Case Number: EC061404 Hearing Date: April 11, 2014 Dept: A

Stepanian v Best Buy Bail Bonds

MOTION TO STRIKE (SLAPP)

Calendar: 6
Case No: EC061404
Date: 4/11/14

MP: Cross-Defendants, Gevork Stepanian, Sona Stepanian, and John Akopian
RP: Cross-Complainant, Best Buy Bail Bonds, Inc.

ALLEGATIONS IN CROSS-COMPLAINT:
The Cross-Complainant was induced by false representations to enter into a settlement agreement. The Cross-Defendants breached the settlement agreement by filing the Complaint to quiet title and for declaratory relief in this action. The Cross-Complainant has suffered damages because it was forced to engage legal counsel to defend against the Complaint in this action.

CAUSES OF ACTION IN CROSS-COMPLAINT:
1) Fraud
2) Common Count
3) Breach of Contract

RELIEF REQUESTED:
Strike Cross-Complaint under CCP section 425.16 (SLAPP)

DISCUSSION:
This case arises from the claims of the Plaintiffs, Gevork Stepanian, Sona Stepanian, and John Akopian, that they have made a full satisfaction of a judgment that the Defendant had against the Plaintiffs and that the Defendant has refused to file a full satisfaction or to release the judgment. The Plaintiffs seek to quiet title on their property to remove the $44,616 abstract of judgment and a declaration of rights and duties to the property.
The Defendant, Best Buy Bail Bonds, Inc., then filed a Cross-Complaint to seek the attorney’s fees that it has incurred to defend itself against the Complaint under theories of fraud and breach of contract.

This hearing concerns the motion of Cross-Defendants, Gevork Stepanian, Sona Stepanian, and John Akopian, to strike the Cross-Complaint under CCP section 425.16. The Cross-Defendants argue that the Cross-Complainant’s claims against them arise from their protected activity, i.e., the right to petition by filing a written complaint for relief. CCP section 425.16 permits the Court to strike causes of action arising from an act in furtherance of the defendant’s right of free speech or petition, unless the plaintiff establishes that there is a probability that the plaintiff will prevail on the claim.

Under CCP section 425.16, the defendant bears the initial burden of showing that the claims fall within the class of suits subject to a motion to strike, i.e., that plaintiff’s claim is based on an act of defendant in furtherance of his right to free speech. Fox Searchlight Pictures, Inc. v. Paladino (2001) 89 Cal. App. 4th 294, 304. Under CCP section 425.16(b)(2), the Court may consider the pleadings and supporting affidavits in making its determination. A defendant meets his initial burden by demonstrating that the act underlying the plaintiff’s case fits one of the categories identified in section 425.16(e). City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78. Subdivision (e) defines the protected acts as the following:

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 connection 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 an issue of public interest.

If the defendant meets this initial burden, the plaintiff then has the burden of demonstrating a probability of prevailing on the claim. Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal. 4th 728, 741. The plaintiff satisfies this burden by demonstrating that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited. Id. Under CCP section 425.16(b)(2), a plaintiff may use affidavits to meet the plaintiff’s burden.

