Filed 11/17/20 Sallah v. Ujas Barstow, LLC CA4/1

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

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COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

JAMES D. SALLAH,

Plaintiff and Respondent,

v.

UJAS BARSTOW, LLC et al.,

Defendants and Appellants.

 D075874

 (Super. Ct. No. 37-2016-00020073-

 CU-BC-CTL)

APPEAL from an order of the Superior Court of San Diego County, 

Katherine A. Bacal, Judge. Affirmed.

Vivoli Saccuzzo, Michael W. Vivoli and Jason Paul Saccuzzo for 

Defendant and Appellant Ujas Barstow, LLC.

Gregor Law Offices and Theodore Steven Gregor for Defendant and 

Appellant Columbia Downtown, LLC.

Law Offices of Joseph A. Lara and Joseph Alan Lara for Defendant and 

Appellant Chhatrala Investments, LLC.

O’Hagan Meyer, Theodore Clarke Peters and Sanay B. Panchal for 

Plaintiff and Respondent James D. Sallah.
2

Court-appointed monitor James D. Sallah sued three corporate entities 

to recover funds allegedly due to defrauded investors. Claiming promissory 

fraud, Sallah alleged that the alter-ego entities executed a $930,000 

promissory note having no intention to repay the loan. Defendants moved to 

strike the complaint under the anti-SLAPP statute (Code Civ. Proc., 

§ 425.16), arguing the fraud claim arose out of protected postexecution 

settlement discussions that Sallah referenced in his operative complaint.1 

The trial court disagreed and denied the motions, concluding the fraud claim 

instead turned on defendants’ false promise to repay the note at the time it 

was executed. Defendants challenge that ruling on appeal, but we agree with 

the trial court’s sound reasoning.

The basis of Sallah’s fraud claim is defendants’ execution of a 

promissory note they allegedly had no intention of repaying. Although the 

complaint references later false assurances made during settlement talks, 

these merely provide evidence of defendant’s earlier fraudulent intent. In the 

first prong of the anti-SLAPP inquiry, defendants must show that the cause 

of action arises out of protected activity. The Supreme Court cautions that 

courts must “respect the distinction between activities that form the basis for 

a claim and those that merely . . . provide evidentiary support for the claim.” 

(Park v. Board of Trustees of California State University (2017) 2 Cal.5th 

1057, 1064 (Park).) We conclude defendants did not meet their moving 

burden and accordingly affirm the order denying their anti-SLAPP motions.

1 Further undesignated statutory references are to the Code of Civil 

Procedure.
3

FACTUAL AND PROCEDURAL BACKGROUND

Florida-based hedge fund OM Global Investment Fund, LLC (OM 

Global) and its portfolio manager Gignesh Movalia allegedly misrepresented 

to investors that their funds would be placed solely in pre-IPO Facebook 

stock. With that money, OM Global instead extended unauthorized loans 

totaling $3.2 million to various companies. These loans formed the basis for 

an enforcement action by the Securities and Exchange Commission. Sallah 

was appointed by a Florida court as a corporate monitor to marshal OM 

Global’s assets for the benefit of defrauded investors.2 

This action arises out of a $930,000 promissory note executed by a 

California-based corporate entity on January 4, 2013, committing to repay 

OM Global $930,000 in principal plus a $27,900 origination fee by February 

28, 2013. The note was issued by “Columbia Downtown, LLC (Chhatrala 

Group),” and signed by Hemant Chhatrala for the borrower and Jenish Patel 

as a witness.3 Patel, a relative of Hemant, served as Chief Investment 

Officer of the “Chhatrala Group,” an informal trade name used by associated 

entities. Hemant and Patel allegedly signed the note to secure funds to 

assume a leasehold interest in a Ramada Inn located in Barstow, California. 

No payment was ever made on the note. 

In the operative Second Amended Complaint (SAC), Sallah alleges that 

Chhatrala Barstow, LLC (Barstow) and Chhatrala Investments, LLC 

(Chhatrala Investments) are alter egos of Columbia Downtown, LLC 

2 Additional background is provided in our resolution of the parties’ prior 

nonpublished opinion, Sallah v. Chhatrala Barstow, LLC, D072326 (Mar. 26, 

2018). 

