Judge: Yolanda Orozco, Case: 21STCV36715, Date: 2022-08-09 Tentative Ruling
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Case Number: 21STCV36715 Hearing Date: August 9, 2022 Dept: 31
SPECIAL MOTION TO STRIKE PLAINTIFFS’
COMPLAINT IS DENIED
Background
Subsequently, on October 6, 2021, Plaintiff filed the operative First Amended Complaint against Defendants, alleging the following, single cause of action: (1) Violation of the Insurance Frauds Prevention Act (Ins. Code § 1871 et seq.).
On May 10, 2022, Defendants filed a Special Motion to Strike Plaintiffs’ Complaint (Code Civ. Proc. § 425.16). Defendants’ Special Motion to Strike Plaintiffs’ Complaint is now before the Court for consideration.
Legal Standard
Code of Civil Procedure 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. (Code Civ. Proc., § 425.16, subd. (b)(1) [“[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 Constitution or the 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”].)
“The defendant in an alleged SLAPP suit bears the initial burden of showing the suit falls within the class of suits subject to a motion to strike under [Code of Civil Procedure] section 425.16.” (Fox Searchlight Pictures, Inc. v. Paladino (2001) 89 Cal. App. 4th 294, 304.) “A defendant meets this burden by demonstrating that the act underlying the plaintiff's cause fits one of the categories spelled out in section 425.16, subdivision (e).” (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78.) Subdivision (e) defines the protected acts as 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).)
If the defendant meets this initial burden, the plaintiff then has the burden of demonstrating a probability of prevailing on the claim. (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal. 4th 728, 741.) The plaintiff satisfies this burden by demonstrating 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. (Id.) Under Code of Civil Procedure section 425.16 subdivision (b)(2), a plaintiff may use affidavits to meet the plaintiff’s burden. (Code Civ. Proc., § 425.16, subd. (b)(2).)
In order to determine whether a cause of action is subject to an anti-SLAPP motion, the Court examines the principal thrust or gravamen of the plaintiff's cause of action. (Ramona Unified School Dist. v. Tsiknas (2005) 135 Cal. App. 4th 510, 519-520.) The critical consideration for a section 425.16 analysis is whether the cause of action is based on the defendant's protected free speech or petitioning activity. (Feldman v. 1100 Park Lane Associates (2008) 160 Cal. App. 4th 1467, 1478-1479.) The anti-SLAPP statute’s definitional focus is not the form of the plaintiff's cause of action but, rather, the defendant's activity that gives rise to his or her asserted liability — and whether that activity constitutes protected speech or petitioning. (Id.)
Request for Judicial Notice
Plaintiff’s Request for Judicial Notice is GRANTED. (Evid. Code, § 425, subd. (d) [“Judicial notice may be taken of the following matters to the extent that they are not embraced within Section 451: ¶(d) Records of (1) any court of this state or (2) any court of record of the United States or of any state of the United States.”].)
Evidentiary Objections
The Court refrains from ruling upon the parties’ submitted evidentiary objections as the Court does not reach the merits on Defendants’ Special Motion to Strike. (Bowen v. Lin (2022) 80 Cal.App.5th 155, 326 [“Finally, Bowen contends the trial court erred when it refused to rule on his objections to the Lins’ declarations. But there was no need to do so because the court did not reach the merits of any of Bowen's causes of action.”].)
Discussion
Defendants move to strike Plaintiff’s operative First Amended Complaint pursuant to Code of Civil Procedure section 425.16. (Code Civ. Proc., § 425.16.)
A.
First Prong—Defendants’ Burden of Demonstrating Cause of
Action Arises From Protected Activity
As an initial matter with respect to an anti-SLAPP motion, “the defendant must establish that the challenged claim arises from activity protected by [Code of Civil Procedure] section 425.16.” (Baral v. Schnitt (2016) 1 Cal.5th 376, 384.) Accordingly, the Court begins with allegations underlying Plaintiff’s sole cause of action for Violation of the Insurance Frauds Prevention Act (Ins. Code § 1871 et seq.), and subsequently, determines whether the actions underlying Plaintiff’s sole cause of action constitute one (1) of the four (4) protected activities contemplated by Code of Civil Procedure section 425.16, subd. (e). (City of Cotati, supra, 29 Cal.4th at p. 78.)
