Opinion
G052538
01-17-2017
GUSHARN K. GILL et al., Plaintiffs and Appellants, v. TIMOTHY CARL AIRES et al., Defendants and Appellants.
Crafts Law Firm, Warren S. Fujimoto; Broedlow Lewis, Jeffrey Lewis and Kelly Broedlow Dunagan for Plaintiffs and Appellants. June Babiracki Barlow, Neil Kalin and Jenny Y. Li, for California Association of Realtors® as Amicus Curiae on behalf of Plaintiffs and Appellants. Straggas Dean, George D. Straggas and James R. Knoles for Defendant and Appellant Timothy Carl Aires. Aires Law Firm and Timothy Carl Aires for Defendants and Appellants JPMCC 2006-LDP7 Trinity Place LLC and LNR Partners LLC.
ORDER MODIFYING OPINION; DENYING PETITION FOR REHEARING AND REQUEST FOR PUBLICATION; CHANGE IN JUDGMENT
It is ordered that the opinion filed on January 17, 2017 be modified as follows:
1. On page 2, the second to last paragraph is deleted and replaced with the following:
We conclude that under section 425.16, subdivision (c)(1), LNR was entitled to attorney fees and costs against both plaintiffs to the extent the fees and costs are separate from those incurred by JPMCC and reverse and remand for the trial court to determine the amount, if any, of the award. We also conclude that under that same section, defendants are entitled to attorney fees and costs against Lucky as to the slander of title and unfair competition causes of action and reverse and remand for the trial court to determine the amount, if any, of the award.
2. On page 16, at the end of the fourth sentence of the last full paragraph, that ends with "resulting trust" add "which is the basis of all the causes of action except for civil contempt" so the sentence reads:
In their cross-appeal, defendants argue there in fact was such a claim based on a theory of resulting trust, which is the basis of all the causes of action except for civil contempt.
3. On page 18, the last sentence of the second full paragraph beginning with "The creditor" is deleted and replaced with the following:
The creditor filed suit alleging, among other things, a cause of action under the theory of a resulting trust.
4. On page 18, the first sentence of the third full paragraph beginning with "On appeal" is modified to read:
On appeal, the court found the claim viable.
5. On page 19, on the second and third to last lines of the first full paragraph, "not" is to be inserted between the words "is" and "to" so the sentence reads:
It is not "to obtain priority for a claim whose object is a security interest in real property." (Campbell, supra, 132 Cal.App.4th at p. 918.)
6. On page 24, the second full paragraph is deleted and replaced with the following:
The court denied defendants' request for attorney fees incurred in defending against the anti-SLAPP motion. Defendants claim the court erred because attorney fees are mandatory. We agree in part and disagree in part.
7. The paragraph commencing at the bottom of page 24 beginning with "However LNR" and ending at the top of page 25 with "LNR is entitled" is modified to read:
But LNR prevailed on its motion in its entirety. Thus, under section 425.16, subdivision (c), attorney fees and costs are mandatory. Because LNR was sued as the manager of JPMCC, however, some or all of its fees may not have been separate from those incurred by JPMCC.
8. On page 25 before the section entitled "DISPOSITION" add the following:
Thus, there may be no basis to award LNR fees or costs. On remand, the court shall exercise its discretion to determine the amount of attorney fees and costs, if any, that LNR can segregate from those incurred by JPMCC.
This also applies to LNR's attorney fees and costs on appeal (Dowling v. Zimmerman (2001) 85 Cal.App.4th 1400, 1426 ["'"A statute authorizing an attorney fee award at the trial court level includes appellate attorney fees unless the statute specifically provides otherwise."'"]), to the extent any of those fees or costs are distinct or separate from those incurred by JPMCC.
Defendants also claim they are entitled to attorney fees and costs against plaintiff Lucky because they prevailed entirely on their motion against that party. Thus, as to Lucky, defendants were entitled to attorney fees and costs in the trial court (§ 425.16, subd. (c)(1)) and are entitled to them on appeal as well.
Although each of the defendants filed a separate motion, each motion was directed to both plaintiffs and each appears to be substantially similar if not completely identical as to Lucky. Thus, some or all of the fees and costs incurred by defendants may have been duplicative. On remand, the court shall determine the amount of attorney fees and costs, if any, to which JPMCC and Aires are entitled to recover against Lucky that can be segregated from those incurred against Gill.
9. On page 25, the paragraph entitled "DISPOSITION" is deleted and replaced with the following:
That portion of the order denying attorney fees and costs to LNR is reversed and the matter is remanded for the court to consider the amount of such fees and costs, if any, to be awarded to LNR. In addition that portion of the order denying attorney fees and costs against Lucky is reversed and remanded for the court to determine the amount of such fees and costs, if any, that can be segregated from those incurred against Gill. The remainder of the order is affirmed. The requests for judicial notice are granted. The motion to strike defendants' cross-reply brief is granted in part as discussed above. To the extent costs are not provided for as set out above, the parties shall bear their own respective costs on appeal.
The petition for rehearing and the request for publication are DENIED. This modification changes the judgment.
THOMPSON, J. WE CONCUR: O'LEARY, P. J. MOORE, J.
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. (Super. Ct. No. 30-2015-00766792) OPINION Appeal from an order of the Superior Court of Orange County, Sheila Fell, Judge. Order affirmed in part and reversed in part. Motion to strike reply brief; request for judicial notice. Motion granted in part; requests for judicial notice granted. Crafts Law Firm, Warren S. Fujimoto; Broedlow Lewis, Jeffrey Lewis and Kelly Broedlow Dunagan for Plaintiffs and Appellants. June Babiracki Barlow, Neil Kalin and Jenny Y. Li, for California Association of Realtors® as Amicus Curiae on behalf of Plaintiffs and Appellants. Straggas Dean, George D. Straggas and James R. Knoles for Defendant and Appellant Timothy Carl Aires. Aires Law Firm and Timothy Carl Aires for Defendants and Appellants JPMCC 2006-LDP7 Trinity Place LLC and LNR Partners LLC.
