Opinion
D069711
04-18-2017
ALBERT SANCHEZ, JR., et al., Plaintiffs and Respondents, v. KEVIN J. MIRCH et al., Defendants and Appellants.
Mirch Law Firm, Kevin J. Mirch, Marie C. Mirch and Erin E. Hanson for Defendants and Appellants. Teeple Hall, Grant G. Teeple and Frederick M. Reich for Plaintiffs and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 37-2015-00023816-CU-NP-CTL) APPEAL from an order of the Superior Court of San Diego County, Joel M. Pressman, Judge. Affirmed. Mirch Law Firm, Kevin J. Mirch, Marie C. Mirch and Erin E. Hanson for Defendants and Appellants. Teeple Hall, Grant G. Teeple and Frederick M. Reich for Plaintiffs and Respondents.
Albert Sanchez and his company, Advanced Medicine and Research, Incorporated (AMARC), unsuccessfully sued his three adult children and several associated business entities (collectively, the Children), and others, in three separate lawsuits arising out of their involvement with certain family businesses. After the lawsuits were terminated in the Children's favor, they filed a malicious prosecution action against Sanchez, AMARC and attorneys Kevin J. Mirch, Marie C. Mirch, Erin E. Hanson, and Mirch Law Firm LLP, who had represented Sanchez and AMARC in the underlying actions (collectively, the Mirch Defendants).
The individual attorneys and Mirch Law Firm LLP (the Mirch Attorneys) appeal from the denial of their special motion to strike the malicious prosecution complaint under Code of Civil Procedure section 425.16 (the anti-SLAPP statute). They contend that the trial court erred in denying the motion because the Children failed to meet their burden to demonstrate a probability of prevailing on the merits of one or more of the asserted claims. We conclude that the Children met their burden under the anti-SLAPP statute to state and substantiate a prima facie case with respect to their malicious prosecution claims and we therefore affirm the order.
Sanchez and AMARC did not join in the appeal.
Subsequent statutory references are to the Code of Civil Procedure unless otherwise specified.
FACTUAL AND PROCEDURAL BACKGROUND
Sanchez Family Businesses
Sanchez formed AMARC in 1995 and, shortly thereafter, the Garnett McKeen Laboratory Inc. (GML) granted AMARC exclusive distribution rights to a dietary supplement that AMARC marketed and sold under the brand name POLY-MVA. Sanchez's three children, Albert Sanchez, Jr. (Albert), Ed Sanchez (Ed), and Linda Shrader (Linda) were each involved in the business, to varying degrees. Approximately five years after forming AMARC, Sanchez began showing signs of diminished physical and mental capacity and his personal and business relationships with his children deteriorated.
We refer to Sanchez's adult children by their first names to avoid confusion. No disrespect is intended.
In 2002, Albert created two additional business entities, AMARC Enterprises, Inc. and ALO Investments LLC (ALO), and filed for a trademark for POLY-MVA on behalf of ALO. Albert asserted that he created these entities with Sanchez's consent to ensure that the Children would control, and benefit from, AMARC after Sanchez's death. Sanchez claimed that Albert created them in an effort to take over the business against Sanchez's will. Although Sanchez acknowledged signing paperwork related to the formation of the entities and the trademark, he claimed that Albert had switched the paperwork that Sanchez had signed with paperwork that ceded greater control to the Children than Sanchez had intended.
In 2005, El-Gen LLC began manufacturing POLY-MVA in place of GML, although GML retained the rights to the formula. In 2008, following a dispute with Sanchez, El-Gen and GML notified Sanchez that they were terminating their oral distribution agreement and that El-Gen would no longer sell POLY-MVA to AMARC Enterprises without a formal written agreement. In response, a consultant working for Sanchez and AMARC sent a letter demanding that El-Gen cease and desist all activities related to any product similar to POLY-MVA, including any sales to AMARC Enterprises. It is unclear from the record precisely what occurred next, but El-Gen eventually entered into a distribution agreement with AMARC Enterprises. Sanchez 1, 2, and 3
In October 2010, the Mirch Defendants filed a lawsuit alleging that Albert, Ed, Linda, GML, El-Gen, AMARC Enterprises, and a number of other individuals and entities had conspired to wrongfully take possession of AMARC's property and business relationships for their own benefit (Sanchez 1). The complaint asserted 19 claims against various combinations of named defendants for conversion, breach of contract, civil conspiracy, defamation and slander, negligent misrepresentation, intentional misrepresentation, misappropriation of likeness and identity, intentional interference with present business relations, and intentional interference with prospective business relations.
