Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County, Super. Ct. No. KC048157, Dan Thomas Oki, Judge.
Oldman, Cooley, Sallus, Gold, Birnberg & Coleman, Ron Gold; Law Offices of Norman Hoffman, Norman Hoffman; Capital Advocates, and Ravinder Mehta for Cross-complainants and Appellants.
Alvarez-Glasman & Colvin, Arnold M. Alvarez-Glasman, City Attorney, Matthew M. Gorman, Deputy City Attorney; Squire, Sanders & Dempsey, Stephen T. Owens, Michael T. Purleski, Stacie D. Yee, and Erinn M. Partridge for Cross-defendants and Respondents.
MANELLA, J.
INTRODUCTION
Appellants Hassen Imports Partnership, Hassen Imports, Inc., Ziad Alhassen, an individual, West Covina Motors, Inc. and Hassen Holdings Company, were the defendants and cross-complainants below. Respondents City of West Covina (City) and the City of West Covina Community Development Commission (Commission) were plaintiffs and cross-defendants. Appellants’ cross-action alleged violations of the Political Reform Act of 1974 (PRA or Act), Government Code section 81000 et seq.
All further references to the individual provisions of the Political Reform Act should be understood as referring to the Government Code.
Appellants appeal from the dismissal of their cross-action, entered after respondents prevailed in a special motion to strike the first amended cross-complaint (FACC) under the anti-SLAPP (Strategic Lawsuit Against Public Participation) statute. The anti-SLAPP statute provides in relevant part: “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 or 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).)
In all further references to Code of Civil Procedure section 425.16, we omit reference to the code and state it simply as section 425.16. All other statutory references are to the Government Code, unless otherwise indicated.
Appellants concede that their cross-action arose from the cross-defendants’ exercise of their constitutional right of petition or free speech in connection with a public issue, and do not claim to have established a probability of prevailing on the cross-action. Appellants’ sole contention on appeal is that the enactment of section 425.16 subsequent to the PRA had the effect of amending the Act, in violation of article II, section 10, subdivision (c), of the California Constitution. We disagree, and affirm the judgment.
“A statute enacted by voter initiative may be changed only with the approval of the electorate unless the initiative measure itself permits amendment or repeal without voter approval. (Cal. Const., art. II, § 10, subd. (c).)” (People v. Cooper (2002) 27 Cal.4th 38, 44 (Cooper).)
BACKGROUND
In 2006, respondents filed a complaint alleging breach of contract and liability under a written guaranty, naming appellants as defendants. The complaint alleged that beginning in 1983, the Commission entered into a series of development agreements with appellants and their predecessors, under which appellants received loans from the Commission to develop or rehabilitate several automobile dealerships, in consideration for guaranteed minimum sales tax revenue. The last of these agreements was amended in 2005, in order to address appellants’ delinquencies under the previous agreements. The 2005 amendment gave appellants additional time and financial assistance to complete the construction of two dealerships by March 15, 2006. The complaint alleged that when appellants failed to meet the deadline and sales tax revenue goals, respondents demanded payment of the shortfall; when appellant failed to pay, respondents filed this action.
Appellants filed a cross-complaint, as taxpayers and citizens of the City, against respondents and three members of the city council--Michael Touhey, Steven Herfert and Shelley Sanderson (council members)--alleging violations of the conflict of interest provisions of the PRA. Respondents demurred to the cross-complaint and filed an anti-SLAPP motion seeking dismissal of the cross-action. After arguing the demurrer, the parties agreed that appellants would file an amended cross-complaint, and respondents would file a new anti-SLAPP motion.
The prohibition against conflicts of interest is set forth in section 87100: “No public official at any level of state or local government shall make, participate in making or in any way attempt to use his official position to influence a governmental decision in which he knows or has reason to know he has a financial interest.” A private action may be brought “for injunctive relief to enjoin violations or to compel compliance with the provisions of [the PRA]. . . .” (§ 91003, subd. (a).)
