Opinion
D074369
08-26-2020
FWO EXPANSION, LLC, Plaintiff and Appellant, v. LADAWN M. TANNER, Defendant and Respondent.
Law Office of Johanna S. Schiavoni, Johanna S. Schiavoni; Vanst Law, Jacqueline S. Vinaccia; Austin Legal Group, Gina M. Austin and Tamara Marie Leetham for Plaintiff and Appellant. Buchanan Ingersoll & Rooney, Kimberly Arouh, Khesraw Karmand, Jennifer Olmedo-Rodriguez and Chance Lyman for Defendant and Respondent LaDawn M. Tanner.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2017-00031074-CU-OR-CTL) APPEAL from an order of the Superior Court of San Diego County, Gregory W. Pollack, Judge. Reversed. Law Office of Johanna S. Schiavoni, Johanna S. Schiavoni; Vanst Law, Jacqueline S. Vinaccia; Austin Legal Group, Gina M. Austin and Tamara Marie Leetham for Plaintiff and Appellant. Buchanan Ingersoll & Rooney, Kimberly Arouh, Khesraw Karmand, Jennifer Olmedo-Rodriguez and Chance Lyman for Defendant and Respondent LaDawn M. Tanner.
Plaintiff FWO Expansion, LLC (FWO) appeals an order granting a special motion to strike filed by defendant LaDawn Tanner (Tanner) under Code of Civil Procedure section 425.16 (commonly known as an anti-SLAPP motion). This lawsuit arises from a dispute regarding a commercial property that FWO hoped to use as a marijuana dispensary. Tanner owns the real property at issue, which is subject to a ground lease held by Mission Valley Cornerstone Property, LLC (MVCP), which also owned a commercial building on the property. In 2016, FWO entered into a multi-million-dollar purchase agreement with MVCP to buy the building and assume the ground lease. The agreement provided for a lengthy escrow period to allow FWO to apply for a conditional use permit (CUP) from the City of San Diego (City) to use the property as a marijuana dispensary.
Subsequent statutory references are to the Code of Civil Procedure unless otherwise specified.
As part of the application process, Tanner was informed of the potential sale and signed a statement indicating FWO intended to use the property for a "dispensary." However, after the City approved the CUP application, Tanner refused to sign the necessary paperwork. She claimed she did not know that "dispensary" meant "marijuana dispensary"—which she asserted was not permitted under the existing lease's requirement that the property be used only for a lawful purpose—and told MVCP she did not consent to the closing of the purchase agreement if it was contingent on securing the CUP.
After MVCP indicated it disagreed with her interpretation of the lease and that it would sign the CUP documents on her behalf, Tanner filed a lawsuit against MVCP, accompanied by a lis pendens, seeking declaratory relief and alleging a claim for anticipatory breach of contract. FWO then filed its own lawsuit against MVCP and Tanner, alleging multiple claims against Tanner. All of the claims are centered on the assertion that Tanner wrongfully interfered with FWO's economic relationship with MVCP when she refused to sign the CUP application and objected to the assignment of the lease. FWO alleges Tanner's interference caused it to spend money to extend the escrow period and ultimately led MVCP to breach the purchase agreement when it could not close the deal. FWO alleges Tanner interfered with the agreement as leverage to force FWO to purchase the underlying property she owned for a price inflated well above market value.
Tanner responded with an anti-SLAPP motion, asserting that because FWO's lawsuit was filed after her own lawsuit, it arose out of Tanner's prelitigation and settlement communications, the filing of her lawsuit, and the recording of the lis pendens. The trial court agreed, finding that FWO's lawsuit arose out of these actions, all of which were protected activities under section 425.16. Also finding that FWO could not establish a probability of prevailing on its claims, the trial court granted Tanner's motion to strike and entered judgment in her favor.
FWO now appeals, arguing the trial court misapplied the analysis established by the California Supreme Court for determining whether a claim arises out of protected activity. We agree. Although Tanner's filing of a lawsuit and lis pendens constitute protected activity, FWO's claims do not arise from those actions. Instead, FWO challenges Tanner's underlying decision to tortuously interfere with the agreement between FWO and MVCP by refusing to sign the CUP documents and objecting to the assignment of the lease. This underlying dispute over the use of the real property and the respective rights of the parties under a lease is the gravamen of the lawsuit, not Tanner's subsequent actions related to the lawsuit. Although Tanner's filing of her lawsuit against MVCP may have "triggered" FWO's complaint by escalating the underlying conflict and her prelitigation statements may have communicated her underlying intent to interfere, this does not establish that FWO's claims arise out of those actions rather than her underlying conduct and decision to interfere. Tanner's actions in the underlying dispute that preceded the lawsuit do not constitute protected activity. Accordingly, we conclude the trial court erred in granting Tanner's anti-SLAPP motion and reverse and remand for further proceedings, including consideration of FWO's request to amend its operative complaint.
FACTUAL AND PROCEDURAL BACKGROUND
We summarize only those facts necessary to resolve the anti-SLAPP issues before us, relying on the operative pleading and accepting as true the evidence favorable to FWO. (See Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1067 (Park).)
General Background
In 1973, Tanner's father and uncle leased a large parcel they owned in Mission Valley to Valley Centre Plaza, Ltd. (VCP) for an initial term ending in March 2072. Later, Tanner succeeded her father and uncle as the owner of the property and VCP assigned its rights under the lease to MVCP. MVCP also owns the large commercial building it built onsite.
Under the lease, the lessee has the right to use the property for "any lawful purpose whatsoever." The lessee also has the right to obtain any necessary permits or other approvals for its intended use. The lease appoints the lessee as attorney-in-fact for the lessor for the purpose of obtaining such permits and expressly authorizes the lessee to execute any and all applications and procedures necessary to obtain such a permit.
