Opinion
NOT TO BE PUBLISHED
Alameda County Super. Ct. No. RG09431416
NEEDHAM, J.
Cross-complainants Robert G. and Leilani M. Souza (the Souzas) appeal from an order striking their cause of action for malicious prosecution against cross-defendant William Webb Farrer (Farrer) pursuant to Code of Civil Procedure section 425.16, the so-called “anti-SLAPP” statute. They contend the court erred in granting Farrer’s anti-SLAPP motion because they demonstrated a probability of prevailing on the merits of their claim. We affirm.
All further statutory references are to the Code of Civil Procedure unless otherwise indicated.
SLAPP is an acronym for “strategic lawsuit against public participation.” (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 57, fn. 1.)
I. FACTUAL AND PROCEDURAL HISTORY
The Souzas contracted with Western Wall Systems, Inc. (WWSI) to furnish and install stucco, drywall, and rock trim on a home they were constructing. The relationship soured, with the Souzas complaining about poor workmanship and WWSI claiming that payment was past due. Between July 2008 and September 2008, WWSI mailed three invoices to the Souzas totaling $55,979. The third, Invoice No. 4772, was for $18,183 in stone work that was not actually delivered or installed. On October 20, 2008, WWSI recorded a mechanic’s lien for $55,979 on the Souza’s property.
Meanwhile, WWSI contacted attorney Farrer about collecting the balance due on the three invoices. Farrer had not been involved in the preparation or filing of the mechanic’s lien, but reviewed documentation provided by WWSI to determine potential damage claims and causes of actions that could be asserted against the Souzas in a lawsuit. On November 6, 2008, Farrer emailed Florence Samuels, a senior contract administrator for WWSI, to express his concern that the items on Invoice No. 4772 were not actually delivered to the Souzas and should not have been included in the mechanic’s lien. Samuels responded, “Baystone material, because it is custom made and cannot be used on other projects, is payable upon delivery. Payment for the material is not dependent on installation. If the customer refuses delivery or indicates that they are not going to let us install, we store it here and charge them. Because Souza has not paid for previous work, i.e., the drywall and the plaster, we have withheld installation until he is current. [¶] We have charged for and filed mechanic’s liens on stored materials on other projects and have not been found in error. Based on that, I suggest the [m]echanic’s lien is correct for [the] amounts invoiced.”
Farrer researched whether a mechanic’s lien could include uninstalled custom materials if those materials had been paid for by WWSI and could not be resold to another customer. After balancing the legal issues concerning the effect of an overstated lien versus his client’s request to pursue recovery for the full amount of the lien, he decided that the claim was legally tenable and elected to pursue a lawsuit that included a request for foreclosure on the lien as it had been filed.
On January 16, 2009, Farrer filed a verified complaint against the Souzas on behalf of WWSI seeking judgment for an amount that included the $18,183 on Invoice No. 4772 and was slightly less than the full amount of the mechanic’s lien based on credits and adjustments. It alleged two separate causes based on the Souzas’ failure to pay the invoices, one for breach of contract and one for foreclosure on the mechanic’s lien. Farrer filed a verified first amended complaint on March 20, 2009, which contained additional claims for interference with economic relations and prospective business advantage. These claims were not based on money owed for work performed, but on allegations that the Souzas had disrupted WWSI’s business relationships with other customers.
On April 10, 2009, Farrer ended his representation of WWSI and new counsel was substituted into the case. A few days later, Farrer received a letter from the Souzas’ attorney stating that the mechanic’s lien was excessive and demanding that it be discharged. Farrer did not respond as he was no longer counsel of record.
On May 8, 2009, the Souzas filed a motion to expunge the mechanic’s lien and sought sanctions against Farrer for prosecution of that lien. They argued that the lien was improper because it included $18,183 for materials not actually delivered or installed, and Civil Code section 3118 provides that “[A]ny person who shall wilfully include in his claim of lien labor, services, equipment, or materials not furnished for the property described in such claim shall thereby forfeit his lien.” The trial court granted the motion to expunge the lien and ordered WWSI to pay the Souzas’ costs and attorney fees. It declined to award costs or attorney fees against Farrer.
