Filed 9/23/26 Diplomat Property Manager v. FortiFi Financial CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

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COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

DIPLOMAT PROPERTY MANAGER, D086371
LLC,

Plaintiff and Respondent,
(Super. Ct. No. 24CU007912C)
v.

FORTIFI FINANCIAL, INC.,

Defendant and Appellant.

APPEAL from an order of the Superior Court of San Diego County,
Loren G. Freestone, Judge. Affirmed.
Orrick Herrington & Sutcliffe, Fredrick S. Levin and Ali M. Abugheida
for Defendant and Appellant.
Buchalter, R. Jeremy Adamson and Robert Collings Little for Plaintiff
and Respondent.
This action involves alleged misuse of California’s Property Assessed
Clean Energy (PACE) program (Stats. 2008, ch. 159, §§ 1–2, p. 523), which
allows homeowners to install renewable energy sources and energy-efficient
upgrades to their homes and have the cost added to their property tax bill to
be paid in installments. (Morgan v. Ygrene Energy Fund, Inc. (2025)
18 Cal.5th 1061, 1070.)
Diplomat Property Manager, LLC’s predecessor made construction
loans secured by real properties to real estate developer Andre Wegner, his
company Top Flight, Top Flight principal Doug Sanchez, and related entity
Palms Blvd Venice Beach, LLC. Sound Equity High Income Debt Fund, LLC
serviced and administered the loans for Diplomat.
Top Flight then entered into voluntary assessment contracts for each
property under the PACE program. FortiFi Financial, Inc., which
administers the PACE program for the relevant governmental entities,
recorded the assessments to have them added as tax liens on the properties.
By law, the PACE liens take priority over other liens and run with the
property. (Sts. & Hy. Code, §§ 5898.30; Gov. Code, § 53340, subd. (e);
Morgan, 18 Cal.5th at p. 1070.)
After Top Flight defaulted on the construction loans and allowed the
property taxes to become delinquent, Sound Equity sued Top Flight, Wegner,
Sanchez, and Palms. The court appointed a receiver to sell the properties.
Diplomat claims buyers generally were unwilling to purchase the properties
subject to FortiFi’s PACE liens, so the receiver used sale proceeds to pay the
PACE lien balances and clear the titles. Because the receiver paid off the
PACE liens first, Diplomat asserts its subsequent recovery was diminished.
Diplomat sued FortiFi, alleging it conspired with Top Flight to pay out
PACE funds to a construction company owned by Wegner, which never
completed the efficiency upgrade work on the homes or did so at inflated
prices. It claims FortiFi never monitored or inspected the work and, along

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with Wegner, pressured the receiver to pay off the PACE liens, which it knew
would subordinate Diplomat’s deeds of trust. The complaint asserted causes
of action for declaratory judgment, tortious interference with contract,
tortious interference with prospective economic advantage, aiding and
abetting breach of contract, conspiracy to commit fraud, and unfair
competition.
FortiFi filed a special motion to strike Diplomat’s complaint, arguing it
was a strategic lawsuit against public participation (SLAPP) under Code of
Civil Procedure section 425.16 (the anti-SLAPP statute). The court denied
the motion, finding FortiFi had not met its initial burden to show that
Diplomat’s complaint arose from protected activity.
FortiFi appeals, arguing Diplomat’s causes of action arise from
protected prelitigation petitioning activity because recording the PACE liens
is a prerequisite to pursuing judicial foreclosure. FortiFi also asserts its
enforcement of the PACE liens in litigation is protected conduct, and that
each of Diplomat’s causes of action arises from FortiFi enforcing the liens in
litigation.
In our view, FortiFi’s argument that recording PACE liens is protected
conduct seeks to push the boundaries of what constitutes protected
prelitigation conduct too far afield of the expressed language and intent of
section 425.16. We further conclude Diplomat’s claims do not arise from
FortiFi’s alleged litigation conduct. Accordingly, we affirm.
I.
A.
According to the operative complaint, although many local governments
adopt the PACE program, they typically contract with private PACE
administrators like FortiFi to serve as de facto lenders. (See also Morgan,

