Court Opinion

ID: 6323509
Source: CourtListenerOpinion
Date Created: 2022-03-15 19:02:51.677344+00
Date Added: 2024-06-11T09:20:46.365470
License: Public Domain

Filed 3/15/22 From The Earth v. City of Commerce CA2/7
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 SEVEN

 FROM THE EARTH, LLC,                                       B311070

           Plaintiff and Respondent,                        (Los Angeles County
                                                            Super. Ct. No. 20STCV36221)
           v.

 CITY OF COMMERCE,

           Defendant and Appellant.

     APPEAL from an order of the Superior Court of Los
Angeles County. Michael P. Linfield, Judge. Affirmed.
     Urtnowski & Associates and J. Brian Urtnowski,
Lisamarie McDermott, for Plaintiff and Respondent.
     Alvarez-Glasman & Colvin and Roger A. Colvin, Tania
Ochoa, for Defendant and Appellant.

                                 _______________________

                                     INTRODUCTION
       The City of Commerce (the City) denied several commercial
cannabis licenses to From The Earth, LLC after From The Earth
refused to participate in an alleged extortion and kickback
scheme operated by a cannabis lobbyist who was colluding with
City officials. From The Earth sued alleging the City violated the
equal protection clause of the Fourteenth Amendment by denying
From The Earth’s license application on pretextual grounds while
approving cannabis licenses for other similar applicants. The
City filed a special motion to strike under Code of Civil Procedure
section 425.16 (an anti-SLAPP motion) arguing that
“communicative activity constituting a conspiracy” by the City in
connection with a public issue qualified as “protected activity”
under the anti-SLAPP statute. The trial court denied the motion
finding From The Earth’s suit did not arise from protected
activity. The City timely appealed. We affirm.

      FACTUAL AND PROCEDURAL BACKGROUND

    A. From The Earth Applies to the City for Cannabis
       Licenses and Advances in the Application Process
       In October 2018 From The Earth applied to the City of
Commerce for non-storefront commercial cannabis delivery,
cultivation, manufacturing and distribution business licenses.
The City’s cannabis license application process has three phases:
1) Initial Application Screening and Preliminary Determination
of Eligibility; 2) Investigation, Scoring and Ranking; and 3) Final
Ranking and City Council Consideration. As part of its
application, From The Earth completed a mapping report

                                 2
verifying that its proposed business location was more than 600
feet from any schools, day cares, parks, and youth centers.1
       On October 31, 2018 the City notified From The Earth
that its application had advanced to phase two of the cannabis
license application process. On November 7, 2018 the City
notified From The Earth it was a “qualified applicant” and its
application had advanced to the third and final phase, City
Council Consideration.
       On November 16, 2018 the City sent From The Earth a
conditional “notice of selection,” stating the City Council had
voted to authorize From The Earth to continue to advance
through the permit process “in order to ultimately establish a
lawful commercial cannabis business in the City.” The notice of
selection was contingent on From The Earth fulfilling all
applicable requirements, including obtaining a recommendation
of approval from the City Planning Commission and the City
Council’s final approval of From The Earth’s development
agreement.
       On November 30, 2018 the City sent an email notifying
From The Earth that it was authorized to apply for a temporary
business license to engage in commercial cannabis activities. The
City addressed this email to two principals of From The Earth as
well as to “Mario”—i.e. Mario Beltran, a lobbyist who allegedly
had been pressuring From The Earth to retain his services, but
whom From The Earth had neither retained nor mentioned to the
City.

1     City of Commerce Municipal Code section 5.61.060(2)
requires that cannabis businesses be located more than 600 feet
from schools, day cares or youth center facilities.

