Edward v. Ellis ( 2021 )


Menu:
  • Filed 12/14/21
    CERTIFIED FOR PUBLICATION
    IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
    FOURTH APPELLATE DISTRICT
    DIVISION THREE
    SANFORD EDWARD,
    Plaintiff and Respondent, G059523
    V. (Super. Ct. No. 30-2019-01052734)
    DAVID ELLIS, OPINION
    Defendant and Appellant.
    Appeal from an order of the Superior Court of Orange County, Richard Y.
    Lee, Judge. Affirmed.
    Ballard Spahr, Robert S. Gutierrez and Elizabeth L. Schilken for Defendant
    and Appellant.
    Bostwick Law, Gary L. Bostwick; Drooz Legal and Deborah Drooz for
    Plaintiff and Respondent.
    A political consultant designed two campaign mailers that were distributed
    to voters in a local city council election. The mailers included statements about a local
    real estate developer and his litigation history with the city and linked the developer to
    certain candidates. The developer sued the political consultant for libel based on
    allegedly false statements about him in the mailers, and the political consultant in turn
    filed a special motion to strike the complaint under the anti-SLAPP (strategic lawsuit
    against public participation) statute. (See Code Civ. Proc., § 425.16 (§ 425.16).)
    The trial court denied the anti-SLAPP motion, finding that although the
    complaint arose from protected conduct, the developer demonstrated a probability of
    prevailing. We agree and therefore affirm the order denying the anti-SLAPP motion.
    FACTS
    The following facts are taken from the complaint, declarations, and other
    evidence submitted on the special motion to strike.
    1. Edward, Headlands, and the Beach Access Litigation
    Plaintiff Sanford Edward is a real estate developer and a managing member
    of Headlands Reserve, LLC (Headlands). Edward and Headlands are known in Dana
    Point (the City) for developing The Strand at Headlands (The Strand), an oceanfront
    community of multimillion dollar homes sited at one of the last undeveloped coastal
    promontories in Southern California.
    In 2009, in accordance with a City ordinance, Headlands installed
    pedestrian gates at The Strand to limit public beach access through the development
    during certain hours. The installation of the gates spawned years of litigation against the
    City.
    During the course of that beach access litigation, the City regularly
    submitted its bills for attorney fees to Headlands for reimbursement pursuant to
    indemnity agreements between Headlands and the City. In August 2015, however,
    Headlands stopped reimbursing the City for its legal fees.
    2. The City’s 2016 Complaint Against Edward for Fraud
    The City ultimately settled the beach access litigation in 2016 and then sued
    Headlands for $553,000 in unpaid legal fees. It also asserted a claim for fraud against
    Edward individually. Headlands cross-complained against the City, asserting the City
    had overbilled it by over $667,000.
    The City, Headlands, and Edward settled the lawsuit in 2017, releasing all
    claims against one another. As part of their written settlement agreement, under the
    heading “City Facility Donation,” Headlands agreed to pay the City $248,200 to help
    renovate the City’s community center. According to Edward, Headlands agreed to this
    term as a “good will’ gesture,” and the payment had nothing to do with resolving the
    City’s claims against him or Headlands. The settlement agreement did not require any
    other payments by either Headlands or Edward.
    The settlement agreement also contained provisions about the City’s fraud
    claim against Edward. First, under the heading “City Retracts and Rescinds Fraud
    Allegations,” the City agreed to “withdraw[ ] all allegations related to personal fraud, and
    Sanford Edward, as none exist. As a result, the City hereby retracts and formally rescinds
    all such allegations and related claims.” Additionally, under the heading “Press Release,”
    the parties agreed to issue a joint press release announcing the settlement, Headlands’
    donation for the community center, and the City’s rescission and withdrawal of its fraud
    allegations against Edward.
    The next month, the Orange County Register published an article reporting
    that the lawsuit between the City and Edward had come to an end. The article reported
    Edward’s $248,200 contribution for improvements to the community center, as well as
    the City’s rescission of its fraud allegation against Edward.
    3. The 2018 City Council Election and the DPTA Mailers
    In 2018, the City held its first district-based city council elections. Three of
    the candidates—Joe Muller, Rick Viczorek, and Jamey Federico—teceived support from
    a political action committee, defendant Dana Point Taxpayers Association (DPTA).
    DPTA hired political consultant David Ellis to manage its campaign.
