Tuesday, February 5, 2019
California Supreme Court:
By a MetNews Staff Writer
The state Supreme Court yesterday declared that an action against the city of Carson can proceed after being dismissed as a SLAPP because the plaintiff’s allegations that the city breached an exclusive agency contract for negotiating the construction of an NFL stadium did not arise from protected activity.
Justice Mariano-Florentino Cuéllar wrote the opinion, which stresses that the anti-SLAPP statute, Code of Civil Procedure §425.16, does not apply where conduct giving rise to a lawsuit only tangentially implicates protected activity.
The opinion affirms, in part, a 2016 decision by Div. One of this district’s Court of Appeal, reversing Los Angeles Superior Court Judge Michael L. Stern’s dismissal of five of the six causes of action brought by Rand Resources, LLC and related parties. Rand sued Carson and a rival company which the city enlisted to negotiate with the NFL after entering the exclusive agency agreement (“EAA”) with Rand.
Rand’s rival, U.S. Capital, LLC, and its owner Leonard Bloom allegedly used their connections with Carson’s former mayor, James Dear, to fraudulently take over the negotiation duties promised to Rand. They created an entity with the same name as Rand to impersonate the plaintiff in their communications with the NFL, the plaintiffs alleged.
Cuéllar agreed with Stern that the two causes of action against Bloom and his company for intentional interference with contract and intentional interference with economic advantage arose from speech concerning a public matter and one under consideration by a legislative body.
Fraud, Tortious Breach
As to Rand’s claims that the city had engaged in tortious breach of contract and that both the city and the Bloom defendants had engaged in fraud, Cuéllar largely agreed with then-Div. One Justice Elwood Lui (now presiding justice of Div. Two), who authored the 2016 opinion in the case.
In that opinion, Lui said:
“The alleged wrongful conduct in plaintiffs’ tortious breach of contract cause of action is the City’s violation of the terms of the EAA by allowing someone other than Rand Resources to act as its agent with respect to efforts to bring an NFL franchise to the City.…The mere fact that some speech occurred in the course of the asserted breach does not mean that the cause of action arises out of protected free speech. To hold otherwise would place the vast majority, if not all, civil complaints alleging business disputes and a large portion of tort litigation within the scope of section 425.16.”
He went on to say:
“The gravamen of the fourth cause of action with respect to the City is…the City’s violation of the terms of the EAA by allowing someone other than Rand Resources to act as its agent with respect to efforts to bring an NFL franchise to the City and the manner in which the City conducted itself in relation to the business transaction between it and Rand Resources, not the City’s exercise of free speech or petitioning activity. Moreover, the identity of the person representing the City in its efforts to lure an NFL team to the City is not a matter of public interest.
“As to Dear, his statement that he did not know Bloom was not a matter of public interest and did not constitute free speech or petitioning activity protected by section 425.16.”
City Attorney’s Promise
Cuéllar noted that the third cause of action for promissory fraud was based on a statement by then-Carson City Attorney Bill Wynder of Aselshire & Wynder LLP (currently the city attorney for Gardena), who allegedly told Rand that the EAA would be renewed if it “showed reasonable progress with respect to bringing an NFL franchise to Carson.”
The jurist said:
“Wynder’s statement, unlike Mayor Dear’s, did relate to the EAA renewal issue before the City Council.
“Yet Wynder’s statement was made in 2012, about two years before the renewal issue even came before the City Council. Section 425.16, subdivision (e)(2) protects only those ‘written or oral statement[s] or writing[s] made in connection with an issue under consideration or review.’…
“What our appellate courts have declined to do is presume speech meets the requirements of section 425.16, subdivision (e)(2) when no official proceeding was pending at the time of the speech.…We agree.”
He also noted that certain statements by Wynder to Rand days before the city council’s denial of the EAA extension showed evidence of its bad faith, those statements were not the basis for liability for the promissory fraud claim.
Turning to the claims brought solely against Bloom and his company, Cuéllar said:
“The Bloom defendants’ communications with the NFL served only as evidence of plaintiffs’ fraud-based claims. Yet the very same communications constitute the conduct by which plaintiffs claim to have been injured in their intentional interference claims….Similarly, although Bloom’s secret communications with the City served as evidence of, or context for, claims based in fraud, those very communications are the interference now complained of in claims five and six.
“Moreover, the Bloom defendants’ acts giving rise to plaintiffs’ intentional interference claims were ‘in connection with a public issue,’ as defined in subdivision (e)(2) and (e)(4) of the anti-SLAPP statute. In contrast to Wynder’s 2012 promise, the Bloom defendants lobbied Mayor Dear and a councilmember in 2014, ‘[a]fter Rand provided the City with its extension request but before the City voted on the extension.’ The Bloom defendants’ communications—designed to influence the City’s renewal decision while the renewal application was pending—are reasonably considered communications ‘in connection with an issue under consideration or review by a legislative...body’ within the meaning of subdivision (e)(2).”
The high court remanded the case for determination of whether the plaintiffs established a probability of success on their intentional interference claims.
The case is Rand Resources, LLC v. City of Carson, 2019 S.O.S. 617.
Joseph J. Ybarra of Huang Ybarra Gelberg & May LLP in Los Angeles argued for the plaintiffs. Anthony R. Taylor of Aleshire & Wynder’s Irvine office represented Carson; and John V. Tamborelli of Tamborelli Law Group in Woodland Hills was counsel for the Bloom defendants.
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