Gonzalez v. Burtech Pipeline CA4/2 ( 2016 )

Filed 8/8/16 Gonzalez v. Burtech Pipeline CA4/2
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication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
FOURTH APPELLATE DISTRICT
DIVISION TWO
WECESLAO S. GONZALEZ et al.,
Cross-complainants and E063314
Appellants,
(Super.Ct.No. MCC1400499)
v.
OPINION
BURTECH PIPELINE
INCORPORATED,
Cross-defendant and Respondent.
APPEAL from the Superior Court of Riverside County. Gloria Trask, Judge.
Affirmed.
Weceslao S. Gonzalez, in pro. per.; Marisela Castaneda, in pro. per.; and Juan B.
Castaneda, in pro. per., for Cross-complainants and Appellants.
Finch, Thornton & Baird, Jason R. Thornton and M. Katy Ross for Cross-
defendant and Respondent.
1
Defendant, Jose Garcia, a foreman for plaintiff, Burtech Pipeline Incorporated
(Burtech), fraudulently submitted payroll information, resulting in paychecks written for
employees not qualified for the hourly rate reported and who did not work the hours
reported. The payroll checks were cashed by defendant, Weceslao S. Gonzalez
(Gonzalez), at various check cashing establishments, including Mailboxes Y Mas,
operated by codefendants, Juan B. Castaneda and Marisela Castaneda (the Castenedas).
Burtech sued Garcia, Gonzalez, and the Castenadas for damages arising from the
fraudulent scheme. Gonzalez and the Castanedas (collectively referred to as cross-
complainants) cross-complained, alleging that they had suffered financial and reputation
losses as a result of being indirectly associated with Garcia’s activity and named as
defendants in Burtech’s complaint. Burtech filed a special motion to strike the cross-
complaint pursuant to Code of Civil Procedure section 425.161 (anti-SLAPP, or strategic
lawsuits against public participation), which was granted; cross-complainants appealed.
On appeal, cross-complainants argue that the trial court erred in (1) granting
Burtech’s special motion to strike the cross-complaint and (2) awarding Burtech attorney
fees. We affirm.
I. BACKGROUND
We summarize the facts as set forth in the complaint and cross-complaint. Jose
Garcia worked as a foreman for Burtech, a general contracting firm specializing in
1 All further statutory references are to the Code of Civil Procedure unless
otherwise indicated.
2
underground sewer, water, and storm drain construction and installation. As foreman,
Garcia was responsible for oversight of employees and completion of field paperwork,
including daily time sheets for field employees, which meant he was responsible for
providing accurate time sheets and turning them in to Burtech’s offices weekly.
Garcia engaged in a scheme of diverting hundreds of thousands of dollars from
Burtech by hiring employees who were not qualified for the hourly rate reported and who
did not work as many hours as were reported to the payroll department. Garcia used the
names and hourly rates of other employees who were qualified to receive payment at the
rate reported, and had the payroll checks made payable in the name of the qualified
individuals, as opposed to the employees actually hired by Garcia at a lower rate to do the
work. Gonzalez would then cash the checks for a fee. After the checks were cashed,
Garcia either divided the proceeds between himself and the employee, or kept the
proceeds for himself. Eventually, the owner of Burtech visited some of the job sites, only
to find no workers on-site performing work. Approximately $230,000 was fraudulently
diverted by Garcia for an extended period of time without Burtech’s knowledge.
Burtech filed its first amended complaint (FAC) against Garcia, Gonzalez, and
Doe defendants for conversion, deceit, breach of fiduciary duty, constructive trust, money
had and received, unjust enrichment, and violation of Commercial Code section 3404.
On July 18, 2014, Burtech filed amendments to the FAC substituting Juan B. Castaneda
and Marisela Castaneda, doing business as Mailboxes Y Mas, for Does 1 and 2. The
causes of action against cross-complainants related to unjust enrichment and violation of
3
Commercial Code section 3404. Specifically, the Commercial Code claim was based on
allegations that the Castanedas willfully failed to require proper identification when
cashing checks, and knowingly cashing checks for individuals who were not the payees
of the checks.
On December 8, 2014, Gonzalez and the Castanedas filed a cross-complaint
against Burtech. The cross-complaint alleged causes of action for facilitation of fraud,
negligent hiring, retention, and supervision, equitable estoppel, civil RICO,2 and statutory
fraud. Cross-complainants alleged that Burtech used undocumented laborers and paid
them under assumed names, issuing checks to them under the assumed names. The
checks were cashed at check cashing places like Mailboxes Y Mas, and cross-
complainants were named as defendants as scapegoats for Burtech’s complicit conduct.
As a consequence, the cross-complaint alleges cross-complainants suffered monetary
losses, as well as loss of their reputation, by being indirectly associated with the illegal
activity and being named as defendants in Burtech’s complaint.
