Privato Security Co. v. Sidman CA6 ( 2015 )


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  • Filed 8/17/15 Privato Security Co. v. Sidman CA6
    NOT TO BE PUBLISHED IN OFFICIAL REPORTS
    California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
    publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
    or ordered published for purposes of rule 8.1115.
    IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
    SIXTH APPELLATE DISTRICT
    PRIVATO SECURITY, LLC,                                               H040385
    (Monterey County
    Plaintiff and Respondent,                                  Super. Ct. No. M123260)
    v.
    GEORGE SIDMAN,
    Defendant and Appellant.
    I. INTRODUCTION
    Appellant George Sidman founded a company called WebLOQ, Inc. (WebLOQ).
    Sidman was chair of the WebLOQ board of directors (Board) before he resigned and
    entered into a settlement agreement with WebLOQ in 2011. WebLOQ ceased operations
    in 2012 and its assets were assigned to a new company, Privato Security, LLC (Privato).
    Privato subsequently filed an action against Sidman alleging that Sidman was liable for
    breach of his settlement agreement with WebLOQ. Privato’s complaint included causes
    of action for libel, breach of contract, unfair competition, and injunctive and declaratory
    relief.
    Sidman responded to the complaint by bringing a special motion to strike under
    Code of Civil Procedure section 425.16,1 the anti-SLAPP2 statute, which provides that a
    1
    All further statutory references are to the Code of Civil Procedure unless
    otherwise indicated.
    cause of action arising from constitutionally protected speech or petitioning activity is
    subject to a special motion to strike unless the plaintiff establishes a probability of
    prevailing on the claim. (§ 425.16, subd. (b)(1).) The trial court granted Sidman’s anti-
    SLAPP motion as to the cause of action for libel and denied the motion as to the other
    causes of action.
    On appeal, Sidman contends that the trial court erred in denying his anti-SLAPP
    motion as to the remaining causes of action because the causes of action for breach of
    contract, unfair competition, and injunctive and declaratory relief all arise from
    prelitigation communications that are protected under section 425.16, and because
    Privato has not shown a probability of prevailing on those causes of action. For the
    reasons stated below, we agree and therefore we will reverse the trial court’s order and
    direct the court to enter a new order granting Sidman’s anti-SLAPP motion as to all four
    causes of action in Privato’s complaint.
    II. FACTUAL AND PROCEDURAL BACKGROUND
    A. WebLOQ
    This action arises from disputes between the founder and former officers of
    WebLOQ, including Sidman, Gerald Williams, and Neal R. Smith, that occurred prior to
    the company’s dissolution in 2012.
    Sidman founded WebLOQ in 2003. Sidman also served as Chairman of
    WebLOQ’s Board and was involved in the development of WebLOQ’s email encryption
    technology. Smith was WebLOQ’s president, chief executive officer (CEO), and a
    member of the Board. Williams served as WebLOQ’s chief financial officer (CFO) and
    corporate secretary.
    2
    “SLAPP is an acronym for ‘strategic lawsuit against public participation.’ ”
    (Jarrow Formulas, Inc. v. LaMarche (2003) 
    31 Cal. 4th 728
    , 732, fn. 1.)
    2
    Dr. David Milligan was appointed to the WebLOQ Board in 2007. By 2009,
    WebLOQ was in financial distress and Dr. Milligan began investing his own funds in the
    company. The Board approved several agreements and a promissory note that resulted in
    Dr. Milligan’s investments becoming loans that were secured on all of WebLOQ’s assets.
    Dr. Milligan’s loans to WebLOQ ultimately totaled more than $2 million. Dr. Milligan
    was appointed Chairman of the Board in February 2011.
    WebLOQ was unable to improve its financial situation by either finding a buyer
    or attracting an investor. Smith, as president and CEO of WebLOQ, sent a letter to
    shareholders in December 2011 advising them that it was no longer feasible for WebLOQ
    to continue operations. The December 2011 letter also informed shareholders that
    Dr. Milligan was intending to foreclose on WebLOQ’s assets as a secured creditor.
    Smith sent a follow-up letter to shareholders in February 2012 in which he stated that
    Dr. Milligan’s foreclosure of WebLOQ’s assets had been completed. Smith also
    requested shareholder approval of the dissolution of WebLOQ.
    The WebLOQ assets acquired by Dr. Milligan through foreclosure included the
    trademark “Privato” and a WebLOQ subsidiary named Privato Security, Inc. In
    January 2012, Dr. Milligan assigned the former WebLOQ assets to a new entity,
    Privato, LLC, which he had created for that purpose. At present, Dr. Milligan is the
    sole owner of Privato, Smith is Privato’s CEO, and Williams is Privato’s CFO.
    B The Settlement Agreement
    In 2010, Sidman became concerned that Smith and Williams had authorized
    payments for paid time off (PTO) for each other, although WebLOQ had laid off staff
    and closed an office due to its financial difficulties. Sidman informed the Board about the
    PTO payments to Smith and Williams and sought to establish a company policy
    prohibiting such payments.
    In the meantime, Smith had become concerned that there was tension between
    Sidman and the Board, “primarily centered around unprofessional and often erratic
    3
    behavior routinely being exhibited by Sidman in the workplace.” According to Smith,
    Sidman’s “inappropriate behavior ultimately resulted in the Board of Directors requiring
    that Mr. Sidman physically remove himself from the WebLOQ headquarters.”
    Sidman resigned from WebLOQ in April 2011. On July 1, 2011, Sidman and
    WebLOQ entered into a settlement agreement and release in which Sidman received a
    lump sum severance payment of $67,500 in exchange for a release of claims and
    agreement to several other express terms.
    Pertinent here, paragraph 11 of the settlement agreement provides in part:
    “[Sidman] agrees that he shall not directly or indirectly (i) make, or cause, assist,
    facilitate or otherwise influence others . . . to make, any negative or disparaging
    statements regarding [WebLOQ], its products, services or technologies, or its past or
    present officers, directors, employees, agents, affiliates, stockholders, investors,
    representatives, customers, partners or suppliers or (ii) act, or cause, assist, facilitate or
    otherwise influence others to act, in any other manner that would damage or interfere
    with [WebLOQ’s] business, including its contracts and relationships with its customers,
    vendors or partners.”
