Lee v. City of Fresno CA5

Filed 3/25/14 Lee v. City of Fresno CA5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for

publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication

or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIFTH APPELLATE DISTRICT

DAE LEE et al.,

F066230

Plaintiffs and Appellants,

(Super. Ct. No. 12CECG00640)

v.

CITY OF FRESNO et al., OPINION

Defendants and Respondents.

APPEAL from a judgment of the Superior Court of Fresno County. M. Bruce

Smith, Judge.

Jay S. Bloom for Plaintiffs and Appellants.

Wanger Jones Helsley, John P. Kinsey, Marisa L. Balch and David E. Cameron

for Defendants and Respondents.

-ooOoo-

Dae Lee and Sook Lee (plaintiffs) leased property from the City of Fresno (City)

and ran a business on the property. A dispute arose between the City and plaintiffs about

whether plaintiffs were in compliance with the lease. After the City served a notice to

perform or quit, plaintiffs filed a complaint against the City and PBID Partners of

Downtown Fresno (PBID) alleging constructive eviction and interference with

contractual relations and economic advantage. The City and PBID (defendants) moved

to strike each cause of action in the complaint under the anti-SLAPP law, Code of Civil

Procedure section 425.16.1 The trial court granted the motion and dismissed the

complaint.

On appeal, plaintiffs contend that defendants’ conduct was not covered by the

anti-SLAPP statute and that plaintiffs made an adequate showing they would prevail at

trial. We disagree and affirm the court’s order.

FACTS AND PROCEDURAL HISTORY

Background2

The City owns real property at 802 Fulton Mall in Fresno (premises), described as

a 60,000 square foot annex connected to the original Gottschalks department store

building located at Fulton Mall and Kern Street. In 1969, the City agreed to a 50-year

lease of the premises with lessee E. Gottschalk & Co., Inc. (Gottschalk). In 1976,

Gottschalk assigned the lease to the Gottschalk Realty Company. In October 1990, with

the consent of the City, the Gottschalk Realty Company assigned the lease to six

1 Unless otherwise indicated, all further statutory references are to the Code of Civil

Procedure. “‘SLAPP’” is an acronym for “‘strategic lawsuit against public

participation.’” (La Jolla Group II v. Bruce (2012) 211 Cal.App.4th 461, 465, fn. 1 (La

Jolla Group).)

2 The facts are based on the pleadings, documents subject to judicial notice, and the

declarations and attached documentation filed in support of, and in opposition to, the

anti-SLAPP motion.

2.

individuals, including plaintiffs.3 Around the same time, plaintiffs purchased the original

Gottschalks department store building at 860 Fulton Mall.

Plaintiffs used the original Gottschalks department store building and the

connected annex to run an indoor discount mall. This involved renting out spaces to

subtenants who operated individual businesses. Individual businesses in the discount

mall included clothing retailers, jewelry repair, a wig shop, a restaurant, and party supply

vendors, among other businesses.

Landlord-tenant dispute

According to the City, in 2010 and 2011, inspections of the premises revealed

various code violations. Correction notices were issued to the tenants, but they did not

correct the identified violations. As a result, Assistant City Manager Bruce Rudd sent a

letter to the tenants dated September 1, 2011. The letter read, in relevant part:

“It has come to my attention that over the last year the properties

located at 802 - 830 Fulton Mall have been inspected by the Fresno Fire

Department as well as the City’s Community Revitalization Division

(formerly the Code Enforcement Division). During these inspections, a

number of code violations were identified and correction notices issued. To

this date, it does not appear that any effort has been made to correct the

current or past violations noted by the City.

“Compounding this matter further is the fact that [the] building

located at 802 Fulton is currently leased by your company from the City of

Fresno.… Upon the review of the lease, as well as other documents related

to this matter, it appears that failure to comply with the requirements set

forth in the lease, as well as other Fresno Municipal Code requirements, has

been an ongoing issue as reflected in a letter from former City Manager Jeff

Reid dated December 15, 1999 (Attachment A).

3 The assignees were plaintiffs Song Ho Kim, Eun Min Kim, Nam Ho Paik, and

Sung Sil Paik. We refer to the six assignees collectively as the “tenants.”

3.

“In addition to various zoning, building, plumbing, electrical and fire

code violations (Attachment B), there are a number of lease violations that

require immediate attention. These issues include, but are not limited to[:]

“Section 8, Improvements and Alterations

 Alterations, such as the painting of murals and the

construction of an office(s), have been made to the building

without City’s approval and without permits.

“Section 11, Maintenance of Leased Premises and Building

 In addition to a number of building code violations, the

ceiling, interior and exterior walls, sidewalks, gutters, and

other appurtenances have not been properly maintained and

are in need of immediate repair.

“Section 17, Assignment and Subletting

 Operating a Multi-Tenant Market and video arcade as well as

selling used items without the appropriate Conditional Use

Permit[.]

 Subletting of the building without the prior approval of the

City Manager.

 Current subletting of the building exceeds 40% of retail space

and is inconsistent with a retail operation as contained in the

lease.

“Therefore, in accordance with Section 21 … , this letter is to

formally notify you of your failure to perform under the terms and

conditions of the lease and that the City will initiate termination within the

next 30 days unless efforts are taken immediately to cure the noted

violations.”

