Court Opinion

ID: 4679217
Source: CourtListenerOpinion
Date Created: 2021-04-20 22:02:36.138524+00
Date Added: 2024-06-11T08:03:49.482009
License: Public Domain

Filed 4/7/21; modified and certified for publication 4/20/21 (order attached)

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                    SECOND APPELLATE DISTRICT

                               DIVISION EIGHT

TRUCK INSURANCE EXCHANGE,                                B302365

        Plaintiff and Respondent,                        (Los Angeles County
                                                         Super. Ct. No. 19STCV26702)
        v.

FEDERAL INSURANCE
COMPANY,

        Defendant and Appellant.

     APPEAL from orders of the Superior Court of Los Angeles
County, Richard L. Fruin, Jr., Judge. Affirmed.

     Chamberlin & Keaster, Kirk C. Chamberlin and Michael C.
Denlinger for Defendant and Appellant.

     Pia Anderson Moss Hoyt, Scott R. Hoyt and John P.
Mertens for Plaintiff and Respondent.

                              _________________________
                        INTRODUCTION
       Appellant asks us to reverse the trial court’s order denying
its special motion to strike a civil complaint for fraud as a
strategic lawsuit against public participation under Code of Civil
Procedure section 425.16. Appellant also asks that we reverse
the trial court’s order overruling its evidentiary objections.
       We affirm both orders.

      FACTUAL AND PROCEDURAL BACKGROUND
A.    Factual Background
      We recite only the facts relevant to the issue before us.
Since 1986, more than 30,000 plaintiffs have filed lawsuits
against Moldex-Metric, Inc. (Moldex), alleging Moldex
manufactured defective air respirators and masks that failed to
protect them from exposure to silica, asbestos, and other
hazardous substances, leading to bodily injury.
       Moldex gave notice of the lawsuits to its primary liability
insurers, which provided indemnity and coverage for Moldex’s
defense of the lawsuits until the year 2003, when the primary
liability policies’ limits were exhausted. Moldex then gave notice
of the lawsuits to its excess and umbrella liability insurers—
namely, appellant Federal Insurance Company (Federal) and
First State Insurance Company (First State)—which began to
indemnify and defend Moldex in the lawsuits.
       On December 20, 2004, Moldex discovered that it was
additionally insured under a primary liability policy issued by
Truck Insurance Exchange (Truck) and sought coverage from

                                 2
Truck.1 Federal and First State sought contribution from Truck
for the indemnity and defense fees they had already paid under
their respective umbrella policies. As a result, litigation ensued
between Truck, Federal, and First State over coverage and the
extent to which Truck was obligated to reimburse Federal and
First State for payments made for Moldex’s defense and
indemnity, plus interest.
B.    Case #1: Federal’s Reimbursement Action
      On September 20, 2007, Federal filed a complaint for
contribution, reimbursement, and declaratory relief against
Truck, First State, and Moldex, in Los Angeles Superior Court
case No. BC377842. Federal alleged it “undertook Moldex’s
defense” and indemnified Moldex “without reservation pursuant
to the terms of the Federal policy,”2 a copy of which was attached
as an exhibit to the complaint. However, “in light of the existence
of available and unexhausted primary insurance,” Federal
believed it had “no duty to defend and no duty to reimburse
defense costs” incurred by Moldex. “[A]s the Truck policy is a
primary policy and the Federal policy is an umbrella policy, it is
the Truck policy that should have responded to [Moldex’s]
actions.” As such, Federal alleged it had no obligation to pay

1    “The Truck Policy was lost, and it was not until . . .
December 2004 that Moldex uncovered evidence of its existence.”
2      It appears Federal defended Moldex under its
umbrella/excess policy without ever issuing a reservation of
rights letter denying it had a duty to do so. The only reservation
of rights letter submitted by Federal addressed a Federal
primary policy.

