that a judgment*1405 was obtained by fraud, misrepresentation, or misconduct, and that the conduct complained of prevented the moving party from fully and fairly presenting the case. Lafarge, 791 F.2d at 1338; Bunch v. United States, 680 F.2d 1271, 1283 (9th Cir.1982). The rule is aimed at judgments which were unfairly obtained, not at those which are factually incorrect. Rozier v. Ford Motor Co., 573 F.2d 1332, 1339 (5th Cir.1978). [2] We hold that Craig has failed to meet this standard because she has not shown that the Shipowners' misrepresentations, made after Craig had almost two years to prepare her case, **prevented her from discovering the PEACOCK's true status under ORVA or from presenting her case. The ORVA status of the PEACOCK was an important issue from the beginning of the litigation. As appellant now sees the case, ORVA prevented her from any recovery, for vessels registered under that Act need not, or arguably need not, comply with certain Coast Guard regulations. It was critical for Craig to find out whether the PEACOCK was registered under

ORVA. That information was not in the exclusive control of the Shipowners. **Craig's counsel could have found out that the PEACOCK was not registered under ORVA, and indeed eventually did find this out, by investigating the matter with the Coast Guard. The litigation commenced in the Northern District of California in June 1980. The Shipowners' trial brief, which contained the first of the misrepresentations about the PEACOCK's ORVA status, was not filed until June 1982. So for two years Craig's counsel had an incentive to find out about the PEACOCK's ORVA status, had access to the necessary information, and was not laboring under a misimpression that possibly could have been created by the conduct of the Shipowners or their counsel. **In these circumstances, we cannot say that the Shipowners' misrepresentations, negligent as they may have been, prevented Craig from fully and fairly presenting her case. **What appears to have happened here was that both parties mistakenly assumed that the PEACOCK was an ORVA vessel because it was fitted to perform, and did perform, seismographic research functions normally associated with an ORVA vessel. Rule 60(b)(1) permits relief from judgment because of mistake, inadvertence, surprise, or excusable neglect, but that rule requires the moving party to justify its actions, see, e.g., In re Burley, 738 F.2d 981, 988 (9th Cir.1984), or to show that its mistake was unexpected and unavoidable rather than careless. See, e.g., Federal's, Inc. v. Edmonton Investment Co., 404 F.Supp. 68, 73 (E.D.Mich.1975), aff'd, 555 F.2d 577 (6th Cir.1977). Craig's decision not to seek relief under this provision was undoubtedly based on the difficulties she would encounter from these requirements. When a motion under Rule 60(b)(3) is based on negligent misrepresentation, it is important that the moving party be required to demonstrate that the misrepresentation prevented it from presenting its case. This eliminates any discontinuity between Rule 60(b)(1) and Rule 60(b)(3). If the rule were otherwise, then a mutual mistake would ordinarily be evaluated under the stringent requirements of Rule 60(b)(1), whereas Rule 60(b)(3) would provide an easy route to post-judgment relief where one of the mistaken parties happens to memorialize the mistake in writing or repeat it orally to the other. Although the requirement of a causal nexus between one party's misrepresentation and the other party's inability to prepare the case is particularly crucial in the context of negligently-made misrepresentations arising out of a mutual mistake, we think a different case would be presented if the Shipowners' misrepresentations had been made with the intent to deceive Craig or her counsel. The magistrate's decision is AFFIRMED.

Alexander v. Robertson, 882 F.2d 421, 14 Fed.R.Serv.3d 641 (9th Cir.(Cal.) Aug 14, 1989)

Under F.R.C.P. 60(b)(3) fraud is not restricted to only that engaged in, committed or perpetrated by an adverse party. Here attorney was unlicensed to practice law.
Defendant in action to recover deficiency judgment brought cross claim against codefendants. The United States District Court for the Northern District of California, Samuel Conti, J., denied cross claim, and appeal was taken. The Court of Appeals, Wiggins, Circuit Judge, held that defendant was not entitled to relief from adverse judgment on its cross claim against codefendants upon discovering that codefendants' counsel was not licensed attorney. Affirmed.

[2] Attorney and Client 45

12(25)

45 Attorney and Client 45I The Office of Attorney 45I(A) Admission to Practice 45k12 Practitioners Not Admitted or Not Licensed; Unauthorized Practice of Law 45k12(25) k. Effect of unauthorized practice in general. Most Cited Cases (Formerly 45k11(12)) Defendant was not entitled to relief from adverse judgment on its cross claim against codefendants upon discovering that codefendants' counsel was not licensed attorney; codefendants were also unaware of counsel's status and, given cross claim's lack of merit, setting aside of judgment would neither protect integrity of judicial system nor vindicate interest of party victimized by unlicensed practice of law. Fed.Rules Civ.Proc.Rule 60(b), 28 U.S.C.A. Appeal from the United States District Court for the Northern District of California. Before POOLE, BOOCHEVER and WIGGINS, Circuit Judges. WIGGINS, Circuit Judge: This case involves two consolidated appeals involving Appellant, Gerry K. Robertson. In case No. 881855 Robertson appeals from a judgment denying him relief on his cross-claims against **Appellees David Fraser, Inc. (Fraser) and **Protective National Insurance Company of Omaha (Protective) for indemnification of Robertson's liability to Paul Alexander and Frederik Poelman. In case No. 8815170 Robertson appeals from an order denying his Rule 60(b) motion for relief from that adverse judgment. The district court had jurisdiction of this case under 28 U.S.C. 1332(a)(2) (1982). We have jurisdiction under 28 U.S.C. 1291 (1982). We affirm the district court's judgments in both appeals. I **Alexander and Poelman, both residents of the Commonwealth of New Zealand, filed a complaint in federal district court in January 1987 against **Robertson, Fraser, and Protective to collect a deficiency judgment arising out of the sale, repossession, and subsequent resale of the vessel, Sunquest II. Robertson answered the complaint, filed a counter-claim, and also cross-*422 claimed against Fraser and Protective. The district court found that Alexander and Poelman had brought the Sunquest II to the United States and arranged through Fraser to find a buyer. **Joseph Rinehart, an independent sales agent for Fraser, located **Robertson who agreed to buy the vessel on the following terms: $65,000 paid upon delivery; an additional $5,000 due 90 days after delivery; and the remaining balance of $205,000 due one year after delivery. The $210,000 that was not paid immediately was to be financed at a rate of 15% per annum and to be paid in monthly installments to Rinehart who, in turn, agreed to transfer the installments to Alexander and Poelman in New Zealand. Robertson failed to pay Rinehart $10,119.50 of the interest installments that became due and, in addition, defaulted on the $205,000 principal payment that came due on June 14, 1986. Alexander returned to the United States, repossessed the vessel, and resold it for a net recovery of roughly $183,000. Around the same time Alexander learned that Rinehart had kept for himself approximately $11,550 of the $25,818 in interest payments actually paid by Robertson. He informed Fraser of the possible impropriety. Rinehart was subsequently terminated as Fraser's sales agent, not because of what Alexander had discovered, but because Fraser learned that Rinehart was not a licensed broker. Alexander and Rinehart subsequently reached an agreement whereby Rinehart returned the embezzled funds plus interest and attorney

fees. Based on these facts the district court ruled that Alexander and Poelman were entitled to a deficiency judgment against Robertson in the amount of $46,442.06 plus interest and attorney fees. The district court further ruled that the amount of the judgment was to be above and beyond the $10,000 security bond tendered by Protective on behalf of its insured, Fraser, as a settlement of any claims Alexander and Poelman would have against them for the malfeasance of Rinehart. Finally, the district court ruled that Fraser and Protective were neither liable to Robertson for Rinehart's misconduct nor did they have any obligation to indemnify Robertson for his liability to Alexander and Poelman. Robertson then filed a timely notice of appeal in case No. 881855. Soon thereafter Robertson learned that David Warren, the attorney who had represented Fraser and Protective, had not been licensed to practice law in the State of California at the time of the trial. Robertson also learned that Warren had failed to become a member of the bar of the Federal District Court for the Northern District of California and to notify the district court, as required by Local Rule 1101, that he no longer was a member of the California bar. With this undisputed information in hand, Robertson returned to the district court and filed a Rule 60(b) motion for relief from the judgment. **The Court of Appeals granted a limited remand in case No. 881855 for a determination of Robertson's motion. Without downplaying the seriousness of Warren's misconduct, the district court entered an order denying the motion on the ground that voiding the judgment would have been an inappropriate sanction under the circumstances. Robertson then filed a second timely notice of appeal in case No. 8815170. The appeals in both cases were consolidated for review. We address first Robertson's arguments that the district court erred in denying him relief on his cross-claims against Fraser and Protective and then we consider the denial of his Rule 60(b) motion for relief from that judgment. II Robertson's appeal in case No. 881855 involves the district court's ruling that neither Fraser nor Protective are liable to Robertson for the damages Robertson allegedly sustained from Rinehart's misappropriation of the installment payments. Robertson asserts several theories of liability against Fraser: **(1) Fraser, through Rinehart, acted as an escrow agent for the sale of the Sunquest II, and as such had a fiduciary relationship with both the buyer and seller; Rinehart's conversion of the installment payments breached that fiduciary duty, and therefore Fraser is liable to Robertson for the losses he sustained; **(2) *423 Rinehart was not a licensed broker, as required by California law, and therefore Fraser is obligated to indemnify Robertson for any losses sustained because of his conduct; and **(3) Fraser's failure to terminate Rinehart immediately after learning of his misappropriation of the installment payments constituted ratification of his acts for which Fraser was directly liable. Robertson asserts that if Fraser is held liable Protective would then be indirectly liable on the $10,000 security bond. Although unclear, these contentions apparently challenge the district court's findings of fact and are, therefore, reviewed for clear error. Fed.R.Civ.P. 52(a). [1] The validity of each of these contentions depends on a single fact that simply is not present: Robertson did not suffer any compensable damages due to Rinehart's misappropriation of the installment payments. It is undisputed that Rinehart agreed to return the embezzled installment payments plus interest and attorney fees to Alexander and Poelman. Robertson was thus never even thought responsible for the interest payments that he had made to Rinehart but which Rinehart had never sent to Alexander and Poelman. Indeed, until this case went to trial Robertson apparently disavowed any responsibility for these diverted installment payments. He apparently assumed, as did Alexander and Poelman, that Rinehart was Alexander and Poelman's agent for purposes of transmitting the installment payments. Robertson has thus failed to show, as a matter of fact, that he suffered damages because of Rinehart's alleged breach of fiduciary duty.FN1 Each of Robertson's theories of liability is defective for this reason.

