Commercial Litigation and Arbitration

Hearsay: Email Proposing to “Get Aggressive” with Counterparty Is a Non-Hearsay Proposal to Perform an Act — Email from Counsel Identifying Strength of Opponent’s Position Claim Offered for Notice, Not Truth

O&M Llc v. Aldridge Pite Llp, 2017 Cal. App. Unpub. LEXIS 2982 (Cal. Ct. App. April 28, 2017):

Aldridge Pite LLP, successor by merger to Pite Duncan, LLP and Diane Elizabeth Bond (collectively Pite) appeal from an order denying their special motion to strike1 the malicious prosecution complaint filed against them and their client, Wells Fargo Bank, N.A. (Wells Fargo)2 by O&M, LLC (O&M) and its property manager, Nexus Development Corporation, Central Division (Nexus) (collectively O&M). Pite contends O&M failed to carry its burden of showing no reasonable attorney would have found the underlying action tenable or that it was brought with malice. Pite further argues the trial court erred in overruling three evidentiary objections. We disagree and affirm the order.


In May 2005, O&M entered into a master lease for property upon which [*2]  it developed a planned unit development. The following year, O&M subleased three parcels of land containing three residential units to Uptown 4 Townhomes, LLC (Uptown).

Uptown obtained three loans from Wells Fargo in the aggregate amount of $1.4 million to purchase the subleases, secured by a deed of trust on each sublease. The deeds of trust named Wells Fargo as lender and beneficiary and Uptown as borrower and trustor.

The subleases required Uptown to make annual lease payments to O&M on January 1 each year. O&M agreed not to terminate the leases upon any default "if within sixty (60) days after service of written notice from Lessor expressing Lessor's intention to terminate this Lease for such default or breach and describing the same, the holder of the trust deed shall cure such default or breach . . . ; provided, however, that if the holder of the trust deed shall fail or refuse to comply with the conditions of this subparagraph (d), Lessor shall be released from the covenants of forbearance herein contained."

In January 2008, Uptown failed to make its lease payments and in July O&M sent it notices of default for the three subleases. Uptown did not cure the defaults.

On October 31, [*3]  Matthew Kaufman, on behalf of O&M, sent 60-day notices of default to Wells Fargo for each sublease to the post office box address identified in the deeds of trusts. The notices informed Wells Fargo that O&M intended "to terminate the [s]ublease[s] unless [Wells Fargo] cures [Uptown's] default in full within sixty (60) days from the date of this letter." These notices were returned as undeliverable.

On November 10, 2008, Toni Clark, Development Manager and Director of Legal Services for Nexus, sent a letter to Wells Fargo at an alternate address, informing Wells Fargo that O&M's original 60-day default notices had been returned and enclosing the original unopened notices. Wells Fargo stamped the default notices received on November 14. The 60-day period for Wells Fargo to cure Uptown's defaults to avoid termination of the leases were thus set to expire on January 10, or at the latest on January 13, 2009.

In December 2008, Tina Fisher, a process specialist with Wells Fargo responsible for reviewing and processing delinquencies on land leases, including the three deeds of trust in this case, received a copy of O&M's November 10th letter and the default notices. On December 16, Fisher called Kaufman [*4]  and left a voicemail message, but he did not return her call.

On December 22, Fisher called Clark "to determine the amount of the default . . . and to confirm that Wells Fargo serviced the Deeds of Trust related to the Subject Properties." When Clark did not answer, Fisher left a voicemail message "that [she] would be out of the office on vacation and that if this matter needed immediate attention she should contact Kelly Ball so . . . Ball could arrange for payment to be made." That same morning at about 11:48 a.m., Clark responded by e-mail to Fisher, advising her of the "the amount necessary to cure the default on all [three] units combined," including interest, through December 18, 2008. Fisher's e-mail server generated an automated response indicating she would be out of the office from December 23 to January 5, 2009, and to contact Ball "if you need assistance while I'm out of the office." Around 9:00 a.m. on December 23, Clark sent another e-mail to Fisher, attaching a spreadsheet identifying the amounts owed on each lease to cure the defaults as of that date, and further notifying her of the 2009 payments that would become due on January 1, 2009, and declared delinquent if not [*5]  paid by January 10.

On January 5, 2009, Clark again e-mailed Fisher notifying her the 60-day default period would end that week and asking if Wells Fargo intended to cure the defaults. Fisher called Clark the next day and left a message. Clark replied via e-mail a few hours later, reminding Fisher she had already sent her "the breakdown of the funds necessary to bring this matter current" and reiterating the 2009 payments were due on January 1, 2009, and had to be paid by January 10 or be deemed delinquent.

On January 8, Fisher e-mailed Clark for the borrower and property addresses of the three properties to confirm Wells Fargo held loans on them. Wells Fargo failed to tender any cure payment by January 13.

Fisher and Clark continued to correspond via e-mail until March regarding various information requested by Fisher. Two days after the cure deadline, Fisher e-mailed Clark for a tax identification number. Clark e-mailed back the same day, attaching a completed W-9 and instructing Fisher to "forward the check(s) to my attention, and let me know if you need anything else."

