Judge Bruce G. Iwasaki, Case 21STCV11576 2023-01-27 Tentative Ruling

Responding Party: Defendant/Cross-complainant Indie Brewing, LLC, Kevin O’Malley, Morgan Keller

This is an action for breach of a commercial lease between landlord 2301 East 7th Street, LLC (Cross-defendant or Landlord) and its tenant, Indie Brewing, LLC (Indie) and the guarantors of the lease, Kevin O’Malley and Morgan Keller (collectively Brewery or Cross-complainants). Cross-complainants allegedly failed to pay rent.

In March 2020, due to the COVID-19 pandemic, Indie’s sales slowed, and it sought to sell the business. In October 2020, Indie executed a letter of intent to sell the business to Alchemy & Science (First Buyer). According to the Landlord, the First Buyer was interested in leasing the rooftop of the building, a reduction in rent payments, exclusive use of the buildings’ elevators, and other lease modifications. The Landlord conditionally approved the assignment of the lease, provided that the back rent was paid, and financial records provided; however, after the First Buyer failed to provide the information, the sale fell through.

On March 25, 2021, the Landlord sued Cross-complainants for breach of lease and guaranty of lease. On June 4, 2021, Cross-complainants filed their cross-complaint against the Landlord for violation of the Los Angeles County eviction moratorium, breach of implied covenant of good faith and fair dealing, unfair business practices, tortious interference with business relations, and declaratory relief. The parties then engaged in settlement negotiations, which included discussing assigning the Brewery’s lease to a potential buyer of the business.

In December 2021, the Brewery executed a letter of intent and Term Sheet with Los Angeles Ale Works, LLC (Second Buyer). As part of that agreement, the Second Buyer would cure all lease defaults upon an executed assignment. On April 14, 2022, the Brewery e-mailed a purchase agreement that was executed with the Second Buyer and a proposed “Assignment of Lease.” The Landlord asserted that the proposed assignment added a provision for an option to extend the lease, which was inconsistent with the existing terms, and that the amounts of outstanding rent were disputed. Thus, the Landlord purportedly countered the proposed assignment and required a new guarantor; the Brewery subsequently rejected the proposals. The Landlord asserts that these discussions were confidential settlement negotiations. On April 28, 2022, the Second Buyer terminated the Asset and Purchase Agreement.

On May 5, 2022, Cross-complainants amended their Cross-complaint and added in causes of action for intentional interference with contractual relations, rescission/frustration of purpose, rescission/impossibility of performance, force majeure, breach of contract, money had and received, and unjust enrichment.

Four days later, the Brewery filed for Chapter 11 bankruptcy and a stay was issued. In October 2022, the bankruptcy court remanded this case back to this Court.

Cross-defendant Landlord now brings a special motion to strike the First Amended Cross-complaint (Cross-complaint) as a strategic lawsuit against public participation (SLAPP). It argues that the entire Cross-complaint arises from the Landlord’s filing of its initial Complaint for breach of lease and guaranty, and its alleged failure to negotiate during privileged settlement negotiations. It further argues that Cross-complainants cannot show any likelihood of success because the claims are barred by the litigation privilege.

The Brewery Cross-complainants oppose the motion. They argue the motion is untimely and there is no protected activity. They group their claims into three types: the Assignment claims, COVID-19 claims, and moratorium claims. They assert that these claims are based on the landlord’s unprotected conduct in refusing consent to the lease assignment, affirmative defenses based on the circumstances surrounding the pandemic, and demanding improper rent that was not yet due in violation of the moratorium. As to the likelihood of success of the claims, Cross-complainants contend that the Landlord’s unreasonable refusal to consent to the assignment makes it liable. The Landlord filed a reply, arguing that the motion is timely, the claims arise from litigation-related communications and activities, and the litigation privilege applies.

The Brewery’s request for judicial notice is granted as to various court documents, stipulations, Resolutions of the Board of Supervisors of the County of Los Angeles, and various executive orders. (Evid. Code, § 452, subds. (c), (d).)

