The California Court of Appeal has affirmed a lower court's decision denying a special motion to strike in a case involving allegations of accounting malpractice. This ruling affects accounting professionals and their clients, emphasizing the legal responsibilities accountants have when filing documents on behalf of corporations.

The case, Li v. Chen (B348971), centers around a dispute between Lingxiao "Tim" Li and Jinwan Shen, who accused Li of fraudulently inducing investments into various businesses. The court's ruling, filed on October 27, 2026, clarifies the boundaries of the anti-SLAPP statute in California, which protects free speech and petition rights.

Background

The parties involved in this case include Lingxiao Li, Jinwan Shen, and Spring Chen, an accountant. Shen and his company, Da Bai Niu (DBN), initially sued Li in February 2024, claiming he had fraudulently induced them to invest in two California corporations, IY International, Inc. and Horizon Holding Group. At the time of the lawsuit, both companies had their corporate status suspended by the Franchise Tax Board (FTB) due to failure to file tax returns.

In September 2024, at Shen's direction, Chen filed documents with the FTB to revive IY and Horizon, indicating that Shen had replaced Li as the sole officer and director of the companies. However, on the same day, Li filed his own documents asserting that he was still the sole officer and director. This led to further legal disputes, with Li, IY, and Horizon suing Chen for accounting malpractice, negligence, and other claims, alleging that she had no authority to file the documents and that they contained false information.

The Ruling

The California Court of Appeal ruled in favor of Shen and DBN, affirming the lower court's decision to deny Chen's special motion to strike. The court found that the claims against Chen arose from her actions of filing documents on behalf of IY and Horizon, which were not protected under the anti-SLAPP statute. The court stated, "The anti-SLAPP statute does not protect Chen from malpractice-related claims asserted by the entities on whose behalf she acted."

Judge Weingart, along with other concurring judges, emphasized that the filings made by Chen did not constitute protected activity under the anti-SLAPP statute, as the claims were based on her alleged negligence and breach of fiduciary duty in filing false documents. The court ruled that the trial court did not err in denying Chen's motion, stating, "The complaint against Chen contains claims that do not arise from protected conduct."

Impact

This ruling has significant implications for accountants and other professionals who file documents on behalf of corporations. It establishes that claims of malpractice and breach of fiduciary duty cannot be dismissed under the anti-SLAPP statute when they arise from actions taken on behalf of the client. This means that professionals can be held accountable for their actions, even if those actions were taken in the context of litigation.

The decision reinforces the idea that the anti-SLAPP statute is not a shield for professionals against claims of negligence or misconduct when acting on behalf of clients. It clarifies that clients have the right to seek recourse for alleged malpractice, regardless of the context in which the actions occurred.

What's Next

Details were not available in the court filing regarding whether Chen plans to appeal the decision. However, this ruling sets a clear precedent for future cases involving accounting malpractice and the responsibilities of professionals in similar situations.