C.W. Howe Partners Inc. v. Mooradian ( 2019 )

Filed 12/19/19
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
C.W. HOWE PARTNERS INC. B290665
et al.,
(Los Angeles County
Cross-complainants and Super. Ct. No. BC662798)
Respondents,
v.
GREG MOORADIAN et al.,
Cross-defendants and
Appellants.
APPEAL from an order of the Superior Court of
Los Angeles County, Howard L. Halm, Judge. Affirmed.
Pitre & Teunisse and Randall J. Pitre for Cross-defendants
and Appellants.
Clark Hill, Richard H. Nakamura Jr., Mehrdad Farivar
and Christopher Menjou for Cross-complainants and
Respondents.
_____________________________________
Greg Mooradian and Debra A. Mooradian appeal from the
order denying their special motion to strike under Code of Civil
Procedure section 425.161 directed to the cross-complaint filed
against them by C.W. Howe Partners Inc. and its principal Carl
William Howe (collectively the Howes) for express indemnity,
equitable indemnity, contribution and declaratory relief. The
trial court ruled none of the Howes’ claims arose from protected
speech or petitioning activity within the meaning of
section 425.16. Although a claim of loss or potential loss is an
essential prerequisite to any indemnification obligation, whether
express or equitable, the Howes’ cross-complaint did not arise
from the filing of the Mooradians’ lawsuit, but from the alleged
breach of their agreement to indemnify the Howes for any
liability attributable to information provided by the Mooradians
or the Mooradians’ representatives and the Mooradians’
underlying fault with regard to their decisionmaking.
Accordingly, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
1. The Mooradian Residence Construction Project
The Mooradians, a married couple, were interested in
remodeling or reconstructing their existing Los Angeles
residence. Although they had no prior design or construction
experience, they discovered in 2014 the work of Erla Dogg
Ingjaldsdottir and Tryggvi Thorsteinsson of Minarc, Inc. profiled
in a book featuring cutting-edge homes that were
environmentally conscious, energy efficient and built with major
components prefabricated offsite. The Mooradians were
1 Statutory references are to this code unless otherwise
stated.
2
particularly drawn to a house located in Venice, California, which
the book attributed to the following: “Minarc” as architect, “Core
Construction” as builder, “mnm.MOD” as manufacturer and
“C.W. Howe” as engineer. The home was constructed entirely
from factory-made parts using a “patented panelized system,”
with structural components of metal and panels containing
expanded polystyrene (EPS) insulation.
The Mooradians met with Ingjaldsdottir and
Thorsteinsson, who represented that MNM Mod Corp., also
known as MNMmod and mnmMOD, was one of their companies.
MNM would custom manufacture offsite, in accordance with a
design Ingjaldsdottir and Thorsteinsson created specifically for
the Mooradians, metal-framed EPS panels using the patented
panelized system. Thorsteinsson sent the Mooradians a proposed
agreement pursuant to which Minarc would provide design and
other services for the construction of a new single-family dwelling
at the site of the Mooradians’ existing residence.2
After the Mooradians signed the Minarc agreement,
Thorsteinsson advised hiring a structural engineer and
recommended Carl Howe. He explained Howe had worked with
Minarc on other residential projects. Howe provided a proposal
to Thorsteinsson and then, after being told the proposal was
2 Under the heading “Key Milestones,” the Minarc
agreement included the following provisions: “Zoning regulations
and codes studied”; “[d]rawings establishing all major elements
and outline specifications are prepared including renderings,
plans, elevation and sections of the building”; “[p]reparing Plans
and specification for construction,” but with “‘[e]ngineering by
others’”; “[m]eeting with local City planners”; “provide ready to
issue permit plans”; and “[p]rovide field observations throughout
the project to ensure compliance with the project documents.”
3
accepted, submitted an August 18, 2014 letter agreement
addressed to the Mooradians, printed on the letterhead of
C.W. Howe Partners and signed by Howe as its principal (the
Howe agreement).
2. The Agreement Between the Mooradians and C.W. Howe
Partners
Howe is a civil engineer licensed in California, and
C.W. Howe Partners is in the business of providing structural
design services for single-family homes and other building types.
