Opinion
B186712
4-26-2007
SHAVER, KORFF & CASTRONOVO, Plaintiff and Respondent, v. VIP BHOLA, Defendant and Appellant.
Law Offices of Jeanene Moenckmeier and Kathryn Irene Phillips for Defendant and Appellant. Shaver, Korff & Castronovo and Tod M. Castronovo for Plaintiff and Respondent.
NOT TO BE PUBLISHED
In 2001, Benjamin Medina was driving his vehicle when he collided with a bicyclist, who was severely injured. A lawsuit followed and Medinas automobile insurer retained a law firm to represent him. The firm assigned the case to Attorney Tod Castronovo. Castronovo was unable to make contact with Medina because Medina had fled to Mexico shortly after being involved in a homicide. Medina did not tell the insurer or Castronovo of his situation or whereabouts. Despite a diligent effort, Medina could not be found. He remained incommunicado throughout the litigation, making it impossible to respond to discovery. A default judgment was entered against him as a terminating sanction. No appeal was filed.
In 2003, Medina, still living in Mexico, filed a legal malpractice action against Castronovos firm, alleging that the firm had not adequately protected his interests. Medina was represented by Vip Bhola, who had served as cocounsel for the bicyclist who had sued Medina. As required by court order, Medina traveled from Mexico to San Diego for his deposition. There, he was arrested for murder. When Medina was eventually deposed, he invoked the Fifth Amendment and refused to answer relevant questions. The superior court entered issue and evidence exclusion sanctions against him. Castronovos firm moved for summary judgment, which was granted. No appeal was taken.
In 2005, Castronovos firm filed this action against Medina and Bhola for malicious prosecution. Bhola responded with a special motion to strike, contending the action was a strategic lawsuit against public participation, or SLAPP. (See Code Civ. Proc., § 425.16 (section 425.16).) The trial court denied the motion, concluding that Castronovos firm had made a sufficient showing that the action had merit. Bhola appealed. We agree with the trial court and therefore affirm.
I
BACKGROUND
The following allegations and facts are taken from the complaint and the evidence submitted on the anti-SLAPP motion. In ruling on such a motion, the trial court accepts as true the evidence favorable to the plaintiff. (See HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 212.) It does not weigh the evidence, make credibility determinations, or resolve evidentiary conflicts. (See Kashian v. Harriman (2002) 98 Cal.App.4th 892, 906.)
A. The Personal Injury Action
On October 20, 1999, Medina was driving his vehicle in El Monte, California. He stopped at an intersection. As Medina started to make a right turn, he hit Jesse Samano, who was riding a bicycle. Samano suffered severe injuries, including brain damage.
On March 10, 2000, Samanos attorney reported the accident to Medinas automobile insurer, The Vision Insurance Group (Vision). Vision used Professional Claims Services, Inc. (PCS) to administrate claims. In response to a March 13, 2000 letter from PCS, Medina completed a "Claim Report Form" and returned it. Medina listed 215 South Vernon Avenue, Azusa, California, as his home address. On August 23, 2000, Medina gave a partial recorded statement to PCS, which was not completed because Medinas cell phone "gave out."
In a telephone conversation with PCS on December 20, 2000, Medina said he had received "something" — some "legal paperwork" — a "couple of months ago" but did not know where it was. In a follow-up conversation on January 2, 2001, PCS learned for the first time that Medina had been sued by Samano and that his default had been entered.
On February 5, 2001, PCS sent an e-mail to the law firm of Even, Crandall, Wade, Lowe & Gates (Even Crandall), indicating that Medina had been served with the summons and complaint on September 19, 2000, and his default had been entered on October 25, 2000. PCS stated that Medina "never told us about it." The e-mail instructed Even Crandall to get the default set aside and to file an answer on Medinas behalf. The firm assigned the case to Castronovo.
Castronovo obtained a copy of the complaint in Samano v. Medina (Super. Ct. L.A. County, 2000, No. KC033979) (Samano case)). It listed Richard M. Foster, Esq., and the Law Offices of Richard M. Foster as Samanos counsel. The proof of service had been filed by Bhola, who used the same office address as Foster. Bhola was Fosters son-in-law. The documents showed that substituted service had been made on Medina by leaving a copy of the summons and complaint with his wife at their home, and then mailing a copy of the papers to the same address, namely, 215 South Vernon Avenue, Azusa, California. Also named as defendants were the City of El Monte, Ramona and Peck Investments, and Tommys World Famous Hamburgers.
