Opinion
NOT TO BE PUBLISHED
Appeal from an order of the Superior Court of Los Angeles County, No. BC235671, Aurelio Muñoz, Judge.
Jacobson Russell Saltz & Fingerman, Michael J. Saltz, Sunny S. Nassim and Keri R. Montrose for Defendants and Appellants Harvey A. Saltz, First Advantage Corporation and The Irvine Company.
Cyrus Sanai, in pro. per., Plaintiff and Respondent.
PERLUSS, P. J.
Harvey A. Saltz, First Advantage Corporation and The Irvine Company (collectively the Saltz parties) appeal from an order denying their special motion to strike under Code of Civil Procedure section 425.16 four of the five causes of action asserted in the first amended supplemental verified complaint filed by Cyrus M. Sanai following our remand for further proceedings in Sanai v. Saltz (2009) 170 Cal.App.4th 746 (Sanai 2009). Mr. Sanai’s most recent pleading alleges violations of the California Consumer Credit Reporting Agencies Act (Civ. Code, § 1785.1 et seq.) (CCRAA) and, alternatively, violations of the federal Fair Credit Reporting Act (15 U.S.C. § 1681 et seq.) (FCRA), as well as claims for extortion and unfair business practices, based primarily on negative credit reports created after a dispute between Mr. Sanai and his landlord over the amount of rent due for his apartment and on the actions of the Saltz parties following Mr. Sanai’s complaints about the initial credit reports. Although Mr. Sanai’s pleading arguably includes collateral or incidental references to the Saltz parties’ litigation-related statements or conduct, we agree with the trial court Mr. Sanai’s claims do not arise from the Saltz parties’ protected speech or petitioning activity in connection with a public issue within the meaning of section 426.16, subdivision (e). Accordingly, we affirm.
Statutory references are to the Code of Civil Procedure unless otherwise indicated.
FACTUAL AND PROCEDURAL BACKGROUND
1. Procedural Overview
The factual background and procedural history of the first eight years of this decade-long lawsuit have been described in detail in our initial opinion in this case, affirming the trial court’s denial of the initial special motion to strike filed by Mr. Saltz and his company, The U.D. Registry, Inc. (UDR), the predecessor to First Advantage (Sanai v. Saltz (Mar. 21, 2002, B147392) [nonpub. opn.] (Sanai 2002)); our subsequent opinion, following the Supreme Court’s decision in Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, reversing the denial of Mr. Sanai’s motion to set aside as void the judgment entered during the appeal of the order denying the special motion to strike and remanding with directions to conduct further proceedings based on the state of the pleadings on January 16, 2001 (Sanai v. Saltz (June 28, 2005, B174924, B170618) [nonpub. opn.] (Sanai 2005)); and our decision last year reversing in part the judgment entered after the trial court granted motions for judgment on the pleadings filed by Mr. Saltz, UDR and First Advantage (Sanai v. Saltz, supra, 170 Cal.App.4th 746. We begin where we left off.
Our remittitur issued on May 5, 2009, following denial by the Supreme Court of the Saltz parties’ petition for review. Mr. Sanai filed an affidavit of prejudice directed to Judge Terry A. Green, who had issued the orders and judgment at issue in Sanai 2009; and the case was reassigned to Judge Aurelio Muñoz.
On June 4, 2009 Mr. Sanai filed a 25-page first amended supplemental verified complaint, which identified five causes of action: breach of various provisions of the CCRAA against Mr. Saltz and First Advantage; an “alternative complaint” for violation of the FCRA against all the Saltz parties; extortion against the Saltz parties; unfair business practices (Bus. & Prof. Code, § 17200 et seq.) against First Advantage and The Irvine Company; and a claim (the fifth cause of action) seeking to vacate as void or voidable all orders to pay money entered in the action against Mr. Sanai by Judge Green (specifically, an award of statutory damages/sanctions of $500 awarded to the Saltz parties pursuant to section 724.050, subdivision (e), and an award of attorney fees of $50,501.25 pursuant to section 724.080, both of which were affirmed in Sanai 2009, supra, 170 Cal.App.4th at page 783). The Saltz parties’ demurrer to Mr. Sanai’s fifth cause of action to vacate Judge Green’s sanctions and attorney fee awards was sustained without leave to amend on October 16, 2009 and is not at issue in this appeal.
Although no issue regarding the sanctions and attorney fee awards is before us in this appeal, while the matter has been pending we have received a number of writ petitions relating to ongoing efforts to enforce those awards. As a practical matter, it would seem both prudent and efficient for the trial court to stay any enforcement of costs, sanctions or fee awards, including the award of costs made in connection with this appeal, until a final judgment has been entered in the case, allowing a full opportunity for the court to assess whatever setoffs may be appropriate, as well as to limit the inevitable skirmishing between the parties on these collateral issues.
On August 3, 2009, after being granted leave to file an oversized memorandum of points and authorities, the Saltz parties filed a special motion to strike the first four causes of action in the first amended supplemental verified complaint pursuant to section 425.16, together with a request for judicial notice and three volumes of exhibits. Mr. Sanai’s request to conduct limited discovery (§ 425.16, subd. (g)) and to bifurcate the hearing on the motion to strike (to defer any determination whether Mr. Sanai had shown a probability of prevailing on the merits of his claims until the court had ruled those claims arose from protected conduct and were not within the commercial speech exemption of section 425.17, subdivision (c)) was denied.
Mr. Sanai then filed his opposition on September 8, 2009; the Saltz parties filed a reply brief, as well as a fourth volume of exhibits on September 17, 2009. Following additional briefing and oral argument, on September 28, 2009 the court denied the motion.
2. The First Amended Supplemental Verified Complaint
a. The rent dispute
As alleged in the first amended supplemental verified complaint, from September 1997 through January 1999 Mr. Sanai rented an apartment in a Newport Beach apartment complex known as Promontory Point, owned by a subsidiary of The Irvine Company and managed by a general partnership that included The Irvine Company. The original six-month lease provided for a monthly rent of $2,165, which was among the highest for a two bedroom apartment in the complex. Mr. Sanai occupied the apartment on a month-to-month basis after the original lease expired.
In September 1998 Mr. Sanai received a letter from a representative of the owner of the apartment complex stating a new monthly rent of $1,435 was being established for his apartment and offering him “the option to renew [for] a minimum of a 6-month up to a 12-month lease, at the monthly rent of $1,410 effective October 1, 1998.” A second copy of this letter was taped to Mr. Sanai’s door a few days after he had received the original by mail. Mr. Sanai responded on October 1, 1998 with a letter of acceptance for a 12-month lease, enclosing a rent check of $1,410 for October 1998.
Shortly after Mr. Sanai’s acceptance of the offer, the manager at the Promontory Point complex, Joe Tortorello, informed Mr. Sanai the monthly rental amount was a mistake and advised him the offer was rescinded. Mr. Sanai (a lawyer specializing in transactional law) responded that he had accepted the offer and the contract was binding. Further discussions between Mr. Sanai and representatives of the owner did not resolve the dispute. In December 1998 a three-day notice to quit was posted on Mr. Sanai’s door. Mr. Sanai moved out of the Promontory Point apartment complex in January 1999.
