Judge: Deborah C. Servino, Case: 30-2021-01167003, Date: 2022-11-18 Tentative Ruling
SPECIAL MOTION TO STRIKE
Cross-Defendant Ten-X Inc.’s special motion to strike Cross-Complainant 271 Express LLC’s Cross-Complaint pursuant to Code of Civil Procedure section 425.16, is denied.
Evidentiary Objection
271 Express’s evidentiary objection is overruled.
Evidence Submitted on Reply
The court did not consider evidence submitted for the first time on reply. Evidence should not be submitted on reply because the opposing party does not have an opportunity to respond. Evidence should be permitted upon reply only in exceptional circumstances, and then only if the opposing party is given time to respond. Id. This court has the discretion to refuse to admit or consider evidence submitted on reply. (Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1536-1538 [affirming denial of anti-SLAPP and exclusion of reply declarations where moving party filed no declarations with moving papers and reply declarations were substantive].)
Requests for Judicial Notice
The parties’ requests for judicial notice are unnecessary as the documents are in the court’s file in this action. It is not necessary to ask the court to take judicial notice of materials previously filed in the case. All that is necessary is to call the court's attention to such papers. (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2021) ¶ 9.53.1a.)
Merits
Code of Civil Procedure section 425.16 permits a special motion to strike Strategic Litigation Against Public Participation (“SLAPP”) lawsuits. A SLAPP suit is “a meritless suit filed primarily to chill the defendant's exercise of First Amendment rights.” (Finton Construction, Inc. v. Bidna & Keys, APLC (2015) 238 Cal.App.4th 200, 208.) The purpose of the anti-SLAPP law is “not [to] insulate defendants from any liability for claims arising from the protected rights of petition or speech. It only provides a procedure for weeding out, at an early stage, meritless claims arising from protected activity.” (Baral v. Schnitt (2016) 1 Cal.5th 376, 384.)
There are four categories of protected speech for an anti-SLAPP motion (Code Civ. Proc., § 425.16, subd. (e)):
The trial court engages in a two-step process to determine whether a special motion to strike should be granted. (Code Civ. Proc., § 425.16, subd. (b)(1); Bonni v. St. Joseph Health System (2021) 11 Cal.5th 995, 1065.) First, “the moving defendant bears the burden of establishing that the challenged allegations or claims ‘aris[e] from’ protected activity in which the defendant has engaged.” (Bonni v. St. Joseph Health System, supra, 11 Cal.5th at p. 1065 [quoting Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1061].) At the first step, the moving defendant bears the burden of identifying all allegations of protected activity, and the claims for relief supported by them. (Baral v. Schnitt, supra, 1 Cal.5th at p. 396.) “If a count pleaded in the complaint encompasses multiple claims and the moving party fails to identify how the acts underlying some of those claims are protected activity, then the moving party has not met its burden with respect to those unidentified claims.” (Pech v. Doniger (2022) 75 Cal.App.5th 443, 459 [quoting Bonni v. St. Joseph Health System, supra, 11 Cal.5th at p. 1010]; see Newport Harbor Offices & Marina, LLC v. Morris Cerullo World Evangelism (2018) 23 Cal.App.5th 28, 48.)
“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.’” (Verceles v. Los Angeles Unified School District (2021) 63 Cal.App.5th 776, 784 [quoting Wilson v. Cable News Network, Inc. (2019) 7 Cal.5th 871, 884, emphasis in original].) A cause of action does not “arise from” protected activity simply because it is filed after protected activity took place. (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 76–77.) Nor does the fact “[t]hat a cause of action arguably may have been triggered by protected activity” necessarily entail that it arises from such activity. (Id. at p. 78.)