On February 8, 2001, Castronovo contacted Foster and explained that Vision had not been notified of the suit. Foster agreed to set aside the default, and Castronovo agreed to answer the complaint promptly. A stipulation to that effect was executed and filed; the default was vacated; and an answer was filed.
Foster sent Castronovo a set of form interrogatories and a document demand. Castronovo agreed to shorten the time to respond to the interrogatories, such that responses would be due on April 30, 2001.
Castronovo had not yet been able to reach Medina. He had tried the business and home telephone numbers listed on Medinas recorded statement but without success. As a result, Castronovo contacted PCS and recommended that it hire an investigator as soon as possible to determine Medinas location. Moore & Associates was retained to do the work. It found a post office box in Medinas name, which, in turn, led to a residential address in West Covina. Castronovo wrote to Medina at that address. There was no response.
By letter dated April 20, 2001, Foster made a policy-limit demand with a 10-day deadline, notwithstanding that he did not yet know what the policy limits were. On April 27, 2001, Castronovo spoke with Foster, stating that Visions policy limits were $15,000 and that the policy-limit demand was accepted. Castronovo also said he had "temporarily lost contact" with Medina but expected to locate him to provide a verified response to the interrogatory concerning whether Medina had any other applicable insurance. Castronovo sent a letter to Foster confirming the conversation.
Foster did not believe that the policy limits were "only" $15,000. He thought Castronovo "was lying" because Medinas vehicle was brand new and, in Fosters opinion, no one would take out an initial policy with limits so low.
In June 2001, Castronovo began employment with the firm of Shaver, Korff & Castronovo (Shaver Korff).
Foster filed a motion to compel answers to the form interrogatories. Castronovo did not file opposition papers. On June 12, 2001, the superior court ordered Medina to serve verified answers within 20 days. Castronovo contacted PCS and suggested that an in-house investigator go to the West Covina address discovered by Moore & Associates to determine if Medina lived there. PCS followed Castronovos advice and learned that the address was not Medinas. On July 2, 2001, Castronovos office informed Foster by letter that "we have been unable to contact Mr. Medina [but] will continue with our efforts."
Castronovo hired another investigator, German Lopez, to find Medina. Lopez learned that the Azusa property (listed as Medinas home address on the claim report form) was owned by Medinas parents. Lopez left a letter with the tenant at the Azusa property, addressed to Medina in care of his parents. The letter stated that Medina needed to contact Castronovos office immediately. Subsequently, the tenant informed Lopez that Medinas mother had been informed of the efforts to contact her son. This, too, led nowhere.
On August 1, 2001, as part of a document production, Castronovo mailed Foster a copy of the declarations page of Medinas policy. It showed that Medina had policy limits of $15,000 per person for bodily injury.
In September 2001, Castronovo filed a motion for summary judgment to enforce the purported settlement agreement based on Fosters acceptance of Visions policy limits. Foster filed a cross-motion, seeking to have Medinas answer stricken for failure to comply with the court order mandating answers to the interrogatories. The superior court denied Castronovos motion and granted Fosters motion, striking Medinas answer.
In October 2001, Fosters law office, listing Bhola as one of its attorneys, filed a request for a default judgment in the amount of $10.25 million. In February 2002, Bhola signed and filed a narrative statement of facts in support of the judgment. On May 22, 2002, a default judgment was entered in the amount requested.
In May 2002, Fosters office established a special needs trust for Samano, using $823,000 in settlement proceeds (not including attorney fees) that would be received in installments from one or more of the other defendants in the action. The superior court awarded $70,000 in attorney fees to Bhola and another attorney from Fosters office and $432 in monthly annuity payments to Bhola and the same attorney.
B. The Legal Malpractice Action
On February 26, 2003, Bhola, now representing Medina, filed an action against several insurers and Shaver Korff (Medina v. Mutual Service Casualty Insurance Company (Super. Ct. L.A. County, 2003, No. KC041162)), seeking specifically, among other things, payment of the $10.25 million judgment. Medina alleged that the insurers breached their duties under the insurance policy and engaged in bad faith. The insurers filed an answer as well as a cross-complaint against Medina and Samano. The cross-complaint sought in part to set aside the default judgment against Medina on the grounds of extrinsic mistake or fraud.
