NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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San Mateo County Super. Ct. No. 496392
Perry Narancic appeals from an order granting respondent Alexandra Gadzo's motion to strike his complaint under the anti-SLAPP statute. (Code Civ. Proc., § 425.16.) He contends the court erred because the gravamen of his causes of action did not target activity protected by the statute and he demonstrated a probability of prevailing on his claims. Cross-appellants Zlatana Gadzo and Morris Gadzo appeal from the order to the extent it denied the anti-SLAPP motion to strike as to them, contending the court erred in ruling that the causes of action asserted against them did not target protected activity.
We conclude that the trial court did not err in granting the motion to strike as to Alexandra Gadzo, but erred in denying the motion to strike as to Zlatana and Morris Gadzo.
I. FACTS AND PROCEDURAL HISTORY
Perry Narancic filed his verified first amended complaint (complaint) against Alexandra Gadzo, Zlatana Gadzo, and Muhamed aka Morris Gadzo, asserting causes of action for breach of contract, intentional misrepresentation, constructive fraud, and negligent misrepresentation. Perry described the matter as an action "seeking redress for serious wrongs arising out of a marital settlement agreement (the 'MSA') between former spouses."
Because some of the parties have the same last name, we hereafter refer to all parties by their first names for clarity, without disrespect.
A. Allegations of the Complaint
According to the complaint, Perry and Alexandra are both attorneys and were formerly husband and wife. In May 2005, while they were still married, Perry and Alexandra entered into a Partnership Agreement with Alexandra's parents, Morris and Zlatana, by which they agreed to jointly develop real property on Gordon Avenue in Menlo Park (the Gordon Project). In essence, Morris and Zlatana were to loan Perry and Alexandra money to complete the construction, and upon sale of the property the proceeds would be shared by the parties.
Tensions arose in Perry and Alexandra's marriage, and on May 21, 2006 the marriage "imploded" when, after an argument over finances, Alexandra called the police and alleged she had been beaten by Perry. Perry was arrested and charged with domestic violence. Perry and Alexandra separated as of May 21, 2006.
In May and June 2006, Perry and Alexandra negotiated the MSA, with Alexandra and her parents allegedly pressuring Perry to sign an agreement they proposed. According to the complaint, Morris and Zlatana visited Perry on June 26, 2006, with a copy of the MSA they and Alexandra had prepared, and told Perry that Alexandra would aggravate the criminal charges against him unless he signed the MSA that night. Perry refused. The next day, Perry attended a hearing on the criminal charges, at which Alexandra requested a restraining order that would prevent Perry from seeing their children, alleging that Perry was threatening her. Shocked by these allegations, Perry passed out in court.
Allegedly as a result of duress and false charges, Perry signed the MSA on June 28, 2006, on terms substantially proposed by respondents. The MSA was also signed by Morris and Zlatana because, allegedly at their demand, the MSA provided that Perry would relinquish all interest in the Gordon Avenue property. Specifically, Perry agreed in the MSA to transfer all of his interest in the Gordon Avenue property to Alexandra, and receive a certain sum of money in exchange for this and another transmutation.
Paragraph 24 of the complaint alleges that the MSA was signed on June 28, 2010. The MSA bears a signing date of June 28, 2006. The 2006 date must be correct, since the judgment in the dissolution proceeding was entered in August 2006 and the complaint was filed on June 28, 2010.
The MSA was signed (and implicitly property distributions were made) based on a valuation for the Gordon Project of $1,550,000. Section 8.5 of the MSA contained warranties pertinent to asset valuation: "Each Party warrants that he or she has made a full and accurate disclosure to the other pursuant to Family Code section 2100 of all assets, liabilities, and encumbrances, and their values, in which one or both Parties have or may have an interest, and each has made a full and accurate disclosure of his or her income. The Parties warrant that they have met their duty pursuant to Family Code section 2100 to update and augment that information including advising the other of any material facts that could substantially affect the value of any asset up until the time of this Agreement."
Under penalty of perjury, Alexandra executed a preliminary disclosure document in which she asserted that the Gordon Project had a fair market value of $1,550,000 as of August 11, 2006. Alexandra again declared under penalty of perjury, on August 22, 2006, that the Gordon Project had a fair market value of $1,550.000. According to the complaint, these two declarations were statutorily required for the judgment of dissolution to be filed. Perry alleges that he reasonably relied on these valuation representations, because they were required by statute to be accurate and because Alexandra was, as a matter of law, in a fiduciary relationship with Perry while negotiating the MSA and judgment.
According to the complaint, Alexandra, Zlatana and Morris knew in June 2006 that the Gordon Project was valued at substantially more than $1,550,000, but they did not advise Perry of that fact.
On August 30, 2006, the court entered judgment in the dissolution proceeding (Judgment) and merged the MSA into the Judgment. Section 13 of the Judgment provides, however, that "the warranty and indemnity provisions shall survive the merger and shall be enforceable in contract, tort or otherwise as provided by law."
Alexandra, after obtaining full title to the Gordon Avenue property, and with the purported approval of Zlatana and Morris, entered into a listing agreement on September 5, 2006, to sell the property for $2.7 million. The property sold for $2.6 million later that month.
B. Perry's Causes of Action
In his first cause of action for breach of contract, Perry contends that Alexandra, Zlatana and Morris breached section 8.5 of the MSA by "failing to advise Perry of the true value of the Gordon Project  anytime prior to Judgment." Had he known the true value, it is alleged, Perry would not have signed the MSA or agreed to the Judgment.
In his second cause of action for intentional misrepresentation, Perry alleges that respondents knew the valuation of the Gordon Project was false when made as of June 28, 2006, Alexandra knew it was false when she signed her declaration on August 22, 2006, the valuation representations were made for the purpose of deceiving Perry, and Perry reasonably relied on those representations.
In his third cause of action for constructive fraud, Perry alleges that he was owed fiduciary duties by Alexandra (while negotiating the MSA and the Judgment) and by all respondents (arising out of the Partnership Agreement), and that "[t]he conduct of [respondents] complained of above, especially the failure to disclose to Perry the true value of the Gordon Project, breached these fiduciary duties and resulted in them obtaining an unlawful benefit."
