Wescott v. Block

Background

Carl A. Wescott proceeded without a lawyer and sued his ex-wife, Monette Stephens; Terry Szucsko, Milla Lvovich, and the law firm Lvovich & Szucsko; and Robert J. Block, a paralegal who worked for Wescott’s attorney, Robert Shearer. Wescott alleged that Stephens and others conspired to obtain confidential information from his attorney-client relationship with Shearer and use it to benefit Stephens. The information allegedly included that Wescott expected to receive more than $250,000 for consulting work connected to Salveo Capital.

Wescott asserted claims for trade-secret misappropriation under federal and state law; violations of the federal and California debt-collection statutes; intrusion upon seclusion; intentional interference with contract; intentional and negligent interference with prospective economic advantage; abuse of process; fraudulent concealment from Wescott; fraudulent concealment from the state court; and aiding and abetting breach of fiduciary duty.

Judge Ryu had recommended dismissing the original complaint with permission to amend after screening under 28 U.S.C. § 1915(e), which requires dismissal of a case that fails to state a legally sufficient claim. Wescott did not object. Judge Chen adopted that recommendation and considered Wescott’s amended complaint even though it was filed late.

Rulings on the Claims

Attorney defendants. The court dismissed with prejudice all claims against Szucsko, Lvovich, and Lvovich & Szucsko. It found Wescott’s allegations that they paid Block and participated in a conspiracy conclusory and unsupported by specific facts. The court also stated that filing a petition seeking Wescott’s Salveo funds did not show that the attorney defendants knew Stephens had obtained information from Block.

Trade-secret misappropriation. The court dismissed with prejudice the federal and state misappropriation claims. Wescott identified Salveo’s securities offering and fundraising goals and strategies as trade secrets, but the court held that he lacked standing—the legal ability to bring a claim—to assert misappropriation of Salveo’s trade secrets. The court also found unclear and insufficient Wescott’s description of his own alleged confidential information.

Debt-collection claims. The court dismissed with prejudice the federal and California debt-collection claims. Wescott had not adequately alleged that the defendants were statutory “debt collectors” or that they were attempting to collect consumer debt, and the amended complaint did not correct those problems.

Intrusion upon seclusion. The court found plausible, to the extent asserted against Stephens and Block, Wescott’s claim that Block disclosed to Stephens information about Wescott’s expected Salveo earnings. The court reasoned that Wescott allegedly gave the information to Block with an expectation of privacy based on his attorney-client relationship with Shearer, and that Stephens allegedly paid Block to obtain it.

Intentional interference with contract. The court dismissed with prejudice this claim. It reasoned that Stephens could ask a court to award her money Wescott owed her, and Wescott did not explain how Block’s conduct caused Salveo to breach any obligation to pay him.

Intentional and negligent interference with prospective economic advantage. The court dismissed with prejudice both claims as to Stephens and Block. It found Wescott’s allegations that the disrupted relationship with Salveo would “almost certainly” have produced substantial economic benefits too conclusory and unsupported by specific facts.

Abuse of process. The court dismissed with prejudice the abuse-of-process claim. It held that Stephens’s request for a court order concerning Wescott’s Salveo earnings was not shown to be improper, and Block did not file that petition.

Fraudulent concealment. The court found that the fraudulent-concealment claim concerning the state court was not viable because the claim requires a duty to disclose to the plaintiff. It also found no plausible duty by Stephens to disclose information to Wescott. The court allowed Wescott’s fraudulent-concealment claim against Block to proceed because Block’s work as a paralegal for Wescott’s attorney could support some duty to disclose what Block had done with Wescott’s private information.

Aiding and abetting breach of fiduciary duty. The court dismissed this claim. Wescott had not made nonconclusory allegations that Shearer participated in giving confidential information to Stephens, and the emails supplied by Wescott indicated that Block acted on his own. The court allowed Wescott to amend to assert a direct breach-of-fiduciary-duty claim against Block, finding it plausible that Block had such a duty because of the attorney-client relationship between Wescott and Shearer. The court stated that Wescott could not assert that claim against Stephens because there was no special relationship between them.

Disposition

Judge Edward M. Chen concluded that the claims allowed to proceed were intrusion upon seclusion against Stephens and Block and fraudulent concealment against Block. The court also permitted Wescott to amend his complaint to assert breach of fiduciary duty against Block only. It ordered the U.S. Marshals Service to serve Stephens and Block with the summons, amended complaint, and order, and required the next amended complaint to be filed by July 11, 2022. The court reminded Wescott that Federal Rule of Civil Procedure 11 requires a good-faith and reasonable basis for allegations.