Jensen v. Charon Solutions
Filed 11/5/13 Jensen v. Charon Solutions CA2/2
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 This opinion has not been certified for
publication or ordered published for purposes of rule 8.1115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
TWO
PEACHES NONG JENSEN et al,
Plaintiffs and Appellants,
v.
CHARON SOLUTIONS, INC., et al.,
Defendants and Respondents.
B240651 (c/w B244155)
(Los Angeles
County
Super. Ct.
No. BC469884)
ORDER
MODIFYING OPINION
AND DENYING REHEARING
[CHANGE IN JUDGMENT]
CHARON SOLUTIONS, INC., et al,
Cross-complainants and Appellants,
v.
PEACHES NONG JENSEN et al.,
Cross-defendants and Respondents.
THE COURT:
It is ordered
that the opinion filed herein on October
10, 2013, be modified as
follows:
On page
three, fourth line, the following sentence should be deleted: “The trial court also properly declined to
award attorney fees for an attorney who was ‘of counsel’ to the firm he
represented.â€
On page nine, at the end of the
fifth line, the following sentence should be added after the word
“appealed.â€: “They later dismissed their
appeal in November 2012.â€
On page
ten, the paragraph under DISCUSSION
is modified to read as follows: “We
address the three challenged rulings:
The trial court’s granting the Attorneys’ motion to strike, granting in
part Charon’s and Segal’s motion to strike, and granting Peachtree’s and
Jensen’s motion to strike.â€
Part III, pages 27 through 30, should be deleted in its entirely, and
all subsequent footnotes should be renumbered to account for the deletion of
footnote 11.
On page 31,
part IV should now read: “III.â€
The
read as follows: “The orders granting
the Attorneys’ motion to strike, granting in part Charon’s and Segal’s motion
to strike, and granting Peachtree’s and Jensen’s motion to strike are affirmed. All parties to bear their own costs on appeal.
This modification changes the
judgment.
The petition for rehearing is
denied.
BOREN, P.
J. CHAVEZ, J. FERNS, J.*
* Judge of the Los Angeles Superior Court, assigned by the
Chief Justice pursuant to article VI, section 6 of the California Constitution.
Filed
10/10/13 Jensen v.
Charon Solutions CA2/2 (unmodified version)
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
TWO
PEACHES NONG JENSEN et al,
Plaintiffs and Appellants,
v.
CHARON SOLUTIONS, INC., et al.,
Defendants and Respondents.
B240651 (c/w B244155)
(Los Angeles
County
Super. Ct. No. BC469884)
CHARON SOLUTIONS, INC., et al,
Cross-complainants and Appellants,
v.
PEACHES NONG JENSEN et al.,
Cross-defendants and Respondents.
APPEALS
from orders of the Superior Court of Los Angeles County. Kevin C. Brazile, Judge. Affirmed.
Law Offices
of Yvonne M. Renfrew and Yvonne M. Renfrew for Plaintiffs and Appellants,
Cross-defendants and Respondents Peaches Nong Jensen and Peachtree Financial
Corporation.
Henry J.
Josefsberg for Defendants and Respondents, Cross-complainants and Appellants
Charon Solutions, Inc. and Perry L. Segal.
Nemecek & Cole, Jonathan B.
Cole, Mark Schaeffer and Michael W. Feenberg for Defendants and Respondents
Marcin Lambirth, LLP, John B. Marcin, Timothy Lambirth, Regina Ashkinadze, and
Graham A. Bentley; Nemecek & Cole and David B. Owen for Defendants and
Respondents Justin Shrenger and the Law Offices of Justin J. Shrenger.
Law Offices of Mark Murad and Mark
Murad for Cross-complainants and Appellants Marcin Lambirth, LLP, John B.
Marcin, Timothy Lambirth, Regina Ashkinadze, Graham Bentley and Defendant and
Respondent Lisa Miller.
* * * * * *
Following a
failed real estate transaction, Charon Solutions Inc. (Charon), owned by Perry
Leonard Segal (Segal), sued Peachtree Financial Corporation (Peachtree) and its
owner Peaches Nong Jensen (Jensen), who in turn cross-complained. After neither side prevailed, they sued each
other for malicious prosecution.
Peachtree and Jensen also sued a number of attorneys, including the Law
Offices of Justin J, Schrenger, Justin J. Schrenger, Marcin Lambirth LLP, John
B. Marcin, Timothy Lambirth, Regina Ashkinadze, Graham Bentley and Lisa Miller
(sometimes collectively Attorneys). In
turn, the Attorneys and Charon and Segal on the one hand, and Peachtree and
Jensen on the other, filed special motions to strike the malicious prosecution
complaints pursuant to Code of Civil Procedure section 425.16.
initially alleged by Charon, the trial court granted the motions to strike and
granted in part the Attorneys’ motions for attorney fee awards.
We
affirm. The trial court properly granted
the Attorneys’ and Charon’s and Segal’s motions to strike. Peachtree and Jensen failed to meet their
burden to demonstrate a probability of prevailing on essential elements of
their malicious prosecution cause of action.
Peachtree failed to establish it received a favorable termination,
Jensen failed to establish that Charon and Segal lacked probable cause to bring
and maintain the underlying action, and both parties failed to show that
Charon’s first attorney acted with malice.
The trial court also properly declined to award attorney fees for an
attorney who was “of counsel†to the firm he represented. Finally, the trial court properly granted
Peachtree’s and Jensen’s motion to strike, as Charon and Segal failed to meet
their burden to show Peachtree lacked probable cause to bring and maintain its
cross-complaint.
FACTUAL AND PROCEDURAL BACKGROUND
Parties and the Proposed Real Estate Venture.
Segal was
the 100 percent owner of Charon, while Jensen was the 100 percent owner of
Peachtree. In September 1999, Jensen
purchased real property located at 22393 Cass Avenue in Woodland Hills
(Cass property) from Scott Silver. As
early as 1999, she expressed to Segal an interest in splitting the Cass
property.
