Court Opinion

ID: 2671748
Source: CourtListenerOpinion
Date Created: 2014-04-30 00:03:20.468242+00
Date Added: 2024-06-11T12:14:12.445054
License: Public Domain

Filed 4/29/14 Sqrow v. A.V.M.G.H. Five CA2/6
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     SECOND APPELLATE DISTRICT

                                                   DIVISION SIX

ALFREDA SQROW et al.,                                                      2d Civil No. B251406
                                                                     (Super. Ct. No. 56-2013-00437970-
     Plaintiffs and Respondents,                                                CU-BC-VTA)
                                                                              (Ventura County)
v.

A.V.M.G.H. FIVE, THE RANCH
LIMITED PARTNERSHIP,

     Defendant and Appellant.

                   Defendant A.V.M.G.H. Five, the Ranch Limited Partnership ("AVMGH"),
a mobile home park owner, appeals an order denying its anti-SLAPP (strategic lawsuit
against public participation) motion. (Code Civ. Proc., § 425.16.)1
                   Plaintiffs Alfreda Sqrow, Frank Sqrow, Beryl Baldwin and Gayle Heninger
are mobile home park residents ("Residents") who pay rent to AVMGH. Residents filed
a class action for breach of contract, breach of the implied covenant of good faith and fair
dealing, promissory estoppel, intentional and negligent infliction of emotional distress
against AVMGH. They claim AVMGH breached its promise that it would not impose
substantial rent increases on very low income seniors.
                   We conclude, among other things, that AVMGH did not meet its burden on
the first prong of its anti-SLAPP motion to show that Residents' action arose from an act

1
    All statutory references are to the Code of Civil Procedure.
in furtherance of its "right of petition." (§ 425.16, subd. (b)(1).) AVMGH's protected act
of petitioning the City of Thousand Oaks ("City") for a rent increase was independent
from its subsequent nonprotected act of raising rents in violation of an alleged agreement
with Residents. We affirm.
                                           FACTS
              Residents are "very low income" senior citizens on "fixed incomes" who
own mobile homes and rent spaces in AVMGH's mobile home park (park) in the City.
              In 1974, the City approved a "Zone Change Application" and its Planning
Commission approved a "development permit" to allow the area upon which the current
park sits to become a "low-income mobile home park." In 1980, the City passed a rent
control ordinance for mobile home parks, but that ordinance did not apply to this park.
              In 1984, Andrew Hohn, the owner of the park, "reached an agreement" with
the City regarding a "formula by which rents could be increased" at the park. That
agreement was "codified" in Resolution 84-037. It provided, among other things, that if
the park did not meet a designated "Net Profit Target Figure," rent increases were
permissible within a maximum limit of 4 percent a year. For almost 30 years, the park's
space rental increases "were governed" by the limits set forth in that resolution.
              Residents claim that when they purchased their mobile homes at the park
they relied on the park owner's representations that "space rents would not increase
substantially" and "never be raised more than a few dollars." They claim that the park's
representatives made these representations continuously from 1977 to 2010.
              Hohn transferred title to the park to AVMGH. Residents claim AVMGH as
"a successor-in-interest . . . is bound by" the park's prior representations to Residents.
              Residents allege that in June 2010, AVMGH deviated from the rent
increase limitations the park had used for decades required by Resolution 84-037.
Instead, it applied for a larger rent increase under the City's Rent Stabilization Ordinance
(RSO). In response to AVMGH's application, the City ultimately passed a new ordinance
(1559-NS), which authorized "a rent increase of $191.00 per month." Residents claim
this was "more than double the existing amount of rent that any resident was paying."

