Opinion
No. C 10-04877 CW.
June 24, 2011
Pursuant to California Code of Civil Procedure section 425.16, commonly known as California's anti-Strategic Lawsuit Against Public Participation (anti-SLAPP) statute, Defendant Nicholas P. Clainos and Defendants Greene Radovsky Maloney Share Henningh LLP (Greene Law Firm), Richard L. Greene and Linda McCall (collectively, Greene Defendants) separately move to strike Plaintiffs Alexander Graham-Sult and David Graham's claims against them and move for attorneys' fees. The Greene Defendants and Defendants Bill Graham Archives LLC, Norton LLC and William E. Sagan (collectively, BGA Defendants) separately move to dismiss Plaintiffs' claims against them. Plaintiffs oppose the motions. The motions were heard on April 7, 2011. After the hearing, Plaintiffs moved for leave to supplement the record. Clainos and the Greene Defendants opposed Plaintiffs' motion.
Having considered oral argument and the papers submitted by the parties, the Court GRANTS Plaintiffs' motion for leave to supplement the record; GRANTS Clainos's anti-SLAPP motion to strike and for attorneys' fees; GRANTS the Greene Defendants' anti-SLAPP motion to strike and for attorneys' fees and DENIES as moot their motion to dismiss; and GRANTS the BGA Defendants' motion to dismiss.
BACKGROUND
Plaintiffs Graham-Sult and Graham, who are New York and Pennsylvania citizens respectively, are sons of Bill Graham, a concert promoter who worked in the San Francisco Bay Area. Bill Graham was the sole owner of Bill Graham Enterprises, Inc. (BGE), through which he conducted his concert promotion business. On October 25, 1991, Bill Graham died in a helicopter crash. At that time, Plaintiffs Graham-Sult and Graham were fourteen and twenty-three years old respectively. This lawsuit concerns a dispute over the ownership of intellectual and tangible property Plaintiffs claim their father owned before his death. The background recited below is based on evidence proffered by the parties.
BGE owned a number of subsidiary entities: Fillmore Corporation; Bill Graham Presents, Inc.; Bill Graham Management, Inc.; and Shoreline Amphitheatre, Ltd. Greene Decl. ¶ 2. The Court refers to BGE and these subsidiaries collectively as "BGE."
Generally, on a motion to dismiss, courts may consider only the complaint. Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). Courts may also consider documents "on which the complaint necessarily relies if: (1) the complaint refers to the document; (2) the document is central to the plaintiff's claim; and (3) no party questions the authenticity of the copy attached to the 12(b)(6) motion." Id. (citation and internal quotation marks omitted). However, because this Order addresses anti-SLAPP motions to strike, the Court also considers declarations proffered by the parties. See Cal. Civ. Proc. Code § 425.16(b)(2); see also Mindys Cosmetics, Inc. v. Dakar, 611 F.3d 590, 598 (9th Cir. 2010).
Clainos, an attorney licensed to practice in California, was appointed executor of Bill Graham's estate under Bill Graham's Last Will and Testament, dated August 2, 1976, and Second Codicil, dated December 22, 1981. Bill Graham's testamentary documents also created trusts for the benefit of Plaintiffs and named Clainos as the trustee to serve until the trusts terminated when Plaintiffs reached twenty-five years of age. Clainos retained the Greene Law Firm to represent him in his role as executor of the estate and trustee of the testamentary trusts. Prior to Bill Graham's death, the Greene Law Firm and Greene, specifically, were counsel to Bill Graham and BGE. During the probate proceedings, Plaintiffs were represented by Philip B. Feldman, an attorney with the law firm known then as Coblentz, Cahen, McCabe Breyer.
On November 7, 1991, the Marin County Superior Court granted Clainos discretionary powers over Bill Graham's estate, which included BGE. Greene Decl., Ex. E. According to Clainos, he served as executor until August 8, 1995, when probate closed pursuant to the state court's final order of accounting. Clainos Decl. ¶ 4. In his role as executor, Clainos decided that Plaintiffs, among other beneficiaries named in Bill Graham's testamentary documents, would receive Bill Graham's "personal possessions located at his home in Corte Madera, commonly known as 'Masada.'" Greene Decl. ¶ 17. Allegedly among these possessions were ten scrapbooks, which contained original prints of posters used in concerts promoted by Bill Graham. Neither Clainos nor Greene conducted an inventory of these personal effects.
On December 9, 1991, Greene investigated the intellectual property rights owned by Bill Graham's estate. Greene met with Jerry Pompili, one of BGE's vice presidents, who informed Greene that "The Fillmore" trademark and copyrights for most of the posters produced by BGE were registered in Bill Graham's personal name. Greene Decl. ¶ 16. However, according to Greene, Pompili represented that "BGE paid for all application and registration fees" and "BGE received all revenues from the sales and licensing of the intellectual property." Id. Based on Pompili's representations, Greene concluded that BGE owned the intellectual property registered in Bill Graham's name.