In January 2000, Charon and
Peachtree entered into an operating agreement for the management of P&P
Holdings, LLC (P&P Operating Agreement).
They were the only members of P&P Holdings (P&P) and each held a
50 percent interest. Neither Segal nor
Jensen were parties to the P&P Operating Agreement or held an interest in
P&P. The stated purpose of P&P
was to invest in real property. Segal
and Jensen verbally agreed their intent was to seek a lot split of the Cass
property for the purpose of transferring ownership of a portion of the lot to
P&P, having P&P develop the new lot with a luxury residence and selling
the residence for the benefit of P&P.
Jensen applied for a lot split in June 2002, and in 2003, the City of
Los Angeles tentatively approved the lot split, issuing a March 2004 decision
date.
In March
2004, Jensen discovered defects in the Cass property that Silver had not
disclosed. After she informed Segal of
the defects, he asked her not to initiate an action against Silver, as it might
jeopardize the lot split. Nonetheless,
initially unbeknownst to Segal, Jensen filed suit against Silver (Silver
action), and Silver cross-complained and recorded a lis pendens against the
Cass property. Silver’s claims were
bifurcated and tried in December 2005.
Also in
December 2005, pending final argument in the Silver action, Charon gave written
notice of its withdrawal from P&P (withdrawal letter). Charon, through Segal, wrote it had learned
Jensen intentionally failed to disclose material information and gave false
testimony in the Silver action. It
accused Jensen of failing to contribute to and obstructing P&P’s venture,
taking out a $200,000 line of credit on the Cass property resulting in a lien
being placed on it and secretly undertaking the Silver action contrary to
Segal’s advice. It asked for a meeting
with Jensen and counsel and sought the disclosure of specified documents,
advising that it would seek to intervene in the Silver action if it did not
receive suitable responses to its requests.
As a result of Jensen’s conduct, as well as her failure to acknowledge
P&P’s existence during her trial testimony, Charon gave notification of its
withdrawal, returned a number of P&P related items and demanded
reimbursement of its P&P investment.
The letter added: “Further, you
are advised that I will be seeking damages in the amount of $300,000 for lost
profits and estimated punitive damages in the amount of $1,200,000 (that figure
may rise as my investigation uncovers more information). Further, I reserve the right to refer the
case to the Department of Real Estate, but will refrain from doing so at this
time to give you an opportunity to cure.â€
Consistent
with the withdrawal letter, Charon, represented by Segal, moved to intervene in
the Silver action. The trial court
denied the motion, noting that Segal could not appear in propria persona on
behalf of a corporation. Thereafter, the
trial court issued a statement of decision in the Silver action, ruling in
favor of Jensen on Silver’s rescission claims.
In March
2006, Segal signed a notice of resignation, completing Charon’s 90-day notice
of withdrawal period from P&P.
Underlying Fraud Action.
In December
2008, Charon, represented by the Law Offices of Justin J. Shrenger and attorney
Justin Schrenger (sometimes collectively Schrenger), filed a complaint against
Peachtree, Jensen and her husband Carl Jensen (Carl) alleging causes of action
for fraud, breach of fiduciary duty, conversion, unjust enrichment and
declaratory relief (underlying fraud action).
Peachtree, Jensen and Carl demurred to the complaint. The trial court sustained the demurrer with
leave to amend as to Peachtree and Carl, overruled the demurrer as to Jensen on
the first through fourth causes of action, and sustained the demurrer without
leave to amend as to Jensen on the fifth and sixth causes of action.
Peachtree
and Jensen also filed a cross-complaint alleging breach of fiduciary duty,
negligence and fraud. After the trial
court sustained a demurrer without leave to amend the breach of fiduciary duty
cause of action against Segal and with leave to amend all other claims,
Peachtree and Jensen filed a first amended cross-complaint alleging claims for
breach of contract, negligence and declaratory relief against Charon and Segal,
breach of fiduciary duty against Charon and fraud against Segal. Thereafter, the trial court sustained a
demurrer without leave to amend as to all causes of action except breach of
contract against Charon and entered a partial judgment of dismissal as to
Segal.
In April 2009, now represented by
Marcin Lambirth LLP and attorney Timothy Lambirth, Charon filed a first amended
complaint against Carl and Jensen only, alleging causes of action for fraud,
breach of fiduciary duty and conversion.
Given that Peachtree had not been named in the first amended complaint,
the trial court entered a partial judgment of dismissal in favor of
Peachtree. Marcin Lambirth associates
including Regina Ashkinadze and Graham Bentley worked on the matter.
Lisa Miller assisted in preparing the matter for trial and acted as second
chair at trial.
Jensen and
Carl moved for summary judgment and alternatively for summary
adjudication. In a May 2010 order, the
trial court denied their motion for summary judgment, but granted summary
adjudication in favor of Carl. Also in
May 2010, Charon dismissed Carl from the underlying fraud action with
prejudice. The trial court denied a
subsequent motion for summary judgment, brought on the basis that the statute
of limitations barred Charon’s claims.
It likewise denied Charon’s motion for summary judgment on the
cross-complaint.
In September 2010, trial commenced
on the complaint’s and cross-complaint’s remaining claims in the underlying
fraud action. At the conclusion of
Charon’s case, the trial court denied Jensen’s motion for nonsuit. The jury rendered a special verdict in favor
of Jensen on Charon’s complaint and in favor of Charon on Jensen’s cross-complaint.
Peachtree’s and Jensen’s
Malicious Prosecution Complaint and Special Motions to Strike.
In
September 2011, Peachtree and Jensen filed a complaint for malicious
prosecution against Charon and Segal, and also against the Attorneys. They alleged the underlying fraud action had
been instituted without probable cause and with malice.
Attorneys’
special motion to strike.
The
Attorneys filed special motions to strike the malicious prosecution
complaint. In support of their motions,
they offered their own declarations and trial transcript excerpts, and sought
judicial notice of pleadings, motions and orders in the underlying fraud
action. Peachtree and Jensen opposed the
motions. The trial court denied their
ex parte application to file an oversized opposition brief. In support of their opposition, they filed a
“master list†to which they attached a number of documents, including
pleadings, orders, transcripts, deposition excerpts, correspondence and e-mails. Jensen also submitted an over 100-page
declaration and Carl an over 50-page declaration. They also filed evidentiary objections. Together with their replies, the Attorneys
objected to the length of Jensen’s opposition papers and filed evidentiary
objections.
