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Pacific Solutions v. Garry Plaza Office Park A
By
06/05/18

Filed 5/31/18 Pacific Solutions v. Garry Plaza Office Park Assn. CA4/3
Received for posting 6/1/18






NOT TO BE PUBLISHED IN OFFICIAL REPORTS

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FOURTH APPELLATE DISTRICT

DIVISION THREE


PACIFIC LOAN SOLUTIONS, LLC,

Plaintiff and Respondent,

v.

GARRY PLAZA OFFICE PARK ASSOCIATION et al.,

Defendants and Appellants.


G054845

(Super. Ct. No. 30-2016-00883653)

O P I N I O N

Appeal from a order of the Superior Court of Orange County, Nathan R. Scott, Judge. Affirmed.
Adams Stirling, Chang N. Le and Paul S. Ablon for Defendants and Appellants.
The Cisneros Firm and Dana L. Cisneros for Pacific Loan Solutions for Plaintiff and Respondent.
* * *
This is an appeal from an order denying a motion pursuant to Code of Civil Procedure section 425.16, the anti-SLAPP statute. Pacific Loan Solutions, LLC (Pacific) sued its commercial owners association, Garry Plaza Office Park Association (Garry Plaza or the association), for various causes of action relating to Pacific’s ownership of a unit in the association. Garry Plaza moved to strike the complaint under the anti-SLAPP statute, arguing that it arose from its rights to free speech and petition, specifically, settlement negotiations it had undertaken with Pacific. The trial court disagreed, concluding the complaint arose from the underlying disputes. We agree with the trial court and therefore affirm the order.

