Filed 9/7/16 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

RAFAEL V. SUAREZ ,
Plaintiff and Appellant,

v.
TRIGG LABORATORIES, INC. ,
Defend ant and Respondent

. B2 64511
(Los Angeles County Super. Ct. No. BC 544554 )

APPEAL from an order of the Superior Court of Los Angeles County, Elizabeth
Feffer , Judge. Affirme d

. Law Office of Greg May and Greg May , for Plaintiff an d Appellant. Mitchell Silberberg & Knupp and Mark T. Hiraide for Defendant and Respondent

.

_____________________________2

Rafael Suarez challenges the grant of Trigg Laboratories’ special motion to strike pursuant to Code of Civil Procedure section 425. 16, the anti

- SLAPP statute

. 1 We affirm
the order.

FACTUAL AND PROCEDURAL SUMMARY Suarez, a business consultant, entered into an arrangement with Trigg Laboratories (Trigg) and its principal owner Michael Trygstad in April 2005
, with the goal of
increas ing company profit and growth to prepare Trigg for an eventual sale. The parties initially expected the arrangement to be short term, and Suarez was paid $125 an hour. After several months, the scope of the work expanded to include raising additional

cap ital

. The parties agreed Suarez would receive five percent of new capital raised and seven percent of any sale of Trigg , or if neither occurred, he would receive just a monthly
retainer

. This was not reduced to writing. Suarez helped Trigg obtain addi tional capital, which would have entitled him to $75,000 under their agreement. At Trygstad’s request, he agreed to defer that payment in exchange for an increase of the percentage he would eventually receive for an “end
transaction

. ” That percentage was later increased to 13.5 percent. In an April 2007 e

- mail to Suarez, Trygstad indicated he did not want to sell the company for less than $40 million. He also told Suarez his potential compensation upon

sa le was excessive. Suarez grew increasingly conc erned about continuing to work for Trigg with only an oral agreement, and in June 2007, he sought a formal written agreement

. Trygstad refused, and one week later terminated Suarez’s employment. O n September 24, 2007, Suarez filed suit against Trigg for quantum meruit , seeking to recover the fair value of the services he had rendered over the course of the Trigg engagement. ( Suarez v. Trigg Laboratories
, Inc . (Super. Ct., L.A. C ounty, 2007, No.
3 78025 ) ( Suarez I

)

. )

1 SLAPP is an acronym for “strategic law suit against public participation.” All statutory references are to the Code of Civil Procedure unless otherwise indicated.3

Meanwhile
, Trygstad engaged Bell Hol dings, Inc. and George Segal Associates (GSA) to assist in selling Trigg. Beginning on June 20, 2008, a series of e

- mails was exchanged by Bell, Trygstad, and GSA. The subject was listed as: “letter of intent
Ansell

. ” Bell informed Trygstad that GSA ha d reported that a prospective investor,
Ansell , was proceeding with a memorandum of intent, which was expected the following
week. Ansell had confirmed its interest in Trigg and its desire to “do a deal” as soon as possible. Trygstad responded to Bell : “Just a reminder that the letter of intent cannot come to me directly. Must go to the attorney you referred to keep the contents within attorney client privilege for the Rafael case.” On June 22, 2008, Bell e

- mailed GSA: “Re: Correspondence/communicati ons regarding Trigg. [¶] NO COMMUNICATIONS
OR CORRESPONDENCE FROM GSA DIRECTLY WITH MICHAEL OR TRIGG COMPANY. All communications directly with me or Trigg attorney

. . . (do not copy Michael). DO NOT SEN [D] MICHAEL or Trigg company

. . . the letter of intent o[r] any other correspondence as per his request.” The letter of intent was sent, but Trigg was not sold to Ansell or to any other buyer.
These e

- mails, sent between June 20 to 22, 2008, preceded Suarez’s July 16, 2008
mediation with Trigg

. Sua rez was u naware of the potential sale of Trigg when he agreed to settle the case for $175,000. Trigg terminated its consulting relationships with Bell and GSA in February and
March 2009 , respectively. During subsequent litigation between Trigg and Bell, counsel
for Bell obtained the e

- mails regarding the letter of intent from Ansell and T rygstad’s instructions not to send any communications to him. Suarez learned of these e

- mails in
late 2010. In January 2011, h is attorney sent letters to Trigg’s couns el , claiming that the law firm and Trigg had wrongfully concealed the Ansell letter of intent from Suarez

. Suarez’s attorney received no response. Suarez filed this acti on against Trigg i n May 2014, seeking rescission of the settlement agreement in Suar ez I based on Trigg’s fraudulent concealment of the prospects for sale of the company, and quantum meruit. Trigg filed a special motion to4

strike pursuant to the anti

- SLAPP statute, asserting Suarez’s claims arise out of
communications that occurred durin g the course of Suarez I

. The trial court found Suarez’s causes of action ar o se from litigation activities protected by the anti

- SLAPP statute and that he failed to make a showing of likelihood of success on the merits. The
action was dismissed without l eave to amend. Suarez appeals.

