Opinion
D071009
05-08-2018
NICOSIA CONSULTING INTERNATIONAL, LLC, Plaintiff and Respondent, v. HARRISON REES, Defendant and Appellant.
Mazur & Mazur, Janice R. Mazur and William E. Mazur, Jr. for Defendant and Appellant. Akerman, Joshua R. Mandell and Michael Weiss for Plaintiff and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2015-00024807-CU-DF-CTL) APPEAL from orders of the Superior Court of San Diego County, Eddie C. Sturgeon, Judge. Affirmed. Mazur & Mazur, Janice R. Mazur and William E. Mazur, Jr. for Defendant and Appellant. Akerman, Joshua R. Mandell and Michael Weiss for Plaintiff and Respondent.
Plaintiff and respondent Nicosia Consulting International, LLC (NCI) sued a former employee, defendant and appellant Harrison Rees, for damages on theories of defamation and intentional interference with contractual relations. NCI alleged that during his employment, Rees submitted a report to the Chula Vista Fire Department (the fire department) about his belief that NCI had installed some compressed natural gas fittings known as weld tees ("weld tees") at a Republic Services facility in Chula Vista, even though those weld tees were not in compliance with applicable manufacturing standards.
Weld tees are piping components that connect two lengths of pipe at a right angle to one another. They are made of stainless steel and are welded where two pipes meet. Various industry codes and state regulations govern the design, construction, fabrication, materials, and operation of these items.
In response, Rees brought an anti-SLAPP special motion to strike the complaint, alleging his reporting conduct was protected or privileged. (Code Civ. Proc., § 425.16; Baral v. Schnitt (2016) 1 Cal.5th 376, 395 (Baral) [proper inquiry is whether plaintiff's claims allege protected activity for the purpose of asserting them as grounds for relief].) The trial court denied the motion and he appeals. The court initially agreed with Rees that the first prong of the test for statutory application was satisfied, such that NCI's causes of action arose from his protected activity on an issue of public interest. (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67 (Equilon) [two-pronged statutory test].)
All statutory references are to the Code of Civil Procedure unless otherwise specified. "SLAPP" refers to "strategic lawsuits against public participation." (Navellier v. Sletten (2002) 29 Cal.4th 82, 85, fn. 1 (Navellier).)
Under section 425.16, subdivision (e)(4), the list of protected categories of conduct includes " '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.' " (City of Montebello v. Vasquez (2016) 1 Cal.5th 409, 422.)
However, the court denied Rees's motion to strike on the second portion of the statutory test, determining that NCI had shown its probability of prevailing on legally sufficient claims. (§ 425.16, subd. (b)(1).) Rees challenges that ruling, claiming NCI was unable to establish that it will prevail on its claims, and that the absolute privilege afforded by Civil Code section 47, subdivision (b) should preclude this litigation. He further argues that the trial court's denial of his reconsideration motion was an abuse of discretion. (§ 1008, subd. (g).)
On de novo review of the order, we conclude that the trial court correctly applied the anti-SLAPP statutory scheme in denying the motion. In response to the showing Rees made, NCI provided evidence addressing the elements of its defamation and economic interference claims. When we accept the responsive evidence as true for purposes of analysis, and without weighing credibility or acting as a finder of fact, we conclude the record fully supports the order. (§ 425.16, subd. (b)(1), (2).) The court did not err as a matter of law when determining NCI's complaint was not barred by privilege principles. Further, it acted within its discretion in evaluating the materials provided at the reconsideration stage of the proceeding. We affirm the orders.
I
BACKGROUND
The purpose of this opinion is not to resolve the merits of the overall dispute, but rather to determine whether the anti-SLAPP statutory scheme was properly applied to the record developed in the motion proceedings. We accordingly outline the background facts in a somewhat abbreviated manner.
A. Nature of Dispute; Complaint
Rees has over four decades of experience in pipefitting and has an inactive California engineering license. In 2013, NCI, a Florida "green technology" construction and consulting firm, purchased his contracting and consulting businesses. As part of his employment agreement with NCI, he agreed to a noncompetition clause for a period of two years. Rees's employment from March 2013 to November 2014 included completing the projects that he had brought to NCI.
At the time, one of NCI's existing customers was Clean Energy Fuels ("Clean Energy"). NCI performed work for Clean Energy in Chula Vista, California, to install weld tees in the piping system of a compressed natural gas fueling station at a Republic Services facility. The work NCI performs in installing weld tees is governed by standards imposed by the American National Standards Institute (ANSI), together with standards and codes established by the American Society of Mechanical Engineers (ASME; these institutions are generally referred to interchangeably). All those standards are overseen and enforced by the California Division of Occupational Safety and Health ("Cal-OSHA," part of the Dept. of Industrial Relations; Lab. Code, § 6302, subd. (d)).
Cal-OSHA "has the power, jurisdiction, and supervision over every employment and place of employment in this state, which is necessary to adequately enforce and administer all laws and lawful standards and orders, or special orders requiring such employment and place of employment to be safe, and requiring the protection of the life, safety, and health of every employee in such employment or place of employment." (Lab. Code, § 6307; see, e.g., Cal. Code Regs., tit. 8, § 536, Piping Standards.)