I
FACTS
We limit our discussion of the facts to those pertinent to resolving the issue presented on appeal.
Garry Plaza is, for all relevant purposes, the commercial equivalent of a homeowners association. It has a declaration of covenants, conditions, and restrictions that was recorded in July 1979 (the CC&Rs) for a property in Santa Ana. It is managed by a board of directors, who employ a management company to handle day-to-day tasks.
Pacific, acting through its principal Jessica Shalaby, purchased a unit in the association on or around April 28, 2016. From the beginning, the complaint alleged, there were problems. The manager denied Pacific access to an Internet and utility connection box, telling Pacific that when they closed escrow, the association had not been “paid for an outstanding judgment lien against the unit.” A document entitled “Homeowners Statement and Transfer Information,” dated one day before closing, stated the total amount due was $2,451.80, which was comprised of $2,426.80 as “other fees” and $25 as late dues, late fees, collection cost and judgment amount. The complaint claimed the demand was false, and asserted the managers had submitted the false demand to escrow asserting there was a judgment against the unit, and this was prompted by the board. Pacific alleged the managers eventually admitted there was no prior judgment or lien against the unit, but demanded payment nonetheless. Around May 26, Pacific paid $2,426.80 through escrow; Pacific characterized the payment as “under duress.”
Thereafter, Pacific alleged it noticed what it referred to as a “noxious odor” coming from the ceiling panels. It decided to remove them, mistakenly believing, it alleged, that it was responsible for the maintenance of all components of the property. Upon removing the panels, Pacific alleged, it was clear that the heating and air conditioning (HVAC), ducting, and electrical systems were in poor condition.
At some point, the board notified the City of Santa Ana of potential code violations in the Pacific’s unit. An inspector visited and required Pacific to obtain plans and permits for removal of the ceiling panel. Pacific did so. Pacific’s complaint alleged that from the end of May until mid-June, the board refused to allow access to the utility box to provide electricity to the unit. The managers, it alleged, first refused to provide access, then required a permit (which Pacific provided) and finally stated the request had to be submitted to the board for approval.
On June 13, attorney for Garry Plaza, Chang N. Le, and attorney for Pacific, Dana Cisneros, began corresponding. The first e-mail, from Le, confirmed a phone call between counsel. Le stated that Shalaby had encroached on association common areas, apparently through the installation of the HVAC unit. The e-mail continued: “Rather than proceed with possible legal action against your client, I can discuss with my client a possible maintenance agreement . . . .” In the meantime, Le stated, he would discuss granting Pacific “access to the common area utilities if you can ensure your client [will] cease and desist any future unapproved construction or installation until the parties can work out an amicable resolution.”
The attorneys continued to work together toward a resolution. Garry Plaza believed that Pacific had made unapproved modifications to the unit and the common area, including to the HVAC, light fixtures, electrical, telephone, and Internet wiring, and removed the drop ceilings. Le offered to prepare a maintenance agreement transferring maintenance for these improvements to Pacific that would be recorded, or alternatively, to prepare a license during Pacific’s ownership with an agreement to return the modifications to its original construction upon sale. Garry Plaza also requested $10,000 toward its reserve fund.
Cisneros, in late June, apparently first learned of the $2,426.80 escrow payment, and requested its immediate return. She asserted that Pacific had incurred damages and attorney fees as a result. Le responded that he was waiting for direction from his client and suggested a possible site inspection or meeting to discuss the matter. They disagreed over whether Pacific’s work had encroached on the common area, but Le stated that his client was “agreeable” to returning the escrow payment.
On June 29, Le sent Cisneros a proposed agreement entitled “Maintenance Agreement and Covenant” which would create a vertical easement in Pacific’s favor above its unit’s vertical limits. It discussed Pacific’s responsibility for maintenance of the improvements, its responsibility to comply with architectural requirements and use licensed contractors, provide insurance, and similar matters. It included a release limited to maintenance requirements only. Cisneros sent back revisions, which Le disagreed with. Le informed Cisneros that if they could not come to an agreement, Pacific “had to replace the ceiling tiles and return the Unit to its 8 feet vertical limit.” The attorneys exchanged multiple e-mails on discussions of provisions with the proposed agreement. On July 18, Le sent Cisneros a revised agreement, and they went through several rounds of revisions. Le stated in his declaration that he threatened a lawsuit on August 24. The discussions and exchanged drafts of the maintenance agreement, however, continued on thereafter.
In September, Le proposed a site inspection, and Cisneros agreed. The inspection took place on October 3. According to the complaint, during the meeting, one of the board members stated that the board made all decisions, and that Le had no authority to make or accept offers or propose agreements.
On October 4, Le sent an e-mail to Cisneros discussing options based on the previous day’s meeting, and stated: “This is the Association’s final offer for a resolution. If within 14 days, the parties cannot come to an agreement, the Association will proceed with filing a complaint for breach of the CC&Rs.” (Original boldface omitted.)
On October 5, Cisneros responded, stating Pacific was willing to make certain concessions, but requesting changes to the proposed agreement. She also proposed that each party bear its own fees and costs, and offered that Pacific would release the association from liability for the escrow payment. The e-mail further stated that if Garry Plaza did not agree to remove the disputed portions of the maintenance agreement, that Pacific elected to proceed to have the dispute resolved through alternate dispute resolution (ADR).
On October 6, Cisneros sent the following e-mail to Le: “Given your client’s unwillingness to negotiate about the recently added terms or to attend mediation, my clients have no choice other than to agree to the terms of your client’s demands or risk forfeiture and the inability to complete their final inspections or to install ducting or to complete the ADA accommodations required of them.” She requested instructions regarding the agreement’s execution.
There are factual disputes over what happened next, but they are not particularly pertinent to the issue before us. Suffice to say the agreement was never executed. A discussion also followed about access to the association’s records. Pacific filed the instant lawsuit on October 27. The complaint alleged 14 separate causes of action, which we summarize briefly. The first cause of action, extortion, addressed the $2,426.80 settlement demand made by the association and paid by Pacific in May 2016.
The second and third causes of action, intentional and negligent interference with prospective economic advantage, and the fifth cause of action, intentional interference with contractual relations, alleged that Pacific lost rental income from June through July, 2016, due to the association’s decision to withhold access to the utility boxes.
The fourth cause of action, negligence, alleged the association had failed to maintain the common area, specifically the ducting, electrical, and wiring systems, and negligence due to alleged poor management decisions of the board.
The sixth and tenth causes of action were for breach of fiduciary duties. The sixth cause of action related to the conduct of board members, failure to maintain the premises, refusing to participate in mediation, “extorting money,” “[m]isrepresenting the Board’s willingness to come to a reasonable resolution of a simple matter of ceiling panels . . .” and other misconduct. The tenth cause of action alleged the board mishandled the Architectural Committee, among other things, unfairly failing to disclose requirements and members, and instead seeking to “force” Pacific to sign the maintenance agreement.
The seventh, eighth, and ninth causes of action alleged breach of contract, and alleged breaches of the duty to maintain and repair, provide access to books and records, and failing to attend mediation.
The eleventh cause of action alleged trespass. The claim alleged that the October 3 meeting was not about a discussion to resolve disputes, but a chance to inspect the unit.
The twelfth cause of action for fraud alleged management had submitted the escrow demand with false information, specifically that there was a judgment lien against the unit, inducing Pacific to pay $2,426.80. Pacific also alleged that management made other false statements on the board’s behalf, including that it was Pacific’s responsibility to pay the fines of past owners, and that access to the utility boxes could only be granted upon such payment. Further, Pacific alleged the statements made to gain access to the unit on October 3 were false.
The thirteenth cause of action was for violation of Business and Professions Code section 17200, largely restating the same facts as other causes of action with respect to the association and board’s actions. The final cause of action was for declaratory relief, again essentially repeating earlier assertions in support of a request for a declaration setting forth the responsibilities of the parties.
Garry Plaza moved to strike the complaint under the anti-SLAPP cause of action, attaching Le’s declaration in support of its argument. Garry Plaza asserted that every cause of action arose from settlement negotiations. Ultimately, the trial court disagreed, finding that Garry Plaza had not made the requisite showing that the complaint arose from protected activity. Garry Plaza now appeals.

