Opinion
B290803
03-26-2020
ARTURO RUBINSTEIN et al., Plaintiffs and Respondents, v. SHARONA YEHUDA, as Trustee, etc. et al., Defendants and Appellants.
Lebedev, Michael & Helmi, Gennady L. Lebedez, Sam Helmi, and Zurit Z. Barajas for Defendant and Appellant Sharona Yehuda as the Trustee for the Keshet Intervivos Trust. Klinedinst, Heather L. Rosing, Samuel B. Strohbehn, Robert M. Shaughnessy, and Catherine M. Asuncion for Defendant and Appellant DLA Piper LLP. Tesser Grossman, Brian M. Grossman, and Gina M. Simas for Plaintiffs and Respondents.
ORDER MODIFYING OPINION; NO CHANGE IN APPELLATE JUDGMENT
THE COURT:
The opinion filed on March 26, 2020 and not certified for publication, is modified as follows:
On page 1: The last name of counsel for Defendant and Appellant Sharona Yehuda as the Trustee for the Keshet Intervivos Trust, which appears as Lebedez, is to be replaced with Lebedev.
This order does not change the appellate judgment. /s/_________
PERLUSS, P. J. /s/_________
SEGAL, J. /s/_________
DILLON, J.
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Los Angeles County Super. Ct. No. BC686380) APPEALS from orders of the Superior Court of Los Angeles County, Malcolm Mackey, Judge. Reversed and remanded with directions. Lebedev, Michael & Helmi, Gennady L. Lebedez, Sam Helmi, and Zurit Z. Barajas for Defendant and Appellant Sharona Yehuda as the Trustee for the Keshet Intervivos Trust. Klinedinst, Heather L. Rosing, Samuel B. Strohbehn, Robert M. Shaughnessy, and Catherine M. Asuncion for Defendant and Appellant DLA Piper LLP. Tesser Grossman, Brian M. Grossman, and Gina M. Simas for Plaintiffs and Respondents.
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INTRODUCTION
In 2015 Sharona Yehuda (Yehuda), as trustee of the Keshet Intervivos Trust, represented by the law firm of Liner LLP, sued Arturo Rubinstein and a Nevada limited liability company he owned and managed, Fab Rock Investments, LLC, for declaratory relief and related equitable causes of action arising from the sale of Keshet's interest in a California limited liability company, RS West Hollywood, LLC, to Fab Rock (the Keshet Action). Yehuda alleged that a modification to the sale agreement gave Keshet an option to take back its interest in RS West at any time and that Fab Rock failed to comply with the modification after Yehuda notified Fab Rock that Keshet intended to exercise its option. Fab Rock filed a cross-complaint alleging breach of contract and interference with contract and argued at trial the modification was an unenforceable fabrication. A jury found in favor of Fab Rock on its breach of contract and interference causes of action, and the trial court found the modification unenforceable. Yehuda dismissed Keshet's remaining equitable causes of action without prejudice.
In 2017 Rubinstein and Fab Rock sued Yehuda and DLA Piper LLP, the successor law firm to Liner LLP, for malicious prosecution. Yehuda and DLA Piper each filed a special motion to strike the complaint under Code of Civil Procedure section 425.16. Rubinstein and Fab Rock conceded the filing of the malicious prosecution complaint arose from activity subject to section 425.16, but they argued they could demonstrate a probability of success on the merits. Rubinstein argued DLA Piper and Yehuda maliciously initiated and maintained the Keshet Action against him personally without probable cause because there was no evidence to support Yehuda's allegation that Rubinstein was an alter ego of Fab Rock. Fab Rock argued Yehuda initiated and maintained the Keshet Action against it based on the modification to the sale agreement, which Yehuda knew was a forgery. The trial court denied both motions, and Yehuda and DLA Piper appealed.
Statutory references are to the Code of Civil Procedure.
We conclude the trial court erred in denying the special motions to strike by DLA Piper and Yehuda. Rubinstein failed to demonstrate the law firm or Yehuda lacked probable cause to allege Rubinstein was Fab Rock's alter ego, and while Fab Rock presented evidence the modification may have been fabricated, Fab Rock failed to present evidence showing Yehuda knew the modification was not genuine. Therefore, we reverse the orders denying the special motions to strike and direct the trial court to grant the motions.
FACTUAL AND PROCEDURAL BACKGROUND
A. Keshet Agrees To Sell Its Interest in RS West to Fab Rock
In August 2011 Keshet and Fab Rock entered into an agreement in which Keshet agreed to sell Fab Rock its 50 percent interest in RS West (the Transfer Agreement). Keshet and two individuals, Shabi Cohen and Yehuda Benezra, formed RS West in 2004 for the purpose of acquiring real estate and developing a condominium project in West Hollywood. Because the construction loan RS West obtained did not cover the full cost of the project, the members had to contribute funds to make up the shortfall. Keshet contributed $1.25 million.
RS West completed the condominium project in 2011 and sought to refinance the construction loan. The bank required personal guaranties from all three members of RS West, but Keshet did not qualify as a guarantor because Yehuda's husband, Yoram Yehuda, had previously declared bankruptcy and Yehuda and Keshet had bad credit. The Yehudas approached Rubinstein, their longtime friend and sometime business associate, for help because they had helped Rubinstein in the past. In 2008 Rubinstein had asked the Yehudas to help him acquire a limited liability company, Baird LLC, which also owned a condominium building. The Yehudas alleged that, at the time, Rubinstein was unable to obtain a $2.8 million loan to buy Baird's assets. Yehuda agreed to secure a loan to purchase Baird's assets and to give Rubinstein an option to buy her interest for $100. In 2009 Rubinstein exercised his option, and Yehuda transferred her interest in Baird—reportedly worth $3.8 million—to Rubinstein for no additional consideration. Yehuda nevertheless remained a personal guarantor of the loan she obtained to help Rubinstein purchase Baird's assets.
