2019-00251316-CU-OR

Chen Mei Dodge vs. C. Ryan Voorhees

Nature of Proceeding: Motion to Strike (Anti-SLAPP)

Filed By: Peterson, Glenn W.

Defendant J. Michael Guttridge’s (“Guttridge”) special motion to strike pursuant to CCP § 425.16 is denied.

Plaintiff Chun Mei Dodge’s request for judicial notice is granted.

Plaintiff filed this instant action against Defendants Ryan Voorhees, Aurora Capital, LLC (“Aurora”), and Guttridge alleging causes of action for fraudulent transfer, breach of contract, breach of fiduciary duty, deceit, rescission, unjust enrichment, quiet title, declaratory relief, and specific performance.

This dispute arises from the operating agreement of Aurora entered into between Plaintiff and Guttridge in 1998. Plaintiff was a 49% investor member of Aurora. Guttridge was the Managing Member holding 51% of Aurora. Aurora’s sole material asset was approximately 900 acres of real property near the City of Galt, commonly known as the Delta Greens. In exchange for contributing to Aurora property rights in both Delta Greens and 1,443 acres of additional land located nearby, Guttridge conferred to Plaintiff a right of first refusal. This right of first refusal required Guttridge to notify Plaintiff after receiving a purchase offer for the Delta Greens and to sell the property to Dodge if she timely exercised her right.

The multiple disputes that have arisen between the parties all stem from Guttridge’s attempt to sell the property to Voorhees and whether or not Plaintiff’s right of first refusal was triggered and properly exercised. Plaintiff’s claims arise from a settlement agreement entered into between Aurora and Voorhees on May 30, 2017 pursuant to which Guttridge caused Aurora to transfer the Delta Greens property to Voorhees. Plaintiff refers to the settlement agreement as the “Secret Contract” because, as she has alleged, it was not disclosed to her until after Aurora conveyed the property to Voorhees. Plaintiff allegedly demanded rescission and notified Guttridge and Voorhees that she was exercising her right of first refusal. Plaintiff also alleges that Voorhees obtained a line of credit secured by the Delta Greens property.

Guttridge now moves to strike the complaint on the basis that the claims arise from protected conduct because it targets “purely litigation conduct” from a previous consolidated action (“Dissolution Action”) involving Guttridge’s involuntarily dissolution action and Plaintiff’s action against him for fraud, etc. Judgment was entered in the Dissolution Action in September 2017 and it is currently on appeal. Prior to trial of the Dissolution Action, Plaintiff filed a new action in June 2017 against Guttridge, and certain attorney defendants (Guttridge’s current counsel) alleging that the attorney defendants owed her a duty because they represented Aurora, in which she was a minority member. The attorney defendants’ anti-SLAPP motion was granted in the 2017 action and the case was ultimately dismissed.

At the outset, the Court will not deny the motion on the basis that it was not filed within 60 days of the filing of the original complaint. Pursuant to CCP § 425.16(f), a special motion to strike “may be filed within 60 days of the service of the complaint, or, in the court’s discretion, at any later time upon terms it deems proper.” Guttridge was served with the complaint in April 2019. There is no dispute that the instant motion was filed more than 60 days later. Guttridge claims that the parties initially engaged in discussions regarding mediation and that stipulated pleading extensions have been in place since service was made. (Peterson Decl. ¶ 16.) Plaintiff contends that it was agreed that Guttridge would respond to her settlement demand by August 9, 2019 and if there was no settlement then a responsive pleading was to be filed by August 23, 2019. (Diepenbrock Decl. ¶ 2.f.) According to Plaintiff, Guttridge did not respond to the settlement demand until August 23 and also did not file the responsive pleading until August 26, 2019. The delay in filing the motion appears occasioned by the parties’ settlement attempts. Nevertheless, the Court retains the discretion to entertain the motion even if it was filed after the 60 day time limit and does so here. (CCP § 425.16(f).) As to Guttridge, this case is essentially still in the initial stages. The reasons articulated in case law finding an anti-SLAPP motion untimely because the parties have incurred costs that a timely motion could avoid do not apply here. ( Hewlett-Packard Co. v. Oracle Corp. (2015) 239 Cal.app.4th 1174, 1188-1189.) The motion has not been brought after the parties incurred substantial expense. Plaintiffs argue that where the motion is untimely and umeritorious, a court can frame its order denying leave to file a late motion indicating as much to preclude an immediately appealable order. This is incorrect. It is only where the Court simply denies leave to file a late motion that the order is not immediately appealable. If the Court makes a finding on the merits of the motion, the order is immediately appealable even if it also ultimately determines it was untimely. (Id. at 1187.) In any event, this is not relevant because the Court is exercising its discretion to entertain the motion.

