Court Opinion

ID: 904002
Source: CourtListenerOpinion
Date Created: 2013-06-21 11:52:52.696025+00
Date Added: 2024-06-11T15:25:29.955633
License: Public Domain

Filed 6/20/13 Wild Goose Club v. Wild Goose Storage CA3
                                           NOT TO BE PUBLISHED
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 This opinion has not been certified for publication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
                                      THIRD APPELLATE DISTRICT
                                                         (Butte)
                                                            ----

WILD GOOSE CLUB,

                   Plaintiff, Cross-defendant and Respondent,                                    C068772

         v.                                                                            (Super. Ct. No. 149934)

WILD GOOSE STORAGE LLC,

                   Defendant, Cross-complainant and Appellant;

WILD GOOSE ENERGY COMPANY LLC,

                   Cross-defendant and Respondent.

         Wild Goose Club, Inc. (Club), operates a waterfowl hunting club on
approximately 1,500 acres of real property in Butte County. Wild Goose Storage, LLC
(Storage) uses depleted reservoirs located far below the surface of the same property to
store billions of cubic feet (bcf) of natural gas for later resale on the energy market.
Under the terms of a 1997 lease and surface rights addendum, Storage makes lease
payments worth hundreds of thousands of dollars each year to lessor, Wild Goose Energy

                                                             1
Company, LLC (Energy). However, Club receives no lease payments despite having
surface rights to the property.
       Starting in 2009, Club sought to receive lease payments from Storage as a third-
party beneficiary of the lease. In addition, Club demanded that Storage abate the noise
and emissions from its operations site on the property. Club communicated its claims for
lease payments to Storage, Storage’s parent company, Niska Gas Storage Partners
(Niska), and attorneys for insurers and underwriters who helped Niska issue stock in a
public offering. After Storage rejected the demands, Club opposed Storage before the
California Public Utilities Commission (CPUC), informed Niska about the third-party
beneficiary claims, and filed the present lawsuit. Club’s complaint is based on its claim
that it is the intended third-party beneficiary of the 1997 lease agreement between
Storage and Energy. After Energy was joined as an indispensable party, Storage cross-
complained against Energy and Club. Club responded with an “anti-SLAPP” motion to
strike Storage’s cross-complaint. (Code Civ. Proc., § 425.16 (Section 425.16).)1 The
motion was based on the assertion that Storage’s cross-complaint sought to chill Club’s
right of petition. Storage opposed the motion, which was granted in part and denied in
part by the trial court.

1       “ ‘SLAPP is an acronym for strategic lawsuit against public participation.
[Citation.]’ (Balzaga v. Fox News Network, LLC (2009) 173 Cal. App. 4th 1325, 1329,
fn. 3 (Balzaga).) To ensure that ‘participation [in matters of public significance] not be
chilled through abuse of the judicial process’ (§ 425.16, subd. (a)), the Legislature
established a presumption against the maintenance of litigation arising from any act ‘in
furtherance of the [defendant]’s right of petition or free speech under the United States
Constitution or the California Constitution in connection with a public issue’ (§ 425.16,
subd. (b)(1)).” (Summit Bank v. Rogers (2012) 206 Cal. App. 4th 669, 678, fn. 2
(Summit).)

                                             2
       On appeal, Storage contends the trial court erred to the extent it granted the anti-
SLAPP motion. Storage further argues the trial court’s order granting the special motion
to strike is “fatally flawed” because it does not actually grant or deny the motion as to
any of the causes of action. Based on its assertion of errors, Storage contends this court
is compelled to reverse the award of costs and fees to Club for prevailing on the anti-
SLAPP motion. Finally, Storage seeks its own attorney fees for opposing the motion.
       We conclude the order granting in part Club’s special motion to strike does not
comply with section 425.16’s requirement that the trial court identify which causes of
action are stricken and which may proceed to trial. Applying the two-part test for
reviewing anti-SLAPP motions, we conclude the motion should have been granted as to
the causes of action for intentional interference with contract and conspiracy to interfere
with contract. Both contract causes of action involve protected activity and Storage had
not demonstrated a probability of success on these two causes of action. However, the
motion should have been denied as to Storage’s cause of action for declaratory relief
because the request for declaratory relief does not involve protected activity. Because we
cannot ascertain the extent to which the trial court granted the special motion to strike, we
vacate the trial court’s order with directions to enter a new order: (1) granting the special
motion to strike the causes of action in the cross-complaint for intentional interference
with contract and conspiracy to interfere with contract; and (2) denying the motion as to
the cause of action for declaratory relief.
       We also vacate the award of attorney fees and costs to Club for bringing the anti-
SLAPP motion and direct the trial court to consider fees and costs in light of this court’s
instructions to grant in part the special motion to strike.

