Rong-Sheng, Inc. v. Yang

Filed 3/13/07 Rong-Sheng, Inc. v. Yang CA2/8

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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 EIGHT

APPEAL from an order of the Superior Court of Los Angeles County, Abraham Khan, Judge. Affirmed.

Frank Carleo for Cross-defendant and Appellant.

Law Offices of John J. Ma and John Jingsheng Ma for Cross-complainant and Respondent.

* * * * * *

Shin P. Yang (appellant), an attorney who filed the instant suit for wrongful eviction of his clients against a motel owner, appeals from the trial courts order denying his special motion to strike a cross-complaint brought by the motel owner against him that appellant claims is a strategic lawsuit against public participation (SLAPP). (See Code Civ. Proc., 425.16.)^[1] We conclude the trial court did not err in denying the motion to strike. Appellants representations and promises to the motel owner regarding payment of his clients back rent were not made in furtherance of appellants constitutional right of petition and free speech. We affirm.

FACTS AND PROCEDURAL HISTORY

1. The Complaint

Appellant filed this action on behalf of his clients, Jin Gang Zhao (Zhao) and Lai Shun Li (Li), against respondent Rong Sheng, Inc., doing business as Win All E-Z Inn (the motel or Rong Sheng), on December 20, 2005.^[2] The complaint asserted claims for denial of tenants access to rental premises, forcible entry and forcible detainer, intentional infliction of emotional distress and conversion.

The complaint alleged as follows. Zhao leased a room from Rong Sheng from May 11, 2000, to December 10, 2005, based on a written agreement. The agreement provided that Zhao (a physically impaired person) and Li (Zhaos relative and live-in attendant) could stay at the motel until Zhao received a workers compensation recovery and, in exchange, Zhao would grant Rong Sheng and Ying a secured lien and priority over all other liens and claims.^[3] In November 2005, Rong Sheng employees pounded on Zhaos door, harassed him and yelled in his face in an attempt to drive him out of the unit, as a result of which Zhao fell and hurt himself. In December 2005, Rong Sheng changed the lock on the room Zhao and Li were occupying to prevent their entry. Zhao became ill and required emergency medical treatment. Rong Sheng prevented Zhao and Li from retrieving their personal property, and Zhao became homeless.

2. The Cross-complaint

In March 2006, Rong Sheng filed a cross-complaint against Zhao, Li and appellant. The cross-complaint asserted causes of action for breach of contract against Zhao, common count for services rendered against Zhao and Li, fraud and negligent misrepresentation against Zhao and appellant, liability arising from a guarantee against appellant, and breach of oral contract against appellant.

Rong Sheng alleged that Zhao checked into the motel in May 2000. Initially, he was a week-by-week tenant. Later, he became a month-by-month tenant. He originally agreed to pay monthly rent of $435, which was later adjusted to $470. Zhao failed to pay his rent as agreed.

Rong Sheng asked Zhao to move out voluntarily or be subject to eviction. Zhao told Rong Sheng he had been injured while working for an Ohio restaurant and his attorney was claiming a workers compensation insurance payment on his behalf which would be approved within five to six months. Zhao stated he could not work because of his immigration status, had no income and had no relatives or friends in Los Angeles who could help. Zhao promised to use his workers compensation recovery to pay off the rents owed the motel. In reliance on Zhaos statements, Rong Sheng allowed Zhao to stay on at the motel as a month-by-month tenant. At intervals, Rong Sheng would demand past due rents and Zhao would assure Rong Sheng his workers compensation recovery would soon be finalized. Zhao signed several promissory notes promising to pay the back rent as soon as he received his recovery.

In October 2003, Rong Sheng again asked Zhao to voluntarily move out or be subject to eviction. Zhao informed Rong Sheng that he had hired appellant to be his new attorney and appellant had assured Zhao his injury warranted a higher recovery than that offered.

Rong Sheng contacted appellant about the status of Zhaos claim. Appellant told Rong Sheng that Zhaos claim warranted at least a half million dollar recovery and the claim would be settled in the next six months. Appellant promised that if Rong Sheng would continue to allow Zhao to stay at the motel, appellant would pay all of Zhaos past due rent from the recovery. To assure Rong Sheng it would receive the rents, appellant instructed Rong Sheng to prepare a promissory note for Zhaos signature and to submit the signed document to appellant so that it would have priority for payment from Zhaos recovery.

