Case Name: McAfee v. Gibraltar SSI, LLC

Case No.: 2015-1-CV-289466

On December 24, 2015, Plaintiff filed the complaint against defendants Gibraltar, Roger Brush, Bryna Brush, Michael Greiner and Kimberly Greiner (collectively, “Defendants”) for declaratory relief. Defendants filed a special motion to strike the complaint pursuant to Code of Civil Procedure section 425.16, set for hearing on April 5, 2016. The day before the hearing, minutes after the Court posted its tentative ruling for April 5, 2016, Plaintiff filed a dismissal of the complaint without prejudice. As a result of the dismissal, the Court intended to issue a ruling based (in part) on the tentative solely for purposes of attorney fees, but did not intend to enter “the tentative ruling as the order of the Court” without modification as counsel claims. Nor did the Court intend to enter judgment based on that tentative ruling. Neither party appeared at the hearing on the motion to strike. The minutes erroneously state that the Court adopted the tentative ruling in full.

On May 13, 2016 Defendants filed an ex parte application to vacate the dismissal, and to enter the “tentative order” granting the motion.[1] The Court issued an order shortening time on a noticed motion.

This is purportedly an action for declaratory relief. According to the allegations of the complaint, on July 30, 2012, the Routt County Colorado District Court entered a judgment in favor of defendant Gibraltar SSI, LLC (“Gibraltar”) against plaintiff Eric McAfee (“Plaintiff”) and Robert Comes in the amount of $17,640,000 based on a breach of a guaranty. (See complaint, ¶¶ 8-10.) The judgment amount was since reduced following a foreclosure sale of the property that secured the loan agreement that was the subject of the breach of guaranty claim to the amount of $6.5 million. (Id.) On April 15, 2014, Gibraltar filed a new and separate action in the Santa Clara County court, Gibraltar SSI, LLC v. McAfee Capital, LLC, et al. (No. 2014-1-CV- 263876), alleging that Plaintiff and McAfee Capital, LLC engaged in a number of fraudulent transactions and transfers intending to place assets outside of Gibraltar’s reach. (See complaint, ¶¶ 12-13.) On April 25, 2014, Gibraltar’s President, Roger Brush, and an employee of Defendant, Michael Greiner, and their wives, Bryna Brush and Kimberly Greiner, filed requests for civil harassment restraining orders in Santa Clara County. (See complaint, ¶ 14.) Before the matters in the request for civil harassment restraining orders could be heard, they were taken off calendar. (Id.) Similarly, in late 2015, Gibraltar dismissed the fraud action as soon as McAfee propounded written discovery. (See complaint, ¶ 15.) The complaint alleges that “[d]espite the fact that GIBRALTAR dismissed its suits against MCAFEE and the harassment restraining orders were dropped, there is no finality to these matters… [a]s Chief Executive Officer (CEO) of AEMETIS, Inc., MCAFEE’s reputation is of the utmost importance and he must be afforded the opportunity to remove any disingenuous cloud.” (Complaint, ¶ 16.) “MCAFEE denies GIBRALTAR’s allegations as well as the allegations made against him in the harassment claims… [t]herefore MCAFEE brings this Complaint for a declaration of his rights and duties as to all claims brought by the Defendants.” (Complaint, ¶ 17.)

Special motion to strike the complaint

  1. Defendants’ Special Motion to Strike the Complaint

Defendants’ request for judicial notice is GRANTED. (Evid. Code § 452, subd. (d).) Plaintiff’s request for judicial notice is GRANTED. (Evid. Code § 452, subd. (d).)

Since Plaintiff voluntarily dismissed the complaint in its entirety, without prejudice, on April 4, 2016, the day before the hearing on the motion, the Court retains limited jurisdiction to decide whether to award attorney fees and costs to Defendants in connection with their motion. (See Weil & Brown, Cal. Prac. Guide: Civ. Proc. Before Trial (Rutter Group 2014), p. 7(II)-70, ¶ 7:1122; see also Law Offices of Andrew L. Ellis v. Yang (2009) 178 Cal App.4th 869, 878-879.) None of the cases that Defendants cites support their argument that the Court should vacate the dismissal, and the Court need not do so to consider a request for attorney fees resulting from the anti-SLAPP motion. The motion to vacate the dismissal of the action is DENIED.

