Opinion
NOT TO BE PUBLISHED
Superior Court County of Santa Barbara No. 1186848, James Brown, Judge
Foley, Bezek, Behle & Curtis; Peter J. Bezek, Appellant.
Wendy Cole Lascher and Aris E. Karakalos; Lascher & Lascher, for Respondents.
YEGAN, Acting P.J.
Helen Jepsen appeals from a judgment of dismissal entered after the trial court struck her cross-complaint for declaratory relief as a SLAPP suit (Strategic Lawsuit Against Public Participation). (Code Civ. Proc., § 425.16.) Respondents, James Petrovich et al., were awarded $15,000 attorney fees under the anti-SLAPP statute (§ 425.16, subd. (c).) They cross-appeal, contending that the trial court erred in not awarding $93,945.88 incurred in defense of the entire lawsuit. We affirm.
All statutory references are to the Code of Civil Procedure.
Procedural History
Respondents James Petrovich, Dale Grimm, Charles Pira, and Alan Cavaletto are directors of the Santa Barbara County Sheriff's Council (Council), a nonprofit public benefit corporation that supports the Santa Barbara County Sheriff's Department by soliciting donations and hosting fundraisers.
On December 23, 2005, respondents filed an action for declaratory relief against Jepsen, Council's acting interim president. The complaint alleged that Council funds had been misappropriated and prayed for a forensic audit.
At a December 28, 2005 ex parte hearing, Jepsen stipulated to an audit. The trial court ordered an audit for the years 2004 and 2005 and enjoined Council from writing checks until the audit was completed.
The complaint was dismissed without prejudice as to Robert C. Miller, a Council director and co-plaintiff, on January 13, 2006.
Jepsen filed a cross-complaint for declaratory relief five days later on January 18, 2006, seeking the same relief requested in the complaint. Respondents moved to strike the action under the anti-SLAPP statute. (§ 425.16.)
The trial court granted the motion on the ground that "[t]he Cross-Complaint here is not only in response to, but actually arises from, the filing of the Verified Complaint and does not arise from an independent transaction or occurrence. The Cross-Complaint is not based on any independent transaction or occurrence. It is based on Plaintiffs' characterization of events and occurrences in their Complaint and Ms. Jepsen's desire for a judicial declaration that Plaintiffs' characterizations are false. Ms. Jepsen's allegations do not describe any controversy as to the validity of any particular Council transaction, the respective rights and duties of the parties under the ByLaws or Corporation Code, or any possible misappropriation concerning which an audit is sought, except that she incorporates 'the same allegations, claims and controversies raised' in the Verified Complaint, all of which Ms. Jepsen elsewhere alleges are false." Respondents dismissed the entire complaint the following year.
Anti-SLAPP Statute
We review the order granting the motion to strike de novo. (Flatley v. Mauro (2006) 39 Cal.4th 299, 325-326.) Section 425.16 requires that a court engage in a two-step process in determining whether an anti-SLAPP motion should be granted. First, the court decides whether the moving party has made a threshold showing that the challenged cause of action is one "arising from" a protected activity. (§ 425.16, subd. (b)(1); City of Cotati v. Cashman (2002) 29 Cal.4th 69, 76.) "If the court finds such a showing has been made, it then must consider whether the [opposing party] has demonstrated a probability of prevailing on the claim. [Citation.]" (Ibid.)
First Prong: Retaliatory Cross-Complaint
It is settled that filing a lawsuit (i.e., respondents' complaint for an accounting) is an exercise of the constitutional right to petition, a protected act under section 425.16. (Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1115-1117.) Respondents must show that the act or acts of which Jepsen complains were taken in furtherance of respondents' right of petition in connection with a public issue. (§ 425.16, subd. (b)(1).)
