Filed 6/27/17 Boladian v. Clough CA2/3
Reposted to provide correct version without citations to record
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE

ARMEN BOLADIAN et al.,

Plaintiffs and Respondents,

v.

LARRY H. CLOUGH,

Defendant and Appellant.
B269508 [related pending appeals B268550, B267950, B270472]

(Los Angeles County
Super. Ct. No. BC576665)


APPEAL from an order of the Superior Court of Los Angeles County, Michael J. Raphael, Judge. Reversed and remanded with directions.
Law Offices of John M. Kalajian and John M. Kalajian for Defendant and Appellant.
King & Ballow and Paul H. Duvall for Plaintiffs and Respondents.


_________________________
Defendant and appellant Larry H. Clough (Clough) appeals an order denying his special motion to strike (Code Civ. Proc., § 425.16) (anti-SLAPP motion) a malicious prosecution complaint filed by plaintiffs and respondents Armen Boladian (Boladian), Bridgeport Music, Inc. (Bridgeport), and Westbound Records, Inc. (Westbound) (sometimes collectively referred to as Boladian).
We conclude the trial court should have granted Clough’s special motion to strike as to Bridgeport because Bridgeport was not added as a defendant in the underlying action until after Clough substituted out of the case. Therefore, Bridgeport has no cause of action against Clough for malicious prosecution.
We also conclude the trial court should have granted Clough’s special motion to strike as to Boladian and Westbound because those parties failed to make a prima facie showing that Clough lacked probable cause to bring the underlying action against them.
FACTUAL AND PROCEDURAL BACKGROUND
1. The underlying action.
On December 5, 2011, musician George Clinton filed suit in the United States District Court for the Central District of California against Westbound and its owner, Boladian, among others. Clinton was represented in that action by Clough, and the last page of the complaint also listed Jeffrey P. Thennisch (Thennisch) of Dobrusin & Thennisch (the Dobrusin firm), a Michigan law firm, as counsel to Clinton.
The complaint, which contained 15 causes of action, including copyright infringement (17 U.S.C. § 501) and declaratory relief, alleged as follows: Clinton is the original creator of, and has rights, title and interest in, the Funkadelic sound recordings released by Westbound (the Westbound Sound Recordings). In 1969, in an oral agreement, Clinton granted Westbound rights to said recordings in exchange for Westbound’s duty to account and pay 50 percent of monies collected for the sale and commercial exploitation of those recordings. However, defendants “have unlawfully utilized the [recordings] without the permission of [Clinton] and without accounting or paying royalties to [Clinton].” Among other things, Clinton requested a judicial declaration that he, and not the defendants, is the owner of all rights relating to the copyright interests and sound recordings comprising the Westbound Sound Recordings.
The complaint also alleged Clinton’s ownership of the copyrights to the musical works and sound recordings known as the Warner Brothers Sound Recordings, consisting of recordings originally released by Warner Brothers on the albums “Uncle Jam Wants You,” “One Nation Under a Groove,” “Hardcore Jollies,” and “Electric Spanking of War Babies.”
On January 4, 2013, Daniel A. Rozansky of Stroock & Stroock & Lavan (Stroock) substituted into the case in place of Clough, who had suffered a series of strokes and heart attacks. On January 7, 2013, the matter was before Judge Manuel L. Real on an order to show cause why the action should not be dismissed for lack of prosecution. Judge Real ordered the action dismissed without prejudice, with 30 days leave to file an amended complaint.
On February 6, 2013, Clinton, through Stroock, filed a first amended complaint, which added Bridgeport as a defendant and reduced the pleading to two causes of action: copyright infringement (17 U.S.C. § 501), and declaratory relief. The amended pleading narrowed the claims to Clinton’s alleged ownership of the Warner Brothers Sound Recordings.
On April 1, 2013, Judge Real granted a defense motion to dismiss for failure to state a claim and lack of personal jurisdiction, and on May 2, 2013, he signed and entered an order dismissing the underlying action with prejudice. The court ruled, inter alia, it lacked personal jurisdiction over Bridgeport; Clinton failed to state a claim for copyright infringement, as the amended complaint was completely devoid of facts concerning any specific instances of infringement; the declaratory relief claim was duplicative of the copyright infringement claim and was unnecessary; and Clinton was not entitled to further leave to amend.
On May 31, 2013, Clinton filed a notice of appeal to the Ninth Circuit. On May 8, 2014, the Ninth Circuit dismissed the appeal for failure to file an opening brief.
2. The instant action.
a. Boladian’s complaint for malicious prosecution.
