Case Name: Danning Jiang v. James Cai, et al.

Case No.: 2019-CV-341417

Special Motion to Strike and Demurrer to the First Amended Complaint by Defendants James Cai (aka Jingming Cai) and SAC Attorneys LLP

Factual and Procedural Background

This is an action for abuse of process. Plaintiff Danning Jiang (“Jiang” or “plaintiff”) is an attorney licensed in the State of California. (First Amended Complaint [“FAC”] at ¶ 1.) Defendant James Cai (aka Jingming Cai) is also an attorney licensed in the State of California and the owner of defendant SAC Attorneys LLP, a limited liability partnership (collectively, “Defendants”). (Id. at ¶¶ 2-3.) Defendants had previously represented an entity known as Chuangjia International Co. dba as TX Trading (“TX Trading”). (Id. at ¶ 5.) TX Trading is jointly owned by Jack Xu (“Xu”) and Shu Teng (“Teng”) as husband and wife. (Ibid.)

On May 31, 2016, on behalf of TX Trading, Defendants filed an interpleader complaint (case no. 16CV295764) against Xu, Teng, and Edadoc USA, Inc. (“Edadoc”). (FAC at ¶ 6.) Edadoc was a joint venture formed among Shenzhen Edadoc Technology Co., Ltd. (“Shenzhen”), Xu, and Teng. (Ibid.) TX Trading asserted in its complaint that a $58,439 fund withdrawn by Teng from Edadoc’s bank account was under dispute among the joint venture parties. (Ibid.) TX Trading did not deposit the interpleader funds and dismissed the complaint with prejudice on June 23, 2016. (Ibid.)

On June 16, 2016, attorney Jiang represented Edadoc and filed a cross-complaint against TX Trading, Xu, and Teng, alleging claims for breach of fiduciary duty, fraud, breach of contract, and declaratory relief. (FAC at ¶ 7.)

On July 28, 2016, Defendants, representing TX Trading, Xu, and Teng, filed a cross-complaint against Edadoc, adding as cross-defendants Jiang, Hansheng Ke (“Ke”), Shenzhen, and Changmao Tang (“Tang”). (FAC at ¶ 8.) Ke is the CEO of Edadoc and Tang is the CEO of Shenzhen. (Id. at ¶ 8, fns. 1-2.) Defendants subsequently amended the cross-complaint on three separate occasions. (Id. at ¶ 8.) As to these cross-complaints, Defendants sued Jiang for misrepresentation, negligence, breach of fiduciary duty and unfair competition. (Id. at ¶ 9.) Jiang believed these allegations were false and the parties thereafter engaged heavily in litigation. (Id. at ¶¶ 9-13.) During this time, attorney Jiang asked Defendants to drop the frivolous claims or he would pursue liability for malicious prosecution. (Id. at ¶ 9.)

On July 5, 2017, Defendants were substituted out and replaced by attorney James Li (“Li”). (FAC at ¶ 14.) Li filed a fourth amended cross-complaint (“4ACC”) removing harmful allegations against attorney Jiang. (Id. at ¶ 15.)

On March 29, 2018, TX Trading, Xu, and Teng dismissed their claims against Jiang with prejudice. (FAC at ¶ 16.)

On January 30, 2019, Jiang filed the operative FAC against Defendants alleging causes of action for: (1) abuse of process; (2) wrongful use of civil proceedings; and (3) unfair business practices (Bus. & Prof. Code, § 17200).

Currently before the Court are the special motion to strike and demurrer to the FAC by Defendants. The parties have filed requests for judicial notice in conjunction with the motions. Plaintiff Jiang filed written opposition and objections to evidence. Defendants filed reply papers.

Special Motion to Strike the FAC

Defendants move to strike the first, second, and third causes of action in the FAC on the ground that each claim arises from protected activity and plaintiff Jiang cannot show a probability of success on the merits. (Code Civ. Proc., § 425.16.)

Defendants’ Request for Judicial Notice

In support of the motion, Defendants request judicial notice of the entire file from the Underlying Action. In particular, Defendants request judicial notice of the following from the Underlying Action: (1) Request for Dismissal filed on March 29, 2018 (Exhibit A); (2) Order dated September 22, 2017, granting TX Trading, Xu, and Teng leave to file a 4ACC against Jiang (Exhibit B); (3) Order dated October 5, 2017, ruling on cross-motions for summary adjudication (Exhibit C); and (4) Substitutions of Attorney dated July 4, 2017 (Exhibit D).

The Court may take judicial notice of these exhibits as records of the superior court under Evidence Code section 452, subdivision (d). (See Stepan v. Garcia (1974) 43 Cal.App.3d 497, 500 [the court may take judicial notice of its own file].) In addition, the exhibits appear relevant to issues raised in the motion. (See Gbur v. Cohen (1979) 93 Cal.App.3d 296, 301 [judicial notice is confined to those matters which are relevant to the issue at hand].)

