Court Opinion

ID: 6496092
Source: CourtListenerOpinion
Date Created: 2022-06-28 23:01:35.633842+00
Date Added: 2024-06-11T08:48:32.394179
License: Public Domain

Filed 6/28/22 Edward v. Ellis CA4/3

                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     FOURTH APPELLATE DISTRICT

                                                DIVISION THREE

 SANFORD EDWARD,

      Plaintiff and Respondent,                                        G060310

           v.                                                          (Super. Ct. No. 30-2019-01052734)

 DAVID ELLIS,                                                          OPI NION

      Defendant and Appellant.

                   Appeal from an order of the Superior Court of Orange County, Richard Y.
Lee, Judge. Affirmed.
                   Ballard Spahr, Robert S. Gutierrez and Elizabeth L. Schilken for Defendant
and Appellant.
                   Bostwick Law, Gary L. Bostwick; Drooz Legal and Deborah Drooz for
Plaintiff and Respondent.
                                              *              *              *
              This is our second opinion in this case. A real estate developer sued a
political consultant for making allegedly false statements about him in campaign mailers
that were distributed to voters in a local city council election. The political consultant
moved to strike the complaint under the anti-SLAPP (strategic lawsuit against public
participation) statute, asserting the claims arose from protected activity. (See Code Civ.
     1
Proc., § 425.16 (§ 425.16).) The trial court denied the political consultant’s anti-SLAPP
motion, finding that although the complaint arose from protected conduct, the developer
had demonstrated a probability of prevailing on his libel claim. The political consultant
appealed that order.
              While that appeal was pending, the developer moved to recover the
attorney fees and costs he had incurred in opposing the anti-SLAPP motion, asserting the
motion was frivolous and solely intended to cause unnecessary delay. The trial court
granted that motion and awarded the developer about $43,000. The political consultant
then filed this second appeal, challenging the fee award.
              In our first opinion, we affirmed the trial court’s order denying the
anti-SLAPP motion, concluding the developer had demonstrated a probability of
prevailing on his libel claim. In this opinion, we affirm the attorney fee award, finding
no abuse of discretion.

                                          FACTS
              As explained more fully in Edward v. Ellis (2021) 72 Cal.App.5th 780,
Dana Point Taxpayers Association (DPTA) is a political action committee that supported
certain candidates in the 2018 Dana Point city council election. DPTA hired political
consultant David Ellis to manage its campaign; Ellis concluded the best way to win was
to run a negative campaign.

         1
              All further undesignated statutory references are to this code.

                                              2
              Ellis designed two campaign mailers suggesting that local real estate
developer Sanford Edward supported and controlled the opposing candidates. The
mailers also arguably insinuated Edward had been found liable for fraud and had paid
damages to the City of Dana Point (the City) in a 2016 lawsuit and was now plotting to
                                                                           2
take over the city council so he could recover that money from the City.
              Those insinuations were false. According to a 2017 settlement agreement
between the City and Edward resolving the 2016 lawsuit, Edward paid nothing to the
City on its fraud cause of action, and the City expressly withdrew and rescinded that
claim.
              Edward believed the mailers falsely suggested he had been found liable for
fraud and paid damages to the City, and he filed a complaint against DPTA for libel per
se. DPTA filed an anti-SLAPP motion in response, asserting the complaint arose out of
its exercise of its free speech on issues of public interest, and Edward could not
demonstrate a probability of prevailing on his claim.
              While DPTA’s anti-SLAPP motion was pending, Edward deposed Ellis,
DPTA’s person most knowledgeable on the creation of the mailers. Ellis admitted during
his deposition that during his prepublication research for the mailers he read an article
published in the Orange County Register that discussed the 2017 settlement between
Edward and the City; the article covered, among other things, the City’s agreement to
rescind its fraud claim against Edward. Edward included the transcript of Ellis’s
deposition in his opposition to DPTA’s anti-SLAPP motion.
              The trial court issued a tentative ruling denying DPTA’s motion. It found
that although the complaint arose from protected activity, Edward had demonstrated a
probability of prevailing on his libel claim because the mailers reasonably could be
understood to falsely imply Edward had been found liable to the City for fraud and paid

