Judge: Teresa A. Beaudet, Case: 21STCV38823, Date: 2023-04-28 Tentative Ruling

Case Number: 21STCV38823    Hearing Date: April 28, 2023    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

Background

On October 21, 2021, Plaintiffs 800 E. Pico Blvd., LLC (“Pico LLC”) and Xiang Hao Cui (“Cui”) (jointly, “Plaintiffs”) filed this action against Defendants Online Edugo, Inc. (“Edugo”), Andrew Kim (“Kim”) and Law Office of Andrew Kim, APC (the “Law Office”) (collectively, “Defendants”). The Complaint asserts one cause of action for wrongful use of civil proceedings.

On December 13, 2021, Kim and the Law Office (jointly, the “Kim Defendants”) filed a special motion to strike the Complaint. On January 20, 2022, the Court issued an Order denying the Kim Defendants’ special motion to strike. On August 3, 2022, the Court issued an Order granting Edugo’s special motion to strike Plaintiffs’ Complaint.

On August 3, 2022, the Court also issued a minute order which provides, inter alia, “[t]he Court sets an Order to Show Cause on September 13, 2022…as to Why the Court should not reconsider its January 20, 2022 order on the special motion to strike as to defendants Kim and the Law Office of Kim.” The Order to Show Cause hearing was then continued to November 3, 2022.

            On November 3, 2022, the Court issued an order vacating its January 20, 2022 Order denying the Kim Defendants’ special motion to strike. The Court’s November 3, 2022 Order also provides that the Kim Defendants may file an amended motion to strike.

The Kim Defendants now move to strike the Complaint. Plaintiffs oppose.

Requests for Judicial Notice

The Court grants the Kim Defendants’ request for judicial notice filed in support of the motion as to Exhibits 1-3. The Court also grants Plaintiffs’ request for judicial notice.

The Court denies the Kim Defendants’ request for judicial notice filed in support of the reply. The Court notes that “[t]he general rule of motion practice…is that new evidence is not permitted with reply papers.” (Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1537.)

Discussion

The anti-SLAPP statute is “a mechanism through which complaints that arise from the exercise of free speech rights can be evaluated at an early stage of the litigation process and resolved expeditiously.” (Simmons v. Allstate Ins. Co. (2001) 92 Cal.App.4th 1068, 1073 [internal quotations omitted].) Courts use a two-step process for determining whether an action is a strategic lawsuit against public participation, or a SLAPP. First, the court determines whether the defendant has established that the challenged claim arises from protected speech. (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) If such a showing has been made, the court “determines whether the plaintiff has demonstrated a probability of prevailing on the claim.” (Ibid.)

A.    Prong One – Arising from Protected Activity

“[T]he only thing the defendant needs to establish to invoke the protection of the SLAPP statute is that the challenged lawsuit arose from an act on the part of the defendant in furtherance of her right of petition or free speech.” (Fox Searchlight Pictures, Inc. v. Paladino (2001) 89 Cal.App.4th 294, 307.)          

An act in furtherance of a person’s right of petition or free speech includes the following:

(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.

(Code Civ. Proc., § 425.16, subd. (e).)

In determining whether a cause of action arises from protected conduct, the court focuses on “the allegedly wrongful and injury-producing conduct that provides the foundation for the claims.” (Castleman v. Sagaser (2013) 216 Cal.App.4th 481, 490-491.) “[T]he critical consideration is whether the cause of action is based on the defendant’s protected free speech or petitioning activity.” (Navellier v. Sletten (2002) 29 Cal.4th 82, 89 (emphasis in original).) In making this determination, the Court considers “the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.” (Ibid.)

Allegations of the Complaint

In the Complaint, Plaintiffs allege that Edugo entered into a commercial lease agreement (“Lease”) with 800 E. Pico Blvd., LLC (“Pico LLC”) for 810 E. Pico Blvd., Unit 311, Los Angeles, CA 90021, and that the Lease provided for one assigned parking space. (Compl., ¶ 13.) Edugo is a computerized testing center that proctors exams for licensing, such as for teaching, counseling, nursing, and other professions. (Compl., ¶ 12.) Cui was not a party to the Lease. (Compl., ¶ 14.)