* * *
Plaintiffs Gusharn K. Gill (Gill) and Lucky 777, Inc. (Lucky; together with Gill, plaintiffs) appeal from an order granting a special motion to strike under Code of Civil Procedure section 425.16 (section 425.16; anti-SLAPP motion; all further statutory references are to this code unless otherwise noted) certain causes of action of their complaint for slander of title, intentional infliction of emotional distress, and violation of Business and Professions Code section 17200 (unfair competition). Plaintiffs contend the court erred in determining the stricken causes of action were privileged pursuant to Civil Code section 47, subdivision (b)(4) (Civil Code section 47(b)(4)) protecting recordation of a lis pendens.
Defendants JPMCC 2006-LDP7 Trinity Place LLC (JPMCC), LNR Partners LLC (LNR), and Timothy Carl Aires (Aires; all three collectively defendants) filed a cross-appeal, arguing the court erred when it determined the slander of title cause of action was not privileged under Civil Code section 47(b)(4) because the claim involved title to or possession of real property. They also claim they should have been awarded attorney fees.
We conclude that under section 425.16, subdivision (e), LNR was entitled to attorney fees and reverse and remand for the trial court to determine the amount of the award. Otherwise we affirm the order.
Both parties filed a request for judicial notice, which, as explained below, we grant. Plaintiffs filed a motion to strike portions of defendants' cross-reply brief, which we grant in part, as discussed below.
FACTS AND PROCEDURAL HISTORY
JPMCC is a Tennessee limited liability company (LLC); LNR is its manager. Rajpal Grewal (Grewal), not a party to this action, is a licensed real estate broker and married to Gill's daughter. After JPMCC obtained a judgment against Grewal (Judgment) in Tennessee in 2010, it secured a sister state judgment in Riverside County in the sum of not quite $210,500. In 2013 JPMCC obtained an assignment order.
JPMCC filed documents to terminate and dissolve.
Aires represents JPMCC in its collection efforts in California. In 2014 he filed an action in Orange County (Orange County Action) against Grewal and four of his real estate clients who had allegedly entered into listing agreements with Grewal. JPMCC sought to recover any sums those clients owed or would owe Grewal. When JPMCC learned the subject real properties were no longer listed, it dismissed the action without prejudice.
About the same time JPMCC filed another action in Los Angeles against Gill and Grewal (Los Angeles Action). It alleged that, although Gill had purchased real property in 2013, Grewal owned an equitable or beneficial interest therein and Gill held "bare legal title" as trustee for Grewal's benefit as the beneficiary of a resulting trust. JPMCC alleged Gill had executed a listing agreement with Grewal. JPMCC further pleaded it claimed a judgment lien against the real property and the right to any sale proceeds. JPMCC subsequently filed a dismissal without prejudice, claiming the listing had expired.
In 2013 Gill bought real property in Hesperia (San Bernardino Property). Six months later Gill listed that property for sale with Grewal acting as the broker. After Gill entered into a purchase and sale agreement, escrow opened.
One month later, Aires filed a creditor action on behalf of JPMCC against Gill and Grewal in San Bernardino Superior Court (San Bernardino Action). The complaint again alleged Grewal had an equitable or beneficial interest in the San Bernardino Property based on a resulting trust with Gill holding "bare legal title" for Grewal's benefit. JPMCC claimed a judgment lien against the real property and the right to any sales proceeds. The complaint pleaded JPMCC was entitled to a judgment against Gill for the value of the property or the amount necessary to satisfy the Judgment. After Aires recorded a lis pendens against the San Bernardino Property the trial court granted Gill's motion to expunge it.
Aires then filed a petition for writ of mandate in an attempt to reinstate the lis pendens, which the Court of Appeal denied. The California Supreme Court denied review (JPMC 2006-LDP7 Trinity Place v. S.G. (Gill), review denied July 23, 2014, S219913), after which JPMCC dismissed the San Bernardino Action with prejudice. In the declaration filed with the request for dismissal Aires stated that after escrow closed on the San Bernardino Property, Gill tendered $100, which JPMCC accepted in exchange for a dismissal.
In March 2014, JPMCC filed a fourth action against Grewal and Gill in Riverside County (Riverside Action) that included a cause of action for fraudulent conveyance. JPMCC alleged Gill had owned real property in Riverside County (Riverside Property) and transferred it to Lucky without consideration. It further alleged use of Lucky to take title was a "scheme" by Grewal and Gill to defraud Grewal's creditors. JPMCC also pleaded Grewal held equitable or beneficial title, with Gill and Lucky holding only "bare legal title." The complaint alleged the latter parties had entered into a listing agreement with Grewal to sell the property. According to the complaint, JPMCC was entitled to a judgment against Gill for the value of the property or the amount necessary to satisfy the Judgment.
JPMCC recorded a lis pendens against the Riverside Property. The superior court denied Gill's request to expunge the lis pendens, after which Gill filed a writ proceeding in the Court of Appeal. The court granted the petition ordering the lis pendens be expunged. Thereafter, JPMCC filed a request for dismissal with prejudice, again based on payment. The declaration filed with it was essentially the same as the declaration filed in connection with the San Bernardino Action.
Subsequently plaintiffs filed the within action against defendants for slander of title, intentional infliction of emotional distress, and unfair competition based on the lis pendens filings and collection activities.
Defendants each filed an anti-SLAPP motion, claiming, among other things, the causes of action were subject to the litigation privilege under Civil Code section 47, subdivision (b).
