Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of Los Angeles County. No. BC389767 Yvette Palazuelos, Judge. Reversed and remanded.
Shumaker Morin, Danny T. Morin; Oldman, Cooley, Sallus, Gold, Birnberg & Coleman, Marshal A. Oldman for Defendants and Appellants Tina Kaloustian and Varujan Kaloustian.
Mitchell Silberberg & Knupp, Christopher B. Leonard for Defendants and Appellants Burgh, Balian & Bergstein and Barbara Bergstein.
Law Office of Philip H. Dyson, Philip H. Dyson for Plaintiffs and Respondents.
ARMSTRONG, J.
Respondents Dennis Michael and Rene Michael brought this suit for malicious prosecution and abuse of process against their sister Tina Kaloustian, her husband Varujan Kaloustian, and the Kaloustians' lawyers, Burch, Balian & Bergstein and Barbara Bergstein ("the attorney defendants"), all of whom are appellants here. Appellants filed a special motion to strike (Code Civ. Proc., § 425.16), which the trial court denied, finding that while appellants, the moving defendants, had met their "initial burden... to demonstrate that the challenged cause of action arises from protected activity," respondents had in turn established a probability that they would prevail on their claims. (Brill Media Co., LLC v. TCW Group, Inc. (2005) 132 Cal.App.4th 324, 329; Code Civ. Proc., § 425.16, subd. (b)(1).) We agree that appellants met their burden (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 741), but after independent review (Computer Xpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 999) find that respondents failed to show the probability that they would prevail. We thus reverse.
Facts
Sooren Michael had three children, Dennis, Rene, and Tina. He died in February 2001, leaving his assets in a trust, the primary asset of which was a shopping center, the Tapo Canyon property. Tina and Rene were co-trustees and beneficiaries of the trust. Dennis was intentionally disinherited, but in July 2001, Tina and Rene disclaimed portions of the estate. This was intended to, and did, result in Dennis receiving a one-third share.
First names are used for purposes of clarity.
Tina also sold a house on Londelius Street in North ridge which Sooren had deeded to her in 1999, and divided the proceeds equally amongst herself and her siblings.
After Sooren's death, Dennis managed the Tapo Canyon property. Then, in February 2002, Dennis, Rene, and Tina formed a partnership, the DRT partnership, and transferred the Tapo Canyon property to the partnership.
The litigation began on February 13, 2003, when Tina as plaintiff (through Varujan as her attorney in fact, because she was suffering health problems) filed suit against Dennis and Rene for dissolution of the partnership and an accounting. A first amended complaint was filed on March 17, 2003. In the complaint and first amended complaint, Tina alleged, inter alia, that Dennis, the managing partner, had misappropriated funds and had violated the partnership agreement by refusing to provide Tina with an accounting, that the partnership agreement was legally defective in specified ways, and that the relationship between Tina and her siblings had become so bitter and antagonistic that the economic purpose of the partnership was likely to be unreasonably frustrated. This was case number BC290363.
Rene and Dennis did not attach a copy of either complaint to their malicious prosecution complaint, or even submit it with their response to the special motion to strike. However, we grant appellants' request that we take judicial notice of those pleadings. We deny all other requests for judicial notice. The pleadings and other documents which are the object of those requests were not before the trial court, and are not helpful to our disposition of this appeal.
Tina was represented not by the attorney defendants, but by another lawyer, Harold Drooz. (The attorney defendants later substituted in for Drooz, who was not a defendant in the malicious prosecution action.)
On June 30, 2003, Tina, represented by the attorney defendants, filed an application under Probate Code section 21320 for a determination that a petition under Probate Code section 850 and for appointment of a receiver would not violate the no contest clause in Sooren's will. This was case number LP009056.
