Reversing a trial judge's ruling, the Second District Court of Appeal has ruled that a development company's lawsuit against its own engineering firm is not a Strategic Lawsuit Against Public Participation - a so-called SLAPP suit - within the meaning of the state anti-SLAPP law. It is one of the few instances in which an attempt to use the state anti-SLAPP law has failed in the appellate courts. SLAPP suits are often filed by developers against citizen groups or others who speak out against their projects. The anti-SLAPP law, Code of Civil Procedure ยง425.16, permits defendants to file a motion to strike and argue that the alleged SLAPP suit should be dismissed. Since the passage of the anti-SLAPP law some eight years ago, the overwhelming majority of published appellate rulings have upheld the motion to strike. In this case, however, the Second District, Division Six, did not do so. The case involved Penfield & Smith Engineers Inc., and its involvement with two different developers seeking to construct a "big box" retail project in Goleta. Los Carneros Community Associates hired Penfield in the mid-1980s to assist with land-use approvals for a 50-acre project. Penfield employee Michael Caccese managed the project for Los Carneros until January of 1996. Among other duties, he was charged with advocating the project. In 1994, Camino Real LLC hired Penfield to assist in obtaining land-use approvals for another property in Goleta. Beginning in 1995, however, both Camino and Los Carneros sought to obtain approval for construction of a big-box retail project. During that time, Camino's project manager, Mark Linehan, came to the conclusion that Caccese, working for Los Carneros, was criticizing the Camino project publicly. Asked by Linehan to choose between the two developers, Penfield chose to terminate its relationship with Camino and continue working for Los Carneros. Late in 1995, Penfield sought to re-established its relationship with Camino and reassured Camino that it would limit its activities on the Los Carneros project to "those which are appropriate for an engineering company and those that do not involve active opposition to your project." Subsequently, Camino hired Penfield to work on unrelated projects. However, Los Carneros regarded the relationship as a violation of its contract with Penfield and terminated Penfield. Caccese resigned from Penfield but continued to work for Los Carneros through another engineering firm. Los Carneros then sued Penfield, Camino, Linehan and others alleging interference with prospective business advantage, declaratory and injunctive relief and breach of contract. Penfield and Camino filed a motion to strike under the anti-SLAPP law, which was granted by Santa Barbara County Superior Court Judge Bruce Dodds because of the "expansive" nature of the previous court rulings. However, the Second District reversed. "The common thread among the cases is that the statements or acts which formed the gravamen of the plaintiffs' complaints were directly related to a matter of some public interest, and the litigation was designed to stifle a citizen's right to free speech or to extinguish the public's participation in the public process," wrote Justice Arthur Gilbert for a unanimous court. "The alleged acts Los Carneros complains of were not made in furtherance of such rights, but instead may constitute a breach of contract. The legal action here does not take on public significance simply because it bears some relation to proceedings before a government or administrative agency. We do not construe the statute so broadly as to abrogate the law of contracts." Gilbert added: "It is true that SLAPP suits are often pleaded in terms of breach of contract or other valid actions. When presented with a motion to strike a complaint pursuant to section 425.16, a court must consider the active objective of the suit and grant the motion if the true goal is to interfere with and burden the defendant's exercise of his free speech and petition rights. "By the same token, not every lawsuit between parties who appear before legislative or executive bodies on some common issue is a SLAPP suit. To apply the statute here would give immunity to parties contracting to perform services concerning matters before government agencies." The Case: Los Carneros Community Associates Inc. v. Penfield & Smith Engineers, No. B105545, 98 Daily Journal D.A.R. 7232 (filed June 29, 1998). The Lawyers: For Los Carneros: Richard M. Coleman, Coleman & Richards, (xxx) xxx-xxxx. For Penfield & Smith: Samuel J. Muir, Collins, Collins, Muir & Traver, (xxx) xxx-xxxx.