                                               3
                                     BACKGROUND
                                Club’s Operative Complaint
       In its third amended and supplemental complaint (the operative complaint)
plaintiff Club alleges it is entitled to lease payments from Storage as the intended third-
party beneficiary of a surface rights addendum to a 1997 lease agreement between
Storage and Energy. Club further alleges the surface rights addendum imposed noise
restrictions on the natural gas storage operations of Storage. Based on these allegations,
Club seeks damages for breach of contract as well as declaratory and injunctive relief
against defendant Storage.2
                                Storage’s Cross-Complaint
       Storage responded by filing a cross-complaint against Club and Energy. The
cross-complaint asserted causes of action against Club for: (1) intentional interference
with contract, (2) conspiracy to interfere with contract, and (3) for declaratory relief.
Each of these causes of action against Club expressly incorporated the allegations
concerning Club’s conduct in demanding lease payments from Storage, communicating
with Niska and its underwriters, and Club’s opposition before the CPUC to Storage’s
expansion plans.
       Storage’s cross-complaint asserted, “the Club, with the support and assistance of
Energy, has engaged in a willful and calculated effort to extract prospectively millions of
dollars from Storage which Storage has no obligation to pay to the Club by, among other
things, asserting non-existent contractual rights, disrupting Storage’s relationship with

2       Although Energy was named as an additional defendant after the trial court found
it to be an indispensible party, Club and Energy entered into an assignment and dismissal
agreement prior to the filing of Club’s operative complaint. Thus, the causes of action in
Club’s operative complaint do not seek damages or injunctive relief against Energy.

                                              4
Energy, asserting knowingly false and frivolous claims against Storage, directing and
instructing officers, directors and/or other agents of Energy to repudiate Energy’s
obligations to Storage, engaging in other conduct detrimental to the rights and interests of
Storage and otherwise acting in a hostile and threatening manner.”
       The cross-complaint further alleges: Under the terms of the 1997 lease agreement,
Club sold to Energy all of its rights and interests in the property for $821,000.3 In turn,
Storage acquired from Energy the subsurface rights to the property when the parties
executed a lease and a surface rights addendum to the lease. In pertinent part, the lease
between Storage and Energy stated, “[t]his Lease constitutes the entire agreement
between the parties pertaining to the subject matter contained herein and supersedes all
prior and contemporaneous agreements, representations and understandings of the parties
with respect to the subject matter hereof.” Based on this term, Storage alleges, “[t]here is
no language in the 1997 Lease or in the SRA [surface rights addendum] that grants the
Club any rights of any kind whatsoever, including any right to seek enforcement of any
obligations of the lessee contained in those documents. Similarly, there is no language in
the 1997 Lease or in the attached [surface rights addendum] that grants the Club any
rights as a third-party beneficiary of the agreement between Energy and Storage.
Accordingly, the Club has no legal basis upon which to obtain the relief it seeks in this
lawsuit.”

3      The operative complaint alleges the property was subject to earlier lease
agreements by entities preceding Energy, Storage, and Club. However, the agreements
preceding the 1997 lease and the subsequent surface rights addendum do not affect the
issues asserted by the parties in this appeal.

                                              5
                  Communications with Storage Demanding Lease Payments
       Storage further alleges that Club interfered with Storage’s rights under the surface
rights addendum by engaging in the following conduct: In December 2009, Dino
Cortopassi –- Club’s president –- wrote a letter to Niska. In that letter, Cortopassi
demanded that Storage engage in “direct discussion” of the “leasehold interests” claimed
by Club. Again, in January 2010, Cortopassi communicated to Niska that “Club intended
to go after Storage to get a significant deal similar to what Energy currently receives.” In
February 2010, Club demanded “satisfactory accommodation” with Storage in the form
of an annual payment “equal to ‘the greater of $250,000 or one percent (1%) of
(Storage’s) total Annual Gross Revenues.’ ” However, “Storage rejected the Club’s
unjustified demand.”
            Communications in Connection with Niska’s Public Offering of Stock.
       In February 2010, Niska filed a registration with the United States Securities and
Exchange Commission for a public offering of more than $350 million of company stock.
In April 2010, Cortopassi wrote to Niska’s chief executive officer and the attorneys for
the underwriters and the issuers of the public offering to inform them of Club’s legal
action against Storage. Storage alleges that Cortopassi’s letters “were calculated to
disrupt and interfere with Niska’s public offering by falsely stating and implying that
Storage did not have a legal right under its Lease with Energy to expand the storage
capacity of the Reservoirs” under the Butte County property. Storage further alleges the
“unprivileged conduct of [Cortopassi] and the Club in directing his April 19, 2010, letter
to persons involved in or impacted by the pending Niska public offering who had no
relationship with the Club was intended to impose additional improper pressure on
Storage to accede to the ongoing shakedown efforts for the Club.”

                                             6
           Communications in Connection with Storage’s Application to the CPUC
       Cortopassi’s April 2010 letter also announced Club was “ ‘in its final preparations
to file its opposition brief to Niska’s pending application with the [CPUC] in which
Storage sought CPUC approval to expand storage capacity of the Reservoirs as permitted
by its Lease with Energy.’ ” According to the cross-complaint, Club “did go forward
with its unjustified and baseless effort to oppose Storage’s CPUC application which
caused Storage to incur months of delay in obtaining approval of that application and
significant costs and expenses.”
       The cross-complaint also alleges that an assignment and dismissal agreement
between Energy and Club “ ‘will allow (the Club) to pursue (Storage) in any court action,
for breach of contract claims arising out of a breach of the [surface rights addendum].’ ”
Based on allegations of collusion between Energy and Club, the cross-complaint set forth
causes of action against Energy for breach of contract, breach of the implied covenant of
good faith and fair dealing, concealment, and declaratory relief.
                                Club’s Anti-SLAPP Motion
       Club moved to strike the cross-complaint pursuant to section 425.16. Club argued
the cross-complaint impermissibly sought to chill Club’s right to petition by targeting the
protected activities of (1) making pre-filing demands and participating in settlement
negotiations, (2) filing a lawsuit with probable cause of success, (3) providing
information to Niska’s chief executive officer and various attorneys representing the
underwriters, (4) participating in CPUC proceedings, and (5) accepting an assignment of
rights by a litigant. Club further argued Storage could not establish a probability of
succeeding on its causes of action because it could not show an intentional act to disrupt
the contractual relationship between Energy and Storage or that Club conspired to disrupt
the contractual relationship.