A copy of the proposed petition was attached. It sought a finding that the disclaimers were void as a matter of law, the appointment of a receiver over the Tapo Canyon property, and orders that Dennis return all sums received as beneficiary of the estate, that the Tapo Canyon property be returned to the trust, and that Rene's and Dennis's share of proceeds of the sale of the Londelius house be returned to Tina.
The application and proposed petition alleged, inter alia, that Tina had agreed to disclaim in Dennis's favor because he badgered her, that the disclaimers were legally invalid because they took place after Tina and Rene had accepted the benefits of the estate by taking distributions and for other reasons, that Dennis was taking a disproportionate share of the Tapo Canyon revenues, and that Dennis had convinced Tina to sell the Londelius house by telling her that proceeds would be used to pay estate taxes, but the proceeds of the sale were not used for that purpose.
The civil case and the probate pleadings were consolidated under the probate court number, and litigation continued in that court.
On October 21, 2003, the probate court made various orders, including an order that Dennis provide an accounting. Dennis complied, filing a trust accounting and a Tapo Canyon accounting.
In January 2004, the probate court held trial on three issues, whether Tina's challenge to the trust was a violation of the no contest clause in Sooren's will (the Probate Code section 21320 application), the validity of the disclaimers, and whether the partnership was legally binding. The ruling, issued in April 2004, was that Tina's challenge was not a violation of the no contest clause, that Tina was estopped by her conduct from claiming that her disclaimer was invalid or in the alternative that if the disclaimer was invalid as a disclaimer it was a valid contract or an assignment, and that the partnership was legally binding.
As appellants argue, there never was a signed, verified, and file-stamped petition, but given that the court decided the issues raised in the proposed petition, we may say that the petition was deemed filed.
The attorney defendants apparently substituted out after the January trial.
In May 2004, Varujan dismissed the first amended civil complaint.
Litigation continued in the probate court. In December 2004, Rene and Dennis filed a petition for distribution of the trust estate, partition of Tapo Canyon property, and dissolution of the partnership. In February 2005, the trial court ruled that its April 2004 order was final, granted Dennis and Rene's petition for dissolution of the partnership, and appointed a referee to dispose of Tapo Canyon and distribute the proceeds among Tina, Rene, and Dennis. Tina appealed, contending, inter alia, that the court had not disposed of all issues in the consolidated proceedings. In February 2007, Division One of this court found that the appeal should have been from the April 2004 order and was untimely.
On April 11, 2005, Dennis and Rene filed this action for malicious prosecution and abuse of process, alleging that specified factual allegations in the pleadings in BC290363 and in LP009056 were malicious, made without probable cause and without any basis in fact, and were known by Tina to be without any basis in fact, that Dennis and Rene had prevailed in the consolidated actions, and that the attorney defendants knew or should have known that Tina's allegations were false and lacked probable cause.
Appellants filed a special motion to strike, submitting with their motion declarations from Tina, Varujan, and the trust's former accountant, Terry Roemer, to the effect that Dennis had taken excessive sums from the Tapo Canyon revenue and had jeopardized the estate's tax status with the transfer of the Tapo Canyon property; a declaration from Barbara Bergstein setting out her reasons for believing that Tina's case had merit; and a declaration from a retired judge, Judge Letteau, whom Bergstein consulted as the litigation moved forward, to the effect that after hearing Bergstein's description of the case and reviewing her mediation brief, he had told her that the case was valid and had merit, and that there was a reasonable chance of prevailing.
With their response, Dennis and Rene submitted the DRT partnership agreement; Tina's Probate Code section 21320 application and Probate Code section 850 petition; the April 2004 trial court ruling in the consolidated cases, Division One's opinion, certified copies of portions of reporter's transcripts for various hearings in the consolidated cases, including portions of what appears to be trial testimony, although it is not always clear who is testifying; and Dennis's declaration and documents purporting to show that in 2004, Tina complained about Dennis to the DMV (concerning a car which did or had belonged to the trust) and to the Department of Real Estate (saying that he was performing acts for which a real estate license was required), causing an investigation.
