Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of San Diego County, No. 37-2007-00051464-CU-MC-NC Jacqueline M. Stern, Judge.
HALLER, Acting P. J.
David Gold (David), individually and as executor for his mother's estate, brought a malicious prosecution action against Sherpaul Corporation and its managing officer, Paul Dziuban. Sherpaul and Dziuban moved to dismiss the complaint under the anti-SLAPP statute. (Code Civ. Proc., § 425.16.), The court denied the motion. Sherpaul and Dziuban appeal. We affirm.
All further statutory references are to the Code of Civil Procedure.
FACTUAL AND PROCEDURAL SUMMARY
This factual summary is based on the pleadings and the evidence presented in the anti-SLAPP proceedings.
Gold-Sherpaul Contract
In 2005, Anna-Rae Gold (Anna-Rae) was terminally ill with cancer. To assist with her care, Anna-Rae and her son, David, retained Sherpaul, an agency that provides homecare services to seniors. On December 1, 2005, the parties signed a written contract in which Sherpaul agreed to provide workers to care for Anna-Rae on a daily basis. Each party had the right to terminate the agreement at any time, with or without cause. The Golds paid a $3,070 deposit, the unused portion of which was refundable at the time of the final invoice.
The contract contained an addendum prohibiting the Golds from soliciting a Sherpaul caregiver to work directly for them. The addendum stated: "Client understands that the CAREGivers are employees of [Sherpaul] and as such owe a duty of loyalty to their employer . . . . [Sherpaul's] ability to provide quality CAREGivers at a competitive price to Clients is dependent upon [Sherpaul's] retention of it's CAREGivers. [¶] . . . As a condition of [Sherpaul] providing services to Client, Client agrees not to interfere with [Sherpaul's] business of providing CAREGivers by soliciting the CAREGivers to leave [Sherpaul] and work directly for Client." The contract provided that upon a breach Sherpaul was entitled to liquidated damages "computed at two hundred percent (200%) of the daily service rate [$245] for a period of 365 days."
Shortly after Sherpaul began providing services, the Golds expressed dissatisfaction with several caregivers, including one who allegedly abandoned Anna-Rae during the Christmas holidays. The Golds believed that only one of Sherpaul's caregivers, Mary Whitehead, provided satisfactory service. Whitehead had been working for Sherpaul for approximately one month.
Termination of Gold-Sherpaul Contract
In mid-February 2006, less than three months after the Golds had initially retained Sherpaul's services, a Sherpaul office manager telephoned David and told him that Whitehead had given notice earlier that day that she would be terminating her employment with Sherpaul. David responded that he would no longer need Sherpaul's services after Whitehead's last day. David asked Sherpaul to refund his deposit with the final invoice.
However, Sherpaul failed to refund the deposit. During the next several months, David made numerous attempts to obtain the amount due, but Sherpaul employees did not respond to his telephone calls.
Three months after the contract termination, on April 26, David wrote a letter to Sherpaul attempting to obtain a refund of the outstanding deposit amount ($371.76). David detailed his numerous unsuccessful attempts to obtain the refund, and complained that Sherpaul had sent "many unqualified (and in one case dangerous) caregivers" and that Sherpaul office staff had "demonstrated incompetence repeatedly." David said this was his fifth attempt to obtain his remaining deposit, and he intended to institute legal proceedings if he did not receive the money by May 3. David sent copies of the letter to the Attorney General, the Sherpaul parent corporate offices, and various hospice and family service organizations.
One week later, Sherpaul's attorney sent a letter to David that did not respond to the refund request, but instead claimed the Golds had violated the nonsolicitation contractual provision. The letter stated: "After a detailed investigation by [Sherpaul], it was discovered that you and [Anna-Rae] retained the homecare services of [Sherpaul's] former employee Mary Whitehead immediately after you cancelled your services with [Sherpaul]." Sherpaul's attorney also said the statements in David's April 26 letter were slanderous and requested that David "cease and desist all such allegations as it would deter any possibility of resolution of this matter without court intervention."
