Perera v. Title Experts CA2/7 ( 2021 )

Filed 8/16/21 Perera v. Title Experts CA2/7
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
ROSEMARY PERERA et al., B304116
Plaintiffs and Respondents, (Los Angeles County
Super. Ct. No. 19STCV26666)
v.
TITLE EXPERTS,
Defendant and Appellant.
APPEAL from an order of the Superior Court of Los
Angeles County, Teresa A. Beaudet, Judge. Affirmed.
Berman Berman Berman Schneider & Lowary, Stephanie
Berman Schneider and Howard Smith for Defendant and
Appellant.
Boren, Osher & Luftman, Jeremy J. Osher and Aaron M.
Gladstein for Plaintiffs and Respondents.
_______________________
Title Experts appeals from an order denying its special
motion to strike (Code Civ. Proc., § 425.16; anti-SLAPP statute)1
the complaint filed by Rosemary Perera (Rosemary), Ramesh
Perera, Gihan Perera, and GRR Capital, LLC (collectively, the
Perera plaintiffs). Title Experts contends the trial court erred in
denying its motion because the Perera plaintiffs’ cause of action
for rescission of the parties’ prior settlement agreement arose out
of protected statements made during the mediation or related to
the settlement agreement. Because the rescission claim is based
on Title Experts’ breach of the settlement agreement, not Title
Experts’ statements, we affirm.
FACTUAL AND PROCEDURAL BACKGROUND
A. Prior Lawsuit and Compromise Agreement
On August 9, 2016 the Perera plaintiffs filed an action
(Perera v. Conaway (Super. Ct. L.A. County, 2016,
No. BC627323)) against James Conaway and Lorraine Conaway,
St. Louis Redevelopment Company and its owner Giro
Katsimbrakis (collectively, SLRC), Title Experts, and others
asserting claims arising from the defendants’ allegedly
fraudulent real estate investment scheme. The Perera plaintiffs
alleged the Conaways, as Rosemary’s financial advisors,
recommended Rosemary invest with SLRC in distressed
properties located in St. Louis, Missouri that would be
rehabilitated to create a cash flow for the investors. Based on the
1 “SLAPP is an acronym for ‘strategic lawsuit against public
participation.’” (City of Montebello v. Vasquez (2016) 1 Cal.5th
409, 413, fn. 2.) All further undesignated statutory references
are to the Code of Civil Procedure.
2
representations made by the Conaways and SLRC, the Perera
plaintiffs invested more than $600,000 to purchase the distressed
properties. Title Experts was selected as the escrow company to
open and administer the escrow, during the pendency of which
the properties were to be rehabilitated and deeded to the Perera
plaintiffs. Once the transaction closed, SLRC was to arrange for
a property management company to place tenants in the
properties. However, SLRC and the other defendants instructed
Title Experts to close the escrow prematurely, and the properties
were never rehabilitated or rented out.
On February 21, 2018 the parties participated in a
mediation with Retired Judge Richard A. Stone. As a result of
the mediation, the parties executed a compromise agreement and
mutual release (compromise agreement) in which SLRC agreed to
purchase back 10 of the properties for $800,000 in exchange for
the Perera plaintiffs dismissing the action and releasing the
defendants from all known and unknown claims. The Perera
plaintiffs agreed to deposit into the escrow all documents
reasonably required to transfer title of the properties to SLRC
and to provide access to the properties to appraisers as necessary.
The compromise agreement also provided that Title Experts
would open and administer the escrow, which would close within
120 days.
On March 1, 2018 the Perera plaintiffs filed a notice of
settlement. However, the Perera plaintiffs subsequently filed a
declaration stating the defendants had defaulted on their
obligations under the compromise agreement. The parties later
3
reached a stipulation to stay the action, which the court entered
on February 19, 2020.2
B. This Action
On July 30, 2019 the Perera plaintiffs filed this action
against Title Experts, the Conaways, SLRC, and others alleging
two causes of action for rescission of the compromise agreement
based on fraud and deceit (first cause of action) and failure of
consideration (second cause of action).3 The complaint alleged
defendants failed to perform their obligations under the
compromise agreement and misrepresented why they could not
comply with its terms. The complaint alleged as to Title Experts
that the compromise agreement required the company to open
escrow, but it failed to do so, forcing the Perera plaintiffs to
“open[] escrow themselves.” Further, Title Experts and the other
defendants “falsely represented that under Missouri law, escrow
could not be opened with the [compromise] [a]greement and could
2 On October 18, 2018 the trial court dismissed the
complaint, but it inadvertently did not dismiss the operative first
amended complaint. The court gave the Perera plaintiffs until
August 12, 2019 to show cause why the case should not be
dismissed. It appears the parties negotiated the stay to avoid
dismissal of the action. On our own motion we augment the
record to include the June 26, 2019 Order re: Plaintiffs’ Motion to
Set Aside Dismissal and February 19, 2020 Minute Order. (Cal.