The trial court heard the
Attorneys’ motions on January 18, 2012 and thereafter entered orders that fully
incorporated by reference its tentative ruling to grant the motions. Preliminarily addressing procedural matters,
the trial court acknowledged that Peachtree and Jensen filed opposition papers
that exceeded the page limits set by the court.
Though it identified Peachtree’s and Jensen’s failure to comply with the
California Rules of Court as an alternative basis for granting the motions, it
further indicated that because of the nature of the matter and the ultimate
disposition it would consider all opposition papers. With respect to evidentiary rulings, the
trial court’s order provided that its “ruling is set forth on page 8 of the
Court’s Final Ruling attached hereto.â€
Although the referenced page 8 is omitted from Peachtree’s and Jensen’s
appendix on appeal, their counsel acknowledged during the hearing “that Your
Honor has ruled on all evidentiary objections.â€
As part of its order, the trial court sustained all but one of the
Attorneys’ objections and overruled all of Peachtree’s and Jensen’s objections.
Addressing the merits of the
motions, the trial court ruled the Attorneys met their burden to show the cause
of action for malicious prosecution arose from protected activity. It further found that Peachtree could not
meet its burden to show a probability of success on the merits, as it filed its
claim more than one year after it was dismissed from the underlying fraud
action, and therefore its cause of action was barred by the one-year
limitations period contained in section 340.6.
As to Jensen, it ruled she could not demonstrate a probability of
success on the merits as the evidence showed neither a lack of probable cause
nor malice on the part of the Attorneys.
More specifically, the denial of her motion for nonsuit established that
the causes of action at trial were objectively tenable. With respect to the causes of action for
conversion, unjust enrichment and declaratory relief that were disposed of
before trial, Jensen failed to submit admissible evidence establishing the
Attorneys acted with malice.
strike.
Charon and
Segal likewise filed a special motion to strike, together with a demurrer. They sought judicial notice of pleadings,
motions, orders and transcripts in the underlying fraud action. Peachtree and Jensen opposed the motion,
arguing that Charon’s and Segal’s conduct was illegal as a matter of law and
therefore not protected, and that they established a probability of prevailing
on all elements of their malicious prosecution cause of action. Jensen and Carl submitted lengthy
declarations virtually identical to those submitted in opposition to the
Attorneys’ motions. Peachtree and Jensen
also filed evidentiary objections. In
turn, Charon and Segal replied and filed evidentiary objections to the
declarations.
On March
28, 2012, the trial court heard Charon’s and Segal’s motion to strike. It granted the motion as to Peachtree and
denied the motion in part as to Jensen.
It ruled Charon and Segal met their initial burden to show that the
conduct alleged arose from protected activity.
With respect to the second prong, the trial court concluded that
Peachtree could not establish a probability of prevailing because it failed to
establish that its dismissal from the action was a favorable termination. On the other hand, it ruled Jensen had met
her burden to show a probability of prevailing with respect to the causes of
action for unjust enrichment and declaratory relief that were eliminated from
the action via a demurrer sustained without leave to amend. The trial court determined that the denial of
Jensen’s motion for nonsuit demonstrated she could not establish a lack of
probable cause as to the remaining causes of action that went to trial.
At the
hearing, the trial court stated that written evidentiary rulings would be
forthcoming. The next day, the trial
court issued a separate order in which it sustained in part and overruled in
part Charon’s and Segal’s evidentiary objections to Carl’s declaration. Peachtree and Jensen appealed from the orders
granting the motions to strike.
Shrenger,
the Marcin Lambirth attorneys and Miller moved for an award of attorney fees
pursuant to section 425.16, subdivision (c)(1).
Peachtree and Jensen opposed the motion, arguing in part that fees were
not available because the Marcin Lambirth attorneys were represented by one of
their own employees. In support of their
opposition, they submitted evidence designed to show that counsel for the
Marcin Lambirth attorneys, Mark Murad (Murad), was associated with the
firm. The Marcin Lambirth attorneys and
Miller objected to Peachtree’s and Jensen’s evidence and argued that Murad was
a former associate, currently operating as an independent contractor and “of
counsel†to the firm. They offered
evidence designed to demonstrate that relationship.
The trial
court granted Shrenger’s and the Marcin Lambirth attorneys’ motions, and denied
Miller’s motion. With respect to Miller,
the trial court reasoned the evidence showed she and her attorney Murad were
both of counsel at Marcin Lambirth, and there was insufficient evidence to show
she incurred attorney fees in bringing the motion. The trial court reduced the amount of the
fees requested by the Marcin Lambirth attorneys, declining to award any amount
for work performed by Murad. The Marcin
Lambirth attorneys appealed.
Charon’s and Segal’s Malicious
Prosecution Cross-Complaint and Special Motion to Strike.
In May 2012,
Charon and Segal filed a cross-complaint alleging a single cause of action for
malicious prosecution on the basis of Peachtree’s and Jensen’s filing the
cross-complaint and first amended cross-complaint in the underlying fraud
action. In turn, Peachtree and Jensen
filed a special motion to strike. They
argued Charon and Segal could not establish a probability of prevailing
because, among other reasons, the denial of summary judgment demonstrated
probable cause and they relied on advice of counsel. In support of the motion, Jensen submitted
her own declaration and incorporated her prior declarations. She attached as exhibits certain pleadings in
the underlying fraud action. Charon and
Segal opposed the motion, asserting that Peachtree’s and Jensen’s arguments
were premised on their concealment of evidence and fraud. In support of their opposition, they
submitted Segal’s declaration, pleadings, motions, orders, deposition excerpts
and a number of documents relating to the Cass property. They also filed evidentiary objections to
Jensen’s declaration. Peachtree and
Jensen replied and filed evidentiary objections.
