FOR PUBLICATION



### UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

3500 S EPULVEDA
, LLC , a Delaware limited liability company; 13 TH &
C REST A SSOCIATES
, LLC , a California limited liability company, Plaintiffs

- C ounter

- D efendants

Appellants

,

v.

M ACY ’ S W EST S TORES
, I NC

. , Defendant

- Appellee

,

RREEF A MERICA REIT II
C ORPORATION BBB , a Maryland corporation, Defendant

- C ounter

- C laimant

Appellee

,

v.

6220 S PRING A SSOCIATES
, LLC , a California limited liability company,
Counter

- D efendant. No. 18

- 56620

D.C. No.
2:17

- cv

- 08537

- R

- JPR2 3500 S EPULVEDA V

. RREEF A MERICA REIT II

3500 S EPULVEDA
, LLC , a Delaware limited liability company; 13 TH &
C REST A SSOCIATES
, LLC , a California limited liability company, Plaintiffs

- C ounter

- D efendants

Appellees

,

v.

M ACY ’ S W EST S TORES
, I NC

. , Defendant

,

and

RREEF A MERICA REIT II
C ORPORATION BBB , a Maryland corporation, Defendant

- C ounter

- C laimant

Appellant

,

v.

6220 S PRING A SSOCIATES
, LLC , a California limited liability company,
Counter

- D efendant

- Appellee. No. 18

- 56637

D. C. No.
2:17

- cv

- 08537

- R

- JPR3500 S EPULVEDA V

. RREEF A MERICA REIT II 3

3500 S EPULVEDA
, LLC , a Delaware limited liability company; 13 TH &
C REST A SSOCIATES
, LLC , a California limited liability company, Plaintiffs

- C ounter

- D efendants

Appellees

,

v.

M ACY ’ S W EST S TORES
, I NC

. , Defendant

,

and

RREEF A MERICA REIT II
C ORPORATION BBB , a Maryland corporation, Defendant

- C ounter

- C laimant

Appellant

,

6220 S PRING A SSOCIATES
, LLC , a California limited liability company,
Counter

- D efendant

- Appellee. No. 19

- 55227

D.C. No.
2:17

- cv

- 08537

- R

- JPR4 3500 S EPULVEDA V

. RREEF A MERICA REIT II

3500 S EPULVEDA
, LLC , a Delaware limited liability company; 13 TH &
C REST A SSOCIATES
, LLC , a California limited liability company, Plaintiffs

- C ounter

- D efendants

Appellants

,

v.

M ACY ’ S W EST S TORES
, I NC

. , Defendant

,

and

RREEF A MERICA REIT II
C ORPORATION BBB , a Maryland corporation, Defendant

- C ounter

- C laimant

Appellee

,

6220 S PRING A SSOCIATES
, LLC , a California limited liability company,
Counter

- D efendant

- Appellant. No. 19

- 55273

D.C. No.
2:17

- cv

- 08537

- R

- JPR

OPINION

Appeal from the United States District Court
for the Central District of California Manuel L. Real, District Judge, Presiding

Argued and Submitted September 2, 2020 Pasadena, California

Filed November 20, 20203500 S EPULVEDA V

. RREEF A MERICA REIT II 5

Before: Sandra S. Ikuta and Mark J. Bennett, Circuit

Judge s, and Douglas P. Woodlock, * District Judge.

Opinion by Judge Bennett

SUMMARY **

California Law

The panel affirmed the district court’s summary judgment on the nuisance claim, and reversed the district court as to the remaining claims, in a diversity action alleging claims and counterclaims arising from a construction project to expand Manhattan Village Shopping Center in Manhattan Beach, California.

Plaintiffs are 3500 Sepulveda, LLC and 13th & Crest; and defendants are RREEF America REIT II Corporation BBB and Macy’s West Stores, Inc. RREEF brought counterclaims against plaintiffs and additional counterdefendant 6220 Spring Associates, LLC (together

, counterdefendants are known as “Hacienda”). The parties’ predecessors executed a Construction, Operation and Reciprocal Easement Agreement (“COREA”) in 1980. In 2008, the parties resolved various disputes in a Settlement Agreement, which included a “Si te Plan.”

* The Honorable Douglas P. Woodlock, United States District Judge for the District of Massachusetts, sitting by designation.