Rules of Court, rule 8.155(a)(1)(A).)
3 The Perera plaintiffs assert they attempted to have Judge
Stone reinstate Perera I based on the failure of defendants to
comply with the compromise agreement, but Judge Stone issued
a tentative order stating he did not have the power to reinstate
the litigation. As a result, the Perera plaintiffs filed this action.
4
not perform unless and until separate sales contracts were
executed for each of the Properties utilizing a special contract
form . . . per Missouri Law.” In addition, defendants delayed
performance under the compromise agreement by making
“countless false promises” to make it seem like they “intended to
imminently comply with their obligations under the Compromise
Agreement.” Further, almost a year after escrow was supposed
to close, counsel for SLRC sent an email to the Perera plaintiffs
stating SLRC “‘cannot take title to the properties which are the
subject of the case.’” SLRC suggested a “‘surrogate’” entity
(owned by Katsimbrakis) take title and pay the money owed to
the Perera plaintiffs in “tranches.”4
In support of the first cause of action for rescission of the
compromise agreement for fraud, the Perera plaintiffs alleged,
“[Defendants] made the representations to [plaintiffs] that
induced [plaintiffs] to enter into the Compromise Agreement.” In
addition, defendants made misrepresentations about their
performance following the execution of the agreement. In
support of the second cause of action for rescission based on
failure of consideration, the Perera plaintiffs incorporated the
previous allegations of the complaint and further alleged that
defendants “have failed to comply with any of their obligations
under the Compromise Agreement,” thereby creating “a material
failure in the consideration exchanged under this Compromise
Agreement.”
4 Merriam-Webster dictionary defines a “tranche” as “a
division or portion of a pool or whole.” (Merriam-Webster’s
Online Dict. (2021) 2 Cal.5th 1057,
1067 (Park); Baral v. Schnitt (2016) 1 Cal.5th 376, 381 (Baral).)
An “‘act in furtherance of a person’s right of petition or free
7
speech under the United States or California Constitution in
connection with a public issue’” includes, in relevant part, “any
written or oral statement or writing made before a legislative,
executive, or judicial proceeding, or any other official proceeding
authorized by law” (§ 425.16, subd. (e)(1)) and “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 (id.,
subd. (e)(2)).
The analysis of a special motion to strike involves a two-
step process. (Baral, supra, 1 Cal.5th at p. 381; Park, supra,
2 Cal.5th at p. 1061.) “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, at pp. 384-
385.)
“A claim arises from protected activity when that activity
underlies or forms the basis for the claim.” (Park, supra,
2 Cal.5th at p. 1062; accord, City of Cotati v. Cashman (2002)
29 Cal.4th 69, 78.) “‘[T]he focus is on determining what ‘the
defendant’s activity [is] that gives rise to his or her asserted
liability—and whether that activity constitutes protected speech
or petitioning.’ [Citation.] . . . [I]n ruling on an anti-SLAPP
motion, courts should consider the elements of the challenged
claim and what actions by the defendant supply those elements
and consequently form the basis for liability.” (Park, at p. 1063.)
“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
8
is asserted.” (Id. at p. 1060; accord, Wilson v. Cable News
Network, Inc. (2019) 7 Cal.5th 871, 884-885.)
We review de novo the grant or denial of a special motion to
strike, “evaluating the context and content of the asserted
activity.” (Wilson v. Cable News Network, Inc., supra, 7 Cal.5th
at pp. 884-885; accord, Park, supra, 2 Cal.5th at p. 1067.) “We
exercise independent judgment in determining whether, based on
our own review of the record, the challenged claims arise from
protected activity. [Citations.] In addition to the pleadings, we
may consider affidavits concerning the facts upon which liability
is based. [Citations.] We do not, however, weigh the evidence,
but accept the plaintiff’s submissions as true and consider only
whether any contrary evidence from the defendant establishes its
entitlement to prevail as a matter of law.” (Park, at p. 1067.)
