Court Opinion

ID: 4638229
Source: CourtListenerOpinion
Date Created: 2020-11-30 20:02:35.069937+00
Date Added: 2024-06-11T07:58:46.402839
License: Public Domain

Filed 11/30/20 Termain v. R.E.A Advisors CA2/5
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on
opinions not certified for publication or ordered published, except as specified by rule
8.1115(b). This opinion has not been certified for publication or ordered published for
purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                      SECOND APPELLATE DISTRICT

                                    DIVISION FIVE

MELVIN TERMAIN et al.,                                          B295498

        Plaintiffs and Respondents,                             (Los Angeles County
                                                                Super. Ct. No. BC722291)
        v.

R.E.A. ADVISORS, INC. et al.,

        Defendants and Appellants.

      APPEAL from an order of the Superior Court of Los
Angeles County, Barbara A. Meiers, Judge. Affirmed in part,
reversed in part, and remanded.
      Alpert, Barr & Grant, Adam D.H. Grant, Alexander S.
Kasendorf, and Ryan T. Koczara, for Defendants and Appellants.
      Leonard, Dicker & Schreiber, Kevin S. Dicker, for Plaintiffs
and Respondents.
       We have here an appeal from the denial of a Code of Civil
Procedure section 425.16 special motion to strike certain causes
of action or allegations in a complaint filed as the result of an
acrimonious breakup of a property management business. The
key issues we are asked decide are whether certain letters sent to
the business’s former clients and their insurers are protected
communications under Code of Civil Procedure section 425.16,1
the anti-SLAPP statute, and if so, whether those communications
are necessarily covered by the Civil Code’s litigation privilege.

                         I. BACKGROUND
       A.     Termain Sues Outerbridge After She Threatens Legal
              Action
       Plaintiff Melvin Termain (Termain) and defendant Sarah
Outerbridge (Outerbridge) were the officers of, and fifty-percent
shareholders in, defendant R.E.A. Advisors, Inc. (REA), a
corporation providing management services to property owners’
associations. Termain resigned from REA in late July 2018, and
when he did, a number of REA’s clients (the Former Clients)
terminated their contracts with the company and entered into
contracts for management services with 4AIIQ, LLC, a new
company Termain had formed. This caused a rift between
Termain and Outerbridge.
       Termain and 4AIIQ, LLC (collectively, Termain & Co) later
filed a verified complaint against Outerbridge and REA
(collectively, Outerbridge & Co). An amended complaint (the
operative complaint) followed two months later. The operative

1
     Undesignated statutory references that follow are to the
Code of Civil Procedure.

                                2
complaint alleges five causes of action: (1) a Corporations Code
cause of action by Termain against Outerbridge & Co for
involuntary dissolution of REA, (2) an accounting cause of action
by Termain against REA, (3) a breach of fiduciary duty cause of
action by Termain against Outerbridge, (4) an intentional
interference with contract cause of action by 4AIIQ, LLC against
Outerbridge & Co, and (5) an intentional interference with
prospective economic advantage cause of action by Termain
against Outerbridge & Co. The fourth and fifth intentional
interference causes of action are the only ones of interest in this
appeal because Outerbridge & Co’s anti-SLAPP motion was
directed solely at those claims.2
      The intentional interference causes of action allege
Outerbridge & Co were aware of 4AIIQ, LLC and Termain’s
respective contracts and relationships with the Former Clients.
The allegations that comprise the two causes of action also
summarize, in substantively identical terms, the acts by
Outerbridge that are alleged as a basis for liability. The
operative complaint states Outerbridge “(i) improperly retained
over $496,000 of funds belonging to [the Former Clients] as
purported ‘liquidated damages’; (ii) wrote to the Former Clients’
insurance carriers asserting meritless claims for breach of
contract; (iii) threatened litigation against the Former Clients for

2
      Termain & Co assert in their Respondents’ Brief that
4AIIQ, LLC dismissed its intentional interference cause of action
against Outerbridge & Co without prejudice. No such dismissal
appears in the record on appeal, however, and Outerbridge & Co
do not address the issue. Regardless, any dismissal was not
before the trial court when it ruled on the anti-SLAPP motion.

                                 3
the proper exercise of their contractual rights to terminate their
relationships with [REA]; and (iv) sought indemnification from
the Former Clients.”

