Concordia Homes v. Jack























Filed 9/29/10 Concordia Homes v. Jack CA4/1

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>NOT TO BE PUBLISHED IN OFFICIAL REPORTS

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California Rules of Court, rule 8.1115(a), prohibits courts
and parties from citing or relying on opinions not certified for publication or
ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115 >.



COURT
OF APPEAL, FOURTH APPELLATE DISTRICT



DIVISION
ONE



STATE
OF CALIFORNIA






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CONCORDIA HOMES OF CALIFORNIA, LLC, Plaintiff and Appellant, v. DON JACK et al., Defendants and Respondents.

D055453 (Super. Ct. Case No. 37-2008-00057120-CU-BC-NC)

APPEAL from
an order of the Superior Court
of San Diego
County, Jacqueline M. Stern, Judge. Affirmed.



Concordia
Homes of California, LLC and LB/L-Concordia Master LLC (collectively Concordia)
sued defendants Don Jack, Farwest West American Trust Contractual Business
Organization (Farwest) and Pacific View, Ltd for breach of contract (Concordia
lawsuit) alleging that Don Jack had breached a settlement agreement by filing an earlier
lawsuit (Jack lawsuit). Defendants filed
a Code of Civil Procedure section 425.16[1]
special motion to strike the complaint, which the trial court granted partly on
grounds Concordia had not shown a likelihood of prevailing on the merits of its
claim because Judge Quinn had ruled that the Jack lawsuit was not released
under the terms of the settlement agreement.
Plaintiff Concordia Homes of California,
LLC appeals the grant of the motion.[2]


Concordia
contends the trial court erred in granting the motion. It concedes its lawsuit arose from the Jack
lawsuit, but contends it had shown a likelihood of prevailing on the merits of
its complaint because, among other reasons, the trial court had misinterpreted
Judge Quinn's ruling. We affirm.

FACTUAL AND
PROCEDURAL BACKGROUND

This case
is before us a second time.[3] In the first appeal, we affirmed the trial
court's ruling denying Concordia's motion for attorney fees in the Jack
lawsuit.

In February
1999, Concordia Homes purchased an eight and one-half acre parcel of vacant land
located in Carlsbad, California
owned by one of Jack's companies, Pacific View Communities, LLC (Pacific
View). The land consisted of 26 building
lots and seven open space lots numbered 1-33, and is now known as Pacific View
Estates. Excluded from the February 1999
agreement was a portion of property the parties referred to as the Remainder
Parcel, which included lot 33. Jack
wanted to keep lot 33 to build his personal residence.

In 1998,
Jack had recorded an initial subdivision map to develop a portion of Pacific
View Estates. He also recorded a
declaration of covenants, conditions and restrictions (1998 CC&Rs)
restricting only lots 4, 5, 6 and 7.

Because a
parcel map had not yet been recorded on the vacant land, Pacific View/Jack
agreed in April 1999 to convey the Remainder Parcel to Concordia Homes or its
assignee. Under the April 1999
agreement, Concordia Homes was to execute and deliver to escrow a deed
reconveying lot 33 to Pacific View, which would be recorded after the final
tract map was recorded.

Before
close of escrow, Pacific View transferred its interest in the Remainder Parcel
(including lot 33) to Farwest, an irrevocable trust created by Jack. Farwest conveyed the Remainder Parcel to LB/L
Concordia Carlsbad-25, LLC (Concordia Carlsbad), the assignee of Concordia
Homes. As required under the terms of
the April 1999 agreement, Concordia Carlsbad reconveyed lot 33 to Farwest.

Concordia
Carlsbad began to develop the vacant land by recording a landscape maintenance
easement encumbering lot 33, revoking the 1998 CC&Rs and recording its own
set of CC&Rs (the 2000 CC&Rs), and recording a notice of annexation,
annexing lot 33 into the development.
When Jack discovered lot 33 had been encumbered by Concordia Carlsbad,
he, as the sole plaintiff, sued Concordia, Concordia Carlsbad, Pacific View
Estates of Carlsbad Homeowners Association, and individual lot owners for
declaratory relief, breach of contract and breach of fiduciary duty. Jack alleged in his first amended complaint
that he was the current holder of all rights previously held by Pacific View
and Farwest in connection with lot 33.

