Xcentric Ventures v. Lisa Borodkin

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.