Second, if the defendant makes the required showing, the burden shifts to the plaintiff to demonstrate the merit of the claim by establishing a probability of success. (Sweetwater Union High School Dist. v. Gilbane Building Co. (2019) 6 Cal.5th 931, 940.) The California Supreme Court has described this second step as a summary judgment like procedure. “The court does not weigh evidence or resolve conflicting factual claims. Its inquiry is limited to whether the plaintiff has stated a legal sufficient claim and made a prima facie factual showing sufficient to sustain a favorable judgment.” (Baral v. Schnitt, supra, 1 Cal.5th at pp. 384-385.) A plaintiff seeking to demonstrate the merit of the claim “may not rely solely on its complaint, even if verified; instead its proof must be made upon competent admissible evidence.” (Sweetwater Union High School Dist. v. Gilbane Building Co., supra, 6 Cal.5th at p. 940 [quoting San Diegans for Open Government v. San Diego State University Research Foundation (2017) 13 Cal.App.5th 76, 95].) For each claim that does arise from protected activity, the plaintiff must show the claim has “at least ‘minimal merit.’” (Bonni v. St. Joseph Health System, supra, 11 Cal.5th at p. 1065 [quoting Park v. Board of Trustees of California State University, supra, 2 Cal.5th at p. 1061].) If the plaintiff cannot make this showing, the court will strike the claim. (Bonni v. St. Joseph Health System, supra, 11 Cal.5th at p. 1065.)
Lawsuits predicated on prelitigation statements or writings may be subject to an anti-SLAPP motion. (CKE Restaurants, Inc. v. Moore (2008) 159 Cal.App.4th 262, 271 [statements made in Proposition 65 intent-to-sue notice within protection of statute]; Digerati Holdings, LLC v. Young Money Entertainment, LLC (2011) 194 Cal.App.4th 873, 887 [communications by musician's attorney to production company regarding disputed documentary film were prelitigation statements made in furtherance of the musician's right of petition under § 425.16, subd. (e)(2))]; Comstock v. Aber (2012) 212 Cal.App.4th 931, 944-945 (reports of sexual assault and harassment to police, nurse, and human resources manager came within § 425.16, subd. (e)(1) & (e)(2), as reports to law enforcement and “statements prior to litigation”].)
But to be protected, the prelitigation statement must relate to litigation that is contemplated “in good faith and under serious consideration”. (Action Apt. Assn., Inc. v. City of Santa Monica (2007) 41 Cal.4th 1232, 1251.) In Edwards v. Centex Real Estate Corp. (1997) 53 Cal.App.4th 15, the court detailed the requirement for a statement to be deemed a protected prelitigation statement under Civil Code section 47, subdivision (b). (See Bailey v. Brewer (2011) 197 Cal.App.4th 781, 790 [in determining whether a statement was made in anticipation of litigation contemplated in good faith and under serious consideration, the court may look to how this test has been applied in cases involving the litigation privilege of Civil Code section 47].)
As the Edwards court explained, the statement must be shown to have been made expressly in the context of imminent litigation. Otherwise, the potential of any litigation that might arise is too attenuated to make the statement. First, the communication must have been made preliminary to a proposed judicial or quasi-judicial proceeding. Second, the verbal proposal of litigation must be made in good faith. Third, the contemplated litigation must be imminent. Unless and until the parties are negotiating under the actual threat of impending litigation, the original justification for the litigation privilege of encouraging access to the courts can have no relevance to their communications. Finally, the litigation must be proposed in order to obtain access to the courts for the purpose of resolving the dispute. (Edwards v. Centex Real Estate Corp. (1997) 53 Cal.App.4th 15, 34–35.)
Here, Ten-X has made no showing that the alleged demand for payment, made in October of 2017, was made in anticipation of litigation. There is no declaration or evidence about the context or the intent behind the demand. Moreover, while the alleged demand for payment was made in October 2017, Ten-X did not file its Complaint until three years later on October 23, 2020. It was Ten-X’s burden to establish the demand was protected as a prelitigation statement. (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) Because Ten-X has not met its burden, there is no need for the court to proceed to the second step of the anti-SLAPP analysis. The special motion to strike is denied.
Attorney’s Fees
In its opposition to Ten-X’s special motion to strike, 271 Express seeks recovery of its attorneys’ fees in the amount of $5,967. (Opp., at p. 16; Pentis Decl., at ¶ 8.)
If the court finds that a special motion to strike is frivolous or is solely intended to cause unnecessary delay, the court shall award costs and reasonable attorney's fees to a plaintiff prevailing on the motion, pursuant to Section 128.5. (Code Civ. Proc., § 425.16, subd. (c).)
