Jensen v. Charon Solutions CA2/2

Filed 10/10/13 Jensen v. Charon Solutions CA2/2
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION TWO
PEACHES NONG JENSEN et al, B240651 (c/w B244155)
Plaintiffs and Appellants, (Los Angeles County
Super. Ct. No. BC469884)
v.
CHARON SOLUTIONS, INC., et al.,
Defendants and Respondents.
CHARON SOLUTIONS, INC., et al,
Cross-complainants and Appellants,
v.
PEACHES NONG JENSEN et al.,
Cross-defendants and Respondents.
APPEALS from orders of the Superior Court of Los Angeles County. Kevin C.
Brazile, Judge. Affirmed.
Law Offices of Yvonne M. Renfrew and Yvonne M. Renfrew for Plaintiffs and
Appellants, Cross-defendants and Respondents Peaches Nong Jensen and Peachtree
Financial Corporation.
Henry J. Josefsberg for Defendants and Respondents, Cross-complainants and
Appellants Charon Solutions, Inc. and Perry L. Segal.
Nemecek & Cole, Jonathan B. Cole, Mark Schaeffer and Michael W. Feenberg for
Defendants and Respondents Marcin Lambirth, LLP, John B. Marcin, Timothy Lambirth,
Regina Ashkinadze, and Graham A. Bentley; Nemecek & Cole and David B. Owen for
Defendants and Respondents Justin Shrenger and the Law Offices of Justin J. Shrenger.
Law Offices of Mark Murad and Mark Murad for Cross-complainants and
Appellants Marcin Lambirth, LLP, John B. Marcin, Timothy Lambirth, Regina
Ashkinadze, Graham Bentley and Defendant and Respondent Lisa Miller.
******
Following a failed real estate transaction, Charon Solutions Inc. (Charon), owned
by Perry Leonard Segal (Segal), sued Peachtree Financial Corporation (Peachtree) and its
owner Peaches Nong Jensen (Jensen), who in turn cross-complained. After neither side
prevailed, they sued each other for malicious prosecution. Peachtree and Jensen also
sued a number of attorneys, including the Law Offices of Justin J, Schrenger, Justin J.
Schrenger, Marcin Lambirth LLP, John B. Marcin, Timothy Lambirth, Regina
Ashkinadze, Graham Bentley and Lisa Miller (sometimes collectively Attorneys). In
turn, the Attorneys and Charon and Segal on the one hand, and Peachtree and Jensen on
the other, filed special motions to strike the malicious prosecution complaints pursuant to
Code of Civil Procedure section 425.16.1 With the exception of two causes of action
initially alleged by Charon, the trial court granted the motions to strike and granted in
part the Attorneys’ motions for attorney fee awards.
We affirm. The trial court properly granted the Attorneys’ and Charon’s and
Segal’s motions to strike. Peachtree and Jensen failed to meet their burden to
demonstrate a probability of prevailing on essential elements of their malicious
1 Unless otherwise indicated, all further statutory references are to the Code of Civil
Procedure.
2
prosecution cause of action. Peachtree failed to establish it received a favorable
termination, Jensen failed to establish that Charon and Segal lacked probable cause to
bring and maintain the underlying action, and both parties failed to show that Charon’s
first attorney acted with malice. The trial court also properly declined to award attorney
fees for an attorney who was “of counsel” to the firm he represented. Finally, the trial
court properly granted Peachtree’s and Jensen’s motion to strike, as Charon and Segal
failed to meet their burden to show Peachtree lacked probable cause to bring and
maintain its cross-complaint.
FACTUAL AND PROCEDURAL BACKGROUND
The Parties and the Proposed Real Estate Venture.
Segal was the 100 percent owner of Charon, while Jensen was the 100 percent
owner of Peachtree. In September 1999, Jensen purchased real property located at
22393 Cass Avenue in Woodland Hills (Cass property) from Scott Silver. As early as
1999, she expressed to Segal an interest in splitting the Cass property.
In January 2000, Charon and Peachtree entered into an operating agreement for
the management of P&P Holdings, LLC (P&P Operating Agreement). They were the
only members of P&P Holdings (P&P) and each held a 50 percent interest. Neither Segal
nor Jensen were parties to the P&P Operating Agreement or held an interest in P&P. The
stated purpose of P&P was to invest in real property. Segal and Jensen verbally agreed
their intent was to seek a lot split of the Cass property for the purpose of transferring
ownership of a portion of the lot to P&P, having P&P develop the new lot with a luxury
residence and selling the residence for the benefit of P&P. Jensen applied for a lot split
in June 2002, and in 2003, the City of Los Angeles tentatively approved the lot split,
issuing a March 2004 decision date.
In March 2004, Jensen discovered defects in the Cass property that Silver had not
disclosed. After she informed Segal of the defects, he asked her not to initiate an action
against Silver, as it might jeopardize the lot split. Nonetheless, initially unbeknownst to
Segal, Jensen filed suit against Silver (Silver action), and Silver cross-complained and
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recorded a lis pendens against the Cass property. Silver’s claims were bifurcated and
tried in December 2005.
Also in December 2005, pending final argument in the Silver action, Charon gave
written notice of its withdrawal from P&P (withdrawal letter). Charon, through Segal,
wrote it had learned Jensen intentionally failed to disclose material information and gave
false testimony in the Silver action. It accused Jensen of failing to contribute to and
obstructing P&P’s venture, taking out a $200,000 line of credit on the Cass property
resulting in a lien being placed on it and secretly undertaking the Silver action contrary to
Segal’s advice. It asked for a meeting with Jensen and counsel and sought the disclosure
of specified documents, advising that it would seek to intervene in the Silver action if it
did not receive suitable responses to its requests. As a result of Jensen’s conduct, as well
as her failure to acknowledge P&P’s existence during her trial testimony, Charon gave
notification of its withdrawal, returned a number of P&P related items and demanded
reimbursement of its P&P investment. The letter added: “Further, you are advised that I
will be seeking damages in the amount of $300,000 for lost profits and estimated punitive
damages in the amount of $1,200,000 (that figure may rise as my investigation uncovers
more information). Further, I reserve the right to refer the case to the Department of Real
Estate, but will refrain from doing so at this time to give you an opportunity to cure.”
Consistent with the withdrawal letter, Charon, represented by Segal, moved to
intervene in the Silver action. The trial court denied the motion, noting that Segal could
not appear in propria persona on behalf of a corporation. Thereafter, the trial court issued
a statement of decision in the Silver action, ruling in favor of Jensen on Silver’s
rescission claims.
In March 2006, Segal signed a notice of resignation, completing Charon’s 90-day
notice of withdrawal period from P&P.
The Underlying Fraud Action.
In December 2008, Charon, represented by the Law Offices of Justin J. Shrenger
and attorney Justin Schrenger (sometimes collectively Schrenger), filed a complaint
against Peachtree, Jensen and her husband Carl Jensen (Carl) alleging causes of action for
4
fraud, breach of fiduciary duty, conversion, unjust enrichment and declaratory relief
(underlying fraud action). Peachtree, Jensen and Carl demurred to the complaint. The
trial court sustained the demurrer with leave to amend as to Peachtree and Carl, overruled
the demurrer as to Jensen on the first through fourth causes of action, and sustained the
demurrer without leave to amend as to Jensen on the fifth and sixth causes of action.
Peachtree and Jensen also filed a cross-complaint alleging breach of fiduciary
duty, negligence and fraud. After the trial court sustained a demurrer without leave to
amend the breach of fiduciary duty cause of action against Segal and with leave to amend
all other claims, Peachtree and Jensen filed a first amended cross-complaint alleging
claims for breach of contract, negligence and declaratory relief against Charon and Segal,
breach of fiduciary duty against Charon and fraud against Segal. Thereafter, the trial
court sustained a demurrer without leave to amend as to all causes of action except
breach of contract against Charon and entered a partial judgment of dismissal as to Segal.
In April 2009, now represented by Marcin Lambirth LLP and attorney Timothy
Lambirth, Charon filed a first amended complaint against Carl and Jensen only, alleging
causes of action for fraud, breach of fiduciary duty and conversion. Given that Peachtree
had not been named in the first amended complaint, the trial court entered a partial
judgment of dismissal in favor of Peachtree. Marcin Lambirth associates including
Regina Ashkinadze and Graham Bentley worked on the matter.2 As “of counsel” to
Marcin Lambirth, attorney Lisa Miller assisted in preparing the matter for trial and acted
as second chair at trial.
Jensen and Carl moved for summary judgment and alternatively for summary
adjudication. In a May 2010 order, the trial court denied their motion for summary
judgment, but granted summary adjudication in favor of Carl. Also in May 2010, Charon
dismissed Carl from the underlying fraud action with prejudice. The trial court denied a
subsequent motion for summary judgment, brought on the basis that the statute of
2 On occasion we refer to this group of attorneys as the Marcin Lambirth attorneys.
5
limitations barred Charon’s claims. It likewise denied Charon’s motion for summary
judgment on the cross-complaint.
In September 2010, trial commenced on the complaint’s and cross-complaint’s
remaining claims in the underlying fraud action. At the conclusion of Charon’s case, the
trial court denied Jensen’s motion for nonsuit. The jury rendered a special verdict in
favor of Jensen on Charon’s complaint and in favor of Charon on Jensen’s cross-
complaint.
