American Products Co. v. Law Offices of Geller, Stewart & Foley

37 Cal. Rptr. 3d 93, 134 Cal. App. 4th 1332, 2005 Cal. Daily Op. Serv. 10652, 2005 Daily Journal DAR 14548, 2005 Cal. App. LEXIS 1921
CourtCalifornia Court of Appeal
DecidedDecember 16, 2005
DocketE037230
StatusPublished
Cited by6 cases

This text of 37 Cal. Rptr. 3d 93 (American Products Co. v. Law Offices of Geller, Stewart & Foley) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Products Co. v. Law Offices of Geller, Stewart & Foley, 37 Cal. Rptr. 3d 93, 134 Cal. App. 4th 1332, 2005 Cal. Daily Op. Serv. 10652, 2005 Daily Journal DAR 14548, 2005 Cal. App. LEXIS 1921 (Cal. Ct. App. 2005).

Opinion

Opinion

HOLLENHORST, J.

Plaintiff American Products Co, Inc. (APC), appeals after summary judgment was granted in favor of defendants Law Offices of Geller, Stewart & Foley, and Michael S. Geller (collectively referred to as the Geller defendants) in APC’s action for intentional interference with prospective economic advantage/contractual relationship and violating Business and *1336 Professions Code section 17200. The principal issue on appeal is the extent of the litigation privilege in Civil Code section 47, subdivision (b) (section 47(b)) as it applies to the Geller defendants’ demand letters to some of APC’s customers prior to the filing or initiation of a lawsuit.

PROCEDURAL BACKGROUND AND FACTS

APC is a manufacturer of after-market automotive accessories. Its accessories include accessory lighting kits for vehicles, such as specialty parking light kits and specialty exhaust tip lights. APC’s products are sold in automotive parts and accessory stores, such as The Pep Boys-Manny, Moe & Jack of California (Pep Boys) and CSK Auto, Inc., doing business as Kragen Auto Parts (Kragen).

On September 5, 2002, the Geller defendants wrote to Pep Boys and identified their client as Michael D. Freeman (Freeman). The letter stated that Freeman recently purchased a blue lights accessory kit from a Pep Boys store, that such lights were illegal, and that Freeman only found out that they were illegal upon arriving home with the kit. The letter alleged that Pep Boys’s sale of this product constitutes unfair business practices within the meaning of Business and Professions Code section 17200 and violates the Consumer Legal Remedies Act (Civ. Code, § 1750 et seq.). The letter demanded that Pep Boys stop selling the lights, post notices in all their stores about the illegal products with an offer for full refund, pay $2,500 to Freeman, and pay $10,000 to the Geller defendants.

On January 6, 2003, the Geller defendants wrote to Kragen on behalf of Freeman. This time Freeman had purchased an Exhaust Tip LED. The letter was substantially similar to the letter sent to Pep Boys in September 2002. Again, the Geller defendants claimed that an illegal product had been sold to Freeman and that Freeman had only found out that the product was illegal 1 upon arriving home. Again, the Geller defendants asserted violations of Business and Professions Code section 17200 and Civil Code section 1750 et seq. The same demands made of Pep Boys were made to Kragen.

On January 15, 2003, Freeman filed a complaint against Pep Boys alleging violations of Business and Professions Code section 17200. He was repre *1337 sented by the Geller defendants. On April 2, an almost identical action was filed by Freeman against Kragen. Again, he was represented by the Geller defendants. Because of the lawsuits, Pep Boys and Kragen informed APC that they would stop selling the accessories which could not be used legally on California roads and would be returning the ones they had in stock.

Upon receiving the news from Pep Boys and Kragen, APC initiated this action against the Geller defendants. The first amended complaint alleges a violation of Business and Professions Code section 17200, interference with a contractual relationship, and intentional interference with prospective economic advantage. APC claimed that the Geller defendants have sent other California businesses demand letters wherein they alleged that the businesses had violated our state’s unfair competition and consumer protection statutes without a good faith basis. APC further claimed that the Geller defendants have initiated lawsuits, based on these demand letters, against the same businesses without a good faith basis. On August 11, 2003, the Geller defendants filed their general denial and asserted a number of affirmative defenses.