About a week later, the Mirch Defendants filed a second lawsuit against Albert, Ed, Linda, Ed's business Scaffold Solutions, Inc., and an escrow agent (Sanchez 2). The complaint in the second lawsuit alleged that Albert, with the assistance of the others, had misappropriated vehicles, pension checks, and funds from the mortgaging and refinancing of loans on certain properties, that Ed had failed to pay back loans that Sanchez had made to him for his business, and that Linda had failed to pay back a loan that Sanchez made to her to purchase property in Palm Springs. The complaint asserted nine claims against various combinations of named defendants for conversion, civil conspiracy, negligent misrepresentation, intentional misrepresentation, and breach of contract.
Finally, in June 2011, the Mirch Defendants filed a third lawsuit against Albert, Linda, ALO, ALS Holdings Limited Partnership, and various lending and title companies, to quiet title to a condominium in Imperial Beach and a commercial building in El Cajon (Sanchez 3). The complaint alleged that Sanchez was the rightful owner of these properties, and that the Children had purchased the properties with Sanchez's personal funds.
The record indicates Sanchez also filed a fourth case related to the trademark for POLY-VMA, but the malicious prosecution complaint does not assert a claim based on that case.
After the court consolidated Sanchez 1 and Sanchez 2, the Children moved for summary judgment or, in the alternative, for summary adjudication on a number of the asserted claims, asserting that the claims were barred by the statute of limitations, lack of standing or laches, or that they were not adequately pleaded. The court found that the Mirch Defendants had not raised a triable issue of material fact with respect to a number of the asserted claims and granted summary adjudication of those claims. The trial court also found that the Mirch Defendants had raised triable issues of fact with respect to at least three of the asserted claims and denied summary adjudication of those claims.
At a 17-day jury trial on the remaining claims, the Children's expert, psychiatrist Dr. Green, testified that Sanchez suffered from depression, delusions, and paranoia. The Mirch Defendants relied almost exclusively on Sanchez's testimony to prove the asserted claims and did not call any witnesses or introduce any evidence regarding Sanchez's mental state. Although they did call a number of other witnesses, the Mirch Defendants presented no corroborating documents or third-party testimony as to a number of the asserted claims. At the close of the Mirch Defendants' case, the Children moved for nonsuit on a number of the claims. The court granted the motion with respect to many of the primary claims, and denied it with respect to two other claims. At the conclusion of the trial, the jury returned a verdict in the Children's favor on all remaining counts.
Following a bench trial in Sanchez 3, the trial court entered judgment in favor of the Children on all claims. The court found that Sanchez had suffered from physical and mental problems since approximately 2000 and that he had "snapped" after he lost the contract with El-Gen. The court further found that it was clear that Sanchez had always wanted to make sure that his children would be taken care of financially, and that Sanchez was aware of, and had agreed to, putting the titles to the properties in the Children's names.
The Mirch Defendants unsuccessfully appealed from both of the adverse judgments.
The Malicious Prosecution Case
After prevailing on all asserted claims in the underlying lawsuits, the Children filed a complaint for malicious prosecution against the Mirch Defendants. The complaint alleged that the Mirch Defendants did not have probable cause to bring, or to continue to prosecute, Sanchez 1, 2, or 3 because they had no legally tenable claims, and that they brought the cases with malice and as part of a pattern of harassing behavior. The Mirch Attorneys filed a special motion to strike the complaint pursuant to section 425.16 (an anti-SLAPP motion), together with exhibits and declarations from each of the individual named attorneys, in support of the motion. After full briefing, and submission of additional declarations and exhibits from both sides, the court denied the motion, concluding that the underlying conduct was protected by section 425.16, but that the Children had demonstrated a probability of success on the merits of their claims.
