Richmond v. Mikkelson

CHRISTOPHER RICHMOND et al., Plaintiffs, Cross-defendants and Appellants, v. DAVID MIKKELSON Defendant, Cross-complainant and Respondent.

D076375

COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA

June 4, 2021

NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Super. Ct. Nos. 37-2017-00016311-CU-BC-CTL; 37-2018-00004335-CU-MC-CTL)

APPEAL from an order and judgment of the Superior Court of San Diego County, Richard S. Whitney, Judge. Motion to dismiss appeal denied. Judgment affirmed.

Hrutkay Law, Matthew J. Hrutkay; Tencer Sherman, Philip C. Tencer and Jessica L. Mulvaney for Plaintiffs, Cross-defendants and Appellants Christopher Richmond and Drew Schoentrup.

Gordon Rees Scully Mansukhani, Richard P. Sybert, Kimberly D. Howatt, and Holly L.K. Heffner for Defendant, Cross-complainant and Respondent, David Mikkelson.

I.INTRODUCTION

This consolidated action is a business dispute over ownership and control of the company that owns the fact-checking internet website "Snopes.com" (Snopes). Plaintiffs Christopher Richmond and Drew Schoentrup (appellants) appeal from a May 29, 2019 judgment in favor of defendant and respondent David Mikkelson and against appellants on Mikkelson's declaratory relief cross-claim alleging that appellants' purchase of a stock share is void and appellants have no right to the stock share. Mikkelson moved to dismiss this portion of the appeal on the ground that the May 29, 2019 judgment is not appealable. As we shall explain, we conclude that the May 29, 2019 judgment is an appealable collateral order that resolved all issues between appellants and Mikkelson. However, we reject the merits of appellants' challenge to the May 29, 2019 judgment and affirm.

Appellants also appeal from the trial court's order granting Mikkelson's motion under the statute prohibiting strategic lawsuits against public participation (anti-SLAPP statute), Code of Civil Procedure¹ section 425.16. We conclude that Mikkelson met his burden of establishing that the challenged conduct arose out of protected activity and that appellants failed to demonstrate a probability of prevailing on the merits. Accordingly, we affirm the order granting the anti-SLAPP motion.

II.FACTUAL AND PROCEDURAL BACKGROUND²

In 1994, Mikkelson founded the Snopes website. In 2003, Bardav, Inc. (Bardav) was formed as a California corporation to operate Snopes, at which time two shares of stock in Bardav were issued: one each to Mikkelson and his then-spouse, Barbara Mikkelson (Barbara).³ In 2014, Mikkelson and Barbara commenced marital dissolution proceedings (the dissolution case). In January 2016, a family law court in Los Angeles entered judgment in the dissolution case (the dissolution judgment). The dissolution judgment incorporated the terms of the couple's marital settlement agreement (MSA). Section 8 of the MSA addressed the couple's Bardav stock. The MSA provided:

"[I]f either Shareholder seeks to sell all or part of his or her share(s), the other shall be given a ten (10) day right of first refusal to match the exact terms of that offer." (Italics added.)

"Either party shall be able to block the sale of all or part of the sale of the company's shares . . . if it can be reasonably concluded . . . that the prospective buyer is antithetical to the health of [ ] [Snopes.com] [web]site or to its purpose. . . ."

"Neither party shall take any actions to diminish the other shareholder's authority as contained in this settlement and/or judgment. . . ."

Proper Media, LLC (Proper) is an internet media company that manages web properties. Bardav retained Proper under a general services agreement (GSA) to manage Snopes. Appellants are two of the original five members of Proper. The other members were Tyler Dunn, Vincent Green, and Ryan Miller.

In July 2016, Barbara sold her 50 percent interest in Bardav (the Barbara share) to the five individual Proper principals—appellants, Dunn, Green, and Miller (collectively the five buyers)—through a stock purchase agreement (SPA). The SPA specifies that the Barbara share was sold to these individuals in specific, varying percentages.⁴ Mikkelson does not dispute that Barbara lawfully sold the Barbara share to the five buyers.

