Filed 4/27/20 Redondo Beach Waterfront v. City of Redondo Beach CA2/3

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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(a). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115(a).
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE
REDONDO BEACH WATERFRONT, LLC,

Plaintiff and Respondent,

v.

CITY OF REDONDO BEACH,

Defendant and Appellant. B292007

Los Angeles County

Super. Ct. No. BC682833

APPEAL from an order of the Superior Court of Los Angeles County, Teresa A. Beaudet, Judge. Affirmed in part, reversed in part, and remanded with directions.

Michael W. Webb and Cheryl Yeun Shin Park, City Attorneys; Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, Jonathan Welner, Daniel T. Pascucci, Antony D. Nash, and Heather J. Silver for Defendant and Appellant.

Shumener, Odson & Oh, Betty M. Shumener, Henry H. Oh, and John D. Spurling for Plaintiff and Respondent.

_______________________________________

INTRODUCTION

A strategic lawsuit against public participation is one “that arises from protected speech or petitioning and lacks even minimal merit.” (Navellier v. Sletten (2002) 29 Cal.4th 82, 89 (Navellier).) Code of Civil Procedure section 425.16 (anti-SLAPP statute) allows a defendant to bring a special motion to strike a claim, or portions of a claim, targeted at protected conduct. A government entity, “just like any private litigant, may make an anti-SLAPP motion where appropriate.” (San Ramon Valley Fire Protection Dist. v. Contra Costa County Employees’ Retirement Assn. (2004) 125 Cal.App.4th 343, 353 (San Ramon).)

Redondo Beach Waterfront, LLC (RBW) sued the City of Redondo Beach (City) for breach of an agreement to develop its waterfront, denial of substantive due process, denial of procedural due process, and for declaratory relief. The City brought an anti-SLAPP motion to strike the complaint. The trial court denied the motion in its entirety, reasoning the claims did not arise from protected speech or petitioning activity. The City appeals.

We conclude two alleged breaches of the agreement arise from the City’s protected conduct. Specifically, the City’s submission of a local voter initiative to a state agency for its review and certification, and the participation of elected officials in decisions affecting RBW, are protected under the anti-SLAPP statute. Accordingly, we reverse in part and affirm in part. On remand, the court should determine whether the claims arising from protected conduct have sufficient merit to survive the motion.

FACTS AND PROCEDURAL BACKGROUND

1. The Waterfront Project
2.
The City had a longstanding interest in redeveloping and revitalizing the Redondo Beach King Harbor Pier area. The City wanted new roads, an updated pier, and a rebuilt parking garage. The City also needed to replace a public swimming area that was violating its National Pollution Discharge Elimination System permit and incurring thousands of dollars in fines.

In 2010, the City’s voters approved Measure G, which modified zoning regulations for the coastal area and authorized an additional 400,000 square feet of new development on the waterfront. In December 2010, the California Coastal Commission certified an amendment to the City’s local coastal plan to incorporate these changes.

Lacking the money to rebuild the road, pier and parking garage, the City entered a “public-private partnership” with CenterCal Properties, LLC (CenterCal) to develop the waterfront in a way that would help pay for these improvements. At some point, CenterCal assigned its rights to RBW with the City’s consent. We refer to CenterCal and RBW as Developer throughout this opinion.

In January 2013, the City and Developer signed an Exclusive Negotiating Agreement. In March 2013, the City and Developer signed a Reimbursement Agreement, providing for the repayment of certain costs associated with the project. In July 2013, the City and Developer signed a Memorandum of Understanding, which anticipated the City leasing parcels to Developer for up to 99 years.

After becoming the City’s development partner, Developer spent more than $15 million developing a plan for a seaside village that included construction and renovation of approximately 525,000 square feet of retail, restaurants, creative offices, specialty cinema, a public market hall, a boutique hotel, parking structures, public boat launch ramp, and a seaside lagoon (Waterfront Project).

3. Measure C
4.
On June 28, 2016, the City received notice of intent to circulate an initiative petition. The notice explained that “Redondo Beach residents and harbor visitors have serious doubts about the ‘Waterfront’ project—the intensity of the proposed development, the high-cost commercial uses it imposes on the public, and the adverse impacts it has on harbor access, coastal-dependent water-oriented recreation, and harbor and ocean views.”

On November 1, 2016, the City Clerk examined the records of registration and determined the petition had been signed by the necessary number of voters. The City then directed staff, with the help of experts, to prepare a report on the impacts of the initiative.

