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Adams v. Ghormley

California Court of Appeals, Fourth District, Third Division
Feb 8, 2011
No. G040728 (Cal. Ct. App. Feb. 8, 2011)

Opinion

NOT TO BE PUBLISHED

Appeal from a judgment of the Superior Court of Orange County, No. 07CC01390, Ronald L. Bauer, Judge.

Kristine L. Adams, in pro. per., for Plaintiff and Appellant.

Proctor, Slaughter & Reagan, Barry J. Reagan and Gabriel M. Lashly for Defendants and Respondents.


OPINION

MOORE, J.

In a prior appeal, we affirmed the dismissal of the first lawsuit Kristine Adams (Adams) filed in connection with mold infiltration in her condominium unit. (Adams v. Newport Crest Homeowners Association (Sept. 9, 2009, G039956) [nonpub. opn.] (Adams I).) She filed a second lawsuit having to do with the settlement agreement in the first lawsuit, as well as continuing mold issues and related matters. (Adams v. Newport Crest Homeowners Association (Super. Ct. Orange County, 2008, No. 07CC01390.) This second lawsuit has been dismissed as against three out of the 15 defendants. Adams appeals from the dismissal.

This court notified the parties of its intention to take judicial notice of the opinion filed in Adams I, supra, G039956 and gave them an opportunity to object. No party having objected, we took notice of that opinion by order filed July 14, 2010.

Adams argues at length that the trial court erred in granting the Code of Civil Procedure section 425.16 anti-SLAPP motion filed by defendants Scott L. Ghormley, an individual, Scott L. Ghormley, a professional corporation, and Carl R. Stevens (collectively, legal counsel defendants). However, she fails to address whether the court erred in sustaining, without leave to amend, the demurrer filed by the legal counsel defendants. Adams has waived any arguments she had that the ruling on the demurrer was incorrect. Consequently, the ruling stands, and that alone is reason for affirmance.

At the same time, we have reviewed the court’s ruling on the anti-SLAPP motion and determined that the motion was properly granted. Adams based her allegations against the legal counsel defendants on two sets of activities: (1) those arising out of the legal counsel defendants’ representation of certain parties in Adams I, culminating in the negotiation and execution of the Adams I settlement agreement; and (2) those arising out of the performance of the Adams I settlement agreement. With respect to the former activities, the legal counsel defendants are protected by the litigation privilege of Civil Code section 47, subdivision (b). With respect to the latter activities, for a variety of reasons, Adams failed to demonstrate a probability of prevailing on her claims. We affirm.

I

FACTS

A. FIRST LAWSUIT:

As we stated in Adams I, supra, (G039956): “Plaintiff Kristine Adams (Adams) brought suit against Newport Crest Homeowners Association and certain others (collectively, Newport Crest), in connection with alleged mold, biological contamination, water intrusion, structural damage, termite and rat infestation, and other issues affecting her condominium unit.... The parties went to mediation and ultimately signed a settlement agreement, which entailed the payment to Adams of $500,000 from Newport Crest’s insurance carrier, and a commitment to perform extensive remediation of her unit within an anticipated 90-day period. The insurance payment was made, but Adams claimed Newport Crest failed to comply with its nonmonetary performance obligations.

“Adams filed a Code of Civil Procedure section 664.6 motion to enforce the terms of the settlement agreement and to order Newport Crest to perform its obligations thereunder, and Newport Crest thereafter filed an ex parte application for an order enforcing the settlement agreement and compelling mediation. Finding that the settlement agreement required disputes thereunder to be returned to mediation, the court denied Adams’s motion and granted Newport Crest’s application. However, Adams did not respond to Newport Crest’s request to schedule a mediation. The court, on its own motion, set an order to show cause re dismissal. After a hearing on the order to show cause, the court ordered Adams’s case dismissed.

“Adams appeal[ed] from the order denying her motion and granting the application of Newport Crest, from the order dismissing her case, and from an order imposing monetary discovery sanctions against her. In attacking the order denying her motion, she insist[ed] that the settlement agreement [was] binding and that, for a variety of reasons, the court erred in failing to convert it to judgment. But when it [came] to challenging the order granting Newport Crest’s application, Adams paradoxically maintain[ed] that the settlement agreement [was] completely unenforceable, due to fraud in the inducement, failure of consideration, a lack of meeting of the minds, and the invalidity of what she characterize[d] as a ‘binding mediation’ provision. In other words, if the settlement agreement [was] construed to include the mediation provision that it clearly [did] contain, then she insist[ed] the settlement agreement [could not] be binding, but she desperately want[ed] the settlement agreement to be enforced, minus the mediation provision to which she agreed.” (Adams I, supra, G039956, fn. omitted.)

