Opinion
B163990.
11-21-2003
J & S CONSTRUCTION CORPORATION et al., Plaintiffs and Respondents, v. MICHELE McCOY BAIN et al., Defendants and Appellants.
Law Offices of Christopher Rolin and Christopher Rolin; Eric Anthony Joe; Nicholas & Doyle and John C. Doyle for Defendants and Appellants. Blatz, Pyfrom & Associates, Gregory C. Pyfrom and Michael J. Allison for Plaintiffs and Respondents.
I. INTRODUCTION
Defendants, Don Bain and Michele McCoy Bain, appeal from an order denying their Code of Civil Procedure section 425.16 special motion to strike. We reverse the order denying the special motion to strike. We direct the trial court, upon issuance of the remittitur, to award defendants their section 425.16, subdivision (c) attorney fees and costs.
II. BACKGROUND
Plaintiff, J & S Construction Corporation (the corporation), performs home inspection services. Plaintiff, Jerry Carlisle, is the owner of and an inspector for the corporation. In 1997, defendants were contemplating purchasing a residence. Ms. Bain hired the corporation to inspect the property. Mr. Carlisle performed the inspection.
Ms. Bain sued the corporation in 1999, alleging negligent failure to discover a major crack in a slab underneath a portion of the house. The corporation sought a nonsuit in the underlying action. The corporation argued: Ms. Bains cause of action, alleged simply as negligence, was one for professional negligence; she had no expert witness who could render a professional opinion as to Mr. Carlisles negligence; and Ms. Bains cause of action was barred by a one-year statute of limitations. Ms. Bain opposed the nonsuit motion on the grounds: her cause of action was for general negligence; her claim was not professional negligence; the evidence established Mr. Carlisle was negligent; and the applicable statute of limitations was three years. The nonsuit motion was at first granted but, upon reconsideration, was denied. There is no record before us as to why the trial court in the underlying lawsuit denied the corporations nonsuit motion. The corporation brought a subsequent motion for a directed verdict. The corporation argued that absent properly qualified testimony, Ms. Bain could not establish professional negligence. The directed verdict motion was also denied. We have no record of the trial courts reasoning in the underlying action for denying the directed verdict motion. However, Ms. Bain later voluntarily dismissed the underlying action against the corporation.
In the present case, plaintiffs allege that when Ms. Bain filed the underlying lawsuit, defendants knew: the crack in the slab had occurred after they purchased the residence; the crack was not present when plaintiffs inspected the property prior to its purchase by defendants; and defendants knew, when Ms. Bain filed the underlying action, "that the crack in the slab was caused by a fractured water line underneath the subject property, which said fractured water line occurred well after [the] close of escrow." Plaintiffs also alleged: "After close of escrow, [the Bains] hired a contractor who reported his findings regarding a fractured water line to them. In spite of the information and knowledge provided by said contractor, [defendants] testified under oath that the crack in the slab was present at the time of the inspection of the subject property by plaintiffs, when they knew that said testimony was false and perjurious [sic]." It was further alleged defendants "ulterior purpose and motivation" in filing the underlying action was to "harass, annoy and injure" plaintiffs so as "to force a monetary settlement." Plaintiffs filed causes of action for malicious prosecution, abuse of process, "conspiracy," and fraud. All of the causes of action rest on the filing and prosecution of the underlying action.
Defendants filed a section 425.16 motion to strike the complaint. Defendants argued: the complaint established this action arose from the exercise of the constitutionally protected right to bring the underlying lawsuit; plaintiffs could not meet their special motion to strike burden because, as to the malicious prosecution cause of action, they could not establish a lack of probable cause; and the remaining causes of action were barred by the litigation privilege. In support of the special motion to strike, defendants presented evidence structural cracks in the slab existed in 1994, prior to plaintiffs inspection.
Plaintiffs opposed the section 425.16 motion. Plaintiffs presented evidence that, prior to filing the underlying action, defendants had been informed by a licensed contractor, Mallory Hicklin, that the damage at issue: was caused by a water main break underneath the house; the damage had occurred after inspection; and had occurred after the close of escrow. Hence defendants knew, before they filed the underlying complaint, that the corporation had no liability. Further, defendants failed to reveal this information during pre-trial discovery or at trial. Indeed, they fired Mr. Hicklin when they learned he would not testify on their behalf in the underlying suit. Moreover, once plaintiffs learned the facts surrounding Mr. Hicklins inspection of the property, defendants dismissed the corporation from the underlying action. In their reply, defendants argued in part that the evidence regarding Mr. Hicklin was inadmissible hearsay. However, defendants did not secure a ruling on any evidentiary objections in the trial court. The trial court denied the section 425.16 motion. As discussed below, that decision was on the merits.
