Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEAL from an order of the Superior Court of Los Angeles County. Super. Ct. No. BC344861, Michael Stern, Judge. Reversed.
Yee & Belilove, Steven R. Yee, Steve R. Belilove, and Frank E. Marchetti for Defendants and Appellants.
Hunt Ortmann Palffy Nieves Lubka Darling & Mah, Inc. and Wahid E. Guirguis for Plaintiffs and Respondents.
CHAVEZ, J.
Gould-Saltman Law Offices, LLP, Richard Gould-Saltman, and Nancy Kaiser (Kaiser) (collectively “appellants”) appeal from an order of the trial court denying their special motion to strike (anti-SLAPP motion) under the anti-SLAPP statute (Code Civ. Proc., § 425.16, hereafter section 425.16) and finding that, because the anti-SLAPP motion was either frivolous or intended to cause delay, sanctions against appellants were warranted. We reverse.
SLAPP is an acronym for strategic lawsuits against public participation. (Wilcox v. Superior Court (1994) 27 Cal.App.4th 809, 813, overruled in part on other grounds in Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 68, fn. 5.)
CONTENTIONS
Appellants contend that the trial court erred in denying their anti-SLAPP motion. Specifically, appellants contend that the trial court erred in finding that respondents made out a prima facie case of malicious prosecution against appellants because (1) respondents failed to establish that Kaiser, who was merely an employee of the firm, was responsible for commencing the action or acted with malice; (2) respondents failed to establish that appellants did not have probable cause to litigate the underlying action; and (3) respondents failed to establish that appellants litigated the underlying action with malice. Appellants further contend that because respondents’ complaint for malicious prosecution arises from a family law matter, it is barred as a matter of law. Finally, appellants argue that, because their anti-SLAPP motion was meritorious, the trial court erred in finding that respondents are entitled to monetary sanctions.
Because we find that reversal is warranted on the grounds that respondents failed to show that appellants did not have probable cause to litigate the underlying action and failed to establish the existence of malice, we do not address the parties’ competing positions as to Kaiser’s role in the litigation.
BACKGROUND
1. The Marital Dissolution
In September 1992, Ludmila and Pavel (Paul) Budilo were married. Paul is the son of respondents Vladimir and Tatiana Budilo (respondents). After their marriage, Ludmila and Paul lived in a house located at 602 Calle Monterey in San Dimas, California (the property).
On November 4, 2003, Ludmila filed for marital dissolution from her husband in Los Angeles Superior Court, case No. BD397619. Ludmila retained Gould-Saltman Law Offices, LLP to represent her in the dissolution action. Attorney Richard Gould-Saltman is a partner and principal of the firm who was primarily responsible for handling the representation of Ludmila. He was assisted by Kaiser, his associate attorney, who was an employee of the firm.
2. The Constructive Trust Action
At the commencement of appellants’ representation of Ludmila, she told them the following facts: subsequent to her engagement to Paul, he had told her that he intended to purchase the property for them to own as husband and wife. However, because they needed assistance in purchasing the property, it would temporarily be placed in the name of respondents. Ludmila told appellants that Paul purchased the property in August 1992 and caused the title to be placed in respondents’ names. She further stated that while she and Paul were married, Paul told her that the property was in respondents’ names for legal and financial reasons, but that she and Paul were the actual owners of the property. Ludmila informed appellants that Paul paid the mortgage every month from their joint bank account and that Paul handled all finances during their marriage. When Ludmila noticed that the mortgage bills were in respondents’ names, Paul told her that he would change the title soon but that it could not be done at that time due to high interest rates or transfer fees. Ludmila informed appellants that throughout her marriage to Paul, respondents represented to Ludmila that the property belonged to Paul and Ludmila and respondents acted as if the property belonged to Paul and Ludmila.
On the basis of Ludmila’s representations, in February 2004 appellants filed a motion for joinder in the dissolution action seeking to join respondents as parties. The court granted the motion and respondents were joined as parties to the dissolution action.
On March 8, 2004, appellants filed a complaint seeking that the property be placed into a constructive trust for Ludmila and Paul so that Ludmila could protect her community property interest in the property. Respondents’ counsel made efforts to discourage appellants from filing and pursuing the action on the grounds that respondents were the sole owners of the property. On March 3, 2004, prior to the hearing on the joinder motion, respondents’ counsel offered appellants the opportunity to review documents which proved that respondents owned the property. Again on March 25, 2004, after the filing of the complaint, counsel for respondents offered to permit appellants to review the documents because the allegations contained in the complaint “have caused, and continue to cause, my clients tremendous stress.”
