Haight Ashbury Free Clinics, Inc. v. Happening House Ventures

184 Cal. App. 4th 1539, 110 Cal. Rptr. 3d 129, 2010 Cal. App. LEXIS 752
CourtCalifornia Court of Appeal
DecidedMay 26, 2010
DocketA125264
StatusPublished
Cited by128 cases

This text of 184 Cal. App. 4th 1539 (Haight Ashbury Free Clinics, Inc. v. Happening House Ventures) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Haight Ashbury Free Clinics, Inc. v. Happening House Ventures, 184 Cal. App. 4th 1539, 110 Cal. Rptr. 3d 129, 2010 Cal. App. LEXIS 752 (Cal. Ct. App. 2010).

Opinions

Opinion

JONES, P. J.

Respondent Haight Ashbury Free Clinics, Inc. (HAFCI), filed a complaint against appellants Happening House Ventures (HHV) and David E. Smith alleging Smith had violated his fiduciary duties to HAFCI. HHV and Smith filed a motion to strike under the SLAPP (strategic lawsuit against public participation) statute (Code Civ. Proc., § 425.16),1 arguing that two of the causes of action HAFCI alleged must be dismissed because they were based in part on constitutionally protected activity. The trial court disagreed and denied the motion. HHV and Smith now appeal arguing the trial court erred when it denied their motion. We agree and will hold that acts that are protected under the SLAPP statute are not “merely incidental” to a cause of action simply because they represent a relatively small number of many alleged wrongful acts.

I. FACTS AND PROCEDURAL HISTORY

In 1967, appellant David E. Smith founded HAFCI, a nonprofit corporation that provides free medical services in San Francisco. Also in 1967, Smith founded appellant HHV, which became a limited partnership by 1977. HHV was formed to assist HAFCI by acquiring San Francisco real estate, which would serve as a home for HAFCI’s services and ultimately be acquired by HAFCI at HHV’s cost less the mortgage balance. Smith was the general partner of HHV, and HAFCI became a limited partner in 1977.

HHV acquired three buildings in San Francisco for HAFCI’s use (the Buildings) and leased them to HAFCI, which used them in its operations.

[1543]*1543In 2005, a dispute arose between HAFCI and HHV, and the HAFCI board of directors removed Smith from his position as HAFCI’s president.

A. The Partnership Case

In August 2005, HAFCI filed a lawsuit against HHV, Smith, and HHV’s administrator David Newlin (Newlin), entitled Haight Ashbury Free Clinics, Inc. v. Happening House Ventures (Super. Ct. S.F. City and County, 2009, No. CGC-05-444472) (the Partnership Case). HAFCI sought an accounting of limited partnership interests in HHV and a judicial declaration of the amount of HAFCI’s proper partnership interest in HHV.

After a trial, the court determined in July 2008 that HAFCI’s proper percentage of interest in HHV was 30.68 percent.

B. The Lease Case

Meanwhile, in March 2006, HHV filed a lawsuit against HAFCI, entitled Happening House Ventures v. Haight Ashbury Free Clinics, Inc., in San Francisco City and County Superior Court (2009, No. CGC-06-450040) (the Lease Case). HHV alleged that HAFCI had breached its lease with HHV (the Lease), which obligated HAFCI to repair, keep and maintain the Buildings in good condition, return them to HHV in the same condition as when received (reasonable wear and tear excepted), and comply with governmental requirements regarding the Buildings.2

In March 2008, HHV accepted HAFCI’s offer to settle the Lease Case pursuant to section 998. The court entered judgment in HHV’s favor and awarded HHV prejudgment interest, attorney fees, and costs, for a total judgment of $594,237.95. HAFCI appealed the awards of prejudgment interest, attorney fees and costs. We affirmed the award of prejudgment interest in Happening House Ventures v. Haight Ashbury Free Clinics (May 28, 2009, A122792) (nonpub. opn.), and HAFCI abandoned its appeal of the fees and costs award in Happening House Ventures v. Haight Ashbury Free Clinics (May 5, 2009, A124121) (app. dism.).

HHV obtained a writ of execution on the Lease Case judgment and began to levy on HAFCI’s property.

C. This Proceeding

In January 2009, HAFCI filed the instant lawsuit against HHV and Smith. The first and second causes of action seek a declaratory judgment that the [1544]*1544HHV limited partnership has been dissolved or, in the alternative, a judicial decree dissolving HHV. The third cause of action, against Smith in his individual capacity, alleges that Smith breached fiduciary duties he owed to HAFCI as general partner of HHV and as a director, officer, and key employee of HAFCI. A fourth cause of action incorporates the allegations of the third cause of action and seeks an accounting based on Smith’s purported breaches of his fiduciary duties.