On January 20, 2015, Burtech filed a special motion to strike the cross-complaint
pursuant to section 425.16 (anti-SLAPP motion). The trial court granted the motion to
strike the entire cross-complaint without leave to amend, on the ground that it arose from
protected activity, and that cross-complainants failed to establish the probable validity of
their claims. On April 3, 2015, Burtech filed a motion for attorney fees and costs
pursuant to section 425.16, subdivision (c). The motion was granted, and Burtech was
2 Racketeer Influenced and Corrupt Organizations Act. (18 U.S.C. § 1961 et seq.)
4
awarded $17,124.79 in fees and costs. On April 13, 2015, cross-complainants filed a
notice of appeal from the order granting the special motion to strike the cross-complaint.
II. DISCUSSION
A. The Trial Court Properly Granted the Anti-SLAPP Motion.
Cross-complainants argue that the trial court erred in granting the anti-SLAPP
motion. They assert the cross-complaint is directed at Burtech’s alleged wrongful and
illegal conduct, although they concede that Burtech’s FAC was a “protected activity.”
We conclude the trial court correctly ruled on the motion.
Section 425.16 authorizes a motion to strike for “‘[a] cause of action against a
person arising from any act of that person in furtherance of the person’s right of petition
or free speech . . . .’” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal. 4th 811, 819.)
The analysis of an anti-SLAPP motion involves two steps: “First, the court decides
whether the defendant has made a threshold showing that the challenged cause of action
is one ‘arising from’ protected activity. (§ 425.16, subd. (b)(1).) If the court finds such a
showing has been made, it then must consider whether the plaintiff has demonstrated a
probability of prevailing on the claim.” (City of Cotati v. Cashman (2002) 29 Cal. 4th 69,
76.) Only a cause of action that satisfies both prongs of the anti-SLAPP statute will be
subject to being stricken under the statute. (Navellier v. Sletten (2002) 29 Cal. 4th 82, 89.)
We review orders granting or denying anti-SLAPP motions de novo. (Oasis West Realty,
LLC v. Goldman, supra, at pp. 819-829.)
5
Burtech had the initial burden of showing that the causes of action against it arose
from protected activity. (§ 425.16, subd. (e).) The protection provided for written or oral
statements made in connection with judicial proceedings includes communications
preparatory to or in anticipation of such proceedings. (Dove Audio, Inc. v. Rosenfeld,
Meyer & Susman (1996) 47 Cal. App. 4th 777, 784.) Statements made in anticipation of
litigation are considered privileged. (Karnazes v. Ares (2016) 244 Cal. App. 4th 344, 353.)
Because the statute expressly refers to “any act,” which includes communicative conduct
such as the filing, funding, and prosecution of a civil action (Rusheen v. Cohen (2006) 37
Cal. 4th 1048, 1056, citing Ludwig v. Superior Court (1995) 37 Cal. App. 4th 8, 17-19), it
protects allegations contained in a complaint against a SLAPP action. A cross-complaint
alleging a cause of action arising from the plaintiff’s act of filing a complaint against the
defendant may qualify as a SLAPP action. (Raining Data Corp. v. Barrenechea (2009)
175 Cal. App. 4th 1363, 1373.)
Here, the allegations of the cross-complaint assert cross-complainants were
financially and reputationally injured solely by virtue of Burtech’s investigation and
filing of a lawsuit to seek redress from Garcia’s fraudulent scheme, which involved using
Gonzalez to cash the payroll checks at check cashing institutions, such as the Castanedas’
business. The first cause of action alleges that Burtech “facilitated” Garcia’s fraud by
engaging in unfair methods of competition in or affecting commerce, in violation of
section 45 of title 15 of the United States Code that caused cross-complainants’ monetary
losses and loss of their reputation “by being indirectly associated with such illegal
6
activity and being named as defendants herein.” (Italics added.) Having omitted any
allegations that they were directly harmed by the alleged unfair business practices, the
sole basis for the claim is cross-complainants’ potential liability arising from the lawsuit,
a protected activity.
The second cause of action similarly alleges that cross-complainants have been
“caused to suffer financial losses and the loss of their reputations for having been
wrongfully sued by Burtech,” establishing that it also arises directly from the protected
activity of filing the lawsuit. (Italics added.) The third cause of action seeks equitable
estoppel from seeking any damages against cross-complainants, so it directly arose from
the protected activity of filing a complaint. The fourth cause of action of the cross-
complaint includes similar allegations that cross-complainants were damaged by being
named as defendants, and the fifth cause of action alleges cross-complainants suffered
financial loss and loss of their reputation by being wrongfully accused of participating in
the scheme and exposing each of them to potential criminal liability.
All of the claims in the cross-complaint are based potential damage relating to the
fact they were named in a lawsuit by Burtech, a protected activity. Cross-complainants
had no direct dealings with Burtech and did not allege any losses from having cashed any
of the checks presented by Gonzalez, aside from being named in the amended complaint
as being indirectly responsible for Burtech’s losses. Having determined that Burtech
made its threshold showing that the challenged causes of action arose from protected
7
activity, we must next determine whether Burtech demonstrated a probability of
prevailing on its claims, the second prong of the anti-SLAPP analysis.
