Baseball Club of Tacoma v. SDL Baseball Partners, LLC

Decision Date04 May 2015
Docket NumberNo. 71792–8–I.,71792–8–I.
Citation187 Wash.App. 519,348 P.3d 1283
CourtWashington Court of Appeals
PartiesThe BASEBALL CLUB OF TACOMA, a Washington limited liability company, Respondent, v. SDL BASEBALL PARTNERS, LLC, a Nevada limited liability company, Robert J. Schlegel and Robert K. Schlegel, Appellants, and Mikal Thomsen and Aaron Artman, Respondents.

Daniel P. Larsen, Attorney at Law, Portland, OR, Michael Barr King, Carney Badley Spellman PS, Brenda S. Molner, Molner Law PLLC, Seattle, WA, for Appellant.

Angela Rene Jones, Carrie Monice Hobbs, Perkins Coie LLP, Seattle, WA, for Respondents.

Opinion

LAU, J.

¶ 1 After purchasing the Tacoma Rainiers minor league baseball team from SDL Baseball Partners LLC (SDL),1 The Baseball Club of Tacoma (TBCOT) filed a complaint alleging, among other things, breach of contract and fraud. SDL filed several counterclaims and third party claims. TBCOT responded with a special motion to strike these claims under Washington's anti-SLAPP statute.2 The trial court granted the motion, concluding that the counterclaims and third party claims “tread” on TBCOT's complaint. But because the thrust or gravamen of SDL's counterclaims and third party claims relies primarily on alleged prelitigation conduct—rather than TBCOT's complaint—we conclude that TBCOT failed to establish that SDL's counterclaims were “based on” protected activity and reverse and remand with instructions to reinstate SDL's counterclaims and third party claims.

FACTS

¶ 2 This case involves a contract dispute. In 2010, SDL Baseball Partners LLC, Robert J. Schlegel, and Robert K. Schlegel, decided to sell the Tacoma Rainiers3 and assets related to the team and stadium. The Baseball Club of Tacoma, led by Mikal Thomsen (third party defendant below), offered to buy the team, and the parties signed a purchase and sale agreement on January 31, 2011. Under the agreement, the purchase price included a $16,500,000 payment to be made at closing and a percentage of the Rainiers' earnings before interest, taxes, depreciation, and amortization in the first four fiscal years with the option to extend for an additional fifth year. These additional payments are known as “Earn–Out” payments.

¶ 3 The agreement also stated that TBCOT “shall rely” on SDL's financial statements, “which need not be audited.” Clerk's Papers (CP) at 511. SDL represented the truth and accuracy of those statements and warranted that they had been prepared in conformity with generally accepted accounting principles (GAAP). The agreement required that SDL reimburse TBCOT for any damages resulting from “any breach of any representation or warranty made in ... this Agreement.” CP at 396.

¶ 4 After acquiring the Rainiers, TBCOT discovered alleged accounting errors and errors in SDL's financial statements. For instance, TBCOT claimed that SDL failed to prepare their financials in conformity with GAAP, as represented in the purchase agreement, and financial statements misrepresented the financial performance of the business.

¶ 5 TBCOT filed suit against SDL in July 2012, alleging breach of contract, breach of implied duty of good faith and fair dealing, fraud, and negligent misrepresentation. SDL filed their initial answer and counterclaims in August 2012. The counterclaims requested a declaratory judgment limiting TBCOT's remedy to the terms of the agreement and alleging that TBCOT's fraud claim was frivolous and advanced without reasonable cause under RCW 4.84.185. In September 2013, SDL filed an amended answer and asserted affirmative defenses and counterclaims. SDL also alleged third party claims against TBCOT officers Mikal Thomsen and Aaron Artman. SDL asserted five new counterclaims in addition to the two previously alleged—breach of duty of good faith and fair dealing, fraud (fraud in the inducement, fraud by omission), negligent misrepresentation, civil conspiracy, and conversion.

¶ 6 In February 2014, TBCOT and third party defendants filed a special motion to strike SDL's counterclaims4 pursuant to RCW 4.24.525, Washington's anti-SLAPP statute. TBCOT argued that SDL's “claims are based entirely on TBCOT's filing of this lawsuit ...,” and because defendants could not show a probability of prevailing on their claims, those claims should be dismissed. The trial court granted the motion to strike, explaining that “the thrust of the counterclaims and third party complaints do tread on protected activity, that being the filing of the lawsuit or the out of court complaints that formed the basis for and are really part and parcel of the lawsuit.”5 Report of Proceedings (RP) (Mar. 14, 2014) at 22. The trial court dismissed SDL's counterclaims and third party claims with prejudice. As required by statute,6 the trial court ordered SDL to pay reasonable attorney fees, costs, and a $10,000 penalty to each of TBCOT, Thomsen, and Artman. SDL appeals.

ANALYSIS7
Standard of Review

¶ 7 We review a trial court's ruling on a special motion to strike pursuant to the anti-SLAPP statute de novo. Alaska Structures, Inc. v. Hedlund, 180 Wash.App. 591, 597, 323 P.3d 1082 (2014).

