Filed 3/21/24 Ultimate Action v. Pacific City Bank CA2/4

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication 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

SECOND APPELLATE DISTRICT

DIVISION FOUR

ULTIMATE ACTION, LLC,

Plaintiff and Appellant,

v.

PACIFIC CITY BANK,

Defendant and Respondent.

 B323803

 (Los Angeles County

 Super. Ct. No. 21STCV26756)

APPEAL from an order of the Superior Court of Los Angeles County, 

Gregory Keosian, Judge. Order affirmed; motion for sanctions denied.

Wolf, Rifkin, Shapiro, Schulman & Rabkin, Eric Levinrad and Johnny 

White for Plaintiff and Appellant.

Meylan Davitt Jain Arevian & Kim, Vincent J. Davitt and Anita Jain 

for Defendant and Respondent.
2

INTRODUCTION

Here we hold that a cross-complaint filed in response to the plaintiff’s 

complaint attacking the validity of a loan agreement does not fall within the 

provisions of a strategic lawsuit against public participation (SLAPP). (Code 

Civ. Proc., § 425.16.)1

The majority shareholder in a company filed an individual and 

derivative action attacking the validity of a loan agreement between the

company and a bank. The bank responded by filing a cross-complaint against 

the majority shareholder and the company, seeking a judicial determination 

of the validity of the agreement, or, alternatively, an equitable lien against 

the company’s real property. The shareholder filed a special motion to strike 

under our anti-SLAPP statute, arguing the bank’s causes of action all arose 

from the shareholder’s protected activity of filing the derivative action. The 

shareholder now appeals the trial court’s denial of its motion to strike the 

bank’s cross-complaint. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

A. Ultimate Action’s Pleadings

Plaintiff and appellant Ultimate Action, LLC (Ultimate Action) owns a 

60 percent interest in 357 South Broadway, LLC (the Company). On July 21, 

2021, Ultimate Action filed this action, individually and derivatively, on 

behalf of the Company, naming respondent Pacific City Bank (the Bank) as a 

defendant. Ultimate Action subsequently filed its operative first amended 

complaint. In the first cause of action, Ultimate Action seeks to rescind a 

2017 loan agreement between the Company and the Bank. Ultimate Action 

1 All further statutory references are to the Code of Civil Procedure 

unless otherwise stated
3

alleges the Company’s minority shareholder orchestrated the loan agreement 

without first obtaining the necessary shareholder approval to bind the

Company to the loan agreement. The complaint also asserts causes of action 

for cancellation, avoidance of fraudulent transfer, and declaratory relief, all 

stemming from the 2017 loan agreement. In its cause of action for 

declaratory relief, Ultimate Action alleges, “A controversy has arisen between 

Plaintiff and the Company, on the one hand, and Pacific City Bank, on the 

other hand, as to whether a valid contract exists between Pacific City Bank 

and the Company, and as to whether Pacific City Bank has a valid security 

interest against the Company’s real estate.”2

B. Pacific City Bank’s Cross-Complaint

On March 30, 2022, the Bank filed a cross-complaint against Ultimate 

Action and the Company. The cross-complaint alleges the Bank extended a 

loan to the Company secured by a deed of trust encumbering real property 

owned by the Company. The Bank claims the Company used the loan to pay 

off then-existing liens on the real property owned by the Company. The 

cross-complaint states that in July 2021, the Bank “learned of Ultimate 

Action’s challenge to the validity and enforceability” of the loan and deed of 

trust. 

The cross-complaint alleges three causes of action: (1) quiet title, 

(2) declaratory relief, and (3) equitable lien by subrogation. In its cause of 

action to quiet title, the Bank alleges that Ultimate Action, “purporting to act 

derivatively in the Company’s shoes,” challenges the validity and 

enforceability of the loan and deed of trust. The Bank seeks “to establish its 

2 The complaint also asserts additional causes of action against other 

parties which are not germane to Ultimate Action’s appeal.
4

first position lien interest against the adverse claims of Cross-Defendants as 

of July 27, 2017.”

In its cause of action for declaratory relief, the Bank states, “An actual 

controversy has arisen and exists between the Bank and Cross-Defendants, 

and each of them, with respect to the rights, obligations and duties of the 

parties.” The Bank contends its deed of trust is valid and enforceable, and 

Ultimate Action and the Company both dispute the validity and 

enforceability of the deed of trust. 