In January 1994, Clainos brokered a deal to sell BGE to BGE's so-called "key employees." Greene Decl. ¶ 18. Clainos claims that he did so to placate these employees, who threatened to leave BGE if they were not given the opportunity to purchase it. According to Clainos, this action was necessary to preserve the value of BGE. Plaintiffs' trusts were signatories to the sale.
To consummate the transaction, the employees formed BG Presents, Inc. (BGP), which acquired all shares of BGE. As part of the sale, Plaintiffs' respective testamentary trusts each received a ten-percent share of BGP. Clainos acquired a thirteen-percent stake. The transaction also encompassed an agreement concerning the BGE Archives, which were defined to include "all posters, handbills, tickets, photographs, slides, videos, audio tapes and other archival material produced or obtained prior to October 25, 1991 in connection with [BGE] prior to October 25, 1991." Greene Decl., Ex. O, at 4. The agreement provided that, in the event of a third-party offer to purchase BGE or the BGE archives, Plaintiffs, along with other beneficiaries, had the option "to purchase all, but not less than all, of the Remaining Archives on the same terms and conditions as offered by the third party." Id. at 4-5. The documents related to the transaction, including the BGE Archives agreement, did not specifically identify the intellectual property held by BGE.
On August 8, 1995, the state court entered its final order of distribution.
On or about August 31, 1995, Richard Idell, who was apparently "special counsel to BGE," wrote Greene to inquire about "how the transfer/assignment of copyrights and trademarks was handled in the sale of [BGE] to the key employees." Greene Decl., Ex. O, at 1. In a letter dated September 1, 1995, Greene responded as follows:
1. As I presume you are aware, most of the tradenames/trademarks/copyrights have always been owned by and in the name of BGE since I understand from Jerry Pompili that BGE paid all the expenses for the applications that he filed.
2. Apparently, on some occasions, Jerry put some of the above items in Bill's name. Thus, to solve that problem we prepared and sent yesterday to Jerry for Nick and Gregg to sign the enclosed Assignment and Acceptance of Assignment. Once that is done, this should solve any title problems.
Greene Decl., Ex. O, at 2.
The assignment was "executed as of August 1, 1995" by Clainos, in his role as executor of Bill Graham's estate. Compl., Ex. B, at CTR01212. The preamble stated that intellectual property used by BGE was registered in Bill Graham's name and that the assignment's purpose was to "confirm BGE's ownership of" the intellectual property. Id. The assignment provided,
Assignor hereby assigns, transfers and conveys to BGE ("Assignee") any and all right, title and interest of the Decedent in any and all copyrights, tradenames, trademarks and servicemarks claimed by or registered in the name of the Decedent, other than the copyright to the Decedent's autobiography.Id. On July 29, 1996, the assignment was recorded in the U.S. Copyright Office.
In December 1997, BGP was sold to SFX Broadcasting, Inc. In accordance with the BGE Archives agreement explained above, SFX's offer to purchase BGP triggered Plaintiffs' right of first refusal, which Plaintiffs declined to exercise. The parties' statement of intent regarding the sale, to which Plaintiffs' trusts were signatories, recited that SFX's acquisition of BGP included "all intellectual property rights used in the operation of BGP's business (including the rights to the names 'Fillmore' and 'Bill Graham Presents.')." Greene Decl., Ex. S, at 3. Section 3.18 of the SFX Purchase Agreement, entitled "Intellectual Property; Software," provided,
Schedule 3.18 attached hereto contains, to each Selling Shareholder's Knowledge, a true and complete list of all trade names, trademarks, trade dress, domain names, service marks, logos, copyrights, patents, and/or similar rights (including registrations and applications to register or renew the registration of any of the foregoing), trade secrets, inventions, know-how, specifically developed computer software and other intellectual property rights or other proprietary rights or confidential information ("Intellectual Property") owned or used by the Company or material to the conduct of the Company's business, including whether such Intellectual Property is owned or licensed by the Company.Id., Ex. T § 3.18. Schedule 3.18 was labeled "Intellectual Property and Software Owned or Used by the Company." Id. at ii. It contained a copy of Clainos's 1995 Assignment and the recordation of the assignment in the U.S. Copyright Office, and indicated that various copyrights and "The Fillmore" trademark were owned by BGP. Id., Ex. T.
Feldman, who also represented Plaintiffs during the SFX sale, was given a copy of the SFX Purchase Agreement. Greene Decl. ¶ 29; Greene Supp. Decl. ¶ 6 and Ex. SC. However, Feldman has "no recollection of seeing or receiving Schedule 3.18, which contains the Assignment, prior to 2011." Am. Feldman Decl. ¶ 2. He does not assert that he did not receive a copy of the SFX Purchase Agreement in 1997. Jacques Fabert, on behalf of Plaintiff David Graham's trust, and Clainos, on behalf of Plaintiff Alexander Graham-Sult's trust, agreed to the terms of the transaction.