From October 1, 1998 through the time he left his Newport Beach apartment, Mr. Sanai paid rent at the rate of $1,410 per month. In February 1999, after Mr. Sanai had moved, Mr. Tortorello contacted Mr. Sanai and demanded he pay back rent in the amount of $2,781; Mr. Sanai refused. In paragraph 22 of the first amended supplemental verified complaint, Mr. Sanai alleges “Tortorello repeatedly threatened during that conversation that he and [The Irvine Company] were powerful and would harm and damage Sanai if he refused to pay.” Mr. Sanai further alleges he told Mr. Tortorello The Irvine Company “should file a timely lawsuit.” (In his original complaint Mr. Sanai had alleged as to this aspect of the February 1999 conversation, “Tortorello threatened to take legal action against Sanai, which Sanai encouraged him to do.”)
b. The false report to credit reporting agencies
Mr. Sanai alleges, on information and belief, The Irvine Company directly or through a subsidiary then retained UDR and Mr. Saltz, UDR’s president, to inform consumer credit reporting agencies that active collection efforts were ongoing to collect a debt in the amount of $2,781 or greater owed to Promontory Point as of “9-99” and that UDR and Mr. Saltz did so. The statements that The Irvine Company directed UDR and Mr. Saltz to make and that were made by UDR and Mr. Saltz regarding Mr. Sanai were “inaccurate, incomplete and/misleading.”
In January 2000 Mr. Sanai was denied a low-interest credit card from American Express due to information from a credit reporting agency that a debt had been sent to collection. Citibank subsequently declined Mr. Sanai’s request to increase his credit-line limit for the same reason. Mr. Sanai obtained a copy of his credit report, which listed an item from UDR stating a collection account was past due for unpaid rent at Promontory Point. Mr. Sanai alleges on information and belief that UDR and Mr. Saltz’s misstatements to credit reporting agencies caused these denials of credit. “The inability to obtain additional credit directly and proximately caused Sanai to suffer additional actual damages.”
c. UDR/First Advantage’s unfair business practices and its punishment of Mr. Sanai and others: the factual predicates for the alleged violations of state and federal statutes governing fair consumer credit reports and Business and Professions Code section 17200
Mr. Sanai alleges, once again on information and belief, “the business of UDR and [First Advantage] included and includes, in part, the following: (a) punishment of tenants who successfully challenge or defy a landlord, or who otherwise succeed in angering them, and (b) creating a ‘black list’ of tenants who, by virtue of their willingness or ability to challenge illegal or unfair practices or acts of a landlord, can be screened out by future landlords.” One component of these practices is the distribution of reports that include “information about whether the prospective tenant had been involved in property related litigation, or successfully resisted unlawful detainer actions filed by landlords.” A second component is “the solicitation and redistribution of tenant reports whereby landlords can make complaints about previous tenants which are then passed on to other landlords” without regard to the truth of the information provided. According to Mr. Sanai, a third component of UDR and First Advantage’s business is “to solicit stale, obsolete, false, inaccurate, incomplete and misleading information from landlords regarding ‘perceived debts’ which the landlords know or believe are legally unenforceable or uncollectible, which information is in turn reported to the major [credit reporting agencies] on behalf of landlords if tenants and former tenants do not accede to threats to make such illegal reports, which threats are made to extort payment of such illegal and enforceable [sic] amounts.”
The first amended supplemental verified complaint then enumerates a variety of acts or failures to act by UDR and Mr. Saltz in connection with UDR’s report of Mr. Sanai’s purported debt to Promontory Point and Mr. Sanai’s challenge to the accuracy and completeness of that report. The pleading further alleges that, in addition to injuring Mr. Sanai by providing false, incomplete and misleading information to third party credit bureaus, UDR stored the same information in its own databases for its own use as a consumer credit reporting agency. According to Mr. Sanai, UDR violated his rights as a consumer with regard to disclosure of the contents of these files and further failed to conduct a reasonable investigation in response to Mr. Sanai’s statements that the information maintained by UDR (and distributed to other credit reporting agencies) was false or misleading.
Among the improper acts alleged, in paragraph 33 Mr. Sanai asserts Mr. Saltz and UDR caused the trial court in this action to issue sanction awards against him through misrepresentations and then “reported these void and meritless sanction and attorney fee awards as valid debts to [consumer credit reporting agencies] and other persons, ” even though UDR knew the orders were void because an appeal was then pending from the denial of UDR’s special motion to strike Mr. Sanai’s original complaint.
In connection with his claim under the FCRA Mr. Sanai alleges he contacted one of the credit reporting agencies (Experian, formerly TRW) and demanded it initiate an investigation of the reports it had received from UDR, which Mr. Sanai contended were false, incomplete or misleading. Mr. Sanai asserts Experian contacted UDR, but UDR failed to conduct a reasonable reinvestigation of the matters and refused to correct any incomplete or misleading information it had provided.
d. The extortion claims
After incorporating all of the substantive allegations pleaded in his first cause of action (violations of the CCRAA) into the second cause of action (violations of the FCRA), Mr. Sanai incorporates the same substantive allegations into the third cause of action for extortion. In addition, in paragraph 63 he alleges, “Tortorello, the authorized agent of [The Irvine Company], threatened to injure Sanai by taking illegal measures to compel Sanai to pay money to [The Irvine Company] and/or its subsidiaries. [The Irvine Company] then conspired with Saltz and UDR to carry out the threat.”
3. The Special Motion To Strike
a. The original complaint and the first special motion to strike
Mr. Sanai’s original complaint, which sought more than $5 million in damages, asserted causes of action for slander, libel, intentional and negligent interference with prospective economic advantage, intentional and negligent infliction of emotional distress and violations of the CCRAA and FCRA, all based on the allegedly false and misleading initial credit reports made by UDR and UDR’s failure to take necessary corrective action in response to Mr. Sanai’s demands. After answering the complaint, UDR, joined by Mr. Saltz, filed a special motion to strike under section 425.16, asserting Mr. Sanai’s lawsuit was brought in retaliation for UDR’s exercise of its constitutional right to petition or engage in speech related to a matter in litigation. UDR argued that, because Mr. Sanai’s debt was detailed in the three-day notice to pay rent or quit that had been served on him as a prerequisite to eviction proceedings, its actions in reporting that alleged debt to the major credit bureaus was speech made in connection with an issue under consideration or review by a judicial body within the meaning of section 425.16, subdivision (e)(2).
The trial court denied the motion, concluding UDR had failed to make the required threshold showing that the challenged causes of action arose from protected activity within the meaning of section 425.16, subdivision (e). We affirmed, explaining that “[t]he gravamen of Sanai’s claims against UDR does not involve the three-day notice to pay rent or quit but rather conduct which occurred well after the sending of the notice and well after Sanai quit the premises, to wit, the reporting of an alleged debt to the consumer credit reporting agencies, including Experian, sometime after April 1999.” (Sanai 2002, supra, [at p. 20].) After reviewing the case law interpreting the statutory definitions of “a cause of action against a person arising from any act... in furtherance of the person’s right of petition or free speech under the United States or the California Constitution in connection with a public issue” (§ 425.16, subd. (b)(1)), the threshold requirement for a special motion to strike, we held “for the official proceeding in section 425.16, subdivision (e), clauses (1) and (2), to be ‘equated’ with a public issue, there must be an actual official proceeding to which the conduct at issue can be connected. If there was no actual official proceeding, there was no public issue to which the conduct can be connected, and the conduct should not fall within the protection of section 425.16, subdivision (e), clauses (1) and (2).” (Sanai 2002, supra, [at p. 34].)