DISCUSSION
I. General Legal Principles and Standard of Review
Where a complaint asserts meritless claims "brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances," the defendant may ask the court to dismiss the lawsuit by filing an anti-SLAPP motion. (§ 425.16; Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 278 (Soukup).) The court decides an anti-SLAPP motion using a two-step process. (Baral v. Schnitt (2016) 1 Cal.5th 376, 384 (Baral.) First, the defendant must make a threshold showing that the claims arise from protected activity and are within the scope of the statute. (Ibid.) If the defendant makes such a showing, the plaintiff must then demonstrate a probability of prevailing on the merits of one or more of the asserted claims to avoid dismissal. (Ibid.)
The right to petition for the redress of grievances protected by section 425.16 includes the right to file and prosecute a civil action. (§ 425.16, subd. (b)(1); Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1056.) Because claims for malicious prosecution arise from the filing of a lawsuit, they necessarily arise from activity protected by the statute. (See Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 735.) Where, as here, the only asserted cause of action is malicious prosecution, we focus our analysis on the second prong of the anti-SLAPP statute. (Id. at pp. 735, 741.)
To demonstrate a probability of prevailing on the merits, the complaint must allege facts sufficient to state a legally cognizable claim, and that claim must be "supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited." (Navellier v. Sletten (2002) 29 Cal.4th 82, 88-89.) Thus, to avoid dismissal of their malicious prosecution claims under the anti-SLAPP statute, the complaint must state, and the Children must substantiate, allegations establishing that: (1) the Mirch Defendants commenced and followed an underlying legal action to conclusion and the asserted claims were terminated on the merits in favor of the Children; (2) the Mirch Defendants did not have probable cause to bring or maintain one or more of the claims that they asserted; and (3) the Mirch Defendants brought the underlying claims with malice. (See Bertero v. National General Corp. (1974) 13 Cal.3d 43, 50 [setting forth the elements of a malicious prosecution claim].)
A party lacks probable cause to bring or maintain a claim if the party relies on factual allegations that it knows to be false or has no reasonable cause to believe is true, or if the party asserts claims that are objectively untenable based on the facts as alleged. (Soukup, supra, 39 Cal.4th at p. 292; Daniels v. Robbins (2010) 182 Cal.App.4th 204, 223 (Daniels).) Evidence that an attorney filed a claim with either open hostility or an indifference to the veracity of the allegations forming the basis of the claim is sufficient to establish malice. (Soukup, at p. 292.) It is not necessary to establish these elements as to each claim asserted in the underlying litigation; it is necessary to put forth evidence establishing only that the accused party brought at least some of the underlying claims without probable cause and with malice to substantiate a claim for malicious prosecution. (See Crowley v. Katleman (1994) 8 Cal.4th 666, 671, 695.)
We review an order granting or denying an anti-SLAPP motion de novo. (Flatley v. Mauro (2006) 39 Cal.4th 299, 325.) We consider the pleadings and admissible evidence, typically in the form of affidavits or declarations submitted in conjunction with the anti-SLAPP motion and the opposition thereto. (See Chabak v. Monroy (2007) 154 Cal.App.4th 1502, 1509-1510.) We do not reweigh the evidence, but instead accept evidence favorable to the malicious prosecution plaintiffs as true and evaluate the defendants' evidence to determine if they have defeated the plaintiffs' claims as a matter of law. (Baral, supra, 1 Cal.5th at pp. 384-385; Chabak, at p. 1510.) At the same time, however, because the tort of malicious prosecution has the potential to chill open access to the courts, we narrowly circumscribe the elements and construe the allegations of the underlying complaints in a light most favorable to the malicious prosecution defendants when determining whether the claims at issue were supported by probable cause. (Daniels, supra, 182 Cal.App.4th at p. 216; Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 164-165.) The Children have the burden of establishing a probability of success on the merits and, thus, that the trial court did not err in denying the special motion to dismiss. (See Feldman v. 1100 Park Lane Associates (2008) 160 Cal.App.4th 1467, 1477-1478.)
