Court Opinion

ID: 4846527
Source: CourtListenerOpinion
Date Created: 2021-08-23 20:07:00.701649+00
Date Added: 2024-06-11T08:11:41.829874
License: Public Domain

Filed 8/23/21 Safe Credit Union v. Diaz CA3
                                           NOT TO BE PUBLISHED
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 This opinion has not been certified for publication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
                                      THIRD APPELLATE DISTRICT
                                                    (San Joaquin)
                                                            ----

 SAFE CREDIT UNION,                                                                            C092158

                    Plaintiff, Cross-defendant and                                     (Super. Ct. No.
                    Appellant,                                                      STKCVUOC201813550)

           v.

 JULIET M. DIAZ,

                    Defendant, Cross-complainant and
                    Respondent.

         Plaintiff and cross-defendant SAFE Credit Union (SAFE) sued defendant and
cross-complainant Juliet M. Diaz for an outstanding balance owed by her on a car loan
after SAFE repossessed and auctioned the car subject to the loan. Diaz cross complained
alleging she and other members of a putative class were victims of SAFE’s unfair debt
collection practices. Generally, Diaz alleged SAFE issued legally inadequate notices of
its intent to sell repossessed vehicles. Because of the legally inadequate notices, SAFE

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was precluded from seeking outstanding balances on the loans from her and members of
the putative class, yet attempted to do so through multiple means including litigation.
Diaz alleged SAFE violated the Rees-Levering Automobile Sales Finance Act (Rees-
Levering Act) (Civ. Code, § 2981 et seq.), the Rosenthal Fair Debt Collection Practice
Act (Rosenthal Act) (Civ. Code, § 1788 et seq.), and the unfair competition law (Bus. &
Prof. Code, § 17200 et seq.). SAFE filed a special motion to strike pursuant to Code of
Civil Procedure1 section 425.16 to strike from Diaz’s cross-complaint the allegations, to
which it refers as “Litigation Claims,” pertaining to SAFE’s litigation. The trial court
denied SAFE’s motion. We affirm.
                   FACTUAL AND PROCEDURAL BACKGROUND
       Diaz filed a class action cross-complaint against SAFE in SAFE’s suit seeking
from her the outstanding balance on a car loan after SAFE’s repossession and sale of the
car subject to the loan. On behalf of herself and others similarly situated, Diaz sought
damages, injunctive relief, and restitution under the Rees-Levering Act, the Rosenthal
Act, and the unfair competition law.
       Specifically, Diaz alleged she brought the suit “to challenge the unlawful, unfair
and deceptive practices of [SAFE] following repossession of [her] and the putative
class’s motor vehicles under a conditional sales contract. [¶] . . . In particular[,] [SAFE]
failed to provide [Diaz] and the class with statutorily-mandated notices of their legal
rights and obligations after repossession of their motor vehicles . . . [¶] . . . [SAFE]
wrongfully deprived [Diaz] and the putative class of their right to reinstate or redeem
their conditional sales contract after repossession, negligently and/or fraudulently
misrepresented the rights and obligations of the parties following repossession, collected,
or sought to collect, a deficiency from [Diaz] and the putative class following

1      Further references are to the Code of Civil Procedure unless indicated otherwise.

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repossession for which [Diaz] and the putative class are not liable as a matter of law. [¶]
. . . [SAFE]’s statutory post-repossession notice (‘Statutory Notice’) is a form document.
[SAFE] sent the Statutory Notice to numerous members of the putative class. [SAFE] is
not entitled to collect on any alleged deficiency balances from members of the putative
class who received such Statutory Notice, and [Diaz] is seeking to enjoin these
collections activities . . . .”
        Diaz alleged a written notice was mailed to her “that stated that her vehicle had
been repossessed and would be sold unless she reinstated her contract or redeemed the
vehicle . . . [¶] . . . [SAFE] refused to grant [Diaz] her statutory rights as set forth in the
notice, and required her to perform additional undisclosed actions as conditions precedent
to reinstatement. In addition, [Diaz]’s Statutory Notice did not contain several of the
disclosures mandated by [the Rees-Levering Act].”
        Diaz alleged three causes of action: First, violation of the Rees-Levering Act
under the theory the statutory notice SAFE sent pursuant to Civil Code section 2983.2,
subdivision (a) did not contain the mandated disclosures and information required by that
section. As a consequence, Diaz could not be held liable for the balance of the loan, yet
SAFE continued to attempt to collect the outstanding balance from her. Second,
violation of the Rosenthal Act under the theory SAFE attempted to collect a nonexistent
outstanding balance by making false representations that Diaz owed a debt, demanding
payment, and suing her. Third, violation of the unfair competition law based on eight
specifically alleged business practices Diaz argued were unlawful, fraudulent, and
contrary to public policy. One such alleged business practice was the filing of “collection
suits against [her] and the class [that did not] comply with Civil Code § 2983.8(b) by
failing to file an affidavit of compliance with the Rees-Levering Act.”
        SAFE filed a special motion to strike several allegations, i.e., the Litigation
Claims, “and each cause of action to the extent based on them” from Diaz’s cross-
complaint. SAFE argued that each of Diaz’s causes of action relied in part on these

