AREA 55, LLC et al., Plaintiffs and Appellants, v. NICHOLAS & TOMASEVIC, LLP et al., Defendants and Respondents.
D075648
COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA
Filed 1/29/21
NOT TO BE PUBLISHED IN OFFICIAL REPORTS. (Super. Ct. No. 37-2018-00007426-CU-NP-NC)
Earl H. Maas, III, Judge.
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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
APPEAL from an order and a judgment of the Superior Court of San Diego County, Earl H. Maas, III, Judge. Reversed and remanded with directions.
Pettit Kohn Ingrassia Lutz & Dolin, Douglas A. Pettit and Jocelyn D. Hannah for Defendants and Respondents.
Area 55, LLC, and SAB Holdings, LLC (together, Appellants) appeal from an order of the trial court granting the special motion to strike their first amended complaint for malicious prosecution (complaint) and the related judgment of dismissal in favor of Nicholas & Tomasevic, LLP (N&T), Craig Nicholas, and Alex Tomasevic (together, Respondents). The trial court ruled that the complaint was a “SLAPP” and struck it pursuant to
The prior action, in which Appellants were named as defendants, was dismissed for failure to prosecute. As we explain, the trial court erred in ruling that Appellants cannot establish that the prior action was not terminated on its merits. Thus, for purposes of the anti-SLAPP statute, the court erred in ruling that Appellants did not demonstrate a probability of prevailing on the merits of their malicious prosecution claim.
In addition, in our de novo review, we exercise our discretion to reach the additional issues raised by the parties in the motion and opposition, rather
Accordingly, we will vacate the order granting Respondents’ special motion to strike the complaint and reverse the judgment. On remand, we will direct the court to enter a new and different order denying Respondents’ special motion.
I. STATEMENT OF THE CASE
In the complaint in this action, Appellants named Respondents in one cause of action for malicious prosecution. Respondents include California attorneys Nicholas and Tomasevic and, as alleged in the complaint, the “purported California limited liability partnership” N&T, which is the successor to Nicholas & Butler, LLP (N&B), “also a purported California limited liability partnership.” Appellants include the successors to Vinturi, Inc. (Vinturi), which, according to the complaint, are responsible for the development and sales of the ” ‘Vinturi Essential Wine Aerator’ (the ‘Vinturi Aerator‘) for wine-lovers who want to enhance their experience of drinking wine.” The United States Patent and Trademark Office issued four patents for the Vinturi Aerator.
Underlying and forming the factual basis for the present malicious prosecution lawsuit is a class action lawsuit in San Diego County Superior Court, case No. 37-2010-00050074-CU-BT-NC, originally entitled Roehrig v. Exica, Inc. (Class Action). Beginning in January 2010 and continuing through the final judgment of dismissal of the Class Action in June 2015, Respondents and N&B were counsel of record for the plaintiff and plaintiff class, and Appellants were the defendants.
A. The Prior Action (the Class Action)2
1. The Vinturi Aerator
Rio Sabadicci invented a red wine aerator. Vinturi, which was wholly owned by Area 55, Inc., produced the aerator for sale. Sabadicci was the chief executive officer of these corporations.
From 2006 until 2010, Vinturi sold its aerator in the United States with the statement ” ‘VINTURI IS MANUFACTURED IN THE USA’ ” printed on the bottom panel of the box, which measured approximately 3.1 inches square. Prior to making this representation, Sabadicci reviewed the Federal Trade Commission Web site, from which he concluded that Vinturi could accurately represent that the Vinturi Aerator was made in the United States because the body, which is 95 percent of the product, was made in the United States.
2. Roehrig Files the Class Action
In November 2009, Tom Roehrig purchased a Vinturi Aerator for $39.99 at a retail store. Roehrig saw the product at a friend‘s house, and after learning that it was made in the United States, he decided to buy the aerator even before going to the store.
A little over a month later, in January 2010, the firm of N&B, including attorney Nicholas, filed the Class Action against Appellants (as the defendants). Named plaintiff Roehrig alleged various consumer fraud claims in four causes of action based on alleged violations of:
By May of 2010, N&B, including attorney Nicholas, had filed a first and second amended complaint on behalf of Roehrig, alleging the same four causes of action against the same defendants.
Representing the named plaintiff, in September 2011 N&B, including attorneys Nicholas and Tomasevic, moved for class certification and for appointment as class counsel. In support of the motion, Roehrig submitted a declaration in which he testified that, when he purchased his Vinturi Aerator, he believed and relied on the representation that it was made or manufactured in the United States, and that, if he had known otherwise, he would have considered competing aerators, especially if any were manufactured in the United States. Following full briefing and oral argument, the court granted the motion, certifying the plaintiff class and appointing N&B as class counsel.
In July 2013, Appellants (as the defendants) moved to dismiss the case. Appellants presented evidence that Roehrig had abandoned his claims against Appellants in 2010, nine months after filing the Class Action and almost a year before moving for class certification, when he filed bankruptcy and did not list his claims in the Class Action lawsuit on his bankruptcy schedules. Treating the motion as a motion for judgment on the pleadings, the court granted the motion with 20 days leave to amend to add a new class representative.
Appellants (as the defendants) brought a motion for prevailing party attorney fees against Roehrig. Relying on
in Roehrig‘s claim under the CLRA and that Roehrig did not prosecute the Class Action in good faith. Finding that Roehrig acted in both subjective and
3. Drew Ector Prosecutes the Class Action
In late November 2013, Respondents filed a third amended complaint against Appellants (as defendants).6 This iteration of the complaint alleged the same four causes of action against the same defendants, but with a different named plaintiff, Drew Ector.
More than a year later, in early 2015, Appellants and N&T entered into an agreement to toll the statute of limitations for Appellants’ “desire to bring a claim against N&T for malicious prosecution of the [Class Action].” The parties (Appellants and N&T) entered into a number of amendments extending the expiration of the tolling period.
