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Mancini and Associates v. Jason Schwetz

Date: 09-04-2019

Case Number: B290498

Judge: Gilbert, P.J.

Court: California Court of Appeals Second Appellate District, Division Six on appeal from the Superior Court, County of Ventura

Plaintiff's Attorney: Marcus A. Mancini and Tara J. Licata

Defendant's Attorney: Gregory Thomas May

Description:




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Of course, on occasion, a client may not fully appreciate the

excellent result achieved by her or his attorney. Such an occasion

provides the background from which this case arises.

An attorney successfully prosecutes an action resulting in a

substantial jury verdict in favor of his client. The retainer

agreement between the attorney and his client provides that the

attorney receive a percentage of the recovery and costs should his

client prevail.

Thereafter, the client, without the attorney’s knowledge or

consent, releases the defendant from the pending judgment,

including attorney fees and costs.

Does this release preclude the attorney from pursuing his

costs and fees from the defendant? Of course not.

2

Jason Schwetz appeals a judgment entered in favor of the

law firm Mancini & Associates (Mancini). We affirm.

FACTUAL AND PROCEDURAL HISTORY

This appeal concerns a written settlement and release from

a 2008 judgment awarded Gina Rodriguez, plaintiff in the

underlying lawsuit, Rodriguez v. Schwetz (Super. Ct. Ventura

County, 2008, No. SC046381). But for $40 collected from

defendant Schwetz in a debtor’s exam, the judgment proved to be

uncollectable. Seven years following trial and her favorable

judgment, Rodriguez regretted the lawsuit and sought “to resolve

all the issues” with Schwetz. The settlement and release broadly

releases the attorney fees and costs due Mancini pursuant to the

firm's retainer agreement with Rodriguez.

Mancini brought this action against Schwetz seeking

attorney fees and costs, plus interest, awarded in the underlying

litigation and incorporated into the 2008 judgment. Following a

court trial, Mancini obtained $409,351 damages on tort theories

of interference with contract and economic advantage. Schwetz

appeals this award.

Underlying Lawsuit and Aftermath

On March 30, 2005, Rodriguez and Mancini agreed in

writing that Mancini would represent Rodriguez in an

employment lawsuit against her former employer NADT, LLC

(NADT), and its principal, Schwetz. The retainer agreement

provided that Mancini’s attorney fees would be 50 percent of any

recovery obtained plus all attorney fees awarded by the trial

court. In addition, the agreement provided that court costs would

be repaid from any recovery and specifically provided for a lien

for Mancini’s fees and costs.

In 2006, Mancini filed a lawsuit against NADT and

Schwetz on behalf of Rodriguez. The complaint alleged causes of

3

action for wrongful termination, sexual harassment, sexual

battery, and breach of contract, among other causes of action.

Two years later, the matter proceeded to jury trial on the causes

of action of breach of contract and sexual battery. The jury

awarded $68,650 damages against Schwetz on the breach of

contract claim and no damages against NADT. In 2008, the trial

court then awarded $12,622.46 costs and $136,050 attorney fees

to Rodriguez, and $5,838.81 costs to NADT.

Following the 2008 judgment, Mancini, on behalf of

Rodriguez, sought to collect the damages. Despite the efforts of

Mancini’s collections attorneys, however, the judgment proved

uncollectable. On occasions, however, Schwetz did offer

"nuisance value[]" settlements.

In January 2014, Rodriguez contacted Schwetz on

Facebook, expressing interest in his well-being and asking if he

continued in business. Schwetz responded that he no longer had

his tanning salon business and suggested they have lunch.

Rodriguez responded that she was "single as usual" and agreed to

meet Schwetz for lunch. Following their conversation and lunch,

the two resumed their friendship.

In 2015, Mancini employed Michael Berke, a collections

attorney, to pursue collection of the judgment. In early April

2015, Berke contacted Schwetz by telephone and also subpoenaed

his bank records. In response, on April 5, 2015, Schwetz

contacted Rodriguez and asked if she had hired Berke to collect

the judgment against him. Rodriguez replied that she did not

employ Berke and had no knowledge of him.