Peachtree’s and Jensen’s Malicious Prosecution Complaint and Special
Motions to Strike.
In September 2011, Peachtree and Jensen filed a complaint for malicious
prosecution against Charon and Segal, and also against the Attorneys. They alleged the
underlying fraud action had been instituted without probable cause and with malice.
Attorneys’ special motion to strike.
The Attorneys filed special motions to strike the malicious prosecution complaint.
In support of their motions, they offered their own declarations and trial transcript
excerpts, and sought judicial notice of pleadings, motions and orders in the underlying
fraud action. Peachtree and Jensen opposed the motions. The trial court denied their
ex parte application to file an oversized opposition brief. In support of their opposition,
they filed a “master list” to which they attached a number of documents, including
pleadings, orders, transcripts, deposition excerpts, correspondence and e-mails. Jensen
also submitted an over 100-page declaration and Carl an over 50-page declaration. They
also filed evidentiary objections. Together with their replies, the Attorneys objected to
the length of Jensen’s opposition papers and filed evidentiary objections.
The trial court heard the Attorneys’ motions on January 18, 2012 and thereafter
entered orders that fully incorporated by reference its tentative ruling to grant the
motions. Preliminarily addressing procedural matters, the trial court acknowledged that
Peachtree and Jensen filed opposition papers that exceeded the page limits set by the
court. Though it identified Peachtree’s and Jensen’s failure to comply with the California
Rules of Court as an alternative basis for granting the motions, it further indicated that
6
because of the nature of the matter and the ultimate disposition it would consider all
opposition papers. With respect to evidentiary rulings, the trial court’s order provided
that its “ruling is set forth on page 8 of the Court’s Final Ruling attached hereto.”
Although the referenced page 8 is omitted from Peachtree’s and Jensen’s appendix on
appeal, their counsel acknowledged during the hearing “that Your Honor has ruled on all
evidentiary objections.” As part of its order, the trial court sustained all but one of the
Attorneys’ objections and overruled all of Peachtree’s and Jensen’s objections.
Addressing the merits of the motions, the trial court ruled the Attorneys met their
burden to show the cause of action for malicious prosecution arose from protected
activity. It further found that Peachtree could not meet its burden to show a probability
of success on the merits, as it filed its claim more than one year after it was dismissed
from the underlying fraud action, and therefore its cause of action was barred by the one-
year limitations period contained in section 340.6. As to Jensen, it ruled she could not
demonstrate a probability of success on the merits as the evidence showed neither a lack
of probable cause nor malice on the part of the Attorneys. More specifically, the denial
of her motion for nonsuit established that the causes of action at trial were objectively
tenable. With respect to the causes of action for conversion, unjust enrichment and
declaratory relief that were disposed of before trial, Jensen failed to submit admissible
evidence establishing the Attorneys acted with malice.
Charon’s and Segal’s special motion to strike.
Charon and Segal likewise filed a special motion to strike, together with a
demurrer. They sought judicial notice of pleadings, motions, orders and transcripts in the
underlying fraud action. Peachtree and Jensen opposed the motion, arguing that Charon’s
and Segal’s conduct was illegal as a matter of law and therefore not protected, and that
they established a probability of prevailing on all elements of their malicious prosecution
cause of action. Jensen and Carl submitted lengthy declarations virtually identical to
those submitted in opposition to the Attorneys’ motions. Peachtree and Jensen also filed
evidentiary objections. In turn, Charon and Segal replied and filed evidentiary objections
to the declarations.
7
On March 28, 2012, the trial court heard Charon’s and Segal’s motion to strike. It
granted the motion as to Peachtree and denied the motion in part as to Jensen. It ruled
Charon and Segal met their initial burden to show that the conduct alleged arose from
protected activity. With respect to the second prong, the trial court concluded that
Peachtree could not establish a probability of prevailing because it failed to establish that
its dismissal from the action was a favorable termination. On the other hand, it ruled
Jensen had met her burden to show a probability of prevailing with respect to the causes
of action for unjust enrichment and declaratory relief that were eliminated from the action
via a demurrer sustained without leave to amend. The trial court determined that the
denial of Jensen’s motion for nonsuit demonstrated she could not establish a lack of
probable cause as to the remaining causes of action that went to trial.
At the hearing, the trial court stated that written evidentiary rulings would be
forthcoming. The next day, the trial court issued a separate order in which it sustained in
part and overruled in part Charon’s and Segal’s evidentiary objections to Carl’s
declaration. Peachtree and Jensen appealed from the orders granting the motions to
strike.
Motions for attorney fees.
Shrenger, the Marcin Lambirth attorneys and Miller moved for an award of
attorney fees pursuant to section 425.16, subdivision (c)(1). Peachtree and Jensen
opposed the motion, arguing in part that fees were not available because the Marcin
Lambirth attorneys were represented by one of their own employees. In support of their
opposition, they submitted evidence designed to show that counsel for the Marcin
Lambirth attorneys, Mark Murad (Murad), was associated with the firm. The Marcin
Lambirth attorneys and Miller objected to Peachtree’s and Jensen’s evidence and argued
that Murad was a former associate, currently operating as an independent contractor and
“of counsel” to the firm. They offered evidence designed to demonstrate that
relationship.
The trial court granted Shrenger’s and the Marcin Lambirth attorneys’ motions,
and denied Miller’s motion. With respect to Miller, the trial court reasoned the evidence
8
showed she and her attorney Murad were both of counsel at Marcin Lambirth, and there
was insufficient evidence to show she incurred attorney fees in bringing the motion. The
trial court reduced the amount of the fees requested by the Marcin Lambirth attorneys,
declining to award any amount for work performed by Murad. The Marcin Lambirth
attorneys appealed.
Charon’s and Segal’s Malicious Prosecution Cross-Complaint and Special
Motion to Strike.
In May 2012, Charon and Segal filed a cross-complaint alleging a single cause of
action for malicious prosecution on the basis of Peachtree’s and Jensen’s filing the cross-
complaint and first amended cross-complaint in the underlying fraud action. In turn,
Peachtree and Jensen filed a special motion to strike. They argued Charon and Segal
could not establish a probability of prevailing because, among other reasons, the denial of
summary judgment demonstrated probable cause and they relied on advice of counsel. In
support of the motion, Jensen submitted her own declaration and incorporated her prior
declarations. She attached as exhibits certain pleadings in the underlying fraud action.
Charon and Segal opposed the motion, asserting that Peachtree’s and Jensen’s arguments
were premised on their concealment of evidence and fraud. In support of their
opposition, they submitted Segal’s declaration, pleadings, motions, orders, deposition
excerpts and a number of documents relating to the Cass property. They also filed
evidentiary objections to Jensen’s declaration. Peachtree and Jensen replied and filed
evidentiary objections.
Following a July 2012 hearing, the trial court granted the motion to strike. Again
adopting its tentative ruling as its final order, the trial court ruled Charon and Segal failed
to meet their burden to show a probability of prevailing on any claims. The trial court
overruled the evidentiary objections to Jensen’s declaration, and sustained in part and
overruled in part the objections to Segal’s declaration.
Charon and Segal appealed. On our own motion, we consolidated their appeal
with those of Peachtree and Jensen and the Marcin Lambirth attorneys.
9
DISCUSSION
We address the four challenged rulings: The trial court’s granting the Attorneys’
motion to strike, granting in part Charon’s and Segal’s motion to strike, denying in part
the Marcin Lambirth attorneys’ motion for attorney fees and granting Peachtree’s and
Jensen’s motion to strike.
I. Applicable Law Governing Special Motions to Strike and Standards of
Review.
A special motion to strike under section 425.16, also known as the “anti-SLAPP”3
statute, allows a defendant to seek early dismissal of a lawsuit involving 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 the California
Constitution in connection with a public issue.” (§ 425.16, subd. (b)(1).)
A defendant bringing a special motion to strike a complaint must make “a
threshold showing that the challenged cause of action is one arising from protected
activity” as defined in section 425.16, subdivision (b)(1). (Equilon Enterprises v.
Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67.) “‘A defendant meets this burden by
demonstrating that the act underlying the plaintiff’s cause fits one of the categories
spelled out in section 425.16, subdivision (e)’ [citation].” (Navellier v. Sletten (2002) 29
Cal.4th 82, 88.)
“‘If the defendant makes that showing, the burden shifts to the plaintiff to establish
a probability he or she will prevail on the claim at trial, i.e., to proffer a prima facie
showing of facts supporting a judgment in the plaintiff’s favor.’ [Citation.]” (Roberts v.
Los Angeles County Bar Assn. (2003) 105 Cal.App.4th 604, 613; see also Governor Gray
Davis Com. v. American Taxpayers Alliance (2002) 102 Cal.App.4th 449, 456 [the
defendant bears the burden on the threshold issue, while the plaintiff bears the burden on
the second issue].) “In assessing the probability of prevailing, a court looks to the
3 “SLAPP is an acronym for ‘strategic lawsuit against public participation.’”
(Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 732, fn. 1.)
10
evidence that would be presented at trial, similar to reviewing a motion for summary
judgment; a plaintiff cannot simply rely on its pleadings, even if verified, but must
adduce competent, admissible evidence. [Citations.]” (Roberts v. Los Angeles County
Bar Assn., supra, at pp. 613–614; accord, Hall v. Time Warner, Inc. (2007) 153
Cal.App.4th 1337, 1346 [the plaintiff’s showing “must consist of evidence that would be
admissible at trial”]; Evans v. Unkow (1995) 38 Cal.App.4th 1490, 1497–1498 [an
averment on information and belief is insufficient to show a probability of prevailing].)
