The opinion
Filed 3/28/24
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION EIGHT
MEDALLION FILM LLC et al., B323356
Plaintiffs and Appellants, (Los Angeles County
Super. Ct. No. 21STCV45129)
v.
LOEB & LOEB LLP,
Defendant and Respondent.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Randolph Hammock, Judge. Judgment vacated;
reversed and remanded with directions.
Eanet, Matthew L. Eanet; Benedon & Serlin, Gerald M.
Serlin and Wendy S. Albers, for Plaintiffs and Appellants.
Hueston Hennigan and Robert N. Klieger for Defendant
and Respondent.
_______________________
Plaintiffs Medallion Film, Pelican Point Capital Partners
(Pelican Point), Jesse Kennedy, Shad Quraishi, and Ike Suri
appeal from the judgment in favor of Loeb & Loeb following the
trial court’s order granting a special motion to strike their first
amended complaint. (Code Civ. Proc.,1 § 425.16.) We vacate the
judgment, reverse the order granting the special motion to strike,
and remand with directions to enter a new order denying the
motion.
FACTUAL AND PROCEDURAL BACKGROUND
In 2014, William Sadleir, as the manager of Clarius Capital
Group (Clarius), entered into a consulting fee agreement with
plaintiffs Medallion Film and Pelican Point providing that
Medallion Film and Pelican Point would assist Clarius in
obtaining funding for film projects, and Clarius would pay them a
portion of any funding so obtained. Clarius agreed not to directly
conduct business or transactions with any of the contacts to
whom it was introduced by Medallion Film and Pelican Point.
Medallion Film and Pelican Point introduced Clarius to Randy
Robertson at BlackRock, one of their contacts listed in the
agreement.
Sadleir is alleged to have dissolved Clarius and its affiliate
and subsidiary entities in 2015, and to have formed, with the
assistance of law firm Loeb & Loeb, a new set of corporate
entities under the name Aviron in order to continue marketing
Clarius’s film properties. It is alleged that Sadleir controlled
1 All undesignated statutory references are to the Code of
Civil Procedure.
2
both the Clarius and Aviron entities, and that he transferred
Clarius’s assets to the Aviron entities.
Later in 2015, Aviron is alleged to have obtained a loan for
its film projects from BlackRock, with a further extension of the
credit arrangement in 2017. When Medallion Film and Pelican
Point learned of this funding in 2017, they allegedly contacted
Sadlier, who denied any affiliation between Aviron and Clarius
and said he was solely an employee of Aviron.
On March 25, 2018, plaintiff Quraishi, Pelican Point’s co-
founder, sent an email to Randy Robertson at BlackRock. This
message read, “Randy hope all is well. [¶] We have a fee
agreement with Bill Sadle[i]r based upon monies raised from
Blackrock thru my introduction to you. What can you do to assist
us here in collecting what is due to us. [¶] Jesse [Kennedy, of
Medallion] will provide a reconciliation. As you know our
financial models were provided to you and Blackrock on the P&A.
[¶] Let us know so we don[’]t have to litigate and can resolve the
matter in an amicable fashion. [¶] Thx.”
Loeb & Loeb learned of the Quraishi email request to
Robertson. On March 28, 2018, Loeb & Loeb partner Bernard
Given II wrote a letter to Quraishi and Kennedy on behalf of
Aviron Capital. Given described Quraishi’s email to Robertson as
a threat of legal action, and wrote, “Aviron has no legal
connection to Clarius Capital Group, LLC whatsoever. It is not a
successor in interest and there is no common ownership between
the two companies. Mr. Sadleir, who signed the referenced
agreement on behalf of Clarius Capital Group, is an Aviron
employee with no ownership interest in Aviron. Had Mr. Sadleir
left Clarius to work at Sony Pictures Entertainment, for example,
your claim for payment to you by Sony, had it received funding
3
from BlackRock, would be equally without merit. [¶] Any further
communication by you to Randy Robertson or anyone else at
BlackRock regarding this matter will be considered by Aviron to
constitute tortious interference.”
Plaintiffs allege Given knew these representations were
false when he made them because Loeb & Loeb had assisted in
the formation of the Aviron entities, registered several of them on
Sadleir’s behalf, advised Sadleir with respect to Aviron and
Clarius, and represented Aviron when it obtained funding from
BlackRock in 2015. Plaintiffs allege Given intended for
Medallion Film and Pelican Point to rely on his false
representations to conclude they were not entitled to payment
under their agreement with Clarius.
Plaintiffs allege they believed Given’s representations that
Aviron and Clarius were unaffiliated, Sadleir was merely an
Aviron employee, and they were not entitled to payment based on
the agreement. However, in December 2019, they learned, from
documents related to litigation between BlackRock and
Sadleir/Aviron, that Given’s representations were false.
Plaintiffs sued Loeb & Loeb in December 2021. The first
amended complaint alleges causes of action for fraudulent
misrepresentation, deceit by concealment, negligent
misrepresentation, aiding and abetting fraud, and violating
California Business and Professions Code section 17200.2 The
plaintiffs attached to the first amended complaint, inter alia, the
following documents:
2 The Business and Professions Code cause of action was
later withdrawn.
