ADEM v. Grewal

Filed 12/22/09 ADEM v. Grewal 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NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

This is an appeal from an order denying the defendants special motion to strike one cause of action of the plaintiffs amended complaint as a strategic lawsuit against public participation (SLAPP). As explained below, we conclude that the trial court acted properly in denying the defendants motion. We therefore affirm the order.

FACTUAL BACKGROUND

This appeal is brought by Pritam Grewal, a defendant and cross-complainant below.[1] The respondents on appeal are the plaintiffs and cross-defendants ADEM, LLC, Boris Kesil, Jacob Obolsky, and Valery Sokolsky (collectively, plaintiffs).

This litigation arose from a loan transaction, secured by a deed of trust executed by Grewal. The facts concerning the transaction are set forth in a declaration by plaintiff Boris Kesil, submitted in opposition to Grewals special motion to strike.

The circumstances surrounding the loan are described in the declaration as follows: In September of 2004, [Kesil] was approached by Defendant Mohinder Vander . . . regarding a $300,000 loan he wished ADEM to extend to him. At the time, Vander was employed by ADEM and had been since 2001. ADEM had previously extended small loans to Vander. Because of the large amount requested, ADEM refused to make the loan to Vander unless he could provide sufficient collateral or other security to ensure his repayment. In response, Vander introduced Kesil to Grewal, who owned real property. Kesil met with Grewal and Vander and discussed the transaction. It was agreed that ADEM would loan Vander $300,000, at an interest rate of 5% per annum, which Vander would repay within four to five weeks.

With respect to security for the loan, Kesils declaration states that ADEMs commitment to extending the loan to Vander was contingent upon Grewal securing its repayment in the event of Vanders default by providing a Deed of Trust on real property he owned. It was agreed that this Deed of Trust was intended to secure Vanders repayment by Grewal. The declaration continues: Grewal executed a Deed of Trust on real property he owned, located at 515 McLaughlin Avenue in San Jose, California. On its face, the Deed of Trust states that it is security for the $300,000 loan, repayable at 5% interest per annum. The Deed of Trust was recorded and mailed to [Kesil] after recording by the Recorders Office.

According to the declaration, the loan was not repaid, either by Vander or by Grewal. This lawsuit ensued.

PROCEDURAL HISTORY

Pleadings and Amendments

In April 2005, plaintiffs filed their initial complaint in this action. Several amendments followed.

Grewal and his wife cross-complained against plaintiffs and others. Their second amended cross-complaint was filed in February 2007. Among other things, the cross-complaint sought cancellation of the deed of trust.

In January 2008, plaintiffs filed their fourth amended complaint, which asserted claims against Grewal for breach of guarantee/promissory estoppel, judicial foreclosure of the deed of trust, fraud, unfair business practices, and imposition of a constructive trust.

In February 2008, plaintiffs sought leave to file a fifth amended and supplemental complaint. As stated in their moving papers: The sole change effected by plaintiffs proposed Fifth Amended Complaint would be to add a new (Eighth) Cause of Action for Breach of Contract against defendant PRITAM GREWAL only.

As plaintiffs acknowledged: The new cause of action is based on the document attached to and incorporated by reference in PRITAM GREWALs Second Amended Cross-Complaint filed in this action, called a fictitious long form deed of trust.[2] According to plaintiffs, Paragraph 3 of the Fictitious Long Form Deed of Trust requires Mr. GREWAL to appear in and defend any action or proceeding purporting to affect the security provided by the Deed of Trust or the rights or powers of plaintiffs as beneficiaries and trustee of the Deed of Trust. . . . Mr. GREWAL has violated this agreement by filing his Cross-Complaint in this action seeking, inter alia, to cancel his own Deed of Trust, as well as by assisting his co-cross-complainant wife (MANJEET GREWAL) in her effort to obtain cancellation by way of summary adjudication. Plaintiffs also maintained that the same provision Paragraph 3 of the Fictitious Long Form Deed of Trust required Grewal to pay their costs and fees in this action.

Grewal opposed plaintiffs request to file a fifth amended complaint, asserting that plaintiffs had failed to comply with applicable court rules, that their delay in seeking leave to amend was unwarranted, and that he would be prejudiced by the amended complaint.

The court granted plaintiffs motion, and their fifth amended complaint was filed in March 2008.

