UGI Construction LLC v. Alen Ternian and Charleen Ternian

Here, Plaintiffs sufficiently allege tenant harassment. First, they allege that Defendants failed to perform and timely complete necessary repairs at the property. (Compl., P.P. 67-68.) Second, they allege that Defendants knew of the substandard conditions, had the means and opportunity to abate them, and refused. (Compl., P.P. 23-24.) Third, they allege that Defendants acted purposefully to vex, injure, and annoy Plaintiffs and to force them to vacate the property or to accept substandard premises without further complaint. (Compl., P. 27.)

Those allegations describe willful conduct directed at these tenants. Article 5.3 took effect on August 6, 2021. An enactment that carries no express retroactivity provision applies prospectively unless it is "very clear from extrinsic sources that the Legislature or the drafters, in fact, intended a retroactive application." (Evangelatos v. Superior Court (1988) 44 Cal.3d 1188, 1209.) Conduct before that date therefore cannot violate article 5.3. However, Plaintiffs allege conditions and refusals to repair over at least the last four years of tenancies that continued well past 2021.

The ordinance's effective date narrows the period the seventh cause of action covers without defeating the cause of action itself. A demurrer does not lie to a part of it. (PH II, Inc., supra, 33 Cal.App.4th at p. 1682.) Accordingly, the Demurrer to the seventh cause of action is overruled. CONCLUSION The Demurrer is overruled.

NATURE OF PROCEEDINGS: Hearing on Special Motion to Strike The Special Motion to Strike is granted in part and denied in part. BACKGROUND Plaintiff and Cross-Defendant UGI Construction LLC (UGI) filed this action against Alen Ternian and Charleen Ternian, alleging that it renovated the backyard of their residence and was not paid for the work. Alen Ternian and Charleen Ternian (Cross-Complainants) filed a Cross-Complaint against UGI and Merchants Bonding Company (Mutual), alleging that UGI performed defectively, damaged the property, charged for work it never furnished or was never authorized to perform, and recorded an excessive mechanic's lien.

The causes of action in the Cross-Complaint are: (1) Breach of Contract; (2) Fraud; (3) Negligence; (4) Breach of Implied Covenant of Good Faith and Fair Dealing; (5) Unjust Enrichment/Restitution; and (6) Claim Against License Bond. UGI filed a Special Motion to Strike certain paragraphs of the Cross-Complaint regarding the recordation of a mechanic's lien. Cross-Complainants filed an Opposition. EVIDENTIARY OBJECTIONS Cross-Complainants submit 19 objections to the Declaration of Jiangning Zheng.

The Court rules as follows. Objection 6. Sustained. Improper legal conclusion; the construction of a writing in evidence is a question for the Court. (Evid. Code, Sec. 310.)

The Court declines to rule on the remaining objections. Neither step of the analysis below depends on the Zheng Declaration. The recording is established by the Complaint and by the recorded instrument attached to it (Compl., P. 31, Ex. 5), and the second step turns on the litigation privilege and on the written contracts. UGI submits 7 objections to the Declaration of Charleen Ternian, numbered 1 through 6 and 9. The Court rules as follows. Objection 1. Sustained. Improper legal conclusion; the construction of a writing in evidence is a question for the Court. (Evid.

Code, Sec. 310.) The Court declines to rule on the remaining objections. The disposition would be the same whether the objections were sustained or overruled. LEGAL STANDARD "If a defendant brings a special motion under the anti-SLAPP statute [Code of Civil Procedure section 425.16] to strike a cause of action, the trial court evaluates that motion using a two-step process: The first examines the nature of the conduct that underlies the plaintiff's allegations to determine whether the conduct is protected by section 425.16; the second assesses the merits of the plaintiff's claim." (Laker v.

