69 Cal. App. 4th 481 | Cal. Ct. App. | 1999
Opinion
Introduction
Appellants appeal from a denial of their motion to strike the complaint based on respondents’ failure to comply with Civil Code section 1714.10.
Overview of the Case
Respondents Westamco Investment Company, Southwest Capital Investment, and Sherman Gardner (collectively, Westamco) filed a malicious prosecution action against appellants Jang W. Lee and J. W. Lee & Associates (collectively, Lee), and the Bank of Seoul. Lee responded to the complaint by filing a motion to dismiss based on Westamco’s failure to comply with the provisions of section 1714.10. That statute requires a party to petition for a judicial determination of a reasonable probability of prevailing as a condition precedent to filing an action against an attorney for conspiring with his or her client based on the attorney’s representation of the client. It is undisputed that Westamco did not petition for such a determination. However, before considering the application of section 1714.10 to this matter, we must first review the underlying circumstance that spawned Westamco’s malicious prosecution action.
The Underlying Litigation
In June 1991, Westamco sold to Eun Sook Yang and David Hoi Chul Yang (collectively, the Yangs) the Pinetree Car Wash located in Covina, California, and took back a promissory note for $580,000 secured by all assets of the car wash. Westamco perfected its lien on July 21, 1991, by filing a UCC-1 financing statement covering “All furniture, fixtures, equipment, merchandise inventory, leasehold interest, leasehold improvements, contracts, contract rights, accounts receivable, collateral of the same or similar type currently owned or hereafter acquired by [the Yangs] located in the premises” of the car wash.
In September 1991, the Yangs borrowed $150,000 from the Bank of Seoul (the Bank) and executed a promissory note in that amount in favor of the Bank and secured it by granting the Bank a lien on all of the personal property at the car wash. The Bank perfected its lien on September 30, 1991, by filing a UCC-1 financing statement covering all personal property and fixtures of the car wash, including equipment, goods, documents, instruments, general intangibles, etc.
In December 1992, the car wash began losing money and the Yangs defaulted on the Westamco note. A receiver was appointed to take charge of the car wash. Ultimately, the Yangs filed for bankruptcy. In July 1993, the bankruptcy was determined to be a “no asset” proceeding, and the bankruptcy stay was lifted. In October 1994, Westamco foreclosed and took
Earlier, in July 1994, the Bank had filed a declaratory relief action to enforce its lien, seeking a determination that the Bank’s lien on “general intangibles” gave the Bank a lien on the car wash’s goodwill that had priority over Westamco’s lien. Westamco filed a motion for summary judgment on the ground that the car wash had no goodwill as a result of its having been closed for two years due to its bankrupt status. The Bank filed opposition to Westamco’s motion for summary judgment and moved to amend its complaint to allege claims for intentional interference with prospective economic advantage and claim and delivery. The court denied the Bank’s motion to amend and granted Westamco’s motion for summary judgment. On June 30, 1995, the Bank filed a notice of appeal. On appeal, the summary judgment was affirmed on March 15, 1996.
Immediately upon filing its notice of appeal, the Bank also filed a second lawsuit against Westamco alleging causes of action for claim and delivery and intentional interference with prospective economic interest, essentially the same claims asserted in the Bank’s unsuccessful motion to amend the first complaint in the first action. On August 28, 1996, the court granted Westamco’s motion for summary judgment in the second lawsuit.
In both lawsuits, including the appeal of the first, the Bank was represented by Lee as counsel of record.
The Malicious Prosecution Action
On August 26, 1997, Westamco filed the present action for malicious prosecution against both the Bank and Lee. The complaint is essentially an embellished reprise of the events and circumstances described above. Lee responded by filing a motion to strike based on section 1714.10, contending that the malicious prosecution complaint, in effect, alleges a cause of action against Lee for a civil conspiracy with Lee’s client, the Bank, to contest the dispute with Westamco.
In relevant part, section 1714.10 provides: “(a) No cause of action against an attorney for a civil conspiracy with his or her client arising from any
The trial court denied Lee’s motion to strike the complaint. Lee appealed the order pursuant to section 1714.10, subdivision (d).
Discussion
Lee’s motion was premised on the assumption that the terms of the complaint allege that Lee conspired with the Bank based on Lee’s representation of the Bank in its two lawsuits and one appeal contesting the priority of Westamco’s lien rights. The singular focus of Lee’s contention is the complaint’s allegations that “On or about July 25, 1994 the Bank, by and through Lee and J. W. Lee, filed a Complaint in the Superior Court . . . alleging four causes of action against [Westamco] . . “[o]n or about June 30, 1995, the Bank, by and through Lee and J. W. Lee, filed a Notice of Appeal with the Second District Court of Appeal”; and “[o]n or about June 30, 1995, defendant Bank, by and through Lee and J. W. Lee, filed a new complaint in the Los Angeles Superior Court . . . .”
