| .. |
Parker v. Spievak
Plaintiff: Robert Parker
Defendant: San Diego attorney James R. Spievak, a.k.a. "Jim Spievak" or "Jimmy"
Case number GIC876457 in San Diego Superior Court, filed December, 2006
Judge (original): Hon. Linda B. Quinn
Judge (final): Hon. Judith Hayes
Causes of Action (stated by Parker against Spievak)
* Legal Malpractice
* Fraud
* Breach of Contract
The underlying case: Defendant Spievak represented Parker in the underlying case of Parker v.
Behrouzi, filed May 2004, in which Parker and his wife sued neighboring tenants Behzad Behrouzi,
Kevin Scott Bourne, Don Barks, Benjamin Daggett, and their landlord, SDSU nurse-midwife program
coordinator Lauren Hunter.
Complaint Filed
August 2007
First Amended Complaint filed
November 2007
Settled, Spievak's malpractice insurance carrier paid Parker $20,000
Plaintiff: Robert Parker
Defendant: San Diego attorney James R. Spievak, a.k.a. "Jim Spievak" or "Jimmy"
Case number GIC876457 in San Diego Superior Court, filed December, 2006
Judge (original): Hon. Linda B. Quinn
Judge (final): Hon. Judith Hayes
Causes of Action (stated by Parker against Spievak)
* Legal Malpractice
* Fraud
* Breach of Contract
The underlying case: Defendant Spievak represented Parker in the underlying case of Parker v.
Behrouzi, filed May 2004, in which Parker and his wife sued neighboring tenants Behzad Behrouzi,
Kevin Scott Bourne, Don Barks, Benjamin Daggett, and their landlord, SDSU nurse-midwife program
coordinator Lauren Hunter.
Complaint Filed
August 2007
First Amended Complaint filed
November 2007
Settled, Spievak's malpractice insurance carrier paid Parker $20,000
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Stutz Artiano Shinoff
& Holtz v. Maura
Larkins defamation
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Elementary School
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CTA
CVE
Stutz Artiano Shinoff
& Holtz
Silence is Golden
Schools and Violence
Office Admin Hearings
Larkins OAH Hearing
Stutz Artiano Shinoff
& Holtz v. Maura
Larkins defamation
SDCOE
CVESD
Castle Park
Elementary School
Law Enforcement
CTA
CVE
Stutz Artiano Shinoff
& Holtz
Silence is Golden
Schools and Violence
Office Admin Hearings
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Trial court ignored the directive of the Court of
Appeal, exactly as happened in Stutz v. Larkins.
NACIF v. WHITE-SORENSON | CA 4DCA Div.1 REVERSED
...
stopforeclosurefraud.com/...reversedremand.../comment-page-1/Aug 12, 2011 –
APPEAL from a judgment of the Superior Court of San Diego County,
Linda B. Quinn and Judith F. Hayes, Judges
Reversed and remanded ..
Appeal, exactly as happened in Stutz v. Larkins.
NACIF v. WHITE-SORENSON | CA 4DCA Div.1 REVERSED
...
stopforeclosurefraud.com/...reversedremand.../comment-page-1/Aug 12, 2011 –
APPEAL from a judgment of the Superior Court of San Diego County,
Linda B. Quinn and Judith F. Hayes, Judges
Reversed and remanded ..
Judge Linda Quinn
San Diego Superior Court
(retired 2012)
San Diego Superior Court
(retired 2012)
Judge Linda Quinn, her husband and their best friend (Thomas WRIGHT) were financially
and socially connected to my ex-employer, David A. Blackburn. I reported ALL of their
involvement in a MORTGAGE... SCHEME to the FBI and Dept. of Real Estate.
Judge Quinn's husband also worked for the Law Firm Duchkor,Spradling who represented
BLACKBURN when he sued me for SLANDER when I reported him to the FBI.
Judge Quinn's family made money from BLACKBURN, the Judge's husband was a partner
of Blackburn and the JUDGE'S HUSBAND and Best friend (WRIGHT) was also an investor
with Blackburn. Judge Quinn filed a ... "waiver" omitting the above facts so she could
...induce me to allow her to be the trial judge. She approved a TRO preventing me from
calling any witnesses to prove I told the Truth about her group... Thus, I lost the trial,
$825,000 cash was paid to BLACKBURN on a $215,000 total judgement. The Judge
allowed the SALE of our ERISA RETIREMENT property so partner Blackburn could get
paid and also so he could pay her Husbands Law Firm...
Attorney John Quinn is a Of Counsel of Duckor Spradling Metzger & Wynne,
a law firm in San Diego, CA. As a lawyer in San Diego, California, attorney Quinn serves San Diego
County, as well as clients throughout California.
Phone (619) 209-3000
Areas of Practice
Commercial Litigation Contract Employment Law Health Care Intellectual Property Mergers and
Acquisitions Overtime Sexual Harassment Tax Law Trade Secret
Admitted to Practice Law 1978, California
Villanova University, BS, 1970
Law School California Western School of Law, JD, 1977
Born: Philadelphia, Pennsylvania, 1948
[2012 Duckor Spradling Metzger & Wynne]
and socially connected to my ex-employer, David A. Blackburn. I reported ALL of their
involvement in a MORTGAGE... SCHEME to the FBI and Dept. of Real Estate.
Judge Quinn's husband also worked for the Law Firm Duchkor,Spradling who represented
BLACKBURN when he sued me for SLANDER when I reported him to the FBI.
Judge Quinn's family made money from BLACKBURN, the Judge's husband was a partner
of Blackburn and the JUDGE'S HUSBAND and Best friend (WRIGHT) was also an investor
with Blackburn. Judge Quinn filed a ... "waiver" omitting the above facts so she could
...induce me to allow her to be the trial judge. She approved a TRO preventing me from
calling any witnesses to prove I told the Truth about her group... Thus, I lost the trial,
$825,000 cash was paid to BLACKBURN on a $215,000 total judgement. The Judge
allowed the SALE of our ERISA RETIREMENT property so partner Blackburn could get
paid and also so he could pay her Husbands Law Firm...
Attorney John Quinn is a Of Counsel of Duckor Spradling Metzger & Wynne,
a law firm in San Diego, CA. As a lawyer in San Diego, California, attorney Quinn serves San Diego
County, as well as clients throughout California.
Phone (619) 209-3000
Areas of Practice
Commercial Litigation Contract Employment Law Health Care Intellectual Property Mergers and
Acquisitions Overtime Sexual Harassment Tax Law Trade Secret
Admitted to Practice Law 1978, California
Villanova University, BS, 1970
Law School California Western School of Law, JD, 1977
Born: Philadelphia, Pennsylvania, 1948
[2012 Duckor Spradling Metzger & Wynne]
David Blackburn at B&H Property Systems, Inc.
Greater San Diego Area
Current
Real Estate Project & Business Development at FORENSIC IMAGING & ARCHIVING INC
President at B&H Property Systems, Inc
Past
Property Manager/Developer at 350 WEST ASH PLAZA
Property Manager/Developer at SUNSHINE RESIDENTIAL PLAZA
Property Manager/Developer at Plaza 2020 High Rise Office Building
Education
San Diego State University-California State University
David A. Blackburn is a native San Diegan who has devoted his education, training and
career to real estate acquisition, renovation, conversion and development. His
entrepreneurial talents have created a wide array of successful business ventures.
After graduating from San Diego State University in 1976 with a degree in real estate and
a minor in finance, Blackburn joined Mission Center Realty Inc. He started handling the
company’s contingent sales. Blackburn learned new project sales, real estate syndication,
investments, apartment sales and business development & planning. Blackburn
maintained a position as one of the company’s top sales agents. Following two years of
association with Mission Center Realty, Blackburn obtained his brokers license.
Blackburn’s latest venture is a new company engaged in mitigating construction defect
litigation, Forensic Imaging & Archiving Inc. The business was inspired by Blackburn’s
motorcycle rental business. Blackburn began taking photos of his motorcycles with the
renter on it to establish its condition prior to rental. His insurance company was so
impressed with the protocol, it offered Blackburn a 25% discount on his policy. Blackburn
decided that a similar protocol could be used to track construction projects, with the
potential of a similar rate of cost savings at a much greater level.
Blackburn acquired, built, or renovated multiple commercial, industrial and residential
projects in Arizona, Nevada, and Montana and California worth a combined total of $136
million.
Blackburn flies his own plane and has achieved his twin engine, high performance, and
instrument license. He is currently working on his commercial rating as a pilot. Blackburn
has participated for years at local and national air shows flying his 1941 North American A-
T 6 trainer in formation flights as well as simulated aerial combat flights.
Specialties
Real Estate Project & Business Development Experience
Century Surety Company v. 350 W.A.
("Blackburn retained the law firm of Duckor Spradling Metzger and Wynne to
defend them in the Helleis action.")
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA
September 28, 2011
CENTURY SURETY COMPANY,
PLAINTIFF,
v.
350 W.A., LLC, ET AL.,
DEFENDANTS.
The opinion of the court was delivered by: M. James Lorenz United States District Court
Judge
ORDER GRANTING MOTION FOR SUMMARY JUDGMENT [doc. #254] AND RELATED
COUNTERCLAIMS.
Plaintiff/counterdefendant Century Surety Company moves for summary judgment or in
the alternative for summary adjudication. [doc. #254] In its motion, plaintiff seeks a
declaration that it is entitled to rescind the insurance policy and is not liable under an
insurance policy it issued because of 350's late tender. Century also seeks summary
judgment on counterclaimants' breach of contract and bad faith claims. The motion has
been fully briefed and is considered without oral argument.
Background
David A. Blackburn purchased a commercial office building at 350 West Ash Street in San
Diego from Hokojitsugyo Co., LTD. During escrow, the building sustained significant
damage due to multiple flooding incidents. Nevertheless, Blackburn completed the
purchase with the Grant Deed recorded on May 15, 2003. Immediately thereafter
Blackburn transferred the property to 350 W.A. LLC, which was formed for the property
ownership, with the Grant Deed also recorded on May 15, 2003. Century issued a
commercial general liability policy, CCP267153 to 350, for the 350 West Ash commercial
office building with an effective date of May 15, 2003.
At the time of the transfer of ownership, Jacqueline Helleis ("Helleis") was and had been
leasing space in the building for her business, Flagship Research ("Flagship").*fn1
On May 15, 2003, 350, by letter signed by Blackburn, advised the building tenants that
their leases -- including Flagship's lease -- were being terminated due to environmental
and fire safety concerns. Blackburn had determined the building to be uninhabitable.
On June 12, 2003, Helleis filed a Complaint against 350 and Blackburn in the Superior
Court for the County of San Diego ("underlying action" or "Helleis"). The Helleis action
included causes of action for breach of contract, breach of the covenant of good faith and
fair dealing, breach of the covenant of quiet enjoyment, constructive eviction, nuisance,
and declaratory relief. Neither 350 nor Blackburn tendered their claim for defense to
Century at any time during the course of the trial. Instead, 350 and Blackburn retained
the law firm of Duckor Spradling Metzger and Wynne to defend them in the
Helleis action.
The Helleis bench trial concluded on June 27, 2005, with the court announcing its decision
from the bench. The trial court dismissed plaintiff's causes of action for nuisance and
declaratory relief and found in favor of Blackburn on all claims, but Helleis was successful
in the remaining causes of action against 350. The trial court awarded Helleis damages in
the amount of $504,826.44, and attorneys' fees of $295,902.00 against 350 only.
On July 8, 2005, twelve days after the trial court made its decision, 350 tendered a claim
for defense and indemnity to Century. Four days after 350 tendered the claim, the state
court entered judgment against 350. On July 27, 2005, Century sent 350 notice it would
defend it in post-judgment and appellate proceedings under a reservation of rights.
Century then filed the above-captioned case against 350 and Helleis on August 3, 2005,
seeking a declaration of its rights and duties under the policy it issued to 350 contending
it had no obligation to defend or indemnify 350. 350 filed an answer on October 3, 2005.
350 and Blackburn filed a counterclaim for declaratory relief, breach of written contract,
and breach of the implied covenant of good faith and fair dealing on October 3, 2005.
350 timely filed an appeal in the underlying state court action. As previously noted,
Blackburn was found not liable on all of the claims brought against him in the Helleis
action. Neither Blackburn nor Helleis appealed the decision. In an effort to obtain an
appeal bond to protect 350's assets from immediate and allegedly aggressive execution
by the judgment creditor (Helleis), Century, Blackburn and 350 entered into an
"Agreement to Procure Appeal Bond" ("Bond Agreement") whereby Century would
provide, for a six-month period only, collateral as security for the appeal bond and after
that time period expired, 350 and Blackburn would substitute their collateral as security for
the appeal bond. Under the parties' Bond Agreement, in the event Blackburn and 350 did
not substitute their collateral within the six-month period, a Stipulated Judgment would be
entered in Century's favor against Blackburn, 350 and other entities associated with
Blackburn. After the six-month period expired, along with several extensions of time,
Blackburn and 350 failed to substitute their own collateral for the appeal bond. Plaintiff
eventually advised Blackburn's counsel that it would be filing an application for entry of
judgment -- the Stipulated Judgment -- in accordance with the parties' Bond Agreement.
The California Court of Appeal affirmed the Helleis trial court in its entirety on July 11,
After full briefing, the Court granted plaintiff's motion for entry of the stipulated judgment
on September 25, 2007. In that same Order, the Court granted plaintiff's motion for
summary judgment finding that the insurance policy did not provide coverage for
breaches of contract or for constructive eviction of a business entity from a commercial
building. Because of the grant of summary judgment in Century's favor, all claims brought
by 350 and Blackburn in their counterclaim were denied with the Court making no findings
as to whether Century was substantially prejudiced as a matter of law by 350's late tender
or Blackburn's standing to bring counterclaims in this action.
350 and Blackburn appealed the Court's decision to the Ninth Circuit Court of Appeals. In
its decision, the Ninth Circuit affirmed the district court's entry of the stipulated judgment
but reversed the summary judgment portion of the Order finding coverage under the
relevant provision of the policy. Century Sur. Co. v. Helleis, 367 Fed. Appx. 765 (9th Cir.
2010). The Court of Appeals later clarified that its decision did not foreclose further
factual development in the district court of Century's claim that a late tender caused
substantial prejudice. (Doc. #233.)
Century again moves for summary judgment on its claims and on 350's and Blackburn's
counterclaims.
Legal Standard
Rule 56 of Federal Rules of Civil Procedure empowers the court to enter summary
judgment on factually unsupported claims or defenses, and thereby "secure the just,
speedy and inexpensive determination of every action." Celotex Corp. v. Catrett, 477 U.S.