With its opposition, the Brewery filed objections to the Landlord’s declarations. The Court overrules both objections to the Vivoli Declaration. As to the Abolfathi Declaration, the Court sustains objections numbers 1 and 2, and overrules objection number 3. As to the Saccuzzo Declaration, the Court sustains objections numbers 4 and 16, and overrules the remaining objections.

In its reply, the Landlord filed objections to the Brewery’s declarations. As to the O’Malley Declaration, the Court sustains objection number 10, and overrules the remaining objections. As to the Fowler Declaration, the Court overrules the objection.

“A cause of action against a person arising from any act of that person in furtherance of the person’s right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, 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, subd. (b)(1).) The purpose of the statute is to identify and dispose of lawsuits brought to chill the valid exercise of a litigant’s constitutional right of petition or free speech. (§ 425.16, subd. (a); Sylmar Air Conditioning v. Pueblo Contracting Services, Inc. (2004) 122 Cal.App.4th 1049, 1055-1056.)

Courts employ a two-step process to evaluate special motions to strike strategic lawsuits against public participation (SLAPP). (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 61.) First, the defendant must show that the challenged lawsuit arises from protected activity, such as an act in furtherance of the right of petition or free speech. (Ibid.) “The moving defendant bears the burden of identifying all allegations of protected activity, and the claims supported by them.” (Baral v. Schmitt (2016) 1 Cal.5^th 376, 396.) In the second step, it “ ‘is then up to the plaintiff to rebut the presumption by showing a reasonable probability of success on the merits.’ ” (Equilon, supra, 29 Cal.4^th at p. 61.) In determining whether the plaintiff has carried this burden, the trial court considers “the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.” (Code Civ. Proc., § 425.16, subd. (b)(2); see Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 291.)

“Analysis of an anti-SLAPP motion is not confined to evaluating whether an entire cause of action, as pleaded by the plaintiff, arises from protected activity or has merit. Instead, courts should analyze each claim for relief—each act or set of acts supplying a basis for relief, of which there may be several in a single pleaded cause of action—to determine whether the acts are protected and, if so, whether the claim they give rise to has the requisite degree of merit to survive the motion.” (Bonni v. St. Joseph Health System (2021) 11 Cal.5th 995, 1010.)

The issue here is whether a claim “arises from” protected activity. Do any of the claims in the Brewery’s Cross-complaint arise from the Landlord’s protected activities? Our Supreme Court has provided guidance on this issue. “A claim arises from protected activity when that activity underlies or forms the basis for the claim.” (Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1062 (Park).) “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.’ ” (Ibid., quoting City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78 (Cotati).) “Arise from” means “based upon,” not “in response to.” The “mere fact an action was filed after protected activity took place does not mean it arose from the activity. The anti-SLAPP statute cannot be read to mean that ‘any claim asserted in an action which arguably was filed in retaliation for the exercise of speech or petition rights falls under section 425.16, whether or not the claim is based on conduct in exercise of those rights.’ ” (Cotati, supra, at p. 77, original italics.) Otherwise, all cross-complaints would be rendered potential SLAPPs – an “absurd result.” (Ibid.)[1] Thus, “[a]lthough litigation-related activities constitute protected activity, ‘it does not follow that any claims associated with those activities are subject to the anti-SLAPP statute.’ ” (ValueRock TN Properties, LLC v. PK II Larwin Square SC LP (2019) 36 Cal.App.5^th 1037, 1046 (ValueRock).)

Cross-complainants first challenges the timeliness of the motion. A special motion to strike must be filed within 60 days from service of the complaint, or at any later time that the court deems proper. (Code Civ. Proc., § 425.16, subd. (f).) A new claim in an amended complaint also may be challenged, with the 60-day period running from service of the amended complaint. (Lam v. Ngo (2001) 91 Cal.App.4th 832, 840-842; Olsen v. Harbison (2005) 134 Cal.App.4th 278, 283.)

Cross-complainants filed their original Cross-complaint on June 4, 2021. The last day to file the motion was August 3, 2021.[2] Cross-complainants then filed their First Amended Cross-complaint on May 5, 2022, adding in several new causes of action. They removed this case to the bankruptcy court on May 7, 2022 and was remanded back to this Court on October 14, 2022.

