Gonzalez v. Burtech Pipeline CA4/2

• Court: California Court of Appeal
• Decided: August 8, 2016
• Docket: E063314
• Status: Unpublished

Opinion

Filed 8/8/16 Gonzalez v. Burtech Pipeline CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FOURTH APPELLATE DISTRICT

DIVISION TWO

WECESLAO S. GONZALEZ et al.,

Cross-complainants and E063314 Appellants, (Super.Ct.No. MCC1400499) v. OPINION BURTECH PIPELINE INCORPORATED,

Cross-defendant and Respondent.

APPEAL from the Superior Court of Riverside County. Gloria Trask, Judge.

Affirmed.

Weceslao S. Gonzalez, in pro. per.; Marisela Castaneda, in pro. per.; and Juan B.

Castaneda, in pro. per., for Cross-complainants and Appellants.

Finch, Thornton & Baird, Jason R. Thornton and M. Katy Ross for Cross-

defendant and Respondent.

1 Defendant, Jose Garcia, a foreman for plaintiff, Burtech Pipeline Incorporated

(Burtech), fraudulently submitted payroll information, resulting in paychecks written for

employees not qualified for the hourly rate reported and who did not work the hours

reported. The payroll checks were cashed by defendant, Weceslao S. Gonzalez

(Gonzalez), at various check cashing establishments, including Mailboxes Y Mas,

operated by codefendants, Juan B. Castaneda and Marisela Castaneda (the Castenedas).

Burtech sued Garcia, Gonzalez, and the Castenadas for damages arising from the

fraudulent scheme. Gonzalez and the Castanedas (collectively referred to as cross-

complainants) cross-complained, alleging that they had suffered financial and reputation

losses as a result of being indirectly associated with Garcia’s activity and named as

defendants in Burtech’s complaint. Burtech filed a special motion to strike the cross-

complaint pursuant to Code of Civil Procedure section 425.161 (anti-SLAPP, or strategic

lawsuits against public participation), which was granted; cross-complainants appealed.

On appeal, cross-complainants argue that the trial court erred in (1) granting

Burtech’s special motion to strike the cross-complaint and (2) awarding Burtech attorney

fees. We affirm.

I. BACKGROUND

We summarize the facts as set forth in the complaint and cross-complaint. Jose

Garcia worked as a foreman for Burtech, a general contracting firm specializing in

1 All further statutory references are to the Code of Civil Procedure unless otherwise indicated.

2 underground sewer, water, and storm drain construction and installation. As foreman,

Garcia was responsible for oversight of employees and completion of field paperwork,

including daily time sheets for field employees, which meant he was responsible for

providing accurate time sheets and turning them in to Burtech’s offices weekly.

Garcia engaged in a scheme of diverting hundreds of thousands of dollars from

Burtech by hiring employees who were not qualified for the hourly rate reported and who

did not work as many hours as were reported to the payroll department. Garcia used the

names and hourly rates of other employees who were qualified to receive payment at the

rate reported, and had the payroll checks made payable in the name of the qualified

individuals, as opposed to the employees actually hired by Garcia at a lower rate to do the

work. Gonzalez would then cash the checks for a fee. After the checks were cashed,

Garcia either divided the proceeds between himself and the employee, or kept the

proceeds for himself. Eventually, the owner of Burtech visited some of the job sites, only

to find no workers on-site performing work. Approximately $230,000 was fraudulently

diverted by Garcia for an extended period of time without Burtech’s knowledge.

Burtech filed its first amended complaint (FAC) against Garcia, Gonzalez, and

Doe defendants for conversion, deceit, breach of fiduciary duty, constructive trust, money

had and received, unjust enrichment, and violation of Commercial Code section 3404.

On July 18, 2014, Burtech filed amendments to the FAC substituting Juan B. Castaneda

and Marisela Castaneda, doing business as Mailboxes Y Mas, for Does 1 and 2. The

causes of action against cross-complainants related to unjust enrichment and violation of

3 Commercial Code section 3404. Specifically, the Commercial Code claim was based on

allegations that the Castanedas willfully failed to require proper identification when

cashing checks, and knowingly cashing checks for individuals who were not the payees

of the checks.

On December 8, 2014, Gonzalez and the Castanedas filed a cross-complaint

against Burtech. The cross-complaint alleged causes of action for facilitation of fraud,

negligent hiring, retention, and supervision, equitable estoppel, civil RICO,2 and statutory

fraud. Cross-complainants alleged that Burtech used undocumented laborers and paid

them under assumed names, issuing checks to them under the assumed names. The

checks were cashed at check cashing places like Mailboxes Y Mas, and cross-

complainants were named as defendants as scapegoats for Burtech’s complicit conduct.

As a consequence, the cross-complaint alleges cross-complainants suffered monetary

losses, as well as loss of their reputation, by being indirectly associated with the illegal

activity and being named as defendants in Burtech’s complaint.

