Alexander Graham-Sult, et al v. Nicholas Clainos, et al

Filing

Filed order and amended opinion (ALFRED T. GOODWIN, DIARMUID F. O'SCANNLAIN and N. RANDY SMITH). The Opinion filed December 27, 2013, appearing at 738 F.3d 1131, is amended as follows: With these amendments, the panel has voted unanimously to deny the petition for panel rehearing. The petition for rehearing is DENIED. No further petitions for rehearing or rehearing en banc may be filed in response to the amended opinion. (See Order for text) AFFIRMED IN PART, REVERSED IN PART AND REMANDED. [8966212] [11-16779, 12-15892]

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ALEXANDER GRAHAM-SULT; DAVID
GRAHAM,
Plaintiffs-Appellants,
v.
NICHOLAS P. CLAINOS; RICHARD L.
GREENE; LINDA MCCALL; GREENE
RADOVSKY MALONEY SHARE &
HENNIGH LLP, a limited liability
partnership; BILL GRAHAM
ARCHIVES LLC, DBA Wolfgang’s
Vault; NORTON LLC, a limited
liability company; WILLIAM E.
SAGAN,
Defendants-Appellees.

No. 11-16779
D.C. No.
4:10-cv-04877CW

Page: 1 of 51

Case: 11-16779

2

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

ALEXANDER GRAHAM-SULT; DAVID
GRAHAM,
Plaintiffs-Appellants,
v.
NICHOLAS P. CLAINOS; RICHARD L.
GREENE; LINDA MCCALL; GREENE
RADOVSKY MALONEY SHARE &
HENNIGH LLP, a limited liability
partnership; BILL GRAHAM
ARCHIVES LLC, DBA Wolfgang’s
Vault; NORTON LLC, a limited
liability company; WILLIAM E.
SAGAN,
Defendants-Appellees.

No. 12-15892
D.C. No.
4:10-cv-04877CW

ORDER AND
AMENDED
OPINION

Appeal from the United States District Court
for the Northern District of California
Claudia Wilken, Chief District Judge, Presiding
Argued and Submitted
April 18, 2013—San Francisco, California
Filed December 27, 2013
Amended February 5, 2014
Before: Alfred T. Goodwin, Diarmuid F. O’Scannlain,
and N. Randy Smith, Circuit Judges.
Order;
Opinion by Judge N.R. Smith

Page: 2 of 51

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 3 of 51

3

SUMMARY*

Anti-SLAPP Statute / California Law
The panel affirmed in part and reversed in part the district
court’s judgment in an action brought by the sons of the late
concert promoter Bill Graham, alleging that they were
entitled to pro rata distributions of certain property owned by
Graham’s estate.
The panel reversed in part the district court’s disposition
of a special motion to strike under California’s anti-SLAPP
statute, holding that the district court erred in dismissing the
plaintiffs’ claims for conversion, unjust enrichment, and
breach of fiduciary duty against Nicholas Clainos, the
executor of Graham’s estate.
The panel held that plaintiffs sufficiently alleged claims
for conversion, copyright infringement, and declaratory relief
against William Sagan, Norton LLC and Bill Graham
Archives, LLC (“BGA Defendants”), and that the district
court therefore erred in dismissing these claims.
Concerning the underlying awards of attorneys’ fees, the
panel vacated the post-motion-to-strike fee award to Clainos,
as well as the post-motion-to-dismiss fee award of the BGA
Defendants.
The panel affirmed the district court’s decision in all other
respects.
*

This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.

Case: 11-16779

4

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS
COUNSEL

James J. Brosnahan (argued) and Kevin A. Calia, Morrison &
Foerster, San Francisco, California; Therese Y. Cannata,
Carolyn A. Johnston and Rachel L. Kent, Cannata, Ching &
O’Toole, San Francisco, California, for Plaintiffs-Appellants.
Nancy L. Tompkins (argued), James M. Wagstaffe and Ivo
Labar, Kerr & Wagstaffe, San Francisco, California, for
Defendant-Appellee Nicholas P. Clainos.
Jerome B. Falk, Jr. (argued) and Jonathan W. Hughes, Arnold
& Porter, San Francisco, California; Ronald E. Mallen and
Cassidy E. Chivers, Hinshaw & Culbertson, San Francisco,
California, for Defendants-Appellees Richard L. Greene,
Linda McCall, and Greene Radovsky Maloney Share &
Hennigh LLP.
Thomas Patrick Lane (argued) and Michael S. Elkin, Winston
& Strawn, New York, New York; Erin R. Ranahan and Drew
A. Robertson, Winston & Strawn, Los Angeles, California,
for Defendants-Appellees Bill Graham Archives LLC DBA
Wolfgang’s Vault, Norton LLC, and William Sagan.

ORDER
The Opinion filed December 27, 2013, appearing at
738 F.3d 1131, is amended as follows:
1. At slip op. 45, delete “, and Clainos and
the Greene Defendants challenge the
amounts awarded”

Page: 4 of 51

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 5 of 51

5

2. At slip op. 45, delete “Both Clainos and
the Greene Defendants appealed their
reduced fee awards.”
With these amendments, the panel has voted unanimously
to deny the petition for panel rehearing. The petition for
rehearing is DENIED.
No further petitions for rehearing or rehearing en banc
may be filed in response to the amended opinion.

OPINION
N.R. SMITH, Circuit Judge:
Plaintiffs Alexander Graham-Sult and David Graham
appeal the district court’s disposition of: (1) a motion to
dismiss; (2) a special motion to strike under California’s antiSLAPP statute; and (3) related attorney’s fees awards.
We affirm the disposition of the motion to strike in part
and reverse in part. Striking Plaintiffs’ conversion and unjust
enrichment claims against Nicholas Clainos was erroneous,
because: (a) taking possession of personal property, (b)
preparing and executing an assignment of intellectual
property following a probate court’s final order, and (c)
receiving consideration for stock sold after a probate court
entered its final order, are not protected activities.
Striking Plaintiffs’ breach of fiduciary duty claim against
Clainos was also erroneous. Even though the conduct
underlying this claim was protected activity, nothing in this

Case: 11-16779

6

02/05/2014

ID: 8966212

DktEntry: 75

Page: 6 of 51

GRAHAM-SULT V. CLAINOS

record suggests Plaintiffs will not be successful on the merits
when pursuing Clainos’s alleged (a) self-dealing, (b) failure
to exercise due care in handling probate estate assets, and (c)
secret transfer of intellectual property to an entity defendant
purchased.
We then turn to the district court’s disposition of a motion
to dismiss certain claims against William Sagan, Norton LLC,
and Bill Graham Archives, LLC (collectively, the “BGA
Defendants”). We conclude that Plaintiffs sufficiently
alleged claims for conversion, copyright infringement, and
declaratory relief against the BGA Defendants, and that
dismissing those claims was erroneous.
Consistent with these conclusions, we consider the
underlying awards of attorney’s fees. We vacate the postmotion-to-strike fee award to Clainos, as well as the postmotion-to-dismiss fee award to the BGA Defendants.
In all other respects, the district court’s decision is
affirmed.
FACTS & PROCEDURAL HISTORY
I. Background
The late Bill Graham (“Graham”) successfully promoted
rock and roll concerts in the San Francisco Bay Area and
internationally. Graham died testate in 1991 when the
helicopter (in which he was riding) crashed into a utility
tower. Graham’s will created individual trusts for his sons,
Alexander Graham-Sult (“Alex”) and David Graham
(“David”), who were 14 and 23 years old respectively at the
time of Graham’s death. The will appointed Graham’s friend

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 7 of 51

7

and business partner, Nicholas Clainos, as the trustee of those
trusts and the executor of the estate.1 Richard Greene, through
his law firm, provided Clainos legal counsel in his capacity
as both executor of the estate and trustee of the trusts.
II. Procedural History
Graham’s substantial estate was in probate for several
years, but, on August 8, 1995, the probate court entered its
final order of distribution. On October 27, 2010, Alex and
David filed the instant lawsuit against: (1) Clainos; (2) the
BGA Defendants; and (3) Greene and related individuals and
entities, including Greene Radovsky Maloney Share &
Hennigh LLP (Greene’s law firm), and Linda McCall
(another attorney with Greene’s firm) (collectively, the
“Greene Defendants”).
Plaintiffs claim that at the time of Graham’s death, his
estate owned: (1) intellectual property (copyrights to posters
registered in Bill Graham’s name and the trademark for the
name “The Fillmore”), (2) ten “scrapbooks” containing
posters, and (3) 100 complete series of original posters.2
Plaintiffs claim they were entitled to pro rata distributions of
this property, and brought twelve causes of action, including
claims for fraud, concealment, breach of fiduciary duty,
conversion, and unjust enrichment.

1

The will also appointed Harold Furst as co-executor, but he apparently
“declined to act.”
2

In their complaint, Plaintiffs inconsistently refer to these assets
collectively as the “Archives.” Plaintiffs also make different allegations
with respect to each of these categories of assets. For clarity, we refer to
each category of assets individually, rather than collectively.