After David responded that Sherpaul's accusations were factually incorrect, Sherpaul's attorney agreed that Sherpaul would return the deposit amount owed to David, but asserted that Sherpaul intended to pursue a breach of contract claim against the Golds. Counsel stated: "the case which will be presented to the Court is quite simple: you cancelled services with Sherpaul and immediately thereafter solicited and retained the homecare services of a [Sherpaul] caregiver (Ms. Whitehead) in breach of your Service Agreement." (Italics added.)
Sherpaul's attorney then sent another letter to David stating: "During my investigation into this matter, I have confirmed that . . . Whitehead is in fact still providing homecare services to [Anna-Rae]. . . . Ms. Whitehead represented that she now works for Borrowed Hands [another homecare agency] in Poway and that she is providing homecare services to [Anna-Rae] through Borrowed Hands." The letter concluded that Sherpaul had authorized him to file a complaint for damages against the Golds, and that Sherpaul would be willing to settle the matter for $75,000.
Sherpaul's Superior Court Complaint Against the Golds
Shortly after, Sherpaul filed a complaint against the Golds, Whitehead, Borrowed Hands, and Suzette Lawler, the director of Borrowed Hands. The complaint alleged two causes of action against the Golds: breach of contract and breach of good faith and fair dealing. Sherpaul claimed the Golds breached the contract by "solicit[ing] . . . Whitehead to work directly for [Anna-Rae] through [the Borrowed Hands agency]" and that "one motivation" for the Golds to cancel services with Sherpaul "was so they could reap the benefit of the qualified, screened and trained caregiver [Sherpaul] provided to [the Golds], but at a lower price per hour as the independent contractor of Borrowed Hands." (Capitalization omitted.) Sherpaul sought injunctive relief and $178,850 under the liquidated damages contract provision. As against the remaining defendants, Sherpaul alleged tortious interference with contract, intentional interference with prospective economic advantage, and a statutory unfair competition claim.
After several months of discovery, on February 27, 2007, Sherpaul dismissed the entire lawsuit. At or about this time, Anna-Rae passed away.
David's Malicious Prosecution Action Against Sherpaul
One month later, David, on behalf of himself and the estate of Anna-Rae, brought a malicious prosecution action against Sherpaul and its managing officer (Dziuban) (collectively Sherpaul).
In the complaint, David alleged the prior action was brought without probable cause, and Sherpaul did not "honestly and reasonably believe there were grounds for the causes of action against [the Golds]." David alleged that before filing the lawsuit, Sherpaul knew from its interviews of Whitehead and Borrowed Hands personnel that neither David nor Anna-Rae had spoken to Whitehead before she left Sherpaul's employment about terminating her employment with Sherpaul or retaining her as a caregiver for Anna-Rae, and that Sherpaul knew at the time of filing the lawsuit that it had no evidence supporting any of the claims against the Golds. David further alleged that Sherpaul acted maliciously in instituting and pursuing the prior lawsuit based on "ill will" arising from the Golds' complaints about Sherpaul's services.
Sherpaul's Anti-SLAPP Motion
Sherpaul then brought a motion to dismiss the malicious prosecution complaint under the anti-SLAPP statute. In support, Sherpaul produced Dziuban's declaration, which stated that Sherpaul brought the prior action based on information that: (1) the Golds cancelled their Sherpaul contract at about the same time that Whitehead gave notice of the employment termination; (2) Whitehead told Sherpaul personnel that she was terminating her employment because she needed to care for her grandson; and (3) Whitehead continued to provide services to Anna-Rae after the employment termination.
