Judge: Armen Tamzarian, Case: 24STCV21221, Date: 2024-12-04 Tentative Ruling

Case Number: 24STCV21221    Hearing Date: December 4, 2024    Dept: 52

Defendant Arms Trans Inc.’s Special Motion to Strike Pursuant to Code of Civil Procedure Section 425.16

Under Code of Civil Procedure section 425.16, defendant Arms Trans Inc. dba Arms Logistics (Arms) specially moves to strike all eight causes of action alleged against it by plaintiffs Alvaro Arevalo, Javier Arevalo, and Elsy Erazo.

Legal Standard

            Courts use a two-step process for resolving anti-SLAPP motions under section 425.16: “First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity.”  (Navellier v. Sletten (2002) 29 Cal.4th 82, 88 (Navellier).)  The defendant must show “the cause of action is based on the defendant’s protected free speech or petitioning activity.”  (Id. at p. 89.) 

Second, once the defendant establishes the first element, courts “must then determine whether the plaintiff has demonstrated a probability of prevailing on the claim.”  (Navellier, 29 Cal.4th at p. 88.)  “[T]he plaintiff need only have stated and substantiated a legally sufficient claim.”  (Ibid., internal quotes and citations omitted.)  “[C]laims with the requisite minimal merit may proceed.”  (Id. at p. 94.)  “Put another way, the plaintiff ‘must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited.’ ”  (Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 821.)

Protected Activity

All eight causes of action arise from protected activity.  Protected activity includes “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.”  (Code Civ. Proc., § 425.16, subd. (e)(2).)  This provision is “construed broadly, to protect the right of litigants” and applies to a communication “if it has ‘ “some relation” ’ to judicial proceedings.”  (Healy v. Tuscany Hills Landscape & Recreation Corp. (2006) 137 Cal.App.4th 1, 5.)  “ ‘Settlement negotiations while a suit is pending are … protected; they involve communications in connection with a matter pending before or under consideration by an official body, and so fall within the scope of section 425.16, subdivision (e)(2).’ ” (Alfaro v. Waterhouse Management Corp. (2022) 82 Cal.App.5th 26, 34 (Alfaro).) 

All eight causes of action allege defendant Arms is liable for communications made during settlement negotiations.  Plaintiffs’ complaint alleges that plaintiffs filed a lawsuit against Arms and co-defendant U Work Personnel, Inc. in 2019 (Comp., ¶ 17), which the parties settled in 2022 (¶ 19).  Plaintiffs allege defendants deceived plaintiffs into agreeing to have only the co-defendants, not Arms, be liable for the settlement amount.  (¶¶ 21-22.)  Plaintiffs allege, “U WORK and ARMS entered into the settlement agreement under the guise that only U WORK would be liable for making payments of the settlement agreement because U WORK was already suspended by the Franchise Tax Board and would become insolvent and never make any payments.”  (¶ 26.)  They further allege, “Defendants knowingly, purposefully, and fraudulently omitted to disclose this material evidence of U WORK’s suspension by the Franchise Tax Board during any and all negotiations with Plaintiffs.  Defendant’s fraudulent intent is further evidenced by Defendants coaxing Plaintiffs, during negotiations, into believing that U WORK wanted to take complete responsibility for paying the settlements and absolve ARMS of liability.”  (¶ 27.)

Plaintiffs’ opposition acknowledges this complaint seeks to hold Arms liable for making communications in settlement negotiations.  Plaintiffs assert, “Plaintiffs are now rightfully suing Defendants for their fraudulent conduct during settlement negotiations in the underlying action.”  (Opp., p. 2.)  They also contend, “[W]hile Plaintiffs do not deny that most of the factual allegations in the Complaint are about statements made during settlement negotiations, these negotiations are admissible in order to prove fraud.”  (Id., p. 5.)  That constitutes protected activity under the anti-SLAPP statute.   

The opposition argues plaintiffs’ claims are not protected activity because the alleged misrepresentations are admissible to show fraud under Evidence Code section 1123, subdivision (d).  (Opp., p. 5.)  That is a rule on the admissibility of evidence.  It is irrelevant to whether activity is protected under the anti-SLAPP statute.  Plaintiffs further argue, “separate litigation in a different forum, such as a separate personal injury or worker’s compensation action, is not within the scope of Anti-SLAPP.”  (Opp., p. 6.)  For this proposition, plaintiffs rely solely on Truestone, Inc. v. Simi West Industrial Park II (1984) 163 Cal.App.3d 715, which does not concern the anti-SLAPP statute.  The Legislature did not enact the anti-SLAPP statute until eight years later.  (See Dowling v. Zimmerman (2001) 85 Cal.App.4th 1400, 1414.)  Finally, plaintiffs make additional arguments based on authority about the admissibility of evidence, such as the doctrine of admissions against interest.  (Opp., p. 7.)

