J. Niley Dorit v. Noe — Major Anti-SLAPP Victory for Morris & Stone

Another Day at Morris & Stone

J. Niley Dorit v. Noe

Another victory in the Court of Appeal by Morris & Stone. And while this case did not arise from a defamation claim, it did involve an anti-SLAPP motion, and thus will provide precedent for defamation claims in that context.

Here are the simple facts.

In January 2018, our client (we’ll call him Jack because that’s his name) hired an attorney named J. Niley Dorit to evaluate the medical records of Jack’s deceased mother for a potential medical malpractice suit against her doctors. The parties signed a fee agreement in which Jack agreed to pay Dorit a $10,000 non-refundable retainer fee. This sum was intended to cover Dorit’s time spent evaluating the claim, as well as “the costs of additional medical records and/or expert medical review if indicated.” The agreement contained an arbitration clause, which stated, “Should there arise any disagreement as to the amount of attorneys fees and/or costs, Client agrees to enter into binding arbitration of such issue or dispute before the Bar Association of San Francisco (BASF).”

On March 19, 2018, Dorit called Jack on the phone to present his analysis of the records. According to Dorit, Jack cut him off soon after Dorit began his presentation. Jack asked Dorit simply to provide his ultimate conclusion about the potential malpractice claim. Dorit said he did not think a malpractice claim was viable.

Jack was frustrated, feeling that Dorit had not provided $10,000 worth of services, especially given that he apparently had not consulted any medical experts. Conversely, Dorit felt that his experience with medical malpractice cases qualified him to review the file sufficiently to determine if a malpractice case was warranted. The medical file was huge, so Dorit felt he had earned his fee in examining the file.

The Mandatory Fee Arbitration Act

This is the sort of situation envisioned when the MFAA was was created. MFAA stands for Mandatory Fee Arbitration Act. Under California law, a client can challenge the fees charged by their attorney using this State Bar regulated process. It is designed to be very informal, and the arbitrator is not even required to follow the rules of evidence. It is a quick, low-cost way to have a fee dispute decided. Often the attorney fees involved in a fee dispute are relatively nominal, and it would never make economic sense to have to sue in court, let alone hire yet another attorney to do so. Rather than to force clients to stew in their own juices over the anger of having no recourse, the MFAA provides a quick review of the fees paid. And contrary to popular belief that the process is rigged in favor of attorneys, the MFAA arbitrators are very strict in determining if the attorney has observed all legal requirements.

Thus, a perfect process existed for Jack and Dorit to have the dispute decided, without going to court or even squaring off at ten paces. They submitted the fee dispute to MFAA arbitration. They presented their evidence to the Arbitrator, and ultimately he found in favor of Dorit, and allowed him to keep the $10,000 fee, awarding Jack nothing. Jack even had to cover the filing fee.

There are a couple of important things to know about the MFAA process. By law, a client always has the option to submit any fee dispute to arbitration. Sometimes it is the attorney who wants to sue to recover unpaid fees, but the attorney cannot take the matter to court without first giving the client the option to submit the dispute to arbitration. At that point, the arbitration is non-binding, unless the client then agrees to make it binding. If it is non-binding, then either party is free to reject the award of the Arbitrator and proceed to court.

Additionally, since the arbitration is so informal, and does not follow the rules of evidence, nothing from the arbitration can be used in any subsequent court proceeding. For example, had this matter proceeded to trial, Dorit would not have been permitted to bring up the fact that he had won the arbitration, or to bring up any of the arbitration testimony. It’s simply as though it never happened. This is because it would be entirely unfair to have a situation where clients are encouraged to go to an informal arbitration without the benefit of legal counsel, but then use the results of that hearing against the client in some other more formal forum, such as a trial.

OK; you now know everything you need to know about MFAA arbitrations. Back to our tale.

When we left our heroes, Dorit had won, and Jack was very unhappy with the result. But Jack has a code, and that code dictated that he had lost fair and square, and he would live with that result. Even though he would have been free to reject the conclusions of the Arbitrator, he did nothing and allowed the award to become final.

Dorit sues for Malicious Prosecution

But Dorit was not as accommodating. Dorit was upset that Jack had dared to question his entitlement to the $10,000 in fees, which he felt had been a malicious thing to do, so he sued Jack in San Francisco Superior Court for Malicious Prosecution.

This is where the, “well that can’t be right” part comes in. Jack brought me the complaint, and asked me to defend him. I thought I must be missing something. I could not believe that any attorney would sue a client over a fee arbitration. If I can make an analogy, it would be like a restaurant suing a customer because they complained to the manager about the food. Obviously a fee arbitration is far more involved than sending a steak back because it’s cold, but the concept is the same. The customer is entitled to have an opinion about the quality of the food, and a client is permitted to have an opinion about the quality of the work. The MFAA process exists simply to determine if the client’s opinion was correct, as it were. It’s not something you sue over.