4
--The 2014 consulting agreement between plaintiffs and
Clarius;
--The Second Amended and Restated Limited Liability
Company Agreement of Aviron Group, alleged to be the parent
company of the Aviron entities, revising Sadleir’s ownership from
l00 percent down to 10 percent of the company, with Temerity
Trust Management (of which Sadleir was identified as manager)
owning 80 percent and a BlackRock subsidiary owning the
remaining 10 percent;
--Limited liability company agreements for two Aviron
subsidiaries, each providing Aviron Group owned the company in
its entirety and that Sadleir would control and manage all the
company’s business affairs as manager;
--The October 2015 Credit and Security Agreement
between BlackRock and Aviron Capital, specifying that one of the
conditions precedent to the effectiveness of the agreement was “a
favorable opinion of Loeb & Loeb LLP, counsel to the Loan
Parties,” and requiring correspondence to Aviron to be copied to
the firm;
--The agreement extending the BlackRock credit
arrangement in 2017, specifying as a condition precedent a
favorable opinion from Loeb & Loeb, counsel for Aviron entities
and/or subsidiaries;
--An Equity Pledge Agreement signed in October 2015 by
Sadleir, as president of Aviron Group, pledging Aviron Group’s
equity interests in subsidiaries Aviron Capital and Aviron
Pictures as collateral for the funding agreement with BlackRock;
--A 2017 omnibus amendment to Aviron’s agreement with
BlackRock, signed by Sadleir as manager of Aviron Pictures and
MAA Releasing and president of Aviron Group;
5
--Two 2019 agreements to advance funds to Aviron Capital
against the credit extended by BlackRock, signed by Sadleir as
manager of Aviron Capital and Temerity Trust Management, and
pledging Sadleir’s personal interest and Temerity Trust’s interest
in Aviron Group as collateral;
--Executive summaries for Aviron Pictures and Clarius, in
which Sadleir is identified as chairman, the companies’ business
models are described in similar terms, and a number of
management personnel are the same for both companies;
--2015 letters to Loeb & Loeb confirming the good standing
of two Aviron subsidiaries;
--A 2017 California Application to Register a Foreign
Limited Liability Company filed for an Aviron company by a
person alleged to be a Loeb & Loeb paralegal;
--The December 2019 complaint by BlackRock against
Sadleir and the Aviron entities in New York, describing the
Aviron entities’ structure, ownership, control, and agreements
with BlackRock;
--A 2019 preliminary injunction in the BlackRock litigation,
prohibiting Sadleir and the Aviron entities from holding
themselves out as manager of, or controlling, or purporting to
control, the operations of Aviron Capital and Aviron Pictures;
--BlackRock’s 2020 amended complaint alleging Sadleir had
created a sham entity and used it to siphon millions of dollars
from BlackRock’s Multi-Sector Income Trust for his personal use
in an elaborate fraud; and
--A text message asserted to have been sent in January
2020 by Sadleir to an officer at Medallion, in which Sadleir
confirmed he still owned the Aviron entities in their entirety.
6
I. The Anti-SLAPP Motion
Loeb & Loeb filed a special motion to strike the first
amended complaint as a strategic lawsuit against public
participation under section 425.16 (an “anti-SLAPP” motion).
Loeb & Loeb claimed the plaintiffs’ causes of action were all
based on the representations in Given’s letter, and they arose
from protected activity because the letter had been “sent in
express response to Plaintiffs’ threat of legal action to recover
amounts purportedly due under the Consulting Fee Agreement,
and therefore in connection with a contemplated lawsuit.”
Loeb & Loeb argued plaintiffs could not establish a
probability of success on their claims. First, Loeb & Loeb
asserted the litigation privilege provided an absolute defense to
all of the causes of action because Given’s letter was sent “in
direct response to Quraishi’s email threatening legal action,” with
the belief that plaintiffs “were actually contemplating litigation,
seriously and in good faith,” and the alleged misrepresentations
related to plaintiffs’ “anticipated claims for fees.” Second, Loeb &
Loeb contended the causes of action were barred by the three-
year statute of limitations. Even applying the discovery rule,
because plaintiffs suspected in 2018 that Sadleir controlled
Aviron, plaintiffs were obligated to investigate. Their
investigation was “minimal at best,” as they only contacted
Sadleir and BlackRock, then stopped inquiring about payment
upon receiving Sadleir’s denial and Given’s letter. This, Loeb &
Loeb claimed, was not reasonable diligence as a matter of law.
Loeb & Loeb argued that if plaintiffs had searched publicly
available records and made record requests, with “a few simple
internet searches,” they would have found a press release and
Canadian government filings relating to an unrelated company’s
7
dealings with Aviron, several online articles, and Aviron’s
website, and they would “readily have discovered not only that
Sadleir controlled Aviron, but also all of the other information
that was supposedly ‘unearthed’ during the BlackRock lawsuit.”
Given all that plaintiffs knew or should have discovered through
investigation, Loeb & Loeb argued their causes of action accrued
in March 2018 and were time-barred as a matter of law.
Third, Loeb & Loeb contended plaintiffs could not prove
justifiable reliance on Given’s representations as a matter of law
because it is unreasonable to rely on an adversary’s
representations under California law. Because plaintiffs believed
Sadleir controlled Aviron and they were therefore entitled to
payment under the consulting agreement, even “threaten[ing]
legal action on that basis,” it was unreasonable as a matter of law
for them to accept and rely on Sadleir and Given’s denials
without independent inquiry.
Finally, Loeb & Loeb claimed the cause of action for aiding
and abetting fraud was barred by the agent’s immunity rule.
The special motion to strike was supported by various
documents and Given’s declaration. He stated he wrote the letter
in response to Quraishi’s “threat of legal action, which I [Given]
regarded as having been made in serious and good faith
contemplation of litigation.” Given declared he believed his
statements in the letter to be true at the time based on
confidential communications and information received in the
course of representing Aviron.
II. Plaintiffs’ Opposition to the Anti-SLAPP Motion
In their opposition to the special motion to strike, plaintiffs
argued Loeb & Loeb had not met its burden of showing the claims
arose from protected activity because Given’s conduct was
8
unlawful as a matter of law and no litigation was seriously being
contemplated in good faith at the time he wrote his letter. Even
if the claims did arise from protected activity, plaintiffs argued
they had a probability of success on the merits because the
litigation privilege did not attach to Given’s letter, as litigation
was at most a future possibility and Given had not sent the letter
in good faith and in serious consideration of litigation.
Plaintiffs argued the statute of limitations had not expired
because their claims did not accrue until December 2019, when
BlackRock sued Aviron and Sadleir. In support of this argument,
plaintiffs submitted evidence that they relied on Given’s
representations to believe they were not entitled to payment
because of “Loeb’s sole access at the time to the material facts
regarding Sadleir’s business dealings and the relationship
between the Aviron and Clarius Entities.” They declared they
later learned from documents from the BlackRock litigation that
Given had known his representations in the March 2018 letter to
be false. The documents revealed Loeb & Loeb knew Sadleir
controlled the Aviron entities because the firm had advised
Sadleir with respect to the BlackRock funding.