On March 25, 2015, Boladian, Bridgeport, and Westbound filed suit against Clinton and his attorneys, namely, Clough, Thennisch and the Dobrusin firm, Rozansky, and Stroock. As against Clough, the complaint pled a cause of action for malicious prosecution of the underlying action. The complaint alleged in relevant part:
The 2011 litigation and subsequent appeal to the Ninth Circuit terminated in Boladian’s favor.
Pursuant to a 1972 written agreement between Clinton and Westbound, the Westbound Sound Recordings were Westbound’s exclusive property, and a 1975 agreement terminating the 1972 agreement reiterated that Westbound retained in perpetuity the exclusive rights to the master recordings and copyrights thereon. Further, in a 1984 bankruptcy filing, Clinton did not claim any recordings or any right to receive royalties from Boladian on his list of assets. Thus, Clinton lacked probable cause to allege that he never entered into a written agreement with Westbound granting it ownership of the master recordings. Clinton deliberately omitted the 1972 agreement and the 1975 agreement from the original complaint in the underlying action, knowing that those documents would undermine his claims and would be entirely inconsistent with his claim that he never entered into any written agreements with Westbound. Clough knew prior to initiating the 2011 litigation that Clinton’s claims were not tenable, and he continued to prosecute the lawsuit even after being advised by Boladian’s attorney, Paul Duvall, of “the glaring deficiencies in Clinton’s claims against [Boladian].”
Further, Clinton and Clough initiated and pursued the 2011 litigation for an improper purpose and for motives other than to secure the proper adjudication of the allegations in the underlying action. In the 2011 litigation, Clough filed a copy of a defamatory and irrelevant declaration by Jane Peterer, a former Bridgeport employee, which previously had been ordered sealed by the district court in Michigan in an unrelated case. “The filing of the Peterer Declaration was a ruse to allow Clinton to publish the contents on his web site and in his autobiography,” and was done with the purpose of destroying Boladian’s reputation.
b. Clough’s special motion to strike.
On September 14, 2015, Clough filed a special motion to strike the malicious prosecution claim against him.
Clough asserted he met his initial burden to invoke the protections of section 425.16 because a cause of action for malicious prosecution is subject to scrutiny under the statute as a matter of law.
Clough further contended: Boladian could not prevail on the malicious prosecution claim because the action was time-barred as to him, in that the statute of limitations on the cause of action against him started running no later than January 25, 2013, when Judge Real dismissed the original complaint with leave to amend; he never sued Bridgeport, which was named as a defendant only after Clough substituted out of the case; the January 2013 order dismissing the action without prejudice was not a favorable termination for Boladian because the action was ongoing; Boladian could not establish that Clough lacked probable cause to believe that Clinton’s claims were tenable; Clough had no liability for events occurring in the case after he substituted out; and Boladian could not demonstrate malice.
Clough supported the motion with a declaration describing the investigation he conducted prior to filing the 2011 litigation, and explaining why he believed Clinton’s claims were tenable.
c. Boladian’s opposition to the special motion to strike.
In opposition, Boladian contended the malicious prosecution action, filed March 25, 2015, was timely, because the underlying action did not terminate until May 2, 2013, when the federal court entered an order dismissing the action with prejudice, and the running of the statute was tolled during the pendency of Clinton’s appeal to the Ninth Circuit.
Boladian further argued as follows: He was capable of prevailing on each of the elements of the malicious prosecution claim. Clough initiated and pursued the 2011 litigation, which terminated in Boladian’s favor with a dismissal with prejudice on May 2, 2013. The evidence, including Clough’s moving declaration, showed that Clough lacked probable cause to allege that Clinton never entered into a written agreement with Westbound regarding ownership of the Westbound Sound Recordings because Clough either knew, or should have known, of Clinton’s signed agreements with Westbound. There was also significant correspondence between the parties, including royalty statements, showing that Westbound had duly accounted to Clinton. Also, Clinton’s failure to list any right to receive royalties or any ownership of master recordings in his 1984 bankruptcy filing barred his claim against Boladian. As for the element of malice, Clough’s use of the Peterer declaration in the 2011 litigation tended to show Clough’s improper purpose in filing and pursuing the 2011 litigation.
d. Trial court’s ruling.