                               3
   B. From The Earth Declines to Hire Lobbyist Mario
       Beltran
       Beltran is a former City of Bell councilmember. From The
Earth understood Beltran had a felony record and a reputation
for attempting to assert influence in cities that were awarding
cannabis licenses.
       Around the time of the City’s November 7, 2018 email,
Beltran telephoned From The Earth. Beltran allegedly stated
that if From The Earth did not engage him as a lobbyist for its
application process and pay Beltran certain kickbacks, he would
ensure the City would deny From The Earth’s cannabis license
application. From The Earth did not respond or engage Beltran’s
services after this phone call.
       On November 30, 2018 Beltran emailed From The Earth
and attached a contract. Among other things the contract
required From The Earth to: make an initial payment of $50,000
to Beltran upon securing its permits; pay Beltran $2,500 monthly
for an indefinite amount of time; and encumber any future
purchaser of From The Earth’s business to also pay Beltran
$2,500 per month (or alternatively, pay Beltran 10 percent of the
purchase price), in exchange for Beltran to “solidify [From The
Earth’s] efforts to secure local permits or licenses to operate
cannabis businesses, specifically in the City of Commerce.”
Beltran requested From The Earth sign and return the contract
to Beltran within 24 hours.
       Within minutes of From The Earth receiving Beltran’s
November 30 email and contract, the City sent its email to From
The Earth, co-addressed to Beltran, authorizing From The Earth
to apply for a temporary commercial cannabis business license.
From The Earth principal Kintu Patel immediately asked the

                                4
City to remove Beltran from any future correspondence with
From The Earth. On or about December 1, 2018 Patel told
Beltran From The Earth would not retain him for any lobbying
services.

   C. The City Denies From The Earth’s Application for
      Cannabis Licenses
      On February 13, 2019 the Planning Commission considered
From The Earth’s commercial cannabis license application. The
Planning Commission expressed concerns about the proposed
location’s “close proximity to a high school,” and voted to
recommend the City Council deny the application. From The
Earth unsuccessfully attempted to appeal the Planning
Commission’s recommendation, a nonappealable decision.
      During the April 30, 2019 City Council meeting, the
councilmembers considered and denied From The Earth’s
application for commercial cannabis licenses. The
councilmembers discussed staff concerns about From The Earth’s
persistent communications with the City and its attempts to
appeal the Planning Commission recommendation. The City
Council also expressed trepidation that From The Earth’s
proposed location was about 1,500 feet from Vail High School, a
continuation school with an “at-risk” student population. When
the City Council raised issues regarding the proposed locations of
other cannabis business license applicants at the same meeting,
the City allegedly allowed those applicants to change their

                                5
proposed business premises and thereafter granted those
applications.2

   D. Complaint and Anti-SLAPP Motions
       From The Earth filed a complaint against the City and
Beltran on September 22, 2020 alleging an equal protection
violation of the Fourteenth Amendment (42 U.S.C. § 1983) by the
City and extortion by Beltran (Pen. Code, § 523). Beltran, who is
not a party to this appeal, filed a special motion to strike the
complaint under Code of Civil Procedure section 425.16 on
October 28, 2020, which the trial court denied on December 1,
2020.3
       On November 23, 2020 the City filed its special motion to
strike under section 425.16 arguing the complaint targeted
“protected conduct by the City in furtherance of its constitutional
right to petition and/or free speech in connection with a public
issue,” and that From The Earth’s equal protection action
“attempts to chill Defendants’ free speech in discussing issues
concerning commercial cannabis businesses” in the City. The
City asserted that a communication could be protected even if it
was illegal and “communicative activity constituting a conspiracy
in connection with an issue under review by the city council
satisfies defendant’s first prong burden.”
       The trial court denied the City’s anti-SLAPP Motion
concluding that From The Earth’s claim against the City did not

2    According to From The Earth, the City gave applicants 18-
006 and 18-053 the opportunity to change their proposed
business locations.

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

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arise from any statements, writings or conduct in furtherance of
the City’s rights to petition or speech but instead arose from the
City’s decisions to deny From The Earth’s cannabis applications
and permits. Thus, the City had not met its initial burden to
demonstrate that From The Earth’s allegations arose from
protected activity.
       The City moved for reconsideration of the trial court’s
denial of its anti-SLAPP motion on the ground the court
improperly refused to strike the extortion-related allegations of
the complaint in lieu of striking the entire complaint. On
January 28, 2021 the trial court denied the City’s motion for
reconsideration ruling the City had not provided the court with
evidence of the existence of “new circumstances” that would
change the disposition of the order denying the anti-SLAPP
motion.
       This appeal followed.