In 2011 Yehuda asked Rubinstein to return the favor by acquiring Keshet's interest in RS West and guaranteeing a loan to refinance RS West's debt. According to Yehuda, Rubinstein agreed to give Keshet an option to require Rubinstein to transfer his interest in RS West to Keshet, similar to the arrangement the parties had agreed to in the Baird transaction. On August 1, 2011 Keshet entered into the Transfer Agreement with Fab Rock, a Nevada limited liability company wholly owned and managed by Rubinstein, pursuant to which Fab Rock agreed to purchase Keshet's membership interest in RS West for $100. Fab Rock also agreed to pay Keshet 50 percent of any distributions it received from RS West. Yehuda alleged that four days later, on August 5, 2011, Keshet and Fab Rock entered into a "Modification/Amendment" to the Transfer Agreement, pursuant to which Fab Rock agreed to give Keshet 100 percent of the distributions from RS West and to transfer back to Keshet the interest Fab Rock purchased in RS West within 24 hours of Keshet's written demand (the Modification). Rubinstein signed the Transfer Agreement on behalf of Fab Rock, and Yehuda alleged Rubinstein also signed the Modification. On May 12, 2012 RS West refinanced its debt on the property with a $3.36 million loan secured by a deed of trust encumbering RS West's property and guaranteed by Rubinstein, Fab Rock, Benezra, and Cohen.
Yehuda alleged Rubinstein agreed to enter into a similar arrangement in connection with a limited liability company that owned a hotel in Florida.
After Keshet transferred its interest in RS West to Fab Rock, RS West restated its operating agreement to identify Fab Rock as a member. Yehuda alleged Keshet continued to manage and make capital contributions to RS West. For example, Yehuda alleged that Keshet continued to make distributions to members and payments for the property's maintenance and property taxes and that Keshet contributed to the settlement of a lawsuit against RS West. Yehuda alleged that Fab Rock did not make any capital contributions to RS West and that neither Fab Rock nor Rubinstein played an active role in the management of RS West or objected to distribution payments to Keshet.
Yehuda alleged that on November 28, 2014 her husband, Yoram, personally delivered a "Transfer Notice" to Rubinstein notifying Fab Rock that, effective December 31, 2014, Keshet would exercise its option to reacquire ownership of its interest in RS West. Yoram said Rubinstein read the notice and said, "Okay." A year later, in November 2015, RS West attempted to sell the West Hollywood property, which required the written consent of more than 50 percent of the membership interests in RS West. Yehuda alleged Fab Rock improperly asserted it still owned a 50 percent interest in RS West and blocked attempts to sell the property. Yehuda also learned Fab Rock improperly attempted to remove a limited liability company owned by Benezra as the managing member of RS West and install Rubinstein as RS West's president and treasurer. On December 4, 2015 Yehuda sent letters through Liner LLP to RS West, Fab Rock, and Rubinstein asserting Keshet's 50 percent ownership in RS West and demanding that Fab Rock and Rubinstein cease interfering in the management of RS West and acknowledge Keshet's ownership interest.
B. Yehuda Sues Rubinstein and Fab Rock
On December 14, 2015 Yehuda, as trustee of Keshet, sued Fab Rock, Rubinstein, and RS West for declaratory relief, specific performance, constructive trust, resulting trust, and injunctive relief (the Keshet Action). Yehuda alleged that Rubinstein was the managing and sole member of Fab Rock and, on information and belief, that Rubinstein and Fab Rock were and acted as alter egos of each other.
Yehuda alleged Rubinstein agreed to acquire a "temporary" interest in RS West from Keshet, to personally guarantee RS West's refinancing loan, and to return Keshet's membership interest in RS West upon Keshet's written demand. Yehuda alleged the parties memorialized these terms in the Transfer Agreement and the Modification. Yehuda alleged that, because she exercised Keshet's option under the Modification, Fab Rock no longer had an interest in RS West or the right to participate in its management or to receive any distributions from the sale of RS West's property. Yehuda alleged that, because Fab Rock and Rubinstein disputed Keshet's ownership interest, there was a present and actual controversy between the parties.
Yehuda, after her attorneys met and conferred with counsel for Rubinstein and Fab Rock, filed a first amended complaint. Rubinstein and Fab Rock demurred, arguing, among other things, the bank that refinanced RS West's construction loan was an indispensable party because the bank's prior consent was required to transfer Fab Rock's ownership interest to Keshet. Rubinstein and Fab Rock also argued Benezra and Cohen were indispensable parties because their guaranties could be adversely affected if the court granted the relief requested. With regard to the substance of Yehuda's causes of action, Rubinstein and Fab Rock argued that the Modification lacked adequate consideration and that its enforcement would not be just or reasonable. Rubinstein and Fab Rock did not contend that the Modification was a forgery or that Rubinstein was an improper defendant.
The trial court sustained the demurrer with leave to amend "only to allow additional parties to be joined as defendants." Yehuda filed a second amended complaint that named Benezra and Cohen as defendants and that alleged Rubinstein was still a personal guarantor of the note. The new allegation ensured the bank's interest in the note would be protected regardless of the outcome of the litigation, thus making it unnecessary to add the bank as a defendant.
C. Rubinstein and Fab Rock File a Cross-Complaint Against the Yehudas in the Keshet Action
Rubinstein and Fab Rock filed a cross-complaint against Yehuda, individually and as trustee of Keshet, and Yoram, alleging causes of action for promissory fraud, interference with contract, breach of oral contract, and declaratory relief. Rubinstein and Fab Rock alleged Yehuda and Yoram filed bankruptcy petitions in 2011 and 2009, respectively, both of which failed to list Keshet's interest in RS West. Rubinstein and Fab Rock alleged the Yehudas "hatched a plan to hide from their creditors and their bankruptcy trustees [Keshet's] interest in [RS West]" by "tak[ing] advantage of the goodwill of their friend Rubinstein." In their cross-complaint, Rubinstein and Fab Rock described the deal Rubinstein had reached with the Yehudas in a way that was similar to how Yehuda had described it in her complaint: "The Yehudas approached Rubinstein and told him that they needed Rubinstein's help to refinance [RS West's] debt. More particularly, the Yehudas told Rubinstein that the refinance required personal guaranties from the members of [RS West], and that the Yehudas did not qualify as guarantors because of poor credit. [¶] The Yehudas proposed a transaction whereby the Trust would sell its membership interest in [RS West] to Rubinstein, in return for a nominal payment ($100) and Rubinstein's agreement to pay to [Keshet] 50% of all member distributions that he received in the future. Rubinstein agreed to the Yehudas' proposal, at which time an oral contract was formed . . . ."