The complaint for constructive trust was served on respondents on December 22, 2004. At that time respondents’ counsel sent a letter to appellants accepting service of the complaint but warning appellants that their proceeding with the lawsuit was subjecting respondents to “great damage.” On January 21, 2005, respondents filed an answer denying all allegations.
On May 6, 2005, and again on May 27, 2005, Ludmila was deposed in the dissolution action. During her deposition, Ludmila retreated from certain statements she had made to appellants regarding respondents’ representations to her about the property. In contrast to her prior statements, she indicated that she had never had any discussions with respondents concerning ownership of the property, and that the only person with whom she had discussed ownership of the property was Paul. On May 11, 2005, appellants issued a formal discovery notice pursuant to the Code of Civil Procedure. The documents in respondents’ counsel’s possession were produced in an exchange of documents with appellants’ counsel on August 17, 2005.
On June 2, 2005, the trial court ordered bifurcation of the constructive trust action from the dissolution action and set the constructive trust action for trial in October 2005. On September 8, 2005, upon review of the documents produced by appellants on behalf of Ludmila, counsel for respondents sent another letter to appellants indicating that the documents produced by appellants did not support their constructive trust claim and asking that the case be dismissed. On September 22, 2005, after reviewing the documents that respondents had produced, appellants offered to dismiss their action. On September 29, 2005, appellants dismissed the constructive trust action with prejudice.
3. The Malicious Prosecution Action
On December 20, 2005, respondents filed this malicious prosecution action. On January 20, 2006, appellants filed a demurrer and motion to strike portions of the malicious prosecution complaint. On February 22, 2006, a hearing was held on appellants’ demurrer and motion to strike, which the trial court then overruled.
On February 17, 2006, appellants filed their anti-SLAPP motion. Respondents opposed the motion, and a hearing was held on March 20, 2006. On March 27, 2006, the trial court issued its order denying the anti-SLAPP motion. The court found that appellants had met their initial burden of showing that the act underlying respondents’ cause of action fits one of the categories spelled out in section 425.16. The burden thus shifted to respondents to produce evidence of a prima facie case against appellants. The trial court found that respondents met this burden. The court found that respondents showed each element of a cause of action for malicious prosecution: commencement of the lawsuit by appellants, without probable cause, favorable termination on the merits, and the existence of malice. Finally, the trial court held that the anti-SLAPP motion was frivolous or intended to cause delay and thus respondents were entitled to monetary sanctions under section 425.16, subdivision (c).
We note that the trial court’s statement of decision indicates that the court found appellants’ anti-SLAPP motion to be “frivolous or solely intended to cause unnecessary delay” because “the prior demurrer was overruled.” However, the parties agree in their recitations of the procedural history of the case, and the record confirms, that appellants’ anti-SLAPP motion was filed prior to the time that the court made its decision on appellants’ demurrer.
On April 19, 2006, appellants filed a timely notice of appeal from the court’s order denying their anti-SLAPP motion.
DISCUSSION
I. Standard of Review
An order granting or denying an anti-SLAPP motion is appealable. (§ 425.16, subd. (i).) The trial court’s ruling on an anti-SLAPP motion is subject to our independent, de novo review. (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 269, fn. 3; Huntingdon Life Sciences, Inc. v. Stop Huntingdon Animal Cruelty USA, Inc. (2005) 129 Cal.App.4th 1228, 1245.)
II. Overview of the Anti-SLAPP Statute
The anti-SLAPP statute is aimed at curbing “lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances.” (§ 425.16, subd. (a).) Protection is extended to “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,” and to any “conduct in furtherance of the exercise of the constitutional right of petition . . . .” (§ 425.16, subd. (e)(2).)
Section 425.16, subdivision (b)(1) establishes a two-step process for determining whether an action should be stricken pursuant to an anti-SLAPP motion. (Navellier v. Sletten (2002) 29 Cal.4th 82, 88 (Navellier).) “First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity. [Citation].” (Ibid.) A defendant meets this burden by demonstrating that the conduct underlying the plaintiff’s cause of action falls under one of the categories listed in section 425.16, subdivision (e). (Ibid.) Second, the court must “determine whether the plaintiff has demonstrated a probability of prevailing on the claim,” by stating and substantiating a legally sufficient claim. If the plaintiff meets that burden, his action will not be stricken under the anti-SLAPP statute. (Id. at pp. 88-89.)
