Opinion
C042819.
11-7-2003
L. RAYMOND ZACHARY, Plaintiff and Appellant, v. JOHN L. GUTH et al., Defendants and Respondents.
After plaintiff L. Raymond Zachary (Raymond) sued attorneys John L. Guth and Jeffrey T. Stromberg for malicious prosecution, defendants successfully moved to strike integral portions of the complaint pursuant to Code of Civil Procedure section 425.16, the so-called anti-SLAPP statute (strategic lawsuits against public participation). (Further section references are to the Code of Civil Procedure.)[]
Because Raymond and other persons discussed in this opinion share the same surname, we shall refer to members of the Zachary family by their first names for purposes of clarity and ease of reference.
Raymond appeals from the ensuing order of dismissal, contending the trial court erred in granting the motion to strike.
FACTS
Raymonds malicious prosecution action arose out of complaints filed by defendants, on behalf of their client, Raymonds sister, Sherry, in two actions seeking to recover property transferred to Raymond by their mother, Miriam, prior to her death.
The first action (the farm action) was filed in March 1998 and concerned Miriams transfer of the family farm to Raymond shortly before her death. Sherry sought restitution and the imposition of a constructive trust on the ground that Raymond obtained the farm as the result of undue influence and fraud. The complaint alleged, in effect, that (1) Miriam suffered from mental limitations and illnesses and was more susceptible to influence and suggestion; (2) Raymond, who held a position of trust in that he was her son and handled her personal and financial affairs, was aware of these limitations; (3) Raymond induced Miriam to execute the deed for his benefit and to the detriment of Sherry, by making false representations or withholding information regarding the tax consequences of transferring the property, by failing to inform Miriam the transfer was contrary to her intended distribution of her estate, and by portraying Sherry as a gold digger who had stolen property and had negative feelings toward her mother; and (4) Miriam relied on these false representations and transferred the farm to Raymond at a time when she was suffering from a lack of mental capacity.
The farm action was resolved via summary judgment in Raymonds favor in February 1999. The trial court found Sherry was unable to controvert Raymonds showing that (1) Miriam was not mistaken as to any fact at the time she transferred the farm; (2) Raymond did not make any representations to Miriam, false or otherwise, with the intention of obtaining the farm from her; (3) Raymond was not in a confidential or fiduciary relationship with Miriam; (4) he did not exert any undue influence over her; and (5) he did not receive any undue benefit.
The second action filed by defendants on behalf of Sherry (the check action) concerned a check for $25,000, drawn on an account belonging to Miriam and made payable to Zachary Farms.[] The check was deposited into the Zachary Farms account, which had been opened by Raymond and on which both Raymond and Miriam were signatories. A notation on the memo portion of the check indicated it was for a loan. The petition alleged that either (1) the money was a loan, which Raymond was obligated to repay to the estate, or, (2) if, as Raymond alleged, the money was maintained for the benefit of Miriam, then the money belonged to the estate and Sherry was entitled to her share.
The appellate record does not reflect when this action was initiated. The record contains a copy of the first amended petition, filed in September 1999, but does not include the original petition.
On November 9, 2001, Sherry voluntarily dismissed the check action before trial.
Raymond sued Sherry and defendants for malicious prosecution, alleging the two actions, which were terminated in his favor, had been brought maliciously and without probable cause.
Defendants moved to strike all references to the two actions from Raymonds complaint pursuant to section 425.16, the anti-SLAPP statute. They asserted section 425.16 applied to the malicious prosecution action because it arose from the right to petition for a redress of grievances, and pertained to written or oral statements made in a judicial proceeding. Defendants also argued there was no evidence that the farm and check actions were legally untenable or lacked probable cause at the time they were initiated.
