Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of San Diego County Super. Ct. No. GIC 858845, William R. Nevitt, Jr., Judge.
McDONALD, J.
In this litigation, plaintiff The Upper Deck Company, et al. (collectively Upper Deck) filed a complaint alleging defendant Orrick, Herrington & Sutcliffe (Attorney) committed legal malpractice when providing services to Upper Deck. In response, Attorney filed a cross-complaint seeking recovery of its outstanding fees. As a fifth cause of action, Attorney pleaded a claim for unfair business practices, alleging Upper Deck had a pattern and practice of hiring law firms without the intent to pay the fees and, after incurring significant fees, claiming malpractice as a pretext to avoid paying the fees.
Upper Deck moved to strike the unfair business practices claim, as well as the other claims in the complaint, pursuant to Code of Civil Procedure section 425.16, commonly referred to as the anti-SLAPP (strategic lawsuit against public participation) statute. (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 57.) The trial court denied Upper Deck's motion and this appeal followed.
All statutory references are to the Code of Civil Procedure unless otherwise specified.
I
FACTUAL AND PROCEDURAL BACKGROUND
A. The Facts
In mid-2003, Upper Deck retained Attorney to defend a complex tax matter. By August 2004, Upper Deck was delinquent in paying for Attorney's legal services, and by January 2005, the unpaid invoices totaled $576,282. Because it appeared Upper Deck would not pay its bills current, and also because the unavailability of Upper Deck's principal made it impractical for Attorney to continue representing Upper Deck, Attorney wrote a January 26, 2005, letter to Upper Deck informing it that Attorney was withdrawing as counsel for Upper Deck. The following day, Upper Deck's corporate counsel responded and asserted Attorney had shown "an inability to competently represent" Upper Deck, and stated Upper Deck would withhold payment on the outstanding invoices pending Upper Deck's audit of Attorney's billings, which would commence on Upper Deck's receipt of billings in the format Attorney agreed to provide. Attorney provided those billings to Upper Deck in March 2005. Upper Deck neither responded nor paid the bills.
B. The Cross-complaint
In late 2005, Upper Deck filed a complaint against Attorney alleging claims for legal malpractice, breach of fiduciary duty, breach of contract and breach of the implied covenant of good faith and fair dealing. Attorney answered and filed a cross-complaint alleging five causes of action. The first four causes of action in Attorney's cross-complaint were contract-based claims seeking to recover the unpaid attorney fees. Attorney's fifth cause of action, which is the subject of the present appeal, asserted a claim for unfair business practices (Bus. & Prof. Code, § 17200 (section 17200 claim)).
Attorney's section 17200 claim alleged Upper Deck had a systematic practice of hiring law firms to perform legal services and incurring significant fees "without the intention of paying . . . such fees," of "then refusing to pay the full amount of fees," and of then "making unmeritorious, pretextual claims of malpractice against its attorneys for the purpose of avoiding the full payment" of the fees. Attorney sought equitable relief as well as restitution for the value of the services it provided to Upper Deck.
C. The Anti-SLAPP Motion
Upper Deck brought a motion to strike under the anti-SLAPP statute. Upper Deck first argued Attorney's section 17200 claim should be stricken because that cause of action arose from protected petitioning activity (filing of malpractice lawsuits against Attorney and others) and Attorney could not show probable success on the merits. Upper Deck also argued the other causes of action should be stricken because the factual allegations underlying those claims were incorporated by reference into the unfair business practices claim, and therefore the contract-based claims were sufficiently interrelated with the section 17200 claim to warrant dismissal under the anti-SLAPP statute.
Attorney opposed the anti-SLAPP motion to strike, arguing that Upper Deck could not meet the threshold burden to show the claims fell within the ambit of the anti-SLAPP statute. Attorney argued its claims were based on conduct not protected by the First Amendment; instead, the bulk of its claims arose from unprotected conduct for Upper Deck's breach of its contractual promise to pay for services, and the section 17200 claim was rooted in the practice of hiring law firms without intending to pay for the services and using the ploy of a malpractice claim to avoid payment. Attorney also asserted that, even if the section 17200 claim did fall within the ambit of the anti-SLAPP statute, Attorney could show a reasonable probability of success on the merits. The trial court denied Upper Deck's motion and Upper Deck timely appealed the ruling with regard to Attorney's fifth cause of action based on its section 17200 claim.
