Opinion
A151225
07-17-2018
GERALD SHIRAR, Plaintiff and Respondent, v. THOMAS B. SHERIDAN, Defendant and Appellant.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Solano County Super. Ct. No. FCS048161)
Plaintiff and respondent Gerald Shirar (respondent) filed a malicious prosecution action against defendant and appellant Thomas B. Sheridan (appellant), an attorney who represented respondent's former commercial tenant, Christopher A. Day, in a prior action related to Day's eviction. Appellant moved to strike respondent's action pursuant to the anti-SLAPP statute, section 425.16 of the Code of Civil Procedure (Section 425.16). The trial court denied the motion. We affirm.
Day was also named as a defendant in the malicious prosecution action, but he is not involved in the present appeal.
"SLAPP is an acronym for 'strategic lawsuit against public participation.' " (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 732, fn. 1 (Jarrow Formulas).)
BACKGROUND
In December 2016, respondent filed a malicious prosecution action against appellant and appellant's former client Day. Respondent alleged Day was a former tenant of commercial property owned by respondent in Vacaville. Day, who operated an automobile repair shop, commenced the tenancy in January 2006 and it became a month- to-month tenancy in January 2007. In the summer of 2014, Day began to breach the lease by "continuously failing to pay his rent." In June 2015, Day owed respondent $52,000 and respondent served Day with a "Three-Day Notice to Pay Rent or Quit." About two weeks later, respondent filed an unlawful detainer action against Day.
In July 2015, Day paid respondent $55,000, and respondent agreed to enter into a new lease with Day that terminated in August 2016. The lease required a security deposit, which was important to respondent because he "had reason to be concerned about whether Defendant Day was properly disposing of hazardous materials and byproducts from his business." In September through November 2015, respondent served Day with three three-day notices to pay rent because Day had failed to pay rent and the security deposit.
By January 2016, Day had still failed to pay the security deposit and respondent filed another unlawful detainer action (2016 UD Action). Day failed to respond to the complaint and respondent requested entry of default on January 26. On February 23, respondent obtained a default judgment against Day. On March 30, respondent obtained a Writ for Possession of his property. The Solano County Sheriff's Department served Day with a notice to vacate with an eviction date of April 7.
Day retained appellant and on or around April 3, 2016, he filed an action (Day Action) alleging a number of claims, including breach of contract, intentional interference with prospective economic relationship, and unfair competition in violation of Business and Professions Code section 17200. Day sought a temporary restraining order stopping the eviction, compensatory and punitive damages, and attorney fees. Respondent's malicious prosecution complaint alleges that the claims were "baseless" and that the Day Action was filed "with the express purpose of halting the April 7, 2016 eviction through any means possible, whether they were legally defensible or not."
On April 4, 2016, Day moved to set aside the default judgment in the 2016 UD Action. The motion was denied on April 12 and the eviction was rescheduled for April 19.
On April 18, 2016, Day filed for bankruptcy. In May, the bankruptcy court granted respondent relief from the automatic stay, and shortly thereafter the bankruptcy case was dismissed due to Day's failure to provide supporting documents.
In the Day Action, Day failed to answer respondent's cross-complaint and respondent's discovery requests. Appellant and Day failed to appear at a deposition of Day scheduled on June 29, 2016, and appellant failed to appear at a case management conference. The superior court issued an Order to Show Cause regarding dismissal of the action and imposition of sanctions for failure to prosecute the action. On August 29, the Day Action was dismissed with prejudice, pursuant to appellant's request.
In December 2016, the present malicious prosecution action was filed against appellant and Day. In February 2017, appellant filed a Section 425.16 motion to strike. Appellant argued the malicious prosecution action was without merit because respondent could not show favorable termination of the Day Action, that there was no probable cause for the Day Action, nor that appellant acted with malice. Regarding probable cause, the motion argued, "on information and belief Day believed that Shirar was actively conspiring with a painter, who was one of Day's employees at his auto-body repair company. [Citation.] On information and belief Day maintained that Shirar was attempting to sabotage Day's business by improperly trying to terminate the New Lease agreement and unlawfully attempting to retain Day's auto-body trade fixtures. [Citation.] Moreover, during a telephone conversation with Shirar's counsel . . . , the landlord's attorney represented to Sheridan that the landlord wanted to evict Day from the Subject Property in order to retain Day's trade-fixtures and then enter into a new lease agreement with Day's painter-employee whereby Shirar would receive increased monthly rent [than] he was receiving from Day."
In opposition to the Section 425.16 motion, respondent argued he could show a probability of prevailing on his malicious prosecution claim. The opposition was supported by his declaration and a declaration from his counsel.
In April 2017, the trial court filed a decision denying appellant's Section 425.16 motion. This appeal followed.
