Filed 6/26/20 Lourick v. Hunt & Henriques CA3

NOT TO BE PUBLISHED

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(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(Sacramento)

—-

MARIANNE K. LOURICK,

Plaintiff and Respondent,

v.

HUNT & HENRIQUES,

Defendant and Appellant.

C086203

(Super. Ct. No. 34-2017-00211482-CU-MC-GDS)

Old litigation never dies; it simply evolves into different forms. Defendant Hunt & Henriques (law firm) appeals from the trial court’s order denying its special motion to strike. (Code Civ. Proc., §§ 425.16, subd. (i), 904.1, subd. (a)(13).) It contends the trial court improperly resolved a threshold issue regarding whether the statute applies to this action, and invites us to reach the substance of whether plaintiff Marianne K. Lourick demonstrated that she had an ultimate likelihood of prevailing on the merits in her action. We shall affirm the order.

FACTUAL AND PROCEDURAL BACKGROUND

In considering whether a defendant’s conduct is “protected activity” within the ambit of section 425.16, the trial court considers both the well-pleaded allegations of the complaint, along with any declarations submitted on that point. (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 79 (Cotati); Talega Maintenance Corp. v. Standard Pacific Corp. (2014) 225 Cal.App.4th 722, 728 (Talega).) We accordingly draw our account of the pertinent facts both from the complaint and the declarations of Lourick and two of her attorneys in opposition.

Lourick was delinquent on a credit card that defendant FIA Card Services, an affiliate of defendant Bank of America, had issued to her with an account number ending in 4328 (account 4328). Both defendant Bank of America and Lourick’s credit report confirmed that this was the sole account she had with defendants Bank of America/FIA. At some point, defendant LVNV Funding, LLC (LVNV) purchased the outstanding debt from defendants Bank of America/FIA. Defendant LVNV engaged the services of defendant law firm to file an action to collect on the debt in 2012. The form complaint filed in April 2012 did not specify the account number associated with the debt.

Lourick did not receive notice of the action, and eventually defendant LVNV obtained a default judgment against Lourick in June 2012 for approximately $20,500. Defendant law firm recorded the judgment and had a lien entered against Lourick’s real property in East Sacramento in July 2012. Neither the judgment nor the lien reference the account number. So matters remained for the next two-plus years.

In early 2015, Lourick became aware of the default judgment when she was subjected to garnishment of her wages, and her efforts to refinance her home were stymied by the existence of the lien. (The allegations do not explain why she never sought relief from the default judgment.)

In March 2015, Lourick received a collection letter from defendant Northland Group, Inc. (Northland). It referenced an account number, specifying only the ending digits of 8384 (account 8384) that had supposedly originated with defendant FIA and was currently owned by defendant LVNV. The letter identified defendant Northland as acting on behalf of defendant LVNV, which was willing to settle the outstanding balance of approximately $20,700 for $8,771 and change. Lourick assumed that this must relate to the judgment that defendant LVNV had obtained against her.

Lourick engaged the services of an attorney on July 6, 2015, to satisfy this debt. The parties reached a settlement for about $6,200 on July 8, with payment due on July 13. This was confirmed in a letter to Lourick’s attorney from defendant Northland signed by Angela Woltjer. This letter again referenced purported account 8384, only by its final digits. It promised a letter of satisfaction upon payment. It curiously included a statement that because of the age of the debt, defendant LVNV would not sue her for it.

On July 10 or 13 (the latter date appearing in her declaration), Lourick called defendant Northland, and spoke with Laura Cleveland. Cleveland identified the full numbers for account 4328 as the debt that underlay the 2012 judgment. Cleveland instructed Lourick to obtain a cashier’s check for payment, which Lourick sent the same day. Lourick took contemporaneous notes to reflect their conversation.

On July 28, defendant Northland sent Lourick a letter of satisfaction. The letter was not signed individually. It again referenced purported account 8384. Neither Lourick nor her attorney noticed the discrepancy between that account number and the account number Cleveland referenced in her call with Lourick. Lourick’s attorney sent a copy of the satisfaction letter to defendant law firm on July 30.