We held that substantial evidence supported the implied finding that the settlement agreement was binding and that the court had properly interpreted the settlement agreement to require disputes to be submitted first to the mediator, not the court. We affirmed the order denying Adams’s motion and granting Newport Crest’s application, the sanctions order, and the dismissal. (Adams I, supra, G039956.)

B. SECOND LAWSUIT:

In October 2007, Adams filed, in her second lawsuit, a first amended complaint against 15 parties, including the legal counsel defendants. The suit primarily arose out of the settlement agreement in the first lawsuit, but also folded in certain residual issues concerning continued mold and other problems in connection with her condominium unit and personal property. Adams asserted 15 causes of action, 13 of which pertained to the legal counsel defendants, as well as others.

The first five causes of action had to do with alleged fraud in the inducement or other misrepresentation in connection with the settlement agreement in the first lawsuit. The sixth, seventh, tenth and eleventh causes of action had to do with alleged breach or frustration of the settlement agreement. The eighth and ninth causes of action, for intentional and negligent infliction of emotional distress, also arose out of the inducement to enter into, or the performance of, the settlement agreement. The twelfth cause of action, for nuisance, had to do with, inter alia, the failure to remediate in accordance with the settlement agreement. The fourteenth cause of action was for injunctive relief. The thirteenth and fifteenth causes of action were not asserted against the legal counsel defendants.

Adams alleged that Scott L. Ghormley and Carl R. Stevens were attorneys for defendants Newport Crest Homeowners Association, Optimum Professional Property Management, Inc. and Professional Community Management of California, Inc. (collectively, Association). She also asserted that they acted in other capacities, such as property manager for, or agent or representative of, the Association. She further alleged that Scott L. Ghormley, and individual, and Carl R. Stevens acted through Scott L. Ghormley, a professional corporation, and that the three were attorneys of record in the first lawsuit.

The legal counsel defendants filed a demurrer, an anti-SLAPP motion under Code of Civil Procedure section 425.16, and a motion to strike many portions of Adams’s first amended complaint, based on Code of Civil Procedure sections 435, 436 and 437 and Civil Code section 3294. In support of the demurrer, they cited Civil Code section 47, pertaining to the litigation privilege, Civil Code section 1714.10, regarding certain conspiracy causes of action against attorneys, and the settlement agreement, under which they said they had no duty to Adams. In the anti-SLAPP motion, the legal counsel defendants argued numerous points, such as Adams’s inability to establish the elements of her causes of action, and the bar of the litigation privilege. In addition, they sought attorney fees and costs in the amount of $8,950, pursuant to Code of Civil Procedure section 425.16, subdivision (c).

Adams later dismissed without prejudice five of her causes of action against the legal counsel defendants-the third cause of action for constructive fraud, the tenth and eleventh causes of action for breach of contract, the twelfth cause of action for nuisance, and the fourteenth cause of action for injunctive relief. This left in place four fraud-related causes of action, two emotional distress causes of action, and a cause of action for breach of the covenant of good faith and fair dealing.

On May 27, 2008, the court heard the legal counsel defendants’ demurrer, motion to strike and anti-SLAPP motion. It sustained the demurrer to plaintiff’s first amended complaint, without leave to amend, granted the motion to strike portions of the first amended complaint, without leave to amend, and granted the anti-SLAPP motion, also without leave to amend. In addition, it ordered Adams to pay attorney fees in the amount of $6,300 in connection with the anti-SLAPP motion. In its formal order of June 4, 2008, the court directed that the case be dismissed in its entirety, with prejudice, as to each of the legal counsel defendants. Adams appeals.

II

DISCUSSION

A. DEMURRER:

In the first 68 pages of her opening brief, Adams discusses the factual and procedural history of the case and presents her arguments with respect to the anti-SLAPP motion. However, she makes no arguments with respect to the demurrer. Indeed, in her four-page summary of argument, she mentions only the anti-SLAPP motion. Only on page 69 of her opening brief does she make any remarks that one could possibly construe as argument with respect to the demurrer.

Those remarks appear under the topic heading: “The Agent’s Immunity Rule and Sufficiency of the Pleadings Were Addressed in the Oppositions[.]” (Capitalization changed and boldface omitted.) The entirety of the discussion reads as follows: “Appellant addressed the Agent’s Immunity rule (Civil Code section 1714.10) in her Oppositions to the Demurrer (1 CT 233-239), and Anti-SLAPP Motion. (2 CT 354). She relies on those papers as her opening argument on the issue. [¶] Appellant addressed the elements of her claims, including the bases for punitive damages, in her Oppositions to the Demurrer and regular Motion to Strike. (1 CT 242-261). The Statement of Facts provides additional details. (1 CT 287-2 CT 308.) The granting of the Anti-SLAPP Motion circumvented discussion on sufficiency of the pleadings. Should the Anti-SLAPP ruling be reversed, Appellant herein re-asserts her request for leave to amend the Complaint upon remand so that she may provide the requisite clarity and accuracy.” (Boldface omitted.)

