Virtual Media Group v. Crawford
Filed 12/11/12 Virtual Media Group v. Crawford
CA2/8
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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115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
SECOND
APPELLATE DISTRICT
DIVISION
EIGHT
VIRTUAL MEDIA GROUP, INC. et
al.,
Plaintiffs and Appellants,
v.
ROZA CRAWFORD,
Defendant and Respondent.
B237817
(Los Angeles
County
Super. Ct.
No. BC459090)
APPEALS from an order of the Superior Court of
County.
Ramona
G. See, Judge. Affirmed.
Russ, August & Kabat, Steven M.
Goldberg and Robert F. Gookin for Plaintiffs and Appellants.
Crawford Weinstein and Daniel A.
Crawford for Defendant and Respondent.
_________________________________________________
Plaintiff
and Appellant Virtual Media Group, Inc. (Virtual)
appeals an order granting an anti-SLAPP motion.
(See Code Civ. Proc., § 425.16.)
FACTS
The current appeal is an outgrowth
of fighting over who owns Virtual and who properly controls the company. The fighting has caused multiple rounds of
litigation, set forth below to provide context for the current anti-SLAPP
motion.
The Virtual case
In 1999, the City of Los Angeles (City) cited Regency
Outdoor Advertising, Inc. for an unlawful wall sign on a building on South San Pedro Street. Brian Kennedy and Drake Kennedy (hereafter the Kennedy brothers) run Regency.
After the City initiated a misdemeanor criminal case charging Regency
with the sign violation, Regency filed an action in federal district court
challenging the City’s outdoor advertising law.
In this same time frame, Regency entered into a business
arrangement with Virtual, which
ostensibly involved a transfer of buildings leases for outdoor
advertising held by Regency to Virtual.
The move was a litigation tactic in the federal court action to avoid
federal abstention. Regency and Virtual
then litigated the federal court action together against the City, apparently
without a federal abstention
problem.
Also in this time frame, Jon Keith
Stephens left a position with Regency and took up a position with Virtual. Acting through Stephens, Virtual later began
asserting claims against Regency regarding Virtual’s rights under the
ostensible transfer of leases noted above.
Through Stephens, Virtual sued Regency in a lawsuit entitled
Media Group, Inc. v. Regency Outdoor Advertising, Inc.
(Super. Ct. L.A. County, 2007, No. BC292359;
the “Virtual case.â€). The
complaint in the Virtual case was
based on fraud and breach of contract.
It alleged that Regency entered into a contract when they transferred
the referenced leases and that Regency never intended to honor the contract,
but entered it only to gain an advantage in the federal court action
challenging the City’s outdoor advertising law.
After a court trial in February 2007, a special verdict
was entered in the Virtual case,
which included findings that “Virtual was created by Regency employees for the
benefit of Regency in June or July 1999;†that Regency provided the $75,000 to
form Virtual and that the money had never been repaid, and that Regency also
“paid the legal bills incurred by Virtual and Regency in the federal
case.†The court found that the Kennedy
brothers were Virtual’s “owners,†and that Regency had not entered into an
enforceable contract with any separately cognizable entity, whether it be
Virtual or Stephens.
name="_ftnref3" title="">[3] The court noted that Stephens earlier
declared under penalty of perjury that he was only the ‘leasing manager’ for
Virtual.
The Regency case
In March 2007, Regency and the Kennedy brothers sued
Stephens in Regency Outdoor Advertising, Inc. v. Stephens et al. (Super. Ct. L.A. County, 2008, No. BC367413,
the “Regency case.â€). The record on appeal does not contain a copy
of the operative pleading in the Regency
case. However, other documents in the
record indicate that Regency and the Kennedy brothers sought injunctive relief
to prevent Virtual, by and through Stephens, from engaging in the outdoor
advertising business and, or to enjoin Stephens from operating Virtual.
In October
2008, the trial court in the Regency
case denied the Kennedy brother’s motion for judgment on the pleadings which
sought a determination that they owned Virtual based on the earlier findings of
fact in the Virtual case. The trial judge denied the motion because the
Virtual case was not then final. The trial court’s order reads:
“[Paragraph] 38 of the SAC contends
that the Kennedy brothers (and not Regency) own Virtual. Accordingly, [Virtual and Stephens] are
entitled to judgment on the pleadings vis-Ã -vis Regency. . . .
“The Kennedy brothers’ claim is no
more viable, assuming they are in fact plaintiffs on the third cause of
action. While the SAC quotes language
from Judge Green’s February 14, 2007 Findings of Fact and Conclusions of Law, these are on appeal and
are not final or binding on this Court.
