Britts v. Superior Court, No. H030560.

• Court: California Court of Appeals
• Writing for the Court: Duffy
• Citation: 52 Cal.Rptr.3d 185,145 Cal.App.4th 1112
• Parties: David BRITTS et al., Petitioners, v. The SUPERIOR COURT of Santa Clara County, Respondent; Berg & Berg Enterprises, LLC, Real Party in Interest.
• Docket Number: No. H030560.
• Decision Date: 18 December 2006

52 Cal.Rptr.3d 185 145 Cal.App.4th 1112 David BRITTS et al., Petitioners,
v.
The SUPERIOR COURT of Santa Clara County, Respondent;
Berg & Berg Enterprises, LLC, Real Party in Interest. No. H030560. Court of Appeal, Sixth District. December 18, 2006.

[52 Cal.Rptr.3d 186]

Meredith N. Landy, Lori E. Romley, Sara M. Folchi, O'Melveny & Myers, Menlo Park, for Petitioners.

No appearance for respondent.

Robert R. Moore, Michael J. Betz, Allen Matkins Leek Gamble & Mallory, San Francisco, for Real Party in Interest.

DUFFY, J.

In this original proceeding, we address whether the stay on "all discovery proceedings" (Code Civ. Proc., § 425.16, subd. (g))¹ imposed upon the filing of an anti-SLAPP² motion extends to discovery motions. The proceeding arises by petition for a writ of mandate directing the superior court to vacate its order (1) granting real party plaintiffs motion to compel production of documents and the occurrence of a deposition; (2) finding a waiver of petitioners' objections to the discovery; and (3) imposing sanctions of $5,000 for the petitioners' failure to have responded to the discovery. Petitioners did not file opposition to the discovery motion but instead filed an anti-SLAPP motion on the day the opposition was due. The anti-SLAPP motion was still pending in another

52 Cal.Rptr.3d 187

department of the superior court when the discovery motion was later heard, when the order was subsequently entered, and on the date petitioners were to comply with the order by providing discovery responses and paying sanctions 20 days later.

As provided under section 425.16, subdivision (g), upon the filing of an anti-SLAPP motion, "all discovery proceedings" in the action are stayed until notice of entry of the trial court's ruling on the motion. The parties to this writ proceeding do not dispute that the term "discovery proceedings" in this context includes the various fact-finding processes authorized by the Civil Discovery Act (§ 2016.010, et seq.) such as the propounding of interrogatories and document demands and the taking of depositions, or that these proceedings are indeed stayed when a special motion to strike is filed in an action. But they do dispute whether a discovery motion that is pending when an anti-SLAPP motion is filed is also stayed, and whether the discovery stay imposed by section 425.16, subdivision (g), generally applies to discovery motions.

We hold that the language of the statute, which we construe broadly and in light of the statute's legislative goals and history, must be read to mean that discovery motions, including those that are pending, are also stayed upon the filing of an anti-SLAPP motion. The trial court here proceeded with the pending discovery motion and issued an order against petitioners compelling discovery, deeming their objections waived, and imposing sanctions against them after their anti-SLAPP motion was filed and the discovery stay invoked. We accordingly grant petitioners' request for writ relief.

STATEMENT OF THE CASE

On July 8, 2005, real party in interest (plaintiff below) Berg & Berg Enterprises, LLC (Berg) brought an action against petitioners David Britts, Tony Daffer, Barry Eggers, Diana Everett, John W. Gerdelman, Cliff Higgerson, Joseph Kennedy, and Bob Williams, as well as another codefendant, John Boyle, alleging a single cause of action for breach of fiduciary duty. The complaint alleged that petitioners and Boyle were former directors of an entity known as Pluris, Inc., of which Berg was a creditor. When Pluris, Inc. became insolvent, petitioners and Boyle allegedly breached their fiduciary duty to Berg by liquidating the company through an assignment for the benefit of creditors, rather than through bankruptcy proceedings.

In response to petitioners' demurrer to the complaint, Berg filed a first amended complaint, which again pleaded the breach of fiduciary duty cause of action and added causes of action for negligent and intentional misrepresentation as species of fraud. Berg also served a demand for production of documents on petitioners under section 2031.010. Petitioners' responses to both the amended pleading and the demand for production were due on January 3, 2006. On that day, Berg also served a notice of taking deposition of petitioner Bob Williams under section 2025.210. The notice set the deposition to take place on January 17, 2006, and also demanded the production of documents at the deposition.

