Court Opinion

ID: 6348442
Source: CourtListenerOpinion
Date Created: 2022-06-09 19:01:31.552794+00
Date Added: 2024-06-11T08:42:18.102728
License: Public Domain

Filed 6/9/22 J.B.B. Investment Partners v. Fair CA1/2
                  NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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 This opinion has not been certified for publication or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

                                      FIRST APPELLATE DISTRICT

                                                   DIVISION TWO

 J.B.B. INVESTMENT PARTNERS,
 LTD. et al.,
             Plaintiffs and Appellants,                                  A160098
 v.
                                                                         (San Mateo County
 R. THOMAS FAIR et al.,
                                                                         Super. Ct. No. 19CIV06345)
             Defendants and Appellants.

         This is our fifth opinion arising from litigation initiated in 2013 by
J.B.B. Investment Partners, Ltd. (JBB) and Silvester Rabic (collectively,
plaintiffs) against R. Thomas Fair, Bronco RE Corporation (Bronco), BRE
Boulevard (Boulevard) and BRE Cameron Creek LLC (Cameron) (collectively,
Fair defendants). Plaintiffs successfully sued the Fair defendants to enforce
a settlement agreement between the parties. In 2019, plaintiffs filed another
lawsuit, against both the Fair defendants and their attorneys, asserting
abuse of process and other claims related to the protracted underlying
litigation. The attorneys filed a motion to strike under the anti-SLAPP
statute (Code Civ. Proc., § 425.16)1 and requested fees as the prevailing party

      Further undesignated statutory references will be to the Code of Civil
         1

Procedure.

                                                               1
on the motion. The trial court granted the motion only as to the abuse of
process claim and denied the fee request.
      Plaintiffs now appeal the grant of the motion as to the abuse of process
claim; the attorneys cross-appeal the denial of the motion as to the other
claims, as well as the denial of their fee request. We affirm the order as to
the abuse of process claim, but reverse as to the other claims and fee request.
We remand for a determination of the amount to which defendants are
entitled.
                                BACKGROUND2
The Parties
      Fair, an attorney and inactive member of the California State Bar, is
the founder of Bronco, which is the managing member of Cameron.
Boulevard3 and Cameron were formed as Arizona limited liability companies
(LLCs) in 2007, each owning apartment units in Arizona. (J.B.B. Investment
Partners IV, supra, 37 Cal.App.5th at pp. 4–5.) Patrick Baldwin and
Christopher Mader, of the Baldwin Mader Law Group (collectively, attorneys
or attorney defendants), represented the Fair defendants in the underlying
litigation and continue to do so.
      Plaintiff JBB is a limited partnership based in Atherton, California,
and plaintiff Rabic is an individual investor. (J.B.B. Investment Partners IV,

      2  The factual and procedural background is taken in part from our prior
opinions in J.B.B. Investment Partners, Ltd. v. Fair (2014) 232 Cal.App.4th
974, 978 (J.B.B. Investment Partners I); J.B.B. Investment Partners, Ltd. v.
Fair (Jan. 25, 2017, A145221) 2017 WL 361077 [nonpub opn.] (J.B.B.
Investment Partners II); J.B.B. Investment Partners, Ltd. v. Fair (Feb. 5,
2019, A152143) 2019 WL 442389 [nonpub. opn.] (J.B.B. Investment Partners
III); J.B.B. Investment Partners, Ltd. v. Fair (2019) 37 Cal.App.5th 1 (J.B.B.
Investment Partners IV).
      3   Boulevard is not involved in the present appeal.

                                         2
supra, 37 Cal.App.5th at p. 5.) In late 2007 and early 2008, they invested in
Boulevard and Cameron, and became members of the LLCs. (Ibid.)
Prior Action on Settlement Agreement
      After making these investments, plaintiffs “asserted they had
discovered that defendants had made various fraudulent representations and
omissions, and the parties attempted to negotiate a settlement of their
dispute.” (J.B.B. Investment Partners IV, supra, 37 Cal.App.5th at p. 5.) On
July 4, 2013, a demand letter was e-mailed to Fair in which a final
settlement offer was made (July 4 offer). On July 5, after receiving no
response, plaintiffs filed a lawsuit against the Fair defendants. (Ibid.)
      Later that same day, Fair responded to the demand letter by e-mail,
stating that he agreed to settle the matter. (J.B.B. Investment Partners IV,
supra, 37 Cal.App.5th at p. 5.) Fair repeated his acceptance of the July 4
offer several times in e-mails and voice messages to the attorneys for JBB
and Rabic. (Ibid.) Fair, however, subsequently failed to sign a draft of the
final settlement. (Ibid.)
J.B.B. Investment Partners I
      Plaintiffs filed a motion pursuant to section 664.6 to enforce the
settlement, which plaintiffs argued they had entered into through the July 4
and 5 e-mail exchanges between Fair and counsel for plaintiffs. (J.B.B.
Investment Partners IV, supra, 37 Cal.App.5th at p. 5.) Defendants filed a
motion to stay the action and compel arbitration pursuant to the arbitration
provision contained in each LLC operating agreement. (Ibid.) The trial court
granted the plaintiffs’ motion and denied the motion to compel arbitration.
(Ibid.) Defendants appealed solely from the trial court’s order granting the
motion to enforce the settlement. (Ibid.) We reversed in J.B.B. Investment
Partners I, concluding that Fair’s printed name on the document sought to be

