SLAPPS: FINE LINE DISTINCTION BETWEEN LEGITIMATE CIVIL DEMAND LETTER AND CRIMINAL EXTORTION
The illegality as a matter of law doctrine, expounded by our High Court in Flatley v Mauro (2006) 39 Cal.4th 299, is, perhaps, the most overused and abused exemption from anti-SLAPP motions. While illegality can be a lifesaver for plaintiffs in those rare cases where it is an appropriate bar to a SLAPP motion, very often, illegality ends up being the typical SLAPP plaintiff's argument of last resort but ultimately unavailing. The general rule is that the anti-SLAPP statute is to be construed broadly. [CCP § 425.16, subd. (a)]. But the corollary to this rule is that exemptions from the anti-SLAPP statute, like illegality and those under CCP § 425.17, must be construed narrowly. Members for an Honest Election Club v. Sierra Club (2008) 45 Cal.4th 309; Hutton v. Hafif (2007) 150 Cal.App.4th 527, 543-545.
Malin v. Singer (filed 7/16/13; No. B237804) illustrates the extreme narrowness of Flatley's illegality doctrine in distinguishing the pre-litigation demand letter in Malin from the criminally extortionate demand letters in Flatley and Mendoza v. Hamzeh (2013) 215 Cal.App.4th 799. Malin, Moore, and defendant Arazm are general partners of Geisha House, LLC (company). In 2011, Arazm consulted her attorney, Martin Singer, regarding Malin and Moore's alleged misappropriation of company assets. Singer sent Malin a demand letter and draft of Arazm's proposed complaint. The demand letter contained what Malin contends was an extortionate threat to disclose certain personal information if he did not pay to settle Arazm's claims.
The demand letter stated in pertinent part: "As a result of your embezzlement, conversion, and breach of fiduciary duty, you have misappropriated more than a million dollars from my client. As a result, my client intends to file the enclosed lawsuit against you, Moore and [others]. `As alleged in the complaint', you, Mr. Moore, and [others] have been embezzling and stealing money from Ms. Arazm and Geisha House for years." In substance, the letter went on to detail the allegations of the civil complaint regarding the schemes Malin and Moore devised to embezzle money, information regarding insurance scams defendants perpetrated as part of the complaint, and illegal transfers of money embezzled in an effort to avoid taxing authorities. Finally, the letter set forth the allegation of the complaint charging Malin had misused company resources to arrange sexual liaisons with older men, including an unidentified L.A. Superior Court Judge (retired) (name intentionally left blank but provided a photo of judge and stated that the name would not be blank if the complaint were filed).
After he received the demand letter, Malin sued Singer and Arazm for civil extortion, violation of civil rights, and intentional and negligent infliction of emotional distress. The latter two causes of action were based on illegal computer hacking and wiretapping tapping activities. The Malin court held that the latter two causes of action were based on activity that was illegal as a matter of law relying on Gerbosi v. Gaims, Weil, West & Epstein (2011) 193 Cal.App.4th 435, 445-446. In contrast, Malin found that the civil extortion claim based on the demand letter did not constitute criminal extortion as a matter of law, that the demand letter constituted protected petition activity under the anti-SLAPP statute, and that the claim was barred by the litigation privilege on CC § 47(b) on prong two. Malin reversed the trial court order denying the SLAPP motion as to the civil extortion claim but affirmed in all other respects.
Malin distinguished a similar demand letter in Flatley, which constituted criminal extortion as a matter of law. Criminal extortion is defined as "obtaining of property from another, with his consent... induced by a `wrongful' use of force or fear ... (Pen. Code § 518). Fear for purposes of extortion may be induced by a threat, either:... 2. to accuse the individual threatened, or any relative of his, or member of his family, of any crime; or, 3. To expose, or impute to `him or them' ... any deformity, disgrace or crime; or, 4. To expose any secret affecting `him or them'. (Pen. Code § 519). ~Every person who, with intent to extort money or other property from another, sends or delivers to any person any letter or writing, ... expressing or implying... any threat such as specified in Section 519, is punishable in the same manner as if such money or property were actually obtained by means of such threat. (Pen. Code § 523). Indeed, the Rules of Professional Conduct specifically prohibit attorneys from `threatening to present criminal, administrative, or disciplinary charges to obtain an advantage in a civil dispute. Flatley, at 327.
Michael Flatley, "the Lord of the Dance" was threatened with rape allegations by Ms. Robertson. Her attorney, Mauro, sent Flatley a demand letter, which expressly threatened to go public (to the media worldwide) with rape allegations and report him to various immigration, taxing, and other authorities if Flatley did not pay $1,000,000 for Mauro and Robertson's silence within 30 days. This threat was reiterated in a phone call to Flatley's attorney.
The Flatley exemption holds that the plaintiff must show that the defendant has either "effectively conceded, or that the evidence `conclusively' establishes, that the assertedly protected speech or petition activity was illegal `as a matter of law'" - such there can be no factual dispute on the point. If such a showing is made, the defendant is barred from using the anti-SLAPP procedure to dismiss the case regardless of merit. Moreover, the illegality established must constitute a violation of a specific criminal statute. G.R. v. Intelligator (2010) 185 Cal.App.4th 606.
The Flatley court found that Mauro's demand letter constitutes criminal extortion as a matter of law and thus Mauro could not challenge Flatley's complaint with a SLAPP motion even though the court assumed, without deciding, that the litigation privilege of CC § 47(b) applied. Flatley observed that the two statutes are not co-extensive. Flatley, at 322.
A key to understanding the Malin/Flatley distinction is the precise relationship between the anti-SLAPP statute's official proceeding prongs and the litigation privilege of CC § 47(b). An informed anti-SLAPP analysis must begin with the general rule, articulated by our High Court in Briggs v. Eden Council for Hope and Opportunity (1999) 19 Cal.4th 1106, 1115 that where a communication is privileged under CC § 47(b), it will ordinarily be subject to a special motion to strike under the official proceeding prongs of subds. (e)(1),(2) of CCP § 425.16 as both statutes were intended to protect certain aspects of the First Amendment right of petition albeit in different ways. Malin, at 10. In contrast, the illegality exception in Flatley and Mendoza merely holds that simply because liability is based on a privileged communication under CC § 47(b), that does not, by itself, necessarily mean that the communication qualifies as a protected act under the anti-SLAPP statute and vice versa. Flatley v. Mauro (2006) 39 Cal.4th 299, 322-325. While the two statutes do not target precisely the same activity, there is significant overlapping coverage.
Malin observed that the "secret" that would allegedly expose Malin and others to disgrace was inextricably tied to Arazm's pending civil complaint. The demand letter accused him of embezzling money and simply informed him that Arazm knew how he had spent these funds. We cannot conclude that Malin's alleged activities [arranging sexual liaisons with old men] would subject him to any more disgrace than the claim that he was an embezzler. Second, to the extent Malin claims the threatened disclosure of secrets affecting a third party, his alleged sexual partner, necessarily constitutes extortion, he is mistaken. The third party - a retired judge - was neither a family member nor a relative under PC § 519. Most importantly, the Malin court concluded "We see a critical distinction between Singer's demand letter, which made no overt threat to report Malin to prosecuting authorities or the IRS, and the letters in Flatley and Mendoza, which contained those express threats and others that had no reasonable connection to the underlying dispute."
This article was previously published in the Los Angeles Daily Journal on July 23, 2013.
James J. Moneer, Esq. has been representing plaintiffs and defendants at all stages of anti-SLAPP litigation since 1994 and frequently testifies as an attorney fee expert. He has been a regular panelist on the The Rutter Group's Anti-SLAPP seminars and has been recognized as an expert in California anti-SLAPP law in Ramona Unified School Dist. v. Tsiknas (2005) 135 Cal.App.4th 510, 523-525. His website is www.slapplaw.com.
