From Casetext: Smarter Legal Research

Emerald Bay Financial, Inc. v. Stojsavljevic

California Court of Appeals, Fourth District, First Division
Jul 2, 2008
No. D050795 (Cal. Ct. App. Jul. 2, 2008)

Opinion


EMERALD BAY FINANCIAL, INC., et al., Plaintiffs and Respondents, v. PETAR STOJSAVLJEVIC et al., Defendants and Appellants. D050795 California Court of Appeal, Fourth District, First Division July 2, 2008

NOT TO BE PUBLISHED

APPEAL from an order of the Superior Court of San Diego County, No. GIN051368, Thomas P. Nugent, Judge.

NARES, Acting P. J.

In this action for malicious prosecution brought by Emerald Bay Financial, Inc. (Emerald) and Financial Freedom Loans, Inc. (FFL) (together plaintiffs), Suppa, Trucchi and Henein, LLP (ST&H) and attorneys Jerry Michael Suppa, Teresa Trucchi, Gregory Highnote and Stephen Shaw (collectively attorney defendants), and their clients, Petar Stojsavljevic (Petar), and Judith Stojsavljevic (Judith), appeal from an order denying their special motion to strike the complaint under Code of Civil Procedure section 425.16, the anti-SLAPP (strategic lawsuit against public participation) statute. They assert the court erred in denying their motion because (1) the action was not pursued "by or at the direction of" certain defendants; (2) there was probable cause to instigate and pursue the underlying action; (3) the underlying action was not initiated or pursued for a malicious purpose; (4) plaintiffs have not suffered any damages; and (5) plaintiffs did not produce sufficient evidence to negate Judith and Petar's advice of counsel affirmative defense. We conclude the court erred in not granting Petar and Judith's motion to strike as plaintiffs cannot show a reasonable probability of success on their malicious prosecution action against them as they cannot produce sufficient evidence to negate Judith and Petar's advice of counsel defense. We also conclude the court did not err in denying the attorney defendants' motion to strike as plaintiffs have demonstrated a reasonable probability of success on their malicious prosecution claims directed against them.

We use first names for clarity and convenience only and intend no disrespect.

All further statutory references are to the Code of Civil Procedure.

FACTUAL AND PROCEDURAL BACKGROUND

A. The Parties

Judith and Petar are married, and Petar is the son of Josephine Stojsavljevic (Josephine) and George Stojsavljevic (George), both of whom are now deceased. They were represented by ST&H and the attorney defendants in the underlying action.

Emerald is a California real estate broker engaged in the mortgage loan brokerage business. Lyle Brock was the president of Emerald. Dianne Brand was the designated real estate broker for Emerald. FFL is a lender. Daniel Muhe was FFL's president.

B. The Loan and Misappropriation by Helena Wood

George and Josephine owned an apartment building in Los Angeles, California. It was an income-producing property and they lived off the rental income.

Helena Wood was a longtime family friend of George and Josephine, who also knew her through their church where she volunteered. Wood gained their trust by inviting them to dinner, driving them around town, presenting them with gifts, and assisting them in decorating their home. In January 2000 Wood, using undue influence, persuaded Josephine to borrow $132,000, using the apartment building as collateral. Josephine used a power of attorney to obtain George's consent to the transaction. Wood told Josephine the funds were being used for a "furniture venture." Emerald arranged the $132,000 loan to George and Josephine from the Thomas Wilson Family Trust.

In March 2000 Wood convinced Josephine to engage Emerald to obtain a second loan in the amount of $300,000 that also encumbered the apartment building. Emerald procured the loan from FFL. A portion of the proceeds of this $300,000 loan was used to pay off the $132,000 loan, and Wood took the remaining balance.

At the time of the loans, Josephine was in her 80's and suffered from dementia.

Brock acted as the broker on the loans to Josephine and George. In arranging both loans, Brock met with Josephine and reviewed the loan documents with her. According to Emerald, it had no knowledge of any possible infirmity or lack of mental capacity by Josephine. In every conversation Brock had with Josephine, she listened to Brock and responded directly and with comprehension to his questions.

In April 2000 FFL assigned the $300,000 note and trust deed to Allan G. and Peggy R. Lieb (the Liebs).