“The court also considers the defendant’s opposing evidence, but only to determine if it
defeats the plaintiff’s showing as a matter of law. [Citation.] That is, the court does not
weigh the evidence or make credibility determinations. [Citations.]” (Kashian v.
Harriman (2002) 98 Cal.App.4th 892, 906.)
We review de novo the legal question of whether the special motion to strike was
properly granted, conducting an independent review of the record. (Flatley v. Mauro
(2006) 39 Cal.4th 299, 325 (Flatley); Bleavins v. Demarest (2011) 196 Cal.App.4th 1533,
1539; Paiva v. Nichols (2008) 168 Cal.App.4th 1007, 1016.) In other words, “our review
is conducted in the same manner as the trial court in considering an anti-SLAPP motion.”
(Paulus v. Bob Lynch Ford, Inc. (2006) 139 Cal.App.4th 659, 672.) We review the trial
court’s ruling and not its rationale. (E.g., City of Santa Monica v. Stewart (2005) 126
Cal.App.4th 43, 80.)
We review evidentiary rulings made in connection with a special motion to strike
for an abuse of discretion. (Hall v. Time Warner, Inc., supra, 153 Cal.App.4th at p. 1348,
fn. 3; Morrow v. Los Angeles Unified School Dist. (2007) 149 Cal.App.4th 1424, 1444.)
“‘A trial court’s exercise of discretion in admitting or excluding evidence . . . will not be
disturbed except on a showing the trial court exercised its discretion in an arbitrary,
capricious, or patently absurd manner that resulted in a manifest miscarriage of justice
. . . .’ [Citations.]” (San Lorenzo Valley Community Advocates for Responsible
Education v. San Lorenzo Valley Unified School Dist. (2006) 139 Cal.App.4th 1356,
1419.) But in order to demonstrate an abuse of discretion, an appellant must
affirmatively challenge the evidentiary rulings on appeal. In other words, the asserted
11
erroneous evidentiary rulings must be identified “as a distinct assignment of error” and be
supported by analysis and citation to authority. (Roe v. McDonald’s Corp. (2005) 129
Cal.App.4th 1107, 1114.) When an appellant fails to do so, “any issues concerning the
correctness of the trial court’s evidentiary rulings have been waived. [Citations.]”
(Lopez v. Baca (2002) 98 Cal.App.4th 1008, 1014–1015.)
II. The Trial Court Properly Granted the Attorneys’ and Charon’s and Segal’s
Special Motions to Strike.
In separate orders after separate hearings, the trial court first granted the
Attorneys’ special motion to strike and thereafter, with one exception, granted Charon’s
and Segal’s special motion to strike. Both motions addressed Peachtree’s and Jensen’s
complaint alleging a single cause of action for malicious prosecution. And in both
orders, the trial court ruled that the moving parties demonstrated the cause of action arose
from protected activity and that Peachtree and Jensen failed to demonstrate a probability
of prevailing. We find no error.
A. Arising from Protected Activity.
In their malicious prosecution complaint, Peachtree and Jensen alleged that the
underlying fraud action was prosecuted without probable cause and with malice. As
explained in Daniels v. Robbins (2010) 182 Cal.App.4th 204, 215: “The plain language
of the anti-SLAPP statute dictates that every claim of malicious prosecution is a cause of
action arising from protected activity because every such claim necessarily depends upon
written and oral statements in a prior judicial proceeding.” (Accord, Jarrow Formulas,
Inc. v. LaMarche, supra, 31 Cal.4th at pp. 734–735 [“by its terms, section 425.16
potentially may apply to every malicious prosecution action, because every such action
arises from an underlying lawsuit, or petition to the judicial branch”]; Plumley v. Mockett
(2008) 164 Cal.App.4th 1031, 1047 [“malicious prosecution action arises from acts in
furtherance of defendants’ right of petition or free speech”].) We agree with the trial
court that the Attorneys and Charon and Segal satisfied their threshold burden to show
the complaint arose from protected activity, as the allegations related to the filing of an
action and their right to petition.
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We reject Peachtree’s and Jensen’s argument that their allegations concerning the
withdrawal letter established the moving parties had engaged in unlawful or criminal
activity that would not qualify as protected activity under section 425.16. In Flatley,
supra, 39 Cal.4th at page 305, the court held communications that amounted to criminal
extortion were not protected activity under the anti-SLAPP statute. There, the defendant
attorney sent a letter to an entertainer threatening to publicly accuse him of rape unless he
“settled” by paying a sum of money to assure silence. (Id. at pp. 308–309, 329.) Relying
on Penal Code section 518’s definition of extortion as “‘the obtaining of property from
another, with his consent . . . induced by a wrongful use of force or fear,’” the Supreme
Court deemed the letter “criminal extortion as a matter of law.” (Flatley, supra, at
pp. 326, 330.) The Court held “that where a defendant brings a motion to strike under
section 425.16 based on a claim that the plaintiff’s action arises from activity by the
defendant in furtherance of the defendant’s exercise of protected speech or petition rights,
but either the defendant concedes, or the evidence conclusively establishes, that the
assertedly protected speech or petition activity was illegal as a matter of law, the
defendant is precluded from using the anti-SLAPP statute to strike the plaintiff’s action.”
(Id. at p. 320.)
Peachtree and Jensen maintain that Charon’s statements in the withdrawal letter
constituted extortion as a matter of law. They alleged Charon and Segal “threatened
JENSEN that if she would not pay them a sum of money, then they would seek to
intervene in the Silver Action” and further alleged Charon and Segal threatened Peachtree
and Jensen “that if they did not ‘cure’ what they alleged to be ‘damages’ sustained as the
alleged result of acts by JENSEN in connection with the Cass Property—by JENSEN or
PEACHTREE paying to SEGAL and/or CHARON SOLUTIONS a sum of money [i.e.,
$300,000]—that they would not only sue JENSEN and/or PEACHTREE for more than a
million dollars” and would also complain about Jensen’s unethical conduct “to the
Department of Real Estate.” In the withdrawal letter—which Peachtree and Jensen
offered as an exhibit in opposition to the motions to strike—Charon asked for a
settlement meeting and offered to pay for Peachtree’s counsel’s time, and stated that it
13
would seek to intervene in the event a meeting did not take place or it did not receive
suitable responses to its inquiries. After outlining the reasons for its withdrawal from
P&P and requesting reimbursement of its investment in P&P—then valued at
approximately $22,000—Charon wrote: “Further, you are advised that I will be seeking
damages in the amount of $300,000 for lost profits and estimated punitive damages in the
amount of $1,200,000 (that figure may rise as my investigation uncovers more
information). Further, I reserve the right to refer the case to the Department of Real
Estate, but will refrain from doing so at this time to give you an opportunity to cure.”
Lest every prelitigation settlement demand be deemed extortion, the Flatley Court
cautioned that its “conclusion that Mauro’s communications constituted criminal
extortion as a matter of law are based on the specific and extreme circumstances of this
case. Extortion is the threat to accuse the victim of a crime or ‘expose, or impute to him
. . . any deformity, disgrace or crime’ (Pen. Code, § 519) accompanied by a demand for
payment to prevent the accusation, exposure, or imputation from being made. Thus, our
opinion should not be read to imply that rude, aggressive, or even belligerent prelitigation
negotiations, whether verbal or written, that may include threats to file a lawsuit, report
criminal behavior to authorities or publicize allegations of wrongdoing, necessarily
constitute extortion.” (Flatley, supra, 39 Cal.4th at p. 332, fn. 16.) Accordingly, cases
following Flatley have concluded that prelitigation threats similar to those made in the
withdrawal letter are protected activity. (See, e.g., Feldman v. 1100 Park Lane
Associates (2008) 160 Cal.App.4th 1467, 1481 [landlord’s prelitigation threats to tenants,
including demanding rent above lease amount, commencing action after consultation
with a federal judge and warning they would never be able to rent another apartment in
the area, deemed communications protected by § 425.16]; Rohde v. Wolf (2007) 154
Cal.App.4th 28, 36–37 [attorney’s voicemail message to client’s sister accusing her of
conspiracy to defraud and threatening “to take ‘appropriate action’” held protected
activity made in anticipation of litigation which the attorney “‘contemplated in good faith
and under serious consideration’”].)
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Here, the Attorneys, Charon and Segal have not conceded, nor did any evidence
conclusively establish, that their protected activities constituted illegal extortion. The
withdrawal letter is unlike the demand letter in Mendoza v. Hamzeh (2013) 215
Cal.App.4th 799, 807, which the court held constituted criminal extortion as a matter of
law outside the protection of the anti-SLAPP statute. In relevant part, the defendant
attorney’s demand letter in that case stated: “‘As you are aware, I have been retained to
represent Media Print & Copy (“Media”). We are in the process of uncovering the
substantial fraud, conversion and breaches of contract that your client has committed on
my client. . . . To date we have uncovered damages exceeding $75,000, not including
interest applied thereto, punitive damages and attorneys’ fees. If your client does not
agree to cooperate with our investigation and provide us with a repayment of such
damages caused, we will be forced to proceed with filing a legal action against him, as
well as reporting him to the California Attorney General, the Los Angeles District
Attorney, the Internal Revenue Service regarding tax fraud, the Better Business Bureau,
as well as to customers and vendors with whom he may be perpetrating the same fraud
upon [sic].’” (Id. at p. 802.) The court found that the attorneys’ threat to report criminal
conduct to applicable enforcement agencies and others, coupled with the demand for the
payment of money, constituted extortion as a matter of law. (Id. at p. 806.) Here, in
contrast, the withdrawal letter threatened to seek damages through litigation; though
Charon reserved the right to report Jensen’s conduct, it did not threaten to report Jensen’s
conduct unless she paid a sum of money.
