Court Opinion

ID: 2649014
Source: CourtListenerOpinion
Date Created: 2014-01-13 23:18:50.951184+00
Date Added: 2024-06-11T12:55:19.425016
License: Public Domain

Filed 1/13/14 PG Inn, Inc. v.Gatward CA2/6
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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

                                     SECOND APPELLATE DISTRICT

                                                   DIVISION SIX

PG INN, INC.,                                                              2d Civil No. B248589
                                                                     (Super. Ct. No. 56-2012-00428313-
     Plaintiff and Respondent,                                                  CU-DF-VTA)
                                                                              (Ventura County)
v.

CHRIS GATWARD et al.,

     Defendants and Appellants.

                   Chris Gatward (Gatward) and M3 Environmental Consulting, LLC (M3)
appeal an order denying a special motion to strike PG Inn, Inc.'s (PG Inn) complaint for
libel pursuant to the anti-"SLAPP" (strategic lawsuit against public participation) statute.
(Code Civ. Proc., § 425.16, subd. ( b)(1).)1 We conclude the complaint did not arise from
the exercise of protected speech and that PG Inn established a probability of prevailing on
the merits. We affirm.
                         FACTUAL AND PROCEDURAL BACKGROUND
                   Gatward is the principal of M3. In 2009, M3 performed airborne mold
spore testing in the basement of the Pacific Grove Inn (the Inn) pursuant to a contract
with the Inn's former manager, Jolie Quest Hotels. PG Inn subsequently purchased the
Inn.

1
    All statutory references are to the Code of Civil Procedure unless otherwise stated.
                 In 2012, PG Inn filed a complaint against Gatward and M3 for "Libel -
Defamation Per Se." PG Inn alleges that, in March 2012, Gatward maliciously published
false statements on Yelp.com and TripAdvisor.com, stating that there was a severe mold
problem in PG Inn's basement that was never remediated.
                 In the 2012 postings, Gatward wrote, "Although I have not stayed here, this
review is more about the hotel management company (Jolie Quest) than the local staff.
[¶] We were asked to perform mold testing at the inn in 2009 and found a severe
problem, largely in the basement area . . . . We were asked back several times to test for
mold spores as the management (Jolie Quest) tried to perform their own remediation, to
no good effect. [¶] To make matters worse they did not pay for our services, and do not
[return] calls or e-mails. The local manager is new and while seems nice, has been
unable to help. [¶] So as far as we know, the mold problem still exists, and the company
are dead beats."
                 Gatward and M3 filed an anti-SLAPP motion, asserting that PG Inn's
complaint arose from constitutionally protected activity because it was brought in
response to M3's efforts to obtain a small claims judgment for unpaid fees and in
response to Gatward's expression of opinions on an issue of public concern, failure to
remediate mold. (§ 425.16, subd. (b)(1) & (e)(2), (3).) Gatward and M3 also argued that
PG Inn could not establish a probability of prevailing on the merits because Gatward's
statements were either opinion or were substantially true.
                 In support of the motion to strike, Gatward presented copies of M3's
November 2009 contract with Jolie Quest Hotels to perform mold and asbestos testing at
the Inn; M3's November 2009 letter reporting its initial findings and recommendations;
M3's January 2010 letter reporting the results of follow-up testing; and an April 2012
small claims judgment and complaint against Jolie Quest Hotels for about $2,000 in
unpaid fees. It is undisputed that M3 obtained this judgment by default and that it was
not satisfied.
                 M3's November 2009 letter after initial testing reported high airborne mold
spore concentrations in the basement of the Inn's main building as compared to outdoor

