Filed 3/27/23 Wu v. Zhong CA1/2
`NOT TO BE PUBLISHED IN OFFICIAL REPORTS
`
`California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
`publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or
`ordered published for purposes of rule 8.1115.
`
`
`IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
`
`FIRST APPELLATE DISTRICT
`
`DIVISION TWO
`
`
`
`ZHIJUN WU,
`
`Plaintiff and Appellant,
`
`
`
`v.
`
`JIANBO ZHONG,
`
`Defendant and Respondent.
`
`
`
` A165948
`
` (San Francisco County
` Super. Ct. No. CGC-21-595414)
`
`
`
`
`
`
`
`
`Zhijun Wu sued Jianbo Zhong, alleging causes of action for conversion
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`and breach of fiduciary duty based on claims Zhong collected rent from one of
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`Wu’s tenants on Wu’s behalf and then failed to pay over the money. Zhong
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`filed a cross-complaint against Wu and her mother, Xuezhen Huang, alleging
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`causes of action for fraud, based on claims that he had loaned them money
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`based on false promises by Huang to repay him and that they had
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`participated in a scheme to avoid paying the debt. Wu then filed an anti-
`
`SLAPP special motion to strike, contending that the cross-complaint arose
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`from her protected activity in sending Zhong a prelitigation demand letter
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`and filing suit against him. The trial court denied the motion, and Wu now
`
`appeals. We affirm.
`
`
`
`1
`
`
`NOT TO BE PUBLISHED IN OFFICIAL REPORTS
`
`California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
`publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or
`ordered published for purposes of rule 8.1115.
`
`
`IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
`
`FIRST APPELLATE DISTRICT
`
`DIVISION TWO
`
`
`
`ZHIJUN WU,
`
`Plaintiff and Appellant,
`
`
`
`v.
`
`JIANBO ZHONG,
`
`Defendant and Respondent.
`
`
`
` A165948
`
` (San Francisco County
` Super. Ct. No. CGC-21-595414)
`
`
`
`
`
`
`
`
`Zhijun Wu sued Jianbo Zhong, alleging causes of action for conversion
`
`and breach of fiduciary duty based on claims Zhong collected rent from one of
`
`Wu’s tenants on Wu’s behalf and then failed to pay over the money. Zhong
`
`filed a cross-complaint against Wu and her mother, Xuezhen Huang, alleging
`
`causes of action for fraud, based on claims that he had loaned them money
`
`based on false promises by Huang to repay him and that they had
`
`participated in a scheme to avoid paying the debt. Wu then filed an anti-
`
`SLAPP special motion to strike, contending that the cross-complaint arose
`
`from her protected activity in sending Zhong a prelitigation demand letter
`
`and filing suit against him. The trial court denied the motion, and Wu now
`
`appeals. We affirm.
`
`
`
`1
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`
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`FACTUAL AND PROCEDURAL BACKGROUND
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`A. Wu’s Complaint against Zhong
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`
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`In September 2021, Wu filed a complaint in San Francisco Superior
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`Court alleging that she owned “residential premises known as 405 Girard
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`Street,” and that in March or April 2018, her mother, Huang, asked Zhong “to
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`help her manage plaintiff’s property the subject premises [sic].” In April
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`2018, Zhong rented 405 Girard Street to a tenant, who agreed to pay $2,500
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`per month in rent. The tenant paid the monthly rent to Zhong, who would
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`deliver it to Huang.
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`
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`In October 2018, Huang went to China, and although the tenant
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`continued to pay his monthly rent to Zhong from November 2018 through
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`August 2021, Zhong failed to forward the rent he had collected, which
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`amounted to about $88,000. Wu further alleged that she had sent a written
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`demand to Zhong for the collected rent, to which Zhong had not responded.
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`
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`Wu alleged causes of action against Zhong for conversion and breach of
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`fiduciary duty, and sought damages of $88,000, plus interest and costs of suit.
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`B. Zhong’s Cross-Complaint against Wu and Huang
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`
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`Zhong filed a cross-complaint against Wu and Huang in December
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`2021, alleging that they owed him more than $87,000 in expenses that he had
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`incurred in connection with their rental properties.
