Court Opinion

ID: 6335163
Source: CourtListenerOpinion
Date Created: 2022-04-26 20:04:18.128228+00
Date Added: 2024-06-11T09:23:48.867421
License: Public Domain

Filed 4/26/22 Mondragon v. Kelliher CA2/3

  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                        SECOND APPELLATE DISTRICT

                                     DIVISION THREE

ELENA MONDRAGON,                                                B311995

      Plaintiff and Appellant,                                  Los Angeles County
                                                                Super. Ct. No.
      v.                                                        18SMCV00467
NEIL KELLIHER et al.,

      Defendants and Respondents.

     APPEAL from an order of the Superior Court of Los
Angeles County, Mark A. Young, Judge. Reversed.
     The Appellate Law Firm, Berangere Allen-Blaine and
Aaron Myers for Plaintiff and Appellant.
     Ogletree, Deakins, Nash, Smoak & Stewart, Lyne A.
Richardson and Brittney L. Turner for Defendants and
Respondents.
                          INTRODUCTION

      The Marina City Club is a mixed-use real estate
development containing both condominiums and apartments. A
five-member Condominium Owners Association (COA) Board of
Directors (Board) manages the finances of the COA and helps
maintain the development. Essex Marina City Club, L.P. (Essex)
owns and runs the apartments.1 The shared areas of the
development are overseen by a Management Council consisting of
two members of the COA Board, two representatives from Essex,
and one mutually-agreed-upon independent member.
      Plaintiff and appellant Elena Mondragon, a COA Board
member, sued defendants and respondents Neil Kelliher, Peter
Bergmann, Louise Pesce, Lahdan Rahmati, and Donna Bryce, all
of whom, at one time or another, served as COA Board
representatives to the Management Council.2 Mondragon claims
respondents breached their fiduciary duty by “their abject failure
to comply with numerous documents that govern both the
operation and maintenance of the Marina City Club … as well as
the use and application of funds collected from members of” the

1 Essex is a defendant in the lawsuit but is not a party to this appeal.
Likewise, Seabreeze Property Management Company, Inc. (Seabreeze),
which was the onsite manager of the development when Mondragon
filed her lawsuit, is a defendant in the lawsuit but is not a party to this
appeal.
2Mondragon also sued defendant and respondent Mahvash Rahmati,
Lahdan’s mother, on the ground that Lahdan’s Board seat was
obtained as a result of Mahvash’s COA membership. We refer to
Kelliher, Bergmann, Pesce, Bryce, Lahdan Rahmati, and Mahvash
Rahmati, collectively, as respondents. Mondragon sued respondents
derivatively on behalf of the COA, a nominal defendant.

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COA. Specifically, she asserts that respondents have authorized
the Management Council to spend money without first obtaining
the approval of a majority of the Board or that the expenditures
do not represent the opinions and/or decisions of a majority of the
Board. She claims Essex and Seabreeze are liable because they
failed to ensure the expenditures were being made pursuant to
certain agreements.
       Respondents filed a special motion to strike Mondragon’s
first amended verified derivative complaint under Code of Civil
Procedure3 section 425.16 (the anti-SLAPP statute), arguing that
the gravamen of the complaint was Mondragon’s disagreement
with the Management Council’s spending decisions and their
opinions regarding expenditures—and those decisions and
opinions were protected speech-related activity concerning a
matter of public interest. The trial court granted the motion, and
Mondragon appeals. We reverse.

                          BACKGROUND

1.    The Marina City Club and its Management Structure
      The Marina City Club is a mixed-use real estate
development built on land owned by the County of Los Angeles.
The development comprises 600 condominium units, 101 rental
apartments, 383 boat slips and related structures, various retail
and commercial spaces, and several parking garages, tennis
courts, and recreational areas.
      The COA is the homeowners association for the
condominium portion of the development. It is governed by a five-

3All undesignated statutory references are to the Code of Civil
Procedure.