The FACC alleged that within 12 months of the City’s filing of the complaint, the named council members received gifts with a value in excess of $1,000 from appellants’ “direct business competitors” in which the council members had management or ownership interests. The FACC alleged that in order to further their own economic interests, the council members directed the Commission to create the appearance of a tax revenue shortfall by refusing to give appellants proper credit for tax revenue generated by appellants’ business, and by voting to approve the filing of the underlying lawsuit, knowing it was baseless. The FACC prayed for injunctive relief setting aside the council members’ financial transactions found to be conflicts of interest, enjoining future violations and enjoining the prosecution of the underlying lawsuit or taking any action on appellants’ contracts with the Commission.
Appellants may not obtain an injunction against the underlying lawsuit, as no cause of action will lie to enjoin ongoing litigation, except to avoid a multiplicity of lawsuits. (Code Civ. Proc., § 526; Civ. Code, § 3423.) The prohibition against such injunctive relief predates the PRA. (See Johnson v. Sun Realty Co. (1934) 138 Cal.App. 296, 301-302.)
Respondents demurred to the FACC and brought another anti-SLAPP motion. Appellants opposed the anti-SLAPP motion on the ground that section 425.16, subdivision (g), which automatically stays discovery pending the motion, effected a “de facto” amendment of the PRA, prohibited by the California Constitution.
The trial court granted respondents’ anti-SLAPP motion, dismissed the cross-complaint and took the demurrer off calendar. In a written order filed October 16, 2006, the court found that the FACC alleged actions taken by respondents in furtherance of their constitutional rights of petition or free speech, and that appellants had failed to meet their burden to make a prima facie showing that the council members’ actions had been taken with a financial interest in the outcome, as defined in section 87100 and the regulations interpreting that provision. The court further found that section 425.16 did not effect an unconstitutional amendment of the PRA. After the court denied appellants’ motion for reconsideration, appellants timely filed their notice of appeal November 30, 2006.
DISCUSSION
1. Appellants’ Contentions on Appeal
Appellants contend that the trial court erred in applying the anti-SLAPP statute to a cause of action arising from alleged violations of the PRA. They assert, as they did below, that section 425.16 was a de facto amendment to the PRA, prohibited by article II, section 10, subdivision (c), of the California Constitution. Appellants acknowledge that they have found nothing in the language or legislative history of section 425.16 indicating a legislative intent to amend the PRA. However, they argue that the practical effect of the anti-SLAPP statute was to amend the PRA, because it “may be used to restrict or chill any of the remedies expressly created under the PRA . . . .”
In particular, appellants contend that the automatic discovery stay of section 425.16, subdivision (g), forecloses a plaintiff’s ability to establish a probability of prevailing, as required by section 425.16, subdivision (b)(1), and thus, actions under the PRA face unavoidable dismissal. In this way, appellants argue, the anti-SLAPP statute takes away the injunctive remedies provided by the PRA in section 91003.
For the first time in oral argument, appellants suggest that the right of a defendant to appeal the denial of an anti-SLAPP motion unconstitutionally impinges on a plaintiff’s right to a preliminary injunction under the PRA. We do not address constitutional arguments not raised in the trial court. (Hale v. Morgan (1978) 22 Cal.3d 388, 394.) We note, however, that appellants never sought a preliminary injunction, nor did they demonstrate how a plaintiff’s entitlement to injunctive relief under section 91003 would be abrogated by the anti-SLAPP statute.
