Case 5:18-md-02834-BLF Document 893-1 Filed 07/29/23 Page 1 of 26
`Case 5:18-md-02834-BLF Document 893-1 Filed 07/29/23 Page 1 of 26
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`EXHIBIT 1
`EXHIBIT 1
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`Case 5:18-md-02834-BLF Document 893-1 Filed 07/29/23 Page 2 of 26
`!FILED
`Court of Canfom6e
`~
`ty of Los Angaiae
`MAY 24 2023
`Oavi1 W. Slaytai. Exa:utive ~aO::llli
`By: A. Duron, Deputy
`SUPERIOR COURT OF THE STA TE OF CALIFORNIA
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`FOR THE COUNTY OF LOS ANGELES - NORTHWEST DISTRICT
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`CASE NO: 21VECV00575
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`FINAL ORDER RE:
`DEFENDANTS-IN-INTERVENTION 'S
`SPE CIAL ANTI-SLAPP MOTIONS TO
`STRIKE THE SECOND CAUSE OF
`ACTION AND RELATED PORTIONS
`OF INTERVENORS ' COMPLAINT-IN- .
`INTERVENTION
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`JUDGE V ALERTE SALKIN
`Dept. NW-U
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`May 24, 2023
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`BRILLIANT DIGIT AL ENTERTAINMENT,)
`INC. , a Delaware corporation; EUROPLAY
`)
`CAPITAL ADVISORS , LLC, a Delaware,
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`limited liability company; CLARIA
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`TNNOVATIONS , LLC , a Delaware limited
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`liability company; and MONTO HOLDINGS ~
`PTY LTD , an Australian company,
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`)
`)
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`)
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`Plaintiffs,
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`vs.
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`PERSONALWEB TECHNOLOGIES, LLC, a
`Texas limited liability company; and DO ES I-
`I 00, inclusive,
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`Defendants.
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`I.
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`BACKGROUND
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`This case is a collection action. Plaintiffs B,illiant Digital Entertainment, Inc. ("BDE");
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`Europlay Capital Advisors, LLC ("Europlay"); C laria Innovations, LLC ("Claria"); and Manto
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`Holdings Pty Ltd. ("Manto") allege default on $19 million of promissory notes by Defendant
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`PersonalWeb Technologies, LLC ("PWT").
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`On April 27, 2021, Plaintiffs filed their complaint against PWT, alleging: (I) breach of
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`promissory note held by BDE; (2) breach of promissory note held by Europlay; (3) breach of
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`promissory note held by Claria; (4) breach of promisso1y note held by Monto; (5) recovery of
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`personal prope1ty; (6) conversion; and (7) specific performance for the appointment of a
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`receiver.
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`Case 5:18-md-02834-BLF Document 893-1 Filed 07/29/23 Page 3 of 26
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`On August 10, 2021, Intervenors Amazon.com, Inc., Amazon Web Services, Inc., and
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`Twitch Interactive, Inc. (collectively, "Amazon") filed a motion for leave to intervene in this
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`case. Then-assigned Judge Bernie LaForteza denied Amazon's intervention motion, but the
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`denial was later overturned by the Second Appellate District Court of Appeal.
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`On December 14, 2022, Amazon filed its complaint-in-intervention against Defcndants(cid:173)
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`In-Intervention Europlay, Claria, BDE, and Monto, seeking/alleging: (1) judgment enforcement;
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`(2) equitable subordination; and (3) equitable accounting.
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`On January 30, 2023, Defendants-In-Intervention Europlay and Claria filed their special
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`motion to strike the second (2nd) cause of action in Amazon's complaint-in-intervention as a
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`strategic lawsuit against public participation ("SLAPP") pursuant to Code of Civil Procedure
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`section 425.16.
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`On February 7, 2023, Defendants-In-Intervention BDE and Monto filed their anti-SLAPP
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`motion to strike the second (2nd) cause of action and related sections in Amazon's complaint-in(cid:173)
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`intervention.
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`On April 4, 2023, Amazon filed its opposition brief.
