Witt v. Landis

Filed 6/20/07 Witt v. Landis CA6

NOT TO BE PUBLISHED IN OFFICIAL REPORTS

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SIXTH APPELLATE DISTRICT

Appellant Steven C. Witt (Witt) was employed by Firsthand Capital Management, Inc. (Firsthand), a San Jose-based investment management company that provided investment advice to certain mutual funds. The president, chief executive officer, and majority shareholder of Firsthand is respondent Kevin M. Landis (Landis). Witt was terminated in April 2003 after seven years of employment with Firsthand. Shortly before his termination, he and Landis entered into a one-page agreement (drafted by Witt and his attorney-wife) entitled Privacy Agreement that is the subject of the instant appeal.

Witt brought a wrongful termination suit against Firsthand and Landis in August 2003. In the second amended complaint, Witt asserted a claim for breach of the Privacy Agreement. Landis in turn filed a cross-complaint against Witt for breach of the same agreement. Witt moved to strike the cross-complaint under the anti-SLAPP (strategic lawsuits against public participation) statute, Code of Civil Procedure section 425.16.[1] Witt alleged in the motion that Landis, through the cross-complaint, was seek[ing] to have Witt pay speculative damages for allegedly exercising his First Amendment right to criticize [Firsthand] in a public forum and his constitutional right to seek redress for his grievances. The court below denied the motion.

Witt appeals from that order. He claims that the motion to strike should have been granted because (1) he established that the activity that was the subject of the cross-complaint was protected speech under the anti-SLAPP statute, and (2) Landis failed to meet his burden of demonstrating a probability of success. Witt contends (among other things) that the confidentiality provisions of the Privacy Agreement that he allegedly breached must be construed as applying only to the public disclosure of information shared privately between Witt and Landis after execution of the agreement. Because (Witt argues) the parties had no post-execution private communications, Landiss breach of contract claim is without merit.

We agree with the trial court that the agreement is ambiguous and is reasonably susceptible to Landiss interpretation that it prohibits disclosure of pre-execution private communications. We therefore conclude that Landis met his burden under section 425.16 of establishing that his claim was meritorious. Accordingly, we affirm the order denying the anti-SLAPP motion to strike.

PROCEDURAL HISTORY

Witt filed suit against Firsthand and Landis on August 5, 2003. He filed a first amended complaint on November 3, 2003. Neither the original complaint nor the first amended complaint alleged a breach of the Privacy Agreement. After the court granted his motion seeking leave to amend, Witt filed a second amended complaint on March 28, 2005.[2] The second amended complaint included a claim for breach of the Privacy Agreement.

Landis then filed a cross-complaint against Witt. Landis alleged that Witt had breached certain confidentiality provisions of the Privacy Agreement by making public accusations of fraud and dishonesty against Landis and Firsthand. Witt filed a demurrer to the cross-complaint, which the court overruled.

Shortly after its filing but before the demurrer was overruled, Witt filed a special motion to strike the cross-complaint under section 425.16. In the motion, Witt contended that (1) the statements allegedly attributable to Witt concerned matters of public interest that were subject to protection under the anti-SLAPP statute (see  425.16, subd. (e)(4)); (2) Landis bore the burden under the anti-SLAPP statute of showing through admissible evidence a reasonable probability that he would prevail on his claim; (3) the breach of contract claim was without merit because the activity complained aboutsending copies of Witts complaint to third partieswas privileged under the constitutional right to petition for redress of grievances; and (4) Landiss claim was without merit in any event because any alleged damages were speculative.

After the filing of extensive opposition and reply papers, the court heard argument on the motion to strike and took the matter under submission.[3] It thereafter denied the motion to strike the cross-complaint. The court reasoned that (1) Witt had satisfied his burden as the moving party of showing that the cross-complaint arose from protected activity under the anti-SLAPP statute; and (2) Landis met his burden of showing a probability that he would prevail on his cross-complaint. Witt filed a timely appeal from the order denying his special motion to strike.

DISCUSSION

I. Issues On Appeal

The overall issue on appeal is whether the trial court erred in denying the motion to strike the cross-complaint. Relevant questions to the disposition of this case include the following:

1. Whether the cause of action in the cross-complaint arose out of activity that is protected by the anti-SLAPP statute.

2. Whether the confidentiality provisions of the Privacy Agreement must be construed to apply only to disclosure of private communications between Witt and Landis occurring after execution of the agreement on April 22, 2003.

3. Whether there was admissible evidence that supported Landiss assertion that Witt breached the Privacy Agreement.

4. Whether Landis presented sufficient evidence of damages to establish the probable validity of his breach of contract claim.[4]

II. Anti-SLAPP Motions To Strike

A SLAPP suit seeks to chill or punish a partys exercise of constitutional rights to free speech and to petition the government for redress of grievances. [Citation.] (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1055.) Thus, a lawsuit arising from constitutionally protected speech or petitioning activity is a SLAPP if it lacks even minimal merit. (Navellier v. Sletten (2002) 29 Cal.4th 82, 89 (Navellier).) A cross-complaint, like a complaint, may be subject to a motion to strike under section 425.16. (Church of Scientology v. Wollersheim (1996) 42 Cal.App.4th 628, 651, disapproved on other grounds in Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 68. fn. 5 (Equilon).)[5]

SLAPP suits may be disposed of summarily by a special motion to strike under section 425.16, commonly known as an anti-SLAPP motion, which is a procedure where the trial court evaluates the merits of the lawsuit using a summary judgment-like procedure at an early stage of the litigation. (Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 192.) The statute provides: 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 [cross-complainant] has established that there is a probability that the [cross-complainant] will prevail on the claim. ( 425.16, subd. (b)(1).) As is relevant to this appeal, the statute defines  act in furtherance of a persons right of petition or free speech under the United States or California Constitution in connection with a public issue to include[] . . . 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. (Id., subd. (e)(4).)