                                       3
enforced as a settlement was not a signature for purposes of section 664.6.
(J.B.B. Investment Partners IV, at p. 6.)
J.B.B. Investment Partners II
       After plaintiffs filed their amended complaint, the Fair defendants filed
a second motion to compel arbitration. (J.B.B. Investment Partners IV, supra,
37 Cal.App.5th at p. 6.) The trial court denied the motion, finding it was “ ‘an
untimely and improper request for reconsideration’ of the prior order denying
defendants’ motion to compel arbitration” and “defendants had ‘engaged in
extensive litigation activities which indicate a waiver of their right to
arbitrate claims arising out of the alleged Operating Agreements.’ ” (Ibid.)
We affirmed in J.B.B. Investment Partners II.
J.B.B. Investment Partners III
       The Fair defendants filed a cross-complaint in 2017, alleging causes of
action for breach of contract, breach of the implied covenant of good faith and
fair dealing, violation of Business and Professions Code section 17200, breach
of fiduciary duty, negligent and intentional infliction of emotional distress,
and false imprisonment. (J.B.B. Investment Partners IV, supra, 37
Cal.App.5th at p. 6.) Plaintiffs filed an anti-SLAPP motion to strike. (Ibid.)
The trial court granted the motion and awarded plaintiffs $12,609 in attorney
fees and costs. (Ibid.) We affirmed the order in J.B.B. Investment Partners
III.
J.B.B. Investment Partners IV
       Plaintiffs moved for summary adjudication related to the July 5, 2013
settlement agreement on its breach of contract claim.4 (J.B.B. Investment

       Plaintiffs also moved for summary adjudication on their promissory
       4

estoppel claim, which the trial court denied and plaintiffs subsequently
dismissed. (J.B.B. Investment Partners IV, supra, 37 Cal.App.5th at p. 7.)

                                        4
Partners IV, supra, 37 Cal.App.5th at p. 7.) The trial court granted the
motion as to plaintiffs’ breach of contract claim, finding as a matter of law
that “ ‘on July 5, 2013, [Fair], on behalf of himself and the three entity
defendants, entered into a binding settlement agreement with plaintiffs.
Defendants thereafter breached the agreement by refusing to recognize and
comply with the terms of the settlement.’ ”5 (Ibid.) The trial court entered a
final judgment awarding plaintiffs $475,424.12.
      We affirmed in J.B.B. Investment Partners IV and imposed sanctions of
$44,654.64 on the Fair defendants and their attorneys for bringing a frivolous
appeal. (J.B.B. Investment Partners IV, supra, 37 Cal.App.5th at pp. 7, 15,
21.) We noted that the case had begun almost six years before, “with a
settlement offer to which Fair—a licensed attorney—agreed in writing some
six times.” (Id. at p. 17.) We cited examples of the defendants’ prior conduct
relevant to our determination, including “repeated attempts to arbitrate this
matter, together with a tardy appeal to this court of one of the trial court’s
orders denying their motion to arbitrate”; offering of “ ‘misleading quotes,
taken out of context from the demand letter’ ” to support their claims in
J.B.B. Investment Partners III; raising a similar argument on summary
adjudication and in J.B.B. Investment Partners IV that we rejected in J.B.B.
Investment Partners III; using “misleading partial quotes” and distorting our
opinion in J.B.B. Investment Partners I; and repeating “completely meritless
arguments raised in the trial court and in their opening brief on J.B.B.
Investment Partners IV, in which they “offered selective facts, misrepresented
the record, and/or argued completely inapplicable law.” (Id. at pp. 17–18.)

      5 The trial court determined that its grant of summary adjudication on
this cause of action extinguished the plaintiffs’ other causes of action, and
thus granted their motion for summary adjudication for release of those
claims. (J.B.B. Investment Partners IV, supra, 37 Cal.App.5th at p. 7.)

                                        5
We concluded that “ ‘any reasonable attorney would agree that the appeal is
totally and completely without merit’ ” and imposed sanctions against both
the defendants and their attorneys because “[d]efendants—through Fair, an
inactive member of the State Bar of California—and their attorneys initiated
an appeal that was totally meritless, following a lengthy history of dubious
litigation, which they doggedly pursued over many years despite Fair’s
repeated and insistent acceptance of an offer to settle this case at its
inception, in July 2013.” (Id. at p. 20.)
Current Action
      In 2019, plaintiffs filed this action against Fair, Bronco, Cameron, and
Baldwin Mader, as well as attorneys Baldwin and Mader in their individual
capacity. The operative complaint asserts causes of action for abuse of
process, breach of fiduciary duty, legal malpractice, constructive fraud,
conversion, and declaratory relief.
      The first cause of action for abuse of process alleged that despite
accepting the 2013 settlement agreement “at least seven (7) times,” Fair and
Cameron reneged and pursued an “aggressive litigation strategy, with the
advice and cooperation of Defendants’ Counsel, against Plaintiffs with the
ulterior motive of avoiding the terms of the Settlement Agreement.” It
alleged, as stated in J.B.B. Investment Partners IV, that “there was no legal
or factual basis whatsoever” for the defendants’ refusal to honor the
settlement agreement, and the defendants’ litigation efforts were “at best,
delay tactics, and abuses of the judicial process” used “to obtain an
unjustifiable collateral advantage over Plaintiffs, improperly forcing them to
accumulate significant legal costs and undergo lengthy and exhaustive cycles
of proceedings in the hopes that Plaintiffs would cease their attempts to
obtain the terms Defendants agreed to in the Settlement Agreement.”

                                        6
      The second, third, and fourth causes of action alleged shareholder
derivative claims by plaintiffs as minority shareholders in Cameron and on
behalf of themselves and “all of the other shareholders in Cameron Creek,
and for the benefit of Cameron Creek, pursuant to the provisions of
California Corporations Code section 800.”6 The second cause of action for
breach of fiduciary duty alleged that defendants’ actions wasted Cameron’s
assets by expending hundreds of thousands of dollars in legal fees to assert
frivolous positions and denying or delaying the settlement agreement without
any basis. The third cause of action for legal malpractice, and the fourth
cause of action for constructive fraud, were asserted against the attorney
defendants only. These claims incorporated the above allegations of
wrongdoing.
      The fifth and sixth causes of action were asserted against Fair,
Cameron and Bronco. The fifth cause of action for conversion alleged that
plaintiffs were entitled to certain distributions from Cameron that had not
been made. The sixth cause of action for declaratory relief sought a judicial
declaration as to whether plaintiffs remained owners of equity interests in
Cameron “as a result of the enforcement by the Court of the Settlement
Agreement as a final judgment.”
      The attorney defendants subsequently filed an anti-SLAPP motion to
strike plaintiffs’ first four causes of action. The Fair defendants joined the

      6  While the second cause of action is not expressly titled as “derivative”
in the operative complaint, as are the third and fourth causes of action, it
contains the same allegation that the claim is made “on behalf of Plaintiff
and all of the other shareholders in Cameron Creek, and for the benefit of
Cameron Creek, pursuant to the provisions of California Corporations Code
section 800.” Plaintiffs analyzed this second cause of action as a derivative
claim in their opposition to the anti-SLAPP motion, and confirm in their brief
that it is also a derivative claim.