Plaintiffs also argued they had demonstrated justifiable
reliance on Given’s representations, and the agent’s immunity
rule did not apply.
III. The Trial Court’s Ruling
On July 12, 2022, the trial court granted the special motion
to strike. With respect to the first prong of the anti-SLAPP
analysis, whether the claim arises from protected activity, the
court found all plaintiffs’ causes of action arose from Given’s
letter. The court found plaintiffs’ evidence was “certainly not
insubstantial and raises a reasonable doubt as to whether Given
9
was truly ignorant of his letter’s falsity.” However, for activity to
be considered unprotected unlawful conduct, the illegality of the
conduct in question must be conceded or conclusively established
by the evidence, neither of which was the case; and because no
showing of good faith/serious consideration of litigation was
required, Loeb & Loeb met its burden of demonstrating the letter
was sent in connection with anticipated litigation.
On the second prong, the court concluded plaintiffs had not
demonstrated a probability of prevailing on the merits because
the litigation privilege barred each cause of action. Although this
was dispositive of the motion, the court analyzed the remaining
prong 2 arguments “for discussion purposes” and concluded the
causes of action were not barred by the statute of limitations,
there was no evidence plaintiffs’ investigation could have
revealed Given’s representations were false, and the agent’s
immunity rule did not apply.
At the hearing, the trial court said it did not like the result
and it believed the outcome was “probably not” fair. The court
encouraged plaintiffs to appeal because if Given knowingly and
maliciously lied, plaintiffs “should be able to sue them for that.”
The trial court struck the first amended complaint in its
entirety and entered judgment in favor of Loeb & Loeb. Plaintiffs
appeal.
DISCUSSION
I. The Anti-SLAPP Law
“The anti-SLAPP statute is ‘designed to protect defendants
from meritless lawsuits that might chill the exercise of their
rights to speak and petition on matters of public concern.
[Citations.] To that end, the statute authorizes a special motion
10
to strike a claim “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.” (§ 425.16, subd. (b)(1).)’ ” (Bonni
v. St. Joseph Health System (2021) 11 Cal.5th 995, 1008–1009
(Bonni).)
Litigating an anti-SLAPP motion is a two-step process.
“First, ‘the moving defendant bears the burden of establishing
that the challenged allegations or claims “aris[e] from” protected
activity in which the defendant has engaged.’ [Citation.] Second,
for each claim that does arise from protected activity, the plaintiff
must show the claim has ‘at least “minimal merit.” ’ [Citation.]
If the plaintiff cannot make this showing, the court will strike the
claim.” (Bonni, supra, 11 Cal.5th at p. 1009.)
We review de novo a trial court’s order granting an anti-
SLAPP motion, considering the pleadings and affidavits
submitted in support of, or in defense to, the subject claims.
(Flickinger v. Finwall (2022) 85 Cal.App.5th 822, 831
(Flickinger).)
II. First Prong
The first question is whether the plaintiffs’ claims arise
from protected activity. To determine this, we “ ‘consider the
elements of the challenged claim and what actions by the
defendant supply those elements and consequently form the basis
for liability.’ [Citation.] The defendant’s burden is to identify
what acts each challenged claim rests on and to show how those
acts are protected under a statutorily defined category of
protected activity.” (Bonni, supra, 11 Cal.5th at p. 1009.)
Loeb & Loeb asserts the causes of action are all based on
activity protected by section 425.16, subdivision (e)(2). We
11
independently determine whether any of the acts from which
challenged claims arise are protected under this provision.
(Bonni, supra, 11 Cal.5th at p. 1009.)
A. Applicable Law
Section 425.16, subdivision (e) identifies four categories of
conduct that are protected under the anti-SLAPP statute, one of
which is a “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)(2).) Although
the statute refers to ongoing proceedings, as this court and many
others have held, “[p]relitigation communications may qualify for
this protection so long as they ‘ “concern[] the subject of the
dispute” and [are] made “in anticipation of litigation
‘contemplated in good faith and under serious consideration.’ ” ’ ”
(Flickinger, supra, 85 Cal.App.5th at pp. 832–833; see also
Trinity Risk Management, LLC v. Simplified Labor Staffing
Solutions, Inc. (2021) 59 Cal.App.5th 995, 1005 (Trinity); People
ex rel. Allstate Ins. Co. v. Rubin (2021) 66 Cal.App.5th 493, 499
(Rubin); Nirschl v. Schiller (2023) 91 Cal.App.5th 386, 401–402
(Nirschl); Bel Air Internet, LLC v. Morales (2018) 20 Cal.App.5th
924, 940–941 (Bel Air); People ex rel. Fire Ins. Exchange v. Anapol
(2012) 211 Cal.App.4th 809, 824 (Anapol); Aguilar v. Goldstein
(2012) 207 Cal.App.4th 1152, 1162; Digerati Holdings, LLC v.
Young Money Entertainment, LLC (2011) 194 Cal.App.4th 873,
887; Bailey v. Brewer (2011) 197 Cal.App.4th 781, 789–790;
Neville v. Chudacoff (2008) 160 Cal.App.4th 1255, 1268.)
Loeb & Loeb disputes the existence of the good faith and
serious consideration requirement, relying on RGC Gaslamp,
LLC v. Ehmcke Sheet Metal Co., Inc. (2020) 56 Cal.App.5th 413
12
(RGC Gaslamp), in which the court cast doubt on its
appropriateness in the prong 1 analysis; and Pech v. Doniger
(2022) 75 Cal.App.5th 443 (Pech), which did not set forth an
independent analysis but described RGC Gaslamp’s analysis as
persuasive. Loeb & Loeb overstates the scope and import of these
decisions: in neither case did the court rule the good faith and
serious consideration requirement no longer exists to determine
whether prelitigation activity is protected. (Pech, at p. 463
[“Ultimately, the RGC Gaslamp court was not required to decide
whether the additional limitations of the litigation privilege
apply in the anti-SLAPP context, and neither are we”]; RGC
Gaslamp, at p. 429 [“We need not resolve this potential tension
here”].) “An appellate decision is not authority for everything
said in the court’s opinion but only ‘for the points actually
involved and actually decided.’ ” (Santisas v. Goodin (1998)
