Turnabout on Remand

Crossroads Investors, L.P.  v. Fed. Nat’l Mortgage Assoc., No. C072585A (D3 Jul. 27, 2017)

This is an odd one. The Court of Appeal issued an opinion affirming the denial of an anti-SLAPP motion. The Supreme Court issued a grant-and-transfer, ordering reconsideration based on an intervening decision. And now, the the Court of Appeal reverses whole hog, in a ruling that is inconsistent with is prior decision in ways untouched by the intervening Supreme Court case.


I missed the original published opinion from the Court of Appeal in this case, which dropped in late-April 2016. (My wife was 8 1/2 months pregnant at the time, so I don’t feel too bad about it.) The case is a commercial mortgage dispute where the Borrower has been in and out of bankruptcy. The key claim is based on the Bank’s failure to give Borrower an accounting of what was needed to pay the loan off or cure the default, as required under Civil Code § 2924c. The bank failed to do that even after Borrower made various requests, including informal oral requests on various occasions during the bankruptcy case, as well as in a formal interrogatory in the litigation.

No doubt, the part of the claim arising from the interrogatory response was protected activity under Code of Civil Procedure § 425.16(e)(1) or (2). But the Court found the part arising from the refusal to respond to informal requests was not, even if it was made during the BK case. The case was thus addressed to a so-called “mixed” cause of action. 

The court suggested that two different tests had been applied in the face of mixed claims. One looked to whether protected activity was the gravamen of the claim or its “principal thrust.” The other asked whether protected conduct was “merely incidental” to merits of the claim. The court found that the interrogatories were more than “merely incidental” but not the “gravamen”
So finding at least one of the tests met, the court proceeded to examine whether Plaintiff made enough of a showing on the merits. In doing so, it applied the so-called Mann rule, which said that so long as plaintiff could make a prima facie showing on any part of a claim—including a part that didn’t implicate protected activity—the motion should be denied. And since Plaintiff did make such a showing for the non-interrogatory part of its § 2924c claim, so affirmed the trial court’s denial on that basis.

But before the decision was final, the Supreme Court decided Baral v. Schnitt, 1 Cal. 5th 376 (2016). Baral overturned the Mann rule, in favor of a rule that works more like a traditional motion to strike. Baral instructed courts evaluating anti-SLAPP motions to examine just the parts of a claim that arise from protected activity, and if those can’t succeed, to strike only those parts. So the Supreme Court granted review and transferred this case back to the Court of Appeal, for reconsideration in light of Baral.

What one would have expected to happen, then, is for the court here on remand to find that the interrogatory-based parts of the claim arose from protected activity, that those parts weren’t likely to succeed, and then to order those parts of the claim struck. But that’s not what happens here. Instead, the court—the exact same three-judge panel—reverses course and orders the trial court to grant the motion in toto.

There’s an initial question whether that’s allowed under the law of the case doctrine, since there’s a prior appellate decision in the case that rules on the non-Baral-implicated parts of the appeal. But since a grant of Supreme Court review generally vacates and de-publishes the prior opinion, the court here finds that there’s nothing left to bind it.

Moving on to the merits, like the prior decision, this opinion concludes that the interrogatory response was protected activity. But this time, it finds that the failure to provide the accounting outside of discovery also arises from protected activity, because an intervening case—Suarez v. Trigg Laboratories, Inc., 3 Cal. App. 5th 118 (2016)—had held that acts of fraudulent concealment in connection with a litigation can be protected. So the court finds that failures to provide the accounting were sufficiently intertwined with the bankruptcy case and efforts to settle it to be protected as statements “in connection with an issue under consideration in” a litigation under § 425.16(e)(2). Moreover, that same connectedness to the bankruptcy litigation also made the nondisclosures reasonably relevant to that litigation, which brings to bear the litigation privilege under § 47(b)(2) of the Civil Code. Which means Plaintiff can’t prevail on these claims either. So the motion should have been granted in relevant part.

Reversed and remanded.