DISCUSSION Section 425.16, subdivision (b)(1) provides: “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 Const itution 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 .” As relevant here, an “ ‘ act in furtherance of a person’s right of petition or free speech

. . . in connection with a public issue ’ ” includes “any written or oral statement or writing made in connection with an issue under consideration or review” by a judicial body. (§ 425.16, subd. (e)(2).) “In the anti

- SLAPP context, the critical consideration is
whether the cause of action is based on the defendant’s protected free speech or petitioning activity.” ( Navellier v. Sletten (2002) 29 Cal.4th 82, 89 ( N avellier ) ; City of
Cotati v. Cashman (2002) 29 Cal.4th 69, 76

- 78.) Analysis of an anti

- SLAPP motion is two

- fold. “First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protec ted activity

. . . . If the court 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.) In making t hese determinations, the court considers the pleadings and supporting and opposing affidavits. ( Ibid .) We review an order granting an anti

- SLAPP motion de novo; we engage in the same process as the trial court to determine if the parties have5

satisfied t heir respective burdens. ( Talega Maintenance Corp. v. Standard Pacific Corp. (2014) 225 Cal.App.4th 722, 728.) Appellant alleged in his pleading that while Suarez I was pending, respondent was notified that a prospective buyer would b e submitting a let ter of intent “to purchase Trigg for $24 million cash, plus a $16 million earn out. Such an offer would give Trigg an implied enterprise value of approximately $40 million. Trygstad knew that disclosure of
the [letter of intent] to Plaintiff while the Qu antum Meruit Action was pending would be extremely harmful to Trigg’s negotiating position in the Quantum Meruit Action.
Plaintiff is informed and believes that Trygstad directed that the existence of the [letter of intent] be suppressed and not disclosed to Plaintiff. This was part of a fraudulent strategy by Trigg to protect the [letter of intent] from being disclosed under the guise of the attorney

- client privilege and other acts of concealment.” As a result of this “evasion,” appellant alleged he was deprived of material informa t ion that should have been disclosed, and was induced to settle his claims in Suarez I for a fraction of their value. Respondent assert s in its anti

- SLAPP motion that all of appellant’s claims in this
action arose out of com munications that occurred during the course of the settlement of Suarez I
, the underlying action for quantum meruit , and thus constitute petitioning activity protected under section 425.16. Communications in the course of s ettlement negotiations are prote cted activity with in the scope of section 425.16. ( Seltzer v. Barnes (2010) 182 Cal.App.4th 953, 963; GeneThera, Inc. v. Troy & Gould Professional Corp. (2009) 171 Cal.App.4th 901, 907.) The protection applies, even against allegations of fraudulent prom ises made during the settlement process. ( Navellier
, supra , 29 Cal.4th at
p. 90; Navarro v. IHOP Properties, Inc. (2005) 134 Cal.App.4th 834, 842.) App ellant argues this action is not premised on respondent’s statements , but its
active concealment and nondisclosure of the anticipat ed letter of intent from Ansell

. In opposing the motion , appellant relied on the email from respondent to Bell, directing that all correspondence related to the expected letter of intent from Ansell be sent to his attorney, n ot to respondent, “to keep the contents within attorney client privilege for the6

Rafael case.” This was litigation

- related activity
, expressly aimed at appellant Rafael
Suarez’s case. So was respondent’s subsequent silence with respect to the potential s ale during settlement discussions with appellant . As appellant made clear in his declaration,
the claim for rescission was based on respondent’s failure to disclose and his concealment of the existence of the letter of intent from Ansell prior to the time appellant agreed to the settlement in Suarez I

. In Navallier
, supra , 29 Cal.4th at page 89, anti

- SLAPP protection was applied to an action alleging “ misrepresentations and omissions” in connection with the signing of a
release in an unde r l ying federal a ction. Defendant allegedly failed to disclose that he was secretly not in agreement with the terms of the release, which induced plaintiffs to file an amended federal action; defendant then claimed he did not release, and did not intend to
release his cla ims. The Supreme Court found that each of defendant’s “acts or ( omissions )

. . . falls squarely within the plain language of the anti

- SLAPP statute.” ( Id

. at p. 90.) Misrepresentation or f ailure to disclose can be protected petitioning activity for

purp oses of section 425.16. This is consistent with established free speech jurisprudence. The right to freedom of speech under the First Amendment to the United States Constitution and under Article
I , section 2 of the California Constitution, encompasses what a speaker chooses to say, and what a speaker chooses not to say; it is a right to speak freely and also a right to refrain from doing so at all. ( Beeman v. Anthem Prescription Management, LLC (2013) 58 Cal.4th 329, 342; Gerawan Farming, Inc. v. Lyon s ( 2000) 24 Cal.4th 468, 491.) The cases relied on by appellant are factually distinct. For example, i n Robles v. Chalilpoyil (2010) 181 Cal.App.4th 566, plaintiffs sued their former expert witness for giving false deposition testimony in the underlyin g wrongful death action and failing to continue to act as an independent expert in the prosecution of that case by entering into a business relationship with plaintiffs’ former lawyer to develop a product based on information obtained while still acting as plaintiffs’ expert. ( Id . at pp. 575