Case: 11-16779

8
III.

02/05/2014

ID: 8966212

DktEntry: 75

Page: 8 of 51

GRAHAM-SULT V. CLAINOS
The Property at Issue

At the time of his death, Graham owned all the shares of
Bill Graham Enterprises, Inc. (“BGE”). Therefore, these
shares became assets of the estate.
Graham also had registered the copyrights to many
posters used by BGE and the trademark “The Fillmore”
(collectively, the “intellectual property”) in his own name.
Therefore, in the course of Greene’s work on the Graham
estate, he investigated whether this intellectual property
belonged to the estate or to BGE. During the investigation, on
December 9, 1991, Greene met with one of BGE’s key
employees, Steve Welkom, and one of BGE’s Vice
Presidents, Jerry Pompili. At this meeting, Greene learned
that “(1) Pompili had filed copyrights for most posters and
the Fillmore trademark in the name of William Graham, (2)
BGE paid for all application and registration fees, [and] (3)
BGE received all revenues from the sales and licensing of the
intellectual property.” Based on these facts, Greene formed
“the legal opinion that BGE owned the intellectual property
registered in the name of William Graham.”
A. Sale of BGE
In 1992, when Clainos began negotiating the sale of BGE
on behalf of the Graham estate, BGE’s key employees
threatened to leave if they were not given the opportunity to
purchase the company. According to Clainos, losing the key
employees would cause BGE’s value to drop significantly.
With the probate court’s encouragement, Clainos structured
a sale to the key employees. In 1993, when Clainos filed a
Petition for Confirmation of Sale, two beneficiaries objected
to the sale. Consequently, Clainos petitioned the court to

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 9 of 51

9

distribute the BGE shares to the Graham estate beneficiaries.
On January 25, 1994, the probate court granted this petition.
After this distribution of shares, the beneficiaries sold
their shares in BGE to the key employees. To consummate
the transaction, a new entity, Bill Graham Presents, Inc.
(“BGP”), was formed; BGP then acquired all of the BGE
shares from the beneficiaries. As part of the transaction,
Plaintiffs also obtained a right of first refusal to the
“Archives”3 BGE held. Accordingly, if BGE or the Archives
were ever sold, Plaintiffs retained the right to purchase them.
(Because this transaction occurred after the shares had been
distributed from the estate, the probate court did not approve
the terms of the sale.) After the sale, Clainos held a thirteen
percent (13%) stake in BGP, Alex and David each held a ten
percent (10%) stake, and the key employees held the
remaining shares.
B. Preparation of the Assignment of Intellectual
Property
On August 31, 1995, three weeks after the probate court
had entered its final order, an attorney representing BGE
wrote to Greene to ask if Greene “[c]ould please clarify. . .
how the transfer / assignment of copyrights and trademarks
was handled in the sale of [BGE] to the key employees?”
After receiving the letter, Greene’s firm prepared an
Assignment, with the stated purpose of “confirm[ing] BGE’s

3
The agreement containing the right of first refusal defined the Archives
as “[A]ll posters, handbills, tickets, photographs, slides, videos, audiotapes
and other archival material produced or obtained prior to October 25, 1991
in connection with the activities of any of the BGP Companies prior to
October 25, 1991.”

Case: 11-16779

02/05/2014

10

ID: 8966212

DktEntry: 75

Page: 10 of 51

GRAHAM-SULT V. CLAINOS

ownership of [the intellectual property].” The Assignment
provided in pertinent part that “Assignor hereby assigns,
transfers and conveys to BGE (‘Assignee’) any and all right,
title and interest of the Decedent in any and all copyrights,
tradenames, trademarks and servicemarks claimed by or
registered in the name of the Decedent.” The Assignment was
backdated to August 1, 1995—seven days before the probate
court entered its final order of distribution.4 Clainos executed
this Assignment in his capacity as executor of Graham’s
estate and sent it to BGE on September 1, 1995. On July 29,
1996, BGE recorded the Assignment in the United States
Copyright Office.
C. Transfers to the BGA Defendants
The BGA Defendants came to own part of the disputed
property through a sequence of transactions following the
close of the Graham estate. In 1997, SFX Entertainment, Inc.
(“SFX”) acquired BGP.5 Plaintiffs were represented by
attorney Philip Feldman (“Feldman”) during this sale. Prior
to closing this transaction, Greene sent Feldman a copy of
Section 3.18 of the sales agreement, which addressed the sale
of intellectual property. The parties do not dispute that
Feldman received this letter.

4

The Assignment provides that it was “executed as of August 1, 1995,
by NICHOLAS P. CLAINOS, as Executor of the Will of William
Graham,” but it is clear that the Assignment was not signed on that date.
On the Assignment’s second page, the Notary Public’s certification states
that Clainos signed the document on August 31, 1995.
5

The sale activated Plaintiffs’ right of first refusal to purchase the
archives, but they declined to exercise it. Instead, they received
$6,785.720 each for their shares in BGP.

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 11 of 51

11

Section 3.18 provided that “Schedule 3.18 attached hereto
contains, to each Selling Shareholder’s Knowledge, a true and
complete list of all . . . trademarks . . . copyrights . . . owned
or used by [BGP] or material to the conduct of [BGP]’s
business.” Schedule 3.18, in turn, included a copy of the
Assignment and the Copyright office registration. Although
Section 3.18 incorporated Schedule 3.18 by reference, Greene
did not attach a copy of Schedule 3.18 or the Assignment to
the letter he sent Feldman.
Clear Channel Communications then bought SFX. Clear
Channel transferred most of the archives (except for a few
unspecified items and the “Fillmore” trademark) to Bill
Graham Archives LLC. In 2002, defendant Norton, LLC
(owned and controlled by defendant Sagan) purchased BGA
from Clear Channel. Allegedly, Clainos, as a paid consultant
to BGA, “conducted significant research and interviews
concerning the Archives, tracing the history and confirming
what Sagan was actually purchasing.”
D. Plaintiffs’ Investigation and Subsequent Actions
In late 2008, Plaintiffs discovered fifty boxes of
documents at BGE’s former headquarters. When Plaintiffs
reviewed those documents in February 2009, they discovered
the Assignment. Suspicious, David and Alex proceeded to
investigate the extent of their father’s intellectual property
registrations. Their research led them to the United States
Copyright Office, where they discovered that Graham had
“over 300 poster copyrights” registered in his name at the
time of his death. Through further research, they discovered
that the trademark for “The Fillmore” had also been
registered to their father.

Case: 11-16779

12

02/05/2014

ID: 8966212

DktEntry: 75

Page: 12 of 51

GRAHAM-SULT V. CLAINOS

In January 2010, nearly one year later, David and Alex
discovered that Sagan and / or BGA had possession of ten of
Graham’s allegedly personal scrapbooks. That same year,
they brought the instant lawsuit.
DISCUSSION
I. Anti-SLAPP
California’s anti-SLAPP statute authorizes defendants to
file a “special motion to strike” any “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 Constitution . . . in connection with a public issue.”
Cal. Civ. Proc. Code § 425.16(b)(1) (emphasis added). Acts
in furtherance of the right of petition include “any written or
oral statement or writing made in connection with an issue
under consideration or review by a . . . judicial body.” Id.
§ 425.16(e)(2). An anti-SLAPP motion is available to
defendants in federal court. See Thomas v. Fry’s Elecs., Inc.,
400 F.3d 1206, 1206-07 (9th Cir. 2005) (per curiam).
We review the district court’s grant of a special motion to
strike de novo. Vess v. Ciba-Geigy Corp. USA, 317 F.3d
1097, 1102 (9th Cir. 2003). We conduct this review in two
steps. Preliminarily, we ask whether the defendant showed
that the plaintiff’s causes of action “arise[] from an act in
furtherance of the defendant’s rights of petition or free
speech.” Mindys Cosmetics, Inc. v. Dakar, 611 F.3d 590, 595
(9th Cir. 2010) (internal quotation marks omitted); see Hylton
v. Frank E. Rogozienski, Inc., 99 Cal. Rptr. 3d 805, 809
(Ct. App. 2009). If the defendant makes that showing, then
we ask whether the plaintiff can show that it has “a
reasonable probability of prevailing in its claims for those

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 13 of 51

13

claims to survive dismissal.” Mindys, 611 F.3d at 598
(internal quotation marks omitted). We address each prong in
turn.
A. Arising from Protected Activity
The district court concluded that all of Plaintiffs’ claims
against Clainos and the Greene Defendants arise from
protected activity, because the “gravamen” of all causes of
action involved Clainos’s performance of his duties as the
executor of Graham’s estate. We disagree with the district
court’s characterization of Plaintiffs’ complaint. Close
scrutiny demonstrates that Plaintiffs’ causes of action arise
from different types of conduct, requiring a moreparticularized analysis under the anti-SLAPP statute.
For purposes of the anti-SLAPP statute, a cause of action
“arises from” conduct that it is “based on.” Copenbarger v.
Morris Cerullo World Evangelism, 156 Cal. Rptr. 3d 70,
74–75 (Ct. App. 2013). Thus, we first ask what activities
form the basis for each of Plaintiffs’ causes of action. We
then ask whether those activities are “protected,” bringing the
cause of action within the scope of the anti-SLAPP statute.
See Wallace v. McCubbin, 128 Cal. Rptr. 3d 205, 218
(Ct. App. 2011). “Where a cause of action is based on both
protected activity and unprotected activity, it is subject to [the
anti-SLAPP statute] unless the protected conduct is merely
incidental to the unprotected conduct.” Id. (emphasis added)
(internal quotation marks omitted). Protected activity is not
“merely incidental” to unprotected activity if the alleged
activity “underl[ies] the cause of action.” Salma v. Capon,
74 Cal. Rptr. 3d 873, 884 (Ct. App. 2008).

