Opinion
G053700
11-06-2017
CREATIVE PLANT RENTALS, LLC, et al., Plaintiffs and Appellants, v. BUDGET TRUCK RENTAL, LLC, Defendant and Respondent.
David E. Allen, Jr., for Plaintiffs and Appellants. Law Office of Michael A. Kruppe and Michael A. Kruppe, for Defendant and Respondent.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2015-00802139) OPINION Appeal from a judgment of the Superior Court of Orange County, Gregory H. Lewis, Judge. Reversed and remanded. David E. Allen, Jr., for Plaintiffs and Appellants. Law Office of Michael A. Kruppe and Michael A. Kruppe, for Defendant and Respondent.
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Creative Plant Rentals, LLC (CPR), and Sean Sommer appeal from the judgment following the trial court's order granting defendant Budget Truck Rental, LLC's (Budget) special motion to strike their complaint for malicious prosecution on the ground it constituted a strategic lawsuit against public participation pursuant to Code of Civil Procedure section 425.16. (The anti-SLAPP law.) CPR and Sommer contend the court erred in granting the motion because they demonstrated a probability of prevailing on the merits of their cause of action, which satisfied their burden under the anti-SLAPP law. We agree, and reverse the judgment.
All further statutory references are to the Code of Civil Procedure.
In order to defeat a special motion to strike under the anti-SLAPP law, a plaintiff is required to prove only a prima facie case: i.e., offer sufficient evidence which, if believed, would support the elements of the cause of action. Thus, for purposes of evaluating whether the plaintiff has satisfied that burden, the trial court is obligated to accept as true all evidence favoring the plaintiff, and disregard any conflicting evidence. In this case, the trial court failed to do that, concluding instead that the parties' lingering dispute about the accuracy of facts alleged by Budget in the underlying case provided a sufficient justification for concluding Budget's underlying complaint had not been maliciously prosecuted, and thus that its motion to strike should be granted. That was error.
FACTS
CPR is a company that creates and installs "large-scale artistic floral displays" for various commercial clients. For over 20 years, it regularly rented trucks from Budget — two to three times per week — to transport its floral displays to their destinations. Sommer is an employee of CPR, and also the son of CPR's owner.
In October 2012, two of the trucks CPR rented from Budget were damaged, in separate accidents, both times while Sommer was driving. Whether CPR and Sommer were obligated to compensate Budget for those damages hinged on whether CPR was entitled to enforce the "Physical Damage Waiver" (PDW) benefit it had paid for in connection with both rentals.
Budget took the position the PDW was not enforceable because Sommer did not qualify as an "authorized additional driver" of either damaged truck under the terms of the rental agreements. And when CPR refused to compensate Budget for the damage to the trucks, Budget filed the underlying lawsuit against both CPR and Sommer, seeking that compensation.
However, when Budget produced a copy of its standard rental agreement in discovery, it revealed that Budget recognized two separate categories of commercial renters — and that Sommer's qualification as an authorized driver appeared to depend on which of those categories CPR fell into. For the first category, identified as "Commercial Rentals/No BTR Account," the agreement specified that only the person who signed the rental document would be an authorized driver — although it offered the option of adding other authorized drivers, including "employees," for "an additional charge." But for the second category of commercial renters, identified as "Commercial Rentals/BTR Account," the authorized drivers would automatically include "your employees, regular fellow employees, employer or formal business partners while engaged in business purposes, with your explicit permission, provided that such business rental originate through the BTR Account." The agreement then defined a "BTR Account" as "your having an established commercial account with us."
Other documents produced by Budget in discovery reflected its understanding that Sommers had been employed by CPR at the time of the accidents. CPR and Sommers also propounded a set of requests for admissions to Budget, which included a request that it admit or deny that "Throughout all of 2012, the defendant CPR was qualified as a 'Commercial BTR Account.'" Budget responded by denying that request for admission. However, in response to a related interrogatory asking it to supply all facts supporting its denial of that requested admission, Budget appeared to do an about-face, and stated, "Creative Plant Rentals was qualified as a 'Commercial BTR Account.'" (Italics added.)
In February 2015, Budget filed a request for dismissal of the underlying lawsuit against Sommer, but not CPR. That dismissal was not pursuant to any settlement.
On March 11, 2015, CPR served notice of a proposed motion for sanctions on Budget in the underlying case, pursuant to section 128.7. That statute authorizes the imposition of sanctions against an attorney or party who files with the court a pleading or motion that lacks factual or legal support, and then fails to withdraw or correct it within 21 days of being served with notice of the motion. (§ 128.7.) CPR argued in the proposed sanction motion that Budget had initiated and prosecuted its lawsuit "with undeniable awareness that the crucial allegations of the complaint are objectively devoid of any factual foundation, and that this lawsuit is frivolous." CPR supported that assertion with a declaration from its counsel, summarizing the discovery conducted in the case and highlighting the fact Budget had admitted in its response to an interrogatory that CPR was qualified as a "Commercial BTR Account."