Fisher received the tax identification number on February 6 and three days later "sent an internal communication within [*6]  Wells Fargo to have a payee header established for O&M . . . so that checks could be issued . . . ." According to Fisher, the payee header was established on February 26, whereupon she e-mailed Clark apologizing for the delay and requesting an updated invoice. Clark e-mailed back the same day that she would supply the new amounts.

On Friday, February 27, Clark provided an updated invoice indicating "[t]he total amount due . . . is good through March 6, 2009." Fisher did not read the e-mail until Monday, March 2. She then "sent an internal request within Wells Fargo for checks . . . to cure the delinquency." Wells Fargo issued two of the checks on March 4, and the third one on March 5.

Meanwhile on March 5, Clark e-mailed Fisher stating O&M had not received payment and, "'[i]n the event we have not received the funds necessary to bring these amounts current . . . I have been directed to proceed with the foreclosure process.'" According to Fisher, the e-mail did not provide a deadline for . . . a response or advise when O&M intended to 'proceed with the foreclosure process.' At no time during our communications did . . . Clark convey in either her written or verbal communications a deadline, or [*7]  any sense of urgency with regard to the payments being requested. I did not have any indication . . . Clark and/or O&M would not accept the funds if not tendered by a date certain."

Fisher received the checks on March 11, at which time she sent them via two-day mail to Clark. She also e-mailed Clark to let her know and to provide the tracking number.

Fisher followed up on April 10 but never heard again from Clark. Later that month, O&M returned the checks, stating it was unwilling to accept them. Fisher "was shocked when [she] received all three checks back in the mail." At the end of July, O&M terminated the subleases.

In October 2009, O&M sent a memorandum to Uptown, setting forth its terms for re-subleasing the property. Among other things, O&M demanded payment of past due rent, reimbursement of O&M's expenses such as premises liability insurance and attorney fees and costs, personal guarantees by Uptown's principals, an indemnity and release from Uptown, plus "a one-time re-subleasing fee in the amount of $50,000."

The next month, Larry Nabb of Wells Fargo sent an e-mail to representatives of Uptown, calling O&M's re-subleasing fee a "ransom fee" and that Wells Fargo's only options [*8]  were either to pay or "get aggressive." Five days later, outside counsel for Wells Fargo e-mailed Nabb, advising that "[t]he [s]ublease[s] . . . clearly provide[] that Wells Fargo (as holder of the deed of trust) would have sixty (60) days from service of written notice of the sublessee/borrower's default in which to cure that default." According to counsel, "[p]resuming that proper notices [of default] were sent, and no timely cure was tendered, then there was a right to terminate the [s]ublease[s]." In his response to counsel's e-mail, Nabb admitted Wells Fargo received the notices of default on November 14, 2009. Wells Fargo did not agree to O&M's new terms and two and a half years later filed the underlying lawsuit.

The Underlying Action

In February 2012, Pite, on behalf of Wells Fargo, filed a lawsuit against O&M and Nexus for wrongful detention, breach of contract, promissory estoppel, unjust enrichment/restitution, unfair competition, and declaratory relief. The original, first amended (FAC), and second amended (SAC) complaints, contained various contradictory allegations.

The original complaint alleged that on February 27, 2009, O&M agreed to waive the 60-day deadline for Wells Fargo to exercise its option to cure [*9]  Uptown's default when it wrote to Wells Fargo and "provided it with a current invoice for the total amount due and promised payment would be accepted if sent prior to March 6, 2009." Wells Fargo thereafter sent three checks to O&M on March 5, 2009.

The FAC asserted additional claims for breach contract and constructive fraud. It also changed its allegations regarding O&M's purported waiver of the 60-day cure deadline and the date by which it tendered its funds. Wells Fargo now alleged that Clark, as Nexus's authorized representative, never "express[ed] that it was O&M's intention to terminate the [s]ubleases if payment was not received by a date certain, and represented and acted in accordance with a continued waiver of the defaults pending payment. [¶] . . . In reliance upon Nexus's promise that the calculation of the cure amount was good through March 6, 2009, [Wells Fargo] mailed three checks payable to O&M dated March 4, 2009 and March 5, 2009." In a subsequent paragraph, Wells Fargo admitted these checks were not tendered until March 11, 2009.

The trial court partially sustained O&M's demurrer to the FAC without leave to amend, noting among other things, the "different allegations" regarding the timing [*10]  of the tender of funds. But it overruled the demurrer as to the causes of action for unjust enrichment/restitution, unfair competition, declaratory relief, and relief from forfeiture.

Wells Fargo then filed its SAC alleging only those four causes of action. In doing so, it eliminated its admission that it had not sent any checks to O&M until March 11, 2009, instead stating only that it mailed checks "dated March 4, 2009 and March 5, 2009."

