IRA Resources v. Mendoza CA1/3 ( 2021 )

Filed 4/21/21 IRA Resources v. Mendoza CA1/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or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
FIRST APPELLATE DISTRICT
DIVISION THREE
IRA RESOURCES,
Cross-Defendant and
Appellant, A156719
v. (Contra Costa County
JUSTIN MENDOZA, Super. Ct. No. MSC17-00093)
Defendant, Cross-Complainant
and Respondent.
Plaintiff Felix The sued defendant Justin Mendoza and his mother,
Zenaida Mendoza, for breach of contract due to failure to make timely
payments on a promissory note and sought reformation of the deed of trust
securing the note so that Felix The could foreclose on their property. A
default and default judgment were entered, the deed of trust was
subsequently assigned to IRA Resources fbo Richard M. Glantz, 35-36506
(“IRA Resources”), and IRA Resources initiated non-judicial foreclosure
proceedings on the property.
Justin Mendoza then successfully moved to set aside the default and
default judgment, and filed a cross-complaint naming IRA Resources as a
cross-defendant. IRA Resources moved to strike causes of action in the cross-
complaint for wrongful foreclosure, intentional infliction of emotional distress
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(IIED), and negligent infliction of emotional distress (NIED) under
California’s anti-SLAPP statute, Code of Civil Procedure section 425.16.1
The trial court denied the motion, finding that the three causes of
action did not arise from protected activity. We agree with the trial court
that the wrongful foreclosure cause of action does not arise from protected
activity. We conclude, however, that the IIED and NIED causes of action are
“mixed” causes of action arising from both protected and unprotected activity,
and that Justin Mendoza has not met his burden to show a probability of
prevailing on the merits of these claims to the extent they are based on
protected activity. We therefore reverse the order denying the motion to
strike solely as to these portions of the IIED and NIED causes of action, and
strike the supporting allegations from the cross-complaint.
FACTUAL AND PROCEDURAL BACKGROUND
A. Felix The’s Prior Complaint
In July 2016, Felix The filed an action for breach of contract against
Pia Gutierrez and Zenaida Mendoza. The complaint contained the following
allegations. Pia Gutierrez proposed that Felix The loan Zenaida Mendoza
$35,000, and prepared a promissory note secured by a deed of trust on her
property. The note, however, did not include a due date so it was “not
possible to foreclose on the note for non-payment” when timely payments
were not made. The complaint requested reformation of the note to insert a
due date of November 6, 2016.
In October 2016, the trial court entered default judgment against
Zenaida Mendoza and reformed the note to add that it was “ ‘all due and
payable on November 4, 2016.’ ”
1 Unless otherwise indicated, all further section references will be to the
Code of Civil Procedure.
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B. Felix The’s Complaint in this Action
In January 2017, Felix The filed this action for breach of contract
against Justin Mendoza and Zenaida Mendoza, as well as Pia Gutierrez. The
complaint alleged that the deed of trust securing the note was only executed
by Zenaida Mendoza, even though Justin Mendoza was on the title to the
property and it was agreed that all parties in title would execute the deed of
trust. It also alleged that Felix The “desires to foreclose but is hampered by
the absence of Justin Mendoza’s signature on the deed of trust.” It requested
reformation of the deed of trust to add Justin Mendoza’s name.
In May 2017, Felix The assigned the deed of trust to himself and his
wife, Angela The. In September 2017, the trial court entered default
judgment against Justin Mendoza and reformed the deed of trust “adding the
signature of Justin Mendoza . . . as if said signature had been subscribed on
said document at the time of its original execution on or about November 2,
2006.”
C. Non-Judicial Foreclosure Proceedings
In October 2017, a Notice of Trustee’s Sale on the property was
recorded. In February 2018, an Assignment of Deed of Trust was recorded,
transferring Felix and Angela The’s interest to IRA Resources. A Trustee’s
Deed Upon Sale was also recorded, stating that the property had been
purchased by IRA Resources at public auction.
D. Justin Mendoza’s Cross-Complaint
In August 2018, Justin Mendoza successfully moved to set aside the
default and default judgment in this action, purportedly having learned of
the “cloud on his title” while searching online for the property’s market value.
In September 2018, he filed a cross-complaint against IRA Resources along
with Felix and Angela The. The cross-complaint asserts causes of action for:
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(1) quiet title; (2) cancellation of instrument – deed of trust; (3) wrongful
foreclosure; (4) IIED; (5) NIED; (6) injunctive relief; and (7) declaratory relief.
