Opinion
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court No. 37-2007-00073235- CU-NP-CTL of San Diego County, Ronald S. Prager, Judge.
McCONNELL, P. J.
In this malicious prosecution action, the trial court granted defendants' special motion to dismiss under the anti-SLAPP (strategic lawsuit against public participation) statute (Code Civ. Proc., § 425.16) based on plaintiff's inability to show a probability of prevailing. Citing our opinion in StaffPro, Inc. v. Elite Show Services, Inc. (2006) 136 Cal.App.4th 1392 (StaffPro), the trial court determined the "favorable termination" element of a malicious prosecution action is not satisfied unless the underlying action considered as a whole terminated in the defendant's favor. On appeal, plaintiff urges us to adopt a rule that the theory of severability applies to the favorable termination element, disapproving our opinions to the contrary in StaffPro and Dalany v. American Pacific Holding Corp. (1996) 42 Cal.App.4th 822 (Dalany). We uphold StaffPro and Dalany, which are based on Supreme Court opinions, and accordingly, affirm the order.
Statutory references are to the Code of Civil Procedure unless otherwise specified.
FACTUAL AND PROCEDURAL BACKGROUND
A. Underlying Lawsuit
In 2003 attorneys with the law firm Naumann & Levine, LLP (collectively Naumann) filed a complaint against Sycamore Ridge Apartments, LLC (Sycamore Ridge) on behalf of 45 past and present tenants and/or employees of Sycamore Ridge. (Gonzalez v. Sycamore Ridge Apartments LLC (Super. Ct. San Diego County, 2003, No. GIC812933 (Gonzalez).) As we noted in an earlier appeal in this matter, in 2002 a Sycamore Ridge tenant contacted Naumann complaining about conditions at the apartment complex. An investigation allegedly revealed high readings of airborne aspergillus/penicillium spores, maintenance deficiencies, roof leaks, vermin infestations, and flying termites at Sycamore Ridge. Naumann solicited plaintiffs to join the Gonzalez action. (Sycamore Ridge Apartments LLC v. Naumann (2007) 157 Cal.App.4th 1385, 1392.)
The complaint included 18 causes of action, most of which alleged Sycamore Ridge's failure to maintain the apartments in a habitable condition, and unfair business practices, including the misuse of tenants' security deposits. Three causes of action were employment related: breach of implied-in-fact employment agreements (fourteenth), termination in violation of public policy (fifteenth), and retaliation (sixteenth). The complaint stated the employment-related causes of action were by employment plaintiffs only, but it did not specifically identify any employee plaintiffs. The record, however, shows that only two of the plaintiffs were former employees of Sycamore Ridge. The complaint prayed for $4 million in general damages, unspecified emotional distress damages, punitive damages and attorney fees.
Each of the following counts of the complaint incorporated preceding paragraphs of the complaint pertaining to poor living conditions and unfair business practices, including the failure to return tenant security deposits: negligence (first); negligence per se (second); breach of contract (third); breach of the covenant of good faith and fair dealing (fourth); unfair business practices in violation of Business and Professions Code section 17200 et seq. (fifth); nuisance (sixth); breach of the warranty of habitability (seventh); breach of the covenant of quiet enjoyment (eighth); fraud and deceit (ninth); violation of Civil Code section 1942.4, which prohibits landlords from collecting rent when the condition of the dwelling "endangers the life, limb, health, property, safety, or welfare of the public or the occupants of the dwelling" (id. at subd. (a)(1)) (tenth); violation of Civil Code sections 1950.5 and 1950.7, which pertain to a landlord's use of security deposits (eleventh); constructive eviction (twelfth); negligent infliction of emotional distress (seventeenth); and intentional infliction of emotional distress (eighteenth). Additionally, the complaint included a cause of action titled "Unlawful Termination of Tenancy" (thirteenth). This count incorporated prior allegations of the complaint pertaining to the poor living conditions and unfair business practices, but it also alleged that an unspecified number of lease agreements between plaintiffs and Sycamore Ridge were subject to the "Section 8 Housing Program found at 42 USCA § 1437 et seq.," and on information and belief, the lessor "failed to comply with Section 8 requirements by acts including... failing to enter into initial Lease Agreements of a minimum one-year term and terminating Section 8 tenancies without 'good cause.' "
In October 2004 Jeffrey LaFave and LaFave & Rice (together LaFave) appeared in the Gonzalez case on the plaintiffs' behalf after filing an association of counsel with the court.