From this we gather two things. First, Adams wanted to make arguments with respect to the agent’s immunity rule, but did not save room in her opening brief to do it. So, in an apparent attempt to circumvent California Rules of Court, rule 8.204(c), regarding the maximum length of briefs, she cited many pages of the record and in essence told the court to find her arguments there. We warned Adams against this tactic in her last appeal. We will not indulge her efforts to circumvent rule 8.204(c). (Adams I, supra, G039956). Furthermore, the appellate court does not furnish argument, or search the record to determine whether it contains support for an appellant’s arguments. (Niko v. Foreman (2006) 144 Cal.App.4th 344, 368; Adams I, supra, G039956.) In short, we will neither search the record for, nor consider any arguments on, the agent’s immunity rule.

Second, we gather Adams thought there was no reason to address the sufficiency of her pleadings, because discussion of that topic was somehow “circumvented” by the ruling on the anti-SLAPP motion. We further interpret her brief remark as meaning there was no reason to challenge the ruling on the demurrer because of the ruling on the anti-SLAPP motion. Nonetheless, she cited many pages of the record, including oppositions to the demurrer, perhaps as a backup plan in case she erred in her assumption that she did not need to challenge the ruling on the demurrer. In other words, if she did err in that regard, the court could scour the record on its own to learn what her arguments with respect to the demurrer had been at the trial level, and to fashion some appellate arguments out of them on her behalf. It doesn’t work that way.

The attempted “incorporation of trial court arguments in an appellate brief is inappropriate. [Citation.]” (Banning v. Newdow (2004) 119 Cal.App.4th 438, 455.) “An appellant... must tender arguments in the appellate briefs. [Citation.]” (Paterno v. State of California (1999) 74 Cal.App.4th 68, 109.) Inasmuch as incorporation by reference of documents filed in the trial court is not permitted, we “disregard these purported incorporations by reference.” (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 294, fn. 20.) In other words, we hold that Adams’s vague references to the ruling on the demurrer are unsupported by argument. Every appellant’s brief must “‘contain a legal argument with citation of authorities on the points made. If none is furnished on a particular point, the court may treat it as waived, and pass it without consideration.’ [Citation.]” (McComber v. Wells (1999) 72 Cal.App.4th 512, 522-523.) Any arguments Adams might have made with respect to the ruling on the demurrer have been waived.

Adams disagrees. In her reply brief, Adams asserts: “There was no written statement of ruling or decision on the subject Demurrer. The only record is in the transcript. (RT 30:12-15.) The trial court never specifically discussed the Demurrer.... Appellant does not believe the trial court reached the issue of defects in the pleadings.” (Boldface omitted.) This assertion directly contradicts statements Adams herself made in her opening brief. For example, the very first sentence of her opening brief reads: “This appeal is from the Order of the court in which the Demurrer, Anti-SLAPP Special Motion to Strike, and Motion to Strike by Defendants Carl R. Stevens..., and Scott L. Ghormley and Scott L. Ghormley, APC..., were granted.”

Moreover, the record makes the ruling on the demurrer perfectly plain. Page 30 of the reporter’s transcript, which Adams cites, states at lines 6 through 7: “The Ghormley and Stevens demurrer is sustained without leave to amend.” That’s as clear as it gets-just as clear as the June 4, 2008 formal order on the motions. The caption of that order identifies it as an order on the demurrer, the motion to strike and the anti-SLAPP motion. The body of the order itself states, “The Court having considered the points and authorities in support [of] and [in] opposition [to] defendants and moving parties Scott L. Ghormley, Scott L. Ghormley, a Professional Corporation and Carl R. Stevens’ Demurrer, Motion to Strike and Special (Anti-SLAPP) Motion to Strike and having heard argument from counsel for both parties rules as follows: [¶] 1. Ghormley/Stevens’ Demurrer to Plaintiff’s First Amended Complaint was sustained without leave to amend....”