In any event, even if we could construe the withdrawal letter as being extortionate,
the letter did not form the basis for Peachtree’s and Jensen’s malicious prosecution
complaint. Rather, the complaint was based on the filing and prosecution of the
complaint and first amended complaint in the underlying fraud action. “In general,
whether a cause of action is subject to a motion to strike under the SLAPP statute turns
on whether the gravamen of the cause of action targets protected activity.” (Haight
Ashbury Free Clinics, Inc. v. Happening House Ventures (2010) 184 Cal.App.4th 1539,
1550.) “[W]here the defendant shows that the gravamen of a cause of action is based on
15
nonincidental protected activity as well as nonprotected activity, it has satisfied the first
prong of the SLAPP analysis.” (Id. at p. 1551, fn. 7; accord, M.F. Farming Co. v. Couch
Distributing Co., Inc. (2012) 207 Cal.App.4th 180, 197 [“Since the protected activity is
not merely incidental, the first prong is satisfied and the burden shifts to plaintiff MF to
show a probability of success on the merits”].) Because the underlying fraud action was
far more than incidental to Peachtree’s and Jensen’s malicious prosecution complaint, we
conclude the Attorneys, Charon and Segal met their burden to establish the complaint
arose from protected activity.
B. Probability of Success on the Merits.
Once the moving parties established that Peachtree’s and Jensen’s malicious
prosecution complaint arose out of activity protected by the anti-SLAPP law, the burden
shifted to them to demonstrate a probability they could prevail on the merits of their
complaint. To establish a probability of prevailing, “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.]” (Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811,
821.)
In order to show a probability of prevailing on their malicious prosecution claim,
Peachtree and Jensen were required to show the underlying fraud action was (1) initiated
by or at the direction of the party that is the defendant in the malicious prosecution
action, (2) legally terminated in favor of the party that is the plaintiff in the malicious
prosecution action, (3) initiated without probable cause, and (4) initiated with malice.
(Siebel v. Mittlesteadt (2007) 41 Cal.4th 735, 740.) To defeat the special motions to
strike, Peachtree and Jensen were required to establish a probability of success as to all
elements of their claim. (See Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d
863, 875; JSJ Limited Partnership v. Mehrban (2012) 205 Cal.App.4th 1512, 1527;
Contemporary Services Corp. v. Staff Pro Inc. (2007) 152 Cal.App.4th 1043, 1058.) In
other words, if the party opposing a special motion to strike is unable to establish a
16
probability of prevailing on even one element, the trial court must grant the motion to
strike, as it did here.
1. Peachtree failed to show it received a favorable termination on
the merits.
Charon’s initial complaint in the underlying fraud action alleged several causes of
action against both Peachtree and Jensen. They demurred to each cause of action on the
grounds Charon failed to plead facts sufficient to state a cause of action and each cause of
action was uncertain. The trial court overruled the demurrer to the extent it argued the
complaint was barred by the statute of limitations and, without further specificity,
sustained the demurrer with leave to amend as to Peachtree. Charon’s first amended
complaint did not name Peachtree as a defendant. Consequently, in January 2010, the
trial court dismissed the complaint with prejudice as to Peachtree and entered a partial
judgment of dismissal in its favor. In connection with Charon’s and Segal’s special
motion to strike, the trial court ruled Peachtree failed to establish its dismissal from the
underlying fraud action constituted a favorable termination on the merits.4
“In order for the termination of a lawsuit to be considered favorable to the
malicious prosecution plaintiff, the termination must reflect the merits of the action and
the plaintiff’s innocence of the misconduct alleged in the lawsuit. . . . Where a
proceeding is terminated other than on the merits, the reasons underlying the termination
must be examined to see if the termination reflects the opinion of either the court or the
prosecuting party that the action would not succeed. [Citation.]” (Pender v. Radin
(1994) 23 Cal.App.4th 1807, 1814.) “If the resolution of the underlying litigation ‘leaves
some doubt as to the defendant’s innocence or liability[, it] is not a favorable termination,
4 As to the Attorneys, the trial court found Peachtree’s malicious prosecution claim
accrued in January 2010 and ruled Peachtree could not prevail because the applicable
one-year statute of limitations barred its claim. Because we find the lack of favorable
termination dispositive as to all moving parties, we need not address this alternative
reason for concluding Peachtree could not demonstrate a probability of prevailing.
17
and bars that party from bringing a malicious prosecution action against the underlying
plaintiff.’ [Citation.]” (Eells v. Rosenblum (1995) 36 Cal.App.4th 1848, 1855.)
Though Peachtree maintains that a voluntary dismissal is, without exception, a
favorable termination on the merits, the law is to the contrary.5 Addressing whether a
voluntary dismissal satisfies the first element of a malicious prosecution claim, the court
in Robbins v. Blecher (1997) 52 Cal.App.4th 886, 893–894, explained: “‘A voluntary
dismissal may be an implicit concession that the dismissing party cannot maintain the
action and may constitute a decision on the merits. [Citations.] “It is not enough,
however, merely to show that the proceeding was dismissed.” [Citation.] The reasons
for the dismissal of the action must be examined to determine whether the termination
reflected on the merits.’ [Citations.] A voluntary dismissal on technical grounds, such as
lack of jurisdiction, laches, the statute of limitations or prematurity, does not constitute a
favorable termination because it does not reflect on the substantive merits of the
underlying claim. [Citations.]” (See also Contemporary Services Corp. v. Staff Pro Inc.,
supra, 152 Cal.App.4th at pp. 1056–1057 [voluntary dismissal to avoid costly litigation
not a favorable termination on the merits]; Oprian v. Goldrich, Kest & Associates (1990)
220 Cal.App.3d 337, 344 [voluntary dismissal to avoid cost and inconvenience of second
trial not a favorable termination on the merits].)
Here, Peachtree did not meet its burden to show that its omission from the first
amended complaint reflected either the trial court’s, the Attorneys’ or Charon’s decision
the action would not be successful. The trial court sustained Peachtree’s demurrer with
leave to amend, thereby leaving open the possibility that Charon’s claim could succeed.
There was no evidence—including in Jensen’s declaration submitted in opposition to
Charon’s and Segal’s special motion to strike—to show that the Attorneys or Charon
5 The cases Peachtree cites are not even relevant to let alone supportive of its point.
(See Kyle v. Carmon (1999) 71 Cal.App.4th 901, 909 [plaintiff may voluntarily dismiss a
complaint following an anti-SLAPP motion]; Adler v. Vaicius (1993) 21 Cal.App.4th
1770, 1776 [defendant has the right to seek costs after a dismissal]; Roybal v. University
Ford (1989) 207 Cal.App.3d 1080, 1085 [dismissal with prejudice of municipal court
action operated as res judicata barring superior court action].)
18
failed to include Peachtree in the first amended complaint because they opined the claim
would not succeed. We agree with the trial court “[t]he evidence presented is insufficient
to determine that the claims against Peachtree Financial and the decision to remove
Plaintiff as a defendant in the underlying litigation were based on the merits.” For this
reason, Peachtree’s reliance on Sycamore Ridge Apartments LLC v. Naumann (2007) 157
Cal.App.4th 1385 is misplaced. There, the finding of favorable termination was based on
evidence reasonably suggesting the plaintiff’s dismissal occurred because the claims
lacked merit; the evidence included the plaintiff’s failure to appear for two depositions
and discovery responses indicating she sustained no damage. (Id. at pp. 1400–1401.)
Because Peachtree failed to make such an evidentiary showing, it could not demonstrate a
probability of prevailing on one of the essential elements of its malicious prosecution
claim.6
2. Jensen failed to show the Attorneys and Charon lacked probable
cause to file and litigate the first amended complaint.
With respect to Jensen, we find dispositive the evidence showing probable cause
to initiate and prosecute the underlying fraud action. For that reason, we will address the
element of probable cause first and exclusively. (See Antounian v. Louis Vuitton
Malletier (2010) 189 Cal.App.4th 438, 448 [resolving probable cause element first for
purposes of anti-SLAPP motion].) The central element of probable cause is “a legal
question to be resolved by the court.” (Plumley v. Mockett, supra, 164 Cal.App.4th at
p. 1047.)
A defendant is not liable for malicious prosecution if it had probable cause to
initiate and maintain the prior lawsuit. This element requires the court to make an
objective determination as to the reasonableness of the defendant’s conduct to ascertain
whether, on the facts known to the defendant, institution of the prior action was
6 In light of our conclusion Peachtree did not show a probability of success on the
favorable termination element of malicious prosecution, we need not reach the parties’
arguments on the probable cause and malice elements of the cause of action, their other
arguments related to favorable termination or their statute of limitations argument.
