Court Opinion

ID: 5134930
Source: CourtListenerOpinion
Date Created: 2021-12-15 00:02:07.046442+00
Date Added: 2024-06-11T08:23:46.856344
License: Public Domain

Filed 12/14/21

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION THREE
SANFORD EDWARD,
Plaintiff and Respondent, G059523
V. (Super. Ct. No. 30-2019-01052734)
DAVID ELLIS, OPINION
Defendant and Appellant.

 

 

Appeal from an order of the Superior Court of Orange County, Richard Y.
Lee, Judge. Affirmed.

Ballard Spahr, Robert S. Gutierrez and Elizabeth L. Schilken for Defendant
and Appellant.

Bostwick Law, Gary L. Bostwick; Drooz Legal and Deborah Drooz for
Plaintiff and Respondent.
A political consultant designed two campaign mailers that were distributed
to voters in a local city council election. The mailers included statements about a local
real estate developer and his litigation history with the city and linked the developer to
certain candidates. The developer sued the political consultant for libel based on
allegedly false statements about him in the mailers, and the political consultant in turn
filed a special motion to strike the complaint under the anti-SLAPP (strategic lawsuit
against public participation) statute. (See Code Civ. Proc., § 425.16 (§ 425.16).)

The trial court denied the anti-SLAPP motion, finding that although the
complaint arose from protected conduct, the developer demonstrated a probability of

prevailing. We agree and therefore affirm the order denying the anti-SLAPP motion.

FACTS

The following facts are taken from the complaint, declarations, and other
evidence submitted on the special motion to strike.

1. Edward, Headlands, and the Beach Access Litigation

Plaintiff Sanford Edward is a real estate developer and a managing member
of Headlands Reserve, LLC (Headlands). Edward and Headlands are known in Dana
Point (the City) for developing The Strand at Headlands (The Strand), an oceanfront
community of multimillion dollar homes sited at one of the last undeveloped coastal
promontories in Southern California.

In 2009, in accordance with a City ordinance, Headlands installed
pedestrian gates at The Strand to limit public beach access through the development
during certain hours. The installation of the gates spawned years of litigation against the
City.

During the course of that beach access litigation, the City regularly

submitted its bills for attorney fees to Headlands for reimbursement pursuant to
indemnity agreements between Headlands and the City. In August 2015, however,
Headlands stopped reimbursing the City for its legal fees.
2. The City’s 2016 Complaint Against Edward for Fraud

The City ultimately settled the beach access litigation in 2016 and then sued
Headlands for $553,000 in unpaid legal fees. It also asserted a claim for fraud against
Edward individually. Headlands cross-complained against the City, asserting the City
had overbilled it by over $667,000.

The City, Headlands, and Edward settled the lawsuit in 2017, releasing all
claims against one another. As part of their written settlement agreement, under the
heading “City Facility Donation,” Headlands agreed to pay the City $248,200 to help
renovate the City’s community center. According to Edward, Headlands agreed to this
term as a “good will’ gesture,” and the payment had nothing to do with resolving the
City’s claims against him or Headlands. The settlement agreement did not require any
other payments by either Headlands or Edward.

The settlement agreement also contained provisions about the City’s fraud
claim against Edward. First, under the heading “City Retracts and Rescinds Fraud
Allegations,” the City agreed to “withdraw[ ] all allegations related to personal fraud, and
Sanford Edward, as none exist. As a result, the City hereby retracts and formally rescinds
all such allegations and related claims.” Additionally, under the heading “Press Release,”
the parties agreed to issue a joint press release announcing the settlement, Headlands’
donation for the community center, and the City’s rescission and withdrawal of its fraud
allegations against Edward.

The next month, the Orange County Register published an article reporting
that the lawsuit between the City and Edward had come to an end. The article reported
Edward’s $248,200 contribution for improvements to the community center, as well as

the City’s rescission of its fraud allegation against Edward.
3. The 2018 City Council Election and the DPTA Mailers

In 2018, the City held its first district-based city council elections. Three of
the candidates—Joe Muller, Rick Viczorek, and Jamey Federico—teceived support from
a political action committee, defendant Dana Point Taxpayers Association (DPTA).
DPTA hired political consultant David Ellis to manage its campaign.