Despite her current protestations to the contrary, the fact that the court ruled on the demurrer was not lost on Adams at the time she commenced this appeal. In her civil case information statement, Adams checked, among others, the box indicating that the appeal was taken from a “[j]udgment of dismissal after an order sustaining a demurrer” and she specifically mentioned the sustaining of the demurrer in one of her attachments. However, when an appellant notices an appeal from “‘a judgment or order that is not challenged in appellant’s opening brief... the appellate court may independently treat the omission as a “partial abandonment” and dismiss the appeal sua sponte as to that particular judgment....’ [Citation.]” (Tanner v. Tanner (1997) 57 Cal.App.4th 419, 422, fn. 2.)

Once the legal counsel defendants argued that Adams had abandoned any appeal from the ruling on the demurrer because she had not challenged the ruling in her opening brief, Adams, in addition to claiming that the court had never ruled on the demurrer, finally offered some arguments on the demurrer-in her reply brief. However, “[w]e do not entertain issues raised for the first time in a reply brief, in the absence of a showing of good cause why such issues were not raised in the opening brief. [Citations.] No good cause appearing here, we will disregard these issues.” (Scott v. CIBA Vision Corp. (1995) 38 Cal.App.4th 307, 322.)

“We must uphold the decision of the trial court if it is correct on any ground. [Citation.]” (Satchmed Plaza Owners Assn. v. UWMC Hospital Corp. (2008) 167 Cal.App.4th 1034, 1045.) The court here sustained the demurrer without leave to amend, granted the motion to strike portions of the first amended complaint, without leave to amend, granted the anti-SLAPP motion, also without leave to amend, and ordered the dismissal with prejudice of Adams’s action against the legal counsel defendants. Inasmuch as the demurrer attacked each cause of action against the legal counsel defendants, as contained in the first amended complaint, the order sustaining the demurrer without leave to amend was a sufficient independent ground to support the dismissal of the case in its entirety, as against those defendants. Because Adams has abandoned any appeal from the ruling on the demurrer (Tanner v. Tanner, supra, 57 Cal.App.4th at p. 422, fn. 2), that ruling stands. We must affirm the dismissal of Adams’s action against the legal counsel defendants, on the basis of the unchallenged ruling on the demurrer.

We would end our analysis here, but for the fact that the court awarded attorney fees to the legal counsel defendants as prevailing parties under their anti-SLAPP motion. That being the case, we turn now to see if the court was correct in granting the anti-SLAPP motion.

B. ANTI-SLAPP MOTION:

(1) Code of Civil Procedure Section 425.16

“‘“[Code of Civil Procedure s]ection 425.16 provides for a special motion to strike ‘[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.’ (§ 425.16, subd. (b)(1).) ‘The Legislature enacted the anti-SLAPP statute to protect defendants, including corporate defendants, from interference with the valid exercise of their constitutional rights, particularly the right of freedom of speech and the right to petition the government for the redress of grievances.’ [Citation.]” [Citation.]’ [Citation.]” (G.R. v. Intelligator (2010) 185 Cal.App.4th 606, 611.)

All subsequent statutory references are to the Code of Civil Procedure unless otherwise specifically indicated.

“‘“In analyzing a section 425.16 motion, the court engages 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.’ [Citation.] The moving defendant meets this burden by showing the act underlying the plaintiff’s cause of action comes within section 425.16, subdivision (b)(1). [Citation.] If the defendant meets this initial burden, the burden then shifts and the plaintiff must show a probability of prevailing on the claim. [Citation.] The plaintiff must demonstrate the complaint is both legally sufficient and is supported by a prima facie showing of facts sufficient to sustain a favorable judgment if the evidence submitted by the plaintiff is given credit. [Citation.] [¶] We review de novo whether section 425.16 protects the subject speech and whether [the plaintiff] demonstrated a probability he would prevail on his... cause of action. [Citation.]” [Citation.]’ [Citation.]” (G.R. v. Intelligator, supra, 185 Cal.App.4th at p. 611.)

“‘“A defendant can meet his or her burden [of showing that the challenged cause of action arises from protected activity] by demonstrating the acts underlying the plaintiff’s cause of action fit within one of the categories of section 425.16, subdivision (e). [Citation.] Section 425.16, subdivision (e) defines an act in furtherance of the defendant’s right of petition or free speech in connection with a public issue to include: ‘(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; (4) or 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.’” [Citation.]’ [Citation.]” (G.R. v. Intelligator, supra, 185 Cal.App.4th at pp. 611-612.)

(2) Background

As we stated in Adams I, supra, (G039956): “In November 2006, Adams and Newport Crest entered into a settlement agreement. The settlement agreement consisted of a six-page initial document, a 10-page attachment A, and a two-page addendum, each with signature pages. The settlement agreement involved two primary components: (1) a $500,000 payment from State Farm Insurance Company to Adams, as set forth in the initial document; and (2) the performance of substantial additional obligations by Newport Crest, pursuant to attachment A.