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The ordinance did not impose a rent increase on Residents. It gave permission for
AVMGH to raise the rents if it elected to do so.
              On January 12, 2011, the park's resident manager scheduled a meeting with
Residents at the park regarding the park's rents. Residents claim the park's representative
promised that: 1) "the Owner would not raise the rent for very-low income individuals,"
and 2) the park sought an increase in rents "for the ten or more empty coaches in the
Park" and not for "residents who were living on fixed incomes."
              In July 2011, AVMGH notified Residents that their monthly rents would be
increased by $191.95 and the increase would be phased in "over a period of seven years."
Residents viewed this as an "exorbitant rent" increase contrary to the promises made by
the park's representatives. They said they could not afford to move or to pay the
increased rent.
              Residents filed a class action against AVMGH, stating multiple causes of
action. They alleged, among other things, that: 1) the rent increases constituted a breach
of contract based on prior oral and written promises made to Residents by the park's
representatives, and 2) AVMGH breached the implied covenant of good faith and fair
dealing by raising the rents contrary to those "promises." Residents also alleged
promissory estoppel, because when the park "made [the] promises to Plaintiffs . . . , it
knew, or reasonably should have known, that Plaintiffs . . . would rely on its promises to
keep any rent increases . . . to a minimum consistent so the Park would always be
affordable to low income seniors . . . ." They alleged causes of action for intentional and
negligent infliction of emotional distress based on the violation of the park owner's
"repeated promises to Plaintiffs."
              AVMGH filed a motion to strike under the anti-SLAPP statute (§ 425.16.)
It claimed "each and every cause of action in the Complaint arises from an act in
furtherance of AVMGH's constitutional rights to petition or free speech in connection
with a public issue . . . ." It claimed that the complaint showed that it "lawfully exercised
its first amendment right in June 2010 to petition the City of Thousand Oaks . . . for a
constitutional just and reasonable return rent increase" under "the City's Rent

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Stabilization Ordinance ('RSO')." It said, "According to the Complaint, AVMGH's
petitioning activity allegedly 'breached' AVMGH['s] alleged 'representations' to Plaintiffs
that the Ranch would 'always' be governed by a rent increase formula applied by the City
in 1984 ('Resolution 84-037') rather than by the City's RSO and that space rent increases
would . . . 'never' be 'substantial.'" It said, "The Complaint on its face admits that
AVMGH obtained such rent increase from the City as of May 24, 2011."
               In their opposition, Residents claimed AVMGH mischaracterized the
underlying substance of their claims: "The gravamen of Plaintiffs' five causes of action is
illegal rent increases, not Defendant's exercise of protected rights." They said, "Plaintiffs'
claims are based on the imposition of rent increases on residents of [the park] . . . ,
starting in October 2011, in violation of: (i) Defendant's express oral and written
promises not to substantially increase rents; (ii) the rental agreements between the parties;
and (iii) Resolution 84-037 . . . . Plaintiff's claims are not based on Defendant's act of
petitioning for a rent increase . . . ."
               The trial court denied the motion. It said, "[T]he conduct which forms the
bases for plaintiffs' causes of action is the act of raising the rates after promising that they
would not. That conduct was not 'in furtherance' of defendant's right of petition." The
court noted that the application to the City for the rent increase was a protected act, but it
was separate from AVMGH's ultimate decision to increase rents. After obtaining
permission from the City, it had the option not to raise rents, or even to lower them. The
gravamen of the case involved AVMGH's act of raising the rents in violation of its
promises to Residents.
                                           DISCUSSION
                                  The First Anti-SLAPP Prong
               AVMGH contends the trial court erred by denying its anti-SLAPP motion
because Residents' action arose from its protected activity of petitioning the City for
permission to increase park rents.
               Residents claim their action was not based on AVMGH's petitioning
activity. Instead, it concerned AVMGH's alleged acts of: 1) making false promises to

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Residents about not raising the rents, 2) causing them to rely on these representations,
and then 3) increasing their rents to their detriment. Residents contend such conduct is
not protected petitioning activity under the anti-SLAPP statute.
              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 Constitution 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."
              There are two prongs to a motion to strike under section 425.16. (City of
Alhambra v. D'Ausilio (2011) 193 Cal.App.4th 1301, 1306.) "[T]he party challenging the
lawsuit has the threshold burden to show that the cause of action arises from an act in
furtherance of the right of petition or free speech." (Ibid.) "Once that burden is met, the
burden shifts to the [plaintiff] to demonstrate a probability of prevailing on the claim."
(Ibid.) Where the defendant does not meet the burden to establish the first prong, the
motion must be denied. (Ibid.)
                          A Lawsuit Arising from a Protected Act?
              In deciding whether the lawsuit arises from a protected act, we look not
only to the pleadings, but also to the underlying "gravamen or principal thrust" of the
action. (Episcopal Church Cases (2009) 45 Cal.4th 467, 477.) The anti-SLAPP statute
does not apply where the complaint refers to protected activity that is "incidental to a
cause of action based essentially on nonprotected activity." (Martinez v. Metabolife
Internat., Inc. (2003) 113 Cal.App.4th 181, 188.) This appeal "is subject to our
independent de novo review." (Gallimore v. State Farm Fire & Casualty Ins. Co. (2002)
102 Cal.App.4th 1388, 1397.)
              AVMGH contends Residents' action was subject to a motion to strike
because a park owner must initially petition the City for approval of a mobile home park
rent increase. It correctly notes that such petitioning activity is protected conduct under
the anti-SLAPP statute.