    Ellis advised DPTA the best way to win was to run a negative campaign
    against the opposition. When doing his research for the campaign, Ellis read various
    articles and other documents in the public domain, including the Orange County
    Register’s article about the 2017 settlement between Edward and the City. As a result, he
    came to believe Edward was a public figure. Ellis also concluded that Edward supported
    the opposing candidates—Joe Jaeger, Mark McGinn, and Charles Payne— after reading
    about a fundraiser Edward allegedly had thrown for them. Ellis never contacted Edward
    to ask whether he supported those candidates, nor did he contact the candidates
    themselves.
    Ellis informed DPTA that Edward and Headlands supported Jaeger,
    McGinn, and Payne. According to DPTA’s officer, that “seemed odd”; “it made no sense
    to us why [Edward, a developer,] would support the other candidates.” Ellis seemed
    “credible,” however, so DPTA believed him.
    Ellis then designed two campaign mailers suggesting Edward supported
    and was able to control Jaeger, McGinn, and Payne.’ The mailers, which DPTA
    approved and which are the subject of the present litigation, were sent to thousands of
    Dana Point residents in late October 2018.
    The first mailer bore the heading, “THERE’S NO FREE LUNCH,” and
    featured a photograph of candidate Charles Payne having lunch with “Headlands
    ' Copies of these mailers were attached to Ellis’s declaration in support of his
    anti-SLAPP motion and are a part of the record. (See appendix, pp. 1-4.)
    Developer Sanford Edward” and “Kingmaker Buck Hill”; the mailer invited voters to
    “MEET THE KINGMAKERS AND THE CANDIDATE,” and stated in a caption that
    the three were “plotting to take over the city council.” On the back was a screenshot of
    the caption from the City’s 2016 complaint against Headlands and Edward, with the
    parties’ names highlighted. Below was the following text: “Dana Point sued Headlands
    developer Sanford Edward for fraud, breach of contract, and not paying $553,000 in legal
    fees to the city.” Beneath that, in bolded red text, it read: “Edward wants his money
    back. [9] Electing city council candidate Charles Payne is his payday.” Below that
    appeared a photograph of a fundraiser at a private club, with the text: “THEN EDWARD
    THREW A PRIVATE FUNDRAISER FOR HIS SLATE OF CANDIDATESJ:] JOE
    JAEGERJ[,] CHARLES PAYNE[, and] MARK McGINN.” The text went on: “/t was
    quite a shindig at the ultra-chic Headlands Strand Clubhouse. [§] Councilwoman Debra
    Lewis led the charge. [§]] Sanford Edward paid the bill. Taxpayers will pay in the end.
    [{] STOP SLICK SANFORD FROM BUYING CITY HALL.”
    The second mailer read, “Meet the KINGMAKERS AND THE
    PUPPETS,” and included the same photograph of Payne dining with Edward and Hill,
    but this time with crowns superimposed on the heads of Edward and Hill. The back of
    the mailer posed the question, “Will the Kingmakers Elect Their Puppets?,” next to a
    picture of a hand holding puppet strings. Beneath were pictures of Jaeger (labeled
    “DISTRICT 1 PUPPET”), McGinn (labeled “DISTRICT 2 PUPPET”), and Payne
    (labeled “DISTRICT 3 PUPPET”), with captions either describing each as “part of the
    Sanford Edward slate” or asserting Lewis had “team[ed] up with Headlands developer
    Sanford Edward” to elect those candidates. Below that appeared the same highlighted
    screenshot of the caption from the City’s 2016 complaint against Headlands and Edward,
    plus additional highlighted screenshots of excerpts from the complaint, which alleged,
    “Dana Point is bringing a further claim against Sanford Edward (‘Edward’) for fraud,”
    and “Defendant Headlands breached this contract by failing to pay for required legal
    5
    services, beginning in August 2015 and totaling $553,754 (with additional amounts
    continuing to be incurred).” Underneath those images was the statement, “Dana Point
    sued Headlands developer Sanford Edward for fraud, breach of contract, and not paying
    $553,000 in legal fees to the city,” followed by bolded red text that read, “Edward wants
    his money back. Electing city council candidates Joe Jaeger, Mark McGinn and Charles
    Payne is his payday. [§]] STOP Developer Slate: Jaeger — McGinn — Payne.”
    4. Edward’s Libel Claim Against DPTA and Ellis
    Edward believed DPTA’s mailers falsely insinuated he was found liable to
    the City for fraud in the City’s 2016 lawsuit over attorney fees from the beach access
    litigation; he also believed the mailers falsely represented that he supported and
    fundraised for certain candidates, when in fact he did not support, endorse, or donate to
    any candidate in the 2018 election. Accordingly, just days after the mailers were
    disseminated, Edward’s lawyer sent a cease-and-desist letter to DPTA. In a further
    exchange of letters between counsel, Edward threatened to sue DPTA unless it published
    a retraction; DPTA denied any wrongdoing and asserted Edward’s complaint would be
    subject to an anti-SLAPP motion.