Ellis advised DPTA the best way to win was to run a negative campaign
against the opposition. When doing his research for the campaign, Ellis read various
articles and other documents in the public domain, including the Orange County
Register’s article about the 2017 settlement between Edward and the City. As a result, he
came to believe Edward was a public figure. Ellis also concluded that Edward supported
the opposing candidates—Joe Jaeger, Mark McGinn, and Charles Payne— after reading
about a fundraiser Edward allegedly had thrown for them. Ellis never contacted Edward
to ask whether he supported those candidates, nor did he contact the candidates
themselves.

Ellis informed DPTA that Edward and Headlands supported Jaeger,
McGinn, and Payne. According to DPTA’s officer, that “seemed odd”; “it made no sense
to us why [Edward, a developer,] would support the other candidates.” Ellis seemed
“credible,” however, so DPTA believed him.

Ellis then designed two campaign mailers suggesting Edward supported
and was able to control Jaeger, McGinn, and Payne.’ The mailers, which DPTA
approved and which are the subject of the present litigation, were sent to thousands of
Dana Point residents in late October 2018.

The first mailer bore the heading, “THERE’S NO FREE LUNCH,” and
featured a photograph of candidate Charles Payne having lunch with “Headlands

 

' Copies of these mailers were attached to Ellis’s declaration in support of his

anti-SLAPP motion and are a part of the record. (See appendix, pp. 1-4.)
Developer Sanford Edward” and “Kingmaker Buck Hill”; the mailer invited voters to
“MEET THE KINGMAKERS AND THE CANDIDATE,” and stated in a caption that
the three were “plotting to take over the city council.” On the back was a screenshot of
the caption from the City’s 2016 complaint against Headlands and Edward, with the
parties’ names highlighted. Below was the following text: “Dana Point sued Headlands
developer Sanford Edward for fraud, breach of contract, and not paying $553,000 in legal
fees to the city.” Beneath that, in bolded red text, it read: “Edward wants his money
back. [9] Electing city council candidate Charles Payne is his payday.” Below that
appeared a photograph of a fundraiser at a private club, with the text: “THEN EDWARD
THREW A PRIVATE FUNDRAISER FOR HIS SLATE OF CANDIDATESJ:] JOE
JAEGERJ[,] CHARLES PAYNE[, and] MARK McGINN.” The text went on: “/t was
quite a shindig at the ultra-chic Headlands Strand Clubhouse. [§] Councilwoman Debra
Lewis led the charge. [§]] Sanford Edward paid the bill. Taxpayers will pay in the end.
[{] STOP SLICK SANFORD FROM BUYING CITY HALL.”

The second mailer read, “Meet the KINGMAKERS AND THE
PUPPETS,” and included the same photograph of Payne dining with Edward and Hill,
but this time with crowns superimposed on the heads of Edward and Hill. The back of
the mailer posed the question, “Will the Kingmakers Elect Their Puppets?,” next to a
picture of a hand holding puppet strings. Beneath were pictures of Jaeger (labeled
“DISTRICT 1 PUPPET”), McGinn (labeled “DISTRICT 2 PUPPET”), and Payne
(labeled “DISTRICT 3 PUPPET”), with captions either describing each as “part of the
Sanford Edward slate” or asserting Lewis had “team[ed] up with Headlands developer
Sanford Edward” to elect those candidates. Below that appeared the same highlighted
screenshot of the caption from the City’s 2016 complaint against Headlands and Edward,
plus additional highlighted screenshots of excerpts from the complaint, which alleged,
“Dana Point is bringing a further claim against Sanford Edward (‘Edward’) for fraud,”

and “Defendant Headlands breached this contract by failing to pay for required legal

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services, beginning in August 2015 and totaling $553,754 (with additional amounts
continuing to be incurred).” Underneath those images was the statement, “Dana Point
sued Headlands developer Sanford Edward for fraud, breach of contract, and not paying
$553,000 in legal fees to the city,” followed by bolded red text that read, “Edward wants
his money back. Electing city council candidates Joe Jaeger, Mark McGinn and Charles
Payne is his payday. [§]] STOP Developer Slate: Jaeger — McGinn — Payne.”
4. Edward’s Libel Claim Against DPTA and Ellis

Edward believed DPTA’s mailers falsely insinuated he was found liable to
the City for fraud in the City’s 2016 lawsuit over attorney fees from the beach access
litigation; he also believed the mailers falsely represented that he supported and
fundraised for certain candidates, when in fact he did not support, endorse, or donate to
any candidate in the 2018 election. Accordingly, just days after the mailers were
disseminated, Edward’s lawyer sent a cease-and-desist letter to DPTA. In a further
exchange of letters between counsel, Edward threatened to sue DPTA unless it published
a retraction; DPTA denied any wrongdoing and asserted Edward’s complaint would be
subject to an anti-SLAPP motion.