Dziuban stated that Sherpaul then dismissed the action in February 2007 because the "discovery . . . revealed facts that did not support our case and it became apparent that we may not be successful in our claim. . . . [David] and Suzette Lawler of Borrowed Hands each provided verified written discovery responses . . . denying that either of them induced Ms. Whitehead to terminate her employment with Sherpaul. Ms. Whitehead also provided verified written discovery responses where she denied that she terminated her employment with Sherpaul after being induced by either the Golds and/or Ms. Lawler of Borrowed Hands to do so. [¶] . . . While we continued to believe that the Golds had breached the Agreement with Sherpaul and that they were simply using Borrowed Hands to appear as if the Agreement had not been breached, the testimony obtained through discovery did not support our contention that a breach of the Agreement had in fact occurred." (Capitalization omitted.)
In opposing the anti-SLAPP motion, David conceded his complaint was subject to the anti-SLAPP statute, but urged the court to deny the motion because there was a likelihood he would prevail on the merits of his malicious prosecution claim. (§ 425.16, subd. (b)(1).) David argued that the evidence showed Sherpaul lacked probable cause to assert the breach of contract claims against the Golds and that Sherpaul was motivated by malice in bringing the prior action.
In support of these arguments, David relied primarily on statements made by Dziuban at his deposition and in his declaration, and facts set forth in Sherpaul counsel's prior letters and the timing of the letters. These facts included the following. At his deposition, Dziuban acknowledged that he was aware that David cancelled the Sherpaul contract in mid-February 2006 only after David learned that Whitehead had given her notice of termination. Dziuban stated he thereafter discovered Whitehead continued to work for the Golds based on two events: (1) on March 14, 2006, he asked one of his employees to surveil Anna-Rae's home, and this employee saw Whitehead arrive and go into the home that morning; and (2) he asked his friend to call the Golds and pose as Whitehead's insurance agent to find out if Whitehead was still working for the Golds, and his friend reported that David said that Whitehead was at Anna-Rae's home that day.
Dziuban acknowledged at his deposition that the nonsolicitation contract provision was breached only if the client solicits the caregiver to leave Sherpaul in addition to soliciting the caregiver to work directly for the client. Dziuban admitted he was unaware of any witnesses who heard the Golds solicit Whitehead to leave Sherpaul's employment and/or solicit Whitehead to work for them before Whitehead terminated her employment with Sherpaul. He also stated he was not aware of any documents that would support this conclusion.
After considering the parties' written submissions and memoranda, the trial court initially indicated in a tentative ruling that it would grant the anti-SLAPP motion, based on its finding that David did not meet his burden to establish Sherpaul lacked probable cause to bring the prior action. However, after a hearing, the court changed its decision, and denied the anti-SLAPP motion. On the probable cause element, the court stated there was an underlying factual dispute as to Dziuban's knowledge at the time the action was initiated and during the ensuing litigation.
Sherpaul appeals from this order.
After the court entered the order denying Sherpaul's anti-SLAPP motion, David filed an amended complaint adding Whitehead, Lawler, and Borrowed Hands as plaintiffs in the malicious prosecution action. Because this appeal is from the court's order denying Sherpaul's motion to strike the original complaint, we agree with Sherpaul that the allegations of the first amended complaint are not relevant to our analysis. We therefore do not consider David's appellate contentions to the extent they seek to establish a lack of probable cause and/or malice based on Sherpaul's claims against these newly added plaintiffs.
DISCUSSION
I. General Legal Principles
It is undisputed that David's malicious prosecution action arises from acts in furtherance of defendants' petition rights and therefore David's complaint is subject to the anti-SLAPP statute. (See Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 741.) Thus, the legal issue on this appeal is whether David met his burden to show a "probability that [he] will prevail" on his malicious prosecution claim. (§ 425.16, subd. (b)(1).)
To meet this burden, David was required to present evidence that, if believed by the trier of fact, was sufficient to support a judgment in his favor. (Zamos v. Stroud (2004) 32 Cal.4th 958, 965.) In deciding the potential merit issue, the trial court considers the parties' pleadings and evidentiary submissions. (Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 821.) The court does not weigh the credibility or compare the strength of competing evidence, but merely determines if there is sufficient evidence to show the plaintiff can satisfy each element of his or her claim. (Ibid.) An appellate court applies a de novo review to this determination. (Zamos v. Stroud, supra, 32 Cal.4th at p. 965.)