Rubinstein and Fab Rock alleged that the Yehudas' "true intent" in entering into the Transfer Agreement was "to temporarily 'park' [Keshet's] membership interest in [RS West] with Rubinstein until after the Yehudas' respective bankruptcy proceedings were closed, and after Rubinstein had personally guaranteed the $3.36 million loan to [RS West]. The Yehudas would then fabricate an agreement whereby Rubinstein purportedly agreed to return the 50% membership interest to [Keshet], and then seek to enforce that fabricated agreement."
Rubinstein and Fab Rock admitted in their cross-complaint that Rubinstein fulfilled his end of the bargain by personally guaranteeing a loan to refinance RS West's debt and that he reasonably relied on the Yehudas and Keshet to fulfill their obligation to transfer the membership interest in RS West unencumbered "because at that time Rubinstein and the Yehudas were close friends." Rubinstein admitted he did not recall signing the Transfer Agreement, but he denied "ever knowingly" signing the "Purported Modification" to that agreement. Rubinstein and Fab Rock alleged the Yehudas gave them written notice Keshet was exercising its right to take back its membership interest only after the Yehudas' bankruptcy proceedings ended. Rubinstein and Fab Rock alleged they would not have agreed to the terms of the Transfer Agreement "for essentially nothing in return." Fab Rock alleged that the Yehudas and Keshet interfered with the operations of RS West and that Keshet breached the Transfer Agreement. Fab Rock also sought a declaration the Modification was an unenforceable forgery, and both Rubinstein and Fab Rock requested compensatory and punitive damages.
D. Fab Rock Prevails at Trial on Its Breach of Contract and Interference Causes of Action
In November 2016, nine months before trial, Yehuda substituted new counsel for Liner LLP. A jury trial on Fab Rock's causes of action for breach of contract and interference with contract began on August 1, 2017. At the close of Yehuda's case-in-chief, Rubinstein filed a motion for judgment under section 631.8. The next day Yehuda dismissed Rubinstein from the causes of action she alleged against him, and the trial court granted Rubinstein's motion for judgment.
Rubinstein and Fab Rock dismissed their first cause of action for promissory fraud, which was the only cause of action by Rubinstein as a cross-complainant.
During the trial Rubinstein and Fab Rock argued Keshet breached the Transfer Agreement by failing to acknowledge Fab Rock was the owner of a 50 percent interest in RS West and entitled to 50 percent of distributions. Rubinstein and Fab Rock argued that, as a result of Keshet's interference in RS West and with the restated operating agreement, RS West lost an offer to purchase the West Hollywood property for $8.2 million. Rubinstein and Fab Rock further argued the Yehudas maliciously created the "bogus" Modification only after RS West received an offer to purchase the property in 2015.
Rubinstein and Fab Rock presented testimony at trial from the attorney who drafted the Transfer Agreement, Lee Lubin. Lubin represented Rubinstein, Fab Rock, the Yehudas, Cohen, Benezra, RS West, and Keshet in various matters, including litigation, possibly at the same time. Lubin testified that no one ever asked him to draft a modification or amendment to the Transfer Agreement to create an option for Keshet to reacquire the membership interest in RS West from Fab Rock and that he never drafted any such document. Lubin stated he first saw the Modification when Rubinstein showed it to him in 2016 and asked if Lubin had prepared it. Lubin testified he did not recall any conversations (as Yoram had described in his testimony) in which Yoram told Lubin that Rubinstein was "just signing as a guarantor returning [a] favor to [Keshet] and [Yehuda] for what she did back in 2008" while "in reality [Keshet] is remaining as the owner and the beneficiary of RS West."
In connection with the sale of Keshet's interest in RS West to Fab Rock, Cohen, Benezra, and Yehuda executed conflicts waivers.
Rubinstein and Fab Rock also introduced into evidence emails from Yoram to Lubin regarding the sale of Keshet's interest in RS West, in which Yoram did not mention the Modification or the oral agreement allegedly memorialized by the Modification. Rubinstein and Fab Rock also sought to impeach Yehuda's testimony about the Modification by pointing out that Yehuda represented in Yoram's 2013 bankruptcy proceeding that Keshet received nothing of value in connection with the sale of its interest in RS West to Fab Rock, but testified at trial that Keshet's interest in RS West was something of value. Yehuda explained that, because in 2013 Keshet had not yet asked Fab Rock to return its interest in RS West, she did not believe Keshet received anything of value (yet) from Fab Rock as a result of the Transfer Agreement.
The jury found in favor of Fab Rock on its causes of action for breach of the Transfer Agreement and interference with the restated RS West operating agreement and, in a special verdict, awarded Fab Rock damages. The jury also found that Keshet and Fab Rock did not "enter into the [Modification] to the [Transfer Agreement]" and that the Yehudas acted with malice, oppression, or fraud in disrupting the rights of Fab Rock under the terms of the restated RS West operating agreement.
Before the court commenced the trial on Yehuda's equitable causes of action, the court discussed with counsel for the parties the timing of a motion notwithstanding the verdict and a motion for a new trial on damages. The trial court stated that it had to accept the jury's finding of facts for purposes of the equitable trial and that, in any event, there was substantial evidence to support the jury's finding that "the [M]odification was not signed by Mr. Rubinstein." The trial court stated: "I assume [Yehuda's] argument would be that the original [Transfer Agreement], which is the only one, . . . never inten[ded] to actually grant an interest to Mr. Rubinstein, it was just being done under—for the purpose of the guarantee for the property by the bank, and that the court should impose a constructive or resulting trust on the property and grant the quiet title to give an interest back to Keshet trust." The court also stated: "I would note, it's going to be a challenging argument, in light of the finding by the jury that, in essence, the Yehudas forged—my reading of it is if you believe that the modification did not happen, then the court's reading of it is that in fact it is not a valid document and the original contract was never modified, which would mean that the [M]odification was a forgery and the testimony of Mr. and Ms. Yehuda was false. [¶] I don't know on those facts how you argue that the court should, in equity, grant them an interest in the property." Later that afternoon, Yehuda dismissed her complaint without prejudice.
Following motions by the Yehudas for judgment notwithstanding the verdict, the trial court vacated the jury's special verdict. The "2nd Revised Judgment Notwithstanding the Verdict" entered on November 30, 2017 found the Transfer Agreement enforceable and the Modification "not an enforceable agreement," reduced the damages the jury had awarded to Fab Rock, and vacated a punitive damages award.