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18 Cal.5th at p. 1071.) The administrators select the private contractors that
will do the home improvement work and pay them directly. The PACE
program encourages installation of “distributed generation renewable energy
sources or energy or water efficiency improvements” (see Sts. & Hy. Code,
§ 5898.21) such as solar panels, artificial turf, and energy efficient water
heaters, furnaces, and light fixtures.
Diplomat alleges that, starting in early 2019, FortiFi colluded with
Wegner to obtain “super-priority” PACE loans on properties already
encumbered by Diplomat’s recorded deeds of trust. In nearly every instance,
FortiFi distributed the loan proceeds to the contractors before they started
any work, rather than incrementally based on progress. None of the
distributions were supported by invoices, receipts, purchase orders, or other
proof of actual or anticipated costs.
As part of the conspiracy, FortiFi paid the funds to a construction
company controlled by Wegner, which never completed any of the work. Top
Flight then “defaulted strategically” on Diplomat’s construction loans, while
simultaneously allowing the property taxes to become delinquent. The
complaint alleges this was “no problem for FortiFi, which knew it would be
paid out first in the default process.”
In April 2021, Sound Equity sued Top Flight, Wegner, Sanchez, and
Palms for defaulting on all the construction loans. The court appointed a
receiver over specific Top Flight properties and later expanded the receiver’s
powers so the receiver could market and sell all eight of the defaulted Top
Flight properties. The receiver sought an order that FortiFi understood
would authorize the sale of two homes clear of all liens without payment of
FortiFi’s PACE assessments.

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 In early November 2022, FortiFi intervened and opposed the motion,
seeking to block the court from stripping the PACE assessment liens. The
receiver revised the motions, and FortiFi advised the court that it did not
oppose the sales based on its understanding that the delinquent PACE debts
would be paid and that the PACE liens would otherwise remain on the
properties.
The court ultimately issued orders directing the receiver to pay
delinquent PACE assessments and confirming the PACE liens would
continue to run with the property after the sale unless prepaid in full.
According to Diplomat, because most buyers were unwilling to buy the
properties subject to the PACE liens, the receiver used sale proceeds
otherwise intended for Diplomat to pay off FortiFi’s PACE liens first.
Through its complaint, Diplomat seeks various remedies, including the
recovery of $844,205—the amount it anticipates FortiFi will be paid through
escrows on the eight properties.
B.
In its anti-SLAPP motion, FortiFi asked the court to strike Diplomat’s
entire complaint. Diplomat opposed the motion. With its reply brief, FortiFi
requested judicial notice of a superior court minute order from a different
case involving PACE liens.
The trial court denied the motion and the request for judicial notice. As
to FortiFi’s contention that recording PACE liens is protected activity, the
court explained that “‘[p]relitigation communications may constitute
protected activity, but only if those communications are
related to litigation that is contemplated in good faith and under serious
consideration. Litigation is not under consideration if it is only a
possibility. . . .’ (People ex rel. Allstate Ins. Co. v. Rubin (2021) 66 Cal.App.5th

5
493, 499.)” It acknowledged PACE liens are like mechanic’s liens in that they
can only be enforced by judicial foreclosure, and that this court previously
determined in RGC Gaslamp, LLC v. Ehmcke Sheet Metal Co., Inc. (2020)
56 Cal.App.5th 413 that mechanic’s liens constitute protected prelitigation
statements. But, citing Medallion Film LLC v. Loeb & Loeb LLP (2024)
100 Cal.App.5th 1272, 1284–1286, the court noted later cases have limited
RGC Gaslamp’s holding to “‘prelitigation activities that were intrinsically
preparatory to litigation such that no analysis o[f] surrounding circumstances
was necessary to determine that they were protected prelitigation activity.’”
Under this authority, when the activities are not “‘intrinsically preparatory’”
to litigation, courts must still evaluate whether litigation was “‘genuinely
contemplated’” at the time the challenged activity occurred.
Applying this test, the court concluded that recording PACE
assessments was not intrinsically preparatory to litigation because their
purpose was to finance home improvements and the expectation was that
they would be repaid as an added property tax. Because they are “‘voluntary
contractual assessments,’” recorded before any default, and designed to
facilitate financing, the court found them more akin to deeds of trust.
As FortiFi did not submit evidence showing it was genuinely
contemplating litigation at the time it recorded the PACE assessments, the
court observed that FortiFi had to rely solely on Diplomat’s allegations to
make that showing. The court acknowledged the complaint reflects FortiFi
knew its lien would subordinate Diplomat’s and that Top Flight strategically
defaulted on the construction loans while also falling behind on its property
tax payments. But the court concluded the complaint overall reflected
FortiFi’s apathy as to whether litigation resulted, which “d[id] not equate to a
genuine contemplation of litigation.” Furthermore, noting that FortiFi did

