Fotsch v. Shroder

Background

Mackenzie Fotsch alleged that she and Matthew Shroder had an oral agreement to pool resources and share ownership of a house at 83 Princess Street in Sausalito. Under the alleged arrangement, Shroder would hold a 75% interest after funding the purchase, and Fotsch would earn a 25% interest through payments for improvements and property taxes and through managing the property. The deed was recorded only in Shroder’s name. Fotsch alleged that she contributed $142,555.23 toward her claimed interest and provided project-management and development services.

After Shroder ended the relationship, the parties’ efforts to document their agreement broke down. Shroder later demanded that Fotsch leave the property and filed an unlawful-detainer action, meaning an eviction lawsuit, in state court. Fotsch’s federal complaint included claims for breach of several agreements, unjust enrichment, breach of fiduciary duty, and conversion.

Motions

Shroder moved under California’s anti-SLAPP statute to strike allegations in six claims. Anti-SLAPP law allows a defendant to challenge claims based on protected speech or petitioning activity, including litigation activity. Shroder argued that the claims improperly treated the filing and service of the unlawful-detainer action as breaches or other wrongful conduct. For the unjust-enrichment claim, he argued that California does not recognize unjust enrichment as an independent claim.

Ruling on the motion to strike

The court held that filing, serving, and prosecuting the unlawful-detainer action were protected petitioning activity. It also held that California’s litigation privilege, which generally prevents liability based on communications made in judicial proceedings, barred allegations that relied on those acts as the basis for liability.

The court granted the motion to strike in part. It struck the allegations in claims one, two, and three that Shroder breached or repudiated the parties’ agreements by serving the unlawful-detainer action. It also struck from claim seven any basis for liability predicated on filing, serving, or prosecuting that action, and struck from claim eleven the allegation that Shroder converted Fotsch’s property by serving the unlawful-detainer summons and complaint. The court did not strike the allegations that Shroder excluded Fotsch from the property, exercised control over it, or refused to account for property or funds. Those allegations involved conduct the court considered unprotected.

The court struck allegations rather than entire claims. The remaining parts of claims one, two, three, seven, and eleven were unaffected by the order, and the court did not decide whether those remaining allegations were legally sufficient. The court also allowed references to the unlawful-detainer action to remain as background or possible evidence, but not as a basis for liability. The court stated that the stricken allegations could not be repleaded because the litigation privilege was absolute and amendment would be futile.

Ruling on unjust enrichment

The court denied the motion to dismiss claim six. Although California treats unjust enrichment as a request for restitution rather than a standalone cause of action, the court held that the claim could be construed as a quasi-contract claim seeking restitution. The allegations that Fotsch provided money, labor, services, and efforts that Shroder retained while denying her the promised ownership interest were sufficient at this stage.

Fees and disposition

The court stated that Shroder may seek attorney’s fees and costs attributable to the successful portions of the anti-SLAPP motion, with timing to be addressed in the parties’ initial case-management-conference statement. The court denied Fotsch’s request for fees because the motion was not frivolous or solely intended to cause delay.

The final disposition was: the motion to strike was granted in part; the motion to dismiss was denied; and Fotsch’s cross-request for attorney’s fees was denied.