The Bank’s cause of action for equitable lien by subrogation is pled in 

the alternative to the other causes of action. The Bank states that in the 

event its deed of trust is found to be invalid or unenforceable, it seeks an 

equitable lien against the Company’s real property “to secure payment to the 

Bank of any and all amounts paid with the Bank’s loan proceeds which were 

used to satisfy the Company’s preexisting debt.” 

In its prayer for relief, the Bank seeks: (1) a quiet title order stating the 

Bank’s deed of trust is a first position lien; (2) a judicial declaration that its 

deed of trust is valid and enforceable; or, alternatively, (3) an order that the 

Bank is entitled to an equitable lien encumbering the property. The Bank 

also seeks to recover its costs of suit, attorneys’ fees, and pre- and postjudgment interest. 

C. Ultimate Action’s Anti-SLAPP Motion

On June 1, 2022, Ultimate Action filed an anti-SLAPP motion to strike 

the Bank’s cross-complaint under section 425.16. Ultimate Action sought to

strike the Bank’s cross-complaint in its entirety as against Ultimate Action. 

Ultimate Action argued all of the Bank’s causes of action arose from Ultimate 

Action’s decision to file the instant action challenging the validity of the 
5

Bank’s loan agreement with the Company. Ultimate Action claimed its filing 

of the lawsuit is protected activity under section 425.16, subdivision (e). 

Ultimate Action further argued the Bank could not establish a reasonable 

probability of prevailing on the merits because Ultimate Action did not have 

any direct ownership interest in the Company’s real property and thus was 

“not a direct participant in the controversy described by the cross-complaint.” 

The Bank opposed Ultimate Action’s motion, arguing that its causes of 

action did not arise from any protected activity undertaken by Ultimate 

Action. The Bank also argued it could establish a probability of success on 

the merits of its claims. 

On August 11, 2022, the trial court issued its ruling denying Ultimate 

Action’s motion. The trial court found Ultimate Action failed to carry its 

burden of establishing that the Bank’s causes of action arose from protected 

activity under section 425.16. The trial court noted that to determine 

whether a cause of action “arises from” protected activity, a court must

disregard the labeling of the claim and instead examine the principal thrust 

or gravamen of the cause of action to determine if protected activity provides 

the foundation for the claim. 

Relying on City of Cotati v. Cashman (2002) 29 Cal.4th 69 (Cotati) and 

Copenbarger v. Morris Cerullo World Evangelism (2013) 215 Cal.App.4th 

1237, the trial court distinguished between claims that “arise from” protected 

activity and those that are merely “triggered by” protected activity. The 

court determined “an anti-SLAPP motion will not lie merely for a lawsuit 

triggered by protected activity, where the activity itself is only evidence of the 

existence of an underlying controversy.” Turning to the allegations of the 

Bank’s cross-complaint, the trial court noted the cross-complaint made 

“incidental mention” of Ultimate Action’s derivative claims. The court 
6

nonetheless held that “While [Ultimate Action] has challenged the validity of 

that interest in its complaint, [the Bank]’s claims are not based on any 

alleged impropriety in [Ultimate Action]’s lawsuit, but merely seeks an 

affirmative adjudication of that interest’s validity, much as was the case with 

the municipal ordinance in City of Cotati.” The trial court found Ultimate 

Action failed to carry its burden to demonstrate the Bank’s claims arose from 

protected activity and denied the motion without reaching the question of 

whether the Bank established a probability of success on the merits. 

D. Appeal

Ultimate Action timely appealed the denial of its motion. On appeal, 

Ultimate Action contends the trial court erred in finding the Bank’s causes of 

action did not arise from protected activity.

DISCUSSION

A. Anti-SLAPP Procedure

The “anti-SLAPP statute is designed to protect defendants from 

meritless lawsuits that might chill the exercise of their rights to speak and 

petition on matters of public concern.” (Wilson v. Cable News Network, Inc.

