Bell v. Brumm CA1/1

Filed 8/19/21 Bell v. Brumm CA1/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or
ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION ONE
NATHAN W. BELL,
Plaintiff and Respondent,
A159820
v.
ERIC BRUMM et al., (Alameda County
Super. Ct. No. RG18924920)
Defendants and
Appellants.
The trial court denied defendants’ special motion to strike portions of
plaintiff’s second amended complaint (Code Civ. Proc., § 425.16) on the
ground the motion should have been made in connection with earlier
pleadings and was therefore untimely. We reverse and remand for the trial
court to hear the motion on its merits.
BACKGROUND
In his original complaint, filed in October 2018, plaintiff asserted seven
causes of action. Defendant interposed a demurrer on the ground the case is
governed by Delaware law and under that law, plaintiff fails to state any
claim for relief.
Before the demurrer was heard, plaintiff, in April 2019, filed a first
amended complaint, asserting the same causes of action but adding
allegations assertedly curing any deficiencies in the original complaint.
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Defendants again interposed a demurrer, which the trial court heard in
August and sustained with leave to amend.
Several weeks later, in early September, plaintiff filed a second
amended complaint, which is the operative pleading for purposes of this
appeal. Plaintiff asserted four causes of action, three of which had been pled
in his prior complaints.
Defendants responded with both a demurrer and a special motion to
strike (anti-SLAPP motion). The special motion to strike targeted the
following: allegations 20 through 143 of the first cause of action; the entirety
of the newly pled third cause of action; and the request for attorney fees and
expenses in the prayer for relief.
Three months later, in February 2020, the trial court sustained
defendants’ demurrer, again with leave to amend. However, the court stayed
the filing of a third amended complaint until the court held a hearing and
ruled on the choice of law issue.
A week later, on March 2, the trial court denied defendants’ special
motion to strike on the sole ground that it should have been brought in
connection with plaintiff’s prior pleadings and thus was untimely. Notably,
this was not a ground plaintiff had raised in his opposition to the motion;
rather, he opposed the motion on the merits.
DISCUSSION1
The Anti-SLAPP Motion Was Properly Directed at The Second
Amended Complaint
1 Whether an anti-SLAPP motion was timely filed is a question of law
we review de novo. (Starview Property, LLC v. Lee (2019) 41 Cal.App.5th
203, 208 (Starview).) While plaintiff suggests the abuse of discretion
standard should apply, given the court’s handling of the choice of law issue,
2
“An anti-SLAPP motion may be brought within 60 days of service of an
amended complaint ‘ “if the amended complaint pleads new causes of action
that could not have been the target of a prior anti-SLAPP motion, or adds
new allegations that make previously pleaded causes of action subject to an
anti-SLAPP motion.” ’ ” (Starview, supra, 41 Cal.App.5th at p. 206; Newport
Harbor Ventures, LLC v. Morris Cerullo World Evangelism (2018) 4 Cal.5th
637, 641; see Code Civ. Proc., § 425.16, subd. (f) [a “special motion may be
filed within 60 days of the service of the complaint or, in the court’s
discretion, at any later time upon terms it deems proper”].)
Defendants maintain their special motion to strike targeted new
allegations and a new cause of action asserted for the first time in the second
amended complaint, and therefore they could not have brought their motion
sooner than they did.
Plaintiff’s original and first amended complaints asserted seven causes
of action: (1) breach of fiduciary duties, (2) breach of duty of fairness to
minority shareholder, (3) action for dissolution of Portrait Displays, Inc., (4)
fraud in furtherance of oppressive, improper restructuring, (5) breach of
contract, (6) breach of the implied covenant of good faith and fair dealing, and
(7) aiding and abetting.
His second amended complaint, which superseded the prior complaints,
asserted four causes of action: (1) fraud, (2) breach of contract, (3) failure to
properly disclose applicability of Corporations Code section 2115, and (4)
breach of fiduciary duties by corporate officers and controlling shareholders.
Despite the reduced number of causes of action, the second amended
complaint exceeded the prior pleadings in size and quantity of allegations.
the sole ruling before us (and, indeed, the only appealable order before us) is
the court’s denial of the anti-SLAPP motion.