On many subsequent occasions, Zhao and appellant promised Rong Sheng that Zhaos claim would be awarded soon. Appellant periodically instructed Zhao to sign a new promissory note and Rong Sheng continued to allow Zhao to remain as a tenant. By the time Zhao signed the last promissory note, in October 2005, Zhao owed Rong Sheng $28,600 in unpaid rents.

Rong Sheng alleged that it would not have agreed to allow Zhao to continue staying at the motel had not appellant promised and assured Rong Sheng he would recover the workers compensation money for Zhao.

In truth, Zhaos workers compensation claim allegedly was no longer a valid and enforceable claim. Appellant and Zhao were aware of this fact but concealed it from Rong Sheng to allow Zhao to live at the motel for free. In October 2005, Zhao confessed to Rong Sheng that he did not know of any progress and did not expect to recover anything from his claim. Although Zhao gave Rong Sheng written notice that he would terminate his tenancy, Zhao became a holdover tenant and finally vacated his room in December 2005.

Rong Sheng alleged that appellant conspired with Zhao to conceal the truth from it, so that Zhao could stay in the United States for as long as he could.

3. Special Motion To Strike

Appellant filed a special motion to strike the causes of action against him in the cross-complaint as a SLAPP on the ground the claims were based on statements of writings made before a judicial proceeding.

In support of the motion to strike, appellant offered his declaration stating that he first met Zhao in the summer of 2002 and that Zhao had requested his help in securing compensation for a 1999 fall while working for a Chinese restaurant in Ohio. Appellant agreed to represent Zhao and associated a workers compensation attorney to represent Zhao in the workers compensation proceeding. Appellant declared he told Rong Sheng that Zhaos injuries were serious but Zhaos case was difficult because the Ohio workers compensation bureau had already closed the case and it was hard to have the case reopened. Appellant denied promising Rong Sheng that Zhao would recover a big workers compensation award. Appellant declared he had never discussed Zhaos workers compensation claim with Rong Sheng or any other third party because Zhaos claim was confidential information.

The trial court denied appellants special motion to strike. The court found the cross-complaint did not allege claims against appellant arising from an act in furtherance of appellants right of petition or free speech. Finding the motion was frivolous, the court awarded sanctions of $1,000 against appellant and his attorney. The court issued a written order denying the motion to strike on June 6, 2006, and Rong Sheng gave written notice of entry of the order on June 9, 2006.

Appellant meanwhile had moved for reconsideration or, alternatively, a new trial on May 30, 2006. ( 1008, subd. (a).) Appellant asserted he had new and different facts by way of claimed documentation showing the ongoing and continued adjudication of Zhaos Ohio workers compensation claim. The court heard the motion for reconsideration on July 10, 2006. The court denied the motion but modified its prior order to delete sanctions, finding there was some good faith in appellants bringing the motion to strike. Appellant did not waive notice of the order but volunteered to give notice. Appellant thereafter served a document entitled notice of ruling on the same day, July 10, 2006.^[4]

On August 11, 2006, appellant filed a notice of appeal of the courts order denying his special motion to strike.

DISCUSSION

1. The Appeal Is Timely

Rong Sheng contends the appeal is untimely because the time to appeal was not extended by appellants motion for reconsideration. We disagree.

Former rule 3(d) provided that [i]f any party serves and files a valid motion to reconsider an appealable order under . . . section 1008, subdivision (a), the time to appeal from that order is extended . . . until the earliest of: [] (1) 30 days after the superior court clerk mails, or a party serves, an order denying the motion or a notice of entry of that order; [] (2) 90 days after the first motion to reconsider is filed; or [] (3) 180 days after entry of the appealable order.

Rong Sheng does not dispute that appellant timely filed his motion for reconsideration. Rather, it argues that former rule 3(d) did not extend appellants time to appeal because the motion for reconsideration was totally baseless. However, the 2002 Advisory Committee comment to former rule 3 explains that [a]s used in these provisions, the word valid means only that the motion . . . complies with all procedural requirements; it does not mean that the motion . . . must also be substantively meritorious. (Advisory Com. com., 23 Pt. 1 Wests Ann. Rules of Court (2005 ed.) foll. former rule 3, p. 99.) A timely brought reconsideration motion extends the time to appeal from an appealable order for which reconsideration was sought even if the trial court ultimately determines the motion was not based upon new or different facts, circumstances, or law, as subdivision (a) of section 1008 requires. (Ibid.) Although substantively unmeritorious, therefore, the motion for reconsideration served to extend appellants time to appeal under former rule 3(d).

