Filed 8/19/20 South of No North v. Herman CA2/4

         NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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
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     IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                            SECOND APPELLATE DISTRICT

                                        DIVISION FOUR


SOUTH OF NO NORTH                                                 B298915 consolidated with B301961
    Plaintiff and Respondent,
                                                                  (Los Angeles County
         v.                                                       Super. Ct. No.BC718566)

DAVID HERMAN et al.,

         Defendants and Appellants.



      APPEAL from orders of the Superior Court of Los Angeles
County, Malcolm H. Mackey, Judge. Reversed.
      Abel Law Offices and Joshua H. Abel for Defendants and
Appellants.
      Law Office of Martin L. Horwitz and Martin Horwitz for
Plaintiff and Respondent.
                          INTRODUCTION
       Appellant David Herman filed a cross-complaint against
respondents South of No North, LLC (SONN) and Daniel Starr,
alleging defamation and related claims. Herman alleged that
respondents caused a defamatory online article to be published
about him, and that respondents told Herman’s employer and
acquaintances that law enforcement agencies were investigating
Herman for embezzling from respondents. Respondents filed a
special motion to strike under the anti-SLAPP statute, Code of
Civil Procedure section 425.16.1 They asserted that because the
online article stated that Starr had filed a police report regarding
the allegations against Herman, Herman’s claims “arose from” a
police report, which is protected activity under section 425.16.
Respondents also contended that Herman’s claims did not have a
probability of success, because filing a police report is privileged
under Civil Code section 47. The trial court agreed and granted
the motion.
       We reverse. Herman did not allege that respondents filed a
police report, nor did he allege any damages arising from the
filing of a police report. To the contrary, Herman stated that he
suspected no police report was ever filed, and that the online
article and respondents’ statements to his employer and
acquaintances were false. Because the filing of a police report
constituted the sole basis for the special motion to strike,


      1All further statutory references are to the Code of Civil
Procedure unless otherwise indicated. An anti-SLAPP motion
seeks to strike a “[s]trategic lawsuit against public participation.”
(Wilson v. Cable News Network, Inc. (2019) 7 Cal.5th 871, 882 fn.
2 (Wilson).)




                                  2
respondents failed to demonstrate that Herman’s claims “arose
from” protected activity and the motion should have been denied.
       The trial court also granted respondents’ motion for
attorney fees as prevailing parties under section 425.16,
subdivision (c). Herman separately appealed that ruling, and we
consolidated the two appeals. Because we reverse the court’s
order granting the special motion to strike, there is no longer a
basis for the fee award. We therefore also reverse the attorney
fees order.
       FACTUAL AND PROCEDURAL BACKGROUND
A.     Herman’s cross-complaint
       SONN filed a complaint against Herman and others on
August 21, 2018; the complaint is not in the record on appeal.
Herman filed a cross-complaint against SONN and Starr on
March 25, 2019. The cross-complaint included 15 causes of
action, but only the first four causes of action are relevant to the
anti-SLAPP motion at issue on appeal: defamation, false light
invasion of privacy, intentional infliction of emotional distress,
and negligent infliction of emotional distress. We therefore focus
on the facts related to those causes of action.
       Herman alleged that SONN “was created to purchase,
construct, renovate/remodel, and sell real estate,” and Starr was
the managing member of SONN. Respondents “embarked on
construction and remodeling of a residential home” in Beverly
Hills, California; the cross-complaint refers to this as “the
project” or “the property.” In March 2017, Starr approached
Herman about assisting with the project. In April 2017,
respondents “hired Herman to assist with financial,
administrative, and personnel tasks related to the Property,
including but not limited to reviewing contractor bids, reviewing