(2019) 7 Cal.5th 871, 883–884 (Wilson).) A “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 shall be subject to a special 

motion to strike, 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).) The anti-SLAPP statute itself provides that 

its protections “shall be construed broadly.” (§ 425.16, subd. (a).)
7

In evaluating an anti-SLAPP motion to strike, courts conduct a twostep analysis. First, the court decides whether a defendant has met its 

“burden of establishing that the challenged allegations or claims ‘aris[e] from’ 

protected activity in which the defendant has engaged.” (Park v. Board of 

Trustees of California State University (2017) 2 Cal.5th 1057, 1061 (Park).) 

Second, if a defendant meets its burden on the threshold showing, the court 

decides if the plaintiff “has established that there is a probability that the 

plaintiff will prevail on the claim.” (§ 425.16, subd. (b)(1).) 

We review the trial court’s order denying the anti-SLAPP motion de 

novo, applying the same two-step analysis. (Oasis West Realty, LLC v.

Goldman (2011) 51 Cal.4th 811, 820.) We independently review whether a 

moving party has made a threshold showing that the challenged cause of 

action arises from protected activity. (Grewal v. Jammu (2011) 191 

Cal.App.4th 977, 988.)

B. Prong One

“At the first step of the analysis, the defendant must make two related 

showings. Comparing its statements and conduct against the statute, it must 

demonstrate activity qualifying for protection. (See § 425.16, subd. (e).) And 

comparing that protected activity against the complaint, it must also 

demonstrate that the activity supplies one or more elements of a plaintiff’s 

claims.” (Wilson, supra, 7 Cal.5th at p. 887.) “At this stage, the question is 

only whether a defendant has made out a prima facie case that activity 

underlying a plaintiff’s claims is statutorily protected.” (Id. at p. 888.) 
8

1. The Gravamen Test

Ultimate Action argues the trial court erred in applying the “gravamen 

test” to determine whether the Bank’s causes of action arise from protected 

activity. Ultimate Action contends the California Supreme Court’s opinions 

in Baral v. Schnitt (2016) 1 Cal.5th 376 (Baral) and Bonni v. St. Joseph 

Health System (2021) 11 Cal.5th 995 (Bonni) rendered the gravamen test 

obsolete and improper. We disagree.

In Baral, our Supreme Court resolved a conflict among California 

Courts of Appeal regarding the application of anti-SLAPP motions targeting 

“mixed” causes of action that included allegations of protected and nonprotected activities. (Baral, supra, 1 Cal.5th at pp. 381–382, 384–396.) The 

Baral court did not address the “principal thrust” or “gravamen” analysis and 

instead considered whether a “cause of action” in the anti-SLAPP context 

should be defined in terms of the primary right theory. (Id. at p. 394.) The 

court rejected this argument, finding “the primary right theory is notoriously 

uncertain in application. . . . The theory is ill-suited to the anti-SLAPP 

context, where the Legislature authorized a special motion to strike only 

claims that arise from protected speech or petitioning activity.” (Id. at p. 

395.) Instead, the Baral court determined the Legislature “had in mind 

allegations of protected activity that are asserted as grounds for relief. The 

targeted claim must amount to a ‘cause of action’ in the sense that it is 

alleged to justify a remedy.” (Ibid.) The court thus concluded that an antiSLAPP motion, like a conventional motion to strike, may be used to attack

particular alleged acts giving rise to a claim for relief within a cause of action. 

(Id. at p. 393.) 

In Bonni, the defendant moved to strike the plaintiff’s “retaliation 

cause of action in its entirety.” (Bonni, supra, 11 Cal.5th at p. 1009.) The 
9

plaintiff argued that because the defendant’s motion was “aimed at the entire 

cause of action,” the court did not have to employ the Baral approach and 

could instead simply determine “whether the gravamen of the entire cause of 

action was based on protected or unprotected activity.” (Id. at p. 1011.) The 

Bonni court rejected this argument, noting the cause of action for retaliation 

included “a nonexhaustive list of at least 19 distinct acts or courses of conduct 

allegedly undertaken in retaliation.” (Id. at p. 1009.) The plaintiff’s

retaliation claim was thus a “mixed cause of action” which was governed by 

Baral. (Id. at pp. 1010–1011.)