“[D]efendants were entitled to a new 60-day period after remand from the federal court in which to refile their SLAPP motions.” (Morin v. Rosenthal (2004) 122 Cal.App.4th 673, 679.) Cross-complainants attempt to distinguish Morin by asserting that those defendants “timely filed their SLAPP motion in the Bankruptcy Court within the 60-day period.” However, they fail to address how this is a meaningful difference. To the extent that they are implying that those defendants preserved the timeliness, this is unpersuasive because the 60-day deadline does not apply in federal court. (Sarver v. Chartier (9th Cir. 2016) 813 F.3d 891, 900.)

In any event, trial courts have considerable discretion to allow the late filing of an anti-SLAPP motion. (Cf. Platypus Wear, Inc. v. Goldberg (2008) 166 Cal.App.4th 772, 787 [finding that it is an abuse of discretion to permit a late motion if the delay is extreme, the reasons behind the delay are weak, the reasons for granting the late filing do not serve the purposes of the SLAPP statute, and the delay caused great prejudice to plaintiff].) Further, the deadline is not jurisdictional. (Lam v. Ngo (2001) 91 Cal.App.4th 832, 840.) Thus, the Court exercises its discretion to consider the merits of the anti-SLAPP motion given that discovery has not commenced, no trial date is set, the unique procedural posture of this case, and Cross-complainants’ failure to show any prejudice.

As outlined above, in the first step of the analysis, Defendants must demonstrate that Plaintiff’s claims arise from four categories of protected activity. 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 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).)

“As our Supreme Court has recognized, ‘the “arising from” requirement is not always easily met.’ [Citation.] ‘[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. [Citation.] Moreover, that a cause of action arguably may have been “triggered” by protected activity does not entail that it is one arising from such.’ [Citation.] ‘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.]’ [Citation.] ‘[I]n ruling on an anti-SLAPP motion, courts should consider the elements of the challenged claim and what actions by the defendant supply those elements and consequently form the basis for liability.’ [Citation.] Put another way, courts should first identify ‘the allegedly wrongful and injury-producing conduct that provides the foundation for the claims,’ and then determine whether that conduct itself constitutes protected activity. [Citations.]” (Callanan v. Grizzly Designs, LLC (2022) 81 Cal.App.5th 517, 526 (Callanan), citing Park, supra, 2 Cal.5th at pp. 1062-1063.)

In Park, the plaintiff professor sued for discrimination after he was denied tenure at defendant’s university. (2 Cal.5th at p. 1061.) He alleged that the school dean “ ‘made comments to [him] and behaved in a manner that reflected prejudice against him on the basis of his national origin.’ ” (Id. at p. 1068.) The defendant then moved to strike the complaint, arguing that the suit “arose from its decision to deny him tenure and the numerous communications that led up to and followed that decision,” which were all protected activities. (Id. at p. 1061.)

The Supreme Court held that the elements of Park’s claim did not depend on the grievance proceeding or any statements of him in the tenure process, “but only on the denial of tenure itself and whether the motive for that action was impermissible.” (Id. at p. 1068.) Thus, whether the decision was oral or written, the communication “does not convert [plaintiff’s] suit to one arising from [protected] speech.” (Ibid.) The dean’s alleged statements may provide evidence of animus, but this did not “convert the statements themselves into the basis for liability.” The Court concluded that Park’s claim was based on the “ ‘act of denying [him] tenure based on national origin’ ” and that even if he omitted the allegations of communicative acts or filing a grievance, the claim would still stand. (Ibid.) The Court explained that “[a] claim arises from protected activity when that activity underlies or forms the basis for the claim. [Citations.] … [T]he 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.’ ” (Id. at pp. 1062–1063.)

