Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of San Diego County, No. 37-2008-00057120-CU-BC-NC Jacqueline M. Stern, Judge.
O'ROURKE, J.
Concordia Homes of California, LLC and LB/L-Concordia Master LLC (collectively Concordia) sued defendants Don Jack, Farwest West American Trust Contractual Business Organization (Farwest) and Pacific View, Ltd for breach of contract (Concordia lawsuit) alleging that Don Jack had breached a settlement agreement by filing an earlier lawsuit (Jack lawsuit). Defendants filed a Code of Civil Procedure section 425.16 special motion to strike the complaint, which the trial court granted partly on grounds Concordia had not shown a likelihood of prevailing on the merits of its claim because Judge Quinn had ruled that the Jack lawsuit was not released under the terms of the settlement agreement. Plaintiff Concordia Homes of California, LLC appeals the grant of the motion.
All statutory references are to the Code of Civil Procedure unless otherwise stated. Section 425.16 is commonly referred to as the anti-SLAPP (strategic lawsuit against public participation) statute. (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 732, fn. 1.)
Although we refer to the arguments and actions of both plaintiffs throughout this opinion, we note that Concordia Homes of California, LLC was the only party that appealed from the judgment.
Concordia contends the trial court erred in granting the motion. It concedes its lawsuit arose from the Jack lawsuit, but contends it had shown a likelihood of prevailing on the merits of its complaint because, among other reasons, the trial court had misinterpreted Judge Quinn's ruling. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
This case is before us a second time. In the first appeal, we affirmed the trial court's ruling denying Concordia's motion for attorney fees in the Jack lawsuit.
On our own motion we take judicial notice of our previous opinion. (Don Jack v. Concordia Homes of California, LLC, et al. (Mar. 27, 2008) D049863 [nonpub. opn.].).
In February 1999, Concordia Homes purchased an eight and one-half acre parcel of vacant land located in Carlsbad, California owned by one of Jack's companies, Pacific View Communities, LLC (Pacific View). The land consisted of 26 building lots and seven open space lots numbered 1-33, and is now known as Pacific View Estates. Excluded from the February 1999 agreement was a portion of property the parties referred to as the Remainder Parcel, which included lot 33. Jack wanted to keep lot 33 to build his personal residence.
In 1998, Jack had recorded an initial subdivision map to develop a portion of Pacific View Estates. He also recorded a declaration of covenants, conditions and restrictions (1998 CC&Rs) restricting only lots 4, 5, 6 and 7.
Because a parcel map had not yet been recorded on the vacant land, Pacific View/Jack agreed in April 1999 to convey the Remainder Parcel to Concordia Homes or its assignee. Under the April 1999 agreement, Concordia Homes was to execute and deliver to escrow a deed reconveying lot 33 to Pacific View, which would be recorded after the final tract map was recorded.
Before close of escrow, Pacific View transferred its interest in the Remainder Parcel (including lot 33) to Farwest, an irrevocable trust created by Jack. Farwest conveyed the Remainder Parcel to LB/L Concordia Carlsbad-25, LLC (Concordia Carlsbad), the assignee of Concordia Homes. As required under the terms of the April 1999 agreement, Concordia Carlsbad reconveyed lot 33 to Farwest.
Concordia Carlsbad began to develop the vacant land by recording a landscape maintenance easement encumbering lot 33, revoking the 1998 CC&Rs and recording its own set of CC&Rs (the 2000 CC&Rs), and recording a notice of annexation, annexing lot 33 into the development. When Jack discovered lot 33 had been encumbered by Concordia Carlsbad, he, as the sole plaintiff, sued Concordia, Concordia Carlsbad, Pacific View Estates of Carlsbad Homeowners Association, and individual lot owners for declaratory relief, breach of contract and breach of fiduciary duty. Jack alleged in his first amended complaint that he was the current holder of all rights previously held by Pacific View and Farwest in connection with lot 33.