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Litigation Claims involving SAFE’s exercise of protected activity, thus the burden must
shift to Diaz to demonstrate she could prevail on her claims.
       The trial court denied SAFE’s special motion to strike reasoning that “each of
Ms. Diaz’s causes of action in the cross-complaint is dependent upon the allegation that
[SAFE] violated provisions of the Rees-Levering Automobile Sales Finance Act,” which
“is not an activity that constitutes protected speech or petitioning.”
       SAFE appeals.
                                       DISCUSSION
                                               I
                                     Legal Background
       “ ‘A SLAPP[2] is a civil lawsuit that is aimed at preventing citizens from
exercising their political rights or punishing those who have done so. “ ‘While SLAPP
suits masquerade as ordinary lawsuits such as defamation and interference with
prospective economic advantage, they are generally meritless suits brought primarily to
chill the exercise of free speech or petition rights by the threat of severe economic
sanctions against the defendant, and not to vindicate a legally cognizable right.’ ” ’ ”
(Sheley v. Harrop (2017) 9 Cal.App.5th 1147, 1160-1161, quoting Simpson Strong-Tie
Co., Inc. v. Gore (2010) 49 Cal.4th 12, 21.)
       “ ‘In 1992, out of concern over “a disturbing increase” in these types of lawsuits,
the Legislature enacted section 425.16, the anti-SLAPP statute. [Citation.] The statute
authorized the filing of a special motion to strike to expedite the early dismissal of these
unmeritorious claims. [Citation.] To encourage “continued participation in matters of
public significance” and to ensure “that this participation should not be chilled through
abuse of the judicial process,” the Legislature expressly provided that the anti-SLAPP

2     Strategic lawsuit against public participation. (See Wilson v. Cable News
Network, Inc. (2019) 7 Cal.5th 871, 882, fn. 2.)

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statute “shall be construed broadly.” ’ ” (Sheley v. Harrop, supra, 9 Cal.App.5th at
p. 1161, quoting Simpson Strong-Tie Co., Inc. v. Gore, supra, 49 Cal.4th at p. 21.)
       “The anti-SLAPP statute ‘provides a procedure for weeding out, at an early stage,
meritless claims arising from protected activity.’ ” (Sheley v. Harrop, supra, 9
Cal.App.5th at p. 1161, quoting Baral v. Schnitt (2016) 1 Cal.5th 376, 384.) “The statute
applies to ‘cause[s] 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
Constitution or the California Constitution in connection with a public issue.’ ” (Sheley,
at p. 1161, quoting § 425.16, subd. (b)(1).) “As used in the statutory scheme, ‘ “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 written or
oral statement or writing made before a legislative, executive, or judicial proceeding, or
any other official proceeding authorized by law, (2) any written or oral statement or
writing made in connection with an issue under consideration or review by a legislative,
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 conduct in furtherance of
the exercise of the constitutional right of petition or the constitutional right of free speech
in connection with a public issue or an issue of public interest.’ ” (Sheley, at p. 1161,
quoting § 425.16, subd. (e).)
       “A special motion to strike involves a two-step process.” (Sheley v. Harrop,
supra, 9 Cal.App.5th at p. 1161, citing Baral v. Schnitt, supra, 1 Cal.5th at p. 384.)
“ ‘[I]f the defendant does not meet its burden on the first step, the court should deny the
motion and need not address the second step.’ ” (Sheley, at p. 1162.) On appeal, we
review de novo whether SAFE met its initial burden of showing the claim arises out of
protected activity. (Ibid.)