Plaintiffs object to Exhibit SC of the Greene Supplemental Declaration, which contains a December 11, 1997 letter faxed by Greene to Feldman concerning the SFX Purchase Agreement. Plaintiffs argue that, because the letter is unsigned, it lacks relevance. Plaintiffs, however, do not object to paragraph six of the Greene Supplemental Declaration, in which Greene states that Exhibit SC "is a true and correct copy of correspondence I faxed to Plaintiffs' attorney, Philip Feldman, on or about December 11, 1997 (the same day the SFX Acquisition Agreement was signed), following a conversation we had on that day." Greene Supp. Decl. ¶ 6. Greene also states that he sent Feldman "certain excerpts from the Agreement relating to intellectual property . . ., including the intellectual property representations and warranties, which incorporate by reference the liability-limiting disclosure schedule setting forth a description of the intellectual property owned by BGE." Id. For his part, Feldman does not deny that he had this conversation with Greene or that he received Greene's faxed letter. Because Exhibit SC is relevant, Plaintiffs' objection is OVERRULED.
After Plaintiff David Graham's trust terminated when he reached twenty-five years of age, he transferred its assets to another trust, for which Fabert served as trustee.
Thereafter, Clear Channel Communications, Inc., purchased SFX. Clear Channel allegedly transferred the copyrights previously held by BGE and portions of the BGE Archives to Bill Graham Archives, LLC. In July 2002, Clear Channel sold Bill Graham Archives, LLC, to Sagan and Norton, LLC, which is allegedly owned by Sagan.
Plaintiffs assert they were not aware of Clainos's 1995 Assignment until February 2009, when they discovered it in a box of documents at the former headquarters of BGE. They found the assignment in an "SFX Sales Binder;" the assignment was located in "Schedule 3.18." Graham-Sult Decl. ¶ 4; Godinez Decl. ¶ 6. They also allege that, in 2009, they learned that Clainos had transferred scrapbooks contained in their father's "personal warehouse" to a "BGE offsite corporate warehouse" so that the scrapbooks could be included in the BGE Archives. Compl. ¶ 25.
Plaintiffs filed their lawsuit on October 27, 2010.
DISCUSSION
I. Anti-SLAPP Motions to Strike
California's anti-SLAPP statute provides,
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.
Cal. Civ. Proc. Code § 425.16(b)(1). California anti-SLAPP motions to strike are available to litigants proceeding in federal court. Thomas v. Fry's Elecs., Inc., 400 F.3d 1206, 1206 (9th Cir. 2005).
Courts analyze these motions in two steps. "First, the defendant must make a prima facie showing that the plaintiff's suit arises from an act in furtherance of the defendant's rights of petition or free speech." Mindys, 611 F.3d at 595 (citation and internal quotation marks omitted). "Second, once the defendant has made a prima facie showing, the burden shifts to the plaintiff to demonstrate a probability of prevailing on the challenged claims." Id.
"At [the] second step of the anti-SLAPP inquiry, the required probability that [a party] will prevail need not be high." Hilton v. Hallmark Cards, 580 F.3d 874, 888-89 (9th Cir. 2009). A plaintiff must show "only a 'minimum level of legal sufficiency and triability.'" Mindys, 611 F.3d at 598 (quoting Linder v. Thrifty Oil Co., 23 Cal. 4th 429, 438 n. 5 (2000)). The plaintiff need only "state and substantiate a legally sufficient claim."Mindys, 611 F.3d at 598 (citation and internal quotation marks omitted). In conducting its analysis, the "court 'does not weigh the credibility or comparative probative strength of competing evidence,' but '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.'" Id. at 599 (quoting Wilson v. Parker, Covert Chidester, 28 Cal. 4th 811, 821 (2002)).
Unless an action is brought pursuant to certain sections of the California Government Code, "a prevailing defendant on a special motion to strike shall be entitled to recover his or her attorney's fees and costs." Cal. Civ. Proc. Code § 425.16(c); see also Bernardo v. Planned Parenthood Fed. of Am., 115 Cal. App. 4th 322, 360-367 (2004) (explaining policy behind mandatory fees and costs provision of anti-SLAPP statute).
A. Clainos's Motion to Strike
Against Clainos, Plaintiffs bring claims for breach of fiduciary duty, breach of trust, conversion, intentional misrepresentation, negligent misrepresentation, fraudulent concealment, promissory estoppel and unjust enrichment.
1. Arising From a Protected Activity
Clainos argues that Plaintiffs' claims arise from his actions as the executor of Bill Graham's estate, all of which he contends were in the furtherance of his right to petition.