The Court’s review of an anti-SLAPP motion involves a two-prong process. (Navellier v. Sletten (2002) 29 Cal.4th 82, 88.) First, Defendant must establish that the challenged causes of action arose from “an act…in furtherance of [their] right of petition or free speech.” (CCP § 425.16(b)(1).) If Defendant meets that burden, then the second prong requires Plaintiffs to establish “that there is a probability that [Plaintiffs] will prevail on the claim.” (Id.) Only a cause of action that satisfies both prongs of the anti-SLAPP statute-i.e., that arises from protected speech and lacks even minimal merit is a SLAPP, subject to being stricken under the statute. (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 819-820; citations omitted.)

Thus, initially, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. (Plumley v. Mockett (2008) 164 Cal.App.4th 1031, 1046. ) “A defendant meets this burden by demonstrating that the act underlying the plaintiff’s cause fits one of the categories spelled out in section 425.16, subdivision (e)” (Braun v. Chronicle Publishing Co. (1997) 52 Cal. App.4th 1036, 1043.)

Subdivision (e) provides: “As used in this section, “act in furtherance of a person’s right of petition or free speech under the United States or California Constitution 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 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.”

First Prong-Arising From Protected Speech

In determining whether Guttridge met his burden, the Court considers not only the pleadings, but also the “supporting and opposing affidavits stating the facts which the liability or defense is based.” (CCP § 425.16(b)(2).) ‘In deciding whether the ‘arising from’ requirement is met, a court considers the ‘pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.” (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 79.) As noted by relevant authority, it is crucial to look past the allegations in the complaint and to consider affidavits in order to obtain the complete picture of the plaintiff’s claims. (Jespersen v. Zubiate-Beauchamp (2003) 114 Cal.App.4th 624, 630.)

CCP § 425.16(e)(1) and (e)(2) “encompass[ ] any cause of action against a person arising from any statement or writing made in, or in connection with an issue under consideration or review by, an official proceeding or body.” (Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1113.) “Thus statements, writings and pleadings in connection with civil litigation are covered by the anti-SLAPP statute, and that statute does not require any showing that the litigated matter concerns a matter of public interest.” (Rohde v. Wolf (2007) 154 Cal.App.4th 28, 35.) “[J]ust as communications preparatory to or in anticipation of the bringing of an action or other official proceeding are within the protection of the litigation privilege of Civil Code section 47, subdivision (b),…such statements are equally entitled to the benefits of section 425.16.” (Briggs, supra, 19 Cal.4th at 1115 [citations omitted].) “Accordingly, although litigation may not have commenced, if a statement ‘concern[s] the subject matter of the dispute’ and is made ‘in anticipation of litigation ‘contemplated in good faith and under serious consideration’ then the statement may be petitioning activity protected by section 425.16.” (Bailey v. Brewer (2011) 197 Cal.App.4th 781, 789-790.) California courts “have looked to the litigation privilege as an aid in construing the scope of section 425.16, subdivisions (e)(1) and (2) with respect to the first step of the two-step anti-SLAPP inquiry.” (Feldman v. 1100 Park Lane Assocs. (2008) 160 Cal.App.4th 1467, 1479.)

According to Guttridge, the entire complaint arises from protected activity because it targets his litigation conduct in the Dissolution Action. To that end he points to allegations in the complaint that he made a settlement in litigation that prejudiced Plaintiff, that he sent written communication to her about the settlement, transferred property in violation of a court-ordered stay, etc. (Comp. ¶¶ 27, 29, 38, 39, 40-43, 45-47. 49.)