Structural design typically entails designing the foundation and
structural framework for a building with specified materials to
allow the building to withstand a variety of forces.
The August 18, 2014 Howe agreement stated on the subject
line, “Contract for Structural Engineering Services: Mooradian
Residence – ‘MnM mod’ – Light Gage Steel Stud House, Green
Roof Deck, Concrete Wall Front Elevation Elements.”3 The first
line of the agreement indicated the C.W. Howe Partners’s
engineering fee for the project was “[i]n accordance with our
review of drawings produced by your Minarc.” Howe understood
Minarc to be the designer of the Mooradian project.
Pursuant to the Howe agreement, the scope of services to
be provided by C.W. Howe Partners included preparing a
preliminary structural design, structural engineering
calculations and structural construction documents. The
agreement listed services that were specifically excluded from the
3 The Howe agreement also stated the Mooradian project
would “be a light gage ‘C’ – stud and joist platform-framed house
where possible and structural steel where required.” According
to Howe, the term “light gage” steel studs refers to studs of a
certain grade of steel.
4
work to be performed by C.W. Howe Partners, including permit
acquisition; construction means and methods or sequences;
design and detailing of any nonstructural element; and
coordination with architectural plans, which was instead to be
performed by the “Designer,” who was to be responsible for
coordination of structural plans with all other professional
disciplines.
Section 4 of the Howe agreement contained the heading
“Client’s Responsibilities,” which was underlined, capitalized and
in bold font. Section 4(a), titled “Information Provided by Client”
in bold font, stated, “Client or Client’s representative shall
provide Engineer with all necessary information for performance
of Engineer’s work on a timely basis. Engineer shall be entitled
to rely upon information provided by Client and Client’s
representative, and shall not be held responsible for accuracy or
completeness of such information; or omission of pertinent
information.”
Section 4(b), titled “Indemnity – Client Provided
Information” in bold font, provided, “Client agrees to indemnify,
defend and hold harmless Engineer, [its] principals, agents and
employees and subcontractors from and against all costs or
liability, including but not limited to attorney fees and expert fees
and costs; arising in whole or in part from errors, omissions or
inaccuracies in any Project related information or documents
provided by, or through Client, or any other person or entity,
acting on Client’s behalf; including but not limited to
recommendations as to the type of foundation by Client’s soils
engineer. Engineer has no duty to defend the Client or any party
claiming through the Client.”
5
Greg Mooradian signed the Howe agreement on August 18,
2014 on behalf of the Mooradians, the “Client.”
3. Construction of the New House
In the last quarter of 2014 the Mooradians’ existing house
was demolished to prepare for the construction of their new
residence. Ingjaldsdottir, Thorsteinsson, Minarc and the Howes
submitted architectural and structural drawings and
specifications for approval by various departments and divisions
of the City of Los Angeles, and the City issued a building permit
in March 2015.
In April 2016 Core Construction and Development Inc., the
general contractor the Mooradians hired at Ingjaldsdottir and
Thorsteinsson’s recommendation, discovered a permit for the roof
deck could not be obtained because the deck railing exceeded the
height limit of the applicable zoning ordinance. The Mooradians
then learned Ingjaldsdottir, Thorsteinsson and Minarc were not
California licensed architects and promptly terminated the
relationship. Claiming substantial construction errors, the
Mooradians also subsequently fired Core Construction and hired
a completion contractor to finish the work.
4. The Litigation
On May 26, 2017 the Mooradians filed a complaint and on
August 8, 2017 a first amended complaint against Ingjaldsdottir,
Thorsteinsson, Minarc, MNM, the Howes, Core Construction and
others. The operative first amended complaint generally alleged
the defendants participated in a joint enterprise designed to
facilitate a variety of unlawful practices, including the practice of
architecture by persons who were not licensed architects and the
manufacture, sale and installation of building materials without
necessary City approvals. In its factual background section it
6
also alleged deficiencies in the Howes’ civil engineering services
and failures in the Howes’ construction supervision.