                                 3
bills, assisting with finance/budget tasks, overseeing the licensed
general contractors that [respondents] hired to perform the
construction on the jobsite, liaising between Starr and
[respondents’] architect and designer, and managing one of
[respondents’] employees,” a jobsite supervisor.
       Herman lived in Nevada, but traveled to California to work
on the project. He also worked as a coach for the junior varsity
football team at Bishop Gorman High School, a Catholic high
school near Las Vegas. The school was under the authority of the
Las Vegas Catholic Archdiocese, which had “control over certain
personnel, hiring and firing.” Herman alleged that he had “a
very good reputation in both his personal and professional life,
and is well respected in both his local business community and
his local community.”
       Herman alleged that “[a]s the Project approached its close,
the relationship between Herman and Starr became strained for
reasons not clear to Herman.” “[W]ithout any factual basis,
[respondents] began to falsely accuse Herman of a criminal act:
embezzling funds from [SONN] and Starr.” Respondents “reached
out to people in Herman’s community and defamed him.”
       Herman alleged that “on or about August 26, 2018, in
‘theblast.com[,]’ [respondents] caused to be published on the
Internet the following defamatory statement” about Herman.
The online article, titled “‘Million Dollar Listing’ Doll-Filled
House Subject of Embezzlement Investigation” (the Blast article),
stated:
              “One of the properties featured on Bravo’s ‘Million
       Dollar Listing’ is now at the center of an embezzlement
       probe and it involves one of the top-ranked football
       programs in the nation.




                                4
             “Real estate mogul Daniel Starr filed a report with
      LAPD[2] last month, which was obtained by The Blast.
      Starr claims his cousin, David Herman, was a project
      manager for the rebuild of the house and allegedly created
      a false bank account to pump up contractors’ invoices and
      siphon the extra money for himself.
             “Herman is also the junior varsity head coach for the
      Bishop Gorman football team. The school, located in
      Nevada, has a top-ranked program and has delivered
      multiple national championships over the years.
             “Starr originally purchased the Beverly Hills home
      from Mary Sheldon, daughter of ‘I Dream of Jeanie’ [sic]
      creator Sidney Sheldon. He appeared on ‘Million Dollar
      Listing’ and realtor Josh Flagg gave him hope that the
      property—which featured a slew of creepy dolls when it
      was featured on the show—could be turned into a
      something very special.
             “Starr did give the property a new life, and the 8,000
      sq ft mansion now has six bedrooms, eight bathrooms and
      will be listed for $18 million at the end of the year. It’s also
      in a star-studded neighborhood near celebs like Mariah
      Carey and Paul McCartney.
             “It’s unclear just how much money Starr alleges
      Herman swindled during the rebuild of the mansion.
             “The Blast reached out to David Herman and Bishop
      Gorman High School for comment and so far no comment.”
      Herman alleged that the “publication infers that Herman
had committed a crime,” and “mentions Herman by name

      2Presumably,   the Los Angeles Police Department.




                                  5
throughout.” He alleged that the statements were false and
defamatory, were not privileged, and respondents “caused these
statements to be made knowing the falsity thereof or without
using reasonable care to determine the truth or falsity thereof.”
Respondents “made the defamatory statements with malice and
with the intent to injure Herman’s good name and reputation and
to interfere with his employment.” Herman further alleged that
the “publication was seen and read by persons in Herman’s
community,” and it harmed Herman’s reputation. “At least one
person in Herman’s community . . . has told Herman directly that
he will no longer do business with him as a result of this article.”
       Herman further alleged that respondents “made
defamatory statements about Herman to various persons at the
Las Vegas Catholic Archdiocese, and persons at Bishop Gorman
High School,” including the school’s athletic director.
Respondents “told these persons, among other things, that
Herman was being criminally charged and investigated by the
FBI, that Herman was an embezzler, and that Herman did a poor
job in connection with his work on the Property.” He also alleged
that respondents “provided the persons at the Las Vegas
Archdioceses [sic] with a copy of the [Blast] article.”
       Herman alleged causes of action for defamation, false light
invasion of privacy, intentional infliction of emotional distress,
and negligent infliction of emotional distress. He alleged that
respondents “caused excessive and unsolicited internal and
external publications of defamation,” which “included express
and implied accusations that Herman was not a competent
employee, violated laws, and that he violated rules and/or
business regulations.” The defamatory statements included “that
Herman committed a crime, was an embezzler, was not a