The letter included two attachments: (1) the 1999 letter from Reid4 and (2) a list

of current zoning ordinance issues and violations, public nuisance ordinance violations,

4 In this letter addressed to the tenants, Reid wrote that an October 1999 inspection

revealed “some code violations” and “conditions inconsistent with the terms of the

lease.” The letter indicated there were building, construction and safety issues, fire

maintenance safety issues, plumbing and mechanical maintenance and safety issues, and

electrical maintenance safety issues. The City requested proposals and plans from the

tenants. In his declaration, Dae Lee stated that the premises were cited for code

violations on one occasion in December 1999, and the matter was resolved when the

4.

fire code violations, and building, electrical, plumbing and mechanical code violations.

The tenants did not cure all the identified code and lease violations within 30 days.5

On December 13, 2011, the City served a “NOTICE TO PERFORM COVENANT OF

LEASE OR QUIT” (first notice). The first notice listed five violations of the covenants of

the commercial lease for 802 Fulton Mall. These were violations of section 7—“USE OF

LEASED PREMISES,” section 8—“IMPROVEMENTS[,] ALTERATIONS,” section 11—

“MAINTENANCE OF LEASED PREMISES AND BUILDING,” section 14—“WASTE[,] QUIET

CONDUCT,” and section 17—“ASSIGNMENT AND SUBLETTING.” The first notice provided

that if the listed breaches of covenants were not cured within 30 days, the premises were

to be vacated and delivered to the City.

The first notice was addressed to “DALE LEE” and Jorge A. Capacete, the general

manager of the discount mall, and was personally served on Capacete. At the time he

received the first notice, Capacete observed City representatives serve the first notice on

subtenants at 802 Fulton and 860 Fulton. Within a few minutes of the service of the first

notice, representatives of PBID arrived and began contacting subtenants. Capacete heard

PBID representatives tell subtenants that their subleases were void and the City was

going to evict the master tenant, Dae Lee, for breach of lease. PBID representatives told

subtenants they were going to have to move and PBID had readily available alternative

premises where they could immediately relocate. Within a week, 90 percent of the

subtenants had left. Vacating subtenants told Capacete “they were scared by the

parties agreed that plaintiffs would repair several items and the City would not require the

repair of other items.

5 In his declaration, Dae Lee did not mention the September 1, 2011 letter, and

therefore did not expressly deny that he received it. Instead, he stated that he received a

letter from the fire department in 2010 “concerning problems at the building.” In

response, plaintiffs hired a sprinkler company, had exhaust problems addressed, and fixed

other minor problems in-house. Dae Lee stated plaintiffs received no citations for code

violations for 12 years.

5.

statements made to them by PBID’s representatives, and they were leaving because they

needed to do business without interruptions or problems.”

PBID is a special benefit assessment district organized to raise funds within

downtown Fresno. It does not own any business or property in downtown Fresno. On

December 15, 2011, Kate Borders, acting on behalf of PBID, distributed a flyer to the

subtenants of the premises.

The flyer read:

“PBID Partners of Downtown Fresno wants to help!

“Day--Monday, December 19, 2011

“Time--8-11am

“Where--PBID offices - across the ‘street’ at 845 Fulton Mall.

“In response to the recent eviction notice presented, we want to

assist any interested retailers to find alternative storefronts in Downtown

Fresno. Our goal is to help you relocate and hopefully not miss one day of

sales.

“Please stop by our office Monday morning, December 19th from

8am to 11am. We will assess your retail needs and help you to find another

space on The Fulton Mall. We will have English and Spanish speaking

representatives available.

“Please come with an idea of your square footage needs, a

description of what you sell, an estimate of your monthly sales, and the

number of employees you currently employ.

“No appointment is necessary, but you may have a short wait. If you

would prefer to call ahead, the number is 490-9966.”

According to Borders, “[the] flyer was distributed to each vendor in response to

the [first notice] served by the City of Fresno, and out of a desire to assist any interested

retailers in finding alternative storefronts in downtown Fresno, California and for the

financial health and condition of downtown Fresno.” Borders also stated that at no time

did PBID solicit any business from plaintiffs or the vendors (i.e., subtenants) located at

the premises.

6.

Two subtenants reported that, on or about December 15, 2011, PBID

representatives told them their subleases were void. A few days later, these subtenants

went to the PBID office and were told that the whole discount mall was going to be shut

down because the City had other plans for the area. These plans included a hotel in place

of the annex and new uses for the old Gottschalks department store.

On January 30, 2012, the City served a second “NOTICE TO PERFORM COVENANT

OF LEASE OR QUIT” (second notice), which was addressed to “DALE LEE,” Capacete,

named individual businesses located in the premises, and “ALL OTHER OCCUPANTS IN

POSSESSION.” The second notice listed four violations of covenants of the commercial

lease for 802 Fulton Mall. These were the same sections of the lease identified in the first

notice, except that section 17—“ASSIGNMENT AND SUBLETTING”—was omitted from the

second notice.6 Again, the notice provided 30 days to cure the violations or vacate the

premises. On March 27, 2012, the City filed an unlawful detainer action against the

tenants (including plaintiffs), named individual businesses, and Doe defendants.

Current lawsuit

On February 27, 2012, plaintiffs initiated the current case by filing a complaint

against defendants in Fresno County Superior Court. Plaintiffs asserted four causes of

action: (1) declaratory relief against the City seeking a judicial declaration that the City

constructively evicted plaintiffs from the premises, (2) violation of civil rights (42 U.S.C.