Case: 11-16779

14

02/05/2014

ID: 8966212

DktEntry: 75

Page: 14 of 51

GRAHAM-SULT V. CLAINOS

Reviewing Plaintiffs’ complaint under this standard, we
conclude that only six of Plaintiffs’ causes of action arise
from protected activity. Because the remaining causes of
action do not arise from protected activity, they were not
properly subject to the special motion to strike.
1. First and Second Causes of Action: Breach of
Fiduciary Duty vs. Clainos, and Aiding and
Abetting Breach vs. the Greene Defendants
Four general categories of Clainos’s activities form the
basis of Plaintiffs’ First Cause of Action for breach of
fiduciary duty against Clainos: (1) making misleading
statements to Plaintiffs, (2) concealing information from
Plaintiffs, (3) engaging in self-dealing in the Assignment and
on other unspecified occasions, and (4) negligently
characterizing, valuing, and distributing assets of Graham’s
estate. Plaintiffs then allege in their Second Cause of Action
that the Greene Defendants aided and abetted Clainos’s
breach of fiduciary duty by: (1) making statements to, and
concealing information from, Plaintiffs; (2) misstating
information in filings in probate court and with the IRS and
concealing information from the probate court; and (3)
preparing the Assignment and assisting Clainos in selfdealing.
Protected activity under the anti-SLAPP statute includes
“writing[s] made in connection with an issue under
consideration or review by a . . . judicial body.” Cal. Civ.
Proc. Code § 425.16(e)(2). Thus, Clainos’s activity is
protected to the extent it involved making representations to
the probate court, or preparing documents for filing in court.
See Cabral v. Martins, 99 Cal. Rptr. 3d 394, 404 (Ct. App.
2009) (“Case law establishes that communications that are

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 15 of 51

15

intimately intertwined with, and preparatory to, the filing of
judicial proceedings qualify as petitioning activity for the
purpose of the anti-SLAPP statute.”). Clainos’s activity is
also protected activity to the extent it involves statements
made to the Plaintiffs, who had “some interest” in the probate
proceedings. Fremont Reorg. Corp. v. Faigin, 131 Cal. Rptr.
3d 478, 489 (Ct. App. 2011) (“A statement is ‘in connection
with’ an issue under consideration by a court in a judicial
proceeding . . . if it relates to a substantive issue in the
proceeding and is directed to a person having some interest in
the proceeding.”). However, as we discuss below, Clainos’s
activity related to executing the Assignment is unprotected
conduct that, itself, does not implicate the right to petition.
Allegations of both protected and unprotected activity
make the First Cause of Action a mixed cause of action.
However, the protected activity is not “merely incidental” to
the unprotected activity. Wallace, 128 Cal. Rptr. 3d at 218
(internal quotation marks omitted). Rather, protected activity
“underl[ies]” Plaintiffs’ breach of fiduciary duty claim here.
Salma, 74 Cal. Rptr. 3d at 884. Plaintiffs could make out a
legally sufficient breach of fiduciary duty claim, based solely
on their allegations related to protected activity. Mosier v. S.
Cal. Physicans Ins. Exch., 74 Cal. Rptr. 2d 550, 565 (Ct. App.
1998) (“The elements of a cause of action for breach of
fiduciary duty are: (1) the existence of a fiduciary duty; (2)
the breach of that duty; and (3) damage proximately caused
by that breach.”). Accordingly, Clainos has satisfied his
burden of showing Plaintiffs’ First Cause of Action arises
from protected activity.
For substantially the same reasons, the Greene
Defendants’ statements to the probate court and to Plaintiffs
about the subject matter of the probate proceedings are

Case: 11-16779

16

02/05/2014

ID: 8966212

DktEntry: 75

Page: 16 of 51

GRAHAM-SULT V. CLAINOS

protected activities. See Cabral, 99 Cal. Rptr. 3d at 404;
Fremont, 131 Cal. Rptr. 3d at 489. These actions underlie the
Second Cause of Action for aiding and abetting. See Casey v.
U.S. Bank, 26 Cal. Rptr. 3d 401, 405 (Ct. App. 2005) (stating
elements of cause of action for aiding and abetting breach of
fiduciary duty); see also Salma, 74 Cal. Rptr. 3d at 884.
Thus, even if the preparation of the Assignment and assisting
Clainos in self-dealing are not protected, Plaintiffs’ Second
Cause of Action as a whole arises from protected activity
under the rule governing mixed causes of action.
2. Third Cause of Action: Breach of Trust vs.
Clainos
In their Third Cause of Action for breach of trust,
Plaintiffs allege that Clainos breached duties he owed them
as trustee of their testamentary trusts, not as executor of the
Graham estate. Plaintiffs allege Clainos breached these duties
in his “characterization, valuation and distribution of assets,”
and that the trusts received reduced distribution as a result.
However, these activities were all preparatory to probate
court filings, or required the probate court’s approval.
Accordingly, Plaintiffs’ Third Cause of Action arises from
protected activity. See Cabral, 99 Cal. Rptr. 3d at 404.
3. Fourth Cause of Action: Conversion vs.
Clainos, the Greene Defendants & the BGA
Defendants
Plaintiffs’ Fourth Cause of Action asserts that Clainos, the
Greene Defendants, and the BGA Defendants converted items
of intellectual property (“The Fillmore” trademark and
various copyrights), and personal property (poster scrapbooks
and 100 sets of original posters). The district court held that

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 17 of 51

17

this cause of action, like the rest of Plaintiffs’ complaint,
arises from Clainos’s and the Greene Defendants’ protected
activity. We disagree.
a. Clainos
Plaintiffs allege that Clainos converted personal property
when he “took possession” of it. Additionally, Clainos
allegedly concealed the existence of the personal property and
may have moved it from Graham’s personal warehouse to a
warehouse BGE owned.
Generally, taking possession of personal property is not
a protected activity, because it is conduct, not a written or
oral statement. See Cal. Civ. Proc. Code § 425.16(e)(2). This
conduct underlies Plaintiffs’ conversion claim against
Clainos. See Hartford Fin. Corp. v. Burns, 158 Cal. Rptr.
169, 172 (Ct. App. 1979) (“The elements of a conversion
cause of action are (1) plaintiffs’ ownership or [r]ight to
possession of the property at the time of the conversion; (2)
defendants’ conversion by a wrongful act or disposition of
plaintiffs’ property rights; and (3) damages.”) (emphasis
added) (quoting Baldwin v. Marina City Props., Inc., 145 Cal.
Rptr. 406, 416 (Ct. App. 1978)). Plaintiffs’ allegation that
Clainos “took possession” of the estate’s personal property
constitutes a “wrongful act” that would substantiate the
second element of Plaintiffs’ conversion claim. Thus,
Plaintiffs’ claim that Clainos converted personal property
from the Graham Estate does not arise from protected
activity.6

6

We are aware that the conversion claim also rests on Clainos’s alleged
concealment of the existence or location of Graham’s personal property,
but those allegations do not change our conclusion. Assuming

Case: 11-16779

18

02/05/2014

ID: 8966212

DktEntry: 75

Page: 18 of 51

GRAHAM-SULT V. CLAINOS

Plaintiffs also allege that Clainos converted intellectual
property by preparing and executing the Assignment in 1995.
According to Plaintiffs, Clainos executed the Assignment on
August 31, 1995, but backdated the assignment to August 1,
1995, seven days before the probate court entered its final
order of distribution. To the extent Plaintiffs’ Fourth Cause of
Action against Clainos arises from that Assignment, it does
not arise from protected activity.
Clainos did not execute the Assignment in connection
with any issues under consideration by a judicial body, for
two reasons. See Cal. Civ. Proc. Code § 425.16(e)(2). First,
the probate court never approved the sale of BGE, let alone
its underlying tangible and intangible assets. The initial sale
of BGE to its key employees occurred outside of probate
proceedings, after the shares of BGE had been distributed out
of the estate. Thus, the transfer of intellectual property
through the Assignment occurred wholly outside the probate
court’s supervision.
Second, no California cases hold that activities
undertaken after a judicial body has finished considering
relevant issues are “in connection with” an issue under
consideration. California courts have recognized that conduct
can be protected by the anti-SLAPP statute, even though no
issue is yet under consideration by a judicial body at the time
the defendant engages in the conduct. For example, serving
a notice terminating a tenancy is protected activity, if giving
such notice is a “legal prerequisite” for filing a lawsuit.

“concealment” of such information is protected activity, see Kupiec v. Am.
Int’l Adjustment Co., 1 Cal. Rptr. 2d 371, 374 (Ct. App. 1991), that
conduct is merely incidental to Plaintiffs’ allegations of unprotected
conduct.

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 19 of 51

19

Birkner v. Lam, 67 Cal. Rptr. 3d 190, 195 (Ct. App. 2007).
Protection also extends to the act of revising a will before it
has been filed in probate court, and the act of filing it in court.
Cabral, 99 Cal. Rptr. 3d at 404. However, these
circumstances are limited to conduct that occurs “in
connection with or in preparation of litigation.” Kolar v.
Donahue, McIntosh & Hammerton, 52 Cal. Rptr. 3d 712, 716
(Ct. App. 2006).7
When Clainos executed the Assignment, the probate court
did not have any other issues to consider regarding the
distribution of the estate’s assets. See Cal. Prob. Code
§ 11641 (“When an order settling a final account and for final
distribution is entered, the personal representative may
immediately distribute the property in the estate to the
persons entitled to distribution, without further notice or
proceedings.”); id. § 11753(a) (discharging personal
representative upon “[d]istribution in compliance with the
court order”). As the probate court had already issued its final
order of distribution, the Assignment was not prepared in

7

Protecting out-of-court conduct that precedes the filing of the lawsuit
is consistent with the purpose of the anti-SLAPP statute to eliminate
litigation that chills the exercise of the right to petition. See Cal. Civ. Proc.
Code § 425.16(a). Logically, an individual’s right to petition could be
substantially compromised if he could not fully prepare to petition because
such conduct could result in liability. However, conduct undertaken after
petitioning has ended does not present the same risk; any conduct
undertaken at that time would have no effect on the earlier petitioning
activity, unless it could be shown that the risk of future liability for postpetitioning activity was foreseeable at the time the defendant petitioned.
Defendants have not made that showing here.

Case: 11-16779

20

02/05/2014

ID: 8966212

DktEntry: 75

Page: 20 of 51

GRAHAM-SULT V. CLAINOS

anticipation of the resolution of any issues by a judicial
body.8
Clainos contends that, even if preparing and executing the
Assignment is not protected activity, it is merely incidental to
the other conduct alleged, and falls under the ambit of “seeing
Graham’s Estate through probate, and ensuring that
[Plaintiffs] received their just share of it.” However, the
execution of the Assignment alone underlies the conversion
claim against Clainos. Plaintiffs cannot avoid the legal effect
of that activity by casting it together with other activities
which would not result in liability. Further, Clainos does not
directly address the significance of the fact that the
Assignment occurred after the probate court was no longer
considering issues related to the distribution of the Graham
estate.
b. The Greene Defendants
Plaintiffs also seek to hold the Greene Defendants liable
for aiding and abetting Clainos’s conversion and conspiring
with him to convert Graham’s property. This derivative claim
arises from the Greene Defendants’ alleged: (1) falsifying

8

Greene argues that the Assignment satisfies the “in connection with”
requirement, because, at the time of the assignment, “the probate
proceeding had not ended . . . and Clainos retained his role and authority
as executor to effect the distribution in accordance with the Probate
Court’s order.” This is beside the point; issues related to the distribution
of assets of the estate were no longer under consideration by the probate
court. It had resolved those issues when it entered its final order of
distribution. Thus, even though the final order did not formally “close” the
probate proceedings, see Cal. Prob. Code §§11641, 11753(a), the
consideration of issues by the probate court had terminated by the time it
was executed.