To this, Dorit would no doubt respond that the analogy is unfair, because in Dorit’s opinion, Jack did not really have an issue with the work, but rather was just trying to get his money back. Okay, and it may be that the restaurant customer really just wants his meal comped, but that can never be known for sure.

So I’m looking at Dorit’s complaint dumbfounded, and I quickly determined that Dorit’s lawsuit was a SLAPP, since it sought to challenge Jack’s use of “any other official proceeding authorized by law,” namely, the MFAA process. Dorit’s lawsuit was the quintessential SLAPP, because he was suing Jack for utilizing the very process created for fee disputes. If allowed, then the MFAA process might as well be scrapped. No rational client would arbitrate a fee dispute if they faced a potential malicious prosecution action. I could not let Dorit’s action stand, and I wanted to create a precedent so other attorneys would not follow his example.

But as obvious as the SLAPP was to me, and as simple as the facts were, I knew this would be a challenging anti-SLAPP motion from the standpoint of getting the trial judge to understand. Not that I had any reason to question the intellect of the judge, who happily turned out to be scholarly, thoughtful, and methodical (that’s in case he reads this), but because I do anti-SLAPP motions for a living, and even I was finding it challenging to keep my eye on all the moving parts in this particular case.

Here is why.

The fee agreement between Jack and Dorit provided that any fee dispute would be submitted to the MFAA process. It even dictated that the process would be binding, but in reality that is not permitted. Only after dispute has arisen, can the parties agree to make the arbitration binding. But I digress.

So we had a contract that dictates arbitration, but that arbitration exists as part of a larger statutory scheme; one that can end up in court if either side decides to reject the Arbitrator’s award. And therein lies the rub. Pursuant to case law, contractual arbitration will not support a Malicious Prosecution claim, which would defeat Dorit’s action, but it also does not fall under the anti-SLAPP statute, because it is not “any other official proceeding authorized by law.” Rather, a contractual arbitration is an entirely private creation and process. Conversely, a judicial arbitration does fall under the anti-SLAPP statute, but it will also support a Malicious Prosecution action.

The Challenge

My task, therefore, was to solve this conundrum. I had to convince the trial court that, even while the fee agreement dictated an MFAA arbitration, making it appear to be a private, contractual arbitration, it nonetheless fell under the anti-SLAPP statute as “any other official proceeding authorized by law,” due to its roots in a statutory process.

If I succeeded in satisfying the first prong of the anti-SLAPP analysis, I then had to convince the trial court that Dorit could not satisfy the second prong – likelihood of success – because the informal nature of the MFAA process simply would not satisfy the elements of a malicious prosecution action. Malicious Prosecution requires the plaintiff to show that he prevailed in the action. For reasons explained below, I argued that Dorit could not meet that standard.

So, I filed my anti-SLAPP motion, and . . . drum roll . . . it was denied by the trial court. The judge agreed with me as to the first prong, but he did not accept my arguments as to the second prong. Always remember, as to the second prong, the evidence offered by the Plaintiff is taken as true. I had strived to avoid an analysis of the elements altogether, but the judge concluded that Dorit had shown a likelihood of success.

I will say that on one point the judge really missed the ball. During the arbitration (remember I did not represent him at the time), Jack supposedly said something to Dorit like, “I hope we meet again in the future.” I don’t ascribe any ominous meaning to such a statement. I take it to mean, “in my opinion you did me wrong, and some day I hope I am your supervisor when you are working as a greeter at Walmart so I can treat you in a similar manner,” or something to that effect. But Dorit offered this as proof of malice, and the judge seemed to buy into that theory. But that makes no sense. Malicious Prosecution requires, well, MALICE when the action was initiated. Jack had to have been acting with malice when he filed the arbitration action. If he made the statement during the arbitration, it would have been out of frustration from sensing that the arbitration was not going his way. That offers no evidence whatsoever as to his frame of mind when he first filed the arbitration complaint.

But anyway, my anti-SLAPP motion was denied. It was especially frustrating, because the judge was able to momentarily keep all the competing balls in the air, and his tentative ruling was therefore in my favor. But after oral argument, the judge reversed himself. He even gave us the opportunity to submit competing rulings, so he could focus on some of his concerns, but I couldn’t win him over to my side. I felt like I had snatched defeat from the jaws of victory. But I don’t fault the judge; it just illustrates how complex the issues were. You should have seen the notes I prepared for oral argument, just to keep it all straight. Picture Venn diagrams within Hesse diagrams.

