Opinion
NOT TO BE PUBLISHED
Appeal from the Superior Court of San Bernardino County, No. CIVSS704579, John P. Wade, Judge.
Law Office of Thomas H. Edwards and Thomas H. Edwards for Plaintiff and Appellant.
Waxler Carner Brodsky, Barry Z. Brodsky, and Christopher L. Wong for Defendants and Respondents.
RICHLI, J.
Plaintiff Yuri Spiro, individually and as trustee of the Spiro Family Trust, (Spiro) owned lakeside residential property in the city of Lake Arrowhead. Defendant Kristen Johnston entered into an agreement to buy the property and deposited $50,000 into escrow. Johnston discovered defects in the property and refused to purchase the property. She demanded that Spiro return her deposit. Spiro maintained that Johnston had forfeited her deposit according to the agreement. Spiro terminated the contract with Johnston and entered into a contract with a third party to buy the property. Johnston’s attorneys, defendants Bradley E. Lundgren (Lundgren) and Allen and Kimbell, LLP. (A&K), sent a letter to the escrow company that opened the new escrow advising it that Johnston might have superior title to the property should the third party buyer purchase it. The third party buyer terminated his deal with Spiro, and Spiro eventually sold the property to another buyer for a reduced price.
Spiro filed a lawsuit against Johnston and A&K for interference with a contractual relationship and slander of title and against Johnston for breach of contract. Johnston settled with Spiro during the pendency of this appeal, and she has been dismissed. Spiro appeals from the trial court’s order granting A&K’s and Lundgren’s special motion to strike the complaint (SLAPP motion) pursuant to Code of Civil Procedure section 425.16 and the resulting dismissal of his lawsuit against A&K and Lundgren. Spiro also contests the award of attorney fees and costs to A&K and Lundgren.
SLAPP is an acronym for “strategic lawsuit against public participation.” (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 57.)
All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
Spiro appealed separately from the order granting attorney fees and costs in case No. E048735. On our own motion, we consolidated the two appeals.
We conclude the trial court properly granted the motion to strike under section 425.16. Further, based on the deferential review standard for the award of attorney fees, we affirm the trial court’s award of attorney fees in this case. We remand for the trial court to consider the costs awarded within the meaning of section 1033.5 and for determining the awarding of fees and costs to A&K and Lundgren on appeal.
I
PROCEDURAL BACKGROUND
Johnston signed a purchase and sale agreement (the agreement) on June 16, 2006, to purchase property owned by Spiro located at 28907 North Shore Road in Lake Arrowhead (the property) for the price of $1,837,500, and the agreement was eventually terminated as discussed, post. On August 6, 2007, Spiro filed a petition to compel arbitration against Johnston, A&K, and Lundgren seeking to enforce an arbitration clause in the agreement. The trial court denied the petition as to A&K and Lundgren.
On August 11, 2008, Spiro filed his complaint against Johnston, A&K, and Lundgren (the complaint). The complaint alleged against Johnston a cause of action for breach of contract and against Johnston, A&K, and Lundgren causes of action for intentional interference with contractual relationship and slander of title. The complaint also demanded costs and attorney fees.
Lundgren and A&K filed a SLAPP motion to dismiss the complaint. Spiro filed opposition to the SLAPP motion. Johnston also filed a SLAPP motion on the slander of title and interference with contractual relationship causes of action.
The trial court granted A&K’s and Lundgren’s SLAPP motion and dismissed the complaint as to them. In addition, the trial court awarded attorney fees and costs to them pursuant to section 425.16, subdivision (c) in an amount to be determined by a proper noticed motion. Johnston’s SLAPP motion was also granted on the two causes of action on which it was brought.
A&K and Lundgren filed a memorandum of costs. They also filed a motion for attorney fees and costs pursuant to section 425.16, subdivision (c) in the amount of $36,754.47. Spiro filed a motion to tax costs. Spiro’s motion to tax costs was denied. A&K and Lundgren were granted their request of $36,754.47 for attorney fees and costs.
Spiro appeals the grant of A&K’s and Lundgren’s SLAPP motion under section 904.1 subdivision (a)(13). Johnston settled with Spiro, and she was dismissed from the instant appeal by this court’s order dated November 25, 2009.
II
FACTUAL BACKGROUND
The following facts are taken from the declarations submitted in support of and in opposition to A&K’s and Lundgren’s SLAPP motion. When necessary, we also refer to the exhibits included with the SLAPP motion and opposition to which the parties have no dispute.
On June 16, 2006, Johnston entered into the agreement to buy the property. Johnston deposited $50,000 into escrow, which was opened at Lake Ridge Escrow. According to the agreement, Johnston had until July 3, 2006, to conduct her due diligence and remove all of her contingencies. Once the contingencies were removed, Johnston had to purchase the property or forfeit the $50,000 deposit. Johnston removed all contingencies on July 3, 2006, excepting that seller was to ensure all plumbing was in working order prior to close of escrow.
On July 5, 2006, a letter was sent to Lake Ridge Escrow from Johnston’s broker cancelling the agreement due to her claim that she discovered several defects in the property that Spiro had not disclosed. Johnston demanded the return of her $50,000 deposit. Spiro refused to release the deposit because he considered the cancellation untimely, as she had already removed the contingencies. The deadline for the close of escrow (July 31, 2006) passed without Johnston depositing the remaining funds to buy the property. On August 4, 2006, Spiro received a letter from an attorney representing Johnston’s broker demanding that her deposit be returned; if it was not returned, she would file a lawsuit.