3 To avoid confusion with the various Chhatrala entities involved in this 

appeal, we refer to Hemant Chhatrala by his first name and intend no 

disrespect.
4

(Columbia), the entity that issued the note.4 Sallah seeks to hold all three 

entities jointly liable for breach of contract, restoration of a lost instrument, 

and fraud. 

Only the fraud cause of action is before us. Sallah alleges that 

Columbia, acting through its agent Hemant, promised on January 4 to repay 

the loan and origination fee. Before signing the note, Patel assured Movalia 

that he would send OM Global an executed copy of the note at a later date. 

Relying on these representations, OM Global lent Columbia $930,000, and at 

Patel’s written request wired the funds to Barstow (for Barstow to acquire 

the hotel). Patel sent Movalia an executed copy of the note on February 13. 

According to Sallah, defendants never had any intention of repaying 

the loan. Instead the entities agreed to: “(a) have Columbia execute the Note 

as the borrower, as evidenced by the signatures of Hemant Chhatrala and 

Jenish Patel; (b) have a related entity ([Barstow]) receive the funds pursuant 

to the Note; but then (c) assert that Hemant Chhatrala’s signature on the 

Note was forged and that Jenish Patel was not authorized to enter the loan 

transaction on behalf of Columbia; and (d) then claim that Columba never 

received any of the loaned funds, all in order to facilitate the argument that 

the Note cannot be enforced.” The fraud cause of action also includes 

allegations that defendants made false promises to repay the loan during 

subsequent settlement talks in connection with Florida litigation. According 

to Sallah, these false assurances “were nothing more than a rouse [sic] 

designed solely for the purpose of prolonging the time that they could keep 

[Sallah] ignorant of the true facts.” In truth, “neither Columbia, nor the 

4 After the lawsuit was filed, Chhatrala Barstow, LLC changed its name 

to Ujas Barstow, LLC. We use the name “Barstow” as shorthand for both 

entities.
5

Alter Ego Defendants had any intention of repaying the moneys loaned 

pursuant to the Note.” But for this fraud, Sallah avers that OM Global never 

would have loaned Columbia nor wired Barstow the $930,000.

Defendants moved to strike the fraud cause of action under the antiSLAPP statute (§ 425.16). They presented a diametrically different view of 

what occurred, claiming the “Note is a fake and a forgery manufactured by 

OM Global’s former manager and convicted felon, Gignesh Movalia, in 

apparent collusion with Jenish Patel . . . , Hemant Chhatrala’s estranged 

nephew who has long-since fled to India.” In three substantively identical 

briefs, defendants argued the fraud claim was premised on statements 

allegedly made during settlement negotiations and, thus, arose out of 

protected activity. Defendants further argued that Sallah could not show the 

minimal merit of his fraud claim because any statements they made during 

settlement discussions were covered by the litigation privilege (Civ. Code, 

§ 47, subd. (b)). 

In opposition, Sallah argued that his promissory fraud claim rested on 

the false promise to repay at the time the note was executed, not on any false 

assurances made during later settlement discussions. As Sallah explained, 

he included allegations regarding later false assurances merely to “illustrate 

a pattern of misbehavior and deception by Defendants”—i.e., to “show a 

course of conduct whereby Defendants continued to make false assurances 

after the fact,” which ultimately delayed Sallah’s discovery of the fraud. 

The trial court agreed with Sallah on this threshold matter and denied 

the anti-SLAPP motions. As the court explained, Sallah alleged promissory 

fraud, “which requires proof that defendants had no intention of performing 

when the promise was made.” This fraud allegedly occurred on January 4, 

2013, when the note was executed and OM Global wired the funds to 
6

Barstow. Although later statements made by Hemant and Patel and 

information obtained in discovery could provide evidence that defendants 

never intended to repay, these allegations were not the basis for the 

promissory fraud claim. As such, defendants did not meet their moving 

burden to demonstrate that the fraud claim was based on protected activity. 

