Opinion
C084181
10-26-2018
REBECCA SINGH et al., Cross-complainants and Appellants, v. LISA MUKAI, Individually and as Trustee, etc., Cross-defendants and Respondents.
NOT TO BE PUBLISHED California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published,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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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. CVCS 14-1361)
Cross-complainants Rebecca Singh, Winning Hit, LLC (the company), and Ralie Singh and Stella Singh, individually and as trustees of the Ralie G. Singh and Stella Singh 1998 Family Revocable Trust, appeal from an order granting a special motion to strike their cross-complaint, which they filed against Lisa Mukai, individually and as trustee of the Chima Childrens (sic) Trust (the trust), and against the beneficiaries of the trust, Robby and Bobby Chima. We will affirm the order granting the special motion to strike the cross-complaint.
We refer to the Singhs by their first names because they share a common surname.
FACTUAL AND PROCEDURAL BACKGROUND
At the time of its creation in 1998, Rebecca and the trust were members of the company, with Rebecca being the majority member and manager of the company. Litigation amongst the members of the company began in 2008, with the instant case being filed in 2014.
In the 2008 case, the trial court entered judgment in 2013, and as it explained in its statement of decision, it found the trust to be a 49 percent member and Rebecca to be a 51 percent member of the company based on its 1998 operating agreement, title to certain disputed real property was quieted in the company, Rebecca breached her fiduciary duty to the trust when she caused it to transfer that property to herself, and that Ralie and Stella held that property in constructive trust for the company.
In the Singhs' prior appeal, we affirmed an order issuing a preliminary injunction preventing Rebecca, Ralie, and Stella from transferring certain property or disseminating the sale proceeds. (Mukai v. Singh (Oct. 29, 2015, C077273) [nonpub. opn.].)
On July 24, 2014, Lisa Mukai, as trustee of the trust, filed a verified complaint alleging causes of action for breach of fiduciary duty, breach of contract, shareholder's derivative claims, conversion, accounting, cancellation of instruments, fraudulent transfer, dissolution, damages for receiving improper distributions, damages for refusal to make distribution, and for injunctive relief against appellants. The complaint is based on alleged acts that occurred following entry of judgment in the 2008 case.
On March 27, 2015, appellants filed a cross-complaint against Mukai, individually and as trustee of the trust, Robby Chima, and Bobby Chima, asserting causes of action for breach of written agreement, breach of fiduciary duties, intentional interference with prospective economic advantage, elder abuse, and declaratory relief. Appellants alleged the trust had failed to make initial and additional capital contributions to the company, which caused their dissolution allocation rights to dissipate, making Rebecca the only voting member of the company. As alleged in the cross-complaint, appellants' causes of action are premised on Mukai's demand on July 24, 2014, and thereafter, for 49 percent of the sale proceeds from the sale of a company asset.
Mukai specially moved to strike the cross-complaint pursuant to Code of Civil Procedure section 425.16 on the grounds the causes of action alleged in the cross-complaint arise from the protected activity of filing the complaint and that appellants are unable to demonstrate a probability of prevailing on their claims. Apparently, there was no reporter present at the hearing on the special motion to strike. Mukai argued that the allegations of each cause of action are based entirely on her filing of the complaint, which she deduces from the cross-complaint's repeated reference to her activity of July 24, 2014, which is the date she filed the complaint. She further argued appellants could not demonstrate a probability of prevailing on the merits because the act on which the cross-complaint is based, i.e., the filing of the complaint, is protected by the litigation privilege of Civil Code section 47.
Undesignated statutory references are to the Code of Civil Procedure.
In opposition to the motion, appellants argued the cross-complaint is not premised on Mukai's filing of the complaint but on her "decision . . . to disregard express provisions of the [company's] operating agreement." They further argued that the cross-complaint is not premised on the filing of the complaint because it does not expressly refer to the filing of the complaint in its allegations. Finally, they argued they "can" demonstrate a probability of prevailing on the merits of their cross-complaint because (1) they have stated claims for each cause of action, and (2) the litigation privilege does not bar their claims. Rebecca submitted a declaration incorporating allegations from the cross-complaint and asserting the cross-complaint is based on Mukai's "taking a position" contrary to the operating agreement of the company. Ralie and Stella too submitted declarations stating that they are not suing Mukai because she sued them but for reasons stated in the cross-complaint.