17 Cal.4th 599, 620.)
We respectfully disagree with the interpretation of the good
faith and serious consideration requirement in RGC Gaslamp
and Pech. The RGC Gaslamp court was troubled by what it
identified as a “potential tension” between considering whether
prelitigation communications were made in good faith and
serious consideration of litigation and the fact that prong 1 of the
anti-SLAPP analysis “requires only a prima facie showing of
protected activity, not a showing that the defendant’s acts were
ultimately lawful or constitutionally protected.” (RGC Gaslamp,
supra, 56 Cal.App.5th at p. 429.) It expressed concern that
requiring a litigant to “affirmatively show that its statements
were made in good faith while litigation was seriously
contemplated” would, in some instances, import into prong 1 an
13
analysis on the merits whether the statements ultimately arose
from protected petitioning activity. (Ibid.)
We understand this concern but think it misconstrues the
showing of good faith and serious consideration of litigation that
is required. “The ‘good faith [and under] serious consideration’
requirement is not a test for malice. (Aronson v. Kinsella (1997)
58 Cal.App.4th 254, 266, [68 Cal.Rptr.2d 305].) Instead, it
focuses on whether the litigation was genuinely contemplated”
(Anapol, supra, 211 Cal.App.4th at p. 824), and it protects
prelitigation communications made in genuine contemplation of
litigation while excluding from protection communications made
when litigation is “just a negotiating tactic or a hypothetical
possibility. [Citations.] [¶] The requirement to show that
litigation is seriously contemplated ensures that prelitigation
communications are actually connected to litigation and that
their protection therefore furthers the anti-SLAPP statute’s
purpose of early dismissal of meritless lawsuits that arise from
protected petitioning activity. (§ 425.16, subd. (a); Anapol, supra,
211 Cal.App.4th at p. 824 [the good faith and serious
consideration requirement ‘guarantees that hollow threats of
litigation are not protected’]; cf. Action Apartment [Assn., Inc. v.
City of Santa Monica (2007) 41 Cal.4th 1232,] 1251 [the policy
underlying the litigation privilege of affording ‘ “the utmost
freedom of access to the courts” ’ is furthered only if litigation is
‘seriously considered’].)” (Bel Air, supra, 20 Cal.App.5th at
pp. 940–941.)
Additionally, RGC Gaslamp and Pech involved prelitigation
activities that were intrinsically preparatory to litigation such
that no analysis of surrounding circumstances was necessary to
determine that they were protected prelitigation activity. In
14
Pech, the communication was legal advice provided by attorneys
to their clients concerning proposed litigation and the clients’
obligations to their former attorney, which by definition was
provided in preparation for litigation and was therefore protected
prelitigation speech. (Pech, supra, 75 Cal.App.5th at p. 462.) In
RGC Gaslamp, the prelitigation communication in question was
the filing of a mechanic’s lien, and the court concluded that
because the filing of a mechanic’s lien was a necessary
prerequisite to bringing a foreclosure action, it was a protected
prelitigation statement preparatory to filing a judicial
proceeding. (RGC Gaslamp, supra, 56 Cal.App.5th at p. 426.)
Finally, we note that even as it questioned the good faith
and serious consideration analysis in general, the RGC Gaslamp
court recognized its utility in circumstances when determining
whether an act was in anticipation of litigation is not as cut and
dried as it is with a mechanic’s lien: “[S]uch criteria may be
helpful in evaluating prelitigation statements that do not
intrinsically anticipate litigation.” (RGC Gaslamp, supra,
56 Cal.App.5th at p. 429.)
B. Application
From a review of the amended complaint, it is clear that
plaintiffs’ first three causes of action, for fraudulent
misrepresentation, deceit by concealment, and negligent
misrepresentation, are all based on Given’s letter. Plaintiffs’
fourth cause of action is somewhat different, and we discuss it
separately below.
We independently review the contents of Loeb & Loeb’s
letter (Trinity, supra, 59 Cal.App.5th at p. 1005) and conclude
Given’s representations were not communications made in
preparation for or in anticipation of litigation. From the first
15
sentence of its appellate brief, Loeb & Loeb repeatedly and
hyperbolically describes the email to which Given responded as
an explicit threat of litigation conclusively establishing Given’s
letter as anticipating litigation. But the actual message to which
Given was responding was nothing of the sort. This was not a
demand letter or litigation threat, and it was not even directed to
Aviron. Rather, plaintiffs reached out to their contact at
BlackRock—the person to whom they had introduced Sadleir
pursuant to the consulting agreement—and asked for
BlackRock’s help in securing the payment to which they thought
they were entitled: “What can you do to assist us here in
collecting what is due to us[?]” They sought BlackRock’s help so
the question of payment could be addressed informally, “so we
don[’]t have to litigate and can resolve the matter in an amicable
fashion.” The email demonstrates the plaintiffs just wanted to be
paid, and they were appealing to whomever they thought would
be influential in persuading Sadleir to pay them without having
to resort to litigation. This is the exact opposite of a threat of
litigation.
While eventual litigation was a remote possibility from the
mere fact that the message alerted Given that someone wanted
something from Aviron, a remote possibility is not enough to
demonstrate a communication is actually connected to litigation
and is therefore protected. When conduct “ ‘will lead to litigation
only if negotiations fail or contractual commitments are not
honored, future litigation is merely theoretical rather than
anticipated and the conduct is therefore not protected
prelitigation activity.’ ” (Rubin, supra, 66 Cal.App.5th at p. 499.)
Indeed, “where one party to a contract requests the other party to
perform its duties under the agreement,” the “possibility of
16
litigation in the event of nonperformance is not enough to
conclude the claim is made in anticipation of litigation
contemplated in good faith and under serious consideration.”
(Anapol, supra, 211 Cal.App.4th at p. 828.)