                                 3
“unless and until the Truck policy has properly exhausted.”
Federal sought reimbursement from Truck for approximately
$4.5 million in defense costs and $98,945 in indemnity costs, plus
interest thereon.
       Truck filed an answer denying the allegations contained in
Federal’s complaint. It asserted 38 affirmative defenses,
including the following as and for its 23rd defense: “To the extent
that Moldex and/or Federal voluntarily paid, assumed an
obligation to pay, or incurred an expense without notice and
approval by Truck, Truck has no obligation to Moldex and/or
Federal for any such payment, obligation or expense.” (Some
capitalizations omitted.)
       Following years of litigation, in February 2013, the court
entered judgment against Truck, awarding approximately
$6 million to Federal ($3,854,391 in defense costs plus $1,992,058
interest and $98,213 in indemnity costs plus $56,835 interest).
The court found Federal had paid and/or reimbursed “the defense
costs Moldex incurred after December 20, 2004 under an
umbrella policy.” The court found Truck had a duty to defend
Moldex in the lawsuits pursuant to its primary liability policy
upon Moldex’s December 20, 2004 notice to Truck about the
lawsuits. The court further found Truck had a duty to reimburse
Federal and First State for all payments each had made for
Moldex’s defense and indemnity costs incurred between
December 2004 and June 2011.
       Truck filed an appeal from the February 2013 judgment in
this court (Case No. B248065).
C.    Settlement Agreement and Release
      While Truck’s appeal was pending, Truck, Federal, and
First State reached a “settlement agreement and release” signed

                                4
July 24, 2013. Per the terms of the settlement, Truck agreed to
pay Federal the total amount of $4,858,700 for the defense and
indemnity costs. Truck agreed to “continue to defend and
indemnify Moldex . . . until such time as Truck establishes that it
has properly exhausted the Truck Policy,” in which case “Truck
agrees to work with Moldex, Federal, and First State to ensure
an orderly transition of the defense.” Additionally, Truck agreed
to file a request for an order of dismissal of its pending appeal,
with prejudice and without costs, within five days.
        “In consideration of all of the terms of this Agreement . . . ,
the Parties each release[d] each other from any and all Claims
that are, were or could have been asserted in the Action.” (Italics
added.) However, the agreement carved out an exception: the
releases set forth “shall not apply to, have any effect on or
constitute a release” of “any of Truck’s rights to claim
contribution for any indemnity paid over its limit and defense
fees incurred therewith,” to the extent such rights exist. The
releases were not “intended to, nor shall be construed to, release,
waive or otherwise affect the Parties’ rights and obligations
under th[e] Agreement.” And finally, each party “represent[ed]
and warrant[ed] that . . . this Agreement has been . . . executed
and delivered in good faith, and for . . . valuable consideration.”
        Truck thereafter dismissed its pending appeal.
D.    Case #2: Truck’s Reimbursement Action
       In January 2014, Truck filed a complaint against Federal,
First State, and Moldex that included a cause of action for
reimbursement and/or contribution of defense fees and indemnity
payments Truck made post-exhaustion of its primary policy’s
limit (Los Angeles Superior Court Case No. BC534069). Truck

                                   5
sought to establish that its primary policy’s limit was exhausted
in July 2013.
       Litigation continued for some time. In May 2017, the Court
of Appeal reversed the trial court’s determination that Truck’s
primary policy had not exhausted, and found it was indeed
exhausted on July 24, 2013 (Case No. B272378). On remand,
Truck sought to recover from Federal and First State the defense
fees it paid after its primary policy was exhausted. It was at this
point that Federal raised for the first time that it never had a
duty to defend Moldex and had only voluntarily done so as a
business decision.
       More specifically, via a declaration filed on December 1,
2017 in support of Federal’s motion for summary adjudication
“re: the duty to defend post July 24, 2013 expenses,” Federal
revealed it had “made [a] business decision, at its option, to
exercise its right to associate in the defense of the Underlying
Lawsuits and began to defend.” (Italics added.) Because it had
no duty to defend, Federal argued it could not be liable for
contribution and refused to reimburse Truck.
       The trial court agreed with Federal and entered judgment
against Truck. We were not provided a copy of the complaint,
order, or resulting judgment; however, the parties’ briefing
provides the trial court found the language set forth in Federal’s
umbrella policy did not impose on Federal a duty to defend and,
instead, afforded Federal the right to associate in the defense.
Truck appealed from the judgment, and its appeal is currently
pending before Division 5 of this Court of Appeal (Case No.
B298906).

