Filed 8/28/13 Gross v. Judge CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

FOURTH APPELLATE DISTRICT

DIVISION THREE

ARTHUR GROSS III,

Plaintiff and Respondent,

v.

JAMES A. JUDGE et al.,

Defendants and Appellants. G047549

(Super. Ct . No. 30-2011-00513096)

O P I N I O N

Appeal from an order of the Superior Court of Orange County, Frederick Paul Horn, Judge. Affirmed. The Judge Law Firm and James A. Judge for Defendants and Appellants. No appearance for Plaintiff and Respondent.2 James A. Judge, Edward Judge, a nd the Judge Law Firm appeal from an order denying their special motion to strike 1 an action filed against them by Arthur Gross III arising out of a debt collecti on matter. They contend the trial court erred by concluding the action did not arise out of protected activity, and because Gross made no showing he had a probability of prevailing, the court sh ould not have granted the

motion. We find no error and affirm the order.

FACTS AND PROCEDURE

Gross is a homeowner within th e Westpark Maintenance District (Westpark), which is a mutual benefit nonprof it corporation. When Gross allegedly fell behind in his monthly asse ssment payments, Westpark commenced collections procedures. Acting in propria persona, Gross filed th e instant action against three sets of defendants: (1) Westpark and its board of di rectors (hereafter collectively referred to in the singular as Westpark); (2) Community Legal Advisers, Inc., and attorney Mark T. Guithues (hereafter collectively referred to in the singular as CLA); and (3) the appellants, including the Judge Law Firm, it s owner, attorney James Judge, and his son, Edward Judge, who is not an attorney but employed by the Judge Law Firm (hereafter collectively referred to as the Judge Law Fi rm Defendants unless the context indicates otherwise). The operative first amende d complaint (the compla int) was premised on allegations all the defendants were attempting to collect more in assessments and fees than Gross owed. The complaint alleged Ja mes Judge was being sued “for his conduct and responsibility as a debt co llector and not for any conduc t inside any court action.”

1 Code of Civil Procedure secti on 425.16 (hereafter section 425.16) authorizes a special motion to strike a Stra tegic Lawsuit Against Public Participation (SLAPP) action, and is referred to as the anti-SLAPP statute. ( Navellier v. Sletten (2002) 29 Cal.4th 82, 85, fn. 1.)3 The complaint alleged Edward Judge (James Judge’s son) was em ployed by the Judge Law Firm, and claimed to be an owner of the fi rm, even though he was not an attorney. Gross alleged that due to health pr oblems in 2008 and 2009, he fell behind on his monthly assessments payable to Westpa rk. In January 2010, when he retrieved “[six] cases of back mail that [were] on hold for him” at the post office, there was a notice from Westpark that he owed $2,200 in late dues. The demand letter, sent by the Judge Law Firm Defendants, in cluded $580 in a ttorney fees and $245.32 in collection costs in the amount owed. Gross disputed the amounts, calculating the maximum he owed in assessments plus late charges was $6 40. Moreover, Gross alleged “[t]he [Judge Law Firm’s] billing is false” because the demand letter was a form letter and “take[s] less

than 15 minutes to fill out” and the retainer agreement between th e Judge Law Firm and Westpark set rates at $200 an hour. Gross alleged Westpark denied him access to its books and records. On February 2, 2010, Gross sent Westpark a letter disputing the amount demanded, requesting a “m eet and confer.” He also tendered a check for $800 as full payment (which appare ntly was rejected). The complaint alleged that on Febr uary 10, 2010, th e Judge Law Firm Defendants filed a collection action against Gr oss on behalf of Westpark. Gross alleged

the trial court sustained his demurrer to th e collection action complaint with leave to amend, but at the hearing on the demurrer the trial court indi cated it agreed with Gross’s assertion Westpark could not “plead atto rney fees, penalties, costs and interest and . . . could only collect fro m [Gross] the actual assessmen ts[,] which [he] already had paid prior to the lawsuit being filed.” But thereafter Westpark “thr ough [its] attorneys, sent back [Gross’s] ch ecks un-cashed” and has continued to return his checks. Westpark

later dismissed the collection action. Gross alleged all the named defendan ts “are attempting to collect more money they can legally charge, including but not limited to falsifie d attorney fees.” Moreover, he alleged Westpark had recently “threatened to foreclose on [Gross’s] home4 if [he] doesn’t pay [the] falsified amount th ey demand. Moreover, the defendants want [Gross] to pay amounts that the court al ready ruled against and amounts that are

