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City of Colton v. Gaylor W. Singletary

May 30, 2012

CITY OF COLTON, CROSS-COMPLAINANT AND APPELLANT,
v.
GAYLOR W. SINGLETARY, CROSS-DEFENDANT AND RESPONDENT.



APPEAL from the Superior Court of San Bernardino County. Janet M. Frangie, Judge. Affirmed in part; reversed in part; affirmed in part as modified. (Super.Ct.No. CIVSS800216)

The opinion of the court was delivered by: Miller J.

See Concurring and Dissenting Opinion

CERTIFIED FOR PUBLICATION

OPINION

The City of Colton (the City) filed a cross-complaint against Gaylor W. Singletary (Singletary) for (1) breach of contract; (2) breach of implied covenant of good faith and fair dealing; (3) unjust enrichment; (4) unfair business practices; (5) declaratory relief; and (6) injunctive relief. The cross-complaint concerned allegations that, in 1992, Singletary had agreed to construct infrastructure in the City as part of a subdivision plan. However, as the result of Singletary bribing a City councilmember, a second agreement was created in 1999, in which the City agreed to construct the infrastructure. Singletary sued to have the City construct the infrastructure per the 1999 agreement, and the City cross-complained for damages as a result of Singletary bribing the councilmember and not constructing the infrastructure per the 1992 agreement.

The trial court granted Singletary's anti-SLAPP motion as to the City's fourth cause of action (unfair business practices) and the sixth cause of action (injunctive relief), but denied the motion in all other respects. (Code Civ. Proc., § 425.16.)*fn1 The trial court awarded Singletary $5,750 for attorney's fees, and $80 for costs.

The City contends the trial court erred by granting the anti-SLAPP motion as to the fourth and sixth causes of action, and awarding attorney's fees and costs. The City raises six issues on appeal. First, the City asserts that the cross-complaint does not, or only incidentally, concerns protected activity. Second, the City contends that the evidence reflects the City is likely to prevail on its cross-complaint. Third, the City asserts the cross-complaint is exempt from the anti-SLAPP statute because it falls within the public enforcement exception. (§ 425.16, subd. (d).) Fourth, the City contends the cross-complaint is exempt from the anti-SLAPP statute because it falls within the public interest exception. (§ 425.17, subd. (b).) Fifth, the City asserts this court can consider the propriety of the attorney fee award on appeal. Sixth, the City contends the trial court erred in awarding attorney's fees.

FACTUAL AND PROCEDURAL HISTORY

A. CROSS-COMPLAINT

The facts in this subsection are taken from the City's cross-complaint and exhibits attached to the cross-complaint.

Singletary owned several acres of mostly undeveloped land in the southern area of the City (the Property). In 1992, Singletary sought permission from the City to subdivide and develop a portion of the Property. The subdivision and development plans triggered an obligation for Singletary to construct infrastructure to serve the Property, such as water systems, sewer systems, and paving streets. Singletary did not want to construct the infrastructure in 1992, so the City and Singletary entered into an agreement that allowed Singletary to subdivide and develop the Property, but defer construction of the infrastructure to a future date of the City's choosing. The foregoing agreement was recorded in a written contract dated October 29, 1992. In November 1992, the contract was recorded in San Bernardino County's official records, in conjunction with the recording of a parcel map by Singletary.

In November 1997, the City councilmember who represented the southern portion of the City was recalled, and James Grimsby (Grimsby) was elected to serve the remainder of the councilmember's term. After Grimsby's election, Singletary bribed Grimsby with cash in exchange for Grimsby's assistance in securing an agreement in which the City would construct the infrastructure. Singletary gave Grimsby approximately $4,986. In 1999, as a result of the bribery, the City Council voted to direct staff to negotiate a "'development plan'" with Singletary, otherwise referred to as the "Center Street extension project," and to enter into contractual agreements to construct various components of the infrastructure.