                                6
E.    Case #3: Truck’s Fraud Action
       For purposes of this appeal, on July 30, 2019, Truck filed a
civil complaint against Federal in Los Angeles Superior Court for
“fraud perpetrated by Federal in support of its efforts to obtain
contribution for amounts it paid to defend Moldex.” Truck
claimed it was fraudulently induced to execute the July 24, 2013
settlement agreement due to Federal’s failure to disclose that its
payment of Moldex’s defense fees and indemnity costs was the
result of a voluntary business decision.
       We summarize the allegations set forth in Truck’s
complaint: Federal made statements in case #1 (i.e., Federal’s
reimbursement action) in a manner so as to conceal the fact that
Federal made a voluntary business decision to pay the defense
fees without any duty under its policy to do so. Federal
represented to the court and named parties that it paid the
defense fees “under its policy” and “pursuant to” its policy, as
though it paid defense fees in satisfaction of its duty to defend
Moldex.3 For instance, in its motion for summary adjudication
filed November 2009, Federal argued it “defended and
indemnified [Moldex] pursuant to an excess policy of insurance.”
Federal made no mention that it had voluntarily opted to make
the payments, as a business decision.

3     California law does not require one insurer to contribute to
and/or reimburse another insurer who made a voluntary
payment. (See Morgan Creek Residential v. Kemp (2007)
153 Cal.App.4th 675, 684–685; see OneBeacon America Ins. Co. v.
Fireman’s Fund Ins. Co. (2009) 175 Cal.App.4th 183, 199; see also
Civ. Code, § 1432.)

                                 7
      Truck posited: “[H]ad Federal taken the position in [case
#1] that it was not obligated to pay the Defense Fees, it would
have immediately lost the . . . Action and been denied a
reimbursement judgment against Truck.” Truck further posited:
“Had Federal acknowledged its payments were voluntary before
July 24, 2013, rather than in December 2017, Truck would not
have entered into the Settlement, nor paid Federal nearly five
million dollars thereunder.” Truck alleged the February 2013
judgment and July 2013 settlement agreement were not entered
in good faith and were obtained via Federal’s “knowingly false
statements” and “fraudulent omissions.” As a result, Truck
claimed both should be deemed void.
      Truck requested general, compensatory, and consequential
damages in the amount of $4,858,700 (plus interest from July 24,
2013 to date of judgment), punitive and exemplary damages, and
reasonable attorney fees and costs.
F.    Federal’s Special Motion to Strike the Complaint
      On August 29, 2019, Federal filed a special motion to strike
Truck’s complaint as a strategic lawsuit against public
participation under the anti-SLAPP statute, citing Code of Civil
Procedure4 section 425.16. Federal also requested an attorney
fees award should it prevail on its motion.
      Federal argued Truck’s complaint for fraud is based on
Federal’s “acts in furtherance of its right to petition” and are thus
protected speech pursuant to section 425.16, subdivisions (e)(1)
and (e)(2). Federal also argued that Truck cannot show a

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

                                 8
probability of prevailing on its fraud claim because (1) it is barred
by the litigation privilege, pursuant to Civil Code section 47;
(2) the July 2013 settlement agreement included a release of all
past, present, and future claims against Federal; and (3) Truck
cannot sue for damages where the basis is fraud in the
inducement. Federal claimed it did not act fraudulently, and
that the “terms and conditions of the umbrella policy were in
plain sight” as Federal had provided a copy of the policy as
Exhibit “A” to its complaint in case #1. Moreover, Federal noted
how Truck had asserted the affirmative defense that Federal’s
defense payments were voluntary “but did not pursue this
defense in that litigation.”
       Truck opposed Federal’s anti-SLAPP motion and provided a
declaration from its counsel and supporting exhibits. Federal
filed objections to the evidence submitted by Truck in its
opposition.
       Meanwhile, while the anti-SLAPP motion was pending,
Truck filed a First Amended Complaint (FAC), asserting three
causes of action: 1) fraud; 2) unjust enrichment; and
3) constructive trust. The record before us does not include a
copy of the FAC.
G.    Trial Court’s Ruling
      On September 30, 2019, Federal’s anti-SLAPP motion was
argued and denied. No court reporter was present and no settled
statement is part of the record on appeal.
      As to the first prong, the court found Federal had met its
burden to show that Truck’s complaint arises from acts in
furtherance of Federal’s right of petition or free speech, i.e.,
Federal’s conduct in connection with the litigation and resulting
settlement of the underlying reimbursement action. As to the

                                 9
second prong, the court found Truck demonstrated a probability
of prevailing on its claim for fraud. And finally, the court
overruled all of Federal’s evidentiary objections.
      Federal timely appealed.