A motion to strike under section 425.16 is analyzed and resolved by the court . . . engag[ing] in a two-step process. First, the court decides whether the [cross-]defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. The moving [cross-]defendants burden is to demonstrate that the act or acts of which the [cross-complainant] complains were taken in furtherance of the [cross-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. ( 425.16, subd. (b)(1).) If the court finds such a showing has been made, it then determines whether the [cross-complainant] has demonstrated a probability of prevailing on the claim. (Equilon, supra, 29 Cal.4th at p. 67.) Thus, [o]nly a cause of action that satisfies both prongs of the anti-SLAPP statutei.e., that arises from protected speech or petitioning and lacks even minimal meritis a SLAPP, subject to being stricken under the statute. (Navellier, supra, 29 Cal.4th at p. 89.)

III. Appellate Review Of Order Granting Anti-SLAPP Motion

An order denying an anti-SLAPP motion to strike is a proper subject for appeal, pursuant to sections 425.16, subdivision (i) and 904.1. (Chambers v. Miller (2006) 140 Cal.App.4th 821, 824; Navarro v. IHOP Properties, Inc. (2005) 134 Cal.App.4th 834, 839.) We review de novo a trial courts ruling on a motion to strike under section 425.16 (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 269, fn. 3) by conducting an independent review of the entire record. [Citations.] (HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 212; see also Siam v. Kizilbash (2005) 130 Cal.App.4th 1563, 1569.)

Thus, our review is conducted in the same manner as the trial court in considering an anti-SLAPP motion. In determining whether the cross-defendant (Witt) has met his initial burden of establishing that the cross-complainants (Landiss) action arises from protected activity, we consider the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based. ( 425.16, subd. (b)(2); see also City of Cotati v. Cashman (2002) 29 Cal.4th 69, 79; Navellier, supra, 29 Cal.4th at p. 89.)

The second prongi.e., whether the cross-complainant (Landis) has shown a probability of prevailing on the meritsis considered under a standard similar to that employed in determining nonsuit, directed verdict or summary judgment motions. (ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 1010 (ComputerXpress).) [I]n order to establish the requisite probability of prevailing [citation], the [cross-complainant] need only have stated and substantiated a legally sufficient claim. [Citations.] Put another way, the [cross-complainant] must demonstrate that the [cross-]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 [cross-complainant] is credited. [Citations.] (Navellier, supra, 29 Cal.4th at pp. 88-89.) A [cross-complainant] is not required to prove the specified claim to the trial court; rather, so as to not deprive the [cross-complainant] of a jury trial, the appropriate inquiry is whether the [cross-complainant] has stated and substantiated a legally sufficient claim. [Citation.] (Mann v. Qualified Old Time Service, Inc. (2004) 120 Cal.App.4th 90, 105.)

As is true with summary judgment motions, the issues in an anti-SLAPP motion are framed by the pleadings. (Church of Scientology v. Wollersheim, supra, 42 Cal.App.4th at p. 655.) The cross-complainant may not rely solely on its cross-complaint, even if verified; instead, its proof must be made upon competent admissible evidence. (ComputerXpress, supra, 93 Cal.App.4th at p. 1010.) In reviewing the cross-complainants evidence, the court does not weigh it; rather, it simply determines whether the cross-complainant has made a prima facie showing of facts necessary to establish its claim at trial. (Ibid.)

We review the courts order denying Witts motion to strike Landiss cross-complaint as a SLAPP suit with the above standard of review in mind.

IV. The Order Denying Motion To Strike Cross-Complaint

A. Claim Arising Out of Protected Activity

Witt argued below that the claim asserted in the cross-complaint arose out of protected activity because it involved conduct in furtherance of the exercise of . . . the constitutional right of free speech in connection with a public issue or an issue of public interest. ( 425.16, subd. (e)(4).) The trial court agreed that Witt had established this first prong in the consideration of an anti-SLAPP motion.

The definition of public interest within the meaning of the anti-SLAPP statute has been broadly construed to include not only governmental matters, but also private conduct that impacts a broad segment of society and/or that affects a community in a manner similar to that of a governmental entity. [Citations.] [M]atters of public interest . . . include activities that involve private persons and entities, especially when a large, powerful organization may impact the lives of many individuals. [Citation.] (Damon v. Ocean Hills Journalism Club (2000) 85 Cal.App.4th 468, 479.) Thus, for instance, in Damon, the court concluded that public comments concerning the competence of a manager of a homeowners association involved speech connected with an issue of public interest within the meaning of section 425.16. (Damon, supra, at pp. 479-480.) More closely analogous to the case before us, in ComputerXpress, supra, 93 Cal.App.4th at pages 1007-1008, the court concluded that Internet postings by investors that disparaged a publicly-traded company were made in connection with an issue of public interest, thereby satisfying the investors burden in making an anti-SLAPP motion of showing that the suit arose out of protected activity. (See also Troy Group, Inc. v. Tilson (C.D.Cal. 2005) 364 F.Supp.2d 1149, 1153-1155.)

