Century Surety Company v. Dennis Prince

• Court: Court of Appeals for the Ninth Circuit
• Decided: July 22, 2019
• Docket: 17-16645
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION JUL 22 2019 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

CENTURY SURETY COMPANY, Nos. 17-16645 18-15945 Plaintiff-Appellant, D.C. No. v. 2:16-cv-02465-JCM-PAL

DENNIS PRINCE; GEORGE RANALLI; SYLVIA ESPARZA, MEMORANDUM*

Defendants-Appellees.

Appeal from the United States District Court for the District of Nevada James C. Mahan, District Judge, Presiding

Argued and Submitted July 10, 2019, as to No. 17-16645 Submitted July 10, 2019, as to No. 18-15945** Portland, Oregon

Before: FERNANDEZ, GRABER, and OWENS, Circuit Judges.

Plaintiff Century Surety Company appeals the with-prejudice dismissal of its

state-law complaint against Defendants Dennis Prince, George Ranalli, and Sylvia

Esparza. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The panel unanimously concludes this case is suitable for decision without oral argument. Fed. R. App. P. 34(a)(2). 1. The district court did not err by granting Prince’s special motion to

dismiss under Nevada Revised Statutes section 41.660, although it did apply an

incorrect legal standard. Because we have de novo review over a district court’s

grant of a special motion to dismiss under a state’s anti-SLAPP law, Makaeff v.

Trump Univ., LLC, 715 F.3d 254, 261 (9th Cir. 2013), we address the merits

instead of remanding for the district court to apply the correct legal standard.

See Farris v. Seabrook, 677 F.3d 858, 865, 868–69 (9th Cir. 2012) (reviewing de

novo where the district court failed to apply a necessary factor before granting a

preliminary injunction and affirming the preliminary injunction).

Under the pre-2013 version of the anti-SLAPP statute, Defendants had the

"initial burden of production and persuasion" to show that Plaintiff’s lawsuit was

"based on a protected communication," as defined in Nevada Revised Statutes

section 41.637. Delucchi v. Songer, 396 P.3d 826, 831 (Nev. 2017) (internal

quotation marks omitted). The parties agree that Prince’s allegations that Michael

Vasquez was in the course or scope of his employment with Blue Streak at the time

of the accident fit within one of section 41.637’s enumerated categories. And

Defendants made their initial threshold showing that Prince’s challenged

communications were truthful or made without knowledge of their falsehood.

Nev. Rev. Stat. § 41.637.

2 The following evidence justified Prince’s allegations: (1) according to the

police incident report, "Vasquez stated he had just gotten off work" before the

accident; (2) Blue Streak’s website advertised that its detailing service was "always

available"; and (3) the license plate on Vasquez’ truck read "JSTDTLD." Plaintiff

argued that Prince failed to meet his initial burden because he never submitted a

declaration attesting to the truth of the allegations. But, although

Delucchi accepted a declaration as sufficient to meet the moving party’s initial

burden, Delucchi did not hold that a declaration is necessary for the moving party

to meet its initial burden. 396 P.3d at 833. And, although Prince did not submit a

declaration, he did sign the state-court complaint. Per Nevada Rule of Civil

Procedure 11, Prince’s signature certified that, "to the best of [his] knowledge,

information, and belief," the complaint’s "factual contentions ha[d] evidentiary

support." In other words, Prince attested to the truth of the allegations, albeit not

under oath. Given the supporting evidence and the signed complaint, Prince

shifted the burden to Plaintiff. John v. Douglas Cty. Sch. Dist., 219 P.3d 1276,

1286–87 (Nev. 2009).

To survive Prince’s special motion to dismiss, Plaintiff had to demonstrate a

genuine issue of material fact "regarding whether the communications were

untruthful or made with knowledge of their falsehood." Id. at 1287. Plaintiff

3 never came to grips with this burden, instead arguing that its evidence raised a

genuine issue of material fact as to whether Vasquez was acting in the course or

scope of Blue Streak’s business at the time of the accident. But what a fact-finder

might determine at trial from conflicting course-and-scope evidence is irrelevant to

whether Prince’s allegations were "untruthful or made with knowledge of their

falsehood" when he made them. Id.

Here, Plaintiff simply "has not provided any evidence that the

communications were untruthful or made with knowledge of falsehood." Id.

Indeed, Plaintiff conceded that "there was some conflicting evidence to support

Prince’s statements." Yet Plaintiff repeatedly pointed to selected evidence that

supported its position that Vasquez was running personal errands at the time of the

accident. But Plaintiff cannot explain why Prince should have been required to

accept as true Vasquez’ affidavit that contradicted the initial incident report, or

Vasquez’ lay opinion that Plaintiff should not bear any financial responsibility for

the accident. Knowledge of contradictory information is not the same thing as

knowledge of falsehood.

2. The district court did not abuse its discretion by denying Plaintiff the

opportunity to conduct discovery. Plaintiff never filed a Federal Rule of Civil

Procedure 56(d) affidavit or declaration seeking further discovery. Although

4 Plaintiff raised the issue of more discovery when it opposed the discovery stay

under Nevada Revised Statutes section 41.660(4), Plaintiff did so perfunctorily at

best. On appeal, Plaintiff still could not state with any specificity what discovery it

requires to respond to the special motion. Given the significant record here and the

opportunity that Plaintiff had to conduct discovery on similar issues in the state-

court proceedings, Plaintiff failed to explain—under Rule 56(d) or section

41.660(4)—what "information that is essential to its opposition" that it "has not

had the opportunity to discover." Metabolife Int’l, Inc. v. Wornick, 264 F.3d 832,

846 (9th Cir. 2001) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250

n.5 (1986)).