On the wrongful foreclosure claim, the cross-complaint alleges that the
cross-defendants foreclosed on Justin Mendoza’s interest in the property
without right, constituting an illegal or fraudulent sale of his real property
interest. Justin Mendoza was never an obligor on any debt, and the cross-
defendants “utilized legal process in this Court to unlawfully and without
notice” add his name to the note and deed of trust. The cross-defendants
“then completed their unlawful and unnoticed foreclosure sale against
[Mendoza’s] interest.”
On the IIED and NIED claims, the cross-complaint alleges that the
cross-defendants wrongfully caused Justin Mendoza’s name to be
interlineated on the note and deed of trust and subsequently defaulted and
foreclosed on his residence, causing him humiliation, mental anguish,
emotional and physical distress. The NIED claim further alleges that the
cross-defendants “took surreptitious and unlawful actions” to cause Justin
Mendoza’s name to be wrongfully added to the note and deed of trust.
E. Anti-SLAPP Motion to Strike
IRA Resources filed an anti-SLAPP motion to strike the wrongful
foreclosure, IIED, and NIED causes of action. It argued that these causes of
action arose from protected activity and that Justin Mendoza could not
prevail on the merits because the alleged conduct of the cross-defendants was
privileged under Civil Code section 47, subdivision (b).
The trial court denied the motion in its entirety. It found that the three
causes of action were not based on protected activity, and thus did not reach
the question of whether Justin Mendoza had shown a probability of
prevailing on the merits of these claims.
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IRA Resources timely appealed.
DISCUSSION
I. The Anti-SLAPP Statute
Section 425.16 provides for the early dismissal of certain unmeritorious
claims that thwart the exercise of a defendant’s constitutional rights of
petition or free speech. (Navellier v. Sletten (2002) 29 Cal.4th 82, 85.) Under
this statute, a defendant may file a special motion to strike claims “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 . . . unless the court determines
that the plaintiff has established that there is a probability that the plaintiff
will prevail on the claim.” (§ 425.16, subd. (b)(1).)
Resolution of a special motion to strike requires the court to engage in
the now familiar two-step process. “First, the court decides whether the
defendant has made a threshold showing that the challenged cause of action
is one arising from protected activity.” (Equilon Enterprises v. Consumer
Cause, Inc. (2002) 29 Cal.4th 53, 67 (Equilon).) Protected activity is defined
by section 425.16, subdivision (e) to include: “(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, (3) any written or oral statement
or writing made in a place open to the public or a public forum in connection
with an issue of public interest, or (4) any other conduct in furtherance of the
exercise of the constitutional right of petition or the constitutional right of
free speech in connection with a public issue or an issue of public interest.”
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The moving defendant must “demonstrate that the conduct by which
the plaintiff claims to have been injured falls within one of those four
categories” and “bears the burden of identifying all allegations of protected
activity, and the claims for relief supported by them.” (Weinberg v. Feisel
(2003) 110 Cal.App.4th 1122, 1130; Baral v. Schnitt (2016) 1 Cal.5th 376, 396
(Baral).) When the plaintiff asserts a “mixed” cause of action, i.e. one “based
on allegations of both protected and unprotected activity,” the court must
look at the protected activity and disregard the unprotected activity. (Baral,
supra, 1 Cal.5th at p. 396.) If the court determines that relief is sought based
on allegations arising from protected activity, the second step is reached.
(Ibid.)
On the second step, “the burden shifts to the plaintiff to demonstrate
the merit of the claim by establishing a probability of success.” (Baral, supra,
1 Cal.5th at p. 384.) This determination follows a “ ‘summary-judgment-like
procedure.’ ” (Ibid.) The inquiry is “limited to whether the plaintiff has
stated a legally sufficient claim and made a prima facie factual showing
sufficient to sustain a favorable judgment.” (Id. at pp. 384–385.)
We review the trial court’s ruling on an anti-SLAPP motion de novo
and begin with the first step: protected activity. (Kajima Engineering &
Construction, Inc. v. City of Los Angeles (2002) 95 Cal.App.4th 921, 929.)
II. Protected Activity
IRA Resources argues that the wrongful foreclosure, IIED, and NIED
causes of action arise from protected activity because they are based on the
filing of this action to reform the deed of trust and add Justin Mendoza’s
signature.