The court granted the anti-SLAPP motions in part and denied them in part. It found the filing of the San Bernardino and Riverside actions and the recording of the two lis pendens were protected activity under the anti-SLAPP statute. (§ 425.16, subd. (e).) The recording of the lis pendens in the Riverside Action was privileged under Civil Code section 47, subdivision (b) because based on a fraudulent conveyance claim. The lis pendens recording in the San Bernardino Action was not because the action did not include a real property claim. Thus plaintiffs showed a likelihood of prevailing on the merits on part of their cause of action for slander of title. Plaintiffs' cause of action survives if they have shown a likelihood of prevailing on just one protected act.
The court also granted some and denied some of the objections to evidence of both plaintiffs and defendants. Neither party has appealed this ruling. Much of what defendants recite as facts is not in the record, having been the subject of evidentiary objections sustained by the court. We do not consider those facts.
The court therefore granted Aires's and JPMCC's anti-SLAPP motions as to the causes of action for intentional infliction of emotional distress, unfair competition and the slander of title action as to the Riverside Action, and denied them as to the slander of title claim based on the San Bernardino Action. It granted LNR's anti-SLAPP motion in full.
While the ruling itself is not precise, the parties interpret it to mean the slander of title cause of action was preserved as to the San Bernardino Action and the claim as to the recording of the lis pendens in the Riverside Action was stricken.
Pursuant to Baral v. Schnitt (2016) 1 Cal.5th 376, "[w]hen relief is sought based on allegations of both protected and unprotected activity, the unprotected activity is disregarded at this stage. If the court determines that relief is sought based on allegations arising from activity protected by the statute, the second step is reached." (Id. at p. 396.) Thus, we analyze the claims as to the Riverside and San Bernardino actions separately.
REQUEST FOR JUDICIAL NOTICE
Plaintiffs filed a request for judicial notice of the documents in connection with dismissals in the action in Los Angeles and the Riverside and San Bernardino actions.
Defendants filed an opposition, claiming, among other things, the documents are irrelevant. In the alternative, defendants seek judicial notice of additional documents regarding dismissal in connection with those three cases.
Although only one of these documents was presented in the trial court, and not each is relevant, we grant both motions because they present a clearer picture of what happened in those three cases and will assist us to some degree in deciding this appeal.
MOTION TO STRIKE CROSS REPLY BRIEF
Plaintiffs filed a motion to strike portions of defendants' cross-reply brief, arguing defendants were limited to replying only to plaintiffs' response to defendants' appeal. Relying on California Rules of Court, rule 8.216(b)(3), plaintiffs object to defendants' discussion of virtually all of the arguments in their cross-reply brief, in effect a surrebuttal to plaintiffs' reply brief. This argument has merit.
As plaintiffs note, the cross-appeal contained only two issues: whether the court erred in denying the motion as to the first cause of action for slander of title regarding the Riverside Property and whether it was error to deny defendants' request for attorney fees.
In opposition, defendants claim all of the issues were raised in their cross-appellants' opening brief. Their other argument is that anything having to do with any of the three causes of action raised in the complaint is relevant to their attorney fees argument.
The fact defendants raised issues in their cross-appeal is not persuasive. As plaintiffs point out defendants' combined brief was improper, in violation of California Rules of Court, rule 2.16(b)(2), which requires a response to the opening brief and a separate section devoted to their cross-appeal. The arguments in the respondent brief are not separated into two sections but are combined in one, making it difficult to distinguish respondents' reply from their own appeal.
We acknowledge certain of the arguments overlap. Based on how the respondents' brief was drafted it is impossible to specify each improper reference. However, we grant the motion and strike those portions of the cross-reply brief to the extent defendants are attempting a second bite at the apple in response to arguments plaintiffs made in their cross-reply brief. We do not consider any of the stricken arguments in deciding this case.
DISCUSSION
1. Overview of Applicable Anti-SLAPP Law
Section 425.16, subdivision (b)(1) provides a party may bring a special motion to strike any "cause of action against [that party] arising from any act [the party commits] in furtherance of the . . . right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue . . . ." An "'act in furtherance of a person's right of . . . free speech under the United States or California Constitution in connection with a public issue' includes: . . . any written or oral statement or writing made before a . . . judicial proceeding" or "any written or oral statement or writing made in connection with an issue under consideration or review by a . . . judicial body . . . ." (§ 425.16, subd. (e)(1), (2).)
There is a two-step analysis used to resolve an anti-SLAPP motion. "First, the defendant[s] must establish that the challenged claim arises from activity protected by section 425.16. [Citation.] If the defendant[s] make[] the required showing, the burden shifts to the plaintiff[s] to demonstrate the merit of the claim by establishing a probability of success." (Baral v. Schnitt, supra, 1 Cal.5th at p. 384.) We review an order granting or denying an anti-SLAPP motion de novo. (Flatley v. Mauro (2006) 39 Cal.4th 299, 325-326.) 2. Protected Speech
The law is settled that filing a lis pendens comes within the definition of protected speech under section 425.16. (Park 100 Investment Group II LLC v. Ryan (2009) 180 Cal.App.4th 795, 806.) And plaintiffs do not dispute this. Therefore we need not discuss this factor. 3. Likelihood of Success on the Merits
The burden thus shifted to plaintiffs to demonstrate they are likely to prevail on the merits of the complaint. To do so they must both show the legal sufficiency of each cause of action and provide evidence to support a prima facie case capable of supporting judgment in their favor. (Rivera v. First DataBank, Inc. (2010) 187 Cal.App.4th 709, 718.) "'We consider "the pleadings, and supporting and opposing affidavits . . . upon which the liability or defense is based."'" (Nygard, Inc. v. Uusi-Kerttula (2008) 159 Cal.App.4th 1027, 1036.) "The court does not weigh evidence or resolve conflicting factual claims. Its inquiry is limited to whether the plaintiff[s have] stated a legally sufficient claim and made a prima facie factual showing sufficient to sustain a favorable judgment. It accepts the plaintiff[s'] evidence as true, and evaluates the defendant[s'] showing only to determine if it defeats the plaintiff[s'] claim as a matter of law. [Citation.]" (Baral v. Schnitt, supra, 1 Cal.5th at pp. 384-385.) 4. Slander of Title
The elements of a cause of action for slander of title are "(1) a publication, (2) without privilege or justification, (3) falsity, and (4) direct pecuniary loss." (Sumner Hill Homeowners' Assn., Inc. v. Rio Mesa Holdings, LLC (2012) 205 Cal.App.4th 999, 1030 (Sumner).) Plaintiffs alleged in their complaint the two lis pendens recorded in connection with the San Bernardino and Riverside actions were not privileged, were false, and clouded their titles, causing them damage, including the properties' diminution in value and lost income. They also alleged defendants knew or should have known Grewal had no interest in the properties.
