Opinion
F059827 Super. Ct. No. S1500CV257501
11-04-2011
GOLDEN HILLS SANITATION COMPANY, INC., Plaintiff and Appellant, v. AB LAND DEVELOPMENT, INC., et al., Defendants and Appellants.
Borton Petrini, Calvin R. Stead, Andrew M. Morgan and Michael J. Stump for Plaintiff and Appellant. Hill, Farrer & Burrill, Paul M. Porter and Patrick E. Michela for Defendants and Appellants.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
OPINION
APPEAL from a judgment of the Superior Court of Kern County. William D. Palmer, Judge.
Borton Petrini, Calvin R. Stead, Andrew M. Morgan and Michael J. Stump for Plaintiff and Appellant.
Hill, Farrer & Burrill, Paul M. Porter and Patrick E. Michela for Defendants and Appellants.
Plaintiff Golden Hills Sanitation Company, Inc., appeals from an order pursuant to Code of Civil Procedure section 425.16, the anti-SLAPP statute, dismissing four of 15 causes of action plaintiff asserted against defendants AB Land Development, Inc., and Edward A. Borges. Those defendants cross-appeal from the portions of that order that deny the anti-SLAPP motion as to five additional causes of action. They also appeal from that portion of the order that permitted plaintiff to further amend those causes of action, if possible, to clearly base those causes of action on "nonprotected activity/speech." With one exception, we conclude neither plaintiff nor defendants have established that the trial court erred. Accordingly, we reverse in part and affirm the remainder of the order.
All further section references are to the Code of Civil Procedure unless otherwise stated.
Section 425.16, as we will explain more fully below, seeks to permit early and expeditious dismissal of nonmeritorious causes of action that are based on certain forms of speechrelated activity by the defendant.
FACTS AND PROCEDURAL HISTORY
Plaintiff has owned and operated a wastewater treatment facility near Tehachapi since approximately 1983. In conjunction with this business, plaintiff obtained an easement to transport treated wastewater across a neighboring golf course and to store such water in Tom Sawyer Lake, located on the golf course. Tom Sawyer Lake originally was fed by a freshwater creek. When mixed with treated water from plaintiff's plant, the lake water was suitable for use in irrigation of the golf course, and the mixture was used in this manner for some period.
At some point during the 1990's, the golf course went out of business, defendant AB Land Development, Inc., bought the property, and the lake water was no longer used to irrigate it. During this time frame, the creek that previously fed fresh water to the lake was diverted. As a result of these changes, the water in Tom Sawyer Lake became stagnant and pungent. Neighbors complained to governmental authorities. Sometime around 2004, the Kern County District Attorney sued the present parties and others to enjoin continuation of Tom Sawyer Lake as a nuisance. That litigation ended in entry of a permanent injunction prohibiting the present parties and others from, inter alia, intentionally violating any cleanup and abatement order for Tom Sawyer Lake issued by the Regional Water Quality Control Board. By the express terms of the judgment, this provision expired on August 1, 2007. A separate paragraph of the judgment provided: "The Defendants Edward A. Borges and A.B. Land Development, Inc. further agree to take appropriate reasonable remediation measures each summer, so long as it is owned by A.B. Land Development, Inc., to aerate Tom Sawyer Lake, in order to mitigate the unpleasant odors that have previously emanated from the lake. The measures may also include the use of lake water to irrigate the golf courses." (This provision constituted paragraph 4 of the judgment; the August 1, 2007, termination provision, by its terms, applied only to paragraphs 2 and 3 of the judgment.)
The Final Judgment and Permanent Injunction, filed July 7, 2004, in People v. A.B. Land Development, Inc., et al. (Super. Ct. Kern County, 2004, No. 248049-NFT) is included in the record on this appeal pursuant to a request for judicial notice granted by the trial court in the present action.
Problems persisted between plaintiff and defendants, with plaintiff contending defendants were interfering with the easement by failing to restore the freshwater flow to the lake and by failing to use the lake water for irrigation, and defendants contending that plaintiff was not properly treating the effluent to produce a sanitary discharge into the lake.
In 2006, plaintiff commenced the present action by filing a complaint for injunctive relief, breach of contract, declaratory relief and quiet title (to establish a prescriptive easement). The court granted a preliminary injunction prohibiting defendants from interfering with plaintiff's use of Tom Sawyer Lake (and plaintiff's pipe works) for the storage of properly treated discharge water; the injunction also prohibited plaintiff from discharging improperly treated water into the lake. The litigation apparently progressed uneventfully, as far as our record on appeal reveals, until 2009, when plaintiff filed a first amended complaint. The causes of action added by the first amended complaint have resulted in the proceedings now before us.
In addition, defendants apparently filed a cross-complaint. The cross-complaint and documents related to it are not included in the record before us on this appeal and no issues have arisen concerning the cross-complaint.