Following a
July 2012 hearing, the trial court granted the motion to strike. Again adopting its tentative ruling as its
final order, the trial court ruled Charon and Segal failed to meet their burden
to show a probability of prevailing on any claims. The trial court overruled the evidentiary
objections to Jensen’s declaration, and sustained in part and overruled in part
the objections to Segal’s declaration.
Charon and
Segal appealed. On our own motion, we
consolidated their appeal with those of Peachtree and Jensen and the Marcin
Lambirth attorneys.
We address the four challenged rulings: The trial court’s granting the Attorneys’
motion to strike, granting in part Charon’s and Segal’s motion to strike,
denying in part the Marcin Lambirth attorneys’ motion for attorney fees and
granting Peachtree’s and Jensen’s motion to strike.
I. Applicable Law
Governing Special Motions to Strike and Standards of Review.
A special motion to strike under section 425.16, also
known as the “anti-SLAPPâ€
name="_ftnref3" title="">[3] statute, allows a defendant
to seek early dismissal of a lawsuit involving a “cause of action against a
person arising from any act of that person in furtherance of the person’s right
of petition or free speech under the United States Constitution or the
California Constitution in connection with a public issue.†(§ 425.16, subd. (b)(1).)
defendant bringing a special motion to strike a complaint must make “a
threshold showing that the challenged cause of action is one arising from
protected activity†as defined in section 425.16, subdivision (b)(1). (Equilon
Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) “‘A defendant meets this burden by
demonstrating that the act underlying the plaintiff’s cause fits one of the
categories spelled out in section 425.16, subdivision (e)’ [citation].†(Navellier
v. Sletten (2002) 29 Cal.4th 82, 88.)
“‘If the defendant makes that showing, the burden shifts to
probability he or she will prevail on the claim at trial, i.e., to proffer a
prima facie showing of facts supporting a judgment in the plaintiff’s
favor.’ [Citation.]†(Roberts
v. Los Angeles County Bar Assn. (2003) 105 Cal.App.4th 604, 613; see also
Taxpayers Alliance (2002) 102 Cal.App.4th 449, 456 [the defendant bears the
burden on the threshold issue, while the plaintiff bears the burden on the
second issue].) “In assessing the
probability of prevailing, a court looks to the evidence that would be
presented at
a motion for summary judgment; a plaintiff cannot simply rely on its pleadings,
even if verified, but must adduce competent, admissible evidence. [Citations.]â€
(Roberts v. Los Angeles County Bar
Assn., supra, at pp. 613–614; accord, Hall
v. Time Warner, Inc. (2007) 153 Cal.App.4th 1337, 1346 [the plaintiff’s
showing “must consist of evidence that would be admissible at trialâ€];
1490, 1497–1498 [an averment on information and belief is insufficient to show
a probability of prevailing].) “The
court also considers the defendant’s opposing evidence, but only to determine if
it defeats the plaintiff’s showing as a matter of law. [Citation.]
That is, the court does not weigh the evidence or make credibility
determinations. [Citations.]†(Kashian
v. Harriman (2002) 98 Cal.App.4th 892, 906.)
review de novo the legal question of whether the special motion to strike was
properly granted, conducting an independent review of the record. (Flatley
v. Mauro (2006) 39 Cal.4th 299, 325 (Flatley);
Bleavins v. Demarest (2011) 196
Cal.App.4th 1533, 1539; Paiva v. Nichols (2008)
168 Cal.App.4th 1007, 1016.) In other
words, “our review is conducted in the same manner as the trial court in
considering an anti-SLAPP motion.†(
139 Cal.App.4th 659, 672.) We
of Santa Monica v. Stewart (2005) 126 Cal.App.4th 43, 80.)
We review
evidentiary rulings made in connection with a special motion to strike for an
abuse of discretion. (
Cal.App.4th at p. 1348, fn. 3; Morrow v.
Los Angeles Unified School Dist. (2007) 149 Cal.App.4th 1424, 1444.) “‘A trial court’s exercise of discretion
. . . will not be disturbed except on a showing the trial court
exercised its discretion in an arbitrary,
capricious, or patently absurd manner that resulted in a manifest miscarriage
of justice . . . .’
[Citations.]†(
Responsible Education v. San Lorenzo Valley Unified School Dist. (2006) 139
Cal.App.4th 1356, 1419.) But in
order to demonstrate an abuse of discretion, an appellant must affirmatively
challenge the evidentiary rulings on appeal.
In other words, the asserted erroneous evidentiary rulings must be
identified “as a distinct assignment of error†and be supported by analysis and
citation to authority. (
Cal.App.4th 1107, 1114.) When an
appellant fails to do so, “any issues concerning the correctness of the trial
court’s evidentiary rulings have been waived.
[Citations.]†(
1008, 1014–1015.)
II. The
Trial Court Properly Granted the Attorneys’ and Charon’s and Segal’s Special
Motions to Strike.
In separate orders after separate
hearings, the trial court first granted the Attorneys’ special motion to strike
and thereafter, with one exception, granted Charon’s and Segal’s special motion
to strike. Both motions addressed
Peachtree’s and Jensen’s complaint alleging a single cause of action for
malicious prosecution. And in both
orders, the trial court ruled that the moving parties demonstrated the cause of
action arose from protected activity and that Peachtree and Jensen failed to
demonstrate a probability of prevailing.
We find no error.
In their malicious
prosecution complaint, Peachtree and Jensen alleged that the underlying fraud
action was prosecuted without probable cause and with malice. As explained in Daniels v. Robbins (2010) 182 Cal.App.4th 204, 215: “The plain language of the anti-SLAPP statute dictates that
every claim of malicious prosecution is a cause of action arising from
protected activity because every such claim necessarily depends upon written
and oral statements in a prior judicial proceeding.†(Accord, Jarrow
Formulas, Inc. v. LaMarche, supra, 31 Cal.4th at pp. 734–735 [“by its
terms, section 425.16 potentially may apply to every malicious prosecution
action arises from an underlying lawsuit, or petition to the judicial branchâ€];
Plumley v. Mockett (2008) 164
Cal.App.4th 1031, 1047 [“malicious prosecution action arises from acts in
furtherance of defendants’ right of petition or free speechâ€].) We agree with the trial court that the
Attorneys and Charon and Segal satisfied their threshold burden to show the
complaint arose from protected activity, as the allegations related to the
filing of an action and their right to petition.
