Opinion
H035365
08-09-2011
PAHL & MCCAY, Plaintiff and Respondent, v. E. CRAIG MOODY, Defendant and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Santa Clara County Super. Ct. No. CV152703)
Appellant E. Craig Moody brought two professional negligence actions against respondent Pahl & McCay (Pahl), which were resolved in favor of Pahl. After Pahl filed a malicious prosecution action against Moody, he filed a special motion to strike the complaint under the anti-SLAPP statute (Code Civ. Proc., § 425.16). The trial court denied the motion, and Moody filed a timely appeal. He contends that the trial court erred in finding that Pahl met its burden of demonstrating a probability of prevailing on its claim. We find no error and affirm.
Pahl & McCay formerly did business as Pahl & Gosselin.
All further statutory references are to the Code of Civil Procedure unless stated otherwise.
I. Factual and Procedural Background
A. Lambert Action
In 1995, Winston and Elaine Lambert's house was destroyed by fire. Farmers Insurance Exchange (FIE) agreed that it was obligated to provide coverage for the loss of the Lamberts' house and that the Lamberts' policy provided for "guaranteed replacement costs." However, FIE and the Lamberts disagreed as to the scope of the term "replacement costs" in the FIE policy. In June 1998, the Lamberts retained Pahl to represent them in their dispute with FIE.
The FIE policy also included a "building and ordinance" endorsement that insured against any increased rebuilding cost due to current zoning or building ordinances.
Winston Lambert told Pahl that he had been trained as an "MAI" certified real estate appraiser, and he was very involved as a decision-maker in forming legal strategies in the dispute with FIE. He communicated with Pahl on "a near daily basis," and, among other things, submitted various definitions of "replacement costs" to Pahl and assisted in the writing of the briefs. In arguing on behalf of the Lamberts, Pahl included the Lamberts' interpretation of "replacement costs," that is, " 'the cost to construct, at current prices, a building with utility equivalent to the building being appraised, using modern materials and current standards, design and layout.' " Pahl also argued that "replacement cost" included the Lamberts' attorney's fees and costs for obtaining five variances, the cost of a new foundation, land stabilization costs, and the cost of designing the replacement house according to "contemporary design standards" and using "contemporary materials."
According to the Lamberts, the terms "contemporary design standards" and "contemporary materials" meant that they "should be able to recover from FIE most of the costs [they] incurred in building their new house, despite the fact that it was very different from the house that burned, in size and in design." FIE took the position that the Lamberts were only entitled to the cost of replacing the burned house with "one of similar kind and quality, with updated material and in conformance with building codes current at the time of rebuilding, essentially a 'stick for a stick' analysis." According to FIE, there was no coverage for costs associated with obtaining variances, constructing a new foundation, or land stabilization.
The FIE policy provided that if there was a dispute as to the amount of loss, a party could make a demand for an appraisal. Each party would then choose an appraiser, and the appraisers would choose an impartial umpire. The appraisers would set the amount of loss. However, if the appraisers failed to reach an agreement, they would submit their differences to the umpire. A written agreement that was signed by any two members of the panel would then set the amount of loss.
Pahl explained to the Lamberts various strategies for resolving the dispute with FIE, including mediation, litigation, and arbitration. In April 2000, Winston Lambert sent a letter to Pahl in which he outlined the advantages and disadvantages of mediation and arbitration. He stated that the issues for arbitration were " 'Replacement versus 'Reproduction' Cost," "What is Replacement Cost," and "Who is qualified to make estimates." He concluded: "We have a much better chance of convincing a judge in Arbitration than a mediator will have of convincing [FIE] and getting them to concede. We have a better chance of convincing an arbitrator now on conceptual issues of setting the 'Rules of the Game' to be fair, than later on cost issues."
