Case Name: Nancy L. Roberts v. Elizabeth L. Larson, et al.

Case No.: 2018-CV-336725

The Special Motion to Strike the Cross-Complaint by Cross-Defendant Nancy L. Roberts

Factual and Procedural Background

Complaint

Plaintiff Nancy L. Roberts (“Nancy”) seeks to quiet title to a 49.5% interest in real property commonly known as 307 Hershner Drive in Los Gatos (“Subject Property”). (Complaint, ¶1.) The Property is jointly owned by plaintiff Nancy, defendant Diane M. Larson (“Diane”), and defendant Elizabeth J. Larson (“Elizabeth”) as tenants in common. (Id.)

On or about May 2, 1990, Nancy, Diane, and defendant Lawrence K. Larson (“Lawrence”) purchased the Subject Property as joint tenants, each possessing an equal one-third beneficial ownership. (Complaint, ¶9.) On or about February 3, 2000, defendants Lawrence and Diane severed the joint tenancy by each transferring an undivided one percent interest to their mother, defendant Elizabeth. (Complaint, ¶11.) Plaintiff Nancy did not transfer any of her interest in the Subject Property to defendant Elizabeth. (Id.)

On or about January 13, 2000, defendants Lawrence, Diane, Elizabeth, and plaintiff Nancy entered into a partnership agreement (“Partnership Agreement”) forming defendant, The Larson-Hershner Partnership (“Partnership”). (Complaint, ¶12.) On or about June 8, 2000, record title to the Subject Property was transferred to the Partnership (with defendant Elizabeth as general partner) in trust for defendants Lawrence, Diane, Elizabeth, and plaintiff Nancy. (Complaint, ¶¶14 – 15.)

Between January 24, 2002 and August 21, 2015, the Subject Property was transferred multiple times. (Complaint, ¶19.) Plaintiff Nancy has always been told that the purpose behind all of the transfers was to obtain financing or refinancing of the Subject Property, but plaintiff Nancy was never provided with any details. (Complaint, ¶20.) Plaintiff Nancy did not question defendant Elizabeth’s request to transfer title because plaintiff Nancy and defendants Diane, Lawrence, and Elizabeth conducted a series of record title transfers for the purpose of refinancing and defendant Elizabeth had the power to do so under the Partnership Agreement. (Complaint, ¶¶17, 18, and 32.) Since August 21, 2015, record title to the Subject Property remains in the name of defendant Diane, as trustee of the Diane Marie Larson Trust dated April 8, 1999 (“Diane Trust”). (Complaint, ¶21.)

In or about January 2002, plaintiff Nancy, defendants Lawrence, Elizabeth, and Diane jointly owned real property located at 18930 Tuggle Avenue in Cupertino (“Tuggle Property”). (Complaint, ¶23.) In or about 2006, plaintiff Nancy and defendant Diane agreed to trade their one-third beneficial ownership interest in the Tuggle Property in exchange for defendant Lawrence’s one-third beneficial interest in the Subject Property. (Complaint, ¶25.) As a result of the trade, plaintiff Nancy and defendant Diane increased their pro-rata ownership share in the Subject Property to 49.5% each. (Complaint, ¶26.) Defendant Elizabeth continued to own the remaining one percent interest. (Id.)

On September 27, 2018, plaintiff Nancy, through her attorney, sent a letter to the Partnership’s attorney in which she requested, among other things, that record title to the Subject Property be transferred back into plaintiff Nancy’s name to reflect her respective ownership of 49.5%. (Complaint, ¶33.) The Partnership’s attorney did not respond to plaintiff Nancy’s request. (Complaint, ¶¶34 – 37.)

On October 24, 2018, plaintiff Nancy commenced this action by filing a complaint. On October 25, 2018, plaintiff Nancy filed the operative first amended complaint (“FAC”) which asserts causes of action for: (1) Quiet Title; (2) Partition; (3) Promissory Fraud; (4) Breach of Fiduciary Duty; (5) Dissolution; (6) Declaratory Relief; (7) Common Count: Money Had and Received; and (8) Accounting.

On February 19, 2019, defendant Diane, individually and as trustee of the Diane Trust, filed an answer to plaintiff Nancy’s complaint. Also on February 19, 2019, defendant Lawrence separately filed an answer to plaintiff Nancy’s complaint. That same date, Diane (individually and as trustee of the Diane Trust) and Lawrence filed a cross-complaint against Nancy.

Cross-Complaint

The cross-complaint alleges that on or about February 7 – 14, 2017, Diane (individually and as trustee of the Diane Trust), Lawrence, Nancy, their mother Elizabeth, and Nancy’s husband Ron Roberts, entered into a written Settlement Agreement and Mutual Release (“Settlement Agreement”) in which the parties agreed to release each other from: “Any and all claims, actions, judgments, obligations, damages, demands, debts, liabilities, and causes of action that are claimed or alleged, or that could have been claimed or alleged, arising from the ownership or the transfers of ownership of any properties once owned by ELIZABETH J. LARSON or her Trust, to LAWRENCE, DIANE or NANCY.” (Cross-Complaint, ¶6.)