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                                              II
                          SAFE Has Not Demonstrated How The
                    Litigation Claims Give Rise To A Claim For Relief
       For complaints and cross-complaints alleging mixed causes of action arising from
both protected and unprotected activity, “[a]t the first step, the moving defendant bears
the burden of identifying all allegations of protected activity, and the claims for relief
supported by them. When relief is sought based on allegations of both protected and
unprotected activity, the unprotected activity is disregarded at this stage. If the court
determines that relief is sought based on allegations arising from activity protected by the
statute, the second step is reached.” (Baral v. Schnitt, supra, 1 Cal.5th at p. 396, italics
added.)
       “The scope of the term ‘cause of action’ in section 425.16(b)(1) is evident from its
statutory context. When the Legislature declared that a ‘cause of action’ arising from
activity furthering the rights of petition or free speech may be stricken unless the plaintiff
establishes a probability of prevailing, it had in mind allegations of protected activity that
are asserted as grounds for relief. The targeted claim must amount to a ‘cause of action’
in the sense that it is alleged to justify a remedy. By referring to a ‘cause of action
against a person arising from any act of that person in furtherance of’ the protected rights
of petition and speech, the Legislature indicated that particular alleged acts giving rise to
a claim for relief may be the object of an anti-SLAPP motion. (§ 425.16(b)(1), italics
added.) . . . Thus, in cases involving allegations of both protected and unprotected
activity, the plaintiff is required to establish a probability of prevailing on any claim for
relief based on allegations of protected activity.” (Baral v. Schnitt, supra, 1 Cal. 5th at
p. 395.)
       SAFE contends the trial court should have reached the second stage of the analysis
because the Litigation Claims, which were multiple allegations throughout the cross-
complaint in which Diaz mentioned or alluded to the lawsuit SAFE filed against her,

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arose from protected activity. We disagree. An allegation is not stricken simply because
it involves protected activity. A special motion to strike under section 425.16 is utilized
to strike distinctive claims for relief arising out of protected activity, and the allegations
of protected activity supporting those claims. (Baral v. Schnitt, supra, 1 Cal.5th at
pp. 393-395.) At the trial court, and again on appeal, SAFE does not identify claims for
relief supported by the Litigation Claims beyond simply pointing to Diaz’s allusion to the
protected activity. This is not sufficient to meet its burden.
       “Typically, a pleaded cause of action states a legal ground for recovery supported
by specific allegations of conduct by the defendant on which the plaintiff relies to
establish a right to relief. If the supporting allegations include conduct furthering the
defendant’s exercise of the constitutional rights of free speech or petition, the pleaded
cause of action ‘aris[es] from’ protected activity, at least in part, and is subject to the
special motion to strike authorized by section 425.16(b)(1).” (Baral v. Schnitt, supra, 1
Cal.5th at pp. 381-382.) But, “[a]ssertions that are ‘merely incidental’ or ‘collateral’ are
not subject to section 425.16.” (Id. at p. 394.) Thus, “[a]llegations of protected activity
that merely provide context, without supporting a claim for recovery, cannot be stricken
under the anti-SLAPP statute.” (Ibid.)
       Indeed, as our Supreme Court’s recent decision in Bonni demonstrates the anti-
SLAPP analysis begins with consideration of the elements of each claim, the actions
alleged to establish those elements, and whether those actions are protected. (Bonni v. St.
Joseph Health System (2021) 11 Cal.5th 995.) SAFE did not engage in this
consideration, which it was required to do to meet its burden. (Id. at p. 1010, citing Baral
v. Schnitt, supra, 1 Cal.5th at p. 396.) Nowhere in the trial court, nor on appeal, does
SAFE identify the elements of Diaz’s claims for recovery and how the actions alleged in
her cross-complaint establish those elements.
       SAFE has consistently listed several paragraphs from Diaz’s cross-complaint and
asserted those paragraphs “and each cause of action to the extent based on them” must be

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stricken because they involve protected activity. Accordingly, SAFE has failed to carry
its burden at the first step of our analysis to identify claims for recovery, not just
allegations, arising out of protected activity.

                                       DISPOSITION
       The order is affirmed. SAFE shall pay Diaz’s costs on appeal. (Cal. Rules of
Court, rule 8.278(a)(1)-(2).)

                                                      /s/
                                                      Robie, J.

We concur:

/s/
Raye, P. J.

/s/
Duarte, J.

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