After various entities related to The Irvine Company (the Irvine Entities) were added as defendants in 2001 based on the trial court’s ruling they were necessary parties, and while the court’s denial of UDR’s original special motion to strike was still on appeal, the Irvine Entities filed their own special motion to strike. The court denied the motion, found it was frivolous and awarded Mr. Sanai costs and attorney fees of $3,880. The Irvine Entities did not appeal from those orders.
b. The Saltz parties’ special motion to strike directed to the June 2009 pleading
Focusing on our analysis in Sanai 2002 that UDR’s purportedly protected speech or petitioning activity was not connected to any official proceeding, thereby failing to fall within the ambit of section 425.16, subdivision (e)(2), the Saltz parties moved to strike the first four causes of action in the first amended supplemental verified complaint, arguing that defect in their earlier unsuccessful motion had been cured because Mr. Sanai was now suing them for conduct that occurred in the pending lawsuit: “[Mr. Sanai] has specifically stated he is suing Defendants for their actions involving actual court proceedings, including the filing and prosecution of a cross-complaint in this litigation [to collect the unpaid rent], obtaining judgments again him, and for reporting information derived from public court records.” As examples, the Saltz parties quoted language from paragraph 25 of Mr. Sanai’s pleading, which alleged UDR and First Advantage distributed information about whether prospective tenants had been involved in property related litigation or had successfully resisted unlawful detainer actions filed by landlords; paragraph 41 (as repeated also in paragraphs 55 and 59) that, knowing The Irvine Company would not take legal action based upon the alleged rent arrearages at Promontory Point, UDR purchased the alleged debt and filed an untimely and void counterclaim; and paragraph 56 that UDR intentionally caused the trial court to issue meritless and void sanctions against Mr. Sanai and then reported these as valid debts to credit bureaus.
In affirming the trial court’s order denying the special motion to strike in Sanai 2002, we noted Mr. Saltz and UDR had relied exclusively on section 425.16, subdivision (e)(2) in both the trial court and on appeal and did not “expressly or by implication invoke any other provisions of subdivision (e) of section 425.16, as a basis for its special motion to strike.” (Sanai 2002, supra, [at p. 19, fn. 7].) Accordingly, we did not consider any other provision of the statute. (Ibid.)
The Saltz parties argued, correctly, that filing a lawsuit is constitutionally protected activity within the meaning of section 425.16 and that statements made in connection with, during or in preparation for litigation are also subject to section 425.16, citing Kashian v. Harriman (2002) 98 Cal.App.4th 892. They further argued causes of action that are grounded on both protected and nonprotected conduct are subject to section 425.16 if at least one of the underlying acts is protected conduct, citing Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP (2005) 133 Cal.App.4th 658 and Salma v. Capon (2008) 161 Cal.App.4th 1275, as well as quoting from this court’s opinion in Fox Searchlight Pictures, Inc. v. Paladino (2001) 89 Cal.App.4th 294.
The Saltz parties’ moving papers also included nearly 50 pages of argument in the memorandum of points and authorities, 70 pages of declarations and three volumes of exhibits directed to establishing Mr. Sanai could not show any likelihood of success on his claims.
c. Mr. Sanai’s opposition to the motion
In opposition to the special motion to strike, Mr. Sanai argued, as we had held in Sanai 2002, the gravamen of his claims against the Saltz parties did not involve protected speech or petitioning activity within the meaning of section 425.16. The additional allegations identified by the Saltz parties in the new pleading, Mr. Sanai explained, were “collateral allusions” or references that did not alter the principal thrust of his lawsuit. Mr. Sanai also argued, with specific reference to his allegations that the Saltz parties had improperly induced the trial court to impose void sanctions and attorney fee awards and had then reported those debts to Experian, that the act of reporting a debt incurred in a lawsuit to a credit reporting agency is not “in connection with” the official proceeding because there is no functional relationship between the report and the proceeding at that time.
Mr. Sanai also noted that in Sanai 2009 we had observed, “[T]he gravamen of Mr. Sanai’s complaint is that UDR falsely reported rent due the Irvine Entities was activity ‘in collection, ’ not that a debt was owed.” (Sanai 2009, supra, 170 Cal.App.4th at p. 761, fn. 9.)
In addition, based on Brill Media Co., LLC v. TCW Group, Inc. (2005) 132 Cal.App.4th 324 (Brill Media), a decision from Division Five of this court, disapproved during the pendency of this appeal in Simpson Strong-Tie Co., Inc. v. Gore (2010) 49 Cal.4th 12 (Simpson Strong-Tie), Mr. Sanai argued his claims against the Saltz parties all fell within the commercial speech exception to special motions to strike found in section 425.17, subdivision (c). Because he believed the Saltz parties had not made the required threshold showing, Mr. Sanai did not present evidence to establish a probability he would prevail on his claims.
4. The Trial Court’s Order Denying the Special Motion To Strike
The trial court denied the motion, concluding the Saltz parties had failed to sustain their first-prong burden of showing Mr. Sanai’s claims are based on protected speech or petitioning activity within the meaning of section 425.16. The court explained the thrust of the first cause of action for violations of the CCRAA is that Mr. Saltz and First Advantage (through its predecessor-in-interest UDR) falsely reported the status of the debt supposedly owed by Mr. Sanai. “Although there are references to courts, these references are insignificant to the cause of action or are merely background information.” The second cause of action for violations of the FCRA alleges the Saltz parties engaged in unfair and deceptive practices by making false and incomplete statements to credit reporting agencies and they further failed to conduct a reasonable reinvestigation when asked to do so. Again, the court explained, “[w]hile there are references to court proceedings, and the instant litigation, it cannot be said this cause of action arises out of the litigation.”
The court noted the extortion cause of action might have “factual allegation weaknesses, ” but nothing in the pleading suggested it arose from protected petitioning or speech activity. Similarly, although the Saltz parties raised a variety of challenges to Mr. Sanai’s pleading (for example, that he had exceeded the scope of our remand in Sanai 2009 by adding new causes of action to his complaint, rather than simply amending the two claims we returned to the trial court for further proceedings), the trial court ruled those matters were not properly considered in deciding a special motion to strike under section 425.16.
Finally, with respect to the claim for unfair business practices, the court acknowledged the first amended supplemental verified complaint made reference to the prosecution of false debts, but found it did so “for illustration purposes only.” “The gravamen of the action is that defendants have been providing false information to the consumer credit reporting agencies and have taken no steps to correct this information.”
The Saltz parties filed a timely notice of appeal.
DISCUSSION
1. Section 425.16: The Anti-SLAPP Statute
SLAPP is an acronym for “strategic lawsuit against public participation.” (Vargas v. City of Salinas (2009) 46 Cal.4th 1, 8, fn. 1.)
Section 425.16 provides, “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 Constitution or the 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.” (§ 425.16, subd. (b)(1).)
Under the statute an “‘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.” (§ 425.16, subd. (e).)
In ruling on a motion under section 425.16, the trial court engages in a two-step process. “First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. The moving defendant’s burden is to demonstrate that the act or acts of which the plaintiff complains were taken ‘in furtherance of the [defendant]’s right of petition or free speech under the United States or California Constitution in connection with a public issue, ’ as defined in the statute. (§ 425.16, subd. (b)(1).) If the court finds such a showing has been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim. 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.’” (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.)
In terms of the so-called threshold issue, the moving party’s burden is to show “the challenged cause of action arises from protected activity.” (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1056; City of Los Angeles v. Animal Defense League (2006) 135 Cal.App.4th 606, 616, fn. 10.) “[T]he statutory phrase ‘cause of action... arising from’ means simply that the defendant’s act underlying the plaintiff’s cause of action must itself have been an act in furtherance of the right of petition or free speech. [Citation.] In the anti-SLAPP context, the critical point is whether the plaintiff’s cause of action itself was based on an act in furtherance of the defendant’s right of petition or free speech. [Citations.] ‘A defendant meets this burden by demonstrating that the act underlying the plaintiff’s cause [of action] fits one of the categories spelled out in section 425.16, subdivision (e)....’” (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78.) “If the defendant does not demonstrate this initial prong, the court should deny the anti-SLAPP motion and need not address the second step.” (Hylton v. Frank E. Rogozienski, Inc. (2009) 177 Cal.App.4th 1264, 1271.)
