Judge Randolph M. Hammock, Case Number: 22STCV12867, Date: 2024-11-21 Tentative Ruling

Plaintiff Bank of America, N.A., as successor-in-interest to FIA Card Services, N.A., brings this action (22STCV12867) against Defendant Walter Y. Kim for common counts. Plaintiff alleges Defendant is indebted to Plaintiff in the amount of $69,183.21 for failure to make payments on a credit account.

Bank of America has filed a second action in against Kim in Los Angeles Superior Court also based on outstanding debts, titled Bank of America, N.A. v. Walter Y. Kim, Case No. 22NWLC08842 (the “Norwalk Action”). After obtaining a default judgment against Kim—using the same method of service found defective in this case—Bank of America recorded an Involuntary Lien against Kim in Los Angeles County.

Pursuant to the anti-SLAPP statute, Bank of America now moves to strike the Cross-Complaint. Kim opposed. After releasing a Tentative Ruling and hearing oral argument, this court invited Cross-Complainant to file a Declaration addressing the issues raised in the Tentative. The Court has read and considered Kim’s 10/28/24 Declaration and Bank of America’s reply thereto, and now rules as follows.

CCP section 425.16 permits the Court to strike causes of action arising from an act in furtherance of the defendant's right of free speech or petition, unless the plaintiff establishes that there is a probability that the plaintiff will prevail on the claim.

“The anti-SLAPP procedures are designed to shield a defendant’s constitutionally protected conduct from the undue burden of frivolous litigation.” (Baral v. Schnitt (2016) 1 Cal.5th 376, 393.) “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.” (Id. at 384.)

“Resolution of an anti-SLAPP motion involves two steps. First, the defendant must establish that the challenged claim arises from activity protected by section 425.16. 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.” (Baral, supra, 1 Cal.5th at 384, citation omitted.) 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 legally sufficient claim and made a prima facie factual showing sufficient to sustain a favorable judgment. It accepts the plaintiff’s evidence as true, and evaluates the defendant’s showing only to determine if it defeats the plaintiff’s claim as a matter of law. ‘[C]laims with the requisite minimal merit may proceed.’” (Id. at 384-385 [citations omitted].) The anti-SLAPP motion need not address what the complaint alleges is an entire cause of action, and may seek to strike only those portions which describe protected activity. (Id. at 395-396.)

To satisfy the first prong of the two-prong test, a movant defendant must 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 as defined in the statute. (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67; see City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78 [“[i]n the anti-SLAPP context, the critical point is whether the plaintiff's cause of action itself was based on an act in furtherance of the defendant's right of petition or free speech”].) Section 425.16 expressly “defines the types of claims that are subject to the anti-SLAPP procedures…as these terms are defined in subdivision (e)(1)-(4) of the statute.” (City of Cotati v. Cashman (2002) 29 Cal. 4th 69, 75–76.)

As relevant here, 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, [and] (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…” (CCP § 425.16(e)(1) & (2).) Courts have adopted an “expansive view of what constitutes litigation-related activities within the scope of section 425.16.” (Neville v. Chudacoff (2008) 160 Cal. App. 4th 1255, 1268 (2008).

As alleged in the Cross-Complaint, “Cross-Defendant Bank of America, N.A., has sued Cross-Complainant in two separate actions in Los Angeles Superior Court. Those actions are (1) the above-captioned action, in which this Cross-Complaint is brought, and (2) an action styled as Bank of America, N.A. v. Walter Y. Kim, Case No. 22NWLC08842 (the “Norwalk Action”). In each action, Cross-Defendant has alleged that Cross-Complainant did not pay outstanding credit card debt.” (Cross-Complaint ¶ 4.) After obtaining a default judgment and abstract of judgment in the Norwalk Action, Bank of America “recorded an Involuntary Lien against Cross-Complaint, in Los Angeles County, on July 21, 2023.” (Id. ¶ 5.)

Meanwhile in the instant action, the Court granted Kim’s motion to vacate a default judgment that Cross-Defendant had obtained against him, based on Cross-Defendant not having validly served Cross-Complainant with the Summons and Complaint.” (Id. ¶ 6.) Because the defective manner of service was the same as that used in the Norwalk Action, Kim alleges that Bank of America “has not effected valid service of the Summons and Complaint in the Norwalk Action.” (Id. ¶ 7.) Thus, as of April 29, 2024, the default judgment obtained against Cross-Complainant in the Norwalk Action was set aside. (Id. ¶ 10.)