In May 2000, Winston Lambert sent a letter to Pahl discussing arbitration, and questioning which definition of "replacement cost" should be used. He also asked whether Pahl was ready to send a letter to FIE, stating, in part, " 'It is obvious that you . . . aren't going to agree to pay 'Replacement Cost' until a judge or arbitrator forces you to; so let's set a date ASAP for arbitration . . . .' "
Pahl explained "numerous times" to Winston Lambert that the proceeding would be conducted as an arbitration, that the results would be final and binding, and the scope would include interpretation of the FIE policy. The Lamberts agreed with this strategy because they wanted a final resolution of their claim. The parties also agreed in writing that the arbitration would include interpretation of "replacement costs." The opening arbitration brief sought replacement costs of $3,045,258.68, which included the $800,000 that FIE had already paid the Lamberts.
The reply arbitration brief outlined various alternative amounts of replacement costs: $2,809,449.74; $2,753,421.84; and $2,503,421.84.
On the first day of the proceeding, Retired Judge Barton Phelps, who was serving as the appraisal proceeding umpire, asked the parties if they had any objection to the two appraisers and the umpire resolving " 'some technical coverage problems, issues involved in determining the claim.' " Neither party had an objection. Winston Lambert never told Pahl that he did not want the appraisers to arbitrate the interpretation of "replacement cost."
After a nine-day hearing, the Lamberts were awarded $1,212, 280, which was nearly twice as much as the amount advocated by FIE.
On August 26, 2005, Moody filed a complaint on behalf of the Lamberts against Pahl for professional negligence, breach of contract, and breach of fiduciary duty. The complaint alleged that Pahl: (1) disregarded the FIE policy and chose an umpire on their behalf who "had never done a replacement cost appraisal as the umpire, and let him control the appraisal process long before the appraisers were to have involved him"; (2) failed to provide the umpire with the actual costs that the Lamberts incurred to rebuild their residence, despite his request that it do so; (3) failed to argue that the Lamberts were entitled to betterment in seeking replacement cost; and (4) failed to argue that Insurance Code section 2071 did not apply to replacement cost policies. It was further alleged that Pahl breached its duties to the Lamberts, and the breach of these duties caused damages in excess of $1,800,000.
Pahl brought a motion for summary judgment, which the trial court granted. The trial court found, in part, that " '[t]he Lamberts have failed to produce any admissible evidence that could show that, but for some negligent or wrongful conduct on the part of the Pahl, they should have received a better outcome than the $1,212,280 insurance recovery award that they received from the appraisal panel.' " The Lamberts then filed an appeal. However, after the matter had been fully briefed, they voluntarily dismissed the appeal.
B. Parivash Action
In May 2004, Jamshid Parivash and Javeed Chaudhry entered into a lease agreement for real property. Almost a year later, Parivash provided Chaudhry with a document entitled "Commercial Lease Agreement [¶] Addend[u]m Two 2 [¶] Last Notice." It provides in relevant part: "This is the last and final notice, please be aware that in the event of one more default by Tenant, check returns, the lease will be terminated and landlord reserve the right to evict tenant by giving him 30 days notice."
On or about July 7, 2005, Parivash prepared and provided Chaudhry with a document entitled, "Your original lease dated 12th May 2004 is void and terminated and you need to move out ASAP[.]" On June 29 and July 15, 2005, Parivash received notification from Wells Fargo Bank that Chaudhry's checks were being returned unpaid. On or about July 25, 2005, Parivash prepared and provided Chaudhry with a letter that states in relevant part: "By 11 am 7/26/05 you should have $12,200 cash or cashiers check to replace the returned check was given/deposit to my acc[ount.] Please do not try to buy time otherwise I have no choice but to give you eviction notice . . . ." On the same day, Parivash placed a notice on one of the windows of Chaudhry's business and took some photographs. An argument ensued between Parivash and Chaudhry, and the police were called.