Accordingly, Defendants’ request for judicial notice is GRANTED.

Jiang’s Request for Judicial Notice

In opposition, plaintiff Jiang requests judicial notice of the following: (1) Jiang’s initial Complaint filed on January 18, 2019 in this action (See Request for Judicial Notice [“RJN”] at Ex. 1); (2) Jiang’s Proofs of Service of Summons on defendant James Cai filed on June 18, 2019 in this action (See RJN at Ex. 2); (3) Jiang’s Proofs of Service of Summons on defendant SAC Attorneys LLP filed on June 18, 2019 in this action (See RJN at Ex. 3); (4) Jiang’s FAC filed on January 30, 2019 in this action (See RJN at Ex. 4); (5) “Order Re: Plaintiff’s Ex Parte Motion to Strike Portion of the Order Dated 04/12/19 and to Reset Hearings on Defendants’ Motions” (See RJN at Ex. 5); (6) Cross-Complaint filed in the Underlying Action on July 28, 2016 (See Jiang Decl. at Ex. 5); (7) Third Amended Cross-Complaint filed in the Underlying Action (See Jiang Decl. at Ex. 6); and (8) 4ACC filed in the Underlying Action on September 28, 2017 (See Jiang Decl. at Ex. 11).

The Court may take judicial notice of these exhibits as records of the superior court under Evidence Code section 452, subdivision (d). The exhibits are also relevant to arguments raised by attorney Jiang in opposition to the motion.

Therefore, the request for judicial notice by plaintiff Jiang is GRANTED.

Jiang’s Evidentiary Objections

In opposition, plaintiff Jiang filed a series of objections to the evidence submitted by Defendants in their moving papers. The Court SUSTAINS Objection No. 7 and declines to address the remaining objections as they are not material in resolving issues raised by the motion.

Timeliness

As a procedural matter, plaintiff Jiang argues the special motion to strike should be denied as it was untimely filed. (See OPP at p. 5.)

Code of Civil Procedure section 425.16 contains a timeliness standard for bringing an anti-SLAPP motion. “The special motion may be filed within 60 days after service of the complaint, or in the court’s discretion, at any later time upon terms it deems proper. The motion shall be scheduled by the clerk of the court for a hearing not more than 30 days after service of the motion unless the docket conditions of the court require a later hearing.” (Code Civ. Proc., § 425.16, subd. (f).) All discovery is automatically stayed once an anti-SLAPP motion is filed. (Code Civ. Proc., § 425.16, subd. (g).)

A number of California cases have addressed untimely anti-SLAPP motions. For example, in Olsen v. Harbison (2005) 134 Cal.App.4th 278 (Olsen), the defendant filed an anti-SLAPP motion 278 days after service of the complaint. (Id. at p. 280.) The trial court denied the motion as untimely, and the defendant appealed. The Olsen court dismissed the appeal and imposed sanctions on the defendant, concluding that the appeal was frivolous. (Id. at p. 289.) In reaching this disposition, the appellate court noted that the availability of an interlocutory appeal from the denial of an anti-SLAPP motion and its attendant stay of trial court proceedings present the possibility for abuse of the anti-SLAPP statute:

“Both the Legislature and the Supreme Court have acknowledged the ironic unintended consequence that anti-SLAPP procedures, enacted to curb abusive litigation, are also prone to abuse. As to abuse occasioned by the stay of proceedings on appeal of the denial of an anti-SLAPP motion, the Supreme Court has encouraged us to resolve these…appeals as expeditiously as possible. To this end, reviewing courts should dismiss frivolous appeals as soon as practicable and do everything in their power to prevent…frustration of the relief granted.”

(Id. at pp. 283-284, internal quotation marks omitted.)

In the course of concluding that the defendant’s appeal was frivolous and sanctionable, the Olsen court outlined the purpose of the 60-day limitation:

“There are two potential purposes of the 60-day limitation. One is to require presentation and resolution of the anti-SLAPP claim at the outset of the litigation before the parties have undertaken the expenses of litigation that begin to accrue after the pleading stage of the lawsuit. The other is to avoid tactical manipulation of the stays that attend anti-SLAPP proceedings. The prejudice to the opponent pertinent to these purposes is that which attends having to suffer such expenses or be subjected to such a stay.”

(Id. at p. 287, internal quotation marks omitted.)

Also, in Morin v. Rosenthal (2004) 122 Cal.App.4th 673, 678-682 (Morin), the appellate court considered whether a trial court had abused its discretion in denying the defendants’ request to allow the filing of an anti-SLAPP motion approximately one month past the 60-day statutory period. As in Olsen, the Morin court emphasized that the purpose of the SLAPP statute is to facilitate the prompt resolution of lawsuits:

“The overall purpose of the SLAPP statute is to provide defendants with a procedural remedy which would allow prompt exposure and dismissal of SLAPP suits. The 60-day period in which a defendant may file a SLAPP motion as a matter of right appears to be intended to permit the defendant to test the foundation of the plaintiff’s action before having to devote its time, energy and resources to combating a meritless lawsuit.”

