Opinion
B320599
09-27-2023
AZUSA GARVEY PROPERTIES, LLC Plaintiff and Respondent, v. WEST COVINA AUTO PLAZA ASSOCIATION, INC. et al., Defendants and Appellants.
Bishton Gubernick and Jeffrey S. Gubernick for Defendants and Appellants West Covina Auto Plaza Association, Inc. and Simon Sarriedine. Blank Rome, Christopher J. Petersen, Nicole N. Wentworth for Plaintiff and Respondent.
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County, No. 21STCV34530 Teresa A. Beaudet, Judge.
Bishton Gubernick and Jeffrey S. Gubernick for Defendants and Appellants West Covina Auto Plaza Association, Inc. and Simon Sarriedine.
Blank Rome, Christopher J. Petersen, Nicole N. Wentworth for Plaintiff and Respondent.
COLLINS, J.
INTRODUCTION
Plaintiff Azusa Garvey Properties, LLC and defendant Simon Sarriedine own properties in the West Covina Auto Plaza, and are members of defendant West Covina Auto Plaza Association, Inc. Azusa Garvey was planning to lease one of its Auto Plaza properties to a used car dealer. Azusa Garvey alleges Sarriedine intentionally interfered with that lease by calling an Association meeting without giving notice to Azusa Garvey, and in Azusa Garvey's absence, Sarriedine had the Association vote to seek a local zoning overlay to prohibit used car sales in the Auto Plaza.
Azusa Garvey sued Sarriedine for intentional interference with prospective economic advantage for holding the unnoticed meeting and using the Association to harm Azusa Garvey and sought declaratory relief against both Sarriedine and the Association. Defendants filed a special motion to strike the intentional interference cause of action under Code of Civil Procedure, section 425.16, the anti-SLAPP statute, asserting that the Association's actions in seeking a zone change constituted protected activity. The trial court denied the motion, finding that Azusa Garvey's cause of action did not arise from protected activity. Defendants appealed.
All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
We affirm. Azusa Garvey's claims arise from Sarriedine's alleged actions in holding the unnoticed meeting and using the Association to interfere with Azusa Garvey's lease, not in petitioning the city for a zoning change.
FACTUAL AND PROCEDURAL BACKGROUND
A. Complaint
Azusa Garvey alleged the following in its complaint. The Association is a nonprofit mutual benefit corporation formed in 1993 for the purpose of protecting the interests of the owners and operators of automobile dealerships in the West Covina Auto Plaza. The Association has seven membership positions, one for each dealership property in the Auto Plaza. The Association's articles state that the Association shall not engage in any activities that are not in furtherance of the Association. Its bylaws require written notice of each meeting to be sent to each member's current mailing address; the notice must include an agenda for the meeting.
Azusa Garvey owns three of the properties within the Auto Plaza. One of these properties is leased, so Azusa Garvey has two votes in the Association, and its tenant has one vote. Sarriedine is the chief executive officer and president of Envision Motors, which owns three properties in the Auto Plaza and has three votes in the Association. Another company, Norm Reeves Honda, has the seventh vote. In late 2019, Sarriedine became chief executive officer and director of the Association. Sarriedine appointed Paulina Morales to several positions within the Association: secretary, chief financial officer, and agent for service of process. Morales was also the acting assistant city manager for the City of West Covina (the City).
From December 2014 to December 2019, Azusa Garvey leased one of its properties, 1900 E. Garvey Avenue South (the 1900 property), to a used automobile retailer, which operated under a conditional use permit issued by the City. Azusa Garvey alleged that "neither the City nor the Association expressed any concern or issue with the operation of a reputable used automobile dealership on the 1900 Property." That lease was set to expire in December 2019. In late 2019, Azusa Garvey informed the City that another company, Enterprise, was interested in leasing the 1900 property for purposes of operating a used automobile dealership. Azusa Garvey requested an extension of the conditional use permit, which would allow Enterprise to use the property for that purpose.