Wednesday, December 11, 2013
Wednesday, July 10, 2013
FAMILY LAW, MALICIOUS PROSECUTION. ABUSE OF PROCESS, AND DEFAMATION
The anti-SLAPP statute is constantly venturing into more and more civil practice areas. Family law is no exception. First, there are special rules that apply to speech and litigation based claims arising from family law and civil harassment proceedings. First and foremost is the Bidna v. Rosen (1993) 19 Cal.App.4th 27, 34, 37 rule: which created "an absolute bar of malicious prosecution claims based on any kind of family law motion or OSC.... no California case has yet to extend the malicious prosecution tort to family law actions." Under Siam v. Kizilbash (2005) 130 Cal.App.4th 1563 the court extended the ban on malicious prosecutions actions in family law to cases arising from prior unsuccessful petitions for civil harassment injunctions under CCP 527.6. A year later, Robinzine v. Vicory (2006) 143 Cal.App.4th 1416 extended the ban to petitions for workplace harassment injunctions under CCP 527.8. Finally, Nakumura v. Parker (2007) 156 Cal.App.4th 327, by analogy, extended the Siam/Robinzine ban on malicious prosecution actions to domestic violence restraining orders under the DPVA at FC 6200 et seq.
What would SLAPP and litigation privilege jurisprudence be without exceptions and exceptions to exceptions? Yet there is hope for you plaintiffs who want to sue your ex wife, girlfriend, or neighbor or any voluntary reporter who makes a knowingly false child abuse report to a mandated reporter or mandated reporting agency including the police, therapist, teacher or principal under PC 11172(a). If a mandated reporter makes such a claim it is absolutely privileged from liability from any action under the litigation privilege and from any malicious prosecution action. Siam, supra. But the Legislature struck a balance by allowing a party wrongly accused of child abuse to file any claim for damages, except malicious prosecution, against a voluntary reporter who makes a "knowingly false" child abuse report. Siam, supra. See also Begier v. Strom (1996) 46 Cal.App.4th 877, 883-885. The Legislative History states "that providing only qualified immunity to voluntary reporters `is necessary to prevent a vindictive former spouse or neighbor [or girlfriend] from making a knowingly false report [of child abuse]." (AB 2497; SB 781]. But yet there is one more exception to the qualified immunity rule for voluntary reporters of child abuse - that is where the child victim, him/herself, makes a voluntary report of child abuse. Chabak v. Monroy (2007) 154 Cal.App.4th 1502, The victim of the alleged abuse who also reports it is absolutely immune from any and all liability for making the report under CC 47(b) and from malicious prosecution liability under Siam and Chabak.
The next tag along tort we often see arising from family proceedings is the abuse of process tort, which is often conflated with malicious prosecution. This is a fundamental mistake that many attorneys make as malicious prosecution is a separate and distinct tort form abuse of process in terms of the activity which it targets and the distinct privilege defenses that may apply to each. Bidna, supra, The former may ordinarily be predicated on the alleged improper initiation and/or continuance of a prior judicial or other quasi-judicial proceeding. Jarrow Formulas v. La Marche (2003) 31 Cal.4th 728 and Zamos v. Stroud (2004) 32 Cal.4th 958. Abuse of process lies for an abuse or misuse of the court's process once in a lawsuit and only after the court issues its process. So any abuse of process claim based on the alleged improper filing of a motion, OSC, or TRO or other application with the court will ordinarily be barred by the litigation privilege of CC 47(b) to the extent the gravamen of the actions is based on communicative conduct even if also connected to other noncommunicative acts. Rusheen v. Cohen (2006) 37 Cal.4th 1048. Abuse of process, unlike malicious prosecution, does not lie for the wrongful initiation or continuance of prior judicial proceedings while malicious prosecution does not lie for subsidiary procedural actions within a lawsuit like the filing of an application for a TRO. Begier, supra. Moreover, abuse of process may only be based on the misuse of the "court's" or "judicial" process not than of an administrative or quasi-judicial tribunal whereas malicious prosecution actions are generally not so limited. Unlike abuse of process, malicious prosecution is the only tort exempt from the litigation privilege of CC 47(b). Jarrow, supra; Silberg v. Anderson (1990) 50 Cal.3d 205.
The classic example of an actionable abuse of process action is illustrated by the following example: W goes into family court to get a domestic violence restraining order and the court grants it. Note this is the first prerequisite - the court must have issued an order pursuant to its processes. Then, after the RO is issued by the court, W goes out and intentionally places herself within 300 feet of H in order to get him thrown in jail and gain an undue advantage in the ongoing child custody proceedings or just to be vindictive and retaliate against H. This is a true abuse or process that is based solely on W's noncommunicative intentional act of moving her body into a location which will result in H's violation of the restraining order. Because it is based on purely on noncommunicative activity, the litigation privilege will not apply. Silberg v. Anderson (1990) 50 Cal.3d 205.
Now that we have seen that pleading derivative tort causes of action arising from prior family law, civil harassment, and child abuse proceedings is like traversing a minefield - a labrynth of statutory and common law privileges and defenses and exceptions thereto, suing for acts arising from family law and CPS proceedings has now become even more fraught with danger for the family law and civil litigation attorney alike. Malicious prosecution, abuse of process, and defamation are the least understood and most abused torts on the books, perhaps because they are not taught in most law schools. Also IIED claims are common here as well and just as difficult to prove, and when based in communicative petition activity, they are barred by the litigation privilege subject to the narrow exceptions discussed above. The lesson for plaintiffs' attorneys is to think hard and have your complaint screened for potential SLAPP and privilege issues and prepare for the SLAPP motion before filing it. For the defense, always look for ways to SLAPP these claims out of court. But this can be more difficult in light of the Mann rule on prong 2 mixed cause of actions. Mann v. Quality Old Time Service (2004) 129 Cal.app.4th 90, 106.
Losing plaintiffs will pay the other side's attorney's fees to the tune of tens of thousands of dollars. The losing defendant has an immediate right of appeal and will get appeal fees is successful on appeal. Then the defense will have the right to file a SLAPPBack malicious prosecution action under CCP 425.18 against the losing plaintiff and his/her attorneys in the prior action.
A competent and experienced SLAPP/malicious prosecution/defamation attorney can dramatically improve chances of winning or losing a SLAPP motion or opposition and, more importantly, can cut down a hefty fee request from the defense and maximize the defense fees with a detailed expert declaration.
While just about any cause of action can trigger a SLAPP motion, the most common SLAPP type claims involve malicious prosecution, abuse of process, defamation, internet libel, slander, trade libel, intentional interference with business, IIED, invasion of privacy, public nuisance claims based on expressive activity. All of these claims, except for malicious prosecution, often involve litigation and other privilege defenses.
Remember SLAPP motions are nuclear. Everything else is just a toy.
What would SLAPP and litigation privilege jurisprudence be without exceptions and exceptions to exceptions? Yet there is hope for you plaintiffs who want to sue your ex wife, girlfriend, or neighbor or any voluntary reporter who makes a knowingly false child abuse report to a mandated reporter or mandated reporting agency including the police, therapist, teacher or principal under PC 11172(a). If a mandated reporter makes such a claim it is absolutely privileged from liability from any action under the litigation privilege and from any malicious prosecution action. Siam, supra. But the Legislature struck a balance by allowing a party wrongly accused of child abuse to file any claim for damages, except malicious prosecution, against a voluntary reporter who makes a "knowingly false" child abuse report. Siam, supra. See also Begier v. Strom (1996) 46 Cal.App.4th 877, 883-885. The Legislative History states "that providing only qualified immunity to voluntary reporters `is necessary to prevent a vindictive former spouse or neighbor [or girlfriend] from making a knowingly false report [of child abuse]." (AB 2497; SB 781]. But yet there is one more exception to the qualified immunity rule for voluntary reporters of child abuse - that is where the child victim, him/herself, makes a voluntary report of child abuse. Chabak v. Monroy (2007) 154 Cal.App.4th 1502, The victim of the alleged abuse who also reports it is absolutely immune from any and all liability for making the report under CC 47(b) and from malicious prosecution liability under Siam and Chabak.