MVCP's Purchase Agreement with FWO
In 2014, the City adopted an ordinance implementing strict zoning regulations for medical marijuana dispensaries that allowed operators to obtain a conditional use permit (CUP) for the sale of medical marijuana in limited locations throughout the City, with a limit of four dispensaries allowed per city council district.
In 2016, FWO identified Tanner's property as fulfilling the City's zoning requirements and ultimately agreed to purchase MVCP's building, as subject to the existing ground lease, for nearly $3 million. The Letter of Intent that preceded the formal purchase agreement reveals that the agreement would include a long escrow term of up to one year to allow FWO to complete the CUP application process, which it was required to begin within seven days of the signing of the purchase agreement. The Letter of Intent also included an agreement for FWO to lease part of the building from MVCP during the escrow period.
Another limited liability company, HGCA, LLC, was involved in the negotiations regarding the property. Although FWO and HGCA were distinct legal entities, they appear to be largely intertwined and any distinctions are materially irrelevant to the issues addressed on appeal.
FWO and MVCP signed the formal purchase agreement in July 2016. The agreement was made contingent on FWO satisfying itself regarding "approvals and permits from governmental agencies or departments . . . which [FWO] deems necessary or desirable in connection with its intended use of the Property." The agreement provided FWO with 180 days to satisfy this contingency. The agreement provided that if FWO required additional time beyond that 180-day period to obtain any governmental approvals, it could obtain an additional 180-day extension of that contingency period by releasing $20,000 of the deposited escrow funds to MVCP. To ensure due diligence, FWO was required under the agreement to provide MVCP with "a written update every 30 calendar days on the status of its CUP application."
In August 2016, MVCP's broker agent contacted Tanner to inform her that MVCP intended to sell the building and sent some forms for Tanner to sign, indicating that MVCP was "required to get a few signatures from you on documentation, in order to proceed with the sale." The broker stated that the first document was "for the CUP application the proposed buyer wants for a dispensary use." The document, titled "Ownership Disclosure Statement," stated that a project known as "CDRS Dispensary" was applying for a CUP from the City. The document states that by signing the document, "the owner(s) acknowledge that an application for a permit . . . will be filed with the City of San Diego on the subject property, with the intent to record an encumbrance against the property." Tanner indicated she was consulting with her attorney and, shortly after, signed the statement on August 18, 2016.
Over the next year, FWO pursued the CUP with the City, which ultimately approved it in July 2017. The CUP set forth multiple terms and conditions for the operation of the marijuana outlet. After the City's approval, Tanner's signature, as owner of the property, was required for the permit to take effect.
On July 28, 2017, MVCP's broker e-mailed Tanner, informing her that her signature was required on the "attached CUP you've been prepped for." Tanner quickly responded by asking the broker: "What is this?" The broker responded that "[i]t is related to the Conditional Use Permit for the new buyers that have been in escrow this whole time, since your first signature on initial documents." Tanner did not respond until August 2, 2017, when she indicated she was meeting with her "legal team/advisors" and would respond "early next week." Expressing her concern, she stated that she had not "heard a peep out of you for a year regarding any sale" and faulted MVCP's broker with not being "open in disclosing the nature of the business of the potential buyer."
After Tanner did not respond after another week, MVCP's owners wrote Tanner directly on August 10, expressing to her that they believed they had "given you ample time and given you the courtesy to sign the CUP as the land owner." The owners informed Tanner that the ground lease "clearly states that we have the right to sign the CUP" and "states that you are required to sign any requests in a prompt timely manner." The owners concluded by warning that they "will be moving forward in the signature process by noon today."
Just minutes before noon, Tanner's attorney sent a response warning that Tanner did not find the CUP to be acceptable and "does not authorize you to proceed to sign her name to any documents or otherwise make representations on her behalf." The attorney explained that Tanner "is not willing to ignore federal prohibitions regarding the sale of marijuana." The attorney concluded by reiterating that Tanner did not authorize MVCP "to obtain a CUP in Ms. Tanner's name for a purpose that violated federal law" and warned that "in no event should any escrow close . . . that is dependent upon Ms. Tanner's consent to the objectionable CUP for a marijuana dispensary on the Property."
A week later, MVCP's attorney responded, claiming that Tanner's refusal to cooperate in the CUP process resulted in Tanner being "presently in breach of the terms of the Lease, and is thereby intentionally threatening to interrupt and even terminate a pending sale of our client's property." The attorney again indicated that MVCP intended to sign the CUP on Tanner's behalf, a right established by the ground lease, and warned that "any further actions by you or your client to try to interfere with this transaction, in contravention of the terms of the Lease, will be met with the appropriate response, and more than likely will include a demand in connection therewith, for substantial compensatory and punitive damages."
Days later, Tanner's attorney responded with her own letter, explaining that Tanner "has been and will continue to comply" with the ground lease, but acknowledged "the Lessor and the Lessee appear to have a disagreement as to what is required under the Ground Lease." The attorney stated that Tanner was willing to "fully cooperate" with the sale of the building, but "is not willing to authorize its use for a marijuana dispensary, which is in violation of federal law and the Ground Lease."
The same day, MVCP's attorney wrote back and claimed that Tanner "is currently in breach of the provisions of the Lease, and further interference, or further refusal to cooperate, will be treated accordingly." He further warned that if Tanner's conduct by her "failure and refusal to abide by the terms of the Lease" resulted in the loss of the sale, "[t]here will be a clear right to recover the sales price, as well as punitive damages . . . ."
Current Litigation
Rather than responding further via letter, Tanner filed a lawsuit the following day. She alleged a cause of action for anticipatory breach of contract, sought declaratory and injunctive relief and, at the same time, recorded a lis pendens. Generally, she alleged that the lease required the property be used for a "lawful purpose" and, because the sale of marijuana is illegal under federal law, the operation of a marijuana dispensary on the property would violate the lease.