Plaintiff’s operative First Amended Complaint alleges the following. Initially, Plaintiff references separate, previous litigation which was filed and prosecuted by Defendant Silver Bird Auto Leasing LLC (hereinafter, “Defendant Silver Bird”). In the referenced previous litigation, which Defendant Silver Bird initiated on approximately March 19, 2018, Defendant Silver Bird sued the following parties subsequent to a motor vehicle accident: Los Angeles USA Tours LLC; Sadegh Fatoorechi; and Ali Dayekh (collectively, “Prior Litigation Defendants”). (FAC, ¶ 10.) Defendant Silver Bird’s Complaint alleged that on approximately December 26, 2017, a 2015 McLaren 650S Spider (“Subject Vehicle”), which Defendant Silver Bird owned and leased to a third-party driver, was involved in a vehicle accident in Beverly Hills, California. (Id. ¶¶ 10-11, 13.) Defendant Silver Bird alleged that the lessor of the Subject Vehicle was making a legal turn when the Subject Vehicle was struck by a Ford E-series tourism van owned and operated by the Prior Litigation Defendants. (Id. ¶ 15.) Defendant Silver Bird’s Complaint sought damages as a result of the motor vehicle collision, contending the collision was caused by the Prior Litigation Defendants’ negligence. (Id. ¶ 13.)
The Prior Litigation Defendants had auto insurance from an insurance company named, Gateway Insurance Company doing business as Alano Insurance Company (“Gateway”). (FAC, ¶ 9.) As Gateway would pay any damages sustained by the Prior Litigation Defendants their insurance policy, Gateway hired a law firm named, Heath & Yuen, APC, for the purpose of representing the Prior Litigation Defendants and defending against Defendant Silver Bird’s Complaint. (Ibid.) The Court notes Heath & Yuen, APC is a named-Plaintiff in the present litigation, who advances the present Complaint against Defendants on behalf of the State of California.
In the Complaint Plaintiff alleges Defendants’ act of filing the Complaint in the previous litigation, and prosecuting the same against the Prior Litigation Defendants, constitutes a violation of the California Insurance Frauds Prevention Act (“IFPA”), which proscribes the presentation of a false or fraudulent claim for the payment of a loss or injury, including the payment of a loss or injury under a contract of insurance. (FAC, ¶¶ 56, 68.) In simpler terms, the IFPA makes unlawful a party’s perpetration of automobile insurance fraud. (Ins. Code, § 1871, subd. (b)-(c).)
The Complaint alleges Defendant Silver Bird’s prior Complaint was based upon false statements thus constituting an effort to wrongfully recover insurance payments from the Prior Litigation Defendants’ insurer (Gateway). Specifically, the Complaint alleges that Defendant Silver Bird’s statement that the driver of the Subject Vehicle made a “legal turn” before the subject motor vehicle accident and that the accident was caused by Prior Litigation Defendants’ own negligence is a false representation. Plaintiff alleges that “[a] post-collision photograph” shows the third-party driver of the Subject Vehicle was the cause of the accident because the third-party driver made an illegal U-turn over a double-set of parallel yellow lines immediately in front of the Prior Litigation Defendants’ tourism van. (FAC, ¶¶ 15-22.)
Additionally, Plaintiff alleges during the prior litigation, Defendant Silver Bird concealed the fact that the third-party driver of the Subject Vehicle was Defendant Silver Bird’s equity owner and counsel-of-record, Filippo Marchino (who is a Defendant in the present action). (Id. ¶¶ 7, 14.) Plaintiff alleges Defendant Silver Bird and Defendant Marchino obstructed discovery during the prior litigation by failing to provide, and willfully withholding, information concerning the name of Defendants’ insurer. (Id. ¶ 23.) Plaintiff, also alleges Defendant Silver Bird and Defendant Marchino produced a false and fabricated cost repair bill for the purposes of proving Defendants’ damages. (Id. ¶¶ 41-42.) Lastly, Plaintiff alleges Defendant Silver Bird and Defendant Marchino wrongfully continued to prosecute the prior action following the California Insurance Guarantee Association’s (“CIGA”) substitution into the action, while knowing that the claim arising from the motor vehicle accident was not a “covered claim” under CIGA’s policies. (Id. ¶¶ 27-39.)