The principle of whether a claim arises from protected activity was explored in ValueRock TN Properties, LLC v. PK II Larwin Square SC LP (2019) 36 Cal.App.5th 1037 (ValueRock), a case that is factually similar to this one. ValueRock involved a lease between the landlord of a community shopping center and its tenant, who sought to assign its interests to the plaintiff, ValueRock. The landlord declined the assignment after ValueRock did not agree to the conditions imposed, such as requiring that the property only be used as a supermarket. ValueRock then sued the landlord for declaratory relief, breach of contract, breach of the implied covenant of good faith, and intentional interference with contract/prospective economic advantage. (Id. at p. 1043.) After the lawsuit was filed, ValueRock and the landlord continued to mediate, which included a counterproposal by ValueRock to the conditions above. The landlord again rejected it, stating that it could not consider a new request when the old request was in dispute. (Id. at p. 1044.) ValueRock then amended its complaint, adding in allegations of the landlord’s denial of its counterproposal. The landlord filed an anti-SLAPP motion, arguing the allegations were based on the protected activities of settlement negotiations and statements made in litigation. (Ibid.)

The trial court denied the anti-SLAPP motion, and the Court of Appeal affirmed, concluding that the complaint was based on the landlord’s business decision to reject the assignments. That is, “an alleged breach of a contractual provision prohibiting a landlord from unreasonably refusing to consent to a lease assignment is not protected activity under the anti-SLAPP statute.” (ValueRock, supra, 36 Cal.App.5th at p. 1048.) While the landlord’s refusal during litigation may have prompted the amended complaint, “that is not to say the . . . complaint was based on Defendants’ litigation conduct.” (Ibid.) Thus, “Defendants are not insulated from liability merely because they again refused to consent to the lease assignment while the case was pending.” (Id. at p. 1050; see also Cotati, supra, 29 Cal.4th at p. 78 [“To focus on [plaintiff’s] litigation tactics, rather than on the substance of [plaintiff’s] lawsuit, risks allowing [defendant] to circumvent the showing expressly required by section 425.16, subdivision (b)(1) that an alleged SLAPP arise from protected speech or petitioning”].)

Here, the Cross-defendant Landlord asserts that the protected activities are the filing of its complaint and the settlement negotiations between the parties. Both activities are protected. (Navellier v. Sletten (2002) 29 Cal.4th 82, 90 [right of petition includes the act of filing a lawsuit]; Seltzer v. Barnes (2010) 182 Cal.App.4th 953, 964-967 [settlement negotiations are protected activity].) The issue, as noted, is whether the Brewery’s claims arise from these activities.

The Brewery’s assignment-based claims arise from the Landlord’s refusal to consent to the assignment, which is not protected activity.

The Brewery asserts that the following claims are based on the Landlord’s refusal to consent to the assignment: breach of implied covenant of good faith; tortious interference with business relations; and intentional interference with contractual relations. The Landlord agrees, but also contends that the reformation of lease claim is based on litigation-related conduct.[3]

Here, the Brewery’s Cross-complaint alleges conduct by the Landlord that is a business decision and does not “arise from” the settlement discussions. (See ValueRock, supra, 36 Cal.App.5th at p. 1040 [“case arises from a landlord’s repeated refusal to consent to a proposed assignment of a ground lease”].) “Although litigation-related activities constitute protected activity, ‘it does not follow that any claims associated with those activities are subject to the anti-SLAPP statute. To qualify for anti-SLAPP protection, the moving party must [also] demonstrate the claim “arises from” those activities.’ ” (Id. at p. 1046.) The Landlord contends that because negotiations preceded the Brewery’s Amended Cross-complaint, it is being sued because of those negotiations, or rather, “for failing to negotiate.”