                                             7
       Storage opposed the anti-SLAPP motion, arguing the cross-complaint neither
implicated Club’s right to petition nor speech on any matter of “public concern.”
Moreover, Storage argued it was likely to succeed on proof that Club’s settlement
demands represented “bad faith tactics” and the evidence would show Club unlawfully
interfered with the lease agreement between Storage and Energy.
                            Order on the Anti-SLAPP Motion
       After a hearing, the trial court issued an order on the anti-SLAPP motion that
states in pertinent part: “The special motion to strike is granted as to any cause of action
that derives from pre-litigation communications, the filing of this lawsuit, participation in
the CPUC matter, or communications concerning the stock offering. The special motion
to strike is denied as to the other acts complained of, including the assignment of the
[surface rights addendum]. Leave to amend is denied. Since the special motion to strike
is granted in part, the Court will find that an award of attorney’s fees incurred is
appropriate and is to be brought by noticed motion.”
                     Storage’s Request for Clarification of the Order
       In response to the order on the anti-SLAPP motion, Storage moved to “request[]
that the Court clarify that portion of its Order filed in this matter on May 13, 2011 (the
‘Order’) regarding the Motion to Strike Storage’s Cross-Complaint . . . filed by [Club]
pursuant to . . . § 425.16 (the ‘Anti-SLAPP Motion’).” Storage stated, “The purpose of
this motion is to request that the Court provide clarification regarding the intended impact
of its Order on Storage’s Fourth, Fifth and Sixth Causes of Action: most significantly
Storage seeks clarification regarding which, if any, of Storage’s Causes of Action the
Court has ruled to be stricken and which remain extant; and as to those Causes of Action
that remain extant, which if any lines or paragraphs thereof are deemed stricken. [¶] . . .
[¶] It is the contention of Storage that none of the Causes of Action in its Cross-
Complaint ‘derive from’ the four categories of conduct identified in the Court’s Order.

                                              8
Presumably the Club takes a contradictory position. For this reason clarification by the
Court is necessary and appropriate. [¶] Simply stated, the provision for clarification by
the Court of the intended scope and extent of its Order will add certainty with respect to
the remaining scope and extent of Storage’s Cross-Complaint and will reduce the
likelihood of future disagreement among the parties regarding what matters are or are not
before this Court by virtue of the Cross-Complaint.”
       Club opposed the motion, asserting, “the court properly struck all causes of action
derived from the identified protected activities.” Finding nothing ambiguous about the
order, Club urged the trial court to deny the motion for clarification.
       At the hearing on the motion, the following colloquy occurred:
       “[Counsel for Storage]: . . . [I]n the Court’s order, it’s granting the motion as to
the causes of action that, quote, derive from pre-litigation correspondence. The Court
will note from both the cross-complaint, as well as the declaration of Simone [sic]
Dupéré that was filed in opposition to the motion that there is pre-litigation
correspondence, some of which has no reference whatsoever to litigation and some does
have reference to litigation. We’re seeking some clarification from the Court as to
whether or not it’s excluding all of that correspondence or only that correspondence
which references litigation?
       “THE COURT: Well, when we take a look at this –- at the SLAPP statute, it
seems to me that the whole statute points to causes of action, not legal allegations or
certain facts that may be part of a cause of action, and what you would like us to do is go
through and parse out, essentially, what applies under the broad umbrella of the statute
and what doesn’t apply and, therefore, it probably is irrelevant.”
       Before the hearing concluded, Storage’s counsel confirmed the trial court did not
intend to identify which causes of action were stricken under section 425.16.

                                              9
       “[Counsel for Storage]: Okay. Your Honor, based upon the Court’s intended
ruling, is it fair to assume that, then, the Court is not going to further clarify as to whether
or not specific causes of action are entirely stricken or just portions of them and, if
portions only, what portions are being stricken by its order?
       “THE COURT: That’s correct.”
       The hearing concluded with the trial court denying the motion for clarification.
                                        Attorney Fees
       Club moved for $31,725 in attorney fees and $903.13 for costs incurred in
bringing the anti-SLAPP motion. Storage opposed the motion, arguing, “Club filed this
Motion seeking recovery of all of its fees and costs” even though it had only partially
prevailed on the special motion to strike. The trial court awarded $24,500 in attorney
fees and costs as requested.
       Storage timely filed its notice of appeal from the orders granting the special
motion to strike and awarding attorney fees and costs.
                                        DISCUSSION
                                               I
                                         Anti-SLAPP
       Storage contends the trial court’s order must be reversed because it does not
identify which –- if any –- of the three causes of action in Storage’s cross-complaint
against Club that were stricken under section 425.16. We agree the trial court should
have identified which of Storage’s causes of action were stricken and which were not.
However, we disagree with Storage’s further argument that the anti-SLAPP motion
should have been denied in its entirety. As we explain, the cause of action for declaratory
relief survives scrutiny under section 425.16.

