Ottosi v. Berry et al.

Filed 10/5/06 Ottosi v. Berry et al. CA2/5

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 977.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 FIVE

APPEAL from a judgment of the Superior Court for the County of Los Angeles, Andria K. Richey, Judge. Affirmed.

Law Offices of Paul Ottosi, Paul Ottosi; De Simone & Huxter and Peter K. Huxter for Plaintiff and Appellant.

Stephan, Oringher, Richman, Theodora & Miller, P.C., Harry W.R. Chamberlain II, Lisa M. Barley for Defendants and Respondents Lloyd Dix, Julius Dix, Law Offices of Lloyd Douglas Dix, LLP; Contos & Bunch and John R. Contos, for Defendants and Respondents Richard and Jerryl Berry.

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Plaintiff and appellant Paul Ottosi (plaintiff) appeals from the trial court’s order granting a special motion to strike, pursuant to Code of Civil Procedure section 425.16[1] (anti-SLAPP motion), brought by defendants and respondents the Law Offices of Lloyd Douglas Dix, LLP (the Dix law firm) and Lloyd and Julius Dix (the Dix law firm and Lloyd and Julius Dix are referred to collectively as the Dix defendants) against plaintiff’s cause of action for malicious prosecution. Plaintiff argues that the trial court lacked jurisdiction to rule on the anti-SLAPP motion because the motion was untimely; that the trial court abused its discretion by allowing Robert and Jerryl Berry (the Berrys) [2] to join in the anti-SLAPP motion; that plaintiff made the submission necessary for showing a reasonable probability of prevailing on his malicious prosecution claim; and that certain of the trial court’s evidentiary rulings were incorrect.

We hold as follows: The anti-SLAPP motion was timely. That the hearing on the anti-SLAPP motion did not occur until more than 30 days after service did not deprive the trial court of jurisdiction to rule on the motion. (San Ramon Valley Fire Protection Dist. v. Contra Costa County Employees’ Retirement Assn. (2004) 125 Cal.App.4th 343, 351.) Defendants met their burden of establishing that plaintiff’s malicious prosecution action arises from a protected activity under section 425.16, in this case, defendants’ right to file a cross-complaint in an underlying action brought by plaintiff against defendants to recover attorney fees. Because defendants met their threshold burden of establishing that their cross-action against plaintiff arose from activity protected under the anti-SLAPP statute, the burden shifted to plaintiff to demonstrate a probability of prevailing on his malicious prosecution claim. Plaintiff did not meet this burden. As a matter of law, plaintiff cannot establish an essential element of his malicious prosecution action -- termination of the underlying fee dispute action in his favor. That action terminated as the result of a negotiated settlement, as evidenced by a signed stipulation between the parties. (Ferreira v. Gray, Cary, Ware & Freidenrich (2001) 87 Cal.App.4th 409, 413.) That the stipulation took place after the judgment does not matter for this purpose. The trial court did not abuse its discretion by allowing the Berrys to join in the anti-SLAPP motion. We therefore affirm the trial court’s order granting defendants’ special motion to strike under section 425.16.

BACKGROUND

Plaintiff brought this action for malicious prosecution against his former clients, the Berrys, and the Berrys’ attorneys, the Dix defendants. Plaintiff had initially represented the Berrys in a personal injury action, but subsequently was replaced by the Dix defendants as the Berrys’ attorneys of record. The Dix defendants settled the personal injury action on the Berrys’ behalf, and on October 15, 2001, received a $250,000 settlement check payable to the Berrys, plaintiff, and the Dix law firm. A dispute arose between plaintiff and the Dix defendants over the allocation of the attorney fees. The Dix defendants offered plaintiff $10,000. There was also a dispute between plaintiff and the Berrys regarding the payment of attorney fees and the amount owed to plaintiff. Plaintiff demanded $120,000, or 40% of the settlement proceeds, whereas the Berrys maintained they had agreed to only 28%.