    DPTA did not retract the statements in its mailers. Instead, in February
    2019, it published a paid advertisement in the Dana Point Times “to clear up any
    confusion that may have resulted.” The advertisement maintained the mailers were
    “factually accurate,” but clarified the City’s 2016 action against Headlands and Edward
    ended in “an out-of-court settlement, in which Mr. Edward agreed to pay nearly $250,000
    to the City of Dana Point” for use in “improv[ing] the City of Dana Point’s community
    and senior center.”
    Unsatisfied with this clarification, Edward filed a complaint against DPTA,
    asserting a single cause of action for libel per se based on DPTA’s distribution of the
    mailers. According to Edward’s complaint, the mailers are defamatory because “they
    convey the false message that Edward was found liable for fraud and other unlawful acts
    6
    against the City, and paid hundreds of thousands of dollars in damages in satisfaction of a
    judgment rendered against him in a case filed by the City... . In fact, [t]he City
    dismissed the Case, rescinded the fraud claim and publicly conceded that it was a
    ‘mistake’ in a formal settlement agreement at least eighteen months before the Mailers
    were published.”
    DPTA filed an anti-SLAPP motion, which the trial court denied. Among
    other things, the court found Edward had demonstrated a probability of prevailing on his
    defamation claim, noting the mailers could be reasonably read as falsely implying
    Edward had been found liable for fraud and paid fraud damages. The court further found
    Edward was a limited purpose public figure and thus had to prove actual malice, and he
    had demonstrated a probability of proving Ellis knew of or recklessly disregarded the
    falsity of the implication that Edward had been adjudged liable for fraud. DPTA did not
    appeal that ruling.
    Edward amended his complaint to substitute in Ellis as a Doe defendant,
    and Ellis responded with his own anti-SLAPP motion. The trial court denied Ellis’s
    motion, adopting a similar line of reasoning as in its earlier order. Ellis appeals that
    order.
    DISCUSSION
    1. The Anti-SLAPP Statute
    The Legislature enacted the anti-SLAPP statute to address “what are
    commonly known as SLAPP suits (strategic lawsuits against public participation)—
    litigation of a harassing nature, brought to challenge the exercise of protected free speech
    rights.” (Fahlen v. Sutter Central Valley Hospitals (2014) 
    58 Cal.4th 655
    , 665, fn. 3.)
    The statute authorizes a special motion to strike meritless claims early in the litigation if
    the claims “aris[e] 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).) The statute is “‘intended to
    resolve quickly and relatively inexpensively meritless lawsuits that threaten free speech
    on matters of public interest.’” (Rand Resources, LLC v. City of Carson (2019) 6 Cal.Sth
    610, 619.)
    When evaluating a special motion to strike, the trial court must engage in a
    two-step process. “First, the court decides whether the defendant has made a threshold
    showing that the challenged cause of action is one arising from protected activity. .. .
    [Citation.] 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.” (quilon
    Enterprises v. Consumer Cause, Inc. (2002) 
    29 Cal.4th 53
    , 67.) “Only a cause of action
    that satisfies both prongs of the anti-SLAPP statute—1.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).)
    We review a trial court’s order denying an anti-SLAPP motion de novo. (Flatley v.
    Mauro (2006) 
    39 Cal.4th 299
    , 325.)
    2. Step One: Protected Activity
    Under step one of the anti-SLAPP analysis, we must first decide whether
    Ellis made a threshold showing that Edward’s claims arose from an act in furtherance of
    Ellis’s right of petition or free speech in connection with a public issue. (§ 425.16,
    subd. (b)(1); see id., subd. (e) [defining protected activity].) Edward does not dispute that
    the complaint arises from protected activity, and rightly so. The distribution of campaign
    mailers and other political literature about candidates’ qualifications is undoubtedly
    protected activity under the anti-SLAPP statute. (See, e.g., Major v. Silna (2005)
    134 Cal App.4th 1485, 1490; Beilenson, supra, 44 Cal.App.4th at pp. 949-950.)
    3. Step Two: Probability of Prevailing
    We therefore turn to step two of the anti-SLAPP analysis, in which Edward
    must demonstrate a probability of prevailing against Ellis. His ““burden of establishing a
    8
    probability of prevailing is not high: We do not weigh credibility, nor do we evaluate the
    weight of the evidence. Instead, we accept as true all evidence favorable to the plaintiff
    and assess the defendant’s evidence only to determine if it defeats the plaintiff s
    submission as a matter of law. [Citation.] Only a cause of action that lacks “even
    minimal merit” constitutes a SLAPP. [Citation.]’ [Citation.] ‘Put another way, the
    plaintiff “must demonstrate that the complaint is both legally sufficient and supported by
    a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence
    submitted by the plaintiff is credited.”’” (Greene v. Bank of America (2013)
    
    216 Cal.App.4th 454
    , 458, fn. omitted (Greene).)
