Opinion
H044936
09-26-2019
GBR MAGIC SANDS MHP, LLC et al., Cross-complainants and Appellants, v. CATHERINE PECORARO et al., Cross-defendants and Respondents.
ORDER MODIFYING OPINION AND DENYING REHEARING [CHANGE IN JUDGMENT] THE COURT:
It is ordered that the opinion filed herein on September 26, 2019, be modified as follows: 1. The second sentence of the disposition is modified to read: "On remand, the court shall vacate those orders, enter a new order denying the motion, and reconsider the Pecoraros' request for fees."
This modification does affect the judgment.
The petition for rehearing is denied. Date:__________
/s/_________
Mihara, J.
/s/_________
Elia, Acting P. J.
/s/_________
Bamattre-Manoukian, J.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Santa Clara County Super. Ct. No. 2011-1CV211815)
Appellants GBR Magic Sands MHP, LLC and MHP Roll-up, LLC (collectively GBR) appeal from the superior court's order granting an anti-SLAPP motion (Code Civ. Proc., § 425.16), striking GBR's declaratory relief cause of action against Vivian Martorana, as trustee, and Catherine Pecoraro (collectively the Pecoraros), and awarding the Pecoraros their attorney's fees. GBR claims that the superior court should not have granted the motion because the declaratory relief cause of action did not arise from protected activity but merely arose in the aftermath of protected activity. We agree with GBR and reverse the superior court's orders.
"SLAPP is an acronym for 'strategic lawsuit against public participation.'" (Simpson Strong-Tie Company, Inc. v. Gore (2010) 49 Cal.4th 12, 16, fn. 1.)
I. Background
This dispute concerns a 20-acre parcel that is part of the land upon which GBR operates a mobile home park called Magic Sands. Originally, the 20-acre parcel had two equal undivided fee interests. Philip and Josephine Barbaccia owned a 50 percent undivided interest in the parcel (which we will call the PJ interest), and their two sons, Cyril and Louis, owned the other 50 percent undivided interest in the parcel (which we will call the CL interest). In 1963, Philip and Josephine granted a 98-year lease of the PJ interest to Cyril and Louis. Cyril used the CL interest and the 1963 lease of the PJ interest to develop Magic Sands. When Philip and Josephine died, their children, Cyril, Louis, Rita, and Josephine Pecoraro, succeeded to fractional shares of the PJ interest. Some of these fractional shares also changed hands through a series of transactions.
Cross-defendant Martorana is allegedly the trustee of Josephine Pecoraro's trust.
In 2007, the CL interest was leased to GBR, an entity controlled by Cyril. In 2008, the 1963 lease on the PJ interest was assigned to GBR. A 2010 partition action led to the entire 20-acre parcel's fee interest becoming vested in Louis, Josephine Pecoraro, and Rita's daughter, Catherine Pecoraro, who had succeeded to half of Rita's interest. The interests now owned by Josephine Pecoraro and Catherine Pecoraro were fractional shares of the PJ interest, which was subject to the 1963 lease; the entire CL interest is now owned by Louis and his LLC, who also own a fractional share of the PJ interest. During the partition action litigation, Louis and the Pecoraros discovered that Cyril had used undue influence to obtain the 1963 lease of the PJ interest, and the Pecoraros filed an action seeking to cancel the 1963 lease and quiet title to their interest in the 20-acre parcel.
Louis and his LLC, LouBar LLC, own 13/16 of the fee interest, while the Pecoraros own the remaining 3/16 of the fee interest in the 20-acre parcel.
In 2013, the court in the cancellation action entered judgment declaring the 1963 lease "void" "as of August 3, 2012" and ruling that the Pecoraros were "entitled to . . . possession of GBR's undivided fifty percent interest in the Property previously subject to the 1963 Lease effective as of August 3, 2012." The 2013 judgment also ruled that GBR had "no right, title or interest in the undivided fifty percent interest in the Property previously subject to the 1963 Lease . . . ." This court affirmed that judgment on appeal.
In March 2017, GBR filed a cross-complaint in an existing action brought by Loubar against GBR. The cross-complaint sought relief against the Pecoraros and others on the ground that the cancellation of the 1963 lease "will cause [the Pecoraros and the others] to gain unjust enrichment." It alleged that the Pecoraros "have suggested that the 1963 Lease's cancellation entitles them to possession of or profits from Magic Sands." GBR maintained that the Pecoraros were not entitled to possession of the 20-acre parcel or profits from its use but only to a share of the rent that GBR was required to pay under the 2007 leases of the CL interest.
The fourth cause of action in GBR's cross-complaint, which is the only one at issue in this appeal, sought declaratory relief with respect to "possession and rent in light of cancellation of the 1963 Lease." GBR alleged that the Pecoraros claimed a right to possess the 20-acre parcel, while GBR claimed a right to continue in possession of the 20-acre parcel under the 2007 leases. GBR also alleged that the Pecoraros claimed a right to a share of the rent paid by GBR's mobile home park tenants to GBR, while GBR claimed that at most the Pecoraros were entitled to a share of the rent paid by GBR under the 2007 leases.
