Case Number: KC070438 Hearing Date: March 01, 2019 Dept: O

Defendants Elecnor Belco Electric, Inc., Roger De Vito, and Bennett W. Root’s motions to strike Plaintiff Lincoln Pacific Builder’s complaint pursuant to Code of Civil Procedure Section 425.16 are DENIED.

Defendants Elecnor Belco Electric, Inc., Roger DeVito, and Bennett W. Root (collectively, the “defendants”) have filed two separate motions moving for an order to strike Plaintiff Lincoln Pacific Builder’s (“plaintiff”) Complaint pursuant to Code of Civil Procedure Section 425.16.

Code of Civil Procedure Section 425.16, the anti-SLAPP statute, provides: “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.” (CCP § 425.16(b)(1).)

An “act in furtherance of a person’s right of petition or free speech under the United States of California Constitution in connection with a public issue” includes (1) any written or oral statement or writing made before a judicial proceeding, (2) any written or oral statement or writing made in a public forum in connection with an issue of public interest, or (3) 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. (CCP § 425.16(e).)

Evaluation of an anti-SLAPP motion requires 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. Second, if the court finds such a showing has been made, the court must then consider whether the plaintiff has demonstrated a probability of prevailing on the claim. (Nygard, Inc. v. Uusi-Kerttula (2008) 159 Cal.App.4th 1027, 1035.)

Defendants’ Burden of Proof

The moving party bears the initial burden of showing that the action falls within the class of suits subject to the special motion to strike. (Matson v. Dvorak (1995) 40 Cal.App.4th 539, 548; Dixon v. Superior Court (1994) 30 Cal.App.4th 733, 742; Wilcox v. Superior Court (1994) 17 Cal.App.4th 809, 819.) A defendant meets this burden by demonstrating that the act underlying the plaintiff’s cause of action fits one of the categories spelled out in Code of Civil Procedure Section 425.16(e). However, it is not enough to establish that the action was filed in response to or in retaliation for a party’s exercise of the right to petition. Rather, the claim must be based on the protected petitioning activity. (Okorie v. Los Angeles Unified School Dist. (2017) 14 Cal.App.5th 574, 586.)

While a defendant need not first establish that his actions are constitutionally protected under the First Amendment as a matter of law (Wilcox, supra, 17 Cal.App.4th at 820), a defendant is required to make a prima facie showing that plaintiff’s suit arises from any act of defendant in furtherance of his right to petition or his right of free speech under the federal or state constitution in connection with an issue of public interest. (CCP § 425.16(e); Equilon Enterprises v. Consumer Cause (2002) 29 Cal.4th 53, 67.) The act which forms the basis for the plaintiff’s cause of action must itself have been an act in furtherance of the right of petition or free speech. (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 76-78; ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 1003; Dowling v. Zimmerman (2001) 85 Cal.App.4th 1400, 1417; Braun v. Chronicle Publishing Co. (1997) 52 Cal.App.4th 1036, 1043.)

A defendant may meet this burden by showing that the act which forms the basis for the plaintiff’s suit was (1) any written or oral statement made before a legislative, executive or judicial proceeding; (2) a statement or writing made in connection with an issue under consideration in such a proceedings or “any other official proceeding authorized by law;” (3) any written or oral statement 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 an issue of public interest. (CCP § 425.16(e); Equilon Enterprises, supra, 29 Cal.4th at 66; Dixon, supra, 30 Cal.App.4th at 742.)

Whether the anti-SLAPP statute applies is determined by the “principal thrust or gravamen” of plaintiff’s claim. The gravamen is defined by the acts on which liability is based. If the allegations of a defendant’s protected activity are only incidental to a cause of action based essentially on nonprotected activity, the mere mention of the protected activity does not subject the cause of action to an anti-SLAPP motion. (Optional Capital, Inc. v. Akin Gump Strauss, Hauer & Feld LLP (2017) 18 Cal.App.5th 95, 110; Martinez v. Metabolife Int’l, Inc. (2003) 113 Cal.App.4th 181, 187.)

Defendants’ burden is to show that the action falls within the class of suits subject to the special motion to strike.

The filing of a lawsuit is an emblematic example of protected petitioning activity. (See CCP § 425.16(e)(1); Navellier v. Sletten (2002) 29 Cal.4th 82, 90.) In the original lawsuit concerning these parties, case number KC067245, plaintiff filed an action against defendants alleging contract claims. Defendants then filed a cross-complaint against plaintiff. The Court granted summary judgment in favor of plaintiff, against the defendants, and the Court of Appeal affirmed the trial court decision.

In the instant matter, case number KC070438, plaintiff asserts a malicious prosecution claim against defendants based on defendants’ cross-complaint in case number KC067245. Because the cross-complaint was filed in a prior judicial proceeding, the instant complaint therefore arises from activity protected by the anti-SLAPP statute. Defendants have satisfied the first prong of the statute.