In Bonni, our California Supreme Court rejected the same 

interpretation of Baral put forth by Ultimate Action here. The Bonni court 

expressly acknowledged the so-called “gravamen test” remained proper in 

certain contexts even after Baral. “To be clear, we do not suggest that every

court that has continued to label its approach a gravamen test even after

Baral has erred. Some courts have invoked the term not in the way Bonni

suggests—to determine the essence or gist of a so-called mixed cause of

action—but instead to determine whether particular acts alleged within the

cause of action supply the elements of a claim [citation] or instead are

incidental background [citations]. This approach is consistent with Baral.” 

(Id. at p. 1012.) Here, the trial court used a gravamen test to determine that 

any reference to Ultimate Action’s derivative action in the Bank’s crosscomplaint was merely “incidental” and did not supply the elements of the 

Bank’s claims. 

In its reply brief on appeal, Ultimate Action states, without analysis or 

support, that all of the Bank’s causes of action are mixed causes of action 

subject to Baral. This assertion was not raised below and was raised by 

Ultimate Action for the first time in its reply on appeal. (In re Marriage of 
10

Nassimi (2016) 3 Cal.App.5th 667, 695 [“‘“theories not raised in the trial 

court cannot be asserted for the first time on appeal”’”]; Bocanegra v. 

Jakubowski (2015) 241 Cal.App.4th 848, 857 [“‘“a party is not permitted to 

change its position on appeal and raise new issues not presented in the trial 

court”’”]; American Drug Stores, Inc. v. Stroh (1992) 10 Cal.App.4th 1446, 

1453 [“Points raised for the first time in a reply brief will ordinarily not be 

considered, because such consideration would deprive the respondent of an 

opportunity to counter the argument”].) 

Even if this argument were properly before us, it is contradicted by 

Ultimate Action’s arguments below and its opening brief on appeal. Ultimate 

Action has repeatedly argued that its filing of the instant action was the sole 

basis for the Bank’s claims against it. For example, in its motion below, 

Ultimate Action expressly claimed that “The claims pled by [the Bank] arise 

exclusively from [Ultimate Action]’s protected act of filing litigation on behalf 

of the Company, thereby satisfying the first prong of the anti-SLAPP 

statute.” In its opening brief on appeal, Ultimate Action claims it was named 

as a party to the Bank’s cross-complaint “solely because [it] filed a derivative 

suit” on behalf of the Company. Ultimate Action also argues that it “finds 

itself the target of a lawsuit for the sole reason that it sued respondent, which 

makes the case a quintessential SLAPP suit.”

Ultimate Action does not point to any non-protected activity that forms 

the basis of the Bank’s causes of action. The Bank’s causes of action against 

Ultimate Action are not mixed causes of action subject to the analysis 

outlined in Baral or Bonni. The trial court thus did not err in looking to the 

gravamen of the Bank’s claims to determine whether Ultimate Action’s filing 

of this action supplied the elements of any of the Bank’s claims.
11

2. Arising from Protected Activity

“A claim arises from protected activity when that activity underlies or 

forms the basis for the claim.” (Park, supra, 2 Cal.5th at p. 1062.) “The 

defendant’s first-step burden is to identify the activity each challenged claim 

rests on and demonstrate that that activity is protected by the anti-SLAPP 

statute. A ‘claim may be struck only if the speech or petitioning activity itself

is the wrong complained of, and not just evidence of liability or a step leading 

to some different act for which liability is asserted.’” (Wilson, supra, 7 

Cal.5th at p. 884; accord, Park, at p. 1060.) “‘[T]he mere fact that an action 

[or claim] was filed after protected activity took place does not mean the 

action [or claim] arose from that activity for the purposes of the anti-SLAPP 

statute.’” (Park, at p. 1063; see Rand Resources, LLC v. City of Carson (2019) 

6 Cal.5th 610, 621 [“a claim does not ‘arise from’ protected activity simply 

because it was filed after, or because of, protected activity, or when protected 

activity merely provides evidentiary support or context for the claim”].) “To 

determine whether a claim arises from protected activity, courts must 

‘consider the elements of the challenged claim and what actions by the 

defendant supply those elements and consequently form the basis for 

liability.’” (Wilson, at p. 884; accord, Park, at p. 1063.)