However, when Lourick’s attorney called defendant law firm on July 31 to ask about the lien removal, “Franklin” told him that payment for the lien based on account 4328 was still outstanding, as opposed to the purported account 8384 that defendant Northland had identified in its correspondence (in contrast with the representations from Cleveland). Defendant law firm would not release the lien until defendant Northland issued a letter of satisfaction specifically for account 4328, and would continue to take collection efforts otherwise. Lourick’s attorney again called “Franklin” on August 14, who reiterated his prior statements. Counsel then called defendant Northland and spoke with Angela Wolter, who refused to provide him the full account number for the purported account 8384 to which defendant Northland had apparently applied the payment. She told him to contact defendant LVNV directly. The number she provided, however, was for defendant Resurgent Capital Services, L.P., an agent with whom defendant LVNV apparently works. When Lourick’s attorney spoke with an employee at that number on August 21, she also represented that account 4328 had been satisfied. When counsel asked for written confirmation of this, she placed him on hold. After 45 minutes, a “supervisor” claimed he had been told the wrong information and that the payment was credited to another account. She refused to tell him anything further, challenging his authorization to speak for Lourick.

On August 24, Lourick’s attorney received a fax from defendant Resurgent that identified purported account 8384 as being satisfied by the payment. Defendant law firm phoned Lourick’s attorney in September 2015 and January 2017 seeking to collect on account 4328. This action followed in April 2017.

Lourick’s first cause of action under the federal Fair Debt Collection Practices Act (15 U.S.C. § 1692 et seq.), cited as violations the shell game defendants engaged in with respect to the account numbers in 2015, premised on their identification of purported account 8384 and their application of her payment to that purported account. The second cause of action reiterated that these allegations violated the state version of the federal act (Civ. Code, § 1788 et seq.). The third cause of action alleged conversion in applying the payment to an account other than the one Lourick sought to satisfy. The complaint had earlier averred the typical allegations that all defendants were acting as agents of each other and thus jointly and severally liable. (A fourth cause of action under the Corporations Code was alleged solely against defendant LVNV.)

In its order denying the special motion to strike, the trial court affirmed its tentative ruling. It identified the supporting allegations of the complaint as “(1) appl[ying] her payment to an account that was not the debt underlying the 2012 judgment, (2) assert[ing] that she had two open and delinquent accounts, when she only had one with defendant [FIA], (3) misrepresent[ing] account numbers and creating a fictitious account, (4) allow[ing] her to believe she was paying the account associated with the judgment, and (5) accept[ing] a payment which she intended to be credited to one account, but applying it to a different account.” Defendant law firm insisted in its motion that the complaint was based on its activity in “filing the lawsuit, filing a proof of service, obtaining judgment, recording an abstract of judgment, and its post-judgment enforcement activities.” The trial court cited the principle that merely because protected activity ultimately triggered a complaint in a causal sense does not mean the complaint is based on the protected activity. The trial court at the outset thus rejected any argument that the first four protected activities had anything to do with the conduct on which Lourick premised her causes of action. It then turned to the (unparticularized) “post-judgment enforcement activity.” The court ruled that enforcement activity is protected only for “court-sanctioned enforcements of judgments” (citing several cases discussing the litigation privilege). It concluded that nothing alleged about the collection activity of defendants could be considered court-sanctioned. Because defendant law firm failed to shift the burden to Lourick to demonstrate a likelihood of success on the merits, the court declined to reach the issue.

Responding to points defendant law firm raised at oral argument, it noted that though there was “uncertainty as to the alleged wrongful conduct of any particular Defendant” and defendant law firm wished “to separate [itself] factually from the other Defendants,” these were not issues cognizable in a special motion to strike. Lourick had identified unprotected activity as the basis for her complaint, and this was sufficient to deny the motion. Defendant law firm filed its notice of appeal in December 2017, and completed its briefing in October 2019.