As an affirmative defense, defendants alleged, among other things, recording the lis pendens in the San Bernardino and Riverside actions was absolutely privileged under Civil Code section 47, subdivision (b).
Civil Code section 47, subdivision (b) provides a broad and absolute privilege to a "publication or broadcast" made "[i]n any . . . judicial proceeding." (La Jolla Group II v. Bruce (2012) 211 Cal.App.4th 461, 472 (La Jolla).) However, Civil Code section 47(b)(4), imposes a limitation on that absolute privilege so that a lis pendens is privileged only if it "identifies an action previously filed with a court of competent jurisdiction which affects the title or right of possession of real property, as authorized or required by law." (Alpha & Omega Development, LP v. Whillock Contracting, Inc. (2011) 200 Cal.App.4th 656, 664-665 (Alpha).)
A lis pendens may be recorded by "[a] party to an action who asserts a real property claim." (§ 405.20.) "Section 405.4 defines a "'[r]eal property claim'" as 'the cause or causes of action in a pleading which would, if meritorious, affect (a) title to, or the right to possession of, specific real property . . . .'" (Kirkeby v. Superior Court (2004) 33 Cal.4th 642, 647 (Kirkeby).)
A lis pendens may be expunged if: (1) "the pleading on which the notice is based does not contain a real property claim" (§ 405.31); or (2) "the claimant has not established by a preponderance of the evidence the probable validity of the real property claim" (§ 405.32).
a. Riverside Action
The order granted the anti-SLAPP motion as to the slander of title claim for the Riverside Action because that action included a cause of action for fraudulent conveyance. That cause of action has been held to "affect [the] title to possession of real property." (Kirkeby, supra, 33 Cal.4th at p. 649.) The trial court ruled the recording of the lis pendens was absolutely privileged under Civil Code section 47(b)(4). Thus, plaintiffs had not shown and could not show they were likely to succeed on the merits of their slander of title claim.
Plaintiffs argue the ruling was incorrect because the lis pendens had been expunged based on defendants' failure to show evidentiary merit. In granting a writ petition ordering the lis pendens to be expunged, the Court of Appeal noted the only cause of action that could possibly support a lis pendens was the one for fraudulent conveyance. JPMCC's reliance on section 405.32 required it to establish the "'probably validity' of any real property claim." Thus, even if the complaint stated a fraudulent conveyance cause of action, JPMCC's failure to show the evidentiary merit of the claim was "fatal."
The court continued, JPMCC "did nothing more than speculate that because . . . Grewal and Gill are allegedly related, any real property held by Gill must have been held for Grewal's benefit, and any transfer by Gill must have been done to hinder Grewal's creditor's. [JPMCC] presented no evidence whatsoever to support any of these conjectures."
Plaintiffs point to Palmer v. Zaklama (2003) 109 Cal.App.4th 1367 (Palmer) to support their claim this lack of evidentiary merit negates any privilege. In Palmer the plaintiffs purchased real property owned by the defendants at a sheriff's sale to satisfy a judgment against the defendants. The defendants then filed a chapter 11 bankruptcy, a suit to set aside the sheriff's sale, and an appeal in the underlying collection action. They also recorded a lis pendens in connection with those actions. After the plaintiffs had the lis pendens expunged they filed an action against the defendants for, among other things, slander of title.
The appellate court held Civil Code section 47(b)(4) did not apply because the underlying proceedings were not the type sufficient to support a lis pendens. (Palmer, supra, 109 Cal.App.4th at p. 1381.) Rather, the complaint was a straight collection action, which is not a proper basis for a lis pendens. (Id. at p. 1381.)
In holding the lis pendens was not privileged, Palmer relied on the fact there are two grounds for expungement of a lis pendens: failure to properly allege a real property cause of action and failure to show the probable validity of the claim. (Palmer, supra, 109 Cal.App.4th at p. 1381.) From this Palmer concluded either is a ground to defeat the Civil Code section 47(b)(4) privilege. (Id. at p. 1380.)
Plaintiffs argue that because the Court of Appeal found the fraudulent conveyance claim lacked any merit, the lis pendens was not privileged under Civil Code section 47(b)(4).
Plaintiffs highlight the language of section 405.4, which defines "'real property claim'" as "a cause or causes of action in a pleading, which would, if meritorious," affect title to or the right to possess a specific piece of property. They point to the comment to section 405.4, which states that the prior iteration of the statute "did not carefully distinguish between the concepts of adequate pleading of a claim justifying a lis pendens and the evidentiary merit of the claim." (Code Com., 14A West's Ann. Code Civ. Proc. (2004 ed.) foll. § 405.4, par. 1, p. 315.)
Plaintiffs note a further comment that states, "[i]f the pleading filed . . . does not properly plead a real property claim, the lis pendens must be expunged . . . . If the claimant does plead a real property claim, but the claim pleaded has no evidentiary merit, the lis pendens must be expunged . . . . By expressly distinguishing the concepts of pleading and evidence . . . the statute makes clear that factual merit is also necessary to maintenance of a lis pendens." (Code Com., 14A West's Ann.Code Civ. Proc., supra, foll. § 405.4, par. 2, p. 315.)
