Opinion
D048380
5-1-2007
FMI, INC., et al., Cross-complainants and Respondents, v. JAMES DARDEEN et al., Cross-defendants and Appellants,
NOT TO BE PUBLISHED
James Dardeen (James), his wife, Lonna Dardeen (Lonna) and Brandi Hutchison appeal from an order denying their special motion to strike a cross-complaint under Code of Civil Procedure section 425.16, the anti-SLAPP (strategic lawsuit against public participation) statute. (All undesignated statutory references are to the Code of Civil Procedure.) We conclude that the anti-SLAPP statute applies because the cross-complaint arose from acts in furtherance of the constitutional right of petition and that cross-complainants failed to show a probability of prevailing on the merits. Accordingly, we reverse the order denying the anti-SLAPP motion and remand the matter with instructions to grant the motion.
FACTUAL AND PROCEDURAL BACKGROUND
James is the former manager of an adult entertainment business known as Pure Platinum (the business) and Lonna and Hutchison formerly worked as topless dancers at the business. In October 2005, Lonna and Hutchison initiated the instant lawsuit against their former employer alleging certain Labor Code violations and unfair or illegal business practices. Thereafter, two of the defendants, FMI, Inc. and Dirty Dans Inc. (together cross-complainants), filed a cross-complaint against Lonna, Hutchison and James (collectively cross-defendants), alleging causes of action for intentional and negligent interference with prospective economic relations, unfair business practices and conspiracy. The following allegations form the sole factual basis underlying cross-complainants three causes of action.
In January 2005, James began negotiating with cross-complainants about purchasing the business, but the parties never came to an agreement because cross-complainants considered Jamess offer to be below fair market value. After cross-complainants rejected Jamess offer to purchase the business, James told them that they would "regret" not selling the business to him and made "other such threats" that cross-complainants understood were intended to destroy the marketability of the business. James made similar statements to third parties regarding cross-complainants refusal to sell the business to him. Thereafter, cross-defendants conspired to make unfounded allegations against cross-complainants about unpaid wages and to file a baseless action against them in order to damage the business and impair cross-complainants ability to market the business to interested third parties. In furtherance of the conspiracy, Lonna and Hutchison retained counsel and sent a demand letter to cross-complainants that contained unfounded allegations regarding unpaid wages.
James then resumed negotiations to purchase the business and made it clear to cross-complainants that Lonna and Hutchison would file suit against cross-complainants unless they agreed to sell the business to him at a discounted price. At the time James was seeking to force cross-complainants to sell their business at a discounted price, James knew that they were in discussions with other third parties regarding sale of the business. When cross-complainants refused to sell the business to James at below market value, Lonna and Hutchison filed the instant action against them, damaging the business and impairing their ability to sell it.
Cross-defendants filed a special motion to strike the cross-complaint, arguing that all claims were subject to section 425.16 because the claims arose from acts in furtherance of the constitutional right of petition and cross-complainants could not establish a reasonable probability of prevailing because the claims were barred by the litigation privilege of Civil Code section 47, subdivision (b).
In opposition to the motion, cross-complainants filed declarations from employees at the business stating that in February 2005, James started acting unprofessionally by, among other things, pocketing money, not paying for his personal drinks, giving his friends free drinks, padding the bills of some customers and firing entertainers that he did not like. They reported that James also told other employees that he was going to force the owner to sell the business at a discount by making the business lose customers and money. Bob Naefke, cross-complainants sole shareholder and president, stated that James threatened to file the instant lawsuit in an attempt to reduce the price of the business and then, after Lonna and Hutchison did so, two groups of potential buyers indicated they were no longer interesting in purchasing the business. Todd Gandy stated that James approached him about purchasing the business together and informed him of a plan to force the business to lose customers and money to get a better purchase price. After hearing Jamess plan, Gandy and his fellow investors decided not to pursue purchasing the business with James.
The trial court concluded that the anti-SLAPP statute applied, but that cross-complainants had established a probability of success on the merits as to each claim and thus denied the motion. Cross-defendants appeal from this order.
DISCUSSION
I. Anti-SLAPP Law
A special motion to strike under section 425.16 allows a defendant to gain early dismissal of a lawsuit that qualifies as a SLAPP. (§ 425.16, subd. (a).) The moving defendant must make a prima facie showing that the plaintiffs or cross-complainants suit is subject to section 425.16, i.e., that the challenged claims arise from an act or acts in furtherance of his or her right of petition or free speech. (§ 425.16, subd. (b)(1); Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67 (Equilon).) These acts include written or oral statements made before a legislative, executive, or judicial proceeding or in connection with an issue under consideration or review by a legislative, executive, or judicial body. (§ 425.16, subd. (e)(1) & (e)(2).) If the defendant establishes the anti-SLAPP statute applies, the burden shifts to the plaintiff to demonstrate a "probability" of prevailing on the claim. (Equilon, supra, 29 Cal.4th at p. 67.) We review de novo the trial courts rulings on an anti-SLAPP motion. (Thomas v. Quintero (2005) 126 Cal.App.4th 635, 645.)
