California Court of Appeals, Third District, Yolo
from a judgment of the Superior Court of Yolo County No. CV
CV 12-1067, Daniel P. Maguire, Judge. Reversed with
Buchalter Nemer, Buchalter, Jeffrey S. Wruble, Efrat M.
Cogan, and Oren Bitan for Defendant and Appellant.
Offices of Melinda Jane Steuer and Melinda Jane Steuer for
Plaintiff and Respondent.
OPINION ON REMAND
NICHOLSON, Acting P. J.
appeal challenges the trial court's denial of
defendant's special motion to strike the complaint under
Code of Civil Procedure section 425.16, otherwise known as
the anti-SLAPP statute. Defendant Federal National Mortgage
Association (Fannie Mae) initiated nonjudicial foreclosure
proceedings against property owned by plaintiff Crossroads
Investors, L.P. (Crossroads), but Crossroads filed for
bankruptcy protection, staying the proceedings. Its proposed
reorganization plan called for selling the property to a
third party, who would reinstate the loan but on different
material terms less favorable to Fannie Mae. Fannie Mae would
not be paid what it was owed in full. The bankruptcy court
called the plan “dubious, ” and Crossroads'
counsel agreed they were “trying to have our cake and
eat it too.”
alleges while the bankruptcy stay was in effect and
afterwards, it requested accountings from Fannie Mae under
Civil Code section 2924c to learn the amount required to
reinstate or pay off the defaulted loan. It also tendered
performance both to reinstate and pay off the loan as
authorized under Civil Code section 2924c. Fannie Mae did not
respond to the requests for accountings except in response to
an interrogatory served on it as part of the bankruptcy
action. It also refused to accept the tenders.
failed to obtain confirmation of a reorganization plan, and
the bankruptcy court granted Fannie Mae relief from the stay.
Crossroads alleges Fannie Mae promised in a telephone
conversation with Crossroads' counsel to notify
Crossroads of the date it intended to sell the property.
Fannie Mae shortly thereafter sold the property, and it did
so without providing prior notice to Crossroads.
filed this action against Fannie Mae for wrongful
foreclosure, breach of contract, fraud, and other tort and
contract causes of action. Fannie Mae filed an anti-SLAPP
motion, contending the actions on which Crossroads based its
complaint arose from the exercise of its constitutional
rights of speech and petition; specifically, statements and
omissions made in, or concerning issues under review in, the
bankruptcy action. It also argued Crossroads could not
establish a prima facie case in support of its claims. The
trial court disagreed and denied the motion. In an earlier
opinion, we affirmed the trial court's order.
California Supreme Court granted Fannie Mae's petition
for review, depublished our original opinion, and transferred
the matter to us to reconsider the appeal in light of
Baral v. Schnitt (2016) 1 Cal.5th 376
(Baral). The parties have filed supplemental briefs
which we have considered.
reverse the trial court's ruling and direct it to grant
the anti-SLAPP motion. Except for claims based on one of
Fannie Mae's actions discussed below, all of
Crossroads' claims arose from Fannie Mae's
constitutionally protected actions that were taken as part
of, or related to, the bankruptcy action. Further, Crossroads
did not establish a prima facie case in support of those
claims, as all of its tort claims based on protected activity
attacked statements privileged under Civil Code section 47,
and its contract claims arising from protected activity were
barred as a matter of law.
2005, Crossroads borrowed $9 million subject to a promissory
note. The note was secured by a deed of trust recorded
against an apartment building Crossroads owned in Woodland.
Fannie Mae became the beneficiary of the deed.
note imposed on Crossroads a prepayment premium (sometimes
referred to as yield maintenance or a prepayment penalty)
should Crossroads pay the unpaid principal before the
note's maturity date or should Crossroads default and
Fannie Mae accelerate the loan.
defaulted on the note in late 2010. Fannie Mae served
Crossroads with a notice of default, and it accelerated the
loan. On February 1, 2011, Fannie Mae initiated nonjudicial
foreclosure proceedings by recording the notice of default
against the property. The notice stated Crossroads could
reinstate the loan by paying all past due payments plus costs
and expenses permitted by statute. It informed Crossroads
that as of December 30, 2010, that amount was $286, 900.10.
required by Civil Code section 2924c (section 2924c), the
notice of default informed Crossroads it could reinstate the
loan by tendering the amount it owed to bring its payments
current no later than five business days before the date
Fannie Mae intended to sell the property. It informed
Crossroads that after the expiration of that time period, the
only way to stop the foreclosure was to pay off the loan
before the sale occurred. It also informed Crossroads it
could learn how much it owed either by submitting a written
request for a written itemization or by contacting Fannie
Mae's trustee. It provided the trustee's address and
addition to recording the notice of default, Fannie Mae
instituted state court litigation against Crossroads and
secured a receiver to take control of the property.