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`On April 13, 2023, Defendants-In-Intervention Europlay, Claria, BDE, and Monto
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`(hereafter, "Plaintiffs") filed their reply brief, supplemental RJN, and their Objection to Todd
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`Gregorian's Declaration.
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`On May 15, 2023, Amazon filed its response to Defendants-in-Interventions' objections.
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`On May 19, 2023, the Court delivered its tentative ruling denying both of Plaintiffs' anti(cid:173)
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`SLAPP motions to all parties.
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`On May 22, 2023, the Court held a hearing on Plaintiffs' anti-SLAPP motions, at which
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`all parties appeared and were represented by counsel. At the conclusion of the hearing, the Court
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`Case 5:18-md-02834-BLF Document 893-1 Filed 07/29/23 Page 4 of 26
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`took the matter under submission. The following analysis has been revised from the Court's
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`original tentative ruling to include, among other things, a section addressing Plaintiffs' further
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`argument that Amazon's equitable subordination claim should be at least partially stricken as a
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`"mixed cause of action."
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`II.
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`LEGALSTANDARD
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`"A cause of action against a person arising from any act of that person in furtherance of
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`the person's right of petition or free speech under the United Stat cs Constitution or the
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`California Constitution in connection with a public issue shall be subject to a special motion to
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`strike, unless the court determines that the plaintiff has established that there is a probability that
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`the plaintiff will prevail on the claim." Code Civ. Proc.,§ 425.16 (b)(l).
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`The trial court applies a burden shifting analysis when considering a special motion to
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`strike brought under section 425.16 (the "Anti-SLAPP Statute"). Soukun v. Law Offices of
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`Herbert Hafif (2006) 39 Cal.4th 260, 278 (Soukun). First, the defense carries the burden of
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`making a threshold showing that the challenged cause of action arises from "any act of that
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`person in furtherance of the person's right of petition or free speech under the [federal or state
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`constitution] with a public issue." Code Civ. Proc.,§ 425.16 (b); see Soukun, at p. 278.
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`Second, and only if the defense meets its threshold burden, the burden will shift to the plaintiff
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`to demonstrate a probability of prevailing on the merits of the claims at issue. Sec Equilon
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`Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67 (Equilon).
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`For purposes of analysis herein, Defendants-in-Intervention (Plaintiffs) have the initial
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`burden, which will shift to Complainants-in-Intervention (Amazon) if Plaintiffs' threshold
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`burden is met.
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`III.
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`REQUESTS FOR JUDICIAL NOTICE
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`Case 5:18-md-02834-BLF Document 893-1 Filed 07/29/23 Page 5 of 26
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`Plaintiffs request that the Court take judicial notice of the following copies of documents:
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`1. The complaint filed in this case on April 27, 2021;
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`2. The Ex Parle Application for Immediate Appointment of Receiver and Preliminary
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`Injunction in Aid of Receiver, filed on May 3, 2021;
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`3. The Nomination of Receiver: Declaration of Brick Kane, filed on May 3, 2021;
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`4. The Declaration of Michael Weiss re: No Opposition to Ex Parte Application for
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`Appointment of Receiver and Preliminary Injunction, filed on May 3, 2021;
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`5. The Declaration of Bruce Poltrock re: Ex Parle Notice, filed on May 3, 2021;
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`6. The Order for Immediate Ex Parle Appointment of Receiver, filed on May 10, 2021;
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`7. The Temporary Restraining Order in Aid of Receiver, filed on May 10, 2021;
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`8. The Stipulation for Entry of Preliminary Injunction in Aid of the Receiver, filed on May
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`20, 2021;
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`9. The Order for Entry of Preliminary Injunction in Aid of the Receiver, filed on June 1,
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`2021;
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`10. The Secured Lenders' Statement of Non-Opposition to Amazon's Motion to Intervene,
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`filed on August 19, 2021;
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`11. The Minute Order denying Amazon's Motion for Leave to Intervene entered on
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`November 17, 2021;
