Opinion
G036758
4-23-2007
SHEA HOMES LIMITED PARTNERSHIP et al., Cross-complainants and Appellants, v. UDR/PACIFIC LOS ALISOS, LP, et al., Cross-defendants and Respondents.
Connor & Fletcher, Edmond M. Connor, Matthew J. Fletcher and Douglas A. Hedenkamp for Cross-complainants and Appellants. Rus, Miliband & Smith, Ronald Rus, Joel S. Miliband, Leo J. Presiado and M. Peter Crinella for Cross-defendants and Respondents.
NOT TO BE PUBLISHED
This is the second appeal between the parties arising from their ongoing dispute over the enforceability of a restrictive covenant. In Shea Homes Limited Partnership v. UDR/Pacific Los Alisos, LP (Jun. 29, 2006, G035827) [nonpub. opn.], Shea Homes Limited Partnership and Madrid LLC (appellants) appealed the dismissal of an action after the trial court struck their complaint under Code of Civil Procedure section 425.16 as a strategic lawsuit against public participation (anti-SLAPP; all further statutory references are to this code). That action involved appellants effort to prohibit UDR/Pacific Los Alisos LP and United Dominion Realty Trust, Inc. (respondents) from processing land use applications to permit construction of a residential development on a parcel appellants claim is subject to a restrictive covenant limiting its use to commercial purposes. We reversed. Acknowledging the parties concession that the causes of action arose from respondents exercise of their petitioning and free speech right, we held appellants had established a probability of prevailing on their claims.
After the trial court dismissed the prior action, respondents obtained the governmental approvals needed to proceed with residential development of the property and filed the present lawsuit challenging the continued enforceability of the restrictive covenant. Appellants cross-complained primarily seeking to prohibit respondents from demolishing the parcels existing improvements, building the proposed residential project, and recording a subdivision map. The trial court granted respondents anti-SLAPP motion and struck the cross-complaint. Since the cross-complaints causes of action do not arise from respondents exercise of their right of petition or free speech, we reverse that ruling.
FACTUAL AND PROCEDURAL BACKGROUND
In December 1992, Mission Viejo Company (MVC) sold a parcel of commercially-zoned property to Kmart Corporation (Kmart). As part of the transaction, MVC and Kmart executed and recorded a document entitled "Covenant Between Landowners." (Capitalization and underlining omitted; covenant.) The covenant acknowledged MVC sold the property as part of an "overall plan for the development of the Mission Viejo Planned Community . . . primarily to provide residents . . . with a Kmart store," MVC owns other real property in Mission Viejo described as "the `Benefit[t]ed Property," and MVC "is in the process of developing" property "adjacent to the Kmart parcel . . . ."
The covenant limited Kmarts use of its parcel to "commercial, industrial and retail uses permitted by . . . [the then effective] zoning ordinances applicable" to the property, and declared, "Unless MVC has given its prior written approval (which approval shall not be unreasonably withheld), and all applicable laws and regulations have then been satisfied, the Kmart Parcel shall not be further subdivided." It prohibited "[r]esidential dwelling units of all types" on the parcel.
The covenant also declared the "restrictions contained in this Agreement run with the land and are made for the benefit of MVC, the Project [i.e., "the Kmart Parcel and MVC property together"] and the Benefit[t]ed Property, and impose[] a burden on the Kmart Parcel, and upon Kmart, [and] its . . . successors and assigns." Kmart agreed "on behalf of itself" and its "successors and assigns, to be bound by, and to assume performance of, all of the provisions and requirements set forth in . . . this Agreement . . ., all of which . . . are acknowledged to be reasonable. . . . Notwithstanding anything in this Agreement . . ., the covenants, conditions and restrictions set forth . . . shall inure to the benefit of the Benefit[t]ed Property . . . ." It gave MVC and "any affiliate" "the right to enforce the covenants, conditions and restrictions contained in this Agreement notwithstanding any transfer of the Benefit[t]ed Property, the Project, or any portion thereof." Finally, the covenant declared, "This Agreement shall terminate . . . on the . . . earlier . . . of (i) conveyance by MVC of all the Benefitted Property, and (ii) expiration of fifteen (15) years after the recordation of this Agreement."
MVC merged with Shea in 1997, resulting in MVCs disappearance as a separate entity. Kmart built and operated a store on its parcel. In 2002, Kmart filed for bankruptcy and eventually closed the Mission Viejo store.
