Atoori v. Faramarzi

Filed 5/18/10 Atoori v. Faramarzi CA2/3

Received for posting 5/25/10

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.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

APPEAL from an order of the Superior Court of Los Angeles County, Kenneth R. Freeman, Judge. Affirmed.

Norris & Galanter and Douglas F. Galanter for Plaintiffs and Appellants.

Law Offices of Farah Faramarzi and Farah Faramarzi for Defendant and Respondent.

_______________________________________

Ben Atoori and Stonelock Media Group, Inc. (Stonelock), appeal an order granting a special motion to strike their complaint against Fred Faramarzi. Plaintiffs allege that Faramarzi created a dispute between plaintiffs and their business partner, Ali Reza Jayez, resulting in business losses. The trial court concluded that the complaint arose from statements made by Faramarzi in anticipation of litigation and that the statements were protected by the litigation privilege (Civ. Code,  47, subd. (b)). The court therefore granted the special motion to strike. Plaintiffs contend the complaint does not arise from an act in furtherance of the constitutional right of petition or free speech within the meaning of the anti-SLAPP statute (Code Civ. Proc.,  425.16)[1] and they have established a reasonable probability of prevailing on the merits. We conclude that plaintiffs have shown no error, and will affirm the order.

FACTUAL AND PROCEDURAL BACKGROUND

1. Business Dealings

Atoori is a film producer and president of Stonelock, a production company. Atoori and Stonelock owned several film projects that were at various stages of production as of July 2006. They formed what they characterize as a partnership/joint venture with Jayez and Cheyenne Studios LLC (Cheyenne) in July 2006 to develop those film projects and to acquire a film library owned by Frank Mayor and AIM Group, LLC (AIM Group). Atoori, Stonelock, Jayez, and Cheyenne later formed Tripod Entertainment, LLC (Tripod), for the same purposes.

Tripod entered into a written agreement with Mayor and AIM Group in February 2007 for the purchase and sale of the film library. Tripod made partial payment toward the purchase but was unable to complete the purchase.

Atoori, Jayez, and Faramarzi entered into a written letter of intent in September 2007 in anticipation of an agreement to form a new company (New Co.) to acquire the film library. The letter of intent stated that if the parties reached an agreement and Faramarzi provided $5 million in financing, New Co. would enter into an agreement with Mayor and AIM Group to acquire the film library on the same terms as the prior agreement with Tripod. The letter of intent stated that Faramarzi would receive the first $5 million in revenue as reimbursement for his investment and that Tripod would receive the next $500,000 as reimbursement for its payment made toward a purchase option, followed by $500,000 to New Co. and an additional $132,000 to Tripod as recoupment for interest paid. Mayor and AIM Group terminated the agreement with Tripod in October 2007, and the letter of intent never developed into an agreement as anticipated.

Atoori and Faramarzi entered into a written agreement in October 2007 to form Visionary Artists, LLC (Visionary Artists), to acquire the film library from Mayor and AIM Group and develop film projects. The agreement stated that any previous payments made by Tripod toward the purchase would be credited to Visionary Artists. It also stated that Jayez has entered into a Full Release of all obligations by Aim Group, Inc. and/or Frank Mayor under the Tripod Purchase Agreement in order to facilitate VAs purchase of the Film Library.

A dispute arose between Atoori and Faramarzi regarding the Visionary Artists agreement. Atoori and Faramarzi entered into a written Buyout Agreement and Release (Buyout Agreement) in December 2007, under which Faramarzi agreed to purchase Atooris interests in Visionary Artists and the film library for $3 million and to release any interest he had acquired in certain film projects. Atoori and Faramarzi also agreed to a mutual release of any claims arising from those matters. Atoori agreed to indemnify Faramarzi and hold him harmless from any claims by Jayez, Tripod, or Stonelock based on prior activities relating to the film library. The Buyout Agreement acknowledged a previous payment of $620,000 by Faramarzi to Atoori (originally a loan), provided for payment of an additional $750,000 upon the execution of the agreement, and provided that Faramarzi would pay Atoori and Stonelock an additional $1,680,000 within 90 days.