Here, the trial court ruled that appellants met their initial burden of showing that the underlying malicious prosecution action was subject to section 425.16, subdivision (e). No party contests this ruling. Therefore, respondents had the burden of proving that they had a reasonable probability of prevailing on their claim. (Navellier, supra, 29 Cal.4th at p. 88.)
III. Respondents’ Malicious Prosecution Cause of Action
A. Respondents’ Burden of Proof
In order to show a reasonable probability of prevailing on their claim, respondents were required to demonstrate that their complaint was “‘“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.”’ [Citations.]” (Navellier, supra, 29 Cal.4th at p. 89.)
In deciding whether respondents showed a probability of prevailing on their malicious prosecution claim, we consider “the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based.” (§ 425.16, subd. (b)(2).) Whether respondents have established a prima facie case is a question of law. (Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 821.)
The tort of malicious prosecution requires a showing that (1) the defendant commenced or prosecuted the underlying lawsuit; (2) the defendant brought the underlying lawsuit without probable cause or continued to prosecute the action after it was discovered that no probable cause existed; (3) the underlying lawsuit was pursued to a legal termination in plaintiff’s favor; and (4) the underlying lawsuit was initiated or prosecuted with malice. (Bertero v. National General Corp. (1974) 13 Cal.3d 43, 50 (Bertero); Zamos v. Stroud (2004) 32 Cal.4th 958, 970 (Zamos).) We disagree with the trial court’s conclusion that respondents made out a prima facie case of malicious prosecution against appellants. Instead, we find that respondents cannot show that the underlying lawsuit was brought without probable cause or was prosecuted with malice.
We note that the tort of malicious prosecution is disfavored, both because of its potential to impose an undue chilling effect on the ordinary citizen’s willingness to report criminal conduct or bring a civil dispute to court and because, as a means of deterring excessive and frivolous lawsuits, it has the disadvantage of constituting a new round of litigation itself. (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 872 (Sheldon).)
B. Probable Cause
The second element of the tort of malicious prosecution requires a showing either that (a) appellants lacked probable cause to bring the lawsuit; or (b) appellants continued to prosecute the action after it was discovered that no probable cause existed. As discussed below, we find that respondents have failed to make out a prima facie case that appellants’ actions fell into either of these two categories.
1. Probable Cause to Bring the Lawsuit
In determining whether probable cause existed, we must objectively determine whether appellants held “‘“a suspicion founded upon circumstances sufficiently strong to warrant a reasonable man in the belief that the charge is true.”’ [Citations.]” (Bertero, supra, 13 Cal.3d at p. 55.) When “there is no dispute as to the facts upon which an attorney acted in filing the prior action, the question whether there was probable cause to institute the prior action is purely a legal question, to be determined by the trial court on the basis of whether, as an objective matter, the prior action was legally tenable or not.” (Sheldon, supra, 47 Cal.3d at p. 868.) We conclude that the prior action in this case was objectively tenable and thus not brought without probable cause.
Appellants’ belief that they had probable cause to file the constructive trust complaint was based on Ludmila’s statements. According to appellants, Ludmila stated under penalty of perjury: (a) that her husband Paul told her that he had purchased a house for them to own as husband and wife; (b) that Paul told her that the property remained in respondents’ names for legal and financial reasons, but that Paul and Ludmila were the actual owners of the property; (c) that Paul paid the mortgage on the property every month from their joint bank account; (d) that Paul told her that he would change the title soon to place it in their name; and (e) that throughout her marriage to Paul, respondents represented to Ludmila that the property belonged to Paul and Ludmila and acted as if that was the case.
Respondents claim that the above information did not constitute probable cause. They argue that while Ludmila’s statements may rise to the level of “suspicion,” they do not rise to the level set by the Supreme Court, namely “a suspicion founded upon circumstances sufficiently strong to warrant a reasonable man in the belief that the charge is true.” Looking objectively at the circumstances, we cannot agree. It is undisputed that the property was purchased approximately one month prior to Paul and Ludmila’s marriage. It is also undisputed that Paul and Ludmila moved into the property immediately following their marriage and lived there throughout their marriage. There is no evidence that respondents ever lived in the property, or ever intended to live in the property. There is no evidence that respondents ever attempted to rent the property to anyone else. The circumstances strongly suggest that the property was purchased on behalf of Paul and Ludmila, and thus support Ludmila’s statements as to what she was told about the ownership of the property. We cannot find that it was unreasonable under the circumstances for Ludmila’s attorneys to have believed that she had a legal interest in the property.
