Opinion
B161310.
11-20-2003
GEORGE KAKELY, Plaintiff and Appellant, v. DICK THOMAS, et al., Defendants and Respondents.
Law Office of Sue Ann Howard and Sue Ann Howard for Plaintiff and Appellant. Pat Murphy for Defendants and Respondents J. Hance, Audie Grubl, Marlene Ogas, Janyce Jenks, John Martin, Marge Morgan, Susan Muench, and Jane Nauman. Lewis Brisbois Bisgaard & Smith, Barry G. Kaiman and Laura E. Stewart for Defendant and Respondent Richard Thomas.
INTRODUCTION
The slander and invasion of privacy lawsuit filed by plaintiff and appellant George Kakely (Kakely) was dismissed after the trial court granted a special motion to strike under Code of Civil Procedure section 425.16. On appeal from the judgment of dismissal, Kakely argues, among other things, that section 425.16 does not apply to his lawsuit because the lawsuit does not arise from an act of defendants in furtherance of defendants right of petition or free speech in connection with a public issue. Because we hold that defendants failed to meet their burden to establish that section 425.16 applies to Kakelys claims, we reverse the judgment.
BACKGROUND
Kakely filed a lawsuit alleging claims for slander per se and false light invasion of privacy against the following defendants in their individual capacities and in their capacities as officers or directors of White Fence Farms Homeowners Association (Association): Dick Thomas, J. Hance, Audie Grubl, Marlene Ogas, Janyce Jenks, John Martin, Marge Morgan, Susan Muench, and Jane Nauman (collectively, defendants). The claims were based upon statements allegedly made by Marge Morgan (Morgan) and Jane Nauman (Nauman) that disparaged Kakely.
In 2001, Kakely was a member of the board of directors of the White Fence Farms Mutual Water Company, Inc. (Water Company). The complaint in this case alleges that in connection with an upcoming election for the board of directors in October 2001, Morgan told various shareholders of Water Company that Kakely was engaged in secret meetings with other members of the board of directors to sell the company "out from underneath" the shareholders and that Kakely had breached his duty of loyalty and his duty of confidentiality as a member of the board of directors. In addition, the complaint alleges that Nauman told various shareholders of Water Company that Kakely disliked Hispanic people and is a bigot.
Defendants filed a special motion to strike the complaint under section 425.16, arguing that Kakelys claims arise from defendants exercise of their right to petition or free speech in connection with a public issue and that Kakely cannot demonstrate a probability of success on the merits of his claims because Morgans and Naumans statements were absolutely privileged under Civil Code section 47 or were qualifiedly privileged as fair comment on matters of public interest. In opposition to the motion, Kakely asserted that the statements were not made in connection with an official proceeding and did not concern a matter of public interest because Association is not a legal entity and Water Company is a private company rather than a governmental entity. The trial court granted defendants motion and entered a judgment of dismissal. Kakely filed a timely appeal from the judgment.
DISCUSSION
Section 425.16 provides in relevant part: "A cause of action against a person arising from any act of that person in furtherance of the persons right of petition or free speech under the United States or 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).) The purpose of section 425.16 is to provide a mechanism for the early dismissal of lawsuits known as "Strategic Lawsuits Against Public Participation," also known as "SLAPP" suits. (See Wilcox v. Superior Court (1994) 27 Cal.App.4th 809, 815-817.) The statute "does not apply in every case where the defendant may be able to raise a First Amendment defense to a cause of action. Rather, it is limited to exposing and dismissing SLAPP suits—lawsuits `brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances `in connection with a public issue." (Id. at p. 819.)
Under the statute, the party moving to strike a cause of action (here, defendants) has the initial burden to show that the cause of action "aris[es] from [an] act . . . in furtherance of the [moving partys] right of petition or free speech . . . in connection with a public issue." (Code Civ. Proc., § 425.16, subd. (b)(1); Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67 (Equilon); Mattel, Inc. v. Luce, Forward, Hamilton & Scripps (2002) 99 Cal.App.4th 1179, 1188.) Once that burden is met, and only if it is met, the burden shifts to the opposing party (here, Kakely) to demonstrate the "probability that the plaintiff will prevail on the claim." (& sect; 425.16, subd. (b)(1); Equilon, supra, 29 Cal.4th at p. 67.) On appeal, we review de novo whether the moving and opposing parties met their respective burdens. (Rivero v. American Federation of State, County and Municipal Employees, AFL-CIO (2003) 105 Cal.App.4th 913, 919.)
Defendants did not meet their initial burden in this case because they failed to establish that Kakelys claims arose from defendants exercise of their right to free speech in connection with a public issue. Section 425.16 states that an "`act in furtherance of a persons 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; (4) or any other conduct in furtherance of the exercise of the constitutional right of petition or the constitution right of free speech in connection with a public issue or an issue of public interest." (& sect; 425.16, subd. (e).) Thus, in order to meet their initial burden on their special motion to strike, defendants were required to show that Kakelys claims arise from speech "in connection with a public issue or an issue of public interest" (& sect; 425.16, subd. (e)(4)) or "in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law" (§ 425.16, subd. (e)(2)).