6
not initiate the litigation as a judicial foreclosure, the court determined that
“[t]here is simply no evidence or allegations that at the time it recorded the
assessments, FortiFi was genuinely contemplating intervening and filing an
opposition 3 ½ years later in a case filed by a non-party to the PACE loan.”
The court further concluded FortiFi’s litigation conduct did not form
the basis for Diplomat’s claims. As to its first cause of action for declaratory
relief, the court determined Diplomat did not allege the PACE liens were
illegitimate and fraudulent because of Diplomat’s conduct in the receivership
action. In the court’s view, the actions giving rise to the claimed illegitimacy
and fraud all predated that litigation. It concluded the remaining five causes
of action were all based on the following specific actions listed in the
complaint, none of which were predicated on FortiFi’s actions in the
receivership case: “‘FortiFi’s (i) failure to vet contractors who performed
renovations on the Properties, (ii) failure to monitor, inspect and document
the work performed by its approved contracts, (iii) decision to approve the use
of a contractor controlled by Wegner, (iv) willful payment to contractors for
work that had not been completed or was completed at inflated and
fraudulent prices for equipment and labor, (v) willful conspiracy with Top
Flight and Wegner and Sanchez to defraud Diplomat, and abuse the PACE
program and (vi) recordation of illegitimate PACE liens with Los Angeles and
Riverside Counties.’”
The court was unpersuaded by FortiFi’s argument that the alleged
fraud “‘was ultimately accomplished in the Sound Equity litigation,’” and that
“‘the alleged fraud would not have been completed’” without its actions in
that litigation. “[A]lthough the alleged scheme to subordinate Diplomat’s
loans with illegitimate and fraudulent PACE liens ‘may have been carried out
by the filing of’ documents in the litigation,” the court explained “FortiFi’s

7
actions in the Sound Equity litigation are not the basis for any of the causes
of action.”
Because the court concluded FortiFi had not met its step one burden of
showing that Diplomat’s complaint arose from protected activity, the court
denied the motion and did not reach step two.
II.
The anti-SLAPP statute seeks to cut short “lawsuits brought primarily
to chill the valid exercise of the constitutional rights of freedom of speech and
petition for the redress of grievances.” (§ 425.16(a).) It “provides a procedure
for weeding out, at an early stage, meritless claims arising from protected
activity.” (Baral v. Schnitt (2016) 1 Cal.5th 376, 384.)
An anti-SLAPP motion involves a two-step process. “At the first step,
the moving defendant bears the burden of identifying all allegations of
protected activity[] and the claims for relief supported by them.” (Baral,
1 Cal.5th at p. 396.) The moving party must establish that the challenged
allegations or claims arise from protected activity, which may include, as
relevant here, “any written or oral statement or writing made before a . . .
judicial proceeding” and “any written or oral statement or writing made in
connection with an issue under consideration or review by a . . . judicial
body.” (§ 425.16(e)(1), (2).) If the defendant satisfies that burden, then at the
second step “the burden shifts to the plaintiff to demonstrate that each
challenged claim based on protected activity is legally sufficient and factually
substantiated.” (Baral, at p. 396.)
We review de novo the denial of an anti-SLAPP motion. (Park v. Board
of Trustees of California State University (2017) 2 Cal.5th 1057, 1067.) In
doing so, we consider relevant pleadings and supporting and opposing
affidavits. (§ 425.16(b)(2).) We accept the evidence favorable to the plaintiff

8
as true and only evaluate the defendant’s evidence to determine if it has
defeated the plaintiff’s submissions as a matter of law. (Flatley v. Mauro
(2006) 39 Cal.4th 299, 326.)
At the first step here, FortiFi contends Diplomat’s complaint arises
from protected activity for two reasons. First, each of Diplomat’s causes of
action stems from FortiFi recording allegedly fraudulent and illegitimate
PACE liens. According to FortiFi, recording PACE liens is protected
prelitigation activity because recording the lien is a prerequisite to pursuing
judicial foreclosure, which is the sole enforcement mechanism for a PACE
assessment. Second, FortiFi asserts its enforcement of the PACE liens in
litigation is protected conduct, and that each of Diplomat’s causes of action
arises from FortiFi enforcing the liens in litigation. We disagree on both
counts.
A.
FortiFi seeks to strike all causes of action against it, arguing that each
claim arises from its recording of PACE liens. Diplomat acknowledges that
its claims center on a fraudulent scheme involving the recorded PACE liens,
but it disputes FortiFi’s contention that the act of recording PACE liens
constitutes protected prelitigation activity.
Courts have long construed the anti-SLAPP statute’s provision
providing protection for “any written or oral statement or writing made in
connection with an issue under consideration or review by a . . . judicial body”
(§ 425.16(e)(2)) as also shielding some prelitigation communications. (Nirschl
v. Schiller (2023) 91 Cal.App.5th 386, 401 citing Briggs v. Eden Council for
Hope & Opportunity (1999) 19 Cal.4th 1106, 1115.) As our high court
explained, “courts considering the question have concluded that ‘[j]ust as
communications preparatory to or in anticipation of the bringing of an action

