Sanai v. Saltz

• Decision Date: 26 January 2009
• Docket Number: No. B198217.,No. B202787.,B198217.,B202787.
• Court: California Court of Appeals Court of Appeals
• Parties: CYRUS M. SANAI, Plaintiff and Appellant, v. HARVEY A. SALTZ et al., Defendants and Respondents.

170 Cal.App.4th 746

88 Cal. Rptr. 3d 673

CYRUS M. SANAI, Plaintiff and Appellant, v. HARVEY A. SALTZ et al., Defendants and Respondents.

No. B198217.

No. B202787.

Court of Appeals of California, Second District, Division Seven.

January 26, 2009.

Cyrus Sanai, in pro. per., for Plaintiff and Appellant.

Jacobson Russell Saltz & Fingerman, Michael J. Saltz, Sunny S. Nassim and Keri R. Montrose for Defendants and Respondents Harvey A. Saltz, The U.D. Registry, Inc., The Irvine Company, Irvine Apartment Communities, LLC, and Irvine Apartment Communities, LP.

OPINION

PERLUSS, P. J.

Cyrus M. Sanai appeals from the judgment entered after the trial court granted motions for judgment on the pleadings filed by Harvey A. Saltz, the former president of The U.D. Registry, Inc. (UDR), a company acquired during the pendency of these proceedings by First Advantage Corporation, and by First Advantage Corporation, as successor in interest to UDR, terminating Mr. Sanai's action for violations of the federal Fair Credit Reporting Act (FCRA; 15 U.S.C. § 1681 et seq.) and the California Consumer Credit Reporting Agencies Act and related state common law claims based on UDR's negative reports about Mr. Sanai's credit following a dispute between Mr. Sanai and his landlord over the amount of rent due for an apartment Mr. Sanai had leased in Newport Beach. Mr. Sanai also appeals from several trial court orders relating to a stay of discovery, denial of leave to amend his complaint and awards of attorney fees and costs. We reverse in part.

FACTUAL AND PROCEDURAL BACKGROUND

We described at length the largely undisputed factual background and the procedural history of the first five years of this litigation in our nonpublished decision in Sanai v. Saltz (June 28, 2005, B174924, B170618 [nonpub. opn.]), from which we now liberally borrow.

1. The Rent Dispute and the Negative Credit Report

Mr. Sanai rented an apartment in a Newport Beach apartment complex known as Promontory Point from August 26, 1997 through January 1999. After the expiration of the original, six-month lease, Mr. Sanai continued to occupy the apartment on a month-to-month basis at a rent of $2,165. In September 1998 Mr. Sanai received a letter dated August 31, 1998 from a representative of the owner of the apartment complex stating a new monthly rent of $1,435 was being established for his apartment and offering him "the option to renew [for] a minimum of a 6-month up to a 12-month lease, at the monthly rent of $1,410 effective October 1, 1998." A second copy of this letter was taped to Mr. Sanai's door a few days after he had received the original by mail. Mr. Sanai responded on October 1, 1998 with a letter of acceptance for a 12-month lease, enclosing a rent check of $1,410 for October 1998.

Within a day of Mr. Sanai's acceptance of the offer set forth in the August 31, 1998 letter, a representative of the owner informed Mr. Sanai the monthly rental amount was a misprint and advised him the offer was rescinded. Mr. Sanai (a transactional lawyer) responded that he had accepted the offer and the contract was binding.¹ Further discussions between Mr. Sanai and representatives of the owner did not resolve the dispute. In December 1998 a three-day notice to quit was posted on Mr. Sanai's door. Mr. Sanai moved out of the Promontory Point apartment complex in January 1999.

From October 1, 1998 through the time he left his Newport Beach apartment, Mr. Sanai paid rent at the rate of $1,410 per month. In February 1999, after Mr. Sanai had moved, a representative of the owner contacted Mr. Sanai and demanded he pay back rent in the amount of $2,781; Mr. Sanai refused. Each party threatened the other with legal action.

The owner of the apartment complex filed no legal action to enforce its claim for unpaid rent against Mr. Sanai and apparently did not assign the debt to a collection agency. However, it did retain UDR and Mr. Saltz in April 1999 to inform consumer credit reporting agencies of the claim for unpaid rent against Mr. Sanai.

In January 2000 Mr. Sanai applied for and was denied a low-interest credit card from American Express due to information from a credit reporting agency that a debt had been sent to collection. Citibank subsequently declined Mr. Sanai's request to increase his credit-line limit for the same reason. Mr. Sanai obtained a copy of his credit report, which listed an item from UDR stating a collection account was past due for unpaid rent at Promontory Point. Mr. Sanai then requested that UDR and Mr. Saltz insert in its reports additional information about Mr. Sanai's dispute with the owner of Promontory Point pursuant to Civil Code section 1785.16. Mr. Sanai has subsequently alleged UDR did not include in its reports sent to third parties the text he had requested.