                                        7
motion.7 The trial court granted the motion as to the cause of action for
abuse of process, but denied it as to the other causes of action. Plaintiffs filed
their notice of appeal.8 The attorney defendants and Fair defendants filed
their notices of cross-appeal shortly thereafter.9
                                 DISCUSSION
                             I. Plaintiffs’ Appeal
      We begin with plaintiffs’ appeal challenging the order granting the
anti-SLAPP motion as to their first cause of action for abuse of process.
      The anti-SLAPP statute provides “a procedural remedy to dispose of
lawsuits that are brought to chill the valid exercise of constitutional rights.”

      7 Joinder was granted as to the first and second causes of action only,
as the third and fourth causes of action were not asserted against the Fair
defendants.
      8 We reject defendants’ argument that Rabic forfeited his right to
appeal because JBB is the only plaintiff who filed a notice. While the notice
only includes JBB in the space for the name of the appealing party, it was
filed by an attorney referenced for both plaintiffs and indicates an appeal
from the order on “Plaintiffs’ Special Motion to Strike.” A notice of appeal
“must be liberally construed” and “is sufficient if it identifies the particular
judgment or order being appealed.” (Cal. Rules of Court, rule 8.100(a)(2).)
This rule of liberal construction “applies to defects in the notice’s designation
of the parties to the appeal,” including “a party who was omitted from the
notice entirely.” (K.J. v. Los Angeles Unified School Dist. (2020) 8 Cal.5th
875, 885; Toal v. Tardif (2009) 178 Cal.App.4th 1208, 1216–1217.) Rabic and
JBB were represented by the same attorneys and presented the same
arguments in the underlying action. In their appellate briefs, the law firm is
listed as representing both parties and refers to “appellants” in the plural.
Defendants suggest no prejudice resulting from the failure to expressly list
Rabic as an appealing party in the notice. We thus construe the notice of
appeal as having been filed on behalf of both JBB and Rabic, and assume
defendants’ arguments apply to both plaintiffs.
      9The Fair defendants have not filed separate briefs in this court, but
instead filed a notice of joinder in the attorney defendants’ combined brief.

                                        8
(Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1055–1056 (Rusheen).) A
defendant may thus file a special motion to strike claims “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.” (§ 425.16, subd. (b)(1).)
      Resolution of an anti-SLAPP motion requires the court to engage in the
now familiar 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.’ ” (Taus v. Loftus (2007) 40 Cal.4th
683, 712.) If the court finds a showing has been made under the first step,
“ ‘it then determines whether the plaintiff has demonstrated a probability of
prevailing on the claim.’ ” (Ibid.) We review a trial court’s order denying an
anti-SLAPP motion de novo. (Rusheen, supra, 37 Cal.4th at p. 1055.)
   A. First Step: Abuse of Process Claim Arose from Protected
      Activity
      Plaintiffs argue that their abuse of process cause of action did not arise
from protected activity by characterizing the claim as founded on defendants’
“baseless acts” taken to repudiate the settlement agreement and abusive
litigation tactics, and not on the content of any filing or statement in
litigation.
      “A claim arises from protected activity when that activity underlies or
forms the basis for the claim.” (Park v. Board of Trustees of California State
University (2017) 2 Cal.5th 1057, 1063–1064.) “Critically, ‘the 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.) Thus, “a claim
may be struck only if the speech or petitioning activity itself is the wrong
complained of, and not just evidence of liability or a step leading to some
different act for which liability is asserted.” (Id. at p. 1060.) Section 425.16,

                                        9
subdivision (e) defines an “ ‘act in furtherance of a person’s right of petition’ ”
to include: “(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.” Defendants bear the burden “to identify what acts each challenged
claim rests on and to show how those acts are protected under a statutorily
defined category of protected activity.” (Bonni v. St. Joseph Health System
(2021) 11 Cal.5th 995, 1009 (Bonni).)
      “The common law tort of abuse of process arises when one uses the
court’s process for a purpose other than that for which the process was
designed. . . . It has been ‘interpreted broadly to encompass the entire range
of “procedures” incident to litigation.’ ” (Rusheen, supra, 37 Cal.4th at
pp. 1056–1057.) “To succeed in an action for abuse of process, a litigant must
establish that the defendant (1) contemplated an ulterior motive in using the
process, and (2) committed a willful act in the use of the process not proper in
the regular conduct of the proceedings.” (Id. at p. 1057.)
      Plaintiffs’ complaint alleged that after Fair accepted the settlement
agreement multiple times, he and Cameron reneged and pursued “an
aggressive litigation strategy, with the advice and cooperation of Defendants’
Counsel” and “with the ulterior motive of avoiding the terms of the
Settlement Agreement.” The “entire history of this litigation was frivolous
and baseless because there was a binding and effective settlement reached
literally on the day this case was filed, and all of the Defendants efforts were,
at best, delay tactics and abuses of the judicial process. Several of those
delay tactics, even if not done to delay a settlement, were independently