FN1. Robertson's brief intimates that he was damaged, although not monetarily, because Rinehart's actions precipitated Alexander's repossession of the Sunquest II. The record does not support his factual assertion that Alexander became concerned about the installment payments before the final principal payment fell due. But even if the record did support this assertion, there is, in the words of the Appellees, no such tort as inducement to come to Sausalito. Robertson's theory of damages is simply unavailing. III [2] Robertson's appeal in case No. 8815170 involves Warren's unauthorized practice of law. Neither party questions the essential facts: **(1) Warren resigned from the California bar before trial began; **(2) he had never applied for membership in the bar of the Federal District Court for the Northern District of California; **(3) he violated Local Rule 1101 by not informing the district court of his status in the state bar; and **(4) none of the parties knew of Warren's misconduct until after the trial ended. The question that we must consider is whether the district court abused its discretion in not vacating the judgment based on these facts. See Bank of Am. Nat'l Trust & Savings Assoc. v. Mamakos, 509 F.2d 1217, 1219 (9th Cir.1975) (applying abuse of discretion standard of review to motion brought under rule 60(b)(1)). Robertson cites to several dated California authorities for the proposition that a judgment will be set aside on appeal, or even by collateral attack, if it is later discovered that either of the party's representatives was not a licensed attorney. See, e.g., City of Downey v. Johnson, 263 Cal.App.2d 775, 69 Cal.Rptr. 830 (1968); People ex rel. Dep't of Public Works v. Malone, 232 Cal.App.2d 531, 42 Cal.Rptr. 888 (1965); see also 7 C.J.S. Atty & Client 31, at 869 (1980); Recent Decision, 29 Cal.L.Rev. 237, 238 (1941) (describing these authorities as holding that a proceeding participated in by a person as an attorney who was not authorized to practice law in the state is error and will be reversed upon appeal). Fraser and Protective, on the other hand, rely on a more recent California decision holding that this type of sanction is appropriate only where the party whose interest the unlicensed attorney represented fails to succeed in the prior proceedings. See Gomes v. Roney, 88 Cal.App.3d 274, 151 Cal.Rptr. 756 (1979); accord Recent Decision, supra, at 240. **Neither party refers to any federal cases decided under Rule 60(b) that would control this precise issue. To our knowledge, then, the question is one of first impression in the federal courts. Robertson relies on the following language in Rule 60(b) as providing support *424 for his contention: On motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment, order, or proceeding for the following reasons: ... (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party.... Fed.R.Civ.P. 60(b). Robertson argues that the fraud committed by Warren falls within the terms of this clause, and therefore the district court abused its discretion in denying his motion for relief from the judgment. Robertson implicitly recognizes that although Warren actively participated in the trial his position as a nonlawyer had no real effect on the district court's initial judgment; Robertson asserts nonetheless that a showing of prejudice is not required under Rule 60(b)(3). Fraser and Protective respond that Rule 60(b)(3) does not apply because the fraud committed here was not by an adverse party but by the party's representative, and in any event Robertson has not shown that Warren's conduct affected the initial judgment. We agree with Fraser and Protective's assertion that Rule 60(b)(3) does not apply directly to this situation because the offending person was not a party to the proceedings. But this conclusion does not end the matter, for there is other language, found further in the Rule, that provides: This rule does not limit the power of a court ... to set aside a judgment for fraud upon the court. See generally 7 J. Moore & J. Lucas, Moore's Federal Practice 60.33 (2d ed.1978). This provision is clearly not limited to fraud committed by an adverse party, e.g., Toscano v. Commissioner, 441 F.2d 930, 93437 (9th Cir.1971) (fraud

committed by complainant's husband and attorney), nor does it necessarily require a showing that the party was prejudiced by the misconduct, see 7 J. Moore & J. Lucas, supra, 60.33, at 50809 (principle has been applied even though it was not established that the judgment was the product of the fraud). The Supreme Court, for example, has explained this provision of the Rule not so much in terms of whether the alleged misconduct prejudiced the opposing party but more in terms of whether the alleged misconduct harms the integrity of the judicial process: [T]ampering with the administration of justice in the manner indisputedly shown here involves far more than an injury to a single litigant. It is a wrong against the institutions set up to protect and safeguard the public, institutions in which fraud cannot complacently be tolerated consistently with the good order of society. Surely it cannot be that preservation of the integrity of the judicial process must always wait upon the diligence of litigants. The public welfare demands that the agencies of public justice be not so impotent that they must always be mute and helpless victims of deception and fraud. HazelAtlas Glass Co. v. Hartford Empire Co., 322 U.S. 238, 246, 64 S.Ct. 997, 1001, 88 L.Ed. 1250 (1944); see also Comment, Rule 60(b): Survey and Proposal for General Reform, 60 Cal.L.Rev. 531, 557 (1972) (fraud upon the court may in appropriate circumstances extend to a case where injury to the public is primarily and extraordinarily involved). Professor Moore, following this rationale, has described the type of fraud that implicates the rule as follows: Fraud upon the court should, we believe, embrace only that species of fraud which does or attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery can not perform in the usual manner its impartial task of adjudging cases that are presented for adjudication. 7 J. Moore & J. Lucas, supra, 60.33, at 515. Robertson's argument that Warren's misconduct subverts the integrity of the judicial process appears to fit neatly within the confines of this rationale. See H.K. Porter Co. Inc. v. Goodyear Tire & Rubber Co., 536 F.2d 1115, 1119 (6th Cir.1976) (dicta) ( Since attorneys are officers of the court, their conduct, if dishonest, would constitute fraud on the court.); Kupferman v. Consol. Research & Mfg. Corp., 459 F.2d 1072, 1079 (2d Cir.1972) (an attorney might commit fraud upon the court by instituting an action to which he knew there was a complete defense). *425 There is, nevertheless, no evidence that Warren's misconduct was, as this circuit has suggested before, designed to improperly influence the court in its decision. England v. Doyle, 281 F.2d 304, 309 (9th Cir.1960). Nor is it preordained that the unlicensed practice of law, without more, inhibits a court from adjudging cases impartially. In this regard, the following thoughtful criticism of an older California decision is helpful: [T]he holding that a judgment rendered in a proceeding in which an unauthorized attorney has practiced law is neither void nor subject to reversal upon appeal should be approved. The practicing of law by the attorney in the instant case in no way lowered the public esteem for the legal profession, nor is it possible to perceive how the court was defrauded. It cannot be said that the plaintiff, having secured a favorable judgment, was injured because he was represented by an ineligible attorney. If the basis for holding such a judgment void is the protection of the party represented, there would seem to be no sound ground upon which to declare the judgment in this case void inasmuch as the party so represented was the successful litigant. The ineligible attorney should be punished; but the right of an attorney to appear for one of the parties is a collateral matter having nothing to do with the merits of the case between the parties. Recent Decision, supra, at 240 (footnote omitted). The district court implicitly found this reasoning persuasive, as do we. We thus agree with the district court that setting aside the judgment on Robertson's Rule

60(b) motion is an inappropriate sanction under these circumstances because it will neither protect the integrity of the judicial system nor vindicate the interests of a party victimized by the unlicensed practice of law. As discussed in Part II above, Robertson cannot succeed on his cross-claims against Fraser and Protective. In essence, then, setting aside the judgment would be a fruitless gesture that would hardly bolster the public's perception of the judicial process. In addition, because none of the parties were aware of Warren's misconduct, vacating the judgment would punish parties who are in no way responsible for the fraud. Finally, there are other remedies available to protect the judicial system from this type of misconduct. Indeed, the district court has already issued an order requiring Warren to show cause why he should not be subjected to disciplinary proceedings. The State of California also makes it a misdemeanor for one to engage in the unauthorized practice of law. See Cal. Bus. & Prof.Code 6126 (West 1974). As did the district court below, we believe recourse to these proceedings would operate adequately to convey the message to the public that the courts will not tolerate this type of misconduct. IV The district court's judgments in both appeals are AFFIRMED. Kupferman v. Consolidated Research & Mfg. Corp., 459 F.2d 1072, 1078, 19 A.L.R. Fed. 747, 16 Fed.R.Serv.2d 160 (2nd Cir.(N.Y.),May 03, 1972) II. [3] F.R.Civ.P. 60(b) authorizes a court on motion to relieve a party or his legal representative from a final judgment for (1) mistake, inadvertence, surprise, or excusable neglect or (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party. However, motions seeking relief under these broad provisions may not be made more than one year after judgment was entered. Any rights of appellant to have the 1962 judgment vacated must therefore stem from the **saving clause in Rule 60(b): This rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment . . . or **to set aside a judgment for fraud upon the court. Since appellant has not initiated an independent action for fraud inter partes,FN7 he can prevail only upon a showing that Ross practiced fraud upon the court by not disclosing the release. FN7. It is questionable whether such an action for an intrinsic fraud such as that here alleged could have survived a motion to dismiss so long as United States v. Throckmorton, 98 U.S. 61, 25 L.Ed. 93 (1878) remains the federal law. The Throckmorton doctrine was strongly attacked by Judge Brennan, as he then was, in Shammas v. Shammas, 9 N.J. 321, 329-330, 88 A.2d 204, 208 (1952). [4][5] The meaning of the quoted phrase has not been much elucidated by decisions. Obviously it cannot be read to embrace any conduct of an adverse party of which the court disapproves; to do so would render meaningless the one-year limitation on motions under F. R.Civ.P. 60(b) (3). See 7 Moore, Federal Practice 60.33 at 511 (1971 ed.). Professor Moore submits that the concept should embrace only that species of fraud which does or attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery cannot perform in the usual manner its impartial task of adjudging cases that are presented for adjudication. Id. at 515 (footnote omitted). We accepted that formulation in Martina Theatre Corp. v. Schine Chain Theatres, Inc., 278 F.2d 798, 801 (2 Cir. 1960). Professor Moore explains Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 64 S.Ct. 997, 88 L.Ed. 1250 (1944), setting aside a judgment on motion because of conduct which, shocking as it was, was a shade less flagrant than that held insufficient to sustain a plenary action in United States v. Throckmorton, 98 U.S. 61, 25 L.Ed. 93 (1878),

see fn. 7, largely on the basis, claimed by appellant to be presented here, that an attorney was implicated in perpetrating the fraud. **While an attorney should represent his client with singular loyalty that loyalty obviously does not demand that he act dishonestly or fraudulently; on the contrary his loyalty to the court, as an officer thereof, demands integrity and honest dealing with the court. **And when he departs from that standard in the conduct of a case he perpetrates a fraud upon the court. 7 Moore, supra, at 513 (footnote omitted). III. If there were no facts other than those stated up to this point, it would be hard to resist the conclusion that the case came within the boundaries of the concept of fraud upon the court which this court recognized in Martina Theatre, supra, 278 F.2d at 801, strict as these are. **Contrary to views intimated by the district court, **Purcell's negligent failure to discover the release would not of itself operate against such a conclusion*1079 if Ross had instituted, or allowed a judgment to be recovered in, an action to which he knew there was a complete defense. Hazel-Atlas Glass Co. v. Hartford-Empire Co., supra, 322 U.S. at 246, 64 S.Ct. 997, 88 L.Ed. 1250. However, the full story has not yet been told; when it has been, Ross' conduct appears in a different light. In re Levander, 180 F.3d 1114, 99 Cal. Daily Op. Serv. 5751, 1999 Daily Journal D.A.R. 7355 (9th Cir.(Cal.), Jul 20, 1999)