Azusa Garvey alleged that when Sarriedine learned Azusa Garvey intended to lease the 1900 property to Enterprise for approximately $42,000 per month, Sarriedine attempted to acquire the 1900 property himself. In July 2020 Sarriedine's company, Envision Motors, offered to lease the 1900 property at below-market rates for the purpose of selling used vehicles; Azusa Garvey rejected the offer. Sarriedine then asked Azusa Garvey if it would sell the 1900 property; Azusa Garvey declined.
Azusa Garvey alleged that Sarriedine, with the help of Morales and the City, then "commenced a scheme to misuse the Association by . . . disregarding the Association Bylaws, in order to cause the Association to take illegal actions to prevent [Azusa Garvey] from leasing" the 1900 property. This action was intended "to aid Sarriedine's efforts to force [Azusa Garvey] to lease or sell to Envision Motors the 1900 Property at a below market price or . . . disrupt [Azusa Garvey's] relationship with Enterprise and prevent [Azusa Garvey] from benefiting from the lease with Enterprise." As part of this scheme, in July 2021 "City staff, at the direction of Morales as Secretary of the Association (who, herself, was acting at the direction of Sarriedine), purported to notice a meeting of the Association at which the issues of 'aesthetics' and 'security' at the Auto Plaza would be discussed." Morales had the notice mailed to Azusa Garvey at an address it had not used for years.
Having no notice of the July 2021 meeting, Azusa Garvey did not attend. At the meeting, "at the behest of Sarriedine and Morales, the Association voted to authorize Sarriedine to request, on behalf of the Association, the implementation of an overlay zone in the Auto Plaza that expressly prohibits any used car dealership from operating at the 1900 Property."
Azusa Garvey filed a complaint against the Association and Sarriedine in September 2021 asserting two causes of action: intentional interference with prospective economic advantage against Sarriedine only, and declaratory relief against both defendants. It alleged that Sarriedine owed a fiduciary duty to the Association and to Azusa Garvey, and he breached that duty by using the Association to promote his own interests and to undermine Azusa Garvey's interests. Azusa Garvey further alleged that Sarriedine "wrongfully disregarded the Association's Bylaws and used the Association to promote the financial interest of Envision Motors and to prevent [Azusa Garvey] from leasing the 1900 Property to Enterprise and enjoying any economic benefit from the lease, which would have totaled over $2.5 million."
In the intentional interference with prospective economic advantage cause of action against Sarriedine, Azusa Garvey alleged, "With knowledge of the relationship between [Azusa Garvey] and Enterprise, Sarriedine, as an officer and director of the Association, caused the Association to disregard its Bylaws and Articles to hold the improper and illegal July Meeting at which the Association took the ultra vires act of authorizing Sarriedine to request, on behalf of the Association, the implementation of an overlay zone in the Auto Plaza expressly prohibiting the operation of a used car dealership at the 1900 Property." It further asserted, "By engaging in this conduct, Sarriedine intended to disrupt the relationship between [Azusa Garvey] and Enterprise or, at a minimum, knew that disruption of the relationship was certain or substantially certain to occur as a result of his actions." In the cause of action for declaratory relief, Azusa Garvey sought a declaration that the July 2021 meeting violated the Association's articles and bylaws, so any actions taken at that meeting must be rescinded. In the prayer, Azusa Garvey asked for damages and declaratory relief.
B. Special motion to strike
Defendants filed a special motion to strike the first cause of action for intentional interference with prospective economic advantage. Under section 425.16, "[a] cause of action arising from a person's act in furtherance of the '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 claim will prevail." (Monster Energy Co. v. Schechter (2019) 7 Cal.5th 781, 788, citing § 425.16, subd. (b)(1).) "Anti-SLAPP motions are evaluated through a two-step process. Initially, the moving defendant bears the burden of establishing that the challenged allegations or claims 'aris[e] from' protected activity in which the defendant has engaged." (Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1061 (Park).) "If the defendant carries its burden, the plaintiff must then demonstrate its claims have at least 'minimal merit.'" (Ibid.)
