Filed 3/13/13 Sgromo v. Batt CA2/4 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

PETER SGROMO et al.,

Cross-complainants and Appellants,

v.

WALTER BATT,

Cross-defendant and Respondent. B236555

(Los Angeles County Super. Ct. No. BC433012)

APPEAL from an order of the Superior Court of Los Angeles County, David L. Minning, Judge. Affirmed. Steven W. Kerekes and George Ch akmakis for Cross-complainants and Appellants. Anderson, McPharlin & Conners, David T. DiBiase, Thomas J. Kearney, and

Jason W. Suh for Cross-de fendant and Respondent.2 This appeal was taken from an order gran ting a special motion to strike a second amended cross-complaint under Code of Civi l Procedure section 425.16, the anti-SLAPP

statute. 1 We conclude that even if appella nts have shown there is a reasonable probability that they will prevail as to certain elements of their cross-claims, their failure to provide any evidence as to damage s is fatal to their appeal. (See Navellier v. Sletten (2003) 106 Cal.App.4th 763, 775-776 ( Navellier ).)

BACKGROUND

The dispute underlying the complaint began when defendant Peter Sgromo allegedly breached an oral partnership agre ement with plaintiff James Parr. Sgromo allegedly had promised Parr 50 percent of the profits from the sales of 3D toys and products (products) that were designed and de veloped by Parr. Sgro mo’s company, Wide Eyes Marketing, Ltd., marketed the products through its c onfidential license and royalty agreements with two toy companies, Learning Curve Brands, Inc. (Learning Curve) and Imperial Toys, LLC (Imperial). Claiming that Sgromo had wrongfully deni ed him his full share of the profits from the sales of the products, Pa rr filed a complaint against Sg romo, Wide Eyes Marketing, Learning Curve, and Imperial. 2 Parr’s complaint alleged nine causes of action for: (1) breach of oral and implied contract ag ainst Sgromo and Impe rial (first cause of

1 SLAPP is the acronym for Strategic Litig ation Against Public Participation. All further statutory references are to the Code of Civil Procedure. Section 425.16, subdivision (b)(1) provides : “A cause of action against a person arising from any act of that person in furthe rance of the person’s ri ght 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.”

2 Both Imperial and Learning Curve have been dismissed from the action. Parr entered a dismissal with prejudice as to Learning Curve on February 2, 2011, and a dismissal without prejudice as to Imperial on January 4, 2012.3 action); (2) breach of contract against L earning Curve (second cause of action); (3-5) common count against Sg romo (third cause of action), Learning Curve (fourth cause of action), and Imperial (fifth cause of action); (6) intentional interference with prospective economic advantage against Sgromo and Imperial (sixth cause of action); (7) negligent interference with business relations against Im perial (seventh cause of action); (8) unfair competition in violation of Business and Profe ssions Code section 17200 against Sgromo, Imperial, and Lear ning Curve (eighth ca use of action); and (9) breach of the implied covenant of good faith and fair dealing against Sgromo, Imperial, and Learning Curve (ninth cause of action). The dispute underlying the cross-comp laint began when Parr attached two confidential documents—Wide Eyes Marketi ng’s confidential roya lty agreement with Learning Curve (royalty agreement) and Wi de Eyes Marketing’s confidential draft license agreement with Imperial (license agreement)—as exhibits to his complaint. In the August 6, 2010 cross-compla int for breach of contract, intentional interference with prospective economic advantage, and intenti onal interference with contractual relations, cross-complainants Sgromo, L earning Curve, and Wide Eyes Marketing alleged that Parr

had breached the nondisclosure clause in Wide Eyes Marke ting’s royalty agreement with Learning Curve, which Parr had signed as a party. In the operative second amended cro ss-complaint, the two remaining crosscomplainants (Sgromo and Wide Eyes Mark eting) alleged claims for intentional interference with prospective economic a dvantage and intentional interference with

contractual relations 3 against Parr and his attorney, Walter Batt, who was added as a

cross-defendant. The second amended cr oss-complaint alleged that Parr and Batt “intentionally and wrongfully attached” the conf idential exhibits to th e complaint in order

