How far will the SLAPP Statute go? Recent Developments show it Extends to Residential Home Transactions where, much to the Chagrin of Homeowners, Renters Inform Potential Buyers of Sex Offenders in the Neighborhood.

How far will the SLAPP Statute go?  Recent Developments show it Extends to Residential Home Transactions where, much to the Chagrin of Homeowners, Renters Inform Potential Buyers of Sex Offenders in the Neighborhood.

By: Dugan P. Kelley, July 2011

Remember the saying growing up, “if you don’t have something nice to say, don’t say anything at all?”  Our parents, or whoever gave us this sage advice, probably never had to wrestle with cases involving the SLAPP statute.[1]  Typically these cases involve juicy and/or salacious allegations being thrown back and forth between the litigants where one party perceives that they are being sued (in whole or part) in an effort to chill their free speech rights, in connection with a public issue.

SLAPP Decision in Cross vs. Cooper

At some point in your career, you probably have brushed up against an Anti-SLAPP motion.  The Anti-SLAPP motion has the potential to nuke the case quickly for aggrieved Defendants and retrieve attorney fees.  There are constant developments in this arena of the law for both Plaintiffs and Defendants.

Recently, the California Sixth Appellate District grappled with the SLAPP statute and its extension to contracts for sale on residential homes.  In Cross vs. Cooper, et al., No. HO33164, the Court was faced with the following scenario: does the Anti-SLAPP protection extend to renters of a house being sold who threaten and disclose the existence of a convicted sex offender to buyers, thereby thwarting the completion of the contract for sale?  The Court of Appeal has answered with an unequivocal “yes” in this scenario.  However, the trial court is now vested with determining if the Plaintiff (Cross) can prevail on the merits.  If so, she will be allowed to proceed further with the suit for damages.  If not, the Defendant (Cooper) will be entitled to an order granting his Anti-SLAPP motion and attorney fees.

Facts Giving Rise to the Anti-SLAPP Motion

As discussed below, this is not your typical SLAPP matter.  It has enough twists and turns for any practitioner, regardless of where on the “v.” you generally find your client.

Plaintiff’s Position:  In June 2007, an owner of a home (Cross) told her renters (Stephen and Laura Cooper) that she intended to sell her home.[2]  The Coopers’ lease was expiring August 31, 2007.  Cross contended that the Coopers refused to cooperate with her attempt to sell the property.  She accused the Coopers of refusing to allow a “For Sale” sign in the yard, severely restricting the available times for potential buyers to view the property, and threatening to disclose to buyers or potential buyers the existence of a convicted sexual offender who lived near the home.  Cross further contended that Cooper demanded one month’s free rent or else he would essentially spill the beans about the sexual offender.  Despite these contentions, Cross obtained a contract for sale on the house.  However, Cross contended that Cooper thwarted the sale in August 2007 by telling the buyer’s agent about the sex offender.  The sale did not go through.  Cross sued the Coopers under a variety of claims, including breach of contract, breach of the implied covenant of good faith and fair dealing, intentional interference with that purchase contract, and intentional and negligent interference with prospective economic advantage.

Defendants’ Position: The Coopers contended that all the claims (except breach of the lease agreement) should be dismissed via the Anti-SLAPP motion.  The Coopers also claimed that they learned about the registered sex offender while leasing the house.  In June 2007, Cooper claimed the police raided the sex offender’s home (across the street from Cross’ house).  Cooper also alleged that he expressed concern to Cross and that Cross claimed the police raid was just a home inspection.  Further, Copper alleged that Cross also informed him that she did not intend to tell buyers of the sex offender.  In August 2007, Cooper contended he discussed the sex offender with a prospective buyer’s agent because of the risk to children of the buyer.

Trial Court’s Position: The trial Court ruled in favor of Cross.  It held that the attempted extortion of one month’s rent was a crime under California Penal Code section 524.  Crimes do not qualify for Anti-SLAPP protection.  Additionally, the other claims did not involve “a matter of public interest,” so they also did not qualify for Anti-SLAPP protection.

Court of Appeal Reverses and Remand

Preliminarily, the Court (reviewing de novo) adroitly explained how broad the Anti-SLAPP protection remains in California.  The Court engages in a two-step process in ruling on an Anti-SLAPP motion.  First, the court decides whether there is a threshold showing that that the challenged cause of action is one arising from protected activity (preventing the chilling of the exercise of First Amendment Rights in connection with a public issue or an issue of public interest).  Second, if the Court finds a protected activity, the burden shifts to the Plaintiff to prove that they will prevail on the merits.

In this case, the Court of Appeal dispatched the notion that Cooper’s conduct was not protected.  The Court reaffirmed that the “public interest” is defined broadly, not narrowly.  (Damon v. Ocean Hills Journalism Club (2000) 85 Cal.App.4th 468.)  The Court reasoned that Cooper’s private communication (with the buyer’s agent) directly related to an issue of considerable interest to the general public and qualified for Anti-SLAPP protection.  Clearly, the issue of the potential dangers posed by convicted sex offenders and strong and widespread public interest in knowing the location of registered sex offenders fall into the “public issue” prong of the Anti-SLAPP provisions.

The Court also noted that under California Civil Code section 2079.10a, contracts for sale (like Cross’ contract with the buyers) require disclosure of California’s sex offender databases and the types of information contained in them, including specific location of offenders.

The Court also dismissed the illegality exception proffered by Cross (e.g. extortion is exempted from Anti-SLAPP provisions).  The Court pointed out that Cross bore the burden (and failed) of conclusively proving the illegal conduct.  Allegations in the Complaint are insufficient to establish illegality and escape the protections afforded to the successful Anti-SLAPP defendant.

After slicing through the remainder of Cross’ arguments, the Court left Cross with the possibility of a silver lining and directions to the trial court.  The Appellate Court held that Cooper satisfied the initial burden to establish protected activity.  Now the Court of Appeal held and directed the trial court to rule on the evidentiary objections (associated with the Anti-SLAPP motion practice) and decide whether Cross has demonstrated a probability of prevailing on the merits of her claims.

Practitioner’s Note: While Cross won at the trial Court level and Cooper prevailed on appeal, it is clear that this issue hasn’t been fully resolved.  However, attorneys on both sides of the “v.” should recognize that the Anti-SLAPP protections are not simply restrained to legal theories of defamation.  The Anti-SLAPP protections are broad and are constantly evolving to meet different factual scenarios.  So, if you really have nothing nice to say, as your mother or father used to warn you, you can always hope that an Anti-SLAPP motion will bail your big mouth out of trouble.

Dugan P. Kelley is a founding partner in the law firm of Kelley Clarke PC.  He practices in the area of civil litigation, including employment, personal injury and business litigation.