Spiro hired attorney Scott L. Whitman. On August 3, 2006, Whitman sent a letter to Johnston’s broker agreeing to fix the plumbing, complete a pest control inspection, and continue with the sale of the property to Johnston. Whitman demanded that Johnston fulfill her obligations under the agreement and proceed with the purchase of the property. If she did not fulfill her obligations under the agreement, Spiro would retain the $50,000 deposit as liquidated damages.
A&K and Lundgren were hired to represent Johnston. Lundgren sent a letter to Whitman dated August 11, 2006. In that letter, Lundgren stated that it was Johnston’s position that she had terminated the agreement and was no longer obligated under it. Johnston rejected that she was required to close escrow. The letter also outlined a counter offer that, if Spiro agreed to the conditions (which included a reduction in the purchase price), Johnston would purchase the property. Spiro had until August 16, 2006, to accept this counter offer; if he did not, Lundgren demanded that Johnston’s deposit be returned.
Whitman rejected the counter offer at Spiro’s request and again demanded the $50,000 deposit due to Johnston’s untimely and unilateral cancellation of the agreement. Whitman contended that the dispute was required to be submitted to mediation. Whitman also informed Lundgren, A&K, and Johnston that it was terminating the agreement and keeping the $50,000.
Lundgren responded that Johnston could cancel the agreement due to Spiro’s failure to disclose defects in the property and rejected that Spiro was entitled to the $50,000 deposit.
On August 31, 2006, Spiro sent a letter cancelling the agreement to Lake Ridge Escrow. Spiro put the property back on the market and found a third party buyer, Dana Taschner. Taschner entered into a written agreement to buy the property on September 8, 2006, for $1,855,000. Escrow was opened at Pickford Escrow Company.
On September 12, 2006, Lundgren and A&K sent the letter that gave rise to the causes of action in this case to Pickford Escrow Company. They stated that they represented Johnston, who had previously entered into an agreement to buy the property. The letter additionally stated, “Ms. Johnston recently received information concerning the existence of another escrow pending with Pickford Escrow company (“Pickford”) whereby the [property] would be sold to an as yet unidentified third party. It is Ms. Johnston’s belief that her interests in the property under the [agreement] or otherwise are superior to those of such third party and that, if such third party completes the purchase and closes escrow, he or she would take title to the property subject to Ms. Johnston’s interests. [¶] This letter shall serve as Ms. Johnston’s formal notice to Pickford and such third party buyer of Ms. Johnston’s claimed interest in the property. Ms. Johnston respectfully requests that Pickford provide a copy of this letter to such third party buyer.”
Lundgren testified that, “[a]t the time that my September 12, 2006 letter was sent, ... litigation was seriously contemplated in good faith. I cannot attest to any further specifics without violating the attorney-client privilege.”
The following day, Whitman sent a letter to Lundgren and A&K demanding withdrawal of the letter. Whitman indicated that there was no contract to purchase the property, as Johnston had terminated the agreement. Whitman threatened litigation against A&K and Lundgren if the letter was not withdrawn. Spiro testified that at no time prior to this letter had A&K, Lundgren, or Johnston demanded specific performance on the agreement. Whitman also testified that at no time prior to the receipt of the September 12 letter had he been under the impression that Johnston was seeking specific performance on the agreement, because she had unilaterally terminated the agreement.
On September 13, 2006, Taschner cancelled the purchase of the property due to the problems with title. However, Taschner was willing to revisit purchasing the property if title was cleared by Spiro.
On September 20, 2006, Lundgren and A&K sent a letter to Whitman setting forth Johnston’s rights to demand specific performance on the agreement. A&K and Lundgren offered to settle the dispute with Spiro if he returned the $50,000 plus fees for escrow termination or continued with purchase of the property under certain terms. On September 29, 2006, a letter was sent from A&K to Whitman indicating that Johnston was no longer seeking specific performance of the agreement and was just seeking damages.
Spiro eventually sold the property for $239,000 less than the net sale price to Taschner.
Spiro filed the complaint on August 11, 2008, alleging the three causes of action as outlined, ante. In response, A&K and Lundgren filed a demurrer to the complaint, a motion to strike under Code of Civil Procedure sections 435 and 436, and the SLAPP motion to strike the allegations. A&K and Lundgren argued in the SLAPP motion that (1) they only owned a duty of care to Johnston, not to Spiro; (2) Spiro’s claims would require them to divulge attorney-client privileged communications; (3) the letter that gave rise to the claim is absolutely privileged pursuant to Civil Code section 47 and cannot form the basis of Spiro’s claims; and (4) the only derivative claims permitted against an adversary’s attorneys is malicious prosecution, which Spiro did not allege.
The demurrer, motion to strike, and SLAPP motion were heard together on November 20, 2008. Spiro argued that, at the time A&K and Lundgren wrote the September 12 letter, there was no good faith belief that there was a legally viable claim to purchase the property and that litigation was seriously contemplated. Spiro contested that the letter was protected speech under section 425.16. They had claimed throughout the process that the agreement had been terminated. A&K and Lundgren argued that since Spiro had not returned the $50,000 deposit, Johnston could proceed with an action for specific performance. The letter was protected activity in anticipation of litigation and was privileged. Spiro responded that Johnston had already terminated the contract. The trial court indicated that it would agree with Spiro if the $50,000 had been refunded.