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              But "'a plaintiff's cause of action does not necessarily arise from a
defendant's section 425.16 protected activity merely because the plaintiff's suit was filed
after the defendant engaged in that activity.'" (Oviedo v. Windsor Twelve Properties,
LLC (2012) 212 Cal.App.4th 97, 110.) "'A cause of action may be "triggered by
protected activity" without necessarily arising from such protected activity.'" (Ibid.)
"'"[T]he defendant's act underlying the plaintiff's cause of action must itself have been an
act in furtherance of the right of petition or free speech."'" (Ibid.)
              In Oviedo, landlords increased a tenant's rent. The tenant claimed the
increase violated a county RSO. The landlords served a three-day notice to pay rent or
quit. The tenant did not pay the increased amount. The landlords filed an unlawful
detainer action to evict the tenant. They eventually dismissed that action. The tenant
filed an action against the landlords. The first cause of action was for "a violation of the
RSO." (Ovideo v. Windsor Twelve Properties, LLC, supra, 212 Cal.App.4th at p. 106.)
The trial court granted an anti-SLAPP motion finding the RSO cause of action was based
on protected "actions leading up to [the] attempted eviction" of the tenant. (Id. at p. 108.)
              The Court of Appeal reversed. It said the appellant's "cause of action is
based, not on the unlawful detainer action and prior communications, but on [the
landlords'] alleged violation of the RSO. In other words, [the landlords] 'were not sued
for their conduct in exercising . . . constitutional rights' but for the underlying conduct of
illegally raising appellant's rent." (Ovideo v. Windsor Twelve Properties, LLC, supra,
212 Cal.App.4th at pp. 110-111, italics added.) "Respondents have not presented any
authority supporting the assertion that their allegedly illegal raising of appellant's rent is
an act in furtherance of their rights of petition or free speech." (Id. at p. 111.)
              Other cases have also distinguished between the protected act of petitioning
a government agency and the liability for the unprotected act of charging excessive,
unlawful or improper rents. In Santa Monica Rent Control Bd. v. Pearl Street, LLC
(2003) 109 Cal.App.4th 1308, the Board filed a lawsuit alleging landlords were
attempting to evade rent control statutes. The trial court granted the defendants' anti-
SLAPP motion. The Court of Appeal reversed. The landlords' filing of papers with the

                                               6
Board was an arguably protected activity. But the anti-SLAPP statute did not apply
because the "suit is based on the Board's claim that defendants are charging an illegal
rent . . . ." (Id. at p. 1318.) Such conduct was not "an act in furtherance of the right of
petition or free speech." (Ibid.)
               The present action is similar to the above cases. It involves a challenge to
the alleged invalidity of a rent increase in violation of promises made to Residents. The
trial court evaluated the anti-SLAPP motion consistent with the analysis in the Oviedo
and Santa Monica Rent Control Board cases. It found AVMGH's "conduct in applying
for authorization to increase rental rates within the park was protected petitioning
activity." But it distinguished between that activity and the unprotected conduct
Residents challenged. It said, "[T]he conduct which forms the bases for plaintiffs' causes
of action is the act of raising the rates after promising that they would not. That conduct
was not 'in furtherance' of [AVMGH's] right of petition." (Italics added.) This action
was not filed to chill AVMGH's right of access to the government or to seek liability for
its petition to the City.
                 Was the Petitioning Act Severable from the Rent Increase?
               AVMGH contends: 1) "the rent increase could not have been brought
about without" its petition to the City, and 2) that protected act is so intertwined with the
rent increase Residents are challenging that the trial court improperly separated the
petitioning act from the rent increase. We disagree.
               AVMGH's petition for authority from the City to raise rents was a separate
act from its act of increasing the rents. At the hearing on its motion, the trial court asked
whether AVMGH had to raise the rents after obtaining permission from the City for a
rent increase. AVMGH's trial counsel replied, "They do not have to increase the rents."
AVMGH was therefore free to decide not to exercise the authority to increase rents if
doing so would violate an agreement with Residents.
               AVMGH claims a petition to the City is required for a mobile home park
rent increase. But that factor does not change the result. (Wang v. Wal-Mart Real Estate
Business Trust (2007) 153 Cal.App.4th 790, 794, 809.) In Wang, the plaintiffs sued for

