Integrated Healthcare v. Fitzgibbons

• Decision Date: 14 June 2006
• Docket Number: No. G036080.,G036080.
• Citation: 140 Cal.App.4th 515,44 Cal.Rptr.3d 517
• Court: California Court of Appeals Court of Appeals
• Parties: INTEGRATED HEALTHCARE HOLDINGS, INC., Plaintiff and Respondent, v. Michael FITZGIBBONS, Defendant and Appellant.

44 Cal.Rptr.3d 517

140 Cal.App.4th 515

INTEGRATED HEALTHCARE HOLDINGS, INC., Plaintiff and Respondent, v. Michael FITZGIBBONS, Defendant and Appellant.

No. G036080.

Court of Appeal, Fourth District, Division 3.

June 14, 2006.

Bond Curtis, Tom Curtis, Berkeley and Alexander W. Kirkpatrick, Pasadena, for Defendant and Appellant.

McNeil, Tropp & Braun, Costa Mesa, Yolita Nowak Lecellier, Jeff I. Braun and Deborah S. Tropp, Costa Mesa, for Plaintiff and Respondent.

Catherine I. Hanson, San Francisco and Gregory M. Abrams, for California Medical Association and American Medical Association as Amici Curiae on behalf of Defendant and Appellant.

OPINION

ARONSON, J.

Defendant Michael Fitzgibbons appeals the trial court's denial of his special motion to strike brought under the anti-SLAPP statute¹ (Code Civ. Proc., § 425.16).² Fitzgibbons contends an e-mail message he sent questioning the financial condition of plaintiff Integrated Healthcare Holdings, Inc., (IHHI) concerned a matter of public interest under section 425.16, subdivision (e)(4), and that IHHI failed to demonstrate a probability of prevailing on the merits of its claims for defamation, breach of contract, tortious interference, and violations of Business and Professions Code section 17200 et seq.

We agree with these contentions and reverse the trial court's order.

I FACTUAL AND PROCEDURAL BACKGROUND

In 2004, Tenet Healthcare Corporation sought to divest itself of a number of California hospitals it owned, including four in Orange County. Among those seeking to purchase the Orange County hospitals was IHHI, a holding company formed for this purpose. As its president concedes, IHHI is a "heavily debt leveraged" company "trying to develop sufficient cash flow to survive in a difficult healthcare market." Because of concerns about IHHI's financial ability to operate the four hospitals, the County of Orange and the California Senate conducted public hearings on the proposed acquisitions.

Among the hospitals IHHI sought to purchase was Western Medical Center — Santa Ana (WMC), a 282-bed acute care facility and one of only three trauma centers in Orange County. WMC's medical staff opposed IHHI's acquisition of WMC, due to concerns about both IHHI's financial stability and its principal, Dr. Kali P. Chaudhuri, who had been involved in the failure of a previous healthcare company. One of the medical staff opposing IHHI's purchase was Fitzgibbons, a member of the medical staff's medical executive committee and WMC's former chief of staff.

The medical staff dropped its opposition to the purchase when they entered into a written agreement with IHHI, effective January 1, 2005. Under the three-year contract, WMC's medical staff received significant financial oversight of WMC's operations, and Dr. Chaudhuri agreed to limit his interest in IHHI to a minority share. The agreement also assured WMC that IHHI had "a lender commitment for a working capital line of credit loan in the approximate aggregate amount of $50 Million, to be available to the Hospital no later than ten (10) days following the closing of the purchasing parties' acquisition of the Hospitals."

Under the heading, "Consideration," the agreement provided: "The Parties further agree that this Agreement will be submitted to [the Department of Health Services] as part of the Hospital's license application process. In consideration for the binding and enforceable commitments of IHHI, and in reliance upon these commitments, the Medical Staff of Western Medical Center — Santa Ana will express public support for the acquisition and operation of IHHI of, and issuance of hospital licenses to IHHI for, the Hospitals, in accordance with the commitments made herein, including being represented at any public hearings on this proposed acquisition and delivering to DHS (Mark Helmar) a letter supporting IHHI's acquisition and licensure of the Hospitals."

