Unreported / Non-Citable
Background
Jinwan Shen and his company Da Bai Niu sued Lingxiao Li and several corporations, including IY International, Inc. and Horizon Holding Group, in February 2024, alleging Li fraudulently induced them to invest millions of dollars. At that time the Franchise Tax Board had suspended Horizon's corporate status; the FTB suspended IY on May 1, 2024. In September 2024, at Shen's direction, accountant Spring Chen and her firm Classic CPA filed statements of information with the Secretary of State identifying Shen as sole officer and director of both entities, then filed FTB revival applications and tax returns for the two companies. The same day the FTB revived the companies, Li filed his own SOI documents identifying himself, not Shen, as sole officer and director.
Li, IY, and Horizon sued Chen on February 14, 2025 for accounting malpractice, negligence, breach of fiduciary duty, and aiding and abetting fraud, alleging Chen lacked authority to file the SOI documents and tax returns on the entities' behalf and that the filings contained false information. Chen filed a special motion to strike under Code of Civil Procedure section 425.16 seeking to strike the entire complaint, arguing the filings were protected activity connected to the Shen-Li lawsuit. The trial court denied the motion, finding the claims did not arise from protected activity.
The Court’s Holding
The Court of Appeal affirmed. The anti-SLAPP statute does not protect Chen from malpractice-related claims asserted by the entities on whose behalf she acted. When a defendant moves to strike an entire complaint without identifying specific claims arising from protected activity, the defendant fails the first-step burden if the complaint presents at least one claim that does not arise from protected conduct. Because IY and Horizon's malpractice-related claims do not arise from protected activity, the trial court did not err in denying the motion to strike the entire complaint.
The court relied on PrediWave Corp. v. Simpson Thacher & Bartlett LLP, Robles v. Chalilpoyil, and Loanvest I, LLC v. Utrecht, which hold that section 425.16 does not shield professionals from malpractice claims by the parties on whose behalf they acted. Although Chen claimed her client was Shen, the filings were made on behalf of IY and Horizon, and the statute does not apply to those entities' suit over forms filed in their name and on their behalf. The statute should not be used to insulate statements from recourse by the very party on whose behalf the statement was made.
The court rejected Chen's argument that the rule did not apply because she was hired by Shen and never retained by Li, IY, or Horizon. It is undisputed the filings purported to be on behalf of IY and Horizon; regardless of who hired Chen and for what purpose, the entities sued her for official communications made on their behalf. The court also rejected the argument that the plaintiffs were circumventing the statute by labeling claims against an adversary's litigation consultant as malpractice, because the entities sued over documents filed in their own names.
Key Takeaways
- An accountant who files corporate documents on behalf of entities cannot use the anti-SLAPP statute to strike malpractice claims brought by those entities, even if the filings facilitated the entities' participation in related litigation.
- A defendant who moves to strike an entire complaint under section 425.16 without identifying specific protected claims fails the first prong if the complaint contains at least one claim that does not arise from protected activity.
- Malpractice and breach of fiduciary duty claims by entities on whose behalf a professional filed documents are not protected under the anti-SLAPP statute, regardless of who hired the professional or whether a formal client relationship existed.
- The anti-SLAPP statute should not insulate filings from recourse by the very entities on whose behalf they were made.
- A professional cannot avoid anti-SLAPP scrutiny by claiming the work was performed for a third party when the documents were filed in the plaintiff entities' own names.
Why It Matters
This unpublished decision applies settled anti-SLAPP law to an accountant rather than an attorney: the statute does not shield professionals from malpractice claims brought by the entities on whose behalf they acted, even when the work was litigation-related. The identity of the entity on whose behalf the filings were made controls, not the identity of the person who hired the professional.
The ruling also underscores the procedural burden on anti-SLAPP movants. Because Chen moved to strike the entire complaint without identifying specific protected claims, she failed the first prong once the complaint contained at least one unprotected claim, leaving the trial court's denial undisturbed on independent review.