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At a minimum, defendants’ special motion to strike was properly
directed at the third cause of action of the second amended complaint, since
this was an entirely new cause of action. Indeed, plaintiffs added this cause
action in the wake of a discovery dispute about representations made in the
course of the litigation.
As for the newly made allegations in support of plaintiff’s fraud cause
action, we first consider whether they are the type of allegations that are
subject to a special motion to strike. At one time, the Courts of Appeal were
in disagreement as to whether a special motion to strike could be surgically
employed to eliminate allegations or whether such motions could only target
entire causes of action. This dispute was resolved in favor of the more
surgical approach in Baral v. Schnitt (2016) 1 Cal.5th 376, 392-394 (Baral).
“The anti-SLAPP procedures are designed to shield a defendant’s
constitutionally protected conduct from the undue burden of frivolous
litigation. It follows, then, that courts may rule on plaintiffs’ specific claims
of protected activity, rather than reward artful pleading by ignoring such
claims if they are mixed with assertions of unprotected activity.” (Id. at
p. 393, italics omitted.) “[L]ike a conventional motion to strike,” a special
motion to strike “may be used to attack parts of a count as pleaded.” (Ibid.)
However, not all allegations are subject to a special motion to strike.
Allegations that “merely provide context, without supporting a claim for
recovery, cannot be stricken under the anti-SLAPP statute.” (Baral, supra,
1 Cal.5th at p. 394.) Thus, allegations that are “ ‘merely incidental’ or
‘collateral’ are not subject to” a special motion to strike. (Ibid.)
Accordingly, when there is a mix of factual allegations with those
supporting a cause of action, the “allegations of protected activity” can be
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excised from mixed causes of action in the complaint. (Baral, supra,
1 Cal.5th at p. 396.)
In examining the allegations plaintiff added to his fraud cause of action
in the second amended complaint, it is apparent they are not merely
incidental, contextual allegations that, under Baral, are beyond the reach of a
special motion to strike. For example, plaintiff included the following new
allegations in elaborating on defendants alleged “fraudulent representations,
including material omissions” (capitalization omitted):
Paragraph 29: “At the time of the 2011 Note Conversion, Defendants
PDI, Brumm and Fishman negligently and/or intentionally failed to
disclose that they intended to use the pseudo foreign corporate status of
PDI and Delaware incorporation as a means to circumvent the specific
California choice of law provision written into the Note Conversion
Agreement.”
Paragraph 31: “At no time did Defendants PDI, Brumm or Fishman
disclose to Plaintiff or other PDI shareholders that they were trying to
subject shareholders to Delaware law in any manner relating to their
rights and privileges appurtenant to their investment shares/notes.”
Paragraph 33: “At the time of the 2011 Note Conversion, Defendants
PDI, Brumm and Fishman negligently and/or intentionally failed to
disclose that they had included a conflicting Delaware choice of law
clause and/or that they otherwise intended to use the pseudo foreign
corporate status of PDI and Delaware incorporation as a means to
circumvent the specific California choice of law provision written into
the Note Conversion Agreement.”
These new allegations, appearing for the first time in plaintiffs’ second
amended complaint, are “asserted as grounds for relief” and are therefore,
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under Baral, subject to a special motion to strike. (Baral, supra, 1 Cal.5th at
p. 395, italics omitted.) And because these allegations did not appear in
plaintiff’s prior pleadings, defendants’ motion to strike was properly directed
at the second amended complaint.
In concluding that defendant’s special motion to strike was
appropriately directed at the second amended complaint, we are taking no
position as to the merits of the motion. Rather, we leave that inquiry—i.e.,
whether defendants have established that plaintiff’s claims are based on
protected activity and, if they are, whether plaintiff has demonstrated “a
probability that he . . . will prevail on the claim[s]” (Code Civ. Proc., § 425.16,
subd. (b)(1)-(3))—to the trial court on remand. (See Starview, supra,
41 Cal.App.5th at p. 213.)
Respondent’s Alternative Grounds to Affirm
Timeliness of Filing After Service of Second Amended Complaint
Plaintiff contends that even if the special motion to strike was properly
directed at the second amended complaint, the motion was nevertheless not
timely filed given the date of service of that pleading.