Faramarzi informed Jayez of the Buyout Agreement on or about March 14, 2008, and requested a release from liability in connection therewith. Jayez, through his attorney, refused and asserted a claim to the $1,680,000 payment in a letter dated March 14, 2008.

2. Interpleader Action

Faramarzi filed a complaint in interpleader on March 21, 2008 against Atoori, Jayez, Tripod, and Stonelock. Faramarzi and Visionary Artists filed an amended complaint in May 2008, alleging that the same defendants had conflicting claims to the $1,680,000 payment and that he claimed no interest in the money. He deposited $1,680,000 with the trial court.

Jayez and Tripod jointly filed a cross-complaint asserting an interest in the interpleaded funds. They alleged that Atoori and Faramarzi had secretly conspired to acquire Tripods rights to the film library and exclude Jayez from the deal. They alleged that, in addition to the other agreements described above, Visionary Artists entered into a written agreement with Mayor in October 2007 for the purchase and sale of the film library. Jayez and Tripod alleged several counts against Atoori, Faramarzi, Stonelock, and Visionary Artists.

Atoori, Jayez, Tripod, and Stonelock entered into a stipulation providing for the release of the interpleaded funds to be distributed in accordance with their undisclosed agreement. The stipulation also released Faramarzi and Visionary Artists from liability to the defendants with respect to the interpleaded funds and included a dismissal of the cross-complaint by Jayez and Tripod. The trial court entered an order pursuant to the stipulation in June 2008.[2]

3. Complaint in the Present Action

Atoori and Stonelock filed a complaint against Faramarzi on July 25, 2008, in the present action, and filed an amended complaint on July 28, 2008. They allege that Faramarzi contacted Jayez in March 2008 and falsely accused Atoori of wrongdoing. Specifically, they allege that Faramarzi accused Atoori of excluding Jayez from the proposed purchase of the film library by Visionary Artists and then selling the interests of Jayez and Tripod to the film library under the terms of the Buyout Agreement. They also allege that Faramarzi informed Jayez of the payment due from Faramarzi to Atoori under the Buyout Agreement and suggested that Jayez could assert a claim to those funds. They allege further that Faramarzi agreed to assist Jayez in filing a lawsuit against Atoori in exchange for a percentage of any recovery, with the expectation that any recovery retained by Jayez would allow Jayez to repay his prior loans from Faramarzi. Atoori and Stonelock allege that Faramarzis statements created a disruption in their business relationships with Jayez, resulting in significant losses.

Atoori and Stonelock allege a count for intentional interference with business relationships based on these allegations. They also allege a count for breach of contract, alleging that Faramarzi failed to timely pay amounts due under the Buyout Agreement and deprived them of the benefits of the Buyout Agreement.

4. Special Motion to Strike

Faramarzi filed a special motion to strike the complaint. He argued that the complaint arose from an act in furtherance of his right of petition or free speech within the meaning of the anti-SLAPP statute because his statements made to Jayez in March 2008 were related to his anticipated interpleader action. He also argued that Atoori and Stonelock could not establish a probability of prevailing on the merits of their claims. Faramarzi also demurred to the complaint.

Atoori and Stonelock argued in opposition to the special motion to strike that Faramarzis statements made to Jayez were not made in furtherance of or in connection with the subsequently filed interpleader action. They also argued that they had a probability of prevailing on the merits of their claims and filed a declaration by Atoori. They also opposed the demurrer.

Faramarzi filed his own declaration in reply to the opposition and filed evidentiary objections to portions of the Atoori declaration. He also filed a request for judicial notice of several documents filed in the trial court in the interpleader action. Atoori and Stonelock filed evidentiary objections to portions of the Faramarzi declaration.

The trial court sustained some of the objections to the Atoori declaration and overruled others, and did not rule on the objections to the Faramarzi declaration or the request for judicial notice. The court concluded that the complaint arose from an act in furtherance of Faramarzis exercise of his constitutional right of petition or free speech because his statements were made in the anticipation of litigation, and that Atoori and Stonelock had failed to establish a probability of prevailing on the merits because both counts were based on statements protected by the litigation privilege (Civ. Code,  47, subd. (b)). The court therefore granted the special motion to strike and did not rule on the demurrer. Atoori and Stonelock timely appealed the order.