In March and April 2003, Singletary was charged with and pled guilty to bribing Grimsby to support the Center Street extension project. (18 U.S.C.S. § 666.) On January 10, 2008, Singletary sued the City, seeking to compel the City to construct the infrastructure at its own expense, per the 1999 agreement.

In 2009, the City discovered the 1992 contract, and in September 2009 the City sought to have Singletary construct the infrastructure, per the 1992 agreement. The City also sought to have Singletary reimburse it in the amount of $408,398.70, for the costs of construction that had already been completed by the City. In October 2009, Singletary rejected the City's demands. The City filed a cross-complaint against Singletary on June 30, 2010.

The City's fourth cause of action was for unfair business practices. (Bus. & Prof. Code, § 17200.) The City alleged: "Singletary has engaged and continues to engage in unlawful, unfair and fraudulent business acts and practices, as more fully set forth above, including but not limited to bribing Grimsby and now attempting to profit by that crime (despite having been caught and having pled guilty to a felony), in violation of various state and federal statutes, including without limitation, 18 U.S.C. § 666, California Government Code sections 1090 et seq., California Code of Civil Procedure section 128.7, subdivisions (b) and (f), and California Civil Code section 3517 and 3521."*fn2 In the "General Allegations" portion of the cross-complaint, the City alleged, "Singletary filed a civil lawsuit against Colton which, in substance, seeks to compel Colton to construct the Infrastructure at its own expense." The fourth cause of action sought (1) an injunction requiring Singletary to construct the remaining infrastructure; (2) restitution for the portions of the infrastructure already completed by the City; and (3) an injunction requiring Singletary to "cease and desist from seeking to profit by his own admitted bribery of Grimsby."

The City's sixth cause of action sought injunctive relief. The sixth cause of action realleged and incorporated by reference all of the general allegations, as well as the allegations in the fourth cause of action. The sixth cause of action sought: (1) an injunction requiring Singletary to construct the remaining infrastructure; (2) restitution for the portions of the infrastructure already completed by the City; and (3) an injunction requiring Singletary to "cease and desist from seeking to profit by Singletary's bribery of Grimsby."

B. ANTI-SLAPP MOTION

On July 21, 2010, Singletary filed an anti-SLAPP motion in response to the cross-complaint. Singletary asserted that the City's cross-complaint was based upon Singletary "'now attempting to profit" from his crime, which meant the City's claims were directed at Singletary's lawsuit against the City. Singletary argued that he had a constitutional right to file a lawsuit, and that "a criminal defendant who enters a non-litigated guilty plea has the right to litigate his factual guilt, for the first time, in a subsequent civil lawsuit." In other words, the guilty plea did not serve as collateral estoppel on the issue of the 1999 agreement being void as a result of the bribery.

Specific to the fourth cause of action for unfair business practices, Singletary argued that the cause of action was based upon his bribes and his current lawsuit, and that Singletary had a right to file his lawsuit. As to the sixth cause of action for injunctive relief, Singletary pointed out that the cause of action was directed at Singletary's attempt "to profit," which was "nothing more than a thinly-veiled attack on [Singletary's] petitioning activities in this case."

C. OPPOSITION TO THE ANTI-SLAPP MOTION

The City opposed Singletary's anti-SLAPP motion. The City argued that the two purposes of the cross-complaint were: (1) to enforce the 1992 contract, and (2) to prevent Singletary from profiting from his illegal activity. The City asserted the anti-SLAPP motion should be denied because: (1) the cross-complaint was exempt from the anti-SLAPP provision pursuant to the public interest exception (§ 425.17, subd. (b)); (2) the anti-SLAPP provisions were not applicable to the causes of action in the cross-complaint; and (3) the City was likely to prevail on the merits of its causes of action.

