Blackburn v. Brady

• Decision Date: 04 March 2004
• Docket Number: No. D042010.,D042010.
• Citation: 10 Cal.Rptr.3d 696,116 Cal.App.4th 670
• Court: California Court of Appeals Court of Appeals
• Parties: David A. BLACKBURN, Plaintiff and Respondent, v. Michael BRADY, Defendant and Appellant.

10 Cal.Rptr.3d 696

116 Cal.App.4th 670

David A. BLACKBURN, Plaintiff and Respondent, v. Michael BRADY, Defendant and Appellant.

No. D042010.

Court of Appeal, Fourth District, Division 1.

March 4, 2004.

Estes & Hoyt and Kevin J. Hoyt, San Diego, for Defendant and Appellant.

Vivoli & Associates, Michael W. Vivoli and Matthew J. Yarling for Plaintiff and Respondent.

HUFFMAN, Acting P.J.

David A. Blackburn sued Michael Brady for partition, accounting and fraud. After the trial court overruled Brady's demurrer to the complaint, he moved to strike the lawsuit under the anti-SLAPP (strategic lawsuits against public participation) statute (Code Civ. Proc., § 425.16).¹ The court denied the motion, finding the statute was inapplicable and, even if it were applicable, Blackburn had established a probability of prevailing on the merits of each cause of action. Brady appeals the trial court's ruling only with regard to the fraud cause of action. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

Blackburn's complaint filed December 27, 2002, alleges he acquired ownership of a one-half interest of real property located in San Diego county (the subject property) as the result of a public auction held on November 19, 2002, in partial satisfaction of a money judgment against Craig S. Lanser, who had previously owned the subject real property as a tenant in common with Brady. On May 25, 2000, Blackburn obtained a money judgment against Craig S. Lanser, who owned certain real property located in the Ocean Beach area of San Diego, California, which included four separate residential units, as tenants in common with Brady. The judgment was $213,030, which was amended March 16, 2001, to $323,688.92 plus interest, to include costs. After several attempts to collect on the judgment failed, Blackburn obtained an order charging partner's interest which ordered Brady to pay Blackburn rents and profits generated by Lanser's share of a business owned by Brady and Lanser, and from the four-unit subject rental property. When Brady failed to pay anything under the order, Blackburn sought and obtained an execution levy and the resulting sale of Lanser's interest, and the community interest of his spouse, in the subject property. After several delays, a Sheriff's sale of the subject property was noticed and conducted on November 19, 2002, resulting in the Sheriff selling one-half interest in the subject property to Blackburn for "the total sum of $211,000.00 [¶] as a credit on judgment and/or costs, [¶] the said purchaser(s) being the highest bidder(s), and that sum being the highest bid; that [the Sheriff has] given said purchaser(s) a Certificate of Sale."

On December 27, 2002, Blackburn filed the instant lawsuit based on his one-half ownership in the subject property acquired as a result of the public auction. The first cause of action in Blackburn's complaint seeks partition by sale of the subject property he now co-owns with Brady. The second cause of action seeks an accounting from Brady for the rents and profits Brady collected from the subject real property and from the business he owned with Lanser after the court issued the June 7, 2000 order charging Brady's partner's interest.

The third cause of action alleges Brady appeared at the November 19, 2002 auction, or creditor sale of the subject property, "in order to bid on Lanser's interest in the property. Prior to the date of the sale, Brady and Lanser had satisfied in full a second trust deed on the real property, but Brady failed to record evidence of satisfaction of the second trust deed with the County Recorder's Office. [Blackburn] is informed and believes the reason Brady failed to record evidence of satisfaction of the second trust deed was to discourage other purchasers from coming forward to bid on Lanser's one half interest in the real property, in order to bid against the real property himself with superior knowledge of the true desirability of the real property. Alternatively, [Blackburn] is informed and believes Brady elected not to record evidence of satisfaction of the second trust deed in order to reduce the likelihood of, or amount of, any payment by a good faith purchaser to [Blackburn] as a result of the sale."

The third cause of action further alleges Brady appeared at the auction pursuant to some agreement with Lanser to bid in excess of $200,000 for Lanser's one-half interest in the property even though the fair market value of the property was only "approximately $78,000.00." On information and belief, Blackburn alleges Brady had no intention of acquiring Lanser's interest in the property for more than $200,000, and "submitted his bid solely to drive up the amount [Blackburn] was required to credit bid against his judgment, thereby reducing [his] judgment against Lanser by more than $210,000.00." Blackburn also alleges Brady's statements made at the creditor's sale concerning his bid were knowingly "false and fraudulent," and made with the intent of inducing Blackburn "to credit bid more money than was fair or necessary to acquire" the subject property. Blackburn reasonably relied on the truth of Brady's statements concerning his bid and was damaged by doing so "in an amount not less than $132,000."

In response, Brady filed both a demurrer to and a motion to strike Blackburn's complaint under the anti-SLAPP law. The court overruled the demurrer before considering Brady's motion to strike. Brady argued in the motion that section 425.16 applied to each of the causes of action in Blackburn's complaint because Brady's claims arose from the exercise of his rights of petition and free speech in protecting his property interests and were ancillary to judicial proceedings between Blackburn and Lanser as well as the Sheriff's auction being an "official proceeding" in which Brady exercised his right to "bid" on the subject property, which in turn was a privileged communication under Civil Code section 47, subdivision (b).

In opposing the anti-SLAPP motion, Blackburn argued there was no logical or legal basis to apply section 425.16 to his partition and accounting causes of action because they are not based upon any protected speech, conduct or petitioning activity within the meaning of that section, merely upon co-ownership of the property. As to the third cause of action, Blackburn argued his claim of fraud is not based upon statements made in an "official proceeding," but only upon a bid in a foreclosure sale which is analogous to a business transaction not subject to protection under section 425.16. Blackburn further asserted that Brady's motion must be denied because Blackburn and his attorney's declarations showed there is a high probability Blackburn will prevail on each cause of action.

The court issued a telephonic ruling denying the motion to strike Blackburn's complaint, finding neither the partition and accounting causes of action arose from constitutionally protected activity, and even assuming they did, Blackburn had shown a likelihood of prevailing on the merits of both causes of action. As to the third cause of action for fraud, the court found that "[Brady's] `bidding process' at the Sheriff's execution sale is not covered by [section] 425.16. Even if it were, [Blackburn] has shown by his declaration and that of his counsel, a probability of prevailing on this cause of action." Because neither party requested oral argument, the court's tentative became its final ruling denying the section 425.16 motion. Brady appealed.

DISCUSSION

I SUMMARY OF APPLICABLE ANTI-SLAPP LAW

The Legislature's purpose in enacting the anti-SLAPP statute is defined in subdivision (a) of section 425.16:

"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 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."

In light of these legislative findings, subdivision (b)(1) of section 425.16 provides that: "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." Under the statute, an "act in furtherance of a person's right of petition or free speech" 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 authorized by law; (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest; (4) or 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).) However, only if the defendant's alleged acts or statements fall under the third or fourth...