To establish a malicious prosecution claim, the plaintiff must prove the prior action was (1) brought (or continued) without probable cause; (2) initiated with malice; and (3) pursued to a legal termination in his or her favor. (See Zamos v. Stroud, supra, 32 Cal.4th at pp. 965-966; Padres L.P. v. Henderson (2003) 114 Cal.App.4th 495, 513.) Each of these elements must be proved to prevail on a malicious prosecution cause of action. (Zamos v. Stroud, supra, 32 Cal.4th at p. 965; Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 871-872 (Sheldon Appel).) Thus, in opposing the anti-SLAPP motion, David was required to show a probability of prevailing on each element of his malicious prosecution claim.
Sherpaul does not challenge that David established a probability of prevailing on the issue of favorable termination based on Sherpaul's voluntary dismissal of the action. (See Sycamore Ridge Apartments, LLC v. Naumann (2007) 157 Cal.App.4th 1385, 1400; Villa v. Cole (1992) 4 Cal.App.4th 1327, 1335.) But he argues the court erred in finding that David met his burden on the lack of probable cause and malice elements. We examine those contentions below.
II. Probable Cause
A. Legal Principles
To determine whether the "without probable cause" element of a malicious prosecution claim is met, a trial court must make an objective determination of the "'reasonableness' of the defendant's conduct, i.e., to 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.) If any reasonable attorney would have considered the action legally tenable, the probable cause element cannot be established. (Ibid.) "This 'lenient standard' for bringing a civil action reflects 'the important public policy of avoiding the chilling of novel or debatable legal claims' and allows attorneys and litigants ' "to present issues that are arguably correct, even if it is extremely unlikely that they will win . . . ." ' " (Padres L.P. v. Henderson, supra, 114 Cal.App.4th at p. 517.) "Only those actions that any reasonable attorney would agree are totally and completely without merit may form the basis for a malicious prosecution suit." (Zamos v. Stroud, supra, 32 Cal.4th at p. 970.)
A claim may be found to have been brought without probable cause because it was not legally supported or because it was not factually supported. (Puryear v. Golden Bear Ins. Co. (1998) 66 Cal.App.4th 1188, 1195.) In opposing the anti-SLAPP motion, David relied primarily on the lack of factual support to show that Sherpaul did not have probable cause to bring the breach of contract claims. To prevail on this theory, David was required to establish a prima facie case showing the facts known to Sherpaul were insufficient "to support [an objectively] reasonable belief that the evidence will sustain a favorable judgment,' or at least a reasonable belief that such evidence exists." (Palmer v. Zaklama (2003) 109 Cal.App.4th 1367, 1383; see Puryear, supra, 66 Cal.App.4th at p. 1195.) Put otherwise, the facts known to Sherpaul must not have "afford[ed] an inference" that legal liability could be established. (Puryear, supra, 66 Cal.App.4th at p. 1197.)
B. Analysis
The evidence presented in the anti-SLAPP proceedings shows that Sherpaul brought its contract claims against the Golds based on the facts that: (1) the Golds terminated their contract shortly after Whitehead gave notice she was terminating her employment with Sherpaul; (2) the Golds and Whitehead resumed a relationship within one month after the termination, and (3) this relationship appeared inconsistent with Whitehead's statement that she left her employment to care for her grandchild. Sherpaul argues that these facts constitute sufficient circumstantial evidence to allow an inference that the Golds breached the nonsolicitation provision, and/or that evidence supporting such an inference could be obtained.