In November 2004 Naumann filed a dismissal without prejudice on behalf of 16 of the plaintiffs in the Gonzalez action, and in January 2005 they were dismissed with prejudice.
This is the fourth of four appeals involving Sycamore Ridge and the underlying Gonzalez case. The three prior appeals arose out of malicious prosecution actions Sycamore Ridge brought against the 16 tenant plaintiffs who voluntarily dismissed their claims before trial. (Sycamore Ridge Apartments LLC v. Naumann, supra, 157 Cal.App.4th 1385; Sycamore Ridge Apartments LLC v. Naumann (Apr. 6, 2007, D047868) [nonpub. opn.]; Sycamore Ridge Apartments LLC v. Naumann (Jan. 9, 2009, D051642) [nonpub. opn].)
In August 2005 the remaining 28 plaintiffs dismissed 11 of the complaint's causes of action, leaving for trial claims for negligence, nuisance, breach of the warranty of habitability and violation of Civil Code sections 1950.5 and 1950.7. One of the remaining plaintiffs was Annette Kritsberg. In September 2005 Sycamore Ridge moved to dismiss her because she could not be located for trial. The court granted the motion without prejudice. Also, by September 2005 both employee plaintiffs had settled their claims against Sycamore Ridge, and the following month the court dismissed the three employment-related causes of action from the complaint.
In October 2005 trial of the Gonzalez case began. On October 11, during trial, the remaining plaintiffs accepted $250,000 from Sycamore Ridge in settlement of their claims. The settlement agreement provides that "[a]lthough she is not a signatory to this release, plaintiff Annette Kritsberg shall receive the same benefits as the other named plaintiffs in this Settlement Agreement."
B. Malicious Prosecution Action
In August 2007 Sycamore Ridge sued Naumann, LaFave and Kritsberg for malicious prosecution of the 11 causes of action in the Gonzalez complaint that were voluntarily dismissed before trial. The action was also based on the dismissal of the three employment-related causes of action in Gonzalez after the employee plaintiffs settled their claims, on the theory that since the complaint did not specifically identify the employee plaintiffs, those causes of action were malicious to the extent they were brought by non-employee plaintiffs.
Kritsberg is not involved in this appeal.
Naumann and LaFave brought special motions to strike the complaint under the anti-SLAPP statute. (§ 425.16.) On July 3, 2008, the court granted the motions, finding the Gonzalez action as a whole did not terminate in Sycamore Ridge's favor because the parties entered into a settlement on the complaint's four remaining causes of action, under which Sycamore Ridge was required to pay tenant plaintiffs $250,000. Citing our opinion in StaffPro, supra, 136 Cal.App.4th 1392, the court explained the favorable termination element of a malicious prosecution action is based on a consideration of the entire underlying action rather than severable portions.
The court later awarded Naumann statutory attorney fees of $18,901.50 and other costs of $2,576. The court awarded LaFave attorney fees of $30,735 and other costs of $3,396.88.
DISCUSSION
I
Anti-SLAPP Statute
In 1992 the Legislature enacted section 426.16, known as the anti-SLAPP statute, to allow a court to dismiss certain types of unmeritorious claims at an early stage in the litigation. (Annette F. v. Sharon S. (2004) 119 Cal.App.4th 1146, 1159.) Section 425.16 provides: "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 or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim." (§ 425.16, subd. (b)(1).) Malicious prosecution actions are subject to anti-SLAPP scrutiny. (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 741.)
In deciding an anti-SLAPP motion, the trial court must "engage in a two-step process. First, the court decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity.... If the court finds such a showing has been made, it then determines whether the plaintiff has demonstrated a probability of prevailing on the claim." (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.)