Rene and Dennis also submitted a new declaration from Rene, but the Kaloustians' objections to the declaration were sustained.
Dennis and Rene asked the court to take judicial notice of Rene's declaration, filed in opposition to Tina's Probate Code section 21320 application, to the effect that, as Tina knew, Sooren intended to put Dennis back in the will, that Dennis had never badgered Tina, that the Londelius house had always "been understood" to be both hers and Tina's, that Dennis had done a good job of managing the shopping center, that all three siblings had received like amounts from the Tapo Canyon profits, and that Tina had signed the disclaimer and the partnership agreement voluntarily and with a full understanding of the consequences. The request for judicial notice was granted.
Tina's Probate Code section 850 petition had attached copies of two 2001 letters to her and Rene from the attorney, Janice Stone, whom they had consulted concerning the disclaimers. The letters set out Stone's legal advice concerning the disclaimers and related matters and opined that Tina and Rene could legally disclaim portions of the estate. Dennis and Rene submitted those letters, as well.
Finally, Dennis and Rene submitted a copy of a new complaint which Tina filed against Dennis in December 2004. This complaint brought causes of action for breach of contract, breach of fiduciary duty and an accounting. Dennis and Rene's malicious prosecution complaint did not allege that this lawsuit was filed maliciously, and they apparently presented the complaint as part of their proof of malice.
Discussion
As the trial court found and parties agree, appellants met their initial burden of showing that Dennis and Rene's complaint arose from protected activity. We thus focus on the next question, whether Dennis and Rene made a prima facie showing of facts, which, if proved, would support a judgment in their favor. (Church of Scientology v. Wollersheim (1996) 42 Cal.App.4th 628, 646, 653.) We find their evidence lacking.
Abuse of process
Although Rene and Dennis named all appellants as defendants in this cause of action, in their brief on appeal, they write that they "assert abuse of process against [the Kaloustians] only." They thus concede that they did not carry their burden as to the attorney defendants. We cannot see that they carried their burden as to the Kaloustians, either. Their only argument is that they produced ample evidence of ulterior motive. Even if that were so, proof of ulterior motive is not sufficient. To prevail on abuse of process, the plaintiff must also show that defendants committed "a wilful act in the use of the process not proper in the regular conduct of the proceeding." (Templeton Feed and Grain v. Ralston Purina Co. (1968) 69 Cal.2d 461, 466.) "[T]he mere filing or maintenance of a lawsuit -- even for an improper purpose -- is not a proper basis for an abuse of process action." (Oren Royal Oaks Venture v. Greenberg, Bernhard, Weiss & Karma, Inc. (1986) 42 Cal.3d 1157, 1169.) There must also be some substantial use or misuse of the judicial process beyond the mere filing of the prior action. (Drasin v. Jacoby & Meyers (1984) 150 Cal.App.3d 481, 485.) Dennis and Rene did not even allege, let alone show, anything more than the mere filing of the prior actions.
Malicious prosecution
To establish a cause of action for malicious prosecution, a plaintiff must plead and prove that the underlying action was brought or continued without probable cause, initiated with malice, and was pursued to a legal termination in the plaintiff's favor. (Zamos v. Stroud (2004) 32 Cal.4th 958, 965-966; Crowley v. Katleman (1994) 8 Cal.4th 666, 676.) On this special motion to strike, Dennis and Rene had the burden of demonstrating a probability of prevailing on each of those elements. We find that they failed on two of the elements, favorable termination and lack of probable cause, and thus need not consider the remaining element.
First, favorable termination. Dennis and Rene argue that appellants waived this contention because they did not raise it in the trial court, and that by failing to raise the issue, appellants conceded it. Appellants did not raise the issue, but we see no concession, and no waiver. The burden of proof was on Dennis and Rene to show a probability of prevailing on each element of the cause of action. If they failed to do so, they are not saved by appellants' failure to point out the flaws in their proof.