A few months later, in April 2015, Appellants (as defendants) moved to dismiss the Class Action for delay in prosecution pursuant to
(Appellants here) were prejudiced by the delay, and the named plaintiff “w[ould] not be able to begin trial before the expiration of the 5[-]year statute (
In June 2015, the court entered a judgment in favor of the defendants (Appellants here) and against Ector and dismissed the claims of the previously certified class. In post-judgment proceedings, as with Roehrig, Appellants brought a
B. The Present Case (Malicious Prosecution)
On February 13, 2018, Appellants (Area 55, LLC, and SAB Holdings, LLC) filed the present action against Respondents (N&T, Nicholas, and Tomasevic). In the operative first amended complaint (previously identified as the complaint), Appellants alleged one cause of action for malicious prosecution against the three defendants.
Respondents responded with an amended special motion to strike the complaint pursuant to the anti-SLAPP statute,
motion). Appellants filed a lengthy written opposition. Respondents filed a reply to the opposition, and Appellants filed a surreply to the reply. We will discuss the details of the parties’ presentations as necessary at part II., post.
Following oral argument in January 2019, the court granted Respondents’ anti-SLAPP motion and struck the complaint. The court first ruled that Respondents met their initial burden of establishing that the complaint arises out their constitutional right to petition. The court then ruled that Appellants did not meet their responsive burden of establishing a prima facie case to
Based on the order granting the anti-SLAPP motion, the court entered a judgment of dismissal in favor of Respondents and against Appellants. Appellants timely appealed from the order and the judgment.
II. DISCUSSION
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.”
In applying this statute, a court generally is required to engage in a two-step process. ” ‘First, the defendant must establish that the challenged claim arises from activity protected by
We review de novo the grant of an anti-SLAPP motion. (Sweetwater, supra, 6 Cal.5th at p. 940.)
A. Prong One—Whether Appellants’ Claim Arises From Protected Activity
For purposes of the threshold determination whether the challenged cause of action is one arising from “protected activity,” a person‘s “protected
Here, the challenged cause of action is malicious prosecution. ” ’ “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.” ’ ” (Medley Capital Corp. v. Security National Guaranty, Inc. (2017) 17 Cal.App.5th 33, 43 (Medley Capital).) The parties agree. Thus, Respondents, as the moving parties, met their initial burden of establishing that Appellants’ claims arose from “protected activity” for purposes of
Turning to the second prong, we now determine whether Appellants met their responsive burden of establishing a probability of prevailing on their malicious prosecution cause of action for purposes of
B. Prong Two—Probability of Appellants’ Success
In determining whether a plaintiff meets its responsive burden under the second prong, “the court shall consider the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.” (
Despite the authority that says the plaintiff‘s evidence in opposition to the motion must be admissible at trial (e.g., College Hospital, supra, 8 Cal.4th at p. 719; Sweetwater, supra, 6 Cal.5th at p. 946 [collecting cases]), “evidence may be considered at the anti-SLAPP motion stage if it is reasonably possible the evidence set out in supporting affidavits, declarations or their equivalent will be admissible at trial” (Sweetwater, at p. 947, italics added). “Conversely, if the evidence relied upon cannot be admitted at trial, because it is categorically barred or undisputed factual circumstances show inadmissibility, the court may not consider it in the face of an objection.”9 (Id. at p. 949.)
On appeal, Appellants argue that, because they presented evidence of a prima facie case that the dismissal of the Class Action was on the merits, the trial court erred in ruling otherwise. As we explain, we agree and will vacate the order granting the anti-SLAPP motion. Rather than remand for consideration of the remaining issues raised by the parties in the anti-SLAPP motion proceedings, however, because the standard of review is de novo, we exercise our discretion to reach, in the first instance, these remaining issues. ( Golden Eagle Land Investment, L.P. v. Rancho Santa Fe Assn. (2018) 19 Cal.App.5th 399, 422 [deciding prong two issue despite trial court‘s failure to reach it].) As we further explain, we conclude that, under the applicable standard for anti-SLAPP motions, Appellants met their burden of establishing the requisite probability of prevailing on their malicious prosecution claim against Respondents, and Respondents did not establish as a matter of law a defense to Appellants’ claim.
We begin our determination whether Appellants’ complaint ” ‘lacks even minimal merit’ ” (Oasis West, supra, 51 Cal.4th at p. 820) by first analyzing the evidence Appellants submitted in support of each of the elements of their cause of action for malicious prosecution. In this regard, to establish a cause of action for the malicious prosecution of a prior 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” ’ “; (2) ” ’ “was brought without probable cause” ’ “; and (3) ” ’ “was initiated with malice.” ’ ” (Zamos, supra, 32 Cal.4th at p. 965, quoting Bertero v. National General Corp. (1974) 13 Cal.3d 43, 50 (Bertero), italics omitted; accord, Roche v. Hyde (2020) 51 Cal.App.5th 757, 787 (Roche).10) We will then analyze whether Respondents established, as a matter of law, that the applicable statute of limitations bars Appellants’ claim.
The tort of malicious prosecution does not have to be directed to an entire lawsuit or even to an entire cause of action. (Bertero, supra, 13 Cal.3d at p. 57, fn. 5 [“an action for malicious prosecution lies when but one of alternate theories of recovery is maliciously asserted“]; Singleton v. Perry (1955) 45 Cal.2d 489, 497 [” ’ “it is not necessary that the whole proceeding be utterly groundless” ’ “]; Kreeger v. Wanland (2006) 141 Cal.App.4th 826, 834 [“[a] claim of malicious prosecution may be based on a single ground for liability alleged in the complaint that lacks probable cause“; “a single cause of action that states several theories of liability will force the defendant to negate each theory to escape liability“].) Very simply, “someone may be liable for malicious prosecution for his or her active role in the malicious prosecution of only a portion of a proceeding.” (Zucchet v. Galardi (2014) 229 Cal.App.4th 1466, 1484.) Where only a portion of the claim or complaint is maliciously prosecuted, the issue becomes one of proof of damages, not of
liability: “[I]n the case of the assertion of a maliciously prosecuted [claim] with one for which there was probable cause [citation], the burden of proving
1. First Element: Favorable Termination
For purposes of meeting their prong two responsive burden as to the first element of the cause of action for malicious prosecution, Appellants must present evidence of a prima facie case that the Class Action was commenced by Respondents and pursued to a legal termination in Appellants’ favor. (Zamos, supra, 32 Cal.4th at p. 965.) There is no dispute both that the Class Action was filed by N&B (the predecessor to N&T) and Nicholas and that the Class Action was prosecuted to judgment by N&T, Nicholas, and Tomasevic (previously identified as Respondents).
