Opinion
G044604 Super. Ct. No. 30-2010-00345431
12-15-2011
GAZOO ENERGY GROUP, INC., Cross-complainant and Respondent, v. GEORGE SHARP, Cross-defendant and Appellant.
Law Offices of Kurt A. Ressler and Kurt A. Ressler for Cross-defendant and Appellant. Julander, Brown & Bollard, Dirk O. Julander and Dustin M. Monroe for Cross-complaint and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule
OPINION
Appeal from an order of the Superior Court of Orange County, David T. MacEachen, Judge. Affirmed.
Law Offices of Kurt A. Ressler and Kurt A. Ressler for Cross-defendant and Appellant.
Julander, Brown & Bollard, Dirk O. Julander and Dustin M. Monroe for Cross-complaint and Respondent.
Cross-defendant George Sharp appeals from the denial of his special motion to strike (anti-SLAPP motion; Code Civ. Proc., § 425.16; all further statutory references are to this code unless otherwise stated) the cross-complaint of cross-complainant Gazoo Energy Group, Inc. He argues the court erred in finding the claims did not arise from protected activity. He also asserts cross-complainant cannot demonstrate it has a probability of prevailing on the merits of its claim. We affirm.
FACTS AND PROCEDURAL HISTORY
Some background information is necessary to understand the dispute before us. Prior to the events underlying this action, one Michael Osborn was involved with three companies, each at some point bearing the name Principal Capital Group, Inc. One of these was a Nevada corporation named Asgard Holdings, Inc., purchased by Osborn, who then changed the name to Principal Capital Group, Inc. (Principal-Asgard).
A second of these companies was incorporated in Delaware (Principal-Delaware). In November 2008 Principal-Delaware agreed to purchase a two-thirds interest in Fortuna Gaming Corporation, a Nevada Corporation, from Camelot Advisors, LLC. Osborn then renamed Fortuna Principal Capital Group, Inc. The purchase price was to be paid in five installments over a ninety-day period. As security for payment of the purchase price Osborn issued to Camelot an irrevocable proxy coupled with an interest, deposited into escrow.
Osborn defaulted and escrow released the proxy to Camelot, which, in December 2008, voted the shares to rescind the sale, remove Osborn from the offices of president, secretary, and treasurer and also remove him and the other directors he had installed. Thereafter, in January 2009, the name of the company was changed to Gazoo Energy Group, Inc, the cross-complainant in this action.
As further background information, in October 2005 cross-defendant sued Osborn and eventually obtained a judgment against him. According to the cross-complaint in our action, in March 2009 Osborn agreed to satisfy the judgment. In May he purported to assign shares of Fortuna Gaming Corporation to cross-defendant. At the time, according to cross-defendant's blog posting, cross-defendant knew Osborn did not own these shares.
In addition, in May 2009 Osborn delivered two checks totaling $153,000 to cross-defendant's lawyer's trust account written on the account of Principle [sic] Capital Group, Inc, also purportedly to satisfy the judgment. The maker of the check then allegedly stopped payment on the checks. The account was never associated with or owned by cross-complainant, and the cross-complaint alleges on information and belief that it belonged to Principal-Asgard.
In January 2010 cross-defendant's lawyer wrote to cross-complainant, claiming cross-defendant owned the controlling interest in cross-complainant by virtue of Osborn's stock transfer. He advised that cross-defendant had authorized him to work out an arrangement for cross-complainant to buy him out or to sue cross-complainant. Cross-defendant also issued a press release reiterating his ownership claim and disclosing that his lawyer had notified cross-complainant of cross-defendant's potential legal action. On the same date, cross-complainant issued its own press release denying cross-defendant's interest.
In February 2010 cross-defendant filed an action against cross-complainant with a single cause of action to collect on the two checks. Cross-complainant filed a cross-complaint for declaratory relief and unfair business practices under Business and Professions Code section 17200. It alleged cross-defendant's claims he held an ownership interest in the company and that he was owed money by virtue of the dishonored checks and sought a declaration to the contrary. The unfair competition count alleged cross-defendant "falsely h[e]ld himself out as being an owner of [cross- complainant's] shares," which was "artificially manipulat[ing]" the price of its stock, confusing the marketplace, and damaging cross-complainant's goodwill, depriving it of investors.
Cross-defendant then filed his anti-SLAPP motion, which the court denied. Although there is nothing in the record showing the basis for the decision, both parties agree the court found cross-defendant had not met his burden to show the claims arose from protected activity.
DISCUSSION
1. Introduction
Section 425.16, subdivision (b)(1) provides a party may bring a special motion to strike any "cause of action against [that party] arising from any act [the party commits] 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 . . . ." An "'act in furtherance of a person's right of . . . free speech under the United States or California Constitution in connection with a public issue' includes: . . . any . . . conduct in furtherance of the exercise of the constitutional right of . . . free speech in connection with a public issue or an issue of public interest." (§ 425.16, subd. (e)(4).)