9
or other official proceeding are within the protection of the litigation privilege
of Civil Code section 47, subdivision (b),’” “such statements are equally
entitled to the benefits of section 425.16.” (Briggs, at p. 1115.) The
Legislature has made clear the anti-SLAPP statute should be “construed
broadly” to protect “the valid exercise of the constitutional rights of freedom
of speech and petition for the redress of grievances.” (§ 425.16(a); Briggs, at
p. 1119.)
The Legislature’s stated intention offers the key to our resolution of the
dispute in this case. Once a homeowner signs a contract agreeing to a PACE
assessment, the relevant legislative body “shall direct its clerk to record a
notice of the existence and amount of each contractual assessment with the
county recorder of the county in which the lot or parcel is located.” (Sts. &
Hy. Code, § 5898.32, italics added.) As FortiFi acknowledges, the
assessments must be recorded to create the lien that, in turn, obligates the
property owner to pay the assessment. In fact, the notices of assessment in
the record expressly state, “[notice is further given] that upon the recording
of this notice in the office of the County Recorder, the Assessment shall
become a lien upon the Property.” The purpose of recording the assessment
was thus to create a tax lien, not to “redress” a “grievance.” The absence of
any sort of grievance at this stage is reinforced by the fact that homeowners
voluntarily enter into PACE assessment contracts. And in the normal course,
the tax lien is paid off in due course by the homeowner without any disputes
and without the need for any litigation. Therefore, we are not persuaded that
the anti-SLAPP statute applies to the act of recording PACE assessments.
FortiFi nonetheless contends that “because PACE assessments must be
recorded in order to be enforced and the only enforcement mechanism
available in the event of non-payment is judicial foreclosure,” there is a direct

10
and logical connection between recording PACE assessments and litigation.
FortiFi cites a series of cases to justify its assertion that all it must show is
that the activity is a legal prerequisite to pursuing judicial remedies. (See
Birkner v. Lam (2007) 156 Cal.App.4th 275 and Feldman v. 1100 Park Lane
Associates (2008) 160 Cal.App.4th 1467; Lunada Biomedical v. Nunez (2014)
230 Cal.App.4th 459; CKE Restaurants, Inc. v. Moore (2008) 159 Cal.App.4th
262; Salma v. Capon (2008) 161 Cal.App.4th 1275.) But we are not convinced
that demonstrating the act is a prerequisite to pursuing judicial remedies,
without more, is enough to satisfy the anti-SLAPP statute.
In the cases FortiFi relies on, an underlying dispute or grievance
existed at the time the petitioning occurred. (See Lunada Biomedical,
230 Cal.App.4th at p. 465 [“Attorneys for a consumer served on a company a
notice required for damages under the Consumers Legal Remedies Act, Civil
Code section 1750 et seq. (CLRA), setting forth alleged violations of the CLRA
and demanding action.”]; CKE Restaurants, 159 Cal.App.4th at pp. 266–267
[respondents served 60-day notice that CKE violated Safe Drinking Water
and Toxic Enforcement Act of 1986 because it failed to warn consumers that
its french fries contained chemical known to cause cancer]; Salma,
161 Cal.App.4th at p. 1281 [while searching for an attorney, defendant served
and recorded notice of rescission of an equity purchase agreement after filing
complaints with police and district attorney alleging fraudulent purchase of
his home and retention of his personal property]; Feldman, 160 Cal.App.4th
at pp. 1474–1475 [owner of apartment building served tenants with three-day
notice to quit during ongoing dispute as to whether owner had approved their
sublease]; Birkner, 156 Cal.App.4th at p. 279 [landlord served tenants with
notice to terminate tenancy and refused to rescind it even after tenant’s
counsel notified him tenants could not be evicted because they were protected