                          DISCUSSION
A.    Standard of Review
       We review a trial court’s ruling on a special motion to
strike pursuant to section 425.16 under the de novo standard.
(Monster Energy Co. v. Schechter (2019) 7 Cal.5th 781, 788; Park
v. Board of Trustees of California State University (2017)
2 Cal.5th 1057, 1067 (Park).) “In other words, we employ the
same two-pronged procedure as the trial court in determining
whether the anti-SLAPP motion was properly granted.”
(Mendoza v. ADP Screening & Selection Services, Inc. (2010)
182 Cal.App.4th 1644, 1652.) We consider “the pleadings, and
supporting and opposing affidavits stating the facts upon which
the liability or defense is based.” (§ 425.16, subd. (b)(2).) In
considering the pleadings and declarations, we do not make
credibility determinations or compare the weight of the evidence;
instead, we accept the opposing party’s evidence as true and
evaluate the moving party’s evidence only to determine if it has
defeated the opposing party’s evidence as a matter of law.
(Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th
260, 269, fn. 3 (Soukup).)
       We review a trial court’s ruling on evidentiary objections by
applying an abuse of discretion standard. (Alexander v. Scripps
Memorial Hospital La Jolla (2018) 23 Cal.App.5th 206, 226.) As
the party challenging the court’s decision, Federal bears the
burden to establish such abuse, which we will find only if the

                                10
trial court’s order “exceeds the bounds of reason.” (DiCola v.
White Brothers Performance Products, Inc. (2008)
158 Cal.App.4th 666, 679.)
B.    Applicable Law
       Section 425.16 provides, inter alia, that “[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’ ” is
defined in section 425.16 to include, in relevant part: “any
written or oral statement or writing made before a legislative,
executive, or judicial proceeding, or any other official proceeding
authorized by law,” and “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.” (§ 425.16, subds. (e)(1) & (e)(2).)
“[A] statement is ‘in connection with’ litigation under section
425.16, subdivision (e)(2), if it relates to the substantive issues in
the litigation and is directed to persons having some interest in
the litigation.” (Neville v. Chudacoff (2008) 160 Cal.App.4th
1255, 1266.)
       The Legislature enacted section 425.16 to prevent and
deter “lawsuits brought primarily to chill the valid exercise of the
constitutional rights of freedom of speech and petition for the
redress of grievances.” (§ 425.16, subd. (a).) Thus, the purpose of
the anti-SLAPP law is “not [to] insulate defendants from any

                                 11
liability for claims arising from the protected rights of petition or
speech. It only provides a procedure for weeding out, at an early
stage, meritless claims arising from protected activity.” (Baral v.
Schnitt (2016) 1 Cal.5th 376, 384 (Baral).)
       When a party moves to strike a cause of action under the
anti-SLAPP law, a trial court evaluates the special motion to
strike by implementing a two-prong test: (1) has the moving
party “made a threshold showing that the challenged cause of
action arises from protected activity” (Rusheen v. Cohen (2006)
37 Cal.4th 1048, 1056 (Rusheen)); and if it has, (2) has the non-
moving party demonstrated that the challenged cause of action
has “ ‘minimal merit’ ” by making “a prima facie factual showing
sufficient to sustain” a judgment in its favor? (Baral, supra,
1 Cal.5th at pp. 384–385; Navellier v. Sletten (2002) 29 Cal.4th
82, 93–94 (Navellier); see also § 425.16, subd. (b)(1)). Thus, after
the first prong is satisfied by the moving party, “the burden
[then] shifts to the [non-moving party] to demonstrate that each
challenged claim based on protected activity is legally sufficient
and factually substantiated.” (Baral, at p. 396.)
C.    Absence of a Reporter’s Transcript
      The record on appeal does not include a settled statement
or agreed statement as authorized by California Rules of Court,
rules 8.163 and 8.137. The September 30, 2019 minute order
does specify that Federal’s anti-SLAPP motion was called for
hearing and “argued” before the court made its ruling.
      Affirmance of the order appealed from may be warranted in
the absence of a reporter’s transcript when such a transcript is
necessary for meaningful review. (See, e.g., Foust v. San Jose
Construction Co., Inc. (2011) 198 Cal.App.4th 181, 186–187
[appeal requiring consideration of testimony could not proceed in