317, 325, 327 (1986). Summary judgment is appropriate if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law. FED. R. CIV. P. 56(c).
The moving party's burden on summary judgment depends on whether it bears the
burden of proof at trial with respect to the claim or defense at issue. "When the party
moving for summary judgment would bear the burden of proof at trial, it must come
forward with evidence which would entitle it to a directed verdict if the evidence went
uncontroverted at trial. In such a case, the moving party has the initial burden of
establishing the absence of a genuine issue of fact on each issue material to its case."
See C.A.R. Transp. Brokerage Co., Inc. v. Darden Restaurants, Inc., 213 F.3d 474, 480
(9th Cir. 2000) (citations omitted). If the moving party does not bear the burden at trial, it
can meet its burden on summary judgment by pointing out the absence of evidence with
respect to any one element of the claim or defense. See Celotex, 477 U.S. at 325.
If the movant meets its burden on summary judgment, the burden shifts to the non-movant
to show summary adjudication is not appropriate. Celotex, 477 U.S. at 317, 324. In this
regard, the non-movant must "go beyond the pleadings" and rely on "evidentiary
materials" such as his "own affidavits, or . . . the depositions, answers to interrogatories,
and admissions on file" to designate specific facts in opposition to the summary judgment
motion. Celotex, 477 U.S. at 324 (internal quotation marks omitted). These evidentiary
materials must show that genuine factual issues remain which "can be resolved only by a
finder of fact because they may reasonably be resolved in favor of either party." Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). If the moving party meets its burden, the
party opposing summary judgment "may not rely merely on allegations or denials of its
own pleading; rather, its response must ... set out specific facts showing a genuine issue
for trial." FED. R. CIV. P. 56(e); see Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586 (1986). All inferences drawn from the evidence must be viewed in the
light most favorable to the non-moving party, Eastman Kodak Co. v. Image Technical
Servs., Inc., 504 U.S. 451, 456 (1992), but inferences must be based on evidence which,
if believed, would be sufficient to support a judgment for the nonmoving party. Celotex,
477 U.S. at 322. Moreover, inferences cannot be created by pointing to "some
metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586 (citations
omitted). Instead, deference to the nonmoving party has limits: (1) a plaintiff cannot rest
on allegations in his pleadings to overcome a motion for summary judgment, Brinson, 53 F.
3d at 1049; and (2) self-serving affidavits do not establish a genuine issue of material fact
if they fail to state facts based on personal knowledge or are too conclusory. Rodriguez v.
Airborne Express, 265 F.3d 890, 902 (9th Cir. 2001).
Determinations regarding credibility, the weighing of evidence, and the drawing of
legitimate inferences are jury functions, and are not appropriate for resolution by the court
on a summary judgment motion. Id.
Rescission
The Court first looks to plaintiff's claim for rescission that was included in its first amended
complaint filed September 14, 2007. If the policy is rescinded, the counterclaims for
breach of contract and bad faith fail as a matter of law.
Century contends that it is entitled to rescind the insurance policy based on two material,
false responses Blackburn provided in the policy application.
Material misstatements or concealment of material facts in an application for insurance,
even if unintentional, entitle an insurer to rescind the insurance policy. Mitchell v. United
Nat. Ins. Co., 127 Cal.App.4th 457, 468-469 (2005) ; INS. CODE, §§ 331, 359. The
insurer must prove that the insured made a material "false representation" in the
application. A representation is false "when the facts fail to correspond with its assertions
or stipulations." (§ 358.) Materiality is determined under "a subjective test; the critical
question is the effect the truthful answers would have had on [the insurer], not on some
'average reasonable' insurer." Imperial Casualty & Indemnity Co. v. Sogomonian, 198 Cal.
App.3d 169, 181 (1988). "Materiality is to be determined not by the event, but solely by
the probable and reasonable influence of the facts upon the party to whom the
communication is due, in forming his estimate of the disadvantages of the proposed
contract, or in making his inquiries." INS. CODE, § 334.
Insurance Code §§ 331 and 359 impose "heavy burdens of disclosure" "upon both parties
to a contract of insurance, and any material misrepresentation or the failure, whether
intentional or unintentional, to provide requested information permits rescission of the
policy by the injured party." Mitchell (quoting Imperial, 198 Cal. App.3d at 179-80).
Insurance Code § 332, provides that each party to an insurance contract disclose, "in
good faith, all facts within his knowledge which are or which he believes to be material to
the contract ...."
In the present case, Blackburn applied on behalf of 350 for insurance coverage. His
response to two questions are at issue here:
Any structural alterations contemplated? Blackburn checked the "NO" box.
Any demolition exposure contemplated? Again, Blackburn checked the "NO" box.
A. False or Misleading Representations in the Policy Application
Century states that the evidence establishes that Blackburn contemplated "structural
alterations" and "demolition exposure" as early as October 2002, and therefore, the policy
application information he provided was false, and the questions and the responses
thereto were material to the decision to issue the policy.
In support of its contention that "structural alterations" or "demolition exposure" was
contemplated by Blackburn at the time of the time the insurance application was made,
Century provides a letter to Blackburn dated October 18, 2002, from Gary London,
President of The London Group Realty Advisors, who wrote:
In review, it is our understanding that you are in the process of acquiring this commercial
office high-rise, located in the Columbia District near Little Italy in Downtown San Diego,
CA. Your intention is to convert the property to residential. I have invested time and
consultation with you, identified and interviewed architects. (Plt's Compendium of Exhibits,
Vol. 4 at 229.)
While the property was in escrow between October 3, 2002 and early December 2002,
Blackburn prepared a brochure that he provided to prospective lenders in which he
represented that the building "offers an excellent opportunity to convert a well located
high rise office building . . . into residential condominiums." (Plf's Exh. B, Blackburn Depo.
at 135-138.)
As noted in the factual background, on May 15, 2003 -- the date the insurance policy was
effective -- 350 advised the building tenants that their leases were being terminated. The
letter announcing the lease terminations, signed by David A. Blackburn as a member of
350, stated [w]e have made the difficult decision that the building should undergo a
complete renovation to restore integrity and safety to the building. . . . Indeed, it currently
appears that the building will have to be de-constructed down to the building's core to fully
address the damage to the building.
(Exh. G to doc. #21.)
Blackburn contends that the evidence shows a disputed factual issue as to falsity of the
application responses. First, Blackburn states he did not conceal information or provide
false information when he applied for commercial general liability insurance on behalf of
350 with Century because there had been "no firm determination of what 350 planned to
do with the building." (Blackburn March 14, 2011 Decl. at ¶ 8.) This late and self-serving
statement of Blackburn's intent does not create an issue of fact as to whether Blackburn
was contemplating structural alterations or demolition exposure. Indeed, the issue is not
whether 350/Blackburn specifically and definitively intended to convert the commercial to
residential use, but rather whether structural alterations or demolition exposure was
contemplated. Whether 350/Blackburn intended to convert the property to residential use
or retain its commercial use, it is undisputed that 350/Blackburn told the occupying
tenants that the building would be undergoing "complete renovations" and likely would
have to be "de-constructed down to the building's core" on May 15, 2003 -- the date the
policy was effective.
For the first time during this litigation, Blackburn contends that "Century's policy was to be
a temporary policy only, and would only serve to protect 350 from claims asserted while it
was operating the Building as a commercial office building. " (Blackburn Decl. at ¶ 9.) This
statement does not create a triable issue of fact as to whether structural alterations or
demolition exposure was contemplated at the time of the application.
In seeking to create a triable issue of fact, 350/Blackburn contend the questions asked in
the application were vague and ambiguous. They rely on a health insurance case,
O'Riordan v. Federal Kemper Life Assur., 36 Cal.4th 281, 287-288 (2005). The California
Supreme Court found that these questions vague and ambiguous: "Have you smoked
cigarettes in the past 36 months?" and "Have you used tobacco in any other form in the
past 36 months?" The Court concluded that the questions could be construed as meaning
habitual smoking as opposed to limited usage because the policy did not ask whether the
applicant had smoked any cigarettes during the relevant period. Id. Further, the
O'Riordan court noted that the applicant did not conceal information about her smoking a
small number of cigarettes because she disclosed it to an agent of the insurance
company when she was applying for the insurance policy. Id.
Here, the policy application did not ask whether the applicant had made firm plans for
structural alterations or demolitions exposure but rather whether such acts were
contemplated. In ordinary and plain usage, the term "contemplated" would include the
concept of "some thought was put into the concept of converting the building to
condominiums, at the time of 350's application there was no firm plan to convert the
building," (Opp. at 30) or "At the time I signed the Application, although I was at the time
heading in the direction of a condominium conversion, no firm decision had been made in
that regard." (Blackburn's Decl. ¶8)
Additionally, contacting all the tenants occupying the building on the effective date of the
insurance policy with the information that the building would likely be deconstructed to its
core cannot be understood as anything other than having contemplated structural
alterations or demolition exposure. 350/Blackburn's attempt to deem the word
"contemplate" to mean a "firm plan" or "firm decision" is without legal or linguistic support.
"To contemplate" is neither vague nor ambiguous in the present context.
As a matter of law, Blackburn's responses to the policy application's questions concerning
structural alterations or demolition exposure were misleading or false.
B. Materiality of Misrepresentation or False Statement
350 also argues that the information about 350's plans for the building was not material.
The materiality of a misrepresentation is determined by its probable and reasonable effect
upon the insurer. INS. CODE, § 334. "The fact that the insurer has demanded answers to
specific questions in an application for insurance is in itself usually sufficient to establish
materiality as a matter of law. [citation omitted] "Other cases, however, inquire into the
nature of the information withheld, and the likely practice of the insurance company had
the concealed facts been truthfully disclosed....' West Coast Life Ins. Co. v. Ward, 132
Cal. App.4th 181,187 (2005) (quoting Old Line Life Ins. Co. v. Superior Court, 229 Cal.
App.3d 1600, 1603--1604 (1991)). The test is a subjective one; "the critical question is
the effect truthful answers would have had on [the particular insurer], not on some
'average reasonable' insurer." Imperial Casualty & Indemnity Co. v. Sogomonian, 198 Cal.
App.3d 169, 181 (1988).
Rescission may be properly granted in a summary judgment motion for the insurer where
the only reasonable inference to be drawn from the undisputed evidence presented is that
"the false negative answers and omissions of [the applicant] were material to [the
insurer's] decision to provide insurance coverage." Id., 198 Cal. App.3d at 182; see also
Lunardi v. Great--West Life Assurance Co. 37 Cal. App.4th 807, 827 (1995).
Blackburn v. Brady
CERTIFIED FOR PUBLICATION COURT OF ... - Cases and Codes
caselaw.lp.findlaw.com/data2/californiastatecases/D042010.PDF
File Format: PDF/Adobe Acrobat - Quick View
Mar 4, 2004 – APPEAL from an order of the Superior Court of San Diego County, J. Richard ... David A.
Blackburn sued Michael Brady for partition, accounting and fraud. ... money judgment against Craig
S. Lanser, who had previously ...
(Appeal from Superior Court of San Diego County, J. Richard Haden, Judge.)
COUNSEL:
Estes & Hoyt and Kevin J. Hoyt for Defendant and Appellant.
Vivoli & Associates, Michael W. Vivoli and Matthew J. Yarling for Plaintiff and Respondent.
HUFFMAN, Acting P.J.
David A. Blackburn sued Michael Brady for partition, accounting and fraud. After the trial court
overruled Brady’s demurrer to the complaint, he moved to strike the lawsuit under the anti-SLAPP
(strategic lawsuits against public participation) statute (Code Civ. Proc., § 425.16). [FN 1] The court
denied the motion, finding the statute was inapplicable and, even if it were applicable, Blackburn had
established a probability of prevailing on the merits of each cause of action. Brady appeals the trial
court’s ruling only with regard to the fraud cause of action. We affirm.
[FN 1] All statutory references are to the Code of Civil Procedure unless otherwise specified.
FACTUAL AND PROCEDURAL BACKGROUND
Blackburn’s complaint filed December 27, 2002, alleges he acquired ownership of a one-half interest
of real property located in San Diego county (the subject property) as the result of a public auction
held on November 19, 2002, in partial satisfaction of a money judgment against Craig S. Lanser, who
had previously owned the subject real property as a tenant in common with Brady. On May 25, 2000,
Blackburn obtained a money judgment against Craig S. Lanser, who owned certain real property
located in the Ocean Beach area of San Diego, California, which included four separate residential
units, as tenants in common with Brady. The judgment was $213,030, which was amended March
16, 2001, to $323,688.92 plus interest, to include costs. After several attempts to collect on the
judgment failed, Blackburn obtained an order charging partner’s interest which ordered Brady to pay
Blackburn rents and profits generated by Lanser’s share of a business owned by Brady and Lanser,
and from the four-unit subject rental property. When Brady failed to pay anything under the order,
Blackburn sought and obtained an execution levy and the resulting sale of Lanser’s interest, and the
community interest of his spouse, in the subject property. After several delays, a Sheriff’s sale of the
subject property was noticed and conducted on November 19, 2002, resulting in the Sheriff selling
one-half interest in the subject property to Blackburn for “the total sum of $211,000.00 [¶] as a credit
on judgment and/or costs, [¶] the said purchaser(s) being the highest bidder(s), and that sum being
the highest bid; that [the Sheriff has] given said purchaser(s) a Certificate of Sale.”
On December 27, 2002, Blackburn filed the instant lawsuit based on his one- half ownership in the
subject property acquired as a result of the public auction. The first cause of action in Blackburn’s
complaint seeks partition by sale of the subject property he now co-owns with Brady. The second
cause of action seeks an accounting from Brady for the rents and profits Brady collected from the
subject real property and from the business he owned with Lanser after the court issued the June 7,
2000 order charging Brady’s partner’s interest.
The third cause of action alleges Brady appeared at the November 19, 2002 auction, or creditor sale
of the subject property, “in order to bid on Lanser’s interest in the property. Prior to the date of the
sale, Brady and Lanser had satisfied in full a second trust deed on the real property, but Brady failed
to record evidence of satisfaction of the second trust deed with the County Recorder’s Office.
[Blackburn] is informed and believes the reason Brady failed to record evidence of satisfaction of
the second trust deed was to discourage other purchasers from coming forward to bid on Lanser’s
one half interest in the real property, in order to bid against the real property himself with superior
knowledge of the true desirability of the real property. Alternatively, [Blackburn] is informed and
believes Brady elected not to record evidence of satisfaction of the second trust deed in order to
reduce the likelihood of, or amount of, any payment by a good faith purchaser to [Blackburn] as a
result of the sale”
The third cause of action further alleges Brady appeared at the auction pursuant to some agreement
with Lanser to bid in excess of $200,000 for Lanser’s one-half interest in the property even though
the fair market value of the property was only “approximately $78,000.00.” On information and belief,
Blackburn alleges Brady had no intention of acquiring Lanser’s interest in the property for more than
$200,000, and “submitted his bid solely to drive up the amount [Blackburn] was required to credit bid
against his judgment, thereby reducing [his] judgment against Lanser by more than $210,000 .00.”