“As courts applying the anti-SLAPP statute have recognized, the 

‘arising from’ requirement is not always easily met. [Citations.] The only 

means specified in section 425.16 by which a moving defendant can satisfy 

the requirement is to demonstrate that the defendant’s conduct by which 

plaintiff claims to have been injured falls within one of the four categories 

described in subdivision (e).” (Equilon Enterprises v. Consumer Cause, Inc.

(2002) 29 Cal.4th 53, 66.) As defined by statute, these four categories of 

protected activity are: “(1) any written or oral statement or writing made 
12

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.” (§ 425.16, subd. 

(e)(1)–(4).)

To carry its burden on the first prong, Ultimate Action alleges the 

Bank’s claims against it all arise from protected activity in the form of 

Ultimate Action’s filing of the instant lawsuit. We agree with the trial court 

that Cotati is instructive here. In that case, a city adopted a mobilehome 

park rent stabilization ordinance. (Cotati, supra, 29 Cal.4th at p. 72.) 

Owners of mobilehome parks sued the city in federal court, claiming the 

ordinance was invalid and unconstitutional. (Ibid.) The city then sued the 

owners in state court, asserting a cause of action for declaratory relief based 

on the dispute between the city and the owners over the validity and 

constitutionality of the ordinance. (Ibid.) The owners filed an anti-SLAPP 

motion to strike the city’s state court complaint, arguing it arose from their 

filing of the federal action. (Id. at pp. 72–73.) The trial court granted the 

motion, finding the city’s state court action arose from the owners’ filing of 

the federal lawsuit. (Id. at p. 73.) 

The Court of Appeal reversed the trial court, and the California 

Supreme Court affirmed the decision of the Court of Appeal. Our Supreme

Court noted, “the mere fact an action was filed after protected activity took 
13

place does not mean it arose from that activity.” (Cotati, supra, 29 Cal.4th at 

pp. 76–77.) “The anti-SLAPP statute cannot be read to mean that ‘any claim 

asserted in an action which arguably was filed in retaliation for the exercise 

of speech or petition rights falls under section 425.16, whether or not the 

claim is based on conduct in exercise of those rights.’ [Citations.]” (Id. at p. 

77.) Instead, “the statutory phrase ‘cause of action . . . arising from’ 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.” 

(Id. at p. 78.) 

Turning to the facts before it, our Supreme Court noted it was 

undisputed that the owners’ federal litigation “informed City of the existence 

of an actual controversy justifying declaratory relief.” (Cotati, supra, 29 

Cal.4th at p. 79.) Nonetheless, the Court held that the city’s state court 

action did not arise from the federal litigation. “In this case, as the Court of 

Appeal stated, a dispute exists between the parties over the constitutionality 

of Cotati Ordinance No. 680. And just as Owners’ lawsuit itself was not the 

actual controversy underlying Owners’ request for declaratory relief in 

federal court, neither was that lawsuit the actual controversy underlying 

City’s state court request for declaratory relief. Rather, the actual 

controversy giving rise to both actions—the fundamental basis of each 

request for declaratory relief—was the same underlying controversy 

respecting City’s ordinance. City’s cause of action therefore was not one 

arising from Owners’ federal suit. Accordingly, City’s action was not subject 

to a special motion to strike.” (Id. at p. 80, fn. omitted.)

We are presented with similar facts here. Ultimate Action filed an 

individual and derivative complaint seeking declaratory relief in the form of a 

judicial declaration that the loan agreement between the Bank and the 
14

Company is invalid. Ultimate Action’s own pleading alleges a “controversy 

has arisen between [Ultimate Action] and the Company, on the one hand, 

and [the Bank], on the other hand, as to whether a valid contract exists 

between [the Bank] and the Company.” In the same way that the owners in

Cotati raised their dispute regarding the constitutionality of the ordinance in 

a federal action, Ultimate Action raised a dispute regarding the enforceability 

of the loan agreement by filing this action. The Bank responded by filing a 

cross-complaint aimed at this same dispute between Ultimate Action, the 

Company, and the Bank regarding the validity of the loan. As in Cotati, it is 

the underlying dispute itself that gives rise to the Bank’s claims, not the 

filing of this lawsuit. 

Ultimate Action’s attempts to distinguish Cotati are unpersuasive. 