The problem, for present purposes, is set forth in plaintiff's motion for leave to file the first amended complaint: "This motion is based on the grounds that after plaintiff GHSC filed the complaint herein and commenced the discovery process, Defendant's [sic] have on numerous occasions published false statements and misrepresentations concerning GHSC to third parties, engaged in both intentional and negligent conduct which interfered with GHSC's prospective economic relations in the community, engaged in activities which prevented GHSC from full use and enjoyment of its real property, [and] entered into agreements with third parties which were designed to cause undue financial burden to GHSC ...." The new causes of action were as follows: intentional interference with prospective economic relations (Sixth Cause of Action), negligent interference with prospective economic relations (Seventh Cause of Action), private nuisance (Eighth Cause of Action), public nuisance (Ninth Cause of Action), defamation (Tenth Cause of Action), conspiracy (Eleventh Cause of Action), intentional misrepresentation (Twelfth Cause of Action), negligent misrepresentation (Thirteenth Cause of Action), concealment (Fourteenth Cause of Action), and false promise (Fifteenth Cause of Action).
Defendants filed both a demurrer to the first amended complaint and a special motion pursuant to section 425.16 to strike the new causes of action. As to the special motion, defendants contended each of the new causes of action arose from defendants' exercise of the rights of petition and free speech on matters of public interest. Plaintiff's opposition to the motion essentially conceded that the sixth, seventh, tenth, twelfth, thirteenth, and fifteenth causes of action arose from speech described in section 425.16. As to those causes of action, however, plaintiff contended it probably would prevail on the merits, thereby precluding dismissal under section 425.16, subdivision (b)(1). Plaintiff contended the eighth, ninth, eleventh, and fourteenth causes of action did not arise from protected speech. In addition, plaintiff contended defendants were not entitled to bring a section 425.16 motion as to any of the causes of action because, first, defendants were subject to the commercial speech exception of section 425.17, subdivision (c), and, second, defendants were barred from relief under section 425.16 because they were in violation of the injunction previously entered in the district attorney's nuisance action against defendants. (This latter point, concerning an equitable bar to the section 425.16 motion, was raised only in a supplemental memorandum, ruled untimely and not considered by the trial court.)
Section 425.16, subdivision (b)(1), states: "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." Subdivision (e) states: "As used in this section, 'act 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."
After hearings on the motion, the trial court granted the section 425.16 motion to strike as to the sixth, seventh, tenth, and fifteenth causes of action. Plaintiff filed a timely notice of appeal from this aspect of the order. The court denied the section 425.16 motion and sustained defendants' demurrer, with leave to amend, as to the eighth, ninth, twelfth, thirteenth, and fourteenth causes of action. Defendants filed a cross-appeal from this aspect of the order. The trial court sustained, without leave to amend, defendants' demurrer to the eleventh cause of action (conspiracy); plaintiff has not appealed from that aspect of the court's order.
Plaintiff filed a motion for judicial notice on July 19, 2010, and defendants filed a "conditional motion for judicial notice" on October 1, 2010. We deferred ruling on both motions pending consideration of the merits of the appeal. We now deny both motions for judicial notice because none of the matters of which notice is sought are germane to the issues on appeal.
DISCUSSION
I. The Appeal
Plaintiff raises four primary issues on appeal. We examine those issues in a different order than plaintiff presents them, since our resolution of certain issues has consequences for later issues.
A. The Trial Court's Refusal To Accept Plaintiff's Untimely Supplemental Opposition Papers
1. Additional procedural history.
Plaintiff filed a timely opposition to defendants' section 425.16 motion on September 11, 2009. In addition to a 30-page memorandum of points and authorities, the opposition included an 11-page declaration of Clinton Hilderbrand, plaintiff's general manager. Twelve days later and one day before the original date for the section 425.16 motion hearing, plaintiff filed a supplemental two-page declaration of Hilderbrand that included 30 pages of documentary attachments. There was no objection to the timeliness of this supplemental declaration. On the date of the hearing, the assigned judge was unavailable and, after appearing before a different judge, the parties agreed to continue the matter to October 15, 2009, three weeks from the original hearing date.
On October 13, 2009—two days before the continued hearing date—plaintiff filed a supplemental memorandum of points and authorities, introducing a new theory for opposing the section 425.16 motion. In addition, plaintiff filed a six-page declaration of Jeffrey Mabry, plaintiff's former president, recounting events beginning in 2001, with the last event recounted occurring in 2007. Further, plaintiff filed a nine-page second supplemental declaration of Hilderbrand, attached to which were 52 pages of exhibits, which included both of his prior declarations and the attachments to those declarations. The second supplemental declaration mostly recounts events occurring before March 1, 2008; nothing set forth in the declaration is alleged to have occurred after January 20, 2009. Neither the supplemental memorandum nor the supplemental declarations contain any assertions about the reason the documents could not have been timely filed in response to the original section 425.16 motion to strike.
