Judge: Margaret L. Oldendorf, Case: 23AHCV00201, Date: 2023-08-16 Tentative Ruling

Case Number: 23AHCV00201    Hearing Date: August 16, 2023    Dept: P

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES

NORTHEAST DISTRICT

          I.        INTRODUCTION

          This case and related case, Navigators Real Estate, Inc. v. Liping Huang, concern a real estate purchase contract. The real estate is a residence in Monrovia owned by Huang.  Jack Chao and Lina Ta are sued for convincing Huang not to go through with the sale, allegedly wrongly depriving Navigators of an earned commission and depriving Shao of the home he seeks to purchase.

          Shao alleges breach of contract and seeks specific performance as to Huang. He sues Chao and Ta for intentional interference with contractual relation. Chao demurs to the pleading and moves to strike all the allegations against him, arguing that because he is Huang’s attorney he cannot be liable for the conduct he is alleged to have engaged in. But the complaint to which this demurrer and motion to strike are aimed does not allege that Chao is Huang’s attorney; and the fact of Chao’s representation is not something of which the Court can take judicial notice. Therefore, the demurrer is overruled and the motion to strike is denied.    

II.       LEGAL STANDARD

A. Law Governing Demurrer

Code Civ. Proc. §430.10(e) provides for a demurrer on the basis that a complaint fails to state a cause of action. A demurrer admits, provisionally for purposes of testing the pleading, all material facts properly pleaded. Tindell v. Murphy (2018) 22 Cal.App.5th 1239, 1247. A demurrer tests the legal sufficiency of a complaint. Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4^th 968, 994. 

B. Law Governing Motion to Strike

          Code Civ. Proc. §436: “The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper:

(a) Strike out any irrelevant, false, or improper matter inserted in any pleading.

(b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.”

          III.     DISCUSSION

          A. Summary of Facts Alleged

¶2       Huang is the owner of real property located at 325 N. Terrace, Monrovia.

¶3       Chao is a California real estate broker.

¶5       On 12/6/22, Shao and Huang entered into a valid Residential Purchase Agreement (RPA) in which Shao agreed to purchase the property from Huang.

¶¶6, 7 Shao performed all conditions and informed Huang that he was ready to proceed.

¶¶8-10 Chao and Ta became aware of the RPA and persuaded Huang to cancel it, without justification.

¶11     Chao and Ta persuaded Huang to maliciously withhold Shao’s more than $2 million in escrow for a prolonged litigation, and withheld the money as leverage to unduly pressure Shao to cancel the RPA without proper justification.

¶12     On behalf of Huang, Chao declared to Shao that Huang refused to close escrow.

¶15     Shao alleges Chao pressured Huang to cancel the valid RPA so that he could become Huang’s real estate broker and sell the Huang property.

          B. Request for Judicial Notice

          Chao requests judicial notice of a cross-complaint filed by Huang against Navigators and others in the related action. In that action, Huang alleges that she retained Chao to represent her in the real estate transaction at issue.

          Judicial notice of the cross-complaint in the related action is granted pursuant to Evid. Code §452(d). However, judicial notice is taken of the document’s existence alone, not of the truth of any matter stated therein. Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1564-1570; Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 113-114.

          C. Analysis

          Chao argues in his demurrer that he is being sued for persuading Huang to cancel escrow and not go through with the RPA; and that this is not actionable because these are attorney-client privileged communications and litigation conduct that is absolutely privileged. The motion to strike makes the same argument.

The demurrer and motion to strike are both premised on matter that is not contained in the challenged pleading: that Chao is Huang’s attorney.

          Nor is such “fact” judicially noticeable. While the Court takes judicial notice of the allegation in the cross-complaint in the related action that Huang retained Chao as an attorney to represent her, judicial notice of the truth of such an allegation is not proper. Consequently, the demurrer and motion to strike lack adequate foundation, and must be denied.

IV.     ORDER

          The demurrer is overruled and the motion to strike is denied.

          Chao is granted 10 days to file his answer.

          Plaintiff is ordered to give notice of ruling.