Defendants argued that Azusa Garvey's cause of action arose from protected activity because "[a]lthough Azusa Garvey's complaint focuses on whether the [Association] exceeded its authority and whether Sarriedine was acting for personal gain, what Azusa Garvey actually takes issue with" is the Association's petitioning of the City to implement an overlay zone-an inherently political activity. Thus, "Azusa Garvey is seeking monetary damages for Defendants' support of a zoning change," which constitutes an "attempt to chill the valid exercise of Defendants' constitutional rights of freedom of speech and petition for redress." Defendants attached as exhibits documents from the City, which included a staff report stating that in July 2021 the Association requested the overlay zone, and the City's ordinance implementing the overlay zone, dated October 5, 2021.
Defendants further asserted that Azusa Garvey did not have a probability of success on the merits, because defendants' support for the overlay zone was privileged under Civil Code section 47, subdivision (b), as communication in a legislative proceeding, and subdivision (d), as communication related to an official proceeding. Defendants requested $9,310.00 in attorney fees.
Azusa Garvey opposed the special motion to strike, stating that the intentional interference claim was not based on protected activity. Rather, Azusa Garvey was alleging that Sarriedine "caus[ed] the Association to hold a meeting (without proper notice) and vote (without required proxy statements) for the purpose of interfering with" Azusa Garvey's economic relationship with Enterprise. Azusa Garvey stated that it was not challenging "the subsequent act of submitting an application for an overlay zone to the City Council." Azusa Garvey further argued that "[e]ven assuming that the participation in hearings before the [City Planning] Commission and the City Council constitute protected activity, that conduct does not underly [sic] or form the basis for [Azusa Garvey's] Intentional Interference Claim."
Azusa Garvey further contended that even if the court held that the cause of action arose from protected activity, Azusa Garvey had a probability of prevailing on the merits. Azusa Garvey asserted that each of the elements for intentional interference with prospective economic advantage could be met, including Sarriedine's knowledge of Azusa Garvey's relationship with Enterprise, his wrongful conduct in the form of several violations of the Association's bylaws, and damages from the lost lease with Enterprise. Azusa Garvey also asserted the special motion to strike was frivolous, and requested attorney fees in the amount of $9,350.00.
Defendants submitted a reply in support of their motion. They asserted that despite Azusa Garvey's "carefully crafted" pleading, "[w]hat prevented [Azusa Garvey] from consummating the lease was a zoning change enacted by the City of West Covina," so there was no merit to the argument that the zone change was "incidental" to the allegations.
C. Court ruling
The court issued a tentative ruling denying the motion, stating that defendants failed to demonstrate that Azusa Garvey's claims arose from protected activity. At the hearing, the parties reiterated their positions. The court adopted the tentative as its final ruling.
In the written ruling, the court discussed the anti-SLAPP standards and the parties' positions, and stated without further explanation, "Based on the arguments and evidence presented, the Court finds Defendants have failed to meet their burden on prong one to establish that the first cause of action arises from protected activity." The court therefore did not address the parties' positions on the second prong of the anti-SLAPP analysis, and denied the motion. The court also denied Azusa Garvey's request for attorney fees, finding that the motion was not frivolous or intended to cause delay.
Defendants timely appealed.
DISCUSSION
Defendants contend the superior court erred in finding that Azusa Garvey's cause of action for intentional interference with prospective economic advantage did not arise from protected activity. "We review de novo the grant or denial of an anti-SLAPP motion. [Citation.] We exercise independent judgment in determining whether, based on our own review of the record, the challenged claims arise from protected activity. [Citations.] In addition to the pleadings, we may consider affidavits concerning the facts upon which liability is based. [Citations.] We do not, however, weigh the evidence, but accept plaintiff's submissions as true and consider only whether any contrary evidence from the defendant establishes its entitlement to prevail as a matter of law." (Park, supra, 2 Cal.5th at p. 1067.) The appellants bear the burden of affirmatively demonstrating error. (Balla v. Hall (2021) 59 Cal.App.5th 652, 671.)