“ ‘ “The anti-SLAPP statute’s definitional focus is not the form of the
plaintiff's cause of action but, rather, the defendant’s activity that gives rise
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to his or her asserted liability—and whether that activity constitutes
protected speech or petitioning.” ’ ” (Feldman v. 1100 Park Lane
Associates (2008) 160 Cal.App.4th 1467, 1478 (Feldman).) “We are mindful
that the lines drawn in these cases are fine ones. However, we are reminded
by our Supreme Court . . . that the ‘focus’ of the statute ‘is not the form of
plaintiff’s cause of action but, rather, the defendant’s activity that gives rise
to his or her asserted liability[.]’ ” (Id. at p. 1483.) In other words, we
disregard the label of a cause of action and instead examine its gravamen.
(Area 51 Productions, Inc. v. City of Alameda (2018) 20 Cal.App.5th 581, 594.)
“Assertions that are ‘merely incidental’ or ‘collateral’ are not subject to
section 425.16.” (Baral, supra, 1 Cal.5th at p. 394.) “Allegations of protected
activity that merely provide context, without supporting a claim for recovery,
cannot be stricken under the anti-SLAPP statute.” (Ibid.) With these
principles in mind, we turn to each of the challenged causes of action.
A. Wrongful Foreclosure Cause of Action
On wrongful foreclosure cause of action, Justin Mendoza alleges that
the cross-defendants foreclosed on his interest in the property without right,
constituting an illegal or fraudulent sale of his real property interest. He also
alleges that the cross-defendants “utilized legal process in this Court to
unlawfully and without notice” add his name to the note and deed of trust,
and “then completed their unlawful and unnoticed foreclosure sale against
[his] interest.” IRA Resources points to this allegation regarding the “legal
process” to argue that the claim arises from protected activity.
We do not find the argument persuasive. Non-judicial foreclosure is
not protected activity under the anti-SLAPP statute. (Garretson v. Post
(2007) 156 Cal.App.4th 1508, 1520 (Garretson) [explaining that non-judicial
foreclosure is a private, commercial transaction that does not involve
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legislative, executive, or judicial proceedings]; Crossroads Investors, L.P. v.
Federal National Mortgage Assn. (2017) 13 Cal.App.5th 757, 778 (Crossroads)
[“The anti-SLAPP statute does not apply to claims of wrongful foreclosure
arising from actions taken in a nonjudicial foreclosure proceeding”].) Justin
Mendoza’s allegations make clear that the conduct giving rise to cross-
defendants’ liability on this cause of action is the wrongful foreclosure itself.
That is the gravamen of the claim. The additional allegation regarding Felix
The’s filing of this action to reform the deed of trust merely explains the
context leading up to the wrongful foreclosure. (Baral, supra, 1 Cal.5th at p.
394.) We conclude that IRA Resources has not satisfied its threshold showing
that the wrongful foreclosure cause of action arises from protected activity.
B. IIED and NIED Causes of Action
On the IIED and NIED causes of action, Justin Mendoza alleges that
cross-defendants committed three wrongful actions: (1) causing his name to
be interlineated on the note and deed of trust; (2) defaulting on the note; and
(3) foreclosing on his residence. IRA Resources points to this first action to
argue that the claims arise from protected activity.
We agree that these are “mixed” causes of action, based on allegations
of both protected (the filing of this action to reform the deed of trust) and
unprotected (default and foreclosure) activity. (Baral, supra, 1 Cal.5th at p.
396.) “ ‘[S]tatements, writings and pleadings in connection with 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.’ ” (Feldman, supra, 160 Cal.App.4th at p. 1478.) Felix The’s filing of
this action is protected activity under the anti-SLAPP statute.
Justin Mendoza’s reliance on Garretson and Crossroads does not alter
our conclusion. In Garretson, the defendant initiated non-judicial foreclosure
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proceedings through notices of default and trustee’s sale. (Garretson, supra,
156 Cal.App.4th at p. 1513.) The plaintiff then filed a complaint that
included a cause of action for wrongful foreclosure, and the defendant moved
to strike the cause of action. (Id. at p. 1514.) Garretson concluded that the
motion to strike was properly denied, as non-judicial foreclosure proceedings
are not protected activity under the anti-SLAPP statute. (Id. at p. 1520.) It
explained that a non-judicial foreclosure is statutorily based, and does not
involve legislative, executive, or judicial proceedings. (Ibid.) Here, unlike
Garretson, the allegedly wrongful conduct is based on a judicial proceeding:
the filing of this action to reform the deed of trust and add Justin Mendoza’s
signature.