DISCUSSION

Challenging the trial court’s ruling, defendants contend that alleged 

statements they made during settlement discussions in the Florida action 

were essential, and not merely incidental, to Sallah’s fraud claim. As such, 

defendants maintain they met their moving burden to show that the fraud 

claim arose out of their protected activity. Defendants further argue that 

Sallah offered no admissible evidence to show that the fraud claim had 

minimal merit. Our conclusion on the first issue avoids the need to reach the 

second. As we explain, the trial court correctly determined that Sallah’s 

promissory fraud cause of action did not arise out of protected activity to 

trigger application of the anti-SLAPP statute.5 

Enacted in 1992, section 425.16 seeks to protect defendants from 

meritless lawsuits that chill their exercise of constitutional rights to speech 

5 Sallah seeks judicial notice of Columbia’s Articles of Organization and 

seeks to supplement the record with new evidence, the “Second Amended 

Operating Agreement for Chhatrala Investments, LLC.” As Sallah explains, 

both documents were inadvertently omitted from his “Compendium of 

Evidence” filed before the trial court; he asserts that they demonstrate 

defendants’ “interrelatedness” and Patel’s apparent authority to bind 

Columbia. Both requests are denied. We find no exceptional circumstances 

to deviate from the usual rule limiting appellate inquiry to matters that were 

part of the record at the time the trial court ruled. (Vons Companies, Inc. v. 

Seabest Foods, Inc. (1996) 14 Cal.4th 434, 444, fn. 3.) Moreover, the 

corporate documents Sallah proffers are irrelevant to our consideration of the 

narrow anti-SLAPP issue addressed on appeal. (See San Diegans for Open 

Government v. City of San Diego (2015) 242 Cal.App.4th 416, 432, fn. 6.)
7

and petition. (Wilson v. Cable News Network, Inc. (2019) 7 Cal.5th 871, 883–

884 (Wilson); § 425.16, subd. (a).) It does so by authorizing defendants to file 

a special motion to strike any claims “arising from any act of that person in 

furtherance of the person’s right of petition or free speech under the United 

States or California Constitution in connection with a public issue . . . , unless 

the court determines that the plaintiff has established that there is a 

probability that the plaintiff will prevail on the claim.” (§ 425.16, subd. 

(b)(1).) By creating a summary-judgment-like procedure at the outset of the 

case, the anti-SLAPP statute provides for early dismissal of actions deemed 

to be “strategic lawsuits against public participation,” or SLAPP suits. (See 

Baral v. Schnitt (2016) 1 Cal.5th 376, 384 (Baral); Navellier v. Sletten (2002) 

29 Cal.4th 82, 85 (Navellier).)

A defendant filing an anti-SLAPP motion bears the initial burden to 

establish that the challenged claim arises from the defendant’s protected 

activity. (Wilson, supra, 7 Cal.5th at p. 884; Baral, supra, 1 Cal.5th at 

p. 396.) This requires a prima facie showing that activity underlying a 

plaintiff’s causes of action is statutorily protected. (Wilson, at pp. 887−888.) 

If the defendant makes the required showing, the burden then shifts to the 

plaintiff to demonstrate that its claim has minimal merit. (Id. at p. 884.) 

“The court, without resolving evidentiary conflicts, must determine whether 

the plaintiff’s showing, if accepted by the trier of fact, would be sufficient to 

sustain a favorable judgment.” (Baral, at p. 396.) If the plaintiff cannot 

make that showing, the court will strike the claim. (Ibid.; Wilson, at p. 884.) 

Focusing our attention on the first prong of the anti-SLAPP inquiry, we 

review de novo whether Sallah’s fraud claim arises from protected activity. 

(Wilson, supra, 7 Cal.5th at p. 884.) At this stage, defendants “must make 

two related showings.” (Id. at p. 887.) “Comparing its statements and 
8

conduct against the statute, [they] must demonstrate activity qualifying for 

protection. (See § 425.16, subd. (e).) And comparing that protected activity 

against the complaint, [they] must also demonstrate that the activity 

supplies one or more elements of a plaintiff’s claims.” (Wilson, at p. 887.) 

Section 425.16 protects “any written or oral statement or writing made 

before a legislative, executive, or judicial proceeding” (§ 425.16, subd. (e)(1)) 

or any such statement made “in connection with an issue under consideration 

or review” in such proceedings (id., subd. (e)(2)). If a statement falls into one 

of these categories, a defendant does not separately need to show that his or 

her statement was made in connection with a “public issue.” (Briggs v. Eden 

Council for Hope and Opportunity (1999) 19 Cal.4th 1106, 1122‒1123.) 

Statements made during settlement talks are statutorily protected as 

statements made in connection with an underlying lawsuit. (Optional 

Capital, Inc. v. Akin Gump Strauss, Hauer & Feld LLP (2017) 18 Cal.App.5th 

95, 114.) The anti-SLAPP statute even protects allegations of fraudulent 

promises made during the settlement process. (Ibid.) It is undisputed that 

Sallah’s fraud cause of action references protected activity, by including 

allegations that false assurances were made by Columbia, Hemant, and Patel 

during settlement negotiations that the earlier-executed note would be 

repaid. 