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`
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`He alleged that Huang, her husband, and their three children
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`(including Wu) immigrated to the United States in September 2012. Huang
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`was the god-daughter of Zhong’s mother and was close to Zhong when young,
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`and because of that connection Huang’s family lived with Zhong and his
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`family in Zhong’s San Francisco home for about five years. Zhong considered
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`Huang a close friend, and trusted her.
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`2
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`Huang told Zhong that because she and her husband could not transfer
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`money from China to the United States for their family’s living and medical
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`expenses without triggering official review, they wanted to buy income-
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`generating property in San Francisco to pay for their expenses. In November
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`2012, Zhong helped Huang and her husband search for and buy a multi-unit
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`property.
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`
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`Huang also told Zhong that she could not bring money into the United
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`States fast enough to pay for remodeling and other expenses related to her
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`rental property while she still had to take care of her children’s living
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`expenses, and so she needed Zhong to loan her the money to cover the
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`expenses related to the rental property. She told him she would pay him
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`back when her children no longer relied on her to take care of all their living
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`and medical expenses. Over the years, Zhong advanced more than $47,000 to
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`evict tenants and remodel the property, based on Huang’s requests and her
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`promises to pay him back after her children were grown.
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`
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`In July 2015, Zhong helped Huang and her husband search for and buy
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`a second multi-unit property, which contained three units including the “405
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`Apartment.” Although the property was purchased in the name of their
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`daughter Wu, Huang and her husband “made it clear” to Zhong and the
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`property manager that they, and not Wu, were the actual owners of the
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`property, and that all rental income should be forwarded to them. Zhong and
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`the property manager complied with that instruction, and Wu was aware of
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`the arrangement. Over the years, Zhong advanced more than $39,900 to
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`remodel and repair the property, all based on Huang’s requests and her
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`promises to pay him back after her children were grown.
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`
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`All Zhong’s loans to Huang’s family were outstanding at the time the
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`cross-complaint was filed.
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`3
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`After Zhong helped remodel the 405 Apartment, Huang asked him to
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`rent it out. Although Wu was the property manager for the unit, Huang
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`asked Zhong to collect the rent in cash and transfer it to her in cash. Zhong
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`collected the money, and paid it over to Huang once or twice a year when
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`Huang would visit her San Francisco residence.
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`
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`In August 2020, Huang collected the rental income from the 405
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`Apartment through the August 2020 rent payment. Zhong asked Huang for
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`an accounting to repay Huang’s outstanding debt to him, since her children
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`were by then able to support themselves. Huang agreed to bring the money
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`to repay Zhong the next time she came to San Francisco, and asked Zhong to
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`continue to collect the rental income from the 405 Apartment and hold onto it
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`until she returned.
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`
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`Then, in September 2021, Zhong received a letter from Wu’s attorney, a
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`copy of which was attached to the complaint. The letter stated that Zhong’s
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`services to collect rent from the tenant of the 405 Apartment were no longer
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`required, and asked for all the rent he had collected since November 2018.
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`
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`Zhong alleged that he immediately contacted Huang, who refused to
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`talk to him except to tell him that Wu was managing the rental properties
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`and he should ask her to repay the loan. He alleged that he tried to contact
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`Wu, but to no avail, and instead received her complaint for conversion and
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`breach of fiduciary duty.
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`
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`Zhong’s cross-complaint alleged five causes of action. Two of them,
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`styled “Fraud/Intentional Misrepresentation and False Promise” and
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`“Negligent Misrepresentation,” are alleged as to Huang only. In these causes
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`of action Zhong alleged that Huang induced him to pay for remodeling and
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`other expenses related to her rental properties by promising that she would
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`pay him back once her children grew up; that she never intended to pay him
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`4
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`back, or that even if she believed her representations and promises she had
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`no reasonable ground for such beliefs; that she intended him to rely on her
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`misrepresentations and promises; and that he reasonably relied on them,
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`based on his long-time friendship with her, and provided her with at least
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`$87,000 for remodeling and other expenses associated with the rental
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`properties, which she had not paid him.
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`
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`Zhong alleged three causes of action, styled “Common Counts,”
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`“Fraudulent Deceit,” and “Conspiracy,” against both Huang and Wu. With
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`respect to the common counts, Zhong alleged that Huang and Wu were
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`indebted to him for expenses he paid in connection with the rental properties.