In the fourth cause of action for negligent misrepresentation, Perry alleges that respondents had no reasonable basis to believe the valuation to be true, and as fiduciaries had a duty to disclose the true value of the Gordon Project before entry of Judgment, but failed to do so.
C. Respondents' Anti-SLAPP Motion to Strike
In September 2010, respondents filed a motion to strike the complaint under Code of Civil Procedure section 425.16. Respondents asserted that each cause of action in the complaint arose from statements made in judicial proceedings or in connection with issues under consideration or review by a judicial body, and Perry could not establish a probability of prevailing on his claims.
Respondents submitted declarations in support of their motion to strike. Morris and Zlatana explained that, as of June 28, 2006, the Gordon Project was only 60 percent complete. They signed the MSA in an effort to extinguish the Partnership Agreement and resolve all claims regarding the Gordon Project, because they understood "this would be the end of the matter." After they believed Alexandra was the sole owner of the Gordon Avenue property, they signed a new partnership agreement with Alexandra to complete the Gordon Project before it was listed for sale.
Alexandra declared, among other things, that Perry had previously sought to set aside the MSA in November 2006 on the grounds of duress, based on statements respondents purportedly made regarding the criminal proceedings and, in April 2007, based on respondents' wrongful valuation of the Gordon Project. The court had set a trial date for Perry's motion to set aside the judgment, but Perry took the motion off calendar and never sought a new hearing date.
Perry filed an opposition to the motion to strike in October 2010. He argued that his causes of action were not subject to the anti-SLAPP statute because respondents waived the protections of the statute by agreeing that false representations and warranties would be actionable in civil court. He also contended that he had demonstrated a probability of prevailing on his claims. Perry submitted evidence including a listing agreement and sales agreement for the sale of the Gordon Avenue property.
Respondents filed a reply brief, arguing that Perry had no probability of prevailing on his claims because, among other things, a mutual release in the MSA barred his lawsuit, the litigation privilege barred each cause of action, and the statute of limitations barred Perry's fraud claims. In a surreply permitted by the court, Perry attempted to counter these arguments.
A hearing was held on the motion on October 29, 2010. The court thereafter issued a written order, filed on January 4, 2011, denying the motion as to Morris and Zlatana but granting the motion as to Alexandra.
As to Morris and Zlatana, the court denied the motion "because they have not satisfied the first prong of C.C.P. § 425.16 and failed to show that their acts underlying the Verified First Amended Complaint were acts in furtherance of their right of petition or any other activity protected under C.C.P. § 425.16." The court explained: "These parents' sign-off on the marital settlement agreement was for the purpose of setting up a new joint venture to complete the Gordon Avenue Project; not related to the litigation as they were not parties in the then-pending cases. Defendants Zlatana and Morris Gadzo are ordered to respond to the Verified First Amended Complaint within twenty days of notice of entry of order."
As to Alexandra, the court granted the motion because: "her acts underlying the Verified First Amended Complaint were acts in furtherance of protected activity under C.C.P. § 425.16. Plaintiff failed to demonstrate a probability of prevailing on his claims."
Notice of entry of the order was served by respondents' counsel on January 14, 2011. Perry filed a notice of appeal from the order on March 14, 2011. (See Code Civ. Proc., § 425.16, subd. (i).) The court clerk mailed notice of the appeal on March 17, 2011. On April 5, 2011, Morris and Zlatana filed a notice of cross-appeal from the portion of the court's order denying their motion. (See Code Civ. Proc., § 425.16, subd. (i); Cal. Rules of Court, rule 8.108(g) [time to file notice of cross-appeal].)
Perry contends the court erred because the gravamen of his causes of action did not target activity protected by the anti-SLAPP statute, and he demonstrated a probability of prevailing on his claims. Zlatana and Morris contend the court erred in concluding that the claims asserted against them did not target protected activity. We address these contentions in turn.
A. Perry's Appeal From the Order Granting Alexandra's Motion to Strike
Code of Civil Procedure section 425.16 (section 425.16) authorizes a defendant to file a special motion to strike where a cause of action arises from an act in furtherance of the defendant's constitutional right of petition or free speech in connection with a public issue. It establishes a procedure by which the trial court evaluates the merits of the plaintiff's claim using a summary-judgment-like procedure at an early stage of the litigation. (Flatley v. Mauro (2006) 39 Cal.4th 299, 312 (Flatley); Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 192.) The purpose is to curb the chilling effect that certain litigation may have on the valid exercise of free speech and petition rights, and the statute is to be interpreted broadly to accomplish that goal. (§ 425.16, subd. (a).)
In pertinent part, section 425.16 provides: "(b)(1) 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. [¶] (2) In making its determination, the court shall consider the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based." (§ 425.16, subd. (b)(1), (2).)
" 'In its motion, the defendant must make a threshold showing that the plaintiff's cause of action arises from the defendant's free speech or petition activity, as specified in the statute. (§ 425.16, subds. (b), (e).) The burden then shifts to the plaintiff to establish a probability of prevailing on the claim. (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67 (Equilon).) If the plaintiff fails to do so, the motion to strike is granted and the prevailing defendant is entitled to recover his or her attorney fees and costs. (§ 425.16, subd. (c).) We review an order granting or denying a motion to strike under section 425.16 de novo. (Flatley, supra, 39 Cal.4th at p. 325.)' (Haight Ashbury Free Clinics, Inc. v. Happening House Ventures (2010) 184 Cal.App.4th 1539, 1547 (Haight Ashbury); Schaffer v. City and County of San Francisco (2008) 168 Cal.App.4th 992, 998 (Schaffer).)" (Wallace v. McCubbin (2011) 196 Cal.App.4th 1169, 1181 (Wallace).)
1. First Prong: Alexandra's Burden to Show Protected Activity
The first prong of the anti-SLAPP analysis required Alexandra to make a threshold showing that Perry's causes of action arose from acts "in furtherance of [her] right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue." (§ 425.16, subd. (b)(1).)
By statutory definition, an " 'act in furtherance of a person's right of petition or free speech . . . in connection with a public issue' includes: (1) any written or oral statement or writing made before a . . . judicial proceeding . . . ; [or] (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." (§ 425.16, subd. (e).)