The court must engage in a two-step analysis under this section. First it has to determine whether the defendant has met its burden to show "'that the challenged cause of action is one arising from protected activity.'" (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 733.) If so, the burden shifts to the plaintiff to demonstrate the likelihood of prevailing on the claim. (Ibid.) "'We consider "the pleadings, and supporting and opposing affidavits . . . upon which the liability or defense is based." [Citation.] However, we neither "weigh credibility [nor] compare the weight of the evidence. Rather, [we] accept as true the evidence favorable to the plaintiff [citation] and evaluate the defendant's evidence only to determine if it has defeated that submitted by the plaintiff as a matter of law." [Citation.]' [Citations.]" (Nygard, Inc. v. Uusi-Kerttula (2008) 159 Cal.App.4th 1027, 1036.) We review an order denying an anti-SLAPP motion de novo. (Flatley v. Mauro (2006) 39 Cal.4th 299, 325-326.)
2. No Protected Speech
Cross-defendant contends he sufficiently met his burden to show the action arises from statements he "made in a public forum in connection with an issue of public interest." (Underscoring omitted.) We disagree.
To prevail cross-defendant must show the cross-complaint arises from his exercise of free speech (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67), that is, the "act underlying the . . . cause of action must itself have been an act in furtherance of the right of . . . free speech." (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78, italics omitted.) To determine whether cross-defendant has met his burden we must look at the "gravamen of the lawsuit." (Kronemyer v. Internet Movie Data Base, Inc. (2007) 150 Cal.App.4th 941, 947.) "'[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. [Citation.] Moreover, that a cause of action arguably may have been "triggered" by protected activity does not entail that it is one arising from such. [Citation.] In the anti-SLAPP context, the critical consideration is whether the cause of action is based on the defendant's protected free speech or petitioning activity.' [Citation.]" (In re Episcopal Church Cases (2009) 45 Cal.4th 467, 477.)
The gravamen of the declaratory relief action is a dispute over ownership of the shares and whether cross-complainant owes on the contested checks. This has nothing to do with any speech, much less speech protected under section 425.16. Cross-defendant relies on allegations that he had "made public claims that he owns a majority of [c]ross-[c]omplainant's stock" and "is owed money from [c]ross-[c]omplainant." But cross-complainant did not sue because of cross-defendant's public claims. It sued to have the court decide ownership of the stock and whether it owes any money to cross-defendant.
The gravamen of the unfair competition cause of action is cross-defendant's claim to own shares in cross-complainant. Cross-defendant argues this is a matter of public interest based on several facts. First, he put out a press release and posted on the Internet "statements that call into question the propriety of [cross-complainant's] corporate actions." Second, he claims cross-complainant has a public presence: it is a publicly traded company, with nearly 49 million shares of common stock and 100 million preferred shares. Cross-complainant has a website and there are message boards that discuss the company. Searching Google cross-defendant's lawyer was able to pull up more than 22,000 hits in .03 seconds. Cross-complainant has a celebrity spokesperson and a marketing firm. It does extensive marketing, including attending trade shows, giving interviews on television, and issuing regular press releases, with a monthly cost of about $10,000. Cross-complainant also gives out awards and products and makes charitable donations.
There are "three situations in which statements may concern a public issue or a matter of public interest: (1) the subject of the statement or activity precipitating the claim was a person or entity in the public eye; (2) the statement or activity precipitating the claim involved conduct that could affect large numbers of people beyond the direct participants; or (3) the statement or activity precipitating the claim involved a topic of widespread public interest." (Mann v. Quality Old Time Service, Inc. (2004) 120 Cal.App.4th 90, 111.) The facts on which cross-defendant relies do not satisfy these factors.
The controversy on which the unfair competition count centers is cross-defendant's alleged false claim of ownership of stock in cross-complainant. This is not a matter of widespread public interest but rather is a private dispute. The fact that cross-defendant issued a press release about it, attempting to put it into the public discussion, is not sufficient. A private dispute does not fall within the statute merely because it is publicized. (Weinberg v. Feisel (2003) 110 Cal.App.4th 1122, 1134.)
Nor could it affect large numbers of people. One person owns the preferred shares. Moreover, only 93 people own the common shares, and cross-defendant claims to own almost 38 million of those 48.5 million shares. And according to cross-defendant's answer to the complaint all the common shares were issued to "insiders." The parties' dispute does not have an impact on a large group of people. Contrast that with the cases on which cross-defendant relies that hold to the contrary. (Troy Group Inc. v. Tilson (C.D. Cal. 2005) 364 F.Supp.2d 1149, 1154 [1,634 shareholders]; Global Telemedia Int'l, Inc. v. Doe 1 (C.D. Cal. 2001) 132 F.Supp.2d 1261, 1265 [18,000 investors].) And in any event, these cases are not binding on us. (Nagel v. Twin Laboratories, Inc. (2003) 109 Cal.App.4th 39, 55.)
