Judge Richard Y. Lee, Case 2019-01072630 2022-08-22 Tentative Ruling

Judge: Richard Y. Lee, Case: 2019-01072630, Date: 2022-08-22 Tentative Ruling

Motion to Strike Pursuant to Code of Civil Procedure § 425.16 (Anti-SLAPP)

The Motion to Strike Pursuant to Code of Civil § 425.16 of Defendants Thomas Luebke and Prestininzi & Luebke is GRANTED. The Third, Fifth, Sixth, Seventh, Ninth, and Tenth causes of action are stricken from the second amended complaint as to Defendants Thomas Luebke and Prestininzi & Luebke.

Defendants Thomas Luebke and Prestininzi & Luebke (“Attorney Defendants”) move to strike the Third, Fifth, Sixth, Seventh, Ninth, and Tenth Causes of Action of the verified Second Amended Complaint (“SAC”) of Plaintiffs Doug Le and Ke Van Nguyen (“Plaintiffs”).

Request for Judicial Notice

Attorney Defendants’ Request for Judicial Notice is denied. Rules of Court Rule Judicial 3.1113(l) requires that “[a]ny request for judicial notice must be made in a separate document listing the specific items for which notice is requested and must comply with rule 3.1306(c).” Attorney Defendants’ Request for Judicial Notice fails to provide a list of the specific items for which notice is requested.

Instead, Attorney Defendants’ Request for Judicial Notice includes a narrative description of some of the procedural history of this case, in which some documents are mentioned. However, there is no indication which of these documents are the ones for which notice is requested.

In addition, to the extent Attorney Defendants seek judicial notice of Exhibits I and N of the Index of Exhibits in Support of the Anti-SLAPP Motion, they do not fall Evidence Code sections 452(d), (g), or (h), as requested by Attorney Defendants.

Plaintiffs’ Request for Judicial is denied. Plaintiffs also failed to comply with California Rule of Court Rule 3.1113(l). Plaintiffs requested judicial notice in their opposition to the motion and not in a separate document as required by the rules of court.

To the extent that Attorney Defendants or Plaintiffs are requesting the Court to take judicial notice of filings made in this case or the related case, it is unnecessary. (See Weil & Brown, Cal. Prac. Guide: Civil Proc. Before Trial (The Rutter Group 2021) ¶ 9.53.1a. “[A]ll that is necessary is to call the court’s attention to such papers.”) The court may consider filings that are before it.

Standing

Plaintiffs argue that Attorney Defendants lack standing to bring the motion because they improperly responded to the verified SAC with an unverified general denial and because Defendant Prestininzi & Luebke is a dissolved entity.

It is true that where a complaint is verified, the defendant must verify the answer and deny all allegations “positively or according to the information and belief of the defendant.” (Civil Proc. Code, §§ 431.30(d), 446.) An unverified answer to a verified complaint is subject to a motion to strike. (Civil Proc. Code, § 435.)

Plaintiffs have filed a motion to strike the Attorney Defendants’ unverified answer, which is set for hearing on 09/12/2022. In the meantime, however, the answer remains on file. Further, regardless of the court’s ruling on the motion to strike, the Attorney Defendants will remain parties to this action with standing to defend themselves.

It is also true that Defendant Prestininzi & Luebke is a dissolved corporation. (Luebke Decl. ¶ 1; see Compl., Exh. E.) However, “[a] corporation which is dissolved nevertheless continues to exist for the purpose of winding up its affairs, prosecuting and defending actions by or against it . . . , but not for the purpose of continuing business except so far as necessary for the winding up thereof.” (Corps. Code, § 2010(a).) The defense of this lawsuit and this Anti-SLAPP motion are not new or continuing business but a necessary action needed to windup the affairs of Defendant Prestininzi & Luebke.

Anti-SLAPP Motion

Civil Procedure Code section 425.16(b) provides in relevant part: “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 or 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.” (Civil Proc. Code § 425.16, subd. (b).) This section is to be construed broadly. (See Civil Proc. Code § 425.16, subd. (a).)