    C. Sidman’s Post-Settlement Agreement Communications
    After WebLOQ ceased operations and its assets were transferred to Privato in
    January 2012, Sidman started communicating with former WebLOQ shareholders.
    Sidman sent a five-page “Letter to WebLOQ Shareholders” dated March 14, 2013, that
    began: “I am sending you this letter because I feel a deep and continuing obligation to
    the investors and other stakeholders whose money and other contributions made
    WebLOQ a reality. When WebLOQ was closed in early 2012 it had already become
    apparent to a few shareholders that what the company leaders were telling the
    stockholders masked the true story. This letter is to inform you of the chain of events and
    activities that shifted all WebLOQ assets into an alter-ego company, and resulted in the
    loss of your investment when they closed the WebLOQ corporation. [¶] You will learn
    4
    of the premeditated actions by the company’s officers and directors that we believe
    violated their corporate fiduciary obligations; and be offered an opportunity to help set
    the stage for appropriate legal action on behalf of the shareholders.”
    The March 14, 2013 letter went on to state, among other things, that “[i]n this
    case, a minority investor imposed harsh loan terms on the company and then named
    himself company Chairman while sitting on both sides of the table. His secured
    convertible notes positioned him to simply foreclose at will and seize all assets; which he
    did with a flagrant disregard for the priority rights of the other stockholders whose total
    investments were two times larger than his inflated debt. He and his two accomplices
    deftly sequestered the company’s assets and then shut down the corporation, while
    paying for and continuing the WebLOQ shadow operations–to which they later rolled
    directly into their successor company. [¶] Like all other investors, he could and should
    have purchased stock in WebLOQ, rather than imposing his self-dealing loans. . . [¶] . . .
    Instead, he and the company CEO and CFO, in clear violation of Delaware law, placed
    their personal interests ahead of all others and manipulated the circumstances to crush the
    WebLOQ shareholders and take all the marbles.”
    The March 14, 2013 letter also concerned potential litigation, as follows: “We are
    now gathering all the documents and other evidence to prepare our case. This case
    preparation stage is crucial to determining next steps and the most appropriate type of
    legal action. We believe there may be additional supporting information in the hands of
    stockholders that would be helpful. . . . As this case comes together we may be seeking
    approvals from WebLOQ shareholders and others to join the action as plaintiffs.”
    Sidman sent a second letter to WebLOQ shareholders, dated April 16, 2013.
    Sidman’s second letter addressed a letter sent to WebLOQ’s former shareholders by
    Dr. Milligan’s attorneys that responded to Sidman’s earlier letter of March 14, 2013.
    Among other things, Sidman stated in his April 16, 2013 letter that “[m]y letter to you of
    March 14th simply chronicled WebLOQ documents sent to shareholders, along with
    5
    publicly available information regarding Privato. Those documents and the resulting
    timeline revealed the secrecy of their actions and the breach of their fiduciary
    obligations.” The April 16, 2013 letter concluded: “We are proceeding with case
    preparation and anticipate filing in the Federal Court in Delaware. For those who have
    indicated an interest in participating as plaintiffs, I will be in touch personally.”
    In addition, Sidman started a public website named “WebLOQ Shareholder
    Information & Documents” with a webpage that included the following statement: “How
    $5 million of WebLOQ shareholder investment, along with all company assets and
    patentable technology, were transferred into Privato Security LLC; a company that is
    owned privately by three former WebLOQ officers and directors, and was created by
    them many months before they closed WebLOQ. [¶] . . . It is in support of case
    preparation for appropriate legal action on behalf of the shareholders and others.”
    D. The Complaint
    The complaint filed in May 2013 by plaintiffs Privato, Smith, and Williams
    against defendant Sidman asserted causes of action for libel, breach of contract, unfair
    competition (Bus. & Prof., Code, § 17200 et seq.), and injunctive and declaratory relief,
    and sought compensatory and punitive damages.
    In the libel cause of action, plaintiffs Privato, Smith and Williams alleged that
    Sidman’s two letters to WebLOQ’s shareholders, dated March 14, 2013, and April 16,
    2013, were false and defamatory because the letters accused plaintiffs of dishonesty and
    crimes in their occupations and business.
    The other causes of action were brought only by plaintiff Privato. The cause of
    action for breach of contract alleged that Sidman had violated the terms of the settlement
    agreement that (1) prohibited him from influencing the actions of WebLOQ shareholders;
    (2) prohibited him from making negative or disparaging statements about WebLOQ and
    its officers and directors; (3) required him to maintain the confidentiality of the
    6
    settlement agreement; and (4) obligated him to indemnify and hold plaintiffs harmless
    under certain circumstances.
    The causes of action for unfair competition and injunctive and declaratory relief
    alleged that Sidman was liable for sending letters to shareholders and publishing on a
    public website “inflammatory statements, misstatements and false accusations about
    Privato, its owner, officers and managers,” as well as holding meetings in which Sidman
    sought to “negatively influence” former shareholders and potential customers.
    E. Sidman’s Section 425.16 Motion
    After answering the complaint, Sidman filed a special motion to strike the
    complaint under section 425.16. In support of his anti-SLAPP motion, Sidman
    contended that the lawsuit was a SLAPP because all causes of action arose from his
    prelitigation communications that were protected under section 425.16,
    subdivision (e)(2).
    Specifically, Sidman argued that the causes of action for libel, breach of contract,
    unfair competition, and injunctive relief were all based on the statements he made in the
    two letters to WebLOQ shareholders and on his public website, which related to potential
    claims for breach of fiduciary duty and the litigation that Sidman anticipated. Sidman
    also argued that each cause of action failed on the merits.