Notwithstanding the Legislature’s intent to diminish meritless actions against attorneys representing insurance companies, section 1714.10 is not so narrowly drafted or applied. The statutory requirement for a judicial determination of a reasonable probability of prevailing has been held to apply in a variety of circumstances. (See, e.g., Villa Pacific Building Co. v. Superior Court (1991) 233 Cal.App.3d 8 [284 Cal.Rptr. 227] [lawyers engaged to perform transactional work for real estate investors sued for conspiring with clients to misappropriate assets]; Pierce v. Lyman (1991) 1 Cal.App.4th 1093 [3 Cal.Rptr.2d 236] [attorney representing trustees sued for civil conspiracy with trustees in an action for fraud and breach of fiduciary duty]; Howard v. Superior Court (1992) 2 Cal.App.4th 745 [3 Cal.Rptr.2d 575] [attorneys representing the buyers of real property who drafted allegedly false documents sued as having “aided and abetted” their clients].)
In Villa Pacific Building Co. v. Superior Court, supra, 233 Cal.App.3d at page 11, and Pierce v. Lyman, supra, 1 Cal.App.4th at pages 1100 and 1109, the complaints specifically alleged a conspiracy between the attorney and client. In Howard v. Superior Court, supra, 2 Cal.App.4th 745, the appellate court equated the allegations of “aiding and abetting” to be the equivalent of alleging a civil conspiracy. Here, the complaint does not even coincide with the fundamental rationale for discouraging civil conspiracy causes of action against an attorney. “The major significance of a conspiracy cause of action ‘lies in the fact that it renders each participant in the wrongful act responsible as a joint tortfeasor for all damages ensuing from the wrong, irrespective of whether or not he was a direct actor and regardless of the degree of his activity. [Citations.]’ ” (Id. at p. 748.) The Howard court reasoned: “In the abstract, there may be a distinction between an aiding and abetting cause of action and one for civil conspiracy. [Fn. omitted.] However, while aiding and abetting may not require a defendant to agree to join the wrongful conduct, it necessarily requires a defendant to reach a conscious decision to
The merit of Lee’s position rests on its premise that the allegation that the Bank acted “by and through Lee” is sufficient to state a cause of action for civil conspiracy. Lee urges the phrase is the equivalent of “aiding and abetting” or “civil conspiracy.” We disagree. Westamco’s complaint simply does not cast the wide net of civil conspiracy. The description of the Bank’s filing of the first and second complaints “by and through” Lee does not plead any conspiracy or union of conduct between the Bank and Lee. It is merely descriptive of the client’s conduct in the underlying proceeding. The complaint pleads a wholly independent cause of action for malicious prosecution against Lee.
Stated another way, it is unnecessary to plead a civil conspiracy to pursue a malicious prosecution action agáinst an attorney who files and prosecutes an action on behalf of a client. Even though Westamco pleads that the Bank acted by and through Lee, the complaint alleges the particular misfeasance of Lee: “. . . the Defendants acted without probable cause in bringing the afore-mentioned lawsuits against Plaintiffs in that, in no conceivable way, could it honestly and reasonably believe that there were grounds for said actions. Moreover, it is absolutely apparent that the Defendants had no reasonable belief that any of the afore-mentioned civil claims and/or respective theories of relief/causes of action, as tried before the Court were tenable. Furthermore, had Defendants, Lee and J. W. Lee, properly, fully and reasonably investigated the facts and the law with regard to the afore-mentioned claims, all of the Defendants would have realized, as did each and every Court which heard/reviewed the underlying actions, that said claims/theories of recovery, especially the fraud and deceit cause of action, were untenable.” (Italics added.) Thus it is clear that Westamco seeks to hold Lee, the attorneys, independently liable for Lee’s failure to investigate and for Lee’s prosecution of untenable claims. To do so does not require any determination that the client (the Bank) is liable.
An attorney may be sued and held separately liable by a third party for malicious prosecution based on representation of a client where there is no probable cause and no tenable basis for pursuing the underlying action. (Norton v. Hines (1975) 49 Cal.App.3d 917, 921 [123 Cal.Rptr. 237] [“In the
In sum, section 1714.10 simply does not apply to a malicious prosecution action against an attorney who is alleged to have prosecuted a claim without probable cause and adequate investigation and which any reasonable attorney would have recognized as untenable. Westamco alleges those elements in its complaint against Lee. Accordingly, we agree with the trial court’s order of denial of Lee’s motion to strike.
Disposition
The order is affirmed.
Hastings, J., and Curry, J., concurred.
A petition for a rehearing was denied February 10, 1999, and the petition of appellant Jang W. Lee for review by the Supreme Court was denied April 14, 1999.
All statutory references are to the Civil Code unless otherwise indicated.
The order for summary judgment in the second lawsuit indicates that the complaint was amended, deleting the causes of action for claim and delivery and intentional interference with economic interest and alleging a new cause of action for fraud.
In addition to the quoted provisions of the malicious prosecution complaint, it contains the same allegations—“the Bank, by and through Lee and J. W. Lee”—in other parts of that pleading.
Wolfrich was disapproved by the Supreme Court in Doctors’ Co. v. Superior Court (1989) 49 Cal.3d 39, 49 [260 Cal.Rptr. 183, 775 P.2d 508].