Each of Perry's four causes of action arises from the misrepresentation or omission of the true value of the Gordon Project during the negotiation of the MSA or later stages of the dissolution proceedings before entry of judgment. As such, they fall within the scope of section 425.16, subdivision (e)(1) and (e)(2).
Respondents spend much of their briefs insisting that the causes of action also arise out of Alexandra's call to the police to report that Perry had committed a crime, respondents' retention of an attorney, Alexandra's statements in Perry's criminal proceeding, and her request for a restraining order. While allegations of these acts are incorporated by reference into each cause of action, liability is not premised on these alleged events, since each cause of action expressly identifies that the wrongful conduct was "failing to advise Perry of the true value of the Gordon Project," the "Valuation misrepresentations," the "failure to disclose to Perry the true value of the Gordon Project," and the willful failure to "disclose the true value of the Gordon Project." A possible exception might be the third cause of action, which refers to "the conduct of Defendants complained of above" as well as the failure to disclose the value of the Gordon Project as the basis for the claim, although it is difficult to see how such acts would constitute constructive fraud. In any event, the salient point is that liability under all of the causes of action is based, at least in part, on statements respondents' allegedly made in the course of the dissolution proceedings.
The second cause of action is perhaps clearest in this regard, as it explicitly asserts that respondents are liable for intentional misrepresentation based on the valuation Alexandra stated in her declaration of August 22, 2006, as well as the valuation provided as of the time the parties entered into the MSA. Indeed, Perry admits that the " 'thrust' of the Second Cause of Action can only be the false Valuation." Liability under the second cause of action is therefore premised on statements made in a judicial proceeding, and the cause of action falls squarely within the scope of the anti-SLAPP statute. (Navellier v. Sletten (2002) 29 Cal.4th 82, 89-90 (Navellier) [fraud claim for misrepresentation in negotiating and executing a release was subject to § 425.16, subd. (e)(2)]; Navarro v. IHOP Properties, Inc. (2005) 134 Cal.App.4th 834, 838, 843 [claim alleging that opposing party obtained a stipulated judgment by making false promises was within scope of § 425.16, subd. (e)(2)].)
The first, third, and fourth causes of action are based on the allegation that respondents did not disclose the true value of the Gordon Project before entry of judgment in the dissolution action. In his first cause of action for breach of the warranty contained in the MSA, Perry contends that respondents breached the MSA by "failing to advise Perry of the true value of the Gordon Project anytime prior to Judgment." In his third cause of action for constructive fraud, Perry alleges: "The conduct of Defendants complained of above, especially the failure to disclose to Perry the true value of the Gordon Project," breached respondents' fiduciary duties. In the fourth cause of action for negligent misrepresentation, Perry alleges that respondents breached a fiduciary duty to disclose the true value of the Gordon Project before entry of the judgment of dissolution.
Although not raised by the parties, the question arises whether the failure to disclose information falls within the ambit of section 425.16, subdivision (e)(1) or (2), which pertains literally to written or oral statements or writings made at or in connection with a judicial proceeding. Based on the allegations of the complaint, we conclude it does, at least in this case.
Perry's causes of action for nondisclosure arise not from the fact that respondents merely remained silent about the value of the Gordon Project, but from their silence in light of the affirmative statements that the Gordon Project was worth $1,550,000. These affirmative statements included the "valuation for the Gordon Project of $1,550,000 (the 'Valuation')," which allegedly led to the signing of the MSA, and Alexandra's later representations of that value in her declarations. Perry's claims for failure to disclose the true value of the Gordon Project, therefore, are really premised on the statements of value that were made (but which were allegedly untrue), as well as the failure to correct those valuations with truthful disclosures. In fact, Perry concedes as much, asserting in his opening brief that the " 'thrust' of the Fourth Cause of Action is based on the Valuation" and asserting in his opposition to the motion to strike that his "constructive fraud claims [referring to the claims other than the breach of warranty] are based on the misrepresentations interests [sic] set forth in the [complaint]." (Italics added.) Furthermore, because the purported omission or concealment of the true value took place in relation to the MSA, it occurred in connection with a "writing" submitted to the court in the course of a judicial proceeding, within the meaning of section 425.16, subdivision (e). For all these reasons, the first, third, and fourth causes of action are subject to the anti-SLAPP law, because they arise out of written or oral statements or writings that were made either before a judicial proceeding or in connection with an issue under consideration by a judicial body. (§ 425.16, subd. (e)(1), (2).)
Indeed, the omission or concealment of material facts in the course of negotiating a settlement of litigation has repeatedly been held to fall within the scope of section 425.16, subdivision (e)(2). (E.g., Navellier, supra, 29 Cal.4th at pp. 89-90 [fraud claim for defendant's misrepresenting and failing to disclose his true intention in negotiating and executing a release involved statements or writings made in connection with an issue under consideration or review by a judicial body under § 425.16, subd. (e)(2)]; Dowling v. Zimmerman (2001) 85 Cal.App.4th 1400, 1418-1420 [claims for fraud and other torts, based inter alia on false representations and concealed material facts during negotiations of a settlement of an unlawful detainer action, were within the scope of § 425.16, subd. (e)(2)]; see also Seltzer v. Barnes (2010) 182 Cal.App.4th 953, 963 [fraud claim based on settlement offer and negotiations was subject to § 425.16]; Kronemyer v. Internet Movie Database, Inc. (2007) 150 Cal.App.4th 941, 947 [claim based on incomplete listing of movie credits was subject to § 425.16; constitutional right of free speech includes right not to speak].) We reach the same conclusion here.
At the very least, liability is based in part on one or more of respondents' purported oral or written statements, which is sufficient in itself to bring the causes of action within the scope of section 425.16. (Wallace, supra, 196 Cal.App.4th at p. 1187 [first prong of anti-SLAPP analysis satisfied where cause of action is based at least in part on protected activity]; Haight Ashbury, supra, 184 Cal.App.4th at p. 1551 & fn. 7 [same]; Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP (2005) 133 Cal.App.4th 658, 672-673 [first prong of anti-SLAPP analysis met where the allegations of loss resulting from protected activity were not merely incidental or collateral to unprotected activity]; Salma v. Capon (2008) 161 Cal.App.4th 1275, 1287 (Salma) [mixed causes of action are subject to a special motion to strike under section 425.16 if "at least one of the underlying acts is protected conduct"].)