That is not the case. Regardless of what arose during settlement negotiations, the Landlord decided not to consent to the assignment. (Cross-complaint, ¶¶ 78 [Landlord breached the implied covenant by “rejecting a full-tender assignment”], 89 [Landlord “unreasonably refuse[d] to accept the assignment”], 94 [Landlord intentionally disrupted the contractual relationship . . . “by refusing to accept a full-tender assignment”].) The refusal to accept the assignment may or may not have been reasonable, but it was that decision, not the negotiations preceding it, that is the basis for the claims in the Cross-complaint. (See Trilogy Plumbing, Inc. v. Navigators Specialty Insurance Co. (2020) 50 Cal.App.5th 920, 935 [“That the conduct underlying [plaintiff’s] claims is related to pending litigation is insufficient to confer protected activity status under section 425.16, subdivision (e)(2),” original italics]; see also Dept. of Fair Employment & Housing v. 1105 Alta Loma Road Apartments, LLC (2007) 154 Cal.App.4th 1273, 1284-1285 [affirming denial of anti-SLAPP motion because the act giving rise to liability was the “fail[ure] to accommodate [tenant’s] disability,” and “[t]he letters, e-mail and filing of unlawful detainer actions constituted [] evidence of [landlord’s] alleged disability discrimination”]; Gallimore v. State Farm Fire & Casualty Insurance Co. (2002) 102 Cal.App.4th 1388, 1399 [reversing order granting anti-SLAPP motion because plaintiff did not seek relief from the defendant’s “communicative acts, but rather for its alleged mistreatment of policyholders and its related violations and evasions of statutory and regulatory mandates,” and distinguishing between defendant’s “allegedly wrongful acts with the evidence that plaintiff will need to prove such misconduct”].) It was the decision to refuse the assignment that is the basis for the Landlord’s claimed liability. (Fowler Decl., ¶ 9 [“As a result of the Landlord’s refusal to assign the lease . . . [Second Buyer] would terminate the . . . pending sale”]; O’Malley Decl., ¶ 51.)

The settlement negotiations here may be the evidence that the Brewery needs to prove its case, i.e., bad faith conduct, but it is not the basis for the claims themselves. Even if the Court excises the allegations as to the settlement negotiations, the fact remains that the Landlord still rejected the assignments and both potential buyers of the Brewery. (Cf. O&C Creditors Group, LLC v. Stephens & Stephens XII, LLC (2019) 42 Cal.App.5th 546, 567 [“the challenged cross-claims are founded upon and would not exist in absence of the protected settlement activity; the cross-claims thus “‘arise from’” and are “‘based on’” the settlement agreement, making them subject to the provisions of the anti-SLAPP statute].) And “the mere fact an action was filed after protected activity took place does not mean it arose from that activity.” (Cotati, supra, 24 Cal.4th at pp. 76-78 [“That a cause of action arguably may have been triggered by protected activity does not entail that it is one arising from such”].) As in ValueRock, the Landlord is not “insulated from liability merely because [it] again refused to consent to the [second] lease assignment while the case was pending.” (36 Cal.App.5th at p. 1050.)

The Landlord relies on Seltzer v. Barnes (2010) 182 Cal.App.4th 953 to argue that settlement negotiations may be an exercise of the right of petition. This contention is accurate as far as it goes, but it fails to recognize that not any claim associated with litigation activities is subject to the anti-SLAPP statute. In Seltzer, the plaintiff conceded the first prong of the analysis – she acknowledged that the challenged negotiations arose from protected speech or petitioning activity. The Seltzer plaintiff argued that the defendant’s negotiations themselves were illegal and argued that she could establish a probability of success in the second prong. (Id. at p. 967.) Unlike the plaintiff in Seltzer, the Brewery Cross-complainants dispute that their claims arise from the Landlord’s protected speech and petitioning activity. Seltzer does not assist the Landlord in its burden to show that the Brewery’s claims arise from protected activity.

For these reasons, the motion to strike is denied as to First Amended Cross-complaint’s second, fourth, fifth, and eighth cause of action.

The Brewery’s moratorium-based claims do not arise from the filing of the lawsuit.

The Brewery asserts that its first (violation of COVID-19 moratorium), third (unfair business practices), tenth (breach of contract), and thirteenth (declaratory relief) are not based on the filling of the lawsuit, but on the violation of the County moratorium. The Court also considers the common count claims (money had and received, unjust enrichment) and declaratory relief as part of this group.

The Landlord argues that the Brewery cannot cite to any wrongful conduct that is not connected to litigation-related activities. But again, simply because litigation occurred, does not mean that the subsequent Cross-complaint was based upon that litigation. (Park, supra, 2 Cal.5th at p. 1063.) Here, the filing of the lawsuit in and of itself is insufficient under these facts to constitute a protected activity. The acts that the Brewery bases its claims on are the Landlord’s alleged violations of the moratorium by improperly demanding and receiving rent. (Cross-complaint, ¶¶ 70, 83 [“Cross-Defendant is in violation of the Moratorium by demanding rent that was not yet due, commencing this lawsuit on or about March 25, 2021, and harassing and intimidating Indie”], 136 [“Cross-Defendant breached the contract by . . . demanding that Cross-Complainants pay rent and/or other expenses that were not owed under the Lease or First Lease Amendment during the Pandemic Period, and collecting such rent and expenses”], 143, 150-152 [Cross-complainant paid rent to Landlord when it should not have], 158 [describing the conflict between the lease and moratorium]; O’Malley Decl., ¶ 31)