The basis of this request is that Ten-X has failed and refused to produce the payment demand in issue. (Opp., at p. 16.) There is no discussion whether the motion to strike was frivolous and brought solely to cause delay. In the absence of any argument by 271 Express, the court does not find that Ten-X’s special motion to strike was frivolous or brought solely to cause unnecessary delay.
DEMURRER
Ten-X’s demurrer to the sixth through ninth causes of action of the Cross-Complaint is sustained with 15 days leave to amend.
For the reason noted above, Ten-X’s request for judicial notice is unnecessary.
A pleading is adequate if it contains a reasonably precise statement of the ultimate facts, in ordinary and concise language, and with sufficient detail to acquaint a defendant with the nature, source and extent of the claim. Under normal circumstances, there is no need for specificity in pleading evidentiary facts. However, bare conclusions of law are insufficient. (Code Civ. Proc., §§ 425.10, subd.(a), 459; Doe v. City of Los Angeles (2007) 42 Cal.4th 531, 549-550; Zelig v. County of Los Angeles (2002) 27 Cal.4th 1112, 1126; Doheny Park Terrace HOA v. Truck Ins. Exchange (2005) 132 Cal.App.4th 1076, 1098-1099; Berger v. California Insurance Guarantee Assn. (2005) 128 Cal.App.4th 989, 1006.)
Sixth Cause of Action for Breach of Contract
The elements of breach of contract are (1) existence of a contract, (2) plaintiff’s performance or excuse from non-performance, (3) breach by defendant, and (4) damages. (First Commercial Mortgage Co. v. Reece (2001) 89 Cal.App.4th 731, 745.)
271 Express alleges that it entered into a commercial real estate under Ten-X became its listing agent. (Cross-Complaint, at ¶¶ 9-11.] That contract contained a 90-day tail period provision. Under that provision, Ten-X would earn a transaction if 271 Express entered into a sale agreement during the tail period. Pursuant to the tail period provision, that period expired on February 14, 2017. (Cross-Complaint, at ¶¶ 12-13, 82 and Exh. C.)
271 Express further alleges that it adhered to the terms of the contract and did not enter into an agreement to sell the property between November 16, 2016 and February 14, 2017. (Cross-Complaint, at ¶ 83.) Rather, on February 15, 2017, 271 Express entered into an agreement to sell the property. (Cross-Complaint, at ¶¶ 19, 84.) Around October 2017, Ten-X demanded payment of the transaction. 271 Express alleges that this is a breach of the agreement. (Cross-Complaint, at ¶¶ 88, 90.)
It appears that 271 Express’s position is that Ten-X demanded payment to which it was not entitled under their agreement. 271 Express has pointed to no provision in the agreement that prohibits Ten-X from demanding payment even though 271 Express alleges it entered into a sale agreement after the tail period.
271 Express contends that on demurrer the court must accept 271 Express’s allegation of its interpretation of the contract. See Aragon-Haas v. Family Security Ins. Services, Inc. (1991) 231 Cal.App.3d 232, 239. As a general proposition, this is correct. But here 271 Express has not really alleged an interpretation of the contract. Rather, it has alleged the conclusion that the payment demand was a breach without any factual allegation to support this. The court “need not accept as true, however, deductions, contentions or conclusions of law or fact.” (Morris v. JPMorgan Chase Bank, N.A. (2022) 78 Cal.App.5th 279, 292. The incorporated agreement (Exh. C) on its face support 271 Express’s conclusory allegation. “The well pled allegations that we accept as true necessarily include the contents of any exhibits attached to the complaint. Indeed, the contents of an incorporated document (in this case, the agreement) will take precedence over and supersede any inconsistent or contrary allegations set out in the pleading. In the case of such a conflict, we will look solely to the attached exhibit.” (Building Permit Consultants, Inc. v. Mazur (2004) 122 Cal.App.4th 1400, 1409.) The demurrer to this cause of action is sustained with 15 days leave to amend.
Seventh Cause of Action for Breach of the Covenant of Good Faith and Fair Dealing
To state a claim for breach of the covenant of good faith and fair dealing, a plaintiff must prove all of the following:
(CACI no. 325.)