1. Cross-Defendant’s Burden
As noted above, the Cross-Defendants have the initial burden of demonstrating that the Cross-Defendant’s acts in the Cross-Complaint fits into one the categories identified in section 425.16(e). The Cross-Defendants seek to strike the entire Cross-Complaint on the ground that the claims arise from the Cross-Defendants’ engaging in the act of filing a written statement with in a judicial proceeding, i.e., their Complaint in this action. This falls within the category of protected activities identified in CCP section 425.16(e)(1).
Under California law, filing a lawsuit is an exercise of a party’s constitutional right of petition. Chavez v. Mendoza (2001) 94 Cal. App. 4th 1083, 1087. The constitutional right to petition includes the basic act of filing litigation or otherwise seeking administrative action. Id. Further, the filing of a judicial complaint satisfies the “in connection with a public issue” component of section 425.16, subdivision (b)(1) because it pertains to an official proceeding. Id. Under these accepted principles, a cause of action arising from the allegedly improper filing of a lawsuit may appropriately be the subject of a section 425.16 motion to strike. Id.
The first cause of action for fraud and the third cause of action for breach of contract seek damages because “Cross-Complainant has been forced to engage legal counsel to defend against the present suit.” The third cause of action alleges that the breach of contract occurred when the Cross-Defendants filed the Complaint. These causes of action arise from the Cross-Defendants’ filing of a lawsuit. They both seek damages for the fees and costs that the Cross-Complainant has incurred to defend itself against the Complaint in this action. Accordingly, the first and third causes of action appear to be subject to the motion to strike.
The second cause of action seeks $44,616 for money paid at the request of the Cross-Defendants. In addition, it includes a request for attorney’s fees.
A review of the Cross-Complaint reveals that the first cause of action includes allegations that identify $44,616 as the amount of an abstract of judgment that had been filed against the Cross-Defendants in the settlement of the underlying case. Further, a review of the Complaint reveals that the Cross-Defendants claim to have satisfied this $44,616 abstract of judgment and they are seeking to quiet title in their property to remove the $44,616 abstract of judgment. This indicates that the second cause of action also arises from the Cross-Defendants’ act of filing the Complaint to seek relief from the $44,616 abstract of judgment and that it also seeks to recover the attorney’s fees incurred by the Cross-Complainant.
Therefore, Cross-Defendants have met their burden of proof because the claims in the Cross-Complaint arise from their act of filing the Complaint, which is a protected activity under CCP section 425.16(e)(1).

In their opposition, the Cross-Complainant makes the argument that their Cross-Complaint does not arise from the act of filing the Complaint. The Cross-Complainant argues that the gravamen of the Cross-Complaint is to seek relief from the fraud and breach of contract.

In order to determine whether a cause of action is subject to a SLAPP motion, the Court examines the principal thrust or gravamen of the plaintiff’s cause of action. Ramona Unified School Dist. v. Tsiknas (2005) 135 Cal. App. 4th 510, 519-520. When a cause of action is based on both protected activity and unprotected activity, it is not subject to section 425.16 if the protected conduct is “merely incidental” to the unprotected conduct. Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP (2005) 133 Cal.App.4th 658, 672. If liability is not based on the protected activity, the cause of action does not target the protected activity and is therefore not subject to the SLAPP statute. City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78 to 79 (“the critical point is whether the plaintiff’s cause of action itself was based on an act in furtherance of the defendant’s right of petition or free speech”).
For example, in Peregrine, the Court found that the causes of action were based on a mixture of unprotected and protected activity. The Court found that the protected activity was not incidental because there were specific allegations that the plaintiff suffered substantial damages as a result of petitioning activity and conduct in a courtroom to delay an SEC investigation and lawsuit. The Court found that the cause of action was based on the act in furtherance of the defendant’s protected activity.

Here, the Cross-Complainant seeks damages as a result of the Cross-Defendants engaging in petitioning activity. In the first cause of action for fraud and in the third cause of action for breach of contract, the Cross-Complainant’s seeks damages solely because “Cross-Complainant has been forced to engage legal counsel to defend against the present suit”. The third cause of action alleges that the breach of contract was the filing of the Complaint.
These allegations indicate that the filing the Complaint is not incidental to the Cross-Complaint. Instead, it is the exclusive cause of the Cross-Complainant’s alleged damages, i.e., the Cross-Complaint is seeking damages for the attorney’s fees that it has incurred to defend itself from the Complaint. The causes of action in the Cross-Complaint are based on the filing of the Complaint, i.e., an act in furtherance of the Cross-Defendants’ right of petition and a protected activity under CCP section 425.16(e)(1).

The Cross-Complaint cites Personal Court Reporters, Inc. v. Rand (2012) 205 Cal. App. 4th 182 to support their argument. However, a review of Personal Computers reveals that it does not support the opposition papers.
In Personal Computers, the plaintiff filed a complaint for breach of contract and common counts to seek $32,323.45 in fees for court reporting services that had not been paid. The defendant filed a motion to strike under the anti-SLAPP statute to argue that the work had been provided in lawsuits and was protected activity. The Court of Appeal found that the legal proceedings in which the court reporting fees had been incurred were incidental to the plaintiff’s claim and that the claim was based essentially on unprotected activity, i.e., the nonpayment of overdue invoices. The gravamen of the plaintiff’s claim in Personal Computers was a collection case, i.e., the plaintiff sought to collect amounts due on unpaid invoices.
In the pending case, the Cross-Complainant does not seek to recover unpaid amounts on invoices. Instead, the Cross-Complainant’s claim of damages are the attorney’s fees that it has incurred to defend against the present suit. The gravamen of the Cross-Complaint is the claim to damages arises from the attorney’s fees incurred to defend against the Complaint.