During his employment by NCI, Rees came to believe that the weld tees NCI was installing underground in several locations posed a safety hazard, due to noncompliance with applicable codes and regulations. Although he brought these concerns to his employer's attention in the fall of 2014, "NCI ignored Rees' report of noncompliant construction material. After being effectively ignored by NCI, Rees contacted the Chula Vista Fire Department [in addition to Cal-OSHA] to determine whether the weld tees were in fact compliant." Rees contends that when he talked to fire department representatives, he did not identify NCI by name as the company that he believed was locally installing noncompliant materials. He resigned his employment with NCI in November 2014. The next summer, he founded a new firm and sent a letter to Clean Energy announcing that his new firm was available for business.
In its defamation cause of action, NCI alleges that Rees made statements of fact, in a false and unprivileged manner, that NCI had installed noncompliant weld tees at the Republic Services facility. Specifically, NCI was notified in the fall of 2014 that "someone had filed a complaint with the Chula Vista Fire Department alleging that the weld tees installed at the Republic Services facility in Chula Vista by NCI were not in compliance with ANSI standards. [¶] NCI initially suspected Rees may have filed the complaints, but Rees denied doing so. [¶] However, after Rees submitted his resignation, officials of the Chula Vista Fire Department confirmed that Rees had been the one to report NCI."
NCI's complaint alleged the fire department "oversees and enforces compliance with ANSI standards" in local fueling stations. Rees had intentionally or negligently told fire department personnel that weld tees being installed in the area were noncompliant with those standards. NCI claims this statement was false and defamatory on its face, having a natural tendency to injure or cause special damage to NCI.
In its interference cause of action, NCI alleges the same statement to fire department personnel amounted to tortious interference with its contractual relationship with its customer Clean Energy, for the building of the natural gas fueling station at the Republic Services facility. NCI contends that Rees was aware of the contract and his intentional act of falsely reporting to the fire department that NCI had installed noncompliant weld tees "was designed to induce a breach or disruption of NCI's contractual relationship with Clean Energy," and had caused such a disruption. NCI alleged it had sustained damages because its performance of its contract became more costly and burdensome, due to Rees's statements.
B. Motion to Strike; Opposition
In his motion, Rees contended he had engaged in protected conduct by disclosing to authorities the concerns he developed about safety issues arising from NCI's work at various sites (Chula Vista, Kearny Mesa, and Anaheim). He argued NCI would not be able to prevail on either of its causes of action, because he did not publish any false information that was specifically connected to it, since he did not name NCI as the responsible party.
In support, Rees's declaration stated that while still employed by NCI, he submitted photographs of NCI's weld tees to Cal-OSHA staffers, requesting a determination about whether his assessment that they were noncompliant was correct. He referenced ASME standards on pressure piping, ASME Part B-31.3. In July 2014, Cal-OSHA's principal engineer Don Cook responded, "We don't consider them legal either," and said further meetings and visits to a worksite would be scheduled at an address Rees gave him (on Clairemont Mesa Blvd. in San Diego). Rees maintains that he did not inform Cook that NCI, his employer, was the company that was installing such allegedly defective weld tees. He brought his concerns to NCI's president and a vice-president, but received no satisfaction.
A few months later, Rees visited the fire department and filed a complaint that weld tees NCI was installing at various sites did not comply with the codes and regulations enforced by the department. Rees left NCI in November 2014. At some point, he obtained several sample weld tees from employees working in the warehouse at NCI, having part numbers that he believed were identical to those being installed in the fueling stations at issue. In May 2015, he took those sample weld tees to be tested by an expert, Juan Diaz from Testing Services and Inspection, Inc. ("TSI," an independent lab). Diaz performed destructive and visual testing of the weld tees Rees got from the warehouse to analyze their compliance with ASME standards. He concluded they did not comply with the applicable provisions of the ASME code, because the weld grooves lacked sufficient fusion in the circumference of the square butt joint.
In addition to a declaration from Diaz, Rees provided one from Daniel Peters, an independent engineering expert he had retained after being sued, to assess whether the weld tees complied with the ASME code. Peters analyzed photographs, Clean Energy's construction documentation and specifications, and the TSI/Diaz report about the testing of "representative" weld tees (e.g., the type installed by NCI in fueling stations). (The trial court sustained numerous NCI objections to the evidence and opinions submitted by both Diaz and Peters, for lack of foundation, thus keeping out their opinions that the weld tees as installed by NCI at Clean Energy's fueling stations in California do not comply with ASME standards and regulations and may pose a safety hazard.)
Each party submitted evidentiary objections to the declarations submitted by each other and the minute order addresses them in detail. Rees has made only nominal challenges to those rulings, without making an effort to show how they amounted to any abuse of discretion. (See Hall v. Time-Warner, Inc. (2007) 153 Cal.App.4th 1337, 1348.) He generally disagrees with the ruling that struck much of his consultant Peters' expert opinion declaration. He suggests that portions of NCI's president's declaration (Nicosia) lack foundation, in referring to Rees's postemployment announcement letter to Clean Energy (seeking its business). NCI's brief does not address whether the rulings had any effect on its showing. Because of the nature of this de novo review, evidentiary topics are not dispositive of this appeal and we address them only briefly (pt. III, post).