With respect to Shaver Korff, Medina alleged that the firm had not adequately protected his interests in the Samano case, constituting a breach of the insurance policy, negligence, and breach of fiduciary duty. On March 5, 2003, Shaver Korff was served with the summons and complaint. Two days later, Castronovo wrote a letter to Bhola, explaining that the firm had been unable to locate Medina and detailing the efforts taken to find him. Castronovo maintained that there was no basis for a malpractice claim against the firm and offered Bhola the opportunity to review the firms legal file in the Samano case.
On or about March 13, 2003, Shaver Korff provided Bhola with a duplicate copy of its entire legal file in Samano, omitting only the billing information. Bhola nevertheless went forward with the litigation. Desmond Hinds, Esq., was retained to defend Shaver Korff.
Shaver Korff served Medina with form and special interrogatories. In responses dated May 8, 2003, Medina stated that his present telephone number was 909-864-6344. That area code indicated a location in Riverside or San Bernardino County. Medina declined to give his past and present home and business addresses, objecting on the grounds of relevancy and privacy. The verifications for the responses bore the signature, "Benjamin Medina," and indicated they had been executed in "North Hollywood, California."
On May 19, 2003, Shaver Korff noticed Medinas deposition for June 5, 2003, to be taken in Los Angeles. This led to a series of communications between Hinds and Bhola concerning Medinas location. Initially, Bhola disclosed only that Medina "currently resides out of the country in Mexico . . . so you can probably take the deposition in Tijuana, Mexico." A few days later, Bhola gave a full address for Medina, indicating he lived at #33, Colonia Centro, Apatzingan, Michoacan, Mexico.
On June 17, 2003, Shaver Korff filed a motion to compel Medinas deposition. Three days later, Bhola served a supplemental response to the form interrogatories stating Medina had been living in Apatzingan, Michoacan, Mexico, from "2/01 to present." Medina filed an opposition to the motion to compel. In a supporting declaration, Medina stated, "I moved to Mexico so that I could make a living for myself there." He asserted it would be a "great financial burden" to come to California for his deposition. The superior court ordered Medina to appear for his deposition in San Diego, to be taken on September 12, 2003.
On September 12, 2003, in San Diego, Medina was arrested for murder before the deposition began. Shaver Korff obtained a copy of a felony complaint charging Medina with murder, attempted murder, shooting at an occupied motor vehicle, and shooting from a motor vehicle, all allegedly occurring on February 9, 2001. According to Bhola, Medina had been the victim of a home invasion robbery on February 9, 2001. As the robbers attempted to drive away, Medina and another individual managed to give chase in a vehicle. During the chase, shots were exchanged. A shot from Medinas vehicle killed one of the robbers. Medina did not fire the shot.
At his preliminary hearing, Medina was represented by Jhayne Eddy, Esq. She was associated with Bhola and Foster, all of whom had the same office address. Eddy had agreed with Medina that she was to be paid out of the recovery, if any, in the legal malpractice case against Shaver Korff. The deputy district attorney raised the issue of this fee arrangement at the beginning of the preliminary hearing, contending Eddy had a conflict of interest. For example, the deputy district attorney had previously mentioned the possibility of having Medina testify against the robbers. But Eddy had advised Medina not to cooperate with the authorities because it might diminish his chances of success in the malpractice case. At the preliminary hearing, Eddy acknowledged that her desire for Medina to succeed in both cases might result in Medinas conviction or a heavier sentence. The superior court judge concluded that there was at least an appearance of a conflict of interest. With Eddys agreement, the preliminary hearing was continued so that other counsel could be found for Medina.
Meanwhile, Hinds and Bhola were trying, without success, to reschedule Medinas deposition in the malpractice case. On motion by Hinds, the superior court ordered that the deposition take place on December 2, 2003, at the Los Angeles County Mens Central Jail.
At the deposition, Medina invoked the Fifth Amendment and refused to answer questions about (1) his whereabouts from the date of the homicide (February 9, 2001) through the date of filing the malpractice case (February 26, 2003) and (2) the means of contacting him during the same period.