The five buyers financed the purchase of Barbara's 50 percent ownership interest in Bardav, in part, with a $1.75 million promissory note between Barbara and Proper (the Note). Each of the five buyers personally guaranteed the Note (the guarantee). The guarantee contains an automatic reversion interest in the Barbara share in the circumstance that Proper defaults on the Note, the default is uncured, Barbara demands that the guarantors satisfy the Note, and the guarantors fail to do so. Specifically, the guarantee states:

"In the event of a default by [Proper] under any of the terms or provisions of the Note and expiration of any applicable cure period, should [Barbara] make a direct demand to the [appellants, Dunn, Green, and Miller] for fulfillment of any of [Proper's] remaining obligations and should [appellants, Dunn, Green, and Miller] fail to satisfy such obligations within fifteen days of the demand,ownership of the Shares shall automatically revert to [Barbara]." (Italics added.)⁵

In March 2017, Bardav terminated the GSA. In May 2017, appellants and Proper filed suit against Bardav and Mikkelson alleging, among other things, that Mikkelson caused Bardav to breach the GSA (the lead case, case no. 37-2017-00016311-CU-BC-CTL). Appellants later amended their complaint to add causes of action against Green and Miller. Among other things, appellants alleged that Green and Miller conspired with Mikkelson to effectuate Mikkelson's scheme to gain control of Bardav.

Appellants and Proper sought a preliminary injunction to enjoin Bardav from terminating the GSA, remove Mikkelson from the Bardav board of directors (the Board), and inspect Bardav's records. In response, Bardav sought injunctive relief to require Proper and appellants to release withheld advertising revenues, Snopes's only source of income. The trial court granted Bardav's motion, requiring Proper to release the withheld monies and denied appellants' motion, finding that Bardav had properly terminated the GSA.

In May 2017, Bardav searched for an independent director to fill the seat on the Board vacated by Barbara. Bardav appointed Brad Westbrook, an individual experienced with social news organizations and media technology. Thereafter, Mikkelson and Westbrook increased the number of Bardav directors to three, but left the third position vacant.

In July 2017, Mikkelson and Snopes launched a crowdfunding campaign on GoFundMe called "Save Snopes," seeking public donations to pay Snopes's operating expenses, payroll, and legal fees. The GoFundMe campaign met its initial fundraising goal of $500,000 in a single day. TheGoFundMe campaign has since raised its fundraising goal to $2 million and receives donations on a daily or near-daily basis.

In October 2017, the Board adopted a new set of corporate bylaws. Section 6.3 of the Bylaws mirrors section 317 of the Corporations Code by authorizing Bardav to advance legal fees incurred by an agent "in defending any proceeding . . ., or any particular claim(s) within such proceeding (as determined by the Board)" prior to the final disposition of the proceeding and conditioned upon receipt of an undertaking. After the new bylaws were adopted, Mikkelson, Green, and Miller sought an advance of their reasonable attorney fees and costs in defending against the lead case. The Board executed a unanimous written consent authorizing these advances, and Mikkelson, Green, and Miller each submitted the requisite undertakings.

In October 2017, Mikkelson filed a cross-complaint in the lead case for declaratory relief and a hearing under Corporations Code section 709.⁶ Mikkelson sought a declaration that the five buyers had voting rights independent of each other as the purchasers of Barbara's 50 percent interest in Bardav. He also sought the trial court's determination under CorporationsCode section 709 regarding the validity of Westbrook's appointment and subsequent election to the Board. Mikkelson also alleged that appellants and Proper had committed fraud and interfered with his prospective economic relations. The trial court granted Mikkelson's claim for relief under Corporations Code section 709 concluding: (1) Westbrook's election to the Board was valid; (2) the new bylaws were properly ratified; and (3) each of the five buyers individually owned fractional interests in the Barbara share.

In the meantime, appellants entered into a side agreement with Barbara to purchase Barbara's security interest in the Note and guarantee (the assignment contract). Under the assignment contract, appellants stepped into Barbara's shoes, holding all of Barbara's previously held rights and obligations under the Note and guarantee, including Barbara's reversionary interest which gave appellants the ability to demand payment of the outstanding balance and, in the event of an uncured default, to foreclose on the Barbara share. Proper then defaulted on the Note, and the cure period expired. Under the terms of the Note, appellants accelerated the outstanding balance due and demanded that Green and Miller cure the default. When Green and Miller did not pay the outstanding balance, appellants claimed ownership of the entirety of the Barbara share, pursuant to the reversionary interest contained in the guarantee, which they had purchased via the assignment contract.

Appellants notified Bardav of their ownership claim to the entirety of the Barbara share. Green and Miller objected to appellants' claim. Mikkelson also...