“Attachment A contemplated that Adams would vacate her unit and that her personal property would be removed. It required Newport Crest to remediate the unit and certain of Adams’s personal property, to pay for the storage of certain personal property, and to pay Adams $3,500 per month for living expenses. The parties agreed that the remediation would ‘include the repairs and abatement measures advocated by the defendants’ construction expert, Anthony Salazar, in his [June 12, 2006] deposition... and/or any other work found necessary by Anthony Salazar (only) to stop current and further water/moisture intrusion.’ They further agreed: ‘Anthony Salazar shall be the supervisor and final authority of what must be done to stop current and further water/moisture intrusion to the HOME, and he is also the final authority on whether those necessary repairs and measures have been properly performed and completed.’ The settlement agreement enumerated 14 items to be investigated and addressed by Salazar.

“The settlement agreement further provided: ‘Anthony Salazar shall make the decision whether each repair that he has advised to be done has been correctly and thoroughly completed. The Industrial Hygienist, in its sole discretion, and according to industry standards, shall determine when the HOME has passed the “clearance test” so that rehabitation can occur.’ The parties agreed to exercise good faith and due diligence to endeavor to complete the remediation and obtain clearance testing within 90 days.

“In addition, paragraph 5 of attachment A provided in part: ‘The Defendants have represented that Mr. Salazar has agreed to his role as set forth in this agreement. If Mr. Salazar quits, is fired or is otherwise unavailable to perform his function pursuant to this agreement, Plaintiff will be notified immediately of said development and will have the right to approve any replacement.’ The addendum to the settlement agreement clarified that Newport Crest had no intention of firing Salazar, so long as he reasonably and timely performed his duties, but that Salazar would be replaced if he could not or would not so perform.” (Adams I, supra, G039956.)

The remediation of the condominium was not completed within 90 days as anticipated. In March 2007, Newport Crest’s counsel informed Adams that Salazar was unwilling to continue work on the project without a release from her. The matter with Salazar went unresolved and Newport Crest’s counsel later told Adams that Newport Crest was hiring Angus Smith to complete the work. (Adams I, supra, G039956.)

It was important to Adams that Salazar perform the tasks designated for him under the settlement agreement and that Smith not be involved in the remediation of her unit. This prompted her to file the second lawsuit.

(3) Analysis

(a) Fraudulent inducement

In her first cause of action, for fraudulent inducement of contract, Adams alleges that the defendants, including Newport Crest and the legal counsel defendants, intentionally misrepresented that they had hired Salazar to carry out his responsibilities as identified in the settlement agreement and that he had agreed to perform those responsibilities. She alleged that the misrepresentations had been made to induce her to enter into the settlement agreement. In her second cause of action, also for fraudulent inducement of contract, Adams alleged that if the misrepresentations were not made intentionally, then they were at least made negligently and recklessly.

As the legal counsel defendants assert, even allegedly fraudulent representations, when made during settlement negotiations in pending litigation, are protected activity within the meaning of section 425.16 subdivisions (b)(1) and (e). (Navellier v. Sletten (2002) 29 Cal.4th 82, 89-90; Navarro v. IHOP Properties, Inc. (2005) 134 Cal.App.4th 834, 841-842; Dowling v. Zimmerman (2001) 85 Cal.App.4th 1400, 1418, 1420.) Once the legal counsel defendants made their threshold showing that the first and second causes of action arose from protected activity, the burden shifted to Adams to show a probability of prevailing on the claims. She was unable to meet her burden, because her claims against the legal counsel defendants were barred by the litigation privilege set forth in Civil Code section 47, subdivision (b). (Navarro v. IHOP Properties, Inc., supra, 134 Cal.App.4th at pp. 843-844.)

“‘Civil Code section 47, subdivision (b) states in relevant part: “A privileged publication or broadcast is one made: [¶]... [¶] (b) In any (1) legislative proceeding, (2) judicial proceeding, (3) in any other official proceeding authorized by law, or (4) in the initiation or course of any other proceeding authorized by law....”’ [Citation.] ‘“The principal purpose of [Civil Code] section [47, subdivision (b)] is to afford litigants and witnesses [citation] the utmost freedom of access to the courts without fear of being harassed subsequently by derivative tort actions.” [Citation.]’” (G.R. v. Intelligator, supra, 185 Cal.App.4th at pp. 616-617.) “‘[T]he privilege is “an ‘absolute’ privilege, and it bars all tort causes of action except a claim of malicious prosecution.” [Citation.]’ [Citation.]” (G.R. v. Intelligator, supra, 185 Cal.App.4th at p. 617.)