Rong Sheng asserts that the issue at bar is whether a party may use a self-serving notice of court rulings to extend the deadline for appeal. The essential issue is not whether the notice was self-serving but whether the notice of ruling triggered the time to appeal at all. We conclude it did not.

Former rule 3(d) allows the appeal period to be extended until the earliest of (1) 30 days after the clerk or a party serves either an order denying the motion for reconsideration or a notice of entry of that order, (2) 90 days after the first motion to reconsider is filed or (3) 180 days after entry of the appealable order. If an order denying reconsideration is deemed to have been entered on July 10, 2006, and a notice of entry of such an order given by service of the notice of ruling, appellants appeal would be untimely since appellant did not file his notice of appeal until 32 days afterwards, on August 11, 2006. Even were it assumed that an order denying reconsideration was entered on the date of the hearing,^[5]appellants service of notice of ruling did not trigger the 30 day period under former rule 3(d)(1) because the document was not titled a notice of entry, nor was a copy of the courts minute order attached to the notice indicating the order had been entered. (See Cuenllas v. VRL International, Ltd. (2001) 92 Cal.App.4th 1050, 1054.) The 30-day period under former rule 3(d)(1) accordingly did not begin to run.

The notice of appeal filed on August 11, 2006, was well within the other time periods specified in former rule 3(d). Appellants motion for reconsideration was filed on May 30, 2006, and the 90th day after that date fell on August 28, 2006. The order denying the special motion to strike was entered on June 6, 2006, and the 180th day after such entry fell on December 3, 2006.

The appeal is therefore timely.

2. Appellants Alleged Conduct Was Not a Protected Activity Under Section 425.16

Appellant contends that the trial court erred in denying his special motion to strike because his actions as an attorney for Zhao and Li was a protected activity under section 425.16.

Section 425.16 provides that [a] cause of action against a person arising from any act of that person in furtherance of the persons right of petition or free speech under the United States or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim. ( 425.16, subd. (b)(1).) An act in furtherance of a persons constitutional right of petition or free speech includes any written or oral statement or writing made before a . . . judicial proceeding or any written or oral statement or writing made in connection with an issue under consideration or review by a . . . judicial body, or any other official proceeding authorized by law. (Id., subd. (e).)

In assessing whether a special motion to strike should be granted, the court engages in a two-step process: First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. . . . If the court finds such a showing has been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim. (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) In making that determination, the court shall consider the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based. ( 425.16, subd. (b)(2).)

An appellate court reviews the trial courts rulings on a special motion to strike independently on a de novo standard of review. (Kajima Engineering & Construction, Inc. v. City of Los Angeles (2002) 95 Cal.App.4th 921, 929; see Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1055.)

Examining the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based, we conclude Rong Shengs cross-complaint does not arise from appellants activity in furtherance of his constitutional rights of speech or petition. Appellant allegedly represented to Rong Sheng that Zhao had a valid workers compensation claim and could recover sufficient money to pay his room rents. He purportedly assured and promised Rong Sheng that he could recover [a] substantial amount of compensation[] for Zhao within a short period of time and that he would personally make sure that Rong Shengs rental claim would be paid off as a priority debt from Zhaos recovery money. The fundamental basis for the cross-complaint was not appellants filing of a lawsuit on Zhao and Lis behalf or representation of Zhao with respect to his workers compensation claim. The fundamental basis for the cross-complaint against appellant was his alleged fraud and misrepresentation.

Appellants alleged assurances to Rong Sheng that Zhao would soon have a substantial recovery and that appellant would personally make sure that Rong Shengs rental claim would be paid off was not a statement made before a . . . judicial proceeding. Nor was the statement made in connection with an issue under consideration or review by a . . . judicial body. The issue pending before the Ohio workers compensation bureau was whether Zhao suffered a work injury and whether Zhao was entitled to obtain compensation for such injury, not whether and when Zhao would or could pay his back rent. The issue pending before the trial court below was whether Rong Sheng unlawfully or improperly evicted Zhao and Li from their motel room and whether appellant made promises and inducements to Rong Sheng to induce it to allow Zhao and Li to remain at the motel.