Defendants contend that Morgans statements regarding Kakely fall within paragraph (4) of subdivision (e) because the statements were made during Kakelys campaign for reelection to the board of directors of Water Company, and courts have held that section 425.16 applies to causes of action based upon speech relating to elections. Although the elections at issue before those courts generally concerned political campaigns for public office, such as a Congressional seat (Beilenson v. Superior Court (1996) 44 Cal.App.4th 944) or a seat on the board of directors of a municipal sanitary district (Evans v. Unkow (1995) 38 Cal.App.4th 1490), at least one court has concluded that section 425.16 applies to claims based upon speech related to an election of an officer to a 10,000 member union (Macias v. Hartwell (1997) 55 Cal.App.4th 669). Defendants argue that the reasoning of those cases applies here, to an election to the board of directors of a private company, because Water Company is comparable to a public utility and thus affects the community in the same way as a governmental entity. Therefore, by seeking reelection to the board of directors of Water Company, Kakely was seeking a position of "public trust" similar to a political office.
In making this argument in the trial court, however, defendants provided no evidence to support their claim that Water Company is comparable to a public utility. Morgan and Nauman, who are shareholders of Water Company, stated in their declarations in support of the motion that the purpose of Water Company is to provide water to households and property within the companys boundaries, but they did not provide any information regarding what those boundaries were. Although all parties appear to agree that Water Company has approximately 400 shareholders, there is no evidence in the record that those shareholders constituted all or a majority of residents or water users in the community. There is no evidence regarding how Water Company functioned in the community, i.e., whether Water Company was the only water provider for the community, whether it supplied water only to shareholders or community residents, whether it was required to supply community residents or shareholders with water, or whether it simply sold water to other water distributors. Such information is necessary in order to determine whether the election of a member to the board of directors is a matter of public interest rather than a matter of interest only to the shareholders of the privately held company. Therefore, defendants did not meet their burden to show that subdivision (e), paragraph (4) applied to Kakelys claims based upon Morgans statements
Defendants also contend that Naumans and Morgans statements fall within paragraph (2) of subdivision (e) of section 425.16 because they were made in the course of investigations by Association into Kakelys conduct as a director of Water Company. Citing to Cohen v. Kite Hill Community Assn. (1983) 142 Cal.App.3d 642 (Cohen), defendants argue that Association serves a function that is "quasi-governmental" and therefore an investigation conducted by Association is an "official proceeding" under subdivision (e). Accordingly, defendants assert, the statements at issue were made in connection with an issue under consideration in an "official proceeding" and Kakelys claims based upon those statements are subject to a special motion to strike.
It may be that certain homeowners associations could be considered "quasi-governments" under certain circumstances, such as the circumstances presented in Cohen, supra, 142 Cal.App.3d 642. In that case, the association was organized for the purpose of administering and enforcing the declaration of covenants, conditions and restrictions that was recorded as to the entire tract of the housing development. Membership in the association was mandatory, and the association had the power to levy and collect assessments against its members and to make and enforce rules governing homeowners living in the development. (Id. at pp. 646, 651.) Under circumstances such as those, courts have concluded that a homeowners association may "function[] as a second municipal government, regulating many aspects of [the homeowners] daily lives." (Chantiles v. Lake Forest II Master Homeowners Assn. (1995) 37 Cal.App.4th 914, 922.)
In this case, defendants failed to provide any evidence that Association had the attributes that have caused courts to conclude that a homeowners association is functioning as a "quasi-government." In fact, it appears from the Association bylaws—which defendants filed with their reply in support of the motion—that membership in Association is entirely voluntary and that Association does not have any power to levy or collect assessments or to make or enforce rules governing all homeowners. Therefore, defendants failed to establish that the investigation conducted by Association was an "official proceeding" such that section 425.16 would apply to Kakelys claims.
Because defendants did not meet their burden on their special motion to strike to show that Kakelys causes of action "aris[e] from [an] act . . . in furtherance of the [defendants] right of petition or free speech . . . in connection with a public issue"
(§ 425.16, subd. (b)(1)), the trial court erred by granting defendants motion. Our ruling is limited to defendants initial burden on the special motion to strike and is based upon the record presented in connection with that motion. We express no opinion regarding whether, on a more developed record, defendants could establish that the statements at issue were made in connection with an official proceeding or involved a public issue such that they might be subject to an absolute or qualified privilege.
DISPOSITION
The judgment is reversed. Kakely shall recover his costs on appeal.
We concur, TURNER, P.J., ARMSTRONG, J. --------------- Notes: All further statutory references are to the Code of Civil Procedure unless otherwise noted.