Eight months after initiating the lawsuit, in October 2012, Wells Fargo asked for an extension of time to respond to O&M's request to produce documents supporting the allegations of the SAC. In a meet and confer letter dated October 17, 2012, counsel for O&M stated the request was unreasonable because it "indicate[d] neither you nor your client ever reviewed documents before filing the complaint. Your client had three years from the date of the actions complained of to gather and fully review all documents in support of its allegations." The letter also addressed Wells Fargo's delay in producing its PMK [person most knowledgeable] for deposition: "The refusal of your client to produce the [PMK] for deposition (especially after requesting and receiving a month's delay) not only lacks substantial [*11]  justification . . . , but is further confirmation that your client has no personal knowledge of, let alone evidentiary support for, the allegations and other factual contentions in its pleading." He warned, "No reasonable attorney would have filed the initial complaint, [or] . . . continue to pursue the remaining claims . . . [and] unless the action [was] dismissed . . . [O&M would] pursue all . . . available remedies" after the case concluded.

In November, Wells Fargo produced its PMK, Cindy Shanabrook, for deposition. She testified Wells Fargo received the 60-day notices of default on November 14, 2008, the subleases provided Wells Fargo 60 days within which to cure the defaults, Wells Fargo did not cure the defaults by the January deadline, and Wells Fargo had nothing in its file stating O&M informed it that it did not have to cure the defaults by the January 2009 deadline.

On September 19, 2013, O&M moved for summary judgment. Less than two months later, Pite, on behalf of Wells Fargo, recorded notices of pendency of action (lis pendens) against two of the three homes that had been the subject of the terminated subleases. The two homes were owned by Kaufman, one of Nexus's senior [*12]  officers and O&M's secretary. Wells Fargo and Pite had learned he owned the two homes during depositions taken in May and June 2013. The remaining home against which a lis pendens was not filed was owned by a third party.

On April 22, 2014, the trial court granted the summary judgment motion, stating: "The lynchpin of Wells Fargo's [SAC] is the claim that O&M's termination of the subleases was unlawful or wrongful. [¶] . . . [¶] The subleases are clear. Wells Fargo had the right to cure within 60 days' notice. It did not. And Wells Fargo has offered no evidence that any act of O&M prevented Wells Fargo from doing so." Wells Fargo appealed but voluntarily dismissed the appeal before briefing.

The Present Case

O&M sued Wells Fargo and Pite for malicious prosecution. Wells Fargo and Pite each filed separate anti-SLAPP motions. The court denied both motions, overruling their objections to O&M's evidence.

The court found Wells Fargo and Pite lacked probable cause to bring or maintain the causes of action for unjust enrichment/restitution, declaratory relief, and relief from forfeiture based on Wells Fargo's admissions in its pleadings and filings. "No reasonable attorney would have thought [*13]  the unjust enrichment/restitution claim legally tenable; an unjust enrichment claim does not lie where, as here, the parties have multiple enforceable express contracts covering the same subject matter at issue. . . . Wells Fargo's declaratory relief and relief from forfeiture claims were based on two factual underpinnings: first, that O&M's 60-day notices were deficient; and second, that O&M, through Nexus, had waived and/or extended the 60-day cure period beyond March 6, 2009. Wells Fargo's admissions in its pleadings and the exhibits attached thereto show the 60-day notices were adequate as a matter of law. . . . The evidence also shows [Wells Fargo and Pite] had no reasonable cause to believe O&M and/or Nexus had waived or extended the cure period beyond March 6, 2009 . . . or that its March 11, 2009 tender was timely."

As to malice, the court determined "[t]he evidence also shows [Wells Fargo and Pite] initiated/maintained the claims asserted in the [SAC] knowing they lacked probable cause . . . after Wells Fargo had unsuccessfully attempted to negotiate the reinstatement of the subleases and Uptown had stopped making payments to Wells Fargo on the subject loans, leaving Wells Fargo [*14]  with a total loss of some $1.4 million . . . which gives rise to an inference of malice due to improper purpose."


I. The Anti-SLAPP Motion

"[A] SLAPP suit is 'a meritless suit filed primarily to chill the defendant's exercise of First Amendment rights.' [Citation.]" (Dove Audio, Inc. v. Rosenfeld, Meyer & Susman (1996) 47 Cal.App.4th 777, 783.) To prevent such actions, section 425.16, subdivision (b)(1), provides, "A cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim." Section 425.16 is to be "construed broadly." (§ 425.16, subd. (a).)

We apply a two-step analysis to an anti-SLAPP motion. "First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one 'arising from' protected activity. [Citation.] If the court finds such a showing has been made, it then must consider whether the plaintiff has demonstrated a probability of prevailing on the claim." (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 76.) "Only a cause of action that satisfies both prongs of the anti-SLAPP [*15]  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." (Navellier v. Sletten (2002) 29 Cal.4th 82, 89.) We review de novo a trial court's ruling granting or denying a motion to strike under anti-SLAPP law. (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 269, fn. 3 (Soukup).)

O&M acknowledges a malicious prosecution complaint satisfies the first prong. (Soukup, supra, 39 Cal.4th at p. 291.) Accordingly, we may move directly to the second prong of the analysis—whether O&M satisfied their burden of demonstrating a probability of prevailing.