In January 2002 Josephine and George defaulted on the note and the Liebs commenced foreclosure proceedings.

C. Plaintiffs' Knowledge of Wood

Plaintiffs and their officers had no knowledge of any scheme by Wood to fraudulently obtain Josephine and George's money. Plaintiffs and their officers had no meaningful involvement with Wood and did not conspire with Wood to obtain money from the proceeds of the loans made to Josephine and George. The net proceeds of both loans were paid directly to Josephine and George. The first loan was in the form of a check made payable to Josephine and George. The second loan was by a check made payable to Josephine.

FFL had no contact with Josephine and George prior to making the $300,000 loan to them. FFL made the loan based on information about the loan provided by Emerald to FFL. FFL did not know that Josephine intended to provide Wood with any funds before FFL made the loan to Josephine and George. FFL first learned that Josephine provided funds to Wood from FFL's loan in May 2000, after the loans were made, and after the $300,000 note was assigned to the Liebs.

The only compensation Emerald and FFL received in connection with the loans to Josephine and George was reflected in the disbursement statements for the loans. They received loan fees totaling $28,560. Plaintiffs and their officers or employees received no compensation or consideration from Wood.

D. The Underlying Action

In May 2002 Petar and Judith, as guardians ad litem for Josephine and George, filed suit against Wood, the Liebs, plaintiffs, and Muhe. (Stojsavljevic v. Wood (Super. Ct. San Diego County, 2002, No. GIN021241).) The complaint was drafted and filed by the attorney defendants. It was verified by Petar and Judith and pleaded eight causes of action. The fourth cause of action for negligence, the seventh for quiet title, and the eighth for rescission were alleged against plaintiffs.

In September 2002 attorney defendants filed an amended complaint which added plaintiffs to the first cause of action for fraud, second cause of action for undue influence, and third cause of action for elder abuse. Thereafter, Brock and Brand were added as defendants.

The attorney defendants took the depositions of the principals of Emerald and FFL. At the depositions, they obtained no information Emerald and/or FFL had any involvement in the fraud committed by Wood.

In December 2002 Petar and Judith settled their claims against the Liebs. The settlement agreement provided in part: "Plaintiffs hereby affirm and acknowledge the validity, priority[,] and enforceability of the Lieb note and trust deed . . . ."

In January 2003, in settlement conference statements served on the attorney defendants, plaintiffs stated that there was no factual or legal basis for any of their causes of action against plaintiffs or their officers. FFL offered to settle for a dismissal of the case against it and its officer, Muhe. Emerald offered to settle the case if Judith, Petar and the attorney defendants paid a portion of the legal fees it had incurred to that point. They rejected both offers.

In June and July 2003 the attorney defendants took Wood's deposition and did not obtain evidence of any complicity between plaintiffs and Wood to steal funds from Josephine and George.

After the completion of Wood's deposition, she was arrested by police. Wood was charged with three felony counts related to her taking funds from Josephine and George that were the subject of the underlying action. In January 2005 Wood pleaded guilty to one felony count.

In July 2003, shortly before the trial then scheduled for August 2003, which was stayed because of Wood's criminal prosecution, plaintiffs again advised the attorney defendants there was no factual or legal basis for any of their causes of action against plaintiffs.

In September 2005 plaintiffs moved for summary judgment, arguing there was no evidence to support Petar and Judith's claims. Specifically, they contended (1) there was no evidence they defrauded Josephine and George; (2) there was no evidence of any undue influence by them; (3) they could not be held liable for negligence as they owed no duty to Josephine and George to prevent Wood's criminal conduct; (4) the causes of action for declaratory relief, injunctive relief, quiet title and rescission were not viable as plaintiffs had no interest in the note and deed of trust and as those causes of action were moot in light of defendants' settlement with the Liebs; and (5) Brand and Brock could not be held personally liable for the actions of Emerald and/or FFL.