On March 19, 2015, eight days after CPR served its notice of motion for sanctions, Budget filed a request for dismissal of the remainder of its lawsuit.
In July 2015, CPR and Sommer filed a complaint for malicious prosecution against Budget. The complaint alleged that CPR's 20 years of regular truck rentals from Budget demonstrated it "had an 'established commercial account' with Budget, as that term is used in Paragraph 5 of the Budget Rental Agreements," and that CPR was qualified as a "'BTR Account" throughout all of October 2012. The complaint also alleged that several Budget employees — including the employee with primary responsibility for handling Budget's claim against CPR and Sommer — knew well before the filing of the underlying lawsuit that: (1) CPR was a BTR account; (2) Sommer was an employee of CPR; (3) Sommer was driving the damaged rental trucks with the express permission of CPR; and (4) CPR and Sommers were entitled to the benefits of the PDW that CPR had purchased in connection with both rentals.
The complaint states that despite Budget's allegedly imputed knowledge of those facts, it falsely took the position that Sommer was not an authorized driver of either truck involved in the accidents at issue in the underlying case. Budget also allegedly represented that falsehood as a fact to third parties, and it wrongfully exposed CPR and Sommer to liability claims from third parties.
The complaint also alleged Budget filed and pursued the underlying lawsuit against CPR and Sommer based on what it knew was a false assertion that the PDW was not enforceable in connection with either of the October 2012 accidents. In filing and pursuing that underlying lawsuit, Budget allegedly acted without probable cause, and with malice. And Budget later voluntarily dismissed that lawsuit against both CPR and Sommer, without consideration.
Budget answered the complaint and then filed a special motion to strike the malicious prosecution complaint under the anti-SLAPP law. In support of the motion, it pointed out that a malicious prosecution lawsuit is subject to the anti-SLAPP law, as it necessarily arises out of petitioning activity. Budget also argued that CPR and Sommer could not demonstrate that its underlying lawsuit had been filed without probable cause because: (1) it was undisputed that Budget's trucks were damaged while Sommer was driving them; and (2) CPR's status as a BTR Account "remains a disputed issue," and "[w]hether [CPR] ultimately turned out to be a preferred renter or not is of no consequence when it comes to [Budget's] original justification for filing the property damage subrogation suit against CPR and Sommer." Budget also argued CPR and Sommer could not establish a probability of prevailing on their malicious prosecution claim because the dismissal of the underlying lawsuit had not reflected on its merits, and because they had not sustained any recoverable damages as a consequence of the alleged malicious prosecution.
CPR and Sommers filed an opposition to the motion, again highlighting their evidence that Budget had acknowledged Sommer was an employee of CPR before filing the complaint, and had admitted in discovery that CPR was a qualified BTR Account.
The trial court granted the motion to strike. The court explained that although CPR and Sommers could establish the underlying case had terminated favorably to them in a manner that reflected on its merits, they had not established a probability of prevailing on the malicious prosecution case because: "The mere fact that Budget . . . knew before filing the action that Sommer was the driver of the truck and that he was an employee of [CPR] does not show . . . that he was an 'authorized and licensed driver' such that Budget . . . lacked probable cause to bring the underlying action against him and [CPR]. Nor does it show malice."
The court subsequently entered judgment in favor of Budget.
DISCUSSION
1. The Anti-SLAPP Law
The anti-SLAPP law provides a summary mechanism to test the merit of any claim arising out of the defendants' protected communicative activities. It authorizes courts to strike any cause of action which falls within the statute's purview, if the plaintiff cannot demonstrate a probability of prevailing on it.
The court engages in a two-step process in determining whether a defendant's motion to strike 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. The moving defendant's burden is to demonstrate that the act or acts of which the plaintiff complains were taken 'in furtherance of the [defendant]'s right of petition or free speech under the United States or California Constitution in connection with a public issue,' as defined in the statute." (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.)
Then, only if the court finds the defendant has made the required showing, the burden shifts to the plaintiff to demonstrate "there is a probability that the plaintiff will prevail on the claim." (§ 425.16, subd. (b)(1); DuPont Merck Pharmaceutical Co. v. Superior Court (2000) 78 Cal.App.4th 562, 567-568.)
We review an order made pursuant to the anti-SLAPP law on a de novo basis. (ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 999 ["Whether section 425.16 applies and whether the plaintiff has shown a probability of prevailing are both reviewed independently on appeal"].) "While we are required to construe the statute broadly, we must also adhere to its express words and remain mindful of its purpose." (Paul v. Friedman (2002) 95 Cal.App.4th 853, 864.) 2. Protected Activity
CPR does not dispute the trial court's determination that the cause of action for malicious prosecution arose out of protected activity.