Attorney submitted evidence showing numerous prior law firms had been retained by Upper deck, had not been paid, and Upper Deck used malpractice allegations against each of those firms. We need not reach Upper Deck's secondary argument--that this showing was insufficient to satisfy Attorney's burden of showing a reasonable probability of success on the merits--because we conclude the section 17200 claim does not arise out of protected conduct. (Paul v. Friedman (2002) 95 Cal.App.4th 853, 868-869.)
The trial court denied the motion because it reasoned (1) Upper Deck did not demonstrate the contract-based claims arose out of conduct protected by the anti-SLAPP statute; and (2) even if the section 17200 claim did arise out of protected conduct Attorney had shown a reasonable probability of prevailing on the merits of that claim. Because we agree with the order, albeit not necessarily all of the rationales for the order, we affirm. (Tippett v. Terich (1995) 37 Cal.App.4th 1517, 1539, disapproved on other grounds by Cortez v. Purolator Air Filtration Products Co. (2000) 23 Cal.4th 163, 171.)
II
LEGAL STANDARDS
A. The Anti-SLAPP Law
The anti-SLAPP law provides that "[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 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." (§ 425.16, subd. (b)(1).) The purpose of the statute is to encourage participation in matters of public significance by allowing a court to promptly dismiss unmeritorious actions or claims brought to chill another's valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances. (Id., subd. (a).)
The anti-SLAPP law involves a two-step process for determining whether a claim is subject to being stricken. In the first step, the defendant bringing an anti-SLAPP motion must make a prima facie showing that the plaintiff's suit is subject to section 425.16 by showing that the defendant's challenged acts were taken in furtherance of his or her constitutional rights of petition or free speech in connection with a public issue, as defined by the statute. (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 733.) If the defendant does not demonstrate this initial prong, the court should deny the anti-SLAPP motion and need not address the second step. (City of Riverside v. Stansbury (2007) 155 Cal.App.4th 1582, 1594; Wang v. Wal-Mart Real Estate Business Trust (2007) 153 Cal.App.4th 790, 811.)
If the defendant satisfies the first step, the burden shifts to the plaintiff to demonstrate there is a reasonably probability of prevailing on the merits at trial. (§ 425.16, subd. (b)(1).) In this phase, the plaintiff must show both that the claim is legally sufficient and there is admissible evidence that, if credited, would be sufficient to sustain a favorable judgment. (Wilcox v. Superior Court (1994) 27 Cal.App.4th 809, 823, disapproved on other grounds by Equilon Enterprises v. Consumer Cause, Inc., supra, 29 Cal.4th at p. 68, fn. 5.; Robertson v. Rodriguez (1995) 36 Cal.App.4th 347, 358.) In making this assessment, the court must consider both the legal sufficiency of and evidentiary support for the pleaded claims. (Traditional Cat Assn., Inc. v. Gilbreath (2004) 118 Cal.App.4th 392, 398-399.)
On appeal, we review de novo the trial court's ruling on the anti-SLAPP motion to strike. (Bernardo v. Planned Parenthood Federation of America (2004) 115 Cal.App.4th 322, 339.)
B. The Gravamen of the Claim Controls Application of the Anti-SLAPP Law
The Supreme Court has recognized the anti-SLAPP statute should be broadly construed (Equilon Enterprises v. Consumer Cause, Inc., supra, 29 Cal.4th at p. 60, fn. 3) and a plaintiff cannot avoid operation of the anti-SLAPP statute by attempting, through artifices of pleading, to characterize an action as a "garden variety" tort or contract claim when in fact the claim is predicated on protected speech or petitioning activity. (Navellier v. Sletten (2002) 29 Cal.4th 82, 90-92.) Accordingly, we disregard the labeling of the claim (Ramona Unified School Dist. v. Tsiknas (2005) 135 Cal.App.4th 510, 522) and instead "examine the principal thrust or gravamen of a plaintiff's cause of action to determine whether the anti-SLAPP statute applies" and whether the trial court correctly ruled on the anti-SLAPP motion. (Id. at pp. 519-522.) We assess the principal thrust by identifying "the allegedly wrongful and injury-causing conduct . . . that provides the foundation for the claim." (Martinez v. Metabolife Internat., Inc. (2003) 113 Cal.App.4th 181, 189.) If the core injury-producing conduct on which the plaintiff's claim is premised does not rest on protected speech or petitioning activity, collateral or incidental allusions to protected activity will not trigger application of the anti-SLAPP statute. (Ibid.)