Not all of appellants efforts on Zhao or Lis behalf constituted a protected activity simply because a workers compensation proceeding or lawsuit was then pending. [T]he mere fact an action was filed after protected activity took place does not mean it arose from that activity. (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 76-77.) The moving party has the obligation to demonstrate the substance of a plaintiffs cause of action was an act in furtherance of the right of petition or free speech. (Id. at p. 78; Jespersen v. Zubiate-Beauchamp (2003) 114 Cal.App.4th 624, 630; see Kurwa v. Harrington, Foxx, Dubrow & Canter (2007) 146 Cal.App.4th 841, 849.) Appellant failed to make this showing. Accordingly, the cross-complaint does not arise from any act of appellant in furtherance of his constitutional right of petition or free speech and is not subject to a special motion to strike.

Appellant argues that the cross-complaint is just an improper attempt brought primarily against Zhao and Li and their attorney . . . to chill the valid exercise of their constitutional rights of petition by Zhao and Li for a redress of their grievances. He further asserts that the cross-complaint is aimed squarely at [appellant] to penalize him for his past and existing work on behalf of his clients Zhao and Li. A plaintiffs (or cross-complainants) subjective intent in bringing an action, however, is irrelevant in determining whether the action constitutes a SLAPP. (See City of Cotati v. Cashman, supra, 29 Cal.4th at pp. 74, 78.) In any case, Rong Shengs causes of action allegedly are based on appellants independent promises and assurances made well before Zhao or Li brought the present suit.

Appellant further asserts that all of his alleged conduct was absolutely privileged as a publication made in a judicial proceeding under Civil Code section 47, subdivision (b). As our Supreme Court has explained, the litigation privilege codified in section 47, subdivision (b) applies to:  any publication required or permitted by law in the course of a judicial proceeding to achieve the objects of the litigation, even though the publication is made outside the courtroom and no function of the court or its officers is involved. [Citations.] [] The usual formulation is that the privilege applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action. [Citations.]  (Rusheen v. Cohen, supra, 37 Cal.4th at p. 1057, quoting Silberg v. Anderson (1990) 50 Cal.3d 205, 212.) Appellants statements to Rong Sheng do not meet this standard. His alleged statements and promises were not made in the course of a judicial proceeding and they were not made to achieve the objects of the litigation. Appellants statements and promises to Rong Sheng resulted in Zhao and Lis continuing to have a place to live while Zhao litigated his workers compensation claim, not to achieve the purposes of the claim itself. Those statements and promises were also made years before Zhao and Li filed the present action and thus could neither have been made in this legal proceeding or to achieve its purposes.^[6]

DISPOSITION

The judgment is affirmed. Rong Sheng is to recover its costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

FLIER, J.

We concur:

COOPER, P. J.

BOLAND, J.

Publication courtesy of San Diego pro bono legal advice.

Analysis and review provided by Poway Property line Lawyers.

^[1] All further section references are to the Code of Civil Procedure unless indicated otherwise.

^[2] The complaint also named Rong Shengs manager, Roy C. Ying (Ying), as a defendant.

^[3] Although a copy of the rental agreement was attached to the complaint as an exhibit, appellants appendix does not include the exhibit.

^[4] Because the parties did not include any minute orders in the record, we are unable to determine whether the courts minute order for July 10, 2006, expressly directed that a formal order regarding the motion be prepared, signed and filed thus triggering a later date of entry. (See Cal. Rules of Court, former rule 2(d)(2).) The Rules of Court have been reorganized and renumbered effective January 1, 2007. All further rule references are to the former Rules of Court.

^[5] Significantly, the court did not sign or file a formal order regarding the motion for reconsideration until September 7, 2006, a date well after the notice of appeal was filed.

^[6] Rong Sheng requests that this court award attorney fees as sanctions against appellant and his law office for bringing a frivolous special motion to strike and for filing a frivolous appeal. Rong Sheng has not cross-appealed from the denial of sanctions in the trial court and thus has failed to preserve this issue for appeal. Although this court has power to impose sanctions for a frivolous appeal, Rong Sheng failed to comply with appropriate procedure for the award of such sanctions. (See former rule 27(e)(2).)