Approximately two months later, on October 12, 2017, FWO filed a separate lawsuit naming only MVCP as a defendant. FWO alleged that the title company would not allow escrow to close until the lawsuit and the accompanying lis pendens were resolved and MVCP had made only "minimal efforts" to resolve the dispute, leading it to breach the purchase agreement.
In December 2017, MVCP filed its own cross-complaint against Tanner, alleging causes of action for breach of contract, breach of the implied covenant of good faith and fair dealing, intentional misrepresentation, negligent misrepresentation, negligent interference with economic advantage, and intentional interference with economic advantage.
Then, in January 2018, FWO filed its first amended complaint—the operative complaint subject to Tanner's anti-SLAPP motion at issue in this appeal—adding Tanner as a defendant. Regarding Tanner, the complaint alleged causes of action for inducing a breach of contract, intentional interference with contractual relations, intentional interference with prospective economic advantage, and negligent interference with prospective economic relations.
These related causes of action all generally require a showing that the defendant had knowledge of an existing contract or prospective economic relationship, took actions that interfered with, or disrupted, the contract or relationship, leading to harm to plaintiff. (See CACI Nos. 2200, 2201, 2202, 2204.)
These causes of action are premised on FWO's allegation, as stated in one cause of action, that "Tanner, despite originally approving of the Purchase Agreement, Lease assignment, and the CUP application, refused to sign the CUP application and threatened to declare MVCP in breach of the Lease if MVCP closed escrow on the Purchase Agreement and assigned the Lease. [FWO] is informed and believes that Tanner desired to profit from the transaction and knew that by threatening MVCP and preventing close of escrow, she was in a better position to demand money from [FWO]." FWO also alleged that Tanner filed her lawsuit "to prevent MVCP from selling the [building] and assigning the Lease to [FWO]" and recorded the lis pendens "in furtherance of her efforts to interfere with the Purchase Agreement." The complaint sets forth the allegation that "[b]ecause of Tanner's pre-litigation threats, and then because of Tanner's litigation, MVCP was unable to close escrow and refused to close escrow . . . ."
FWO sought compensatory damages from Tanner for "at least" the money it placed in escrow that was released to MVCP during the delay caused by her refusal to sign the CUP and the subsequent lawsuit.
Anti-SLAPP Motion
Tanner then filed her anti-SLAPP motion targeting FWO's first amended complaint. She asserted that FWO's causes of action against her arose out of the protected activity of filing her lawsuit against MVCP and filing the lis pendens. She further alleged that FWO could not establish a probability of prevailing on its causes of action because she was unaware of the agreement between FWO and MVCP and had the right to refuse the use of the property to sell marijuana because it is illegal under federal law.
Tanner also filed an anti-SLAPP motion against MVCP's cross-complaint, which was granted by the trial court in the same order that granted Tanner's anti-SLAPP motion as to FWO. The ruling as to MVCP is not at issue in this appeal.
The trial court agreed and granted the anti-SLAPP motion. The court found that FWO's causes of action were all based upon the "same four alleged wrongs committed by Tanner: 1. Tanner's filing of a lis pendens. 2. Tanner's filing of a lawsuit. 3. Tanner's making pre-litigation threats. 4. Tanner's refusal to sign the CUP." The court found all of these acts to be protected activity, in part by concluding that her refusal to sign the CUP before she filed her lawsuit was a "settlement negotiation" related to the lawsuit. Shifting the burden, the court concluded that FWO failed to demonstrate it could prevail on the merits because the sale of marijuana would violate the ground lease such that Tanner could refuse such a use, which would also require a CUP that "unlawfully creates obligations and conditions on the part of Tanner not previously agreed upon in the ground lease." Alternatively, the court concluded that all of Tanner's alleged wrongs are "covered by the" absolute litigation privilege. Accordingly, the trial court granted Tanner's anti-SLAPP motion.
DISCUSSION
I. The Anti-SLAPP Motion
A. Legal Principles
"The Legislature enacted section 425.16 in response to 'a disturbing increase in lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances.' [Citation.] These lawsuits prompted the Legislature to declare that 'it is in the public interest to encourage continued participation in matters of public significance, and that this participation should not be chilled through abuse of the judicial process.' [Citation.] To limit such risks, the anti-SLAPP legislation provides a special motion to strike 'intended to resolve quickly and relatively inexpensively meritless lawsuits that threaten free speech on matters of public interest.' [Citation.] In 1997, the Legislature amended the statute to provide that, directed to this end, the statute 'shall be construed broadly.' " (Rand Resources, LLC v. City of Carson (2019) 6 Cal.5th 610, 619.)
The 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." (§ 425.16, subd. (b)(1).) Section 425.16, subdivision (e) identifies four categories of activity protected by the anti-SLAPP statute. It states, "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 legislative, executive, or judicial proceeding, or any other official proceeding authorized by law, (2) 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, (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest, or (4) any other 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).)
"A court evaluates an anti-SLAPP motion in two steps. '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. [Citations.] If the defendant carries its burden, the plaintiff must then demonstrate its claims have at least "minimal merit." ' [Citation.] If the plaintiff fails to meet that burden, the court will strike the claim." (Wilson v. Cable News Network, Inc. (2019) 7 Cal.5th 871, 884.)
