Opinion
B223488
11-09-2011
FARO DE LUZ, INC., Plaintiff and Respondent, v. JOEL MORALES et al., Defendants and Appellants.
Greta S. Curtis for Defendants and Appellants. Law Office of Kent M. Bridwell and Kent M. Bridwell for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.
(Los Angeles County Super. Ct. No. BC414519)
APPEAL from an order of the Superior Court of Los Angeles County, Ralph W. Dua, Judge. Affirmed.
Greta S. Curtis for Defendants and Appellants.
Law Office of Kent M. Bridwell and Kent M. Bridwell for Plaintiff and Respondent.
Plaintiff Faro de Luz, Inc. (plaintiff), a church corporation, first brought the underlying lawsuit to recover control over assets that were allegedly taken by defendants Reverend Joel Morales, Olga Garcia, Reina Sanchez, and Faro de Luz Central, Inc. Defendants responded by filing a motion to strike under Code of Civil Procedure section 425.16 (the "anti-SLAPP" statute), which the trial court denied. While the appeal from the denial was pending, plaintiff filed a motion for award of attorney's fees and costs, arguing that defendants' anti-SLAPP motion was frivolous. The trial court granted plaintiff's motion and ordered defendants and their lawyer, Attorney Greta Curtis, to pay plaintiff's attorney's fees in the sum of $19,291.60. In this appeal, appellants Morales, Garcia, and Sanchez contend that the fee award was erroneously granted. We conclude that the trial court had jurisdiction to grant plaintiff's fees motion and its determination of the award was not an abuse of discretion. Therefore, we affirm.
Plaintiff, in its respondent's brief, requests clarification from the court that only Morales, Garcia, and Sanchez remain as active appellants in this current appeal. Based on the information in the docket, we agree that the appellants are Morales, Garcia, and Sanchez, and not Attorney Curtis nor Faro de Luz Central, Inc.
The initial notice of appeal from the order awarding attorney's fees was filed on March 30, 2010, naming only Morales, Garcia, and Sanchez as appellants. On April 20, 2010, a second notice of appeal was filed on behalf of those appellants, and also named Attorney Curtis and Faro de Luz Central, Inc. as additional appellants. However, this second notice was dismissed as to all appellants except for Garcia on May 17, 2010, for not paying the filing fee, and a remittitur was subsequently issued on August 4, 2010.
On October 13, 2010, this court stayed the matter as to appellant Garcia only, as she had filed for bankruptcy. In the court's order, we noted that the appeal was not stayed as to Morales, Sanchez and Attorney Curtis. Thereafter, counsel for respondent suggested (in an unrelated opposition) that Morales, Sanchez and Attorney Curtis were no longer appellants (as the April 20, 2010 notice of appeal had been dismissed with respect to each of them), and sought clarification from this court. On October 28, 2010, we amended our stay order to indicate that the appeal was not stayed as to Morales and Sanchez (who could proceed on the March 30, 2010 notice of appeal), but not Attorney Curtis, as her sole notice of appeal (April 20, 2010) had been dismissed.
Thereafter, we were informed that the matter had been removed to bankruptcy court, and issued an order suspending all proceedings on November 1, 2010. On November 19, 2010, Garcia voluntarily dismissed her bankruptcy case, and on March 4, 2011, the action was remanded back to state court. Thus, on April 15, 2011, we vacated our order of suspension and indicated that "the appeals in this matter as to all parties are returned to active status in this court." This order simply returned the suspended matter to active status; it did not reinstate the appeals which had previously been dismissed.
On April 19, 2011, we issued a second order indicating the stay with respect to appellant Garcia was also vacated. However, Garcia was in default with respect to her April 20, 2010 notice of appeal (for failure to designate a record), so that appeal was dismissed.
Thus, the April 20, 2010 notice of appeal was dismissed as to all purported appellants and only the March 30, 3010 notice of appeal, filed by Morales, Garcia and Sanchez, remains. Attorney Curtis and Faro de Luz Central, Inc. are not parties to this appeal.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff Faro de Luz, Inc. is a non-profit religious corporation, which operates a church in Los Angeles and is governed by a board of directors. Plaintiff alleged that around September 2008, Morales, Garcia, and Sanchez induced plaintiff's then president, Juana Delia Navarro, to sign over control of plaintiff's funds and bank accounts. Defendants purportedly informed Navarro that plaintiff's corporate status had been suspended due to its failure to timely file a statement of information with the California Secretary of State, and that consequently plaintiff was about to lose its nonprofit status. Defendants threatened to sue Navarro for unspecified causes of action and damages. In addition, defendants represented to Navarro that Garcia, the wife of the deceased founder of Faro de Luz, Inc., Noel Garcia, owned the church.