The next tag along tort we often see arising from family proceedings is the abuse of process tort, which is often conflated with malicious prosecution. This is a fundamental mistake that many attorneys make as malicious prosecution is a separate and distinct tort form abuse of process in terms of the activity which it targets and the distinct privilege defenses that may apply to each. Bidna, supra, The former may ordinarily be predicated on the alleged improper initiation and/or continuance of a prior judicial or other quasi-judicial proceeding. Jarrow Formulas v. La Marche (2003) 31 Cal.4th 728 and Zamos v. Stroud (2004) 32 Cal.4th 958. Abuse of process lies for an abuse or misuse of the court's process once in a lawsuit and only after the court issues its process. So any abuse of process claim based on the alleged improper filing of a motion, OSC, or TRO or other application with the court will ordinarily be barred by the litigation privilege of CC 47(b) to the extent the gravamen of the actions is based on communicative conduct even if also connected to other noncommunicative acts. Rusheen v. Cohen (2006) 37 Cal.4th 1048. Abuse of process, unlike malicious prosecution, does not lie for the wrongful initiation or continuance of prior judicial proceedings while malicious prosecution does not lie for subsidiary procedural actions within a lawsuit like the filing of an application for a TRO. Begier, supra. Moreover, abuse of process may only be based on the misuse of the "court's" or "judicial" process not than of an administrative or quasi-judicial tribunal whereas malicious prosecution actions are generally not so limited. Unlike abuse of process, malicious prosecution is the only tort exempt from the litigation privilege of CC 47(b). Jarrow, supra; Silberg v. Anderson (1990) 50 Cal.3d 205.
The classic example of an actionable abuse of process action is illustrated by the following example: W goes into family court to get a domestic violence restraining order and the court grants it. Note this is the first prerequisite - the court must have issued an order pursuant to its processes. Then, after the RO is issued by the court, W goes out and intentionally places herself within 300 feet of H in order to get him thrown in jail and gain an undue advantage in the ongoing child custody proceedings or just to be vindictive and retaliate against H. This is a true abuse or process that is based solely on W's noncommunicative intentional act of moving her body into a location which will result in H's violation of the restraining order. Because it is based on purely on noncommunicative activity, the litigation privilege will not apply. Silberg v. Anderson (1990) 50 Cal.3d 205.
Now that we have seen that pleading derivative tort causes of action arising from prior family law, civil harassment, and child abuse proceedings is like traversing a minefield - a labrynth of statutory and common law privileges and defenses and exceptions thereto, suing for acts arising from family law and CPS proceedings has now become even more fraught with danger for the family law and civil litigation attorney alike. Malicious prosecution, abuse of process, and defamation are the least understood and most abused torts on the books, perhaps because they are not taught in most law schools. Also IIED claims are common here as well and just as difficult to prove, and when based in communicative petition activity, they are barred by the litigation privilege subject to the narrow exceptions discussed above. The lesson for plaintiffs' attorneys is to think hard and have your complaint screened for potential SLAPP and privilege issues and prepare for the SLAPP motion before filing it. For the defense, always look for ways to SLAPP these claims out of court. But this can be more difficult in light of the Mann rule on prong 2 mixed cause of actions. Mann v. Quality Old Time Service (2004) 129 Cal.app.4th 90, 106.
Losing plaintiffs will pay the other side's attorney's fees to the tune of tens of thousands of dollars. The losing defendant has an immediate right of appeal and will get appeal fees is successful on appeal. Then the defense will have the right to file a SLAPPBack malicious prosecution action under CCP 425.18 against the losing plaintiff and his/her attorneys in the prior action.
A competent and experienced SLAPP/malicious prosecution/defamation attorney can dramatically improve chances of winning or losing a SLAPP motion or opposition and, more importantly, can cut down a hefty fee request from the defense and maximize the defense fees with a detailed expert declaration.
While just about any cause of action can trigger a SLAPP motion, the most common SLAPP type claims involve malicious prosecution, abuse of process, defamation, internet libel, slander, trade libel, intentional interference with business, IIED, invasion of privacy, public nuisance claims based on expressive activity. All of these claims, except for malicious prosecution, often involve litigation and other privilege defenses.
Remember SLAPP motions are nuclear. Everything else is just a toy.
Wednesday, May 15, 2013
ORDER GRANTING SLAPP MOTION REVERSED IN UD CASE AS IT DID NOT ARISE FROM UD ACTION OR 3-DAY NOTICE IN COPENBARGER v. MORRIS CERULLO WORLDWIDE EVANGLISM 2013 WL 1809626
The Unlawful Detainer/SLAPP cases over the last six years or so continue to baffle courts and litigants alike due primarily to the sharp distinctions in the gravamen analysis that have become the hallmark of SLAPP motions in UD cases. Unlike the typical SLAPP case, which often involves malicious prosecution, abuse of process, defamation and related type claims, Copenbarger v. Morris Cerullo Worldwide Evangelism (4th Dist. Div. 3 2013) 2013 WL 1809626 involved claims for declaratory relief, breach of contract, and intentional interference with contract against sublessors of commercial office space in Newport Harbor.
The lesson of Copenbarger goes back to our High Court's landmark arising from prong analysis in City Cotati v. Cashman (2002) 29 Cal.4th 69. Simply because you see litigation or free speech activity floating around in the cause of action does not mean that the liability arises from it. Subd. (b)(1) of section 425.16 states in pertinent part that SLAPP motions apply to: "A cause of action against a person "arising from" any act in furtherance...." These two words - arising from - have been the most vexing for courts to apply. This deceptively simple phrase has led to the gravamen/principal thrust line of cases and the mixed cause of action doctrine in California's anti-SLAPP jurisprudence. In Cerullo, the court noted that although an unlawful detainer action itself is protected under section 425.16, terminating a lease is not. A complaint arising out of or based on the dispute or conduct underlying the UD action is not subject to a special motion to strike. "The mere fact that an action was filed after protected activity took place does not mean that the action arose from that activity for purposes of the anti-SLAPP statute. "When, as in this case, the challenged lawsuit follows service of a Three-Day Notice to Quit `the pivotal distinction' is whether an actual or contemplated unlawful detainer action by a landlord... merely `preceded' or `triggered' the tenant's lawsuit or whether it was instead the `basis' or `cause' of that suit." In Cerullo, the Court found that defendants fell prey to the "logical fallacy "post hoc ergo propter hoc - i.e. because the three-day notices preceded plaintiff's complaint the notices must have caused plaintiff's complaint."
Plaintiff, Paul Copenbarger, acting individually and derivatively on behalf of Newport Harbor Offices & Marina (NHOM) appealed from the order denying his special motion to strike in its entirety as to all three causes of action. NHOM (and Copenbarger) is the sublessee, defendant/respondent Morris Cerullo Worlwide Evangelism is the sublessor under a ground lease of commercial property in Newport Beach.
After Cerullo served NHOM with a three-day notice to cure or quit, Copenbarger filed a complaint asserting causes of action against Cerullo, Roger Artz, and D'Allessio and VMG et al. for declaratory relief, breach of lease, and intentional interference with contract. Defendants Cerullo et al. brought a special motion to strike, which the trial court granted in its entirety finding that each cause of action arose from the three-day notice and subsequent UD action against NHOM. The Court of Appeal resoundingly reversed. "The dispositive issue on appeal is whether the causes of action asserted in Copenbarger's complaint arose out of Cerullo's petitioning activity - i.e. service of the three-day notice to quit and the subsequent UD action. We conclude that while the three day notice might have triggered the complaint, the evidence in the record demonstrates the complaint was based on an underlying dispute over NHOM's repair and maintenance obligations under the sublease and other unprotected activities." Hence, the entire dispute arose from the repair obligations under the sublease which predated the three-day notice and UD action. Thus, the complaint could not have arisen from or based liability on the three-day notice or the subsequent UD action.
James J. Moneer, Esq. represented plaintiff, Paul D. Copenbarger, in the trial court in this matter. At oral argument, it was readily apparent that the trial judge was confused about the arising from prong - maintaining that because the lawsuit was "triggered by" or "came after" posting the three-day notice and filing the UD action, that each cause of action must therefore arise from these acts.