Here, in the Class Action, a judgment of dismissal was entered in favor of Appellants (i.e., the defendants in the prior action for purposes of Appellants’ malicious prosecution claim) and against the named plaintiff, by which “[t]he action of the class” was also dismissed. The judgment followed the trial court‘s ruling on cross-motions: (1) The court denied a motion filed by Respondents (as counsel, on behalf of their clients, the named plaintiff and the certified class) to specially set the matter for trial before the expiration of the statutory deadline in which to bring the case to trial (
“The Court is not persuaded that [the named plaintiffs] have diligently sought to prepare the matter for trial. [The current named plaintiff‘]s deposition has not been taken and was apparently cancelled . . . by [N&T], despite [counsel‘s] promises to the Court that it would proceed [the
next week]. The Class has not been notified despite certification [and appointment of class counsel more than three and a half] years ago. Defendants [(i.e., Appellants)] have persuasively argued that they will be prejudiced by an expedited trial, and that [the named] Plaintiff‘s delays have caused witnesses to become unavailable or difficult to locate. [¶] . . . [The current named] Plaintiff will not be able to begin trial before the expiration of the 5[-]year statute (
CCP 583.360 ).”
We must now determine whether, for purposes of the current claim for malicious prosecution, the foregoing dismissal was a legal termination which reflects on the merits of the claims against Appellants (as the defendants) in the Class Action.
In Jaffe v. Stone (1941) 18 Cal.2d 146 (Jaffe), our Supreme Court explained: “The theory underlying the requirement of favorable termination is that it tends to indicate the innocence of the accused . . . .
” ‘A ” ‘favorable’ termination does not occur merely because a party complained against has prevailed in an underlying action. While the fact he has prevailed is an ingredient of a favorable termination, such termination must further reflect on his innocence of the alleged wrongful conduct. If the termination does not relate to the merits—reflecting on neither innocence of
nor responsibility for the alleged misconduct—the termination is not favorable in the sense it would support a subsequent action for malicious prosecution.” ’ ” (Roche, supra, 51 Cal.App.5th at p. 788, quoting Lackner v. LaCroix (1979) 25 Cal.3d 747, 751 (Lackner).) Where, as here, the prior action is terminated other than on the merits, in determining whether the termination ” ’ ” ‘relate[s] to the merits’ ” ’ ” (ibid., italics added), ” ‘the court must examine the reasons for termination to see if the disposition reflects the opinion of the court or the prosecuting party that the action would not succeed’ ” (Medley Capital, supra, 17 Cal.App.5th at p. 47, italics added; accord, Roche, at p. 788). “And should there be a conflict as to the circumstances of the termination, ‘the determination of the reasons underlying the dismissal is a question of fact.’ ” (Medley Capital, at p. 47; accord, Roche, at p. 788; Sycamore Ridge Apartments, LLC v. Naumann (2007) 157 Cal.App.4th 1385, 1399 (Sycamore Ridge).)
We begin our analysis with the following guidance from our Supreme Court:
” ‘A dismissal for failure to prosecute . . . does reflect on the merits of the action. . . . The reflection arises from the natural assumption that one does not simply abandon a meritorious action once instituted.’ ”
(Lackner, supra, 25 Cal.3d at pp. 750-751 [termination of prior action by statute of limitations defense not related to merits], italics added, quoting Minasian v. Sapse (1978) 80 Cal.App.3d 823, 827 (Minasian) [termination of prior action by dismissal for failure to prosecute related to the merits] and quoted in this court‘s recent opinion in Citizens of Humanity, LLC v. Hass (2020) 46 Cal.App.5th 589, 609; Sycamore Ridge, supra, 157 Cal.App.4th at p. 1400.) In Minasian, at page 827, the court explained that, when a discretionary dismissal for failure
Minasian was an appeal in a malicious prosecution action, where the sole issue was whether a discretionary dismissal of the prior action for failure to prosecute under the two-year statute was a favorable termination. (Minasian, supra, 80 Cal.App.3d at pp. 824-825.) There, the court expressly ruled that “[a] dismissal for failure to prosecute under
We now consider the showing by Appellants in support of their position. Focusing on the order dismissing the Class Action for delay in prosecution, Appellants rely on the six findings expressed by the court. Examining the reasons for the termination of the Class Action as we must (Medley Capital, supra, 17 Cal.App.5th at p. 47), we examine those findings.
First, in dismissing the Class Action, the court found: “The Class has not been notified [of this class litigation] despite certification [and appointment of N&B as class counsel] years ago.” A reasonable inference from Respondents’ failure to notify the class of both the existence of the class
and the appointment of class counsel for more than three and a half years is that their failure to proceed relates to and reflects on the merits, in that class counsel like Respondents do not abandon a meritorious action once a class has been certified. (See Lackner, supra, 25 Cal.3d at p. 751; Minasian, supra, 80 Cal.App.3d at p. 827.)
Second, in dismissing the Class Action, the court found that the named plaintiffs (i.e., N&T‘s clients) did not “diligently . . . prepare the matter for trial.” Similarly, in a sixth finding, the court ruled that Ector, the second named plaintiff, “will not be able to begin trial before the expiration of the five[-]year [mandatory dismissal] statute (
- “The main lawyer I dealt with at N&T was Alex Tomasevic. I did not have more than two meetings with him, and did not meet with any other lawyers from N&T.”
- “When I revealed to N&T that I had no receipts or other documents, not even a credit card charge, to show for my purchase [of a Vinturi Aerator], N&T did not do anything I‘m aware of to confirm that I had actually bought a Vinturi.”