Plaintiff further alleged that defendants filed a statement of information with the California Secretary of State, naming themselves as officers of plaintiff, removing Navarro (amongst others) from the board of directors, and forming Faro de Luz Central, Inc. On May 27, 2009, plaintiff sued defendants Morales, Garcia, Sanchez, and Faro de Luz Central, Inc., asserting that defendants improperly and illegally took funds from plaintiff's petty cash and bank accounts. Plaintiff sought declaratory relief to determine the respective rights of the plaintiff and defendants, and damages for fraud and conversion of property.
Not to be confused with plaintiff, Faro de Luz, Inc.
On August 3, 2009, defendants filed a special motion to strike plaintiff's entire complaint pursuant to the anti-SLAPP statute, on the basis that the speech and conduct that were the gravamen of plaintiff's complaint were protected by the First Amendment right to free speech and right to petition in connection with a public issue. Defendants argued that the representations made to Navarro were made in contemplation of litigation. Defendants also argued that the suspension of the church's corporate status was a matter of public interest.
In addition, they claimed that they were attempting to ascertain the extent of Noel Garcia's estate, in anticipation of an as-yet-unfiled probate action, when they informed Navarro that his widow owned the church.
On September 8, 2009, plaintiff filed an opposition to defendants' anti-SLAPP motion, arguing that defendants failed to show, and could not show, that plaintiff's lawsuit arose from defendants' exercise of free speech or petition rights as defined by the anti-SLAPP statute. Plaintiff emphasized that defendants never brought the threatened lawsuit against Ms. Navarro. Plaintiff also asserted that neither the communications nor the church's corporate status were matters of public interest. Even taking defendants' special motion to strike in the best possible light, plaintiff maintained that it was the taking of property that was the basis of its complaint, not the communications, or the threatened lawsuit.
With respect to the probate action, which had been filed, plaintiff argued that simply making a claim of ownership which would later be adjudicated in a probate action did not trigger the litigation privilege.
After a hearing on the anti-SLAPP motion on September 22, 2009, the court issued an order denying defendants' motion. On September 30, 2009, defendants appealed the denial of their special motion to strike, and on December 17 and 18, 2009, filed two notices of stay due to the pending appeal.
Defendants' appeal from the denial of their anti-SLAPP motion (not to be confused with the current appeal concerning the fees award) was dismissed on March 12, 2010, for failure to properly procure the record.
Plaintiff filed a motion for costs and reasonable attorney's fees on December 18, 2009, arguing that defendants and their counsel filed a frivolous anti-SLAPP motion and seeking $19,291.60 in attorney's fees and costs. Plaintiff then filed an objection to the notice of stay on December 22, 2009. Although defendants were aware of plaintiff's motion for fees, they never filed an opposition. Following a hearing on January 15,
2010, at which defendants failed to appear, the court issued an order on February 2, 2010, ruling that the plaintiff was entitled to reasonable attorney's fees pursuant to Code of Civil Procedure section 425.16 and section 128.5, subsection (b)(2), upon plaintiff's submission of substantiating documents in a supplemental declaration. Referencing plaintiff's opposition to the anti-SLAPP motion as support, the court found that, because defendants' motion lacked legal ground, it was completely without merit and no reasonable attorney would have brought an anti-SLAPP motion given these circumstances.
After plaintiff submitted its supplemental declaration, the court issued its final ruling on March 1, 2010, ordering defendants and their counsel to pay $19,291.60 and amending its February 2, 2010 order nunc pro tunc by replacing section 128.5, subsection (b)(2) with 128.6, subsection (b)(2). Appellants Morales, Garcia and Sanchez now appeal the trial court's order to pay plaintiff's attorney's fees and costs.
Section 128.6 has since been repealed. Our references to section 128.6 are references to former section 128.6.
ISSUES ON APPEAL
Appellants contend that the order awarding attorney's fees and costs was erroneous and should be reversed because: (1) the trial court did not have jurisdiction to make an order for attorney's fees and costs because an appeal concerning the denial of the anti-SLAPP motion was pending at the time; (2) the trial court did not cite the correct statute in its order granting the fee award; and (3) the trial court failed to apply the proper standard and adequately explain its reasoning in the order. Defendants do not challenge the amount of the fee award.
DISCUSSION
According to the anti-SLAPP statute, a defendant may move to strike one or more causes of action "arising from" any act of the defendant that was 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 . . . . " (Code Civ. Proc., § 425.16(b)(1).) The defendant must first make a threshold showing that the challenged cause of action arose from a protected activity. (Moore v. Shaw (2004) 116 Cal.App.4th 182, 193-194.) A cause of action which arguably may have been triggered by a protected activity does not mean the action is one "arising from" that activity. (Foundation for Taxpayer & Consumer Rights v. Garamendi (2005) 132 Cal.App.4th 1375, 1384 (Garamendi).) If the defendant meets the burden, the plaintiff must show a probability of prevailing in order for the motion to be denied. (Moore v. Shaw, supra, 116 Cal.App.4th at p. 194.)