It is true that the filing of the lawsuit is one way in which the landlord could have violated the moratorium, but the causes of action do not arise from this one act. The Brewery would have a claim, independent of whether the lawsuit was filed, and the mere act of filing the lawsuit does not insulate the Landlord as a protected activity. (Cf. Navallier v. Sletten (2002) 29 Cal.4th 82, 90 [finding that the claims arose from protected activity because “but for the federal lawsuit . . . plaintiffs’ present claims would have no basis”].) The Landlord argues that it did not engage in any other activity to collect rent but a pre-litigation letter that it sent to the Brewery and the filing of the Complaint. But those acts are mere evidence related to liability. (ValueRock, supra, 36 Cal.App.5th at p. 1047.) The overarching act complained of is the violation of the moratorium itself. That is, there exists a dispute about the primacy of the parties’ rights and obligations under either the lease or under the COVID-19 moratorium. The Landlord’s alleged violation of the moratorium by previously receiving and demand rent from the Brewery would exist regardless of the Landlord’s lawsuit. (See Cordoba Corp. v. City of Industry (Jan. 3, 2023, No. B316304) ___Cal.App.5th___ [2023 Cal. App. Lexis 3, *9; 2023 WL 21762][distinguishing Cotati and affirming trial court’s granting of motion to strike because plaintiff’s complaint did not target an underlying controversy that existed apart from the litigation].)

The Supreme Court’s decision in Cotati is analogous here. In that case, the underlying controversy was the constitutionality of a city’s rent stabilization ordinance. (29 Cal.4th at p. 71.) A group of mobilehome owners sued in federal court for declaratory judgment that the ordinance was unconstitutional. (Id. at p. 72.) The City of Cotati then sued the owners in state court for a declaration that the ordinance was constitutional. The owners brought an anti-SLAPP motion in the state court case, arguing that the City’s case arose from their earlier federal case based on allegations within the City’s complaint that referenced the federal action. (Ibid.) The High Court held that the “actual controversy giving rise to both actions—the fundamental basis of each request for declaratory relief—was the same underlying controversy.” Thus, the City’s cause of action “was not one arising from [the] Owners’ federal suit.” (Id. at p. 80.)

Here, as in the lawsuits in Cotati, the moratorium claims arise from a dispute over the effect of the local ordinance. The underlying basis of the Brewery’s Cross-complaint is the Landlord’s alleged violation of the moratorium. (Cross-complaint, ¶¶ 143-144, 158-159.) In other words, the Brewery seeks declaratory judgment as to whether the moratorium excuses its rent obligations under the lease. (Id. at ¶ 158; O’Malley Decl., ¶¶ 20-26.) That controversy exists independently from the Landlord’s lawsuit or any pre-litigation demand letter that Landlord allegedly sent to the Brewery, and is not “based on an act in furtherance of the” Landlord’s right of petition or free speech. (City of Cotati, supra, 29 Cal.4th at p. 78.)

The Landlord relies on Navarro v. IHOP Properties, Inc. (2005) 134 Cal.App.4th 834. In Navarro, defendant IHOP and plaintiff franchisee negotiated a stipulated judgment in an unlawful detainer action. The agreement required the plaintiff to locate a buyer for her franchise; after she failed to do so, IHOP enforced the judgment. (Id. at pp. 837-838.) The franchisee then filed a separate suit against IHOP for breach of contract and fraud. She alleged that IHOP falsely promised to consider outside offers to buy her franchise rights “‘without undue delay’ but intentionally delayed consideration of purchase offers until the deadline had passed” to enforce the judgment. (Id. at p. 838.) IHOP then filed an anti-SLAPP motion against the franchisee’s complaint, which was denied. (Ibid.) The Court of Appeal reversed, finding that the franchisee’s claims “ ‘fall[] squarely” on “allegedly fraudulent statements within the context of negotiating the stipulated judgment” and therefore within the “ambit of the anti-SLAPP statute” as petitioning activity. (Id. at pp. 842-843.)