Under the anti-SLAPP statute, an act in the furtherance of an individual's right to petition includes "any written or oral statement or writing made before . . . judicial proceeding" and "any written or oral statement or writing made in connection with an issue under consideration or review by a . . . judicial body." Cal. Civ. Proc. Code § 425.16(e). The "'anti-SLAPP statute's definitional focus is . . . the defendant's activity that gives rise to his or her asserted liability — and whether that activity constitutes protected speech or petitioning.'" Martinez v. Metabolife Int'l, Inc., 113 Cal. App. 4th 181, 187 (2003) (quoting Navellier v. Slatten, 29 Cal. 4th 82, 92 (2002); emphasis byNavellier court). The "principal thrust or gravamen of the plaintiff's cause of action . . . determines whether the anti-SLAPP statute applies." Martinez, 113 Cal. App. 4th at 188 (citation omitted; emphasis in original). Where a claim is based on "protected activity and unprotected activity, it is subject to section 425.16 unless the protected conduct is merely incidental to the unprotected conduct." Haight Ashbury Free Clinics, Inc. v. Happening House Ventures, 184 Cal. App. 4th 1539, 1551 (2010) (citation and internal quotation marks omitted).
Plaintiffs' claims are based, in part, on statements made in the probate proceedings. They contend that Clainos misrepresented the nature of their father's estate in documents filed in state court. And, as discussed further below, they complain that Clainos's fraud infected the state court's judgment. Clainos's conduct before the state court is more than incidental to this case.
Because Plaintiffs' claims are based, in substantial part, on statements Clainos made in connection with an issue under consideration by a judicial body, they fall within the scope of the anti-SLAPP statute. The burden therefore shifts to Plaintiffs to state and substantiate their claims against Clainos.
2. Probability of Success
a. Statute of Limitations
Clainos contends that Plaintiffs' claims are barred by the relevant statutes of limitations. Plaintiffs do not dispute that, because they brought their case in October 2010, their claims are time-barred unless they have a basis for tolling relevant limitations periods.
Plaintiffs' claims other than for breach of fiduciary duty must have been brought within three years of the date they accrued.See Cal. Civ. Proc. Code § 338(d); Cal. Prob. Code § 16460. California courts have reached varying conclusions regarding the limitations period applicable to claims for breach of fiduciary duty. Compare David Welch Co. v. Erskine Tulley, 203 Cal. App. 3d 884, 893 (1988) (applying four-year limitations period) with City of Vista v. Robert Thomas Secs., Inc., 84 Cal. App. 4th 882, 889 (2000) (concluding that three-year limitations period applies because plaintiff's breach of fiduciary duty claim was grounded in fraud). Even under the more generous four-year limitations period, Plaintiffs' breach of fiduciary duty claim would be barred, unless they can justify the tolling of the statute.
Under California law, a limitations period may be tolled until the basis of a claim "is discovered or with reasonable diligence could have been discovered." Elec. Equip. Express, Inc. v. Donald H. Seiler Co., 122 Cal. App. 3d 834, 855 (1981). However, where a fiduciary relationship between the parties exists at the time the claim arose, a plaintiff's duty of diligence is relaxed because "'a fiduciary has a duty to make a full and fair disclosure of all facts which materially affect the rights and interest of the parties, and, where a fiduciary relationship exists, facts which would ordinarily require investigation may not excite suspicion.'" Id. (quoting Bennett v. Hibernia Bank, 47 Cal. 2d 540, 559-60 (1956)). In such circumstances, "a plaintiff need not disprove that an earlier discovery could have been made upon a diligent inquiry but need show only that he made an actual discovery of hitherto unknown information within the statutory period before filing the action." Bennett, 47 Cal. 2d at 563. However, a plaintiff "does have a duty to investigate even where a fiduciary relationship exists when 'he has notice of facts sufficient to arouse the suspicions of a reasonable man.'" Elec. Equip., 122 Cal. App. 3d at 855 (quoting Bennett, 47 Cal. 2d at 563).
Plaintiffs assert that their claims concerning the disputed intellectual property did not accrue until they discovered the 1995 Assignment. See Pls.' Opp'n to Clainos Mot. to Dismiss 5:16-17. Clainos claims that Plaintiffs had notice of the 1995 Assignment in 1997, through the SFX sale. He cites Greene's declaration that Feldman was provided a copy of the SFX Purchase Agreement, which referred to Schedule 3.18 that contained the 1995 Assignment. In response, Plaintiffs state that they were not aware of the 1995 Assignment before discovering it in the Schedule 3.18 section of the SFX Sales Binder they discovered in February 2009. Plaintiffs and Fabert state that, prior to that time, they never saw the binder, Schedule 3.18 or the 1995 Assignment. Plaintiffs' current counsel represents that she, along with other legal staff, reviewed "documents from various sources, including plaintiffs and" Feldman's law firm. Cannata Am. Decl. ¶ 3. In particular, counsel states that none of the "correspondence" from Feldman's firm that she reviewed made reference to the intellectual property at issue in this action or to the 1995 Assignment. Id. ¶ 4. Feldman represents that he does not recall whether he saw or received Schedule 3.18 prior to 2011.