Given declared he wrote the letter in response to Quraishi’s
“threat of legal action, which I regarded as having been made in
serious and good faith contemplation of litigation.” This self-
serving declaration is both insufficient on its own to establish a
prima facie showing of protected activity (Anapol, supra,
211 Cal.App.4th at p. 830; Nirschl, supra, 91 Cal.App.5th at
p. 403 [“one side’s subjective belief that negotiations will fail or
that litigation will likely occur is insufficient, standing alone, to
transform statements made in a prelitigation negotiation into
protected activity”]) and at obvious odds with the actual
correspondence forwarded to Given. Once we dispense with the
fiction that plaintiffs’ email to BlackRock was an explicit threat
of litigation against Aviron, Loeb & Loeb offers no evidence that
Given wrote his letter in good faith and serious contemplation of
litigation. Given did not declare he was seriously and in good
faith contemplating litigation when he made his alleged
misrepresentations; and he had no reason to believe litigation
would result from the communications here because the parties
“could well have negotiated a settlement and obviated any need”
for litigation. (Mission Beverage Co. v. Pabst Brewing Co., LLC
(2017) 15 Cal.App.5th 686, 704.) Given’s bombastic and
disproportionate response to an email not even directed to his
client is not a communication made in good faith and serious
contemplation of litigation but an attempt to dissuade the
plaintiffs from making any further inquiries.
17
We conclude Given’s letter was not prelitigation conduct
protected under the anti-SLAPP statute.
C. Fourth Cause of Action
Plaintiffs’ fourth cause of action, for aiding and abetting
fraud, is predicated on different conduct. In this claim, plaintiffs
contend Loeb & Loeb “knew that Sadleir was going to commit
fraud against Plaintiffs because they represented Sadleir as well
as the Aviron Entities and Clarius Entities in transactional and
litigation matters. In fact, Defendant[] assisted with the
formation of the Aviron Entities and ultimately advised Sadleir
on the BlackRock funding. Defendant[] [was] therefore privy to
Sadleir’s plan to form the Aviron Entities to continue marketing
and distributing film projects that he initially undertook through
the Clarius Entities. [¶] Defendant[] helped Sadleir form the
Aviron Entities to continue marketing and distributing film
projects that he initially undertook through the Clarius Entities,
with the knowledge and intention that formation of the Aviron
Entities was done, in part, to avoid Sadleir’s contractual
obligation to pay Plaintiffs pursuant to the Consulting Fee
Agreement.”
This allegedly wrongful conduct precedes Given’s letter and
has no connection to protected activity; in this cause of action, the
letter is essentially the external-facing cover-up of Loeb & Loeb’s
previous actions aiding and abetting Sadleir’s fraud. While the
cause of action is not a model of clarity, as it pivots from these
allegations to allegations of reliance on Given’s representations,
this cause of action nonetheless alleges Given aided and abetted
Sadleir’s alleged fraud by means of wrongful conduct entirely
separate from the later letter.
18
In their anti-SLAPP motion, Loeb & Loeb made no effort to
demonstrate that this conduct was protected activity. In fact,
they did not acknowledge these allegations, instead asserting
that each cause of action “seeks to hold Loeb liable for statements
made by Given in his March 28, 2018 correspondence” and that
“[t]he only thing Loeb is alleged to have done is to send a single
letter on behalf of Aviron, its client.” Therefore, while we hold
the causes of action were not subject to dismissal under the anti-
SLAPP law because Given’s letter was not protected prelitigation
activity, we hold that dismissal of the fourth cause of action in its
entirety was error for the additional reason that it contains
allegations of nonprotected conduct that survive any anti-SLAPP
analysis. (Bonni, supra, 11 Cal.5th at p. 1010; Baral v. Schnitt
(2016) 1 Cal.5th 376, 393, 396 (Baral) [an anti-SLAPP motion
may be used to attack parts of a count as pleaded; unprotected
activity is disregarded and the anti-SLAPP analysis is performed
with regard to the protected activity].) “[B]y its very terms,
section 425.16 does not apply to activity that is not in furtherance
of the constitutional rights of free speech or petition.” (Flatley v.
Mauro (2006) 39 Cal.4th 299, 324.)
III. Second Prong
While our conclusion that the causes of action asserted in
the amended complaint arise from conduct that is not protected is
determinative of this appeal, we discuss the second prong
because even if Loeb & Loeb did carry its burden to make a prima
facie showing that the claims alleged in the amended complaint
arose from protected activity, the plaintiffs made the requisite
showing of merit required by the statute to survive the special
motion to strike. This is equally and independently sufficient to
demonstrate the anti-SLAPP motion should have been denied.
19
“[W]e may conclude a contested portion of an anti-SLAPP motion
should be denied solely based on a plaintiff’s showing of merit, as
a sufficiently meritorious claim cannot be struck regardless of
whether it arises from activity the anti-SLAPP statute protects.”
(Serova v. Sony Music Entertainment (2022) 13 Cal.5th 859, 872.)
The Supreme Court has stated, “If the defendant makes the
required showing [on prong 1], the burden shifts to the plaintiff
to demonstrate the merit of the claim by establishing a
probability of success. We have described this second step as a
‘summary-judgment-like procedure.’ [Citation.] The court does
not weigh evidence or resolve conflicting factual claims. Its
inquiry is limited to whether the plaintiff has stated a legally
sufficient claim and made a prima facie factual showing sufficient
to sustain a favorable judgment. It accepts the plaintiff’s
evidence as true, and evaluates the defendant’s showing only to
determine if it defeats the plaintiff’s claim as a matter of law.
[Citation.] ‘[C]laims with the requisite minimal merit may
proceed.’ ” (Baral, supra, 1 Cal.5th at pp. 384–385, fn. omitted.)
Loeb & Loeb argues the plaintiffs cannot show a probability
of prevailing on the merits because their claims are barred as a
matter of law by the litigation privilege, the statute of
limitations, and the absence of justifiable reliance. We find Loeb
& Loeb has not defeated plaintiffs’ claims as a matter of law.