** This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader.6 3500 S EPULVEDA V

. RREEF A MERICA REIT II

Plaintiffs alleged that defendants violated the COREA. Applying California law, the panel held that the district court erred in granting summary judgment to defendants on this
claim. The fact that RREEF had discretion to revise the Site
Plan d id not mean that Hacienda gave up its rights under the COREA, especially considering that the Settlement Agreement, by its own terms did not amend the COREA.

Plaintiffs alleged that defendants’ Project interfered with their easement rights under the COREA . The panel held that the Settlement Agreement did not extinguish plaintiffs’ easement rights under the COREA, and the district court erred in holding otherwise.

Plaintiffs alleged that defendants violated the Settlement Agreement’s covenant of good fait h and fair dealing. The panel held that there was a genuine dispute of material fact as to whether RREEF’s construction of a north parking deck
involved bad faith.

Plaintiffs alleged that defendants’ construction
encroached on their easement and eliminat ed essential parking, creating a nuisance under California law. The panel held that plaintiffs did not point to any specific offensive conduct or manner that was not authorized by the City of Manhattan Beach. Accordingly, plaintiffs did not raise
triable issues of fact regarding the nuisance claim, and the panel affirmed the district court’s grant of summary judgment.

Plaintiffs alleged that defendants intentionally or negligently interfered with Hacienda’s business and
contractual relations with its t enants. The panel held that plaintiffs raised triable issues whether defendants’ construction interfered with Hacienda’s tenant contracts, and3500 S EPULVEDA V

. RREEF A MERICA REIT II 7

whether defendants acted with the knowledge that
interference would occur as a result of their action. The

pane l reversed the district court’s grant of summary judgment.

The panel also reversed the district court’s grant of summary judgment as to plaintiffs’ request for declaratory relief on the parties’ rights and duties arising out of the Settlement Agreement a nd the COREA.

Concerning RREEF’s counterclaims, the district court granted Hacienda’s motion for summary judgment on the basis that RREEF’s counterclaims were barred by California’s litigation privilege. The panel disagreed. The panel held that policy c onsiderations weighed against applying the litigation privilege here. Applying the litigation privilege to this case would undermine the Settlement Agreement and invite more litigation.

F inally, the panel held the attorneys ’ fees question moot,
and vacat ed the district court ’ s order denying the parties ’ motions for attorneys ’ fees.

COUNSEL

Geoffrey B

. Kehlmann (argued) and Robin Meadow

, Greines Martin Stein & Richland LLP, Los Angeles, California, for Plaintiffs

- Counter

- Defendants

- Appellants /
Cross

- Appellees

.

Michael G

. Romey (argued), R. Peter Durning Jr.

, Jamie L. Sprague, and Sarah F. Mitchell, Latham & Watkins LLP, Los Angeles, California, for Defendant

- Counter

- Claimant

Appellee /Cross

- Appellant

.8 3500 S EPULVEDA V

. RREEF A MERICA REIT II

OPINION

BENNETT, Circuit Judge:

Before the court are cross

- appeals from the district court’s orders granting summary judgment (i) to Defendants on Plaintiffs’ claims, and (ii) to Counterdefendants on the counterclaims. We have jurisdiction under 28 U.S.C. § 1291, and we review the district court’s grant of summary judgment de novo, viewing the facts in the light most
favorable to the non

- movant. See Flores v. City of San
Gabriel , 824 F.3d 890, 897 (9th Cir. 2016). The parties agree that California law appli es. We affirm in part, reverse in part, and remand.

I. Background

Plaintiffs are 3500 Sepulveda, LLC, and 13th & Crest Associates, LLC. They brought claims against Defendants RREEF America REIT II Corporation BBB (“RREEF”), and Macy’s West Stores, Inc. ( “Macy’s”). Defendant RREEF then brought counterclaims against Plaintiffs and an additional Counterdefendant, 6220 Spring Associates, LLC (together, Counterdefendants are known as the “Hacienda Parties” or “Hacienda”).

The parties’ dispute concerns a const ruction project to expand Manhattan Village Shopping Center (the “Shopping Center”) in Manhattan Beach, California. The forty

- four

acre Shopping Center includes multiple parcels of land. The
Hacienda Parties own a 0.7

- acre parcel located at
3500 Sepulved a Boulevard. The Hacienda Building is a commercial building located on the 3500 Sepulveda property. Hacienda rents its space to commercial tenants, including restaurants, retail stores, and offices. Macy’s3500 S EPULVEDA V

. RREEF A MERICA REIT II 9

owns another single parcel of land, and RREEF o wns the remaining parcels in the Shopping Center.