                                              10
                                                A.
                                         Section 425.16
         Section 425.16 sets forth the requirements for striking causes of action intended to
chill the rights of speech or petition. In pertinent part, the anti-SLAPP statute provides:
         “(b)(1) 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.
         “(2) In making its determination, the court shall consider the pleadings, and
supporting and opposing affidavits stating the facts upon which the liability or defense is
based.
         “(3) If the court determines that the plaintiff has established a probability that he
or she will prevail on the claim, neither that determination nor the fact of that
determination shall be admissible in evidence at any later stage of the case, or in any
subsequent action, and no burden of proof or degree of proof otherwise applicable shall
be affected by that determination in any later stage of the case or in any subsequent
proceeding.
         “(c)(1) Except as provided in paragraph (2), in any action subject to subdivision
(b), a prevailing defendant on a special motion to strike shall be entitled to recover his or
her attorney’s fees and costs. If the court finds that a 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. [¶] . . . [¶]
         “(e) As used in this section, ‘act in furtherance of a person’s right of petition or
free speech under the United States or California Constitution in connection with a public

                                                11
issue’ includes: (1) any written or oral statement or writing made before a legislative,
executive, or judicial proceeding, or any other official proceeding authorized by law,
(2) any written or oral statement or writing made in connection with an issue under
consideration or review by a legislative, executive, or judicial body, or any other official
proceeding authorized by law, (3) any written or oral statement or writing made in a place
open to the public or a public forum in connection with an issue of public interest, or
(4) any other conduct in furtherance of the exercise of the constitutional right of petition
or the constitutional right of free speech in connection with a public issue or an issue of
public interest.” (Italics added.)
       As the California Supreme Court has explained, “Section 425.16 posits . . . a two-
step process for determining whether an action is a SLAPP. First, the court decides
whether the defendant has made a threshold showing that the challenged cause of action
is one arising from protected activity. (§ 425.16, subd. (b)(1).) ‘A defendant meets this
burden by demonstrating that the act underlying the plaintiff’s cause fits one of the
categories spelled out in section 425.16, subdivision (e)’ (Braun v. Chronicle Publishing
Co. (1997) 52 Cal. App. 4th 1036, 1043). If the court finds that such a showing has been
made, it must then determine whether the plaintiff has demonstrated a probability of
prevailing on the claim. (§ 425.16, subd. (b)(1); see generally Equilon, supra, 29 Cal.4th
at p. 67.)” (Navellier v. Sletten (2002) 29 Cal. 4th 82, 88 (Navellier).) In short, “ ‘[o]nly
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.’ [Citation.]” (Thomas v. Quintero (2005) 126
Cal. App. 4th 635, 645, italics omitted.)
       An anti-SLAPP motion challenging a complaint premised on multiple causes of
action need not be granted or denied in its entirety. “[T]he fact the SLAPP motion [is]
properly denied as to some of [the] causes of action does not preclude granting the

                                              12
motion as to the remaining causes of action.” (ComputerXpress, Inc. v. Jackson (2001)
93 Cal. App. 4th 993, 1004 (ComputerXpress).) Thus, the trial court must assess the merit
of each cause of action challenged by a special motion to strike under section 425.16.
       In considering a special motion to strike, the trial court must determine whether
“ ‘the gravamen or principal thrust’ of the action” targets protected activity. (Episcopal
Church Cases (2009) 45 Cal. 4th 467, 477.) “Where . . . a cause of action is based on
both protected activity and unprotected activity, it is subject to section 425.16 ‘ “unless
the protected conduct is ‘merely incidental’ to the unprotected conduct.” ’ (Peregrine
Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP (2005) 133 Cal. App. 4th 658,
672 (Peregrine Funding) [first prong of SLAPP analysis met where the allegations of
loss resulting from protected activity were not merely incidental or collateral to
unprotected activity]; see Mann v. Quality Old Time Service, Inc. (2004) 120 Cal. App. 4th
90, 104 (Mann) [because the defendants’ reports to government agencies formed a
substantial part of the factual basis for defamation and trade libel claims, the claims were
subject to the SLAPP statute even though also based on nonprotected statements].)”
(Haight Ashbury Free Clinics, Inc. v. Happening House Ventures (2010) 184 Cal. App. 4th
1539, 1550-1551.) The corollary to the gravamen of the complaint test is that “a
defendant in an ordinary private dispute cannot take advantage of the anti-SLAPP statute
simply because the complaint contains some references to speech or petitioning activity
by the defendant. (See Paul v. Friedman [(2002)] 95 Cal.App.4th [853,] 866 [‘[t]he
statute does not accord anti-SLAPP protection to suits arising from any act having any
connection, however remote, with an official proceeding’].)” (Martinez v. Metabolife
Internat., Inc. (2003) 113 Cal. App. 4th 181, 188; accord Episcopal Church Cases, supra,
45 Cal.4th at p. 478.)
       In reviewing the trial court’s order on the special motion to strike, we exercise our
independent judgment. “Appellate review of a trial court’s ruling on an anti-SLAPP