                         DISCUSSION

    A. Section 425.16, the “Arising from” Requirement, and
       Standard of Review
       Under section 425.16, commonly known as the anti-SLAPP
statute, “[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.” (§ 425.16, subd. (b)(1).)
An “‘act in furtherance of a person’s right of petition or free
speech under the United States or California Constitution in

                                 7
connection with a public issue’ includes: (1) any written or oral
statement or writing made before a legislative, executive, or
judicial proceeding, or any other official proceeding authorized by
law, (2) any written or oral statement or writing made in
connection with an issue under consideration or review by a
legislative, executive, or judicial body, or any other official
proceeding authorized by law, (3) any written or oral statement
or writing made in a place open to the public or a public forum in
connection with an issue of public interest, or (4) any other
conduct in furtherance of the exercise of the constitutional right
of petition or the constitutional right of free speech in connection
with a public issue or an issue of public interest.” (§ 425.16,
subd. (e).)
       In ruling on an anti-SLAPP motion, the trial court engages
in a two-step process. “First, the defendant must establish that
the challenged claim arises from activity protected by section
425.16. [Citation.] If the defendant makes the required showing,
the burden shifts to the plaintiff to demonstrate the merit of the
claim by establishing a probability of success.” (Baral v. Schnitt
(2016) 1 Cal.5th 376, 384 (Baral), accord, Bonni v. St. Joseph
Health System (2021) 11 Cal.5th 995, 1009.) “Only a cause of
action that satisfies both prongs of the anti-SLAPP statute—i.e.,
that arises from protected speech or petitioning and lacks even
minimal merit—is a SLAPP, subject to being stricken under the
statute.” (Navellier v. Sletten (2002) 29 Cal.4th 82, 89], italics
omitted (Navellier).) “If the moving party fails to demonstrate
that any of the challenged claims for relief arise from protected
activity, the court properly denies the motion to strike without
addressing the second step (probability of success).” (C.W. Howe
Partners Inc. v. Mooradian (2019) 43 Cal.App.5th 688, 698

                                 8
(Mooradian); see, e.g., City of Cotati v. Cashman (2002) 29
Cal.4th 69, 80-81 (City of Cotati).)
       “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,
1062-1063 (Park).) “The defendant’s first-step burden is to
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 evidence of
liability or a step leading to some different act for which liability
is asserted.’” (Wilson v. Cable News Network, Inc. (2019) 7
Cal.5th 871, 884 (Wilson); accord, Park, at p. 1060.) “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 for liability.’” (Wilson, at p. 884; accord, Park, at
p. 1063.)
       We review de novo an order granting or denying an anti-
SLAPP motion (Wilson, supra, 7 Cal.5th at p. 884; Park, supra, 2
Cal.5th at p. 1067), “considering the parties’ pleadings and
affidavits describing the facts on which liability or defenses are
predicated.” (Mooradian, supra, 43 Cal.App.5th at p. 699, citing
§ 425.16, subd. (b)(2); see Navellier, supra, 29 Cal.4th at p. 89.)

   B. From The Earth’s Complaint Does Not Arise from
      Protected Activity by the City of Commerce
      On appeal, the City contends that this case “arises from” an
alleged “conspiracy to commit extortion between a city and a
third party against a commercial cannabis business in relation to
the city’s business permit application process,” based on the