Dated:                                                              _______________________________

                                                                              MARGARET L. OLDENDORF

                                                                       JUDGE OF THE SUPERIOR COURT

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES

NORTHEAST DISTRICT

          I.        INTRODUCTION

          This case and related case, Navigators Real Estate, Inc. v. Liping Huang, concern a real estate purchase contract. The real estate is a residence in Monrovia owned by Huang.  Jack Chao and Lina Ta are sued for convincing Huang not to go through with the sale, allegedly wrongly depriving Navigators of an earned commission and depriving Shao of the home he seeks to purchase.

          Shao alleges breach of contract and seeks specific performance as to Huang. He sues Chao and Ta for intentional interference with contractual relation. Chao demurs to the pleading and moves to strike all the allegations against him, arguing that because he is Huang’s attorney he cannot be liable for the conduct he is alleged to have engaged in. But the complaint to which this demurrer and motion to strike are aimed does not allege that Chao is Huang’s attorney; and the fact of Chao’s representation is not something of which the Court can take judicial notice. Therefore, the demurrer is overruled and the motion to strike is denied.    

II.       LEGAL STANDARD

A. Law Governing Demurrer

Code Civ. Proc. §430.10(e) provides for a demurrer on the basis that a complaint fails to state a cause of action. A demurrer admits, provisionally for purposes of testing the pleading, all material facts properly pleaded. Tindell v. Murphy (2018) 22 Cal.App.5th 1239, 1247. A demurrer tests the legal sufficiency of a complaint. Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4^th 968, 994. 

B. Law Governing Motion to Strike

          Code Civ. Proc. §436: “The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper:

(a) Strike out any irrelevant, false, or improper matter inserted in any pleading.

(b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.”

          III.     DISCUSSION

          A. Summary of Facts Alleged

¶2       Huang is the owner of real property located at 325 N. Terrace, Monrovia.

¶3       Chao is a California real estate broker.

¶5       On 12/6/22, Shao and Huang entered into a valid Residential Purchase Agreement (RPA) in which Shao agreed to purchase the property from Huang.

¶¶6, 7 Shao performed all conditions and informed Huang that he was ready to proceed.

¶¶8-10 Chao and Ta became aware of the RPA and persuaded Huang to cancel it, without justification.

¶11     Chao and Ta persuaded Huang to maliciously withhold Shao’s more than $2 million in escrow for a prolonged litigation, and withheld the money as leverage to unduly pressure Shao to cancel the RPA without proper justification.

¶12     On behalf of Huang, Chao declared to Shao that Huang refused to close escrow.

¶15     Shao alleges Chao pressured Huang to cancel the valid RPA so that he could become Huang’s real estate broker and sell the Huang property.

          B. Request for Judicial Notice

          Chao requests judicial notice of a cross-complaint filed by Huang against Navigators and others in the related action. In that action, Huang alleges that she retained Chao to represent her in the real estate transaction at issue.

          Judicial notice of the cross-complaint in the related action is granted pursuant to Evid. Code §452(d). However, judicial notice is taken of the document’s existence alone, not of the truth of any matter stated therein. Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1564-1570; Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 113-114.

          C. Analysis

          Chao argues in his demurrer that he is being sued for persuading Huang to cancel escrow and not go through with the RPA; and that this is not actionable because these are attorney-client privileged communications and litigation conduct that is absolutely privileged. The motion to strike makes the same argument.

The demurrer and motion to strike are both premised on matter that is not contained in the challenged pleading: that Chao is Huang’s attorney.

          Nor is such “fact” judicially noticeable. While the Court takes judicial notice of the allegation in the cross-complaint in the related action that Huang retained Chao as an attorney to represent her, judicial notice of the truth of such an allegation is not proper. Consequently, the demurrer and motion to strike lack adequate foundation, and must be denied.

IV.     ORDER

          The demurrer is overruled and the motion to strike is denied.

          Chao is granted 10 days to file his answer.

          Plaintiff is ordered to give notice of ruling.

