Case Name: Friendly Wholesalers of California, et al. v. Chavez Management Group, Inc., et al.

Case No.: 17CV319303

Defendants’ Special Motion to Strike and Dismiss the Complaint by Plaintiff Jalal Shreim Against Defendants and For Attorney’s Fees

Factual and Procedural Background

Plaintiff Friendly Wholesalers of California (“FWOC”) is a commercial tenant of the premises located at 2213 Ringwood Avenue in San Jose (“Subject Property”). (Complaint, ¶1.) Plaintiff Jalal Shreim (“Shreim”) is the owner of FWOC. (Complaint, ¶2.)

FWOC became a commercial tenant of the Subject Property pursuant to a Lease Agreement dated January 31, 2002 for the period of March 1, 2002 through February 28, 2007. (Complaint, ¶13 and Exh. A.) The First Amendment to the Lease Agreement dated February 28, 2007 extended the term of the lease for an additional 24 months. (Complaint, ¶14 and Exh. B.) Addendum I to the Lease Agreement extended the term of the lease for an additional two years, commencing December 1, 2009 through November 30, 2011. (Complaint, ¶16 and Exh. D.) Addendum II to the Lease Agreement extended the lease for an additional three years from December 1, 2011 through November 30, 2014. (Complaint, ¶17 and Exh. E.)

On or about April 19, 2013, defendants Chavez Management Group, Inc. (“Chavez”), 2205-1113 Ringwood, LLC (“Ringwood”), Marco Chavez (“Marco”), and George Chavez (“George”) (collectively, “Defendants”) amended the Lease Agreement providing written authorization for plaintiffs to sublease a portion of the Subject Property (“Sublease Authorization”). (Complaint, ¶18.) Addendum III to the Lease Agreement extended the term of the lease for an additional three years from December 1, 2014 through November 30, 2017. (Complaint, ¶19 and Exh. F.)

Pursuant to the Sublease Authorization, on or about May 2013, FWOC subleased a portion of the Subject Property to Renegade Cricket, LLC dba ProCricShop (“Renegade”). (Complaint, ¶22.)

Despite being current on rent, on or about April 2017, Defendants posted a “3 Day Notice to Quit” to FWOC, Renegade, and unknown entity OnCourier365, claiming FWOC did not have authorization to sublease. (Complaint, ¶23.) OnCourier365 was never a subtenant of FWOC. (Complaint, ¶24.) The “3 Day Notice to Quit” was seen by Renegade and various customers of FWOC, creating instability in FWOC’s business and contractual relations with Renegade and its customers. (Complaint, ¶25.) Plaintiffs reminded Defendants that they had Sublease Authorization and OnCourier365 was not their subtenant. (Complaint, ¶26.)

However, on or about April 13, 2017, [Defendants] filed an unlawful detainer against FWOC, Renegade, and OnCourier365 in Santa Clara County Superior Court (“Unlawful Detainer”). (Complaint, ¶26 and Exh. G.) FWOC attempted to clarify and resolve matters with Defendants to no avail. (Complaint, ¶27.) FWOC and Renegade filed their answers and paid filing fees. (Id.)

On June 16, 2017, Defendants filed a Request for Dismissal of the Unlawful Detainer. (Complaint, ¶28 and Exh. H.)

Approximately one week later, Defendants issued another “3 Day Notice to Quit” to FWOC, OnCourier365 and Go East Movers, acknowledging Renegade was an authorized subtenant, but claiming OnCourier365 and Go East Movers were not authorized. (Complaint, ¶29.) Plaintiffs again reminded Defendants that they had Sublease Authorization and that OnCourier365 and Go East Movers were not subtenants. (Complaint, ¶31.) However, on or about June 30, 2017, [Defendants] filed another unlawful detainer action against FWOC, Renegade, OnCourier365 and Go East Movers in Santa Clara County Superior Court (“Second Unlawful Detainer”). (Complaint, ¶31 and Exh. I.)

FWOC attempted to clarify and resolve matters with Defendants to no avail. (Complaint, ¶32.) FWOC and Renegade filed respective answers to the Second Unlawful Detainer and paid their filing fees. (Id.) On October 5, 2017, Defendants filed another Request for Dismissal of the Second Unlawful Detainer. (Complaint, ¶33 and Exh. J.)