CONTENTIONS

Atoori and Stonelock contend (1) the alleged statements made by Faramarzi to Jayez concerning Atoori were not made in furtherance of his constitutional right of petition or free speech within the meaning of the anti-SLAPP statute; (2) the statements were not protected by the litigation privilege because Faramarzi did not make the statements at a time when he seriously and in good faith contemplated litigation; and (3) other reasons asserted by Faramarzi in the trial court that plaintiffs could not prevail on the merits of their complaint are groundless.

DISCUSSION

1. Special Motion to Strike

A cause of action is subject to a special motion to strike if it arises from an act in furtherance of the defendants constitutional right of petition or free speech in connection with a public issue and the plaintiff fails to establish a probability of prevailing on the merits of the claim. ( 425.16, subd. (b)(1).) The purpose of the anti-SLAPP statute is to encourage participation in matters of public significance and prevent meritless litigation designed to chill the exercise of First Amendment rights. ( 425.16, subd. (a).) The Legislature has declared that the statute must be construed broadly to that end. (Ibid.)

A defendant moving to strike a cause of action under the anti-SLAPP statute must show that the cause of action aris[es] 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 ( 425.16, subd. (b)(1)). (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67 [124 Cal.Rptr.2d 507, 52 P.3d 685].) If the defendant makes that showing, the plaintiff must establish a probability of prevailing on the merits of the claim in order to avoid dismissal. ( 425.16, subd. (b)(1); Equilon, supra, at p. 63.) On appeal, we independently determine whether the challenged cause of action arises from the defendants exercise of the constitutional right of petition or free speech and whether the plaintiff has demonstrated a probability of prevailing on the merits of the claim. (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1055 [39 Cal.Rptr.3d 516, 128 P.3d 713]; ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 999 [113 Cal.Rptr.2d 625].) (Hall v. Time Warner, Inc. (2007) 153 Cal.App.4th 1337, 1345-1346.)

2. The Complaint Arises from Acts in Furtherance of Faramarzis
Right of Petition

A cause of action aris[es] from protected activity within the meaning of section 425.16, subdivision (b)(1) only if the defendants act underlying the cause of action, and on which the cause of action is based, was an act in furtherance of the defendants right of petition or free speech in connection with a public issue. (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78 [124 Cal.Rptr.2d 519, 52 P.3d 695]; ComputerXpress, Inc. v. Jackson, supra, 93 Cal.App.4th at p. 1001.) (Hall v. Time Warner, Inc., supra, 153 Cal.App.4th at p. 1346.)

Faramarzis acts on which the complaint is based are his alleged statements made to Jayez (1) informing Jayez of Visionary Artists proposed purchase of the film library and the subsequent Buyout Agreement, (2) suggesting that Jayez had been wrongfully excluded from the transactions, and (3) encouraging Jayez to pursue litigation against Atoori and Stonelock.[3]

Section 425.16, subdivision (e) describes four categories of conduct that constitute an  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  within the meaning of subdivision (b)(1): (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.  (Hall v. Time Warner, Inc., supra, 153 Cal.App.4th at p. 1347.) If the defendant shows that the cause of action arises from a statement described in section 425.16, subdivision (e)(1) or (2), the defendant is not required to separately demonstrate that the statement was made in connection with a public issue. (Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1113 (Briggs).)

Statements made before an official proceeding or in connection with an issue under consideration in an official proceeding, as described in section 425.16, subdivision (e)(1) and (2), are not limited to statements made after the commencement of an official proceeding. Instead, statements made in anticipation of a court action or other official proceeding may be entitled to protection under the anti-SLAPP statute.  [J]ust as communications preparatory to or in anticipation of the bringing of an action or other official proceeding are within the protection of the litigation privilege of Civil Code section 47, subdivision (b) [citation], . . . such statements are equally entitled to the benefits of section 425.16. [Citations.] (Briggs, supra, 19 Cal.4th at p. 1115; accord, Flatley v. Mauro (2006) 39 Cal.4th 299, 322, fn. 11.)