And Division Four of the First District Court of Appeal held that an employers written statements to the NASD (National Association of Securities Dealers) concerning the reasons for terminating its broker-dealer employee were matters of public interest under the anti-SLAPP statute. (Fontani v. Wells Fargo Investments, LLC (2005) 129 Cal.App.4th 719, 733-734, disapproved on another ground in Kibler v. Northern Inyo County Local Hosp. Dist. (2006) 39 Cal.4th 192, 203, fn. 5.)The court concluded: Wells Fargos statement to the NASD concerned possible conduct capable of affecting a significant number of investors. If true, Fontanis misrepresentation of information when selling annuities is conduct with the potential to affect not just Fontanis individual customers, but all those in the annuity market. For example, mistruths about an annuity may artificially inflate the purchase price and thereafter affect the market. Therefore, the Form U-5 contents concerning Fontanis purported misconduct in this regard likewise concern a matter of public interest under section 425.16, subdivision (e)(4). (Fontani, supra, at p. 733.)

Here, somewhat ironically, Landis himself established that Witts conduct alleged in the cross-complaint concerned a matter of public interest. The cross-complaint alleged that Witt breached the confidentiality provisions of the Privacy Agreement by sending packets of mis-information [sic] to third parties, including allegations that Landis and [Firsthand] conducted themselves fraudulently and dishonestly. In opposition to the motion to strike, Landis submitted evidenceWitts answers to interrogatories and deposition testimonythat this complained-of activity included (1) sending copies of the first amended complaint to some 21 financial reporters, and (2) meeting or speaking with at least four reporters. Landis complained that as a consequence of Witts false accusations, institutional investors aware of Witts allegations against Landis [have] refrained from, and will continue to refrain from, placing their investments with anyone so tainted. The same is true for the hundreds of thousands of individual investors who, as a consequence of Witts breach of the Privacy Agreement, have come to learn of the unfounded allegations Witt has made of fraudulent and illegal conduct carried out by Landis. In opposition to the motion to strike, Landis declared that Witts smear campaign had caused significant damage to [his] reputation and to Firsthands reputation, resulting in monetary damages of over $3,000,000.00.

The subject matter of Witts alleged statements concerning claimed dishonest or fraudulent practices of Landis were matters of public interest under the anti-SLAPP statute. The alleged statements, according to the cross-complaint, impugned the integrity of Landis, the head of an investment firm whoLandis himself statedis an individual involved with making investment decisions involving billions of dollars of investors assets. As such, the comments involved far more than a private dispute between an employer and its former employee. (See Rivero v. American Federation of State, County and Municipal Employees, AFL-CIO (2003) 105 Cal.App.4th 913, 924 (Rivero ) [unions statements concerning alleged improprieties of supervisor of eight custodians did not involve matter of public interest under  425.16].)

The First District Court of Appeal has noted that, while the boundaries for determining whether a matter is of public interest under section 425.16, subdivision (e)(4), are imprecise, statements falling within the statute generally have at least one of three characteristics, namely, they concerned [1] a person or entity in the public eye [citations], [2] conduct that could directly affect a large number of people beyond the direct participants [citations] or [3] a topic of widespread, public interest [citation]. (Rivero, supra, 105 Cal.App.4th at p. 924; see also Commonwealth Energy Corp. v. Investor Data Exchange, Inc. (2003) 110 Cal.App.4th 26, 33 [Fourth District Court of Appeal citing with approval Riveros criteria for statements concerning matters of public interest].) The alleged statements of Witt involved matters of public interest under at least the first and second criteria identified in Rivero. Landis and the company he heads, Firsthand, are certainly in the public eye, given the large aggregate dollar volume of the investments that they manage. And the manner in which a person makes investment decisions involving billions of dollars certainly implicates more than the participants (i.e., Landis and Witt), but may affect investors with either actual or prospective relationships with Firsthand and Landis.

We therefore conclude that Witt satisfied his burden of establishing that the claim alleged in the cross-complaint arose out of activity protected under the anti-SLAPP statute. We proceed to the second prong in assessing the merits of a motion to strike: whether the cross-complainant (Landis) made a prima facie showing of the probable validity of his claim.

B. Prima Facie Showing of Valid Breach of Contract Claim

Landiss cross-complaint sets forth a single cause of action for breach of contract. To be entitled to damages for breach of contract, a plaintiff must plead and prove (1) a contract, (2) plaintiffs performance or excuse for nonperformance, (3) defendants breach, and (4) damage to plaintiff. [Citations.] (Walsh v. West Valley Mission Community College Dist. (1998) 66 Cal.App.4th 1532, 1545.) Therefore, in order to defeat Witts anti-SLAPP motion, Landis must have properly pleaded and presented competent evidence establishing each of these elements to support his claim for breach of the Privacy Agreement.

Witt does not appear to dispute that Landis established the first two elementsWitt admits the existence of a contract and does not raise a serious question as to Landiss performance thereunder.[6] Witt instead focuses on Landiss alleged failure to establish either a breach of contract or damages.

Witts argument on appeal is that Landisbased upon the only appropriate interpretation of the Privacy Agreementdid not establish acts constituting its breach. Specifically, Witt asserts that the provisions of the agreement that require the parties to keep confidential their private communications apply only to communications occurring after execution of the agreement. Since Witt and Landis admittedly had no substantive private communications after they signed the Privacy Agreement, Witts subsequent contacts to the press were not actionable under the agreement. Witt contends further that Landis presented insufficient evidence of damages caused by any alleged breach to support the contract claim.

Landis responds that Witt forfeited his contract interpretation challenge. He asserts that, even if Witts argument is considered, the Privacy Agreement is reasonably susceptible to the interpretation that the confidentiality covenant applied to pre-execution private communications between the parties. He argues further that he presented competent evidence of Witts breach and of causally related damages.