II. The Children Sufficiently Stated and Substantiated
a Claim for Malicious Prosecution
The Mirch Attorneys argue that the Children failed to meet their burden because they failed to state a claim for malicious prosecution and did not make a prima facie evidentiary showing substantiating such a claim.
A. The Complaint States a Claim for Malicious Prosecution Against All Defendants
1. The first and second causes of action state a claim against Hanson
The Mirch Attorneys argue that the first and second causes of action in the malicious prosecution complaint are not legally sufficient to state a claim against individually named attorney Hanson because the complaint does not specifically allege that she lacked probable cause or acted with malice in prosecuting Sanchez 1 and 2. Although the allegations under the first and second causes of action do not refer to Hanson by name, they are nonetheless sufficient to state a claim against her.
The background section of the malicious prosecution complaint, incorporated by reference into the first and second causes of action, alleges that Hanson represented Sanchez in several lawsuits against the Children; that Hanson, together with Kevin and Marie Mirch, owned, directed and/or controlled the Mirch Law Firm; and that the Mirch Defendants, collectively, filed each of the three underlying complaints. The specific allegations under the first and second causes of action assert that the Mirch Law Firm, of which Hanson was allegedly an integral member, filed and prosecuted each of the cases without probable cause and with malice. The appellate opinions from Sanchez 1 and 2, attached as exhibits to the complaint, identify Hanson as counsel for Sanchez and AMARC. (See Hoffman v. Smithwoods RV Park, LLC (2009) 179 Cal.App.4th 390, 399-400.) Viewing the complaint and the exhibits as a whole, we conclude the complaint adequately alleges that Hanson, as a controlling member of the Mirch Law Firm and a lawyer representing Sanchez and AMARC in the underlying matters, prosecuted Sanchez 1 and 2 without probable cause and with malice.
2. The complaint sufficiently states a claim against Mirch Law Firm LLP
The Mirch Attorneys also assert that the malicious prosecution complaint cannot state a claim against defendant Mirch Law Firm LLP because the firm did not exist at the time attorney Kevin Mirch filed the three underlying complaints. Those complaints, attached as exhibits to the malicious prosecution complaint, show that Kevin Mirch signed each complaint on behalf of "Mirch Law Firm." Further, even if the legal entity now called Mirch Law Firm LLP did not come into existence until February 2013, as the Mirch Attorneys allege, all three underlying cases were still pending at that time. Because the complaint alleges that the firm did not have probable cause to bring or to continue to prosecute the cases and that the institution and prosecution was done with malice, it states a claim for malicious prosecution against Mirch Law Firm LLP based, at least, on the continued prosecution of the lawsuits after February 2013. (See Zamos v. Stroud (2004) 32 Cal.4th 958, 960 (Zamos).) We therefore conclude that the malicious prosecution complaint sufficiently states a claim against Mirch Law Firm LLP.
3. The complaint pleads malice sufficiently to state a claim
Finally, the Mirch Attorneys assert that the malicious prosecution complaint does not state a claim against any of them because it contains only conclusory allegations regarding malice. We disagree.
The complaint alleges that the Mirch Attorneys filed three complaints asserting 30 causes of action against various parties, that they did not prevail on any of the asserted claims, that the lawsuits did not assert any legally tenable claim, and that they filed and prosecuted each case without probable cause, with malice and as part of a pattern of harassing behavior. The complaint attaches the three underlying complaints, verdict forms from Sanchez 1 and 2, rulings on the various motions, and the statement of decision from Sanchez 3. These documents demonstrate the questionable "shotgun approach" that the Mirch Attorneys employed in the underlying cases, that they did not raise a triable issue of fact as to a number of asserted claims, and that they did not prevail on any asserted claim. These allegations are not merely conclusory. Even if they were, the express allegation of malice is sufficient to meet the minimal pleading requirements necessary to state a claim for malicious prosecution. (See Albertson v. Raboff (1956) 46 Cal.2d 375, 383 (Raboff) [complaint sufficiently pleads malice when it expressly alleges malice and when it alleges underlying action was instituted for an improper purpose].) We therefore conclude that the malicious prosecution complaint sufficiently alleges malice.
