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On Behalf of | Dec 14, 2019 | Firm News

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Defendants Aaron Wong and Tianqi Liu, as personal representatives of the Estate of Sylvia Tang and co-trustees of the Sylvia Tang Trust (collectively, the Tang Estate), appeal from a trial court order denying a special motion to strike under California’s antiSLAPP statute, Code of Civil Procedure section 425.16. The Tang Estate brought the motion after plaintiffs James Wong and Irene Wong, as personal representatives of the estate of Alan Wong (collectively, the Wong Estate), sued under a contractual agreement to be indemnified for the costs the Wong Estate incurred in defending against a separate lawsuit brought by a company the Tang Estate controls.

Sylvia Tang (Tang) and Alan Chung Cheung Wong (Wong) married in 1999 and divorced in 2011. During their marriage, Wong held a 48.5 percent interest and Tang held an 11 percent interest in Asian Square Inc. (Asian Square), which owns and operates Grand Century Mall in San Jose. On December 31, 2011, Tang and Wong entered a marital settlement agreement (settlement agreement) that resolved several disputes, including the division of assets and debts. The couple’s divorce judgment, which was based on the settlement agreement, was filed on May 17, 2013, and entered nunc pro tunc as of December 31, 2011.

The settlement agreement contains two indemnity provisions. First, section 1.7 provides that “as and for an equalizing payment,” Wong will transfer to Tang “100% of his 48.5% interest in Asian Square . . . , subject to all liabilities attendant thereto, for which [Tang] shall assume sole and separate responsibility and shall indemnify and hold [Wong] harmless from any liabilities attendant thereto.” Second, section 2.1 provides, “If either party has incurred or does incur, on or before the effective date of this agreement, any liability not disclosed and listed in this agreement on which the other is or may become personally liable or that could be enforced at any time against an asset held or to be received under this agreement by the other party, that warrantor will fully indemnify the other with respect to the obligation, including, but not limited to, any and all liability on the obligation, attorney fees, and related costs.” Wong died in June 2013, and Tang died that August. Wong did not transfer his Asian Square shares to Tang before his death, but the Tang Estate successfully sought an order in probate court to effect the transfer. 2  Thus, the Tang Estate now held a 59.5 percent interest in Asian Square.

In February 2014, Asian Square received a “Notice of Default and Election to Sell Under Deed of Trust” in connection with a deed of trust recorded against Asian Square’s real property. The underlying promissory note was executed in 2009, and it involved a $5 million loan with United Commercial Bank (UCB) as the lender and Asian Square as the borrower. Upon receiving the notice of default, Asian Square promptly paid off the loan. A few months later, in June 2014, Asian Square sued the Wong Estate in San Mateo Superior Court Case No. CIV529052 (the Asian Square litigation) to recoup the $5 million paid. In its complaint, Asian Square alleged that “[t]he $5 million proceeds of the UCB loan [were] appropriated, in full, by [Wong] for his own personal benefit and/or the benefit of his Trust, and with absolutely no benefit to Asian Square.”

Three years later, the Wong Estate obtained a judgment in its favor after the trial court sustained without leave to amend its demurrer to Asian Square’s complaint. Asian Square appealed, and Division Four of this court recently reversed the judgment and remanded for further proceedings. (Asian Square, Inc. v. Wong (May 29, 2019, A152308) [nonpub. opn.].)

Meanwhile, the Wong Estate demanded indemnity from the Tang Estate for the costs it incurred in the Asian Square litigation, and the Tang Estate refused. In November 2017, the Wong Estate filed this lawsuit against the Tang Estate, alleging claims for breach of contract, express contractual indemnity, and equitable indemnity. The complaint seeks to enforce the settlement agreement by requiring the Tang Estate to indemnify the Wong Estate for the latter’s costs and liabilities in the Asian Square litigation.

The Tang Estate responded by filing an anti-SLAPP motion to strike the complaint. The Tang Estate asserted that as holder of the controlling interest in Asian Square, it directed and funded the Asian Square litigation, which constituted protected petitioning activity on which the Wong Estate’s three causes of action were based. The Wong Estate opposed, contending the Tang Estate’s filing of the Asian Square litigation, while concededly protected activity, was not the basis for this lawsuit. It argued that instead, the activity forming the basis of this suit was “the Tang [Estate’s] breach of the [settlement agreement] by refusing to honor its broad indemnity obligation.” After taking judicial notice of the superior court records in the divorce case and the Asian Square litigation, the trial court agreed with the Wong Estate and denied the anti-SLAPP motion.