The trial court overruled the evidentiary objections made by Spiro to the declarations filed in support of the SLAPP motion. It then found, “As to the merits of the SLAPP motion, the Court finds that the issue here centers around the so-called slander letter of September 12th, 2006. [¶] The Court further finds that the September 12th, 2006 letter, which forms the basis for the second and third cause[s] of action, does fall within the protections of the statute as protected speech.”
The trial court went on to address whether there was a reasonable probability that Spiro would have success in the litigation. It noted that the letter was “a classic case of an attorney’s assertion of rights on behalf of his client. Such assertion should not form the basis of lawsuits against attorneys.” The trial court also relied on the declaration in support of the SLAPP motion that litigation was contemplated by Johnston, and there was a legitimate dispute over the return of Johnston’s deposit. The trial court found the communication was privileged under Civil Code section 47.
The trial court granted the SLAPP motion. The complaint was dismissed as to A&K and Lundgren. The trial court ruled that defendants’ attorney fees and costs under section 425.16, subdivision (c) would be granted upon a proper motion. The demurrer and motions to strike were rendered moot. We will discuss the award of attorney fees and costs in part IV, post.
A hearing on Johnston’s SLAPP motion was conducted on January 29, 2009, and it was granted as to the causes of action of slander of title and interference with contractual relationship.
III
RULING ON SLAPP MOTION
Spiro contends the trial court erred by granting the SLAPP motion filed by A&K and Lundgren, as the offending letter that gave rise to the causes of action for slander of title and interference with contractual relationship was not protected activity as defined under Code of Civil Procedure section 425.16. Further, the letter was not privileged under Civil Code section 47, subdivision (b). As such, there was ample evidence to show there was a reasonable probability that Spiro would prevail on his claims if his lawsuit continued.
A. Standard of Review
“Review of an order granting or denying a motion to strike under section 425.16 is de novo.” (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 269, fn. 3; see also Gallimore v. State Farm Fire & Casualty Ins. Co. (2002) 102 Cal.App.4th 1388, 1396 (Gallimore) [“[w]hether section 425.16 applies and whether the plaintiff has shown a probability of prevailing are both legal questions which we review independently on appeal”].) “However, we neither ‘weigh credibility [nor] compare the weight of the evidence. Rather, [we] accept as true the evidence favorable to the plaintiff [citation] and evaluate the defendant’s evidence only to determine if it has defeated that submitted by the plaintiff as a matter of law.’ [Citation.]” (Soukup, at p. 269, fn. 3.) Section 425.16 “shall be construed broadly.” (§ 425.16, subd. (a).)
B. Section 425.16’s Application to the September 12 Letter Giving Rise to the Causes of Action of Slander of Title and Interference with Contractual Relationship
“In 1992, the Legislature enacted section 425.16 in an effort to curtail lawsuits brought primarily ‘to chill the valid exercise of... freedom of speech and petition for redress of grievances’ and ‘to encourage continued participation in matters of public significance.’ [Citation.] The section authorizes a special motion to strike ‘[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....’ [Citation.] The goal is to eliminate meritless or retaliatory litigation at an early stage of the proceedings. [Citations.] The statute directs the trial court to grant the 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.’ [Citation.] (Gallimore, supra, 102 Cal.App.4th at pp. 1395-1396, fn. omitted.)
“The statutory language establishes a two-part test. First, it must be determined whether the plaintiff’s cause of action arose from acts by the defendant in furtherance of the defendant’s right of petition or free speech in connection with a public issue. [Citation.]” (Gallimore, supra, 102 Cal.App.4th at p. 1396; see also City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78.)
In Chavez v. Mendoza (2001) 94 Cal.App.4th 1083, 1089, the court held that “a court must generally presume the validity of the claimed constitutional right in the first step of the anti-SLAPP analysis, and then permit the parties to address the issue in the second step of the analysis, if necessary.”
“[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 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 fits one of the categories spelled out in section 425.16, subdivision (e)....’ [Citations.]” (City of Cotati v. Cashman, supra, 29 Cal.4th at p. 79.) Under section 425.16, subdivision (e), an act in furtherance of a person’s right of petition or free speech includes, in pertinent part: “(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....”
“‘Any act’ includes communicative conduct such as filing, funding, and prosecution of a civil action. [Citation.] This includes qualifying acts committed by attorneys in representing clients in litigation.” (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1056.) In Kashian v. Harriman (2002) 98 Cal.App.4th 892, 908, the court recognized that “a fairly expansive view of what constitutes litigation-related activities within the scope of section 425.16” has been adopted. The protection extends to communications between private parties preliminary to the institution of an official proceeding. (Kolar v. Donahue, McIntosh & Hammerton (2006) 145 Cal.App.4th 1532, 1537.)
If a statement is (1) related to substantive issues in the litigation and is directed to persons interested in the litigation, and (2) the litigation itself is “‘“contemplated in good faith and under serious consideration, ”’” it is protected. (Neville v. Chudacoff (2008) 160 Cal.App.4th 1255, 1268.)
Spiro’s causes of action for interference with contractual relationship and slander of title are based on the letter written to Pickford Escrow Company on September 12 warning a third party buyer of the property that Johnston might have superior title to the property. Hence, we must first decide under the first step of the SLAPP analysis if the letter was protected activity under section 425.16.