Plaintiffs conclude from this that to affect title to real property a real property claim must both be properly pleaded and have evidentiary merit. They contend that based on the expungement of the lis pendens in the Riverside Action, the fraudulent conveyance claim had no merit and thus could not affect title to the property.
Plaintiffs' argument is sympathetic and has a certain logic to it. And it is consistent with Palmer. Since Palmer, however, two cases have disagreed with its rationale and holding.
In Alpha, supra, 200 Cal.App.4th 656 the plaintiff brought a slander of title action for the defendant's wrongful recording of a lis pendens. The defendant filed an anti-SLAPP motion, arguing the plaintiff could not show the likelihood of prevailing because the lis pendens was privileged under Civil Code section 47(b)(4). In opposing the motion, the plaintiff relied on Palmer, arguing there was no privilege because the lis pendens had no evidentiary merit. Nonetheless, the trial court granted the motion based on the privilege.
In affirming that ruling, the Court of Appeal held "the definition of 'real property claim'" in section 405.4 does not include an evidentiary merit element. (Alpha, supra, 200 Cal.App.4th at p. 667.) A real property claim is defined as a "'cause or causes of action in a pleading which would, if meritorious, affect (a) title to, or the right to possession of, specific real property . . . .'" (Ibid., italics omitted.) Thus, "[s]ection 405.4 does not define [a] 'real property claim,' or lack thereof, on the basis of the strength or weakness of the evidence to support that claim. Instead, it is clear from the plain language of section 405.4 that a 'real property claim' is determined from the cause or causes of action set forth in the pleading(s)" (Ibid., italics omitted.)
Likewise, "[t]he language of subdivision (b)(4) of Civil Code section 47 is not ambiguous and in any event is not reasonably susceptible to a construction that would create an additional exception to the absolute litigation privilege based on the lack of 'evidentiary merit' of a claimant's real property claim in connection with a recorded lis pendens." (Alpha, supra, 200 Cal.App.4th at p. 667, italics omitted.) "'"'Courts must take a statute as they find it, and if its operation results in inequality or hardship in some cases, the remedy therefor lies with the legislative authority.'"'" (Ibid.)
Plaintiffs attempt to distinguish Alpha, arguing we must look at "the claim as actually pled and with[] reference to [the] evidence," citing to Urez Corp. v. Superior Court (1987) 190 Cal.App.3d 1141 (Urez), Lewis v. Superior Court (1994) 30 Cal.App.4th 1850 (Lewis), and Campbell v. Superior Court (2005) 132 Cal.App.4th 904 (Campbell). In those cases, the plaintiffs filed lis pendens based on a cause of action for constructive trust or equitable lien. The court held those claims did not support a lis pendens because they were not truly real property claims, but rather were collection actions seeking damages disguised as real property claims. (Urez, supra, 190 Cal.App.3d at p. 1149; Lewis, supra, 30 Cal.App.4th at p. 1865; Campbell, supra, 132 Cal.App.4th at pp. 918-919.)
In Lewis the court held labeling a claim one for fraudulent conveyance made no difference because there were no allegations of any conveyance. (Lewis, supra, 30 Cal.App.4th. at p. 1865.) But here, on the other hand, defendants did allege a fraudulent conveyance by Gill to Lucky in conjunction with Grewal or his affiliates. Contrary to plaintiffs' assertion, the courts in Urez, Lewis, and Campbell did not analyze whether the claims had evidentiary merit.
La Jolla, supra, 211 Cal.App.4th 461, considering the same question of whether a lis pendens lacking evidentiary merit was privileged, also disagreed with Palmer. In La Jolla the appellate court affirmed the grant of an anti-SLAPP motion striking a slander of title cause of action. It held a lis pendens recorded in connection with a quiet title claim was privileged under Civil Code section 47(b)(4) because it was based on a real property claim. The plaintiffs, relying heavily on Palmer, argued the privilege did not apply because the quiet title action had no evidentiary merit. The court disagreed.
It distinguished Palmer, following the reasoning in Alpha. (La Jolla, supra, 211 Cal.App.4th at pp. 475-477.) The court reiterated that the rules of statutory interpretation would be violated if it added an evidentiary merit exception to Civil Code section 47(b)(4) when the Legislature had not done so. (Id. at p. 476.)
The court also concurred the definition of a real property claim in section 405.4 on which a lis pendens could be based added weight to its interpretation. The definition does not include any reference to the "'strength or weakness of the evidence to support the claim.'" (La Jolla, supra, 211 Cal.App.4th at p. 477.) Likewise, under Civil Code section 47(b)(4) a lis pendens is privileged when the underlying action "affects" title to or possession of real property.
Plaintiffs also attempt to distinguish Kirkeby, supra, 33 Cal.4th 642, which held a fraudulent conveyance action is a real property claim supporting a lis pendens. (Id. at p. 647.) As Kirkeby stated, according to the plain language of section 405.31 (expungement based on failure to state a real property claim), there was no requirement the court "'look through the pleadings to ascertain the purpose of the party seeking to maintain notice of lis pendens.'" (Id. at pp. 649, 650.) Rather, the legislative history was to the contrary, requiring the court to review only the "specific claim as pled" and decide whether it was a real property claim. (Id. at p. 650.)
Plaintiffs argue that in Kirkeby, "the legal sufficiency of the pleading was never in doubt," noting the court stated the creditor had sufficiently pleaded a fraudulent conveyance cause of action because it alleged the debtor "had transferred title of the subject properties with the intent to defraud." (Kirkeby, supra, 33 Cal.4th at p. 650.)
But plaintiffs are conflating the requirements of expungement under section 405.32 (expungement based on failure to establish the probable validity of a real property claim) with the question of whether a lis pendens is privileged under Civil Code section 47(b)(4). It is true a lis pendens can be expunged based on failure to show probable validity of the alleged real property claim. But that is not the test for determining whether a recording was privileged under Civil Code section 47(b)(4).
