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Standard of Review-The Two-Step Process for Evaluating Special Motions to Strike-independent judgment-Applied Business Software v. Pacific Mortage Exchange   


 

DISCUSSION

            1.         The Two-Step Process for Evaluating Special Motions to Strike

            In deciding a special motion to strike, the trial court first determines “whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity.  The moving defendant’s burden is to demonstrate that the act or acts of which the plaintiff complains were taken ‘in furtherance of the [defendant]’s right of petition or free speech under the United States or California Constitution in connection with a public issue,’ as defined in the statute.  (§ 425.16, subd. (b)(1).)”  (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67, Equilon.)  “ ‘A defendant meets this burden by demonstrating that the act underlying the plaintiff’s cause fits one of the categories spelled out in section 425.16, subdivision (e)’ [citation].”  (Navellier, supra, 29 Cal.4th at p. 88.)  If the defendant meets that burden, the burden shifts to the plaintiff to demonstrate a probability that it will prevail on that cause of action.  (§ 425.16, subd. (b)(1).)

            However, merely showing that the plaintiff filed its complaint after the defendant engaged in protected activity is not sufficient because it does not demonstrate that the activity on which the plaintiff’s cause of action is based was itself an act of the defendant taken in furtherance of the defendant’s right of petition or free speech in connection with a public issue.  (Equilon, supra, 29 Cal.4th at p. 66.)  Section 425.16, subdivision (b) addresses causes of action against a defendant that arise from the constitutionally protected activities of the defendant, not that simply follow in time those activities.  Moreover, because a cause of action that arises from a defendant’s protected actions is synonymous with a cause of action that is based on the defendant’s protected actions, “[t]he anti-SLAPP statute cannot be read to mean that ‘any claim asserted in an action which arguably was filed in retaliation for the exercise of speech or petition rights falls under section 425.16, whether or not the claim is based on conduct in exercise of those rights.’  [Citations.]”  (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 77.)  Thus, “arising from” does not equate with “in response to.”  (Ibid.)  “That a cause of action arguably may have been triggered by protected activity does not entail that it is one arising from such.”  (Id. at p. 78.)

            2.         Standard of Appellate Review

            Our duty in this appeal is to use our independent judgment in reviewing the defendant’s special motion to strike.  (Gallimore v. State Farm Fire & Casualty Ins. Co. (2002) 102 Cal.App.4th 1388, 1396.)  Applying the rules set out above for evaluating such motions, we conclude that defendant has not met its section 425.16 threshold burden.

            3.         Plaintiff’s Action Is Not Based on Defendant’s Protected Activity

            The defendant’s acts on which the plaintiff’s complaint is based are defendant’s alleged failure to provide the certification called for in the settlement agreement, and defendant’s alleged use of plaintiff’s software after the time set out in the settlement agreement for ceasing use of it.  Neither of those alleged actions by the defendant can reasonably be said to have been taken by defendant in furtherance of its right of petition or free speech in connection with a public issue.  Therefore, it cannot reasonably be said that plaintiff’s complaint arises from/is based on protected activities undertake by defendant.  It is irrelevant that plaintiff did not file this suit until after defendant’s president filed a declaration on behalf of a party in a different lawsuit.  It is even irrelevant if the instant case was filed in retaliation for defendant’s having submitted the declaration.  The filing of that declaration is not what this case is based on.  This is a breach of contract suit based solely on defendant’s alleged failure to comply with specific provisions in the settlement agreement.  Moreover, it is not relevant that in its complaint, plaintiff set out the text of the abovementioned nondisparagement clause contained in the settlement agreement.  As noted above, although the clause is mentioned in the complaint, there are no corresponding allegations that defendant breached the clause.  Thus, there is no cause of action based on that clause.  Whatever plaintiff’s purpose was for setting out the non-disparagement clause without also making corresponding allegations that such clause was breached, the fact remains that the allegations were not made.

            We find no merit in defendant’s contention that (1) because settlement agreements that are entered into in judicial proceedings fit within descriptive provisions in subdivision (e) of section 425.16 (writings made in judicial proceedings, and writings made in connection with issues under consideration in judicial proceedings), and (2) because such settlement agreements are thus the product of an act taken by a party to the judicial proceeding in furtherance of that party’s right of petition, then (3) a suit that is brought by one of the signatories to the settlement agreement against another signatory to that agreement for the purpose of enforcing the agreement is necessarily based on the defendant’s protected activity because entering into a settlement agreement in a judicial proceeding is protected activity.  Based on that reasoning, defendant asserts that it necessarily follows that in all such enforcement suits, the burden is automatically shifted to the plaintiff, under section 425.16, to prove a probability of prevailing in the suit.

            Defendant relies on Navellier, supra, 29 Cal.4th 82, to support that analysis, but Navellier involved activities on the part of a defendant that are not similar to those at issue in the instant case.  In Navellier the parties had entered into a release of claims during the course of a suit in federal court.  The release did not settle the entire federal suit and while the federal case was still pending, the defendant in that case filed counterclaims against the plaintiffs.  That prompted the plaintiffs to sue the defendant in a California state court and allege that (1) the defendant breached the release by filing his counterclaims in the federal suit and (2) the defendant committed fraud in misrepresenting his intention to be bound by the release.  The defendant filed a special motion to strike the state court complaint and the Navellier court ruled that the defendant had met his threshold burden in connection with that motion.  His allegedly fraudulent acts in negotiating, executing and repudiating the release and his alleged breach of the release by the filing of counterclaims against plaintiffs, were protected petition activities because they were undertaken during the course of the federal judicial proceeding, and because the filing of the counterclaims itself was protected activity associated with a judicial proceeding.  That is very far from the circumstances in this case.

            Here, the gist of plaintiff’s complaint is not that defendant did something wrong by acts committed during the course of the underlying federal action, but rather that defendant did something wrong by breaching the settlement agreement after the underlying action had been concluded.  Under the explanatory provisions in subdivision (e) of section 425.16, defendant’s entering into the settlement agreement during the pendency of the federal case was indeed a protected activity, but defendant’s subsequent alleged breach of the settlement agreement after the federal case was concluded is not protected activity because it cannot be said that the alleged breaching activity was undertaken by defendant in furtherance of defendant’s right of petition or free speech, as those rights are defined in section 425.16.  Thus, the instant suit is based on alleged conduct of the defendant that is not protected activity.

            We reject defendant’s contention that we should “extend” Navellier to cover all causes of action alleging the breach of a settlement agreement when the case that produced the settlement agreement was concluded prior to the alleged breach.  Such an extension of Navellier would ignore the clear directive of the Supreme Court in Equilon and City of Cotati, discussed above, that section 425.16 applies to causes of action that arise from/are based on the defendant’s constitutionally protected conduct described in section 425.16.  The simple breach of contract alleged in the instant case does not arise from such constitutionally protected activity.

            Because defendant has not met its burden of showing that the causes of action set out in plaintiff’s complaint were based on protected activities undertaken by the defendant, the burden of showing a probability of prevailing on its claims never shifted to the plaintiff and therefore we have no need to discuss that second prong of section 425.16.

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