TALEGA MAINTENANCE CORPORATION, Plaintiff and Respondent, v. STANDARD PACIFIC CORPORATION et al., Defendants and Appellants.
No. G048282
Fourth Dist., Div. Three.
Apr. 15, 2014.
225 Cal.App.4th 722
Newmeyer & Dillion, James S. Hultz and Uliana A. Kozeychuk for Defendants and Appellants.
The Law Offices of Jeri E. Tabback and Jeri E. Tabback for Plaintiff and Respondent.
OPINION
IKOLA, J.—Plaintiff Talega Maintenance Corporation (HOA), a homeowners association, sued two developers for construction defects. The developers, which developed the residential community itself, also developed certain trails adjacent to the housing community. The trails were badly damagеd during rains and flooding in 2005 and again in 2010, allegedly as a result of construction defects.
The HOA also sued three former employees of the developers. The employees were appointed by the developers to be members of the HOA‘s board of directors at various times since 2003.1
The HOA alleges the employee defendants committed fraud, negligence, and breached fiduciary duties in performing their duties as board members. In particular, the HOA contends it is not financially responsible for repairing the trails; thе developers are. Yet the developer board members, who comprised a majority of the board, represented that the HOA was responsible and expended HOA funds to investigate and repair the trails.
FACTS
The following facts are taken from the complaint and the declarations filed in connection with the anti-SLAPP motion.
Defendant Talega Associates, LLC, purchased land for what became a 3,900-acre master planned community in San Clemente known as the “Talega Project.” Ultimately, more than 3,500 homes housing more than 9,000 residents were built. Plaintiff is the homeowners association for the Talega Project. Defendant Standard Pacific Corporation (collectively with Talega Associates referred to as Developers) was a “Guest Builder” that purchased unimproved lots and built separate communities within the Talega Project. The complaint alleges the Developers planned and constructed the Prima Deshecha and Cristianitos regional riding and hiking trails (the Trails), which are the trails at issue here. Defendants Patrick Hayes, Jerome Miyahara, and James B. Yates (collectively, Developer Board Members) were employees of Talega Associates who were appointed to represent Talega Associates on the HOA‘s board of directors. At all relevant times, thе Developer Board Members comprised a majority of the HOA‘s board of directors.
In approximately 2005, the Trails suffered a partial slope failure as a result of severe rains. By that time, title to a portion of the damaged property had already transferred to the HOA. The Developer Board Members represented that the HOA was responsible to pay for repairs to the property it owned—the allegedly fraudulent statement—and to that end expended over $500,000 of HOA funds. According to the complaint, however, the Developer Board Members knew, but failed to disclose, that under the relevant controlling documents, the Developers were responsible for the cost of repairs. Further, the Developer Board Members knew, but failed to disclose, that the damages were the result of the Developers’ improper construction of the Trails, as explicitly pointed out to them by agents of Orange County.
In 2010 rains again damaged the Trails. This time, however, the independent board members had formеd an executive committee—with no Developer
The HOA filed suit in September of 2012, alleging causes of action for breach of fiduciary duty, fraud, cоnstructive fraud, construction defect, negligence, and declaratory relief. Each of the defendants filed anti-SLAPP motions targeting the causes of action for breach of fiduciary duty, fraud, constructive fraud, and negligence. At the hearing on the motions the court recognized it was a close call, stating, “I don‘t think it‘s a slam dunk. It could go either way. And I just want to give it some more thought as to the extent to which it might operate to strike some but not all of the allegations; or whether it is an all or a nothing.” Ultimately, the court denied the motions in their entirety, stating, “[Defendants] failed to establish that any statements were an exercise of free speech. Additionally, [defendants] failed to establish that statements at issue were made before, or in connection with, an official proceeding authorized by law. Moreover, even if the statements were made in a public forum via a [homeowners association] open board meeting, [defendants] have not demonstrated that they involved a matter of sufficient public interest or an exercise of a free speech right.” Defendants timely appealed.
DISCUSSION
I. Legal Principles
The аnti-SLAPP statute “requires the court to engage in a two-step process. First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. [Citation.] If the court finds such a showing has been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim.” (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67 [124 Cal.Rptr.2d 507, 52 P.3d 685].)
“The sole inquiry under the first prong of the anti-SLAPP statute is whether the plaintiff‘s claims arise from protected speech or petitioning
As used in the anti-SLAPP statute, ” ‘act in furtherance of a person‘s right of petition or free speech in connection with a public issue’ includes: (1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law, (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law, (3) any written or oral statement or writing made in a place open to the public or a public forum in сonnection with an issue of public interest, or (4) any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or on an issue of public interest.” (
“An order denying a special motion to strike under section 425.16 is immediately appealable. [Citations.] Our review is de novo; we engage in the same two-step process as the trial court to determine if the parties have satisfied their respective burdens. [Citations.] If the defendant fails to show that the lawsuit arises from protected activity, we affirm the trial court‘s ruling and need not address the merits of the case under the second prong of the statute.” (Castleman, supra, 216 Cal.App.4th at p. 490.)
