Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County No. SC105242, John L. Segal, Judge.
Law Offices of Edward J. Chong & Associates, Edward J. Chong; Henry M. Lee, Law Corporation, Henry M. Lee, and Robert Myong for Defendants and Appellants.
Law Offices of George R. Royce and George R. Royce for Plaintiffs and Respondents.
BIGELOW, P. J.
Danny and Laura Shamam filed a malicious prosecution action against Aggie Rees and her attorneys, the law corporation Henry M. Lee and Henry M. Lee individually (collectively, the Lee defendants). The Lee defendants filed a special motion to strike pursuant to Code of Civil Procedure section 425.16 (section 425.16). They now appeal from the trial court’s denial of that motion. We affirm the trial court order.
Rees is not a party to this appeal.
FACTUAL AND PROCEDURAL BACKGROUND
I. Small Claims Proceeding and the Underlying Rees Action
In or around January 2008, Danny and Laura Shamam were interested in renting a home Aggie Rees was attempting to lease (the property). After negotiations, the Shamams and Rees signed a lease indicating that the Shamams would pay $3,500 per month in rent, provide two months’ rent as a security deposit, and pay six months’ rent in advance. The lease also indicated the Shamams were to provide their own washer and dryer for the property without altering the premises. Rees later asked the Shamams to sign an amendment to the lease requiring a larger security deposit and increased rent. The Shamams gave Rees the $7,000 security deposit and the $21,000 advance rent payment, which she accepted. However, the Shamams did not sign the lease amendment and Rees refused to allow them to move into the house. She returned the $21,000, but kept the security deposit.
In April 2008, the Shamams filed a small claims proceeding seeking return of their security deposit with interest. They prevailed on their claim. In July 2008, Rees filed a complaint against the Shamams for breach of contract and fraud. The complaint-which the Lee defendants filed on Rees’s behalf-alleged: “Despite executing the lease and the property being available for move-in, Defendant Shamams breached the said lease by refusing to move in and paying rent.” It further alleged the Shamams committed fraud by representing they would “execute the lease agreement and move in immediately to the property” when they had no intention of performing under the lease. With respect to the washer and dryer, the complaint alleged only that the “Shamams represented that if Rees would allow the Shamams to have their own washer and dryer at the property, they would move in immediately and sign a lease for one full year at $3,500 per month.” According to the complaint, Rees lost an opportunity to sell the property due to the Shamams’ actions and suffered over $60,000 in compensatory damages.
Rees also appealed the small claims proceeding. At the trial de novo in November 2008, Rees testified that originally she wanted a $7,000 security deposit, but she then wished to increase it to $7,400 because the Shamams decided not to bring their own washer and dryer. Rees admitted that while all parties had signed a lease, the Shamams did not sign the amendment Rees proposed that would have required a larger security deposit. Rees asserted Danny Shamam had verbally agreed to the amendment, but she conceded he did not sign it. Rees additionally admitted she accepted the $7,000 security deposit and the $21,000 cashier’s check but did not allow the Shamams to move into the property. An attorney from Lee’s office was present and spoke briefly on Rees’s behalf. Although the attorney said his appearance was limited to explaining the status of a notice of related case, he also argued that the key issue was why Rees kept the security deposit. Counsel asserted Rees kept the money for “damages,” and although the Shamams never signed the lease amendment they were still “bound with the original lease.” The court found the Shamams were entitled to the return of their security deposit with interest.
Meanwhile, the parties litigated Rees’s breach of contract and fraud action. In January 2009, the Shamams deposed Rees. On March 30, 2009, the Lee defendants filed an amended complaint on Rees’s behalf. The amended complaint clarified that Rees’s son owned the property in question, but Rees was his assignee. In all other respects, the complaint was unchanged. On April 1, 2009, the Lee defendants moved to be relieved as Rees’s counsel. According to Lee, Rees had stopped communicating with counsel, refused to pay attorney fees, and refused to provide information for discovery. On April 16, 2009, Rees’s deposition continued. On April 30, the trial court granted the Lee defendants’ withdrawal motion. In May 2009, the court ordered Rees to produce documents the Shamams had requested in discovery. Trial was continued from June to July 2009. In June 2009, Rees voluntarily dismissed her action without prejudice.