The record does not include the jury's punitive damages award, the Yehudas' motion for judgment notwithstanding the verdict, the transcript of the hearing on that motion, or the trial court's order denying the Yehudas' motion for a new trial and granting in part their motion for judgment notwithstanding the verdict.
E. Rubinstein and Fab Rock Sue Yehuda and Liner LLP for Malicious Prosecution
In December 2017 Rubinstein and Fab Rock filed this action for malicious prosecution against Yehuda, as trustee of Keshet, and Liner LLP, but Rubinstein and Fab Rock did not sue Yehuda individually or the attorneys who represented Yehuda as trustee at the time of the trial on the Keshet Action. In the first cause of action by Rubinstein against Yehuda and Liner LLP, Rubinstein alleged Yehuda and Liner LLP "did not honestly, reasonably, and in good faith believe that Rubinstein had any personal liability to Keshet arising out of the [Keshet Action]" because the facts alleged in the Keshet Action "show that the dispute was between Keshet and Fab Rock and that Rubinstein was merely an owner of Fab Rock." Rubinstein alleged Yehuda acted maliciously because she filed the Keshet Action against him even though she knew he "was not a proper defendant but sued him anyway with the intent to deplete his financial resources and cause him emotional distress." Rubinstein alleged Liner LLP acted maliciously because it knew from the allegations in the Keshet Action "there was no liability stated against Rubinstein personally, but nonetheless named him as a defendant . . . thereby demonstrating a callous disregard for Rubinstein's rights."
In the second cause of action by Fab Rock against Yehuda as trustee, Fab Rock alleged Yehuda lacked probable cause to instigate the Keshet Action because Yehuda did not "honestly, reasonably, and in good faith believe that the Modification was an authentic agreement." Fab Rock alleged Yehuda acted maliciously because she knew "the Modification was a forgery, but asserted its authenticity nonetheless with the intent to steal from Fab Rock its interest in a company worth millions of dollars."
F. DLA Piper and Yehuda File Special Motions To Strike the Malicious Prosecution Complaint
DLA Piper responded to the complaint as the successor law firm of Liner LLP, and both DLA Piper and Yehuda filed special motions to strike under section 425.16. DLA Piper and Yehuda argued that the complaint arose from protected activity and that Rubinstein and Fab Rock could not demonstrate a probability of prevailing on their malicious prosecution causes of action because probable cause supported the causes of action in the Keshet Action and neither DLA Piper nor Yehuda pursued the Keshet Action with malice. DLA Piper argued Liner LLP properly named Rubinstein as a defendant in the Keshet Action because Rubinstein was Fab Rock's sole and managing member and its alter ego, Rubinstein's status as a guarantor of the RS West loan made him an indispensable party, Rubinstein's "alleged bad acts" supported individual liability, and Rubinstein had requested a copy of RS West's Internal Revenue Service form K-1 in connection with a personal loan application (which suggested Rubinstein claimed an interest in RS West for a personal benefit). DLA Piper also pointed out that, even though Yehuda filed three versions of the complaint in the Keshet Action (all of which included alter ego allegations), Rubinstein did not claim he was improperly sued until trial, which began long after Liner LLP had substituted out of the case. DLA Piper also argued Rubinstein had no evidence Liner LLP pursued the Keshet Action with malice.
Yehuda made similar arguments in support of her special motion to strike Rubinstein's cause of action. With respect to Fab Rock's cause of action, Yehuda argued she had a "good faith, genuine belief that Mr. Rubinstein signed the Modification" because the Yehudas, shortly after they signed the Transfer Agreement, had a conversation with Rubinstein about the Modification in which Rubinstein told them he did not want to be financially liable for RS West as a result of the Transfer Agreement. Thus, Yehuda stated in her declaration, she prepared the Modification, and Yoram personally delivered it to Rubinstein. Yehuda stated Rubinstein gave Yoram "a copy of the Modification with what [Yoram] recognized to be Mr. Rubinstein's signature." Yehuda asserted that, based on "the personal experience and extrinsic evidence under which Keshet came into possession of the Modification," she had a good faith and genuine belief Rubinstein signed the Modification. Yehuda also argued she did not sue Fab Rock with malice because she subjectively believed she had a good faith basis for suing Fab Rock.
Rubinstein and Fab Rock conceded their causes of action for malicious prosecution arose from protected activity under section 425.16. In opposition to DLA Piper's special motion to strike, Rubinstein argued Liner LLP had no factual basis on which to allege he was the alter ego of Fab Rock because Rubinstein "was merely the signatory [to the Transfer Agreement] on behalf of Fab Rock." Rubinstein also argued Liner LLP made no effort in discovery to substantiate the alter ego allegations. Rubinstein argued that these facts also showed "Liner LLP callously added Rubinstein as a personal defendant to a contract dispute to which Rubinstein was not a party," which supported a finding of malice.
In opposition to Yehuda's special motion to strike, Rubinstein and Fab Rock argued Keshet sued them without probable cause. Rubinstein's arguments mirrored those he made in opposing DLA Piper's special motion to strike, and Fab Rock argued Yehuda's claim to an interest in RS West was untenable because the Modification "was forged by Keshet." Fab Rock contended collateral estoppel precluded Yehuda from relitigating this issue because the trial court and the jury in the Keshet Action concluded the Modification was a forgery. And, Fab Rock argued, even if the court allowed Yehuda to relitigate the issue, there was "ample evidence" Yehuda lacked probable cause to claim Keshet had an ownership in Fab Rock's membership interest in RS West. On the issue of malice, Fab Rock and Rubinstein relied on the jury's finding that the Yehudas acted with malice in the Keshet Action and the "fact that the Yehudas forged the Modification."
The trial court denied the special motions to strike. In denying DLA Piper's motion, the trial court ruled the evidence "reasonably infer[red] a lack of probable cause, and the existence of malice, by reference to underlying case filings, proceedings and unsupportive discovery efforts." In denying Yehuda's motion, the trial court ruled "underlying factual findings, and evidence, support elements of a lack of probable cause, and the existence of malice, as to the underlying case theories, including alter ego issues . . . ." DLA Piper and Yehuda timely appealed.