II. Section 425.16 Applies
Cross-complainants contend that section 425.16 does not apply because the cross-complaint arises from cross-defendants tortious conduct in an attempt to devalue the business and not from threats to file or the filing of the instant complaint. We disagree.
Courts are required to interpret section 425.16 broadly in favor of protecting legitimate exercises of free speech and the right to petition. (§ 425.16, subd. (a).) Subdivisions (e)(1) and (e)(2) of section 425.16 are coextensive with the litigation privilege of Civil Code section 47, subdivision (b) (Ruiz v. Harbor View Community Assn. (2005) 134 Cal.App.4th 1456, 1467, fn. 3) and protect "all statements or writings made before, or in connection with issues under consideration by, official bodies and proceedings[.]" (Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1119 (Briggs).) Accordingly, "[j]ust as communications preparatory to or in anticipation of the bringing of an action or other official proceeding are within the protection of the litigation privilege of Civil Code section 47, subdivision (b) [citation], . . . such statements are equally entitled to the benefits of section 425.16. [Citation.]" (Id. at p. 1115.)
To prevail on an anti-SLAPP motion, the movant must first make a threshold showing that the challenged cause of action arises from protected activity. (Equilon, supra, 29 Cal.4th at p. 67.) To meet this burden, the moving party need not prove that all the acts alleged in a cause of action fall within the protection of the anti-SLAPP statute. (Mann v. Quality Old Time Service, Inc. (2004) 120 Cal.App.4th 90, 103 (Mann).) Where a cause of action is based on allegations that include protected and nonprotected activities, the cause of action is vulnerable to a special motion to strike under the anti-SLAPP statute if the protected conduct forms a substantial part of the factual basis for the claim. (Id. at p. 104.)
The cross-complaint at issue contains causes of action against all cross-defendants for intentional and negligent interference with prospective economic relations and unfair business practices. Although the cross-complaint pleaded conspiracy as a separate cause of action, conspiracy is not a separate tort; rather, it is a theory of liability rendering each participant responsible as a joint tortfeasor for all damage ensuing from the conspiracy, irrespective of whether the participant was a direct actor and regardless of the degree of his or her activity. (Richard B. LeVine, Inc. v. Higashi (2005) 131 Cal.App.4th 566, 574.) In and of itself, a conspiracy does not give rise to a cause of action unless it involves a civil wrong resulting in damage. (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 511.) Because the focus of a section 425.16 motion is on the activity giving rise to the asserted liability, and not on the form of the cause of action (Navellier v. Sletten (2002) 29 Cal.4th 82, 92), we focus on cross-defendants alleged activity.
Cross-complainants alleged that all cross-defendants were coconspirators and agents of the other cross-defendants and committed all acts as part of a conspiracy and within the course and scope of their agency. The acts that cross-defendants allegedly committed are: (1) threatening cross-complainants with litigation; (2) filing the instant action against cross-complainants; and (3) telling cross-complainants and third parties that cross-complainants would regret their decision to not sell the business to James. While the third act is not a protected activity, the first two acts constitute a substantial part of cross-complainants claims and clearly bring the cross-complaint within the purview of subdivisions (e)(1) and (e)(2) of section 425.16. Additionally, the declaration of the owner of the business confirms that the cross-complaint was based in part on the threats to file and the filing of the instant litigation. Accordingly, we turn to the second prong of the inquiry and examine whether cross-complainants can demonstrate a likelihood of prevailing on the merits of their claims.
III. Cross-complainants Have Not Shown A Probability of Success
To establish a likelihood of prevailing on its claims, "the appropriate inquiry is whether the plaintiff has stated and substantiated a legally sufficient claim." (Mann, supra, 120 Cal.App.4th at p. 105.) In making this determination, the court may not weigh the credibility or comparative strength of the evidence, but must consider whether the plaintiff has made a prima facie showing of facts based on competent admissible evidence that would, if proved, support a judgment in the plaintiffs favor. (Ibid.) We measure the plaintiffs showing against a standard similar to that used in deciding a motion for nonsuit, directed verdict, or summary judgment. (ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 1010.) Just as a plaintiff cannot defeat a summary judgment motion based on a theory of recovery not yet pleaded (Lewinter v. Genmar Industries, Inc. (1994) 26 Cal.App.4th 1214, 1223), a plaintiff cannot defeat an anti-SLAPP motion based on evidence showing a different theory of recovery. (Premier Medical Management Systems, Inc. v. California Ins. Guarantee Assn. (2006) 136 Cal.App.4th 464, 475-476 ["On review of an anti-SLAPP motion to strike . . . the standard is akin to that for summary judgment or judgment on the pleadings. We must take the complaint as it is"].)