Appellants' argument in the trial court regarding their probability of prevailing on the merits reads in its entirety: "Cross-Complainants can demonstrate a probability of prevailing on the Cross-Complaint. As seen above, in section II [which sets forth the titles and parties associated with each of the causes of action], cross-complainants have stated claims for each of the causes of action in the cross-complaint. [¶] And, as stated above in section B, the litigation privilege of Civil Code section 47 does NOT bar the claims alleged in the cross-complaint. [¶] Accordingly, the motion to strike should be denied."
The trial court granted Mukai's special motion to strike. In the course of granting the motion, the trial court sustained Mukai's evidentiary objections to Rebecca's declaration submitted in opposition to the motion. It found the cross-complaint arises from Mukai's petitioning activities. It then considered whether appellants had shown a probability of prevailing on the merits. It found they had not, and specifically noted that in their opposition to the motion they had "fail[ed] to argue any evidentiary facts to support their probability of success on the merits." The trial court found that appellants' "failure to argue the relevant contents of [their] declarations is an admission that they have no probability of success on the merits . . . ." Ultimately, however, the trial court further found that upon consideration of the declarations, appellants had not shown by their evidentiary presentation a probability of prevailing on the merits of their claims. Finally, the trial court awarded Mukai her requested attorney fees for the preparation of the special motion to strike.
These objections are not contained in the record on appeal, which means we have no way to know which portions, if any, of Rebecca's declaration were admitted into evidence. It is the appellants' burden to provide an adequate record to assess claims of error (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1140-1141), and we note appellants did not include any evidentiary objections on their notice designating the record on appeal. To the extent appellants claim there were no such objections or that it was error to sustain those objections, they ask us to rely on information outside the record on appeal, do not cite any portion of the record that arguably supports their claim (a proof of service and the court's docket), and did not provide us with a reporter's transcript that may have clarified the facts. Thus, they have forfeited any contention with respect to the evidentiary objections the trial court indicated it sustained. (Cal. Rules of Court, rule 8.204(a)(1)(B)-(C); further undesignated rule references are to these rules.) Nevertheless, because appellants never cite the declarations in support of their arguments on appeal, we are able to complete our appellate review without the benefit of a complete record.
DISCUSSION
Appellants claim the trial court erred in finding they had failed to prove a probability of prevailing on the merits. Appellants argue the trial court erred in finding the trust's capital account was concomitant with its membership interest, in finding the cross-complaint was barred by collateral estoppel, and because its findings would have problematic income tax repercussions. We remind appellants that we review the trial court's ruling as opposed to its reasoning. Thus, if the trial court properly granted the special motion to strike, even for the wrong reason, we will not disturb its ruling on appeal. (See Belair v. Riverside County Flood Control Dist. (1988) 47 Cal.3d 550, 568 ["There is perhaps no rule of review more firmly established than the principle that a ruling or decision correct in law will not be disturbed on appeal merely because it was given for the wrong reason. If correct upon any theory of law applicable to the case, the judgment will be sustained regardless of the considerations that moved the lower court to its conclusion."].) They further argue the trial court erred in awarding Mukai her requested attorney fees. In this instance, we conclude the trial court did not err in granting the special motion to strike the cross-complaint or in granting Mukai her attorney fees associated with the preparation of the motion.
1.0 Standard of Review
"A cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim." (§ 425.16, subd. (b)(1).) In ruling on a special motion to strike, the trial court engages in a two-step process. (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 76.) "First, the court decides whether the [moving party] has made a threshold showing that the challenged cause of action is one 'arising from' protected activity. [Citation.] [Second, if] the court finds such a showing has been made, it then must consider whether the plaintiff [or cross-complainant] has demonstrated a probability of prevailing on the claim." (Ibid.)
In turn, "[w]e review de novo a ruling on a special motion to strike under section 425.16. [Citation.] Thus, we apply our independent judgment, both to the issue of whether the cause of action arises from a protected activity and whether the plaintiff has shown a probability of prevailing on the claim." (Maranatha Corrections, LLC v. Department of Corrections & Rehabilitation (2008) 158 Cal.App.4th 1075, 1084.) " 'We consider "the pleadings, and supporting and opposing affidavits . . . upon which the liability or defense is based." (§ 425.16, subd. (b)(2).) However, we neither "weigh credibility [nor] compare the weight of the evidence. Rather, [we] accept as true the evidence favorable to the plaintiff [citation] and evaluate the defendant's evidence only to determine if it has defeated that submitted by the plaintiff as a matter of law." ' " (Flatley v. Mauro (2006) 39 Cal.4th 299, 326.) Additionally, we consider only the evidence that was admitted in the trial court in considering whether cross-complainants have met their burden. (See Morrow v. Los Angeles Unified School Dist. (2007) 149 Cal.App.4th 1424, 1439, 1444.)