                                               2.
air samples. M3's visual inspection disclosed various areas of water damage and visible
mold. M3 concluded, "Analytical results of the bioaerosol sampling as well as the visual
inspection conducted during this evaluation do suggest a significant airborne mold spore
concentration is present in [the] basement of the Main Building, the basement of the Back
House, and water intrusion around the bathtub wall in Room 14 of the Back House." M3
recommended six remedial actions involving cleaning, removal, and further inspection.
It recommended that any mold discovered on wood in wall cavities be sanded, cleaned
and dried and that work be performed by an experienced mold remediation contractor and
followed by further testing.
              M3's January 2010 letter after follow-up testing reported that there were no
longer any indoor spore concentrations in the basement above outdoor levels. It
described these findings as typical of a "well-maintained building." This letter was
written two years before Gatward's Internet postings. M3 wrote that "spore
concentrations found in the indoor areas were lower than outdoor" concentrations in all
cases, "with similar relative concentrations of mold species dominating the samples." In
a section labeled "Observations," M3 noted a "clogged" sink in a maintenance area and
"[v]isible water damage and suspect mold" still on the ceiling of a "refrigerator room"
and also along the base of the wallboard in a closet under a stairway, not previously
noted. But in its "conclusions," M3 reported, "Analytical results of the bioaerosol
sampling as well as the visual inspection conducted during this evaluation do not suggest
a significant airborne mold spore concentration is still present in [the] basement of the
Main Building." The 2010 recommendations omitted five of the six original substantive
recommended actions. M3 continued to recommend sanding, cleaning, and drying of the
refrigerator room ceiling, and added recommendations to unclog and clean the sink and to
remove the "mold impacted wallboard walls along the base of the stairway closet" in
order to inspect the interior wall cavity "for possible mold growth."
              In support of the motion to strike, Gatward declared that as of January
2010, "[he and M3] understood that PG [Inn] had not retained an experienced mold
remediation contractor but, instead, attempted to do the work themselves"; that after

                                             3.
issuing the January 2010 report, "[he and M3] were never called back to the premises of
PG Inn"; that, as far as he knew, no further testing was ever done; and that "PG Inn has
yet to pay and has not satisfied the judgment of $2,136.52." The contract, small claims
complaint, and judgment attached to his declaration show that Jolie Quest Hotels, not PG
Inn, was the party responsible for payment for M3's services. Gatward also submitted
copies of three TripAdvisor.com posts from 2010, 2011, and 2012 describing the
basement as dark, smelly, or dank (April 16, 2010: "Room #1 is in the basement! It is
very dark and it was also smelly . . . ."; June 27, 2011: "Room a little dank/stuffy"; and
April 17, 2012: "[W]hen you don't have a reservation that [sic] sticks you in the dungeon
below").
              PG Inn opposed the special motion and submitted copies of M3's 2010
report and Gatward's 2012 postings on Yelp.com and TripAdviser.com, quoted above.
PG Inn also submitted the declaration of a shareholder of PG Inn, Gary Peterson, who
oversaw the Inn's remediation efforts between M3's 2009 and 2010 inspections. Peterson
described his experience with mold remediation and declared that there was no mold
problem at the Inn after M3's final report. He also declared that Yelp and TripAdvisor
took down Gatward's postings "immediately" after PG Inn contacted them, "but the
economic damages had already begun to take effect"; and "[s]ince the reviews were
posted, the Pacific Grove Inn suffered a dramatic loss in guest stays, which has translated
into a loss of revenue and loss of value of the building itself.
              The trial court denied Gatward and M3's motion to strike, ruling that they
had not shown that Gatward's statements fell under the protection of section 425.16 and
that PG Inn demonstrated a probability of prevailing. The court reasoned that the ability
of a management company to pay its bills is not a matter of public concern, the existence
of any mold problems at the Inn would concern a small number of people, and that PG
Inn demonstrated it could prove the statements were false.
                                       DISCUSSION
              Gatward and M3 contend that PG Inn's complaint arose from protected
activity because Gatward's statements were made in a public forum concerning a public

                                              4.
issue and because they were made in connection with an issue under consideration by a
court in his small claims collection action. They also contend that PG Inn did not
establish a probability of prevailing because the statements were not provably false and it
did not offer evidence of pecuniary damage.
              We review an order granting or denying a motion to strike under section
425.16 de novo. (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 820.)
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." Protected activities include statements "made in connection with an issue under
consideration or review by a . . . judicial body" (id., subd. (e)(2)), and statements "made
in a . . . public forum in connection with an issue of public interest" (id., subd. (e)(3)).
              Our analysis involves two steps: First, we decide whether Gatward and M3
have made a threshold showing that PG Inn's complaint arises from protected activity.
(§ 425.16, subd. (b)(1).) If so, we consider whether PG Inn has not demonstrated a
probability of prevailing on its claim. "Only a cause of action that satisfies both prongs
of the anti-SLAPP statute . . . is a SLAPP, subject to being stricken under the statute."
(Navellier v. Sletten (2002) 29 Cal.4th 82, 89.)
                                      Protected Activity
              Gatward's statement, "To make matters worse they did not pay for our
services," was arguably made in connection with issues under review by the court in his
small claims case. But PG Inn's complaint did not arise from that statement. The
statement is included in a copy of the postings attached to its complaint, but PG Inn
alleged no false statements about nonpayment. Where allegations about protected
conduct are merely incidental to unprotected conduct, the first prong is not met.
(Peregrine Funding Inc. v. Sheppard Mullin Richter & Hampton LLP (2005) 133