                                 12
the absence of a reporter’s transcript or a settled statement].) As
a result, Federal cannot rely on errors at the September 30, 2019
hearing unless the claimed error appears on the face of the record
before us. (Cal. Rules of Court, rule 8.163; see, e.g., Ballard v.
Uribe (1986) 41 Cal.3d 564, 574 [declining to review the adequacy
of an award of damages absent a reporter’s transcript or settled
statement of the damages portion]; Vo v. Las Virgenes Municipal
Water Dist. (2000) 79 Cal.App.4th 440, 447–448 [“The absence of
a record concerning what actually occurred at the trial precludes
a determination that the trial court abused its discretion”].)
       However, because we review the denial of an anti-SLAPP
motion de novo and must conduct an independent analysis of our
own, we can resolve the appeal from the ruling on Federal’s
special motion to strike in the absence of a reporter’s transcript.
“While a record of the hearing would have been helpful to
understand the trial court’s reasoning, it is not necessary here
where our review is de novo and the appellate record includes the
trial court’s written orders and all . . . materials germane to
Appellant[’s] motion.” (Bel Air Internet, LLC v. Morales (2018)
20 Cal.App.5th 924, 933; Chodos v. Cole (2012) 210 Cal.App.4th
692, 696.) The absence of a reporter’s transcript is not fatal to
Federal’s appeal of the court’s denial of its anti-SLAPP motion.
       The same, however, cannot be said for Federal’s appeal of
the trial court’s order overruling its evidentiary objections, which
Federal contends was “prejudicial error.” The cardinal rule of
appellate review is judgments and orders of the trial court are
presumed correct and prejudicial error must be affirmatively
shown. (Denham v. Superior Court (1970) 2 Cal.3d 557, 564.)
The appellant—in this case, Federal—has the burden of
providing an adequate record, and the failure to provide an

                                13
adequate record for meaningful review requires the issue to be
resolved against the appellant. (Maria P. v. Riles (1987)
43 Cal.3d 1281, 1295–1296.)
      We do not know what took place at the September 30, 2019
hearing where the parties “argued” prior to the court’s ruling on
the pending matters. In its opening and reply briefs, Federal
recites Evidence Code sections 1400 and 1401 regarding
authentication, conclusively states that the exhibits attached to
Truck’s opposition were “not properly authenticated” and should
not have been considered, and contends the trial court committed
“prejudicial error” by overruling its objections. Without more, we
cannot undertake a meaningful review of the basis of the trial
court’s decision. We do not know what took place during the
September 30, 2019 hearing, and Federal’s minimal argument
does not meet the threshold of affirmatively showing error by the
court. We see no abuse of discretion; the trial court’s ruling on
Federal’s evidentiary objections is affirmed.
D.    The FAC is Not Relevant to Our Review of the Anti-SLAPP
      Motion
       On appeal, Truck contends that while filing the FAC did
not moot Federal’s anti-SLAPP motion, “it does affect it.” As
such, Truck argues Federal’s failure to include the FAC in the
record is “an error which costs it the appeal.”
       Truck is mistaken. The FAC is not the operative complaint
for purposes of Federal’s anti-SLAPP motion; indeed, the FAC
was not even filed until after the filing of the anti-SLAPP motion.
“ ‘A plaintiff . . . may not seek to subvert or avoid a ruling on an
anti-SLAPP motion by amending the challenged complaint . . . in
response to the motion.’ ” (Contreras v. Dowling (2016)
5 Cal.App.5th 394, 411.) Thus, the FAC is not relevant to our

                                14
review and Federal’s failure to include it in the record before us
does not affect its appeal.5
E.    Prong 1: Arising from Protected Activity
       Federal’s initial burden at step one is to show that Truck’s
complaint for fraud arises from Federal’s protected activity.
(Park, supra, 2 Cal.5th at p. 1061.)
       There is no question that filing documents in court is
petitioning activity protected by section 425.16, subdivision (e).
(See Birkner v. Lam (2007) 156 Cal.App.4th 275, 281 [“ ‘[t]he
constitutional right to petition . . . includes the basic act of filing
litigation’ ”]; City of Colton v. Singletary (2012) 206 Cal.App.4th
751, 766 [same].) Plainly read, the statute “encompasses any
cause of action against a person arising from any statement or
writing made in, or in connection with, an issue under
consideration or review by, an official proceeding or body.”
(Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th
1106, 1113.)
       In determining whether a mixed cause of action (meaning,
one containing allegations of both protected and non-protected
activity) is subject to the anti-SLAPP statute, we examine
whether the principal thrust or gravamen of the cause of action
targets protected activity. (Okorie v. Los Angeles Unified School

5     In the same vein, we find Oakland Bulk and Oversized
Terminal, LLC v. City of Oakland (2020) 54 Cal.App.5th 738
inapposite. In that case, the trial court sustained a demurrer
with leave to amend and then deferred a ruling on the pending
anti-SLAPP motion directed to the complaint that was the
subject of the sustained demurrer. (Id. at p. 748.)