Ultimate Action inaccurately claims that Cotati applies “the inherently 

subjective ‘gravamen’ test that Baral and Bonni discredited.” The court in 

Cotati did not itself apply a gravamen test but rather merely stated that the 

trial and appellate courts both recognized the subject matter of the city’s suit 

was identical to that of the owners’ suit. “City has consistently taken the 

position that the actual controversy with respect to which it seeks declaratory 

relief is the same as the controversy with respect to which Owners earlier 

sought declaratory relief in federal court . . . . And while the courts below 

have drawn different conclusions from the fact, both have recognized that the 

gravamen of City’s state court action is the same as that of Owners’ federal 

court action.” (Cotati, supra, 29 Cal.4th at p. 79.) We also note Cotati did not 

involve a mixed cause of action; rather, it concerned a cause of action for 

declaratory relief that was alleged to arise solely from protected activity. As 

set forth above, Bonni expressly recognized that courts may properly examine 

the “gravamen” of a non-mixed cause of action in determining whether 
15

protected activity supplies the elements of a claim or is merely incidental to 

it. (Bonni, supra, 11 Cal.5th at p. 1012.) In short, the holdings of Baral and 

Bonni did not discredit, disapprove, or otherwise invalidate the holding or 

reasoning of Cotati.

Ultimate Action also argues Cotati is inapplicable because, in that case,

the owners’ federal lawsuit only informed the city of the existence of a 

controversy justifying declaratory relief and did not itself constitute that 

controversy. The same is true here. The Bank’s cross-complaint states that 

it first learned of the existence of this dispute in July 2021, which is when 

Ultimate Action filed this suit. The cross-complaint seeks to adjudicate the 

same underlying dispute regarding the validity of the loan and not the act of 

filing this lawsuit. As in Cotati, Ultimate Action’s filing of this action is 

merely evidence of the existence of the dispute between the parties.

Other courts have applied the reasoning of Cotati to analogous facts 

and reached the same result. For example, in Gotterba v. Travolta (2014) 228 

Cal.App.4th 35 (Gotterba) a dispute arose between an employer and a former 

employee over a termination agreement which included a confidentiality 

provision. (Id. at pp. 38–39.) When the plaintiff began making statements to 

the press, the defendant’s counsel sent the plaintiff a letter alleging the 

statements breached the termination agreement and threatening legal 

action. (Id. at p. 38.) The plaintiff filed an action for declaratory relief 

seeking a judicial determination of his rights and duties under the agreement 

because the defendant threatened to take legal action against him based 

upon alleged violations of the agreement. (Id. at p. 39.) The defendant filed 

an anti-SLAPP motion to strike, arguing the plaintiff’s action arose from the 

defendant’s protected activity of sending a prelitigation demand letter. (Id. 
16

at pp. 39–40.) The trial court denied the motion and the Court of Appeal 

affirmed. (Id. at p. 40.)

The Court of Appeal determined “that a communication preparatory to 

or in anticipation of litigation” was protected activity under section 425.16, 

subdivision (e)(2). (Gotterba, supra, 228 Cal.App.4th at p. 41.) However, the 

court concluded that the plaintiff’s cause of action for declaratory relief did 

not arise from that protected activity. “Although the prelitigation letters may 

have triggered Gotterba’s complaint and may be evidence in support of the 

complaint, they are not the basis of the complaint.” (Id. at p. 42.) The court 

determined that protected activity did not supply the elements of the 

plaintiff’s claim because “If the threats of litigation were removed from Atlo’s 

demand letters, the same dispute would exist regarding the terms of the 

termination agreement.” (Ibid.) “The complaint seeks declaratory relief 

regarding the validity of the asserted termination agreements and not the 

propriety of [the defendants’] demand letters. [¶] . . . That ‘protected 

activity may lurk in the background—and may explain why the rift between 

the parties arose in the first place—does not transform a [contract] dispute 

into a SLAPP suit.’ [Citation.]” (Id. at pp. 41–42.) The court also noted the 

plaintiff’s lawsuit did not seek to curtail the defendant’s right to send 

demand letters. (Ibid.)