In regard to the public interest exception, the City explained that anti-SLAPP provisions do not apply to lawsuits that are "'brought solely in the public interest or on behalf of the general public'" if certain conditions exist. The conditions are: (1) "The plaintiff does not seek any greater relief than or different from the relief sought for the general public or a class of which the plaintiff is a member"; (2) "The action, if successful, would enforce an important right affecting the public interest, and would confer a significant benefit, whether pecuniary or non-pecuniary, on the general public or a large class of persons"; and (3) "Private enforcement is necessary and places a disproportionate financial burden on the plaintiff in relation to the plaintiff's stake in the matter." (§ 425.17, subd. (b).)

The City argued that its cross-complaint was brought in the public interest, that it sought reimbursement for past and future expenditures of public funds, and that it aimed to prevent Singletary "from illegally absconding with more funds belonging to the general public." The City asserted that it was not seeking relief greater than or different from the relief sought for the general public. The City reasoned that since it was a public entity, the relief it sought was inherently public.

Further, the City contended that success on the cross-complaint would enforce an important public right affecting the public interest, because the public would benefit from enforcing the 1992 agreement, and from "not allowing wrongdoers to profit from their crimes with taxpayer dollars." The City explained: "Preventing Singletary from profiting by his bribery will deter other would-be criminals from targeting public funds."

In regard to private enforcement, the City asserted it needed to privately enforce the 1992 agreement, because the public criminal action taken by the United States Attorney's Office did not prevent Singletary "from attempting to profit from his crimes." Accordingly, the City concluded that the cross-complaint was exempt from the anti-SLAPP provisions.

As to the issue of protected activity, the City asserted, "Singletary's bribery of Grimsby is not conduct in furtherance of Singletary's first amendment rights." The City conceded that the filing of a lawsuit was a protected activity, but asserted that "Singletary's lawsuit is anything but legitimate," and to deem such a lawsuit protected "would be [turning] the Code on its head." Further, the City argued that the gravamen of the cross-complaint was the important consideration--not the mere mention of protected activities. The City argued that the gravamen of its "first, second, third and fifth causes of action is to enforce the 1992 Contract." The City asserted that the gravamen of the fourth and sixth causes of action was "restor[ing] to [the City] the benefits taken by Singletary's illegal conduct and to prevent him from profiting further thereby." Alternatively, the City argued that to the extent the fourth and sixth causes of action related to Singletary's right to petition, the anti-SLAPP motion should fail because the City was likely to prevail on the merits.

As to the fourth cause of action, the City argued that bribery of a councilperson was an unlawful business practice, and Singletary was seeking "to enforce the illegal contract procured by his bribe," which was "unfair and fraudulent," and therefore, "Singletary should be enjoined from seeking to profit from his crime, and [the City] is entitled to restitution." The City reasoned, "While Singletary's acts of filing a civil suit might be protected by the litigation privilege, his underlying attempt to extort more money from [the City] is not."

In regard to the sixth cause of action, the City argued that injunctive relief was warranted because monetary relief would not make the City whole. The City argued injunctive relief was necessary to prevent Singletary from "seeking to profit from his illegal bribe." The City asserted that Singletary had "shown remarkable resourcefulness in trying to procure the benefits from his criminal activity, even several years after he was caught," and a permanent injunction was needed to "combat Singletary's fraud."

D. REPLY TO ANTI-SLAPP OPPOSITION

Singletary filed a reply to the City's opposition to the anti-SLAPP motion. As to the public interest exception, Singletary argued that the City did not plead any facts supporting the application of the public interest exception. In particular, Singletary argued that there was nothing indicating (1) the cross-complaint was filed on behalf of the general public or for the public good, because (a) there was nothing indicating that the City planned to restore the money to the City's taxpayers, (b) there was nothing indicating how many people would be affected by the lawsuit, and (c) the City had a "personal stake" in the lawsuit, so the lawsuit could not have been brought solely on behalf of the public; (2) the City sought relief greater or different than mere restitution to the taxpayers, because the City wanted more than the damages that would be awarded under the 1992 contract--Singletary asserted that the City wanted "a court declaration that all 'California cities are not liable under quasi-contract theories as a matter of law'"; and (3) the cross-complaint was not necessary because the City already challenged Singletary's complaint by filing a motion for sanctions (§ 128.7). Further, Singletary argued that the City's opposition included a concession that the cross-complaint was based on Singletary's "constitutional right to sue."