Three causes of action—fraud, negligent breach of contract,
and restitution and injunctive relief for unfair business
practices—were asserted against the Howes. For the fraud cause
of action and, by its reference to the fraud allegations, the unfair
business practices cause of action, the Mooradians alleged the
Howes claimed in or about 2012 to have engineered the EPS
panels that have since been used in other residential structures
constructed by its coconspirators; knew Ingjaldsdottir,
Thorsteinsson, Minarc and MNM regularly incorporated into
their designs for residential steel-framed structures the MNM-
branded C-stud framed EPS panels that were manufactured by
MNM offsite; and regularly served as the civil engineer for such
structures.4 The Mooradians further alleged, to fraudulently
induce them to sign the Howe agreement and in furtherance of
the defendants’ conspiracy, the Howes intentionally suppressed
certain material facts that should have been disclosed, including
that Minarc was not a licensed architect; MNM did not have City
approval to manufacture the EPS panels offsite; and the EPS
4 Debra Mooradian’s February 21, 2018 declaration, which
was filed in support of the Mooradians’ special motion to strike,
included, among other exhibits, a March 2012 posting on the
website of C.W. Howe Partners referring to a “two story steel and
styrofoam kit-of-parts systems” it had engineered for “Minarc
Architects,” as well as an August 2012 email from Howe to
Thorsteinsson referring to the Howes “spending time, money, and
effort on developing the MnM System.”
7
panels included materials not approved for use in residential
construction within the City.5
On December 22, 2017 the Howes filed a cross-complaint
against the Mooradians for express indemnity, equitable
indemnity, contribution and declaratory relief. In its general
allegations the cross-complaint set forth verbatim sections 4(a)
and 4(b) of the Howe agreement and asserted the Howes’
structural design under the Howe agreement was to be based on
information and drawings provided by the Mooradians’ designer
Minarc; the Mooradians, or Minarc as the Mooradians’
representative, had provided the Howes an architectural design
using elements labeled “EPS Panels”; and the selection of
EPS panels had been solely by the Mooradians and/or Minarc. It
also referred to the Mooradians’ filing of their first amended
complaint, alleging the Mooradians in their first amended
complaint admitted the EPS panels had been specified in plans
prepared by Minarc, manufactured by an entity owned by
Minarc’s owners and featured as the subject of various
representations by the Minarc’s owners and of Minarc’s and
MNM’s website postings that the Mooradians had reviewed.
For the express indemnity claim, the Howes alleged the
Mooradians had agreed to the indemnification provisions of the
Howe agreement, which obligated them to indemnify, defend and
5 For the negligence-based cause of action, the Mooradians
alleged the Howes’ negligence included preparing structural
plans referring to Minarc as an architect, participating in the
delivery of unapproved EPS panels and failing to detect MNM
was not approved by the City to manufacture or assemble the
EPS panels offsite.
8
hold harmless the Howes for any liability arising from the use of
the EPS panels as asserted in the Mooradians’ first amended
complaint, but breached the agreement by failing and refusing to
comply with their indemnification obligations.
For the equitable indemnity claim, the Howes denied
liability for the events described in the Mooradians’ first
amended complaint arising from the Mooradians’ and/or Minarc’s
decision to use the EPS panels. The Howes claimed that the
Mooradians and/or Minarc were wholly or partially responsible
for any injuries arising from their decision to use the EPS panels
and that the Mooradians should be required to pay a share of any
liability imposed on the Howes in proportion to the Mooradians’
comparative negligence.
The contribution claim alleged the Howes were entitled to
contribution from the Mooradians because of any judgment
against Howe as a result of the Mooradians’ first amended
complaint. By their declaratory relief claim, the Howes sought a
declaration of the Mooradians’ obligation to indemnify the Howes,
their duty to pay the Howes’ costs of defense and their
comparative liability for any damages claimed in the first
amended complaint.
5. The Mooradians’ Special Motion To Strike
The Mooradians responded to the Howes’ cross-complaint
by filing a section 425.16 special motion to strike, which was
supported by the Mooradians’ declarations. In their moving
papers the Mooradians argued the Howes’ cross-claims arose
from the Mooradians’ acts in furtherance of their right of petition
within the meaning of section 425.16—specifically, from the filing
of the Mooradians’ complaint. The Mooradians also argued the
9
Howes could not establish a probability of prevailing on their
claims.