We agree with the reasoning of Alpha and La Jolla, rather than that of Palmer. The argument that once a lis pendens has been found to lack factual support the privilege should not apply has some surface appeal. But we cannot deny the language of Civil Code section 47(b)(4) contains no evidentiary merit element. Even if such a test might seem appropriate in some circumstances, the Legislature has not seen fit to make it part of the statute. And "we are not at liberty to insert what has been omitted." (La Jolla, supra, 211 Cal.App.4th at p. 477.)
In sum, because the lis pendens recorded against the Riverside Property was based on a real property claim, it is privileged under Civil Code section 47(b)(4).
Attacking from a different angle, plaintiffs argue defendants are collaterally estopped from relying on the issue of privilege because it has already been litigated in the Riverside Action. "'Collateral estoppel precludes the relitigation of an issue only if (1) the issue is identical to an issue decided in a prior proceeding; (2) the issue was actually litigated; (3) the issue was necessarily decided; (4) the decision in the prior proceeding is final and on the merits; and (5) the party against whom collateral estoppel is asserted was a party to the prior proceeding or in privity with a party to the prior proceeding.'" (Plumley v. Mockett (2008) 164 Cal.App.4th 1031, 1048-1049.)
Plaintiffs claim the writ of mandate issued by the appellate court granting the motion to expunge the lis pendens "necessarily decided" whether defendants had alleged a real property claim. They contend the motion to expunge, opposition, and reply in the trial court "confirm" the parties and the superior court addressed the sufficiency of the pleading, not the sufficiency of the evidence to support the claim.
But the appellate court specifically did not address the sufficiency of the pleading but instead determined there was no evidence to support the alleged real property claim, stating "even if the pleading were sufficient to state a cause of action for fraudulent conveyance, [JPMCC's] failure to factually support the claim is fatal." It emphasized, JPMCC "presented no evidence whatsoever to support any of these conjectures."
Based on this ruling, the issue of whether the lis pendens was based on a real property claim was not finally and necessarily decided. Thus a critical element of collateral estoppel has not been met, and defendants are not barred from litigating the issue.
b. San Bernardino Action
1) Resulting Trust as Basis for Claim Lis Pendens Affects Title to Real Property
In the ruling on the anti-SLAPP motion the court found the lis pendens recorded in the San Bernardino Action was not privileged under Civil Code section 47(b)(4) because the action did not contain a real property claim. In their cross-appeal, defendants argue there in fact was such a claim based on a theory of resulting trust. Defendants maintain the San Bernardino Action contained a specific legal description of the San Bernardino Property and alleged Grewal holds "an equitable and/or beneficial title" in that real property even though Gill held title and was a trustee for Grewal. The prayer sought an order that Gill held title for the benefit of Grewal. Defendants also prayed the judgment lien on the property be foreclosed for a receiver to sell the property.
Defendants argue their request for a "forced judicial sale" falls within the confines of Civil Code section 47(b)(4) "because if successful, it would affect title to the real property described in the lis pendens." We disagree.
Defendants' argument is long on legal authority and short on facts. They cite several cases defining a resulting trust, including Estate of Yool (2007) 151 Cal.App.4th 867, which states: "'A resulting trust arises by operation of law from a transfer of property under circumstances showing that the transferee was not intended to take the beneficial interest. [Citations.] Such a resulting trust carries out and enforces the inferred intent of the parties. [Citations.] "Ordinarily a resulting trust arises in favor of the payor of the purchase price of the property where the purchase price, or a part thereof, is paid by one person and the title is taken in the name of another. [Citations.]"'" (Id. at p. 874.) "In other words, the relationship between resulting trustee and beneficiary arises where one, in good faith, acquires title to property belonging to another." (Ibid., italics omitted.
But "[t]he weight of authority holds a lis pendens may not be recorded in a creditor's action to impose a constructive trust or equitable lien on real property solely as a means of enforcing a debt. Indeed, the creditor's suit claims no present interest in the property, and only entitlement to a remedy that, if granted, would 'affect title.'" (Greenwald & Bank, Cal. Practice Guide: Real Property Transactions (The Rutter Group 2015) ¶ 11:646, p. 11-197, italics omitted.)
Defendants argue cases discussing constructive trusts do not apply to their alleged resulting trust. We disagree. The fact a constructive trust and a resulting trust are different is irrelevant to the issue here. "For purposes of determining the propriety of a lis pendens, the constructive trust and the equitable lien are indistinguishable. 'Resulting trusts, constructive trusts and equitable liens are very much akin to each other, and their basic purposes to identify and impress upon certain property the beneficial rights that have arisen in an innocent party who in some way contributed to the acquisition, protection or improvement of that property are, in general, the same.'" (Okuda v. Superior Court (1983) 144 Cal.App.3d 135, 141, italics omitted.)
For example, Urez, supra, 190 Cal.App.3d 1141 stated, "[A]llegations of equitable remedies, even if colorable, will not support a lis pendens if, ultimately, those allegations act only as a collateral means to collect money damages. . . . [T]he true purpose of the lis pendens statute is to provide notice of pending litigation and not to make plaintiffs secured creditors of defendants nor to provide plaintiffs with additional leverage for negotiating purposes." (Id. at p. 1149; see Campbell, supra, 132 Cal.App.4th 904, 919 [action to impose equitable lien not real property claim supporting lis pendens].)
Defendants rely on Fidelity National Title Ins. Co. v. Schroeder (2009) 179 Cal.App.4th 834 (Fidelity) to support their theory. In Fidelity a debtor transferred title to real property to a third person without consideration to avoid having a creditor record a lien against the property. The creditor filed suit alleging, among other things, a cause of action for a resulting trust.