To constitute fraud upon the court, officers of the court must submit fraudulent evidence to the court. To determine whether there has been fraud on the court, this circuit and others apply Professor Moore's definition: Fraud upon the court should, we believe, embrace only that species of fraud **which does or **attempts to, defile the court itself, or **is a fraud perpetrated by officers of the court so that the judicial machinery can not perform in the usual manner its impartial task of adjudging cases that are presented for adjudication. Pejury submitted to the court results in the defiling of the court and harms the integrity of the judicial process.
Chapter 11 debtors moved to amend bankruptcy court order awarding the attorney fees, seeking to designate partnership to which judgment debtor's assets had been conveyed as additional judgment debtor. The Bankruptcy Court granted motion and awarded debtors additional fees and costs against partnership. Partnership appealed. The United States District Court for the Central District of California, Kim McLane Wardlaw, J., reversed. Debtors appealed. The Court of Appeals, Tashima, Circuit Judge, held that: (1) federal court may amend a judgment or order under its inherent power when the original judgment or order was obtained through fraud on the court; (2) actions of judgment debtor and partnership, in committing fraud on the bankruptcy court, triggered bankruptcy court's inherent power to amend order; (3) bankruptcy court could rely on California law permitting amendment of judgment to add judgment debtor to amend its attorney fees order; (4) under California law, as predicted by Court of Appeals, finding that partnership was alter ego of judgment debtor was not required for amendment of order; and (5) partnership in essence controlled litigation, as required for amendment of order. District court decision reversed and remanded with directions. [3] Federal Civil Procedure 170A 170A Federal Civil Procedure 170AVII Pleadings and Motions 928

170AVII(I) Motions in General 170Ak928 k. Determination. Most Cited Cases Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases Federal court may amend a judgment or order under its inherent power when the original judgment or order was obtained through fraud on the court. [4] Bankruptcy 51 2164.1

51 Bankruptcy 51II Courts; Proceedings in General 51II(B) Actions and Proceedings in General 51k2164 Judgment or Order 51k2164.1 k. In General. Most Cited Cases The inherent power of Article III courts to amend a judgment extends to bankruptcy courts. Bankr.Code, 11 U.S.C.A. 105(a). [5] Bankruptcy 51 2164.1

51 Bankruptcy 51II Courts; Proceedings in General 51II(B) Actions and Proceedings in General 51k2164 Judgment or Order 51k2164.1 k. In General. Most Cited Cases **Judgment debtor and partnership to which judgment debtor's assets had been transferred committed fraud on the bankruptcy court when judgment debtor's corporate officer testified in deposition that judgment debtor's assets haven't been sold, even though assets had already been transferred to shell entities, and bankruptcy court relied upon judgment debtor's depositions to impose attorney fees on judgment debtor rather than partnership, which was party with the assets; therefore, bankruptcy court could exercise its inherent power to amend order that required judgment debtor to pay attorney fees and costs to Chapter 11 debtors to add partnership as judgment debtor. [7] Federal Civil Procedure 170A 928

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(I) Motions in General 170Ak928 k. Determination. Most Cited Cases Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases

For purposes of federal court's inherent powers to set aside or amend judgment or order obtained through fraud on the court, phrase fraud on the court should be read narrowly, in the interest of preserving the finality of judgments. [8] Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases To constitute fraud on the court, the alleged misconduct must harm the integrity of the judicial process. [9] Federal Civil Procedure 170A 928

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(I) Motions in General 170Ak928 k. Determination. Most Cited Cases Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases Generally, nondisclosure by itself does not constitute fraud on the court triggering federal court's inherent powers to set aside or amend fraudulently obtained order or judgment. [10] Federal Civil Procedure 170A 928

170A Federal Civil Procedure 170AVII Pleadings and Motions 170AVII(I) Motions in General 170Ak928 k. Determination. Most Cited Cases Federal Civil Procedure 170A 2654

170A Federal Civil Procedure 170AXVII Judgment 170AXVII(G) Relief from Judgment 170Ak2651 Grounds 170Ak2654 k. Fraud; Perjury. Most Cited Cases Perjury by a party or witness, by itself, is not normally fraud on the court for purposes of federal court's inherent powers to set aside or amend judgment or order obtained through fraud on the court. [13] Judgment 228 228 Judgment 310

228VIII Amendment, Correction, and Review in Same Court 228k310 k. Parties. Most Cited Cases To amend judgment to add additional judgment debtors under California law, two requirements must usually be met: (1) new party must be alter ego of old party, and (2) new party must have controlled the litigation, thereby having had the opportunity to litigate, to satisfy due process concerns. U.S.C.A. Const.Amend. 14; West's Ann.Cal.C.C.P. 187. [16] Bankruptcy 51 2164.1

51 Bankruptcy 51II Courts; Proceedings in General 51II(B) Actions and Proceedings in General 51k2164 Judgment or Order 51k2164.1 k. In General. Most Cited Cases Under California law, as predicted by Court of Appeals, finding that partnership to which judgment debtor's assets had been transferred was alter ego of judgment debtor was not required for bankruptcy court to amend its order requiring judgment debtor to pay attorney fees and costs to Chapter 11 debtors to add partnership as additional judgment debtor, given that conduct of judgment debtor during bankruptcy proceedings, which suggested to debtors and court that judgment debtor was proper party with the assets, amounted to a fraud on the court. West's Ann.Cal.C.C.P. 187. Before: FERGUSON, O'SCANNLAIN, and TASHIMA, Circuit Judges. ORDER The opinion filed on July 7, 1999, is amended to include Judge Ferguson's concurring opinion attached hereto. OPINION TASHIMA, Circuit Judge: In December, 1993, the bankruptcy court awarded attorneys' fees to Chapter 11 debtors Roger and Josie Levander against **AllCarr Communications Company, Inc. (Corporation). In November, 1996, the bankruptcy court entered two orders that amended the December, 1993, order to add **AllCarr Communications Company, a general partnership (Partnership), as an additional judgment-debtor. On appeal, the district court reversed the November, 1996, order for lack of jurisdiction. The Levanders appeal, contending that jurisdiction existed to amend the original order under the bankruptcy court's inherent equitable powers, Rule 60(a) and (b) of the Federal Rules of Civil Procedure, and 187 of the California Code of Civil Procedure. We have jurisdiction under 28 U.S.C. 158(d), and we reverse. We hold that the bankruptcy court had jurisdiction to amend its order under 187 and its inherent power based on the fraud perpetrated upon it by the Corporation and the Partnership. I. The Levanders owned a cellular telephone service company. In 1991 and 1992, they filed separate bankruptcy petitions, which were consolidated in April, 1992, and thereafter jointly administered. On July 29, 1992, the Corporation filed a proof of claim against the Levanders' bankruptcy estate alleging a nonpriority general unsecured claim for $714,742.21 that the Levanders owed the Corporation on three promissory notes. At a hearing on July 30, 1993, the bankruptcy court disallowed this claim on the ground that the Corporation had previously accepted stock in satisfaction of the obligation. The bankruptcy court confirmed the Levanders' plan of reorganization on August 11, 1993. *1117 On August 20, 1993, the Corporation appealed the confirmation order and the order disallowing its claim. The bankruptcy court, the bankruptcy appellate panel (BAP), and this

court all refused to grant the Corporation's motion for a stay of the confirmation pending appeal. The Corporation subsequently abandoned its appeal and the BAP dismissed the Corporation's appeal with prejudice on September 30, 1994. Meanwhile, on December 13, 1993, the bankruptcy court granted the Levanders' motion for attorneys' fees and costs totaling $44,170.00 against the Corporation for the time period of May 17, 1993, through August 31, 1993. The court did not know of the existence of the Partnership or that the Corporation had transferred its assets, so it awarded the attorneys' fees and costs only against the Corporation. The reason the court so believed was that when one of the Corporation's officers was asked during a May, 1993, deposition whether the Corporation's assets had been sold, he answered: No. The assets haven't been sold. To the question of as far as you know, **AllCarr Communications [Corporation] is still an active company? the same officer answered: Yes. They still have the [cellular telephone] numbers and is active. The court ordered the Corporation to pay the awarded amount, but reserved final judgment on the total amount of fees and costs to be awarded until the Corporation's appeal was completed. On July 20, 1995, after unsuccessfully seeking voluntary payment from the Corporation, the Levanders had the marshal levy a writ of execution against the Corporation's bank accounts. That same day, a former employee of the Corporation responded to the writ, stating that she owned what had been the Corporation's assets in the bank and produced a bill of sale to that effect. This bill of sale, dated December 7, 1993,FN1 showed that the Partnership had transferred to her the ownership of what had formerly been the Corporation's assets, including the store, inventory, and all of the equipment, for one dollar. FN1. The Partnership sold everything one day after this court denied the Corporation's motion for a stay pending appeal, and only five days after the bankruptcy court ruled that the Levanders were entitled to recover their fees and costs from the Corporation. On September 29, 1995, the Levanders requested documents and depositions from the Corporation's officers regarding the sale or transfer of the Corporation's assets. On the day that production was to commence, the Corporation filed a voluntary bankruptcy petition, which stayed discovery. The Corporation's bankruptcy filing also prevented the Levanders from proceeding with a motion they had filed for additional attorneys' fees against the Corporation. The Levanders then filed a motion under Rule 2004 of the Federal Rules of Bankruptcy Procedure, which was granted on November 14, 1995, for the same documents and depositions. These documents and depositions revealed that the assets traveled in a circle. Beginning on February 4, 1993, months before the officer testified that the Corporation still had its assets, the Corporation transferred its assets to 19 corporate entities. These corporate entities later conveyed the Corporation's assets to the Partnership, which had been formed on February 25, 1993. Finally, in December, 1993, the Partnership sold the assets to the former employee for one dollar. On June 14, 1996, the Levanders filed a motion to amend the attorneys' fees order to designate the Partnership as an additional judgment-debtor.FN2 On November 6, 1996, the bankruptcy court granted the motion to amend the order, stating that equity screams for some remediation FN3 *1118 because the Partnership was the real party in interest in the Corporation's litigation against the Levanders' estate.FN4 The Partnership appealed the order to the BAP on November 15, 1996, and, on December 30, 1996, the appeal was transferred to the district court. FN2. The Levanders also included Edwin Prober, Elias Miller, the Estate of Paul Miller, and the 19 corporations in their motion to amend the judgment. The bankruptcy court denied this part of the Levanders' motion, a decision the Levanders do not appeal.