In their opposition the Howes disputed their cross-claims
arose from actions in furtherance of a right of petition.6 They
contended their cross-complaint did not allege the Mooradians’
wrongful act was the filing of the complaint, which constituted
arguably protected activity, but rather the breach of the
obligation to indemnify the Howes for any liability attributable to
information provided by the Mooradians or the Mooradians’
representatives.
In his declaration supporting the opposition Howe stated,
in preparing structural designs, C.W. Howe Partners relies on
information provided by others, including architects, designers
and other consultants, who are typically hired directly by the
property owner. Because the services of C.W. Howe Partners are
intertwined with services others provide, C.W. Howe Partners
typically includes the provisions set forth in sections 4(a) and 4(b)
of the Howe agreement. For the Mooradian residence,
C.W. Howe Partners based the structural design from the set of
plans by the Mooradians’ designers, with whom C.W. Howe
Partners did not have a contractual relationship. Howe further
explained C.W. Howe Partners had no role in the selection of the
insulation material, a nonstructural item, used in the Mooradian
project. Moreover, the decision whether to use framing
assemblies fabricated offsite or onsite pertains to means, methods
and sequences of construction excluded from the scope of work
under the Howe agreement.
6 The Howes’ opposition also disputed they could not
establish the probability of prevailing on their claims.
10
The trial court heard the Mooradians’ special motion to
strike on April 18, 2018. After taking the matter under
submission, the court later that same day denied the motion,
ruling the Mooradians had failed to establish the Howes’ cross-
complaint arose from an act in furtherance of the Mooradians’
right of petition or free speech. The court, however, denied the
Howes’ request for attorney fees, finding the arguments advanced
by the Mooradians “were not completely and totally without
merit.” The Mooradians filed a timely notice of appeal. (§ 904.1,
subd. (a)(13).)7
DISCUSSION
1. Section 425.16, the Anti-SLAPP Statute,8 and the
“Arising From” Requirement
Section 425.16 provides, “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 under the United States
Constitution or the California Constitution in connection with a
7 Although the Mooradians’ notice of appeal failed to specify
the date of the order being appealed, there is no question they
sought review of the April 18, 2018 order denying their special
motion to strike, which was the only appealable order included in
their designation of the record on appeal. (See Cal. Rules of
Court, rule 8.100(a)(2) [notice of appeal “must be liberally
construed”]; D’Avola v. Anderson (1996) 47 Cal.App.4th 358, 362
[reviewing court may consider the contents of the designation of
the record in determining whether a respondent has been misled
by the notice of appeal].) The Howes do not contend they were
prejudiced in any way by that omission.
8 SLAPP is an acronym for “strategic lawsuit against public
participation.” (City of Montebello v. Vasquez (2016) 1 Cal.5th
409, 413, fn. 2.)
11
public issue shall be subject to a special motion to strike, unless
the court determines that the plaintiff has established that there
is a probability that the plaintiff will prevail on the claim.”
(§ 425.16, subd. (b)(1).)
Pursuant to section 425.16, subdivision (e), an “‘act in
furtherance of a person’s right of petition or free speech under the
United States or California Constitution in connection with a
public issue’ includes: (1) any written or oral statement or writing
made before a legislative, executive, or judicial proceeding, or any
other official proceeding authorized by law, (2) any 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, (3) any
written or oral statement or writing made in a place open to the
public or a public forum in connection with an issue of public
interest, or (4) any other conduct in furtherance of the exercise of
the constitutional right of petition or the constitutional right of
free speech in connection with a public issue or an issue of public
interest.”
In ruling on a motion under section 425.16, the trial court
engages in a two-step process. “First, the defendant must
establish that the challenged claim arises from activity protected
by section 425.16. [Citation.] If the defendant makes the
required showing, the burden shifts to the plaintiff to
demonstrate the merit of the claim by establishing a probability
of success.” (Baral v. Schnitt (2016) 1 Cal.5th 376, 384.) “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)
12
29 Cal.4th 82, 89 (Navellier), italics omitted.) If the moving party
fails to demonstrate that any of the challenged claims for relief
arise from protected activity, the court properly denies the
motion to strike without addressing the second step (probability
of success). (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 80-
81; Trilogy at Glen Ivy Maintenance Assn. v Shea Homes, Inc.