UDR/Pacific Los Alisos LP acquired the Kmart Parcel in 2004. Appellants allege the parties discussed the enforceability and possible modification of the covenants use restrictions, but "[i]nstead of reaching" an "agreement with [appellants] to modify the [c]ovenant, [respondents] . . . pushed forward with . . . permit applications . . . with the City of Mission Viejo . . . to . . . allow residential . . . uses[,] . . . further subdivide the . . . Parcel[,] . . . and . . . demolish the existing buildings on the [s]ite." These efforts included appearances before the citys planning commission to obtain a recommendation for approval of their residential development applications.
When appellants learned of these efforts, they advised respondents that the redevelopment efforts, in their view, violated the terms of the covenant. The parties further negotiations failed to resolve the matter and appellants filed suit. (Shea Homes Limited Partnership v. UDR/Pacific Los Alisos, LP (Super. Ct. Orange County, 2005, No. 05CC03856).) Their complaint sought a declaration "the [c]ovenant is still in effect" and it "prohibits [respondents] . . . from: (1) taking any further steps to process the [residential development] [a]pplications for review and approval by City staff, (2) allowing any administrative proceedings to be conducted by the . . . [p]lanning [c]omission or [c]ity [c]ouncil . . . for approval, (3) making any further applications for subdivision approvals, zone changes, general plan amendments, variances, or other governmental permits that would allow a [prohibited] use of the Kmart Parcel . . ., or (4) selling or offering to sell, all or any portion of the . . . [p]arcel for residential use." Appellants also sought "compl[iance] with . . . the terms of the . . . [c]ovenant," by enjoining respondents from proceeding with the above described land use amendment efforts.
Respondents filed an anti-SLAPP motion. In April 2005, the trial court granted it, struck the complaint, and dismissed the action. It found respondents residential development applications and appearance before the planning commission constituted "act[s] in furtherance of free speech in connection with a public issue," and appellants did not show a probability of prevailing on the merits because "[t]he language of the [covenant] do[es] not expressly prohibit [respondents]. . . from petitioning . . . to re-zone or subdivide the land . . . ."
Appellants appealed that ruling. They conceded the trial court properly found respondents had established the first prong of the anti-SLAPP motion, but claimed they made a sufficient showing of a probability of prevailing on their claims. This court reversed. (Shea Homes Limited Partnership v. UDR/Pacific Los Alisos, LP, supra, G035827.) We agreed that equitable remedies are available to enforce restrictive covenants including efforts to apply for land use development approvals, appellants opposition to the anti-SLAPP motion contained evidence supporting the complaints allegations, and appellants did not have to establish they would necessarily succeed on their claims to prevail on the anti-SLAPP motion. (Id. at pp. 7-10.)
In May 2005, respondent UDR/Pacific Los Alisos LP filed the current action against appellants. The second amended complaint sought a declaration that Sheas acquisition of MVCs assets constituted a "conveyance of all of the `Benefitted Property," thereby resulting in a termination of the covenants use restriction, plus damages for appellants alleged "breach[] [of] the [c]ovenant by unreasonably withholding consent to the further subdivision or change in use of the [p]roperty."
Appellants filed a cross-complaint against respondents and two related entities, United Dominion Realty LP, and UDR Los Alisos, LLC. The cross-complaint sought specific performance of the covenants use restrictions, declaratory and injunctive relief, plus damages for respondents alleged repudiation of the covenant. In addition to the facts summarized above, the cross-complaint alleged that in August and September 2005, respondents received from Mission Viejos planning commission and city council "all of the discretionary approvals . . . need[ed] to proceed with the demolition of the former Kmart store . . . and the construction of the 260 dwelling units on the Kmart Parcel." They also alleged respondents presented a development schedule to the planning commission reflecting their intent to begin construction of the residential project in February 2006 and complete the sale of all units by October 2007.
The cross-complaint sought "a declaration . . . that the [c]ovenant is still in effect and entitles [appellants] to prevent [respondents] . . . from: (a) demolishing any existing improvements on [the] Kmart Parcel . . ., (b) undertaking any grading or construction activities at the [s]ite to build or install any new improvements relating to the [residential development project] . . ., (c) recording a new subdivision map for the [s]ite . . ., or (d) otherwise establishing or maintaining any prohibited residential uses on the Kmart Parcel" without obtaining Sheas "prior written agreement." Appellants also sought "specific performance in the form of a permanent injunction forbidding [respondents], without Sheas prior written consent, from" engaging in any of the foregoing activities. Finally, appellants sought damages, alleging "[t]he actions of [respondents] . . . constitute a repudiation and . . . breach of the [c]ovenant . . . ."