On or about March 15, 2020, Edugo closed its business due to Los Angeles County’s order to close non-essential businesses to mitigate the COVID-19 pandemic, and during this time, Edugo did not pay rent to Pico LLC. (Compl., ¶ 16.) At some point in October 2020, Edugo and Pico LLC agreed to resolve the delinquent rent by a lump sum payment of $10,000, and agreed that thereafter rent would be reduced to $1,800 per month. (Compl., ¶¶ 18, 26, Ex. 1.) Edugo then had to close again on December 1, 2020 due to a second pandemic-related closure order. (Compl., ¶¶ 18, 26, Ex. 1.)

On April 14, 2021, Edugo filed an action against Jane’s Management Systems, LLC and its owner John Ko, Pico LLC, Cui (owner and member of Pico LLC), Win Security and its owners Jenny Cho and Moon Hee Cho, and Metro Parking, Inc. and its owner Gab Jea Cho. (Compl., ¶¶ 20, Kim Defendants’ RJN, Ex. 1.) Edugo’s lawsuit, Online Edugo, Inc. v. 800 E. Pico Blvd., LLC, et al., Case No. 21STCV14159, alleged causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, retaliatory wrongful eviction, and preliminary and permanent injunction (the “Lease Action”). (Compl., ¶ 25; Kim Defendants’ RJN, Ex. 1.) Kim and the Law Office represented Edugo in the Lease Action. (Kim Defendants’ RJN, Ex. 1.) In the Lease Action, Edugo alleged that Pico LLC, by and through Cui, called Edugo five to seven times per week about rent, and that the calls continued until the end of March 2021, even though Edugo’s representative asked Cui to stop calling. (Kim Defendants’ RJN, Ex. 1.) The testing center reopened on April 1, 2021, and on that date, Ko came to Edugo’s test center and threatened Edugo to pay rent by 9 a.m., the same day. (Kim Defendants’ RJN, Ex. 1.) Edugo also alleged that when test-takers arrived to park, Metro Parking and Cho falsely told them Edugo’s test center had been closed, and test takers were turned back or forced out from the parking lot. (Kim Defendants’ RJN, Ex. 1.)

Plaintiffs filed a demurrer and motion to strike the complaint in Edugo’s Lease Action. (Compl., ¶ 26.) On September 13, 2021, the Honorable Stephen I. Goorvitch sustained Plaintiffs’ demurrer to each of the causes of action in the complaint without leave to amend. (Compl., ¶ 26, Ex. 1.)

In the instant action, Plaintiffs allege that Defendants initiated the Lease Action against Plaintiffs for an improper purpose and with a malicious intent. (Compl., ¶ 33.) Plaintiffs assert that Defendants sued them for two contract claims despite attaching a lease to its complaint that Cui was not a party to. (Ibid.) Plaintiffs also allege that Defendants had no foundation for their retaliatory eviction claim, and that Defendants acknowledged that the Lease Action was filed to get free rent and free parking. (Ibid.) Plaintiffs assert that Kim pursued a temporary restraining order against Plaintiffs knowing they were not responsible for management of the parking lot. (Ibid.)

Statements in Connection with Anticipated or Pending Official Proceedings

The Kim Defendants contend that Plaintiffs’ single cause of action for wrongful use of civil proceedings[1] arises from statements protected under Code of Civil Procedure section 425.16, subdivision (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”). It is well-settled that “[t]he constitutional right of petition encompasses ‘the basic act of filing litigation.’” (Navellier v. Sletten, supra, 29 Cal.4th at p. 90.) In addition, “[t]he plain language of the anti-SLAPP statute dictates that every claim of malicious prosecution is a cause of action arising from protected activity because every such claim necessarily depends upon written and oral statements in a prior judicial proceeding.” (Area 55, LLC v. Nicholas & Tomasevic, LLP (2021) 61 Cal.App.5th 136, 151.) Therefore, the Court finds that the burden now shifts to Plaintiffs on prong two. (See Baral v. Schnitt (2016) 1 Cal.5th 376, 396 [“[i]f the court determines that relief is sought based on allegations arising from activity protected by the statute, the second step is reached”].)

B.    Prong Two – Probability of Prevailing

On prong two of the anti-SLAPP analysis, a “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.” (Premier Medical Management Systems, Inc. v. California Ins. Guarantee Assn. (2006) 136 Cal.App.4th 464, 476 [internal quotations omitted].) In making the prong two determination, “the court shall consider the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.” (Code Civ. Proc., § 425.16, subd. (b)(2).) “The court does not, however, weigh [defendant’s] evidence against the plaintiff’s, in terms of either credibility or persuasiveness. Rather, the defendant’s evidence is considered with a view toward whether it defeats the plaintiff’s showing as a matter of law, such as by establishing a defense or the absence of a necessary element.” (1-800 Contacts, Inc. v. Steinberg (2003) 107 Cal.App.4th 568, 585.)