(2015) 235 Cal.App.4th 361, 367.)
“A claim arises from protected activity when that activity
underlies or forms the basis for the claim.” (Park v. Board of
Trustees of California State University (2017) 2 Cal.5th 1057,
1062-1063 (Park).) Thus, “[t]he defendant’s first-step burden is to
identify the activity each challenged claim rests on and
demonstrate that that activity is protected by the anti-SLAPP
statute. A ‘claim may be struck only if the speech or petitioning
activity itself is the wrong complained of, and not just evidence of
liability or a step leading to some different act for which liability
is asserted.’” (Wilson v. Cable News Network, Inc. (2019)
7 Cal.5th 871, 884 (Wilson); accord, Park, at p. 1060.) “‘[T]he
mere fact that an action [or claim] was filed after protected
activity took place does not mean the action [or claim] arose from
that activity for the purposes of the anti-SLAPP statute.’” (Park,
at pp. 1062-1063; see Rand Resources, LLC v. City of Carson
(2019) 6 Cal.5th 610, 621 [“a claim does not ‘arise from’ protected
activity simply because it was filed after, or because of, protected
activity, or when protected activity merely provides evidentiary
support or context for the claim”].) “To determine whether a
claim arises from protected activity, courts must ‘consider the
elements of the challenged claim and what actions by the
defendant supply those elements and consequently form the basis
for liability.’” (Wilson, at p. 884; accord, Park, at p. 1063.)
13
We review de novo an order granting or denying a special
motion to strike under section 425.16 (Wilson, supra, 7 Cal.5th at
p. 884; Park, supra, 2 Cal.5th at p. 1067), considering the parties’
pleadings and affidavits describing the facts on which liability or
defenses are predicated. (§ 425.16, subd. (b)(2); see Navellier,
supra, 29 Cal.4th at p. 89; see also San Diegans for Open
Government v. San Diego State University Research Foundation
(2017) 13 Cal.App.5th 76, 94.)
2. The Howes’ Cross-complaint Does Not Arise from the
Mooradians’ Protected Petitioning Activity
The Howes’ causes of action for express and equitable
indemnity constitute the essence of their cross-complaint.9
“Express indemnity refers to an obligation that arises ‘“by virtue
of express contractual language establishing a duty in one party
to save another harmless upon the occurrence of specified
circumstances”’” and “is enforced in accordance with the terms of
the contracting parties’ agreement.” (Prince v. Pacific Gas &
9 In addition to their claims for express and equitable
indemnity, the Howes alleged causes of action for contribution
and declaratory relief. However, “the dichotomy between
[contribution and indemnity] is more formalistic than
substantive,” and “‘[[i]ndemnity] is only an extreme form of
contribution.’” (American Motorcycle Assn. v. Superior Court
(1978) 20 Cal.3d 578, 591 & fn. 3; see Prince v. Pacific Gas &
Electric Co. (2009) 45 Cal.4th 1151, 1162, fn. 7 [“[c]ontribution
and indemnity are related doctrines, but contribution
‘“presupposes a common liability which is shared by the joint
tortfeasors on a pro rata basis”’”].) As for the Howes’ request for
declaratory relief, the Mooradians acknowledge in their opening
brief that this claim “is predicated solely upon their claim for
indemnity and defense.”
14
Electric Co. (2009) 45 Cal.4th 1151, 1158 (Prince); see Valley
Crest Landscape Development, Inc. v. Mission Pools of Escondido,
Inc. (2015) 238 Cal.App.4th 468, 481 [applying four-year statute
of limitations for breach of written contract to express indemnity
claim because, by bringing claim for express indemnity under
subcontract, “Valley Crest was, in effect, suing . . . for breach of
contract”]; Ranchwood Communities Limited Partnership v. Jim
Beat Construction Co. (1996) 49 Cal.App.4th 1397, 1417 [“we
must treat the cross-complaints’ causes of action for express
indemnity as contract based”].) “[T]he elements of a cause of
action for breach of contract are (1) the existence of the contract,
(2) plaintiff’s performance or excuse for nonperformance,
(3) defendant’s breach, and (4) the resulting damages to the
plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th
811, 821; accord, Professional Collection Consultants v. Lujan
(2018) 23 Cal.App.5th 685, 690; see Four Star Electric, Inc. v.