2.0 Protected Activity
Appellants do not dispute in their opening brief the trial court's finding the cross-complaint arose from protected activity. Nevertheless, because appellants respond in their reply brief to Mukai's appellate argument that she showed the cross-complaint was premised on the protected activity of filing the complaint, we briefly address whether Mukai adequately met her initial burden of showing the causes of action alleged in the cross-complaint arose from protected activity. We conclude she did meet that burden.
To the extent appellants may claim they did dispute that finding in the opening brief, they have forfeited that contention by failing to present an argument to that effect in a separate heading. (Rule 8.204(a)(1)(B); San Joaquin River Exchange Contractors Water Authority v. State Water Resources Control Bd. (2010) 183 Cal.App.4th 1110, 1135 [argument forfeited for lack of separate heading].)
A cross-complaint alleging a cause of action arising from the plaintiff's act of filing the complaint against the defendant and participation in the subsequent litigation qualify as protected activity for purposes of section 425.16. (Church of Scientology v. Wollersheim (1996) 42 Cal.App.4th 628, 651; Raining Data Corp. v. Barrenechea (2009) 175 Cal.App.4th 1363, 1374.) Here, as appellants argue, the gist of the cross-complaint is that "Mukai is being sued for . . . taking a position and making demands as though the Trust was a fully-paid in member, when in fact it is not." The cross-complaint alleges her conduct occurred "[d]uring the period July 24, 2014." Mukai presented her complaint, filed July 24, 2014, which takes the position that the trust is entitled to 49 percent of any proceeds from the sale of a company asset. The cross-complaint further alleges Mukai "does not have standing to bring this suit" because the trust has "a negative capital account" with the company. The allegations of the cross-complaint, when read in their entirety, make it clear appellants' cross-complaint arises from Mukai's prosecution of her complaint against them, and the legal positions she is asserting in the course of that litigation.
Appellants provide only a smattering of record citations in the course of their appellate argument that the cross-complaint does not arise from protected activity. They cite seven paragraphs of the 119-paragraph cross-complaint for the proposition that "[n]one of the allegations [of the cross-complaint] relate to damages caused by the filing of the complaint in this matter." While the allegations of three of those seven paragraphs, which fall under the heading "general allegations," do allege conduct outside the scope of the litigation, paragraph No. 33, which is part of the first cause of action, alleges Mukai "[d]uring the period July 24, 2014," breached the operating agreement of the company by "taking a position" that the trust is entitled to 49 percent of the sales proceeds of company assets. The two other paragraphs, Nos. 34 and 35, allege the position is "factually and legally incorrect" and that the trust has a zero percent membership interest due to its lack of capital contributions. What appellants apparently fail to recognize is that, despite no express allegation that the cross-complaint is directly premised on the filing of the complaint, Mukai has shown the way she "took" the complained-of position and "demanded" payment based on the disputed membership interest on July 24, 2014, was by filing the complaint and prosecuting her action. This is protected activity for purposes of section 425.16. (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1056 ["communicative conduct such as the filing, funding, and prosecution of a civil action" is litigation activity protected for purposes of a special motion to strike].) Thus, we conclude the trial court did not err in finding Mukai had made a threshold showing that the cross-complaint arose from protected activity.
We disregard appellants' citation to various pages of the cross-complaint in lieu of actually summarizing for us the content of the cross-complaint. A string cite of pages following a sentence reading in its entirety, "Instead, the proposed cross-complaint states as follows," fails to satisfy appellants' burden of providing cogent legal and factual argument on appeal. (Rule 8.204(a)(1)(B)-(C); People v. Oates (2004) 32 Cal.4th 1048, 1068, fn. 10.) Neither do we consider appellants' various other factual assertions that are not supported by any citation to the record. (Rule 8.204(a)(1)(C); People v. Smith (2015) 61 Cal.4th 18, 48; City of Lincoln v. Barringer (2002) 102 Cal.App.4th 1211, 1239 & fn. 16.)
