Filed 7/14/20 Gino Morena Enterprises v Moore CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

GINO MORENA ENTERPRISES,

Cross-complainant and Respondent,

v.

DEBBIE MOORE,

Cross-defendant and Appellant.

D076142

(Super. Ct. No. 37-2015-00032410-

CU-WM-NC)

APPEAL from an order of the Superior Court of San Diego County, Earl H. Maas III, Judge. Affirmed.

Hewgill Cobb & Lockard and Justin G. Hewgill for Cross-defendant and Appellant.

Solomon Ward Seidenwurm & Smith, Daniel E. Gardenswartz and Deborah A. Yates for Cross-complainant and Respondent.

I.

INTRODUCTION

In 2015, Debbie Moore, acting in propria persona, filed a petition for writ of mandate in the superior court in this action seeking review of a decision of the Unemployment Insurance Appeals Board denying her claim for unemployment benefits related to her former employment with Gino Morena Enterprises (Gino Morena). Moore’s petition sought a writ “ordering respondent Unemployment Insurance Appeals Board . . . to . . . declare [Moore] eligible for unemployment compensation benefits, and to grant such benefits . . . .” Moore’s petition did not seek any relief against Gino Morena.

The following year, Moore filed a lawsuit in federal court against Gino Morena, alleging age discrimination and wrongful termination. In early 2017, Moore and Gino Morena entered into a Settlement and Release Agreement (Agreement) in the federal action that contained a broad release and a covenant not to sue. Notwithstanding having entered into the Agreement, and notwithstanding that Moore’s petition for writ of mandate did not seek any relief against Gino Morena, Moore subsequently obtained a default judgment against Gino Morena in this action.

After having the default judgment set aside, Gino Morena brought a cross-complaint against Moore containing a single cause of action for breach of contract. In its breach of contract cause of action, Gino Morena alleged that Moore had violated the Agreement by obtaining the default judgment and seeking money damages against it.

Moore filed a special motion to strike pursuant to the anti-SLAPP statute (Code Civ. Proc., § 425.16). Applying the two-step process for resolving such motions (see, e.g., Baral v. Schnitt (2016) 1 Cal.5th 376, 384 (Baral), the trial court denied the special motion to strike (anti-SLAPP motion), concluding that Moore failed to establish that the cross-complaint arose out of an act in furtherance of Moore’s right to petition, and that Gino Morena had established a probability that it would prevail on its breach of contract claim.

On appeal, Moore claims that the trial court erred in denying her anti-SLAPP motion. We assume that Moore established that her cross-complaint arises from petitioning activity, but conclude that Gino Morena demonstrated a probability of prevailing on its breach of contract cause of action. Accordingly, we affirm the order.

II.

FACTUAL AND PROCEDURAL BACKGROUND

A. Proceedings related to Moore’s petition for writ of mandate

1. Moore’s petition

In September 2015, Moore, acting in propria persona, filed a petition for writ of mandate in the superior court seeking review of a decision of the Unemployment Insurance Appeals Board denying her claim for unemployment benefits. In the caption of the pleading, Moore improperly failed to list the Unemployment Insurance Appeals Board as a party, and improperly listed Gino Morena as the defendant. However, the body of the writ petition properly identified the Unemployment Insurance Appeals Board as the respondent and Gino Morena as the real party in interest.

In her petition, Moore explained that Gino Morena had employed her as a part-time barber at Camp Pendleton. According to Moore, she was “notified by [Gino Morena] that her services were terminated because she refused to pay money for a Rapid Gate pass[ ] when there was another pass available to her at no cost.”

Moore further stated that an examiner of the Employment Development Department (Department) found that she was disqualified from receiving unemployment benefits because she had failed to obtain a permit that Gino Morena had required her to purchase. According to Moore, an administrative law judge affirmed the examiner’s decision, after concluding that Moore had been “discharged for misconduct.” Moore stated that the Unemployment Insurance Appeals Board affirmed the administrative law judge’s decision. Moore claimed that the administrative law judge and the appeals board abused their discretion in reaching these decisions.