The Pecoraros brought a motion to strike the fourth cause of action in the cross-complaint under Code of Civil Procedure section 425.16, and the court granted their motion. It found that the fourth cause of action arose from the Pecoraros' "petitioning activity, i.e., filing of the action to cancel the 1963 Lease." "This claimed controversy exists specifically because [the] Pecoraros sought and obtained cancellation of the 1963 Lease, a protected activity." GBR timely appealed from the court's order granting the Pecoraros' motion. The parties subsequently stipulated to the amount of attorney's fees, and the court awarded the Pecoraros $56,225 in attorney's fees. GBR also appealed from the attorney's fees order.
The Pecoraros also moved to strike the first through third causes of action in the cross-complaint, but the court did not rule on that portion of their motion because GBR dismissed those causes of action against the Pecoraros.
II. Analysis
GBR challenges the superior court's determination that its declaratory relief cause of action arose from protected activity. It claims that the declaratory relief cause of action arose from "the parties' respective real estate interests in the 20 Acres," not "the Pecoraros' petitioning activity in the [cancellation] action." GBR's position is that it is irrelevant that the cancellation action "led to" its cause of action. In GBR's view, its declaratory relief cause of action "seeks to resolve a dispute concerning the interpretation and legal effect of the 2007 Leases, which encumber the 20 Acre parcel independent of the 1963 Lease that was cancelled in the Pecoraro lawsuit."
In its opening brief, GBR also claimed that the superior court had erred in finding that it had failed to show a probability of prevailing. It claimed that "[t]he record contains the evidence necessary" for it to prevail on its cause of action. However, in its reply brief, GBR "withdraws its argument demonstrating that it showed a probability of success on the declaratory relief claim . . . ." We therefore need address only whether the Pecoraros demonstrated that GBR's declaratory relief cause of action arose from their protected activity.
"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), italics added.) "The moving defendant's burden is to demonstrate that the act or acts of which the plaintiff complains were taken 'in furtherance of the [defendant]'s right of petition or free speech under the United States or California Constitution in connection with a public issue,' as defined in the statute. (§ 425.16, subd. (b)(1).) 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." (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) "We review de novo the grant or denial of an anti-SLAPP motion. [Citation.] We exercise independent judgment in determining whether, based on our own review of the record, the challenged claims arise from protected activity. [Citations.] In addition to the pleadings, we may consider affidavits concerning the facts upon which liability is based." (Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1067 (Park).)
" '[A]ct in furtherance of a person's right of petition or free speech under the United States or California Constitution in connection with a public issue' includes: (1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law, (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law, (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest, (4) or any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest." (Code Civ. Proc., § 425.16, subd. (e).)
The dispositive issue in this case is whether GBR's declaratory relief cause of action arose from protected activity. "[T]he statutory phrase 'cause of action . . . arising from' means simply that the defendant's act underlying the plaintiff's cause of action must itself have been an act in furtherance of the right of petition or free speech. [Citations.] In the anti-SLAPP context, the critical point is whether the plaintiff's cause of action itself was based on an act in furtherance of the defendant's right of petition or free speech." (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78 (Cotati).) "The anti-SLAPP statute's definitional focus is not the form of the plaintiff's cause of action but, rather, the defendant's activity that gives rise to his or her asserted liability—and whether that activity constitutes protected speech or petitioning." (Navellier v. Sletten (2002) 29 Cal.4th 82, 92 (Navellier).) " '[T]he mere fact that an action was filed after protected activity took place does not mean the action arose from that activity for the purposes of the anti-SLAPP statute.' [Citations.]" (Park, supra, 2 Cal.5th at p. 1063.) "[T]hat a cause of action arguably may have been 'triggered' by protected activity does not entail it is one arising from such." (Navellier, at p. 89.)
The determination as to whether a declaratory relief cause of action is based on protected activity turns on the underlying basis for the dispute upon which the cause of action is based. If the dispute itself arises from the conduct in prior litigation, the dispute arises from protected activity. If the dispute instead involves the same underlying factual situation that was involved in the prior litigation, but not the specific activities by the defendant in that prior litigation, the dispute does not arise from protected activity even if the dispute was triggered by the prior litigation. In Navellier, the basis for the cause of action was the defendant's litigation activity so the cause of action did arise from protected activity. (Navellier, supra, 29 Cal.4th at p. 90.) In Cotati, on the other hand, the basis for the cause of action was an underlying dispute, not any of the litigation conduct in a separate lawsuit that concerned that same underlying dispute. (Cotati, supra, 29 Cal.4th at pp. 80-81.)
We independently examine the pleadings and affidavits to determine whether the Pecoraros, as the moving party, bore their burden of establishing that GBR's declaratory relief cause of action arose from the Pecoraros' activity in the prior litigation, which would be protected activity, or instead arose from the underlying real property dispute.