Under the first step, commonly referred to as the first "prong" of the anti-SLAPP analysis, courts examine the plaintiff's allegations to determine whether the claims arise from protected activity. "A claim arises from protected activity when that activity underlies or forms the basis for the claim. [Citations.] Critically, 'the defendant's act underlying the plaintiff's cause of action must itself have been an act in furtherance of the right of petition or free speech.' [Citations.] '[T]he mere fact that an action was filed after protected activity took place does not mean the action arose from that activity for the purposes of the anti-SLAPP statute.' [Citations.] Instead, the focus is on determining what 'the defendant's activity [is] that gives rise to his or her asserted liability—and whether that activity constitutes protected speech or petitioning.' [Citation.] 'The only means specified in section 425.16 by which a moving defendant can satisfy the ["arising from"] requirement is to demonstrate that the defendant's conduct by which plaintiff claims to have been injured falls within one of the four categories described in subdivision (e) . . . .' [Citation.] In short, in 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 pp. 1062-1063.)
"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 the 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.)
B. FWO's Claims Do Not Arise From Protected Activity
On appeal, FWO primarily argues the trial court did not apply the proper legal test to determine whether FWO's allegations "arise from" Tanner's protected activity, as required under the first prong of the anti-SLAPP analysis. To support this argument, FWO relies heavily on the Supreme Court's decision in Park, supra, 2 Cal.5th 1057.
In Park, the plaintiff was an assistant professor of Korean national origin. (Park, supra, 2 Cal.5th at p. 1061.) After his application for tenure at a public university was denied, he filed a discrimination lawsuit. (Ibid.) The university responded with a motion to strike, contending that the lawsuit arose from its decision to deny him tenure and the communications that led up to and followed that decision, which it believed were all protected activities. (Ibid.) After the trial court denied the motion, the appellate court reversed, concluding that the tenure process was an official proceeding and the communications in connection with that process were protected activity. (Id. at pp. 1061-1062.)
The Supreme Court disagreed, explaining that "a claim is not subject to a motion to strike simply because it contests an action or decision that was arrived at following speech or petitioning activity, or that was thereafter communicated by means of speech or petitioning activity. Rather, 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." (Park, supra, 2 Cal.5th at pp. 1060-1061.)
The high court instructed that a court ruling on an anti-SLAPP motion must "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.) While a claim challenged as a SLAPP may be filed because of protected activity, and that protected activity may supply evidence of the parties' disagreement, such a claim is not subject to the anti-SLAPP statute if the plaintiff demonstrates that the specific elements of the claim do not depend on the protected activity to establish the alleged cause of action. (Id. at p. 1064.) Thus, courts must "respect 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." (Ibid.)
Applying this analysis to the facts before it, the Park court concluded that establishing plaintiff's discrimination claim did not depend on the official proceeding or any statements made in connection with that proceeding, but rather arose from the decision to deny tenure for discriminatory reasons, which was not protected activity. (Park, supra, 2 Cal.5th at p. 1068.) While the university's official statements may have communicated that decision, or otherwise provided evidence of the alleged animus, they did not form the basis of the plaintiff's claim. (Ibid.) Because the plaintiff could have omitted the allegations regarding communicative acts or official proceedings and still stated the same claims, his claims did not arise from protected activity. (Ibid.)
The Supreme Court in Park relied heavily on one of its earlier decisions, City of Cotati v. Cashman (2002) 29 Cal.4th 69 (City of Cotati), which is also instructive here. In that case, a group of citizens filed a federal lawsuit seeking declaratory and injunctive relief to declare a new city ordinance unconstitutional and unenforceable. (Id. at p. 72.) The city responded by filing an action for declaratory relief in state court, alleging that a controversy regarding the validity of the ordinance had arisen between the city and the citizens. (Ibid.) In response, the citizens filed an anti-SLAPP motion to strike the city's complaint, alleging it arose from their protected activity of filing a lawsuit. (Id. at pp. 72-73.) The trial court granted the motion, finding that the city's lawsuit was filed shortly after the citizens' federal lawsuit, involved the exact contention made by the citizens, and named only those citizens as defendants. (Id. at p. 73.)
The Supreme Court disagreed, holding that the city's lawsuit did not arise out of the citizen's filing of the federal lawsuit. It is not enough, the court explained, to satisfy the requirements of section 425.16 that an action was filed after protected activity took place or in response to that protected activity. (City of Cotati, supra, 29 Cal.4th at pp. 76-77.) Similarly, a "responsive but independent lawsuit" may "arise from the same transaction or occurrence alleged in a preceding lawsuit, without necessarily arising from that earlier lawsuit itself." (Id. at p. 78.) As applied to the facts presented in City of Cotati, the court agreed the city's declaratory relief action did not arise out of the citizens' federal lawsuit, but rather that the federal lawsuit merely informed the city of an existing actual controversy justifying declaratory relief. (Id. at p. 79.) As the court explained, the citizens' own declaratory relief claim demonstrated the existence of an actual controversy between the parties that predated their own lawsuit, as a declaratory relief action must establish an existing actual, present controversy and cannot meet this requirement by simply pointing to the lawsuit itself as establishing the controversy. (Id. at p. 80.)
Here, when FWO's complaint is analyzed under the standards set forth in Park and City of Cotati, it is clear that FWO's causes of action do not arise from Tanner's protected activities. Although those activities may be offered as evidence of Tanner's alleged wrongful conduct, these acts do not "supply [the] elements and consequently form the basis for liability" of the claims raised by FWO in its operative complaint. (Park, supra, 2 Cal.5th at p. 1063.)
In the operative complaint, FWO alleges causes of action against Tanner for inducing breach of contract, intentional interference with contractual relations, intentional interference with prospective economic advantage, and negligent interference with prospective economic relations. These causes of action, all variations of a similar theme, generally require a showing that Tanner's wrongful "acts" interfered with FWO's contract with MVCP to sell the property and assign the lease to allow FWO to use the property as a marijuana dispensary under the CUP approved by the City. (See Little v. Amber Hotel Co. (2011) 202 Cal.App.4th 280, 291 [inducing breach of contract]; Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126 [intentional interference with contractual relations]; Della Penna v. Toyota Motor Sales, U.S.A. (1995) 11 Cal.4th 376, 392-393 [intentional interference with prospective economic advantage]; Venhaus v. Shultz (2007) 155 Cal.App.4th 1072, 1077-1078 [negligent interference with prospective economic advantage]; see generally Ixchel Pharm, LLC v. Biogen, Inc. (Aug. 3, 2020, S256927) ___ Cal.5th ___ [2020 Cal. LEXIS 4876, **6-9] [discussing elements of California's traditionally recognized economic relations torts].)