II
DISCUSSION
A. The Anti-SLAPP Statutory Framework
The anti-SLAPP statute states: “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.” (§ 425.16, subd. (b)(1).) The purpose of the anti-SLAPP statute is to dismiss meritless lawsuits designed to chill the defendant’s free speech rights at the earliest stage of the case. (See Wilcox v. Superior Court (1994) 27 Cal.App.4th 809, 815, fn. 2, disapproved on another ground in Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 68.) The statute is to be “construed broadly.” (§ 425.16, subd. (a).)
Section 425.16, subdivision (e), specifies the type of acts covered by the statute. As relevant here, an “‘act in furtherance of a person’s right of petition or free speech . . . in connection with a public issue’ includes: (1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law, (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law . . . .” (§ 425.16, subd. (e).)
To determine whether an anti-SLAPP motion should be granted or denied, the trial court engages 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).)’” (Jarrow Formulas, Inc. v. LaMarche, supra, 31 Cal.4th at p. 733.)
If that threshold is met, courts then look to the second step, determining whether the plaintiff has demonstrated a probability of prevailing on the merits. To do so, the plaintiff must state and substantiate a legally sufficient claim (Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1122-1123), thereby demonstrating his case has at least “‘“minimal merit.”’” (Cole v. Patricia A. Meyer & Associates, APC (2012) 206 Cal.App.4th 1095, 1105.) “Only a cause of action that satisfies both prongs of the anti-SLAPP statute—i.e., that arises from protected speech or petitioning and lacks even minimal merit—is a SLAPP, subject to being stricken under the statute.” (Navellier v. Sletten (2002) 29 Cal.4th 82, 89 (Navellier).)
On appeal, we “review an order granting an anti-SLAPP motion de novo, applying the same two-step procedure as the trial court.” (Cole v. Patricia A. Meyer & Associates, APC, supra, 206 Cal.App.4th at p. 1105.) In conducting our review, “[w]e consider ‘the pleadings, and supporting and opposing affidavits . . . upon which the liability or defense is based.’” (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 269, fn. 3.)