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 21 of 51

21

probate court filings, (2) concealing information from
plaintiffs and the probate court, (3) making false statements
to plaintiffs and the probate court, and (4) assisting with the
preparation of the Assignment.
Plaintiffs’ claim against the Greene Defendants arises
from protected activity to the extent it is based on statements
the Greene Defendants made to them and to the probate court.
See Cabral, 99 Cal. Rptr. 3d at 404; Fremont, 131 Cal. Rptr.
3d at 489. However, Plaintiffs also base their claim for
conversion of the intellectual property on unprotected
activity: the Greene Defendants’ “assisting with the
preparation of the Assignment.” Inclusion of this unprotected
activity makes Plaintiffs’ conversion claim against the Greene
Defendants a mixed cause of action.
Even though mixed, this cause of action arises from
protected activity, because protected activity “underl[ies]” the
claim. Salma, 74 Cal. Rptr. 3d at 884. The Greene
Defendants’ preparation of probate court filings and
representations to the Plaintiffs were protected activity. These
activities could have constituted independent acts of aiding
and abetting Clainos’s conversion. See Fiol v. Doellstedt,
58 Cal. Rptr. 2d 308, 312 (Ct. App. 1996). Thus, this conduct
is not merely incidental to the unprotected activity of
preparing the Assignment. Therefore, the cause of action as
a whole arises from protected activity.

Case: 11-16779

22

02/05/2014

ID: 8966212

DktEntry: 75

Page: 22 of 51

GRAHAM-SULT V. CLAINOS
4. Fifth Cause of Action (Deceit—Intentional
Misrepresentation) & Sixth Cause of Action
(Deceit—Negligent Misrepresentation) vs.
Clainos & the Greene Defendants

Plaintiffs’ Fifth and Sixth Causes of Action also arise
from protected activity. Plaintiffs base these claims on
allegations that Clainos and the Greene Defendants
intentionally and negligently misrepresented numerous facts
about the Graham estate and the probate proceedings to the
Plaintiffs. Statements made to persons with an interest in a
court proceeding are categorically protected activity under the
anti-SLAPP statute. Fremont, 131 Cal. Rptr. 3d at 489.
5. Seventh Cause of Action: Fraud / Concealment
vs. Clainos and the Greene Defendants
Plaintiffs’ Seventh Cause of Action against Clainos and
the Greene Defendants for actual fraud and / or concealment
under California Civil Code § 1572 also arises from protected
activity. In this cause of action, Plaintiffs primarily fault
Clainos and the Greene Defendants for not disclosing the
Graham estate’s alleged interest in the intellectual property,
scrapbooks, or poster series. This amounts to an allegation
that Clainos and the Greene Defendants failed to disclose
important information regarding the assets of the estate, while
the probate court was considering how those assets should be
distributed. As previously stated, communicating about the
subject matter of litigation to a person with an interest in the
litigation is a protected activity. Fremont, 131 Cal. Rptr. 3d
at 489. For purposes of this analysis, it makes no difference
that Plaintiffs include allegations of omissions, rather than
only affirmative misrepresentations. See Navellier v. Sletten,
131 Cal. Rptr. 2d 201, 206 (Ct. App. 2003) (“The [litigation]

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 23 of 51

23

privilege informs interpretation of the ‘arising from’ prong of
the anti-SLAPP statute . . . .”); see also Kupiec v. Am. Int’l
Adjustment Co., 1 Cal. Rptr. 2d 371, 374 (Ct. App. 1991)
(holding that concealment is privileged activity).
6. Eighth Cause of Action: Promissory Estoppel
vs. Clainos
Plaintiffs’ Eighth Cause of Action alleges that Clainos is
liable for promissory estoppel. Plaintiffs allege that, “in his
capacity as executor of the estate . . . [Clainos] promised
plaintiffs that all of Bill Graham’s scrapbooks would be given
to plaintiffs.” Plaintiffs further assert that Clainos made this
promise “[a]s part of the distribution of the assets of the
Estate.” This allegation plainly underlies Plaintiffs’
promissory estoppel claim. See Aceves v. U.S. Bank, 120 Cal.
Rptr. 3d 507, 514 (Ct. App. 2011) (stating elements of
promissory estoppel cause of action).
Because Clainos made this statement to parties with an
interest in the litigation about the subject matter of the
probate proceedings (the distribution of assets), we conclude
under Fremont that this cause of action arises from protected
activity. 131 Cal. Rptr. 3d at 489.
Plaintiffs’ argument that their promissory estoppel claim
does not arise from protected activity, because it is not based
on communications in probate court itself, is irrelevant.
California does not limit “protected activity” to only
communications directed to an adjudicative body. Rather, the
statements only need to be made “in connection with an issue
under consideration” by such a body. Cal. Civ. Proc. Code
§ 425.16(e)(2). Clainos’s alleged promise relating to the

Case: 11-16779

24

02/05/2014

ID: 8966212

DktEntry: 75

Page: 24 of 51

GRAHAM-SULT V. CLAINOS

distribution of the estate assets fits within this class of
conduct.
7. Ninth Cause of Action: Unjust Enrichment vs.
Clainos
Finally, Plaintiffs’ Ninth Cause of Action does not arise
from protected activity. Plaintiffs allege that “Clainos
misappropriated and converted [assets] of the Estate for
purposes of reselling them for his own personal enrichment.”
Further, Plaintiffs allege that Clainos received $9.125 million
for his shares in BGP when SFX purchased the business in
1997, including a signing bonus. These activities do not
implicate statements or writings Clainos made to the probate
court or to the Plaintiffs.
Clainos does not specifically argue on appeal that this
cause of action arises from protected activity. Presumably he
would characterize it as protected, because it arises from his
activities as executor of the estate. However, as discussed
above, that fact alone does not make a cause of action
protected (especially this one, which alleges entirely
unprotected activity).
B. Reasonable Probability of Prevailing
When a defendant bringing an anti-SLAPP motion has
shown that a cause of action arises from protected activity,
the plaintiff then must demonstrate “a reasonable probability
of prevailing in its claims for those claims to survive
dismissal.” Mindys, 611 F.3d at 598 (internal quotation marks
omitted). “Reasonable probability in the anti-SLAPP statute
[means] . . . . only a minimum level of legal sufficiency and
triability.” Id. (internal quotation marks omitted). To

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 25 of 51

25

determine whether the plaintiff has made this showing, the
court “consider[s] the pleadings, and supporting and opposing
affidavits stating the facts upon which the liability or defense
is based.” Cal. Civ. Proc. Code § 425.16(b)(2). Accordingly,
Plaintiffs meet their burden if “the complaint is both legally
sufficient and supported by a sufficient prima facie showing
of facts to sustain a favorable judgment if the evidence
submitted by the plaintiff is credited.” Mindys, 611 F.3d at
599 (internal quotation marks omitted).
Here, the district court did not analyze Plaintiffs’
reasonable probability of prevailing by evaluating whether
they had provided sufficient prima facie evidence of the legal
sufficiency of any of their claims. Instead, the court held that
Plaintiffs could not prevail on any claim, in the face of three
substantive defenses: (i) the litigation privilege, (ii) the statute
of limitations, and (iii) res judicata. Thus, the issue on appeal
is whether the Plaintiffs have made a sufficient showing to
overcome those defenses as to each of its stricken causes of
action. See Flatley v. Mauro, 139 P.3d 2, 17 (Cal. 2006)
(noting that plaintiff opposing an anti-SLAPP motion must
overcome the substantive defense of the litigation privilege
“to demonstrate a probability of prevailing”).
1. Litigation Privilege
California’s litigation 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
ha[s] some connection or logical relation to the action.”
Mansell v. Otto, 133 Cal. Rptr. 2d 276, 280 (Ct. App. 2003).
The privilege “immunizes defendants from virtually any tort
liability (including claims for fraud), with the sole exception

Case: 11-16779

26

02/05/2014

ID: 8966212

DktEntry: 75

Page: 26 of 51

GRAHAM-SULT V. CLAINOS

of causes of action for malicious prosecution.” Olsen v.
Harbison, 119 Cal. Rptr. 3d 460, 467 (Ct. App. 2010). Thus,
“[t]he litigation privilege . . . present[s] a substantive defense
a plaintiff must overcome to demonstrate a probability of
prevailing.” Flatley, 139 P.3d at 17.
a. Clainos
The district court determined that the litigation privilege
defeated Plaintiffs’ claims against Clainos to the extent they
were “based on statements Clainos made in the probate
proceedings.”9 We agree, because Clainos’s statements were
(1) made in a judicial proceeding, (2) by the executor (a
participant authorized by law), (3) to achieve the distribution
of the estate’s assets, and (4) a central part of the estate’s
administration. See Kupiec, 1 Cal. Rptr. 2d at 374.
We reject Plaintiffs’ arguments that: (1) applying the
litigation privilege to Clainos’s conduct produces an
“irreconcilable conflict” with state laws, and (2) the litigation
privilege should not apply to fiduciaries.
First, Plaintiffs do not cite any cases holding that applying
the litigation privilege to Clainos’s statements in the probate
proceedings would create an impermissible conflict with state
law. Action Apartment Ass'n v. City of Santa Monica,
163 P.3d 89 (Cal. 2007), which they do cite, is
distinguishable. Action Apartment acknowledged numerous
state statutes that had abrogated the litigation privilege by

9

The litigation privilege also bars Plaintiffs’ claims to the extent they
are based on probate-related statements Clainos made to Plaintiffs.
Rodriguez v. Panayiotou, 314 F.3d 979, 988 (9th Cir. 2002) (“The
California courts have applied the privilege quite expansively.”).