The lesson of Copenbarger goes back to our High Court's landmark arising from prong analysis in City Cotati v. Cashman (2002) 29 Cal.4th 69. Simply because you see litigation or free speech activity floating around in the cause of action does not mean that the liability arises from it. Subd. (b)(1) of section 425.16 states in pertinent part that SLAPP motions apply to: "A cause of action against a person "arising from" any act in furtherance...." These two words - arising from - have been the most vexing for courts to apply. This deceptively simple phrase has led to the gravamen/principal thrust line of cases and the mixed cause of action doctrine in California's anti-SLAPP jurisprudence. In Cerullo, the court noted that although an unlawful detainer action itself is protected under section 425.16, terminating a lease is not. A complaint arising out of or based on the dispute or conduct underlying the UD action is not subject to a special motion to strike. "The mere fact that an action was filed after protected activity took place does not mean that the action arose from that activity for purposes of the anti-SLAPP statute. "When, as in this case, the challenged lawsuit follows service of a Three-Day Notice to Quit `the pivotal distinction' is whether an actual or contemplated unlawful detainer action by a landlord... merely `preceded' or `triggered' the tenant's lawsuit or whether it was instead the `basis' or `cause' of that suit." In Cerullo, the Court found that defendants fell prey to the "logical fallacy "post hoc ergo propter hoc - i.e. because the three-day notices preceded plaintiff's complaint the notices must have caused plaintiff's complaint."
Plaintiff, Paul Copenbarger, acting individually and derivatively on behalf of Newport Harbor Offices & Marina (NHOM) appealed from the order denying his special motion to strike in its entirety as to all three causes of action. NHOM (and Copenbarger) is the sublessee, defendant/respondent Morris Cerullo Worlwide Evangelism is the sublessor under a ground lease of commercial property in Newport Beach.
After Cerullo served NHOM with a three-day notice to cure or quit, Copenbarger filed a complaint asserting causes of action against Cerullo, Roger Artz, and D'Allessio and VMG et al. for declaratory relief, breach of lease, and intentional interference with contract. Defendants Cerullo et al. brought a special motion to strike, which the trial court granted in its entirety finding that each cause of action arose from the three-day notice and subsequent UD action against NHOM. The Court of Appeal resoundingly reversed. "The dispositive issue on appeal is whether the causes of action asserted in Copenbarger's complaint arose out of Cerullo's petitioning activity - i.e. service of the three-day notice to quit and the subsequent UD action. We conclude that while the three day notice might have triggered the complaint, the evidence in the record demonstrates the complaint was based on an underlying dispute over NHOM's repair and maintenance obligations under the sublease and other unprotected activities." Hence, the entire dispute arose from the repair obligations under the sublease which predated the three-day notice and UD action. Thus, the complaint could not have arisen from or based liability on the three-day notice or the subsequent UD action.
James J. Moneer, Esq. represented plaintiff, Paul D. Copenbarger, in the trial court in this matter. At oral argument, it was readily apparent that the trial judge was confused about the arising from prong - maintaining that because the lawsuit was "triggered by" or "came after" posting the three-day notice and filing the UD action, that each cause of action must therefore arise from these acts.
Friday, April 26, 2013
IN DEFAMATION CASE, 9TH CIR. MAY REVISIT ISSUE OF WHETHER SLAPP MOTIONS CAN BE BROUGHT AT ALL IN FEDERAL COURT
In the latest case to send shock waves through the California civil defense bar, Makaeff v. Trump University (filed 4/17/13 9th Cir.) No. 11-55016, a disgruntled former student of Trump University's wealth building through real estate seminars sued Trump U. for unfair business practices, fraud and the like, claiming that Trump University is a "scam" and published her experiences with Trump U. internet chat rooms and review sites. She found many other former students had posted comments expressing their dissatisfaction with the seminar and the exorbitant price they paid ($34,000.00) with little or no ROI. In return, Trump sued Makaeff, the former student for defamation. Makaeff filed and won her anti-SLAPP motion before the 9th Circuit on that grounds that an (e)(4) issue of public interest was implicated by the post and met prong one. On prong two, the court found that Trump U was a limited purpose public figure for purposes of the public controversy of whether Trump U.'s private, for-profit, real estate education programs were a scam, which is exactly what Makeaff;s post was about. All Justices concede that this is clearly proper case in which to grant an anti-SLAPP under California's anti-SLAPP statutory scheme.
The rub comes from Chief Judge, Alex Kozinski's concurring opinion joined by Judge Paez. Judge Kozinski expressed his strong opinion that an en banc hearing revisiting the U.S. Newsham v. Lockheed Missile and Space Co., 190 F.3d 963, 973 (9th Cir. 1999) and its progeny on the issue whether exotic state procedural rules, like California's anti-SLAPP statute, should be applied in federal court. The Newsham case held that the anti-SLAPP statute will apply in federal court to state law claims in diversity cases but without the shortened time periods for filing the motion under subd. (f) and without the automatic stay on discovery under subd. (g) applicable in state court because those two provisions directly collide with the federal rule of civil procedure. Moreover, while the anti-SLAPP statute is a procedural burden shifting device and pre-trial dismissal motion, its goal is substantive - to swiftly extricate defendants from suit for engaging in prima facie First Amendent speech or petition activity. It is the lawsuit itself that has the chilling effect at which the anti-SLAPP statute is aimed. The Court conducted an analysis under the Erie doctrine in arriving at its conclusion that the anti-SLAPP statute serves a substantive goal, it will apply in federal court with some limitations. Erie Railroad v. Thompkins 304 U.S 64 (1938) [state substantive law will apply to state law claims in federal court but federal procedural law will apply in federal court]. Judge Kozinski believes the anti-SLAPP statute is purely procedural.
Under the pressure of sequestration and budget cuts, courts are feeling the pinch and this too might be partial motivating factor behind Judge Kozinski's eagerness to revisit Newsham. It would certainly eliminate a lot of messy SLAPP motions and appeals from the dockets in the 9th Circuit at the both the trial and appellate levels. Judge Kozinski has invited Trump's counsel to file a petition for en banc hearing on the issue of whether SLAPP motions are properly used at all in federal court. This case will be watched closely by the bench and bar in the coming months.
The argument for Makeaff if the court grants en banc hearing on the issue, is to show that the anti-SLAPP statute was intended as an immunity statute at least in protecting a specified class of defendants from the expense and delay of lawsuits generally simply because they have exercised their First Amendment speech or petition rights. This way the law may be considered substantive rather than procedural under Erie.
Moreover, eliminating the anti-SLAP procedure from federal courts would promote rampant forum shopping by plaintiffs lawyers, a result the California Legislature clearly did not intend - many plaintiffs would continue to get away with silencing defendants just for posting comments on the internet about their dissatisfaction with a business or retaliate for making a complaint to a government agency. Even with the anti-SLAPP law in place in federal court, it is still far more plaintiff friendly than its state law counterpart as Judge Kozinski points out.
Finally, the majority opinion contains a great defamation analysis in a consumer rights type of case against a business for unfair business practices etc.
The rub comes from Chief Judge, Alex Kozinski's concurring opinion joined by Judge Paez. Judge Kozinski expressed his strong opinion that an en banc hearing revisiting the U.S. Newsham v. Lockheed Missile and Space Co., 190 F.3d 963, 973 (9th Cir. 1999) and its progeny on the issue whether exotic state procedural rules, like California's anti-SLAPP statute, should be applied in federal court. The Newsham case held that the anti-SLAPP statute will apply in federal court to state law claims in diversity cases but without the shortened time periods for filing the motion under subd. (f) and without the automatic stay on discovery under subd. (g) applicable in state court because those two provisions directly collide with the federal rule of civil procedure. Moreover, while the anti-SLAPP statute is a procedural burden shifting device and pre-trial dismissal motion, its goal is substantive - to swiftly extricate defendants from suit for engaging in prima facie First Amendent speech or petition activity. It is the lawsuit itself that has the chilling effect at which the anti-SLAPP statute is aimed. The Court conducted an analysis under the Erie doctrine in arriving at its conclusion that the anti-SLAPP statute serves a substantive goal, it will apply in federal court with some limitations. Erie Railroad v. Thompkins 304 U.S 64 (1938) [state substantive law will apply to state law claims in federal court but federal procedural law will apply in federal court]. Judge Kozinski believes the anti-SLAPP statute is purely procedural.