On appeal the court found the cause of action viable. It stated that under the particular facts "the debtor actually retained an equitable interest to which a judgment lien may attach" creating an equitable trust. (Fidelity, supra, 179 Cal.App.4th at pp. 849, 850.)
Fidelity is distinguishable on several grounds. First, it did not involve a lis pendens. Second, the San Bernardino Action merely makes conclusory allegations that, despite title on the deed, Grewal somehow owns an equitable interest in the San Bernardino Property. There are no allegations Grewal transferred that property to Gill to avoid payment to defendants or how Grewal might have obtained an interest in Gill's property. Nor are there any allegations Grewal patently or secretly paid any part of the consideration for the San Bernardino Property. And the complaint fails to allege how Grewal obtained his alleged interest in that property. The bare allegation of a resulting trust is not sufficient.
As amicus observes, the real basis of the cause of action is that because Gill is Grewal's mother-in-law, there must be a resulting trust. As amicus further points out, all a creditor would have to do to satisfy the Civil Code section 47(b)(4) privilege is allege some familial or other relationship and allege the debtor owns some equitable interest in real property held in the name of the relative. This would extend the use of a lis pendens far beyond its intended purpose and would open the doors to abuse of the process. As defendants note more than once, the sole purpose of a lis pendens is to give notice of the pending proceedings. (Albertson v. Raboff (1956) 46 Cal.2d 375, 379.) It is "to obtain priority for a claim whose object is a security interest in real property." (Campbell, supra, 132 Cal.App.4th at p. 918.)
Amicus also argues it is not unusual or untoward for a real estate broker to act on behalf of a family member. Rather, that is often the best or only way for the broker to succeed in business.
Defendants point to a footnote in Kirkeby that the case did not present the issue of whether a claim for constructive trust or equitable lien would support a lis pendens. (Kirkeby, supra, 33 Cal.4th 642, 650, fn. 7.) This does not in any way diminish the current state of the law.
Additionally, we reject defendants' claim Kirkeby stands for the proposition Civil Code section 47(b)(4) and section 405.4 (definition of a real property claim) look only to "the effect of the possible judgment, and not the primary purpose of the lawsuit." Contrary to defendants' argument, Kirkeby cannot be stretched to hold that if a claim could "result in a judgment altering the state of title to specific real property, then a 'real property claim' has been pled."
The mere fact defendants might prevail on some non-real property-based cause of action and ultimately be able to foreclose on real property to satisfy the judgment does not somehow transform the collection claim into one affecting title to or possession of real property as required by the statute. A lis pendens cannot be used as a collateral means to collect money damages. (Urez, supra, 190 Cal.App.3d at p. 1145.) The slander of title cause of action as to the San Bernardino Action was not privileged.
2) Prima Facie Showing of Likelihood of Success on the Merits
To defeat the motion, plaintiffs also had to make a prima facie showing of the elements of a slander of title claim, to wit, a false publication that is not privileged or justified and that causes a monetary loss. (Sumner, supra, 205 Cal.App.4th at p. 1030.)
The lis pendens is a publication, and, as discussed above, its recording was false. Yet relying on M.F. Farming Co. v. Couch Distributing Co., Inc. (2012) 207 Cal.App.4th 180, disapproved on another ground in Baral v. Schnitt, supra, 1 Cal.5th at page 376, footnote 11, defendants maintain they had a conditional privilege to disparage or were justified in disparaging the property because they had an "honest and good faith assertion of an inconsistent legally protected interest" in the property. They claim plaintiffs had to show they lacked justification.
Plaintiffs made a sufficient showing. In the complaint Gill alleged defendants knew or should have known Grewal had no interest in the property and in spite of that knowledge, falsely claimed to the contrary. In addition, in her declaration in opposition to the motion, Gill stated she owned the property; Grewal never had an interest of any kind in the property and did not pay any part of the purchase price. Further, the lis pendens was expunged, and defendants dismissed the San Bernardino Action.
This was sufficient at this point in the proceedings to make a prima facie case negating the privilege affirmative defense. We do not weigh evidence but accept plaintiffs' as true. We look at defendants' evidence only to determine whether it defeats plaintiffs' evidence as a matter of law. It does not.
The mere allegation defendants dismissed the San Bernardino Action because they were paid $100 from escrow does not show they had any interest in the property or even believed they did. Nor does the argument defendants were seeking to extend or modify the law change our conclusion. That can be addressed at trial. "[T]he anti-SLAPP statute requires only 'a minimum level of legal sufficiency and triability.'" (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 738.) Plaintiffs have met that standard.
Relying on West Investment Co. v. Moorhead (1953) 120 Cal.App.2d 837, 844, disapproved on another ground in Albertson v. Raboff, supra, 46 Cal.2d at page 380, defendants argue plaintiffs also had to show a favorable termination of the prior action and cannot do so. We did not find any authority to suggest that is an element of slander of title. Instead the elements are those stated above: "(1) a publication, (2) without privilege or justification, (3) falsity, and (4) direct pecuniary loss." (Sumner, supra, 205 Cal.App.4th at p. 1030.) If anything, West Investment appears to be an outlier case and we disregard it and the argument.
Defendants also claim plaintiffs do not have any damages. Again we disagree.
In the complaint plaintiffs alleged the San Bernardino Property decreased in value, they lost income because they were unable to sell and invest money elsewhere, and paid taxes, insurance and interest they would not have been required to had they sold the property sooner. (Glass v. Gulf Oil Corp. (1970) 12 Cal.App.3d 412, 419 ["'impairment of vendability'" proper damages in slander of title action].) They also incurred attorney fees and cost in defending the San Bernardino Action to clear title. (Sumner, supra, 205 Cal.App.4th at p. 1031 [attorney fees and costs incurred to clear title sufficient to support slander of title cause of action].) Gill reiterated these facts in her declaration. This is sufficient to defeat the motion.