In opposition to the motion, NCI argued that enough evidence had been submitted to show it was NCI that Rees had mentioned to the fire department as installing defective weld tees, and this harmed NCI's reputation. (See Dewing v. Blodgett (1932) 124 Cal.App. 100, 105 [plaintiff need not be mentioned by name if defamatory statement describes plaintiff in such a way as to direct attention there, and if the recipient understands the statement as referring to plaintiff].) NCI also argued the fire department took no action against NCI, instead deferring the matter to Cal-OSHA, which in April 2015 had notified Rees that the weld tees were not subject to the sections of the ASME code that he had cited as controlling.
NCI submitted an opposing declaration from its director of mechanical services, Rick Lemmon, stating, "On October 30, 2014, I received a call from Derek Olivas from the Chula Vista Fire Department. Mr. Olivas informed me that weld tees installed in the underground portions of fill lines at the Republic Services facility, located at 881 Energy Way, Chula Vista, had been reported to be non-compliant with code." (Rees's objections were sustained to other statements in the Lemmon declaration, e.g., that Olivas told him it was Rees who complained and left him an NCI business card.)
Further, NCI questioned how Rees had obtained his sample weld tees for testing, since he did not work on the Clean Energy account and was not involved with NCI's installation of those weld tees. NCI submitted a declaration from its president Nicosia, who described his disputes with Rees over payment for the jobs Rees brought to NCI when it bought his companies, and said it had become clear that Rees was quite unhappy at NCI for various personal reasons. NCI did not have its own warehouse from which Rees could have obtained the sample weld tees, as he claimed. Nicosia supplied a copy of the letter Rees wrote to Clean Energy after leaving NCI, soliciting business from Clean Energy, which had forwarded it to him.
NCI provided a declaration from William Caputo, the director of marketing and sales at NorthCape Industrial Supplies, LLC (''NorthCape"), stating NCI purchases weld tees from NorthCape, an affiliated company that supplies components and services to firms engaging in natural gas operations, including compressed gas ("CNG"). The weld tees that NorthCape sells to NCI are manufactured by various third parties, who represent that their products are fabricated to meet industry standards (ANSI, ASME, and American Society for Testing Materials (ASTM)). Rees filed successful objections to other statements made by Caputo (that NCI told NorthCape to perform proof pressure and burst testing on its sample weld tees). However, Rees's objections were overruled regarding Caputo's statements that NorthCape's tests showed its weld tees survived at units of pressure measurement (pounds per square inch) that were four times higher than the codes required.
NCI supplied two expert declarations about its efforts in obtaining independent third party review and testing of NCI's inventory of purchased weld tees. Mark Elrod, an engineer at Applied Technical Services, Inc., had reviewed the weld tee design in 2015 as used by NCI, and found it complied with design criteria as specified by ASME B-31.3 (pressure piping code). Craig Thompson, a hydraulics engineer for National Technical Systems Orlando, stated in his declaration that a company it acquired had earlier tested, in 2015, a sampling of four weld tees of different part numbers, provided to it by NorthCape, for proof pressure and burst levels. The tests found the weld tees met the specified requirements of the ASME code.
NCI filed a declaration from its attorney Joshua Mandell, attaching 28 pages of examples from a series of e-mails and other private communications between Rees and Cal-OSHA and other officials, on weld tee safety questions. Mandell explained that hundreds of pages of such documents had been produced to NCI pursuant to a discovery order in a similar Alameda Superior Court case. In one such November 21, 2014 e-mail, from Rees to Cal-OSHA engineers Don Cook and Gary Teel, he requested, "[P]lease see attached complaint to the Chula Vista fire department concerning the tees that you enforced removal of in Kearny Mesa. Derek [Olivas] from the fire department called me back on this and I directed him to you. Derek said that the contractor was going to prove these tees would pass code. Which is impossible unless they rewrite the B-31.3 code. Could you please update me if you are involved in this, thank you Harrison Rees." In response, Gary Teel's April 22, 2015 e-mail told Rees, "It was determined that the subject welded stainless steel tees do not fall under the requirements of ASME B31.3 Chapter IX as the maximum working pressure/temperature do not exceed an ASME B16.5 class 2500 rating."
Other similar lawsuits against Rees were apparently filed by NCI in Alameda and Orange counties. The opening brief represents that there are two other pending appeals from other actions. Those references do not constitute authority on which we may rely, and we consider this case individually.
NCI argues Teel's April 22, 2015 e-mail was dispositive in showing that the fire department took no action against NCI. However, the investigation continued into 2016, including determinations about which weld tees should be inspected under the applicable ASME standards, as shown in the reconsideration materials.
NCI further argued Rees had interfered with its relationship with a significant client, Clean Energy, for his own advantage, and later solicited the client's business. At the relevant times, Rees was not acting in a capacity as NCI's agent in taking those actions, and no privilege or bar to tort liability should apply. As a result of Rees's report, NCI claimed it had incurred damages and expenses for the testing of weld tees.
Rees filed reply papers, asserting that his fire department report about the weld tees qualified for absolute privilege, as a communication intended to report wrongdoing or trigger an official investigation. (Hawran v. Hixson (2012) 209 Cal.App.4th 256, 282 (Hawran).)
