McMullen v. Haycock

Filed 8/16/06 McMullen v. Haycock CA2/4

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 977(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 977(b). This opinion has not been certified for publication or ordered published for purposes of rule 977.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

APPEAL from a judgment of the Superior Court of Los Angeles County, Gerald Rosenberg, Judge. Affirmed.

Don H. Haycock, in pro. per., for Defendant and Appellant.

Timothy G. Dallinger for Plaintiff and Respondent.

In this malicious prosecution action, we reject the defendant's contentions of error, including that the complaint was time-barred and that the trial court committed instructional error, and affirm the judgment for the plaintiff.

BACKGROUND

Plaintiff and respondent Hugh S. McMullen owned and occupied a condominium in the Doverwood Townhomes in Culver City since 1978. In 1998, McMullen suffered a debilitating stroke that required a month-long stay in a rehabilitation facility and six or seven months of outpatient physical therapy. McMullen, an attorney, could not work for about one year after the stroke and, during that period, did not pay approximately $4,700 in assessments to the Doverwood Townhomes Owners Association (the Association). Although McMullen attempted to negotiate a payment plan, the Association demanded payment in full and in September 1999, scheduled a trustee's sale of his condominium.

McMullen retained a foreclosure consultant who advised him to delay the trustee's sale by quitclaiming a fractional interest in his condominium to a party in bankruptcy who would be identified, for a fee, by the consultant. Hoping to delay the sale long enough to cure his indebtedness, McMullen recorded a deed granting a 1/100th percent interest in his condominium to an unknown party in bankruptcy named Roberto Avila. After the trustee postponed the foreclosure sale, the consultant selected another unknown party in bankruptcy, Spencer Enterprises, in whose favor McMullen recorded a deed granting a one‑eighth interest in his condominium. The trustee again postponed the foreclosure sale, but McMullen was unable to pay the entire debt before the sale was held on January 18, 2000.

The trustee sold the property for $22,700, of which $13,759.97 was applied to extinguish McMullen's indebtedness to the Association, consisting of the unpaid assessments, interest, attorney fees, and costs. Although McMullen had recorded the two deeds, the title insurer issued a guarantee that prior to the trustee's sale, McMullen was the sole titleholder to the property. The trustee refused, however, to disburse the surplus funds to McMullen and deposited the funds with the superior court in an interpleader action. (Civ. Code, § 2924j.)

A. The Underlying Action Against McMullen

Defendant and appellant Don Haycock, who represented the trustee in the interpleader action, also represented the Association in the underlying action against McMullen. (Doverwood Townhomes Owners Assn. v. McMullen (Super. Ct. L.A. County, 2001, No. SC064332.) Haycock filed the Association's complaint in the underlying action against McMullen on November 8, 1999, seeking to recover as breach of contract damages the homeowner association fees, interest, attorney fees, and costs that were paid in full, on or about the date that the complaint was served, from the proceeds of the private trustee's sale on January 18, 2000. The complaint also alleged a claim for fraudulent transfer of real property, based on the theory that McMullen, in order to delay the trustee's sale, had fraudulently conveyed a 1/10th interest in the condominium to a party in bankruptcy named Francisco Gomez. In his declaration that was attached as an exhibit to the complaint, however, Gomez rejected the quitclaim deed and denied any knowledge of the matter.[1] The complaint also sought to invalidate the quitclaim deed to Gomez as fraudulent and to quiet title to the condominium in McMullen, who no longer held title after the January 18, 2000 sale.

Despite the fact that McMullen's debt to the Association was fully paid as a result of the January 18, 2000 trustee's sale, Haycock continued to prosecute the underlying action for one year and propounded discovery requests concerning McMullen's allegedly fraudulent transfers and related matters that were rendered moot by the sale of the condominium. On December 15, 2000, the trial court granted McMullen $1,875 in discovery sanctions against the Association and Haycock.

On January 12, 2001, the Association voluntarily dismissed the underlying action against McMullen with prejudice. On March 15, 2001, the trial court awarded McMullen $44,185.33 in attorney fees under Civil Code section 1354, which permits the award of attorney fees to the prevailing party in actions to enforce covenants and restrictions in condominium and other community development projects. The trial court also ordered that the interpleaded funds be released to McMullen.