FN3. During its October, 1996, hearing to determine whether to add the Partnership as a judgment-debtor, the bankruptcy court characterized the Corporation's earlier deposition testimony as plain not true. FN4. The bankruptcy court actually filed two separate orders on November 6, 1996, both of which granted the Levanders' motion to amend the judgment to add the Partnership as an additional judgment-debtor. In addition to granting the motion to amend, the first order awarded the Levanders an additional $37,051.85 in fees and costs against the Partnership for the time period September 1, 1993, through March 31, 1996. The second order specifically amended paragraphs 14 of the original order so that it included both the Partnership and Corporation as judgment-debtors. **To facilitate discussion, we refer to the two orders as the order. On September 25, 1997, the district court entered an order reversing the decision of the bankruptcy court to add the Partnership as a judgment-debtor for lack of jurisdiction. Specifically, the district court concluded that the ten-day time limit of Federal Rule of Civil Procedure 59(e) had expired. The district court also held that 187 of the California Code of Civil Procedure did not govern because the federalnot staterules of procedure control in bankruptcy court.

And the court stated at p. 1118,

[2] The inherent powers of federal courts are those that are necessary to the exercise of all others. Primus Automotive Fin. Servs., Inc. v. Batarse, 115 F.3d 644, 648 (9th Cir.1997) (quoting Roadway Express, Inc. v. Piper, 447 U.S. 752, 764, 100 S.Ct. 2455, 65 L.Ed.2d 488 (1980) (quoting United States v. Hudson, 11 U.S. (7 Cranch) 32, 34, 3 L.Ed. 259 (1812))). This inherent power, which is based on equity, see HazelAtlas Glass Co. v. HartfordEmpire Co., 322 U.S. 238, 244, 64 S.Ct. 997, 88 L.Ed. 1250 (1944), not only springs forth from courts' traditional power to manage their own affairs so as to achieve the orderly and expeditious disposition of cases, Chambers v. NASCO, Inc., 501 U.S. 32, 43, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991) (quoting Link v. Wabash R. Co., 370 U.S. 626, 63031, 82 S.Ct. 1386, 8 L.Ed.2d 734 (1962)), but also furthers the pursuit of achieving complete justice by enabling the court to suspend those judgments whose enforcement leads to inequitable results. Hadix v. Johnson, 144 F.3d 925, 937 (6th Cir.1998). In Chambers, the Supreme Court observed that the inherent power of federal courts includes, inter alia, the power to vacate judgments on proof that a fraud upon the court has been committed. See Chambers, 501 U.S. at 44, 111 S.Ct. 2123. The Court justified the historic power of equity to set aside fraudulently begotten judgments on the basis that tampering with the administration of justice in this manner involves far more than an injury to a single litigant. It is a wrong against the institutions set up to protect and safeguard the public. Id. (internal quotation marks and alterations omitted) (citation omitted); see also HazelAtlas Glass Co., 322 U.S. at 246, 64 S.Ct. 997 (The public welfare demands that the agencies of public justice be not so impotent that they must always be mute and helpless victims of deception and fraud.); Universal Oil Products Co. v. Root Refining Co., 328 U.S. 575, 66 S.Ct. 1176, 90 L.Ed. 1447 (1946) (bribery of judge). *1119 Just as a court may use its inherent power to protect its integrity by vacating a judgment obtained by fraud, it also may amend a judgment for the same purpose. When a court vacates a judgment obtained by fraud, it not only rids itself of the defilement caused by the fraud, but also restores balance and fairness between the parties by removing the benefit gained by the party that committed the fraud. Amending a judgment serves these same goals by removing the benefitfor example, the avoidance of a judgment against itselfthat the party gained by committing fraud on the court.

[3] **We therefore hold that a federal court may amend a judgment or order under its inherent power when the original judgment or order was obtained through fraud on the court.FN5 Cf. Pumphrey v. K.W. Thompson Tool Co., 62 F.3d 1128, 1133 (9th Cir.1995) (**non-disclosure of existence of videotape containing unfavorable results amounted to fraud on the court, thereby justifying new trial). FN5. Although motions for relief from judgment may also be brought pursuant to Rule 60(b) of the Federal Rules of Civil Procedure, Rule 60(b)'s savings clause specifically provides that the rule does not limit the power of a court ... to set aside a judgment for fraud upon the court. Fed.R.Civ.P. 60(b); see also id. at advisory committee notes, 1946 amendment ([T]he rule expressly does not limit the power of the court, when fraud has been perpetrated upon it, to give relief under the saving clause.). [4] Thus, the bankruptcy court had the inherent power to amend its judgment to add the Partnership as an additional judgment-debtor based on the fraud committed upon it.FN6 We now turn to the question of whether the Corporation and the Partnership committed fraud upon the bankruptcy court. FN6. The inherent power of Article III courts to amend a judgment extends to bankruptcy courts. Cf. Caldwell v. Unified Capital Corp. ( In re Rainbow Magazine, Inc.), 77 F.3d 278, 284 (9th Cir.1996) (noting that 11 U.S.C. 105(a) provides bankruptcy courts with the authority to issue orders necessary to prevent an abuse of process, including the power to sanction) (quoting 11 U.S.C. 105(a)). B. [5][6][7] A court must exercise its inherent powers with restraint and discretion in light of their potency. See Chambers, 501 U.S. at 44, 111 S.Ct. 2123. Although the term fraud on the court remains a nebulous concept, Broyhill Furniture Indus., Inc. v. Craftmaster Furniture Corp., 12 F.3d 1080, 1085 (Fed.Cir.1993), that phrase should be read narrowly, in the interest of preserving the finality of judgments. Toscano v. Commissioner, 441 F.2d 930, 934 (9th Cir.1971). [8] Simply put, not all fraud is fraud on the court. To constitute fraud on the court, the alleged misconduct must harm[ ] the integrity of the judicial process. Alexander v. Robertson, 882 F.2d 421, 424 (9th Cir.1989). To determine whether there has been fraud on the court, this circuit and others apply Professor Moore's definition: Fraud upon the court should, we believe, embrace only that species of fraud **which does or **attempts to, defile the court itself, or **is a fraud perpetrated by officers of the court so that the judicial machinery can not perform in the usual manner its impartial task of adjudging cases that are presented for adjudication. Gumport v. China International Trust and Inv. Corp. ( In re Intermagnetics America, Inc.), 926 F.2d 912, 916 (9th Cir.1991) (quoting 7 James Wm. Moore et al., Moore's Federal Practice 60.33, at 515 (2d ed. 1978)). [9][10] Generally, non-disclosure by itself does not constitute fraud on the court. See England v. Doyle, 281 F.2d 304, 310 (9th Cir.1960) (failure to produce evidence, without more, does not constitute fraud on the court). Similarly, perjury by a party or witness, by itself, is not normally fraud on the court. See, e.g., Gleason v. Jandrucko, 860 F.2d 556, 55960 (2d Cir.1988); *1120 12 James Wm. Moore & Joseph T. McLaughlin, Moore's Federal Practice 60.21[4][c], at 605657 (3d ed.1998). The Gleason court reasoned that since perjury is an evil that could and should be exposed at trial, it should not qualify as fraud upon the court. See Gleason, 860 F.2d at 560.

**The reason why the courts in these cases did not treat perjury or non-disclosure alone as fraud on the court was that the plaintiff had the opportunity to challenge the alleged perjured testimony or non-disclosure because the issue was already before the court. For example, in Gleason, Gleason could have **deposed eyewitnesses and **introduced evidence at trial to impeach the police officers' testimony, which he claimed was perjured, because the issues of lack of probable cause and bad faith on the part of the officers, and therefore their credibility, were already before the court. See id. at 559. The court concluded that Gleason could not, after the fact, claim fraud on the court based only on this alleged perjury, which he could have challenged during the trial. See id. at 55960. In contrast, the perjury and non-disclosure in the instant case (that the Corporation had transferred its assets to shell entities months before the Corporation testified in depositions that the Corporation's assets haven't been sold) was notand could not have beenan issue at the attorneys' fees hearing, as neither the court nor the Levanders knew that the Partnership existed. Therefore, neither the Levanders nor the court had any reason to question the veracity of the Corporation with respect to whether the Corporation still possessed its assets. Further, not only did the Corporation and the Partnership deceive the Levanders, but they also deceived the court, because the court relied on the Corporation's depositions to impose attorneys' fees on the Corporation, rather than on the party with the assetsthe Partnership. See, e.g., Broyhill Furniture Indus., Inc., 12 F.3d at 108687 (although party knowingly withheld material and thereafter sought enforcement of a fraudulently obtained patent, there was no fraud on the court because fraudulent evidence used to obtain patent from patent office was not submitted to court, so court itself was not victim of fraud); In re Intermagnetics Am., Inc., 926 F.2d at 917 ([T]he inquiry as to whether a judgment should be set aside for fraud upon the court ... focuses not so much in terms of whether the alleged fraud prejudiced the opposing party but more in terms of whether the alleged fraud harms the integrity of the judicial process.). Therefore, since the bankruptcy court itself was defiled by the perjury, the fraud was a fraud on the court. Cal. Prac. Guide Prof. Resp. Ch. 3-D California Practice Guide: Professional Responsibility Paul W. Vapnek, Mark L. Tuft, Ellen R. Peck and Justice Howard B. Wiener (Ret.) Chapter 3. Attorney-Client Relationship D. Authority Of Client Vs. Authority Of Attorney [3:132] The fact a client hires a lawyer to represent him or her in a particular matter does not mean the lawyer is authorized to exercise complete control over that matter. Unless the parties agree otherwise, the attorney has implied authority as to procedural matters, but the client retains the right to make ultimate decisions affecting the outcome of the case (i.e., matters affecting the clients substantive rights). [Blanton v. Womancare, Inc. (1985) 38 C3d 396, 403405, 212 CR 151, 155156; Stewart v. Preston Pipeline Inc. (2005) 134 CA4th 1565, 15811582, 36 CR3d 901, 914915 (collecting cases)there is no bright line between procedural and substantive rights matters; and see generally, Rest.3d Law Governing Lawyers 21, Comment e]