                                               5.
Cal.App.4th 658, 672; Fox Searchlight Pictures, Inc. v. Paladino (2001) 89 Cal.App.4th
294, 308.)
              PG Inn alleged that Gatward falsely stated that "there was a severe mold
problem in [the] Inn's basement and also stated that the problem was never remediated."
Gatward offered no evidence that mold remediation was an issue under review in the
small claims case and his small claims complaint suggests it was not. It was an action to
collect fees for a testing contract. The contract shows that M3 was not retained to
conduct remediation. Whether or not remediation occurred would have been irrelevant to
M3's collection claim, even if it had been litigated rather than resolved by default. We
therefore must consider whether Gatward's statements about mold are protected as
statements in a public forum about an issue of public interest.
              Web sites accessible to the public are public forums. (Barrett v. Rosenthal
(2006) 40 Cal.4th 33, 41, fn. 4 [Yahoo message board].) But defamatory statements are
not transformed into issues of public interest merely because they are posted on a Web
site. (Du Charme v. International Brotherhood of Electrical Workers (2003) 110
Cal.App.4th 107, 114 [statement on labor union Web site that union manager was fired
for financial mismanagement was in a public forum but not connected to an issue of
public interest, notwithstanding widespread viewing by union members and a pending
governmental investigation into mismanagement of union finances].) Statements about
private disputes are not protected by the anti-SLAPP statute. (Weinberg v. Feisel (2003)
110 Cal.App.4th 1122, 1132 [publications in trade newsletter accusing a token collector
of theft did not involve an issue of public interest and were not protected];
Commonwealth Energy Corp. v. Investor Data Exchange, Inc. (2003) 110 Cal.App.4th
26, 34 [telemarketing pitch "was about Investor Data's services, not about investment
scams in general" and was not protected]; Consumer Justice Center v. Trimedica
International, Inc. (2003) 107 Cal.App.4th 595, 600-601 [advertising claims for breast
enlarging herbal supplements did not concern the general topic of herbal supplements of
interest to public and were not protected].)

                                               6.
               But statements may be connected to an issue of public interest if they
concern a person or entity in the public eye, a topic of widespread public interest, or
conduct that could directly affect a large number of people beyond the direct participants.
(Rivero v. American Federation of State, County and Municipal Employees, AFL-CIO
(2003) 105 Cal.App.4th 913, 924 [flyers criticizing custodial staff supervisor did not
concern an issue of public interest].) PG Inn is not an entity in the public eye. It owned
one bed and breakfast property. The statements did not involve a topic of widespread
public interest. They were narrowly focused comments on the Inn's business practices, of
interest only to its customers and potential customers, a limited portion of the public.
They did not involve conduct that could affect large numbers of people.
               "[I]n cases where the issue is not of interest to the public at large, but rather
to a limited, but definable portion of the public . . . , the constitutionally protected activity
must, at a minimum, occur in the context of an ongoing controversy, dispute or
discussion" to be protected. (Du Charme v. International Brotherhood of Electrical
Workers, Local 45, supra, 110 Cal.App.4th 107, 119; id. at p. 118 [statement was of
interest to members of the union but "unconnected to any discussion, debate or
controversy," and was not protected].) Gatward offered no evidence of an ongoing
discussion about mold or health concerns, his comments were not made in the context of
any ongoing discussion about those issues, and his comments were narrowly focused on
the Inn without reference to any broader concerns. He wrote, "We were asked to perform
mold testing at the [I]nn . . . and found a severe problem . . . . [A]s far as we know, the
mold problem still exists . . . ."
               Gatward argues that his comments were part of an ongoing discussion
about the Inn's services and they were connected to the general health risk of mold
exposure, an issue of public interest. We "examin[e] . . . the specific nature of the speech
rather than the generalities that might be abstracted from it." (Commonwealth Energy
Corp. v. Investor Data Exchange, Inc., supra, 110 Cal.App.4th 26, 34.) As the court
observed in Consumer Justice Center v. Trimedica International, Inc., supra, 107
Cal.App.4th 595, 601, "Trimedica's speech is not about herbal supplements in general. It