On November 29, 2016, a report by City staff discussed the potential impacts on the Waterfront Project. According to the report, it was unclear whether the initiative required Coastal Commission approval to become effective. It was also unclear whether the initiative would apply to the Waterfront Project which, the report noted, had been recently approved by the City Council and City Harbor Commission. If effective, the initiative would substantially reduce the development allowed along the waterfront. These changes would “eliminate the City’s ability to attract a development partner to pay for some or all of the looming $156M to $196M” necessary to maintain public access to the waterfront and the commercial business located there.

In December 2016, the City placed the proposed initiative, Measure C, on the ballot for the March 7, 2017 election. The argument in favor of Measure C was prepared by a group called Rescue Our Waterfront and was signed by City Councilmember Bill Brand, and future councilmembers Todd Loewenstein and Nils Nehrenheim. According to Rescue Our Waterfront, Measure C would stop construction of “a waterfront mall adding 13,136 daily car trips and doubling development.” Opponents of Measure C argued it would result in City taxpayers themselves paying for the necessary repairs to the waterfront area. The City Attorney’s analysis that accompanied the ballot materials cautioned that Measure C, if approved, would not necessarily prevent the planned Waterfront Project from going forward.

5. As Measure C moved forward, the City approved permits and a Vesting Tentative Tract Map for the Waterfront Project.
6.
In August 2016, as opponents of the Waterfront Project gathered signatures, the City Harbor Commission approved various permits for the Waterfront Project, including a Vesting Tentative Tract Map. “James A. Light and others” appealed these approvals to the City Council. In October 2016, the City Council passed a resolution denying the appeal and sustaining the decisions of the Harbor Commission. The City resolution provided notice to Developer that its application for a Vesting Tentative Tract Map was “deemed complete” as of June 23, 2016. The City’s resolution conferred on Developer “a vested right to proceed with development in substantial compliance with the ordinances, policies, and standards described in Section 66474.2 of the Government Code of the State.”

In November 2016, more than a dozen individuals appealed the City’s approval of the Coastal Development Permit to the Coastal Commission. Among the appellants were two members of the City Council at that time: Bill Brand and Stephen Sammarco. Nils Nehrenheim, who was later elected to the City Council, also appealed.

7. The ALPIF
8.
In January 2017, before Measure C was approved by the electorate, the City and Developer signed an Agreement for Lease of Property and Infrastructure Financing (ALPIF). The ALPIF merged the parties’ former agreements, rendering all prior agreements “of no further force and effect.” The agreement forbade City officials with personal interests in the agreement from participating in decisions relating to the agreement. It required the City to lease various parcels to Developer, including the Redondo Beach Pier, Redondo Beach Marina Basin 3, Redondo Beach Marina, International Boardwalk, and 200 Fishermen’s Wharf. For its part, Developer would “construct and reconstruct certain infrastructure … .” Developer’s improvements would have to comply with applicable rules and regulations. This included rules and regulations not in effect at the time of the agreement—except for any vested right Developer had “in accordance with the existing general plan, zoning, vesting tentative tract map, or other land use designations.”

9. After Measure C passed, the City Council forwarded it to the Coastal Commission for certification.
10.
Measure C was approved by the electorate on March 7, 2017. During the same election cycle, Brand ran for mayor, and Nehrenheim and Loewenstein ran for council seats “on an anti-Waterfront platform.” Brand and Loewenstein were elected on March 7, but Nehrenheim was forced into a runoff election and was not elected until later in the Spring.

On May 23, 2017, the City Council passed a resolution, sending Measure C to the Coastal Commission for certification. The Resolution stated Measure C amended two sections of the City’s Municipal Code, which had previously been certified by the Coastal Commission as part of the City’s coastal plan. The Resolution further stated that because the City was required by law to submit to the Coastal Commission any proposed amendments to that plan, the City was sending Measure C to the Commission. The vote on sending Measure C to the Coastal Commission passed unanimously.

11. The City did not timely submit a complete boat ramp application to the Coastal Commission.
12.
The Waterfront Project could not proceed without a boat ramp, and the Harbor Commission had therefore approved a permit for the ramp in October 2016. The ALPIF, effective January 31, 2017, required the City to submit a complete boat ramp application to the Coastal Commission within the following 90 days. Before the application was due, however, Brand and several others appealed to the Coastal Commission the City’s decision to grant a boat ramp permit. Then on April 6, 2017, the City wrote to Developer explaining that the City’s performance of some of its obligations under the ALPIF would be delayed because the City did not know whether the Coastal Commission would certify or modify Measure C. On May 12, 2017, the Coastal Commission determined the boat ramp/permit appeal raised a “substantial issue” requiring a full hearing before the Commission.