Shortly
before trial on the matter, Concordia moved in limine to exclude evidence
regarding the claims alleged in the Jack lawsuit, arguing those claims were
released in a 2000 settlement agreement entered into by Concordia, Concordia
Carlsbad, Pacific View Ltd., Pacific View Communities, LLC, Ron Grunow and RDG
Consultants and their assigns. The
"Settlement in Full and Release Agreement" addressed Concordia's
claims "against the Civil Engineering work for the residential tract,
Pacific View Estates," and the parties mutually released each other from
"any and all Claims and Costs, known and unknown regarding any such claims
against the Civil Engineering Work."
The settlement agreement applied to claims known and unknown that arose
no later than September 1, 2000. The settlement agreement stated, "
'Claims' and 'Costs['] shall not include any rights, powers, liabilities, or
duties created by this Agreement, or which any [sic] be involved in connection
with enforcement or interpretation of this Agreement." Don Jack signed the settlement agreement in
his capacity as "Managing Member" of both Pacific View Ltd. and
Pacific View.

Concordia's
motion in limine stated that "all of the claims alleged in the first
amended complaint were released in the settlement agreement," and
accordingly it sought "entry of judgment in favor of defendants."[4] Jack opposed the motion on grounds Concordia
had not raised the issue of the settlement agreement in the answer to the
complaint and never produced it in discovery.
Moreover, the settlement agreement's scope was limited to claims against
civil engineering work and claims arising before September 2001, but Jack's
claim arose after October 23, 2000.


Judge Quinn
heard arguments on the motion on the day trial was to start. Because of the number and complexity of the
issues presented in the evidentiary motions, the court continued the hearing
rather than empanel a jury.[5] Judge Quinn subsequently ruled: "I do
find that the general release of claims, dated September 1st, 2000, acts as a
general release; however, the evidence that was presented indicates that
although the CC&Rs were created one month prior to this, in August of 2000,
that at that point in time lot 33 had not been annexed into the development,
was not annexed into the development until [October 23, 2000], and that the
causes of action that the plaintiff has brought in this case can generally go
forward."

Jack voluntarily
dismissed Concordia from the Jack lawsuit before May 1, 2006, and the lawsuit proceeded against Concordia
Carlsbad. The trial court permitted Jack
to add defendants Pacific View Ltd. and Farwest after the trial court's ruling
on the motion in limine.

In our
March 2008 opinion in the first appeal, we noted that in September 2006, the
trial court had issued a minute order summarily denying Concordia Homes's
motion for attorney fees, finding that the claims dismissed by Jack "arise
from an action on contract" and thus Civil Code section 1717 bars the
award of attorney fees. The trial court
also dismissed Jack's case because no manager of Concordia Carlsbad had been
appointed by a Delaware
court. We affirmed the trial court's
ruling regarding the attorney fees.

>Concordia's Lawsuit and the Anti-SLAPP
Motion

In August
2008, Concordia sued Jack, Pacific View Ltd., Farwest, and six other defendants
in the Concordia lawsuit. Concordia
brought a single cause of action alleging defendants had breached the
settlement agreement by filing the Jack lawsuit.[6] Concordia alleged it had been "damaged
by virtue of having to defend [itself] in connection with the Jack
lawsuit," and claimed it was entitled to recover "in excess of
$200,000" in fees and costs incurred in enforcing its rights under the
settlement agreement.

Defendants
argued that the Concordia lawsuit arose out of their exercise of their right to
file the Jack lawsuit, and Concordia was unable to prevail on its breach of
contract claim because it could not establish the elements of that cause of
action.