Throughout the filing of the Unlawful Detainer and Second Unlawful Detainer, Defendants refused to accept rent from Plaintiffs, harassed FWOC and Renegade by, among other things, denying FWOC and Renegade access to certain portions of the Subject Property, removing three-phase electric units from the Subject Property, attempting to contact/ contacting FWOC’s contacts to obtain negative information about Shreim, shutting down power, etc. (Complaint, ¶35.) Defendants also interfered with FWOC’s efforts with Everest California (“Everest”) concerning a business loan. (Complaint, ¶36.)

On November 16, 2017, plaintiffs FWOC and Shreim filed a complaint against Defendants asserting claims for:

(1) Malicious Prosecution
(2) Breach of Contract
(3) Breach of the Implied Covenant of Good Faith and Fair Dealing
(4) Intentional Interference with Contractual Relations
(5) Negligent Interference with Contractual Relations
(6) Intentional Interference with Prospective Economic Advantage
(7) Negligent Interference with Prospective Economic Advantage
(8) Unfair Business Practices – Violations of Business & Professions Code §17200 et seq.

On December 19, 2017, Defendants filed an answer to plaintiffs’ complaint.

On December 21, 2017, Defendants filed the motion now before the court, a special motion to strike plaintiff Shreim’s complaint.

Discussion

I. Procedural violation.

As a preliminary matter, the court notes that plaintiff Shreim’s opposition is untimely filed and served. Code of Civil Procedure section 1005, subdivision (b) states, “All papers opposing a motion … shall be filed with the court and a copy served on each party at least nine court days … before the hearing.” Based on a hearing date of March 13, 2018, plaintiff Shreim’s opposition had to be filed and served no later than February 28, 2018. Plaintiff Shreim did not serve opposition until March 2, 2018, two court days late, and did not file opposition until March 5, 2018, three court days late.

California Rules of Court, rule 3.1300, subdivision (d) states, “No paper may be rejected for filing on the ground that it was untimely submitted for filing. If the court, in its discretion, refuses to consider a late filed paper, the minutes or order must so indicate.” Since the court has discretion to consider a late filed paper, since Defendants have not claimed any prejudice from the late filing, and to avoid the expenditure of any further judicial resources, the court will look past this procedural violation and consider the opposition on its merits. However, plaintiff Shreim and plaintiff’s counsel are hereby admonished for the procedural violation. Any future violation may result in the court’s refusal to consider the untimely filed papers.

II. Defendants’ special motion to strike plaintiff Shreim’s complaint is GRANTED.

A. The two-step procedure for anti-SLAPP motions.

Code of Civil Procedure section 425.16 requires a court to engage in a two-step process when determining whether a defendant’s anti-SLAPP motion should be granted. First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one “arising from” protected activity. The moving defendant’s burden is to demonstrate that the act or acts of which the plaintiff complains were taken in furtherance of the defendant’s right of petition or free speech under the United States or California Constitution in connection with a public issue. If the court finds such a showing has been made, it then must consider whether the plaintiff has demonstrated a probability of prevailing on the claim. In making these determinations, the trial court considers the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based. (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.)

B. Step one – threshold showing that the challenged cause of action arises from protected activity.

Defendants have the initial burden to demonstrate that the claims asserted by plaintiff Shreim in the complaint “arise from” some protected activity. “Defendant need only make a prima facie showing that plaintiff’s complaint ‘arises from’ defendant’s constitutionally-protected free speech or petition activity. The burden shifts to plaintiff to establish as a matter of law that no such protection exists.” (Weil & Brown, et al., CAL. PRAC. GUIDE: CIV. PRO. BEFORE TRIAL (The Rutter Group 2015) ¶7:991, pp. 7(II)-54 to 7(II)-55 citing Governor Gray Davis Committee v. American Taxpayers Alliance (2002) 102 Cal.App.4th 449, 458 – 459.)

“A defendant meets the burden of showing that a plaintiff’s action arises from a protected activity by showing that the acts underlying the plaintiff’s cause of action fall within one of the four categories of conduct described in section 425.16, subdivision (e). [Citation.] Those four categories are: ‘(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; (4) or 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.’” (Siam v. Kizilbash (2005) 130 Cal.App.4th 1563, 1569 (Siam).)

Here, the claims made in the complaint stem from Defendants’ issuance of the “3-Day Notices to Quit” and the prosecution of the Unlawful Detainer and Second Unlawful Detainer. In opposition, plaintiff concedes a malicious prosecution claim is automatically subject to an anti-SLAPP motion. (See MPA ISO Plaintiff Jalal Shreim’s Opposition, etc., p. 4, lines 9 – 10.) Plaintiff offers no further argument or relevant legal authority on the issue of whether the causes of action asserted in the complaint arise from protected activity. Instead, plaintiff Shreim moves directly to step two, implicitly conceding the causes of action asserted in the complaint arise from protected activity.

