Xcentric Ventures v. Lisa Borodkin , 798 F.3d 1201 ( 2015 )


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  •                  FOR PUBLICATION
    UNITED STATES COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    XCENTRIC VENTURES, LLC, an               No. 13-15544
    Arizona limited liability company,
    Plaintiff-Appellant,      D.C. No.
    2:11-cv-01426-
    v.                          GMS
    LISA J. BORODKIN,
    Defendant-Appellee.
    XCENTRIC VENTURES, LLC, an               No. 13-16271
    Arizona limited liability company,
    Plaintiff-Appellant,      D.C. No.
    2:11-cv-01426-
    v.                          GMS
    LISA J. BORODKIN; RAYMOND
    MOBREZ; ILIANA LLANERAS,                 ORDER AND
    Defendants-Appellees.        OPINION
    Appeal from the United States District Court
    for the District of Arizona
    G. Murray Snow, District Judge, Presiding
    Argued and Submitted
    June 10, 2015—San Francisco, California
    2             XCENTRIC VENTURES V. BORODKIN
    Filed August 25, 2015
    Before: Barry G. Silverman, Ronald M. Gould,
    and Andrew D. Hurwitz, Circuit Judges.
    Order;
    Per Curiam Opinion
    SUMMARY*
    Malicious Prosecution
    The panel redesignated the memorandum disposition filed
    June 15, 2015 as a per curiam opinion; and affirmed the
    district court’s summary judgment and judgment on the
    pleadings in favor of defendants Raymond Mobrez and Iliana
    Llaneros, and Fed. R. Civ. P. 12(b)(6) dismissal of defendant
    Lisa Borodkin in Xcentric Ventures, LLC’s malicious
    prosecution action.
    The panel held Xcentric could not prove an element of its
    malicious prosecution claims under California law, that the
    underlying claims were brought or continued without factual
    or legal probable cause.
    *
    This summary constitutes no part of the opinion of the court. It has
    been prepared by court staff for the convenience of the reader.
    XCENTRIC VENTURES V. BORODKIN                 3
    COUNSEL
    David S. Gringas (argued), Gringas Law Office, PLLC,
    Phoenix, Arizona, for Plaintiff-Appellant.
    David Meyer (argued), San Diego, California, for
    Defendants-Appellees Mobrez and Llaneras.
    Damion D. Robinson, Van Vleck, Turner, & Zaller, LLP, Los
    Angeles, California; Lisa Borodkin (argued), Redondo Beach,
    California, for Defendant-Appellee Borodkin.
    ORDER
    Raymond Mobrez and Iliana Llaneras’ Request for
    Reconsideration of Order Denying Request for Publication is
    GRANTED. The Memorandum disposition filed June 15,
    2015, is redesignated as a per curiam opinion.
    Lisa Borodkin’s Request for Judicial Notice in connection
    with the request for reconsideration is DENIED AS MOOT.
    OPINION
    PER CURIAM:
    Xcentric Ventures appeals the district court’s grant of
    summary judgment and judgment on the pleadings in favor of
    defendants Mobrez and Llaneras and Rule 12(b)(6) dismissal
    of defendant Borodkin in Xcentric’s malicious prosecution
    action. We have jurisdiction pursuant to 28 U.S.C. § 1291
    4           XCENTRIC VENTURES V. BORODKIN
    and review de novo. We agree with the district court that
    Xcentric cannot prove an element of its malicious prosecution
    claims, that the underlying claims were brought or continued
    without factual or legal probable cause. We also deny
    Borodkin’s motion for sanctions.
    Xcentric claims that the underlying claims lacked factual
    probable cause because defendants Mobrez and Llaneras lied
    about phone conversations to support their underlying
    extortion claim. Factual probable cause is lacking if the
    litigant “relies upon facts which he has no reasonable cause
    to believe to be true.” Sangster v. Paetkau, 
    80 Cal. Rptr. 2d 66
    , 74 (Ct. App. 1998). However, summary judgment is
    proper if any undisputed facts, other than the fabricated
    evidence, provide probable cause for the claim. Roberts v.
    McAfee, Inc., 
    660 F.3d 1156
    , 1165 (9th Cir. 2011); 
    Sangster, 80 Cal. Rptr. 2d at 75
    –77. The underlying complaint, first
    amended complaint, and summary judgment orders establish
    that all of the underlying claims in this case were supported
    by other undisputed written statements. Therefore, any
    dispute about whether Mobrez and Llaneras lied about the
    phone conversations did not negate probable cause. See
    
    Roberts, 660 F.3d at 1165
    ; 
    Sangster, 80 Cal. Rptr. 2d at 75
    –77.
    For the same reason, Xcentric cannot state a plausible
    claim that Borodkin continued the lawsuit without factual
    probable cause after learning that her clients had lied about
    the phone calls. The district court properly took judicial
    notice of the underlying court documents. Sprewell v. Golden
    State Warriors, 
    266 F.3d 979
    , 990 (9th Cir.), amended by
    