We address below the parties respective contract interpretation arguments; consider whether Landis presented sufficient evidence of breach; and assess whether Landis made a prima facie showing of damages caused by Witts alleged breach of the Privacy Agreement.

1. Contract interpretation

a. Forfeiture of Witts interpretation argument

Landis contends that Witt forfeited the theory advanced on appeal that the Privacy Agreement must be construed to apply only to post-execution private communications. He argues that Witt did not raise this theory in connection with the anti-SLAPP motion; he therefore may not present it as a basis for reversing the trial courts denial of the motion to strike. We reject Landiss assertion.

Undeniably, Witt did raise his interpretation theory in his demurrer to the cross-complaint, heard and decided shortly before the motion to strike. Witt arguedquoting paragraph three of the agreement that contained the confidentiality provision on which Landis suedthat: The [Privacy] Agreement was executed on April 22, 2003. Witt was terminated one week later. Therefore, any Private communications between Landis and Witt under this Agreement would have had to take place during that one-week period. Landis responded to this theory in his opposition to the demurrer, arguing that there was nothing in the contract that expressly limited the private communications that were subject to confidentiality to post-execution communications. And Witt mentioned in his reply papers in support of the motion to strike that Landis had failed to present evidence of a breach because he had alleged (inconsistent with a claim of breach) that Witt had refused to communicate with him after the Privacy Agreement was signed.

Witt did not forfeit his contract interpretation argument. It was sufficiently presented in the demurrer, and it was raised in the reply filed in support of the motion to strike. Additionally, even were the issue not adequately raised in the motion to strike itself, we perform an independent review of the entire recordof which the demurrer is a partin determining whether the anti-SLAPP motion was properly denied. (Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal.App.4th 659, 672.) Moreover, the cases cited by Landis in support of his forfeiture argument (see People v. Gordon (1990) 50 Cal.3d 1223, 1251-1252; Brunson v. Department of Motor Vehicles (1999) 72 Cal.App.4th 1251, 1256-1257; People v. Greenberger (1997) 58 Cal.App.4th 298, 373) are inapposite; each of them involved the introduction of a new legal theory following a trial on the merits. (See also Delfino v. Agilent Technologies, Inc. (2006) 145 Cal.App.4th 790, 818, fn. 36 [theory raised for first time on appeal from judgment entered on summary judgment motion not considered]; Beroiz v. Wahl (2000) 84 Cal.App.4th 485, 498, fn. 9 [same].) Herealthough we conclude that the theory was, in fact raisedthe contention is that Witt did not present his interpretation theory in the anti-SLAPP motion. Forfeiture is inapplicable to cases disposed of at an early pleading stage. (See Smith v. Commonwealth Land Title Ins. Co. (1986) 177 Cal.App.3d 625, 629-630 [failure to raise theory in trial court did not result in its forfeiture on appeal after order sustaining demurrer without leave to amend].)

b. parties contentions and applicable law

The core issue in determining whether Landis presented a prima facie case for breach of contract is whether the confidentiality provisions of the Privacy Agreement may be breached by one partys public disclosure of the parties pre-execution private communications. Witt argues that the confidentiality clause applies only to private communications occurring after the signing of the agreement; because Landis admits that there were no such post-execution communications, he cannot sustain a breach of contract claim. Witt asserts that the court erred in considering Landiss declaration insofar as Landis purported to present evidence that it was his understandingundisclosed to Wittthat the confidentiality clause of the Privacy Agreement applied to private communications between the parties occurring either before or after the contracts signing. Witt contends that such purported evidence was inadmissible and that his objection to it should have been sustained. He argues further that the only reasonable interpretation of the agreement is that paragraph threes nondisclosure prohibition applies only to post-execution private communications between the parties.

Landis responds that Witt waived his objection to the Landis declaration by failing to press the trial court for a ruling on it. He asserts that consideration of his declaration was in any event appropriate under rules of contract interpretation, because it was extrinsic evidence properly considered by the court in aid of construing the contracts meaning. And since the Privacy Agreement is reasonably susceptible to Landiss interpretation, the trial court properly concluded that Landis had made a prima facie showing in support of his breach of contract claim.

[T]he intention of the parties as expressed in the contract is the source of contractual rights and duties. (Pacific Gas & E. Co. v. G. W. Thomas Drayage etc. Co.(1968) 69 Cal.2d 33, 38, fn. omitted (PG&E).) This principle is based upon Civil Code section 1636: A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful. As the First District Court of Appeal has summarized: The mutual intention to which the courts give effect is determined by objective manifestations of the parties intent, including the words used in the agreement, as well as extrinsic evidence of such objective matters as the surrounding circumstances under which the parties negotiated or entered into the contract; the object, nature and subject matter of the contract; and the subsequent conduct of the parties. [Citations.] (Morey v. Vannucci (1998) 64 Cal.App.4th 904, 912.)

The trial court is required to provisionally receive extrinsic evidence to ascertain whether the contract language is reasonably susceptible to the interpretation advanced. (PG&E, supra, 69 Cal.2d at p. 40.) Extrinsic evidence must be provisionally considered not only where the ambiguity is patent from a reading of the instrument, but also to determine the existence of any latent ambiguity. (Southern Pacific Transportation Co. v. Santa Fe Pacific Pipelines, Inc. (1999) 74 Cal.App.4th 1232, 1241.) If the court decides that the language of the agreement, considering all of the circumstances, is fairly susceptible of either one of the two interpretations contended for . . . [citations], extrinsic evidence relevant to prove either of such meanings is admissible. (PG&E, supra, at p. 40, fn omitted.)