When defendants objected to the late supplemental filings at the October 15, 2009, hearing, the trial court sustained that objection. The court continued the section 425.16 motion hearing to October 30, 2009. At that hearing, the court took the section 425.16 motion under submission. By amended minute order dated December 28, 2009, the court granted the motion in part and denied it in part, as set forth in our factual summary, above.
The trial court did not expressly sustain the objection to the untimely pleadings nor expressly strike those pleadings. Instead, in response to counsel's inquiry whether he should respond to the pleadings, the court stated: "I think they are late filed, and I don't think you need to respond." On appeal, the parties agree that the court did not consider the untimely pleadings.
2. Analysis.
Plaintiff contends the trial court abused its discretion in declining to consider the pleadings filed on October 13, 2009. Plaintiff does not dispute that the October 13 pleadings were untimely. Instead, it contends that, because the hearing was going to be continued from October 15 to October 30 in any event, defendants had adequate time to reply to the documents and the court had adequate time to consider both the October 13 documents and any reply defendants might have chosen to file. Relying on Mann v. Cracchiolo (1985) 38 Cal.3d 18, plaintiff contends the policy of full consideration of the merits of an issue should prevail over rigid application of rules governing timeliness.
Section 1005, subdivision (b), provides, in relevant part: "All papers opposing a motion ... shall be filed with the court and a copy served on each party at least nine court days ... before the hearing." California Rules of Court, rule 3.1300(b) states that the court, "on its own motion or on application for an order shortening time supported by a declaration showing good cause, may prescribe shorter times for the filing and service of papers than the times specified in Code of Civil Procedure section 1005." Rule 3.1300(d) states, in part: "If the court, in its discretion, refuses to consider a late filed paper, the minutes or order must so indicate."
Here the court indicated its exercise of discretion on the record, as indicated in footnote 6, ante.
In this case, plaintiff failed to file an application for order shortening time and has not, at any time, attempted to show good cause why the October 13 pleadings were not filed in a timely manner. "A trial court has broad discretion under rule 3.1300(d) ... to refuse to consider papers served and filed beyond the deadline without a prior court order finding good cause for late submission." (Bozzi v. Nordstrom, Inc. (2010) 186 Cal.App.4th 755, 765.) As the court stated in Bozzi: "We cannot find any reason to conclude the trial court abused its discretion. Defendants followed all the rules and were entitled to expect the trial court to enforce them. Plaintiff did not invoke any of the available procedures to obtain a court order permitting [plaintiff] to file late papers." (Ibid.)
Mann v. Cracchiolo, supra, 38 Cal.3d 18, upon which plaintiff relies, does not support plaintiff's position. In that case, the plaintiffs had appealed from orders denying their motion for disqualification of the trial judge. (Id. at p. 26.) The appellate court stayed all further proceedings in the trial court. (Ibid.) The defendants then filed a motion for summary judgment to be heard on October 15. (Ibid.) The plaintiffs sought writ relief in the appellate court. The appellate court denied the petition and terminated the stay on October 8; the plaintiffs were notified by telephone on that day. On October 13, the trial judge issued a minute order stating that all pending motions would be heard on October 15. (Id. at p. 27.) The plaintiffs served their opposition to the summary judgment motion on October 12, a court holiday, and filed the pleadings the next day. (Id. at p. 28.) Under a local rule of court, opposition to summary judgment motions was required to be filed three court days prior to the hearing; because of the holiday, that would have made the opposition due on October 9, just one day after the appellate court dissolved its stay of all trial court proceedings. (Ibid.) The trial court refused to consider the plaintiffs' opposition pleadings and granted summary judgment for the defendants. (Id. at pp. 25-26.) The Court of Appeal affirmed.
On petition for review, the Supreme Court reversed. Under the circumstances, filing an opposition to the 800-page summary judgment motion on the next day after the Court of Appeal dissolved the stay "would have required Herculean efforts." (Mann v. Cracchiolo, supra, 38 Cal.3d at p. 30.)
No similar circumstances are apparent in the present case. Plaintiff not only was able to file a timely opposition to the section 425.16 motion, but it also filed a supplemental declaration in opposition that was considered by the trial court. The second set of supplemental opposition papers largely concerned events that had occurred months or years before the date of the original declaration in opposition to the section 425.16 motion. While the October 13 supplemental memorandum of points and authorities sought to introduce a new legal theory, the theory itself was based on events that had taken place five years prior to the present proceedings. Finally, plaintiff made no attempt to show good cause for the untimely pleadings. Plaintiff has not established that the court abused its discretion in rejecting the October 13 supplemental pleadings. (Cf. Bozzi v. Nordstrom, Inc., supra, 186 Cal.App.4th at p. 765.)