                                               7.
is commercial speech about the specific properties and efficacy of a particular product,
Grobust. If we were to accept Trimedica's argument that we should examine the nature
of the speech in terms of generalities instead of specifics, then nearly any claim could be
sufficiently abstracted to fall within the anti-SLAPP statute."
              Gatward points out that in Wong v. Jing (2010) 189 Cal.App.4th 1354,
1367, criticisms about a dentist posted on Yelp.com were protected because they were
made in connection with an ongoing discussion about public health concerns. But in that
case, the statements included broad comments on health issues, "general anesthetic harms
a kid's nerve system" and "[t]he metallic filing, called silver amalgams [sic], has a small
trace of mercury in it. The newer composite filling . . . does not. In addition, it uses a
newer technology to embed fluoride to clean the teeth for you." (Id. at p. 1361.) The
defendant also demonstrated an ongoing public discussion about the issue by submitting,
"copies of various Web site pages to show that the Internet is an important source of
public information about oral hygiene, dentists, and dentistry" and "Web site pages
concerning the use of silver amalgam to fill cavities and whether it is safe because it
contains mercury." (Id. at p. 1362.) A medical journal article and a "data sheet" used by
the dentist also described the ongoing public controversy about the use of silver amalgam
fillings. Gatward and M3 developed no record of an ongoing discussion or debate here.
Gatward's reliance on Bently Reserve LP v. Papaliolios (2013) 218 Cal.App.4th 418, 425,
in which criticisms of apartment building managers posted on Yelp.com "undoubtedly
ar[ose] from protected activity," is misplaced because in that case the parties agreed the
first prong had been met and the court "'bypass[ed] the initial inquiry.'"
              Gatward also relies on Cross v. Cooper (2011) 197 Cal.App.4th 357, 382,
in which a tenant's statements to prospective homebuyers that a registered sex offender
lived nearby were protected although there was no ongoing discussion or controversy in
the neighborhood about the offender. But those statements were directly related to a
topic of widespread public interest. The Cross court acknowledged that the fact that a
broad and amorphous public interest can be connected to a specific dispute is not
sufficient, but found the statements disseminated information regarding registered sex

                                              8.
offenders and so were directly related to an issue that has been legislatively recognized as
being of compelling and widespread public concern. (Id. at pp. 378-379; Pen. Code,
§§ 290.4, 290.45 ["Megan's Law"].) The court also relied on a line of cases that hold that
preventing child sexual abuse and protecting children from sexual predators are issues of
widespread public interest. (Cross, at p. 375.) It decided that, even if interest in one
particular offender was not widespread and concerned only a narrow group of neighbors,
the statements would be protected under the Du Charme rule because they were made in
the context of an ongoing discussion. "[T]he continuous access to and dissemination of
information about the presence of a registered offender in the area [on the Megan's Law
internet registry] represents ongoing 'discussion,' albeit a cyber discussion, between local
authorities and local residents about that particular offender." (Cross, at p. 383.) Here,
Gatward did not develop a record of a widespread public interest in mold exposure or
establish that his statements were made in the context of any ongoing controversy,
dispute or discussion about the issue. The fact that there may be a broad and amorphous
public interest in unremediated mold does not alone meet the requirements of the statute.
                                  Probability of Prevailing
              Even if Gatward's statements were protected, he and M3 would not be
entitled to relief under the anti-SLAPP statute because PG Inn demonstrated a probability
of prevailing on the merits. To satisfy the second prong, a plaintiff responding to an anti-
SLAPP motion "'"must demonstrate that the complaint is both legally sufficient and
supported by a sufficient prima facie showing of facts to sustain a favorable judgment if
the evidence submitted by the plaintiff is credited."'" (Oasis West Realty, LLC v.
Goldman, supra, 51 Cal.4th 811, 820.) We accept as true the evidence favorable to the
plaintiff. (Ibid.) We do not weigh credibility or compare the weight of the evidence.
(Ibid.) If the plaintiff can show a probability of prevailing on any part of its claim, the
entire cause of action stands. (Ibid.)
              PG Inn alleged that Gatward falsely stated that a severe mold problem in
the Inn's basement was never remediated. It offered proof that Gatward wrote that M3
"found a severe problem," that "management (Jolie Quest) tried to perform their own