If the defendant establishes the statute applies, the burden shifts to the plaintiff to demonstrate a “probability” of prevailing on the claim. (Equilon Enterprises v. Consumer Cause, Inc., supra, 29 Cal.4th at p. 67.) In deciding the question of potential merit, the trial court properly considers the pleadings and evidentiary submissions of both the plaintiff and the defendant, but may not weigh the credibility or comparative strength of any competing evidence. (Taus v. Loftus (2007) 40 Cal.4th 683, 713-714; Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 821.) The question is whether the plaintiff presented evidence in opposition to the defendant’s motion that, if believed by the trier of fact, is sufficient to support a judgment in the plaintiff’s favor. (Zamos v. Stroud (2004) 32 Cal.4th 958, 965.) Nonetheless, the court should grant the motion “‘if, as a matter of law, the defendant’s evidence supporting the motion defeats the plaintiff’s attempt to establish evidentiary support for the claim.’” (Taus, at p. 714; Wilson, at p. 821; Zamos, at p. 965.)
“‘The defendant has the burden on the first issue, the threshold issue; the plaintiff has the burden on the second issue.’” (Kajima Engineering & Construction, Inc. v. City of Los Angeles (2002) 95 Cal.App.4th 921, 928.) We review the trial court’s rulings independently under a de novo standard of review. (Flatley v. Mauro (2006) 39 Cal.4th 299, 325; Rusheen v. Cohen, supra, 37 Cal.4th at p. 1055.)
2. The Trial Court Properly Denied the Special Motion To Strike
a. Mr. Sanai’s claims against the Saltz parties do not fall within the commercial speech exception of section 425.17 , subdivision (c)
Noting a “disturbing abuse” of the anti-SLAPP law that “has undermined the exercise of the constitutional rights of freedom of speech and petition for the redress of grievances, contrary to the purpose and intent of Section 425.16, ” the Legislature in 2003 enacted section 425.17, effective January 1, 2004 (Stats. 2003, ch. 338, § 1), which removed from the reach of section 425.16 certain actions “brought solely in the public interest or on behalf of the general public” (§ 425.17, subd. (b); see Club Members for an Honest Election v. Sierra Club (2008) 45 Cal.4th 309) and many claims arising from commercial speech activities. (§ 425.17, subd. (c); see Simpson Strong-Tie, supra, 49 Cal.4th 12.) Specifically, section 425.17, subdivision (c), excludes causes of action arising from representations of facts about the speaker’s or a competitor’s business operations, goods, or services “made 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 “made in the course of delivering the person’s goods or services.”
Section 425.17, subdivision (c), provides in full, “Section 425.16 does not apply to any cause of action brought against a person primarily engaged in the business of selling or leasing goods or services, including, but not limited to, insurance, securities, or financial instruments, arising from any statement or conduct by that person if both of the following conditions exist: [¶] (1) The statement or conduct consists of representations of fact about that person’s or a business competitor’s business operations, goods, or services, that is made 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 the statement or conduct was made in the course of delivering the person’s goods or services. [¶] (2) The intended audience 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, except where the statement or conduct was made by a telephone corporation in the course of a proceeding before the California Public Utilities Commission and is the subject of a lawsuit brought by a competitor, notwithstanding that the conduct or statement concerns an important public issue.”
In Simpson Strong-Tie, disapproving the contrary conclusion in Brill Media, supra, 132 Cal.App.4th at pages 329 through 331, the Supreme Court held the burden of proof as to the applicability of the commercial speech exemption rests on the plaintiff (here Mr. Sanai) who is seeking the benefit of the exemption in opposing the defendant’s special motion to strike. (Simpson Strong-Tie, supra, 49 Cal.4th at pp. 25-26.) In addition, again contrary to the analysis in Brill Media, the Supreme Court rejected the grammatically plausible interpretation of section 417, subdivision (c), that extended its potential reach to all statements made in the course of delivering goods or services, not just those that consisted of “representations of fact about that person’s or a business competitor’s business operations, goods, or services.” (Simpson Strong-Tie, at pp. 26-28.) Instead, looking to the statute’s purpose and the consequences of a more expansive interpretation of its language, the Court held that the elements of the commercial speech exception did not differ for statements or conduct made for the purpose of promoting or obtaining sales (that is, advertising) and statements or conduct made in the course of delivering the person’s goods or services. In either case only those statements or conduct that consist of “representations of fact about that person’s or a business competitor’s business operations, goods, or services” qualified for the commercial speech exemption. (Id. at pp. 29-30.)
As summarized in Simpson Strong-Tie, a cause of action arising from commercial speech is exempt from the anti-SLAPP law 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 the 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; (4) the intended audience for the statement or conduct meets the definitions set forth in section 425.17[, subdivision] (c)(2) [a customer or potential customer or one likely to repeat the statement to or otherwise influence a customer or potential customer].” (Simpson Strong-Tie, supra, 49 Cal.4th at p. 30.)
In the trial court Mr. Sanai argued, consistent with the now-disapproved holding in Brill Media, supra, 132 Cal.App.4th 324, that the Saltz parties had failed to satisfy their burden of establishing the nonapplicability of the commercial speech exception to his claims against them based on false or misleading credit reports—statements made in the course of delivering their services. On appeal, in light of Simpson Strong-Tie, which was decided after the Saltz parties had filed their opening brief, Mr. Sanai shifts ground and argues he satisfied his burden of establishing all four elements of the commercial speech exemption as articulated by the Supreme Court. This effort is unsuccessful.
First, Mr. Sanai does not even address the applicability of the commercial speech exception to his claim for extortion. As to that cause of action, based on allegations a representative of The Irvine Company threatened to injure Mr. Sanai by taking illegal measures (now explained to mean causing UDR to make false credit reports) to compel him to pay money (allegedly past due rent) to The Irvine Company or its subsidiaries, Mr. Sanai has plainly failed to satisfy the fourth—intended audience—element of section 425.17, subdivision (c), as explained in Simpson Strong-Tie (even putting aside our serious questions about whether the second or third elements were shown). The audience for the threats was Mr. Sanai himself, not customers or potential customers of The Irvine Company.
With respect to the other three causes of action at issue on this appeal, Mr. Sanai argues the false or misleading statements in the credit reports at the heart of the litigation—that Mr. Sanai owed money to Promontory Point and that the debt was in collection—were made in the course of delivering goods or services (the third element in the Simpson Strong-Tie test) and described The Irvine Company’ business operations, at least as conducted through various partnerships and subsidiaries (the second element of the test). Mr. Saltz and UDR/First Advantage acted as The Irvine Company’s agents in this regard, Mr. Sanai argues, and must be equally merged with their principals for purposes of the commercial speech exemption since corporate entities can only act through their agents.
There are at least two fatal flaws with this analysis. First, statements that Mr. Sanai owed money and the debt was in collection are not “about” The Irvine Company’s or Promontory Point’s or any other of the Irvine Entities’ “business operations, goods, or services.” (§ 425.17, subd. (c)(1).) Rather, they are statements “about” Mr. Sanai, as Mr. Sanai himself acknowledged at the outset of this litigation when he sued Mr. Saltz and UDR for slander and libel. (Cf. Simpson Strong-Tie, supra, 49 Cal.4th at pp. 30-31 [allegedly defamatory advertisement by lawyer suggesting plaintiff company’s screws are defective is a statement about the plaintiff company, not the lawyer or his competitors].) Moreover, to the extent the credit reports somehow suggested how The Irvine Company manages its properties or treats its tenants, Mr. Sanai’s causes of action do not “arise from” those representations of fact, as required by section 425.17, subdivision (c), but rather from statements about his creditworthiness. (See id. at p. 31 [plaintiff company’s causes of action do not arise from alleged inference in advertisement that lawyer will investigate “whether you have a potential claim, ” but from inference that plaintiff’s products are defective].)