The California Supreme Court has stated that a prelitigation communication is privileged only if it relates to litigation that is contemplated in good faith and under serious consideration. (Action Apartment Assn., Inc. v. City of Santa Monica(2007) 41 Cal.4th 1232, 1251 (Action Apartment).) Good faith in this context refers to a good faith intention to file a lawsuit rather than a good faith belief in the truth of the communication. (Ibid.) Similarly, the Courts of Appeal have stated that a prelitigation statement falls within section 425.16, subdivision (e)(1) or (2) if the statement  concern[s] the subject of the dispute and is made in anticipation of litigation contemplated in good faith and under serious consideration  [citation]. (Neville v. Chudacoff (2008) 160 Cal.App.4th 1255, 1268; accord, Rohde v. Wolf (2007) 154 Cal.App.4th 28, 37.)

A person who may be subject to conflicting claims relating to the same personal property or the performance of an obligation may file a complaint in interpleader to compel the claimants to litigate their claims among themselves. (Code Civ. Proc.,  386, subd. (a).) The claimants are named as defendants. (Ibid.) The interpleading party may deposit with the court any amount that he or she admits to be payable. (Id., subd. (c).) A defendant in such an action may allege his or her ownership of the disputed property, or some other interest, either in an answer or a cross-complaint. (Id., subd. (d).) The interpleading party may be discharged from liability to the conflicting claimants. (Id., subd. (a).)

Faramarzi alleged in his complaint in interpleader that Atoori, Jayez, Tripod, and Stonelock had conflicting claims to the $1,680,000 payment due from him under the Buyout Agreement. He deposited $1,680,000 with the court, alleged that he claimed no interest in the funds, and sought a judicial resolution of the conflicting claims. He stated in his declaration filed in reply to plaintiffs opposition to his special motion to strike that he realized after making his initial payment to Atoori under the Buyout Agreement that Jayez and Tripod could assert a claim to his payments under the agreement, that he contemplated filing a complaint in interpleader, and that he requested a release from Jayez in order to avoid the necessity of commencing an interpleader action.

Faramarzis statements made to Jayez in March 2008, approximately one week before he filed his complaint, concerned the subject of his interpleader action. Faramarzi allegedly informed Jayez of Visionary Artists proposed purchase of the film library and the subsequent Buyout Agreement. Those statements and his statements allegedly suggesting that Jayez had been wrongfully excluded from the transactions and encouraging Jayez to pursue litigation against Atoori and Stonelock all concerned the potential for the conflicting claims that were the subject of his interpleader action. Moreover, in light of the facts that Farmarzi filed his complaint in interpleader approximately one week later, claimed no interest in the disputed funds, and deposited $1,680,000 with the court to be distributed to the appropriate parties as determined by the court, it cannot reasonably be disputed that the interpleader action was contemplated in good faith and was under serious consideration at the time of the alleged statements.

Accordingly, we conclude that the count for intentional interference with business relationships arises from statements made before an official proceeding or in connection with issue an issue under consideration in an official proceeding within the meaning of section 425.16, subdivision (e)(1) and (2). The complaint therefore arises from acts in furtherance of Faramarzis right of petition or free speech in connection with a public issue, and plaintiffs were required to establish a probability of prevailing on the merits to avoid a dismissal.

3. The Litigation Privilege Precludes any Probability of
Plaintiffs Prevailing on the Merits

The litigation privilege precludes liability arising from a publication or broadcast made in a judicial proceeding or other official proceeding.[4]  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 [has] some connection or logical relation to the action. [Citation.] The privilege is not limited to statements made during a trial or other proceedings, but may extend to steps taken prior thereto, or afterwards. [Citation.] (Action Apartment, supra, 41 Cal.4th at p. 1241.) The litigation privilege is interpreted broadly in order to further its principal purpose of affording litigants and witnesses the utmost freedom of access to the courts without fear of harassment in derivative tort actions. (Ibid.) The privilege is absolute and applies regardless of malice.[5] (Ibid.)