The Mirch Attorneys argue that Drummond v. Desmarais (2009) 176 Cal.App.4th 439 (Drummond) supports the opposite conclusion, but they misconstrue the decision. In Drummond, the plaintiffs brought a malicious prosecution claim against their attorney, Desmarais, based on a malicious prosecution complaint that Desmarais had previously filed against them. (Id. at p. 442.) The court expressly did not consider whether the allegations regarding malice in the plaintiffs' malicious prosecution complaint were sufficient to state a claim. (Id. at p. 449.) Rather, the court explained that the specific conclusory and self-contradictory allegations regarding malice in the underlying complaint previously filed by Desmarais constituted evidence from which a factfinder could reasonably find that Desmarais lacked probable cause to file the underlying complaint. (Id. at pp. 453-454.) As such, Drummond does not support the Mirch Attorneys' position here.
B. The Children Presented Sufficient Evidence to Establish a Prima Facie Showing on
Each Element of their Malicious Prosecution Claim
Having concluded that the malicious prosecution complaint sufficiently states a claim against each of the Mirch Attorneys, we next address whether the Children made an adequate prima facie evidentiary showing on each element of the claim.
1. Evidence that the Mirch Defendants commenced and prosecuted the underlying
actions and that the actions terminated in the Children's favor
With respect to the first element, the malicious prosecution plaintiffs submitted copies of the complaints filed in Sanchez 1, 2 and 3 as well as transcripts, minute orders, jury verdict forms, a statement of decision, and appellate opinions related to each. Each complaint indicates on its face that it was commenced by Kevin Mirch, Marie Mirch, and the Mirch Law Firm, and Erin Hanson is also listed on the face of the complaint in Sanchez 3. The other court documents confirm that each named defendant continued to prosecute the cases throughout the proceedings in the superior and appellate courts. The evidence therefore establishes that the Mirch attorneys commenced and prosecuted the underlying actions on behalf of Sanchez and AMARC.
We turn next to the requirement that the underlying actions terminated in the Children's favor. To make the necessary prima facie showing, the Children were required to present evidence tending to establish that they prevailed on the merits of the underlying claims in the overall termination of the lawsuits. (See Daniels, supra, 182 Cal.App.4th at p. 217; Ray v. First Federal Bank (1998) 61 Cal.App.4th 315, 318 (Ray).) Regarding Sanchez 1 and 2, the evidence establishes that the court granted summary adjudication on a number of asserted claims and granted nonsuit motions on several other claims, and that the jury returned verdicts in the Children's favor on all remaining claims. With respect to Sanchez 3, the statement of decision issued after the bench trial indicates that the Children prevailed on the merits of all claims asserted in that case as well. The Children therefore made the requisite prima facie showing with respect to this element.
The Mirch Attorneys argue that at least four of the asserted claims were not terminated in the Children's favor because those claims were dismissed based on the applicable statutes of limitations. Although termination based on a purely technical ground ordinarily does not reflect on the merits of the underlying claims (see Drummond, supra, 176 Cal.App.4th at p. 456), dismissal of some claims on a technical ground does not preclude a finding that the overall termination indicates that the Children prevailed on the merits. (See Daniels, supra, 182 Cal.App.4th at p. 217; Ray, supra, 61 Cal.App.4th at p. 318 [termination in favor of defendant element met where summary judgment reflected decision based on both a statute of limitations bar and the merits of claims].) Here, the evidence indicates that the termination of the majority of the asserted claims was based on the merits and was in the Children's favor.