III. DISCUSSION
A. Timeliness
Plaintiffs contend the trial court denied defendants section 425.16 motion not on the merits, but because it was untimely; it was filed more than 60 days after the service of the complaint. (§ 425.16, subd. (f).) However, the trial court had the discretion to hear the motion on the merits more than 60 days after service of the complaint. Section 425.16, subdivision (f) states, "The special motion may be filed within 60 days of the service of the complaint or, in the courts discretion, at any later time upon terms it deems proper." Moreover, the record is clear that the trial court exercised its discretion to consider the special motion to strike on the merits more than 60 days after the complaint was served. At the hearing on the motion, the trial court from the outset focused argument on whether section 425.16 was applicable to this action. The court ruled the section 425.16 motion was meritless; the present action was not a "SLAPP" suit. There was no discussion whatsoever of the timeliness issue raised in the opposition. On appeal, plaintiffs do not specifically contend the trial court abused its discretion in considering defendants section 425.16 motion on the merits. As a result, we need not consider whether the trial court properly exercised its discretion in that regard.
B. Standard of Review
Our review is de novo. (Kashian v. Harriman (2002) 98 Cal.App.4th 892, 906; Kajima Engineering & Construction, Inc. v. City of Los Angeles (2002) 95 Cal.App.4th 921, 929.) We independently determine whether defendants have met their initial burden and, if so, whether plaintiffs have shown a probability of prevailing on the merits. (Kashian v. Harriman, supra, 98 Cal.App.4th at p. 906; ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 999.)
A special motion to strike may be filed in response to "`a meritless suit filed primarily to chill the defendants exercise of First Amendment rights." (Dove Audio, Inc. v. Rosenfeld, Meyer & Susman (1996) 47 Cal.App.4th 777, 783, quoting Wilcox v. Superior Court (1994) 27 Cal.App.4th 809, 815, fn. 2, disapproved on another point in Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 68, fn. 5.) Section 425.16 authorizes a court to summarily dismiss such meritless suits. The purpose of the statute was set forth in section 425.16, subdivision (a) as follows: "The Legislature finds and declares that there has been a disturbing increase in lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances. The Legislature finds and declares that it is in the public interest to encourage continued participation in matters of public significance, and that this participation should not be chilled through abuse of the judicial process . . . ." Under section 425.16, any cause of action against a person "arising from any act . . . in furtherance of the . . . right of petition or free speech . . . ," in connection with a public issue must be stricken unless the court finds a "probability" that the plaintiff will prevail on whatever claim is involved. (§ 425.16, subd. (b)(1); Equilon Enterprises v. Consumer Cause, Inc., supra, 29 Cal.4th at p. 58; Dowling v. Zimmerman (2001) 85 Cal.App.4th 1400, 1415.)
When a special motion to strike is made, the trial court must consider two components. First, the court must consider whether the moving defendant has carried its burden of showing that the lawsuit falls within the purview of section 425.16, i.e., arises from protected activity. The moving defendant has the initial burden of establishing a prima facie case that plaintiffs cause of action arises out of a defendants actions in the furtherance of petition or free speech rights. (§ 425.16, subd. (b)(1); Equilon Enterprises v. Consumer Cause, Inc., supra, 29 Cal.4th at p. 67; Mission Oaks Ranch, Ltd. v. County of Santa Barbara (1998) 65 Cal.App.4th 713, 721, overruled on another point in Briggs v. Eden Council for Hope & Opportunity (1999) 19 Cal.4th 1106, 1123, fn. 10.) The moving defendant has no obligation to demonstrate that the plaintiffs subjective intent was to chill the exercise of constitutional speech or petition rights. (Navellier v. Sletten (2002) 29 Cal.4th 82, 89; Equilon Enterprises v. Consumer Cause, Inc., supra, 29 Cal.4th at p. 66.) Nor must a moving defendant show that the action had the effect of chilling free speech or petition rights. (Navellier v. Sletten, supra, 29 Cal.4th at p. 88; City of Cotati v. Cashman (2002) 29 Cal.4th 69, 75.)