In Sanai 2009 we affirmed the trial court’s order granting judgment on the pleadings on these and several other state common law tort claims on the ground they were preempted by federal law. (Sanai 2009, supra, 170 Cal.App.4th at pp. 773-774.)
As the Supreme Court admonished in Simpson Strong-Tie in rejecting arguments similar to those advanced by Mr. Sanai, “We are reluctant to allow plaintiffs to evade the limitations of the statutory text by mere wordplay, especially given our obligation to construe the commercial speech exemption narrowly.” (Simpson Strong-Tie, supra, 49 Cal.4th at pp. 31-32.)
b. Reporting litigation results to credit bureaus is not speech in connection with an issue under consideration by a judicial body within the meaning of section 425.16, subdivision (e)(2)
The Saltz parties’ contention that their special motion to strike the first four causes of action in Mr. Sanai’s first amended supplemental verified complaint differs significantly from their original, unsuccessful motion is grounded on the assumption Mr. Sanai’s new allegations regarding their improper reporting of false or void court records to credit bureaus is protected speech in connection with an issue under consideration by a judicial body within the meaning of section 425.16, subdivision (e)(2). From this premise they argue their protected speech activity is not merely incidental to Mr. Sanai’s allegations of nonprotected conduct, which were at issue in the first appeal in this case (the original negative credit report, as we held in Sanai 2002), and insist an anti-SLAPP motion is properly brought to challenge a mixed cause of action combining, as here, both protected and nonprotected activity as the basis for the plaintiff’s claims.
The Saltz parties’ initial premise is suspect. To be sure, as the Saltz parties’ observe, truthfully reporting on the contents of official court records open to public inspection is a constitutionally protected activity. (See, e.g., Taus v. Loftus, supra, 40 Cal.4th at p. 725; Gates v. Discovery Communications, Inc. (2004) 34 Cal.4th 679, 692, quoting Cox Broadcasting Corp. v. Cohn (1975) 420 U.S. 469, 495 [95 S.Ct. 1029, 43 L.Ed.2d 328] [“‘the States may not impose sanctions on the publication of truthful information contained in official court records open to public inspection’”]; see generally U.D. Registry, Inc. v. State of California (1995) 34 Cal.App.4th 107, 116 [statutory restrictions on credit reporting agencies’ reporting of certain information about unlawful detainer defendants contained in CCRAA are unconstitutional].) But that does not mean, as the Saltz parties assume, a “constitutionally protected” truthful report to a credit bureau about the results of a judicial proceedings falls within the ambit of section 425.16, subdivision (e)(2), or is otherwise properly the basis for a anti-SLAPP motion under section 425.16, subdivision (e)(4), without a further showing (wholly absent here) that the report concerns a public issue or an issue of public interest.
As we discussed in Sanai 2002, and as has been reviewed in many anti-SLAPP cases during the past decade (see, e.g., PrediWave Corp. v. Simpson Thacher & Bartlett LLP (2009) 179 Cal.App.4th 1204, 1219), in Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, the Supreme Court held a moving party relying on section 425.16, subdivision (e) (1) and (2), need establish only that the challenged statement was made within or in connection with an official proceeding whether or not it pertained to an issue of public significance: “[P]lainly read, section 425.16 encompasses any cause of action against a person arising from any statement or writing made in, or in connection with an issue under consideration or review by, an official proceeding or body.” (Briggs, at p. 1113; see id. at p. 1123 [“a defendant moving to strike a cause of action arising from a statement made before, or in connection with an issue under consideration by, a legally authorized official proceeding [under subdivision (b) (1) and (2)] need not separately demonstrate that the statement concerned an issue of public significance”].) The Supreme Court explained, quoting from the Court of Appeal decision in Braun v. Chronicle Publishing Co. (1997) 52 Cal.App.4th 1036, 1047, “‘Under the plain terms of the statute it is the context or setting itself that makes the issue a public issue: all that matters is that the First Amendment activity take place in an official proceeding or be made in connection with an issue being reviewed by an official proceeding.’” (Briggs, at p. 1116.) However, a defendant seeking to strike a cause of action that arises from protected conduct described in subdivision (e) (3) and (4) must demonstrate the matter concerns a public issue or an issue of public interest. (Briggs, at pp. 1117-1118.)
Even though we broadly construe the anti-SLAPP statute (§ 425.16, subd. (a)), case law makes clear not all statements about a judicial proceeding or the outcome of litigation necessarily qualify as a statement or writing made in connection with an issue under consideration or review by a judicial body within the meaning of section 425.16, subdivision (e)(2). “[A] statement is ‘in connection with’ litigation under section 425.16, subdivision (e)(2) if it relates to the substantive issues in the litigation and is directed to persons having some interest in the litigation.” (Neville v. Chudacoff (2008) 160 Cal.App.4th 1255, 1266 [letter written by attorney to client’s customers when client was seriously and in good faith contemplating lawsuit against former employee for breach of contract and misappropriation of trade secrets falls within § 426.16, subd. (e)(2)]; accord, McConnell v. Innovative Artists Talent & Literary Agency, Inc. (2009) 175 Cal.App.4th 169, 177-179 [quoting Neville; claim for wrongful termination based on letter purportedly written as part of employer’s investigation of pending or prospective claims in lawsuit against former employee did not fall within § 425.16, subd. (e)(2) because letter did not reflect investigative activity and was not written in connection with an issue under review by a judicial body]; Seltzer v. Barnes (2010) 182 Cal.App.4th 953, 962 [quoting Neville;claims based on secret negotiation of settlement agreement fall within § 425.16, subd. (e)(2)].)
In Paul v. Friedman (2002) 95 Cal.App.4th 853, 866, this court discussed the first aspect of this two-part requirement, explaining section 425.16, subdivision (e)(2), “does not accord anti-SLAPP protection to suits arising from any act having any connection, however remote, with an official proceeding. The statements or writings in question must occur in connection with ‘an issue under consideration or review’ in the proceeding.” The necessary connection, we emphasized, is “to an issue under review in a proceeding, and not merely to a proceeding.” (Paul, at p. 866.)
The second aspect of section 425.16, subdivision (e)(2), is illustrated in Healy v. Tuscany Hills Landscape & Recreation Corp. (2006) 137 Cal.App.4th 1, in which the court held an allegedly defamatory letter sent by counsel for a homeowners association to members of the association that described litigation between the association and an individual homeowner in a dispute over weed abatement fell within the scope of section 425.16, subdivision (e)(2). “Because one purpose of the letter was to inform members of the association of pending litigation involving the association, the letter is unquestionably ‘in connection with’ judicial proceedings [citation] and bears ‘“some relation”’ to judicial proceedings.” (Healy, at pp. 5-6.)