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`12. The Appellate Court Opinion Reversing Denial of Intervention, filed on October 3, 2022;
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`13. The Minute Order as to Receiver Communications, filed on October 6, 2022;
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`14. The Declarations of Val Miller, David Stapleton and Michael Buhman in Support of Ex
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`Parle Application to Approve Stipulation re: Substitution of Receiver, filed on September
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`19, 2022;
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`15. The Ex Parle Application of Receiver to Approve Stipulation re: Substitution of
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`Receiver, filed on September 19, 2022;
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`16. The Order on Stipulation to Substitute Stapleton Group in Place of REA, filed on
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`September 20, 2022;
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`17. Receiver Reports filed in this case;
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`18. Paragraph 7-99 of Todd Gregorian's declaration in Support of Opposition of
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`Amazon.com Inc., Amazon Web Services, Inc., and Twitch Interactive, Inc., to Motion to
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`Withdraw as Counsel by Stubbs Alderton & Markiles, LLP, Document 691-1, filed June
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`8, 2021, in the United States District Court, Northern District of California, San Jose
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`Division, Case #5:18-md-02834-BLF, 5:18-cv-00767-BLF, and 5:18-cv-05619-BLF (the
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`fact to be noticed being that Amazon knew about and had obtained pleadings relating to
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`the appointment of a receiver in this action by at the latest June 8, 2021 ); and
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`19. Appellants' Appendix to Appellants' Opening Brief in lieu of Clerk's Transcript, filed
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`March 25, 2022, in the California Second District Court of Appeal, Division Four (the
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`fact of which judicial notice is requested being that Amazon's complaint-in-intervention
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`was not included in the record on appeal of Amazon's motion seeking intervention).
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`The foregoing documents are judicially noticeable under Evidence Code sections 452 and
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`453. The Court takes judicial notice as requested.
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`IV.
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`DISCUSSION
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`Plaintiffs move for an order specially striking the second cause of action and related
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`portions in Amazon's complaint-in-intervention on grounds that the alleged inequitable conduct
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`giving rise to Amazon's equitable subordination claim is protected activity under the Anti(cid:173)
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`SLAPP Statute. Plaintiffs argue that Amazon is suing Plaintiffs for instituting this case against
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`Case 5:18-md-02834-BLF Document 893-1 Filed 07/29/23 Page 7 of 26
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`PWT and for acting to secure the appointment of a receiver of PWT's assets, which are examples
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`of protected conduct under the Anti-SLAPP Statute.
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`Ultimately, the motions will be denied.
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`a. Review of Allegations in the Complaint-In-Intervention
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`Amazon pleads that on March 2, 2021, it was awarded by the Northern District of
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`California valid judgments of $5,187,203.99 in attorneys' fees, $214,421.07 in non-taxable costs,
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`and $1,497.62 in post-judgment interest, for a total judgment of $5,403,122.68 against PWT.
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`(Complaint-In-Intervention,~[ 9.) Amazon pleads, however, that PWT and Plaintiffs have
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`engaged in an asset protection scheme designed to make PWT judgment-proof and evade
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`Amazon's effort to collect on its debt. (Id. at ,r,r 10, 19.)
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`In their original complaint, the four Plaintiffs plead that they each executed a promissory
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`note to PWT, thus yielding a total of four (4) separate debts owed by PWT to Plaintiffs. (See
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`generally, Complaint.) Amazon pleads that the four (4) loans made by Plaintiffs to PWT were
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`each amended and restated as of December 31, 2019, with a maturity date of December 31, 2022.
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`(Complaint-In-Intervention, ,r 18.) Amazon pleads that after it was awarded its judgment by the
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`Northern District of California on March 2, 2021, instead of waiting until December of 2022, i.e.
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`the natural maturity date on the loans, in March of 2021, Plaintiffs demanded full repayment on
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`their loans to PWT-- less than halfway through the loans' term. (Ibid.) Amazon pleads that
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`PWT coordinated Plaintiffs' early demand on their loans in anticipation of its subsequent default,
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`as PWT's assets were not sufficient to pay the full amount due immediately. (Id. at ,r 22.)