E. HEARING ON THE ANTI-SLAPP MOTION

On September 14, 2010, the trial court held a hearing on Singletary's anti-SLAPP motion. At the beginning of the hearing, the trial court stated that its tentative ruling was to grant the anti-SLAPP motion as to the fourth and sixth causes of action, but otherwise deny the motion. The trial court explained, "It seems to me that the City of Colton wants me to adjudicate the merits of the claim, and I cannot do that on these motions. I cannot adjudicate the merits and there's just way too much going on between the different contracts, and you know, what--what went on in the period of time."

As to the fourth cause of action, the trial court said, "It seems to me the whole cause of action for . . . unlawful business practice is, it's an unlawful business practice for him to bring an action against us when he's a convicted criminal. That--not only am I unclear that that can be the basis of an unlawful business practice or a business activity, it's--it's impinging on his right to bring a claim."

The City argued that Singletary's act of filing a lawsuit was not the only act at issue in the fourth and sixth causes of action, and that the claims also addressed his bribery and Singletary's continuing actions with neighboring property owners, developers, and contractors. The City conceded that it perhaps needed to provide more detail in its cross-complaint, but argued that it would be an oversimplification to assert that its claims were based merely upon Singletary filing a lawsuit.

The trial court responded, "But it appears to me that the fourth cause of action, the gravamen of that action is basically that it's an unlawful practice, business practice, for him to pursue his claims for the purpose of obtaining the benefit of his wrongful conduct. That's all I get." As to the sixth cause of action, the trial court found that the request for injunctive relief was not solely linked to the Singletary's lawsuit, but the trial court concluded that the allegations could not be parsed. The trial court said, "you can't separate them out. You can't carve them out. That if it's the subject of protected activity, the entire thing goes."

Singletary then argued that the trial court's conclusion about not parsing meant that the entire cross-complaint should be stricken, because all the causes of action incorporated a reference to Singletary filing a complaint, and, therefore, since items cannot be "carved out" the anti-SLAPP motion should be granted as to the whole cross-complaint. The City argued that incidental allegations in a pleading do not make a cause of action subject to an anti-SLAPP strike.

In response to the parties' arguments, the court said, "SLAPP motions are very, very, very difficult." The trial court explained, "But it's very interesting to me, I don't think it's appropriate to strike . . . all of the causes of action in a complaint because it's related to another cause of action that is subject to an Anti-SLAPP motion and . . . [¶] . . . I could be wrong. [¶] . . . It's inconsistent--I'm not going to change my ruling, but I think maybe . . . that needs to be decided."

The City again argued that there was nothing in the fourth and sixth causes of action specifically referencing Singletary's lawsuit. The City offered to stipulate that it was only seeking to enjoin Singletary's non-lawsuit related activities--so Singletary would not be enjoined from suing the City. The trial court stated that it felt troubled by having to strike the sixth cause of action, due solely to its association with the fourth cause of action, because it felt there were portions of the sixth cause of action that were appropriate; however, the trial court again concluded that the law required the entire sixth cause of action to be stricken, since it was partially related to protected activity.

The City asked if the trial court considered the public interest exception. The trial court stated that it did consider the argument, but concluded that it did not apply. The trial court explained, "[J]ust because you're a contracting party doesn't mean that you're asserting [an] interest that is solely in the public interest." The City asked, "But whose other interest would . . . [we] be seeking to pursue? We are a public entity." The trial court responded that if such an argument were correct, then any time a public agency were involved in a lawsuit, then the anti-SLAPP provisions would not apply. The trial court said that if such a rule were made "it would defeat the whole--they should just say that, any governmental entity and it's not that." The City responded that there was very little anti-SLAPP law involving public agencies, because "public entities aren't subject to the SLAPP statute as a practical matter." The trial court concluded that the City had not presented sufficient evidence that the public interest exception applied to the cross-complaint.