Second, once the defendant meets this burden, the obligation then shifts to the plaintiff to establish a probability that she or he will prevail on the merits. (§ 425.16, subd. (b)(1); Equilon Enterprises v. Consumer Cause, Inc., supra, 29 Cal.4th at p. 67; Briggs v. Eden Council for Hope & Opportunity, supra, 19 Cal.4th at p. 1115.) As to the second step of the weighing process, the Supreme Court in Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 821, described the trial judges duties as follows: "In deciding the question of potential merit, the trial court considers the pleadings and evidentiary submissions of both the plaintiff and the defendant (§ 425.16, subd. (b)(2)); though the court does not weigh the credibility or comparative probative strength of competing evidence, it should grant the motion if, as a matter of law, the defendants evidence supporting the motion defeats the plaintiffs attempt to establish evidentiary support for the claim. [Citation].)" (Orig. italics; see Paul for Council v. Hanyecz (2001) 85 Cal.App.4th 1356, 1365, disapproved on another point in Equilon Enterprises v. Consumer Cause, Inc., supra, 29 Cal.4th at p. 68, fn. 5.) In Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 741, the Supreme Court held, "[I]f a court ruling on [a section 425.16] motion concludes the challenged cause of action arises from protected petitioning, it then `determines whether the plaintiff has demonstrated a probability of prevailing on the claim. [Citation.] To satisfy this prong, 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.]"
Section 425.16, subdivision (e), defines acts in furtherance of free speech or petition rights in connection with a public issue by setting forth four categories of conduct to which the statute applies. Section 425.16, subdivision (e) provides: "As used in this section, `act in furtherance of a persons right of petition or free speech under the United States or California Constitution in connection with a public issue includes: (1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law; (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law; (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest; (4) or any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest." The Supreme Court has held that a specific public issue showing is required for acts claimed to fall under section 425.16, subdivisions (e)(3) and (e)(4). (Briggs v. Eden Council for Hope & Opportunity, supra, 19 Cal.4th at pp. 1111-1123; Du Charme v. Intern. Bro. of Elec. Workers (2003) 110 Cal.App.4th 107, 113.) As the Court of Appeal explained in Consumer Justice Center v. Trimedica International, Inc. (2003) 107 Cal.App.4th 595, 600, "When the defendants alleged acts fall under the first two prongs of section 425.16, subdivision (e) (speech or petitioning before a legislative, executive, judicial, or other official proceeding, or statements made in connection with an issue under review or consideration by an official body), the defendant is not required to independently demonstrate that the matter is a `public issue within the statutes meaning. (Briggs v. Eden Council for Hope & Opportunity[, supra,] 19 Cal.4th [at p.] 1113 [].) If, however, the defendants alleged acts fall under the third or fourth prongs of subdivision (e), there is an express `issue of public interest limitation. ([Id.] at p. 1117.)" If a matter of public interest is not at issue, section 425.16, subdivisions (e)(3) and (e)(4) do not apply. (Commonwealth Energy Corp. v. Investor Data Exchange, Inc. (2003) 110 Cal.App.4th 26, 32; Consumer Justice Center v. Trimedica International, Inc., supra, 107 Cal.App.4th at p. 600.)
D. Application to the Present Case
Defendants met their initial burden of showing that the present lawsuit falls within the purview of section 425.16. All of the causes of action arise out of Ms. Bains filing and prosecution of the underlying negligence action. (§ 425.16, subd. (e)(1).) A malicious prosecution claim is subject to a section 425.16 special motion to strike. (Jarrow Formulas, Inc. v. LaMarche, supra, 31 Cal.4th at pp. 733-741; Chavez v. Mendoza (2001) 94 Cal.App.4th 1083, 1086.) We turn to the question whether plaintiffs have established a probability of prevailing on the merits.
1. Evidentiary Issues
Defendants argue in part that plaintiffs failed to establish a probability of prevailing by competent, admissible evidence. However, as noted above, defendants did not secure a ruling on their evidentiary objections in the trial court. As a result, all such objections have been waived. (See Johnson v. City of Loma Linda (2000) 24 Cal.4th 61, 65-66; Ann M. v. Pacific Plaza Shopping Center (1993) 6 Cal.4th 666, 670, fn. 1.) Defendants attempt to refute plaintiffs evidence, and to bolster their own showing, by reference to evidence submitted in support of their summary judgment motion. The summary judgment motion was filed after the special motion to strike was denied. Obviously, the cited evidence was not before the trial court when it ruled on the special motion to strike. As a result, we will not consider it. (Doers v. Golden Gate Bridge etc. Dist. (1979) 23 Cal.3d 180, 184, fn. 1; Loving & Evans v. Blick (1949) 33 Cal.2d 603, 613-614.)