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breach of contract and fraud involving a sale of two parcels of their real estate for a
commercial development. They alleged the defendants agreed to provide street access
for the plaintiffs' remaining properties in the development plans that had to be approved
by the city. The city approved the defendants' plans, but they included a change that
deprived the plaintiffs of street access. The defendants filed an anti-SLAPP motion
claiming city approval was required for the project and the action arose from that
protected petitioning act of submitting the plans to the city. The Court of Appeal
disagreed and held the action arose from the breach of the agreement and not from the
defendants' petition to the city for approval of the plans. The causes of action referred to
the "applications for City development permits" but that did not convert them "into
liability claims that were based principally upon protected speech or conduct." (Id. at
p. 794.) Here, as in Wang, the act of breaching the alleged agreement not to raise the
rents was severable from the act of petitioning the City.
              But even where the lawsuit is closely intertwined with facts involving a
protected activity, courts may properly distinguish between the "'liability that is based on
speech or petitioning activity'" and liability based on contractual causes of action. (City
of Alhambra v. D'Ausilio, supra, 193 Cal.App.4th at p. 1307.) In City of Alhambra, the
city sued a former city employee for breach of contract for violating an agreement that
prohibited him from participating in city firefighter's union activities against the city.
The defendant subsequently engaged in a union demonstration wearing his union shirt.
He claimed the action arose from his protected activities of free speech which fell within
the anti-SLAPP statute. The Court of Appeal disagreed. It distinguished between the
protected activity and the contract claim upon which liability was sought. It said, "The
City did not sue appellant because he engaged in protected speech; the City sued him
because it believed he breached a contract which prevented him from engaging in certain
speech-related conduct . . . ." (Id. at p. 1308.) Here, as in City of Alhambra, Residents
believed AVMGH breached a contract.
              Residents also sought liability for tortious conduct based on misleading
representations about rent increases. Those alleged misrepresentations are not protected

                                              8
activity and are distinguishable from the petition to the City. In Gallimore v. State Farm
Fire & Casualty Ins. Co., supra, 102 Cal.App.4th 1388, the plaintiff sued an insurance
company for misleading policyholders. He relied on reports the company submitted to
the Department of Insurance. The company claimed its communications with the
Department of Insurance were protected involving its "right to freely communicate with
its regulatory agency." (Id. at p. 1399.) It claimed it was entitled to anti-SLAPP relief.
The Court of Appeal disagreed. It had no trouble distinguishing between protected
conduct and the plaintiff's liability claim. It said, "Plaintiff seeks no relief from State
Farm for its communicative acts, but rather for its alleged mistreatment of
policyholders . . . ." (Ibid.)
               AVMGH suggests a direct or indirect challenge to a defendant's petitioning
act necessarily triggers the first prong of the anti-SLAPP statute. But that claim was
rejected in a case where the goal of the petitioning act was allegedly unprotected and
instituted to violate the vested rights of tenants. In Marlin v. Aimco Venezia, LLC (2007)
154 Cal.App.4th 154, a landlord gave notice to the city under the Ellis Act that it was
withdrawing units from rent control. It served notices to the tenants as a step toward
eviction proceedings. Tenants filed an action directly challenging the validity of the
petitioning act--the Ellis Act notices. The Court of Appeal ruled the anti-SLAPP statute
did not apply. It rejected the claim that the Ellis Act notices were protected. It said,
"Clearly, the cause of plaintiffs' complaint was defendants' allegedly wrongful reliance on
the Ellis Act as their authority for terminating plaintiffs' tenancy. Terminating a tenancy
or removing a property from the rental market are not activities taken in furtherance of
the constitutional rights of petition or free speech." (Id. at pp. 160-161.)
                   Was the Rent Increase Protected Commercial Speech?
               AVMGH contends its act of imposing the rent increase on Residents was
commercial speech which is constitutionally protected.
               Residents claim AVMGH's commercial speech issue was not raised in the
trial court. This argument was not presented as a ground for relief in the anti-SLAPP
motion. Issues raised for the first time on appeal are normally forfeited where the