We reject Peachtree’s
and Jensen’s argument that their allegations concerning the withdrawal letter
established the moving parties had engaged in unlawful or criminal activity
that would not qualify as protected activity under section 425.16. In Flatley,
supra, 39 Cal.4th at page 305, the court held communications that amounted
to criminal extortion
were not protected activity under the anti-SLAPP statute. There, the defendant attorney sent a letter
to an entertainer threatening to publicly accuse him of rape unless he
“settled†by paying a sum of money to assure silence. (Id.
at pp. 308–309, 329.) Relying on Penal
Code section 518’s definition of extortion as “‘the obtaining of property
from another, with his consent . . . induced by a wrongful use
of force or fear,’†the Supreme Court deemed the
letter “criminal extortion
as a matter of law.†(
pp. 326, 330.) The Court held “that where a defendant brings a
motion to strike under section 425.16 based on a claim that the plaintiff’s
action arises from activity by the defendant in furtherance of the defendant’s
exercise of protected speech or petition rights, but either the defendant
concedes, or the evidence conclusively
petition activity was illegal as a matter of law, the defendant is precluded
from using the anti-SLAPP statute to strike the plaintiff’s action.†(Id.
at p. 320.)
Peachtree and Jensen maintain that
Charon’s statements in the withdrawal letter constituted extortion as a matter
of law. They alleged Charon and Segal
“threatened JENSEN that if she would not pay them a sum of money, then they
would seek to intervene in the Silver Action†and further alleged Charon and
Segal threatened Peachtree and Jensen “that if they did not ‘cure’ what they
alleged to be ‘damages’ sustained as the alleged result of acts by JENSEN in
connection with the Cass Property—by JENSEN or PEACHTREE paying to SEGAL and/or
CHARON SOLUTIONS a sum of money [i.e.,
$300,000]—that they would not only sue JENSEN and/or PEACHTREE for more than a
million dollars†and would also complain about Jensen’s unethical conduct “to
the Department of Real Estate.†In the withdrawal letter—which Peachtree and
Jensen offered as an exhibit in opposition to the motions to strike—Charon
asked for a settlement meeting and offered to pay for Peachtree’s counsel’s
time, and stated that it would seek to intervene in the event a meeting did not
take place or it did not receive suitable responses to its inquiries. After outlining the reasons for its
withdrawal from P&P and requesting reimbursement of its investment in
P&P—then valued at approximately $22,000—Charon wrote: “Further, you are advised that I will be
seeking damages in the amount of $300,000 for lost profits and estimated
punitive damages in the amount of $1,200,000 (that figure may rise as my
investigation uncovers more information).
Further, I reserve the right to refer the case to the Department of Real
Estate, but will refrain from doing so at this time to give you an opportunity
to cure.â€
Lest every
prelitigation settlement demand be deemed extortion, the Flatley Court cautioned that its “conclusion that Mauro’s
communications constituted criminal extortion as a matter of law are based on
the specific and extreme circumstances of this case. Extortion is the threat to accuse the victim
of a crime or ‘expose, or impute to him . . . any deformity,
disgrace or crime’ (Pen. Code, § 519) accompanied by a demand for payment to
prevent the accusation, exposure, or imputation from being made. Thus, our opinion should not be read to imply
that rude, aggressive, or even belligerent prelitigation negotiations, whether
verbal or written, that may include threats to file a lawsuit, report criminal
behavior to authorities or publicize allegations of wrongdoing, necessarily
constitute extortion.†(
fn. 16.) Accordingly, cases following
prelitigation threats similar to those made in the withdrawal letter are
protected activity. (See, e.g.,
160 Cal.App.4th 1467, 1481 [landlord’s prelitigation
threats to tenants, including demanding rent above lease amount, commencing
action after consultation with a federal judge and warning they would never be
able to rent another apartment in the area, deemed communications protected by
§ 425.16]; Rohde v. Wolf
(2007) 154 Cal.App.4th 28, 36–37 [attorney’s voicemail message
to client’s sister accusing her of conspiracy to defraud and threatening “to
take ‘appropriate action’†held protected activity made in anticipation of
litigation which the attorney “‘contemplated in good faith and under serious
consideration’â€].)
Here, the
Attorneys, Charon and Segal have not conceded, nor did any evidence
conclusively establish, that their protected activities constituted illegal
extortion. The withdrawal letter is
unlike the demand letter in Mendoza v.
Hamzeh (2013) 215 Cal.App.4th 799, 807, which the court held constituted
criminal extortion as a matter of law outside the protection of the anti-SLAPP
statute. In relevant part, the defendant
attorney’s demand letter in that case stated:
“‘As
you are aware, I have been retained to represent Media Print & Copy
(“Mediaâ€). 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].’†(
report criminal conduct to applicable enforcement agencies and others, coupled
with the demand for the payment of money, constituted extortion as a matter of
law. (Id. at p. 806.) Here, in
contrast, the withdrawal letter threatened to seek damages through litigation;
though Charon reserved the right to report Jensen’s conduct, it did not
threaten to report Jensen’s conduct unless she paid a sum of money.