11
under rent ordinance].) Thus, these cases do not mandate the conclusion that
a recording is protected solely because it is a prerequisite to pursuing judicial
remedies.
FortiFi also cites an unpublished trial court decision from another
court, purportedly for its reasoning—the very same decision the trial court
declined to consider via FortiFi’s request for judicial notice. Diplomat moved
to strike FortiFi’s reply brief based on its reliance on this non-citable
authority. Because FortiFi did not expressly violate the rules offered by
Diplomat, we deny the motion and decline to impose sanctions. But,
although FortiFi claims it provided the case solely for its reasoning, FortiFi
provided only the trial court’s conclusion with no indication of how the court
grappled with Supreme Court or published appellate authority to reach that
conclusion. Thus, it appears FortiFi actually cited the case for its
precedential value. As the trial court correctly noted in denying FortiFi’s
request for judicial notice of this case, a trial court order has no precedential
value. (Crab Addison, Inc. v. Superior Court (2008) 169 Cal.App.4th 958,
963, fn. 3.) For this reason, we decline to consider this trial court decision.
In our view, FortiFi’s position—that any activity is protected
prelitigation conduct so long as it is a prerequisite to eventually, possibly
pursuing judicial remedies—is too attenuated from our Supreme Court’s
rationale for extending anti-SLAPP coverage to prelitigation activities in the
first place. As the court explained, “[u]nder the plain terms of the statute[,] it
is the context or setting itself that makes the issue a public issue: all that
matters is that the First Amendment activity take place in an official
proceeding or be made in connection with an issue being reviewed by an
official proceeding.” (Briggs, 19 Cal.4th at p. 1116, italics added.) Filing a
PACE assessment with the county recorder for the purposes of complying

12
with a statutory mandate and creating a voluntary lien is not an activity in
connection with an issue currently under review by a court or even one
contemplated at the time of filing. And FortiFi does not argue that the
actions of the recorder’s office constitute official proceedings authorized by
law, such that the mere filing of the assessment, independent of any later
litigation, independently satisfies the anti-SLAPP statute. (See
§ 425.16(e)(1), (2).)
For this reason, we agree with the trial court that recording a PACE
assessment is more akin to filing a deed of trust than a mechanic’s lien.
“Deeds of trust are filed with the owner’s consent and, at least initially, their
purpose is to facilitate credit rather than to collect debts.” (Wilton v.
Mountain Wood Homeowners Assn. (1993) 18 Cal.App.4th 565, 570.)
“Although deeds of trust may be foreclosed judicially after a default, they are
not at their inception related to judicial proceedings.” (Ibid.) Thus, neither
deeds of trust nor PACE liens are created or recorded to “redress” a
“grievance.” In arguing that “the only enforcement mechanism available in
the event of non-payment [on a PACE lien] is judicial foreclosure,” FortiFi
implicitly acknowledges that a grievance necessitating judicial foreclosure
only arises in the event of nonpayment.
Mechanic’s liens, meanwhile, are filed in the event of nonpayment, and
thus are premised on the existence of a grievance. The contractor, supplier,
or laborer has performed work on a property or delivered materials and has
not been paid. (See RGC Gaslamp, 56 Cal.App.5th at p. 422 [mechanic’s liens
are available to resolve payment disputes in private construction projects].)
As we noted in RGC Gaslamp, the recording of a mechanic’s lien “is a
necessary prerequisite to a foreclosure action” and “is not a prerequisite for
contractual performance or anything else.” (Id. at p. 430.) Recording a PACE

13
assessment, by contrast, is a prerequisite to something else—receiving
repayment along with taxes. Thus, although we stated in RGC Gaslamp that
no additional showing besides recording was necessary to satisfy the moving
party’s burden, that case pre-supposed the existence of a grievance in need of
redress and the recording occurred under materially different circumstances.
(See ibid.)
A claimant also must enforce their mechanic’s liens through a
foreclosure suit within 90 days. (RGC Gaslamp, 56 Cal.App.5th at p. 423
citing Civ. Code, § 8460(a).) Although litigation was likewise in view in the
cases FortiFi relies on, FortiFi never filed a foreclosure action and only
intervened three-and-a-half years after recording the liens. During oral
argument, FortiFi’s counsel appeared to argue it did not matter how much
time passed between recording and enforcement in this case because there
were no “off ramps” during that time span. In our view, at the time of
recording, FortiFi had not yet reached the on ramp of non-payment necessary
to potentially demonstrate the statutorily required grievance.
We also reject FortiFi’s argument that Birkner, Feldman, Lunada
Biomedical, CKE Restaurants, and Salma “hold true to the intent of
section 425.16, which ‘is construed broadly, to protect the right of litigants to
the utmost freedom of access to the courts without [the] fear of being
harassed subsequently by derivative tort actions.’ (Rohde v. Wolf (2007)
154 Cal.App.4th 28, 35 [cleaned up].)” We do so because “[s]ection 425.16 is
not concerned with securing for litigants freedom of access to the judicial
process.” (Flatley, 39 Cal.4th at p. 324.) That is the objective of the litigation
privilege. (Ibid.) “The purpose of section 425.16 is to protect the valid
exercise of constitutional rights of free speech and petition from the abuse of
the judicial process (§ 425.16(a)), by allowing a defendant to bring a motion to