Two days later, Parivash prepared and provided Chaudhry with a document entitled, "FINAL NOTICE TO VACATE." The document states in relevant part: "Please understand that due to the last notice was given to you on June 24, 2005, and July 7, 2005, you have [to] terminate the lease since you did not follow through with your promises to landlord. You have caused financial and [a]ffected landlord credit and caused him duress for several months. I have 7 bounced checks in my position and have given to you at least 4-6 more . . . which were bounced since May 2004." Parivash also prepared and handed Chaudhry a second document entitled, "FINAL NOTICE TO VACATE." This document states in relevant part: "You have broken lease condition several times and you have not provided information as was promised in the lease, and have damaged landlord credit by giving landlord bad checks several times. You have been given notice[] after notice[] verbal and in writing, I have tried to help you as much as I can but unfortunately you have caused so much duress to the landlord and his family that no longer can be tolerated by landlord. [¶] Every month I had to beg you to not give me bad check, I had to come at least 4 to 5 times each month for collecting the rent, but you still did not care. Sorry you need to move. [¶] Landlord can no longer be suffering because of you." (Boldface omitted.)
On or about July 28, 2005, Parivash consulted attorney Steven Roth regarding the appropriate means to evict Chaudhry if he did not pay the rent. Roth informed him that the lease documents and the 30-day notice, which Parivash had given to Chaudhry were "fine," and that if Chaudhry did not leave by August 30, 2005, Parivash would be required to give him a three-day notice to quit. Parivash then prepared a document dated September 1, 2005. It was entitled "3-DAY NOTICE - WASTE OR NUISANCE," and provided in relevant part: "Notice is hereby given that, within three days after service on you of this notice, you and all others in possession are to surrender the premises . . . ." (Caps and boldface omitted.)
In November 2005, Parivash retained Pahl to file a commercial unlawful detainer action against Chaudhry. He provided Pahl with an extensive list of items, which he believed were breaches of the lease by Chaudhry. The list included: writing at least eight bad checks within the prior 14 months; failing to report the amount of wholesale business, which affected the amount of rent due; illegally subletting a portion of the premises; altering the premises without Parivash's consent; and damaging the premises.
On April 21, 2006, the parties stipulated to entry of judgment and judgment was entered in favor of Parivash for possession of the premises. Parivash was also awarded $25,000 in damages, $1,080 for sanctions, attorney's fees of $9,354, and costs of $626.50. However, Parivash did not pay Pahl for its legal services, and Pahl filed suit against him.
On December 11, 2006, Parivash retained Moody to file a cross-complaint against Pahl for professional negligence. The cross-complaint alleged: Parivash received a deposition subpoena from Pahl in connection with another lawsuit involving Chaudhry, and spoke to an attorney at Pahl; this attorney falsely told Parivash that the FBI was investigating Chaudhry, whom it suspected of being a terrorist and a member of Al Qaeda, and the FBI would seize Parivash's building if Chaudhry was arrested; and Parivash retained Pahl to evict Chaudhry based on these statements. The cross-complaint also alleged that in October 2005, and for the prior few months, Parivash and Chaudhry had been discussing how to resolve issues relating to the payment of rent, but that they had "decent, businesslike relations" and Parivash anticipated that their business relationship would continue to be a good one because they were negotiating an adjustment to their lease agreement that would have been more favorable to Parivash. It was also alleged that Parivash suffered damages in excess of $600,000 as a result of Pahl's breach of its duties to Parivash and its fraudulent statements.
During a deposition, Moody conceded that "there were no complaints about any of the legal work" performed by Pahl when the complaint was filed. On March 17, 2008, a jury trial was held, and the jury returned a verdict in favor of Pahl on the complaint and the cross-complaint.
C. Present Malicious Prosecution Action
On September 18, 2009, Pahl filed a complaint for damages for malicious prosecution against Moody. The first cause of action alleged that when Moody filed the Parivash cross-complaint, he was in possession of several letters, e-mails, and notices between Parivash and Chaudhry showing that Parivash had intended, and had tried, to evict Chaudhry months before retaining Pahl, and thus he knew the factual allegations underlying the cross-complaint were not true. Pahl also alleged that even if Moody did not know when he filed the cross-complaint that these factual allegations were not true, he subsequently learned during Parivash's deposition that Parivash's claims were false and thus no reasonable attorney would have continued to prosecute the cross-complaint. Pahl further alleged that Moody did not have probable cause at any time to file the cross-complaint and that he acted maliciously "in order to harass, annoy, vex and pressure" Pahl. It was also alleged that judgment was entered in Pahl's favor on both the Pahl complaint and the Parivash cross-complaint.