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 27 of 51

27

authorizing sanctions for types of speech that would
otherwise fall within the privilege. Id. at 98–99. For example,
perjury statutes criminalize statements made under oath, Cal.
Penal Code § 118(a); many such statements likely fall within
the litigation privilege’s scope. In actions under such statutes,
courts have jettisoned the privilege, because applying it
would cause “irreconcilable conflicts between the privilege
and other co-equal state laws.” Action Apartment, 163 P.3d at
99.
Plaintiffs do not assert any claims under such statutes.
They cite the perjury statute, but the instant litigation is not a
criminal prosecution for perjury. They also cite probate
statutes, which impose a variety of duties on the executor.
However, unlike the statutes discussed in Action Apartment,
none of those probate statutes authorize criminal or civil
action against the executor based on the statements made in
court. See 163 P.3d at 98; see also Oei v. N. Star Capital
Acquisitions, LLC, 486 F. Supp. 2d 1089, 1100–01 (C.D. Cal.
2006) (holding that statute proscribing abusive debtcollection practices not subject to litigation privilege). Thus,
Plaintiffs have not shown that applying the privilege to
Clainos’s statements would result in an “irreconcilable
conflict” between the privilege and California state law.
Plaintiffs then argue that, because the litigation privilege
does not apply to malpractice claims asserted against
attorneys by their clients, it should not apply to Plaintiffs’
claims against Clainos. According to Plaintiffs, Clainos (like
an attorney representing his client) acted as a representative
of the beneficiaries in his capacity as executor, and therefore
he should be similarly deprived of the litigation privilege
here. Even if this premise is correct, California has not
eliminated the privilege for such claims. California has

Case: 11-16779

28

02/05/2014

ID: 8966212

DktEntry: 75

Page: 28 of 51

GRAHAM-SULT V. CLAINOS

exempted malpractice claims asserted by clients against both
their attorneys and expert witnesses. See Kolar, 52 Cal. Rptr.
3d at 718–19. But here, Plaintiffs do not assert a malpractice
claim and have not cited any cases that pierce the litigation
privilege for claims by beneficiaries against executors.
b. The Greene Defendants
The litigation privilege also bars Plaintiffs’ claims against
the Greene Defendants to the extent they are based on certain
types of conduct. In California, any statement made in a
“judicial proceeding” or “any other official proceeding
authorized by law” is privileged. Cal. Civ. Code § 47(b). This
privilege extends to statements made outside of judicial
proceedings. In Chang v. Lederman, 90 Cal. Rptr. 3d 758
(Ct. App. 2009), the court held that the privilege
encompassed a letter sent by a lawyer, who was representing
a trustee, to the occupant of a residence owned by the trust.
90 Cal. Rptr. 3d at 774–75. The letter was privileged, even
though probate proceedings had not yet been initiated. Id. at
763, 775. Similarly, in Steiner v. Eikerling, 226 Cal. Rptr.
694 (Ct. App. 1986), the court held that the privilege
encompassed both the filing of a forged will in probate court
and the act of preparing the will. 226 Cal. Rptr. at 696.
Given its broad scope, the litigation privilege protects the
Greene Defendants from liability based on (1) filings made in
the probate court; and (2) statements made to (and
information concealed from) both Plaintiffs and the probate
court related to the probating of the estate.

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 29 of 51

29

2. Statute of Limitations
No one disputes that the statute of limitations, which is
four years at most, bars all of Plaintiffs’ claims in the absence
of an applicable tolling doctrine. See generally Cal. Civ. Proc.
Code § 338 (three-year statute of limitations applicable to
variety of civil claims, including fraud); David Welch Co. v.
Erskine & Tulley, 250 Cal. Rptr. 339, 344 (Ct. App. 1988)
(holding four-year statute of limitations applies to breach of
fiduciary duty claims). Rather, the parties disagree over
whether the statute of limitations was tolled because Clainos
was Plaintiffs’ fiduciary. The district court held that: (1)
Plaintiffs had notice of the facts giving rise to their claims
based on the intellectual property and the scrapbooks; (2) the
notice triggered the statute of limitations; and (3) as a result,
the statute had run prior to suit. We disagree.
“In cases involving fraud . . . the statute commences to
run when the plaintiff discovers he has a cause of action or,
through the use of reasonable diligence, should have
discovered it.” Bennett v. Hibernia Bank, 305 P.2d 20, 32
(Cal. 1956). However, “the same degree of diligence is not
required where a fiduciary relationship exists between the
parties at the time the alleged acts of negligence occur.” Elec.
Equip. Express, Inc. v. Donald H. Seiler & Co., 176 Cal.
Rptr. 239, 252 (Ct. App. 1981). Regardless, Plaintiffs have “a
duty to investigate even where a fiduciary relationship exists
when [they have] notice of facts sufficient to arouse the
suspicions of a reasonable man.” Id. (internal quotation marks
omitted).
In this case, the parties do not dispute that, as the executor
of the Graham estate and trustee of Plaintiffs’ testamentary
trusts, Clainos owed Plaintiffs a fiduciary duty. See Estate of

Case: 11-16779

30

02/05/2014

ID: 8966212

DktEntry: 75

Page: 30 of 51

GRAHAM-SULT V. CLAINOS

Sanders, 710 P.2d 232, 237 (Cal. 1985) (executor owes
fiduciary duty to estate beneficiaries). Thus, even though
Plaintiffs had some duty to investigate the facts surrounding
the distribution of assets from their father’s estate, that duty
was limited, because they were “entitled to rely on the
statements and advice provided by the fiduciary.” Eisenbaum
v. W. Energy Res., Inc., 267 Cal. Rptr. 5, 11 (Ct. App. 1990)
(internal quotation marks omitted); see Hobbs v. Bateman
Eichler, Hill Richards, Inc., 210 Cal. Rptr. 387, 404 (Ct. App.
1985). Plaintiffs’ duty to investigate differs with respect to
their claims regarding the intellectual and personal property.
a. Intellectual Property
Defendants contend that the statute of limitations has run
on Plaintiffs’ claims, to the extent they are based on the
intellectual property, because Plaintiffs had notice of their
interest in the intellectual property. The district court agreed,
concluding that: (a) Plaintiffs had notice of the Assignment
in 1997, because their attorney had received a copy of an
agreement that referenced it; and (b) Plaintiffs had notice that
their father had copyrights registered in his name at an earlier
time. We reject these conclusions
First, Plaintiffs were not put on notice of the Assignment
in 1997. The district court relied on the fact that Richard
Greene sent Feldman—then David and Alex’s lawyer—a
copy of the portion of the sale agreement, which outlined the
transfer of intellectual property in the sale of BGP to SFX.10

10

Plaintiffs’ argument that they should not be charged with notice of the
Assignment in 1997, because whether Feldman actually received Schedule
3.18 is a disputed fact is irrelevant. Defendants do not claim that Feldman
received Schedule 3.18. The relevant, undisputed fact is that Feldman

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 31 of 51

31

That provision incorporated by reference a “Schedule 3.18,”
to which the Assignment was attached. However, neither
Schedule 3.18 nor the Assignment accompanied the copy of
Section 3.18 that Greene sent to Feldman. The district court
concluded that the incorporation of Schedule 3.18 by
reference should have put Feldman (and by extension, Alex
and David) on notice of the facts surrounding the transfer of
intellectual property Plaintiffs now claim is fraudulent. But
we take a different view.
Because Clainos was Plaintiffs’ fiduciary, Plaintiffs were
entitled to rely on the “statements and advice” he gave them.
Eisenbaum, 267 Cal. Rptr. at 11 (internal quotation marks
omitted). Thus, when he told them that the inventories and
accountings filed with the probate court were complete, they
were entitled to believe him. They did not have a duty to
investigate facts surrounding the sale of BGE to the key
employees or subsequent transactions, to the extent the facts
they knew were consistent with what Clainos had told them.
The reference to Schedule 3.18 in Section 3.18 of the SFX
sale agreement was not sufficient to arouse the suspicions of
a reasonable person, because BGP’s sale of some intellectual
property assets was entirely consistent with what Clainos had
told Plaintiffs to that point. Only actual knowledge of the
Assignment would have aroused Plaintiffs’ suspicions that
something was amiss, because the Assignment was dated well
after the actual sale to the key employees and implied that the
estate could have had a direct interest in some items of
intellectual property at one time. However, Greene sent

received a copy of Section 3.18 of the SFX Sale Agreement, which
incorporated Schedule 3.18 by reference. Because Greene did not send
Feldman a copy of Schedule 3.18, the issue is whether the language of
Section 3.18 put Plaintiffs on notice.

Case: 11-16779

32

02/05/2014

ID: 8966212

DktEntry: 75

Page: 32 of 51

GRAHAM-SULT V. CLAINOS

neither Schedule 3.18 nor the Assignment to Feldman with
Section 3.18. Therefore, we cannot say that Feldman’s receipt
of Section 3.18 made Plaintiffs “aware of facts which would
make a reasonably prudent person suspicious.” Hobbs,
210 Cal. Rptr. at 404 (emphasis omitted). Receiving Section
3.18 may have triggered Plaintiffs’ duty to read,11 but it did
not give rise to the duty to investigate for purposes of the
statute of limitations. See id. As a result, Plaintiffs are not
charged with knowledge of the Assignment until they
discovered it in 2009.
Second, we are not convinced that the copyright symbols
on Graham’s posters put Plaintiffs on notice that their father
“may have registered intellectual property in his name.”
Whether Plaintiffs saw the copyright symbols on their
father’s posters appears to be a disputed question of fact.12
11

The district court cited cases dealing with the duty to read in contract
law. Madden v. Kaiser Found. Hosps., 552 P.2d 1178, 1185 (Cal. 1976)
(“[O]ne who assents to a contract is bound by its provisions and cannot
complain of unfamiliarity with the language of the instrument.”).
However, the issue here is not whether a party is bound by a term in a
contract they signed without having read the term. The issue is whether
Feldman read anything that would have contradicted the representations
Clainos made to Plaintiffs regarding the estate assets, thereby putting him
on notice that Clainos may have been misrepresenting the facts.
12

Plaintiffs submitted the declarations of Jacques Fabert (David’s thentrustee) and Feldman, who stated that Clainos led them to believe that the
Archives (here, including the intellectual property) belonged to BGE.
Fabert further stated he had no reason to believe that Graham had
intellectual property registered in his name prior to 2009. Clainos
submitted a declaration contradicting Plaintiffs’ evidence, citing numerous
opportunities Plaintiffs had to view the copyright-symbol-bearing posters.
Given these opportunities, Clainos concludes that “[i]t is inconceivable
that Plaintiffs never saw posters bearing the ‘© Bill Graham’ notice” and
that Plaintiffs do not deny this in their declaration.