- “In the Third Amended Complaint that N&T filed on my behalf, N&T wrote in paragraph 25 that I had been ‘damaged’ and ‘lost money’ in connection with my wine aerator purchase. But, before N&T added me to the lawsuit, I did not feel like I had lost money. I had no reason to believe that the wine aerator I bought was inferior. And I did not suffer any emotional stress as a result of my purchase.”
- “Even after being N&T‘s lead plaintiff in the underlying class action for more than two and a half years, I do not have any understanding of what components of the Vinturi . . . [A]erator are and are not made in the United States.”
- “The wine aerator was never of any major significance in my life before I joined the underlying class action. N&T wrote in the Third Amended Complaint that I was ‘dismayed’ after my wine aerator purchase, but I don‘t really know the definition of that word or whether I‘d be using it correctly.”
-
“To my recollection, there were never any settlement figures shared with me. [¶] . . . Until November 10, 2017, [which is more than two and a half years after the order dismissing the Class Action,] I also never learned of the settlement proposal that [the defendants in the Class Action] had communicated to [Tomasevic] on April 8, 2015 [two weeks prior to the hearing on the motion to dismiss], that would have involved my getting a release from [those defendants, i.e., Appellants in this malicious prosecution action] for any costs or for any claim for malicious prosecution in exchange for my dismissal of the [Class Action] case, since N&T never communicated that to
me. I also never saw the Joint Request for Dismissal that [the defendants in the Class Action] had sent on April 27, 2015, [a few days after the hearing on the motion to dismiss,] to N&T offering to waive costs and attorney‘s fees against me, as well as release any claims arising out of my prosecution of the case. . . . I don‘t recall ever hearing from N&T about any settlement offers made by [the Class Action defendants] to let me out of the case without any consequences.” - “I don‘t recall anyone at N&T telling me [in or around April 2015] that [the defendants in the Class Action] had a pending motion to dismiss the case. . . . I don‘t recall N&T ever telling me there was a requirement that the case be brought to trial within a certain amount of time. . . . [¶] . . . [¶] . . . On May 11, 2015, [which was approximately three weeks after the dismissal of the Class Action,] N&T sent me an email saying that, back on April 30, 2015, the Court ‘issued orders on the motions’ that ‘all came down against us.’ . . . I don‘t know what that means, and I don‘t think I knew then that this was a dismissal. . . . [¶] . . . [N&T] wrote that ‘we will not be able to proceed without an appeal first.’ . . . [¶] . . . N&T never discussed with me the merits of an appeal. I don‘t know if N&T ever filed an appeal of the dismissal of my case.”
This evidence, and inferences from this evidence (including N&T‘s lack of communication with Ector), sufficiently establish that N&T, irrespective of the named plaintiffs, did not diligently prepare the case for trial. The evidence further establishes that N&T, irrespective of the named plaintiffs, did not consider an appeal from the grant of judgment on the pleadings as to Roehrig. From this evidence, a jury could reasonably find that Respondents’ failure to proceed relates to and reflects on the merits, in that class counsel like Respondents do not abandon a meritorious action once a class has been certified. (See Lackner, supra, 25 Cal.3d at p. 751; Minasian, supra, 80 Cal.App.3d at p. 827.)13
Third and fourth, in dismissing the Class Action, the court found both: (1) that Respondents failed to produce for deposition their client, Ector, the
We acknowledge that, as a general rule, counsel cannot later be liable for malicious prosecution “‘solely because that attorney‘s client . . . unilaterally, and for reasons known only to herself, refuses to make discovery‘” in the prior action. (Daniels v. Robbins (2010) 182 Cal.App.4th 204, 211, 221-222 (Daniels) [despite court order, the plaintiff in the prior action “refused to serve any written discovery responses or appear for a deposition“].) In contrast, here, Ector testified, N&T “did not inform me that the Court had ordered [my] deposition to proceed on . . . April 29, 2015.” To the contrary, on April 28, an N&T attorney wrote to Ector that she was going to try to find a mutually agreeable date for his deposition “in the ‘next two weeks,‘” explaining, “‘[o]pposing counsel is a real treat and I‘d like to shut him up by getting new dates‘” after the court-ordered date. N&T then gave intentionally false, inconsistent explanations when it refused to produce him for deposition: To defense counsel, N&T cancelled Ector‘s court-ordered deposition on the date of the deposition, stating that “‘[a]n unexpected work obligation arose‘” for Ector; yet, in a declaration to the court, the N&T attorney testified that “‘Ector‘s job requires that he travel for work, often on short notice.‘”
In these regards, Ector testified, “I had not been the one to cancel my deposition for April 29, 2015, and I did not cause anyone at N&T to misrepresent facts to the Court.” In fact, during the 14 hours between 6:00 a.m. and 8:00 p.m. on April 29, the date of the court-ordered deposition, Ector (who had told the N&T attorney that he would be returning to San Diego as of April 27) went to a restaurant for breakfast with his brother, returned home for a few hours, left and returned home a few hours later, rearranged the furniture on his sundeck, attended a class or presentation at the University of San Diego, and again returned home—never going farther than six miles from his residence in Pacific Beach.
Finally, in dismissing the Class Action, the court found that the “delays [by N&T on behalf of the named plaintiff] have caused witnesses to become unavailable or difficult to locate.” This evidence supports an inference, if not an actual finding, that without the delays Respondents caused Appellants (the defendants in the Class Action) would have discovered facts that reflect adversely on the merits of the Class Action claims. That is because class counsel like Respondents do not abandon a meritorious action once a class has been certified. (See Lackner, supra, 25 Cal.3d at p. 751; Minasian, supra, 80 Cal.App.3d at p. 827.)
Respondents’ arguments do not persuade us otherwise.15
Respondents’ principal argument, and one we do not reject lightly, is that the judge who ruled on the anti-SLAPP motion is the same judge who dismissed the Class Action. With regard to the issue of whether the Class Action was terminated on its merits in 2015, in 2019 the judge ruled:
“Here, the Court‘s dismissal did not constitute a termination on the merits of the underlying lawsuit and rather, was based solely on a technical issue — the plaintiffs could not be ready for trial in the less than four months remaining before expiration of the five-year statute. Because this is the same Court that dismissed the underlying case, there is no question about the Court‘s intentions in dismissing.”16
Thus, Respondents argue, because the trial court‘s written order in 2019 tells us why the court dismissed the Class Action in 2015, there is no dispute or conflicting evidence as to whether the dismissal reflects on the merits.17 We disagree.
