AARON, J.
Defendants Aimco Properties, L.P. (Aimco), Neil Heimburge, Erik Heimburge, and Saundra Squires (the Heimburges and, together with Aimco, Defendants) appeal an order denying their motion under the anti-SLAPP
In order for a defendant to prevail on an anti-SLAPP motion, the defendant must establish that the challenged claim arises from activity protected by section 425.16. (Taus v. Loftus (2007) 40 Cal.4th 683, 712.) If the defendant makes the required showing, the plaintiff then must demonstrate the merit of the claim by establishing a probability of success. (Id. at p. 714.) During the pendency of this appeal, the California Supreme Court issued a decision in Baral v. Schnitt (2016) 1 Cal.5th 376 (Baral), disapproving a line of cases concerning the showing required of a plaintiff at the second step of the anti-SLAPP analysis in cases in which the factual allegations supporting a pleaded cause of action include both protected and unprotected activity. Baral also clarified the "showings and findings" required at both steps of the anti-SLAPP procedure. (Baral, 1 Cal.5th at p. 396.) We requested that the parties file supplemental briefs addressing the impact, if any, of the Baral decision on this case.
We conclude that Defendants did not carry their initial burden at the first step of the anti-SLAPP analysis to show that any of Shops's claims for relief arose from Defendants' protected activity. Rather, Defendants' protected conduct alleged in the SAC was incidental or collateral to, and merely provided context for, Shops's claims for relief.
In 2014, the Baroudis (Krista Baroudi and her son Marco) and the Heimburges each owned 50 percent of La Jolla Cove Motel and Hotel Apartments, Inc. (LJCM), and Universal Boot Shops, a general partnership (UBS). LJCM and UBS owned certain real property in La Jolla located on Coast Boulevard and on Prospect Street.
In June 2014, the Heimburges accepted an offer from PRES Real Estate Investments, LLC (PRES) to purchase their 50 percent interests in LJCM and UBS for approximately $26 million in cash and provided notice of the offer to LJCM, UBS, and the Baroudis, pursuant to their ROFR rights. In July, PRES assigned to Aimco its rights to purchase the Heimburges' interests in LJCM and UBS.
In August, after the primary ROFR rights of LJCM and UBS had expired and the Baroudis' secondary ROFR rights were triggered, the Baroudis accepted a letter of intent pursuant to which La Jolla Cove Suites, LLC (Suites) would purchase all of the stock of LJCM and assets of UBS for $60 million. The Baroudis received a $1 million deposit from Suites. On that day, the Baroudis exercised their ROFR rights to purchase the Heimburges' 50 percent interests in LJCM and UBS on the same terms as set forth in the PRES offer, and paid a $1 million deposit into escrow. Suites subsequently assigned its rights under the letter of intent to Shops. After learning of that letter of intent, Aimco took action to prevent the sale of the real property owned by LJCM and UBS to Shops and, instead, to secure that property for itself.
On September 16, Aimco and the Heimburges entered into a contribution agreement (Contribution Agreement), pursuant to which Aimco agreed to purchase the Heimburges' interests in LJCM and UBS and apparently offered the Heimburges the option to avoid or defer taxes on the transaction by accepting as purchase consideration operating partnership units in an umbrella partnership real estate investment trust. The Contribution Agreement stated, inter alia, that: "If Krista Baroudi subsequently refuses or fails to close the transactions contemplated by her purported exercise of each ROFR on or before September 30, 2014, such ROFR shall be deemed to have been waived."
Just before the scheduled close of escrow for the Baroudis' exercise of their ROFR, Aimco filed a lawsuit against the Heimburges and the Baroudis seeking equitable relief to prevent that closing.
