Opinion
NOT TO BE PUBLISHED
Superior Court County of Ventura No. SC048315, William Q. Liebmann, Judge.
David Hoffman. Jeffrey Isaac Ehrlich, for Appellant.
Bonne, Bridges, Mueller, O'Keefe & Nichols and Joel Bruce Douglas, for Respondent.
YEGAN, J.
In this malicious prosecution action, Susi Helaly appeals from a judgment on the pleadings in favor of Barbara DiMeo, respondent. Respondent represented the plaintiff in a prior action against appellant. Appellant contends that the trial court erroneously determined that, pursuant to Brennan v. Tremco Inc. (2001) 25 Cal.4th 310 (Brennan), the malicious prosecution action was barred because the prior action had been terminated in contractual arbitration. We affirm.
Factual and Procedural Background
Ashraf Helaly (Ashraf) was the owner of Vascular Multi Speciality, Inc. (Vascular). Appellant and Lisa Matsuda were employees of the company. Appellant was Ashraf's former wife. In April 2006 Matsuda filed a complaint against Ashraf, Vascular, and appellant (the defendants) for employment discrimination, sexual harassment, negligence, and infliction of emotional distress. The complaint alleged that appellant was "an administrative assistant" to Ashraf and "a supervisor" of Vascular.
All of the defendants were represented by the same attorney. In June 2006 a stipulation for arbitration was filed. The stipulation was signed by the attorney for the defendants and by respondent, the attorney for Matsuda. The stipulation stayed the trial court proceedings "pending arbitration before the Hon. Steven Stone (ret.) of the claims set forth herein." The stipulation requested that the trial court "retain jurisdiction... to enforce any arbitration award...." The stipulation incorporated by reference the terms of an attached 2005 arbitration agreement signed only by Matsuda. The agreement stated in part: "It is agreed that any controversy, claim or dispute arising out of or relating to [Matsuda's]... employment... will be resolved exclusively by final and binding arbitration before a neutral Arbitrator under the laws of the State of California."
Pursuant to the stipulation, the trial court ordered that the proceedings be "stayed pending arbitration of the claims set forth herein." The court retained jurisdiction "to enforce any arbitration award."
In August 2006 new counsel was substituted to represent Ashraf and appellant. During Matsuda's deposition on August 22, 2006, new counsel requested that the action against appellant be dismissed. Respondent obtained Matsuda's consent to the dismissal. The following day, respondent gave appellant a signed request for a voluntary dismissal as to appellant.
In October 2006 appellant filed a complaint for malicious prosecution against respondent and Matsuda. In December 2007 the trial court granted a motion for summary judgment as to Matsuda but denied the motion as to respondent. In March 2007 respondent filed a request for an order requiring appellant to show cause why the malicious prosecution action should not be dismissed. Respondent alleged that a dismissal was required because the prior action had been terminated in contractual arbitration. Respondent relied on Brennan, supra, 25 Cal.4th 310.
The trial court "issued an Order to Show Cause concerning whether a motion for judgment on the pleading[s] lies in favor of [respondent] and against [appellant]." In May 2008 the trial court granted judgment on the pleadings in favor of respondent. The court concluded that, pursuant to Brennan, appellant's complaint for malicious prosecution failed to state a cause of action because it could not establish the element of a favorable termination of the prior action.
In March 2008 Justice Stone rendered his final decision in favor of Matsuda and against Ashraf and Vascular.
Standard of Review
"A motion for judgment on the pleadings performs the same function as a general demurrer, and hence attacks only defects disclosed on the face of the pleadings or by matters that can be judicially noticed. [Citations.]" (Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 999.) " 'Our only task in reviewing a ruling on a demurrer is to determine whether the complaint states a cause of action.' " (People ex rel. Lungren v. Superior Court (1996) 14 Cal.4th 294, 300.) " '[W]e are not bound by the determination of the trial court, but are required to render our independent judgment on whether a cause of action has been stated.' [Citation.]" (Lance Camper Manufacturing Corp. v. Republic Indemnity Co. (1996) 44 Cal.App.4th 194, 198.) We accept as true the complaint's factual allegations and give them a liberal construction. (Gerawan Farming, Inc. v. Lyons (2000) 24 Cal.4th 468, 515-516.) "We consider evidence outside the pleadings which the trial court considered without objection. [Citation.]" (Pomona College v. Superior Court (1996) 45 Cal.App.4th 1716, 1721.)
Discussion
One of the elements of a cause of action for malicious prosecution is that the prior action must have resulted in a termination favorable to the plaintiff in the malicious prosecution action. (Brennan, supra,25 Cal.4th at p. 313.) In Brennan our Supreme Court concluded that "a contractual arbitration proceeding does not result in a favorable termination of a prior action." (Id., at p. 312.) Irrespective of whether the prior "action started in court or in arbitration, if it ends in contractual arbitration, that termination will not support a malicious prosecution action." (Id., at p. 314.) The court reasoned that "to permit an action for malicious prosecution to follow contractual arbitration would defeat the purpose of that arbitration.... [C]ontractual arbitration is a relatively quick and inexpensive, but necessarily somewhat 'roughshod,' procedure that the parties may voluntarily choose to resolve their dispute and avoid further recourse to the courts. [Citation.]" (Id., at p. 316.) "[T]he parties who voluntarily choose arbitration generally expect and desire that the arbitration will end their dispute...." (Id., at p. 315.) Thus, "contractual arbitration should not lead to additional litigation in the courts." (Id., at p. 317.)