3 Learning Curve was dism issed from the complaint on February 2, 2011, and its name does not appear on the second amended cross-complaint that was filed on May 9, 2011. The breach of contract cross-claim wa s eliminated by an order sustaining a demurrer without leave to amend.4 to alert Imperial to the difference in roya lty rates and disrupt its business relationship with Wide Eyes Marketing, which resulte d in economic damages of over $89,000. Batt filed a special motion to strike the second amended cross-complaint under the

anti-SLAPP statute. As to th e first prong of the anti-SLAP P analysis, Batt argued that because section 425.16 applies to statements made in connectio n with or in preparation of litigation (citing Kashian v. Harriman (2002) 98 Cal.App.4th 892, 908), the act of filing the complaint and exhibits clearly cons tituted a protected litigation activity (citing G.R. v. Intelligator (2010) 185 Cal.App.4th 606, 616). As to the second prong of the antiSLAPP analysis, Batt argued that Sgromo and Wide Eyes Marketing were incapable of prevailing on the merits of their cross-claims , because those claims were barred, as a matter of law, by the litigation privilege of Civil Code section 47: “A privileged publication or broadcast is one made: . . . [¶] (b) In any . . . (2 ) judicial proceeding

. . . .” On September 1, 2011, the trial court gr anted Batt’s special motion to strike on the grounds that: (1) the cross-co mplaint’s allegations arose fro m a litigation activity that is protected by the anti-SLAPP statute; and (2) Sgromo and Wide Eyes Marketing had

failed to demonstrate a likeliho od of prevailing on their cross- claims against Batt. This timely appeal followed.

DISCUSSION

I. Standard of Review In deciding a special motion to strike, the superior court must engage in a two-step process. “First, the court decides whether the [cross-]defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. The moving [cross-]defendant’s burden is to dem onstrate that the act or acts of which the [cross-complainant] comp lains were taken ‘in furtherance of the [cross-]defendant’s right of petition or free speech under the United Stat es or California Constitution in connection with a public issue,’ as defined in the stat ute. [Citation.] If the court finds such a5 showing has been made, it then determin es whether the [cross-complainant] has demonstrated a probability of prevailing on the [cross-]claim. Under section 425.16, subdivision (b)(2), the trial court in maki ng these determinations considers ‘the pleadings, and supporting and opposing affidavits statin g the facts upon which the liability or defense is based.’” ( Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) We review the superior co urt’s ruling independently under the de novo standard of review. ( Kajima Engineeri ng & Construction , Inc. v. City of Los Angeles (2002) 95 Cal.App.4th 921, 929.) In this case, Sgro mo and Wide Eyes Marketing conc ede that their cross-complaint targets the type of petitioning activity that is protected by the anti-SLAPP statute, but argue they are likely to prev ail on the merits because the litigation privilege does not apply to the voluntary breach of an express confidentiality agreement ( ITT Telecom Products Corp. v. Dooley (1989) 214 Cal.App.3d 307, 3 17-320), or the unauthorized

disclosure of a trade secret (Civ. Code, § 3426.11).

II. Analysis Assuming for the sake of argument that Sgromo and Wide Ey es Marketing have demonstrated that the litigation privilege do es not bar their intentional interference claims, they have not explained why a reve rsal is warranted in the absence of any supporting evidence of damages. Damages are, of course, an essential element of both intentional interference with pr ospective economic advantage ( Korea Supply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134, 1153) a nd intentional interference with contractual relations ( Pacific Gas & Electric Co . v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126). In support of their purported damages of ove r $89,000, Sgromo and Wide Eyes Marketing relied exclusively upon the unverified allegations of their second amended cross-complaint. Mere allegations , however, do not provide the evidentiary showing that is required under the sec ond prong of the anti- SLAPP analysis. ( Navellier

, supra , 106 Cal.App.4th at pp. 775-776.)6 In Navellier , the appellate court faced an anal ogous situation in which the first prong of the anti-SLAPP statute had been met, and the issue on appeal was whether the plaintiffs had established a probability of pr evailing on their fraud or breach of contract claims as required by the second prong of th e statute. In reversing the order denying the defendants’ special motion to strike, the appella te court concluded that the plaintiffs had failed to establish a probability of prevailing on either claim. As to the fraud claim, the court held that it was barred by the litigation pr ivilege. As to the breach of contract claim, the court held that a lthough the litigation privilege did not apply, the plaintiffs had failed to provide any supporting evidence of damages. Because we find the court’s analysis of the damages issue to be e qually applicable here, we quote from the Navellier opinion at length: “A fundamental problem with these various claims is th at there is no evidence in the record of any damages from the breach of contract. Damages are, of course, a necessary element of the breach of contract cause of action (BAJI No. 10.85), and proof of that element is wholly lacking. Plainti ffs have taken the position that there was ‘no requirement for [them] to come forward w ith evidence of damages’ because defendant ‘moved to strike solely on issues of law and did not contest or allege that there was no evidence of damages.’ But wher e, as here, the motion to stri ke meets the ‘arising from’ prong of the anti-SLAPP test, the plaintiff must satisfy the second prong of the test and