1. The Third Cause of Action

Of particular relevance to this appeal is HAFCI’s third cause of action, which alleges that Smith breached his fiduciary duties to HAFCI in several ways. In part, the cause of action is based on the allegation that Smith allowed Newlin to manage key aspects of HAFCI’s and HHV’s business (including granting Newlin power of attorney to perform Smith’s duties as general partner of HHV) without adequate supervision, resulting in Newlin’s commission of a number of wrongful and improper acts. In addition, paragraph 31 in the third cause of action asserts that Smith breached his fiduciary duties to HAFCI by committing numerous other acts, two of which would become the subject of the motion at issue in this appeal (and which we set forth in italics): “(a) purporting to consent on behalf of all HHV limited partners, including HAFCI, to waive their right to purchase HHV interests that other limited partners wished to sell; [f] (b) engaging in the conduct found to be improper in the Decision in the Partnership Case; [j[] (c) engaging in conduct designed to enhance Smith’s personal tax position in ways that were of no benefit to HAFCI as a nonprofit corporation; [1] (d) failing to give HAFCI the opportunity promised by HHV and Smith to acquire the three HHV Buildings at HHV’s cost less the mortgage balance; [f] (e) using rent paid by HAFCI under the Lease to build Smith’s personal wealth through the acquisition of real estate partnerships, other securities and tax benefits; [][] (f) diverting HAFCI opportunities to himself; [1] (g) using HAFCI resources for his personal use; [f] (h) causing HHV to pay the legal expense of defending him against his own breaches of fiduciary duties to HAFCI; [(J[] (i) causing HHV to enter into a settlement agreement with Newlin under which HHV recovered far less than the damage caused by Newlin’s conduct as described above and released all claims against Newlin; [1] (j) causing HAFCI to consent to a Lease that imposed on HAFCI all of the burdens of ownership of the Buildings without receiving any of the benefits of ownership; [j[] (k) causing HHV to pay personal expenses; [|] (1) saddling HAFCI with the obligation to repay a 1985 ‘loan’ from HHV at a time when HAFCI’s rent payments to HHV exceeded the combined amount of the loan and HHV’s expenses for the Buildings, in effect ‘loaning’ back to HAFCI a portion of HAFCI’s own excessive rent payments; [][] (m) using HHV’s securities accounts for the benefit of SFREIC and other Smith-related entities; [][] (n) causing HHV to enter into a settlement with its former attorney Arthur Brunwasser that [1545]*1545insufficiently compensated HHV for Brunwasser’s conflicts of interest in representing HHV, Smith and Newlin at the same time; [][] (o) willfully conspiring with Newlin to have both of them testify falsely in depositions in the Partnership Case in what Smith described as a ‘legal compromise;’ and [][] (p) willfully misrepresenting facts surrounding the claims in the Partnership Case in a letter to the San Francisco Bay Guardian.” (Italics added.)

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Stetson v. Poudre Valley
Colorado Court of Appeals, 2025
Solorzano v. Sunnova Energy Corp. CA4/1
California Court of Appeal, 2025
Petrosyan v. BMW of North America CA2/4
California Court of Appeal, 2025
People v. Barajas CA6
California Court of Appeal, 2024
Littlefield v. Littlefield
California Court of Appeal, 2024
Taylor v. City of Sunnyvale CA6
California Court of Appeal, 2024
Hutcheson v. UBS Financial Services CA1/2
California Court of Appeal, 2023
The Cochran Firm v. Seck CA2/4
California Court of Appeal, 2023
City of Long Beach v. Patel CA2/1
California Court of Appeal, 2023
Estate of Bowman CA2/1
California Court of Appeal, 2022
Mendez-Villegas v. Duarte CA5
California Court of Appeal, 2022
Higgins v. St. Margaret's Episcopal School CA4/3
California Court of Appeal, 2021
Reynolds v. Palmbaum CA3
California Court of Appeal, 2021
Billesbach v. Specialized Loan Servicing LLC
California Court of Appeal, 2021

Cite This Page — Counsel Stack

Bluebook (online)
184 Cal. App. 4th 1539, 110 Cal. Rptr. 3d 129, 2010 Cal. App. LEXIS 752, Counsel Stack Legal Research, https://law.counselstack.com/opinion/haight-ashbury-free-clinics-inc-v-happening-house-ventures-calctapp-2010.