Board of Trustees of California State University (2019) 32 Cal.App.5th 745, 759.) "The plaintiff carries the burden of demonstrating that its claim has 'at least "minimal merit."' [Citation.] If the plaintiff is unable to demonstrate that his or her claim has at least minimal merit, then the trial court should deem the cause of action a SLAPP and should strike it." (Id. at p. 760.) "[T]he 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 v.

Cable News Network, Inc. (2019) 7 Cal.5th 871, 884.) A claim may be struck "only if the speech or petitioning activity itself is the wrong complained of, and not just evidence of liability or a step leading to some different act for which liability is asserted." (Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1060 (Park).) In ruling on the 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.) "Analysis of an anti-SLAPP motion is not confined to evaluating whether an entire cause of action, as pleaded by the plaintiff, arises from protected activity or has merit." (Bonni v.

St. Joseph Health System (2021) 11 Cal.5th 995, 1010.) "At the first step, the moving defendant bears the burden of identifying all allegations of protected activity, and the claims for relief supported by them. When relief is sought based on allegations of both protected and unprotected activity, the unprotected activity is disregarded at this stage. If the court determines that relief is sought based on allegations arising from activity protected by the statute, the second step is reached. There, the burden shifts to the plaintiff to demonstrate that each challenged claim based on protected activity is legally sufficient and factually substantiated.

The court, without resolving evidentiary conflicts, must determine whether the plaintiff's showing, if accepted by the trier of fact, would be sufficient to sustain a favorable judgment.

If not, the claim is stricken. Allegations of protected activity supporting the stricken claim are eliminated from the complaint, unless they also support a distinct claim on which the plaintiff has shown a probability of prevailing." (Baral v. Schnitt (2016) 1 Cal.5th 376, 396 (Baral).) "Allegations of protected activity that merely provide context, without supporting a claim for recovery, cannot be stricken under the anti-SLAPP statute." (Id. at p. 394.) "[A]t the second stage of an anti-SLAPP hearing, the court may consider affidavits, declarations, and their equivalents if it is reasonably possible the proffered evidence set out in those statements will be admissible at trial." (Sweetwater Union High School Dist. v.

Gilbane Building Co. (2019) 6 Cal.5th 931, 949.) ANALYSIS I. Protected Activity A. Recordation UGI contends that each targeted allegation arises from its recordation of a mechanic's lien, an act of petitioning protected by Code of Civil Procedure section 425.16, subdivisions (e)(1) and (e)(2). Cross-Complainants argue that the acts giving rise to their claims are UGI'S defective performance, unauthorized charges, and damage to the property, and that the recordation is evidence and a consequence of that conduct rather than the wrong itself.

The California Constitution provides that contractors and laborers "shall have a lien upon the property upon which they have bestowed labor or furnished material for the value of such labor done and material furnished; and the Legislature shall provide, by law, for the speedy and efficient enforcement of such liens." (Cal. Const., art. XIV, Sec. 3.) "The claimant shall commence an action to enforce a lien within 90 days after recordation of the claim of lien. If the claimant does not commence an action to enforce the lien within that time, the claim of lien expires and is unenforceable." (Civ.

Code, Sec. 8460, subd. (a).) Recordation is thus the step the statute requires before a claimant may sue. "The filing of a mechanic's lien is a necessary prerequisite to bringing a foreclosure action. [Citation.] As such, it is a protected prelitigation statement preparatory to filing a judicial proceeding." (RGC Gaslamp, LLC v. Ehmcke Sheet Metal Co., Inc. (2020) 56 Cal.App.5th 413, 426 (RGC Gaslamp).) "The filing of a mechanic's lien constitutes protected activity, even if the lien was invalid or otherwise improper." (Id. at p. 421.)

At the first step a court asks whether the movant has made a prima facie showing that the underlying activity is protected, "'not whether it has shown its acts are ultimately lawful.'" (Id. at pp. 425-426.) Here, the recording supplies the element of breach in paragraphs 34 and 54(e). Paragraph 34 alleges that UGI'S "recording of an excessive and legally unsupported mechanic's lien" was "an additional and independent breach of the Contracts." (Cross-Compl., P. 34.) Paragraph 54(e) alleges as a breach of the implied covenant UGI'S "recording an excessive, improper, and legally unsupported mechanic's lien," which the paragraph says clouded title and interfered with the use and enjoyment of the property. (Cross-Compl., P. 54(e).)