C. Ruling
At the hearing on the motion, the court told the parties it was a close case. After taking the matter under submission, the court issued a written order on April 27, 2016, denying Rees's special motion to strike and making evidentiary rulings as requested. Initially, the court determined that the statements sued upon were made in connection with an issue of public interest, within the meaning of section 425.16, subdivision (e)(4), because Rees had provided evidence that based upon his 49 years of experience as an engineer, he was concerned about the risk of harm from potentially defective weld tees. The court then rejected the claim by NCI that an exemption for commercial speech applied, as set forth in section 425.17, subdivision (c). The court ruled, without explanation, that Rees's fire department report about the weld tees was not an absolutely privileged one.
We accept, as unchallenged, the trial court's determination on the first prong of the test (Rees adequately showed coverage by the anti-SLAPP statutory scheme). On appeal, neither party has addressed any issues about an exemption from such coverage, for commercial speech (§ 425.17, subd. (c); Simpson Strong-Tie Co., Inc. v. Gore (2010) 49 Cal.4th 12, 21). The salient issue on appeal is whether NCI satisfied the second prong of the test, probability of prevailing.
In addressing NCI's probability of prevailing under the statute, the court specifically focused on the defamation elements, stating that the record supported a conclusion that factual questions existed on whether Rees's report to the fire department had readily identified NCI as the potential offender in installing defective weld tees (publication). With regard to the truth or falsity of Rees's fire department report, the court noted that the fire department had initiated an investigation, but there was no showing of its taking any adverse action against NCI. Expert witnesses' declarations presented by NCI included engineering reports about the pressure tests it had caused to be performed upon the same type of weld tees obtained from the same supplier. Those weld tees passed the pressure tests and were found to comply with the applicable specifications. The court noted that NCI had sufficiently established that its own experts' testing was done on items from the supplier, NorthCape, one month after Rees's testing was done. In response to the respective showings, the court said, "Rees objects that it is unclear when the part was made or if the product was changed, but there is no evidence the parts have changed."
In the ruling, the court next cited to the declaration provided by NCI's president, which showed that Rees had become angry with NCI's decisions during his employment there. The court determined that this declaration raised inferences that Rees may have had other motives than public safety to make his complaint to the fire department. After Rees resigned, NCI learned that he had written a letter to an NCI client, Clean Energy, seeking its business. This letter also supported NCI's probability of prevailing on its cause of action for tortious interference with contractual relations, since it was written to a competitor for the purpose of seeking business, after Rees left NCI. For those reasons, the motion was denied. The court allowed NCI an opportunity to amend the complaint if deemed necessary (which is not an issue on appeal).
D. Reconsideration Request
About two weeks after the trial court issued its April 27, 2016 written order denying the motion, Rees filed a motion for reconsideration under section 1008. He explained he had just received material from a public records request he had made to Cal-OSHA, and argued this should constitute new evidence justifying reconsideration of the ruling. Specifically, Rees made a showing that on April 29, 2016, two days after the court issued its order denying his anti-SLAPP motion, Cal-OSHA issued a letter directed to Clean Energy. Its principal safety engineer, Don Cook, described the investigation and documentation involved in this same lawsuit, and summarized discovery materials from this action, as provided to him and to Clean Energy by NCI. Cook's letter discussed whether Clean Energy had been using appropriate material and adequate welding techniques. It concluded that the available tests were inconclusive and from its investigation of the information provided to it, Cal-OSHA was unable to determine if all the weld tees complied with ASME regulations. Because of remaining uncertainties about the types of weld tees utilized, Cal-OSHA stated it "cannot find them acceptable for use."
As an enforcement matter, Cook's letter directed Clean Energy that it should provide a list of all locations where NCI had performed construction services for it, and at those locations, "[a]ll welded tees shall be removed from service or if any welded tee fitting is left in service it shall be inspected by an engineer from this office for material specification compliance and weld quality."
Opposition and reply papers were submitted. On August 5, 2016 the court denied Rees's motion for reconsideration. He appeals.
II
REVIEW; COVERAGE OF STATUTORY SCHEME
We review de novo the trial court's rulings on this special motion to strike. (Kleveland v. Siegel & Wolensky, LLP (2013) 215 Cal.App.4th 534, 548 (Kleveland).) Under the two-step analysis required by the anti-SLAPP statutory framework, "[t]he court is first to determine if the lawsuit falls within the scope of the statute, as arising from protected activity (generally, petitioning or free speech). [Citations.] The defendant bears the burden of demonstrating that a cause of action in the lawsuit is one 'arising from' protected activity." (Kleveland, supra, at p. 548; Equilon Enterprises, supra, 29 Cal.4th at p. 67.)
For coverage by the statute under section 425.16, subdivision (e)(4), the relevant inquiry is whether the plaintiff is seeking relief based upon an act done in furtherance of the defendant's petitioning or speech rights. (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78; Baral, supra, 1 Cal.5th 376, 382, 395 ["claims that are based on the conduct protected by the statute" are subject to striking].) The ruling determined that Rees's fire department report amounted to protected conduct as described in section 425.16, subdivision (e)(4), "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."