Here, the wrongful, injurious acts includes the service of the 3 day notices to quit and the commencement of the Unlawful Detainer and Second Unlawful Detainer. California courts recognize that “[t]he prosecution of an unlawful detainer action indisputably is protected activity within the meaning of section 425.16.” (Wallace v. McCubbin (2011) 196 Cal.App.4th 1169, 1182 – 1183; Feldman v. 1100 Park Lane Associates (2008) 160 Cal.App.4th 1467, 1479; Birkner v. Lam (2007) 156 Cal.App.4th 275, 281 (Birkner), citing Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 734–735; Navellier v. Sletten (2002) 29 Cal.4th 82, 90; Chavez v. Mendoza (2001) 94 Cal.App.4th 1083, 1087.) “The constitutional right to petition … includes the basic act of filing litigation or otherwise seeking administrative action.” (Birkner v. Lam, supra, 156 Cal.App.4th at p. 281, citing Ludwig v. Superior Court (1995) 37 Cal.App.4th 8, 19.)

Similarly, since the termination notice is a legal prerequisite for bringing an unlawful detainer action (see Code Civ. Proc., §§1161, subd. 1, 1162), service of such a notice constitutes activity in furtherance of the constitutionally protected right to petition. (Feldman v. 1100 Park Lane Associates (2008) 160 Cal.App.4th 1467, 1480; Birkner v. Lam, supra, 156 Cal.App.4th at p. 282.)

C. Step two – probability of prevailing.

“[I]f a court ruling on an anti-SLAPP motion concludes the challenged cause of action arises from protected petitioning, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim. To satisfy this prong, the plaintiff must state and substantiate a legally sufficient claim. Put another way, the plaintiff must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited.” (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 741; internal citations and punctuation omitted.) “The court does not weigh credibility or comparative strength of the evidence. The court considers defendant’s evidence only to determine if it defeats plaintiff’s showing as a matter of law.” (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 291.)

1. First cause of action.

The first cause of action in plaintiffs’ complaint is one for malicious prosecution. “To establish a cause of action for the malicious prosecution of a civil proceeding, a plaintiff must plead and prove that the prior action (1) was commenced by or at the direction of the defendant and was pursued to a legal termination in his, plaintiff’s, favor [citations]; (2) was brought without probable cause [citations]; and (3) was initiated with malice.” (Bertero v. National General Corp. (1974) 13 Cal.3d 43, 50; see also CACI, No. 1501.) The elements for the cause of action were also stated in Robinzine v. Vicory (2006) 143 Cal.App.4th 1416, 1422, where the court wrote, “To establish a cause of action for malicious prosecution, the plaintiff must prove the prior action was: (1) brought by the defendant and resulted in a favorable termination for the plaintiff; (2) initiated or continued without probable cause; and (3) initiated with malice.”

Plaintiff Shreim proffers evidence that the Unlawful Detainer and Second Unlawful Detainer were both dismissed without prejudice. However, Shreim’s argument misses a fundamental point. The Unlawful Detainer and Second Unlawful Detainer did not name Shreim as a defendant and were instead brought against FWOC, Renegade, OnCourier365 and Go East Movers. Plaintiff Shreim lacks standing to pursue a malicious prosecution claim as there is no evidence that plaintiff Shreim was a named defendant in any prior action.

2. Second and third causes of action.

With regard to the second and third causes of action for breach of contract and breach of implied covenant of good faith and fair dealing, it is Defendants’ contention that Shreim cannot maintain either of these two causes of action because he is not a party to the subject Lease Agreement or any subsequent addendum or amendment thereto. The underlying Lease Agreement identifies FWOC and Monir Shreim as tenants. A subsequent Addendum II to the Lease Agreement identifies only FWOC as the lessee and is executed by Jalal Shreim, but in his capacity as the owner of FWOC, not in his own individual capacity. Shreim does not even advance any argument that he, individually, would be able to prevail on either of these two claims.

3. Fourth through seventh causes of action.

The elements which a plaintiff must plead to state the cause of action for intentional interference with contractual relations are (1) a valid contract between plaintiff and a third party; (2) defendant’s knowledge of this contract; (3) defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage. (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 55; Tuchscher Development Enterprises, Inc. v. San Diego Unified Port Dist. (2003) 106 Cal.App.4th 1219, 1239; see also CACI, No. 2200.) “In California there is no cause of action for negligent interference with contractual relations.” (Davis v. Nadrich (2009) 174 Cal.App.4th 1, 9.)