Cross-complainants causes of action for intentional and negligent interference with economic relations required a showing that cross-defendants engaged in conduct that was (1) wrongful by some legal measure other than the fact of interference itself and (2) interfered with an economic relationship between cross-complainants and another person or entity that contained a probable future economic benefit or advantage to cross-complainants. (Della Penna v. Toyota Motor Sales, U.S.A., Inc. (1995) 11 Cal.4th 376, 392-393; National Medical Transportation Network v. Deloitte & Touche (1998) 62 Cal.App.4th 412, 439-440 [independently wrongful requirement applies to both intentional and negligent interference claims].) The act "must be wrongful by some legal measure, rather than merely a product of an improper, but lawful, purpose or motive." (Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1159 & fn. 11; Arntz Contracting Co. v. St. Paul Fire & Marine Ins. Co. (1996) 47 Cal.App.4th 464, 477 [focus for determining wrongfulness should be on the defendants objective conduct].)
Cross-complainants also asserted a claim for unfair business practices, alleging that cross-defendants actions amounted to an unfair or unlawful business practice. The Unfair Business Practices Act (the Act, Bus. & Prof. Code, §§ 17200, 17500) prohibits, among other things, "any unlawful, unfair or fraudulent business act or practice" (Bus. & Prof. Code, § 17200) and creates an independent action when a business practice violates some other law. (Farmers Ins. Exchange v. Superior Court (1992) 2 Cal.4th 377, 383.) As such, this claim also required proof that cross-defendants alleged actions were wrongful.
Cross-complainants alleged that cross-defendants acted wrongfully by threatening a lawsuit and filing the instant action. These acts, however, cannot support a claim for interference with economic relations or unfair business practices because they were absolutely privileged under Civil Code section 47, subdivision (b). (Silberg v. Anderson (1990) 50 Cal.3d 205, 215 [privilege applies to interference claims]; Manufacturers Life Ins. Co. v. Superior Court (1995) 10 Cal.4th 257, 284 [claim under the Act cannot be based on conduct that is absolutely privileged].) The litigation privilege affords litigants and witnesses "the utmost freedom of access to the courts without fear of being harassed subsequently by derivative tort actions" (Silberg v. Anderson, supra, 50 Cal.3d at p. 213) and applies to "any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action. [Citations.]" (Id. at p. 212.) The privilege also extends to prelitigation statements made with a good faith belief in a legally viable claim and in serious contemplation of litigation. (Aronson v. Kinsella (1997) 58 Cal.App.4th 254, 266.) Importantly, "communications made in connection with litigation do not necessarily fall outside the privilege simply because they are, or are alleged to be, fraudulent, perjurious, unethical, or even illegal." (Kashian v. Harriman (2002) 98 Cal.App.4th 892, 920.)
We reject cross-complainants contention that James cannot invoke the litigation privilege because he is not a party to the instant complaint. This contention ignores their own allegations that James was liable for threatening to file the complaint and filing the complaint as a coconspirator and agent of Lonna and Hutchison. Based on these allegations, James was a participant in the proceeding, even if he was not a named litigant. (Briggs, supra, 19 Cal.4th at p. 1116 [a defendant moving to strike under section 425.16 need not demonstrate that its protected statements or writings were made on its own behalf]; Rubin v. Green (1993) 4 Cal.4th 1187, 1193-1200 [litigation privilege applied to claim that a tenant and a law firm had wrongfully solicited litigation against plaintiff mobile home park by discussing the possibility of a lawsuit with park residents]; Ludwig v. Superior Court (1995) 37 Cal.App.4th 8, 18 [litigation privilege applied to a private individual who acted in pursuit of self-interest in instigating lawsuits by third parties]; cf., Schoendorf v. U.D. Registry, Inc. (2002) 97 Cal.App.4th 227, 242-243 [litigation privilege will not shield persons who make statements about past litigation in which they were not involved]; Wise v. Thrifty Payless, Inc. (2000) 83 Cal.App.4th 1296, 1306-1307 [pharmacys wrongful disclosure of confidential information was not privileged because person who received the information used it in litigation].)