DPTA did not retract the statements in its mailers. Instead, in February
2019, it published a paid advertisement in the Dana Point Times “to clear up any
confusion that may have resulted.” The advertisement maintained the mailers were
“factually accurate,” but clarified the City’s 2016 action against Headlands and Edward
ended in “an out-of-court settlement, in which Mr. Edward agreed to pay nearly $250,000
to the City of Dana Point” for use in “improv[ing] the City of Dana Point’s community
and senior center.”

Unsatisfied with this clarification, Edward filed a complaint against DPTA,
asserting a single cause of action for libel per se based on DPTA’s distribution of the
mailers. According to Edward’s complaint, the mailers are defamatory because “they

convey the false message that Edward was found liable for fraud and other unlawful acts

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against the City, and paid hundreds of thousands of dollars in damages in satisfaction of a
judgment rendered against him in a case filed by the City... . In fact, [t]he City
dismissed the Case, rescinded the fraud claim and publicly conceded that it was a
‘mistake’ in a formal settlement agreement at least eighteen months before the Mailers
were published.”

DPTA filed an anti-SLAPP motion, which the trial court denied. Among
other things, the court found Edward had demonstrated a probability of prevailing on his
defamation claim, noting the mailers could be reasonably read as falsely implying
Edward had been found liable for fraud and paid fraud damages. The court further found
Edward was a limited purpose public figure and thus had to prove actual malice, and he
had demonstrated a probability of proving Ellis knew of or recklessly disregarded the
falsity of the implication that Edward had been adjudged liable for fraud. DPTA did not
appeal that ruling.

Edward amended his complaint to substitute in Ellis as a Doe defendant,
and Ellis responded with his own anti-SLAPP motion. The trial court denied Ellis’s
motion, adopting a similar line of reasoning as in its earlier order. Ellis appeals that

order.

DISCUSSION
1. The Anti-SLAPP Statute
The Legislature enacted the anti-SLAPP statute to address “what are
commonly known as SLAPP suits (strategic lawsuits against public participation)—
litigation of a harassing nature, brought to challenge the exercise of protected free speech
rights.” (Fahlen v. Sutter Central Valley Hospitals (2014) 58 Cal.4th 655, 665, fn. 3.)
The statute authorizes a special motion to strike meritless claims early in the litigation if
the claims “aris[e] from any act of that person in furtherance of the person’s right of

petition or free speech under the United States Constitution or the California Constitution
in connection with a public issue.” (§ 425.16, subd. (b)(1).) The statute is “‘intended to
resolve quickly and relatively inexpensively meritless lawsuits that threaten free speech
on matters of public interest.’” (Rand Resources, LLC v. City of Carson (2019) 6 Cal.Sth
610, 619.)

When evaluating a special motion to strike, the trial court must engage in a
two-step process. “First, the court decides whether the defendant has made a threshold
showing that the challenged cause of action is one arising from protected activity. .. .
[Citation.] 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.” (quilon
Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) “Only a cause of action
that satisfies both prongs of the anti-SLAPP statute—1.e., that arises from protected
speech or petitioning and lacks even minimal merit—is a SLAPP, subject to being
stricken under the statute.” (Navellier v. Sletten (2002) 29 Cal.4th 82, 89 (Navellier).)
We review a trial court’s order denying an anti-SLAPP motion de novo. (Flatley v.
Mauro (2006) 39 Cal.4th 299, 325.)