19
objectively legally tenable. (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th
260, 292; Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 878 (Sheldon
Appel).) “A litigant will lack probable cause for his action either if he relies upon facts
which he has no reasonable cause to believe to be true, or if he seeks recovery upon a
legal theory which is untenable under the facts known to him.” (Sangster v. Paetkau
(1998) 68 Cal.App.4th 151, 164–165.) “Only those actions that any reasonable attorney
would agree are totally and completely without merit may form the basis for a malicious
prosecution suit.” (Zamos v. Stroud (2004) 32 Cal.4th 958, 970.) Probable cause must
exist for every cause of action advanced in the underlying suit. (Crowley v. Katleman
(1994) 8 Cal.4th 666, 678–679.) “If the court determines that there was probable cause to
institute the prior action, the malicious prosecution action fails, whether or not there is
evidence that the prior suit was maliciously motivated.” (Sheldon Appel, supra, at
p. 875.)
“Under established law, certain nonfinal rulings on the merits may serve as the
basis for concluding that there was probable cause for prosecuting the underlying case on
which a subsequent malicious prosecution action is based. [Citation.]” (Paiva v.
Nichols, supra, 168 Cal.App.4th at p. 1020.) Though the jury in the underlying fraud
action ultimately found in Jensen’s favor, multiple interim rulings demonstrated that the
Attorneys and Charon had probable cause to bring and pursue the first amended
complaint in that action. Initially, the trial court overruled Jensen’s demurrer to the four
causes of action first alleged in the original complaint and subsequently re-alleged in the
first amended complaint. (See Swat-Fame, Inc. v. Goldstein (2002) 101 Cal.App.4th 613,
626 [“because the trial court overruled Swat–Fame’s demurrer to the fraud claim, the
lawyers necessarily had probable cause to bring the claim for fraud”], disapproved on
another point in Zamos v. Stroud, supra, 32 Cal.4th at p. 973; see also Franklin Mint Co.
v. Manatt, Phelps & Phillips, LLP (2010) 184 Cal.App.4th 313, 365 [applying Swat-
Fame to the denial of a motion to dismiss in federal court, and characterizing Swat-Fame
setting forth a “sound rule, . . . consistent with the principle that ‘[c]laims that have
20
succeeded at a hearing on the merits . . . are not so lacking in potential merit that a
reasonable attorney or litigant would necessarily have recognized their frivolousness’”].)
Following the demurrer ruling, the trial court denied Jensen’s motion for summary
judgment. While the interim adverse judgment rule first provided that a victory at trial
reversed on appeal sufficed to establish probable cause, the rule has been extended to the
denial of a defense motion for summary judgment. (Antounian v. Louis Vuitton
Malletier, supra 189 Cal.App.4th at p. 450.) Our Supreme Court in Wilson v. Parker,
Covert & Chidester, supra, 28 Cal.4th at page 824, elaborated: “Denial of a defense
summary judgment motion on grounds that a triable issue exists, or of a nonsuit, while
falling short of a determination of the merits, establishes that the plaintiff has
substantiated, or can substantiate, the elements of his or her cause of action with evidence
that, if believed, would justify a favorable verdict . . . . [A] claimant or attorney who is in
possession of such evidence has the right to bring the claim, even where it is very
doubtful the claim will ultimately prevail.” (Accord, Hutton v. Hafif (2007) 150
Cal.App.4th 527, 550 [it is a “well-established rule of law applicable to a malicious
prosecution complaint that the denial of a summary judgment motion in the underlying
action establishes probable cause to file that lawsuit”]; Roberts v. Sentry Life Insurance
(1999) 76 Cal.App.4th 375, 384 [“denial of defendant’s summary judgment in an earlier
case normally establishes there was probable cause to sue, thus barring a later malicious
prosecution suit”].)7
Finally, at the conclusion of the evidence during the trial in the underlying fraud
action, the trial court denied Jensen’s motion for nonsuit. She argued there was
7 Because the summary judgment ruling addressed only whether the statute of
limitations barred the action, the trial court did not find the denial of the motion
indicative of probable cause. It relied on the Wilson court’s qualification that “[d]enial of
a summary judgment motion on procedural or technical grounds, rather than for existence
of triable issues of material fact, says nothing regarding the potential merit of the action
and hence does not establish probable cause for its initiation.” (Wilson v. Parker, Covert
& Chidester, supra, 28 Cal.4th at p. 823.) We need not resolve here whether overcoming
a statute of limitations bar is a technical or procedural ground unrelated to the action’s
merits, given the other favorable interim rulings that involved the claims’ merits.
21
insufficient evidence to support any of the four causes of action alleged in the first
amended complaint, emphasizing the lack of evidence of damages. Charon opposed the
motion, summarizing the evidence supporting its claims. The trial court ruled there was
“sufficient evidence for the jury to decide these issues.” This ruling established that
Charon had probable cause to bring the underlying fraud action, as the denial of a motion
for nonsuit “is tantamount to a judicial declaration that, at a minimum, the . . . claims
were objectively tenable.” (Hufstedler, Kaus & Ettinger v. Superior Court (1996) 42
Cal.App.4th 55, 69; see also Wilson v. Parker, Covert & Chidester, supra, 28 Cal.4th at
p. 824 [finding that denial of a motion for nonsuit establishes the plaintiff can
substantiate its claims with sufficient evidence to support a favorable verdict].)
Jensen argues that these interim rulings cannot support a finding of probable cause
because they were obtained by fraud or perjury. (See Plumley v. Mockett, supra, 164
Cal.App.4th at p. 1053 [describing exception to interim adverse judgment rule “where the
underlying victory was obtained by fraud or perjury”]; see also Roberts v. Sentry Life
Insurance, supra, 76 Cal.App.4th at p. 384 [“if denial of summary judgment was induced
by materially false facts submitted in opposition, equating denial with probable cause
might be wrong”].) The “fraud exception” requires both “‘“knowing use of false and
perjured testimony”’” and a showing that the interim ruling would not have been made
“but for” the use of the false evidence. (Antounian v. Louis Vuitton Malletier, supra, 189
Cal.App.4th at p. 452.)
Jensen cannot raise the fraud exception against the Attorneys because she cannot
support her contention with any admissible evidence. Her election not to include the trial
court’s evidentiary rulings as part of her appendix does not change their effect. The trial
court sustained all but one of the Attorneys’ 15 evidentiary objections to her and Carl’s
declarations, which effectively struck the entire declarations from evidence. Notably,
objection numbers five and six were directed to Jensen’s “evidence” that the denial of
summary judgment and nonsuit involved false testimony. Because she has denied their
existence, Jensen has not challenged the evidentiary rulings on appeal. Consequently, we
deem any issue concerning those rulings to have been waived and find the evidence was
22
properly excluded. (E.g., Roe v. McDonald’s Corp., supra, 129 Cal.App.4th at pp. 1113–
1115.) Absent any evidence of Charon’s fraud in connection with the interim rulings,
Jensen cannot meet her burden to overcome the effect of those rulings demonstrating
probable cause.
The same evidentiary rulings were not made in connection with Charon’s and
Segal’s special motion to strike. Nonetheless, even if we consider Jensen’s evidence, we
cannot conclude the fraud exception applies. Her declaration outlines in detail the
supposed false testimony given by Segal at trial which formed the basis of the denial of
the motion for nonsuit. Such testimony included Segal’s claim that Jensen concealed the
existence of the Silver action from him, concealed the existence of the lis pendens
recorded by Silver against the Cass property and concealed her obtaining a line of credit
against the Cass property. That testimony, however, was already considered by the jury
in the underlying fraud action. Though Jensen seeks to characterize Segal’s testimony as
false, the jury concluded otherwise, making the finding in its special verdict that Jensen
and Charon were in a special relationship of trust or confidence and that Jensen
“intentionally fail[ed] to disclose an important fact that Charon Solutions, Inc. did not
know and could not reasonably have discovered.” We agree with the conclusion in
Plumley v. Mockett, supra, 164 Cal.App.4th at page 1056 “that where claims of fraud or
perjury are litigated and rejected by a fact finder in an underlying case, those same claims
cannot be relied on to establish the absence of probable cause in a subsequent malicious
prosecution suit. Stated differently, one cannot relitigate adversely decided factual
matters for purposes of establishing the fraud exception to the interim adverse judgment
rule.” (See also Paiva v. Nichols, supra, 168 Cal.App.4th at p. 1027 [alleged
misrepresentations that were raised before the trial court cannot be used to show the trial
court’s ruling was fraudulently induced].) Thus, the testimony cited by Jensen cannot
support application of the fraud exception. Moreover, Jensen’s failure to demonstrate
that Segal knowingly used false or perjured testimony constitutes an independent basis
why the fraud exception does not apply. (See Antounian v. Louis Vuitton Malletier,
23
supra, 189 Cal.App.4th at p. 452.) Accordingly, the interim rulings likewise established
probable cause for the purpose of Charon’s and Segal’s special motion to strike.
We find no merit to Jensen’s remaining challenge that Charon could not have had
probable cause to institute the underlying fraud action because it lacked standing to bring
claims for injuries suffered by P&P. The court in Iglesia Evangelica Latina, Inc. v.