The court below determined that the Privacy Agreement was ambiguous. A trial courts threshold determination that a contract is ambiguous is subject to independent review. (Winet v. Price (1992) 4 Cal.App.4th 1159, 1165.) Thus, [a]n appellate court is not bound by a trial courts construction of a contract where (a) the trial courts contractual interpretation is based solely upon the terms of the written instrument without the aid of extrinsic evidence; (b) there is no conflict in the properly admitted extrinsic evidence; or (c) a the trial courts determination was made on the basis of improperly admitted incompetent evidence. [Citation.] (Morey v. Vannucci, supra, 64 Cal.App.4th at p. 913.)

We begin with an examination of the language of the Privacy Agreement, followed by a discussion of any extrinsic evidence presented that is relevant to the interpretation of the agreement.

c. language of contract

The essence of Landiss cross-complaint is that Witt breached two paragraphs of the Privacy Agreement that concern the confidentiality of the private communications between Landis and Witt. Paragraph two provides: Private Communications. Landis and Witt hereby agree that Private communications between Landis and Witt under this Agreement shall remain Private. And paragraph three reads: Non-Disclosure. Landis and Witt hereby agree that they will not, directly or indirectly, make known to any other person any information affecting or relating to Private communications between Landis and Witt under this Agreement, unless otherwise agreed to in writing by Landis and Witt. (Original underscore.)

We note initially that it is unclear from a cold reading whether paragraphs two or three proscribe the public disclosure of preexisting Private communications between the parties. The phrase any information affecting or relating to Private communications in paragraph three appears quite broad. (See Bay Cities Paving & Grading, Inc. v. Lawyers Mutual Ins. Co. (1993) 5 Cal.4th 854, 868 [word [r]elated . . . [has] a broad meaning that encompasses a myriad of relationships].) But the term Private communications is not defined anywhere in the agreement.[7] Indeed, while paragraph two of the agreement contains a so-called definition of the term, that statement (as quoted above) is a mere tautology. It would have been a simple matter for the draftspersons (Witt and his wife) to have specifiedeither in paragraph three or by providing an actual definition of Private communicationsthat the parties were obligated to keep confidential only those private communications occurring after execution of the agreement. The agreement, of course, contains no such precision.

Witt argues that use of the modifier under this Agreement in paragraph three to describe Private communications makes it clear that only post-signing communications are embraced by the confidentiality clause. But under this Agreement may simply mean that the confidentiality clause applies only to private communications covered by the agreement, thereby limiting the scope of the communications substantively, not temporally.

Witt argues further that the purpose of the agreement, as stated in its preamble, suggests that only post-execution private communications are to be kept confidential. The preamble reads in part: The purpose of this agreement . . . is to set forth the terms and conditions under which [Landis and Witt] shall engage in Private dialogue. Witt posits that shall engage denotes that the agreement applies only to private communications occurring after execution of the Privacy Agreement. But it is also plausible that the agreement was intended to promote a private dialogue between the parties by preventing either party (but presumably Witt) from immediately publicizing the charges of impropriety to which he had alluded shortly before the contracts signing. Indeed, the prospect (from Landiss viewpoint) of Witts going public immediately after signing the agreement would have dampened, if not obliterated, the likelihood of a private dialogue between the parties that the agreement was intended to foster.

Additionally, Witt argues that paragraph one of the Privacy Agreement supports the construction that only post-execution private communications between the parties are subject to paragraph threes confidentiality restriction. Paragraph one reads: Effective Date of Agreement. This Agreement shall be effective as of April 22, 2003. (Original underscore.) Witt contends that this special date reference was intended to make only post-execution private communications subject to the confidentiality clause. But we agree with Landis that paragraph one need not necessarily be so construed. Rather, as Landis argues, the inclusion of an effective date paragraph could just as easily be interpreted as a temporal limitation on the prohibition against public disclosure of private communications. Stated otherwise, the effective date language may have been intended to eliminate the possibility of one or both parties being in breach immediately upon executing the agreement, in the event that Witt and/or Landis had disclosed publicly a private communication before April 22, 2003.

Based upon the foregoing, we reject Witts claim that the Privacy Agreement on its face makes confidential only post-execution private communications between Landis and Witt.

d. extrinsic evidence

As this court has previously noted, ambiguity is not an abstract question. We must consider the whole instrument and the circumstances of the case. [Citation.] (Lockheed Martin Corp. v. Continental Ins. Co. (2005) 134 Cal.App.4th 187, 197.) Therefore, in aid of interpreting the Privacy Agreement, we next consider any extrinsic evidence offered by the parties on such matters as the agreements subject matter, and the circumstances surrounding its negotiation and execution.

Landiss opposition to the motion to strike includes some evidencenamely, Landiss declaration and excerpts from Witts depositionrelevant to these issues. The record, however, discloses no extrinsic evidence that was presented by Witt having a bearing on interpreting the agreement.[8]

Witt testified in his deposition that he, along with his wife, an attorney, drafted the one-page Privacy Agreement. It was executed by both parties on April 22, 2003. The agreement came about as a result of Witts suggestion to Landis. According to Landiss declaration, [Witt] suggested a confidentiality agreement should protect our discussions. Landis also understood that Witts friend and advisor, Hanuman (Roads) Jiva, had sent an e-mail in Witts name to Firsthands in-house counsel on April 7, 2003, in which he advocated the signing of a confidentiality agreement.