The parties’ predecessors executed the Construction, Operation and Reciprocal Easement Agreement (the “COREA”) in 1980. The COREA defines a “Common Area” within the Shopping Center as including the
“Automo bile Parking Area, access roads, driveways,
Perimeter Sidewalks

. . . , and similar areas.” Under the COREA, the parties and their permittees have “nonexclusive easements over the Common Area of [the parties’] respective Tract[s], for the passage and acco mmodation of pedestrians and vehicles.” The easements run with the land. Hacienda’s tenants and customers drive through and park in
the Common Area. The parking lot known as “Lot F” is particularly important to Hacienda, as Lot F is located
“across the drive aisle from the Hacienda Building.”

In 2006, RREEF applied to the City of Manhattan Beach (the “City”) for approval to renovate and expand the Shopping Center. Around the same time, Hacienda was attempting to convert parts of its building from office space
to restaurants. RREEF and Hacienda vigorously opposed each other’s plans for renovation, and various legal disputes

arose.

The parties resolved those disputes in a Settlement Agreement (the “Agreement”) in 2008. 1 Under the terms of
the Settlement Agreement, RREEF agreed not to oppose Hacienda’s plan to convert office space into restaurants, and

1 The parties to the Settlement Agreement are the Hacienda
Parties

— 3500 Sepulveda, 13th & Crest, and 6220 Spring (which is a Counterdefendant but not a Plaintiff)

— and RREEF. Macy’s, which is a Defendant to some of the claims but not a Counterclaimant, is not named as a party to the Settlement Agreement.10 3500 S EPULVEDA V

. RREEF A MERICA REIT II

Hacienda agreed not to oppose RREEF’s expansion project (the “Project”)

— subject to certain limitations in the Agreement. The current dispute is over RREEF ’s Project,
and Hacienda’s restaurant

- conversion plan is irrelevant for

our purposes.

The Settlement Agreement includes a “Site Plan”

— a series of drawings that set forth RREEF’s proposed Project to expand Macy’s and other retail space, and to construct

new parking structures. The Site Plan and an additional “Parking Plan” lay out, among other things, the available retail and parking spaces during and upon completion of stages of construction. The Settlement Agreement provides
that RREEF will submit the Si te Plan to the City for approval: “RREEF is preparing to amend the RREEF Application [to the City] to reflect a revised expansion plan for the Shopping Center as generally depicted in the [attached] Site Plan.” The Settlement Agreement also gives
RREEF “d iscretion” to revise the Site Plan, and it allows Hacienda to object to certain material revisions during the City’s approval process. Section 6 of the Settlement Agreement states that “nothing in this Agreement shall
constitute an amendment to the

. . . COREA.”

The City’s approval process includes circulating the proposed plan and environmental impact report for public comment and holding public hearings. During this process, RREEF submitted multiple revised versions of the Site Plan.
Hacienda took issu e with the new versions, which Hacienda believed were materially different from the agreed

- upon Site Plan in the 2008 Settlement Agreement and would harm
Hacienda’s interests. In particular, Hacienda was concerned that the new plans reduced the amount of available parking
for Hacienda and its tenants

— both during and after the completion of construction. Hacienda and its agents3500 S EPULVEDA V

. RREEF A MERICA REIT II 11

opposed the revised Site Plans in multiple public hearings, wrote letters to the City raising similar concerns, and were allegedly involved in certain lawsuits challenging the Project.

The City approved RREEF’s Project

— based on a
revised Site Plan

— in 2017, and construction began soon
after. Hacienda’s tenants started complaining about the construction almost immediately, ra ising concerns about the loss of parking spaces, road closures, and other
inconveniences. Tenants demanded compensation for lost
business. They also demanded rent reductions, threatened to not renew their leases, and threatened legal action.

In October 2 017, Plaintiffs sued Defendants in California Superior Court, alleging breach of contract, anticipatory breach of contract, breach of the covenant of good faith and fair dealing, interference with easement rights, nuisance, and intentional and negligent in terference
with business and contractual relations. Plaintiffs’ underlying theory is that the current Site Plan is substantially different from the agreed

- upon Site Plan in the Settlement Agreement, and that RREEF’s expansion and construction Project viol ates Plaintiffs’ rights. Defendants removed the case to federal court, and RREEF filed counterclaims against the Hacienda Parties, alleging breach of contract and breach of the covenant of good faith and fair dealing. RREEF’s theory is that Hacienda viol ated the Settlement Agreement by opposing the Project.