B. Plaintiff's "Disentitlement" Theory
In various circumstances, a party who "violate[s] conscience, good faith or other equitable principle in his prior conduct" will not be afforded a remedy if he seeks judicial vindication of his rights. (Lynn v. Duckel (1956) 46 Cal.2d 845, 850.) This principle is embodied in the "unclean hands" defense. (See 13 Witkin, Summary of Cal. Law (10th ed. 2005) Equity, § 9, pp. 289-290.) One version of that doctrine is known as "disentitlement." In one of the cases upon which plaintiff relies, a father was precluded from appealing an award of attorney fees to the mother, when the father's action in hiding the children outside California was the occasion for the wife incurring the attorney fees. (See MacPherson v. MacPherson (1939) 13 Cal.2d 271, 277.) In another, a mother was precluded from requesting reunification services in a dependency proceeding when she refused to participate in a psychological evaluation that would permit the court to determine whether reunification services were appropriate. (See In re C.C. (2003) 111 Cal.App.4th 76, 85.)
Asserting an analogy to these cases, plaintiff contends defendants should be precluded from pursuing a section 425.16 motion because they have, in plaintiff's view, failed to comply with the injunction entered in 2004 that required defendants "to take appropriate reasonable remediation measures each summer ... to aerate Tom Sawyer Lake, in order to mitigate the unpleasant odors that have previously emanated from the lake. The measures may also include the use of lake water to irrigate the golf courses."
Plaintiff did not timely raise this issue in the trial court but, instead, raised it only in the untimely supplemental points and authorities filed October 13. While this issue may be raised for the first time on appeal when the unconscionable conduct in question appears on the face of the record (Katz v. Karlsson (1948) 84 Cal.App.2d 469, 473), the defense normally must be raised in a timely manner in the trial court, so that the opposing party may have an opportunity to present relevant evidence. (Fibreboard Paper Products Corp. v. East Bay Union of Machinists (1964) 227 Cal.App.2d 675, 726.)
Even if plaintiff were permitted to raise the disentitlement issue on this appeal, we would reject plaintiff's contention because the alleged misconduct of defendants is unrelated to the interests defendants seek to vindicate in the section 425.16 motion. "The misconduct that brings the unclean hands doctrine into play must relate directly to the cause at issue. Past improper conduct or prior misconduct that only indirectly affects the problem before the court does not suffice. The determination of the unclean hands defense cannot be distorted into a proceeding to try the general morals of the parties." (Kendall-Jackson Winery, Ltd. v. Superior Court (1999) 76 Cal.App.4th 970, 979.) Thus, in MacPherson v. MacPherson, supra, 13 Cal.2d 271, upon which plaintiff relies, the conduct of the father in hiding the children from the mother was the cause of the mother's expenditure of attorney fees; it was the award of those fees that the father was prohibited from contesting while he remained in contempt of the custody order. (Id. at p. 277.) Here, plaintiff has asserted no relationship between defendants' alleged failure to comply with the stipulated injunction and defendants' speech activities; it is the protection of that speech activity that defendants seek to vindicate in the section 425.16 motion. In the absence of such a relationship between alleged misconduct and the assertion of the rights in question, there is no occasion for application of the disentitlement doctrine or any other form of unclean hands defense. (See Kendall-Jackson Winery, Ltd. v. Superior Court, supra, 76 Cal.App.4th at 984 [collecting cases].)
C. The Section 425.17 Exception
"A special motion to strike [filed under section 425.16] involves a two-step process. First, the defendant must make a prima facie showing that the plaintiff's 'cause of action ... aris[es] from' an act by the defendant 'in furtherance of the [defendant's] right of petition or free speech ... in connection with a public issue.' (§ 425.16, subd. (b)(1).) If a defendant meets this threshold showing, the cause of action shall be stricken unless the plaintiff can establish 'a probability that the plaintiff will prevail on the claim.' (Ibid.)" (Simpson Strong-Tie Co., Inc. v. Gore (2010) 49 Cal.4th 12, 21, fn. omitted (Simpson).) Section 425.16, however, is inapplicable under certain circumstances enumerated in section 425.17. (Simpson, supra, 49 Cal.4th. at pp. 21-22.) The issue in the present case involves the commercial speech exemption contained in section 425.17, subdivision (c), the same provision construed by the Supreme Court in Simpson. (See Simpson, supra, 49 Cal.4th. at p. 22.) The commercial speech exemption is to be narrowly construed (ibid.) and the party asserting the exemption has the burden of proving the applicability of the exemption. (Id. at p. 26.)
Section 425.17, subdivision (c), exempts "from the anti-SLAPP law a cause of action arising from commercial speech when (1) the cause of action is against a person primarily engaged in the business of selling or leasing goods or services; (2) the cause of action arises from a statement or conduct by that person consisting of representations of fact about that person's or a business competitor's business operations, goods, or services; (3) the statement or conduct was made either for the purpose of obtaining approval for, promoting, or securing sales or leases of, or commercial transactions in, the person's goods or services or in the course of delivering the person's goods or services; and (4) the intended audience for the statement or conduct meets the definition set forth" in section 425.17, subdivision (c)(2). (Simpson, supra, 49 Cal.4th at p. 30.)