Plaintiffs' evidence does not contradict Clainos's showing that, in 1997, the SFX Purchase Agreement was sent to Feldman and the Agreement included the 1995 Assignment. Plaintiffs do not dispute that Feldman was their attorney for the purposes of the SFX sale. Nor do they offer a declaration from Feldman stating that he did not receive the SFX Purchase Agreement in 1997. That Feldman, approximately fourteen years later, does not recall seeing or receiving Schedule 3.18 and the 1995 Assignment is not inconsistent with Greene's declaration that the SFX Purchase Agreement was provided to Feldman and an inference that he received it. Under general agency principles, "an attorney is his client's agent, and . . . the agent's knowledge is imputed to the principal even where . . . the agent does not actually communicate with the principal, who thus lacks actual knowledge of the imputed fact." Herman v. L.A. Cnty. Metro. Transp. Auth., 71 Cal. App. 4th 819, 828 (1999); see also Stalberg v. W. Title Ins. Co., 230 Cal. App. 3d 1223, 1230-31 (1991) (concluding that law firm's knowledge of fact was imputed to clients); Cal. Civ. Code § 2332 ("As against a principal, both principal and agent are deemed to have notice of whatever either has notice of, and ought, in good faith and the exercise of ordinary care and diligence, to communicate to the other."). This principle of constructive notice is irrebutable. Herman, 71 Cal. App. 4th at 828. Because the SFX Sales Agreement was provided to Feldman, and this Agreement referred to and incorporated Schedule 3.18 by reference, Plaintiffs are charged with notice of the 1995 Assignment as of 1997.
Furthermore, Section 3.18 of the SFX Sales Agreement stated that, by signing the document, Plaintiffs warranted through their respective trusts that BGP owned the intellectual property listed in Schedule 3.18. This warranty imposed on Plaintiffs a duty to investigate the intellectual property owned by BGP, notwithstanding Clainos's role as their fiduciary, because they were affirmatively representing that BGP owned the copyrights and trademark at issue in this case. Indeed, even if the 1995 Assignment were not sent to Feldman, an investigation into the facts underlying the warranty in Section 3.18 would have revealed the 1995 Assignment, which was recorded with the Copyright Office. Thus, Feldman's receipt of the SFX Sales Agreement bars Plaintiffs' claims against Clainos for the disputed intellectual property.
In addition, Fabert signed the SFX Sales Agreement as trustee of Plaintiff David Graham's trust. As noted above, in doing so, Fabert represented to Clear Channel that BGP owned the poster copyrights and "The Fillmore" trademark. Although Fabert asserts that he never received a copy of Schedule 3.18, the 1995 Assignment or the SFX Sales Binder, he does not contend that anyone prevented him from obtaining a copy of Schedule 3.18, which was incorporated by reference in the SFX Sales Agreement. Under California law, "one who assents to a contract is bound by its provisions and cannot complain of unfamiliarity with the language of the instrument." Madden v. Kaiser Found. Hosps., 17 Cal. 3d 699, 710 (1976); see also Circuit City Stores, Inc. v. Ahmed, 283 F.3d 1198, 1200 (9th Cir. 2002). Had Fabert investigated the facts underlying the warranty he made, he would have discovered the 1995 Assignment. Thus, Plaintiff David Graham's claims against Clainos based on the disputed intellectual property are time-barred based on both Feldman's receipt of the SFX Sales Agreement and Fabert's assent to it.
Finally, many of the posters contained the notice, "© Bill Graham." Nimmer Decl. ¶¶ 14, 39-43. This should have put Plaintiffs on notice, at the time of the probate proceedings, that their father may have registered intellectual property in his name. Indeed, Plaintiffs acknowledge that Bill Graham had registered the copyrights and "The Fillmore" trademark with the Copyright Office and the U.S. Patent and Trademark Office respectively. See, e.g., Compl. ¶ 20; Nimmer Decl. ¶¶ 14-16. And, as Plaintiffs recognize, a search of publically-available records would have shown that this intellectual property was registered in Bill Graham's name. See, e.g., Graham-Sult Decl. ¶ 4 (noting that an investigation at the Copyright Office led to his "realization" that his father held "over 300 poster copyrights"). All this further supports a conclusion that Plaintiffs' claims against Clainos concerning the intellectual property are time-barred.
Plaintiffs' claims against Clainos concerning the scrapbooks fare no better. Plaintiffs do not dispute that, during the probate period, they were responsible for identifying the personal property of their father to which they were entitled. And, at the time that BGE was sold to the key employees in 1994, Plaintiffs knew that anything claimed by BGE would be included in the sale. This distinction — between Bill Graham's personal scrapbooks and the BGE archives — should have put Plaintiffs, who were represented by counsel, on notice that they should investigate the nature of Bill Graham's personal holdings. They did not do so. Although a specific item-by-item inventory was never undertaken, Plaintiffs do not contend that they requested one and were denied.
Accordingly, Plaintiffs' claims against Clainos were time-barred by the time they brought their lawsuit in October 2010.
b. Res Judicata
Clainos also asserts that Plaintiffs' action lacks merit because, based on the state court's final order, it is barred by the doctrine of res judicata.