fraudulent.” Gross’s complaint alleged Westpark violated various provisions of the Davis-Stirling Common Interest Developm ent Act (Davis-Stirling Act; Civ. Code, § 1350 et seq.), pertaining to notices, access to records, and meeting and conferring with members. It alleged all the defendants violated the unfair business practices law (Bus. & Prof. Code, § 17200 (UCL)), by “engag[ing] in false and fra udulent billing practices by falsely billing for services not rendered” and by “falsifying billi ng statements . . . falsifying attorney fees, fines and penalties, [a nd] threatening people’s homes . . . .” The complaint alleged Westpark and CLA (and no t the Judge Law Firm Defendants), violated

the Rosenthal Fair Debt Collection Practices Act (Rosenthal Act; Civ. Code, § 1788 et seq.), by “false billing practices, charging for fees that they are all aware were denied by the court, harassing and threat ening harm to [Gross] if he fails to pay the illegal amount[,]” and denying him access to books a nd records so he can determine the true

amount he owes. Based on the foregoing general alle gations, Gross’s complaint contained causes of action against the Judge Law Firm Defendants (and all the other defendants) for fraud and intentional misrepresentation (third cause of action), alleging they made misrepresentations to get Gross to pay more th an “legally chargeable [;]” violation of the UCL (eighth cause of action) engaging in unfair business pr actices by falsifying billing statements; declaratory relief (tenth cause of action) seeking a judici al determination of the amounts due; and injunctive relief (eleve nth cause of action) seeking to halt imposition of “false charges[.]” The other causes of action alleged against Westpark

and/or CLA included causes of action for breach of the CC&Rs ; breach of fiduciary duty; fraudulent concealment; violations of the Davis-Stirling Act; and violation of the

Rosenthal Act.5 Special Motion to Strike The Judge Law Firm Defendants filed a special motion to strike Gross’s complaint, and sought $4,875 in additional attorney fees a nd costs incurred in preparing the special motion to strike. They also f iled a demurrer to Gro ss’s complaint on the ground it failed to state facts sufficient to constitute a cause of action. In their special motion to strike, the Judge Law Firm Defendants contended Gross’s complaint arose out of protected activ ity because the allegations all pertained to the Judge Law Firm’s collecti on actions undertaken on beha lf of its client, Westpark, while litigation was under consideration. Ja mes Judge declared the Judge Law Firm was retained by Westpark on December 14, 2009, to collect outstanding assessments due on Gross’s property. On January 4, 2010, the Judge Law Firm sent Gross a letter demanding payment of unpaid assessments of $1,539.49 th rough February 5, 2010, attorney fees of $580, and collection costs of $245.32—for a total of $2,364.81. The demand letter warned Gross that if he did not pay, fo reclosure proceedings might ensue and/or Westpark might choose to file suit and get a pe rsonal judgment against him. It stated if Gross did not either pay the amount owed or contact the Judge Law Firm to set up a payment plan within 30 days, legal action to collect the debt would be taken. The letter was signed by Edward Judge. Gross did not pay any portion of the amount demanded. James Judge declared the $580 atto rney fees charge encompassed time spent, “opening the file, obtaining title info rmation, reviewing all of the recorded documents and other documents giving rise to the assessment of the claim as well as [generating] the actual letter itse lf. This is a standard char ge based upon what I estimate

was involved in terms of staff time and atto rney time going up to the time of the letter. [¶] . . . All of the collection efforts I ha ve described were made while litigation was being seriously considered and undertaken.” James Judge declared that on February 10, 2010, the Judge Law Firm filed the collection action against Gross. On J une 21, 2010, the Judge Law Firm filed a6 dismissal of the collection action without prejudice not “because of anything having to do with [Gross] and his delinquency . . . [but because] there were other disputes between [Gross] and [Westpark] and it was decide d they best be handled together.” Gross filed written opposition to the sp ecial motion to strike, but it was not supported by any declarations or evidence. Gross argued he was not suing the Judge Law Firm Defendants because of their litigation ac tions, but rather over their debt collection practices. Ruling In its tentative ruling on the special motion to strike , the trial court stated: “[The Judge Law Firm Defendants] cont end that the action is based on their representation of [Westpark], sp ecifically their sending of th e demand letter and the filing of the complaint in the underl ying [collection] action. (E xhibits B and C to the moving papers.) [¶] While the [complaint] is against Westpark, it is not clear that the claims against [the Judge Law Firm Defendants] are based on their representation of Westpark. [¶] The [complaint] barely mentions [the Judge Law Firm Defe ndants]. Paragraph 5 simply alleges that the [Judge Law Firm] is a legal corporation . . . . Paragraph 6 alleges . . . Edward Judge . . . claims to be an owner of the law [firm] and paragraphs 24 and 25 repeats [ sic ] that he is not an attorney, notwithstanding a statement he made [to the contrary]. Paragraph 7 alleges . . . James A. Judge is an attorn ey who works primarily as a debt collector. [¶] Thus, [the Judge La w Firm Defendants] have failed to show that the action arises from protected activity a nd the burden never shifts to [Gross].” Following oral argument, the trial court issu ed its order denying the special motion to strike but sustaining the Judge Law Firm Defendants’ demurrer with leave to amend. 2