While the causes of action contain other elements—such as the existence of a contract or economic relationship between FWO and a third party, Tanner's knowledge of that relationship, and resulting harm to FWO—neither the trial court nor Tanner suggest these elements involve any protected activity by Tanner.
The acts complained of, however, are distinct from Tanner's acts in relation to her litigation. In the fourth cause of action for inducing breach of contract, FWO alleges that these "acts" include that "Tanner refused to sign the CUP. Tanner also threatened to declare MVCP in default of the Lease if MVCP closed escrow on the Purchase Agreement and transferred the Lease." As alleged by FWO, its claims arise from Tanner's refusal to honor her obligations under the lease to sign the CUP and not interfere with FWO's purchase agreement, including the assignment of the lease to FWO. Tanner's decision to act otherwise forms the basis for FWO's claims, not her subsequent activities related to the filing of her lawsuit.
As summarized by Tanner's own attorney in a letter sent to MVCP, the disagreement over the parties' respective duties and Tanner's decision to act in accordance with her own interpretation of the lease predates the filing of her lawsuit and filing of the lis pendens. In response to MVCP's repeated requests made to Tanner to sign the CUP application, her attorney explained that "the Lessor and the Lessee appear to have a disagreement as to what is required under the Ground Lease. The Lessor maintains Lessee must use the Property for a lawful purpose, and since marijuana is illegal under federal law, Lessee cannot operate a marijuana dispensary on the Property." Based on Tanner's decision to act in accordance with her own interpretation, she told MVCP that she objects to the CUP and "does not authorize [MVCP] to proceed to sign her name to any documents or otherwise make representations on her behalf"; and she demanded that "[i]n no event should any escrow close, whether on August 23, 2017 or another date, that is dependent upon Ms. Tanner's consent to the objectionable CUP for a marijuana dispensary on the Property." While this letter communicated Tanner's decision, her underlying actions form the basis of FWO's claims.
Tanner's own complaint provides further evidence that the dispute between the parties existed before she filed the lawsuit. In support of the claim for declaratory relief, Tanner alleged "[a]n actual controversy has arisen and now exists between Plaintiff and Defendants . . . concerning their respective rights and obligations under the Lease. Specifically, (1) Plaintiff and Defendants dispute whether the Property can be used as a marijuana dispensary, and Plaintiff contends that such is unlawful under federal law, impermissible under the Lease, and therefore Plaintiff requests a declaration that Defendants may not operate, or take steps to operate, a marijuana dispensary on the Property; and (2) Plaintiff and Defendants dispute whether Plaintiff must sign the CUP for a marijuana dispensary, and Plaintiff contends that the CUP conflicts with, violates, breaches, and/or impermissibly expands Plaintiff's liability and/or legal obligations under various provisions of the Lease because it requires the operation of a marijuana dispensary on the Property and expands Plaintiff's liability and/or legal obligations beyond the terms stated in the Lease; Defendants contend otherwise; and Plaintiff requests a declaration that Plaintiff is not required to sign the CUP for a marijuana dispensary, and can revoke any CUP on the Property in her name for a marijuana dispensary."
As explained by the Supreme Court in City of Cotati, a plaintiff cannot create the controversy underlying a claim for declaratory relief by filing a lawsuit. Rather, the dispute must be preexisting. "The requirement that plaintiffs seeking declaratory relief allege 'the existence of an actual, present controversy [Citation] would be illusory if a plaintiff could meet it simply by pointing to the very lawsuit in which he or she seeks that relief. Obviously, the requirement cannot be met in such a bootstrapping manner; 'a request for declaratory relief will not create a cause of action that otherwise does not exist.' " (City of Cotati, supra, 29 Cal.4th at p. 80.) Thus, because the dispute giving rise to Tanner's disruption of the economic relationship between FWO and MVCP existed before she filed her lawsuit, she cannot claim it arises from that lawsuit.
As the trial court noted and FWO concedes, FWO included general allegations in its complaint concerning the filing of Tanner's lawsuit and lis pendens, and incorporated those allegations into its causes of action. The inclusion of these allegations, however, is not fatal to FWO's ability to demonstrate its causes of action do not arise out of those actions. FWO does not include allegations relating to the filing of the lawsuit as a basis for liability, but rather simply as "speech that provides evidence of liability." (Park, supra, 2 Cal.5th at p. 1065.)
Critically, reviewing FWO's complaint reveals that if FWO had filed its lawsuit before Tanner filed her lawsuit or omitted those specific allegations from its complaint, it could have stated and established the elements of the same causes of action. The claims are all generally premised on the allegation that "Tanner, despite originally approving of the Purchase Agreement, Lease Assignment, and the CUP application, refused to sign the CUP application and threatened to declare MVCP in breach of the Lease if MVCP closed escrow on the Purchase Agreement and assigned the Lease. [FWO] is informed and believes that Tanner desired to profit from the transaction and knew that by threatening MVCP and preventing close of escrow, she was in a better position to demand money from [FWO]." While her subsequent actions relating to the lawsuit provide additional evidence regarding her underlying decisions and actions that interfered with the relationship between FWO and MVCP, her litigation-related actions are not necessary to establish the elements of the alleged causes of action. "The fact that an activity protected by the anti-SLAPP statute may have triggered a lawsuit does not necessarily mean that the causes of action arose from the protected activity." (Third Laguna Hills Mutual v. Joslin (2020) 49 Cal.App.5th 366, 373.)