The following further details are also pertinent. Plaintiff’s Complaint alleges that, due to the costs incurred by Gateway, Prior Litigation Defendants’ insurer in defending Defendant Silver Bird’s Complaint, Gateway became insolvent and was liquidated. (FAC, ¶¶ 24, 25.) As a result of Gateway’s liquidation, CIGA, a government-created fund from which insureds may obtain financial and legal assistance in the event their insurer becomes insolvent, substituted into this action to defend the Prior Litigation Defendants. (Id. ¶¶ 27-28.) CIGA is authorized to pay “covered claims”, which are not coextensive with an insolvent insurer’s obligations under the insolvent insurer’s own policies. (Id. ¶ 32.) Rather, CIGA’s “covered claims” abide by their own definitions and policies. (Ibid.) Plaintiff’s Complaint alleges Defendant Silver Bird and Defendant Marchino continued to prosecute the prior litigation against CIGA and the Prior Litigation Defendants, while knowing that the claims advanced by Defendants did not constitute “covered claims”. (Id. ¶¶ 32-39.)
In sum, Plaintiff’s Complaint alleges the aforementioned actions committed by Defendants, including Defendants’ filing and prosecution of the prior Complaint, as well as Defendants’ alleged fraudulent representations advanced during the prior litigation, constitute violations of IFPA. (FAC, ¶¶ 56, 68.)
Following the Court’s review of the parties’ arguments and a review of the operative First Amended Complaint, the Court finds the actions underlying Plaintiff’s sole cause of action under the IFPA affirmatively constitute protected activities under the following two (2) categories 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”; 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”. (Code Civ. Proc., § 425.16, subd. (e); Navallier v. Sletten (2002) 29 Cal.4th 82, 90 [holding, “a claim for relief filed in . . . court indisputably is a ‘statement or writing made before a . . . judicial proceeding’ ” which is contemplated by Code of Civil Procedure section 425.16, subdivision (e)(1)].)
The parties do not dispute the fact that Plaintiff’s Complaint arises from a protected activity, under Code of Civil Procedure section 425.16, subdivision (e). Rather, the parties vigorously dispute whether an exception to the anti-SLAPP statute is applies here. Code of Civil Procedure section 425.17, subdivision (b) provides as follows:
Section 425.16 does not apply to any action
brought solely in the public interest or on behalf of the general public if all
of the following conditions exist:
(1) The plaintiff does not seek any relief
greater than or different from the relief sought for the general public or a
class of which the plaintiff is a member. A claim for attorney's fees, costs,
or penalties does not constitute greater or different relief for purposes of
this subdivision.
(2) The action, if successful, would enforce
an important right affecting the public interest, and would confer a
significant benefit, whether pecuniary or nonpecuniary, on the general public
or a large class of persons.
(3) Private enforcement is necessary and places a disproportionate financial burden on the plaintiff in relation to the plaintiff's stake in the matter.
(Code Civ. Proc., § 425.17, subd. (b).) (This exception will be referenced below as the “Public Interest Exception”.)
Plaintiff contends the Public Interest Exception is applicable to Plaintiff’s Complaint and, therefore, while Plaintiff’s Complaint “arises from” a protected activity, Plaintiff’s Complaint is not subject to the anti-SLAPP statute pursuant to the Public Interest Exception.
Under facts and holding of People ex rel. Strathmann v. Acacia Research Corp. (2012) 210 Cal.App.4th 487 (Strathmann), the Court is largely persuaded by Plaintiff’s argument. Initially, the Court finds that Plaintiff’s Complaint constitutes an “action brought solely in the public interest or on behalf of the general public.” (Code Civ. Proc., § 425.17, subd. (b).) Plaintiff brings the operative First Amended Complaint pursuant to Section 1871.7 of the Insurance Frauds Prevention Act (previously and hereinafter referenced as the “IFPA”), which states that “[a]ny interested persons, including an insurer, may bring a civil action for a violation of this section for the person and for the State of California.” (Ins. Code, § 1871.7, subd. (e)(1).) Plaintiff sufficiently constitutes an “interested person” under Section 1871.7 of the IFPA as Plaintiff Heath & Yuen, APC served as counsel for the Prior Litigation Defendants, which were affected and injured by Defendants’ fraudulent conduct. (FAC, ¶ 9 [“Plaintiff is an interested person as it was previously retained by now liquidated insurer Gateway . . . and the California Insurance Guarantee Association (‘CIGA’) to represent and to defend Gateway’s insureds against Silver Bird’s complaint . . . .”].)