II. The Malicious Prosecution Action and Special Motion to Strike
In October 2009, the Shamams filed a malicious prosecution action against Rees and the Lee defendants. On December 8, 2009, the Lee defendants filed a special motion to strike the complaint pursuant to section 425.16. On December 24, 2009, Rees, in pro. per., filed another breach of contract and fraud complaint against the Shamams asserting allegations identical to those of the earlier action.
In support of the special motion to strike, Lee submitted a declaration indicating the Lee defendants had represented Rees in several lawsuits prior to the action against the Shamams, all of which were resolved in her favor. Lee attested that in the previous actions Rees provided his office with facts, documentation, and witnesses, and he opined that he therefore had no reason to believe that Rees would make false representations to him about her dispute with the Shamams. Lee declared that he believed Rees could assert a breach of contract claim based on the Shamams’ failure to install a washer and dryer at the property. According to Lee, he felt that “Rees had, at a bare minimum, a viable claim that the lease was ambiguous as to the washer and dryer condition, therefore, the negotiations and discussions leading up [to] the lease would have to be evaluated by a trier of fact.” As to the fraud claim, Lee attested that Rees was emphatic that getting a specially sized washer and dryer for the property was extremely important to her. Rees believed the Shamams had agreed to both provide the special appliances and leave them at the property after their tenancy ended in exchange for a $6,000 annual reduction in rent. Lee planned to argue that the Shamams attempted to move in with “no intent of satisfying the washer and dryer condition.”
Although Rees did not answer or otherwise respond to the Shamams’ malicious prosecution complaint, she submitted a declaration in support of the Lee defendants’ special motion to strike. Rees explained her version of the lease negotiations with the Shamams, and the dispute regarding the washer and dryer. Rees declared that as the litigation continued she could no longer pay her attorneys and she stopped communicating with them because she could not pay their fees. She further stated: “I know my attorneys filed a motion to withdraw which was granted. After that motion was granted, I could not find another attorney who I could afford who would take this case. I ultimately made the decision to dismiss this case without prejudice for the sole and exclusive reason that I could not afford to pay for my attorney’s fees and could not afford to hire a new attorney to continue with the case. If I could pay for my attorney’s fees, I would never have dismissed this lawsuit and would have prosecuted the case all the way through trial. My decision to dismiss this case had nothing to do with my having any second thoughts about the Shamams’ innocence. In fact, once I locate a new attorney to handle this matter, I intend to re file the lawsuit and prosecute my lawsuit all the way through trial against the Shamams.”
In opposition to the special motion to strike, the Shamams argued that the Rees complaint and amended complaint asserted only that the Shamams breached the lease and committed fraud by failing to take possession of the house or pay rent. They asserted that the small claims proceeding, documentary evidence, and Rees’s own admissions disproved the complaint’s allegations, leading to the conclusion that the Lee defendants maliciously prosecuted them.
The trial court found the Shamams demonstrated a probability of prevailing on their malicious prosecution claim and denied the special motion to strike. The Lee defendants timely appealed.
DISCUSSION
I. Applicable Legal Principles
A. Section 425.16: The Anti-SLAPP Statute
A strategic lawsuit against public participation (SLAPP) “seeks to chill or punish a party’s exercise of constitutional rights to free speech and to petition the government for redress of grievances.” (Rusheen v. Cohen (2006) 37 Cal.4th 1048, 1055 (Rusheen).) A court must undertake a two-step process in evaluating an anti-SLAPP motion. First, the court must determine “whether the defendant has made a threshold showing that the challenged cause of action arises from protected activity.... If the court finds the defendant has made the threshold showing, it determines then whether the plaintiff has demonstrated a probability of prevailing on the claim.” (Id. at p. 1056; Hutton v. Hafif (2007) 150 Cal.App.4th 527, 537.)
The parties agree that the Shamams’ malicious prosecution action “arises from” protected activity, as defined by section 425.16. (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 734-735, 741 (Jarrow).) However, they dispute whether the Shamams demonstrated a probability of prevailing on their claims. To succeed on the second prong of section 425.16, a plaintiff must “ ‘ “state[] and substantiate [] a legally sufficient claim.” [Citation.] “Put another way, the plaintiff ‘must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by the plaintiff is credited.’ ” [Citation.]’ [Citation.]” (Zamos v. Stroud (2004) 32 Cal.4th 958, 965 (Zamos).) “ ‘The court’s responsibility is to accept as true the evidence favorable to the plaintiff.’ [Citation.]” (Daniels v. Robbins (2010) 182 Cal.App.4th 204, 215 (Daniels).) “A plaintiff ‘need only establish that his or her claim has “minimal merit” [citation] to avoid being stricken as a SLAPP. [Citations.]’ (Soukup v. Law Office of Herbert Hafif (2006) 39 Cal.4th 260, 292 (Soukup).” (Sycamore Ridge Apartments LLC v. Naumann (2007) 157 Cal.App.4th 1385, 1397 (Sycamore Ridge).)
