ROMAN JAMES DESIGN BUILD, INC., Plaintiff and Appellant, v. DAVID MONARCH et al., Defendants and Respondents.
G060712 (Super. Ct. No. 30-2021-01188990)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION THREE
Filed 1/10/23
Deborah C. Servino, Judge.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS. California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
Appeal from an order of the Superior Court of Orange County, Deborah C. Servino, Judge. Affirmed.
Brown, Neri, Smith & Khan and Geoffrey A. Neri for Plaintiff and Appellant.
Clausen Miller, Joseph J. Ferrini and Ian R. Feldman for Defendants and Respondents.
The Company sued the Monarch parties for intentional and negligent interference with prospective economic advantage and intentional interference with contract. The Monarch parties filed a motion to strike the operative complaint pursuant to
We affirm. It is well established the act of recording a lis pendens, upon which the Company’s lawsuit is based, is protected conduct under
FACTS AND PROCEDURAL BACKGROUND
I. THE FIRST AMENDED COMPLAINT
The Company, along with then coplaintiff James, filed a first amended complaint against the Monarch parties containing causes of action for intentional
In support of the asserted causes of action, the first amended complaint alleged, inter alia, the Monarch parties (1) knew (or should have known) of the Company’s economic relationships and knew of its written contracts with several lenders and counterparties in four projects which included operating and loan agreements; (2) “engaged in wrongful conduct by recording frivolous lis pendens on the properties
A couple of months after the first amended complaint was filed, James filed a request that he be dismissed from the action without prejudice. James’s dismissal from the action was thereafter entered by the clerk as requested, leaving the Company as the sole plaintiff in the matter.
II. THE ANTI-SLAPP MOTION AND THE OPPOSITION
The Monarch parties filed an anti-SLAPP motion seeking to strike the first amended complaint in its entirety on the ground each cause of action within it was based on protected conduct in the forms of recording a lis pendens and related communications.
The Company filed an opposition to the anti-SLAPP motion, arguing: “Because [the Monarch parties]’ conduct in recording the lis pendens was not privileged, that conduct is not entitled to the protection of California’s anti-SLAPP statute. As [the Monarch parties] cannot meet their burden at step 1 of the anti-SLAPP analysis, the burden does not shift to [the Company] to demonstrate at step 2 the probability of prevailing on its claims. However, in any event, [the Company] can easily satisfy the applicable standard, pursuant to which it need only show the claims have ‘even minimal merit’. [Citation.] Contrary to the Motion’s arguments otherwise, [the Company] has competent evidence to support a prima facie case for each of its claims, including interference by [the Monarch parties] and resulting damage.”
III. THE TRIAL COURT GRANTS THE ANTI-SLAPP MOTION AND AWARDS ATTORNEY FEES TO THE MONARCH PARTIES
The trial court granted the anti-SLAPP motion. In its order, the court concluded the Monarch parties met their burden of showing the Company’s first amended complaint arose from protected activity under
The trial court ordered the first amended complaint stricken. The trial court also awarded the Monarch parties $10,740.40 in reasonable attorney fees and costs under
I. SECTION 425.16 AND THE GOVERNING STANDARD OF REVIEW
“A cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.” (
“Litigation of an anti-SLAPP motion involves a two-step process. First, ‘the moving defendant bears the burden of establishing that the challenged allegations or claims “aris[e] from” protected activity in which the defendant has engaged.’ [Citation.] Second, for each claim that does arise from protected activity, the plaintiff must show the claim has ‘at least “minimal merit.”’ [Citation.] If the plaintiff cannot make this showing, the court will strike the claim.” (Bonni v. St. Joseph Health System (2021) 11 Cal.5th 995, 1009.) “We have described this second step as a ‘summary-judgment-like procedure.’ [Citation.] The court does not weigh evidence or resolve conflicting factual claims. Its inquiry is limited to whether the plaintiff has stated a legally sufficient claim and made a prima facie factual showing sufficient to sustain a favorable judgment. It accepts the plaintiff’s evidence as true, and evaluates the defendant’s showing only to determine if it defeats the plaintiff’s claim as a matter of law. [Citation.] ‘[C]laims with the requisite minimal merit may proceed.’ [Citation.]” (Baral, supra, 1 Cal.5th at pp. 384-385, fn. omitted.)