                                              9.
remediation, to no good effect," and that "[a]s far as we know, the mold problem still
exists . . . ." The statements contain assertions of fact, notwithstanding the phrase "[a]s
far as we know." Couching an assertion in the form of conjecture does not render it
inactionable, if a fact is implied. (Wilbanks v. Wolk (2004) 121 Cal.App.4th 883, 902.)
And although some Internet rants have been found to be mere opinion, Gatward's
statements were not. He implied knowledge of facts as an environmental expert with
first-hand knowledge of conditions at the Inn. (Bently Reserve LP v. Papaliolios, supra,
218 Cal.App.4th 418, 426; id. at p. 428 [tenant's post on Yelp contained provable
falsehoods and not mere opinions because he "went out of his way to win credibility with
his audience" by referring to his "first-hand experience"].)
              PG Inn's evidence supports a finding that the gist of these statements was
false and that Gatward and M3 knew or should have known they were false. (Hughes v.
Hughes (2004) 122 Cal.App.4th 931, 936.) M3's reports support a finding that the
"significant airborne mold spore concentration" that M3 reported in 2009 was not present
in 2010 when M3 reported that "[a]nalytical results of the bioaerosol sampling as well as
the visual inspection conducted during this evaluation do not suggest a significant
airborne mold spore concentration is still present in [the] basement of the Main
Building." The reports and Peterson's declaration provide evidence that remediation
efforts between 2009 and 2010 reduced airborne levels of mold spores from levels up to
hundreds of times higher than outdoor samples to levels that were below outdoor samples
consistent with a well-maintained building. On November 18, 2009, M3 found 1,100,000
spores per cubic meter in a basement air sample as compared to 1,800 outside. In 2010, it
found that "spore concentrations found in the indoor areas were lower than outdoor"
concentrations in all samples. Gatward points to evidence that mold remained visible in
2010 in two places and that a sink was clogged. M3 noted these facts in 2010 and
nevertheless concluded that visual inspection and sampling "do not suggest a significant
airborne mold spore concentration is still present." We do not weigh the probative
strength of competing evidence. PG Inn's evidence is sufficient to sustain a jury finding
that the gist of Gatward's statements was untrue.

                                             10.
              Gatward and M3 contend that PG Inn has presented insufficient evidence of
special damages to prevail on a claim for trade libel. Even assuming proof of damages is
required and that Gatward did not forfeit the contention when he did not raise it in the
trial court, the declaration of Peterson concerning lost revenues is sufficient to sustain PG
Inn's burden at this stage. The plaintiff's burden to establish a probability of prevailing
on its claim must be compatible with the early stage at which the motion is brought and
the parties' limited opportunity to conduct discovery. (Wilcox v. Superior Court (1994)
27 Cal.App.4th 809, 823, disapproved on another ground in Equilon Enterprises v.
Consumer Cause, Inc. (2002) 29 Cal.4th 53, 68, fn. 5.)
                                       DISPOSITION
              The judgment is affirmed. Respondent shall recover costs on appeal.
              NOT TO BE PUBLISHED.

                                           GILBERT, P.J.

We concur:

              YEGAN, J.

              PERREN, J.

                                             11.
                               Rebecca Susan Riley, Judge

                             Superior Court County of Ventura

                        ______________________________

      Gordon & Rees, LLP, Peter Schwartz, David L. Jones, Gary A. Collis for
Defendants and Appellants.

      Law Office of Megan DeZotell, Megan DeZotell for Plaintiff and Respondent.

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