The parties filed cross

- motions for summary judgment, and the district court granted both motions and dismissed all the claims and counterclaims. The parties then each filed a motion for attorneys’ fe es, which the district court denied on the ground that no party prevailed. This appeal and cross

appeal followed. Plaintiffs argue that the district court erred12 3500 S EPULVEDA V

. RREEF A MERICA REIT II

in granting summary judgment on their claims, and RREEF argues that the district court erred in granting summary judgment on its counterclaims.

II. Plaintiffs’ Claims

We affirm the district court’s grant of summary judgment on the nuisance claim and reverse the district court as to the remaining claims.

1. Breach of Contract

Plaintiffs allege that Defendants violated the COREA, under which the parties agreed to perform construction work “so as not to unreasonably interfere with the use, occupancy or enjoyment of the remainder of the Shopping Center or any part thereof by any other Party, and any ot her Occupant of the Shopping Center, and the Permittees of any other Party and such other Occupants.” The district court granted summary judgment to Defendants on this claim. According to the district court, Plaintiffs agreed to the Project under the
Set tlement Agreement, and further agreed that RREEF
would have discretion to revise the Site Plan and execute the Project; therefore, Plaintiffs cannot now complain of conduct to which they consented.

Plaintiffs point out that section 6 of the Settlement Agre ement provides that “ nothing in this Agreement shall
constitute an amendment to the

. . . COREA,” and argue that they have claims under the COREA. The district court, however, essentially read section 6 out of the Agreement:

While Section 6 of the Settlem ent Agreement states that the agreement does not constitute an amendment to the COREA, the agreement would essentially lose all meaning if the court3500 S EPULVEDA V

. RREEF A MERICA REIT II 13

were to adopt [Hacienda’s] interpretation of this section as preserving all of their easement rights even d uring the duration of the construction project.

We disagree. We conclude that section 6 can be harmonized with the rest of the Settlement Agreement and with the
COREA. See Cal. Civ. Code § 1641 (“The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other.”). Read in conjunction with section 6, sections 4 and 5 of the Settlement Agreement provide that RREEF has discretion to pursue the Project and alter the Sit e Plan, and Hacienda’s objections to the City are limited to RREEF’s material changes. That RREEF has discretion to revise the Site Plan does not mean that Hacienda gave up its rights under the COREA, especially considering that the Settlement Agreement, by its own terms, does not amend the
COREA. 2

2. Interference with Easement Rights

Plaintiffs allege that Defendants’ Project has interfered with their easement rights under the COREA. Under California law, interference with an easement is actionable when the grantor of the easement “ unreasonably impede [ s ] the [grantee] in his rights,” Dolnikov v. Ekizian , 165 Cal. Rptr. 3d 658, 666 (Ct. App. 2013) (quoting City of Los

2 The district court stated that Defendants argued below that the Settlement Agreement’s release provision “includes Plaintiffs’ claims” related to the Project. On appeal, Defendants do not argue that the Settlement Agreement’s release provision bars Plain tiffs’ claims in this lawsuit, and we do not address this issue. As discussed below, we note that the release provision is ambiguous on its face and extrinsic evidence is needed to interpret the provision.14 3500 S EPULVEDA V

. RREEF A MERICA REIT II

Angeles v. Howard , 53 Cal. Rptr. 274, 277 (Ct. App. 1966)), through actions “that make it more difficult to use an easement, that interfere with the ability to maintain an d repair improvements built for its enjoyment, or that increase the risks attendant on exercise of rights created by the easement,” id. (emphasis omitted) (quoting Restatement (Third) of Property: Servitudes § 4.9 cmt. c (Am. Law Inst. 2000)).

The district court granted summary judgment to Defendants, again concluding that Plaintiffs cannot sue
Defendants for conduct to which Plaintiffs consented. As discussed above, the Settlement Agreement does not extinguish Plaintiffs’ easement rights under the COREA, and the district court erred in holding otherwise.