This case is similar to Neville. There an employee was fired from his job for purportedly misappropriating client lists and soliciting employer’s customers to start a competing business in violation of his employment contract. (Neville v. Chudacoff, supra, 160 Cal.App.4th at p. 1259.) A letter was sent by the employer’s attorney to the employer’s customers at the employer’s direction advising the customers not to do business with the former employee so as to avoid any involvement in litigation that might ensue between the employer and former employee over his actions. (Id. at pp. 1259-1260.) The letter expressly stated that the former employee had violated his employment agreement and that the employer had notified him of the breach and intended to aggressively pursue its remedies. (Id. at p. 1260.) The employer filed a complaint against the employee for several causes of action. The employee filed a cross-complaint, alleging defamation due to the letter sent by employer’s attorney. The employer filed a SLAPP motion seeking to dismiss the defamation action claiming the letter was protected activity. (Ibid.) The trial court found the letter was protected activity and dismissed the cause of action. (Id. at p. 1261.)
On appeal, the appellate court first concluded that the letter related directly to the employer’s claims of breach of contract and misappropriated trade secrets. The letter was directed to the employer’s customers, all of whom conceivably would have an interest in the potential litigation. (Neville v. Chudacoff, supra, 160 Cal.App.4th at pp. 1267-1268.) Further, the evidence before the trial court showed there was a threat of impending litigation. (Id. at p. 1269.) Under these circumstances, the court concluded that the employer “satisfied his threshold burden to show that his conduct fell within the ambit of section 425.16, subdivision (e)(2).” (Id. at p. 1270.)
At the time that the letter was written in this case, the issue of Johnston receiving her $50,000 under the agreement was still in dispute. Although she had terminated the contract and requested her money back on July 5, 2006, as late as August 11, 2006, Johnston had made a counter offer agreeing to still purchase the property if Spiro would meet certain conditions. Spiro rejected that counter offer and demanded to keep the $50,000. It was after this that A&K and Lundgren sent the letter to Pickford Escrow Company advising the escrow company and any third party purchaser that there was an ongoing dispute regarding Johnston’s purchase of the property and that she may have superior title to the property.
Here, Lundgren presented testimony that, when he wrote the letter on September 16, he had a good faith belief that he would file breach of contract action against Spiro. We accept his statement as true. (Soukup v. Law Offices of Herbert Hafif, supra, 39 Cal.4th at p. 269, fn. 3.) Moreover, as in Neville, A&K and Lundgren sent a letter to the third party buyer, who certainly had an interest in litigation on the property.
We do not read section 425.16 as narrowly as Spiro. According to Spiro, the letter is protected only if the statements are connected to the specific remedies to be pursued in litigation. He claims that Johnston only anticipated filing a lawsuit for rescission and damages, not specific performance, and therefore the statements made in the letter that Johnston could have superior title could not be protected.
“[I]t is the principal thrust or gravamen of the plaintiff’s cause of action that determines whether the anti-SLAPP statute applies [citation]....” (Martinez v. Metabolife Internat., Inc. (2003) 113 Cal.App.4th 181, 188; see also Wang v. Wal-Mart Real Estate Business Trust (2007) 153 Cal.App.4th 790, 802 [applicability of SLAPP statute determined by “principal thrust or predominant nature of the complaint”].) “[A] court considering a special motion to strike must examine the allegedly wrongful conduct itself, without particular heed to the form of action within which it has been framed. [Citations.]” (Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP (2005) 133 Cal.App.4th 658, 671.)
Here, the gravamen or thrust of Spiro’s claim against A&K and Lundgren was that they slandered the title to the Lake Arrowhead property and interfered with a contractual relationship. However, Johnston, whom A&K and Lundgren represented, alleged that Spiro had failed to disclose defects in the property as required by the agreement and alleged she was entitled to the return of her $50,000 deposit. Hence, at the time the September 12 letter was sent to Pickford Escrow, A&K and Lundgren were anticipating potential litigation on the agreement, either to enforce the agreement, i.e., seek specific performance, or seek damages. (See Karapetian v. Carolan (1948) 83 Cal.App.2d 344, 355 [“[T]he notice of rescission should not be held to be an ‘irrevocable’ election until it is made ‘effectual’ by the innocent party receiving back the consideration with which he has parted. Where the fraudulent party prevents that from happening, either by parting with the property or by refusing to disgorge his ill-gotten gains, or otherwise, and the innocent party if forced to an action, he should be permitted, if he so desires, to then affirm the contract and sue for damages or to disaffirm and sue for rescission.”].) Either way, the September 12th letter clearly involved potential defenses to Spiro’s upcoming litigation. At the time the September 12 letter was written, the letter was protected activity.
Here, everyone was “lawyered up” by the time the letter was sent to Pickford Escrow Company: Johnston had hired A&K and Lundgren, and Spiro had hired Whitman. Prior to the September 12 letter, the parties had exchanged several letters that disputed who had the right to terminate the contract and that mediation/litigation was imminent if it was not resolved. A&K and Lundgren had presented a counter offer to Spiro’s attorney wherein Johnston would still purchase the property from Spiro if certain conditions were met. Spiro refused the counter offer and demanded the $50,000. It was conceivable at the time the letter to Pickford Escrow Company was written that Johnston contemplated a suit for specific performance and/or rescission of the contract. The September 12 letter clearly was written in contemplation of litigation and related to the issues to be resolved by the dispute. This is enough to satisfy the requisite conditions: the letter related to substantive issues in the litigation, and the litigation itself was contemplated in good faith and under serious consideration. (Neville v. Chudacoff, supra, 160 Cal.App.4th at p. 1268.) Because we conclude that Spiro’s claims are based on A&K’s and Lundgren’s protected petitioning activity, the burden shifts to Spiro under section 425.16 to make a prima facie showing that his claims have merit.