Although a cross-complaint may be subject to a special motion to strike, not all cross-complaints qualify as SLAPP suits. "Only those cross-complaints alleging a cause of action arising from the plaintiff's act of filing the complaint against the defendant and the subsequent litigation would potentially qualify as a SLAPP action. (§ 425.165, subds. (b) and (d).) For example, a person may attempt to bring a SLAPP suit alleging that libelous allegations or statements were contained in the complaint itself. However, because defendant's allegations are privileged communications under Civil Code section 47, the suit would be meritless. [Citation.]" (Church of Scientology v. Wollersheim (1996) 42 Cal.App.4th 628, 651.)
Jepson claims that the cross-complaint falls outside the anti-SLAPP statute because it does not seek damages. We reject the argument because it assumes that declaratory relief actions are immune from the anti-SLAPP statute. "The anti-SLAPP statute's definitional focus is not the form of the plaintiff's cause of action but, rather, the defendant's activity that gives rise to his or her asserted liability – and whether that activity constitutes protected speech or petitioning." (Navellier v. Sletten (2002) 29 Cal.4th 82, 92.) Stated another way, "it is the principal thrust or gravamen" of the cross-complaint that determines whether the anti-SLAPP statute applies. (Martinez v. Metabolife Internat., Inc. (2003) 113 Cal.App.4th 181, 188.)
Jepsen unabashedly characterizes the cross-complaint as a "Mirror Image Cross Complaint." The cross-complaint recites the allegations in the complaint and states that Jepsen has "no ability . . . to publicly address the issues and expose them as false and politically motivated." The focus of the action is respondents' complaint, not the audit or Council's finances. Council is not even a named party in the cross-complaint.
In opposition to respondents' motion to stay discovery, Jepson stated: "What is also clear from a more in depth review of the Complaint and Cross-Complaint is that, on an item by item basis, there is nothing new or different in the framing of the legal dispute between the parties because the Cross-Complaint merely seeks the same relief as Plaintiffs sought in the original Complaint."
Jepsen argues that the California Supreme Court has left open whether a declaratory relief action is subject to the anti-SLAPP statute. In City of Cotati v. Cashman, supra, 29 Cal.4th 69 (City of Cotati), City filed a complaint for declaratory relief to determine the constitutionality of a mobile home park rent stabilization ordinance. The complaint was filed after the park owner filed an action for declaratory relief in federal court challenging the ordinance. Our Supreme Court held that City's state court action did not fall within the purview of the anti-SLAPP statute because the complaint arose from a dispute over the ordinance and was not based on the federal action. (Id., at p. 77.) The court rejected the argument that an action filed in response to a prior lawsuit automatically means that it arose from the earlier case. (Id., at p. pp. 77-78.) "[T]he statutory phrase 'cause of action . . . arising from' means simply that 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.] In the anti-SLAPP context, the critical point is whether the plaintiff's cause of action itself was based on an act in furtherance of the defendant's right of petition or free speech. [Citations.]" (Id., at p. 78.)
Unlike City of Cotati, the cross-complaint is an offshoot of the complaint, designed to perpetuate the litigation with burdensome discovery demands. Jepsen propounded 1,050 interrogatories, made 410 document demands, and noticed 8 depositions after the parties stipulated to the audit. Based on Jepsen's construction of the law, a defendant can file a retaliatory cross-complaint for declaratory relief with impunity. It would undermine the anti-SLAPP statute and permit the defendant to perpetuate the litigation with unreasonable discovery demands. The cross-complaint does not seek a determination of the underlying controversy but, instead, challenges the allegations in the complaint. (Compare Visher v. City of Malibu (2005) 126 Cal.App.4th 364, 370.) The first sentence of the cross-complaint alleges that Jepsen seeks "a declaration that the allegations made against her . . . in the Verified Complaint are not based upon fact and indeed are false. . . ."
Second Prong: Likelihood of Prevailing
The trial court correctly found that the first prong of the anti-SLAPP statute was satisfied and that the burden shifted to Jepsen to demonstrate a probability of prevailing on her claim. (Navellier v. Sletten, supra, 29 Cal.4th at p. 88.)