    As noted, Edward’s complaint asserts a single cause of action against Ellis
    for libel per se. Libel is the publication of an unprivileged written communication about
    the plaintiff that is false, defamatory, and has a natural tendency to injure. (Civ. Code,
    §§ 44, 45; Jackson v. Mayweather (2017) 
    10 Cal.App.5th 1240
    , 1259-1260.) Libel per se
    is when the communication is defamatory without the need for explanatory matter. (Civ.
    Code, § 45a.) Where, as here, the plaintiff is a limited public figure, he must prove both
    that the challenged statement is false, and that the defendant made the libelous statement
    with “actual malice.”’ (Balla vy. Hall (2021) 
    59 Cal.App.5th 652
    , 675 (Balla).)
    a. Falsity
    Ellis first contends Edward failed to show a probability of prevailing on the
    merits because the mailers did not include any falsities, express or implied. We disagree.
    Unlike mere opinions, a statement that suggests or implies a false assertion
    of fact is actionable. (Balla, supra, 59 Cal.App.5th at p. 677; [ssa v. Applegate (2019)
    
    31 Cal.App.5th 689
    , 702 (/ssa).) The “dispositive question” in such a case is “whether a
    reasonable fact finder could conclude the published statement declares or implies a
    Edward does not dispute he is a limited public figure for purposes of this
    case.
    provably false assertion of fact.” (Franklin v. Dynamic Details, Inc. (2004)
    
    116 Cal. App.4th 375
    , 385 (Franklin).) This is ordinarily a question of law for the court,
    “unless the statement is susceptible of both an innocent and a libelous meaning, in which
    case the jury must decide how the statement was understood.” (/bid.)
    In determining whether the disputed statement communicates or implies a
    provably false assertion of fact, we look at the totality of the circumstances, looking first
    to the language of the statement and whether it was understood in a defamatory sense,
    and then considering the context in which the statement was made. (Franklin, supra,
    116 Cal.App.4th at p. 385.) We focus not on the literal truth or falsity of each word in a
    Ceeee
    statement, but rather on ““‘whether the ‘gist or sting’ of the statement is true or false,
    benign or defamatory, in substance.””’” (Balla, supra, 59 Cal.App.Sth at pp. 677-678;
    Issa, supra, 31 Cal.App.5th at p. 702; see, e.g., Overstock.com, Inc. v. Gradient
    Analytics, Inc. (2007) 
    151 Cal.App.4th 688
    , 704 [stylistic emphasis on key phrases
    supported finding that the publications could be understood as implying false assertions
    of fact].) We also consider “whether the reasonable or ‘average’ reader would so
    interpret the material. [Citations.] The ‘average reader’ is a reasonable member of the
    audience to which the material was originally addressed.” (Couch v. San Juan Unified
    School Dist. (1995) 
    33 Cal. App.4th 1491
    , 1500.)
    Applying those standards to this record, we conclude the mailers in
    question could reasonably be understood by an average Dana Point voter to imply that
    Edward was found liable for fraud and paid money damages to the City as a result. Both
    mailers included a highlighted screenshot of the caption from the City’s 2016 complaint
    against Edward for fraud; below that, both mailers declared that the City sued Edward for
    fraud, breach of contract, and not paying $553,000 in legal fees; and immediately below
    that, both mailers asserted in bolded red letters that “Edward wants his money back.”
    Read together and in context, the apparent implication from these statements is that
    Edward was found liable and had to pay damages on the City’s claims, including its fraud
    10
    claim, and he now wants to recover that money. Indeed, the mailers suggest no other
    possibility as to why Edward “wants his money back.”
    That brings us to whether that insinuation was provably false. We conclude
    it was, as it is undisputed that Edward paid nothing to the City on its fraud cause of
    action. The 2017 settlement agreement did require Edward to make a $248,200
    “[dJonation” for the renovation of a community center, but that payment was not made on
    the fraud claim; to the contrary, the City expressly withdrew, retracted, and rescinded all
    “allegations related to personal fraud, and Sanford Edward,” as part of the settlement.