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strike any action that arises from any activity by the defendant in
furtherance of those rights.” (Ibid.)
Declining to apply the anti-SLAPP statute here will not deprive FortiFi
of access to the courts. The lawsuit is to recover funds that were allegedly
fraudulently obtained, not to suppress FortiFi’s right to record PACE liens
under normal, lawful circumstances—or, for that matter, to record
illegitimate PACE assessments against other parties. Accordingly, a holding
declining to protect the recording of PACE liens will not, as FortiFi claims,
run afoul of the anti-SLAPP statute’s purpose of protecting litigants from
meritless claims designed to chill speech.
The trial court concluded that recording PACE liens was not protected
conduct by applying the test that prelitigation communications may only
qualify for statutory protection if they concern the subject of the dispute and
if the anticipated litigation is contemplated in good faith and under serious
consideration. (Medallion Film, 100 Cal.App.5th at p. 1284.) Although some
courts, including our own, have questioned the appropriateness of this test
(see RGC Gaslamp, 56 Cal.App.5th at p. 429 [but concluding it need not
resolve whether to apply this test while noting it “may be helpful in
evaluating prelitigation statements that do not intrinsically anticipate
litigation”]), most courts apply it. (See Medallion Film, at pp. 1284–1285
[collecting cases].) But we are not persuaded we must reach the stage of
employing this test because at the time FortiFi recorded the PACE
assessments pursuant to its statutory duty, no dispute existed, and neither
party had a grievance it sought to redress. This was not a protected act of
petitioning under the anti-SLAPP statute.
Nonetheless, FortiFi responds the complaint’s allegations demonstrate
litigation was always the intention in this particular case. In its view,

15
because FortiFi and Top Flight purportedly entered a conspiracy to defraud
Diplomat by “strategically” placing the PACE assessments into default, and
because the only way to obtain payment aside from voluntary payment is
litigation, the complaint alleges litigation was the plan all along. FortiFi also
contends the complaint accuses FortiFi of “priming”—“jump[ing] in front of
otherwise first-position creditors [like Diplomat] in the payment waterfall.”
Somewhat ironically, in arguing the trial court erred in considering
whether the anticipated litigation was contemplated in good faith and under
serious consideration, FortiFi characterizes this test as an inappropriate
intent-based analysis. Yet, in asking us to consider the intent of the
conspiracy to conclude that recording the PACE assessments really was done
in anticipation of litigation in this case, FortiFi asks us to consider its intent.
We decline to do so.
We further find FortiFi’s argument problematic for three reasons.
First, only one party in this scenario was aware that recording the PACE
liens was envisioned as prelitigation activity. On this point, we agree with
other cases finding an attorney’s subjective expectations of litigation
insufficient to establish the activity was protected prelitigation conduct.
(See, e.g., Rubin, 66 Cal.App.5th at p. 501 [concluding doctor’s medical
reports and bills were not protected where doctor’s argument that they were
intended to be used in litigation “‘hinge[d] on his subjective understanding of
the purpose of his reports and bills’”]; People ex rel. Fire Ins. Exchange v.
Anapol (2012) 211 Cal.App.4th 809, 829 [concluding “an insurance claim
cannot be transformed from a simple claim for payment submitted in the
usual course of business into protected prelitigation conduct solely on the
basis of the subjective intent of the attorney submitting the claim”].) Second,
assuming for the sake of resolving this issue that the allegations are true,