Shortly before trial on the matter, Concordia moved in limine to exclude evidence regarding the claims alleged in the Jack lawsuit, arguing those claims were released in a 2000 settlement agreement entered into by Concordia, Concordia Carlsbad, Pacific View Ltd., Pacific View Communities, LLC, Ron Grunow and RDG Consultants and their assigns. The "Settlement in Full and Release Agreement" addressed Concordia's claims "against the Civil Engineering work for the residential tract, Pacific View Estates, " and the parties mutually released each other from "any and all Claims and Costs, known and unknown regarding any such claims against the Civil Engineering Work." The settlement agreement applied to claims known and unknown that arose no later than September 1, 2000. The settlement agreement stated, " 'Claims' and 'Costs['] shall not include any rights, powers, liabilities, or duties created by this Agreement, or which any [sic] be involved in connection with enforcement or interpretation of this Agreement." Don Jack signed the settlement agreement in his capacity as "Managing Member" of both Pacific View Ltd. and Pacific View.
Concordia's motion in limine stated that "all of the claims alleged in the first amended complaint were released in the settlement agreement, " and accordingly it sought "entry of judgment in favor of defendants." Jack opposed the motion on grounds Concordia had not raised the issue of the settlement agreement in the answer to the complaint and never produced it in discovery. Moreover, the settlement agreement's scope was limited to claims against civil engineering work and claims arising before September 2001, but Jack's claim arose after October 23, 2000.
Concordia argued: "By its terms, the [settlement agreement] releases and discharges each of the parties thereto, as well as their 'Associated Entities and Persons, ' from all 'Claims' and 'Costs', known and unknown.... [¶] Plaintiff's claims in this action, as the alleged holder of rights delegated by the Farwest Trust and as the alleged assignee of claims held by Pacific View and Pacific communities, arise out of claims that arose prior to September 1, 2000.... [¶] Plaintiff may not assert any claims as the alleged assignee of Pacific View or Pacific Communities because their claims were released and discharged in September 2000 and the alleged assignment of their rights occurred in 2004 or 2005 (several years after the execution of the settlement agreement). Plaintiff may also not assert any claims as the alleged holder of rights held by the Farwest Trust because [it] was an affiliate, assign, and successor of Pacific View."
Judge Quinn heard arguments on the motion on the day trial was to start. Because of the number and complexity of the issues presented in the evidentiary motions, the court continued the hearing rather than empanel a jury. Judge Quinn subsequently ruled: "I do find that the general release of claims, dated September 1st, 2000, acts as a general release; however, the evidence that was presented indicates that although the CC&Rs were created one month prior to this, in August of 2000, that at that point in time lot 33 had not been annexed into the development, was not annexed into the development until [October 23, 2000], and that the causes of action that the plaintiff has brought in this case can generally go forward."
Judge Quinn treated the motion in limine as raising more than a specific evidentiary issue, and compared it to an attack on the pleadings, stating: "Let me note... the election has been made to basically roll into motions in limine, which have a pretty limited basis generally, all issues that would involve judgment on the pleadings, a demurrer, several motions for summary judgment, for summary adjudication, and the election has been made to present these at — in this manner. Generally motions in limine, if they were brought within the scope that they were supposed to be brought, we would have a jury and you would be testifying. [¶] But I am not going to make a ruling on these things without giving them as much consideration as I can, given the fact that this was supposed to be the day you start trial."
Jack voluntarily dismissed Concordia from the Jack lawsuit before May 1, 2006, and the lawsuit proceeded against Concordia Carlsbad. The trial court permitted Jack to add defendants Pacific View Ltd. and Farwest after the trial court's ruling on the motion in limine.
In our March 2008 opinion in the first appeal, we noted that in September 2006, the trial court had issued a minute order summarily denying Concordia Homes's motion for attorney fees, finding that the claims dismissed by Jack "arise from an action on contract" and thus Civil Code section 1717 bars the award of attorney fees. The trial court also dismissed Jack's case because no manager of Concordia Carlsbad had been appointed by a Delaware court. We affirmed the trial court's ruling regarding the attorney fees.
Concordia's Lawsuit and the Anti-SLAPP Motion
In August 2008, Concordia sued Jack, Pacific View Ltd., Farwest, and six other defendants in the Concordia lawsuit. Concordia brought a single cause of action alleging defendants had breached the settlement agreement by filing the Jack lawsuit. Concordia alleged it had been "damaged by virtue of having to defend [itself] in connection with the Jack lawsuit, " and claimed it was entitled to recover "in excess of $200,000" in fees and costs incurred in enforcing its rights under the settlement agreement.