                                        10
abuses of process as well.” Defendants “misused multiple judicial processes,”
including by “filing three appeals which had no merit, filing false statements
under oath, filing a Strategic Lawsuit Against Public Participation, filing an
improper, duplicative Motion to Compel Arbitration after a previous denial of
a Motion that was substantively the same, by opposing entry of summary
judgment under the Settlement Agreement without any basis . . . and by
generally aggressively litigating the Underlying Case in spite of the
Settlement Agreement.” “Each new filing” in the underlying action and
appeals was alleged to “represent[] a separate abuse of process taken for the
ulterior motive of delaying and/or preventing compliance” with the settlement
agreement.
      It is apparent from these allegations that all the conduct alleged to
constitute an abuse of process involves the filing of documents in court and
associated litigation activity, acts clearly protected under section 425.16,
subdivision (e). (Rusheen, supra, 37 Cal.4th at p. 1056 [“ ‘Any act’ includes
communicative conduct such as the filing, funding, and prosecution of a civil
action” and “includes qualifying acts committed by attorneys in representing
clients in litigation”].)
      Plaintiffs offer three arguments to the contrary, none of which we find
persuasive. First, plaintiffs attempt to avoid this conclusion by
characterizing the court filings as evidence of an underlying substantive
wrong (baseless repudiation of the settlement agreement) and not themselves
the cause of the harm plaintiffs claimed (delayed enforcement of the
settlement agreement and attorney fees incurred in the underlying
litigation). (City of Alhambra v. D’Ausilio (2011) 193 Cal.App.4th 1301, 1307
(D’Ausilio) [courts must “distinguish between (1) speech or petitioning
activity that is mere evidence related to liability and (2) liability that is based

                                        11
on speech or petitioning activity”].) Plaintiffs claim they were not harmed by
the content of defendants’ filings and arguments in court, which were simply
means of achieving delay.10 But, unlike the situation in D’Ausilio,11 the
court filings and arguments in the underlying litigation are not just evidence
related to liability: they are necessarily the acts and communications upon
which the abuse of process claim was based.
      Second, plaintiffs cite JBB to argue that the defendants’ litigation
conduct was illegal and therefore outside the protection of the anti-SLAPP
statute. In that decision, we explained that the “history of this case and the
indisputable ‘total lack of merit’ of this appeal provide strong evidence of
defendants’ subjective intent, i.e., that they ‘ “must have intended it only for
delay.” ’ ” (JBB Investment Partners IV, supra, 37 Cal.App.5th at p. 19.)

      10 To support this argument, plaintiffs quote the trial court’s tentative
ruling, which is not part of the record on appeal and was replaced by the trial
court’s contrary final decision. Plaintiffs’ reply brief asks us to take “special
judicial notice” of the tentative ruling, as well as several Governor’s executive
orders and emergency rules of court pertaining to COVID-19. As to the
tentative ruling, we deny the request as plaintiffs did not provide a copy of
the ruling and failed to seek judicial notice through the required separate
motion. (Cal. Rules of Court, rule 8.252(a).) Although we take judicial notice
of the emergency orders and rules to the extent they are matters for
mandatory judicial notice (Evid. Code, §§ 451 & 459), plaintiffs fail to state
what relevance these orders and rules have to this appeal and we are aware
of none. (Cal. Rules of Court, rule 8.252(a)(2)(A).)
      11 In D’Ausilio, the defendant participated in a protest and was then
sued by the city for violating a prior agreement to not engage in specified
conduct in support of city employees. D’Ausilio affirmed the denial of the
defendant’s anti-SLAPP motion, explaining that “ ‘the critical consideration is
whether the cause of action is based on the defendant’s protected free speech
or petitioning activity.’ ” (D’Ausilio, supra, 193 Cal.App.4th at p. 1307.) The
city did not sue the defendant “because he engaged in protected speech,” but
rather, “because it believed he breached a contract which prevented him from
engaging in certain speech-related conduct.” (Id. at p. 1308.)

                                       12
Plaintiffs rely upon Lefebvre v. Lefebvre (2011) 199 Cal.App.4th 696, which
concluded that section 425.16 does not extend to filing a false police report in
violation of the Penal Code, an illegal activity that is “not in furtherance of
constitutionally protected speech or petition rights.” (Lefebvre, at p. 704.)
      Defendants’ conduct in this litigation, while baseless and sanctionable,
was not criminal. In Flatley v. Mauro (2006) 39 Cal.4th 299, the California
Supreme Court made clear that a defendant is precluded from using the anti-
SLAPP statute where the assertedly protected speech or petition activity is
illegal as a matter of law. (Flatley, at p. 320.) Courts have repeatedly
interpreted the term “illegal” from Flatley to mean “criminal, not merely
violative of a statute.” (E.g., Price v. Operating Engineers Local Union No. 3
(2011) 195 Cal.App.4th 962, 971; Finton Construction, Inc. v. Bidna & Keys,
APLC (2015) 238 Cal.App.4th 200, 210–211; Bergstein v. Stroock & Stroock &
Lavan LLP (2015) 236 Cal.App.4th 793, 806–807 (Bergstein).) We agree with
these authorities.
      Third, plaintiffs argue their abuse of process cause of action is not
subject to an anti-SLAPP motion because it is “partially subject to
SLAPPback.” A “SLAPPback” is defined as “any cause of action for malicious
prosecution or abuse of process arising from the filing or maintenance of a
prior cause of action that has been dismissed pursuant to a special motion to
strike under Section 425.16.” (§ 425.18, subd. (b)(1).) An anti-SLAPP motion
may not be filed against a SLAPPback by a party “whose filing or
maintenance of the prior cause of action from which the SLAPPback arises
was illegal as a matter of law.” (§ 425.18, subd. (h).) (Soukup v. Law Offices
of Herbert Hafif (2006) 39 Cal.4th 260, 268 (Soukup).) For purposes of
section 425.18, subdivision (h), an “illegal act” is “an act ‘[f]orbidden by law,’ ”