                                  15
Dist. (2017) 14 Cal.App.5th 574, 586–587 (Okorie); City of Colton
v. Singletary, supra, 206 Cal.App.4th at p. 767.) “ ‘ “We assess
the principal thrust by identifying ‘[t]he allegedly wrongful and
injury-producing conduct . . . that provides the foundation for the
claim.’ [Citation.] If the core injury-producing conduct upon
which the plaintiff’s claim is premised does not rest on protected
speech or petitioning activity, collateral or incidental allusions to
protected activity will not trigger application of the anti-SLAPP
statute.” ’ ” (Hunter v. CBS Broadcasting Inc. (2013)
221 Cal.App.4th 1510, 1520.) In making this inquiry, courts
“look to see whether the essence or ‘bulk’ of the cause of action is
based on protected activity.” (Okorie, at p. 587.) “A claim arises
from protected activity when that activity underlies or forms the
basis for the claim.” (Park, supra, 2 Cal.5th at pp. 1062).
       Our independent review of the pleadings and the
supporting declarations discloses Truck’s complaint for fraud is
based on conduct that is protected activity.
       Truck’s complaint alleged its cause of action for fraud
arises from Federal’s positions taken in Federal’s reimbursement
action (case #1, BC377842) leading up to the February 2013
judgment, and during the negotiations leading up to the July
2013 settlement agreement and release. Truck’ complaint
specifies Federal’s “pleadings, motions and briefs” represented it
paid Moldex’s defense fees “under its policy” or “pursuant to the
terms of the Federal policy.” Truck’s complaint further specified
that this conduct by Federal amounted to fraudulent omissions
and misstatements, as Federal concealed the fact that it defended
Moldex as a voluntary decision until its filing of the declaration
in Truck’s reimbursement action (case #2, BC534069) in
December 2017. Based on the foregoing, we find the principal

                                 16
thrust or gravamen of Truck’s fraud cause of action is based on
Federal’s protected activity.
       Truck argues C.W. Howe Partners Inc. v. Mooradian (2019)
43 Cal.App.5th 688 (Howe) controls. We do not agree, especially
as that case discusses an anti-SLAPP motion challenging causes
of action for express indemnity and equitable indemnity—not
fraud. (Id. at pp. 695–696.) Further, there currently is a split of
authority whether an action to enforce an indemnification
obligation is even subject to the anti-SLAPP statute. (Edmon et
al., Cal. Practice Guide: Civil Procedure Before Trial (The Rutter
Group 2020) ¶ 7:814; see Long Beach Unified School Dist. v.
Margaret Williams, LLC (2019) 43 Cal.App.5th 87, 97–100 &
fn. 7 [indemnity claims arose from protected activity of filing
underlying lawsuit]; cf. Howe, at p. 701 [wrongful act giving rise
to indemnity claim was not filing of underlying action, but refusal
to honor contractual indemnification obligation]; Wong v. Wong
(2019) 43 Cal.App.5th 358, 365 [defendant was not sued for
pursuing earlier litigation, but for breaching its obligation to
indemnify plaintiff for expenses incurred in that litigation].)
       Based on the foregoing, we find the first prong of the two-
step anti-SLAPP analysis is satisfied.
F.    Prong 2: Probability of Prevailing on the Cause of Action
       Federal contends the trial court erroneously found that
Truck met its burden to establish a probability of success on the
merits. We disagree.
       First, Federal argues Truck’s claim for fraud is barred by
the litigation privilege. The litigation privilege is “relevant to the
second step in the anti-SLAPP analysis in that it may present a
substantive defense a plaintiff must overcome to demonstrate a
probability of prevailing.” (Flatley v. Mauro (2006) 39 Cal.4th