B. Protected Activity
We must first decide whether the challenged claims arise from acts in furtherance of Pacific’s right of free speech or right of petition under one of the categories set forth in section 425.16, subdivision (e). In doing so, “[w]e examine the principal thrust or gravamen of a plaintiff’s cause of action to determine whether the anti-SLAPP statute applies . . . .” (Ramona Unified School Dist. v. Tsiknas (2005) 135 Cal.App.4th 510, 519-520.) “A defendant who files a special motion to strike bears the initial burden of demonstrating that the challenged cause of action arises from protected activity.” (Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP (2005) 133 Cal.App.4th 658, 669.) “In deciding whether the ‘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.’” (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 79.)
“We assess the principal thrust by identifying ‘[t]he allegedly wrongful and injury-producing conduct . . . that provides the foundation for the claim.’” (Hylton v. Frank E. Rogozienski, Inc. (2009) 177 Cal.App.4th 1264, 1272.) We keep in mind that “[i]n 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.” (Navellier, supra, 29 Cal.4th at p. 89.) “The mere fact that a lawsuit was filed after the defendant engaged in protected activity does not establish the complaint ‘arose from’ protected activity under the statute because a cause of action may be triggered by protected activity without arising from it.” (Ben-Shahar v. Pickart (2014) 231 Cal.App.4th 1043, 1051.)
In Navellier, supra, 29 Cal.4th 82, the plaintiffs sued the defendant, Sletten, in federal court. They alleged Sletten had breached his fiduciary duty by terminating the plaintiffs’ contract to provide investment advisory services, among other things. A few months after the plaintiffs filed the federal case, Sletten entered into an agreement, rehiring the plaintiffs. As part of that agreement, Sletten signed a general release that released all claims against the plaintiffs except for indemnity and contribution. (Id. at pp. 85-86.) The plaintiffs, however, did not dismiss the federal action, and instead filed an amended complaint. Sletten then filed counterclaims, a number of which were barred by the federal court due to the general release. (Id. at pp. 86-87.) The plaintiffs then filed a new lawsuit in state court, arguing Sletten had breached the release by filing the counterclaims and committing fraud by misrepresenting his intent to be bound by the release. (Id. at p. 87.)
The Supreme Court ultimately concluded the “‘arising from’” prong of the anti-SLAPP statute was satisfied because all of the plaintiffs’ claims arose from protected activities. “In alleging fraud . . . plaintiffs complain about Sletten’s alleged negotiation, execution, and repudiation of the Release. . . . Sletten’s negotiation and execution of the Release, therefore, involved ‘statement[s] or writing[s] made in connection with an issue under consideration or review by a . . . judicial body’ (§ 425.16, subd. (e)(2)), i.e., the federal district court, and his arguments respecting the Release’s validity were ‘statement[s] or writing[s] made before a . . . judicial proceeding’. . . .” (Navellier, supra, 29 Cal.4th at p. 90.) The gravamen of the acts complained of in Navellier was based on protected activity, rather than merely triggered by it. (Id. at p. 89.)
“Determining the gravamen of the claims requires examination of the specific acts of alleged wrongdoing and not just the form of the claim.” (Bergstein v. Stroock & Stroock & Lavan LLP (2015) 236 Cal.App.4th 793, 804.) When all is said and done, that determination is a simple one in the instant case. There were underlying disagreements between the parties about the management of the association and the treatment of Pacific by Garry Plaza. While these matters were discussed by the parties, it was the underlying grievances, and not the fact of those discussions, which are the gravamen of the complaint. Not every attempt to resolve a dispute is a settlement negotiation; there must be at least some evidence of serious contemplation of litigation.
In Seltzer v. Barnes (2010) 182 Cal.App.4th 953, 958 (Seltzer), after an owner sued a condominium association and its management company, the association cross-complained for trespass and for unpaid assessments. The owner tendered the cross-complaint to her homeowner’s insurer, Allstate, which retained counsel on her behalf. (Id. at p. 959.) Allstate agreed to defend the cross-complaint, subject to a reservation of rights, and asserted that the assessment claims were not covered under the policy. The owner’s counsel (hired by Allstate) settled the case with the association, but it did not encompass the assessment claims. The owner then sued Allstate, the association, the management company, and coverage counsel, alleging collusion to defeat coverage and convert the policy proceeds to the association. (Ibid.)
Coverage counsel filed an anti-SLAPP motion, which was denied by the trial court, but reversed by the Court of Appeal. (Seltzer, supra, 182 Cal.App.4th at pp. 959-960, 973.) The court found the owner’s claims arose from settlement negotiations, which were within the anti-SLAPP statute. The owner argued the negotiations in her case were illegal and in violation of various statutes. The court noted that the anti-SLAPP law cannot be used by a defendant whose alleged activity is illegal as a matter of law, but in this case, the legitimacy was in dispute. (Id. at pp. 964-966.)
Seltzer, however, was a very different case than the one before us. The entire basis for the owner’s claims in Seltzer indisputably arose from the parties’ conduct during settlement negotiations. Here, the informal discussions that took place between June and October without discussion of litigation were not even vaguely similar. The parties were not debating a settlement agreement, but Garry Plaza’s maintenance agreement proposal. Garry Plaza does not assert it threatened litigation before August 24, in an e-mail from Le to Cisneros, and given the continued discussions that followed, it is unclear how serious that was. If any date could be pointed to as a serious indication that litigation was being contemplated, it would be October 4, when Le stated the parties must resolve their disputes within 14 days or proceed to a lawsuit. All of Pacific’s claims either arose before that date, or the negotiations were incidental to the claims alleged.
