A scrap metal company, Central Metal, and its owners (plaintiffs) borrowed $17 million from Horvitz & Levy’s client BBCN, formerly known as Center Bank (the Bank). When plaintiffs defaulted on the loans in 2009, the Bank worked out loan deferral and change-in-terms agreements with the plaintiffs. Plaintiffs again defaulted on the loans. The Bank then issued notices of default and warned plaintiffs it would pursue its legal remedies. The Bank also insisted that plaintiffs hire a consultant to assess their finances. The consultant reported that the plaintiffs’ books were in disarray and large amounts of capital could not be accounted for. In January 2010, the Bank instituted a receivership action and the consultant was appointed as receiver. Plaintiffs responded by immediately declaring bankruptcy.
In January 2014, plaintiffs sued the Bank, contending the Bank plotted with the consultant to “take over” their business. According to plaintiffs’ complaint, this supposed plot resulted in the receivership action, the bankruptcy, and millions in ensuing damages to their business. The Bank filed an anti-SLAPP motion, asserting that plaintiffs’ action arose from the Bank’s petitioning conduct (in both the receivership action and the later bankruptcy proceedings), and that plaintiffs could not establish a probability of prevailing because their claims were time-barred under the applicable statutes of limitations. The trial court granted the motion (except as to one cause of action).
The California Court of Appeal (Second Appellate District, Division Five) agreed with Horvitz & Levy’s arguments on appeal and affirmed. It held that the Bank’s litigation conduct was the “core injury producing conduct” underlying plaintiffs’ complaint, and that plaintiffs’ claims thus arose from protected petitioning conduct within the meaning of the anti-SLAPP statute. With regard to the second prong of the anti-SLAPP analysis—whether plaintiffs had established a probability of prevailing on their claims—the Court of Appeal held all of plaintiffs’ causes of action (save one) were time-barred under the applicable statutes of limitations because plaintiffs were on notice of their claims no later than when the Bank filed its receivership action in January 2010.