Raymond opposed the motion to strike on the ground that it was untimely. He also claimed the evidence established that the two actions were brought without probable cause and, therefore, the motion to strike should be denied. To support his position, Raymond submitted pleadings and documents filed in connection with his successful summary judgment motion in the farm action. According to Raymond, the summary judgment motion established that the farm action was entirely without merit. In addition, he submitted declarations from three individuals who asserted that Miriam had told them she was going to pay for a pool to be built at Raymonds house for her grandchildren. He maintained this demonstrated that the $25,000, which was the subject of the check action, was to be used to build a swimming pool.
Defendants objected to the three declarations, asserting they contained inadmissible hearsay. Defendants also maintained that their motion to strike was timely, and that Raymond had failed to demonstrate there was any evidence that defendants knew the lawsuits were without merit at the time the actions were filed.
The trial court ruled that defendants motion was timely, sustained their evidentiary objections, and granted the motion to strike. The court found Raymond failed to establish a probability he would prevail at trial because he presented no evidence that defendants had knowledge of facts demonstrating the actions did not have merit at the time they filed the actions. Thereafter, the court dismissed the malicious prosecution action against defendants with prejudice.
DISCUSSION
Section 425.16 provides in pertinent part: "(b)(1) A cause of action against a person arising from any act of that person in furtherance of the persons 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. [¶] (2) In making its determination, the court shall consider the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based. [¶] . . . [¶] (e) As used in this section, `act in furtherance of a persons right of petition or free speech under the United States or California Constitution in connection with a public issue includes: (1) any written or oral statement or writing made before a legislative, executive, or judicial proceeding, or any other official proceeding authorized by law; (2) any written or oral statement or writing made in connection with an issue under consideration or review by a legislative, executive, or judicial body, or any other official proceeding authorized by law; (3) any written or oral statement or writing made in a place open to the public or a public forum in connection with an issue of public interest; (4) or any other conduct in furtherance of the exercise of the constitutional right of petition or the constitutional right of free speech in connection with a public issue or an issue of public interest."
In determining whether to grant a section 425.16 motion, the court engages in a two-step process. First, it decides whether the defendant has made a threshold showing that the challenged cause of action is one arising from protected activity within the meaning of the statute. (§ 425.16, subd. (b)(1).) If such a showing has been made, the burden shifts to the plaintiff to provide the court with sufficient evidence to permit it to determine whether "there is a probability that the plaintiff will prevail on the claim." (§ 425.16, subd. (b)(1); Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 741; Mattel, Inc. v. Luce, Forward, Hamilton & Scripps (2002) 99 Cal.App.4th 1179, 1188; DuPont Merck Pharmaceutical Co. v. Superior Court (2000) 78 Cal.App.4th 562, 568.)
"The process the court uses in determining the merits of the motion is similar to the process used in approaching summary judgment motions. The evidence presented must be admissible [citation] and the trial court does not weigh the evidence. [Citation.] Rather, a probability of prevailing is established if the plaintiff presents evidence establishing a prima facie case which, if believed by the trier of fact, will result in a judgment for the plaintiff. [Citation.]" (Mattel, Inc. v. Luce, Forward, Hamilton & Scripps, supra, 99 Cal.App.4th at p. 1188.)
Raymond does not contend that a malicious prosecution cause of action against an attorney, arising from the alleged improper filing of a lawsuit on behalf of the attorneys client, is not the proper subject of a motion to strike under section 425.16. (Jarrow Formulas, Inc. v. LaMarche, supra, 31 Cal.4th at pp. 735, 741 [a cause of action for malicious prosecution is within the purview of, and is not exempt from, a section 425.16 motion to strike]; White v. Lieberman (2002) 103 Cal.App.4th 210, 220-221 [section 425.16 protects an attorney acting in his capacity as an advocate]; Chavez v. Mendoza (2001) 94 Cal.App.4th 1083, 1087-1089 [a section 425.16 motion may be brought against a malicious prosecution action].)
Rather, Raymond argues that he met his burden of establishing a probability of prevailing on his malicious prosecution claim.
To establish a claim for malicious prosecution, the plaintiff must demonstrate the prior action was begun at the direction of the defendant, pursued to a legal termination in plaintiffs favor, brought without probable cause and initiated with malice. (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 871 (hereafter Sheldon Appel).)