In sum, all of the causes of action alleged against Alexandra fall within the scope of the anti-SLAPP statute.
Perry, however, contends that respondents waived their right to the protection of the anti-SLAPP statute, or should be estopped from enforcing it, because they agreed to language in the MSA (section 11) and the Judgment (section 13) that permits the filing of contract and tort claims for breach of the warranty in MSA section 8.5. In particular, Perry notes that the Judgment provides: "Notwithstanding the merger of the provisions of the Agreement into the Judgment of Dissolution, the Court finds that the parties expressly agree that the warranty and indemnity provisions and all executory provisions shall survive the merger and shall be enforceable in contract, tort or as otherwise provided by law."
The fact that warranties remain enforceable after the Judgment, however, does not mean that the anti-SLAPP statute cannot be invoked where implicated. The upshot of the cited provision of the Judgment is merely that, whatever rights the parties had under the MSA to enforce its warranty and indemnity provisions, they retained after the Judgment. The provision does not state that respondents have surrendered their rights under the anti-SLAPP law, or even mention the anti-SLAPP statute or any affect the provision might have on the application of section 425.16. Nor can it be implied, on the record in this case, that respondents voluntarily relinquished their statutory protections against meritless claims falling within the scope of section 425.16, merely because the Judgment states more generally that warranties may be enforced. After all, not every attempt to enforce the warranty, indemnity, and executory provisions of the MSA would implicate the anti-SLAPP statute: only claims asserted in new litigation that fall within the ambit of section 425.16, subdivision (e).
Moreover, Perry provides no legal authority supporting his proposition that the Judgment's enforcement provision could constitute a waiver of the rights provided by the anti-SLAPP statute or justify application of the estoppel doctrine. Perry relies solely on the following inapposite passage from Navellier, supra, 29 Cal.4th at page 94: "The Legislature's inclusion of a merits prong to the statutory SLAPP definition thus, contrary to the dissent's suggestion, preserves appropriate remedies for breaches of contracts involving speech by ensuring that claims with the requisite minimal merit may proceed. [Citation omitted.] Indeed, as the statute is designed and as we have construed it, a defendant who in fact has validly contracted not to speak or petition has in effect 'waived' the right to the anti-SLAPP statute's protection in the event he or she later breaches that contract."
Perry's reliance on this language in Navellier is misplaced. There was no contention in Navellier that, as Perry asserts here, the moving party could be barred from relief under the anti-SLAPP statute merely because he had agreed that the other party could assert certain types of claims. To the contrary, Navellier held that the moving party in that case could potentially obtain relief under the anti-SLAPP statute. (Navellier, supra, 29 Cal.4th at p. 95.) In any event, the language Perry quotes from Navellier does not apply to the instant case: respondents did not breach a contract "not to speak or petition." (Id. at p. 94.)
In his reply brief, Perry further argues that respondents waived their rights under the anti-SLAPP law because section 8.4 of the MSA includes a self-executing remedy clause, which reserves judicial authority to correct any breach of the warranty in section 8.5 of the MSA. Perry did not raise this argument in the trial court or include it substantially in his opening brief in this appeal, and it is therefore waived. In any event, Perry provides no legal authority supporting his argument that MSA section 8.4, which says nothing about anti-SLAPP motions, should strip respondents of their statutory rights under section 425.16.
Lastly, Perry refers us to Martinez v. Metabolife Internal, Inc. (2003) 113 Cal.App.4th 181, at page 191 (Martinez), for the proposition that an action for breach of an express warranty is "outside the boundaries of conduct to which the anti-SLAPP statute applies." That, however, is not what Martinez holds. Martinez actually stated: "the core conduct underlying the breach of warranty and fraud claims seeks recovery for physical injuries caused by activities outside the boundaries of conduct to which the anti-SLAPP statute applies," those activities being the placement of statements on labels and instructions that a certain product qualified as a dietary supplement. (Ibid., italics added.) What makes the matter before us different from Martinez - quite obviously - is that this case pertains not to statements on a product label, but statements made in connection with a settlement agreement during the course of a judicial proceeding, which brings the matter within the scope of section 425.16, subdivision (e).
The court did not err in concluding that Alexandra established that the causes of action against her arose from activity protected by the anti-SLAPP statute.
2. Second Prong: Perry's Burden to Show a Probability of Prevailing
Since Alexandra made the requisite showing on prong one, the burden shifted to Perry to demonstrate that he had a probability of prevailing on his claims. (Zamos v. Stroud (2004) 32 Cal.4th 958, 965.) The issue is whether Perry presented evidence which, if believed by the trier of fact, would be sufficient to support a judgment in Perry's favor. (Ibid; Wallace, supra, 196 Cal.App.4th at pp. 1206, 1212 [requiring admissible evidence]; HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 212 [same]; Tuchscher Development Enterprises, Inc. v. San Diego Unified Port Dist. (2003) 106 Cal.App.4th 1219, 1236 [same].)
Perry contends that, to establish a probability of prevailing, a plaintiff may rely on the allegations of his verified complaint. (Salma, supra, 161 Cal.App.4that pp. 12891290 [verified allegations based on personal knowledge of the pleader may be considered in deciding a section 425.16 motion].) Respondents contend that a plaintiff cannot rely on the allegations of his pleadings, even if they were verified. (Hailstone v. Martinez (2008) 169 Cal.App.4th 728, 735; Paiva v. Nichols (2008) 168 Cal.App.4th 1007, 1017.) Respondents also ask us to rule on evidentiary objections they made at the hearing in the trial court, because the trial court refused to rule on them. We need not address these matters further, since Perry's allegations and evidence, even if accepted in their entirety, do not satisfy Perry's burden under the second prong because of the release in the MSA, the litigation privilege, and the statute of limitations, discussed post.
a. The release of MSA section 8.1
Section 8.1 of the MSA, entitled "Mutual Release," provides: "The Parties intend to settle all aspects of their marital relationship and rights by this Agreement. Except as otherwise provided in this Agreement, the Parties and the Investors mutually release and forever discharge each other from any and all actions, liabilities, claims, demands, and obligations of any kind or character, both in law and in equity, that either of them ever had, now has, or may have against the other upon or by reason of any matter, cause, or thing up to the Effective Date. This shall include any potential civil suit in regards to the Gordon house project."