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 33 of 51

33

However, even if Plaintiffs saw the copyright symbols on
their father’s posters, the issue is whether those symbols
would have put Plaintiffs on notice of facts indicating that
Clainos had misrepresented that BGE owned the Archives.
Hobbs, 210 Cal. Rptr. at 404. The fact that the posters bore
the copyright symbol of Bill Graham is not inconsistent with
Clainos’s alleged representations to Plaintiffs. BGE, which
Bill Graham owned entirely at the time of his death, used the
posters in its concert promotion business. Under these
circumstances, a reasonable person, seeing the copyrighted
posters, would not necessarily conclude that Clainos’s
statement to the Plaintiffs that BGE owned the Archives was
a misrepresentation. Rather, a reasonable person could
logically conclude that, even if Bill Graham created the
posters initially, he had subsequently transferred them to
BGE, which now used them as part of its business operations.
Moreover, a copyright symbol itself does not indicate that the
work on which it appears is protected by a registered
copyright.13 Thus, even if Plaintiffs had viewed the copyright
symbols on some of their father’s posters, such viewing
would not have triggered their duty to investigate Clainos’s
representations regarding ownership of the estate’s assets.
b. Personal Property
The district court also erred by holding that the statute of
limitations barred Plaintiffs’ claims to the extent they are
based on the disputed personal property. The district court
concluded that Plaintiffs were on notice that “they should
investigate the nature of Bill Graham’s personal holdings,”
because Plaintiffs were “responsible for identifying the
13

Here, for example, David Graham’s mother inscribed the copyright
notices on the posters herself.

Case: 11-16779

34

02/05/2014

ID: 8966212

DktEntry: 75

Page: 34 of 51

GRAHAM-SULT V. CLAINOS

personal property of their father to which they were entitled.”
On appeal, Plaintiffs assert that Clainos controlled their
access to Graham’s personal property, that he did not give
them full access to all of his memorabilia, and that they never
had reason to know that they were not given full access to all
of his scrapbooks.
Whether Plaintiffs in fact had access to all of Graham’s
archives, and what Clainos and the Greene Defendants told
Plaintiffs about the archives they did have access to, appears
to be a factual dispute. Creating a mere dispute of fact is not
sufficient to prevail on a motion to strike. See Peregrine
Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP,
35 Cal. Rptr. 3d 31, 43 (Ct. App. 2005). Rather, “the evidence
submitted by the plaintiff [must be] credited” when ruling on
a motion to strike. Id. (internal quotation marks omitted).
Thus, the district court erred by holding that the statute of
limitations bars Plaintiffs’ claims to the extent they are based
on the disputed personal property.
c. Conclusion
In sum, Plaintiffs produced evidence that could overcome
the statute of limitations defense. We reverse and remand so
that the district court can evaluate whether Plaintiffs have
made a sufficient showing to establish a prima facie cause of
action to the extent their claims are not barred by other
defenses.
3. Res judicata
We also disagree with the district court’s conclusion that
res judicata barred Plaintiffs’ claims to the extent they were

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 35 of 51

35

based on the disputed scrapbooks. Plaintiffs made a sufficient
showing to overcome this substantive defense.
California’s Probate Code provides that the final order of
the probate court generally discharges the personal
representative from all claims by heirs “based upon any act or
omission directly authorized, approved, or confirmed in the
judgment or order.” Cal. Prob. Code § 7250(a). However, the
final order does not have this effect if the order is “obtained
by fraud or conspiracy or by misrepresentation contained in
the petition or account or in the judgment as to any material
fact.” Id. § 7250(c).
Here, Plaintiffs’ allegations of Clainos’s fraud were
sufficient to overcome Clainos’s substantive res judicata
defense. “Fraudulent concealment of assets by an
administrator . . . constitutes extrinsic fraud,” which will
preclude a probate court’s final order from having res judicata
effect. E. & J. Gallo Winery v. Gallo Cattle Co., 967 F.2d
1280, 1287 (9th Cir. 1992); see Lazzarone v. Bank of Am.,
226 Cal. Rptr. 855, 864 (Ct. App. 1986). Plaintiffs’
Complaint alleges that Clainos promised that they would
receive all the scrapbooks, and they thought they had received
them, but that Clainos controlled their access to the
scrapbooks. Thus, Plaintiffs allege that Clainos concealed the
existence of ten scrapbooks. In declarations, Plaintiffs further
state their belief that Clainos did not provide them with full
access to the archives, or a full inventory of them. Thus,
Plaintiffs have shown that their claims regarding the
scrapbooks are not entirely without merit by operation of res
judicata. See Mindys, 611 F.3d at 599.

Case: 11-16779

36

02/05/2014

ID: 8966212

DktEntry: 75

Page: 36 of 51

GRAHAM-SULT V. CLAINOS
4. Business Judgment Rule

Finally, we reject Clainos’s argument that the business
judgment rule protects him from liability for all of his actions
as executor of the Graham estate. In the probate context, the
business judgment rule provides that “an executor or
administrator is not liable for any decreases in the value of
estate assets on account of his acts or omissions done in good
faith and without negligence.” Estate of Beach, 542 P.2d 994,
1004 (Cal. 1975). Here, the same allegations Plaintiffs can
rely on to overcome the statute of limitations and res judicata
are also sufficient to show that Clainos lacked good faith, at
least for purposes of overcoming the business judgment rule
defense here.
C. Conclusion14
Because we disagree with the district court’s analysis of
the substantive defenses, in this section we analyze the
implications of that conclusion on each of Plaintiffs’ claims
against Clainos and the Greene Defendants.
1. First Cause of Action: Breach of Fiduciary
Duty vs. Clainos
We reverse the district court’s decision to strike
Plaintiffs’ First Cause of Action. While we agree with the

14

Plaintiffs argue, for the first time on reply, that the district court erred
by granting Clainos’s and the Greene Defendants’ motions to strike,
without giving them an opportunity to amend their complaint. The
argument is waived. See Nisqually Indian Tribe v. Gregoire, 623 F.3d
923, 928 n.6 (9th Cir. 2010) (noting argument not presented in opening
brief on appeal is waived).

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 37 of 51

37

district court that the litigation privilege bars this claim based
on statements Plaintiffs made to the probate court or to the
Plaintiffs themselves, Plaintiffs also allege that Clainos
breached his fiduciary duty by engaging in activities that the
litigation privilege does not protect.15 Thus, we remand for
the district court to determine whether Plaintiffs can make an
adequate showing to survive a motion to strike on the
remainder of the claim.
2. Second Cause of Action: Aiding & Abetting
Breach of Fiduciary Duty vs. The Greene
Defendants
We affirm the district court’s decision to strike Plaintiffs’
Second Cause of Action. The district court held that the
general three-year statute of limitations, California Civil
Procedure Code § 338(d), barred Plaintiffs’ claims against the
Greene Defendants. As discussed above, that limitations
period was tolled due to Clainos’s fiduciary relationship with
Plaintiffs. However, Greene relies on a different statute of
limitations, which is not subject to the fiduciary-tolling rule.16
15
These include allegations that Clainos breached his fiduciary duty by
“engaging in repeated acts of self dealing,” “engineering a sale of BGE to
himself and other key employees while secretly transferring the
Copyrights and ‘The Fillmore’ trademark to BGE,” and “failing to use due
care in characterizing, valuing and distributing the assets of the Bill
Graham Estate.”
16

The Greene Defendants did not raise this statute of limitations defense
in their motions or replies in the district court. However, Plaintiffs have
not argued that the Greene Defendants waived this argument, and have
therefore waived the opportunity to object on that ground. See Norwood
v. Vance, 591 F.3d 1062, 1068 (9th Cir. 2009) (“It is well-established that
a party can waive waiver implicitly by failing to assert it.” (internal
quotation marks omitted)).

Case: 11-16779

38

02/05/2014

ID: 8966212

DktEntry: 75

Page: 38 of 51

GRAHAM-SULT V. CLAINOS

California Civil Procedure Code § 340.6(a) bars “[a]n action
against an attorney for a wrongful act or omission, other than
for actual fraud, arising in the performance of professional
services . . . four years from the date of the wrongful act or
omission.” Plaintiffs’ whole claim that the Greene Defendants
aided and abetted Clainos’s breach of fiduciary duty arises
from the Greene Defendants’ performance of professional
services representing Clainos in his role as executor. The
“actual fraud” exception to § 340.6(a) does not apply to this
claim, because Plaintiffs’ Second Cause of Action only
alleges that the Greene Defendants aided and abetted a breach
of fiduciary duty—not that they committed actual fraud.
Accordingly, Plaintiffs do not have a reasonable probability
of prevailing against the Greene Defendants on their Second
Cause of Action.
3. Third Cause of Action: Breach of Trust vs.
Clainos
We affirm the district court’s decision to strike Plaintiffs’
Third Cause of Action. This claim arises from Clainos’s
characterization, valuation, and proposed distribution of
assets, which were all related to filings made with the probate
court. Accordingly, it is barred by the litigation privilege.
Moreover, “[t]he principal purpose of [the litigation
privilege] is to afford litigants and witnesses . . . the utmost
freedom of access to the courts without fear of being harassed
subsequently by derivative tort actions.” Rodriguez, 314 F.3d
at 988 (alterations in original) (internal quotation marks
omitted). Applying the privilege to Clainos’s activities here
is consistent with this purpose, because it ensures he could
submit to the court a distribution plan that best effectuates the
wishes of the decedent, free from the risk of collateral

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 39 of 51

39

litigation by beneficiaries in the potentially contentious
context of probate.
4. Fifth Cause of Action (Deceit—Intentional
Misrepresentation); Sixth Cause of Action
(Deceit—Negligent Misrepresentation) vs.
Clainos and the Greene Defendants; Seventh
Cause of Action: Fraud & Concealment vs.
Clainos & the Greene Defendants; Eighth
Cause of Action: Promissory Estoppel vs.
Clainos
We affirm the district court’s decision to strike Plaintiffs’
Fifth, Sixth, Seventh, and Eighth causes of action. These
claims are based on alleged “communications with some
relation to judicial proceedings,” and therefore fall within the
litigation privilege.17 Rubin v. Green, 847 P.2d 1044, 1047
(Cal. 1993) (emphasis added) (internal quotation marks
omitted). As such, these communications are “absolutely
immune from tort liability,” id., and Plaintiffs cannot show
that they have a probability of succeeding on these claims.18
II. Motion to Dismiss
Plaintiffs also challenge the district court’s dismissal with
prejudice of their claims against the BGA Defendants for (1)

17

Even causes of action based on alleged concealment of information,
rather than affirmative communications, are protected by the litigation
privilege. See Kupiec, 1 Cal. Rptr. 2d at 374.
18

We need not address the second prong of the anti-SLAPP analysis for
Plaintiffs’ Fourth or Ninth causes of action, because these causes of action
do not arise from protected activity. Hylton, 99 Cal. Rptr. 3d at 809.