In relying on his memory rather than the evidence presented by the parties, the trial judge did not apply the proper standard. As we set forth ante and as Respondents acknowledge in their appellate brief, in the prong two analysis, the court must “consider[ ] whether [Appellants] produced sufficient admissible evidence to establish the probability of prevailing on the merits on every cause of action asserted.” (Citing Soukup, supra, 39 Cal.4th at p. 269.) Unfortunately, that is not what the trial court did here; instead, it considered
While the well-meaning trial judge used his years of experience on the bench and memory of a prior case in an apparent attempt to jump to the ultimate finding in this case, the anti-SLAPP process does not allow for such a procedure.19 Instead, in prong two, the anti-SLAPP statute directs a procedure whereby the court “‘accepts the plaintiff‘s evidence as true‘” and then determines whether such evidence establishes “‘a prima facie factual showing sufficient to sustain a favorable judgment.‘”20 (Sweetwater, supra, 6 Cal.5th at p. 940.) Moreover, the procedure employed here—by which the court relied on its memory from the Class Action four years earlier, rather than on the evidence presented—does not allow for meaningful review.
In our de novo review in this appeal, we have applied, and will continue to apply, the standard set forth by our Supreme Court based on the record that was before the trial court at the time it made its ruling—which does not include the individual judge‘s recollection of events almost four years earlier. As we explained prior to conducting our de novo review ante, we accepted Appellants’ evidence “as true” and concluded that such evidence established a prima facie factual showing sufficient to sustain a finding of a termination in Appellants’ favor. (Sweetwater, supra, 6 Cal.5th at p. 940.)
Respondents next argue that, even if we do not consider the trial judge‘s recollection, “there was no favorable termination as to the initial class representative, Roehrig, who was dismissed for lack of standing . . . [and
First, there was no termination of the Class Action, favorable or not, when, in January 2014, the court entered a judgment of dismissal as to Roehrig only, based on the November 2013 order granting Appellants’ motion for judgment on the pleadings—which expressly allowed “20 days leave to amend to add a new class representative.” By then, the class had been certified for more than two years, and N&T‘s third amended complaint was pending on behalf of Ector as the named plaintiff. Regardless whether Roehrig‘s claims were dismissed because he had abandoned them years earlier, the Class Action was not terminated until the court dismissed it in April 2015. (See, e.g., Department of Forestry & Fire Protection v. Howell (2017) 18 Cal.App.5th 154, 196 [“Generally speaking, ’ “there can be only one final judgment in a single action.“’ “].)
Furthermore, the sole authority on which Respondents rely, Hudis, supra, 125 Cal.App.4th 1586, is distinguishable. In Hudis, a malicious prosecution case, the appellate court held that the defendant attorney‘s former clients (i.e., the plaintiffs in the prior action) lacked standing to prosecute the prior action for elder abuse against the malicious prosecution plaintiffs, because the former clients “had not been appointed as the personal representatives of [the decedent] and had not established that they were her successors in interest” for purposes of asserting a claim for elder abuse. (Id. at p. 1592.) In fact, their lack of standing in the prior action, which was not a favorable termination for malicious prosecution purposes, was based on a lack of “standing to state a cause of action,” not on a lack of “capacity to sue.” (Ibid.) In Hudis, the former clients never had the right to bring the claims that were dismissed. In contrast, the former client here (Roehrig) originally had standing to state the causes of action against Appellants (because he said that he had bought a Vinturi Aerator in reliance on the representation that it was ” ‘Manufactured in the USA’ “), but affirmatively abandoned them in his bankruptcy case.
More applicable is the case of Lanz v. Goldstone (2015) 243 Cal.App.4th 441 (Lanz), on which Appellants rely. There, like former plaintiff Roehrig here, the cross-complainant in the underlying action (i.e., the client of the attorney defendant in the later malicious prosecution action) had abandoned some of the claims in the prior action by failing to schedule them in her bankruptcy filings. (Id. at pp. 453, 462.) Contrary to the situation in Hudis, supra, 125 Cal.App.4th 1586, where the claimants in the underlying action never had the right to bring the claims that were dismissed, in Lanz the cross-complainant in the underlying action
“Appropriately analyzed, one could conclude that the failure to list the claims on the bankruptcy schedule reflected [the cross-complainant‘s] opinion ‘that the [underlying cross-]action would not succeed.’ [Citations.] . . . [¶] Regardless, the claims were in essence abandoned, and such abandonment can be favorable termination, as is generally held . . . where an action has been dismissed for failure to bring it to trial within the statutory period for discretionary dismissal, as this reflects on the merits of the action, a reflection that ‘arises from the natural assumption that one does not simply abandon a meritorious action once instituted.’ (Minasian[, supra,] 80 Cal.App.3d [at p.] 827.)”
(Lanz, supra, 243 Cal.App.4th at pp. 461-462, italics added.)21 In short, the Lanz court ruled that the abandonment of a claim in a bankruptcy case results in the same favorable termination (for purposes of a later malicious prosecution claim) as a dismissal for failure to prosecute.
As their final argument, Respondents contend that “the law protects attorneys from malicious prosecution actions which ensue because of their client‘s recalcitrance in discovery.” (Citing Daniels, supra, 182 Cal.App.4th at p. 221.) Daniels is unhelpful in this appeal, however, because in Daniels the client “‘unilaterally, and for reasons known only to herself, refuse[d] to make discovery.‘” (Id. at p. 222.) Here, in contrast, there is no claim that the client, Ector, made the decision not to participate in discovery. As we explained ante, the court did not base the dismissal on Ector‘s failure to appear at his deposition. In its order dismissing the Class Action, the court expressly faulted Ector‘s counsel—i.e., N&T—both for cancelling client Ector‘s deposition and, in doing so, for reneging on its “promises to the Court that [the deposition] would proceed.”