The complaint also alleges a cause of action for unfair competition.
The second cause of action alleged that when Moody filed the Lambert complaint, he was in possession of several letters, e-mails, reports, and briefs that demonstrated that the Lamberts would not have been able to prove that they would have received a more favorable verdict but for Pahl's negligent or wrongful conduct. Pahl also alleged that Moody conducted no discovery to determine whether the Lamberts could prove causation and damages. It was further alleged that the trial court granted Pahl's motion for summary judgment on the ground that the Lamberts failed to produce any admissible evidence on causation. Pahl also alleged that Moody did not have probable cause to file the complaint at any time and he acted maliciously and "with the purpose to harass, annoy, vex and embarrass" Pahl.
Moody filed an anti-SLAPP motion to strike the complaint. The motion was accompanied by a memorandum of points and authorities, a request for judicial notice, a declaration by Moody, and a declaration of counsel. Moody argued that the malicious prosecution action arose out of acts that were in furtherance of constitutionally-protected rights—initiating the Lambert complaint and the Parivash cross-complaint—and thus, was subject to a motion to strike under the anti-SLAPP statute. He then argued that Pahl was unable to meet its burden of showing that it would prevail on its malicious prosecution claims. Moody asserted that Pahl's claims were without merit because it could not show he lacked probable cause to file the Lambert complaint and/or the Parivash cross-complaint. Moody also maintained that Pahl could not show that he brought the complaint and cross-complaint with malice.
Pahl filed opposition to the motion, which included a memorandum of points and authorities, declarations by Anthony Adair and Stephen Pahl, and several exhibits. Moody filed a reply. Following a hearing, the trial court denied the motion to strike the complaint.
II. Discussion
A. Anti-SLAPP Statute
In enacting section 425.16, the Legislature found that "it is in the public interest to encourage continued participation in matters of public significance, and ... this participation should not be chilled through abuse of the judicial process." (§ 425.16, subd. (a).) Section 425.16, subdivision (b)(1) states: "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." The Legislature has also mandated that section 425.16 "shall be construed broadly." (§ 425.16, subd. (a).)
The anti-SLAPP statute provides a means for the trial court to evaluate the merits of a possible SLAPP "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), thereby providing a defendant with the opportunity to limit the costs of litigation. (Kibler v. Northern Inyo County Local Hospital Dist. (2006) 39 Cal.4th 192, 195.) The trial court must apply a two-part test in ruling on a motion to strike under section 425.16. "First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one 'arising from' protected activity." (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 76 (Cotati),quoting § 425.16, subd. (b)(1).) As relevant here, the statutory definition of protected activity includes "any written or oral statement or writing made before a . . . judicial proceeding . . . ." (§ 425.16, subd. (e)(1).) "If the court finds such a showing has been made, it then must consider whether the plaintiff has demonstrated a probability of prevailing on the claim." (Cotati, at p. 76.)
B. Standard of Review
In reviewing a trial court's denial of a motion to strike under section 425.16, we conduct " ' "an independent review of the entire record." ' " (Paiva v. Nichols (2008) 168 Cal.App.4th 1007, 1016 (Paiva).)We employ the same standard as the trial court, that is, after the defendant has met his initial burden of showing that the challenged action arose from protected activity, we must determine "whether the plaintiff . . . has shown a probability of prevailing on the merits." (Id. at p. 1017.) This standard is " 'similar to that employed in determining nonsuit, directed verdict or summary judgment motions. . . . "[T]he 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.' " ' [¶] As is true with summary judgment motions, the issues in an anti-SLAPP motion are framed by the pleadings. The plaintiff may not rely solely on its complaint, even if verified; instead, its proof must be made upon competent admissible evidence. In reviewing the plaintiff's evidence, the court does not weigh it; rather, it simply determines whether the plaintiff has made a prima facie showing of facts necessary to establish its claim at trial.' " (Ibid., internal citations omitted.) In order to avoid being stricken by a special motion to strike, a plaintiff need only show that his or her claim has "minimal merit." (Navellier v. Sletten (2002) 29 Cal.4th 82, 89.)