All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
If the court further finds that the defendant brought a frivolous anti-SLAPP motion or one solely to cause unnecessary delay, the court shall impose sanctions against the defendant, the defendant's attorney, or both by awarding costs and reasonable attorney's fees to the plaintiff. (§ 425.16, subd. (c); § 128.5, subd. (a); Moore v. Shaw, supra, 116 Cal.App.4th at pp. 198-199.)
1. Jurisdiction to Determine Attorney's Fees While an Appeal was Pending
Whether a court has subject matter jurisdiction is a question of law and is reviewed de novo. (Robbins v. Foothill Nissan (1994) 22 Cal.App.4th 1769, 1774; Aquila, Inc. v. Superior Court (2007) 148 Cal.App.4th 556, 568.)
While an appeal from an order granting or denying an anti-SLAPP motion automatically stays all further proceedings on the merits of the affected causes of action pursuant to section 916, subsection (a), (Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 190-192), it does not deprive the trial court of jurisdiction to entertain a motion for attorney's fees. (Carpenter v. Jack in the Box Corp. (2007) 151 Cal.App.4th 454, 461; Doe v. Luster (2006) 145 Cal.App.4th 139, 144, Nazemi v. Tseng (1992) 5 Cal.App.4th 1633, 1639.) The purpose of the automatic stay rule is to protect the appellate court's jurisdiction and prevent the trial court from rendering an appeal futile by altering the appealed order. (Elsea v. Saberi (1992) 4 Cal.App.4th 625, 629.) Thus, if a particular matter will not impact the "effectiveness" of the appeal, it is not a matter embraced in or affected by the appealed order, and the proceedings are permitted. (See ibid.)
Accordingly, the trial court in the instant case did not err in considering plaintiff's motion for attorney's fees and costs. The appeal from the denial of defendants' anti-SLAPP motion only stayed proceedings on the merits of the causes of action affected by the motion. The determination of whether defendants' motion was frivolous and, consequently, whether plaintiff was entitled to recover attorney's fees, did not affect or change the underlying order of denial that was being appealed from at the time. Thus, the court was not deprived of jurisdiction to entertain the fees motion according to the anti-SLAPP statute.
2. Correct Statute to Determine Fee Sanction for Anti-SLAPP Motion
If a trial court finds that a defendant's anti-SLAPP motion is frivolous, it awards costs and reasonable attorney's fees to the plaintiff pursuant to section 128.5. (Code Civ. Proc., § 425.16, subd. (c)(1).) Referencing section 128.5 indicates that a court must apply the procedures and substantive standards of section 128.5 when deciding whether to award attorney's fees and costs. (Moore v. Shaw, supra, 116 Cal.App.4th at p. 199.) Although, by its own terms, section 128.5 only applies to a complaint filed, or a proceeding initiated, on or before December 31, 1994, section 425.16 "incorporates the substantive and procedural requirements of section 128.5, but does not incorporate its limitation as to the date of filing of the complaint." (Chitsazzadeh v. Kramer & Kaslow (2011) 199 Cal.App.4th 676, 683.)
In the instant case, the trial court's amended order for attorney's fees is not void for citing section 128.6, because it is the procedures and substantive standards of section 128.5 that matter, not the exact designation of the statute itself. It would not have made any difference whether the trial court applied the standards set out in section 128.5 or section 128.6, since substantively, the two sections are identical. Appealing defendants have no basis to complain they were not given notice that fees and costs were being sought or would be awarded under the standards of section 128.6. They had been given notice that fees and costs would be sought pursuant to the anti-SLAPP statute which references section 128.5. Had they chosen to oppose plaintiff's motion for fees, their opposition would be subject to the same substantive standards regardless of whether one section or the other was applied. Thus, any possible error in this regard is harmless.
We understand the trial court's confusion. As conceded by appellants, "Code of Civil Procedure [section] 128.6 reenacts the exact sanctions scheme currently set forth in section 128.5, deleting only section 128.5's limitation to pre-1995 actions." Thus, although the trial court originally indicated its sanctions order was under section 128.5, it subsequently amended the order to refer to 128.6, the otherwise identical statute which appeared, on its face, to be the applicable statute due to the date the action was filed. The amendment was, however, unnecessary. As section 425.16 incorporates section 128.5 without its date limitation, section 128.5 was the appropriate standard to use. However, as the standard is concededly the same in both statutes, the trial court's reference to section 128.6 in no way undermines the propriety or effectiveness of its order.
