Judge: H. Jay Ford, III, Case: SC126362, Date: 2022-10-27 Tentative Ruling

Case Number: SC126362    Hearing Date: October 27, 2022    Dept: O

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SUBJECT:                 SLAPP MOTION TO STRIKE

MOVING PARTY:   Plaintiff/Cross-Defendant Claudia Finato

RESP. PARTY:         Defendant/Cross-Complainant Keith Fink and Associates

TENTATIVE RULING

Plaintiff/Cross-Defendant Claudia Finato’s Motion to Strike is DENIED.  Keith Fink and Associates’ (KFA)request for fees is DENIED. 

“Litigation of an anti-SLAPP motion involves a two-step process. First, the moving defendant bears the burden of establishing that the challenged allegations or claims arise from protected activity in which the defendant has engaged.  Second, for each claim that does arise from protected activity, the plaintiff must show the claim has “at least ‘minimal merit.  If the plaintiff cannot make this showing, the court will strike the claim.”  Bonni v. St. Joseph Health System (2021) 11 Cal.5th 995, 1009 (where moving party seeks to strike an entire cause of action alleging multiple factual bases, court does not determine whether 1^st prong is met based on “gravamen” test but must determine whether each factual bases supplies the element of claim or merely provides context). 

I.  1^st step analysis—Finato fails to satisfy her burden under Bonni

On the first step, “courts are to consider the elements of the challenged claim and what actions by the defendant supply those elements and consequently form the basis for liability.  The defendant's burden is to identify what acts each challenged claim rests on and to show how those acts are protected under a statutorily defined category of protected activity.”  Bonni, supra, 11 Cal.5th at 1009. 

Finato does not cite or meet her burden under  Bonni.  Finato argues her decision to fire KFA and her 2015 settlement as protected conduct under CCP §425.16(e)(1) and (2).  Finato, however, fails to identify what elements of KFA’s three causes of action are supplied by the alleged protected conduct.  Finato fails to satisfy her burden under Bonni on the first step of SLAPP.  Finato’s SLAPP motion is DENIED.

II.  2^nd step analysis—Cross-Defendant establishes a probability of prevailing

            While Finato failed to meet her first step burden, to complete the SLAPP analysis, the Court elects to address KFA’s burden under the second step.  “Typically, a defendant must establish the anti-SLAPP statute's applicability before the burden shifts and a plaintiff must establish a claim has sufficient merit.  But only a claim that satisfies both prongs of the anti-SLAPP statute is a SLAPP, subject to being stricken under the statute.  Given this and this court's inherent, primary authority over the practice of law, we may conclude a contested portion of an anti-SLAPP motion should be denied solely based on a plaintiff's showing of merit, as a sufficiently meritorious claim cannot be struck regardless of whether it arises from activity the anti-SLAPP statute protects.”  Serova v. Sony Music Entertainment (2022) 13 Cal.5^th 859, 872. 

“Precisely because the statute (1) permits early intervention in lawsuits alleging unmeritorious causes of action that implicate free speech concerns, and (2) limits opportunity to conduct discovery, the plaintiff's burden of establishing a probability of prevailing is not high: We do not weigh credibility, nor do we evaluate the weight of the evidence. Instead, we accept as true all evidence favorable to the plaintiff and assess the defendant's evidence only to determine if it defeats the plaintiff's submission as a matter of law.  Only a cause of action that lacks ‘even minimal merit' constitutes SLAPP.”  Overstock.com, Inc. v. Gradient Analytics, Inc. (2007) 151 Cal.App.4th 688, 699.  “In order to establish a probability of prevailing on a cause of action in the context of an anti-SLAPP motion, a plaintiff must state and substantiate a legally sufficient claim.”  La Jolla Group II v. Bruce (2012) 211 Cal.App.4th 461, 470. 