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`Amazon pleads that the demands for repayment were part of PWT and Plaintiffs' scheme to
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`thwart Amazon's collection on Amazon's judgment, and that Plaintiffs' early demands for
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`repayment "constitute gross and egregious inequitable conduct." (Id. at ,r 19.)
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`Amazon pleads that Plaintiffs are PWT's insiders, such that the ultimate beneficial owner
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`of PWT is the same person/entity as the ultimate beneficial owner of Plaintiffs. (Complaint-In(cid:173)
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`Intervention, ,I 11.) Amazon pleads that Claria was the member and governing authority of PWT
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`at its formation. (Id. at ,I 12.) Amazon pleads that Manto owns 20% of PWT. (Id. at ,I 13.)
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`Amazon pleads that Kevin Bermeister is the non-executive chairman of PWT and founded BDE.
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`(Id. at ,I 14.) Amazon pleads that Mr. Bermeister's cousin Mark Dyne is the former chairman
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`and chief executive officer ("CEO") of BOE and founded Europlay. (Id. at ,I 15.)
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`Amazon pleads that a Receiver has been appointed with "exclusive control over all of the
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`Collateral, and [PWT], including without limitation all cash and all collateral," and liens securing
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`the Receiver's Certificates arc "prior and superior to all liens, encumbrances, and claims against
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`the Collateral held by any other persons or entities, including without limitation any other
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`secured creditors." (Complaint-In-Intervention, ,r 16, quoting Stipulation and Order Authorizing
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`Receiver to Retain Counsel, pp. 2-3.) Amazon pleads that all assets necessary to pay the
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`judgment PWT owes to Amazon are now within the Receivership. (Id. at ,r 17.) Amazon pleads
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`that its interests as PWT's judgment-creditor have been subordinated to the Receivership. (Id. at
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`,I 20.)
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`Amazon pleads that PWT consented to the appointment of the Receiver "as part of a
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`scheme to avoid the judgment owed to Amazon by keeping [PWT's] assets under the umbrella of
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`the same beneficial owner." (Complaint-In-Intervention, ,r,r 21, 22.) Amazon pleads that
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`Plaintiffs' interests "are, or should be, subordinated to Amazon's interests as a judgment-creditor
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`since any transfer of assets to the parties who sought a receiver would be akin to a transfer of
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`assets to an insider or to the ultimate equity interest, which should not occur, since a third-party,
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`arms' length creditor (Amazon) is superior and should be paid in full first with priority over
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`Case 5:18-md-02834-BLF Document 893-1 Filed 07/29/23 Page 9 of 26
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`insider interests." (Id. at ,r 23.) Amazon pleads that the "Receivership, and the accompanying
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`injunction, prevent Amazon from exercising legal remedies to obtain a full accounting." (Id. at ,r
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`24.)
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`b. The conduct giving rise to Amazon's complaint-in-intervention is not protected for
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`purposes of the anti-SLAPP statute.
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`For Plaintiffs to prevail on their special motion to strike under the Anti-SLAPP Statute,
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`they must make a threshold showing that Amazon's equitable subordination claim arises from
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`some act or acts by Plaintiffs in furtherance of Plaintiffs' right of petition or free speech in
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`connection with a public issue. Code Civ. Proc.,§ 425.16 (b); see Soukun, supra, 39 Cal.4th at p.
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`278; see also JSJ Limited Partnership v. Mehrban (2012) 205 Cal.App.4th 1512, 1521 (in first
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`prong of anti-SLAPP analysis, court disregards merits of underlying lawsuit to focus solely on
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`whether defendant's conduct was protected).
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`The Court will find that Plaintiffs' conduct giving rise to Amazon's equitable
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`subordination claim does not constitute protected activity.
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`The Anti-SLAPP Statute only protects acts "in furtherance of a person's right of petition
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`or free speech ... in connection with a public issue." Code Civ. Proc.,§ 425.16 (b). All "that
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`matters is that the First Amendment activity take place in an official proceeding or be made in
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`connection with an issue being reviewed by an official proceeding." Briggs v. Eden Council for
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`Hope & Opportunity (1999) 19 Cal.4th 1106, 1116.