C. Protected Activity
The parties agree that Moody met his initial burden of establishing that the malicious prosecution action arose from the exercise of his right of petition. (§ 425.16, subd. (e)(1).) As our high court has observed, "by its terms, section 425.16 potentially may apply to every malicious prosecution action, because every such action arises from an underlying lawsuit, or petition to the judicial branch. By definition, a malicious prosecution suit alleges that the defendant committed a tort by filing a lawsuit." (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 734-735.) A malicious prosecution claim will also lie for a cross-complaint where each element of the tort is satisfied. (Bertero v. National General Corp. (1974) 13 Cal.3d 43, 50-53 (Bertero).)
D. Probability of Prevailing on Claim
In order to prevail on a malicious prosecution claim, "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].' " (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 871 (Sheldon Appel), quoting Bertero, supra, 13 Cal.3d at p. 50.) Thus, Pahl was required to plead and present a prima facie evidentiary showing that satisfied each element of its malicious prosecution claim to defeat Moody's anti-SLAPP motion. Here, the parties agree that both the Lambert and Parivash actions were terminated on the merits in favor of Pahl. At issue then is whether Pahl failed to make a sufficient evidentiary showing that Moody brought the Lambert and Parivash actions without probable cause and with malice.
1. Absence of Probable Cause
Whether there was an absence of probable cause in bringing the prior case is a question of law to be resolved by the court. (Sheldon Appel, supra, 47 Cal.3d at pp. 874-875.) This issue is viewed under an objective standard applied to the facts upon which the defendant acted in prosecuting the prior case. (Id. at pp. 878, 881.) " '[P]robable cause to bring an action does not depend upon it being meritorious, as such, but upon it being arguably tenable, i.e., not so completely lacking in apparent merit that no reasonable attorney would have thought the claim tenable. [Citation.]' " (Paiva, supra, 168 Cal.App.4th 1019.) There is no probable cause for an action when one " 'relies upon facts which he has no reasonable cause to believe to be true.' " (Sycamore Ridge Apartments, LLC v. Naumann (2007) 157 Cal.App.4th 1385, 1402 (Sycamore):)"If the lawyer discovers the client's statements are false, the lawyer cannot rely on such statements in prosecuting an action." (Daniels v. Robbins (2010) 182 Cal.App.4th 204, 223.) The determination as to whether there was probable cause to bring an action depends on the facts that were known to the litigant or the attorney when the action was filed. (Sheldon Appel, at p. 881.) However, "an attorney may be held liable for malicious prosecution for continuing to prosecute a lawsuit discovered to lack probable cause." (Zamos v. Stroud (2004) 32 Cal.4th 958, 970.)
"In determining whether the prior action was legally tenable, i.e., whether the action was supported by probable cause, the court is to construe the allegations of the underlying complaint liberally, in a light most favorable to the malicious prosecution defendant. [Citation.]" (Sycamore, supra, 157 Cal.App.4th at p. 1402.) However, in reviewing an anti-SLAPP motion, this court " '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 . . . .' [Citation.]" (Id. at p. 1397.)
Moody argues that there were multiple bases for liability in the Lambert action. He first claims that Pahl failed to advocate for the Lamberts using the appraisal process outlined in the FIE policy, thereby increasing the costs for the Lamberts. Stephen Pahl's declaration and documents written by Winton Lambert refute this claim. Because the Lamberts wanted a final resolution of the dispute, they agreed to arbitration despite their belief that the proceedings did not comply with the FIE policy. Pahl presented the following evidence: Pahl discussed with Winston Lambert the various strategies for resolving the dispute, including mediation, litigation, and arbitration; Pahl explained to Winston Lambert that the appraisal proceeding would be conducted as an arbitration, which would be final and binding and would include the interpretation of the FIE policy; and Winston Lambert acknowledged the relative merits of arbitration and agreed with this strategy. Thus, no reasonable attorney would have concluded that this theory had arguable merit.