2. Step One: Protected Activity

Under step one of the anti-SLAPP analysis, we must first decide whether
Ellis made a threshold showing that Edward’s claims arose from an act in furtherance of
Ellis’s right of petition or free speech in connection with a public issue. (§ 425.16,
subd. (b)(1); see id., subd. (e) [defining protected activity].) Edward does not dispute that
the complaint arises from protected activity, and rightly so. The distribution of campaign
mailers and other political literature about candidates’ qualifications is undoubtedly
protected activity under the anti-SLAPP statute. (See, e.g., Major v. Silna (2005)

134 Cal App.4th 1485, 1490; Beilenson, supra, 44 Cal.App.4th at pp. 949-950.)
3. Step Two: Probability of Prevailing
We therefore turn to step two of the anti-SLAPP analysis, in which Edward

must demonstrate a probability of prevailing against Ellis. His ““burden of establishing a

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probability of prevailing is not high: We do not weigh credibility, nor do we evaluate the
weight of the evidence. Instead, we accept as true all evidence favorable to the plaintiff
and assess the defendant’s evidence only to determine if it defeats the plaintiff s
submission as a matter of law. [Citation.] Only a cause of action that lacks “even
minimal merit” constitutes a SLAPP. [Citation.]’ [Citation.] ‘Put another way, the
plaintiff “must demonstrate that the complaint is both legally sufficient and supported by
a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence
submitted by the plaintiff is credited.”’” (Greene v. Bank of America (2013)

216 Cal.App.4th 454, 458, fn. omitted (Greene).)

As noted, Edward’s complaint asserts a single cause of action against Ellis
for libel per se. Libel is the publication of an unprivileged written communication about
the plaintiff that is false, defamatory, and has a natural tendency to injure. (Civ. Code,
§§ 44, 45; Jackson v. Mayweather (2017) 10 Cal.App.5th 1240, 1259-1260.) Libel per se
is when the communication is defamatory without the need for explanatory matter. (Civ.
Code, § 45a.) Where, as here, the plaintiff is a limited public figure, he must prove both
that the challenged statement is false, and that the defendant made the libelous statement
with “actual malice.”’ (Balla vy. Hall (2021) 59 Cal.App.5th 652, 675 (Balla).)

a. Falsity

Ellis first contends Edward failed to show a probability of prevailing on the
merits because the mailers did not include any falsities, express or implied. We disagree.

Unlike mere opinions, a statement that suggests or implies a false assertion
of fact is actionable. (Balla, supra, 59 Cal.App.5th at p. 677; [ssa v. Applegate (2019)

31 Cal.App.5th 689, 702 (/ssa).) The “dispositive question” in such a case is “whether a

reasonable fact finder could conclude the published statement declares or implies a

 

Edward does not dispute he is a limited public figure for purposes of this
case.
provably false assertion of fact.” (Franklin v. Dynamic Details, Inc. (2004)

116 Cal. App.4th 375, 385 (Franklin).) This is ordinarily a question of law for the court,
“unless the statement is susceptible of both an innocent and a libelous meaning, in which
case the jury must decide how the statement was understood.” (/bid.)

In determining whether the disputed statement communicates or implies a
provably false assertion of fact, we look at the totality of the circumstances, looking first
to the language of the statement and whether it was understood in a defamatory sense,
and then considering the context in which the statement was made. (Franklin, supra,
116 Cal.App.4th at p. 385.) We focus not on the literal truth or falsity of each word in a

Ceeee

statement, but rather on ““‘whether the ‘gist or sting’ of the statement is true or false,
benign or defamatory, in substance.””’” (Balla, supra, 59 Cal.App.Sth at pp. 677-678;
Issa, supra, 31 Cal.App.5th at p. 702; see, e.g., Overstock.com, Inc. v. Gradient
Analytics, Inc. (2007) 151 Cal.App.4th 688, 704 [stylistic emphasis on key phrases
supported finding that the publications could be understood as implying false assertions
of fact].) We also consider “whether the reasonable or ‘average’ reader would so
interpret the material. [Citations.] The ‘average reader’ is a reasonable member of the
audience to which the material was originally addressed.” (Couch v. San Juan Unified
School Dist. (1995) 33 Cal. App.4th 1491, 1500.)

Applying those standards to this record, we conclude the mailers in
question could reasonably be understood by an average Dana Point voter to imply that
Edward was found liable for fraud and paid money damages to the City as a result. Both
mailers included a highlighted screenshot of the caption from the City’s 2016 complaint
against Edward for fraud; below that, both mailers declared that the City sued Edward for
fraud, breach of contract, and not paying $553,000 in legal fees; and immediately below
that, both mailers asserted in bolded red letters that “Edward wants his money back.”

Read together and in context, the apparent implication from these statements is that

Edward was found liable and had to pay damages on the City’s claims, including its fraud

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claim, and he now wants to recover that money. Indeed, the mailers suggest no other
possibility as to why Edward “wants his money back.”