"'A plaintiff establishes a probability of prevailing on the claim by showing that the complaint is legally sufficient and supported by a prima facie showing of facts that, if proved at trial, would support a judgment in the plaintiff's favor. [Citation.] The court cannot weigh the evidence, but must determine as a matter of law whether the evidence is sufficient to support a judgment in the plaintiff's favor. [Citation.] The court must consider not only facts supported by direct evidence, but also facts that reasonably can be inferred from the evidence. [Citation.] The defendant can defeat the plaintiff's evidentiary showing by presenting evidence that establishes as a matter of law that the [*16]  plaintiff cannot prevail. [Citation.] The defendant cannot defeat the plaintiff's evidentiary showing, however, by presenting evidence that merely contradicts that evidence but does not establish as a matter of law that the plaintiff cannot prevail. [Citation.]' [Citation.]" (Ulkarim v. Westfield LLC (2014) 227 Cal.App.4th 1266, 1274-1275.)

We now apply these rules to O&M's cause of action for malicious prosecution. "To prevail on a malicious prosecution claim, the plaintiff must show that the prior action (1) was commenced by or at the direction of the defendant and was pursued to a legal termination favorable to the plaintiff; (2) was brought without probable cause; and (3) was initiated with malice. [Citation.]" (Soukup, supra, 39 Cal.4th at p. 292.) The first element is undisputed. Therefore, we turn to whether O&M demonstrated a probability of prevailing on the issues probable cause and malice. The answer is yes.

A. Lack of Probable Cause

Probable cause to bring an action exists where the suit is "'arguably tenable, i.e., not so completely lacking in apparent merit that no reasonable attorney would have thought the claim tenable.' [Citation.] 'This rather lenient standard for bringing a civil action reflects "the important public policy of avoiding the chilling of novel or debatable [*17]  legal claims."' [Citation.] In view of that policy, '[o]nly those actions that "'any reasonable attorney would agree [are] totally and completely without merit'" may form the basis for a malicious prosecution suit.' [Citation.] A litigant lacks probable cause '"if he [or she] relies upon facts which he [or she] has no reasonable cause to believe to be true, or if he [or she] seeks recovery upon a legal theory which is untenable under the facts known to him [or her]."' [Citation.] '"Where a prior action asserted several grounds for liability, an action for malicious prosecution will lie if any one of those grounds was asserted with malice and without probable cause."' [Citation.]" (Nunez v. Pennisi (2015) 241 Cal.App.4th 861, 875 (Nunez).) Here, O&M has shown a probability of prevailing on the unjust enrichment/restitution cause of action.

"[O]ne method of showing lack of probable cause is to prove that no reasonable attorney would contend that the facts alleged in the underlying action would establish liability under the legal theory advanced—i.e., the claim is legally untenable. [Citations.] . . . [¶] The other method is to prove that the attorney (1) alleged facts the attorney knew or subsequently learned were not true, or (2) the attorney [*18]  had no reasonable basis to infer that evidence of the alleged facts could be developed through discovery or further investigation—i.e., the claim is factually untenable. [Citations.]" (Franklin Mint Co. v. Manatt, Phelps & Phillips, LLP (2010) 184 Cal.App.4th 313, 363.)

California courts are split on whether a separate cause of action for unjust enrichment exists. (Levine v. Blue Shield of California (2010) 189 Cal.App.4th 1117, 1138 (Levine).) Some have recognized a separate cause of action (see Peterson v. Cellco Partnership (2008) 164 Cal.App.4th 1583, 1593 (Peterson)), while others have concluded "'"[t]here is no cause of action in California for unjust enrichment"'" (Levine, supra, 189 Cal.App.4th at p. 1138). But all acknowledge that unjust enrichment is synonymous with restitution. (Ibid.)

"An unjust enrichment theory is inapplicable . . . [where] express contracts" govern the matter at hand. (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1370 (Durell).) Additionally, "'"There is no equitable reason for invoking restitution when the plaintiff gets the exchange which he expected."'" (Id. at p. 1371.) "'[T]he "mere fact that a person benefits another is not of itself sufficient to require the other to make restitution therefor."' [Citation.]" (Peterson, supra, 164 Cal.App.4th at p. 1593.)

No reasonable attorney would contend the facts alleged in the prior action established a cause of action for unjust enrichment/restitution. The claim was based on allegations Wells Fargo was a third party beneficiary under the subleases, O&M unlawfully terminated [*19]  the subleases, and was unjustly enriched by retaining the compensation allowed under the subleases. But the pleadings filed by Pite on Wells Fargo's behalf show the termination of the subleases was not unlawful but in compliance with the terms of the subleases; therefore, O&M was not unjustly enriched. The subleases explicitly provided Wells Fargo with an opportunity to cure any default by Uptown by making payment within 60 days after service of written notice. Uptown defaulted on the subleases. Clark forwarded the previously-returned notices of default to Wells Fargo on November 10, 2008. Wells Fargo acknowledged it received the notices on November 14, 2008. The original complaint admitted no cure payment was attempted prior to March 5, 2009. Although the SAC omits the date upon which the cure payment was tendered, the FAC concedes Wells Fargo did not tender any payment until March 11, 2009, with checks dated after the cure deadline.