“In deciding the question of potential merit, the trial court considers the pleadings and evidentiary submissions of both the plaintiff and the defendant [citation]; though the court does not weigh the credibility or comparative probative strength of competing evidence, it should grant the motion if, as a matter of law, the defendant’s evidence supporting the motion defeats the plaintiff’s attempt to establish evidentiary support for the claim. [Citation.]” (Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 821.)
We review the trial court’s ruling de novo. (Rusheen, supra, 37 Cal.4th at p. 1055; Antounian v. Malletier (2010) 189 Cal.App.4th 438, 448.)
B. Malicious Prosecution
“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. [Citation.]” (Soukup, supra, 39 Cal.4th 260, 292.) “[A]n attorney may be held liable for malicious prosecution for continuing to prosecute a lawsuit discovered to lack probable cause.” (Zamos, supra,32 Cal.4th at p. 970.)
II. The Shamams Demonstrated a Probability of Prevailing on their Claim
A. Favorable Termination
The Lee defendants contend the Shamams did not establish that Rees’s breach of contract and fraud action terminated in their favor. We disagree.
i. “Termination”
The Lee defendants argue that Rees’s action never “terminated” because two months after the Shamams filed their malicious prosecution complaint Rees filed a complaint identical to the one in the underlying action. The Lee defendants cite no legal support for their argument. In fact, caselaw discussing termination in a malicious prosecution context is fatal to the contention. For example, in Kennedy v. Byrum (1962) 201 Cal.App.2d 474, 480 (Byrum), the court explained:
“ ‘[I]t is now the well-established rule that a verdict or final determination upon the merits of the malicious civil suit or criminal prosecution complained of is not necessary to the maintenance of an action for malicious prosecution, but that it is sufficient to show that the former proceeding had been legally terminated. The fact that such legal termination would not be a bar to another civil suit or criminal prosecution founded on the same alleged cause is no defense to the action for malicious prosecution; otherwise a party might be continuously harassed by one suit after another, each dismissed before any opportunity for a trial on the merits.’ [Citation.].... ‘While it is necessary to prove that the former malicious action was terminated favorably to the party claiming injury, it need not be shown that it was finally decided on its merits. It is sufficient if it was disposed of in such a manner as to require the plaintiff to institute another action to try the issues presented. [Citations.]’ ”
These principles are applicable here. That Rees’s voluntary dismissal was without prejudice, giving her the ability to pursue the underlying claims anew, has no bearing on whether the first action legally terminated. To try the issues from the first suit after the dismissal, Rees was required to institute another action. The first action thus “terminated” for purposes of a malicious prosecution claim. (Hurgren v. Union Mutual Life Ins. Co., supra, 141 Cal. at pp. 587-588; Byrum, supra, 201 Cal.App.2d at p. 480; Hudson v. Zumwalt (1944) 64 Cal.App.2d 866, 872; see also Sierra Club Foundation v. Graham (1999) 72 Cal.App.4th 1135, 1151-1152.)
Indeed, in an early case, Hurgren v. Union Mutual Life Ins. Co. (1904) 141 Cal. 585, 588, our high court considered a similar argument to the one the Lee defendants make here. The court noted: “It is suggested that the plaintiff might commence the suit upon a perfectly good cause of action, and for some legal reason dismiss it, and afterwards bring and successfully prosecute to judgment a second suit; while in the meantime the defendant might have brought and maintained an action for the malicious prosecution founded upon the first action. If such an improbable thing could be imagined, the law would not thereby be changed. But it must be remembered that plaintiff in the action for malicious prosecution must show affirmatively, not only that the action complained of had been terminated, but that it commenced maliciously, and without probable cause; which could not well be done in the case suggested.”