IHHI's acquisition and licensing of the hospitals was completed in March 2005. On May 9, 2005, the lender on IHHI's $50-million acquisition loan, and a $30 million non-revolving working capital line of credit, served IHHI with a notice of default. The default was disclosed in IHHI's filing with the Securities Exchange Commission (SEC), and reported in an article in the May 17, 2005, Orange County Register, which cited an analyst's warning that IHHI needed to "find another investment partner `really quickly' or the whole thing could be headed for bankruptcy court."

Two days after the article appeared, Fitzgibbons sent an e-mail message to medical executive committee members and other individuals Fitzgibbons believed might offer financial assistance to the hospital, expressing concern IHHI could be headed for bankruptcy. The e-mail stated: "By the way, the hospital appears to be underwater and I don't think IHHI can get an investor to pony up the $20 million, for the 60-70 million shares of stock which they are selling. Admissions are down 20%. They got a reduction of costs by dumping Tenet by 13%, and increased insurance payment of 7% (but that is neutralized by the factoring). Then their nursing salaries went up 8% — so they're in the red. No way to get out. That is ominous. What would the buyer get buying IHHI stock? Control of IHHI, but not the land? Sounds like its going BK. Get ready. [¶] Now, if the doctors had been in the deal . . . interest rates would have been better say 9%??, would have had our capital say $10 million, and admissions would have been even. Result happiness. Sad. [¶] It might work if they came to us on hands and knees and gave us the stock in exchange for our telling the world we support them, and get a refinance at a better rate??? Who would lend? Ligon's the CFO's family supposedly has money. [¶] The loan default is classic `chaudhuri.' I guess Mr. Mogel won't be pooring [sic] expensive brandy on the table today. [¶] Mike Fitzgibbons."

On June 23, 2005, IHHI filed a complaint against Fitzgibbons based on his May 19 e-mail message, seeking damages for (1) defamation; (2) intentional interference with a contractual relationship; (3) negligent interference with a contractual relationship; (4) breach of contract; (5) breach of the duty of good faith and fair dealing; and (6) violation of Business and Professions Code section 17200 et seq. The complaint alleges Fitzgibbons's e-mail message was forwarded to Blue Cross/Wellpoint, Inc., (Blue Cross) with whom IHHI had been negotiating for higher insurance payments, and the e-mail message provoked concern on the part of Blue Cross, stalling negotiations. IHHI alleges this delay has cost it over $500,000.

Fitzgibbons filed a special motion to strike under the anti-SLAPP statute, which the trial court denied. Fitzgibbons now appeals.

II STANDARD OF REVIEW

An order denying an anti-SLAPP special motion to strike is appealable under Code of Civil Procedure sections 425.16, subdivision (j), and 904.1. We review the order de novo. (ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 999, 113 Cal.Rptr.2d 625.)

III DISCUSSION

A. Fitzgibbons Has Met His Burden of Demonstrating the May 19 E-Mail Message Concerned "an Issue of Public Interest"

The anti-SLAPP statute 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 or California Constitution in connection with a 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." (Code Civ. Proc., § 425.16, subd. (b)(1).) An act in furtherance of the right of free speech includes "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." (§ 425.16, subd. (e).)

The anti-SLAPP statute arose from the Legislature's recognition that SLAPP suit plaintiffs are not seeking to succeed on the merits, but to use the legal system to chill the defendant's first amendment right of free speech. (Moore v. Liu (1999) 69 Cal.App.4th 745, 81 Cal.Rptr.2d 807.) Thus, the statute notes: "The Legislature finds and declares that there has been a disturbing increase in lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances. The Legislature finds and declares that it is in the public interest to encourage continued participation in matters of public significance, and that this participation should not be chilled through abuse of the judicial process. To this end, this section shall be construed broadly." (§ 425.16, subd. (a).)

To prevail on an anti-SLAPP motion, the movant must first make "`a threshold showing that the challenged cause of action' arises from an act in furtherance of the right of petition or free speech in connection with a public issue." (Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 192, 25 Cal.Rptr.3d 298, 106 P.3d 958.) Once the movant meets this burden, the plaintiff must demonstrate "`a probability of prevailing on the claim.'" (Ibid.) If the plaintiff cannot meet this burden, the trial court must strike the cause of action. (Ibid.)

Section 425.16, subdivision (e), clarifies what speech is covered by the statute: "As used in this section, `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...