C. Spiro’s Reasonable Probability of Success on His Claims at Trial
“Assuming this threshold condition is satisfied, it must then be determined that the plaintiff has established a reasonable probability of success on his or her claims at trial.” (Gallimore, supra, 102 Cal.App.4th at p. 1396.)
In order to establish a reasonable probability of success on his claims for purposes of section 425.16, subdivision (b)(1), “‘the plaintiff “must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited.”’ [Citation.]” (Navellier v. Sletten (2002) 29 Cal.4th 82, 88-89.) This burden “has been likened to that in opposing a motion for nonsuit or a motion for summary judgment.” (Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP, supra, 133 Cal.App.4th at p. 675.) “A plaintiff is not required ‘to prove the specified claim to the trial court’; rather, so as to not deprive the plaintiff of a jury trial, the appropriate inquiry is whether the plaintiff has stated and substantiated a legally sufficient claim. [Citation.]” (Mann v. Quality Old Time Service, Inc. (2004) 120 Cal.App.4th 90, 105.)
Spiro contends there was ample evidence presented to prove that A&K and Lundgren slandered his title and intentionally interfered with his contractual relationship with Taschner. He contends that the SLAPP motion therefore should have been denied “unless the evidence in the record is sufficient to establish as a matter of law that the letter was privileged under [Civil Code section] 47(b).” A&K and Lundgren claim that the alleged conduct, i.e., the September 12 letter, cannot provide the basis for liability because it is protected by the litigation privilege of Civil Code section 47, subdivision (b), and hence Spiro could not show that he had a reasonable probability of prevailing on his claims.
Since we conclude that the letter was privileged, we need not address whether the evidence, even had it been admitted, was ample to show Spiro would prevail on his claims.
“The general principles governing the application of the litigation privilege are familiar. The privilege applies to any publication or other communication required or permitted by law in the course of a judicial or quasi-judicial proceeding to achieve the objects of the litigation, whether or not the publication is made in the courtroom or in court pleadings, and whether or not any function of the court or its officers is involved. [Citations.]” (Rothman v. Jackson (1996) 49 Cal.App.4th 1134, 1140.)
The litigation privilege furthers several policies, including “‘encouraging attorneys to zealously protect their clients’ interests.’” (Home Ins. Co. v. Zurich Ins. Co. (2002) 96 Cal.App.4th 17, 23.) “To achieve this purpose of curtailing derivative lawsuits, the courts have interpreted the litigation privilege broadly. [Citation.]” (Feldman v. 1100 Park Lane Associates (2008) 160 Cal.App.4th 1467, 1485.)
Whether a statement falls with the scope of the litigation privilege “is an issue of law, and not fact.” (Nguyen v. Proton Technology Corp. (1999) 69 Cal.App.4th 140, 147.) If A&K’s and Lundgren’s letter, which is the only evidence giving rise to the causes of action, is subject to the litigation privilege, Spiro is unable to show probability of prevailing on his causes of action. (GeneThera, Inc. v. Troy & Gould Professional Corp. (2009) 171 Cal.App.4th 901, 909-910.) “Any doubt as to whether the privilege applies is resolved in favor of applying it. [Citations.]” (Adams v. Superior Court (1992) 2 Cal.App.4th 521, 529.)
We believe that the litigation privilege applies to the September 12 letter. A&K and Lundgren provided evidence that they contemplated litigation against Spiro at the time they wrote the September 12 letter. The letter was clearly made in anticipation of litigation between Spiro and Johnston. Acting in the interests of Johnston, A&K and Lundgren informed Taschner that they were claiming an interest in the property, and if he proceeded with the purchase of the property, he might take it subject to Johnston’s interest or have no title at all. This is the type of activity protecting their client’s interests in having a more difficult time getting possession of the property if a third party purchased it that the policy of the litigation privilege is designed to protect. Further, the September 12 letter was clearly connected to the potential litigation.
Spiro claims that there was no lawsuit pending, and Johnston had no claim for specific performance, at the time the letter was sent. The letter was sent in order to get Spiro to settle, not in anticipation of litigation. Further, he claims Lundgren’s conclusory statement in his declaration that he contemplated litigation does not support that the letter was privileged. Spiro again argues there was no connection between the lawsuit A&K and Lundgren actually contemplated (rescission and damages) and the claim of superior title that would require a lawsuit for specific performance.
Spiro’s claims are based on mere speculation. Spiro has provided nothing to this court that supports that A&K’s and Lundgren’s declaration that they contemplated litigation was false or misleading. Moreover, for a prelitigation communication to be privileged, it need only be shown that it relates to the litigation that is contemplated in good faith and under serious consideration. (Action Apartment Assn., Inc. v. City of Santa Monica (2007) 41 Cal.4th 1232, 1251.) We have found that litigation was contemplated. Finally, as outlined, ante, there was a dispute over the agreement, and there were numerous potential resolutions of the action, including specific performance. Since the property had not been sold and Spiro had not returned the $50,000, conceivably Johnston could have filed for specific performance despite her earlier rescission based on Spiro’s alleged fraud in representing the condition of the property. (Karapetian v. Carolan, supra, 83 Cal.App.2d at p. 355.)