WWSI’s new counsel filed a third amended complaint (a second amended complaint having been filed in the interim) that dropped the foreclosure claim and included causes of action for breach of written contract, intentional interference with contractual relationships, intentional and negligent interference with prospective economic advantage, libel and slander. The Souzas filed a cross-complaint against WWSI and others, alleging causes of action for malicious prosecution and fraud against Farrer. In this cross-complaint, the Souzas alleged that Farrer had improperly filed a lawsuit seeking foreclosure on a “wrongful and fraudulent lien” and that he “fraudulently verified under penalty of perjury that the materials upon which the lien was based were furnished and supplied to the Souza home.” The cross-complaint also averred that Farrer had acted with malice because he knew when he filed the original complaint that the mechanic’s lien included amounts billed for materials not delivered or installed.
Farrer answered the cross-complaint and filed an anti-SLAPP motion asking the court to strike the claims against him for fraud and malicious prosecution. (§ 425.16.) In response, the Souzas dismissed without prejudice their cause of action for fraud and opposed the motion’s challenge to the malicious prosecution claim. The trial court granted Farrer’s motion and ordered the malicious prosecution claim dismissed. The Souzas appeal, arguing that this order must be reversed.
II. DISCUSSION
Section 425.16 allows a party to file 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 California Constitution....” (§ 425.16, subd. (b)(1).) Once the moving party meets its initial burden of showing that the cause of action involves protected activity, the burden shifts to the opposing party to demonstrate a “probability that the plaintiff [or cross-complainant] will prevail on the claim.” (Ibid.) On appeal, the trial court’s ruling on both prongs of an anti-SLAPP motion are reviewed de novo. (StaffPro, Inc. v. Elite Show Services, Inc. (2006) 136 Cal.App.4th 1392, 1399 (StaffPro).)
The Souzas claim against Farrer for malicious prosecution arose from the lawsuit he filed on behalf of WWSI and, specifically, the cause of action for foreclosure on the mechanic’s lien. Under the anti-SLAPP statute, an “ ‘act in furtherance of a person’s right of petition or free speech’ ” is defined to include “any written or oral statement or writing made before a... judicial proceeding....” (§ 425.16, subd. (e)(1).) The Souzas concede that malicious prosecution is a claim arising from activities protected under the anti-SLAPP statute. (See Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 734-735; Daniels v. Robbins (2010) 182 Cal.App.4th 204, 214-215 (Daniels) [malicious prosecution is claim necessarily arising from protected activity].)
The fate of the Souzas’ claim for malicious prosecution thus rests on the second prong of the anti-SLAPP analysis, which asks whether they have established a “probability” of prevailing. (§ 425.16, subd. (b)(1).) This standard requires a showing that the challenged cause of action is both legally sufficient and supported by a prima facie showing of facts sufficient to sustain a favorable judgment. (Zamos v. Stroud (2004) 32 Cal.4th 958, 965 (Zamos).) The court does not weigh the evidence to determine whether it is more probable than not that the plaintiff will prevail, but must accept the evidence favorable to the plaintiff as true and consider whether the defendant has shown, as a matter of law, a defense to the claim or the absence of a necessary element. (Daniels, supra, 182 Cal.App.4th at p. 215.)
The tort of malicious prosecution requires proof of a prior action that was (1) commenced by or at the defendant’s direction, and which terminated in the plaintiff’s favor; (2) brought or continued without probable cause; and (3) initiated with malice. (Zamos, supra, 32 Cal.4th at p. 965; StaffPro, supra, 136 Cal.App.4th at p. 1398.) It is a “disfavored” claim “ ‘due to the principles that favor open access to the courts for the redress of grievances.’ ” (Downey Venture v. LMI Ins. Co. (1998) 66 Cal.App.4th 478, 493 (Downey Venture) ; see also Sheldon Appel Co. v. Oliker (1989) 47 Cal.3d 863, 872 (Sheldon Appel).)
We conclude the Souzas have not established a probability of prevailing because they failed to satisfy the first element of a malicious prosecution claim, namely, a termination of a prior action in their favor. The lawsuit by WWSI, in which the Souzas filed their cross-complaint, is still pending. And although the mechanic’s lien was expunged and the foreclosure claim dropped in the third amended complaint, the companion breach of contract claim based on the same set of underlying facts has yet to be resolved.