Further, Plaintiff alleges, as a result of Defendants’ wrongful litigation against the Prior Litigation Defendants, Plaintiff “incurred approximately $121,222.43 in unnecessary defense costs . . . .” (Id. ¶ 40.) According to Plaintiff’s allegations, Plaintiff is an “interested person” who has a personal stake in bringing an action on behalf of the State of California for Defendants’ alleged violation of the IFPA. (Ins. Code, §1871.7, subd. (e)(1).) Therefore, Plaintiff, as the person bringing the “qui tam action”, “stands in the shoes of the People of the State of California, who are deemed to be the real party in interest,” pursuant to Section 1871.7 of the IFPA. (Strathmann, supra, 210 Cal.App.4th at p. 500.) “ ‘ “Qui tam” is part of the longer Latin phrase “qui tam pro domino rege quam pro se ipso in hac parte sequitur”, which means “who brings the action for the king as well as for himself.” [Citation.]’ ” (Id. at p. 491, fn. 2.) Pursuant to Section 1871.7 of the IFPA, Plaintiff “does not personally recover damages [as a result of this action], but, if successful, receives a substantial percentage of the recovery as a bounty.” (Id. at p. 500.) Accordingly, the Court finds Plaintiff, who brings the present action pursuant to Section 1871.7 of the IFPA, brings the present action “solely in the public interest or on behalf of the general public”. (Code Civ. Proc., § 425.17, subd. (b).)
The Court finds Plaintiff’s First Amended Complaint sufficiently satisfies the three (3) requisite conditions for the the Public Interest Exception to apply. First, Plaintiff’s Complaint “does not seek any relief greater than or different from the relief sought for the general public”. (Code Civ. Proc., § 425.17, subd. (b)(1).) Plaintiff does not seek individualized relief in the complaint. (FAC, Prayer for Relief ¶¶ 1-4.) Rather, Plaintiff prays for a penalty, assessment, attorneys’ fees, costs, and expenses, which are permitted categories of relief under Section 1871.1, subdivisions (b) and (g)(1)(A)(iii)(I) of the IFPA. (Ibid.; Ins. Code, §§ 1871.1, subd. (b) [“Every person who violates any provision of this section . . . shall be subject . . . to a civil penalty of not less than five thousand dollars ($5,000) nor more than ten thousand dollars ($10,000), plus an assessment of not more than three times the amount of each claim for compensation . . . .”] and (g)(1)(A)(iii)(I) [“The person bringing the action . . . shall first receive the amount the court determines is reasonable for attorney’s fees, costs, and expenses that the court determines to have been necessarily incurred.”].) Indeed, the Public Interest expressly provides that, “[a] claim for attorney's fees, costs, or penalties does not constitute greater or different relief” from that sought for the general public. (Code Civ. Proc., § 425.17, subd. (b).) Accordingly, as Plaintiff’s First Amended Complaint “does not seek any relief greater than or different from the relief sought for the general public”, the Court finds the first condition of the Public Interest Exception is satisfied. (Code Civ. Proc., § 425.17, subd. (b)(1).)
Second, the Court finds the complaint additionally satisfies the second condition of the Public Interest Exception, which requires “ ‘[t]he action, if successful, would enforce an important right affecting the public interest,’ and would confer a significant benefit, either pecuniary or nonpecuniary, on the general public.” (Strathmann, supra, 210 Cal.App.4th at p. 504; Code Civ. Proc., § 425.17, subd. (b)(2).) As expressly held by the Court of Appeal in Strathmann, actions brought pursuant to the IFPA undoubtedly enforce an important right affecting the public and confer a significant benefit upon the general public as “[t]he purpose of the Insurance Frauds Prevention Act (Ins. Code, § 1871 et seq.) is to supplement government efforts to fight insurance fraud without creating new and expensive bureaucracies. [Citation.] ‘It is in the government’s interest to have insurers investigate and prosecute such proceedings. The government serves to gain both in terms of fraud prevention and financially from such actions, especially given limited investigative and prosecutorial resources available to it.’ [Citation.] The general public also benefits from qui tam actions to enforce Insurance Code section 1871.7, because fraudulent insurance claims result in higher premiums. [Citation.] ‘Insureds are the indirect victims who pay higher premiums due to the prevalence of insurance fraud.’ [Citation.]” (Ibid.) Accordingly, the Court finds Plaintiff’s operative First Amended Complaint satisfies the second condition of the Public Interest Exception as it enforces “an important right affecting the public interest,’ and . . . confer[s] a significant benefit, either pecuniary or nonpecuniary, on the general public.” (Strathmann, supra, 210 Cal.App.4th at p. 504; Code Civ. Proc., § 425.17, subd. (b)(2).)