2. Evidence that the Mirch Defendants lacked probable
cause to assert the underlying claims
The Mirch Attorneys assert that the evidence is insufficient to establish a lack of probable cause because, they contend, they reasonably relied on Sanchez and "other witnesses and documents" to obtain the factual allegations underlying each complaint and, based on these witnesses and documents, believed that the asserted claims were tenable. The Children respond that the evidence indicates that the Mirch Attorneys could not have reasonably relied on Sanchez, given his mental condition, that they lacked any corroborating evidence, and, therefore, they could not have reasonably believed that the claims were tenable. We conclude that the Children's evidence is sufficient to support at least the minimal necessary prima facie showing that the Mirch Attorneys lacked probable cause to pursue each of the underlying actions.
a. Sanchez 1 & 2
The evidence establishes that the Mirch Attorneys filed the complaints in Sanchez 1 and 2 within a few days of one another, alleging a large number of claims against various groups of defendants. A review of the complaints reveals that many of the asserted claims are based largely on vague and conclusory statements, including, for example, that Linda "intentionally prevented AMARC from having access to its assets when she used funds to pay for her personal expenses . . . includ[ing] but not [] limited to her and her husband's credit card bills" causing damages to Sanchez and AMARC in excess of $1 million, and that various defendants made unidentified defamatory statements about Sanchez during meetings with unidentified business partners. Conclusory statements of this nature indicate a lack of probable cause. (See Drummond, supra, 176 Cal.App.4th at pp. 453-454.)
Further, there are no exhibits attached to either complaint and the Children's attorney, Teeple, asserts in his sworn declaration that the Mirch Defendants did not present any evidence at trial, beyond the testimony of Sanchez, to support the asserted claims. The Mirch Attorneys could have easily evaluated the veracity of Sanchez's allegations by attempting to obtain and review relevant documentation, such as bank statements showing whether Albert and Linda had withdrawn large sums of money from AMARC's account. The fact that they did not present any corroborating evidence, even at trial, suggests that they failed to conduct even a basic investigation, or overlooked the fact that any investigation they did undertake did not uncover evidence supporting the factual basis for the asserted claims, and instead relied exclusively on the claims of their client.
The Mirch Defendants argue, without citation to legal authority, that the trial court erred in overruling their objections to the Teeple declaration, among others. We see no abuse of discretion in the court's evidentiary rulings. We decline to address the evidentiary arguments raised for the first time in the reply brief. (See, e.g., Reichardt v. Hoffman (1997) 52 Cal.App.4th 754, 764-766.)
Although an attorney may ordinarily rely on the allegations of his or her client at the outset of a case, he or she may not continue to do so if the evidence, or lack thereof, developed through discovery indicates that the client's allegations are unfounded or unreliable. (Daniels, supra, 182 Cal.App.4th at pp. 223-224; Sycamore Ridge Apartments LLC v. Naumann (2007) 157 Cal.App.4th 1385, 1405-1406 (Sycamore Ridge).) The Children submitted evidence that Dr. Green opined that Sanchez suffered from depression, delusions, and paranoia and that Sanchez made demonstrably false and delusional statements at trial regarding his ability to send medication to remote locations through a hologram and that the FDA had stolen POLY-MVA from him and resold it in Mexico. This evidence is sufficient to substantiate the Children's claim that Sanchez had a diminished mental capacity at the time the Mirch Attorneys filed and prosecuted Sanchez 1 and 2, and that it was thus not reasonable for the Mirch Attorneys to rely solely on Sanchez's assertions as support for their claims. (See Daniels, supra, 182 Cal.App.4th at pp. 223-224.) Although Dr. Green's and Sanchez's testimony occurred near the conclusion of the trial, the parties engaged in extensive pretrial discovery. A reasonable factfinder could infer that the Mirch Attorneys were, or should have been, aware of their client's mental condition before trial concluded and that they continued to prosecute the cases, including Sanchez 3, even after being made aware of Sanchez's questionable reliability.
The Mirch Defendants argue that Teeple's declaration is insufficient evidence of the testimony at trial, but do not refute it nor point to any evidence or testimony contradicting Teeple's characterization of Dr. Green's or Sanchez's testimony.