The trial court found Raymond failed to present any evidence establishing that defendants lacked probable cause to file the lawsuits at the time they were initiated.
Whether defendants had probable cause for instituting the prior action is a question of law to be determined by the trial court. (Sheldon Appel, supra, 47 Cal.3d at pp. 875.) The court resolves this question by making an "objective determination of the `reasonableness of the defendants conduct," determining "whether, on the basis of the facts known to the defendant, the institution of the prior action was legally tenable." (Id. at p. 878.)
The legal tenability of an action is tested by whether any reasonable attorney would have thought the claim tenable. (Sheldon Appel, supra, 47 Cal.3d at p. 886.) "`Counsel and their clients have a right to present issues that are arguably correct, even if it is extremely unlikely that they will win . . . . [Citation.]" (Id. at p. 885.) In other words, the plaintiff in a malicious prosecution action must show that any reasonable attorney would agree the underlying claim was totally and completely without merit. (Ibid.) This lenient standard of legal tenability reflects "the important public policy of avoiding the chilling of novel or debatable legal claims." (Id. at p. 885; accord, Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 817.)
Raymond does not dispute that the two complaints filed by defendants on behalf of their client, Sherry, stated legally tenable claims if there was evidence to support the factual allegations therein. Instead, he argues there was no evidence to support the allegations and, therefore, the two lawsuits were initiated without probable cause. To support his position, he relies on the documentation he submitted in connection with his motion for summary judgment in the farm action, and the three declarations regarding Miriams desire to build a pool for her grandchildren, which the trial court ruled were inadmissible.[] He claims this evidence shows that the two actions were entirely without merit.
Raymond contends that, contrary to the courts evidentiary ruling, the three declarations were admissible. However, this argument is waived because he raised it for the first time in his reply brief without a showing of good cause. (Garcia v. McCutchen (1997) 16 Cal.4th 469, 482, fn. 10; Neighbours v. Buzz Oates Enterprises (1990) 217 Cal.App.3d 325, 335, fn. 8.) In any event, the three declarations simply indicate that Miriam intended to build a pool for her grandchildren. They do not state that she gave Raymond the $25,000 check in question for this purpose. Moreover, he does not provide a citation to any evidence in the record demonstrating that defendants were aware of this intention when they initiated the check action, or at any pertinent time prior to their dismissal of the action. Under the circumstances, these declarations do not support his claim that defendants initiated the check action without probable cause.
However, Raymond points to nothing in the documentation he submitted to the trial court that reflects defendants, as opposed to Sherry (who was not a party to the motion to strike and is not a party on appeal), were aware of this evidence when they initiated the lawsuits, or at any other relevant time.
In addition, Raymond points to no evidence establishing that the two complaints do not accurately reflect the facts Sherry told defendants, or that she ever told defendants these facts were incorrect. Nor does Raymond cite to any admissible evidence in the record demonstrating that defendants knew the allegations of the complaint were untrue or unsupportable at the time they instituted the lawsuit. (See Swat-Fame, Inc. v. Goldstein (2002) 101 Cal.App.4th 613, 624-627 [an attorney is entitled to rely on information provided by the client unless the attorney is made aware of information as to verifiable facts which, if true, would totally negate the clients cause of action]; see also Morrison v. Rudolph (2002) 103 Cal.App.4th 506, 512-513.)
Raymond primarily relies upon the fact that he successfully moved for summary judgment in the underlying action, claiming this demonstrated that defendants action was completely without merit. But it is not enough to show the action lacked merit. Raymond also must show that it lacked probable cause at the time it was filed. (Jarrow Formulas, Inc. v. LaMarche, supra, 31 Cal.4th at p. 742, 743, fn. 13.) A summary judgment in the defendants favor in the underlying case on the ground of insufficient evidence does not establish, as a matter of law, a lack of probable cause. (Id. at p. 742.) "[T]here is probable cause if, at the time the claim was filed, `any reasonable attorney would have thought the claim tenable. [Citation.] Plainly, a claim that appears `arguably correct or `tenable when filed with the court may nevertheless fail . . . for reasons having to do with the sufficiency of the evidence actually adduced as the litigation unfolds. . . . As defendants point out, every case litigated to a conclusion has a losing party, but that does not mean the losing position was not arguably meritorious when it was pled. [Citation.] And just as an action that ultimately proves nonmeritorious may have been brought with probable cause, successfully defending a lawsuit does not establish that the suit was brought without probable cause. [Citations.]" (Id. at pp. 742-743, fn. omitted.)