In January 2006 the court granted the motion. On the fraud cause of action the court found there was no evidence plaintiffs made any misrepresentations or concealed any material facts with an intent to defraud Josephine and George. On the elder abuse causes of action the court found there was no evidence that they pressured Josephine to provide money to Wood or acted with an intent to deceive. On the negligence count the court found plaintiffs did not breach any duty to Judith and Petar. On the declaratory relief cause of action the court found there was no evidence the plaintiffs were party to a contract that required a judicial determination. On the claim for an injunction to stop foreclosure and for rescission of the loan agreement, the court found the settlement between Judith, Petar and the Liebs that reaffirmed the validity of the promissory note mooted that cause of action. On the cause of action for quiet title, the court found there was no evidence plaintiffs had any interest in the property that served as collateral for the loans.

E. The Instant Malicious Prosecution Action

In April 2006 plaintiffs filed this malicious prosecution action. It named as defendants Petar, Judith, and the attorney defendants. The complaint alleged they acted without probable cause in bringing the underlying action against plaintiffs and continuing to litigate the action against them. Plaintiffs asserted Judith, Petar and the attorney defendants "either knew or should have known and recklessly and consciously disregarded and turned a blind eye toward information they possessed indicating that the actions of [Wood] in obtaining [the loan funds] were done without any assistance from plaintiffs." Plaintiffs also alleged they knew or should have known plaintiffs had no duty to protect Josephine and George from the unforeseeable criminal acts of Wood and that they had no interest in the subject property. The complaint alleged Judith, Petar and the attorney defendants acted with malice by instituting and prosecuting the underlying action because it was for the improper purpose of coercing plaintiffs into an unjust settlement and forcing them to expend attorney fees. Plaintiffs asserted they were damaged in the amount of $186,784 in attorney fees they were forced to expend in defending against the underlying action.

F. Anti-SLAPP Motion To Strike

Petar, Judith and the attorney defendants brought an anti-SLAPP motion to strike plaintiffs' complaint, asserting they could not show a probability of success on the merits of their malicious prosecution claim as (1) they could not show the underlying action was instigated and pursued without probable cause; (2) they could not show the underlying action was instigated and pursued with malice; (3) Petar and Judith had a valid affirmative defense of advice of counsel; and (4) plaintiffs were not damaged.

In response, plaintiffs filed a motion seeking discovery on the advice of counsel defense to support their opposition to the motion to strike. The court granted the motion.

Thereafter, plaintiffs filed opposition to the motion to strike, arguing the evidence in the underlying action showed they could establish a probability of success on their malicious prosecution action, and Petar and Judith did not meet their burden of proof on the advice of counsel defense.

G. Court's Ruling

The court denied the anti-SLAPP motion to strike, finding plaintiffs had established a probability of prevailing in their malicious prosecution action. Specifically, on the probable cause element, the court stated, "[T]his court has examined the record in the underlying case and finds a complete absence of evidence to support the Stojsavljevic's claims." On the malice element, the court found the evidence was sufficient to show Petar, Judith and the attorney defendants instituted and prosecuted the action for the purpose of forcing a settlement that had no relation to the merits of the claim because, in addition to the action lacking probable cause, (1) Judith indicated she knew Wood did not have money to satisfy a judgment; and (2) the attorney defendants demanded a global settlement from plaintiffs and the other parties to the underlying action. As to Petar and Judith's advice of counsel defense, the court found they could not establish that defense as a matter of law because, based upon the lack of any evidence to support their claims, a jury could infer they did not act in good faith and therefore were not entitled to an advice of counsel defense.

DISCUSSION

I. Applicable Law and Standard of Review

Section 425.16 provides in part: "A cause of action against a person arising from any act of that person in furtherance of the person's 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).) Determining whether the statute bars a given cause of action requires a two-step analysis. (Navellier v. Sletten (2002) 29 Cal.4th 82, 88 (Navellier).) First, the court must decide whether the party moving to strike a cause of action has made a threshold showing that the cause of action "aris[es] from [an] act . . . in furtherance of the [moving party's] right of petition or free speech." (§ 425.16, subd. (b)(1); Navellier, supra, 29 Cal.4th at p. 88.) If the court finds that such a showing has been made, the burden then shifts to the plaintiff to demonstrate a "probability that the plaintiff will prevail on the claim." (§ 425.16, subd. (b)(1); Navellier, supra, 29 Cal.4th at p. 88.) In order to demonstrate a probability of prevailing, a party opposing a special motion to strike under section 425.16 " ' "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." ' [Citation.]" (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 741 (Jarrow).) We review de novo a trial court's order granting a special motion to strike under section 425.16. (Computer Xpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 999.)