April 15, 2011, Crossroads entered into a contract to sell
the property to Ezralow Company, LLC (Ezralow) for $10.95
million. On May 9, 2011, Crossroads and Ezralow proposed to
Fannie Mae that Ezralow would assume Crossroads'
obligations and pay off the loan on condition Fannie Mae
agreed to waive the prepayment premium. Fannie Mae refused to
waive the premium, and it rejected the proposal.
Mae recorded a notice of trustee's sale against the
property on June 24, 2011. The notice stated the property
would be sold on July 19, 2011. It also stated the total
unpaid amount of Crossroads' obligations and reasonable
estimated costs, expenses and advances as of the notice's
date was estimated to be $10, 525, 126.40. The notice stated
prepayment premiums, accrued interest and advances
“will increase this figure” prior to the sale,
and it provided a Web site address and telephone number for
Crossroads to use to obtain updated sale information.
18, 2011, the day before the property was scheduled to be
sold, Crossroads filed for Chapter 11 bankruptcy protection.
It did so in part “to restructure the Loan so that it
can consummate the sale of the Property to [Ezralow] and
assumption of the Loan by [Ezralow].” In its petition,
Crossroads asserted it owed Fannie Mae approximately $8.7
million. When Crossroads declared bankruptcy, the state court
action was stayed but not dismissed. (11 U.S.C. § 362.)
following day, July 19, Crossroads entered into an amended
and restated contract to sell the property to Ezralow for
$10.95 million. This agreement conditioned the sale on the
filing by Crossroads of a Chapter 11 bankruptcy proceeding,
which it had, and on Crossroads seeking, and the bankruptcy
court approving, a reorganization plan under which Ezralow
would assume and reinstate the loan, and the loan's terms
would be restructured to eliminate the prepayment premium and
vary the interest rate and the maturity date. The agreement
required Ezralow to approve the proposed reorganization plan
before Crossroads submitted it to the court. If Ezralow
disapproved the proposed plan, the agreement was
automatically terminated. Also, Ezralow could terminate the
agreement and cancel escrow if the bankruptcy court did not
approve eliminating the prepayment premium as part of the
filed its first disclosure statement and proposed
reorganization plan with the bankruptcy court, and it based
its plan on the terms of the July 19, 2011 sale agreement
with Ezralow. Crossroads' proposed plan asked
the court to approve the sale to Ezralow for $10.95 million,
but it also proposed eliminating the prepayment premium. The
bankruptcy court rejected Crossroads' first disclosure
statement in part because it failed to acknowledge Fannie
Mae's full claim.
Mae filed a proof of claim in the bankruptcy action for $10,
447, 090.43. The claim included $1, 590, 616.61 for the
prepayment premium. Crossroads objected to the claim,
contending, among other things, the prepayment premium was an
unreasonable liquidated damages provision unenforceable under
Civil Code section 1671. At a hearing on February 6, 2012,
the bankruptcy court disagreed and overruled Crossroads'
objection. It ruled the prepayment premium was enforceable
under California law, and Fannie Mae could claim it in the
same day it ruled Fannie Mae was entitled to claim the
prepayment premium, the bankruptcy court conditionally
granted Fannie Mae relief from the bankruptcy stay. The court
had disapproved Crossroads' first disclosure statement,
and Crossroads had made no effort to prosecute plan
confirmation until only recently when it filed a second
statement. The court granted Fannie Mae relief from the stay
to be effective three months later on May 15, 2012, provided
Crossroads had not obtained confirmation of its
reorganization plan by that date.
the bankruptcy court rejected Crossroads' objection to
the prepayment premium, Crossroads served an interrogatory in
the bankruptcy action on Fannie Mae that asked for the amount
required “under state law” to cure the loan as of
June 1, 2012. Fannie Mae responded by stating it could not
provide an accurate response because the interrogatory sought
an amount that was contingent upon future events; it would
provide a response on June 1, 2012.
bankruptcy hearing on its second disclosure statement,
Crossroads contended its July 19, 2011 sale agreement with
Ezralow was still the operating agreement for purposes of its
reorganization plan. It asked the court to rule on whether
its plan under that agreement to eliminate the prepayment
premium and decelerate the loan had a chance of being
accepted. The court called the Ezralow agreement
“dubious.” It explained: “You are trying to
have your cake and eat it too. You are trying to sell this to
somebody else and avoid calling it a sale to somebody else,
right? That is what is going on here. [¶] I mean, your
client-this debtor is going to retain a small piece and is
going to sell it to someone else, and the reason your client
is holding on to a small piece is you are trying to avoid
calling it a sale so you don't have to do a sale clause
or acceleration clause or whatever.”
counsel agreed with the court's summary, saying,
“We are trying to have our cake and eat it too.”
The court said it lacked sufficient information to declare at
that point in time whether Crossroads' proposed plan
could be confirmed. The court disapproved the second
disclosure statement and granted Crossroads time to file an
amended statement. The following month, the court rejected
Crossroads' third disclosure statement.
senior vice president stated in a declaration that Ezralow
was committed to purchasing the property and reinstating or
paying off the loan in full, including prepayment penalties,
if necessary. Ezralow had the financial wherewithal to do so.
Crossroads' bankruptcy counsel, Kenrick Young, stated in
a declaration that while the bankruptcy action was pending
from July 2011 to May 2012, Crossroads informed Fannie Mae
many times it was ready, willing, and able to cure the
default or pay off the loan upon being provided the amount
necessary to do so. Crossroads had the ability to fulfill its
tender offers because Ezralow had agreed to pay those funds
on its behalf. Although it opposed the prepayment premium,
Crossroads informed Fannie Mae that if the bankruptcy court
determined Fannie Mae was entitled to the prepayment premium,
Crossroads would pay Fannie Mae's claim in full because
the contracted sales price was sufficient to pay it. Young
did not specify when or where Crossroads relayed this
information to Fannie Mae.
also stated in his declaration that while the bankruptcy
action was pending, Crossroads asked Fannie Mae many times to
provide the amount required to cure the default or pay off
the loan. Crossroads alleges in its verified complaint that
Fannie Mae refused to accept Crossroads' tenders and
provided no response to Crossroads' requests for an
accounting. Young did not specify when or where Crossroads
made these requests or Fannie Mae refused to accept tender.
April 2012, Crossroads filed its fourth disclosure statement,
which the court conditionally approved. Crossroads also
filed a motion to continue the stay.
the motion to continue the stay was pending, Young e-mailed a
settlement offer to Fannie Mae's attorney, Anthony
Napolitano, on May 2, 2012. Crossroads offered to pay Fannie
Mae $9 million to compromise Fannie Mae's bankruptcy
claim. Fannie Mae rejected the offer.
bankruptcy court heard the motion to continue the stay on May
14, 2012, and took the matter under submission. After the
hearing, Young asked Napolitano if Crossroads would still be
willing to entertain a settlement offer. He also asked if
Fannie Mae would notify him if it intended to foreclose on
the property. Napolitano told Young he wanted to wait for the
court's ruling on the motion to continue the stay before
engaging in any further discussions.
bankruptcy court denied the motion to continue the stay. It
had given Crossroads ample time to obtain a confirmed
reorganization plan, and it was apparent Crossroads'
proposed plan was “likely unconfirmable.” Despite
the court's previous approval of Fannie Mae's claim
for the prepayment premium, Crossroads was still seeking to
sell the property to Ezralow as part of its reorganization
without providing for payment of the premium. The bankruptcy
court found no legal way for Crossroads to accomplish its
objective through bankruptcy, and thus concluded
Crossroads' plan did not have a reasonable possibility of
being confirmed within a reasonable time.
Mae's relief from the bankruptcy stay became effective on
May 15, 2012, as Crossroads had not obtained an approved
reorganization plan by that date.
17, 2012, Young spoke with Napolitano by telephone. The two
attorneys remembered the call differently, but for our
purposes, we assume the truth of Young's testimony where
there is conflict. Young asked if Fannie Mae would be willing
to hold off on foreclosing and support a sale to Ezralow
under a provision of the Bankruptcy Code. Fannie Mae would be
paid the full amount of its claim, but the sale would not
close for two months. Young asked for a payoff amount to pay
the loan in full. Young also asked Napolitano if he would
agree to notify Crossroads of any scheduled sale date by a
reasonable time prior to its occurrence. Young stated in his
declaration that Napolitano agreed to provide notice of a
that day, Napolitano by e-mail asked to inspect the property.
Young responded by e-mail that Crossroads wished to sell the
property to Ezralow and pay Fannie Mae. He asked if Fannie
Mae would agree to a consensual sale of the property to
Ezralow on condition Fannie May received the amount it
claimed in its amended bankruptcy claim. Young said
Crossroads was looking at a July or early August 2012 close
of escrow. Crossroads alleged Napolitano did not respond to
contacted Napolitano by telephone on May 22, 2012. He asked
Napolitano to provide him with the amount required to cure
the default. He also proposed that Crossroads would dismiss
its bankruptcy action to allow for a faster sale to Ezralow
and payment in full to Fannie Mae. He stated Crossroads was
ready, willing, and able to cure the default or pay Fannie
Mae in full upon receiving the amount of its demand.
Napolitano stated that in this call, Young also asked him to
confirm in writing that Fannie Mae would give him notice
before foreclosing. Napolitano told Young he could not
provide him with the confirmation but he would relay
Young's request for a reinstatement quote to Fannie Mae
and get back to him.
24, 2012, the trustee sold the apartment complex at a
nonjudicial foreclosure sale. The sale took Crossroads by
surprise. Young believed Napolitano would have honored his
promise to notify him of any scheduled sale prior to the sale
objected to the trustee's sale and asked the trustee to
set it aside and not record a new deed. It also dismissed its
bankruptcy action in June 2012. It filed this action against
Fannie Mae and the trustee and recorded a lis pendens.
However, the trustee recorded a trustee's deed upon sale.
first amended complaint alleges seven causes of action
against Fannie Mae: wrongful foreclosure, breach of contract,
breach of the implied covenant of good faith and fair
dealing, negligence, fraud, promissory estoppel, and
intentional interference with a contractual
relationship. It seeks to rescind the trustee's
sale and to recover damages. Crossroads alleges the conduct
by Fannie Mae from which all of its causes of action arise
consists of: (1) Fannie Mae's repeated failure to
provide, in response to Crossroads' requests and its
interrogatory, a timely and accurate accounting of the amount
needed to reinstate the loan or pay the loan in full, in
violation of section 2924c; (2) its refusal to accept
Crossroads' tenders of the amount required to cure the
default or pay the loan in full, in violation of section
2924c; and (3) its falsely stating it would provide
Crossroads with advance notice of a trustee's sale, and
its actual failure to provide that notice.
Mae filed an anti-SLAPP motion and a demurrer against the
complaint. The trial court denied the motion. It ruled Fannie
Mae had not shown Crossroads' action arose from Fannie
Mae's protected activity. The court wrote: “The
gravamen of plaintiff's first amended complaint is its
contention that defendant wrongfully foreclosed upon the
subject property in an illegally conducted non-judicial
foreclosure.” The court also overruled the demurrer.
Mae contends the trial court erred when it denied its
anti-SLAPP motion. It argues it submitted sufficient evidence
to establish that Crossroads was suing based on Fannie
Mae's protected activities, and that Crossroads failed to
show it was likely to succeed on the merits. We agree, except
with regard to any claims arising from Fannie Mae's
rejection of the May 2011 settlement proposed by Crossroads
and Ezralow. Those claims did not arise from protected
and Standard of Review
Law of the case doctrine
proceeding, we must address an issue Crossroads raises about
our scope of review. Crossroads contends our current review
is subject to the law of the case doctrine. It argues our
prior opinion continues to be the law of this case on all
points it decided except the issues impacted by
Baral, and that the scope of our current review is
limited accordingly. We disagree. The law of the case
doctrine does not ...