F & H Construction (1992) 7 Cal.App.4th 1375, 1380 [“[a]n
indemnitee seeking to recover on an agreement for
indemnification must allege the parties’ contractual relationship,
the indemnitee’s performance of that portion of the contract
which gives rise to the indemnification claim, the facts showing a
loss within the meaning of the parties’ indemnification
agreement, and the amount of damages sustained”].)
Equitable indemnity, which “requires no contractual
relationship,” “‘is premised on a joint legal obligation to another
for damages’”; it is “subject to allocation of fault principles and
comparative equitable apportionment of loss.” (Prince, supra,
45 Cal.4th at p. 1158.) “‘The elements of a cause of action for
[equitable] indemnity are (1) a showing of fault on the part of the
indemnitor and (2) resulting damages to the indemnitee for
15
which the indemnitor is . . . equitably responsible.’” (Bailey v.
Safeway, Inc. (2011) 199 Cal.App.4th 206, 217.)
The Mooradians contend the existence of a claim of loss to
be indemnified is a necessary prerequisite to any indemnification
obligation and argue the filing of their first amended complaint
supplies an essential element of the Howes’ cross-claims for
indemnity. The element of “fault,” they contend, connotes
responsibility for a claim of loss; the element of “resulting
damages” refers to damages arising from a claim of loss. They
assert there would be no claim of loss without the filing of their
first amended complaint.
To be sure, a cause of action arising from the defendant’s
(or, as applicable here, cross-defendant’s) litigation activity
directly implicates the right to petition and is subject to a special
motion to strike. (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1056
[“‘[a] cause of action “arising from” defendant’s litigation activity
may appropriately be the subject of a section 425.16 motion to
strike’”]; Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th
728, 741 [malicious prosecution action by its very nature arises
out of defendant’s constitutionally protected petitioning activity—
the underlying lawsuit]; see Navellier, supra, 29 Cal.4th at p. 90.)
But to satisfy the first prong, the Mooradians had to
establish the Howes’ causes of action “arise from” the
Mooradians’ litigation activity; and they misunderstand the
analysis employed to determine whether a claim arises from
protected conduct. The “elements” analysis as articulated by the
Supreme Court in Park, supra, 2 Cal.5th at page 1063 and
adopted in Wilson, supra, 7 Cal.5th at page 884 does not mean
any allegation of protected activity supporting an element of a
cause of action subjects that cause of action to a challenge under
16
section 425.16. Courts should only consider the elements of the
challenged cause of action as part of an analysis to determine
what actions by the defendant form the basis for liability. As
cautioned by the Park Court, in the first step of the anti-SLAPP
analysis, care must be taken “to respect the distinction between
activities that form the basis for a claim and those that merely
lead to the liability-creating activity or provide evidentiary
support for the claim.” (Park, at p. 1064.) As discussed, the
Supreme Court in both Park and Wilson made clear “the speech
or petitioning activity itself” must constitute “the wrong
complained of.” (Wilson, at p. 884; Park, at p. 1060.)
The filing of the Mooradians’ first amended complaint is
not the wrongful act forming the basis for the Mooradians’
liability as alleged in the Howes’ cross-claims. Rather, the
alleged wrongful act that forms the basis for the express
indemnity cause of action is the Mooradians’ failure to indemnify,
defend and hold harmless the Howes in breach of section 4(b) of
the Howe agreement, including to indemnify the Howes from any
liability arising from the use of the EPS panels selected by the
Mooradians or the Mooradians’ representative Minarc. Similarly,
the alleged wrongful act supporting the equitable indemnity
cause of action—the alleged “fault” for which they should be held
equitably responsible for any damages suffered by the Howes—is
the decision they or their representative Minarc made to use the
EPS panels.10
10 As the Mooradians indicate in their reply brief, the
Supreme Court in Baral v. Schnitt, supra, 1 Cal.5th at page 396
stated, “When relief is sought based on allegations of both
protected and unprotected activity, the unprotected activity is
disregarded.” The Howes’ cross-claims, however, do not allege
17
Navellier, supra, 29 Cal.4th 82 illustrates the difference.