Southern Pacific Latin American Dist. of the Assemblies of God (2009) 173 Cal.App.4th
420, 445, summarized the relevant principles: “Standing is a threshold issue, because
without it no justiciable controversy exists. [Citation.] ‘Every action must be prosecuted
in the name of the real party in interest . . . .’ [Citation.] ‘Generally, “the person
possessing the right sued upon by reason of the substantive law is the real party in
interest.” [Citations.]’ [Citation.] To have standing, a party must be beneficially
interested in the controversy, and have ‘some special interest to be served or some
particular right to be preserved or protected.’ [Citation.] This interest must be concrete
and actual, and must not be conjectural or hypothetical. [Citation.]” Lack of standing is
a jurisdictional defect that mandates dismissal of an action, and it can be raised for the
first time at any stage in the action. (Cummings v. Stanley (2009) 177 Cal.App.4th 493,
501.)
In view of the mandated remedy for lack of standing, we need not address
Jensen’s final challenge. Even if we were to conclude that Charon lacked standing, such
a finding would not change our disposition, as it would negate the favorable termination
element of Jensen’s malicious prosecution claim. (See Ludwig v. Superior Court (1995)
37 Cal.App.4th 8, 26, fn. 30 [“we question whether even a dismissal based on any lack of
standing or exhaustion of administrative remedies should be held to reflect on the
merits”]; Minasian v. Sapse (1978) 80 Cal.App.3d 823, 827 [“a dismissal . . . for lack of
jurisdiction . . . not only is not on the merits, it is unreflective of the merits”].) In other
words, if Jensen were able to show a lack of probable cause due to Charon’s lack of
standing, she would be unable to show the underlying fraud action was favorably
terminated on the merits. She would be unable to demonstrate a probability of prevailing
24
on one of the critical elements of her malicious prosecution claim, and we would
conclude the special motion to strike was properly granted as to Charon and Segal.8
3. Peachtree and Jensen failed to show Schrenger acted with
malice.
Because a malicious prosecution action may be based on a single cause of action
in a lawsuit involving multiple claims (see Crowley v. Katleman, supra, 8 Cal.4th at
p. 693), we discuss the remaining two causes of action that were alleged in the original
complaint but not the first amended complaint in the underlying fraud action. The trial
court denied Charon’s and Segal’s motion to strike as to those two claims on the basis
that Jensen met her burden to establish a probability of prevailing on all three malicious
prosecution elements as to those parties. In connection with the Attorneys’ special
motion to strike, however, the trial court ruled Jensen failed to meet her burden to
establish the element of malice.9 We agree that Peachtree’s and Jensen’s failure to offer
admissible evidence showing malice supported the trial court’s conclusion that they could
not establish a probability of prevailing against Shrenger on the unjust enrichment and
declaratory relief claims alleged in the original complaint.
The malice element of malicious prosecution “relates to the subjective intent or
purpose with which the defendant acted in initiating the prior action. [Citation.] The
8 We acknowledge that the parties again have raised multiple arguments in support
of and in opposition to Jensen’s position that the order granting the special motion to
strike should be reversed. “Ordinarily, when an appellate court concludes that affirmance
of the judgment is proper on certain grounds it will rest its decision on those grounds and
not consider alternative grounds which may be available.” (Filipino Accountants’ Assn.
v. State Bd. of Accountancy (1984) 155 Cal.App.3d 1023, 1029.) We find no basis to
depart from the ordinary rule.
9 We note that the trial court also ruled Jensen could not establish a probability of
prevailing for her failure to offer evidence of malice in connection with the conversion
claim alleged in the first amended complaint, explaining that claim was not part of the
motion for nonsuit. The trial court made no such distinction in its later order granting in
part Charon’s and Segal’s motion to strike, and we likewise find no admissible evidence
in the record establishing that the motion for nonsuit was not directed to all claims
alleged in the first amended complaint.
25
motive of the defendant must have been something other than that of bringing a perceived
guilty person to justice or the satisfaction in a civil action of some personal or financial
purpose. [Citation.] The plaintiff must plead and prove actual ill will or some improper
ulterior motive. [Citation.] It may range anywhere from open hostility to indifference.
[Citation.]” (Downey Venture v. LMI Ins. Co (1998) 66 Cal.App.4th 478, 494.)
Shrenger represented Charon when it filed the original complaint against
Peachtree and Jensen in December 2009.10 Approximately three months later, he moved
to be relieved as counsel and ultimately substituted out of the action before the first
amended complaint was filed. In support of his special motion to strike, Shrenger
submitted a declaration in which he averred he evaluated the facts as provided to him by
Segal, he had no reason to know that any of the information Segal provided was
inaccurate or untruthful, and he filed the complaint against Peachtree and Jensen on the
basis of Segal’s information and his own business litigation experience. He further
averred that he had no knowledge of Peachtree or Jensen before being retained by
Charon, and he bore no “ill will or malice towards either of these parties.” He stated that
his “sole intention in drafting and filing the Complaint was to obtain the redress for
CHARON which, based upon the information that had been provided to me, I believed it
to be entitled.”
While Shrenger established the absence of any improper motive, Jensen offered no
admissible evidence to support a showing of malice. Nonetheless, she argues that malice
should be inferred from evidence showing a lack of probable cause. (See Soukup v. Law
Offices of Herbert Hafif, supra, 39 Cal.4th at p. 292.) Again, however, her contention
10 There was no evidence offered to show that any of the other Attorneys were
involved in the decision to file the unjust enrichment and declaratory relief causes of
action, and those Attorneys did not maintain those claims once they were counsel of
record. Thus, Peachtree and Jensen failed to show any probability of prevailing against
them on those two claims. (See Sycamore Ridge Apartments LLC v. Naumann, supra,
157 Cal.App.4th at p. 1410 [“An attorney who associates into a case that is being
maliciously prosecuted participates in harming the defendant for the time period that the
attorney allows the untenable claims to remain alive”].)
26
fails for a lack of evidence. In making an assessment of legal tenability, an attorney is
entitled to rely on the information provided by his or her client, unless the attorney is on
notice of specific factual errors or misstatements in the client’s version of events that
render the claim untenable. (Swat-Fame, Inc. v. Goldstein, supra, 101 Cal.App.4th at
pp. 625–627.) Peachtree and Jensen offered no evidence to demonstrate that Schrenger
did not reasonably rely upon Segal’s representations. Accordingly, we agree with the
trial court that the evidence was insufficient to support a showing of malice, and
Peachtree and Jensen therefore failed to satisfy their burden of establishing a probability
of success on the remaining aspect of the malicious prosecution claim.
III. The Trial Court Properly Denied a Portion of the Marcin Lambirth
Attorneys’ Motion for Attorney Fees.
Following the trial court’s granting their special motion to strike, the Marcin
Lambirth attorneys moved for an award of attorney fees pursuant to section 425.16,
subdivision (c).11 Initially, they sought recovery of $44,893.86 in fees and costs, which
included time spent by attorneys Murad, Michael W. Feenberg and Johnathan B. Cole. In
support of the motion, Murad submitted a declaration averring that he represented the
Marcin Lambirth attorneys in defending against Peachtree and Jensen’s malicious
prosecution action and drafted the anti-SLAPP motion. Attached to his declaration were
copies of the invoices he submitted to the Marcin Lambirth attorneys. Before the hearing
on the anti-SLAPP motion, he had substituted out of the action, and Feenberg and Cole
thereafter represented the Marcin Lambirth attorneys.
Peachtree and Jensen opposed the motion. Their primary argument was that
Murad was actually an employee of Marcin Lambirth and therefore the firm was
essentially self-represented. Peachtree’s and Jensen’s counsel submitted a declaration
attaching evidence showing that Murad was listed as an attorney on the firm’s Web site,
he appeared in firm photographs on the Web site, a local Bar Association article
11 Shrenger and Miller also moved for attorney fee awards, but they have not
challenged the trial court’s rulings on their motions.
27
described Murad as a firm associate, a publication from the same local Bar Association
provided a Marcin Lambirth e-mail address for Murad, both Marcin Lambirth’s and
Murad’s individual listings on the Martindale Hubbell Web site described Murad as an
attorney with the firm, and Murad’s “LinkedIn” profile identified him as an attorney at
Marcin Lambirth.
In reply, the Marcin Lambirth attorneys reduced their fee request to $31,423.22 for
an unrelated and inadvertent inclusion of attorney time. They also offered evidence—
through their joinder in Miller’s reply—to demonstrate that Murad was merely “of
counsel” to Marcin Lambirth and represented the firm in the capacity of an independent
contractor. Murad declared that he had been an associate at Marcin Lambirth from
October 2007 to October 2008 and thereafter became of counsel to the firm; since 2009
he was compensated by the firm as an independent contractor. He attached current
information from the City of Pasadena, the California State Bar, Martindale Hubbell and
LinkedIn showing a business address separate from Marcin Lambirth. Attorney Marcin
similarly averred that Murad was not an employee or associate of the firm while the
malicious prosecution action was litigated.
Following a March 2012 hearing, the trial court denied the motion to the extent it
sought attorney fees incurred for Murad and granted the balance of the motion. It ruled
that Marcin Lambirth’s evidence was insufficient to show the actual relationship between
Murad and the firm beyond Murad’s of counsel status. More specifically, there was no
evidence offered to show that Marcin Lambirth was required to pay fees to Murad, that
Murad and Marcin Lambirth had an attorney-client relationship or that Murad’s business
was to represent his own individual clients as opposed to clients of the firm.
Accordingly, the trial court reduced the amount requested by $14,098.44—the amount
attributable to Murad’s work.