An anti-SLAPP motion must be denied “‘if the plaintiff presents evidence
establishing a prima facie case which, if believed by the trier of fact, will result in a
judgment for the plaintiff. [Citation.]’” (Fleishman v. Superior Court (2002) 102
Cal. App. 4th 350, 356.) Whether the plaintiff established a prima facie case is a question
of law. (Zamos v. Stroud (2004) 32 Cal. 4th 958, 965.)
To satisfy this second prong, cross-complainants must substantiate each element
of the alleged causes of action through competent, admissible evidence. (DuPont Merck
Pharmaceutical Co. v. Superior Court (2000) 78 Cal. App. 4th 562, 568.) “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, supra, 29 Cal.4th at p. 89.)
In making this determination, we must examine the substance of the claims, rather than
their form or label: “The anti-SLAPP statute’s definitional focus is not the form of the
plaintiff’s cause of action but, rather, the defendant’s activity that gives rise to his or her
asserted liability—and whether that activity constitutes protected speech or petitioning.”
(Id. at p. 92, italics omitted.)
Here, the substance of each cause of action of the cross-complaint attempts to
attach liability on Burtech for naming cross-complainants in the lawsuit, and thereby
indirectly associating them with Garcia’s fraudulent scheme and exposing them to
8
potential liability. None of the causes of action establishes any conduct of Burtech that
would give rise to a claim by cross-complaints other than its act of naming them in the
action.
First, the claims sounding in fraud (first and fifth causes of action) omit any
allegation that Burtech made any representations or promises to cross-complainants, on
which they relied to their detriment. Without a misrepresentation alleged to have been
made to cross-complainants, and detrimental reliance by them on such a
misrepresentation, the conduct complained of in the first and fifth claims boil down to
Burtech’s act of filing the lawsuit. There is no likelihood cross-complainants could
prevail against Burtech on those two causes of action.
Second, the negligent hiring, etc., claim alleges injury to cross-complainants solely
due to their indirect liability to Burtech arising from the lawsuit. There is no allegation
that Garcia injured, defrauded, or otherwise harmed cross-complainants, so his conduct as
an employee of Burtech is not actionable by them, and there is no likelihood they will
prevail on it.
Third, the equitable estoppel claim is defective because the equitable estoppel
doctrine acts defensively only, such that “a stand-alone cause of action for equitable
estoppel will not lie as a matter of law.” (Behnke v. State Farm General Ins. Co. (2011)
196 Cal. App. 4th 1443, 1463.) There is no likelihood of prevailing on this claim.
Fourth, while there is a private right of action under the civil RICO statute (see
Cianci v. Superior Court (1985) 40 Cal. 3d 903, 909), it is not covered by section 41 of
9
title 15 of the United States Code as alleged in the cross-complaint (which relates to the
establishment and membership composition of the Federal Trade Commission). Cross-
complainants did not make the necessary factual allegations to bring Burtech under the
purview of the civil RICO statute (18 U.S.C. § 1964 et seq.), and did not produce
evidence at the hearing on the anti-SLAPP motion that would support its ability to prove
such a claim. There is no likelihood of prevailing on the fourth cause of action.
The trial court properly determined that all of the claims in the cross-complaint
arose from protected activity and that cross-complainants failed to establish a probability
of prevailing on any of the claims. The motion was properly granted to strike the entire
cross-complaint.
B. The Trial Court Properly Awarded Attorney Fees.
Cross-complainants assert the trial court erroneously granted Burtech’s motion for
attorney fees. They assert that the filing of the notice of appeal after the granting of the
special motion to strike deprived the trial court of jurisdiction to consider other matters.
We disagree.
It is true that under section 916, ordinarily “‘the trial court is divested of’ subject
matter jurisdiction over any matter embraced in or affected by the appeal during the
pendency of that appeal.” (Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal. 4th
180, 196-197.) However, “an appeal does not stay proceedings on ‘ancillary or collateral
matters which do not affect the judgment [or order] on appeal’ even though the
10
proceedings may render the appeal moot.” (Id. at p. 191, citing Betz v. Pankow (1993) 16
Cal. App. 4th 931, 938.)
One such ancillary or collateral matter is a motion for attorney fees. A trial court
retains jurisdiction to entertain a motion for attorney fees despite the filing of an appeal.
(Robertson v. Rodriguez (1995) 36 Cal. App. 4th 347, 360, citing Nazemi v. Tseng (1992)
5 Cal. App. 4th 1633, 1639; see also Doe v. Luster (2006) 145 Cal. App. 4th 139, 144.)
Cross-complainants do not challenge Burtech’s right to seek fees following a
successful anti-SLAPP motion, or the amount of fees and costs ordered. The trial court
was authorized to hear and award attorney fees after the notice of appeal had been filed.
III. DISPOSITION
The judgment is affirmed. Burtech is entitled to its costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
RAMIREZ
P. J.
We concur:
HOLLENHORST
J.
McKINSTER
J.
11