DISCUSSION

Section 425.16 protects all petitioning activity of a defendant, such as litigation. (Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1115, 1117.) This includes any conduct in furtherance of the right to petition. (§ 425.16, subd. (e)(4).) As a threshold issue, a defendant must establish that the supporting allegations arise from or are based on such protected activity. It is not sufficient if supporting allegations merely relate to the protected activity, or lurk in the background as the reason why the dispute between the parties arose, or if the same factual basis underlies the protected petitioning activity as the subsequent litigation, or if the protected activity “ ‘ “triggered” ’ ” the bringing of an action. (Episcopal Church Cases (2009) 45 Cal.4th 467, 477-478; Cotati, supra, 29 Cal.4th at pp. 79-80; Sheley v. Harrop (2017) 9 Cal.App.5th 1147, 1161 (Sheley); Talega, supra, 225 Cal.App.4th at p. 729.) If a defendant fails to cross this threshold, the motion should be denied without considering whether a plaintiff has then in response demonstrated a prima facie case in support of the complaint to defeat the motion as required under section 425.16. (Sheley, at p. 1162 [only a claim based on protected activity that is without merit is subject to motion to strike]; accord, Schaffer v. City and County of San Francisco (2008) 168 Cal.App.4th 992, 1004 [§ 425.16 targeted at unmeritorious actions, so prima facie showing of merit defeats motion].) We review the issue de novo (Sheley, at p. 1162), it being a question of law rather than fact or any exercise of discretion.

To begin with, we do not understand why defendant law firm belabors the status of its 2012 conduct as protected activity. No one disputes this. It is the question of its conduct in 2015 and 2017 that is at issue.

In terms of its collection efforts in September 2015 and January 2017, defendant law firm repeatedly asserts that these were in furtherance of enforcing the lawful 2012 judgment and are therefore protected. The trial court, after citing Rusheen v. Cohen (2006) 37 Cal.4th 1048 (Rusheen) and cases cited therein, did not consider these efforts to be “court-sanctioned,” and therefore they were not protected activity. Lourick defends the judgment in terms of Rusheen. We believe both the trial court and Lourick misread that decision.

The issue before Rusheen was whether noncommunicative conduct to collect on a judgment—specifically, the levy on a writ of execution—is protected in the same manner as the judgment and conduct underlying the judgment (an issue on which the Courts of Appeal had been split). Rusheen held that this kind of conduct was protected as well under the litigation privilege if it is “necessarily related.” (Rusheen, supra, 37 Cal.4th at pp. 1052, 1065; see id. at p. 1060 [making clear that levy is at issue, not writ of execution). “Stated another way, unless it is demonstrated that an independent, noncommunicative, wrongful act was the gravamen of the action, the litigation privilege applies.” (Id. at p. 1065, italics added.)

In the course of reaching this conclusion, Rusheen discussed three other cases involving the litigation privilege that the trial court cited in its ruling. It is here in a prefatory characterization of the three that Rusheen referred collectively to them as narrowing the reach of abuse of process “in the context of court-sanctioned enforcements of judgments.” (Rusheen, supra, 37 Cal.4th at p. 1059.) One had said the enforcement conduct was clearly permitted under law in the judicial process (a motion for writ of sale); the second said the conduct (levying, filing an abstract of judgment) was logically related to litigation objectives; and the third said a writ of execution and levy were an extension of the judicial process related to a litigation objective. (Id. at pp. 1059-1060.)

In considering the public policy implications of its holding with respect to the tort of abuse of process (the broadening of the litigation privilege leading to a narrowing of the tort (Rusheen, supra, 37 Cal.4th at p. 1063)), Rusheen noted that the process of execution and levying are both “subject to judicial supervision,” and given these procedural protections for a party who would otherwise need to bring suit, it agreed with the expansion of privilege/limitation on abuse of process in the three cases it referenced earlier (id. at p. 1065).

Despite this discussion of these cases applying the litigation privilege to conduct in the enforcement of judgment that is “court-approved” and that is “subject to judicial supervision,” Rusheen did not condition its holding to expressly include these criteria in measuring the reach of the privilege. Rather, all Rusheen required for the litigation privilege to apply was enforcement conduct that was necessarily related to some judgment.

Neither party discusses the extent to which the litigation privilege may be fully analogous with protected activity such that Rusheen should be considered persuasive in the present matter. Flatley v. Mauro (2006) 39 Cal.4th 299 explained that the two are not congruent because they are aimed at different concerns, although the litigation privilege may be an “aid” in interpreting section 425.16; the former is an absolute shield to protect both the wicked and the just in order to preserve participants in the judicial process from derivative litigation toward the end of free access to the courts, while the latter is a sword to protect defendants from meritless claims based on protected activity. (Id. at pp. 322-325.) Nevertheless, even were we to apply Rusheen directly, we find the trial court took too stringent a view of defendant law firm’s calls seeking to collect on the 2012 judgment. They did not need to be judicially supervised or “court-approved,” as we have just discussed. They simply needed to be logically related to the 2012 judgment, which they were.

