Opinion
G059234
02-03-2022
ALI BEHZADNIA et al., Cross-complainants and Respondents, v. EVECINA CULTURAL AND EDUCATIONAL FOUNDATION, INC. et al., Cross-defendants and Appellant.
Samadani Law, and Arash Samadani for Cross-defendants and Appellants. Khan Law Group, Masood-Ur Rahman Khan, Haroon Manjlai and Jason J. Allison for Cross-complainants and Respondents.
NOT TO BE PUBLISHED
Appeal from an order of the Superior Court of Orange County No. 30-2019-01087953, Deborah C. Servino, Judge. Affirmed.
Samadani Law, and Arash Samadani for Cross-defendants and Appellants.
Khan Law Group, Masood-Ur Rahman Khan, Haroon Manjlai and Jason J. Allison for Cross-complainants and Respondents.
OPINION
MARKS, J. [*]
This appeal arises from the denial of a special motion to strike pursuant to Code of Civil Procedure section 425.16 (strategic lawsuit against public participation; anti-SLAPP). Cross-complainants allege the board of directors of cross-defendant Evecina Cultural and Education Foundation (the Foundation) have misrepresented, and fraudulently concealed, information about the finances of the Foundation. Cross-defendants (the Foundation and its nominal board of directors) responded with an anti-SLAPP motion, which the court denied on the ground that the issue was not one of public interest. Cross-defendants appealed.
We affirm. It is well established that speech does not implicate an issue of public interest merely because it concerns a nonprofit organization. Here, cross-defendants did not submit any evidence to suggest the public is interested in its finances, instead treating its finances as per se a public issue because it must report its finances to the Attorney General. But that simply is not the law. Cross-defendants do not get a free pass on the first prong of the anti-SLAPP analysis simply because the Foundation is a nonprofit. Having failed to establish that the controversy over its finances is a matter of public interest, cross-defendants' anti-SLAPP motion was properly denied.
FACTS
The complaint is not in the record. Thus we begin with the cross-complaint, which was filed by five individuals who allege they are "donors and members of the advisory board of [the Foundation]." The cross-complaint alleges six causes of action against the Foundation and four individuals who are nominally members of the board of directors (there seems to be a dispute about who comprises the board). The first four causes of action are for breach of fiduciary duty arising out of the board of directors' alleged failure to comply with requirements in the Foundation's bylaws pertaining to elections, annual meetings, appointment of committees, and accessibility of books and records. Those causes of action are not at issue in the anti-SLAPP motion.
Instead, the anti-SLAPP motion was directed at the fifth cause of action for fraud and the sixth cause of action for declaratory relief (because it incorporates the fifth cause of action for fraud). The anti-SLAPP motion is based on the following allegation: "CROSS-COMPLAINANTS are informed and believe, and based thereon allege, that the Board of Directors have intentionally misrepresented or concealed information to [Foundation] members, information regarding the finances of [the Foundation], with the intention of presenting a constant need for additional donations by [the Foundation] [sic] to meet its operational and other expenses and liabilities."
Cross-defendants filed their anti-SLAPP motion arguing that "[statements concerning a non-profit... that are distributed to the nonprofit's membership qualify as statements made in connection with an issue of public interest." They also argued that because the Foundation must comply with statutory requirements to report its finances to the Attorney General, its finances are a matter of public interest. In connection with the motion, cross-defendants submitted a one-page declaration from the president of the Foundation declaring the Foundation is a not-for-profit corporation that makes financial records available to its members, publishes certain information about its finances on its web site, and reports to the Attorney General in compliance with Government Code section 12586, subdivision (a).
That section requires that, with certain exceptions, "every charitable corporation . . . subject to this article shall, in addition to filing copies of the instruments previously required, file with the Attorney General periodic written reports, under oath, setting forth information as to the nature of the assets held for charitable purposes and the administration thereof by the corporation . . . in accordance with rules and regulations of the Attorney General."
In connection with their opposition, cross-complainants submitted a one-page declaration from Ali Behzadnia (one of the cross-complainants) declaring that, as a member of the Foundation, he had never seen the Foundation publish financial information.
The court denied the motion. Relying on Donovan v. Dan Murphy Foundation (2012) 204 Cal.App.4th 1500 (Donovan), the court ruled that statements about a nonprofit's finances are not necessarily matters of public interest, and that cross-defendants "provided no information regarding its size or the number of members and donors." It thus concluded that cross-defendants had not established that fifth and sixth causes of action arose from speech pertaining to a public issue. Cross-defendants appealed.
DISCUSSION
"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." (Code Civ. Proc, § 425.16, subd. (b)(1), italics added.) The anti-SLAPP statute contemplates a two-part analysis: first, determining whether the cause of action arises from protected activity; second, if so, determining whether there is a probability of prevailing on the claim. We review a trial court's ruling denying an anti-SLAPP motion de novo. (Dual Diagnosis Treatment Center, Inc. v. Buschel (2016) 6 Cal.App.5th 1098, 1103.) Because we conclude below that cross-defendants' financial disclosures (or lack thereof) did not constitute protected activity, we need not address whether cross-complainants have shown a probability of prevailing.