Moody also does not explain how the process outlined in the FIE policy would have resulted in a greater award or less costs if the Lamberts were required to litigate the matter following the appraisal process.
Moody next contends that Pahl failed to define and distinguish between "replacement costs" and "reproduction costs." Moody asserts that Pahl did not use either the definition of replacement cost as set forth in the FIE policy or the preferred definition of the Lamberts. First, Moody ignores that FIE and the Lamberts had differing interpretations of the policy language, and he fails to demonstrate how arguing the policy language itself would have been more advantageous to the Lamberts. Second, he claims that the Lamberts were entitled to "the amount actually spent to replace the building, as permitted in the policies." Again, Moody misses the point of the dispute between FIE and the Lamberts. Though the parties agreed that the Lamberts were entitled to replacement costs for their destroyed residence, the issue was which costs were included in this amount. To rely on the policy language did not resolve the issue. Third, the arbitration briefs and Winston Lambert's letters show that Pahl presented the Lamberts' preferred definition of "replacement costs" several times to the arbitration panel. Moody has also ignored exhibits presented by Pahl that established Winston Lambert's active role as a decision maker in forming legal strategies in the dispute and his assistance in the writing of the briefs. Accordingly, no reasonable attorney would have concluded that this theory was arguably tenable.
The FIE policy provided that coverage "will be settled at replacement cost without deduction for depreciation, subject to the following methods: [¶] (1) Settlement under replacement cost will not be more than the smallest of the following: [¶] (a) the replacement cost of that part of the building damaged for equivalent construction and use on the same premises. [¶] (b) the amount actually and necessarily spent to repair or replace the building intended for the same occupancy and use." The building and ordinance endorsement to this policy provided: "Settlement under replacement cost will not be more than the smallest of the following: [¶] (a) the limit of insurance under this policy that applies to the damaged or destroyed dwelling or separate structure. [¶] (b) the replacement cost of that part of the building damaged for equivalent construction and use on the same premises. [¶] (c) the amount actually and necessarily spent to repair or replace the building intended for the same occupancy and use."
Moody also claims that Pahl "allowed the appraisers, without the Lamberts' agreement, to exceed their authority; and/or that Pahl failed to seek to have the award vacated by the Superior Court once it was clear that the appraisers had exceeded their authority." When an appellant asserts a point but fails to support it with argument and citations to relevant authority, the court may treat the point as waived. (People v. Stanley (1995) 10 Cal.4th 764, 793 (Stanley))Here, Moody has failed to support this claim with argument or legal authority. Accordingly, it has been waived.
Even assuming that there has been no waiver, the claim has no merit. In Moody's reply brief, he asserts that "the appraisers determined issues of law and coverage as they determined which replacement costs were covered by the policy," and thus Pahl was negligent in failing to seek vacation of the award under Jefferson Ins. Co. v. Superior Court (1970) 3 Cal.3d 398. Jefferson is distinguishable from the present case. Jefferson upheld an order vacating an appraisal award because the appraisers had exceeded their power by erroneously deciding a question of law. (Id. at p. 403.) In contrast to Jefferson, here, the parties asked the appraisal panel to decide a question of law. Pahl presented evidence that he had explained to the Lamberts the various strategies for resolving their dispute with FIE. In his April 2000 letter, Winston Lambert stated that the issues for arbitration were " 'Replacement versus 'Reproduction' Cost," "What is Replacement Cost," and "Who is qualified to make estimates." Winston Lambert also agreed with Pahl that the proceeding would be conducted as an arbitration and would include the interpretation of the FIE policy. The opening brief, which was heavily edited by Winston Lambert, focuses on the issue of replacement cost. The parties also agreed in writing that the appraisal proceedings would include the interpretation of "replacement costs." When asked on the first day of the proceeding if there was any objection to the panel's resolution of "some technical coverage problems," neither Lambert objected. Thus, since the Lamberts sought the appraisal panel's determination of a legal issue, that is, which replacement costs were covered under the policy, they were precluded from seeking to vacate the award on this ground. (See Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 403 ["The 'doctrine of invited error' is an 'application of the estoppel principle:' 'Where a party by his conduct induces the commission of error, he is estopped from asserting it as a ground for reversal' on appeal. [Citation.]".)
