Baral v. Schnitt
Annotate this CaseBaral and Schnitt owned a company, IQ. Baral accused Schnitt of fraud and breaches of fiduciary duty, seizing control and secretly negotiating the sale of IQ to his advantage, while excluding Baral’s membership interest and co-management powers. His complaint alleged slander and libel and that Schnitt unilaterally retained Moss Adams to investigate IQ after Schnitt discovered misappropriation and gave false information to discredit Baral. Moss Adams concluded that Baral had engaged in unauthorized transactions; Schnitt refused to correct allegedly false information in the report, which was published to the potential purchaser and others. The trial court determined that the defamation claims should be struck under Code of Civil Procedure 425.16 (anti-SLAPP statute). Because those claims were based exclusively on communications made in a prelitigation fraud investigation, the court concluded that the absolute litigation privilege (Civil Code 47(b) applied. Baral filed amended complaints. Schnitt filed another anti-SLAPP motion, seeking to strike all references to the audit in breach of fiduciary duty, constructive fraud, and declaratory relief causes of action. The trial court denied the motion. Without expressly deciding whether the complaint contained allegations of protected activity, the court concluded: “[The] Anti-SLAPP motion still applies to causes of action or to an entire complaint, not allegations…. if a cause of action contains portions that are subject to anti-SLAPP and portions that are not, the defendant can move to strike those portions that are subject …. No case allows striking allegations per se under [section] 425.16; that is within the province of a regular motion to strike.” The court of appeal affirmed.
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