On October 22, 2001, plaintiff filed a complaint against defendants alleging four causes of action -- imposition of constructive trust, accounting, declaratory relief, and common count (the Fee Dispute Action). Accompanying the complaint was a demand to arbitrate the fee dispute. On November 26, 2001, defendants filed a cross-complaint against plaintiff, alleging causes of action for breach of fiduciary duty, breach of contract, breach of the implied covenant of good faith and fair dealing, interference with prospective business advantage, tort in essence, accounting, and declaratory relief. Plaintiff filed a motion to strike, along with a demurrer, which the trial court granted with leave to amend, and defendants filed a first amended cross-complaint alleging the same causes of action as in the original cross-complaint. The matter proceeded to a court trial. At the conclusion of the case, plaintiff made a motion for non-suit on the cross-complaint, which the court denied. On April 27, 2004, the court issued a 51 page statement of decision that apportioned the fee award between plaintiff and the Dix law firm. Plaintiff received $79,874, and the Dix law firm received $24,290. With regard to defendants’ cross-complaint, the court found that there was insufficient evidence to establish as a matter of law that plaintiff breached the retainer agreement, the implied covenant of good faith and fair dealing, or any fiduciary duty owed to the Berrys. The court also found that there was insufficient evidence to establish that defendants were entitled to recover on their causes of action for interference with prospective business advantage or for tort in essence. After judgment was entered on May 3, 2004, the Dix defendants filed a motion for a new trial, or in the alternative, for modification of the judgment, on various grounds, including that judgment should not have been entered against the Berrys and Julius and Lloyd Dix personally, but against the Dix law firm only. In August 2004, all the parties entered into a stipulation and order for modification of judgment, in which the parties stipulated that the judgment be modified to be against the Dix law firm only, and not against any other defendant, contingent upon the defendants’ agreeing to withdraw any pending motions, and to refrain from filing any additional post-trial motions, including a motion to tax costs. The parties further acknowledged that the judgment had been satisfied by the payment of $101,500.

On October 4, 2004, plaintiff filed this action against defendants for malicious prosecution, abuse of process and tort of another. The Dix defendants filed a special motion to strike under section 425.16, a demurrer, and a motion to strike claims for punitive damages and attorney fees. The Berrys joined in those motions. Plaintiff objected to the Berrys’ joinder and filed an ex parte application challenging the timeliness of the Berrys’ joinder and moving to strike their joinder in the anti-SLAPP motion. The Berrys opposed the motion and filed their own motion for leave of court to join in the Dix defendants’ motion. The trial court denied plaintiff’s ex parte application and granted the Berrys’ joinder.

Plaintiff argued that defendants’ anti-SLAPP motion was untimely in that the hearing date for the motion had been set for more than thirty days after service of the motion. The trial court took judicial notice that based on the court’s calendar conditions, the motion had been set for the earliest available date and was thus timely. After hearing argument from the parties, the trial court took the matter under submission. By minute order dated April 7, 2005, the trial court granted defendants’ motion, concluding that the claims asserted in defendants’ cross-complaint were “based on conduct in furtherance of the right to free speech and petition” and that plaintiff had failed to establish a reasonable probability of success in his malicious prosecution action. The trial court awarded the Dix defendants $22,984.90 and the Berrys $5,375.10 in statutory attorney fees and costs as prevailing parties under section 425.16, subdivision (c). Plaintiff filed this appeal.