It is, of course, true that a claim may be struck only if the speech or petitioning activity itself is the wrong complained of, and not just evidence of liability or a step leading to some different act for which liability is asserted.” (Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1060; see Greco v. Greco (2016) 2 Cal.App.5th 810, 819-820.) Here, Plaintiff contends that the allegations referred to in the Complaint are merely tangential to provide context of her current claims and that none of her claims are premised on any litigation activity. Rather, she contends that she seeks to impose liability on Guttridge based on his failure to honor contractual obligations under §§ 7.03 and 7.10 of the Aurora Operating Agreement before causing Aurora to transfer Delta Greens to Voorhees. (Comp. ¶¶ 21, 26, 42.) According to Plaintiff, § 7.03 of the Operating Agreement required 2/3 (two thirds) member approval of any sale of Delta Greens unless the sales documents stated that the price was computed as if the property were annexed into the City of Galt and that § 7.10 gave her a right of first refusal for any sale. Plaintiff alleges that Guttridge failed to comply with these contractual obligations under the Operating Agreement. To that end, her first through third causes of action for fraudulent transfer, breach of contract and breach of fiduciary duty all are premised on Guttridge’s alleged breach of the obligations under the Operating Agreement. (Comp. ¶¶ 54-57, 62-63, 68.) The fourth cause of action for deceit is premised on allegations that Guttridge failed to disclose the Secret Contract and had he done so she would have insisted upon his compliance with the Operating Agreement. (Id. ¶¶ 74, 78.) The remaining causes of action for rescission, unjust enrichment, quiet title, declaratory relief, and specific performance are premised on similar allegations. According to Plaintiff, the specific allegations highlighted by Defendant are tangential and simply provide context for her claims. She argues that none of her claims are premised on anything that took place at the trial in the Dissolution Action.

Here, the Court agrees that Guttridge has failed to show that the claims in Plaintiff’s complaint are premised on protected activity. While there are numerous references to the previous litigation between the parties, none of the instant claims at issue are premised on Guttridge’s petitioning activity. The entire premise of this action is that Guttridge breached provisions of the Operating Agreement when he entered into the Secret Contract pursuant to which Aurora would transfer Delta Greens to Voorhees. It is true that entering into a settlement agreement in connection with a lawsuit constitutes protected activity. (Applied Bus. Software, Inc. v. Pac. Mortg. Exch., Inc. (2008) 164 Cal.App.4th 1108, 1118 [entering settlement agreement protected, but breaching the settlement after the lawsuit concluded is not protected].) But here, the conduct complained of is not simply that Guttridge entered the settlement agreement. The alleged wrongful conduct is that Guttridge breached the provisions of the Operating Agreement, specifically sections §§ 7.03 and 7.10, by failing to obtain Plaintiff’s consent to the Secret Contract and failing to provide her a right of first refusal. Allegedly violating contractual provisions cannot fairly be said to constitute protected activity even if the Secret Contract was completed during litigation.

The critical distinction is whether the protected activity merely preceded or triggered the lawsuit, or whether it is the basis of the lawsuit. (City of Alhambra v. D’Ausilio (2011) 193 Cal.App.4th 1301, 1307; Clark v. Mazgani (2009) 170 Cal.App.4th 1281, 1287.) “[t] he mere fact that an action was filed after protected activity took place does not mean that it arose from that activity.” (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 76-77.) Guttridge is being sued for failing to comply with contractual obligations under the Operating Agreement prior to entering the Secret Contract. He is not being sued simply because of his litigation conduct. This is unlike the cases cited by Defendant where for example the defendant was “sued because of the affirmative counterclaims he filed in federal court.” (Navellier v. Sletten (2002) 29 Cal.4th 82, 90; see also Digerati Holdings, LLC v. Young Money Entertainment, LLC (2011) 194 Cal.App.873, 888 [defendant sued for public statements made in contemplation of litigation]; Vivian v. Labrucherie (2013) 214 Cal.App.4th 267, 274 [liability premised on breach on non-disparagement clause in a settlement agreement by way of statements made to internal affairs investigators and in court papers].) In the anti-SLAPP context, the critical consideration is whether the cause of action is based on the defendant’s protected free speech or petitioning activity. City of Cotati v. Cashman (2002) 29 Cal. 4th 69, 76-78; see also Briggs v.Eden Council for Hope & Opportunity (1999) 19 Cal. 4th 1106, 1114; ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 1001.)