Lastly, the Court finds Plaintiff’s operative First Amended Complaint satisfies the third and final condition of the Public Interest Exception, which provides, “[p]rivate enforcement is necessary and places a disproportionate financial burden on the plaintiff in relation to the plaintiff’s take in the matter.” (Code Civ. Proc., § 425.17, subd. (b)(3).) Presently, private enforcement of this action is necessary because, despite being served with the Complaint and all material evidence and information possessed by Plaintiff concerning this action on October 4 and 6, 2021, neither the District Attorney nor the Insurance Commissioner has intervened to prosecute this action. (Strathmann, supra, 210 Cal.App.4th at p. 504 [holding, “[i]n this case, private enforcement is necessary because neither the Attorney General nor the Insurance Commissioner has intervened to prosecute the action.”]; Plaintiff’s Index of Exhibits, Exs. B [Proof of Service upon District Attorney and California Department of Insurance on October 4, 2021], C [Proof of Service upon California Department of Insurance on October 6, 2021].) Further, although Plaintiff may be entitled to statutory penalties in the event this action is successful, such a stake in the outcome of this litigation is disproportionately overwhelmed by “the significant personal and financial stress of pursuing difficult, time-consuming, and often lengthy litigation” under the IFPA. (Strathmann, supra, 210 Cal.App.4th at p. 504.) Accordingly, the Court finds Plaintiff’s complaint satisfies the third and final condition of the Public Interest Exception, which provides, “[p]rivate enforcement is necessary and places a disproportionate financial burden on the plaintiff in relation to the plaintiff’s take in the matter.” (Code Civ. Proc., § 425.17, subd. (b)(3).)
In light of the Court’s findings, the Court is persuaded Plaintiff’s operative First Amended Complaint, while arising from protected activities, is exempt from scrutiny under the anti-SLAPP statutory scheme, pursuant to the Public Interest Exception. The Court notes that Defendants do not dispute the fact that Plaintiff’s complaint satisfies the three required conditions under the Public Interest Exception. Indeed, neither Defendants’ moving nor reply papers provide challenge the applicability of the Public Interest Exception. Code of Civil Procedure section 425.17, subdivision (b) (i.e., the Public Interest Exception) expressly states, “Section 425.16 [i.e., the anti-SLAPP statute] does not apply to any action brought solely in the public interest or on behalf of the general public if all of the following conditions exist . . . .” (Code Civ. Proc., § 425.17, subd. (b).) The Court concludes the three (3) conditions apply and Plaintiff’s First Amended Complaint is outside of the purview of the anti-SLAPP statute. (Ibid.)
Defendants advance a differing argument for the purposes of demonstrating Plaintiff’s First Amended Complaint is subject to the anti-SLAPP statute. Defendants argue Plaintiff lacks standing to bring an action under the IFPA. (Mot., at p. 14:3-4 [“The anti-SLAPP exemption does not apply because, by failing to meet statutory requirements, Heath & Yuen never obtained standing to sue on behalf of the general public.”].) Defendants appear to argue that the Public Interest Exception is inapplicable here because Plaintiff has failed to satisfy certain procedural requirements under the IFPA and, as a result, Plaintiff lacks standing to pursue a representative, qui tam action on behalf of the People of the State of California. The crux of Defendants’ argument is that Plaintiff failed to satisfy the requirements in Section 1871.1, subdivision (e)(4)(B) of the IFPA, emphasized in bold below:
(e)(1) Any interested persons, including
an insurer, may bring a civil action for a violation of this section for the
person and for the State of California. The action shall be brought in the
name of the state. The action may be dismissed only if the court and the
district attorney or the commissioner, whichever is participating, give written
consent to the dismissal and their reasons for consenting.