At a City Council meeting on June 13, 2017, the council discussed how to respond to a Coastal Commission request for more information on the permit application for the boat ramp. After public comment, the council passed a resolution directing its staff to not respond to the Coastal Commission’s request for information.

13. The City refused to provide documents in response to Developer’s request.
14.
On March 14, 2017, Developer filed a Public Records Act request seeking documents from the City “concerning, among other things, the entitlements for the Waterfront Project and Brand’s conduct concerning the entitlements.” The City refused to provide these documents. Developer filed similar requests concerning Loewenstein and Nehrenheim. The City did not respond to these requests.

15. Developer filed a complaint in federal court, and the City terminated the ALPIF.
16.
On June 23, 2017, Developer filed a complaint in the United States District Court alleging the City had deprived Developer of due process, violated the contracts clause, and breached the parties’ contract. The complaint also sought a declaratory judgment. On August 15, 2017, Developer amended the complaint to eliminate the cause of action for violating the contracts clause.

In a letter dated August 25, 2017, the City alleged Developer’s federal complaint violated the ALPIF’s forum selection clause. Then, in a September 5, 2017 letter, the City also claimed Developer had “repudiated” the parties’ Reimbursement Agreement by refusing to reimburse the City $1,033,523. The City alleged the ALPIF required Developer to pay the costs for environmental consultants, attorneys, and other third party services set forth in the 2013 Reimbursement Agreement as last amended on January 31, 2017.

On October 26, 2017, the City sent a “Notice of Termination” to Developer, stating it was terminating the ALPIF because of the defaults alleged in the City’s August and September letters.

17. Developer filed a complaint in state court.
18.
On November 9, 2017, Developer filed a complaint in state court, alleging that the City materially and repeatedly breached the ALPIF by seeking to retroactively apply Measure C to shut down the Waterfront Project and strip Developer of its vested rights. The complaint further alleged the City terminated the ALPIF after asserting pretextual breaches on the part of Developer. The complaint set forth four causes of action: deprivation of substantive due process (42 U.S.C. § 1983), deprivation of procedural due process (42 U.S.C. § 1983), breach of contract, and declaratory relief (Code Civ. Proc., § 1060).

Developer’s complaint specifically alleged the City breached the parties’ agreement in the following nine ways: “(1) failing to protect … Plaintiff’s property and contractual rights … ; (2) seeking out a new development partner … ; (3) seeking to redesign the Waterfront Project … ; (4) allowing officials who have a clear conflict of interest to … participate in decisions … that affect the ALPIF … ; (5) refusing to allow Plaintiff access to records … ; (6) failing to submit the complete application for the required boat ramp to the Coastal Commission … ; (7) using the Reimbursement Agreement … to manufacture a breach; (8) using the filing of the Federal Complaint to manufacture defaults … ; and (9) declaring a forfeiture/termination of the ALPIF when it had no right to do so.” Developer’s due process causes of action were based on the same conduct.

In the request for declaratory relief, Developer asked the court to resolve the question of whether Developer owed the City money under the Reimbursement Agreement. Developer also asked the court to declare that Developer had not breached the ALPIF and the City had no right to terminate the parties’ agreement.

The City entered a general denial and alleged numerous affirmative defenses.

19. The City filed an anti-SLAPP motion, which Developer opposed.
20.
The City filed a special motion to strike, contending Developer’s complaint was based on activity protected by the anti-SLAPP statute. The motion targeted just four of the alleged breaches: failing to protect Developer’s vested rights; communicating with a new development partner; seeking a redesign of the development; and allowing conflicted City officials to participate in decisions affecting the ALPIF.

Developer opposed the motion, asserting “the only defendant in this case is the City, and the collective action of a government entity is not SLAPPable,” citing San Ramon, supra, 125 Cal.App.4th 343. Developer recognized the anti-SLAPP statute has been applied to some collective government conduct, but argued its claims were based on neither “speech” nor “expressive activity,” but simply “the City’s breaches of the ALPIF and violations of Gov. Code § 66498.1.”

Developer noted the City’s motion did not argue that the failure to timely complete the boat ramp application or the City’s refusal to provide documents were protected conduct.

21. The court denied the City’s anti-SLAPP motion.
22.
The court denied the City’s anti-SLAPP motion in a written order. In its ruling, the court addressed six of the nine alleged breaches enumerated in the complaint.