    In opposition to the anti-SLAPP motion, plaintiffs asserted that the “heart” of their
    complaint was not protected speech, but was instead a controversy about the scope and
    enforceability of the settlement agreement. Plaintiffs argued that Sidman’s
    “inflammatory statements” in his two letters and on the public website alerted them to the
    existence of a dispute regarding the terms of the settlement agreement that prohibited
    Sidman from making disparaging comments regard WebLOQ and its past or present
    officers, directors, or employees. Plaintiffs also argued that they could demonstrate a
    probability of prevailing on each of their claims.
    7
    F. The Trial Court’s Order
    In its order of September 4, 2013, the trial court granted Sidman’s anti-SLAPP
    motion in part and denied it in part. The court granted the motion as to the cause of
    action for libel, finding that the claim was based upon protected speech because the
    statements in Sidman’s letters were made in anticipation of litigation and were therefore
    protected under section 425.16, subdivision (e)(2). The court also determined that
    plaintiffs could not demonstrate a probability of prevailing on their libel claim because
    the allegedly libelous statements were inadmissible pursuant to the Civil Code section 47,
    subdivision (b) litigation privilege.
    The trial court denied the anti-SLAPP motion as to the causes of action for breach
    of contract, unfair competition, and injunctive and declaratory relief, finding that those
    causes of action did not arise from activities protected under section 425.16. The court
    determined that “the actual dispute between the parties is to the validity of the [settlement
    agreement] provisions and the parties’ rights and obligations under the [settlement
    agreement].” Citing Graffiti Protective Coatings, Inc. v. City of Pico Rivera (2010)
    
    181 Cal. App. 4th 1207
    , the court also found that with regard to those causes of action,
    Sidman’s speech or petitioning activity was “ ‘mere evidence related to liability,’ not the
    basis for liability itself. [Citation.]”
    III. DISCUSSION
    Sidman filed a timely notice of appeal from the trial court’s order. An order
    granting or denying a special motion to strike under section 425.16 is immediately
    appealable. (§ 425.16, subd. (i); § 904.1, subd. (a)(13); City of Costa Mesa v. D’Alessio
    Investments, LLC (2013) 
    214 Cal. App. 4th 358
    , 371.)
    On appeal, Sidman reiterates his contentions that the trial court erred in denying
    his anti-SLAPP motion because the causes of action for breach of contract, unfair
    competition, and declaratory and injunctive relief all arise from activity that is protected
    under section 425.16, and because plaintiffs do not have a probability of prevailing on
    8
    their claims.3 We will begin our evaluation of defendants’ contentions with an overview
    of section 425.16, the anti-SLAPP statute, followed by a discussion of the applicable
    standard of review.
    A. Section 425.16
    Section 425.16 was enacted in 1992 in response to a “disturbing increase” in
    lawsuits brought for the strategic purpose of chilling a defendant’s rights of petition and
    free speech. (§ 425.16, subd. (a).)4 SLAPPs are unsubstantiated lawsuits based on
    claims arising from defendant’s constitutionally protected speech or petitioning activity.
    (Equilon Enterprises v. Consumer Cause, Inc. (2002) 
    29 Cal. 4th 53
    , 60; Navellier v.
    Sletten (2002) 
    29 Cal. 4th 82
    , 89 (Navellier).)
    Section 425.16 applies to any 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 . . . .” (§ 425.16, subds. (b)(1), (e)(4).) The stated purpose of section 425.16 is to
    encourage protected speech by permitting a court to promptly dismiss unmeritorious
    actions or claims that are brought “primarily to chill the valid exercise of the
    constitutional rights of freedom of speech and petition for the redress of grievances.”
    3
    We deny Sidman’s request for judicial notice filed May 20, 2014, of his cross-
    complaint filed-stamped March 18, 2014, which was not before the trial court at the time
    of the September 4, 2013 order that is the subject of this appeal. “It has long been the
    general rule and understanding that ‘an appeal reviews the correctness of a judgment as
    of the time of its rendition, upon a record of matters which were before the trial court for
    its consideration.’ [Citation.]” (In re Zeth S. (2003) 
    31 Cal. 4th 396
    , 405.)
    4
    Section 425.16, subdivision (a) provides: “The Legislature finds and declares
    that there has been a disturbing increase in lawsuits brought primarily to chill the valid
    exercise of the constitutional rights of freedom of speech and petition for the redress of
    grievances. The Legislature finds and declares that it is in the public interest to
    encourage continued participation in matters of public significance, and that this
    participation should not be chilled through abuse of the judicial process. To this end, this
    section shall be construed broadly.”
    9
    (§ 425.16, subd. (a); Soukup v. Law Offices of Herbert Hafif (2006) 
    39 Cal. 4th 260
    , 278
    (Soukup).)
    Under section 425.16, the trial court evaluates the merits of a possible SLAPP by
    “using a summary-judgment-like procedure at an early stage of the litigation.” (Varian
    Medical Systems, Inc. v. Delfino (2005) 
    35 Cal. 4th 180
    , 192.) The procedures authorized
    in the statute allow a defendant to stay discovery before litigation costs mount, obtain
    early dismissal of the lawsuit, and recover attorney’s fees. (Kibler v. Northern Inyo
    County Local Hospital Dist. (2006) 
    39 Cal. 4th 192
    , 197-198.)
    A defendant seeking the protection of the anti-SLAPP statute has the burden of
    making the initial showing that the lawsuit arises from conduct “in furtherance of [a]
    person’s right of petition or free speech under the United States Constitution or the
    California Constitution in connection with a public issue . . . .” (§ 425.16, subds. (b)(1),
    (e)(4); 
    Navellier, supra
    , 29 Cal.4th at pp. 87-88.) Once the defendant has shown that
    the plaintiff’s claim arises from one of the section 425.16, subdivision (e) categories
    of protected activity, the burden shifts to the plaintiff to demonstrate a probability of
    prevailing on the claim. (§ 425.16, subd. (b)(1); 
    Navellier, supra
    , at p. 88.)
