Lee v. Financial Pacific Ins.
Co.















Filed 6/29/12 Lee v. Financial Pacific Ins. Co. CA3









NOT TO BE PUBLISHED







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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115>.



IN
THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD
APPELLATE DISTRICT

(Calaveras)

----






>

DON H. LEE, Plaintiff and Appellant, v. FINANCIAL PACIFIC INSURANCE COMPANY, Defendant and Respondent.

C067418 (Super. Ct. No. 10CV36902)

Defendant
Financial Pacific Insurance Company (Financial Pacific) filed an anti-SLAPP motion,
pursuant to Code of Civil Procedure section 425.16,href="#_ftn1" name="_ftnref1" title="">[1] to strike plaintiff Don H. Lee’s complaint.href="#_ftn2" name="_ftnref2" title="">[2] The trial court granted the
motion, finding that the complaint arose from Financial Pacific’s protected
petitioning activity and Lee did not have a probability of prevailing on the
merits.

We
affirm.

ANTI-SLAPP
LAW

Section
425.16, subdivision (b)(1) provides: “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 Constitution or the
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.” “As used in [section 425.16],
‘act in furtherance of a person’s right of petition or free speech under the
United States or California Constitution in connection with a public issue’ includes: (1) any written or oral statement or writing
made before a legislative, executive, or judicial proceeding, or any other
official proceeding authorized by law . . . .”
(§ 425.16, subd. (e).)

“Section
425.16, subdivision (b)(1) requires the court to engage 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.
The moving defendant’s burden is to demonstrate that the act or acts of
which the plaintiff complains were taken ‘in furtherance of the [defendant]’s
right of petition or free speech under the United States or California
Constitution in connection with a public issue,’ as defined in the statute. (§ 425.16, subd. (b)(1).) 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. Under
section 425.16, subdivision (b)(2), the trial court in making these
determinations 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
review an order granting an anti-SLAPP motion de novo. (Flatley
v. Mauro (2006) 39 Cal.4th 299, 325.)
“‘We consider “the pleadings, and supporting and opposing affidavits
. . . upon which the liability or defense is based.” (§ 425.16, subd. (b)(2).) However, we neither “weigh credibility [nor]
compare the weight of the evidence.
Rather, [we] accept as true the evidence favorable to the plaintiff
[citation] and evaluate the defendant’s evidence only to determine if it has
defeated that submitted by the plaintiff as a matter of law.” [Citation.]’
[Citation.]” (>Flatley v. Mauro, supra, at p. 326.)

BACKGROUND

Westwind
Development, Inc. (Westwind) developed the subdivision called Gold Strike
Heights in Calaveras County. Financial
Pacific Insurance Company, the defendant in the current action, issued bonds
guaranteeing to the Gold Strike Heights Association, representing the
homeowners, that Westwind would perform its obligations.



There
are three actions that are relevant to this appeal:

·
The first was an action by Gold
Strike Heights Association (the rights to which Gold Strike Heights Association
assigned to Don H. Lee, the plaintiff in the current action) to recover from
Financial Pacific on a bond guaranteeing Westwind’s payment of homeowners
association dues to Gold Strike Heights Association. We refer to this action as the “dues
action.”

·
The second was an action by
Gold Strike Heights Homeowners
Association (note the difference from Gold Strike Heights Association) to
recover from Financial Pacific on a bond guaranteeing Westwind’s construction
of a clubhouse. We refer to this action
as the “clubhouse action.”

·
The third and final (the
current action on appeal) is an action by Lee seeking declaratory relief
concerning the validity of the settlement in the dues action. We refer to this action as the “declaratory
relief action.”

In
2008, Financial Pacific settled the dues action with Lee for the amount of the
bond ($23,070), sending the check to the Gold Strike Heights >Homeowners Association (not the Gold
Strike Heights Association, which corporation had been suspended and, according
to Lee, succeeded by the Gold Strike Heights Homeowners Association). At the time, Financial Pacific was
represented by Edward Rocknich.

In
2010, the clubhouse action went to trial.
In preparing for that trial, Janis Hulse, the new attorney for Financial
Pacific, discovered that the settlement proceeds in the dues action had been
paid to the Gold Strike Heights Homeowners Association, which was not the
beneficiary named on the bond. Despite
the payment to an association not named as beneficiary on the bond, Financial
Pacific was fully reimbursed by a principal of Westwind for the settlement in
the dues action.

In
a motion in limine in the clubhouse action, Hulse, on behalf of Financial
Pacific, sought to exclude from the trial any evidence of the settlement paid
in the dues action. In the course of
arguing the motion in limine, Hulse made the following statement, which is the
core of Lee’s declaratory relief action:

“If
this [the settlement in the dues action] is going to come into evidence, we
will put people on that we feel that [Financial Pacific] was defrauded in that
Mr. Lee represented he was the homeowners association on the bond. I was the person who discovered part way into
this litigation that, oh, my gosh, these aren’t even the proper obligees, that
-- that the proper obligee is a suspended corporation, and Mr. Lee
. . . created a whole new corporation in 2007. That was before -- that information that I
discovered was after [Financial Pacific] paid on the bond and realized they had
been defrauded. . . . So
you’re creating a whole new trial on a whole new issue that is not relevant to
this case as to a mistake [Financial Pacific] may have made or a fraud committed
by Mr. Lee.”