We agree that it does. As explained by our Supreme Court in Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 734-735, the plain language of the anti-SLAPP statute governs claims for malicious prosecution because such claims necessarily arise out of written and oral statements in a prior judicial proceeding. "By definition, a malicious prosecution suit alleges that the defendant committed a tort by filing a lawsuit." (Id. at p. 735.)
3. Probability of Success
Once the defendant has satisfied the first prong on the anti-SLAPP analysis, the burden shifts to the pleader to demonstrate "there is a probability that the plaintiff will prevail on the claim." (§ 425.16, subd. (b)(1).)
"'A plaintiff establishes a probability of prevailing on the claim by showing that the complaint is legally sufficient and supported by a prima facie showing of facts that, if proved at trial, would support a judgment in the plaintiff's favor." (Ulkarim v. Westfield LLC (2014) 227 Cal.App.4th 1266, 1274.)
And in determining whether the plaintiff has made that showing, "[t]he court cannot weigh the evidence, but must determine as a matter of law whether the evidence is sufficient to support a judgment in the plaintiff's favor. [Citation.] The court must consider not only facts supported by direct evidence, but also facts that reasonably can be inferred from the evidence. [Citation.] The defendant can defeat the plaintiff's evidentiary showing by presenting evidence that establishes as a matter of law that the plaintiff cannot prevail. [Citation.] The defendant cannot defeat the plaintiff's evidentiary showing, however, by presenting evidence that merely contradicts that evidence but does not establish as a matter of law that the plaintiff cannot prevail.'" (Ulkarim v. Westfield LLC, supra, 227 Cal.App.4th at pp. 1274-1275, italics added.)
In this case, for CPR and Sommer to demonstrate a probability of prevailing on their cause of action for malicious prosecution, they were required to plead and provide evidence to support the elements of that cause of action; i.e., that Budget's underlying lawsuit "'(1) was commenced by or at the direction of the defendant and was pursued to a legal termination in [plaintiffs'], favor [citations]; (2) was brought without probable cause [citations]; and (3) was initiated with malice [citations].'" (Crowley v. Katleman (1994) 8 Cal.4th 666, 676.)
Even if Budget's lawsuit was not lacking in probable cause when commenced, it may still support a cause of action for malicious prosecution because "continuing to prosecute a lawsuit discovered to lack probable cause" may also support a claim of malicious prosecution. (Zamos v. Stroud (2004) 32 Cal.4th 958, 973.) Thus, even if Budget was initially unaware of the facts demonstrating its lawsuit against CPR and Sommers lacked merit, it could still be held liable for malicious prosecution if it continued to prosecute the lawsuit after learning of those facts.
We conclude CPR and Sommer have demonstrated a probability of prevailing on each of the elements of their malicious prosecution cause of action.
a. Favorable termination
There is no dispute that the underlying complaint against CPR and Sommer was commenced at the direction of Budget, and the trial court concluded they had demonstrated a probability of prevailing on the favorable termination element of their malicious prosecution cause of action. We agree.
As explained in Sycamore Ridge Apartments LLC v. Naumann (2007) 157 Cal.App.4th 1385, 1400-1401, "[a] voluntary dismissal is presumed to be a favorable termination on the merits, unless otherwise proved to a jury." "If the evidence of the circumstances of the termination is conflicted, '"the determination of the reasons underlying the dismissal is a question of fact."'" (Daniels v. Robbins (2010) 182 Cal.App.4th, 204, 217.)
In this case, Budget acknowledges that its decision to dismiss the underlying case was voluntary, prompted by CPR's motion for sanctions. Budget even characterizes the dismissal as a "capitulat[ion]" to avoid the threat of sanctions under section 128.7. It is difficult to view that capitulation as anything other than a reflection on the merits of Budget's case.
Actually, Budget filed its request for dismissal against Sommer in February 2015, before CPR and Sommer gave notice of the intended sanction motion in March. But Budget does not contend its dismissal of Sommer was anything other than voluntary, or that it received any consideration in exchange for the dismissal.
In the trial court, Budget contended its decision to dismiss the underlying lawsuit in response to a sanction notice amounted to a "settlement." It characterized the notice as an "offer . . . to have Budget dismiss the suit in exchange for CPR/Sommer's forbearance from proceeding with the 128.7 motion for attorney fees." And in turn, Budget "accepted the settlement and effectuated it by filing the dismissals." Thus, Budget concluded that settlement did not reflect on the merits of its lawsuit. But Budget offered no authority for its "settlement" view of the section 128.7 capitulation, and we know of none. Budget did not reassert that contention in its brief on appeal.