(Id. at p. 681, internal quotation marks omitted.)

In concluding that the trial court had not abused its discretion in denying the defendants’ request, the Morin court noted that defendants had not acted in a fashion consistent with the purpose of the anti-SLAPP statute: “Here, instead of attempting to promptly expose and dismiss Morin’s suit as a SLAPP, defendants chose to devote their time, energy and resources to moving the case from state court to federal court and, after remand from the federal court, moving the case from one branch of the superior court to another and then from one judge to another in the chosen branch.” (Morin, supra, 122 Cal.App.4th at p. 681.)

Moreover, it seemed settled that the 60-day time period begins to re-run upon the service of an amended complaint or cross-complaint. (Yu v. Signet Bank/Virginia (2002) 103 Cal.App.4th 298, 315 (Yu).) For example, in Lam v. Ngo (2001) 91 Cal.App.4th 832, the appellate court stated:

“Because the Legislature has specified that the anti-SLAPP suit law (Code Civ. Proc., § 425.16) is to be construed broadly, the provision in the law that a special motion to strike ‘may be filed within 60 days of the service of the complaint’ (§ 425.16, subd. (f)) includes amended as well as original complaints.”

(Id. at p. 835.)

Recently, however, in Newport Harbor Ventures, LLC v. Morris Cerullo World Evangelism (2018) 4 Cal.5th 637 (Newport Harbor), the California Supreme Court granted review to decide whether a special motion to strike an amended complaint may seek dismissal of causes of action that had been included in earlier complaints. In doing so, the Supreme Court held:

“ ‘[A] defendant must file an anti-SLAPP motion within 60 days of service of the first complaint (or cross-complaint, as the case may be) that pleads a cause of action coming within section 425.16[, subdivision] (b)(1) unless the trial court, in its discretion and upon terms it deems proper, permits the motion to be filed at a later time [citation]. An amended complaint reopens the time to file an anti-SLAPP motion without court permission only if the amended complaint pleads new causes of action that could not have been the target of a prior anti-SLAPP motion, or adds new allegations that make previously pleaded causes of action subject to an anti-SLAPP motion.’ [Citation.]”

(Id. at p. 641; see also id., at p. 646. )

Relying on Newport Harbor, plaintiff Jiang here argues he personally served Defendants with the original Complaint on February 4, 2019. (See Jiang’s RJN at Exs. 2-3.) The FAC added a claim for unfair competition and no changes were made to the first and second causes of action. Plaintiff Jiang thus contends the special motion to strike needed to be filed on or before April 5, 2019 to be considered timely. As Defendants did not file their motion until April 16, 2019, Jiang asserts the motion is untimely and should be denied.

This contention is not persuasive. The statute expressly provides that a defendant may file a motion to strike “within 60 days of the service of the complaint or, in the trial court’s discretion, at any time upon terms it deems proper.” (Code Civ. Proc., § 425.16, subd. (f), italics added.) As pointed out in the reply papers, Defendants, on April 12, 2019, made ex parte requests to the Court to file a longer memorandum in support of their special motion to strike and to file the motion beyond the 60-day period. (See Reply at pp. 1-2.) The Court (Hon. Kirwan), finding good cause, granted the requests thus allowing Defendants to file their motion on or before April 30, 2019. Having filed their motion on April 16, 2019, the Court finds the special motion to strike is timely filed and thus it will be addressed on its merits.

Legal Standard

Code of Civil Procedure section 425.16 provides for a “special motion to strike” when a plaintiff’s claims arise from certain acts constituting the exercise of the constitutional rights of freedom of speech and petition for the redress of grievances, “unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.” (Code Civ. Proc., § 425.16, subds. (a) & (b)(1).)

“Consistent with the statutory scheme, ruling on an anti-SLAPP motion involves a two-step procedure. First, the moving defendant must identify ‘all allegations of protected activity’ and show that the challenged claim arises from that activity. [Citations.] Second, if the defendant makes such a showing, the ‘burden shifts to the plaintiff to demonstrate that each challenged claim based on protected activity is legally sufficient and factually substantiated.’ [Citation.] Without resolving evidentiary conflicts, the court determines ‘whether the plaintiff’s showing, if accepted by the trier of fact, would be sufficient to sustain a favorable judgment.’ [Citation.]” (Bel Air Internet, LLC v. Morales (2018) 20 Cal.App.5th 924, 934.)

First Prong: Protected Activity

“A defendant meets his or her burden on the first step of the anti-SLAPP analysis by demonstrating the acts underlying the plaintiff’s cause of action fall within one of the four categories spelled out in [Code of Civil Procedure] section 425.16, subdivision (e).” (Collier v. Harris (2015) 240 Cal.App.4th 41, 50-51 (Collier).) That section provides that an “‘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 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.” (Code Civ. Proc., § 425.16, subd. (e).) “These categories define the scope of the anti-SLAPP statute by listing acts which constitute an ‘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.’” (Collier, supra, at p. 51, citing Code Civ. Proc., § 425.16, subd. (e).)