"[T]o establish a probability of prevailing on the claim [citation], a plaintiff responding to an anti-SLAPP motion must ' "state[] and substantiate[] a legally sufficient claim." ' [Citations.] 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.' [Citations.] 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." (Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 821.) The "plaintiff 'cannot simply rely on the allegations in the complaint.' " (ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 1010.)
The court's ruling on a special motion under section 425.16 is subject to our independent review. (Annette F. v. Sharon S., supra, 119 Cal.App.4th at p. 1159.)
II
Malicious Prosecution/Favorable Termination Element
A
"To establish a cause of action for malicious prosecution, a plaintiff must demonstrate that the prior action (1) was initiated by or at the direction of the defendant and legally terminated in the plaintiff's favor, (2) was brought without probable cause, and (3) was initiated with malice." (Siebel v. Mittlesteadt (2007) 41 Cal.4th 735, 740 (Siebel).) If any of these elements is missing, a malicious prosecution action fails as a matter of law. (Pender v. Radin (1994) 23 Cal.App.4th 1807, 1813-1814.)
"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... [of malicious prosecution]." (Jaffe v. Stone (1941) 18 Cal.2d 146, 150.) If the resolution of the underlying litigation " ' "leaves some doubt as to the defendant's innocence or liability[, it] is not a favorable termination, and bars that party from bringing a malicious prosecution action against the underlying plaintiff." ' " (StaffPro, supra, 136 Cal.App.4th at pp. 1399-1400.)
"A voluntary dismissal is presumed to be a favorable termination on the merits, unless otherwise proved to the jury. [Citations] This is because ' "[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." ' " (Sycamore Ridge Apartments LLC v. Naumann, supra, 157 Cal.App.4th at p. 1400.)
A dismissal resulting from a settlement, however, does not generally " '' "constitute a favorable determination because '... the dismissal reflects ambiguously on the merits of the action as it results from the joint action of the parties, thus leaving open the question of defendant's guilt or innocence. [Citation.]' [Citation.] After all, '[t]he purpose of a settlement is to avoid a determination of the merits.' " (Pender v. Radin, supra, 23 Cal.App.4th at p. 1814; Casa Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336, 342 (Casa Herrera); Dalany, supra, 42 Cal.App.4th at p. 828.)
We do not consider the disposition of the underlying plaintiffs' causes of action piecemeal. "To determine 'whether there was a favorable termination,' we 'look at the judgment as a whole in the prior action....' " (Casa Herrera, supra, 32 Cal.4th at p. 341, quoting Sagonowsky v. More (1998) 64 Cal.App.4th 122, 129; Siebel, supra, 41 Cal.4th at p. 741; StaffPro, supra, 136 Cal.App.4th at p. 1405 & fn. 13; Dalany, supra, 42 Cal.App.4th at p. 829 & fn. 2.)
B
Sycamore Ridge contends the trial court erred by determining it must consider the favorable termination element of the malicious prosecution action in light of the outcome of the Gonzalez action as a whole. Sycamore Ridge asserts that principles of severability should apply to the favorable termination element, and we should disapprove of our opinions to the contrary in StaffPro and Dalany. We are unpersuaded.
In Staffpro and Dalany, we relied on the California Supreme Court's decision in Crowley v. Katleman (1994) 8 Cal.4th 666 (Crowley). (Staffpro, supra, 136 Cal.App.4th at pp. 1402-1403; Dalany, supra, 42 Cal.App.4th at pp. 829-830.) In Crowley, the court reaffirmed the rule it announced in Bertero v. National General Corp. (1974) 13 Cal.3d 43, 55-57 (Bertero), that severability principles apply to the probable cause element of a malicious prosecution action. The court concluded that "[u]nder the rule of [Bertero], the complaint in the case at bar states a cause of action for malicious prosecution even though it does not allege that every one of the grounds asserted in the will contest lacked probable cause." (Crowley, supra, at p. 679.)