      B.     Outerbridge & Co File a Special Motion to Strike the
             Intentional Interference Causes of Action, or Certain
             of Their Allegations
       Outerbridge & Co responded to the operative complaint by
filing a special motion to strike the intentional interference
causes of action or, in the alternative, at least some of the
allegations included in those causes of action. Outerbridge & Co
contended each of the four bases summarized as the factual
predicate for those causes of action (retaining “liquidated
damages,” advising insurance carriers of breach of contract,
threatening litigation, and seeking indemnification) were
activities undertaken in anticipation of litigation, and thus,
protected activity under the anti-SLAPP statute. Outerbridge &
Co contended Outerbridge decided to sue Termain & Co and the
Former Clients in August 2018 (almost immediately after
Termain resigned) and Termain & Co had simply beaten them to
the punch with their own lawsuit. In addition to arguing the
intentional interference acts complained of constituted anti-
SLAPP statute protected activity, Outerbridge & Co also argued
Termain & Co could not show a probability of prevailing on the
intentional interference claims for three reasons: (1) the specified
acts were covered by the litigation privilege, (2) Outerbridge & Co
had not committed an independently wrongful act, which is
necessary to assert an intentional interference with prospective
economic advantage claim, and (3) Termain himself suffered no
damages.

                                 4
       Outerbridge submitted a declaration in support of the anti-
SLAPP motion. In broad strokes, this is what it avers:
Outerbridge learned about Termain’s resignation and the Former
Clients’ decisions to terminate their contracts with REA on
August 1, 2018. She contacted and retained attorneys that same
day. After reviewing various REA records and systems, she
“began seriously contemplating initiating litigation against
[Termain & Co] and the Former Clients” and “then decided that
REA would pursue litigation against the Former Clients and
[Termain & Co], and began exercising rights REA had under the
contracts with the Former Clients.”3 According to Outerbridge,
her “primary reason for contacting attorneys was to evaluate a
litigation plan related to Termain’s resignation and his and
4AIIQ’s actions. . . , the available legal options, and to prepare
Litigation Letters [i.e., the letters to the Former Clients and their
insurers] . . . .” A sample of these “Litigation Letters,” two that
were addressed to Rye Canyon Industrial Center OA (Rye
Canyon) and its insurer, are attached to Outerbridge’s
declaration.
       The attached letter addressed to Rye Canyon’s insurance
carrier states its purpose is to place the insurer on notice for
claims of damage arising out of contractual breaches by its
insured. The letter states Rye Canyon was obligated to pay
liquidated damages pursuant to its contract with REA and was
also required to indemnify, defend, and hold REA and interested
parties harmless against any losses and expenses. The letter
additionally states it is intended to “serve as a demand” for

3
    Outerbridge’s initial declaration mistakenly refers to
Termain and 4AIIQ, LLC as “Defendants.”

                                  5
payment of any unpaid liquidated damages and any financial loss
incurred, and to tender the defense to any claims arising out of
the actions of the insured and its new managing agent.” The
letter further advises the insurer that “there are multiple
avenues of litigation being pursued” and asked the insurer to
contact Outerbridge prior to a certain date “to prevent further
legal fees.”
       The attached letter to former client Rye Canyon itself
states the client’s funds previously held in trust—with deductions
for known liabilities, including liquidated damages—were being
sent to the client’s new managing agent (i.e., Termain & Co).
The letter represents its purpose is to notify Rye Canyon that it
had breached its contract with REA, the letter claims Rye
Canyon had conspired with Termain, and the letter asserts Rye
Canyon had been an accomplice to the damage and harm REA
had suffered. The letter additionally claims Rye Canyon was
required to “indemnify, defend and hold [REA and various
affiliated individuals] harmless” from losses, costs, and attorney
fees “in connection with your intentional gross misconduct and
that misconduct of your new managing agent.” The letter closes
by notifying Rye Canyon that its insurance company had been
provided with a copy of the letter, along with a demand to
address REA’s damages.
       In addition to the sample letters, Outerbridge’s declaration
attached redacted billing statements from her attorneys. The
bills reflect entries as early as August 1, 2018. Though the
redactions hide the vast majority of the descriptions of the legal
work performed, the non-redacted portion of the bills do indicate,
among other things, that the lawyers reviewed emails regarding