3.0 Probability of Prevailing on the Merits
To demonstrate a probability of prevailing on the merits, appellants must "have ' "stated and substantiated a legally sufficient claim." ' " (Navellier v. Sletten (2002) 29 Cal.4th 82, 88.) This means they " ' "must demonstrate that the [cross-]complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the [cross-complainants] is credited." ' " (Id. at pp. 88-89.) Here, because appellants have failed to make a sufficient evidentiary showing, we conclude the trial court did not err in finding they had not demonstrated a probability of prevailing on the merits.
In the trial court, appellants presented no further argument to indicate their probability of prevailing on the merits than to baldly say that the cross-complaint sufficiently stated the causes of action and that the litigation privilege of Civil Code section 47 did not apply. The trial court found this "failure to argue the relevant contents of [their] declarations is an admission [by appellants] that they have no probability of success on the merits . . . ." The court further found, however, that if it were to consider the declarations, the declarations did not support any finding that any capital contributions had been required by the company since the judgment was entered in the 2008 case, which the court deemed to have a preclusive effect on the state of the respective capital accounts at the time of entry of judgment.
On appeal, appellants argue (primarily without the benefit of citation to the record) they met their burden of providing a probability of success on the merits by contending Mukai has failed to present evidence of a capital contribution and by arguing the trial court erred in finding the trial court's statement of decision in the 2008 case had collateral estoppel effect. Even assuming Mukai did not show the trust made a capital contribution and that the trial court did err in finding the prior statement of decision had issue preclusive effect as to the state of the membership interests and capital accounts of the trust at that time, appellants still have not presented any argument either in the trial court or here to meet their evidentiary burden to show that they have a probability of prevailing on each of the alleged causes of action in the cross-complaint. (Winograd v. American Broadcasting Co. (1998) 68 Cal.App.4th 624, 632 ["The burden of demonstrating error rests on the appellant."].) Appellants must do more than argue they have presented legally sufficient causes of action; they must also present evidence to affirmatively show they can prevail on each of those legally sufficient causes of action. (Taus v. Loftus (2007) 40 Cal.4th 683, 714 [to resist a special motion to strike, the nonmoving party must "demonstrate both that the claim is legally sufficient and that there is sufficient evidence to establish a prima facie case with respect to the claim"].) Because the trial court found they did not meet their burden of showing a probability of prevailing, appellants must present some cogent argument on appeal, with citation to evidence in the record, to demonstrate that they can prove the causes of action alleged. They have failed to present any such affirmative showing either in the trial court or here. Accordingly, we conclude appellants have not met their burden of showing the trial court erred in finding they had not demonstrated a probability of prevailing on the merits.
As we stated above, we disregard any portion of appellants' arguments that are not supported by citation to the record. (Rule 8.204(a)(1)(C).)
We reject appellants' erroneous assertion that the rules of admissibility of evidence are somehow reduced for special motions to strike. The case appellants rely upon, Wong v. Jing (2010) 189 Cal.App.4th 1354, 1368, does not stand for the proposition that "[f]or purposes of an opposition to a motion to strike, the plaintiff is allowed to use evidence that is not properly authenticated to point out that the evidence is out there and supports its claims" because the rules of evidence should "be relaxed" in early stage motions. Wong states: "To show a likelihood of success, '[t]he plaintiff's showing of facts must consist of evidence that would be admissible at trial.' [Citation.] The plaintiff may not rely on the allegations in the complaint or assertions in a declaration based on information and belief. [Citations.] However, to meet his or her burden, the plaintiff need only make a ' "sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited." ' " (Ibid.) Thus, Wong does not stand for the proposition that the rules of evidence are relaxed for a special motion to strike, merely that the burden on the suing party is a reduced prima facie showing rather than the higher burden that applies at trial. Here, appellants did not meet even that reduced burden. --------
4.0 Attorney Fees
Appellants claim we should reverse the order granting attorney fees to Mukai regardless whether we affirm the order granting the special motion to strike. They claim that even if we affirm the trial court's order granting the motion, we could find Mukai is not a prevailing party on the motion because the results of the motion were "illusory" (Moran v. Endres (2006) 135 Cal.App.4th 952, 954), " ' "minimal" ' " and " ' "insignificant" ' " (Mann v. Quality Old Time Services (2006) 139 Cal.App.4th 328, 340). The cases cited by appellants are inapposite because here Mukai was able to successfully obtain an order striking the entire cross-complaint. We decline to reverse the order granting attorney fees.
DISPOSITION
The order granting the special motion to strike the cross-complaint and granting attorney fees to Mukai is affirmed. Respondents are entitled to their costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1), (2).)
BUTZ, Acting P. J. We concur: MAURO, J. RENNER, J.