The release thus precludes Perry from asserting claims or obtaining relief against Alexandra, as well as Zlatana and Morris (identified as the "Investors" in the MSA), for anything up to the "Effective Date" of June 28, 2006.
To avoid the consequences of this release, Perry would have to establish that it was obtained by fraud, deception, misrepresentation, duress or undue influence. (Skrbina v. Fleming Companies (1996) 45 Cal.App.4th 1353, 1366.) In this regard, Perry urges that his complaint is "replete with allegations of fraud and duress as the basis for his claims." There is, however, no allegation or evidence that the release provision itself was induced by fraud or duress. Nor does the complaint seek to set aside the MSA as a whole on the grounds of fraud or duress. Rather, Perry seeks to obtain damages and other monetary relief based on his entry into the MSA.
With this in mind, we conclude that the first cause of action is barred by the release. The first cause of action seeks relief based on section 8.5 of the MSA, thus affirming the enforceability of the MSA rather than contending it should be set aside. Although Perry does allege that he would not have entered into the MSA if the true facts had been disclosed concerning the value of the property, in context the allegation is plainly meant to establish proximate cause in order to recover damages, since the cause of action is premised on the enforceability of the MSA. There is no allegation or evidence to support any argument that the section 8.5 warranty provision should be enforced while the section 8.1 release should not be enforced due to fraud, duress, or the like.
The first cause of action alleges that respondents breached section 8.5 by failing to advise Perry of the true value "anytime prior to Judgment." Because the release only bars actions based on occurrences up to the effective date of the MSA (June 28, 2006), a question could arise as to whether the release would preclude the first cause of action to the extent it is based on respondents' failure to apprise Perry of the true value of the Gordon Project between June 28, 2006 and entry of judgment on August 30, 2006. The parties do not address this issue. We conclude that, notwithstanding the allegation that respondents breached section 8.5 by failing to advise Perry of the true value "anytime prior to Judgment," section 8.5 provided an obligation that extended only to the date of the MSA (June 28, 2006), not the date of the Judgment. According to the complaint, section 8.5 of the MSA warrants that the parties have made full and accurate disclosures of the value of assets and warrant that they have met their duty under Family Code section 2100 to update and augment the information "including advising the other of any material facts that could substantially affect the value of any asset up until the time of this Agreement." (Italics added.) Thus (and logically), the obligations of section 8.5 pertained to the same period as the release of section 8.1. Perry's first cause of action could only be based on acts up to June 28, 2006, and the release bars any such claim.
The second, third and fourth causes of action are based on misrepresentation or omission. Because the complaint seeks damages rather than rescission, and because there is no allegation or evidence that the section 8.1 release is unenforceable, we conclude that these causes of action are barred by the MSA as well. (In any event, the second, third, and fourth causes of action are precluded by the statute of limitations and litigation privilege, discussed post.)
Perry argues that the scope and interpretation of a release is "always a question of fact" and therefore respondents' "argument that the release is an absolute bar, at this early stage, to Plaintiff's claims must fail as a matter of law." Perry misperceives the second prong of the required anti-SLAPP analysis. It is his burden to provide evidence from which a jury could decide the issue in his favor; he provides no such evidence. For this reason, the case on which he relies - Casey v. Proctor (1963) 59 Cal.2d 97 - is unavailing. Furthermore, in light of subsequent decisions, the rule in Casey is of questionable vitality. (Winet v. Price (1992) 4 Cal.App.4th 1159, 1171, fn. 7 [noting that Casey predated California Supreme Court cases holding that the construction of a written instrument is a question of law for the court where there is no competent parol evidence or such evidence is undisputed].)
Equally unpersuasive is Perry's suggestion that the enforcement provision in the Judgment precludes respondents' reliance on the release. As mentioned ante, the Judgment provided that whatever rights the parties had to enforce the warranty provisions of the MSA, they retained after the Judgment. Implicitly, the limitations that the MSA imposed on those rights - including the release in the MSA - were retained as well. Nothing in the record can permit the Judgment to be construed so as to resurrect the rights the parties bargained away in negotiating the MSA, or to create new rights the parties had already expressly relinquished. There being no allegation or evidence to the contrary, section 8.1 of the MSA precludes Perry's causes of action.
b. The litigation privilege (Civ. Code, § 47)
"[T]he [litigation] privilege bars a civil action for damages for communications made '[i]n any (1) legislative proceeding, (2) judicial proceeding, (3) in any other official proceeding authorized by law, or (4) in the initiation or course of any other proceeding authorized by law and reviewable pursuant to [statutes governing writs of mandate],' with certain statutory exceptions that do not apply to the present case. The privilege . . . often is referred to as an 'absolute' privilege, and it bars all tort causes of action except a claim for malicious prosecution." (Hagberg v. California Federal Bank (2004) 32 Cal.4th 350, 360.)
Perry's second cause of action sounds in tort and is expressly premised on statements made in court filings and, more generally, in a judicial proceeding. The cause of action is barred by the litigation privilege.
Perry's third and fourth causes of action are tort claims premised on respondents' alleged failure to make adequate disclosures about the value of assets at issue in a court proceeding. As explained ante, the complaint asserts that this nondisclosure is actionable because of the express valuations provided as of the entry into the MSA and in Alexandra's subsequent declarations in the dissolution proceeding. Perry's "claims, however styled, are founded upon the utterance of injurious communications in or in connection with the prior [marital dissolution proceedings]. [Respondents] cannot be liable without reliance on privileged communications made in the course of a judicial proceeding." (Doctors' Co. Ins. Services v. Superior Court (1990) 225 Cal.App.3d 1284, 1299.) These causes of action are precluded by the litigation privilege as well.