    Thus, “ ‘[s]ection 425.16 posits . . . a two-step process for determining whether an
    action is a SLAPP. First, the court decides whether the defendant has made a threshold
    showing that the challenged cause of action is one arising from protected activity. . . . If
    the court finds that such a showing has been made, it must then determine whether the
    plaintiff has demonstrated a probability of prevailing on the claim.’ [Citation.] ‘Only a
    cause of action that satisfies both prongs of the anti-SLAPP statute—i.e., that arises from
    protected speech or petitioning and lacks even minimal merit—is a SLAPP, subject to
    being stricken under the statute.’ [Citation.]” 
    (Soukup, supra
    , 39 Cal.4th at pp. 278-
    279.)
    10
    B. The Standard of Review
    “Review of an order granting or denying a motion to strike under section 425.16 is
    de novo. [Citation.] We consider ‘the pleadings, and supporting and opposing
    affidavits . . . upon which the liability or defense is based.’ (§ 425.16, subd. (b)(2).)
    However, we neither ‘weigh credibility [nor] compare the weight of the evidence.
    Rather, [we] accept as true the evidence favorable to the plaintiff [citation] and evaluate
    the defendant’s evidence only to determine if it has defeated that submitted by the
    plaintiff as a matter of law.’ [Citation.]” 
    (Soukup, supra
    , 39 Cal.4th at p. 269, fn. 3.)
    Applying this standard of review, we will independently determine from our
    review of the record whether any of the three remaining causes of action constitutes a
    SLAPP under section 425.16. We will begin by addressing the cause of action for breach
    of contract.
    C. Breach of Contract
    1. Protected Activity
    We first consider whether Sidman met his burden to make the threshold showing
    that Privato’s breach of contract claim arises from one of the section 425.16,
    subdivision (e) categories of protected activity. (§ 425.16, subd. (b)(1); 
    Navellier, supra
    ,
    29 Cal.4th at p. 88.) Sidman contends that Privato’s breach of contract claim is a SLAPP
    because it is based on protected activity under section 425.16, subdivision (e)(2),
    consisting of the two letters he sent to WebLOQ shareholders in anticipation of litigation.
    Privato argues to contrary that its breach of contract claim arises from the various
    provisions of the settlement agreement that Sidman allegedly violated, and therefore the
    claim is based upon a dispute regarding the enforceability and scope of the parties’
    settlement agreement, not protected activity.
    The California Supreme Court has stated the standard for determining whether
    the defendant’s acts, as alleged in the complaint, constitute activity protected under
    section 425.16, subdivision (e). “[T]he statutory phrase ‘cause of action . . . arising from’
    11
    means simply that the defendant’s act underlying the plaintiff’s cause of action must
    itself have been an act in furtherance of the right of petition or free speech. [Citation.]
    In the anti-SLAPP context, the critical point is whether the plaintiff’s cause of action
    itself was based on an act in furtherance of the defendant’s right of petition or free
    speech. [Citations.] ‘A defendant meets this burden by demonstrating that the act
    underlying the plaintiff’s cause fits one of the categories spelled out in section 425.16,
    subdivision (e) . . . .’ [Citations.]” (City of Cotati v. Cashman (2002) 
    29 Cal. 4th 69
    , 78
    (City of Cotati).)
    Section 425.16, subdivision (e) provides in pertinent part: “As used in this
    section, ‘act in furtherance of a person’s right of petition or free speech under the United
    States or California Constitution in connection with a public issue’ includes: (1) any
    written or oral statement or writing made before a legislative, executive, or judicial
    proceeding, or any other official proceeding authorized by law, (2) any written or oral
    statement or writing made in connection with an issue under consideration or review by
    a legislative, executive, or judicial body, or any other official proceeding authorized by
    law . . . .”
    Since “[t]he filing of lawsuits is an aspect of the First Amendment right of
    petition” 
    (Soukup, supra
    , 39 Cal.4th at p. 291), a claim based on actions taken in
    connection with litigation fall “squarely within the ambit of the anti-SLAPP statute’s
    ‘arising from’ prong. (§ 425.16, subd. (b)(1).” (
    Navellier, supra
    , 29 Cal.4th at p. 90,
    fn. omitted.) “Thus, statements, writings, and pleadings in connection with civil
    litigation or in contemplation of civil litigation are covered by the anti-SLAPP statute,
    and that statute does not require any showing that the litigated matter concerns a matter
    of public interest. [Citation.]” (Lunada Biomedical v. Nunez (2014) 
    230 Cal. App. 4th 459
    , 472 (Lunada).)
    In the present case, Privato alleges in its complaint that Sidman breached several
    provisions of the settlement agreement “by repeatedly sending letters to shareholders and
    12
    publishing on a public website inflammatory statements, misstatements and accusations
    about the WebLOQ’s successor, Privato, its officers, employees and its managers; by
    further taking steps to threaten litigation against Plaintiffs; making misrepresentations
    concerning Plaintiffs in order to interfere with Privato’s business and negatively
    influence potential investors, potential clients/customers, management and other
    interested parties; and by holding meetings and conferences in order to negatively
    influence former shareholders, potential clients/customers, potential investors,
    management and other interested parties in violation of his legal duties and the
    Settlement Agreement, all done in order to gain an unfair business advantage over
    Plaintiff, its’ owner, member and managers.”
    We determine that the cause of action for breach of contract alleges activity
    protected under section 425.16, subdivision (e)(2). Sidman’s two letters to shareholders
    and his public website contained statements clearly made in anticipation of litigation. For
    example, the March 14, 2013 letter stated: “We are now gathering all the documents and
    other evidence to prepare our case. This case preparation stage is crucial to determining
    next steps and the most appropriate type of legal action. We believe there may be
    additional supporting information in the hands of stockholders that would be helpful. . . .