Similarly, the court in Contemporary Services Corp. v. Staff Pro Inc. (2007) 152 Cal.App.4th 1043 considered an allegedly defamatory e-mail sent by the president of Staff Pro, which was engaged in protracted and contentious litigation with one of its competitors, to nine of Staff Pro’s actual or potential customers who had provided discovery or had been called as witnesses. The e-mail was critical of the competitor’s litigation tactics and provided a summary of what had transpired in the lawsuit. Because it was “a litigation update, which describes the parties’ contentions and court rulings, and is directed to individuals who had some involvement in the parties’ litigation” (id. at p. 1055), the court of appeal held the trial court had correctly “concluded the e-mail falls within the parameters of section 425.16, subdivision (e)(2) in that it was made ‘in connection with an issue under consideration or review by a... judicial body.’” (Contemporary Services Corp., at p. 1055.)
Under these authorities, merely reporting the filing of unlawful detainer actions or other landlord-tenant lawsuits to credit bureaus not otherwise participating in the litigation, or even informing the credit bureaus of the results of such actions, while certainly related to a judicial proceeding, is neither a statement or writing made in connection with an issue under consideration or review by a judicial body nor directed to persons having some interest in the litigation, as those terms are used in construing section 425.16, subdivision (e)(2). (Cf. Schoendorf v. U.D. Registry, Inc. (2002) 97 Cal.App.4th 227, 242-243 [reports on unlawful detainer actions prepared for use by subscribers to a tenant screening services are not protected by the litigation privilege of Civ. Code § 47, subd. (b)(2)].)
In Schoendorf v. U.D. Registry, Inc., supra, 97 Cal.App.4th 227 Division One of this court reversed a trial court order granting UDR’s special motion to strike a complaint filed by a tenant alleging UDR had provided misleading and incomplete information about her to landlords and other subscribers to its tenant screening services. The court concluded the tenant had made a prima facie showing on the merits of her claims. (Id. at p. 240.) With respect to the first prong of the special motion to strike, the court “assume[d] that UDR has made a sufficient showing that this action comes within the ambit of the anti-SLAPP statute” because the tenant failed to properly raise the issue on appeal. (Id. at p. 238.)
Sipple v. Foundation for Nat. Progress (1999) 71 Cal.App.4th 226, which applied section 425.16 to a defamation action based on a newspaper article published by Mother Jones magazine concerning domestic violence charges in a custody dispute between a nationally known political consultant and his first wife—the sole case cited on this point in the Saltz parties’ opening brief—does not compel a contrary result. As our colleagues in Division Two of this court explained, the plaintiff and appellant, Donald Sipple, had been prominently featured in newspaper articles and magazines as an image maker and media strategist and had over the years urged his clients (including Governor George W. Bush and Senator Robert Dole) to advocate the prevention and punishment of domestic violence. (Sipple, at p. 230.) The article at issue discussed the custody proceedings, which included testimony that Sipple had physically and verbally abused his first and second wives. Sipple’s current wife testified he had never abused her during their 15-year marriage. The court held the defamation action based on the article fell within the ambit of the anti-SLAPP statute and, turning to the merits, was absolutely privileged under Civil Code section 47, subdivision (d), as a fair and true report in a public journal of a judicial proceeding. However, the court did not conclude, as the Saltz parties suggest, that the statements in the article were writings made in connection with an issue under consideration or review by a judicial body under section 425.16, subdivision (e)(2). Rather, the court held “the article, insofar as it discusses the statements made during depositions or at the hearing at the custody trial, falls within the ambit of section 425.16, subdivision (e)(1)”—statements made at a judicial proceeding. (Sipple, at pp. 237-238.) To the extent the article contained additional material and did not simply quote trial or deposition testimony (for example, reporting information obtained through interviews with Sipple’s first and second wives amplifying their testimony), the court held the statements fell within section 425.16, subdivision (e)(3), statements made in a public forum in connection with an issue of public interest, rejecting Sipple’s contention that spousal abuse or domestic violence, the subject of the article, is not an issue of public interest. (Sipple, at p. 238.) As discussed, the Saltz parties do not contend the reports made to credit bureaus at issue in this case regarding either Mr. Sanai specifically or tenants generally involve an issue of public interest and come within the scope of section 425.16, subdivision (e)(3) or (4).
In their reply brief the Saltz parties also cite Haight Ashbury Free Clinics, Inc. v. Happening House Ventures (2010) 184 Cal.App.4th 1539, 1549, as support for their assertion that reporting the results of litigation to credit bureaus is protected activity within the meaning of section 425.16, subdivision (e)(2). The relevant allegation in Haight Ashbury Free Clinics, however, was that defendant David E. Smith had breached his fiduciary duty to the plaintiff organization when he wrote a letter to the San Francisco Bay Guardian during a prior lawsuit between the plaintiff and Smith that misrepresented the claims involved in the lawsuit. As the court held, the letter to the newspaper by a party to on-going litigation discussing the issues in the lawsuit was unquestionably a “‘writing made in connection with an issue under consideration or review by a.... judicial body.’” (Id. at p. 1548.)
To avoid this conclusion regarding the applicability of section 425.16 to reports of litigation results to credit bureaus, counsel for the Saltz parties suggested at oral argument that the categories of protected activity enumerated in section 425.16, subdivision (e)(1) through (4), are simply illustrative, not all-encompassing. This argument was supported in a posttrial letter brief by citation to, and quotation from, Averill v. Superior Court (1996) 42 Cal.App.4th 1170, a case involving private conversations regarding a public issue. Explaining that the list of acts in furtherance of a person’s right to petition and to free speech specified by section 425.16, subdivision (e), is “preceded by the word ‘includes, ’” the Averill court held, “Even if the [allegedly defamatory] statements [challenged by the plaintiff] were not expressly covered under subdivision (e) of the statute, the categories enumerated there are not all-inclusive.” (Id. at p. 1175.)
As the Saltz parties note in passing, however, the Averill decision preceded the 1997 amendments to section 425.16, which, among other changes, added subdivision (e)(4)—the so-called “catch-all provision”—to the anti-SLAPP statute, thereby expressly making the statute applicable to any protected speech or petitioning activity in connection with a public issue. (Stats. 1997, ch. 271, § 1, pp. 1291-1292; see Lieberman v. KCOP Television, Inc. (2003) 110 Cal.App.4th 156, 164 [“Subdivision (e)... includes four separate categories of acts which qualify for treatment under the section.... Category four provides a catch-all for ‘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’”]; Carver v. Bonds (2005) 135 Cal.App.4th 328, 342-343 [broadly construing subd. (e)(4) to apply to written or oral statements]; Vogel v. Felice (2005) 127 Cal.App.4th 1006, 1015 [observing that challenges to “pure speech” would always involve “conduct” within the meaning of subd. (e)(4)].) Thus, the analysis in Averill v. Superior Court, supra, 42 Cal.App.4th 1170 with respect to the pre-1997 version of section 425.16, subdivision (e), upon which the Saltz parties rely is moot. The categories in subdivision (e) as currently written are necessarily all-inclusive, notwithstanding the retention of the word “includes, ” because subdivision (e)(4), in fact, includes all protected speech and petitioning activity provided it is with respect to a public issue or issue of public interest. Because Mr. Sanai’s credit status does not satisfy that threshold requirement, the Saltz parties quite properly do not argue their special motion to strike falls within section 425.16, subdivision (e)(4).
c. The four challenged causes of action arise from nonprotected activity
i. Application of section 425.16 to “mixed” causes of action
Although we conclude reporting the results of third-party unlawful detainer actions and other landlord-tenant litigation to credit bureaus does not fall within the scope of section 425.16, subdivision (e)(2), the allegation the Saltz parties themselves improperly induced the trial court to award sanctions and an attorney fee award against Mr. Sanai in the pending litigation and then reported those obligations as undisputed, knowing they were void, is more problematic. Certainly the Saltz parties’ statements to the trial court fall within section 425.16, subdivision (e)(1). And litigation updates by participants in the lawsuit to other parties legitimately interested in the litigation are within section 425.16, subdivision (e)(2) (see Healy v. Tuscany Hills Landscape & Recreation Corp., supra, 137 Cal.App.4th at pp. 5-6), although, as discussed, we question whether third-party credit bureaus acquiring the information for tenant screening or other business purposes are “interested” as that term has been used in the decisions construing the scope of this subdivision.