The unjust enrichment/restitution claim thus lacked probable cause because it was an untenable legal theory under the facts known to Pite at the time it filed the underlying action on Wells Fargo's behalf. (Nunez, supra, 241 Cal.App.4th at p. 875.) Wells Fargo received the exchange it expected [*20]  under the plain terms of the subleases. (Durell, supra, 183 Cal.App.4th at p. 1371.)

Pite acknowledges Durell's holding, but argues Wells Fargo had the right to allege "inconsistent theories of recovery in the underlying action." That may be, but a malicious prosecution action still lies for any theory asserted without probable cause. (Nunez, supra, 241 Cal.App.4th at p. 875.)

Pite maintains probable cause existed to file the underlying action based on three theories. We are not persuaded.

First, Pite claims Clark's February 27, 2009, e-mail3 constituted a contractual offer by O&M to "Wells Fargo to cure the 2008 default past the expiration of the 60-day period in January 2009." But Pite never raised this argument in either the underlying action or in its anti-SLAPP motion. That failure forfeits its right to raise it on appeal. (Porterville Citizens for Responsible Hillside Development v. City of Porterville (2007) 157 Cal.App.4th 885, 912.)

During oral argument, Pite stressed it had "repeatedly" made this contention in the trial court. But while Pite's anti-SLAPP motion cited the February 27 e-mail and Wells Fargo's waiver argument, no suggestion was ever made that the February 27, 2009, e-mail was an "offer" that could be accepted by Wells Fargo so as to form a new binding contract. And while the existence of probable cause is a question of law and new legal issues can be [*21]  raised on appeal, we decline to exercise our discretion to consider it. (In re Marriage of Priem (2013) 214 Cal.App.4th 505, 511.)

Second, Pite asserts, "Wells Fargo had a reasonable basis for contending that the 60-day default notices were deficient" because "O&M never sent a default notice for the January 1, 2009 annual payment missed by Uptown." But O&M terminated the subleases for Wells Fargo's failure to cure the 2008 default, not the 2009 default. Realizing that, Pite concedes in its reply brief "[t]he issue is simply whether Wells Fargo's tender of the three checks on March 11, 2009 was timely to cure the 2008 defaults." They were not. As Pite acknowledges, "[t]he 60-day deadline based on the November 10, 2008 default notices had expired [60 days after they were served,] on January 10, 2009."

Lastly, Pite argues that "[o]nce O&M waived the 60-day default period . . . by negotiating with Wells Fargo past that deadline, there was a viable theory that O&M had to negotiate in good faith." But that places the proverbial cart (whether there was a duty to negotiate in good faith) before the horse (whether O&M waived the 60-day default period). Pite fails to present supporting authority or argument to support its conclusory assertion that negotiating past [*22]  the deadline constitutes a waiver. It does not.

"'"[W]aiver is the intentional relinquishment of a known right after knowledge of the facts." [Citations.] The burden . . . is on the party claiming a waiver of a right to prove it by clear and convincing evidence that does not leave the matter to speculation, and "doubtful cases will be decided against a waiver" [citation].' [Citations.] The waiver may be either express, based on the words of the waiving party, or implied, based on conduct indicating an intent to relinquish the right. [Citation.]" (Waller v. Truck Ins. Exchange, Inc. (1995) 11 Cal.4th 1, 31, italics added.) "Waiver requires an existing right . . . , actual or constructive knowledge of the right's existence, and either an actual intention to relinquish it or conduct so inconsistent with any intent to enforce the right as to induce a reasonable belief it has been relinquished. [Citations.]" (Utility Audit Co., Inc. v. City of Los Angeles (2003) 112 Cal.App.4th 950, 959.) Whether waiver exists is a question of fact unless "the relevant facts are undisputed and only one inference may reasonably be drawn from the facts." (Bower v. Inter-Con Security Systems, Inc. (2014) 232 Cal.App.4th 1035, 1043, italics added.) O&M's conduct did not constitute a waiver as a matter of law.

Hendren v. Yonash (1966) 243 Cal.App.2d 672 (Hendren), cited by co-appellant Wells Fargo, is instructive. The case involved a contract for the cutting and removal [*23]  of timber on the land with an option to extend the rights. Around the time the extension option expired, the landowners performed various services to the loggers, e.g., providing keys for access roads, locating property lines, and helping them find employees. Neither party realized the time for exercising the option had passed. The landowners sent a message to the lumber company about delinquent taxes but did not receive a reply. Upon realizing the extension option deadline had passed, the landowners notified the lumber company to cease all logging. The lumber company immediately tendered the delinquent taxes and the annual fee, but the landowners refused the tender. (Id. at pp. 675-676.)

Hendren concluded no waiver occurred: "The burden is on the party asserting the waiver to prove it by evidence that does not leave the matter uncertain. [Citation.] There has been no proof of an intention on the part of respondents to waive, and their acts were not such as would necessarily induce belief of relinquishment of any right. Until June 11, 1961, appellants had a perfect right to log the land. The evidence is that neither party thought of the expiration date of the option. There was no duty on respondents [*24]  to recall that date to mind and to notify appellants of it. The contract places the duty on appellants." (Hendren, supra, 243 Cal.App.2d at p. 680.)