For the foregoing reasons, Appellants met their prong two responsive burden of presenting evidence, which if credited by a trier of fact, would establish a prima facie showing that the dismissal of the Class Action reflects favorably to Appellants on the merits of the claims asserted against them in the Class Action.
For purposes of meeting their prong two responsive burden as to the second element of the cause of action for malicious prosecution, Appellants must present evidence of a prima facie case that Respondents brought or maintained the Class Action without probable cause. (Zamos, supra, 32 Cal.4th at pp. 966, 973.)
“An action is deemed to have been pursued without probable cause if it was not legally tenable when viewed in an objective manner as of the time the action was initiated or while it was being prosecuted.” (Sycamore Ridge, supra, 157 Cal.App.4th at p. 1402.) “Only those actions that any reasonable attorney would agree are totally and completely without merit may form the basis for a malicious prosecution suit.” (Zamos, supra, 32 Cal.4th at p. 970.) The tort of malicious prosecution “includes continuing to prosecute a lawsuit discovered to lack probable cause.” (Zamos, supra, 32 Cal.4th at p. 973.) Expressly relying on its reasoning in Zamos, in Soukup, supra, 39 Cal.4th 260, our Supreme Court explained that “the maintenance of . . . an action discovered to lack probable cause may expose the plaintiff‘s attorney to liability for malicious prosecution.” (Soukup, at p. 297.) “While an attorney is entitled to rely on information from his or her client for purposes of assessing a claim‘s legal tenability, ‘[a]n exception to this rule exists where the attorney is on notice of specific factual mistakes in the client‘s version of events.’ ” (Olivares v. Pineda (2019) 40 Cal.App.5th 343, 355 (Olivares).)
In Olivares, for example, the trial court denied an anti-SLAPP motion directed to a number of claims, including one for malicious prosecution; and the appellate court affirmed. (Olivares, supra, 40 Cal.App.5th at p. 347.) As relevant to this appeal, the appellate court concluded that the plaintiffs had presented sufficient evidence of a prima facie case for establishing the lack of probable cause element of the cause of action for malicious prosecution. (Id. at pp. 355-356.) The court based its ruling on the showing by the plaintiff tenants that the defendant attorneys continued to prosecute an unlawful detainer action after they knew that the rent demand was based on “significant errors in [the landlord‘s] rent ledger.” (Id. at p. 355.)
Here, N&B and Nicholas filed the class action on behalf of named plaintiff Roehrig in January 2010. Nine months later, in September 2010, Roehrig filed a Chapter 7 (liquidation) bankruptcy case; in December 2010, he received a discharge; and in the first week of January 2011, the bankruptcy court approved the trustee‘s report and closed Roehrig‘s bankruptcy case.
Thus, Appellants argue, as of June 2011, Respondents knew (or should have known) that their client Roehrig had, as a matter of law, abandoned the claims Respondents were prosecuting on his behalf. With this knowledge, Appellants’ argument continues, Respondents continued prosecuting the claims for more than two years until the court granted judgment on the pleadings as to Roehrig in November 2013. Appellants conclude their argument with the contention that, at a minimum, Respondents’ prosecution of the Class Action during this period was the maintenance of the action at a time they knew their client (Roehrig) had abandoned the claims. Although the record does not contain direct evidence that N&T had actual knowledge Roehrig had abandoned his claims, the record contains direct evidence that N&T knew all of the facts that effected an abandonment of Roehrig‘s claims as a matter of law. From this evidence, we have no difficulty inferring that N&T knew the legal effect of this uncontradicted evidence and, thus, no difficulty concluding that Appellants met their responsive burden of presenting a prima facie case that Respondents lacked probable cause to maintain the Class Action as of, at least, June 2011 when Appellants took Roehrig‘s deposition.
Respondents suggest that “any reasonable attorney” would not have known that, by his bankruptcy filings, Roehrig had abandoned (to the Chapter 7 estate) his claims against Appellants as a matter of law. (Underscoring omitted.) As an example, Respondents rely on the fact that Appellants did not raise Roehrig‘s bankruptcy and the resultant abandonment of his claims in opposition to Roehrig‘s motion to certify the class and appoint N&B as class counsel. With the parties emphasizing different evidence to support a finding of objective reasonableness, we neither weigh it nor resolve the dispute in these anti-SLAPP proceedings. (Sweetwater, supra, 6 Cal.5th at p. 940.) In any event, because “the extent of a defendant attorney‘s investigation and research” is not relevant to the determination of whether the underlying
Respondents further contend that an application of the “interim adverse judgment rule” establishes the requisite probable cause for Respondents to have prosecuted the Class Action during the more than two years after they knew the facts that, as a matter of law, effected an abandonment of Roehrig‘s claims against Appellants. Under the interim adverse judgment rule, a malicious prosecution defendant (here, Respondents) can establish probable cause for having brought the prior action (here, the Class Action), thereby defeating the later malicious prosecution claim (here, the present case), by showing an interim victory on the merits in the prior action, even where the prior action is ultimately terminated in favor of the defendant (here, Appellants). (Parrish v. Latham & Watkins (2017) 3 Cal.5th 767, 776-777 (Parrish); Kinsella v. Kinsella (2020) 45 Cal.App.5th 442, 447 (Kinsella).) We are not convinced that the interim adverse judgment rule applies here.
California courts have long held that a victory on the merits in the trial court, even if reversed on appeal, conclusively establishes the requisite probable cause to have brought the prior action. (Holliday v. Holliday (1898) 123 Cal. 26, 32 [“when a person is charged before a competent court having jurisdiction of the matter, and is tried and found guilty, the judgment rendered, unless it is shown to have been obtained by means of fraud, is conclusive evidence of probable cause for making the charge, even though it is afterward held to be unauthorized and reversed on appeal“; italics added]; Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 817.) “The rationale is that claims which succeed after an adversary hearing on the merits, even if later reversed, ’ “are not so lacking in potential merit that a reasonable attorney or litigant would necessarily have recognized their frivolousness.” ’ (Parrish, supra, 3 Cal.5th at p. 776; [citations omitted].)” That is because, unless the initial success was procured by certain improper means . . . , the claims ‘cannot be “totally and completely without merit.“’ (Parrish, at p. 776; [citations omitted].)” (Kinsella, supra, 45 Cal.App.5th at p. 455.)