Despite this, Plaintiff alleges that “Cross-Defendant has not caused the Involuntary Lien recorded against Cross-Complainant in the Norwalk Action to be set aside.” (Id. ¶ 11.) Plaintiff alleges that the “recording, and not setting aside, the Involuntary Lien against Cross-Complainant in the Norwalk Action violate the [Rosenthal Fair Debt Collection Practices Act], and have caused, and continue to cause, damage to Cross-Complainant in an amount according to proof.” (Id. ¶ 12.)

But here, the cause of action arises from Bank of America allegedly improperly maintaining an Involuntary Lien against Kim in the Norwalk Action despite the default judgment having been set aside. This conduct is protected under the anti-SLAPP statute as a “written or oral statement or writing made before a…judicial proceeding,” or one “in connection with an issue under consideration or review by a…judicial body…” (CCP § 425.16(e)(1) & (2).)

“To establish a probability of prevailing, 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. For purposes of this inquiry, the trial court considers the pleadings and evidentiary submissions of both the plaintiff and the defendant; though the court does not weigh the credibility or comparative probative strength of competing evidence, it should grant the motion if, as a matter of law, the defendant’s evidence supporting the motion defeats the plaintiff’s attempt to establish evidentiary support for the claim. In making this assessment it is the court’s responsibility…to accept as true the evidence favorable to the plaintiff […]. The plaintiff need only establish that his or her claim has minimal merit to avoid being stricken as a SLAPP.” (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 291.)

The facts here are effectively undisputed. On August 21, 2023, the Court granted Kim’s motion to vacate the default judgment in this action based on a determination that the judgment was void on its face due to lack of valid substitute service. (Lipscomb Decl. ¶ 4, Exh. A & B.) Bank of America did not oppose the motion.

As to the means of service, the Proofs of Service for the instant action and the Norwalk Action are “substantively identical.” (Compare, Lipscomb Decl., Exh. A and Exh. C.) Thus, despite effective notice that the service was defective as of August 21, 2023 at the latest, Bank of America did not withdraw the Involuntary Lien in the Norwalk Action until April 29, 2024, when the case was dismissed. (Lipscomb Decl. ¶¶ 6, 7.)

Under Civil Code section 1788.15(a), “[n]o debt collector shall collect or attempt to collect a consumer debt by means of judicial proceedings when the debt collector knows that service of process, where essential to jurisdiction over the debtor or his property, has not been legally effected.”

First, Bank of America argues the cause of action is barred by the litigation privilege. “The litigation privilege, codified at Civil Code section 47, subdivision (b), provides that a ‘publication or broadcast’ made as part of a ‘judicial proceeding’ is privileged. This privilege is absolute in nature, applying ‘to all publications, irrespective of their maliciousness.’ [Citation.] ‘The usual formulation is that the privilege applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that [has] some connection or logical relation to the action.’” (Kenne v. Stennis (2014) 230 Cal. App. 4th 953, 964.) “[T]he privilege is ‘an “absolute” privilege, and it bars all tort causes of action except a claim of malicious prosecution.’ (Hagberg v. California Federal Bank (2004) 32 Cal.4th 350, 360; Kashian v. Harriman (2002) 98 Cal.App.4th 892, 926–927 [plaintiff must overcome litigation privilege to demonstrate a probability of prevailing under anti-SLAPP prong two].)

In support of application of the litigation privilege, Bank of America relies on the California Supreme Court’s decision in Rusheen v. Cohen (2006) 37 Cal. 4th 1048, 1058, where the Court held the “communicative act of filing an allegedly false declaration of service of process fell within the litigation privilege.”

Kim counters that the litigation privilege is not a bar to claims under the Rosenthal Act. Kim relies on Komarova v. Nat'l Credit Acceptance, Inc. (2009) 175 Cal. App. 4th 324, 337, where the Court of Appeal held that the litigation privilege “cannot be used to shield violations of” the Rosenthal Act. The court reasoned that the Act was “more specific” than the litigation privilege and would be left “significantly inoperable if it did not prevail over the privilege where…the two conflict.” (Id. at 340.)