“A claim arises from protected activity when that activity underlies or forms the basis for the claim. [Citations.] Critically, ‘the defendant’s act underlying the plaintiff’s cause of action must itself have been an act in furtherance of the right of petition or free speech.’ [Citations.] ‘[T]he mere fact that an action was filed after protected activity took place does not mean the action arose from that activity for the purposes of the anti-SLAPP statute.’ [Citations.] Instead, the focus is on determining what ‘the defendant’s activity [is] that gives rise to his or her asserted liability—and whether that activity constitutes protected speech or petitioning.’ [Citation.]” (Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1062-1063 (Park).)

“[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, supra, 2 Cal.5th at p. 1060.) To determine whether the speech constitutes the wrong itself or is merely evidence of a wrong, “in ruling on an anti-SLAPP motion, courts should consider the elements of the challenged claim and what actions by defendant supply those elements and consequently form the basis for liability.” (Id. at p. 1063.)

“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.’” (Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP (2005) 133 Cal.App.4th 658, 670.) “[I]f the defendant does not demonstrate this initial prong, the court should deny the anti-SLAPP motion and need not address the second step.” (Baharian-Mehr v. Smith (2010) 189 Cal.App.4th 265, 271.)

First Cause of Action: Abuse of Process

The first cause of action is a claim for abuse of process. According to the first cause of action, plaintiff Jiang alleges Defendants filed cross-complaints against him, took his deposition, and propounded written discovery for the purpose intimidating and harassing him. (FAC at ¶¶ 18-19.) Plaintiff Jiang thus suffered damages including mental distress because of this conduct. (Id. at ¶¶ 20-21.)

The conduct alleged here includes the filing of cross-complaints, taking a deposition, and propounding of written discovery. Such actions constitute statements or conduct made in connection with issues under consideration by a judicial body under Code of Civil Procedure section 425.16, subdivision (e)(2). (See Navellier v. Sletten (2002) 29 Cal.4th 82, 88-89 (Navellier) [the filing of a complaint in breach of a general release is a writing made in connection with an issue under review by a judicial body and therefore satisfies the first prong of the analysis]; Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1115 [the right to petition protected under section 425.16 includes the basic act of filing litigation].) In addition, California cases have determined that claims for abuse of process arise from protected activity. (See S.A. v. Maiden (2014) 229 Cal.App.4th 27, 42 [like malicious prosecution, an abuse of process claim involves protected activity]; see also Booker v. Rountree (2007) 155 Cal.App.4th 1366, 1370 [“Abuse of process claims are subject to a special motion to strike.”].)

In opposition, plaintiff Jiang argues the litigation conduct alleged in support of the first cause of action is illegal as a matter of law and thus Defendants are not entitled to the protections afforded by section 425.16. (See OPP at pp. 14-16.)

In enacting the anti-SLAPP statute, the Legislature stated that its purpose was to address “lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition.” (Code Civ. Proc., § 425.16, subd. (a).) In Flatley v. Mauro (2006) 39 Cal.4th 299 (Flatley), the California Supreme Court held that when it is uncontested or otherwise conclusively established that a person acted illegally in exercising his or her First Amendment rights, that activity is not a valid exercise of rights, and is accordingly not protected under the anti-SLAPP statute. (Flatley, supra, 39 Cal.4th at p. 320.) In particular, Flatley held that “where a defendant brings a motion to strike under section 425.16 based on a claim that the plaintiff’s action arises from activity by the defendant in furtherance of the defendant’s exercise of protected speech or petition rights, but either the defendant concedes, or the evidence conclusively establishes, that the assertedly protected speech or petition activity was illegal as a matter of law, the defendant is precluded from using the anti-SLAPP statute to strike the plaintiff’s action.” (Ibid., italics added.) “The rationale is that the defendant cannot make a threshold showing that the illegal conduct falls within the purview of the statute and promotes section 425.16’s purpose to prevent and deter lawsuits [referred to as SLAPP’s] brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances.” (Id. at p. 316, internal quotation marks and citations omitted.)

The illegality exception to section 425.16 articulated in Flatley is narrow. The party opposing the anti-SLAPP motion must either show that the other party concedes to the illegal activity, or that the alleged illegality is conclusively established by uncontroverted evidence. (Flatley, supra, 39 Cal.4th at p. 320.) In Flatley, the Supreme Court determined that section 425.16 did not apply to the defendant’s speech, which it determined to be extortion as a matter of law. (Id. at p. 333.) There the defendant did not dispute that he sent the letters that the court later determined was extortion as a matter of law, nor did he contest the contents. (Id. at pp. 328-329.) The defendant also did not contest the version of the telephone calls he allegedly made as set forth in the plaintiff’s opposition to the motion to strike. (Ibid.) As a result, the court determined that the evidence was uncontroverted. (Ibid.)