2. Mr. Sanai's Complaint and UDR's Special Motion to Strike

In September 2000 Mr. Sanai filed a complaint against UDR and Mr. Saltz alleging causes of action for slander, libel, intentional and negligent interference with prospective economic advantage, intentional and negligent infliction of emotional distress, violations of the Consumer Credit Reporting Agencies Act (Civ. Code, § 1785.1 et seq.) and violation of the FCRA (15 U.S.C. § 1681s-2). The complaint sought in excess of $5 million in damages.

After answering the complaint, UDR filed a special motion to strike under Code of Civil Procedure section 425.16, asserting Mr. Sanai's lawsuit was brought in retaliation for UDR's exercise of its constitutional right to petition or engage in speech related to a matter in litigation. UDR argued that, because Mr. Sanai's debt was detailed in the three-day notice to pay rent or quit that had been served on him as a prerequisite to eviction proceedings, its actions in reporting that alleged debt to the major credit bureaus was speech made in connection with an issue under consideration or review by a judicial body within the meaning of Code of Civil Procedure section 425.16, subdivision (e)(2). On December 5, 2000 the trial court denied the motion, concluding UDR had failed to make the required threshold showing that the challenged causes of action arose from protected activity within the meaning of section 425.16, subdivision (e).² At the same time the trial court denied Mr. Sanai's motion for preliminary injunction, which sought to enjoin UDR from threatening to make or making false statements about him to consumer credit reporting agencies, finding Mr. Sanai had not demonstrated he was likely to prevail on the merits of his lawsuit.

UDR and Mr. Saltz appealed the trial court's order denying the special motion to strike, filing notices of appeal on January 16, 2001 (Code Civ. Proc., §§ 425.16, subd. (j), 904.1, subd. (a)(13)); Mr. Sanai cross-appealed from the trial court's denial of his motion for a preliminary injunction (Code Civ. Proc., § 904.1, subd. (a)(6)). On February 2, 2001, two months after the trial court's ruling denying its special motion to strike, UDR also filed a petition for writ of mandate to vacate the trial court's order and requested this court immediately stay all trial court proceedings, arguing its right to appeal the trial court's order was not an adequate remedy. Mr. Sanai opposed the writ petition, noting UDR had exercised its right to appeal from the trial court's denial of the special motion to strike and asserting that none of the public interest considerations the Legislature sought to protect through Code of Civil Procedure section 425.16's expedited procedures was implicated by this case.

We summarily denied the petition for writ of mandate and request for stay of proceedings on February 9, 2001. (The U.D. Registry, Inc. v. Superior Court (Feb. 9, 2002, B147603) [nonpub. opn.], review den. Apr. 25, 2001, S095491.) UDR did not seek a stay of the trial court proceedings by petition for a writ of supersedeas ancillary to its appeal, either before or after our summary denial of its petition for writ of mandate. (See Reed v. Superior Court (2001) 92 Cal.App.4th 448, 455 .)³

In an opinion filed March 21, 2002 we affirmed the trial court's denial of UDR's special motion to strike, holding that "for the official proceeding in [Code of Civil Procedure] section 425.16, subdivision (e), clauses (1) and (2), to be `equated' with a public issue, there must be an actual official proceeding to which the conduct at issue can be connected. If there was no actual official proceeding, there was no public issue to which the conduct can be connected, and the conduct should not fall within the protection of section 425.16, subdivision (e), clauses (1) and (2)." (Sanai v. The U.D. Registry, Inc. (Mar. 21, 2002, B147392) [nonpub. opn.].) Mr. Sanai's cross-appeal from the denial of his motion for a preliminary injunction was dismissed as moot. (Ibid.) The remittitur issued May 24, 2002.

3. Further Proceedings in the Trial Court

While the appeal from the denial of UDR's special motion to strike was pending in this court from January 16, 2001 to May 24, 2002, the litigation proceeded in the trial court, which issued a number of orders, at least at the outset without any formal objection by either party, determining pleading issues and discovery disputes (including orders for sanctions) and ultimately resolving against Mr. Sanai all of the substantive issues raised by his lawsuit.

Initially, the trial court held Mr. Sanai's landlord was a necessary and indispensable party to the action. As a result, Mr. Sanai filed a first amended complaint and thereafter a second amended complaint adding the owners of the apartment Mr. Sanai had leased (Irvine Apartment Communities, L.P., Irvine Apartment Communities, LLC, and The Irvine Company; collectively Irvine Entities) as defendants and asserting a cause of action against Irvine Apartment Communities, L.P., and Irvine Apartment Communities, LLC, for breach of a written lease agreement (the purported agreement to lease the ...