The trial court did not find it necessary to reach the additional analysis of whether Rees's fire department report took place in the context of "official" proceedings within the meaning of section 425.16, subdivision (e)(1) and (2). On appeal, Rees continues to argue that issue. However, since the terms of section 425.16, subdivision (e)(4), the "catchall category," were litigated below and have broad application, we need not decide whether these challenged communications likewise took place in the context of such "official" proceedings. (See City of Montebello v. Vasquez, supra, 1 Cal.5th 409, 429 [conc. & dis. opn., Liu, J.].)
Under section 1008, subdivision (g), the denial of a reconsideration motion is not separately appealable. However, if the underlying order that was the subject of reconsideration is appealable, the denial of reconsideration is reviewable as part of an appeal from the underlying order. This denial order was an appealable one under the anti-SLAPP statute. (§§ 425.16, subd. (i), 904.1, subd. (a)(13).)
III
PROBABILITY OF PREVAILING
Once a moving defendant has adequately shown that relief is sought based on allegations arising from activity protected by the statute, the court must examine whether the plaintiff has "demonstrated a probability of prevailing on the claim." (Navellier, supra, 29 Cal.4th at p. 88.) "Under section 425.16, subdivision (b)(2), the trial court in making these determinations considers 'the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.' . . . [T]he court's responsibility is to accept as true the evidence favorable to the plaintiff . . . .' " (Kleveland, supra, 215 Cal.App.4th at p. 548; HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 212.) "[T]he burden shifts to the plaintiff to demonstrate that each challenged claim based on protected activity is legally sufficient and factually substantiated. The court, without resolving evidentiary conflicts, must determine whether the plaintiff's showing, if accepted by the trier of fact, would be sufficient to sustain a favorable judgment." (Baral, supra, 1 Cal.5th 376, 396.) A plaintiff may not rely solely on the pleading as support for the requisite " ' "minimal merit" ' " of the complaint. (Kleveland, supra, at p. 548.)
A. Absolute Privilege Issues
As part of the anti-SLAPP analysis common to both causes of action, the trial court declined to find that absolute privilege protected Rees's fire department report. He contends the court erred in this respect, arguing that as a matter of law, Civil Code section 47, subdivision (b)(3) created an absolute privilege for his publication, which arguably occurred within an "official proceeding authorized by law." We agree that Rees raised this privilege issue, a matter of law, in a sufficiently timely manner in his reply papers. Such a privilege assertion under Civil Code section 47 is " ' "relevant to the second step in the anti-SLAPP analysis in that it may present a substantive defense plaintiff must overcome to demonstrate a probability of prevailing." ' " (City of Costa Mesa v. D'Alessio Investments, LLC (2013) 214 Cal.App.4th 358, 381 (City of Costa Mesa); Rohde v. Wolf (2007) 154 Cal.App.4th 28, 38.)
Rees has made no claims of protection by qualified privilege. (Civ. Code, § 47, subd. (c).)
Generally, an official proceedings privilege covers proceedings of administrative boards and quasi-judicial and quasi-legislative bodies. (5 Witkin, Summary of Cal. Law (11th ed. 2017) Torts, § 685, p. 943.) An official proceedings privilege is similar to a litigation privilege, and in both, there is a relevancy limitation to the asserted privilege. (Id., § 671, pp. 919-920, § 688, p. 949.) It will be a question for the finder of fact if an asserted privilege was abused, "unless the facts permit but one conclusion." (Frisk v. Merrihew (1974) 42 Cal.App.3d 319, 326.) Where the evidence is conflicting, the court cannot determine as a matter of law whether a logical connection exists between an allegedly defamatory statement, and the objective of the official business in which it occurred. (Id. at p. 325.)
A claim of official proceedings privilege may be valid as to "communications to or from officials or agencies that precede institution of formal proceedings." (5 Witkin, Summary of Cal. Law, supra, Torts, § 685, p. 944; see, e.g., Tiedemann v. Superior Court (1978) 83 Cal.App.3d 918, 926 [communications to a tax agency designed to prompt regulatory enforcement action "must be considered a part of the official proceeding itself"].) For example, in Hagberg v. California Federal Bank (2004) 32 Cal.4th 350, 355, the court ruled that tort liability may not be imposed for citizen contacts to law enforcement personnel that report suspected criminal activity by another person. Such statements are privileged under Civil Code section 47, subdivision (b), and except for liability for malicious prosecution, no tort liability for them will attach.
Here, the complaint admits that the fire department "oversees and enforces compliance with ANSI standards" in local fueling stations. Even in such cases involving citizen contacts to public safety personnel, there is still a relevancy inquiry about whether the communication bears a " ' "connection or logical relation" ' " to the object of the official proceeding. A " 'functional connection' " is required. (Hawran, supra, 209 Cal.App.4th at p. 283 [corporation's press release about investigating its own problems in research results did not fall within official proceeding privilege, because press release was insufficiently related to the purposes of outside investigation by federal agency].) In explaining the required relationship of challenged statements to an official proceeding (e.g., litigation), this court said "the ' "connection or logical relation" which a communication must bear to litigation in order for the privilege to apply, is a functional connection,' i.e., the communication must 'function as a necessary or useful step in the litigation process and must serve its purposes' [citation] and 'cannot be satisfied by communications which only serve interests that happen to parallel or complement a party's interests in the litigation,' including vindication in the court of public opinion [citation]. The test 'can be satisfied only by communications which function intrinsically, and apart from any consideration of the speaker's intent, to advance a litigant's case.' " (Ibid.; italics omitted.)