Perry argues that the litigation privilege does not apply because all of his causes of action are "in the nature of contract because they arise from the warranty under Section 8.5 of the MSA - which is the gravamen of Plaintiff's claim for damages." Not so. Perry's first cause of action is in the nature of contract, but his second, third, and fourth causes of action are in the nature of tort.
Perry also argues that respondents' failure to advise him of the true value of the Gordon Project is a noncommunicative act and therefore not subject to the litigation privilege. (Citing Rubin v. Green (1993) 4 Cal.4th 1187, 1195-1196.) Not so. Under the allegations of the complaint, the causes of action are based on the failure to state the true value of the Gordon Project, both in the sense of affirmative representations that the property was worth $1,550,000, and in the failure to correct the valuation in other communications.
Finally, in his reply brief Perry protests that there could never be an enforceable warranty if every settlement statement constitutes protected speech under the anti-SLAPP law and is absolutely privileged under the litigation privilege. He implores that this will "entirely gut the public policy of the law to encourage and enforce settlement."
Perry's concerns are unfounded. In the first place, warranties in marital settlement agreements may be enforced by motion in the dissolution proceedings in which they were made, and such motions would not be subject to the anti-SLAPP statute. In fact, Perry initially embarked on that approach, but abandoned it to file this new and separate lawsuit. Second, even if pursued in a new lawsuit, not every effort to enforce a warranty will implicate the anti-SLAPP statute. What makes Perry's action subject to section 425.16 is not that it seeks to enforce the warranty provision of the MSA, but that he seeks to do so by attacking statements made during the negotiation of the resolution of the pending judicial proceeding. Third, even if the anti-SLAPP law applies, it does not preclude every attempt to enforce a warranty, but only those that have no merit whatsoever. Moreover, because the litigation privilege does not pertain to causes of action for breach of contract, warranties may be enforced in contract notwithstanding section 425.16 and the litigation privilege. Perry gives us no reason to conclude that this avenue for relief does not suffice.
c. Statute of limitations
Respondents also argue that the second, third, and fourth causes of action - for intentional misrepresentation, constructive fraud, and negligent misrepresentation - are barred by the statute of limitations. (See Traditional Cat Assn., Inc. v. Gilbreath (2004) 118 Cal.App.4th 392, 398 [statute of limitations defense may be considered in evaluating probability of prevailing for purposes of anti-SLAPP statute].) We agree.
The limitations period for fraud is three years from the date of discovery. (Code Civ. Proc., § 338, subd. (d).) The limitations period for negligent misrepresentation is generally two years. (E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1316 [cause of action for negligent misrepresentation is typically two years under Code Civ. Proc., § 339].)
In his second cause of action, Perry claims that respondents committed fraud based on the valuation as of June 28, 2006, and on Alexandra's declaration in August 2006. The third cause of action for constructive fraud and the fourth cause of action for negligent misrepresentation, pertaining to the failure to disclose to Perry the true value of the Gordon Project before entry of the Judgment, accrued by the time the Judgment was entered in August 2006. Perry alleges that he discovered the sale price for the Gordon Project, and thus the difference between its market value and the valuation provided by respondents, in October 2006: "Perry did not know the true value of the Gordon Project until he discovered the sale price in October 2006." Therefore, the limitations period expired no later than three years after that - in October 2009.
The original complaint was filed in June 2010. The second, third, and fourth causes of action are time-barred.
Perry argues that all of his causes of action should be subject to a four year limitations period because "the Second, Third and Fourth Causes of Action tag on to the 4 year limitations period that governs the First Cause of Action." More accurately, his position is that the limitations periods for his claims are determined by the gravamen of the causes of action, and, he urges, the gravamen of all of his causes of action is the breach of the warranty in the written MSA. For this proposition, he relies on San Filippo v. Griffiths (1975) 51 Cal.App.3d 640 (San Filippo).
In San Filippo, the plaintiff filed a lawsuit seeking to enforce her former husband's promises in their "Property Settlement and Separation Agreement." (San Filippo, supra, 51 Cal.App.3d at p. 644.) Specifically, the plaintiff wife sought to enforce her former husband's contractual promise to pay her half of the value of their community property, both as to community property not disclosed to her at the time of the agreement, and as to the value of the disclosed community property in excess of the value he had allegedly understated. (Ibid.) Acknowledging the fraud-like allegations that the husband failed to disclose or adequately value the community property, the court nonetheless concluded that the gravamen of the action was to enforce the parties' contract, and thus the limitations period for contract claims should be applied. (Id. at p. 645.) The court explained: "In the case at bench, a fragment of [the wife's] cause of action is, as we have said, at least debatably touched upon by fraud. But nevertheless, the action in its entirety is founded on an express written contract, under which [the husband] agreed to pay [the wife] 50 percent of the value of any undisclosed community property or community property value. It must, in reason, be said that the gravamen of [the wife's] action is an 'obligation . . . founded upon an instrument in writing' [citation], and not one founded on 'fraud' [citation]." (Ibid?)
San Filippo is readily distinguished from the matter at hand. In our case, the second, third, and fourth causes of action are not "debatably touched upon by fraud" (San Filippo, supra, 51 Cal.App.3d at p. 645), they are permeated by fraud. Perry stated his contract claim in his first cause of action, basing it expressly on the warranty provision in the MSA; by contrast, in his second, third, and fourth causes of action for "Fraud-Intentional Misrepresentation," "Constructive Fraud," and "Negligent Misrepresentation," he targets the respondents' false valuation or failure to disclose the true valuation. Thus, while San Filippo dealt with a single cause of action that was primarily based on a contract, the case before us involves multiple causes of action that Perry has divided between contract and fraud; Perry has thus already received the benefit of San Filippo in that the part of his complaint founded on contract is governed by the longer limitations period for contract actions. Moreover, while the gravamen of the cause of action in San Filippo was to enforce the right to amounts due under the parties' contract, the gravamen of the second, third, and fourth causes of action in this case is not to enforce a right to certain amounts due under the MSA, but to enforce the right not to be misled or deceived in the valuation of property. That sounds in fraud or negligent misrepresentation.
