Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County. No. BC370843 Michael C. Solner, Judge.
Greenberg Traurig, Jeff E. Scott and John J. Lucas for Defendants and Appellants.
Law Office of Lawrence P. House, Lawrence P. House; Law Offices of Gary A. Laff and Gary A. Laff for Plaintiff and Respondent.
ARMSTRONG, J.
Plaintiff Jang Kye Choi sued defendants Rescomm Holdings No. 2, LLC ("Rescomm"), UM Capital, LLC, and United Mortgage and Loan Corp. (together, Defendants) because Rescomm demanded payment, and ultimately sued him, to collect on a defaulted promissory note which he maintained was void due to the lapse of the statute of limitations. Defendants filed an anti-SLAPP motion, contending that their threat, and commencement, of litigation to recover the debt was protected activity pursuant to Code of Civil Procedure section 425.16. The trial court agreed that Choi's complaint arose out of protected activity, but concluded that Choi had met his burden of establishing a probability of prevailing on the merits. It therefore denied the motion. Defendants appeal that ruling.
FACTUAL AND PROCEDURAL BACKGROUND
In August of 1996, Choi obtained a $25,000 home improvement loan evidenced by a promissory note (the "Note") from Alta Loma Financial. The Note was secured by a second deed of trust on Choi's real property (the "Property"). Defendant Rescomm is the assignee of the Note.
Choi defaulted on the loan obligation secured by the first deed of trust on the Property, and the lender on that senior note foreclosed on the Property in October 1998. Choi stopped making payments on the Note at that time. Neither Alta Loma Financial nor Rescomm took any immediate action to collect on the Note.
In May of 2004, Rescomm retained the law firm of Hemar, Rousso & Heald (Hemar) to collect on the Note or to make other arrangements for its payment. On May 4, 2004, Hemar wrote to Choi, informed him that the Note was past due and in default, gave notice that Rescomm was accelerating the Note, that all amounts due under the Note were immediately due and payable, and that, in the event Choi failed to make satisfactory arrangements to satisfy the debt, Rescomm would file a lawsuit to enforce the obligation.
On May 25, 2004, Choi and Rescomm entered into a Forbearance Agreement which confirmed, among other things, that Rescomm was the assignee of the Note, that the Note was in default, and that Choi owed Rescomm the principal sum of $24,286.13 and interest in the sum of $18,864.45. The Forbearance Agreement set forth a new payment schedule for repayment of the debt, and provided that Rescomm "would forbear from enforcing its remedies" under the Note as long as Choi remained "in compliance with" the payment schedule. Choi made some but not all payments called for under the Forbearance Agreement, and was in default by the end of June 2005.
On August 16, 2006, Rescomm filed suit against Choi in Los Angeles Superior Court to collect on Choi's debt. Choi demurred to the complaint, arguing that the four year statute of limitations barred Rescomm's enforcement of the Note. He further argued that the Forbearance Agreement was unenforceable for failure of consideration, since the statute of limitations had run by the time the parties entered into it. The Superior Court sustained Choi's demurrer; Rescomm did not appeal the judgment.
On May 10, 2007, Choi filed the instant lawsuit as a putative class action. He alleges that, to the extent Defendants' collection activities took place after the expiration of the statute of limitations, their conduct was fraudulent and violated California's Unfair Competition Law and False Advertising Law. As described by Choi, defendants "are predators who purchase stale, unenforceable, notes, often from the entities that have been taken over by the government following the failure of a variety of lenders (a government bail-out at taxpayer's expense), paying only a fraction of a penny on the dollar in the process. Defendant Rescomm then doggedly pursues the unfortunate defaulted obligors on those stale instruments, falsely representing that it has legal 'remedies' that it can invoke if the obligors do not pay sums which are unrecoverable. Defendant Rescomm and its agents (often attorneys which are retained to pursue the unenforceable obligations) harass Plaintiff Class members, who are often already vulnerable to Defendants' strong-arm tactics because of the circumstances that forced them into financial distress. If Defendants are unsuccessful in coercing payments from Plaintiff Class members, Defendants commonly initiate litigation, using the judicial system to assist them in obtaining default judgments and then executing on those void judgments."
Defendants maintained that all of Choi's claims are premised on their prelitigation statements threatening to file suit if Choi did not pay the debt, and their initiation of litigation to recover the debt. Consequently, on July 20, 2007, they filed an anti-SLAPP motion. At the hearing on the motion, the trial court found that defendants had met their burden of establishing that Choi's claims arose from defendants' protected activity under section 425.16, subdivision (b)(1). The court nevertheless denied the motion, concluding "I see a possibility" of Choi prevailing on the merits. Defendants timely appealed that ruling.
DISCUSSION
Code of Civil Procedure section 425.16, subdivision (e) provides: "As used in this section, 'act in furtherance of a person's right of petition or free speech under the United States or California Constitution in connection with a public issue' includes: (1) any written or oral statement or writing made before a . . . judicial proceeding . . . ." Numerous cases have confirmed that filing a lawsuit is protected activity under the anti-SLAPP statute. (Kajima Engineering and Const., Inc. v. City of Los Angeles (2002) 95 Cal.App.4th 921, 929 ["filing a lawsuit is an exercise of the constitutional right of petition."]; Chavez v. Mendoza (2001) 94 Cal.App.4th 1083, 1087 ["It is well established that filing a lawsuit is an exercise of a party's constitutional right of petition."]; Dove Audio, Inc. v. Rosenfeld, Meyer & Susman (1996) 47 Cal.App.4th 777, 784 ["The constitutional right to petition includes the basic act of filing litigation or otherwise seeking administrative action."].) Likewise, litigation related conduct and correspondence, including sending demand letters, is protected activity. (Kashian v. Harriman (2002) 98 Cal.App.4th 892, 908; Blanchard v. DIRECTTV, Inc. (2004) 123 Cal.App.4th 903, 918.) Thus, the trial court correctly found that defendants met their burden of establishing that the conduct complained of in plaintiff's lawsuit was protected activity within the meaning of the anti-SLAPP law. The burden then shifted to Choi "to show, by competent and admissible evidence, that [he] would probably prevail" on his claims. (Macias v. Hartwell (1997) 55 Cal.App.4th 669, 675.)