    275 F.3d 1187
    (9th Cir. 2001). Those documents establish
    that Borodkin relied on written statements, not her clients’
    XCENTRIC VENTURES V. BORODKIN                    5
    original statements about the phone calls, when she continued
    to pursue the claims in California.
    Legal probable cause exists if “any reasonable attorney
    would have thought the claim tenable” on the facts known to
    him. Jarrow Formulas, Inc. v. LaMarche, 
    74 P.3d 737
    , 742
    (Cal. 2003). Legal probable cause exists even if the claims
    are “extremely unlikely” to win. 
    Id. The standard
    is an
    objective question of law to be decided by the court.
    
    Sangster, 80 Cal. Rptr. 2d at 75
    . We agree with the district
    court that the claims asserted by Mobrez, Llaneras, and
    Borodkin in California were tenable based on the facts
    alleged in the underlying lawsuit.
    The underlying attempted racketeering extortion claim
    alleged that Xcentric attempted to extort money by
    encouraging third parties to post negative reviews,
    manipulating the posts to highlight negative reviews and to
    further highlight the negative reviews if the businesses posted
    rebuttals, and then charging high fees to “turn the negative
    into a positive.” The claim was tenable because a district
    court had previously held that similar allegations stated an
    extortion claim against Xcentric.          Hy Cite Corp. v
    badbusinessbureau.com, L.L.C., 
    418 F. Supp. 2d 1142
    ,
    1149–50 (D. Ariz. 2005) (holding that allegations that
    Xcentric created and solicited false, defamatory complaints
    against businesses and then charged $50,000 and monthly fee
    of $1,500 to remove or stop posting the complaints stated an
    extortion claim); Sheldon Appel Co. v. Albert & Oliker,
    
    765 P.2d 498
    , 511–12 (Cal. 1989) (a claim is tenable if “at
    least one prior California decision” with “somewhat
    comparable” facts suggests available relief).
    6           XCENTRIC VENTURES V. BORODKIN
    Nor were the racketeering or unfair competition claims
    untenable because the business run by Mobrez and Llaneras,
    Asia Economic Institute, lacked revenue. Mobrez and
    Llaneras sufficiently alleged and proved the requisite injury
    to business and property and economic loss, including that
    they paid an expert to mitigate the damaging posts and lost
    specific business opportunities and contracts because of the
    negative posts. Diaz v. Gates, 
    420 F.3d 897
    , 900 (9th Cir.
    2005) (en banc) (per curiam) (holding that injury to a
    business or property interest includes harm that “amount[s] to
    intentional interference with contract and interference with
    prospective business relations”); Kwikset Corp. v. Superior
    Ct., 
    246 P.3d 877
    , 884 (Cal. 2011) (requiring some sort of
    lost money or property to establish actual economic loss for
    unfair competition claims).
    Xcentric alleged and argued that the remaining claims
    lacked legal probable cause because it was immune for third
    party posts pursuant to the Communications Decency Act.
    The fraud and unfair business practices claims alleged that
    Xcentric manipulated and added content to the posts;
    misrepresented its website as neutral, even though it
    manipulated the postings to favor its program members; and
    made other misrepresentations about the nature of its website.
    The claim was tenable because the Communications Decency
    Act does not immunize Xcentric for the content it creates and
    posts. Fair Housing Council v. Roommates.Com, LLC,
    
    521 F.3d 1157
    , 1163 (9th Cir. 2008) (en banc). Moreover, at
    the time of the underlying case, at least one district court in
    California had indicated in dicta that the Communications
    Decency Act does not immunize misrepresentations made by
    a publisher about its publishing conduct. Levitt v. Yelp! Inc.,
    Nos. 10-1321 & 10-2351, 
    2011 WL 5079526
    , at *9 (N.D.
    XCENTRIC VENTURES V. BORODKIN                     7
    Cal. Oct. 26, 2011) (dicta), aff’d on other grounds, 
    765 F.3d 1123
    (9th Cir. 2014).
    The remaining derivative claims asserted against Xcentric
    were tenable because Xcentric was a necessary party if the
    plaintiffs could obtain an order for the third parties to remove
    the defamatory posts. Blockowicz v. Williams, 
    675 F. Supp. 2d
    912, 915–16 (N.D. Ill. 2009) (refusing to order Xcentric to
    remove defamatory postings, even though the plaintiffs had
    obtained injunctive relief, because Xcentric was not a party
    to the lawsuit).
    Finally, the district court did not abuse its discretion when
    it denied Xcentric’s requests to extend the case management
    order deadline and to file a second amended complaint.
    AFFIRMED.