Witt testified in deposition that the purpose of the agreement [was that] if something was discussed that was private, [the parties were] not to discuss it outside those walls. Landis welcomed the idea of a confidentiality agreement and hoped that if [Witt] were holding back on the specifics of his criticisms because he felt insecure, a confidentiality agreement might allow him to open up and be more forthcoming.

In addition, Landis noted in his declaration that it was his understanding that the Privacy Agreement obligated both [parties] to keep the discussions [they] had been having, in particular the insinuations [Witt] was making concerning honesty_[,_] integrity, etc._[,_] to [themselves]. Additionally, since the Privacy Agreement covered any information affecting or relating to our private communications, [Landis] understood that any explanations or specifics as to the concerns [Witt] was hinting at about Firsthands (and [Landiss]) honesty, integrity, etc., would also be kept confidential. Landis also declared that it was his understanding that by publicizing his baseless allegations to the press, [Witt] was breaching [the parties] agreement to keep such matters confidential. On appeal, Witt objects to this evidence of Landiss understanding concerning the agreement. He argues that the subjective intention or understanding that Landis may have had concerning the Privacy Agreementwhere there was no evidence that it was disclosed to Witt at the time of executionis completely irrelevant and inadmissible to construe the agreement. (See Winet v. Price, supra, 4 Cal.App.4th at p. 1166, fn. 3 [evidence of the undisclosed subjective intent of the parties is irrelevant to determining the meaning of contractual language].)

Witt filed objections below to the Landis declaration; in particular, Witt objected to the paragraphs in which Landis described his understanding of the Privacy Agreement. But his counsel made no reference to the objections at the lengthy hearing on the anti-SLAPP motion. Witts counsel did not assert at the hearing that the evidence proffered by Landis concerning his understanding of the agreement was objectionable and did not press for a ruling on the evidentiary objections. Landis asserts that the objections were waived because of the failure to press for a ruling below. We agree.

The most comprehensive discussion of this waiver issue appears in Gallant v. City of Carson (2005) 128 Cal.App.4th 705. There, the plaintiff opposed an anti-SLAPP motion with a declaration. The defendants filed evidentiary objections but did not ask for or obtain a ruling on them at the hearing. (Id. at p. 710.) After extended analysis, the Second District Court of Appeal (Division One) held that the Ann M.[9]rulethat a party submitting evidentiary objections in connection with a summary judgment motion waives them if he or she does not press the court for a ruling and the court fails to rule on themapplied to evidentiary objections in anti-SLAPP motions. (Gallant, supra, at p. 710.) Thus, the court held that it is the objecting partys obligation to preserve the evidentiary objections in connection with a special motion to strike under section 425.16  (tactfully) to remind the court at the hearing of the necessity to rule on [the objections]. [Citation.] (Gallant, supra, at p. 713, quoting Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2004) 10:210.3, p. 10-75.) Lest there be any doubt as to whether the Ann M. waiver rule applies to evidentiary objections asserted in connection with a special motion to strike under section 425.16, the Supreme Court recently cited Gallant with approval in two anti-SLAPP motion cases for this precise point. (See Soukup v. Law Offices of Herbert Hafif, supra, 39 Cal.4th at p. 291, fn. 17; Flatley v. Mauro (2006) 39 Cal.4th 299, 306, fn. 4.) Therefore, Witt waived his evidentiary objections to the Landis declaration.[10]

e. conclusion re interpretation

After considering the terms of the Privacy Agreement and the extrinsic evidence identified above,[11] we conclude that the agreement is ambiguous insofar as it is unclear as to precisely what Private communications are subject to the confidentiality provisions of paragraphs two and three. The parties may have intended by their agreementas Landis arguesthat each of them would keep confidential their private communications occurring both after the contract was signed and those that occurred before April 22, 2003, the earlier conversations having been the parties incentive to enter into the Privacy Agreement. Alternatively, the agreement may be construed as providing for the confidentiality of only post-execution private communicationsas Witt contends.

Witt argues that the plain language of the agreement compels the conclusion that only private discussions between the parties occurring after the contracts execution are subject to the confidentiality clause. But for the reasons we discuss above, we disagree. Based upon a review of the contract language itself, along with the extrinsic evidence presented in Landiss opposition,[12] we find that the contract is reasonably susceptible to the interpretation advanced by Landis.[13] Therefore, we conclude that there was a sufficient evidentiary showingassuming an adequate showing of breach and damages (discussed, post)to support Landiss breach of contract claim.

In its order, the court held: The Court is persuaded . . . the Privacy Agreement . . . is ambiguous. The Court cannot, as a matter of law, determine its interpretation. . . . This Court concludes that Landis[s] interpretation is plausible and any ambiguity must be resolved by a trier of fact. Witt takes issue with the courts conclusion that the contract ambiguity must be resolved by the trier of fact. We agree with Witt that the courts order contained an incorrector at least an incompleterecitation of the law applicable to the interpretation of contracts.

As Chief Justice Traynor explained: The interpretation of a written instrument, even though it involves what might properly be called questions of fact [citation], is essentially a judicial function to be exercised according to the generally accepted canons of interpretation so that the purposes of the instrument may be given effect. [Citations.] Extrinsic evidence is admissible to interpret the instrument, but not to give it a meaning to which it is not reasonably susceptible [citations], and it is the instrument itself that must be given effect. [Citations.] It is therefore solely a judicial function to interpret a written instrument unless the interpretation turns upon the credibility of extrinsic evidence. (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865.) Thus, it is only [w]here the interpretation of contractual language turns on a question of the credibility of conflicting extrinsic evidence [that] interpretation of the language [becomes] not solely a judicial function. [Citations.] (Morey v. Vannucci, supra, 64 Cal.App.4th at pp. 912-913.)