                                 6
competent employee, and/or violated State and/or Federal law.”
These statements also cast Herman in a false light. Publication
was made to “third persons, who had no need or desire to know,”
including respondents’ employees, “Herman’s community in
Nevada, and . . . prospective future employers and business
partners of Herman.” Herman alleged that he was damaged by
the statements in his reputation and standing in the community.
He also asserted that respondents’ actions caused emotional
distress. He requested actual damages, punitive damages,
attorney fees, and costs.
B.     Respondents’ anti-SLAPP motion
       Respondents filed a special motion to strike the entire
cross-complaint under section 425.16, or in the alternative, to
strike the first four causes of action. Under section 425.16, “[a]
cause of action arising from a person’s act in furtherance of the
‘right of petition or free speech under the United States
Constitution or the California Constitution in connection with a
public issue shall be subject to a special motion to strike, unless
the court determines that the plaintiff has established that there
is a probability’ that the claim will prevail.” (Monster Energy Co.
v. Schechter (2019) 7 Cal.5th 781, 788 (Monster Energy), citing §
425.16, subd. (b)(1).) Thus, “[a]nti-SLAPP motions are evaluated
through a two-step process. Initially, the moving defendant bears
the burden of establishing that the challenged allegations or
claims ‘aris[e] from’ protected activity in which the defendant has
engaged.” (Park v. Board of Trustees of California State
University (2017) 2 Cal.5th 1057, 1061 (Park).) “If the defendant
carries its burden, the plaintiff must then demonstrate its claims
have at least ‘minimal merit.’” (Ibid.)




                                 7
        In their motion, respondents stated that Starr is SONN’s
manager and Herman’s cousin. They argued that Herman’s first
four causes of action relied on the allegation that “Starr filed a
police report making allegedly defamatory comments, and the act
of filing the police report with allegedly defamatory comments
defamed him, cast him in a false light, and caused him emotional
distress.” Respondents pointed to the sentence in the Blast
article stating, “Real estate mogul Daniel Starr filed a report
with LAPD last month, which was obtained by The Blast.” They
asserted, “The cornerstone for these 4 causes of action is the
claim that Starr filed a police report. The causes of action are
then built around the filing of that police report, and what
happened after a third party news source obtained the police
report and found it newsworthy.” And although the cross-
complaint had alleged that respondents “caused [the Blast
article] to be published on the Internet,” respondents in their
motion asserted, in all-bold font, “Significantly, there is no
allegation that either of the cross-defendants had any role in
publishing the article.”
        Respondents argued that they therefore met the first prong
of the anti-SLAPP analysis: “The case law is crystal clear: the
filing of a police report is a protected activity.” They also
contended that it is “unquestionable that such police reports
come within the protection of the anti-SLAPP statute.” The
contended that Herman’s causes of action therefore arose from
protected activity.
        Respondents asserted that Herman could not meet the
second prong of the anti-SLAPP analysis to show a probability of
prevailing, because respondents’ actions fell under the litigation
privilege in Civil Code section 47. They also argued, “[T]he cross-




                                 8
complaint does not allege that the cross-defendants published the
article. Instead, it alleges a third party news source obtained the
police report and published a summary of its findings. The only
allegation is that Starr filed a police report.” Respondents
further asserted that the article only said that Starr “alleged”
things about Herman, and such generalized statements of
opinion are not actionable.
C.     Opposition and reply
       Herman opposed respondents’ motion, stating, “The
allegations in the Cross-Complaint do not hinge on or arise from
a police report.” Instead, although the article referenced a police
report, “[t]he alleged police report is incidental to the claims.”
Herman pointed out that other than quoting the article, the
cross-complaint said nothing about a police report, and instead
stated that respondents had made untrue and defamatory
publications to the people Herman worked with and people in
Herman’s community. He argued that his claims “are a result of
[respondents’] slanderous conduct and defamatory publications
made to third persons, regardless of the police report.”
       Herman also contended that other than the Blast article’s
mention of a police report, there was no suggestion that any such
report was ever filed. Herman stated in a declaration that he
had never seen a copy of a police report, he had “never been
contacted by the LAPD, the FBI, or by any governmental law
enforcement agency regarding Starr, any of the matters in the
Complaint filed by SONN, or any of the matters in the Cross-
Complaint.” Herman stated that he had contacted the LAPD to
determine if a police report had been filed, he was waiting for a
response from the LAPD, and he “intends to subpoena
‘theblast.com’ for a copy of the alleged police report.”