    As this case comes together we may be seeking approvals from WebLOQ shareholders
    and others to join the action as plaintiffs.” Similarly, the April 16, 2013 letter concluded:
    “We are proceeding with case preparation and anticipate filing in the Federal Court in
    Delaware. For those who have indicated an interest in participating as plaintiffs, I will be
    in touch personally.” (See 
    Navellier, supra
    , 29 Cal.4th at p. 90; see also Neville v.
    Chudacoff (2008) 
    160 Cal. App. 4th 1255
    , 1267-1268 [former employer’s letter to
    customers regarding former employee’s violation of agreement not to contact customers
    was protected under section 425.16 as communication in anticipation of litigation].)
    However, the cause of action for breach of contract also alleges activity by Sidman
    that arguably is not protected under section 425.16, subdivision (e)(2) as actions taken in
    13
    connection with litigation. (See 
    Navellier, supra
    , 29 Cal.4th at p. 90.) In particular,
    Privato alleges that Sidman breached the settlement agreement by holding meetings and
    making misrepresentations in order to “negatively influence” former shareholders and
    others.
    Where, as here, a cause of action alleges both activity protected under
    section 425.16, subdivision (e) and unprotected activity, we apply the “ ‘principal thrust
    or gravamen’ test.” (Club Members for an Honest Election v. Sierra Club (2008) 
    45 Cal. 4th 309
    , 319 (Club Members).) “The ‘principal thrust or gravamen’ test has been
    used to determine whether an action fits within the scope of the anti-SLAPP protection
    provided by section 425.16 when a pleading contains allegations referring to both
    protected and unprotected activity. [Citation.]” (Ibid.)
    Under that test, “when the allegations referring to arguably protected activity are
    only incidental to a cause of action based essentially on nonprotected activity, collateral
    allusions to protected activity should not subject the cause of action to the anti-SLAPP
    statute.” (Martinez v. Metabolife Internat., Inc. (2003) 
    113 Cal. App. 4th 181
    , 188.) Thus,
    “a defendant in an ordinary private dispute cannot take advantage of the anti-SLAPP
    statute simply because the complaint contains some references to speech or petitioning
    activity by the defendant. [Citation.]” (Ibid.; accord, PrediWave Corp. v. Simpson
    Thacher & Bartlett LLP (2009) 
    179 Cal. App. 4th 1204
    , 1219.)
    Having carefully reviewed the complaint, we find that the allegations of protected
    activity—the statements in letters to shareholders and website statements made in
    anticipation of litigation—are not merely incidental to the cause of action for breach of
    contract. To the contrary, the “principal thrust or gravamen” of the breach of contract
    cause of action is Sidman’s alleged activity of sending letters and creating a website for
    the purpose of promoting the participation of former WebLOQ shareholders in a lawsuit
    that Sidman intended to bring against former WebLOQ officers and directors for breach
    of fiduciary duty. (See Club 
    Members, supra
    , 45 Cal.4th at p. 319.)
    14
    Since the letters and website constitute activity protected under section 425.16,
    subdivision (e)(2) as statements made in anticipation of litigation 
    (Lunada, supra
    , 230
    Cal.App.4th at p. 472), we determine that Sidman has met his burden to make a threshold
    showing that the breach of contract cause of action arises from speech or petitioning that
    is protected under the anti-SLAPP statute. (See 
    Navellier, supra
    , 29 Cal.4th at pp. 93-95
    [breach of contract action alleging that the defendant breached a release of claims by
    filing claims in court arose from protected activity]; D’Arrigo Bros. of California v.
    United Farmworkers of America (2014) 
    224 Cal. App. 4th 790
    , 799-800 [breach of
    contract claim alleging that defendant union breached agreement with employer arose
    from protected activities before the Agriculture Labor Relations Board]; Vivian v.
    Laburcherie (2013) 
    214 Cal. App. 4th 267
    , 274 [breach of contract claim alleging that
    defendant breached a settlement agreement by making disparaging statements in family
    court arose from protected activity].)
    Since Sidman has satisfied the first prong of the anti-SLAPP statute, we turn to
    consideration of the second prong: whether Privato has met its burden to show a
    probability of prevailing on its breach of contract claim, since “no cause of action
    qualifies as a SLAPP merely because the defendant’s actions conceptually fall within
    the ambit of the statute’s initial prong.” (
    Navellier, supra
    , 29 Cal.4th at p. 95.)
    2. Probability of Prevailing
    Sidman argues that Privato cannot show a probability of prevailing on its breach
    of contract claim because Privato did not sign the settlement agreement between Sidman
    and WebLOQ, and also because the right to enforce the settlement agreement was not
    transferred from WebLOQ to Privato. Alternatively, Sidman argues that Privato has not
    15
    provided evidence that he breached the settlement agreement, since the only evidence
    offered in support of his alleged breach is Dr. Milligan’s unsigned declaration.5
    Privato responds that it submitted evidence of the documents that transferred
    WebLOQ’s assets to Privato, and those documents, when read together, show that Privato
    is the successor in interest to WebLOQ and therefore Privato acquired the right to enforce
    the settlement agreement with Sidman. WebLOQ also asserts that any ambiguity in the
    documents regarding Privato’s acquisition of the right to enforce the settlement
    agreement may be clarified by evidence of the parties’ subjective intent.
    We begin our analysis by noting that the California Supreme Court in Navellier
    ruled that the “merits prong to the statutory SLAPP definition (§ 425.16, subd. (b)(1)) . . .
    preserves appropriate remedies for breaches of contracts involving speech by ensuring
    that claims with the requisite minimal merit may proceed. [Citations.]” (
    Navellier, supra
    , 29 Cal.4th at p. 94.) In Navellier, the court determined that the defendant’s
    threshold showing that the plaintiffs’ breach of contract claim arose from litigation
    activity protected under section 425.16 was not dispositive, since the “plaintiffs may
    defeat the anti-SLAPP motion by establishing a probability of prevailing on their claim.
    [Citation.]” (
    Navellier, supra
    , 29 Cal.4th at p. 95, fn. omitted.)