Dated:                                                              _______________________________

                                                                              MARGARET L. OLDENDORF

                                                                       JUDGE OF THE SUPERIOR COURT

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES

NORTHEAST DISTRICT

          I.        INTRODUCTION

          This case and the related case, Navigators Real Estate, Inc. v. Liping Huang, concern a real estate purchase contract. The real estate is a residence in Monrovia owned by Huang.  Jack Chao and Lina Ta are sued for convincing Huang not to go through with the sale, allegedly wrongly depriving Navigators of an earned commission and depriving Shao of the home he seeks to purchase.

          Shao alleges breach of contract and seek specific performance as to Huang. He sues Chao and Ta for intentional interference with contractual relations.

          Before the Court is Chao’s special motion to strike. Because Chao has not established that he is being sued for engaging in activity that is protected pursuant to Code Civ. Proc. §425.16(e), the motion is denied.

II.       LEGAL STANDARD

          Code Civ. Proc. §425.16, the anti-SLAPP statute, provides for a special motion to strike. “The anti-SLAPP statute does not 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, italics in original.

          In Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67 (Equilon), the California Supreme Court stated: 

          “[W]e may summarize a court’s task in ruling on an anti-SLAPP motion to strike as follows. Section 425.16, subdivision (b)(1) requires the court to engage in a two-step process. First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. The moving defendant’s burden is to demonstrate that the act or acts of which the plaintiff complains were taken ‘in furtherance of the [defendant]’s right of petition or free speech under the United States or California Constitution in connection with a public issue,’ as defined in the statute. (§ 425.16, subd. (b)(1).) If the court finds such a showing has been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim. Under section 425.16, subdivision (b)(2), the trial court in making these determinations considers ‘the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.’”

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          III.     DISCUSSION

          A. Summary of Facts Alleged

¶2       Huang is the owner of real property located at 325 N. Terrace, Monrovia.

¶3       Chao is a California real estate broker.

¶5       On 12/6/22, Shao and Huang entered into a valid Residential Purchase Agreement (RPA) in which Shao agreed to purchase the property from Huang.

¶¶6, 7 Shao performed all conditions and informed Huang that he was ready to proceed.

¶¶8-10 Chao and Ta became aware of the RPA and persuaded Huang to cancel it, without justification.

¶11     Chao and Ta persuaded Huang to maliciously withhold Shao’s more than $2 million in escrow for a prolonged litigation; and withheld the money as leverage to unduly pressure Shao to cancel the RPA without justification.

¶12     On behalf of Huang, Chao declared to Shao that Huang refused to close escrow.

¶15     Shao believes Chao pressured Huang to cancel the valid RPA so that he could become Huang’s real estate broker and sell the Huang property.

          B. Analysis

          Analysis of an anti-SLAPP motion requires consideration of three basic questions:

          (1) is the motion timely?

          (2) has the defendant shown he or she is being sued for engaging in activity that is protected by the statute?

          (3) if so, has the plaintiff shown a probability of prevailing on the merits of that claim?

                    1. The Motion Was Filed Late

          This motion was filed 64 rather than 60 days after service of the Complaint. The Court declines to deny the motion on this basis. 

                     2. Chao Was Not Sued For Engaging In Protected Activity

          Chao has the burden to demonstrate that the conduct for which he is being sued is constitutionally protected, as defined in Section 425.16(e). The conduct for which Chao is being sued is allegedly persuading Huang to cancel the RPA, and/or persuading Huang to hold up Shao’s money in escrow to pressure him into canceling the RPA. (It is not clear who actually canceled the agreement.)

          The question is whether this activity falls into one of the four categories identified in Code Civ. Proc. §425.16(e):

          (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.

          Chao urges that his conduct falls into the second category: written or oral statements made in connection with an issue under consideration or review by a judicial body. But Chao offers no evidence that he was engaging in litigation activity when he allegedly persuaded Huang to cancel the escrow, or urged holding up Shao’s money so that he would cancel. Instead, the evidence indicates that Chao was retained to represent Huang in the real estate transaction, not in litigation. Chao Declaration, ¶11; Ta Declaration, ¶¶8-10 and Exhibits C and D. To the extent Chao has been sued for persuading Huang not to go through with the RPA, he has not established that he is being sued for engaging in protected litigation activity.