The final order of a probate court "releases the personal representative and the sureties from all claims of the heirs or devisees and of any persons affected thereby based upon any act or omission directly authorized, approved, or confirmed in the judgment or order." Cal. Prob. Code § 7250(a). This rule does "not apply where the judgment or order is obtained by fraud or conspiracy or by misrepresentation contained in the petition or account or in the judgment as to any material fact." Id. § 7250(c). Such a misrepresentation may include "the omission of a material fact." Id.
Plaintiffs contend that the order closing probate was based on Clainos's misrepresentations and omissions concerning the nature of their father's estate. However, Plaintiffs' claims against Clainos regarding the disputed scrapbooks are precluded by the state court's final order. To make out their claim of fraud, Plaintiffs contend that the scrapbooks did not appear on any inventory compiled by Clainos or the Greene Law Firm. However, Clainos and Greene state, and Plaintiffs do not dispute, that no specific inventory of Bill Graham's personal memorabilia was ever made. And, as noted above, Plaintiffs do not contend that they sought such an inventory, only to be denied. Plaintiffs assert that Clainos "controlled our access as well as the definition of what specific Archive items we could have" and that they "were never given complete access to the Archives." Graham-Sult Decl. ¶ 7. Even if this were true and even if it prevented them from discovering items in their father's personal collection, Plaintiffs were represented by counsel and could have objected in the probate proceedings. Indeed, they do not dispute that they were responsible for "going through" their father's personal items. Greene Decl. ¶ 17. Plaintiffs, however, did not raise their concerns before the state court.
Accordingly, to the extent they are based on the disputed scrapbooks, Plaintiffs' claims are barred by the state court's final order. For this additional reason, Plaintiffs' claims against Clainos regarding the scrapbooks lack merit.
c. Litigation Privilege
California Civil Code section 47(b) provides that communications made in or related to judicial proceedings are absolutely immune from tort liability. The California Supreme Court explains that the purpose of the privilege is "to afford litigants . . . the utmost freedom of access to the courts without fear of being harassed subsequently by derivative tort actions." Silberg v. Anderson, 50 Cal. 3d 205, 213 (1990). "The litigation privilege applies to any communications (1) made in a judicial proceeding; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; (4) that have some connection or logical relation to the action."Sharper Image Corp. v. Target Corp., 425 F. Supp. 2d 1056, 1077 (N.D. Cal. 2006) (citing Silberg, 50 Cal. 3d at 212). Once these requirements are met, § 47(b) operates as an absolute privilege.Silberg, 50 Cal. 3d at 216. "Any doubt about whether the privilege applies is resolved in favor of applying it." Kashian v. Harriman, 98 Cal. App. 4th 892, 913 (2002).
As noted above, a substantial portion of Plaintiffs' action is based on statements Clainos made in the probate proceedings. See, e.g., Compl. ¶ 59. Thus, to the extent that Plaintiffs' claims are based on these statements, the litigation privilege immunizes Clainos from liability. Plaintiffs' reliance on Action Apartment Association, Inc. v. City of Santa Monica, 41 Cal. 4th 1232 (2007), is unavailing. Action Apartment teaches that the litigation privilege is trumped by statutes that are "more specific than the litigation privilege" and that "would be significantly or wholly inoperable" if the privilege were asserted. Id. at 1246. These requirements are met by criminal statutes penalizing perjury and subornation of perjury and statutes related to state bar discipline. Id. Plaintiffs, however, do not cite any authority that their claims arise under statutes to which the litigation privilege does not apply. Indeed, following Action Apartment, state courts have recognized the continued breadth of the litigation privilege, reaffirming that it "immunizes defendants from virtually any tort liability (including claims for fraud), with the sole exception of causes of action for malicious prosecution." Olsen v. Harbison, 191 Cal. App. 4th 325, 333 (2010) (citation omitted).
Because Plaintiffs have not otherwise stated claims against Clainos, their action is stricken as a SLAPP. Although leave to amend may be granted, Plaintiffs present no evidence or argument suggesting that amendment would change the outcome. Thus, leave to amend is denied as futile. As a prevailing defendant, Clainos is entitled to attorneys' fees and costs. Cal. Civ. Proc. Code § 425.16(c).
California law prohibits state courts from affording leave to amend following a grant of a motion to strike under the anti-SLAPP statute. See, e.g., Simmons v. Allstate Ins Co., 92 Cal. App. 4th 1068, 1073-74 (2001). However, federal district courts retain discretion to grant leave to amend, notwithstanding such a motion. See Greensprings Baptist Christian Fellowship Trust v. Cilley, 629 F.3d 1064, 1066 n. 1 (9th Cir. 2010) (citingVerizon Del., Inc. v. Covad Commc'ns Co., 377 F.3d 1081, 1091 (9th Cir. 2004)).
B. Greene Defendants' Motion to Strike
Against the Greene Defendants, Plaintiffs bring claims for aiding and abetting a breach of fiduciary duty, conversion, intentional misrepresentation, negligent misrepresentation and fraudulent concealment. Plaintiffs state that these claims are based on the Greene Defendants' "wrongful participation in the conversion of estate assets and coverup." Pls.' Opp'n to Greene Firm Defs.' Mot. to Strike 14:10.