16
finding this recording protected would allow a co-conspirator to not only
defraud another lender but also rely on its conspiracy to avoid facing the
merits of a complaint alleging wrongdoing. And third, it would result in a
lack of uniformity as to whether the recording of PACE liens is considered
protected activity.
People ex rel. 20th Century Ins. Co. v. Building Permit Consultants, Inc.
(2000) 86 Cal.App.4th 280 addressed a similar argument. There, an
insurance company alleged fraud related to insurance claims following the
Northridge earthquake. (Id. at p. 282.) In the underlying complaint,
20th Century claimed that “in cases where a homeowner had been paid by
20th Century for earthquake damage, ‘defendants would prepare a false and
fraudulent report which indicated that the earthquake damage was more
extensive than previously claimed by the homeowner and paid for by ex rel.
Plaintiff 20th Century. Defendants falsely and fraudulently attributed
damage to the Northridge earthquake when, as defendants were aware, there
was no damage at all or, if there was damage, it resulted from causes other
than the Northridge earthquake.’” (Id. at p. 284.) If 20th Century did not
pay the additional insurance benefits demanded, the defendants used biased
appraisers and referred clients to attorneys who were instructed to file
litigation. (Id. at p. 282.)
In a subsequent anti-SLAPP motion, the defendants argued “their right
to petition [was] implicated by the allegation that they prepared and used
false and fraudulent damage reports and repair estimates.” (20th Century,
86 Cal.App.4th at p. 284.) They supported their motion with a declaration
from the owner explaining that the majority of the reports were prepared in
anticipation of litigation. (Ibid.) The court disagreed, explaining that the
damage reports were sent to demand performance on an insurance contract

17
and that no issue was under consideration in any official proceeding at the
time the defendants created and submitted their reports and claims. (Id. at
p. 285.) Relevant here, the court concluded, “[i]f we protect the reports and
claims under section 425.16 because they eventually could be used in
connection with an official proceeding, we would effectively be providing
immunity for any kind of criminal fraud so long as the defrauding party was
willing to take its cause to court. Defendants have cited nothing to us that
demonstrates the anti-SLAPP law embraces such actions. We are satisfied it
does not.” (Ibid.)
We agree with 20th Century’s conclusion on this point. Accordingly, we
conclude the trial court correctly determined that recording the PACE liens is
not prelitigation activity protected by the anti-SLAPP statute and thus did
not err in denying FortiFi’s motion to strike on this basis.
B.
FortiFi next argues Diplomat’s complaint arises from FortiFi’s
enforcement of PACE assessments in the Sound Equity litigation. We
disagree.
It is undisputed none of Diplomat’s six causes of action mention FortiFi
filing a lawsuit or its actions during the Sound Equity litigation. Its first
cause of action for declaratory relief seeks a declaration the PACE liens are
“illegitimate and fraudulent” such that FortiFi must “disgorge all proceeds
therefrom.” The remaining five causes of action are based on the actions
listed previously, which included FortiFi’s “willful conspiracy with Top Flight
and Wegner and Sanchez to defraud Diplomat, and abuse the PACE
program.”
FortiFi contends the causes of action all arise from its alleged actions
during the Sound Equity litigation because these acts were all part of the

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fraudulent conspiracy to defraud Diplomat referenced in each of the causes of
action. FortiFi summarizes the allegations relating to its litigation activity,
which were listed in the complaint under the heading “FortiFi’s Fraudulent
Conspiracy With Top Flight,” (bolding omitted) as follows: (1) “FortiFi
resisted requests for information from the receiver in litigation”; (2) “FortiFi
interfered with the orderly operation of the court-ordered receivership”;
(3) “FortiFi threatened to object (and did object) to pending sale motions in
court”; (4) “FortiFi and Wegner ‘wrongfully collaborate[d]’ to ‘pressure’ the
receiver to pay off the allegedly ‘illegitimate’ PACE liens”; and (5) “[t]his
included ‘[o]n at least two occasions, shortly after the receiver discussed
specific FortiFi loans with FortiFi’s CFO, Mark Roh, . . . Wegner texted or
called the receiver to demand that the receiver stop auditing the loans and
“just pay it off.”’” According to the complaint, “[t]his behavior by FortiFi
created a mosaic of conspiracy and collusion with Wegner. The structural
protections of the PACE program, the lack of any oversight and enforcement
by FortiFi over its loans and work to be completed, the collusion between
Wegner and Forti[F]i, and the obvious financial incentive for both Wegner
and FortiFi, all facilitated this fraud, the only true victim of which is
Diplomat.”
As FortiFi sees it, its alleged conduct in the Sound Equity litigation
forms an essential part of the “fraudulent conspiracy” because each act was
done in furtherance of the purported conspiracy. FortiFi argues the aim of
the purported conspiracy—to maintain the PACE assessments’ super priority
lien status—was accomplished when FortiFi intervened, objected to the
motions that would have stripped the PACE assessments from the homes,
and prevailed in its efforts. Thus, it contends that absent its alleged conduct
in the Sound Equity litigation, Diplomat would have nothing to complain