Nonetheless, “a defendant in an ordinary private dispute cannot take advantage of the anti-SLAPP statute simply because the complaint contains some references to speech or petitioning activity by the defendant.” (Martinez v. Metabolife Internat., Inc. (2003) 113 Cal.App.4th 181, 188.) Case law is clear, when a special motion to strike pursuant to section 425.16 challenges a cause of action that includes allegations of both protected and nonprotected activity (sometimes referred to as a “mixed” cause of action), “if the allegations of protected activity are only incidental to a cause of action based essentially on nonprotected activity, the mere mention of the protected activity does not subject the cause of action to an anti-SLAPP motion.” (Scott v. Metabolife Internat., Inc. (2004) 115 Cal.App.4th 404, 415; accord, World Financial Group, Inc. v. HBW Ins. & Financial Services, Inc. (2009) 172 Cal.App.4th 1561, 1574 [“‘“when the allegations referring to arguably protected activity are only incidental to a cause of action based essentially on nonprotected activity, collateral allusions to protected activity should not subject the cause of action to the anti-SLAPP statute”’”]; Haight Ashbury Free Clinics, Inc. v. Happening House Ventures, supra, 184 Cal.App.4th at p. 1550 [“[i]f liability is not based on protected activity, the cause of action does not target the protected activity and is therefore not subject to the SLAPP statute”].)
On the other hand, if the allegations of nonprotected conduct are collateral to the substance of the cause of action, their presence does not prevent the court from applying the statute. As we explained in Fox Searchlight Pictures v. Paladino, supra, 89 Cal.App.4th at page 308, “[A] plaintiff cannot frustrate the purposes of the SLAPP statute through a pleading tactic of combining allegations of protected and nonprotected activity under the label of one ‘cause of action.’” (Accord, Mann v. Quality Old Time Service, Inc. (2004) 120 Cal.App.4th 90, 103.)
In applying section 425.16 to mixed causes of action, “it is the principal thrust or gravamen of the plaintiff’s cause of action that determines whether the anti-SLAPP statute applies [citation], and when the allegations referring to arguably protected activity are only incidental to a cause of action based essentially on nonprotected activity, collateral allusions to protected activity should not subject the cause of action to the anti-SLAPP statute.” (Martinez v. Metabolife Internat., Inc., supra, 113 Cal.App.4th at p. 188; see Episcopal Church Cases (2009) 45 Cal.4th 467, 477-478 [“This dispute [involving ownership of property] and not any protected activity ‘is the gravamen or principal thrust’ of the action. [Citation to Martinez.] The additional fact that protected activity may lurk in the background—and may explain why the rift between the parties arose in the first place—does not transform a property dispute into a SLAPP suit.”]; Hylton v. Frank E. Rogozienski, Inc., supra, 177 Cal.App.4th at p. 1272 [“[W]e assess the principal thrust by identifying ‘[t]he allegedly wrongful and injury-producing conduct... that provides the foundation for the claim.’ [Citation.] If the core injury-producing conduct upon which the plaintiff’s claim is premised does not rest on protected speech or petitioning activity, collateral or incidental allusions to protected activity will not trigger application of the anti-SLAPP statute.”].) That is, “the cause of action is vulnerable to a special motion to strike under the anti-SLAPP statute only if the protected conduct forms a substantial part of the factual basis for the claim.” (A.F. Brown Electrical Contractors, Inc. v. Rhino Electric Supply, Inc. (2006) 137 Cal.App.4th 1118, 1125; see Haight Ashbury Free Clinics, Inc. v. Happening House Ventures, supra, 184 Cal.App.4th at p. 1550 [“whether a cause of action is subject to a motion to strike under the SLAPP statute turns on whether the gravamen of the cause of action targets protected activity”].)
Although, as the Saltz parties argue, some language in Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP, supra, 133 Cal.App.4th at pages 671, 673 and footnote 9, and Salma v. Capon, supra, 161 Cal.App.4th at page 1288, footnote 5, suggests the principal thrust or gravamen test should not be applied to determine if a mixed cause of action falls within the ambit of section 425.16, the Supreme Court’s recent decisions in Episcopal Church Cases, supra, 45 Cal.4th 467, and Club Members for an Honest Election v. Sierra Club, supra, 45 Cal.4th 309 expressly recognize the propriety of that approach. (See Episcopal Church Cases, at pp. 477-478 [quoted above]; Club Members, at p. 319 [“The ‘principal thrust or gravamen’ test serves the legislative intent that section 425.16 be broadly interpreted. Thus, a plaintiff could not deprive a defendant of anti-SLAPP protection by bringing a complaint based upon both protected and unprotected conduct.”].) However, that does not require an either-or determination or mean the gravamen of a cause of action must be based only on protected activity or on nonprotected activity. Rather, the proper statement of the rule, as articulated several months ago in Haight Ashbury Free Clinics, is: “[W]here the defendant shows that the gravamen of a cause of action is based on nonincidental protected activity as well as nonprotected activity, it has satisfied the first prong of the SLAPP analysis.” (Haight Ashbury Free Clinics, Inc. v. Happening House Ventures, supra, 184 Cal.App.4th at p. 1551, fn. 7; accord, World Financial Group, Inc. v. HBW Ins. & Financial Services, Inc., supra, 172 Cal.App.4th at p. 1574 [“‘[a] cause of action is subject to a motion to strike under the anti-SLAPP statute even if it is based only in part on allegations regarding protected activity’”].)
ii. Any litigation-related statements or conduct identified in the first amended supplemental verified complaint is collateral to the substance of Mr. Sanai’s claims
The Saltz parties’ argument to the contrary notwithstanding, there can be little question the principal thrust of Mr. Sanai’s action is, and always has been, that UDR and Mr. Saltz made false reports to Experian and other credit bureaus in 1999 and 2000 indicating active collection efforts were ongoing with respect to Promontory Point’s claim for unpaid rent and that UDR thereafter failed to take appropriate corrective action when he challenged the accuracy and completeness of their reports. (See generally Sanai 2002, supra, [at p. 20].) Those allegations are contained in paragraphs 23 and 24 of the first cause of action in the first amended supplemental verified complaint (violations of the CCRAA) and are incorporated by reference into the second (violation of the FRCA) and fourth (violation of Bus. & Prof. Code, § 17200) causes of action in the pleading. This core, injury-producing conduct is not protected activity within the meaning of section 425.16.
To be sure, in paragraph 25 Mr. Sanai alleges UDR and First Advantage, as part of their usual business practices, create blacklists and otherwise punish tenants willing to challenge landlords’ illegal practices and distribute reports to credit bureaus that include, among other materials, information from public court files regarding litigation filings and results. But the assertion that UDR/First Advantage and Mr. Saltz engage in this behavior is not the basis for any claim of violation of the CCRAA or the FCRA; that is, Mr. Sanai’s first two causes of action do not arise from these acts—even if they might be considered protected speech within the meaning of section 425.16. (Cf. Simpson Strong-Tie, supra, 49 Cal.4th at p. 31 [plaintiff company’s causes of action do not arise from alleged inference in advertisement that lawyer will investigate “whether you have a potential claim, ” but from inference that plaintiff’s products are defective].) They are, at most, collateral allegations. Moreover, because Mr. Sanai does not contend UDR/First Advantage employed these practices against him, even though they are also incorporated into his fourth cause of action against First Advantage and The Irvine Company for unfair competition, they cannot serve as a basis for relief and, therefore, are incidental to that claim, as well. (See generally Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court (2009) 46 Cal.4th 993, 1001 [as amended by Proposition 64, to have standing to seek remedies under the unfair competition law a plaintiff must “have suffered injury resulting from an unlawful action”].)