“The second prong of the statute deals with whether the plaintiff has “demonstrated a probability of prevailing on the claim.  Under section 425.16, subdivision (b)(2), the superior court, in making these determinations, considers ‘the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.’ For purposes of an anti-SLAPP motion, the court considers the pleadings and evidence submitted by both sides, but does not weigh credibility or compare the weight of the evidence. Rather, the court's responsibility is to accept as true the evidence favorable to the plaintiff.  A plaintiff need only establish that his or her claim has minimal merit to avoid being stricken as a SLAPP.  With these descriptions in mind, we will not strike a cause of action under the anti-SLAPP statute unless it lacks even minimal merit.”  Ralphs Grocery Co. v. Victory Consultants, Inc. (2017) 17 Cal.App.5th 245, 261.

The “probability of prevailing” is tested by the same standard governing a motion for summary judgment, nonsuit, or directed verdict.  Thus, in opposing a SLAPP motion, it is plaintiff's burden to make a prima facie showing of facts that would support a judgment in plaintiff's favor.”  Taus v. Loftus (2007) 40 Cal.4th 683, 714 (a “summary-judgment-like procedure”). 

Even if Finato had satisfied her burden on the first step of SLAPP, Defendant satisfies its burden on the second step of SLAPP.  As such, the SLAPP motion is also denied based on Defendant’s showing of a probability of prevailing on its claim.

A.  Breach of contract

KFA establishes each element of the breach of contract cause of action.  The elements of a breach of contract claim are (1) that plaintiff and defendant entered into a contract; (2) that plaintiff did all, or substantially all, of the significant things that the contract required of plaintiff; (3) that all conditions required for defendant’s performance had occurred or those conditions were waived; (4) that defendant failed to do something that the contract required defendant to do; (5) that plaintiff was harmed; and (6) that defendant’s breach was a substantial factor in causing plaintiff’s harm. CACI 303. 

KFA sufficiently states a claim for breach of contract.  KFA alleges all necessary elements at ¶¶6-12.  The complaint is legally sufficient.

KFA submits evidence in support of each element of the breach of contract claim.  KFA submits evidence of a written Fee Agreement with Plaintiff.  See Opposition, Dec. of S. Hernandez, ¶2; Plaintiff’s FAC, Ex. A.  Based on ¶F(1) of the Fee Agreement, Finato was required to pay KFA reasonable attorney’s fees from any “settlement, judgment, or other recovery, after it is obtained by the Client.”  Id. at ¶3; Plaintiff’s FAC, Ex. A, ¶F(1).  KFA provided legal services pursuant to the Fee Agreement.  Id. at ¶¶4-7.  KFA was terminated in April 2014.  Id. at ¶7.  Finato reached a settlement with LABite.com around September 2015.  Id. at ¶11.  Finato has refused to pay any portion of her settlement funds to KFA, despite demands that she acknowledge the validity of KFA’s lien.  Id. at ¶13.  KFA submits prima facie evidence of a breach of contract.

Finato fails to defeat KFA’s breach of contract claim as a matter of law.  Because KFA establishes all elements of its claim, the Court will assess Finato's evidence “only to determine if it defeats the plaintiff's submission as a matter of law.”  Overstock.com, Inc., supra, Cal.App.4th at 699.  Finato argues that the breach of contract claim is barred, because her decision to enter into the Settlement Agreement is protected conduct under CC §47(b) and the four-year statute of limitations under CC P §337(1).

CC §47(b) is an absolute affirmative defense to all tort causes of action, except the tort of malicious prosecution.  See Flatley v. Mauro (2006) 39 Cal.4^th 299, 322 (noting that there is not a complete overlap between statements protected under CCP §425.16 and CC §47(b)).  “[S]ection 47(b) operates to bar civil liability for any tort claim based upon a privileged communication, with the exception of malicious prosecution, whose requirements include malice, lack of probable cause, and termination in the plaintiff's favor.”  Hagberg v. California Federal Bank FSB (2004) 32 Cal.4th 350, 375.