The anti-SLAPP statute defines an '"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'" as falling into one of four categories of speech. (Code Civ. Proc, § 425.16, subd. (e).) Only two of those categories are relevant here: "(3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest, or (4) any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest." (Ibid.) Both of these categories require cross-defendants to demonstrate that the underlying lawsuit arises from some form of speech made in connection with an issue of public interest.
At oral argument, cross-defendants argued, for the first time, that Code of Civil Procedure Section 425.16, subdivision (e)(2) applies here as well. That subsdivision applies to "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." However, that contention has been forfeited thrice over. First, cross-defendants did not raise subdivision (e)(2) in the trial court. (Bently Reserve LP v. Papaliolios (2013) 218 Cal.App.4th 418, 436.) Second, in their opening brief, cross-defendants mentioned subdivision (e)(2) in a footnote only. (SEIU-USWW v. Preferred Building Services, Inc. (2021) 70 Cal.App.5th 403, 408 fn. 3 ["The contention is forfeited: 'An appellant cannot bury a substantive legal argument in a footnote and hope to avoid waiver of that argument'"].) Third, the issue is waived because a new issue cannot be raised at oral argument. (In re I.C. (2018) 4 Cal.5th 869, 888 fn. 5.)
Turning to the case at hand, cross-defendants contend, "Statements concerning a non-profit corporation's finances made by its board members to it members (e.g., at the Foundation's community center, which is open to the public), the general public (e.g., by posting to the Foundation's publicly accessible website), or to an executive body (e.g., by filing them with the Attorney General's Office) are clearly statements made in a place open to the public or a public forum in connection with a public issue, and thus qualify for protection under California's anti-SLAPP statute." (fn. omitted.) Although cross-defendants do not phrase it as such, their argument amounts to a contention that statements concerning a nonprofit's finances are per se public issues, regardless of the content or context of the speech at issue.
A similar argument was rejected in Donovan, supra, 204 Cal.App.4th 1500. There, a former director sued a nonprofit organization and its directors, alleging he was wrongfully removed from the board after raising concerns about the nonprofit's financial condition. (Id. at pp. 1502-1503.) The defendants responded with an anti-SLAPP motion, arguing, "the vote to remove [the former director] as a director was an exercise of free speech, that the vote was in connection with a matter of public interest because (1) the [Dan Murphy] Foundation is in the public eye, (2) it is supervised by the Attorney General, and (3) its assets are held for the benefit of the public." (Id. at p. 1504.)
The trial court granted the anti-SLAPP motion, but the Court of Appeal reversed, holding, inter alia, that the defendants had failed to show its speech (the vote to remove the director) was in connection with a public issue. "[The defendants] presented no evidence of widespread public interest in the financial oversight or governance of the [Dan Murphy] Foundation. They submitted no news articles indicating that the public was interested in these issues, or even in the dispute among directors of the [Dan Murphy] Foundation. Rather, [defendants] rely solely on the fact that the [Dan Murphy] Foundation is one of the largest charitable organizations in Southern California, subject to public oversight by the Attorney General, and that it donates a substantial amount of money every year to persons and entities that affect millions of Southern Californians. None of these facts, standing alone or taken together, would transform a private disagreement among directors of the Foundation into a public issue or an issue of public interest. . . . [citation.] Nor does the fact that the Foundation's grants may affect large numbers of people transform every dispute among its board members into a matter of public interest. Were the law otherwise, every act of the governing body of a large organization would constitute a matter of public interest." (Donovan, supra, 204 Cal.App.4th at pp. 1508-1509.)
The holding in Donovan applies with even more force here, where cross-defendants presented an even more paltry evidentiary showing than the defendants in Donovan. In addition to proffering no evidence that the public was interested in the Foundation's finances, defendants put on no evidence of the size of the Foundation or the number of people affected. Cross-defendants' entire argument rests on the premise that issues about its finances are per se public issues. However, Donovan expressly rejected that premise, and we do too.
Cross-defendants attempt to distinguish Donovan by highlighting that the dispute in Donovan was purely private, whereas the financial disclosures at issue here were made public. The mere fact that speech is made in public, however, does not make it an issue of public interest. After an extensive review of caselaw, the court in Rivero v. American Federation of State, County, and Municipal Employees, AFL-CIO (2003) 105 Cal.App.4th 913, distilled the definition of an issue of public interest to the following circumstances: "the subject statements either concerned a person or entity in the public eye [citations], conduct that could directly affect a large number of people beyond the direct participants [citations], or a topic of widespread, public interest [citation]."(Id.at p. 924.) There is no evidence that any of these circumstances apply here. Accordingly, the anti-SLAPP motion was properly denied.
Our high court recently approved of this analysis in FilmOn.com Inc. v. DoubleVerify Inc. (2019) 7 Cal.5th 133, 149-150.
DISPOSITION
The order denying the anti-SLAPP motion is affirmed. Respondents shall recover their costs incurred on appeal.
WE CONCUR: FYBEL, ACTING P. J. GOETHALS, J.
[*] Judge of the Orange County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.