Plaintiff’s Burden of Proof

Plaintiff now has the burden of proof to establish a probability that he will prevail on his malicious prosecution claim against defendants. (CCP § 425.16(b).) Plaintiff must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment. (Premier Med. Mgmt. Systems, Inc. v. California Ins. Guar. Ass’n (2006) 136 Cal.App.4th 464, 476.)

Plaintiff contends that defendants filed a cross-complaint in the original lawsuit for the improper purpose of obtaining a set-off in the amount it owed to plaintiff. In order to prevail in a suit for malicious prosecution, plaintiff must demonstrate that: (1) the action was commenced by or at the direction of defendant; (2) pursued to a legal termination favorable to the plaintiff; (3) brought without probable cause; and initiated with malice.

Plaintiff presents the following evidence:

Defendants’ cross-complaint asserted causes of action for Breach of Oral Contract, Breach of Written Contract, Fraud, Breach of Fiduciary Duty, and Common Counts.

The underlying contract.

In support of its Breach of Oral Contract claim, defendants contended that there was no written contract covering the “takeover jobs.” However, as the trial court and appellate court noted, the fourth contract defined the transition expenses defendant Elecnor Belco Electric, Inc (“Belco”) agreed to pay plaintiff, had an integration clause providing that it was the complete and entire agreement covering the matters therein, and that it may not be amended except by a subsequent agreement in writing. (See Opposition to Motion to Strike Complaint, Exhibit 3.) Thus, the takeover jobs, which formed the basis of defendants’ oral claim, are “matters covered herein,” and therefore, the integration clause specifically precluded the oral claim.

In support of the Fraud claim, defendants contended that plaintff fraudulently induced it to enter into the oral contract to create a joint venture for the “takeover jobs.” However, as shown above, there was no oral contract. Further, there was no joint venture because a joint venture is an undertaking by two or more persons jointly to carry out a single business enterprise for profit. (Weiner v. Fleischman (1991) 54 Cal.3d 476, 482.) In support of its claim, defendants produced a declaration, attesting that it “worked together” with plaintiff on the projects due to an emergency situation. (See Wong Deposition in Opposition to Summary Judgment Motion (Case #KC067245) at 99.) However, “working together” towards a common goal is not the same as carrying out a “business enterprise for profit.” Additionally, there was deposition evidence that it had no joint venture with plaintiff and did not obtain a joint venture license pursuant to Business and Professions Code Section 7029.1(a). (Id.) Thus, without an oral contract or joint venture, defendants’ Fraud claim were defective.

Finally, in support of the Breach of Written Contract claim, defendants alleged that plaintiff breached the June 2013 TEC Work Assignment Agreement by failing to assign all the contracts it was supposed to assign. However, plaintiff produced evidence that it assigned the seven (7) newly-awarded contracts to defendant Belco that were listed as attachments to the contract. (See Issue 5,1 in Opposition to Summary Judgment Motion (Case #KC067245).) Defendant Belco also accepted the assignment and worked on all 7 newly-awarded contracts. (Id. (Issue 5, 2-3).) Defendant Belco did not present any evidence that would have created a triable issue on its written contract claim.

Defendant De Vito met with plaintiff’s counsel during the pendency of the underlying litigation with defendant Bennett W. Root also present. Both defendants De Vito and Root were informed that Mr. Wong’s admission during his deposition proved that there was no joint venture and no oral agreement. Despite Mr. Wong’s admission, all defendants continued to litigate the cross-complaint to obtain a negotiating advantage. (HMS Capital, Inc. v. Laywers Title Co. (2004) 118 Cal.App.4th 204 (settlement documents are admissible in a malicious prosecution suit as evidence of malice).)

Defendants contend that the malicious prosecution claim is defective because plaintiff suffered no damages arising from the cross-complaint. However, plaintiff has produced evidence that it lost profits due to the litigation from 2014 to 2017, when defendant Belco refused to pay Lincoln during this time because of its set-off demand.

The Court finds that plaintiff has produced sufficient evidence to demonstrate a probability of prevailing on its claim that defendants original cross-complaint was commenced by or at the direction of defendants, pursued to a legal termination favorable to the plaintiff, brought without probable cause, and initiated with malice. (See Soukup, supra, 39 Cal. 4th at 292.)

In reaching this conclusion, this Court is not weighing the strength of the parties’ evidence. This Court is only concerned with whether the malicious prosecution claim is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment. (Premier Med. Mgmt. Systems, Inc. v. California Ins. Guar. Ass’n (2006) 136 Cal.App.4th 4464, 476.)

Accordingly, the motions are DENIED.