                                6
Termain’s actions and reviewed and revised a letter regarding a
partnership dispute.
       Termain & Co filed an opposition to the anti-SLAPP motion
that argued Outerbridge & Co’s failure to return the Former
Clients’ money was illegal because the liquidated damages
contractual provision was unenforceable. The opposition also
argued Outerbridge & Co had not engaged in protected pre-
litigation activity because the letters in question had not been
sent in connection with litigation that was contemplated in good
faith and under serious consideration. Termain & Co
additionally argued that the fourth and fifth intentional
interference causes of action had the requisite minimal merit to
proceed. Termain & Co asked the court to order Outerbridge &
Co to pay attorney fees in the amount of $7,225 for filing a
frivolous anti-SLAPP motion.
       With their opposition, Termain & Co. submitted
declarations from Craig Eichman (Craig), the president of Rye
Canyon; Lisa Eichman (Lisa), Rye Canyon’s secretary; and
Termain himself. According to Craig’s declaration, Rye Canyon
notified REA that it intended to terminate its contract in late
July 2018. The following month, Rye Canyon received a letter
from Outerbridge and learned REA was refusing to return
$60,000 of the funds REA was holding in trust for Rye Canyon.
Craig also learned Rye Canyon’s insurance carrier had received a
claim stating Rye Canyon owed REA unpaid liquidated damages.
Rye Canyon demanded Outerbridge return the $60,000 and she
agreed to do so only if Rye Canyon terminated its business
relationship with Termain & Co—which Rye Canyon agreed to
do. Lisa’s declaration was similar to Craig’s in substance,
including an assertion that Outerbridge refused to return Rye

                               7
Canyon’s $60,000 until Rye Canyon ceased working with
Termain & Co. Termain’s declaration attested, among other
things, that the letters to each of the Former Clients and their
insurance carriers were substantially similar. He maintained
Outerbridge & Co’s actions were a proper basis for civil liability
and resulted, in Rye Canyon’s case, in the loss of a client and the
$18,864 annual fee Rye Canyon paid to 4AIIQ, LLC. Termain
also noted Outerbridge & Co had not (at least by the time of the
declaration’s signing) filed suit against Termain, 4AIIQ, LLC, or
any of the Former Clients.
       Along with a reply to Termain & Co’s opposition,
Outerbridge filed her own supplemental declaration. In
pertinent part, it reads as follows: “When I sent the letters to the
Former Clients and insurers, I did so with a good faith belief that
REA had legally viable claims for breach of contract. The
communications were sent after I retained counsel and while I
was seriously contemplating filing a lawsuit against [Termain &
Co] and the Former Clients. In fact, as the Litigation Letters
state, multiple avenues of litigation were ‘being pursued.’ The
intent of the Litigation Letters was to (1) provide confirmation of
the receipt of termination [of the contracts]; (2) inform the
Former Clients that their debts to REA were paid and any
remaining funds, after an amount was held for outstanding
checks, would be sent to [Termain & Co] with a full accounting;
(3) put the Former Clients on notice of their breach of contract
and explain why they were in breach; (4) inform the Former
Clients that REA was enforcing the terms of the agreement; and
(5) demand that the insurance carriers indemnify REA for
[Termain & Co’s] breaches.” Outerbridge acknowledged Termain
& Co did sue before REA filed suit, but she maintained REA

                                 8
would file a cross-complaint against Termain & Co and some of
the Former Clients when it was time to answer the complaint.

       C.    The Trial Court’s Ruling
       The trial court heard argument from the parties at a
hearing on the anti-SLAPP motion and took the matter under
submission. In a subsequent order, the court denied the motion.
       The trial court found Outerbridge & Co had not made a
prima facie showing that the challenged intentional interference
causes of action (or any claims stated in those causes of action)
arose from activity protected by the anti-SLAPP statute.
Specifically, the court believed Outerbridge’s letters were not
protected pre-litigation communications—“other than the 1st
paragraph,” the court said—because there was no basis to believe
the statements in the letters were made in connection with
litigation contemplated in good faith and under serious
consideration and there was “no evidence” a lawyer had approved
or suggested the contents of the letter. The trial court also found
it significant that there was no evidence of any lawsuit
contemplated against the Former Clients to whom Outerbridge
sent the letters, there were no justifiable grounds for any such
lawsuit in the court’s view, and there were no justifiable grounds
in the court’s view for suits or claims against the Former Clients’
insurers. While the court’s protected activity determination was
alone dispositive, the court further found Termain & Co had in
any event shown a probability of prevailing on their intentional
interference claims. The trial court granted Termain & Co’s
request for attorney fees (in the full amount requested), believing
the award was “required by the Code.”