Section 425.17, subdivision (c)(2), requires that the "intended audience" for the statement "is an actual or potential buyer or customer, or a person likely to repeat the statement to, or otherwise influence, an actual or potential buyer or customer, or the statement or conduct arose out of or within the context of a regulatory approval process, proceeding, or investigation," with certain exceptions not applicable here.
The trial court found that section 425.17, subdivision (c), was inapplicable because plaintiff failed to make an "adequate showing that defendants 'sell services'" under that subdivision. (Capitalization omitted.) Plaintiff contends its uncontested evidence establishes that "[defendant] is primarily engaged in the business of selling goods and services, in providing wastewater reclamation and land development." (Boldface and initial capitalization omitted.) We agree with the trial court: The evidence does not establish that defendants are in the business of wastewater reclamation, nor is there any evidence defendants sell "land development services," even if there is evidence that might support a conclusion that defendants intend to engage in development of their own land at some future time.
Plaintiff does not assert on appeal that the evidence shows defendants were in the business of selling land development services. Instead, it contends the evidence shows that "[p]assively, [defendant] also planned and took steps to develop residential and commercial improvements around the golf course ...." Such a showing would not establish that defendants are in the business of selling land development services.
The evidence upon which plaintiff relies is the declaration of Clinton Hilderbrand, the general manager of plaintiff. That declaration, however, establishes, at most, that the primary business of defendants' predecessor in interest was the operation of a golf course, which is, arguably, the sale of a "service." Collateral to the operation of the golf course, defendants' predecessor used plaintiff's treated effluent to irrigate the golf course. However, when defendants discontinued operation of the golf course, the collateral use of the effluent for irrigation was terminated as well. Thus, there is no sense in which it can be said that defendants are engaged in the business of selling wastewater reclamation services; indeed, the entire thrust of plaintiff's position in this litigation is that defendants refuse to engage in the business of wastewater reclamation.
In addition to its failure to establish, initially, that defendants are primarily engaged in the business of selling goods or services, plaintiff entirely fails to establish the second requirement for applicability of section 425.17, subdivision (c), that "the cause of action arises from a statement or conduct by that person consisting of representations of fact about that person's or a business competitor's business operations, goods, or services." (Simpson, supra, 49 Cal.4th at p. 30.) Plaintiff does not contend its causes of action arise from defendants' statement about defendants' "business operations, goods, or services," but contends that they arise from statements and conduct about the "business operations, goods, or services" of defendants' "business competitor," namely plaintiff. To the contrary, however, plaintiff's evidence establishes that the nature of the relationship between plaintiff and defendants (at least if defendants had actually been performing a "primary business" of wastewater reclamation) was "synergistic," not competitive.
Plaintiff asserts that "business competitor" is much broader than encompassed by any traditional idea of two entities vying for the same customers. Instead, plaintiff contends a business competitor is anyone who seeks "through wrongful actions to gain financially by putting the plaintiff out of business, even where those parties are not in traditional competition." (Underlining omitted.) Plaintiff relies on Brill Media Co., LLC v. TCW Group, Inc. (2005) 132 Cal.App.4th 324, 339 (Brill Media), in support of this proposition. That reliance is misplaced.
Under the prevailing interpretation of section 425.17, subdivision (c), at the time Brill Media was decided, there was no requirement that the cause of action arise from a statement or conduct by the person consisting of representations of fact about that person's or a business competitor's business operations, goods, or services. Instead, it was viewed as sufficient if the statement or conduct was made in the course of delivering the defendants' goods or services, regardless about whom the statement was made. (See Simpson, supra, 49 Cal.4th at p. 26; see also Tuck Beckstoffer Wines LLC v. Ultimate Distributors, Inc. (N.D. Cal. 2010) 682 F.Supp.2d 1003, 1012.) That view of section 425.17, subdivision (c), though "plausible," was altered by the Supreme Court in Simpson, supra, 49 Cal.4th at pages 26 through 30. Under Simpson, even a statement made "in the course of delivering" (§ 425.17, subd. (c)(1)) the speaker's services was required to be a factual statement about the speaker or a business competitor. The point, for present purposes, is that the definition of "business competitor" was not before the court in Brill Media. Cases are not authority for points not considered therein. (People v. Gilbert (1969) 1 Cal.3d 475, 482, fn. 7.)
Further, the Supreme Court rejected the general contention that a defendants' injurious, defamatory statements made in a business context satisfy the requirements of section 425.17, subdivision (c). (See Simpson, supra, 49 Cal.4th at p. 30 [product liability attorney's statements about screw manufacturer].) There is no language in section 425.17 that would support a different ruling where, as plaintiff suggests, the statements were made with the intent of driving a plaintiff out of business. We conclude plaintiff has not established that defendants are plaintiff's "business competitor" within the meaning of section 425.17, subdivision (c).
Because plaintiff has failed to establish the necessary prerequisites for invocation of the section 425.17 exemption from section 425.16, we now turn to the remaining issue in this appeal, whether plaintiff has established a probability that it would prevail on the merits of any of the four causes of action stricken by the trial court.