The court in Crowley noted the defendant's reliance on a case pertaining to the favorable termination element of a malicious prosecution action (Freidberg v. Cox (1987) 197 Cal.App.3d 381 (Freidberg)) was misplaced. The court explained: "Prior opinions have stressed that the two elements of the tort serve different purposes: '[Plaintiff] confuses the elements of probable cause and favorable termination. Whether a prior action was legally tenable goes to the issue of probable cause, that is, did the defendant have an honest and reasonable belief in the truth of the allegations.[] [Citation.] Whether a prior action was terminated favorably tends to show the innocence of the defendant in the prior action [citations], and is not affected by the objective tenability of the claim. In short, these two elements of the malicious prosecution tort serve different purposes, and the legal tenability of the underlying action is not the standard by which to judge whether the action was terminated in [plaintiff's] favor.' " (Crowley, supra, 8 Cal.4that p. 686.)
"[T]he probable cause element calls on the trial court to make an objective determination of the 'reasonableness' of the defendant's conduct, i.e., to determine whether, on the basis of the facts known to the defendant, the institution of the prior action was legally tenable. The resolution of that question of law calls for the application of an objective standard to the facts on which the defendant acted." (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 878.)
The court added that "[f]or these reasons, even the Freidberg court recognized that Bertero did not affect the favorable termination requirement." (Crowley, supra, 8 Cal.4th at p. 686.) The Freidberg court explained that " '[a]lthough Bertero ... holds that lack of probable cause concerning but one of several claims in a cross-complaint will support an action for malicious prosecution... [t]he court did not alter the rule that there must be a favorable termination of the entire action.' " (Freidberg, supra, 197 Cal.App.3d at pp. 386-387, italics added.) Freidberg rejected the notion that Bertero impliedly disapproved Murdock v. Gerth (1944) 65 Cal.App.2d 170 (Freidberg, at p. 386), in which the court held that "in determining whether a proceeding alleged to have been maliciously prosecuted has been terminated in favor of the party injured by such proceeding, consideration should be given to the judgment as a whole. To hold otherwise would defeat the purpose of the rule which seeks to prevent collateral attack upon judgments of duly constituted courts. Hence, the decree or judgment itself in the former action is the criterion by which to determine who was the successful party in such proceeding." (Murdock v. Gerth, at p. 177, italics added.)
The Crowley court also cited Jenkins v. Pope (1990) 217 Cal.App.3d 1292, (Crowley, supra, 8 Cal.4th at p. 686), which likewise held the Supreme Court's holding in Bertero "that a malicious prosecution suit may be maintained where only one of several claims in the prior action lacked probable cause [citation] does not alter the rule there must be a favorable termination of the entire action. [Citation.] In Bertero, the question whether all or only part of the prior action had to be without probable cause arose only after judgment had been reached in the plaintiff's favor in the prior action as a whole. Indeed, even a partial summary judgment cannot support an action for malicious
prosecution because the entire proceeding is not legally terminated while the remaining portions of the case remain pending." (Jenkins v. Pope, supra, at p. 1300, italics added.) The court explained the allowance of a malicious prosecution on a cause of action dropped from a complaint would discourage the amendment of pleadings to delete theories that discovery proves untenable. "Since litigants should be encouraged to amend pleadings to drop groundless causes of action, such amendments cannot create a basis for liability for malicious prosecution." (Id. at p. 1301.)
In Dalany, the plaintiff (Dalany) sued his former employer (APHC) to collect $165,000 in loans he had advanced to the corporation. The corporation cross-complained against Dalany, alleging he was guilty of various breaches of his fiduciary duty to the corporation. The trial court denied Dalany's motion for summary adjudication on his claims for affirmative relief, and granted Dalany's motion on some, but not all, of the claims APHC asserted in its cross-complaint. Eventually, Dalany and APHC entered into a stipulated judgment that required APHC to pay him $105,000. (Dalany, supra, 42 Cal.App.4th at pp. 825-826.) Dalany then sued APHC and others for malicious prosecution. We rejected Dalany's argument that his success on a summary adjudication motion on some causes of action before entry of the stipulated judgment constituted a favorable termination for malicious prosecution purposes, at least as to those claims. We explained the "Supreme Court has recently emphasized that although for purposes of determining probable cause each theory asserted in a prior action must be separately considered, separate consideration of prior theories of claims is not appropriate with respect to the element of favorable termination." (Id. at pp. 829-830, citing Crowley, supra, 8 Cal.4th at p. 686.)