                                 9
                          II. DISCUSSION
       The trial court was wrong to conclude the intentional
interference causes of action, or at least the claims premised on
the communications sent to the Former Clients and their
insurers, did not arise from protected activity. Outerbridge’s
declaration, including the sample letters and the attorney fee
statements, suffice to make a prima facie showing (Wilson v.
Cable News Network, Inc. (2019) 7 Cal.5th 871, 888 (Wilson); City
of Montebello v. Vasquez (2016) 1 Cal.5th 409, 420 (Montebello))
that Outerbridge & Co were contemplating litigation seriously
and in good faith. But a prima facie showing is not a legally
dispositive showing, and the difference matters at the second step
of anti-SLAPP analysis. The question of whether litigation was
seriously under good faith consideration by Outerbridge & Co—
which is the same test for deciding whether the Civil Code’s
litigation privilege applies to a pre-litigation communication
(Action Apartment Assn., Inc. v. City of Santa Monica (2007) 41
Cal.4th 1232, 1251 (Action Apartment))—is a factual issue that
cannot be resolved at this stage of the litigation. Because it is not
clear whether the litigation privilege applies, and because the
declarations submitted by Termain and the Eichmans (taken as
true for present purposes) establish the intentional interference
claims have minimal merit, Outerbridge & Co’s anti-SLAPP
motion fails at the second step of anti-SLAPP analysis. Though
we accordingly affirm the denial of the special motion to strike,
we shall reverse the trial court’s award of attorney fees to
Termain & Co, the non-moving party. There was no basis for
that.

                                 10
       A.    The Anti-SLAPP Statute
       The anti-SLAPP statute authorizes a defendant (or cross-
defendant) to file a special motion to strike “in order to expedite
the early dismissal of unmeritorious claims” arising from
protected activity. (Montebello, supra, 1 Cal.5th at 416, 420.)
Our analysis under the anti-SLAPP statute proceeds in two
steps.
       “First, the moving defendant must make a prima facie
showing ‘that the act or acts of which the plaintiff complains were
taken “in furtherance of the [defendant]’s right of petition or free
speech under the United States or California Constitution in
connection with a public issue,” as defined in the statute.’
[Citation.] If the defendant makes this initial showing of
protected activity, the burden shifts to the plaintiff at the second
step to establish a probability it will prevail on the claim.
[Citation.] The plaintiff need only state and substantiate a
legally sufficient claim. [Citation.] The plaintiff’s evidence is
accepted as true; the defendant’s evidence is evaluated to
determine if it defeats the plaintiff’s showing as a matter of law.
[Citation.] The procedure is meant to prevent abusive SLAPP
suits, while allowing ‘claims with the requisite minimal merit [to]
proceed.’ (Navellier v. Sletten (2002) 29 Cal.4th 82, 94[ ].)”
(Montebello, supra, 1 Cal.5th at 420.)
       Our review of the trial court’s order denying Outerbridge &
Co’s anti-SLAPP motion is de novo. (Park v. Board of Trustees of
California State University (2017) 2 Cal.5th 1057, 1067 (Park).)

                                11
      B.     Outerbridge & Co Made a Prima Facie Showing That
             the Intentional Interference Causes of Action Arise
             Out of Protected Activity
       A party filing an anti-SLAPP motion satisfies the first
prong of the anti-SLAPP statute if he or she makes a prima facie
showing that the plaintiff’s cause of action “arises from” an act
the defendant performed in furtherance of the defendant’s right
of petition or free speech. (City of Cotati v. Cashman (2002) 29
Cal.4th 69, 78 (Cotati); see also Park, supra, 2 Cal.5th at 1062 [“A
claim arises from protected activity when that activity underlies
or forms the basis for the claim”].) The moving party does not
have to prove that its actions are constitutionally protected as a
matter of law. (Flatley v. Mauro (2006) 39 Cal.4th 299, 319
(Flatley).) Rather, “the question is only whether a defendant has
made out a prima facie case that activity underlying [the moving
party’s] claims is statutorily protected.” (Wilson, supra, 7 Cal.5th
at 888.)
       There are four categories of “protected activity” under the
anti-SLAPP statute. The pertinent category in this case covers
“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, subd. (e)(2).) This category of
protected activity includes not just statements made during the
course of pending litigation, but also certain prelitigation
statements—that is, “‘communications preparatory to or in
anticipation of the bringing of an action. . . .’” (Briggs v. Eden
Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1115,
citations omitted; Digerati Holdings, LLC v. Young Money