Respondents also point to the offers that they made to permit appellants to review documents showing that the constructive trust claim was meritless. Respondents’ offers to allow appellants to view documents did not serve to negate appellants’ probable cause. First, it is not uncommon in contentious litigation for attorneys to indicate to each other that the other’s claim is without merit, and, as California courts have noted, family law matters are often particularly contentious. (Bidna v. Rosen (1993) 19 Cal.App.4th 27, 35 (Bidna) [“family law cases have a unique propensity for bitterness”].) Second, as appellants point out, proof that respondents held legal title to the property would not have undermined Ludmila’s position. Indeed, the constructive trust complaint specifically alleged that “[t]itle to the property was taken and is presently held in the names of [respondents].”
One of appellants’ arguments on appeal is that, under Bidna, supra, 19 Cal.App.4th at page 32, there is an absolute bar of malicious prosecution claims originating in family law matters. Specifically, the Bidna court held that “no malicious prosecution action may arise out of unsuccessful family law motions or OSC’s.” (Id. at p. 37.) The constructive trust action does not fall into the category of a family law motion or OSC. Rather, it arose from a complaint which commenced a second lawsuit that was eventually bifurcated from the dissolution proceeding. Therefore, we decline to hold that it is barred as a matter of law under Bidna. However, the Bidna court’s characterization of family law litigation as being particularly bitter and emotional is relevant to the analysis of the parties’ positions and actions during the underlying dispute over the property. As the Bidna court stated, “[b]itterness and emotional distress” in family law litigation often “makes it extremely difficult to distinguish truly ‘malicious’ [filings] from ordinary ones.” (Id. at p. 35.)
Respondents counter that although the constructive trust cause of action acknowledged that title to the property was held in respondents’ names, a constructive trust action also requires an allegation that the plaintiff has a “better right” to the subject property. (GHK Associates v. Mayer Group, Inc. (1990) 224 Cal.App.3d 856, 879.) Specifically, appellants were required to show that respondents had obtained the property “by fraud, accident, mistake, undue influence, the violation of a trust, or other wrongful act,” and had “no other and better right thereto” than Ludmila. (Civ. Code, § 2224.) Thus, respondents argue, appellants had an obligation to investigate whether respondents had a “better right” to the property prior to filing the constructive trust action.
Respondents do not dispute that, if Ludmila’s sworn statements were true, respondents’ actions in holding the property in their names could be considered a “wrongful act” under the constructive trust statute. Appellants need not have shown that respondents’ actions amounted to fraud or intentional misrepresentation, but only that the acquisition of the property was wrongful and respondents’ keeping of the property would constitute unjust enrichment. (Calistoga Civic Club v. City of Calistoga (1983) 143 Cal.App.3d 111, 116.)
Again, we find that the circumstances supported appellants’ reasonable belief that Paul and Ludmila held a “better right” to the property than respondents. The timing of the purchase, Paul and Ludmila’s exclusive residence there throughout their marriage, Ludmila’s belief that the mortgage was paid from their joint bank account, and Ludmila’s statements that she had been told that the property belonged to her and Paul, all support appellants’ reasonable belief that the property rightfully belonged to the marital estate.
2. Continuation of Prosecution
The Supreme Court has held that an attorney may be held liable for malicious prosecution for continuing to prosecute a lawsuit after learning that the lawsuit is not supported by probable cause. (Zamos, supra, 32 Cal.4th at p. 960.) Respondents contend that, under Zamos, appellants are liable for malicious prosecution because they continued to prosecute their constructive trust action after they discovered that it lacked merit. In support of this argument, respondents point to Ludmila’s deposition, which took place on May 6, 2005, and May 27, 2005. During the deposition, Ludmila contradicted one of her earlier statements regarding the property. She had initially informed appellants that throughout her marriage to Paul, respondents represented to Ludmila that the property belonged to Paul and Ludmila. However, in the first half of her deposition, she testified that respondents never made any representations to her about ownership of the property. In the second half of her deposition, she confirmed again that respondents never made her any promises about ownership of the property. Respondents contend that appellants’ failure to dismiss the lawsuit until four months after Ludmila provided this testimony constitutes malicious prosecution under Zamos.