III
ANALYSIS
A. The Gravamen of Attorney's Section 17200 Claim
Upper Deck argued below, and contends on appeal, that because Attorney's section 17200 claim contained the averment that Upper Deck had a practice of "making unmeritorious, pretextual claims of legal malpractice against its attorneys for the purpose of avoiding the full payment" of the fees, the claim necessarily sought recovery for the injury caused to Attorney by Upper Deck's petitioning activities of filing lawsuits for legal malpractice. However, we are convinced that the "wrongful and injury-causing conduct . . . that provides the foundation for the claim" (Martinez v. Metabolife Internat., Inc., supra, 113 Cal.App.4th at 189) is the alleged fraud by Upper Deck in hiring law firms to perform legal services and incurring significant fees "without the intention of paying . . . such fees" and then, pursuant to that intent, "refusing to pay the full amount of fees." A claim asserting injury from "promissory fraud" (see Agosta v. Astor (2004) 120 Cal.App.4th 596, 603), even when tangentially connected with official proceedings, is not subject to dismissal under the anti-SLAPP statutes because it is "a purely business type event or transaction and is not the type of protected activity contemplated under [the anti-SLAPP statutes]." (Blackburn v. Brady (2004) 116 Cal.App.4th 670, 676-677.)
A close evaluation of Attorney's operative allegations demonstrates that any tacit reference to Upper Deck's petitioning activity is incidental or collateral to the core of Attorney's section 17200 claim. First, the wrongful and injury-producing conduct is the alleged promise without intent to perform--Upper Deck's hiring of Attorney and promise to pay for Attorney's services while allegedly intending not to pay for the services--not the later filing of the malpractice lawsuit. Second, the actual injury to Attorney alleged by the complaint is that it performed the services and was not paid, and the recovery sought by Attorney is payment for those services. Thus, the injury caused by the core wrongful conduct was complete prior to, and apart from, any petitioning activity by Upper Deck. These facts convince us that the "wrongful and injury-causing conduct . . . that provides the foundation for the claim" (Martinez v. Metabolife Internat., Inc., supra, 113 Cal.App.4th at 189) is the alleged promissory fraud by Upper Deck rather than Upper Deck's subsequent petitioning activity.
Upper Deck asserts the protected petitioning activity was filing lawsuits for malpractice. Although such conduct is within the ambit of the anti-SLAPP statutes, the section 17200 claim contains no explicit reference to Upper Deck's lawsuits. Instead, the section 17200 claim alleged Upper Deck sought to avoid payment by "making unmeritorious, pretextual claims of malpractice against its attorneys" without specifying the context within which those assertions were made. The only explicit reference to petitioning activity was in paragraph 17 of the common allegations, where Attorney alleged Upper Deck had filed the present malpractice lawsuit, but that fact was alleged as the basis for asserting Upper Deck had waived its arbitration rights under Business and Professions Code section 6201, subdivision (d). The protected petitioning activity relied on by Upper Deck is derived by implication rather than by allegation. We nevertheless evaluate this appeal on the assumption that the reference to Upper Deck's malpractice claims encompasses the filing of malpractice lawsuits.
The analysis in Scott v. Metabolife Internat., Inc. (2004) 115 Cal.App.4th 404 (Scott) convinces us that Attorney's references to Upper Deck's practice of inter positioning a pretextual malpractice claim to avoid payment does not convert Attorney's claim for promissory fraud into a claim arising out of petitioning activity. In Scott, the plaintiff alleged Metabolife manufactured and marketed a defective product, which proximately caused her personal injuries. Metabolife arguedthe lawsuit was based on its advertising or commercial speech, thereby triggering application of the anti-SLAPP statute. However, the Scott court concluded Metabolife's commercial speech was not the gravamen or principal thrust of the personal injury claims because:
"Scott does not seek redress for that advertising. In fact, Metabolife's advertising itself caused Scott no injury at all. That advertising is unrelated to and distinct from the injury-causing conduct by Metabolife upon which Scott's personal injury causes of action are based. Rather, Scott seeks redress for her own personal injuries because Metabolife manufactured and sold her a defective product that injured her. For purposes of section 425.16, each of Scott's four causes of action is based upon Metabolife's act of manufacturing and selling the defective product that caused Scott's injury. It is this act of manufacturing and selling the defective product that underlies each one of these causes of action." (Id. at p. 416.)