Regarding the first alleged breach, the attempt to deprive Developer of its contractual and vested rights through retroactive application of Measure C, the court viewed the actual conduct underlying this claim as the City’s passage of the resolution that sent Measure C to the Coastal Commission for certification. The court then ruled “[t]he City passing a resolution is not conduct arising from protected activity,” quoting from San Ramon, supra, 125 Cal.App.4th at p. 354: “Acts of governance mandated by law, without more, are not exercises of free speech or petition.”

Regarding the second and third alleged breaches, the seeking of new development partners and designs for the waterfront, the court found the underlying conduct identified by the City (an email communication by a City Official) was not protected under the anti-SLAPP statute. Relying on Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1067 (Park), the court explained that while the identified communication was “an example of evidence” that might prove the City was seeking out new partners for Waterfront development, it was not the type of conduct that would “itself support a claim for breach of the ALPIF.”

As for the fourth alleged breach, the City allowing conflicted City officials to participate in decisions affecting the agreement, the court noted that the only objectionable conduct identified by Developer was the allegation that the City authorized Mayor Brand to “interject himself” into the City’s “decisions and actions” concerning Developer’s rights. The trial court determined the conduct underlying this claim was “basically any official decision made by the City involving the ALPIF, which as [previously discussed] does not implicate protected activity.”

Regarding the fifth alleged breach, the City’s refusal to provide documents to Developer, the court ruled this was not conduct arising from protected speech or petitioning activity, and noted “the City [did] not attempt to argue as much.”

Finally, regarding the sixth alleged breach, the failure to timely complete the boat ramp application, the court identified the underlying conduct as the City’s passage of a resolution directing staff to refrain from responding to requests from the Coastal Commission for information concerning the boat ramp. The court reiterated its position that the passing of a resolution is not the type of conduct protected under the anti-SLAPP statute.

Without addressing the remaining three alleged breaches, the court concluded “the essence or gravamen” of Developer’s complaint was based on non-protected activity, and denied the City’s motion to strike the complaint. In light of its ruling, the court deemed it unnecessary to determine whether Developer had demonstrated a probability of prevailing on the merits of the claims.

DISCUSSION

The City contends the court erred in denying its anti-SLAPP motion because Developer’s claims are based on protected conduct. We agree in part. The City’s submission of Measure C to the Coastal Commission for certification, and the participation of elected officials in decisions affecting Developer, were acts in furtherance of the City’s right of petition or free speech.

1. General Principles Relating to anti-SLAPP Motions
2.
“A court evaluates an anti-SLAPP motion in two steps. ‘Initially, the moving defendant bears the burden of establishing that the challenged allegations or claims “aris[e] from” protected activity in which the defendant has engaged. [Citations.] If the defendant carries its burden, the plaintiff must then demonstrate its claims have at least “minimal merit.” ’ ” (Wilson v. Cable News Network, Inc. (2019) 7 Cal.5th 871, 884; § 425.16, subd. (b).)

The court’s analysis at the first-step “turns on two subsidiary questions: (1) What conduct does the challenged cause of action ‘arise[] from’; and (2) is that conduct ‘protected activity’ under the anti-SLAPP statute?” (Mission Beverage Co. v. Pabst Brewing Co., LLC (2017) 15 Cal.App.5th 686, 698.) As to the first question, “[a] claim arises from protected activity when that activity underlies or forms the basis for the claim.” (Park, supra, 2 Cal.5th at p. 1062, italics added.) No claims are categorically excluded from operation of the anti-SLAPP statute. (See Navellier, supra, 29 Cal.4th at pp. 92–93 [rejecting suggestion that breach of contract or fraud claims can never arise from protected speech or petitioning, and noting 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”].)

As to the second question, conduct identified as the basis for a claim is protected under the anti-SLAPP statute if it “falls within one of the four categories described in subdivision (e) [of section 425.16] … .” (Rand Resources, LLC v. City of Carson (2019) 6 Cal.5th 610, 620 (Rand).) The categories in subdivision (e) describe conduct “ ‘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.’ ” (§ 425.16, subd. (e).) Three of the categories in subdivision (e) are relevant to this appeal: communications “made before … any other official proceeding authorized by law” (Id., subd. (e)(1)); communications “made in connection with an issue under consideration or review by … any other official proceeding authorized by law” (Id., subd. (e)(2)); and “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” (Id., subd. (e)(4)).

We review de novo the grant or denial of a special motion to strike. (Park, supra, 2 Cal.5th at p. 1067.) “We exercise independent judgment in determining whether, based on our own review of the record, the challenged claims arise from protected activity.” (Ibid.)