Spiro has not shown a probability of prevailing on his causes of action against A&K and Lundgren. (See Silberg v. Anderson (1990) 50 Cal.3d 205, 212, 215 [litigation privilege immunizes from liability for all torts other than malicious prosecution].) As such, we affirm the trial court’s granting of A&K’s and Lundgren’s SLAPP motion and dismissal of the complaint.
IV
ATTORNEY FEES AND COSTS
Spiro claims that, should we uphold the trial court’s ruling, the trial court erred by granting all of A&K’s and Lundgren’s attorney fees, as they were only entitled to fees related to the filing of the SLAPP motion. He further argues the costs awarded were improper.
A. Additional Factual Background
At the time the trial court denied the SLAPP motion, it indicated that it would award attorney fees and costs pursuant to section 425.16, subdivision (c) to A&K and Lundgren upon a proper noticed motion.
On or about December 5, 2008, A&K and Lundgren filed a memorandum of costs. In that memorandum of costs, they asked for $760 for filing and motion fees and $1,807.98 for “Other, ” which included “Attorney Service Charges for filing documents with the Court, ” for a total of $2,567.98. The request included “anticipated” costs for recovering attorney fees. Spiro filed a motion to tax costs on February 18, 2009, arguing that the costs detailed in the memorandum of costs were not allowable under section 1033.5 and were excessive.
Thereafter, in February 2009, A&K and Lundgren filed their motion for attorney fees pursuant to section 425.16, subdivision (c). In that motion, they complained that they were forced not only to file the SLAPP motion under section 425.16, but also to oppose the petition to compel arbitration and to file a demurrer and a motion to strike. A&K and Lundgren claimed that the complaint and the petition to compel arbitration were frivolous and that they were entitled to attorney fees and costs for both. The fees and costs incurred for the arbitration proceeding were $10,420, and the motion to strike fees and costs amounted to $26,334.47.
A&K and Lundgren argued that section 425.16, subdivision (c) should be interpreted broadly to include all fees and cost incurred to extricate themselves from a baseless lawsuit. They also argued they were entitled to all attorney fees and costs associated with bringing the motion to recover costs.
A declaration by one of the attorneys, Barry Z. Brodsky, who represented A&K and Lundgren, was submitted. He declared that attorney fees in the amount of $1,281 were incurred in defending the arbitration proceeding, and $1,935 in fees were incurred relating to the SLAPP suit. Brodsky also detailed the costs incurred: messenger fees for filing the SLAPP motion, the demurrer, and other documents totaling $2,209.75; Federal Express fees in the amount of $27.51; photocopying in the amount of $1,532.44; and computerized research in the amount of $717.77.
Another attorney, Christopher L. Wong, declared that A&K and Lundgren incurred attorney fees for the defense of the petition to compel arbitration in the amount of $9,139. As for the SLAPP suit and other actions, including the demurrer preparation and motion to strike, Wong billed $19,912.
The total amount requested was $3,216 for Brodsky’s attorney fees, $29,051 in fees for Wong’s work, and $4,487.47 in costs, for a total of $36,754.47.
Spiro filed opposition to the motion for attorney fees. He claimed that A&K and Lundgren should only be awarded attorney fees associated with filing the SLAPP suit. Spiro recognized that section 425.16, subdivision (c) was ambiguous as to what fees and costs were to be awarded to a prevailing party but argued that it should be only those associated with the SLAPP suit itself. Further, the explanations of time submitted by Wong and Brodsky did not adequately inform the trial court as to what hours were spent solely on the preparation of the SLAPP suit, and therefore no fees should be awarded. In the alternative, Spiro claimed the attorney fees should be awarded for no more than $9,004.50 that related to the SLAPP suit, supported by a fees and cost analysis provided by attorney Thomas H. Edwards.
Spiro also claimed that A&K and Lundgren were not entitled to additional costs not included in the memorandum of costs. Further, the additional costs were not allowed under section 1035.5, subdivision (a). The messenger costs should not be awarded, as A&K and Lundgren had not made the adequate showing they were reasonably necessary are required by section 1033.5, subdivision (c)(2).
A&K and Lundgren made evidentiary objections to the calculation of attorney fees and costs by Edwards.
The trial court heard the motion for attorneys fees and costs on April 2, 2009. After hearing brief argument, the trial court ruled that the objections to Edwards’s declaration were sustained. The trial court awarded pursuant to section 425.16, subdivision (c) the amount of $36,754.47 to A&K and Lundgren. Spiro’s motion to tax costs was denied.
B. Attorney fees Pursuant to Section 425.16, subdivision (c)
Relying on Lafayette Morehouse, Inc. v. Chronicle Publishing Co. (1995) 39 Cal.App.4th 1379, 1383, Spiro contends that a prevailing defendant under section 425.16 can only recover attorney fees and costs incurred in preparing the SLAPP motion, not fees and costs related to work on the entirety of the lawsuit. In response, A&K and Lundgren claim that section 425.16 should be construed broadly and include all fees and costs incurred to be extricated from a frivolous lawsuit.