In Crossroads, the defendant initiated non-judicial foreclosure
proceedings and the plaintiff filed for bankruptcy. (Crossroads, supra, 13
Cal.App.5th at p. 765.) The plaintiff then sued the defendant, alleging it did
not respond to various requests made by the plaintiff in the bankruptcy
proceedings, and the defendant moved to strike. (Ibid.) Crossroads
acknowledged the general rule that the anti-SLAPP statute does not apply to
claims arising from non-judicial foreclosure proceedings. It explained,
however, that plaintiff’s claims arose from the defendant’s protected activity
in the bankruptcy action, and that the context of the bankruptcy action
“makes all the difference.” (Id. at p. 778.)
So too here. This action to reform the deed of trust is a judicial
proceeding, and Felix The’s filing of the complaint is protected activity under
the anti-SLAPP statute. We conclude that IRA Resources satisfied its
threshold showing as to Justin Mendoza’s IIED and NIED claims, to the
extent they are based on the cross-defendants’ efforts to reform the deed of
trust. We thus proceed to the second step on these claims.
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III. Likelihood of Prevailing
On this second step, we must determine whether Justin Mendoza
established a likelihood of prevailing on the IIED and NIED claims based on
the cross-defendants’ protected activity. (Baral, supra, Cal.5th at p. 396.)
(Schwarzburd v. Kensington Police Protection & Community Services Dist.
Bd. (2014) 225 Cal.App.4th 1345, 1355 [we have the discretion to proceed to a
second-step determination though the trial court did not reach this question.)
IRA Resources argue that he fails this second step because, to the extent the
IIED and NIED claims are based on the filing of this action to reform the
deed of trust, the claims are barred by the litigation privilege under Civil
Code section 47, subdivision (b). We agree.
“The litigation privilege is ‘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.’ ” (Feldman, supra, 160
Cal.App.4th at p. 1485.) Civil Code section 47, subdivision (b), provides that
a “ ‘ “publication or broadcast” ’ ” made as part of a “ ‘ “judicial proceeding” ’ ”
is privileged. This privilege is absolute in nature, and applies to “ ‘ “any
communication (1) made in judicial or quasi-judicial proceedings; (2) by
litigants or other participants authorized by law; (3) to achieve the objects of
the litigation; and (4) that have some connection or logical relation to the
action.” ’ ” (Feldman, supra, 160 Cal.App.4th at p. 1485.) “ ‘The privilege “is
not limited to statements made during a trial or other proceedings, but may
extend to steps taken prior thereto, or afterwards.” ’ ” (Ibid., italics omitted.)
Instead of the absolute litigation privilege under Civil Code 47,
subdivision (b), Justin Mendoza argues that the qualified common interest
privilege under subdivision (c) should be applied here. To support this
argument, he relies on the proposition that the qualified common interest
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privilege applies to non-judicial foreclosure. (Kachlon v. Markowitz (2008)
168 Cal.App.4th 316, 339.) We reject this argument because, as explained
above, Felix The’s filing of this action to reform the deed of trust initiated a
judicial proceeding. The litigation privilege under Civil Code section 47,
subdivision (b) immunizes a defendant from tort liability for claims based on
privileged communications, including claims for IIED and NIED. (Feldman,
supra, 160 Cal.App.4th at p. 1486; Kemps v. Beshwate (2009) 180 Cal.App.4th
1012, 1019.) Accordingly, Justin Mendoza is barred from asserting such
claims based on the filing of this action.
In sum, we conclude that Justin Mendoza has failed to establish a
likelihood of prevailing on the IIED and NIED claims based on the cross-
defendants’ protected activity.
DISPOSITION
The trial court’s order on the motion to strike is reversed in part, and
hereby modified to grant the special motion to strike as follows: (1) in
paragraph 67, the phrase “Cross-complainant’s name to be interlineated on a
promissory note and deed of trust and Cross-defendants’ subsequent” is
stricken; (2) in paragraph 74, the phrase “Cross-complainant’s name to be
interlineated on a promissory note and deed of trust and Cross-defendants’
subsequent” is stricken; and (3) paragraph 80 is stricken in its entirety. The
order is otherwise affirmed.
Each party shall bear its own costs on appeal. (Cal. Rules of Court,
rule 8.278(a)(3).)
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_________________________
Petrou, J.
WE CONCUR:
_________________________
Fujisaki, Acting P.J.
_________________________
Jackson, J.
IRA Resources v. Mendoza/ A156719
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