The elements for the tort of intentional interference with prospective economic advantage “are usually stated as follows: (1) an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (2) the defendant’s knowledge of the relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant.” (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153 (Korea).)

“The tort of negligent interference with prospective economic advantage is established where a plaintiff demonstrates that (1) an economic relationship existed between the plaintiff and a third party which contained a reasonably probable future economic benefit or advantage to plaintiff; (2) the defendant knew of the existence of the relationship and was aware or should have been aware that if it did not act with due care its actions would interfere with this relationship and cause plaintiff to lose in whole or in part the probable future economic benefit or advantage of the relationship; (3) the defendant was negligent; and (4) such negligence caused damage to plaintiff in that the relationship was actually interfered with or disrupted and plaintiff lost in whole or in part the economic benefits or advantage reasonably expected from the relationship.” (North American Chemical Co. v. Superior Court (1997) 59 Cal.App.4th 764, 786.)

In each of the fourth through seventh causes of action, one of the necessary elements is the existence of either a contract or some economic relationship between the plaintiff and a third party. Defendants contend Shreim cannot establish the existence of a contract or economic relationship between Shreim, individually, and some third party which Defendants interfered with. In opposition, Shreim contends he had a contractual relationship with Everest Financial and Renegade. However, Shreim’s evidence establishes only that FWOC had authority to sublease and a subtenant relationship between FWOC and Renegade. Further, Shreim’s declaration states Defendants interfered “with [FWOC] business operations.” The declaration further states, “[Defendant Chavez] interfered with [FWOC]’s business loan with Everest Financial. [Defendant] Chavez provided private financial information and also advised Everest that [FWOC] was being evicted.” Although Shreim declares, “I was the personal guarantor of this loan,” there is no allegation in the complaint (or any explanation) as to how any action or conduct by Defendants interfered with Shreim’s contractual guarantor obligations, any other contract between Shreim and some third party, or any economic relationship between Shreim and a third party.

4. Eighth cause of action.

“Business and Professions Code section 17200 et seq. prohibits unfair competition, including unlawful, unfair, and fraudulent business acts. The UCL covers a wide range of conduct. It embraces anything that can properly be called a business practice and that at the same time is forbidden by law.” (Korea, supra, 29 Cal.4th at p. 1143.) “The UCL covers a wide range of conduct. It embraces anything that can properly be called a business practice and that at the same time is forbidden by law.” (Id.) “Section 17200 ‘borrows’ violations from other laws by making them independently actionable as unfair competitive practices. In addition, under section 17200, a practice may be deemed unfair even if not specifically proscribed by some other law.” (Id.) “By proscribing unlawful business practices, the UCL borrows violations of other laws and treats them as independently actionable. In addition, practices may be deemed unfair or deceptive even if not proscribed by some other law. Thus, there are three varieties of unfair competition: practices which are unlawful, or unfair, or fraudulent.” (Blakemore v. Superior Court (2005) 129 Cal.App.4th 36, 48.) Plaintiff Shreim contends his UCL claim is derivative of and incorporate all the preceding causes of action.

“In order to establish a probability of prevailing on the claim, a plaintiff responding to an anti-SLAPP motion must ‘state and substantiate a legally sufficient claim.’” (Taus v. Loftus (2007) 40 Cal.4th 683, 713.) As discussed above with each of the preceding causes of action, plaintiff Shreim has not substantiated any legally sufficient claim. Accordingly, Defendants special motion to strike and dismiss the complaint by plaintiff Jalal Shreim against Defendants is GRANTED.

III. Defendants’ request for attorney’s fees.

“[A] prevailing defendant on a special motion to strike shall be entitled to recover his or her attorney’s fees and costs.” (Code Civ. Proc., §425.16, subd. (c)(1).) “There are three alternative procedures by which a successful defendant may obtain a fee award under CCP §425.16(c): [1] request fees as part of the anti-SLAPP motion; [2] make a noticed motion for fees after the anti-SLAPP motion has been granted; or [3] include the fee request in the cost bill after entry of judgment.” (Weil & Brown, et al., CAL. PRAC. GUIDE: CIV. PRO. BEFORE TRIAL (The Rutter Group 2017) ¶7:1185, p. 7(II)-73 citing American Humane Association v. L.A. Times Communications (2001) 92 Cal.App.4th 1095, 1103, et al.) Defendants state their intent to employ the second method, i.e., make a separately noticed motion. The court will reserve any ruling on attorney’s fees until then.