The analytical flaw in this argument is that it disregards the relevant contract language and is based on a false factual premise—that Sherpaul's breach of contract claim was viable if based on Gold's solicitation after Whitehead's resignation. The anti-solicitation provision states: "Client agrees not to interfere with [Sherpaul's] business of providing CAREGivers by soliciting the CAREGivers to leave [Sherpaul] and work directly for Client." (Italics added.) As Dziuban admitted below, under the plain language of this provision, this contract is breached only when the client (the Golds) solicited the caregiver (Whitehead) "to leave" Sherpaul, i.e., terminate her employment with the company. (Italics added.) At his deposition, Dziuban admitted that before Sherpaul filed the lawsuit he understood a client does not breach this provision merely because the client employed a Sherpaul caregiver, and instead a breach occurs only if the client also solicited the caregiver to leave Sherpaul's employment.
There are no facts in the record supporting a reasonable inference that the Golds solicited Whitehead to leave Sherpaul's employment. The fact that Whitehead worked for the Golds after she left Sherpaul does not lead to a reasonable inference that the Golds played a part in asking or encouraging Whitehead to terminate her relationship with Sherpaul. Although Whitehead's statement that she needed to care for her grandson may have raised some questions as to Whitehead's true motives, there was no reasonable basis to conclude that Whitehead's statement could be attributed to the Golds, i.e., that the Golds knew that Whitehead was going to, or had made, this statement to Sherpaul or that they suggested that she do so. The facts show that Anna-Rae had a terminal illness and therefore there would be only a short term need for continued care. Under the circumstances, it is not reasonable to infer that Whitehead would have quit her Sherpaul job based on an agreement by the Golds that they would retain her services for a brief time period.
Only a very minimal level of evidence is needed to support the bringing of a civil action and the evidence need not be direct. However, a party does not have probable cause to institute an action if there is a complete lack of supporting proof or the reasonable possibility of obtaining any such proof. (See Puryear v. Golden Bear Ins. Co., supra, 66 Cal.App.4th at pp. 1197-1198.) In response to David's evidentiary showing supporting his malicious prosecution claim, Sherpaul presented no evidence, direct or circumstantial, from which it could be inferred that the Golds solicited Whitehead to leave her employment. Moreover, the record establishes that Sherpaul communicated with all parties with knowledge of the relevant events before filing the lawsuit—David, Lawler, and Whitehead—and each denied that Whitehead had been solicited to leave Sherpaul's employment. Dziuban states that Sherpaul became aware during discovery in the prior action that the "facts that did not support our case . . . ." However, Dziuban did not identify any facts that Sherpaul learned during discovery of which it was unaware before it filed the action.
Further, the record shows that Sherpaul brought the case based solely on the theory that the Golds retained Whitehead to work for them after the Golds discovered that she had left Sherpaul's employment. For example, in his letter of May 8, 2006, Sherpaul's counsel stated: "the case which will be presented to the Court is quite simple: you canceled services with [Sherpaul] and immediately thereafter solicited and retained the homecare services of a [Sherpaul] caregiver (Ms. Whitehead) in breach of your Service Agreement." (Italics added.) Similarly, during discovery in the underlying case, Sherpaul explained the basis of its breach of contract cause of action against the Golds as follows: "As of May 11, 2006, Whitehead was providing caregiving services to Anna-Rae. . . . Plaintiff believes this is circumstantial evidence that Whitehead was solicited by [the Golds] to continue providing homecare services to [David and Anna-Rae] after they canceled services with Plaintiff." (Italics added.) Consistent with this position, Dziuban stated in his declaration that: "It became our belief that the [Golds] cancelled the Agreement for homecare services with [Sherpaul] and immediately thereafter solicited and retained the homecare services of Ms. Whitehead." (Italics added.) As explained above, this theory—that the Golds solicited Whitehead to work for them after Whitehead left Sherpaul's employment—is insufficient to establish a breach of contract.