DISCUSSION

A. Applicable Law and Standard of Review

Section 425.16 provides in relevant part: “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 or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.” (Code Civ. Proc., § 425.16, subd. (b)(1).) Determining whether the statute bars a given cause of action requires a two-step analysis. (Navellier v. Sletten (2002) 29 Cal.4th 82, 88 (Navellier).) First, the court must decide whether the party moving to strike a cause of action has made a threshold showing that the cause of action “aris[es] from [an] act . . . in furtherance of the [moving party’s] right of petition or free speech.” (§ 425.16, subd. (b)(1); Navellier, supra, 29 Cal.4th at p. 88.) If the court finds that such a showing has been made, the burden then shifts to the plaintiff to demonstrate a “probability that the plaintiff will prevail on the claim.” (§ 425.16, subd. (b)(1); Navellier, supra, 29 Cal.4th at p. 88.) In order to demonstrate a probability of prevailing, a party opposing a special motion to strike under section 425.16 “‘”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.”’ [Citation.]” (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 741.) We review de novo a trial court’s order granting a special motion to strike under section 425.16. (ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 999.)

B. Timeliness of Motion

Citing Decker v. U.D. Registry, Inc. (2003) 105 Cal.App.4th 1382 and Fair Political Practices Com. v. American Civil Rights Coalition, Inc. (2004) 121 Cal.App.4th 1171, plaintiff argues that defendants failed to comply with the filing and service requirements prescribed by section 425.16, subdivision (f), and that such failure deprived the trial court of jurisdiction to rule on defendants’ anti-SLAPP motion. Section 425.16, subdivision (f) states that an anti-SLAPP motion “may be filed within 60 days of the service of the complaint or, in the court’s discretion, at any later time upon terms it deems proper. The motion shall be scheduled by the clerk of the court for a hearing not more than 30 days after the service of the motion unless the docket conditions of the court require a later hearing.”

Defendants’ anti-SLAPP motion was timely filed. Plaintiff states that service of the complaint was completed on December 19, 2004. [3] Defendants’ anti-SLAPP motion was filed and served on January 14, 2005, within the 60-day time period prescribed by the statute. The hearing on the motion was also timely held. Although the hearing occurred on March 7, 2005, more than 30 days after service of defendants’ motion, defendants’ counsel submitted a declaration stating that she had telephoned the court clerk, who advised her that March 7, 2005 was the earliest available date for a hearing, and the trial court specifically found that the court’s calendar conditions precluded an earlier hearing date. Thus, under the statute, the hearing was timely. (Barak v. The Quisenberry Law Firm (2006) 135 Cal.App.4th 654, 659.)

In our view, the timing of a hearing on anti-SLAPP motion is not a jurisdictional matter, but a procedural matter determined by the docket conditions of the trial court and therefore best left to the discretion of the trial court. (See San Ramon Valley Fire Protection Dist. v. Contra Costa County Employees’ Retirement Assn., supra, 125 CalApp.4th at p. 351 [applicability of 30-day time limit in section 425.16 not jurisdictional, but a procedural issue].) We therefore do not follow Decker v. U.D. Registry, Inc., supra, 105 Cal.App.4th 1382 and Fair Political Practices Com. v. American Civil Rights Coalition, Inc., supra, 121 Cal.App.4th 1171.[4] Defendants complied with the filing and service requirements of section 425.16, subdivision (f), and the trial court did not lack jurisdiction to rule on defendants’ motion.

C. Defendants’ Cross-Complaint Satisfies the “Arising From” Prong of the Anti-SLAPP Statute

Plaintiff does not dispute that defendants’ cross-complaint falls within the ambit of 425.16, subdivision (b)(1) as a cause of action against a person arising from any act . . . in furtherance of the right of petition by establishing that the causes of action asserted in their cross-complaint “aris[es] from an[] act . . . in furtherance of the person’s right of petition . . .” (§ 425.16, subd. (b)(1).) Plaintiff’s malicious prosecution action alleges that defendants committed a tort by filing a cross-complaint in the Fee Dispute Action. Defendants’ claims arise from conduct that is protected under section 425.16. (Jarrow Formulas, Inc. v. LaMarche, supra, 31 Cal.4th at p. 735; see also Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260.)