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member Board made up of volunteer homeowners. The Board is
responsible for managing COA finances, entering into contracts,
enforcing various rules that apply to the condominium portion of
the development, and imposing discipline when those rules are
violated. The directors serve staggered two-year terms, with two
seats up for election one year and the other three seats up for
election the next year.
       Essex owns the City Club apartments, retail and
commercial spaces, parking garages, and recreational facilities.
Together, the COA and Essex are responsible for maintaining
and managing the various common areas in the development.
       Over the years, Essex and the COA have disagreed about
the management of the common areas of the City Club. In 1994,
after litigation and a subsequent settlement agreement, Essex
and the COA agreed to form a five-member Management Council
to help manage the development. The Management Council
consists of two representatives from Essex, two COA
representatives from the COA Board, and one independent
representative to be mutually-agreed-upon.
       The document that formed the Management Council, called
the “BK Settlement Agreement,” states: “The Association
Representatives shall at all times represent the opinion and/or
decisions of the majority of the Board of Directors and may be
removed for any reason at any time by a majority of the Board of
Directors.”4

4According to the June 2013 minutes of a special meeting of the COA
Board, the settlement agreement would implement new Management
Council procedures. The Board noted that it requested, in advance of
Council meetings, the Council’s agenda packet and motions that will be

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      At various points since 2017, Pesce, Kelliher, Bergmann,
Bryce, and Lahdan Rahmati have been members of the Board.
During their terms, the latter four respondents also served as
representatives to the Management Council.
2.    Mondragon’s Lawsuit
      In the operative pleading, Mondragon sued respondents for
breach of fiduciary duty and accounting, and sued Essex and
Seabreeze for breach of contract and accounting. In the breach of
fiduciary duty claim, Mondragon alleged that respondents had a
fiduciary duty to abide by all provisions of the City Club’s
governing documents; that they breached this duty by allowing
the Management Council to spend COA funds without first
seeking approval from the COA Board; and that by spending
money respondents did not have the authority to spend, the COA
suffered damages.5
      Kelliher, Pesce, and Bergmann filed a special motion to
strike the complaint under the anti-SLAPP statute (§ 425.16).
Mahvash Rahmati, Lahdan Rahmati, Bryce, Seabreeze, and
Essex later joined the motion. Respondents argued that the
conduct underlying the allegations was their exercise of free
speech concerning how the COA should spend its money and
whether certain expenditures should be approved. Respondents
also argued that Mondragon filed the lawsuit because she
disagreed with them about those issues. Respondents did not

voted upon so that the Board could provide its input prior to those
meetings.
5 The parties do not challenge the court’s finding that the third cause
of action for accounting is derivative of the first cause of action for
breach of fiduciary duty.

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argue that Mondragon had pleaded a “mixed cause of action”—
that is, a cause of action that rests on allegations of multiple acts,
some of which constitute protected activity and some of which do
not. (See Bonni v. St. Joseph Health System (2021) 11 Cal.5th
995, 1010 (Bonni).)
       With respect to the second prong of the anti-SLAPP
statute, respondents argued that Mondragon could not
demonstrate a probability of success on the merits because she
had not presented evidence of either breach of a duty or damages
caused by such a breach. In particular, they argued that the
settlement agreement does not require the Board to vote on
proposed expenditures before the Board’s representatives
approve them in the Management Council.
       Mondragon opposed the motion. She argued that her claims
did not concern respondents’ opinions regarding whether certain
expenditures should be approved, but rather their violation of the
governing documents—and those actions were not protected
activity. Mondragon also argued that to the extent respondents
met their initial burden, she met her burden of showing that her
claims had minimal merit.
       After a contested hearing, the court, which did not have the
benefit of recent California Supreme Court authority on this
subject, granted respondents’ anti-SLAPP motion. As to the first
prong, it held “that the gravamen of Plaintiff’s complaint is her
disagreement with the Director Defendants’ opinion as to how the
Association should be governed and the finances managed. Here,
Director Defendants have shown that the complained of conduct

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is protected under [section] 425.16(e)(4) and they have met their
burden as to prong 1.”6
       As to the second prong, the court concluded that
Mondragon had not established an ability to prove with
admissible evidence a probability that she would prevail. First,
the court held that Mondragon had not established that the
Board members breached their fiduciary duty: The governing
documents did not require that the Board express its approval via
a formal vote, and Mondragon had “not presented competent
evidence that the individuals in the Management Council did not
act in accordance with the opinion of the majority of the Board of
Directors.” Next, the court also held that Mondragon had not
submitted any evidence of causation or damages.7
       Mondragon timely appealed the order granting the anti-
SLAPP motion.