Assertions that are merely "incidental" or "collateral" to the cause of action are not subject to a motion to strike. (Baral v. Schnitt (2016) 1 Cal.5th 376, 394.) "Allegations of protected activity that merely provide context, without supporting a claim for recovery, cannot be stricken under the anti-SLAPP statute." (Ibid.) Here, while FWO includes allegations that it concedes concern protected activity, those allegations merely provide context and are incidental to FWO's causes of action, as discussed ante.
We find support for this conclusion in a recent decision by this court, Gaynor v. Bulen (2018) 19 Cal.App.5th 864 (Gaynor), in which the beneficiaries of a family trust filed a claim for breach of fiduciary duty against a de facto trustee and the other trustees, alleging their actions resulted in an inequitable distribution of trust funds. (Id. at p. 869.) In part, plaintiffs alleged that to implement the plan to benefit one class of beneficiaries over another, the trustees "wrongfully withdrew Trust assets and then used these assets to file and defend probate petitions in attempting to persuade the probate court to adopt their plan." (Ibid.) Seizing on these allegations, defendants filed an anti-SLAPP motion, contending that the claim arose out of the filing of probate litigation. (Ibid.)
This court affirmed the trial court's order denying the motion to strike. (Gaynor, supra, 19 Cal.App.5th at pp. 869-870.) Relying on the analysis applied in Park, we concluded the plaintiffs' claims "were predicated on [defendant] taking actions to favor himself to the detriment of the Gaynor beneficiaries." (Id. at p. 879.) While the complaint included allegations regarding the "improper use of probate litigation," we concluded those allegations "merely reflected the manner in which the [defendants] implemented their alleged wrongful plan to alter the trustee succession rules to favor their own interests." (Ibid.) While recognizing that the legal filings were protected activities, we explained that "[a]lthough the alleged breach of loyalty may have been carried out by the filing of probate petitions, it was not the petitioning activity itself that is the basis for the breach of fiduciary claim." (Id. at p. 880.) Thus, while the litigation activities would provide evidence of the alleged breaches of fiduciary duty, "the filing of these petitions was not necessary to establish this portion of the breach of fiduciary duty claim." (Ibid.)
The analysis applied in Gaynor equally applies here. FWO alleges Tanner interfered with its economic relationship with MVCP by failing to fulfill her duties under the ground lease to sign the CUP documents and not oppose the assignment of the lease to FWO to operate a marijuana dispensary on the property. Although Tanner may have carried out her acts of interference in part by filing her lawsuit, which provides evidence of her alleged wrongful breaches of duty, her acts of filing the lawsuit and the lis pendens were not necessary to establish FWO's causes of action. Accordingly, we conclude that FWO's claims do not arise out of Tanner's protected activity, but rather her earlier decision to interfere with the agreement between FWO and MVCP. (See Park, supra, 2 Cal.5th at p. 1066 ["while [the alleged wrongful conduct] may be carried out by means of [protected] speech . . . , [this] circumstance [does not] transform[] [the] suit to one arising from speech"].) "That 'protected activity may lurk in the background—and may explain why the rift between the parties arose in the first place—does not transform a [contract] dispute into a SLAPP suit.' " (Gotterba v. Travolta (2014) 228 Cal.App.4th 35, 42 (Gotterba), quoting Episcopal Church Cases (2009) 45 Cal.4th 467, 478.)
The cases cited by the trial court and Tanner to support the conclusion that Tanner met her burden under the first prong of the anti-SLAPP analysis because FWO's action arises out of Tanner's filing of a lawsuit or a lis pendens are entirely distinguishable. Under the same analysis applied in Park, each of the cases involved causes of action where the filing of the lawsuit was a critical element of the cause of action rather than mere evidence of underlying alleged wrongs. In other words, if the allegations regarding the filing of the lawsuit or the lis pendens were removed from the complaint, plaintiff could not state the challenged cause of action.
For example, in the cases cited by the trial court regarding the filing of a lis pendens, the plaintiffs alleged causes of action for slander of title premised on the filing of the lis pendens as the specific act that slandered title. (La Jolla Group II v. Bruce (2012) 211 Cal.App.4th 461, 471 [finding action arose out of protected activity because the challenged cause of action for "slander of title" was premised on a single activity: the recording of the lis pendens]; Manhattan Loft, LLC v. Mercury Liquors, Inc. (2009) 173 Cal.App.4th 1040, 1050.) Without the filing of the lis pendens, there would be no slander of title and, accordingly, the plaintiff would be unable to state a cause of action.
Similarly, the cases holding that the filing of a lawsuit constitutes protected activity involve anti-SLAPP motions challenging causes of action in which the filing of the lawsuit was a necessary element to the alleged claims, which could not be stated without reference to the litigation. In Navellier v. Sletten (2002) 29 Cal.4th 82, the plaintiff sued defendant for breach of contract on the basis that defendant filed a counterclaim in a parallel proceeding in violation of a settlement agreement. (Id. at p. 87.) The defendant filed an anti-SLAPP motion, contending the lawsuit arose directly out of protected activity in the context of litigation activity. (Ibid.) On appeal, the Supreme Court held that the breach of contract cause of action arose from protected activity, i.e., the filing of the counterclaims, because "but for the federal lawsuit and [defendant]'s alleged actions taken in connection with that litigation, plaintiffs' present claims would have no basis." (Id. at p. 90.)
In Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, the Supreme Court held that a malicious prosecution cause of action arose from protected activity, stating that " '[b]y definition, a malicious prosecution suit alleges that the defendant committed a tort by filing a lawsuit.' " (Id. at p. 291.) On appeal, Tanner also relies upon Kashian v. Harriman (2002) 98 Cal.App.4th 892, which analyzed a cause of action for unfair and deceptive business practices in violation of section 17200 of the Business and Professions Code. (Id. at pp. 901-902.) In that cause of action, the plaintiff alleged the defendant, an attorney, was filing lawsuits in the name of organizations that were " 'a mere shell and sham.' " (Id. at p. 902.) On appeal from the trial court's order granting defendant's anti-SLAPP motion, the appellate court concluded the causes of action necessarily arose from the defendant's acts and statements made in connection with the challenged litigation. (Id. at pp. 907-908.)
Considered together, these cases are premised on the conclusion that but for the plaintiff's act of filing a lawsuit or a lis pendens, the challenged cause of action would not exist because the act of filing was a necessary element. Here, on the other hand, although FWO's lawsuit followed Tanner's filing of her lawsuit and the lis pendens, FWO's causes of action do not rely on Tanner's litigation actions to state the elements of its claim. If Tanner never filed her lawsuit, FWO could have filed a substantively identical complaint alleging the same causes of action and established the same basis for relief. Thus, its claims do not arise from the litigation.
The trial court also found that Tanner's refusal to sign the CUP application was protected activity because it preceded her lawsuit such that it qualified as "prelitigation threats" and "settlement negotiations" protected by the anti-SLAPP statute. Even if we accept that these communications qualify as protected activity, FWO's lawsuit did not arise from those statements. "Prelitigation communications . . . may provide evidentiary support for the complaint without being a basis of liability." (Graffiti Protective Coatings, Inc. v. City of Pico Rivera (2010) 181 Cal.App.4th 1207, 1215.)
Here, the trial court did not distinguish between "prelitigation communications" that merely provide evidence of the underlying dispute and those that form the basis of a claim for relief. The letters sent by Tanner's attorney merely referenced the existing dispute between the parties and communicated Tanner's decision to refuse to sign the CUP application and oppose the assignment of the lease to FWO. As we already discussed in applying Park, FWO's claims do not arise from these communications.
Even assuming Tanner's "prelitigation communications" formed the basis for FWO's claims, they do not rise to the level of protected activity. "[C]onduct is not automatically protected merely because it is related to pending litigation; the conduct must arise from the litigation." (Optional Capital, Inc. v. DAS Corp. (2014) 222 Cal.App.4th 1388, 1400.)
To support its conclusion that Tanner's communications were protected activity, the trial court relied upon Digerati Holdings, LLC v. Young Money Entertainment, LLC (2011) 194 Cal.App.4th 873, in which the plaintiffs sued a film production company for breach of contract and related causes of action arising from a dispute over a film starring one of the plaintiffs. (Id. at pp. 878-879.) The defendant then filed a cross-complaint for, inter alia, breach of the implied covenant of good faith and fair dealing based in part on allegations that the plaintiffs, through an attorney, threatened third-party distributors with lawsuits if they acquired the rights to the film. (Id. at pp. 880-881.) On appeal, the court held that this cause of action arose from protected activity because plaintiffs' statements made through an attorney threatening distributors with litigation were "prelitigation communications . . . made in furtherance of [plaintiffs'] right of petition" because the evidence established that plaintiffs "seriously and in good faith contemplated commencing litigation . . . to enforce their rights under the agreement." (Id. at p. 888.) As the Digerati court explained, the prelitigation statements were protected because they (1) concern the subject matter of the dispute and (2) were made " ' "in anticipation of litigation 'contemplated in good faith and under serious consideration.' " ' " (Id. at p. 887.)
Similarly, in Karnazes v. Ares (2016) 244 Cal.App.4th 344, a case cited by Tanner, the plaintiff sued an attorney for fraud and related causes of action arising from e-mails sent by the attorney to the plaintiff seeking to settle a lawsuit that plaintiff intended to file against the attorney's client. (Id. at pp. 348-349.) The e-mails included "a review of possible claims and references to [the client] . . . . In addition, they contain[ed] a request for a copy of any complaint that might be filed in the matter under discussion." (Id. at p. 354.) The appellate court upheld the trial court's finding that these e-mails constituted protected activity because "[t]he protection provided for written or oral statements made in connection with judicial proceedings . . . includes communications preparatory to or in anticipation of such proceedings." (Id. at p. 353.)
In both of these cases, the prelitigation statements were made by attorneys and specifically referenced seriously proposed litigation. Here, on the other hand, although Tanner's statements were made through her attorney, those statements made no mention of any threat of litigation. The protection for prelitigation statements under section 425.16 is limited "to circumstances in which future litigation is 'genuinely contemplated,' rather than just a negotiating tactic or a hypothetical possibility." (Bel Air Internet, LLC v. Morales (2018) 20 Cal.App.5th 924, 940.) Thus, "when a cause of action arises from conduct that is a 'necessary prerequisite' to litigation, but will lead to litigation only if negotiations fail or contractual commitments are not honored, future litigation is merely theoretical rather than anticipated and the conduct is therefore not protected prelitigation activity. [Citations.] Similarly, payment demands with vague references to future ' "legal remedies" ' may not demonstrate that litigation was actually under serious consideration." (Id. at p. 941.)
At most, Tanner hinted that she would "enforce her rights" and "seek damages" if she was harmed by MVCP's sale to FWO for the operation of a marijuana dispensary. These references to potential legal remedies were not only unnecessary to commencing a legal action, they also merely refer to a theoretical future lawsuit if the parties could not resolve their disagreement regarding their respective contractual obligations. Moreover, Tanner's declaration in support of her motion to strike does not include any statement suggesting that when she made these statements through her attorney, she was contemplating any litigation.
The record establishes that Tanner's statements were merely made before litigation was filed, not that they were prelitigation statements made in furtherance of her right to petition the court. If section 425.16 were interpreted to protect any statement made before litigation was eventually filed simply because those statements concerned the topic of the litigation, the anti-SLAPP statute would apply to a wide range of lawsuits entirely unrelated to petitioning activity. We cannot endorse such an overly broad interpretation of the statute.