The only case the Lee defendants cite to support their argument, Babb v. Superior Court (1971) 3 Cal.3d 841, is inapposite. In Babb, the defendant in a medical malpractice action filed a cross-complaint seeking a declaratory judgment that the action constituted malicious prosecution. (Id. at p. 844.) Our high court found this tactic violated the established principle that a malicious prosecution plaintiff must plead and prove that the prior judicial proceeding in question terminated in the plaintiff’s favor. (Id. at pp. 845-846.) Babb did not concern a situation in which the underlying action ended, a malicious prosecution action was filed, and a new case was initiated based on the same claims advanced in the first underlying action.
ii. “Favorable”
The Lee defendants further contend Rees’s action did not terminate in the Shamams’ favor. We again disagree. “ ‘The basis of the favorable termination element is that the resolution of the underlying case must have tended to indicate the malicious prosecution plaintiff’s innocence. [Citations.] When prior proceedings are terminated by means other than a trial, the termination must reflect on the merits of the case and the malicious prosecution plaintiff’s innocence of the misconduct alleged in the underlying lawsuit.’ [Citation.] If the evidence of the circumstances of the termination is conflicted, ‘ “the determination of the reasons underlying the dismissal is a question of fact.” ’ [Citation.]” (Daniels, supra, 182 Cal.App.4th at p. 217.)
Rees voluntarily dismissed her suit against the Shamams. In general, “[a] voluntary dismissal is presumed to be a favorable termination on the merits, unless otherwise proved to a jury. [Citations.] This is because a ‘ “[a] dismissal for failure to prosecute... does reflect on the merits of the action [and in favor of the defendant].... The reflection arises from the natural assumption that one does not simply abandon a meritorious action once instituted.” ’ [Citation.]” (Sycamore Ridge, supra, 157 Cal.App.4th at p. 1400.) Despite this presumption, to be a “favorable termination,” a voluntary dismissal still must reflect “ ‘ “ ‘the opinion of someone, either the trial court or the prosecuting party, that the action lacked merit or if pursued would result in a decision in favor of the defendant.’ ” ’ ” [Citation.]... [¶]... The focus is not on the malicious prosecution plaintiff’s opinion of his innocence, but on the opinion of the dismissing party.’ [Citation.]” (Contemporary Services Corporation v. Staff Pro Inc. (2007) 152 Cal.App.4th 1043, 1056 (Contemporary Services).)
Lee and Rees declared that Rees voluntarily dismissed her action against the Shamams for financial reasons alone, and not because she believed her action lacked merit. While, if credited, this explanation could prevent a characterization of the dismissal as a “favorable termination,” (Oprian v. Goldrich, Kest & Associates (1990) 220 Cal.App.3d 337, 344-345), we find the Shamams established a prima facie showing that Rees in fact voluntarily dismissed her complaint for reasons reflecting on the merits of the case. At least three pieces of evidence support the Shamams’ case.
First, soon after Rees filed her complaint she received a trial de novo of the small claims proceeding in which the Shamams had successfully recovered their security deposit. In the trial de novo, Rees admitted the Shamams had signed a lease, she wanted to amend the lease because of an issue with the washer and dryer, the Shamams did not agree to sign an amended lease, and Rees then refused to return their security deposit. These admissions directly contradicted the allegations in her complaint that the Shamams breached the lease by failing to move in and pay rent or that they committed fraud by falsely representing they would execute the lease and move in. Neither the complaint nor the amended complaint alleged any other legal theories of recovery or the facts to support any other legal theories.
Second, at her deposition, Rees again admitted that the Shamams gave her both a $7,000 security deposit and a check for $21,000, which represented six months of rent in advance. According to the fully executed lease, this was what was required of the Shamams. These facts contradicted the allegation in the complaint and amended complaint that the Shamams refused to pay rent.
Rees and the Lee defendants subsequently claimed that a provision in the fully executed lease requiring the Shamams to provide their own washer and dryer for the property was intended by the parties to mean that the Shamams would not only provide a washer and dryer that would fit within the particular confines of the kitchen at the property before they ever moved in, but also that they would leave the washer and dryer with the property at the conclusion of their tenancy. Even if this were a viable theory, neither Rees’s original complaint nor the amended complaint alleged it.
Third, shortly before Rees dismissed her case, she stopped complying with discovery obligations. Lee admits that Rees was uncooperative with her own counsel at her deposition. In May 2009, Rees also lost a motion to compel and was ordered to produce additional documents.
This evidence creates a prima facie showing that Rees’s voluntary dismissal was in fact a reflection of her evaluation of the merits of her claims rather than purely a financial decision.
