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32592 Valle Road LLC v. J Star Capital Holdings

December 23, 2010

32592 VALLE ROAD LLC, PLAINTIFF AND RESPONDENT,
v.
J STAR CAPITAL HOLDINGS, INC., DEFENDANT AND APPELLANT.



Appeal from an order of the Superior Court of Orange County, Charles Margines, Judge. Reversed and remanded. (Super. Ct. No. 30-2009-00126501)

The opinion of the court was delivered by: Aronson, J.

32592 Valle Road v. J. STAR Capital Holdings CA4/3

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

OPINION

Defendant J STAR Capital Holdings, Inc., (J STAR Holdings) appeals from an order denying its special motion to strike under the anti-SLAPP statute, Code of Civil Procedure section 425.16 (all further statutory references are to the Code of Civil Procedure, unless otherwise noted).*fn1

Plaintiff 32592 Valle Road LLC, (Valle Road) sued J STAR Holdings, alleging it induced defendants J STAR Motors, Inc., (J STAR Motors) and Jared W. Merrell to breach their lease with Valle Road. Valle Road alleged J STAR Holdings caused the breach by copying Valle Road's lender on a letter requesting Valle Road stipulate to relief from the automatic stay in Valle Road's pending bankruptcy proceeding. The letter sought relief from the stay so J STAR Motors and Merrell could file a state court action terminating the lease.

Concluding J STAR Holdings lacked standing to seek relief from the automatic bankruptcy stay because it was not a party to the lease, the trial court ruled J STAR Holdings was not entitled to section 425.16's protection. We reverse and remand the matter for the trial court to enter a new order granting J STAR Holdings' motion, and to decide any motion for attorney fees and costs under section 425.16, subdivision (c).

I FACTS AND PROCEDURAL HISTORY

Valle Road owned commercial real property in San Juan Capistrano, California. Valle Road borrowed money from Zions First National Bank (Zions Bank) to purchase the property and Zions Bank held a first trust deed to secure the loan.

In December 2006, Valle Road leased the property to J STAR Motors and its president, Merrell, for a five-year term. J STAR Motors operated a car dealership on the property. Early in the lease, J STAR Motors and Merrell repeatedly complained that Valle Road had intentionally interfered with their use of the property. For example, J STAR Motors and Merrell accused Valle Road of blocking access to various portions of the property and erecting a for sale sign that misled its customers to believe J STAR Motors was going out of business.

Less than two years into the lease, Valle Road defaulted on the Zions Bank loan. Eight months later, Valle Road filed for bankruptcy to prevent Zions Bank from foreclosing on the property.

During the pendency of the bankruptcy, Michael Vivoli, J STAR Motors and Merrell's counsel, sent a letter to Valle Road's bankruptcy counsel complaining that Valle Road continued to interfere with J STAR Motors and Merrell's use of the property. Vivoli's letter concluded by requesting Valle Road stipulate to grant relief from the automatic bankruptcy stay so J STAR Motors and Merrell could file a state court action terminating the lease based on Valle Road's conduct. Vivoli sent a copy of his letter to Zions Bank's counsel because he believed Zions Bank could object to any motion for relief from the automatic stay.

Valle Road refused to stipulate to grant J STAR Motors and Merrell relief from the automatic stay. J STAR Motors and Merrell subsequently filed a motion seeking relief from the stay, which the bankruptcy court granted.

A few weeks after Vivoli's letter, and while the bankruptcy was still pending, J STAR Motors and Merrell abandoned the property and moved the business to an Anaheim Hills parcel they purchased in the name of J STAR Holdings. Zions Bank foreclosed on Valle Road's property shortly after J STAR Motors and Merrell stopped paying rent.

Valle Road sued J STAR Motors, Merrell, and J STAR Holdings, asserting three causes of action. The first cause of action alleged J STAR Motors and Merrell breached the lease by abandoning the property and refusing to pay further rent. The second cause of action alleged J STAR Motors and Merrell intentionally interfered with the relationship between Valle Road and Zions Bank by copying Zions Bank's counsel on the letter requesting relief from the automatic stay. The third cause of action alleged J STAR Holdings induced J STAR Motors and Merrell to breach their lease with Valle Road by copying Zions Bank's counsel on the same letter. The first amended complaint did not explain how copying the letter to Zions Bank's counsel caused J STAR Motors and Merrell to breach the lease.

J STAR Motors, Merrell, and J STAR Holdings filed a special motion to strike the second and third causes of action. The motion asserted the letter constituted protected petitioning activity because it explained the basis for a proposed state court lawsuit and requested a stipulation for relief from the automatic bankruptcy stay so J STAR Motors and Merrell could seek relief in state court. The motion also asserted Valle Road had no evidence to support its inadequately pled second and third causes of action.

In opposition, Valle Road changed the basis for liability on the third cause of action. It now asserted, in a proposed, redrafted complaint, J STAR Holdings' conduct in finding a new location for J STAR Motors' facilities induced J STAR Motors and Merrell to breach their lease. The opposition did not mention, and made no attempt to defend, the letter copied to Zions Bank's counsel as the basis for the third cause of action against J STAR Holdings.

The trial court's minute order granted the motion on the second cause of action, but denied it on the third cause of action, explaining: "The motion is DENIED as to the 3rd C/A (Intentional interference with business relations). While the same conduct by defendants alleged in the 2nd C/A forms the basis for this claim, the court reaches a different result. J Star Holdings, against whom the 3rd C/A is directed, was not a party to the lease agreement. Thus, it had no standing to seek relief in bankruptcy court and consequently cannot maintain that the letter fell within the scope of [section] 425.16, [subdivision] (e)(2). Moving parties have failed to meet their initial burden, and the court need not consider whether plaintiff has demonstrated a probability of prevailing at trial."

J STAR Holdings appealed the trial court's denial of the special motion to strike on the third cause of action alleging interference with business relations. Valle Road did not appeal the trial court's ...


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