                                 9
       Herman stated in his declaration, “Based on my knowledge
of Starr and his business practices, I am informed and believe
that Starr paid someone at ‘theblast.com’ to run [the] article
thereby causing it to be published.” Herman stated that he
intended to determine through discovery whether Starr or SONN
had paid theblast.com to publish the article. Herman also
believed that Starr made defamatory statements to people at the
Las Vegas Catholic Archdiocese and at Bishop Gorman High
School, including the school’s athletic director, who had received
the Blast article and contacted Herman about it. Herman also
stated that Starr told Herman’s stepfather that the FBI was
investigating Herman.
       Herman argued that because the cross-complaint was not
based on a police report, and it was unclear whether a police
report had even been filed, his allegations did not arise from
protected activity and respondents had not met their initial
burden. Herman also asserted that even if respondents had
shifted the burden, his claims were likely to prevail on the
merits. He further argued that the litigation privilege did not
apply, and requested attorney fees under section 425.16,
subdivision (c).
       In their reply, respondents asserted again that Herman’s
allegations arose from a police report because “[b]ut for the police
report, the filing of which is protected activity, theblast.com . . .
would not have allegations to report. Everything alleged against
the moving parties was attributed in the news article as having
been obtained from the police report.” Respondents argued that
filing a police report was a protected activity, and the litigation
privilege applied to police reports.




                                 10
       Respondents also disputed Herman’s contention that the
police report was incidental to his claims, stating, “The only
‘statements’ attributed to [respondents] in theblast.com news
publication came from information theblast.com gleaned from a
police report. The police report is not incidental to the claims. It
is essential to the claims.” Respondents asserted that the only
statements or conduct “attributed to [them] arise out of the filing
of the police report.”
D.     Court’s ruling on the special motion to strike
       Following a short hearing, the trial court granted
respondents’ motion and struck the first four causes of action in
the cross-complaint without leave to amend. The court’s written
ruling implied that respondents met their burden under the first
prong of the anti-SLAPP analysis, stating that Herman’s first
four causes of action “are based upon a quoted Internet
publication that expressly was solely based upon [respondents’]
alleged police report, which moving parties are not shown
conclusively to have made falsely. In other words, but for a
reported police report, caused by [respondents], that alleged
publication would not have existed, because the publication is
about no other conduct.” The court continued, “Further, that
police report allegedly was communicated to a substantial
number of people, including Bishop Gorman High School athletic
director, and the Las Vegas Archdioceses [sic], regarding the
public interest of knowing about an allegedly embezzling
employee, beyond the one publication on the Internet. . . . Thus,
the full breadth of the 1st through 4th claims are intertwined
with the police report, as to the various, alleged publications.”
       The court held that Herman failed to meet the second
prong of the anti-SLAPP analysis because “the opposing




                                 11
declaration fails to be sufficiently competent to prove the
elements of the claims, including by failing to prove that
[respondents] caused the police report, or the Internet and other
publications of defamatory statements about embezzling, and by
failing to prove it caused harm.” The court also noted that police
reports are protected activity, and the “anti-SLAPP statute is
inapposite where the making of a false police report is
uncontested or conclusive, because that is not an act in
furtherance of the constitutional rights of petitioning or free
speech.”
       Herman appealed the court’s order.
E.     Attorney fees
       Respondents then filed a motion seeking attorney fees and
costs. (See § 425.16, subd. (c)(1) [“a prevailing defendant on a
special motion to strike shall be entitled to recover his or her
attorney's fees and costs.”].) Herman opposed the motion,
asserting that the court’s ruling on the anti-SLAPP motion was
being appealed, and respondents’ requested fees were excessive.
       The court awarded respondents the amount of fees and
costs requested: $25,066.37. Herman also appealed that order.
We granted Herman’s motion to consolidate the two appeals.
                           DISCUSSION
       As stated above, anti-SLAPP motions under section 425.16
are evaluated through a two-step process. The moving defendant
bears the burden of establishing that the challenged claims arise
from protected activity, and if the defendant meets that burden,
the plaintiff must establish that there is a probability that his
claims will prevail. (See Park, supra, 2 Cal.5th at p. 1061;
Monster Energy, supra, 7 Cal.5th at p. 788.) Protected activity
includes “(1) any written or oral statement or writing made