Therefore, the Cross-Defendants have met their burden of proof under CCP section 425.16 because the causes of action in the Cross-Complaint arise from the an act in furtherance of the Cross-Defendants’ right of petition and a protected activity under CCP section 425.16(e)(1).

b. Cross-Complainant’s Burden
The Cross-Complainant has the burden of demonstrating a probability of prevailing on its claims. Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal. 4th 728, 741. The Cross-Complainant can satisfy this burden by demonstrating that its Cross-Complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited. Id. Under CCP section 425.16(b)(2), a plaintiff may use affidavits to meet the plaintiff’s burden.
The Cross-Complaint does not meet his burden. The Cross-Complaint does not proceed through each of its three causes of action and demonstrate that they plead sufficient facts. Instead, the Cross-Complaint offers solely the conclusion that it has “included in its pleadings sufficient facts and admissible evidence to support a favorable judgment in the instant Cross-Complaint”. There is no analysis of the pleadings. There is no argument that directs the Court to the allegations that plead each essential element of each of the three causes of action. This does not demonstrate that the pleadings are legally sufficient.
Further, the Cross-Complaint does not direct the Court to a sufficient prima facie showing of facts to sustain a favorable judgment. For example, the first cause of action in the Cross-Complaint is for fraud. The cause of action has the following elements:

1) a representation, usually of fact, which is false;
2) knowledge of its falsity;
3) intent to defraud;
4) justifiable reliance upon the misrepresentation; and
5) damage resulting from that justifiable reliance
Stansfield v. Starkey (1990) 220 Cal. App. 3d 59, 72-73.

There is no argument in the opposition papers that directs the Court to the evidence that demonstrates that the Cross-Complainant has a sufficient prima facie showing of facts to sustain a favorable judgment. There is no argument directing the Court to evidence of a representation made by each of the three Cross-Defendants, evidence that they knew it was false, evidence that they had an intent to defraud, evidence that the Cross-Complainant justifiably relied upon the misrepresentation, and no evidence of damages.
The third cause of action for breach of contract has the following elements:

1) the contract,
2) plaintiff’s performance or excuse for nonperformance,
3) defendant’s breach, and
4) the resulting damages to plaintiff.
Reichert v. General Ins. Co. (1968) 68 Cal. 2d 822, 830.

There is no argument directing the Court to evidence of any of these elements.

The opposition papers include a few documents and two declarations. Since the Cross-Complainant failed to offer an explanation of how they meet its burden, the Court can only speculate as to their purpose.
Untabbed exhibit 1 contains a letter from Mary Adams, an escrow officer for Closeline Escrow of California. Ms. Adams is making an inquiry about the abstract of judgment in this case. Ms. Adams is not a party to this case. It is unknown how this letter contains facts that tend to establish any element of any claim in the Cross-Complaint.
Untabbed exhibit 2 contains a letter from Benjamin Wasserman, who is the Cross-Complainant’s attorney. In the letter, Mr. Wasserman states that the abstract of judgment is currently valued at $79,039.97 due to interest. It is unexplained how this letter contains facts that tend to establish any element of any claim in the Cross-Complaint.
There is also an untabbed declaration from Benjamin Wasserman. Mr. Wasserman states facts regarding the underlying cases between the parties. Mr. Wasserman also states that the Cross-Defendants filed the Complaint on September 26, 2013 and that he received phone calls from an escrow officer and the Cross-Defendants regarding the abstract of judgment and the judgment lien. Mr. Wasserman than offers his own opinions that the Cross-Defendants made fraudulent statements in the telephone calls. Further, Mr. Wasserman offers his opinion that the Cross-Defendants are acting fraudulently and deceptively by claiming that they have satisfied the judgment. It is unexplained how his declaration contains facts that tend to establish any element of any claim in the Cross-Complaint.
There is an untabbed declaration from Patricia Haddad, who is the officer manager for Benjamin Wasserman. Ms. Haddad states that she received multiple phone calls from an escrow officer and the Cross-Defendants regarding the abstract of judgment and the judgment lien. Ms. Haddad offers the same opinions of Mr. Wasserman, i.e., the Cross-Defendants are acting fraudulently. It is unknown how her declaration contains facts that tend to establish any element of any claim in the Cross-Complaint.
Finally, the Cross-Complaint requests that the Court take judicial notice of the pleadings, the case summary, the notice of entry of judgment, and the abstract of judgment in the prior cases between these parties, i.e., in EC042901 and BC382461. It is unexplained how the facts in these documents filed with the Court tend to establish any element of any claim in the Cross-Complaint.