For purposes of an anti-SLAPP motion, "[t]he court considers the pleadings and evidence submitted by both sides, but does not weigh credibility or compare the weight of the evidence. Rather, the court's responsibility is to accept as true the evidence favorable to the plaintiff. . . ." (HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th. 204, 212 (HMS Capital).) Further, a plaintiff "need only establish that his or her claim has 'minimal merit' [citation] to avoid being stricken as a SLAPP. [Citations.]" (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 291 (Soukup).)

II. Analysis

Because there is no dispute the malicious prosecution claims arise from conduct that is protected under section 425.16, we must determine whether plaintiffs met their burden of having "demonstrated a probability of prevailing on the claim[s]." (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) To satisfy this burden, "the plaintiff must 'state[ ] and substantiate[ ] a legally sufficient claim.' [Citation.] 'Put another way, 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." ' [Citation.]" (Jarrow, supra, 31 Cal.4th at p. 741.) "Section 425.16 therefore establishes a procedure where the trial court evaluates the merits of the lawsuit using a summary-judgment-like procedure at an early stage of the litigation." (Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 192.)

"[I]n order to establish a cause of action for malicious prosecution of either a criminal or civil proceeding, a plaintiff must demonstrate 'that the prior action (1) was commenced by or at the direction of the defendant and was pursued to a legal termination in his, plaintiff's, favor [citations]; (2) was brought without probable cause [citations]; and (3) was initiated with malice [citations].' [Citation.]" (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 871-872 (Sheldon Appel).)

A. Action Commenced by or at Direction of Petar, Judith and the Attorney Defendants

Defendants first assert that because attorney Trucchi was the attorney at ST&H with the main responsibility for the underlying case, the action was not commenced "'by or at the direction'" of the remaining attorney defendants. They also assert because Petar and Judith relied upon the advice of their counsel the action was not commenced by or at their direction. We reject these contentions.

Notably, Judith, Petar and the attorney defendants cite no authority for such novel propositions. There is no requirement of a certain level of involvement in litigating an action for an attorney to be subject to a malicious prosecution action. While this fact may be relevant to an attorney's level of knowledge about the merits of the action, and therefore whether the attorney acted with malice (which element will be discussed in more detail, post), it is not a separate basis for determining there is not a probability a plaintiff will be successful on a malicious prosecution action. Rather the term "'commenced by or at the direction of the defendant'" refers to the fact it must be shown the defendant has gone beyond merely resisting his opponent's attack and has sought some affirmative relief. (Coleman v. Gulf Ins. Group (1986) 41 Cal.3d 782, 793-794.)

Nor does the assertion of an advice of counsel defense make a defendant automatically immune from a malicious prosecution action. It is only when a defendant prevails on that affirmative defense that he or she may not be subject to a malicious prosecution judgment.

B. Probable Cause

If an action was not legally tenable when viewed in an objective manner as of the time the action was initiated or being prosecuted, the action was pursued without probable cause. Courts must "determine whether, on the basis of the facts known to the defendant, the institution of the prior action was legally tenable." (Sheldon Appel, supra, 47 Cal.3d at p. 878.) "The resolution of that question of law calls for the application of an objective standard to the facts on which the defendant acted. [Citation.]" (Ibid.) The test the court is to apply is whether "any reasonable attorney would have thought the claim tenable." (Id. at p. 886.) The tort of malicious prosecution also includes the act of "continuing to prosecute a lawsuit discovered to lack probable cause." (Zamos v. Stroud (2004) 32 Cal.4th 958, 973.) The same standard applies "to the continuation as to the initiation of a suit." (Id. at p. 970.)

"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 either if he relies upon facts which he has no reasonable cause to believe to be true, or if he seeks recovery upon a legal theory which is untenable under the facts known to him." (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 164-165 (Sangster).)