(2) A copy of the complaint and written
disclosure of substantially all material evidence and information the person
possesses shall be served on the district attorney and commissioner. The
complaint shall be filed in camera, shall remain under seal for at least 60
days, and shall not be served on the defendant until the court so orders. The
local district attorney or commissioner may elect to intervene and proceed with
the action within 60 days after he or she receives both the complaint and the
material evidence and information. If more than one governmental entity elects
to intervene, the district attorney shall have precedence.
(3) The district attorney or commissioner may,
for good cause shown, move the court for extensions of the time during which
the complaint remains under seal under paragraph (2). The motions may be
supported by affidavits or other submissions in camera. The defendant shall not
be required to respond to any complaint filed under this section until 20 days
after the complaint is unsealed and served upon the defendant.
(4) Before the expiration of the 60-day
period or any extensions obtained under paragraph (3), the district attorney or
commissioner shall either:
(A) Proceed with the action, in which
case the action shall be conducted by the district attorney or commissioner.
(B) Notify the court that it declines to take over the action, in which case the person bringing the action shall have the right to conduct the action.
(Code Civ. Proc., § 1871.7, subd. (e)(1), (e)(2), (e)(3), (e)(4)(A)-(B) [emphasis added].)
Essentially, Defendants argue, although Plaintiff has properly served the District Attorney and Insurance Commissioner with the Complaint and all material evidence on October 4 and 6, 2021, and, although the District Attorney and Insurance Commissioner have failed to subsequently intervene in this action, Plaintiff “lacks standing” to bring this action because neither the District Attorney nor the Insurance Commissioner have filed a Notice with this Court indicating “it declines to take over the action”. (Id. § 1871.7, subd. (e)(4)(B).)
The Court finds Defendants’ argument unpersuasive and flawed. Initially, while Defendants argue Plaintiff “lacks standing” to bring an action under the IFPA, the relevant statutory authority concerning “standing” is in Insurance Code section 1871.7, subdivision (e)(1), as opposed to Insurance Code section 1871.7, subdivision (e)(4)(B). (People ex rel. Allstate Insurance Co. v. Muhyeldin (2003) 112 Cal.App.4th 604, 608 [holding, the question of whether or not a party has standing under the Insurance Frauds Prevention Act is governed by Insurance Code section 1871.7, subdivision (e)(1)].) As noted previously, Insurance Code section 1871.7, subdivision (e)(1) provides, “[a]ny interested persons . . . may bring a civil action for a violation of [the IFPA] . . . .” (Ins. Code, § 1871.7, subd. (e)(1).) The Court has previously determined that Plaintiff sufficiently constitutes an “interested person” under the IFPA and, therefore, has standing to bring the present action against Defendants.
Second, while Defendants argue Plaintiff may prosecute an action under the IFPA only where the District Attorney or Insurance Commissioner affirmatively file a Notice with the Court indicating their refusal to “take over the action”, such an interpretation of Section 1871.7 is flawed and neglects the whole of the statutory scheme. (See Jurcoane v. Superior Court (2001) 93 Cal.App.4th 886, 893 [“We must read statutes as a whole, giving effect to all their provisions, neither reading one section to contradict others or its overall purpose, nor reading the whole scheme to nullify one section.”].) Section 1871.7 explicitly states that the Attorney General and/or the Insurance Commissioner have exactly sixty (60) days to “elect to intervene and proceed with the action” following receipt of Plaintiff’s Complaint and the material evidence and information. (Ins. Code, § 1871.7, subd. (e)(2) [“The local district attorney or commissioner may elect to intervene and proceed with the action within 60 days after he or she received both the complaint and the material evidence and information.”].) Section 1871.7 confers a limited, sixty (60) day period in which intervention and prosecution may be pursued. (Ibid.) The sixty- day period may be extended only if the District Attorney and/or Insurance Commissioner move for an extension of the sixty (60) day period to intervene where good cause is shown. (Id. § 1871.7, subd. (e)(3), (e)(4).) However, where an extension is not obtained under Section 1871.7, subdivision (e)(3), the statutory scheme makes clear that the District Attorney’s and Insurance Commissioner’s right to intervene may only be exercised within the enumerated sixty (60) day period. (Id. § 1871.7, subd. (e)(2).)