D. Plaintiff Failed to Establish a Reasonable Probability of Prevailing

Because the trial court correctly determined that plaintiff’s claims arise from conduct that is protected under section 425.16, we must now determine whether plaintiff met his burden of having “demonstrated a probability of prevailing on the claim[s].” (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) To satisfy this burden, “the plaintiff must ‘state[ ] and substantiate[ ] a legally sufficient claim.’ [Citation.] ‘Put another way, 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.”’ [Citation.]” (Jarrow Formulas, Inc. v. LaMarche, supra, 31 Cal.4th at p. 741.) “Section 425.16 therefore establishes a procedure where the trial court evaluates the merits of the lawsuit using a summary-judgment-like procedure at an early stage of the litigation.” (Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 192.)

“In order to maintain an action for malicious prosecution, the plaintiff must first demonstrate that there was a favorable termination of the underlying litigation. [Citation.] This requirement is an essential element of the tort of malicious prosecution, and it is strictly enforced. [Citation.] Where the underlying litigation ends by way of a negotiated settlement, there is no favorable termination for the purposes of pursuing a malicious prosecution action.” (Ferreira v. Gray, Cary, Ware & Freidenrich, supra, 87 Cal.App.4th at pp. 412-413.)[5]

Citing the April 27, 2004 statement of decision issued by the court in the Fee Dispute Action and the judgment entered on May 3, 2004, plaintiff claims he established that the Fee Dispute Action was terminated on the merits in his favor. Defendants dispute this claim and maintain that the parties entered into a stipulated settlement after the judgment was entered.

Included in the record on appeal is a document dated as of August 20, 2004 entitled stipulation and order for modification of judgment entered May 3, 2004. That document bears plaintiff’s signature, as well as the signature of the defendants, although it is not signed by the superior court judge who entered the May 3, 2004 judgment, nor does it appear to have been filed with the superior court. The document states that contingent upon the defendants’ withdrawal of any pending motions and refraining from filing any additional post-judgment motion, the judgment entered on May 3, 2004 shall be modified to reflect that the judgment is against only the Dix law firm and not against any other defendant. The document also states the parties’ acknowledgment that the judgment was satisfied by the payment of $101,500.

The parties’ signed stipulation is evidence that the Fee Dispute Action terminated as the result of a negotiated settlement. “This termination of the litigation did not reflect the merits of the underlying action, but rather, the compromise between the parties, and therefore, as a matter of law, there was not a favorable termination for purposes of a malicious prosecution action.” (Ferreira v. Gray, Cary, Ware & Freidenrich, supra, 87 Cal.App.4th at p. 413.) “The fact that a settlement occurs after trial as opposed to earlier in the proceeding does not change the essential fact that the litigation terminated as the result of the parties’ agreement and not based on the merits of the action.” (Ibid.)

That the stipulation was never filed with the superior court, or an order never entered pursuant to the stipulation formally modifying the judgment does not alter the result. Parties may agree to terminate or settle a lawsuit without a court’s intervention. Also of no consequence is the fact that the Dix defendants and the Berrys signed the stipulation in December 2004, after plaintiff commenced this action. The agreement itself is dated as of August 20, 2004. The agreement was never revoked before being fully signed; and it was performed, in that the sum was paid and no motions or appeals by any of the defendants were filed or heard. Moreover, “[e]ven if not enforceable under [Code of Civil Procedure § 664.6] settlements signed by counsel alone may be enforceable in separate proceedings: e.g., by motion for summary judgment (after amending the pleadings to allege settlement defense); or in a separate suit in equity.” (Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2006) ¶ 12:958, p.12(11)-105; see Levy v. Superior Court (1995)10 Cal.4th 578, 586, fn. 5; Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 306.) And it was enforceable as against plaintiff, who did sign it. Here, all of the parties to the Fee Dispute Action signed the stipulation, which terminated that action.