                           DISCUSSION

      Mondragon contends the court erred in granting the anti-
SLAPP motion because her cause of action for breach of fiduciary
duty is not based on protected activity. Respondents argue that
“the record shows that she sued [them] to retaliate against them

6 The court denied the motion as to Essex and Seabreeze. It held that
the movants “did not make specific arguments as to how these
Defendants engaged in protected activity and solely made arguments
as to prong two of the anti-SLAPP analysis. Since Seabreeze and Essex
failed to meet their burden under prong [one], the Court does not reach
prong [two] as to these defendants.”
7The court also found that the accounting claim failed because it was
derivative of the breach of fiduciary duty claim.

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for expressing opinions that she disagrees with regarding the
[A]ssociation’s finances.” We agree with Mondragon.
1.    Applicable Law and Standard of Review
       Under section 425.16, a defendant may move to strike
claims “ ‘arising from any act … in furtherance of the
[defendant’s] right of petition or free speech under the United
States Constitution or the California Constitution in connection
with a public issue.’ ” (Wilson v. Cable News Network, Inc. (2019)
7 Cal.5th 871, 884 (Wilson).) As relevant here, protected acts
include statements or conduct made “in connection with a public
issue or an issue of public interest.” (See § 425.16, subds. (e)(3)–
(4).)8 Section 425.16 does not completely insulate a defendant’s
protected speech, however. Instead, it provides a mechanism “for
weeding out, at an early stage, meritless claims arising from”
protected activity. (Baral v. Schnitt (2016) 1 Cal.5th 376, 384
(Baral).)
       Courts apply a two-step test when evaluating an anti-
SLAPP motion. (Baral, supra, 1 Cal.5th at p. 384.) “First, the
defendant must establish that the challenged claim arises from
activity protected by section 425.16.” (Ibid.) To do so, the
defendant must “identify the activity each challenged claim rests
on and demonstrate that that activity is protected by the anti-
SLAPP statute. A ‘claim may be struck only if the speech or
petitioning activity itself is the wrong complained of, and not just

8 The parties agree the first two categories of protected activity under
section 425.16, subdivision (e), do not apply in this case because none
of the underlying conduct concerns “a legislative, executive, or judicial
proceeding, or any other official proceeding authorized by law.”
(§ 425.16, subd. (e)(1)–(2).)

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evidence of liability or a step leaning to some different act for
which liability is asserted.’ [Citation.] To determine whether a
claim arises from protected activity, courts must ‘consider the
elements of the challenged claim and what actions by the
defendant supply those elements and consequently form the basis
of liability.’ [Citation.] Courts then must evaluate whether the
defendant has shown any of these actions fall within one or more
of the four categories of ‘ “act[s]” ’ protected by the anti-SLAPP
statute. [Citations.]” (Wilson, supra, 7 Cal.5th at p. 884.)
       If the defendant makes that showing, the plaintiff then
must “demonstrate the merit of the claim by establishing a
probability of success.” (Baral, supra, 1 Cal.5th at p. 384.) This
second step involves an analysis similar to that used to evaluate
a summary judgment motion. (Ibid.) “The court does not weigh
evidence or resolve conflicting factual claims. 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. [The court] 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.”
(Id. at pp. 384–385.)
       We independently review an order granting a special
motion to strike under section 425.16. (Wilson, supra, 7 Cal.5th
at p. 884.) “ ‘ “[W]e engage in the same, two-step process as the
trial court to determine if the parties have satisfied their
respective burdens. [Citations.]” ’ ” (Abuemeira v. Stephens (2016)
246 Cal.App.4th 1291, 1298.)
2.    Respondents have not satisfied their first-step burden.
     As discussed, at “the first step of the analysis, the
defendant must make two related showings. Comparing its