Moreover, the SAC contains allegations which show that the real dispute
in the third cause of action is to determine the true owners of
Virtual. . . . But the Kennedys do not allege that
they are shareholders of Virtual.
“A California corporation can only be owned by its shareholders and can only
act through its duly authorized board of directors. Here, the Kennedys have not alleged
sufficient legal standing to seek injunctive relief on behalf of Virtual. Furthermore, the Kennedys have failed to
allege that they have complied with Corporations Code [section 800, subdivision
(b)(2),] prior to filing this action on behalf of Virtual. Plaintiffs’ Opposition fails to analyze these
serious issues and instead relies only on Judge Green’s findings which are on
appeal and the circular argument that the Kennedys are the ‘owners of the
company.’â€
The trial court granted Regency and the Kennedy brothers
leave to file a third amended complaint, if they so chose.
The Stephens case
In December
2010, Stephens filed a complaint against Regency and the Kennedy brothers,
Ct. L.A. County, No. BC451413, the “Stephens
case.â€). The complaint in the
defendant, based on allegations that Stephens was the sole shareholder and
officer of Virtual, but that the Kennedy brothers had made various
representations, and undertaken various actions, purportedly exercising
ownership and control over Virtual.
Stephens sought to be confirmed as Virtual’s sole shareholder, director
and officer. In the alternative, if the
Kennedy brothers were ruled to be authorized to control Virtual, then Stephens
sought to recover the cash and value of his services that he had contributed to
Virtual over a period of years.
Upon filing the complaint in the Stephens case, Stephens retained a lawyer, Roza Crawford (the
appellant in the current appeal), to represent Virtual.
Virtual’s behalf in the Stephens case.
The litigation giving rise to the current appeal
joined by Virtual, filed a complaint against Stephens and attorney Crawford and
her law practice, the Crawford Law Group (CLG).
labeled “Declaratory Relief,†“Abuse of Process,†and “Injunction.†The allegations involving Crawford and CLG
are that Stephens improperly retained Crawford and CLG to represent Virtual in
the Stephens lawsuit knowing he did
not have the authority to do so.
Crawford filed a verified answer to the complaint in the suit and wrongfully
admitted all the material allegations.
The complaint further alleges that lawyers for the
Kennedy brothers had informed Crawford about the judgment in the Virtual
case, and had informed Crawford that the Kennedys had not authorized her to
represent Virtual in the Stephens
case. The complaint alleged that
Crawford had acknowledged receiving those communications, but refused to heed
them.
On April 18, 2011, Crawford filed an anti-SLAPP motion to strike the
complaint. (§ 425.16.)
timely notice of appeal. Crawford filed
a motion for an award of attorney’s fees and costs as the prevailing party,
which was granted in the amount of $6,777.
DISCUSSION
I. The
Anti-SLAPP Statute
The
Legislature enacted the anti-SLAPP statute to address the societal ills caused
by meritless lawsuits filed to “chill†the exercise of the “constitutional
rights of freedom of speech and petition for the redress of grievances.†(§ 425.16, subd. (a).) To this end, the statute established a
special procedure for striking chilling and meritless causes of action at an
early stage of litigation. The special procedure for
striking a cause of action entails two-steps.
In the first step, the court’s task is to determine whether the moving
defendant has made a threshold showing that a challenged cause of action is one
“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 . . . .â€
(§ 425.16, subd. (b)(1).)
An act “in
furtherance of [a] person’s right of petition or free speech under the United
States Constitution or California Constitution in connection with a public
issue†includes:
“(1) any written or oral statement or writing made
before a . . . judicial
proceeding, . . .
“(2) any written or oral statement or writing made
in connection with an issue under consideration or review by
a . . . judicial body . . . ,
or . . .
“(4) any other conduct in furtherance of the
exercise of the constitutional right of
petition . . . .â€
(§ 425.16, subd. (e).)
If the court determines the moving
defendant has made the required threshold showing that a challenged cause of
action “arises from protected activity†as described above, it then falls to
the court to move to the second step of the anti-SLAPP statute’s special
striking procedure. In this second step,
the court’s task is to determine whether the plaintiff has demonstrated
a “probability†that he or she will prevail on his or her claim. (§ 425.16, subd. (b)(1);
(2002) 29 Cal.4th 53, 67; PrediWave Corp.
v. Simpson Thacher & Bartlett LLP (2009) 179 Cal.App.4th 1204, 1218 (
Cal.App.4th 1308, 1317.)