Despite the dismissal, the Court still retains jurisdiction and has the discretion to determine whether Defendants are the prevailing party and entitled to attorney fees and costs under Code of Civil Procedure section 425.16, subdivision (c). (See Weil & Brown, Cal. Prac. Guide: Civ. Proc. Before Trial (Rutter Group 2014), p. 7(II)-70, ¶ 7:1123; see also Kyle v. Carmon (1999) 71 Cal.App.4th 901, 917-918.) To make this determination, the court must consider the merits of the anti-SLAPP motion even though it has no jurisdiction to grant or deny it. (See Tourgeman v. Nelson & Kennard (2014) 222 Cal.App.4th 1447, 1457; see also Liu v. Moore (1999) 69 Cal.App.4th 745, 752.)

In Equilon Enterprises, LLC v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, the California Supreme Court established the trial court’s duty in ruling on an anti-SLAPP motion to strike:

Section 425.16, subdivision (b)(1) requires the court to engage in a two-step process. First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. The moving defendant’s burden is to demonstrate that the act or acts of which the plaintiff complains were taken ‘in furtherance of the [defendant]’s right of petition or free speech under the United States or California Constitution in connection with a public issue,’ as defined in the statute. [Citation.] If the court finds [that defendant has made its threshold showing], it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim. Under section 425.16, subdivision (b)(2), the trial court in making these determinations considers ‘the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.

(Id. at 67.)

“[I]n order to establish the requisite probability of prevailing [citation], the plaintiff need only have ‘stated and substantiated a legally sufficient claim.’” (Navellier v. Sletten (2002) 29 Cal. 4th 82, 88, quoting Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal. 4th 1106, 1123.) “Put another way, the plaintiff ‘must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited.’” (Id. at 88-89, quoting Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 821.) “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.” (Id. at 89.)

The complaint clearly arises from protected activity

Code of Civil Procedure section 425.16, subdivision (e) states that an “act in furtherance of a person’s right of petition… includes… any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law… [or] any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law….” (Code Civ. Proc. § 425.16, subd. (e)(1)-(2).) “In the anti-SLAPP context, the critical point is whether the plaintiff’s cause of action itself was based on an act in furtherance of the defendant’s right of petition or free speech.” (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78.) “[I]t is the principal thrust or gravamen of the plaintiff’s cause of action that determines whether the anti-SLAPP statute applies….” (Martinez v. Metabolife Intern., Inc. (2003) 113 Cal.App.4th 181, 188 (emphasis original).)

Here, Plaintiff’s declaratory relief claim alleges that “[d]espite the fact that GIBRALTAR dismissed its suits against MCAFEE and the harassment restraining orders were dropped… MCAFEE’s reputation is of the utmost importance and he must be afforded the opportunity to remove any disingenuous cloud” as he “denies GIBRALTAR’s allegations as well as the allegations made against him in the harassment claims… [t]herefore, [he] brings this Complaint for a declaration of his rights and duties as to all claims brought by the Defendants.” (Complaint, ¶¶ 16-17; see also complaint, prayer, ¶ 1 (seeking “a judicial determination of the merits on all of Defendants’ claims against MCAFEE”).) Here, the gravamen of the complaint is that the allegations of the fraud action and the harassment claims have clouded Plaintiff’s reputation, and he seeks a declaration regarding the claims brought by and since dismissed by the Defendants. It is clear that Plaintiff’s complaint itself is based on the allegations of the prior action and harassment claims—writings that clearly constitute acts in furtherance of a person’s right of petition, and protected activity pursuant to section 425.16. (See Shekhter v. Financial Indemnity Co. (2001) 89 Cal.App.4th 141, 151 (stating that causes of action arising out of filing and prosecution of fraud lawsuits, as well as statements made to the press and to government agencies in relation to those lawsuits “is in the nature of typical litigation subject to a special motion to strike”).) Defendants met their burden, and the Court must determine whether the plaintiff has demonstrated a probability of prevailing on the claim.

