Case Number: EC062388    Hearing Date: September 12, 2014    Dept: B

10. EC062388
AKZO NOBEL PAINTS LLC vs DALIA GOURJI, et al
Motion to Strike Cross Complaint
Request for Attorney’s Fees and Costs

Plaintiff filed this action on April 4, 2014 seeking to set aside fraudulent conveyances undertaken to avoid collection of a debt. A Cross-Complaint was filed on May 23, 2014. The Cross-Complainant, Pacific Crest Painting Drywall & Stucco (“Pacific Crest”) is a painting contractor. The Cross-Defendant, Akzo Nobel Paints LLC (“Akzo Nobel”, is a supplier of paints. After a dispute arose regarding an agreement between the parties, Akzo Nobel filed a prior action, EC055362, (identified in the moving papers, and hereafter, as the “underlying action”)to seek damages from Pacific Crest and from the individuals, Dalia Grouji, Jacob Shahmoon, and Itai Alishav. Akzo Nobel obtained a judgment in the underlying action after the Court imposed terminating sanctions on Pacific Crest, Dalia Grouji, Jacob Shahmoon, and Itai Alishav.
The Cross-Complainants, Pacific Crest, Dalia Grouji, Jacob Shahmoon, and Itai Alishav, bring this action to seek relief from the judgment entered in EC055362. Cross Complainants allege that the judgment should be set aside because the Court lacked jurisdiction, there was insufficient notice for the motion to impose terminating sanctions, the Cross-Defendants, Akzo Nobel, Kenneth Reynolds, and Michael Rock, engaged in extrinsic fraud by making false representations to the Court.
Cross-Defendant, Kenneth Reynolds, was the attorney providing legal services to Cross-Defendant, Akzo Nobel Paints LLC, in the underlying action. Cross-Defendant, Michael Rock is the director of credit for the Plaintiff and provided declarations in support of the judgment and make false representations during the settlement negotiations.
The causes of action in the Cross-Complaint are for:
1) Set Aside Default and Default Judgment – Lack of Jurisdiction
2) Set Aside Default and Default Judgment – Lack of Notice
3) Set Aside Default and Default Judgment – Extrinsic Fraud & Mistake
4) Fraud (dismissed on September 5, 2014)
5) Negligence (dismissed on September 5, 2014)
6) Declaratory Relief

This hearing concerns the motion of Cross-Defendant, Kenneth Reynolds, and the motion of Cross-Defendants, Akzo Nobel Paints LLC and Michael Rock, to strike the Cross-Complaint under CCP section 425.16.

1. Motion of Cross-Defendant, Kenneth Reynolds
The Cross-Defendant, Kenneth Reynolds, requests that the Court strike the Cross-Complaint on the ground that it is based on legal services he provided in the underlying action. On September 5, 2014, the Cross-Complainants filed a notice of dismissal for Kenneth Reynolds. Since Kenneth Reynolds was dismissed, his motion to strike is moot.
Accordingly, the Court takes off calendar Mr. Reynolds’ motion to strike.

2. Cross-Defendants, Akzo Nobel Paints LLC and Michael Rock
The Cross-Defendants, Akzo Nobel and Michael Rock, request that the Court strike the Cross-Complaint on the ground that it is based on the communications they made to the Court and in the litigation in the underlying action. On September 5, 2014, the Plaintiff dismissed Michael Rock and the fourth and fifth causes of action. Since Michael Rock was dismissed, his motion to strike is moot. The following analyzes the motion with regards to Akzo Nobel.

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.
The defendant bears the initial burden of showing that the claims fall within the class of suits subject to a motion to strike under CCP section 425.16, 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 will then satisfy 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.
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. The critical consideration for section 425.16 analysis is whether the cause of action is based on the defendant’s protected free speech or petitioning activity. Feldman v. 1100 Park Lane Associates (2008) 160 Cal. App. 4th 1467, 1478-1479. The anti-SLAPP statute’s definitional focus is not the form of the plaintiff’s cause of action but, rather, the defendant’s activity that gives rise to his or her asserted liability—and whether that activity constitutes protected speech or petitioning. Id.

a. Cross-Defendant’s Burden
As noted above, the Cross-Defendant, Akzo Nobel, has the initial burden of demonstrating that the Cross-Defendant’s acts in the Cross-Complaint fit into one the categories identified in section 425.16(e).