                                  9
City’s purported communications with Beltran about its cannabis
permit application process. The City argues that From The
Earth’s equal protection claim arises from these presumptive
communications, not from the City’s denial of the permit, and
that such communications are protected activity under the anti-
SLAPP statute.
      To determine whether From The Earth’s claim arises from
protected activity, we consider the elements of the claim and
what alleged actions by the defendant form the basis for liability
under those elements. (Wilson, supra, 7 Cal.5th at p. 884.) The
City must show that From The Earth’s Fourteenth Amendment
equal protection cause of action “arise[s] from a 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; from a
written or oral statement or writing made in a place open to the
public or a public forum in connection with an issue of public
interest; or from other conduct in furtherance of the exercise of
the rights of petition or of free speech in connection with a public
issue or an issue of public interest.” (Shahbazian v. City of
Rancho Palos Verdes (2017) 17 Cal.App.5th 823, 834
(Shahbazian).) The parties do not dispute that the City’s
cannabis license application process is an issue of public interest.
      As relevant here, a “class of one” equal protection claim
under the Fourteenth Amendment “contains the following
essential elements: (1) plaintiff was treated differently from other
similarly situated persons [or corporations]; (2) the difference in
treatment was intentional; and (3) there was no rational basis for
the difference in treatment.” (Genesis Environmental Services v.
San Joaquin Valley Unified Air Pollution Control Dist. (2003) 113

                                10
Cal.App.4th 597, 605, fn. omitted, citing Village of Willowbrook v.
Olech (2000) 528 U.S. 562.) The elements of From The Earth’s
equal protection cause of action do not require it to prove the City
made any statement or writing or otherwise took action to
further the City’s exercise of its constitutional rights to free
speech and to petition.
       From The Earth alleges it established each of the elements
of a “class of one” equal protection claim against the City for the
City’s unequal application of its cannabis licensing guidelines.
First, From The Earth claims the City treated it differently from
other similar applicants by pretextually denying its application
based on the proposed location of its commercial operations,
while allowing other applicants (but not From The Earth) the
opportunity to move their proposed business premises when
location was a concern. Second, From The Earth claims the
City’s disparate treatment of applicants was intentional and the
City’s purported basis for denying From The Earth’s cannabis
application was a sham. In support of its claim From The Earth
alleges Beltran threatened to sabotage its application process
with the City if From The Earth failed to hire him. The City also
included Beltran on the application-related communications
without From The Earth having informed the City that Beltran
had any involvement in its license application. Further, the City
denied From The Earth’s license application shortly after it
refused to engage Beltran as a lobbyist. The inference is there
was collusion between Beltran and the City that ultimately
caused the City to deny From The Earth’s license application.
Third, From The Earth contends the City’s alleged concern about
From The Earth’s proposed location being too close to a school
was not a rational basis for the denial given that the intended

                                11
premises were more than the 600-foot minimum distance and the
City permitted other applicants to change their proposed
locations.
       We conclude that From The Earth’s Fourteenth
Amendment equal protection claim against the City, for denying
From The Earth’s cannabis business license application, does not
arise from protected activity. Section 425.16 does not generally
protect a governmental entity’s decisions to issue or deny
permits. (Shahbazian, supra, 17 Cal.App.5th at p. 826.) In
analyzing a claim based on discriminatory government action,
the court must distinguish between challenges to government
decisions and “statements that may have led to those decisions.”
(Id. at pp. 836-837.) “[A] claim is not subject to a motion to strike
simply because it contests an action or decision that was arrived
at following speech or petitioning activity, or that was thereafter
communicated by means of speech or petitioning activity.” (Park,
supra, 2 Cal.5th at p. 1060.) The foundation of From The Earth’s
equal protection claim is the City’s denial of From The Earth’s
cannabis license application and the City’s divergent treatment of
similarly situated applicants — not the City’s “speech.”
       The purported or inferred communication between the City
and Beltran is merely “evidence of liability” supporting From The
Earth’s claim that the City intentionally engaged in differential
treatment when it denied From The Earth’s application; the
communication itself is not “the wrong complained of” in this
cause of action. (See Park, supra, 2 Cal.5th at p. 1060.) As the
court held in Graffiti Protective Coatings, Inc. v. City of Pico
Rivera, (2010) 181 Cal.App.4th 1207, 1215, “[t]he
communications assist in telling the story. But [the plaintiff’s]
claims against [the city] are not based on those communications.”