Based on Medinas refusal to answer relevant questions at his deposition, Shaver Korff filed a motion to strike the complaint. Medina filed opposition. The trial court denied the motion to strike but granted issue and evidence exclusion sanctions. The following issues, among others, were deemed established: (1) Shaver Korffs inability to make contact with Medina in the Samano case was due to Medinas willful unavailability; (2) Medina willfully made himself unavailable to Shaver Korff and did not participate in his defense because of his involvement in the criminal activities that led to his subsequent arrest; (3) Shaver Korff did not breach any duties owed to Medina; (4) the order striking Medinas answer in Samano and the ensuing default and default judgment were not caused by Shaver Korff but were the direct and proximate result of Medinas willful noncooperation and nonparticipation in his defense; and (5) Medina was not damaged as a result of any conduct, act, or omission of Shaver Korff.
The superior court issued its order on March 26, 2004. By letter dated May 6, 2004, Hinds requested that Bhola dismiss the malpractice action in light of the sanctions order. The letter pointed out that, under Zamos v. Stroud (2004) 32 Cal.4th 958, a plaintiff could be found liable for malicious prosecution based on the continued prosecution of a lawsuit if, after its filing, he discovered there was a lack of probable cause. Hinds asserted that, given the courts prior order, "[p]atently no `probable cause exists to prosecute Mr. Medinas claims." Bhola did not take any steps toward dismissal.
On May 17, 2004, Shaver Korff filed a motion for summary judgment, noticing the hearing for August 2, 2004. Shaver Korff took Fosters deposition on July 10. On July 21, Bhola noticed Castronovos deposition for August 5 — three days after the summary judgment hearing.
The summary judgment motion was heard as scheduled. Bhola did not file opposition papers. Nor did he or any other attorney appear on Medinas behalf. The superior court granted the motion on the day of the hearing. The next day, August 3, 2004, the court served notice of entry of judgment.
At some point after the granting of the motion and before August 6, 2004, Bhola placed a telephone call to Hinds, saying he did not know about the summary judgment motion or the hearing on the motion. Nevertheless, Bhola did not file any papers to set aside or otherwise challenge the judgment. No appeal was filed.
In 2005, Medina was tried on the criminal charges. During the course of the trial, all charges against him were dismissed.
C. The Present Action
On March 4, 2005, Shaver Korff filed this malicious prosecution action against Medina and Bhola. The complaint set forth in detail the procedural history of the Samano case and the legal malpractice action. It further alleged as follows. The default judgment entered against Medina in Samano was caused by Medinas willful concealment of his whereabouts and his willful refusal to cooperate and participate in his defense. Thereafter, in bringing and continuing to prosecute the legal malpractice action against Shaver Korff, Medina and Bhola acted without probable cause and with malice. In the malpractice action, the superior court had entered summary judgment in Shaver Korffs favor. As a consequence of the malpractice action, Shaver Korff incurred attorney fees and costs.
Bhola filed an anti-SLAPP motion, contending primarily that Shaver Korff could not establish a probability that it would prevail at trial. In its opposition papers, Shaver Korff argued to the contrary. Both sides submitted declarations and supporting evidence.
On August 3, 2005, the trial court heard the anti-SLAPP motion. Foster, who was never counsel of record in this case, appeared to argue the motion on Bholas behalf. At the hearing, the trial court denied the motion, stating that the evidence was sufficient for the case to go forward on the merits. An order was duly entered. Bhola moved for reconsideration, which Shaver Korff opposed. The trial court denied reconsideration because Bhola had not shown the existence of any new facts, circumstances, or law. (See Code Civ. Proc., § 1008, subd. (b).) Bhola appealed.
II
DISCUSSION
The anti-SLAPP statute protects defendants from interference with the valid exercise of their constitutional rights, particularly the right of freedom of speech and the right to petition the government for the redress of grievances. (See Lafayette Morehouse, Inc. v. Chronicle Publishing Co. (1995) 37 Cal.App.4th 855, 862-864; Conroy v. Spitzer (1999) 70 Cal.App.4th 1446, 1448.)
"[S]ection 425.16 requires that a [trial] court engage in a two-step process when determining whether a defendants anti-SLAPP motion should be granted. First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one `arising from protected activity. (§ 425.16, subd. (b)(1).) If the court finds such a showing has been made, it then must consider whether the plaintiff has demonstrated a probability of prevailing on the claim." (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 76.) We review the trial courts decision de novo. (Robinzine v. Vicory (2006) 143 Cal.App.4th 1416, 1421.)