Plaintiffs opposed the
anti-SLAPP motion, contending that although Concordia was dismissed from the
Jack lawsuit, it already had spent "hundreds of thousands of dollars
defending [itself] against the claims made which had already been
released." Concordia argued that
the two prongs of the anti-SLAPP statute were not met because its lawsuit arose
not from protected activity but from a breach of the settlement agreement, and
it was likely to prevail on its cause of action because notwithstanding the
clear language of the settlement agreement, the Jack lawsuit asserted claims
that arose before September 1, 2000.

The trial
court granted defendants' special motion to strike on grounds Concordia had not
shown a likelihood of prevailing on the merits because: (1) Concordia had
failed to adequately address Judge Quinn's ruling allowing the Jack lawsuit to
proceed despite the settlement agreement and, as a matter of law, that ruling
defeats Concordia's claim that Jack had breached the settlement agreement; (2)
Concordia had not brought a compulsory cross-complaint in the Jack lawsuit as
required under section 426.30, subdivision (a), thus barring Concordia's breach
of contract claim, which was a "related cause of action" under
section 426.10; (3) Concordia had sued Jack as a member of Pacific View
Communities, and the action was untimely under Corporation Code section 17355,
subdivision (2)(B) because that entity had been canceled in December 1999 and
it owned no assets; (4) Pacific View Ltd and Farwest were added as defendants
after Judge Quinn had ruled the Jack lawsuit could proceed, therefore Concordia
had failed to show that those defendants filed the Jack lawsuit in breach of
the settlement agreement; (5) Farwest was not a party to the settlement
agreement and Concordia did not show how Farwest could have breached it,
considering that Concordia had presented no evidence supporting an alter ego
theory; (6) in light of Judge Quinn's ruling, Concordia had failed to meet its
burden of showing that its costs incurred in the Jack lawsuit were damages
proximately caused by an alleged breach of the release agreement, and Concordia
incurred no costs defending against any released claims; and (7) Concordia
failed to show that its claimed damages were incurred in good faith or in the
exercise of its reasonable discretion because Concordia delayed until the eve
of trial to rely on the settlement agreement as a defense.[7]

Concordia
challenges the trial court's ruling in its entirety. Specifically, Concordia claims: Jack breached
the settlement agreement, and the trial court misinterpreted Judge Quinn's
ruling; it was not required to bring a compulsory cross-complaint to the Jack
lawsuit because the settlement agreement involved a "completely separate
and independent transaction;" it sought indemnification against defendants
for the fees and costs it had incurred in the Jack lawsuit and therefore its
claim accrued only after the trial court had "determined that Defendants
claims [sic] were barred by the
Settlement Agreement;" it did not sue Jack as a member of Pacific View
Communities but rather as the assignee of the original signatories to the
settlement agreement and as the holder of all the rights relating to the
subject property; the settlement agreement applies to Farwest as an assignee
and entity related to Jack and Pacific View; it was not required to demonstrate
its damages were incurred in good faith or in the exercise of reasonable
discretion.

DISCUSSION

I. Section
425.16/Appellate Standard of Review

The
anti-SLAPP statute allows a party to file a special motion to strike causes of action
"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." (§
425.16, subd. (b)(1).) In determining
whether to grant defendant's anti-SLAPP motion, the court "engage[s] in a
two-step process. First, the court decides
whether the defendant has made a threshold showing that the challenged cause of
action is one arising from protected activity. . . . If the court finds such a showing has been
made, it then determines whether the plaintiff has demonstrated a probability
of prevailing on the claim. . . . [I]n
making these determinations[, the court] considers 'the pleadings, and
supporting and opposing affidavits stating the facts upon which the liability
or defense is based.' " ( >Equilon Enterprises v. Consumer Cause, Inc.
(2002) 29 Cal.4th 53, 67.) We apply our
independent judgment to each prong, and rule on the motion de novo. (Thomas
v. Quintero (2005) 126 Cal.App.4th 635, 645.)

II. Respondents Met Their
Threshold Prima Facie Burden

Concordia's
discussion of the first prong of the anti-SLAPP test is limited to this
concession in its opening brief:
"Since it appears well-established that the act of filing the Jack
lawsuit is considered a 'valid' exercise of Defendants' right of petition or
free speech (notwithstanding Defendants' voluntary relinquishment of that
right) the focus in this appeal is on the second part of the anti-SLAPP
analysis."