The court’s determination of an anti-SLAPP motion is a two-step process. (Baral v. Schnitt (2016) 1 Cal.5th 376, 384-385.) First, the court determines if the party moving to strike a cause of action has met its initial burden to show that the cause of action arises from an act in furtherance of the moving party’s right of petition or free speech. (Ibid.) Then, if the court determines that showing has been made, the court determines whether the opposing party has demonstrated a probability of prevailing on the claim. (Navellier v. Sletten (2002) 29 Cal.4th 82, 88.) “The anti-SLAPP procedures are designed to shield a defendant’s constitutionally protected conduct from the undue burden of frivolous litigation. It follows, then, that courts may rule on plaintiffs’ specific claims of protected activity, rather than reward artful pleading by ignoring such claims if they are mixed with assertions of unprotected activity.” (Baral v. Schnitt, supra, 1 Cal.5th 376 at p. 393.)

Protected Activity

“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. When relief is sought based on allegations of both protected and unprotected activity, the unprotected activity is disregarded at this stage. If the court determines that relief is sought based on allegations arising from activity protected by the statute, the second step is reached.” (Baral v. Schnitt, supra, 1 Cal.5th 376 at p. 396.)

There are four categories of protected speech for an anti-SLAPP motion, including: (1) statements made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law; (2) statements 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) statements 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. (Civil Proc. Code, § 425.16, subds. (e)(1)-(4).)

Lawsuits predicated on prelitigation statements or writings may be protected by the anti-SLAPP statute. (See CKE Restaurants, Inc. v. Moore (2008) 159 Cal.App.4th 262, 271.) Specifically, pre-litigation communications sent in anticipation of litigation contemplated in good faith and under serious consideration qualify are subject to the anti-SLAPP statute. (See, e.g., ibid.; Comstock v. Aber (2012) 212 Cal.App.4th 931, 944-945.) On the other hand, debt collection efforts intended to collect on the debt, where no litigation was under serious consideration, are not protected under the anti-SLAPP statute. (A.F. Brown Electrical Contractor, Inc. v. Rhino Electric Supply, Inc. (2006) 137 Cal.App.4th 1118, 1127-1128.)

Plaintiffs’ claims against Attorney Defendants are based on the allegation that Attorney Defendants conspired to wrongfully foreclose on the Subject Property. (See SAC ¶¶ 32-41). Plaintiffs specifically allege that Attorney Defendants made false statements about the amount of the debt, falsely sent out a notice of default, and initiating wrongful foreclosure on Plaintiffs’ home. (SAC ¶ 237.)

Plaintiffs argue that the notice of default does not constitute protected activity because it did not arise from litigation or in preparation of litigation, was not associated to a pending settlement, was only addressed to one debtor (Plaintiff Le), and Attorney Defendants cannot invoke immunity for their debt collecting activities.

The evidence shows that Attorney Defendants were retained by Hung Do on 05/02/2019 to act as legal counsel and to assist with a real estate dispute involving the Subject Property. (Luebke Decl. ¶ 3.) Attorney Defendants then sent a letter dated 05/06/2019 to Plaintiff Le demanding payment from Plaintiffs and advising that: “In the event payment is not received within fourteen days (14) of the date of this letter, my client will pursue all available legal remedies including foreclosure and filing a lawsuit.” (Le Compl., Exh. D.) Less than one week after that deadline passed, the Attorney Defendants initiated legal action by filing a complaint on behalf of Hung Do in the lead case. (See Do Compl.)

The fact that the letter was addressed to only one of the two debtors does not undermine the fact that the letter confirms that Attorney Defendants’ actions were taken in anticipation of litigation contemplated in good faith and under serious consideration, especially where litigation commenced shortly after the letter was sent to Plaintiff Le.

Attorney Defendants have met their burden to show their actions constituted protected activities.