The
trial court in the clubhouse action excluded, under Evidence Code section 352,
the evidence concerning payment of the settlement in the dues action.

Lee
demanded a retraction of Hulse’s statements concerning the possible mistake or
fraud involved in paying the settlement in the dues action. But neither Hulse nor Financial Pacific
responded to the demand. Thereafter, Lee
filed his complaint for declaratory relief, seeking a declaration that the dues
action settlement was valid and for costs and attorney fees under Civil Code
section 1354, subdivision (c), which provides for an award of costs and
attorney fees in an action to enforce equitable servitudes.

In
his complaint for declaratory relief,
Lee characterized the dispute as follows:


“Defendant
Financial Pacific now contends that the rightful beneficiary under the surety
bond was the Gold Strike Heights Association, not the Gold Strike Heights
Homeowners Association and thus payment to this later enacted corporation was
in error and procured by fraud and the $23,070.00 must be returned. [¶]
Plaintiff Lee however contends that the intended beneficiary of the
surety bond was the Gold Strike Heights Homeowners Association as the successor
corporation to the Gold Strike Heights Association and the payment was entirely
appropriate. [¶] Plaintiff Lee
further contends that no fraud whatsoever was committed by Plaintiff Lee when
Defendant Financial Pacific offered to settle the 2007 case and further
insisted that the $23,070.00 settlement proceeds be paid directly to the Gold
Strike Heights Homeowners Association.”
(Unnecessary capitalization and paragraph numbers omitted.)

Later
in the complaint, Lee added: “Plaintiff
Lee mailed letters to attorney Janis Hulse advising her that he would have no
other choice but to file an action for declaratory relief unless Defendant
Financial Pacific withdrew its claim that the 2008 release agreement was
procured by fraud. There was no response
whatsoever to either communication.”

Finally,
Lee stated that he believed that Financial Pacific intended to recover the
settlement proceeds from Lee.

Financial
Pacific filed a motion to strike based on section 425.16. In support of the anti-SLAPP motion, Hulse
declared that Financial Pacific does not currently plan to seek rescission of
the dues action settlement because Financial Pacific was fully reimbursed for
the money it paid to settle the action.

The
trial court granted Financial Pacific’s anti-SLAPP motion. It concluded that (1) the declaratory relief
action was based solely on Hulse’s comments in the clubhouse action, which
constituted protected petitioning activity, and (2) Lee made no showing of a
probability of prevailing on the merits.
The trial court therefore entered judgment in favor of Financial
Pacific.

Lee
appeals, representing himself.

DISCUSSION

I

Arising from Protected Activity

We
first turn to the question of whether the trial court properly found that Lee’s
complaint arose from a protected activity.
We conclude that his complaint arose solely from Hulse’s protected
petitioning activity in the clubhouse action.

In
determining whether the challenged action is one arising from a protected
activity, the “court must . . . focus on the substance of the plaintiff’s
lawsuit” (Peregrine Funding, Inc. v.
Sheppard Mullin Richter & Hampton LLP (2005) 133 Cal.App.4th 658,
669-670) and determine “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]” (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78 (>City of Cotati), original italics.) “The anti-SLAPP statute’s definitional focus
is not the form of the plaintiff’s cause of action but, rather, the defendant’s
activity that gives rise to his or her
asserted liability — and whether that activity constitutes protected speech or
petitioning.” (Navellier v. Sletten (2002) 29 Cal.4th 82, 92, original italics.)

“Where
. . . a cause of action is based on both protected activity and
unprotected activity, it is subject to section 425.16 ‘“unless the protected
conduct is ‘merely incidental’ to the unprotected conduct.”’ [Citations.]”
(Haight Ashbury Free Clinics, Inc.
v. Happening House Ventures (2010) 184 Cal.App.4th 1539, 1551.)

The
dispute Lee seeks to resolve in his declaratory relief action is whether the
settlement in the dues action remains valid.
Lee’s action is based completely on Hulse’s statements in her argument
concerning the motion in limine in the clubhouse action. Without those statements, there is no
dispute. Financial Pacific has made no
statements in derogation of the settlement (except for Hulse’s statements), and
Financial Pacific has taken no action or threatened any action to undo the
settlement.

Lee’s
complaint with regard to Financial Pacific’s position and intention is simply
unfounded. He alleges in his complaint
that Financial Pacific intends to recover the settlement funds paid in the dues
action, but the facts presented in the anti-SLAPP motion do not support that
allegation. That leaves as the core of
Lee’s action his allegation that he filed the declaratory relief action because
Hulse’s failure to retract the statements gave him “no other
choice . . . .” In
other words, the complaint is based on Hulse’s statements, not some underlying
dispute.