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`The filing of a lawsuit is protected by the First Amendment right of petition and therefore
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`protected activity under the Anti-SLAPP Statute. See Sheley v. Harrop (2017) 9 Cal.App.5th
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`114 7, 1165 (Sheley). A plaintiff cannot frustrate the purposes of the Anti-SLAPP Statute
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`through a pleading tactic of combining allegations of protected and nonprotected activity under
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`Case 5:18-md-02834-BLF Document 893-1 Filed 07/29/23 Page 10 of 26
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`the label of one cause of action. Fox Searchlight Pictures, Inc. v. Paladino (2001) 89
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`Cal.App.4th 294, 308. Where a cause of action alleges both protected and unprotected activity,
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`the cause of action will be subject to the Anti-SLAPP Statute unless the protected conduct is
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`incidental to the unprotected conduct." FilmOn.com Inc. v. Double Verify Inc. (2019) 7 Cal.5th
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`133, 149.
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`Plaintiffs rely on Peregrine Funding, Inc. v. Sheppard Mullin Richter & Hampton LLP
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`(2005) 133 Cal.App.4th 658 (Peregrine) for their position that their use of litigation to thwart
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`Amazon's collections efforts is protected activity. In Peregrine, the SEC was investigating an
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`alleged Ponzi scheme and sought to halt the offending company's dissipation of assets.
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`Peregrine, at pp. 666-668. The plaintiff alleged that, to frustrate those efforts, the def end ant-law
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`firm representing the company's controllers threatened bankruptcy litigation "to derail or disrupt
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`the SEC action." Id. at p. 667. The lawyers then "orchestrated the bankruptcies of the entity(cid:173)
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`plaintiffs" and successfully interfered with the SEC's efforts to obtain key discovery. Id. at p.
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`672.
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`Years later, a bankruptcy trustee representing the insolvent entities sued the defendant-
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`law firm for aiding and abetting and malpractice. Peregrine, supra, 133 Cal.App.4th at p. 668.
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`The defendant-law firm brought an anti-SLAPP motion, which the trial court denied. Id. at p.
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`665. The Court of Appeal reversed, finding that the plaintiff's causes of action arose from
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`protected activity under the Anti-SLAPP Statute. Id. at p. 672. Specifically, the protected
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`conduct identified by the Court of Appeal included the law firm's petitioning activities, such as
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`opposing the SEC's efforts to obtain restraining orders, and litigation tactics, such as refusing to
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`allow an individual client to testify and threatening to put the funding entities into bankruptcy if
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`the SEC persisted in seeking testimony. Id. at pp. 671-672.
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`Plaintiffs argue that this case is like Peregrine because the inequitable conduct claimed
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`by Amazon arises from Plaintiffs' filing of this case and application to the Court for the
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`appointment of a receiver. The Court disagrees.
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`This case is distinguishable from Peregrine because the inequitable conduct alleged in
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`Amazon's complaint-in-intervention is conduct which is unrelated to, and which plainly pre(cid:173)
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`dates, Plailltiffs' initiation of litigation before this Court. Amazon pleads that as of December
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`31, 2019, Plaintiffs' four(4) inequitably issued loans to PWTwere amended and restated, with a
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`maturity date of December 31, 2022. Amazon pleads that on March 2, 2021, it was awarded a
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`total judgment of $5,403,122.68 against PWT in the Northern District of California.
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`Amazon pleads that after Amazon was awarded its judgment by the Northern District,
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`instead of waiting until the natural maturity date (late 2022) on their loans to PWT, Plaintiffs
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`demanded full repayment from PWT in March of 2021, less than halfway through the loan term.
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`Amazon pleads that PWT coordinated Plaintiffs' early demand on their loans in anticipation of
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`PWT's subsequent default, as PWT's assets were insufficient to pay the full amount due
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`immediately. Amazon pleads that the conduct at issue was part of PWT and Plaintiffs' scheme
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`to thwart Amazon's collection on its judgment, and that Plaintiffs' early demands for repayment
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`"constitute gross and egregious inequitable conduct." (Complaint-In-Intervention, ,r 19.)