“The covenant of good faith and fair dealing, implied by law in every contract, exists merely to prevent one contracting party from unfairly frustrating the other party's right to receive the benefits of the agreement actually made.” (Guz v. Bechtel Nat. Inc. (2000) 24 Cal.4th 317, 349.) With the exception of bad faith insurance cases, a breach of the covenant of good faith and fair dealing permits a recovery solely in contract. (Spinks v. Equity Residential Briarwood Apartments (2009) 171 Cal.App.4th 1004, 1054.) In order to state a cause of action for breach of the implied covenant of good faith and fair dealing, a valid contract between the parties must be alleged. The implied covenant cannot be extended to create obligations not contemplated by the contract. (Racine & Laramie v. Department of Parks and Recreation (1992) 11 Cal.App.4th 1026, 1031-1032; Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 690.) “If the allegations do not go beyond the statement of a mere contract breach and, relying on the same alleged acts, simply seek the same damages or other relief already claimed in a companion contract cause of action, they may be disregarded as superfluous as no additional claim is actually stated.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1394-1395.)
271 Express’s allegations for this cause of action are essentially the same as for its breach of contract cause of action. 271 Express does not allege how Ten-X’s demand for payment deprives 271 Express of the benefit of its bargain under their agreement. Accordingly, the demurrer to this cause of action is sustained with 15 days leave to amend.
Eighth Cause of Action for Equitable Indemnity
“The elements of a cause of action for indemnity are (1) a showing of fault on the part of the indemnitor and (2) resulting damages to the indemnitee for which the indemnitor is . . . equitably responsible. [Citation.]” (Expressions at Rancho Niguel Assn. v. Ahmanson Developments, Inc., (2001) 86 Cal.App.4th 1135, 1139.) Equitable indemnity applies only among defendants who are jointly and severally liable to the plaintiff. (GEM Developers v. Hallcraft Homes of San Diego, Inc. (1989) 213 Cal.App.3d 419, 426-427.) Furthermore, with limited exception, there must be some basis for tort liability against the proposed indemnitor. (Munoz v. Davis (1983) 141 Cal.App.3d 420, 425.)
271 Express has not alleged how it and Ten-X are jointly and severally liable to a plaintiff. The only plaintiff alleged is Ten-X. 271 Express does not explain how Ten-X can be jointly and severely liable to itself under the contract it is suing. Ten-X’s demurrer to this cause of action is sustained with 15 days leave to amend.
Ninth Cause of Action for Declaratory Relief
The essential elements of a declaratory-relief cause of action are (1) an actual controversy between the parties regarding contractual or property rights (2) involving continuing acts/omissions or future consequences, (3) which has sufficiently ripened to permit judicial intervention and resolution, but (4) which has not yet blossomed into an actual cause of action. (Osseous Technologies of America, Inc. v. Discoveryortho Partners LLC (2010) 191 Cal.App.4th 357, 366-369.)
Code of Civil Procedure section 1061 provides: “The court may refuse to exercise the power granted by this chapter in any case where its declaration or determination is not necessary or proper at the time under all the circumstances.” Declaratory relief is properly refused with respect to issues that can and are likely to be determined in the main/underlying action. (See, e.g., General of America Ins. Co. v. Lilly (1968) 258 Cal.App.2d 465, 470–471; California Ins. Guarantee Assn. v. Superior Court (1991) 231 Cal.App.3d 1617, 1623–1624 [“Generally, an action in declaratory relief will not lie to determine an issue which can be determined in the underlying tort action . . . [t]he declaratory relief statute should not be used for the purpose of anticipating and determining an issue which can be determined in the main action; [rather] [t]he object of the statute is to afford a new form of relief where needed and not to furnish a litigant with a second cause of action for the determination of identical issues.”].)
271 Express alleges that a controversy has arisen as to the parties’ rights and obligations under its agreement with Ten-X. (Cross-Complaint, at ¶ 109.) It seeks a declaration that it does not owe Ten-X the transaction fee. (Cross-Complaint, at ¶ 112.) In other words, Cross-Complainants’ declaratory relief cause of action is duplicative and derivative of its breach of contract cause of action. Moreover, it raises the same issue that will be decided by Ten-X’s Complaint for breach of contract. Because the issues alleged in the declaratory relief cause of action will be determined in the main action, the demurrer is sustained to this cause of action with 15 days leave to amend.
Ten-X shall give notice of the rulings.