Nor do the facts show that cross-complainant is an entity in the public eye. That cross-complainant issues press releases, has a website and a celebrity spokesperson, and employs a marketing firm are generic facts that apply to countless other companies. Likewise, the mere fact the shares are publicly traded does not transform the private dispute into a public issue.
The cases which cross-complainant cites, Ampex Corp. v. Cargle (2005) 128 Cal.App.4th 1569, Troy Group, Inc. v. Tilson, supra, 364 F.Supp. 1149, and Global Telemedia, Int'l, Inc. v. Doe 1, supra, 132 F.Supp.2d 1361, do not support his position. Although the courts in those cases noted facts including public trading of stock, large numbers of outstanding shares and investors, use of press releases, and a presence on the Internet, the crucial fact in all of them was that the gravamen of the action was directly connected to the Internet or other public activity of the defendant. The claim in each case was for defamation based on statements made on the Internet on a message board, in a chat room, or in e-mail.
That is not the case here. Cross-defendant's issuance of a press release about the underlying issues is not the same. "[T]here should be some degree of closeness between he challenged statements and the asserted public interest [citation]; the assertion of a broad and amorphous public interest is not sufficient." (Weinberg v. Feisel, supra, 110 Cal.App.4th at p. 1132.)
Thus, cross-defendant has not met his burden to show the claims in the cross-complaint arise from protected activity.
3. Litigation Privilege
Cross-defendant also relies on section 425.16, subdivision (e)(2), which defines an "'act in furtherance of a person's right of petition or free speech'" to include "any written or oral statement or writing made in connection with an issue under consideration or review by a . . . judicial body . . . ." He maintains the demand letter his lawyer sent to cross-complainant and his claim in the press release and posted on the Internet that he would file an action triggered that provision by virtue of the litigation privilege set out in Civil Code section 47, subdivision (b). That statute defines "[a] privileged publication" as a statement made in a "judicial proceeding."
Although there is "a relationship" between section 425.16 and Civil Code section 47, subdivision (b), and the latter may be used to "constru[e] the scope of [section 425.16,] subdivision (e)(1) and (2) with respect to . . . whether a given communication falls within the ambit of [those subdivisions]" (Flatley v. Mauro, supra, 39 Cal.4th at pp. 322-323), the two statutes are not coextensive (id. at p. 323). The litigation privilege "grants absolute immunity from tort liability for communications made in relation to judicial proceedings . . . ." (Id. at p. 324; see Garretson v. Post (2007) 156 Cal.App.4th 1508, 1517 ["Although the interpretation of language in Civil Code section 47 has been used to interpret similar language in the anti-SLAPP statute [citation], we reject the broad conclusion that conduct deemed communicative for purposes of Civil Code section 47 automatically qualifies as constitutionally protected speech under section 425.16"].)
To fall within the privilege, the communication must be made to further the purpose of the litigation and be logically related to it. (Silberg v. Anderson (1990) 50 Cal.3d 205, 212.) Here, the demand letter and press release cross-defendant seeks to protect do not satisfy this requirement. They discussed his claim of ownership, yet the complaint cross-defendant filed was only to recover on the checks, which is totally unrelated.
Moreover, to merit protection under Civil Code section 47, subdivision (b), the action must arise out of the prelitigation statements. Cross-complainant did not sue based on the letter or the press release. It sued because of cross-defendant's claim of ownership. The various cases cross-defendant cites in support of his argument actually defeat it. In all of them the claim arose out of the prelitigation letter or communication. (Rohde v. Wolf (2007) 154 Cal.App.4th 28 [defamation action arising from statements in lawyer's recorded message]; Aronson v. Kinsella (1997) 58 Cal.App.4th 254 [letter threatening legal action]; Dove Audio, Inc. v. Rosenfeld, Meyer & Susman (1996) 47 Cal.App.4th 777 [same].)
In the case before us cross-complainant is not suing for defamation, malicious prosecution, abuse of process, or any other tort arising from the letter. That the unfair competition count contains one sentence stating cross-defendant has threatened to sue to "assert his interest" does not change the analysis. Were this sentence stricken the cause of action would remain the same.
DISPOSITION
The order is affirmed. Respondent is entitled to costs on appeal.
RYLAARSDAM, ACTING P. J. WE CONCUR: BEDSWORTH, J. ARONSON, J.