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`In his fraudulent deceit and conspiracy causes of action, Zhong alleged that
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`in 2015 Huang initiated a scheme to defraud Zhong. The scheme involved
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`Huang asking Zhong to rent out the 405 Apartment and collect the rents,
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`with all rents received and transferred in cash, so there would be no canceled
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`checks to provide evidence that money had been transferred. Zhong alleged
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`that Wu was aware of the scheme and agreed with Huang that they would
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`avoid paying back the money Zhong had loaned to the family, and that Wu
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`helped Huang carry out the scheme by falsely accusing Zhong of converting
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`rent proceeds in an amount that would cancel out the debt.
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`
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`Zhong sought compensatory and punitive damages, plus interest,
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`attorney fees, and costs of suit.
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`C. Motion to Strike
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`
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`Wu filed an anti-SLAPP special motion to strike Zhong’s cross-
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`complaint under Code of Civil Procedure section 425.16, subdivision (b)(1).1
`
`
`1 Subsequent statutory references are to the Code of Civil Procedure
`unless otherwise stated. The anti-SLAPP statute was enacted to deter
`“ ‘strategic lawsuits against public participation,’ ” or “ ‘SLAPP suits.’ ”
`(Barry v. State Bar of California (2017) 2 Cal.5th 318, 321.)
`
`
`
`5
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`
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`The trial court denied the motion on the ground that Wu failed to show that
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`the cross-complaint arose from her protected activity. Wu timely appealed.
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`DISCUSSION
`
`
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`On appeal, Wu argues that the trial court erred in denying her motion
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`to strike with respect to Zhong’s causes of action for fraudulent deceit and
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`conspiracy. Wu argues that those causes of action are based on her
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`conversion claim against Zhong and her prelitigation demand letter, which
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`are protected activities, and that Zhong failed to make a prima facie case that
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`he could prevail on either cause of action.
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`A. Applicable Law and Standard of Review
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`
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`“The anti-SLAPP statute is ‘designed to protect defendants from
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`meritless lawsuits that might chill the exercise of their rights to speak and
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`petition on matters of public concern. [Citations.] To that end, the statute
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`authorizes a special motion to strike a claim “arising from any act of that
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`person in furtherance of the person’s right of petition or free speech under the
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`United States Constitution or the California Constitution in connection with
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`a public issue.” (§ 425.16, subd. (b)(1).)’ (Wilson [v. Cable News Network, Inc.
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`(2019)] 7 Cal.5th [871,] 883-884.)” (Bonni v. St. Joseph Health System (2021)
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`11 Cal.5th 995, 1008-1009 (Bonni).)
`
`
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`“Litigation of an anti-SLAPP motion involves a two-step process. First,
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`‘the moving defendant bears the burden of establishing that the challenged
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`allegations or claims “aris[e] from” protected activity in which the defendant
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`has engaged.’ (Park [v. Board of Trustees of California State University
`
`(2017)] 2 Cal.5th [1057,] 1061 [(Park)].) Second, for each claim that does
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`arise from protected activity, the plaintiff must show the claim has ‘at least
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`“minimal merit.” ’ (Ibid.)” (Bonni, supra, 11 Cal.5th at p. 1009.)
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`6
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`In the first step of the analysis, courts determine “whether the
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`plaintiff’s claims arise from protected activity. At this first step, courts are to
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`‘consider the elements of the challenged claim and what actions by the
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`defendant supply those elements and consequently form the basis for
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`liability.’ [Citation.] The defendant’s burden is to identify what acts each
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`challenged claim rests on and to show how those acts are protected under a
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`statutorily defined category of protected activity.” (Bonni, supra, 11 Cal.5th
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`at p. 1009.)
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`
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`Section 425.16, subdivision (e), identifies four categories of protected
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`activity. As relevant here, those categories include “conduct in furtherance of
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`the exercise of the constitutional right of petition or the constitutional right of
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`free speech in connection with a public issue or an issue of public interest.”
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`(Id., subd. (e)4).) “ ‘The constitutional right to petition . . . includes the basic
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`act of filing litigation.’ ” (Dove Audio, Inc. v. Rosenfeld, Meyer & Susman
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`(1996) 47 Cal.App.4th 777, 784.) And as a general matter, a demand letter
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`sent in anticipation of litigation is also “entitled to the benefits of section
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`425.16.” (Ibid.)