(b) Fraud and deceit

Adams’s fourth and fifth causes of action were for fraud and deceit. The fourth cause of action pertained to the alleged concealment of Salazar’s lack of participation in the property remediation and the fifth cause of action had to do with the alleged concealment of the participation of Smith. Adams incorporated by reference all of her allegations pertaining to the purported fraudulent misrepresentations that induced her to enter into the settlement agreement.

In addition to incorporating those allegations, in paragraph 8.3 of the fourth cause of action, Adams stated: “At no time up to and including the signing of the Settlement contract did any Defendant inform Plaintiff that Mr. Salazar had not seen the Settlement contract, did not know of the duties set forth therein as his responsibilities, and had not been hired for those duties.” Furthermore, in paragraph 9.3 of the fifth cause of action, Adams stated: “At no time up to and including the signing of the Settlement contract did any Defendant ever inform Plaintiff that they chose ANGUS SMITH instead of Mr. Salazar to perform the functions and duties assigned to Mr. Salazar in the Settlement contract.” In paragraph 9.9 of the fifth cause of action, Adams also alleged: “Plaintiff did not learn until June 2007 that the ‘repairs’ that Defendants claim they had done during the period from January 2007 up to the present were actually small repairs made right before trial was supposed to occur in October 2006 (done so as to cast Defendants in a better light for the jury) - which is before the Settlement contract was even entered into. And these repairs had been made by SMITH, the unqualified, non-expert, biased, in-house maintenance contractor to Defendants.”

Clearly, in her fourth and fifth causes of action, Adams continued to rely on allegations pertaining to the same presettlement conduct at issue in her first and second causes of action pertaining to fraudulent inducement. In addition, however, she alleged that the defendants concealed the fact that, after the settlement agreement had been signed and remediation of her unit was supposedly under way, Salazar was not involved but Smith was.

Even though settlement negotiations are protected activity within the meaning of section 425.16, Adams is correct that conduct concerning the performance of a settlement agreement is not necessarily protected activity. (Applied Business Software, Inc. v. Pacific Mortgage Exchange, Inc. (2008) 164 Cal.App.4th 1108, 1117-1118.) At the same time, “a plaintiff cannot frustrate the purposes of the SLAPP statute through a pleading tactic of combining allegations of protected and nonprotected activity under the label of one ‘cause of action.’” (Fox Searchlight Pictures, Inc. v. Paladino (2001) 89 Cal.App.4th 294, 308, fn. omitted.) Adams employed this tactic by combining allegations of protected presettlement activity and nonprotected postsettlement activity. Section 425.16 applies.

That being the case, we turn to the second prong of 425.16-whether Adams demonstrated a probability of prevailing on the merits with respect to her fraudulent concealment claims. Where presettlement conduct is concerned, we have already stated that the litigation privilege of Civil Code section 47, subdivision (b) applies. Postsettlement conduct is another thing.

Adams relies on several letters from Stevens, written between February 26, 2007 and April 12, 2007, and a declaration of her former attorney, Stanley R. Jones, to show postsettlement fraudulent concealment. However, Adams does not show that copies of the Stevens letters were ever presented to the trial court. In her briefing on appeal, she notes that she mentioned the letters in her statement of facts in opposition to the motion. Her statement of facts, in turn, relies on her unverified first amended complaint as evidence of the existence and content of the letters. However, “[i]n deciding the question of potential merit, the trial court considers the pleadings and evidentiary submissions of both the plaintiff and the defendant [citation]; 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.’ [Citation.] The ‘plaintiff “cannot simply rely on the allegations in the complaint.”’ [Citation.]” (Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc. (2005) 129 Cal.App.4th 1228, 1244-1245; see also Roberts v. Los Angeles County Bar Assn. (2003) 105 Cal.App.4th 604, 613-614.) Where the Stevens letters are concerned, that is exactly what Adams did-she simply relied on the allegations in her first amended complaint.

Consequently, we need not consider Adams’s representations regarding those three letters. However, we note that her description of the letters does not demonstrate that Stevens did anything more than report on the status of remediation efforts and on the fact that, by March 2007, it had been learned that Salazar would not work on the project without a release. Even were we to consider Adams’s information regarding the letters, it would be insufficient to show postsettlement fraudulent concealment of the nonparticipation of Salazar and the participation of Smith.

In addition to the Stevens letters, Adams relies heavily on the August 22, 2007 declaration of Jones, a copy of which she provided to the court. According to Jones, he spoke to Salazar on May 8, 2007 and Salazar said “that he did not realize that he was given any responsibilities under the Settlement Agreement until mid-March 2007, when he for the first time received and reviewed a copy of the agreement received from Carl Stevens.... Mr. Salazar told me that he became concerned that he was not legally protected and contacted an attorney, who drafted a release of Mr. Salazar to be signed by the parties to the Settlement Agreement.”