The court held that this lawsuit does not arise from protected activity, explaining that the Wong Estate is “not suing [the Tang Estate] because [the Tang Estate] (or an aligned party) filed a lawsuit. [The Wong Estate is] suing [the Tang Estate] because [it] incurred legal fees defending an action in which the complaining party (Asian Square) sought to hold [the Wong Estate] responsible for alleged liabilities of Asian Square incurred as a result of [Wong’s] alleged misappropriation of funds for his personal benefit.” (Italics omitted.) As a result of this conclusion, the court did not reach the issue whether the Wong Estate’s claims had merit.

The Tang Estate claims the court erred by concluding that the instant case does not arise from its protected activity of litigating the other lawsuit.

“Anti-SLAPP motions are evaluated through a two-step process. Initially, the moving defendant bears the burden of establishing that the challenged allegations or claims ‘aris[e] from’ protected activity in which the defendant has engaged. [Citations.] If the defendant carries its burden, the plaintiff must then demonstrate its claims have at least ‘minimal merit.’ ” (Park v. Board of Trustees of California State University (2017)  5 2 Cal.5th 1057, 1061 (Park).)

The Wong Estate does not dispute that the Tang Estate’s “pursuit of the Asian Square lawsuit” is protected petitioning activity. (See § 425.16, subd. (e); Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1056; Ludwig v. Superior Court (1995) 37 Cal.App.4th 8, 18.) Nor does it dispute that this activity is protected even though Asian Square, not the Tang Estate, was the named party in the other litigation. (See Lennar Homes of California, Inc. v. Stephens (2014) 232 Cal.App.4th 673, 680–681 (Lennar Homes).) Rather, the Wong Estate argues that the Tang Estate did not carry its burden to demonstrate that protected activity “underlies or forms the basis for” the challenged claims. (Park, supra, 2 Cal.5th at p. 1062.) W

The California Court of Appeal agreed. Park addressed the “requisite nexus between the claims an anti-SLAPP motion challenges and protected activity.” (Park, supra, 2 Cal.5th at p. 1062, emphasis omitted.) The Supreme Court explained that “a claim is not subject to a motion to strike simply because it contests an action or decision that was arrived at following speech or petitioning activity, or that was thereafter communicated by means of speech or petitioning activity. Rather, a claim may be struck only if the speech or petitioning activity itself is the wrong complained of, and not just evidence of liability or a step  leading to some different act for which liability is asserted.” (Id. at p. 1060.)

Thus, in evaluating anti-SLAPP motions, “courts should consider the elements of the challenged claim and what actions by the defendant supply those elements and consequently form the basis for liability.” (Id. at p. 1063.)

In short, the Wong Estate’s claims for indemnity do not arise from the Tang Estate’s protected activity in relation to the Asian Square litigation. As a result, the trial court properly denied the anti-SLAPP motion on the basis that the Tang Estate failed to carry its burden under the first prong of the analysis.

The California Court of Appeal agreed and affirmed.

See Wong v. Wong.

If you are faced with California’s Anti-SLAPP issues and dispicable defamation, you need a highly skilled and tenacious attorney as your advocate!  Contact the Law Office of Robert Rodriguez! 209-596-4263.

Robert Rodriguez has prosecuted and defended California’s Anti-SLAPP law Section 425.16 of the Code of Civil Procedure, et seq. in the State of California courts. Robert Rodriguez has litigated well over 100 family law cases and civil litigation matters including personal injury motor vehicle cases, dog bite and slip & fall cases, breach of contract, defamation & invasion of privacy, fraud, unfair business practice, malicious prosecution, workplace and employment matters including sexual harassment, wrongful termination, wage & hour violations, discrimination pursuant to the FEHA, Gov’t Code §§ 12940 et seq., violations of the FMLA & Pregnancy Leave, Civil Rights  discrimination pursuant to 42 U.S.C. § 1983 and Title VII of the 1964 Civil Rights Act in the State of California and California federal district courts.

* Disclaimer – Robert Rodriguez is licensed to practice only in the State of California & this analysis is applied only under State of California law.  Robert Rodriguez is also admitted to practice in the U.S. District Courts, Central, Northern & Eastern Districts of California.  Robert Rodriguez has practiced in the California Court of Appeal.