3. Mixed Claims
4.
In Baral, our Supreme Court resolved a split among the Courts of Appeal regarding application of the two prong anti-SLAPP analysis to “mixed claims”—i.e., causes of action that contain both allegations based on protected activity and allegations based on unprotected activity. (See Baral v. Schnitt (2016) 1 Cal.5th 376, 385–388 (Baral).) Before Baral, some courts held an anti-SLAPP motion must defeat an entire cause of action as pleaded (see, e.g., Mann v. Quality Old Time Service, Inc. (2004) 120 Cal.App.4th 90), while others concluded allegations of protected activity could be stricken from a mixed cause of action without affecting the allegations of unprotected activity (see, e.g., City of Colton v. Singletary (2012) 206 Cal.App.4th 751).

Baral resolved the split in favor of the latter view, holding that “an anti-SLAPP motion, like a conventional motion to strike, may be used to attack parts of a count as pleaded. [Citations.]” (Baral, supra, 1 Cal.5th at p. 393.) Because the Legislature “had in mind allegations of protected activity that are asserted as grounds for relief,” the defendant’s special motion to strike may target “particular alleged acts giving rise to a claim for relief … .” (Id. at p. 395.)

5. Public Entities
6.
The anti-SLAPP statute extends its protections to public entities as well as individuals and private organizations. (Vargas, supra, 46 Cal.4th at p. 19 [“section 425.16 may not be interpreted to exclude governmental entities … from its potential protection”].) In Vargas, the plaintiffs argued the anti-SLAPP statute did not protect the government because government speech, unlike that of individuals or private organizations, was not protected under the First Amendment. The Court rejected this view as unsupported by either the text or the purposes of the anti-SLAPP statute, concluding “the statutory remedy afforded by section 425.16 extends to statements and writings of governmental entities and public officials on matters of public interest and concern that would fall within the scope of the statute if such statements were made by a private individual or entity.” (Id. at p. 17.)

The California Supreme Court has distinguished the votes of individual councilmembers from public entity decisions. (City of Montebello v. Vasquez (2016) 1 Cal.5th 409, 423, 425 (Montebello).) Councilmembers’ votes are protected by the anti-SLAPP statute because they further the councilmembers’ rights of advocacy and communication with their constituents. (Ibid.) By contrast, collective action by a public entity does not automatically “implicate its ‘rights of free speech or petition.’ [Citation.]” (Id. at pp. 425–426.) This distinction is important because many “ ‘public entity decisions … are arrived at after discussion and a vote at a public meeting,’ [citation]” and if such actions were routinely subjected to a special motion to strike, the result would be to “ ‘chill the resort to legitimate judicial oversight over potential abuses of legislative and administrative power.’ [Citation.]” (Ibid.) Accordingly, it is only when the act undertaken by a public entity is itself a type of expressive activity that would be protected if undertaken by a private individual that the collective action is subject to anti-SLAPP protection. (Id. at p. 425, fn. 13.)

San Ramon, discussed by the high court in Montebello, illustrates this distinction. In that case, the plaintiffs challenged a decision of the Contra Costa County Employees’ Retirement Association (the Board) to set a pension contribution level for plaintiffs. (San Ramon, supra, 125 Cal.App.4th at p. 353.) The Board responded with an anti-SLAPP motion, contending the decision was protected under subdivision (e)(4) of section 425.16, as conduct in furtherance of the constitutional right of free speech in connection with a public issue. (San Ramon, at p. 353.) The court of appeal disagreed, explaining that just because the public entity acted following “a majority vote of its constituent members” did not mean “the litigation challenging that action arose from protected activity … .” (Id. at p. 354.) The relevant conduct was not the majority vote itself, but the activity the majority decision set in motion. (Ibid.) Since the Board was sued for its decision to charge the plaintiffs more for pension contributions—as opposed to “the content of speech it … promulgated or supported” or “its exercise of a right to petition”— the anti-SLAPP statute did not protect it. (Id. at p. 357.) The court acknowledged the result would be different “if the action taken by the Board had been to authorize participation in a campaign to amend state pension laws, or to become actively involved in a voter initiative seeking such changes.” (Ibid.)

By contrast, our high court determined in Vargas, supra, 46 Cal.4th at pp. 17–19, that a city’s publicly funded communications opposing a pending ballot measure were protected activity as “statements relating to a public issue or a matter of public interest.” (Id. at p. 19; see also Montebello, supra, 1 Cal.5th at p. 425 & fn. 13 [distinguishing San Ramon from Vargas by noting that the conduct at issue in Vargas was “taken in furtherance of the right of free expression” and the type of “expressive activity … that might be engaged in by private individuals or entities”].)