6 In his declaration, Dae Lee stated that the statement in the first notice that the

subleases were unauthorized was “totally false and inserted into the thirty day notice for

an improper purpose.” He continued, “After being advised by plaintiff of the state of the

record concerning the approval of sub-leases, the City served a second thirty day notice

on January 24, 2012, after the expiration of the thirty day period stated in the first

Notice.” We note, however, that the first notice did not state that all subleases were

unauthorized. Rather, it stated that lessees were in violation of various covenants of the

lease, including section 17. The notice quoted the language from section 17 of the lease,

but did not state that any particular subleases were unauthorized.

7.

§ 1983) against all defendants, (3) interference with contractual relations against PBID,

and (4) interference with economic advantage against PBID.

Plaintiffs alleged that, when they took over the lease of the premises in 1990, the

City knew they were going to operate a discount mall on the premises, subleasing spaces

to individual subtenants who would operate separate businesses. The City knew that

plaintiffs would receive income from rent paid by subtenants. On or about December13,

2011, the City served plaintiffs and their subtenants with the first notice, which stated

plaintiffs were in breach of the lease by, among other things, entering into prohibited

subleases. In addition, “during the time plaintiffs had the right to cure any asserted

breaches of the Lease, various agents or employees of the defendant City of Fresno went

to the premises and orally informed the individual sub-lessees [subtenants] that the

plaintiffs’ discount mall was going to be closed down by the City of Fresno, and that the

individual sub-lessees should move their businesses to other premises. Defendant’s

agents or employees offered to re-locate the individual sub-lessees to premises they

owned or operated.” Plaintiffs alleged:

“As a result of said service [of the first notice] and the statements

made by defendant’s agents or employees to the sub-lessees, the sub-

lessees immediately stopped paying rent and have vacated said premises.

Plaintiffs are now left with vacant premises having no sub-lessees.

Defendant’s acts have denied plaintiffs the beneficial use of said premises,

leaving plaintiffs without any source of income from the property.”

Plaintiffs further alleged that each and every defendant was the agent or employee

of the remaining defendants.

Defendants removed the case to federal district court, and the parties later

stipulated to dismissal of the second cause of action and remand of the case to Fresno

County Superior Court.

8.

On July 3, 2012, defendants filed a motion to strike the first, third, and fourth

causes of action (all remaining claims) pursuant to section 425.16, the anti-SLAPP

statute, and a general demurrer to the complaint.

In support of the anti-SLAPP motion, defendants first argued that all the claims

arose from activity protected under section 425.16. They noted that an unlawful detainer

action is protected activity. Since the service of a notice to perform or quit and

statements about the mall being closed down by the City were related to, and made in

anticipation of, the City’s unlawful detainer action, those actions were also protected

under section 425.16.

Second, defendants argued that plaintiffs could not establish a probability of

prevailing because all their claims were barred by the litigation privilege (Civ. Code,

§ 47, subd. (b)) and, moreover, plaintiffs could not prove all the elements required to

establish any of their claims.

Plaintiffs responded that their claims were “based on the landlord’s solicitation of

plaintiffs’ customers in breach of the landlord’s covenant of quiet enjoyment,” not the

service of a 30-day notice to perform or quit. They posited a “landlord’s solicitation of a

tenant’s customers” is not conduct taken in furtherance of litigation and is not protected

activity. In addition, plaintiffs argued they established a reasonable probability of

prevailing on their claims.

On October 2, 2012, the trial court granted the defendants’ anti-SLAPP motion.

The court agreed with defendants that all of plaintiffs’ claims were based on (1) serving

notices to perform or quit and (2) making statements about the City’s litigation activity.

The court determined that this conduct was made in connection with litigation and was

protected under the anti-SLAPP statute. The court next found that plaintiffs did not

demonstrate a probability of prevailing on any of their claims. After granting defendants’

anti-SLAPP motion to strike, the court found defendants’ general demurrer to be moot.

Plaintiffs filed a notice of appeal on November 14, 2012.

9.

DISCUSSION

I. Overview of the anti-SLAPP statute

The Legislature enacted the anti-SLAPP statute to provide a procedure “for the

early dismissal of unmeritorious claims filed to interfere with the valid exercise of the

constitutional rights of freedom of speech and petition for the redress of grievances.

[Citation.] The Legislature authorized the filing of a special motion to strike such claims

(§ 425.16, subds.(b)(1), (f)), and expressly provided that section 425.16 should ‘be

construed broadly.’ [Citations.]” (Club Members For An Honest Election v. Sierra Club

(2008) 45 Cal.4th 309, 315.)

Under the anti-SLAPP statute, any “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” is “subject to a special motion to strike, unless the court determines that the

plaintiff has established that there is a probability that the plaintiff will prevail on the

claim.” (§ 425.16, subd. (b)(1).) Thus, in deciding an anti-SLAPP motion, a trial court

engages in a two-step process. “First, the court decides whether the defendant has made

a threshold showing that the challenged cause of action is one arising from protected

activity. The moving defendant’s burden is to demonstrate that the act or acts of which

the plaintiff complains were taken ‘in furtherance of the [defendant]’s right of petition or

free speech under the United States or California Constitution in connection with a public

issue,’ as defined in the statute. (§ 425.16, subd. (b)(1).)” (Equilon Enterprises v.

Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67 (Equilon).) Second, “[i]f the court finds

such a showing has been made, it then determines whether the plaintiff has demonstrated

a probability of prevailing on the claim.” (Ibid.)

II. Standard of review

“We review de novo the trial court’s ruling on an anti-SLAPP motion.” (La Jolla

Group, supra, 211 Cal.App.4th at p. 469.) “‘We consider “the pleadings, and supporting

10.

and opposing affidavits … upon which the liability or defense is based.” (§ 425.16,

subd. (b)(2).) 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.]’ [Citation.].” (Flatley v. Mauro (2006) 39

Cal.4th 299, 326 (Flatley).)

III. First step: Defendants showed plaintiffs’ claims arose from protected activity

“Under the first step of the analysis under section 425.16, [defendants] must make

a threshold showing that the challenged cause of action arose from protected activity

within the meaning of the statute.” (La Jolla Group, supra, 211 Cal.App.4th at p. 471.)

“In the anti-SLAPP context, the critical consideration is whether the cause of action is

based on the defendant’s protected free speech or petitioning activity.” (Navellier v.

Sletten (2002) 29 Cal.4th 82, 89 (Navellier).)

Protected activity under section 425.16 includes “any act … in furtherance of the

person’s right of petition .…” (§ 425.16, subd. (b)(1).) This means litigation activity,

including “communicative conduct such as the filing, funding, and prosecution of a civil

action” is protected under section 425.16. (Rusheen v. Cohen (2006) 37 Cal.4th 1048,

1056.) In addition, statements made in preparation for, or in anticipation of, litigation are

protected under section 425.16. (Flatley, supra, 39 Cal.4th at p. 322, fn. 11 [rejecting the

plaintiff’s argument that prelitigation communication is not protected activity under

section 425.16]; Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106,

1115 (Eden Council); Rohde v. Wolf (2007) 154 Cal.App.4th 28, 36-37 [attorney’s

voicemail messages left for the plaintiff when “the spectre of litigation loomed over all

communications between the parties” were made in anticipation of litigation and

protected under section 425.16].)

11.

Here, the common factual allegations underlying all of plaintiffs’ causes of action

are (1) the City served the first notice on plaintiffs and their subtenants on or about

December 13, 2011, and (2) around the same time, defendants made statements to the

subtenants that: the “discount mall was going to be closed down by the City,” the

subtenants “should move their businesses to other premises,” and defendants would help

“re-locate the individual sub-lessees to premises they owned or operated.” These

allegations were supported by declarations from Capacete and two subtenants.

Immediately after service of the first notice, Capacete heard PBID representatives tell

subtenants that their subleases with plaintiffs were void, the City was going to evict Dae

Lee, and PBID had readily available premises where the subtenants could relocate. The

two subtenants were told by PBID representatives that the discount mall was going to be

shut down and the City had other plans for the area. A PBID representative confirmed

that she gave plaintiffs’ subtenants flyers about finding new retail space, which were

handed out “[i]n response to the recent eviction notice presented.”

A. Service of notice

An unlawful detainer action falls within the scope of petitioning activity protected

by the anti-SLAPP statute. (Wallace v. McCubbin (2011) 196 Cal.App.4th 1169, 1182

(Wallace).) As defendants point out, service of written notice of the tenants’ failure to

perform covenants of the lease is a necessary prerequisite to filing an unlawful detainer

action. (§ 1161, subd. (3).) Written notice also must be served on any subtenants in

actual occupation of the property. (Ibid.) In this case, all evidence indicates that service

of the first notice on plaintiffs and their subtenants on December 13, 2011, was made in

preparation for the subsequent unlawful detainer action. Consequently, service of the

first notice qualified as protected activity under section 425.16. (See Wallace, supra, at

p. 1183 [service of notice of eviction is protected activity under anti-SLAPP statute

where it is a legal prerequisite to bringing unlawful detainer action]; Birkner v. Lam

(2007) 156 Cal.App.4th 275, 283-285 [service of termination notice was communication

12.

preparatory or in anticipation of bringing legal action and was protected under

section 425.16].) Plaintiffs appear to concede this point, as they argue, “[Their] causes of

actions are based on the landlord’s interference with and solicitation of plaintiffs’ sub-

tenants in breach of the landlord’s covenant of quiet enjoyment. The claims are not

based on the service of a thirty day Notice.” (Italics added.)

B. Statements to subtenants

Plaintiffs alleged defendants made statements to the subtenants that the “discount

mall was going to be closed down by the City” and that the subtenants “should move

their businesses to other premises.” Defendants argue that these statements to subtenants

“simply reiterate[d] the legal effect of a successful unlawful detainer action (i.e.,

termination of the tenants’ possession), and thus relate[d] directly to, and were made in

anticipation of, the City’s eventual unlawful detainer action.” In other words, these

statements were prelitigation communication protected under section 425.16.

In support of their position, defendants rely on Feldman v. 1100 Park Lane

Associates (2008) 160 Cal.App.4th 1467 (Feldman). In Feldman, the landlord filed an

unlawful detainer action against a tenant and his subtenants. The subtenants, the

Feldmans, then filed a cross-complaint against the landlord and Andrew Hawkins

alleging retaliatory eviction, breach of implied covenant of quiet enjoyment, and

wrongful eviction, among other claims. (Id. at pp. 1473, 1475.) The Feldmans alleged

they reached an agreement with the tenant to sublet his apartment and they believed they

had been approved as subtenants by the landlord’s attorney. (Id. at pp. 1473-1474.) The

Feldmans moved into the apartment. About a month later, Hawkins, “who identified

himself as the ‘trouble shooter’ for the owner of the apartments,” gave notice that they

had not been approved and they were in possession of the apartment unlawfully. (Id. at

p. 1474.) According to subtenant and cross-complainant Konrad Feldman, Hawkins

subsequently made the following threatening statements to him:

13.