Blackburn also alleges Brady’s statements made at the creditor’s sale concerning his bid were
knowingly “false and fraudulent,” and made with the intent of inducing Blackburn “to credit bid more
money than was fair or necessary to acquire” the subject property. Blackburn reasonably relied on
the truth of Brady’s statements concerning his bid and was damaged by doing so “in an amount not
less than $132,000.”
In response, Brady filed both a demurrer to and a motion to strike Blackburn’s complaint under the
anti-SLAPP law. The court overruled the demurrer before considering Brady’s motion to strike.
Brady argued in the motion that section 425.16 applied to each of the causes of action in Blackburn’s
complaint because Brady’s claims arose from the exercise of his rights of petition and free speech
in protecting his property interests and were ancillary to judicial proceedings between Blackburn
and Lanser as well as the Sheriff’s auction being an “official proceeding” in which Brady exercised
his right to “bid” on the subject property, which in turn was a privileged communication under Civil
Code section 47, subdivision (b).
In opposing the anti-SLAPP motion, Blackburn argued there was no logical or legal basis to apply
section 425.16 to his partition and accounting causes of action because they are not based upon any
protected speech, conduct or petitioning activity within the meaning of that section, merely upon co-
ownership of the property. As to the third cause of action, Blackburn argued his claim of fraud is not
based upon statements made in an “official proceeding,” but only upon a bid in a foreclosure sale
which is analogous to a business transaction not subject to protection under section 425.16.
Blackburn further asserted that Brady’s motion must be denied because Blackburn and his attorney’
s declarations showed there is a high probability Blackburn will prevail on each cause of action.
The court issued a telephonic ruling denying the motion to strike Blackburn’s complaint, finding
neither the partition and accounting causes of action arose from constitutionally protected activity,
and even assuming they did, Blackburn had shown a likelihood of prevailing on the merits of both
causes of action. As to the third cause of action for fraud, the court found that “[Brady's] ‘bidding
process’ at the Sheriff’s execution sale is not covered by [section] 425.16. Even if it were,
[Blackburn] has shown by his declaration and that of his counsel, a probability of prevailing on this
cause of action.” Because neither party requested oral argument, the court’s tentative became its
final ruling denying the section 425.16 motion. Brady appealed.
DISCUSSION
I. SUMMARY OF APPLICABLE ANTI-SLAPP LAW
The Legislature’s purpose in enacting the anti-SLAPP statute is defined in subdivision (a) of section
425.16:
“The Legislature finds and declares that there has been a disturbing increase in lawsuits brought
primarily to chill the valid exercise of the constitutional rights of freedom and petition for the redress
of grievances. The Legislature finds and declares 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. To this end, this section shall be construed broadly.”
In light of these legislative findings, subdivision (b)(1) of section 425.16 provides that: “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 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.” Under the statute, an
“act in furtherance of a person’s right of petition or free speech” 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 constitutional right
of free speech in connection with a public issue or an issue of public interest.” (§ 425.16, subd. (e).)
However, only if the defendant’s alleged acts or statements fall under the third or fourth categories
of subdivision (e) of section 425.16, is the defendant required to independently demonstrate that the
matter is a “public issue” within the statute’s meaning. (Briggs v. Eden Council for Hope &
Opportunity (1999) 19 Cal.4th 1106, 1113.)
In ruling on an anti-SLAPP motion, a court must first determine whether the defendant has met his
burden of showing the challenged cause of action is one arising from activity protected under the
statute. (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67; Navellier v. Sletten
(2002) 29 Cal.4th 82, 88-89 .) If the defendant does not meet this threshold burden, the court must
deny the motion. (Equilon Enterprises, supra, at p. 67.) If the defendant does meet this burden, then
the plaintiff must demonstrate a probability of prevailing on the merits of the claim. (Ibid.) “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. [Citations.]” (Navellier, supra, 29 Cal.4th at p. 89.) In
analyzing whether the initial “arising from” requirement is met, a court considers “the pleadings,
and supporting and opposing affidavits stating the facts upon which the liability or defense is
based.” (§ 425.16, subd. (b)(2).)
We independently review a trial court’s ruling on a SLAPP motion under a de novo standard of
review. (ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 999.) Moreover, whether
section 425.16 applies to a particular complaint, presents a legal question subject to the same de
novo review standard on appeal. (Kashian v. Harriman (2002) 98 Cal.App.4th 892, 906.)
II. ANALYSIS
Brady contends Blackburn’s third cause of action for fraud is subject to the anti-SLAPP law because
it arises out of his written bid or oral statements made at the November 19, 2002 Sheriff’s auction
which is an “official proceeding authorized by law,” and thus constitutes protected activity under
section 425.16, subdivision (e)(1). He specifically argues that his bid and statements made to the
sheriff about his bid at the sale authorized by sections 704.750 through 704.770 were in furtherance
of his free speech rights to appear and bid at the sale. In support of this argument, Brady cites to the
allegations of Blackburn’s complaint and his declaration filed in opposition to the special motion to
strike which show the gravamen of Blackburn’s fraud claim is Brady’s bid at the Sheriff’s auction
made purportedly without the intent to perform.
However, like the plaintiff in Kajima Engineering & Construction, Inc. v. City of Los Angeles (2002) 95
Cal.App.4th 921 (Kajima ), Brady fails to appreciate that the fraud cause of action does not arise from
an act of free speech or right of petition for the redress of a grievance, but rather only from his
actions which affected the bidding at a court ordered sale, which in essence is an event where
offers to buy property are received according to certain requirements. Plainly, even construing the
gravamen of Blackburn’s third cause of action, as Brady does, as fraud committed in his bidding at
the Sheriff’s auction, it is a purely business type event or transaction and is not the type of protected
activity contemplated under section 425.16, subdivision (e). (See Kajima, supra, 95 Cal.App.4th at pp.
928-932; People ex rel. 20th Century Ins. Co. v. Building Permit Consultants, Inc. (2000) 86 Cal.App.
4th 280, 285 (20th Century Ins. Co.).)
Ignoring this preliminary fact, Brady concentrates on the phrase “any other official proceeding
authorized by law” in subdivision (e)(1) of section 425.16 to assert the fraud cause of action is
subject to the anti-SLAPP law. He argues that because his bid, a type of written statement, was
made in an execution sale or auction authorized by law, and because the sale also stemmed from
the conclusion of the lawsuit between Blackburn and Brady’s partner Lanser, it necessarily arose
out of an “official proceeding” and is thus subject to his motion to strike. However, as case authority
has pointed out, section 425.16 “does not accord anti-SLAPP protection to suits arising from any act
having any connection, however remote, with an official proceeding. The statements or writings in
question must occur in connection with ‘an issue under consideration or review’ in the proceeding.”
(Paul v. Friedman (2002) 95 Cal.App.4th 853, 866; see 20th Century Ins. Co., supra, 86 Cal.App.4th at
pp. 284-285.)
The ministerial event of a Sheriff’s sale or auction simply does not concern an issue under review or
determine some disputed matter as contemplated under the anti-SLAPP law. Rather, as already
noted, it consists merely of offers and the acceptance of the highest bid made according to certain
requirements without any determination based on the exercise of one’s free speech or petition
rights. As such, it concerns a business dealing or transaction somewhat analogous to the
unprotected activity of bidding on public contracts in Kajima, supra, 95 Cal.App.4th 921, and not the
exercise of protected activity under section 425.16. Brady has cited no authority that demonstrates
the anti-SLAPP law would embrace his bid at a Sheriff’s auction. Because his various attempts to
argue otherwise based on his selective dissection of subdivision (e)(1) of section 425.16 are
unsupportable in light of the purpose and existing interpretations of the anti-SLAPP legislation, we
need not engage in an expansive interpretation of what “official proceeding” means for the statute
as he would have us do. [FN 2]
[FN 2] Interestingly, Brady claims his bid is a protected, privileged statement under Civil Code section
47, subdivision (b) because it was made in an “official proceeding authorized by law,” but then
argues the law concerning that section cannot be used to define what an official proceeding
authorized by law under the anti-SLAPP legislation means.
Moreover, Brady has also attempted to gloss over Blackburn’s additional allegations of fraud caused
by Brady’s failure to record satisfaction of the second deed of trust on the property, arguing those
allegations only show he intended not to perform the contract of the sale of property if his bid were
accepted. However, such noncommunitive act of concealment to keep away other bidders at the
Sheriff’s sale is a separate basis for the fraud cause of action, and it was not done in an official
proceeding which would render it protected activity.
Accordingly, we conclude Brady has failed to make the necessary prima facie showing that his
activity came within the protection of the anti-SLAPP statute. Having so concluded, it is unnecessary
to determine whether Blackburn established the probable validity of his fraud claims.
DISPOSITION
The order appealed from is affirmed. Blackburn to recover costs on appeal.
WE CONCUR: McDONALD and AARON, JJ.
Greater San Diego Area
Current
Real Estate Project & Business Development at FORENSIC IMAGING & ARCHIVING INC
President at B&H Property Systems, Inc
Past
Property Manager/Developer at 350 WEST ASH PLAZA
Property Manager/Developer at SUNSHINE RESIDENTIAL PLAZA
Property Manager/Developer at Plaza 2020 High Rise Office Building
Education
San Diego State University-California State University
David A. Blackburn is a native San Diegan who has devoted his education, training and
career to real estate acquisition, renovation, conversion and development. His
entrepreneurial talents have created a wide array of successful business ventures.
After graduating from San Diego State University in 1976 with a degree in real estate and
a minor in finance, Blackburn joined Mission Center Realty Inc. He started handling the
company’s contingent sales. Blackburn learned new project sales, real estate syndication,
investments, apartment sales and business development & planning. Blackburn
maintained a position as one of the company’s top sales agents. Following two years of
association with Mission Center Realty, Blackburn obtained his brokers license.
Blackburn’s latest venture is a new company engaged in mitigating construction defect
litigation, Forensic Imaging & Archiving Inc. The business was inspired by Blackburn’s
motorcycle rental business. Blackburn began taking photos of his motorcycles with the
renter on it to establish its condition prior to rental. His insurance company was so
impressed with the protocol, it offered Blackburn a 25% discount on his policy. Blackburn
decided that a similar protocol could be used to track construction projects, with the
potential of a similar rate of cost savings at a much greater level.
Blackburn acquired, built, or renovated multiple commercial, industrial and residential
projects in Arizona, Nevada, and Montana and California worth a combined total of $136
million.
Blackburn flies his own plane and has achieved his twin engine, high performance, and
instrument license. He is currently working on his commercial rating as a pilot. Blackburn
has participated for years at local and national air shows flying his 1941 North American A-
T 6 trainer in formation flights as well as simulated aerial combat flights.
Specialties
Real Estate Project & Business Development Experience
Century Surety Company v. 350 W.A.
("Blackburn retained the law firm of Duckor Spradling Metzger and Wynne to
defend them in the Helleis action.")
UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA
September 28, 2011
CENTURY SURETY COMPANY,
PLAINTIFF,
v.
350 W.A., LLC, ET AL.,
DEFENDANTS.
The opinion of the court was delivered by: M. James Lorenz United States District Court
Judge
ORDER GRANTING MOTION FOR SUMMARY JUDGMENT [doc. #254] AND RELATED
COUNTERCLAIMS.
Plaintiff/counterdefendant Century Surety Company moves for summary judgment or in
the alternative for summary adjudication. [doc. #254] In its motion, plaintiff seeks a
declaration that it is entitled to rescind the insurance policy and is not liable under an
insurance policy it issued because of 350's late tender. Century also seeks summary
judgment on counterclaimants' breach of contract and bad faith claims. The motion has
been fully briefed and is considered without oral argument.
Background
David A. Blackburn purchased a commercial office building at 350 West Ash Street in San
Diego from Hokojitsugyo Co., LTD. During escrow, the building sustained significant
damage due to multiple flooding incidents. Nevertheless, Blackburn completed the
purchase with the Grant Deed recorded on May 15, 2003. Immediately thereafter
Blackburn transferred the property to 350 W.A. LLC, which was formed for the property
ownership, with the Grant Deed also recorded on May 15, 2003. Century issued a
commercial general liability policy, CCP267153 to 350, for the 350 West Ash commercial
office building with an effective date of May 15, 2003.
At the time of the transfer of ownership, Jacqueline Helleis ("Helleis") was and had been
leasing space in the building for her business, Flagship Research ("Flagship").*fn1
On May 15, 2003, 350, by letter signed by Blackburn, advised the building tenants that
their leases -- including Flagship's lease -- were being terminated due to environmental
and fire safety concerns. Blackburn had determined the building to be uninhabitable.
On June 12, 2003, Helleis filed a Complaint against 350 and Blackburn in the Superior
Court for the County of San Diego ("underlying action" or "Helleis"). The Helleis action
included causes of action for breach of contract, breach of the covenant of good faith and
fair dealing, breach of the covenant of quiet enjoyment, constructive eviction, nuisance,
and declaratory relief. Neither 350 nor Blackburn tendered their claim for defense to
Century at any time during the course of the trial. Instead, 350 and Blackburn retained
the law firm of Duckor Spradling Metzger and Wynne to defend them in the
Helleis action.
The Helleis bench trial concluded on June 27, 2005, with the court announcing its decision
from the bench. The trial court dismissed plaintiff's causes of action for nuisance and
declaratory relief and found in favor of Blackburn on all claims, but Helleis was successful
in the remaining causes of action against 350. The trial court awarded Helleis damages in
the amount of $504,826.44, and attorneys' fees of $295,902.00 against 350 only.
On July 8, 2005, twelve days after the trial court made its decision, 350 tendered a claim
for defense and indemnity to Century. Four days after 350 tendered the claim, the state
court entered judgment against 350. On July 27, 2005, Century sent 350 notice it would
defend it in post-judgment and appellate proceedings under a reservation of rights.
Century then filed the above-captioned case against 350 and Helleis on August 3, 2005,
seeking a declaration of its rights and duties under the policy it issued to 350 contending
it had no obligation to defend or indemnify 350. 350 filed an answer on October 3, 2005.
350 and Blackburn filed a counterclaim for declaratory relief, breach of written contract,
and breach of the implied covenant of good faith and fair dealing on October 3, 2005.