Section
425.16 protects any “‘act in furtherance of a person’s right of petition or
free speech under the href="http://www.adrservices.org/neutrals/frederick-mandabach.php">United
States or California Constitution in connection with a public issue.’” (§ 425.16, subd. (e).) Such acts include “any written or oral
statement or writing made in connection with an issue under consideration or
review by a . . . judicial body . . . .” (§ 425.16, subd. (e).) Thus, “statements, writings and pleadings in
connection with civil litigation are covered by the anti-SLAPP statute, and
that statute does not require any showing that the litigated matter concerns a
matter of public interest. [Citations.]” (Rohde
v. Wolf (2007) 154 Cal.App.4th 28, 35.)

Here,
Hulse’s statements were made in connection with civil litigation and are
therefore protected petitioning activity under section 425.16.

While
conceding that Hulse’s statements were made in connection with a civil
proceeding, Lee contends that his action does not arise from those statements
but, instead, those statements are merely evidence of an underlying
dispute. In support of this contention
in his opening brief, Lee cites several cases, including State Farm General Ins. Co. v. Majorino (2002) 99 Cal.App.4th 974 (>Majorino), which he also cites in his
reply brief.

In
Majorino, several individuals filed a
complaint against homeowners after the individuals were allegedly assaulted
during a party in the home. Thereafter,
the homeowners’ insurer, State Farm, filed an action against the partygoers and
the homeowners seeking a judicial determination of State Farm’s duty to
indemnify the homeowners. The partygoers
filed an anti-SLAPP motion in the declaratory relief action, but the trial
court denied it. (Id. at p. 976.)

The
Court of Appeal affirmed the denial of the anti-SLAPP motion. Responding to the partygoers’ argument that
State Farm’s action arose from their filing of the original complaint, the
court stated: “[T]he act that underlies
and forms the basis for State Farm’s declaratory relief action is not the
personal injury lawsuit filed by [the partygoers], but the [homeowners’] tender
of the defense of that lawsuit under a policy that contains an arguably
applicable exclusionary clause.” (>Majorino, supra, 99 Cal.App.4th at p.
977.) In other words, State Farm’s
declaratory relief action pertained to a real dispute concerning terms of the
insurance policy. State Farm sought a
declaration that the insurance policy did not apply to the alleged loss and,
therefore, State Farm was not liable.

Here,
there is no such real, underlying dispute.
Considering the evidence submitted in connection with the anti-SLAPP
motion, as we must, we conclude that Financial Pacific is not attempting to
invalidate the settlement in the dues action.
And, since there is no underlying dispute, Lee’s complaint arose solely
from Hulse’s in-court statements.

Accordingly,
Financial Pacific established that Lee’s complaint arose from a protected
activity, and we must determine whether Lee established a probability of
prevailing on the merits.href="#_ftn3"
name="_ftnref3" title="">[3]

II

Probability of Prevailing on the Merits

The
trial court found that Lee did not establish a probability of prevailing on the
merits. We agree.

To
establish a probability of prevailing on the merits, a plaintiff opposing an
anti-SLAPP motion must “‘“‘state[] and substantiate[] a legally sufficient
claim.’” [Citations.] 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 (§ 425.16, subd. (b)(2)); 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.’ [Citation.] Thus, [a plaintiff’s] burden as to the second
prong of the anti-SLAPP test is akin to that of a party opposing a motion for
summary judgment. [Citation.]” (Navellier
v. Sletten (2003) 106 Cal.App.4th 763, 768, italics omitted.)

Lee
cites only one authority in his argument that he established a probability of
prevailing on the merits: >White v. Western Title Ins. Co. (1985) 40
Cal.3d 870 (superseded by statute on another issue as stated in >Lee v. Fidelity National Title Ins. Co.
(2010) 188 Cal.App.4th 583), which he claims holds that the litigation
privilege does not bar use of a judicial communication to prove liability.

We
need not delve into whether a judicial communication may be used to prove
liability in this case because Lee has no probability of prevailing on the
merits for a more fundamental reason:
there is no actual controversy.
Financial Pacific has been reimbursed for the money it paid to Gold
Strike Heights Homeowners Association in the dues action, and there is no
evidence that Financial Pacific will ever attempt to invalidate the
settlement. Contrary to Lee’s allegation
in his complaint, there is no evidence that “Financial Pacific intends to
recover the $23,070.00 paid to the Gold Strike Heights Homeowners
Association . . . .”
Therefore, a declaration concerning the validity of the settlement would
have no effect.

“Any
person interested under a written instrument . . . may, >in cases of actual controversy relating
to the legal rights and duties of the respective parties, bring an original
action . . . for a declaration of his or her rights and duties in the
premises . . . .” (§
1060, italics added; see also Pittenger
v. Home Savings & Loan Assn. (1958) 166 Cal.App.2d 32, 36.) Because there is no actual controversy here,
Lee cannot obtain declaratory relief.
Therefore, he has no probability of prevailing on the merits.href="#_ftn4" name="_ftnref4" title="">[4]

DISPOSITION

The judgment is affirmed. Financial Pacific is awarded its href="http://www.fearnotlaw.com/">costs on appeal. (Cal. Rules of Court, rule 8.278(a)(2).)







NICHOLSON , J.







We concur:







RAYE , P. J.







MAURO , J.