Accepting as true the evidence favorable to the plaintiffs, as we must, plaintiffs met their burden of proof on this element of their malicious prosecution claim. For example, Emerald never had any interest in the subject property, and the lender FFL only briefly held a trust deed on the property before assigning the loan to the Liebs. Accordingly, Petar, Judith and the attorney defendants had no legal or factual basis to name Emerald and FFL on the cause of action for rescission of the loan, and to name Emerald on the quiet title claim. Further, once Petar and Judith settled the action against the Liebs and confirmed the validity of the loan in the settlement agreement, those causes of action became moot. Indeed, as noted by the court in granting plaintiffs' motion for summary judgment, defendants presented no argument or authority in opposition to that motion that those causes of action should not be dismissed.

For the first time on appeal, Judith, Petar and the attorney defendants assert that the rescission cause of action did not seek to rescind the promissory note but rather the "loan transactions" and sought to have the fees paid to plaintiffs returned. However, a review of both the complaint and the first amended complaint shows unequivocally that they sought to rescind the promissory note and never mentioned the fees charged by plaintiffs.

Also for the first time on appeal defendants assert that the quiet title cause of action was not alleged against FFL. However, while defendants neglected to name FFL in the title to that cause of action, in the body of that cause of action, as well as in the prayer for relief, it is clear FFL was named in, and the defendants sought relief against it, in that cause of action.

We need not go any further in our probable cause analysis as "[p]robable cause . . . must exist for every cause of action advanced in the underlying action. '[A]n action for malicious prosecution lies when but one of alternate theories of recovery is maliciously asserted . . . .' [Citation.]" (Soukup, supra, 39 Cal.4th at p. 292.) However, the court also did not err in concluding plaintiffs met their burden on the fraud, undue influence, and negligence claims.

With regard to the fraud and undue influence causes of action, there is no evidence plaintiffs acted with an intent to deceive Josephine and George or that they persuaded Josephine to give money to Wood. With regard to the negligence claim, Petar, Judith and the attorney defendants provide no authority for the proposition plaintiffs had a duty to protect George and Judith from the criminal actions of Wood.

In sum, plaintiffs have met their burden of showing a reasonable probability they will prevail on the probable cause element of their malicious prosecution claim as against the attorney defendants. As we shall explain in greater detail, post, however, plaintiffs cannot show a reasonable probability of success on the probable cause element as to Judith and Petar because they cannot produce sufficient evidence to overcome Judith and Petar's advice of counsel defense.

C. Malice

The malice element of the malicious prosecution tort goes to the defendant's subjective intent in initiating the prior action. (Sheldon Appel, supra, 47 Cal.3d at p. 874.) The mere absence of probable cause without more "is not sufficient to demonstrate malice." (Downey Venture v. LMI Ins. Co. (1998) 66 Cal.App.4th 478, 498-499, fn. 29.)

For purposes of a malicious prosecution claim, malice "is not limited to actual hostility or ill will toward the plaintiff. Rather, malice is present when proceedings are instituted primarily for an improper purpose." (Sierra Club Foundation v. Graham (1999) 72 Cal.App.4th 1135, 1157 (Sierra Club).) "Suits with the hallmark of an improper purpose" include, but are not necessarily limited to, "those in which: ' ". . . (1) the person initiating them does not believe that his claim may be held valid; (2) the proceedings are begun primarily because of hostility or ill will; (3) the proceedings are initiated solely for the purpose of depriving the person against whom they are initiated of a beneficial use of his property; (4) the proceedings are initiated for the purpose of forcing a settlement which has no relation to the merits of the claim." ' " (Ibid., italics added.)

Here, the evidence showed that before the action was filed, the attorney defendants knew Wood did not have the ability to satisfy a judgment in this matter. Despite lacking probable cause on the claims stated against plaintiffs, the attorney defendants thereafter demanded a global settlement for $145,000 and rejected FFL's offer to allow them to dismiss the action against it for a waiver of costs.

In HMS Capital, supra, 118 Cal.App.4th at page 218, the Court of Appeal found the refusal to dismiss an untenable case unless the defendant paid $25,000 evidence of malice: "These facts could support a conclusion that [plaintiff] was simply trying to squeeze a settlement from [defendant] on a baseless case, and hence evidence of malice."