On appeal, the parties rely on two different “favorable termination” cases to support their arguments. The Lee defendants contend Contemporary Services is controlling, while the Shamams rely on Sycamore Ridge. The Shamams’ evidentiary showing renders this case more like Sycamore Ridge than Contemporary Services. We briefly discuss both cases below.
In Contemporary Services, the parties were engaged in two civil actions simultaneously. Contemporary Services Corporation (CSC) sued Staff Pro and related individuals in 2001. In 2004, Staff Pro and others sued CSC and related individuals. (Contemporary Services, supra, 152 Cal.App.4th at pp. 1047-1048.) Trial of both actions was scheduled to begin in 2006. (Id. at p. 1049.) According to Staff Pro’s counsel, Staff Pro did not have the financial resources to prepare for and try both actions at the same time. As a result, Staff Pro voluntarily dismissed its action without prejudice. (Ibid.) CSC later filed a malicious prosecution action against Staff Pro. Staff Pro responded with a special motion to strike the complaint.
The Court of Appeal found CSC had not demonstrated a probability of prevailing on the malicious prosecution claim because there was no evidence that the underlying action terminated in CSC’s favor. The record showed only that Staff Pro could not afford to pursue the 2004-filed action, not that the Staff Pro defendants dismissed the case because they lost faith in their claims. (Contemporary Services, supra, 152 Cal.App.4th at p. 1057.) The court concluded the record did not establish the Staff Pro defendants “sustained any adverse rulings in the case, or otherwise had reason to believe their claims would be unsuccessful.” (Ibid.) Thus, the voluntary dismissal could not be characterized as a favorable termination.
A different result was reached in Sycamore Ridge. In that case, before the voluntary dismissal, the malicious prosecution defendants submitted discovery responses on behalf of their client (Powell) that made it clear there was no factual basis to support the claims asserted on her behalf in the complaint against Sycamore Ridge. (Sycamore Ridge, supra, 157 Cal.App.4th at p. 1393.) Powell also failed to appear for her own deposition. Around two months later, Powell voluntarily dismissed her claims without prejudice. Sycamore Ridge filed a malicious prosecution action against Powell’s attorneys and they in turn filed a special motion to strike the complaint. (Id. at p. 1395.)
The court of appeal concluded Sycamore Ridge made a prima facie showing that Powell’s action terminated in its favor. Although there were no adverse rulings against Powell, the court found Powell’s failure to appear for her deposition and her interrogatory responses permitted “the reasonable inference that the allegations of mold contamination and personal injuries brought on behalf of Powell were groundless, and that the voluntary dismissal was motivated by a recognition that most of the claims made on Powell’s behalf in the complaint were meritless.” (Sycamore Ridge, supra, 157 Cal.App.4th at p. 1400.) In a footnote, the court also distinguished Contemporary Services on its facts, noting that “Sycamore Ridge... presented evidence that defendants had reason to believe that a number of Powell’s claims would be unsuccessful,” unlike the malicious prosecution plaintiff in Contemporary Services. (Sycamore Ridge, supra, at p. 1401, fn. 8.)
The facts before us are more closely aligned with those of Sycamore Ridge than Contemporary Services. Although Lee and Rees have declared that Rees voluntarily dismissed her suit because she could not afford attorneys’ fees, there are also indications that Rees (and the Lee defendants) had reason to believe her claims would be unsuccessful. (See Drummond v. Desmarais (2009) 176 Cal.App.4th 439, 456-457 [nebulousness and implausibility of claimed financial motive for dismissal distinguished case from Contemporary Services].) Rees and Laura Shamams’ sworn testimony during the small claims appeal defeated Rees’s claims as alleged in the complaint. The written lease that all parties signed did not support Rees’s interpretation of the washer/dryer negotiations, even though Rees testified at her deposition that her real estate attorney prepared the lease at her direction. And, like Powell in Sycamore Ridge, Rees stopped complying with discovery obligations before dismissing the complaint. Rees then suffered an adverse ruling on a motion to compel. While in Contemporary Services the record offered no reason for the voluntary dismissal other than the defendant’s counsel’s statement that the defendant could not afford to prosecute and defend two cases simultaneously, here there is evidence that suggests Rees and her attorneys in fact lost faith in the merit of her claims. This is a sufficient prima facie showing of favorable termination.