The additional defendants in the Concordia lawsuit are Margaret Jack, Phillip G. Mullard, Farwest Holding Co. Ltd., Pacific View, and Fred S. Pardes and Wayne A. Hosek, as trustees of Farwest.
Defendants argued that the Concordia lawsuit arose out of their exercise of their right to file the Jack lawsuit, and Concordia was unable to prevail on its breach of contract claim because it could not establish the elements of that cause of action.
Plaintiffs opposed the anti-SLAPP motion, contending that although Concordia was dismissed from the Jack lawsuit, it already had spent "hundreds of thousands of dollars defending [itself] against the claims made which had already been released." Concordia argued that the two prongs of the anti-SLAPP statute were not met because its lawsuit arose not from protected activity but from a breach of the settlement agreement, and it was likely to prevail on its cause of action because notwithstanding the clear language of the settlement agreement, the Jack lawsuit asserted claims that arose before September 1, 2000.
The trial court granted defendants' special motion to strike on grounds Concordia had not shown a likelihood of prevailing on the merits because: (1) Concordia had failed to adequately address Judge Quinn's ruling allowing the Jack lawsuit to proceed despite the settlement agreement and, as a matter of law, that ruling defeats Concordia's claim that Jack had breached the settlement agreement; (2) Concordia had not brought a compulsory cross-complaint in the Jack lawsuit as required under section 426.30, subdivision (a), thus barring Concordia's breach of contract claim, which was a "related cause of action" under section 426.10; (3) Concordia had sued Jack as a member of Pacific View Communities, and the action was untimely under Corporation Code section 17355, subdivision (2)(B) because that entity had been canceled in December 1999 and it owned no assets; (4) Pacific View Ltd and Farwest were added as defendants after Judge Quinn had ruled the Jack lawsuit could proceed, therefore Concordia had failed to show that those defendants filed the Jack lawsuit in breach of the settlement agreement; (5) Farwest was not a party to the settlement agreement and Concordia did not show how Farwest could have breached it, considering that Concordia had presented no evidence supporting an alter ego theory; (6) in light of Judge Quinn's ruling, Concordia had failed to meet its burden of showing that its costs incurred in the Jack lawsuit were damages proximately caused by an alleged breach of the release agreement, and Concordia incurred no costs defending against any released claims; and (7) Concordia failed to show that its claimed damages were incurred in good faith or in the exercise of its reasonable discretion because Concordia delayed until the eve of trial to rely on the settlement agreement as a defense.
The trial court denied the special motion to strike brought by the remaining defendants, reasoning that Concordia had not proved they were named plaintiffs in the Jack lawsuit, therefore their motion did not arise from their petitioning activity. This appeal does not address the court's ruling as to those defendants.
Concordia challenges the trial court's ruling in its entirety. Specifically, Concordia claims: Jack breached the settlement agreement, and the trial court misinterpreted Judge Quinn's ruling; it was not required to bring a compulsory cross-complaint to the Jack lawsuit because the settlement agreement involved a "completely separate and independent transaction;" it sought indemnification against defendants for the fees and costs it had incurred in the Jack lawsuit and therefore its claim accrued only after the trial court had "determined that Defendants claims [sic] were barred by the Settlement Agreement;" it did not sue Jack as a member of Pacific View Communities but rather as the assignee of the original signatories to the settlement agreement and as the holder of all the rights relating to the subject property; the settlement agreement applies to Farwest as an assignee and entity related to Jack and Pacific View; it was not required to demonstrate its damages were incurred in good faith or in the exercise of reasonable discretion.
DISCUSSION
I. Section 425.16/Appellate Standard of Review
The anti-SLAPP statute allows a party to file a special motion to strike causes of action "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." (§ 425.16, subd. (b)(1).) In determining whether to grant defendant's anti-SLAPP motion, the court "engage[s] in a two-step process. First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity.... If the court finds such a showing has been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim.... [I]n making these determinations[, the court] considers 'the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.' " (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) We apply our independent judgment to each prong, and rule on the motion de novo. (Thomas v. Quintero (2005) 126 Cal.App.4th 635, 645.)
II. Respondents Met Their Threshold Prima Facie Burden
Concordia's discussion of the first prong of the anti-SLAPP test is limited to this concession in its opening brief: "Since it appears well-established that the act of filing the Jack lawsuit is considered a 'valid' exercise of Defendants' right of petition or free speech (notwithstanding Defendants' voluntary relinquishment of that right) the focus in this appeal is on the second part of the anti-SLAPP analysis."