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statements and conduct against the statute, it must demonstrate
activity qualifying for protection. [Citation.] And comparing that
protected activity against the complaint, it must also
demonstrate that the activity supplies one or more elements of a
plaintiff’s claims. [Citations.]” (Wilson, supra, 7 Cal.5th at
p. 887.) The key here is the acts that form the basis of the
plaintiff’s cause of action and whether those acts constitute
protected activity. (Bonni, supra, 11 Cal.5th at pp. 1011–1012.)
       “Assertions that are ‘merely incidental’ or ‘collateral’ are
not subject to section 425.16 [Citations.] Allegations of protected
activity that merely provide context, without supporting a claim
for recovery, cannot be stricken under the anti-SLAPP statute.”
(Baral, supra, 1 Cal.5th at p. 394.) Thus, we must consider
whether any allegations of protected activity “supply the
elements” of Mondragon’s claim for breach of fiduciary duty “or
merely provide context.” (Bonni, supra, 11 Cal.5th at p. 1012.) If
Mondragon “has alleged 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.”
(Ibid.) Respondents “bear the burden of showing that each
allegation supporting [Mondragon’s] claim of recovery is one that
rests on protected activity.” (Ibid.) To the extent any acts are
unprotected, the claims based on those acts survive. (Ibid.)
       Put another way, if “a cause of action contains multiple
claims and a moving party fails to identify how the speech or
conduct underlying some of those claims is protected activity, it
will not carry its first-step burden as to those claims. [Citation.]”
(Bonni, supra, 11 Cal.5th at p. 1011.)
       “ ‘The elements of a cause of action for breach of fiduciary
duty are: (1) existence of a fiduciary duty; (2) breach of the

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fiduciary duty; and (3) damage proximately caused by the
breach.’ ” (Gutierrez v. Girardi (2011) 194 Cal.App.4th 925, 932.)
In her operative pleading, Mondragon alleged that respondents
“had a fiduciary duty to faithfully enforce the provisions of all
documents governing the operation, management, and control of
the City Club, as well as provisions in those documents regarding
the collection and use of … COA funds”; that they “breached their
fiduciary duties to [the] COA and its members by violating the …
governing documents,” including by allowing “millions of dollars
in expenditures of … COA funds to be approved by the
Management Council, without the knowledge and/or approval of
a majority of the” Board; and that their “failure to comply with
the governing documents with respect to collection and
disbursement of funds has resulted in rampant waste of funds
belonging to members of the … COA.”
       For their part, respondents insist that the basis for this
cause of action is Mondragon’s dislike of how they “represented
the [COA] on [the] Management Council (meaning she does not
like the opinions they expressed with respect to various
expenditures), and she does not like the way the Board conducted
Association business (meaning she disagrees with the opinions of
the other Board members regarding how various expenditures
should be handled). … This is all conduct in furtherance of
Respondents’ exercise of free speech.” That is, respondents
contend that Mondragon’s cause of action rests entirely on
allegations of acts that constitute protected activity. (See Bonni,
supra, 11 Cal.5th at p. 1010.)
       As a preliminary matter, we note that the operative
pleading does not mention respondents’ opinions as members of
the Management Council; instead, it asserts that respondents’

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approvals of certain expenditures did not reflect the views or
opinions of a majority of the Board. And while respondents’
approvals or votes in favor of those expenditures may reflect their
views and opinions and provide context for the breach of fiduciary
duty claim, the cause of action was not based on protected
conduct, but rather on violations of their fiduciary duty to act in
the best interests of the COA. We also note that courts routinely
reject anti-SLAPP motions based upon conduct like respondents’
conduct. (See, e.g., Greco v. Greco (2016) 2 Cal.App.5th 810, 824–
825 [breach of fiduciary duty claims against trustee based on
wrongful taking of money from trust and estates not protected];
Talega Maintenance Corp. v. Standard Pacific Corp. (2014) 225
Cal.App.4th 722, 728 [breach of fiduciary duty claims based on
withholding information and improperly directing funds not
protected, even though expenditure of money precipitated by
board votes].)
       Certainly, we recognize that voting can constitute protected
activity. (See Schroeder v. Irvine City Council (2002) 97
Cal.App.4th 174, 183, fn. 3 [stating with respect to city council
member votes, “voting is conduct qualifying for the protections
afforded by the First Amendment”].) Nonetheless, voting is not
per se protected activity. (See Donovan v. Dan Murphy
Foundation (2012) 204 Cal.App.4th 1500, 1506 [stating, with
respect to the vote of a nonprofit organization board member:
“The mere act of voting, however, is insufficient to demonstrate
that conduct challenged in a cause of action arose from protected
activity.”].) Here, Mondragon’s claim on behalf of the COA arises
from the act of spending money in violation of respondents’
fiduciary duties. While the expenditure of money may have been
precipitated by a vote by respondents when they were on the