DISCUSSION
A. Section 425.16 and the Tort of Malicious Prosecution
"'Code of Civil Procedure section 425.16 sets out a procedure for striking complaints in harassing lawsuits . . . which are brought to challenge the exercise of constitutionally protected free speech rights.' [Citation.] A cause of action arising from a person's act in furtherance of the 'right of petition or free speech under the United States Constitution or the 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 claim will prevail." (Monster Energy Co. v. Schechter (2019) 7 Cal.5th 781, 788; § 425.16, subd. (b)(1).) Section 425.16 "'does not insulate defendants from any liability for claims arising from the protected rights of petition or speech. It only provides a procedure for weeding out, at an early stage, meritless claims arising from protected activity.'" (Monster Energy Co., at p. 788; quoting Baral v. Schnitt (2016) 1 Cal.5th 376, 384.)
Resolution of a special motion to strike under section 425.16 involves two steps. First, the defendant must establish that the challenged claim arises from protected activity by section 425.16. "'If the defendant makes the required showing, the burden shifts to the plaintiff to demonstrate the merit of the claim by establishing a probability of success. We have described this second step as a "summary-judgment-like procedure." [Citation.] The court does not weigh evidence or resolve conflicting factual claims. Its inquiry is limited to whether the plaintiff has stated a legally sufficient claim and made a prima facie factual showing sufficient to sustain a favorable judgment. It accepts the plaintiff's evidence as true, and evaluates the defendant's showing only to determine if it defeats the plaintiff's claim as a matter of law.'" (Monster Energy Co. v. Schechter, supra, 7 Cal.5th at p. 788; see Baral v. Schnitt, supra, 1 Cal.5th at p. 396 [in step two the "burden shifts to the plaintiff to demonstrate that each challenged claim based on protected activity is legally sufficient and factually substantiated"].) Thus, a court should grant a special motion to strike under section 425.16 "if, as a matter of law, the defendant's evidence supporting the motion defeats the plaintiff's attempt to establish evidentiary support for the claim." (Litinsky v. Kaplan (2019) 40 Cal.App.5th 970, 980 (Litinsky).) We review the grant or denial of a special motion to strike de novo. (Monster Energy Co., at p. 788; Park v. Board of Trustees of California State University (2017) 2 Cal.5th 1057, 1067.)
Rubinstein and Fab Rock concede DLA Piper and Yehuda satisfied their initial burden to show the causes of action for malicious prosecution arise from activity protected under section 425.16. Section 425.16 defines an "'act in furtherance of a person's right of petition or free speech'" to include "any written or oral statement or writing made before a . . . judicial proceeding . . . ." (§ 425.16, subd. (e)(1).) Thus, "every claim of malicious prosecution is a cause of action arising from protected activity, because every such claim necessarily depends upon written and oral statements in a prior judicial proceeding." (Lee v. Kim (2019) 41 Cal.App.5th 705, 719; accord, Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 734-735; see Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1538 ["'It is well established that filing a lawsuit is an exercise of a party's constitutional right of petition.'"].) The only issue is whether Rubinstein and Fab Rock satisfied their respective burdens to demonstrate a probability of prevailing on the merits of their causes of action for malicious prosecution. (See Lee v. Kim, at p. 719.)
"To prevail on a malicious prosecution claim, the plaintiff must show that the prior action (1) was commenced by or at the direction of the defendant and was pursued to a legal termination favorable to the plaintiff; (2) was brought without probable cause; and (3) was initiated with malice." (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 292 (Soukup); accord, Zhang v. Chu (Mar. 5, 2020, B292418) ___ Cal.App.5th ___, ___ [2020 WL 1060994, p. 3]; Lee v. Kim, supra, 41 Cal.App.5th at pp. 719-720.) DLA Piper and Yehuda do not dispute the termination of the Keshet Action was favorable to Rubinstein and Fab Rock. Thus, to defeat the special motions to strike by DLA Piper and Yehuda, Rubinstein and Fab Rock had to show Liner LLP and Yehuda filed the Keshet Action without probable cause and with malice. (See Lee v. Kim, at pp. 720-721 ["To demonstrate a probability of prevailing on the second prong of the [section 426.15] analysis, [the plaintiff] was required to produce admissible evidence from which a trier of fact could find in his favor, as to every element [the plaintiff] needed to prove at trial to establish malicious prosecution."]; Nunez v. Pennisi (2015) 241 Cal.App.4th 861, 875 [to survive a special motion to strike, a malicious prosecution plaintiff has the burden to make a prima facie showing of facts necessary to establish a malicious prosecution].)
"We keep in mind that malicious prosecution is a 'disfavored action.' [Citation.] '[T]he elements of [malicious prosecution] have historically been carefully circumscribed so that litigants with potentially valid claims will not be deterred from bringing their claims to court by the prospect of a subsequent malicious prosecution claim.'" (Jay v. Mahaffey, supra, 218 Cal.App.4th at p. 1539; accord, Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 872 (Sheldon Appel); see Daniels v. Robbins (2010) 182 Cal.App.4th 204, 216 [malicious prosecution is a disfavored action because the law favors "'"open access to the courts for the redress of grievances"'"].)
B. Liner LLP and Yehuda Had Probable Cause To Allege Rubinstein Was Fab Rock's Alter Ego
"The question of probable cause is 'whether as an objective matter, the prior action was legally tenable or not.' [Citation.] 'A litigant will lack probable cause for his action either if he relies upon facts which he has no reasonable cause to believe to be true, or if he seeks recovery upon a legal theory which is untenable under the facts known to him.' . . . Probable cause, moreover, must exist for every cause of action advanced in the underlying action." (Soukup, supra, 39 Cal.4th at p. 292; see Lee v. Kim, supra, 41 Cal.App.5th at p. 724.) "The test to be applied in evaluating the existence of probable cause is 'whether any reasonable attorney would have thought the claim tenable.'" (Lee v. Kim, at p. 725; see Sheldon Appel, supra, 47 Cal.3d at p. 886.)
"Probable cause may exist even where the underlying lawsuit lacks merit. [Citation.] '"Counsel and their clients have a right to present issues that are arguably correct, even if it is extremely unlikely that they will win . . . ."' [Citation.] 'Reasonable lawyers [also] can differ, some seeing as meritless suits which others believe have merit, and some seeing as totally and completely without merit suits which others see as only marginally meritless.' [Citation.] 'Only those actions that any reasonable attorney would agree are totally and completely without merit may form the basis for a malicious prosecution suit.'" (Lee v. Kim, supra, 41 Cal.App.5th at p. 725; accord, Zamos v. Stroud (2004) 32 Cal.4th 958, 970; see Nunez v. Pennisi, supra, 241 Cal.App.4th at p. 875 ["Probable cause to bring an action exists where the suit is 'arguably tenable, i.e., not so completely lacking in apparent merit that no reasonable attorney would have thought the claim tenable.'"].)