II. The Constructive Fraud, Breach of Fiduciary Duty, and Negligence Causes of Action Are Not Subject to the Anti-SLAPP Statute
Of the four causes of action subject to the anti-SLAPP motions, we can immediately rule out all but the fraud cause of action.
The only possible application would be
Instead, defendants insist that these causes of action are in fact based on express statements made at board meetings, and thus should be trеated the same as the fraud cause of action. Defendants recount that plaintiff‘s attorney admitted at oral argument in the trial court that “[t]he fraud allegation is based on a statement that was made at a board meeting.” They then leap to the following conclusion: “In fact, all of the causes of action are based upon the allegation that the Defendants controlled, directed, and/or voted for certain actions taken by the HOA in connection with the Regional Trails. [Citation.] Therefore, the HOA‘s admission . . . extends to all of the subject causes of action.” But that is a non sequitur. Controlling, directing, and voting for certain actions are not statements.
We recognize, nonetheless, that voting can constitute protected activity. (See Schroeder v. Irvine City Council (2002) 97 Cal.App.4th 174, 183, fn. 3 [118 Cal.Rptr.2d 330] [stating in dicta, with respect to city council member votes, “voting is conduct qualifying for the protections afforded by the First Amendment“].) Nonetheless, voting is not per se protected activity. (See Donovan v. Dan Murphy Foundation (2012) 204 Cal.App.4th 1500, 1506 [140 Cal.Rptr.3d 71] (Donovan) [stating, with respect to the vote of a nonprofit organization board member, “The mere act of voting, however, is insufficient to demonstrate that conduct challenged in a cause of action arose from protected activity.“].) Here, the HOA‘s claim arises from the act of spending money in violation of the Developer Board Members’ fiduciary duties. The allegations in the complaint concerning the breach of fiduciary duty cause of action, for example, include no mention of voting. While the expenditure of money may have been precipitated by a vote, “the fact that protected activity may have triggered a cause of action does not necessarily mean the cause of action arose from the protected activity.” (Id. at p. 1507; see Graffiti Protective Coatings, Inc. v. City of Pico Rivera (2010) 181 Cal.App.4th 1207, 1218 [104 Cal.Rptr.3d 692] [conduct challenged in action alleging city failed to comply with competitive bidding requirement was not officials’ communications or deliberations, but their failure to obey state and local laws].) The vote
III. The Fraud Cause of Action Is Not Subject to the Anti-SLAPP Statute
The fraud cause of action presents a closer question. The HOA alleges the Developer Board Members fraudulently misrepresented that the HOA was financially liable for repairing the Trails. The HOA‘s counsel conceded this representation was made at a HOA board meeting. Defendants contend
A. Homeowners Association Board Meetings Are Not Official Proceedings
We begin our analysis with two cases that found the proceeding before it was an official proceeding authorized by law. The first is the seminal case analyzing “official proceeding,” Kibler v. Northern Inyo County Local Hospital Dist. (2006) 39 Cal.4th 192 [46 Cal.Rptr.3d 41, 138 P.3d 193] (Kibler). The issue in Kibler was whether a hospital‘s peer review disciplinary proceedings were ” ‘оfficial proceeding[s]’ ” for purposes of the anti-SLAPP statute. (Kibler, supra, at p. 197.) The plaintiff was a doctor who had been disciplined. He sued the hospital based on statements made during the proceedings and the hospital brought an anti-SLAPP motion. (Id. at pp. 196-197.) In concluding the hospital peer review proceedings are official proceedings, the court relied on three considerations. First, peer review proceedings are required of hospitals and heavily regulated. (Id. at pp. 199-200.) Second, because hospitals are requirеd to report the results of peer review proceedings to the Medical Board of California, peer review proceedings play a “significant role” in ” ‘aid[ing] the appropriate state licensing boards in their responsibility to regulate and discipline errant
The second case reaching a similar result is Fontani v. Wells Fargo Investments, LLC (2005) 129 Cal.App.4th 719 [28 Cal.Rptr.3d 833], disapproved on other grounds in Kibler, supra, 39 Cal.4th at page 203, footnote 5. In Fontani a former securities broker-dealer sued his former employer based on statements the latter made to the National Association of Securities Dealers (NASD) concerning the reasons for the plaintiff‘s termination. (Fontani, supra, at p. 725subdivision (e)(1). (Id. at p. 728.) In answering in the affirmative, the court relied on the following observations: “In its capacity here, the NASD exercises governmental power because ‘it is the primary regulatory body for the broker-dealer industry’ and thus performs uniquely regulatory functions typically performed by a governmental regulatory agency. [Citations.] More specifically, while the NASD may perform some private functions, . . . it stands as a regulatory surrogate for the [Securities and Exchange Commission]. The federal securities laws ” ‘delegate[] government power” to [self-regulatory organizations] such as the New York Stock Exchange . . . and the NASD “to enforce . . . compliance by members of the industry with both the legal requirements laid down in the Exchange Act and ethical standards going beyond those requirements.” ’ ” (Id. at p. 729; see Vergos v. McNeal (2007) 146 Cal.App.4th 1387, 1396 [53 Cal.Rptr.3d 647] [administrative grievance procedure set up by Regents of the University of California, “a constitutional entity having quasi-judicial powers,” deemed official proceeding].)