Similarly, the allegation UDR purchased from The Irvine Entities the claim for rent arrearages and pursued it as a void counterclaim (cross-claim) in the pending litigation—although certainly protected petitioning activity (see Navellier v. Sletten (2002) 29 Cal.4th 82, 89-90; Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 741)—while providing color and context, has absolutely no bearing on the alleged violations of the CCRAA or the FRCA or the unfair competition claim, for that matter. The same is true of the allegations that UDR hired Mr. Saltz’s son to serve as its legal counsel, creating a conflict of interest, and that UDR’s agreement to indemnify The Irvine Company from legal claims has led to that defendant’s reluctance to correct the inaccurate credit reports. Mr. Sanai’s causes of action simply do not “arise from” those protected acts, as required to satisfy the first prong of section 425.16.
As we explained in Sanai 2009, supra, 170 Cal.App.4th at pages 754 through 756, while the appeal from the denial of UDR’s initial special motion to strike was pending in this court, a trial date was set for UDR’s cross-complaint to collect unpaid rent. Mr. Sanai made a statutory tender of the full amount sought by UDR. UDR accepted the offer and dismissed its cross-complaint on May 17, 2002—one week prior to issuance of the remittitur in Sanai 2002. Our decision in Sanai 2005, applying Varian Medical Systems, Inc. v. Delfino, supra, 35 Cal.4th 180, reversing the trial court’s order denying Mr. Sanai’s motion to set aside void judgment and orders made during the pendency of Sanai 2002 and directing the court to conduct further proceedings based on the state of the pleadings as of January 16, 2001, did not address the effect, if any, the automatic stay of proceedings had on the parties’ settlement of the dispute over unpaid rent. From the record before us, it does not appear that claim remains active.
As discussed, the allegations of misleading and inaccurate negative credit reports in paragraph 33 (repeated in paragraph 56) are somewhat different. Mr. Sanai alleges UDR caused the trial court to issue meritless sanction awards against him in this case and then reported them as valid debts to credit bureaus even though it knew the awards were void and Mr. Sanai disputed their validity. However, Mr. Sanai does not allege UDR’s protected conduct in obtaining sanctions from the trial court was tortious or otherwise unlawful, and none of his causes of action arise from or are based upon that petitioning activity. As for the allegedly improper, negative credit reports made after the sanctions were obtained, it is the fact the debt owed was improperly labeled undisputed and enforceable, not its source (as a sanction in litigation), that Mr. Sanai attacks. It is included in the first amended supplemental verified complaint as simply another in the litany of the Saltz parties’ false credit reports.
Moreover, even if those reports are protected speech activity within the meaning of section 425.16, subdivision (e)(2), and even if, standing alone, a violation of the CCRAA could be predicated on such conduct, Mr. Sanai’s claims are not based in any significant part on this allegation. In fact, Mr. Sanai denies seeking to impose any liability for this purported act of false credit reporting in 2001, insisting instead it merely illustrates UDR’s and Mr. Saltz’s business methods. Thus, this allegation, read in the context of the entire first amended supplemental verified complaint, is collateral to the substance of causes of action based on nonprotected activity. (See Gallanis-Politis v. Medina (2007) 152 Cal.App.4th 600, 614; Scott v. Metabolife Internat., Inc., supra, 115 Cal.App.4th at p. 414.)
Finally, the third cause of action for extortion only alleges that Joe Tortorello, as the authorized agent for The Irvine Company, threatened during a February 1999 telephone call to take illegal measures to injure Mr. Sanai if he did not pay money to one of the Irvine Entities and Mr. Saltz and UDR conspired with The Irvine Company to carry out the threats. The nature of those purportedly illegal measures is not identified. As the trial court observed, although the factual allegations supporting this cause of action may be weak, no protected speech or petitioning activity is asserted as the basis for the claim.
The Saltz parties, however, emphasize that in his original complaint, which did not include a claim for extortion, Mr. Sanai alleged Tortorello had threatened during the February 1999 telephone call to file a lawsuit to collect unpaid rent, which is protected petitioning activity within the meaning of section 425.16. Because that allegation is inconsistent with those contained in the current pleading, they contend, it should be read into the first amended supplemental verified complaint. However, Mr. Sanai explained in the trial court, and repeats in his brief on appeal, although a lawsuit was discussed during the February 1999 telephone call, the threat of illegal measures referred to in this new cause of action was making false credit reports, not enforcement of the claim for unpaid rent. According to Mr. Sanai, the new pleading was “carefully drafted” to avoid basing a cause of action on any collection proceeding. Although this allegation of illegal threats was not contained in the original complaint, it is not inconsistent with the initial pleading, which did not purport to describe the entire February 1999 conversation between Mr. Sanai and Tortorello. As we discussed in Sanai 2009, supra, 170 Cal.App.4th at page 769, although there may be good reason for the trial court and the Saltz parties to be skeptical about the accuracy of new and more refined factual allegations from Mr. Sanai, in terms of evaluating his pleading (whether in granting leave to amend, the issue in Sanai 2009, or assessing whether a cause of action is based at least in part on allegations regarding protected activity), absent unexplained contradictions in those allegations, any challenge to them must await summary judgment or trial.
The explanation, set forth in Mr. Sanai’s memorandum of points and authorities, should have been presented in the declaration he filed in opposition to the motion. (§ 425.16, subd. (b)(2); see City of Cotati v. Cashman (2002) 29 Cal.4th 69, 79.)
In sum, Mr. Sanai’s first amended supplemental verified complaint now contains several allegations of misconduct by the Saltz parties that arguably involve protected speech or petitioning activity. Yet, whatever his reasons for including those allegations, that conduct does not constitute a substantial part of the factual basis for any of the four causes of action challenged by the special motion to strike. (See Episcopal Church Cases, supra, 45 Cal.4th at p. 477 [“‘[i]n the anti-SLAPP context, the critical consideration is whether the cause of action is based on the defendant’s protected free speech or petitioning activity, ’” quoting Navellier v. Sletten, supra, 29 Cal.4th at p. 89].) Rather, they are, to paraphrase language we have used before, merely side notes to a story primarily based on nonprotected activity. Accordingly, the trial court properly denied the special motion to strike.
Mr. Sanai has moved for an order entering terminating sanctions against the Saltz parties, arguing the August 2009 special motion to strike and this appeal from the order denying that motion were filed in bad faith to delay discovery and are repetitive and meritless. Although we affirm the trial court’s order denying the special motion to strike, because of the differences between Mr. Sanai’s June 4, 2009 pleading and his original complaint in this action, which was addressed in our ruling in Sanai 2002, as well as the significant case law and statutory developments relating to special motions to strike during the past eight years, the Saltz parties’ motion and this appeal cannot be considered totally and completely without merit, nor is there a sufficient demonstration they were filed for the sole purpose of harassing Mr. Sanai. (Cal. Rules of Court, rule 8.276(a)(1); see §§ 425.16, subd. (c)(1), 128.5.) Accordingly, the motion for sanctions is denied.
DISPOSITION
The order denying the section 425.16 special motion to strike is affirmed. Mr. Sanai is to recover his costs on appeal.
We concur: WOODS, J., ZELON, J.