On appeal, the Lee defendants assert Rees personally drafted the terms of the lease. However, the Shamams offered an excerpt from Rees’s deposition in which she testified all of the terms of the lease were prepared by her attorney according to her instructions. We do not resolve this or other factual disputes at this juncture. Instead, we consider whether, if credited, the Shamams’ evidence offered in opposition to the special motion to strike establishes that their malicious prosecution claim has minimal merit. (Soukup, supra, 39 Cal.4th at p. 292; Daniels, supra, 182 Cal.App.4th at p. 215.)
B. Lack of Probable Cause
The Shamams also established a prima facie showing that the Lee defendants brought or maintained the Rees action without probable cause.
“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.’ [Citation.]” (Soukup, supra, 39 Cal.4th at p. 292.) A suit that turns out to lack merit may not necessarily have lacked probable cause. “ ‘ “Counsel and their clients have a right to present issues that are arguably correct, even if it is extremely unlikely that they will win....” ’ [Citations.]” (Jarrow, supra, 31 Cal.4th at p. 742.) Thus, “ ‘[t]he test applied to determine whether a claim is tenable is “whether any reasonable attorney would have thought the claim was tenable.” ’ ” (Zamos, supra, 32 Cal.4th at p. 971.)
The Shamams have sufficiently shown that no reasonable attorney would have thought Rees’s claims were tenable. No later than the small claims appeal proceeding, it was undisputed that Rees and the Shamams signed a lease requiring a $7,000 security deposit and $3,500 per month for rent. It was also undisputed that the Shamams tendered the $7,000 security deposit and six months of rent in advance, and that Rees accepted the monies. Rees further admitted that she attempted to renegotiate the lease because of an issue with the washer and dryer and, when the Shamams refused to sign a lease amendment, she did not allow them to move into the house. On these facts, the theory set forth in Rees’s complaint-that the Shamams did not pay rent and refused to take possession of the house-was objectively untenable.
A lawyer from the Lee defendants’ office was present and appeared at the proceeding, so we may infer the Lee defendants knew of Rees’s admissions at the trial de novo. Despite this knowledge, the Lee defendants did not amend the complaint for some time. When they did amend the complaint, it still asserted only that the Shamams breached the lease by failing to move in and pay rent, and that they committed fraud by falsely representing that they would execute the lease and move in to the property immediately. Even if at the time Rees’s suit was filed the facts known to the Lee defendants constituted probable cause to prosecute her claims, Rees’s admissions at the small claims appeal rendered the claims asserted in the complaint untenable. (Zamos, supra, 32 Cal.4th at p. 973 [malicious prosecution includes continuing to prosecute a lawsuit discovered to lack probable cause].)
The Lee defendants now contend that Rees’s case was really about an alleged ambiguity in the lease which caused Rees to believe the Shamams had agreed to provide a “specially sized” washer and dryer for the property before moving in and to leave the appliances after their tenancy was over. However, “ ‘[t]he test in a malicious prosecution action is not whether defendant had reasonable grounds to seek some kind of relief in the original action; it is instead whether he had reasonable grounds for asserting the theory for relief contained in the complaint and tried to the factfinder.... [C]ounsel for an unsuccessful plaintiff cannot shield himself from a malicious prosecution action by arguing that even if the only theory advanced in the complaint and at trial was groundless and maliciously asserted, he nonetheless possessed some other undisclosed and unlitigated, but tenable, theory. He must stand or fall on the theory advanced and if that theory is one which he knows, or should know, is groundless and he nevertheless maliciously advances it, he must fall.’ [Citations.]” (Franklin Mint (184 Cal.App.4th 349-350.)
Rees’s pleadings did not plead any legal theory or facts relating to an ambiguity in the lease, the washer and dryer provision as a material term of the contract that was to be performed at a specific time, or fraud relating to the provision of the washer and dryer in exchange for discounted rent. Although we liberally construe the pleadings in favor of the pleader, “[p]robable cause for the initiation of an action depends upon the legal tenability of the action which was actually brought.” (Leonardini v. Shell Oil Co. (1989) 216 Cal.App.3d 547, 571.) The most liberal construction of Rees’s complaints does not include the legal theories or facts the Lee defendants now claim were the heart of the case. Indeed, Lee’s assertions that he and the firm’s attorneys felt they could make arguments based on negotiations about the washer and dryer that were never reduced to writing are significantly undercut by the pleadings the Lee defendants drafted, which state only that the “Shamams represented that if Rees would allow the Shamams to have their own washer and dryer at the property, they would move-in immediately and sign a lease for one full year at $3,500.00 per month.”