The Mirch Attorneys submitted declarations with their anti-SLAPP motion asserting that, in addition to Sanchez's statements, they relied on other unspecified documents and witnesses and argue that the 35 exhibits lodged with their motion to strike establish a reasonable basis for their pursuit of Sanchez 1 and 2. However, they attempt to connect this evidence to only eight of the numerous asserted claims and, as to those claims that they do address, they point primarily to evidence supporting innocuous facts that are only tangentially related to the merits of the asserted claims, and not to evidence supporting the elements of the claims. For example, with respect to their claim for conversion of the Imperial Beach condominium, the Mirch Attorneys identify an e-mail from Albert to Sanchez providing a copy of the homeowner's insurance policy covering the condominium and a diagram of unknown origin indicating that ALE Holdings owned the condominium. Neither of these documents substantiates the conversion claim.
Further, even if the cited evidence did support these eight claims, there remains a large number of claims for which the Mirch Attorneys have not provided any supporting evidence beyond Sanchez's testimony. (See Soukup, supra, 39 Cal.4th at p. 292 [concluding a claim for malicious prosecution lies when but one of several alternative theories for recovery is prosecuted without probable cause and with malice].) For example, the Mirch Attorneys do not provide any documentary evidence or third-party testimony regarding the defamatory statements that the Children allegedly made, any bank statements showing withdrawals of large sums of money by the Children that they allegedly used for their own purposes, or any e-mails or other communications documenting the representations that the Children are alleged to have made regarding the use of profits generated by the POLY-MVA business. An attorney conducting a reasonable investigation would expect to uncover some additional evidence supporting at least some of Sanchez's allegations if the allegations were based in fact, and would not continue to prosecute the cases in the absence of any such corroborating evidence.
Finally, the Mirch Attorneys argue that the denial of a handful of motions for summary judgment or nonsuit, standing alone, is sufficient to establish that they had probable cause to pursue the underlying actions. (See, e.g., Paiva v. Nichols (2008) 168 Cal.App.4th 1007, 1020 [concluding certain nonfinal rulings on the merits may serve as evidence of probable cause].) However, the fact that the court denied summary judgment as to three of the numerous asserted claims in Sanchez 1 and 2 does not preclude a finding that the Mirch Attorneys lacked probable cause with respect to the other asserted claims. (See Soukup, supra, 39 Cal.4th at p. 292.) The court's granting of motions attacking other asserted claims for a lack of evidentiary support indicates a lack of probable cause with respect to those claims. (See Carson v. Facilities Development Co. (1984) 36 Cal.3d 830, 838-839 [granting of a nonsuit indicates plaintiff did not present evidence supporting a legally tenable claim].)
Based on the foregoing, we conclude that the Children presented sufficient evidence from which a factfinder could conclude that any reasonable attorney in the Mirch Attorneys' position would have known, at some point during the prosecution of the lawsuits, that one or more of the asserted claims was not legally tenable or not supported by credible evidence. Thus, the Children have made the required prima facie showing that the Mirch Attorneys lacked probable cause. (Raboff, supra, 46 Cal.2d at p. 382 ["probable cause requires a reasonable belief in the validity of the claim asserted"]; Daniels, supra, 182 Cal.App.4th at pp. 222-224 [finding a lack of probable cause where there is insufficient evidence or information affording an inference to support a favorable judgment on the asserted claims].)
b. Sanchez 3
The evidence supporting a finding of no probable cause with respect to Sanchez 1 and 2 supports the same conclusion with respect to Sanchez 3. The Mirch Attorneys filed Sanchez 3 approximately six months after Sanchez 1 and 2. By the time of the bench trial in Sanchez 3, the Mirch Attorneys had the knowledge that they gained from prosecuting Sanchez 1 and 2 regarding Sanchez's mental state and the lack of evidence supporting his allegations. Yet they continued to prosecute Sanchez 3.
