Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
ORIGINAL PROCEEDING; petition for writ of mandate. Judith A. Vander Lans, Judge L.A.S.C. No. NC037880.
John K. Saur and David E. Allen Jr. for Petitioners.
No appearance for Respondent.
Law Offices of Milford V. Smith and Milford V. Smith for Real Party in Interest.
OPINION AND ORDER GRANTING PEREMPTORY WRIT OF MANDATE
In this malicious prosecution action, we hold that a finding in the underlying action that the plaintiff in this case was entitled to attorney fees and costs does not collaterally estop the defendants in this action from attempting to prove that the filing of the underlying action was supported by probable cause.
BACKGROUND
LASC No. NS015466
David P. Christianson, Mary Cook, and other shareholders of Royal Palms Apartments, Inc., a 164-unit stock cooperative, sued the Board of Directors of the corporation, including Richard H. Gibson in his capacity as a Board member, seeking an order compelling an election. Gibson, the only defendant who responded, filed an answer denying the allegation that he was a member of the Board. Before any hearing was held, the shareholders dismissed their petition, and Gibson was thereafter determined to be the prevailing party and awarded $4,113.70 for his fees and costs. The shareholders appealed, and we affirmed the award, explaining:
“The trial court’s finding that Gibson was not a member of the Board at the time Cook’s petition was filed or at any time thereafter is supported by substantial evidence and is binding on this appeal. (Thueson v. U-Haul Internat., Inc. (2006) 144 Cal.App.4th 664, 669.) Gibson’s answer to Cook’s petition denies Cook’s allegation that he was residing at the Royal Palms, a member of the Board, and the Secretary of the Board at the times relevant to these proceedings, and his papers filed with regard to the fee motions include documents showing his October 28, 2005, sale of his Royal Palms unit (that is the date escrow closed) and his resignation from the Board sent the same date to the Board’s president (‘Please accept my resignation effective Friday, October 28, 2005’).
“Cook’s argument on appeal—that the trial court abused its discretion in awarding fees to Gibson—focuses on the relief Cook obtained against the Board (the election was held in response to her petition) and ignores the fact that Gibson prevailed on his fee motion because he was not a member of the Board when the petition was filed or when the election was held. In short, Gibson, who should never have been named as a party, became the prevailing party when Cook voluntarily dismissed her petition and was entitled to his fees as the prevailing party.”
LASC No. NC37880
Meanwhile, on December 28, 2005, Gibson sued Christianson and the other plaintiffs in LASC No. NS015466 for damages, alleging that they engaged in malicious prosecution.
Gibson moved in limine to prevent Christianson from re-litigating the issue of whether Gibson was properly a party. Relying on the above quoted language, respondent court dismissed Gibson from the trial.
DISCUSSION
The determination whether a party is entitled to attorney fees does not include a finding that the underlying action was filed without probable cause.
The issue involved in the shareholders’ action against the board of directors was whether, upon the voluntary dismissal of the action, Gibson was entitled to recover his attorney fees and costs as the prevailing party. Our conclusion that he was the prevailing party was based on the fact that the trial court’s finding on that narrow issue was supported by substantial evidence.
The issue presented in this malicious prosecution action is whether Gibson was a proper defendant in the underlying action—that is, whether it was filed or prosecuted without probable cause and with malice.
“To establish a cause of action for malicious prosecution, a plaintiff must demonstrate that the prior action (1) was initiated by or at the direction of the defendant and legally terminated in the plaintiff’s favor, (2) was brought without probable cause, and (3) was initiated with malice. [Citation.]” (Siebel v. Mittlesteadt (2007) 41 Cal.4th 735, 740.)
Malicious prosecution “includes continuing to prosecute a lawsuit discovered to lack probable cause.” (Zamos v. Stroud (2004) 32 Cal.4th 958, 970.)
Gibson contends a reasonable attorney would have determined who sat on the board before filing and serving the complaint, and states that information about his sale of his condominium was easily available in the public record and known to all the shareholders. Thus, he asserts, there was no probable cause to name Gibson as a defendant.
The parties dispute certain facts, i.e., whether Christianson or his counsel knew, or reasonably could have discovered, whether Gibson was still on the Board at the time the lawsuit was filed. This is a factual issue that must be determined by a jury. In Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 877, the Supreme Court determined that the issue of probable cause is a legal matter to be determined by a judge, but that preliminary fact determinations must be made by the jury: “[I]f the facts upon which the defendant acted in bringing the prior action ‘are controverted, they must be passed upon by the jury before the court can determine the issue of probable cause. . . . “What facts and circumstances amount to probable cause is a pure question of law. Whether they exist or not in any particular case is a pure question of fact. The former is exclusively for the court, the latter for the jury.”’ [Citations.]” The Supreme Court explained: “When there is a dispute as to the state of the defendant’s knowledge and the existence of probable cause turns on resolution of that dispute, . . . cases hold that the jury must resolve the threshold question of the defendant’s factual knowledge or belief. Thus, when . . . there is evidence that the defendant may have known that the factual allegations on which his action depended were untrue, the jury must determine what facts the defendant knew before the trial court can determine the legal question whether such facts constituted probable cause to institute the challenged proceeding.” (Sheldon Appel Co. v. Albert & Oliker, supra, 47 Cal.3d at p. 881.)
This is the rule: based on the facts known to the defendant at the time the suit was filed, or which later became known to the defendant, the court determines whether any reasonable attorney would have thought the claim tenable. (Zamos v. Stroud, supra, 32 Cal.4th at p. 971; Sheldon Appel Co. v. Albert & Oliker, supra, 47 Cal.3d at p. 868, 884.) If the facts upon which the defendant acted are in dispute—as they are here—those facts must be determined by the jury before the court can make its legal determination. (Sheldon Appel Co. v. Albert & Oliker, supra, at p. 877; see also Bergman v. Drum (2005) 129 Cal.App.4th 11, 14, fn. 2; Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 165.)
“In analyzing the issue of probable cause in a malicious prosecution context, the trial court must consider both the factual circumstances established by the evidence and the legal theory upon which relief is sought. A litigant will lack probable cause for his action . . . if he relies upon facts which he has no reasonable cause to believe to be true . . . . ” (Sangster v. Paetkau, supra, 68 Cal.App.4th at p.164, emphasis added.) “Evidentiary disputes and factual questions may require resolution before the trial court applies the objective standard to the issue of probable cause. For example, there may be factual issues concerning the information known to the defendant when it brought the underlying action. Thus, the malicious prosecution plaintiff may claim that the defendant was aware of information that established the lack of truth in the factual allegations of the prior complaint. In such circumstances, the jury must resolve the threshold question of the defendant’s prior knowledge of the facts before application of the objective probable cause standard.” (Id. at p. 165.)
The determination of whether Christianson and his counsel knew at the time the underlying action was filed that Gibson was not a Board member is a fact for the jury to determine.
DISPOSITION
THEREFORE, let a peremptory writ issue, commanding respondent superior court to vacate its order of January 7, 2008, (1) granting a motion in limine prohibiting the parties from re-litigating the issue of whether there was probable cause to name plaintiff as a party in the underlying action and (2) dismissing Gibson from this case; and to issue a new and different order denying the motion and reinstating Gibson as a defendant, in Los Angeles Superior Court case No. NC037880, entitled Richard H. Gibson v. David P. Christianson et al.
The parties shall bear their own costs.
THE COURT:
VOGEL, J., Acting P.J. ROTHSCHILD, J. JACKSON, J.
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6, of the California Constitution.