To begin with, plaintiff has forfeited this objection because he did not
raise it in the trial court. (See Platypus Wear, Inc. v. Goldberg (2008)
166 Cal.App.4th 772, 781 [because plaintiff objected to defendant’s request to
file late special motion to strike, issue was preserved for appeal].)
Even if the issue was preserved, plaintiff’s argument is without merit.
Code of Civil Procedure section 425.16, subdivision (f) provides that a
special anti-SLAPP motion “may be filed within 60 days of the service of the
complaint or, in the court’s discretion, at any later time upon terms it deems
proper.” However, the “moving party on an anti-SLAPP motion gets an extra
five days for mailing . . . [¶] . . . when . . . the complaint at which the special
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motion to strike is directed has itself been mailed.” (Lam v. Ngo (2001)
91 Cal.App.4th 832, 842.) In short, Code of Civil Procedure section 1013,
subdivision (a) applies to anti-SLAPP motions. (Lam, at p. 842.)
Plaintiff served the second amended complaint by mail on September 5,
2019, giving defendants 65 days to file their anti-SLAPP motion. The last
day of that time-period fell on Saturday, November 9. Defendants filed their
motion on Wednesday, November 6. It was therefore timely filed under Code
of Civil Procedure section 1013.
Plaintiff claims the 60-day time for filing should have run from the date
of a defendant’s receipt of the operative pleading, regardless of mode of
service and regardless of Code of Civil Procedure section 1013. He maintains
defendants received the second amended complaint on September 6, one day
after the date of the proof of service, and therefore the motion should have
been filed within 60 days of that date. Plaintiff cites no authority in support
of his assertion that regardless of the mode of service, receipt triggers the
filing period.
Plaintiff further asserts that because the second amended complaint
was served both by mail and by federal express, the federal express date
should control for purposes of the deadline for filing a special motion to
strike. However, the proof of service for the second amended complaint,
which is the court record of service, states the pleading was served by mail.
Again, plaintiff cites no authority for the proposition that the court’s record
should not be controlling as to the filing period for a responsive document.
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Hearing date of Anti-SLAPP Motion
Plaintiff also urges as an alternative ground for affirmance that the
special motion to strike was not timely heard by the trial court.2 As plaintiff
points out, Code of Civil Procedure subdivision (f) of section 425.16, specifies
that a special motion to strike “shall be scheduled by the clerk of the court for
a hearing not more than 30 days after the service of the motion unless the
docket conditions of the court require a later hearing.” Here, defendants filed
their motion on November 6, 2019, but the motion was not heard until March
2, 2020.
Plaintiff has also forfeited this objection since he did not raise it in the
trial court. (See San Ramon Valley Fire Protection Dist. v. Contra Costa
County Employees’ Retirement Assn. (2004) 125 Cal.App.4th 343, 350-351
[having failed to object in the trial court, party forfeited objection that anti-
SLAPP motion was not timely set for hearing within 30 days; failure to raise
the objection deprived the moving party and the court from establishing that
docket conditions required later scheduling].)
Mootness of Anti-SLAPP Motion
Finally, plaintiff maintains the court’s ruling should be affirmed
because the sustaining of defendants’ demurrer with leave to amend
rendered the special motion to strike moot.
There is some confusion in the cases as to whether, when both a special
motion to strike and a demurrer are filed, as was the case here, the motion to
strike should be heard and decided first. (Compare Oakland Bulk &
Oversized Terminal, LLC v. City of Oakland (2020) 54 Cal.App.5th 738, 750-
2 While plaintiff claims “unreasonable delay” was part of the basis for
the court’s denial of the motion, the trial court made no reference to any such
delay in its ruling.
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751 (Oakland Bulk) [trial court did not err in deferring ruling on defendant’s
special motion to strike where court had previously sustained defendant’s
demurrer with leave to amend] with Martin v. Inland Empire Utilities Agency
(2011) 198 Cal.App.4th 611, 629 (Martin)[trial courts should grant or deny
special motions to strike “in toto, i.e., without leave to amend, prior to ruling
on any pending demurrers”].)