What are the full scope of substantial rights of the client, in an attorney client relationship?
Yanchor v. Kagan, 22 Cal.App.3d 544, 99 Cal.Rptr. 367 (Cal.App. 2 Dist., Dec 29, 1971) Appeal by judgment creditor from an order of the Superior Court of Los Angeles County, Robert W. Kenny, J., granting judgment debtor's motion to enter satisfaction of judgment. The Court of Appeal, Dunn, J., held that covenant not to execute against single judgment debtor

had the effect of an outright release where judgment debtor filed motions to enter satisfaction of judgment. Affirmed. [3] Attorney and Client 45 63

45 Attorney and Client 45II Retainer and Authority 45k63 k. The Relation in General. Most Cited Cases Attorney is an agent of his client and the attorney-client relationship is governed by the rules applicable to the relationship of principal and agent in general. [4] Attorney and Client 45 63

45 Attorney and Client 45II Retainer and Authority 45k63 k. The Relation in General. Most Cited Cases Client as principal is bound by acts of the attorney-agent within the scope of his actual authority, express or implied, or his apparent, or ostensible, authority. [5] Attorney and Client 45 101(1)

45 Attorney and Client 45II Retainer and Authority 45k101 Settlements, Compromises, and Releases 45k101(1) k. In General. Most Cited Cases **Judgment creditor's attorney did not have implied authority to enter into agreement not to execute against judgment debtor, as the agreement resulted in the surrender of the creditor's right to enforce the judgment. [6] Principal and Agent 308 99

308 Principal and Agent 308III Rights and Liabilities as to Third Persons 308III(A) Powers of Agent 308k98 Implied and Apparent Authority 308k99 k. In General. Most Cited Cases **If principal by his acts has led others to believe that he has conferred authority upon an agent, he cannot be heard to assert, as against third persons who have relied and acted thereon in good faith, that he did not intend to confer such power. West's Ann.Civ.Code, 2317, 2334. [7] Principal and Agent 308 137(1)

308 Principal and Agent 308III Rights and Liabilities as to Third Persons 308III(A) Powers of Agent 308k137 Estoppel to Deny Authority 308k137(1) k. In General. Most Cited Cases **Ostensible authority of agent rests upon doctrine of estoppel. West's Ann.Civ.Code, 2317, 2334.

[8] Principal and Agent 308

137(1)

308 Principal and Agent 308III Rights and Liabilities as to Third Persons 308III(A) Powers of Agent 308k137 Estoppel to Deny Authority 308k137(1) k. In General. Most Cited Cases **Essential elements of ostensible authority of agent include **representation by principal, **justifiable reliance thereon by third person, and **change of position or injury resulting from such reliance. West's Ann.Civ.Code, 2317, 2334. [9] Principal and Agent 308 124(1)

308 Principal and Agent 308III Rights and Liabilities as to Third Persons 308III(A) Powers of Agent 308k124 Questions for Jury 308k124(1) k. In General. Most Cited Cases Whether agent has ostensible authority is question of fact and may be implied from circumstances. West's Ann.Civ.Code, 2317, 2334. [10] Attorney and Client 45 101(1)

45 Attorney and Client 45II Retainer and Authority 45k101 Settlements, Compromises, and Releases 45k101(1) k. In General. Most Cited Cases Where judgment creditor urged judgment debtor to discuss case with creditor's attorney and took debtor to attorney's office for that purpose, creditor and his attorney requested debtor's cooperation in suit assuring him that creditor did not seek recovery against debtor, and creditor's attorney furnished agreement not to enforce judgment against debtor upon which debtor relied and did not offer defense in suit brought against him and others, **debtor was justified, under doctrine of ostensible authority, in believing that creditor had authorized his attorney to make such agreement. West's Ann.Civ.Code, 2317, 2334. DUNN, Associate Justice. [1] This is an appeal by plaintiff, upon a Clerk's Transcript, only, from an order granting the motion of **defendant Al Kagan to enter satisfaction of a judgment previously entered in favor of plaintiff and against defendant Kagan. Such an order is appealable. (Code Civ.Proc. s 904.1(b): Baum v. Baum, 51 Cal.2d 610, 614615, 335 P.2d 481 (1959). Distinguish: Anderson v. Joseph, 146 Cal.App.2d 450, 452, 303 P.2d 1053 (1956).) **369 The action was commenced by **plaintiff Yanchor March 8, 1967, against **defendants William and Katherine Reid, respondent Kagan and others. In the complaint it was alleged that by reason of false representations made by the defendants, plaintiff had been induced to invest $15,071 *547 in a land development project. He sought compensatory and punitive damages, as well as injunctive relief.FN1 FN1. The cause of action for injunctive relief apparently was abandoned. The case was tried without a jury in July and August 1969. On September 4th judgment was entered in favor of plaintiff and against defendant Kagan for $18,811, plus costs.FN2 Defendant's motion for new trial was denied. Thereafter, from November 1969 to September

1970, plaintiff attempted to collect the judgment. FN2. Plaintiff also was awarded damages of $1,260 against the Reids for rents due. They paid this sum, and a satisfaction of the judgment was entered as to them, only. (Code Civ.Proc. s 675.) On September 10, 1970 defendant moved for an order vacating the judgment on the ground it was obtained by extrinsic fraud. In his declaration supporting the motion, defendant stated: (1) In April or May 1967 defendant was advised by plaintiff that he had retained an **attorney, Thomas Reeks, to recover money owed plaintiff by Mr. Reid. Plaintiff requested that defendant accompany him to Reeks' office to discuss the case, stating that defendant's testimony might be needed if a suit were filed. Defendant was assured that plaintiff did not intend to sue him, but only Reid. In reliance on this assurance, defendant met with plaintiff and Reeks. **Reeks told defendant that he was counting on defendant's cooperation as a witness for plaintiff if suit were filed. He, too, assured defendant that he would not be named in any action against Reid. Defendant requested that this be put in writing, and Reeks promised to do so. On the strength of this promise, defendant discussed the case with Reeks and plaintiff on several occasions and agreed to become a witness for plaintiff if he sued Reid. (2) Early in August 1967, Reeks sent defendant a document entitled Agreement. It was signed by Reeks and stated that plaintiff would not enforce any judgment obtained against defendant in the lawsuit.FN3 Defendant asks Reeks why the agreement provided that judgment would not be enforced, whereas he understood no suit would be brought against him. Reeks replied that even though plaintiff did not want to sue defendant, he would have to be named as a defendant because he was a necessary *548 party; therefore, the agreement had been worded in terms of not enforcing the judgment in order to protect defendant. Reeks added that he was relying on defendant's testimony because without it, plaintiff did not have a case. Defendant believed Reeks, and agreed to continue cooperating. FN3. The full text of the agreement was as follows: FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, it is agreed that William Yanchor will not enforce any judgment obtained against Al Kagan, regarding Los Angeles Superior Court action No. 905,156, entitled William Yanchor v. William L. Reid, Al Kagan and others. Provided, however, that if Al Kagan fails to keep this agreement entirely confidential, that it shall immediately become null and void and of no effect. Dated: July 31, 1967. /s/ Thomas E. Reeks, Attorney for plaintiff. (3) In June 1969 Reeks served defendant with a copy of the summons and complaint. It was then he first discovered that he was a defendant in the lawsuit. Reeks again told him that he had been named as a defendant only because he was a necessary party, that plaintiff had no intention of obtaining a judgment against him, and that Reid was the real culprit. (4) Less than a week before the trial, defendant consulted an attorney and explained the situation to him. The attorney filed an answer for defendant and agreed to represent him for half the ordinary fee **370 because he would not have to put on a defense. At the trial, defendant was called by plaintiff and testified (as if under cross-examination; Evid.Code s 776) as an adverse witness. He did not take the stand in his own behalf, or put on any defense, because he was thoroughly convinced no judgment was being sought against him. At the conclusion of the trial, he was aghast to learn that judgment had been ordered against

him. He reminded Reeks of the agreement. Reeks denied any knowledge of it, and advised defendant to pay the judgment. On the basis of these declarations, defendant had contended that he was prevented by fraudulent acts' of plaintiff and Reeks from putting forth a defense at the trial. Defendant's motion to vacate the judgment was denied. Defendant then successfully moved for an order to enter satisfaction of the judgment pursuant to Code Civ.Proc. s 675, basing his motion upon the grounds set forth in his declaration filed in support of his motion to vacate. Plaintiff appeals from the order granting this motion. [2] The trial court apparently concluded that appellant was bound by the agreement not to enforce the judgment, and that such agreement was equivalent to satisfaction of the judgment. Appellant contends the order cannot be sustained upon either of these grounds.FN4 FN4. Appellant further contends that the court was without power summarily to determine the nature and effect of the agreement in ruling upon a motion for satisfaction of judgment made and resisted on the basis of declarations, and that respondent was limited to an independent action to enforce the agreement. These contentions are without merit. On a motion made under Code Civ.Proc. s 675, the court has jurisdiction to determine whether a judgment has been satisfied in fact, if that issue is in dispute. See: State Bank of Lansing v. McLaury, 175 Cal. 31, 33, 165 P. 7 (1917). *549 In his declaration in opposition to the motion, **plaintiff-appellant stated without contradiction that he did not authorize Reeks to make the agreement, that he did not learn of it until after the trial, and that he had never approved it. [3][4][5] An attorney is an agent of his client ( People v. Gilbert, 25 Cal.2d 422, 443, 154 P.2d 657 (1944)), and the attorney-client relationship is governed by the rules applicable to the relationship of principal and agent in general. ( Moving Picture, etc., Union v. Glasgow Theaters, Inc., 6 Cal.App.3d 395, 403, 86 Cal.Rptr. 33, (1970).) Hence, the client as principal is bound by the acts of the attorney-agent within the scope of his actual authority (express or implied), or his apparent, or ostensible, authority. (1 Witkin, Cal. Procedure, Second Ed. 117, Attorneys' s 107.) **Reeks did not have express authority to enter into the agreement. **Neither did he have implied authority to do so, because the agreement resulted in the surrender of a substantial right of appellant, namely, the right to enforce the judgment. ( Bice v. Stevens, 160 Cal.App.2d 222, 231232, 325 P.2d 244 (1958); Redsted v. Weiss, 71 Cal.App.2d 660, 663, 163 P.2d 105 (1945).) [6][7][8][9] Defendant-respondent contends appellant was bound, nevertheless, under the doctrine of ostensible authority, which is such as a principal, intentionally or by want of ordinary care, causes or allows a third person to believe the agent to possess. (Civ.Code s 2317.) Where ostensible authority exists, a principal is bound by acts of his agent . . . to those persons only who have in good faith, and without want of ordinary care, incurred a liability or parted with value, upon the faith thereof. (Civ.Code s 2334.) Under these provisions, if a principal by his acts has led others to believe that he has conferred authority upon an agent, he cannot be heard to assert, as against third persons who have relied and acted thereon in good faith, that he did not intend to confer such power. ( Myers v. Stephens, 233 Cal.App.2d 104, 114115, 43 Cal.Rptr. 420 (1965); Gaine v. Austin, 58 Cal.App.2d 250, 261, 136 P.2d 584 (1943).) Thus, ostensible authority rests upon the doctrine of estoppel.**371 ( Freitas v. Marsh, 70 Cal.App.2d 711, 713, 161 P.2d 565 (1945); County, etc., Bank v. Coast D. & L. Co., 46 Cal.App.2d 355, 366, 115 P.2d 988 (1941).) Its essential elements are **representation by the principal, **justifiable reliance thereon by a third person, and **change of position or injury resulting from such reliance. ( Hobart v. Hobart Estate Co., 26 Cal.2d 412, 451452, 159 P.2d 958 (1945); Hartong v. Partake, Inc., 266