1. Arising from Protected Activity
Plaintiffs' claims against the Greene Defendants are subject to the anti-SLAPP statute for the same reasons that their claims against Clainos are. Plaintiffs plead that some of the alleged misrepresentations and non-disclosures of which they complain were contained in documents these Defendants prepared and filed in state court. See, e.g., Compl. ¶ 42(a)-(d). These Defendants' conduct before the state court was more than incidental to Plaintiffs' claims.
Because Plaintiffs' claims are based, in substantial part, on the Greene Defendants' statements made in connection with an issue under consideration by a judicial body, they fall within the scope of the anti-SLAPP statute. The burden therefore shifts to Plaintiffs to state and substantiate their claims against the Greene Defendants.
2. Probability of Success
Plaintiffs' claims against the Greene Defendants are barred by the statute of limitations and the litigation privilege for the reasons stated above. Because Plaintiffs have not otherwise stated claims against the Greene Defendants, their action is stricken as a SLAPP. Although leave to amend may be granted, Plaintiffs present no evidence or argument suggesting that amendment would change the outcome. Thus, leave to amend is denied as futile. As prevailing defendants, the Greene Defendants are entitled to attorneys' fees and costs. Cal. Civ. Proc. Code § 425.16(c).
Plaintiffs' claims against the Greene Defendants concerning the disputed scrapbooks are based on these Defendants' "preparing and filing false inventories and accountings with the Probate Court" and "making intentionally false representations to plaintiffs and the Probate Court." This conduct clearly falls within the scope of the litigation privilege.
The Greene Defendants' motion to dismiss is denied as moot.
II. BGA Defendants' Motion to Dismiss Pursuant to Rule 12(b)(6)
A complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a). Dismissal under Rule 12(b)(6) for failure to state a claim is appropriate only when the complaint does not give the defendant fair notice of a legally cognizable claim and the grounds on which it rests. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). In considering whether the complaint is sufficient to state a claim, the court will take all material allegations as true and construe them in the light most favorable to the plaintiff. NL Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986). However, this principle is inapplicable to legal conclusions; "threadbare recitals of the elements of a cause of action, supported by mere conclusory statements," are not taken as true. Ashcroft v. Iqbal, ___ U.S. ___, 129 S. Ct. 1937, 1949-50 (2009) (citing Twombly, 550 U.S. at 555).
When granting a motion to dismiss, the court is generally required to grant the plaintiff leave to amend, even if no request to amend the pleading was made, unless amendment would be futile. Cook, Perkiss Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911 F.2d 242, 246-47 (9th Cir. 1990). In determining whether amendment would be futile, the court examines whether the complaint could be amended to cure the defect requiring dismissal "without contradicting any of the allegations of [the] original complaint." Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990). Leave to amend should be liberally granted, but an amended complaint cannot allege facts inconsistent with the challenged pleading. Id. at 296-97.
Against the BGA Defendants, Plaintiffs bring claims for conversion, promissory estoppel, unjust enrichment, copyright infringement and declaratory relief. They seek a declaration that they "and/or the Estate of Bill Graham are the rightful owners of" the copyrights discussed above and "approximately ten (10) scrapbooks." Compl. ¶ 102. Plaintiffs do not identify the scrapbooks at issue in their complaint.
A. Conversion
Under California law, a claim for conversion requires a plaintiff to allege (1) "ownership or right to possession of property;" (2) a defendant's wrongful act toward the property, causing interference with the plaintiff's possession; and (3) damage to the plaintiff. PCO, Inc. v. Christensen, Miller, Fink, Jacobs, Glaser, Weil Shapiro, LLP, 150 Cal. App. 4th 384, 394 (2007).
The 1995 Assignment precludes Plaintiffs' claim against the BGA Defendants for the alleged conversion of copyrights. Plaintiffs do not allege any facts indicating that they had any right to possession of the disputed copyrights in July 2002, the month the BGA Defendants acquired them. By that time, even under Plaintiffs' allegations, the copyrights already had been transferred from Bill Graham's estate to BGE to BGP to SFX to Bill Graham Archives. Furthermore, Plaintiffs do not plead facts suggesting that the BGA Defendants engaged in wrongdoing Although they contend that Sagan should have known that the 1995 Assignment was defective, they plead no facts to support this contention.
As noted above, the Court generally may consider only the complaint on a motion to dismiss. However, the 1995 Assignment is properly before the Court on the BGA Defendants' motion because Plaintiffs' complaint refers to the document, it is central to Plaintiffs' claim, and no party questions its authenticity. See Daniels-Hall, 629 F.3d at 998.
Similarly, Plaintiffs do not allege facts suggesting that they had an ownership interest in the ten scrapbooks. Like the copyrights, Plaintiffs allege that these items were transferred between several entities before the BGA Defendants acquired them in July 2002. Furthermore, Plaintiffs do not allege how the BGA Defendants acted improperly with respect to the ten scrapbooks.