Paragraph 57(C) demands damages for that interference and for the cloud on title. (Cross-Compl., P. 57(C).) Cross-Complainants describe those paragraphs

the same way in opposing the Motion. (Opp., at p. 8.) Without the recording, those paragraphs plead no breach and demand no damage. Cross-Complainants' reliance on Park is misplaced. The question under Park is whether the petitioning activity "itself is the wrong complained of" or serves instead as "evidence of liability or a step leading to some different act for which liability is asserted." (Park, supra, 2 Cal.5th at p. 1060.) Here, paragraph 34 identifies no act of UGI other than the recording, and neither do paragraphs 54(e) and 57(C).

Cross-Complainants' defective-work, property-damage, and unauthorized-charge allegations describe a different wrong, and the Motion does not attack the claims they support. Cross-Complainants also attempt to relocate the wrong from the act of recording to UGI'S inclusion of false and inflated charges within the recorded instrument. Neither the amount a claim of lien states nor the claimant's intent in stating it bears on the first step. Both are questions for the second step. (RGC Gaslamp, supra, 56 Cal.App.5th at pp. 425-426, 430.)

Likewise, paragraphs 25, 29(c), 35(C), and 44(C) demand damages for the cloud on title and for interference with the property's ownership, use, and enjoyment. (Cross-Compl., P.P. 25, 29(c), 35(C), 44(C).) Paragraphs 25 and 29(c) sit among the general allegations that every cause of action incorporates, and paragraphs 35(C) and 44(C) sit in the damages allegations of the first and second causes of action. (Cross-Compl., P.P. 30, 36, 45, 50, 58, 61.) Each identifies an item of recovery that exists only because UGI recorded.

Relief is therefore "sought based on" the recording wherever the paragraph sits. (Baral, supra, 1 Cal.5th at p. 396.) Baral shields an allegation that gives context without supporting recovery. (Id. at p. 394.) These paragraphs ask for the recovery. UGI describes the entirety of paragraph 55 as repeating the recording allegation and paragraph 56 as concluding from it. (Mot., at p. 3:18-24.) Neither description holds. Paragraph 55 alleges that Cross-Complainants notified UGI of the defects and demanded that it return, that UGI refused to remedy them, and that UGI'S "refusal to engage in good-faith dispute resolution, its continued pursuit of grossly inflated and legally unsupported claims, and its recording of an excessive mechanic's lien" were each breaches of the implied covenant. (Cross-Compl., P. 55.)

Only the last of the three is the recording. UGI identifies neither the refusal to remedy nor the pursuit of its payment claims as protected activity. The Court does not strike what the Motion never identified. (Baral, supra, 1 Cal.5th at p. 396.) Paragraph 56 alleges no act at all; it draws a conclusion from everything "described above," most of which is the unprotected conduct in paragraphs 54(a) through (d). (Cross-Compl., P. 56.) The Motion is therefore granted as to the portion of paragraph 55 beginning with the words "and its recording of an excessive mechanic's lien" and ending with the words "offers to resolve this dispute," and is denied as to the remainder of paragraph 55 and as to paragraph 56.