The court in City of Alhambra v. D’Ausilio (2011) 193 Cal.App.4th 1301

(City of Alhambra) reached the same result. In that case, a former employee

of the City of Alhambra sued the city for civil rights violations and eventually 

settled with the city. (Id. at pp. 1303–1304.) As part of the settlement, he 

agreed that he would not represent or advocate for any city employees, 

including members of the Alhambra Firefighter’s Association (AFA). (Ibid.) 

A year after the settlement was signed, the city became aware that the 
17

former employee participated in an AFA meeting and advocated that the AFA

participate in a demonstration against the city. (Ibid.) He also personally 

took part in a protest while wearing an AFA shirt. (Ibid.)

In response, the city filed a lawsuit against him, claiming his actions 

breached the settlement agreement. (City of Alhambra, supra, 193 

Cal.App.4th at p. 1304.) The city’s complaint included a cause of action for 

declaratory relief, seeking a judicial determination of the defendant’s

obligations under the settlement agreement. (Id. at p. 1305.) The defendant 

filed an anti-SLAPP motion to strike the cause of action for declaratory relief. 

The trial court denied the motion, finding the cause of action for declaratory 

relief did not arise from the defendant’s protected activity. (Ibid.) The Court 

of Appeal affirmed. In doing so, the court recognized the city’s lawsuit was 

triggered by the defendant’s protected petitioning activities. (Id. at p. 1307.) 

The court nonetheless concluded that the city’s “declaratory relief claim 

arises from a contract dispute; it does not arise from actions taken by 

appellant in furtherance of his constitutional rights.” (Id. at p. 1309.)

The same result follows here. While it is undisputed that the Bank’s 

cross-complaint was triggered by Ultimate Action’s filing of the instant 

lawsuit, that does not establish that the Bank’s claims are based on Ultimate 

Action’s petitioning activity. The Bank’s causes of action for quiet title and 

declaratory relief stem from a dispute between Ultimate Action and the Bank 

regarding the validity of the loan agreement between the Company and the 

Bank. That Ultimate Action chose to communicate this disagreement by 

filing a lawsuit does not mean the Bank’s claims are based on protected 

activity. It is the existence of the dispute itself that forms the basis of the 

Bank’s claims, not the forum or vehicle by which Ultimate Action 

communicated that dispute to the Bank. If Ultimate Action simply called the 
18

Bank and informed it of this dispute by phone, there would be no question 

that section 425.16 would not apply to the Bank’s claims. Ultimate Action’s 

filing of the instant lawsuit is thus evidence in support of the Bank’s claims 

for quiet title and declaratory relief, but it is not the basis of those claims.

Ultimate Action has also made no showing that the filing of this action 

supplies one or more elements of the Bank’s third cause of action for 

equitable lien by subrogation. The doctrine of equitable subrogation “‘is 

broad enough to include every instance in which one person, not acting as a 

mere volunteer or intruder, pays a debt for which another is primarily liable, 

and which in equity and good conscience should have been discharged by the 

latter.’ [Citations.]” (Caito v. United California Bank (1978) 20 Cal.3d 694, 

704.) The Bank’s third cause of action for equitable lien by subrogation stems 

from the use of the Bank’s loan proceeds to satisfy the Company’s preexisting debts, not Ultimate Action’s filing of this action. This cause of action

does not seek damages against Ultimate Action or seek to impose liability 

against Ultimate Action based on the filing of this lawsuit. Instead, it seeks 

a lien against the Company’s real property to secure repayment of the loan 

proceeds, which the Company accepted and used for its benefit. The fact that 

this third cause of action was triggered by Ultimate Action’s filing of the 

lawsuit does not establish that the cause of action arises from protected 

activity. 

We find that Ultimate Action has failed to carry its burden to show the 

challenged causes of action arise from protected activity. As Ultimate Action 

has not satisfied the first prong of the anti-SLAPP analysis, we affirm the 

trial court’s order denying Ultimate Action’s anti-SLAPP motion to strike 

without reaching the question of whether the Bank has established a 

probability of success on the merits of its claims.
19

DISPOSITION

The order denying Ultimate Action’s anti-SLAPP motion to strike is 

affirmed. The Bank’s motion for sanctions is denied. The Bank is awarded 

its costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

ZUKIN, J.

We concur:

CURREY, P. J.

COLLINS, J.