Defendants chose not to respond to plaintiff's fees motion and not to attend the January 15, 2010 hearing on the fees motion because they mistakenly assumed that the trial court had no jurisdiction to hear a motion on attorney's fees while their appeal from the denial of the anti-SLAPP motion was pending. Since defendants were given adequate notice and an opportunity to be heard, they were not denied due process.
By post-argument letter brief, Attorney Curtis argues that the attorney fee award could not have been entered against her, as Moore v. Kaufman (2010) 189 Cal.App.4th 604, 615 prohibits a fee-shifting award under section 425.16 to be imposed against a party's attorney. To the extent the argument is cognizable in this appeal, as Attorney Curtis is not an appellant (see fn. 1, ante), we disagree. There are two attorney's fees provisions in the anti-SLAPP statute. First, "a prevailing defendant on a special motion to strike shall be entitled to recover his or her attorney's fees and costs." (Code Civ. Proc., § 425.16, subd. (c)(1).) Second, "[i]f the court finds that a special motion to strike is frivolous or is solely intended to cause unnecessary delay, the court shall award costs and reasonable attorney's fees to a plaintiff prevailing on the motion, pursuant to Section 128.5." (Ibid.) The first provision is a fee-shifting provision, which does not provide for an award against opposing counsel. (Moore v. Kaufman, supra, 189 Cal.App.4th at p. 615.) The latter, however, is a sanctions provision, which clearly does. (Code Civ. Proc., § 128.5, subd. (a).)
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3. Proper Standard for Frivolousness & Sufficiency of Trial Court's Order
Whether an anti-SLAPP motion is frivolous is reviewed for abuse of discretion. (Moore v. Shaw, supra, 116 Cal.App.4th at p. 199.) If an anti-SLAPP motion is frivolous, the imposition of sanctions is mandatory, (id., at pp. 198-199), in an amount to be determined within the trial court's sound discretion. (Garamendi, supra, 132 Cal.App.4th at p. 1384.)
Under section 128.5, a frivolous action is one that is "totally and completely without merit," (§ 128.5, subd. (b)(2)), and is determined by an objective standard of whether any reasonable attorney would agree such motion is totally devoid of merit. (Levy v. Blum (2001) 92 Cal.App.4th 625, 635.) Factors to consider include lack of legal grounds, lack of evidentiary showing, or laches. (Finnie v. Town of Tiburon (1988) 199 Cal.App.3d 1, 12-14.) In addition, an order of attorney's fees should be in writing and should describe in detail the conduct or circumstances justifying the order. (§ 128.5, subd. (c)(2)). This requirement may be satisfied if the court incorporates by reference " 'papers setting forth the conduct, circumstances, and legal arguments underlying the court's conclusions.' " (Garamendi, supra, 132 Cal.App.4th at p. 1388.)
Here, appellants argue that before sanctions may be imposed there should be a showing of subjective bad faith, which they argued the court did not find. However, courts are allowed to infer subjective bad faith from the procedural circumstances involved. (FLIR Systems, Inc. v. Parrish (2009) 174 Cal.App.4th 1270, 1278.) Such circumstances include the pursuit of a frivolous tactic. (Shelton v. Rancho Mortgage & Investment Corp. (2002) 94 Cal.App.4th 1337, 1346.)
In this case, there was sufficient evidence from which the trial court could conclude that defendants pursued a frivolous anti-SLAPP motion and infer subjective bad faith. Plaintiff's opposition to the anti-SLAPP motion, as well as its motion for attorney's fees, thoroughly detailed the lack of merit to defendants' motion to strike. There was no evidence the communications made by defendants were in anticipation of litigation and there was no basis for defendants' argument that a church's corporate status was generally a matter of public interest. Due to the lack of legal grounds, the court was within its discretion to find that no reasonable attorney would have made an anti-SLAPP motion under these circumstances.
The trial court's order was also sufficient to satisfy the requirement that the court recite in detail the conduct or circumstances justifying the order. The trial court's order consisted of two parts: (1) the February 2, 2010 order; and (2) the March 1, 2010 order, which incorporated and amended the February order. The court's reasoning is made clear by the February order's reference to and incorporation of plaintiff's opposition to defendants' anti-SLAPP motion. As noted above, plaintiff's opposition included arguments and reasons why the communications or conduct that defendants claimed were protected under the anti-SLAPP statute were not only unconnected with the right to petition or free speech, but were not public issues. Thus, the court did not merely recite the elements required for finding frivolousness. Instead, it included in its order, by reference, the "conduct, circumstances, and legal arguments" supporting its conclusion that defendants' motion was completely devoid of merit. This was sufficient.
DISPOSITION
The order is affirmed. Appellants shall pay respondent's costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
CROSKEY, J.
WE CONCUR:
KLEIN, P. J.
KITCHING, J.