Judge: Andrew E. Cooper, Case: 24CHCV00808, Date: 2024-11-21 Tentative Ruling

Case Number: 24CHCV00808    Hearing Date: November 21, 2024    Dept: F51

Special Motion to Strike (Anti-SLAPP)

Motion filed: 07/29/2024

MOVING PARTY: Defendant Bankers Healthcare Group, LLC

RESPONDING PARTY: Plaintiff Robert W. Steele

NOTICE: Ok

RELIEF REQUESTED: An order, pursuant to CCP § 425.16, striking Steele’s entire complaint, or alternatively, the 1st or 2nd cause of action, and awarding BHG attorneys’ fees and costs in the amount of $13,692.50.   

TENTATIVE RULING: The motion is GRANTED.

EVIDENTIARY OBJECTIONS: BHG’s evidentiary objections are OVERRULED.

BACKGROUND

On March 12, 2024, Plaintiff Robert W. Steele (“Steele”) filed a Complaint against Defendant Bankers Healthcare Group, LLC (“BHG”) alleging two causes of action for (1) Malicious Prosecution, and (2) Unfair Debt Collection Practices under the Rosenthal Fair Debt Collection Practices Act. The underlying action upon which this action is based was Bankers Healthcare Group, LLC v. Robert W. Steele, Case No. STK-CV-UOC-2022-00059711 (the “Underlying Action”). In the Underlying Action, BHG was the plaintiff and Steele was the defendant.

ANALYSIS

Legal Standard

A special motion to strike strategic lawsuits against public participation (“SLAPP” actions) provides a procedural remedy to dismiss at an early stage nonmeritorious litigation meant to chill the valid exercise of the constitutional rights to petition or engage in free speech. (Code Civ. Proc. § 425.16; Newport Harbor Ventures, LLC v. Morris Cerullo World Evangelism (2018) 4 Cal.5th 637, 642; Dziubla v. Piazza (2020) 59 Cal.App.5th 140, 148.) The anti-SLAPP statute is intended to “encourage continued participation in matters of public significance;” therefore, it is to be “construed broadly.”¿ (Code Civ. Proc. § 425.16, subd. (a).)¿

The anti-SLAPP statute sets forth a two-step procedure for determining whether a cause of action is a SLAPP action.¿(Code Civ. Proc. § 425.16, subd. (b); Bonni v. St. Joseph Health System (2021) 11 Cal.5th 995, 1009.) First, the court must determine whether the defendant has made a prima facie showing that the defendant’s acts of which plaintiff complains were taken in furtherance of the defendant’s constitutional rights of petition or free speech in connection with a public issue.¿(Code Civ. Proc. § 425.16, subd. (b)(1).) If the court finds that the defendant has met its threshold burden, the burden then shifts to the plaintiff to show that there is a probability that the plaintiff will prevail on the claim.¿(Ibid.; Governor Gray Davis Com. v. American Taxpayers Alliance (2002) 102 Cal.App.4th 449, 456.)

Under the statute, an “‘act in furtherance of a person’s right of petition or free speech’ 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 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, 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).)

I.        First Cause of Action – Malicious Prosecution

A.    Protected Activity

A defendant has the initial burden to show that a plaintiff’s cause of action arises from the defendant’s protected activity as defined by the anti-SLAPP statute. (Code Civ. Proc. § 425.16, subd. (b)(1).) “In deciding whether the initial ‘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.’” (Navellier v. Sletten (2002) 29 Cal.4th 82, 89.)

The first cause of action for malicious prosecution arises from BHG’s litigation of the Underlying Action. Thus, the first issue is whether BHG’s litigation of the Underlying Action is protected activity under the Anti-SLAPP statute. It undoubtedly is. By definition, a malicious prosecution suit alleges that the defendant committed a tort by filing a lawsuit. [Citation.]” (See also Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1113 [“plainly read, [Anti-SLAPP] encompasses any cause of action against a person arising from any statement or writing made in, or in connection with an issue under consideration or review by, an official proceeding or body”].) Thus, the first cause of action arises from BHG’s protected activity of filing a lawsuit against Steele.