The Pecoraros argued below that this cause of action arose from protected activity because it sought "to re-litigate the right of possession which the Pecoraros obtained as a result of their successful cancellation of the 1963 Lease in the [cancellation] action." They claimed that this issue "was fully litigated or could have been litigated in" the cancellation action. However, the allegations describing this cause of action in GBR's cross-complaint did not reflect that it was based on protected activity itself rather than merely a dispute that had arisen in the aftermath of protected activity. GBR alleged that its action was aimed at resolving "competing claims to possession of, or income from, the 20 Acres" due to the Pecoraros' "suggest[ion] that the 1963 Lease's cancellation entitles them to possession of or profits from Magic Sands." GBR claimed that it was entitled to possession under the 2007 leases and the Pecoraros were entitled only to a share of the rent that GBR was obligated to pay to the Pecoraros' co-owner under those 2007 leases.
The Pecoraros also asserted below that "the 2007 Leases only concerned Lots 25 and 26 of the property where Magic Sands operated, while . . . the 1963 Lease encumbered Parcels 1, 3, and 8." They do not repeat this argument on appeal, probably because it is meritless. The 1963 lease granted a lease over an "undivided one-half interest" in Lots 25 and 26. The 2007 leases granted a lease over the other one-half "tenancy in common" interests in Lots 25 and 26, which were sometimes also described as parcels 1, 3, and 8. Parcels 1, 3, and 8 were simply legal descriptions of portions of Lots 25 and 26; they described the same real property.
Due to the nature of the limited issue before us, we have no need to resolve the meaning of the "right of possession" of an undivided 50 percent interest in real property that has been lawfully leased by the owner of the other undivided 50 percent interest in that same real property.
GBR's declaratory relief cause of action alleged: "The parties dispute what their rights and obligations are regarding possession and rent in light of cancellation of the 1963 Lease. . . . GBR seeks a declaration that Cross-Defendants may not seek to possess the 20 Acres, interfere with management of, or otherwise rely on a supposed right to possession to disrupt GBR's possession, operation, management or peaceful enjoyment of the property and operation of the Magic Sands business on the 56 Acres. [¶] . . . Regarding rent, California law provides that the fee owners—the Pecoraros, Lou and LouBar—are entitled at most only to the rents paid by GBR under the 2007 Leases. The Pecoraros, Lou and LouBar dispute this conclusion and contend that cancellation of the 1963 Lease entitles them to a share of income or rents the mobile home park tenants pay to GBR. A judicial determination of the rights of Cross-Complainant GBR on the one hand, and Cross-Defendants on the other hand, is necessary to resolve the rights and obligations of the parties, so that each party knows its rights and obligations going forward under the 2007 Leases and as lessee and lessors, and the operation of Magic Sands is not disrupted. GBR therefore seeks a declaration of the Court that as a result of the cancellation of the 1963 Lease, Cross-Defendants are entitled at most only to a share of the rents paid by GBR under the 2007 Leases." (Italics added.)
The underlying legal dispute, as GBR framed it in its declaratory relief cause of action, is whether the Pecoraros, as the fee owners of part of the PJ interest, have (1) a right to possession of the undivided parcel despite GBR's possession of it under the 2007 leases of the CL interest, and (2) a right to recover a share of the payments GBR collects as the lessor of the 20-acre parcel to the tenants of Magic Sands. There is a potential legal basis for GBR's claim, though we need not address the validity of its claim. "As to the ordinary tenancy in common in surface rights, it is the rule that where one of several cotenants . . . receives rents from third persons for the use of the land, he must account to his cotenants for their share." (Dabney-Johnston Oil Corp. v. Walden (1935) 4 Cal.2d 637, 656.) GBR claims that this rule applies and restricts what it might be obligated to pay to the Pecoraros.
We conclude that the Pecoraros failed to meet their burden of demonstrating that GBR's declaratory relief cause of action arose from the Pecoraros' prior litigation activity rather than from the same underlying real property dispute. GBR's allegations in its declaratory relief cause of action did not target any litigation activity. These allegations sought to resolve a dispute over possession and rent that was triggered by the result of the prior litigation. This is much more like the dispute in Cotati than it is like the dispute in Navellier. The superior court erred in concluding that the mere relationship between the prior litigation and the declaratory relief cause of action meant that the latter arose from the former within the meaning of Code of Civil Procedure section 425.16. Consequently, we reverse both the court's order granting the Pecoraros' motion and the related attorney's fees order.
GBR's request for judicial notice is denied as the materials it asked us to judicially notice are unnecessary to our disposition of this appeal.
III. Disposition
The orders granting the Pecoraros' Code of Civil Procedure section 425.16 motion and awarding the Pecoraros their attorney's fees are reversed. On remand, the court shall vacate those orders and enter new orders denying both the motion and the request for fees. GBR shall recover its costs on appeal.
/s/_________
Mihara, J. WE CONCUR: /s/_________
Elia, Acting P. J. /s/_________
Bamattre-Manoukian, J.