In addition, the statement of decision that the court issued following the bench trial supports a finding of a lack of probable cause. In it, the court found that Sanchez had suffered periods of confusion beginning in 2000. The court noted that after GML and El-Gen informed Sanchez that they intended to terminate their prior arrangement with AMARC in 2008, Sanchez "snapped" and began suing "everybody he could get his hands on." The court also found that Sanchez failed to corroborate an alleged wrongful transfer of $800,000 of his money, on which his claim was based, with bank statements or any other documentary evidence and that the Children presented evidenced establishing that they never received the funds. Thus, the statement of decision indicates that the Mirch Attorneys again relied solely on Sanchez's statements as a basis for pursuing Sanchez 3 despite evidence from the previous cases and additional evidence put forward by the Children in Sanchez 3 indicating that there was no factual basis for the claim alleged in the complaint.
The Mirch Attorneys argue that the statement of decision is not sufficient evidence of a lack of probable cause because it shows only that the court determined that the suit lacked merit after the evidentiary record was developed. We disagree. As noted, Sanchez 3 trailed Sanchez 1 and 2 such that the Mirch Attorneys were already aware of Dr. Green's and Sanchez's testimony from the previous trial by the time of the trial in Sanchez 3, if not earlier. The statement of decision in Sanchez 3 indicates that there was no corroborating evidence to support the claims asserted in Sanchez 3, which constitutes further evidence that no reasonable attorney would have continued to pursue the case based solely on Sanchez's testimony. The Mirch Attorneys had an obligation to discontinue prosecution of the suit once it became apparent that there was no probable cause to pursue the asserted claims. (See Zamos, supra, 32 Cal.4th at p. 960.)
We thus conclude that the Children made the minimal necessary prima facie showing to substantiate their claims that the Mirch Attorneys lacked probable cause in the continued prosecution of Sanchez 3. (See Drummond, supra, 176 Cal.App.4th at p. 449; Daniels, supra, 182 Cal.App.4th at p. 224.)
3. Evidence of malice
The Mirch Attorneys contend that the Children did not provide evidence of the Mirch Attorneys' subjective intent or purpose in prosecuting the underlying actions and thus, did not make the requisite prima facie showing of malice. However, because malice is rarely admitted, there is no requirement that a malicious prosecution plaintiff submit overt evidence that the defendant actually harbored an improper motive. (HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 218.) Instead, malice is typically proven by circumstantial evidence. (Ibid.)
The circumstantial evidence is sufficient to substantiate the Children's malice claims. The evidence that the Mirch Attorneys acted without probable cause is itself sufficient to raise an inference of malice, and while this inference, alone, is not enough to make a prima facie showing (see HMS Capital, supra, 118 Cal.App.4th at p. 218), there is additional circumstantial evidence here that is sufficient to do so. First, evidence that the Mirch Attorneys failed to conduct a reasonable investigation and instead, relied almost exclusively on the statements of Sanchez, despite being aware of demonstrably false and delusional statements that he made during the course of their representation, tends to show an indifference to the veracity of the allegations forming the basis of the asserted claims. This is indicative of malice. (Sycamore Ridge, supra, 157 Cal.App.4th at pp. 1407, 1409.) The "shotgun" approach that the Mirch Attorneys employed in filing three separate complaints in the span of six months alleging numerous, and in some cases, substantially unrelated, causes of action against numerous defendants in a conclusory manner also suggests malice. (Ibid.) Finally, the joint trial readiness conference report filed in Sanchez 1 and 2 indicating that Sanchez and AMARC were seeking $50 million in compensatory damages, an enormous sum unsupported by the specific allegations in the Sanchez 1 and 2 complaints or by evidence in the records, as well as punitive damages, provides further support for the conclusion that the Mirch Attorneys acted with malice.
Based on the foregoing, we conclude that the Children made the minimal necessary prima facie showing to substantiate their claims that the Mirch Attorneys acted with malice. We therefore conclude that the Children stated and substantiated a claim for malicious prosecution sufficient to overcome the anti-SLAPP motion.
DISPOSITION
The order is affirmed.
/s/_________
AARON, J. WE CONCUR: /s/_________
BENKE, Acting P. J. /s/_________
O'ROURKE, J.