People ex rel. 20th Century Ins. Co. v. Bldg. Permit Consultants, Inc.

California Court of Appeal Dec 22, 2000 No. No. B139322Published

Before: Epstein

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Holding. The court held that the defendants failed to establish a prima facie case that the lawsuit arose from protected petition or free speech activity under the anti-SLAPP statute. The court determined that the creation of fraudulent insurance claims and damage reports does not constitute protected activity simply because those documents might later be used in litigation.

Issues

Whether the defendants met their initial burden of showing that the lawsuit arose from acts in furtherance of their right of petition or free speech under Code of Civil Procedure section 425.16.

Disposition. Affirmed

Quotations verified verbatim against the opinion

“defendants have failed to make a prima facie showing that the lawsuit was brought to chill their First Amendment rights.”

“If we protect the reports and claims under section 425.16 because they eventually could be used in connection with an official proceeding, we would effectively be providing immunity for any kind of criminal fraud”

[282]Opinion

EPSTEIN, J. Building Permit Consultants, Inc., and John Kaldawi appeal from an order denying a special motion to strike an action as a “SLAPP” (strategic lawsuits against public participation) suit. We affirm the order of the trial court.

Factual and Procedural Background

The underlying lawsuit is brought by 20th Century Insurance Company. Defendant Building Permit Consultants is a company assisting individuals in compiling and preparing repair estimates. Defendant John Kaldawi is the owner of the company.

The following is alleged in the complaint. Defendants were part of a scheme to increase the amount of money 20th Century paid to defendants’ clients who suffered damage from the Northridge earthquake of January 17, 1994. Defendants “cold called” and sent direct mail to large numbers of homeowners in the Northridge area after the earthquake. Defendants persuaded homeowners to enter into allegedly illegal contracts by which defendants were to receive up to 50 percent of the insurance proceeds recovered from the homeowners’ claims. Defendants then prepared damage and repair estimates, expert reports, billings, and other documents for use in support of filing allegedly false and fraudulent claims. In cases where 20th Century did not pay the amount of insurance benefits demanded by the defendants and their clients, defendants (1) invoked an appraisal process and selected biased appraisers who defendants knew would adopt and advocate the fraudulent and inflated cost estimates and repair recommendations prepared by defendants; and (2) referred clients to attorneys who were instructed to file litigation and advance the fraud.

The complaint relies, in part, on violation of Insurance Code section 1871.7, subdivision (a), which makes it unlawful “to procure clients or patients to perform or obtain services or benefits under a contract of insurance or that will be the basis for a claim against an insured individual or his or her insurer.” Plaintiff seeks over $50 million in damages in the underlying suit.

Defendants Kaldawi and Building Permit Consultants brought a special motion to strike the complaint pursuant to Code of Civil Procedure section [283425]

People ex rel. 20th Century Ins. Co. v. Bldg. Permit Consultants, Inc.

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