In proffering the defense of the interim adverse judgment rule,22 Respondents rely on the following rulings from the trial court in the Class Action: a
For example, with regard to the demurrer, the court‘s order overruling the demurrer expressly indicates that it did not reach the merits: “[T]he allegations for each of the four causes of action are sufficient for this stage of the pleadings.”
Likewise, during the proceedings in which the court certified the class and later denied decertification, the court had no occasion to consider the merits, as opposed to the procedural status, of the claims against Appellants. That is because ” ‘[t]he certification question is “essentially a procedural one that does not ask whether an action is legally or factually meritorious.” ’ ” (Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1023 (Brinker), quoting Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326, quoting Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 439-440 (Linder); accord, Ayala v. Antelope Valley Newspapers, Inc. (2014) 59 Cal.4th 522, 530 [in determining whether case should proceed as a class action, “the focus ‘is on what type of questions—common or individual—are likely to arise in the action, rather than on the merits of the case’ “; italics added], 531 [“the class certification inquiry must focus on ‘whether the theory of recovery advanced by the proponents of certification is . . . likely to prove amenable to class treatment’ “]; Lockheed Martin Corp. v. Superior Court (2003) 29 Cal.4th 1096, 1104.)24
Thus, because Respondents have not established that the interim adverse judgment rule applies as a bar to the later malicious prosecution claim as a matter of law, Respondents have not defeated Appellants’ prima facie showing that, at least as of June 2011, Respondents maintained the Class Action without probable cause.25
3. Third Element: Malice
For purposes of meeting their prong two responsive burden as to the third element of the cause of action for malicious prosecution, Appellants must present evidence of a prima facie case that Respondents brought or maintained the Class Action with malice. (Zamos, supra, 32 Cal.4th at p. 965.)
The malice element goes to Respondents’ subjective intent in either initiating or continuing the Class Action. (Olivares, supra, 40 Cal.App.5th at p. 356; Soukup, supra, 39 Cal.4th at p. 292.) “As an element of malicious prosecution, malice ‘reflects the core function of the tort, which is to secure compensation for harm inflicted by misusing the judicial system, i.e., using it for something other than to enforce legitimate rights and secure remedies to which the claimant may tenably claim an entitlement.’ ” (Lanz, supra, 243 Cal.App.4th at pp. 466-467.) In this context, malice “is not limited to actual hostility or ill will and may be present when proceedings are instituted or maintained primarily for an improper purpose.” (Olivares, at p. 356; accord, Lanz, at p. 466.)
Respondents contend that “lack of probable cause alone is insufficient to show malice.” (Citing Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1543 [lack of probable cause is measured objectively, whereas existence of malice is measured subjectively].) We do not disagree. (See Golden State, supra, 53 Cal.App.5th at p. 38; Daniels, supra, 182 Cal.App.4th at p. 225; Downey Venture v. LMI Ins. Co. (1998) 66 Cal.App.4th 478, 498.) Here, however, in addition to the absence of probable cause (for maintaining the Class Action after becoming aware of the facts that resulted in an abandonment of Roehrig‘s claims),26 we have findings by the trial court in the Class Action—in an order affirmed by this court (Roehrig, supra, D066790)—that Roehrig initiated and maintained his claim in bad faith. Although the order determining bad faith was directed to Roehrig, not to his attorneys, certain of the findings implicate counsel‘s bad faith as well.
For example, at his deposition, Roehrig testified that, before purchasing the Vinturi Aerator, his friend, Rones (who was in the business of selling a competing wine aerator) told Roehrig not only that the Vinturi Aerator was made in China, but also “which law firm he should call“—i.e., N&T. Once Appellants (defendants in the Class Action) subpoenaed Rones for his deposition, N&B prepared (and Roehrig signed) an errata sheet that deleted all 35 references to Rones “in an attempt to eliminate information about Rones‘s involvement in the purchase of the [Vinturi A]erator and the filing of
In addition, we further rely on the following facts related to N&T‘s investigation and research: Neither Tomasevic nor Nicholas did any investigation into whether Roehrig had abandoned his claims; Tomasevic did no bankruptcy research at any time prior to Appellants’ motion to dismiss based on the abandonment; and there is no evidence that Nicholas did any bankruptcy law research at any time. Unlike probable cause which is determined on an objective standard, because the determination of malice is subjective (based on what the individual malicious prosecution defendant believed at the time of maintaining the underlying action), “the extent of a defendant attorney‘s investigation and research may be relevant to the . . . question of whether or not the attorney acted with malice.” (Sheldon Appel, supra, 47 Cal.3d at p. 883.) For purposes of our prong two anti-SLAPP analysis, the evidence of the lack of N&T‘s investigation and research related to Roehrig‘s ability to prosecute his claims in the Class Action further supports an inference of malice—with no evidence or argument of an affirmative defense as a matter of law as to malice.
Accordingly, Appellants met their responsive burden of establishing a prima facie showing that Respondents prosecuted the Class Action with malice.27
4. Defense: Statute of Limitations
Asserting a statute of limitations defense, Respondents argue that, regardless of Appellants’ prong two showing, Respondents’ showing defeats Appellants’ claims as a matter of law. (See Sweetwater, supra, 6 Cal.5th at p. 940.)
Appellants’ first argument in response (as it was in the trial court) is that Respondents waived their right to assert such a defense. More specifically, Appellants contend that the waiver results from Respondents not properly pleading the defense in their answer to the complaint. We agree.