Special Motion to Strike

In May 2008, Grewal brought a special motion to strike pursuant to Code of Civil Procedure section 425.16.[3] The motion sought dismissal of the eighth cause of action of the fifth amended complaint as a strategic lawsuit against public participation.[4]

In support of his motion, Grewal argued: There is no question that plaintiffs eighth cause of action, alleging that Grewal breached the deed of trust by seeking to cancel the deed of trust, arises out of Grewals right of petition or free speech, i.e., the filing of his cross-action herein. Accordingly, plaintiffs eighth cause of action is subject to the anti-SLAPP motion to strike. Grewal also asserted that plaintiffs would be unable to demonstrate the requisite probability of prevailing on that cause of action, because the allegations of his cross-complaint, wherein he seeks to cancel the Deed of Trust and disputes liability thereunder, are subject to the absolute [litigation] privilege contained in Civil Code section 47(b).

Plaintiffs opposed Grewals special motion to strike. In their memorandum of points and authorities, plaintiffs maintained that the challenged eighth cause of action of their fifth amended complaint did not arise from protected activity. Plaintiffs also argued that Grewal had waived the statutes protection by contracting to appear and defend the deed of trust. Furthermore, plaintiffs asserted, their breach of contract claim could not be stricken under the statute because it was at least minimally meritorious. In plaintiffs view: Even if the litigation privilege applied with respect to the allegations referring to Pritam Grewals cross-complaint, the litigation privilege would not completely bar the breach of contract action but only that aspect of it referring to the Grewal cross-complaint. Thus, the privilege cannot be applied to cause a dismissal of the entire breach of contract cause of action. In addition to their legal arguments, plaintiffs submitted two declarations, one by their attorney and another by plaintiff Boris Kesil.

Grewal replied to plaintiffs opposition. He also filed a request for judicial notice of the memorandum of points and authorities that plaintiffs had submitted in support of their successful motion for leave to file the fifth amended complaint. The court granted the request for judicial notice.

By written order filed on July 8, 2008, the trial court denied Grewals special motion to strike, saying Grewal failed to make a threshold showing that the challenged cause of action arises from protected activity. As the court explained: The breach of contract claim does not arise from Grewals cross-complaint, but rather from Grewals alleged independent breach of his agreement to pay off the loan he secured with his Deed of Trust and to defend against all attempts to impair the security.

Appeal

This timely appeal by Grewal followed.

In this court, Grewal renews the arguments that he made below. He maintains that the challenged cause of action arose from his protected activity in filing a cross-complaint. Grewal also asserts that plaintiffs cannot establish a probability of prevailing on their breach of contract claim, arguing that the claim is barred by the litigation privilege, that he has not waived the statutes protections, and that plaintiffs cannot establish damages from the alleged breach.

As they did below, plaintiffs dispute Grewals arguments. Plaintiffs maintain that their breach of contract claim did not arise from protected activity. Plaintiffs also assert that they demonstrated a probability of prevailing, urging Grewals waiver of the statutory protections, his waiver of the litigation privilege, and the inapplicability of the litigation privilege. Plaintiffs also argue that they have been damaged.

DISCUSSION

We begin our assessment of the parties contentions by setting forth the general principles that inform our analysis. We then apply those principles to the case at hand.

I. General Principles

Strategic lawsuits against public participation are commonly referred to by the acronym SLAPP. (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 57 (Equilon).) SLAPP suits arise from constitutionally protected speech or petitioning activity and lack even minimal merit. (Navellier v. Sletten (2002) 29 Cal.4th 82, 89 (Navellier); Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1055.)

A. The Statute

In 1992, the Legislature responded to the disturbing increase in such suits by enacting section 425.16. ( 425.16, subd. (a); Rusheen v. Cohen, supra, 37 Cal.4th at pp. 1055-1056.) The statute incorporates the Legislatures express declaration that it is in the public interest to encourage continued participation in matters of public significance, and that this participation should not be chilled through abuse of the judicial process. ( 425.16, subd. (a).) In 1997, the statute was amended to clarify the Legislatures intent that this section shall be construed broadly. (Ibid.; Equilon, supra, 29 Cal.4th at p. 60.)