In Navellier the Supreme Court held a claim for breach of a
release clause in a contract was subject to section 425.16 because
the alleged breach consisted of asserting claims in litigation (in a
counterclaim in a federal lawsuit that had been initiated prior to
the release agreement) that had purportedly been released under
the contract: “In alleging breach of contract, plaintiffs complain
about Sletten’s having filed counterclaims in the federal action.
Sletten, plaintiffs argue, ‘counterclaimed for damages to recover
money for the very claim he had agreed to release a year
earlier’ and ‘was sued for that act.’” (Navellier, at p. 90; see id. at
p. 89 [“[p]laintiffs . . . alleged that Sletten had committed breach
of contract by filing counterclaims in the federal action”].)
Similarly, in Moss Bros. Toy, Inc. v. Ruiz (2018)
27 Cal.App.5th 424 the petitioning activity itself constituted the
alleged breach. In that case an employer filed a breach of
contract action against an employee alleging the employee had
breached two arbitration agreements by failing to submit his
employment-related disputes to arbitration, instead filing a
putative class action complaint in superior court against the
employer. The trial court granted the employee’s special motion
to strike. (Id. at pp. 430-432.) In affirming, the court of appeal
relied, among other cases, on Vivian v. Labrucherie (2013)
214 Cal.App.4th 267, where a motion pursuant to section 425.16
successfully challenged a breach of contract action that had
alleged protected activity constituted the breach: “There, the
plaintiff’s breach of contract claims were based on the defendant’s
any part of the Mooradians’ breach or other wrongful conduct
includes the protected activity of filing their lawsuit.
18
protected activity of making statements to internal affairs
investigators and in family court papers . . . . Because the
plaintiff was seeking to impose liability on the defendant for her
acts of making protected statements, the plaintiff’s action was
based on protected activity.” (Moss Bros. Toy, at pp. 438-439.)
Unlike the plaintiffs in Navellier and Moss Bros. Toy, the Howes
did not allege in their cross-complaint that by filing their lawsuit
the Mooradians had breached the Howe agreement or otherwise
engaged in wrongful activity.
Neither Lennar Homes of California, Inc. v. Stephens
(2014) 232 Cal.App.4th 673 (Lennar Homes) nor the recent case
from Division Four of this court, Long Beach Unified School Dist.
v. Margaret Williams, LLC (Dec. 9, 2019, B290069)
__ Cal.App.5th __ [2019 Cal.App. Lexis 1228] (Williams), which
affirmed trial court orders granting special motions to strike first
party contractual indemnity causes of action, provides persuasive
support for the Mooradians’ motion.
In Lennar Homes defendants Stella Stephens and Timothy
and Melissa Young, a married couple, purchased homes from
builder Lennar Homes of California, Inc., entering into
agreements that required the homebuyers to indemnify and
defend Lennar from any costs and liabilities arising from claims
the homebuyers might make based on the builder’s nondisclosure
or incomplete disclosure of various items. Stella Stephens and
Timothy Young, but not Melissa Young, were named plaintiffs in
a federal class action lawsuit asserting claims of fraudulent
nondisclosure and misrepresentation against Lennar. After
dismissal of the federal action, Lennar sued all three homebuyers
for express contractual indemnity to recover its attorney fees and
costs in defending the federal action. The trial court granted the
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homebuyers’ section 425.16 motion, and the court of appeal
affirmed. (Lennar Homes, supra, 232 Cal.App.4th at pp. 677-
679.) Significantly, however, Lennar did not dispute on appeal
that its cause of action for indemnity as asserted against
Stephens and Timothy Young arose from actions in furtherance
of their right to petition (id. at p. 680); Lennar argued Melissa
Young had failed to satisfy the first prong of the anti-SLAPP
analysis because, unlike her husband, she was not named as a
plaintiff in the federal action (ibid.).11 Applying authority holding
that section 425.16 applies to one who did not personally engage
in protected petitioning activity but who provided support for
that activity, the appellate court concluded Timothy Young
effectively brought suit on behalf of both himself and his wife,
asserting rights belonging jointly to them, and the federal
litigation therefore constituted an act in furtherance of Melissa
Young’s right of petition, even though she was not named as a
plaintiff. (Lennar Homes, at pp. 681, 684.)