    “To establish a probability of prevailing, the 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.’ [Citations.]” 
    (Soukup, supra
    , 39 Cal.4th at p. 291.) “The showing must be
    made through ‘competent and admissible evidence.’ [Citations.] Thus, declarations that
    lack foundation or personal knowledge, or that are argumentative, speculative,
    5
    We recognize that Sidman has argued on appeal that the two letters to WebLOQ
    shareholders and the webpage attached to the unsigned declaration of Dr. Milligan are
    inadmissible. For purposes of our analysis, we will assume, without deciding, that the
    letters and webpage are admissible evidence.
    16
    impermissible opinion, hearsay, or conclusory are to be disregarded. [Citation.]”
    (Gilbert v. Sykes (2007) 
    147 Cal. App. 4th 13
    , 26.) “ ‘[T]he plaintiff “cannot simply rely
    on the allegations in the complaint” [citation] . . . .’ [Citation.]” (Alpha & Omega
    Development, LP v. Whillock Contracting, Inc. (2011) 
    200 Cal. App. 4th 656
    , 664.)
    Accordingly, Privato had the burden to make a prima facie showing of facts,
    supported by admissible evidence, that is sufficient to support each element of its breach
    of contract cause of action. (See 
    Soukup, supra
    , 39 Cal.4th at p. 291.) The elements of a
    cause of action for breach of contract are: “(1) the existence of the contract,
    (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and
    (4) the resulting damages to the plaintiff. [Citation.]” (Oasis West Realty, LLC v.
    Goldman (2011) 
    51 Cal. 4th 811
    , 821.)
    The issue raised in this appeal, however, is whether Privato, as a nonsignatory to
    the settlement agreement between Sidman and WebLOQ, has the right to enforce the
    settlement agreement. Privato acknowledges that “there exists some ambiguity . . .
    regarding whether the documents transferring WebLOQ’s interests to Privato include the
    [settlement agreement] among those interests transferred.” Privato further acknowledges
    that although it “maintains that all [the] transfer documents, collectively, unambiguously
    transfer to Privato all contract and all rights arising from any WebLOQ contract,
    including the [settlement agreement], to the extent that there may be any ambiguity on
    the subject, evidence reflecting the parties’ subjective intent on the issue is relevant and
    appropriately considered by this Court. It should also be noted that such ambiguity may
    be dispelled once the parties are allowed to commence discovery in this case.”
    We determine that Privato has not met its burden to establish a probability of
    prevailing on its breach of contract claim in the absence of a prima facie showing that it
    has the right to enforce the settlement agreement as a nonsignatory to the agreement.
    (
    Navellier, supra
    , 29 Cal.4th at p. 95.) Privato implicitly concedes that the documents
    pertaining to Privato’s acquisition of WebLOQ’s assets do not expressly address the
    17
    settlement agreement between WebLOQ and Sidman. Privato also acknowledges that the
    transfer documents are arguably ambiguous with respect to Privato’s right to enforce the
    settlement agreement made between Sidman and WebLOQ. Moreover, our review of the
    record shows that Privato did not submit any evidence regarding the parties’ subjective
    intent as to whether the transfer of WebLOQ’s assets to Privato included the right to
    enforce the settlement agreement between Sidman and WebLOQ.
    Since we have determined that Sidman met his burden to make a threshold
    showing that Privato’s breach of contract claim arose from litigation-related activity
    protected under section 425.16, subdivision (e)(2), and Privato failed to met its burden to
    show that it had a probability of prevailing on the breach of contract claim, we conclude
    that Sidman’s anti-SLAPP motion should be granted as to the cause of action for breach
    of contract. We reiterate that “ ‘[o]nly a cause of action that satisfies both prongs of the
    anti-SLAPP statute—i.e., that arises from protected speech or petitioning and lacks even
    minimal merit—is a SLAPP, subject to being stricken under the statute.’ [Citation.]”
    
    (Soukup, supra
    , 39 Cal.4th at pp. 278-279.)
    D. Unfair Competition
    Sidman contends that Privato’s unfair competition cause of action is also based
    upon his protected activity of sending letters to WebLOQ shareholders that enlisted their
    support in litigation. He also contends that Privato cannot show a probability of
    prevailing because the unfair competition cause of action is barred by the litigation
    privilege set forth in Civil Code section 47, subdivision (b) (hereafter, section 47(b)).
    Alternatively, Sidman argues that Privato cannot show a probability of prevailing since
    he is not a business and his act of sending letters to WebLOQ shareholders does not
    constitute a business practice.
    Privato argues that its unfair competition claim is not barred by the section 47(b)
    litigation privilege since the privilege is not unlimited. Additionally, Privato argues that
    18
    Sidman’s sending of letters to WebLOQ shareholders constitutes an unfair business
    practice.
    1. Protected Activity
    In its unfair competition cause of action, Privato alleges that Sidman is liable for
    unfair business practices under Business and Professions Code section 17200 et seq. for
    (1) “[r]epeatedly sending letters to shareholders and publishing on a public website
    inflammatory statements, misstatements and false accusations about Privato, its owner,
    officers and managers;” (2) “[t]hreatening litigation against Plaintiffs in order to create
    leverage and extort the company in an unfair manner;” (3) “[m]aking misrepresentations
    concerning Plaintiffs in order to interfere with the company’s business and negatively
    influence former shareholders, potential investors/purchasers, potential clients/customers,
    management and other interested parties;” (4) “[h]olding meetings and conferences in
    order to negatively influence former shareholders, potential investors/purchasers,
    potential clients/customers, management and other interested parties in violation of his
    legal duties and obligations under the Settlement Agreement, all done in order to gain an
    unfair business advantage over Plaintiff, its’ member and managers.”