In her prayer for relief, Moore stated the following:

“WHEREFORE, petitioner prays as follows:

“1: That this court issue an alternative writ of mandate ordering respondent Unemployment Insurance Appeals Board[:]

“(a) to set aside its decision affirming the decision of the administrative law judge affirming the determination of the Director of Employment Development that the claimant Debbie Moore was discharged for misconduct in connection with her work, and declare her eligible for unemployment compensation benefits, and to grant such benefits, or

“(b) In the alternative, to show cause before this court at a time and place to be fixed by the court why it has not done so and directing it to file with this court the record of all proceedings in this matter before the respondent and administrative law judge:

“2: That, after hearing on the order to show cause, this court issue a peremptory writ of mandate to the same effect as the alternative writ except for the order to show cause:

“3: For cost of suit herein incurred: and

“4: For such other and further relief as the court may deem proper[.]”

Moore attached the relevant decisions and related documents from the Unemployment Insurance Appeals Board as exhibits to her petition.

2. Moore’s proof of service

In February 2017, Moore filed a proof of service stating that she had served the petition for writ of mandate and related exhibits on Gino Morena.

3. Moore’s statement of damages

On August 9, 2017, Moore filed a handwritten document that states in relevant part:

“Statement – [¶] I was awarded benefits of $89.– weekly by Employment [D]evelopment [D]epartment. [¶] So for 2 years it would be $9,256.– . [¶] Than[k] – you! [¶] Debbie Moore.”

4. The default judgment

That same day, the trial court entered a default judgment against Gino Morena in the amount of $9,256.

5. The order pursuant to judgment

In October 2017, the trial court entered an order entitled “Order pursuant to judgment” that lists Gino Morena as “Defendant” in the caption and states the following:

“1. Plaintiff Debbie Moore [‘Plaintiff’] sought reversal of a decision by the Office of Appeals for the Director of Employment Development, which decision denied Plaintiff certain unemployment benefits.

“2. Defendant defaulted after being properly served with the summons and complaint.

“3. The Court, on August 9, 2017, granted judgment for Plaintiff in the amount of $9256, which represents the employment benefits Plaintiff claimed.

“4. Therefore, Plaintiff is entitled to $9256 from the Director of Employment Development.”

6. Gino Morena’s motion to set aside the default judgment

In November 2018, Gino Morena filed a motion to set aside the default judgment. In its motion, Gino Morena argued that the judgment was void for lack of jurisdiction because Morena’s prayer for relief in her writ petition did not request any monetary damages against Gino Morena. Gino Morena also argued that the default judgment was void for lack of effective service because Gino Morena had not received actual notice that Moore was seeking monetary damages against it.

7. The trial court’s order setting aside the default judgment

In January 2019, the trial court set aside the default judgment.

B. Gino Morena’s cross-complaint

After the trial court set aside the default judgment, Gino Morena filed a cross-complaint against Moore that contained a single cause of action for breach of contract. In the “Factual Background” (formatting omitted) portion of its cross-complaint, Gino Morena outlined the procedural history of the case discussed above, including Moore’s filing the petition for writ of mandate in 2015, Moore’s obtaining the default judgment in August 2017 against Gino Morena for $9,256, and Moore’s obtaining the October 2017 “Order Pursuant to Judgment.”

Gino Morena alleged that, in October 2018, Moore faxed the October 2017 order to Gino Morena. According to Gino Morena, this was the first notice it had received that money damages had been awarded against it. Gino Morena noted that it had successfully moved to set aside the default judgment.

Gino Morena also stated that, in September 2016, Moore filed an action in federal court against it. Gino Morena alleged that it had entered into the Agreement with Moore in early 2017. Gino Morena attached the Agreement as an exhibit to its cross-complaint. The Agreement contains broad release and covenant not to sue provisions. Gino Morena stated, “Notwithstanding the Agreement, [Moore] submitted a proposed Judgment by Default in this action . . . requesting damages against [Gino Morena] of $9,256,” which the court had entered.

In the breach of contract claim, Gino Morena further alleged that “[t]he parties agreed that the Agreement would be a full and final settlement between them as to all differences and disputes between them, including without limitation all matters regarding the employee-employer relationship between the parties.” Gino Morena alleged that it had performed its obligations under the 2017 Agreement by paying Moore $8,000. Gino Morena claimed that Moore had breached the Agreement by “seeking monetary damages against [Gino Morena], after signing the Agreement.”