                                 12
      The City argues it met the first prong of the section 425.16
analysis because From The Earth’s Fourteenth Amendment
equal protection claim “attempts to chill the City’s free speech in
discussing issues concerning commercial cannabis businesses in
the City.” The City is incorrect. From The Earth challenged the
City’s denial of its permit alleging it received differential
treatment because it refused to bribe the City through payments
made via a lobbyist.4

4       Although it does not affect our conclusion, we agree with
the City and the trial court that the illegality exception of Flatley
v. Mauro (2006) 39 Cal.4th 299 (Flatley) is inapplicable here.
Flatley held that conduct “illegal as a matter of law” is not
protected by the anti-SLAPP statute (id. at p. 317) and concluded
that an attorney’s demand letters (amounting to criminal
extortion) were not subject to a special motion to strike because
“[e]xtortion is not a constitutionally protected form of speech.”
(Id. at p. 328.) In Flatley, however, the evidence of the attorney’s
communications was uncontroverted and conclusive. (Id. at
p. 332, fn. 16 [conclusion that the communications constituted
criminal extortion as a matter of law was “based on the specific
and extreme circumstances of this case”]; see Wallace v.
McCubbin (2011) 196 Cal.App.4th 1169, 1188, disapproved on
other grounds in Baral, supra, 1 Cal.5th at p. 396, fn. 11 [Flatley
exception “exists only where ‘the defendant concedes the illegality
of its conduct or the illegality is conclusively shown by the
evidence’”].) Here the City unequivocally denies From The
Earth’s allegations regarding bribery; given the disputed
contentions, we cannot resolve within the first prong analysis
whether any activity amounted to extortion as a matter of law.
(See Flatley, at p. 316 [“If . . . a factual dispute exists about the
legitimacy of the defendant’s conduct, it cannot be resolved
within the first step but must be raised by the plaintiff in
connection with the plaintiff’s burden to show a probability of
prevailing on the merits”]; Bergstein v. Stroock & Stroock &

                                 13
      We find that “granting a special motion to strike in these
circumstances would chill citizens’ attempts to challenge
government action.” (Shahbazian, supra, 17 Cal.App.5th at
p. 826.) Because the City did not satisfy its burden with respect
to the first prong of the section 425.16 analysis, the burden never
shifted to From The Earth to demonstrate it was likely to prevail
on the merits, and we do not address the second prong of the
section 425.16 analysis here. (Id. at p. 839, fn. 9; City of Cotati,
supra, 29 Cal.4th at pp. 80-81.)

    C. The Trial Court Did Not Err in Denying the City’s
       Request to Strike the Extortion Allegations from the
       Complaint
       The City also contends, as it did in its motion for
reconsideration, that the trial court erred by not partially
striking from the complaint “meritless claims arising from
protected activity, i.e., the communicative conduct between the
City and Beltran which allegedly amounted to a conspiracy to
commit extortion.” Although the City’s anti-SLAPP motion
sought to “dismiss” the complaint “in its entirety,” at the hearing
on its motion the City orally requested, at a minimum, the court
partially strike the complaint. The trial court denied the request
to partially strike the complaint concluding it was not
procedurally appropriate for the City to raise the issue for the
first time at the hearing.

Lavan LLP (2015) 236 Cal.App.4th 793, 810 [had defendants
disputed any element of aiding and abetting claim, “no conclusion
could be drawn, as a matter of law, that their conduct was
illegal”].)

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       Irrespective of the timeliness or propriety of the City’s
request to partially strike the complaint, we find there was no
basis for the trial court to strike the extortion allegations. From
The Earth asserted its cause of action for extortion solely against
Beltran, not the City, and, as discussed above, the alleged events
that demonstrated the extortion scheme were merely evidence to
support From The Earth’s equal protection cause of action
against the City, not the claim itself. “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.
                            DISPOSITION
       The trial court’s order denying the City’s special motion to
strike is affirmed. From The Earth shall recover its costs on
appeal.

                                     WISE, J.

We concur:

      SEGAL, Acting P. J.            FEUER, J.


      Judge of the Alameda County Superior Court, assigned by
the Chief Justice pursuant to article VI, section 6 of the
California Constitution.

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