                                12
Entertainment, LLC (2011) 194 Cal.App.4th 873, 886-887
(Digerati).
       A prelitigation statement constitutes protected activity for
anti-SLAPP purposes if it “‘concern[s] the subject of the dispute’
and is made ‘in anticipation of litigation “contemplated in good
faith and under serious consideration.”’” (Neville v. Chudacoff
(2008) 160 Cal.App.4th 1255, 1268 (Neville), quoting Action
Apartment, supra, 41 Cal.4th at 1251.) The “‘good faith [and
under] serious consideration’ requirement . . . . focuses on
whether the litigation was genuinely contemplated . . . . [and]
guarantees that hollow threats of litigation are not protected.”4
(People ex rel. Fire Ins. Exchange v. Anapol (2012) 211
Cal.App.4th 809, 824 (Anapol).) “Thus, for example, when a
cause of action arises from conduct that is a ‘necessary
prerequisite’ to litigation, but will lead to litigation only if
negotiations fail or contractual commitments are not honored,
future litigation is merely theoretical rather than anticipated and
the conduct is therefore not protected prelitigation activity.” (Bel
Air Internet, LLC v. Morales (2018) 20 Cal.App.5th 924, 941.)

4
       Contrary to what the trial court believed, the “good faith”
requirement does not require a lawyer to have approved or
suggested the language used in a prelitigation communication. A
lawyer’s involvement in the creation or delivery of a
communication may of course be probative of whether it was a
protected prelitigation communication, but such involvement is
not determinative. (See Anapol, supra, 211 Cal.App.4th at 830-
831 [litigation was not under serious consideration even though
the statements at issue were made by attorneys].) If the rule
were otherwise, self-represented litigants could not claim the
protections of subdivision (e)(2) of the anti-SLAPP statute.

                                13
      To reiterate, the fourth and fifth intentional interference
causes of action arise from the four actions by Outerbridge & Co
described therein: (1) retaining over $496,000 of the Former
Clients’ funds as liquidated damages; (2) sending letters to the
Former Clients’ insurance companies asserting the clients
breached their contracts with REA; (3) threatening litigation
against the Former Clients for terminating their relationship
with REA; and (4) seeking indemnification from the Former
Clients. The evidence in support of Outerbridge & Co’s
contention that they were seriously and in good faith
contemplating litigation when they sent the letters consisted of
the letters themselves, redacted attorney fee statements from
Outerbridge & Co’s attorneys, and the declarations from
Outerbridge. (See generally Cotati, supra, 29 Cal.4th at 79 [“In
deciding whether the ‘arising from’ requirement is met, a court
considers ‘the pleadings, and supporting and opposing affidavits
stating the facts upon which the liability or defense is based.’
(§ 425.16, subd. (b))”].)
      Neither the letters nor the attorney fee statements alone
make the requisite showing. Focusing first on the letters to the
Former Clients, they make various allegations regarding the
nature and consequences of the Former Clients’ actions, including
an assertion they conspired with Termain, but they stop short of
expressly mentioning or threatening potential litigation. They
do, however, suggest the possibility of litigation in that they
assert the Former Clients had a duty to defend and indemnify
REA from and against a variety of ills, including claims,
attorneys’ fees, and damages related to their actions.
Considering next the letters to the insurers, they similarly
demand a defense against any claims arising out of the actions of

                               14
the Former Clients and those of their new managing agent
(4AIIQ, LLC) and demanded payment of damages. Unlike the
client letters, the insurer letters do reference, albeit briefly,
“multiple avenues of litigation being pursued, which you [the
insurers] will be required to reimburse.” As to the attorney fee
statements submitted with Outerbridge’s declaration, they are
heavily redacted but they do indicate Outerbridge communicated
with attorneys the same day Termain resigned and the attorneys,
at the very least, reviewed emails regarding actions taken by
Termain. They also reflect, among other things, that the
attorneys considered a settlement offer at the end of August, but
they do not identify the other party to the potential settlement.
       While the letters and attorney billing statements would not
alone be enough to satisfy Outerbridge & Co’s step one anti-
SLAPP burden, when considered alongside Outerbridge’s
declarations we believe the threshold prima facie protected
activity showing was met. Outerbridge attests she “began
seriously contemplating initiating litigation” based on research
she began the day she learned Termain resigned from REA and
the Former Clients were terminating their relationships with the
company. Outerbridge further declares her “primary reason” for
contacting attorneys was to “evaluate a litigation plan related to
Termain’s resignation and his and 4AIIQ’s actions . . . .” She
avers the letters sent to the Former Clients and their insurers
were “part of REA’s litigation plan,” and while Termain & Co
were first to the courthouse, she maintains REA still intended to
file a cross-complaint against Termain & Co and some Former