The statute furnishes a mechanism for quickly identifying and eliminating suits that chill public participation: a special motion to strike, commonly called an anti-SLAPP motion. 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 plaintiff has established that there is a probability that the plaintiff will prevail on the claim. ( 425.16, subd. (b)(1).) The anti-SLAPP motion permits the trial court to evaluate the merits of a possible SLAPP 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 statutory motion to strike may be granted as to one or more causes of action, rather than the entire pleading. ( 425.16, subd. (b)(1).) This is particularly appropriate in cases where the claims are not factually or legally intertwined. (ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 1004 (ComputerXpress).) The challenged cause of action may appear in a complaint, in a cross-complaint, or in other pleadings. ( 425.16, subd. (h); City of Cotati v. Cashman (2002) 29 Cal.4th 69, 77 (Cotati).)

B. Two-Pronged Analysis

A special motion to strike triggers a two-step process in the trial court. (Equilon, supra, 29 Cal.4th at p. 67; Navellier, supra, 29 Cal.4th at p. 88.) First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. (Cotati, supra, 29 Cal.4th at p. 76, quoting  425.16, subd. (b)(1).) If the court finds such a showing has been made, it then must consider whether the plaintiff has demonstrated a probability of prevailing on the claim. (Cotati, at p. 76; 425.16, subd. (b)(1).) Only a cause of action that satisfies both prongs of the anti-SLAPP statute i.e., that arises from protected speech or petitioning and lacks even minimal merit is a SLAPP, subject to being stricken under the statute. (Navellier, supra, 29 Cal.4th at p. 89; Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 278-279 (Soukup).)

In each part of the two-step process, the party with the burden need only make a threshold, prima facie showing. (Cotati, supra, 29 Cal.4th at p. 76.) In assessing each partys showing, the trial court considers the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based. ( 425.16, subd. (b)(2).)

1. First Prong: Acts Arising From Protected Activity

The court first considers whether the action is one arising from protected activity. It is the defendants burden to show that the challenged cause of action falls within the statute. (Equilon, supra, 29 Cal.4th at p. 66; ComputerXpress, supra, 93 Cal.App.4th at p. 1006.)

As courts applying the anti-SLAPP statute have recognized, the arising from requirement is not always easily met. (Equilon, supra, 29 Cal.4th at p. 66.) The conduct at issue must fall within one of the four categories set forth in the statute. (Ibid., citing 425.16, subd. (e).) The statutory definition of an act in furtherance of right of petition or free speech 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; (4) or 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. ( 425.16, subd. (e).)

As case law makes clear, the mere fact that an action was filed after protected activity took place does not mean the action arose from that activity for the purposes of the anti-SLAPP statute. (Navellier, supra, 29 Cal.4th at p. 89.) In the anti-SLAPP context, the critical consideration is whether the cause of action is based on the defendants protected free speech or petitioning activity. (Ibid.)

2. Second Prong: Probability of Prevailing

If the defendants showing satisfies the first prong of the analysis, the court proceeds to the second step, a determination of the plaintiffs probability of prevailing on the merits. ( 425.16, subd. (b)(1); Cotati, supra, 29 Cal.4th at p. 76.) The plaintiff has the burden of showing such a probability. (Taus v. Loftus (2007) 40 Cal.4th 683, 713.) To carry that burden, the plaintiff must state and substantiate a legally sufficient claim. (Id. at pp. 713-714.)

In deciding the question of potential merit, the trial court considers the pleadings and evidentiary submissions of both the plaintiff and the defendant ( 425.16, subd. (b)(2)). . . . (Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 821.) The court does not weigh the evidence or assess its probative value. (Ibid.; Taus v. Loftus, supra, 40 Cal.4th at p. 714.) Rather, the court accepts as true the evidence favorable to the plaintiff. (Soukup, supra, 39 Cal.4th at p. 291.) The court measures the plaintiffs showing against a standard similar to that used in deciding a motion for nonsuit, directed verdict, or summary judgment. (ComputerXpress, supra, 93 Cal.App.4th at p. 1010; Paiva v. Nichols (2008) 168 Cal.App.4th 1007, 1017; see Varian Medical Systems, Inc. v. Delfino, supra, 35 Cal.4th at p. 192.) The plaintiff need only establish that his or her claim has minimal merit [citation] to avoid being stricken as a SLAPP. (Soukup,at p. 291.) But the court should grant the motion if, as a matter of law, the defendants evidence supporting the motion defeats the plaintiffs attempt to establish evidentiary support for the claim. (Wilson v. Parker, Covert & Chidester, at p. 821; Taus v. Loftus, at p. 714.)