                                 17
299, 323.) Accordingly, we must first determine whether the
litigation privilege applies; if it does not, then we proceed with
determining whether Truck has shown that its fraud cause of
action has the requisite minimal merit.
       1.    Litigation Privilege
       Civil Code section 47 provides an absolute privilege for
communications made in any legislative, judicial or other official
proceeding authorized by law, or in the initiation or course of any
other proceeding authorized by law. (Id., subd. (b).) Thus, Truck
cannot establish a probability of prevailing if the litigation
privilege precludes a finding of liability on its claim for fraud.
       The principal purpose of the litigation privilege is to afford
litigants and witnesses the utmost freedom of access to the courts
without fear of harassment in subsequent derivative actions.
(Action Apartment Assn., Inc. v. City of Santa Monica (2007)
41 Cal.4th 1232, 1241.) “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.”
(Silberg v. Anderson (1990) 50 Cal.3d 205, 212 (Silberg).) The
privilege is “not limited to statements made during a trial or
other proceedings, but may extend to steps taken prior thereto, or
afterwards.” (Rusheen, supra, 37 Cal.4th at p. 1057.)
       Federal argues “everything which Truck relies upon [for its
fraud claim] occurred during the prosecution and/or settlement
negotiations” of case #1. Federal contends Truck’s reliance on
Federal’s conduct “involv[ing] court-related events” triggers the
litigation privilege and precludes Truck’s claim for fraud.
Federal also argues application of the litigation privilege to

                                 18
Truck’s complaint “promotes the important public policy of
enhancing the finality of judgments and avoiding unending post
judgment derivative litigation.”
       Truck, on the other hand, argues the litigation privilege
does not apply as this is a case of extrinsic fraud. (See Silberg,
supra, 50 Cal.3d at p. 214 [litigation privilege is absolute “except
in the most narrowly circumscribed situations, such as extrinsic
fraud”].) Thus, we must determine whether the fraud alleged in
Truck’s complaint is extrinsic. If we find Federal induced Truck
to enter the July 2013 settlement agreement via extrinsic fraud,
then the litigation privilege does not apply and Truck has
satisfied the second prong, that is, it has successfully
demonstrated the requisite minimal merit for its fraud claim.
(Navallier, supra, 29 Cal.4th at p. 94 [claims with the requisite
minimal merit may proceed].)
       2.    Fraud
       “Fraud is extrinsic where the defrauded party was deprived
of the opportunity to present his or her claim or defense to the
court, that is, where he or she was kept in ignorance or in some
other manner, other than from his or her own conduct,
fraudulently prevented from fully participating in the
proceeding.” (In re Marriage of Stevenot (1984) 154 Cal.App.3d
1051, 1068.) In contrast, fraud is “intrinsic if a party has been
given notice of the action and has not been prevented from
participating therein, that is, if he or she had the opportunity to
present his or her case and to protect himself or herself from any
mistake or fraud of his or her adversary, but unreasonably
neglected to do so.” (Id. at p. 1069, italics added.)

                                19
       Federal argues Truck’s allegations of purported fraudulent
conduct by Federal are examples of intrinsic fraud. First,
Federal contends its conduct could not possibly be fraudulent as
it had provided Truck with a copy of its umbrella policy in
September 2007 (attached as Exhibit “A” to its complaint). “The
fact that Truck failed to read the clear and unambiguous terms of
the Federal Umbrella Policy is not the fault of Federal.” Next,
Federal contends Truck had asserted the affirmative defense that
Federal’s defense/indemnity payments were voluntary but “failed
to utilize the liberal discovery tools available to it in ferreting out
the ‘fraud.’ ” Finally, Federal argues Truck “released the claim
for which it now seeks damages” by signing the July 2013
settlement agreement, which contains a broad release of all
claims, known and unknown, past, present, and future.
       We find these arguments unavailing. Federal is correct
that Truck was provided a copy of the Federal umbrella policy as
early as September 2007 and had asserted as an affirmative
defense but failed to “ferret[] out” via discovery whether Federal’s
payments of Moldex’s defense was voluntary. However, as
mentioned, intrinsic fraud only occurs when a party had the
opportunity to present their case or to protect themselves from
fraud by the opposing party “but unreasonably neglected to do
so.” (In re Marriage of Stevenot, supra, 154 Cal.App.3d at
p. 1069.) Accepting Truck’s evidence as true and evaluating the
moving party Federal’s evidence only to determine if it has
defeated Truck’s evidence as a matter of law, we cannot say that
Truck unreasonably neglected to determine whether Federal was
making a voluntary business decision or acting under its policy.
These are arguable issues to be decided by the trier of fact and we
do not believe any argument is precluded as a matter of law.