Selectively quoting from Navellier, supra, 29 Cal.4th 82,
Lennar Homes relied on a facile “but for” analysis to conclude
Lennar’s claim against Melissa Young arose from protected
activity because, but for the federal litigation, Lennar’s
indemnification claim would have no basis. (Lennar Homes,
11 Lennar contended the express indemnity cause of action
against Melissa Young did not arise from her own petitioning
activity. Because Melissa Young had agreed “‘to indemnify
Lennar for costs incurred in defending a meritless suit by a third
party (here Mr. Young),’” Lennar unsuccessfully attempted to
characterize its claim against Melissa Young as a
“‘straightforward third-party indemnity claim.’” (Lennar Homes,
supra, 232 Cal.App.4th at p. 684.)
20
supra, 232 Cal.App.4th at pp. 684-685.) The Lennar Homes
court, which decided the case several years before the Supreme
Court’s clarification of proper section 425.16 analysis in Wilson,
supra, 7 Cal.5th 871 and Park, supra, 2 Cal.5th 1057, did not
consider whether the wrongful act giving rise to an express
indemnity claim for purposes of the first prong of section 425.16
was the filing of the underlying action or the refusal to honor the
contractual indemnification obligation.12
Williams, supra, ___ Cal.App.5th ___ involved a first party
contractual indemnity claim filed by the Long Beach Unified
School District as a cross-complaint in a lawsuit by Margaret
Williams and Margaret Williams, LLC alleging the District had
wrongfully terminated the LLC’s contract to perform construction
management and environmental compliance work for the District
and unlawfully caused Williams’s arsenic poisoning.13 (Id. at
p. ___ [2019 Cal.App. Lexis 1228, *1-2].) Relying on the
truncated first prong reasoning in Lennar Homes, the Williams
court concluded, “Here, the District’s cross-claims for defense and
12 As explained by Division One of the First District in Wong
v. Wong (Dec. 13, 2019, A154286) __ Cal.App.5th __ [2019
Cal.App. Lexis 1252, *13], which involved a third party
indemnity claim, “Lennar Homes was decided before Park and did
not employ Park’s elements-based analysis. The builder
effectively conceded that the husband and the other woman had
met their first-prong burden.”
13 In Williams the District’s cross-complaint included a breach
of contract cause of action; the LLC’s contract contained an
indemnity provision, which the District alleged the LLC breached
by failing to accept the District’s tenders of defense and
indemnity. (Williams, supra, __ Cal.App.5th __ [2019
Cal.App. Lexis 1228, *9-11].)
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indemnity likewise would have no basis without the Underlying
Action in which it seeks to be defended and indemnified.” (Id. at
p. __ [2019 Cal.App. Lexis 1228, *17].) However, implicitly
recognizing the flaw inherent in utilizing a simple “but for”
analysis, rather than considering the elements of the challenged
claims to determine what actions form the basis for liability, as
required by Park, supra, 2 Cal.5th at page 1063, the Williams
court went on to conclude, even if the District’s cross-complaint
for indemnity did not arise from the underlying action, it
nonetheless arose from protected activity within the meaning of
section 425.16, subdivision (e)(4), because funding or refusing to
fund litigation (that is, refusing the District’s demand for a
defense and indemnification) constituted protected conduct in
furtherance of petitioning activity and Williams and her LLC’s
lawsuit involved an issue of public interest (allegations of an
environmental hazard at a construction site for a public school).
(Williams, at p. __ [2019 Cal.App. Lexis 1228, *18].) The
Mooradians do not, and cannot, assert that their refusal to honor
the Howes’ indemnity demand similarly implicates an issue of
public interest.
In sum, the trial court properly determined the Mooradians
failed to establish the Howes’ cross-claims arose from protected
activity.
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DISPOSITION
The order denying the Mooradians’ special motion to strike
is affirmed. The Howes are to recover their costs on appeal.
PERLUSS, P. J.
We concur:
ZELON, J.
SEGAL, J.
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