In addition, the Cross-Complainant fails to address the litigation privilege, which would be an affirmative defense to the claims based on the representations made when the parties resolved the underlying cases. Under Civil Code section 47(b), a publication made in any legislative or judicial proceeding is privileged. This provision of Civil Code section 47 creates the litigation privilege and protects attorneys, judges, jurors, witnesses, and other court personnel from liability arising from communications made during a judicial proceeding. Budwin v American Psychological Assn. (1994) 24 Cal App 4th 875, 880. The privilege advances the policies of promoting complete and truthful testimony, encouraging zealous advocacy, giving finality to judgments, and avoiding unending litigation. Id.
The privilege is not limited to statements made in a courtroom. Hagberg v California Federal Bank (2004) 32 Cal 4th 350, 361. In addition to protecting testimony in court and statements made in pleadings, it includes statements made prior to the filing of a lawsuit, whether in preparation for anticipated litigation or to investigate the feasibility of filing a lawsuit. Id. Accordingly, the privilege applies to any communication:

1) made in judicial proceedings;
2) by litigants or other participants authorized by law;
3) made to achieve the objects of the litigation; and
4) that has some connection or logical relation to the action.
Budwin v American Psychological Assn. (1994) 24 Cal App 4th 875, 880-881.

The principal purpose of this privilege is to afford litigants and witnesses the utmost freedom of access to the courts without fear of being harassed subsequently by derivative tort actions. Silberg v. Anderson (1990) 50 Cal.3d 205, 213-216. It promotes the effectiveness of judicial proceedings by encouraging attorneys to zealously protect their clients’ interests. Id. The litigation privilege has been referred to as “the backbone to an effective and smoothly operating judicial system.” Id.
To effectuate its vital purposes, the litigation privilege is held to be absolute in nature. Id. It has been held to immunize defendants from tort liability based on theories of abuse of process, intentional infliction of emotional distress, intentional inducement of breach of contract, intentional interference with prospective economic advantage, negligent misrepresentation, invasion of privacy, negligence, and fraud. Id. The only exception is the tort for malicious prosecution actions. Id.

In the pending Cross-Complaint, the first cause of action for fraud includes allegations that the Cross-Defendants made representations when they entered into the stipulation for entry of judgment to resolve the litigation that they were aware that the Cross-Complainant was relying upon the promises in the settlement and that the settlement was the entire agreement between the parties. The representations identified in the first cause of action were made in an underlying judicial proceeding by litigants and their attorney, were made to achieve the object of settling the litigation, and have a connection to the litigation.
Accordingly, the representations are subject to the absolute protection of the litigation privilege. The Cross-Complainant offers no argument regarding this affirmative defense.

Accordingly, the Cross-Complainant has not met its burden of proof because the Cross-Complainant did not demonstrate that the Cross-Complaint is legally sufficient and the Cross-Complaint did not make a prima facie showing that it can establish the essential elements of any cause of action. Therefore, the Cross-Complaint will be stricken under CCP section 425.16.

c. Attorney’s Fees
Under CCP section 425.16(c)(1), a prevailing defendant on a special motion to strike shall be entitled to recover his or her attorney’s fees and costs. The Cross-Defendants state that they reserve the right to seek attorney’s fees if they are the prevailing party.

RULING:
GRANT motion to strike the Cross-Complaint under CCP section 425.16 (SLAPP)