Without addressing the legal counsel defendants’ hearsay objections, we simply observe that the information contained in the declaration is directed to presettlement conduct. That is, it bears upon whether the defendants had correctly represented in the settlement agreement that Salazar had “agreed to his role as set forth [therein].” (Adams I, supra, G039956.) It does not bear upon whether Salazar had continued to work on the remediation of Adams’s unit postsettlement, albeit without knowledge of the specific terms of the settlement agreement, or more particularly, whether the legal counsel defendants were, postsettlement, covering up the alleged lack of participation of Salazar.

In short, Adams did not submit evidence of postsettlement conduct that would demonstrate a probability of success on the merits of the cause of action for fraudulent concealment. The trial court did not err in granting the anti-SLAPP motion with respect to the fourth and fifth causes of action.

(c) Breach of implied covenant of good faith

Adams’s sixth cause of action was for breach of the covenant of good faith and fair dealing as implied in the settlement agreement. She alleged that the defendants tortiously breached the settlement agreement with the purpose of frustrating her enjoyment of the contract rights thereunder.

Adams incorporated by reference allegations concerning the purported fraudulent inducement. She again emphasized the presettlement conduct of the defendants. For example, in paragraph 10.8 she said: “By the time of the ‘settlement’ at the end of 2006, Plaintiff had been ordered to move out of her Home two years earlier by a doctor; Plaintiff suffered from bad health due to allergies, rhinitis, and asthma caused by the conditions of the Home; she had lost her law practice, social network, friends, and professional connections; and she was financially devastated, owing almost $200,000 in loans. All of these conditions that began in 2003 were caused and perpetuated by Defendants.”

In paragraph 10.12, Adams alleged: “Defendants, and each of them, are, were, and always have been aware of this vulnerability. In 2003 and through 2004 Defendants had, and in fact, created the vulnerability. From April 2005 all the way to settlement in late 2006, Defendants consciously exploited this vulnerability; and, by the time of settlement, Defendants were aware of the effect of the stress on Plaintiff in terms of her M.S., as enumerated in this Complaint, supra.

Adams stated that the defendants’ frustration of the benefits of the settlement agreement included the acts and omissions enumerated in paragraph 11.4. In paragraph 11.4, Adams alleged a conspiracy which “included... intentional and fraudulent misrepresentation in the Settlement contract about Mr. Salazar’s knowledge and consent to his role in the contract....” In that paragraph, she also alleged many ways in which the various defendants failed to properly remediate her property as required by the settlement agreement. Although Adams does not allege that the legal counsel defendants were parties to the settlement agreement, she indicates that they were the agents of the legal counsel defendants in carrying out, or rather failing to carry out, the terms of the settlement agreement.

Adams once again intertwines the legal counsel defendants’ allegedly fraudulent conduct in the negotiation of the settlement agreement and their allegedly improper activity in the administration of the settlement agreement after it was signed. As we have stated, however, she cannot frustrate the purposes of the anti-SLAPP statute by combining allegations of protected and nonprotected activity in her pleading. (Fox Searchlight Pictures, Inc. v. Paladino, supra, 89 Cal.App.4th at p. 308.) Her allegations against the legal counsel defendants are based in significant part on protected activity, so the first prong of the section 425.16 test is met.

Where the second prong of the section 425.16 test is concerned, we have already stated that Adams cannot show a probability of prevailing on a cause of action with respect to the presettlement activities of the legal counsel defendants because those activities are protected by the litigation privilege. Any postsettlement activities allegedly undertaken in furtherance of the fraudulent plan fail because the legal counsel defendants cannot be held liable for breaching, tortiously or otherwise, a contract to which they are not parties. Adams makes no argument to the contrary and cites no authority for the proposition that one who is not party to a contract can be held liable for its breach. Consequently, Adams has waived any claim that she met her burden to show a probability of prevailing on the merits of this cause of action with respect to postsettlement activities. (McComber v. Wells, supra, 72 Cal.App.4th at pp. 522-523.)

(d) Conspiracy

The seventh cause of action was for conspiracy to intentionally frustrate the enjoyment of contract. The alleged conspiracy began with the “intentional and fraudulent misrepresentation in the Settlement contract about Mr. Salazar’s knowledge and consent to his role in the contract....” The cause of action incorporated by reference the allegations of fraud in the inducement. The alleged conspiracy continued through a plethora of purported failures to perform the settlement agreement. The cause of action was essentially a combination of the fraud in the inducement and breach of contract allegations.