2. The Political Reform Act
The PRA was enacted in 1974 as an initiative measure intended to correct election abuses in California. (§§ 81001, 81002; California Common Cause v. Fair Political Practices Com. (1990) 221 Cal.App.3d 647, 649.) The measure was intended to ensure that “[s]tate and local government should serve the needs and respond to the wishes of all citizens equally, without regard to their wealth”; and that “[p]ublic officials, whether elected or appointed, should perform their duties in an impartial manner, free from bias caused by their own financial interests or the financial interests of persons who have supported them.” (§ 81001, subds. (a), (b).) The PRA declared that its purposes would be accomplished by requiring the disclosure of “[a]ssets and income of public officials which may be materially affected by their official actions,” the disqualification of such officials in appropriate circumstances, “in order that conflicts of interest may be avoided,” and the provision of “[a]dequate enforcement mechanisms . . . to public officials and private citizens in order that [the Act] will be vigorously enforced.” (§ 81002, subds. (c), (f).)
The PRA permits amendment by the Legislature “to further its purposes by statute, passed in each house by rollcall vote entered in the journal, two-thirds of the membership concurring and signed by the Governor, if at least 12 days prior to passage in each house the bill in its final form has been delivered to the commission for distribution to the news media and to every person who has requested the commission to send copies of such bills to him or her.” (§ 81012, subd. (a).) Any statute amending or repealing the PRA “becomes effective only when approved by the electors.” (§ 81012, subd. (b).)
Section 425.16 does not purport to amend the PRA. Indeed, its provisions make no mention of the PRA.
See Statutes 1992, chapter 726, section 2 (SB 1264). Appellants request that we take judicial notice of the fact that SB 1264, by which section 425.16 was enacted, was passed by a simple majority of the members of the Legislature. However, they have not submitted a copy of the bill or any other evidence of its legislative history, despite their burden to do so. (See People v. Maxwell (1978) 78 Cal.App.3d 124, 130; Evid. Code, § 452, subd. (c).) We therefore decline to grant the request. As we conclude that the anti-SLAPP statute did not amend the PRA, we need not determine whether the Legislature followed the procedures of section 81012, or whether section 425.16 furthered the purposes of the PRA. (See Huening v. Eu (1991) 231 Cal.App.3d 766, 770, 779, fn. 4 (Huening).)
3. Standards for Determining Whether a Legislative Act is an Amendment Prohibited by the California Constitution
Article II, section 10, subdivision (c), of the California Constitution provides: “The Legislature may . . . amend or repeal an initiative statute by another statute that becomes effective only when approved by the electors unless the initiative statute permits amendment or repeal without their approval.” Under article II, section 10, “‘the voters have the power to decide whether or not the Legislature can amend or repeal initiative statutes. This power is absolute and includes the power to enable legislative amendment subject to conditions attached by the voters. [Citation.]’ [Citations.]” (Amwest Surety Ins. Co. v. Wilson (1995) 11 Cal.4th 1243, 1251, italics omitted.)
The voters’ initiative power is coextensive with the power of the Legislature to enact statutes. (Santa Clara County Local Transportation Authority v. Guardino (1995) 11 Cal.4th 220, 253.) In determining whether particular legislation constitutes an amendment, it is the duty of the courts to guard that power jealously, resolving doubts against action that might conflict with it. (Proposition 103 Enforcement Project v. Quackenbush (1998) 64 Cal.App.4th 1473, 1486-1487 (Proposition 103).)
“An amendment is a legislative act designed to change an existing initiative statute by adding or taking from it some particular provision. [Citations.]” (Cooper, supra, 27 Cal.4th at p. 44; see also Proposition 103, supra, 64 Cal.App.4th at p.1485; Franchise Tax Bd. v. Cory (1978) 80 Cal.App.3d 772, 777; Huening, supra,231 Cal.App.3d at p. 775.) “An amendment is ‘. . . any change of the scope or effect of an existing statute, whether by addition, omission, or substitution of provisions, which does not wholly terminate its existence, whether by an act purporting to amend, repeal, revise, or supplement, or by an act independent and original in form. . . .’ [Citation.] A statute which adds to or takes away from an existing statute is considered an amendment. [Citation.]” (Franchise Tax Bd. v. Cory, supra, 80 Cal.App.3d at p. 776.)