    Of course, that is not the only possible reading of the mailers. We
    recognize an average reader might reach some other conclusion. * But if the statements
    contained in the mailers are susceptible of both an innocent and libelous meaning, it is for
    the jury, not us, to decide how they were in fact understood. (Franklin, supra,
    116 Cal.App.4th at p. 385; see also Okun v. Superior Court (1981) 
    29 Cal.3d 442
    , 450 [“a
    writing’s susceptibility to innocent meaning does not in itself preclude a finding that an
    ordinary reader would understand it in a libelous sense” ].)
    Ellis argued in his briefing and at oral argument that the “Edward wants his
    money back” statement is too generalized to support any particular conclusion and is
    instead “classic rhetorical hyperbole” typical of political debate. (See Grenier v. Taylor
    (2015) 
    234 Cal.App.4th 471
    , 486 [“rhetorical hyperbole, vigorous epithets, lusty and
    imaginative expressions of contempt and language used in a loose, figurative sense will
    not support a defamation action”].) We are not persuaded. Rhetorical hyperbole is
    language that is so loose, figurative, or hyperbolic that it negates any impression that the
    writer was seriously maintaining a factual proposition susceptible of being proved true or
    , At oral argument we invited counsel for Ellis to provide us with some
    alternative innocent inference that might be drawn from this language. He was unable to
    do so.
    11
    false. (Hoang v. Tran (2021) 
    60 Cal.App.5th 513
    , 534; see, e.g., Ferlauto v. Hamsher
    (1999) 
    74 Cal. App.4th 1394
    , 1403-1404 [book’s flip characterizations of opponent’s
    lawyer as “Kmart Johnnie Cochran,” “creepazoid attorney,” and “loser wannabe lawyer”
    were classic rhetorical hyperbole that could not be interpreted as stating actual facts];
    Beilenson y. Superior Court (1996) 
    44 Cal.App.4th 944
    , 951 (Beilenson) [defendant’s
    999
    statement in political campaign that plaintiff's conduct was a ““rip-off,”’ taken in context
    with rest of mailer, was rhetorical hyperbole].)
    Here, the phrase “Edward wants his money back” appears immediately
    below actual screenshots and a factual description of the City’s 2016 complaint against
    Edward. Indeed, Ellis testified he used the screenshots of the complaint’s caption “to
    generate [a sense of] authenticity and validity.” The juxtaposition and proximity of the
    phrase “Edward wants his money back” to those screenshots and factual description
    suggests the “money back” statement was intended to be factual in nature, not political
    hyperbole.
    Other parts of the mailers do employ rhetorical language—e.g., the mailers
    refer to Edward as a “[k]ingmaker[]” and urge voters to “STOP SLICK SANFORD
    FROM BUYING CITY HALL.” But the phrase “Edward wants his money back”
    appears immediately next to factual assertions about the City’s 2016 lawsuit. A
    reasonable reader might well conclude that the “Edward wants his money back” line was
    also factual in nature.
    We are mindful that, particularly in the political context, “we “must be
    vigilant to afford a wide berth to the free exchange of ideas, including those that
    challenge or criticize statements made or actions taken by candidates seeking elected
    office.’ [Citations.] [§] But characterizing speech as ‘political’ does not automatically
    or entirely exempt it from liability for defamation.” (Balla, supra, 59 Cal.-App.5th at
    p. 680.) ““[E]ven as to public officials, knowingly false statements of fact are
    12
    constitutionally unprotected.’” (/bid.) On this record, we conclude the mailers are
    reasonably susceptible of an interpretation that implies a provably false assertion of fact.
    b. Actual Malice
    Ellis next asserts Edward’s libel claim should be dismissed because Edward
    did not establish a probability of producing clear and convincing evidence of actual
    malice. We again disagree.
    As noted above, a libel plaintiff who is a public figure must prove, by clear
    and convincing evidence, that the defendant made the libelous statement with “‘actual
    malice’—that is, with knowledge that it was false or with reckless disregard of whether it
    was false or not.” (New York Times Company vy. Sullivan (1964) 
    376 U.S. 254
    , 279-280
    (New York Times); see Reader’s Digest Assn. v. Superior Court (1984) 
    37 Cal.3d 244
    ,
    256-257.) Although at trial a public figure plaintiff must establish actual malice by clear
    and convincing evidence, in the context of an anti-SLAPP motion the plaintiff must
    instead establish only a “probability” that he or she can produce clear and convincing
    evidence of actual malice. (Ampex Corp. v. Cargle (2005) 128 Cal._App.4th 1569, 1578
    (Ampex).)
    “*TA|ctual malice can be proved by circumstantial evidence.’ [Citation.]