                                12
before a legislative, executive, or judicial proceeding, or any other
official proceeding authorized by law,” and “(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.”
(§ 425.16, subd. (e).)
       “We review de novo the grant or denial of an anti-SLAPP
motion. [Citation.] We exercise independent judgment in
determining whether, based on our own review of the record, the
challenged claims arise from protected activity. [Citations.] In
addition to the pleadings, we may consider affidavits concerning
the facts upon which liability is based. [Citations.] We do not,
however, weigh the evidence, but accept plaintiff’s submissions as
true and consider only whether any contrary evidence from the
defendant establishes its entitlement to prevail as a matter of
law.” (Park, supra, 2 Cal.5th at p. 1067.)
A.     Herman’s claims do not arise from a police report
       “The defendant’s first-step burden is to identify the activity
each challenged claim rests on and demonstrate that that activity
is protected by the anti-SLAPP statute.” (Wilson, supra, 7
Cal.5th at p. 884.) Here, the trial court found that Herman’s
challenged claims arose from respondents’ filing of a police
report, and was therefore protected activity under section 425.16.
This finding was erroneous. Herman did not allege that
respondents filed a police report, nor did he allege that any of his
damages resulted from respondents’ filing of a police report.
       To determine whether a cause of action arises from a
defendant’s protected activity, we look at the “pleadings, and
supporting and opposing affidavits stating the facts upon which
the liability or defense is based.” (§ 425.16, subd. (b)(2).) “A




                                 13
claim arises from protected activity when that activity underlies
or forms the basis for the claim.” (Park, supra, 2 Cal.5th at p.
1062.) “[T]he focus is on determining what ‘the defendant’s
activity [is] that gives rise to his or her asserted liability—and
whether that activity constitutes protected speech or petitioning.’
[Citation.] ‘The only means specified in section 425.16 by which a
moving defendant can satisfy the [“arising from”] requirement is
to demonstrate that the defendant’s conduct by which plaintiff
claims to have been injured falls within one of the four categories
described in subdivision (e) . . . .’ [Citation.] In short, in ruling
on an anti-SLAPP motion, courts should consider the elements of
the challenged claim and what actions by the defendant supply
those elements and consequently form the basis for liability.” (Id.
at p. 1063 [emphasis in original].)
       Respondents do not discuss the meaning of the “arising
from” prong of the anti-SLAPP test, or cite any authorities
addressing that issue. Rather, their sole contention in the special
motion to strike, repeated verbatim in their respondent’s brief, is
that filing a police report constitutes protected activity under
section 425.16: “Filing a police report is unquestionably a
protected activity. As such, [respondents] have made the
threshold showing that action arises from acts in furtherance of
their rights of petition and free speech.” Respondents have not
asserted, below or on appeal, any other basis for finding that the
cross-complaint is barred under section 425.16.3



      3For example, respondents have not contended that the
alleged defamatory statements were made in connection with an
issue of public interest. (§ 425.16, subd. (e)(3), (4).)




                                 14
       The allegations regarding respondents’ actions in Herman’s
cross-complaint do not arise from the filing of a police report.
Nothing in the cross-complaint suggests Herman was damaged
as a result of a police report. Indeed, Herman questions whether
any such report was actually filed, stating that he had never been
contacted by the LAPD or any other law enforcement agency
about issues regarding the property, and he was attempting to
discover from the LAPD whether such a report was filed.
Although the Blast article stated that a report had been filed
with the LAPD, Herman also alleged that respondents told
Herman’s stepfather and people at the Las Vegas Catholic
Archdiocese and Bishop Gorman High School that Herman was
being investigated by the FBI, a wholly different agency.
       Moreover, the cross-complaint does not suggest that
Herman’s employer, business associates, or acquaintances ever
received a copy of a police report. Rather, Herman alleged that
respondents “caused” the Blast article to be published, and he
clarified in his declaration that he believed respondents paid
theblast.com to publish the article. Herman also alleged that
respondents gave the Blast article to people at the Las Vegas
Archdiocese. None of these allegations arise from respondents’
filing of a police report.
       Respondents cite several cases holding that filing police
reports constitutes protected activity under section 425.16,
subdivision (e). In Kenne v. Stennis (2014) 230 Cal.App.4th 953,
for example, the plaintiff alleged that the defendants were
evading service of process for a lawsuit to enforce a judgment. As
part of their attempts to evade process, the defendants allegedly
filed false police reports and two civil harassment petitions. The
plaintiff conceded that “each of her six claims against defendants,