In its prayer for relief, Gino Morena requested damages in an amount to be proven at trial, “including attorney’s fees and related costs to have the default judgment vacated, to prepare and file an Answer, to prepare and file this cross-complaint, and to continue to litigate this case until it is decided or dismissed,” return of “some or all of the consideration paid to Moore,” as well as interest, and other relief as the court may deem proper.

C. Proceedings related to Moore’s anti-SLAPP motion

1. Moore’s anti-SLAPP motion

Moore filed an anti-SLAPP motion, seeking to strike Gino Morena’s cross-complaint. In a supporting brief, Moore claimed that Gino Morena’s cross-complaint arose from protected activity because it was clear that Gino Morena sued Moore “because she named and served them in her [w]rit [of mandate].”

Moore also maintained that Gino Morena would not be able to show a likelihood of success on its breach of contract cause of action because any contract to waive unemployment insurance benefits was void under California law, and thus, any “breach of the settlement [Agreement] . . . would [be] unenforceable.” Moore also argued that her pursuit of a default judgment against Gino Morena could not support its breach of contract cause of action because, even if Gino Morena were to argue that its claim was premised on the “erroneous default judg[ ]ment,” rather than the writ seeking unemployment benefits, any such action would, in reality, amount to an attempt “to rely on an unenforceable waiver of Unemployment Insurance Benefits . . . to be a breach of contract.”

2. Gino Morena’s opposition

Gino Morena filed an opposition in which it argued that, “[w]hile the action underlying the breach has some connection to a court action, the court action does not comprise the ‘principal thrust or gravamen’ of the claims.” (Italics omitted.) Gino Morena maintained that it had not sued Moore for seeking unemployment benefits, arguing:

“Ms. Moore breached the . . . Agreement not when she sought unemployment benefits, but rather when she: (1) told this Court that she had been ‘awarded’ $9,256; (2) asked this Court to award monetary damages against [Gino Morena] for that amount; and then (3) upon securing a judgment, faxed it to [Gino Morena] seeking to collect additional money. These actions are not protected activity under [section] 425.16.”

Gino Morena also argued that the trial court “need not rely on the prong one analysis because Moore’s motion should also be denied under the second prong of the anti-SLAPP analysis.”

With respect to its probability of prevailing, Gino Morena argued that it could establish all four elements of its breach of contract claim. Specifically, Gino Morena argued that the parties had entered into the Agreement, Gino Morena performed its obligation under the Agreement by paying Moore the consideration identified in the Agreement, Moore breached the Agreement by improperly obtaining a default judgment against Gino Morena and attempting to collect on the judgment, and Gino Morena suffered damages as a result of Moore’s breach as outlined in a declaration from Rex Morena, Gino Morena’s president and chief executive officer, that Gino Morena lodged with its opposition. Those damages included restitution for monies paid to Moore for a “worthless covenant not to sue,” damages related to the “human capital” that Gino Morena was forced to expend on this litigation, reputational damages resulting from Moore’s wrongful securing of a default judgment that could cause Gino Morena to be at “risk of appearing to lack integrity,” and legal expenses.

3. Moore’s reply

Moore filed a reply brief in which she reiterated her argument that Gino Morena’s breach of contract claim arose from Moore’s petition activity, arguing that Moore’s “litigation activities are the sole basis of the Cross-Complaint.” With respect to the probability of prevailing, Moore reiterated her argument that Gino Morena’s breach of contract claim was based on Moore’s pursuit of “non-waiverable [sic] rights,” upon which Gino Morena could not prevail.

4. The trial court’s ruling

After holding a hearing, the court entered an order denying Moore’s anti-SLAPP motion. The order states in relevant part:

“[Moore] has failed to establish that the cross-complaint arises out of an act in furtherance of [Moore’s] right of petition. [Citation.] [Gino Morena] has also established a probability that it will prevail on its breach of contract claim.”

5. The appeal

Moore timely appeals from the trial court’s order denying her anti-SLAPP motion.

III.

DISCUSSION

A. The trial court properly denied Moore’s anti-SLAPP motion

Moore claims that the trial court erred in denying her anti-SLAPP motion.

1. Governing law

a. Relevant law governing anti-SLAPP motions

i. Determination of an anti-SLAPP motion in the trial court

Section 425.16 permits a defendant to file a “[s]pecial motion to strike” [i.e., anti-SLAPP motion] when a plaintiff brings a claim against the defendant “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.” (§ 425.16, subd. (b)(1).)