Under the pressure of sequestration and budget cuts, courts are feeling the pinch and this too might be partial motivating factor behind Judge Kozinski's eagerness to revisit Newsham. It would certainly eliminate a lot of messy SLAPP motions and appeals from the dockets in the 9th Circuit at the both the trial and appellate levels. Judge Kozinski has invited Trump's counsel to file a petition for en banc hearing on the issue of whether SLAPP motions are properly used at all in federal court. This case will be watched closely by the bench and bar in the coming months.
The argument for Makeaff if the court grants en banc hearing on the issue, is to show that the anti-SLAPP statute was intended as an immunity statute at least in protecting a specified class of defendants from the expense and delay of lawsuits generally simply because they have exercised their First Amendment speech or petition rights. This way the law may be considered substantive rather than procedural under Erie.
Moreover, eliminating the anti-SLAP procedure from federal courts would promote rampant forum shopping by plaintiffs lawyers, a result the California Legislature clearly did not intend - many plaintiffs would continue to get away with silencing defendants just for posting comments on the internet about their dissatisfaction with a business or retaliate for making a complaint to a government agency. Even with the anti-SLAPP law in place in federal court, it is still far more plaintiff friendly than its state law counterpart as Judge Kozinski points out.
Finally, the majority opinion contains a great defamation analysis in a consumer rights type of case against a business for unfair business practices etc.
Sunday, April 14, 2013
CITY'S SLAPP MOTION GRANTED AS TO DEFAMATION, TRADE LIBEL, INTENTIONAL INTEFERENCE - "ARISING FROM" PUBLIC NUISANCE - ALLEGED PROSTITUTION AND MEDICAL MARIJUANA
The latest twist in anti-SLAPP/defamation/privilege jurisprudence resulted in the granting of the City of Costa Mesa's anti-SLAPP motion to a cross-complaint filed by a commercial landlord against the City and 4 out of 5 of the City employees sued. The recently published opinion is City of Costa Mesa v. D'Alessio Investments, LLC filed 3/11/13 (Case No. G046397 4th/3). In the the underlying complaint (main action), the City sued D'Alessio as the landlord of a commercial office building in Costa Mesa and various tenants to abate a public nuisance - namely alleged acts of prostitution at several massage establishments and the operation of medical marijuana dispensaries in violation of the City's zoning code. The trial court granted preliminary injunctions in favor of the City in August 2011, enjoining the prohibited practices on the premises during the pendency of the action. In September 2011, D'Alessio filed a cross-complaint for alleging the City and 5 of its employees (Nichols, Willa-Bouwens-Killeen, Lee, Melynda Shank, and Ashabi) committed slander, trade libel, and intentional interference with prospective economic advantage by making certain statements to D'Alessio's prospective tenants and construction contractors. The trial court granted the anti-SLAPP motion pursuant to Code of Civil Procedure section 425.16 as to three cross-defendants only. The Court of Appeal, affirmed and reversed in part, concluding that the anti-SLAPP motion should have been granted as to four out of five cross-defendants.
The complaint by the City essentially alleged the Costa Mesa Police Department initiated an investigation into the activities of massage establishments at the Property in July 2010, which resulted in the collection of evidence of prostitution as well as a variety of other noncriminal municipal code violations. The complaint further alleged that several of the defendant businesses were distributing marijuana in violation of the municipal code and these businesses had other non-marijuana related violations of the code. In August 2011, the court issued preliminary injunctions ordering D'Alessio and the tenants to cease operating any and all massage parlors and marijuana dispensaries on the premises during the pendency of the litigation.
D'Alessio's cross-complaint alleged that five City employees made 11 oral statements about D'Alessio that amounted to slander, trade libel, and interference with prospective economic advantage. The cross-complaint did not specify the date on which any of the statements were allegedly made or the context in which they were made, other than to allege they occurred within the past year. The defamation cross-complaint alleged the statements were made with malice. The slander cross-complaint went to allege the various statements made by each of the five City employees to potential tenants seeking business licenses from the City. As to the first three employees - Nichols, Shank, and Bouwens-Killeen, the gist of the statements was that each of these employees told a prospective tenant seeking a license to operate a business at the Property, in essence, that the Property had been raided by police, and that after police documented comings and goings at the Property, they found illegal businesses operating there. Other statements by these employees allegedly included: "the City of Costa Mesa will not issue business licenses to anyone attempting to rent space at the property because the City is in the middle of litigation with the owner of the Property due to illegal activity and that D'Alessio is the owner of the Property." Shank also allegedly told a construction contractor that "Dennis D'Alessio has been arrested for prostitution and drug dealing that occurred at the property." Bouwens-Killeen made each the foregoing statements to construction contractors and additionally stated" "[D'Alessio], the owner of the Property is known throughout the City for doing illegal things at the Property."
Ashabi allegedly told a prospective tenant that "the City will not issue business licenses to anyone attempting to rent space at the Property because the owner is in the middle of litigation with the City due to illegal activity."
In support of their anti-SLAPP motion pursuant to section 425.16, the City and its employees filed a declaration from the city attorney attesting in pertinent part to the following facts: When the City's Complaint was filed on April 22,2011, the City stopped issuing any new business licenses for the Property, if the requested business licenses concerned activities or operations related to the City's complaint. Pursuant to a TRO issued May 2011, the City ceased issuing for the property any building permits or new business licenses relating to medical marijuana or massage establishments. There is no City policy or court order regarding issuing other types of business licenses nor has the City placed a moratorium on issuing other types of business licenses for the Property. Moreover, each of the five employees signed declarations attesting that they never made any of the statements alleged in the complaint and that they denied bearing any malice or ill-will toward D'Alessio.
As to prong one, the court ruled that each of the alleged statements were made in connection with issues under review in ongoing litigation between the City and D'Alessio as well as the City's executive body. As to prong two, the court ruled as to three of the employees, Nichols, Shank, and Bouwens-Killeen, that D'Alessio provided no evidence that they made the statements alleged in the cross-complaint. Nor does D'Alessio even argue that the statements admitted to by Nichols and Bouwens-Killeen in their declarations were false or otherwise wrongful. Thus, the trial court should have granted the SLAPP motion as to all three of these cross-defendants. Trial court had erroneously denied the SLAPP motion as to Nichols and Bouwens-Killeen on prong one. Hence, the court of appeal reversed as to two out of three of the foregoing defendants and found that the SLAPP motion should have been granted as to each them.
The Court, however, went on to give more in-depth consideration to Ashabi and Lee's statements.
As to prong one, the Court broke down its analysis into three components: (a) was there an "issue under consideration or review by an executive, legislative or judicial body" under subdivision (e)(2)?; (b) were the employees' statements made "in connection with" this issue under subdivision (e)(2)?; and (c) did the causes of action pleaded by D'Alessio "arise from" the employees statements?
On a side note, one of the grounds curiously not raised by the cross-defendants here is that the issues of prostitution, dispensing marijuana, and other illegal acts in a prominent commercial building in the community constituted an issue of public interest under subdivision (e)(4). In footnote 4, in accord with the recent trend, the Court of Appeal recognized that subd. (e)(3) is superfluous in that its public forum requirement is now unnecessary in light of subdivision (e)(4), which has no such requirement. Subd. (e)(4) was added to section 425.16 in 1997 to broaden the statute.
An issue is "under consideration" if it is "kept before the mind, given attentive thought, reflection, or subject to inspection or examination.