    Considerations such as ‘anger and hostility toward the plaintiff,’ ‘reliance upon sources
    known to be unreliable [citations] or known to be biased against the plaintiff,’ and
    ‘failure to investigate’ may, “in an appropriate case, indicate that the publisher himself
    had serious doubts regarding the truth of his publication.’ [Citation.] Such evidence is
    relevant “to the extent that it reflects on the subjective attitude of the publisher.’” (Balla,
    supra, 59 Cal.App.Sth at p. 683.) However, “failure to investigate, without more,
    generally is insufficient” to show malice. (/bid.) And “we will not infer actual malice
    solely from evidence of ill will, personal spite or bad motive.” (Ampex, supra,
    128 Cal App.4th at p. 1579.)
    13
    In both his anti-SLAPP motion and now on appeal, Ellis insists he never
    intended to convey that Edward was found liable for fraud and paid damages to the City
    when he used the phrase “Edward wants his money back.” According to Ellis, he cannot
    be held liable for a falsity he never meant to convey. (See De Havilland v. FX Networks,
    LLC (2018) 21 Cal. App.5th 845, 869-870 [in cases of defamation by implication, public
    figure plaintiff must prove the defendant intended the defamatory impression, and not
    just unknowingly misled the public]; Dodds v. American Broadcasting Co. (9th Cir.
    1998) 
    145 F.3d 1053
    , 1064 [same].)
    The record raises credibility questions about Ellis’s professions of
    innocence. First, there are Ellis’s own explanations for what he intended to convey with
    the phrase “Edward wants his money back.” When specifically asked at deposition what
    he had in mind when he used that phrase, Ellis repeatedly claimed he could not recall.”
    In the absence of a meaningful explanation for his word choice, Ellis gives us no reason
    to believe he accidently or unknowingly misled the public when he falsely insinuated
    Edward had paid damages for fraud.
    Second, and more importantly, Ellis expressly admitted both at deposition
    and in his subsequent written declaration that as part of his prepublication research for the
    mailers, he read the Orange County Register’s article about the 2017 settlement between
    Edward and the City, including (1) the section describing the City’s agreement to
    “rescind” its fraud claim against Edward and (2) the section mentioning Edward’s
    4 ;
    Ellis answered, “I don’t recall,” “I don’t remember,” or “I don’t know” over
    100 times during his three-hour deposition. When asked whether the phrase “Edward
    wants his money back” could be understood to mean Edward paid money to the City after
    being sued for fraud, Ellis testified, “I don’t know what it could be interpreted to mean. I
    don’t interpret.” When asked what he intended it to say, Ellis answered, “I didn’t intend
    it to — it’s just a phrase.” The trial court observed that Ellis’s deposition testimony was
    “very vague, disjointed, and peculiar.” Among other things, the court’s order noted Ellis
    could not articulate a reason why he chose to run a negative campaign, nor could he
    explain why the mailers targeted Edward.
    14
    $248,000 contribution for the community center. These admissions are critical to our
    analysis as they demonstrate beyond any point of dispute that Ellis knew long before
    distribution of the contested mailers that Edward did not pay damages to the City for
    fraud, yet he went ahead with the publication of mailers that insinuated the very opposite.
    As aresult, Ellis arguably acted “with ‘actual malice’—that is, with knowledge that [the
    statements were] false.” (See New York Times, 
    supra,
     376 U.S. at pp. 279-280.)
    For these reasons, we conclude Edward “establish[ed] a probability that
    [he] can produce clear and convincing evidence that the allegedly defamatory statements
    were made with knowledge of their falsity ....” (See Ampex, supra, 128 Cal.App.4th at
    p. 1578.)
    We reiterate that for purposes of our anti-SLAPP analysis, Edward’s
    burden on prong two is “not high,” and we are required to “accept as true all evidence
    favorable to” Edward. (Greene, supra, 216 Cal.App.4th at p. 458.) Under that low
    standard, Edward met his burden of showing his libel claim against Ellis has “minimal
    merit.” (See Navellier, 
    supra,
     29 Cal.4th at p. 89 [only a cause of action that “lacks even
    minimal merit” is “ subject to being stricken under the statute”].) The actual merits of
    Edward’s claim must be resolved by the trier of fact. °
    In light of our decision to affirm the denial of Ellis’s anti-SLAPP motion,
    we need not reach Edward’s evidentiary objections to material cited in Ellis’s opening
    brief; for the same reason, Edward’s request for judicial notice is denied.
    15
    DISPOSITION
    The order denying Ellis’s anti-SLAPP motion is affirmed. Edward shall
    recover his costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1).)
    GOETHALS, J.
    I CONCUR:
    MARKS, J.*
    * Judge of the Orange County Superior Court, assigned by the Chief Justice pursuant to
    article VI, section 6 of the California Constitution.