On April 18, 2001, the Association appealed from: (1) its own voluntary dismissal of the underlying action under section 473; (2) the March 15, 2001 order for attorney fees and costs; and (3) the December 15, 2000 order for discovery sanctions. On July 31, 2002, Division Two of this District: (1) affirmed the March 15, 2001 order for attorney fees and costs; (2) concluded that the appeal from the voluntary dismissal was abandoned by the Association's failure to assert any cognizable legal argument; and (3) determined that the sanction order was not subject to appellate review after the Association's voluntary dismissal of the action. (Doverwood Townhome Owners Assn. v. McMullen (July 31, 2002, B149685) [nonpub. opn.].)

In the prior appellate opinion, Division Two quoted with approval the trial court's following reasons for determining that McMullen had prevailed in the underlying action: Although the Association recovered the entire amount of McMullen's indebtedness, it did so through the private trustee's sale that was completed by the time the complaint was served. Thereafter, the Association had no further claims against McMullen because there were no uncompensated damages. Nevertheless, Haycock continued the litigation for one year in order to ferret out information unrelated to the underlying action, such as the identity of the person who had threatened the trustee with litigation and to determine whether third persons might have a claim to the surplus funds that were deposited with the court in the interpleader action.

B. The Present Action for Malicious Prosecution

On September 15, 2003, McMullen filed the present malicious prosecution action against Haycock and the Association, which is no longer a party. McMullen alleged that: (1) Haycock had continued to prosecute the underlying complaint after it was rendered moot by the trustee's sale on January 18, 2000; (2) the underlying action had ended in McMullen's favor when the Association voluntarily dismissed the complaint with prejudice; (3) both the trial court and the appellate court had determined that McMullen was the prevailing party in the underlying action; and (4) Haycock had initiated and prosecuted the underlying action with malice. McMullen sought damages for emotional distress, lost wages, compensatory damages, punitive damages, attorney fees, and costs.

McMullen testified at trial that he was surprised by the breach of contract claim because, after the trustee's sale of his condominium, his debt had been paid in full. Similarly, McMullen was puzzled by the underlying quiet title claim because, after the trustee's sale, he no longer held title to the condominium. As for the underlying fraudulent transfer claim, McMullen was shocked because, until he was served with the complaint, he had no knowledge of the Gomez deed, which he did not sign, record, or deliver to Gomez.

McMullen testified that Haycock had maliciously attacked his character and professional reputation by falsely accusing him of feigning his stroke, violating his ethical obligations as an attorney, violating the law, filing fraudulent bankruptcy petitions, making false claims, engaging in criminal fraud, committing perjury, and conspiring to commit fraud. McMullen testified that as a result of Haycock's malicious conduct, he suffered emotional and physical distress from the injury to his personal and professional reputation and because of Haycock's references to reports to various authorities, including the State Bar. McMullen testified that he was embarrassed, upset, mortified, and depressed by the false accusations. He was so depressed by the false accusations that he was unable to seek employment. His blood pressure rose, he became agitated, he felt helpless, and was at wit's end.

The jury returned a verdict for McMullen and awarded him economic damages of $150,415.44 and noneconomic damages of $250,000. Based on its finding by clear and convincing evidence that Haycock had acted with malice, oppression, or fraud, the jury awarded McMullen punitive damages of $150,000. The trial court entered judgment for McMullen (after subtracting the amount of the settlement with the Association) for $515,415.44 plus interest and costs.

DISCUSSION

I

Statute of Limitations

Haycock contends that the malicious prosecution complaint, which was filed on September 15, 2003, is barred by the statute of limitations. We disagree.

We shall assume, as Haycock contends, that McMullen's malicious prosecution claim accrued on January 12, 2001, when the Association voluntarily dismissed the underlying action with prejudice. At that time, the statute of limitations for malicious prosecution was codified in former section 340, subdivision (3)[2] (Stats. 1905, ch. 258, § 2, p. 232), which imposed a one-year limitations period â€