B.     Probability of Prevailing

The second step of the inquiry requires the plaintiff to demonstrate that its claims have at least “minimal merit.” (Bonni, 11 Cal.5th at 1009.) At this stage, the court does not weigh evidence or resolve conflicting factual claims. Its inquiry is limited to whether the plaintiff has stated a legally sufficient claim and made a prima facie factual showing sufficient to sustain a favorable judgment. It accepts the plaintiff’s evidence as true and evaluates the defendant’s showing only to determine if it defeats the plaintiff’s claim as a matter of law. (Wilson v. Cable News Network, Inc. (2019) 7 Cal.5th 871, 891; Navellier, 29 Cal.4th at 88–89.) The court does not weigh credibility or the comparative strength of the evidence offered by the parties. (Overstock.com, Inc. v. Gradient Analytics, Inc. (2007) 151 Cal.App.4th 688, 699–700.)

Because this malicious prosecution action arises from protected activity, the burden shifts to Steele to show that he has a reasonable probability of prevailing on his claim against BHG. (Governor Gray Davis Com. v. American Taxpayers Alliance (2002) 102 Cal.App.4th 449, 456.)

“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.’ [Citation.]” (Nunez v. Pennisi (2015) 241 Cal.App.4th 861, 872-873.) The issue, then, is whether Steele has submitted enough evidence to establish a reasonable probability that he will be able to show each of these elements.

BHG does not dispute that Steele can show the first element.

Element (2): Brought Without Probable Cause

In seeking to establish a lack of probable cause, Steele only argues that the Underlying Action was brought without probable cause because “BHG and its attorney in the underlying case apparently felt it necessary to change not only their declarations, but also the details of the ‘statement of account’ attached to each declaration. The facts, as already recited, speak for themselves.” (Opposition, 6.)

The Court finds that this argument alone does not meet Steele’s burden to establish a lack of probable cause.  As to the Underlying Complaint, BHG’s initial Underlying Complaint alleged the date of breach as November 10, 2020, which Steele argues was without probable cause because Steele was making payments up until October 2022. As to the Underlying FAC, Steele argues that it was without probable cause because he was legally justified in withholding payments beginning in October of 2022. While Steele admits in his Complaint that he stopped making payments in October 2022, the Underlying FAC’s revised date of the alleged breach, Steele argues that his refusal to continue payments at this time was not a breach as it was legally justified because BHG was by then pursuing the underlying litigation against Steele. (Complaint, ¶ 25.)

In Reply, BHG argues that Steele’s own evidence submitted in the underlying action shows that he made ten late payments before BHG filed its initial lawsuit. BHG contends that under the Note, when Steele is in default, the entire unpaid, accelerated balance becomes due. (Table of Exhibits, Ex. 1.) BHG also points out that although Steele asserts that it was BHG’s failure to send statements that caused his late payments, the Note states that payments were due by the 10th of the month such that Steele should have been on notice and paying regardless of a lack of statements.

Here, the Court finds that Steele fails to meet his burden to prove that BHG lacked probable cause to file the initial Underlying Complaint or the Underlying FAC. As to the Underlying Complaint, the Note contained an acceleration clause allowing BHG to seek the entirety of the balance if Steele made late payments. (Table of Exhibits, Ex. 1.) 

Upon Steele’s own admission, he made late payments on multiple occasions prior to BHG’s commencement of the underlying action. (Table of Exhibits, Ex. 14.) Per the Note, payments were due on the 10th of each month, but Steele made payments after the 10th of the month on eight different occasions. (Table of Exhibits, Ex. 14.)

Steele does not offer any legal authority to support the assertion that BHG’s failure to send statements after Steele requested them justifies the late payments. Thus, BHG had probable cause to bring the underlying action and seek all amounts due under the Note’s acceleration clause after Steele’s late payments.

As to probable cause for the Underlying FAC alleging the date of breach as October 2022, Steele attached to his Complaint evidence that Steele completely stopped making payments on the Note as of October 10, 2022. (Complaint, Attach. D.) Steele provides no legal support for his argument that he was legally justified in stopping his payments on the Note beginning October 10, 2022, simply because BHG had initiated the Underlying Action against him. Without establishing that BHG’s lawsuit discharged Steele’s duty to continue paying on the Note, Steele was in breach and BHG had probable cause to file their Underlying FAC.