D. Probability of Success on the Merits
Plaintiff acknowledges that the speech and conduct of defendants from which the four stricken causes of action arise is the kind of speech and conduct described in section 425.16. It contends that if neither the disentitlement doctrine nor the commercial speech exemption bars application of section 425.16, then defendants' motion still should have been denied because plaintiff, in the language of section 425.16, subdivision (b)(1), "has established that there is a probability that the plaintiff will prevail on the claim."
A party opposing a section 425.16 motion has the burden of establishing by admissible evidence a probability it will prevail on the merits of a cause of action. "In resisting such a motion, the plaintiff need not produce evidence that he or she can recover on every possible point urged. It is enough that the plaintiff demonstrates that the suit is viable, so that the court should deny the special motion to strike and allow the case to go forward." (Wilbanks v. Wolk (2004) 121 Cal.App.4th 883, 905.)
"On appeal, we review the motion de novo and independently determine whether the parties have met their respective burdens. [Citations.] In evaluating the motion, we consider 'the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.' (§ 425.16, subd. (b)(2).) However, we do not weigh credibility or compare the weight of the evidence. [Citation.] Rather, we accept as true evidence favorable to the plaintiff, determine whether the plaintiff has made a prima facie showing of facts necessary to establish its claim at trial, and evaluate the defendant's evidence only to determine whether it defeats that submitted by the plaintiff as a matter of law." (Tichinin v. City of Morgan Hill (2009) 177 Cal.App.4th 1049, 1061; see Hansen v. Department of Corrections & Rehabilitation (2008) 171 Cal.App.4th 1537, 1543-1544.)
Significant portions of the evidence plaintiff proffered in the trial court were rejected as untimely, and we concluded earlier that the court did not abuse its discretion in excluding that evidence. The trial court also sustained objections to other portions of that evidence, and plaintiff does not challenge that ruling on appeal. On appeal we consider only the admissible evidence. (Hailstone v. Martinez (2008) 169 Cal.App.4th 728, 735.)
We will not unnecessarily extend this opinion by discussing all the elements of each of the causes of action struck by the trial court. Instead, where an obviously missing element of proof dooms the cause of action, we will address that element directly. In doing so, we do not mean to imply that the cause of action is otherwise viable.
The sixth and seventh causes of action in the first amended complaint allege intentional and negligent interference with prospective economic relations. (See generally 5 Witkin, Summary of Cal. Law, supra, Torts, § 742, pp. 1071-1073; id. at § 753, p. 1090.) The gist of both causes of action is that defendants knowingly made false statements about plaintiff to various persons and agencies and that, as a result, prospective residential customers for plaintiff's sewer plant were required by the agencies to install septic-tank systems instead of connecting to plaintiff's plant. As plaintiff recognizes, proof of these causes of action would require, among other elements, proof that defendants' statements caused the agencies to make the determination in question. However, the only evidence proffered by plaintiff in support of causation was the statement in the Hilderbrand declaration that the "false representations by defendants were a substantial factor in the decision by [the agencies] not to connect the certain new houses with plaintiff's [sewer] system." Defendants' objections to that statement (as speculation and lacking foundation and personal knowledge) were sustained. There was no other evidence of causation. Accordingly, plaintiff did not establish it would probably prevail on the merits of these two causes of action.
Plaintiff's opening brief, in this instance and in others, misrepresents the record on appeal. The brief states, "As the result of [defendant's] false statements to the CSD [Community Services District] and the County of Kern that [plaintiff] polluted Tom Sawyer Lake and the soil under the lake, [plaintiff] failed to gain approval for new connections it would otherwise have obtained." In support of this statement, plaintiff cites to a portion of the Hilderbrand declaration to which defendants' evidentiary objections were overruled, in which Hilderbrand asserts that defendants made false statements to the agencies and one of the agencies refrained from approving new sewer hookups. Plaintiff does not acknowledge that the trial court sustained defendants' objection to the very next paragraph, which sought to link the false statements and the agency's decision. That paragraph, stricken by the trial court and quoted in the accompanying text, provides the only evidentiary link between the false statements and the agency decision.
The tenth cause of action is for defamation. The complaint alleges, insofar as pertinent here, that defendants told "third parties" that plaintiff had polluted Tom Sawyer Lake and had contaminated the neighboring soil and groundwater. Hilderbrand's declaration in opposition to the section 425.16 motion states that defendants made "a false statement that effluent discharged by plaintiff had contaminated a pond on defendants' land and the soil beneath the pond, knowing that scientific tests had proven otherwise." The statement was made, according to the declaration, to local agencies and to "the community in general." Defendants contend this allegation is not "'provably false'" and cannot, as a result, be defamatory. In addition, defendants contend the alleged statement was privileged under Civil Code section 47, subdivision (c).
Defendants also contend that two other statements alleged to be defamatory constitute mere opinion, and not a statement of fact. Because this contention would not defeat the entirety of the defamation cause of action even if it were correct, we need not and do not address that contention at this point in the litigation.