          Chao states that on December 23, 2022, he spoke by telephone with Charles Pok, a real estate attorney representing both Navigators and Shao. He declares that during the conversation, Mr. Pok disagreed with Chao’s assertion that Navigators had acted as a dual agent, and that Mr. Pok “indicated a possible lawsuit.” Chao Declaration, ¶18. Chao is not being sued for asserting that Navigators was a dual agent, so this evidence does not support his motion. Chao urges that all communicative acts by an attorney are protected, citing Finton Construction, Inc. v. Bidna & Keys, APLC (2015) 238 Cal.App.4th 200, 209. But in Finton, the attorneys were sued for conduct they took in actual litigation. The same is not true here.

          There is the matter of a pre-litigation letter: Chao was apparently retained approximately two weeks after execution of the RPA. The evidence indicates that, after allegedly persuading Huang not to go through with the RPA, he attempted to negotiate new terms. Chao Declaration, ¶19; Ta Declaration, Exhibit E (email from Chao to attorney Charles Pok offering terms to resolve the “purchase agreement dispute”). Chao characterizes this letter as a “settlement offer;” but, importantly, he does not aver (and the email does not indicate) that it was sent in anticipation of litigation. Further, there is no indication in the letter itself or in Chao’s declaration what claims he contends Huang could have brought against Shao.

          Chao relies on Neville v. Chudacoff (2008) 160 Cal.App.4th 1255. In that case, an employer came to believe that a former employee had misappropriated its trade secrets and was unfairly competing against it. The employer sent a letter to its customers. The letter, which was written by the employer’s attorney, was captioned “Maxsecurity v. Mark Neville.” The body of the letter advised its clients that it had come to the employer’s attention that its former employee may have been in contact with them, and that any contract would violate Neville’s agreement with the company. Four months later, the employer sued the former employee for misappropriation of trade secrets and related claims. The former employee filed a cross-complaint for defamation based on the pre-litigation letter. The employer’s anti-SLAPP motion to strike was granted and affirmed on appeal. The Court of Appeal observed:

          “The evidence before the trial court in this case established a threat of impending litigation. The Letter’s reference line reads, “Maxsecurity v. Mark Neville, dba ABD Audio and Video.” It is written on the letterhead of Chudacoff’s law office, and states that ‘this office represents Maxsecurity in the above-matter [sic].’ The Letter further states, ‘We have notified Mr. Neville of his breach and shall be aggressively pursue [sic] all available remedies.’ Chudacoff declared that he ‘undertook to represent Maxsecurity in its efforts to enforce the employment agreement’ with Neville, and prepared the letter at his client's request. Maxsecurity filed suit approximately four months after the letter was written, with Chudacoff acting as counsel of record.” Id. at 1269.

          None of these markers exist here. The letter Chao wrote to Shao’s attorney Pok in an attempt to negotiate different terms for the sale in no way indicates that litigation is being contemplated.

IV.     CONCLUSION AND ORDER

          “We keep in mind that ‘[i]n the anti-SLAPP context, the critical consideration is whether the cause of action is based on the defendant’s protected free speech or petitioning activity. [Citations.]’ (Navellier v. Sletten, supra, 29 Cal.4th at p. 89, 124 Cal.Rptr.2d 530, 52 P.3d 703.)” Finton Construction, supra, 238 Cal.App.4th at 209-210, italics in original.

          The only conduct Chao is sued for is for allegedly persuading Huang to cancel the RPA. That conduct has not been shown to be litigation or pre-litigation activity, and therefore it does not fall within the protection of the statute.

          Chao’s special motion to strike is therefore denied. Plaintiff is ordered to give notice.

Dated:                                                              _______________________________

                                                                              MARGARET L. OLDENDORF

                                                                       JUDGE OF THE SUPERIOR COURT