But the question becomes whether the fraud claim is based on that 

protected activity—the anti-SLAPP statute only covers claims “ ‘arising from 

any act of [the defendant] in furtherance of the [defendant’s] right of petition 

or free speech.’ ” (Park, supra, 2 Cal.5th at p. 1062.) “[T]he mere fact that an 

action was filed after protected activity took place does not mean the action 

arose from that activity for the purposes of the anti-SLAPP statute.” 

(Navellier, supra, 29 Cal.4th at p. 89.) “In the anti-SLAPP context, the 
9

critical consideration is whether the cause of action is based on the 

defendant's protected free speech or petitioning activity.” (Ibid.) “A claim 

arises from protected activity when that activity underlies or forms the basis 

for the claim.” (Park, at p. 1062.) In making this inquiry, courts “have taken 

care to respect the distinction between activities that form the basis for a 

claim and those that merely lead to the liability-creating activity or provide 

evidentiary support for the claim.” (Id. at p. 1064, italics added; see Graffiti 

Protective Coatings, Inc. v. City of Pico Rivera (2010) 181 Cal.App.4th 1207, 

1214−1215 [“In deciding whether an action is a SLAPP, the trial court should 

distinguish between (1) speech or petitioning activity that is mere evidence

related to liability and (2) liability that is based on speech or petitioning 

activity.”].) Thus, to meet their moving burden, defendants needed to show 

that one or more elements of the promissory fraud claim rests on the false 

assurances allegedly made during settlement talks. (Park, at p. 1063; 

Wilson, supra, 7 Cal.5th at p. 887.)

Defendants did not carry that burden. Fraud requires a 

misrepresentation, knowledge of falsity (scienter), intent to induce reliance, 

justifiable reliance, and damages. (Lazar v. Superior Court (1996) 12 Cal.4th 

631, 638 (Lazar).) “ ‘Promissory fraud’ is a subspecies of the action for fraud 

and deceit. A promise to do something necessarily implies the intention to 

perform; hence, where a promise is made without such intention, there is an 

implied misrepresentation of fact that may be actionable fraud.” (Ibid; see 

Civ. Code, § 1710, subd. (4) [defining deceit as the making of a promise 

“without any intention of performing it”].) None of the essential elements of 

Sallah’s claim for promissory fraud rest on statements made during 

settlement discussions after the execution of the note. Instead, the claim is 

based on proof that defendants did not intend to repay at the time they 
10

executed the note. Later statements merely provide evidentiary support for 

defendants’ intent at the time the note issued. (See Park, supra, 2 Cal.5th at 

p. 1068 [where the elements of plaintiff’s claims did not depend on proof of 

the protected activity alleged in the complaint, that activity did not form the 

basis of the challenged claim]; Gaynor v. Bulen (2018) 19 Cal.App.5th 864, 

880 (Gaynor) [anti-SLAPP statute did not apply where allegations of 

protected activity would merely provide evidence of liability rather than form 

the basis for it].)

A careful reading of the SAC supports this inescapable conclusion. The 

fraud claim turns on defendants’ promises in executing the note. Sallah 

alleges that defendants “expressly promised” to repay the loan and 

origination fee in signing the note on January 4. OM Global relied on this 

representation in extending the loan. The representations “were in fact 

false.” In truth, defendants never intended to repay and planned to avoid 

liability by claiming Hemant’s signature was forged and that Patel lacked 

authority to bind Columbia, while denying that Columbia ever received the 

funds. Evidence of this intent was apparent in later settlement talks—

Hemant and Patel made false assurances that the note would be repaid, only 

to later claim “that the Note had been forged and that Jenish Patel had no 

authority.” Given discovery revelations of links between the defendants, 

Sallah inferred that “Defendants never intended to repay any portion of the 

Note.” OM Global would never have loaned Columbia or its alleged alter egos 

money, had it known they had no intention of repaying. As we read it, the 

fraud claim turns on a false promise to repay at the time the note was signed, 

inducing OM Global to loan defendants money in reasonable reliance of that 
11

promise and incur damages. It does not turn on any false assurances made 

thereafter—as to which Sallah does not allege any action taken in reliance.6

Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18 (Tenzer) does not suggest 