In any event, even if we could
construe the withdrawal letter as being extortionate, the letter did not form
the basis for Peachtree’s and Jensen’s malicious prosecution complaint. Rather, the complaint was based on the filing
and prosecution of the complaint and first amended complaint in the underlying
fraud action. “In general, whether a cause
of action is subject to a motion to strike under the SLAPP statute turns on
whether the gravamen of the cause of action targets protected activity.†(Haight
Ashbury Free Clinics, Inc. v. Happening House Ventures (2010) 184
Cal.App.4th 1539, 1550.) “[W]here
the defendant shows that the gravamen of a cause of action is based on
nonincidental protected activity as well as nonprotected activity, it has
satisfied the first prong of the SLAPP analysis.†(Id. at
p. 1551, fn. 7; accord, M.F. Farming Co.
v. Couch Distributing Co., Inc. (2012) 207 Cal.App.4th 180, 197 [“Since the
protected activity is not merely incidental, the first prong is satisfied and
the burden shifts to plaintiff MF to show a probability of success on the
meritsâ€].) Because the underlying fraud action was far
more than incidental to Peachtree’s and Jensen’s malicious prosecution
complaint, we conclude the Attorneys, Charon and Segal met their burden to
establish the complaint arose from protected activity.
Once the moving
parties established that Peachtree’s and Jensen’s
malicious prosecution complaint arose out of activity protected by
“the plaintiff ‘must demonstrate that the complaint is both legally sufficient
and supported by a sufficient prima facie showing of facts to sustain a
favorable judgment if the evidence submitted by the plaintiff is
credited.’ [Citations.]†(Wilson
v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 821.)
In order to show a
probability of prevailing on their malicious prosecution claim, Peachtree and
Jensen were required to show the underlying fraud action was (1) initiated by
or at the direction of the party that is the defendant in the malicious
prosecution action, (2) legally terminated in favor of the party that is the
plaintiff in the malicious prosecution action, (3) initiated without probable
cause, and (4) initiated with malice. (
735, 740.) To defeat the special motions
to strike, Peachtree and Jensen were required to establish a probability of
success as to all elements of their claim.
(See
47 Cal.3d 863, 875; JSJ Limited
Partnership v. Mehrban (2012) 205 Cal.App.4th 1512, 1527;
Inc. (2007) 152 Cal.App.4th 1043, 1058.)
In other words, if the
party opposing a special motion to strike is unable to establish a probability
of prevailing on even one element, the trial court must grant the motion to
strike, as it did here.
1. Peachtree
failed to show it received a favorable termination on the merits.
Charon’s initial
complaint in the underlying fraud action alleged several causes of action
against both Peachtree and Jensen. They demurred to each cause of action on the
grounds Charon failed to plead facts sufficient to state a cause of action and
each cause of action was uncertain. The
trial court overruled the demurrer to the extent it argued the complaint was
barred by the statute of limitations and, without further specificity,
sustained the demurrer with leave to amend as to Peachtree. Charon’s first amended complaint did not name
Peachtree as a defendant. Consequently,
in January 2010, the trial court dismissed the complaint with prejudice as to
Peachtree and entered a partial judgment of dismissal in its favor. In connection with Charon’s and Segal’s special motion to strike, the trial court
ruled Peachtree failed to establish its dismissal from the underlying fraud
action constituted a favorable termination on the merits.
“In order for the
termination of a lawsuit to be considered favorable to the malicious
prosecution plaintiff, the termination must reflect the merits of the action
and the plaintiff’s innocence of the misconduct alleged in the lawsuit. . . . Where a proceeding is terminated other than on the merits,
the reasons underlying the termination must be examined to see if the
termination reflects the opinion of either the court or the prosecuting party
that the action would not succeed. [Citation.]†(Pender v. Radin (1994) 23 Cal.App.4th 1807, 1814.) “If the resolution of the underlying litigation ‘leaves some
doubt as to the defendant’s innocence or liability[, it] is not a
favorable termination, and bars that party from bringing a malicious
prosecution action against the underlying plaintiff.’ [Citation.]â€
(Eells v. Rosenblum (1995) 36
Cal.App.4th 1848, 1855.)
Though
Peachtree maintains that a voluntary dismissal is, without exception, a
favorable termination on the merits, the law is to the contrary.
satisfies the first element of a malicious prosecution claim, the court in
886, 893–894, explained: “‘A voluntary
dismissal may be an implicit concession that the dismissing party cannot
maintain the action and may constitute a decision on the merits. [Citations.]
“It is not enough, however, merely to show that the proceeding was
dismissed.†[Citation.] The reasons for the dismissal of the action
must be examined to determine whether the termination reflected on the
merits.’ [Citations.] A voluntary dismissal on technical grounds, such as lack of
jurisdiction, laches, the statute of limitations or prematurity, does not
constitute a favorable
not reflect on the substantive merits
of the underlying claim.
[Citations.]†(See also
Inc., supra, 152 Cal.App.4th at pp. 1056–1057 [voluntary dismissal to avoid
costly litigation not a favorable termination on the merits];
220 Cal.App.3d 337, 344 [voluntary dismissal to avoid cost and inconvenience of
second trial not a favorable termination on the merits].)
Here,
Peachtree did not meet its burden to show that its omission from the first
amended complaint reflected either the trial court’s, the Attorneys’ or
Charon’s decision the action would not be successful. The trial court sustained Peachtree’s
demurrer with leave to amend, thereby leaving open the possibility that
Charon’s claim could succeed. There was
no evidence—including in Jensen’s declaration submitted in opposition to
Charon’s and Segal’s special motion to strike—to show that the Attorneys or
Charon failed to include Peachtree in the first amended complaint because they
opined the claim would not succeed. We
agree with the trial court “[t]he evidence presented is insufficient to
determine that the claims against Peachtree Financial and the decision to
remove Plaintiff as a defendant in the underlying litigation were based on the
merits.†For this reason,
Peachtree’s reliance on Sycamore Ridge
Apartments LLC v. Naumann (2007) 157 Cal.App.4th 1385 is misplaced. There, the finding of favorable termination
was based on evidence reasonably suggesting the plaintiff’s dismissal occurred
because the claims lacked merit; the evidence included the plaintiff’s failure
to appear for two depositions and discovery responses indicating she sustained
no damage. (Id. at pp. 1400–1401.)
Because Peachtree failed to make such an evidentiary showing, it could
not demonstrate a probability of prevailing on one of the essential elements of
its malicious prosecution claim.
failed to show the Attorneys and Charon lacked probable cause to file and litigate
the first amended complaint.