The attorney defendants assert that in finding evidence of malice the court improperly considered settlement communications. However, as the Court of Appeal stated in HMS Capital, supra, 118 Cal.App.4th at p. 219, defendants cite "no case holding that settlement discussions are inadmissible to show that a case was litigated for an improper purpose."

The attorney defendants cite Sierra Club, supra, 72 Cal.App.4th 1135 for the proposition it was improper for the court to consider the parties' settlement positions in the underlying action. However, that case merely held a settlement of an action that occurred after termination of an underlying proceeding was irrelevant to the issue of whether the malicious prosecution defendant acted with malice in that case. (Id. at p. 1157.)

Malice is also shown by the irrelevant and inflammatory "evidence" the attorney defendants submitted in opposition to the summary judgment motion. In their opposition the attorney defendants accused plaintiffs of an unrelated "massive fraud perpetrated on the public" and accused Brock and his attorney in the underlying case of a "multi million dollar and ongoing Ponzi scheme/securities fraud perpetrated against the general public." The court sustained plaintiffs' objections to this irrelevant "evidence." If the facts are "exaggerated, overdrawn, or colored to the detriment [a party], . . . the court or jury may consider these circumstances as evidence tending to prove actual malice, and they may be sufficient for that purpose without other evidence on the subject." (Brewer v. Second Baptist Church (1948) 32 Cal.2d 791, 799.)

The attorney defendants assert that, with the exception of Trucchi, because of the minimal nature of the other ST&H attorneys' involvement, and the fact Trucchi directed prosecution of the action, they lacked malice and those defendants should have prevailed on their motions to strike. This contention is both legally and factually infirm.

There is no authority for the proposition that only the attorney with primary responsibility on a case may be sued for malicious prosecution. Further, Suppa, Highnote and Shaw's participation in the underlying action is not as limited as the attorney defendants suggest. Suppa was the attorney who initially met Petar and Judith and also appeared on their behalf at a judicial settlement conference. At that conference, according to plaintiffs' counsel he "scoffed" at their claim there were no facts to support the action against Emerald and demanded "'six figures'" to settle the action. Highnote took the depositions of plaintiffs' principals, Brock and Muhe. Highnote made "numerous" court appearances and participated in drafting the trial readiness conference report, which identifies issues, witnesses and exhibits to be used at trial. Shaw prepared the opposition to the motion for summary judgment, including the irrelevant evidence the court excluded, and argued the motion to the court. "An attorney's assertion that he or she did not initiate a lawsuit and that his or her participation in the case was to be limited in time and scope does not eliminate the attorney's potential liability for malicious prosecution." (Sycamore Ridge Apartments, LLC v. Naumann (2007) 157 Cal.App.4th 1385, 1410-1411 (Sycamore Ridge).)

D. Damages

Without citation to authority, the attorney defendants contend plaintiffs were required to prove they incurred damages in order to defeat their anti-SLAPP motion. In Sycamore Ridge, supra, 157 Cal.App.4th at pages 1411-1412, we stated, "[D]efendants cite no authority establishing that a malicious prosecution plaintiff must present evidence of the facts supporting the damages claimed in order to establish a probability of prevailing [on a malicious prosecution claim]. Rather, the weight of authority holds that in order to prevail, a malicious prosecution plaintiff must establish three elements, i.e., that the prior action (1) was commenced by or at the direction of the defendant and was pursued to a legal termination in plaintiff's favor, (2) was brought without probable cause, and (3) was initiated with malice. [Citation.] In order to be granted monetary relief, a malicious prosecution plaintiff must also prove damages. However, there is no requirement that, for purposes of surviving an anti-SLAPP motion, a malicious prosecution plaintiff must provide specific evidence of the extent of the damages suffered. A malicious prosecution claim is actionable precisely because the malicious prosecution is presumed to have injured the defendant in the underlying action." We find the reasoning in Sycamore Ridge persuasive and conclude a malicious prosecution plaintiff need not establish the amount of its damages in order to defeat an anti-SLAPP motion.

Moreover, there is sufficient evidence in the record to support plaintiffs' assertions they suffered damage as a result of the underlying action. A plaintiff who successfully asserts a malicious prosecution claim can obtain reasonable attorney's fees incurred defending against the prior action. (Bertero v. National General Corp. (1974) 13 Cal.3d 43, 59-64.) Plaintiffs submitted evidence they incurred $186,784 in attorney fees in defending the underlying action.