                               15
Clients when it is time to answer the complaint.5 These
declaration statements, combined with the other evidence, suffice
to make a prima facie showing that the intentional interference
claims arose, at least in part, from protected petitioning activity.
       The small number of points Termain & Co advance to
argue there was no prima facie showing of protected activity are
not persuasive. Termain & Co contend the content of the letters
sent by Outerbridge do not sufficiently threaten litigation and
were sent for the sole purpose of intimidating and harassing the
Former Clients. This, however, too strongly downplays what the
letters do say. They include one express reference to litigation
and they broadly relate to the subject of the dispute between
Outerbridge & Co and Termain & Co over the nature of
Termain’s departure and REA’s loss of the Former Clients (as
well as a dispute between Outerbridge & Co and the Former
Clients regarding the clients’ actions). More importantly,
Termain & Co’s argument essentially ignores the statements in
Outerbridge’s declaration.6 While Termain & Co may discover

5
       Termain & Co’s brief on appeal asserts, without citation to
the appellate record, that Outerbridge filed a cross-complaint in
November 2019. Since that fact (if it is a fact) was not before the
trial court and is not in the record before us, we do not consider
it.
6
       Termain & Co acknowledge Outerbridge’s declaration only
briefly, and when they do, they argue that the question of a
prima facie showing of protected activity is “at best a disputed
issue on which Outerbridge’s mere say-so regarding her intent
does not meet her SLAPP burden.” The only case cited in
connection with this argument is a federal case declining to make
a ruling on an anti-SLAPP issue until the plaintiff in the case

                                16
grounds to dispute the veracity of her statements as the case
unfolds, there is nothing now that wholly negates Outerbridge’s
factually uncontradicted statement, under penalty of perjury,
that she was seriously contemplating litigation against Termain
& Co and the Former Clients and the letters were sent as part of
Outerbridge & Co’s litigation strategy. Nor is there anything
now that defeats Outerbridge’s assertion, in her supplemental
declaration, that REA still intended to file a cross-complaint
against Termain & Co and some of the Former Clients.7

was permitted to conduct discovery, a decision permitted by
federal case law and the federal rules of civil procedure.
(Shropshire v. Fred Rappoport Co. (N.D.Cal. 2003) 294 F.Supp.2d
1085, 1100.) The case has no bearing here.
7
       Termain & Co also argue there has been no prima facie
showing that the fourth and fifth causes of action arise at least
partly from protected prelitigation communications because the
communications do not satisfy the “good faith” portion of the
“good faith and under serious consideration” requirement. The
substance of Termain & Co’s argument, however, relates not to
the requirements for anti-SLAPP protection, but to the
requirements for the application of the litigation privilege.
Although we may look to litigation privilege jurisprudence when
considering whether a party has engaged in activity protected by
the anti-SLAPP statute, the doctrines are not coextensive, and
we need not determine whether a communication is protected by
the litigation privilege during a prong-one anti-SLAPP analysis.
(See Navellier, supra, 106 Cal.App.4th at 770 [“privilege informs
interpretation of the ‘arising from’ prong of the anti-SLAPP
statute [citation], but protections afforded by the statute and the
privilege are not entirely coextensive [citations]”].)

                                17
      C.     Termain & Co Demonstrated the Intentional
             Interference Claims Have Minimal Merit
       Having concluded Outerbridge & Co clear the prima facie
bar for establishing Termain & Co’s intentional interference
claims arise from protected activity, we move to the second stage
of anti-SLAPP analysis. To defeat the anti-SLAPP motion,
Termain & Co bears the burden of demonstrating a probability of
prevailing on the challenged claims. (Baral v. Schnitt, 1 Cal.5th
376, 384; see also Oasis West Realty, LLC v. Goldman (2011) 51
Cal.4th 811, 820.) In evaluating whether a plaintiff has made
that showing, a “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.
It 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.” (Baral, supra, at 384-385.) A plaintiff
opposing an anti-SLAPP motion thus need only show the cause of
action or claim at issue has “minimal merit.” (Baral, supra, at
385, 391; Equilon Enterprises v. Consumer Cause, Inc. (2002) 29
Cal.4th 53, 63 [plaintiff need only state and substantiate a legally
sufficient claim].)