Respondents filed an anti-SLAPP motion to strike the cross-complaint. They argued "[t]he [c]ross-[c]omplaint contains the exact same public participation allegations set forth in the previously dismissed [c]omplaint," its "causes of action . . . are the same as those alleged in the [prior c]omplaint," and appellants "cannot establish a probability that they will prevail on these claims."
In January 2006, the trial court granted the anti-SLAPP motion. On the first prong, it found respondents "petitioning of the City" was "not merely incidental to" "the main thrust of [appellants] causes of action, . . . to prevent [respondents] from developing the property absent Sheas consent," and thus, appellants "cross-action seeks to prevent constitutionally protected activity . . . ." It also held appellants failed to establish a probability of success on the merits, concluding the covenant between MVC and Kmart did not run with the land and, in any event, had been extinguished by the merger of MVC and Shea.
DISCUSSION
1. Introduction
"A cause of action against a person arising from any act of that person in furtherance of the persons right of petition or free speech under the United States or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim." (§ 425.16, subd. (b)(1).)
"Resolution of an anti-SLAPP motion `requires the court to engage 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 defendants 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. [Citation.] 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. [Citation.]" (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 733.) "Whether section 425.16 applies and whether the plaintiff has shown a probability of prevailing are both reviewed independently on appeal. [Citations.]" (ComputerXpress, Inv. v. Jackson (2001) 93 Cal.App.4th 993, 999; see also Kolar v. Donahue, McIntosh & Hammerton (2006) 145 Cal.App.4th 1532, 1536.)
Appellants challenge the trial courts ruling on both grounds. Since we conclude the trial court erred in finding the causes of action in the cross-complaint arose from respondents exercise of their right of petition and free speech, we need not consider the remaining contentions. (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 80-81.)
2. The Focus of the Cross-complaints Causes of Action
Respondents argue "the main thrust of the . . . [c]ross-[c]omplaint" is "preventing [them] from engaging in" any petitioning activity "and thereby obtaining the necessary permits for developing the [p]roperty without [a]ppellants consent . . . ." (Fn. omitted.) Appellants concede their cross-complaint contains allegations concerning respondents petitioning activities before Mission Viejos planning commission and city council, but argue these allegations are merely "factual background," and they are not seeking to prevent or recover damages for those activities. They contend their causes of action are "aimed at preventing threatened breaches involving . . . demolition and construction activities and the actual recordation of a final subdivision map for the Kmart Parcel." (Fn. omitted.) We agree with appellants analysis.
"The anti-SLAPP statutes definitional focus is not the form of the plaintiffs cause of action but, rather, the defendants activity that gives rise to his or her asserted liability—and whether that activity constitutes protected speech or petitioning." (Navellier v. Sletten (2002) 29 Cal.4th 82, 92.) "[T]he statutory phrase `cause of action . . . arising from means simply that the defendants act underlying the plaintiffs 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 plaintiffs cause of action itself was based on an act in furtherance of the defendants right of petition or free speech. [Citations.]" (City of Cotati v. Cashman, supra, 29 Cal.4th at p. 78.)
Appellants original complaint sought to prevent respondents petitioning efforts that sought the governmental approvals necessary to redevelop the Kmart parcel. That activity was clearly covered by the anti-SLAPP statute. By the time we issued our decision reversing the dismissal of that action, respondents had obtained the requisite approvals from the city. The cross-complaint before us now seeks to establish the current viability of the covenants use restriction, plus prohibit respondents from recording a subdivision map, demolishing the existing improvements and constructing their proposed residential project. The latter activity is not protected by section 425.16.
Respondents nonetheless contend the pleadings causes of action "are founded" on activity covered by section 425.16. To support this claim, they cite appellants admission that the dispute underlying the cross-complaint began with their announced intent to proceed with the propertys residential development before the covenants 15-year term expired, the cross-complaints allegations concerning their "pushing forward" with the permit applications and appearances before the citys planning commission and city council, plus the fact these allegations of protected activity are incorporated into each count.
Initially, we note that footnote 2 of respondents brief admits "[t]he issue" in the prior appeal, "that the [c]ovenant prohibited [them] from petitioning the [c]ity to initiate the future subdivision" of the Kmart Parcel, "is not raised in this appeal, and has no bearing on the legal issues presented here." As appellants claim, this footnote appears to "conce[de]" the cross-complaint is not a SLAPP suit.