Choi's complaint is based entirely on defendants' sending pre-litigation demand letters, negotiation and entry into the Forbearance Agreement, and the filing of a lawsuit. The complaint alleges (1) that Rescomm's attorney wrote to Choi, demanding payment of all amounts due under the Note and stating that the "next action on the part of [the attorneys] if this letter is ignored shall be a lawsuit;" (2) those same attorneys presented Choi with a Forbearance Agreement, and represented to him "that if Choi were to sign the Forbearance Agreement, Defendant Rescomm would 'forbear from enforcing its remedies under the Loan Documents as long as [plaintiff Choi] is in compliance with' the Forbearance Agreement and the original 'Loan Documents;'" (3) that defendants' agents represented to Choi that he was indebted to Rescomm in the principal sum of $24,186.13 and interest in the sum of $18,864.45 and that Rescomm "had remedies under the Loan Documents," both of which representations were false on account of the running of the statute of limitations. All of these activities as specified in the complaint are protected by defendants' rights of petition and free speech, and are thereby subject to the anti-SLAPP statute. They are also protected by the litigation privilege, which accords defendants absolute immunity from liability based on those statements. As a result, there is no possibility that Choi will prevail in this lawsuit.
The litigation privilege, as codified in Civil Code section 47, subdivision (b), 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." (Silberg v. Anderson (1990) 50 Cal.3d 205, 212.) "Although originally enacted with reference to defamation, the privilege is now held applicable to any communication, whether or not it amounts to a publication, and all torts except malicious prosecution." (Ibid. [internal citations omitted].)
Courts have recognized "the working definition of 'judicial proceedings' to include proceedings which have the potential for becoming a court concern." (Izzi v. Rellas (1980) 104 Cal.App.3d 254, 262.) Thus, numerous decisions have applied the privilege to pre-litigation communications. (See, e.g., Rubin v. Green (1993) 4 Cal.4th 1187, 1191-1196 [letter sent four months prior to commencement of litigation was related to the anticipated litigation and protected by the litigation privilege]; Blanchard v. DIRECTTV, Inc., supra, 123 Cal.App.4th at pp. 917-918 [demand letters sent to suspected pirates of television programming after statute of limitations had run, demanding that recipients stop participating in pirating activity or face litigation, and followed by litigation, protected activity].) In addition, "[w]hen the communication has some relation to a proceeding that is actually contemplated in good faith and under serious consideration by . . . a possible party to the proceeding, the communication is privileged." (Block v. Sacramento Clinical Labs, Inc. (1982) 131 Cal.App.3d 386, 393, internal citations omitted; Rubin v. Green, supra, 4 Cal.4th at p. 1194 [the privilege applies to "communications with 'some relation' to an anticipated lawsuit" and therefore, to "prelitigation communications."].) As the Court of Appeal in Blanchard explained, ". . . if the statement is made with a good faith belief in a legally viable claim and in serious contemplation of litigation, then the statement is sufficiently connected to litigation and will be protected by the litigation privilege. If it applies, the privilege is absolute." (Blanchard v. DIRECTTV, Inc., supra, 123 Cal.App.4th at p. 919, internal citation omitted.)
Moreover, the privilege applies "to all publications, irrespective of their maliciousness," and irrespective of a party's alleged "motives, morals, ethics or intent." (Silberg v. Anderson, supra, 50 Cal.3d at p. 220; see also Izzi v. Rellas, supra, 104 Cal.App.3d at p. 265 [evidence of malice will not negate a defense based on the absolute litigation privilege].)
The essence of the conduct upon which Choi bases his causes of action is that defendants made demands on Choi to pay monies owed under a promissory note, and filed suit to enforce that obligation, after the statute of limitations on the claim had run. The litigation privilege protects defendants from any liability to Choi for this conduct, unless Choi has evidence that the underlying lawsuit was brought without probable cause and was prosecuted with malice. The complaint alleges no cause of action for malicious prosecution. Accordingly, Rescomm's actions as alleged in Choi's lawsuit are absolutely privileged.
Choi seems to acknowledge that he has no viable claim against defendants for filing or prosecuting their lawsuit against him. He maintains, however, that his claims are based not on defendants' speech in initiating or threatening litigation, but on Rescomm's conduct in purchasing stale loans, United Mortgage and Loan Corp.'s conduct in acting as "a loan servicer," and UM Capital's conduct in receiving payments made to Rescomm and United Mortgage. None of the cited conduct gives rise to liability. Accordingly, because there was no probability that Choi would prevail on the merits, the anti-SLAPP motion was meritorious, and the trial court erred in denying it.
DISPOSITION
The order denying defendants' anti-SLAPP motion is vacated; the trial court is directed to grant the motion. Defendants are to recover their costs on appeal.
We concur: TURNER, P. J., KRIEGLER, J.