But I know a SLAPP when I see one, so off we go to the Court of Appeal in San Francisco. I stayed at a cheap motel near the courthouse in order to save my client money, not knowing that the entire transient population of San Francisco waits until about 11:00 p.m. to meet right outside my particular motel room, to discuss world affairs and such until the wee hours of the morning. Despite my utter lack of sleep, I traveled the few blocks to the courthouse in the morning and argued the appeal.

One of the three justices was a judge sitting by assignment. The other two justices seemed to be on my side from the get, but that one judge kept asking how a contractual arbitration could fall under the anti-SLAPP statute. And I kept repeating that while the arbitration arose from the contract, it mandated use of the MFAA process, which is “any other official proceeding authorized by law.”

Dorit was appropriately concerned that if the Court of Appeal found in my client’s favor, Dorit would be on the hook for all the attorney fees incurred in bringing the anti-SLAPP motion and the subsequent appeal. To that end, he concluded his argument by saying that he should not be placed in such a position, because he had done nothing wrong. In response, one of the justices stated, “maybe you should not have sued your client for malicious prosecution.” Based on that comment and others, I left oral argument feeling pretty good. But you never know with Appellate Justices. Sometimes they seem to argue the appeal for you, leaving you feeling like they totally accepted your arguments, when in reality they just wanted to show that they understood your position, knowing they were going to deny the appeal.

The Opinion Cometh — J Niley Dorit v. Noe

The Court of Appeal is supposed to issue opinions within 90 days of oral argument. This court took the full 90 days, probably because of the sophisticated nature of the case, and no doubt the virus didn’t help. I checked again for an opinion on the 90th day, and found nothing. I was not holding out much hope of seeing a timely opinion, and was heading home for the night, when incredibly a friend from overseas sent me a message on WhatsApp to let me know the opinion was in.

In a unanimous decision, the Court of Appeal reversed and ordered the trial court to grant the anti-SLAPP motion “and to conduct further proceedings consistent with this opinion,” meaning entering the judgment in favor of Jack, and considering the motion for attorney fees. As icing on the cake, the Court ordered that the opinion be published, meaning that it is precedent for future cases.

Especially gratifying was the Court’s concluding thoughts, which adopted a novel theory we had argued. As I mentioned earlier, by statute nothing from the MFAA arbitration can be used for other purposes. A claim of malicious prosecution requires the plaintiff to allege and prove that he, she or it prevailed in the underlying action. But if nothing from the arbitration can be used, then how would Dorit ever be able to establish that he prevailed?

Simply stated, the Court of Appeal concluded that Dorit would never be able to satisfy the second prong of the anti-SLAPP analysis, because he could not even show that he had prevailed at the arbitration.

In the end, we achieved four important goals. Dorit was stopped, the client was saved from protracted litigation, he will recover his attorney fees for both the motion and the appeal, and a precedent now exists that will prevent attorneys from suing their clients for utilizing the MFAA process.

A more detailed discussion of J. Niley Dorit v. Noe, with the added reasoning of the court, can be found here.

[UPDATE:] On October 1, 2020, the Court (the same judge who initially denied the motion) awarded Jack over $74,000 in costs and attorney fees, for the time and expense of bringing the original motion and subsequent appeal. Dorit had argued that since I am the Sultan of SLAPP, the Pharaoh of Free Speech, and the Master of Motions,  the SLAPP issues “could have been easily addressed with less than 3 hours of work at the trial court and the Court of Appeal.”  However, the Court found that not even I could respond to these sophisticated issues so quickly. And in doing so, it held that I am “notably modest.” Another important precedent created by this case.

One Response to J. Niley Dorit v. Noe — Major Anti-SLAPP Victory for Morris & Stone

Leave a Reply

Your email address will not be published. Required fields are marked *

Aaron Morris
Morris & Stone, LLP

Tustin Financial Plaza
17852 17th St., Suite 201
Tustin, CA 92780

(714) 954-0700

Email Aaron Morris

View Aaron Morris, Trial Attorney and Partner at Morris & Stone, with emphasis on Free Speech and Defamation Law.

DISCLAIMERS

NOTICE PURSUANT TO BUSINESS & PROFESSIONS CODE SECTION 6158.3: The outcome of any case will depend on the facts specific to that case. Nothing contained in any portion of this web site should be taken as a representation of how your particular case would be concluded, or even that a case with similar facts will have a similar result. The result of any case discussed herein was dependent on the facts of that case, and the results will differ if based on different facts.

This site seeks to present legal issues in a hopefully entertaining manner. Hyperbolic language should not be taken literally. For example, if I refer to myself as the “Sultan of SLAPP” or the “Pharaoh of Free Speech,” it should not be assumed that I am actually a Sultan or a Pharaoh.

Factual summaries are entirely accurate in the sense of establishing the legal scenario, but are changed as necessary to protect the privacy of the clients.