                                        13
which may include non-criminal statutory violations. (Soukup, at p. 283 &
fn. 12; Bergstein, supra, 236 Cal.App.4th at pp. 808–809.)12
      Plaintiffs argue that the anti-SLAPP motion is barred here to the
extent their allegations attack defendants’ “statutory violations” and relate to
the 2017 cross-complaint stricken in the prior action.13 Defendants maintain
there is no such thing as a partial SLAPPback, citing Hutton v. Hafif (2007)
150 Cal.App.4th 527. Hutton, however, did not address the concept of
“partial SLAPPback” plaintiffs advance here. Hutton concluded that section
425.18, subdivision (h) did not preclude an anti-SLAPP motion where the
prior action was based in part on conduct that did not violate any statute
and, therefore, the plaintiff failed to prove the prior action was “ ‘illegal as a
matter of law’ not ‘partially illegal’ as [plaintiff] suggests.” (Hutton, at
p. 545.)
      Even if applicable, we are unpersuaded that the requirements of
section 425.18, subdivision (h) are met here. To satisfy this provision, a
plaintiff must “identify with particularity the statute or statutes violated by
the filing and maintenance of the underlying action” and, absent a concession
from the defendant, the illegality must be “conclusively established by the
evidence presented in connection with the motion to strike.” (Soukup, supra,
39 Cal.4th at pp. 286–287.) Here, the full extent of plaintiffs’ argument is
that “sanctions were awarded for [the defendants’] illegal conduct” that

      12 Bergstein made clear that this interpretation of “illegal act” under
section 425.18, subdivision (h) was limited to the particular context of
SLAPPbacks and did not apply to the rule established in Flatley. (Bergstein,
supra, 236 Cal.App.4th at pp. 808–809.)
      13Plaintiffs refer to statutes providing for the imposition of sanctions
based on improper actions (e.g., frivolous, bad faith, solely intended to cause
unnecessary delay), citing sections 128.5, 128.7, and 907, and contend
defendants were sanctioned for “illegal conduct” violating these statutes.

                                        14
“violated multiple statutes governing the Court’s ability to award sanctions.
See e.g. [Code of Civil Procedure sections] 128.5, 128.7, 907.” But conduct
warranting sanctions—i.e., “actions or tactics, made in bad faith, that are
frivolous or solely intended to cause unnecessary delay” (§ 128.5, subd. (a))—
is not the sort of affirmatively unlawful or illegal conduct section 425.18,
subdivision (h) was intended to reach. (Soukup, at pp. 289–290 [rejecting
argument that “sham” lawsuit came within § 425.18, subd. (h) exemption].)
   B. Second Step: No Probability of Prevailing on the Merits
      The second step of the anti-SLAPP analysis requires us to decide
whether plaintiffs have demonstrated a probability of prevailing on their
abuse of process claim. This determination follows a “ ‘summary-judgment-
like procedure.’ ” (Taus v. Loftus, supra, 40 Cal.4th at p. 714.) The court
does not weigh evidence or resolve conflicting factual claims. (Ibid.) Its
inquiry is limited to whether the plaintiff has stated a legally sufficient claim
and made a prima facie factual showing sufficient to sustain a favorable
judgment. (Ibid.) It accepts the plaintiff’s evidence as true, and evaluates
the defendant’s showing only to determine if it defeats the plaintiff’s claim as
a matter of law. (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811,
819–820.) On this step, plaintiffs argue that defendants egregiously misused
court processes by groundlessly repudiating the settlement agreement and
using meritless motions and appeals and mischaracterization of the facts to
force plaintiffs to endure years of delay and incur hundreds of thousands of
dollars in attorney fees in order to enforce the settlement.
      As earlier stated, an abuse of process requires the plaintiffs to establish
that the defendant (1) “contemplated an ulterior motive in using the process”
and (2) “committed a willful act in the use of the process not proper in the
regular conduct of the proceedings.” (Rusheen, supra, 37 Cal.4th at p. 1057.)

                                       15
“The gist of the tort is the misuse of the power of the court: It is an act done
under the authority of the court for the purpose of perpetrating an injustice,
i.e., a perversion of the judicial process to the accomplishment of an improper
purpose.” (Younger v. Solomon (1974) 38 Cal.App.3d 289, 297.) “Some
definite act or threat not authorized by the process or aimed at an objective
not legitimate in the use of the process is required. And, generally, an action
lies only where the process is used to obtain an unjustifiable collateral
advantage. For this reason, mere vexation or harassment are not recognized
as objectives sufficient to give rise to the tort.” (Ibid.)
      The case law is clear that “mere filing or maintenance of a lawsuit—
even for an improper purpose—is not a proper basis for an abuse of process
action.” (Oren Royal Oaks Venture v. Greenberg, Bernhard, Weiss & Karma,
Inc. (1986) 42 Cal.3d 1157; Ramona Unified School Dist. v. Tsiknas (2005)
135 Cal.App.4th 510, 520 (Ramona).)14 Moreover, “ ‘merely taking a frivolous
appeal is not enough to constitute an abuse of process’ ” and there is no
liability where the defendant “ ‘has done nothing more than carry out the
process to its authorized conclusion, even though with bad intentions.’ ”
(Tellefsen v. Key System Transit Lines (1961) 198 Cal.App.2d 611, 615; see
also Coleman v. Gulf Ins. Group (1986) 41 Cal.3d 782, 792 [abuse of process
claim insufficient where based on alleged filing of a meritless appeal to cause
delay and coerce settlement].)
      So too here. Defendants used the court process to resist plaintiffs’
action. Even if defendants’ litigation conduct was vexatious or sanctionable,
it does not satisfy the elements for an abuse of process claim. Indeed, “ ‘[t]he

      14Plaintiffs attempt to distinguish Ramona on the ground that the
defendant in that case had initiated the underlying action. (Ramona, supra,
135 Cal.App.4th at p. 522.) This factual distinction is not relevant to the
question whether defendants misused the court process.

                                         16
policy of the rule is obvious. If the wrongful conduct of a defendant causing
the plaintiff to sue him would give rise to an independent tort and a separate
cause of action, there would be no end to the litigation, for immediately upon
the entry of judgment the plaintiff would start another action . . . .”
(California Physicians’ Service v. Superior Court (1992) 9 Cal.App.4th 1321,
1325, fn. 2.) We thus conclude the anti-SLAPP motion was properly granted
as to this abuse of process because plaintiffs have not demonstrated a
likelihood of prevailing on the merits of their abuse of process claim.15
      Given this conclusion, we need not address defendants’ additional
arguments that the cause of action is barred by the statute of limitation and
litigation privilege. We note, however, that the applicability of the latter
defense is apparent given the acts upon which the abuse of process claim are
necessarily based upon are filings and statements in the course of and related
to the underlying litigation. (Civ. Code, § 47, subd. (b); Silberg v.
Anderson (1990) 50 Cal.3d 205, 212 [“The usual formulation is that the
privilege applies to any communication (1) made in judicial or quasi-judicial
proceedings; (2) by litigants or other participants authorized by law; (3) to
achieve the objects of the litigation; and (4) that have some connection or
logical relation to the action”].)