C. Waiver

The protections of section 425.16 may be waived. As the California Supreme Court explained in Navellier, a defendant who in fact has validly contracted not to speak or petition has in effect waived the right to the anti-SLAPP statutes protection in the event he or she later breaches that contract. (Navellier, supra, 29 Cal.4th at p. 94.) But as a thorough reading of Navellier makes clear, the issue of waiver arises only in the second prong of the analysis. (DaimlerChrysler Motors Co. v. Lew Williams, Inc. (2006) 142 Cal.App.4th 344, 351.) Thus, in Navellier, the mere fact the constitutional speech occurred in violation of a contract did not by itself preempt the application of the anti-SLAPP statute. Rather, the issue of breach was to be addressed under the statutes merits prong. (Ibid.) It is the plaintiffs burden to show that the defendant breached a valid waiver of the right to speak or petition. (Ibid.)

D. Appellate Review

By statute, an order denying a special motion to strike is appealable. ( 425.16, subd. (i); 904.1, subd. (a)(13); see Varian Medical Systems, Inc. v. Delfino, supra, 35 Cal.4th at p. 185.)

On appeal, we review the entire record de novo to determine, first, whether the defendant has made the requisite initial showing that the plaintiffs action arose from protected activity, and, if so, whether the plaintiff has demonstrated a reasonable probability of success. (Soukup, supra, 39 Cal.4th at p. 269, fn. 3; Rusheen v. Cohen, supra, 37 Cal.4th at p. 1055.)

II. Analysis

As we now explain, Grewal failed to satisfy the first prong of the two-part analysis, which requires a threshold showing that the challenged claim arose from protected activity. Based on our independent review and analysis of the record, we agree with the trial court that the claim did not arise from Grewals cross-complaint; rather, it arose from the asserted breach of his obligations under the deed of trust.

A. Protected Activity

At issue in the first prong of the analysis is whether the plaintiffs cause of action actually arose from the assertedly protected activity, and . . . whether the activity was in fact protected. (Cabral v. Martins (2009) 177 Cal.App.4th 471, 479.)

Unquestionably, the constitutional right to petition includes the basic act of filing suit. (Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1115; accord, Sycamore Ridge Apartments, LLC v. Naumann (2007) 157 Cal.App.4th 1385, 1397-1398.) Petition rights thus include communicative conduct such as the filing, funding, and prosecution of a civil action. (Rusheen v. Cohen, supra, 37 Cal.4th at p. 1056.)

B. Arising From Requirement

As our high court has explained, however: That a cause of action arguably may have been triggered by protected activity does not entail that it is one arising from such. (Cotati, supra, 29 Cal.4th at p. 78; accord, Kolar v. Donahue, McIntosh & Hammerton (2006) 145 Cal.App.4th 1532, 1537.) Thus, the mere fact that an action was filed after protected activity took place does not mean the action arose from that activity for the purposes of the anti-SLAPP statute. (Navellier, supra, 29 Cal.4th at p. 89; accord, Applied Business Software, Inc. v. Pacific Mortg. Exchange, Inc. (2008) 164 Cal.App.4th 1108, 1116 (Applied Business).)

That principle applies here. The fact that plaintiffs breach of contract claim was brought after Grewal filed his second amended cross-complaint and that it may have been triggered by that pleading does not show that plaintiffs claim is one arising from such. (Cotati, supra,29 Cal.4th at p. 78.)

In assessing the threshold showing, the critical consideration is whether the cause of action is based on the defendants protected free speech or petitioning activity. (Navellier, supra,29 Cal.4th at p. 89.) A cause of action that arises from a defendants protected actions is synonymous with a cause of action that is based on the defendants protected actions. . . . (Applied Business, supra,164 Cal.App.4th at p. 1116.)

The analysis turns on whether the conduct that forms the basis for the plaintiffs cause of action was itself . . . an act in furtherance of the right of petition or free speech. (Equilon, supra,29 Cal.4th at p. 66, internal quotation marks and citations omitted.) The focus is not on the plaintiffs litigation tactics but rather on the substance of the challenged claim. (Cotati, supra, 29 Cal.4th at p. 78.)

Courts thus need to examine the specific acts of wrongdoing alleged in the challenged pleading to determine whether they constitute protected activity. (Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP (2005) 133 Cal.App.4th 658, 671 (Peregrine).) Because conduct such as the breach of a contract may also fall within the class of constitutionally protected speech or petitioning activity, a court considering a special motion to strike must examine the allegedly wrongful conduct itself, without particular heed to the form of action within which it has been framed. (Ibid.) Courts thus focus on the specific nature of the challenged protected conduct, rather than generalities that might be abstracted from it. (Dyer v. Childress (2007) 147 Cal.App.4th 1273, 1279.)