“‘(A) That he has done hundreds of evictions, so he knows the

landlord will win, and how many had we done?

“(B) That regardless of the outcome of the current case, my wife

and I will never be able to rent another apartment in San Francisco;

“(C) That he understands the law and has discussed the case with

his uncle, who is a federal judge;

“(D) That we will not be able to file suit against them because they

will win; [and]

“(E) That we could not have read the Addendum [a document

provided by the landlord’s attorney regarding the subtenancy] properly.’”

(Feldman, supra, 160 Cal.App.4th at pp. 1474-1475.)

The landlord and Hawkins filed an anti-SLAPP motion to strike the Feldmans’

cross-complaint. The trial court found the claims arose from protected activity but

determined that the Feldmans showed a probability of prevailing on all of their claims

except the claim for retaliatory eviction. (Feldman, supra, 160 Cal.App.4th at pp. 1475-

1476.) Both parties appealed. (Id. at p. 1477.)

Aside from a single negligence claim (which was based on the landlord’s

communications with the Feldmans made before they moved in), the Court of Appeal

observed, “[I]t appears that the cross-complaint was based entirely upon the alleged

threats by Hawkins, the service of the notice to quit, and the filing of the unlawful

detainer action itself.” (Feldman, supra, 160 Cal.App.4th at p. 1479.) The filing of the

unlawful detainer and service of the notice to quit were protected activity under

section 425.16. (Id. at pp. 1479-1480.) Further, the court concluded: “Hawkins’s

alleged ‘threats’ were similarly within the scope of the anti-SLAPP statute. Clearly these

statements were communications in connection with an ongoing dispute and in

anticipation of litigation.” (Id. at p. 1481.)

We agree with defendants that Feldman is instructive. In the present case, there

was an ongoing dispute between the City and the tenants regarding the tenants’

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obligations under the lease, as shown by Rudd’s letter of September 1, 2011, and it was

anticipated that the City would file an unlawful detainer action following service of

written notice to perform or quit. Statements to the subtenants that the discount mall was

going be closed down by the City, the subleases were void, and the subtenants should

move out essentially communicated the speaker’s opinion that the City would prevail in

an unlawful detainer action. These statements are similar to Hawkins’s statements in

Feldman that the landlord would win and the Feldmans would not be able to file suit

against the landlord. Since plaintiffs alleged that PBID was an agent or employee of the

City, PBID representatives are analogous to Hawkins, who was the landlord’s

representative. (Feldman, supra, 160 Cal.App.4th at p. 1489.) Following the reasoning

of Feldman, we conclude these statements—that the discount mall was going to be closed

down by the City, the subleases were void, and the subtenants should move out—were all

communications in connection with an ongoing dispute and in anticipation of litigation

and, therefore, were protected activity under section 425.16.

Although the trial court relied on Feldman in its decision, plaintiffs did not address

the case in their opening appeal brief. Their attempts to distinguish Feldman in their

reply brief are not persuasive. They point out that Feldman did not involve claims of

business interference and the landlord in Feldman did not interfere with its tenant’s

business (although it did interfere with the tenant’s agreement with his subtenants).

Plaintiffs then argue the Feldman holding does not apply to this case, but they do not

explain why.7 Next, plaintiffs concede that “[a] landlord is within its rights to serve a

7 The fact that plaintiffs in this case alleged business tort claims while the Feldmans

sued for retaliatory eviction (among other claims) is not a meaningful distinction. The

focus of our analysis is defendants’ alleged conduct, not the form of plaintiffs’ causes of

action. (See Navellier, supra, 29 Cal.4th at pp. 91-92 [rejecting argument that breach of

contract and fraud claims are categorically not covered by the anti-SLAPP statute and

observing “conduct alleged to constitute breach of contract may also come within

constitutionally protected speech or petitioning”].)

15.

notice to perform [or] quit, and to tell sub-tenants that they will lose an eviction case and

have to vacate.” They claim, however, that they “are not suing for anything having to do

with litigation.” This is not a reasonable characterization of their own complaint. Their

complaint alleged, “As a result of said service [of the first notice] and the statements by

defendant’s agents or employees to the sub-lessees, the sub-lessees immediately stopped

paying rent and have vacated said premises.… Defendant’s acts have denied plaintiffs

the beneficial use of said premises .…” Plaintiffs’ claims clearly arose from the service

of the first notice and statements made in connection with the potential unlawful detainer

action.