Section 425.16, subdivision (c)(1) provides that a defendant who prevails on a
special motion to strike is “entitled to recover his or her attorney’s fees and costs.” The
California Supreme Court has therefore instructed that “any SLAPP defendant who
brings a successful motion to strike is entitled to mandatory attorney fees.” (Ketchum v.
28
Moses (2001) 24 Cal.4th 1122, 1131.) The amount of the fee award, however, is left to
the trial court’s discretion. (Id. at p. 1134.) “The reason is that the ‘“‘experienced trial
judge is the best judge of the value of professional services rendered in his court, and
while his judgment is of course subject to review, it will not be disturbed unless the
appellate court is convinced that it is clearly wrong’”’ [Citations.]” (Premier Medical
Management Systems, Inc. v. California Ins. Guarantee Assn. (2008) 163 Cal.App.4th
550, 556–557.) But where the question does not involve the amount of the fee award, but
whether fees should be awarded at all, the question becomes one of law that we review
independently. (Carpenter & Zuckerman, LLP v. Cohen (2011) 195 Cal.App.4th 373,
378; Sherwood Partners, Inc. v. EOP-Marina Business Center, L.L.C. (2007) 153
Cal.App.4th 977, 981.)
In determining whether attorney fees have been incurred for the purpose of awards
under section 425.16, subdivision (c), courts have relied on cases construing fee awards
to prevailing parties under Civil Code section 1717. (Carpenter & Zuckerman, LLP v.
Cohen, supra, 195 Cal.App.4th at pp. 378–380.) The case law regarding contractual
attorney fee awards is clear. The court in Sands & Associates v. Juknavorian (2012) 209
Cal.App.4th 1269, 1272 (Sands), held “a law firm cannot recover attorney fees under a
prevailing party clause when, as a successful litigant, it is represented by ‘of counsel.’”
The Sands court premised its conclusion “on two well-settled principles. First, when a
law firm is the prevailing party in a lawsuit and is represented by one of its partners,
members, or associates, it cannot recover attorney fees even though the litigation is based
on a contract with a prevailing party clause. [Citations.] [¶] Second, the relationship
between a law firm and ‘of counsel’ is ‘“close, personal, continuous, and regular.”’
[Citation.] ‘“[T]o the extent the relationship between [an attorney] or law firm and
another [attorney] or law firm is sufficiently ‘close, personal, regular and continuous,’
such that one is held out to the public as ‘of counsel’ for the other, the . . . relationship
must be considered a single, de facto firm for purposes of [avoiding the representation of
adverse interests].”’ [Citations.]” (Id. at pp. 1272–1273.)
29
Here, the evidence was undisputed that Murad was of counsel to Marcin Lambirth
at the time he represented the firm in connection with the malicious prosecution action.
Marcin averred “Mr. Murad has been ‘of counsel’ to Marcin Lambirth, LLP, and has
been an independent contractor with Marcin Lambirth, LLP, since October 2008.”
Murad similarly declared that “[s]ince October 2008, I have been ‘Of Counsel’ to Marcin
Lambirth, LLP, and I have been an independent contractor.” Similarly, in Sands, supra,
209 Cal.App.4th at page 1295, the evidence showed the firm communicated to the public
via firm letterhead and directories that the two attorneys were of counsel, and the court
concluded “it does not matter that they may have represented clients obtained through
their own efforts, that they had what they call a ‘separate’ practice, or that they were not
on the firm’s payroll.” The Sands court held “[i]n light of the close, personal,
continuous, and regular relationship between the Sands firm and Of Counsel [citation],
we conclude that, in recovering the unpaid attorney fees from Juknavorian, Of Counsel
were pursuing the interests of the Sands firm and their own personal interests; the firm
and Of Counsel had the same interests. [Citations.]” (Id. at p. 1296–1297.) The court
added that “because the firm and Of Counsel constituted a ‘single, de facto firm’
[citation], an attorney-client relationship did not exist between them. [Citations.]” (Id. at
p. 1297.)
Though the Marcin Lambirth attorneys argue the evidence was insufficient to
show that Murad remained associated with the firm, their own declarations established
that he served as of counsel to the firm. In light of that relationship, we find Sands,
supra, 209 Cal.App.4th 1269 controlling. “[B]ecause the relationship between a law firm
and ‘of counsel’ is close, personal, regular, and continuous, we conclude that a law firm
and ‘of counsel’ constitute a single, de facto firm, and thus a law firm cannot recover
attorney fees under a prevailing party clause when, as a successful litigant, it is
represented by ‘of counsel.’” (Id. at p. 1273.) The trial court properly declined to award
attorney fees for work performed by Murad.
30
IV. The Trial Court Properly Granted Peachtree’s and Jensen’s Special Motion
to Strike.
In its order granting Peachtree’s and Jensen’s special motion to strike the
malicious prosecution cross-complaint filed by Charon and Segal, the trial court ruled
Peachtree and Jensen met their burden to show the cross-complaint arose from protected
activity and Charon and Segal failed to meet their burden to demonstrate a probability of
prevailing on the merits. More specifically, the trial court ruled that the denial of
summary judgment on the breach of contract cause of action in the cross-complaint in the
underlying fraud action established the objective tenability of that claim, and it rejected
Charon’s and Segal’s argument that the summary judgment ruling was induced by the use
of false or perjured testimony. As to the remaining claims for breach of fiduciary duty,
fraud, negligence and declaratory relief which were disposed of by demurrer, the trial
court determined Charon and Segal failed to provide evidence that those claims lacked
probable cause. We find no basis to disturb the trial court’s order.
A. Additional Background Related to Pleadings Underlying the Motion to
Strike.
After the trial court sustained a demurrer with leave to amend, Peachtree filed a
first amended cross-complaint against Charon and Segal in the underlying fraud action.12
It generally alleged that Segal represented to Jensen he had significant real estate
development experience and was familiar with the government permit and entitlement
process. In reliance on Segal’s “representations of his experience and expertise in the
development and construction fields, and his representation of his knowledge and
proficiency in dealing with governmental entities,” Peachtree agreed to enter into a
partnership with Charon.
In connection with the breach of contract cause of action, Peachtree alleged that
Peachtree and Charon entered into the P&P Operating Agreement and, in furtherance of
12 The trial court sustained the demurrer without leave to amend as to the breach of
fiduciary duty claim against Segal.
31
that agreement, Jensen and Segal entered into an oral agreement whereby Segal would
employ his services to obtain a lot split of the Cass property. Upon completion of the lot
split, a portion of the Cass property would be conveyed to P&P for development.
Peachtree alleged that it and Jensen performed the terms of the P&P Operating
Agreement and the oral agreement, but that Segal failed to competently pursue the lot
split and to achieve the lot split, and in turn caused Charon to withdraw from P&P.
The second cause of action for breach of fiduciary duty alleged against Charon
identified a number of specific breaches, generally categorized as misrepresenting
Segal’s skill and expertise in real estate development, failing to further P&P’s interests by
making the required governmental submissions, failing to seek project approval from
neighboring property owners and failing to advise Peachtree and Jensen of the negative
consequences stemming from a lot split. The third cause of action for fraud against Segal
alleged that Jensen reasonably and justifiably relied on his representations about his real
estate expertise, that Segal knew such representations were false and that Jensen
expended money in reliance on such representations. The fourth cause of action for
negligence against Charon and Segal reiterated much of the breach of fiduciary duty
claim, and the fifth cause of action sought a judicial determination of the parties’
respective rights to the Cass property.
The trial court thereafter sustained demurrers without leave to amend to all causes
of action except breach of contract against Charon. After the trial court denied Charon’s
motion for summary judgment, that claim went to trial and the jury answered “No” to the
special verdict question “[d]id Charon Solutions, Inc. fail to do something that the
contract required it to do?”
Charon and Segal thereafter filed their malicious prosecution cross-complaint.
They alleged the cross-complaint and first amended cross-complaint were brought
without probable cause and Jensen’s failure to cooperate and initiation of the Silver
action led to the demise of the lot split. They further alleged that the denial of summary
judgment was the result of Jensen’s concealing material documents which had been part
32
of her architect’s file and showed the conditions she claimed Segal failed to satisfy had
been approved.
B. Charon and Segal Failed to Demonstrate a Probability of Prevailing.
Because there is no question that the malicious prosecution cross-complaint arose
from protected activity, we proceed directly to the second prong of the anti-SLAPP
motion and determine whether Charon and Segal established a probability of prevailing.
To make this assessment, we “must consider both the legal sufficiency of and evidentiary
support for the pleaded claims, and must also examine whether there are any
constitutional or nonconstitutional defenses to the pleaded claims and, if so, whether
there is evidence to negate those defenses. [Citation.]” (Ramona Unified School Dist. v.
Tsiknas (2005) 135 Cal.App.4th 510, 519.) “[T]he plaintiff cannot rely on the allegations
of the complaint, but must produce evidence that would be admissible at trial.
[Citation.]” (Integrated Healthcare Holdings, Inc. v. Fitzgibbons (2006) 140 Cal.App.4th
515, 527.) The plaintiff’s showing must be “made through ‘competent and admissible
evidence.’ [Citations.] Thus, declarations that lack foundation or personal knowledge, or
that are argumentative, speculative, impermissible opinion, hearsay, or conclusory are to
be disregarded. [Citation.]” (Gilbert v. Sykes (2007) 147 Cal.App.4th 13, 26.)