“ ‘The theory underlying the requirement of favorable termination is that it tends to indicate the innocence of the accused, and coupled with the other elements of lack of probable cause and malice, establishes the tort, that is, the malicious and unfounded charge...against an innocent person.’... [¶] Because of this requirement, it is obvious that a defendant cannot cross-complain or counterclaim for malicious prosecution in the first or main action [Citations.].” (Babb v. Superior Court (1971) 3 Cal.3d 841, 846, italics added; see also Jenkins v. Pope (1990) 217 Cal.App.3d 1292, 1297-1301 [same]; contrast Loomis v. Murphy (1990) 217 Cal.App.3d 589, 592-595 [cross-complaint properly amended to include cause of action for malicious prosecution after main action was dismissed].)
The Souzas argue that the mechanic’s lien was severable from WWSI’s other claims and that the order expunging the lien terminated that aspect of the action. They cite Albertson v. Raboff (1956) 46 Cal.2d 375, 382, for the proposition that a malicious prosecution action may proceed when there has been a favorable termination of a “separate part of the [prior] proceeding.” We are not persuaded. In Albertson, the court held that a malicious prosecution claim could be predicated upon a judgment in a former action establishing that the defendant had no interest in the plaintiff’s real property, even though a different aspect of that judgment (an award of damages) was being challenged on appeal. (Ibid.) Albertson did not consider the propriety of a cross-complaint for malicious prosecution in a case where the underlying complaint had not been resolved; it merely concluded that a pending appeal on a different issue did not affect the finality of the claim on which the malicious prosecution action was based.
The Souzas’ citation to Sierra Club Foundation v. Graham (1999) 72 Cal.App.4th 1135 is similarly unavailing. There, the court concluded that the favorable termination of a federal lawsuit supported a malicious prosecution action, even when claims related to the federal suit were raised in a separate state court action that ultimately settled (a dismissal following a settlement not being a favorable termination for purposes of malicious prosecution). (Id. 1150-1153.) Given the separate nature of the two proceedings, the outcome of the state court case did not change the final and favorable nature of the judgment in the federal case. (Ibid.) The Sierra Club Foundation decision did not involve a malicious prosecution claim made via cross-complaint in a pending action.
The Souzas’ efforts to inject a malicious prosecution claim into a lawsuit that has not yet terminated “is not only unsupported in the law, but reflects an unwise and undesirable policy.” (Pope, supra, 217 Cal.App.3d at p. 1301.) Although the mechanic’s lien was expunged because $18,183 of the $55,979 lien amount was attributable to materials not delivered or installed, the companion breach of contract claim has not been adjudicated. While we express no opinion on the merits of the parties’ respective positions, WWSI could theoretically obtain a judgment for contractual damages in the amount of its lien notwithstanding the invalidity of the lien itself. In determining whether the termination of an action was favorable to the party claiming malicious prosecution, we must consider the judgment as a whole. (StaffPro, supra, 136 Cal.App.4th at p. 1402-1405; Crowley v. Katleman (1994) 8 Cal.4th 666, 676; Dalany v. American Pacific Holding Corp. (1996) 42 Cal.App.4th 822, 829.) Until there has been a judgment on WWSI’s breach of contract claim, it is impossible to assess whether the action against the Souzas has terminated favorably.
By contrast, each theory of a prior action must be separately considered for the purpose of determining the probable cause element of a malicious prosecution claim. (StaffPro, supra, 136 Cal.App.4th at pp. 1402-1403.)
Even if we were to conclude that the order expunging the mechanic’s lien was a favorable termination of a special proceeding involving the attempt to enforce a lien, we would not reverse the trial court’s ruling. Apart from the problem that arises from the timing of their claim, the Souzas have not made a prima facie showing on one of the two remaining elements necessary to prove malicious prosecution.
The second element, probable cause, is assessed objectively, and is lacking when a reasonable attorney would agree the issue raised was without merit. (Sheldon Appel, supra, 47 Cal.3d at p. 878; see also Daniels, supra, 182 Cal.App.4th at p. 222.) For purposes of our discussion here, we assume without deciding that Farrer lacked probable cause to seek foreclosure on a mechanic’s lien that included undelivered materials. (See Civ. Code, §§ 3118, 3123, subd. (a); Halbert’s Lumber, Inc. v. Lucky Stores, Inc. (1992) 6 Cal.App.4th 1233, 1240-1244, and cases cited therein; Consolidated Elec. Distributors, Inc. v. Kirkham, Chaon & Kirkham, Inc. (1971) 18 Cal.App.3d 54, 58.) But even if the inflated amount of the lien rendered the foreclosure theory unreasonable as a cause of action, there is no evidence supporting an inference that Farrer acted with malice.