B. Title Experts Failed To Establish That the Second Cause of
Action Arose From Protected Activity
Title Experts contends the Perera plaintiffs’ second cause of
action for rescission is based on alleged misrepresentations made
by Title Experts about the compromise agreement and breach of
the agreement, which constitute protected activities in
furtherance of Title Experts’ right to petition.5 The Perera
plaintiffs acknowledge their complaint contains allegations that
Title Experts made misrepresentations about the settlement, but
they contend the second cause of action arises from Title Experts’
failure to perform under the compromise agreement, which is not
5 Title Experts does not challenge on appeal the Perera
plaintiffs’ dismissal of their first cause of action.
9
protected petitioning activity. The Perera plaintiffs have the
better argument.
The second cause of action for rescission is based on Title
Expert’s breach of contract (the compromise agreement). (See
Wong v. Stoler (2015) 237 Cal.App.4th 1375, 1384 [“A party to a
contract has two different remedies when it has been injured by a
breach of contract or fraud and lacks the ability or desire to keep
the contract alive. [Citation.] The party may disaffirm the
contract, treating it as rescinded, and recover damages resulting
from the rescission. [Citation.] Alternatively, the party may
affirm the contract, treating it as repudiated, and recover
damages for breach of contract or fraud.”]; Taliaferro v. Davis
(1963) 216 Cal.App.2d 398, 410-411 [when a failure of
consideration is alleged, the plaintiff must plead that the
defendant breached the contract for failing to perform a material
promise, the performance of which has been exchanged for
performance by the other party].) The elements of a breach of
contract claim are (1) the existence of the contract; (2) the
plaintiff’s performance of the contract or excuse for non-
performance; (3) the defendant’s breach of the contract; and
(4) the resulting damage to the plaintiff. (Coles v. Glaser (2016)
2 Cal.App.5th 384, 391; Kumaraperu v. Feldsted (2015)
237 Cal.App.4th 60, 70.)
The complaint alleges as to the second cause of action, “The
consideration for which [plaintiffs] bargained [in entering the
compromise agreement] was: (1) the purchase by SLRC of the
Properties; (2) payment of $800,000; and (3) release from any
liability.” In exchange, the Perera plaintiffs agreed to release all
known and unknown claims and dismiss the pending action. The
Perera plaintiffs performed their end of the bargain, but
10
defendants “have failed to comply with any of their obligations
under the Compromise Agreement.”
These allegations make clear the alleged breach of contract
was Title Experts’ failure to perform its obligations under the
compromise agreement, not any statements Title Experts may
have made regarding its performance. (See ValueRock TN
Properties, LLC v. PK II Larwin Square SC LP (2019)
36 Cal.App.5th 1037, 1049-1050 [affirming denial of anti-SLAPP
motion where complaint referenced settlement discussions but
the tenant’s claim arose out of the landlord’s decision not to
consent to the assignment rather than landlord’s settlement
communications or litigation-related conduct]; Department of
Fair Employment & Housing v. 1105 Alta Loma Road
Apartments, LLC (2007) 154 Cal.App.4th 1273, 1284-1285
[affirming denial of anti-SLAPP motion because the act giving
rise to liability was the “fail[ure] to accommodate [the tenant’s]
disability,” and “[t]he letters, e-mail and filing of unlawful
detainer actions constituted [ ] evidence of [the landlord’s] alleged
disability discrimination”]; Gallimore v. State Farm Fire &
Casualty Ins. Co. (2002) 102 Cal.App.4th 1388, 1399 [reversing
order granting anti-SLAPP motion because the plaintiff did not
seek relief from the defendant’s “communicative acts, but rather
for its alleged mistreatment of policyholders and its related
violations and evasions of statutory and regulatory mandates,”
distinguishing between a party’s “allegedly wrongful acts with
the evidence that plaintiff will need to prove such misconduct”].)