350 timely filed an appeal in the underlying state court action. As previously noted,
Blackburn was found not liable on all of the claims brought against him in the Helleis
action. Neither Blackburn nor Helleis appealed the decision. In an effort to obtain an
appeal bond to protect 350's assets from immediate and allegedly aggressive execution
by the judgment creditor (Helleis), Century, Blackburn and 350 entered into an
"Agreement to Procure Appeal Bond" ("Bond Agreement") whereby Century would
provide, for a six-month period only, collateral as security for the appeal bond and after
that time period expired, 350 and Blackburn would substitute their collateral as security for
the appeal bond. Under the parties' Bond Agreement, in the event Blackburn and 350 did
not substitute their collateral within the six-month period, a Stipulated Judgment would be
entered in Century's favor against Blackburn, 350 and other entities associated with
Blackburn. After the six-month period expired, along with several extensions of time,
Blackburn and 350 failed to substitute their own collateral for the appeal bond. Plaintiff
eventually advised Blackburn's counsel that it would be filing an application for entry of
judgment -- the Stipulated Judgment -- in accordance with the parties' Bond Agreement.
The California Court of Appeal affirmed the Helleis trial court in its entirety on July 11,
After full briefing, the Court granted plaintiff's motion for entry of the stipulated judgment
on September 25, 2007. In that same Order, the Court granted plaintiff's motion for
summary judgment finding that the insurance policy did not provide coverage for
breaches of contract or for constructive eviction of a business entity from a commercial
building. Because of the grant of summary judgment in Century's favor, all claims brought
by 350 and Blackburn in their counterclaim were denied with the Court making no findings
as to whether Century was substantially prejudiced as a matter of law by 350's late tender
or Blackburn's standing to bring counterclaims in this action.
350 and Blackburn appealed the Court's decision to the Ninth Circuit Court of Appeals. In
its decision, the Ninth Circuit affirmed the district court's entry of the stipulated judgment
but reversed the summary judgment portion of the Order finding coverage under the
relevant provision of the policy. Century Sur. Co. v. Helleis, 367 Fed. Appx. 765 (9th Cir.
2010). The Court of Appeals later clarified that its decision did not foreclose further
factual development in the district court of Century's claim that a late tender caused
substantial prejudice. (Doc. #233.)
Century again moves for summary judgment on its claims and on 350's and Blackburn's
counterclaims.
Legal Standard
Rule 56 of Federal Rules of Civil Procedure empowers the court to enter summary
judgment on factually unsupported claims or defenses, and thereby "secure the just,
speedy and inexpensive determination of every action." Celotex Corp. v. Catrett, 477 U.S.
317, 325, 327 (1986). Summary judgment is appropriate if the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law. FED. R. CIV. P. 56(c).
The moving party's burden on summary judgment depends on whether it bears the
burden of proof at trial with respect to the claim or defense at issue. "When the party
moving for summary judgment would bear the burden of proof at trial, it must come
forward with evidence which would entitle it to a directed verdict if the evidence went
uncontroverted at trial. In such a case, the moving party has the initial burden of
establishing the absence of a genuine issue of fact on each issue material to its case."
See C.A.R. Transp. Brokerage Co., Inc. v. Darden Restaurants, Inc., 213 F.3d 474, 480
(9th Cir. 2000) (citations omitted). If the moving party does not bear the burden at trial, it
can meet its burden on summary judgment by pointing out the absence of evidence with
respect to any one element of the claim or defense. See Celotex, 477 U.S. at 325.
If the movant meets its burden on summary judgment, the burden shifts to the non-movant
to show summary adjudication is not appropriate. Celotex, 477 U.S. at 317, 324. In this
regard, the non-movant must "go beyond the pleadings" and rely on "evidentiary
materials" such as his "own affidavits, or . . . the depositions, answers to interrogatories,
and admissions on file" to designate specific facts in opposition to the summary judgment
motion. Celotex, 477 U.S. at 324 (internal quotation marks omitted). These evidentiary
materials must show that genuine factual issues remain which "can be resolved only by a
finder of fact because they may reasonably be resolved in favor of either party." Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). If the moving party meets its burden, the
party opposing summary judgment "may not rely merely on allegations or denials of its
own pleading; rather, its response must ... set out specific facts showing a genuine issue
for trial." FED. R. CIV. P. 56(e); see Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 586 (1986). All inferences drawn from the evidence must be viewed in the
light most favorable to the non-moving party, Eastman Kodak Co. v. Image Technical
Servs., Inc., 504 U.S. 451, 456 (1992), but inferences must be based on evidence which,
if believed, would be sufficient to support a judgment for the nonmoving party. Celotex,
477 U.S. at 322. Moreover, inferences cannot be created by pointing to "some
metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586 (citations
omitted). Instead, deference to the nonmoving party has limits: (1) a plaintiff cannot rest
on allegations in his pleadings to overcome a motion for summary judgment, Brinson, 53 F.
3d at 1049; and (2) self-serving affidavits do not establish a genuine issue of material fact
if they fail to state facts based on personal knowledge or are too conclusory. Rodriguez v.
Airborne Express, 265 F.3d 890, 902 (9th Cir. 2001).
Determinations regarding credibility, the weighing of evidence, and the drawing of
legitimate inferences are jury functions, and are not appropriate for resolution by the court
on a summary judgment motion. Id.
Rescission
The Court first looks to plaintiff's claim for rescission that was included in its first amended
complaint filed September 14, 2007. If the policy is rescinded, the counterclaims for
breach of contract and bad faith fail as a matter of law.
Century contends that it is entitled to rescind the insurance policy based on two material,
false responses Blackburn provided in the policy application.
Material misstatements or concealment of material facts in an application for insurance,
even if unintentional, entitle an insurer to rescind the insurance policy. Mitchell v. United
Nat. Ins. Co., 127 Cal.App.4th 457, 468-469 (2005) ; INS. CODE, §§ 331, 359. The
insurer must prove that the insured made a material "false representation" in the
application. A representation is false "when the facts fail to correspond with its assertions
or stipulations." (§ 358.) Materiality is determined under "a subjective test; the critical
question is the effect the truthful answers would have had on [the insurer], not on some
'average reasonable' insurer." Imperial Casualty & Indemnity Co. v. Sogomonian, 198 Cal.
App.3d 169, 181 (1988). "Materiality is to be determined not by the event, but solely by
the probable and reasonable influence of the facts upon the party to whom the
communication is due, in forming his estimate of the disadvantages of the proposed
contract, or in making his inquiries." INS. CODE, § 334.
Insurance Code §§ 331 and 359 impose "heavy burdens of disclosure" "upon both parties
to a contract of insurance, and any material misrepresentation or the failure, whether
intentional or unintentional, to provide requested information permits rescission of the
policy by the injured party." Mitchell (quoting Imperial, 198 Cal. App.3d at 179-80).
Insurance Code § 332, provides that each party to an insurance contract disclose, "in
good faith, all facts within his knowledge which are or which he believes to be material to
the contract ...."
In the present case, Blackburn applied on behalf of 350 for insurance coverage. His
response to two questions are at issue here:
Any structural alterations contemplated? Blackburn checked the "NO" box.
Any demolition exposure contemplated? Again, Blackburn checked the "NO" box.
A. False or Misleading Representations in the Policy Application
Century states that the evidence establishes that Blackburn contemplated "structural
alterations" and "demolition exposure" as early as October 2002, and therefore, the policy
application information he provided was false, and the questions and the responses
thereto were material to the decision to issue the policy.
In support of its contention that "structural alterations" or "demolition exposure" was
contemplated by Blackburn at the time of the time the insurance application was made,
Century provides a letter to Blackburn dated October 18, 2002, from Gary London,
President of The London Group Realty Advisors, who wrote:
In review, it is our understanding that you are in the process of acquiring this commercial
office high-rise, located in the Columbia District near Little Italy in Downtown San Diego,
CA. Your intention is to convert the property to residential. I have invested time and
consultation with you, identified and interviewed architects. (Plt's Compendium of Exhibits,
Vol. 4 at 229.)
While the property was in escrow between October 3, 2002 and early December 2002,
Blackburn prepared a brochure that he provided to prospective lenders in which he
represented that the building "offers an excellent opportunity to convert a well located
high rise office building . . . into residential condominiums." (Plf's Exh. B, Blackburn Depo.
at 135-138.)
As noted in the factual background, on May 15, 2003 -- the date the insurance policy was
effective -- 350 advised the building tenants that their leases were being terminated. The
letter announcing the lease terminations, signed by David A. Blackburn as a member of
350, stated [w]e have made the difficult decision that the building should undergo a
complete renovation to restore integrity and safety to the building. . . . Indeed, it currently
appears that the building will have to be de-constructed down to the building's core to fully
address the damage to the building.
(Exh. G to doc. #21.)
Blackburn contends that the evidence shows a disputed factual issue as to falsity of the
application responses. First, Blackburn states he did not conceal information or provide
false information when he applied for commercial general liability insurance on behalf of
350 with Century because there had been "no firm determination of what 350 planned to
do with the building." (Blackburn March 14, 2011 Decl. at ¶ 8.) This late and self-serving
statement of Blackburn's intent does not create an issue of fact as to whether Blackburn
was contemplating structural alterations or demolition exposure. Indeed, the issue is not
whether 350/Blackburn specifically and definitively intended to convert the commercial to
residential use, but rather whether structural alterations or demolition exposure was
contemplated. Whether 350/Blackburn intended to convert the property to residential use
or retain its commercial use, it is undisputed that 350/Blackburn told the occupying
tenants that the building would be undergoing "complete renovations" and likely would
have to be "de-constructed down to the building's core" on May 15, 2003 -- the date the
policy was effective.
For the first time during this litigation, Blackburn contends that "Century's policy was to be
a temporary policy only, and would only serve to protect 350 from claims asserted while it
was operating the Building as a commercial office building. " (Blackburn Decl. at ¶ 9.) This
statement does not create a triable issue of fact as to whether structural alterations or
demolition exposure was contemplated at the time of the application.
In seeking to create a triable issue of fact, 350/Blackburn contend the questions asked in
the application were vague and ambiguous. They rely on a health insurance case,
O'Riordan v. Federal Kemper Life Assur., 36 Cal.4th 281, 287-288 (2005). The California
Supreme Court found that these questions vague and ambiguous: "Have you smoked
cigarettes in the past 36 months?" and "Have you used tobacco in any other form in the
past 36 months?" The Court concluded that the questions could be construed as meaning
habitual smoking as opposed to limited usage because the policy did not ask whether the
applicant had smoked any cigarettes during the relevant period. Id. Further, the
O'Riordan court noted that the applicant did not conceal information about her smoking a
small number of cigarettes because she disclosed it to an agent of the insurance
company when she was applying for the insurance policy. Id.
Here, the policy application did not ask whether the applicant had made firm plans for
structural alterations or demolitions exposure but rather whether such acts were
contemplated. In ordinary and plain usage, the term "contemplated" would include the
concept of "some thought was put into the concept of converting the building to
condominiums, at the time of 350's application there was no firm plan to convert the
building," (Opp. at 30) or "At the time I signed the Application, although I was at the time
heading in the direction of a condominium conversion, no firm decision had been made in
that regard." (Blackburn's Decl. ¶8)
Additionally, contacting all the tenants occupying the building on the effective date of the
insurance policy with the information that the building would likely be deconstructed to its
core cannot be understood as anything other than having contemplated structural
alterations or demolition exposure. 350/Blackburn's attempt to deem the word
"contemplate" to mean a "firm plan" or "firm decision" is without legal or linguistic support.
"To contemplate" is neither vague nor ambiguous in the present context.
As a matter of law, Blackburn's responses to the policy application's questions concerning
structural alterations or demolition exposure were misleading or false.
B. Materiality of Misrepresentation or False Statement
350 also argues that the information about 350's plans for the building was not material.
The materiality of a misrepresentation is determined by its probable and reasonable effect
upon the insurer. INS. CODE, § 334. "The fact that the insurer has demanded answers to
specific questions in an application for insurance is in itself usually sufficient to establish
materiality as a matter of law. [citation omitted] "Other cases, however, inquire into the
nature of the information withheld, and the likely practice of the insurance company had
the concealed facts been truthfully disclosed....' West Coast Life Ins. Co. v. Ward, 132
Cal. App.4th 181,187 (2005) (quoting Old Line Life Ins. Co. v. Superior Court, 229 Cal.
App.3d 1600, 1603--1604 (1991)). The test is a subjective one; "the critical question is
the effect truthful answers would have had on [the particular insurer], not on some
'average reasonable' insurer." Imperial Casualty & Indemnity Co. v. Sogomonian, 198 Cal.
App.3d 169, 181 (1988).
Rescission may be properly granted in a summary judgment motion for the insurer where
the only reasonable inference to be drawn from the undisputed evidence presented is that
"the false negative answers and omissions of [the applicant] were material to [the
insurer's] decision to provide insurance coverage." Id., 198 Cal. App.3d at 182; see also
Lunardi v. Great--West Life Assurance Co. 37 Cal. App.4th 807, 827 (1995).
Blackburn v. Brady
CERTIFIED FOR PUBLICATION COURT OF ... - Cases and Codes
caselaw.lp.findlaw.com/data2/californiastatecases/D042010.PDF
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Mar 4, 2004 – APPEAL from an order of the Superior Court of San Diego County, J. Richard ... David A.
Blackburn sued Michael Brady for partition, accounting and fraud. ... money judgment against Craig
S. Lanser, who had previously ...
(Appeal from Superior Court of San Diego County, J. Richard Haden, Judge.)
COUNSEL:
Estes & Hoyt and Kevin J. Hoyt for Defendant and Appellant.
Vivoli & Associates, Michael W. Vivoli and Matthew J. Yarling for Plaintiff and Respondent.
HUFFMAN, Acting P.J.
David A. Blackburn sued Michael Brady for partition, accounting and fraud. After the trial court
overruled Brady’s demurrer to the complaint, he moved to strike the lawsuit under the anti-SLAPP
(strategic lawsuits against public participation) statute (Code Civ. Proc., § 425.16). [FN 1] The court
denied the motion, finding the statute was inapplicable and, even if it were applicable, Blackburn had
established a probability of prevailing on the merits of each cause of action. Brady appeals the trial
court’s ruling only with regard to the fraud cause of action. We affirm.
[FN 1] All statutory references are to the Code of Civil Procedure unless otherwise specified.