A. Litigation Privilege
“A plaintiff cannot show a probability of prevailing on the
merits of a cause of action for anti-SLAPP purposes where the
cause of action is barred by the litigation privilege codified in
Civil Code section 47. [Citations.] ‘The litigation privilege
precludes liability arising from a publication or broadcast made
in a judicial proceeding or other official proceeding. “ ‘The usual
20
formulation is that the privilege applies to any communication
(1) made in judicial or quasi-judicial 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.] The privilege ‘is not limited to
statements made during a trial or other proceedings, but may
extend to steps taken prior thereto, or afterwards.’ [Citation.]”
[Citation.] The litigation privilege is interpreted broadly in order
to further its principal purpose of affording litigants and
witnesses the utmost freedom of access to the courts without fear
of harassment in derivative tort actions. [Citation.] The
privilege is absolute and applies regardless of malice.’ ”
(Flickinger, supra, 85 Cal.App.5th at p. 840.)
“A prelitigation communication is privileged only when it
relates to litigation that is contemplated in good faith and under
serious consideration.” (Action Apartment Assn., Inc. v. City of
Santa Monica, supra, 41 Cal.4th at p. 1251.) The privilege
“ ‘arises at the point in time when litigation is no longer a mere
possibility, but has instead ripened into a proposed proceeding
that is actually contemplated in good faith and under serious
consideration as a means of obtaining access to the courts for the
purpose of resolving the dispute.’ ” (Haneline Pacific Properties,
LLC v. May (2008) 167 Cal.App.4th 311, 319.) It does not apply
to statements made “simply as a tactical ploy to negotiate a
bargain.” (Edwards v. Centex Real Estate Corp. (1997)
53 Cal.App.4th 15, 36 (Edwards).)
We are not persuaded Given’s letter is protected by the
litigation privilege. Given’s representations did not relate to
litigation that was contemplated in good faith and under serious
consideration. The premise of Loeb & Loeb’s litigation privilege
21
argument is that the plaintiffs’ email was an explicit threat of
litigation, and from that they reason their letter responded to
that explicit threat of litigation and was therefore written in
anticipation of that threatened litigation, satisfying the good
faith and serious consideration requirement. But this premise is
incorrect. As discussed above, the email to which Given
responded with his letter did not contain any threat: it was a
request to a third party for help obtaining money the plaintiffs
believed they were owed—in order to avoid litigation.
At most, the email alerted Given to a potential dispute with
plaintiffs that at some point, if not resolved through negotiation
and mutual agreement, could possibly develop into a lawsuit.
That is not enough to invoke the litigation privilege. (Edwards,
supra, 53 Cal.App.4th at p. 36 [the “mere potential or ‘bare
possibility’ that judicial proceedings ‘might be instituted’ in the
future is insufficient to invoke the litigation privilege”].) As the
Edwards court explained, “In the present litigious society, there
is always at least the potential for a lawsuit any time a dispute
arises between individuals or entities. More than a mere
possibility or vague ‘anticipation’ of litigation must be required
for the privilege to attach, or else the privilege may be misused in
ways for which there is no public policy justification or
purpose. . . . [T]he ‘bare possibility’ that a judicial proceeding
‘might be instituted’ in the future ‘is not to be used as a cloak to
provide immunity’ for fraud and other tortious conduct when the
possibility has not ripened into a proposed judicial proceeding
that is contemplated in good faith and under serious
consideration.” (Id. at p. 33.)
22
B. Statute of Limitations
Loeb & Loeb contends the causes of action were barred by
the three-year statute of limitations applicable to fraud claims.
(§ 338, subd. (d).) A cause of action for fraud accrues when the
injured party could have discovered the fraud or mistake through
the exercise of reasonable diligence (Sun’n Sand, Inc. v. United
California Bank (1978) 21 Cal.3d 671, 701, superseded by statute
on other grounds as stated in Mills v. U.S. Bank (2008)
166 Cal.App.4th 871, 883), and actual knowledge is not required
for accrual if “a plaintiff knows facts that should raise suspicion
and trigger a further investigation.” (Vera v. REL-BC, LLC
(2021) 66 Cal.App.5th 57, 69.)
Loeb & Loeb argues plaintiffs already suspected Sadleir
controlled Aviron in 2017, as demonstrated by their 2017
communication with Sadleir asking about payment. This
suspicion, Loeb & Loeb contends, obligated plaintiffs to
investigate, and their minimal investigation was not reasonably
diligent as a matter of law. Loeb & Loeb argues plaintiffs did not
allege they took any steps “to ascertain Sadleir’s relationship
with Aviron beyond a single inquiry to each of Sadleir and
BlackRock. Plaintiffs do not purport to have searched publicly
available materials, to have requested copies of the financing
agreements or any corporate records, or to have done anything
else to investigate their suspicion” that Sadleir controlled Aviron.
Had plaintiffs searched these materials, Loeb & Loeb represented
to the trial court, “they would readily have discovered not only
that Sadleir controlled Aviron, but also all of the other
23
information that was supposedly ‘unearthed’ during the
BlackRock lawsuit.”3
Specifically, Loeb & Loeb asserted in support of their anti-
SLAPP motion that with “a few simple internet searches,”
plaintiffs would have discovered: (1) a 2015 press release from a
Canadian company, Quizam Media Corporation, announcing it
had signed a letter of intent to acquire an equity interest in
“Sadleir’s new motion picture distribution company,
headquartered in Beverly Hills, California,” of which Sadleir was
presently the only other shareholder; (2) Quizam’s 2015 filing
with SEDAR, which Loeb & Loeb described as the Canadian
equivalent of the Securities and Exchange Commission’s EDGAR
filing system, disclosing it had entered into an agreement with
Sadleir and Aviron to acquire an interest in Aviron; and (3) three
of Quizam’s Consolidated Financial Statements covering the
years 2014 through 2016, and its 2015 Management’s Discussion
& Analysis form, each of which mentioned Quizam investing in
“William Sadleir’s new motion picture distribution company,
Aviron Capital, LLC.” Loeb & Loeb also asserted that plaintiffs
would have found a January 2017 Nasdaq.com article, articles
from May 2017 and November 2017 from Deadline Hollywood,
and Aviron’s website. According to a declaration by Loeb &
3 Perhaps sensing an overstatement, Loeb & Loeb moderated
that assertion on appeal, stating that investigation of publicly
available documents would have told plaintiffs “that Sadleir
exercised at least indirect control over the company.”