" '[T]he critical question [in applying the official proceeding privilege] is the aim of the communication, not the forum in which it takes place. If the communication is made "in anticipation of or [is] designed to prompt official proceedings, the communication is protected." ' " (Hawran, supra, 209 Cal.App.4th at p. 284, italics omitted; Hagberg, supra, 32 Cal.4th at p. 368.) Absolute privilege can only apply when the defendant can provide evidence and arguments that his "assertedly defamatory statements" "somehow achieved the object of, and had the necessary functional connection to," the subject official investigation. (Hawran, supra, at p. 286.)
NCI's pleadings alleged the fire department had responsibility to oversee local fueling stations. NCI then provided declarations to support its argument that there was no adequate functional connection between Rees's report and any official proceedings, as to qualify him to assert absolute privilege. This showing is sufficient for present purposes. First, the evidence establishes the fire department simply referred the matter to Cal-OSHA, suggesting it was collateral to its jurisdiction. Next, Nicosia's declaration states that Rees did not work on any aspect of NCI's Clean Energy account and was not involved in its fueling station work. Rees's work for NCI involved finishing up other contracts that NCI acquired when it bought his businesses. Later, Rees approached Clean Energy for work for his new business, supporting an inference that he was acting as a competitor with NCI and may not have been acting merely as a concerned citizen pursuing public safety matters.
Rees failed to establish as a matter of law that the official privilege applied to his report. He did not establish that his communications intrinsically functioned to advance the fire department's official duties. (Hawran, supra, 209 Cal.App.4th at p. 283; City of Costa Mesa, supra, 214 Cal.App.4th at p. 382.)
B. Defamation
"[I]t is now settled that the defenses of truth and of privilege [citation] are distinct." (5 Witkin, Summary of Cal. Law, supra, Torts, § 655, p. 899.) NCI's defamation claim asserts that Rees's fire department report was false and identified it closely enough to cause it damage. Two elements of the defamation cause of action are at issue here, publication and falsity. (Shively v. Bozanich (2003) 31 Cal.4th 1230, 1242- 1243 [tort of defamation requires "publication"]; City of Costa Mesa, supra, 214 Cal.App.4th 358, 378 [factual truth is a defense to be proven by defendant, unless a private person sues for allegedly defamatory statements about a public concern, in which event, the burden of proving falsity falls on the plaintiff]; Hawran, supra, 209 Cal.App.4th 256, 289-290 ["totality of the circumstances" test applies in determining if a statement declares or implies a provably false factual assertion].)
First, Rees argues he made no publication specifically naming NCI when he went to the fire department to complain. The trial court sustained his objections to reports in the Lemmon declaration, that Lemmon was told by a fire department employee (Derek Olivas) that it was Rees who had complained about his employer NCI. Similarly, the court sustained Rees's objections to reports in the Nicosia declaration that Lemmon was told by this fire department representative that Rees gave him an NCI business card with Rees's name on it. At this stage of the proceeding, our concern is whether NCI will nevertheless be able to substantiate its factual allegations about publication. (Baral, supra, 1 Cal.5th 376, 396.)
It is well established that a plaintiff may complain of statements that do not mention it by name, by alleging that they were published or spoken concerning it (the "colloquium;" 5 Witkin, Summary of Cal. Law, supra, Torts, § 653, pp. 895-896; Dewing v. Blodgett, supra, 124 Cal.App. at p. 104). On the intended subject of Rees's report, NCI has provided more than the allegations of its complaint, in its effort to show the requisite " ' "minimal merit" ' " of the complaint. (Kleveland, supra, 215 Cal.App.4th at p. 548.) Although some of Rees's objections to portions of the Lemmon declaration were sustained, the court allowed NCI to use that declaration to establish that the fire department employee informed Lemmon/NCI that someone had reported that weld tees were noncompliant with the code, as installed at the Republic Services facility. Reasonable inferences can be drawn from the circumstances of the report that NCI was its specific target. Such inferences are consistent with Rees's admission that he went to the fire department to make such a report (albeit not mentioning NCI by name).
With respect to the other main disputed issue, falsity, Rees contends that based on his own investigation, in retaining experts and talking to Cal-OSHA representatives, his statements were true. (Washer v. Bank of America (1948) 87 Cal.App.2d 501, 509 [truth is a complete defense against liability for defamation even against claimed malicious purpose]; 5 Witkin, Summary of Cal. Law, supra, Torts, § 655, pp. 897-898.) In his declaration, Rees explained that when he originally developed concerns that noncompliant weld tees might be posing a safety hazard at NCI worksites, he contacted Cal-OSHA principal engineer, Don Cook, and sent him pictures of the weld tees being installed by NCI (not named). In response, Cook's office investigated and as of July 28, 2014, made a preliminary determination that the weld tees were not compliant with ASME standards, and in an e-mail attached as an exhibit to the Rees declaration, Cook scheduled inspections at a San Diego address Rees gave him (different from the Chula Vista Republic Services site). The court sustained numerous NCI evidentiary objections to Rees's declaration and attachment, which he does not argue on appeal.