         2
              The mailers are attached in an appendix to our first opinion.

                                              3
fraud damages. Citing Ellis’s deposition testimony, the court further found Edward had
demonstrated a probability of proving DPTA acted with actual malice because its person
most knowledgeable (Ellis) knew of or recklessly disregarded the falsity of the statements
in the mailers. DPTA waived its right to a hearing and submitted on the tentative ruling,
which became the order of the court. DPTA did not appeal that ruling.
              Edward then amended his complaint to substitute in Ellis as a Doe
defendant. Ellis responded with his own anti-SLAPP motion, raising similar arguments
to those previously asserted by DPTA. Ellis also argued Edward could not establish
actual malice because there was no evidence Ellis intended to convey that Edward had
been found liable for fraud and paid damages. (See De Havilland v. FX Networks, LLC
(2018) 21 Cal.App.5th 845, 869-870 [in cases of defamation by implication, public figure
plaintiff must prove the defendant intended the defamatory impression, and not just
unknowingly misled the public].) His motion also cited additional authorities not
previously cited by DPTA concerning rhetorical hyperbole and defamatory implication.
              The trial court denied Ellis’s motion, adopting a similar line of reasoning as
in its earlier order denying DPTA’s anti-SLAPP motion. Among other things, the court
found Edward had made a sufficient prima facie showing of the legal sufficiency and
triability of the actual malice element, citing Ellis’s admission during his deposition that
he had read the newspaper article about the settlement and the City’s rescission of the
fraud claim before distributing the mailers. Ellis filed a notice of appeal of that order.
              While Ellis’s first appeal was pending, Edward filed a motion to recover
the attorney fees and costs he had incurred in opposing Ellis’s anti-SLAPP motion. He
argued Ellis’s anti-SLAPP motion was frivolous and was solely intended to cause
unnecessary delay, as demonstrated by the fact that it raised the same arguments that the
trial court had previously rejected in its ruling on DPTA’s anti-SLAPP motion. (See
§ 425.16, subd. (c)(1) [prevailing plaintiff on anti-SLAPP motion shall recover fees under
§ 128.5 if the motion was frivolous or solely intended to cause unnecessary delay].)

                                              4
              The trial court granted Edward’s fee motion and awarded him over $43,000
in fees and costs. The court reasoned that many of the arguments raised in Ellis’s motion
were identical to arguments raised in DPTA’s motion that had been rejected by the court.
As for the fact that Ellis’s anti-SLAPP motion raised one previously unasserted issue—
Ellis’s alleged lack of intent to convey falsity—the court found that was a “distinction . . .
without a difference in light of the facts and evidence submitted to the Court on the
anti-SLAPP motions, Ellis’ position as DPTA’s authorized agent and person most
knowledgeable, and Ellis’ deposition testimony.” Ellis filed a second appeal, this time
                             3
challenging the fee order.
              Meanwhile, in the first appeal, we affirmed the order denying Ellis’s
anti-SLAPP motion, since Edward had shown a probability of prevailing on the merits:
the mailers reasonably could be understood by an average Dana Point voter to imply that
Edward was found liable for fraud and paid money damages to the City as a result, and
the insinuation was provably false. We noted the mailers also might be susceptible to
other innocent interpretations, but concluded it was for the jury to decide how they were
in fact understood.
              We further found Edward had established a probability of producing clear
and convincing evidence of actual malice—i.e., that Ellis made the defamatory
statements despite knowledge of their falsity. We noted that Ellis admitted at deposition
that, as part of his prepublication research for the mailers, he read the newspaper article
about the 2017 settlement between Edward and the City, including the section describing
the City’s agreement to “rescind” its fraud claim against Edward. We concluded that
admission demonstrated Ellis was aware long before distribution of the contested mailers
that Edward did not pay damages to the City for fraud, yet Ellis went ahead with the
publication of mailers that insinuated the very opposite.

       3
             The parties fully briefed this second appeal in late 2021, before we
published our opinion in the first appeal.

                                              5
              We now turn to Ellis’s second appeal challenging the fee order.

                                       DISCUSSION
              As we explained in our previous opinion, the Legislature enacted the
anti-SLAPP statute to address “what are commonly known as SLAPP suits (strategic
lawsuits against public participation)—litigation of a harassing nature, brought to
challenge the exercise of protected free speech rights.” (Fahlen v. Sutter Central Valley
Hospitals (2014) 58 Cal.4th 655, 665, fn. 3.) The statute authorizes a special motion to
strike meritless claims early in the litigation if the claims “aris[e] from any act of that
person in furtherance of the person’s right of petition or free speech under the United
States Constitution or the California Constitution in connection with a public issue.”
(§ 425.16, subd. (b)(1).)
              When evaluating a special motion to strike, the trial court engages in a
two-step process. “First, the court decides whether the defendant has made a threshold
showing that the challenged cause of action is one arising from protected activity. . . .
[Citation.] If the court finds such a showing has been made, it then determines whether
the plaintiff has demonstrated a probability of prevailing on the claim.” (Equilon
Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) “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.)
              “If the court finds that [the] special motion to strike is frivolous or is solely
intended to cause unnecessary delay, the court shall award costs and reasonable
attorney’s fees to a plaintiff prevailing on the motion, pursuant to Section 128.5.”
(§ 425.16, subd. (c)(1); see § 128.5, subd. (a) [permitting court to order party “to pay the
reasonable expenses, including attorney’s fees, incurred by another party as a result of
actions or tactics, made in bad faith, that are frivolous or solely intended to cause