DISCUSSION
I. The Anti-SLAPP Law
"In 1992, the Legislature enacted [S]ection 425.16 in an effort to curtail lawsuits brought primarily 'to chill the valid exercise of . . . freedom of speech and petition for redress of grievances' and 'to encourage continued participation in matters of public significance.' (§ 425.16, subd. (a).) The section authorizes a special motion to strike '[a] cause of action against a person arising from any act of that person in furtherance of the person's right of petition or free speech under the United States [Constitution] or [the] California Constitution in connection with a public issue . . . .' (§ 425.16, subd. (b)(1).) The goal is to eliminate meritless or retaliatory litigation at an early stage of the proceedings. [Citations.] The statute directs the trial court to grant the special motion to strike 'unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim.' (§ 425.16, subd. (b)(1).)" (Gallimore v. State Farm Fire & Casualty Ins. Co. (2002) 102 Cal.App.4th 1388, 1395-1396, fn. omitted (Gallimore).)
"The statutory language establishes a two-part test. First, it must be determined whether the plaintiff's cause of action arose from acts by the defendant in furtherance of the defendant's right of petition or free speech in connection with a public issue. [Citation.] 'A defendant meets this burden by demonstrating that the act underlying the plaintiff's cause fits one of the categories spelled out in [S]ection 425.16, subdivision (e).' [Citation.] Assuming this threshold condition is satisfied, it must then be determined that the plaintiff has established a reasonable probability of success on his or her claims at trial." (Gallimore, supra, 102 Cal.App.4th at p. 1396.) "Whether [S]ection 425.16 applies and whether the plaintiff has shown a probability of prevailing are both legal questions which we review independently on appeal." (Ibid.)
II. Respondent Showed a Probability of Prevailing
Respondent does not dispute his lawsuit arises out of petitioning activity for purposes of the anti-SLAPP statute. (See Jarrow Formulas, supra, 31 Cal.4th at pp. 734-735.) Accordingly, respondent bore the burden of demonstrating " ' "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." ' " (Navellier v. Sletten (2002) 29 Cal.4th 82, 88-89 (Navellier).) "We do not weigh credibility, nor do we evaluate the weight of the evidence. Instead, we accept as true all evidence favorable to the plaintiff and assess the defendant's evidence only to determine if it defeats the plaintiff's submission as a matter of law." (Overstock.com, Inc. v. Gradient Analytics, Inc. (2007) 151 Cal.App.4th 688, 699-700 (Overstock.com).) To establish a cause of action for malicious prosecution, "[t]he underlying action must have been: (i) initiated or maintained by, or at the direction of, the defendant, and pursued to a legal termination in favor of the malicious prosecution plaintiff; (ii) initiated or maintained without probable cause; and (iii) initiated or maintained with malice." (Parrish v. Latham & Watkins (2017) 3 Cal.5th 767, 775 (Parrish).)
At the outset, we note there is no dispute that the Day Action was terminated in respondent's favor; that is, appellant does not dispute that voluntary dismissal of the Day Action with prejudice is sufficient for a prima facie showing on that element. (See Sycamore Ridge Apartments, LLC v. Naumann (2007) 157 Cal.App.4th 1385, 1400 ["A voluntary dismissal is presumed to be a favorable termination on the merits, unless otherwise proved to a jury."].)
On the question of whether respondent made a sufficient prima facie showing of lack of probable cause, appellant attempts to restrict the issue to whether the Day Action was maintained without probable cause because that is how the trial court analyzed the issue. In particular, the trial court reasoned there was no probable cause at least after the April 12, 2016, denial of the motion to set aside the default judgment in the 2016 UD Action. The Day Action was maintained without probable cause after that point, the court reasoned, because the "judgment necessarily established that [Shirar] had the right to immediate possession of the property due to [Day's] nonpayment of the security deposit as required by the parties' written lease agreement."
However, respondent also argued the Day Action was initiated without probable cause, at least as to the breach of contract claim. In his opposition to the Section 425.16 motion he argued, "The breach of contract claim was foreclosed by the default judgment in the unlawful detainer case. Specifically, it was based on the theory that Plaintiff Shirar was improperly trying to force Defendant Day out of his property. This claim lacks any basis in law or fact. Before Day filed his baseless lawsuit against [Shirar], he had lost all legal right to remain in possession of [Shirar's] property, and, a fortiori, lacked any legal claim that Shirar's eviction efforts were unlawful. Nonetheless, on or around April 1, 2016, Defendant Sheridan called [Shirar's] attorney and informed him that Day might even file for bankruptcy to stop the eviction. [Citation.] Due diligence and basic legal research should have informed Sheridan that once a Default Judgment has been entered and a Writ of Possession has been issued, a tenant no longer has any rights to his rental property and must relinquish it to the owner or be evicted." On appeal, appellant does not explain why that was not a sufficient prima facie showing the Day Action was initiated without probable cause. To the extent appellant suggests his intent to move to vacate the default judgment in the 2016 UD Action means the Day Action was not initiated without probable cause, that argument fails because he has not shown there was a basis to believe the motion had any prospect of success.