Soon, Schwetz and Rodriguez prepared a document entitled

“Memorandum of Settlement and Mutual Release"

(Memorandum). The Memorandum refers to the underlying

lawsuit and judgment and releases the parties, and their agents

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and attorneys “from all judgments, fees, costs, claims, damages,

demands, and causes of action, known or unknown, suspected or

unsuspected, arising out of the Action.”1 Schwetz and Rodriguez

executed the document on April 6, 2015, several days after

Berke's initial contact with Schwetz. By FAX, Schwetz

immediately provided a copy of the Memorandum to Berke, who

then forwarded the document to Mancini.

Mancini’s Lawsuit Against Schwetz

In 2016, Mancini brought this lawsuit against Schwetz

alleging causes of action for intentional interference with

contract, intentional interference with economic relations,

negligent interference with prospective economic relations, and

enforcement of an attorney lien.

At trial, Schwetz testified that he and Rodriguez drafted

the Memorandum because Rodriguez wanted to resolve their

differences. He admitted that he knew there were continuing

efforts to collect the judgment and intended the Memorandum to

resolve all claims, including Mancini's attorney fees, against him.

Schwetz stated that he provided no consideration to Rodriguez

for the settlement and release. He added that the parties

executed a settlement agreement sometime in 2014, but that he

could not locate the original or a copy.

Following presentation of evidence and argument by the

parties, the trial court decided that Mancini established that

Schwetz intentionally interfered with the retainer agreement and

with Mancini’s economic benefit. The court then entered

judgment for $409,351.81. In ruling, the trial judge commented,

“Something about this [factual situation] doesn’t seem right. It’s

1 Schwetz later testified that NADT may have been defunct

by the time the parties executed the Memorandum.

5

inconsistent. Sometimes I see this happen, this sort of resolution

when there is evidence of a kind of romantic relationship that’s

been rekindled . . . .”

Schwetz appeals and contends that: 1) Mancini’s claims

are precluded by the litigation privilege of Civil Code section 47,

and 2) insufficient evidence exists that he intentionally interfered

with Mancini’s contractual relationship with Rodriguez.

DISCUSSION

I.

Schwetz argues that his settlement communications with

Rodriguez were privileged by the litigation privilege of Civil Code

section 47. He acknowledges that the litigation privilege was not

litigated in the trial court, but contends that we may decide the

issue as one of law on uncontroverted facts.

Generally, issues not raised in the trial court may not be

raised for the first time on appeal. (Sea & Sage Audubon Society,

Inc. v. Planning Com. (1983) 34 Cal.3d 412, 417.) A "forgiving

approach" may apply where important issues of public policy

exist and the issue is a pure question of law. (Ibid.) Otherwise,

it is unfair to the trial court and to the opposing litigant for a

party to raise a new and different theory on appeal. (Mattco

Forge, Inc. v. Arthur Young & Co. (1997) 52 Cal.App.4th 820,

847.)


Here Schwetz does not present any singular important

public policy issue raised in the context of this litigation that a

forgiving approach should resolve. Nevertheless, giving Schwetz

the benefit of the doubt, we shall discuss the merits of his

contentions. (Sea & Sage Audubon Society, Inc. v. Planning

Com., supra, 34 Cal.3d 412, 417.)

Civil Code section 47, subdivision (b) codifies a privilege

that applies to a "publication or broadcast" that is part of a

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"judicial proceeding." The primary purpose of this privilege is to

"afford litigants and witnesses [citation] the utmost freedom of

access to the courts without fear of being harassed subsequently

by derivative tort actions." (Silberg v. Anderson (1990) 50 Cal.3d

205, 213.) The privilege applies when statements are made in

judicial or quasi-judicial proceedings by litigants or other

participants to achieve the objects of the litigation. (Id. at

p. 212.) The statements must also have some connection or

logical relationship to the litigation. (Ibid.) Judgment

enforcement proceedings are an extension of the judicial process.

(O'Keefe v. Kompa (2000) 84 Cal.App.4th 130, 134-135 [postjudgment

collection efforts related to litigation objective].) The

privilege also applies to statements made during settlement

negotiations. (Optional Capital, Inc. v. DAS Corp. (2014) 222

Cal.App.4th 1388, 1404.)