For the reasons stated above, Raymond has failed to meet his burden of establishing that defendants lacked probable cause when they initiated the two actions.
Raymond asserts that, if defendants had questioned Sherry more carefully and performed a reasonable investigation, they would have uncovered facts demonstrating that the lawsuits lacked merit.
But "[a]llowing inadequate research to serve as an independent basis for proving the absence of probable cause on the part of an attorney would tend to create a conflict of interest between the attorney and client, tempting a cautious attorney to create a record of diligence by performing extensive legal research, not for the benefit of his client, but simply to protect himself from his clients adversaries in the event the initial suit fails." (Sheldon Appel, supra, 47 Cal.3d at p. 883.) Hence, "the adequacy of an attorneys research is not relevant to the probable cause determination." (Ibid.)
Raymond relies on Arcaro v. Silva & Silva Enterprises Corp. (1999) 77 Cal.App.4th 152 (hereafter Arcaro) and Puryear v. Golden Bear Ins. Co. (1998) 66 Cal.App.4th 1188 (hereafter Puryear) for the proposition that defendants lacked probable cause because they did not have sufficient evidence to uphold a favorable judgment or sufficient information affording an inference that such evidence could be obtained for trial. His reliance on those cases is misplaced.
Arcaro affirmed a trial court verdict finding an underlying action on a guarantee by a collection agency lacked probable cause, where the agency was on notice that Arcaros signature had been forged on the debt documents upon which the agency filed the collection action against Arcaro. (77 Cal.App.4th at p. 154, 157.) Notice of the forgery arose when Arcaro (1) provided sample signatures that no reasonable person could conclude resembled his alleged signature on the application for credit, and (2) provided the name of a suspect, who was a person already known to be involved, as well as an explanation how that person could have acquired Arcaros personal information. (Id. at p. 156-157.) When Arcaro refused to pay the account, the collection agency referred the matter to its attorney with instructions to file suit, and without informing the attorney that Arcaro claimed his signature had been forged. (Id. at p. 155.)
The outcome in Arcaro hinged on the fact that the plaintiff in the underlying action was given specific information as to verifiable facts which, if true, would totally negate its cause of action. Despite this information, the plaintiff proceeded with its collection action anyway without identifying any evidence that would have warranted an inference that the signature was genuine. (Arcaro, supra, 77 Cal.App.4th at p. 158.) These unusual facts created an exception to the rule that the adequacy of a pre-filing investigation is irrelevant to the issue of probable cause to bring the action. (Swat-Fame, Inc. v. Goldstein, supra, 101 Cal.App.4th at p. 627.) There are no similar circumstances in the present case.
Furthermore, in Arcaro, "the collection agencys attorneys were not named as defendants in the malicious prosecution action; and Arcaro contains no hint that the attorneys lacked probable cause to file suit based on the facts known to them. To the contrary, Arcaro suggests the attorneys were entitled to rely on the genuineness of Arcaros signature on the guarantee and had no duty to investigate before filing suit. [Citation.]" (Swat-Fame, Inc. v. Goldstein, supra, 101 Cal.App.4th at pp. 626-627.)
Under the circumstances, Arcaro is of no help to Raymond in his action against Sherrys attorneys.