The attorney defendants assert that because plaintiffs' counsel in the underlying action also defended other parties who are not plaintiffs in this malicious prosecution action, they cannot show they would have avoided incurring these attorney fees if they had not been a party to the underlying lawsuit. Again, the attorney defendants cite no legal authority for this proposition. Plaintiffs were required to defend the underlying action. They retained and paid an attorney to represent them. How much, if any, of the fees can be segregated and subtracted from the total fees incurred to account for the parties who are not plaintiffs in this action is a matter to be decided by proof. Plaintiffs have established the fact they have suffered damages. That is sufficient.

E. Advice of Counsel Defense

"'Probable cause may be established by the defendants in a malicious institution proceeding when they prove that they have in good faith consulted a lawyer, have stated all the facts to him, have been advised by the lawyer that they have a good cause of action and have honestly acted upon the advice of the lawyer.' (Luchesi v. Giannini & Uniack (1984) 158 Cal.App.3d 777, 788; Pond v. Insurance Co. of North America, supra, 151 Cal.App.3d at p. 288 ["Reliance upon the advice of counsel, in good faith and after full disclosure of the facts, customarily establishes probable cause"].) [Citation.]" (DeRosa v. Transamerica Title Ins. Co. (1989) 213 Cal.App.3d 1390, 1397-1398.)

In support of their motion to strike, Judith and Petar both stated that "[i]n making every decision in this case, I relied, in good faith, entirely upon the advice of my attorneys at [ST&H]. I provided my attorneys with all of the information that was known to me relative to this matter. I followed the advise [sic] provided by my attorneys." In her declaration in support of the motion to strike, Trucchi stated that Judith and Petar told her "many times . . . they were relying completely upon [her] advice regarding the underlying lawsuit." She also stated that Judith and Petar "disclosed all of the relevant facts of which they were aware to me at all times."

Plaintiffs were allowed to conduct discovery on the advice of counsel defense, including written discovery and the depositions of Judith and Petar. Despite that discovery, they have provided no evidence to dispute Judith and Petar's statements they relied on the advice of their counsel in initiating and pursuing the underlying action, or that their reliance on advice of counsel was not in good faith.

Plaintiffs assert Judith and Petar cannot show good faith reliance on advice of counsel because they did not state in their declarations they "had been advised that they had any good cause of action against either" plaintiff and did not produce any documents showing their attorneys' advice given to them. However, plaintiffs have not cited any authority for the proposition that an attorney must specifically advise a client as to the merits of each cause of action before the client may rely on an attorney's advice to pursue an action against a defendant. That is because this contention is untenable. Under such an interpretation of this affirmative defense, if an attorney neglected to offer specific advice as to the merits of each cause of action, the client would thereafter be denied an advice of counsel defense. Nor is there any authority for the idea that advice from counsel need be written as opposed to oral. Further, the attorney defendants did outline their theory of recovery against plaintiffs in a settlement demand letter sent to plaintiffs, which they also sent to Judith and Petar.

Because plaintiffs have not shown a probability of success in overcoming Judith and Petar's advice of counsel defense, the court erred in denying their motion to strike, and that portion of the court's order is reversed.

DISPOSITION

The order denying Judith and Petar's anti-SLAPP special motion to strike is reversed. In all other respects, the court's order is affirmed. Parties to bear their own costs on appeal.

WE CONCUR: O'ROURKE, J., IRION, J.


Summaries of

Emerald Bay Financial, Inc. v. Stojsavljevic

California Court of Appeals, Fourth District, First Division
Jul 2, 2008
No. D050795 (Cal. Ct. App. Jul. 2, 2008)
Case details for

Emerald Bay Financial, Inc. v. Stojsavljevic

Case Details

Full title:EMERALD BAY FINANCIAL, INC., et al., Plaintiffs and Respondents, v. PETAR…

Court:California Court of Appeals, Fourth District, First Division

Date published: Jul 2, 2008

Citations

No. D050795 (Cal. Ct. App. Jul. 2, 2008)