That brings us to whether that insinuation was provably false. We conclude
it was, as it is undisputed that Edward paid nothing to the City on its fraud cause of
action. The 2017 settlement agreement did require Edward to make a $248,200
“[dJonation” for the renovation of a community center, but that payment was not made on
the fraud claim; to the contrary, the City expressly withdrew, retracted, and rescinded all
“allegations related to personal fraud, and Sanford Edward,” as part of the settlement.

Of course, that is not the only possible reading of the mailers. We
recognize an average reader might reach some other conclusion. * But if the statements
contained in the mailers are susceptible of both an innocent and libelous meaning, it is for
the jury, not us, to decide how they were in fact understood. (Franklin, supra,

116 Cal.App.4th at p. 385; see also Okun v. Superior Court (1981) 29 Cal.3d 442, 450 [“a
writing’s susceptibility to innocent meaning does not in itself preclude a finding that an
ordinary reader would understand it in a libelous sense” ].)

Ellis argued in his briefing and at oral argument that the “Edward wants his
money back” statement is too generalized to support any particular conclusion and is
instead “classic rhetorical hyperbole” typical of political debate. (See Grenier v. Taylor
(2015) 234 Cal.App.4th 471, 486 [“rhetorical hyperbole, vigorous epithets, lusty and
imaginative expressions of contempt and language used in a loose, figurative sense will
not support a defamation action”].) We are not persuaded. Rhetorical hyperbole is
language that is so loose, figurative, or hyperbolic that it negates any impression that the

writer was seriously maintaining a factual proposition susceptible of being proved true or

 

, At oral argument we invited counsel for Ellis to provide us with some

alternative innocent inference that might be drawn from this language. He was unable to
do so.

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false. (Hoang v. Tran (2021) 60 Cal.App.5th 513, 534; see, e.g., Ferlauto v. Hamsher
(1999) 74 Cal. App.4th 1394, 1403-1404 [book’s flip characterizations of opponent’s
lawyer as “Kmart Johnnie Cochran,” “creepazoid attorney,” and “loser wannabe lawyer”
were classic rhetorical hyperbole that could not be interpreted as stating actual facts];
Beilenson y. Superior Court (1996) 44 Cal.App.4th 944, 951 (Beilenson) [defendant’s

999

statement in political campaign that plaintiff's conduct was a ““rip-off,”’ taken in context
with rest of mailer, was rhetorical hyperbole].)

Here, the phrase “Edward wants his money back” appears immediately
below actual screenshots and a factual description of the City’s 2016 complaint against
Edward. Indeed, Ellis testified he used the screenshots of the complaint’s caption “to
generate [a sense of] authenticity and validity.” The juxtaposition and proximity of the
phrase “Edward wants his money back” to those screenshots and factual description
suggests the “money back” statement was intended to be factual in nature, not political
hyperbole.

Other parts of the mailers do employ rhetorical language—e.g., the mailers
refer to Edward as a “[k]ingmaker[]” and urge voters to “STOP SLICK SANFORD
FROM BUYING CITY HALL.” But the phrase “Edward wants his money back”
appears immediately next to factual assertions about the City’s 2016 lawsuit. A
reasonable reader might well conclude that the “Edward wants his money back” line was
also factual in nature.

We are mindful that, particularly in the political context, “we “must be
vigilant to afford a wide berth to the free exchange of ideas, including those that
challenge or criticize statements made or actions taken by candidates seeking elected
office.’ [Citations.] [§] But characterizing speech as ‘political’ does not automatically
or entirely exempt it from liability for defamation.” (Balla, supra, 59 Cal.-App.5th at

p. 680.) ““[E]ven as to public officials, knowingly false statements of fact are

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constitutionally unprotected.’” (/bid.) On this record, we conclude the mailers are
reasonably susceptible of an interpretation that implies a provably false assertion of fact.

b. Actual Malice

Ellis next asserts Edward’s libel claim should be dismissed because Edward
did not establish a probability of producing clear and convincing evidence of actual
malice. We again disagree.