"In making its determination, the trial court is required to consider the pleadings and the supporting and opposing affidavits stating the facts upon which the liability or defense is based." (Church of Scientology v. Wollersheim (1996) 42 Cal.App.4th 628, 646, italics omitted, disapproved on another point in Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 68, fn. 5.) "It is recognized, with the requirement that the court consider the pleadings and affidavits of the parties, the test is similar to the standard applied to evidentiary showings in summary judgment motions pursuant to Code of Civil Procedure section 437c and requires that the [plaintiffs] showing be made by competent admissible evidence within the personal knowledge of the declarant. . . . Averments on information and belief are insufficient. . . . As in a motion for summary judgment, the pleadings frame the issues to be decided." (Church of Scientology v. Wollersheim, supra, 42 Cal.App.4th at pp. 654-655, citations and fn. omitted; accord, DuPont Merck Pharmaceutical Co. v. Superior Court (2000) 78 Cal.App.4th 562, 568.)
"`An assessment of the probability of prevailing on the claim looks to trial, and the evidence that will be presented at that time." (Church of Scientology v. Wollersheim, supra, 42 Cal.App.4th at p. 656.) 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." (Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 821.)
As stated, the trial court must construe the evidence favorably to the plaintiff and cannot weigh the evidence, make credibility determinations, or resolve evidentiary conflicts. (See HMS Capital, Inc. v. Lawyers Title Co., supra, 118 Cal.App.4th at p. 212; Kashian v. Harriman, supra, 98 Cal.App.4th at p. 906.) The trial court considers the defendants evidence only to determine if it defeats the plaintiffs showing as a matter of law. (See Kashian v. Harriman, supra, 98 Cal.App.4th at p. 906.)
A. Defendants Protected Activity
Turning to the language of the anti-SLAPP statute, "[a] cause of action against a person arising from any act of that person in furtherance of the persons 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." (§ 425.16, subd. (b)(1).)
"As used in [the statute], `act in furtherance of a persons right of petition or free speech under the United States or California Constitution in connection with a public issue includes: (1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law; (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law; (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest; (4) or any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest." (§ 425.16, subd. (e), italics added.)
By its very nature, Shaver Korffs cause of action — malicious prosecution — is based on Bholas filing and pursuit of civil litigation, namely, the legal malpractice action. The anti-SLAPP statute (§ 425.16, subd. (e)(1), (2)) therefore applies. (See Zamos v. Stroud, supra, 32 Cal.4th at pp. 964-965; Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 736-741 & fn. 6; Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1115.)
B. Plaintiffs Probability of Success
The burden thus shifted to Shaver Korff, and it had to — in the words of the statute — "establish[] that there is a probability that [it] will prevail on [its] claim." (§ 425.16, subd. (b)(1).) "The term `probability is synonymous with `reasonable probability." (Schoendorf v. U.D. Registry, Inc. (2002) 97 Cal.App.4th 227, 238.) As we explain, Shaver Korff succeeded in that respect.
It has long been established that to prevail on a malicious prosecution claim, the plaintiff must prove that the defendant brought a prior action without probable cause, initiated with malice, pursued to a termination in plaintiffs favor, and resulting in injury. (See Slaney v. Ranger Ins. Co. (2004) 115 Cal.App.4th 306, 318.) More recently, our Supreme Court recognized that liability for malicious prosecution may also exist where, in the prior action, the plaintiff continued to prosecute the lawsuit after learning that the suit lacked probable cause. (See Zamos v. Stroud, supra, 32 Cal.4th at pp. 966-967, 970.)
"[P]robable cause is determined objectively, i.e., without reference to whether the attorney bringing the prior action believed the case was tenable . . . , and . . . the standard of probable cause to bring a civil suit [is] equivalent to that for determining the frivolousness of an appeal . . . , i.e., probable cause exists if `any reasonable attorney would have thought the claim tenable. . . . This rather lenient standard for bringing a civil action reflects `the important public policy of avoiding the chilling of novel or debatable legal claims. . . . Attorneys and litigants . . . `"have a right to present issues that are arguably correct, even if it is extremely unlikely that they will win . . . ." . . . Only those actions that `"any reasonable attorney would agree [are] totally and completely without merit" may form the basis for a malicious prosecution suit." (Wilson v. Parker, Covert & Chidester, supra, 28 Cal.4th at p. 817, citations omitted.)