In Oakland Bulk, the city first filed a demurrer and an ordinary motion
to strike. Two weeks later, it filed a special motion to strike portions of the
operative complaint, which was set for hearing two weeks after its demurrer
and ordinary motion to strike. (Oakland Bulk, supra, 54 Cal.App.5th at
pp. 746-747.) After issuing a tentative ruling on the demurrer and ordinary
motion to strike, all three matters came on for hearing, the court commenting
that the special motion to strike seemed “premature.” (Id. at pp. 748-749.)
After overruling in part and sustaining in part the demurrer with leave to
amend, the court denied the special motion to strike without prejudice to the
filing of a new motion in response to an amended complaint. (Id. at p. 749)
Pointing out that the anti-SLAPP statute is silent as to the issue of
amendment, and that in Nguyen-Lam v. Cao (2009) 171 Cal.App.4th 858,
871, the appellate court had approved the granting of a special motion to
strike with leave to amend, the Court of Appeal concluded the trial court’s
handling of the special motion to strike made perfect sense and that the court
did not error in granting leave to amend prior to ruling on the special motion.
(Oakland Bulk, at pp. 750-751.)
In Martin, the defendants concurrently filed a demurrer and a special
motion to strike. (Martin, supra, 198 Cal.App.4th at p. 616.) Unfortunately,
the trial court proceedings were not a model of clarity as to the special motion
to strike. The upshot was that the appellate court concluded the trial court
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had implicitly granted the motion as to all but one of the causes of action and
further ruled the trial court was correct in doing so. (Id. at pp. 623-625.) As
to the remaining cause of action, the appellate court concluded it was
apparent the trial had granted the motion with leave to amend. The
defendants claimed the trial court errored in granting leave to amend and
should have granted their motion. (Id. at pp. 625-626.)
The Court of Appeal agreed the trial court had erred—because the
court had not first determined that the defendants had carried their burden
to show that plaintiff’s claim arose from protected activity. (Martin, supra,
198 Cal.App.4th at pp. 627-629.) The court canvassed a number of cases
addressing amendment, concluding that the holdings “barred trial courts
from granting anti-SLAPP motions with leave to amend only when the
defendants had already made a prima facie showing on the first prong.” (Id.
at p. 628.) The trial court, however, had made no such determination. (Id. at
p. 629.) Accordingly, the appellate court deemed the trial court’s grant with
leave to amend to be the “functional equivalent” of an order denying the
motion. (Ibid.) The appellate court further concluded that the trial court had
not erred in “denying” the motion because defendants failed to make a prima
facie showing that the cause of action at issue was based on protected
activity. (Ibid.)
The Martin court went on to “stress what other cases exposited herein
have strongly noted: section 425.16 provides no mechanism for granting anti-
Slapp motions with leave to amend. [Citations.] Trial courts should either
grant or deny such motions in toto, i.e., without leave to amend, prior to
ruling on any demurrers. A proper ruling on the anti-SLAPP motion would,
in most cases, obviate the need to rule on the demurrer at all or, at the very
least, in its entirety.” (Martin, supra, 198 Cal.App.4th at p. 629.)
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The instant case presents an entirely different situation than Oakland
Bulk or Martin, as well as the cases discussed in those two cases. Here,
plaintiff urges that we need not reach the merits of the trial court’s ruling on
the special motion to strike because that ruling is purportedly moot due to
the court’s prior sustaining of defendants’ demurrer with leave to amend.
Regardless of whether mootness could ever be urged on such a ground, the
difficulty with such an argument here lies in the basis for the trial court’s
ruling. As we have discussed, the trial court ruled defendants’ special motion
to strike was untimely because the motion could have, and should have, been
directed at prior complaints. Thus, this ruling could foreclose the defendants’
ability to bring a new special motion to strike on like grounds as to any
further amended complaint plaintiff may file. Accordingly, it is entirely
appropriate to address the merits of the trial court’s order.
DISPOSITION
The trial court’s order denying defendants’ special motion to strike is
reversed and the matter is remanded for further proceedings consistent with
this opinion.
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_________________________
Banke, J.
We concur:
_________________________
Margulies, Acting P.J.
_________________________
Sanchez, J.
A159820, Bell v. Brumm
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