Metropolitan News-Enterprise


Wednesday, January 3, 2007


Page 1


Anti-SLAPP Statute Applied to Hotel’s Attempt to Block Competitor’s Building Project—C.A.




An exception to the anti-SLAPP statute for certain types of business disputes does not apply to an effort to block environmental approvals for a competitor’s building project, the Court of Appeal for this district has ruled.

Div. Five last week agreed with Los Angeles Superior Court Judge Gregory W. Alarcon that Code of Civil Procedure Sec. 425.17 does not apply to a dispute between West Hollywood hotel operators Sunset Millenium Associates and LHO Grafton Hotel, L.P., owner of The Grafton on Sunset.

The court, however, reversed the judge’s order striking Sunset Millenium’s complaint, saying the plaintiff had shown a reasonable likelihood of prevailing on its claim that LHO Grafton violated a signed 1999 agreement between the plaintiff and The Grafton’s prior owner not to oppose each other’s expansion plans.

The complaint alleged that the defendant breached that agreement by, among other things, opposing the plaintiff’s 2004 expansion plan before the City Council and then filing a mandate petition challenging the city’s approval of an EIR and development agreement.. Sunset Millenium, which sued 16 days after the mandate petition was filed,  asked for damages and injunctive and declaratory relief.

LHO Grafton moved to strike the complaint under the anti-SLAPP law, saying it implicated the company’s right to petition the government. Sunset Millenium responded that the case fell under an exception to the statute contained in Code of Civil Procedure Sec. 425.17(c).

That provision makes the anti-SLAPP procedure inapplicable “to any cause of action brought against a person primarily engaged in the business of selling or leasing goods or services . . . arising from any statement or conduct by that person if both of the following conditions exist: 

(1)  The statement or conduct consists of representations of fact about . . . a business competitor’s business operations, goods, or services, that is made for the purpose of obtaining approval for, promoting, or securing sales or leases of, or commercial transactions in, the person’s goods or services, or the statement or conduct was made in the course of delivering the person’s goods or services. 

(2)  The . . . statement or conduct arose out of or within the context of a regulatory approval process, proceeding, or investigation . . . notwithstanding that the conduct or statement concerns an important public issue.”

Alarcon held that statute inapplicable and granted the motion to strike.

Presiding Justice Paul Turner, writing for the Court of Appeal, explained that the statute does not apply because the statements and activities that prompted the suit, while they concerned “business operations,” were not made to promote the defendant’s “goods or services” and were not “made in the course of delivering” such goods or services.

The jurist elaborated:

“As noted, all of the statements and conduct involved plaintiff’s 2004 project—not defendant’s hotel services.  Defendant operates a hotel—it is not an environmental consulting agency or public interest group dedicated to protection of the city’s ecosystem.  Thus, section 425.17 subdivision (c) does not apply and the trial court correctly concluded it was obligated to resolve the merits of defendant’s special motion to strike.”

But in an unpublished portion of the opinion, Turner said the plaintiff had met its burden of showing the “minimal merit” needed to defeat an anti-SLAPP motion.  

The state Supreme Court, he explained, has held that the motion must be denied if the plaintiff is able to “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.”

Here, Turner explained, a trier of fact could find that LHO Grafton would not have been “materially adversely impacted by the 2004 project,” and thus violated its predecessor’s agreement with Sunset Millenium by opposing it.

Justice Sandy Kriegler concurred in the opinion. Justice Richard Mosk concurred separately.

Attorneys on appeal were Jeffrey N. Brown and Alan S. Petlak of Pircher, Nichols & Meeks for the plaintiff and Fred Gaines, Lisa A. Weinberg and Noelle V. Bensussen of Gaines & Stacey for the defendants.

The case is Sunset Millenium Associates v. LHO Grafton Hotel, B188995.


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