In Puryear, supra, 66 Cal.App.4th 1188, the other case upon which Raymond relies, an insured sued his insurer, Golden Bear Insurance Company (Golden Bear), alleging it wrongfully failed to pay insurance proceeds. Golden Bear cross-complained for indemnity against A & L Insurance Services, Inc. and Puryear, who was a former officer of the corporation. Golden Bear ultimately dismissed its action against Puryear, who then sued the insurance company and its attorneys for malicious prosecution. (Id. at pp. 1190-1193.) The defendants moved for summary judgment on the ground the indemnity action was filed with probable cause. (Id. at p. 1193.) Puryear opposed the motion, pointing out that in deposition testimony, the attorneys conceded they had no evidence to support a theory of alter ego liability against Puryear and failed to identify any evidence to support his personal liability for the shortcomings of A & L Insurance Services, Inc. (Ibid.) The trial court granted summary judgment, finding defendants had a legally tenable claim because there was sufficient confusion in their mind over the correct individual or entity which was legally responsible for the acts of A & L Insurance Services, Inc. at the time the cross-complaint was filed. (Id. at p. 1193-1194.)
Puryear reversed the judgment, holding the trial court erred in finding defendants had probable cause to bring the underlying claim against Puryear as an individual. (66 Cal.App.4th at pp. 1196-1198.) No reasonable attorney could have thought the claim objectively tenable because there was no evidence from which defendants could have inferred that Puryear was personally liable for the acts of A & L Insurance Services, Inc. An action against Puryear was tenable only if the facts known to defendants afforded an inference that he personally was negligent in communicating between Golden Bear and the insured, or that A & L Insurance Services, Inc. was not a corporation at the time, or that the corporate veil could be pierced as to him. (Id. at p. 1197.)
In other words, the attorneys in Puryear lacked probable cause to sue the malicious prosecution plaintiff as a matter of law absent the existence of certain facts, and the attorneys did not possess any information reasonably warranting an inference that such facts existed.
Such is not the case here. Defendants possessed information given to them by Sherry, and they were entitled to rely on this information absent evidence they knew that it was false. (Morrison v. Rudolph, supra, 103 Cal.App.4th at pp. 512-513; Swat-Fame, Inc. v. Goldstein, supra, 101 Cal.App.4th at p. 629.)
Moreover, the record includes a copy of a declaration that defendant Guth submitted in the underlying farm action, in which he stated he met with Miriam and Raymond around January 12, 1995, to discuss estate planning for Miriam and her husband Loyd. During the meeting, they discussed giving Raymond 20 of approximately 70 acres of the farm, and selling the rest of the acreage to him. There was no suggestion that the entire farm would be given to Raymond. The remainder of the estate was to be evenly divided between the couples three children, Raymond, Sherry, and Floyd. Thereafter, Miriam advised Guth that Raymonds girlfriend was defrauding Miriam and Loyd, and using Loyds credit cards without permission. Guth advised Miriam that if she and Loyd wanted help with estate planning, they should come see Guth without Raymond. Based on the previous meeting, Guth was concerned that Raymond was taking too active a part in his parents estate planning, and wished to make certain of their intentions without Raymonds immediate influence.
Miriam and Loyd never came in to see Guth. In June 1995, Floyd killed Loyd, set fire to the family house, and shot himself. Thereafter, in June 1996, Miriam drafted a $25,000 check to Zachary Farms, and a notation on the check reflects the money was for a loan. In September 1996, a few months before she died, Miriam transferred the farm to Raymond via a grant deed.
Thus, Guth had information that, despite Miriams previously stated intent to divide her estate equally between her children, she transferred a large portion of her estate to Raymond shortly before her death, which resulted in Raymond receiving significantly more than Sherry. Furthermore, it appeared Raymond had the use of money that was intended as a loan, and therefore should be returned to the estate. Given his observations regarding Raymonds behavior during the estate planning session in 1995, this information reasonably warranted an inference that evidence existed to support Sherrys allegations regarding Raymonds alleged undue influence and fraud.
Accordingly, Raymond has not meet his burden of establishing that the trial court erred in granting the section 425.16 motion to strike.
DISPOSITION
The judgment is affirmed.
We concur: DAVIS, J. and HULL, J.