otherwise. It merely holds that promissory fraud cannot be proven by mere 

evidence that a promise was made and not fulfilled. (Id. at p. 30.) “Rather, 

‘something more than nonperformance is required to prove the defendant’s 

intent not to perform his promise.’ ” (Ibid.; accord Riverisland Cold Storage, 

Inc. v. Fresno-Madera Production Credit Assn. (2013) 55 Cal.4th 1169, 1183 

[“the intent element of promissory fraud entails more than proof of an unkept 

promise or mere failure of performance”].) Relying on Tenzer, defendants 

contend that allegations regarding the parties’ settlement discussions were 

essential, and not merely incidental, to the fraud claim. Without those 

allegations, Sallah merely alleged that Columbia executed the note and did 

not intend to repay. Indeed, so. But these are the essential elements of a 

promissory fraud claim. Although Tenzer requires more to prove defendants’ 

intent not to perform beyond mere nonperformance, such evidence is not 

itself a required element of the claim. 

Because a defendant’s fraudulent intent can rarely be shown by direct 

evidence, it “must often be established by circumstantial evidence”—

6 Defendants suggest the SAC alleges a “fantastic” theory premised on 

abuse of process—i.e., “that Defendants planned from the very start to induce 

OM Global into lending the sum of $930,000 with the intent to claim in 

litigation the Note was forged, to claim in litigation JP was not authorized to 

enter the loan transaction on behalf of Columbia, to claim in litigation

Columbia never received the money, and then to use and abuse settlement 

discussions and discovery to prevent the Monitor from learning the truth 

about the fraud.” (Italics added.) But the claim as pleaded is premised on 

something more basic—a false promise to repay at the time the note was 

signed. It does not depend on any abuse of process by defendants during 

subsequent litigation, discovery, or settlement discussions.
12

including “from such circumstances as defendant’s insolvency, his hasty 

repudiation of the promise, his failure even to attempt performance, or his 

continued assurances after it was clear he would not perform.” (Tenzer, 

supra, 39 Cal.3d at p. 30, italics added; see Las Palmas Associates v. Las 

Palmas Center Associates (1991) 235 Cal.App.3d 1220, 1239 [because there is 

“rarely” direct evidence of a defendant’s fraudulent intent, a plaintiff may 

rely on a defendant’s subsequent conduct as circumstantial evidence “to show 

that a defendant made the promise without the intent to keep the 

obligation”]; 5 Witkin, Summary of Cal. Law (11th ed. 2020), Torts, § 900 

[“It is a difficult matter to prove the original lack of intention by direct 

evidence. But circumstantial evidence of subsequent conduct is admissible 

and may be sufficient.”].) Simply put, that Sallah endeavors to prove 

defendants’ fraudulent intent by pointing to false assurances made after the 

fact does not mean that his promissory fraud claim is based on those later 

assurances.7

The question on prong one is whether a plaintiff’s cause of action arises 

out of the defendant’s protected activity. Here it plainly does not—the basis 

for the promissory fraud claim is that defendants executed the note on 

January 4, 2013 having no intention to repay. That their contemporaneous 

intention may be proven at trial by false assurances made later during 

settlement discussions does not change the analysis. (See Park, supra, 

2 Cal.5th at p. 1068; Gaynor, supra, 19 Cal.App.5th at p. 880.) As the trial 

7 Defendants question why the allegations are included in the SAC if 

they do not underlie the fraud action. Although we cannot be certain, claims 

of fraud and deceit require particularized pleading. (Lazar, supra, 12 Cal.4th 

at p. 645; Committee on Children’s Television, Inc. v. General Foods Corp.

(1983) 35 Cal.3d 197, 216−217.) Mindful of these requirements, Sallah may 

have felt the need to plead facts supporting his allegation that defendants 

had no intent to repay the note at the time the note was signed.
13

court correctly determined, the promissory fraud cause of action does not 

arise out of defendant’s protected activity. Because defendants did not meet 

their moving burden, their anti-SLAPP motions were properly denied.

DISPOSITION

The order denying defendants’ special motions to strike the SAC is 

affirmed. Sallah is entitled to recover his costs on appeal.

DATO, J.

WE CONCUR:

O’ROURKE, Acting P. J.

GUERRERO, J.