Here, the Court held that at the time in question in the instant case, both an executive body (the City government) and a judicial body (the trial court) were considering and reviewing the issue of whether illegal activity was occurring at the Property and what should be done about it. The City, once injunctive relief was granted, formulated a policy of refusing to issue certain business licenses at the Property. Both forms of review qualify for anti-SLAPP protection under section 425.16, subdivision (e)(2). As to the second question - whether the employees' statements were made "in connection with" the issues under review - the trial court narrowly construed this prong in error in that it found prong one met only for those employee statements that mentioned the word "litigation" or that were made in connection with litigation. But the statute asks whether the statements were "made in connection with an issue under review" before a branch of government, not whether the statements specifically referenced litigation. The Court found that all of the allegedly slanderous communications referenced in the cross-complaint are based on employees in the City planning and code enforcement departments communicating with parties interested in obtaining licenses at the Property. Hence, each communication is connected to the issue of alleged illegal activity at the Property AND the executive body policy consequences of this issue for individuals seeking business licenses at the Property.
Prong two, the court went on to analyze the elements of each cause of action as to Ashabi and noted that while trade libel always places the burden of proving falsity on the plaintiff or cross-complainant, in a slander claim, the burden of proving truth is ordinarily on the defendant. But because this is a case involving an issue of public interest to the community- a public nuisance and alleged illegal activity in the neighborhood - the burden of falsity falls squarely on the plaintiff' shoulders under the First Amendment. Here, neither side presented any evidence that illegal activity occurred or did not occur at the property. Moreover, the court examined various statutory anc common law privilege and immunity defenses raised by the City and rejected each of them. The Court also rejected the litigation privilege defense of CC 47(b). Hence, because the burden of proving falsity as to each cause of action fell on D'Alessio, he could not show a probability of prevailing on each of his claims as to Ashabi.
Lee's statements, however, stand on substantially different footing. D'Alessio submitted declarations from two different prospective tenants on separate occasions attesting that Lee made the following statements to to them: He said "there was a lot of illegal businesses there, they have massage parlors and marijuana dispensaries and the cops raided it. A second prospective tenant had a conversation with Lee. "Lee said "Dennis D'Alessio has recently been `convicted' of prostitution and drug dealing and that `the entire building is set to be shut down shortly because of illegal activity carried on there."
Here, D'Alessio presented uncontroverted evidence that he had never been convicted of any crime - a fact conceded by cross-defendants on appeal. Nor was there any evidence that the entire building was set to be shut down or that the City had stopped issuing business licenses to other businesses other than the massage and dispensary businesses in that Property. Hence, D'Alessio had met his burden of raising a triable issue of falsity and malice as to Lee and the City. The Court rejected the litigation privilege because Lee's statements were not directed to a participant or witness in the City's lawsuit against D'Alessio - prospective tenant not a necessary party or witness with direct interest in outcome of that litigation. Lee's statements failed to serve a useful or functional step in furthering the truth ascertainment objectives of that proceeding.
Hence the SLAPP motion was granted as to four out of five cross-defendants
The complaint by the City essentially alleged the Costa Mesa Police Department initiated an investigation into the activities of massage establishments at the Property in July 2010, which resulted in the collection of evidence of prostitution as well as a variety of other noncriminal municipal code violations. The complaint further alleged that several of the defendant businesses were distributing marijuana in violation of the municipal code and these businesses had other non-marijuana related violations of the code. In August 2011, the court issued preliminary injunctions ordering D'Alessio and the tenants to cease operating any and all massage parlors and marijuana dispensaries on the premises during the pendency of the litigation.
D'Alessio's cross-complaint alleged that five City employees made 11 oral statements about D'Alessio that amounted to slander, trade libel, and interference with prospective economic advantage. The cross-complaint did not specify the date on which any of the statements were allegedly made or the context in which they were made, other than to allege they occurred within the past year. The defamation cross-complaint alleged the statements were made with malice. The slander cross-complaint went to allege the various statements made by each of the five City employees to potential tenants seeking business licenses from the City. As to the first three employees - Nichols, Shank, and Bouwens-Killeen, the gist of the statements was that each of these employees told a prospective tenant seeking a license to operate a business at the Property, in essence, that the Property had been raided by police, and that after police documented comings and goings at the Property, they found illegal businesses operating there. Other statements by these employees allegedly included: "the City of Costa Mesa will not issue business licenses to anyone attempting to rent space at the property because the City is in the middle of litigation with the owner of the Property due to illegal activity and that D'Alessio is the owner of the Property." Shank also allegedly told a construction contractor that "Dennis D'Alessio has been arrested for prostitution and drug dealing that occurred at the property." Bouwens-Killeen made each the foregoing statements to construction contractors and additionally stated" "[D'Alessio], the owner of the Property is known throughout the City for doing illegal things at the Property."
Ashabi allegedly told a prospective tenant that "the City will not issue business licenses to anyone attempting to rent space at the Property because the owner is in the middle of litigation with the City due to illegal activity."
In support of their anti-SLAPP motion pursuant to section 425.16, the City and its employees filed a declaration from the city attorney attesting in pertinent part to the following facts: When the City's Complaint was filed on April 22,2011, the City stopped issuing any new business licenses for the Property, if the requested business licenses concerned activities or operations related to the City's complaint. Pursuant to a TRO issued May 2011, the City ceased issuing for the property any building permits or new business licenses relating to medical marijuana or massage establishments. There is no City policy or court order regarding issuing other types of business licenses nor has the City placed a moratorium on issuing other types of business licenses for the Property. Moreover, each of the five employees signed declarations attesting that they never made any of the statements alleged in the complaint and that they denied bearing any malice or ill-will toward D'Alessio.
As to prong one, the court ruled that each of the alleged statements were made in connection with issues under review in ongoing litigation between the City and D'Alessio as well as the City's executive body. As to prong two, the court ruled as to three of the employees, Nichols, Shank, and Bouwens-Killeen, that D'Alessio provided no evidence that they made the statements alleged in the cross-complaint. Nor does D'Alessio even argue that the statements admitted to by Nichols and Bouwens-Killeen in their declarations were false or otherwise wrongful. Thus, the trial court should have granted the SLAPP motion as to all three of these cross-defendants. Trial court had erroneously denied the SLAPP motion as to Nichols and Bouwens-Killeen on prong one. Hence, the court of appeal reversed as to two out of three of the foregoing defendants and found that the SLAPP motion should have been granted as to each them.
The Court, however, went on to give more in-depth consideration to Ashabi and Lee's statements.
As to prong one, the Court broke down its analysis into three components: (a) was there an "issue under consideration or review by an executive, legislative or judicial body" under subdivision (e)(2)?; (b) were the employees' statements made "in connection with" this issue under subdivision (e)(2)?; and (c) did the causes of action pleaded by D'Alessio "arise from" the employees statements?
On a side note, one of the grounds curiously not raised by the cross-defendants here is that the issues of prostitution, dispensing marijuana, and other illegal acts in a prominent commercial building in the community constituted an issue of public interest under subdivision (e)(4). In footnote 4, in accord with the recent trend, the Court of Appeal recognized that subd. (e)(3) is superfluous in that its public forum requirement is now unnecessary in light of subdivision (e)(4), which has no such requirement. Subd. (e)(4) was added to section 425.16 in 1997 to broaden the statute.
An issue is "under consideration" if it is "kept before the mind, given attentive thought, reflection, or subject to inspection or examination.
Here, the Court held that at the time in question in the instant case, both an executive body (the City government) and a judicial body (the trial court) were considering and reviewing the issue of whether illegal activity was occurring at the Property and what should be done about it. The City, once injunctive relief was granted, formulated a policy of refusing to issue certain business licenses at the Property. Both forms of review qualify for anti-SLAPP protection under section 425.16, subdivision (e)(2). As to the second question - whether the employees' statements were made "in connection with" the issues under review - the trial court narrowly construed this prong in error in that it found prong one met only for those employee statements that mentioned the word "litigation" or that were made in connection with litigation. But the statute asks whether the statements were "made in connection with an issue under review" before a branch of government, not whether the statements specifically referenced litigation. The Court found that all of the allegedly slanderous communications referenced in the cross-complaint are based on employees in the City planning and code enforcement departments communicating with parties interested in obtaining licenses at the Property. Hence, each communication is connected to the issue of alleged illegal activity at the Property AND the executive body policy consequences of this issue for individuals seeking business licenses at the Property.