In lieu of responding to the complaint or the discovery requests, on January 3, 2006, petitioners filed a special motion to strike under section 425.16—the anti-SLAPP statute—directed at Berg's negligent and intentional misrepresentation causes of action. They also separately demurred to the breach of fiduciary duty cause of action. All parties agreed that the filing of the anti-SLAPP motion effected a stay on Berg's pending discovery efforts under section 425.16, subdivision (g). Prior to

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the hearing on petitioners' motions, Berg voluntarily dismissed its fraud-based causes of action, apparently recognizing that the motion to strike those causes of action was well taken.

On February 24, 2006, the trial court (Hon. C. Randall Schneider), by written order, sustained petitioners' demurrer with leave to amend. The court determined that Berg could not state an individual claim for relief but could amend to plead the claim derivatively. Finding that it would have granted the anti-SLAPP motion had Berg not dismissed the fraud causes of action, the court also determined that petitioners were entitled to an award of attorney fees under the anti-SLAPP statute, the amount thereof to be determined by separate motion. (§ 425.16, subd. (c).) Also on February 24, 2006, Berg renoticed the deposition of Bob Williams to take place on March 8, 2006.

On March 1, 2006, petitioners served their responses to Berg's demand for production of documents. The responses were composed of objections, which nevertheless constituted a "response" under section 2031.210. On March 2, 2006, Berg served by hand delivery notice of entry of the court's February 24 order. At the same time, Berg contended that the discovery responses served by petitioners the previous day were untimely and that all objections had consequently been waived. Berg argued that the responses had been due on February 24, 2006, since the court's order indicating how it would have ruled on petitioners' anti-SLAPP motion and finding that they were entitled to attorney fees had been served by the clerk that day, effectively terminating the discovery stay under section 425.16, subdivision (g). The parties met and conferred on the timeliness and adequacy of petitioners' responses, but were unable to resolve their dispute.

On March 3, 2006, petitioners served their objections to the renoticed deposition of Bob Williams under section 2025.410. Although Berg had served the day before a notice of entry of the court's order stating how it would have ruled on petitioners' anti-SLAPP motion, the grounds for objection to the deposition included that the stay was still operative. On March 10, 2006, Berg for a third time noticed the deposition of Bob Williams to take place on March 23, 2006. Petitioners again objected to the deposition on numerous grounds, which this time did not include that the anti-SLAPP discovery stay was still in effect.

On March 16, 2006, Berg filed its second amended complaint, again pleading a single cause of action against petitioners for breach of fiduciary duty.

On April 11, 2006, Berg filed a motion to compel petitioners' further responses to its demand for production, to compel Williams's deposition, and for discovery sanctions. The hearing was set for May 12, 2006.

On April 20, 2006, petitioners applied ex parte for an order extending time to respond by demurrer or motion to the second amended complaint and setting a briefing and hearing schedule for those proceedings. Berg opposed the application but expressly requested that if the court were to grant additional time for the petitioners to respond to the amended pleading and petitioners were to file another anti-SLAPP motion, that the court also allow Berg's then-pending discovery motion to "proceed notwithstanding the discovery stay [that would be] imposed by the anti-SLAPP statute." The trial court (Hon. John F. Herlihy) issued an order directing petitioners to file their response to the second amended complaint and any intended anti-SLAPP motion on or before May 1, 2006, with the hearing to take place

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on June 22, 2006. The court's order did not address Berg's pending discovery motion but, according to petitioners, Judge Herlihy said at the ex parte hearing that "he did not believe that the court had the power to issue [Berg's requested order concerning its pending discovery motion] because the anti-SLAPP legislation was to the contrary."

In compliance with the court's order, on May 1, 2006, petitioners filed their demurrer and second anti-SLAPP motion. But they filed no opposition to Berg's discovery motion to compel, which was due that same day under section 1005. Petitioners claimed they were relieved from filing an opposition due to the stay on discovery proceedings, which was reimposed under the anti-SLAPP statute upon the filing of their second special motion to strike. (§ 425.16, subd.(g).) From May 5th to May 10, 2006, petitioners repeatedly requested Berg's counsel to notify the court of the discovery stay and to take the discovery motion off calendar. Berg's counsel refused to do so, asserting that discovery pending before the May 1 filing of petitioners' new anti-SLAPP motion "remain[ed] viable."

On May 10, 2006, two days before the hearing on the discovery motion, petitioners' counsel wrote a letter to the discovery judge (Hon. Socrates P. Manoukian) informing him of the filing of the anti-SLAPP motion and of their position that that filing had resulted in a...