      15 Plaintiffs cannot avoid the anti-SLAPP motion by arguing that
defendants’ conduct meets all the elements of malicious prosecution—a point
raised in a footnote of the opening brief and briefly in reply. Plaintiffs did not
allege a cause of action for malicious prosecution and “cannot use an
eleventh-hour amendment to plead around a motion to strike under the anti-
SLAPP statute.” (Navellier v. Sletten (2003) 106 Cal.App.4th 763, 772.) In
any event, plaintiffs do not explain how they could demonstrate a probability
of prevailing on the merits of a malicious prosecution claim given its first
element requires that the prior action “was commenced by or at the direction
of the defendant . . . .” (Soukup, supra, 39 Cal.4th at p. 292.)

                                        17
                         II. Defendants’ Cross-Appeal
      We turn next to defendants’ cross-appeal arguing the trial court erred
in denying their anti-SLAPP motion as to the second, third, and fourth
causes of action and in denying their request for attorney fees.
   A. First Step: Derivate Claims Arose from Protected Activity
      As described above, the second, third, and fourth causes of action
alleged derivative claims asserted by plaintiffs on behalf of themselves and
all shareholders in Cameron and for the benefit of Cameron. Each of these
claims is based on the theory that defendants wasted corporate resources by
pursing the baseless underlying litigation, incurring much greater expenses
than would have been required if they had abided by the settlement
agreement.16
      The trial court described the “thrust” of these three claims as the
defendants being “engaged in ‘overly aggressive’ litigation” to avoid or delay
paying the amounts due under the settlement agreement. The claims were
based on defendants’ conduct in litigating the underlying action
“unnecessarily,” “asserting frivolous claims,” and failing to disclose to their
client that the motions, appeals, and cross-complaint “lacked merit, but were
filed anyway.” While these acts are generally within the scope of a person’s
“ ‘right of petition,’ ” the court concluded that the claims were not based on
activity protected by the anti-SLAPP statute because they were claims by a
client against its own attorneys. The court explained: “ ‘It is unreasonable to
interpret [the anti-SLAPP statute] to include a client’s causes of action
against the client’s own attorney arising from litigation-related activities

      16We reject plaintiffs’ assertion that the anti-SLAPP motion challenged
only the third cause of action. The record reflects that the motion to strike
was expressly directed at all three of these claims and plaintiffs addressed all
of them in their opposition.

                                       18
undertaken for that client.’ (PrediWave Corp. v. Simpson Thacher & Bartlett
LLP (2009) 179 Cal.App.4th 1204, 1227, 1228; see also Chodos v. Cole (2012)
210 Cal.App.4th 692.)” It continued: “ ‘In a malpractice suit, the client is not
suing because the attorney petitioned on his or her behalf, but because the
attorney did not competently represent the client’s interests while doing so.
Instead of chilling the petitioning activity, the threat of malpractice
encourages the attorney to petition competently and zealously.’ (Kolar v.
Donahue, McIntosh & Hammerton (2006) 145 Cal.App.4th 1532, 1540.)”
      We agree with defendants that the trial court was overly focused on the
nature of the derivative claims instead of the acts underlying them. “ ‘[T]he
anti-SLAPP statute’s definitional focus is not the form of the plaintiff’s cause
of action but, rather, the defendant’s activity that gives rise to his or her
asserted liability—and whether that activity constitutes protected speech or
petitioning.’ ” (Peregrine Funding, Inc. v. Sheppard Mullin Richter &
Hampton LLP (2005) 133 Cal.App.4th 658, 671.) “[A] court considering a
special motion to strike must examine the allegedly wrongful conduct itself,
without particular heed to the form of action within which it has been
framed.” (Ibid.) In other words, when a plaintiff alleges “various acts as a
basis for relief and not merely as background, each act or set of acts must be
analyzed separately under the usual two-step anti-SLAPP framework.”
(Bonni, supra, 11 Cal.5th at p. 1012.) The determination cannot be based on
the “gravamen approach” of determining whether based on identifying the
“essence or gist” of the cause of action. (Id. at pp. 1010–1011, 1012, fn. 2.)17

      17Bonni accepted use of a gravamen approach only as a means to
“determine whether particular acts alleged within the cause of action supply
the elements of a claim” or instead are “incidental background . . . .” (Bonni,
supra, 11 Cal.5th at p. 1012.)

                                        19
      Here, as the trial court correctly observed, the acts upon which these
three derivate claims were based fell within the scope of protected activity:
filing a cross-complaint, multiple appeals, and motions for a stay, to compel
arbitration and for sanctions. Defendants’ “baseless” and protracted
litigation was not just the background of plaintiffs’ claims; without the
litigation conduct, their claims would not exist.
      Wittenberg v. Bornstein (2020) 50 Cal.App.5th 303 (Wittenberg)
illustrates the necessary distinction. In Wittenberg, the plaintiff asserted
causes of action for breach of fiduciary duty and conspiracy against the
attorney who had previously represented a company co-owned by plaintiff
and was now representing the other co-owner in litigation. (Id. at p. 307.)
The claims were based on the attorney’s representation of clients with
adverse interests and use of the company’s confidential information for that
new representation. (Id. at p. 314.) Wittenberg concluded that these acts did
not constitute protected activity; the litigation conduct was “merely
incidental” to the alleged conduct supporting the attorney’s purported
breaches of his fiduciary and professional obligations. (Ibid. ) On the other
hand, claims arising from the attorney’s preparation and filing of a request to
dismiss the company’s cross-complaint arose from activity protected under
section 425.16. (Wittenberg, at p. 315; see also O&C Creditors Group, LLC v.
Stephens & Stephens XII, LLC (2019) 42 Cal.App.5th 546, 567 [claims against
attorneys for settling lawsuit and disbursing funds in derogation of a lien,
cast as wrongful disbursement of settlement funds, arose from protected
settlement activity because claims were “founded upon and would not exist in
absence of the protected settlement activity”]; Contreras v. Dowling (2016)
5 Cal.App.5th 394, 411 [claim against landlord’s attorney alleging he aided
and abetted entry into tenant’s apartment arose from protected activity