24
Loeb’s counsel, these articles and website printouts were
attached to the declaration, but they are not in the record.4
Loeb & Loeb’s argument is unavailing. If the plaintiffs
suspected Sadleir controlled Aviron as of 2017 or their inquiries
in 2018, that would allow a fraud claim against Sadleir to have
accrued at that time. But these are claims against Loeb & Loeb,
based not on Sadleir’s fraud but on Loeb & Loeb’s conduct:
making allegedly false representations about Sadleir, Aviron, and
Clarius, as well as whether the 2014 consulting fee agreement
entitled plaintiffs to payment. Suspecting they might be owed
money under the agreement is not sufficient to put plaintiffs on
notice that a letter from Aviron’s attorney specifically dispelling
that suspicion may have contained false representations.
Even if plaintiffs were required to investigate Given’s
representations in the letter because before receiving it they
thought they were or could be entitled to payment, there is no
evidence that a reasonable investigation would have revealed
4 According to Loeb & Loeb, one of these articles mentioned
“the October 2015 Share Exchange agreement between Quizam
and Aviron and William Sadleir” (the January 2017 article);
another stated Aviron Pictures had been formed with funding
from “Aviron Capital, a consortium of financiers including
principal William Sadleir” (the May 2017 article); and the third
described Aviron as “a consortium of financiers including
principal William Sadleir, who is chairman/CEO” (the November
2017 article). Loeb & Loeb also described printouts from Aviron
Pictures’s website as identifying Sadleir as “previously CEO of
Clarius Entertainment” and Aviron’s “Chairman & CEO”;
describing the company’s business model in similar terms to that
of Clarius Capital; and identifying various former Clarius
executives as members of Aviron’s senior management team.
25
Given had made false representations to them. “The mere fact
that information exists somewhere in the public domain is by no
means conclusive.” (Vega v. Jones, Day, Reavis & Pogue (2004)
121 Cal.App.4th 282, 295.) The “reasonable” investigation
proposed by Loeb & Loeb would have involved rooting through
government filings and financial statements made by a Canadian
company, an investigation significantly deeper than the “simple
internet searches” Loeb & Loeb claimed would have yielded this
information. While a single phrase in Quizam’s 2015 press
release did say Sadleir’s new company had no other shareholders,
we are not convinced that plaintiffs should be charged with
locating a single phrase in an unrelated company’s press release
that did not even mention Aviron by name, simply calling it “New
Company.”
More importantly, none of the documents identified by Loeb
& Loeb would have revealed to plaintiffs that Given’s letter
contained misrepresentations. The Canadian company
documents simply referred to negotiations and an agreement to
acquire an interest in Aviron, referred to as “Sadleir’s new motion
picture distribution company.” While, as noted above, the
Canadian company’s 2015 press release contained a statement
that Sadleir’s unnamed new company had no other shareholders,
his full ownership of Aviron in 2015 does not mean that at other
times Sadleir owned all of Aviron—in fact, the Quizam
documents suggest Sadleir later did not own Aviron in its
entirety, since they announce and concern Quizam’s purchase of
an ownership interest in Aviron. While we were not provided
with the remaining items Loeb & Loeb says a basic investigation
would have uncovered, based on its description of them they
similarly would not have been enough to alert plaintiffs, or any
26
reasonable person, that Given’s various representations about
Sadleir, Aviron, and Clarius may have been false.
We also note that Given declared that at the time he wrote
the letter, he believed his representations were accurate. If
Given, who as Sadleir and Aviron’s attorney had access to not
only all the information in the public record, but also his
“confidential communications with Mr. Sadleir in his capacity as
an Aviron employee and other confidential information that Loeb
received from Aviron in the course of its representation,” was not
able to detect that his statements were false, this both
undermines any claim that plaintiffs should have been on notice
that Given’s statements might be misrepresentations and
strongly suggests they would not, exercising reasonable diligence,
have discovered the letter contained false statements.
Accepting plaintiffs’ evidence as true, it is reasonable to
conclude plaintiffs were not aware of the alleged
misrepresentations in Given’s letter until the documents were
revealed in the BlackRock litigation. As the trial court noted, the
fact that they did not file suit until those documents became
available is evidence that they had not been aware of the fraud.
The causes of action are not barred by the statute of limitations.
C. Justifiable Reliance
In a rather bleak argument, Loeb & Loeb argues plaintiffs
cannot prove they justifiably relied on Given’s representations
because as a matter of law it was not justifiable to rely on the
representations he made as counsel for Aviron.
Loeb & Loeb argues it is “not reasonable under California
law for a party to actual or threatened litigation to accept the
other side’s ‘representations as an adversary without an
independent inquiry’ ” (italics omitted), but the case upon which
27
it relies does not stand for such a broad principle. In Wilhelm v.
Pray, Price, Williams & Russell (1986) 186 Cal.App.3d 1324,
opposing counsel in pending litigation was alleged to have met
with the plaintiff, an 87-year-old woman, and made false
representations that convinced her to dismiss her pending
litigation. (Id. at pp. 1328–1329, 1331.) The court sustained
demurrers to the operative complaint on multiple grounds, one of
which was that the allegations precluded a showing of actual or
justifiable reliance. (Id. at p. 1332.) The court pointed out that
plaintiff had been represented by counsel, and it stated, “Because
her counsel prepared and filed the dismissal, she must have
consulted with [her counsel] before hand. Also, it would not be
‘reasonable’ for [her] to accept [opposing counsel’s]
representations as an adversary without an independent
inquiry.” (Ibid., italics omitted.)
While it may not be reasonable for a person represented by
counsel and engaged in litigation to rely on representations made
by opposing counsel about why they should drop their pending
lawsuit, that is not the case here. There was no obvious reason
for plaintiffs to consider Given an adversary. They were not
litigating against one of Given’s clients; they simply asked a third
party for help obtaining money they thought was due to them,
and in return they received Given’s letter making representations
about Sadleir, Aviron, and Clarius and denying plaintiffs had any
entitlement to money under the consulting agreement. As the
situations here and in Wilhelm markedly differ, Wilhelm does not
demonstrate that the plaintiffs could not justifiably rely on
Given’s representations as a matter of law.