Applicability of the Anti–SLAPP Statute

¶ 8 In response to “Strategic Lawsuits Against Public Participation” or “SLAPPs,” the legislature passed an anti-SLAPP statute aimed at promptly disposing of “lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances.” Laws of 2010, ch. 118 § 1(a). Whether a court strikes a claim under the statute depends on a two-step analysis. First, the “moving party bringing a special motion to strike a claim ... has the initial burden of showing by a preponderance of the evidence that the claim is based on an action involving public participation and petition.” RCW 4.24.525(4)(b). A court reviews “the pleadings, declarations, and other supporting documents to determine whether the gravamen of the underlying claim is based on protected activity.” Hedlund, 180 Wash.App. at 597, 323 P.3d 1082. If the moving party fails to “make an initial prima facie showing that the [non-moving party's] suit arises from an act in furtherance of the [moving party's] right of petition,” the motion to strike should be denied. Hedlund, 180 Wash.App. at 597, 323 P.3d 1082. Second, if the moving party is successful, “the burden shifts to the responding party to establish by clear and convincing evidence a probability of prevailing on the claim. If the responding party meets this burden, the court shall deny the motion.” RCW 4.24.525(4)(b).

¶ 9 As to the first step, SDL relies on Hedlund to argue that private contract disputes are exempt from the anti-SLAPP statute. We disagree. Nevertheless, we conclude that TBCOT failed to show that SDL's counterclaims arise[ ] from an act in furtherance of [TBCOT's] right of petition.” Hedlund, 180 Wash.App. at 597, 323 P.3d 1082 (emphasis added). California courts have noted that a breach of contract claim can constitute protected activity for purposes of the anti-SLAPP statute:

[P]laintiffs strenuously insist that this is “a garden variety breach of contract and fraud claim” not covered by [the anti-SLAPP statute].... [W]e have declined to hold ‘that [the anti-SLAPP statute] does not apply to events that transpire between private individuals'....
....
... Nothing in the statute itself categorically excludes any particular type of action from its operation ... [C]onduct alleged to constitute breach of contract may also come within constitutionally protected speech or petitioning.
The anti-SLAPP statute's definitional focus is not the form of the plaintiff's cause of action, but, rather, the defendant's activity that gives rise to his or her asserted liability—and whether that activity constitutes protected speech or petitioning.

Navellier v. Sletten, 29 Cal.4th 82, 90–92, 52 P.3d 703, 124 Cal.Rptr.2d 530 (2002).8

¶ 10 Therefore, TBCOT's filing of a complaint in superior court is a protected action under the statute. The statute protects an “action involving public participation and petition,” which is further defined as [a]ny oral statement made, or written statement or other document submitted, in a ... judicial proceeding....” RCW 4.24.525(2)(a). Further, “It is well established that filing a lawsuit is an exercise of a party's constitutional right of petition.” Chavez v. Mendoza, 94 Cal.App.4th 1083, 1087, 114 Cal.Rptr.2d 825 (2001). To hold that private contract disputes are exempt from the anti-SLAPP statute contradicts the legislature's instruction that it be “construed liberally to effectuate its general purpose of protecting participants ... from an abusive use of the courts.” Laws of 2010, Ch. 118, § 3.

¶ 11 Although TBCOT's complaint is protected activity for purposes of the anti-SLAPP statute, SDL may properly file legitimate counterclaims. See, e.g., Navellier, 29 Cal.4th at 92–93, 124 Cal.Rptr.2d 530, 52 P.3d 703 (“That contract and fraud claims are not categorically excluded from the operation of the anti-SLAPP statute does not mean ... that Sletten therefore cannot be sued....”). The fundamental inquiry is whether SDL's counterclaims are “based on” TBCOT's protected activity and therefore within the scope of the anti-SLAPP statute. “To determine whether a pleaded cause of action falls within the ambit of Washington's anti-SLAPP statutes, the trial court must decide whether the claim targets activity involving public participation and petition. To properly do so, the trial court must focus on the principal thrust or gravamen of the claim.” Davis v. Cox, 180 Wash.App. 514, 523, 325 P.3d 255 (2014) (footnote omitted). In evaluating the thrust or gravamen of an alleged SLAPP, we consider the pleadings and supporting and opposing affidavits, viewing the facts and all reasonable inferences therefrom in the light most favorable to the nonmoving party—in this case, SDL. Davis, 180 Wash.App. at 528, 325 P.3d 255. Here, the specific nature of SDL's counterclaims indicates that the thrust or...

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  • Cornelius v. Chronicle, Inc.
    • United States
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    • January 25, 2019
    ...that trial court's ruling on SLAPP motion is reviewed under de novo standard of review); Baseball Club of Tacoma v. SDL Baseball Partners, LLC, 348 P.3d 1283, 1286 (Wash. Ct. App. 2015) (stating that trial court's ruling on special motion to strike is reviewed de novo). ¶ 9. In considering ......
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    ...of the constitutional rights of freedom of speech and petition for the redress of grievances.'" Baseball Club of Tacoma v. SDL Baseball Partners, LLC, 348 P.3d 1283, 1286 (Wash. Ct. App. 2015) (citing Laws of 2010, ch. 118 § 1(a)). However, in Davis v. Cox, 183 Wn.2d 269 (2015), the Washing......
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    ...of the constitutional rights of freedom of speech and petition for the redress of grievances.'" Baseball Club of Tacoma v. SDL Baseball Partners, LLC, 348 P.3d 1283, 1286 (Wash. Ct. App. 2015) (citing Laws of 2010, ch. 118 § 1(a)). Whether a court strikes a claim under the statute depends o......

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