FACTUAL AND PROCEDURAL BACKGROUND
Blackburn’s complaint filed December 27, 2002, alleges he acquired ownership of a one-half interest
of real property located in San Diego county (the subject property) as the result of a public auction
held on November 19, 2002, in partial satisfaction of a money judgment against Craig S. Lanser, who
had previously owned the subject real property as a tenant in common with Brady. On May 25, 2000,
Blackburn obtained a money judgment against Craig S. Lanser, who owned certain real property
located in the Ocean Beach area of San Diego, California, which included four separate residential
units, as tenants in common with Brady. The judgment was $213,030, which was amended March
16, 2001, to $323,688.92 plus interest, to include costs. After several attempts to collect on the
judgment failed, Blackburn obtained an order charging partner’s interest which ordered Brady to pay
Blackburn rents and profits generated by Lanser’s share of a business owned by Brady and Lanser,
and from the four-unit subject rental property. When Brady failed to pay anything under the order,
Blackburn sought and obtained an execution levy and the resulting sale of Lanser’s interest, and the
community interest of his spouse, in the subject property. After several delays, a Sheriff’s sale of the
subject property was noticed and conducted on November 19, 2002, resulting in the Sheriff selling
one-half interest in the subject property to Blackburn for “the total sum of $211,000.00 [¶] as a credit
on judgment and/or costs, [¶] the said purchaser(s) being the highest bidder(s), and that sum being
the highest bid; that [the Sheriff has] given said purchaser(s) a Certificate of Sale.”
On December 27, 2002, Blackburn filed the instant lawsuit based on his one- half ownership in the
subject property acquired as a result of the public auction. The first cause of action in Blackburn’s
complaint seeks partition by sale of the subject property he now co-owns with Brady. The second
cause of action seeks an accounting from Brady for the rents and profits Brady collected from the
subject real property and from the business he owned with Lanser after the court issued the June 7,
2000 order charging Brady’s partner’s interest.
The third cause of action alleges Brady appeared at the November 19, 2002 auction, or creditor sale
of the subject property, “in order to bid on Lanser’s interest in the property. Prior to the date of the
sale, Brady and Lanser had satisfied in full a second trust deed on the real property, but Brady failed
to record evidence of satisfaction of the second trust deed with the County Recorder’s Office.
[Blackburn] is informed and believes the reason Brady failed to record evidence of satisfaction of
the second trust deed was to discourage other purchasers from coming forward to bid on Lanser’s
one half interest in the real property, in order to bid against the real property himself with superior
knowledge of the true desirability of the real property. Alternatively, [Blackburn] is informed and
believes Brady elected not to record evidence of satisfaction of the second trust deed in order to
reduce the likelihood of, or amount of, any payment by a good faith purchaser to [Blackburn] as a
result of the sale”
The third cause of action further alleges Brady appeared at the auction pursuant to some agreement
with Lanser to bid in excess of $200,000 for Lanser’s one-half interest in the property even though
the fair market value of the property was only “approximately $78,000.00.” On information and belief,
Blackburn alleges Brady had no intention of acquiring Lanser’s interest in the property for more than
$200,000, and “submitted his bid solely to drive up the amount [Blackburn] was required to credit bid
against his judgment, thereby reducing [his] judgment against Lanser by more than $210,000 .00.”
Blackburn also alleges Brady’s statements made at the creditor’s sale concerning his bid were
knowingly “false and fraudulent,” and made with the intent of inducing Blackburn “to credit bid more
money than was fair or necessary to acquire” the subject property. Blackburn reasonably relied on
the truth of Brady’s statements concerning his bid and was damaged by doing so “in an amount not
less than $132,000.”
In response, Brady filed both a demurrer to and a motion to strike Blackburn’s complaint under the
anti-SLAPP law. The court overruled the demurrer before considering Brady’s motion to strike.
Brady argued in the motion that section 425.16 applied to each of the causes of action in Blackburn’s
complaint because Brady’s claims arose from the exercise of his rights of petition and free speech
in protecting his property interests and were ancillary to judicial proceedings between Blackburn
and Lanser as well as the Sheriff’s auction being an “official proceeding” in which Brady exercised
his right to “bid” on the subject property, which in turn was a privileged communication under Civil
Code section 47, subdivision (b).
In opposing the anti-SLAPP motion, Blackburn argued there was no logical or legal basis to apply
section 425.16 to his partition and accounting causes of action because they are not based upon any
protected speech, conduct or petitioning activity within the meaning of that section, merely upon co-
ownership of the property. As to the third cause of action, Blackburn argued his claim of fraud is not
based upon statements made in an “official proceeding,” but only upon a bid in a foreclosure sale
which is analogous to a business transaction not subject to protection under section 425.16.
Blackburn further asserted that Brady’s motion must be denied because Blackburn and his attorney’
s declarations showed there is a high probability Blackburn will prevail on each cause of action.
The court issued a telephonic ruling denying the motion to strike Blackburn’s complaint, finding
neither the partition and accounting causes of action arose from constitutionally protected activity,
and even assuming they did, Blackburn had shown a likelihood of prevailing on the merits of both
causes of action. As to the third cause of action for fraud, the court found that “[Brady's] ‘bidding
process’ at the Sheriff’s execution sale is not covered by [section] 425.16. Even if it were,
[Blackburn] has shown by his declaration and that of his counsel, a probability of prevailing on this
cause of action.” Because neither party requested oral argument, the court’s tentative became its
final ruling denying the section 425.16 motion. Brady appealed.
DISCUSSION
I. SUMMARY OF APPLICABLE ANTI-SLAPP LAW
The Legislature’s purpose in enacting the anti-SLAPP statute is defined in subdivision (a) of section
425.16:
“The Legislature finds and declares that there has been a disturbing increase in lawsuits brought
primarily to chill the valid exercise of the constitutional rights of freedom and petition for the redress
of grievances. The Legislature finds and declares 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. To this end, this section shall be construed broadly.”
In light of these legislative findings, subdivision (b)(1) of section 425.16 provides that: “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 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.” Under the statute, an
“act in furtherance of a person’s right of petition or free speech” 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 constitutional right
of free speech in connection with a public issue or an issue of public interest.” (§ 425.16, subd. (e).)
However, only if the defendant’s alleged acts or statements fall under the third or fourth categories
of subdivision (e) of section 425.16, is the defendant required to independently demonstrate that the
matter is a “public issue” within the statute’s meaning. (Briggs v. Eden Council for Hope &
Opportunity (1999) 19 Cal.4th 1106, 1113.)
In ruling on an anti-SLAPP motion, a court must first determine whether the defendant has met his
burden of showing the challenged cause of action is one arising from activity protected under the
statute. (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67; Navellier v. Sletten
(2002) 29 Cal.4th 82, 88-89 .) If the defendant does not meet this threshold burden, the court must
deny the motion. (Equilon Enterprises, supra, at p. 67.) If the defendant does meet this burden, then
the plaintiff must demonstrate a probability of prevailing on the merits of the claim. (Ibid.) “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. [Citations.]” (Navellier, supra, 29 Cal.4th at p. 89.) In
analyzing whether the initial “arising from” requirement is met, a court considers “the pleadings,
and supporting and opposing affidavits stating the facts upon which the liability or defense is
based.” (§ 425.16, subd. (b)(2).)
We independently review a trial court’s ruling on a SLAPP motion under a de novo standard of
review. (ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 999.) Moreover, whether
section 425.16 applies to a particular complaint, presents a legal question subject to the same de
novo review standard on appeal. (Kashian v. Harriman (2002) 98 Cal.App.4th 892, 906.)
II. ANALYSIS
Brady contends Blackburn’s third cause of action for fraud is subject to the anti-SLAPP law because
it arises out of his written bid or oral statements made at the November 19, 2002 Sheriff’s auction
which is an “official proceeding authorized by law,” and thus constitutes protected activity under
section 425.16, subdivision (e)(1). He specifically argues that his bid and statements made to the
sheriff about his bid at the sale authorized by sections 704.750 through 704.770 were in furtherance
of his free speech rights to appear and bid at the sale. In support of this argument, Brady cites to the
allegations of Blackburn’s complaint and his declaration filed in opposition to the special motion to
strike which show the gravamen of Blackburn’s fraud claim is Brady’s bid at the Sheriff’s auction
made purportedly without the intent to perform.
However, like the plaintiff in Kajima Engineering & Construction, Inc. v. City of Los Angeles (2002) 95
Cal.App.4th 921 (Kajima ), Brady fails to appreciate that the fraud cause of action does not arise from
an act of free speech or right of petition for the redress of a grievance, but rather only from his
actions which affected the bidding at a court ordered sale, which in essence is an event where
offers to buy property are received according to certain requirements. Plainly, even construing the
gravamen of Blackburn’s third cause of action, as Brady does, as fraud committed in his bidding at
the Sheriff’s auction, it is a purely business type event or transaction and is not the type of protected
activity contemplated under section 425.16, subdivision (e). (See Kajima, supra, 95 Cal.App.4th at pp.
928-932; People ex rel. 20th Century Ins. Co. v. Building Permit Consultants, Inc. (2000) 86 Cal.App.
4th 280, 285 (20th Century Ins. Co.).)
Ignoring this preliminary fact, Brady concentrates on the phrase “any other official proceeding
authorized by law” in subdivision (e)(1) of section 425.16 to assert the fraud cause of action is
subject to the anti-SLAPP law. He argues that because his bid, a type of written statement, was
made in an execution sale or auction authorized by law, and because the sale also stemmed from
the conclusion of the lawsuit between Blackburn and Brady’s partner Lanser, it necessarily arose
out of an “official proceeding” and is thus subject to his motion to strike. However, as case authority
has pointed out, section 425.16 “does not accord anti-SLAPP protection to suits arising from any act
having any connection, however remote, with an official proceeding. The statements or writings in
question must occur in connection with ‘an issue under consideration or review’ in the proceeding.”
(Paul v. Friedman (2002) 95 Cal.App.4th 853, 866; see 20th Century Ins. Co., supra, 86 Cal.App.4th at
pp. 284-285.)
The ministerial event of a Sheriff’s sale or auction simply does not concern an issue under review or
determine some disputed matter as contemplated under the anti-SLAPP law. Rather, as already
noted, it consists merely of offers and the acceptance of the highest bid made according to certain
requirements without any determination based on the exercise of one’s free speech or petition
rights. As such, it concerns a business dealing or transaction somewhat analogous to the
unprotected activity of bidding on public contracts in Kajima, supra, 95 Cal.App.4th 921, and not the
exercise of protected activity under section 425.16. Brady has cited no authority that demonstrates
the anti-SLAPP law would embrace his bid at a Sheriff’s auction. Because his various attempts to
argue otherwise based on his selective dissection of subdivision (e)(1) of section 425.16 are
unsupportable in light of the purpose and existing interpretations of the anti-SLAPP legislation, we
need not engage in an expansive interpretation of what “official proceeding” means for the statute
as he would have us do. [FN 2]
[FN 2] Interestingly, Brady claims his bid is a protected, privileged statement under Civil Code section
47, subdivision (b) because it was made in an “official proceeding authorized by law,” but then
argues the law concerning that section cannot be used to define what an official proceeding
authorized by law under the anti-SLAPP legislation means.
Moreover, Brady has also attempted to gloss over Blackburn’s additional allegations of fraud caused
by Brady’s failure to record satisfaction of the second deed of trust on the property, arguing those
allegations only show he intended not to perform the contract of the sale of property if his bid were
accepted. However, such noncommunitive act of concealment to keep away other bidders at the
Sheriff’s sale is a separate basis for the fraud cause of action, and it was not done in an official
proceeding which would render it protected activity.
Accordingly, we conclude Brady has failed to make the necessary prima facie showing that his
activity came within the protection of the anti-SLAPP statute. Having so concluded, it is unnecessary
to determine whether Blackburn established the probable validity of his fraud claims.
DISPOSITION
The order appealed from is affirmed. Blackburn to recover costs on appeal.
WE CONCUR: McDONALD and AARON, JJ.
Motion to Strike
granted by Quinn,
overturned by Court
of Appeal
Freeman v. Schack
APPEAL from a judgment
of the Superior Court of
San Diego County, Linda
B. Quinn, Judge.
Reversed and
remanded with
directions.
Barry & Associates and David
Barry for Plaintiffs and Appellants.
Law Offices of Anthony A.
Ferrigno, Anthony A. Ferrigno; and
Alexander M. Schack for
Defendant and Respondent.
O’ROURKE, J.
Plaintiffs Arleen Freeman and
James Alexander appeal from a
judgment entered after the trial
court granted defendant Alexander
Schack’s special motion to strike
their complaint under Code of
Civil Procedure section 425.16.
[FN1] Plaintiffs sued Schack for
breach of contract, professional
negligence and breach of fiduciary
duty based on allegations that he
had entered into a contract by
which he assumed attorney-client
duties toward plaintiffs but
abandoned them in order to
represent adverse interests in the
same and different litigation, thus
breaching the contract as well as
the fiduciary duties owed them.
The trial court granted Schack’s
special motion to strike as to all
causes of action on grounds
plaintiffs’ causes of action
stemmed from petitioning activity
and plaintiffs did not demonstrate
a probability of prevailing on their
causes of action because the
Noerr-Pennington doctrine [FN2]
provided a complete defense.
FN1. All statutory references are to
the Code of Civil Procedure
unless otherwise indicated.
Section 425.16 is commonly
referred to as the anti-SLAPP
(strategic lawsuit against public
participation) statute. (Jarrow
Formulas Inc. v. LaMarche (2003)
31 Cal.4th 728, 732, fn. 1.)
FN2. Eastern R.R. Presidents
Conference v. Noerr Motor Freight,
Inc. (1961) 365 U.S. 127 (Noerr );
United Mine Workers of America v.
Pennington (Pennington ) (1965)
381 U.S. 657; see Freeman v.
Lasky, Haas & Cohler (9th Cir.
2005) 410 F.3d 1180, 1183.)
Plaintiffs contend the trial court
erred in granting the special
motion to strike because (1)
Schack did not meet his burden of
proving his actions-which
constitute violations of State Bar
Rules of Professional Conduct-
were constitutionally protected; (2)
plaintiffs satisfied their burden of
showing a likelihood of prevailing
on the merits; and (3) the Noerr-
Pennington doctrine does not
apply and cannot provide Schack
with a defense. We conclude
section 425.16 does not apply to
plaintiffs’ causes of action and on
that basis reverse the judgment
with directions that the trial court
deny the special motion to strike.
FACTUAL AND PROCEDURAL
BACKGROUND
Plaintiffs are real estate agents in
San Diego County who were
represented by attorney David
Barry in filing lawsuits against
Sandicor and other entities for
alleged violations of California’s
antitrust laws and other
assertedly unlawful acts. (See
Freeman v. San Diego Ass’n of
Realtors (1999) 77 Cal.App.4th
171, 177-178; California Ass’n of
Realtors v. Barry (D048441, May
22, 2007) [nonpub. opn.].) [FN3]
Sandicor operated a real estate
sales multiple listing service in
San Diego County. (Freeman, 77
Cal.App.4th at p. 177.) In March
2003, plaintiffs succeeded in
reversing a summary judgment
on appeal in the Ninth Circuit in a
federal district court case,
Freeman et al. v. San Diego
County Board of Realtors, et al.,
United States District Court, Case
No. 98-CV-0139 TW (JAH)
(hereafter Freeman II ). [FN4] On
the day the Ninth Circuit filed its
decision, Schack telephoned
Barry and asked if Barry could use
his help in prosecuting the case.