The trial court took the matter under submission. The trial court issued a ruling granting the anti-SLAPP motion as to the City's fourth and sixth causes of action. The trial court explained, "The gravamen of these causes of action is directed to Singletary's filing of the underlying complaint and the City did not meet its burden of demonstrating a probability prevailing on these causes of action."

DISCUSSION

A. TWO-STEP ANTI-SLAPP PROCESS

1. CONTENTION

The City contends the trial court erred by granting the anti-SLAPP motion as to the fourth and sixth causes of action because (1) the causes of action do not concern protected activity, and (2) the City is likely to prevail on the causes of action. We agree n part, and disagree in part.

2. ANTI-SLAPP LAW AND STANDARD OF REVIEW

"In 1992, the Legislature enacted section 425.16, the anti-SLAPP statute, to provide for the early dismissal of unmeritorious claims filed to interfere with the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances. [Citation.]" (Club Members for an Honest Election v. Sierra Club (2008) 45 Cal.4th 309, 315.) Anti-SLAPP motions involve a two-step process. First, the defendant must make a prima facie showing that the plaintiff's causes of action arise from actions by the defendant that were in furtherance of the defendant's right of petition or free speech in connection with a public issue. If the defendant satisfies this threshold burden, then the plaintiff must establish a probability of prevailing on its claims. (§ 425.16, subd. (b)(1); Club Members, at pp. 315-316.)

"We independently determine whether a cause of action is based upon activity protected under the statute, and if so, whether the plaintiff has established a reasonable probability of prevailing. [Citation.]" (Sylmar Air Conditioning v. Pueblo Contracting Services, Inc. (2004) 122 Cal.App.4th 1049, 1056.)

3. PRELIMINARY ISSUES

a) Language of the Fourth Cause of Action

The fourth cause of action concerns unfair business practices. (Bus. & Prof. Code, § 17200.) In the "General Allegations" portion of the cross-complaint, the City alleges, "Notwithstanding the [1992] Contract, and further notwithstanding his felony bribery conviction, on January 10, 2008, Singletary filed a civil lawsuit against Colton which, in substance, seeks to compel Colton to construct the Infrastructure at its own expense. Singletary's complaint and subsequent amended complaints fail to acknowledge the [1992] Contract or the bribery conviction. Moreover, Singletary failed to produce the Contract in written discovery. Ultimately, Colton learned of the existence of the Contract in 2009 through its own independent investigation. The staff members who had been involved with the Contract back in 1992 had long since left the employ of the City."

Within the fourth cause of action, the City realleges and incorporates all of the general allegations, including the one set forth ante. The fourth cause of action includes the following allegation: "Singletary has engaged and continues to engage in unlawful, unfair and fraudulent business acts and practices, as more fully set forth above, including but not limited to bribing Grimsby and now attempting to profit by that crime (despite having been caught and having pled guilty to a felony), in violation of various state and federal statutes including without limitation, 18 U.S.C. § 666, California Government Code sections 1090 et seq., California Code of Civil Procedure section 128.7, subdivisions (b) and (f), and California Civil Code section 3517 and 3521."*fn3

In the fourth cause of action, Colton alleged that it was "entitled to injunctive relief and restitution orders requiring Singletary to: (a) construct those portions of the Infrastructure which remain to be constructed; (b) reimburse Colton for the portions of the Infrastructure which Colton has already constructed; [and] (c) cease and desist from seeking to profit by his own admitted bribery of Grimsby."

b) Interpretation of the Fourth Cause of Action

In reading the fourth cause of action, we have found two separate causes of action that have been combined. The first concerns Singletary's bribery and seeks restitution. The second concerns Singletary's lawsuit and seeks an injunction. We infer that a portion of the cause of action relates to the bribery due to the citations to (1) 18 United State Code section 666, which relates to bribing a public official; and (2) Government Code section 1090, which concerns financial conflicts of interest in public sales or purchases. It can be reasonably inferred from these legal citations that the City is alleging it is owed restitution due to Singletary's act of bribing Grimsby.

We infer that the second half of the cause of action concerns Singletary's lawsuit against the City due to the citations to Code of Civil Procedure section 128.7, subdivisions (b) and (f). Code of Civil Procedure section 128.7, subdivision (b) concerns presenting a court with a pleading or motion. Code of Civil Procedure section 128.7, subdivision (f) relates to awarding punitive damages against a plaintiff when a court determines an action was maintained by a felon against the felon's victim for actions arising out the relevant felony. It appears from these legal citations that the City is alleging fault with Singletary's act of filing a lawsuit. Thus, the fourth cause of action presents two theories of liability or fault: (1) bribery (18 U.S.C. § 666, Gov. Code, § 1090), and (2) filing a lawsuit (Code of Civ. Proc., § 128.7, subds. (b) & (f)).

4. PROTECTED ACTIVITY

As set forth ante, when considering an anti-SLAPP motion, it must be determined whether the lawsuit relates to the cross-defendant's acts in furtherance of his "right of petition or free speech . . . in connection with a public issue." (§ 425.16, subd. (b)(1).) "'"A defendant meets this burden by demonstrating that the act underlying the plaintiff's cause fits one of the categories spelled out in section 425.16, subdivision (e) . . . ."' [Citations.]" (Bleavins v. Demarest (2011) 196 Cal.App.4th 1533, 1539-1540.) Section 425.16, subdivision (e), defines an "action in furtherance of a person's right of petition or free speech . . . in connection with a public issue" as including "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." (See also Birkner v. Lam (2007) 156 Cal.App.4th 275, 281 ["'The constitutional right to petition . . . includes the basic act of filing litigation or otherwise seeking administrative action.'"].)

Section 128.7, subdivision (b), provides: "By presenting to the court, whether by signing, filing, submitting, or later advocating, a pleading, petition, written notice of motion, or other similar paper, an attorney or unrepresented party is certifying that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, all of the following conditions are met: [¶] (1) It is not being presented primarily for an improper purpose . . . . [¶] (2) The claims, defenses, and other legal contentions therein are warranted by existing law . . . . [¶] (3) The allegations and other factual contentions have evidentiary support . . . . [¶] (4) The denials of factual contentions are warranted on the evidence . . . ."

As set forth ante, a portion of the City's fourth cause of action alleges Singletary "has engaged and continues to engage in unlawful, unfair and fraudulent business acts and practices," in part by violating section 128.7, subdivision (b). As set forth in the paragraph ante, section 128.7 relates to the acts of filing motions or pleadings with court. Further, in the "General Allegations" portion of the City's cross-complaint specifically mentions Singletary's act of "fil[ing] a civil lawsuit against Colton." Since this portion of the fourth cause of action concerns Singletary's complaint, the cause of action relates to a writing made in connection with an issue under consideration or review by a judicial body. (§ 425.16, subd. (e).) Thus, the activity is protected because it relates to Singletary's right to petition in connection with a public issue.*fn4

In regard to the bribery portion of the fourth cause of action, bribery is not a protected activity. (See Flatley v. Mauro (2006) 39 Cal.4th 299, 328 ["Extortion is not a constitutionally protected form of speech."]; see also Cross v. Cooper, supra, 197 Cal.App.4th at pp. 383-384.) Thus, the mixed cause of action has presented us with a quandary: one of the theories of fault (the lawsuit) ...


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