 “A plaintiff must plead and prove three elements to establish the tort of malicious prosecution: a lawsuit (1) was commenced by or at the direction of the defendant and was pursued to a legal termination favorable to the plaintiff; (2) was brought without probable cause; and (3) was initiated with malice.” (Nunez v. Pennisi (2015) 241 Cal.App.4th 861, 872–873 [internal quotations omitted].) 

The issuance of a preliminary injunction “conclusively establishes probable cause for bringing the underlying causes of action.” (Fleishman v. Superior Court (2002) 102 Cal.App.4th 350, 357; see also Fleishman v. Superior Court (2002) 102 Cal.App.4th 350, 355 [“If the denial of an anti-SLAPP motion based on the action’s potential merit conclusively establishes probable cause for the action, the issuance of a preliminary injunction must have the same effect.”].) 

Here, Edugo sought and obtained a preliminary injunction in the underlying Lease Action, which enjoins Plaintiffs from refusing to allow Edugo’s patrons to park in the garage. (Kim Defendants’ RJN, Exs. 2, 3.) Because the issuance of a preliminary injunction against Plaintiffs conclusively establishes that Defendants’ underlying Lease Action was brought with probable cause, Plaintiffs here cannot demonstrate the probable validity of their cause of action for wrongful use of civil proceedings.    

In their opposition, Plaintiffs note that on July 22, 2022, they filed a demurrer to Edugo’s complaint in the underlying Lease Action. (Plaintiffs’ RJN, Ex. 5.) On September 13, 2021, the Honorable Stephen I. Goorvitch sustained Plaintiffs’ demurrer to each of the causes of action alleged in Edugo’s complaint, without leave to amend. (Plaintiffs’ RJN, Ex. 7.) Plaintiffs assert that under these facts, the Kim Defendants lacked probable cause to bring their claims.

But as discussed above, the Fleishman Court found that the issuance of a preliminary injunction “conclusively establishes probable cause for bringing the underlying causes of action.” (Fleishman v. Superior Court, supra, 102 Cal.App.4th at p. 357.)

Next, Plaintiffs assert that “Edugo’s admitted breach of the lease made it clear the Kim Defendants lacked probable cause to file the underlying action.” (Opp’n at p. 7:3-4.) Plaintiffs submit the Declaration of John Ko, who states that on or about January 22, 2019, Pico LLC entered into a lease agreement with Edugo to lease property at 800 E. Pico Blvd., Unit 311, Los Angeles, CA 90021. (Ko Decl., ¶¶ 4-5.) Mr. Ko states that in December 2020, Edugo failed to pay rent in full. (Ko Decl., ¶ 11.) Plaintiffs assert that Edugo’s causes of action in the underlying Lease Action for breach of contract, breach of the implied convent of good faith and fair dealing, and retaliatory wrongful eviction could not be maintained in light of the fact that Edugo failed to pay rent. But again, the Court does not see how this changes the fact that the issuance of a preliminary injunction “conclusively establishes probable cause for bringing the underlying causes of action.” (Fleishman v. Superior Court, supra, 102 Cal.App.4th at p. 357.) As discussed, a preliminary injunction was issued in the underlying Lease Action.

Plaintiffs also contend that “[t]he Preliminary Injunction Order did not assess whether Edugo was likely to succeed on the merits of the claims alleged in the Underlying Complaint. To the contrary, the injunctive relief Edugo obtained was not the relief sought in the Underlying Complaint.” (Opp’n at p. 9:3-5, emphasis omitted.) Plaintiffs contend that the “Complaint sought injunctive relief requiring Defendants to accept Edugo’s parking validations, which Judge Strobel explicitly refused to grant.” (Opp’n at p. 9:5-7.) But Plaintiffs do not point to allegations in Edugo’s complaint seeking “injunctive relief requiring Defendants to accept Edugo’s parking validations.” Rather, the Complaint alleges, inter alia, that “it was discussed during the negotiation for the lease, that defendant PICO LLC and its parking lot vendor…would not separately charge to [sic] the test-takers for parking if they present a validation stamp from plaintiff.” (Plaintiffs’ RJN, Ex. 1, ¶ 9.) Moreover, the Complaint alleges that “when plaintiff’s test-takers came to park their cars, they were turned away by the parking lot manager of defendants…falsely telling the test takers that plaintiff’s test center is closed permanently.” (Plaintiffs’ RJN, Ex. 1, ¶ 15.) The subject preliminary injunction in the Lease Action addresses this alleged issue, providing that “the court grants a preliminary injunction enjoining defendants from refusing to allow plaintiff’s patrons to park in the garage. However, the court does not enjoin defendants from charging a parking fee to those patrons.” (See Plaintiffs’ RJN, Ex. 4.) The Complaint in the Lease Action also alleges that “defendants and each of them failed to perform as agreed by failing to provide leased premises fit or adequate for the purpose of leased purpose, i.e., test center, and to provide adequate parking services as agreed.” (Plaintiffs’ RJN, Ex. 1, ¶ 19.)