    16
    FYBEL, J., concurring:
    I respectfully concur in the majority opinion. I write separately to express
    my firmly held belief that open discussion and robust debate are the best means of
    exposing lies and errors in public speech. Nearly 100 years ago, Justice Brandeis said, in
    Whitney v. California (1927) 
    274 U.S. 357
    , 377 (conc. opn. of Brandeis, J.), “If there be
    time to expose through discussion the falsehood and fallacies, to avert the evil by the
    processes of education, the remedy to be applied is more speech, not enforced silence.”
    These words are more relevant now than they have ever been.
    More than a decade ago, I expressed my views on this subject in my dissent
    in Overhill Farms, Inc. vy. Lopez (2010) 
    190 Cal.App.4th 1248
    . In that case, a number of
    employees of the plaintiff, a publicly traded company that manufactured frozen food,
    participated in protests outside of the plaintiff's two plants and the place of business of
    one of plaintiff's customers. (/d. at pp. 1251, 1253.) The employees carried signs and
    4 999
    handed out leaflets and flyers declaring the plaintiff to be “‘unfair’” and “‘racist’” due to
    layoffs it had made in response to an IRS audit. (/d. at p. 1255.) The plaintiff sued the
    employees for defamation and a host of other torts with the primary goal of enjoining
    further protests. (/d. at p. 1252.)
    The trial court denied the employees’ anti-SLAPP motion to strike, and the
    majority opinion affirmed. (Overhill Farms, Inc. v. Lopez, supra, 190 Cal.App.4th at
    p. 1252.) I dissented because I believed the plaintiff had failed to produce evidence
    showing the employees had made any provably false assertion of fact. (/d. at pp. 1273,
    1274-1277 (dis. opn. of Fybel, J.).) The plaintiff had the ability and means to issue its
    own press release, distribute its own leaflets, and otherwise present its own side of the
    story in a public forum. (/d. at pp. 1273, 1278 (dis. opn. of Fybel, J.) The lawsuit, by
    which the plaintiff primarily sought an injunction to prohibit future speech, was an
    attempt to “curb and chill employee protests.” (/d. at p. 1273 (dis. opn. of Fybel, J.)
    Justice Brandeis’s advice was particularly apt: More speech, not less, was the proper
    remedy.
    In the present case, although I agree with the majority that the assertion
    “Edward wants his money back” implies a provably false assertion of fact, I believe this
    is a close call. The flyer stated that the City of Dana Point (the City) had sued Edward
    for $553,000 in unpaid legal fees. Immediately below that statement was the sentence,
    “Edward wants his money back.” The content, context, and placement of these two
    statements are sufficient to imply a provably false assertion of fact: Edward paid the City
    $533,000, and he will get that money back if “his” slate of candidates is elected.
    I hasten to add that Ellis has a plausible argument that the statement
    “Edward wants his money back” is not a provably false fact. Indeed, the majority
    opinion acknowledges that Ellis’s statements are susceptible of an innocent meaning.
    (Maj. opn., ante, at p. 11.) Thus, Ellis might eventually prevail. But at the second step of
    the anti-SLAPP analysis, Edward’s burden was ““‘not high.’” (Greene v. Bank of America
    (2013) 
    216 Cal. App.4th 454
    , 458.) He had to show only that his claim of malice has the
    requisite “minimal merit” (Navellier v. Sletten (2002) 
    29 Cal.4th 82
    , 89). Given this low
    threshold, Ellis’s argument does not carry the day at this stage.
    I also agree that Edward has produced evidence establishing a probability
    of prevailing on his claim of actual malice. Under New York Times Co. vy. Sullivan
    (1964) 
    376 U.S. 254
    , 285-286, an inference of actual malice may be drawn from
    circumstantial evidence that a statement was made with knowledge of its falsity or with
    reckless disregard for its truth. Thus, evidence that Ellis knew before the flyers were
    published that Edward had not paid damages to the City is enough to meet his low burden
    of establishing his claim has the requisite minimal merit. (Navellier v. Sletten, 
    supra,
     29
    Cal.4th at p. 89.)
    I concur in the result in this case because Edward’s burden on the second
    step of the anti-SLAPP analysis is only to show that his claim has the requisite minimal
    2
    merit. (Navellier v. Sletten, 
    supra,
     29 Cal.4th at p. 89.) For the reasons I have explained,
    this burden has been met, but only because it is so low.
    Finally, it would have been much more consistent with our cherished and
    robust First Amendment values for Edward to have responded to the assertions in the
    flyer by engaging in public speech rather than filing a lawsuit. Edward, like the plaintiff
    employer in Overhill Farms, had the ability and means to issue his own flyer or press
    release or otherwise tell his side of the story in a public forum.