Similarly, in Lefebvre v. Lefebvre (2011) 199 Cal.App.4th 696 (Lefebvre), the appellate court concluded that defendant’s actions in filing a police report against the plaintiff did not involve an exercise of the right of petition or free speech. This is because the defendant did not deny she had “submitted an illegal, false criminal report” against the plaintiff. (Lefebvre, supra, 199 Cal.App.4th at p. 705.) Because the record conclusively established the defendant’s statements to police were false, and thus illegal under Penal Code section 148.5 (it is a misdemeanor to make a false police report), the court properly denied the anti-SLAPP motion.

However, in a case where a factual dispute concerning the illegality of the statements or conduct are at issue, the Flatley exception is inapplicable. (Seltzer v. Barnes (2010) 182 Cal.App.4th 953, 965-967 (Seltzer).) For example, in Seltzer, the plaintiff failed to conclusively establish the illegality of settlement negotiations at issue as there were several factual disputes, including the defendant’s intent, during the proceedings. (Id. at p. 965.) “[C]onduct that would otherwise be protected by the anti-SLAPP statute does not lose its coverage simply because it is alleged to have been unlawful.” (Hansen v. Department of Corrections & Rehabilitation (2008) 171 Cal.App.4th 1537, 1545.) The party opposing the special motion to strike bears the burden that no factual dispute exists as to the illegality of the conduct underlying the complaint. (Seltzer, supra, 182 Cal.App.4th at p. 965.)

As stated above, the conduct at issue here includes the filing of cross-complaints, taking a deposition, and propounding of written discovery. For the conduct to be illegal, it must be criminal and not simply violate a statute. (See Mendoza v. ADP Screening & Selection Services, Inc. (2010) 182 Cal.App.4th 1644, 1654 [Flatley’s use of the phrase “illegal” intended to mean criminal, and not merely violative of a statute]; Finton Construction, Inc. v. Bidna & Keys, APLC (2015) 238 Cal.App.4th 200, 210 [same].) Defendants do not concede that such conduct was illegal as a matter of law. In opposition, plaintiff Jiang argues his evidence conclusively establishes that Defendants’ conduct was illegal as a matter of law. As pled, the first cause of action does not allege that Defendants’ litigation conduct amounts to any criminal actions. Nor is it clear what evidence or what crime Defendants engaged in with respect to the filing of cross-complaints, taking a deposition, or propounding of written discovery. Plaintiff Jiang appears to argue that Defendants aided and abetted or conspired with their clients to commit perjury. (See OPP at pp. 15-16.) This contention however is not supported by the evidence let alone the conclusive evidence necessary to support the illegality exception.

The Court therefore concludes Defendants have met their burden with respect to the first prong as to the abuse of process claim.

Second Cause of Action: Wrongful Use of Civil Proceedings

The second cause of action is a claim identified as “Wrongful Use of Civil Proceedings.” The Court treats this cause of action as a claim for malicious prosecution.

The second cause of action alleges: (1) Defendants were actively involved in bringing and continuing the lawsuit against plaintiff Jiang; (2) the lawsuit ended in Jiang’s favor; (3) no reasonable person in Defendants’ circumstances would have believed that there were reasonable grounds to bring the lawsuit against Jiang; (4) Defendants acted primarily for a purpose other than succeeding on the merits of the claim; and (5) Jiang was harmed. (FAC at ¶¶ 25-27.)

“ ‘The tort of malicious prosecution consists of instituting or instigating unjustifiable criminal or civil judicial proceedings.’ [Citation.] ‘By definition, a malicious prosecution suit alleges that the defendant committed a tort by filing [or instigating] a lawsuit.’ [Citation.]” (Johnson v. Ralphs Grocery Co. (2012) 204 Cal.App.4th 1097, 1103.) “It is well established that the anti-SLAPP statute applies to malicious prosecution actions.” (Id. at p. 1104; see Jarrow Formulas, Inc. v. La Marche (2003) 31 Cal.4th 728, 735 [“[E]very Court of Appeal that has addressed the question has concluded that malicious prosecution causes of action fall within the purview of the anti-SLAPP statute”].) In opposition, plaintiff Jiang raises the same argument regarding the illegality exception which the Court rejected for reasons stated above. Accordingly, Defendants have met their burden with respect to the first prong as to the claim for malicious prosecution.

Third Cause of Action: Unfair Business Practices

The third cause of action is a claim for unfair business practices. Plaintiff Jiang alleges the conduct set forth in the first and second causes of action constitutes unlawful, unfair and or fraudulent business practices. (See FAC at ¶¶ 33-34.) As stated above, the conduct at issue are the filing of cross-complaints, taking a deposition, and propounding of written discovery by Defendants in the Underlying Action. Such conduct constitutes protected activity in support of the claim for unfair business practices for reasons stated above. (See Bernardo v. Planned Parenthood Federation of America (2004) 115 Cal.App.4th 322, 358 [claim for injunctive relief under the UCL arose from protected activity].) In opposition, plaintiff Jiang raises the same argument regarding the illegality exception which the Court rejected for reasons stated above. Accordingly, Defendants have met their burden with respect to the first prong as to the claim for unfair business practices.