Once the recording is eliminated as a ground for recovery, paragraph 56 draws its conclusion from what remains. Accordingly, UGI has carried its first-step burden as to paragraph 34, paragraph 54(e), the identified portion of paragraph 55, paragraph 57(C), and the identified lien-damage portions of paragraphs 25, 29(c), 35(C), and 44(C). B. Illegality

Cross-Complainants argue that the recordation lost any protection because it was illegal under Civil Code section 8422. UGI replies that the illegal as a matter of law exception is narrow and that section 8422 tolerates the errors alleged. In Flatley v. Mauro (2006) 39 Cal.4th 299, 320, (Flatley) the California Supreme Court held "where a defendant brings a motion to strike under section 425.16 based on a claim that the plaintiff's action arises from activity by the defendant in furtherance of the defendant's exercise of protected speech or petition rights, but either the defendant concedes, or the evidence conclusively establishes, that the assertedly protected speech or petition activity was illegal as a matter of law, the defendant is precluded from using the anti-SLAPP statute to strike the plaintiff's action."

The statute Cross-Complainants invoke provides that "[e]xcept as provided in subdivisions (b) and (c), erroneous information contained in a claim of lien relating to the claimant's demand, credits and offsets deducted, the work provided, or the description of the site, does not invalidate the claim of lien." (Civ. Code, Sec. 8422, subd. (a).) Such information invalidates the lien only "if the court determines" that "[t]he claim of lien was made with intent to defraud," or that an innocent third party became a bona fide owner after recordation. (Id., subd. (b).)

And "[a]ny person who shall willfully include in a claim of lien labor, services, equipment, or materials not furnished for the property described in the claim, shall thereby forfeit the person's lien." (Id., subd. (c).) Here, UGI concedes nothing that would show that the filing of the lien was illegal as a matter of law. It denies that the extra work was unauthorized, denies that the work went unperformed, and attributes the $235 difference between the recorded figure and its present calculation to a scrivener's error. (Mot., at pp. 7:12-8:10; Zheng Decl.

P.17.) An error of that size is the kind subdivision (a) tolerates. In contrast, Cross-Complainants contend the recorded balance includes roughly $184,676 in extra work approved by no written change order, of which some $104,100 is attributed to a single line item the First Contract already priced as an upgrade. (Opp., at pp. 13-14.) Whether the parties agreed that UGI would perform that additional work for that sum, and whether that work was performed is the merits issue, and UGI does not concede and the record does not definitively show that it was.

Subdivision (b) commits the question of fraudulent intent to another proceeding. The statute makes an erroneous demand invalidating only upon a judicial determination of fraudulent intent, and it assigns that determination to the enforcement action. UGI has pleaded that action. (Compl., P.P. 47-51.) Thus, a statute that anticipates a later finding of fraudulent intent cannot furnish the conclusive establishment Flatley requires before the finding is made. Forfeiture under subdivision (c) is a civil consequence of a civil filing, and Cross-Complainants identify no crime. "[E]ven if the filing of duplicative mechanic's liens is statutorily unauthorized, it is not criminal and does not fit the illegality exception." (RGC Gaslamp, supra, 56 Cal.App.5th at p. 427, fn. 9.)

Thus, subdivision (c) does not bring the recording within the exception.

C. Unspecified Allegations The Notice of Motion also asks the Court to strike "[e]ach other allegation of the Cross-Complaint, wherever incorporated by reference, that seeks to impose liability for, or to recover damages arising from, UGI'S recordation of its mechanic's lien." (Notice of Mot., at p. 2:2-4.) Cross-Complainants argue that the request would delete allegations the Motion never identifies. UGI replies that the Cross-Complaint incorporates every preceding allegation into every cause of action, so that relief at the level of allegations is what the pleading requires.

Each cause of action incorporates by reference all preceding allegations. (Cross-Compl., P.P. 30, 36, 45, 50, 58, 61.) An incorporation clause repeats only the allegations that remain in the pleading, and an allegation stricken from the pleading is no longer part of that pleading. The allegations stricken above are therefore stricken throughout the Cross-Complaint, and the request requires no separate order as to them. Beyond those allegations, UGI identifies nothing. Thus, the Motion is denied as to any further allegation the Notice of Motion does not specifically identify.