2. Malicious Prosecution
Discussing its prior holding in Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 874, the test for securing a malicious prosecution judgment was described by the Supreme Court in Wilson v. Parker, Covert & Chidester, supra, 28 Cal.4th at page 817: "Applying that policy perspective to the delineation of the probable cause element, this court held, first, that the existence or nonexistence of probable cause is a legal question to be resolved by the court in the malicious prosecution case; litigants are thus protected against the danger that a lay jury would mistake a merely unsuccessful claim for a legally untenable one. (Sheldon Appel [Co. v. Albert & Oliker ], supra, 47 Cal.3d at pp. 874-877.) We further held that probable cause is determined objectively, i.e., without reference to whether the attorney bringing the prior action believed the case was tenable (id. at pp. 877-882), and that the standard of probable cause to bring a civil suit was equivalent to that for determining the frivolousness of an appeal (In re Marriage of Flaherty (1982) 31 Cal.3d 637), i.e., probable cause exists if `any reasonable attorney would have thought the claim tenable. (Sheldon Appel [Co. v. Albert & Oliker], supra, [47 Cal.3d] at p. 886.) This rather lenient standard for bringing a civil action reflects `the important public policy of avoiding the chilling of novel or debatable legal claims. (Id. at p. 885.) Attorneys and litigants, we observed, `"have a right to present issues that are arguably correct, even if it is extremely unlikely that they will win . . . ." (Ibid., quoting In re Marriage of Flaherty, supra, [31 Cal.3d] at p. 650.) Only those actions that `"any reasonable attorney would agree [are] totally and completely without merit" may form the basis for a malicious prosecution suit. (Ibid.)"
Defendants contend plaintiffs cannot demonstrate a probability of prevailing on the merits of their malicious prosecution claim. Defendants reason the trial courts denial, in the underlying action, of nonsuit and directed verdict motions establishes that probable cause existed as a matter of law. (See Wilson v. Parker, Covert & Chidester, supra, 28 Cal.4th at pp. 824, 826.) We agree.
Wilson involved an underlying lawsuit where a special motion to strike was initially erroneously denied. The Court of Appeal in the underlying litigation granted a mandate petition holding under the second prong of section 425.16, subdivision (b)(1), the plaintiffs could not establish a probability of prevailing on the merits. In compliance with the writ of mandate, the trial court in the underlying lawsuit granted the special motion to strike and dismissed the complaint. The defendants in the underlying suit, although having lost their special motion to strike initially in the trial court, albeit erroneously, then filed a malicious prosecution complaint against the plaintiffs. (Wilson v. Parker, Covert & Chidester, supra, 28 Cal.4th at pp. 815-816.)
In Wilson, the Supreme Court held that because the special motion to strike in the underlying lawsuit was originally denied by the trial judge, a subsequent malicious prosecution lawsuit could not be pursued. The Wilson court noted: "Long before Sheldon Appel was decided, decisions in California and elsewhere established that a trial court judgment or verdict in favor of the plaintiff or prosecutor in the underlying case, unless obtained by means of fraud or perjury, establishes probable cause to bring the underlying action, even though the judgment or verdict is overturned on appeal or by later ruling of the trial court. Although this rule predates Sheldon Appel, it is motivated by much the same policy concern. Because malicious prosecution suits have the potential to penalize and deter the legitimate invocation of the judicial process for redress of grievances, only claims that a reasonable litigant or attorney would have seen as lacking all merit should form the basis for such a suit. Claims that have succeeded at a hearing on the merits, even if that result is subsequently reversed by the trial or appellate court, are not so lacking in potential merit that a reasonable attorney or litigant would necessarily have recognized their frivolousness." (Wilson v. Parker, Covert & Chidester, supra, 28 Cal.4th at pp. 817-818, fn. omitted.) In the omitted footnote, the Supreme Court adverted to those cases which have held that probable cause or potential merit are established for malicious prosecution purposes even though the verdict or finding is later set aside on appeal: "Bealmear v. So. Cal. Edison Co. (1943) 22 Cal.2d 337, 340; Carpenter v. Sibley (1908) 153 Cal. 215, 218; Holliday v. Holliday (1898) 123 Cal. 26, 32; Cowles v. Carter (1981) 115 Cal.App.3d 350, 356, 359; Fairchild v. Adams (1959) 170 Cal.App.2d 10, 15; see also Crescent Live Stock Co. v. Butchers Union (1887) 120 U.S. 141, 149-151; Restatement Second of Torts, section 675, comment b, page 458; Prosser and Keeton, The Law of Torts (5th ed. 1984) section 120, page 894." (Wilson v. Parker, Covert & Chidester, supra, 28 Cal.4th at pp. 817-818, fn. 2.) This decisional authority collected in Wilson is controlling in this case. The denial of the nonsuit and directed verdict motions in the underlying lawsuit is sufficient to establish defendants probable cause defense in this case. Plaintiffs failed to establish the probability they would prevail in this lawsuit given defendants probable cause defense which was established as a matter of law. There is no merit to plaintiffs fraud and perjury contentions. Therefore, the trial court should have granted the special motion to strike the malicious prosecution cause of action.