Steele has failed to meet his burden to show that he has a reasonable probability of prevailing on his Malicious Prosecution claim against BHG as to the probable cause element.

Element (3): Initiated with Malice

The “malice” element of malicious prosecution focuses on the subjective intent or purpose with which the defendant acted in initiating the prior action. (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 292. “The motive of the defendant must have been something other than . . . the satisfaction in a civil action of some personal or financial purpose. [Citation.] The plaintiff must plead and prove actual ill will or some improper ulterior motive. [Citation.]” (Downey Venture v. LMI Insurance Co. (1998) 66 Cal.App.4th 478, 494, emphasis in original.)

Steele argues in Opposition that “there is a mountain of evidence from which to infer malice.” (Opposition, 6.) However, Steele fails to establish that BHG’s motive was something other than the satisfaction in a civil action of a financial purpose.

Steele has failed to meet his burden to show that he has a reasonable probability of prevailing on his Malicious Prosecution claim against BHG as to the malice element.

Accordingly, the Court finds that the Malicious Prosecution claim is a strategic lawsuit against public participation (SLAPP) and must be stricken from the Complaint.

Second Cause of Action – Unfair Debt Collection Practices

A.    Protected Activity

In his complaint, Steele alleges that BHG wrongfully sued Steele concerning a loan which BHG falsely claimed that Mr. Steele owed money on and falsely alleged that Mr. Steele had breached obligations that he had not breached. (Complaint, ¶ 1.) Steele also states that BHG displayed the following unfair conduct: (1) accelerating the loan on which he was making payments, (2) suing him without basis, and (3) seeking an amount far in excess of the otherwise outstanding loan. (Complaint, ¶ 17.)

The second cause of action for unfair debt collection practices under the Rosenthal act arises largely from BHG’s litigation of the Underlying Action, which Steele contends was unfair because he did not owe money on the Note and had not been in breach. Thus, the first issue is whether BHG’s litigation of the Underlying Action is protected activity under the Anti-SLAPP statute. It undoubtedly is, as already discussed above. (Briggs, supra, 19 Cal.4th at 1113 [“plainly read, [Anti-SLAPP] encompasses any cause of action against a person arising from any statement or writing made in, or in connection with an issue under consideration or review by, an official proceeding or body”].) Thus, the second cause of action arises from BHG’s protected activity of filing a lawsuit against Steele.

B.     Probability of Prevailing

`           Because this unfair debt collection practices cause of action arises from protected activity, once again the burden shifts to Steele to show that he has a reasonable probability of prevailing on his claim against BHG. (Governor Gray Davis Com, supra, 102 Cal.App.4th at 456.)

The litigation privilege is “relevant to the second step in the anti-SLAPP analysis in that it may present a substantive defense a plaintiff must overcome to demonstrate a probability of prevailing.” (Flatley, supra, 39 Cal.4th at p.323.) 

“‘The usual formulation is that 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 [has] some connection or logical relation to the action.’ [Citation.]  The privilege ‘is not limited to statements made during a trial or other proceedings, but may extend to steps taken prior thereto, or afterwards.’ [Citation.]”  (Action Apartment Assn., Inc. v. City of Santa Monica (2007) 41 Cal.4th 1232, 1241.)  “[T]he litigation privilege was founded on defamation actions, and has been applied primarily to provide absolute immunity from tort liability for communications with ‘some relation’ to judicial proceedings.”  (Feldman v. 1100 Park Lane Associates (2008) 160 Cal.App.4th 1467, 1494.)  The Supreme Court has noted that it has previously “directed that section 47(b) be applied broadly to bar tort actions based on privileged communications, excepting only the tort of malicious prosecution.” (Hagberg v. California Fed. Bank (2004) 32 Cal. 4th 350, 358.) “The privilege applies to communications relative to the defense of an action as well as those relative to its filing and prosecution.”  (Cabral v. Martins (2009) 177 Cal.App.4th 471, 485.)  “The privilege is ‘absolute in nature, applying “to all publications, irrespective of their maliciousness.” ’ [Citation.]”  (Optional Capital, Inc. v. Akin Gump Strauss, Hauer & Feld LLP (2017) 18 Cal.App.5th 95, 116.)  “ ‘The principal purpose of [the litigation privilege] is to afford litigants and witnesses [citation] the utmost freedom of access to the courts without fear of being harassed subsequently by derivative tort actions.’ ” (Action Apartment, supra, 41 Cal.4th at p.1241.) 