Given the pleadings, the actual lease, Rees’s admissions during the small claim proceedings, and Rees’s deposition testimony, we conclude the Shamams demonstrated a prima facie case that Lee brought or continued litigating Rees’s action without probable cause. (Zamos, supra, 32 Cal.4th at p. 970; Daniels, supra,182 Cal.App.4th at p. 223.)
C. Malice
Finally, the Lee defendants assert the Shamams did not make a prima facie showing of malice. Although this is a close call, we conclude the Shamams made a sufficient showing to defeat the special motion to strike.
“ ‘The “malice” element... relates to the subjective intent or purpose with which the defendant acted in initiating the prior action. [Citation.] The motive of the defendant must have been something other than that of bringing a perceived guilty person to justice or the satisfaction in a civil action of some personal or financial purpose. [Citation.] The plaintiff must plead and prove actual ill will or some improper ulterior motive.” [Citations.] Malice ‘may range anywhere from open hostility to indifference. [Citations.] Malice may also be inferred from the facts establishing lack of probable cause.’ [Citation.]” (Soukup, supra,39 Cal.4th at p. 292.) But “a lack of probable cause in the underlying action, by itself, is insufficient to show malice.” (Daniels, supra, 182 Cal.App.4th at p. 225.) Likewise, negligence in conducting factual research is not enough on its own to show malice. (Ibid.) However, “proof of malice can consist of evidence a party knowingly brings an action without probable cause.” (Id. at p. 226.) Further, “malice can be inferred when a party continues to prosecute an action after becoming aware that the action lacks probable cause.” (Ibid.)
In this case, Lee’s associate was present at Rees’s small claims appeal and participated on a limited issue. Thus, shortly after filing Rees’s initial complaint, and before filing the amended complaint, the Lee defendants knew that, contrary to the complaint’s allegations, the Shamams had not failed to pay rent or failed to move into the property on their own accord. The Lee defendants also knew that the fully executed lease contained only one provision related to the washer and dryer, and that provision stated simply that the Shamams would provide their own washer and dryer without altering the premises. Despite this knowledge, the Lee defendants prosecuted Rees’s claims as framed by the complaint for several months after the small claims appeal and before withdrawing from the case. Further, the Lee defendants filed the amended complaint without any revised or additional allegations or legal theories.
Sycamore Ridge is again instructive. In Sycamore Ridge, the client Powell’s complaint contained claims that were clearly untenable, as demonstrated by her discovery responses. Although the attorneys drafted Powell’s discovery responses and therefore knew she had no compensable claims under most of the causes of action of the complaint, they continued to prosecute the case on her behalf. The court held that from the malicious prosecution plaintiff’s evidence, “one could infer that the [attorney] defendants were at best indifferent as to whether the claims alleged on [the client’s] behalf had any basis in fact.” (Sycamore Ridge, supra, 157 Cal.App.4th at p. 1408.) The same evidence permitted a sufficient showing of malice to defeat a special motion to strike with respect to the attorneys who later took over the case. The court explained that if the second set of attorneys “knew the relevant facts and did not take immediate steps to dismiss [the client’s] unmeritorious claims, one could infer that the continued prosecution of those claims was motivated by a malicious intent. If the [second set of attorneys] were not aware of the relevant facts because they failed to adequately familiarize themselves with the case before associating in as cocounsel, this would indicate a degree of indifference from which one could also infer malice.” (Ibid.)
As in Sycamore Ridge, the Lee defendants knew the claims alleged in Rees’s complaint were not tenable at the time of the small claims appeal at the latest. Despite this knowledge, the Lee defendants did not amend the complaint to include different allegations or dismiss the complaint. The Lee defendants argue we must liberally construe the pleadings and that any pleading deficiency cannot suggest malice, particularly since they could have amended the pleadings to include additional theories of recovery. This argument ignores the fact that even after the small claims appeal, the Lee defendants never sought leave to amend the complaint to include what they now claim was the pivotal theory of the case. Instead, they presented an entirely unsupported theory of recovery and continued prosecuting the case on Rees’s behalf for several months. At a minimum, the Lee defendants’ actions indicate indifference from which one could infer malice.
We therefore conclude the Shamams have demonstrated a probability of prevailing on their malicious prosecution claim. The Lee defendants have not defeated the Shamams’ evidentiary showing as a matter of law.
DISPOSITION
The trial court order is affirmed. Respondents to recover their costs on appeal.
We concur: RUBIN, J., FLIER, J