That same day, Shops and the Baroudis executed a formal purchase agreement. However, shortly thereafter, CTC notified them that pending litigation prevented it from proceeding with the closing of the Baroudis' ROFR rights and sale of their interests in LJCM and UBS to Shops. Nevertheless, Shops deposited the entire $60 million purchase price into the escrow account and requested that the Baroudis and the Heimburges complete the ROFR closing that day. In fact, the closing did not occur on that day, nor did it occur thereafter.
Aimco purchased the Heimburges' and the Baroudis' interests in LJCM and UBS before the end of 2014.
While the Aimco purchase was pending, Shops filed the instant action. Its SAC named Aimco, the Heimburges, LJCM, UBS, and others as defendants and alleged nine causes of action: (1) intentional interference with contract; (2) intentional interference with prospective economic relations; (3) negligent interference with prospective economic relations; (4) unfair business practices (UBP); (5) declaratory relief that the Baroudis had properly exercised their ROFR rights; (6) declaratory relief that Aimco's assignment was invalid; (7) declaratory relief that the amended offer was invalid; (8) declaratory relief that the Contribution Agreement was invalid; and (9) declaratory relief that the sale transactions between Aimco and the Heimburges and Aimco and the Baroudis were invalid and should be unwound.
Defendants filed a section 425.16 motion to strike the entire SAC or, in the alternative, all allegations related to the filing of Aimco's complaint and its attorney's letter to CTC. The trial court denied the motion, concluding that Defendants had not carried their burden to show that Shops's claims arose from protected acts (i.e., Aimco's complaint and its attorney's letter) and stating that those acts were only two of many that allegedly interfered with Shops's contractual and other rights related to the purchase of the real property at issue. The court further concluded that, even if those two acts constituted the gravamen of Shops's claims, Shops had nevertheless carried its burden to establish a prima facie case that Defendants interfered with its rights by presenting evidence of the Contribution Agreement and Aimco's ultimate purchases of the Heimburges' and the Baroudis' interests.
Defendants timely filed a notice of appeal, challenging the trial court's order denying their section 425.16 motion. On August 1, 2016, after the parties had filed their briefs in this appeal, the California Supreme Court issued its opinion in Baral. (Baral, supra, 1 Cal.5th 376.) We requested, received, and have considered the parties' supplemental letter briefs addressing the application of Baral to this appeal.
A SLAPP "is a civil lawsuit that is aimed at preventing citizens from exercising their political rights or punishing those who have done so. `"While SLAPP suits masquerade as ordinary lawsuits such as defamation and interference with prospective economic advantage, they are generally meritless suits brought primarily to chill the exercise of free speech or petition rights by the threat of severe economic sanctions against the defendant, and not to vindicate a legally cognizable right."' [Citations.]" (Simpson Strong-Tie Co., Inc. v. Gore (2010) 49 Cal.4th 12, 21.) Section 425.16, the anti-SLAPP statute, "was enacted in 1992 for the purpose of providing an efficient procedural mechanism to obtain an early and inexpensive dismissal of nonmeritorious claims `arising from any act' of the defendant `in furtherance of the person's right of petition or free speech under the United States or California Constitution in connection with a public issue. . . .' (§ 425.16, subd. (b)(1).)" (Martinez v. Metabolife Internat., Inc. (2003) 113 Cal.App.4th 181, 186.)
Section 425.16, subdivision (b)(1), provides:
As described in the introduction, a court engages in a two-step process in deciding an anti-SLAPP motion. "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).) If the court finds such a showing has been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim." (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67 (Equilon).) "Only a cause of action that satisfies both prongs of the anti-SLAPP statute — i.e., that arises from protected speech or petitioning and lacks even minimal merit — is a SLAPP, subject to being stricken under the statute." (Navellier v. Sletten (2002) 29 Cal.4th 82, 89 (Navellier).)