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`
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`If the court finds that the defendant has made the required showing
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`with respect to the first step of the analysis, the court proceeds to the second
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`step, which requires it to “determine whether the plaintiff has demonstrated
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`a probability of prevailing on the claim.” (Navellier v. Sletten (2002) 29
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`Cal.4th 83, 88 (Navellier).) “[T]o establish the requisite probability of
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`prevailing [citation], the plaintiff need only have ‘ “stated and substantiated a
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`legally sufficient claim.” ’ [Citations.] ‘Put another way, the plaintiff “must
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`demonstrate that the complaint is both legally sufficient and supported by a
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`sufficient prima facie showing of facts to sustain a favorable judgment if the
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`7
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`
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`evidence submitted by the plaintiff is credited.” ’ [Citations.]” (Id. at pp. 88-
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`89.)
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`
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`A “prevailing defendant” on a special motion to strike is entitled to
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`recover attorney fees and costs. (§ 425.16, subd. (c).)
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`
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`We apply the de novo standard of review to an order denying an anti-
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`SLAPP special motion to strike. (Flatley v. Mauro (2006) 39 Cal.4th 299,
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`325.)
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`B. Analysis
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`
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`To determine whether Zhong’s causes of action for fraudulent deceit
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`and conspiracy arise from protected conduct, we consider the elements of the
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`claims, the actions Zhong alleged to establish the elements, and whether
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`those actions are protected. (Bonni, supra, 11 Cal.5th at p. 1015.) Wu has
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`the burden of identifying allegations of protected activity and the claims for
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`relief that are supported by those allegations. (Baral v. Schnitt (2016) 1
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`Cal.5th 376, 396.)
`
`
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`Even if a cause of action is “ ‘triggered’ by protected activity,” the cause
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`of action does not necessarily arise from protected activity for purposes of the
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`anti-SLAPP statute, because “the critical consideration is whether the cause
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`of action is based on the defendant’s protected free speech or petitioning
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`activity.” (Navellier, supra, 29 Cal.4th at p. 89.) In our analysis, we must
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`“respect the distinction between activities that form the basis for a claim and
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`those that merely lead to the liability-creating activity or provide evidentiary
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`support for the claim.” (Park, supra, 2 Cal.5th at p. 1064.)
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`
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`“If the core injury-producing conduct upon which the plaintiff’s claim is
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`premised does not rest on protected speech or petitioning activity, collateral
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`or incidental allusions to protected activity will not trigger application of the
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`anti-SLAPP statute.” (Hylton v. Frank E. Rogozienski, Inc. (2009) 177
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`
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`8
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`
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`Cal.App.4th 1264, 1272; see also Bonni, supra, 11 Cal.5th at p. 1012
`
`[“ ‘[a]ssertions that are “merely incidental” or “collateral” are not subject to
`
`section 425.16 . . . [and] cannot be stricken under the anti-SLAPP statute’ ”].)
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`But to the extent protected acts are alleged as a basis for relief and not
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`merely as background, the acts must be analyzed separately under the two-
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`step anti-SLAPP framework. (Bonni at p. 1012.)
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`
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`If a claim is based on allegations of protected acts, and if the plaintiff
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`cannot show that the claim has at least minimal merit, the allegations of
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`protected acts will be stricken. But to the extent claims are based on
`
`unprotected acts, the claims will survive an anti-SLAPP motion to strike.
`
`(Bonni, supra, 11 Cal.5th at p. 1012.)
`
`
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`Wu argues that Zhong’s causes of action for fraudulent deceit and
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`conspiracy are based on two protected activities: Wu’s sending Zhong a
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`prelitigation demand letter, and her filing and prosecuting her claim for
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`conversion.2 We are not persuaded.
`
`
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`In his cause of action for fraudulent deceit, Zhong alleges that since
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`2015, when Huang and her husband bought a rental property in Wu’s name,
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`Wu and Huang acted together to deceive Zhong into collecting rent payments
`
`for the 405 Apartment in cash, and transferring them to Huang in cash, so
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`that there would be no records of the transfers and they could claim an offset
`
`for the money Zhong spent on their rental properties, thereby avoiding the
`
`need to repay him. In other words, Zhong alleges that Wu and Huang were
`
`
`2 Wu observes that “[c]onspiracy is not a cause of action but a legal
`doctrine that imposes liability.” (Applied Equipment Corp. v. Litton Saudi
`Arabia Ltd. (1994) 7 Cal.4th 503, 510.) Zhong responds that his allegations
`of conspiracy provide a basis for imposing liability on Wu for the causes of
`action he has alleged against Huang for intentional and negligent
`misrepresentation.