            1.      There is a probability Termain & Co will be
                    able to show the intentional interference claims
                    are not barred by the litigation privilege
      Before we assess the factual showing made in support of
the viability of the intentional interference claims on the merits,
we must decide whether the claims are dead on arrival because
they are predicated on prelitigation conduct covered by the

                                 18
litigation privilege codified at Civil Code section 47, subdivision
(b). The litigation 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. [Citations.]’ [Citation.]” (Edwards v.
Centex Real Estate Corp. (1997) 53 Cal.App.4th 15, 29.) “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, supra, 39 Cal.4th at 323.) The privilege is
also “absolute; it applies, if at all, regardless whether the
communication was made with malice or the intent to harm.
[Citation.]” (Kashian v. Harriman (2002) 98 Cal.App.4th 892,
913.)
       Like subdivision (e)(2) of section 425.16, which we have
already discussed at length, the litigation privilege can apply to
prelitigation communications, including demand letters. (Lerette
v. Dean Witter Organization, Inc. (1976) 60 Cal.App.3d 573, 577.)
The test as to whether the privilege applies is also nominally the
same as the subdivision (e)(2) determination: we consider
whether the prelitigation communication in question “relates to
litigation that is contemplated in good faith and under serious
consideration.” (Action Apartment, supra, 41 Cal.4th at 1251; see
also ibid. [“Whether a prelitigation communication relates to
litigation that is contemplated in good faith and under serious
consideration is an issue of fact. For example, in [a 1999 case],
the Court of Appeal held that the trial court erred in granting
summary judgment on the basis of the litigation privilege
because ‘[i]t remain[ed] a triable issue of fact

                                 19
whether . . . imminent litigation was seriously proposed and
actually contemplated in good faith as a means of resolving the
dispute between [the parties]’”].)
       Though the test is the same, the standard of proof at step
two of the anti-SLAPP inquiry is reversed. Rather than
considering, as we did at step one, whether Outerbridge & Co
have made a prima facie showing that the actions challenged as
intentional interference with contract or prospective economic
advantage arise from communications made in preparation for
litigation under serious, good faith consideration, we consider
whether Termain & Co have shown the opposite under the low
probability of prevailing standard that applies. In other words
we determine whether the evidence submitted in connection with
the anti-SLAPP motion indicates Termain & Co may be able to
prove Outerbridge’s letters to the Former Clients and their
insurers were not sent in furtherance of “‘imminent litigation’”
that was “‘seriously proposed and actually contemplated in good
faith as a means of resolving the dispute . . . .’” (Action
Apartment, supra, 41 Cal.4th at 1251.)
       Termain & Co has made the required showing and the
applicability of the litigation privilege is subject to genuine
dispute at this stage. Although Outerbridge declared she was
seriously contemplating litigation and had retained counsel prior
to writing the letters, there is no good evidence Outerbridge’s
counsel was in fact preparing to sue at the time. The letters
themselves were signed by Outerbridge, not counsel, and the
heavily redacted attorney billing statements do not clearly show
counsel performed any work in connection with the letters. The
letter to the insurers made only an oblique reference to civil
litigation, and the letters to the Former Clients made no direct

                               20
reference to litigation at all. Further, it was Termain & Co, not
Outerbridge & Co who sued, and as of the time the anti-SLAPP
motion was filed, Outerbridge & Co had neither filed suit against
defendant or the Former Clients nor filed a cross-complaint.
There is therefore a realistic probability that Termain & Co will
be able to show Outerbridge & Co were not seriously considering
litigation at the time Outerbridge wrote the letters and the
letters were instead attempts to harass the Former Clients,
interfere with Termain & Co’s relationships with them, or induce
a monetary concession without the serious contemplation of
actual litigation.

            2.      The factual predicate for Termain’s intentional
                    interference with prospective economic
                    advantage cause of action has the requisite
                    minimal merit
       Apart from the claim that the litigation privilege bars any
prospect of prevailing, which we have rejected, Outerbridge & Co
maintain Termain & Co have no probability of establishing,
factually, the elements of an intentional interference with
prospective economic advantage cause of action. The elements of
the tort of interference with prospective economic advantage are
“(1) an economic relationship between the plaintiff and a third
party, with a probability of future economic benefit to the
plaintiff; (2) the defendant’s knowledge of this relationship; (3)
intentional and wrongful conduct on the part of the defendant,
designed to interfere with or disrupt the relationship; (4) actual
disruption or interference; and (5) economic harm to the plaintiff
as a proximate result of the defendant’s wrongful conduct.
[Citation.] A plaintiff’s burden includes pleading and proving