    We find that the “principal thrust or gravamen” of the unfair competition cause of
    action, like the breach of contract cause of action, is Sidman’s alleged activity of sending
    letters and creating a website for the purpose of obtaining the participation of former
    WebLOQ shareholders in a lawsuit that Sidman intended to bring against former
    WebLOQ officers and directors for breach of fiduciary duty. (See Club 
    Members, supra
    ,
    45 Cal.4th at p. 319.) Having previously determined that Sidman’s letters to former
    WebLOQ shareholders and his website constitute activity protected under section 425.16,
    subdivision (e)(2) as statements made in anticipation of litigation 
    (Lunada, supra
    , 230
    Cal.App.4th at p. 472), we similarly determine that Sidman has met his burden to make
    a threshold showing that the unfair competition cause of action arises from speech or
    petitioning that is protected under the anti-SLAPP statute. (See 
    Navellier, supra
    ,
    19
    29 Cal.4th at pp. 93-95; but see City of Alhambra v. D’Ausilio (2011) 
    193 Cal. App. 4th 1301
    , 1307-1308 [City’s declaratory relief action arose from a controversy regarding the
    scope and enforceability of its settlement agreement with the plaintiff employee, not his
    protected activity].)
    2. Probability of Prevailing
    We next consider whether Privato can meet its burden to show that it has a
    probability of prevailing on its unfair competition claim, beginning with Sidman’s
    contention that the claim is barred by the litigation privilege codified in section 47(b).
    (See 
    Navellier, supra
    , 29 Cal.4th at p. 95.) “The litigation privilege is also relevant to
    the second step in the anti-SLAPP analysis in that it may present a substantive defense
    a plaintiff must overcome to demonstrate a probability of prevailing. [Citations.]”
    (Flatley v. Mauro (2006) 
    39 Cal. 4th 299
    , 323 (Flatley).)
    Section 47(b) provides in part: “A privileged publication or broadcast is one
    made: [¶] . . . [¶] . . . In any (1) legislative proceeding, (2) judicial proceeding, (3) in any
    other official proceeding authorized by law, or (4) in the initiation or course of any other
    proceeding authorized by law . . . .” “ ‘The principal purpose of [the litigation privilege]
    is to afford litigants and witnesses [citation] the utmost freedom of access to the courts
    without fear of being harassed subsequently by derivative tort actions. [Citations.]’ ”
    (Action Apartment Assn., Inc. v. City of Santa Monica (2007) 
    41 Cal. 4th 1232
    , 1241
    (Action Apartment).)
    “In its application to communications made in a ‘judicial proceeding,’
    section 47(b) is not limited to statements made in a courtroom. Many cases have
    explained that section 47(b) encompasses not only testimony in court and statements
    made in pleadings, but also statements made prior to the filing of a lawsuit, whether in
    preparation for anticipated litigation or to investigate the feasibility of filing a lawsuit.
    [Citation.]” (Hagberg v. California Federal Bank (2004) 
    32 Cal. 4th 350
    , 361
    (Hagberg).) However, “[a] prelitigation communication is privileged only when it relates
    20
    to litigation that is contemplated in good faith and under serious consideration.
    [Citations.]” (Action 
    Apartment, supra
    , 41 Cal.4th at p. 1251.)
    In Rubin v. Green (1993) 
    4 Cal. 4th 1187
    (Rubin), our Supreme Court addressed
    the issue of whether the litigation privilege of section 47(b) barred an unfair competition
    claim. The plaintiff in Rubin was a co-owner of a mobile home park, who sued a park
    resident and her attorneys after they sent the co-owner a letter complaining of defects in
    park operation and giving notice of their intention to sue him. 
    (Rubin, supra
    , at p. 1191.)
    The amended complaint included an unfair competition claim alleging that the defendant
    attorneys had a pattern of meeting with mobile home park residents for the purpose of
    soliciting their participation in litigation against the park owner. (Id. at p. 1192.) The
    court determined that defendant’s alleged acts came within the scope of the litigation
    privilege, stating that “we can imagine few communicative acts more clearly within the
    scope of the privilege than those alleged in the amended complaint, that is, meeting and
    discussing with [mobile home park] residents park conditions and the merits of the
    proposed failure-to-maintain lawsuit, and filing the complaint and subsequent pleadings
    in the litigation.” (Id. at p. 1195.)
    Having determined that the attorney defendants were protected from tort liability
    by the section 47(b) litigation privilege, the Rubin court next considered whether the
    defendants were also protected from liability under the unfair competition statute,
    Business and Professions Code section 17200. As the Supreme Court later confirmed in
    Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 
    20 Cal. 4th 163
    (Cel-Tech), the court in Rubin “ ‘rejected the claim that a plaintiff may, in effect,
    “plead around” absolute barriers to relief by relabeling the nature of the action as one
    brought under the unfair competition statute.’ [Citation.]
    The Cel-Tech court further stated that in Rubin “[w]e found ‘the conduct of
    defendants alleged in the complaint’ came ‘within the scope of [Civil Code]
    section 47(b),’ and thus was ‘absolutely immune from civil tort liability . . . . If the
    21
    policies underlying section 47(b) are sufficiently strong to support an absolute privilege,
    the resulting immunity should not evaporate merely because the plaintiff discovers a
    conveniently different label for pleading what is in substance an identical grievance
    arising from identical conduct as that protected by section 47(b).’ [Citation.]” 
    (Cel-Tech, supra
    , 20 Cal.4th at p. 182.) In other words, “[a] plaintiff may thus not ‘plead around’ an
    ‘absolute bar to relief’ simply ‘by recasting the cause of action as one for unfair
    competition.’ [Citation.]” (Ibid.)
    Our Supreme Court therefore concluded in Rubin that the “plaintiff’s tack of
    pleading his claim under the unfair competition statute does not override the litigation
    privilege in this case . . . .” 
    (Rubin, supra
    , 4 Cal.4th at p. 1204; see also People ex. rel.
    Gallegos v. Pacific Lumber Co. (2008) 
    158 Cal. App. 4th 950
    , 958-964 [unfair
    competition action against lumber company alleging that company made misstatements
    and submitted false data in California Environment Quality Act proceedings was barred
    under section 47(b) litigation privilege].)