The "threshold issue" in determining the application of the

litigation privilege is whether the defendant's conduct was

communicative or noncommunicative. (LiMandri v. Judkins

(1997) 52 Cal.App.4th 326, 345.) Civil Code section 47,

subdivision (b) applies only to communicative acts and does not

apply to tortious courses of conduct. (LiMandri, at p. 345.)

Here, although Schwetz's act of executing the

Memorandum was communicative, it was but one act in a course

of tortious conduct to deprive Mancini of its attorney fees.

Schwetz spoke with collections attorney Berke and learned that

the judgment against him was again the subject of collection.

Schwetz then contacted Rodriguez to learn if she had employed

Berke. Rodriguez confirmed that she was not seeking to enforce

the judgment, had not employed Berke, and did not know that

Berke was seeking to collect the judgment. Schwetz was present

during the underlying trial and admitted that he knew of the

7

judgment against him. The judgment specifically awarded

Rodriguez attorney fees as well as damages and costs. Schwetz’s

noncommunicative conduct was not protected by the litigation

privilege. A third party who impairs an attorney's rights

pursuant to a contractual lien may be subject to liability for

tortious interference with contractual relations or prospective

economic advantage. (Little v. Amber Hotel Co. (2011) 202

Cal.App.4th 280, 291.)


II.

Schwetz contends that there is insufficient evidence that he

knew of Mancini’s attorney fee lien or that he intended to

interfere with Mancini's collection of its attorney fees and costs.

He relies upon his testimony that he had no knowledge of

Mancini’s fee retainer agreement with Rodriguez: “I didn’t know

what she had or didn’t have. . . . I would have no knowledge of

that.”

In reviewing the sufficiency of evidence to support a

judgment, we view the evidence and draw all reasonable

inferences therein in favor of the judgment. (Beck Development

Co. v. Southern Pacific Transportation Co. (1996) 44 Cal.App.4th

1160, 1203.) We do not reweigh the evidence or reassess witness

credibility. (Id. at pp. 1203-1204.) We discard unfavorable

evidence as not having sufficient verity to be accepted by the trier

of fact. (Little v. Amber Hotel Co., supra, 202 Cal.App.4th 280,

292.)


Sufficient evidence and all reasonable inferences therefrom

establish that Schwetz knew that Mancini had a fee agreement

with Rodriguez and that he intentionally and wrongfully

interfered to avoid paying the attorney fees and costs. Schwetz

was present during trial of the underlying litigation, received the

judgment, and knew that the trial court separately awarded

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$136,050 attorney fees to Rodriguez. Schwetz also knew that

Mancini represented Rodriguez throughout trial.

Post-judgment, Schwetz offered nuisance value settlements

from time to time, paid $40 to Mancini’s counsel in a debtor’s

exam, and acknowledged that he knew Berke was attempting to

collect the judgment. Rodriguez informed Schwetz that she did

not intend to collect the judgment. Within several days of

Berke’s contract, Schwetz executed the Memorandum with

Rodriguez releasing the parties’ attorneys from all judgments,

fees, costs, claims, damages, and demands. Schwetz provided no

consideration for the settlement and release. He testified that

one purpose of the Memorandum was to resolve all the issues,

including Rodriguez’s attorney fees and claims.

Having found the judgment supported by sufficient

evidence of Schwetz’s intentional interference with contract, we

need not discuss his remaining contentions.
Outcome:
The judgment is affirmed. Respondent shall recover costs on appeal.
Plaintiff's Experts:
Defendant's Experts:
Comments:

About This Case

What was the outcome of Mancini and Associates v. Jason Schwetz?

The outcome was: The judgment is affirmed. Respondent shall recover costs on appeal.

Which court heard Mancini and Associates v. Jason Schwetz?

This case was heard in California Court of Appeals Second Appellate District, Division Six on appeal from the Superior Court, County of Ventura, CA. The presiding judge was Gilbert, P.J..

Who were the attorneys in Mancini and Associates v. Jason Schwetz?

Plaintiff's attorney: Marcus A. Mancini and Tara J. Licata. Defendant's attorney: Gregory Thomas May.

When was Mancini and Associates v. Jason Schwetz decided?

This case was decided on September 4, 2019.