The upshot of these cases is that under the anti-SLAPP statute, a suit challenging a public entity decision must be evaluated based on the substance of the decision. If the decision is to take action in furtherance of the public entity’s right of petition or free speech in connection with a public issue, that act is subject to protection under the anti-SLAPP statute (§ 425.16, subd. (b)(1)). (See Montebello, supra, 1 Cal.5th at p. 425 & fn. 13.) If the decision does not implicate the rights of free speech or petition, the anti-SLAPP motion must be denied. (See San Ramon, supra, 125 Cal.App.4th at p. 355.)

Importantly, the anti-SLAPP statute does not insulate the public entity “from any liability for claims arising from the protected rights of petition or speech. It only provides a procedure for weeding out, at an early stage, meritless claims arising from protected activity.” (Baral, supra, 1 Cal.5th at p. 384; see also Schaffer v. City and County of San Francisco (2008) 168 Cal.App.4th 992, 1002 [the anti-SLAPP statute “is not an immunity statute; it provides a means by which defendants can protect themselves against certain meritless claims at an early stage of the litigation”].)

7. Some of Developer’s claims arise from protected activity.
8.
In its motion, the City highlighted the following instances of protected activity: asking the Coastal Commission to certify Measure C; allowing officials with conflicts to participate in decisions affecting the ALPIF; and seeking a new development partner and design for the waterfront. Citing Baral, the City contended “the court should strike allegations of protected activity within a cause of action, even if the entire cause of action would not be stricken.”

8.1. Sending Measure C to the Coastal Commission was protected activity.
8.2.
Developer’s first alleged breach was that the City jeopardized Developer’s vested rights and failed to ensure the City could perform its own obligations under the parties’ agreement. Developer alleged the City did this, at least in part, by attempting to retroactively apply Measure C to the Waterfront Project. In the trial court’s view, the City’s passage of the resolution that sent Measure C to the Coastal Commission was not protected because, under San Ramon, “Acts of governance mandated by law, without more, are not exercises of free speech or petition.”

Although the court’s reasoning is correct in principle, the City did more than engage in a mere act of governance. Here, the City passed a resolution to request that a state agency, the Coastal Commission, review a local initiative seeking changes to the City’s coastal plan. Absent the City’s request, “the Coastal Commission could not apply Measure C to the Waterfront Project.” The City’s conduct was protected under subdivision (e)(4) as furthering the City’s right of petition in connection with a public issue or issue of public interest. (See Rand, supra, 6 Cal.5th at pp. 620–621.)

A cause of action is protected under subdivision (e)(4) if the underlying conduct was (1) in furtherance of defendant’s right of petition or free speech and (2) in connection with a public issue. (Rand, supra, 6 Cal.5th at pp. 620–621.) Sending Measure C to the Coastal Commission furthered the City’s right to petition because the City sought administrative action, namely to have the Commission certify the proposed amendments to the City’s coastal plan. (See California Motor Transport Co. v. Trucking Unlimited (1972) 404 U.S. 508, 513 [right of access to agencies and to be heard on applications is part of the right of petition protected by the First Amendment]; see also Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1115 [constitutional right of petition includes seeking administrative action].) For purposes of the anti-SLAPP statute, it makes no difference whether the party initiating the proceedings is a public entity or a private individual. (Vargas, supra, 46 Cal.4th at p. 17.)

In deciding whether the expressive conduct is about a public issue, “courts look to certain specific considerations, such as whether the subject of the speech or activity ‘was a person or entity in the public eye’ or ‘could affect large numbers of people beyond the direct participants’; and whether the activity ‘occurred in the context of an ongoing controversy, dispute or discussion, [citation]’ or ‘affected a community in a manner similar to that of a governmental entity.’ ” (FilmOn.com Inc. v. DoubleVerify Inc. (2019) 7 Cal.5th 133, 145–146.)

In this case, the development of the City’s waterfront area had been an ongoing subject of public debate, discussion, and controversy for several years. In 2010, the City passed Measure G, which “authorized an additional 400,000 square feet of net new development of the Waterfront.” More recently, the electorate passed Measure C, which again addressed the development of this area. The application of Measure C to the Waterfront Project, moreover, continued to be a matter of public controversy as evidenced by the public discussion at the City Council hearing over whether to send Measure C to the Coastal Commission.