Here, any determination at trial as to whether the confidentiality provisions of the Privacy Agreement apply to pre-execution private communications between the parties is primarily (if not solely) a judicial function. At least at this stage of the proceedings, there was no conflicting extrinsic evidence that would require resolution by a trier of fact. That assessment, however, may change if further extrinsic evidence is adduced that requires a weighing of the credibility of conflicting evidence. Since all extrinsic evidence relevant to interpreting the contract may not have been presented in the motion to strike, it is premature to predict that there will be issues necessary to interpret the contract for resolution by the trier of fact. We conclude that the court did not accurately set forth the analytic framework for resolving the contract interpretation issue at trial. This inaccuracy, however, has no impact upon the correctness of the courts conclusion that, for purposes of considering the motion to dismiss, the Privacy Agreement was ambiguous and was reasonably susceptible to the interpretation that its confidentiality provisions applied to pre-execution private communications.

2. Evidence of breach

Landis alleges in his cross-complaint that Witt repeatedly breached the confidentiality provision of [the Privacy Agreement] by sending packets of mis-information [sic] to third parties, including allegations that Landis and [Firsthand] conducted themselves fraudulently and dishonestly. Witt asserts that there was no breach because the confidentiality provisions applied only to post-execution private communications and Landis admitted that there were no such communications after April 22, 2003. We have rejected that argument, concluding above that the Privacy Agreement is ambiguous and is reasonably susceptible to the construction that it applies to pre-signing private communications.

In opposition to the motion to strike, Landis presented evidence of Witts breach of the agreement, i.e., evidence that he publicly disclosed matters relating to the parties pre-execution private communications. The evidence consisted of statements contained in Landiss declaration and Witts discovery responses and deposition testimony. Witt submitted no declaration refuting Landiss evidentiary showing of breach.

Landis stated in his declaration that in the weeks leading up to Witts termination on April 29, 2003, the two of them had conversations in which Witt made unspecific references concerning incompetence, or disingenuousness, or honesty, or integrity. But when [Landis] pressed [Witt] to try to find out what he was talking about, he would not give [Landis] any explanation, instead saying things like You know what I mean. Landis declared that in or about August 2004, Witt followed up on his prior threats to cause harm to Landiss reputation by publicizing the allegations of Witts complaint. Landis stated that he learned from some reporters in the financial press that they had received [Witts] allegations that [Landis] had been conducting business fraudulently, had misled the investing public, had broken SEC rules, etc., from [Witts] attorneys. In or about September 2004, there were articles in the financial press that included Witts allegations. Landis specified five articles in the financial press[14] that raised concerns about Landiss integrity based upon Witts allegations.

In addition, Landis in his opposition submitted Witts answers to interrogatories in which Witt admitted that he had sent (1) a copy of each of the five volumes of his deposition transcripts to one reporter, and (2) a copy of his first amended complaint to 21 different reporters. The first amended complaint was replete with references to Landiss alleged improprieties, such as allegations that he had made misrepresentations to the public, mismanaged mutual funds, made an improper financial maneuver to understate Firsthands financial position, and had terminated Witt because of his refusal to participate in unlawful and improper actions. And Witt testified in deposition that he had met with one reporter from Barrons at his attorneys offices and had spoken with at least three other reporters.

This evidence, collectively, constituted a sufficient prima facie showing that Witt breached the confidentiality provisions of the Privacy Agreement. Landis therefore satisfied this element of his claim for breach of contract.

3. Damages

a. evidence presented

Landis alleged in the cross-complaint that his business and personal reputation had been severely damaged as a result of Witts breach of the confidentiality provisions of the Privacy Agreement. The evidence of these damages that Landis submitted in his opposition to the motion to strike consisted of his declaration, excerpts from Witts deposition, and the declarations of two expert witnesses, Brian Brinig and Howard Schneider.

Landis declared that prior to Witt commencing his smear campaign in mid-2004, there was not one word written or spoken about [Landis] or about Firsthand that suggested [they] were engaged in fraudulent activities, had violated SEC rules, were misleading the public, or were otherwise unethical or immoral. Based upon his experience in the mutual fund industry, Landis stated that the publication of the various articles reporting Witts allegations caused significant damage to the reputations of Landis and Firsthand, a company in which he held a 62 percent stock ownership. Landis opined that Witts breaches of the Privacy Agreement caused severe harm to [his] reputation, and that the loss of [his] good name in this industry has diminished [his] opportunities, [his] prospects, [his] ability to attract and retain investors, and ultimately [his] income and [his] net worth by an amount that is far in excess of $3 million.

Witt testified in his deposition that he understoodconsistent with what his advisor, Jiva, wrote to Landis in August 2003that if Witts allegations of wrongdoing became more public, it would be damaging to the reputations of Landis and Firsthand.[15] He also testified that it was his belief that bad press may have a dramatic effect upon the success of a mutual fund and of a mutual fund advisor. Specifically, Witt felt that it was foreseeable that publicity concerning his allegations would have a harmful effect upon Landis and Firsthand.[16]

In his declaration, Schneiderwho had 15 years experience in the mutual funds industryopined that trust is a crucial element for success in the marketing and distribution of mutual funds to the retail public. After considering various articles from late 2004 to early 2005 describing Witts allegations (see fn. 14, ante), Schneider concluded that this adverse publicity would have a deleterious lingering impact on [Firsthand] funds business results. Any hint of impropriety at a mutual fund or mutual funds complex can elicit concern among existing investors in the fund(s), causing some to withhold additional investments and others to withdraw assets fearing for the safety of their investment. He opined that the negative publicity might also cause a substantial proportion of prospective customers to consider other alternatives that are untainted by similar publicity and would increase the possibility that other sources for distribution of mutual funds (e.g., investment advisors, retirement plans, variable annuities) would eliminate consideration of the mutual fund suffering the adverse publicity. Schneider concluded that there was a high probability that Firsthands mutual funds sustained a significant business fall-out as a result of the adverse publicity containing Witts allegations.