3. Breach of the Covenant of Good Faith and Fair Dealing

Plaintiffs argue that Defendants violated the Settlement Agreement’s covenant of good faith and fair dealing when they used their discretion “to unf airly change the site plan and engage in unreasonable construction activities.” “There is an implied covenant of good faith and fair dealing in every contract that neither party will do anything which will injure the right of the other to receive the bene fits of the agreement.” Foley v. Interactive Data Corp. , 765 P.2d 373, 390 (Cal. 1988) (quoting Comunale v. Traders & Gen. Ins.
Co. , 328 P.2d 198, 200 (Cal. 1958)). A party can breach the covenant without “breach of a specific provision of the
contract.” Carma Devs. (Cal.), Inc. v. Marathon Dev. Cal.,
Inc. , 826 P.2d 710, 727 (Cal. 1992). Rather, the question is whether the party’s conduct, “while not technically transgressing the express covenants

. . . frustrates the other party’s rights to the benefit s of the contract.” Racine & Laramie, Ltd. v. Dep’t of Parks & Rec. , 14 Cal. Rptr. 2d 335,3500 S EPULVEDA V

. RREEF A MERICA REIT II 15

338 (Ct. App. 1992) (quoting Love v. Fire Ins. Exch.

, 271 Cal. Rptr. 246, 256 (Ct. App. 1990)). “The covenant of good faith finds particular application in situati ons where one party is invested with a discretionary power affecting the rights of another.” Carma Devs. , 826 P.2d at 726. The party with discretionary power must exercise such power in good faith and through “objectively reasonable conduct.” Badie
v. B ank of Am. , 79 Cal. Rptr. 2d 273, 284 (Ct. App. 1998) (quoting Lazar v. Hertz Corp. , 191 Cal. Rptr. 849, 857 (Ct. App. 1983)).

Section 5 of the Settlement Agreement provides that the
“North Deck may be constructed in two stages

— Stage One and Stage Two

— as d epicted on the Site Plan and in substantial conformity with [the Parking Plan],” and that “the construction of the Parking Decks shall be subject to the
additional terms set forth in attached Exhibit G.” Exhibit G further provides that “[d]uring Stage One construction of the North Deck, there shall be not less than 240 parking spaces
available in the area referenced as ‘Lot F.’” RREEF thereafter decided to construct the North Deck as a “unitary deck” rather than in stages, and did not maintain the
240 par king spaces in Lot F. 3

Because the Settlement Agreement does not require construction of the North Deck in stages, and Exhibit G provides for 240 parking spaces during Stage One, RREEF has not expressly breached the Agreement by constructing
the North Dec k without maintaining any parking spaces in

3 Hacienda’s opening brief appears to suggest tha t its breach of covenant claim is based on a theory of anticipatory breach because RREEF represented that it did not intend to maintain the 240 parking

spaces. However, construction of the North Deck has since begun, thereby mooting the anticipatory breac h theory.16 3500 S EPULVEDA V

. RREEF A MERICA REIT II

Lot F. However, viewing the facts in the light most favorable to Plaintiffs, there is a genuine dispute of material
fact as to whether RREEF’s construction of the North Deck involved bad faith. The parties clea rly contemplated whether construction of the North Deck would cause parking shortages for Hacienda and agreed to measures to mitigate those expected problems. Notably, Exhibit G does not say that its terms are applicable only if the North Deck is

construc ted in stages. Rather, it simply assumes that there will be stages of construction. RREEF has not presented any evidence that constructing the North Deck as a “unitary deck” will eliminate or mitigate the contemplated problems regarding parking shortages . Accordingly, Plaintiffs have presented sufficient evidence to raise a triable issue as to
whether RREEF’s construction of the North Deck was contrary to “the contract’s purposes and the parties’ legitimate expectations.” Carma Devs.

, 826 P.2d at 728.

4

. Nuisance

Plaintiffs allege that Defendants’ construction
encroached on their easement and eliminated essential parking, creating a nuisance under California law. See Monks v. City of Rancho Palos Verdes , 84 Cal. Rptr. 3d 75, 104 (Ct. App. 2008). Defend ants argue that the Project was constructed in accordance with City regulations; therefore, it
could not have been a nuisance. See Cal. Civ. Code § 3482 (“Nothing which is done or maintained under the express authority of a statute can be deemed a nuisance.”); Williams v. Moulton Niguel Water Dist. , 232 Cal. Rptr. 3d 356, 361 (Ct. App. 2018) (“Although [ § 3482] speaks in terms of ‘a statute,’ that ter m has been broadly interpreted to include regulations and other express government approvals.”).