As discussed in the Court’s November 3, 2022 Order and the Court’s August 3, 2022 Order on Edugo’s special motion to strike, “[t]he Court…finds that the causes of action in the Lease Action for breach of contract; breach of implied covenant of good faith and fair dealing; retaliatory wrongful eviction; and preliminary and permanent injunction are reasonably related to the parking issue. These claims arise from the denial of parking access and the request for a preliminary injunction is framed in these terms.” (November 3, 2022 Order at p. 4:19-23.)

In the opposition, Plaintiffs also assert that Fleishman is distinguishable. In Fleishman, “David M. Fleishman (petitioner), an attorney for Sunterra Corporation (hereafter Sunterra), [sought] extraordinary writ review of the trial court’s order denying his motion for judgment on the pleadings in a malicious prosecution action filed against him. Chester Salisbury (Salisbury), a former Sunterra employee, allege[d] that petitioner maliciously prosecuted an earlier action (hereafter Sunterra’s action) against him. In that action, the trial court granted Sunterra’s application for a preliminary injunction. Petitioner contend[ed] that the issuance of the preliminary injunction conclusively establishes that Sunterra’s entire action was brought with probable cause.” (Fleishman v. Superior Court, supra, 102 Cal.App.4th at pp. 352-353.) The Court of Appeal agreed. (Id. at p. 353.) “The Sunterra complaint contained six causes of action: (1) intentional interference with Sunterra’s contractual relationship with the Swansons; (2) unfair competition; (3) false advertising; (4) conducting real estate brokerage activities under unlicensed fictitious business names (Cal. Code Regs., tit. 10, § 2731); (5) misappropriation of trade secrets in violation of the Uniform Trade Secrets Act (Civ. Code, § 3426 et seq.); (6) common law misappropriation of trade secrets.” (Id. at p. 353.)

In Fleishman, the trial court “issued a preliminary injunction prohibiting Salisbury from: (1) destroying documents memorializing Sunterra’s trade secrets; (2) disclosing or using Sunterra’s trade secrets; (3) soliciting any customers of [Sunterra] whose identities or product preferences became known to Salisbury during his employment with [Sunterra]; (4) making false or misleading statements concerning his affiliation with Sunterra, the Inn, or his provision of real estate sales services; and (5) conducting real estate sales and brokerage activities under [fictitious] business names without possession of a real estate license for such fictitious business names, unless working under a licensed broker[.]” (Fleishman v. Superior Court, supra, 102 Cal.App.4th at pp. 353-354 [internal quotations omitted].)

Plaintiffs assert that “[u]nlike in the present case, in Fleishman the injunctive relief that was granted was directly related to Sunterra’s six causes of action.” (Opp’n at p. 11:11-23.) But again, as discussed above, the Court finds that the causes of action in the Lease Action for breach of contract, breach of implied covenant of good faith and fair dealing, retaliatory wrongful eviction, and preliminary and permanent injunction are reasonably related to the parking issue.

            Lastly, Plaintiffs assert that Defendants instituted and maintained the underlying Lease Action with malice. However, as discussed above, the Court does not find that Plaintiffs have demonstrated that the Lease Action was brought without probable cause. As set forth above,

“[a] plaintiff must plead and prove three elements to establish the tort of malicious prosecution: a lawsuit (1) was commenced by or at the direction of the defendant and was pursued to a legal termination favorable to the plaintiff; (2) was brought without probable cause; and (3) was initiated with malice.” (Nunez v. Pennisi, supra, 241 Cal.App.4th at p. 872–873 [internal quotations omitted].) Thus, the Court need not and does not discuss the third element of malice.

Conclusion

Based on the foregoing, the Kim Defendants’ special motion to strike is granted. The Kim Defendants are ordered to provide notice of this Order. 

DATED:  April 28, 2023                                ________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court