                                             13
motion is de novo. (United States Fire Ins. Co. v. Sheppard, Mullin, Richter & Hampton
LLP (2009) 171 Cal. App. 4th 1617, 1625.) ‘ “Thus, [appellate] review is conducted in the
same manner as the trial court in considering an anti-SLAPP motion.” ’ (Paiva v.
Nichols (2008) 168 Cal. App. 4th 1007, 1016.)” (Summit, supra, 206 Cal.App.4th at
p. 681.)
                                               B.
                      The Trial Court’s Duties under Section 425.16
       Storage challenges the trial court’s order by arguing, “the anti-SLAPP statute does
not authorize the striking of an individual allegation from a cause of action, only the
striking of a cause of action in its entirety. . . . In ‘striking’ some allegations and not
‘striking’ others, the order ends up not striking any cause of action at all.” The
contention has merit.
       The trial court did not determine whether the gravamen of the three causes of
action in the cross-complaint against Club was focused on protected activity. The order
on the special motion to strike does not even identify the causes of action for intentional
interference with contract, conspiracy to interfere with contract, and declaratory relief. In
short, the trial court did not carry out its duty under section 425.16 to determine whether
Club met its burden to show the cross-complaint arose out of protected activity.
(Episcopal Church Cases, supra, 45 Cal.4th at p. 477.)
       The trial court’s error in failing to consider whether protected activity constitutes
the gravamen of Storage’s cross-complaint does not constitute error that is reversible per
se. Anti-SLAPP motions present questions of law that we review in the same way as the
trial court without the need to resolve conflicts in the evidence. (U.S. Fire Ins. Co. v.
Sheppard, Mullin, Richter & Hampton (2009) 171 Cal. App. 4th 1617, 1625.)
Consequently, “ ‘[t]he lack of a statement of reasons presents no harm where . . . our
independent review establishes the validity of the judgment.’ (Soto v. State of California

                                               14
(1997) 56 Cal. App. 4th 196, 199; see also Conley v. Matthes (1997) 56 Cal. App. 4th 1453,
1459–1460 [applying harmless error standard].)” (Santa Barbara Pistachio Ranch v.
Chowchilla Water Dist. (2001) 88 Cal. App. 4th 439, 449.) “If the trial court’s decision
denying an anti-SLAPP motion is correct on any theory applicable to the case, we may
affirm the order regardless of the correctness of the grounds on which the lower court
reached its conclusion.” (City of Alhambra v. D'Ausilio (2011) 193 Cal. App. 4th 1301,
1307.) Accordingly, we apply the two-part test for anti-SLAPP motions in order to
determine whether the causes of action in Storage’s cross-complaint should have been
stricken.
                                              C.

     Whether the Gravamen of the Cross-complaint Pertains to Protected Activity

            1. Causes of Action for Intentional Interference with Contract and for
                            Conspiracy to Interfere with Contract
       Upon examination of the cross-complaint, we conclude the gravamen of Storage’s
causes of action for intentional interference with contract and conspiracy to interfere with
contract pertain to protected activity. Specifically, these causes of action focused on
Club’s pre-filing demands, communications with Niska, and appearance before the
CPUC to oppose Storage’s application to increase its use of the reservoirs.
       First, the causes of action for interference with contract rested on Club’s pre-filing
demands and attempts to enter into settlement negotiations with Storage. Section 425.16,
subdivision (e), provides in part, an “ ‘act in furtherance of a person’s right of petition or
free speech under the United States or California Constitution in connection with a public
issue’ includes: (1) any written or oral statement or writing made before a legislative,
executive, or judicial proceeding, or any other official proceeding authorized by law,
(2) any written or oral statement or writing made in connection with an issue under

                                              15
consideration or review by a legislative, executive, or judicial body, or any other official
proceeding authorized by law . . . .” “Communications made in preparation for or in
anticipation of the bringing of an action or other official proceeding fall within the ambit
of these subdivisions. (Briggs v. Eden Council for Hope & Opportunity (1999) 19
Cal. 4th 1106, 1115 (Briggs ).)” (Salma v. Capon (2008) 161 Cal. App. 4th 1275, 1285,
italics added.) Storage’s own argument in the trial court in opposition to the anti-SLAPP
motion confirms these causes of action focused principally on protected activity. Storage
argued: “Cortopassi’s December 2009 and February 2010 letters reflect the Club’s bad
faith motivation, which is the gravamen of Storage’s Cross-Complaint.” (Italics added.)
       Second, the causes of action for interference with contract both reallege that Club
sent letters to the chief executive officer of Niska and the attorneys for the underwriters
and insurers who participated in the public stock offering. These letters were clearly
litigation related as they were accompanied by a copy of Club’s original complaint
against Storage and asserted the claim that “Storage did not have a legal right under its
Lease with Energy to expand the storage capacity of the reservoirs.” (Italics added.)
Published decisions have taken a “fairly expansive view of what constitutes litigation-
related activities within the scope of section 425.16.” (Kashian v. Harriman (2002) 98
Cal. App. 4th 892, 908.) The communications referenced by Storage in its cross-
complaint appear to have been directly related to the subject of this litigation, and subject
to section 425.16. (Ibid.; see also Briggs v. Eden Council for Hope & Opportunity (1999)
19 Cal. 4th 1106, 1115.)
       Third, the causes of action for interference with contract focus on Club’s
participation in proceedings before the CPUC to prevent Storage from increasing its use
of the underground reservoirs. Specifically, Storage emphasizes Club filed an
“opposition brief to Niska’s pending application with the [CPUC] in which Storage
sought approval to expand storage capacity of the Reservoirs as permitted by its Lease