                                12
Management Council, “the fact that protected activity may have
triggered a cause of action does not necessarily mean the cause of
action arose from the protected activity.” (Id. at p. 1507; see
Graffiti Protective Coatings, Inc. v. City of Pico Rivera (2010) 181
Cal.App.4th 1207, 1218 [conduct challenged in action alleging
city failed to comply with competitive bidding requirement was
not officials’ communications or deliberations, but their failure to
obey state and local laws].) Thus, any vote by members of the
Management Council was merely incidental to the claim for
breach of fiduciary duty.
       In any event, whatever Mondragon’s true motives in
bringing her lawsuit, and whatever other assertions she makes,
the elements of her claim do not challenge respondents’ opinions
about expenditures or involve respondents’ free speech rights or
their right to petition. The elements of her claim challenge the
fact that respondents approved expenditures that did not comply
with the BK Settlement Agreement and other documents because
they did not first secure the Board’s consent, or they approved
expenditures that did not reflect the views of the majority of the
Board. Respondents had the burden to demonstrate that this
conduct was protected activity. (Bonni, supra, 11 Cal.5th at
pp. 1011–1012.)
       Yet in evaluating the first prong of the anti-SLAPP
analysis, both below and on appeal, respondents have failed to
address that conduct in any meaningful way. Instead, they have
conflated the challenged acts with what they describe as “the
activity giving rise to the complaint,” then argued such activity
was “their participation on the Management Council and their
alleged opinions regarding whether certain expenditures should
be approved.”

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       Again, respondents’ opinions about expenditures while they
were members of the Management Council are not the acts
Mondragon challenges. And though they spill much ink arguing
that their opinions were expressed in furtherance of their rights
of free speech on a matter of public interest, they never extend
their analysis to the acts actually alleged as the basis of
Mondragon’s claim. Put differently, although respondents “have
paid lip service to the application of [section 425.16,]
subdivision (e)(4), they make no effort to explain how withholding
[proposed expenditures] information they had a fiduciary duty to
divulge, or expending funds [without Board approval], is
constitutionally protected conduct.” (Talega Maintenance Corp. v.
Standard Pacific Corp., supra, 225 Cal.App.4th at pp. 728–729.)9
       Because we conclude the challenged cause of action does
not arise from protected activity, we reverse the order and need
not decide whether the other requirements of section 425.16,
subdivision (e)(4) were met; we also do not address the merits of
the case under the second prong of the statute.

9 Lee v. Silveira (2016) 6 Cal.App.5th 527, 542–543, cited by
respondents, is factually and legally distinguishable from this case.
The Lee court concluded it was “significant that plaintiffs—and not
[the association]—brought this action against director defendants,”
and it was “clear from the substance of plaintiffs’ declaratory relief
claim that director defendants’ acts in voting were not merely
incidental to the allegations of wrongful conduct asserted against the
majority block. To the contrary, plaintiffs allege director defendants
engaged in such wrongful conduct as a result of how they voted in
board meetings on public issues affecting [the association’s] members.”
Here, unlike the plaintiffs in Lee, Mondragon filed a derivative suit on
behalf of the COA and named the COA as a nominal defendant. And in
this case, respondents’ votes to expend monies were merely incidental
to the claim, which concerned their violation of fiduciary duties.

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                       DISPOSITION

      The order granting respondents’ anti-SLAPP motion is
reversed. Mondragon shall recover her costs on appeal.

 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                                                  LAVIN, J.
WE CONCUR:

     EDMON, P. J.

     EGERTON, J.

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