Unlike Navarro, the Brewery’s claims are not based on the settlement negotiations themselves or the filing of the lawsuit. Rather, it is the decision that resulted from the settlement discussions and the underlying violation of the moratorium that gives rise to their claims. In Navarro, the franchisee’s claims derived directly from the settlement negotiations. Stated differently, but for the settlement, the franchisee’s cause of action for fraud would not exist – the protected acts were IHOP’s “promises in exchange for stipulation of judgment,” which concern “allegedly fraudulent statements within the context of negotiating the stipulated judgment.” (Navarro, supra, 134 Cal.App.4th at pp. 842-843.) Thus, the fraud claim depended upon the settlement negotiations between IHOP and the franchisee. Here, none of the Brewery’s claims depend on the filing of the suit or the settlement discussions. The predicate of the assignment-based claims is the business decision not to consent to the assignment of the Brewery’s proposed buyers. The basis of the moratorium claims is the violation of the moratorium itself. Neither of those acts are protected activities. (See also Callanan, supra, 81 Cal.App.5th at p. 528 [cross-complaint filed in retaliation insufficient for anti-SLAPP statute].)

Accordingly, the Brewery’s claims do not arise from the Landlord’s filing of the lawsuit and the motion is denied as to the first, third, tenth, eleventh, twelfth, and thirteenth causes of action.

Because Cross-defendant Landlord has failed to meet its burden of showing that Cross-complainant Brewery’s claims arose from protected activity, the Court need not address the second prong. (ValueRock, supra, 36 Cal.App.5th at p. 1050.)

To the extent that the Cross-complaint pleads affirmative defenses or remedies, rather than causes of action, the motion to strike those defenses is denied. “[A]n anti-SLAPP motion may not be directed to an affirmative defense. The reason appears on the face of the statute itself: Only a ‘cause of action’ asserted by a plaintiff, cross-complainant, or petitioner may be the subject of an anti-SLAPP motion. (§ 425.16(b)(1), (h).) A cause of action seeks relief. An affirmative defense cannot seek relief and is not asserted by a plaintiff, a cross-complainant, or a petitioner.” (Morris Cerullo World Evangelism v. Newport Harbor Offices & Marina, LLC (2021) 67 Cal.App.5th 1149, 1154.) In its reply, the Landlord concedes that the sixth (rescission/frustration of purpose), seventh (rescission/impossibility of performance), and ninth (force majeure) causes of action are affirmative defenses. Thus, the motion is denied as to those claims.

“The purpose of anti-SLAPP motions is to weed out lawsuits designed to stifle free speech or lawful expressive conduct.” (Yeager v. Holt (2018) 23 Cal.App.5th 450, 456, italics added; Code Civ. Proc., § 425.16, subd. (a).) The Legislature declared it to be in the public interest “to encourage continued participation in matters of public significance.” For the Landlord to prevail in its motion to strike, the acts on which the Cross-complainant’s claims are based must be “in furtherance of the right of petition or free speech.” (Code Civ. Proc., § 425.16, subd. (b).) The Landlord’s business decision to reject the assignment, and its acts allegedly in violation of the County moratorium, are not acts in furtherance of its rights of petition or free speech. The Landlord’s lawful expressive conduct is in no way stifled by the Brewery’s Cross-complaint.

[1] The Landlord does not cite the Supreme Court’s decision in Park, and directs little attention to the Supreme Court’s analysis in Cotati.

[2] The parties stipulated several times to extend the deadline to file the motion.

[3] The Landlord also argues that the tenth (breach of contract), eleventh (money had and received), and twelfth (unjust enrichment) causes of action rely on “privileged settlement communications” because that was the only time in which it requested rent from the Brewery. However, because the allegations are that the Landlord violated the moratorium, the Court treats these causes of action as part of the “moratorium-based claims,” discussed below. (Cross-complaint, ¶¶ 137, 143, 151.)

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