Probability of Prevailing

“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 v. Schnitt, supra, 1 Cal.5th at p. 384.) On a special motion to strike, plaintiffs are not permitted to simply rest on their pleading. (See Hecimovich v. Encinal School Parent Teacher Organization (2012) 203 Cal.App.4th 450, 474.)

Rather, the court is to consider supporting and opposing affidavits, in addition to the pleading. (See Civil Proc. Code, § 425.16, subd. (b)(2).) Admissible evidence must be submitted. (See Tuchschler Dev. Enterprises, Inc. v. San Diego Unified Port Dist. (2003) 106 Cal.App.4th 1219, 1237.) The plaintiff’s burden of establishing a probability of prevailing is not high; a plaintiff need only establish that the plaintiff's claim has minimal merit to avoid having it stricken as a SLAPP suit. (Monster Energy Co. v. Schechter (2019) 7 Cal.5th 781, 793; see also Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 291.)

Third, Fifth, Sixth, Seventh, and Ninth Causes of Action

Although Plaintiffs contend that the SAC pleads only the Tenth Cause of Action against Attorney Defendants, the court must consider the SAC as framed in the pleading. (See Medical Marijuana, Inc. v. ProjectCBD.com (2020) 46 Cal.App.5th 869, 883.) The SAC asserts the third, fifth, sixth, seventh, and ninth causes of action against “All Defendants,” which includes the Attorney Defendants.

Plaintiffs do not address and, therefore, fail to establish a probability of prevailing on these causes of action.

Tenth Cause of Action

The tenth cause of action appears to allege both negligence and unfair debt collection practices claims.

Plaintiffs do not address the probability of prevailing on a negligence claim and thus fail to meet their burden of demonstrating a probability of success on that claim.

Here, Plaintiffs also fail to show the probability of prevailing on a claim for violation of the federal Fair Debt Collection Practices Act (“FDCPA”) or the Rosenthal Fair Debt Collection Practices Act (“Rosenthal Act”).

Both the FDCPA and Rosenthal Act prohibit a “debt collector” from collecting or attempting to collect a consumer debt by threats or other unfair practices expressly listed in the respective acts. (See 15 U.S.C., §§ 1692a-1692o; Civ. Code, § 1788.10.) To establish a claim, Plaintiffs must show that Attorney Defendants are debt collectors within the meaning of the respective statutes.

The federal FDCPA defines “debt collector” as any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. (15 U.S.C., § 1692a(6).) Courts have held that attorneys who “regularly” engage in consumer debt collection activity are debt collectors under the FDCPA, even when that activity consists of litigation. (Heintz v. Jenkins (1995) 514 U.S. 291, 299; Fox v. Citicorp Credit Services Inc. (9th Cir. 1994) 15 F.3d 1507, 1512-1513.)

Plaintiffs acknowledge this authority (see Opp’n at 30:18-22), but fail to point to facts or evidence that show that Attorney Defendants regularly engage in consumer debt collection activity.

The Rosenthal Act that was effective during the relevant period defined “debt collector” to mean “any person who, in the ordinary course of business, regularly, on behalf of himself or herself or others, engages in debt collection. The term includes any person who composes and sells, or offers to compose and sell, forms, letters, and other collection media used or intended to be used for debt collection, but does not include an attorney or counselor at law.” (Civil Code, § 1788.2(c) [eff. 01/01/2007-12/31/2019], emphasis added.)

The Rosenthal Act’s reference to attorneys includes law firms. (See Carney v. Rotkin, Schmerin & McIntyre (1988) 206 Cal.App.3d 1513, 1518, 1526.) Plaintiffs contend that “the majority” of courts follow the opposite reasoning, but Plaintiffs fail to cite to any published authority from the courts of this state to support that contention, and this court is aware of none. Carney v. Rotkin, Schmerin & McIntyre is the only published California authority on this issue and is binding on this court.

Because Plaintiffs do not establish that Attorney Defendants are debt collectors as defined in the FDCPA or Rosenthal Act, Plaintiffs fail to meet their burden to show probability of prevailing on the merits of any unfair debt collection practices claim.

Attorney Defendants shall give notice of this ruling.