Rees contends his statements addressed a matter of public concern, and thus NCI as the plaintiff must bear the burden of proving falsity, but cannot do so. (5 Witkin, Summary of Cal. Law, supra, Torts, § 659, p. 901; City of Costa Mesa, supra, 214 Cal.App.4th 358, 378; Hawran, supra, 209 Cal.App.4th at p. 289 [inquiry is " ' "whether a reasonable fact finder could conclude the published statement declares or implies a provably false assertion of fact." ' "].) Even accepting that in this anti-SLAPP context, NCI must be able to show it will probably prevail on the falsity issue, a reading of the declarations as a whole supports a conclusion that Rees's fire department report was capable of conveying provably false factual implications about NCI's business. The NCI declaration from Caputo, a NorthCape agent, stated that as a supplier, it provided NCI and other firms with weld tees that were certified to meet industry standards. The NorthCape access records did not show how Rees had obtained his sample weld tees from any warehouse. NCI cast substantial doubt on how Rees said that he obtained his samples, by questioning his chain of custody and submitting its president's declaration that it does not have a warehouse of its own from which he could have gotten them. Rees did not work on the Clean Energy account, even though he claimed familiarity with it.
The two expert declarations submitted by Rees documented that he obtained testing of certain types of weld tees, but the record remains ambiguous as to when he obtained the weld tees that he tested, whether they were the type actually installed by NCI, and what exact ASME standards they must meet. Rees's declaration from expert Diaz stated that he ran both visual and destructive tests to determine whether there were any defects in the sample weld tees brought to him by Rees. Most of NCI's evidentiary objections to the Peters declaration, including his opinion, were sustained on grounds of lack of foundation, and Rees has not shown why the rulings amounted to an abuse of discretion. The trial court was not required to accept Rees's argument that only he had used the proper standards to test only correct versions of the products that were installed by NCI.
Factual disputes are not resolved in a special motion to strike proceeding. (Taus v. Loftus (2007) 40 Cal.4th 683, 714 [court does not weigh evidence or assess the credibility of the declarations in support of the anti-SLAPP motion].) If the plaintiff can demonstrate a prima facie showing of facts to sustain a favorable judgment, if that evidence is credited, the motion should be denied. (Id. at pp. 713-714.) Because of numerous inconsistencies in the record thus far about the types of products tested and the applicable standards, Rees's evidence does not now establish as a matter of law he is entitled to assert a complete defense of truth, so as to defeat NCI's showing in opposition to his motion. (Id. at p. 714.)
C. Intentional Interference With Contractual Relations
We next examine NCI's claim that Rees intentionally interfered with its contractual relations with Clean Energy, on the Republic Services work. His knowledge of the existence of a valid contract is not in dispute, but Rees challenges additional elements of the showing NCI was required to make, for defeating the motion to strike in this respect. (Mintz v. Blue Cross of California (2009) 172 Cal.App.4th 1594, 1603 [additional elements include defendant's intentional acts toward inducing breach or disruption of the contractual relationship, such actual breach or disruption, and resulting damage].)
Rees first asserts that as an employee of NCI at the time of the fire department report, he as an agent could not be liable for interfering with the contract of his principal. Rees's title was managing director of the mechanical division. "California recognizes a cause of action against noncontracting parties who interfere with the performance of a contract. 'It has long been held that a stranger to a contract may be liable in tort for intentionally interfering with the performance of the contract.' [Citations.] [¶] However, consistent with its underlying policy of protecting the expectations of contracting parties against frustration by outsiders who have no legitimate social or economic interest in the contractual relationship, the tort cause of action for interference with a contract does not lie against a party to the contract." (Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 513-514 (Applied Equipment), italics omitted; Woods v. Fox Broadcasting Sub., Inc. (2005) 129 Cal.App.4th 344, 351-353, 356 (Woods) ["[C]ontract interference claims [can] be stated against owners, officers, and directors of the company whose contract was the subject of the litigation. While those defendants may attempt to prove that their conduct was privileged or justified, that is a defense which must be pleaded and proved."].)
NCI disputes Rees's claim to have been acting within the course and scope of his employment, when he went to the fire department to complain about the weld tees used in the Clean Energy work. Rather, NCI pursues the theory that "a stranger to a contract may be liable in tort for intentionally interfering with the performance of the contract." (Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126.) NCI has sufficiently shown that Rees does not qualify as a party to the contract with Clean Energy. He had a limited set of duties, completing the work he brought to NCI, which did not include any Clean Energy assignments.
As another objection to the court's finding that NCI will probably prevail on this theory, Rees argues that NCI failed to show that his fire department report actually disrupted or breached the Clean Energy contractual relationship, as opposed to creating mere risks to it. (Applied Equipment, supra, 7 Cal.4th at p. 514, fn. 5 [elements of tort include actual disruption]; Woods, supra, 129 Cal.App.4th at p. 356.) According to Rees, NCI failed to satisfy this requirement because his letter soliciting business from Clean Energy was sent several months after his fire department report was made. However, his declaration admits that at an earlier time during his employment, he had developed concerns about noncompliant weld tees from his visits to several locations where Clean Energy was constructing fueling stations throughout California, and he took action at the time. Moreover, NCI's president's declaration avers that after the fire department report was made, there was some disruption of and strained relations in its business relationship with Clean Energy, and NCI was required to conduct and pay for extra tests to clear its name over the concerns Rees raised about the adequacy of the weld tees being used.