                                  20
       Federal had expressly averred in its September 2007
complaint that it defended Moldex pursuant to the terms of its
umbrella policy, and the trial court thereafter ruled in the
resulting judgment that Federal had “paid and/or reimbursed . . .
the defense costs Moldex incurred after December 20, 2004 under
an umbrella policy.” Furthermore, Federal had indicated in its
September 2007 complaint that it undertook Moldex’s defense
“without reservation” and stated it had no obligation to pay
“unless and until the Truck policy has properly exhausted.” Thus,
Truck presented sufficient evidence (via its opposition to the anti-
SLAPP motion) that it was induced to enter the July 2013
settlement agreement due to extrinsic fraud by Federal. We
accept Truck’s evidence as true. (Soukup, supra, 39 Cal.4th at
p. 269, fn. 3.)
       Here, a factfinder considering all the circumstances could
reasonably conclude that when Truck signed the July 2013
settlement agreeing to pay nearly $5 million to Federal and to
dismiss its pending appeal of the February 2013 judgment, it did
so in reasonable reliance on Federal’s course of conduct and
Federal’s stated position that it had a duty to defend Moldex
pursuant to its policy. Moreover, Truck agreed to file a request
for dismissal of its pending appeal, with prejudice, when it
entered the settlement agreement, which further supports a
finding of extrinsic fraud by Federal. “The essence of extrinsic
fraud is one party’s preventing the other from having his day in
court.” (City and County of San Francisco v. Cartagena (1995)
35 Cal.App.4th 1061, 1067.)

                                21
       And finally, for two reasons, Federal is mistaken in its
belief that Truck “released the claim for which it now seeks
damages” by signing the July 2013 settlement agreement. First,
“a written release extinguishes any obligation . . . provided it has
not been obtained by fraud, deception, misrepresentation.”
(Skrbina v. Fleming Companies (1996) 45 Cal.App.4th 1353,
1366.) We have already determined that Truck’s evidence
supports a prima facie factual showing of fraudulent conduct by
Federal. Second, the settlement agreement itself specifically
carved out an exception that the release “shall not apply to, have
any effect on or constitute a release” of “any of Truck’s rights to
claim contribution for any indemnity paid over its limit and
defense fees incurred therewith.” Thus, Truck’s reimbursement
action (i.e., case #2)—where Federal submitted a declaration
indicating its decision to defend Moldex was a voluntary business
decision—falls squarely within the exception specified in the July
2013 settlement agreement and is not a claim for which liability
was released.
       Based on the foregoing, we find Truck has met its burden of
showing a probability of prevailing on the merits of its fraud
cause of action.

                                22
                         DISPOSITION
      The trial court’s order overruling Federal’s evidentiary
objections is affirmed. The order denying Federal’s special
motion to strike Truck’s complaint for fraud is affirmed. Costs
are awarded to Truck.

                                    STRATTON, J.

We concur:

             GRIMES, Acting P. J.

             WILEY, J.

                               23
Filed 4/20/21
                     CERTIFIED FOR PUBLICATION

       IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                      SECOND APPELLATE DISTRICT

                              DIVISION EIGHT

TRUCK INSURANCE EXCHANGE,                   B302365

       Plaintiff and Respondent,            (Los Angeles County
                                            Super. Ct. No. 19STCV26702)
       v.
                                            ORDER MODIFYING OPINION
FEDERAL INSURANCE                           AND CERTIFYING OPINION
COMPANY,                                    FOR PUBLICATION

       Defendant and Appellant.             [NO CHANGE IN JUDGMENT]

BY THE COURT:
       It is ordered that the opinion filed herein on April 7, 2021, be modified
as follows:
       On page 22 of the opinion, the first paragraph is deleted entirely and
replaced with the following paragraph:
                  And finally, Federal is mistaken in its belief that Truck
            “released the claim for which it now seeks damages” by signing the
            July 2013 settlement agreement. “[A] written release extinguishes
            any obligation . . . provided it has not been obtained by fraud,
            deception, misrepresentation.” (Skrbina v. Fleming Companies
            (1996) 45 Cal.App.4th 1353, 1366.) We have already determined
            that Truck’s evidence supports a prima facie factual showing of
            fraudulent conduct by Federal.
      In addition, pursuant to rule 8.1105(b) of the California Rules of Court,
the opinion, as modified, is ordered certified for publication in the Official
Reports.

      There is no change in the judgment.

________________________________________________________________________
GRIMES, Acting P. J.           STRATTON, J.                  WILEY, J.

                                       2