Alternatively, the court construed Tanner's prelitigation statements as "settlement negotiations." The trial court cited Seltzer v. Barnes (2010) 182 Cal.App.4th 953, in which the court concluded that the plaintiff's causes of action challenging her attorney's settlement negotiations with a third party arose from protected activity because the defendant's claim "is based on appellant's communication of an offer to settle and the content of the offer." (Id. at pp. 962-963.) In the same manner as the other cases cited by the trial court, the challenged cause of action could not be alleged but for the settlement offer. Such a claim—where the settlement negotiations are the central element of plaintiff's claim—is entirely distinguishable from the alleged settlement offer in this case, which does not form the basis for FWO's claims. Each cause of action could be alleged without reference to the settlement offer, which only offers additional evidence of Tanner's alleged improper motive for interfering with the purchase agreement. FWO's complaint does not assert that the alleged settlement offer itself was wrongful, but rather that it merely communicated Tanner's underlying wrongful motive for interfering with the relationship between MVCP and FWO.
On appeal, Tanner additionally asserts that FWO's claim of alleged damages further bolsters the conclusion that the claims arise from protected activity. She points to the complaint's inclusion of damages in the exact amount FWO paid into escrow under the purchase agreement, which Tanner contends was caused by the delay arising from the litigation, as evidence that the claims necessarily arise from that litigation.
Notably, this contention is not entirely accurate: although FWO does seek to recover its escrow costs, its prayer for relief asks for damages of "at least" its escrow costs, with the total amount to be determined at trial. Moreover, in Gaynor, we recognized that focusing too narrowly on a complaint's prayer for damages is unwarranted to demonstrate that claims arise from protected activity. "[T]he anti-SLAPP statute's focus is on the defendant's alleged injurious speech or conduct, 'rather than the damage which flows from said conduct.' " (Gaynor, supra, 19 Cal.App.5th at p. 884, quoting Renewable Resources Coalition, Inc. v. Pebble Mines Corp. (2013) 218 Cal.App.4th 384, 397.)
While the prayer for damages is not entirely irrelevant to the anti-SLAPP analysis, the prayer in this case does not demonstrate FWO's claims arise from Tanner's litigation activity. As Tanner acknowledges in her brief, not all of the increased escrow costs were incurred after Tanner filed her lawsuit, but rather that some preceded the lawsuit. While some costs were incurred after the lawsuit was filed, the complaint unequivocally alleges that the escrow period was extended due to Tanner's refusal to sign the CUP application, not because of the filing of litigation. Her refusal to sign, which FWO alleges was wrongful, gave rise to FWO's claims. As discussed ante, her actions surrounding the CUP application are not protected activity. (See also Copenbarger v. Morris Cerullo World Evangelism (2013) 215 Cal.App.4th 1237, 1247 [claim disputing the parties' respective rights and obligations under certain terms of a ground lease does not arise from protected activity]; Shahbazian v. City of Rancho Palos Verde (2017) 17 Cal.App.5th 823, 835 [claim challenging decision regarding city permit does not arise from protected activity].)
Accordingly, we conclude that the trial court erred in finding that Tanner satisfied her burden under the first prong of the anti-SLAPP analysis. Thus, the order must be reversed and we need not consider the second prong of the analysis. (Gotterba, supra, 228 Cal.App.4th at pp. 43-44.) We express no opinion on the trial court's finding that FWO was not likely to succeed on the merits of its claims and have no need to address the arguments on appeal arising under the second part of the anti-SLAPP analysis.
II. FWO's Motion for Leave to Amend its Complaint
Before Tanner filed her anti-SLAPP motion, FWO sought to intervene in the case filed by Tanner against MVCP with its own complaint including claims for intentional and negligent misrepresentation. Rather than granting FWO leave to intervene, the trial court simply consolidated the two lawsuits. Tanner then filed her anti-SLAPP motion, precluding FWO from seeking leave to amend its existing complaint to add the misrepresentation causes of action. (See, e.g., Okorie v. Los Angeles Unified School Dist. (2017) 14 Cal.App.5th 574, 599 [trial court may not entertain a motion for leave to amend a complaint after a motion for anti-SLAPP motion is filed and before it is decided].)
At the end of the hearing at which the trial court granted Tanner's anti-SLAPP motion, FWO asked the court to grant leave to amend its complaint to add the misrepresentation causes of action. The court denied the request, finding that because it granted Tanner's anti-SLAPP motion, Tanner was entitled to judgment in her favor.
On appeal, FWO contends that the trial court abused its discretion in denying it leave to amend its complaint. It asks this court to instruct the trial court to allow FWO to amend its complaint on remand.
Given the trial court's ruling was premised on its order granting the anti-SLAPP motion, our reversal of that order necessitates a reconsideration of the motion for leave to amend. However, as FWO acknowledges, permitting a party to amend its complaint is a matter within the trial court's discretion, even if that discretion should be applied liberally. (Nestle v. Santa Monica (1972) 6 Cal.3d 920, 939.) Thus, while we agree with FWO that the court's order denying it leave to amend must be reversed, we disagree the proper remedy is for this court to instruct the trial court that it must grant leave to amend. Instead, we reverse and remand without prejudice to the filing of a motion for leave to amend the operative complaint, which the trial court may consider in the first instance and exercise its usual discretion.
DISPOSITION
The trial court's order granting Tanner's anti-SLAPP motion and denying FWO's oral motion for leave to amend its complaint is reversed and the matter is remanded for further proceedings in accordance with this opinion. Appellant is entitled to recover its costs on appeal.
HALLER, J. WE CONCUR: BENKE, Acting P. J. IRION, J.