On or about October 25, 2018, Nancy filed and caused to be served, the FAC in this action thereby breaching the Settlement Agreement. (Cross-Complaint, ¶9.) On or about November 20, 2018, cross-complainants’ counsel wrote to Nancy’s counsel asking the lawsuit be dismissed due to the Settlement Agreement. (Cross-Complaint, ¶10 and Exh. B.) On or about February 7, 2019, Nancy’s counsel responded and refused to dismiss the lawsuit. (Cross-Complaint, ¶11 and Exh. C.)

The cross-complaint by Diane (individually and as trustee of the Diane Trust) and Lawrence (collectively, “Cross-Complainants”) asserts causes of action for: (1) Breach of Contract; and (2) Declaratory Relief.

Special Motion to Strike the Cross-Complaint

Currently before the Court is plaintiff/cross-defendant Nancy’s special motion to strike each cause of action in the Cross-Complaint. (Code Civ. Proc., § 425.16) Cross-complainants filed written opposition and submitted a request for judicial notice in conjunction with the motion. Nancy filed reply papers and evidentiary objections.

Request for Judicial Notice

In opposition, Cross-Complainants request judicial notice of the following: (1) California State Board of Equalization Letter to County Assessors dated February 29, 2008; and (2) Certified Copy of Limited Partnership Certificate of Cancellation, filed with the Secretary of State’s office on April 13, 2015 (and certified on July 12, 2019). Cross-Complaints seek judicial notice under Evidence Code sections 451 and 452. The Court however does not need to rely on these exhibits to fully address the issues raised on this special motion to strike. (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].)

Consequently, the request for judicial notice is DENIED.

Evidentiary Objections

In reply, cross-defendant Nancy filed a series of objections to the evidence submitted by Cross-Complainants in their opposition papers. The Court declines to address these objections as they are not material in resolving issues raised by the motion.

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: Breach of Contract

The first cause of action is a claim for breach of contract. Cross-Complainants allege cross-defendant Nancy breached the written Settlement Agreement by commencing this action because all of the claims were released as part of the settlement. Nancy argues the first cause of action is based on the protected act of filing the FAC.

Filing a complaint is an act in furtherance of the right of petition because a complaint is a written statement made in connection with a judicial proceeding. (Mundy v. Lenc (2012) 203 Cal.App.4th 1401, 1408-1409, citing Code Civ. Proc., § 425.16, subd. (e)(2); see also Navellier v. Sletten (2002) 29 Cal.4th 82, 92-93.) Even so, a cause of action must be based on, and not simply asserted “in response to,” the protected conduct. (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 77 (City of Cotati).) Thus, a cross-complaint does not arise from the protected activity of petitioning for redress simply because it is filed in response to a complaint. (Ibid.) Such an interpretation of section 425.16 would produce “absurd results.” (Ibid.)

Nevertheless, a claim that the institution of a lawsuit is a breach of the general release in a settlement agreement qualifies as a claim arising from the protected act of petitioning because the breach itself is the protected act of filing a complaint. (City of Cotati, supra, 29 Cal.4th at p. 77.) In the first cause of action, the breach itself is the filing of the FAC. (See Cross-Complaint, ¶9.) Had Nancy not commenced this action, there would be no breach because the first cause of action is based solely on breach of the release provision in the settlement agreement. The first cause of action therefore arises from protected activity.

In opposition, Cross-Complainants argue the breach of contract claim does not arise from protected activity as it does not concern a matter of widespread public interest. For this proposition, they rely on DualDiagnosis Treatment Center, Inc. v. Buschel (2016) 6 Cal.App.5th 1098. That case however is distinguishable as it addressed section 425.16, subdivisions (e)(3) and (4) which relate to statements and writings in connection with an issue of public interest. By contrast, the filing of the FAC falls under section 425.16, subdivisions (e)(2) which pertains to statements or writings in connection with an issue under consideration or review by a legislative, executive or judicial body. Such statements and writings need not consider a public issue and thus the authority cited in opposition is inapposite. (See Vergos v. McNeal (2007) 146 Cal.App.4th 1387, 1395 [“Subdivisions (e)(1) and (e)(2) of section 425.16 do not require the defendant to show a public issue or issue of public interest.”].)

In addition, Cross-Complainants cite to Navellier v. Sletten (2003) 106 Cal.App.4th 763 and DaimerChrysler Motors Co. v. Lew Williams, Inc. (2006) 142 Cal.App.4th 344 in support of their opposition. (See OPP at p. 5.) Cross-Complainants however do not articulate how these decisions address the issue of whether the breach of contract claim arises from protected activity. The Court therefore concludes that cross-defendant Nancy has met her initial burden in showing the first cause of action arises from protected activity.