Schack described himself as a
class action attorney who did
antitrust litigation and explained
his credentials in detail. Barry
accepted Schack’s offer, telling
Schack about the arrangement he
had with other attorneys and
explaining the division of
contingent fees in the event of
success. During the course of
several conversations that day,
Barry and Schack discussed the
overall strategy of plaintiffs’ case,
including matters such as getting
plaintiffs certified as class
representatives and an early trial
on damages.
FN3. We take judicial notice of our
files and prior opinions relating to
this matter. (Evid.Code, §§ 452,
subds.(a), (d)(1), 459 .)
FN4. Throughout, Schack refers to
the district court action as
Freeman II. We adopt that
designation for ease of reference.
The Ninth Circuit’s decision
appears in Freeman v. San Diego
Assn. of Realtors (9th Cir.2003)
322 F.3d 1133.
The next week, Barry drafted a fee
agreement for the attorneys who
would represent plaintiffs in what
he referred to as “phase 2″ of the
case: the legal proceedings
following the Ninth Circuit’s
decision. Those attorneys were
Barry, Schack, attorney Richard
Johnson and occasionally Ken
Frost. Barry sent Schack a copy of
an earlier fee agreement and,
over several revisions, Barry,
Johnson and Schack negotiated
over the language for the phase 2
fee agreement. The versions of
that fee agreement confirmed that
the phase 2 attorneys had
attorney-client duties to plaintiffs.
In April 2004, Barry, Johnson and
Schack signed an “Attorney
Association and Fee Sharing
Agreement” (the Fee Sharing
Agreement) relating to the
pending Freeman II litigation. The
Fee Sharing Agreement contains
provisions addressing the legal
relationship between and
respective responsibilities of
Barry and the other phase 2
attorneys. In particular, the Fee
Sharing Agreement stated that the
phase 2 attorneys were not
parties to the existing attorney-
client relationships between Barry
and plaintiffs, but “agree they will
take no action which would
breach any obligation owed to any
client(s)” and “acknowledge that,
in undertaking the services
covered by this agreement, they
are subject to all responsibilities
and obligations owed by attorneys
to their clients under applicable
law … as to each and every client
who is or hereafter becomes a
plaintiff in [Freeman II ], and for
whom a signed written agreement
is provided by Barry, to the extent
each respective phase 2 attorney
provides services hereunder.”
At various times during March,
April and May 2003, Barry and
Schack communicated by
telephone, e-mail and letter about
various matters concerning the
case, including class certification,
damages proof and a proposed
damages expert, pending
motions and settlement
strategies. [FN5]On June 3, 2003,
Schack emailed Barry and
Johnson concerning his
involvement in the cases. He
wrote: “In signing the agreement
to split fees, it was intended that
all clients would give their written
consent before the agreement
was effective. Before that consent
was obtained, I deemed it
necessary to withdraw from the
agreement based on certain
confidential circumstances. I will
continue to assist you in any way
necessary to benefit my client and
the class, and look for a
successful resolution of these
matters.”
FN5. Barry specifically recounts
his communications and their
subjects in his declaration filed in
support of a motion to disqualify
Schack from the Freeman II
action; that declaration is an
exhibit to plaintiffs’ papers in
opposition to Schack’s section
425.16 special motion to strike
and provides the basis for much
of our factual background.
Barry and Schack continued their
communications through April
2004. In April 2004, Schack and
attorney Dan Mogin, with whom
Schack frequently worked, filed a
motion on behalf of “proposed
plaintiff in-intervention” Alan
Hemphill to have Hemphill
intervene as a representative of
the proposed class in Freeman II.
In part, Schack and Mogin argued
Hemphill, a purchaser and end-
user of multiple listing services in
San Diego who was “acting
independently of the Freeman
Plaintiffs,” satisfied typicality and
other requirements to represent
the class unlike plaintiffs, who
were inadequate representatives.
In May 2004, Freeman, Schack,
Barry, and Mogin participated in a
mediation planning session in
Los Angeles. At the mediation,
Schack and Mogin began
proposing that Freeman II should
be settled for coupons to the
class members valued at
approximately $30 or less. The
settlement would not provide for
real estate agents who had
dropped out of the industry since
1994. It would provide for a $1
million payment to Schack and
Mogin. Freeman and Barry
expressed their opposition to the
idea. After the mediation, Barry
ceased conveying privileged or
confidential information and work
product to Schack because Barry
believed Schack was
representing interests adverse to
plaintiffs.
In June 2004, Barry attended a
judicial settlement conference at
which Mogin and Schack
appeared representing Hemphill.
Before they addressed the court,
Mogin and Schack told Barry and
Freeman that an agreement in
principle had been worked out by
which the defendants would
provide class members free use
of Sandicor services for four
consecutive Januarys, but
members who left real estate
without using that opportunity
would forfeit those usage rights.
The settlement did not provide for
members who left the real estate
business. Mogin and Schack
stated they expected attorney fees
to be about $1 million to be paid
in cash. Moments later, the
magistrate judge presiding over
the settlement conference
confirmed that an agreement in
principle had been reached with
the Freeman II defendants. Barry
and Freeman advised the court
they were strongly against such a
settlement; Barry described the
assets available to the Freeman II
defendants with which they could
fund a fair settlement.
Several days after the settlement
conference, Barry wrote to Schack
demanding that he and his client
immediately withdraw from
Freeman II or Barry would move to
disqualify them from the lawsuit
based on current conflicts of
interest in their representation of
Hemphill, Freeman and
Alexander. Barry eventually
unsuccessfully brought a
disqualification motion. Schack
and Mogin filed a new federal
court action on Hemphill’s behalf
and obtained preliminary approval
of a settlement class that
excluded Freeman and Alexander.
Freeman and Alexander settled
and dismissed their action in
November 2004.
In January 2005, plaintiffs, on
behalf of themselves and a
putative class, sued Schack,
Mogin and other entities for
breach of contract, professional
negligence and breach of fiduciary
duty. They alleged Schack had
assumed attorney-client duties to
plaintiffs in March 2003, executed
a written agreement in April 2003
reflecting his assumption of such
duties and pledging, among other
things, to use his best efforts to
obtain a full recovery of damages
to the class, but breached the
agreement by representing
Hemphill, filing a new lawsuit on
Hemphill’s behalf, and concluding
the Hemphill litigation.
Schack moved to strike the
complaint under section 425.16
and joined in Mogin’s own section
425.16 motion. He argued
plaintiffs’ causes of action were
based on written or oral
statements or writings made
before a judicial proceeding,
written or oral statements or
writings made in connection with
an issue under consideration or
review by a judicial body, or other
conduct in furtherance of the
exercise of the constitutional right
of petition. (§ 425.16 subds. (e)
(1), (e)(2) & (e)(4).).) On this
prong, Schack argued that “all of
the conduct alleged in the
Complaint arose out of petitioning
activity, to-wit, it all relates to the
two underlying class actions.”;
Turning to the second inquiry
under section 425.16, Schack
further argued plaintiffs could not
demonstrate a probability of
prevailing because the Noerr-
Pennington doctrine-barring
claims having as its gravamen
constitutionally protected activity-
provided a complete defense and
immunity for Schack’s conduct
relating to the prosecution of
Freeman II and the Hemphill
litigation, in particular, his
decision to accept an offer of
settlement. Schack also
demurred to the complaint.
Schack filed a joint opposition to
the demurrers and section 425.16
motions to strike. [FN6]
FN6. That portion of plaintiffs’
opposition relating to Schack’s
section 425.16 motion reads as
follows: “Schack does not deny
that he had attorney-client duties
to plaintiffs. Nor does he deny that
he acted adversely to plaintiffs in
the San Diego Realtors case. He
does not deny that abandoned
[sic ] Freeman and Alexander to
pursue the interests of Hemphill
adversely to Freeman and
Alexander. As described above
under the Mogin motion to strike,
the malpractice case against
Schack is not subject to a special
motion to strike and must be
denied.”
The court initially sustained the
demurrers and deemed the
section 425.16 motions moot. On
reconsideration, however, it
granted the section 425.16 motion
on grounds plaintiffs’ causes of
action “stem from … the two
underlying federal class actions”
and thus constituted petitioning
activity, and plaintiffs did not
demonstrate a probability of
prevailing on their causes of
action because the Noerr-
Pennington doctrine provided a
complete defense. Plaintiffs filed
the present appeal.
DISCUSSION
I. Section 425.16/Appellate
Standard of Review
“[S]ection 425.16, the anti-SLAPP
statute, provides in relevant part:
‘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 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.’ [Citation.]
Under this statute, the party
moving to strike a cause of action
has the initial burden to show that
the cause of action ‘aris[es] from
[an] act … in furtherance of the
[moving party's] right of petition or
free speech.’ [Citations.] Once that
burden is met, the burden shifts to
the opposing party to demonstrate
the ‘probability that the plaintiff will
prevail on the claim.’ [Citations.]
‘To satisfy this prong, the plaintiff
must “state [ ] and substantiate [ ]
a legally sufficient claim.”
[Citation.] “Put another way, the
plaintiff ‘must demonstrate that
the complaint is both legally
sufficient and supported by a
sufficient prima facie showing of
facts to sustain a favorable
judgment if the evidence
submitted by the plaintiff is
credited.’”‘”(Zamos v. Stroud
(2004) 32 Cal.4th 958, 964-965.)
We review de novo the court’s
order granting Schack’s section
425 .16 special motion to strike.
(Soukup v. Law Offices of Herbert
Hafif (2006) 39 Cal.4th 260, 269,
fn. 3.)”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.’”
(Ibid.)
II. Schack’s Threshold Prima
Facie Burden
Speaking to the first prong, the
California Supreme Court
explains that “[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. [Citation.] … [T]he
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.] ‘A defendant
meets this burden by
demonstrating that the act
underlying the plaintiff’s cause fits
one of the categories spelled out
in section 425.16, subdivision (e)
….’” (City of Cotati v. Cashman
(2002) 29 Cal.4th 69, 78.) It is “;
the principal thrust or gravamen of
the plaintiff’s cause of action that
determines whether the anti-
SLAPP statute applies [citation],
and when the allegations referring
to arguably protected activity are
only incidental to a cause of action
based essentially on
nonprotected activity, collateral
allusions to protected activity
should not subject the cause of
action to the anti-SLAPP statute.”
(Martinez v. Metabolife Internat.,
Inc. (2003) 113 Cal.App.4th 181,
188.)
...Schack also relies upon
Peregrine Funding, Inc. v.
Sheppard Mullin Richter Hampton
LLP (2005) 133 Cal.App.4th 658,
in which the court found some
causes of action in an attorney
malpractice case subject to
section 425.16. However,
Peregrine Funding itself
recognized that in cases where
protected activities and
nonprotected activities are alleged
in the same cause of action, the
cause of action is not subject to
section 425.16 if the protected
activities are “merely incidental” or
“collateral” to the nonprotected
activities. (Peregrine Funding, at
p. 672.) Although Peregrine
Funding questioned Benrasa,
supra, 123 Cal.App.4th 1179, it
was on the premise that Benrasa
“focus[ed] on the theoretical time
that a breach of duty occurs, as
opposed to the specific
allegations of wrongdoing in the
operative complaint.” (Peregrine
Funding, 133 Cal.App.4th at p.
674.) We need not decide whether
we agree with Peregrine Funding’
s characterization of Benrasa; we
prefer to apply the analysis set out
by the California Supreme Court
requiring us to focus upon the
“activity that gives rise to
[Schack's] asserted liability.”
(Navellier v. Sletten, supra, 29 Cal.
4th at p. 92; see also Huntingdon
Life Sciences, Inc. v. Stop
Huntingdon Animal Cruelty USA,
Inc. (2005) 129 Cal.App.4th 1228,
1244)
For the foregoing
reasons, we conclude
plaintiffs’ causes of action
were not based on, and
do not arise from, an
exercise of the
constitutional rights of
petition or free speech as
enumerated in section
425.16, subdivision (e).
Consequently, the burden
never shifted to plaintiffs
to demonstrate a
probability of prevailing
on the merits against
Schack.
DISPOSITION
The judgment is reversed
and the trial court is
directed to enter an order
denying the Code of Civil
Procedure section 425.16
special motion to strike.
Plaintiffs shall recover
their costs on appeal.
WE CONCUR: NARES, Acting P.
J., and AARON, J.
granted by Quinn,
overturned by Court
of Appeal
Freeman v. Schack
APPEAL from a judgment
of the Superior Court of
San Diego County, Linda
B. Quinn, Judge.
Reversed and
remanded with
directions.
Barry & Associates and David
Barry for Plaintiffs and Appellants.
Law Offices of Anthony A.
Ferrigno, Anthony A. Ferrigno; and
Alexander M. Schack for
Defendant and Respondent.
O’ROURKE, J.
Plaintiffs Arleen Freeman and
James Alexander appeal from a
judgment entered after the trial
court granted defendant Alexander
Schack’s special motion to strike
their complaint under Code of
Civil Procedure section 425.16.
[FN1] Plaintiffs sued Schack for
breach of contract, professional
negligence and breach of fiduciary
duty based on allegations that he
had entered into a contract by
which he assumed attorney-client
duties toward plaintiffs but
abandoned them in order to
represent adverse interests in the
same and different litigation, thus
breaching the contract as well as
the fiduciary duties owed them.
The trial court granted Schack’s
special motion to strike as to all
causes of action on grounds
plaintiffs’ causes of action
stemmed from petitioning activity
and plaintiffs did not demonstrate
a probability of prevailing on their
causes of action because the
Noerr-Pennington doctrine [FN2]
provided a complete defense.
FN1. All statutory references are to
the Code of Civil Procedure
unless otherwise indicated.
Section 425.16 is commonly
referred to as the anti-SLAPP
(strategic lawsuit against public
participation) statute. (Jarrow
Formulas Inc. v. LaMarche (2003)
31 Cal.4th 728, 732, fn. 1.)
FN2. Eastern R.R. Presidents
Conference v. Noerr Motor Freight,
Inc. (1961) 365 U.S. 127 (Noerr );
United Mine Workers of America v.
Pennington (Pennington ) (1965)
381 U.S. 657; see Freeman v.
Lasky, Haas & Cohler (9th Cir.