Plaintiff argues that the stipulation was contingent upon defendants’ withdrawal of a pending post-judgment motion to tax costs, and that defendants’ failure to withdraw that motion voided the settlement. Plaintiff does not dispute, however, that the motion to tax costs, while not formally withdrawn, was never pursued by defendants. Nor does plaintiff dispute that he received the benefit of the parties’ negotiated settlement -- payment of $101,500, substantially more than the $79,000 awarded pursuant to the May 3, 2004 judgment. In light of that negotiated settlement, as a matter of law, there was no favorable termination of the Fee Dispute Action in plaintiff’s favor. (Ibid.) Plaintiff cannot satisfy an essential element of his malicious prosecution cause of action and accordingly cannot demonstrate a reasonable probability of prevailing on this claim. (Jarrow Formulas, Inc. v. LaMarche, supra, 31 Cal.4th at p. 741.) Defendants’ anti-SLAPP motion was properly granted on that basis. We therefore need not address plaintiff’s objections to the trial court’s evidentiary rulings (which do not relate to the

parties’ stipulation or settlement)[6] or plaintiff’s inability to satisfy the remaining elements of his malicious prosecution cause of action.[7]

E. The Berrys’ Joinder

Plaintiff contends the trial court abused its discretion by allowing the Berrys to join in the anti-SLAPP motion filed by the Dix defendants. The Berrys’ joinder was supported by the declarations of both Robert and Jerryl Berry stating why a ruling on the anti-SLAPP motion filed by the Dix defendants would be equally applicable to them. The Berrys were defendants in plaintiff’s malicious prosecution action, were parties in the Fee Dispute Action, and were clients of both plaintiff and the Dix defendants. The trial court did not abuse its discretion in granting the Berrys’ joinder in the anti-SLAPP motion. (Barak v. The Quisenberry Law Firm, supra, 135 Cal.App.4th at p. 661.)

DISPOSITION

The judgment is affirmed. Defendants are awarded their costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.

MOSK, J.

We concur.

ARMSTRONG, Acting P. J. KRIEGLER, J.

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[1] All further statutory references are to the Code of Civil Procedure, unless otherwise stated.

[2] The Berrys and the Dix defendants are collectively referred to as defendants.

[3] Plaintiff’s proof of service, however, indicates that defendants were personally served on November 4, 2004.

[4] In October 2005, the Legislature amended section 425.16, subdivision (f) by enacting Assembly Bill 1158, which states in relevant part: “It is the intent of the Legislature, in amending subdivision (f) of Section 425.16 of the Code of Civil Procedure, to overrule the decisions in Decker v. U.D. Registry, Inc. (2003) 105 Cal.App.4th 1382, 1387-1390, and Fair Political Practices Com. v. American Civil Rights Coalition, Inc. (2004) 121 Cal.App.4th 1171, 1174-1178.” (Assem. Bill No. 1158 (2005-2006 Reg. Sess.) October 5, 2005.) That amendment took effect after the events in issue in this case.

[5] In addition to demonstrating a favorable termination of the underlying lawsuit, a plaintiff asserting a malicious prosecution cause of action must also establish the following two elements: the defendants lacked probable cause in bringing their claims against the plaintiff; and the defendants initiated their action or cross-action with actual malice. (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 871.)

[6] Plaintiff contends the trial court abused its discretion by sustaining defendants’ objection, based on lack of foundation, to the following statement in his declaration in support of his opposition to the anti-SLAPP motion: “Defendants, however, noticed no depositions and served Plaintiff with only 11 special interrogatories, 10 requests for production of documents and one set of form interrogatories.” The statement, while possibly relevant to other elements of plaintiff’s malicious prosecution action--defendant’s malice or lack of probable cause in bringing their cross-action against plaintiff--is not relevant to the essential element of termination of the Fee Dispute Action in plaintiff’s favor.

[7] We deny plaintiff’s request that we take judicial notice of various documents, most of which are from the superior court file in the underlying Fee Dispute Action and are already part of the record on appeal.