1. Claims based on protected and unprotected activity

As we have noted, plaintiffs contend their claims are not based on the service of

the first notice but are “based on the landlord’s interference with and solicitation of

plaintiffs’ sub-tenants in breach of the landlord’s covenant of quiet enjoyment.” They

assert: “[Defendants] convinced the sub-tenants to breach their leases. They solicited

business. They assisted the sub-tenants in vacating the premises. A landlord can’t solicit

the tenant’s customers, causing it to lose its sole source of income, and then continue to

demand the payment of rent and other leasehold obligations.” We have already

concluded that statements to subtenants made in connection with the ongoing landlord-

tenant dispute and potential consequences of an unlawful detainer action were protected

under section 425.16. There was also evidence that PBID offered to help subtenants find

new storefronts.8 To the extent plaintiffs’ argument is that the offer to help subtenants

8 Capacete heard PBID representatives tell subtenants that PBID had readily

available alternative premises where they could immediately relocate. PBID distributed a

flyer which stated, “In response to the recent eviction notice presented, we want to assist

any interested retailers to find alternative storefronts in Downtown Fresno. Our goal is to

help you relocate and hopefully not miss one day of sales.” There is no evidence in the

record that PBID actually helped subtenants relocate, however.

16.

relocate was not protected activity because it was not made in connection with an

ongoing dispute and in anticipation of litigation, we conclude this does not insulate

plaintiffs’ claims from the anti-SLAPP statute.

“Where a cause of action is based on both protected activity and unprotected

activity, it is subject to section 425.16 ‘“‘unless the protected conduct is “merely

incidental” to the unprotected conduct.’”’ [Citations.]” (Wallace, supra, 196

Cal.App.4th at p. 1187; Salma v. Capon (2008) 161 Cal.App.4th 1275, 1287 (Salma) [“A

mixed cause of action is subject to section 425.16 if at least one of the underlying acts is

protected conduct, unless the allegations of protected conduct are merely incidental to the

unprotected activity.”].)

Here, all of plaintiffs’ claims were premised on the allegation that defendants’

conduct caused plaintiffs’ subtenants to breach their subleases and move out, resulting in

the denial to plaintiffs of “the beneficial use of [the] premises.” According to Capacete,

vacating subtenants told him they were “scared” by statements made by PBID

representatives and they were leaving “because they needed to do business without

interruptions or problems.” This suggests the subtenants moved out of plaintiffs’

discount mall because they were afraid they were going to be evicted, not simply because

they were offered help in finding different retail space. In other words, the subtenants

moved out because of defendants’ protected activities of serving the notice to perform or

quit and making statements related to the potential unlawful detainer action. Thus, even

if we assume the offer to help subtenants relocate was not protected activity, we cannot

say the protected activity was merely incidental to the unprotected activity. Rather,

defendants’ protected activities “represent the bulk of the allegations underlying [each]

cause of action.” (Salma, supra, 161 Cal.App.4th at p. 1288.) Accordingly, all of

plaintiffs’ claims are subject to the anti-SLAPP motion. (See, e.g., Wallace, supra, 196

Cal.App.4th at pp. 1184-1187 [retaliatory eviction claim was subject to anti-SLAPP

motion where claim was based on protected activities of three-day notice to quit and

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ensuing unlawful detainer action and unprotected activities of neighbors’ complaints to

landlord and landlord’s refusal to accept new subtenant].)

2. Case law

In support of their position that their claims are not based on defendants’ protected

litigation activity, plaintiffs cite Department of Fair Employment & Housing v. 1105 Alta

Loma Road Apartments, LLC (2007) 154 Cal.App.4th 1273 (Alta Loma). In Alta Loma, a

landlord decided to remove its apartment building from the rental market, and one of the

tenants asserted that she was disabled and requested a year to find alternative housing

pursuant to state and local law. The landlord requested confirmation of the tenant’s

disability, and the tenant, believing it was a violation of her right to privacy, did not

provide detailed information about her disability. The landlord had the tenant removed

through an unlawful detainer action. The Department of Fair Employment and Housing

(DFEH) then brought suit against the landlord for disability discrimination, and the

landlord filed an anti-SLAPP motion. (Id. at p. 1275.) The trial court denied the

landlord’s motion, finding the complaint did not arise out of the landlord’s protected

petitioning activity. The Court of Appeal affirmed. (Id. at p. 1276.)

The court reasoned:

“We will assume [the landlord]’s acts of filing and serving notices of

its intent to remove its residential units from the rental market, its

investigation and communications made necessary by the rent control

removal process, and its filing and prosecuting its unlawful detainer actions

against [the tenant] constituted protected petitioning or free speech activity.

‘But the mere fact an action was filed after protected activity took place

does not mean it arose from that activity.’ Instead, ‘“‘the act underlying the

plaintiff’s cause’ or ‘the act which forms the basis for the plaintiff’s cause

of action’ must itself have been an act in furtherance of the right of petition

or free speech.” [Citation.]’

“In this case, the pleadings and the affidavits submitted by the

parties establish the gravamen of DFEH’s action against [the landlord] was

one for disability discrimination, and was not an attack on any act [the

landlord] committed during the rental property removal process or during

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the eviction process itself. [¶] … [¶] Contrary to [the landlord]’s

argument, the communications and the actual eviction itself were not the

acts attacked in DFEH’s complaint. Instead, the allegations of wrongdoing

in DFEH’s complaint arose from [the landlord]’s alleged acts of failing to

accommodate [the tenant]’s disability. The letters, e-mail and filing of

unlawful detainer actions constituted DFEH’s evidence of [the landlord]’s

alleged disability discrimination.” (Alta Loma, supra, 154 Cal.App.4th at

pp. 1283-1285, fns. omitted.)