"'The fundamental basis of declaratory relief is the existence of an actual, present controversy over a proper subject.' [Citation.]" (City of Cotati, supra,29 Cal.4th at p. 79.) Jepsen's cross-complaint prays for an audit that was ordered before the cross-complaint was filed. A court will not grant declaratory relief on a moot issue. (§§ 1060, 1061; see 2 Witkin, Cal. Procedure (4th ed. 1996) Jurisdiction § 384, pp., 987-988 [court may decline to exercise jurisdiciton over sham or moot actions]; General of America Ins. Co. v. Lilly (1968) 258 Cal.App.2d 465, 470 [declaratory relief cannot be used as substitute for litigating identical issues in the main action].)
The remainder of the cross-complaint fails because respondents' complaint, whether true or false, is protected speech and subject to the litigation privilege. (Civ. Code, § 47, subd. (b)(2); see e.g., Church of Scientology v. Wollersheim, supra, 42 Cal.App.4th at p. 651.) The litigation privilege affords extraordinary protection to the uninhibited airing, discussion and resolution of disputes in judicial or quasi-judicial arenas. (Rothman v. Jackson (1996) 49 Cal.App.4th 1134, 1146-1147.) Jepson cannot do an end run around the anti-SLAPP statute by "combining allegations of protected and nonprotected activity under the label of one 'cause of action.' " (Fox Searchlight Pictures, Inc. v. Paladino (2001) 89 Cal.App.4th 294, 308, fn. omitted; see Martinez v. Metabolife Internat., Inc. supra, 113 Cal.App.4th at p. 187 ["plaintiff cannot avoid operation of the anti-SLAPP statute . . . through artifices of pleading"].)
Cross-Appeal
The trial court found that respondents were prevailing parties on the anti-SLAPP motion and awarded $15,000 attorney fees. (§ 425.16, subd., (c).) Citing Lafayette Morehouse, Inc. v. Chronicle Publishing Co. (1995) 39 Cal.App.4th 1379, 1383, (Lafayette Morehouse), it found that respondents could recover reasonable fees and costs in bringing the special motion to strike, but not for the entire action. Respondents previously sought and were denied fees and costs (approximately $90,000) when they dismissed their complaint without prejudice.
Respondents assert they are entitled to fees and costs for defense of the entire action, i.e., $93,945.88 and that any other remedy fails to protect those subjected to SLAPP actions. In 1997, the Legislature amended section 425.16 to provide that the anti-SLAPP statute "be construed broadly." (§ 425.16, subd. (a), as amended by States.1997, ch. 271, § 1.) Respondents cite no authority that the 1997 amendment was intended to overrule Lafayette Morehouse or mandate recovery of all fees and costs incurred in the SLAPP suit. Our Supreme Court, in construing the 1997 amendment, recently noted that "the fee 'provision [under section 425.126] applies only to the motion to strike, and not the entire action,' " (S.B. Beach Properties v. Berti (2006) 39 Cal.4th 374, 381.)
Respondents argue that S.B. Beach Properties v. Berti, supra, addressed an unrelated issue and is not controlling. We conclude that the Supreme Court's examination of the legislative history of section 425.16, subdivision (c) is persuasive. Respondents are entitled to reasonable attorney fees for bringing the motion to strike, not the entire action. (Lafayette Morehouse, supra, 39 Cal.App.4th at p. 1383; see also Westland v. Law Offices of Mastagni, Holstedt & Chiurazzi (2006) 141 Cal.App.4th 15, 21; Paul for Council v. Hanyecz (2001) 85 Cal.App.4th 1356, 1362, fn 4.)
The order granting the special motion to strike is affirmed, as is the order awarding respondents $15,000 attorney fees. (§ 425.16, subd. (c).) Respondents are entitled to costs on appeal as well as reasonable attorney fees on appeal to be determined on noticed motion in the superior court.
We concur: COFFEE, J. PERREN, J.