II. THE COMPANY’S CLAIMS ARISE OUT OF PROTECTED ACTIVITY
A claim is only subject to an anti-SLAPP motion if it “aris[es] from” protected activity. (
In its order granting the anti-SLAPP motion, the trial court concluded each of the three causes of action in the first amended complaint arose out of the Monarch parties’ act of recording the lis pendens in the underlying family law action. The Company does not challenge this determination, stating in its opening brief: “Here, the principal thrust or gravamen of [the Company]’s claims, the ‘core injury–producing conduct’ is that [the Monarch parties’] recording of a lis pendens interfered with [the Company]’s prospective economic advantage and contractual relations. As attested to by James, it was and is the recording and fact of the lis pendens on each property that led to his inability to obtain refinancing on the subject properties. [Citation.] Indeed, the lenders who contacted James specifically identified the lis pendens as the reason that they could no longer provide financing or refinancing of the properties. [Citation.] Accordingly, it was evidently the lis pendens themselves, not the demand letters, that led
It is well established the recording of a lis pendens is protected activity under
In its opening brief, the Company argues that, although in general the recording of lis pendens constitutes protected activity, it is not protected activity here because the lis pendens was not privileged.
But, as recognized by the trial court, “the fact that an act is not privileged does not mean that it is not subject to anti-SLAPP protection.” In Flatley v. Mauro (2006) 39 Cal.4th 299, 325 (Flatley), the California Supreme Court explained that
In Park 100 Investment Group II, LLC v. Ryan (2009) 180 Cal.App.4th 795, 806 (Park 100), the plaintiff cited Flatley, supra, 39 Cal.4th 299 in support of the argument the filing of an invalid lis pendens constitutes an illegal act which cannot constitute protected activity under
The appellate court concluded: “Flatley does not assist [the respondent]. [¶] An illegal act is one that is forbidden by law. [Citation.] Even if a lis pendens is not appropriate under the circumstances, it is not an illegal act forbidden by law. (E.g., Manhattan Loft, LLC v. Mercury Liquors, Inc., supra, 173 Cal.App.4th 1040-1050 [defendants’ conduct in filing lis pendens was protected activity even if the lis pendens was invalid, as it did not refer to a pending lawsuit, but referred to arbitration proceedings; thus, even if a lis pendens was not properly filed, the defendants met their
The Monarch parties’ conduct of recording the lis pendens, therefore, constituted protected activity within the meaning of
III. THE COMPANY DID NOT CARRY ITS BURDEN OF SHOWING A PROBABILITY OF PREVAILING ON THE MERITS OF ITS CLAIMS
As discussed ante, once the Monarch parties met their burden of demonstrating the Company’s claims arose from protected conduct, the burden shifted to the Company to demonstrate their claims were “legally sufficient and factually substantiated.” (Baral, supra, 1 Cal.5th at p. 396.) A plaintiff cannot meet this burden by relying on its own pleading but must present admissible evidence. (Newport Harbor, supra, 23 Cal.App.5th at p. 49.)
The elements of intentional interference with prospective economic advantage are “(1) the existence, between the plaintiff and some third party, of an economic relationship that contains the probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge of the relationship; (3) intentionally wrongful acts designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm proximately caused by the defendant’s action. [Citation.]” (Roy Allan Slurry Seal, Inc. v. American Asphalt South, Inc. (2017) 2 Cal.5th 505, 512.)
“The elements of negligent interference with prospective economic advantage are (1) the existence of an economic relationship between the plaintiff and a third party containing the probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge of the relationship; (3) the defendant’s knowledge (actual or construed) that the relationship would be disrupted if the defendant failed to act with reasonable care; (4) the defendant’s failure to act with reasonable care; (5) actual disruption of the relationship; and (6) economic harm proximately caused by the
“Tortious interference with contractual relations requires ‘(1) the existence of a valid contract between the plaintiff and a third party; (2) the defendant’s knowledge of that contract; (3) the defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.’ [Citations.]” (Ixchel Pharma, LLC v. Biogen, Inc., supra, 9 Cal.5th at p. 1141.)
Each of the Company’s claims requires proof of “actual” disruption of an economic relationship or contract which resulted in economic harm to the Company. In its order, the trial court concluded the Company failed to carry its burden of showing a probability of prevailing on its claims because it failed to produce admissible evidence of such disruption and consequent damages: “[The Company] contends that it was unable to extend loans on four of its projects due to the lis pendens recorded by [the Monarch parties], which resulted in millions in damages. [The Company], however, failed to submit admissible evidence demonstrating actual disruption of the relationship and/or resulting damages. The only evidence in support of such contention is contained in the declaration by [the Company]’s principal, Roman James. But that evidence was inadmissible as hearsay, lacks personal knowledge, and/or lacks foundation. [Citation.] [The Company] did not cure the asserted defect and did not demonstrate the defects were curable at the hearing on the motion. (Sweetwater Union High School Dist. v. Gilbane Building Co. [(2019)] 6 Cal.5th [931,] 949.) Accordingly, [the Company] fails to meet its burden on the second prong.”