Spiro fails to set forth the standard for the review the award of attorney fees and costs under section 425.16. The award of fees and costs is reviewed under the abuse of discretion standard. (Visher v. City of Malibu (2005) 126 Cal.App.4th 364, 368.) A trial court’s exercise of discretion is abused only when its ruling exceeds the “‘bounds of reason.’” (Dove Audio, Inc. v. Rosenfeld, Meyer & Susman (1996) 47 Cal.App.4th 777, 785.)
After Lafayette was decided, the California Legislature amended the SLAPP statute in 1997, mandating that the statute be “‘construed broadly.’” (See Briggs v. Eden Council for Hope and Opportunity (1999) 19 Cal.4th 1106, 1119.) Subsequent courts have concluded such amendment included that awarding attorneys fees and costs requires that it be construed broadly. (Rosenaur v. Scherer (2001) 88 Cal.App.4th 260, 285-286.) In Wanland v. Law Offices of Mastagni, Holstedt & Chiurazzi (2006) 141 Cal.App.4th 15, the court addressed whether the defendants could seek their attorney fees and costs incurred for opposing a stay of an award of attorney fees under section 425.16, subdivision (c). The appellate court concluded that to deny such fees would result in “the protection provided to a defendant who is brought into court for exercising free speech and petition rights would be compromised. This would be inconsistent with the Legislature’s directive that section 425.16 be broadly construed to encourage continued participation in free speech and petition activities. [Citations.] In our view, the full protection of a defendant’s rights requires an award of attorney fees for litigating the adequacy of the plaintiff’s undertaking.” (Wanland, at p. 22.)
Defendant relies on several other cases that have followed Lafayette despite the amendment to section 425.16. In S.B. Beach Properties v. Berti (2006) 39 Cal.4th 374, 378, 381, 383 and Chambers v. Miller (2006) 140 Cal.App.4th 821, 823, 826, both involving dismissal of cases prior to a SLAPP motion being filed and the right to attorney fees for a SLAPP motion that was never prepared, the reviewing courts referred to Lafayette as holding that the fee provision in section 425.16 applies only to the motion to strike and not to the entire action. Neither case addressed the actual award of fees. In Platypus Wear, Inc. v. Goldberg (2008) 166 Cal.App.4th 772, 785, a case involving the request to file a late SLAPP motion, the appellate court referred to an illusory promise by the defendant to limit its attorney fees to those incurred in litigation of the SLAPP motion and referred to Lafayette as so limiting attorney fees, but it did not address which fees were recoverable, as that was not an issue in the case. Additionally, in Paul for Council v. Hanyecz (2001) 85 Cal.App.4th 1356, 1362, fn. 4, although the court referred to Lafayette as holding that only attorney fees incurred in preparing the motion to strike under section 425.16 were recoverable, it did not address the award of attorney fees and what a defendant is entitled to recover when he or she successfully defends a lawsuit. Finally, Christian Research Institute v. Alnor (2008) 165 Cal.App.4th 1315 did involve an attack on attorney fees granted on a successful SLAPP motion. (Id. at p. 1318.) However, the only issue was a reduction of fees expended on the SLAPP motion (the only action litigated), and therefore it did not address the issue involved in this case. (Id. at pp. 1319-1320.)
Both parties presented these arguments to the trial court below regarding the scope of attorney fees under section 425.16, subdivision (c). Based on the foregoing, the authority is conflicting. Some cases seemingly limit the award of attorney fees strictly to the preparation and hearings on the SLAPP motion itself. However, other cases appear to expand the definition to include those actions required to defend against the baseless lawsuit.
Here, the only causes of action against A&K and Lundgren were dismissed by the SLAPP motion. A&K and Lundgren make a persuasive argument that, had they not been successful on their opposition to the petition to compel arbitration, they would have been unable to bring the SLAPP motion upon which they were able to get the entire lawsuit against them dismissed. The opposition to the petition to compel arbitration was an integral party of bringing the SLAPP motion.
We also note that a court is not required to allocate attorney fees for work on issues or claims that are so intertwined that it is impossible to separate them. (Akins v. Enterprise Rent-A-Car Co. (2000) 79 Cal.App.4th 1127, 1133.) In this case, the demurrer, motion to strike, and SLAPP motion were so intertwined that court was not required to allocate attorney fees among them. We have reviewed the issues raised in the demurrer and motion to strike and note that each involve issues and facts similar to the SLAPP motion.
Under a different standard of review, we may have found the attorney fees incurred in opposing the petition to compel arbitration did not qualify as fees incurred in bringing the SLAPP motion even under a broadly construed section 425.16. However, based on authority before the trial court, we cannot say that its decision to grant all of the attorneys fees incurred in eventually getting the complaint dismissed exceeded all “‘bounds of reason.’” (Dove Audio, Inc. v. Rosenfeld, Meyer & Susman, supra, 47 Cal.App.4th at p. 785.)
Based on the foregoing, we affirm the trial court’s award of attorney fees under section 425.16, subdivision (c).
We note that Spiro made other arguments in the trial court regarding the adequacy of the documentation of the attorney fees. He does not appear to raise such arguments on appeal.
C. Award of Costs
Spiro also contends that the trial court abused its discretion by awarding costs not allowable under section 1035.5, subdivisions (a) and (b). Spiro also claims that any of the costs not included in the memorandum of costs filed by A&K and Lundgren in addition to their noticed motion for fees and costs under section 425.16 should not be awarded, as they were required to be included in a noticed memorandum of costs by section 1034 and California Rules of Court, rule 3.1700.
