Braden v. BH Fin. Servs., Inc., C 13-02287 CRB
| Decision Date | 31 October 2013 |
| Docket Number | No. C 13-02287 CRB,C 13-02287 CRB |
| Court | U.S. District Court — Northern District of California |
| Parties | SONJA FELICIA BRADEN, Plaintiff, v. BH FINANCIAL SERVICES, INC., et al., Defendants. |
Following the voluntary dismissal of Defendants' state court collection action against her, Plaintiff Sonja Felicia Braden brings a malicious prosecution claim against Defendants, as well as claims under the Fair Debt Collection Practices Act ("FDCPA"), California's Rosenthal Fair Debt Collection Practices Act ("RFDCPA"), and California Finance Lender Law. See generally Compl. (dkt. 1). Defendants move to strike Braden's malicious prosecution and RFDCPA claims pursuant to California's anti-SLAPP statute, Cal. Code Civ. P. § 425.16, which permits early dismissal of meritless claims filed to interfere with defendants' constitutional rights of petition and freedom of speech. See generally Mot. Strike (dkt. 23). In addition to opposing the motion, Braden moves for a "sufficient opportunity to conduct discovery or otherwise obtain and present facts essential to justify her opposition" under Federal Rule of Civil Procedure 56(d). Mot. Disc. at 2 (dkt. 33). Uponconsideration of the motions and the oppositions thereto, the Court GRANTS Defendants' motion to strike and DENIES Braden's motion for discovery.1
This case stems from a $5,075 loan Braden obtained from a non-party entity called CashCall, Inc. After Braden stopped making payments on her loan, CashCall sold the debt at a loss to defendant Mountain Lion Acquisitions. Braden alleges that defendant Dennis Carruthers, an employee at Mountain Lion, personally selected Braden's debt for purchase by Mountain Lion, and ultimately selected the debt for resale to defendant BH Financial Services, Inc. Braden alleges that defendant Steven Goldstein, an employee at BH Financial, personally selected Braden's debt for purchase by BH Financial. After purchasing the debt, BH Financial filed a state court collection action against Braden. BH Financial was represented in the collection action by defendants Kenneth John Miele and the Law Office of Kenosian & Miele, LLP.2 Four days before trial, BH Financial unilaterally dismissed the state court action against Braden without prejudice. Compl. ¶ 57.
In the motion before the Court, Defendants move to strike Braden's RFDCPA and malicious prosecution claims from the Complaint, arguing that this is a "SLAPP" suit—a Strategic Lawsuit Against Public Participation—and these two claims arise out of Defendants' protected activity of filing suit against Braden. See Cal. Code Civ. P. § 425.16(b)(1). Braden argues that Defendants' motion should be denied for two reasons: (1) the anti-SLAPP statute does not apply in federal court; and (2) Braden has a reasonable probability of prevailing on her RFDCPA and malicious prosecution claims. Braden's arguments are not persuasive.
California's anti-SLAPP statute "is designed to discourage suits that 'masquerade as ordinary lawsuits but are brought to deter common citizens from exercising their political or legal rights or to punish them for doing so.'" In re NCAA Student-Athlete Name & Likeness Licensing Litig., 724 F.3d 1268, 1272 (9th Cir. 2013) ("NCAA Student-Athlete Litig.") (quoting Batzel v. Smith, 333 F.3d 1018, 1024 (9th Cir. 2003). The anti-SLAPP statute sets forth a procedure by which defendants can move to strike SLAPP claims:
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 Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that there is a probability that the plaintiff will prevail on the claim.
Cal. Code Civ. P. § 425.16(b)(1).
When deciding a motion to strike pursuant to the anti-SLAPP statute, the court engages in a two-step analysis. First, "defendant bears the burden to show that the statute applies because the lawsuit arises from defendant's act in furtherance of its right of petition or free speech." Doe v. Gangland Prods., Inc., No. 11-56325, — F.3d —, 2013 WL 5066826 (9th Cir. Sept. 16, 2013) (citing Marijanovic v. Gray, York & Duffy, 137 Cal. App. 4th 1262, 1270 (2006)).3
If the defendant makes that showing, the court then considers whether the plaintiff has demonstrated "a reasonable probability" of prevailing on the merits of her claims. NCAA Student-Athlete Litig., 724 F.3d at 1273 (quoting Batzel, 333 F.3d at 1024). The NinthCircuit has characterized the standard to withstand an anti-SLAPP motion as "a low bar": "plaintiff must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited." Roberts v. McAfee, Inc., 660 F.3d 1156, 1163 (9th Cir. 2011) (quoting Manufactured Home Cmties., Inc. v. Cnty. of San Diego, 655 F.3d 1171, 1176-77 (9th Cir. 2011)). Although "the court does not weigh the credibility or comparative probative strength of competing evidence, it should grant the motion if, as a matter of law, the defendant's evidence supporting the motion defeats the plaintiff's attempt to establish evidentiary support for the claim." Id.