On November 10, 2015, after hearing the matter, the trial court entered an order denying Clough’s special motion to strike.
With respect to the statute of limitations, the trial court ruled Boladian timely filed suit within one year of the accrual of the cause of action, and “[a]s for the other issues raised in defendant Clough’s motion, plaintiffs have, at this stage, at least [made] the prima facie case necessary to survive a motion to [strike]. Whether the [termination] in the federal case was favorable, lack of probable cause, and malicious intent are triable issues. Consequently, with a timely complaint, plaintiffs have established a probability of prevailing on the merits, and defendant Clough’s anti-SLAPP motion is denied.”
Clough filed a timely notice of appeal from the order denying his special motion to strike.
CONTENTIONS
Clough contends: he was not a proper malicious prosecution defendant because he substituted out of the underlying case as counsel of record before the filing of the operative first amended complaint, which superseded the original complaint that he filed; the malicious prosecution complaint was time-barred as to him; plaintiffs failed to meet their burden to establish a probability of prevailing on their malicious prosecution claim; and the trial court erred in its evidentiary rulings.
DISCUSSION
1. General principles.
“The anti-SLAPP statute does not insulate defendants from any liability for claims arising from the protected rights of petition or speech. It only provides a procedure for weeding out, at an early stage, meritless claims arising from protected activity. Resolution of an anti-SLAPP motion involves two steps. First, the defendant must establish that the challenged claim arises from activity protected by section 425.16. [Citation.] If the defendant makes the required showing, the burden shifts to the plaintiff to demonstrate the merit of the claim by establishing a probability of success. [The Supreme Court has] described this second step as a ‘summary-judgment-like procedure.’ [Citation.] The court does not weigh evidence or resolve conflicting factual claims. Its inquiry is limited to whether the plaintiff has stated a legally sufficient claim and made a prima facie factual showing sufficient to sustain a favorable judgment. It accepts the plaintiff’s evidence as true, and evaluates the defendant’s showing only to determine if it defeats the plaintiff’s claim as a matter of law. [Citation.] ‘[C]laims with the requisite minimal merit may proceed.’ [Citation.]” (Baral v. Schnitt (2016) 1 Cal.5th 376, 384-385, fn. omitted.)
Our review of the trial court’s order denying Clough’s special motion to strike is de novo. (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 269, fn. 3 (Soukup).)
2. Elements of the tort of malicious prosecution.
As this court noted in Downey Venture v. LMI Ins. Co. (1998) 66 Cal.App.4th 478, 493, “ ‘Malicious prosecution is a disfavored action. [Citations.] This is due to the principles that favor open access to the courts for the redress of grievances.’ ” Therefore, “the elements of the tort have historically been carefully circumscribed so that litigants with potentially valid claims will not be deterred from bringing their claims to court by the prospect of a subsequent malicious prosecution claim.” (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 872 (Sheldon Appel).)
To establish “ ‘a cause of action for the malicious prosecution of a civil proceeding, a plaintiff must plead and prove that the prior action (1) was commenced by or at the direction of the defendant and was pursued to a legal termination in his, plaintiff’s, favor [citations]; (2) was brought without probable cause [citations]; and (3) was initiated with malice [citations].’ ” (Crowley v. Katleman (1994) 8 Cal.4th 666, 676.)
The test for probable cause for malicious prosecution purposes is “whether any reasonable attorney would have thought the claim tenable.” (Sheldon Appel, supra, 47 Cal.3d at p. 886.) The probable cause element requires an objective determination of the reasonableness of the defendant’s conduct, i.e., “to determine whether, on the basis of the facts known to the defendant [Clough], the institution of the prior action was legally tenable.” (Id. at p. 878, italics added.)
Significantly for present purposes, a client’s knowledge is not imputed to his or her attorney for purposes of evaluating the element of probable cause. “ ‘Granted that for some purposes an attorney is treated as the agent of his client so that his conduct is imputed to his client [citation], the client is not the agent of his attorney. Thus, if the client is guilty of misfeasance in failure to disclose all facts relevant to probable cause to his attorney or malfeasance in a false recitation, the dereliction is not imputable to counsel.’ [Citation.]” (Zeavin v. Lee (1982) 136 Cal.App.3d 766, 772.) Therefore, for purposes of evaluating whether an attorney had probable cause to pursue an action on behalf of a client, the attorney “ ‘is entitled to rely on information provided by a client’ ” unless the attorney discovers that the client’s statements are false. (Daniels v. Robbins (2010) 182 Cal.App.4th 204, 223.)