We find the circumstances here to be distinguishable from those in Zamos. Zamos was the plaintiff in a malicious prosecution action against Stroud. In support of his anti-SLAPP motion, Stroud presented evidence that at the time the underlying fraud lawsuit against Zamos was filed, the facts available to Stroud were sufficient to support a cause of action for fraud. (Zamos, supra, 32 Cal.4th at p. 971.) In opposition to the motion, Zamos presented evidence that, shortly after the lawsuit was filed, Stroud was given transcripts of trial testimony which showed that the lawsuit had no merit. (Ibid.) After Stroud was presented with the exculpatory documents, the lawsuit proceeded through summary judgment briefing and through a trial, at which time the judge granted Zamos’s motion for nonsuit. (Id. at pp. 962-963.) Thus, in contrast to the circumstances before us, Stroud continued to actively prosecute the case through extensive motion practice and trial.
In addition, the testimony that Ludmila provided in her deposition was not as significant to the constructive trust claim as the testimonial evidence presented to the prosecuting attorney in Zamos. In Zamos, the trial testimony that was delivered to Stroud early in the proceedings showed that the fraud claims alleged against Zamos were completely without merit. (Zamos, supra, 32 Cal.4th at pp. 962-963.) Here, Ludmila’s deposition testimony undermined her previous statements but did not render her claim to be completely meritless. Whether or not she discussed the status of the property with respondents, she still could have been correct in her claim that the property rightfully belonged to the marital community.
After Ludmila’s deposition in May 2005, the parties engaged in a document exchange. The document exchange occurred on August 17, 2005. Assuming that it took appellants some time to review the documents and analyze their significance, appellants’ offer to dismiss the constructive trust action in mid-September 2005, and their relatively quick action in dismissing the action with prejudice one week later, does not amount to malicious prosecution under Zamos.
Despite the distinction between the facts of this case and those present in Zamos, we do not condone appellants’ delay in investigating the claims of respondents’ attorney. Had appellants made their document request at an earlier date, Ludmila’s testimony may have prompted an immediate dismissal of the matter. While appellants’ failure to seek out the documents in respondents’ possession for 16 months was not ideal, we conclude that under the circumstances of this case it does not support a malicious prosecution cause of action. However, even if it did, we find that respondents’ malicious prosecution action would still fail on the ground that respondents cannot show the required element of malice.
C. Malice
In order to satisfy the element of malice, respondents must “plead and prove actual ill will or some improper ulterior motive. [Citation.]” (Downey Venture v. LMI Ins. Co. (1998) 66 Cal.App.4th 478, 494, original italics.) For the purposes of a malicious prosecution cause of action, malice “may range anywhere from open hostility to indifference. [Citation.]” (Ibid.) In order to show malice, respondents must present evidence showing “either actual hostility or ill will on the part of the defendant or a subjective intent to deliberately misuse the legal system for personal gain or satisfaction at the expense of the wrongfully sued defendant. [Citation.]” (Id. at pp. 498-499.)
In support of their claim that appellants prosecuted the constructive trust action with malice, respondents rely on the same arguments that they made regarding probable cause. They argue that appellants brought the action despite being warned that it was baseless, and failed to adequately investigate the facts. Respondents suggest that malice can be inferred from appellants’ consistent rejection of respondents’ attorney’s offer to allow them to review the documents. As discussed above, under the specific circumstances of this case, we disagree with respondents’ position that appellants’ conduct in initiating and maintaining the action was unjustifiable. When the documents were eventually exchanged under the formal discovery procedures set forth in the Code of Civil Procedure, appellants reviewed them in a matter of weeks and promptly dismissed the case.
Respondents present only one additional fact in support of their malice argument: that appellants “charged their client a large sum in attorneys’ fees until the case was dismissed.” We decline to find that appellants’ conduct in charging their client for their services amounts to malice. Attorneys are entitled to make a living by charging fees, and there is no indication that Ludmila has made any claim that such fees were excessive in this case.
Respondents have failed to make a showing that appellants brought the underlying lawsuit without probable cause or continued to prosecute the action after it was discovered that no probable cause existed. In addition, respondents have failed to show that appellants acted with malice in bringing and maintaining the action. Thus, respondents cannot demonstrate a reasonable probability of prevailing on their malicious prosecution claim. Because reversal is warranted on these grounds, we do not address appellants’ arguments as to Kaiser’s role in the litigation.
DISPOSITION
The order denying appellants’ special motion to strike under section 425.16 and imposing sanctions on appellants is reversed. Respondents shall bear the costs of appeal.
We concur: BOREN, P. J., DOI TODD, J.