Hanover Insurance v. Fremont Bank
68 F. Supp. 3d 1085
N.D. Cal.2014Background
- Fremont Bank loaned Legg, Inc. money secured by collateral including Legg’s accounts receivable and perfected via UCC filings.
- Hanover Insurance Co. issued performance/payments bonds for Legg’s Bonded Projects and paid subcontractor claims when Legg defaulted.
- Hanover and the Bank attempted to collect from the City of Livermore and Burke Construction; Hanover asserted priority to remaining contract funds.
- Bank sent May 8, 2013 letters claiming superior rights to Legg’s accounts receivable and directing funds to Bank; Hanover disputed priority.
- State court actions were filed against Legg and guarantors, later consolidated; Bank obtained attachments and a judgment against Legg; funds were partially collected by the Sheriff.
- Hanover filed this federal action asserting declaratory and other claims (declaratory judgment, money had and received, conversion, intentional interference) against the Bank; Bank moved to dismiss under anti-SLAPP and for prudential abstention (Younger, Colorado River, Brillhart).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Hanover’s claims arise from protected activity under anti-SLAPP | Hanover claims the Bank’s May 8 letters and litigation actions relate to protected activity. | Bank argues the claims arise from non-protected conduct and pre-/post-litigation steps. | Anti-SLAPP does not apply to all claims; some claims arise from non-protected activity and survive. |
| Whether the declaratory-judgment claim arises from protected activity | Declaratory relief seeks rights to funds, not enforcement of the Bank’s litigation. | Letters and litigation related to the Bank’s rights may be protected. | Declaratory-judgment claim does not arise from protected activity. |
| Whether money had and received and conversion claims arise from protected activity | Claims concern ownership of funds Hanover alleges Bank wrongfully received. | Protected activity limits apply to Bank’s litigation-related acts. | Neither claim arises from protected activity; anti-SLAPP denied for these claims. |
| Whether intentional interference with contract arises from protected activity | May 8 letters interfered with Hanover–City contractual relationship. | Letters were not protected in connection with litigation. | Letters not protected; anti-SLAPP denied for this claim. |
| Whether prudential doctrines (Younger, prior exclusive jurisdiction, Brillhart, Colorado River) warrant dismissal | N/A for Hanover; court should decide; no abstention. | Bank urges abstention due to parallel state proceedings. | Court declines to abstain; retains jurisdiction; does not apply Younger, prior exclusive jurisdiction, Brillhart, or Colorado River abstention. |
Key Cases Cited
- Equilon Enterprises v. Consumer Cause, Inc., 29 Cal.4th 53 (Cal. 2002) (two-step anti-SLAPP analysis; protected activity threshold and probability of prevailing)
- Freeman v. Schack, 154 Cal.App.4th 719 (Cal. App. 2007) (arising-from analysis; protected activity must be integral to the claim)
- City of Cotati v. Cashman, 29 Cal.4th 69 (Cal. 2002) (definition of 'arising from' in anti-SLAPP context)
- Neville v. Chudacoff, 160 Cal.App.4th 1255 (Cal. App. 2008) (pre-litigation communications protected if in connection with an issue under review by a court)