3. Bridgeport has no cause of action against Clough for malicious prosecution; the trial court erred in denying Clough’s special motion to strike Bridgeport’s cause of action against him.
We begin with Bridgeport, one of the three malicious prosecution plaintiffs.
Clough’s original complaint in the underlying action did not include Bridgeport as a defendant. Bridgeport was added as a defendant by way of the first amended complaint, filed by Stroock on Clinton’s behalf on February 6, 2013. Therefore, Clough neither commenced nor prosecuted the underlying action as against Bridgeport.
Accordingly, with respect to Bridgeport, the trial court erred in denying Clough’s special motion to strike the malicious prosecution action.
4. With respect to Boladian and Westbound’s cause of action for malicious prosecution, Clough met his burden with respect to the first step of the anti-SLAPP analysis.
There is no question that the malicious prosecution action against Clough arose from his protected activity in representing Clinton, who was the plaintiff in the underlying action against Boladian. (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 734-735 [malicious prosecution action necessarily arises from protected petitioning activity in filing the underlying lawsuit].)
Therefore, the issues before us relate exclusively to the second step of the analysis, namely, whether Boladian and Westbound met their burden to establish a probability of prevailing on their malicious prosecution claim. (§ 425.16, subd. (b)(1).)
5. In opposing Clough’s special motion to strike, Boladian and Westbound failed to meet their burden to make a prima facie showing with respect to the malicious prosecution element of lack of probable cause.
As discussed below, on our de novo review of the trial court’s ruling, we conclude Boladian and Westbound failed to meet their burden to show that Clough lacked probable cause to bring and pursue the underlying action. We approach the issue bearing in mind that once Clough met his burden to show the malicious prosecution claim arose out of his protected activity, the burden shifted to Boladian and Westbound “to demonstrate the merit of the claim by establishing a probability of success.” (Baral v. Schnitt, supra, 1 Cal.5th at p. 384.)
In opposing Clough’s anti-SLAPP motion, Boladian contended Clough had no basis for “the primary claim in the Complaint he drafted,” i.e., that Clinton never entered into a written agreement with Westbound regarding ownership of the Westbound Sound Recordings, and that an alleged oral agreement should be rescinded because Westbound never accounted to Clinton. Boladian argued there was no probable cause for that claim because the 1972 and 1975 agreements established Westbound’s rights in the Westbound Sound Recordings, and because there was “significant correspondence” in which Westbound furnished Clinton with royalty statements.
We conclude the existence of the 1972 and 1975 agreements, and the royalty statements, without more, is insufficient to establish Clough’s knowledge thereof. Clough did not draft the 1972 and 1975 agreements and Boladian did not present any competent evidence that Clough became aware of the existence of those agreements, or of the royalty statements, during his representation of Clinton. Boladian’s evidence in this regard consisted of the following:
Boladian’s opposing declaration asserted: “Although Clinton claims he and his counsel, including Thennisch and the Dobrusin law firm, had reasonable good faith grounds for bringing the 2011 Litigation, this claim simply is not true. Mr. Clinton and his counsel knew he signed agreements with Westbound in 1972 and 1975, which he claimed in the 2011 Litigation did not exist, and which made clear that Westbound is the owner of the Westbound Masters.” (Italics added.) This bare assertion as to the state of mind of Clinton and his various counsel was insufficient to support a prima facie showing with respect to Clough, because Boladian did not set forth any facts that would support a finding that Clough knew of the 1972 and 1975 agreements at the time he brought the underlying action.
Boladian’s declaration also stated that Clinton “and his counsel” knew of correspondence including royalty statements which had been supplied to Clinton. However, the attached correspondence, dating back to 1976 and 1977, was directed to Clinton and to various individuals other than Clough. This showing likewise was insufficient to support a conclusion that Clough was aware of the royalty statements.