28
Loeb & Loeb next cites three federal district court cases
that also do not tend to establish plaintiffs’ reliance was
unjustifiable as a matter of law. Two, Borg v. Principal Life Ins.
Co. (N.D.Cal., July 24, 2008, No. C 07-03149 JW) 2008 WL
11453724 and Facebook, Inc. v. ConnectU, Inc. (N.D.Cal., June
25, 2008, No. C 07-01389 JW) 2008 WL 8820476, state, “Where a
party is represented by counsel, or where the alleged
misrepresentation was made by an adversary during the course
of negotiations, courts have held that reliance is unjustifiable.”
(Borg, at p. *3; Facebook, at p. *5.) There is no evidence that
plaintiffs were represented by counsel on this matter, and Given’s
alleged misrepresentations were not made during negotiations.
In the third case, the plaintiffs were “sophisticated businessmen
who were represented by counsel during the negotiation,
preparation, and execution of [a] merger agreement” and then
alleged fraud during the negotiations. (Scognamillo v. Credit
Suisse First Boston LLC (N.D.Cal., Aug. 25, 2005, No. C03-2061
TEH) 2005 WL 2045807, p. *7.) Given the plaintiffs’
sophistication and representation, the court held they could not
“demonstrate that, in the absence of a fiduciary relationship,
reliance on statements made by individuals on the other side of a
business transaction would have been justified in light of
Plaintiffs’ knowledge and experience.” (Ibid.) Again, that is not
remotely akin to the factual situation here and does not suggest,
let alone establish, that plaintiffs’ reliance was unjustifiable as a
matter of law.
In Cicone v. URS Corp. (1986) 183 Cal.App.3d 194, 205, the
court rejected the proposition that an attorney “ ‘is not justified in
relying on statements of law made by an adverse party or
attorney in the course of arm’s length negotiations,’ ” and the
29
court in Shafer v. Berger, Kahn, Shafton, Moss, Figler, Simon &
Gladstone (2003) 107 Cal.App.4th 54, 75, observed that “ ‘cases
from twenty-eight states hold[] that “[a]n attorney can be liable
to a nonclient, even an adversary in litigation, for fraud or
deceit.” ’ ” In Shafer, the attorney for the defendants’ insurance
company misrepresented the scope of the insurance company’s
coverage. (Ibid.) The court ruled the plaintiffs “justifiably relied
on [the attorney’s] alleged false statements. They had no reason
to doubt him. . . . [They] reasonably relied on the coverage
representations made by counsel for an insurance company.”
(Id. at pp. 75–76.)5 Similarly here, accepting plaintiffs’ evidence
as true, they reasonably relied on representations concerning
Aviron’s ownership, control, and obligations made by counsel for
that company.
Loeb & Loeb claims it was “unreasonable as a matter of
law” for plaintiffs to rely on Given’s representations without
independent inquiry because “plaintiffs actually believed that
Sadleir controlled Aviron and that they were therefore entitled to
payment under the Consulting Fee Agreement, and they
threatened legal action on that basis.” The portions of the record
Loeb & Loeb relies upon to support that assertion do not bear it
out. Loeb & Loeb cites to the email plaintiffs sent to BlackRock,
which does not state or necessarily imply they believed Sadleir
controlled Aviron; and, as we have already discussed, was not a
threat of legal action. Loeb & Loeb also refers the court to the
declarations of Quraishi and Kennedy, both of which describe
5 Loeb & Loeb attempts to distinguish this case by asserting,
inaccurately, that the misrepresentation upon which the Shafer
plaintiffs relied was made by “plaintiff’s own counsel.”
30
Quraishi’s inquiries with Sadleir and BlackRock, and neither of
which establishes they believed Sadleir controlled Aviron and
that this entitled them to payment under the consulting
agreement. This argument does not establish that plaintiffs’
reliance was unjustifiable as a matter of law.
The reasonableness of reliance is a question of fact, and it
may only be decided as a matter of law “ ‘if reasonable minds can
come to only one conclusion based on the facts.’ ” (Hasso v. Hapke
(2014) 227 Cal.App.4th 107, 132.) Loeb & Loeb has not
demonstrated that reasonable minds could only conclude the
plaintiffs’ reliance on Given’s representations was unreasonable.
Loeb & Loeb argues “the most basic of inquiries would have
revealed the true facts,” but that both assumes a duty on
plaintiffs’ part to perform this research—a duty Loeb & Loeb has
not established—and fails to answer the question why plaintiffs
would or should have thought they needed to verify the
unsolicited representations about Aviron made by its attorney,
whose knowledge of the company and its structure, ownership,
and obligations was considerably more extensive than theirs.
Moreover, as discussed above, the evidence does not show that if
the plaintiffs had performed the research Loeb & Loeb claims
they should have performed, they would have located information
revealing Given’s representations to them were false. To the
contrary, it strongly suggests that even in the exercise of
reasonable diligence they would not have learned Given had
made misrepresentations to them.
We agree with the trial court that plaintiffs’ evidence was
“certainly not insubstantial and raises a reasonable doubt as to
whether Given was truly ignorant of his letter’s falsity.”
Plaintiffs submitted evidence that Given made representations of
31
important facts to plaintiffs; he knew those representations to be
false at the time he made them, and he intended for plaintiffs to
rely upon them and stop inquiring about payment; and that
plaintiffs believed Given and reasonably relied on his
representations to their detriment, suffering economic damages
as to which the misrepresentations were a substantial cause. In
light of this evidence, and because the claims are not barred as a
matter of law, we conclude the plaintiffs have “made a prima
facie factual showing sufficient to sustain a favorable judgment.”
(Baral, supra, 1 Cal.5th at p. 385.)
DISPOSITION
The judgment is vacated and the order granting the special
motion to strike is reversed. On remand, the trial court is
directed to enter an order denying the motion. Appellants shall
receive their costs on appeal.
CERTIFIED FOR PUBLICATION
STRATTON, P. J.
We concur:
WILEY, J. VIRAMONTES, J.
32