2005) 410 F.3d 1180, 1183.)
Plaintiffs contend the trial court
erred in granting the special
motion to strike because (1)
Schack did not meet his burden of
proving his actions-which
constitute violations of State Bar
Rules of Professional Conduct-
were constitutionally protected; (2)
plaintiffs satisfied their burden of
showing a likelihood of prevailing
on the merits; and (3) the Noerr-
Pennington doctrine does not
apply and cannot provide Schack
with a defense. We conclude
section 425.16 does not apply to
plaintiffs’ causes of action and on
that basis reverse the judgment
with directions that the trial court
deny the special motion to strike.
FACTUAL AND PROCEDURAL
BACKGROUND
Plaintiffs are real estate agents in
San Diego County who were
represented by attorney David
Barry in filing lawsuits against
Sandicor and other entities for
alleged violations of California’s
antitrust laws and other
assertedly unlawful acts. (See
Freeman v. San Diego Ass’n of
Realtors (1999) 77 Cal.App.4th
171, 177-178; California Ass’n of
Realtors v. Barry (D048441, May
22, 2007) [nonpub. opn.].) [FN3]
Sandicor operated a real estate
sales multiple listing service in
San Diego County. (Freeman, 77
Cal.App.4th at p. 177.) In March
2003, plaintiffs succeeded in
reversing a summary judgment
on appeal in the Ninth Circuit in a
federal district court case,
Freeman et al. v. San Diego
County Board of Realtors, et al.,
United States District Court, Case
No. 98-CV-0139 TW (JAH)
(hereafter Freeman II ). [FN4] On
the day the Ninth Circuit filed its
decision, Schack telephoned
Barry and asked if Barry could use
his help in prosecuting the case.
Schack described himself as a
class action attorney who did
antitrust litigation and explained
his credentials in detail. Barry
accepted Schack’s offer, telling
Schack about the arrangement he
had with other attorneys and
explaining the division of
contingent fees in the event of
success. During the course of
several conversations that day,
Barry and Schack discussed the
overall strategy of plaintiffs’ case,
including matters such as getting
plaintiffs certified as class
representatives and an early trial
on damages.
FN3. We take judicial notice of our
files and prior opinions relating to
this matter. (Evid.Code, §§ 452,
subds.(a), (d)(1), 459 .)
FN4. Throughout, Schack refers to
the district court action as
Freeman II. We adopt that
designation for ease of reference.
The Ninth Circuit’s decision
appears in Freeman v. San Diego
Assn. of Realtors (9th Cir.2003)
322 F.3d 1133.
The next week, Barry drafted a fee
agreement for the attorneys who
would represent plaintiffs in what
he referred to as “phase 2″ of the
case: the legal proceedings
following the Ninth Circuit’s
decision. Those attorneys were
Barry, Schack, attorney Richard
Johnson and occasionally Ken
Frost. Barry sent Schack a copy of
an earlier fee agreement and,
over several revisions, Barry,
Johnson and Schack negotiated
over the language for the phase 2
fee agreement. The versions of
that fee agreement confirmed that
the phase 2 attorneys had
attorney-client duties to plaintiffs.
In April 2004, Barry, Johnson and
Schack signed an “Attorney
Association and Fee Sharing
Agreement” (the Fee Sharing
Agreement) relating to the
pending Freeman II litigation. The
Fee Sharing Agreement contains
provisions addressing the legal
relationship between and
respective responsibilities of
Barry and the other phase 2
attorneys. In particular, the Fee
Sharing Agreement stated that the
phase 2 attorneys were not
parties to the existing attorney-
client relationships between Barry
and plaintiffs, but “agree they will
take no action which would
breach any obligation owed to any
client(s)” and “acknowledge that,
in undertaking the services
covered by this agreement, they
are subject to all responsibilities
and obligations owed by attorneys
to their clients under applicable
law … as to each and every client
who is or hereafter becomes a
plaintiff in [Freeman II ], and for
whom a signed written agreement
is provided by Barry, to the extent
each respective phase 2 attorney
provides services hereunder.”
At various times during March,
April and May 2003, Barry and
Schack communicated by
telephone, e-mail and letter about
various matters concerning the
case, including class certification,
damages proof and a proposed
damages expert, pending
motions and settlement
strategies. [FN5]On June 3, 2003,
Schack emailed Barry and
Johnson concerning his
involvement in the cases. He
wrote: “In signing the agreement
to split fees, it was intended that
all clients would give their written
consent before the agreement
was effective. Before that consent
was obtained, I deemed it
necessary to withdraw from the
agreement based on certain
confidential circumstances. I will
continue to assist you in any way
necessary to benefit my client and
the class, and look for a
successful resolution of these
matters.”
FN5. Barry specifically recounts
his communications and their
subjects in his declaration filed in
support of a motion to disqualify
Schack from the Freeman II
action; that declaration is an
exhibit to plaintiffs’ papers in
opposition to Schack’s section
425.16 special motion to strike
and provides the basis for much
of our factual background.
Barry and Schack continued their
communications through April
2004. In April 2004, Schack and
attorney Dan Mogin, with whom
Schack frequently worked, filed a
motion on behalf of “proposed
plaintiff in-intervention” Alan
Hemphill to have Hemphill
intervene as a representative of
the proposed class in Freeman II.
In part, Schack and Mogin argued
Hemphill, a purchaser and end-
user of multiple listing services in
San Diego who was “acting
independently of the Freeman
Plaintiffs,” satisfied typicality and
other requirements to represent
the class unlike plaintiffs, who
were inadequate representatives.
In May 2004, Freeman, Schack,
Barry, and Mogin participated in a
mediation planning session in
Los Angeles. At the mediation,
Schack and Mogin began
proposing that Freeman II should
be settled for coupons to the
class members valued at
approximately $30 or less. The
settlement would not provide for
real estate agents who had
dropped out of the industry since
1994. It would provide for a $1
million payment to Schack and
Mogin. Freeman and Barry
expressed their opposition to the
idea. After the mediation, Barry
ceased conveying privileged or
confidential information and work
product to Schack because Barry
believed Schack was
representing interests adverse to
plaintiffs.
In June 2004, Barry attended a
judicial settlement conference at
which Mogin and Schack
appeared representing Hemphill.
Before they addressed the court,
Mogin and Schack told Barry and
Freeman that an agreement in
principle had been worked out by
which the defendants would
provide class members free use
of Sandicor services for four
consecutive Januarys, but
members who left real estate
without using that opportunity
would forfeit those usage rights.
The settlement did not provide for
members who left the real estate
business. Mogin and Schack
stated they expected attorney fees
to be about $1 million to be paid
in cash. Moments later, the
magistrate judge presiding over
the settlement conference
confirmed that an agreement in
principle had been reached with
the Freeman II defendants. Barry
and Freeman advised the court
they were strongly against such a
settlement; Barry described the
assets available to the Freeman II
defendants with which they could
fund a fair settlement.
Several days after the settlement
conference, Barry wrote to Schack
demanding that he and his client
immediately withdraw from
Freeman II or Barry would move to
disqualify them from the lawsuit
based on current conflicts of
interest in their representation of
Hemphill, Freeman and
Alexander. Barry eventually
unsuccessfully brought a
disqualification motion. Schack
and Mogin filed a new federal
court action on Hemphill’s behalf
and obtained preliminary approval
of a settlement class that
excluded Freeman and Alexander.
Freeman and Alexander settled
and dismissed their action in
November 2004.
In January 2005, plaintiffs, on
behalf of themselves and a
putative class, sued Schack,
Mogin and other entities for
breach of contract, professional
negligence and breach of fiduciary
duty. They alleged Schack had
assumed attorney-client duties to
plaintiffs in March 2003, executed
a written agreement in April 2003
reflecting his assumption of such
duties and pledging, among other
things, to use his best efforts to
obtain a full recovery of damages
to the class, but breached the
agreement by representing
Hemphill, filing a new lawsuit on
Hemphill’s behalf, and concluding
the Hemphill litigation.
Schack moved to strike the
complaint under section 425.16
and joined in Mogin’s own section
425.16 motion. He argued
plaintiffs’ causes of action were
based on written or oral
statements or writings made
before a judicial proceeding,
written or oral statements or
writings made in connection with
an issue under consideration or
review by a judicial body, or other
conduct in furtherance of the
exercise of the constitutional right
of petition. (§ 425.16 subds. (e)
(1), (e)(2) & (e)(4).).) On this
prong, Schack argued that “all of
the conduct alleged in the
Complaint arose out of petitioning
activity, to-wit, it all relates to the
two underlying class actions.”;
Turning to the second inquiry
under section 425.16, Schack
further argued plaintiffs could not
demonstrate a probability of
prevailing because the Noerr-
Pennington doctrine-barring
claims having as its gravamen
constitutionally protected activity-
provided a complete defense and
immunity for Schack’s conduct
relating to the prosecution of
Freeman II and the Hemphill
litigation, in particular, his
decision to accept an offer of
settlement. Schack also
demurred to the complaint.
Schack filed a joint opposition to
the demurrers and section 425.16
motions to strike. [FN6]
FN6. That portion of plaintiffs’
opposition relating to Schack’s
section 425.16 motion reads as
follows: “Schack does not deny
that he had attorney-client duties
to plaintiffs. Nor does he deny that
he acted adversely to plaintiffs in
the San Diego Realtors case. He
does not deny that abandoned
[sic ] Freeman and Alexander to
pursue the interests of Hemphill
adversely to Freeman and
Alexander. As described above
under the Mogin motion to strike,
the malpractice case against
Schack is not subject to a special
motion to strike and must be
denied.”
The court initially sustained the
demurrers and deemed the
section 425.16 motions moot. On
reconsideration, however, it
granted the section 425.16 motion
on grounds plaintiffs’ causes of
action “stem from … the two
underlying federal class actions”
and thus constituted petitioning
activity, and plaintiffs did not
demonstrate a probability of
prevailing on their causes of
action because the Noerr-
Pennington doctrine provided a
complete defense. Plaintiffs filed
the present appeal.
DISCUSSION
I. Section 425.16/Appellate
Standard of Review
“[S]ection 425.16, the anti-SLAPP
statute, provides in relevant part:
‘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 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.’ [Citation.]
Under this statute, the party
moving to strike a cause of action
has the initial burden to show that
the cause of action ‘aris[es] from
[an] act … in furtherance of the
[moving party's] right of petition or
free speech.’ [Citations.] Once that
burden is met, the burden shifts to
the opposing party to demonstrate
the ‘probability that the plaintiff will
prevail on the claim.’ [Citations.]
‘To satisfy this prong, the plaintiff
must “state [ ] and substantiate [ ]
a legally sufficient claim.”
[Citation.] “Put another way, the
plaintiff ‘must demonstrate that
the complaint is both legally
sufficient and supported by a
sufficient prima facie showing of
facts to sustain a favorable
judgment if the evidence
submitted by the plaintiff is
credited.’”‘”(Zamos v. Stroud
(2004) 32 Cal.4th 958, 964-965.)
We review de novo the court’s
order granting Schack’s section
425 .16 special motion to strike.
(Soukup v. Law Offices of Herbert
Hafif (2006) 39 Cal.4th 260, 269,
fn. 3.)”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.’”
(Ibid.)
II. Schack’s Threshold Prima
Facie Burden
Speaking to the first prong, the
California Supreme Court
explains that “[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. [Citation.] … [T]he
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.] ‘A defendant
meets this burden by
demonstrating that the act
underlying the plaintiff’s cause fits
one of the categories spelled out
in section 425.16, subdivision (e)
….’” (City of Cotati v. Cashman
(2002) 29 Cal.4th 69, 78.) It is “;
the principal thrust or gravamen of
the plaintiff’s cause of action that
determines whether the anti-
SLAPP statute applies [citation],
and when the allegations referring
to arguably protected activity are
only incidental to a cause of action
based essentially on
nonprotected activity, collateral
allusions to protected activity
should not subject the cause of
action to the anti-SLAPP statute.”
(Martinez v. Metabolife Internat.,
Inc. (2003) 113 Cal.App.4th 181,
188.)
...Schack also relies upon
Peregrine Funding, Inc. v.
Sheppard Mullin Richter Hampton
LLP (2005) 133 Cal.App.4th 658,
in which the court found some
causes of action in an attorney
malpractice case subject to
section 425.16. However,
Peregrine Funding itself
recognized that in cases where
protected activities and
nonprotected activities are alleged
in the same cause of action, the
cause of action is not subject to
section 425.16 if the protected
activities are “merely incidental” or
“collateral” to the nonprotected
activities. (Peregrine Funding, at
p. 672.) Although Peregrine
Funding questioned Benrasa,
supra, 123 Cal.App.4th 1179, it
was on the premise that Benrasa
“focus[ed] on the theoretical time
that a breach of duty occurs, as
opposed to the specific
allegations of wrongdoing in the
operative complaint.” (Peregrine
Funding, 133 Cal.App.4th at p.
674.) We need not decide whether
we agree with Peregrine Funding’
s characterization of Benrasa; we
prefer to apply the analysis set out
by the California Supreme Court
requiring us to focus upon the
“activity that gives rise to
[Schack's] asserted liability.”
(Navellier v. Sletten, supra, 29 Cal.
4th at p. 92; see also Huntingdon
Life Sciences, Inc. v. Stop
Huntingdon Animal Cruelty USA,
Inc. (2005) 129 Cal.App.4th 1228,
1244)
For the foregoing
reasons, we conclude
plaintiffs’ causes of action
were not based on, and
do not arise from, an
exercise of the
constitutional rights of
petition or free speech as
enumerated in section
425.16, subdivision (e).
Consequently, the burden
never shifted to plaintiffs
to demonstrate a
probability of prevailing
on the merits against
Schack.
DISPOSITION
The judgment is reversed
and the trial court is
directed to enter an order
denying the Code of Civil
Procedure section 425.16
special motion to strike.
Plaintiffs shall recover
their costs on appeal.
WE CONCUR: NARES, Acting P.
J., and AARON, J.
Judge Linda
Boelhauf Quinn
Boelhauf Quinn
San Diego judge continues
stay in fireworks suit
By Christopher Cadelago and
Mike Lee
Oct. 28, 2011
A judge on Friday temporarily
delayed requiring environmental
reviews for fireworks displays
and thousands of other events
permitted by the city of San
Diego.
San Diego County Superior
Court Judge Linda Quinn called
the city’s request for an
indefinite delay “fluffy,” but
set a Dec. 9 hearing on whether
to lift the stay on her precedent-
setting decision to require the
reviews.
Quinn also granted a request
from environmental attorney
Marco Gonzalez to receive the
list of city approved special
events, to be updated every two
weeks.