Next, Perry argues that his third and fourth causes of action for constructive fraud and negligent misrepresentation should have a four-year limitations period for a different reason: a four-year limitations period applies to claims for breach of fiduciary duty. (David Welch Co. v. Erskine & Tulley (1998) 203 Cal.App.3d 884, 893 [applying four-year catchall limitations period of Code Civ. Proc. § 343 to claim for breach of fiduciary duty].)
Welch is unhelpful to Perry, because it involved a claim that was undisputedly based on a breach of fiduciary duty, while Perry has no breach of fiduciary duty claim in his complaint. Rather, Perry argues, the limitations period for breach of fiduciary duty should apply to his third and fourth causes of action because these claims are based on respondents' breach of fiduciary duties and not solely on fraud. (See Robuck v. Dean Witter & Co. (9th Cir. 1980) 649 F.2d 641, 644 ["if one of plaintiff's state law theories was grounded in a claim that Dean Witter breached a fiduciary duty to Robuck, then the four-year period would apply, not the three-year period governing actions based solely on fraud"].)
Again, we must disagree. While the third and fourth causes of action do refer to respondents' fiduciary duties, they do so for the purpose of setting up claims for constructive fraud and negligent misrepresentation. The point of these claims, and the source of Perry's alleged harm, is that Perry was purportedly deceived into entering the MSA and agreeing to the Judgment, not that those who deceived him were fiduciaries. As Perry himself pronounced at the hearing in the trial court: "In this case, the gravamen of all four causes of action in the complaint arise out of a misrepresentation or concealment of the true value of this joint venture project called the [Gordon] project." (Italics added.)
Lastly, Perry argues that the statute of limitations has not run because respondents are engaged in an ongoing conspiracy and still possess the proceeds they wrongfully obtained. His argument is meritless. In the first place, most of his causes of action are expressly limited to failures to disclose occurring up to the time of the judgment - back in August 2006 - and, more importantly, the allegations and evidence establish that Perry discovered the purported conspiracy by October 2006. The conspiracy is therefore not "ongoing" in any sense that would continue to delay the running of the limitations period. Furthermore, the mere fact that respondents possess the allegedly ill-gotten gains is not enough to vitiate the statute of limitations. If it were, no limitations period would run on Perry's causes of action until he had recovered a judgment for all he wanted from respondents - in effect, there would be no limitation period at all.
In sum, the release contained in the MSA, the litigation privilege, and the applicable statutes of limitation each compel the conclusion that Perry failed to demonstrate a probability of prevailing on any of his causes of action. The court did not err in granting the anti-SLAPP motion brought by Alexandra.
Perry contends that the anti-SLAPP motion as to Alexandra was frivolous, and he is entitled to an award of attorney fees and costs. We obviously find no merit in his contention. His accusations that Alexandra committed perjury in the dissolution proceedings are immaterial to whether his claims in this action target protected activity or have a probability of prevailing.
B. Zlatana and Morris' Appeal: Their Motion to Strike
As mentioned, in denying the motion to strike as to Zlatana and Morris, the trial court concluded they had not satisfied the first prong of section 425.16 because: "These parents' sign-off on the marital settlement agreement was for the purpose of setting up a new joint venture to complete the Gordon Avenue Project; not related to the litigation as they were not parties in the then-pending cases."
1. Prong One: Zlatana and Morris' Burden to Show Protected Activity
Respondents contend that the record does not support the court's finding that Zlatana and Morris signed the MSA in order to set up a new joint venture. They claim the evidence Zlatana and Morris provided in their declarations was that they signed the MSA because Perry and Alexandra asked them to, and Perry did not contest their assertions in his declaration or present evidence that Zlatana and Morris signed the MSA to create a new venture. Thus, they urge, "the record is devoid of evidence that Zlatana and Morris signed the MSA in order to create a 'new joint venture' to complete the Gordon Project." (Italics in original.)
Respondents are incorrect. In their own declarations, Zlatana and Morris both averred, in identical language, that they "signed the MSA in an effort to extinguish the Partnership Agreement and resolve all claims relating to the Gordon Project" and that they later "signed a new partnership agreement with Alexandra to construct the Gordon Project with luxury finishes." (Italics added.) From their own sworn statements, therefore, it could be inferred that Zlatana and Morris signed the MSA in order to terminate their joint venture with Perry and Alexandra and begin a new one with Alexandra alone.
Morris declared: "On June 28, 2006, my wife and I were asked by [Perry] and Alexandra to sign the MSA that my daughter and [Perry] signed. . . . I signed the MSA in an effort to extinguish the Partnership Agreement and resolve all claims relating to the Gordon Project because I understood this would be the end of the matter. [¶] . . . [O]n July 3, 2006, my wife and I signed a new partnership agreement with Alexandra to construct the Gordon Project with luxury finishes." Zlatana declared: "On June 28, 2006, my husband and I were asked by [Perry] and Alexandra to sign the MSA that my daughter and [Perry] signed. . . . I signed the MSA in an effort to extinguish the Partnership Agreement and resolve all claims relating to the Gordon Project because I understood this would be the end of the matter. . . . [¶] . . . [O]n July 3, 2006, my husband and I signed a new partnership agreement with Alexandra to construct the Gordon Project with luxury finishes."
The more appropriate argument is that, regardless of the reason Morris and Zlatana signed the MSA, their purpose in signing it does not preclude them from claiming the protections of the anti-SLAPP statute.
At the hearing on the motion to strike, the court expressed its understanding that to invoke the protections of the anti-SLAPP statute, a defendant must be sufficiently connected to the underlying litigation. In its written order, the court noted that Zlatana and Morris' execution of the MSA was "not related to the litigation as they were not parties in the then-pending cases." To the extent the court found that Zlatana and Morris did not meet their burden as to prong one because they were not parties or sufficiently related to the underlying marital dissolution proceeding, the court erred.
For a defendant to claim the protections of section 425.16, he or she need not have been the one who actually made the statements before the judicial tribunal or in the judicial proceedings. (Ludwig v. Superior Court (1995) 37 Cal.App.4th 8, 16-18 [defendant may claim protection under anti-SLAPP statute, even though he only supported another person who actually performed the protected activity].) It is enough that the plaintiff is attempting to hold the defendant liable for those statements, on the basis of activity that is protected by the anti-SLAPP statute. (See Wallace, supra, 196 Cal.App.4th at pp. 1183-1184.)