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`Plaintiffs did not file their case against PWT until April 27, 2021. This case originated
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`more than a year after Amazon alleges Plaintiffs issued their four (4) promissory notes to PWT
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`in December of 2019 and in furtherance of their scheme. Plaintiffs demanded full repayment
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`from PWT on the four ( 4) promissory notes in March of 2021, more than a month before this
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`case was even filed, and less than halfway through the loan term on each note. Such conduct,
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`which Amazon alleges to have been inequitable, is clearly not protected activity because it was
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`not engaged in furtherance of Plaintiffs ' right to petition in connection with a public issue.
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`Here, Plaintiffs have not shown that the conduct giving rise to Amazon's equitable
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`subordination clain1 took place in any official proceeding or was made in connection with any
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`issue being reviewed by an official proceeding, particularly because the alleged inequitable
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`conduct predates the litigation which Plaintiffs try to assert as the basis of their protected activity
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`argument in their anti-SLAPP motions.
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`c. That Amazon's complaint-in-intervention refers to this case and motion practice
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`related to the appointment of the Receiver is incidental to Plaintiffs' conduct giving
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`rise to Amazon's equitable subordination claim.
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`A claim arises from protected activity only if the protected activity "underlies or fonns
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`the basis for the claim." City of Cotati v. Cashman (2002) 29 Cal.4th 69, 78 (Cotati). To
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`determine whether a claim arises out of protected activity, courts must consider the nature of
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`defendant 's activity that gives rise to his or her asserted liability. Park v. Board of Trustees of
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`California State University (2017) 2 Cal.5th 1057, l 063. In other words, comis must "consider
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`the elements of the challenged claim" and detemune whether "the speech or petitioning activity
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`itself is the wrong complained of, and not just evidence of liability or a step leading to some
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`different act for which liability is asserted." Id. at pp. 1060, 1063 (emphasis in original).
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`In Optional Capital, Inc. v. DAS Co,p. (2014) 222 Cal.App.4th 1388 (Optional Capital),
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`the Cou11 of Appeal distinguished between A) conduct giving rise to a cause of action; and B)
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`litigation instituted later as a tool to further the wrong complained of in the plaintiff's complaint.
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`Optional Capital, at pp. 1399-1400. The Court held that conduct "is not automatically protected
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`merely because it is related to pending litigation; the conduct must arise from the litigation." Id.
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`at p. 1401 (emphasis added). There is nothing in the Anti-SLAPP Statute that warrants striking
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`allegations in a pleading merely because those allegations refer to ongoing litigation so long as
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`the litigation, which is protected conduct, is not that conduct which gives rise to the plaintiff's
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`cause of action. See ibid.
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`Plaintiffs ask the Court to find that Amazon's equitable subordination claim arises from
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`protected activity because Amazon pleads facts in the complaint-in-intervention regarding the
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`Receivership and motion practice before this Court related to Plaintiffs' application for the
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`appointment of a Receiver. Specially, Amazon pleads that a Receiver has been appointed with
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`"exclusive control over all of the Collateral, and [PWT], including without limitation all cash and
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`all collateral," and liens securing the Receiver's Certificates are "prior and superior to all liens,
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`encumbrances, and claims against the Collateral held by any other persons or entities, including
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`without limitation any other secured creditors." (Complaint-In-Intervention, ,i 16, quoting
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`Stipulation and Order Authorizing Receiver to Retain Counsel, pp. 2-3.) Amazon pleads that all
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`assets necessary to pay the judgment PWT owes to Amazon are now within the Receivership,
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`and that its interests as PWT's judgment-creditor have been subordinated to the Receivership.
