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
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment