United States District Court, N.D. California
ORDER ON PLAINTIFF'S MOTION TO STRIKE RE: DKT.
ILLSTON, UNITED STATES DISTRICT JUDGE
the Court is plaintiff's motion to strike the
counterclaim asserted by defendants Langan Engineering,
Environmental, Surveying and Landscape Architecture, D.P.C.
and Langan Engineering and Environmental Services, Inc.
(collectively “Langan”). Pursuant to Civil Local
Rule 7-1(b), the Court finds this matter appropriate for
resolution without oral argument and VACATES the December 6,
parties' dispute stems from four excess insurance
policies - the 2014, 2015, 2016, and 2017 policies,
respectively - that Langan took out from plaintiff RLI
Insurance Company (“RLI”). Dkt. No. 33 at 2
(Motion to Strike). RLI's amended complaint seeks
judicial rescission of each policy (claims 1, 2, 3, and 4),
damages for misrepresentation/concealment (5, 6), a
declaratory judgment (7, 8, 9), and finally a claim for
Recoupment of Insurer Payments (10). Amended Compl.
¶¶ 61-146. RLI argues Langan did not disclose
potential liability from Langan's 2010 purchase of
various T&R Consolidated (“T&R”) assets
and concurrent acquisition of many of the principals and
staff of T&R. Amended Compl. ¶¶ 10-11. T&R
was a geotechnical engineering firm that worked on the
Millennium Tower project in San Francisco, including
preparation of reports relating to the projected settling of
the building. Amended Compl. ¶ 6. RLI alleges that after
construction began on Millennium Tower, but prior to its
completion, the Tower had already settled beyond the amount
projected by T&R. Id. RLI alleges that during
the course of due diligence prior to purchasing T&R,
Langan learned that T&R notified its insurance carrier in
2008 of a potential claim regarding accelerated, excessive
and/or differential settlement of Millennium Tower. Amended
Compl. ¶ 10.
August 2016, Langan was named in various lawsuits under a
theory of successor liability for T&R's work on
Millennium Tower. Amended Compl. ¶ 115. These cases were
ultimately consolidated under lead case Laura Lehman v.
Transbay Joint Powers Authority, et al, San Francisco
Superior Court, Case No. CGC-16-553758 (“Millennium
Tower Actions”). Id. RLI alleges August 2016
is the first time Langan informed RLI of a potential claim.
Amended Compl. ¶ 119. Underlying third party claimants
asserting liability claims against Langan have made
settlement demands in the Millennium Tower Actions and Langan
has requested RLI commit to funding the settlements (beyond
the primary carrier's contributions). Amended Compl.
¶ 144. RLI has agreed to fund the settlements under a
reservation of rights, including the right to recoup payments
from Langan in the event RLI is found not to owe coverage.
April 15, 2019, RLI filed the instant action. Dkt. No. 1. On
September 27, 2019, plaintiff RLI filed an amended complaint.
Dkt. No. 30. On October 11, 2019, defendant Langan answered
the amended complaint and included a counterclaim; the
counterclaim includes two causes of action seeking (1)
damages for breach of the covenant of good faith and fair
dealing and (2) declaratory relief. Dkt. No. 31. RLI brings
the instant motion to strike Langan's first cause of
action in the counterclaim, arguing it violates
California's Anti-SLAPP statute. Dkt No. 33.
California Legislature passed California Civil Procedure Code
section 425.16 to address “a disturbing increase”
in Strategic Lawsuits Against Public Participation
(“SLAPPs”), or suits brought “primarily to
chill the valid exercise of the constitutional rights of
freedom of speech and petition for the redress of
grievances.” Cal. Civ. Proc. Code § 425.16(a).
Section 425.16 permits defendants (or counterclaim
defendants) to bring a “special motion to strike”
if a cause of action against them arises “from any act
. . . in furtherance of the person's right of petition or
free speech . . . in connection with a public issue[.]”
Id. § 425.16(b)(1), (h). A special motion to
strike under section 425.16 is commonly referred to as an
order to prevail on an anti-SLAPP motion, the movant must
first make a prima facie showing, through the pleadings
themselves and supporting affidavits, that the statement or
conduct underlying the legal claims against it qualifies for
protection under the anti-SLAPP statute. Id. §
425.16(b); Vess v. Ciba-Geigy Corp. USA, 317 F.3d
1097, 1110 (9th Cir. 2003). Specifically, the movant must
show “that the challenged cause of action is one
‘arising from' protected
activity. (§ 425.16, subd. (b)(1).).” City of
Cotati v. Cashman, 29 Cal.4th 69, 76, (2002) (emphasis
added). The burden then shifts to the non-moving party to
demonstrate a probability of prevailing on the challenged
claims. Cal. Civ. Proc. Code § 425.16(b)(1);
Vess, 317 F.3d at 1110.
it is a state statute, a party may bring an anti-SLAPP motion
to strike state law claims in federal court. Vess,
317 F.3d at 1109 (citing United States ex. rel. Newsham
v. Lockheed Missiles & Space Co., 190 F.3d 963,
970-73 (9th Cir. 1999) (holding that there is no direct
conflict between the Federal Rules and §§ 425.16(b)
and (c), and that adopting California procedural rules serves
the purposes of the Erie doctrine)).
anti-SLAPP statute establishes four categories of protected
speech or conduct. Cal. Civ. Proc. Code § 425.16(e),
including “any written or oral statement or writing
made before a legislative, executive, or judicial
proceeding[.]” Id. RLI contends Langan
“has sued RLI for filing its Complaint” (Dkt. No.
33 at 2) and argues RLI's amended complaint is protected
speech as a “claim for relief filed in federal district
court indisputably is a statement or writing made before a
… judicial proceeding (425.16(e)(1)).” Dkt. No.
33 at 12 (citations and internal quotations omitted). But
“to suggest that all cross-actions arise from the
causes of action in response to which they are pled would
contravene the statutory scheme governing
cross-complaints.” City of Cotati v. Cashman,
29 Cal.4th 69, 77 (2002). Further, “a cross-complaint
often arises out of the same transaction, occurrence, or
series of transactions or occurrences as the cause of action
which the plaintiff alleges…without necessarily
arising from that earlier lawsuit
itself.” City of Cotati v. Cashman, 29 Cal.4th
69, 78 (2002) (emphasis added) (internal citations and
counterclaim arises from the underlying insurance contracts
and the dispute over whether RLI has acted in bad faith - an
issue that has been percolating, as alleged in the
counterclaim, for several years and certainly long before the
filing of RLI's complaint. RLI seeks to rescind the
contracts and Langan seeks to enforce them - different sides
of the same coin and independently viable lawsuits.
Langan's counterclaim alleges in part that Langan
provided timely notice of the Millennium Tower Litigation in
August 2016 and “RLI did nothing in response” for
nearly three years. Counterclaim ¶ 18 (Dkt. No. 31). The
counterclaim alleges further that: (1) RLI sat on its hands
to see if Langan could successfully defend against the
successor liability claim; (2) RLI did so to continue
collecting premiums from Langan without committing to
coverage; and (3) after it appeared likely that Langan would
lose a summary adjudication motion on the successor liability
issue, RLI filed the instant action seeking to rescind the
four policies. Counterclaim ¶ 28.
unpacking the “arising from” analysis, the
California Supreme Court case City of Cotati is
particularly helpful. 29 Cal.4th 69 (2002). There, owners of
mobilehome parks sued a city in federal court challenging the
validity of a mobilehome park rent stabilization program.
Id. at 73. Subsequently, the city sued the owners in
state court for a declaratory judgment upholding the rent
stabilization program. Id. The owners moved in state
court to strike the city's complaint under the anti-SLAPP
statute. Id. The California Supreme Court held the
city's subsequent state court action against the owners
did not “arise from” the owners' protected
activity and therefore, was not subject to a special motion
to strike. Id. at 80. While the owners'
“federal court action
informed [the city] of the
existence of an actual controversy justifying declaratory