II. Minimal Merit A. Litigation Privilege UGI contends that the litigation privilege of Civil Code section 47, subdivision (b), bars any liability founded on the recording. Cross-Complainants argue that the privilege extends only to communicative acts made in good faith and does not immunize illegal conduct causing damages unrelated to the use of that conduct in litigation. UGI replies that the privilege is absolute and that the authority Cross-Complainants cite holds the opposite of what they say it holds.

A privileged publication is one made "[i]n any ... judicial proceeding." (Civ. Code, Sec. 47, subd. (b).) "The usual formulation is that the privilege applies to any communication (1) made in judicial or quasi-judicial proceedings; (2) by litigants or other participants authorized by law; (3) to achieve the objects of the litigation; and (4) that have some connection or logical relation to the action." (Silberg v. Anderson (1990) 50 Cal.3d 205, 212.) The Legislature intended the privilege to apply "to all publications, irrespective of their maliciousness." (Id. at p. 216.) "[T]he recording of a mechanic's lien is absolutely privileged, and does not give rise to a slander of title action even if the claim of lien is invalid." (RGC Gaslamp, supra, 56 Cal.App.5th at p. 437.) "'Any deficiencies in the lien procedure were a matter of defense to the action and did not militate against the privilege.'" (Id. at p. 436.)

Here, every element is satisfied. UGI recorded the claim of lien and then filed this action to foreclose it. (Compl., P.P. 31, 47-51, Ex. 5.) The California Constitution confers the lien, and Civil Code section 8460 makes recordation the step that precedes a foreclosure action. A claimant who records is therefore a participant authorized by law even before it becomes a litigant. (Cal. Const., art. XIV, Sec. 3; Civ. Code, Sec. 8460, subd. (a); RGC Gaslamp, supra, 56 Cal.App.5th at p. 437.) The recording concerns the payment dispute the foreclosure cause of action

presents. Cross-Complainants read Olszewski v. Scripps Health (2003) 30 Cal.4th 798 for two propositions. The first, that the privilege protects only communications made in good faith, appears nowhere in the opinion. The second, that the privilege "'applies only to communicative acts and does not privilege tortious courses of conduct,'" is recited there as a general rule and then held inapplicable. The Supreme Court concluded that the gravamen was the communicative act of asserting the liens, and it rejected the contention that using those liens to seize funds was noncommunicative conduct outside the privilege. (Id. at p. 831.)

Here, the gravamen of the targeted allegations is a communicative act. "The distinction between communicative and noncommunicative conduct hinges on the gravamen of the action. That is, the key in determining whether the privilege applies is whether the injury allegedly resulted from an act that was communicative in its essential nature." (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1057.) UGI recorded an instrument with the County Recorder. Recording an instrument is communicative in its essential nature.

Cross-Complainants' reliance on Scalzo v. Baker (2010) 185 Cal.App.4th 91 is similarly misplaced. There, a party obtained his brother's confidential credit card records by misrepresenting himself to the card issuer and then circulated them outside the litigation, and the privilege did not protect "illegal conduct that results in damages unrelated to the use of the fruits of that conduct in litigation." (Id. at p. 100.) Here, the damages Cross-Complainants demand are a cloud on title and interference with the property's use and enjoyment.

Both are legal effects of the recorded instrument itself. Not every claim founded on the recordation of an invalid mechanic's lien is barred, and an owner may seek declaratory and injunctive relief testing the lien's validity. (RGC Gaslamp, supra, 56 Cal.App.5th at pp. 437-438.) However, the paragraphs before the Court seek neither remedy, and each instead demands money damages for the recording. B. Contract Exception Cross-Complainants argue that the contracts permit a lien only for a genuinely unpaid balance, so that recording a lien for more is an independent breach of the written agreements.

UGI replies that a contract theory escapes the privilege only where the recording breaches a separate promise, and that neither contract contains one. "[C]onduct alleged to constitute a breach of contract may also come within the statutory protections for protected speech or petitioning." (Feldman v. 1100 Park Lane Associates (2008) 160 Cal.App.4th 1467, 1483-1484 (Feldman).) Whether the privilege applies to an action for breach of contract "turns on whether its application furthers the policies underlying the privilege." (Wentland v.