Cal.App.2d 942, 960, 72 Cal.Rptr. 722 (1968); Reusche v. California Pac. Title Ins. Co., 231 Cal.App.2d 731, 736, 42 Cal.Rptr. 262 (1965); Freitas v. Marsh, Supra, 70 Cal.App.2d at p. 713, 161 P.2d 565; *550Fairbanks v. Crump Irr., etc., Co., Inc., 108 Cal.App. 197, 211, 291 P. 629 (1930)). Whether ostensible authority existed is a question of fact ( Barclay Kitchen, Inc. v. California Bank, 208 Cal.App.2d 347, 353, 25 Cal.Rptr. 383 (1962); House Grain Co. v. Finerman & Sons, 116 Cal.App.2d 485, 492, 253 P.2d 1034 (1952)), and may be implied from circumstances ( Gaine v. Austin, Supra, 58 Cal.App.2d at p. 261, 136 P.2d 584). [10] Defendant-respondent's declaration in support of the motion establishes all of the elements necessary to make the agreement binding upon plaintiff-appellant by the doctrine of ostensible authority. Thus: appellant urged respondent to discuss the case with appellant's attorney, Reeks, and took respondent to Reeks' office for that purpose; appellant and Reeks requested respondent's cooperation, assuring him that appellant did not seek recovery against him; when Reeks furnished the agreement not to enforce judgment, respondent was justified in believing that appellant had authorized Reeks to make the agreement; respondent relied on the agreement and therefore did not offer a defense at the trial. Many of the statements in respondent's declaration were contradicted in the declarations appellant and Reeks filed in opposition to the motion. However, we must assume the trial court determined all conflicts in favor of respondent, and such determination of the controverted facts may not be disturbed on appeal. ( Lynch v. Spilman, 67 Cal.2d 251, 259, 62 Cal.Rptr. 12, 431 P.2d 636 (1967); Griffith Co. v. San Diego College for Women, 45 Cal.2d 501, 507508, 289 P.2d 476 (1955).) We now consider whether the agreement constituted satisfaction of the judgment within the meaning of Code Civ.Proc. s 675, which provides in part: (a) Satisfaction of a judgment may be entered upon an execution returned satisfied, or upon an acknowledgment of satisfaction filed with the clerk or with the judge . . . which may recite payment of the judgment in full or the acceptance by the judgment creditor of any lesser sum in full satisfaction thereof . . .. Whenever a judgment is satisfied in fact, otherwise than upon an execution, the party or attorney must give such acknowledgment . . . and, upon motion, the court may compel it, or may order the entry of satisfaction to be made without it. (Emphasis added.) [11] Unless it clearly appears that there was an actual satisfaction in fact, this provision does not apply. ( State Bank of Lansing v. McLaury, 175 Cal. 31, 32, 165 P. 7 (1917); Sager v. O'Connell, 107 Cal.App.2d 391, 394395, 237 P.2d 59 (1951); 29 Cal.Jur.2d 305306, Judgments' s 324.) The language of section 675 indicates that satisfaction in fact *551 of a money judgment means full payment of the judgment by execution or otherwise, or acceptance by the judgment creditor of a lesser sum in full satisfaction of the judgment. In his declaration supporting the motion for satisfaction of judgment, respondent did not state that the judgment was satisfied by payment. He relied exclusively upon the agreement not to enforce judgment. We turn now to consider the effect of the agreement. [12] A covenant not to execute is similar to a covenant not to sue, although differences are obvious. A covenant not to sue is not a release. Thus, even before enactment of our statutes concerning contribution**372 among joint tortfeasors,FN5 such a covenant was held not to be a release which would discharge a joint tortfeasor from liability ( Stewart v. Cox, 55 Cal.2d 857, 861, 13 Cal.Rptr. 521, 362 P.2d 345 (1961); Markwell v. Swift & Co., 126 Cal.App.2d 245, 252, 272 P.2d 47 (1954), overruled in part by Stewart, supra, on other grounds). Nevertheless, where there was no joint tortfeasor to be affected, such a covenant has been given the effect of a release. ( Matthey v. Gally & David, 4 Cal. 62 (1854); Sunset Scavenger Corp. v. Oddou, 11 Cal.App.2d 92, 96, 53 P.2d 188 (1936).) The reasoning behind the latter ruling is thus stated in 5A Corbin on Contracts, 1964 ed. p. 600, s 1251: A contract by a creditor never to bring action against his debtor for the enforcement of the debt is legally operative as a discharge of the debtor's duty. . . . Such a contract as this is not in terms a release. Being in the form of a promise by the creditor, it might seem to be intended to create a duty in him, rather than to discharge an existing duty in another

person. To refuse to give it effect as a discharge, however, would result in an unnecessary and highly undesirable circuity of action. If the creditor should sue the debtor for the enforcement of his original claim, the debtor could at once maintain a counter-action for damages for the breach of the creditor's promise never to sue. The damages to which the debtor would be entitled in this counteraction would include the amount of the creditor's recovery in his action against the debtor. In spite of its promissory form, Such a contract by the creditor clearly indicates an intention to discharge the obligor, in any case not involving a joint obligor . . .. In the case of joint obligors, the device of a contract not to sue was adopted in order to escape the technical rule, applicable to joint contracts, that the discharge of one joint obligor necessarily discharges all the others. (Emphasis added.) And, as stated in Sunset, supra, 11 Cal.App.2d at p. 96, 53 P.2d at p. 190: A covenant not to sue a sole tort-feasor is, to avoid circuity of action, considered in law a release and may be so pleaded in an action against such tort-feasor. But a covenant not to sue one of several tort-feasors cannot be so pleaded by the covenantee, *552 who must seek his remedy in an action for breach of the covenant. We think this reasoning also applies to a covenant not to execute. FN5. Code Civ.Proc. s 875 et seq., which are inapplicable. We are not dealing with the problem of joint tortfeasors. It is true that a seemingly contrary rule is stated in Ivy v. Pacific Automobile Ins. Co., 156 Cal.App.2d 652, 662, 320 P.2d 140, 147 (1958): The covenant not to execute is similar to the covenant not to sue. Whatever the legal effect of such covenants may be, and the law is not too clear on this subject, it can at least be said that such a covenant does not amount to a release or satisfaction of the debt. It does not extinguish the cause of action or the judgment. (And see: Critz v. Farmers Ins. Group, 230 Cal.App.2d 788, 803, 41 Cal.Rptr. 401 (1964).) Ivy and Critz, however, both involved claims that insurance carriers, in bad faith, had permitted judgments in excess of policy limits to be entered against their insureds, who were found thus to have been exposed to damages even though a covenant not to execute had, in each case, been obtained, protecting them against execution. These cases establish that a covenant not to execute does not have a self-executing effect; I.e., the judgment exists.

Search terms: authority of client vs. authority of attorney scope of decisions on matters which affect the clients substantive rights or that are central to the controversy or which affect the essential rights of the client, civil cases, decision on whether to file a case or cause of action.
Linsk v. Linsk, 70 Cal.2d 272, 449 P.2d 760, 74 Cal.Rptr. 544 (Cal. Feb 03, 1969) Action by wife for divorce, in which husband filed cross complaint seeking divorce. The Superior Court, Los Angeles County, Bayard Rhone, J., after original proceedings had ended in mistrial due to disability of trial judge and after attorneys for both parties had stipulated that case could be decided by different judge entirely on basis of record previously made, entered judgment against wife on her complaint and in favor of husband on his cross complaint, and the wife appealed. The Supreme Court, Mosk, J., held that fact that case was improperly decided, as result of stipulation of attorneys for both parties, to which wife objected, solely on basis of record previously made at original proceeding was prejudicial to wife, where there was no evidence of collusion, action was seriously contested, and there was some corroborating evidence. Judgment reversed. Opinion, 69 Cal.Rptr. 813, vacated.