“[T]he analysis necessary to determine whether a particular act is or is not an amendment to a prior statute is described as follows: ‘Whether an act is amendatory of existing law is determined not by title alone, or by declarations in the new act that it purports to amend existing law. On the contrary, it is determined by an examination and comparison of its provisions with existing law. If its aim is to clarify or correct uncertainties which arose from the enforcement of the existing law, or to reach situations which were not covered by the original statute, the act is amendatory, even though in its wording it does not purport to amend the language of the prior act.’” (Franchise Tax Bd. v. Cory, supra,80 Cal.App.3d at p. 777.)
4. Section 425.16 Did Not Amend the PRA
Appellant contends the anti-SLAPP statute effected an amendment by foreclosing discovery. Section 425.16 does not foreclose discovery. Subdivision (g) provides: “All discovery proceedings in the action shall be stayed upon the filing of [an anti-SLAPP motion]. The stay of discovery shall remain in effect until notice of entry of the order ruling on the motion. The court, on noticed motion and for good cause shown, may order that specified discovery be conducted notwithstanding this subdivision.” Thus, although discovery is stayed upon the filing of an anti-SLAPP motion, the trial court may permit discovery to go forward. “The trial court . . . must liberally exercise its discretion by authorizing reasonable and specified discovery timely petitioned for by a plaintiff . . . when evidence to establish a prima facie case is reasonably shown to be held . . . by defendant or its agents and employees.” (Lafayette Morehouse, Inc. v. Chronicle Publishing Co. (1995) 37 Cal.App.4th 855, 868.)
Appellants cannot claim to have been denied discovery needed to establish a probability of prevailing, as they failed to ask the trial court to authorize such discovery. On appeal, they contend the information lay within the exclusive possession of the defendants--a claim which, if true, would have provided the court with a basis for granting a motion for discovery. (See Lafayette Morehouse, Inc. v. Chronicle Publishing Co., supra, 37 Cal.App.4th at p. 868.) Thus, appellants’ failure to obtain discovery flowed not from section 425.16, but from their own inaction. Moreover, as respondents note, it appears that much of the council members’ financial dealings are a matter of public record. (See §§ 87200, 87203, 87206, 87207; People v. Hedgecock (1990) 51 Cal.3d 395, 399-400.)
In their reply brief, appellants acknowledge that section 425.16 does not foreclose discovery, arguing instead that having to make a motion makes obtaining discovery expensive and burdensome, which conflicts with the PRA’s purpose of vigorous enforcement. (See § 81002, subds. (c), (f).) Further, appellants argue, plaintiffs must make the motion on shortened time, and the defendants might interpose objections, adding more expense and delays. There is no provision in the PRA giving plaintiffs an unfettered right to conduct discovery. Thus, section 425.16 does not change the PRA “by adding or taking from it some particular provision” relating to discovery. (People v. Cooper, supra, 27 Cal.4th at p. 44, italics added; see also Proposition 103, supra, 64 Cal.App.4th at p. 1485; Franchise Tax Bd. v. Cory, supra, 80 Cal.App.3d at p. 777; Huening, supra, 231 Cal.App.3d at p. 775.)
The Civil Discovery Act governs all discovery issues, except as otherwise provided by the Legislature. (Zellerino v. Brown (1991) 235 Cal.App.3d 1097, 1104; Code Civ. Proc., § 2016.010 et seq.)
Nor have we found a provision in the PRA giving appellants an unfettered right to prosecute their claim. The PRA mandates no more than “[a]dequate enforcement mechanisms . . . in order that [the Act] will be vigorously enforced.” (§ 81002, subd. (f).) No provision of the PRA mandates the vigorous enforcement of meritless claims.