"`The "malice" element . . . relates to the subjective intent or purpose with which the defendant acted in initiating the prior action. . . . The motive of the defendant must have been something other than that of bringing a perceived guilty person to justice or the satisfaction in a civil action of some personal or financial purpose. . . . The plaintiff must plead and prove actual ill will or some improper ulterior motive. . . . Malice `may range anywhere from open hostility to indifference. . . . Malice may also be inferred from the facts establishing lack of probable cause." (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 292, some italics added, citation omitted.) At least four circumstances demonstrate malice in a malicious prosecution case: "where the prior suit was commenced (1) by a party who did not believe the claim to be valid; (2) chiefly as a result of hostility or ill will; (3) solely to deprive the party being sued of the beneficial use of that partys property; or (4) for the purpose of extracting a settlement bearing no relationship to the claim." (Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal.App.4th 659, 675, fn. 12, italics added.)
We have no trouble concluding that Shaver Korff pleaded a legally viable claim. The complaint alleged sufficient facts which, if true, would satisfy all of the elements of malicious prosecution. Nor do we have any problem concluding that Shaver Korffs evidence in opposition to the anti-SLAPP motion, if credited, showed a reasonable probability that the firm will prevail at trial.
Bhola based the legal malpractice action in part on the insurance policy, alleging that Shaver Korff had violated the policy by failing to defend Medina adequately in the Samano case. But the policy expressly gave the insurer the right to "settle or defend, as we consider appropriate, any claim or suit asking for . . . damages." And the insurer retained Shaver Korff to represent Medina.
"Under familiar forms of liability insurance policies[, such as the one here,] the defense of an action against the insured is wholly controlled by the insurer; it selects and pays the attorneys, picks the witnesses, determines whether to compromise the case, retains the right to call upon the assured for such assistance as it wants, bars him from otherwise intervening in the conduct of the case, through its own attorneys and agents conducts the trial throughout, likewise conducts any appeal and pays any final judgment up to the limit of the coverage." (Causey v. Cornelius (1958) 164 Cal.App.2d 269, 276.) "[A]n insurance company has a direct pecuniary interest in the underlying third party action against its insured and . . . having such an interest, it is entitled to have counsel represent its own interests as well as those of its insured, as long as their interests are aligned." (Gafcon, Inc. v. Ponsor & Associates (2002) 98 Cal.App.4th 1388, 1414.) Thus, Bholas assertion that Shaver Korff acted without authority in making various defense decisions appears highly questionable.
Bhola argues that Shaver Korff had a conflict of interest in representing Medina because Medinas exposure (as shown by medical records) exceeded Visions $15,000 policy limits. That factor, however, did not give rise to a conflict. (See generally Croskey et al., Cal. Practice Guide: Insurance Litigation (The Rutter Group 2006) ¶¶ 7:769 to 7:785.6, pp. 7B-91 to 7B-97; Civ. Code, § 2860, subd. (b).)
The policy also contained a standard cooperation clause, requiring Medina to "[c]ooperate with us in the investigation, settlement or defense of any claim or suit." Medina was further obligated to "[p]romptly send us copies of any notices or legal papers received in connection with the accident or loss." "Liability insurance policies invariably require the insured to cooperate with the insurer in investigation and defense of third party lawsuits." (Croskey et al., Cal. Practice Guide: Insurance Litigation, supra, ¶ 7:419, p. 7A-135.) "`[S]uch provisions "enable the [insurer] to possess itself of all knowledge, and all information as to other sources and means of knowledge, in regard to facts, material to [its] rights, to enable [it] to decide upon [its] obligations and to protect [itself] against false claims."" (Truck Ins. Exchange v. Unigard Ins. Co. (2000) 79 Cal.App.4th 966, 976.) The insureds breach of the duty to cooperate with the insurer relieves the insurer of its duty to defend and indemnify if its ability to provide a defense has been substantially prejudiced. (Ibid.)
Assuming that, before filing the malpractice action, Bhola was unaware of Medinas failure to cooperate with Shaver Korff, he surely knew about it nine days later when Castronovo sent him the firms legal file in the Samano case. The file indicated that Medina had failed to notify the insurer of (1) the Samano suit, (2) the service of the summons and complaint, and (3) the entry of his default. The file also detailed, through letters and investigative reports, Shaver Korffs unsuccessful efforts to find Medina. And Medinas willful disappearance and noncooperation arguably prejudiced the insurers ability to provide a defense. Thus, the insurer, which controlled the litigation, was fully authorized under the policy to instruct Castronovo to set aside Medinas default and file an answer. That is exactly what Castronovo did. Thereafter, Shaver Korff could not respond to discovery because of Medinas ongoing noncooperation and seclusion, leading to another default. It follows that any reasonable attorney, after reviewing Shaver Korffs legal file, would have agreed that continuing to prosecute a malpractice action against the firm would be "totally and completely without merit." (Wilson v. Parker, Covert & Chidester, supra, 28 Cal.4th at p. 817.)