2 At the same time, the trial court also denied a special motion to strike filed by CLA and one of Westpark’s board member s, and sustained de murrers filed by CLA and Westpark with leave to amend.7 DISCUSSION A. General Principles Section 425.16, subdivision (b)(1), st ates, “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 C onstitution or the California Constitution in connection with a public issue shall be subject to a specia l motion to strike, unless the court determines that the plaintiff has esta blished that there is a probability that the plaintiff will prevail on the claim.” Secti on 425.16 is to be “construed broadly.”

Consideration of a sect ion 425.16 special motion to strike anticipates a two-step process. “First, the court decide s whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. The moving defendant’s burden is to demonstrate that the act or acts of which the plaintiff complains were taken ‘in furtherance of the [defendant]’s right of petition or free speech

under the United States or California Constituti on in connection with a public issue,’ as defined in the statute. (§ 425.16, subd. (b)(1).) If the c ourt finds such a showing has been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim.” ( Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67 ( Equilon Enterprises ).) We review a trial court’s ruling on a special motion to strike de novo. ( Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP (2005) 133 Cal.App.4th 658, 675.) B. Arising Ou t of Prong The Judge Law Firm Defendants contend the trial court erred by concluding they did not satisfy the “a rising out of” prong. We disagree. “[T]he statutory phrase ‘cause of acti on . . . 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. [Citation.] . . . [T]he critical point is whether the plaintiff’s cause of action itself was based on an act in furtherance of the8 defendant’s right of petition or free speech. [Citations.] ‘A defend ant meets this burden by demonstrating that the act underlying the plaintiff’s cause fits one of the categories spelled out in section 425.16, subdi vision (e) . . . .’ [Citations.]” ( City of Cotati v.

Cashman (2002) 29 Cal.4th 69, 78 ( City of Cotati ).) As used in section 425.16, an “‘act in furtherance of a person’s right of petition or free speech under the United States or California Constitution in connection with a public issue’ includes: (1) any writte n or oral statement or writing made before a legislative, executive, or judicial proceedin g, or in any other official proceeding authorized by law, (2) any written or oral st atement or writing made in connection with an issue under consideration or review by a le gislative, 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 cond uct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free sp eech in connection with a public issue or an issue of public interest.” (§ 425.16, su bd. (e).) The Judge Law Firm Defendants rely on the first two categories, i.e., they contend Gross’s complaint arises out of the exercise of their petitioning activity. 3 These first two clauses of the anti-SLAPP statute “[a]re [c]oextensive with the [l] itigation [p]rivilege.” ( A.F. Brown Electrical Contractor, Inc. v. Rhino Electric Supply, Inc. (2006) 137 Cal.App.4th 1118, 1124 ( A.F. Brown ), italics omitted.) In determining whether a defendant ha s met its first prong burden, the trial court “shall consider the pleadings, and sup porting and opposing affidavits stating the

3 “When the defendant’s alleged ac ts fall under the first two prongs of section 425.16, subdivision (e) (speech or petitioning before a le gislative, executive, judicial, or other official proceeding, or st atements made in conn ection with an issue under review or consideration by an offici al body), the defendant is not required to independently demonstrate that th e matter is a ‘public issue’ w ithin the statute’s meaning. [Citation.]” ( Navarro v. IHOP Properties, Inc. (2005) 134 Cal.A pp.4th 834, 842-843.)9 facts upon which the liability or defense is based.” (§ 425.16, subd. (b)(2); see City of

Cotati , supra, 29 Cal.4th at p. 79; Equilon Enterprises, supra, 29 Cal.4th at p. 67.) 4 Although in meeting its burden “[d]efendant need only make a prima facie showing that plaintiff’s complaint ‘arises from’ defendan t’s constitutionally protected free speech or petitioning activity[,]” (We il & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2013) ¶ 7: 991, pp. 7(II)-51 to 52; see Governor Gray Davis Com. v. American Taxpayers Alliance (2002) 102 Cal.App. 4th 449, 458), we agree with the trial court the Judge Law Firm Defendants did not make that showing here. The Judge Law Firm Defendants argue there are only two possible acts alleged in Gross’s complaint pe rtaining to them: (1) they sent Gross a collection demand letter (in common parlance called a “dunning lette r”); and (2) they subsequently filed a collections lawsuit. The Judge Law Firm Defendants argue both acts are on their face protected petitioning activity, and thus, the “arising out of” prong was satisfied. We have no quibble with the latter pa rt of the Judge Law Firm Defendants’ assertion—filing and dismissing the collecti on lawsuit is clearl y protected petitioning activity. ( Chavez v. Mendoza (2001) 94 Cal.App.4th 1083, 1087-1088.) But with regard to the former part of the Judge Law Firm De fendants’ argument, that sending the dunning letter (or other routine debt collection ac tivity) is necessarily protected petitioning activity, we note numerous cases (none of wh ich have been mentioned by the Judge Law Firm Defendants in their appellate brief) have concluded the contrary. For example, in A.F. Brown, supra, 137 Cal.App.4th 1118, this court held defendant’s routine debt collection practices were not protected activ ities, where there was no evidence litigation was under serious consideration, and thus, the special motion to strike a complaint arising