The Perera plaintiffs do not allege any communications by
Title Experts during or after the settlement negotiations
constituted a breach of the compromise agreement. Rather, Title
Experts’ statements as to why its performance was not feasible
11
and its false promises that it intended to comply were “activities
that . . . [led] to the liability-creating activity or provide
evidentiary support for the claim,” and as such, are not subject to
the anti-SLAPP statute. (Park, supra, 2 Cal.5th at p. 1064.)
Alternatively, Title Experts’ alleged statements were “merely
incidental” to the Perera plaintiffs’ second cause of action,
likewise falling outside the ambit of the anti-SLAPP statute.
(Baral, supra, 1 Cal.5th at p. 394 [“Assertions that are ‘merely
incidental’ or ‘collateral’ are not subject to section 425.16.
[Citations.] Allegations of protected activity that merely provide
context, without supporting a claim for recovery, cannot be
stricken under the anti-SLAPP statute.”]; see Aguilar v.
Goldstein (2012) 207 Cal.App.4th 1152, 1160 [“‘If the mention of
protected activity “is only incidental to a cause of action based
essentially on nonprotected activity,” then the anti-SLAPP
statute does not apply.’”].)
Title Experts’ position that the anti-SLAPP statute applies
to any breach of a settlement agreement is contrary to the law.
(See Old Republic Construction Program Group v. The Boccardo
Law Firm, Inc. (2014) 230 Cal.App.4th 859, 869 (Old Republic)
[although entry of stipulation for settlement was protected
conduct under the anti-SLAPP statute, claims relating to breach
of the stipulation did not arise from protected activity because
the alleged wrongful conduct was not the stipulation, but the
improper withdrawal of settlement funds]; Applied Business
Software, Inc. v. Pacific Mortgage Exchange, Inc. (2008)
164 Cal.App.4th 1108, 1118 [defendant’s alleged conduct that
breached settlement agreement by continuing to use software
and failing to return software copies was not conduct in
furtherance of its right of petition or free speech]; cf. Navellier v.
12
Sletten (2002) 29 Cal.4th 82, 90 [plaintiffs’ claims alleging
repudiation of release in settlement agreement by filing
counterclaims in federal action arose from protected petitioning
activity].)
As the Court of Appeal in Old Republic, supra,
230 Cal.App.4th at page 870 explained, “If the protected status of
an underlying agreement furnished sufficient ground to invoke
the anti-SLAPP statute against a claim for breach of that
agreement, it would follow that every suit to enforce a settlement
agreement would be subject at the threshold to a SLAPP motion.
Such a regime would significantly diminish the utility of such
agreements, reduce the incentive for parties to enter into them,
and thereby magnify the workload on courts, with attendant
delay and expense for those who must resort to them. It follows
that merely citing a settlement agreement as the basis for a duty
allegedly breached by the defendant is not enough, by itself, to
bring a cause of action for the breach within the statute.”
Title Experts’ reliance on Mundy v. Lenc (2012)
203 Cal.App.4th 1401 and GeneThera, Inc. v. Troy & Gould
Professional Corp. (2009) 171 Cal.App.4th 901 is misplaced. In
Mundy, the Court of Appeal concluded the plaintiff’s claim for
breach of contract arose from protected activity because the
alleged conduct that violated the parties’ settlement agreement
was the filing of a complaint, which “fits the definition of an act
in furtherance of a person’s right of petition.” (Mundy, at
p. 1408.) Similarly, in GeneThera the Court of Appeal concluded
the plaintiff’s claims for interference with contractual relations
and negligence arose from protected petitioning activity because
they were based on the communication by defendants’ attorney of
a settlement offer. (GeneThera, at pp. 905, 907-908.) As the
13
GeneThera court reasoned, “An attorney’s communication with
opposing counsel on behalf of a client regarding pending litigation
directly implicates the right to petition and thus is subject to a
special motion to strike.” (Id. at p. 908.) Here, the second cause
of action is based on the failure of Title Experts to comply with its
obligations under the compromise agreement, not the negotiation
of the agreement or later communications by Title Experts.6
DISPOSITION
The order is affirmed. The Perera plaintiffs are to recover
their costs on appeal.
FEUER, J.
We concur:
PERLUSS, P. J.
SEGAL, J.
6 Because we affirm the trial court’s order denying the
special motion to strike under the first prong of the anti-SLAPP
analysis, we do not reach whether the Perera plaintiffs showed a
probability of success on the merits.
14