The same applies here. Until the 60-day January deadline, Wells Fargo had the absolute right to cure the defaults. Although both parties here knew of that date, unlike in Hendren, the subleases nevertheless placed the duty to cure on Wells Fargo. O&M had no obligation to remind Wells Fargo of the deadline and the fact Clark did so on numerous occasions did not demonstrate an intention to waive the deadline. The subleases clearly stated O&M's intention not to terminate the subleases for any default if, within 60 days after service of written notice, Wells Fargo "shall cure such default." Wells Fargo did not do so.

Like the landowners in Hendren, therefore, O&M did not waive the 60-day default period. Wells Fargo did not timely tender the cure payment and O&M's continued communications with it did not constitute a waiver of the January deadline. (See Drips v. Moore (1918) 179 Cal. 249, 252 ["demands for payment or . . . forbearance to exercise . . . right of forfeiture pursuant to the provisions of the contract" does not constitute waiver]; Kay v. Kay (1961) 188 Cal.App.2d 214, 218 [despite "a long lapse of time between the first default and the declaration [*25]  of default and demand for possession, . . . mere lapse of time does not amount to a waiver" where delay could have been an act of "forbearance rather than the intentional relinquishment of the contract right"]; Ross v. Gentry (1928) 94 Cal.App. 742, 744-745 [no waiver by continued solicitation of payment of overdue principal and interest]; 54 Cal.Jur.3d (2017) Real Estate, § 197, pp. 272-273 ["right to declare a forfeiture is not waived by mere delay in declaring it, by forbearance, by willingness to accept overdue payments, or by a demand or continued effort to collect installments provided for in the contract," fns. omitted].)

Pite failed to carry its burden of establishing waiver by clear and convincing evidence. Given the clear and plain language of the subleases, the above authorities, and the admissions made by Pite and Wells Fargo, we conclude no reasonable attorney would have found the claim of unjust enrichment/restitution to be tenable. There was thus no probable cause to bring it. Because O&M did not waive the original 60-day January cure date, we need not address Pite's claim the trial court erred in ruling it "had no reasonable cause to believe O&M and/or Nexus had waived or extended the cure period beyond March 6, 2009." [*26] 

B. Malice

"'The "malice" element . . . relates to the subjective intent or purpose with which the defendant acted in initiating the prior action. [Citation.] The motive of the defendant must have been something other than that of bringing a perceived guilty person to justice or the satisfaction in a civil action of some personal or financial purpose. [Citation.] The plaintiff must plead and prove actual ill will or some improper ulterior motive.' [Citations.] Malice 'may range anywhere from open hostility to indifference. [Citations.]"' (Soukup, supra, 39 Cal.4th at p. 292.) "'Since parties rarely admit an improper motive, malice is usually proven by circumstantial evidence and inferences drawn from the evidence.' [Citation.]" (Daniels v. Robbins (2010) 182 Cal.App.4th 204, 225 (Daniels).) "Malice may be inferred from circumstantial evidence, such as the defendants' lack of probable cause, supplemented with proof that the prior case was instituted largely for an improper purpose. [Citation.] This additional proof may consist of evidence that the prior case was knowingly brought without probable cause or was brought to force a settlement unrelated to its merits." (Cole v. Patricia A. Meyer & Associates, APC (2012) 206 Cal.App.4th 1095, 1114.)

In determining whether malice exists, we keep in mind that in reviewing an anti-SLAPP motion, we must accept [*27]  as true the evidence favorable to the plaintiff and that a "'plaintiff needs to show only a case of "minimal merit." [Citations].'" (Barker v. Fox & Associates (2015) 240 Cal.App.4th 333, 348.) Further, a reviewing court may consider not only facts supported by direct evidence, but also facts reasonably inferable from the evidence. (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 822 (Oasis).) We draw all reasonable inferences from the evidence in favor of the plaintiff. (Tushscher Development Enterprises, Inc. v. San Diego Unified Port Dist. (2003) 106 Cal.App.4th 1219, 1238-1239 (Tushscher); Nagel v. Twin Laboratories, Inc. (2003) 109 Cal.App.4th 39, 52 (Nagel).)

Although Pite is correct that under Daniels, supra, 182 Cal.App.4th at page 225, the mere "'lack of probable cause in the underlying action, by itself, is insufficient to show malice,'" here there is more. O&M "cite[d] evidence of attitudes ranging from 'open hostility to indifference' [citation] that satisfies the requirement of a showing of minimal merit to [its ] malicious prosecution claim so as to defeat defendants' motions." (Soukup, supra, 39 Cal.4th at p. 295.)