Here, Steele has not submitted evidence which, if believed by the trier of fact, is sufficient to result in a judgment for Steele. (McGarry v. Univ. of San Diego (2007) 154 Cal.App.4th 97, 108-09.)  Steele attached to his Complaint BHG's Underlying Complaint, which states, “[o]n or about November 10, 2020, Defendant Steele breached the Note with Plaintiff by, among other things, failing and refusing to make the required scheduled payments pursuant to the Note...Despite Plaintiffs demands for payment, Defendant Steele failed and refused and continues to fail and refuse to pay the amounts due and owing to Plaintiff pursuant to the terms of the Note.” (Complaint, Attach. A.)

As discussed above, the Note contained an acceleration clause allowing BHG to seek the entirety of the balance if Steele made late payments. (Table of Exhibits, Ex. 1.) Upon Steele’s own admission, he made eight late payments prior to BHG’s commencement of the underlying action. (Table of Exhibits, Ex. 14.) Thu, per the Note, Steele was in breach at the time BHG commenced the action. Further, Steele attached to his Complaint evidence that Steele completely stopped making payments on the Note as of October 10, 2022. (Complaint, Attach. D.) Without establishing that BHG’s lawsuit discharged Steele’s duty to continue paying on the Note, Steele was also in breach when BHG filed the Underlying FAC. Thus, the underlying action was not for the collection of non-existent debts, but for amounts actually owed by Steele after Steele made late payments on the note on or before November 10, 2020, and after Steele completely stopped paying on the note on October 10, 2022.

Moreover, the Rosenthal Act cause of action is time barred as a cause of action for violation of the Rosenthal Act is subject to a one (1) year limitations period. (CCP § 1788.30.) Here, the occurrence of the violation was the date that BHG filed the Underlying Action on July 15, 2022, which Steele contends constitutes unfair debt collection practices. Thus, to be timely, Steele’s claim must have been filed by July 15, 2023. However, Steele filed the instant action on March 12, 2024, which is one year and nearly eight months after the occurrence of the violation.

While Steele argues that each discrete violation of the Rosenthal Act triggers its own one-year limitations period, citing Brown v. Transworld Systems (2023) 73 F.4th 1030, 1040-41, Brown is a United States Court of Appeal case which is not binding on this Court. Even if it were, Steele fails to establish that the filing of the Underlying FAC or any subsequent action taken after BHG commenced the Underlying Action constituted a discrete act of violation. By Steele’s own admission, he stopped making payments on October 10, 2022, which is the date of breach per the Underlying FAC. Thus, BHG was not pursuing a nonexistent debt when it filed the Underlying FAC, and accordingly, this does not constitute a discrete violation of the Rosenthal Act which would set a new statute of limitations.

Steele has failed to meet his burden to demonstrate a reasonable probability of prevailing on the merits of his unfair debt collection practices claim.

Accordingly, the Court finds that the unfair debt collection practices claim is a strategic lawsuit against public participation (SLAPP) and must be stricken from the Complaint.

Attorney Fees and Costs

A prevailing defendant on a special motion to strike is entitled to recover attorney fees and costs. (CCP § 425.16, subd. (c)(1.) BHG requests $13,632.50 in attorneys’ fees, based on an attorney rate of $665 per hour and a total of 20.5 hours of work (13.5 hours preparing the motion, 3 hours analyzing the Opposition, 3 hours preparing a Reply, and 1 hour appearing on the motion). (Declaration of Ryan T. Koczara, ¶¶ 5-6.) Koczara also requests the $60.00 filing fee in costs. (Koczara Decl. ¶ 7.) The Court grants these fees and costs.

CONCLUSION

The motion is GRANTED.