`
`
`
`9
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`
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`engaging in a set-up to avoid paying back the money he had laid out; that set-
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`up is the fraudulent activity from which Zhong’s cause of action arises.
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`Zhong’s cross-complaint refers to Wu’s demand letter and to her claim that he
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`converted the rental proceeds, but Zhong does not allege that the demand
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`letter or complaint give rise to the cause of action: instead, his allegations
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`concerning the demand letter and subsequent complaint provide evidence to
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`support his claim that Wu, the nominal owner of the property, was aware of
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`the arrangement requiring him to collect the rent and transfer it to Huang,
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`and that Wu and Huang intended to avoid paying him any of the money he
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`had laid out on their behalf. As allegations that provide evidentiary support
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`for the claim of fraudulent deceit, the allegations are not subject to the anti-
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`SLAPP statute, even though they refer to protected activity. (Park, supra, 2
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`Cal.5th at p. 1064.)
`
`
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`Similarly, in his cause of action for conspiracy, Zhong alleges that, with
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`Wu’s awareness, agreement, and participation, Huang initiated a scheme to
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`defraud him of the money he loaned by asking him to rent out the 405
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`Apartment, collect the rent in cash, and transfer it to Huang. The allegation
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`that Wu accused Zhong of conversion is made by way of providing evidence
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`that Wu was involved in Huang’s scheme, and therefore the allegation is not
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`subject to the anti-SLAPP statute.
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`
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`In both causes of action, for fraudulent deceit and conspiracy, Zhong
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`alleges that he was injured in two ways: “Not only had he not been paid back
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`the money he loaned Cross-Defendant Huang and her family, but he was
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`accused of converting the rental proceeds that he had collected on Huang’s
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`behalf and delivered to Huang.” (Cross-Complaint, ¶¶ 56, 64.) We do not
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`read Zhong’s allegations as claiming injury from the demand letter or
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`complaint in and of themselves. To the contrary, he seeks relief based on
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`10
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`
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`Huang and Wu’s failure to pay him the money they owe him: the accusation
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`of conversion is part of an alleged fraudulent scheme, and is incidental to, not
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`the cause of, his alleged injury. As Zhong puts it, he “mentions the wrongful
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`accusation” while describing how he was harmed by the alleged scheme to
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`avoid repaying him, but he does not allege a cause of action that arises from
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`the accusation itself, such as intentional infliction of emotional distress.
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`
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`To support her argument that Zhong’s claims rest on protected activity,
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`Wu relies on Blanchard v. DIRECTV, Inc. (2004) 123 Cal.App.4th 903 and
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`Rohde v. Wolf (2007) 154 Cal.App.4th 29, but those cases are not like the one
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`before us. This is not a case where “[t]he entire lawsuit is premised on [Wu’s]
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`demand letter.” (Blanchard, supra, 123 Cal.App.4th at p. 918.) Nor is this a
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`case in which Zhong is suing for defamation based on the demand letter or
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`the complaint Wu filed against him. (See Rohde, supra, 154 Cal.App.4th at p.
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`32 [plaintiff sued for defamation based on voicemail messages containing
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`accusations of fraud and threatening to take “appropriate action”].) The
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`actions giving rise to Zhong’s claim of fraudulent deceit—the alleged scheme
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`to avoid repaying Zhong by arranging an offsetting false debt, made possible
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`by requiring Zhong to collect rent in cash and pay it over in cash so no
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`records would exist, all done with Wu’s knowledge and approval—occurred
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`long before Wu sent the demand letter or filed her complaint.
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`
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`Because Wu has not met her burden to show that Zhong’s causes of
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`action for fraudulent deceit and conspiracy arise from protected activity, we
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`do not reach the second step of the anti-SLAPP analysis.
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`DISPOSITION
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`The challenged order is affirmed. Zhong is entitled to recover his costs
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`on appeal.
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`11
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`_________________________
`Miller, J.
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`WE CONCUR:
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`_________________________
`Richman, Acting P.J.
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`_________________________
`Markman, J.*
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`A165948, Wu v. Zhong
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`* Judge of the Alameda Superior Court, assigned by the Chief Justice
`pursuant to article VI, section 6 of the California Constitution.
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`12
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