In a similar vein, the malpractice action was not viable unless Shaver Korffs alleged negligence resulted in injury to Medina, and he could prove damages to a legal certainty. (See Slovensky v. Friedman (2006) 142 Cal.App.4th 1518, 1528.) But when Shaver Korff stepped into the Samano case, Medinas default had already been taken. Although the firm managed to get the default set aside by stipulation, the ultimate result — due to Medinas noncooperation and nonparticipation — was the same: the entry of another default. The ensuing default judgment was simply a matter of routine paperwork. Consequently, it is difficult to see how Shaver Korffs actions put Medina in a worse position.
In addition, according to the argument presented by Bhola in his anti-SLAPP motion, the legal malpractice action may have been a premature or unnecessary means of remedying the default judgment against Medina. Bhola argued below that, because Shaver Korff never made contact with Medina in the Samano case, the firm was not authorized to represent Medina and improperly made a general appearance by filing an answer to the complaint. If Bhola truly believed that all along, he could have brought an independent action in equity to vacate the default judgment. (See Groves v. Peterson (2002) 100 Cal.App.4th 659, 667-669; Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2006) ¶¶ 5:463 to 5:465, pp. 5-109 to 5-110.) Yet Bhola chose not to pursue it.
That Bhola arguably knew of the fatal flaw in the malpractice case — Medina had fled to Mexico and did not cooperate in Samano — may be inferred from Medinas discovery responses in the malpractice case. In 2003, when asked in interrogatories to provide Medinas current and past home addresses, Bhola objected on the grounds of relevancy and privacy but gave a California telephone number as Medinas number. Bhola delayed providing information about Medinas residence as long as possible. After Shaver Korff noticed Medinas deposition for Los Angeles, Bhola responded, stating only that Medina lived in Mexico and could be deposed in Tijuana. Later, Bhola disclosed Medinas full address, indicating Medina had lived in Mexico since February 2001 — the month of the homicide for which Medina was arrested when he eventually appeared for his court-ordered deposition in San Diego.
In arguing that the trial court erred in denying the anti-SLAPP motion, Bhola mistakenly focuses on the reason why Shaver Korff prevailed in the legal malpractice action, namely, the granting of summary judgment based on Medinas invocation of the Fifth Amendment at his deposition. Bhola contends he did not foresee that particular outcome. But the probability of success in the present case for malicious prosecution need not rest on Medinas silence at the deposition in the malpractice action. Rather, the question is whether any reasonable attorney would have realized that the malpractice action was untenable at any point before or during its prosecution. (See Zamos v. Stroud, supra, 32 Cal.4th at pp. 965-967, 970.) Bhola arguably should have come to that realization, if not before initiating the litigation based upon what Medina told him, then upon reviewing Shaver Korffs Samano file nine days after bringing suit — more than eight months before Medinas deposition.
Bhola correctly notes in his opening brief that the trial judge was not empowered to resolve conflicts in the evidence. Nevertheless, he repeatedly states that Castronovo persuaded Foster to set aside Medinas default on the ground that substituted service on Medinas wife had been defective. From this, Bhola concludes that Shaver Korff committed malpractice by agreeing, in exchange, to answer the complaint without Medinas consent. Bhola contends that, instead, Shaver Korff should have vacated the default by motion and then insisted that Foster re-serve Medina.
But this argument ignores Castronovos sworn statement that he neither questioned the validity of service nor stated he had Medinas consent to file an answer. In his declaration, Castronovo "categorically denies" Bholas version of what happened. And Fosters confirming letter on the subject indicates that he agreed to set aside the default because Medina had failed to inform Vision about the suit.