Under the first step, the defendant has the initial burden to show that the claims arose from his or her protected activity. (Equilon, supra, 29 Cal.4th at p. 67.) In deciding whether the defendant has met that burden, a court considers "whether the plaintiff's cause of action itself was based on an act in furtherance of the defendant's right of petition or free speech." (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78, some italics added.) The court's focus is not the form of the cause of action or claim, "but, rather, the defendant's activity that gives rise to his or her asserted liability — and whether that activity constitutes protected speech or petitioning." (Navellier, at p. 92.)
On appeal from an order denying an anti-SLAPP motion, "[w]e independently review the record to determine whether the asserted causes of action arise from the defendant's free speech or petitioning activity, and, if so, whether the plaintiff has shown a probability of prevailing. [Citations.] We consider `the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.' [Citations.] We do not reweigh the evidence, but accept as true all evidence favorable to the plaintiff and evaluate the defendant's evidence only to determine if it has defeated the evidence submitted by the plaintiff as a matter of law. [Citations.] If the trial court's decision denying an anti-SLAPP motion is correct on any theory applicable to the case, we may affirm the order regardless of the correctness of the grounds on which the lower court reached its conclusion. [Citation.]" (City of Alhambra v. D'Ausilio (2011) 193 Cal.App.4th 1301, 1306-1307.)
Prior to the California Supreme Court's recent decision in Baral, there was uncertainty regarding how the anti-SLAPP statute applied at the second step of the anti-SLAPP analysis when a cause of action alleged both protected and unprotected conduct (i.e., a "mixed cause of action"). (Baral, supra, 1 Cal.5th at pp. 381-382.) Some courts "held that [an anti-SLAPP] motion lies only to strike an entire count as pleaded in the complaint." (Id. at p. 382.) One court so holding was Mann v. Quality Old Time Service, Inc. (2004) 120 Cal.App.4th 90, which stated: "Where a cause of action refers to both protected and unprotected activity and a plaintiff can show a probability of prevailing on any part of its claim, the cause of action is not meritless and will not be subject to the anti-SLAPP procedure." (Mann, at p. 106.) By so holding, Mann presumed that an anti-SLAPP motion must defeat an entire cause of action as pleaded in a complaint. (Baral, at p. 385.) However, other courts had concluded that allegations of protected conduct could be stricken from a mixed cause of action without affecting the allegations of unprotected conduct. (Baral, at p. 387, citing City of Colton v. Singletary (2012) 206 Cal.App.4th 751, 772-774.)
In Baral, the California Supreme Court clarified the applicability of the anti-SLAPP statute to mixed causes of action and disapproved the Mann line of cases. (Baral, supra, 1 Cal.5th at pp. 392-396.) Baral stated: "[A]n anti-SLAPP motion, like a conventional motion to strike, may be used to attack parts of a count as pleaded. [Citations.]" (Id. at p. 393.) Accordingly, "courts may rule on plaintiffs' specific claims of protected activity, rather than reward artful pleading by ignoring such claims if they are mixed with assertions of unprotected activity." (Ibid.) Construing the anti-SLAPP statute's use of the term "cause of action" to mean a claim arising from protected activity, Baral stated:
"To avoid confusion, [Baral referred] to the proper subject of a special motion to strike as a `claim,' a term that also appears in section 425.16[, subd.](b)(1)." (Baral, supra, 1 Cal.5th at p. 382.)