The first cause of action seeks to set aside the judgment in the underlying case on the ground that the Superior Court lacked jurisdiction to impose terminating sanctions. The Cross-Complainants allege in paragraphs 15 to 18 and 30 that a petition for bankruptcy had been filed and that Akzo Nobel’s motion for terminating sanctions was filed before the case had been remanded to the Superior Court.
Further, the Cross-Complainants allege in paragraph 31 that the judgment granted relief in excess of that demanded in the Complaint. In paragraphs 25 and 26, the Cross-Complainants allege that the Cross-Defendants filed declarations to seek attorney’s fees and penalty interest and that the Cross-Defendants made misrepresentations to obtain penalties and a judgment against the individual Cross-Complainants, Dalia Grouji, Jacob Shahmoon, and Itai Alishav.
These allegations indicate that the principal thrust or the gravamen of the Cross-Complainants’ claim is that the Cross-Defendants improperly filed written documents with the Court and that the Cross-Defendants made false representations in the written documents to obtain penalties and the judgment. This cause of action is based on the Cross-Defendant’s motion and declarations, which are written statements made in judicial proceeding and in connection with an issue under consideration by the judicial body. This falls squarely within the categories identified in CCP section 425.16(e)(1) and (e)(2).
Accordingly, the Cross-Defendant has met its burden of demonstrating that the first cause of action is subject to a SLAPP motion.

The second cause of action seeks to set aside the judgment in the prior case on the ground that the Cross-Defendant had failed to provide sufficient notice to the Cross-Complainants. This cause of action is based on the Cross-Defendant’s notice of motion, which is a written statement made in judicial proceeding and in connection with an issue under consideration by the judicial body. This also falls within the categories identified in CCP section 425.16(e)(1) and (e)(2).
Accordingly, the Cross-Defendant has met its burden of demonstrating that the second cause of action is subject to a SLAPP motion.

The third cause of action seeks to set aside the judgment in the prior case on the ground that the Cross-Defendants engaged in extrinsic fraud by making false statements to induce the Cross-Complainants to believe that the dispute would be resolved outside of Court. Further, the allegations in paragraph 40 indicate that the Cross-Complainants seek relief in the third cause of action on the ground that the Cross-Defendants made false representations to prevent the Cross-Complainants from attending the hearing, that the Cross-Defendants submitted false pleadings, and that the Cross-Defendants submitted pleadings based on inapplicable law.
These allegations indicate that the claim is based on written documents filed with the Court, which are written statements made in judicial proceeding and in connection with an issue under consideration by the judicial body. Further, these allegations indicate that the claim is based on oral statements made in connection with the issue under consideration by the judicial body, i.e., the motion for terminating sanctions. This falls within the categories identified in CCP section 425.16(e)(1) and (e)(2).
Accordingly, the Cross-Defendant has met its burden of demonstrating that the second cause of action is subject to a SLAPP motion.

The Cross-Complainants dismissed the fourth and fifth causes of action on September 5, 2014.

The sixth cause of action seeks declaratory relief regarding a dispute regarding the judgment in the underlying case. The Cross-Complainants allege in paragraph 60 that they contend that the judgment is a product of fraud or mistake. As discussed above, the Cross-Complainants claim that the judgment was obtained by fraud because the Cross-Defendants made false oral and written statements to the Court and to the Cross-Complainants regarding the motion for terminating sanctions. Since the sixth cause of action seeks a declaration regarding the judgment obtained through this alleged fraudulent statements, the sixth cause of action is based on the Cross-Defendant’s written and oral statements made in a judicial proceeding and in connection with an issue under consideration by the judicial body. Further, these allegations indicate that the claim is based on oral statements made in connection with the issue under consideration by the judicial body, i.e., the motion for terminating sanctions. This falls within the categories identified in CCP section 425.16(e)(1) and (e)(2).
Accordingly, the Cross-Defendant has met its burden of demonstrating that the sixth cause of action is subject to a SLAPP motion.