Plaintiff cannot state a viable cause of action for declaratory relief

“A complaint for declaratory relief is legally sufficient if it sets forth facts showing the existence of an actual controversy relating to the legal rights and duties of the parties under a written instrument or with respect to property and requests that the rights and duties of the parties be adjudged by the court.” (Wellenkamp v. Bank of America (1978) 21 Cal.3d 943, 947, citing Cal. Code Civ. Proc. § 1060 and Maguire v. Hibernia Savings & Loan Society (1944) 23 Cal.2d 719.) “The court may refuse to exercise the power granted by this chapter in any case where its declaration or determination is not necessary or proper at the time under all the circumstances.” (Code Civ. Proc. § 1061; see also DeLaura v. Beckett (2006) 137 Cal.App.4th 542, 545 (stating that “[t]he court also may sustain a demurrer without leave to amend if it determines that a judicial declaration is not ‘necessary or proper at the time under all the circumstances’”); see also Otay Land Co. v. Royal Indem. Co. (2008) 169 Cal.App.4th 556, 562 (stating that “[t]he fundamental basis of declaratory relief is the existence of an actual, present controversy over a proper subject”).)

Here, there was simply no actual, present controversy presented by the complaint: the fraud action was dismissed and the request for civil harassment restraining orders were withdrawn nearly two years ago. Defendants’ memorandum states that “[i]n late 2015, Gibraltar decided to no longer pursue the Fraudulent Conveyance Action.” (Defs.’ memo of points and authorities in support of special motion to strike, p.4:11-13.) To the extent that Plaintiff is seeking a declaration as to the possible, yet-to-be-filed, revival of the fraud actions and requests for civil harassment restraining orders, “[t]he ‘actual controversy’ referred to in Code of Civil Procedure section 1060 is one which admits of definitive and conclusive relief by judgment within the field of judicial administration, as distinguished from an advisory opinion upon a particular or hypothetical state of facts.” (Alameda County Land Use Assn. v. City of Hayward (1995) 38 Cal.App.4th 1716, 1722; see also Wilson & Wilson v. City Council of Redwood City (2011) 191 Cal.App.4th 1559, 1573 (stating that “an ‘actual controversy’ … is one which admits of definitive and conclusive relief by judgment within the field of judicial administration, as distinguished from an advisory opinion upon a particular or hypothetical state of facts”); see also Winter v. Gnaizda (1979) 90 Cal.App.3d 750, 755 (stating same); see also Sherwyn & Handel v. Department of Social Services (1985) 173 Cal.App.3d 52, 58 (stating same).)[2] As Plaintiff has not stated a legally sufficient claim for declaratory relief, the special motion to strike the complaint was meritorious.

Defendants’ objections were not the basis of the Court’s ruling.

Since the cause of action for declaratory relief is subject to being stricken under the statute had it not been dismissed, an award of attorneys’ fees and costs under Code of Civil Procedure section 425.16 is justified. (See Liu v. Moore, supra, 69 Cal.App.4th at p. 752.) Defendants shall submit a motion for attorney fees and costs.

The Court will prepare the order.

[1] The Court notes that a tentative ruling is just that, a ruling, not an order. The Court remains free to modify any tentative ruling until issuance of an order on that ruling.

[2] Additionally, as Defendants asserted in their original reply papers on the special motion to strike, Plaintiff appears to allege a declaratory relief cause of action seeking the “removal of any disingenuous cloud” caused by the dismissed claims because Plaintiff knows that a cause of action for defamation would be barred by the litigation privilege. (See Defs.’ Reply brief in support of special motion to strike, p.7:11-28; see also Defs.’ reply brief in support of demurrer, pp.5:20-28, 6:25-28, citing Civ. Code § 47, subd.(b).) To the extent that Plaintiff seeks a cause of action for defamation—even if it is ultimately barred by the litigation privilege, Plaintiff is precluded from seeking declaratory relief, because once “the rights of the complaining party have crystalized into a cause of action for past wrongs [such] that a money judgment will fully resolve the dispute,” an actual controversy which can be resolved by means of declaratory judgment is not presented. (Cardellini v. Casey (1986) 181 Cal.App.3d 389, 396; see also Travers v. Louden (1967) 254 Cal.App.2d 926, 929 (stating that “[i]n our research of the subject we have found no authority for the proposition that declaratory relief is proper procedure when the rights of the complaining party have crystallized into a cause of action for past wrongs, all relationship between the parties has ceased to exist and there is no conduct of the parties subject to regulation by the court”).) As the prior actions and proceedings have been dismissed or dropped, there is no relationship between the parties and no conduct that is subject to regulation by the court.