With
respect to Jensen, we find dispositive the evidence showing probable cause to
initiate and prosecute the underlying fraud action. For that reason, we will address the element
of probable cause first and exclusively.
(See Antounian
v. Louis Vuitton Malletier (2010) 189
Cal.App.4th 438, 448 [resolving probable cause element first for purposes of
anti-SLAPP motion].) The central element of probable cause is “a legal question to
be resolved by the court.†(
Cal.App.4th at p. 1047.)
A
defendant is not liable for malicious prosecution if it had probable cause to
initiate and maintain the prior lawsuit.
This element requires the court to make an objective determination as to
the reasonableness of the defendant’s conduct to ascertain whether, on the
facts known to the defendant, institution of the prior action was objectively
legally tenable. (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 292;
47 Cal.3d 863, 878 (Sheldon Appel).) “A litigant will
lack probable cause for his action either if he relies upon facts which he has
no reasonable cause to believe to be true, or if he seeks recovery upon a legal
theory which is untenable under the facts known to him.†(Sangster
v. Paetkau (1998) 68 Cal.App.4th 151, 164–165.) “Only those actions that any reasonable
attorney would agree are totally and completely without merit may form the
basis for a malicious prosecution suit.â€
(Zamos v. Stroud (2004) 32
Cal.4th 958, 970.) Probable cause must
exist for every cause of action advanced in the underlying suit. (Crowley
v. Katleman (1994) 8 Cal.4th 666, 678–679.)
“If the court determines that there was probable cause to
institute the prior action, the malicious prosecution action fails, whether or
not there is evidence that the prior suit was maliciously motivated.†(Sheldon
Appel, supra, at p. 875.)
“Under established law, certain nonfinal rulings on the
merits may serve as the basis for concluding that there was probable cause for
prosecuting the underlying case on which a subsequent malicious prosecution
action is based. [Citation.]†(Paiva v. Nichols, supra, 168
Cal.App.4th at p. 1020.) Though the jury in
the underlying fraud action ultimately found in Jensen’s favor, multiple
interim rulings demonstrated that the Attorneys and Charon had probable cause
to bring and pursue the first amended complaint in that action. Initially, the trial court overruled Jensen’s
demurrer to the four causes of action first alleged in the original complaint
and subsequently re-alleged in the first amended complaint. (See Swat-Fame,
Inc. v. Goldstein (2002) 101 Cal.App.4th 613, 626 [“because the trial court overruled Swat–Fame’s demurrer to the fraud claim, the lawyers necessarily
had probable
fraudâ€], disapproved on another point in Zamos v. Stroud, supra, 32 Cal.4th at p. 973; see also Franklin Mint Co. v. Manatt, Phelps & Phillips, LLP (2010) 184
Cal.App.4th 313, 365 [applying Swat-Fame
to the denial of a motion to dismiss in federal court, and characterizing
consistent with the principle that ‘[c]laims that have succeeded at a hearing
on the merits . . . are not so lacking in potential merit that a
reasonable attorney or litigant would necessarily have recognized their
frivolousness’â€].)
Following the demurrer ruling, the trial
court denied Jensen’s motion for summary judgment. While the interim adverse judgment rule first
provided that a victory at trial reversed on
appeal sufficed to establish probable cause, the rule has been extended to
the denial of a defense motion for summary judgment. (Antounian
v. Louis Vuitton Malletier, supra 189 Cal.App.4th at p. 450.) Our Supreme Court in Wilson v. Parker,
Covert & Chidester, supra, 28
Cal.4th at page 824, elaborated: “Denial
of a defense summary judgment motion on grounds that a triable issue exists, or
of a nonsuit, while falling short of a determination of the merits, establishes
that the plaintiff has substantiated, or can substantiate, the elements of his
or her cause of action with evidence that, if believed, would justify a
favorable verdict . . . .
[A] claimant or attorney who is in possession of such evidence has the
right to bring the claim, even where it is very doubtful the claim will
ultimately prevail.†(Accord,
527, 550 [it is a “well-established rule of law applicable to a malicious
prosecution complaint that the denial of a summary judgment motion in the
underlying action establishes probable cause to file that lawsuitâ€];
76 Cal.App.4th 375, 384 [“denial of defendant’s summary judgment in an earlier
case normally establishes there was probable cause to sue, thus barring a later
malicious prosecution suitâ€].)
Finally, at the
conclusion of the evidence during the trial in the underlying fraud action, the
trial court denied Jensen’s motion for nonsuit. She argued there was insufficient evidence to
support any of the four causes of action alleged in the first amended
complaint, emphasizing the lack of evidence of damages. Charon opposed the motion, summarizing the
evidence supporting its claims. The
trial court ruled there was “sufficient evidence for the jury to decide these
issues.†This ruling established that
Charon had probable cause to bring the underlying fraud action, as the denial
of a motion for nonsuit “is tantamount
to a judicial declaration that, at a minimum, the . . . claims
were objectively tenable.†(
Court (1996) 42 Cal.App.4th 55, 69; see also Wilson v. Parker, Covert
& Chidester, supra, 28 Cal.4th at p. 824 [finding that denial of a
motion for nonsuit establishes the plaintiff can substantiate its claims with
sufficient evidence to support a favorable verdict].)
Jensen argues
that these interim rulings cannot support a finding of probable cause because
they were obtained by fraud or perjury.
(See Plumley v. Mockett, supra,
164 Cal.App.4th at p. 1053 [describing exception to interim adverse judgment
rule “where the underlying victory was obtained by fraud or perjuryâ€]; see also
Roberts v. Sentry Life Insurance, supra, 76
Cal.App.4th at p. 384 [“if denial of summary judgment was induced by materially
false facts submitted in opposition, equating denial with probable cause might
be wrongâ€].) The “fraud exceptionâ€
requires both “‘“knowing use of false and perjured testimonyâ€â€™â€ and a showing
that the interim ruling would not have been made “but for†the use of the false
evidence. (Antounian v. Louis Vuitton Malletier, supra, 189 Cal.App.4th at p.