A prelitigation communication is privileged only if it relates to litigation that is contemplated in good faith and under serious consideration (Action Apartment, supra, 41 Cal.4th at p. 1251), as we have stated. Good faith in this context refers to a good faith intention to file a lawsuit rather than a good faith belief in the truth of the communication. (Ibid.) The requirement of good faith contemplation and serious consideration provides some assurance that the communication has some   connection or logical relation   to a contemplated action and is made  to achieve the objects   of the litigation. (Ibid.) Whether a prelitigation communication relates to litigation that is contemplated in good faith and under serious consideration is an issue of fact. (Ibid.)

Faramarzi stated in his declaration, I filed the subsequent interpleader action based on their [Jayezs and Tripods] assertion of claim to the remaining buyout payment. Plaintiffs contend this shows that Faramarzi was not seriously contemplating litigation at the time of his alleged statements to Jayez and that Faramarzi filed his complaint as a defensive reaction to a dispute he himself caused. We do not construe the declaration as an admission to that effect.

In our view, the facts alleged in the complaint and the undisputed evidence in the record show that Faramarzi had good reason to believe that Jayez and Tripod, if they became aware that their interests in Tripods payments previously made toward the purchase of the film library had effectively been sold primarily for the benefit of others, would assert a claim to the $1,680,000 payment due to Atoori and Stonelock under the Buyout Agreement. It was prudent and furthered the purpose of the contemplated interpleader action, to allow for the judicial resolution of conflicting claims, for Faramarzi to contact Jayez rather than proceed to deliver the payment to Atoori. The potential for conflicting claims was very substantial at the time of the alleged statements, all of which related to the conflicting claims that became the subject of the interpleader action filed approximately one week later, as we have stated. Neither the quoted statement in Faramarzis declaration nor any other evidence presented or cited by plaintiffs controverts what is plain on this record.[6] We conclude that the record establishes as a matter of law that the alleged statements related to litigation that was contemplated in good faith and under serious consideration at the time the statements were made.

The interpleader action provided an appropriate opportunity for the court to resolve in an orderly fashion the dispute concerning the interpleaded funds and related matters. The present action exemplifies the sort of derivative litigation that the litigation privilege was intended to prevent.

Accordingly, we conclude that the litigation privilege applies to the alleged statements and precludes liability for the counts alleged in the complaint. Plaintiffs therefore cannot establish a probability of prevailing on the merits of their claims. In light of our conclusion, we need not address plaintiffs other contentions.[7]

DISPOSITION

The order granting the special motion to strike is affirmed. Faramarzi is entitled to recover his costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

CROSKEY, J.

We Concur:

KLEIN, P. J. KITCHING, J.

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[1] All statutory references are to the Code of Civil Procedure unless stated otherwise.

[2] We judicially notice the complaint filed on March 21, 2008, the first amended complaint filed on May 13, 2008, the cross-complaint filed by Jayez and Tripod on March 26, 2008, and the stipulation and order filed June 11, 2008, all in Los Angeles Superior Court case No. LC080896. (Evid. Code,  452, subd. (d).)

[3] Plaintiffs contend their count for breach of contract is not based on Faramarzis failure to deliver the payment due under the Buyout Agreement and deposit of that amount in court instead in connection with the interpleader action, but on his alleged disruption of their business relationships with Atoori and Stonelock in violation of the implied covenant of good faith and fair dealing in the Buyout Agreement. We will accept this characterization solely for the purpose of our ruling in this appeal.

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

[5] The litigation privilege does not apply to malicious prosecution actions. (Albertson v. Raboff (1956) 46 Cal.2d 375, 382.) Albertson explained, [t]he policy of encouraging free access to the courts that underlies the absolute privilege applicable in defamation actions is outweighed by the policy of affording redress for individual wrongs when the requirements of favorable termination, lack of probable cause, and malice are satisfied. (Ibid.; accord, Action Apartment, supra, 41 Cal.4th at p. 1242.)

[6] In addition to the statement in the declaration quoted by plaintiffs, Faramarzi declared that he seriously considered in good faith filing the interpleader action not to be subject to multiple liability and that he sought a release from Jayez in order not to need to file the interpleader action.

[7] Plaintiffs argue for the first time in their reply brief that Faramarzi breached a confidentiality clause in the Buyout Agreement and that the litigation privilege does not apply to the breach. We consider the point waived because plaintiffs failed to assert the argument in their opening brief on appeal. (Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 764.)