The court also clarified, however, that "[a]ssertions [involving protected conduct] that are `merely incidental' or `collateral' are not subject to section 425.16." (Baral, supra, 1 Cal.5th at p. 394.) In discussing protected acts that are incidental to the plaintiff's claims for relief, Baral cited Wallace v. McCubbin (2011) 196 Cal.App.4th 1169, in which the court stated at page 1183: "For purposes of anti-SLAPP analysis, . . . an alleged act is incidental to a claim, and incidental to any unprotected activity on which the claim is based, only if the act is not alleged to be the basis for liability." (Baral, at p. 394.) Wallace, in turn, cited Scott v. Metabolife Internat., Inc. (2004) 115 Cal.App.4th 404 at pages 414 to 417, in which the court concluded that the defendant's advertising conduct was merely incidental to its manufacturing and sales conduct that was the basis for plaintiff's claims for relief. (Wallace, at p. 1183; see also Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP (2005) 133 Cal.App.4th 658, 672 [protected conduct that is merely incidental to unprotected conduct is not subject to anti-SLAPP statute]; Gallimore v. State Farm Fire & Casualty Ins. Co. (2002) 102 Cal.App.4th 1388, 1399 [anti-SLAPP statute does not apply when defendant's alleged protected conduct is merely evidence supporting plaintiff's claims for relief and does not constitute the alleged wrongful conduct itself].) Baral further noted that "[a]llegations of protected activity that merely provide context, without supporting a claim for recovery, cannot be stricken under the anti-SLAPP statute." (Baral, supra, 1 Cal.5th at p. 394.)
As described above, the SAC alleged nine causes of action, including three interference claims, a UBP claim, and five requests for declaratory relief. In its general allegations, the SAC asserted certain conduct by Defendants, including the execution of the Contribution Agreement and Aimco's ultimate purchases of the Heimburges' and the Baroudis' LJCM and UBS ownership interests, that allegedly wrongfully interfered with Shops's rights under its agreement with the Baroudis. On appeal, Defendants apparently concede that those actions are not activities protected by section 425.16 and, therefore, are not subject to an anti-SLAPP motion. The SAC also alleged in the general allegations that Aimco filed its September 2014 lawsuit and that its attorney then sent a letter to CTC on September 30. However, the SAC purported to exclude the filing of that lawsuit and the letter as grounds for its claims for relief, stating:
The SAC proceeded to summarize "Defendants' acts of interference" in a chronological manner, omitting any reference to Aimco's lawsuit and its attorney's letter to CTC, while expressly describing certain other conduct, including: (1) Aimco's inducement of Richard Annen, the Heimburges' and the Baroudis' broker and fiduciary, to secretly work for it in an effort to interrupt the Baroudis' ROFR rights and closing of Shops's purchase; (2) Aimco's actions to disrupt the relations of the Heimburges and the Baroudis with the intent to prevent the closing of Shops's purchase; (3) the execution of the Contribution Agreement; (4) Aimco's ultimate purchases of the LJCM and UBS ownership interests from the Heimburges and the Baroudis, which interfered with Shops's purchase agreement and prevented Shops from acquiring the property pursuant to that agreement; and (5) Aimco's taking possession of Shops's $1 million deposit that rightfully belonged to Shops. The SAC's general allegations, described above, were then incorporated by reference into each of its nine specific causes of action. None of the nine causes of action referred to Aimco's lawsuit or its attorney's letter to CTC, or specifically alleged that those acts, or any delay in the closings of the escrows that may have been caused by those acts, were a basis for the relief requested.
Defendants filed an anti-SLAPP motion seeking an order striking Shops's entire SAC or, in the alternative, all allegations and generalized references related to the filing of Aimco's lawsuit and its attorney's letter to CTC. Defendants argued that the entire SAC should be stricken because "the only alleged causative acts by Aimco are [its] protected litigation activity" on which Shops could not show a probability of prevailing without reference to those protected acts. Alternatively, Defendants argued that the trial court should at least strike the specific allegations of protected litigation activity. Noting the split of authority that existed at that time regarding how the anti-SLAPP statute applied to a mixed cause of action, Defendants argued that the SAC did not allege any such mixed causes of action because their "[l]itigation activity is the
Shops opposed Defendants' anti-SLAPP motion, arguing, inter alia, that its claims did not arise from Aimco's lawsuit because the lawsuit had not, in fact, impaired or delayed the close of the Baroudis' ROFR escrow, and that its claims also did not arise from the letter from Aimco's attorney to CTC. Shops also argued that under the Mann line of cases, when mixed causes of action are alleged, an anti-SLAPP motion must be denied if a plaintiff shows minimal merit in any part of that cause of action. Shops maintained that Defendants' motion must therefore be denied because Shops's allegations and evidence showed that Defendants' unprotected conduct was a substantial factor in causing its harm.