                                             16
with Energy.” Club’s opposition to Storage’s application before the CPUC constituted
protected activity within the meaning of section 425.16. “[C]ommunications to an
official agency intended to induce the agency to initiate action are part of an ‘official
proceeding.’ ” (Lee v. Fick (2005) 135 Cal. App. 4th 89, 96, quoting Brody v. Montalbano
(1978) 87 Cal. App. 3d 725, 732.)
       However, we note the causes of action for interference with contract also rest on
allegations that Club induced a breach of contract between Storage and Energy. The
alleged breach of contract does not implicate protected activity as defined by section
425.16. For this conduct, “[t]he liability theory is the loss . . . allegedly caused by breach
of contract . . . , rather than damages caused by any protected activity involving speech or
petitioning the government.” (Wang v. Wal-Mart Real Estate Business Trust (2007) 153
Cal. App. 4th 790, 809 (Wang).)
       Thus, Storage’s causes of action for interference with contract incorporate
allegations regarding protected and nonprotected activities by Club. The trial court
recognized as much when it indicated the anti-SLAPP was granted to the extent the cross-
complaint was based on protected activity and denied insofar as it pertained to
nonprotected activity. However, the finding that the cross-complaint was based on
allegations pertaining to protected and nonprotected activities should not have marked the
end of the trial court’s analysis. “It is well-established that a plaintiff will not avoid the
application of the anti-SLAPP statute by disguising the pleading as a ‘garden variety’ tort
claim if the basis of the alleged liability is predicated on protected speech or conduct.
(Navellier, supra, 29 Cal. 4th 82, 90–92.) Thus, ‘a plaintiff cannot frustrate the purposes
of the SLAPP statute through a pleading tactic of combining allegations of protected and
nonprotected activity under the label of one “cause of action.” ’ (Fox Searchlight
Pictures, Inc. v. Paladino (2001) 89 Cal. App. 4th 294, 308.)” (Wang, supra, 153

                                              17
Cal.App.4th at pp. 801-802.) If the gravamen of the complaint pertains to protected
activity, the special motion to strike under section 425.16 is properly granted. (Ibid.)
       The allegations concerning the protected activities by Club constitute the bulk of
the focus of the cross-complaint and are the gravamen of Storage’s causes of action for
interference with contract. These causes of action seek damages for activities by Club,
most of which are protected activity.
                        2. Cause of Action for Declaratory Relief
       In contrast to Storage’s causes of action for interference with the contract, its
cause of action for declaratory relief focuses on a declaration of Club’s rights under the
surface rights addendum. Specifically, Storage seeks an adjudication of whether Club is
an intended third-party beneficiary of the surface rights addendum, Club may sue to
enforce any provision in the 1997 lease or the surface rights addendum, Club could
receive rights under the surface rights addendum by assignment, and whether the conduct
of Energy and Storage during the period between 1998 and 2009 informed Storage’s
rights to conduct its operations.
       Both Club’s and Storage’s pleadings demonstrate an actual and present
controversy regarding the extent of Club’s rights -– if any -– under the surface rights
addendum and the assignment of rights from Energy to Club. The question of whether
Club has standing or may seek to enjoin Storage to abate its noise and operations is
largely informed by whether it is an intended third-party beneficiary of the surface rights
addendum. The parties’ competing claims focus on the language of the surface rights
addendum, which states, with certain exceptions, “no operations of any nature shall be
allowed . . . which shall cause any noise, smoke, water vapor, or result in the construction
of any structures, during a period commencing thirty (30) days prior to the opening of the
annual Water Fowl Hunting Season . . . , and ending thirty (30) days after the closing
thereof, (the ‘Restricted Period’); excepting that the normal operation of meters,

                                             18
pipelines, wellheads, water pumps, separators, tanks and other similar equipment, as
required for routine gas storage operations, shall be allowed during the Restricted
Period.” The surface rights addendum further provides, “It is hereby acknowledged that
the primary use of the surface of the Leased Premises is and shall be the hunting of water
fowl. Prior to commencing any operations on the Operations Site . . . Lessee shall
prepare a landscaping plan (‘Plan’) for said Operations Site. . . . Said Plan shall provide,
among other things, for the construction of a berm surrounding the Operations Site, of
sufficient height (but not less than three feet (3’)) to conceal well heads and equipment.
The berm shall be planted on its external side with native growth selected to grow to a
maximum height, and having as its purpose maximum concealment and camouflage of
the Operations Site, and noise suppression.” These issues do not implicate protected
activity.
       The focus on the extent of Club’s rights under the surface rights addendum and the
validity of the assignment by Energy does not implicate or chill Club’s right of petition.
Significantly, Club itself seeks declaratory relief as to the same issues in its operative
complaint. Club’s complaint claimed that Energy executed a valid assignment of its
leasehold rights under the surface rights addendum to Club, Club was an intended third-
party beneficiary of the surface rights addendum, and Club had standing to enforce the
provisions of the surface rights addendum to enforce noise restrictions against Storage.
       The reciprocal nature of the relief requested by Storage and Club indicates the
cause of action for declaratory relief survives under section 425.16. (See generally City
of Alhambra v. D'Ausilio, supra, 193 Cal.App.4th at pp. 1307-1308 [declaratory relief
cause of action not held to be subject to section 425.16 where it mirrored “nearly
identical relief” requested by opposing party and did not focus on protected activity]; see
also City of Cotati v. Cashman (2002) 29 Cal. 4th 69, 79 [holding City’s declaratory relief
cause of action was not subject to being stricken under section 425.16 because it sought