                                21
‘that the defendant not only knowingly interfered with the
plaintiff’s expectancy, but engaged in conduct that was wrongful
by some legal measure other than the fact of interference itself.’
[Citation.] We consider an act independently wrongful ‘if it is
proscribed by some constitutional, statutory, regulatory, common
law, or other determinable legal standard.’ [Citation.]”
(Overstock.com, Inc. v. Gradient Analytics, Inc. (2007) 151
Cal.App.4th 688, 713.)
       In our view, the declarations submitted with Termain &
Co’s opposition to the anti-SLAPP motion suffice to meet the
minimal merit threshold (Baral, supra, 1 Cal.5th at 385, 391) for
establishing these elements. Termain declares he had a
relationship with Rye Canyon, a former client of REA, as well as
the Eichmans; the relationship was disrupted by Outerbridge &
Co’s actions; and Termain & Co suffered monetary harm as a
result. Craig Eichman declared REA failed to return $60,000 of
funds to Rye Canyon that REA had held in trust for Rye Canyon
(an independently wrongful act). Craig’s declaration also avers
neither he nor anyone else associated with Rye Canyon possessed
or duplicated any trade secret or confidential information
belonging to REA. Lisa Eichman’s declaration made similar
assertions. Craig also declared that, had it not been for
Outerbridge’s actions, there is no reason Rye Canyon would not
have stayed in business with Termain & Co.
       It makes no difference, as Outerbridge & Co argue,
whether the liquidated damages clause in REA’s contracts with
the Former Clients is presumptively valid. Even if we assume for
the sake of argument that the liquidated damages clause was
valid, the evidence presented indicates Outerbridge & Co seized
money to cover the purported liquidated damages without

                               22
permission from the Former Clients, without any sort of court
order, and without contractual authorization (the pertinent
clause of the contract provides the client “shall pay” certain
amounts as liquidated damages under specified circumstances
but it does not authorize simply seizing such damages from client
funds held in trust8). This is sufficient to make a prima facie
factual showing of an independently wrongful act. We are also
unconvinced by Outerbridge & Co’s argument that Termain lacks
standing to assert an intentional interference with prospective
economic advantage claims. The statements in Termain’s
declaration suffice to show that he personally suffered harm, not
just 4AIIQ, LLC.

         D.    Attorney Fees
         The anti-SLAPP statute directs a trial court to award
reasonable attorneys’ fees to a non-moving party when the court
determines the defendant’s anti-SLAPP motion was “frivolous
or . . . solely intended to cause unnecessary delay.” (§ 425.16,
subd. (c)(1).) “Frivolous in this context means that any
reasonable attorney would agree the motion was totally devoid of
merit.” (Gerbosi v. Gaims, Weil, West & Epstein, LLP (2011) 193
Cal.App.4th 435, 450 (Gerbosi).)
         In order to award attorneys’ fees against a losing defendant
on an anti-SLAPP motion, “the trial court must make a finding
the SLAPP motion was frivolous or brought solely to delay the

8
      This is in contrast to the section of the contract pertaining
to the agent’s regular compensation, which expressly entitles the
agent “to deduct such compensation when due from the funds
therein its possession.”

                                 23
proceedings[, and . . . .] must follow the procedural requirements
for a sanction order set out in section 128.5 which requires,
among other things, the order ‘shall recite in detail the conduct or
circumstances justifying the order.’ . . . Failure to satisfy both
these elements renders the order invalid.” (Morin v.
Rosenthal (2004) 122 Cal.App.4th 673, 682 (Morin).) We review
an order awarding attorneys’ fees for abuse of discretion.
(Gerbosi, supra, 193 Cal.App.4th at 450.)
       Here, the trial court’s order neither found Outerbridge &
Co’s motion frivolous nor recited the conduct or circumstances
justifying the order; in fact, if anything, the little the trial court’s
ruling says about the award of fees suggests the trial court
erroneously believed Termain & Co were entitled to fees simply
because the trial court denied Outerbridge & Co’s motion. While
this alone requires reversal of the attorney fees award, we are
additionally of the view that there was nothing frivolous about
Outerbridge & Co’s motion and, accordingly, there can be no
basis for an award of attorney fees to the non-moving party. We
shall accordingly reverse the award of attorney fees.

                                  24
                           DISPOSITION
      The trial court’s award of attorney fees to Melvin Termain
and 4AIIQ, LLC is reversed. In all other respects, the trial
court’s order is affirmed. Both sides are to bear their own costs
on appeal.

    NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

                      BAKER, Acting P. J.

We concur:

      MOOR, J.

      KIM, J.

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