In reply, Defendants argued, inter alia, that Aimco's lawsuit and its attorney's letter to CTC were not merely incidental to Shops's claims and that Aimco's execution of the Contribution Agreement and ultimate acquisitions of the ownership interests of the Heimburges and the Baroudis in LJCM and UBS were not tortious. Defendants argued that Shops's entire case should be dismissed because it was based on Aimco's litigation activities that are protected by the anti-SLAPP statute.
The trial court denied Defendants' anti-SLAPP motion in its entirety. In so doing, the court addressed both steps of the test for anti-SLAPP motions. With respect to the first step, the court concluded that Aimco's lawsuit and its attorney's letter to CTC were acts protected by the litigation privilege and, thus, by section 425.16. However, the court proceeded to conclude that Shops's claims did not arise from that protected activity, stating:
The trial court went on to address the second step of the anti-SLAPP analysis, stating that even if it were to conclude that Defendants had established that Shops's claims arose from protected activity, the court would deny the Defendants' anti-SLAPP motion because Shops had established a probability of prevailing on the merits. Specifically, the court stated:
Accordingly, the trial court denied Defendants' anti-SLAPP motion in its entirety.
Based on our independent review of the record, we conclude that Defendants did not carry their initial burden to show that any of Shops's claims for relief arose out of Defendants' alleged protected activity. Rather, the SAC's allegations of protected conduct are incidental to, or provide context for, Shops's claims for relief that arise solely out of Defendants' unprotected conduct. The trial court therefore properly denied Defendants' anti-SLAPP motion.
At the time the trial court decided Defendants' anti-SLAPP motion, it did not have the benefit of Baral's recent clarification of the required showings and findings at each step of the analysis in determining anti-SLAPP motions. The SAC alleged nine causes of action, including claims for intentional interference with contract, intentional interference with prospective economic relations, negligent interference with prospective relations, UBP, and declaratory relief. The SAC asserted that certain conduct on the part of Defendants, including the execution of the Contribution Agreement and Aimco's ultimate purchases of the Heimburges' and the Baroudis' LJCM and UBS ownership interests, wrongfully interfered with Shops's rights. The SAC also contained allegations that Aimco filed its September 2014 lawsuit and that its attorney sent a letter to CTC on September 30.
The SAC expressly set forth the grounds for its claims for relief in paragraph 62, quoted above, stating, inter alia, that Shops's "claim is that Defendants wrongfully interfered with [the Baroudis'] ROFR, the [letter of intent], later assigned to [Shops], and with [Shops's] contract with [the Baroudis], to obtain a property worth in excess of $60 million;. . . . Defendants' actionable misconduct culminated in Aimco's wrongful acquisition of the first 50% on October 31 (the Heimburges' interest) and the second 50% on December 16 (the Baroudis' interest). As a result, Aimco now possesses the Property that rightfully belongs to [Shops]."
In paragraph 63, the SAC specified Defendants' alleged acts of interference supporting Shops's claims for relief. The acts described did not include any reference to Aimco's lawsuit or its attorney's letter to CTC and, instead, expressly described the Contribution Agreement, Aimco's ultimate purchases of the Heimburges' and the Baroudis' LJCM and UBS ownership interests, and other conduct on the part of Defendants. None of the SAC's nine causes of action specifically referred to Aimco's lawsuit or its attorney's letter to CTC or specifically alleged that either of those acts, or any delay that may have been caused by those acts, was a basis for the relief requested.
Although the SAC alleged in its general allegations activity by Defendants that is protected under the anti-SLAPP statute (i.e., Aimco's lawsuit and its attorney's letter to CTC), the SAC did not base any of its claims for relief on Aimco's lawsuit or its attorney's letter to CTC.