Here, all four causes of action are alleged against all of the respondents, and all respondents are alleged to have made the misrepresentations and omissions that are the crux of each cause of action. Zlatana and Morris are therefore alleged to have actually performed the wrongdoing that is so clearly within the scope of the anti-SLAPP statute. Further, Perry alleged in his complaint that Zlatana and Morris were sufficiently related to Alexandra, and sufficiently involved in her wrongdoing, so as to be liable for what Alexandra did. Specifically, he alleged: "each of the Defendants, in addition to acting for himself, herself, or itself and on his, her or its own behalf individually, is and was acting as the agent, servant, employee and representative of, and with the knowledge, consent and permission of, and in conspiracy with, each and all of the Defendants. . . . Specifically, and without limitation, Perry alleges on information and belief that the actions, omissions, breaches, conspiracy, and misrepresentations alleged herein and attributed to one or more of the specific Defendants were approved, ratified, and done in cooperation and knowledge of each and all of the Defendants."
Accordingly, and in light of our conclusion ante that the wrongdoing alleged in the complaint falls within the scope of section 425.16, subdivision (e), we respectfully find no basis for the court's conclusion that Zlatana and Morris failed to satisfy their burden to show that the claims against them targeted protected activity.
2. Prong Two: Perry's Burden to Show Probability of Prevailing
The trial court did not decide prong two as to Zlatana and Morris because of its ruling on prong one. "In such circumstances, we may remand the matter to the trial court to conduct the second-prong analysis. [Citation.] On the other hand, we have discretion to decide the issue ourselves, since it is subject to independent review. [Citation.]" (Wallace, supra, 196 Cal.App.4th at p. 1195.) Because there are no factual issues to be resolved by the trial court, and the evidence presented as to Zlatana and Morris' motion was the same as the evidence considered by the court as to Alexandra's motion, we will proceed to decide prong two out of judicial efficiency, without objection from appellant.
As to the first cause of action, Perry has no probability of prevailing against Zlatana and Morris for the same reason he has no probability of prevailing against Alexandra: the release in section 8.1 of the MSA. The release expressly provides that the "Parties" (including Perry) and the "Investors" (namely, Zlatana and Morris), release and discharge each other from all claims and liability, including "any potential civil suit in regards to the Gordon house project."
In addition, Perry has no probability of prevailing on the first cause of action for another reason. The first cause of action alleges that respondents breached section 8.5 of the MSA by failing to state the true value of the Gordon Project. By its terms, however, section 8.5 of the MSA provides that only "Parties" to the MSA warrant the accuracy of their disclosures and compliance with Family Code section 2100. The MSA defined "Parties" to include only Perry and Alexandra, not Zlatana and Morris. As a matter of law, therefore, Zlatana and Morris cannot be liable under the first cause of action.
In his reply brief, Perry contends that Zlatana and Morris should nonetheless be held liable under section 8.5 of the MSA because (1) they are alleged to be in a conspiracy with Alexandra, (2) a disclosed principal may be held liable on a contract made solely in the name of an agent, and (3) Perry's allegations must be treated as true.
Perry misses the mark on all three counts. First, conspiracy liability can apply only where the alleged conspirator is legally capable of committing an underlying tort; a nonparty to a contractual obligation cannot, as a matter of law, be liable under a conspiracy theory for breach of the obligation to which it was not a party. (See Applied Equipment Corp. v. Litton Saudi Arabia Ltd. (1994) 7 Cal.4th 503, 510-514; Weinbaum v. Goldfarb, Whitman & Cohen (1996) 46 Cal.App.4th 1310, 1315-1317.) Second, while the complaint alleges that all respondents were acting as agents of the others, the argument that Alexandra signed the MSA in her own dissolution proceeding and agreed to the express warranty as the agent of her parents is not only illogical, but immaterial in light of the MSA's express definition of the "Parties" to whom section 8.5 applies. Third, we are not obliged to accept Perry's allegations as true in the second prong of analysis under the anti-SLAPP law; he must establish a probability of prevailing by admissible evidence. (Wallace, supra, 196 Cal.App.4th at p. 1212.) For each of the foregoing reasons, Perry failed to establish a probability of prevailing as to the first cause of action against Zlatana and Morris.
Perry's arguments concerning the extent of Zlatana and Morris' participation in Alexandra's alleged wrongdoing are notably inconsistent. On page 24 of his reply brief, Perry urges that Zlatana and Morris were co-conspirators and principals to their agent Alexandra for purposes of making them liable for breach of a warranty in the MSA that, by its terms, does not obligate Zlatana or Morris to do anything. Beginning just two pages later on page 26, Perry urges that Zlatana and Morris were not sufficiently engaged in the alleged wrongdoing to avail themselves of the protections of the anti-SLAPP statute, urging that they merely "sign[ed] an agreement negotiated between Appellant and Respondent, because they were asked to do so."
As to the second, third, and fourth causes of action, Perry's claims against Zlatana and Morris are barred by the release in the MSA and the statute of limitations (if not also the litigation privilege, which we need not and do not address as to Zlatana and Morris) for the same reasons discussed ante in connection with Perry's claims against Alexandra. Accordingly, Perry failed to establish a probability of prevailing as to any of his causes of action against Zlatana and Morris.
On September 6, 2011, Perry filed a motion in this court, seeking the imposition of sanctions against respondents for improperly requesting to augment the record, asserting frivolous arguments in the respondents' brief, and other matters. We deny the motion. On September 9, 2011, Perry filed a request for judicial notice of numerous documents. We deny the request for failure to meet the standards for judicial notice and failure to comply with rule 8.252(a)(B) of the California Rules of Court. We add that judicial notice of the material would not affect the disposition of this appeal.
The order is affirmed except as to that portion which denies the motion to strike as to cross-appellants Zlatana Gadzo and Morris Gadzo; as to that portion, the order is reversed and remanded to the trial court for entry of a new order granting the motion as to cross-appellants, and for such further proceedings as are appropriate under prevailing law. (Code Civ. Proc., § 425.16, subd. (c).)
SIMONS, Acting P. J.