The Court will now address whether plaintiff Jiang can establish a probability of prevailing on the merits of his claims.

Second Prong: Probability of Success on the Merits

“To establish a probability of prevailing, 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. For purposes of this inquiry, the trial court considers the pleadings and evidentiary submissions of both the plaintiff and the defendant; though the court does not weigh the credibility or comparative probative strength of competing evidence, it should grant the motion if, as a matter of law, the defendant’s evidence supporting the motion defeats the plaintiff’s attempt to establish evidentiary support for the claim. In making this assessment it is the court’s responsibility…to accept as true the evidence favorable to the plaintiff…The plaintiff need only establish that his or her claim has minimal merit to avoid being stricken as a SLAPP.” (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 291, internal citations and quotation marks omitted.)

First Cause of Action: Abuse of Process

The tort of abuse of process constitutes the use of a legal process against another to accomplish a purpose for which it is not designed. (Brown v. Kennard (2001) 94 Cal.App.4th 40, 44.) To prevail on an abuse of process claim, the plaintiff must allege and prove that (1) the defendant had an ulterior motive in using the processes of court, and (2) the defendant acted willfully in the use of the legal process for a purpose other than the one for which it was designed. (Oren Royal Oaks Venture v. Greenberg, Bernhard, Weiss & Karma, Inc. (1986) 42 Cal.3d 1157, 1168 (Oren Royal Oaks Venture).)

As stated above, with respect to the first cause of action, plaintiff Jiang alleges Defendants filed cross-complaints against him, took his deposition, and propounded written discovery for the purpose of intimidating and harassing him. (FAC at ¶¶ 18-19.) Plaintiff Jiang thus suffered damages including mental distress because of this conduct. (Id. at ¶¶ 20-21.)

To defeat a SLAPP motion, a plaintiff must overcome substantive defenses. (Hecimovich v. Encinal School Parent Teacher Organization (2012) 203 Cal.App.4th 450, 472.) “A plaintiff cannot establish a probability of prevailing if the litigation privilege precludes the defendant’s liability on the claim.” (Fremont Reorganizing Corp. v. Faigin (2011) 198 Cal.App.4th 1153, 1172.) Defendants here argue the claim is barred by the litigation privilege. The litigation privilege applies “to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action.” (Silberg v. Anderson (1990) 50 Cal.3d 205, 212 (Silberg).) The privilege “is not limited to statements made during a trial or other proceedings, but may extend to steps taken prior thereto, or afterwards.” (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1057.) The litigation privilege is interpreted broadly in order to further its principal purpose of affording litigants and witnesses the utmost freedom of access to the courts without fear or harassment in derivative tort actions. (Action Apartment Assn., Inc. v. City of Santa Monica (2007) 41 Cal.4th 1232, 1241.) The privilege is absolute and applies regardless of malice. (Id. at p. 1241.) The litigation privilege has been held to immunize defendants from tort liability based on abuse of process. (Silberg, supra, at p. 215.)

Here, the abuse of process claim is based on the filing of cross-complaints against plaintiff Jiang, taking his deposition, and propounding written discovery on him. (See FAC at ¶ 18.) Each of these acts are protected under the litigation privilege. (See Baker v. Littman (1956) 138 Cal.App.2d 510, 514, fn. 1 [filing of civil action subject to litigation privilege]; see also Sipple v. Foundation For Nat. Progress (1999) 71 Cal.App.4th 226, 242-243 [litigation privilege applies to discovery].) In opposition, plaintiff Jiang argues the litigation privilege does not apply as Defendants’ conduct had no connection or logical relation to the action and were not made to achieve the objects of the litigation. (See OPP at p. 17.) Plaintiff Jiang however does not substantiate this claim with citation to legal authority or supporting evidence. Nor is plaintiff Jiang’s contention persuasive as the alleged conduct forms the basis for each of the claims in the FAC. The Court therefore concludes the abuse of process claim is barred by the litigation privilege.