In 1992,
the Legislature enacted section 425.16 to provide for the early dismissal of
unmeritorious claims filed to interfere with the valid exercise of the
constitutional rights of freedom of speech and petition for the redress of
grievances. ( >Martinez > v. Metabolife Internat., Inc. (2003)
113 Cal.App.4th 181, 186.) The
Legislature authorized the filing of a special motion to strike such claims (§
425.16, subds.(b)(1), (f)) and expressly provided that section 425.16 should
"be construed broadly." (§
425.16, subd. (a); see Briggs v. Eden
Council for Hope and Opportunity (1999) 19 Cal.4th 1106, 1119.) The constitutional right of petition
encompasses the basic act of filing litigation.
(See Navellier v. Sletten
(2002) 29 Cal.4th 82, 90.)

Here, the
Concordia lawsuit arose out of the filing and prosecution of the Jack
lawsuit. The complaint specifically
stated: "On or about August 6,
2004, defendants breached the Settlement Agreement by filing an
action against plaintiffs. . . wherein defendants asserted claims against
plaintiffs which had been released pursuant to the terms of the settlement
agreement. [¶] In connection with the trial of the Jack
lawsuit, the trial court found that the Settlement Agreement was a 'general
release' of all claims known and unknown between the parties that existed as of
September 1, 2000. By virtue of that finding, defendants are
estopped, directly and collaterally, from contending [otherwise]." Accordingly, we agree with Concordia's
concession and next consider the anti-SLAPP statute's second prong.

II. Concordia Did Not
Establish a Reasonable Probability of Prevailing Because its Claim is Barred by
Collateral Estoppel

" 'In
order to establish a probability of prevailing on the claim [citation], a
plaintiff responding to an anti-SLAPP motion 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."
[Citations.] In deciding the
question of potential merit, the trial court considers the pleadings and
evidentiary submissions of both the plaintiff and the defendant [citation];
though the court does not weigh the
credibility or comparative probative strength of competing evidence, it should
grant the motion if, as a matter of law, the defendant's evidence supporting
the motion defeats the plaintiff's attempt to establish evidentiary support for
the claim.' " (Vargas v. City of Salinas (2009) 46 Cal.4th 1, 19-20.)

The parties
dispute whether the trial court properly interpreted Judge Quinn's ruling. Concordia argues: "Contrary to the
[trial] court's finding, Judge Quinn granted
the motion in limine to the extent it dealt with pre-September 2000 claims,
i.e., those which were released by the Settlement Agreement and the assertion
of which serves as the basis for the present action. Concordia did not seek to bar any claim which
arose after September 1, 2000,
and that is not the basis of its action
in the present case. . . . As such, defendants assertion [ >sic] of released claims is, in fact, a
breach of the agreement and Judge Quinn's ruling did not alter that
result." Defendants note that
Concordia had alleged in its complaint that defendants are estopped from relying
on Judge Quinn's ruling. Defendants
interpret Judge Quinn's ruling as a finding "that none of the claims in the Jack lawsuit had been released . . .
[and] all of the claims in the Jack lawsuit could 'go forward.' "

We conclude
that Concordia failed to establish a reasonable probability of prevailing on
its breach of contract cause of action because Judge Quinn's ruling
conclusively resolved that issue against Concordia, and it was collaterally
estopped from claiming defendants had breached the settlement agreement.[8] "[T]he fundamental principles that
govern the doctrine of collateral estoppel
[are]: 'Issue preclusion by collateral estoppel "prevents 'relitigation of
issues argued and decided in prior proceedings.' [Citation.]" [Citations.]
The doctrine "rests upon the ground that the party to be affected,
or some other with whom he is in privity, has litigated, or had an opportunity
to litigate the same matter in a former action in a court of competent
jurisdiction, and should not be permitted to litigate it again to the
harassment and vexation of his opponent. . . " ' " ( Mooney
v. Caspari (2006) 138 Cal.App.4th 704, 717.) " ' "
'Traditionally, collateral estoppel has been found to bar relitigation of an
issue decided at a previous proceeding "if (1) the issue necessarily
decided at the previous [proceeding] is identical to the one which is sought to
be relitigated; (2) the previous [proceeding] resulted in a final judgment on
the merits; and (3) the party against whom collateral estoppel is asserted was
a party or in privity with a party at the prior [proceeding]." . . .' [Citations.]" [Citations.]
"In addition to these factors, . . . the courts consider whether the party against
whom the earlier decision is asserted had a 'full and fair' opportunity to
litigate the issue." ' " (Ibid.)