Next we turn to two cases holding the proceeding at issue was not an official proceeding.
In Garretson v. Post (2007) 156 Cal.App.4th 1508 [68 Cal.Rptr.3d 230], “[t]he key issue” was “whether defendant‘s act of noticing a nonjudicial foreclosure sale of plaintiff‘s property constitutes protected activity under the anti-SLAPP statute.” (Id. at p. 1515.) The court noted that nonjudicial foreclosure sales are governed by a comprehensive statutory framework and that the end result is a “final adjudication of the rights of the borrower and lender.” (Id. at p. 1516Id. at p. 1518 action.’ ” (Id. at p. 1520.) The court distinguished Kibler on the basis that nonjudicial foreclosures “are not closely linked to any governmental, administrative, or judicial proceedings or regulation, such as the state licensing and regulation of physicians in Kibler.” (Garretson, supra, at p. 1521.)
In Donovan, supra, 204 Cal.App.4th 1500, the plaintiff was a former member of the board of directors of a nonprofit charitable оrganization who sued the organization and current board members for wrongful removal. (Id. at pp. 1502-1503Corporations Code, and the issue whether to retain [the plaintiff] was an issue of consideration before the [board of directors].” (Id. at p. 1508Kibler on the basis that board decisions are not subject to review by administrative mandate and because, though meetings of the board of directors were authorized by statute, “the actual procedures are left to the private organizations.” (Donovan, supra, at p. 1508; see Olaes v. Nationwide Mutual Ins. Co. (2006) 135 Cal.App.4th 1501, 1508 [38 Cal.Rptr.3d 467] [private company‘s sexual harassment grievance protocol not an official proceeding].)
In this spectrum of cases, homeowners association meetings fall outside the scope of official proceedings. Although the word “official” in
The problem is, the relevant issue is not the general construction and condition of the Trails. Rather, the allegedly fraudulent statement concerns who has to pay for repairing the Trails. There is nothing in the record suggesting the County of Orange or City of San Clemente was considering that issue.
Courts have generally rejected attempts to abstractly generalize an issue in order to bring it within the scope of the anti-SLAPP statute. For example, in the context of
“The definition of ‘public interest’ within the meaning of the anti-SLAPP statute has been broadly construed to include not only governmental matters, but also private conduct that impacts a broad segment of society and/or that affects a community in a manner similar to that of a governmental entity.” (Damon, supra, 85 Cal.App.4th at p. 479.) “Although matters of public interest include legislative and governmentаl activities, they may also include activities that involve private persons and entities, especially when a large, powerful organization may impact the lives of many individuals.” (Church of Scientology v. Wollersheim (1996) 42 Cal.App.4th 628, 650 [49 Cal.Rptr.2d 620], disapproved on other grounds in Equilon Enterprises v. Consumer Cause, Inc., supra, 29 Cal.4th at p. 68, fn. 5.) However, “in cases where the issue is not of interest to the public at large, but rather to a limited, but definable portion of the public (a private group, organization, or community), the constitutionally protected activity must, at a minimum, occur in the context of an ongoing controversy, dispute or discussion, such that it warrants protection by a statute that embodies the public policy of encouraging participation in matters of public significance.” (Du Charme v. International Brotherhood of Electrical Workers (2003) 110 Cal.App.4th 107, 119 [1 Cal.Rptr.3d 501].)
It is the latter requirement that is absent with respect to the fraud cause of action here. There is no indication in the record that there was any controversy, dispute, or discussion surrounding the Developer Board Members’ representation that the HOA was liable to pay the repair costs. To the contrary, a declаration submitted by an independent board member states, “I believed [the Developer Board Members‘] representations, as I had no reason to believe at the time that they were not telling me the truth or acting in the best interest of the Association.” This suggests there was no controversy about the issue, and nothing in the record contradicts that inference. The Developer Board Members made their statements and others believed them without dispute. Given the absence of any controversy, dispute, or discussion, the issue of who was to pay for the repairs, which was of interest to only a narrow sliver of society, was not a public issue.
By contrast, in cases involving statements made at public homeowners association forums where the court found there was a public issue, the
Because defendants failed to meet their burden to show the challenged causes of action arose from protected activity, “we affirm the trial court‘s ruling and need not address the merits of the case under the second prong of the statute.” (Castleman, supra, 216 Cal.App.4th at p. 490.)
DISPOSITION
The order is affirmed. Plaintiff shall recover its costs incurred on appeal.
Moore, Acting P. J., and Thompson, J., concurred.