In 1992, the Legislature enacted section 425.16 to provide for the early dismissal of unmeritorious claims filed to interfere with the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances. (Martinez v. Metabolife Internat., Inc. (2003) 113 Cal.App.4th 181, 186.) The Legislature authorized the filing of a special motion to strike such claims (§ 425.16, subds. (b)(1), (f)) and expressly provided that section 425.16 should "be construed broadly." (§ 425.16, subd. (a); see Briggs v. Eden Council for Hope and Opportunity (1999) 19 Cal.4th 1106, 1119.) The constitutional right of petition encompasses the basic act of filing litigation. (See Navellier v. Sletten (2002) 29 Cal.4th 82, 90.)
Here, the Concordia lawsuit arose out of the filing and prosecution of the Jack lawsuit. The complaint specifically stated: "On or about August 6, 2004, defendants breached the Settlement Agreement by filing an action against plaintiffs... wherein defendants asserted claims against plaintiffs which had been released pursuant to the terms of the settlement agreement. [¶] In connection with the trial of the Jack lawsuit, the trial court found that the Settlement Agreement was a 'general release' of all claims known and unknown between the parties that existed as of September 1, 2000. By virtue of that finding, defendants are estopped, directly and collaterally, from contending [otherwise]." Accordingly, we agree with Concordia's concession and next consider the anti-SLAPP statute's second prong.
II. Concordia Did Not Establish a Reasonable Probability of Prevailing Because its Claim is Barred by Collateral Estoppel
" 'In order to establish a probability of prevailing on the claim [citation], a plaintiff responding to an anti-SLAPP motion must " 'state[ ] and substantiate[ ] a legally sufficient claim.' " [Citation.] Put another way, the plaintiff "must demonstrate that the 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 plaintiff is credited." [Citations.] In deciding the question of potential merit, the trial court considers the pleadings and evidentiary submissions of both the plaintiff and the defendant [citation]; though the court does not weigh the credibility or comparative probative strength of competing evidence, it should grant the motion if, as a matter of law, the defendant's evidence supporting the motion defeats the plaintiff's attempt to establish evidentiary support for the claim.' " (Vargas v. City of Salinas (2009) 46 Cal.4th 1, 19-20.)
The parties dispute whether the trial court properly interpreted Judge Quinn's ruling. Concordia argues: "Contrary to the [trial] court's finding, Judge Quinn granted the motion in limine to the extent it dealt with pre-September 2000 claims, i.e., those which were released by the Settlement Agreement and the assertion of which serves as the basis for the present action. Concordia did not seek to bar any claim which arose after September 1, 2000, and that is not the basis of its action in the present case.... As such, defendants assertion [sic] of released claims is, in fact, a breach of the agreement and Judge Quinn's ruling did not alter that result." Defendants note that Concordia had alleged in its complaint that defendants are estopped from relying on Judge Quinn's ruling. Defendants interpret Judge Quinn's ruling as a finding "that none of the claims in the Jack lawsuit had been released... [and] all of the claims in the Jack lawsuit could 'go forward.' "
We conclude that Concordia failed to establish a reasonable probability of prevailing on its breach of contract cause of action because Judge Quinn's ruling conclusively resolved that issue against Concordia, and it was collaterally estopped from claiming defendants had breached the settlement agreement. "[T]he fundamental principles that govern the doctrine of collateral estoppel [are]: 'Issue preclusion by collateral estoppel "prevents 'relitigation of issues argued and decided in prior proceedings.' [Citation.]" [Citations.] The doctrine "rests upon the ground that the party to be affected, or some other with whom he is in privity, has litigated, or had an opportunity to litigate the same matter in a former action in a court of competent jurisdiction, and should not be permitted to litigate it again to the harassment and vexation of his opponent... " ' " (Mooney v. Caspari (2006) 138 Cal.App.4th 704, 717.) " ' " 'Traditionally, collateral estoppel has been found to bar relitigation of an issue decided at a previous proceeding "if (1) the issue necessarily decided at the previous [proceeding] is identical to the one which is sought to be relitigated; (2) the previous [proceeding] resulted in a final judgment on the merits; and (3) the party against whom collateral estoppel is asserted was a party or in privity with a party at the prior [proceeding]."...' [Citations.]" [Citations.] "In addition to these factors, ... the courts consider whether the party against whom the earlier decision is asserted had a 'full and fair' opportunity to litigate the issue." ' " (Ibid.)