On January 20, 2015, Burtech filed a special motion to strike the cross-complaint

pursuant to section 425.16 (anti-SLAPP motion). The trial court granted the motion to

strike the entire cross-complaint without leave to amend, on the ground that it arose from

protected activity, and that cross-complainants failed to establish the probable validity of

their claims. On April 3, 2015, Burtech filed a motion for attorney fees and costs

pursuant to section 425.16, subdivision (c). The motion was granted, and Burtech was

2 Racketeer Influenced and Corrupt Organizations Act. (18 U.S.C. § 1961 et seq.)

4 awarded $17,124.79 in fees and costs. On April 13, 2015, cross-complainants filed a

notice of appeal from the order granting the special motion to strike the cross-complaint.

II. DISCUSSION

A. The Trial Court Properly Granted the Anti-SLAPP Motion.

Cross-complainants argue that the trial court erred in granting the anti-SLAPP

motion. They assert the cross-complaint is directed at Burtech’s alleged wrongful and

illegal conduct, although they concede that Burtech’s FAC was a “protected activity.”

We conclude the trial court correctly ruled on the motion.

Section 425.16 authorizes a motion to strike for “‘[a] cause of action against a

person arising from any act of that person in furtherance of the person’s right of petition

or free speech . . . .’” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 819.)

The analysis of an anti-SLAPP motion involves two steps: “First, the court decides

whether the defendant has made a threshold showing that the challenged cause of action

is one ‘arising from’ protected activity. (§ 425.16, subd. (b)(1).) If the court finds such a

showing has been made, it then must consider whether the plaintiff has demonstrated a

probability of prevailing on the claim.” (City of Cotati v. Cashman (2002) 29 Cal.4th 69,

76.) Only a cause of action that satisfies both prongs of the anti-SLAPP statute will be

subject to being stricken under the statute. (Navellier v. Sletten (2002) 29 Cal.4th 82, 89.)

We review orders granting or denying anti-SLAPP motions de novo. (Oasis West Realty,

LLC v. Goldman, supra, at pp. 819-829.)

5 Burtech had the initial burden of showing that the causes of action against it arose

from protected activity. (§ 425.16, subd. (e).) The protection provided for written or oral

statements made in connection with judicial proceedings includes communications

preparatory to or in anticipation of such proceedings. (Dove Audio, Inc. v. Rosenfeld,

Meyer & Susman (1996) 47 Cal.App.4th 777, 784.) Statements made in anticipation of

litigation are considered privileged. (Karnazes v. Ares (2016) 244 Cal.App.4th 344, 353.)

Because the statute expressly refers to “any act,” which includes communicative conduct

such as the filing, funding, and prosecution of a civil action (Rusheen v. Cohen (2006) 37

Cal.4th 1048, 1056, citing Ludwig v. Superior Court (1995) 37 Cal.App.4th 8, 17-19), it

protects allegations contained in a complaint against a SLAPP action. A cross-complaint

alleging a cause of action arising from the plaintiff’s act of filing a complaint against the

defendant may qualify as a SLAPP action. (Raining Data Corp. v. Barrenechea (2009)

175 Cal.App.4th 1363, 1373.)

Here, the allegations of the cross-complaint assert cross-complainants were

financially and reputationally injured solely by virtue of Burtech’s investigation and

filing of a lawsuit to seek redress from Garcia’s fraudulent scheme, which involved using

Gonzalez to cash the payroll checks at check cashing institutions, such as the Castanedas’

business. The first cause of action alleges that Burtech “facilitated” Garcia’s fraud by

engaging in unfair methods of competition in or affecting commerce, in violation of

section 45 of title 15 of the United States Code that caused cross-complainants’ monetary

losses and loss of their reputation “by being indirectly associated with such illegal

6 activity and being named as defendants herein.” (Italics added.) Having omitted any

allegations that they were directly harmed by the alleged unfair business practices, the

sole basis for the claim is cross-complainants’ potential liability arising from the lawsuit,

a protected activity.

The second cause of action similarly alleges that cross-complainants have been

“caused to suffer financial losses and the loss of their reputations for having been

wrongfully sued by Burtech,” establishing that it also arises directly from the protected

activity of filing the lawsuit. (Italics added.) The third cause of action seeks equitable

estoppel from seeking any damages against cross-complainants, so it directly arose from

the protected activity of filing a complaint. The fourth cause of action of the cross-

complaint includes similar allegations that cross-complainants were damaged by being

named as defendants, and the fifth cause of action alleges cross-complainants suffered

financial loss and loss of their reputation by being wrongfully accused of participating in

the scheme and exposing each of them to potential criminal liability.

All of the claims in the cross-complaint are based potential damage relating to the

fact they were named in a lawsuit by Burtech, a protected activity. Cross-complainants

had no direct dealings with Burtech and did not allege any losses from having cashed any

of the checks presented by Gonzalez, aside from being named in the amended complaint

as being indirectly responsible for Burtech’s losses. Having determined that Burtech

made its threshold showing that the challenged causes of action arose from protected

7 activity, we must next determine whether Burtech demonstrated a probability of

prevailing on its claims, the second prong of the anti-SLAPP analysis.