                                       20
where specific acts shown were advising client and writing letter to opposing
counsel]; Bergstein, supra, 236 Cal.App.4th at p. 811 [although framed as
aiding and abetting breach of fiduciary duty by plaintiffs’ former counsel, who
assisted defendant attorneys in litigation against plaintiffs, claims arose from
protected activity because “ ‘specific acts of alleged wrongdoing’ in the
complaint are litigation activities”].)
      The legal malpractice cases relied upon by the trial court are
distinguishable because they established, in effect, an exemption from the
anti-SLAPP statute that is not applicable here. (PrediWave v. Simpson
Thacher & Bartlett LLP, supra, 179 Cal.App.4th at pp. 1227–1228
(PrediWave); Chodos v. Cole, supra, 210 Cal.App.4th at pp. 696–697, 702–
703; Kolar v. Donahue, McIntosh & Hammerton, supra, 145 Cal.App.4th at
pp. 1537–1538.) PrediWave concluded that the anti-SLAPP statute does not
apply to “clients’ causes of action against attorneys based upon the attorneys’
acts on behalf of those clients” because those causes of action are not being
brought to chill the valid exercise of speech or petitioning activity.
(PrediWave, at p. 1227.) Other kinds of actions, including “clients’ causes of
action against attorneys based upon statements or conduct solely on behalf of
different clients” and “nonclients’ causes of action against attorneys” are
protected. (Ibid.; see also Thayer v. Kabateck Brown Kellner LLP (2012) 207
Cal.App.4th 141, 158.)
      We are not persuaded that the derivative claims in this case fall within
the PrediWave exemption because they are based on actions taken in the
prior litigation on behalf of Cameron against plaintiffs. In practical effect,
plaintiffs seek to impose liability on Cameron’s attorneys for litigation
conduct on Cameron’s behalf that harmed plaintiffs. In Wittenberg, the
appellate court focused on the alleged conduct and did not utilize the

                                          21
PrediWave framework upon determining that it did not “fall squarely” within
any one of those categories. (Wittenberg, supra, 50 Cal.App.5th at p. 315.)
We do the same here and conclude that the derivative claims arise from
protected litigation activity.
   B. Second Step: No Probability of Prevailing on the Merits
        Defendants argue that plaintiffs cannot demonstrate a probability of
prevailing on the derivative claims for three reasons: (1) plaintiffs failed to
show standing to bring a derivative claim; (2) derivative suits for malpractice
are barred; and (3) the claims are barred by the litigation privilege. The first
of these is dispositive.
        On this second step of the anti-SLAPP analysis, plaintiffs bear the
burden “to demonstrate that each challenged claim based on protected
activity is legally sufficient and factually substantiated” and “must
demonstrate this probability of success with admissible evidence.” (Laker v.
Board of Trustees of California State University (2019) 32 Cal.App.5th 749,
768.)
        “[E]lements for standing ‘are not mere pleading requirements but
rather an indispensable part of the plaintiff’s case’ ” and thus “ ‘each element
must be supported in the same way as any other matter on which the
plaintiff bears the burden of proof, i.e., with the manner and degree of
evidence required at the successive stages of the litigation.’ ” (Troyk v.
Farmers Group, Inc. (2009) 171 Cal.App.4th 1305, 1345; Major v. Silna
(2005) 134 Cal.App.4th 1485, 1498 [anti-SLAPP motion should have been
granted where plaintiff failed to demonstrate standing and therefore failed to
carry burden of demonstrating probability of prevailing on merits]; Muddy
Waters, LLC v. Superior Court (2021) 62 Cal.App.5th 905, 924, fn. 9 [same].)

                                        22
      As plaintiffs acknowledge, a shareholder has standing to enforce the
rights of a corporation through a derivative action only while he or she
maintains stock ownership. (Grosset v. Wenaas (2008) 42 Cal.4th 1100,
1114–1115 (Grosset).) Grosset explained the rationale for this rule: “If
successful, a derivative claim will accrue to the direct benefit of the
corporation and not to the stockholder who litigated it. [Citations.] Because
a derivative claim does not belong to the stockholder asserting it, standing to
maintain such a claim is justified only by the stockholder relationship and
the indirect benefits made possible thereby, which furnish the stockholder
with an interest and incentive to seek redress for injury to the corporation.
[Citations.] Once this relationship ceases to exist, the derivative plaintiff
lacks standing because he or she ‘no longer has a financial interest in any
recovery pursued for the benefit of the corporation.’ [Citations.]” (Id. at
p. 1114.)
      Defendants argue that plaintiffs did not, and cannot, demonstrate they
meet the continuous ownership requirement because the settlement
agreement terminated their interests in Cameron.18 Although defendants do
not point to any specific language in the agreement, we look to the second
paragraph of the July 4, 2013 e-mail delineating the terms of the agreement.

      18 We reject any suggestion by plaintiffs that this argument is forfeited
for failure to raise it in the trial court proceedings. “It is well settled that a
party may raise the issue of standing for the first time on appeal.”
(Steadman v. Osborne (2009) 178 Cal.App.4th 950, 954–955.) On an anti-
SLAPP motion, a plaintiff is not deprived of the ability to present evidence on
standing because the defendant did not argue this point and retains the
burden to produce such evidence to show a probability of prevailing on his or
her claim. (Muddy Waters, LLC v. Superior Court, supra, 62 Cal.App.5th at
p. 924, fn. 9.) Plaintiffs obviously knew the question of their continued
ownership interests in Cameron was disputed, as this was the subject of their
sixth cause of action for declaratory relief.