Overall, if the evidence provided by NCI is credited, it adequately addressed each element of the interference cause of action, to satisfy its current burden of showing it will probably prevail on the merits. (Taus v. Loftus, supra, 40 Cal.4th at pp. 713-714.)
IV
DENIAL OF RECONSIDERATION
A party seeking reconsideration of a court's order under section 1008 must show the existence of new or different facts, circumstances or law, and explain why they were not produced at the original hearing. (The New York Times Co. v. Superior Court (2005) 135 Cal.App.4th 206, 212.) The court's ruling on a motion for reconsideration is reviewed under an abuse of discretion standard. (Ibid.; Yolo County Dept. of Child Support Services v. Myers (2016) 248 Cal.App.4th 42, 50.) Whether Rees proffered new or different facts sufficient to satisfy the requirements of section 1008 is a "question confided to the sound discretion of the trial court, with the exercise of which [the appellate court] will not interfere absent an obvious showing of abuse." (Graham v. Hansen (1982) 128 Cal.App.3d 965, 971.)
Here, Rees requested reconsideration of the April 27, 2016 ruling, on the grounds that after it was issued, he contacted Cal-OSHA's safety engineer Don Cook to seek an update on any findings that had been issued about the NCI weld tees. His request was treated as a Public Records Act request, and the next month, Rees received a copy of Cal-OSHA's findings dated April 29, 2016, in the form of Cook's three-page letter to Clean Energy. This letter notified Clean Energy about many documents produced during the NCI-Rees litigation, and referred to the current inquiry under discussion with Clean Energy as whether the piping systems installed at its facilities were in compliance with California and ANSI regulations. The letter discussed various expert reports and statements about the fabrication of welding, and noted that it was difficult to determine, based upon the information that had been provided to Cook's office, which weld tees utilized had been made with certified material that met all specifications. In conclusion, the letter stated:
"The problem we face is confidence that all the welded tees were fully welded and the proper material used. Certainly the photos of the tee fittings showed welds of two tees that weren't full penetration. These fittings are used to contain a flammable gas at high pressures in places of employment in areas that can also have public access so there is a great consequence in case of failure. The code requirement for full penetration welds ensures the tee has sufficient strength while using the correct material stress provides the appropriate ASME code safety margin for the completed tees. We are unable to determine that all the welded tees comply with ASME B-31.3 as required by the California Code of Regulations Title 8 §536(a) and therefore cannot find them acceptable for use. [¶] On or before June 30, 2016, please provide this office with a list of all locations in the state of California where NCI performed construction services on your [Clean Energy's] behalf. All welded tees shall be removed from service or if any welded tee fitting is left in service it shall be inspected by an engineer from this office for material specification compliance and weld quality. [¶] Please contact this office if you have any questions." (Italics added.)
California Code of Regulations, title 8, section 536 sets design and industrial safety standards for installation of compressed natural gas piping components.
Rees's request for reconsideration argued that this new evidence from Cal-OSHA confirms that his fire department report was true, thus fatally undermining NCI's defamation and tortious interference claims. Rees contended the letter "further confirm[ed] the report was made to trigger (and did trigger) an investigation and is absolutely privileged" under Civil Code section 47, subdivision (b). (Hawran, supra, 209 Cal.App.4th at p. 282.)
NCI opposed reconsideration, first arguing that the Cal-OSHA letter to Clean Energy was irrelevant to the claims in the complaint arising from the fire department report. NCI also contended that Cook's letter fell short of any merits determination about the truth of Rees's complaints. The letter only required Clean Energy to provide Cal-OSHA with a list of locations where NCI had performed construction services on its behalf, so that either those weld tees could be removed from service or could be "inspected by an engineer from this office for material specification compliance and weld quality."
NCI submitted an additional declaration from its director of mechanical services, Lemmon, stating that none of the NCI-installed weld tees have been ordered removed from service by either Cal-OSHA or the fire department. NCI also submitted an expert declaration from engineer Roger Reedy, explaining why he found NCI's weld tees were in compliance with the applicable codes. Rees replied that Reedy could not claim to have personally inspected the subject weld tees.
Keeping our focus on the substantive nature of the NCI allegations about Rees's fire department report, we are unable to conclude that Rees's new evidence showed he was entitled to reconsideration of the anti-SLAPP ruling. It is not surprising that ongoing investigations were undertaken from 2014 through 2016, in this context involving complex operations of several businesses and their governmental regulators. The tone and recommendations in Cook's April 29, 2016 letter clearly indicate the Cal-OSHA and related determinations are incomplete. The current record suggests that further proceedings may become necessary before any conclusive determinations are made about the relevant safety and inspection issues, as they affect proof of NCI's causes of action. The trial court did not abuse its discretion in finding the anti-SLAPP ruling was appropriately made and Rees had not made a sufficient showing, within the meaning of section 1008, to require that his reconsideration motion be granted.
DISPOSITION
The orders are affirmed. Costs are awarded to Respondent.
HUFFMAN, Acting P. J. WE CONCUR: NARES, J. O'ROURKE, J.