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about because its first lien position would have been preserved. Because
litigation conduct is protected activity, and because FortiFi contends each
cause of action is predicated on the same fraudulent conspiracy, it asserts
each claim arises from protected activity.
This argument hinges on the faulty premise that Diplomat would not
have been harmed but for FortiFi intervening in the litigation to defend its
lien position. But this is not accurate. As FortiFi admits, the receiver asked
the court to strip FortiFi’s PACE assessment liens without compensation or

notice at the closing of each sale.1 There is no indication, however, the court
intended to grant this request. Furthermore, FortiFi argued in the Sound
Equity Litigation that Article XIII, section 32 of the California Constitution
and Revenue & Taxation Code section 4807 barred the receiver’s request
because those provisions prohibit a court from entering any order that would
prevent or enjoin the collection of property taxes, which include PACE
assessments. According to FortiFi, the court agreed. We will not presume
that, absent FortiFi highlighting this law, the court would have ruled
contrary to law. (Cf. Wilson v. Sunshine Meat & Liquor Co. (1983) 34 Cal.3d
554, 563 [“it is presumed that the court followed the law”].) Thus, we will not
assume the court would have stripped the loans without compensation.
This left two options: either the receiver would have paid off the PACE
liens in full to provide clean title to the buyers or it would have had to sell the
properties subject to the PACE liens. As the complaint alleges no one would
buy the properties subject to the liens, if they sold at all, they most likely

1 This statement is also somewhat misleading, as counsel for the receiver
clarified during oral argument in the trial court that the receiver sought only
to pay off the amount of the PACE liens that was in arrears, not the amount
due going forward. Counsel asserted the receiver intended the PACE liens
would remain on the property.
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would only have eventually sold at a loss equivalent to the value of the liens
since the PACE improvement work was never done. Either option would
result in a financial loss to Diplomat. Therefore, the conspiracy “to defraud
Diplomat, and abuse the PACE program” was complete and the damages
incurred when Top Flight defaulted and stopped paying its taxes.
In other words, Diplomat’s claims were not based on FortiFi’s
subsequent litigation conduct. (See Park, 2 Cal.5th at p. 1062.) As described
in the allegations, what makes the liens illegitimate and fraudulent is that
“FortiFi pre-funded the loans in full” and “there is no evidence that the
renovation work was done at all.” These actions damaged Diplomat because
they created a superior debt on properties that did not appreciate based on
the improvements because the work was never done. FortiFi intervened in
the litigation after these acts underlying Diplomat’s claims, including Top
Flight’s default, occurred. “[T]he mere fact that an action was filed after
protected activity took place does not mean the action arose from that activity
for the purposes of the anti-SLAPP statute.” (Navellier v. Sletten (2002)
29 Cal.4th 82, 89.)
Therefore, FortiFi has not shown its alleged litigation activity was the
injury-producing conduct necessary to prove FortiFi: (1) intentionally acted to
induce disruption of the contractual relationship between Diplomat and Top
Flight and did actually disrupt the relationship (see Jenni Rivera Enterprises,
LLC v. Latin World Entertainment Holdings, Inc. (2019) 36 Cal.App.5th 766,
782); (2) intentionally engaged in wrongful acts designed to interfere with the
economic relationship between Diplomat and Top Flight and actually
disrupted the relationship (see Korea Supply Co. v. Lockheed Martin Corp.
(2003) 29 Cal.4th 1134, 1153–1154); (3) engaged in a common plan to
knowingly make a false representation with the intent to defraud and induce

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justifiable reliance (see AREI II Cases (2013) 216 Cal.App.4th 1004, 1021–
1022); or (4) engaged in an unfair or fraudulent business practice (see Durell
v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1359) and caused Diplomat
to suffer damage as a result. And although Diplomat concedes its cause of
action for aiding and abetting breach of contract is not recognized in
California, it correctly notes FortiFi has not demonstrated its alleged
litigation activity supplied any of the elements of the claim asserted or the
related California tort of inducing breach of contract. (See Shamblin v. Berge
(1985) 166 Cal.App.3d 118, 122–123 [claim of inducing breach of contract
requires knowledge of valid contract, intent to induce its breach, actual
breach by unjustified or wrongful conduct, and damages].)
Because FortiFi has not met its burden at the first step of the anti-
SLAPP analysis, we need not address the second step.

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 III.
We affirm the order. Diplomat shall recover its costs on appeal.

CASTILLO, J.

WE CONCUR:

DO, Acting P. J.

KELETY, J.

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