                                       23
This provision states: “You must enter a Stipulated Judgment for $350,000
which is the full bore amount of all amounts invested, all interest, all fees, all
costs and everything else which Stipulated Judgment will be held in escrow
and not entered if payment is timely made in accord with the next
paragraph.” According to this provision, payment of the stipulated amount
would constitute full reimbursement of plaintiffs’ investment in Cameron.
And it would certainly appear that once that investment was returned,
plaintiffs would no longer be members of the LLC. Given that plaintiffs were
awarded $475,424.12 on their cause of action for breach of the settlement
agreement, it appears that plaintiffs no longer hold ownership interests in
Cameron and have failed to meet their burden on standing.
      Plaintiffs offer three arguments to the contrary, none of which we find
persuasive. First, plaintiffs contend that there is no language in the
settlement agreement granting their ownership interests to defendants or
anyone else “without actual cash delivery as required by the express terms of
the Settlement Agreement” and that the agreement cannot be interpreted as
terminating their status as shareholders “until at least all of the monies owed
to them per the agreement have been paid.” The record reflects, however,
that all payments due under the settlement agreement have been paid
through the $475,424.12 judgment. Indeed, plaintiffs filed a satisfaction of
judgment, confirming “full satisfaction” of the judgment. The present lawsuit
was filed after the conclusion of the prior litigation and the operative
complaint in this action was filed after the satisfaction of judgment. At that
point, plaintiffs had received all payment due under the settlement
agreement, which expressly constituted return of “all amounts invested, all
interest, all fees, all costs and everything else.”

                                         24
      Second, plaintiffs suggest that there is some other payment owed apart
from the settlement agreement: amounts they believe are due as profits on
their investment. This assertion appears to refer to their fifth cause of action
for conversion, alleging plaintiffs had not received any of the disbursements
promised as a result of their investment in Cameron or more specifically, the
proportional distributions other investors received when the real property
that was Cameron’s sole asset sold in 2018. JBB’s general partner submitted
a declaration to the trial court stating that neither he nor Rabic received any
of the disbursements reported on tax forms (K-1s), and that JBB never
received the “8% priority income return per year” it was promised prior to
investing in Cameron. Rabic’s declaration similarly states he never received
any portion of the promised “8% priority per year.” We are not persuaded by
plaintiffs’ contention that their continued ownership interests are
demonstrated by the K-1s defendants provided to them. The validity of the
settlement agreement continued to be disputed well into 2019. (J.B.B.
Investment Partners IV, supra, 37 Cal.App.5th 1, review den. Oct. 9, 2019.)
Defendants had little choice but to provide the K-1s to plaintiffs, since they
would have remained members of the LLC if defendants had prevailed in
their attempts to disprove the settlement agreement.
      Third, plaintiffs ask us to apply an equitable exception to the
requirement of continuous ownership for standing to maintain derivative
claims. While California law “generally requires a plaintiff in a shareholder’s
derivative suit to maintain continuous stock ownership throughout the
pendency of the litigation,” Grosset explained that equitable considerations
may warrant an exception where a merger “is used to wrongfully deprive the
plaintiff of standing, or if the merger is merely a reorganization that does not
affect the plaintiff’s ownership interest.” (Grosset, supra, 42 Cal.4th at

                                       25
p. 1119.) Similarly, in Haro v. Ibarra (2009) 180 Cal.App.4th 823, the
appellate court determined that equitable considerations warranted an
exception where the plaintiffs alleged they were wrongfully deprived of their
shares pursuant to a scheme to force them out by imposing unique
assessments on them and declaring their shares forfeited when they refused
to pay. (Id. at pp. 836–837.)
      Here, the equitable considerations stemming from defendants’ alleged
litigation conduct do not directly implicate plaintiffs’ ownership interests so
as to trigger the exception contemplated by Grosset and applied in Haro.
Plaintiffs sued the Fair defendants and entered a settlement agreement
providing for full repayment of their investment in Cameron. If they
ultimately lost ownership interests in Cameron, it was pursuant to the
settlement agreement; there is nothing in the record to indicate that
defendants’ litigation of the validity of that agreement constituted a scheme
to wrongfully deprive plaintiffs of their ownership interests.
   C. Request for Attorney Fees
      Defendants argue the trial court erred in denying their request for
attorney fees on the ground that they did not prevail on all causes of action.
Section 425.16, subdivision (c)(1) provides, with certain exceptions not
relevant here, “a prevailing defendant on a special motion to strike shall be
entitled to recover his or her attorney’s fees and costs.” Given our conclusion
that the anti-SLAPP motion should have been granted as to all causes of
action, we conclude defendants are entitled to recover their fees and costs.
      We are again unpersuaded by plaintiffs’ argument that the mandatory
attorney fees provision is inapplicable because their case is a SLAPPback.
(§ 425.18, subd. (c) [fees provision in section is inapplicable to SLAPPback];
Hutton v. Hafif, supra, 150 Cal.App.4th at p. 539 [same].) As discussed

                                       26
above, plaintiffs characterize their case as a SLAPPback based on the cross-
complaint stricken in the prior action, but that filing was just one of the acts
upon which plaintiffs based their abuse of process claim and they offer no
authority or analysis for their position that section 425.18 applies to a
“partial” SLAPPback.
      We thus conclude that the trial court erred in denying the defendants’
request for attorney fees and remand the matter to determine the amount of
the attorney fees to be awarded to defendants.
                                DISPOSITION
      The anti-SLAPP order is affirmed as to its grant of the motion to strike
count one of the amended complaint, but reversed as to its denial of the
motion as to counts two, three, and four of the amended complaint with
directions to enter an order granting the motion as to these causes of action.
The denial of defendants’ request for attorney fees is reversed and the matter
remanded for a determination of the amount of fees to which defendants are
entitled.
      Costs awarded to Fair.

                                       27
                                           _________________________
                                           Mayfield, J.*

We concur:

_________________________
Richman, Acting P.J.

_________________________
Stewart, J.

J.B.B. Investment Partners, LTD et al. v. Fair et al. (A160098)

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

                                      28