Parsing out the SAC's allegations of protected activity, we conclude that Shops's claims for relief are not based on allegations of Defendants' protected activity. (Baral, supra, 1 Cal.5th at p. 396.) Rather, Shops's claims for relief are based on Defendants' unprotected conduct, including the execution of the Contribution Agreement and Aimco's purchases of the Heimburges' and the Baroudis' ownership interests in LJCM and UBS. Defendants argued below, and argue on appeal, that Aimco's lawsuit and its attorney's letter to CTC constituted alleged acts of interference, if not the ultimate acts of interference, under the SAC. However, as noted, the SAC did not allege that either of those protected acts caused Shops's harm. Instead, the SAC alleged that the Baroudis' ROFR rights and Shops's rights under the purchase agreement continued in effect after September 30, 2014, thereby allowing the close of escrows of the transactions based on the Baroudis' and Shops's rights to occur after that date. The SAC alleged claims for relief arising out of Aimco's acquisition, after those delays, of the Heimburges' and the Baroudis' LJCM and UBS ownership interests while Shops still had an enforceable contract to purchase the Baroudis' ownership interests in LJCM and UBS (and the Baroudis still had enforceable ROFR rights to acquire the Heimburges' ownership interests in those entities). The SAC alleged that the purchase agreement between Shops and the Baroudis provided for an extension of the escrow closing date up to three months if the Heimburges resisted the Baroudis' attempt to exercise or enforce their ROFR rights. It further alleged that Shops remained ready, willing, and able to close the purchase after September 30, 2014. Thus, contrary to Defendants' apparent belief as expressed in the Contribution Agreement, Shops contends that Aimco was not free to intervene and interfere with Shops's rights after September 30, 2014, when the escrows did not close.
To the extent that the SAC included allegations of protected activity by Defendants (i.e., Aimco's lawsuit and its attorney's letter to CTC), those allegations were merely incidental or collateral to, and merely provided context for, Shops's claims for relief, which were based on Defendants' unprotected activity as expressly alleged in the SAC. (Baral, supra, 1 Cal.5th at p. 394.) The anti-SLAPP statute does not apply to Defendants' alleged protected conduct because that conduct is, at most, evidence supporting Shops's claims for relief and does not constitute the alleged wrongful conduct on which those claims are based. (Wallace v. McCubbin, supra, 196 Cal.App.4th at p. 1183; Gallimore v. State Farm Fire & Casualty Ins. Co., supra, 102 Cal.App.4th at p. 1399.)
Accordingly, Defendants did not carry their initial burden under the first step of the anti-SLAPP analysis to show that Shops's claims for relief under the SAC arose from allegations of their protected activity. (Baral, supra, 1 Cal.5th at p. 395; § 425.16, subd. (b)(1).) Because Defendants did not carry their initial burden, we need not, and do not, address whether Shops carried its burden under the second step to show that it had a probability of prevailing on any claims for relief arising out of allegations of Defendants' protected activity. Defendants' anti-SLAPP motion therefore must be denied and none of the SAC's allegations of protected activity need be stricken under the anti-SLAPP statute. Based on our reasoning above, we conclude that the trial court correctly denied Defendants' anti-SLAPP motion.
Defendants also contend that the SAC's three causes of action against the Heimburges for interference torts and its UBP cause of action against Defendants must be stricken based on grounds other than section 425.16. In particular, Defendants contend that the Heimburges cannot be held liable for interference with their own contract or economic relationship. They also argue that the common law torts alleged in the SAC cannot provide a basis for a UBP cause of action. However, none of those arguments were raised in the trial court in Defendants' anti-SLAPP motion. Accordingly, we decline Defendants' request that we address those non-SLAPP contentions in this appeal.
The order is affirmed. Shops shall recover its costs on appeal.
McCONNELL, P. J. and BENKE, J., concurs.