Even if the litigation privilege did not apply, plaintiff Jiang would still need to demonstrate that his abuse of process claim is legally sufficient to show a probability of prevailing on the merits. (See Navellier, supra, 29 Cal.4th at pp. 88-89 [plaintiff must demonstrate 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].) Plaintiff Jiang here fails to properly allege that Defendants had an ulterior motive in pursuing the cross-complaints and subsequent discovery in the Underlying Action. The allegation simply says that Defendants intentionally used this legal procedure to intimidate and harass Jiang. (See FAC at ¶ 19.) However, “[m]ere ill will against the adverse party in the proceedings does not constitute an ulterior or improper motive.” (Ion Equipment Corp. v. Nelson (1980) 110 Cal.App.3d 868, 876.) “[T]here is no liability where the defendant has done nothing more than carry out the process to its authorized conclusion, even though with bad intentions.” (Clark Equipment Co. v. Wheat (1979) 92 Cal.App.3d 503, 524.) Instead, “[t]he improper purpose usually takes the form of coercion to obtain a collateral advantage, not properly involved in the proceeding itself, such as the surrender of property or payment of money, by use of the process as a threat.” (Id. at pp. 524-525.) As pled, plaintiff’s allegation closely resembles ill will and bad intentions which do not constitute an ulterior purpose and thus fails to state a claim for abuse of process. In addition, “the mere filing or maintenance of a lawsuit—even for an improper purpose—is not a proper basis for an abuse of process action.” (Oren Royal Oaks Venture, supra, 42 Cal.3d at p. 1169, italics added; see also Flores v. Emerich & Fike (E.D. Cal. 2006) 416 F.Supp.2d 885, 907 [violation of civil discovery rules does not constitute an abuse of process].)

Since the claim is not legally sufficient and barred by the litigation privilege, plaintiff Jiang fails to show a probability of success on the merits. As a consequence, the Court declines to address Defendants’ statute of limitations argument.

Second Cause of Action: Malicious Prosecution

“A plaintiff must plead and prove three elements to establish the tort of malicious prosecution: a lawsuit (1) was commenced by or at the direction of the defendant and was pursued to a legal termination favorable to the plaintiff; (2) was brought without probable cause; and (3) was initiated with malice.” (Nunez v. Pennisi (2015) 241 Cal.App.4th 861, 872-873.)

As stated above, with respect to the second cause of action, plaintiff Jiang alleges: (1) Defendants were actively involved in bringing and continuing the lawsuit against plaintiff Jiang; (2) the lawsuit ended in Jiang’s favor; (3) no reasonable person in Defendants’ circumstances would have believed that there were reasonable grounds to bring the lawsuit against Jiang; (4) Defendants acted primarily for a purpose other than succeeding on the merits of the claim; and (5) Jiang was harmed. (FAC at ¶¶ 25-27.)

“The first element of a malicious prosecution cause of action is that the underlying case must have been terminated in favor of the malicious prosecution plaintiff. The basis of the favorable termination element is that the resolution of the underlying case must have tended to indicate the malicious prosecution plaintiff’s innocence. [Citations.] When prior proceedings are terminated by means other than a trial, the termination must reflect on the merits of the case and the malicious prosecution plaintiff’s innocence of the misconduct alleged in the underlying lawsuit. [Citations.]” (HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 214.)

“In most cases, a voluntary unilateral dismissal is considered a termination in favor of the defendant in the underlying action; the same is true of a dismissal for failure to prosecute. [Citations.]” (Villa v. Cole (1992) 4 Cal.App.4th 1327, 1335 (Villa).) “A voluntary dismissal may be an implicit concession that the dismissing party cannot maintain the action and may constitute a decision on the merits. [Citations.] ‘It is not enough, however, merely to show that the proceeding was dismissed.’ [Citation.] The reasons for the dismissal of the action must be examined to determine whether the termination reflected on the merits.” (Eells v. Rosenblum (1995) 36 Cal.App.4th 1848, 1854-1855; Camarena v. Sequoia Ins. Co. (1987) 190 Cal.App.3d 1089, 1099-1100.)

Furthermore, “a resolution of the underlying litigation that leaves some doubt as to the defendant’s innocence or liability is not a favorable termination, and bars that party from bringing a malicious prosecution action against the underlying plaintiff. Thus, a dismissal resulting from negotiation, settlement or agreement is generally not deemed a favorable termination of the proceedings. [Citations.] The purpose of a settlement is to avoid a determination on the merits. ‘In such a case the dismissal reflects ambiguously on the merits of the action as it results from the joint action of the parties, thus leaving open the question of defendant’s guilt or innocence.’ [Citations.]” (Villa, supra, 4 Cal.App.4th at pp. 1335-1336.)

The FAC here alleges Defendants were actively involved in bringing a lawsuit against plaintiff Jiang and the action ended in Jiang’s favor. (See FAC at ¶ 25.) Plaintiff Jiang argues there was a favorable termination as the Underlying Action was dismissed by TX Trading, Xu, and Teng with prejudice on March 29, 2018. (See Jiang Decl. at ¶ 18; Ke Decl. at ¶ 15.) As stated above, it is not enough for plaintiff Jiang to simply show the Underlying Action was dismissed. The reasons for the dismissal must be examined to determine whether the termination reflected on the merits. In opposition, plaintiff Jiang vaguely refers to “factors leading to dismissal” and factors leading to his innocence. (See OPP at p. 21.) But he does not explain these factors and why they conclusively establish his innocence. Thus, there remains some doubt as to whether the voluntary dismissal resulted in a favorable termination.