Civil Code section 47, subdivision (c), creates a qualified privilege for a "communication, without malice, to a person interested therein, (1) by one who is also interested, or (2) by one who stands in such a relation to the person interested as to afford a reasonable ground for supposing the motive for the communication to be innocent, or (3) who is requested by the person interested to give the information." Defendants contend their evidence in support of the section 425.16 motion shows that they had ample factual basis for its statements and, accordingly, did not act with malice. In reviewing a section 425.16 order, however, we do not resolve factual disputes and do not weigh the evidence. (Tichinin v. City of Morgan Hill, supra, 177 Cal.App.4th at p. 1061.) Thus, for present purposes, we are required to credit plaintiff's evidence tending to establish that defendants acted maliciously. (See Hailstone v. Martinez, supra, 169 Cal.App.4th at p. 740.)
For the requirement that the "contamination" allegation be provably false, defendants cite Seelig v. Infinity Broadcasting Corp. (2002) 97 Cal.App.4th 798, 809. In that case, the court noted that to be defamatory, a statement must have factual content. The court held that aspersions such as "skank" and "loser" are vague and are so lacking in content as to not be provably true or false. As such, they constitute mere "rhetorical hyperbole which no [one] could reasonably [interpret] to be a statement of actual fact." (Id. at p. 811.) When we consider the alleged statements in the present case, in the overall context of the storage of treated water produced by a sewer plant, as we are required to do (see id. at p. 809), we think the term "contaminated" has sufficient content to make it provably true or false. Accordingly, we conclude that the defamation cause of action "has at least minimal merit" (Hailstone v. Martinez, supra, 169 Cal.App.4th at p. 743) and, therefore, plaintiff has established a probability of prevailing on the merit sufficient to defeat a section 425.16 motion. (Hailstone v. Martinez, supra, 169 Cal.App.4th at p. 741.)
The fifteenth cause of action in the first amended complaint is for false promise. The complaint alleges defendants promised plaintiff, by means of entering in to the stipulated judgment in People v. A.B. Land Development, Inc., et al., supra, 248049-NFT that defendants "would take measures to properly maintain Tom Sawyer Lake to avoid any possible nuisance complaints." The complaint alleges defendants did not intend to perform this promise when they made the promise. It alleges in general terms that plaintiff "reasonably relied on [defendants'] promise" and was harmed as a result.
The tort of false promise is a version of the more generalized tort of deceit. Civil Code section 1709 states: "One who willfully deceives another with intent to induce him to alter his position to his injury or risk, is liable for any damage which he thereby suffers." Civil Code section 1710, in relevant part, states that deceit includes a "promise, made without any intention of performing it." "It is settled that a plaintiff, to state a cause of action for deceit ... must plead that he or she actually relied on the misrepresentation. [Citations.] The law appears always to have been so in this state." (Mirkin v. Wasserman (1993) 5 Cal.4th 1082, 1088-1089.)
Plaintiff has not alleged in the first amended complaint nor submitted any evidence that it relied on defendants' promise. Instead, plaintiff implies that "relied upon" is simply synonymous with "believed," and that it believed defendants' promise: "The promise that [defendant] would maintain Tom Sawyer Lake was made to Judge Etcheverry and the Kern County District Attorney not just [to plaintiff]. The promise was also made to [plaintiff] in a formal written acceptance of the responsibilities through the 'Ponding Agreement' when [defendant] acquired the golf course. To not fulfill the promise would also be a violation of [Regional Water Quality Control Board] discharge orders. Justifiable reliance on such a promise is self-evident." (Record citations omitted.)
The justifiable reliance required for this tort, however, is more than mere belief in the promisor's veracity. Actionable reliance, to paraphrase Civil Code section 1709, requires that the plaintiff has altered his position to his injury or risk as a result of the promise. The plaintiff must have "'alter[ed] his legal relations.'" (Spinks v. Clark (1905) 147 Cal. 439, 444; see also Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 976.) The question here is not, as, for example, in Engalla, whether there is sufficient proof plaintiff's change in legal position was caused by the false promise. The question here is whether plaintiff alleged and submitted evidence that it had acted to its detriment at all, whether motivated by the false promise or not. We conclude plaintiff has neither pled nor proved that it altered its legal relations in response to the alleged false promise.
II. The Cross-Appeal
Defendants contend the trial court erred in failing to grant their section 425.16 motion as to five causes of action. In addition, they contend the court abused its discretion in permitting plaintiff to amend its complaint after the court sustained defendants' demurrer to those causes of action. The five causes of action are the eighth and ninth (private and public nuisance), the twelfth and thirteenth (intentional and negligent misrepresentation), and the fourteenth (concealment).