To avoid the litigation privilege, cross-complainants argue that their claims were not based on threats to file the instant litigation or on the filing of the litigation, but on cross-defendants tortious conduct aimed at destroying the marketability of the business. (Kupiec v. American Internat. Adjustment Co. (1991) 235 Cal.App.3d 1326, 1331 [litigation privilege does not apply to tortious courses of conduct].) To support this contention, they cite the following allegations in their cross-complaint:
"Upon Cross-Complainants rejection of [Jamess] unacceptable offers to purchase the Business, Cross-Defendant told Cross-Complainants representatives: You will regret this decision. Youll see how this plays out, all the way out, as well as making other such threats which Cross-Complainants understood were intended to destroy marketability. [James] also made similar statements to third parties regarding Cross-Complainants refusal to sell the Business to [him]."
Cross-complainants argue that the foregoing allegations placed the cross-defendants on fair notice about the business tort claims detailed in the declarations they filed in opposition to the motion. While we agree with cross-complainants general contention that the litigation privilege does not apply to tortious courses of conduct, the cross-complaint does not allege, in substantial part, such conduct.
A complaint or cross-complaint must contain "[a] statement of the facts constituting the cause of action, in ordinary and concise language." (§ 425.10, subd. (a)(1).) "This fact-pleading requirement obligates the plaintiff to allege ultimate facts that as a whole apprise[ ] the adversary of the factual basis of the claim. [Citations.]" (Davaloo v. State Farm Ins. Co. (2005) 135 Cal.App.4th 409, 415.) In other words, the plaintiff or cross-complainant must set forth "essential facts of his case with reasonable precision and with particularity sufficient to acquaint a defendant [or cross-defendant] with the nature, source[,] and extent of his cause of action. [Citation.]" (Youngman v. Nevada Irrigation Dist. (1969) 70 Cal.2d 240, 245.)
Here, the allegations quoted above placed the cross-defendants on notice that threats or statements James made to cross-complainants or third parties interfered with an economic relationship or constituted an illegal or unlawful business practice. The allegations do not place the cross-defendants on fair notice of any other tortious conduct. Thus, the declarations filed by cross-complainants detailing Jamess acts of conversion and improper management of the business were wholly irrelevant because the cross-complaint did not even allude to such activities as a basis for the causes of action.
The remaining allegations of wrongful conduct contained in the cross-complaint concern Jamess act of telling cross-complainants that they would regret their decision to not sell the business to him and his act of making similar statements to third parties. These allegations are not protected by the litigation privilege because they have no connection or logical relation to the complaint. (Silberg v. Anderson, supra, 50 Cal.3d at p. 212.) Accordingly, we review cross-complainants evidence to determine whether they have made a prima facie showing of facts based on competent admissible evidence that would, if proved, support a judgment in their favor on any of the alleged causes of action. (Mann, supra, 120 Cal.App.4th at p. 105.)
The cross-complainants evidence revealed that James used the threatened lawsuit involving Lonna and Hutchison as a bargaining chip with the owner of the business and that he solicited another dancer at the business to join the complaint. James told another employee that the business owner would regret not selling the business to him and "pay" if he got fired. He also told other employees and third parties of a plan he had to purchase the club for a cheap price.
This evidence, however, does not show that James engaged in any actionable wrongful conduct. Threatening litigation and filing the lawsuit were privileged activities and Jamess statements to other employees, while showing an improper motive, were not unlawful. (Korea Supply Co. v. Lockheed Martin Corp., supra, 29 Cal.4th at p. 1159 & fn. 11 [act is independently wrongful if it is "proscribed by some constitutional, statutory, regulatory, common law, or other determinable legal standard"].)
Even if Jamess statements or threats constituted wrongful conduct, cross-complainants have not presented any evidence showing how this conduct caused them any damages. Cross-complainants evidence shows that two groups of interested investors decided not to purchase the business based on the pending lawsuit, not based on any statements James made to them, the financial status of the business or how James managed the business.
Finally, investors James had solicited to purchase the business with him decided not to pursue a business opportunity with him after hearing about his plan and observing him convert money from the business and otherwise improperly manage the business. This tortious conduct, however, is not alleged in the cross-complaint and cannot support the causes of action. Accordingly, cross-complainants have not shown a likelihood of prevailing on the alleged causes of action and the trial court erred in denying the anti-SLAPP motion.
DISPOSITION
The order denying the motion to strike is reversed and the matter is remanded to the superior court with directions to enter a new order granting the motion. Cross-defendants are awarded their costs on appeal. On remand, the trial court shall award the cross-defendants reasonable attorney fees and costs incurred on the motion to strike and on appeal.
We Concur:
McCONNELL, P. J.
HUFFMAN, J.