Again, to the extent this cause of action is grounded in presettlement conduct, it is based on activity protected under section 425.16. Although Adams maintains that much of the activity was postsettlement, she claims the conspiracy was designed in the presettlement phase and carried out afterward. We conclude, once again, that she combined allegations of both protected and nonprotected activity. One cannot avoid the application of the anti-SLAPP statute by this device. (Fox Searchlight Pictures, Inc. v. Paladino, supra, 89 Cal.App.4th at p. 308.)

The burden was upon Adams to make a prima facie showing of the merit of her claim with evidence that was admissible at trial. (Salma v. Capon (2008) 161 Cal.App.4th 1275, 1289.) “Unverified allegations in the pleadings or averments made on information and belief cannot make the showing. [Citations.]” (Ibid.)

In her opening brief, Adams makes no argument that she met her burden to demonstrate a probability of success on the merits of her conspiracy cause of action with respect to postsettlement conduct. We could end our discussion here and state that she waived any such argument. (Schubert v. Reynolds (2002) 95 Cal.App.4th 100, 108.) However, we observe that Adams states in her reply brief: “The cause of action for conspiracy against [the legal counsel defendants] and the other defendants lists the specific acts and identifies the participants, including two signatories to the settlement agreement (the homeowners association and its resident property management company), and the signatories’ in-house maintenance contractor, ANGUS SMITH.” She also says that the court must accept as true the evidence that is favorable to her.

Adams misses the point. She has the burden on appeal to cite the portions of the record in support of her position. (Del Real v. City of Riverside (2002) 95 Cal.App.4th 761, 768.) As we have already stated, it is improper to incorporate trial court arguments in appellate briefs. (Banning v. Newdow, supra, 119 Cal.App.4th at p. 455; Paterno v. State of California, supra, 74 Cal.App.4th at p. 109.) Adams fails to cite any portion of the record to demonstrate that she met her burden to make a prima facie showing of the merit of her conspiracy claim, as based on postsettlement conduct, with admissible evidence.

(e) Infliction of emotional distress

Adams’s eighth and ninth causes of action were for intentional infliction of emotional distress and negligent infliction of emotional distress, respectively. She incorporated by reference almost all of her prior allegations, including those concerning fraud in the inducement. In her eighth cause of action, Adams stated that the defendants “willfully, maliciously, and knowingly engaged in the acts enumerated in [the Complaint]... with a conscious design to injure Plaintiff and deprive Plaintiff of her rights and interests.” In her ninth cause of action, she stated that if the acts were not done intentionally, then they were done negligently and recklessly.

We repeat our analysis with respect to the fourth through seventh causes of action above. Adams cannot circumvent the anti-SLAPP statute by combining protected presettlement activity with potentially nonprotected postsettlement activity. (Fox Searchlight Pictures, Inc. v. Paladino, supra, 89 Cal.App.4th at p. 308.) Consequently, section 425.16 applies.

The burden was on Adams to show a probability of success on the merits with respect to her emotional distress causes of action. However, Adams failed to address the emotional distress causes of action in her briefing on appeal. Consequently, she has waived any argument that she met her burden with respect to those causes of action. (Schubert v. Reynolds, supra, 95 Cal.App.4th at p. 108.)

(f) Attorney fees

Adams has not shown that the court erred in granting the anti-SLAPP motion. Consequently, the legal counsel defendants were entitled to attorney fees. (§ 425.16, subd. (c)(1).) This would have been so even if we had held that the motion should have been granted only as to some of the causes of action. (Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc., supra, 129 Cal.App.4th at p. 1267.) Adams did not address attorney fees, so we need not consider whether the amount of the attorney fees award was correct.

In their respondent’s brief, the legal counsel defendants mention that they should be entitled to attorney fees on appeal. They are correct. (Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc., supra, 129 Cal.App.4th at p. 1267.) We leave this matter for the determination of the trial court. (Ibid.)

III

DISPOSITION

The judgment is affirmed. Respondents shall recover their costs on appeal.

WE CONCUR: RYLAARSDAM, J., FYBEL, J.


Summaries of

Adams v. Ghormley

California Court of Appeals, Fourth District, Third Division
Feb 8, 2011
No. G040728 (Cal. Ct. App. Feb. 8, 2011)
Case details for

Adams v. Ghormley

Case Details

Full title:KRISTINE L. ADAMS, Plaintiff and Appellant, v. SCOTT L. GHORMLEY et al.…

Court:California Court of Appeals, Fourth District, Third Division

Date published: Feb 8, 2011

Citations

No. G040728 (Cal. Ct. App. Feb. 8, 2011)

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