Accordingly, the Cross-Defendant, Akzo Nobel, has met its burden because it has demonstrated that the acts in the Cross-Complaint fit into the categories of protected conduct identified in section 425.16(e).

b. Cross-Complainants Burden
The Cross-Complainants have the burden of demonstrating a probability of prevailing on their claims. Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal. 4th 728, 741. The Cross-Complainants may satisfy this burden by demonstrating that each cause of action 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.
The Cross-Complainants filed untimely opposition papers on September 8, 2014.

A review of the opposition papers reveals that they do not demonstrate that each cause of action is legally sufficient. The Cross-Complainants do not proceed through each cause of action and direct the Court to the paragraphs that plead each essential element of the causes of action.
Further, the Cross-Complainants do not meet their burden of demonstrating that the causes of action are supported by a sufficient prima facie showing of fact to sustain a favorable judgment. The Cross-Complainants do not direct the Court to the evidence that establishes each essential element of their causes of action.

Also, the Cross-Complainants’ evidence does not meet their burden of proof. For example, in the first cause of action, the Cross-Complainants attempted to plead that the Court was without jurisdiction to impose terminating sanctions on March 8, 2013 in EC055362 because the case had not been remanded from the bankruptcy court.
The Defendant, Itai Alishav, filed a notice of removal to bankruptcy court on November 7, 2012. The removal of a civil action from a state court to a federal court operates as a literal “removal” of the action from the state court and terminates the state court’s jurisdiction to proceed in it at the time. Allstate Insurance Co. v. Superior Court (1982) 132 Cal. App. 3d 670, 675. The jurisdictional event that restores jurisdiction to the state court occurs when the state court receives a certified copy of the remand order. Spanair S.A. v. McDonnell Douglas Corp. (2009) 172 Cal. App. 4th 348, 356.
The declaration of Itai Ilishav in support of the opposition papers includes a copy of the notice of remand in untabbed exhibit 3. A review of the notice of remand reveals that the bankruptcy court issued an order on January 11, 2013 that remanded the case back to this Court. The notice of remand includes the proof of service that indicates that the notice of remand was served on Department A of the Burbank Courthouse on January 11, 2013.
This indicates that the remand restored jurisdiction back to the state court on January 11, 2013. Since the Court imposed terminating sanctions on March 8, 2013, which was after the remand on January 11, 2013, the Court had jurisdiction when it imposed the terminating sanctions. Accordingly, the Cross-Complainants fail to establish that the Court lacked jurisdiction.
Further, the Cross-Complainants cannot meet their burden because the Cross-Defendant’s acts in the Cross-Complaint are protected by the absolute litigation privilege. This privilege is enacted in Civil Code section 47(b) and provides that a publication made in any legislative or judicial proceeding is privileged. The litigation privilege is absolute 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 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.
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. Therefore, 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.

Doubts are to be resolved in favor of relevancy and pertinence; that is to say, the matter to which the privilege does not extend must be so palpably wanting in relation to the subject matter of the controversy that there can be no reasonable doubt of its impropriety. Friedman v. Knecht (1967) 248 Cal. App. 2d 455, 460. If the privilege is worth having, its purpose would be largely defeated if it were to vanish simply because one possible meaning of a statement made during judicial proceedings does not relate to them. Id.
The Cross-Complainants seek relief based on allegations that the Cross-Defendant filed an improper motion and made false representations in written documents submitted to the Court an in oral statements to the Court and to the Cross-Complainants regarding the issues before the Court. These acts involve communications made in a judicial proceeding. The communications were made by litigants. The communications were made to achieve the object of the litigation, i.e., a motion to impose sanctions. The communications had some logical relation to the action because they were related to the Cross-Defendant’s attempt to obtain terminating sanctions. The litigation privilege applies to the communications. Since the privilege is absolute, it is not possible for the Cross-Complainants to bring claims based on the allegations in the Cross-Complaint.

Therefore, the Court grants the Cross-Defendant’s anti-SLAPP motion and strikes the claims in the Cross-Complaint against Akzo Nobel because the pleadings are based on acts protected under CCP section 425.16.

c. Attorney’s Fees
The Cross-Defendant’s motion includes a request for attorney’s fees. However, the Cross-Defendant did not support the request with any facts in a declaration identifying the amount of attorney’s fees incurred on the motion. Instead, the Cross-Defendant states that it reserves the right to seek attorney’s fees under CCP section 425.16(c) in a separate motion. Cross-Defendant must bring such a motion in order to be granted fees.