We begin with the materially different allegations made between the original and subsequent complaints. The original complaint alleged Wells Fargo sent the three cure checks on March 5, 2009, and O&M expressly agreed to waive the 60-day deadline plus promised to accept payment if the checks were sent before March 6, 2009. The FAC admitted the cure checks, dated March 4 and 5, 2009, were not sent to O&M until March 11, [*28]  2009. The trial court noted this change regarding the date of "the alleged tender of cure payment" in ruling on O&M's demurrer to the FAC. The SAC then took out the reference to March 11, 2009, merely stating vaguely that cure checks dated March 4 and 5 were sent to O&M without acknowledging the prior allegation they were sent "in reliance" on the promise that the cure amount was good through March 6, 2009. From these facts, it is reasonably inferable Pite omitted significant facts in different pleadings to do an end run around an action it knowingly brought without probable cause.

This impression is bolstered by the fact that three years before the lawsuit was filed, Wells Fargo's outside counsel opined in an e-mail that O&M had the right to terminate the subleases if proper notices of the defaults were given and Wells Fargo failed to cure the defaults within 60 days thereafter, both of which indisputably occurred. By nonetheless proceeding with the underlying lawsuit, Wells Fargo acted with an attitude of indifference towards O&M's rights under the subleases and the existing facts. The opinion may have been taken out of context and counsel may not have been asked for such an opinion [*29]  as Pite argues, but it is nevertheless a piece of evidence from which an inference of malice can be made.

The evidence also supports an inference Pite filed the underlying lawsuit on Wells Fargo's behalf to pressure O&M to settle the matter of the new subleases. After negotiations for new subleases went sour, Wells Fargo, through Nabb, sent an e-mail in November 2009 to Uptown. Nabb agreed that an attached e-mail, if sent to O&M, was "fairly aggressive and at this point will likely send them over the edge. However I'm feeling like we can't reason with them regardless. Reflecting on last week, I'm positive the only reason Matt [Kaufman] wanted to meet was thinking that [Wells Fargo] would pay his $50K ransom fee. I'm starting to feel like they won't negotiate the $50K fee, hence our only choice is either pay it or get aggressive with them." Inasmuch as Wells Fargo did not pay the "ransom," it is reasonable to infer Pite "g[o]t aggressive" on its behalf by filing the underlying action.

This inference is buttressed by the fact Pite recorded lis pendens, not when the underlying action was filed or in the ensuing 18 months, but only after O&M filed its summary judgment and solely against the two [*30]  homes owned by Kaufman, a senior officer of Nexus and the secretary for O&M whose identity Pite discovered during depositions. O&M claims the lis pendens against Kaufman's homes remained until almost a year after the court granted summary judgment in O&M's favor, and after Wells Fargo had abandoned its appeal of the judgment. During oral argument, however, Wells Fargo and Pite asserted they had attempted to withdraw the lis pendens a few months after they filed their notices of appeals, and a month before they abandoned them, but that O&M's counsel requested new withdrawals be filed to address a typographical error regarding the recordation dates. Thus, although the timing of the initial filing of the lis pendens remains suspect, we decline to factor in the date when the lis pendens were actually withdrawn.

Pite counters the above evidence and inferences by pointing to declarations by two of their attorneys, which stated they held no malice or ill will toward O&M and "believed the underlying action was brought with probable cause." It also cites the absence of a settlement demand or "actual evidence" that it knew the prior action lacked probable cause or that it filed the lawsuit to [*31]  force a settlement. Pite also provides alternate explanations for Wells Fargo's outside counsel's e-mail regarding O&M's right to terminate the subleases, the discovery disputes described in O&M's counsel meet and confer letter,4 and the reason for filing the lis pendens. But on review of an anti-SLAPP motion, we must construe all reasonable inferences from the evidence in plaintiff's favor. (Oasis, supra, 51 Cal.4th at p. 822; Tushscher, supra, 106 Cal.App.4th at pp. 1238-1239; Nagel, supra, 109 Cal.App.4th at p. 52.)

At most, the two attorney declarations and Pite's arguments present factual questions, which cannot be resolved on an anti-SLAPP motion. For that reason, while the attorney declarations submitted by Pite may be similar to those in Daniels, supra, 182 Cal.App.4th at page 225 [attorneys "denied in their declarations that they brought and pursued the underlying action with an improper motive"], that alone is insufficient to defeat O&M's evidence. Pite's evidence and arguments do not establish as a matter of law that O&M cannot prevail; they merely contradict O&M's evidence. (Ulkarim, supra, 227 Cal.App.4th at pp. 1274-1275.) Accepting all admissible evidence as true and indulging every reasonable inference in O&M's favor, the trial court properly found O&M satisfied the minimal merit showing required to defeat Pite's motion. (Soukup, supra, 39 Cal.4th at p. 296.)