An appellate court reviews an order on an
anti-SLAPP motion under the de novo standard of review. (PrediWave,
supra, 179 Cal.App.4th at p. 1218.)
As a result, we will employ the same two-step procedure as did the trial
court in deciding if Crawford’s anti-SLAPP motion was properly granted.
II. Virtual’s
Contentions on Appeal
Virtual
contends the order granting attorney Crawford’s anti-SLAPP motion must be
reversed because the trial court erred in determining that Crawford’s conduct
underlying Virtual’s complaint was entitled to constitutional protection. Not so.
A
plaintiff cannot avoid the anti-SLAPP statute by attempting, through artifices
of pleading, to characterize a cause of action as a garden variety tort or
contract claim when in fact the claim is predicated on protected speech or
petitioning activity. (
82, 90-92.) In other words, a court that
is presented with an anti-SLAPP motion is not precluded from applying the
statute merely because of the label a plaintiff attaches to a cause of action. Instead, a court must “examine the
anti-SLAPP statute applies. . . .†(Ramona
Unified School Dist. v. Tsiknas (2005) 135 Cal.App.4th 510, 519-522.) The gravamen of a cause of action is the
allegedly wrongful conduct that is the foundation for the cause of action. (Martinez
v. Metabolife Internat., Inc. (2003) 113 Cal.App.4th 181, 189.)
Here, it cannot be questioned that Virtual sued Crawford
because she acted in the role of
an attorney for a party in a judicial proceeding. Indeed, Virtual’s first cause of action for
declaratory relief expressly seeks a judgment declaring that Crawford is “not
authorized to represent Virtual in the pending litigation.†Its second cause of action for abuse of
process alleges that Crawford, working with Stephens, caused an answer to be
filed in an effort “to gain an advantage†in the Stephens litigation. These
allegations end Virtual’s argument that the anti-SLAPP statute does not apply
in the first instance. Except where undisputedly
illegal conduct is involved, conduct connected to litigation falls within the
protective reach of the anti-SLAPP statute. (See Briggs
v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1116-1119;
Flatley v. Mauro (2006)
39 Cal.4th 299, 321-325; Healy v.
Tuscany Hills Landscape & Recreation Corp. (2006) 137 Cal.App.4th 1,
5-6; Rohde v. Wolf (2007) 154
Cal.App.4th 28, 35-37; Haight Ashbury
Free Clinics, Inc. v. Happening House Ventures (2010) 184 Cal.App.4th 1539,
1548-1549.)
This brings us to the second step of the anti-SLAPP
procedure. Virtual contends the trial
court’s order granting Crawford’s anti-SLAPP motion must be reversed because
Virtual presented evidence showing a probability that it will prevail on its
claims. Again, Virtual is wrong.
Virtual’s allegations against Crawford consist entirely
of representing a client and filing pleadings in the course of litigation. Such conduct, even if it were “fraudulent†in
the sense that Crawford was not authorized to act as Virtual’s attorney, cannot
be a basis for liability because it is absolutely protected by the litigation
privilege set forth in Civil Code section 47, subdivision (b). (See Rusheen
v. Cohen (2006) 37 Cal.4th 1048, 1056.)
No more needs to be said.
Denying Virtual the special procedural remedy afforded
under the anti-SLAPP statute does not mean that Virtual is left with no remedy
against an attorney such as Crawford, who allegedly did wrong in representing
Virtual without proper authority. One
obvious remedy is one that Virtual has already exercised, namely, a motion to
strike the answer that Crawford filed on Virtual’s behalf. Virtual also could possibly have moved to
disqualify Crawford as Virtual’s attorney of record. What Virtual could not do is file a separate
lawsuit against Crawford for alleged abuse of process based on her
litigation-related activities. Such a
lawsuit is just the type of chilling lawsuit –– a lawsuit intended to chill
petitioning activity –– at which the anti-SLAPP statute is aimed, particularly
in a context where the litigation giving rise to the abuse of process claim is
still ongoing.
DISPOSITION
The order
is affirmed. Respondent to recover costs
on appeal.
BIGELOW,
P. J.
We concur:
FLIER,
J.
GRIMES,
J.
name="_ftn1" title="">[1]
references to Virtual include aligned plaintiffs and appellants Brian Kennedy
and Drake Kennedy.
name="_ftn2" title="">[2]
further section references are to the Code of Civil Procedure unless otherwise
specified.