At most, Budget could argue there is a dispute of fact as to whether Budget's dismissal of the case reflected upon its merits. But such a dispute is not sufficient to demonstrate CPR and Sommers cannot prevail on this element of their cause of action as a matter of law. Consequently, they have sustained their burden with respect to that element.
b. Lack of probable cause
Budget's assertion that CPR and Sommer could not demonstrate a probability of prevailing on their malicious prosecution cause of action focused primarily on the probable cause element. Probable cause to bring a lawsuit exists if "any reasonable attorney would have thought the claim tenable." (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d. 863, 886.)
Budget asserts that the existence of probable cause is a question of law for the court to decide, using an objective standard. However, "[w]hen 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 [citation] . . . the jury must resolve the threshold question of the defendant's factual knowledge or belief." (Sheldon Appel Co. v. Albert & Oliker, supra, 47 Cal.3d at p. 881.)
In this case, there is a dispute of fact as to whether Budget knew CPR qualified as a BTR account when it filed the underlying lawsuit against CPR and Sommers. Although Budget does argue, at some length, that CPR was actually not a BTR account — offering evidence that its internal definition of a BTR account refers only to a special type of commercial account established directly with Budget's "national corporate office," and not to any commercial account established with "the local rental office" — Budget does not point to any language in the rental agreement explaining that distinction to its customers. Thus, Budget does not establish, as a matter of law, that CPR did not meet the definition of a BTR account set forth in its rental agreement.
As CPR and Sommer point out, Budget's uncommunicated beliefs as to the meaning of terms in the rental agreements would not be relevant in interpreting the legal effect of its provisions. (Hilleary v. Garvin (1987) 193 Cal.App.3d, 322, 327 [party's "uncommunicated subjective intent is not relevant. The existence of mutual assent is determined by objective criteria"]; Alex Robertson Co. v. Imperial Casualty & Indemnity Co. (1992) 8 Cal.App.4th 338, 346 ["there is no evidence in the record this intent was ever communicated to Imperial. Obviously, for there to be a mutual intent of the parties, the intent must have been shared"].) --------
But more significantly, in their opposition to Budget's motion to strike, CPR and Sommer offered evidence to support the conclusion CPR actually was a BTR Account — in the form of Budget's own concession of that point in response to discovery in the underlying case. CPR and Sommer also offered evidence Budget also knew Sommer was CPR's employee. Taken together, those pieces of evidence were sufficient to support the inference that when Budget filed the underlying lawsuit, it did know Sommer qualified as an authorized additional driver of both rental vehicles damaged in the accidents, and consequently that CPR and Sommer were entitled to the benefits of the PDW purchased in connection with both rentals. And assuming Budget knew those things, no reasonable attorney would have thought Budget had a tenable claim to recover from CPR and Sommer the very same damages it had waived any right to be compensated for under the terms of those agreements.
Drawing all inferences in favor of CPR and Sommer, as we are required to do, we conclude they have demonstrated a probability of prevailing on their assertion that the underlying case was brought against them without probable cause.
c. Malice
The final element of a malicious prosecution cause of action is malice. "The 'malice' element . . . relates to the subjective intent or purpose with which the defendant acted in initiating the prior action. [Citation.] . . . [Citation.] . . . Improper purposes can be established in cases in which, for instance (1) the person bringing the suit does not believe that the claim may be held valid; (2) the proceeding is initiated primarily because of hostility or ill will; (3) the proceeding is initiated solely for the purpose of depriving the opponent of a beneficial use of property; or (4) the proceeding is initiated for the purpose of forcing a settlement bearing no relation to the merits of the claim. (Daniel v. Robbins, supra, 182 Cal.App.4th at p. 224.) However, "[s]ince parties rarely admit an improper motive, malice is usually proven by circumstantial evidence and inferences drawn from the evidence." (HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 218.)
Significantly, "[w]hile . . . a lack of probable cause, standing alone, does not support an inference of malice, malice may still be inferred when a party knowingly brings an action without probable cause." (Swat-Fame, Inc. v. Goldstein, (2002) 101 Cal.App.4th 613, 634, disapproved on other grounds in Reid v. Google (2002) 50 Cal.4th 512, 532, fn. 7.) In this case, CPR and Sommer presented evidence which, if believed, was sufficient to establish Budget knew all the facts demonstrating that its lawsuit against CPR and Sommer lacked probable cause, but filed and prosecuted that lawsuit anyway. Consequently, that evidence was also sufficient to support the inference that Budget acted with malice in doing so.
Because CPR and Sommer provided sufficient evidence to demonstrate a probability of prevailing on all the elements of their malicious prosecution cause of action against Budget, we conclude the trial court erred by granting Budget's special motion to strike their complaint under the anti-SLAPP law.
DISPOSITION
The judgment is reversed and the cause is remanded to the trial court for further proceedings. CPR and Sommer are to recover their costs on appeal.
IKOLA, J. WE CONCUR: BEDSWORTH, ACTING P. J. MOORE, J.