The specific allegations cited by Defendant do not show otherwise. To that end paragraphs 27-39 simply recite background history regarding the Dissolution Action, including a May 25, 2017 MSC at which it was alleged no settlement was reached. Paragraphs 40 through 43 describe the Secret Contract including that it contains a recitation that it purported to memorialize a settlement reached at the May 25, 2017 MSC despite the allegation that no settlement was reached. The fact that it is alleged that the Secret Contract may have violated a Court order does not show that the claims are premised on protected activity. Paragraphs 45 through 49 detail what took place at the trial in the Dissolution Action. Paragraph 49 alleges that Voorhees demanded that Plaintiff pay him $30 million for an option to purchase Delta Greens, which she calls a “shakedown.” However, this too is not the conduct on which the lawsuit is based and in any event does not even involve Guttridge. “[A] claim may be struck only if the speech or petitioning activity itself is the wrong complained of, and not just evidence of liability or a step leading to some different act for which liability is asserted.” (Park v. Board of Trustees of California State Univ, (2017) 2 Cal.5th 1057, 1060.) Here, the conduct highlighted by Guttridge is either evidence of liability of a step leading to some different act. The wrongful conduct is the alleged conduct in breaching the Operating Agreement, not Guttridge’s protected activity. See, e.g. Area 51 Productions, Inc. v. City of Alameda, 20 Cal. App. 5th 581. “If the core injury-producing conduct upon which the plaintiff’s claim is premised does not rest on protected speech or petitioning activity, collateral or incidental allusions to protected activity will not trigger application of the anti-SLAPP statute.” (Hylton v. Frank E. Rogozienski, Inc. (2009) 177 Cal.App.4th 1264, 1272

Guttridge also relies on case law indicating that the litigation privilege in Civil Code § 47 is useful in analyzing the first prong of the anti-SLAPP statute. As set forth above, courts “have looked to the litigation privilege as an aid in construing the scope of section 425.16, subdivisions (e)(1) and (2) with respect to the first step of the two-step anti-SLAPP inquiry.” (Feldman, supra, 160 Cal.App.4th at 1479.) However, “statements protected by the litigation privilege are not necessarily protected by the anti-SLAPP statute.” (Zhang v. Jenevein (2019) 31 Cal.App.5th 585, 596.)

In any event, Civil Code § 47(b) bars a civil action for damages for communications made in the course of judicial proceedings and also “in any other official proceeding authorized by law.” (Civ. Code § 47(b)(2), (3).) The privilege is absolute and applies regardless of whether the communication was made with malice or the intent to harm. (Wise v. Thrifty Payless, Inc. (2000) 83 Cal.App.4th 1296, 1302.) The litigation privilege extends not only to statements made during litigation or official proceedings but also to pre-litigation communications. (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1057.) Pre-litigation communications are protected when it “relates to litigation that is contemplated in good faith and under serious consideration” and is “connected with, or ha[s] some logical relation to” the anticipated litigation or is “in furtherance of the objects of the litigation.” (Action Apartment Ass’n, Inc. v. City of Santa Monica (2007) 41 Cal.4th 1232, 1251.) The instant action is premised on allegations that Guttridge breached the Operating Agreement when he entered the Secret Contract by failing to obtain Plaintiff’s consent to the Secret Contract and failing to provide her a right of first refusal. No communicative conduct is involved.

As a result, the Court concludes that Defendant failed to show that the complaint, or any cause of action set forth therein, arose from “any act…in furtherance of [his] right of petition or free speech.” (CCP § 425.16(b)(1).) Given this finding, the Court need not and does not reach the second prong of the anti-SLAPP analysis to determine whether Plaintiff has shown that “there is a probability that [Plaintiff] will prevail on the claim.” (Id.)

Finally the Court notes that Defendant makes an additional argument at the end of his motion that Plaintiff’s claims are barred by issue/claim preclusion and that the action is subject to a plea in abatement due to the pendency of the Dissolution Action that is currently on appeal. The request is not made as part of the first or second prong of the anti-SLAPP analysis. Rather, it is a separate stand alone request at the end of the opening memorandum. This is entirely improper. The notice of motion makes no mention of the plea in abatement and only refers to the motion under CCP § 425.16. As recognized by Defendant’s own authority the issue may be raised by demurrer or by answer. (Plant Insulation Co. v. Fibreboard Corp. (1990) 224 Cal.App.3d 781.) This is not a demurrer. In any event, even if construed as a demurrer, the argument relies on extrinsic evidence which cannot be considered on a demurrer. (Ion Equipment Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.) Finally in considering the subject pleading and matters that were properly subject to judicial notice, for example, the Judgment in the Dissolution Action, this Court denied Defendant Voorhees “plea in abatement” on May 7, 2019 concluding that “[n]either the Amended Judgment After Court Trial nor the Final Statement of Decision contain any express reference to the 2017 Secret Contract or to any allegation by Dodge that the 2017 Secret Contract triggered her right of first refusal under the operating agreement.” (ROA 36.)

The motion is denied.

This minute order is effective immediately. No formal order pursuant to CRC rule 3.1312 or other notice is required.