                                               6
unnecessary delay”].) This provision is designed to “discourage[] [the filing of]
unmeritorious strike motions.” (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1137.)
              The imposition of sanctions for a frivolous anti-SLAPP motion is
mandatory. (Foundation for Taxpayer & Consumer Rights v. Garamendi (2005)
132 Cal.App.4th 1375, 1388 (Garamendi).) “‘Frivolous in this context means that any
reasonable attorney would agree the motion was totally devoid of merit.’” (L.A. Taxi
Cooperative, Inc. v. The Independent Taxi Owners Assn. of Los Angeles (2015)
239 Cal.App.4th 918, 932 (L.A. Taxi).)
              We review the trial court’s finding that the anti-SLAPP motion was
frivolous for abuse of discretion. (Garamendi, supra, 132 Cal.App.4th at p. 1394.)
“‘Discretion is abused whenever, in its exercise, the court exceeds the bounds of reason,
all of the circumstances before it being considered’” (Denham v. Superior Court (1970)
2 Cal.3d 557, 566 (Denham)), or when the court’s ruling “is ‘so irrational or arbitrary that
no reasonable person could agree with it’” (Sargon Enterprises, Inc. v. University of
Southern California (2012) 55 Cal.4th 747, 773 (Sargon)). For example, if the trial court
applies the incorrect legal standard in awarding fees, that could amount to an abuse of
discretion and warrant a reversal. (See, e.g., Baughn v. Department of Forestry & Fire
Protection (2016) 246 Cal.App.4th 328, 341 [trial court awarded fees to the plaintiff who
successfully defeated anti-SLAPP motion because the plaintiff was prevailing party, not
because motion was frivolous; court abused its discretion in awarding fees on improper
basis, so matter was remanded for reconsideration].) Unless a clear case of abuse is
shown, we will not substitute our judgment for the trial court’s opinion and thereby divest
the trial court of its discretionary power. (Denham, at p. 566.)
              The trial court in this case found Ellis’s anti-SLAPP motion was frivolous
because most of his arguments were identical to arguments previously raised in DPTA’s
motion and rejected by the court. The court rejected Ellis’s argument that his motion was
not frivolous because it raised a previously unasserted issue—his lack of intent to convey

                                             7
falsity—finding that was a “distinction . . . without a difference in light of . . . Ellis’
deposition testimony.”
                 As discussed at oral argument, we believe it is a close call whether any
reasonable attorney would agree Ellis’s anti-SLAPP motion was totally devoid of merit.
(See L.A. Taxi, supra, 239 Cal.App.4th at p. 932 [“‘Frivolous in this context means that
any reasonable attorney would agree the [anti-SLAPP] motion was totally devoid of
merit.’”].) However, applying the deferential abuse of discretion standard of review here,
as we must, we conclude the court’s ruling did not exceed the bounds of reason, nor was
it so irrational or arbitrary that no reasonable person could agree with it. (Sargon, supra,
55 Cal.4th at p. 773; Denham, supra, 2 Cal.3d at p. 566.) Ellis’s motion raised arguments
that were largely similar in substance to arguments the court had previously rejected, and
Ellis’s new argument concerning his lack of intent to convey a falsity was contradicted by
his own deposition testimony. We discern no abuse of discretion in the court’s finding of
frivolousness.
                 Ellis insists his anti-SLAPP motion was not frivolous because his motion
cited new authorities on rhetorical hyperbole and defamatory implication that were not
previously cited in DPTA’s anti-SLAPP motion, and he reasonably believed his motion
would turn out more favorably than DPTA’s motion because DPTA had waived its right
to a hearing on its motion. These arguments ignore the applicable standard of review,
which is abuse of discretion. At the end of the day, the controlling question here is not
whether we believe Ellis’s motion was frivolous; it is whether the trial court’s conclusion
that the motion was frivolous exceeded the bounds of reason. On this record, particularly
in the face of Ellis’s own deposition testimony, we conclude it did not.
                 Ellis also argues that the previous ruling on DPTA’s anti-SLAPP motion,
which was heard before Ellis was even a party to the lawsuit, should not preclude Ellis
from bringing his own anti-SLAPP motion. We agree. A newly added defendant may
bring his or her own anti-SLAPP motion. However, if that anti-SLAPP motion is

                                                8
frivolous, as the trial court found here, the moving party runs the risk of an attorney fee
award.

                                      DISPOSITION
              The order is affirmed. Edward shall recover his costs on appeal. (Cal.
Rules of Court, rule 8.278(a)(1).)

                                                  GOETHALS, ACTING P. J.

WE CONCUR:

SANCHEZ, J.

MARKS, J.*

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

                                              9