City May Not Use “Anti-SLAPP” Motion to Dismiss Claim That City Employee Falsely Told Potential Tenants That Property Owner Was Criminally Convicted

Property owners often bristle at statements that local government staff make to prospective tenants or purchasers of their property, concerned that they will be scared away by overly harsh or inaccurate speech.  When those statements are perceived to have gone too far, property owners sometimes sue for defamation.  A recent court ruling helps set the boundaries between the types of defamation claims against local government that will swiftly be dismissed as “strategic lawsuits against public participation,” and those that will be allowed to proceed to court.

In this case, a city brought a nuisance abatement lawsuit against a property owner and its tenants for alleged prostitution occurring at massage parlors located on the property and the operation of marijuana dispensaries in violation of city code.  The property owner then cross-complained against the city and several of its employees for defamation over statements made to potential tenants and construction contractors that the owner had been convicted for illegal activity at the property, and that the city would not issue permits or licenses to any tenants due to litigation over illegal activity at the property.

The city and its employees filed an “anti-SLAPP” motion, which is a procedure to dismiss “strategic lawsuits against public participation,” lawsuits that aim to chill speech protected by the First Amendment.  The court of appeal ruled that claims against the city and one employee for making false statements should not be dismissed, but that other claims arising from the employees speech should be dismissed.  (City of Costa Mesa v. D’Alessio Investments, LLC (--- Cal.Rptr.3d ----, Cal.App. 4 Dist., March 11, 2013).

Facts

The litigation began when the City of Costa Mesa (“City”) and the State of California filed a nuisance abatement action to stop the illegal activities at the property.  The complaint named as defendants Dennis D’Alessio and D’Alessio Investments, owners of a commercial property in Costa Mesa (“Property”), as well as 10 businesses operating at the Property and 16 individuals affiliated with the businesses.  City’s complaint alleged that its police department investigated the activities of the massage parlors located on the Property and found evidence of prostitution as well as other noncriminal municipal code violations.  City’s complaint also alleged that several of the businesses on the Property were unlawfully distributing marijuana and violating other provisions of the municipal code.

The trial court ordered the massage parlors and individual defendants to abate all conditions causing a nuisance at the Property, ordered them to stop using the Property during the litigation, and prohibited the operation of massage parlors on the Property.  D’Alessio was not named as a defendant in the massage parlor case.  The court also granted a preliminary injunction against the medical marijuana defendants prohibiting the sale, cultivation, possession, or distribution of marijuana on the Property.

D’Alessio cross-complained against City and five City employees, alleging the employees made statements about him that constituted slander, trade libel, and interference with prospective economic advantage.  D’Alessio alleged various city code enforcement officers told prospective tenants of the Property and construction contractors that City police had raided the Property, found illegal businesses operating on the Property, and that the City would not issue business licenses to anyone attempting to rent space at the Property because the City was in the middle of litigation with the owner of the Property over the illegal activity.

D’Alessio further alleged that senior planner Mel Lee told prospective tenants that D’Alessio had been convicted of prostitution and drug dealing that occurred at the Property, that the Property was known for illegal activity including prostitution and drug dealing, that the entire building at the Property was scheduled to be shut down because of illegal activity that was conducted there, and that the prospective tenant should “look at other buildings” because of the illegal activities being conducted at the Property.

Decision

City and the employees named in D’Alessio’s lawsuit filed an “anti-SLAPP” motion against D’Alessio, which is a motion to dismiss a cause of action arising from any act in furtherance of the person’s right of petition or free speech under the federal or state constitutions in connection with a public issue.  Anti-SLAPP law applies not only to private conversations, but also to the speech of government employees.

In determining whether to dismiss a claim under the anti-SLAPP statute, courts must engage in a two-step process under the anti-SLAPP statute, first deciding whether the challenged cause of action arises from protected activity, and second determining the probability of prevailing on the claim.

The court found that most of D’Alessio’s allegations concerned protected activity, statements regarding “an issue under consideration or review by a legislative, executive, or judicial body.”  Because the City and the trial court were both considering and reviewing the alleged illegal activity occurring at the Property, statements made by city staff regarding the allegations were protected.  Statements about the City’s policy regarding issuance of licenses and permits while the Property was under investigation were not false, and were likewise covered by the anti-SLAPP statute.  The court found that D’Alessio provided no evidence to support most of his contentions regarding what the city staff told the prospective tenants and contractors.  With no evidence, the court found that D’Alessio had no probability of prevailing on those claims, and therefore those claims should be dismissed under the anti-SLAPP motion.

The court also found, however, that Lee’s alleged statements about D’Alessio’s criminal convictions were different and should not be dismissed under the anti-SLAPP law.  Lee allegedly stated that D’Alessio had been convicted of prostitution and drug dealing charges and that the Property would be shut down due to illegal activity.  Those alleged statements were not true, and could constitute sufficient grounds for a defamation claim.  The court found that Lee and City failed to show these statements would be protected by the Civil Code litigation privilege, which protects a “publication or broadcast” made as part of a judicial proceeding.  The court further determined that the statements were not covered by prosecutorial immunity, which applies to statements made in the course of prosecutorial or investigative duties, or governmental immunity for misrepresentations.  Because D’Alessio alleged that he had suffered harm as a result of city employees providing inaccurate information to third parties, the anti-SLAPP motion would not apply to these claims.

Questions

If you have any questions concerning the content of this Legal Alert, please contact the following from our office, or the attorney with whom you normally consult.

Jeffrey L. Massey | 916.321.4500

Jon E. Goetz | 805.786.4302

Topics:  Anti-SLAPP, Motion to Dismiss, Property Owners, Public Employees, Tenants

Published In: Civil Procedure Updates, Constitutional Law Updates, Personal Injury Updates, Commercial Real Estate Updates, Zoning, Planning & Land Use Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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