Case: 11-16779

02/05/2014

40

ID: 8966212

DktEntry: 75

Page: 40 of 51

GRAHAM-SULT V. CLAINOS

conversion, (2) promissory estoppel, (3) unjust enrichment,
(4) copyright infringement, and (5) declaratory relief. We
affirm in part and reverse in part.19
A. Standard of Review
We review the district court’s grant of a motion to dismiss
de novo. Caldwell v. Enstrom Helicopter Corp., 230 F.3d
1155, 1156 (9th Cir. 2000). Dismissal without leave to amend
is reviewed for abuse of discretion. See OSU Student Alliance
v. Ray, 699 F.3d 1053, 1079 (9th Cir. 2012).
B. Analysis
“To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to state a claim to
relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (internal quotation marks omitted).
“Although for the purposes of a motion to dismiss we must
take all of the factual allegations in the complaint as true, we
are not bound to accept as true a legal conclusion couched as
a factual allegation.” Id. (quoting Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555 (2007)) (internal quotation marks omitted).
Even when dismissal of a complaint might be warranted,
Federal Rule of Civil Procedure 15(a) authorizes parties to
amend their complaint “with . . . the court’s leave.” Fed. R.
Civ. P. 15(a)(2).
19

We reject the BGA Defendants’ argument that the statute of
limitations bars all of the Plaintiffs’ claims. Plaintiffs alleged that Clainos
was their fiduciary and that they relied on his representations regarding the
content, value, and distribution of the estate assets. The existence of this
fiduciary relationship relieved Plaintiffs of the duty to investigate the facts
(including those that gave rise to their claims against the BGA
Defendants), tolling the statute of limitations.

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 41 of 51

41

1. Fourth Cause of Action: Conversion
We reverse the district court’s dismissal of Plaintiffs’
claim that the BGA Defendants converted the copyrights,
trademark, and scrapbooks in or around 2002.20 To establish
their claim for conversion at trial, Plaintiffs would be
required to prove, first of all, ownership or a right to possess
the converted property. See Fremont Indem. Co. v. Fremont
Gen. Corp., 55 Cal. Rptr. 3d 621, 638 (Ct. App. 2007) (“The
basic elements of [conversion] are (1) the plaintiff’s
ownership or right to possession of personal property; (2) the
defendant’s disposition of the property in a manner that is
inconsistent with the plaintiff’s property rights; and (3)
resulting damages.”). Here, the district court concluded that
Plaintiffs’ allegations did not show that they were entitled to
ownership or possession of either asset as of the date the
BGA Defendants took possession of the property, and that
Plaintiffs failed to plead facts showing that the BGA
Defendants engaged in wrongdoing.
We disagree. Plaintiffs alleged the following facts
surrounding the initial transfer of the intellectual property
from the Graham estate to BGE: (1) the posters were
Graham’s personal project, and he only permitted his
businesses to use the designs; (2) Graham had registered
copyrights in his own name, confirming his intent that they be
his personal property; (3) as Graham’s personal property,
these items became part of his estate; and (4) as beneficiaries
of the Graham estate, Plaintiffs were entitled to a pro rata

20

Plaintiffs also allege that the BGA Defendants took possession of the
converted “personal property.” However, the only specific personal
property Plaintiffs mention is the scrapbooks; Plaintiffs do not make
specific allegations about the disputed poster series.

Case: 11-16779

02/05/2014

42

ID: 8966212

DktEntry: 75

Page: 42 of 51

GRAHAM-SULT V. CLAINOS

share of the intellectual property and personal property as of
the date of the probate court’s orders of distribution. Taking
these allegations as true, Iqbal, 556 U.S. at 678, it is plausible
that Plaintiffs were entitled to a share of the disputed
intellectual and personal property as of 2002 when the BGA
Defendants took possession of it.
The district court also held that, on the second element of
their conversion claim, Plaintiffs failed to allege facts
suggesting that the BGA Defendants engaged in wrongdoing.
We also disagree with this conclusion. Under California law,
a plaintiff must only allege that the defendant assumed
“control or ownership over the property” or “applied the
property to his own use” to plead this element of a conversion
claim. Oakdale Vill. Grp. v. Fong, 50 Cal. Rptr. 2d 810, 812
(Ct. App. 1996) (noting that “[c]onversion is . . . a strict
liability tort”).21 Plaintiffs’ allegation that the BGA
Defendants “took possession of a portion of [the] converted
intellectual and personal property” in 2002 satisfies this
requirement. Accordingly, the district court erred by
dismissing this claim.22
21
The BGA Defendants could assert a defense as an innocent purchaser.
See CRS Recovery, Inc. v. Laxton, 600 F.3d 1138, 1145 (9th Cir. 2010).
However, they did not raise it in their motion to dismiss or on appeal.
Additionally, Plaintiffs alleged in their complaint that Sagan knew of the
prior fraudulent transfers of the Copyrights and the scrapbooks. Taken as
true, Iqbal, 556 U.S. at 678, that allegation defeats the BGA Defendants’
innocent purchaser defense. See Laxton, 600 F.3d at 1145 (“As a general
rule, an innocent purchaser for value and without actual . . . notice that his
or her vendor has secured the goods by a fraudulent purchase is not liable
for conversion.”) (emphasis added) (internal quotation marks omitted).
22

The district court did not analyze the damages element of the
conversion claim, and the parties do not dispute it on appeal. Nevertheless,
Plaintiffs have pleaded sufficient facts to support that element.

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 43 of 51

43

2. Eighth Cause of Action: Promissory Estoppel
We affirm the district court’s dismissal of Plaintiffs’
Eighth Cause of Action against the BGA Defendants. Four
elements comprise a promissory estoppel claim: (1) a
promise, (2) reasonable and (3) foreseeable reliance by the
promisee, and (4) injury to the promisee. U.S. Ecology, Inc.
v. State, 28 Cal. Rptr. 3d 894, 905 (Ct. App. 2005). Plaintiffs
did not allege that the BGA Defendants had made any
promise to them.23 Because Plaintiffs have not argued that
they could provide evidence of such a promise, the district
court had the discretion to dismiss this claim without leave to
amend.
3. Tenth Cause of Action: Unjust Enrichment
We also affirm the district court’s dismissal of Plaintiffs’
Tenth Cause of Action for “unjust enrichment” against the
BGA Defendants. Defendants argue that “unjust enrichment”
is not a cause of action in California, and Plaintiffs do not

23

Plaintiffs do allege that Clainos (assisted by the Greene firm)
promised to deliver all of Graham’s scrapbooks to them. Thus, by
asserting a promissory estoppel claim against the BGA Defendants,
Plaintiffs seek to enforce a promise made to them (the promisees) by
Clainos (the promisor) against the BGA Defendants (a third party to the
promise). Currently this is not a cognizable claim under California law.
The authorities Plaintiffs cite are unpersuasive. Burgess v. California
Mutual Building & Loan Ass’n, 290 P. 1029 (Cal. 1930), involved the
enforcement of a promise against a promisor by a third-party to the
promise, and is therefore distinguishable from this case. 290 P. at
1031–32. Likewise, we will not read the general principle “where one of
two innocent persons must suffer by the act of a third, he by whose
negligence it happened, must be the sufferer,” Powers v. Pac. Diesel
Engine Co., 274 P. 512, 514 (Cal. 1929) (quoting Cal. Civ. Code § 3543)
(internal quotation marks omitted), to give rise to a new cause of action.

Case: 11-16779

44

02/05/2014

ID: 8966212

DktEntry: 75

Page: 44 of 51

GRAHAM-SULT V. CLAINOS

dispute this. See, e.g., Durell v. Sharp Healthcare, 108 Cal.
Rptr. 3d 682, 699 (Ct. App. 2010) (“There is no cause of
action in California for unjust enrichment.”) (internal
quotation marks omitted). Plaintiffs’ Tenth Cause of Action
therefore fails to state a claim, and the district court properly
dismissed it without leave to amend.24 See UMG Recordings,
Inc. v. Shelter Capital Partners LLC, 718 F.3d 1006, 1014
(9th Cir. 2013).
4. Eleventh Cause
Infringement

of

Action:

Copyright

We reverse the district court’s dismissal of Plaintiffs’
copyright infringement claim. The district court dismissed
this claim, because it concluded that the Assignment
effectively transferred ownership of the Copyrights from the
Graham estate to BGE and then to the BGA Defendants
through the transactions that followed. However, as discussed
above, see supra Part II.B.1, Plaintiffs pleaded enough facts
to show that the Assignment was not effective, and that they
therefore had a legitimate claim to the Copyrights when the
BGA Defendants obtained them. Accordingly, we reverse the
district court’s dismissal of this claim. Because we reverse
the district court’s dismissal of this claim, we also vacate the
fee award to the BGA Defendants.