452.)
Jensen
cannot raise the fraud exception against the Attorneys because she cannot
support her contention with any admissible evidence. Her election not to include the trial court’s
evidentiary rulings as part of her appendix does not change their effect. The trial court sustained all but one of the
Attorneys’ 15 evidentiary objections to her and Carl’s declarations, which
effectively struck the entire declarations from evidence. Notably, objection numbers five and six were
directed to Jensen’s “evidence†that the denial of summary judgment and nonsuit
involved false testimony. Because she
has denied their existence, Jensen has not challenged the evidentiary rulings
on appeal. Consequently, we deem any
issue concerning those rulings to have been waived and find the evidence was
properly excluded. (E.g.,
Cal.App.4th at pp. 1113–1115.) Absent
any evidence of Charon’s fraud in connection with the interim rulings, Jensen
cannot meet her burden to overcome the effect of those rulings demonstrating
probable cause.
The
same evidentiary rulings were not made in connection with Charon’s and Segal’s
special motion to strike. Nonetheless,
even if we consider Jensen’s evidence, we cannot conclude the fraud exception
applies. Her declaration outlines in
detail the supposed false testimony given by Segal at trial which formed the
basis of the denial of the motion for nonsuit.
Such testimony included Segal’s claim that Jensen concealed the
existence of the Silver action from him, concealed the existence of the lis
pendens recorded by Silver against the Cass property and concealed her
obtaining a line of credit against the Cass property. That testimony, however, was already
considered by the jury in the underlying fraud action. Though Jensen seeks to characterize Segal’s
testimony as false, the jury concluded otherwise, making the finding in its
special verdict that Jensen and Charon were in a special relationship of trust
or confidence and that Jensen “intentionally fail[ed] to disclose an important
fact that Charon Solutions, Inc. did not know and could not reasonably have
discovered.†We agree with the conclusion
in Plumley v. Mockett, supra, 164
Cal.App.4th at page 1056 “that
where claims of fraud or perjury are litigated and rejected by a fact finder in
an underlying case, those same claims cannot be relied on to establish the
absence of probable cause in a subsequent malicious prosecution suit. Stated differently, one cannot relitigate
adversely decided factual matters for purposes of establishing the fraud
exception to the interim adverse judgment rule.
at p. 1027 [alleged misrepresentations that were raised before the trial court
cannot be used to show the trial court’s ruling was fraudulently
induced].) Thus, the testimony cited by
Jensen cannot support application of the fraud exception. Moreover, Jensen’s failure to demonstrate
that Segal knowingly used false or perjured testimony constitutes an
independent basis why the fraud exception does not apply. (See Antounian
v. Louis Vuitton Malletier, supra, 189 Cal.App.4th at p. 452.) Accordingly, the interim rulings likewise
established probable cause for the purpose of Charon’s and Segal’s special
motion to strike.
We
find no merit to Jensen’s remaining challenge that Charon could not have had
probable cause to institute the underlying fraud action because it lacked
standing to bring claims for injuries suffered by P&P. The court in Iglesia Evangelica Latina, Inc. v. Southern Pacific Latin American
Dist. of the Assemblies of God (2009) 173 Cal.App.4th 420, 445, summarized
the relevant principles: “Standing is a threshold
issue, because without it no justiciable controversy exists. [Citation.]
‘Every action must be prosecuted in the name of the real party in
interest . . . .’
[Citation.] ‘Generally, “the
person possessing the right sued upon by reason of the substantive law is the
real party in interest.â€
[Citations.]’ [Citation.] To have standing, a party must be
beneficially interested in the controversy, and have ‘some special interest to
be served or some particular right to be preserved or protected.’ [Citation.]
This interest must be concrete and actual, and must not be conjectural
or hypothetical. [Citation.]†Lack of standing is a jurisdictional defect that mandates dismissal of an action, and it can
be raised for the first time at any stage in the action. (Cummings
v. Stanley (2009) 177 Cal.App.4th 493, 501.)
In view of the mandated remedy for
lack of standing, we need not address Jensen’s final challenge. Even
if we were to conclude that Charon lacked standing, such a finding would not
change our disposition, as it would negate the favorable termination element of
Jensen’s malicious prosecution claim.
(See Ludwig v. Superior Court (1995)
37 Cal.App.4th 8, 26, fn. 30 [“we question whether even a dismissal based on any lack of
standing or exhaustion of administrative remedies should be held to reflect on
the meritsâ€]; Minasian v.
Sapse (1978) 80 Cal.App.3d 823, 827 [“a dismissal . . . for lack of
jurisdiction . . . not only is not on the
merits, it is unreflective of the meritsâ€].)
In other words, if Jensen were able to show a lack of probable cause due
to Charon’s lack of standing, she would be unable to show the underlying fraud
action was favorably terminated on the merits.
She would be unable to demonstrate a probability of prevailing on one of
the critical elements of her malicious prosecution claim, and we would conclude
the special motion to strike was properly granted as to Charon and Segal.
and Jensen failed to show Schrenger acted with malice.
Because
a malicious
based on a single cause of action in a lawsuit involving multiple claims (see
p. 693), we discuss the remaining two causes of action that were alleged
in the original complaint but not the first amended complaint in the underlying
fraud action. The
trial court denied Charon’s and Segal’s motion to strike as to those two claims
on the basis that Jensen met her burden to establish a probability of
prevailing on all three malicious prosecution elements as to those parties. In connection with the Attorneys’ special
motion to strike, however, the trial court ruled Jensen failed to meet her
burden to establish the element of malice.
failure to offer admissible evidence showing malice supported the trial court’s
conclusion that they could not establish a probability of prevailing against
Shrenger on the unjust enrichment and declaratory relief claims alleged in the
original complaint.
The malice element
of malicious prosecution “
which the defendant acted in initiating the prior action. [Citation.]
The motive of the defendant must have been something other than that of
bringing a perceived guilty person to justice or the satisfaction in a civil
action of some personal or financial purpose.
[Citation.] The plaintiff must
plead and prove ac
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