Plaintiffs respond that “even if there were a City ordinance approving the expansion project, it would not3500 S EPULVEDA V

. RREEF A MERICA REIT II 17

expressly allow RREEF to engage in such harmful
inte rference as to eliminate all convenient parking for the Hacienda Building during a yearlong construction project.” While it is true that “although an activity authorized by statute cannot be a nuisance, the [m]anner in which the activity is performed may constitute a nuisance,” Venuto v.
Owens

- Corning Fiberglas Corp. , 99 Cal. Rptr. 350, 359 (Ct. App. 1971), Plaintiffs do not point to any specific offensive conduct or manner that was not authorized by the City. Accordingly, Plaintiffs have not raised triab le issues of fact regarding the nuisance claim, and we affirm the district court’s grant of summary judgment.

5. Interference with Business and Contractual
Relations

Plaintiffs allege that Defendants intentionally or negligently interfered with Hacienda’s business and contractual relations with its tenants, pointing to tenant complaints about RREEF’s construction. The elements of a claim of intentional interference are “(1) a valid contract between plaintiff and a third party; (2) defendant’s knowledge of this contract; (3) defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.” Quelimane Co. v. Stewart Title Guar. Co. , 960 P.2d 513, 530 (Cal. 1998) (quoting Pac. Gas & Elec. Co. v. Bear Stearns
& Co. , 791 P.2d 587, 589

– 90 (Cal. 1990)). The only difference between intentional and negligent interference is
the defendant’s intent. See Nelson v. Tucker Ellis, LLP

, 262 Cal . Rptr. 3d 250, 264 n.5 (Ct. App. 2020).

We conclude that Plaintiffs have raised triable issues
whether Defendants’ construction interfered with Hacienda’s tenant contracts, and whether Defendants acted18 3500 S EPULVEDA V

. RREEF A MERICA REIT II

with the knowledge that “interference is certain or

s ubstantially certain to occur as a result of [their] action.” Quelimane , 960 P.2d at 531.

Defendants’ sole argument on appeal is that Plaintiffs’ claims fail because a claim of tortious interference “requires a ‘wrongfulness’ element, such that the defend ant’s interfering conduct ‘was wrongful by some legal measure
other than the fact of interference itself.’” Defendants are incorrect. Under California law, there is no additional “wrongfulness” element for a claim of interference with existing contracts. See id. at 530 (“Because interference with an existing contract receives greater solicitude than does interference with prospective economic advantage, it is not necessary that the defendant’s conduct be wrongful apart
from the interference with the cont ract itself.” (citation omitted)). Accordingly, we reverse the district court’s grant of summary judgment.

6. Declaratory Relief

For the reasons noted above, we also reverse the district court’s grant of summary judgment as to Plaintiffs’ request
for decl aratory relief on the parties’ rights and duties arising out of the Settlement Agreement and the COREA.

III. RREEF’s Counterclaims

RREEF brought counterclaims against Hacienda for breach of contract, breach of the implied covenant of good
faith and fair de aling, and declaratory relief. RREEF contends that Hacienda and its agents engaged in an “exhaustive campaign of opposition” to the Project, violating the Settlement Agreement’s release provision and other provisions governing the parties’ conduct in the City’s application

- approval process.3500 S EPULVEDA V

. RREEF A MERICA REIT II 19

The district court granted Hacienda’s motion for summary judgment on the basis that “RREEF’s counterclaims are barred by California’s litigation privilege.” We disagree.

In California, the litigation privilege immunize s defendants from certain lawsuits based on their privileged communications in judicial proceedings and other official proceedings, including local city council proceedings. See
Cal. Civ. Code § 47; Cayley v. Nunn , 235 Cal. Rptr. 385, 387 (Ct. App. 1987). The litigation privilege traditionally applied only to tort claims, and the California Supreme Court has not decided whether the privilege applies to contract claims. We understand that the California Supreme Court is currently considering whether the l itigation privilege applies to contract claims, and if so, under what circumstances. See
Doe v. Olson , Cal. Sup. Ct. No. S258498.