Appellants suggest that we disregard the terms, “aimed at” or “designed to change” a “particular provision,” despite the use of these terms in the very authorities upon which they rely. (See Proposition 103, supra, 64 Cal.App.4th at p. 1485; Franchise Tax Bd. v. Cory, supra, 80 Cal.App.3d at p. 777; Huening, supra, 231 Cal.App.3d at p. 775.) Appellants contend that Proposition 103 and Franchise Tax Bd. v. Cory held that any act which has any effect upon any aspect of the enforcement of another is an amendment, even if the act was not aimed at the affected statute or designed to change it. The cited cases do not support appellants’ contention.
In Proposition 103, supra, 64 Cal.App.4th 1473, the court observed that a legislative act may effect an amendment of a pre-existing statute even where the Legislature did not name the statute or express an intent to amend it. (Id. at pp. 1486-1487.) There, however, the court found that the Legislature had amended an initiative measure by enacting a statute affecting a particular provision of Proposition 103, to which the Legislature had expressly referred. (Id. at p. 1488.) Proposition 103, the initiative measure providing for insurance premium rollbacks of 20 percent, vested the insurance commissioner with the sole authority to establish a formula to implement the rollbacks. (Id. at pp. 1484-1486; Ins. Code, § 1861.01, subd. (a).) The Legislature changed the formula with legislation calling for the deduction of certain expenses from the premium before applying the 20 percent rollback. (Proposition 103, at p. 1484.) In so doing, the court held, the Legislature had arrogated to itself the rate-making discretion that Proposition 103 had vested solely with the commissioner, thus effecting a change in the voter-approved initiative. (Id. at p. 1486.) The court’s conclusion was bolstered by the fact that the Legislature had expressly declared its intention to effect a change in Proposition 103 by repeatedly referring to the initiative and declaring that the new statute “further[ed] the purpose of Proposition 103.” (Id. at p. 1488.) Thus, the court found, the statute was expressly designed to “change the effect” of the voter-approved initiative. (Ibid.)
In Franchise Tax Bd. v. Cory, supra, 80 Cal.App.3d 772, the court held that legislation effected an amendment of existing law where its “‘aim [was] to clarify or correct uncertainties which arose from the enforcement of the existing law . . . .’” (Id. at p. 777.) The legislature had inserted “control language” into a budget bill designed to set standards and restrict the manner in which the Franchise Tax Board could conduct campaign audits, as required by the PRA. (Id. at pp. 774, 775.) Although the statute did not expressly purport to amend the PRA, the court found that it acted directly upon the audit provisions of the PRA, thus effecting an unconstitutional amendment: “The control language unquestionably adds to the [Political Reform] Act, both by clarifying the standards to be used and by significantly restricting the manner in which audits are to be conducted. As such it undertakes to amend the Act, and . . . is invalid.” (Id. at p. 777.)
In Huening, the court again emphasized that an amendment is a legislative act that “aim[s] to clarify . . . or to reach situations which were not covered by the original statute . . .,” or that is “‘“‘designed to change some prior or existing law by adding or taking from it some particular provision.’”’” (Huening, supra, 231 Cal.App.3d at p. 775.) The court found that in enacting Elections Code section 3564.1, which required additional information from authors of ballot arguments, the Legislature had amended chapter 8 of the PRA. (Huening,at pp. 769-771, 776-777.) The court held that although the PRA did not limit the content of ballot arguments, Elections Code section 3564.1 effected an amendment of the Act by adding a restriction to the PRA’s provisions covering the content, inspection and printing of ballot pamphlets. (Id.at pp. 771, 778.) Huening thus illustrates how one statute may be aimed at another, and designed to change its provisions by adding to them, regardless of the Legislature’s expressed intent. (See id. at pp. 776-778.)