- 576.) The court found this was not protected activity under the anti

- SLAPP statute: “The central7

subject of the complaint against appellant is not an exercise of free speech or petition but the negligence or fraud in herent in his act of entering into a business relationship to respondents’ detriment.” ( Id . at p. 580.) This reasoning has no counterpart in appellant Suarez’s action against respondent Trigg. Respondent’s alleged wrongdoing was concealing or failing to disclose the existence of a letter of intent to purchase Trigg in order to prevent appellant from obtaining a more favorable settlement in Suarez I . The alleged wrongdoing was directed squarely at the underlying litigation.
In Renewable Resources Coalit ion, Inc. v. Pebble Mines Corp. (2013)
218 Cal.App.4th 384, the defendants purchased confidential documents from plaintiff’s former fundraiser, then used those documents to prosecute a complaint against plaintiff for alleged election law violations. The c ourt reversed the grant of defendants’ special motion to strike: “Rather than focusing on the gravamen of this action, which was that the Pebble defendants allegedly purchased the Coalition’s confidential documents, the trial court focused on the injury t o the Coalition, which was forced to defend itself in the
A laska Public Offices Commission proceeding. However, the gravamen of an action is
the allegedly wrongful and injury

- producing conduct , not the damage which flows from such conduct. Here, the grav amen of the Coalition’s action is the allegation that the Pebble defendants wrongfully purchased its confidential documents. Said purchase was not an act by defendants in furtherance of their right of petition or free speech.” ( Id . at
p. 387.) In our ca se, the allegedly wrongful conduct

— concealing or failing to disclose the potential purchase

— occurred as an explicit part of the settlement strategy for Suarez I

. In United S t

ates Fire Ins. Co. v. Sheppard, Mullin, Richter & Hampton LLP (2009) 171 Cal.Ap p.4th 1617, a law firm represented U nited States Fire in a lawsuit by its insured over the scope of U nited S tates Fire’s duty to defend and indemnify the insured against asbestos

- related claims. The firm then represented a group of asbestos
creditors seek ing to maximize insurance benefits from various insurers, including U nited
S tates Fire. The court held U nited S tates Fire’s action to enjoin the firm from the8

conflicted representation was not protected activity under the anti

- SLAPP statute, explaining th at the principal thrust of the misconduct alleged was the law firm’s acceptance of representation adverse to the plaintiff, not the actual disclosure of confidential information it had obtained during its representation of U nited S tates Fire.
Reference to protected activity was “only incidental to the principal thrust of the complaint.” ( Id

. at p. 1628 ; see also Coretronic Corp. v. Cozen O’Connor (2011)
192 Cal.App.4th 1381 , 1391, holding that action alleging concealment of dual representation is not prot ected activity: “ That the concealment occurred in the context of litigation does not change this result, as it is clear that any litigation activity is only incidental to plaintiffs allegations of wrongdoing.” ( Coretronic Corp. v. Cozen
O’Connor
, at p. 1 391.) In contrast, respondent’s alleged concealment in our case was undertaken specifically to affect the settlement of the Suarez I litigation. Jespersen v. Zubiate

- Beauchamp (2003) 114 Cal.App.4th 624 does not aid appellant. In that attorney malprac tice action, the conduct from which the action arose was the attorneys’ failure to serve timely discovery responses, and failure to comply with
two court orders ; “t he alleged attorney malpractice did not consist of any act in furtherance of anyone’s right of petition or free speech, but appellants’ negligent failure to do so on behalf of their clients.” ( Id at p. 631.) This differs from the allegations of respondent’s affirmative nondisclosure and concealment for purposes of affecting
settlement in our ca se

. The activity upon which appellant premises this action is respondent’s
concealment of and failure to disclose the letter of intent from Ansell prior to the time appellant agreed to settle Suarez I

. This claim arises from respondent’s litigation

act ivity

— to keep this information within the attorney

- client privilege for purposes of “the Rafael [Suarez] case.” And it arises from respondent’s protected right of free speech

— the right not to speak. The first prong of the anti

- SLAPP statute has been sati sfied. Ordinarily we would turn to the second prong of the anti

- SLAPP analysis, examining whether the plaintiff’s showing, if accepted by the trier of fact, would be9

sufficient to sustain a favorable judgment. ( Baral v. Schnitt (August 1, 2016, S255090) ___Cal. 4th ___ [2016 Cal. Lexis 6383] .) In this case, however, appellant states in his reply brief that respondent’s discussion of this prong should be disregarded because “appellant Suarez raised no issue regarding the second prong.” For that reason, w e do
not reach that issue

.

DISPOSITION
The order of dismissal is affirmed. Respondent is awarded costs on appeal.

CERTIFIED FOR PUBLI CATION

.

EPSTEIN, P. J.

We concur:

WILLHITE, J.

COLLINS, J.