“‘It is axiomatic that the right to recover costs is purely statutory, and, in the absence of an authorizing statute, no costs can be recovered by either party.’” (Davis v. KGO-T.V., Inc. (1998) 17 Cal.4th 436, 439, superseded by statute on other grounds as stated in Anthony v. City of Los Angeles (2008) 166 Cal.App.4th 1011, 1017.) “[T]he applicable statute defines the extent of a party’s right to recover costs.” (Benson v. Kwikset Corp. (2007) 152 Cal.App.4th 1254, 1279.) Under section 1032, “the party who prevails in any action or proceeding ‘is entitled as a matter of right to recover costs....’ [Citation.] Section 1033.5, subdivision (a), contains a list of items allowed as recoverable costs.... Subdivision (b) contains a list of items that ‘are not allowable as costs, except when expressly authorized by law....’ An item neither specifically allowable under subdivision (a) nor prohibited under subdivision (b) may be allowed or denied in the discretion of the court. [Citation.] All costs awarded must be ‘reasonable in amount’ and only be for items ‘reasonably necessary to the conduct of the litigation rather than merely convenient or beneficial to its preparation.’ [Citation.] [¶] A costs award is reviewed on appeal for abuse of discretion. [Citations.]” (El Dorado Meat Co. v. Yosemite Meat & Locker Service, Inc. (2007) 150 Cal.App.4th 612, 616-617.) Section 1032, subdivision (b) allows the prevailing party to recover their costs “[e]xcept as otherwise expressly provided by statute....”
Here, section 425.16, subdivision (c) provides for the recovery of costs and fees related to the bringing of a SLAPP motion. Spiro claims that despite this language A&K and Lundgren were required to include all of their costs in a noticed memorandum of costs.
Section 1034 provides that a prevailing party who claims prejudgment costs must do so in accordance with rules established by the Judicial Council. California Rules of Court, rule 3.1700, subdivision (1) provides, in pertinent part, “A prevailing party who claims costs must serve and file a memorandum of costs within 15 days after the date of mailing of the notice of entry of judgment or dismissal....”
We note that another court has found that a “successful defendant who specially moves to strike pursuant to section 425.16 has the option of utilizing a separate noticed attorney fee motion.” (American Humane Assn. v. Los Angeles Times Communications (2001) 92 Cal.App.4th 1095, 1103.) In Carpenter v. Jack in the Box Corp. (2007) 151 Cal.App.4th 454, the court noted that a prevailing party on a SLAPP motion can seek fees and costs on a noticed motion after the determination of the SLAPP motion. (Id. at pp. 460-461.)
The trial court here granted all of the costs included in the noticed motion of attorneys fees and costs sought under section 425.16. We have found no authority, and Spiro has failed to provide any, that would require that, when seeking costs under section 425.16, a separate memorandum of costs must be filed to recover these expenses. We see no reason that costs could not be combined with attorney fees in the motion under section 425.16. Certainly, if we had found that the costs awarded included those costs that were not related to the SLAPP motion, a separate memorandum of those costs would be required. Since that is not the case here, we find A&K and Lundgren could request costs in the noticed motion of fees and costs under section 425.16, subdivision (c).
However, based on defendant’s reference to Davis v. KGO-T.V., Inc., supra, 17 Cal.4th 426, a case in which the California Supreme Court found a statute that separately provides for the award of fees and costs was still subject to restrictions of section 1033.5, as that section merely explained allowable costs, but did not contradict with the award of costs (Davis, at p. 446), we agree that the award of costs under section 425.16 is still subject to the restrictions under section 1033.5.
The determination of reasonableness is peculiarly within the trial court’s discretion. (Thon v. Thompson (1994) 29 Cal.App.4th 1546, 1548.) “Whether a cost is ‘reasonably necessary to the conduct of the litigation’ is a question of fact for the trial court, whose decision will be reviewed for abuse of discretion. [Citations.]” (Gibson v. Bobroff (1996) 49 Cal.App.4th 1202, 1209.)
Here, it is impossible to discern from the trial court’s ruling whether it considered the restrictions in section 1033.5 in granting the costs to A&K and Lundgren or whether it determined that all of the costs were allowable under section 425.16, without consideration of section 1033.5. Since, as discussed post, we are remanding to the trial court for a consideration of the costs and fees incurred by A&K and Lundgren in defending the instant appeal, we believe that the trial court is in the better position to determine whether the costs incurred by A&K and Lundgren as set forth in their motion under section 425.16 were allowable under section 1033.5. Certainly, if the trial court considered section 1033.5 in making its award of costs, it need only state such upon remand.
As alluded to, ante, appellate challenges concerning the motion to strike under section 425.16 are also subject to an award of fees and costs, which are determined by the trial court after the appeal is resolved. (Dove Audio, Inc. v. Rosenfeld, Meyer Susman, supra, 47 Cal.App.4th at p. 785.) Since A&K and Lundgren are successful on appeal, we remand to the trial court for it to determine the proper amount of fees and costs.
IV
DISPOSITION
The judgment of dismissal is affirmed. A&K and Lundgren shall recover its costs and attorney fees on appeal, the amount of which shall be determined by the trial court. In addition, the trial court shall review the costs awarded to A&K and Lundgren on their noticed motion for attorneys fees and costs under section 425.16 to ensure they are allowable costs under section 1033.5.
We concur: RAMIREZ P.J., MILLER J.