As noted above, a libel plaintiff who is a public figure must prove, by clear
and convincing evidence, that the defendant made the libelous statement with “‘actual
malice’—that is, with knowledge that it was false or with reckless disregard of whether it
was false or not.” (New York Times Company vy. Sullivan (1964) 376 U.S. 254, 279-280
(New York Times); see Reader’s Digest Assn. v. Superior Court (1984) 37 Cal.3d 244,
256-257.) Although at trial a public figure plaintiff must establish actual malice by clear
and convincing evidence, in the context of an anti-SLAPP motion the plaintiff must
instead establish only a “probability” that he or she can produce clear and convincing

evidence of actual malice. (Ampex Corp. v. Cargle (2005) 128 Cal._App.4th 1569, 1578
(Ampex).)

“*TA|ctual malice can be proved by circumstantial evidence.’ [Citation.]
Considerations such as ‘anger and hostility toward the plaintiff,’ ‘reliance upon sources
known to be unreliable [citations] or known to be biased against the plaintiff,’ and
‘failure to investigate’ may, “in an appropriate case, indicate that the publisher himself
had serious doubts regarding the truth of his publication.’ [Citation.] Such evidence is
relevant “to the extent that it reflects on the subjective attitude of the publisher.’” (Balla,
supra, 59 Cal.App.Sth at p. 683.) However, “failure to investigate, without more,
generally is insufficient” to show malice. (/bid.) And “we will not infer actual malice

solely from evidence of ill will, personal spite or bad motive.” (Ampex, supra,

128 Cal App.4th at p. 1579.)

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In both his anti-SLAPP motion and now on appeal, Ellis insists he never
intended to convey that Edward was found liable for fraud and paid damages to the City
when he used the phrase “Edward wants his money back.” According to Ellis, he cannot
be held liable for a falsity he never meant to convey. (See De Havilland v. FX Networks,
LLC (2018) 21 Cal. App.5th 845, 869-870 [in cases of defamation by implication, public
figure plaintiff must prove the defendant intended the defamatory impression, and not
just unknowingly misled the public]; Dodds v. American Broadcasting Co. (9th Cir.
1998) 145 F.3d 1053, 1064 [same].)

The record raises credibility questions about Ellis’s professions of
innocence. First, there are Ellis’s own explanations for what he intended to convey with
the phrase “Edward wants his money back.” When specifically asked at deposition what
he had in mind when he used that phrase, Ellis repeatedly claimed he could not recall.”
In the absence of a meaningful explanation for his word choice, Ellis gives us no reason
to believe he accidently or unknowingly misled the public when he falsely insinuated
Edward had paid damages for fraud.

Second, and more importantly, Ellis expressly admitted both at deposition
and in his subsequent written declaration that as part of his prepublication research for the
mailers, he read the Orange County Register’s article about the 2017 settlement between
Edward and the City, including (1) the section describing the City’s agreement to

“rescind” its fraud claim against Edward and (2) the section mentioning Edward’s

 

4 ;
Ellis answered, “I don’t recall,” “I don’t remember,” or “I don’t know” over

100 times during his three-hour deposition. When asked whether the phrase “Edward
wants his money back” could be understood to mean Edward paid money to the City after
being sued for fraud, Ellis testified, “I don’t know what it could be interpreted to mean. I
don’t interpret.” When asked what he intended it to say, Ellis answered, “I didn’t intend
it to — it’s just a phrase.” The trial court observed that Ellis’s deposition testimony was
“very vague, disjointed, and peculiar.” Among other things, the court’s order noted Ellis
could not articulate a reason why he chose to run a negative campaign, nor could he
explain why the mailers targeted Edward.

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$248,000 contribution for the community center. These admissions are critical to our
analysis as they demonstrate beyond any point of dispute that Ellis knew long before
distribution of the contested mailers that Edward did not pay damages to the City for
fraud, yet he went ahead with the publication of mailers that insinuated the very opposite.
As aresult, Ellis arguably acted “with ‘actual malice’—that is, with knowledge that [the
statements were] false.” (See New York Times, supra, 376 U.S. at pp. 279-280.)

For these reasons, we conclude Edward “establish[ed] a probability that
[he] can produce clear and convincing evidence that the allegedly defamatory statements
were made with knowledge of their falsity ....” (See Ampex, supra, 128 Cal.App.4th at
p. 1578.)