"In making an initial assessment of tenability, an attorney is entitled to rely on the information provided by the client, unless the attorney is on notice of specific factual errors in the client's version of events that render the claim untenable." (Lee v. Kim, supra, 41 Cal.App.5th at p. 725; see Litinsky, supra, 40 Cal.App.5th at p. 981 ["Unless a lawyer discovers that his or her client has provided false information, the lawyer is generally entitled to rely on information from his or her client in filing or prosecuting a lawsuit."].) "However, an attorney who has probable cause to commence a lawsuit may be liable for malicious prosecution if he or she continues to prosecute the action after learning it is not supported by probable cause." (Lee v. Kim, at p. 725; see Soukup, supra, 39 Cal.4th at p. 296 ["'an attorney may be held liable for continuing to prosecute a lawsuit discovered to lack probable cause'"]; Arcaro v. Silva & Silva Enterprises Corp. (1999) 77 Cal.App.4th 152, 158-159 ["when a party is put on notice a fundamental element of its case is disputed, it should not proceed without evidence sufficient to support a favorable judgment on that element or at least information affording an inference such evidence can be obtained"].) "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." (Yee v. Cheung (2013) 220 Cal.App.4th 184, 200; see Sycamore Ridge Apartments, LLC v. Naumann (2007) 157 Cal.App.4th 1385, 1402.)
Rubinstein contends Liner LLP and Yehuda lacked probable cause to bring or to maintain the Keshet Action against him as an alter ego. Rubinstein argues that his status as the sole owner and member of Fab Rock did not "give rise to an alter ego theory" and that, once Fab Rock alleged in its cross-complaint in the Keshet Action that it (and not Rubinstein) claimed ownership in RS West, Liner LLP and Yehuda were on notice the alter ego theory was not sustainable. Under these circumstances, Rubinstein contends, no reasonable attorney "would have believed that there was probable cause to" allege that Rubinstein and Fab Rock were alter egos.
In the second amended complaint in the Keshet Action, Yehuda (represented by Liner LLP) alleged, on information and belief, that Rubinstein was the managing and sole member of Fab Rock. She also alleged "each of the Defendants was the agent, employee and/or alter-ego of each of its co-defendants and, in doing the things mentioned, was acting in the course and scope of its authority as an agent, employee or alter-ego, and with the authorization, permission, and consent of its co-defendants." Although Yehuda and Liner LLP phrased this boilerplate allegation in the alternative to apply equally to all defendants in the Keshet Action (including Benezra, Cohen, and Does 1 through 20), Rubinstein argues Yehuda and Liner LLP maliciously prosecuted the allegation against him.
1. The Alter Ego Doctrine
"Ordinarily a corporation is considered a separate legal entity, distinct from its stockholders, officers and directors, with separate and distinct liabilities and obligations. [Citation.] The same is true of a limited liability company (LLC) and its members and managers. [Citations.] [¶] That legal separation may be disregarded by the courts 'when [a corporation or LLC] is used [by one or more individuals] to perpetrate a fraud, circumvent a statute, or accomplish some other wrongful or inequitable purpose.'" (Curci Investments, LLC v. Baldwin (2017) 14 Cal.App.5th 214, 220-221; see Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 539 [the alter ego doctrine "affords protection where some conduct amounting to bad faith makes it inequitable for the corporate owner to hide behind the corporate form"].) "In those situations, the corporation's or LLC's actions will be deemed 'to be those of the persons or organizations actually controlling the corporation, in most instances the equitable owners.'" (Curci Investments, LLC, at p. 221; see Sonora Diamond, at p. 538.)
"Before the alter ego doctrine will be invoked in California, two conditions generally must be met. [¶] 'First, there must be such a unity of interest and ownership between the corporation and its equitable owner that the separate personalities of the corporation and the shareholder do not in reality exist. Second, there must be an inequitable result if the acts in question are treated as those of the corporation alone.' [Citation.] While courts have developed a list of factors that may be analyzed in making these determinations, '[t]here is no litmus test to determine when the corporate veil will be pierced; rather the result will depend on the circumstances of each particular case.'" (Curci Investments, LLC v. Baldwin, supra, 14 Cal.App.5th at p. 221; see Mesler v. Bragg Management Co. (1985) 39 Cal.3d 290, 300; Sonora Diamond Corp. v. Superior Court, supra, 83 Cal.App.4th at p. 538.)
Evidence that an LLC "serve[s] as a vehicle for holding and investing" the money of an individual who is also the sole and managing member of that LLC supports a unity of interest. (Curci Investments, LLC v. Baldwin, supra, 14 Cal.App.5th at p. 224; see Zhang v. Chu, supra, ___ Cal.App.5th at p. ___ [2020 WL 1060994, p. 4] [concentration of stock ownership in one individual or family is evidence of alter ego].) Another factor tending to show a unity of interest is the use of the same offices and employees. (See Zhang v. Chu, at p. ___ [p. 4]; Highland Springs Conference & Training Center v. City of Banning (2016) 244 Cal.App.4th 267, 280-281; Zoran Corp. v. Chen (2010) 185 Cal.App.4th 799, 811.) In general, the conditions in which a court may disregard the structure of a limited liability company and consider it the alter ego of a member "necessarily vary according to the circumstances in each case inasmuch as the [alter ego] doctrine is essentially an equitable one and for that reason is particularly within the province of the trial court." (Zoran Corp., at p. 811; see Highland Springs Conference & Training Center, at p. 281.)