It is worth noting that despite Plaintiff’s service of the Complaint and evidentiary materials upon the District Attorney and Insurance Commissioner, neither entity elected to intervene within the sixty (60) day deadline, which has long ago run, nor has either entity filed a Notice communicating the entity’s decision to decline intervention within the sixty (60) day deadline. While the statute is silent as to what happens when the District Attorney or Insurance Commissioner fail to intervene or fail to notify the Court of the entity’s refusal to intervene, within the 60 day deadline, Defendants’ view of the statute makes no sense.
The Court has carefully reviewed the whole of Section 1871.7 and finds that where the District Attorney and Insurance Commissioner fail to intervene within the 60 days, the Legislature’s intention was that the Plaintiff would proceed with the action. Thus, Section 1871.7, subdivision (f)(3) states, [i]f the district attorney or commissioner elects not to proceed with the action, the person who initiated the action shall have the right to conduct the action.” (Ins. Code, § 1871.7, subd. (f)(3).) There is no statutory provision that prohibits or limits the ability of a plaintiff to continue the action in the absence of intervention or notice that no intervention would be sought by the District Attorney or the Insurance Commissioner. A different result would run counter to the policy objectives underlying this law.
Section 1871.7, subdivision (e)(4)(B) merely states that where the District Attorney and Insurance Commissioner choose not to intervene in a particular action, this decision should be communicated to the Court “[b]efore the expiration of the 60-day period or any extension obtained under paragraph (3)”. (Ins. Code, § 1871.7, subd. (e)(4)(b).) The statute does not impose a notice requirement after the sixty (60) day period has lapsed. (Ibid.) In other words, the statute does not require notification at any time beyond the sixty (60) day time period during which the District Attorney and Insurance Commissioner may intervene. (Ibid.) A reasonable interpretation of Section 1871.7 would suggest that where the District Attorney and Insurance Commission fail to intervene within the sixty (60) day time period, the right to intervene lapses and a plaintiff may proceed with the action.
For the reasons stated, the Court finds the failure of the District Attorney and Insurance Commissioner to provide notice that no intervention would be sought, does not prevent Plaintiff’s prosecution of the present action.
Third, even if the Attorney General or Insurance Commissioner elected to intervene in the present action, this would not eliminate the Public Interest Exception. As noted previously, the Public Interest Exception applies “to any action brought solely in the public interest or on behalf of the general public”, where all three conditions referenced above are satisfied. (Code Civ. Proc., § 425.17, subd. (b).) Rather, the action would nonetheless be sufficiently characterized as an “action brought solely in the public interest or on behalf of the general public”. (Code Civ. Proc., § 425.17, subd. (b).) Further, if the District Attorney or the Insurance Commissioner decided to intervene, such intervention would not preclude Plaintiff’s prosecution of this action. Indeed, even [i]f the district attorney or commissioner proceeds with the action . . . [the filing plaintiff] shall have the right to continue as a party to the action . . . .” (Ins. Code, § 1871.7, subd. (f)(1).) Accordingly, the Court finds the entity’s participation in the action would not change the character of Plaintiff’s Complaint, and as Plaintiff would remain a party to the present action, the complaint would remain an “action . . . solely in the public interest or on behalf of the general public[,]” and the Public Interest Exception would still apply.
Lastly, the Court notes that Defendants have cited no authority to support their arguments otherwise.
Based on the foregoing, the Court finds the Public Interest Exception applies to Plaintiff’s operative First Amended Complaint and, therefore, Plaintiff’s First Amended Complaint is not subject to Defendants’ present Special Motion to Strike. (Tourgeman v. Nelson & Kennard (2014) 222 Cal.App.4th 1447, 1467 [“Because Tourgeman's action satisfied each of the requirements of the public interest exception to the anti-SLAPP statute, we conclude that Tourgeman's action was exempt from application of the anti-SLAPP statute.”].)
Conclusion
Defendants’ Special Motion to Strike Plaintiffs’ Complaint (Code Civ. Proc. § 425.16) Is DENIED.
Defendants to give notice.
The parties are strongly encouraged to attend all
scheduled hearings virtually or by audio. Effective July 20, 2020, all matters
will be scheduled virtually and/or with audio through the Court’s
LACourtConnect technology. The parties are strongly encouraged to use
LACourtConnect for all their matters. All masking protocols will be observed at
the Courthouse and in the courtrooms.