We reiterate that for purposes of our anti-SLAPP analysis, Edward’s
burden on prong two is “not high,” and we are required to “accept as true all evidence
favorable to” Edward. (Greene, supra, 216 Cal.App.4th at p. 458.) Under that low
standard, Edward met his burden of showing his libel claim against Ellis has “minimal
merit.” (See Navellier, supra, 29 Cal.4th at p. 89 [only a cause of action that “lacks even
minimal merit” is “ subject to being stricken under the statute”].) The actual merits of

Edward’s claim must be resolved by the trier of fact. °

 

In light of our decision to affirm the denial of Ellis’s anti-SLAPP motion,
we need not reach Edward’s evidentiary objections to material cited in Ellis’s opening
brief; for the same reason, Edward’s request for judicial notice is denied.

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DISPOSITION
The order denying Ellis’s anti-SLAPP motion is affirmed. Edward shall
recover his costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1).)

GOETHALS, J.

I CONCUR:

MARKS, J.*

* Judge of the Orange County Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.

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FYBEL, J., concurring:

I respectfully concur in the majority opinion. I write separately to express
my firmly held belief that open discussion and robust debate are the best means of
exposing lies and errors in public speech. Nearly 100 years ago, Justice Brandeis said, in
Whitney v. California (1927) 274 U.S. 357, 377 (conc. opn. of Brandeis, J.), “If there be
time to expose through discussion the falsehood and fallacies, to avert the evil by the
processes of education, the remedy to be applied is more speech, not enforced silence.”
These words are more relevant now than they have ever been.

More than a decade ago, I expressed my views on this subject in my dissent
in Overhill Farms, Inc. vy. Lopez (2010) 190 Cal.App.4th 1248. In that case, a number of
employees of the plaintiff, a publicly traded company that manufactured frozen food,
participated in protests outside of the plaintiff's two plants and the place of business of

one of plaintiff's customers. (/d. at pp. 1251, 1253.) The employees carried signs and

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handed out leaflets and flyers declaring the plaintiff to be “‘unfair’” and “‘racist’” due to
layoffs it had made in response to an IRS audit. (/d. at p. 1255.) The plaintiff sued the
employees for defamation and a host of other torts with the primary goal of enjoining
further protests. (/d. at p. 1252.)

The trial court denied the employees’ anti-SLAPP motion to strike, and the
majority opinion affirmed. (Overhill Farms, Inc. v. Lopez, supra, 190 Cal.App.4th at
p. 1252.) I dissented because I believed the plaintiff had failed to produce evidence
showing the employees had made any provably false assertion of fact. (/d. at pp. 1273,
1274-1277 (dis. opn. of Fybel, J.).) The plaintiff had the ability and means to issue its
own press release, distribute its own leaflets, and otherwise present its own side of the
story in a public forum. (/d. at pp. 1273, 1278 (dis. opn. of Fybel, J.) The lawsuit, by

which the plaintiff primarily sought an injunction to prohibit future speech, was an

attempt to “curb and chill employee protests.” (/d. at p. 1273 (dis. opn. of Fybel, J.)
Justice Brandeis’s advice was particularly apt: More speech, not less, was the proper
remedy.

In the present case, although I agree with the majority that the assertion
“Edward wants his money back” implies a provably false assertion of fact, I believe this
is a close call. The flyer stated that the City of Dana Point (the City) had sued Edward
for $553,000 in unpaid legal fees. Immediately below that statement was the sentence,
“Edward wants his money back.” The content, context, and placement of these two
statements are sufficient to imply a provably false assertion of fact: Edward paid the City
$533,000, and he will get that money back if “his” slate of candidates is elected.

I hasten to add that Ellis has a plausible argument that the statement
“Edward wants his money back” is not a provably false fact. Indeed, the majority
opinion acknowledges that Ellis’s statements are susceptible of an innocent meaning.
(Maj. opn., ante, at p. 11.) Thus, Ellis might eventually prevail. But at the second step of
the anti-SLAPP analysis, Edward’s burden was ““‘not high.’” (Greene v. Bank of America
(2013) 216 Cal. App.4th 454, 458.) He had to show only that his claim of malice has the
requisite “minimal merit” (Navellier v. Sletten (2002) 29 Cal.4th 82, 89). Given this low
threshold, Ellis’s argument does not carry the day at this stage.

I also agree that Edward has produced evidence establishing a probability
of prevailing on his claim of actual malice. Under New York Times Co. vy. Sullivan
(1964) 376 U.S. 254, 285-286, an inference of actual malice may be drawn from
circumstantial evidence that a statement was made with knowledge of its falsity or with
reckless disregard for its truth. Thus, evidence that Ellis knew before the flyers were
published that Edward had not paid damages to the City is enough to meet his low burden
of establishing his claim has the requisite minimal merit. (Navellier v. Sletten, supra, 29
Cal.4th at p. 89.)