Plaintiff also argued that, under Planned Parenthood Federation of America,

Inc. v. Center for Medical Progress, 890 F.3d 828, 834 (9th Cir. 2018), cert.

denied, 139 S. Ct. 1446 (2019), "discovery must be allowed" under Rule 56 "when

an anti-SLAPP motion to strike challenges the factual sufficiency of a claim." But

Planned Parenthood involved an anti-SLAPP motion under California law, not

Nevada law. Id. at 830–31. California’s anti-SLAPP statute, unlike the applicable

version of section 41.660, requires a plaintiff responding to an anti-SLAPP motion

to show "that there is a probability that the plaintiff will prevail on the claim" to

avoid dismissal. Id. at 833 (quoting Cal. Civ. Proc. Code § 425.16(b)(1)). By

5 contrast, Plaintiff here did not have to show a probability of prevailing on its

claims to avoid dismissal. Indeed, Prince’s special motion to dismiss did not

challenge "the factual sufficiency" of Plaintiff’s claims, but rather challenged the

fact that the claims targeted good-faith communications. So, Planned Parenthood

does not require discovery here.

3. Because Plaintiff was not entitled to conduct discovery, the district court

also did not abuse its discretion in denying leave to amend the complaint. See

Yagman v. Garcetti, 852 F.3d 859, 863 (9th Cir. 2017) ("[A] district court should

grant leave to amend . . . unless it determines that the pleading could not possibly

be cured by the allegation of other facts." (quoting Ebner v. Fresh, Inc., 838 F.3d

958, 963 (9th Cir. 2016))). The problem with Plaintiff’s complaint is not the

sufficiency of the allegations, but the very nature of the allegations—that they

target protected communications in an effort to suppress those communications.

Thus, no matter how many additional allegations of fraud and conspiracy Plaintiff

added to its complaint, Nevada’s anti-SLAPP statute would still doom the

complaint.

4. The district court erred by awarding $9,784.50 in attorney fees to Ranalli

under Nevada Revised Statutes section 41.670(1)(a) for work done on a Rule

6 12(b)(6) motion to dismiss.1 Nevada law does not address whether Ranalli may

recover fees in this circumstance. Absent controlling Nevada precedent, Nevada

courts look to California law for guidance in interpreting Nevada’s anti-SLAPP

statute when the relevant provisions are similar. Shapiro v. Welt, 389 P.3d 262,

268 (Nev. 2017).

In Graham-Sult v. Clainos, 756 F.3d 724, 752 (9th Cir. 2014), we affirmed a

fee award under California’s anti-SLAPP statute that included fees for time that the

defendants’ lawyers spent "not exclusively in pursuit of the anti-SLAPP motion,"

such as hours "spent on the motion to dismiss." But a more recent California case

undermines Graham-Sult and guides us here. See Wolfson v. Watts (In re Watts),

298 F.3d 1077, 1083 (9th Cir. 2002) ("Our interpretation in [a prior opinion] was

only binding in the absence of any subsequent indication from the California courts

that our interpretation was incorrect." (quoting Owen ex rel. Owen v. United

States, 713 F.2d 1461, 1464 (9th Cir. 1983))). After we decided Graham-Sult, the

California Court of Appeal clarified that "a fee award under the anti-SLAPP statute

may not include matters unrelated to the anti-SLAPP motion, such as . . . summary

judgment research," because such matters are not "incurred in connection with the

1 We review de novo legal questions concerning a party’s entitlement to attorney fees under state law. PSM Holding Corp. v. Nat’l Farm Fin. Corp., 884 F.3d 812, 828 (9th Cir. 2018). 7 anti-SLAPP motion." 569 E. Cty. Blvd. LLC v. Backcountry Against The Dump,

Inc., 212 Cal. Rptr. 3d 304, 310–11 (Ct. App. 2016) (internal quotation marks

omitted). Thus, because Ranalli’s Rule 12(b)(6) motion was unrelated to Prince’s

anti-SLAPP motion, we vacate the $9,784.50 portion of Ranalli’s fee award

attributable to the Rule 12(b)(6) motion.

5. The district court did not err by awarding $15,600 in attorney fees to

Prince under section 41.670(1)(a) for work done by a partner at his current law

firm with whom he had an attorney-client relationship.2 Under Nevada law, an

attorney representing himself and a law firm represented by one of its own

attorneys may not recover attorney fees because they do not actually incur fees.

Dezzani v. Kern & Assocs., Ltd., 412 P.3d 56, 63 (Nev. 2018). But Nevada law

does not address the precise question here: whether an attorney represented by a

current law partner may recover fees where the represented attorney’s current firm

is not a party to the case and the case concerns events that happened while the

represented attorney worked elsewhere. We turn to California law for guidance.

In Gilbert v. Master Washer & Stamping Co., 104 Cal. Rptr. 2d 461, 467–69

(Ct. App. 2001), the defendant partner had been sued personally and his law firm

2 Plaintiff did not challenge the district court’s factual finding that Prince had an attorney-client relationship with his law partner, and that finding was not clearly erroneous. 8 was not a party to the case (Prince’s situation exactly). The court affirmed an

award of attorney fees to the defendant and held that the defendant "incurred" fees

because he would either "experience a reduced draw from the partnership . . . to

account for the amount of time his or her partners or colleagues have specifically

devoted to his or her representation, or absorb a share of the reduction in other

income the firm experiences because of the time spent on the case." Id. at 467. As

a Nevada court would, Shapiro, 389 P.3d at 268, we follow Gilbert and affirm

Prince’s fee award.

AFFIRMED IN PART and VACATED IN PART. In case no. 18-15945,

the parties shall bear their own costs on appeal.