“Resolution of an anti-SLAPP motion involves two steps. First, the defendant must establish that the challenged claim arises from activity protected by section 425.16. [Citation.] If the defendant makes the required showing, the burden shifts to the plaintiff to demonstrate the merit of the claim by establishing a probability of success.” (Baral, supra, 1 Cal.5th at p. 384.)

The California Supreme Court has ” ‘described th[e] second step as a “summary-judgment-like procedure.” [Citation.]’ ” (Sweetwater Union High School Dist. v. Gilbane Building Co. (2019) 6 Cal.5th 931, 940 (Sweetwater).) As the Sweetwater court explained:

” ‘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.]” (Ibid.)

ii. Standard of review

An appellate court reviews “de novo the grant or denial of an anti-SLAPP motion.” (Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1067.) ” ‘Only a cause of action that satisfies both prongs of the anti-SLAPP statute—i.e., that arises from protected speech or petitioning and lacks even minimal merit—is a SLAPP, subject to being stricken under the statute.’ ” (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 278–279.) Thus, an appellate court may elect to affirm an order denying anti-SLAPP motion on the ground that the defendant has established a probability of prevailing on the cause of action, without addressing the “arising under” prong. (See, e.g., Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 820 [“we will proceed in these particular circumstances directly to the second prong, inasmuch as we have readily found that Oasis has demonstrated a probability of prevailing on its claims”]; Southern California Gas Co. v. Flannery (2014) 232 Cal.App.4th 477, 485–486 [“We need not engage in the first step of the anti-SLAPP analysis, and . . . proceed directly to the second step of analysis and conclude SCGC has established a probability of prevailing on the merits of the Interpleader Action, which provides an adequate basis for affirming the order of the trial court”].)

b. Relevant substantive law

The elements of a cause of action for breach of contract are: ” ‘ “(1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to plaintiff.” ‘ ” (Coles v. Glaser (2016) 2 Cal.App.5th 384, 391.)

2. Application

Moore claims that the trial court erred in determining that Gino Morena established a probability of prevailing on its breach of contract cause of action. Moore does not dispute that Gino Morena made a prima facie showing of the first two elements of its claim, namely, that the parties had entered into a contract (i.e., the Agreement), and that Gino Morena performed its obligation under the Agreement (i.e., by paying Moore $8,000). However, Moore contends that Gino Morena will not be able to prove that she breached the Agreement for two reasons.

First, Moore contends that “any contract to waive unemployment insurance benefits is void.” (Citing Unemp. Ins. Code, § 1342; see fn. 9 ante.) This argument fails because Gino Morena’s breach of contract claim is not premised on an allegation that Moore breached the Agreement by seeking unemployment benefits. Rather, Gino Morena claims that Moore breached the Agreement by obtaining a default judgment against Gino Morena for $9,256. Specifically, the cross-complaint alleges that Moore breached the Agreement by “seeking monetary damages against [Gino Morena], after signing the Agreement.”

We reject Moore’s argument that it would be an “absurd result[ ]” to permit her “procedural error[ ]” in obtaining a default judgment in the writ proceeding against Gino Morena to constitute a “breach of contract.” Even assuming that Moore did not understand the impropriety of her actions in obtaining a default judgment against Gino Morena, there is nothing absurd about concluding that her actions constitute prima facie evidence of a breach of the Agreement’s release and covenant not to sue provisions. In those provisions, Moore promised to “forever discharge[ ] [Gino Morena] . . . from any and all . . . liabilities . . . of any nature whatsoever . . . arising from or in any way related to or growing out of . . . [Moore’s] prior employment with, relationship, and separation from [Gino Morena],” and agreed not to “participate, or otherwise cooperate in any legal, administrative, or other adversary proceedings . . . taken against [Gino Morena].” Moore also agreed that she would not “file, cause to be filed, or otherwise voluntarily participate in the filing, investigation, and/or prosecution of any such charges, complaints, petitions, or accusatory pleadings in any court or with any governmental agency.” (See fn. 8, ante.) Evidence that Moore obtained a default judgment against Gino Morena after having entered into the Agreement clearly constituted prima facie evidence that she had breached these provisions of the Agreement.