2. The Alter Ego Allegation Was Objectively Tenable
Liner LLP and Yehuda had probable cause to allege Rubinstein's liability under an alter ego theory and to continue to prosecute the Keshet Action against Rubinstein as Fab Rock's alleged alter ego until Yehuda dismissed Rubinstein from the case. Liner LLP received information from the Yehudas indicating that Rubinstein was the sole owner and managing member of Fab Rock (an allegation Rubinstein does not contest), that the parties had a history of engaging in casual dealings and creating informal business relationships involving their closely held companies (often with the apparent goal of mutually defrauding their creditors), and that Rubinstein had used Fab Rock's interest in RS West to obtain a personal loan. In addition, documents obtained by Liner LLP from the Yehudas indicated Rubinstein and Fab Rock had the same office address and phone number and used the same attorney. And Liner LLP and Yehuda had information Rubinstein engaged in wrongful conduct as Fab Rock's manager, including attempting to sell RS West's real estate holdings without Yehuda's consent. While these facts are not incontrovertible proof Rubinstein was Fab Rock's alter ego, no reasonable attorney would conclude based on these facts that Yehuda's alter ego allegation was "'totally and completely without merit.'" (Lee v. Kim, supra, 41 Cal.App.5th at p. 725.)
These facts distinguish this case from Puryear v. Golden Bear Ins. Co. (1998) 66 Cal.App.4th 1188 (Puryear), on which Rubinstein primarily relies. In that case the court reversed an order granting summary judgment in favor of a malicious prosecution defendant and its attorneys because there was no probable cause to allege in the underlying action a corporate officer was liable for a corporation's negligence. (Id. at p. 1190.) Indeed, nothing in the record in Puryear supported an inference that the corporate officer was personally negligent or that "he satisfied any criterion for piercing the corporate veil." (Id. at p. 1197.) The malicious prosecution defendants in Puryear also conceded in deposition testimony they had "no evidence to support a theory of alter ego liability against [the officer] and failed to identify any evidence to support [the officer's] personal liability for the shortcomings" of the corporation. (Id. at p. 1193.) In contrast, at the time Yehuda and Liner LLP filed the Keshet Action, there was evidence of several criteria for piercing Fab Rock and imposing alter ego liability on Rubinstein, and there was undisputed evidence Rubinstein was personally involved in the underlying transaction.
Rubinstein's argument that Fab Rock and not Rubinstein asserted ownership of an interest in RS West in the Keshet Action cross-complaint did not undermine Yehuda's alter ego claim. Rubinstein's litigation position in the underlying action merely established he intended to contest personal liability for Fab Rock's conduct. (See Litinsky, supra, 40 Cal.App.5th at p. 985 [an attorney is "not obligated to drop her client's claim simply because her litigation opponent claimed [the client] was lying"].)
Rubinstein's contention that Liner LLP conducted no discovery to support the alter ego allegations also fails. Not only does Rubinstein ignore the other evidence supporting the alter ego allegations, Rubinstein's contention rests on only a small portion of discovery Liner LLP propounded in the Keshet Action on behalf of Yehuda and seeks to deduce from that incomplete sampling that Yehuda and Liner LLP did not serve any other discovery concerning the relationship between Fab Rock and Rubinstein. Contrary to Rubinstein's characterization of the discovery propounded by Liner LLP, the requests for production of documents in the Keshet Action sought information about Rubinstein's involvement in, and relationship to, RS West and about Fab Rock's alleged ownership interest in RS West. Moreover, Rubinstein did not submit evidence indicating whether discovery had closed at the time Liner LLP ended its representation of Keshet.
Finally, the facts underlying the Keshet Action established that an inequitable result could have occurred if Rubinstein were not bound by any relief the court might grant in that case. Rubinstein, like Benezra and Cohen, was an indispensable party in the Keshet Action, both as a personal guarantor of the RS West loan and as a party to certain related cases. Moreover, counsel for Rubinstein met and conferred with Liner LLP in response to the original complaint and demurred to the first amended complaint in the Keshet Action, and in neither instance did counsel for Rubinstein argue or advise Liner LLP or Yehuda that Rubinstein was an improper defendant. (Cf. Puryear, supra, 66 Cal.App.4th at p. 1192 [opposing counsel informed counsel for the plaintiff in the underlying action that the corporate officer named individually in the complaint no longer held shares in the corporate defendant].) Taken together, these facts further showed Liner LLP and Yehuda had probable cause to allege Rubinstein was Fab Rock's alter ego.
C. Yehuda Had Probable Cause To Rely on the Modification To Support Keshet's Claim to Fab Rock's Interest in RS West
As stated, a litigant lacks probable cause when she relies on facts without reasonable cause to believe they are true or on an untenable legal theory. (Soukup, supra, 39 Cal.4th at p. 292; Lee v. Kim, supra, 41 Cal.App.5th at p. 724.) "The resolution of that question requires an objective determination of the reasonableness of the underlying lawsuit based on the facts known to the party bringing the suit." (Lee v. Kim, at p. 724; see Sheldon Appel, supra, 47 Cal.3d at p. 878 ["the 'belief' in question relate[s] to the defendant's belief in, or knowledge of, a given state of facts"].) "When there is a dispute as to the state of the defendant's knowledge and the existence of probable cause turns on resolution of that dispute, . . . the jury must resolve the threshold question of the defendant's factual knowledge or belief." (Sheldon Appel, at p. 881; accord, Medley Capital Corp. v. Security National Guaranty, Inc. (2017) 17 Cal.App.5th 33, 47-48.)
Fab Rock contends the causes of action Yehuda alleged in the Keshet Action "were untenable on the facts known to [Yehuda]" because the "central claim" that Keshet owned a 50 percent interest in RS West was based on the Modification, which "was adjudicated to have been forged by the Yehudas." And, Fab Rock argues, even if Yehuda could "re-litigate" the issue, there was evidence the Modification was a forgery, including (1) Keshet's attorney drafted the Transfer Agreement but not the Modification; (2) Yoram sent an email to his attorney describing the deal between Keshet and Fab Rock but did not mention the Modification; (3) Yoram sent an email to his attorney "attaching all of [the] deal documents, which attachment [did] not include the supposedly contemporaneous Modification"; and (4) Yehuda testified in a prior bankruptcy proceeding that "Keshet got nothing in return for its transfer of the 50% interest to Fab Rock." Fab Rock contends this evidence shows Yehuda did not have probable cause to file the Keshet Action.