We reject defendants' argument plaintiffs resorted to self-help and thus already have been compensated. Defendants cite to Gill's declaration where she explained that, due to damages she incurred from the recordation of the lis pendens and being sued by JPMCC, Grewal agreed to reduce his commission. Ultimately, JPMCC was paid $100 from escrow. Gill's statement was in response to a claim by Aires in his declaration that $100 was not a customary commission. However, the court sustained plaintiffs' objections to that statement. In any event, reduction of a commission does not equate to self-help that negates a damages claim.
Finally, that emotional distress damages may not be recovered in a slander of title cause of action does not impair the claim itself. 6. Intentional Infliction of Emotional Distress
Gill sued defendants for intentional infliction of emotional distress. The elements of that cause of action are "'(1) extreme and outrageous conduct by the defendant with the intention of causing, or reckless disregard of the probability of causing, emotional distress; (2) the plaintiff's suffering severe or extreme emotional distress; and (3) actual and proximate causation of the emotional distress by the defendant's outrageous conduct.'" (Wilson v. Hynek (2012) 207 Cal.App.4th 999, 1009.)
The court granted the anti-SLAPP motion as to this cause of action. Defendants argue this claim is barred by the absolute privilege of Civil Code section 47, subdivision (b). They are correct.
Civil Code section 47, subdivision (b) states a "privileged publication . . . is one made . . . [¶] . . . [¶] (b) [i]n any . . . judicial proceeding." The complaint alleged Gill suffered emotional distress due to the recording of the two lis pendens and plaintiffs' collection activity undertaken, in part, by the filing of the two actions in Los Angeles and Orange County.
In her declaration in opposition to the motion, Gill stated she suffered emotional distress "[a]s a result of defendants' filing of the [Riverside, San Bernardino and Los Angeles actions and another collection effort in an escrow in the Inland Empire] and recording of Lis Pendens." Thus her claim is based on defendants' protected litigation activity.
"[A]s many cases have concluded, the litigation privilege under Civil Code section 47, subdivision (b), bars [intentional infliction of emotion distress] claims arising out of litigation conduct." (S.A. v. Maiden (2014) 229 Cal.App.4th 27, 43 & cases cited therein.) "In this case, because the alleged wrongful conduct did 'not involve any action outside of ordinary court proceedings [citation] calculated to humiliate or inflict emotional distress" [citation], the litigation privilege under Civil Code section 47, subdivision (b), applies to bar" Gill's intentional infliction of emotional distress cause of action. (Id. at p. 44, italics omitted.) 7. Unfair Competition
Likewise, the unfair competition cause of action is based on defendants' alleged wrongful collection activities and is privileged as well under Civil Code section 47, subdivision (b). (Rubin v. Green (1993) 4 Cal.4th 1187, 1193.) Thus, the order striking this cause of action was correct. 8. Claims Against LNR
Plaintiffs named LNR, the manager of JPMCC, in all of the causes of action. Plaintiffs contend LNR is liable because JPMCC had no other way to appear except through LNR as JPMCC was a terminated LLC. Plaintiffs also vaguely refer to JPMCC's discovery responses, without explanation or record reference, to show LNR controlled JPMCC. This is not sufficient to meet their burden.
In addition, defendants argue that, since JPMCC was a Tennessee company, the law of that state should control. Defendants cite two provisions of Tennessee law that arguably control. Tennessee Code Annotated section 48-217-101, subdivision (a)(1) provides that, with some exceptions, a manager of an LLC has no personal liability for the acts of the LLC. Subdivision (b) provides this limitation on liability remains in full effect even after dissolution or termination of the LLC. Tennessee Code Annotated section 48-249-114, subdivision (a)(1)(B) reiterates the limitation on liability after dissolution.
Plaintiffs did not address these sections or the larger choice of law issue. Without deciding either of those arguments, they highlight plaintiffs' failure to show the likelihood of prevailing on their claim against LNR. 9. Attorney Fees
The court denied defendants' request for attorney fees included in the anti-SLAPP motion. Defendants claim the court erred because attorney fees are mandatory. As to JPMCC and Aires we disagree. We reverse and remand as to LNR.
Section 425.16, subdivision (c) states that, with certain exceptions not applicable here, a defendant who prevails on an anti-SLAPP motion "shall be entitled to recover his or her attorney's fees and costs." However, where a motion is only partially successful, as with JPMCC and Aires, fees are not required if "the results obtained are insignificant and of no practical benefit to the moving party." (Fremont Reorganizing Corp. v. Faigin (2011) 198 Cal.App.4th 1153, 1177.) In such an instance, the trial court must exercise its discretion to determine whether fees are appropriate and, if so, the amount. (Ibid.)
JPMCC and Aires did not meet their burden to show the court abused its discretion. Without such an affirmative showing we must assume the court properly exercised its discretion. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1140-1141.) The primary cause of action for slander of title still remains. It is reasonable to consider that the other two causes of action, intentional infliction of emotional distress and unfair competition, are derivative of and subsumed into the slander of title claim that defendants must still litigate. Therefore the court could reasonably determine the results of the anti-SLAPP motion did have much of an effect on the action against these defendants.
However LNR prevailed on its motion in its entirety. Thus, under section 425.16, subdivision (c), fees are mandatory. Because LNR was sued as the manager of JPMCC, however, some or all of its fees may not have been separate from those incurred by JPMCC. In that case there might be no basis to award it fees. On remand, the court shall exercise its discretion to determine the amount of attorney fees, if any, to which LNR is entitled.
DISPOSITION
That portion of the order denying attorney fees to LNR is reversed and the matter is remanded for the court to consider the amount of fees, if any, to be awarded to LNR. The remainder of the order is affirmed. The requests for judicial notice are granted. The motion to strike defendants' cross-reply brief is granted in part as set out above. The parties shall bear their own respective costs on appeal.
THOMPSON, J. WE CONCUR: O'LEARY, P. J. MOORE, J.