Second Cause of Action: Declaratory Relief

The second cause of action is a claim for declaratory relief. Cross-Complainants allege an actual controversy exists between them and cross-defendant Nancy regarding the following: (1) that the Settlement Agreement and Mutual Release was validly entered into and is in full force and effect; (2) that the filing of the instant lawsuit is a violation and breach of the Settlement Agreement and Mutual Release; and (3) that cross-defendants are obligated to reimburse Cross-Complainants for all costs, attorney’s fees and expenses incurred. (Cross-Complaint, ¶14(a) – (c).)

“An anti-SLAPP motion lies against a complaint for declaratory relief, among other types of causes of action.” (Gotterba v. Travolta (2014) 228 Cal.App.4th 35, 40.) As pointed by the moving papers, the declaratory relief claim, at least in part, is based on the filing of the FAC in the underlying action. (See Cross-Complaint, ¶14(b).) As this conduct constitutes protected activity, cross-defendant Nancy meets her initial burden with respect to the first prong as to this allegation. (See CKE Restaurants, Inc. v. Moore (2008) 159 Cal.App.4th 262 [declaratory relief claim based on filing of Prop 65 intent-to- sue notices constitutes protected activity]; see also Country Side Villas Homeowners Assn. v. Ivie (2011) 193 Cal.App.4th 1110 [appellate court concluded declaratory relief action arose from defendant’s right of free speech in criticizing and speaking out against the association].)

However, as stated above, the declaratory relief claim is also based on whether the Settlement Agreement and Mutual Release was validly entered into and is in full force and effect. (See Cross-Complaint, ¶14(a).) This allegation is not addressed in the moving papers and California courts have determined that such allegations, in the context of declaratory relief, do not constitute protected activity. (See City of Cotati, supra, 29 Cal.4th at p. 69 [City’s action seeking declaratory judgment with respect to ordinance’s validity was not subject to anti-SLAPP motion]; see also City of Alhambra v. D’Ausilio (2011) 193 Cal.App.4th 1301, 1307 [declaratory relief claim did not arise from protected activity but from an actual, present controversy between the parties regarding the scope and enforceability of Section 3.8 of the settlement agreement].) As a consequence, the claim for declaratory relief will remain intact with respect to this allegation. The Court will nevertheless address the second prong of the special motion to strike as to the allegation set forth in paragraph 14, subdivision (b) which constitutes protected activity. (See Baral v. Schnitt (2016) 1 Cal.5th 376, 395 [“In cases involving allegations of both protected and unprotected activity, the plaintiff is required to establish a probability of prevailing on any claim for relief based on allegations of protected activity”].)

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].)

“[T]he elements of a cause of action for breach of contract are (1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)

Also, to qualify for declaratory relief, a party is required to show that their action presents two essential elements: (1) a proper subject of declaratory relief, and (2) an actual controversy involving justiciable questions relating to the rights or obligations of a party. (Lee v. Silveira (2016) 6 Cal.App.5th 527, 546.)

In opposition, Cross-Complainants submit declarations from their counsel, David Hoffman, and from cross-complainant Lawrence. This evidence however does not address whether Cross-Complainants have a probability of succeeding on the merits of their breach of contract claim or declaratory relief cause of action. Nor do the memorandum of points and authorities submitted in opposition articulate whether Cross-Complainants have sufficient evidence to succeed on the merits. For example, with respect to the breach of contract claim, there is no evidence showing that Cross-Complainants have fully performed under the Settlement Agreement. Nor is there any evidence that Cross-Complainants suffered damages as a result of a breach of the Settlement Agreement by cross-defendant Nancy. The opposition instead focuses on defenses raised by cross-defendant Nancy in the moving papers. (See OPP at pp. 6-9.) This is not enough as Cross-Complainants must provide evidence to demonstrate success on their claims. (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].) In Newport Harbor Offices & Marina, LLC v. Morris Cerullo World Evangelism (2018) 23 Cal.App.5th 28, cited in the reply papers, the Fourth Appellate District stated:

“It is not our job to sift through the mountains of evidence and figure out whether they support each element of a prima facie case. Nor is it our job to supply the legal authority and analytical framework to determine the legal sufficiency of the claims. It is the responsibility of (plaintiff), as the party opposing the anti-SLAPP motion, to organize the evidence and develop its arguments at the second step of the analysis.”

(Id. at p. 50.)

Based on the foregoing, Cross-Complainants have not met their burden with respect to the second step of the anti-SLAPP analysis. Having failed to do so, the breach of contract claim and a portion of the declaratory relief cause of action must be stricken.

Disposition

The special motion to strike the first cause of action in the Cross-Complaint is GRANTED. The first cause of action is hereby stricken.

The special motion to strike the second cause of action in the Cross-Complaint is GRANTED IN PART and DENIED IN PART. The motion is granted as to paragraph 14, subdivision (b) in the second cause of action and that paragraph is hereby stricken. The motion is denied as to the remaining allegations in the second cause of action.

The Court will prepare the Order.