The principal thrust or gravamen of the claim determines whether section 425.16 applies. (Dyer v. Childress, supra, 147 Cal.App.4th at p. 1279, quoting Martinez v. Metabolife Intern., Inc. (2003) 113 Cal.App.4th 181, 188; In re Episcopal Church Cases (2009) 45 Cal.4th 467, 477.) The allegations of plaintiffs complaint assist us in determining whether the principal thrust or gravamen of the causes of action is protected petitioning activity. (Freeman v. Schack (2007) 154 Cal.App.4th 719, 728.)

1. Conduct Giving Rise to the Claim

In this case, plaintiffs claim for breach of contract rests on three specific acts by Grewal: (1) failing to pay the loan; (2) executing and filing a cross-complaint . . . to cancel and otherwise impair the security of the Deed of Trust; and (3) supporting the efforts of his fellow cross-complainant . . . to cancel and otherwise impair said security.

In his appellate briefs, Grewal focuses solely on allegations related to his conduct in petitioning to cancel the deed of trust. (See Feldmanv. 1100Park Lane Associates (2008) 160 Cal.App.4th 1467, 1484 [the activities that allegedly breached the contract were the protected activities].) Grewal does not mention, much less discuss, the allegation that he failed to pay the loan secured by the deed of trust. (See Applied Business, supra, 164 Cal.App.4th at p. 1117 [breach of contract suit was based solely on defendants alleged failure to comply with specific provisions in the settlement agreement].) But the cause of action asserts both nonpayment and litigation activity as contract breaches.

Considering the variety of wrongful acts alleged, the causes of action at issue in this case are mixed in that they are based on both protected and unprotected activity. (Peregrine, supra, 133 Cal.App.4th at p. 672.) In such cases, case law instructs, the cause of action will be subject to section 425.16 unless the protected conduct is merely incidental to the unprotected conduct. (Ibid.) Put another way, when the allegations referring to arguably protected activity are only incidental to a cause of action based essentially on nonprotected activity, collateral allusions to protected activity should not subject the cause of action to the anti-SLAPP statute. (Martinez v. Metabolife Intern., Inc., supra, 113 Cal.App.4th at p. 188.) In assessing whether the protected conduct is incidental, courts look to the principal thrust or gravamen of the plaintiffs cause of action to determine whether the statute applies. (Ibid.)

2. Gravamen of the Claim

Here, we conclude, the gravamen of the challenged cause of action is Grewals conduct in breaching the provisions of the deed of trust, not his actions in filing and supporting the cross-complaint. (Applied Business, supra, 164 Cal.App.4th at p. 1118.)

As plaintiffs stated below, their claim was based on the document attached to and incorporated by reference in Grewals cross-complaint, the fictitious long form deed of trust. Reasonably interpreted, that statement reflects the key focus of plaintiffs claim as the instrument itself, particularly the obligations that it imposes on Grewal; the litigation challenging the validity of that instrument represents a secondary consideration. (See Applied Business, supra,164 Cal.App.4th at p. 1118 [the gist of plaintiffs complaint is not that defendant did something wrong by acts committed during the course of the underlying federal action, but rather that defendant did something wrong by breaching the settlement agreement]; Wang v. Wal-Mart Real Estate Business Trust (2007) 153 Cal.App.4th 790, 808 [the alleged improper conduct does not arise from . . . petitioning activities but instead from defendants conduct in carrying out its contractual duties].) The gravamen of the challenged claim is reflected in its allegation of failure to repay the loan. The thrust of that claim is also consistent with the overall focus of plaintiffs complaint against Grewal, which seeks recovery for breach of guarantee, foreclosure of the deed of trust, fraud, unfair business practices, and imposition of a constructive trust.