On January 27, 2004, the Geller defendants moved for summary judgment on the grounds that their letters to Pep Boys and Kragen were absolutely protected by the litigation privilege of section 47(b). Although APC filed its opposition and the Geller defendants filed their reply, hearing on the motion was continued several times to allow APC to conduct discovery.

After conducting further discovery, APC requested the trial court to take judicial notice of 24 matters in which Freeman or Mr. Geller were named plaintiffs. See appendix A to this opinion. Freeman acknowledged that he has been a plaintiff in some 15 to 20 other lawsuits. He estimated that he has been a plaintiff in roughly 25 lawsuits over the last three years in which the Geller defendants have represented him.

Other evidence offered by APC shows that Freeman was an attorney who was found guilty of seven counts of bankruptcy fraud in 1997. He resigned from the State Bar on April 13, 1997, with charges pending. In 2002, he was employed by the Geller defendants as a paralegal. Regarding this case, Freeman stated that at the end of August 2002, he purchased some blue lights from Pep Boys in Moreno Valley because he “had previously purchased . . . similar items from another auto parts store. . . . [f] With respect to one of . . . *1338 the two lawsuits, [he] purchased a lighting product that [he] suspected might be unlawful to install on a car, but [he] wanted to confirm. And in the next [lawsuit he] purchased it to see if that product was also unlawful to install on the car. So . . . with respect to both of them [he] had a suspicion that they were not lawful to be installed. But [he] didn’t learn . . . that it was indeed until [he] later consulted with Mr. Geller.” Richard A. Stewart, a named partner in the Geller defendants’ law firm is a Riverside County Sheriff reserve deputy who has issued citations to motorists for using the same automotive lighting accessory kits that are the subject of Freeman’s actions against Pep Boys and Kragen.

The demand letters sent prior to initiation of the actions against Pep Boys and Kragen claimed that the products “are not allowed on any private passenger car ever!” If Freeman had put the products on his car, then he “could have been severely fined and stopped by the police or highway patrol for no other reason than he installed [the products], which [Pep Boys and Kragen] sell in [their] California stores.” Additionally, the letters claimed that “even if there were a warning, we still believe that it would be illegal, there was no warning of any kind associated with these [products].” The letters stated the Geller defendants’ belief that “the sale of these parts is illegal.” The letters informed Pep Boys and Kragen that “[Remedies under the Consumers Legal Remedies Act include, but are not limited to, injunctive relief, restitution, actual damages, punitive damages and full attorneys fees. [The Geller defendants’] office currently charges $325 per hour for consumer law. [][] The Consumers Legal Remedies Act requires that [the Geller defendants] give [Pep Boys and Kragen] 30 days notice prior to filing suit. This letter constitutes [the Geller defendants’] 30 days notice. If [their] demands are not met within the next 30 days, a class action suit may be filed without further notice to you. [The Geller defendants] will seek disgorgement for all sales made of such illegal [products] as well as damages for anyone that actually purchased them.”

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Roscoe BK Restaurant v. Murphy CA2/8
California Court of Appeal, 2016
Ramos v. U.S. Bank National Assn. CA1/4
California Court of Appeal, 2013
Nilsen v. Neilson (In Re Cedar Funding, Inc.)
419 B.R. 807 (Ninth Circuit, 2009)
People Ex Rel. Gallegos v. Pacific Lumber Co.
70 Cal. Rptr. 3d 501 (California Court of Appeal, 2008)
Dealertrack, Inc. v. Huber
460 F. Supp. 2d 1177 (C.D. California, 2006)

Cite This Page — Counsel Stack

Bluebook (online)
37 Cal. Rptr. 3d 93, 134 Cal. App. 4th 1332, 2005 Cal. Daily Op. Serv. 10652, 2005 Daily Journal DAR 14548, 2005 Cal. App. LEXIS 1921, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-products-co-v-law-offices-of-geller-stewart-foley-calctapp-2005.