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New Court of Appeal Opinion Re: Anti-SLAPP Motion and Mixed Causes of Action

The California Court of Appeal, Second Appellate District, Division One (LA), issued an opinion in Baral v. Schnitt (Feb. 5, 2015, B253620) __ Cal.App.4th __, addressing whether Code of Civil Procedure section 425.16, the anti-SLAPP statute, “authorizes excision of allegations subject to the anti-SLAPP statute (protected activity) in a cause of action that also contains meritorious allegations not within the purview of that statute (mixed cause of action).” (Slip opn., p. 2.) The court concluded that the statute does not. According to the court, the anti-SLAPP statute applies only to an entire cause of action. (Id. at p. 15.)

Robert Baral (“Baral”) and David Schnitt (“Schnitt”) owned a company together called IQ BackOffice, LLC (“IQ”). Baral filed a second amended complaint alleging breach of fiduciary duty, fraud, negligent misrepresentation and declaratory relief arising from a pre-litigation fraud investigation in regards to IQ. (Slip opn., pp. 2-4.) Schnitt moved to strike all references to the audit that took place during the fraud investigation pursuant to Code of Civil Procedure section 425.16. (Id. at pp. 5-6.) The trial court denied Schnitt’s motion finding that the anti-SLAPP statute applies to causes of action or to an entire complaint, not allegations. (Id. at p. 6.) Schnitt appealed the court’s order denying the anti-SLAPP motion. (Ibid.)

The Court of Appeal held Baral’s allegations regarding the audit described protected activity. Therefore, the court concluded the causes of action were mixed. (Slip opn., pp. 10-13.) “‘Appellate courts have wrestled with the application of the anti-SLAPP law where . . . a single cause of action includes multiple claims, some protected by that law and some not.’” (Id. at p. 15 quoting Cho v. Chang (2012) 219 Cal.App.4th 521, 526.) The Court of Appeal stated: “We too have struggled with this issue. We come out on the side of those cases holding that, if the nonmoving party demonstrates a prima facie case of prevailing on any part of a mixed cause of action, the anti-SLAPP motion fails. Our conclusion is based on: (1) the express words of the statute; (2) its underlying policies; and (3) the extraordinary consequences of the anti-SLAPP statute that distinguishes it from all other procedural motions.” (Slip opn., p. 15.) The express words of the anti-SLAPP statute state that it applies to a “cause of action.” (Id. at p. 20.) The court also explained that allowing anti-SLAPP motions to excise allegations would burden the trial courts “with more prolix motions with little commensurate savings in trial time.” (Id. at p. 21.) The Court of Appeal affirmed the trial court’s order holding mixed causes of action containing potentially meritorious claims should proceed unencumbered by the special procedures of the anti-SLAPP statute. (Id. at p. 22.)

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