Grewal points out that plaintiffs eighth cause of action was alleged in direct response to the Grewals second amended cross-complaint. But the fact that the cause of action was brought in response to his pleading is not determinative. Defendants have fallen victim to the logical fallacy post hoc ergo propter hoc because the [protected act] preceded plaintiffs complaint [it] must have caused plaintiffs complaint. (Marlin v. Aimco Venezia, LLC (2007) 154 Cal.App.4th 154, 160, italics added.) A cause of action may be triggered by or associated with a protected act, but it does not necessarily mean the cause of action arises from that act. (Kolar v. Donahue, McIntosh & Hammerton, supra, 145 Cal.App.4th at p. 1537, 1540 [in garden variety malpractice action, claims arose from defendants alleged legal malpractice and not from petitioning activity]; see also, e.g., Clark v. Mazgani (2009) 170 Cal.App.4th 1281, 1287 [complaint was not premised on landlords protected activities of initiating or prosecuting the unlawful detainer action but on violation of Ellis Act]; Freeman v. Schack, supra, 154 Cal.App.4th at p. 732 [the principal thrust of the conduct underlying the plaintiffs claims was not defendant attorneys filing or settlement of litigation but his undertaking to represent a party with interests adverse to plaintiffs]; Kajima Engineering and Const., Inc. v. City of Los Angeles (2002) 95 Cal.App.4th 921, 929 [the challenged pleading arose from plaintiffs bidding and contracting practices, not from acts in furtherance of its right of petition or free speech].)

Nor is it determinative that the challenged cause of action explicitly refers to the cross-complaint. The rule 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. (Martinez v. Metabolife Intern., Inc., supra, 113 Cal.App.4th at p. 188.)

C. Conclusion

A cause of action may be related to, associated with, or even triggered by protected activity without being subject to the anti-SLAPP statute. (Kolar v. Donahue, McIntosh & Hammerton, supra, 145 Cal.App.4th at p. 1537; Martinez v. Metabolife Intern., Inc., supra, 113 Cal.App.4th at p. 188.) The additional fact that protected activity may lurk in the background . . . does not transform a property dispute into a SLAPP suit. (In re Episcopal Church Cases, supra, 45 Cal.4th at p. 477.)

In this case, the allegations concerning Grewals petitioning activity are incidental to the principal thrust of the challenged claim as a secured loan transaction. (Martinez v. Metabolife Intern., Inc., supra, 113 Cal.App.4th at p. 188.) The gravamen of plaintiffs contract claim is Grewals breach of the obligations imposed on him by the deed of trust, conduct that does not constitute protected activity under the statute. (Wang v. Wal-Mart Real Estate Business Trust, supra, 153 Cal.App.4th at p. 808.)

Because Grewal failed to make a threshold showing that the challenged cause of action was based on protected activity, the burden of showing a probability of prevailing on its claims never shifted to the plaintiff and therefore we have no need to discuss that second prong of section 425.16. (Applied Business, supra, 164 Cal.App.4th at pp. 1118-1119; Marlin v. Aimco Venezia, LLC, supra, 154 Cal.App.4th at p. 160.)

DISPOSITION

The July 2008 order denying the special motion to strike is affirmed.

____________________________________________

McAdams, J.

WE CONCUR:

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Rushing, P.J.

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Duffy, J.

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[1] There is another named defendant, Mohinder Vander (Vander). And there is another cross-complainant, defendants wife, Manjeet Grewal. Neither is a party to this appeal.

[2] As plaintiffs explained in their reply papers on the motion: The document in question is a somewhat obscure record known as a Fictitious Long Form Deed of Trust and Assignment of Rents, which is a multi-page form of Deed of Trust containing various obligations incorporated by reference into Short Form Deeds of Trust recorded in Santa Clara County which Trustors of Short Form instruments are deemed to undertake.

[3] Unspecified statutory references are to the Code of Civil Procedure.

[4] In pertinent part, the challenged cause of action states: 51. GREWAL has alleged in his Second Amended Cross-Complaint filed in this action that the Deed of Trust referred to hereinabove . . . incorporated the Fictitious Long Form Deed of Trust and Assignment of Rents. . . . Pursuant to Paragraph 3 of the Fictitious Long Form Deed of Trust and Assignment of Rents, GREWAL agreed [t]o appear in and defend any action or proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or Trustee, and to pay all costs and expenses, including evidence of title and attorneys fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may appear, and in any suit brought by Beneficiary to foreclose this deed. [] 52. GREWAL breached, and continues to be in breach of, his agreement to carry out the terms of the Fictitious Deed of Trust by failing to pay the amount of the LOAN due to plaintiffs as hereinabove alleged, by executing and filing a cross-complaint herein against plaintiffs seeking to cancel and otherwise impair the security of the Deed of Trust . . . , and by supporting the efforts of his fellow cross-complainant MANJEET GREWAL to cancel and otherwise impair said security.