As noted above, in the first step under the anti-SLAPP analysis the court determines whether the plaintiff's claims arise from protected activity. (Bonni v. St. Joseph Health System (2021) 11 Cal.5th 995, 1009.) "A claim arises from protected activity when that activity underlies or forms the basis for the claim." (Park, supra, 2 Cal.5th at p. 1062.) "[A] claim may be struck only if the speech or petitioning activity itself is the wrong complained of, and not just evidence of liability or a step leading to some different act for which liability is asserted." (Id. at p. 1060.)
Defendants assert that Azusa Garvey's intentional interference with prospective economic advantage cause of action arises from protected activity under section 425.16, subdivision (e)(4), which protects "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." (§ 425.16, subd. (e)(4).) Azusa Garvey correctly points out that defendants did not rely on subdivision (e)(4) in their motion below; rather, they cited only (e)(1) and (2). Arguments not raised below are forfeited. (See World Financial Group, Inc. v. HBW Ins. &Financial Services, Inc. (2009) 172 Cal.App.4th 1561, 1569 and fn. 7 ["Although we review the trial court's ruling on a SLAPP motion de novo, our task is to determine whether defendants demonstrated to the trial court that the lawsuit arises from protected activity"].)
Section 425.16, subdivision (e)(1) protects "any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law." Subdivision (e)(2) protects "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."
Even if we were to consider defendants' contentions, however, we are not persuaded that the trial court erred. "[I]n ruling on an anti-SLAPP motion, courts should consider the elements of the challenged claim and what actions by the defendant supply those elements and consequently form the basis for liability." (Park, supra, 2 Cal.5th at p. 1063.) A cause of action for intentional interference with prospective economic advantage requires a plaintiff to plead and prove "(1) an economic relationship between plaintiff and a third party, with the probability of future economic benefit to the plaintiff; (2) defendant's knowledge of the relationship; (3) an intentional act by the defendant, designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the defendant's wrongful act." (Edwards v. Arthur Andersen LLP (2008) 44 Cal.4th 937, 944.)
The intentional interference with prospective economic advantage cause of action was alleged against Sarriedine only. The "intentional act[s] by the defendant designed to disrupt the relationship" were Sarriedine's various actions involved in planning and holding the July meeting without providing Azusa Garvey notice or a vote, which was designed to harm Azusa Garvey. The fact that the Association's plan involved petitioning activity is incidental to the allegation that Sarriedine used the Association to harm Azusa Garvey's relationship with Enterprise. Had Sarriedine influenced the Association to take some other action-to contact Enterprise directly and offer it a lease elsewhere, for example-Azusa Garvey's intentional interference claim would remain the same despite the lack of any petitioning activity or connection with a public issue. A claim is not subject to a motion to strike simply because the allegedly wrongful "action or decision . . . was thereafter communicated by means of speech or petitioning activity." (Park, supra, 2 Cal.5th at p. 1060.)
Indeed, the Supreme Court warned in Park that "[f]ailing to distinguish between the challenged decisions and the speech that leads to them or thereafter expresses them 'would chill the resort to legitimate judicial oversight over potential abuses of legislative and administrative power.'" (Park, supra, 2 Cal.5th at p. 1067.) Thus, courts must be mindful of the "distinction between activities that form the basis for a claim and those that merely lead to the liability-creating activity or provide evidentiary support for the claim." (Id. at p. 1064.) Here, while the Association's petitioning activity may constitute evidence that Sarriedine used the Association to interfere with Azusa Garvey's relationship with Enterprise, that petitioning activity is not the tortious activity underlying Azusa Garvey's claim.
Thus, defendants did not demonstrate that Azusa Garvey's cause of action for intentional interference with prospective economic advantage arose from protected activity, and the trial court did not err in denying the motion on this basis.
Because we find that the trial court did not err in denying the motion on the first step of the anti-SLAPP analysis, we do not reach the parties' contentions regarding the second step.
DISPOSITION
The court's order is affirmed. Azusa Garvey is entitled to its costs on appeal.
We concur: CURREY, P.J. MORI, J.