    The decision in Rubin and as discussed in Cel-Tech guides our analysis here. The
    acts alleged in Privato’s complaint come within the scope of the section 47(b) litigation
    privilege since, as we have discussed, the gravamen of Privato’s claims against Sidman is
    his prelitigation communications with former WebLOQ shareholders. (See 
    Hagberg, supra
    , 32 Cal.4th at p. 361; 
    Cel-Tech, supra
    , 20 Cal.4th at p. 182.) Privato cannot
    overcome the section 47(b) litigation privilege that applies to its claims against Sidman
    by pleading the claims as an unfair competition cause of action. (See 
    Cel-Tech, supra
    , at
    p. 182.) For that reason, we determine that the section 47(b) litigation privilege precludes
    Privato from demonstrating a probability of prevailing on its unfair competition claim
    
    (Flatley, supra
    , 39 Cal.4th at p. 323) and Sidman’s anti-SLAPP motion should be granted
    as to the unfair competition cause of action.
    22
    E. Injunctive and Declaratory Relief
    Sidman contends that the cause of action for injunctive and declaratory relief
    should be stricken for the same reason that Privato’s breach of contract claim fails: that
    Privato cannot show that it has standing to enforce the settlement agreement between
    Sidman and WebLOQ. Sidman also contends that Privato cannot obtain injunctive relief
    since injunctive relief is a remedy, not a cause of action, and Privato has not shown that it
    has a right to any remedy.
    Privato again argues that its claims arise from the parties’ dispute regarding the
    scope and enforceability of the settlement agreement, and not from any protected activity.
    Where, as here, the subject of a special motion to strike is a cause of action for
    declaratory relief, the defendant must show that the actual controversy underlying the
    cause of action arises from protected activity within the meaning of section 425.16,
    subdivision (e). (City of 
    Cotati, supra
    , 29 Cal.4th at pp. 78-80.)
    Privato’s declaratory relief cause of action repeats verbatim the allegations in its
    other causes of action regarding Sidman’s conduct, including his letters to WebLOQ
    shareholders and his webpage. The declaratory relief action also alleges that “[p]laintiff
    has demanded that Defendant cease his actions in violation of the Settlement Agreement
    and to further cease from damaging and disparaging Plaintiffs and from causing . . .
    damage to the business affairs and reputation of Privato.” We have previously
    determined that the gravamen of Privato’s claims against Sidman is his prelitigation
    communications with former WebLOQ shareholders (Sidman’s letters and webpage),
    which constitute protected activity under section 425.16, subdivision (e)(2). Sidman’s
    anti-SLAPP motion therefore made the requisite threshold showing that the declaratory
    relief cause of action arises from protected activity.
    To survive Sidman’s anti-SLAPP motion, Privato had the burden of introducing
    “ ‘ “substantial evidence that would support a judgment of [declaratory] relief made in
    the plaintiff's favor.” [Citations.]’ [Citation.]” 
    (Lunada, supra
    , 230 Cal.App.4th at
    23
    p. 479, fn. omitted.) Privato cannot meet that burden because, as we have previously
    determined, its claims against Sidman are precluded by the section 47(b) litigation
    privilege that applies to prelitigation communications. (See 
    Cel-Tech, supra
    , 20 Cal.4th
    at p. 182.)
    We also determine that Privato cannot state a cause of action for injunctive relief.
    “Injunctive relief is a remedy and not, in itself, a cause of action, and a cause of action
    must exist before injunctive relief may be granted. [Citation.]” (Shell Oil Co. v. Richter
    (1942) 
    52 Cal. App. 2d 164
    , 168 (Shell Oil); see also County of Del Norte v. City of
    Crescent City (1999) 
    71 Cal. App. 4th 965
    , 973 [a permanent injunction is attendant to an
    underlying cause of action].)
    As we have discussed with regard to the causes of action for breach of contract,
    unfair competition, and declaratory relief, Privato cannot establish a probability of
    prevailing on any of the causes of action asserted in its complaint. In the absence of a
    viable cause of action, Privato may not obtain injunctive relief. (See Shell 
    Oil, supra
    ,
    52 Cal.App.2d at p. 168.) Therefore, Sidman’s anti-SLAPP motion should be granted as
    to the cause of action for injunctive and declaratory relief.
    F. Conclusion
    For the reasons stated above, we determine Sidman has made a threshold showing
    that the causes of action for breach of contract, unfair competition, and injunctive and
    declaratory relief arise from speech or petitioning activity protected under section 425.16,
    subdivision (e)(2) and Privato has not demonstrated a probability of prevailing on any of
    the causes of action. We therefore conclude that Sidman’s anti-SLAPP motion should be
    granted as to the causes of action for breach of contract, unfair competition, and
    injunctive and declaratory relief. (See 
    Soukup, supra
    , 39 Cal.4th at pp. 278-279.)
    Having reached that conclusion, we need not address Sidman’s claims of evidentiary
    error.
    24
    We further conclude that the trial court erred in granting the anti-SLAPP motion
    only as to the cause of action for libel and in denying the motion as to the other causes of
    action. Therefore, we will reverse the September 4, 2013 order and direct the court to
    enter a new order granting the motion as to the all four causes of action in the complaint
    pursuant to section 425.16.
    IV. DISPOSITION
    The September 4, 2013 order granting the special motion to strike in part and
    denying the motion in part is reversed. The matter is remanded to the trial court with
    directions to enter a new order granting the motion to strike as to all four causes of action
    in the complaint pursuant to Code of Civil Procedure section 425.16, and to conduct
    proceedings as appropriate to determine costs and reasonable attorney fees, including
    attorney fees on appeal, to be awarded to appellant. (See Paiva v. Nichols (2008)
    
    168 Cal. App. 4th 1007
    , 1038.)
    25
    ___________________________________________
    BAMATTRE-MANOUKIAN, ACTING P.J.
    WE CONCUR:
    __________________________
    MIHARA, J.
    __________________________
    MÁRQUEZ, J.