“In the absence of [a decision of the highest state court], a federal court must predict how the highest state court
would de cide the issue using intermediate appellate court decisions, decisions from other jurisdictions, statutes, treatises, and restatements as guidance.” In re Kirkland

, 915 F.2d 1236, 1239 (9th Cir. 1990). California’s intermediate appellate courts have appl ied the litigation privilege to contract claims in limited situations where “its application furthers the policies underlying the privilege.”
Wentland v. Wass , 25 Cal. Rptr. 3d 109, 114 (Ct. App. 2005). These policies include “ensur[ing] free access to t he courts, promot[ing] complete and truthful testimony, encourag[ing] zealous advocacy, giv[ing] finality to judgments, and avoid[ing] unending litigation.” Id. at 115.20 3500 S EPULVEDA V

. RREEF A MERICA REIT II

We conclude that the policy considerations weigh against applying the litigation privilege here. 4 While the Settlement agreement did not clearly prohibit Hacienda’s prior participation in the municipal and judicial proceedings regarding the construction of the Shopping Center, and while Hacienda’s right to communicate in s uch proceedings is a matter of public concern, Hacienda willingly limited its communications under the Settlement Agreement. See id. at 116 (“Just as one who validly contracts not to speak waives the protection of the anti

- SLAPP statute, so too has he
wai ved the protection of the litigation privilege.” (citation omitted)). California courts that have applied the litigation privilege to contract claims did so in the face of weightier policy concerns than we face here. See, e.g.

, Vivian v.
Labrucherie , 153 Cal. Rptr. 3d 707, 716 (Ct. App. 2013) (communication made during investigation of potential police misconduct); McNair v. San Francisco , 210 Cal. Rptr. 3d 267, 281 (Ct. App. 2016) (doctor’s disclosure of public safety concerns involving patient who was a bus driver). And on the other side of the policy balance are significant concerns about the finality of settlements and the stability of

contract. See Wentland

, 25 Cal. Rptr. 3d at 116 (refraining from applying the litigation privilege where doing so wo uld “not encourage finality [or] avoid litigation”). Applying the litigation privilege to this case would undermine the Settlement Agreement and invite more litigation.

4 If the California Supreme Court holds otherwise while this case is pending, the district court is not bound by our conclusion. See Owen ex
rel. Owen v. United States , 713 F.2d 1461, 1464 (9th Cir. 1983) (“Our interpretation

. . . was only bind ing in the absence of any subsequent indication from the California courts that our interpretation was incorrect.”).3500 S EPULVEDA V

. RREEF A MERICA REIT II 21

We note that some California courts have also held that “the privilege will apply to c ontract claims only if the agreement does not ‘clearly prohibit’ the challenged
conduct.” Crossroads Invs., L.P. v. Fed. Nat’l Mortg. Ass’n

, 222 Cal. Rptr. 3d 1, 28 (Ct. App. 2017) (quoting
Labrucherie , 153 Cal. Rptr. 3d at 715). The counterclaims
here a re partly based on the Settlement Agreement’s release provision, section 12, and RREEF alleges that Hacienda violated section 12 through its involvement in lawsuits opposing the Project. We conclude that section 12 is ambiguous as to whether it prohibits the lawsuits in question. Specifically, the language of section 12 is ambiguous as to (i) whether the release covers claims based on future events that occur after the date of the Settlement Agreement, and (ii) if it does, whether those later

- arising clai ms include
claims based on future versions of the Site Plan. On the one hand, section 12 contains arguably forward

- looking language: “[Hacienda] releases [RREEF] from

. . . [all claims] that [the Hacienda Parties] have or may have against [RREEF]” (emphas is added). On the other, section 12 references two specific applications for two specific Site Plans, both of which were already in existence at the time of the Settlement Agreement’s execution. 5

Thus, we conclude that the district court erred in applying the litigation privilege to grant summary judgment.

5 Because section 12 is ambiguous, the district court will need to consider extrinsic evidence on remand should it need to interpret section
12. See Winet v. Price , 6 Cal. Rptr. 2d 554, 557 (Ct. App. 1992).22 3500 S EPULVEDA V

. RREEF A MERICA REIT II

Finally, we hold the attorneys’ fees question moot and vacate the district court’s January 29, 2019 Order denying the parties’ motions for attorneys’ fees. 6

The parties are to bear their own cos ts on appeal.

AFFIRMED in part, REVERSED in part, and
REMANDED.

6 Hacienda’s Motion to Take Judicial Notice (Dkt. 36) is
GRANTED . Defendants’ Motion to File Oversized Brief (Dkt. 63) is
GRANTED

.