                                               9
appellant failed to give the trial court an opportunity to consider them. (Tudor Ranches,
Inc. v. State Comp. Ins. Fund (1998) 65 Cal.App.4th 1422, 1433.) But even on the
merits, the result is the same.
              AVMGH initially points to the right to make reasonable returns on
investments. (Kavanau v. Santa Monica Rent Control Bd. (1997) 16 Cal.4th 761, 771.)
Residents claim this due process right is not implicated in an anti-SLAPP motion based
on the First Amendment. (§ 425.16.) But even if it is, they claim they are not precluding
AVMGH from making a return on its investment. They are only seeking compliance
with AVMGH's agreement to limit the increases to the specified amounts and increase
formula (Resolution 84-037) upon which they relied.
              AVMGH claims rent increases are "protected commercial speech." But the
issue is not whether commercial transactions involving rent increases are generally
protected, it is whether the conduct alleged as the gravamen of Residents' action is
protected.
              Commercial speech is "[e]xpression concerning purely commercial
transactions." (Ohralik v. Ohio State Bar Assn. (1978) 436 U.S. 447, 455.) It does not
contain the elements of political expression and ideas that trigger the higher scrutiny
involved in traditional First Amendment cases. (Id. at p. 456; Texas v. Johnson (1989)
491 U.S. 397, 404-405; In re Joshua H. (1993) 13 Cal.App.4th 1734, 1747.)
Consequently, courts "have afforded commercial speech a limited measure of protection,
commensurate with its subordinate position in the scale of First Amendment values,
while allowing modes of regulation that might be impermissible in the realm of
noncommercial expression." (Ohralik, at p. 456.)
              First Amendment protection for commercial speech does not apply to
conduct that is "misleading." (Central Hudson Gas & Electric Corp. v. Public Service
Comm'n (1980) 447 U.S. 557, 566.) In commercial speech and traditional First
Amendment speech cases, the tortious conduct of making false or misleading
representations is not protected activity. (Gertz v. Robert Welch, Inc. (1974) 418 U.S.
323, 340 ["there is no constitutional value in false statements of fact"]; see also Larson v.

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City and County of San Francisco (2011) 192 Cal.App.4th 1263, 1284 ["Like ordinary
speech, commercial speech that is misleading, fraudulent, or concerns unlawful activity is
not protected at all by the First Amendment"]; Weirum v. RKO General, Inc. (1975) 15
Cal.3d 40, 48 ["The First Amendment does not sanction the infliction of physical injury
merely because achieved by word, rather than act"].) Courts have therefore held such
tortious conduct is not immune from civil liability (Gertz, at p. 340), and government has
a legitimate interest to protect citizens from being victimized by it (Larson, at pp. 1284-
1289).
               Consequently, anti-SLAPP protection does not apply to commercial speech
containing misrepresentations in public advertizing (Nagel v. Twin Laboratories, Inc.
(2003) 109 Cal.App.4th 39, 43, 46-49), or to transactions where the landlord's challenged
act was allegedly taken to mislead tenants and violate their vested rights (Clark v.
Mazgani (2009) 170 Cal.App.4th 1281, 1284, 1288).
               Moreover, appellate courts have repeatedly rejected the claim that charging
an allegedly excessive or improper rent is a constitutionally protected activity. (See
Ovideo v. Windsor Twelve Properties, LLC, supra, 212 Cal.App.4th at pp. 110-111;
Santa Monica Rent Control Bd. v. Pearl Street, LLC, supra, 109 Cal.App.4th at p. 1318
["defendants have not presented any authority for the proposition that their conduct in
charging illegal rent is an act in furtherance of their rights of petition or free speech"
(italics added)]; see also Marlin v. Aimco Venezia, LLC, supra, 154 Cal.App.4th at
pp.160-161.)
               AVMGH does not focus on the gravamen of Residents' action. The
allegation here is that AVMGH deliberately misled Residents and raised their rents in
breach of an agreement. AVMGH has not shown how such alleged conduct is protected.
(Oviedo v. Windsor Twelve Properties, LLC, supra, 212 Cal.App.4th at pp. 110-111; City
of Alhambra v. D'Ausilio, supra, 193 Cal.App.4th at p. 1308; Gallimore v. State Farm
Fire & Casualty Ins. Co., supra, 102 Cal.App.4th at p. 1399; see also Gertz v. Robert
Welch, Inc., supra, 418 U.S. at p. 340.)

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               We have reviewed AVMGH's remaining contentions and we conclude it
has not shown error.
               The order is affirmed. Costs on appeal are awarded in favor of the
respondents.
               NOT TO BE PUBLISHED.

                                          GILBERT, P.J.
We concur:

               YEGAN, J.

               PERREN, J.

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                                Mark S. Borrell, Judge

                           Superior Court County of Ventura

                         ______________________________

             Hart/King, A Professional Corporation, C. William Dahlin, Boyd L. Hill
for Defendant and Appellant.

             Horvitz & Levy LLP, John A. Taylor, Jr., Eric S. Boorstin; Perkins Coie
LLP, Lester O. Brown, James G. Bernald, Amir Gamliel; Bet Tzedek Legal Services,
Michelle Marie Kezirian, Patricia A. Van Dyke for Plaintiffs and Respondents.

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