Daniels, supra, 182 Cal.App.4th 204, to which Pite analogizes this case, is inapposite. [*32]  There, the malicious prosecution plaintiff presented evidence of "a lack of probable cause" and the defendant attorney's "possible negligence in conducting factual research," each of which by itself, is insufficient to demonstrate malice. (Id. at p. 225.) Additionally, although "proof of malice can consist of evidence a party knowingly brings an action without probable cause" or "continues to prosecute an action after becoming aware that the action lacks probable cause" (id. at p. 226), the factual allegations in Daniels "were called into question by the apparent absence of any evidentiary support for the allegations" (id. at p. 227). Daniels concluded that the attorney defendants' "sustained inability to provide any support for [the underlying] allegations, on its own, does not allow an inference that they knew there was no probable cause for continuing to prosecute the underlying action." (Ibid.) The court distinguished the case from Zamos v. Stroud (2004) 32 Cal.4th 958, in which "the factual allegations were explicitly disproved by the presentation of prior sworn deposition testimony." (Daniels, supra, 182 Cal.App.4th at p. 227.) Daniels held, "[T]hat distinction is dispositive." (Ibid.) It is dispositive here as well.

O&M presented sufficient evidence from which an inference can be made that Pite initiated [*33]  the prior case with knowledge it lacked probable cause, and continued to prosecute even after Wells Fargo's PMK confirmed during her deposition that Wells Fargo's cure payment had been untimely tendered. For that matter, Pite, on behalf of Wells Fargo, recorded lis pendens against the two properties owned by Kaufman after discovering during depositions that he owned them, yet did not do so against the third property. These facts also distinguish this case from Roger Cleveland Golf Co., Inc. v. Krane & Smith, APC (2014) 225 Cal.App.4th 660, 688 (Roger Cleveland), overruled on another ground in Lee v. Hanley (2015) 61 Cal.4th 1225, 1239, where the evidence of malice consisted solely of a declaration from the plaintiff that in response to the comment that the case was frivolous and ought to be dismissed, the defendant said, "'"[T]hat may be true, but all I have to do is get the case to a jury."'" (Roger Cleveland, supra, 225 Cal.App.4th at p. 688, fn. omitted.)

Viewing the evidence in O&M's favor, as we are required to do at this stage of the proceeding, we conclude it made the requisite demonstration of probability of success on the merits, and Pite did not defeat that showing as a matter of law.

II. Evidentiary Objections

Pite contends the trial court erred in overruling its hearsay objections to three documents. One was the e-mail chain characterizing O&M's offer [*34]  to reinstate the subleases as "ransom" and stating Wells Fargo's only options were to "pay it or get aggressive" and another was the e-mail from Wells Fargo's outside counsel. Neither was hearsay, as they were not being offered to prove the truth of the matter asserted. The e-mail chain proposing to "get aggressive" was "a proposal to perform an act, and therefore was 'neither inherently true nor false.' [Citation.]" (People v. Cowan (2010) 50 Cal.4th 401, 472 [offer to "'come down right now'" was not hearsay but "a proposal to perform an act," which is "'neither inherently true nor false'" and thus not hearsay].) And the e-mail from outside counsel was offered to prove Wells Fargo and Pite "had notice or knowledge" the underlying claims lacked merit, not to prove what outside counsel said was true. (Magnolia Square Homeowners Assn. v. Safeco Ins. Co. (1990) 221 Cal.App.3d 1049, 1057; see Younger v. State Bar of California (1974) 12 Cal.3d 274, 286.)

The third document to which Pite claims the court erroneously overruled its objections was the October 17, 2012, meet and confer letter from O&M's counsel to Pite. According to Pite, the letter was a "'set up'" letter and "plainly hearsay." But we need not decide the admissibility of the letter because Pite acknowledges "[t]he trial court did not cite to this letter in making its ruling." Pite has made no effort to show how [*35]  the alleged error in overruling its objection to the letter actually prejudiced it if the court did not rely on it. Pite had the burden to demonstrate actual prejudice and its failure to do so forfeits the claim of error. (Overhill Farms, Inc. v. Lopez (2010) 190 Cal.App.4th 1248, 1271.)

III. Attorney Fees

Pite's final argument is that O&M cannot recover its appellate attorney fees because it did not appeal from the trial court's order denying the anti-SLAPP motions but not awarding any fees. O&M, however, seeks attorney fees incurred during this appeal. Code of Civil Procedure section 425.16, subdivision (c)(1), provides in part: "If the court finds that a special motion to strike is frivolous or is solely intended to cause unnecessary delay, the court shall award costs and reasonable attorney's fees to a plaintiff prevailing on the motion." Nevertheless, we deny O&M's request for attorney fees because it has not shown Pite's anti-SLAPP motion was frivolous or solely intended to cause unnecessary delay.


The order denying appellant's anti-SLAPP motion is affirmed. Respondents shall recover their costs on appeal.


Code of Civil Procedure section 425.16 (section 425.16) authorizes a special motion to strike a strategic lawsuit against public participation (SLAPP), and is referred to as the anti-SLAPP statute. (Navellier v. Sletten (2002) 29 Cal.4th 82, 85, fn. 1.)

Wells Fargo has filed a separate appeal (G052840) from the denial of its separate special motion to strike. The two appeals were not consolidated.

The February 27, 2009, e-mail from Clark reads, "Attached is an updated invoice for the amounts owed on the Anderson properties on which Wells Fargo owns a security interest. The total amount due of $25,307.74 is good through March 6, 2009. Please let me know when we can expect to receive payments on this."

Pite admits the trial court did not rely on this meet and confer letter.

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