    If the flyers told lies, Edward could counter them with the truth. As Justice
    Kennedy stated, in an opinion joined in by Chief Justice Roberts and Justices Ginsburg
    and Sotomayor and concurred in by Justices Breyer and Kagan: “The remedy for speech
    that is false is speech that is true. This is the ordinary course in a free society. The
    response to the unreasoned is the rational; to the uninformed, the enlightened; to the
    straight-out lie, the simple truth.” (United States v. Alvarez (2012) 
    567 U.S. 709
    , 727.)
    FYBEL, ACTING P. J.
    APPENDIX
    34145 Pacific Coast Hwy. #701
    Dana Point, CA 92626 US POSTAGE
    PAID |,
    BC
    THERE'S NO FREE LUNCH
    Sanford Edwards, Buck Hill, and District 3 city council candidate Charles Payne plotting to take over the city council
    Kingmaker
    ete gt
    (i a |
    ta
    Headlands Lie a ;
    i eT TCE 1 C4
    Developer arma
    ALO CM aE TG
    ra
    Charles Payne _,.,..
    eM leery
    CITY OF DANA POINT CASE NO: 30-2018-00872051-CU-BC-CJC
    Plaintiff,
    JUDGE: Judge Theodore Howard
    DEPT:
    VS.
    COMPLAINT FOR DAMAGES
    Complaint Filed:
    Edward, an individual, and DOES 1 to
    50, inclusive,
    Defendants.
    )
    )
    )
    )
    )
    Headlands Reserve, LLC, Sanford
    )
    Dana Point sued Headlands developer Sanford Edward for fraud,
    breach of contract, and not paying $553,000 in legal fees to the city.
    Edward wants his money back.
    Electing city council candidate Charles Payne is his payday.
    SM =
    FUNDRAISER FOR HIS SLATE OF
    CANDIDATES
    it was quite a shindig at the ultra-chic Headlands Strand Clubhouse.
    Councilwoman Debra Lewis led the charge.
    Sanford Edward paid the bill.
    Taxpayers will pay in the end.
    SLICK SANFORD FROM BUYING CITY HALL
    Paid for by Dana Point Taxpayers Association
    Not authorized by any candidate or any committee controlled by a candidate. 554
    34145 Pactfic Coast Hwy. #701
    Dana Point, CA 92626 Us STAGE
    PAID
    ac
    eC-7T%S
    DANA POINT
    ts
    Pon ene eee ee eee cel all Rea Ree Ee Per daa R eee Dias eas torel Tal
    Kingmaker
    Pitted a tL
    Headlands » i ’
    Developer Candidate
    Sanford Edward
    ME ie iC ee
    NMbss
    AL aS
    PD
    PUPPETS os
    Will the Kingmakers © Bg
    Elect Their Puppets? | j
    DISTRICT 1 PUPPET DISTRICT 2 PUPPET OTL ad ed od
    ir. &
    , Bad .
    Councilwoman Debra Lewis 2nd District candidate Councilwoman Debra Lewis
    teaming up with Headlands Mark McGinn is teaming teaming up with Headlands
    developer Sanford Edward to elect part of the Sanford developer Sanford Edward to elect
    Joe Jaeger in District 1 Edward slate Charles Payne in District 3
    11 || CITY OF DANA POINT CASE NO; 30-2016-00872051-CU-BC-CJC
    12 Plaintiff, JUDGE: Judge Theodore Howard
    13 DEPT:
    14 “ COMPLAINT FOR DAMAGES
    15 || Headlands Reserve, LLC, Sanford Complaint Filed:
    Edward, an individual, and DOES 1 to
    50, inclusive,
    Defendants.
    ee eee
    BN SU of Saal cree Sh hecrrne ———
    26 42. Defendant Headlands breached this contract by failing to pay for required |
    27 || services, beginning in August 2015 and totaling $553,754 (with additional amounts continuing
    28 |] be incurred).
    Dana Point sued Headlands developer Sanford Edward for fraud,
    breach of contract, and not paying $553,000 in legal fees to the city.
    Edward wants his money back.
    Electing city council candidates Joe Jaeger,
    Mark McGinn and Charles Payne is his payday.
    Developer Slate: Jaeger — McGinn - Payne
    Paid for by Dana Point Taxpayers Association 5 5 7
    Not authorized by any candidate or any committee controlled by a candidate.
    

Document Info

Docket Number: G059523

Filed Date: 12/14/2021

Precedential Status: Precedential

Modified Date: 12/15/2021