                                              19
determination of validity of ordinance rather than to chill right of petition].) Because the
request for declaratory relief does not implicate protected activity, the anti-SLAPP
motion should have been denied as to this cause of action.
                                             D.
      Probability of Success for the Interference with Contract Causes of Action
       Having determined the gravamen of Storage’s causes of action for interference
with contract arise out of protected activity, we must consider whether Storage
demonstrated these causes of action have a probability of success. To establish a
probability of prevailing on a cause of action, “ ‘the plaintiff “must demonstrate that the
complaint is both legally sufficient and supported by a sufficient prima facie showing of
facts to sustain a favorable judgment if the evidence submitted by the plaintiff is
credited.” ’ ” (Navellier, supra, 29 Cal.4th at pp. 88–89, quoting Wilson v. Parker,
Covert & Chidester (2002) 28 Cal. 4th 811, 821.) In applying the second step of the anti-
SLAPP test, we examine “ ‘the pleadings and supporting and opposing affidavits stating
the facts upon which the liability or defense is based.’ (§ 425.16, subd. (b).) Looking at
those affidavits, ‘[w]e do not weigh credibility, nor do we evaluate the weight of the
evidence. Instead, we accept as true all evidence favorable to the plaintiff and assess the
defendant’s evidence only to determine if it defeats the plaintiff's submission as a matter
of law.’ (Overstock.com, Inc. v. Gradient Analytics, Inc. (2007) 151 Cal. App. 4th 688,
699–700.) [¶] . . . [¶] In the words of the Supreme Court, plaintiff needs to show only a
‘minimum level of legal sufficiency and triability.’ (Linder v. Thrifty Oil Co. (2000) 23
Cal. 4th 429, 438, fn. 5.) In the words of other courts, plaintiff needs to show only a case
of ‘minimal merit.’ (See Peregrine Funding, Inc. v. Sheppard Mullin Richter &
Hampton LLP (2005) 133 Cal. App. 4th 658, 675, quoting Navellier v. Sletten (2002) 29
Cal. 4th 82, 95.)” (Grewal v. Jammu (2011) 191 Cal. App. 4th 977, 989.)

                                             20
       In support of its opposition to the anti-SLAPP motion, Storage introduced
declarations by (1) Storage’s counsel, Thomas Sanford, that recounted Club’s opposition
to an increase in Storage’s use of the reservoirs and that authenticated the attached
surface rights addendum between Energy and Storage, and (2) by Niska’s chief executive
officer, Simon Dupéré. The Dupéré declaration tracked Storage’s theory of the case by
stating: “This litigation has disrupted Storage’s contractual relationship with Energy, in
that Energy has attempted to partially assign the Lease to the Club in an effort to bestow
standing on the Club so that it can sue Storage.” The Dupéré declaration acknowledged
“[t]he current litigation is very different from the substances of [Cortopassi]’s letters to
me, since the current litigation only addresses alleged noise violations and does not seek
‘reformation’ of the Lease to include a limit on the size of the reservoirs we lease from
Energy.”
       Notably, neither the declarations nor their attachments introduced by Storage
contains any assertion that the 1997 lease or surface rights addendum disallowed Energy
from assigning its rights under the addendum. Also, the declarations do not assert
Storage’s use of the reservoirs under the property was actually disrupted by Club’s claims
as a third-party beneficiary of the 1997 lease and surface rights addendum. Instead, the
declarations show Storage believed it had been harmed by the very fact of having to
respond to Club’s communications and defend against Club’s opposition before the
CPUC and in court. The Dupéré declaration claims its “rights and reasonable
expectations under the Lease have . . . been disrupted because Storage has had to expend
considerable time, energy and money to defend this lawsuit as well as defend against the
Club’s opposition to Storage’s application for expansion of its facility before [the
CPUC].”
       As we have noted, Storage’s causes of action for interference with contract are
founded on (1) pre-filing demands, (2) communicating about Club’s third-party

                                              21
beneficiary rights under the surface rights addendum, (3) proceedings before the CPUC,
and (4) Energy’s assignment of leasehold interests to Club.
       The first two categories of conduct by Club were protected by the litigation
privilege set forth in Civil Code section 47.4 As the California Supreme Court has
explained, “ ‘The principal purpose of [Civil Code] section 47[, subdivision (b),] is to
afford litigants and witnesses [citation] the utmost freedom of access to the courts
without fear of being harassed subsequently by derivative tort actions.’ (Silberg v.
Anderson (1990) 50 Cal. 3d 205, 213.) Additionally, the privilege promotes effective
judicial proceedings by encouraging ‘ “open channels of communication and the
presentation of evidence” ’ without the external threat of liability (ibid.), and ‘by
encouraging attorneys to zealously protect their clients’ interests.’ (Id. at p. 214.)
‘Finally, in immunizing participants from liability for torts arising from communications
made during judicial proceedings, the law places upon litigants the burden of exposing
during trial the bias of witnesses and the falsity of evidence, thereby enhancing the
finality of judgments and avoiding an unending roundelay of litigation, an evil far worse
than an occasional unfair result.’ (Ibid.) [¶] To accomplish these objectives, the
privilege is ‘an “absolute” privilege, and it bars all tort causes of action except a claim of
malicious prosecution.’ (Hagberg v. California Federal Bank (2004) 32 Cal. 4th 350,
360.)” (Flatley v. Mauro (2006) 39 Cal. 4th 299, 321-322.) Clearly, Storage’s cross-
complaint does not allege malicious prosecution.

4Civil Code section 47, subdivision (b), states in relevant part: “A privileged publication
or broadcast is one made: [¶] . . . [¶] (b) In any (1) legislative proceeding, (2) judicial
proceeding, (3) in any other official proceeding authorized by law, or (4) in the initiation
or course of any other proceeding authorized by law and reviewable pursuant to
Chapter 2 (commencing with Section 1084) of Title 1 of Part 3 of the Code of Civil
Procedure.”