We also reject Moore’s argument that the litigation privilege “shields [Moore] from liability.” (Formatting omitted.) ” ‘The usual formulation is that the privilege applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action. [Citations.]’ ” (Wentland v. Wass (2005) 126 Cal.App.4th 1484, 1490 (Wentland).) ” ‘ “The principal purpose of [the litigation privilege] is to afford litigants and witnesses [citation] the utmost freedom of access to the courts without fear of being harassed subsequently by derivative tort actions. [Citations.]” [Citation.]’ ” (Feldman v. 1100 Park Lane Associates (2008) 160 Cal.App.4th 1467, 1485, italics added.) The litigation privilege ” ‘is generally described as one that precludes liability in tort, not liability for breach of contract. [Citations.]’ [Citation.] ‘[W]hether the litigation privilege applies to an action for breach of contract turns on whether its application furthers the policies underlying the privilege. [Citations.]’ (Wentland[, supra, 126 Cal.App.4th at p. 1492].)” (Feldman, supra, at p. 1486.)

More specifically, in Wentland, supra, 126 Cal.App.4th 1484, the Court of Appeal carefully considered whether the litigation privilege should shield a party from liability for a breach of contract claim premised on the breach of the provisions of a settlement agreement. The Wentland court concluded that the litigation privilege should not apply in such an instance:

“[C]onsidering the policies to be furthered by the litigation privilege, we conclude the privilege should not apply in this breach of contract case. Just as one who validly contracts not to speak waives the protection of the anti-SLAPP statute [citation], so too has he waived the protection of the litigation privilege.” (Id. at p. 1494.)

We agree with the reasoning of Wentland, supra, 126 Cal.App.4th 1484, and conclude that the litigation privilege clearly should not bar a suit based on a covenant not to sue, since to apply the privilege in such a fashion would frustrate the purpose of the contract. (Cf. Navellier v. Sletten (2002) 29 Cal.4th 82, 94 [stating that the Court’s interpretation of section 425.16 “preserves appropriate remedies for breaches of contracts involving speech by ensuring that claims with the requisite minimal merit may proceed,” and observing that “a defendant who in fact has validly contracted not to speak or petition has in effect ‘waived’ the right to the anti-SLAPP statute’s protection in the event he or she later breaches that contract”].) Accordingly, we reject Moore’s argument that the litigation privilege shields her from potential liability on Gino Morena’s breach of contract claim.

Finally, Moore claims that Gino Morena “cannot show harm” (i.e., prove damages). In his declaration, Rex Morena listed several types of damages that Gino Morena claimed to have suffered as a result of Moore’s suit. (See pt. II.C.2, ante.) We need not address the merits of each of these categories of damages in this opinion, since case law makes clear that a plaintiff may carry its burden of establishing a prima facie breach of contract cause of action against an anti-SLAPP motion through the availability of nominal damages. (See Mission Beverage Co. v. Pabst Brewing Co., LLC (2017) 15 Cal.App.5th 686, 711 [recognizing availability of the recovery of nominal damages to satisfy a plaintiffs’ burden to establish a probability of prevailing on anti-SLAPP challenge to a breach of contract claim]; Midland Pacific Building Corp. v. King (2007) 157 Cal.App.4th 264, 275. In Midland, the Court of Appeal affirmed an order denying an anti-SLAPP motion targeting a breach of contract action, reasoning in relevant part:

“The [defendants] argue there is no evidence of damages. . . . [I]n the absence of a showing of actual damages, nominal damages are available. (Civ. Code, § 3360;[ ] Sweet v. Johnson (1959) 169 Cal.App.2d 630, 632.) [Plaintiff] has shown a prima facie case for breach of contract. That is what is necessary for [plaintiff] to prevail.” (Ibid.)

The same is true in this case. We therefore conclude that Moore is not entitled to reversal on the ground that Gino Morena “cannot show harm.”

Accordingly, we conclude that Gino Morena demonstrated a probability of prevailing on its breach of contract claim, and that the trial court thus did not err in denying Moore’s anti-SLAPP motion.

IV.

DISPOSITION

The order denying Moore’s anti-SLAPP motion is affirmed. Moore is to bear costs on appeal.

AARON, Acting P. J.

WE CONCUR:

IRION, J.

DATO, J.