The trial court sustained the Monarch parties’ evidentiary objections to the following portions of James’s declaration, on the grounds those portions constituted hearsay,5 lacked foundation, assumed facts not in evidence and/or declared facts of which James lacked personal knowledge:
- “All was going well until I was told, by Mr. Martin, that as the result of the lis pendens recorded on the Sunset Plaza Property, I was no longer eligible for a loan.”
- “In addition, I was sent an email from the President of Pivotal Capital (Mr. Joe Gigliello on November 21, 2019) containing a copy of the lis pendens filed on the Sunset Plaza Property and I was subsequently told that because of this fact, the loan would not be extended again.”
- “Due to a similar series of events, as described above, the lender on the Laguna Beach Project, Mr. Andrew Martin, President of Arcus Capital, decided to not approve an extension of the loan that was previously made on the Laguna Beach property. Consequently, I lost this property, leaving me with no interest in the project. RJDB lost income in the form of construction draws on development [of] the property, which ceased, as well as lost profits on an eventual sale of the property.”
“I also lost all interest in the Robin Drive Project when a lender I had previously repaid tens of millions of dollars on other projects (Skylark Capital) learned about the lis pendens being filed on the Robin Drive project.” - “In addition, my land owner partner on the Robin Drive project told me that he had heard ‘talk around town’ that I was in trouble and a bad risk due to having Lis Pendens filed on all of my projects.”
- “I tried to extend the loan with Skylark Capital, the lender on the Robin [Drive] Project, but due to the lis pendens filed on the property I was turned down.”
- “Within a few weeks I was sent a letter from the landowner that removed me from the project and I lost all interest therein.”
- “On the project located at 1250 Bel Air Road, I was asked by my landowner equity partner to roll over the construction loan.”
- “Consequently, when he received notice of the Lis Pendens having been filed on the property, he felt that he personally and his entire Forty-Eight Million Dollar ($48,000,000.00) Bel Air Road project were at risk.”
- “In addition, due to the lis pendens the lender would not roll the loan over and no other lender would loan on a property with such a cloud on title.”
In the absence of any specific argument explaining how any of the court’s evidentiary rulings constituted an abuse of discretion, we deem the Company’s challenge to such rulings forfeited. In any event, the record shows the court did not abuse its discretion because the subject portions of the declaration are inadmissible as hearsay and/or because they lack foundation or James’s personal knowledge of the facts asserted.
The Company does not contend that, absent the portions of James’s declaration the court deemed inadmissible, it produced evidence showing the Monarch parties’ conduct of recording the lis pendens actually interfered with any contract or economic relationship of the Company’s so as to cause it to suffer economic harm or damages. Indeed, the portions of James’s declaration deemed admissible by the trial
IV. SWEETWATER UNION HIGH SCHOOL DIST. V. GILBANE BUILDING CO. (2019) 6 CAL.5TH 931
Citing Sweetwater Union High School Dist. v. Gilbane Building Co. (2019) 6 Cal.5th 931 (Sweetwater), the Company argues that, even if the trial court’s evidentiary rulings were correct, the Company “could certainly cure any evidentiary problem at trial in demonstrating actual disruption of its business and damages by presenting competent witnesses . . . who withdrew financing or refused refinancing after learning of the lis pendens and supplanting any reliance on hearsay with their live testimony.” Therefore, the Company’s argument continues, the Monarch parties’ “objections should not have been sustained or, at the very least, [the Company] should have been permitted to attempt to cure the asserted defects before the trial court granted the anti-SLAPP motion on the basis of evidentiary objections.”
The Company’s argument is based on a misreading of the California Supreme Court’s decision Sweetwater, supra, 6 Cal.5th 931. In that case, the Supreme Court considered the “narrow question” of “what kind of evidence a court may consider” in determining whether a plaintiff has demonstrated a probability of success in defending against an anti-SLAPP motion. (Id. at p. 937.)