Moody next asserts that Pahl "failed to submit billing statements . . . which resulted in an ultimate decision that did not take into account all the costs that the Lamberts actually occurred." He speculates that if Pahl had submitted these invoices, the Lamberts would have been awarded costs "actually and necessarily incurred, which was $3,045,258.68." However, the Lamberts intended to build a house that was significantly different in size, design, and materials from the house that had been destroyed. Given this situation, Pahl chose to use the comparative method of valuing the structure and determined that providing the receipts would be inconsistent with the presentation of damages under this method. Pahl discussed this concept with Winston Lambert on numerous occasions. Thus, Moody fails to explain how use of the comparative method constituted either a breach of Pahl's duty or caused damage to the Lamberts.
Moody contends that Pahl failed to argue that the Lamberts were entitled to "betterment" in seeking their replacement costs and erred in advising the Lamberts that they were not entitled to betterment. There is no merit to this contention.
Here, Stephen Pahl's declaration stated that the "concept of 'replacement cost' inherently includes a degree of 'betterment,' particularly where, as in the Lamberts' policy, an insurer also provides coverage under a building and ordinance endorsement" and that he "advocated for betterment in arguing on behalf of the Lamberts." The arbitration briefs presented by Pahl illustrate this point. Pahl argued throughout these briefs that the Lamberts were entitled to replacement cost, that is "[t]he cost to construct, at current prices, a building with utility equivalent to the building being appraised, using modern materials and current standards, design, and layout" rather than reproduction cost, which is the cost to construct "an exact duplicate or replica of the building." Thus, Pahl advocated a definition of replacement costs that included the concept of betterment. Thus, Moody knew or should have known that this theory had no merit.
Relying on two statements in the arbitration brief, Moody counters that Pahl argued that betterment was inapplicable. Moody is wrong. The brief states that betterment, which is defined at this point in the brief as "the replacement of a depreciable asset, with a new asset, is not a factor or issue under either cost method." The brief also states that "[a]s betterment is not a factor under either cost method, the depreciation of the Lamberts' residence is not at issue." Here, Pahl was arguing that the arbitrators could not deduct any amount from the award that would be attributable to the depreciation of the Lamberts' residence. These statements did not claim that the Lamberts were not entitled to betterment in terms of using modern materials and current standards, design, and layout.
Moody's final contention is that "Pahl failed to recognize and pursue the argument that [Insurance Code s]ection 2071 did not apply to replacement cost policies and the term 'like kind and quality' was not applicable to the FIE policy. As a result, the Lamberts were denied recovery of hundreds of thousands of dollars in replacement costs."
Insurance Code section 2070 provides: "All fire policies on subject matter in California shall be on the standard form, and, except as provided by this article shall not contain additions thereto. No part of the standard form shall be omitted therefrom except that any policy providing coverage against the peril of fire only, or in combination with coverage against other perils, need not comply with the provisions of the standard form of fire insurance policy or Section 2080; provided, that coverage with respect to the peril of fire, when viewed in its entirety, is substantially equivalent to or more favorable to the insured than that contained in such standard form fire insurance policy." Insurance Code section 2071 sets forth the standard form for fire insurance policies in California.
Since Moody has failed to support his contention with argument or legal authority, the issue has been waived. (Stanley, supra, 10 Cal.4th at p. 793.) Even if we were to consider the contention, it has no merit. The Lamberts submitted a reply arbitration brief in which they argued that "anyone with coverage similar to the Lamberts is exempt from compliance to [sic] the provisions in Standard Form 2071 (such as 'like kind and quality' or its methodologies toward payment)." Thus, the argument was presented to the appraisal panel.
