Medley Capital Corp. v. Sec. Nat'l Guaranty, Inc.
17 Cal. App. 5th 33
Cal. Ct. App. 5th2017Background
- MCC was sued for malicious prosecution by SNG and Ghandour after MCC’s cross-claims against Fourth Third settled; MCC claimed SNG's cross-claim against MCC was improper and fraudulent; SNG and Ghandour voluntarily dismissed the MCC cross-claim, with no merits ruling on dismissal; MCC then sued for malicious prosecution in 2015; anti-SLAPP motion to strike was denied at trial; appellate review was de novo for step two.
- The underlying dispute centers on a loan to SNG from Fourth Third LLC, with MCC allegedly servicing or holding a role; SNG alleged a discounted payoff (DPO) agreement involving MCC, Fourth Third, and Ghandour; MCC denied involvement and any DPO; MCC provided declarations and emails to show lack of involvement; SNG pressed forward with the cross-claim until settlement with Fourth Third.
- SNG paid $17 million to settle with Fourth Third in 2015; the cross-claim against MCC was dismissed by SNG without prejudice after settlement; MCC then filed its malicious prosecution complaint in September 2015.
- The trial court denied MCC’s anti-SLAPP motion and the order was appealed; the court reviews step two de novo under Grewal and related authorities.
- The court ultimately affirmed the denial of the anti-SLAPP motion, concluding MCC showed probability of prevailing on malicious prosecution, including favorable termination, lack of probable cause, and malice.
- There were extensive communications and declarations showing MCC was not involved; SNG acknowledged MCC’s non-involvement and misidentification in some communications; evidence supported MCC’s claim of lack of probable cause and malice in pursuing the cross-claim.
- The decision emphasizes that a voluntary dismissal without prejudice can still be analyzed for favorable termination under current case law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether MCC established probability of prevailing on malicious prosecution | MCC argues lack of probable cause and malice. | SNG/Ghandour contend genuine dispute over facts; termination was not favorable. | Yes; MCC proved probability of prevailing. |
| Whether MCC satisfied favorable termination | Dismissal was not on the merits; not favorable. | Dismissal should be treated as favorable termination per Casa Herrera and related authority. | Yes; dismissal without prejudice can be favorable termination. |
| Whether lack of probable cause is shown given evidence | SNG/Ghandour claim MCC had evidence of DPO and misled court. | Evidentiary record shows MCC not involved; no DPO; proper party misidentified. | Yes; probable cause lacking given record and admissions. |
| Whether malice proven | MCC acted with improper purpose in pursuing MCC; evidence of press release and mischaracterization. | Actions stemmed from legitimate efforts; improper purpose not shown. | Yes; substantial evidence of malice supported. |
Key Cases Cited
- Casa Herrera, Inc. v. Beydoun, 32 Cal.4th 336 (Cal. 2004) (favorable termination depends on merits and surrounding circumstances)
- Grewal v. Jammu, 191 Cal.App.4th 977 (Cal. App. 2011) (second step of anti-SLAPP is de novo review of pleadings and affidavits)
- Navellier v. Sletten, 29 Cal.4th 82 (Cal. 2002) (probability-of-prevailing standard for SLAPP analysis)
- Sierra Club Foundation v. Graham, 72 Cal.App.4th 1135 (Cal. App. 1999) (malice inquiry narrowly defined; factual issue)
- Lanz v. Goldstone, 243 Cal.App.4th 441 (Cal. App. 2015) (templates for anti-SLAPP second-step analysis)