I concur in the result in this case because Edward’s burden on the second

step of the anti-SLAPP analysis is only to show that his claim has the requisite minimal

2
merit. (Navellier v. Sletten, supra, 29 Cal.4th at p. 89.) For the reasons I have explained,
this burden has been met, but only because it is so low.

Finally, it would have been much more consistent with our cherished and
robust First Amendment values for Edward to have responded to the assertions in the
flyer by engaging in public speech rather than filing a lawsuit. Edward, like the plaintiff
employer in Overhill Farms, had the ability and means to issue his own flyer or press
release or otherwise tell his side of the story in a public forum.

If the flyers told lies, Edward could counter them with the truth. As Justice
Kennedy stated, in an opinion joined in by Chief Justice Roberts and Justices Ginsburg
and Sotomayor and concurred in by Justices Breyer and Kagan: “The remedy for speech
that is false is speech that is true. This is the ordinary course in a free society. The
response to the unreasoned is the rational; to the uninformed, the enlightened; to the

straight-out lie, the simple truth.” (United States v. Alvarez (2012) 567 U.S. 709, 727.)

FYBEL, ACTING P. J.
APPENDIX

 

34145 Pacific Coast Hwy. #701
Dana Point, CA 92626 US POSTAGE

PAID |,
BC

 

 

 

THERE'S NO FREE LUNCH

Sanford Edwards, Buck Hill, and District 3 city council candidate Charles Payne plotting to take over the city council

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CITY OF DANA POINT CASE NO: 30-2018-00872051-CU-BC-CJC

Plaintiff,

JUDGE: Judge Theodore Howard

DEPT:
VS.

COMPLAINT FOR DAMAGES

Complaint Filed:

Edward, an individual, and DOES 1 to
50, inclusive,

 

Defendants.

  

 

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Headlands Reserve, LLC, Sanford
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Dana Point sued Headlands developer Sanford Edward for fraud,
breach of contract, and not paying $553,000 in legal fees to the city.

Edward wants his money back.
Electing city council candidate Charles Payne is his payday.

SM =
FUNDRAISER FOR HIS SLATE OF
CANDIDATES

 

it was quite a shindig at the ultra-chic Headlands Strand Clubhouse.
Councilwoman Debra Lewis led the charge.

Sanford Edward paid the bill.

Taxpayers will pay in the end.

   
   
  

SLICK SANFORD FROM BUYING CITY HALL

 

Paid for by Dana Point Taxpayers Association
Not authorized by any candidate or any committee controlled by a candidate. 554

 

 

 
 

34145 Pactfic Coast Hwy. #701
Dana Point, CA 92626 Us STAGE

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DISTRICT 1 PUPPET DISTRICT 2 PUPPET OTL ad ed od

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Councilwoman Debra Lewis 2nd District candidate Councilwoman Debra Lewis
teaming up with Headlands Mark McGinn is teaming teaming up with Headlands
developer Sanford Edward to elect part of the Sanford developer Sanford Edward to elect
Joe Jaeger in District 1 Edward slate Charles Payne in District 3

    
 

     

11 || CITY OF DANA POINT CASE NO; 30-2016-00872051-CU-BC-CJC

12 Plaintiff, JUDGE: Judge Theodore Howard

13 DEPT:

14 “ COMPLAINT FOR DAMAGES
15 || Headlands Reserve, LLC, Sanford Complaint Filed:

Edward, an individual, and DOES 1 to
50, inclusive,

Defendants.

 

 

ee eee

 

 

BN SU of Saal cree Sh hecrrne ———
26 42. Defendant Headlands breached this contract by failing to pay for required |
27 || services, beginning in August 2015 and totaling $553,754 (with additional amounts continuing
28 |] be incurred).

Dana Point sued Headlands developer Sanford Edward for fraud,
breach of contract, and not paying $553,000 in legal fees to the city.
Edward wants his money back.

Electing city council candidates Joe Jaeger,
Mark McGinn and Charles Payne is his payday.

     
 

Developer Slate: Jaeger — McGinn - Payne

 

Paid for by Dana Point Taxpayers Association 5 5 7
Not authorized by any candidate or any committee controlled by a candidate.