Yehuda argues she had probable cause because she reasonably believed the Modification was authentic. Yehuda explained in her declaration in support of her special motion to strike that she received the Modification with Rubinstein's signature from her husband and that she believed Rubinstein's signature was genuine. She stated that she, her husband, and Rubinstein were "long-time friends of more than [28] years and developed a long-standing personal and business relationship where we had provided each other with personal and financial assistance." She said that she did not "forge, Photoshop or do anything else to otherwise manipulate Mr. Rubinstein's signature on the Modification" and that she had a "reasonable, genuine, and good faith belief that Mr. Rubinstein agreed to the Modification and had signed it in his own hand." Yehuda said that she continued to play an active role in RS West, including by paying expenses for the property owned by RS West, and that Rubinstein played no role in the management of RS West. We may accept Yehuda's factual assertions to the extent Fab Rock did not contradict them. (See Litinsky, supra, 40 Cal.App.5th at p. 983 [in ruling on a special motion to strike, the trial court need not disregard the defendant's evidence where it does not conflict with the plaintiff's evidence].)
Even if the evidence submitted by Fab Rock indicates the Modification was a forgery, none of that evidence shows Yehuda knew the document was a forgery. Thus, even accepting Fab Rock's argument that the trial court's judgment in the Keshet Action had some kind of preclusive effect (an issue we need not reach), the trial court in that action "was not asked to decide the issue of probable cause and therefore did not draw any inferences specifically related to that issue," including whether Yehuda knew the Modification was a forgery. (Key v. Tyler (2019) 34 Cal.App.5th 505, 539.)
The court's statements in the Keshet Action were not factual findings and cannot impeach the trial court's subsequent written ruling. (See Key v. Tyler, supra, 34 Cal.App.5th at p. 539, fn. 16; Silverado Modjeska Recreation & Park Dist. v. County of Orange (2011) 197 Cal.App.4th 282, 300 ["'[A] judge's comments in oral argument may never be used to impeach the final order, however valuable to illustrate the court's theory they might be under some circumstances.'"].)
The other evidence cited by Fab Rock to show the Modification was a forgery similarly reveals nothing about Yehuda's knowledge. Neither Lubin's testimony, in which he said he did not recall drafting the Modification, nor Yoram's emails reflect Yehuda's subjective knowledge. And Yehuda's testimony in 2013 that Keshet "received nothing of value in connection with its transactions with Fab Rock" is consistent with Fab Rock's understanding of Yehuda's motivation for entering into the transactions in the first place; namely, "to hide from their creditors and their bankruptcy trustees [Keshet's] interest in [RS West]." If indeed Yehuda was "hiding" Keshet's interest in RS West from Yoram's creditors, Fab Rock should have expected her to discount the value of Keshet's holdings in Yoram's bankruptcy case. Yehuda's 2013 testimony, while it may reveal a conspiracy to defraud the Yehudas' creditors and the bankruptcy trustee, does not tend to show Yehuda knew the Modification was a forgery at the time Yehuda initiated and prosecuted the Keshet Action.
At oral argument counsel for Fab Rock represented that Fab Rock's "best evidence" Yehuda knew the Modification was not genuine was the "historical way in which [the Yehudas] acted together" in connection with the transaction with Rubinstein. But that evidence actually supports the opposite conclusion. The history of prior dealings between the Yehudas and Rubinstein includes the transaction relating to Baird LLC, in which they used the same type of option Yehuda purportedly exercised in the Modification.
Fab Rock's evidence fell far short of the kind of evidence courts have found demonstrate a lack of probable cause based on a litigant's belief or knowledge of the true facts underlying a cause of action. For example, in Arcaro v. Silva & Silva Enterprises Corp., supra, 77 Cal.App.4th 152, cited by Fab Rock, an accountant's former client forged the accountant's signature and used the accountant's social security number to obtain a line of credit at a hardware store. (Id. at p. 154.) When the store's collection agency attempted to collect on an outstanding debt, the accountant told the collector, the collector's attorney, and a store representative that the signature on the credit application was not his. The accountant also identified the person who likely had forged it, explained how that person could have acquired the personal information that appeared on the credit application, and provided 10 sample signatures, "which no reasonable person could conclude resembled the signature on the credit application." (Id. at p. 157.) The collection agency sued the accountant anyway, and the accountant later successfully sued the collection agency for malicious prosecution. (Id. at pp. 155-156.) This court held that, had the accountant "not denied the authenticity of his signature[, the collection agency] would have had probable cause to maintain the collection action against him." (Id. at p. 157.) Here, there is no evidence Rubinstein or Fab Rock ever notified Yehuda before she filed the Keshet Action that the Modification was a forgery. And although Fab Rock challenged the authenticity of the Modification in its cross-complaint, Rubinstein alleged only that he did not recall "ever knowingly" signing the Modification, not that he didn't sign it. Rubinstein also said he did not recall signing the Transfer Agreement, but he did not challenge its authenticity. Finally, while the two meet-and-confer letters from counsel for Fab Rock to counsel for Yehuda were silent on the issue of the Modification's authenticity, they pressed the other two allegations in Fab Rock's cross-complaint: the Modification lacked consideration and it violated the terms of the RS West operating agreement.
In Nunez v. Pennisi, supra, 241 Cal.App.4th 861 a contractor sued a boat owner for malicious prosecution following nonsuit of an underlying breach of contract action by the boat owner. (Id. at pp. 865-866.) In the underlying complaint the boat owner alleged the contractor "'unreasonably and without substantial justification abandon[ed]'" work on his boat. (Id. at p. 875.) At trial, however, the boat owner admitted he took the boat without informing the contractor of his plans to leave the dock and sail the boat "down south." (Id. at pp. 868, 876.) Thus, the contractor could not possibly have "abandoned" his work because there was no boat for him to work on. (Id. at p. 876.) The court held the contractor satisfied his burden in opposition to a special motion to strike to show that the boat owner pursued the underlying action based on facts he had no reasonable cause to believe were true. (Id. at p. 876.) Fab Rock did not make any kind of similar showing that Yehuda knew the Modification was a forgery. (See Litinsky, supra, 40 Cal.App.5th at p. 984 [where a court can accept a malicious prosecution plaintiff's claim that an agreement was "actually fraudulent and also accept [the defendant's] testimony concerning the facts she knew indicating that the agreement might be genuine," the court does not err in concluding the defendant had probable cause to bring the underlying action].)
DISPOSITION
The trial court's orders denying the special motions to strike by DLA Piper and Yehuda are reversed. The trial court is directed to enter a new order granting both special motions to strike. DLA Piper and Yehuda are to recover their costs on appeal.
SEGAL, J.
We concur:
PERLUSS, P. J.
Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.