“We don’t unnecessarily oppose
a stay, but we oppose a blanket
stay that’s indefinite without a
forum for us to receive
information,” Gonzalez told the
judge.
City attorneys argued that they
made significant progress
addressing Quinn’s May order,
including weekly meetings with
about 10 high-ranking officials,
but needed more time to
avoid “devastating”
economic fallout if the city
were forced to stop issuing
park-use permits and special
event permits because it
hasn’t done environmental
assessments.
“Many San Diego citizens will
lose jobs, many of the
nonprofits will go out of
business, and the local
economy will suffer,” Deputy
City Attorney Glenn Spitzer
wrote in court papers.
He said the most time-
consuming issue was developing
a “programmatic” environmental
impact report to address major
events such street fairs, races
and parades that are important
cultural touchstones and
fundraisers for nonprofit groups.
Spitzer said the city is
aggressively moving forward
with an overarching
environmental review that will
streamline the permitting
process but didn’t provide a
date by which it would be done.
“The Office of Special Events
has been meeting with the police
department, development
services and attorneys in our
office and brainstorming the new
overhaul. So they have made
significant progress,” he said
Friday. “And I understand with
the concern that it is a bit fluffy
at this point. “That’s just the way
cities operate. It’s a big ship we’
re steering. And we’ve already
steered it pretty sharp.
“What I can offer is that in the
near future we can provide a
firm timeline.”
Gonzalez contested San
Diego’s push for extra time.
He said the city’s request
contained “gross hyperbole” and
that the city didn’t follow court
rules for seeking an extended
delay.
The tangle of court actions
started to 2010, when Gonzalez
and the Coastal Environmental
Rights Foundation sued the city
for alleged violations of the
California Environmental Quality
Act, or CEQA, with regards to
permitting the annual Fourth of
July fireworks show in La
Jolla.
They weren’t successful in
stopping the pyrotechnic
display. However, Quinn in May
agreed with Gonzalez that the
city’s permitting process was
faulty.
The San Diego City Council
revised its permitting language
at about the same in hopes of
avoiding CEQA reviews, but
Quinn said it left too much
discretion for city officials and
therefore park-use permits were
subject to CEQA. She then put
her ruling on hold so that the
July 4 show La Jolla could go off
as planned.
On Oct. 11, the City Council
voted to alter the municipal code
to clarify that the vast majority of
park-use permits are routine —
not up to the discretion of
parks officials — and therefore
don’t need environmental
reviews. That change must be
voted on a second time by the
council — likely on Nov. 14 —
before being formally enacted.
Gonzalez is expected to
challenge the legality of the city’
s action at that time.
stay in fireworks suit
By Christopher Cadelago and
Mike Lee
Oct. 28, 2011
A judge on Friday temporarily
delayed requiring environmental
reviews for fireworks displays
and thousands of other events
permitted by the city of San
Diego.
San Diego County Superior
Court Judge Linda Quinn called
the city’s request for an
indefinite delay “fluffy,” but
set a Dec. 9 hearing on whether
to lift the stay on her precedent-
setting decision to require the
reviews.
Quinn also granted a request
from environmental attorney
Marco Gonzalez to receive the
list of city approved special
events, to be updated every two
weeks.
“We don’t unnecessarily oppose
a stay, but we oppose a blanket
stay that’s indefinite without a
forum for us to receive
information,” Gonzalez told the
judge.
City attorneys argued that they
made significant progress
addressing Quinn’s May order,
including weekly meetings with
about 10 high-ranking officials,
but needed more time to
avoid “devastating”
economic fallout if the city
were forced to stop issuing
park-use permits and special
event permits because it
hasn’t done environmental
assessments.
“Many San Diego citizens will
lose jobs, many of the
nonprofits will go out of
business, and the local
economy will suffer,” Deputy
City Attorney Glenn Spitzer
wrote in court papers.
He said the most time-
consuming issue was developing
a “programmatic” environmental
impact report to address major
events such street fairs, races
and parades that are important
cultural touchstones and
fundraisers for nonprofit groups.
Spitzer said the city is
aggressively moving forward
with an overarching
environmental review that will
streamline the permitting
process but didn’t provide a
date by which it would be done.
“The Office of Special Events
has been meeting with the police
department, development
services and attorneys in our
office and brainstorming the new
overhaul. So they have made
significant progress,” he said
Friday. “And I understand with
the concern that it is a bit fluffy
at this point. “That’s just the way
cities operate. It’s a big ship we’
re steering. And we’ve already
steered it pretty sharp.
“What I can offer is that in the
near future we can provide a
firm timeline.”
Gonzalez contested San
Diego’s push for extra time.
He said the city’s request
contained “gross hyperbole” and
that the city didn’t follow court
rules for seeking an extended
delay.
The tangle of court actions
started to 2010, when Gonzalez
and the Coastal Environmental
Rights Foundation sued the city
for alleged violations of the
California Environmental Quality
Act, or CEQA, with regards to
permitting the annual Fourth of
July fireworks show in La
Jolla.
They weren’t successful in
stopping the pyrotechnic
display. However, Quinn in May
agreed with Gonzalez that the
city’s permitting process was
faulty.
The San Diego City Council
revised its permitting language
at about the same in hopes of
avoiding CEQA reviews, but
Quinn said it left too much
discretion for city officials and
therefore park-use permits were
subject to CEQA. She then put
her ruling on hold so that the
July 4 show La Jolla could go off
as planned.
On Oct. 11, the City Council
voted to alter the municipal code
to clarify that the vast majority of
park-use permits are routine —
not up to the discretion of
parks officials — and therefore
don’t need environmental
reviews. That change must be
voted on a second time by the
council — likely on Nov. 14 —
before being formally enacted.
Gonzalez is expected to
challenge the legality of the city’
s action at that time.
Ex-Broward judge's
conduct warrants
one-year suspension
January 9, 2013
By Tonya AlanezSun
Sentinel
Former Broward Circuit
Judge Ana Gardiner
tearfully testified at her
two-day Florida Bar
inquiry in November.
Former Broward Circuit
Judge Ana Gardiner
deserves a one-year
suspension of her law
license for lying about a
clandestine cell phone
and text message
relationship she had
with a prosecutor, a
judicial referee for the
Florida Bar wrote in a
report.
"I find the misconduct at
issue involves
dishonesty and deceit,"
Palm Beach County
Circuit Judge David
Crow wrote in his
22-page Jan. 8 report.
"[Gardiner] failed to
disclose the honest and
true nature of her
relationship with
[Assistant State Attorney
Howard Scheinberg]."
conduct warrants
one-year suspension
January 9, 2013
By Tonya AlanezSun
Sentinel
Former Broward Circuit
Judge Ana Gardiner
tearfully testified at her
two-day Florida Bar
inquiry in November.
Former Broward Circuit
Judge Ana Gardiner
deserves a one-year
suspension of her law
license for lying about a
clandestine cell phone
and text message
relationship she had
with a prosecutor, a
judicial referee for the
Florida Bar wrote in a
report.
"I find the misconduct at
issue involves
dishonesty and deceit,"
Palm Beach County
Circuit Judge David
Crow wrote in his
22-page Jan. 8 report.
"[Gardiner] failed to
disclose the honest and
true nature of her
relationship with
[Assistant State Attorney
Howard Scheinberg]."
Judge Sharon Armstrong (also
a graduate of Catholic University)
a graduate of Catholic University)
| . |
When a judge has a passionate
personal interest in the outcome
of a case, and she gets that case
put on her calendar by simply
asking a friend at the courthouse,
she has clearly subverted the
impartiality of the justice system.
This is exactly what happened in Stutz v.
Larkins, the defamation suit against this
author.
San Diego Superior Court claims that
cases are randomly assigned to judges,
but there have been some troubling
exceptions to this rule.
When cases are assigned to Judge
Linda Quinn, she has repeatedly passed
them directly to Judge Judith Hayes
rather than sending them "back to the
wheel" for a random assignment.
In a way, it's sort of sweet. They have a
case-sharing arrangement like two
kindergarten teachers sharing art
projects.
In the Stutz Artiano Shinoff & Holtz v.
Maura Larkins defamation case
regarding this website, Hayes took over
the case from Quinn.
My suspicions about how this might have
happened were confirmed on
personal interest in the outcome
of a case, and she gets that case
put on her calendar by simply
asking a friend at the courthouse,
she has clearly subverted the
impartiality of the justice system.
This is exactly what happened in Stutz v.
Larkins, the defamation suit against this
author.
San Diego Superior Court claims that
cases are randomly assigned to judges,
but there have been some troubling
exceptions to this rule.
When cases are assigned to Judge
Linda Quinn, she has repeatedly passed
them directly to Judge Judith Hayes
rather than sending them "back to the
wheel" for a random assignment.
In a way, it's sort of sweet. They have a
case-sharing arrangement like two
kindergarten teachers sharing art
projects.
In the Stutz Artiano Shinoff & Holtz v.
Maura Larkins defamation case
regarding this website, Hayes took over
the case from Quinn.
My suspicions about how this might have
happened were confirmed on
Judge Linda
Quinn
Quinn
Judge, San Diego
Superior Court
(1989-2012), Municipal
Court (1987-89), Civil
Independent Calendar for
10 years, Supervisor Civil
Division (2005-07)
Partner, Platt, Tebbets &
Baelhauf, (1983-1987) full
service commercial
business law firm with
emphasis on real estate
litigation
Superior Court
(1989-2012), Municipal
Court (1987-89), Civil
Independent Calendar for
10 years, Supervisor Civil
Division (2005-07)
Partner, Platt, Tebbets &
Baelhauf, (1983-1987) full
service commercial
business law firm with
emphasis on real estate
litigation
Associate, Platt, Tebbets &
Peterson, (1978-1983) full
service commercial
business law firm with
emphasis on real estate
litigation
EDUCATION &
PROFESSIONAL
AFFILIATIONS
J.D., California Western
School of Law, San Diego
(1977)
B.A., University of
California, San Diego
(1973)
Peterson, (1978-1983) full
service commercial
business law firm with
emphasis on real estate
litigation
EDUCATION &
PROFESSIONAL
AFFILIATIONS
J.D., California Western
School of Law, San Diego
(1977)
B.A., University of
California, San Diego
(1973)
Cases passed directly between Judge Hayes and
Judge Linda B. Quinn
(some involving Daniel Shinoff)
Judge Linda B. Quinn
(some involving Daniel Shinoff)
Education: Catholic
University of America
...a private university
located in
Washington, D.C.
Acceptance rate:
87% (2010)
University of America
...a private university
located in
Washington, D.C.
Acceptance rate:
87% (2010)
Sept. 18, 2009 when Judge Hayes was very late in arriving, and the substitute bailiff
got into a long, meandering conversation with some of the lawyers sitting in the gallery.
I happened to be sitting behind the attorneys.
Eventually one lawyer asked about bailiff about how cases ended up with Judge Hayes
when they had been assigned to Judge Quinn. Officer P. said that the judges handled
"overflow" cases for each other. He justified Hayes' acquisition of Quinn's cases by
saying "Quinn does overflow" for Hayes, although I am not aware of any cases that
were transferred from Judge Hayes to Judge Quinn.
Judge Quinn presided at one of the hearings in my case after she transferred the case
to Hayes, when Hayes was apparently unable to make it to the courthouse.
It all sounds pretty "fluffy" to me, to use a term favored by Judge Quinn (see right
column). Judge Quinn was worried about city officials having "too much discretion", but
she has taken an unseemly amount of discretion upon herself.
I wish Marco Gonzalez were concerned with whether or not the court follows court rules.
It's not enough to demand that only the city follow court rules.
got into a long, meandering conversation with some of the lawyers sitting in the gallery.
I happened to be sitting behind the attorneys.
Eventually one lawyer asked about bailiff about how cases ended up with Judge Hayes
when they had been assigned to Judge Quinn. Officer P. said that the judges handled
"overflow" cases for each other. He justified Hayes' acquisition of Quinn's cases by
saying "Quinn does overflow" for Hayes, although I am not aware of any cases that
were transferred from Judge Hayes to Judge Quinn.
Judge Quinn presided at one of the hearings in my case after she transferred the case
to Hayes, when Hayes was apparently unable to make it to the courthouse.
It all sounds pretty "fluffy" to me, to use a term favored by Judge Quinn (see right
column). Judge Quinn was worried about city officials having "too much discretion", but
she has taken an unseemly amount of discretion upon herself.
I wish Marco Gonzalez were concerned with whether or not the court follows court rules.
It's not enough to demand that only the city follow court rules.
Asthma coronary at camp
Transferred to Judge Judith Hayes (?!) from Judge Quinn
Sanchez v. SDCOE
10/10/08 10:30AM C-68
Hayes, Judith F.
Summary Judgment GIC880054
D)McCabe Union School Distr
D)San Diego County Office of Education
Daniel R. Shinoff
12/18/07 01:30PM C-74
Quinn, Linda B.
Demurrer / Moti GIC880054
D)McCabe Union School Distr
DANIEL R. SHINOFF
D)San Diego County Office of Education
DANIEL R. SHINOFF
Case Title: SANCHEZ VS
SAN DIEGO COUNTY OFFICE OF EDUCATION
Case Number: GIC880054
Case Location: San Diego
Case Type: Civil
Date Filed: 02/13/2007
Category: CU-PO PI/PD/WD - Other
Plaintiff/Petitioner
SANCHEZ OCTAVIO P
SANCHEZ VIRGINIA
Defendant/Respondent
SAN DIEGO COUNTY
OFFICE OF EDUCATION
CAMP DENVER C FOX
MCCABE UNION SCHOOL DISTRICT
Transferred to Judge Judith Hayes (?!) from Judge Quinn
Sanchez v. SDCOE
10/10/08 10:30AM C-68
Hayes, Judith F.
Summary Judgment GIC880054
D)McCabe Union School Distr
D)San Diego County Office of Education
Daniel R. Shinoff
12/18/07 01:30PM C-74
Quinn, Linda B.
Demurrer / Moti GIC880054
D)McCabe Union School Distr
DANIEL R. SHINOFF
D)San Diego County Office of Education
DANIEL R. SHINOFF
Case Title: SANCHEZ VS
SAN DIEGO COUNTY OFFICE OF EDUCATION
Case Number: GIC880054
Case Location: San Diego
Case Type: Civil
Date Filed: 02/13/2007
Category: CU-PO PI/PD/WD - Other
Plaintiff/Petitioner
SANCHEZ OCTAVIO P
SANCHEZ VIRGINIA
Defendant/Respondent
SAN DIEGO COUNTY
OFFICE OF EDUCATION
CAMP DENVER C FOX
MCCABE UNION SCHOOL DISTRICT