Alternatively, Lourick contends defendant law firm’s conduct cannot be protected activity because it was illegal, as in Flatley, supra, 39 Cal.4th 299, which concluded that if the evidence on the question of protected status demonstrates the petitioning conduct was “illegal as a matter of law” either through a concession (a highly unlikely situation), or by being “uncontroverted and conclusive,” the conduct is not within the ambit of section 425.16. (Flatley, at p. 320.) As subsequent cases have demonstrated, the illegality must be criminal, not civil. (Compare Collier v. Harris (2015) 240 Cal.App.4th 41, 57 [violation of Bus. & Prof. Code not a crime]; Mendoza v. ADP Screening & Selection Services, Inc. (2010) 182 Cal.App.4th 1644, 1653-1654 [no criminal violation involved]; with Flatley, at p. 330 [criminal extortion as a matter of law]; Paul for Council v. Hanyecz (2001) 85 Cal.App.4th 1356, 1366-1367 [money laundering]; and see Wilcox v. Superior Court (1994) 27 Cal.App.4th 809, 820 [hypothetical arson as protest would not be protected].) The petitioning conduct in the present case might be proven to be both criminal as well as civil, but the evidence at present is not uncontroverted and conclusive. Therefore, this is not a basis to find section 425.16 inapplicable.

However, there is also the evidence of the conduct of “Franklin” when Lourick’s attorney contacted defendant law firm to have the lien expunged. When presented with documentary evidence that Lourick had in fact made a payment in settlement of a claim to the collection agent (Northland) of defendant law firm’s principal (LVNV), “Franklin” refused to proceed any further because the wrong account number was on the document. “Franklin” did not offer to confirm with defendant Northland whether this was in fact a different valid debt or simply a mix-up. “Franklin” did not offer to check with defendant LVNV to determine whether this was indeed a settlement of the debt underlying the judgment. “Franklin” did not ask for documentation, such as Lourick’s credit report, to demonstrate there were not any other outstanding debts to defendant LVNV based on another plaintiff account it had acquired from defendant FIA. “Franklin” simply stonewalled.

This conduct could be considered equivocal in the sense of indifferent hand-washing good faith. But it also gives rise to a rational inference that defendant law firm was acting in concert with other entities associated with its principal to try to exact a double payment from Lourick on a debt already satisfied, which is the gist of the trial court’s ruling. Such conduct, then, would not have any rational connection with the enforcement of a valid underlying judgment, a flag defendant law firm waves vigorously throughout its briefing. Instead, this conduct and the subsequent collection efforts would be independent conduct knowingly untethered to any unsatisfied judgment. As a result, it is not conduct within the protection of section 425.16.

This leaves defendant law firm’s remaining two arguments, which are subsumed in our analysis above. It contends there is a “but for” connection between the present action and the 2012 judgment in the sense that the former would never have been filed without the existence of the latter and therefore it is subject to section 425.16. But that is not the test. It is whether the conduct in 2015/2017 had a protected connection with the 2012 judgment, a point we already have discussed at length before, concluding otherwise. Defendant law firm, invoking the obligation to plead statutory causes of action with particularity (Searcy v. Hemet Unified School Dist. (1986) 177 Cal.App.3d 792, 802), contends the allegations of acting in concert with respect to the actions of the various defendants are insufficient. As we have already discussed, both the trial court and this court find the overt acts alleged give rise to a rational inference of the actions of the individual parties being in concert toward an end of defrauding Lourick in seeking to collect on an already settled judgment. Lourick did not need to be any more specific at this point in the litigation. Each defendant is on notice of the conduct for which it is being called to answer.

Defendant law firm had asked us to conduct a review of the evidence to determine whether Lourick had adequately established a prima facie case in support of the merits of the case. As we do not find defendant law firm has demonstrated the presence of protected activity, we do not need to do so.

DISPOSITION

The order is affirmed. Lourick is awarded her costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1), (2).)

/s/

BUTZ, J.

We concur:

/s/

BLEASE, Acting P. J.

/s/

HOCH, J.