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`Amazon further pleads that PWT consented to the appointment of the Receiver "as part
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`of a scheme to avoid the judgment owed to Amazon by keeping [PWT's] assets under the
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`umbrella of the same beneficial owner." (Complaint-In-Intervention, ,i,i 21, 22.) Amazon pleads
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`that Plaintiffs' interests "are, or should be, subordinated to Amazon's interests as a judgment(cid:173)
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`creditor since any transfer of assets to the parties who sought a receiver would be akin to a
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`transfer of assets to an insider or to the ultimate equity interest, which should not occur, since a
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`third-party, arms' length creditor such as Amazon is superior and should be paid in full first
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`having priority over insider interests." (Id. at ,i 23.) Amazon pleads that the "Receivership, and
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`the accompanying injunction, prevent Amazon from exercising legal remedies to obtain a full
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`accounting." (Id. at ,i 24.)
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`The Court recognizes that the foregoing allegations concern protected conduct. See
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`Sheley, supra, 9 Cal.App.5th at p. 1165 (filing a lawsuit is protected conduct for purposes of
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`anti-SLAPP analysis). However, the filing of this case and the Court's appointment of a
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`Receiver are not the predicate for Amazon seeking equitable subordination. Rather, Amazon's
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`equitable subordination claim arises from Plaintiffs' insider status within PWT's ownership
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`structure and inequitable conduct dating back to Plaintiffs' early demand on the four (4)
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`promissory notes held against PWT. Amazon pleads that Plaintiffs' early demand for loan
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`repayment "constitute[s] gross and egregious inequitable conduct." (Complaint-In-Intervention.,
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`,i 19.) Amazon further pleads that Plaintiffs and PWT orchestrated the appointment of the
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`Receiver as part of larger a scheme to avoid paying Amazon's judgment "by keeping [PWT's]
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`assets under the umbrella of the same beneficial owner." (Id. at iii[ 21, 22 [emphasis added].)
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`Amazon pleads facts showing that the essential inequitable conduct by Plaintiffs which
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`constitutes actionable conduct occurred in March of 2021 when Plaintiffs prematurely demanded
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`PWT repay its loans, a month before this case was filed. The filing of this case and the eventual
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`appointment of a Receiver are the instrumentalities by which Plaintiffs later sought to further
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`their scheme. Thus, Plaintiffs' litigation of this case is distinguishable from the conduct giving
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`rise to Amazon's equitable subordination cause of action, and Plaintiffs' alleged inequitable
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`conduct is not protected under the Anti-SLAPP Statute. See Optional Capital, supra, 222
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`Cal.App.4th at p. 1401 (conduct is not automatically protected merely because it is related to
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`pending litigation; the conduct must arise from the litigation). Id. at p. 1401 (emphasis added).
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`On the face of the complaint-in-intervention, all of Amazon ' s claims regarding Plaintiffs'
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`application for and PWT's consenting to the appointment of a Receiver and the effect of said
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`appointment on Amazon's ability to collect on its judgment against PWT are offered by Amazon
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`as evidence of Plaintiffs ' inequitable conduct. The appointment of the Receiver is not the
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`inequitable conduct which Amazon seeks to subordinate. See Park, supra , 2 Cal.5th at pp. 1060,
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`1063 (for court to strike pleading under anti-SLAPP statute, protected activity must be itself the
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`wrong complained of rather than merely evidence of liability).
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`d. Plaintiffs' argument that their early demands for repayment from PWT are
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`protected activity fails because Plaintiffs do not explain how their demands were
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`made in anticipation of court action.
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`In their reply brief, Plaintiffs ask the Court to grant their Anti-SLAPP motions because
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`their alleged inequitable early demands for repayment from PWT on the four (4) promissory
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`notes at issue in this case constitute protected activity.
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`Plaintiffs rely on case law for their position that protected activity under the Anti-SLAPP
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`Statute is "not limited to statements made after commencement of such a proceeding" but
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`includes "statements made in anticipation of a court action. " See Digerati Holdings, LLC v.
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`Young Money Entertainment, LLC (2011) 194 Cal.App.4th 873 , 886-887. Plaintiffs cite pre(cid:173)
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`lawsuit demand letters as "paradigmatic examples of protected activity." (Reply, p. 14: 14-16.)
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`See Blanchard v. DIRECTV, Inc. (2004) 123 Cal.App.4th 903 , 919 (Blanchard).