On to the merits. The favorable termination requirement is not satisfied by a partial victory. Dennis and Rene had to present a prima facie case that they prevailed in the entire action. (Dalany v. American Pacific Holding Corp. (1996) 42 Cal.App.4th 822, 829; StaffPro, Inc. v. Elite Show Services, Inc. (2006) 136 Cal.App.4th 1392, 1402-1403.) The facts presented were to the contrary.
One of Tina's causes of action in the consolidated cases was for an accounting. That was ordered. Dennis and Rene argue that the accounting does not matter, because appellants did not show that Dennis converted funds or mismanaged the property, but the argument misses the point. A cause of action for an accounting is not a cause of action for conversion.
Tina also obtained a ruling in her favor on her Probate Code section 21320 petition. Dennis and Rene argue that application has no meaning because the Probate Code section 850 petition became the operative pleading once it was determined that the petition would not violate the no contest clause in the will, and point out that Tina did not prevail on the petition. We cannot agree that Tina's success on the application has no meaning. The application was part of the case, and it is relevant to the favorable termination analysis.
Nor did Dennis and Rene show a probability that they could establish that any appellant acted without probable cause as to any cause of action, and their lack of evidence is such that we need not dwell on appellants' arguments concerning the advice of counsel defense, or Bergstein's consultation with Judge Letteau. Dennis and Rene did nothing to show that all reasonable lawyers would agree that any cause of action was totally and completely without merit. (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 885.)
Instead, probable cause for the causes of action for an accounting and for dissolution of the partnership is established by the fact that the court made those orders. The dissolution occurred on Dennis and Rene's application, after Tina's complaint was dismissed, but it is obvious that a party who opposes certain relief, then requests that same remedy, cannot claim that the original request was without probable cause. Probable cause for Probate Code section 21320 application is similarly demonstrated by the fact that Tina obtained a favorable ruling on the application.
As to the Probate Code section 850 petition, Dennis and Rene cite the evidence (Rene's declaration and the Janice Stone letters), that Tina was not coerced into doing anything, but made her decisions on her own, in accord with her father's wishes, with the advice of counsel. This evidence does not address the causes of action in the petition, and does not present a prima facie case that no reasonable attorney could conclude (as Bergstein did) that the disclaimers could be invalidated because Tina and Rene had accepted the benefits of the estate, or that a receiver could and should be appointed, or indeed that any portion of the petition was without probable cause.
The letters from Janice Stone to Tina and Rene establish, at most, that one reasonable attorney thought that the disclaimers were valid, but do nothing to establish that no reasonable attorney would believe otherwise.
On appeal, though not as far as we can tell in the trial court, Dennis and Rene contend that transfer of the Tapo Canyon property to the partnership did not jeopardize the estate's tax treatment. We need not reach the merits of that contention. Even if that is so, and the attorney defendants were wrong about the tax consequences, being wrong is not the same as acting without probable cause.
We see even less in the way of evidence or argument concerning the proceeds of the sale of the Londelius house. The only evidence Dennis and Rene offered on this point was the evidence, in Rene's declaration, that the family had always considered the house to be hers as well as Tina's, evidence not relevant to the cause of action. We cannot see that they presented any evidence concerning the use of the proceeds to pay taxes, or any legal argument which would establish that there was no probable cause for the request that the proceeds be returned to Tina.
We say the same about the request for appointment of a receiver. Dennis and Rene cite Rene's declaration that Dennis managed the Tapo Canyon property fairly, and that the funds he received were in line with the management fees and the distributions to Tina and Rene. This does not establish that, given the trust accountant's concerns, the request for a receiver was utterly without merit.
Disposition
The order denying appellants' special motion to strike is reversed and the matter remanded to the trial court with directions to enter a new and different order granting that motion. Appellants to recover costs on appeal.
We concur: TURNER, P. J., KRIEGLER, J.