Sherpaul alternatively argues it was merely acting on its counsel's advice and therefore cannot be liable for malicious prosecution. However, Sherpaul never raised this defense in bringing the anti-SLAPP motion or in their reply papers below. Because a reliance-on-counsel defense requires a factual analysis (e.g., the nature of the information conveyed to defendant's attorney and the nature of the advice given by counsel), it cannot be raised for the first time on appeal. To negate the lack of probable cause element in a malicious prosecution action by claiming reliance on counsel's advice, the defendant must prove it: (1) consulted with a lawyer in good faith; (2) communicated all the relevant facts to the lawyer; (3) was advised by the lawyer that it had a valid cause of action; and (4) honestly acted upon the lawyer's advice. (Palmer v. Zaklama, supra, 109 Cal.App.4th at p. 1383.) These facts are not established on the record before us.
III. Malice
Sherpaul additionally contends David did not meet his burden to show a probability of prevailing on the malice element of his malicious prosecution claim. We disagree.
The malice element focuses on the defendant's subjective intent in initiating the prior action, and is generally an issue to be determined by a jury. (HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 218.) Malice is established when the evidence shows the party brought the prior action based on hostility or ill will or for another improper purpose. (Albertson v. Raboff (1956) 46 Cal.2d 375, 383; accord HMS Capital, supra, at p. 218; Downey Venture v. LMI Ins. Co. (1998) 66 Cal.App.4th 478, 498-499.) The lack of probable cause is a factor supporting a finding of malice, but standing alone it does not suffice to establish this element. (HMS Capital, supra, 118 Cal.App.4th at p. 218; Padres L.P. v. Henderson, supra, 114 Cal.App.4th at p. 522.) Whether malice exists presents a factual question and its proof may be inferred from all the circumstances of the case. (Sheldon Appel, supra, 47 Cal.3d at p. 874.)
To satisfy his burden on the malice element, David presented evidence showing the lawsuit was triggered by his complaints about Sherpaul's failure to return amounts owed and about the unsatisfactory services provided by Sherpaul, and in retaliation for his actions in communicating these complaints to third parties. David also relied on the evidence showing Sherpaul's excessively high settlement demand ($75,000) despite the lack of any evidence supporting his claims, and the evidence of Dziuban's questionable conduct in seeking to obtain evidence to support his claims, including having one of his employees sit outside the Golds' home and having one of his friends misrepresent himself as an insurance agent to try to obtain evidence against the Golds. Viewed in the totality of the circumstances, this evidence was sufficient to support a claim that Sherpaul brought the lawsuit based on hostility and ill will toward the Golds, rather than for a proper purpose of enforcing the nonsolicitation contract provision.
To rebut the malice element, Sherpaul relied primarily on Dziuban's testimony that he brought the action solely based on his good faith belief that there was sufficient circumstantial evidence to support his breach of contract claims. This evidence is insufficient to negate the malice element as a matter of law and at most creates a factual issue. Although at trial Sherpaul can certainly rely on Dziuban's testimony to defend against David's malice claims, Dziuban's statements of his subjective intent are insufficient to defeat the malice element at this stage of the proceeding.
IV. Conclusion
For purposes of the " 'minimal merit' required to defeat a SLAPP motion," there was sufficient evidence that Sherpaul had no probable cause to bring the action and that it acted with malice in filing and maintaining the action. (See Fashion 21 v. Coalition for Humane Immigrant Rights of Los Angeles (2004) 117 Cal.App.4th 1138, 1149, fn. omitted.) In reaching this conclusion, we do not intend to suggest any opinion as to the ultimate resolution of the case. Based on the state of the evidence after discovery is complete, the trial court may ultimately conclude that David cannot meet his burden of proof to establish a lack of probable cause and/or a factfinder may determine that David cannot meet his burden to show Sherpaul brought this action for improper purposes. But at the very earliest stage of the litigation, David produced sufficient evidence to avoid a motion to strike.
DISPOSITION
Order affirmed. Appellants to pay respondent's costs on appeal.
WE CONCUR: McINTYRE, J., IRION, J.