            “Generally, the litigation privilege precludes liability in tort, not liability for breach of contract.  If one expressly contracts not to engage in certain speech or petition activity and then does so, applying the privilege would frustrate the very purpose of the contract if there was a privilege to breach it.  Thus, the privilege will apply to contract claims only if the agreement does not clearly prohibit the challenged conduct, and if applying the privilege furthers the policies underlying the privilege.”  Crossroads Investors, L.P. v. Federal National Mortgage Assn. (2017) 13 Cal.App.5th 757, 787 (on SLAPP motion, litigation privilege did not apply to contract claims based on defendant’s breach of contractual obligation to conduct nonjudicial foreclosure in accordance with California law; application of privilege would undermine, not further, policy goals of litigation privilege).   

KFA is not based on a privilege statement or broadcast.  KFA is not seeking to impose liability on Finato for entering into the 2015 Settlement Agreement, nor is liability based on Finato’s statements during negotiation of the 2015 Settlement or statements contained in the 2015 Settlement Agreement.  CC §47(b) simply does not apply.

With regard to SOL, Finato fails to establish that the breach of contract cause of action is barred by CCP §337(1) as a matter of law.  Finato argues the Settlement Agreement was executed in 2015 and the breach of contract claim accrued by 2016, at the latest. 

However, KFA’s breach of contract cause of action is contained in a compulsory cross-complaint.  “It is well established that the filing of an underlying lawsuit tolls the statute of limitations for compulsory cross-complaints.”  Paredes v. Credit Consulting Services, Inc. (2022) 82 Cal.App.5th 410, 428.  Finato filed this action on 9-6-16.  Even using the 2016 accrual date proposed by Finato, the breach of contract cause of action is timely.  The breach of contract claim was not time barred when Finato filed this action, and the limitations period has been tolled since that time. 

Finato also argues she has not actually received the settlement funds from LABite.com.  However, it is undisputed that Finato does not intend to honor the Fee Agreement with KFA.  KFA is allowed to sue for breach of contract based on Finato’s anticipatory breach.  See Romano v. Rockwell Internat., Inc. (1996) 14 Cal.4^th 479, 489 (if promisor repudiates contract before performance is due, plaintiff may treat repudiation as anticipatory breach and sue for damages immediately). 

Finato argues KFA cannot recover damages for failure to honor the attorney lien until the validity and amount of the lien is adjudicated in a separate action. Finato cites Mojtahedi for this proposition.  The requirement of an “independent action” means the attorney claiming a lien on a client's judgment must establish the lien in an action other than the one in which the judgment is obtained. See Southern California Gas Co. v. Flannery (2016) 5 Cal.App.5th 476, 496; Levin v. Gulf Ins. Group (1999) 69 Cal.App.4th 1282, 1285, fn 3; Mojtadhedi v. Vargas (2014) 228 Cal.App.4th 974, 975.  In Mojtadhedi, the attorney lienholder filed an action against successor counsel for recovery on the lien.  See Mojtahedi, supra, 228 Cal.App.4^th at 975.  The attorney lienholder “never brought an action against his former clients to establish the reasonable cost of his attorney fees…”  Id.  “At issue is whether plaintiff can enforce an attorney fees lien solely via an action against defendant, who holds the settlement funds in his client trust account.”  Id. at 977. 

KFA’s instant cross-complaint is the “independent action” against the client required under Mojtahedi.  KFA is also not seeking to sue any third party for recovery on the lien, e.g. successor counsel. 

B.  Quantum Meruit

The requisite elements of quantum meruit are (1) the plaintiff acted pursuant to “an explicit or implicit request for the services” by the defendant, and (2) the services conferred a benefit on the defendant.  See Port Medical Wellness, Inc. v. Connecticut General Life Insurance Company (2018) 24 Cal.App.5th 153, 180.  Based on the same evidence presented in support of the breach of contract action, KFA establishes the probability of prevailing on the breach of contract cause of action. 