We first
reject Concordia's interpretation of Judge Quinn's ruling. Judge Quinn ruled, "I do find that the
general release of claims, dated September
1st 2000, acts as a general release," but Judge Quinn
qualified that statement, noting, "It does act as a general release for
all claims known and unknown between the parties on September 1, 2000." The part of Judge Quinn's ruling that
Concordia overlooks states: "[H]owever, the evidence that was presented
indicates that although the CC&Rs were created one month prior to this, in
August of 2000, that at that point in time lot 33 had not been annexed into the
development until [October 23, 2000], and that the causes of action that [Jack]
has brought in this case can generally go forward." Judge Quinn allowed Jack's lawsuit to proceed
because it arose at a later date, and its claims were not encompassed among
those prohibited by the settlement agreement, which applied to claims that
arose or were known before September 1,
2000.

Under the
doctrine of collateral estoppel, the contested issue of whether Jack's lawsuit
breached the settlement agreement is identical to the issue raised in the Jack
lawsuit. It was briefed by Concordia and
Jack, the same parties to the Concordia lawsuit, and Judge Quinn ruled on
it. On appeal of the Jack lawsuit, that
ruling was not challenged. Therefore, we
conclude Judge Quinn's decision, which was adverse to Concordia, is binding on
the parties and their privies. We note
that this ruling also applies to the other defendants in this appeal, Farwest
and Pacific View Ltd, and not because Concordia claims they "are entities
which Jack owned and controlled," an issue we do not decide. Rather, Jack's claim of breach of contract,
relating to the annexation of lot 33, did not arise until after the September
1, 2000 operative date provided for in the settlement agreement, and therefore
the claims of all defendants fall outside of the purview of the settlement agreement.

In light of
our conclusion regarding the applicability of the doctrine of collateral
estoppel, we need not address the other bases for the trial court's conclusion
that Concordia had failed to show it was likely to prevail on the merits of its
complaint.

IV. Attorney Fees on Appeal

Defendants
request that we remand the case for the trial court to award them their
attorney fees and costs incurred in connection with Concordia's appeal under
section 425.16, subdivision (c), which provides that "[i]n any action
subject to subdivision (b), a prevailing defendant on a special motion to
strike shall be entitled to recover his or her attorney's fees and
costs." The statute includes fees
and costs incurred in defending an unsuccessful appeal of an order granting a
special motion to strike. (Wanland
v. Law Offices of Mastagni, Holstedt & Churazzi (2006) 141 Cal.App.4th
15, 20.) The provision for fees and
costs " 'is broadly construed so as to effectuate the legislative purpose
of reimbursing the prevailing defendant for expenses incurred in extricating
[himself or itself] from a baseless lawsuit.' " (GeneThera,
Inc. v. Troy & Gould Professional Corp. (2009) 171 Cal.App.4th 901,
910.) Accordingly, defendants are
entitled to their attorney fees on appeal.

DISPOSITION

The
judgment is affirmed and the matter remanded to the trial court for a
determination of the proper amount of attorney fees on appeal in accordance
with this opinion. In addition to
attorney fees, respondents Don Jack, Pacific View, Ltd. and Farwest American
Trust Contractual Business Organization shall recover costs on appeal.





O'ROURKE, J.



WE CONCUR:







HUFFMAN,
Acting P. J.







HALLER,
J.







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id=ftn1>

[1] All statutory references are to the
Code of Civil Procedure unless otherwise stated. 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.)