We turn now to whether respondent made a prima facie showing the Day Action was initiated or maintained with malice, which is the focus of appellant's briefing. "Merely because the prior action lacked legal tenability, . . . without more, would not logically or reasonably permit the inference that such lack of probable cause was accompanied by the actor's subjective malicious state of mind. In other words, the presence of malice must be established by other, additional evidence . . . . [T]hat evidence must include proof of either actual hostility or ill will on the part of the defendant or a subjective intent to deliberately misuse the legal system for personal gain or satisfaction at the expense of the wrongfully sued defendant. [Citation.] In other words, in California, the commission of the tort of malicious prosecution requires a showing of an unsuccessful prosecution of a criminal or civil action, which any reasonable attorney would regard as totally and completely without merit [citation], for the intentionally wrongful purpose of injuring another person." (Downey Venture v. LMI Ins. Co. (1998) 66 Cal.App.4th 478, 498-499, fn. omitted (Downey Venture).) "Since parties rarely admit an improper motive, malice is usually proven by circumstantial evidence and inferences drawn from the evidence." (HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 218 (HMS Capital).)
At the outset, we reject appellant's suggestion this court cannot consider any of the circumstances leading up to initiation of the Day Action. That argument is premised on his assumption the only issue is lack of probable cause to maintain the action. He argues because he took no affirmative steps to move the Day Action forward after denial of the motion to set aside the default judgment in the 2016 UD Action, the only conduct upon which a finding of malice could be based is the voluntary dismissal of the Day Action. However, as explained previously, respondent also made a prima facie showing the action was initiated without probable cause. Accordingly, appellant is wrong in asserting that "the sole issue on appeal is . . . whether the voluntary dismissal of a purportedly untenable case can constitute 'other, additional evidence' sufficient to sustain a finding of malice . . . ."
In the present case, there is direct evidence the Day Action was filed for the purpose of preventing or delaying the eviction of Day from respondent's property, instead of for the purpose of prevailing on the merits of the claims alleged in the action. (See HMS Capital, supra, 118 Cal.App.4th at p. 218; Sierra Club Foundation v. Graham (1999) 72 Cal.App.4th 1135, 1157; Downey, supra, 66 Cal.App.4th at p. 494.) In particular, respondent's counsel averred in his declaration in opposition to the Section 425.16 motion that, "On or around March 31, 2016, I received a call from [appellant] who was attempting to negotiate some way to avoid the eviction [on] behalf of his client. At one point during the conversation [appellant] threatened to file 'more lawsuits' and further indicated that Day might even file for bankruptcy to stop the April 7, 2016 eviction if we refused to stop it." On appeal, appellant argues, "this alleged statement is related to the unlawful detainer action, not the underlying lawsuit that Sheridan brought against Shirar on behalf of his client, Day, which is the basis of the malicious prosecution action." To the contrary, the statement was allegedly made well after respondent obtained a default judgment in the 2016 UD Action, and a reasonable inference is that the Day Action is one of the " 'more lawsuits' " appellant allegedly threatened to file if respondent did not stop the eviction. Accordingly, respondent presented direct evidence the Day Action was filed for the purpose of delaying or stopping the eviction.
As explained in Drummond v. Desmarais (2009) 176 Cal.App.4th 439, at pages 451-452, "malice at its core refers to an improper motive for bringing the prior action. [Citation.] As an element of liability it reflects the core function of the tort, which is to secure compensation for harm inflicted by misusing the judicial system, i.e., using it for something other than to enforce legitimate rights and secure remedies to which the claimant may tenably claim an entitlement. Thus the cases speak of malice as being present when a suit is actuated by hostility or ill will, or for some purpose other than to secure relief."
There is also substantial circumstantial evidence the Day Action was filed for the purpose of delaying the eviction. Although insufficient alone to establish malice, the breach of contract claim was remarkably meritless, given the judgment in the 2016 UD Action and the apparent absence of any basis for relief from the judgment. The Day Action was filed shortly before the eviction was scheduled to occur, even though the claims in the Day Action could have been asserted earlier. Day filed for bankruptcy and his counsel (not appellant) stated in a letter that the filing was "in order to stop" the 2016 UD Action, but Day failed to file the papers required to move the bankruptcy forward. More revealingly, appellant stopped prosecuting the Day Action after the eviction was effectuated, even though the action sought damages for intentional interference with prospective economic relationships and unfair competition. If the Day Action had been filed for the purpose of obtaining a damage award on the claims, the eviction of Day should not have stopped the suit from going forward.
In sum, accepting respondent's evidence as true (Overstock.com, supra, 151 Cal.App.4th at pp. 699-700), respondent made a sufficient showing to support an inference that appellant filed the Day Action for the purpose of preventing or delaying the eviction of Day from respondent's property, instead of for the purpose of prevailing on the merits of the claims. That is a sufficient prima facie showing of facts to sustain a finding on the element of malice and, given that malice is the only contested element, respondent's malicious prosecution claim. The trial court did not err in denying appellant's Section 425.16 motion.
Because respondent presented direct and circumstantial evidence the Day Action was filed for an improper purpose, we need not address appellant's contention that "indifference" to the rights of others is insufficient to support a finding of malice. Neither need we address arguments about whether the extent of appellant's research prior to filing the Day Action provided a basis for a finding of malice. --------
DISPOSITION
The trial court's order is affirmed. Costs on appeal are awarded to respondent.
/s/_________
SIMONS, Acting P.J. We concur. /s/_________
NEEDHAM, J. /s/_________
BRUINIERS, J.