An anti-SLAPP motion must be denied “‘if the plaintiff presents evidence

establishing a prima facie case which, if believed by the trier of fact, will result in a

judgment for the plaintiff. [Citation.]’” (Fleishman v. Superior Court (2002) 102

Cal.App.4th 350, 356.) Whether the plaintiff established a prima facie case is a question

of law. (Zamos v. Stroud (2004) 32 Cal.4th 958, 965.)

To satisfy this second prong, cross-complainants must substantiate each element

of the alleged causes of action through competent, admissible evidence. (DuPont Merck

Pharmaceutical Co. v. Superior Court (2000) 78 Cal.App.4th 562, 568.) “Only a cause

of action that satisfies both prongs of the anti-SLAPP statute—i.e., that arises from

protected speech or petitioning and lacks even minimal merit—is a SLAPP, subject to

being stricken under the statute.” (Navellier v. Sletten, supra, 29 Cal.4th at p. 89.)

In making this determination, we must examine the substance of the claims, rather than

their form or label: “The anti-SLAPP statute’s definitional focus is not the form of the

plaintiff’s cause of action but, rather, the defendant’s activity that gives rise to his or her

asserted liability—and whether that activity constitutes protected speech or petitioning.”

(Id. at p. 92, italics omitted.)

Here, the substance of each cause of action of the cross-complaint attempts to

attach liability on Burtech for naming cross-complainants in the lawsuit, and thereby

indirectly associating them with Garcia’s fraudulent scheme and exposing them to

8 potential liability. None of the causes of action establishes any conduct of Burtech that

would give rise to a claim by cross-complaints other than its act of naming them in the

action.

First, the claims sounding in fraud (first and fifth causes of action) omit any

allegation that Burtech made any representations or promises to cross-complainants, on

which they relied to their detriment. Without a misrepresentation alleged to have been

made to cross-complainants, and detrimental reliance by them on such a

misrepresentation, the conduct complained of in the first and fifth claims boil down to

Burtech’s act of filing the lawsuit. There is no likelihood cross-complainants could

prevail against Burtech on those two causes of action.

Second, the negligent hiring, etc., claim alleges injury to cross-complainants solely

due to their indirect liability to Burtech arising from the lawsuit. There is no allegation

that Garcia injured, defrauded, or otherwise harmed cross-complainants, so his conduct as

an employee of Burtech is not actionable by them, and there is no likelihood they will

prevail on it.

Third, the equitable estoppel claim is defective because the equitable estoppel

doctrine acts defensively only, such that “a stand-alone cause of action for equitable

estoppel will not lie as a matter of law.” (Behnke v. State Farm General Ins. Co. (2011)

196 Cal.App.4th 1443, 1463.) There is no likelihood of prevailing on this claim.

Fourth, while there is a private right of action under the civil RICO statute (see

Cianci v. Superior Court (1985) 40 Cal.3d 903, 909), it is not covered by section 41 of

9 title 15 of the United States Code as alleged in the cross-complaint (which relates to the

establishment and membership composition of the Federal Trade Commission). Cross-

complainants did not make the necessary factual allegations to bring Burtech under the

purview of the civil RICO statute (18 U.S.C. § 1964 et seq.), and did not produce

evidence at the hearing on the anti-SLAPP motion that would support its ability to prove

such a claim. There is no likelihood of prevailing on the fourth cause of action.

The trial court properly determined that all of the claims in the cross-complaint

arose from protected activity and that cross-complainants failed to establish a probability

of prevailing on any of the claims. The motion was properly granted to strike the entire

cross-complaint.

B. The Trial Court Properly Awarded Attorney Fees.

Cross-complainants assert the trial court erroneously granted Burtech’s motion for

attorney fees. They assert that the filing of the notice of appeal after the granting of the

special motion to strike deprived the trial court of jurisdiction to consider other matters.

We disagree.

It is true that under section 916, ordinarily “‘the trial court is divested of’ subject

matter jurisdiction over any matter embraced in or affected by the appeal during the

pendency of that appeal.” (Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th

180, 196-197.) However, “an appeal does not stay proceedings on ‘ancillary or collateral

matters which do not affect the judgment [or order] on appeal’ even though the

10 proceedings may render the appeal moot.” (Id. at p. 191, citing Betz v. Pankow (1993) 16

Cal.App.4th 931, 938.)

One such ancillary or collateral matter is a motion for attorney fees. A trial court

retains jurisdiction to entertain a motion for attorney fees despite the filing of an appeal.

(Robertson v. Rodriguez (1995) 36 Cal.App.4th 347, 360, citing Nazemi v. Tseng (1992)

5 Cal.App.4th 1633, 1639; see also Doe v. Luster (2006) 145 Cal.App.4th 139, 144.)

Cross-complainants do not challenge Burtech’s right to seek fees following a

successful anti-SLAPP motion, or the amount of fees and costs ordered. The trial court

was authorized to hear and award attorney fees after the notice of appeal had been filed.

III. DISPOSITION

The judgment is affirmed. Burtech is entitled to its costs on appeal.

NOT TO BE PUBLISHED IN OFFICIAL REPORTS RAMIREZ P. J.

We concur:

HOLLENHORST J.

McKINSTER J.