Here, in contrast, the alleged wrongdoing by defendants was the service of the first

notice and the statements made by defendants. Plaintiffs did not allege defendants

committed any wrongful acts preceding the service of the first notice such as failing to

accommodate a disability. The present case is more like Feldman, supra, 160

Cal.App.4th at page 1483, in which the court distinguished Alta Loma because the

Feldmans’ claims were actually based on the protected activities of filing an unlawful

detainer action, serving a three-day notice, and making statements in connection with the

threatened unlawful detainer. The Feldman court explained, “These activities are not

merely cited as evidence of wrongdoing or activities ‘triggering’ the filing of an action

that arises out of some other independent activity. These are the challenged activities

and the bases for all causes of action .…” (Feldman, supra, at p. 1483.) Likewise, in this

case, plaintiffs’ claims arose from protected activity and not “some other independent

activity.” (Ibid.; see also Wallace, supra, 196 Cal.App.4th at p. 1192 [distinguishing Alta

Loma and other landlord-tenant cases where claims were not based on landlord’s

protected activities of serving notice and filing unlawful detainer].)

The other cases cited by plaintiffs are not helpful to their appeal. Brenton v.

Metabolife Internat., Inc. (2004) 116 Cal.App.4th 679, 685-686 (Brenton) presented the

issue “whether a claim for physical injury against a manufacturer allegedly caused by use

of its product, asserting theories of liability sounding in tort, contract and strict liability,

is within the ambit of the anti-SLAPP statute merely because the manufacturer also

engaged in commercial speech to market that product.” The Court of Appeal held the

plaintiff’s claims were not subject to the anti-SLAPP statute, concluding that protected

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speech was not the basis of claims for personal injuries allegedly caused by a defective

product. (Id. at pp. 686-687, citing Martinez v. Metabolife Internat., Inc. (2003) 113

Cal.App.4th 181, 188 (Martinez).) The court followed its earlier decision, Martinez, in

which the court held that “when the allegations referring to arguably protected activity

are only incidental to a cause of action based essentially on nonprotected activity,

collateral allusions to protected activity should not subject the cause of action to the anti-

SLAPP statute.” (Martinez, supra, at p. 188.) Plaintiffs’ case is nothing like Brenton and

Martinez. We have concluded the protected activity alleged by plaintiffs was not merely

incidental to their claims.

Ericsson GE Mobile Communications, Inc. v. C.S.I. Telecommunications

Engineers (1996) 49 Cal.App.4th 1591 (Ericsson), disapproved of on another point in

Eden Council, supra, 19 Cal.4th at page 1123, footnote 10, and disapproved of on

another point in Equilon, supra, 29 Cal.4th at page 68, footnote 5, is not relevant to

plaintiffs’ appeal either. In Ericsson, the plaintiff, Ericsson, and another company,

Motorola, submitted proposals to Orange County to supply a law enforcement public

communications system. The county hired the defendant to validate analysis of the

competing proposals. (Ericsson, supra, at pp. 1594-1595.) After the county awarded the

contract to Motorola, Ericsson sued the defendant alleging intentional interference with

economic advantage. Ericsson alleged that the defendant intentionally misrepresented

the technical and financial merits of the competing proposals to persuade the county to

award the contract to Motorola. (Id. at pp. 1595-1596.) After the trial court granted the

defendant’s anti-SLAPP motion, the Court of Appeal reversed, concluding that the

complaint arose from the defendant’s performance of contractual obligations and not acts

in furtherance of the right of free speech. (Id. at p. 1594.) To the extent Ericsson held

that breach of contract or fraud claims are not subject to anti-SLAPP motions if the

defendant’s acts relate to contractual obligations, the California Supreme Court later

rejected the categorical exclusion of certain types of causes of action from the anti-

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SLAPP statute. (Navellier, supra, 29 Cal.4th at pp. 91-92.) At any rate, Ericsson

considered the scope of free speech rights under section 425.16, not petitioning activity,

and has no bearing on plaintiffs’ case.

In sum, defendants met their burden of showing that all of plaintiffs’ claims arose

from defendants’ protected activity.

IV. Second step: Plaintiffs did not demonstrate a probability of prevailing on their

claims

In the second step of the section 425.16 analysis, the court “determines whether

the plaintiff[s] ha[ve] demonstrated a probability of prevailing on the claim.” (Equilon,

supra, 29 Cal.4th at p. 67.) “‘“[T]he plaintiff[s] ‘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[s] is credited.’

[Citations.]” [Citation.]’ [Citation.] ‘Thus, plaintiffs’ burden as to the second prong of

the anti-SLAPP test is akin to that of a party opposing a motion for summary judgment.’

[Citation.] If the plaintiff fails to carry that burden, the cause of action is ‘subject to be

stricken under the statute.’ [Citation.]” (Feldman, supra, 160 Cal.App.4th at pp. 1477-

1478.)

Plaintiffs assert that, even if defendants’ conduct is covered by the anti-SLAPP

statute, they have established a reasonable probability that they will prevail on their

claims. Defendants contend that all of plaintiffs’ claims are barred by the litigation

privilege.

“The litigation privilege, codified at Civil Code section 47, subdivision (b),

provides that a ‘publication or broadcast’ made as part of a ‘judicial proceeding’ is

privileged. This privilege is absolute in nature, applying ‘to all publications, irrespective

of their maliciousness.’ [Citation.]” (Action Apartment Assn., Inc. v. City of Santa

Monica (2007) 41 Cal.4th 1232, 1241 (Action Apartment).) “‘The usual formulation is

that the privilege applies to any communication (1) made in judicial or quasi-judicial

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proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the

objects of the litigation; and (4) that [has] some connection or logical relation to the

action.’ [Citation.]” (Ibid.)