Although the trial court did not refer to the doctrine of collateral estoppel by name, we conclude that is the applicable legal theory in light of Concordia's allegation in its complaint and the trial court's ruling, which stated: "Plaintiffs have failed to adequately address Judge Quinn's ruling in the Jack case on Plaintiff's motion in limine... Judge Quinn denied Plaintiffs' motion, concluding the release contained in the settlement agreement... did not bar Jack's causes of action from going forward. This evidence is sufficient to defeat Plaintiff's current claim for breach of that settlement agreement against Defendant Jack as a matter of law." Similarly, regarding defendants Farwest and Pacific View Ltd., the trial court stated that in view of Judge Quinn's ruling, Plaintiffs could not "show, as a matter of law, that prosecution of the Jack lawsuit constitutes a breach" of the settlement agreement.
We first reject Concordia's interpretation of Judge Quinn's ruling. Judge Quinn ruled, "I do find that the general release of claims, dated September 1st 2000, acts as a general release, " but Judge Quinn qualified that statement, noting, "It does act as a general release for all claims known and unknown between the parties on September 1, 2000." The part of Judge Quinn's ruling that Concordia overlooks states: "[H]owever, the evidence that was presented indicates that although the CC&Rs were created one month prior to this, in August of 2000, that at that point in time lot 33 had not been annexed into the development until [October 23, 2000], and that the causes of action that [Jack] has brought in this case can generally go forward." Judge Quinn allowed Jack's lawsuit to proceed because it arose at a later date, and its claims were not encompassed among those prohibited by the settlement agreement, which applied to claims that arose or were known before September 1, 2000.
Under the doctrine of collateral estoppel, the contested issue of whether Jack's lawsuit breached the settlement agreement is identical to the issue raised in the Jack lawsuit. It was briefed by Concordia and Jack, the same parties to the Concordia lawsuit, and Judge Quinn ruled on it. On appeal of the Jack lawsuit, that ruling was not challenged. Therefore, we conclude Judge Quinn's decision, which was adverse to Concordia, is binding on the parties and their privies. We note that this ruling also applies to the other defendants in this appeal, Farwest and Pacific View Ltd, and not because Concordia claims they "are entities which Jack owned and controlled, " an issue we do not decide. Rather, Jack's claim of breach of contract, relating to the annexation of lot 33, did not arise until after the September 1, 2000 operative date provided for in the settlement agreement, and therefore the claims of all defendants fall outside of the purview of the settlement agreement.
In light of our conclusion regarding the applicability of the doctrine of collateral estoppel, we need not address the other bases for the trial court's conclusion that Concordia had failed to show it was likely to prevail on the merits of its complaint.
IV. Attorney Fees on Appeal
Defendants request that we remand the case for the trial court to award them their attorney fees and costs incurred in connection with Concordia's appeal under section 425.16, subdivision (c), which provides that "[i]n any action subject to subdivision (b), a prevailing defendant on a special motion to strike shall be entitled to recover his or her attorney's fees and costs." The statute includes fees and costs incurred in defending an unsuccessful appeal of an order granting a special motion to strike. (Wanland v. Law Offices of Mastagni, Holstedt & Churazzi (2006) 141 Cal.App.4th 15, 20.) The provision for fees and costs " 'is broadly construed so as to effectuate the legislative purpose of reimbursing the prevailing defendant for expenses incurred in extricating [himself or itself] from a baseless lawsuit.' " (GeneThera, Inc. v. Troy & Gould Professional Corp. (2009) 171 Cal.App.4th 901, 910.) Accordingly, defendants are entitled to their attorney fees on appeal.
DISPOSITION
The judgment is affirmed and the matter remanded to the trial court for a determination of the proper amount of attorney fees on appeal in accordance with this opinion. In addition to attorney fees, respondents Don Jack, Pacific View, Ltd. and Farwest American Trust Contractual Business Organization shall recover costs on appeal.
WE CONCUR: HUFFMAN, Acting P. J.HALLER, J.