Extortion Is Not Privileged

Mendoza v. Hazmeh
(Cal. Ct. of App., 2d Dist.), filed April 22, 2013

KEY FACTS

Attorney Reed Hazmeh represented a client in a dispute between Miguel Mendoza. The dispute concerned Mendoza’s employment as the manager of a print and copy business.

Hazmeh sent Mendoza a letter that said: “We are in the process of uncovering the substantial fraud, conversion and breaches of contract that your client has committed on my client. . . . To date we have uncovered damages exceeding $75,000, not including interest applied thereto, punitive damages and attorneys’ fees. If your client does not agree to cooperate with our investigation and provide us with a repayment of such damages caused, we will be forced to proceed with filing a legal action against him, as well as reporting him to the California Attorney General, the Los Angeles District Attorney, the Internal Revenue Service regarding tax fraud, the Better Business Bureau, as well as to customers and vendors with whom he may be perpetrating the same fraud upon [sic].”

Based on this letter, Mendoza sued Hazmeh. Mendoza brought causes of action against Hazmeh for civil extortion, intentional infliction of emotional distress and unfair business practices. Mendoza alleged: “Hazmeh’s threat to report Mendoza to the California Attorney General, the Los Angeles District Attorney, and the Internal Revenue Service constitute[s] the crime of extortion under California law.”

Hazmeh filed a special motion to strike under Code of Civil Procedure section 425.16, sometimes referred to as an anti-SLAPP motion. He asserted his letter was privileged and could not be the basis for a lawsuit such as Mendoza’s.

The trial court denied the motion.

HOLDING & REASONING

The Court of Appeal affirmed.

Under Section 425.16, a party may move to dismiss certain unmeritorious claims that are brought to thwart constitutionally protected speech or petitioning activity. However, under Flatley v. Mauro, 39 Cal.4th 299 (2006), communications, even in the context of pre-litigation communications, which constitute criminal extortion as a matter of law are not covered by the anti-SLAPP statute.

The threat to report a crime may constitute extortion even if the victim did, in fact, commit a crime. The threat to report a crime may in and of itself be legal. But when the threat to report a crime is coupled with a demand for money, the threat becomes illegal, regardless of whether the victim, in fact, owed the money demanded. The law does not contemplate the use of criminal process as a means of collecting a debt.

Regardless of whether Mendoza committed any crime or wrongdoing or owed Chow money, Hazmeh’s threat to report criminal conduct to enforcement agencies and to Mendoza’s customers and vendors, coupled with a demand for money, constitutes “criminal extortion as a matter of law,” as articulated in Flatley, and the anti-SLAPP statute did not protect Hazmeh.

ANALYSIS

This case follows the logic of prior case law in holding that a threat to report alleged criminal wrongdoing, as a means of forcing payment, will not be protected as a litigation-related communication.