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`This argument fails, however, because Plaintiffs fail to explain how their early demands
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`for repayment from PWT were made in anticipation of court action. Amazon alleges that
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`Plaintiffs and PWT arranged for Plaintiffs to recall millions of dollars in investments in PWT
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`shortly after Amazon was awarded a valid judgment in federal court. Such conduct does not
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`amount to a "pre-lawsuit demand letter" (see Blanchard, supra, 123 Cal.App.4th at p. 919) but
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`rather an entire asset protection scheme designed to avoid paying Amazon's judgment altogether.
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`Had Plaintiffs not called in their loans, the Court infers that sufficient funds would have been
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`available to pay Amazon. While it is clear that said scheme anticipated PWT's default, it is not
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`clear how the scheme anticipated any action before a court or tribunal.
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`Because Plaintiffs have not shown that the conduct giving rise to Amazon's equitable
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`subordination claim arises from protected activity, their anti-SLAPP motions to strike portions of
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`Amazon's complaint-in-intervention will be denied.
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`e. Amazon's equitable subordination claim is not a "mixed cause of action."
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`On May 22, 2023, at the hearing on Plaintiffs' anti-SLAPP motions, Plaintiffs argued that
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`the foregoing analysis is incorrect because Amazon's equitable subordination claim constitutes a
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`so-called "mixed cause of action." See Bonni v. St. Joseph Health System (2021) 11 Cal.5th 995
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`(Bonni). Plaintiffs argued that the Court should strike the allegations related to the Receiver in
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`Amazon's complaint-in-intervention, even if the Court finds that the Amazon's allegations related
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`to Plaintiffs calling in the four (4) promissory notes are not protected. The Court disagrees.
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`In Bonni, the pleading at issue in the movant's anti-SLAPP motion involved "a
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`nonexhaustive list of at least 19 distinct acts or courses of conduct allegedly undertaken in
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`retaliation for Bonni's complaints of unsafe conditions." Bonni, supra, 11 Cal.5th at p. 1009.
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`Citing Baral v. Schnitt (2016) 1 Cal.5th 376, 382, the Bonni Court found that the plaintiff's cause
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`of action constituted "what is sometimes loosely referred to as a 'mixed cause of action'-that is,
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`a cause of action that rests on allegations of multiple acts, some of which constitute protected
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`activity and some of which do not." Id. at p. 1010. In such a circumstance, the Court of Appeal
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`held that "the moving defendant must identify the acts alleged in the complaint that it asserts are
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`protected and what claims for relief are predicated on them." Ibid. "In tum, the court should
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`examine whether those acts are protected and supply the basis for any claims." Ibid.
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`The Court has already determined that some of the conduct referred to in Amazon's
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`complaint-in-intervention is protected, namely the court action to institute a receivership in this
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`case. (See Complaint-In-Intervention, ,i,i 16-17, 20-24.) However, the Court has also already
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`expressly determined that such protected conduct does not serve as the basis for Amazon's
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`equitable subordination claim, as alleged in Amazon's pleading.
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`The necessary elements of equitable subordination are: (1) that a defendant-fiduciary
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`engaged in inequitable conduct; (2) that said misconduct resulted in injury to the petitioner or
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`conferred an unfair advantage to the fiduciary; and (3) that the plaintiff's invocation of an
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`equitable subordination claim is not inconsistent with the Commercial Code. See Feresi v. The
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`Livery, LLC (2014) 232 Cal.App.4th 419,427 (Feresi).
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`In paragraph 19 of the complaint-in-intervention, Amazon pleads that Plaintiffs' demands
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`for repayment from PWT were part of PWT and Plaintiffs' scheme to thwart Amazon's
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`collection on Amazon's judgment, and that Plaintiffs' early demands for repayment "constitute
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`gross and egregious inequitable conduct." Such alleged "inequitable conduct," which is an
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`essential element of equitable subordination, is plainly the basis for liability in the complaint-in(cid:173)
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`intervention. While Amazon's auxiliary allegations regarding the receivership are down-the-line
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`evidence of that conduct, they are not the basis for Amazon's equitable subordination c