But even without this admission, the anti-SLAPP statute does not apply here. While the cross-complaint contains allegations referring to respondents efforts to obtain the discretionary approvals essential to proceed with their redevelopment project, without more, these allegations do not bring the cross-complaint within the scope of section 425.16. "[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" (Fox Searchlight Pictures, Inc. v. Paladino (2001) 89 Cal.App.4th 294, 308, fn. omitted), but neither can "a defendant in an ordinary private dispute . . . take advantage of the anti-SLAPP statute simply because the complaint contains some references to speech or petitioning activity by the defendant. [Citation.]" (Martinez v. Metabolife Internat., Inc. (2003) 113 Cal.App.4th 181, 188.) When the allegations of a complaint refer to protected activity, "it is the principal thrust or gravamen of the plaintiffs cause of action that determines whether the anti-SLAPP statute applies [citation] . . . ." (Ibid.)
The "principal thrust or gravamen" of appellants cross-complaint is respondents recordation of a final subdivision map, demolition of the existing improvements and construction of the residential project. The petitioning activity allegations merely reflect respondents have acquired the requisite governmental approvals for redevelopment of the parcel and declared their intent to immediately proceed with that development. (Martinez v. Metabolife Internat., Inc., supra, 113 Cal.App.4th at pp. 189-190 [allegations concerning product labeling and advertising in complaint seeking damages for injuries allegedly caused by the defendants products insufficient to establish anti-SLAPP motions threshold burden on fraud and breach of express warranty causes of action because "core of the . . . claim[s] is that the Product did not satisfy the warranties for the Product" and the defendant "knew the Product did not satisfy the warranties"].) Since "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 [do] not subject the cause of action to the anti-SLAPP statute." (Id. at p. 188.)
The fact appellants filed their cross-complaint after respondents publicly announced their intention to immediately proceed with residential project and that it was "in response to" that announcement does not establish the cross-complaint constitutes a SLAPP suit. (City of Cotati v. Cashman, supra, 29 Cal.4th at pp. 76-78; see also Santa Monica Rent Control Bd. v. Pearl Street, LLC (2003) 109 Cal.App.4th 1308, 1318 [action against landlord to compel compliance with rent control law; "while this suit may have been `triggered by defendants" "filing of paperwork[] with the Board," "it is not true that this suit is based on the filing of such papers"]; Gallimore v. State Farm Fire & Casualty Co. (2002) 102 Cal.App.4th 1388, 1399 [defendants protected activity may have "`triggered [the] plaintiffs action, but that action did not `arise from" the protected activity].)
Appellants incorporation of the petitioning activity allegations into each count of the cross-complaint also does not alter the result. In Kajima Engineering & Construction, Inc. v. City of Los Angeles (2002) 95 Cal.App.4th 921, the trial court struck one of 21 causes of action from a cross-complaint under the anti-SLAPP statute. The appellate court rejected the cross-defendants attempt to strike the remaining causes of action because a paragraph alleging protected activity contained in the stricken count had been incorporated by reference into all of the remaining counts. "Kajima points to no authority suggesting that the mere incorporation by reference of a cause of action struck under the anti-SLAPP statute taints the other causes of action that do not allege acts taken in furtherance of the right to petition or free speech. Complaints generally incorporate prior allegations into subsequent causes of action. [Citation.] Because of this general practice, to strike an entire complaint based simply on the incorporation of prior allegations would unnecessarily expand the anti-SLAPP statute beyond acts taken in furtherance of the right of petition or free speech." (Id. at pp. 931-932.) Respondents "contention confuses" their "allegedly wrongful acts with the evidence that [appellants] will need to prove such misconduct." (Gallimore v. State Farm Fire & Casualty Ins. Co., supra, 102 Cal.App.4th at p. 1399.)
It is true appellants allege respondents actions, including their petitioning activity, "constitute[d] a repudiation and anticipatory breach of the [c]ovenant," and that the third count seek damages because of respondents "various breaches." But the cross-complaints gravamen is injunctive relief to prohibit demolition of the current improvements and construction of the residential project prior to expiration of the use restrictions 15-year term. The only "injuries" specified in the cross-complaint are the effects stemming from permitting respondents to proceed with their residential development of the Kmart Parcel; the "significant departure from the Mission Viejo Master Plan," "frustrat[ion]" or "negat[ion]" of "the purpose and intent of the [c]ovenant"; plus the adverse "impact [on] the use and enjoyment of the apartment units that Madrid owns and operates," which include "noise, light, traffic, potential loss of tenants, [and] loss of additional commercial amenities."
Thus, we conclude the trial court erred in finding respondents satisfied the first prong of their anti-SLAPP motion.
DISPOSITION
The order is reversed. Appellants shall recover their costs on appeal.
We concur:
SILLS, P. J.
FYBEL, J.