Accordingly, Plaintiffs' conversion claim against the BGA Defendants is dismissed. Because amendment would be futile, the Court does not afford leave to amend.
B. Promissory Estoppel
To state a claim for promissory estoppel, a plaintiff must plead "(1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) the reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance." US Ecology, Inc. v. State, 129 Cal. App. 4th 887, 901 (2005) (citation and internal quotation and editing marks omitted).
Plaintiffs' promissory estoppel claim against the BGA Defendants is based on Clainos's and the Greene Defendants' alleged promises to give them all of Bill Graham's scrapbooks. Plaintiffs do not contend that the BGA Defendants ever made them a promise. Because Plaintiffs fail to allege that the BGA Defendants promised them anything, Plaintiffs' promissory estoppel claim against the BGA Defendants is not cognizable.
Neither Powers v. Pacific Diesel Engine Company, 206 Cal. 334 (1929), nor Burgess v. California Mutual Building and Loan Association, 210 Cal. 180 (1930), require a contrary conclusion.Powers stands for the proposition that an original owner may be estopped from asserting ownership over property in light of a bona fide purchaser's claim if the original owner negligently entrusted the property to a third party who sold the property to the purchaser. 206 Cal. at 341; see also Reynolds v. Reynolds, 54 Cal. 2d 669, 675 (1960) (explaining that Powers reflects the principle of "upholding claims of bona fide purchasers when any basis of estoppel could be found to exist"). The Powers court relied on the precept that, "where one of two innocent persons must suffer by the act of a third, he, by whose negligence it happened, must be the sufferer." 206 Cal. at 339 (citation omitted). This principle is not applicable to the promissory estoppel claim in this case. The BGA Defendants did not originally own the scrapbooks, nor did they negligently entrust them to Clainos. Burgess concerned a third party enforcing a promise made by a promisor to another party. 210 Cal. at 186-88. Here, as noted above, Plaintiffs have failed to allege any promise by the BGA Defendants.
Accordingly, Plaintiffs' promissory estoppel claim against the BGA Defendants is dismissed. Because this claim is based on alleged promises made by Clainos and the Greene Defendants and there is no indication that amendment would save this claim, this dismissal is without leave to amend.
C. Unjust Enrichment
Plaintiffs' unjust enrichment claim is based on their allegations that the BGA Defendants "wrongfully acquired the copyrights and the scrapbooks." Compl. ¶ 93. However, assuming that unjust enrichment is a cognizable cause of action under California law, Plaintiffs allege no facts to suggest that the BGA Defendants acted improperly. As stated above, Plaintiffs do not plead how the BGA Defendants knew or should have known that SFX's ownership of the copyrights and the scrapbooks was improper.
Accordingly, Plaintiffs' unjust enrichment claim against the BGA Defendants is dismissed. Because there is no indication that amendment would save this claim, this dismissal is without leave to amend.
D. Copyright Infringement
To bring a claim for copyright infringement, a plaintiff must be the "legal or beneficial owner of an exclusive right under a copyright" and allege "infringement of that particular right committed while he or she is the owner of it." 17 U.S.C. § 501(b). As already stated, based on the 1995 Assignment and the alleged subsequent transfers of the disputed copyrights, Plaintiffs do not own the copyrights at issue. Accordingly, their copyright infringement claim against the BGA Defendants is dismissed. Because amendment would not save this claim, this dismissal is without leave to amend.
E. Declaratory Judgment
The Declaratory Judgment Act (DJA) permits a federal court to "declare the rights and other legal relations" of parties to "a case of actual controversy." 28 U.S.C. § 2201; see Wickland Oil Terminals v. Asarco, Inc., 792 F.2d 887, 893 (9th Cir. 1986). The "actual controversy" requirement of the Declaratory Judgment Act is the same as the "case or controversy" requirement of Article III of the United States Constitution. Am. States Ins. Co. v. Kearns, 15 F.3d 142, 143 (9th Cir. 1994).
Plaintiffs' declaratory judgment claim against the BGA Defendants fails because they have not alleged facts showing that there is an actual case or controversy. Accordingly, this claim is dismissed. Because there is no indication that amendment would save any of their claims and permit them to show an actual case or controversy, this dismissal is without leave to amend.
CONCLUSION
For the foregoing reasons, the Court GRANTS Plaintiffs' motion for leave to supplement the record; GRANTS Clainos's anti-SLAPP motion to strike and for attorneys' fees; GRANTS the Greene Defendants' motion to strike and for attorneys' fees and DENIES as moot their motion to dismiss; and GRANTS the BGA Defendants' motion to dismiss. Plaintiffs' actions against Clainos and the Greene Defendants are stricken as SLAPPs. Their claims against the BGA Defendants are dismissed without leave to amend.
As noted above, under the anti-SLAPP statute, Clainos and the Greene Defendants are entitled to attorneys' fees and costs. These Defendants may seek fees and costs in accordance with Civil L.R. 54-1 and 54-5.
The Clerk shall enter judgment and close the file.
IT IS SO ORDERED.