In Sweetwater, supra, 6 Cal.5th at page 938, a school district sued to void contracts it had entered into with the defendants on the ground the district’s superintendent and others had received meals, vacations, and event tickets from the program director and chief executive officer of one of the defendants before and during the bidding and approval process for those contracts. The defendants filed an anti-SLAPP motion, arguing the school district’s complaint “stemmed from constitutionally protected political expression.” (Ibid.) In opposition, the school district relied “on
The trial court overruled the defendants’ hearsay objections to the school district’s evidence and denied the anti-SLAPP motion. (Sweetwater, supra, 6 Cal.5th at p. 939.) The Court of Appeal affirmed. (Ibid.)
The Supreme Court, in turn, affirmed the appellate court. (Sweetwater, supra, 6 Cal.5th at p. 937.) The Supreme Court explained: “The anti-SLAPP statute describes what evidence a court may consider at the second step. It provides that ‘[i]n making its determination, the court shall consider the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.’ . . . [¶] Although not mentioned in the SLAPP Act, the
The Supreme Court acknowledged the factual narratives of the guilty plea forms and the excerpts of grand jury testimony proffered by the school district constituted hearsay. (Sweetwater, supra, 6 Cal.5th at pp. 941-942.) The court explained, however, “statutes allowing consideration of some statements in resolving pretrial motions provide
The Supreme Court concluded the change of plea forms could be considered declarations under
In the opening brief, the Company argues the trial court should not have sustained the Monarch parties’ evidentiary objections to James’s declaration because the Company could have cured any evidentiary problem at trial in demonstrating actual disruption of its business and damages “by presenting competent witnesses (e.g., the various lenders (Mr. Giglietto and the ‘other parties’) who withdrew financing or refused refinancing after learning of the lis pendens and supplanting any reliance on hearsay with their live testimony.” The Supreme Court in Sweetwater made it clear, in order to show a probability of prevailing on the merits, the plaintiff must produce declarations or their equivalent by which statements therein reflect they were made by competent witnesses with personal knowledge of the facts they swear to be true.
Here, the Company did not offer any statements by lenders such as Giglietto “that are the equivalent of affidavits and declarations because they were made under oath or penalty of perjury in California.” (Sweetwater, supra, 6 Cal.5th at p. 945.) (Nor did the Company offer any explanation why it had failed to do so.)
Instead, it merely offered James’s declaration summarizing what he believed such witnesses might testify to in a declaration or if called at trial. (See Fashion 21 v. Coalition for Humane Immigrant Rights of Los Angeles (2004) 117 Cal.App.4th 1138, 1147 [“[T]he proper view of ‘admissible evidence’ for purposes of the SLAPP statute is evidence which, by its nature, is capable of being admitted at trial . . . . Courts have thus excluded evidence which would be barred at trial by the hearsay rule, or because it is speculative, not based on personal knowledge or consists of impermissible opinion testimony. This type of evidence cannot be used by the plaintiff to establish a probability of success on the merits because it could never be introduced at trial.”].) James’s declaration, therefore, is insufficient under
Our conclusion is consistent with the appellate court’s decision in Sanchez v. Bezos (2022) 80 Cal.App.5th 750 (Sanchez). In Sanchez, the plaintiff sued the defendants for defamation, alleging the defendants had falsely told several reporters the plaintiff had given explicit nude photographs of one of the defendants to a newspaper in an effort to damage that defendant. (Id. at p. 758Ibid.) The trial court found the summary of the reporters’ statements contained in the plaintiff’s declaration constituted inadmissible hearsay, and therefore could not be considered for anti-SLAPP purposes. As the plaintiff offered no other evidence the defendants had made defamatory comments about him, the court granted the anti-SLAPP motion and entered judgment in favor of the defendants.
On appeal, the plaintiff argued, inter alia, under Sweetwater, supra, 6 Cal.5th 931, “hearsay may be considered for anti-SLAPP purposes if there is a reasonable possibility the hearsay will be cured at trial” and that “any hearsay in his declaration can be cured when the reporters testify under oath in deposition or at trial.” (Sanchez, supra, 80 Cal.App.5th at p. 758Sweetwater. That case reaffirmed that hearsay, absent an applicable exception, may not be considered for anti-SLAPP purposes. The only examples of ‘curable’ hearsay in that decision were statements made under oath or penalty of perjury. Those statements by analogy fell within the hearsay exception for affidavits and declarations in anti-SLAPP proceedings. The reporters’ statements recounted in plaintiff’s declaration, in contrast, were not made under oath or penalty of perjury, and the trial court properly declined to consider them.” (Id. at p. 759.)
The order is affirmed. Respondents shall recover costs on appeal.
MOTOIKE, J.
WE CONCUR:
GOETHALS, ACTING P. J.
SANCHEZ, J.