Prong two, the court went on to analyze the elements of each cause of action as to Ashabi and noted that while trade libel always places the burden of proving falsity on the plaintiff or cross-complainant, in a slander claim, the burden of proving truth is ordinarily on the defendant. But because this is a case involving an issue of public interest to the community- a public nuisance and alleged illegal activity in the neighborhood - the burden of falsity falls squarely on the plaintiff' shoulders under the First Amendment. Here, neither side presented any evidence that illegal activity occurred or did not occur at the property. Moreover, the court examined various statutory anc common law privilege and immunity defenses raised by the City and rejected each of them. The Court also rejected the litigation privilege defense of CC 47(b). Hence, because the burden of proving falsity as to each cause of action fell on D'Alessio, he could not show a probability of prevailing on each of his claims as to Ashabi.
Lee's statements, however, stand on substantially different footing. D'Alessio submitted declarations from two different prospective tenants on separate occasions attesting that Lee made the following statements to to them: He said "there was a lot of illegal businesses there, they have massage parlors and marijuana dispensaries and the cops raided it. A second prospective tenant had a conversation with Lee. "Lee said "Dennis D'Alessio has recently been `convicted' of prostitution and drug dealing and that `the entire building is set to be shut down shortly because of illegal activity carried on there."
Here, D'Alessio presented uncontroverted evidence that he had never been convicted of any crime - a fact conceded by cross-defendants on appeal. Nor was there any evidence that the entire building was set to be shut down or that the City had stopped issuing business licenses to other businesses other than the massage and dispensary businesses in that Property. Hence, D'Alessio had met his burden of raising a triable issue of falsity and malice as to Lee and the City. The Court rejected the litigation privilege because Lee's statements were not directed to a participant or witness in the City's lawsuit against D'Alessio - prospective tenant not a necessary party or witness with direct interest in outcome of that litigation. Lee's statements failed to serve a useful or functional step in furthering the truth ascertainment objectives of that proceeding.
Hence the SLAPP motion was granted as to four out of five cross-defendants
Friday, January 4, 2013
M.F. Farming apparently conflicts with Wang v. Walmart - Are statements made to obtain a permit from the City the "gravamen" of the claim under SLAPP??
Does M.F. Farming Co. v. Couch Distributing Co. (2012) 207 Cal.App.4th 180 apparently conflict with Wang v. Walmart (2007) 153 Cal.App.4th 790 sub silentio?
Couch is the "city permit/easement dispute" case.
Plaintiff, M.F. Farming, alleged the following in its First Amended Complaint (FAC): Plaintiff MF and defendant Couch Distributing entered into a written agreement in about November 1974 in which MF agreed to sell Parcels A and C to defendant Couch and to grant the company "a non exclusive right of way easement for ingress and egress and for all utility purposes over Parcel B. These parcels were on the ocean side of and abutted Highway 1. By grant deed recorded on June 5, 1975, M.F. granted the two Parcels A and C and the right of way/utility easement over Parcel B to defendant Couch. Defendant Couch purchased Parcel A for purposes of constructing and operating its Budweiser distribution center.
The FAC stated on information and belief that "on a parcel map dated December 1979, as well as subsequent parcel maps submitted to the City of Watsonville by Couch Distributing as part of its application for building permits, Couch Distributing knowingly showed Parcel B as a right of way easement rather than as a separate parcel in order to obtain permits which were otherwise not legal. The complaint further stated that plaintiff, MF now desires to develop and use its property that abuts the inland side of Highway 1 and intends to use parcel B for access. Couch contends that MF has in some manner lost the right to use Parcel B for ingress and egress.
Based on these facts, MF alleged four causes of action for quiet title, slander of title, cancellation of cloud on title, and injunctive relief. Only the latter three were the subject of Couch's anti-SLAPP motion. The slander of title cause of action alleged that defendant Couch Distributing published, without privilege or justification, false maps and plot plans that cast doubt on plaintiff's title. The cancellation of cloud on title cause of action alleged that the improperly published documents were false and fraudulently indicated Couch owned the property at issue and plaintiff MF owned only an easement. It further alleged that defendants were using the false claim of ownership as grounds for obtaining permits for the unlawful development of defendants' property and to prevent plaintiff from developing the subject property and/or causing various government agencies to coerce plaintiff into granting defendants rights and/or ownership of the subject property." The action for injunctive relief alleged that the defendants had blocked plaintiff from the free use of its property of Parcel B as a means of ingress and egress to its property abutting Highway 1.
Defendant submitted the declaration of George Couch which averred as follows: MF's proposed specific plan for the proposed development provided for "a major public access road across Parcel B. Couch testified that "this road would have routed substantial amounts of traffic through the heart of Couch Distributing's operations, which would have been devastating to its continued operations. Moreover, defendant Couch had opposed the use of Parcel B as a public access road in the City's administrative proceedings. George Couch or his attorney appeared at several noticed hearings to testify in opposition to the road and the attorney also wrote two letters to the City expressing the company's strong opposition to the road.
Using another "arising from" analysis, the court noted seminal SLAPP cases from our High Court that held: " The mere fact that an action was field after protected activity took place does not mean the action arose from that activity for purposes of the anti-SLAPP statute. That a cause of action may arguably have been "triggered" by protected activity does not entail is one arising from such activity.
Although the defendant's opposition to the City's approval of Parcel B as an access road to the development might have been a trigger for the lawsuit, those activities were not the basis for challenged causes of action. The complaint's second and third causes of action concerned defendant Couch Distributing's publication of allegedly false maps and documents. In fact, MF's declarations submitted in opposition to the SLAPP motion focused squarely on the two site plans. MF recognizes that the "site plans were submitted to the City of Watsonville as part of the development of Couch's property. Since the site maps were apparently submitted to the City in connection with its permitting process, an official proceeding, it appears that the arising from prong is satisfied as to the second and third causes of action. Since the cause of action arose directly out of statements made and plans submitted to the planning commission and the city council, the defendant satisfied the first prong of the anti-SLAPP statute. Plaintiff MF argued that defendant's statements to the City were fraudulent and thus did not constitute the exercise of free speech or petition. But the Court rejected plaintiff's argument holding that the issue of whether the statements were fraudulent is an issue to be addressed on prong two. The Court also rejected MF' argument that Couch's statements were fraudulent and illegal as a matter of law because there was a clear factual dispute on the point.
As to the fourth cause of action for injunctive relief, the court found that this cause of action arose from both protected and unprotected activity as it incorporated the allegations of petition activity from the prior causes of action by reference but also added allegations of overuse of the easement, encroachments, and other physical interferences with the easement. Having concluded that the injunctive relief claim was a mixed cause of action, the court held, relying on Haight-Ashbury Free Clinics v. Happening House, that the protected activity is not merely incidental, the first prong is satisfied, and the burden shifts to plaintiff to show a probability of prevailing on prong two. In this respect, MF Farming represents a continuation of the recent trend of following a broad plain language construction of the "arising from" prong in mixed cause of action cases while rejecting earlier narrow interpretation cases, like Wang v. Walmart. It is interesting that MF Farming failed to mention Wang because it is virtually indistinguishable from MF Farming and yet Wang found that the defendant's statements in the City Permit hearing were merely incidental to the claim and thus were not the "principal thrust or gravamen" of the claim.