We conclude the City’s act of sending Measure C to the Coastal Commission was protected activity and reverse the trial court’s decision to the contrary.

8.3. Allowing elected City officials to participate in decisions involving Developer was protected activity.
8.4.
Developer also accused the City of breaching the ALPIF by allowing conflicted elected officials to participate in decisions affecting the parties’ agreement. Again, the court decided this claim was based on “official decision made by the City involving the ALPIF,” which does not implicate protected activity.

This alleged breach of contract claim concerns the votes and public comments of the City’s mayor and two councilmembers. Developer complained that Brand, Loewenstein, and Nehrenheim drafted Measure C and then ran for public office on an anti-Waterfront Project platform. On that basis, Developer objected to their participation in council decisions impacting the Waterfront Project. We conclude the mayor’s and councilmembers’ conduct is protected under the anti-SLAPP statute as “written or oral statement[s] or writing[s] made before a legislative … proceeding.” (§ 425.16, subd. (e)(1); Montebello, supra, 1 Cal.5th at pp. 422–423 [Subdivision (e)(1) protects “council members’ votes, as well as statements made in the course of their deliberations at the city council meeting where the votes were taken”].)

To be sure, Developer contends that the actual activity underlying its breach of contract claim is the City’s failure to prevent those individuals from engaging in prohibited conduct. According to Developer, the City exposed itself to liability by allowing Brand, Loewenstein, and Nehrenheim “to continue to make decisions and/or participate in decisions or conduct that affect the ALPIF” and Developer’s rights. This argument is not persuasive.

The ALPIF provided that City officials shall not have any personal interests in the agreement, and could not participate in any decision that would affect his or her personal interests. The only means of breaching this provision was for an individual official to participate in a decision despite his or her personal interest in the ALPIF. (Rand, supra, 6 Cal.5th at p. 626 [Because City attorney’s promise supplied an element of promissory fraud claim, it properly “arose” from speech that might be protected under section 425.16]; see also Navellier, supra, 29 Cal.4th at p. 92 [“The anti-SLAPP statute’s definitional focus is … the defendant’s activity that gives rise to his or her asserted liability.”].) Thus, even if the City had the means to prevent these individuals from participating in City decisions, the failure to employ those means would not have constituted a breach, whereas the participation of an individual City official in a decision despite his or her personal interest would establish the breach. (Park, supra, 2 Cal.5th at p. 1068 [“Communications disparaging [employee], without any adverse employment action, would not support a claim for employment discrimination, but an adverse employment action, even without the prior communications, surely could.”].)

In essence, Developer seeks to impute liability to the City for the speech and petitioning activity of its mayor and councilmembers, conduct which Developer contends the City should have stifled based on the individuals’ alleged conflicts of interest. Having determined this claim rests upon the participation of elected officials in decisions affecting the agreement, the City’s failure to prevent the challenged conduct was also protected activity. Put differently, the ALPIF’s “no conflicts” provision does not impact the inquiry as to whether the challenged conduct is protected under step one of the anti-SLAPP analysis. Whether the challenged conduct violated the ALPIF is a merits-based determination under step two. (See Navellier, supra, 29 Cal.4th at p. 94.)

4.3 Communications seeking a new development partner and design were not protected.

Developer’s third and fourth alleged breaches were the City seeking a new development partner and design for the waterfront. The court found the conduct underlying these breaches were email “communications between the City and potential partners concerning the development of the Waterfront.” Following Park, supra, 2 Cal.5th 1057, the court ruled these communications were not protected because they were evidence of the alleged breach, rather than constituting the breach itself. We agree.

In Park, the plaintiff was denied tenure at California State University, Los Angeles, and filed suit under the California Fair Employment and Housing Act (Gov. Code, § 12900 et seq.) for national origin discrimination. The defendant filed an anti-SLAPP motion. The trial court denied the motion because the complaint was based on the defendant’s decision to deny tenure, rather than on any communicative conduct in connection with that decision. (Park, supra, 2 Cal.5th at p. 1061.) The Supreme Court agreed with the trial court, and explained: “[A] claim is not subject to a motion to strike simply because it contests an action or decision that was arrived at following speech or petitioning activity[,] … Rather, 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.” (Id. at p. 1060.)