Plaintiffs provide no authority or argument why Alfaro (or the cases cited therein) do not apply.  Arms meets its burden of showing all eight causes of action arise from protected activity. 

Probability of Prevailing on the Merits

Plaintiffs do not meet their burden of showing a probability of prevailing on any of their eight causes of action against Arms.  Plaintiffs’ opposition does not address the probability of prevailing.  It argues only that defendant failed to meet its burden of showing the complaint arises from protected activity.  The opposition does not identify the elements of any of plaintiffs’ eight causes of action. 

Several cases have held that granting an anti-SLAPP motion was proper where the plaintiff “failed to offer any admissible evidence to establish a prima facie case.”  (San Diegans for Open Government v. San Diego State University Research Foundation (2017) 13 Cal.App.5th 76, 109 [citing two prior cases].) 

The only evidence plaintiffs submitted is the declaration of their counsel, Luis Guardado.  He presents no admissible evidence on any of the elements of plaintiffs’ claims.  He begins almost all statements in his declaration with, “Based upon my review of the file” in the prior litigation.  (Guardado Decl., ¶¶ 2-13.)  There are only three exceptions: the paragraph identifying himself (¶ 1), a paragraph stating, “[A]fter U WORK failed to make a single payment, Plaintiffs filed a Motion to Vacate the Dismissal, which was denied” (¶ 13), and statements concerning the amount of attorney fees plaintiffs incurred for the opposition (¶¶ 14-23). 

Even if plaintiffs had made any relevant arguments and presented admissible evidence, they would not succeed in showing a probability of prevailing.  The litigation privilege protects Arms’s conduct.  “A plaintiff cannot establish a probability of prevailing if the litigation privilege precludes the defendant’s liability on the claim.”  (Digerati Holdings, LLC v. Young Money Entertainment, LLC (2011) 194 Cal.App.4th 873, 888.)  The litigation privilege “bars all tort cases of action except a claim of malicious prosecution.”  (Geragos v. Abelyan (2023) 88 Cal.App.5th 1005, 1031.)  It also bars claims framed as breach of contract when they “seek to void the [contract] based upon [defendants’] fraud.”  (Edwards v. Centex Real Estate Corp. (1997) 53 Cal.App.4th 15, 40.)

As discussed above, all eight causes of action seek to hold Arms liable for misrepresentations or omissions in settlement negotiations used to fraudulently induce settlement of the prior lawsuit.  Several cases have held that the litigation privilege bars claims for fraudulent inducement of settlement agreements.  (Bonni v. St. Joseph Health System (2022) 83 Cal.App.5th 288, 304; Seltzer v. Barnes (2010) 182 Cal.App.4th 953, 969-972; Navarro v. IHOP Properties, Inc. (2005) 134 Cal.App.4th 834, 843; Home Ins. Co. v. Zurich Ins. Co. (2002) 96 Cal.App.4th 17, 20.)  The litigation privilege thus bars plaintiffs’ claims against Arms.

Disposition

            Defendant Arms Trans Inc. dba Arms Logistics’ special motion to strike is granted.  The court hereby strikes the entire complaint against defendant Arms Trans Inc. without leave to amend.

Defendant Arms Trans Inc.’s Motion to Seal

Defendant Arms Trans Inc. dba Arms Logistics (Arms) moves to seal exhibit 2 in support of its special motion to strike. 

California Rules of Court, rule 2.550(d) provides:

A court may order that a record be filed under seal only if it expressly finds facts that establish:

(1) There exists an overriding interest that overcomes the right of public access to the record;

(2) The overriding interest supports sealing the record;

(3) A substantial probability exists that the overriding interest will be prejudiced if the record is not sealed;

(4) The proposed sealing is narrowly tailored; and

(5) No less restrictive means exist to achieve the overriding interest.

Assuming Arms establishes the first four elements, it does not establish the final element.  It moves to seal the unredacted copy of a confidential settlement agreement and release of claims.  There is a less restrictive means of maintaining the agreement’s confidentiality: not filing it.  Sealing records under California Rules of Court rule 2.550 is only necessary when there is a reason the court must have access to the confidential information.  The text of the settlement agreement is irrelevant to Arms’ special motion to strike.  The information included in the publicly filed documents suffices for the court to rule on the motion.

Defendant Arms Trans Inc. dba Arms Logistics’ motion to seal records is denied.