                                              22
       Moreover, a review of Club’s pre-filing demands, settlement negotiations, and
operative complaint shows assertions of legal rights rather than intentional disruption of
the contractual relationship between Storage and Energy. Indeed, Club’s demands for
payment and noise abatement as a third-party beneficiary of the lease agreement did not
seek to disrupt that agreement. To the contrary, Club’s assertion of rights as a third-party
beneficiary sought to enforce rather than invalidate the lease agreement. (Cf. Shell v.
Schmidt (1954) 126 Cal. App. 2d 279, 290 [discussing circumstances under which third-
party beneficiary may sue on contract].)
       The third category of conduct in the interference with contract causes of action,
i.e., Club’s opposition before the CPUC to Storage’s expanded use of the reservoirs, also
did not undermine the validity of the lease.5 This category of Club’s communications is
protected by the litigation privilege. (Civ. Code, § 47.) Club filed a protest with the
CPUC that provided, in pertinent part: “In an action presently pending in the Butte
County Superior Court, entitled Wild Goose Club, Inc. vs. Wild Goose Storage, LLC, et
al. (Case No. 149934) (the ‘Wild Goose Lawsuit’), [Club] alleges, among other things,
that [Storage] has breached the environmental restrictions in the surface rights lease
under which it purports to operate the 8.5 acre Well Pad Site, and that [Storage] is not
entitled to expand its operations on the Well Pad Site to accommodate the proposed
increase in its storage operations from 29 bcf to 49 bcf. A true copy of the complaint
filed in the Wild Goose Lawsuit is attached as Exhibit A.” The remainder of Club’s
protest reiterated the allegations set forth in the operative complaint. Club’s
communication with the CPUC was directly related to its claims in the lawsuit and sought
to hold Storage to the terms of the 1997 lease and surface rights addendum.

5 The CPUC approved Niska’s application to expand the storage capacity of the
reservoirs.

                                             23
Consequently, Club’s protest is protected by the litigation privilege and not subject to the
tort causes of action brought in Storage’s cross-complaint. (Flatley v. Mauro, supra, 39
Cal.4th at pp. 321-322 [litigation privilege applies to statements communicating demands
made in underlying lawsuit].) In addition, Club’s protest does not seek to disrupt the
contractual relationship between Storage and Energy.
       The final category of conduct alleged by Storage to have been wrongful was
Club’s receipt of an assignment of rights under the surface rights addendum from Energy.
Storage’s cross-complaint and arguments in opposition to the anti-SLAPP motion rest on
the assumption that Club interfered with the contractual relationship by securing the
assignment of rights from Energy. However, it is well established that “[t]he law
generally favors free alienability of property, and California follows the common law rule
that a leasehold interest is freely alienable. (See Kassan v. Stout (1973) 9 Cal. 3d 39, 43;
49 Am.Jur.2d, Landlord and Tenant, § 398 (1980).)” (Kendall v. Ernest Pestana, Inc.
(1985) 40 Cal. 3d 488, 494.) Granted, restriction on the alienability of leasehold interests
is not wholly prohibited. (Ibid.) However, the “common law’s hostility toward restraints
on alienation has caused such restraints on leasehold interests to be strictly construed
against the lessor.” (Ibid.) Thus, even in cases in which a lease has a term prohibiting
assignment except by prior consent of the lessor, “such consent may be withheld only
where the lessor has a commercially reasonable objection to the assignment, even in the
absence of a provision in the lease stating that consent to assignment will not be
unreasonably withheld.” (Id. at p. 496.)
       Storage’s cross-complaint and declarations in support of its opposition to the anti-
SLAPP motion do not allege or identify any purported restriction on leasehold rights in
the 1997 lease or the surface rights addendum. And, Storage offers no authority in
support of the proposition Club or Energy could act tortiously in assigning rights under
the surface rights addendum. Thus, Storage’s allegations about Club’s wrongful motive

                                             24
in seeking a partial assignment of the leasehold rights do not affect Energy’s assignment
of leasehold interests to Club.
       In sum, the cross-complaint’s causes of action for interference with contract do not
have sufficient merit to avoid being stricken under section 425.16. Accordingly, we
conclude the anti-SLAPP motion should have been granted as to Storage’s causes of
action for interference with contract and conspiracy to interfere with contract.
                                              II
                                       Attorney Fees
       Storage challenges the award of attorney fees to Club after the trial court granted
the anti-SLAPP motion in part. The determination of which party prevailed on an anti-
SLAPP motion lies within the discretion of the trial court. (Mann v. Quality Old Time
Service, Inc. (2006) 139 Cal. App. 4th 328, 340.) Here, the trial court awarded fees based
on an order we vacate because we cannot ascertain the extent to which it granted or
denied the special motion to strike. In effect, our conclusion that the trial court erred in
ruling on the anti-SLAPP motion compels us to vacate the fees awarded under section
425.16. (See Panakosta Partners, LP v. Hammer Lane Management, LLC (2011) 199
Cal. App. 4th 612, 639.)
                                      DISPOSITION
       The order granting in part and denying in part the anti-SLAPP motion and the
order awarding attorney fees to Wild Goose Club, Inc., for bringing the anti-SLAPP
motion are vacated. On remand, the trial court shall enter a new order (1) granting the
special motion to strike as to the causes of action for intentional interference with
contract and conspiracy to interfere with contract, and (2) denying the motion as to the
cause of action for declaratory relief. The trial court shall also consider the extent to
which any of the parties may recover attorney fees and costs for bringing or defending

                                              25
against the special motion to strike. Wild Goose Club, Inc., shall recover costs on appeal.
(Cal. Rules of Court, rule 8.278(a)(1) & (2).)

                                                     HOCH             , J.

We concur:

      NICHOLSON               , Acting P. J.

           BUTZ               , J.

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