Wass (2005) 126 Cal.App.4th 1484, 1494 (Wentland).) In Wentland, the defendants had promised not to accuse the plaintiff of wrongdoing in connection with a particular project, and a claim for breaking that promise survived. (Ibid.) In Feldman, the privilege barred a contract claim where the agreement contained no "confidentiality agreement or other agreement not to sue." (Feldman, supra, 160 Cal.App.4th at p. 1497.)

Here, section 3 of each agreement sets out the payment terms and provides that, upon nonpayment, "Contractor may cease work, file a lien, reclaim materials, and recover attorney fees for unpaid balances." (Compl., Exs. 1, 2, Sec. 3.) Section 7 of each provides that UGI "retains the right to file a lien if payments are not received as per contract terms." (Compl., Exs. 1, 2, Sec. 7.) Cross-Complainants read the words "for unpaid balances" as a ceiling on the lien right. But that is the very nature of a mechanic's lien.

Indeed, section 7 is express in that it is a retained right, existing independent of the contract, rather than a substantive limitation on that right. Nor does the change-order provision defeat the litigation privilege. Section 6 requires that changes, including additional work and price adjustments, "be approved in writing before work begins," and it makes approval "via signed document, email, or text message" binding. (Compl., Exs. 1, 2, Sec. 6.) Whether Cross-Complainants approved the extra work in one of those forms decides what UGI may recover on its contract, common count, and foreclosure claims. (See RGC Gaslamp, supra, 56 Cal.App.5th at p. 436.)

Even if UGI is not entitled to recover the amount claimed in the lien, its decision to file the lien, as prerequisite to its foreclosure action remains protected by the litigation privilege. (See id. at p. 437.) Accordingly, Cross-Complainants have not demonstrated minimal merit on the claims predicated on the recording of the lien. The Motion attacks nothing beyond the recording. Cross-Complainants' allegations of defective performance, property damage, and unauthorized charges are therefore unaffected, and the causes of action that plead that conduct proceed.

The Motion is granted as to paragraph 34, paragraph 54(e), the identified portion of paragraph 55, paragraph 57(C), and the identified lien-damage portions of paragraphs 25, 29(c), 35(C), and 44(C), each stricken as a ground for relief predicated on UGI'S recording of the mechanic's lien. The Motion is otherwise denied. III. Attorney Fees UGI seeks its fees and costs under Code of Civil Procedure section 425.16, subdivision (c)(1), in an amount to be established by declaration or noticed motion.

Cross-Complainants argue that UGI is no prevailing defendant. They request an award of their fees if the Court finds the Motion frivolous or solely intended to cause unnecessary delay. "[A] prevailing defendant on a special motion to strike shall be entitled to recover that defendant's attorney's fees and costs." (Code Civ. Proc., Sec. 425.16, subd. (c)(1).) "[U]nder Code of Civil Procedure section 425.16, subdivision (c), any SLAPP defendant who brings a successful motion to strike is entitled to mandatory attorney fees." (Ketchum v.

Moses (2001) 24 Cal.4th 1122, 1131.) A movant who succeeds in part "must generally be considered a prevailing party unless the results of the motion were so insignificant that the party did not achieve any practical benefit from bringing the motion." (Mann v. Quality Old Time Service, Inc (2006) 139 Cal.App.4th 328, 339-340.) Here, UGI achieved a practical benefit. The order removes the recording as an independent source of liability and returns the parties' dispute over the lien amount to the foreclosure cause of action.

UGI is entitled to the reasonable fees and costs it incurred in connection with this motion. UGI may

seek attorney fees and costs under CCP Sec. 425.16, subdivision (c) by noticed motion. CONCLUSION The Special Motion to Strike is granted in part and denied in part. | Home -->)" -->