At the same time they filed their section 425.16 motion to strike, defendants also filed a demurrer to the first amended complaint. The court decided the demurrer and the section 425.16 motion in the same minute order. The court sustained the demurrer to the five causes of action, essentially on the grounds of uncertainty. (§ 430.10, subd. (f).)The court noted that these causes of action appeared to rely upon allegations of speech protected under section 425.16 as well as allegations of "nonprotected activity/speech." "If [the nonprotected] facts are relied upon, then plaintiff should be allowed to so plead, and allege facts which are not subject to being stricken." The court permitted plaintiff to amend the complaint "without prejudice to renewal [of the section 425.16 motion] if subsequent pleadings of those causes of action still demonstrate that the same are subject to being stricken pursuant to CCP § 425.16 et. seq." (Capitalization omitted.)
While an order denying a special motion to strike is made appealable by section 425.16, subdivision (i), an order sustaining a demurrer with leave to amend is not an appealable order. (See § 904.1.) Further, a party is not aggrieved by an order sustaining a demurrer filed by that party. Because defendants have appealed from what they characterize as denial in part of their special motion to strike, we have addressed the merits of the appeal, instead of dismissing the appeal as taken from a nonappealable order.
Defendants' first contention is set forth in their opening brief on the cross-appeal, as follows: "It is well-settled that when a cause of action alleges both protected and unprotected activity, a special motion to strike pursuant to section 425.16 must be granted unless the protected conduct was 'merely incidental.' Mann v. Quality Old Time Service, Inc. (2004) 120 Cal.App.4th 90, 103."
We read Mann v. Quality Old Time Service, Inc., supra, 120 Cal.App.4th 90 (Mann) differently. The Mann court stated that, in determining whether a cause of action will be subject to section 425.16 analysis (in other words, in conducting the first step of section 425.16 review (see Simpson Strong-Tie Co., Inc. v. Gore, supra, 49 Cal.4th at p. 21)), a mixed cause of action "will be subject to section 425.16 unless the protected conduct is 'merely incidental' to the unprotected conduct." (Mann, supra, 120 Cal.App.4th at p. 103.) After the trial court makes that determination, the Mann court then stated, the court must determine whether plaintiff has demonstrated a probability of prevailing on the merits. (Ibid.) "Where a cause of action refers to both protected and unprotected activity and a plaintiff can show a probability of prevailing on any part of its claim, the cause of action is not meritless" and cannot be dismissed under section 425.16. (Mann, supra, 120 Cal.App.4th at p. 106, italics in original; see also Wallace v. McCubbin (2011) 196 Cal.App.4th 1169, 1212.)
In Mann, the trial court (and the appellate court) could understand what was being alleged in the relevant causes of action. After determining that the causes of action arose from section 425.16 protected activity, the court could determine whether the causes of action were, nevertheless, sufficiently meritorious to survive the section 425.16 motion— and the appellate court was able to review that determination. (See Mann, supra, 120 Cal.App.4th at pp. 107-111.) The problem in this case is different: Here, the trial court could not even make the first-step section 425.16 determination because the first amended complaint was uncertain. Even though the court recognized that in its formal attributes (that is, because of its incorporation by reference of certain earlier paragraphs in the complaint) the complaint suggested that the five causes of action arose, at least in part, from protected activity, the court could not be certain that this was actually plaintiff's intent in trying to state its causes of action. Accordingly, as is appropriate when a complaint is uncertain, the court sustained defendants' demurrer to the relevant causes of action. (See 5 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 974, pp. 387-388.) Thus, as a factual matter and as a matter of procedure, the trial court addressed the demurrer before the special motion to strike and, having concluded on the demurrer that the causes of action were uncertain and demurrable, the court did not reach or decide the special motion to strike.
Thus, the net effect of the trial court's order was to sustain the demurrer, not to deny the section 425.16 motion. To reiterate, not only is an order granting a demurrer with leave to amend not an appealable order (9 Witkin, Cal. Procedure, supra, Appeal, § 154, pp. 230-231), but defendants are not entitled to appeal in any event from an order granting their own motion (see § 902 [only an aggrieved party may appeal]).
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Defendants' second contention is that the trial court erred in granting leave to amend the complaint. Defendants cite Simmons v. Allstate Ins. Co. (2001) 92 Cal.App.4th 1068, 1073, for the proposition that a party is not permitted to amend its complaint after a section 425.16 motion in an effort to avoid the requirements of that section. In Simmons, the trial court granted the section 425.16 motion and denied the plaintiff's oral motion to amend the complaint. In the present case, as discussed, the court sustained defendants' demurrer; it never reached the merits of the section 425.16 motion with respect to the five causes of action it allowed plaintiff to amend. Accordingly, Simmons is inapposite.
DISPOSITION
The order reflected in the amended minute order of December 28, 2009, is reversed insofar as it grants defendants' section 425.16 motion as to the tenth cause of action (defamation) in the first amended complaint. In all other respects, it is affirmed. As stated in footnote 5, ante, the parties' motions for judicial notice are denied. The parties shall bear their own costs on appeal.
DETJEN, J. WE CONCUR: GOMES, Acting P.J. DAWSON, J.