                                15
including the conspiracy, malicious prosecution, and intentional
infliction of emotional distress claims that are the subject of the
appeal, is based on the same alleged conduct by defendants—the
making of allegedly false police reports about the service of
process incident . . . and the filing of two civil harassment
petitions.” (Id. at p. 966.) The court held, “All of that conduct,
however, was in furtherance of defendants’ constitutional right of
petition, a protected activity under section 425.16.” (Ibid.)
       Respondents also cite Comstock v. Aber (2012) 212
Cal.App.4th 931, in which the cross-complainant, Comstock,
alleged that the cross-defendant, Aber, falsely reported that
Comstock had sexually assaulted her. Comstock alleged two
causes of action, defamation and intentional infliction of
emotional distress, and alleged that Aber had made her false
statements to several people, including police. Addressing Aber’s
statements to police, the Court of Appeal noted, “The law is that
communications to the police are within SLAPP” under section
425.16, subdivision (e)(1) and (e)(2). (Id. at p. 941.)
       Respondents also cite Siam v. Kizilbash (2005) 130
Cal.App.4th 1563, in which the plaintiff alleged that the
defendant falsely accused him of abusing the defendant’s young
sons; defendant reported the abuse to school officials and police.
After investigations deemed the accusations unfounded, the
plaintiff sued defendant alleging eight causes of action, including
libel and slander. (Id. at p. 1568.) The Court of Appeal held that
the “defendant’s reports of child abuse to persons who are bound
by law to investigate the report or to transmit the report to the
authorities are protected by the statute. (§ 425.16, subd. (e)(2).)”
(Id. at p. 1570.)




                                 16
        These cases are inapposite. Here, Herman did not allege
that respondents filed a police report or initiated any sort of
official proceeding. To the contrary, Herman alleged that
respondents falsely told theblast.com, his acquaintances, and his
business associates that the police were investigating him.
“Under the first step of the anti-SLAPP analysis, . . . it is the
defendant’s acts that matter. [Citations.] If the acts alleged in
support of the plaintiff’s claim are of the sort protected by the
anti-SLAPP statute, then anti-SLAPP protections apply.”
(Wilson, supra, 7 Cal.5th at p. 887.) Because filing a police report
does not constitute “the defendant’s conduct by which plaintiff
claims to have been injured” (Equilon Enterprises v. Consumer
Cause, Inc. (2002) 29 Cal.4th 53), Herman’s claims did not “arise
from” protected activity.
        Respondents asserted no other argument regarding the
first prong of the anti-SLAPP analysis. They therefore did not
meet their initial burden under section 425.16, and their special
motion to strike should have been denied on that basis.
        Because respondents did not meet their burden under the
first prong of the anti-SLAPP analysis, we do not address the
parties’ contentions regarding the second prong, whether
Herman’s claims have a probability of success.
B.      Attorney fees
        As noted above, the trial court awarded respondents
attorney fees and costs in the amount of $25,066.37 as prevailing
parties under the anti-SLAPP statute. (See § 425.16, subd.
(c)(1).) Herman appealed that order, and asserts that if the
court’s ruling on respondents’ anti-SLAPP motion is reversed, the
fee award must also be reversed. We agree.




                                17
      In light of our holding that respondents’ special motion to
strike should have been denied, respondents are no longer the
prevailing parties under section 425.16. Thus, there is no longer
a basis for an award of attorney fees and costs under section
425.16, subdivision (c)(1), and we therefore reverse the trial
court’s order awarding fees and costs to respondents.
                          DISPOSITION
      The trial court’s orders (1) granting respondents’ special
motion to strike under section 425.16, and (2) awarding
respondents fees and costs under section 425.16 are reversed.
Herman is entitled to recover his costs on appeal.
  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS



                           COLLINS, J.

We concur:



MANELLA, P. J.



WILLHITE, J.




                               18