In sum, the arbitration briefs and documents written by Winston Lambert established that Moody knew or should have known that the Lambert action against Pahl had no merit. Thus, Pahl presented a prima facie showing that Moody pursued the Lambert action without probable cause.
Similarly, Moody did not have probable cause to file the Parivash cross-complaint. Moody asserts that he believed Parivash's account that he hired Pahl to evict Chaudhry based on Pahl's false statements that Chaudhry was a terrorist and that the eviction notices were simply Parivash's method of obtaining payment from Chaudhry. Moody also accepted Parivash's claims that he and Chaudhry had "decent, businesslike relations," that he anticipated that this relationship "would continue to be a good one," and that he suffered damages in excess of $600,000 as a result of Pahl's breach of its duties to him. However, Pahl submitted deposition testimony and exhibits that established: Parivash's business relationship with Chaudhry was not "decent" or "good," and had deteriorated to the point where the police were involved; Parivash had been attempting to evict Chaudhry on his own for several months by providing notices that the lease was void and demanding that he vacate the premises; and after Parivash consulted another attorney, who told him that he was required to serve a three-day notice in the event that Chaudhry did not pay his rent on August 30, Parivash prepared this notice on September 1. A couple of months later, Parivash retained Pahl to file an unlawful detainer action against Chaudhry, and provided an extensive list of what he believed were breaches of the lease by Chaudhry. Even assuming that the facts available to Moody when the cross-complaint was filed were sufficient to support a professional negligence claim, there was no probable cause to pursue the claim. Had Moody conducted even minimal discovery he would have obtained transcripts and documents which would have led any reasonable attorney to conclude that Parivash intended to evict Chaudhry regardless of any fraudulent statements by Pahl, and thus Parivash suffered no damages. Accordingly, Pahl made a prima facie showing that Moody filed the Parivash cross-complaint without probable cause.
2. Malice
Whether the defendant acted with malice in initiating the underlying civil proceedings is a question of fact that is usually decided by the jury. (Sheldon Appel, supra, 47 Cal.3 at pp. 874-875.) "Malice may not only consist of ill will or hostility toward the malicious prosecution plaintiff, but may also result where the prior suit was 'instituted primarily for an improper purpose.' [Citations.] Typically—since it is rare that there will be a 'smoking gun' admission of improper motive—malice is established 'by circumstantial evidence and inferences drawn from the evidence.' [Citation.]" (Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal.App.4th 659, 675.) "Malice 'may range anywhere from open hostility to indifference. [Citation.] Malice may also be inferred from the facts establishing lack of probable cause.' [Citation.]" (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 292.) " '[I]f the trial court determines that the prior action was not objectively tenable, the extent of a defendant attorney's investigation and research may be relevant to the further question of whether or not the attorney acted with malice.' " (Sycamore, supra, 157 Cal.App.4th at p. 1407.)
In the present case, though Moody's declaration states that he "bore no malice whatsoever to the PAHL firm or any of its attorneys," a trier of fact could reasonably infer that Moody filed and pursed the Lambert and Parivash actions primarily for an improper purpose. As we have stated, a review of the documents, pleadings, transcripts, and briefs in both the Lambert and Parivash actions have established that the facts upon which Moody relied were false. That Moody filed these two professional negligence claims against Pahl within less than 16 months tends to show that he was either indifferent to the merits of these claims or that he sought to harass Pahl. Thus, Pahl has made a prima facie showing of malice.
E. Conclusion
Since Pahl met its burden of stating and substantiating a legally sufficient claim of malicious prosecution, the trial court properly denied Moody's motion to strike the complaint pursuant to section 425.16.
III. Disposition
The order striking the special motion to strike is affirmed.
Mihara, Acting P. J. WE CONCUR: Duffy, J. Lucas, J.
Judge of the Santa Clara County Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.