Bholas argument also overlooks the virtual impossibility of vacating the default by motion. The proof of service documents, filed by Bhola himself, did not suggest any reason to question the validity of service. And a motion would have required a supporting declaration from Medina, who was nowhere to be found. Further, if, as Bhola contends, Shaver Korff had no authority to represent Medina in the first place (and could not agree to file an answer to the complaint), how could the firm have authority to file a motion to vacate the default on his behalf? More to the point, what would a reasonable attorney in Castronovos situation have done? Reject an agreement with opposing counsel to set aside the default by stipulation and, instead, risk it all on a meritless motion? Do nothing unless and until the client was found or showed up, letting the default go unchallenged for an undeterminable amount of time (as it turned out in this case, more than two years)? To pose these questions is to answer them. We therefore find little merit in Bholas attack on Castronovos decision to enter into the stipulation.
Bholas briefs refer several times to the evidence submitted with his motion for reconsideration, which was filed after the trial court denied his anti-SLAPP motion. In particular, Bhola submitted a declaration from an "expert," who opined that Shaver Korff had committed malpractice. As stated, the trial court denied the motion because it did not meet the requirements for reconsideration. (See Code Civ. Proc., § 1008, subd. (b).) Yet Bhola discusses the experts opinion without informing us that it was submitted as part of the motion for reconsideration. Nor does Bhola argue that the motion for reconsideration was improperly denied. In essence, then, Bhola relies on evidence in this court without acknowledging that it was never properly before the trial court. This omission is misleading to say the least.
Bhola also relies on the insurers cross-complaint in the legal malpractice action in arguing that there was probable cause to sue Shaver Korff for malpractice. But he cites no authority for the proposition that the allegations in a defendants cross-complaint are binding on another defendant who is not a party to that pleading. We therefore reject Bholas reliance on the cross-complaint to show probable cause. (See Kurinij v. Hanna & Morton (1997) 55 Cal.App.4th 853, 865; Interinsurance Exchange v. Collins (1994) 30 Cal.App.4th 1445, 1448.)
Finally, Bhola argues that Shaver Korffs evidence would not support a finding of malice. We disagree. "Malice" may range from open hostility to indifference and may be inferred from the facts establishing lack of probable cause. It includes litigation brought or maintained for an improper purpose. (See Soukup v. Law Offices of Herbert Hafif, supra, 39 Cal.4th at p. 292.) The evidence would support the following scenario.
Bhola sometimes worked out of his father-in-laws office and sometimes out of his own office. Both attorneys used the same address. Their names appeared interchangeably on court documents. Bholas father-in-law obtained a default in a personal injury case because the defendant, Medina, failed to tell his automobile insurer he had been sued. Medina fled to Mexico after being involved in a homicide and did not tell the insurer of his whereabouts. The insurer retained defense counsel, who convinced the father-in-law to set aside the default. An answer was filed, as instructed by the insurer. Defense counsel retained investigators to conduct an extensive search for Medina, but he could not be found. With Medina incommunicado, the defense could not answer discovery. Bhola obtained a $10.25 million default judgment as a terminating sanction. He also established a special needs trust, pocketing substantial attorney fees and receiving monthly annuity payments.
Medina carried only $15,000 in insurance. He still lived in Mexico and faced likely prosecution for murder if he returned to the United States. As a practical matter, Medina appeared judgment proof.
In an unusual alliance, Bhola undertook the representation of Medina — a former adverse party — and filed a legal malpractice action, expressly seeking payment of the judgment from former defense counsel. Bhola contended that former counsel never had authority to represent Medina and improperly made a general appearance on Medinas behalf by filing an answer to the complaint. Yet Bhola knew from former counsels file that (1) the default judgment was the result of Medinas willful noncooperation and seclusion in Mexico, and (2) former counsel had attempted diligently to locate him. Aware of Medinas involvement in a homicide, Bhola sought to prevent his having to return to the United States. That effort failed and Medina was ordered to appear in San Diego for his deposition. He was promptly arrested for murder. One of Bholas associates initially represented Medina in the criminal proceedings, advising him not to cooperate with the authorities because that might compromise his ability to win the malpractice action. Later, the associate withdrew from further representation, upon the criminal courts recommendation, because her fee was to be paid out of the legal malpractice recovery, if any. At Medinas deposition in the malpractice case, he invoked the Fifth Amendment, resulting in discovery sanctions and, ultimately, summary judgment against him.
Based on this scenario, we conclude that Shaver Korffs evidence would support a finding that Bhola pursued the legal malpractice action with malice, namely, with an improper ulterior motive or, at a minimum, with indifference. Accordingly, the trial court properly denied the anti-SLAPP motion.
III
DISPOSITION
The order is affirmed.
We concur:
VOGEL, J.
JACKSON, J.