West Headnotes [1] Attorney and Client 45 88

45 Attorney and Client 45II Retainer and Authority 45k87 Commencement and Conduct of Litigation 45k88 k. In General. Most Cited Cases Attorney is authorized, by virtue of his employment, to bind client in procedural matters arising during course of action, but he may not impair client's substantial rights or cause of action itself. West's Ann.Code Civ.Proc. 283. [2] Attorney and Client 45 86

45 Attorney and Client 45II Retainer and Authority 45k86 k. Stipulations and Admissions. Most Cited Cases Rebuttable presumption that attorney has power to surrender his client's substantive rights was not applicable with respect to stipulation signed by plaintiff wife's attorney in divorce case, where it was clear to attorneys for both parties as well as judge who accepted stipulation that it was entered over wife's objections. West's Ann.Code Civ.Proc. 283. [3] Attorney and Client 45 86

45 Attorney and Client 45II Retainer and Authority 45k86 k. Stipulations and Admissions. Most Cited Cases In retaining counsel for prosecution or defense of suit, right to do many acts in respect to cause is embraced as ancillary or incidental to general authority conferred, including authority to enter into stipulations and agreements in all matters of procedure during progress of trial, and stipulations thus made, so far as they are simply necessary or incidental to management of suit, and which affect only procedure or remedy **as distinguished from cause of action itself and essential rights of client, are binding on client. West's Ann.Code Civ.Proc. 283. [4] Attorney and Client 45 101(1)

45 Attorney and Client 45II Retainer and Authority 45k101 Settlements, Compromises, and Releases 45k101(1) k. In General. Most Cited Cases If counsel merely employs his best discretion in protecting client's rights and achieving client's fundamental goals, he has authority to proceed in any appropriate manner, but if counsel abdicates a substantial right of client contrary to express instructions, he exceeds his authority. West's Ann.Code Civ.Proc. 283. [5] Attorney and Client 45 86

45 Attorney and Client 45II Retainer and Authority 45k86 k. Stipulations and Admissions. Most Cited Cases Right of party to have trier of fact observe his demeanor and that of his adversary and

other witnesses during examination and cross-examination is so crucial to party's cause of action that attorney cannot be permitted to waive by stipulation such right as to all testimony in trial, **when stipulation is contrary to express wishes of his client. West's Ann.Code Civ.Proc. 283. [6] Attorney and Client 45 103

45 Attorney and Client 45II Retainer and Authority 45k103 k. Ratification by Client. Most Cited Cases Fact that wife failed to challenge stipulation signed by her attorney regarding determination of divorce case entirely on basis of record previously made at proceeding which ended in mistrial until approximately six weeks after case was taken under submission did not amount to waiver of her objection or estoppel where it was clear to presiding judge who accepted stipulation as well as to attorneys for both parties that wife consistently refused to accede to procedure followed. West's Ann.Code Civ.Proc. 283. [7] Attorney and Client 45 103

45 Attorney and Client 45II Retainer and Authority 45k103 k. Ratification by Client. Most Cited Cases Wife was not estopped to challenge her attorney's authority to execute stipulation relating to determination of divorce case entirely on basis of record previously made at proceeding which ended in mistrial where husband, in reliance upon such stipulation, had consented to continuation of support order at time stipulation was made. West's Ann.Code Civ.Proc. 283. [8] Attorney and Client 45 70

45 Attorney and Client 45II Retainer and Authority 45k68 Proof of Authority 45k70 k. Presumptions. Most Cited Cases Generally, stipulation of attorney will be presumed to have been authorized by client, as well in order to uphold action of court as for protection of other party to stipulation, but when adverse party, as well as court, is aware that attorney is acting in direct opposition to his client's instructions, reason for rule ceases and court should not act upon stipulation nor can adverse party claim right to enforce judgment rendered by reason thereof. West's Ann.Code Civ.Proc. 283. [9] Divorce 134 127(4)

134 Divorce 134IV Proceedings 134IV(J) Evidence 134IV(J)3 Weight and Sufficiency 134k127 Testimony of Parties, and Corroboration 134k127(4) k. Sufficiency of Corroboration. Most Cited Cases Primary purpose of requirement of corroboration of parties' statement in divorce case is to prevent collusion, and where there is no collusion between spouses, only slight additional proof is required. West's Ann.Civ.Code, 130.

[10] Divorce 134

184(12)

134 Divorce 134IV Proceedings 134IV(O) Appeal 134k184 Review 134k184(12) k. Harmless Error. Most Cited Cases Fact that divorce case was improperly decided, as result of stipulation of attorneys for both parties, to which wife objected, solely on basis of record previously made at original proceeding, which ended in mistrial due to disability of trial judge, **was prejudicial to wife, against whom judgment was entered, where there was no evidence of collusion, action was seriously contested, and there was some corroborating evidence. West's Ann.Civ.Code, 130. MOSK, Justice. Plaintiff wife brought an action for divorce against defendant husband, who filed a cross-complaint, also seeking a divorce. The original proceedings ended in a mistrial due to the disability of the trial judge who heard the evidence. Subsequently plaintiff's attorney stipulated over his client's express objection that the case could be decided by a different judge entirely on the basis of the record previously made. Counsel for both parties were aware of plaintiff's objections, as was the presiding judge, who nevertheless accepted the stipulation and assigned the case to a trial court. There the trial judge, not shown by the record to be advised of the adamant position of plaintiff, examined only the record at the prior trial and, without hearing testimony, entered judgment against plaintiff on her complaint and in favor of defendant on his crosscomplaint. Plaintiff appeals therefrom, maintaining that the court exceeded its jurisdiction in proceeding to determine the matter on the record of the prior trial pursuant to a stipulation made by plaintiff's attorney over her express objection. We conclude that this contention is meritorious and the judgment must be reversed. Plaintiff and defendant were married in 1958 and separated in 1965. In November ***546 **762 of that year plaintiff filed a complaint for divorce on the ground of extreme cruelty and defendant filed an answer and cross-complaint, also alleging extreme cruelty. A trial was held before Judge Albert E. Wheatcroft of the Los Angeles Superior Court. After 11 days of trial, during which testimony was taken and various exhibits received in evidence, the case was submitted on June 1, 1966. Shortly thereafter Judge Wheatcroft became incapacitated due to an accident, and he vacated submission of the case, declared a mistrial and transferred the action back to the presiding judge of the superior court. On August 5, 1966, plaintiff, her attorney, and defendant's attorneys met with the presiding judge of the court in his chambers. Plaintiff's attorney reported that plaintiff had not *276 signed a stipulation, apparently discussed previously between the parties, to submit the matter to the presiding judge on the record made during the trial previously held. The presiding judge indicated that he desired both parties to sign the stipulation and suggested that counsel explore the matter with plaintiff privately. Plaintiff and her attorney thereupon left the room. The attorney returned to chambers alone and informed both the judge and defendant's attorneys that plaintiff refused to sign the proposed stipulation. **The judge then declared the attorneys alone could stipulate that the case be heard by another judge, who could decide the issues solely upon the transcript of the testimony and exhibits introduced at the previous trial unless that judge desired additional testimony. Such a stipulation was made by the attorneys.FN1 FN1. Defendant claims that in the discussion held in chambers plaintiff did not object to the submission of her case on the record made in the prior trial but objected only to having the presiding judge hear the matter on that record. Therefore, argues defendant, (T)he implication was that it depended upon which judge heard the case,

not upon what evidence the judge based his decision. However, it only stipulation presented to plaintiff and which she refused to merely that the case could be decided by a judge other than the testimony but also that the issue would be determined solely on record at the prior trial.

is clear that sign provided one who heard the basis of

the not the the

The case was assigned to Judge Bayard Rhone, who was not shown by the record to have been advised of the foregoing events. Ultimately he denied plaintiff a divorce and granted a divorce to defendant on the basis of the record made in the trial held before judge Wheatcroft. No additional testimony was taken. In a memorandum decision the judge indicated that plaintiff had not offered sufficient corroboration of her testimony to justify granting her a divorce. Plaintiff moved for a new trial on the ground, inter alia, that her attorney did not have the authority over her objections to enter into a stipulation that the action could be decided upon the record made in the prior trial. [1][2][3] Section 283 of the Code of Civil Procedure provides that an attorney may bind his client in any of the steps of an action or proceeding. The attorney is authorized by virtue of his employment to **bind the client in procedural matters arising during the course of the action but **he may not impair the client's substantial rights or **the cause of action itself. ( Gagnon Co., Inc. v. Nevada Desert Inn (1955) 45 Cal.2d 448, 460, 289 P.2d 466;FN2 *277Zurich G.A. & L. Ins. Co., Ltd. v. Kinsler (1938) 12 Cal.2d 98, 105106, 81 P.2d 913; Duffy v. Griffith Co. (1962) 206 Cal.App.2d 780, 790, 24 Cal.Rptr. 161.) The extent of an attorney's powers in this regard has been aptly described as follows: In retaining counsel for the prosecution ***547 **763 or defense of a suit, the right to do many acts in respect to the cause is embraced as ancillary, or incidental to the general authority conferred and among these is included the authority to enter into stipulations and agreements in all matters of procedure during the progress of the trial. Stipulations thus made, so far as they are simply necessary or incidental to the management of the suit, and which affect only the procedure or remedy as distinguished from the cause of action itself, and the essential rights of the client, are binding on the client. ( Armstrong v. Brown (1936) 12 Cal.App.2d 22, 28, 54 P.2d 1118, 1121.) FN2. In Gagnon it was held that there may be a rebuttable presumption that an attorney has the power to surrender his client's substantive rights. The present case does not involve a situation which such a presumption could be applied since it was clear to the attorneys for both parties as well as the judge who accepted the stipulation that it was entered into over plaintiff's objections. Under the foregoing concept it has been held that an attorney may refuse to call a witness even though his client desires that the witness testify ( Nahhas v. Pacific Greyhound Lines (1961) 192 Cal.App.2d 145, 146, 13 Cal.Rptr. 299); may abandon a defense he deems to be unmeritorious ( Duffy v. Griffith Co. (1962) supra, 206 Cal.App.2d 780, 793, 24 Cal.Rptr. 161; but see Robinson v. Sacramento City, etc., Sch. Dist. (1966) 245 Cal.App.2d 278, 287, 53 Cal.Rptr. 781); may stipulate that the trial judge could view the premises ( Lachman Bros. v. Muenzer (1956) 143 Cal.App.2d 520, 525, 300 P.2d 295), that a witness, if called, would give substantially the same testimony as a prior witness ( Newman v. Los Angeles Transit Lines (1953) 120 Cal.App.2d 685, 695, 262 P.2d 95) and that the testimony of a witness in a prior trial be used in a later action ( Smith v. Whittier (1892) 95 Cal. 279, 289, 30 P. 529); and he may waive the late filing of a complaint ( Union Storage & Transfer Co. v. Smith (1953), 79 N.D. 605, 58 N.W.2d 782, 786).FN3 FN3. In Zurich G.A. & L. Ins. Co., Ltd. v. Kinsler (1938) supra, 12 Cal.2d 98, 105, 81 P.2d 913, it was said by way of dictum that an attorney may, over his client's objections, insist that a case be tried before a jury. (See also Harness v. Pacific Curtainwall Co. (1965) 235 Cal.App.2d 485, 490, 45 Cal.Rptr. 454.)