‘establish evidentiary support for [ its] claim.’ ( Wilson v. Parker, Covert & Chidester [(2002)] 28 Cal.4th [811,] 82 1 (italics added); see also Simmons v. Allstate Ins. Co. [(2001)] 92 Cal.App.4th [1 068,] 1073 [‘a SLAPP motion, like a summary judgment motion . . . requires an evidentiary showing’]; Church of Scientology v. Wollersheim (1996) 42 Cal.App.4th 628, 655, disapproved on another point in Equilon Enterprises v. Consumer Cause, Inc. [(2002)] 29 Cal.4th [53,] 68, fn. 5 [claims must be supported ‘by admissible evidence’].) That de fendant raised legal issues in his motion did not relieve plaintiffs of their burden of presenting a suffi cient ‘showing of facts to sustain a favorable judgment’ ( Wilson v. Parker, Covert & Chidester, supra, at p. 821), and after plaintiffs’7 opposition was filed defendant co uld properly point to the fa ilure to meet that burden, regardless of any other theories he may have advanced in his original moving papers. “The Supreme Court majority herein, in explaining that its decision would not ‘unduly burden plaintiffs allegi ng breach of an agreement not to sue,’ pointed out that such an action ‘presumably would involve at a minimum the pleading and proof of the alleged agreement.’ ( Navellier v. Sletten [(2002)] 29 Cal.4th [82,] 94.) Plaintiffs did undertake that ‘minimum’ pleading and proof w ith respect to the rele ase in this case. However, the majority went on to observe th at a party in plaintiffs’ position would need to substantiate its claims ‘by appending the a lleged agreement to an affidavit stating the facts upon which the defendant’s liability is based’ ( ibid. ), and plaintiffs presented no affidavit or other evidence stating facts with respect to their alleged damages. “Plaintiffs contend, citing DuPont Merck Pharmaceutical Co. v. Superior Court (2000) 78 Cal.App.4th 562, that they should now be given an opportunity to produce the requisite evidence. However, this preceden t supports defendant, not plaintiffs. The plaintiffs in DuPont were not granted leave to belatedl y present evidence in opposition to an anti-SLAPP motion; they ar gued that they had establis hed a probability of success because their complaint had su rvived a demurrer. The cour t rejected that argument, stating that: ‘It would defeat the obvious purposes of the anti-SLAPP statute if mere allegations in an unverified complaint would be sufficient to avoid an order to strike the complaint. Substantiation requires something more than that. Once the court determines the first prong of the statute has been met, a plaintiff must provide the court with sufficient evidence to permit th e court to determine whether “there is a probability that the plaintiff will prevail on the claim.”’ ( Id. at p. 568.) Here, plaintiffs have presented nothing as to their damages on the breach of contract cause of action beyond the bare allegations of their unverified complaint—an insufficient showing to survive the motion to strike that cause of action. ( Ibid. )” ( Navellier

, supra , 106 Cal.App.4th at pp. 775- 776.) We conclude that the above analysis is dispositive of this appeal. Like the plaintiffs in Navellier , cross-complainants pr ovided no evidence or affidavits containing8 facts with respect to their alleged damages. In support of their purported damages of over $89,000, Sgromo and Wide Eyes Marketing relied solely on th e unverified allegations of

their second amended cross- co mplaint. As the court in Navellier explained, such bare allegations are insufficient to avoi d a special motion to strike. ( Navellier

, supra , 106 Cal.App.4th at pp. 775-776.) We therefor e conclude that Sgromo and Wide Eyes Marketing are incapable of showing that, in th e absence of the trial court’s alleged errors, they would have defeated the motion to strike.

DISPOSITION

The order granting the special motion to strike is affirmed. Respondent Walter Batt is awarded his attorney fees and costs on appeal. 4

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

SUZUKAWA, J.

We concur:

WILLHITE, Acting P. J.

MANELLA, J.

4 Batt contends he is entitled to attorney f ees for prevailing on appeal. He is correct. ( Gene Thera, Inc. v. Troy & Gould Professional Corp. (2009) 171 Cal.App.4th 901, 910.)