In the present case, Respondents filed both an answer and an amended answer to the first amended complaint (previously identified as “complaint“), and in both they failed to “giv[e] the number of the section . . . relied upon” (§ 458). In both answers, Respondents alleged the following statute of limitations defense, in full: “The Complaint, and each cause of action contained therein, is barred by the applicable statutes of limitations.”28 However, an answer that fails to specify the applicable statute (and subdivision, if applicable) ” ‘raise[s] no issue and present[s] no defense.’ ” (Davenport v. Stratton (1944) 24 Cal.2d 232, 248 (Davenport), quoting Overton v. White (1937) 18 Cal.App.2d 567, 574 [waiver of statute of limitations defense where the answer merely failed to “refer to the proper subdivision“].) Stated differently, where the defendant fails to comply with section 458‘s strict pleading requirements, the defendant “waives the defense” of the bar of the applicable statute of limitations. (Martin v. Van Bergen (2012) 209 Cal.App.4th 84, 91 (Martin).)
In Davenport, supra, 24 Cal.2d at page 247, our Supreme Court “h[e]ld that the provisions of section 458 of the Code of Civil Procedure must be strictly applied.” Prior to reaching this holding, the court traced the history of the strict application to 1893 (id. at pp. 246-247), citing Wolters v. Thomas (1893) 3 Cal.Unrep. 843, 846 [“That there must be a strict compliance [with section 458] . . . has often been held“], citing Manning v. Dallas (1887) 73 Cal. 420, 421 [by not complying with § 458, “the attempt to plead [the statute of limitations] must be treated as altogether a failure“]. Nothing has changed in 125 years: “This section ‘has been strictly construed as requiring that the relevant statute and subdivision, if applicable, be pleaded, otherwise the answer fails to raise the statute of limitations defense.’ ” (Southern California Edison Co. v. Severns (2019) 39 Cal.App.5th 815, 827, italics added; accord, Choi v. Sagemark Consulting (2017) 18 Cal.App.5th 308, 322, fn. 7 [“section 458 has been strictly construed“].)
Based on the foregoing authorities and the record on appeal, we conclude that Respondents waived their potential defense based on a statute of limitations. (Davenport, supra, 24 Cal.2d at p. 248; Martin, supra, 209 Cal.App.4th at p. 91.)
Respondents present two arguments in opposition to a finding they waived a statute of limitations defense. Neither argument is persuasive.
First, Respondents rely on the fact that, in their anti-SLAPP motion, they gave “notice” to Appellants “that Respondents relied upon the defense that the malicious prosecution claim is barred by the one-year limitations [period] in . . . § 340.6.”29 (Citing Tofte v. Tofte (1936) 12 Cal.App.2d 111, 113 [“when a defendant relies for answer upon any provision of the statute of limitations applicable to cases of this nature he need not necessarily plead all of the statutes upon which he intends to rely in his separate defenses“].) However, an anti-SLAPP motion filed after an answer is not the proper procedural vehicle for “pleading the Statute of Limitations,” as required by section 458. In addition, for the following reasons, Tofte is not persuasive: It does not mention section 458 or any of the other binding authorities (some cited ante) to the contrary; it fails to follow a line of cases from the late 1800‘s to the present, including early and consistent instruction from our Supreme Court, in which section 458 has been strictly applied; it was decided before Davenport, supra, 24 Cal.2d 232; and our research has not disclosed any case that has followed the language in Tofte on which Respondents presumably rely.
Second, Respondents argue that Appellants forfeited their right to object to Respondents’ waiver, because Appellants failed to demur to the answer. (Citing Hydro-Mill Co., Inc. v. Hayward, Tilton & Rolapp Ins. Assocs., Inc. (2004) 115 Cal.App.4th 1145.) We disagree. Contrary to Respondents’ statement, to preserve a waiver objection
For the foregoing reasons, Respondents’ showing in response to Appellants’ prong two showing did not defeat Appellants’ malicious prosecution claim as a matter of law.
5. Conclusion
Where, as here, the plaintiff opposing the anti-SLAPP motion ” ‘can show a probability of prevailing on any part of its claim, the cause of action is not meritless’ and will not be stricken.” (Oasis West, supra, 51 Cal.4th at p. 820.) That is because a cause of action for malicious prosecution ” ‘lies when but one of alternate theories of recovery is maliciously asserted.’ ” (Soukup, supra, 39 Cal.4th at p. 292.)
Appellants here presented evidence of a probability of prevailing on their claim that Respondents maliciously prosecuted the Class Action from at least June 2011 (when they learned of the facts that resulted in Roehrig‘s abandonment of his claims against Appellants) through at least November 2013 (when the court granted judgment on the pleadings against Roehrig); and Respondents did not properly plead the statute of limitations defense they attempted to apply in response. Thus, for anti-SLAPP prong two purposes, Appellants’ showing ” ‘stated a legally sufficient claim and made a prima facie factual showing sufficient to sustain a favorable judgment,’ ” and Respondents’ showing failed to ” ‘defeat [Appellants‘] claim as a matter of law.’ ” (Sweetwater, supra, 6 Cal.5th at p. 940.)
III. DISPOSITION
The order granting Respondents’ anti-SLAPP motion is vacated, and the judgment is reversed. Upon issuance of the remittitur, the superior court is directed to enter an order denying Respondents’ special motion to strike
IRION, J.
WE CONCUR:
HUFFMAN, Acting P. J.
DATO, J.
Notes
At his June 2011 deposition in the Class Action, Roehrig testified that, before he purchased the Vinturi Aerator, he had a conversation with Sean Rones, Roehrig‘s high school friend who was in the business of selling a competing wine aerator. Rones told Roehrig that the Vinturi Aerator was made in China, not ” ‘Made in the USA’ ” as advertised. When Roehrig later went to the store and bought it, he looked only at the Vinturi Aerator; but he never used it. Instead, Roehrig contacted N&B, by inference a recommendation from Rones, and decided to file the Class Action. Once Appellants (defendants in the Class Action) subpoenaed Rones for his deposition, N&B prepared (and Roehrig signed) an errata sheet to Roehrig‘s deposition transcript that deleted all 35 references to Rones “in an attempt to eliminate information about Rones‘s involvement in the purchase of the [Vinturi A]erator and the filing of this [Class Action].” (Roehrig, supra, D066790.)
California Rules of Court, rule 3.1340 provides in part that, upon motion, the trial court “may dismiss an action under