4 The Judge Law Firm Defendants argue the trial court erroneously considered only the allegations of the complain t in the first prong inquiry and disregarded the declarations. We see nothing in the reco rd indicating the trial court misunderstood the law or disregarded the declarations, and in view of our de novo standard of review, we need not consider this point further.10 from defendant/supplier’s filing a stop notice and its other collection efforts against plaintiff/contractor was properly denied. ( Id. at pp. 1128-1130.) Numerous federal cases

have held in consumer’s actions against debt collectors involv ing allegations of violations

of California’s Rosenthal Act and the fede ral Fair Debt Collection Practices Act,

15 U.S.C. sections 1692 et seq. (“FDCPA”), sending a du nning letter was not petitioning activity protected by the litigation privilege (C iv. Code, § 47), or subject to a special motion to strike. (See Hutton v. Law Offices of Collins & Lamore (S.D.Cal. 2009) 668 F.Supp.2d 1251, 1259 [du nning letter not protected activ ity for anti-SLAPP statute purposes]; Welker v. Law Office of Horwitz (S.D.Cal. 2009) 626 F.Supp.2d 1068, 1072 ( Welker ) [sending dunning letters not protected for anti-SLAPP statute purposes]; Yates v. Allied Int’l Credit Corp. (S.D.Cal. 2008) 578 F.Supp .2d 1251, 1255 [litigation privilege does not apply to clai m brought under Rosenthal Act]; Rouse v. Law Offices of Rory Clark (S.D.Cal. 2006) 465 F.Supp.2d 1031, 1038 [debt coll ection activity not protected for anti-SLAPP st atute purposes]; see also Komarova v. National Credit Acceptance, Inc. (2009) 175 Cal.App.4th 324, 337 [litigation priv ilege does not apply to claims of Rosenthal Act violations].) In any event, we do not need to deci de if sending the dunning letter itself was protected activity. 5 As the trial court observed, the allegations concerning the

5 We note in this regard the filing of the collection lawsuit after the letter was sent would not convert the dunning letter in to a privileged communication. “California courts rightly have rejected the notion ‘tha t a lawsuit is adequately shown to be one “arising from” an act in furtherance of the ri ghts of petition or free speech as long as suit was brought after the defendant engaged in such an act . . . .’ [Citation.]” ( City of Cotati, supra, 29 Cal.4th at p. 77.) A challenged communi cation is deemed to have been made “in connection with” a lawsuit only if the suit was “under serious consideration” at the time the communication was made. ( A.F. Brown, supra, 137 Cal.App.4th at p. 1128 [even the “threat of potential legal ac tion [in a challenged communication] is insufficient . . . to demonstrate a lawsuit was under serious consideration”].) There must be evidence litigation was under serious consideration, and we do not believe James Judge’s self-serving conclusory de claration that “[a]ll of the collection efforts . . . were made while litigation was bei ng seriously considered . . .” suffices. (See11 Judge Law Firm Defendants are scant, but it appears the core conduct underlying the complaint is not filing the collection lawsuit or sending the dunning letter, but rather the billing practices by which the Judge Law Firm Defendants calculated the amount of attorney fees and costs that attached to the debt. Alth ough James Judge submitted his declaration explaining the fees and costs were reasonable, that does not make the alleged conduct underlying the action protected. Be cause the Judge Law Fi rm Defendants have not demonstrated the acts on which the complain t is based are protected for purposes of the anti-SLAPP statute, we need not consid er whether Gross demonstrated a probability of prevailing, and we affirm the order denying the special motion to strike. ( A.F. Brown,

supra, 137 Cal.App.4th at p. 1130.)

DISPOSITION

The order is affirmed. Because no appearance has been made by Respondent, no costs are awarded.

O’LEARY, P. J.

WE CONCUR:

BEDSWORTH, J.

ARONSON, J.

Welker , supra, 626 F.Supp.2d at p. 1073 [defendant ’s bald assertion dunning letter was sent “‘in the course of litig ation,’” not sufficient].)