More significantly, Scott rejected Metabolife's claim that the references in the complaint to the protected speech necessarily triggered application of the anti-SLAPP statute to the causes of action referring to such speech. First, Scott noted, "[t]he mere fact Scott's lawsuit followed the [protected speech] does not establish that the lawsuit arose from that advertising. [Citing City of Cotati v. Cashman (2002) 29 Cal.4th 69, 76-77.] Even though these causes of action require the proof of some speech, the core of these causes of action is that the product did not conform to the warranties and statements made by Metabolife. Thus, the wrongful injury-producing conduct on which these claims are based arises from the nature of the defective product." (Scott, supra, 115 Cal.App.4th at pp. 416-417.) Similarly, although Upper Deck's malpractice claims preceded Attorney's cross-complaint, the core of the injury alleged by the section 17200 claim is conduct unrelated to protected activity.
Moreover, in rejecting Metabolife's argument that the plaintiff's reliance on protected activity showed her claims seeking redress for injury arose out of its protected advertising activities, the Scott court concluded that:
"Metabolife confuses the method of proof Scott will use to demonstrate its product is defective with Metabolife's conduct from which these causes of action arise. [¶] In Gallimore v. State Farm Fire & Casualty Ins. Co. [(2002) 102 Cal.App.4th 1388], plaintiff sued defendant insurance company for unfair business practices in violation of [Business and Professions Code section 17200] based on a Department of Insurance investigation that examined 825 claim files and found violations in nearly 50 percent of them. (Gallimore v. State Farm Fire & Casualty Ins., supra, 102 Cal.App.4th at p. 1392.) The appellate court concluded the plaintiff's causes of action arose out of the underlying claims-handling violations, not any communication between defendant and the Department of Insurance about the claims process. (Id. at p. 1399.) Defendant argued its communications with the Department of Insurance were protected communications, and allowing the plaintiff to rely on them to prosecute the action interfered with its rights to communicate with that department. (Ibid.) The court retorted, 'This contention confuses [defendant's] allegedly wrongful acts with the evidence that plaintiff will need to prove such misconduct. Plaintiff seeks no relief from [defendant] for its communicative acts, but rather for its alleged mistreatment of policyholders and its related violations and evasions of statutory and regulatory mandates.' (Ibid.)
"Similarly here, Scott does not seek redress from Metabolife for its communicative conduct. That is not the thrust or gravamen of these causes of action. Instead, Scott seeks redress for the personal injuries she suffered as a result of Metabolife's manufacture of what she contends is a defective product. To the extent that Metabolife's labels and advertising are relevant, they are merely means of demonstrating the product was defective because appropriate warnings were not issued with the product. In this sense, Metabolife confuses the evidence necessary to establish its product was defective from the conduct that this lawsuit arises from." (Scott, supra, 115 Cal.App.4th at pp. 417-418, fn. omitted.)
We conclude an analogous analysis applies here. The gravamen of Attorney's section 17200 claim seeks redress for the injury allegedly suffered from Upper Deck's promissory fraud. Because promissory fraud requires proof beyond mere nonperformance of the promise (see, e.g., Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 30-31 [" 'something more than nonperformance is required to prove the defendant's intent not to perform his promise.' [Citations.] . . . [I]f plaintiff adduces no further evidence of fraudulent intent than proof of nonperformance of an oral promise, he will never reach a jury."]), Attorney alleged Upper Deck did not intend to pay for the services and, as proof thereof, alleged Upper Deck had a pattern of seeking to avoid payment to Attorneys and others by interposing claims of malpractice. As in Scott, Attorney does not seek to recover for any injury caused by the petitioning activity, but refers to that activity for its evidentiary value. To paraphrase Scott, Upper Deck "confuses the evidence necessary to establish [the fraud with] the conduct that this lawsuit arises from." (Scott, supra, 115 Cal.App.4th at p. 418.)
We conclude Upper Deck has not established Attorney's section 17200 claim arises from protected activity, and therefore the trial court correctly denied Upper Deck's anti-SLAPP motion, including with respect to Attorney's fifth cause of action.
DISPOSITION
The order is affirmed. Attorney is entitled to costs on appeal.
WE CONCUR: HUFFMAN, Acting P. J., McINTYRE, J.