On the other hand, an attorney may not, by virtue of his general authority over the conduct of the action, stipulate that his client's premises constituted an unsafe place to work where such a stipulation would dispose of the client's sole interest in the premises ( *278Harness v. Pacific Curtainwall Co. (1965) supra, 235 Cal.App.2d 485, 491, 45 Cal.Rptr. 454), nor may he stipulate to a matter which would eliminate an essential defense ( Fresno City High School Dist. v. Dillon (1939) 34 Cal.App.2d 636, 646647, 94 P.2d 86). He may not agree to the entry of a default judgment ( Ross v. Ross (1953) 120 Cal.App.2d 70, 74, 260 P.2d 652), or a summary judgment against his client ( Roscoe Moss Co. v. Roggero (1966) 246 Cal.App.2d 781, 786787, 54 Cal.Rptr. 911), **may not compromise his client's claim ( Bice v. Stevens (1958) 160 Cal.App.2d 222, 231, 325 P.2d 244), or stipulate that only nominal damages may be awarded ( Price v. McComish (1937) 22 Cal.App.2d 92, 99, 70 P.2d 978), and he cannot agree to an increase in the amount of the judgment against his client ( Knowlton v. Mackenzie (1895) 110 Cal. 183, 188189, 42 P. 580). Likewise, an attorney is without authority to waive findings so that no appeal can be prosecuted ( Wuest v. Wuest (1942) 53 Cal.App.2d 339, 344 345, 127 P.2d 934, but see Fowlkes v. Ingraham (1947) 81 Cal.App.2d 745, 747, 185 P.2d 379, criticized in 1 Witkin, Cal. Procedure, s 47, pp. 5859), or agree that a judgment may be made payable in gold coin rather than in legal tender ( Merritt v. Wilcox (1877) 52 Cal. 238, 242). An attorney is also forbidden without authorization to stipulate that the opposing party's failure to comply with a statute would not be pleaded as a defense ( De Long v. Owsley's Ex'x (1948), 308 Ky. 128, 213 S.W.2d 806, 807), or **to write a letter to a creditor asking it to join in a bankruptcy petition where he has been employed only to institute bankruptcy proceedings ( **764***548B. F. Goodrich Rubber Co. v. Holland (1931) 159 Miss. 346, 131 So. 882, 883), and he may not bond his client by a statement that it stands ready to pay a stated sum ( Couch v. Landers (Mo. 1958) 316 S.W.2d 588, 592593) or that if the jury finds for plaintiff the amount of the verdict would constitute a landlord's lien against livestock ( Noska v. Mills (Tex.Civ.App.1940) 141 S.W.2d 429, 432). [4] The dichotomy in the foregoing cases appears to relate to whether the attorney has relinquished a substantial right of his client in entering into a stipulation on his behalf. If counsel merely employs his best discretion in protecting the client's rights and achieving the client's fundamental goals, his authority to proceed in any appropriate manner has been unquestioned.**On the other hand, if counsel abdicates a substantial right of the client contrary to express instructions, he exceeds his authority.

atty_client_retainer_&_auth_commence_&_conduct_of_litig_ca_digest.doc Knabe v. Brister, 65 Cal.Rptr.3d 493 Cal.App.3.Dist.,2007 An attorney is not authorized merely by virtue of his retention in litigation to impair the client's substantial rights or the cause of action itself. CPI Builders, Inc. v. Impco Technologies, Inc., 114 Cal.Rptr.2d 851 Cal.App.4.Dist.,2001 An attorney is not authorized merely by virtue of being retained for litigation to impair the client's substantial rights or the cause of action itself. Moss v. Stockdale, Peckham & Werner, 54 Cal.Rptr.2d 805 Cal.App.2.Dist.,1996 Despite general rule which imputes attorney's neglect to client, there are exceptional cases in which client, relatively free from personal neglect, will be relieved of default or dismissal attributable to inaction or procrastination of attorney; attorney's

authority to bind his or her client does not permit attorney to impair or destroy client's cause of action.

**Romadka v. Hoge, 283 Cal.Rptr. 878

Cal.App.6.Dist.,1991 Attorney's unauthorized disposition of clients' substantive rights is invalid and judgment based thereon is therefore void. West's Ann.Cal.C.C.P. 473 . In re Marriage of Helsel, 243 Cal.Rptr. 657 Cal.App.4.Dist.,1988 In family law cases, when court is confronted with motion to set aside stipulation, which disposed of some of issues in case on grounds that lawyer for one of parties was not authorized to enter into the stipulation, court must determine whether issues disposed of, individually or together, were central to the controversy; if dispute is substantially resolved by virtue of the stipulation, it is tantamount to settlement and dismissal of civil case and cannot stand if client can demonstrate a lack of authorization. Ford v. State of California, 172 Cal.Rptr. 162 Cal.App.5.Dist.,1981 Attorney cannot act against his client's objections and has no authority to act without client's knowledge and express consent; however, an attorney has authority, in the absence of fraud, to bind his client in all matters pertaining to regular conduct of his case. (Per Hammerberg, J., with one Judge concurring in the judgment.) atty_client_retainer_&_auth_proof_of_auth_evid_of_auth_ca_digest.doc Anand v. California Dept. of Developmental Services, 626 F.Supp.2d 1061 45 ATTORNEY AND CLIENT 45II Retainer and Authority 45 68 Proof of Authority 45k72 k. Evidence of authority. E.D.Cal.,2009 A plaintiff claiming her attorney entered into a settlement agreement without authorization has the burden, under California law, to show that the attorney did not have her authority to settle her claims or that she should not otherwise be bound by her attorney's acts through her subsequent ratification. In re Marriage of Helsel, 243 Cal.Rptr. 657 Cal.App.4.Dist.,1988 Husband's payment of two support payments pursuant to a modified order increasing child support pursuant to divorce, did not establish as matter of law that husband authorized his lawyer to act in stipulating to order increasing support, where husband explained his compliance with order was to avoid possible contempt finding, especially where husband acted promptly in discharging his former counsel, obtaining new counsel, and bringing underlying motion to remove stipulation within 30 days of its entry. Gagnon Co. v. Nevada Desert Inn, 289 P.2d 466 Cal.,1955

In stockholders' derivative action against corporation and a director and officer thereof, who raised defense of res judicata because of Nevada court's judgment dismissing with prejudice corporation's action against him, evidence justified trial court's conclusion that attorney signing complaint in Nevada action had authority to commence it and to dismiss it with prejudice. People v. Western Meat Co., 110 P. 338 Cal.App.3.Dist.,1910 While it is presumed that an attorney appearing and acting for a party to a cause has authority to do so, and the burden rests on the party denying such authority to sustain his denial, such appearance is not conclusive and the party for whom the attorney appeared may thereafter show that the attorney appeared without authority. atty client retainer & auth proof_of_auth_obj_to_auth_ca_digest.doc [Cited 2 times for this legal issue] Turner v. Caruthers, 17 Cal. 431 Cal.,1861 The proper procedure for defendant in case the attorney for plaintiff is not authorized to bring the suit is to move the court on proper affidavits to dismiss the suit on such grounds. atty_client retainer_&_auth scop of auth in gen ca_digest.doc Towery v. Ryan, 12 Cal. Daily Op. Serv. 2345 45 ATTORNEY AND CLIENT 45II Retainer and Authority 45k77 k. Scope of authority in general. C.A.9.Ariz.,2012 An attorney who abandons his client without notice severs the principal-agent relationship and no longer acts, or fails to act, as the client's representative; his acts or omissions therefore cannot fairly be attributed to the client. Lal v. California, 610 F.3d 518 C.A.9.Cal.,2010 An attorney's actions are typically chargeable to his or her client and do not ordinarily constitute extraordinary circumstances warranting relief from judgment under the catch-all provision of the rule setting forth the grounds for relief from judgment. Fed.Rules Civ.Proc.Rule 60(b)(6), 28 U.S.C.A . Anand v. California Dept. of Developmental Services, 626 F.Supp.2d 1061 E.D.Cal.,2009 The attorney-client relationship is simply a form of agency, and federal courts typically rely on a state's agency laws when those issues arise. Minkin v. Levander, 230 Cal.Rptr. 592 Cal.App.2.Dist.,1986 Actions of attorney are imputed to client who retained him unless his neglect is so inexcusable and extreme as to constitute positive misconduct.

Blanton v. Womancare, Inc., 696 P.2d 645 Cal.,1985 An attorney is not authorized, merely by virtue of his retention in litigation, to impair client's substantial rights or the cause of action itself. Blanton v. Womancare, Inc., 696 P.2d 645 Cal.,1985 An attorney is not a general agent, and has no general authority to enter into contract on behalf of his client. Carroll v. Abbott Laboratories, Inc., 654 P.2d 775 Cal.,1982 Even though plaintiff's attorney failed to give effective representation in connection with production of documents as ordered by trial court, he did not obliterate the existence of the attorney-client relationship, and thus attorney's neglect was imputed to the plaintiff, requiring dismissal of action for failure to produce documents. West's Ann.Cal.C.C.P. 473 . Orange Empire Nat. Bank v. Kirk, 66 Cal.Rptr. 240 Cal.App.4.Dist.,1968 Authority of attorney to bind client does not permit attorney to impair or destroy a client's cause of action or defense.

Gagnon Co. v. Nevada Desert Inn, 289 P.2d 466 Cal.,1955 An attorney's implied general authority does not include power to dispose of his client's substantive rights. Hoagland v. Chargin, 286 P.2d 931 Cal.App.1.Dist.,1955 Attorney does not have implied authority to surrender any substantial right of his client, and may not confess judgment against client without client's consent. Nellis v. Massey, 239 P.2d 509 Cal.App.2.Dist.,1952 Attorney has no general authority to act for his client. West's Ann.Code Civ.Proc. 283 . Himmelfarb v. U.S., 175 F.2d 924 C.A.9.Cal.,1949 An attorney has no power to surrender substantial legal rights of his client, in absence of express authority. Redsted v. Weiss, 163 P.2d 105 Cal.App.1.Dist.,1945 The implied authority of an attorney ordinarily does not extend to the doing of acts which will result in the surrender or giving up of any substantial right of the client.

West's Ann.Code Civ.Proc. 283 . Wuest v. Wuest, 127 P.2d 934 Cal.App.2.Dist.,1942 The general authority of an attorney does not permit him to bind his client by any act which amounts to a surrender in whole or in part of any substantial right. Fretz v. Stover, 89 U.S. 198 U.S.Va.,1874 Clients were not bound by wrongful acts of their attorney.