Here, in contrast, appellants have pointed to no particular provision or group of provisions in the PRA at which the anti-SLAPP statute was aimed or which it was designed to change by addition, deletion, clarification, or correction. Indeed, the anti-SLAPP statute’s mechanism to weed out meritless claims applies generally to all actions based upon an exercise of free speech or petition, whether arising from a violation of the PRA, another voter-approved initiative or any other statute. As respondents note, section 425.16 adds no more than would be added by any modification to existing mechanisms to eliminate meritless claims, such as motions for summary judgment, demurrers and motions for judgment on the pleadings. Thus, to apply appellants’ reasoning to every change in the rules of civil procedure that apply generally to all civil lawsuits would create a chaotic hodgepodge of procedural rules applicable to some actions, but not to voter-enacted statutes that predated them. Statutory “constructions which . . . defy common sense, or lead to mischief or absurdity, are to be avoided. [Citations.]” (California Mfrs. Assn. v. Public Utilities Com. (1979) 24 Cal.3d 836, 844.)
For example, the 1992 and 1993 amendments to Code of Civil Procedure section 437c made major revisions to summary judgment procedures, including establishing a less onerous burden of proof for moving defendants. (See Union Bank v. Superior Court (1995) 31 Cal.App.4th 573, 583-584.) Taken to its logical conclusion, appellants’ argument would dictate that any defendant sued under the PRA (or any other pre-1992 voter-enacted statute) would be required to meet the more onerous pre-1992 summary judgment burden. Similarly, appellants’ argument would make application of the current standards of summary judgment to any lawsuit filed under the PRA (or any other pre-1992 voter-enacted statute) an unconstitutional amendment. No case has suggested such a result.
We conclude that section 425.16 did not amend the PRA. Thus, we affirm the trial court’s order granting the anti-SLAPP motion and dismissing the cross-action. As appellants sought reversal of the award of attorney fees only in the event of the reversal of the order granting the anti-SLAPP motion, we affirm the fee order, as well.
Buried in a page-long paragraph regarding other issues, appellants’ opening brief asserts that the prospect of an award of attorney fees to a prevailing defendant “imposes a chilling effect on the [plaintiff’s] rights conferred under the PRA. . . .” No reasoned argument or citation to authority regarding this contention was provided until the reply brief. We do not consider undeveloped contentions. (Rossiter v. Benoit (1979) 88 Cal.App.3d 706, 710-711.) Nor do we consider arguments made for the first time in reply briefs. (See Varjabedian v. City of Madera (1977) 20 Cal.3d 285, 295, fn. 11.) In any event, appellants have failed to show that a mechanism designed to dispose promptly of meritless cases has a chilling effect on the vigorous enforcement of the PRA. (See Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 63 [“‘section 425.16 provides an efficient means of dispatching, early on in the lawsuit, . . . a plaintiff’s meritless claims’”].) The attorney-fee provision of section 425.16, subdivision (c), is “content neutral” and “primarily designed to promote and encourage protected conduct--the right of defendants to exercise their First Amendment rights without fear of unmeritorious SLAPP lawsuits. (Schroeder v. Irvine City Council (2002) 97 Cal.App.4th 174, 195; see also id. at p.196 [rejecting claim that mandatory award of attorney fees under anti-SLAPP statute impermissibly burdened litigant’s exercise of First Amendment right to sue governmental entity under the PRA, noting that “‘baseless litigation is not immunized by the First Amendment right to petition.’ (Bill Johnson’s Restaurants, Inc., v. NLRB (1983) 461 U.S. 731, 743)”].)
Respondents request attorney fees on appeal. “‘A statute authorizing an attorney fee award at the trial court level includes appellate attorney fees unless the statute specifically provides otherwise.’ [Citation.] Since section 425.16, subdivision (c) provides for an award of attorney fees and costs to a prevailing defendant on a special motion to strike, and does not preclude recovery of appellate attorney fees by a prevailing defendant-respondent, those fees are recoverable” in an amount to be determined by the trial court. (Dove Audio, Inc. v. Rosenfeld, Meyer & Susman (1996) 47 Cal.App.4th 777, 785.)
DISPOSITION
The judgment of dismissal and the order awarding fees and costs are affirmed. Respondents shall recover their costs and attorney fees on appeal, the amount of which shall be determined by the trial court.
We concur: WILLHITE, Acting P. J., SUZUKAWA, J.