Ultimately, the respondents’ brief on appeal invites speculation as to Clough’s state of mind. The brief argues, “through Clough’s representation of Clinton and Clinton’s other attorneys, Clough certainly should have been aware that the 1972/1975 Agreements existed and that documentation existed demonstrating that Boladian did properly account to Clinton.” (Italics added.) We disagree. The evidence showed Clough was Clinton’s local litigation counsel in California, not his transactional attorney, and Clough represented Clinton intermittently, beginning in 2002. The contracts and correspondence from the 1970’s were not a matter of public record, and Boladian did not show that Clough would have discovered these documents in the course of a reasonable investigation before filing suit. The assertion by Boladian and Westbound that Clough should have been aware of the 1972 and 1975 agreements and the correspondence dating back to 1976 and 1977 falls short of a prima facie showing of facts to sustain a favorable judgment if the evidence submitted by Boladian and Westbound were credited.
With respect to the issue of Clough’s lack of probable cause, Boladian’s opposing declaration also relied on a December 19, 2012 letter sent by Boladian’s counsel, Duvall, to Clough as well as to Rozansky at Stroock, which was in the process of substituting in for Clough. In that letter, Duvall asserted that Clinton’s allegations in the 2011 litigation with respect to Westbound Sound Recordings were meritless in light of the 1972 and 1975 agreements; copies of the agreements were attached to Duvall’s letter.
Boladian’s reliance on Duvall’s December 19, 2012 letter to show Clough’s lack of probable cause is misplaced for a number of reasons. Duvall did not send the letter until the day after Clough signed a substitution of attorney form to withdraw from the case. Further, Boladian did not show that the facts set forth in the December 19, 2012 letter were known to Clough when he filed suit in December 2011, a full year earlier. Also, Boladian did not show that he advised Clough of the relevant facts any earlier than December 19, 2012. Thus, Duvall’s December 19, 2012 letter has no bearing on whether Clough initiated and prosecuted the underlying action without probable cause.
On the issue of lack of probable cause, Boladian also contends Clough’s assertion that Boladian had no ownership in the musical compositions underlying the Warner Masters was a “knowingly false allegation.” Boladian bases this argument on the grounds that Clinton assigned such compositions to Bridgeport, and on the existence of a “widely known and publicly available judicial decision validating that assignment.” However, Boladian does not show that Clough was aware of such assignments by Clinton. As for the judicial decision cited by Boladian, it is merely a pretrial order from the district court in Florida in 2000, and Boladian did not show that Clough had knowledge thereof.
In sum, in opposing the anti-SLAPP motion, Boladian did not show that on the basis of the facts known to Clough, the institution of the prior action was not legally tenable. (Sheldon Appel, supra, 47 Cal.3d at p. 878.)
Rather than establishing that their claim had some merit, Boladian and Westbound’s opposition papers below emphasized alleged weaknesses in Clough’s moving papers. They argued, inter alia, “Clinton’s facts in support of probable cause in his Motion are sparse to virtually non-existent. His Declaration[, inter alia,] states only that he interviewed an unknown bankruptcy attorney and he did investigative work that found . . . three ‘dvds or cds’ that contained Mr. Clinton’s work.” (Italics added.) Similarly, in their respondents’ brief on appeal, Boladian and Westbound assert: “Clough is unable to point to any actual facts known to him at filing that support a finding of probable cause. Instead, Clough presents a short list of meetings and unspecified activities he claims contain a number of facts that led him to conclude a jury could have found in Clinton’s favor. . . . Clough’s facts in support of finding probable cause are nonexistent.” (Italics added.)
As we have noted, Clough had no burden in his moving papers below to establish probable cause – his only burden below was to demonstrate that the malicious prosecution claim arose from his protected activity. (Baral v. Schnitt, supra, 1 Cal.5th at p. 384.) Thereafter, the burden rested with Boladian and Westbound to demonstrate that Clough lacked probable cause, by making a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by them were credited. (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 820.)
Having determined that Boladian and Westbound failed to make a prima facie showing that Clough lacked probable cause to institute and prosecute the underlying action, it is unnecessary to address any of Clough’s remaining contentions on appeal.
DISPOSITION
The order denying Clough’s special motion to strike the malicious prosecution complaint filed by Boladian, Westbound and Bridgeport is reversed, and the matter is remanded with directions to enter a new order granting Clough’s motion in its entirety, and for further proceedings not inconsistent with this opinion. (§ 425.16, subd. (c)(1).) Clough shall recover his costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS




EDMON, P. J.


We concur:




LAVIN, J.




JOHNSON (MICHAEL), J.*