The “malice” necessary for malicious prosecution is based on the actor’s subjective intent or purpose in initiating the prior action, and must be based on evidence of “actual hostility or ill will” or the institution of the prior lawsuit for an “improper ulterior motive.” (Downey Venture, supra, 66 Cal.App.4th at pp. 494-495, 498.) A lack of probable cause, standing alone, is not sufficient to establish malicious intent. “Merely because the prior action lacked legal tenability, as measured objectively..., 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.” (Id. at p. 498; see also Jarrow Formulas, supra, 31 Cal.4th at p. 743.)
A malicious prosecution plaintiff may establish that a prior action was brought or maintained for an improper purpose by showing “(1) the person bringing the suit does not believe that the claim may be held valid; (2) the proceeding is initiated primarily because of hostility or ill will; (3) the proceeding is initiated solely for the purpose of depriving the opponent of a beneficial use of property; or (4) the proceeding is initiated for the purpose of forcing a settlement bearing no relation to the merits of the claim.” (Daniels, supra, 182 Cal.App.4th at p. 224.) None of these circumstances apply to Farrer in the case before us.
Farrer filed a declaration in support of his anti-SLAPP motion in which he explained that he had not been involved in preparing or filing the mechanic’s lien itself; that he contacted a representative of WWSI when he realized that a portion of the lien was based on materials that had not been delivered to the construction site; that he considered WWSI’s explanation that because the materials were custom built and could not be resold to other customers, they were constructively delivered as soon as they were received and paid for by WWSI; that “[a]fter balancing the legal issues surrounding a potentially overstated lien with [his] client’s desire to pursue recovery for the full amount stated in its lien” he determined that a legally tenable argument could be made for the inclusion of the undelivered materials in the lien; that he therefore filed a complaint that included a foreclosure cause of action; that he had never met the Souzas before this case and harbored no ill will toward them; that his sole reason for prosecuting the action on behalf of WWSI was to act as an advocate on its behalf; and that he had substituted out of the case before the motion to expunge the lien had been filed. These assertions were not contradicted by any evidence presented by the Souzas, and cannot be reasonably construed to show ill will or improper motive.
The Souzas note that internal correspondence sent by Cordell Ross, a project manager for WWSI, to Tim Ritter, its owner and president, referred to the ongoing payment dispute with the Souzas and suggested that it would be difficult for them to obtain a final loan with liens on the property. While this is arguably relevant to whether WWSI acted with malice when it filed the lien, Farrer was not retained until after the lien was filed. (Compare Daniels, supra, 182 Cal.App.4th at p. 225 [motivation of client not imputed to attorneys].)
Farrer’s declaration shows that he weighed the pros and cons of proceeding on the mechanic’s lien before opting to include a foreclosure claim in the complaint. Though this theory of recovery proved legally untenable, we cannot infer any ill will or improper motive based solely on the decision to pursue a novel interpretation of the mechanic’s lien statutes. Even without the inclusion of the foreclosure cause of action, the Souzas would have been called upon to defend a breach of contract claim seeking damages for the same monies sought through foreclosure. Nor can malice be implied from Farrer’s maintenance of the action after the Souzas filed a motion to expunge the lien; by then, he was no longer counsel of record.
III. SANCTIONS REQUEST
Farrer has filed a separate motion seeking sanctions against the Souzas for filing a frivolous appeal. (Code Civ. Proc., § 907; Cal. Rules of Ct., rule 8.276(a)(1).) Although the Souzas have not prevailed in their arguments, we do not find their appeal to be frivolous. (See In re Marriage of Flaherty (1982) 31 Cal.3d 637, 650.) We note that under the anti-SLAPP statute, Farrer may seek reasonable attorney fees in the trial court as part of his costs on appeal. (§ 425.16, subd. (c)(1); see, generally, Wanland v. Law Offices of Mastagni, Holstedt & Chiurazzi (2006) 141 Cal.App.4th 15, 23.)
IV. DISPOSITION
The trial court’s order granting Farrer’s anti-SLAPP motion is affirmed. Farrer shall recover his costs on appeal, including reasonable attorney fees, in an amount to be determined by the trial court.
We concur. SIMONS, Acting P. J., BRUINIERS, J.