In addition, plaintiff Jiang acknowledges the existence of a settlement in the Underlying Action. (See OPP at p. 21; Ke Decl. at ¶ 14.) Jiang did not produce the settlement agreement in support of his opposition and argues it is irrelevant to this action. The mere existence of the settlement agreement also raises doubts as to whether termination of the Underlying Action was favorable to plaintiff Jiang. As one California appellate court stated:

“We recognize that cases are settled for a variety of reasons: however, where both sides give up anything of value in order to end the litigation, a party cannot later claim he received a favorable termination. [Citations.] It is not necessary to analyze the particular circumstances of the settlement or to examine the motivations of the parties—a negotiated settlement not only creates an ambiguity as to the merits of the underlying action, it is entirely inconsistent with bringing a further lawsuit for malicious prosecution. [Citation.]”

(Ferreira v. Gray, Cary, Ware & Friendenrich (2001) 87 Cal.App.4th 409, 413-414.)

Based on the foregoing, the Court finds plaintiff Jiang has not established a legal termination in his favor of the Underlying Action to support his claim for malicious prosecution.

Moreover, the malicious prosecution claim is not legally sufficient as plaintiff Jiang fails to allege facts showing that Defendants maintained the Underlying Action with malice. “As an element of the tort of malicious prosecution, malice at its core refers to an improper motive for bringing the prior action.” (Drummond v. Desmarais (2009) 176 Cal.App.4th 439, 451.) “Thus the cases speak of malice as being present when a suit is actuated by hostility or ill will, or for some purpose other than to secure relief. [Citations.]” (Id. at p. 452.) “It is also said that a plaintiff acts with malice when he asserts a claim with knowledge of its falsity, because one who seeks to establish such a claim ‘can only be motivated by an improper purpose.’ [Citation.]” (Ibid.) There are simply no facts alleged to support the element of malice to state a viable claim for malicious prosecution.

Finally, plaintiff Jiang alleges he suffered damages, including harassment and mental distress, as a result of malicious prosecution. (See FAC at ¶ 28.) Plaintiff Jiang does not address the element of damages in his opposition or cite to supporting evidence to maintain his claim for malicious prosecution. (See McGarry v. University of San Diego (2007) 154 Cal.App.4th 97, 108 [in the second prong, the plaintiff must show both that the claim is legally sufficient and there is admissible evidence that, if credited, would be sufficient to sustain a favorable judgment]; see also Newport Harbor, supra, 23 Cal.App.5th at p. 50 [it is the responsibility of the party opposing the anti-SLAPP motion to organize the evidence and develop its arguments at the second step of the analysis].)

Since the claim is not legally sufficient, plaintiff Jiang fails to show a probability of success on the merits. As a consequence, the Court declines to address Defendants’ remaining arguments to the second cause of action.

Third Cause of Action: Unfair Business Practices

The third cause of action is a claim for unfair business practices under Business and Professions Code section 17200. “Because section 17200’s definition is ‘disjunctive,’ the statute is violated where a defendant’s act or practice is unlawful, unfair, fraudulent or in violation of section 17500.” (South Bay Chevrolet v. General Motors Acceptance Corp. (1999) 72 Cal.App.4th 861, 878.)

According to the UCL claim, plaintiff Jiang alleges Defendants violated the following provisions of the California Penal Code: (1) Section 118(a) [false affidavits as to affiant’s testimony]; (2) Section 127 [subornation of perjury]; (3) Section 182 [a felony – criminal conspiracy]; and (4) Section 138 [a felony – taking or offering to take bribes by witness].) (FAC at ¶ 34.) As a result, plaintiff suffered substantial pecuniary losses and injury to his business reputation and accordingly seeks injunctive relief. (Id. at ¶ 34.)

Like plaintiff’s other claims, the UCL cause of action is not legally sufficient. There are no underlying facts alleged in the FAC to support any of the violations of the Penal Code attributed to Defendants in the UCL claim. The conduct which is previously alleged, meaning the filing of cross-complaints, taking of plaintiff’s deposition, and propounding of written discovery, which is incorporated into the UCL claim (see FAC at ¶ 30), are subject to the litigation privilege for reasons stated above.

Based on the foregoing, plaintiff Jiang has not met his burden with respect to the second step of the anti-SLAPP analysis. Having failed to do so, the motion is granted and the FAC is hereby stricken.

Demurrer to the FAC

Given the Court’s ruling on the special motion to strike, the demurrer is moot.

Disposition

The special motion to strike to the FAC is GRANTED. The FAC is hereby STRICKEN.

Defendants’ request for attorney’s fees and costs is DENIED WITHOUT PREJUDICE subject to a noticed motion and attorney declaration to support an award of fees and costs. (Code Civ. Proc., § 425.16, subd. (c); Ketchum v. Moses (2001) 24 Cal.4th 1122, 1131.)

In light of this ruling, the demurrer to the FAC is MOOT.

The Court will prepare the Order.