In support of its assertion that Pacific’s entire complaint arose from protected activity, Garry Plaza claims “the [escrow] Demand and alleged refusal to allow access to the utility box arose from the negotiations and were made in anticipation of litigation contemplated in good faith and under serious consideration,” because “[t]he Demand stated it would ‘hold the escrow company responsible for any unpaid amounts.’” The demand was a form document sent by an escrow company. If this type of document reflected “serious consideration” of litigation, then lawsuits following nearly every transfer of real estate involving an association would be subject to an anti-SLAPP motion. This is surely not the case. There is simply no evidence that Garry Plaza seriously contemplated litigation as of the day after escrow closed. Garry Plaza has not meet the evidentiary threshold necessary to establish the escrow demand constituted free speech or petitioning activity that became the gravamen of Pacific’s causes of action.
Next, Garry Plaza refers to the fact that associations have a fiduciary relationship with its members and collects assessments from them, two unarguable propositions. It then argues: “Given the crucial importance of all dues and assessments to the very existence of the Association and its fiduciary relationship with the owners, Garry Plaza seriously considered litigation.” It does not cite to any part of the record to support this bare assertion, and it is plainly insufficient.
The remaining assertions of protected activity are equally flawed. Garry Plaza tries mightily to turn every communication into a “settlement negotiation,” but does not have the facts to back up its claims. It asserts: “The fraud claim was based on Garry Plaza’s alleged oral statement misrepresenting the purpose of the October 3, 2016 meeting at the Unit and on the erroneous written statement in the Demand that there was a ‘judgment,’ when there was not.” Even if we accept this characterization as true, it does not support its argument that the fraud claim was based on protected activity; if Garry Plaza’s true intent was to conduct an inspection of the unit without notice or permission, that is not protected activity, and the stated purpose of the meeting is irrelevant.
Similarly, Garry Plaza argues the trespass cause of action was based on Pacific’s claim that Garry Plaza “inspected the Unit after stating that the purpose of the meeting was to finalize the agreement.” This is not quite what the complaint says, but for the same reason as with respect to the fraud claim, it does not establish the trespass was based on protected activity. The gravamen of the claim is the trespass itself, not any discussion or negotiation, or the fact that a meeting was taking place. A trespass does not “arise from” protected conduct.
Garry Plaza also asserts that the cause of action alleging it refused to participate in ADR is protected activity. Garry Plaza asserts this failure was “merely asserting its right to petition the court through litigation,” although it fails to cite evidence as to its reasoning, and therefore it fails to make the requisite factual showing. Given that every homeowners association dispute requires an attempt at ADR before litigation, Garry Plaza’s reasoning would mean that the mention of a request for ADR in a complaint subjects it to an anti-SLAPP motion. This was neither the intent of the association ADR law, nor the anti-SLAPP law. While the request for mediation is related to any ongoing attempts to resolve a dispute informally, it does not arise from it. Nor does Garry Plaza establish the failure to do or say anything is necessarily protected activity.
A complaint, to be properly subject to an anti-SLAPP motion, must assert “allegations of protected activity that are asserted as grounds for relief. The targeted claim must amount to a ‘cause of action’ in the sense that it is alleged to justify a remedy.” (Baral v. Schnitt (2016) 1 Cal.5th 376, 395.) “Assertions that are ‘merely incidental’ or ‘collateral’ are not subject to section 425.16. [Citations.] Allegations of protected activity that merely provide context, without supporting a claim for recovery, cannot be stricken under the anti-SLAPP statute.” (Id. at p. 394.)
What the evidence here reflects is that the first time lawyers were involved was in June 2016. By that time, the allegedly false escrow demand had already been made, the HVAC problems had been revealed, and management had denied Pacific access to the utility box. Even at that point, Garry Plaza’s attorney expressly stepped away from suggesting “possible” litigation and indicated he wanted to work toward an “amicable resolution.” Pacific’s attorney responded by taking a step in Garry Plaza’s direction, indicating it would cooperate with Garry Plaza’s requests “until resolution of this matter.” They proceeded in this vein for months.
The proposed written agreement was not a settlement agreement; it was a maintenance agreement, to be recorded as an easement on the property. These discussions indicated a good faith attempt to resolve the issues between the parties, but nothing indicates the serious contemplation of litigation, not even Le’s mention of a lawsuit on August 24, given what followed. As we said, not all attempts to resolve a dispute are settlement negotiations, nor does the involvement of attorneys automatically indicate such intent. The gravamen of this case does not relate to settlement negotiations. It relates to the alleged underlying conduct itself, the most egregious of which happened early on. The anti-SLAPP motion was, therefore, properly denied.
Because we conclude the complaint is not a SLAPP, we need not proceed to the second part of the analysis and determine whether Pacific is likely to succeed on the merits of its claim.

III
DISPOSITION
The order is affirmed. Pacific is entitled to its costs on appeal.



MOORE, J.

WE CONCUR:




O’LEARY, P. J.



IKOLA, J.




Description This is an appeal from an order denying a motion pursuant to Code of Civil Procedure section 425.16, the anti-SLAPP statute. Pacific Loan Solutions, LLC (Pacific) sued its commercial owners association, Garry Plaza Office Park Association (Garry Plaza or the association), for various causes of action relating to Pacific’s ownership of a unit in the association. Garry Plaza moved to strike the complaint under the anti-SLAPP statute, arguing that it arose from its rights to free speech and petition, specifically, settlement negotiations it had undertaken with Pacific. The trial court disagreed, concluding the complaint arose from the underlying disputes. We agree with the trial court and therefore affirm the order.
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