24

Even were “unjust enrichment” a viable cause of action, the BGA
Defendants paid considerable value for the intellectual property. Plaintiffs
therefore would not be able to adequately plead such a claim.

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS
5. Twelfth Cause
Judgment

of

Action:

Page: 45 of 51

45
Declaratory

Finally, we reverse the district court’s dismissal of
Plaintiffs’ Twelfth Cause of Action for a declaratory
judgment against the BGA Defendants. The district court
incorrectly concluded that Plaintiffs “ha[d] not alleged facts
showing that there is an actual case or controversy.” See Am.
States Ins. Co. v. Kearns, 15 F.3d 142, 143 (9th Cir. 1994).
As discussed above, the issue of the validity of the
Assignment and who has a current right to own the
intellectual property is a disputed issue of fact and law.
Accordingly, this case presents an actual controversy, and the
district court erred by dismissing it for lack of that
prerequisite.25
6. Conclusion
We affirm in part and reverse in part the district court’s
grant of the BGA Defendants’ motion to dismiss. Because we
reverse the dismissal of the copyright infringement claim, we
address below the district court’s award of attorney’s fees
under 17 U.S.C. § 505.

25

We acknowledge that, typically, the district court has the discretion to
dismiss or entertain a declaratory judgment action. But, here, the district
court did not dismiss Plaintiffs’ declaratory judgment claim as an exercise
of its discretion. Rather, it concluded, as a matter of law, that this case
lacked the pre-requisite of a “case or controversy.” However, on remand,
the district court may exercise its discretion to determine whether to
entertain the declaratory judgment action.

Case: 11-16779

46
III.

02/05/2014

ID: 8966212

DktEntry: 75

Page: 46 of 51

GRAHAM-SULT V. CLAINOS
Attorney’s Fees

Under the anti-SLAPP statute’s fee-shifting provision, the
district court awarded Clainos and the Greene Defendants
attorney’s fees for prevailing on the motion to strike.
Likewise, the district court awarded fees to the BGA
Defendants under the Copyright Act’s fee-shifting provision.
Plaintiffs appeal these attorney’s fee awards.
A. Anti-SLAPP
After prevailing on the anti-SLAPP motion, Clainos
requested $133,431.50, and the Greene Defendants requested
$260,506.50. The district court awarded Clainos $126,431.50,
plus fees for the reply, and awarded the Greene Defendants
$240,506.00 plus “reasonable fees on fees.”
Because we reverse the district court’s grant of Clainos’s
motion to strike, we must also vacate his award of attorney’s
fees. See Paul for Council v. Hanyecz, 102 Cal. Rptr. 2d 864,
872 (Ct. App. 2001) (“Because we have determined
defendants should not have prevailed on their motion to
strike, it follows that they are not entitled to the fees and costs
the trial court awarded them.”), disapproved of on other
grounds by Equilon Enters. v. Consumer Cause, Inc., 52 P.3d
685 (Cal. 2002). However, because we affirm the grant of the
motion to strike as to the Greene Defendants, we address
Plaintiffs’ specific challenges to the fee award.
1. Standard of Review
State law governs attorney’s fees awards based on state
fee-shifting laws, like California’s anti-SLAPP statute. See
Northon v. Rule, 637 F.3d 937, 938 (9th Cir. 2011). Under

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 47 of 51

47

California law, therefore, we review the district court’s award
of attorney’s fees under the anti-SLAPP statute for abuse of
discretion. Nichols v. City of Taft, 66 Cal. Rptr. 3d 680, 684
(Ct. App. 2007). “A trial court’s exercise of discretion
concerning an award of attorney fees will not be reversed
unless there is a manifest abuse of discretion.” Id. “[R]eversal
is appropriate where [1] there is no reasonable basis for the
ruling or [2] the trial court has applied the wrong test or
standard in reaching its result.” Id. at 685 (internal quotation
marks omitted).
2. Analysis
Plaintiffs first argue that the fees awarded to the Greene
Defendants are unreasonable, because the award is much
greater than the fees that courts have awarded to successful
anti-SLAPP defendants in some other cases. That discrepancy
does not make the district court’s award unreasonable or a
product of applying the wrong standard. See Premier Med.
Mgmt. Sys., Inc. v. Cal. Ins. Guarantee Ass’n, 77 Cal. Rptr.
3d 695, 703 (Ct. App. 2008) (rejecting 50 hour figure as an
upper limit for the hours allowed an anti-SLAPP motion).
Defining what is reasonable by reference to other cases would
violate the principle that “each fee application under [the antiSLAPP statute] must be assessed on its own merits . . . taking
into account what is reasonable under the circumstances.” Id.
Such an approach would also “conflict with application of the
deferential abuse of discretion standard [we must] apply on
appeal.” Id. Thus, the solitary fact that the fee awarded in this

Case: 11-16779

48

02/05/2014

ID: 8966212

DktEntry: 75

Page: 48 of 51

GRAHAM-SULT V. CLAINOS

case is higher than that awarded in other cases does not make
it an abuse of discretion.26
Next, Plaintiffs argue that the district court awarded an
unreasonable fee, because it granted fees for hours that the
Greene Defendants’ lawyers expended that were not
exclusively in pursuit of the anti-SLAPP motion. These hours
included time lawyers spent on the motion to dismiss, reply,
other filings, document review, and preparing initial
disclosures. Citing Christian Research v. Alnor, 81 Cal. Rptr.
3d 866 (Ct. App. 2008), Plaintiffs argue that, by awarding
fees for these hours, the district court failed to apply the
general rule that “the anti-SLAPP statute’s fee provision
applies only to the motion to strike, and not to the entire
action.” 81 Cal. Rptr. 3d at 874 (internal quotation marks
omitted). The district court did not abuse its discretion by
awarding fees for these activities.
At the outset, the entire action against the Greene
Defendants was subject to the motion to strike; no causes of
action against them survived it. Thus, the rule Plaintiffs cite
from Christian Research does not control the outcome here.
Further, the anti-SLAPP statute is “intended to
compensate a defendant for the expense of responding to a
SLAPP suit. To this end, the provision is broadly construed
so as to effectuate the legislative purpose of reimbursing the
26

Plaintiffs cite Christian Research Institute v. Alnor, 81 Cal. Rptr. 3d
866 (Ct. App. 2008) numerous times. This case does not control our
analysis. In Christian Research, the court addressed the question of
whether the district court abused its discretion by making certain
reductions to the fee award. Id. at 873. This appeal raises a different
question: whether the district court abused its discretion by not making
reductions.

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 49 of 51

49

prevailing defendant for expenses incurred in extracting
herself from a baseless lawsuit.” Wanland v. Law Offices of
Mastagni, Holstedt & Chiurazzi, 45 Cal. Rptr. 3d 633, 637
(Ct. App. 2006) (citation omitted) (internal quotation marks
omitted). Here, the Greene Defendants incurred the expenses
Plaintiffs dispute in responding to a lawsuit the district court
found to be baseless. Accordingly, the district court’s
decision to award fees other than those exclusively incurred
in responding to the anti-SLAPP motion was not an abuse of
discretion.
Plaintiffs base their remaining arguments on speculation
and inferences. Thus, they question the credibility of the
declaration the Greene Defendants filed, which states that
only $15,000 was spent on work unrelated to the anti-SLAPP
motion. Plaintiffs state that this number “simply cannot be
true,” because the BGA Defendants, who filed only a motion
to dismiss, claimed $134,243.25 for that motion alone.
Plaintiffs then hypothesize about how many hours the Greene
Defendants’ lawyers actually spent on work not exclusively
related to the anti-SLAPP motion.
Plaintiffs also rely on speculation and inferences to
contest the fee award to the extent it is based on the
participation of the Howard Rice law firm (now Arnold &
Porter). Plaintiffs argue that it was unnecessary for Greene to
retain Howard Rice, because that firm did not provide any
benefit and caused duplicative work. However, the district
court directly considered this issue, and concluded that
Howard Rice’s participation was reasonable. The court also
determined that the Greene Defendants gave a reasonable
justification for hiring two firms. Namely, Greene had a longstanding relationship with Jerome Falk, the Howard Rice
lawyer initially hired to work on the matter. Falk was also

Case: 11-16779

50

02/05/2014

ID: 8966212

DktEntry: 75

Page: 50 of 51

GRAHAM-SULT V. CLAINOS

“familiar with many aspects of the estate probate and
administration,” because he had previously defended Clainos
in litigation related to the administration of the Graham
estate. Additionally, Ronald Mallen, the non-Howard Rice
attorney retained by Greene’s insurer, “welcomed the skills
that [Falk] and his firm would bring to the defense of [the
instant litigation].”
We reject Plaintiffs’ arguments. Even where they present
a possible alternative way of viewing the evidence of the
hours the attorneys claimed, they do not make the district
court’s view unreasonable. Accordingly, they do not show
that the district court abused its discretion.
B. Motion to Dismiss
After prevailing on their motion to dismiss, the BGA
Defendants requested $177,366.75 in attorney’s fees,
including $43,123.50 for work on the fee petition, under
17 U.S.C. § 505. The BGA Defendants also requested
$3,819.95 in costs. The district court awarded $134,243.25 in
fees and all requested costs.
On appeal, we need not address Plaintiffs’ specific
challenges to the fee award. Because we reverse the dismissal
of the copyright infringement claim, we also vacate the
district court’s award of attorney’s fees under 17 U.S.C.
§ 505.
CONCLUSION
We affirm in part, and reverse in part. We AFFIRM the
district court’s grant of the Greene Defendants’ special
motion to strike and also AFFIRM their fee award. However,

Case: 11-16779

02/05/2014

ID: 8966212

DktEntry: 75

GRAHAM-SULT V. CLAINOS

Page: 51 of 51

51

we AFFIRM in part, and REVERSE in part the district
court’s grant of Clainos’s motion to strike. Accordingly, we
VACATE Clainos’s fee award. Further, we AFFIRM in
part, and REVERSE in part the district court’s grant of the
BGA Defendants’ motion to dismiss. We also therefore
VACATE the BGA Defendants’ fee award. The parties shall
bear their own costs on appeal.
AFFIRMED in part, REVERSED in part, and
REMANDED.