On prong two, the court outlined the elements of a slander of title claim and found that plaintiff failed to adduce evidence to support the claim. First, the court found that it does not appeal that MF can show that Couch published documents that falsely represented that it owned Parcel B or falsely claimed some legal interest in it since there is no dispute that Couch owned an easement over Parcel B. Secondly, the court found that no evidence or expert testimony was introduced showing that defendant's recordation of the parcel map or submission of the site plans to the City had actually impaired the value of Parcel B. There was no evidence of proximately-caused pecuniary loss as to the slander of title claim. As to the third cause of action for cancellation of cloud on title, plaintiff, likewise, could not show that defendant's recordation and submissions to the City cast a cloud on title precisely, because there was no evidence of falsity or disparagement of title and no evidence of pecuniary loss was presented.
As to the fourth cause for injunctive relief, a mixed cause of action, the Court cited, indirectly, via our High Court opinion in Oasis West Realty v. Goldman, the Mann rule and held that because plaintiff produced evidence of unprotected activity alleged that defendant physically interfered with and overburdened plaintiff's right of way easement, plaintiff was able to show a probability of prevailing. Hence, the entire claim stands. Note that under City of Colton, the bribery case previously discussed in my prior blog, the result would have been different. Under Colton, the court would have split the injunctive relief claim into two separate causes of action. The Court would have stricken that part of the claim based on protected petition activity and allowed the remainder of the cause of action based on the unprotected activity to proceed. Under Mann, the entire cause of action stands. Under Colton, only that part of the claim based on protected activity gets stricken if plaintiff fails to show a probability of prevailing.
The MF Farming case presents a number of juicy SLAPP issues in mixed cause of action SLAPP cases on both prong one and prong two that, hopefully, will get resolved by our High Court soon.
Couch is the "city permit/easement dispute" case.
Plaintiff, M.F. Farming, alleged the following in its First Amended Complaint (FAC): Plaintiff MF and defendant Couch Distributing entered into a written agreement in about November 1974 in which MF agreed to sell Parcels A and C to defendant Couch and to grant the company "a non exclusive right of way easement for ingress and egress and for all utility purposes over Parcel B. These parcels were on the ocean side of and abutted Highway 1. By grant deed recorded on June 5, 1975, M.F. granted the two Parcels A and C and the right of way/utility easement over Parcel B to defendant Couch. Defendant Couch purchased Parcel A for purposes of constructing and operating its Budweiser distribution center.
The FAC stated on information and belief that "on a parcel map dated December 1979, as well as subsequent parcel maps submitted to the City of Watsonville by Couch Distributing as part of its application for building permits, Couch Distributing knowingly showed Parcel B as a right of way easement rather than as a separate parcel in order to obtain permits which were otherwise not legal. The complaint further stated that plaintiff, MF now desires to develop and use its property that abuts the inland side of Highway 1 and intends to use parcel B for access. Couch contends that MF has in some manner lost the right to use Parcel B for ingress and egress.
Based on these facts, MF alleged four causes of action for quiet title, slander of title, cancellation of cloud on title, and injunctive relief. Only the latter three were the subject of Couch's anti-SLAPP motion. The slander of title cause of action alleged that defendant Couch Distributing published, without privilege or justification, false maps and plot plans that cast doubt on plaintiff's title. The cancellation of cloud on title cause of action alleged that the improperly published documents were false and fraudulently indicated Couch owned the property at issue and plaintiff MF owned only an easement. It further alleged that defendants were using the false claim of ownership as grounds for obtaining permits for the unlawful development of defendants' property and to prevent plaintiff from developing the subject property and/or causing various government agencies to coerce plaintiff into granting defendants rights and/or ownership of the subject property." The action for injunctive relief alleged that the defendants had blocked plaintiff from the free use of its property of Parcel B as a means of ingress and egress to its property abutting Highway 1.
Defendant submitted the declaration of George Couch which averred as follows: MF's proposed specific plan for the proposed development provided for "a major public access road across Parcel B. Couch testified that "this road would have routed substantial amounts of traffic through the heart of Couch Distributing's operations, which would have been devastating to its continued operations. Moreover, defendant Couch had opposed the use of Parcel B as a public access road in the City's administrative proceedings. George Couch or his attorney appeared at several noticed hearings to testify in opposition to the road and the attorney also wrote two letters to the City expressing the company's strong opposition to the road.
Using another "arising from" analysis, the court noted seminal SLAPP cases from our High Court that held: " The mere fact that an action was field after protected activity took place does not mean the action arose from that activity for purposes of the anti-SLAPP statute. That a cause of action may arguably have been "triggered" by protected activity does not entail is one arising from such activity.
Although the defendant's opposition to the City's approval of Parcel B as an access road to the development might have been a trigger for the lawsuit, those activities were not the basis for challenged causes of action. The complaint's second and third causes of action concerned defendant Couch Distributing's publication of allegedly false maps and documents. In fact, MF's declarations submitted in opposition to the SLAPP motion focused squarely on the two site plans. MF recognizes that the "site plans were submitted to the City of Watsonville as part of the development of Couch's property. Since the site maps were apparently submitted to the City in connection with its permitting process, an official proceeding, it appears that the arising from prong is satisfied as to the second and third causes of action. Since the cause of action arose directly out of statements made and plans submitted to the planning commission and the city council, the defendant satisfied the first prong of the anti-SLAPP statute. Plaintiff MF argued that defendant's statements to the City were fraudulent and thus did not constitute the exercise of free speech or petition. But the Court rejected plaintiff's argument holding that the issue of whether the statements were fraudulent is an issue to be addressed on prong two. The Court also rejected MF' argument that Couch's statements were fraudulent and illegal as a matter of law because there was a clear factual dispute on the point.
As to the fourth cause of action for injunctive relief, the court found that this cause of action arose from both protected and unprotected activity as it incorporated the allegations of petition activity from the prior causes of action by reference but also added allegations of overuse of the easement, encroachments, and other physical interferences with the easement. Having concluded that the injunctive relief claim was a mixed cause of action, the court held, relying on Haight-Ashbury Free Clinics v. Happening House, that the protected activity is not merely incidental, the first prong is satisfied, and the burden shifts to plaintiff to show a probability of prevailing on prong two. In this respect, MF Farming represents a continuation of the recent trend of following a broad plain language construction of the "arising from" prong in mixed cause of action cases while rejecting earlier narrow interpretation cases, like Wang v. Walmart. It is interesting that MF Farming failed to mention Wang because it is virtually indistinguishable from MF Farming and yet Wang found that the defendant's statements in the City Permit hearing were merely incidental to the claim and thus were not the "principal thrust or gravamen" of the claim.
On prong two, the court outlined the elements of a slander of title claim and found that plaintiff failed to adduce evidence to support the claim. First, the court found that it does not appeal that MF can show that Couch published documents that falsely represented that it owned Parcel B or falsely claimed some legal interest in it since there is no dispute that Couch owned an easement over Parcel B. Secondly, the court found that no evidence or expert testimony was introduced showing that defendant's recordation of the parcel map or submission of the site plans to the City had actually impaired the value of Parcel B. There was no evidence of proximately-caused pecuniary loss as to the slander of title claim. As to the third cause of action for cancellation of cloud on title, plaintiff, likewise, could not show that defendant's recordation and submissions to the City cast a cloud on title precisely, because there was no evidence of falsity or disparagement of title and no evidence of pecuniary loss was presented.
As to the fourth cause for injunctive relief, a mixed cause of action, the Court cited, indirectly, via our High Court opinion in Oasis West Realty v. Goldman, the Mann rule and held that because plaintiff produced evidence of unprotected activity alleged that defendant physically interfered with and overburdened plaintiff's right of way easement, plaintiff was able to show a probability of prevailing. Hence, the entire claim stands. Note that under City of Colton, the bribery case previously discussed in my prior blog, the result would have been different. Under Colton, the court would have split the injunctive relief claim into two separate causes of action. The Court would have stricken that part of the claim based on protected petition activity and allowed the remainder of the cause of action based on the unprotected activity to proceed. Under Mann, the entire cause of action stands. Under Colton, only that part of the claim based on protected activity gets stricken if plaintiff fails to show a probability of prevailing.
The MF Farming case presents a number of juicy SLAPP issues in mixed cause of action SLAPP cases on both prong one and prong two that, hopefully, will get resolved by our High Court soon.
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