Finato’s arguments regarding litigation privilege and statute of limitations fail for the same reasons discussed in connection with the breach of contract cause of action.  Finato also argues the quantum meruit claim fails as an issue of law, because KFA alleges an enforceable contract.  “[I]t is well settled that there is no equitable basis for an implied-in-law promise to pay reasonable value when the parties have an actual agreement covering compensation.”  Hedging Concepts, Inc. v. First Alliance Mortgage Co. (1996) 41 Cal.App.4^th 1410, 1419. 

However, KFA is entitled to allege alternative theories of recovery.  A plaintiff is allowed to allege and maintain inconsistent theories of recovery in a complaint.  See Mendoza v. Rast Produce Co., Inc. (2006) 140 Cal.App.4th 1395, 1402.  Finato has repudiated the parties’ Fee Agreement and there is therefore a possibility that the alleged Fee Agreement will be deemed unenforceable. In the face of this possibility, KFA is entitled to plead quantum meruit in the event the Fee Agreement is found unenforceable.  KFA is not required to elect its remedies in response to SLAPP motion.  “Nothing in the anti-SLAPP statute required [plaintiffs] to make an election between the breach of contract and quantum meruit causes of action in response to the anti-SLAPP motion.”  Newport Harbor Ventures, LLC v. Morris Cerullo World Evangelism (2016) 6 Cal.App.5th 1207, 1223. 

C.  Common Count:  Services Rendered

The elements of a common count claim for goods and services rendered are:  (1) that defendant requested, by words or conduct, that plaintiff perform services for the benefit of defendant; (2) that plaintiff performed the services as requested; (3) that defendant has not paid plaintiff for services; and (4) the reasonable value of the services that were provided. CACI No. 371. 

KFA’s evidence in support of the breach of contract claim also establishes each of the elements of the common count for services rendered.  Finato’s arguments regarding statute of limitations, litigation privilege and existence of an applicable agreement covering compensation fail for the reasons stated in connection with the breach of contract and quantum meruit claims.

III.  KFA’s Request for Fees pursuant to CCP §425.16(c)

            “The anti-SLAPP statute requires the trial court to award reasonable attorneys' fees to a prevailing plaintiff pursuant to section 128.5 when the court determines that a defendant's anti-SLAPP motion was ‘frivolous or ... solely intended to cause unnecessary delay.’ (§ 425.16, subd. (c)(1) [‘shall’ award].)  Frivolous in this context means that any reasonable attorney would agree the motion was totally devoid of merit.  An order awarding attorneys’ fees pursuant to section 128.5, as incorporated in section 425.16, subdivision (c), is reviewed under the abuse of discretion test.”  Gerbosi v. Gaims, Weil, West & Epstein, LLP (2011) 193 Cal.App.4^th 435, 450.

“Section 128.5, subdivision (b)(2), defines frivolous to mean ‘totally and completely’ without merit, or for the ‘sole’ purpose of harassing an opposing party. When a motion has partial merit, it is not ‘totally and completely’ without merit, nor can it be said that its ‘sole’ purpose is to harass.”  Id.

            KFA seeks fees as prevailing party on the SLAPP motion.  KFA argues the motion was frivolous, because it is based on “imaginary cross-claims and requests for relief that simply do not exist in the Cross-complaint.”  Opposition, 15:15-17.  KFA fails to establish that Finato’s motion was frivolous or totally devoid of merit.  KFA’s motion for fees is DENIED.  

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SUBJECT:                 DEMURRER TO CROSS-COMPLAINT  

MOVING
PARTY:   Plaintiff/Cross-Defendant Claudia
Finato

RESP.
PARTY:         Defendant/Cross-Complainant Keith Fink and Associates

TENTATIVE RULING

Plaintiff/Cross-Defendant Finato’s
Demurrer to the Cross-Complaint is OVERRULED. 
Finato is ordered to serve an answer within 10 days.  As discussed in connection with the SLAPP
motion, Defendant/Cross-Complainant Keith Fink and Associates allege sufficient
facts to state claims for breach of contract, quantum meruit and common counts
(services rendered).