Braden argues that California's anti-SLAPP statute does not apply in federal courts, and therefore, Defendants' motion should be denied. However, the Ninth Circuit has "long held that the anti-SLAPP statute applies to state law claims that federal courts hear pursuant to their diversity jurisdiction." Hilton v. Hallmark Cards, 599 F.3d 894, 900 n.2 (9th Cir. 2010) (citing United States ex rel. Newsham v. Lockheed Missiles & Space Co., 190 F.3d 963, 970-73 (9th Cir. 1999)); see also NCAA Student-Athlete Litig., 724 F.3d at 1272 (citing Thomas v. Fry's Elecs., Inc., 400 F.3d 1206 (9th Cir. 2005) (per curiam)). The law is well settled on this matter, and Defendants' motion is appropriately before this Court.
Braden does not dispute that Defendants engaged in protected activity by filing the state court collection action against her. Accordingly, the Court proceeds to the second step of the anti-SLAPP analysis to consider whether there is a reasonable probability that Braden will prevail on the two claims Defendants move to strike. The Court finds that there is not.
Braden alleges that Defendants violated the RFDCPA by filing a suit to collect a debt they knew to be unenforceable. In Braden's view, the debt was unenforceable because (1)CashCall violated California Financial Code § 22340(a)4 by selling the debt to Mountain Lion, and (2) this willful violation of § 22340(a) rendered the loan void under § 22750(b)5and therefore uncollectible by Mountain Lion or any subsequent transferee. Opp'n at 15-16. Braden alleges that, because Defendants attempted to collect a void and uncollectible loan, their conduct contravened the RFDCPA, Cal. Civ. Code § 1788 et seq.6 Opp'n at 18-19.
Defendants argue that § 22340 is unrelated to the conduct at issue. Instead, they contend that § 22340 applies only to loans secured by real estate and does not restrict any conduct. Mot. Strike at 7-8. Under Defendants' interpretation, § 22340 permits finance companies without real estate broker licenses to sell real estate backed loans to institutional investors. Id. at 8. As is set forth in the legislative history, § 22340 was passed specifically to clarify that this conduct was permitted-not to limit any other transactions.7
The Court agrees that § 22340 merely gave licensees under the Financial Lender Law express authority to sell real-estate secured loans without being licensed real estate brokers. In addition to the legislative history of § 22340, cited extensively by Defendants, a provision of the California Code of Regulations appears to indicate quite clearly that § 22340 applies only to real-estate secured loans. See 10 Cal. Code Regs. tit. 10, § 1460. Section 1460 titled, "Real Estate Secured Loans: Sale to Institutional Investors," provides, in relevant part: "Loans made by a finance company under Financial Code sections 22340 and 22600 shall meet all of the following requirements: . . . (b) The finance company shall be the lender or creditor on the promissory note and the beneficiary on the deed of trust securing the loan. . . ." Id. (emphasis added). Both the regulation's title and its description of a § 22340 loan being secured by a deed of trust lend additional support for the proposition that § 22340 applies strictly to real estate backed loans.
Beyond Braden's strained interpretation of § 22340 suggesting that it applies to Defendants, Braden offers no authority that Defendants' alleged violation supports an RFDCPA claim. Even if that section prohibits any conduct—an interpretation that is not supported by the plain language—it simply does not apply to Braden's loan, which was not backed by real estate. Because Braden's RFDCPA claim hinges on Defendants' violation of § 23400, she cannot demonstrate a reasonable probability of prevailing.
To establish a malicious prosecution claim, Braden must show that Defendants' state court collection action "(1) was commenced by or at the direction of the defendant and was pursued to a legal termination favorable to the plaintiff; (2) was brought without probable cause; and (3) was initiated with malice." Kaufman v. Capital Quest, Inc., No. C-11-1301 JCS, 2011 WL 5864159 (N.D. Cal. Nov. 22, 2011) (quoting Soukup v. Law Offices of Herbert Hafif, 39 Cal. 4th 260, 292 (2006)). Regardless of the opportunity for additionaldiscovery, it is clear that probable cause existed for Defendants' state court collection action against...
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