In StaffPro, the plaintiff in a malicious prosecution action (StaffPro) had been sued by a competitor in the event-staffing industry (Elite). The underlying complaint included causes of action for (1) engaging in unlawful business practices in violation of Business and Professions Code section 17200, (2) offering below-cost services in violation of Business and Professions Code section 17043, and (3) underbidding Elite on a number of contracts, constituting intentional interference with prospective business advantage. Elite sought injunctive relief, monetary damages and attorney fees. Immediately before trial, Elite dismissed its third cause of action and its claim for monetary damages as to the second cause of action, limiting the issues at trial to the legality of StaffPro's business practices and Elite's requests for injunctive relief and attorney fees. At the close of Elite's evidence, the court granted StaffPro's motion for judgment under Code of Civil Procedure section 631.8 as to the second cause of action, but denied the motion as to the first cause of action. At the conclusion of trial, the court ordered StaffPro to take certain remedial measures pertaining to workers' compensation insurance coverage and the use of only licensed personnel for certain activities. The court found Elite brought its suit in good faith, and the suit benefited the public. (StaffPro, supra, 136 Cal.App.4th at pp. 1394-1396.)
StaffPro sued Elite for malicious prosecution as to the second and third causes of action of the underlying lawsuit, and Elite moved under the anti-SLAPP statute to dismiss the action. The court granted the motion, finding StaffPro failed to satisfy its burden under Code of Civil Procedure section 425.16 of establishing a probability of prevailing, since the underlying action was not terminated in its favor. (StaffPro, supra, 136 Cal.App.4th at p. 1396.)
On appeal, StaffPro contended "its inability to demonstrate favorable termination of Elite's first cause of action does not bar it from establishing that Elite maliciously prosecuted its second and third causes of action." (StaffPro, supra, 136 Cal.App.4th at p. 1402.) Relying on Singleton v. Perry (1955) 45 Cal.2d 489 (Singleton), StaffPro argued "the favorable termination element of the malicious prosecution tort must be determined with respect to each 'severable' cause of action, and that Elite's second and third causes of action, which terminated in StaffPro's favor, are severable from the first." (StaffPro, supra, at p. 1402.)
We pointed out, however, that StaffPro failed to heed Crowley and distinguish between cases evaluating the probable cause element, such as Singleton, from those evaluating the favorable termination element of the tort. We explained that "[a]s we stated in Dalany[, supra], 42 Cal.App.4th [at page] 829..., our Supreme Court's decision in Crowley, supra, 8 Cal.4th 666, dictates that the severability analysis implicit in Singleton is inapplicable to the favorable termination element of the malicious prosecution tort." "[T]he severability analysis that StaffPro urges us to apply in the instant case has been explicitly rejected by our Supreme Court, which requires instead that we look to the judgment in the underlying action ' "as a whole." ' " (StaffPro, supra, at p. 1402, citing Crowley, supra, 8 Cal.4th at pp. 684-685.)
Sycamore Ridge asserts we should abrogate StaffPro and Dalany because the language of Crowley on which they rely is dicta, since Crowley pertains to the probable cause element of a malicious prosecution action. We rejected that assertion in StaffPro, however, explaining that while the "favorable termination analysis in Crowley was arguably not required for the decision in that case," Supreme Court " 'dictum, while not controlling authority, carries persuasive weight and should be followed where it demonstrates a thorough analysis of the issue or reflects compelling logic.' " (StaffPro, supra, 136 Cal.App.4th at p. 1403, fn. 9.)