3. Abuse of Process, "Conspiracy," and Fraud
Defendants contend plaintiffs remaining causes of action are barred by the absolute litigation privilege, Civil Code section 47, subdivision (b). On appeal, plaintiffs have not presented any argument in support of their abuse of process, "conspiracy," or fraud causes of action. We conclude those causes of action are barred by the litigation privilege. (Olszewski v. Scripps Health (2003) 30 Cal.4th 798, 830-831; Moore v. Conliffe (1994) 7 Cal.4th 634, 641-643; Silberg v. Anderson (1990) 50 Cal.3d 205, 211-219.) Accordingly, plaintiffs did not establish a probability of prevailing on these claims. Hence, defendants section 425.16 motion should have been granted as to the causes of action for abuse of process, "conspiracy," and fraud.
E. Attorneys Fees
Defendants are entitled to their attorney fees and costs incurred in the trial court and on appeal. Section 425.16, subdivision (c) states in pertinent part, "In any action subject to subdivision (b), a prevailing defendant on a special motion to strike shall be entitled to recover his or her attorneys fees and costs." When a defendant prevails on a section 425.16 motion to strike, an award of attorneys fees is mandatory. (Ketchum v. Moses (2001) 24 Cal.4th 1122, 1131; Pfeiffer Venice Properties v. Bernard (2002) 101 Cal.App.4th 211, 215.) Defendants have prevailed on their section 425.16 motion. Therefore, on remand, the trial court must, on defendants motion, determine the amount of defendants recoverable attorney fees including those incurred on appeal. (Wilkerson v. Sullivan (2002) 99 Cal.App.4th 443, 447-448; Kashian v. Harriman, supra, 98 Cal.App.4th at p. 933; Rosenaur v. Scherer (2001) 88 Cal.App.4th 260, 287; Dove Audio, Inc. v. Rosenfeld, Meyer & Susman, supra, 47 Cal.App.4th at p. 785; Evans v. Unkow (1995) 38 Cal.App.4th 1490, 1499-1500.) The attorney fee motion should be filed in compliance with rule 870.2 of the California Rules of Court. (American Humane Assn. v. Los Angeles Times Communications (2001) 92 Cal.App.4th 1095, 1103-1104.)
IV. DISPOSITION
The order denying the special motion to strike is reversed. The trial court is directed on remand to enter an order granting the special motion to strike in its entirety. Defendants, Don Bain and Michele McCoy Bain, are to recover their costs and attorney fees jointly and severally from plaintiffs, J & S Construction Corporation and Jerry Carlisle, pursuant to Code of Civil Procedure section 425.16, subdivision (c).
I concur:
ARMSTRONG, J. --------------- Notes: All further statutory references are to the Code of Civil Procedure unless otherwise noted.
MOSK, J., Dissenting.
I respectfully dissent. I do not believe that denying a nonsuit motion based on the statute of limitations and failure to introduce an expert witness and denying a motion for directed verdict based upon the failure to introduce expert witness testimony establish probable cause so as to preclude a malicious prosecution action. Plaintiffs have set forth a prima facia case sufficient to overcome a Code of Civil Procedure section 425.16 special motion to strike.
In Roberts v. Sentry Life Insurance (1999) 76 Cal.App.4th 375, 384, the court said, "We conclude that denial of defendants summary judgment in an earlier case normally establishes there was probable cause to sue, thus barring a later malicious prosecution suit." A reason for this is that "summary judgment rulings usually are grounded in a dependable evaluation of the facts." (Id. at p. 383.)
Here, the denials of the nonsuit and directed verdict motions did not involve an evaluation of the facts. Rather, they dealt only with the statute of limitations and lack of an expert witness. That a plaintiff has brought an action within the period of limitations and has an expert witness does not establish that the claim is based on probable cause.
Accordingly, I would not have concluded that there was probable cause solely because of the denial of the two motions. I would have affirmed the trial courts order.