Park cited Graffiti Protective Coatings, Inc. v. City of Pico Rivera (2010) 181 Cal.App.4th 1207 (Graffiti) to further illustrate the distinction. (Park, supra, 2 Cal.5th at p. 1065.) In Graffiti, the plaintiff sued a city after its government contract was terminated and a new contract awarded without competitive bidding to a rival. (Graffiti, at p. 1211.) The trial court granted the City’s anti-SLAPP motion because any communications between the City and others leading to the termination of plaintiff’s contract constituted expressive conduct in furtherance of the City’s exercise of free speech. (Id. at pp. 1214–1215.) Reversing, the Court of Appeal explained that the trial court failed to appreciate that “[p]relitigation communications or prior litigation may provide evidentiary support for the complaint without being a basis of liability.” (Id. at p. 1215.) On review, our high court agreed, adding that “[w]hile communications by the city preceding its decision might be helpful in establishing what events led to the change in contract, the contractor’s claims were not based on them, but on the award of a new contract in alleged violation of laws regulating competitive bidding. [Citation.]” (Park, at p. 1065.)

Here, as in Graffiti and Park, the City’s communications with other potential design or development partners were not the basis of Developer’s alleged injury. Developer claimed to have been injured by the City’s decision to seek retroactive application of Measure C to strip it of its vested rights, and pretextual termination of the ALPIF. Any purported conversation between the City and other potential developers would not establish a breach, but instead constitute the type of conduct that might “lead to the liability-creating activity or provide evidentiary support for the claim.” (Park, supra, 2 Cal.5th at p. 1064; Baral, supra,1 Cal.5th at p. 394 [“Allegations of protected activity that merely provide context, without supporting a claim for recovery, cannot be stricken under the anti-SLAPP statute”]; see also Area 51 Productions, Inc. v. City of Alameda (2018) 20 Cal.App.5th 581, 596 [email communications that led to and followed the injury producing conduct, City’s failure to lease certain property to plaintiff in accordance with contract, were merely incidental to asserted claims and not the basis for liability asserted by plaintiff].)

Accordingly, the trial court properly ruled these breaches and the underlying communications were not protected under section 425.16.

4.4. The City forfeited any argument that the remaining breaches identified by Developer in the complaint constituted protected conduct.

Developer’s fifth through ninth alleged breaches were based on the City’s failure to allow Developer access to records, failure to timely submit the completed application for the boat ramp, and the City’s termination of the ALPIF on pretextual grounds. The City’s anti-SLAPP motion did not argue that the conduct underlying these allegations was protected.

On appeal the City concedes the conduct underlying the first two claims was “arguably unprotected conduct.” As to its termination of the ALPIF, however, the City argues these breaches arose from communications “made in connection with ongoing or anticipated litigation,” referencing Developer’s federal complaint and the City’s subsequent cross-complaint.

Because a defendant has the burden at step one to identify “all allegations of protected activity, and the claims for relief supported by them,” the City has forfeited any argument that the identified conduct is protected under the anti-SLAPP statute. (Baral, supra, 1 Cal.5th at p. 396; see Rand, supra, 6 Cal.5th at p. 627, fn. 5 [declining to consider anti-SLAPP arguments not presented to the trial court].)

9. The court must proceed to step two in evaluating the City’s anti-SLAPP motion.
10.
Once defendant establishes the complaint seeks relief “based on allegations arising from [protected] activity[,]” the court must proceed to step two. (Baral, supra, 1 Cal.5th at p. 396.) At step two, “the burden shifts to the plaintiff to demonstrate that each challenged claim based on protected activity is legally sufficient and factually substantiated.” (Ibid.)

As we explained, the City met its first-step burden as to Developer’s claims regarding transmission of Measure C to the Coastal Commission and the participation of conflicted City officials. The City “is therefore entitled to preliminary screening of those claims to determine whether they have minimal merit.” (Wilson v. Cable News Network, Inc., supra, 7 Cal.5th at p. 904.)

Both parties urge us to allow the trial court the first opportunity to conduct this second-step analysis. We agree, and remand the matter to allow the court to evaluate whether these two claims have the minimal merit required to survive a special motion to strike. (See Collier v. Harris (2015) 240 Cal.App.4th 41, 58 [noting majority of appellate courts have declined to undertake step-two analysis for first time on appeal].)

DISPOSITION

The order denying the City’s anti-SLAPP motion is reversed as to Developer’s claims that the City breached the parties’ agreement by: (1) sending Measure C to the Coastal Commission for certification; and (2) allowing City officials with conflicts of interest to participate in decisions affecting the ALPIF. On remand, the trial court shall determine whether these claims have the minimal merit necessary to survive an anti-SLAPP motion.

The order is affirmed in all other respects. The parties shall bear their own costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

LAVIN, J.

WE CONCUR:

EDMON, P. J.

EGERTON, J.