Appellant contends that Brennan is inapplicable where, as here, an action is terminated in contractual arbitration by a voluntary dismissal rather than the arbitrator's final decision on the merits. We disagree. Appellant's interpretation of Brennan would lead to additional litigation in the courts after the parties had selected contractual arbitration to "resolve their dispute and avoid further recourse to the courts." (Brennan, supra, 25 Cal.4that p. 316.). This is the very result that the Brennan court wanted to avoid.
Moreover, allowing a malicious prosecution action in these circumstances would be contrary to public policy. It is the policy of this state to " 'encourage voluntary dismissals of meritless claims at the earliest stage possible.' " (Zamos v. Stroud (2004) 32 Cal.4th 958, 969.) Such early dismissals " 'assist in the efficient administration of justice and reduce the harm to individuals targeted by meritless claims.' " (Id., at p. 970.) If we were to adopt appellant's interpretation of Brennan, we would be encouraging the litigation of meritless claims rather than their voluntary dismissal. A party who litigated a meritless claim to a final decision by the arbitrator could not be sued for malicious prosecution. On the other hand, a party who voluntarily dismissed a meritless claim at an early stage in the arbitration proceedings would be subject to a malicious prosecution action. Surely, our Supreme Court in Brennan did not contemplate such an absurd result.
Appellant contends that Brennan is still inapplicable because she was not a party to the underlying 2005 arbitration agreement signed only by Matsuda. This contention is without merit because the stipulation for arbitration expressly incorporated the terms of the 2005 arbitration agreement. Moreover, irrespective of that agreement, the stipulation committed the parties to arbitration. The stipulation states: "[T]he parties have agreed to stipulate to submit the matter to arbitration before the Hon. Steven Stone...."
Finally, appellant argues that Brennan does not apply here because she did not personally agree to contractual arbitration. On March 18, 2008, appellant executed a declaration in which she stated, "When Ms. Matsuda sued me, I never signed any kind of agreement with her about binding arbitration and I never consented to a binding arbitration." Appellant claims that she was not bound by her counsel's execution of the stipulation for arbitration.
A similar issue was considered in NORCAL Mutual Ins. Co. v. Newton (2000) 84 Cal.App.4th 64 (NORCAL). The defendant in that case declared in opposition to a petition to compel arbitration "that she had never agreed or consented to binding arbitration with NORCAL." (Id., at p. 77.) However, her attorney had demanded arbitration, and a copy of the demand letter had been sent to her. The court noted, "Her declaration does not state she was unaware of these legal demands being asserted on her behalf, and there is nothing in the record to suggest that she did anything to disavow or disassociate herself from them." (Id., at p. 79.) The court concluded that the defendant's "failure to promptly disaffirm her agent's assertion of her agreement to arbitrate constituted a ratification. [Citation.]" (Ibid., fn. omitted.)
Here, as in NORCAL, appellant's declaration did not state that she had been unaware of her counsel's stipulation for arbitration. On the contrary, the record indicates that she knew the prior action was going to be decided by arbitration. The record includes Matsuda's August 2006 deposition. In appellant's presence during the deposition, her counsel stated that "the arbitrator," not "Judge Harwin," would be deciding the issues "in this case." Counsel also stated in appellant's presence: "... I believe that we have not selected an arbitrator in this case yet. I don't think that Stone has been selected; is that correct?" Respondent replied, "I believe we did agree to the use of Justice Stone." Neither appellant nor her counsel disputed respondent's reply.
Nothing in the record suggests that appellant promptly disavowed her counsel's stipulation for arbitration or took any action to set it aside. Thus, like the defendant in NORCAL, appellant ratified counsel's stipulation and is bound by it. She cannot avoid the application of Brennan by claiming that she did not sign the stipulation or consent to binding arbitration.
Blanton v. Womancare, Inc. (1985) 38 Cal.3d 396, is distinguishable. In Blanton the plaintiff's attorney signed a stipulation for binding arbitration without the plaintiff's consent and "contrary to her express instructions." (Id., at p. 403.) "When apprised that her attorney had submitted her dispute to binding arbitration, [plaintiff] immediately objected, and fired [her attorney]. She then hired new counsel, and through him moved to invalidate the stipulation to binding arbitration executed by [her former attorney]...." (Id., at p. 400.)
Our Supreme Court concluded that the plaintiff was not bound by counsel's stipulation. The court observed that, although the plaintiff may have been bound by counsel's stipulation if she had ratified it, no such ratification had occurred: "[W]hile unauthorized acts of an attorney may be binding upon his client through ratification [citation], no ratification appears here. Immediately upon learning of the arbitration agreement plaintiff fired her attorney and engaged new counsel to set it aside." (Blanton v. Womancare, Inc., supra, 38 Cal.3d at p. 408.)
Unlike the plaintiff in Blanton, appellant did not immediately repudiate her counsel's arbitration agreement upon learning of it. She learned of the agreement no later than Matsuda's deposition in August 2006. But she did not repudiate the agreement until March 19, 2008, when she declared that she had "never consented to a binding arbitration." "This failure to promptly disaffirm her agent's assertion of her agreement to arbitrate constituted a ratification. [Citation.]" (NORCAL, supra, 84 Cal.App.4th at p. 79, fn. omitted.)
Disposition
The judgment is affirmed. Respondent shall recover her costs on appeal.
We concur: GILBERT, P.J., COFFEE, J.