Briniga certified public accountant for approximately 30 yearsattempted to quantify the damages Landis alleges were sustained as a result of the adverse publicity. Brinig observed that there was a negative business trend at Firsthand during the time period from September 2004 (i.e., the time when the first article appeared) and May 2005, namely a decline of $203,800,000.00 in the amount of net assets under management (Net AUM).[17] Firsthand derives its revenue from the funds it manages based on a pre-set percentage of the Net AUM. After reviewing the statistics kept by Firsthand concerning the changes in its Net AUM, Brinig determined thatby comparing the daily rate of net redemptions (subtractions) occurring from January to September 2004 with the daily rate between September 2004 and May 2005the rate of net daily redemptions had increased by 58 percent; this translated into an excess amount of net redemptions of $91,331,000.00 for the eight-month period in question (September 2004 to May 2005. Because Firsthand received approximately 1.92 percent of Net AUM as revenue, Brinig opined that Firsthand had lost revenue of $1,754,000.00. After subtracting Firsthands variable expenses that would have been saved as a result of the loss of gross income, Brinig calculated the loss of net income to be $1,363,000.00. Taking into consideration that Firsthand had not yet suffered a full year at the loss calculation described by Brinig, he opined that Firsthand had suffered a loss of net income to date of over $500,000.00; since Landis owns 62 per cent of the outstanding shares of the company, he suffered a direct loss of $310,000.00. Brinig further opined that Firsthand would sustain future losses of net income of more than $1,000,000.00 per year (and Landis would suffer corresponding annual losses of $620,000.00) until the company recovered the Net AUM lost as a result of the excess redemptions it had experienced.

Witt argued in his motion, inter alia, that Firsthands assets under management began its downward spiral in 2001 and the company and its management have faced public criticism from a number of stock analysts and investors, all long before Witt filed this herein action. His counsel attached to her declaration a series of articles and Internet chat room discussions dating back to 2002 that were critical of Landis and Firsthand.

b. discussion

Witt contends that Landis failed to present evidence of damages that resulted from the alleged breach of the Privacy Agreement. He argues that the evidence presented in opposition to the motion to strike was speculative, and was based upon expert opinions that were unreliable. He also asserts that there was no link between Firsthands business reversals and the alleged breach of the confidentiality provisions of the agreement. We conclude that Landiss evidence was sufficient to survive Witts pretrial challenge via special motion to strike.

Witt asserts that there was no prima facie showing here because Landis failed to prove damages that were clearly ascertainable in their nature and origin, as required by Civil Code section 3301: No damages can be recovered for a breach of contract which are not clearly ascertainable in both their nature and origin. Witt relies upon Roberts v. Los Angeles County Bar Assn. (2003) 105 Cal.App.4th 604 (Roberts), in support of his contention. That reliance is misplaced. In Roberts, a candidate for judicial office sued the county bar association for rating her not qualified. The appellate court reversed the denial of the bar associations anti-SLAPP motion, concluding, inter alia, that the plaintiff had failed to establish a probability of prevailing on any of her claims. (Id. at pp. 617-619.) In concluding that the plaintiff had not established a prima facie breach of contract claim, the court noted that she had failed to show that either of the alleged breachesthe bar associations failure to give a full 48 hours notice of negative comments before her hearing with the associations subcommittee, and the failure to exclude one disqualified committee member from the plaintiffs appeal before the full committeecaused any damage. (Id. at pp. 617-618.) Because the evidence showed that the hearing was postponed (so that the plaintiff ultimately received 48 hours notice of the negative comments) and the disqualified member did not participate in the committees deliberations or vote, the court found that the plaintiff had failed to demonstrate that any alleged breach caused her any damage. (Ibid.)  

Roberts is distinguishable. Here, unlike in Roberts, Landis presented a direct link between Witts alleged breach of the agreement (i.e., disclosure of the parties private communications and the resultant adverse publicity) and damages (i.e., the increase in the daily rate of net redemptions, resulting in a decline in the Net AUM and the consequent reduction in gross revenues). Landis may or may not ultimately prove that Witts conduct was the cause of the increase in the daily rate of net redemptions. For instance, it may ultimately be concluded that that business trend starting in September 2004 was merely a coincidence in timing with the adverse publicity about which Landis complains. But it suffices here that Landis has adequately demonstrated that his claim for breach of contract damages is . . . supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the [cross-complainant] is credited. [Citations.] (Navellier, supra, 29 Cal.4th at p. 89.)[18]

Additionally, Witt cites Westrec Marina Management, Inc. v. Jardine Ins. Brokers Orange County, Inc. (2000) 85 Cal.App.4th 1042 (Westrec Marina), and Biren v. Equality Emergency Medical Group, Inc. (2002) 102 Cal.App.4th 125 (Biren), in support of his position that Landiss damages evidence was insufficient because the expert opinion evidence was not based upon reasonably reliable market data and was based on speculation. Neither case supports Witts cha