36 Cal.App.5th 1037
Cal. Ct. App.2019Background
- Larwin Square landlord (Larwin) and parent Kimco refused consent to proposed assignment of a 1977 ground lease (which forbids assignment without prior written consent but provides consent "shall not be unreasonably withheld") for an anchor supermarket space.
- Vons assigned the lease chain to Haggen entities in 2015; tenant Haggen defaulted after a few months and the space remained vacant while Propco continued paying rent.
- In 2016 Propco/ValueRock sought Larwin’s consent to assign the lease to ValueRock; Larwin requested financials, use assurances (grocery use), and raised concerns about the chain of assignments; Larwin denied consent based on lack of assurances and financial information, and Haggen’s default.
- Plaintiffs sued in 2016 alleging Larwin unreasonably withheld consent (breach of contract, implied covenant, and tort claims). While litigation was pending, plaintiffs submitted an amended assignment request in 2018 with different terms (lower guarantor net worth, 90-day marketing campaign, transfer of all rights to ValueRock TN) and expressly stated the 2018 request was not a settlement offer and would not release prior claims.
- Larwin treated the 2018 letter as a settlement communication and denied consent again; plaintiffs amended their complaint to add allegations about Larwin’s 2018 refusal. Larwin moved to strike under the anti‑SLAPP statute (§ 425.16), arguing the 2018 request and responses were protected litigation/settlement communications.
- The trial court denied the anti‑SLAPP motion, finding the claims attack Larwin’s business decision to withhold consent (not protected petitioning/speech), and the Court of Appeal affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the second amended complaint "arises from" protected petitioning or speech under the anti‑SLAPP statute | The amended complaint challenges Larwin’s business decision to withhold consent to assignment; it is not based on settlement or litigation communications | The 2018 assignment request and Larwin’s response were settlement communications or litigation‑related statements, thus protected activity shielded by § 425.16 | Court: Claims do not arise from protected activity — the gravamen is Larwin’s refusal to consent (a contractual/business decision), so anti‑SLAPP does not apply |
| Whether a settlement communication made during litigation can form the basis of liability here | The 2018 letter expressly disclaimed being a settlement communication and preserved plaintiffs’ claims for damages; acceptance would not have released prior claims | Even if tied to settlement talks, settlement communications are protected and thus the complaint should be struck | Court: The explicit disclaimers and the nature of the relief sought show the 2018 request was not a settlement offer that would resolve prior claims; even if settlement talks motivated the request, the complaint is based on non‑protected conduct |
| Whether litigation communications that influenced plaintiffs’ amended proposal convert the claims into petitioning activity | Plaintiffs argue any influence from discovery or litigation does not convert a contract‑based claim into a SLAPP; the claims target the decision to withhold consent | Defendants argue the amended request was crafted in response to discovery/litigation and thus defendants’ responses are protected | Court: The mere fact litigation influenced the amended request does not make the complaint arise from protected activity; a causal background relationship is insufficient |
| Whether defendants are entitled to attorney fees under anti‑SLAPP if motion fails | Plaintiffs seek fees because defendants moved to strike | Defendants argued their motion was proper because litigation communications were at issue | Court: Motion was not frivolous; plaintiffs’ fee request denied (no fees awarded to defendants either) |
Key Cases Cited
- Park v. Bd. of Trustees of California State University, 2 Cal.5th 1057 (2017) (speech must itself be the wrong complained of for anti‑SLAPP protection)
- Crossroads Investors, L.P. v. Federal Nat. Mortgage Ass'n, 13 Cal.App.5th 757 (2017) (settlement discussions in connection with litigation are generally protected activity)
- Equilon Enterprises v. Consumer Cause, Inc., 29 Cal.4th 53 (2002) (two‑step anti‑SLAPP analytical framework)
- Flatley v. Mauro, 39 Cal.4th 299 (2006) (de novo review and evidentiary standards on anti‑SLAPP motions)
- City of Cotati v. Cashman, 29 Cal.4th 69 (2002) (protected activity may trigger but does not automatically convert a claim into a SLAPP)