Additionally, Sycamore Ridge asserts we should abrogate StaffPro and Dalany because the opinion of another court, Sierra Club Foundation v. Graham (1999) 72 Cal.App.4th 1135 (Sierra Club), "contains the better analysis." Sierra Club states: "[T]he malicious prosecution plaintiff need not demonstrate that the entire underlying proceeding was utterly groundless. Groundless charges coupled maliciously and without probable cause with well-founded causes are not less injurious for the coupling. [Citation.] Thus, a malicious prosecution plaintiff is not precluded from establishing favorable termination where severable claims are adjudicated in his or her favor." (Id. at p. 1153.)
In StaffPro, we concluded Sierra Club was unconvincing for several reasons, including because it relied on pre-Crowley opinions, and it "cannot be reconciled with the overall message of Crowley —that favorable termination must be determined by evaluation ' "the judgment as a whole." ' " (StaffPro, supra, 136 Cal.App.4th at p. 1405.) We also noted "it is solely Sierra Club's dicta, not its holding, that is in conflict with Dalany. In Sierra Club, the court held that a plaintiff's settlement of a lawsuit with related claims did not preclude a finding of favorable termination with respect to a different lawsuit that was resolved in a separate proceeding in plaintiff's favor. [Citation.] The unique scenario faced in Sierra Club is distinct from that at issue here — where a malicious prosecution plaintiff attempts to separate the causes of action contained in the same lawsuit." (Id. at p. 1405, fn. 12.)
Sycamore Ridge also asserts we should not rely on StaffPro because there, the causes of action in the underlying complaint were non-severable, and thus our conclusion that the complaint must be considered as a whole to determine the favorable termination element is dicta. In StaffPro, the trial court ruled StaffPro could not establish favorable termination of the underlying action because Elite succeeded on its first cause of action and its other two causes of action were not severable from the first cause of action. On appeal, however, StaffPro contended the second and third causes of action were severable from the first cause of action, and thus could serve as an independent basis for StaffPro's malicious prosecution action. (StaffPro, supra, 136 Cal.App.4th at p. 1399.) StaffPro's analysis of the favorable termination element pertains directly to severable causes of action, and is not dicta. We were not required to determine whether the causes of action were actually separable, because even if they were, the favorable termination question depends on the outcome of the litigation as a whole.
We stand by our analyses in StaffPro and Dalany. Indeed, in Casa Herrera, supra, 32 Cal.4th at page 341, and Siebel, supra, 41 Cal.4th at page 741, both of which were decided after Sierra Club, our high court reaffirmed its position in Crowley that, as a general principle of malicious prosecution law, we look to the underlying judgment as a whole in assessing the favorable termination element. Plaintiffs' attorneys often sue on multiple theories of recovery and later drop some claims as the case progresses. As a matter of public policy, they should not be vulnerable to malicious prosecution actions when they make those decisions. (See Jenkins v. Pope, supra, 217 Cal.App.3d at p. 1300.) Unless the underlying litigation considered in its entirety ends favorably to the defense, the guilt of the defendant in a following malicious prosecution action is not indicated.
Contrary to Sycamore Ridge's assertion, the Supreme Court in Siebel did not "implicitly support the Sierra Club severability concept." Rather, the court merely distinguished Sierra Club on its facts. (Siebel, supra, 41 Cal.4th at p. 744, fn. 5.) In Siebel the court also distinguished the facts in this court's Dalany opinion. (Id. at pp. 743-744.)
Because the Gonzalez action considered as a whole did not terminate favorably to Sycamore Ridge, as a matter of law it cannot show a probability of prevailing in this action. Accordingly, the court properly granted defendants' motions under the anti-SLAPP statute.
Given our holding, the probable cause element of the malicious prosecution action is not germane. Accordingly, LaFave's motion to strike portions of Sycamore Ridge's reply brief that for the first time raise theories pertaining to the probable cause element is moot.
DISPOSITION
The order is affirmed. Respondents are awarded costs on appeal.
WE CONCUR: McDONALD, J., AARON, J.