“‘The principal purpose of [the litigation privilege] is to afford litigants and

witnesses [citation] the utmost freedom of access to the courts without fear of being

harassed subsequently by derivative tort actions. [Citations.]’ [Citation.]” (Action

Apartment, supra, 41 Cal.4th at p. 1241.) To serve the purpose of “curtailing derivative

lawsuits,” our Supreme Court has “given the litigation privilege a broad interpretation,”

and it has been invoked to immunize defendants from tort liability based on intentional

inducement of breach of contract and intentional interference with prospective economic

advantage, among other claims. (Id. at pp. 1241-1242.)

The litigation privilege is not limited to statements made during trial and “‘may

extend to steps taken prior thereto.’” (Action Apartment, supra, 41 Cal.4th at p. 1241.)

“A prelitigation communication is privileged only when it relates to litigation that is

contemplated in good faith and under serious consideration.” (Id. at p. 1251.)

In Feldman, supra, 160 Cal.App.4th at page 1488, the Court of Appeal held the

litigation privilege applied to the service of the notice to quit because the evidence

showed the landlord promptly filed an unlawful detainer action after serving the notice.

“The notice to quit was clearly connected to and logically related to the unlawful detainer

action.” (Ibid.) Hawkins’s statements to the subtenant were also covered by the

litigation privilege. The court explained:

“Hawkins was [the landlord]’s representative and his statements

concerned the Feldmans’ tenancy. Crediting the Feldmans’ description of

Hawkins’s statements, he told them they were unapproved occupants, he

threatened them with legal action if they did not agree to pay market rent,

he asserted that the Feldmans could not win an eviction suit, and that

whatever the result of the threatened eviction, the Feldmans would never be

able to rent another apartment in San Francisco. Whether taken

individually or as a whole, Hawkins’s statements were clearly connected to

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and made in anticipation of the eviction action they threatened. Whether

done maliciously or without reasonable grounds to believe that the

Feldmans were unlawful occupants of the premises, the statements were

privileged.” (Feldman, supra, 160 Cal.App.4th at p. 1489.)

Similarly, in this case, the evidence shows the City followed up the first notice

with a second notice and then filed an unlawful detainer action. Plaintiffs do not allege

the City was not contemplating an unlawful detainer action at the time the first notice was

served. Therefore, the litigation privilege applies to the service of the first notice to the

plaintiffs and subtenants.9 Further, statements to subtenants that the discount mall was

going to be closed, their subleases were void, and they should move out “were clearly

connected to and made in anticipation of the eviction action … threatened” by the City,

and these statements are also covered by the litigation privilege. (Feldman, supra, 160

Cal.App.4th at p. 1489.)

It appears to us that all of defendants’ conduct is covered by the litigation

privilege. The harm alleged by plaintiffs was the denial of the “beneficial use of [the]

premises” resulting from the subtenants stopping payment of rent and vacating the

premises. As we have observed, plaintiffs’ evidence shows the subtenants moved out

because they were “scared” and needed to do business without interruption or problem,

suggesting defendants’ conduct of serving the first notice and making statements about

the potential unlawful detainer action caused the subtenants to move out. The litigation

privilege applies to this conduct. As a result, plaintiffs cannot demonstrate a probability

of prevailing on any of their claims.

9 Plaintiffs’ claim that the first notice contained the false statement that the

subleases were unauthorized does not change the result. The litigation privilege applies

even to false statements. (See Feldman, supra, 160 Cal.App.4th at p. 1489 [statements

privileged even if made “maliciously or without reasonable grounds”]; Flatley, supra, 39

Cal.4th at p. 322 [“The litigation privilege has been applied in ‘numerous cases’

involving ‘fraudulent communication or perjured testimony.’”].)

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Plaintiffs argue the litigation privilege should not apply because “there is no

reasonable or logical relationship between the institution of an unlawful detainer case and

the solicitation of plaintiffs’ sub-tenants.” Defendants respond that there is no evidence

that the City or PBID solicited plaintiffs’ subtenants and the evidence shows PBID does

not own any facilities to rent to the subtenants. We agree with defendants. Although the

evidence shows that PBID offered subtenants help to relocate, it does not show that PBID

actually helped subtenants relocate, and certainly does not show that PBID or the City

asked the subtenants to move into their facilities.

V. Attorney fees

Defendants request an award for attorney fees incurred in responding to plaintiffs’

appeal. Under section 425.16, a prevailing defendant is entitled to recover attorney fees

and costs, which includes fees incurred on appeal. (Evans v. Unkow (1995) 38

Cal.App.4th 1490, 1499-1500.) Accordingly, defendants are awarded attorney fees on

appeal, the amount to be determined by the trial court upon motion by defendants. (City

of Alhambra v. D’Ausilio (2011) 193 Cal.App.4th 1301, 1310.)

DISPOSITION

The order of the trial court is affirmed. Costs are awarded to defendants.

_____________________

Kane, Acting P.J.

WE CONCUR:

_____________________

Franson, J.

_____________________

LaPorte, J.⃰

⃰ Judge of the Kings Superior Court, assigned by the Chief Justice pursuant to

article VI, section 6 of the California Constitution.

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