Here, as dictated by Komarova, the litigation privilege is not a bar to Kim’s cause of action under the Rosenthal Act. Bank of America’s reliance on Rusheen is misplaced because that decision did not involve a cause of action under the Rosenthal Act. Therefore, Komarova is not inconsistent with that decision, and controls here. [FN 1]

Bank of America also argues Kim cannot prevail because he has not demonstrated the case involves a “consumer debt.” As noted, section 1788.15(a) applies to attempts to collect a “consumer debt.” A consumer debt means “money, property, or their equivalent, due or owing or alleged to be due or owing from a natural person by reason of a consumer credit transaction.” (CCP § 1788.2(f).) A “consumer credit transaction” is “a transaction between a natural person and another person in which property, services, or money is acquired on credit by that natural person from the other person primarily for personal, family, or household purposes.” (CCP § 1788.2(e).)

As noted in the original Tentative, Kim’s only evidence in the initial opposition was a declaration from his counsel, Robert Lipscomb, attesting to “unpaid credit card debt.” (Lipscomb Decl. ¶ 2.) But there was no declaration from Plaintiff, and no evidence that the credit card debt was used “primarily for personal, family, or household purposes.” (CCP § 1788.2(e).) Kim’s failure to provide that evidence would be fatal to his cause of action under the Rosenthal Act.

At the conclusion of the October 17 hearing on this motion, this court permitted Kim to file and serve a declaration addressing the personal nature of the credit card debt. Kim now states in his Declaration that he “used the Subject Card primarily for [his] personal, family, and household expenses: specifically, including but not limited to, paying for personal and family automobile insurance and family health insurance premiums, hotel, restaurant, food, and grocery purchases, and [his] personal and family overseas travel expenses.” (Kim Decl. ¶¶ 3, 4.) He further attests that he has “not used the Subject Card for any business purposes.” (Id. ¶ 7.)

In its supplemental reply to the declaration, Defendant objects to the introduction of this new evidence. It contends it was improper for the court to continue the hearing and “sua sponte advise” Plaintiff to submit additional evidence. While its displeasure for this decision is clear, Defendant has not cited authority holding that it is improper. Therefore, the court will consider this evidence in the interests of justice. See also, Sweetwater Union High School Dist. v. Gilbane Building Co. (2019) 6 Cal.5th 931, 947-949. [Hearsay declarations are generally admissible in special motions to strike.]

Considering this evidence, Plaintiff has prima facie established that the case involves a “consumer debt.” It is settled that “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.” (Overstock.com, Inc. v. Gradient Analytics, Inc. (2007) 151 Cal. App. 4th 688, 699–700.)

Finally, Defendant also raises the affirmative defense that it has procedures in place to avoid violations of the statute, which it contends are sufficient to immunize it from liability. Civil Code section 1788.30(e) provides: “A debt collector shall have no civil liability to which such debt collector might otherwise be subject for a violation of this title, if the debt collector shows by a preponderance of evidence that the violation was not intentional and resulted notwithstanding the maintenance of procedures reasonably adapted to avoid any such violation.”

Defendant submits a declaration from counsel, Kurtiss Jacobs, who attests that Bank of America “prohibits [the law firm] from allowing any process server to serve a summons and complaint without adhering to all jurisdictional requirements.” (Jacobs Decl. ¶ 2.) Bank of America requires the firm “to pay all process servers the same compensation whether a service is successful or unsuccessful,” and in turn, the firm “contracts ABC Legal Services to serve process and prohibits ABC from allowing any of its process severs, all of whom must be registered, from serving a summons and complaint ineffectively.” (Id. ¶ 3, 4.) The firm “conducts periodic reviews with ABC to ensure compliance, and as a matter of routine business practice H&H requires ABC to investigate and report to H&H whenever any defendant complains fo the circumstances of service of process.” (Id. ¶ 5.)

Here, whether the violation was intentional and whether these procedures are reasonably adapted to avoid violating the statute is a question the court cannot resolve now. Indeed, the purported failure to properly serve the Defendants in either this action or the Norwalk action might preponderate that the procedures in place were, in fact, not “reasonably adapted” to avoid any such violation.

Judge of the Superior Court

FN 1 - It is worth noting that Komarova was clearly aware of the Supreme Court’s decision in Rusheen given that it cited to Rusheen a handful of times in its opinion. (See Komarova, supra, 175 Cal. App. 4th at 336, 339, 341-43.)