In their motion to strike, Peachtree and Jensen focused on the probable cause
element of malicious prosecution, and argued both the affirmative defense of advice of
counsel and the interim adverse judgment rule demonstrated they had probable cause to
file and maintain the cross-complaint. Because we find the advice of counsel defense
dispositive, we need not address the other probable cause arguments raised by the parties.
“Lack of probable cause is an essential element of a cause of action for the
malicious institution of a civil proceeding. [Citation.]” (Copenbarger v. International
Ins. Co. (1996) 46 Cal.App.4th 961, 964, fn. omitted.) “‘Probable cause may be
established by the defendants in a malicious institution proceeding when they prove that
they have in good faith consulted a lawyer, have stated all the facts to him, have been
advised by the lawyer that they have a good cause of action and have honestly acted upon
33
the advice of the lawyer.’ [Citations.]” (DeRosa v. Transamerica Title Ins. Co. (1989)
213 Cal.App.3d 1390, 1397–1398.)
Here, in support of the special motion to strike, Jensen averred that after she and
Peachtree were served with the complaint in the underlying fraud action, she engaged
attorney Alan Carnegie (who had represented her in the Silver action) to represent them.
During the course of that representation, they discussed whether to file a cross-complaint.
In connection with that determination, Jensen made a full disclosure to Carnegie of all
favorable and unfavorable facts known to her related to the matters alleged in the
underlying fraud action and provided him with all documents in her possession or control
concerning those matters. Jensen’s declaration outlined a number of specific facts
disclosed to Carnegie concerning Jensen’s discussions with Segal about the proposed lot
split of the Cass property. She declared: “Based on all of the foregoing, Mr. Carnegie
advised me that in his opinion, Peachtree had both a legal and factual basis to file in the
underlying action a cross-complaint asserting claims for (i) breach of fiduciary duty,
(ii) negligence, and (iii) fraud. He said each of those three claims was well founded in
law and factually well supported, and I, as an officer and director of Peachtree, relied
upon that advice in authorizing him to file that cross-complaint on behalf of Peachtree.”
Jensen made similar representations in connection with the filing of the first amended
cross-complaint, averring that she relied on his advice in filing that pleading. Further
according to her declaration, Jensen outlined the discovery in which she engaged and
stated that Carnegie continued to advise her throughout that process that her claims were
well founded in fact and law. At no time did Carnegie indicate to her that he no longer
considered her claims to be unsupported by fact or law. Jensen averred she “consulted
both [sic] Mr. Carnegie in good faith, and in good faith relied and acted upon his advice
and counsel.”
“Good faith reliance on the advice of counsel, after truthful disclosure of all the
relevant facts, is a complete defense to a malicious prosecution claim. [Citation.]”
(Bisno v. Douglas Emmett Realty Fund 1988 (2009) 174 Cal.App.4th 1534, 1544
(Bisno).) Jensen’s declaration was sufficient to raise the defense. As in Bisno, her
34
declaration outlined the facts she disclosed to counsel and her good faith reliance on
counsel’s advice in filing the cross-complaint. (Id. at pp. 1544–1547.) The Bisno court
expressly declined to impose a heightened duty of disclosure on one relying on an advice
of counsel defense, rejecting the notion that the client is obligated to point out particular
contract provisions that may be detrimental to its position or provide documents that offer
nothing more than cumulative information. (Id. at pp. 1547–1549.)
Against this defense, Charon and Segal failed to offer admissible evidence to
demonstrate a probability of prevailing. To meet its burden on the second prong of an
anti-SLAPP motion, the plaintiff opposing the motion must show that “‘“defenses are not
applicable to the case as a matter of law or by a prima facie showing of facts which, if
accepted by the trier of fact, would negate such defenses.”’ [Citations.]” (Birkner v. Lam
(2007) 156 Cal.App.4th 275, 285–286; see also Flatley v. Mauro, supra, 39 Cal.4th at
p. 323 [“The litigation privilege . . . may present a substantive defense a plaintiff must
overcome to demonstrate a probability of prevailing”]; Weil Brown, Cal. Practice Guide:
Civil Procedure Before Trial (The Rutter Group 2012) 7:1015, p. 7(II)–49 [to
demonstrate a “‘probability of success on the merits,’” “[p]laintiff must present evidence
to overcome any privilege or defense to the claim that has been raised”].) Though several
courts have stated a defendant moving to strike bears the burden of proof on an
affirmative defense (see Seltzer v. Barnes (2010) 182 Cal.App.4th 953, 969; Premier
Medical Management Systems, Inc. v. California Ins. Guarantee Assn. (2006) 136
Cal.App.4th 464, 477), reliance on advice of counsel need not be raised by way of an
affirmative defense (see State Farm Mut. Auto. Ins. Co. v. Superior Court (1991) 228
Cal.App.3d 721, 727 [“advice of counsel need not be affirmatively alleged in a malicious
prosecution action as a defense to the elements of lack of probable cause and malice”];
Walker v. Jensen (1949) 95 Cal.App.2d 269, 275 [“the defense of reliance upon the
advice of counsel may be shown under a general denial”]). Accordingly, for the purpose
of the motion to strike, Charon and Segal ultimately bore the burden of negating the
advice of counsel defense.
35
In an effort to meet their burden, Charon and Segal objected to the portions of
Jensen’s declaration that addressed her advice of counsel defense; the trial court
overruled all objections. On appeal, they maintain the trial court abused its discretion
because Jensen’s statements were hearsay and conclusory. We find no basis to disturb
the trial court’s rulings. (See In re Ryan N. (2001) 92 Cal.App.4th 1359, 1385
[“Evidentiary rulings will not be overturned on appeal in the absence of a clear abuse of
that discretion, upon a showing that the trial court’s decision was palpably arbitrary,
capricious, or patently absurd, and resulted in injury sufficiently grave as to amount to a
miscarriage of justice”].) Jensen’s statements concerning what she disclosed to Carnegie
and what she did in reliance on his advice were evidence of her state of mind in filing and
pursuing Peachtree’s cross-complaint, and therefore not made inadmissible by the
hearsay rule. (Evid. Code, § 1250, subd. (a)(2).) Moreover, the statements were not
conclusory, as the level of specificity was similar to statements in other cases found
adequate to support an advice of counsel defense.13 (See, e.g., Bisno, supra, 174
Cal.App.4th at pp. 1544–1547; DeRosa v. Transamerica Title Ins. Co., supra, 213
Cal.App.3d at p. 1398.) Charon’s and Segal’s citation to Wilson v. Superior Court (1964)
226 Cal.App.2d 715, 722, is not persuasive, as in that case the court found a declaration
by counsel stating his “belief” that certain matters were covered by the work product rule
did not constitute evidence.
Charon and Segal also challenged the sufficiency of Peachtree and Jensen’s
showing, arguing that they were required to offer Carnegie’s declaration regarding the
advice he provided. But they have cited no authority for the proposition that an advice of
counsel defense requires a declaration or testimony from counsel, nor have we located
any. (See Warner v. O’Connor (1962) 199 Cal.App.2d 770, 774–775 [probable cause
13 Typically, a “conclusory” objection is reserved for expert testimony. (See
Jennings v. Palomar Pomerado Health Systems, Inc. (2003) 114 Cal.App.4th 1108, 1117
[“when an expert’s opinion is purely conclusory because unaccompanied by a reasoned
explanation connecting the factual predicates to the ultimate conclusion, that opinion has
no evidentiary value because an ‘expert opinion is worth no more than the reasons upon
which it rests’”].)
36
based on advice of counsel defense found valid on the basis of the plaintiff’s testimony];
cf. Bisno, supra, 174 Cal.App.4th at p. 1544 [characterizing attorney declarations as
“back[ing] up” the plaintiff’s advice of counsel defense, but not suggesting such
declarations were required].)
Charon and Segal’s central contention is that Peachtree and Jensen may not rely
on the advice of counsel defense because they concealed evidence. As explained in
Palmer v. Zaklama (2003) 109 Cal.App.4th 1367, 1383, “if the defendant acted in bad
faith or withheld facts from counsel he or she knew or should have known would have
defeated the cause of action, probable cause is not established. ‘[C]ounsel’s advice must
be sought in good faith [citation] and “. . . not as a mere cloak to protect one against a suit
for malicious prosecution.” [Citation.]’ [Citation.]”
They rely on the declaration of Marcin Lambirth attorney Ashkinadze who stated
that in January 2010 she conducted the deposition of architect John Dolinsky and at that
time learned about the existence of a file for a remodel project on the Cass property.
Thereafter, she undertook efforts to obtain the file, including subpoenaing Dolinsky.
When he failed to produce anything in response to the subpoena, she contacted him by
telephone and he told her that Carnegie told him he did not have to produce the file and
Jensen instructed him not to produce the file. After receiving an ex parte notice of a
motion to compel, Carnegie told Ashkinadze that he had never seen the file, but would
instruct Dolinsky to provide it. Thereafter, in May 2010 Dolinsky made the file available
at his office. The file contained documents generated in 2007 that related to a proposed
second floor addition and garage relocation for the single family residence on the Cass
property. In connection with that project, the file also contained a 2008 covenant and
agreement regarding the approval of a parcel map that suggested one of the conditions
Peachtree and Jensen alleged Charon and Segal failed to complete was now satisfied.14
14 Although the trial court sustained Peachtree and Jensen’s objections to the
statements in Segal’s declaration on this point, it overruled their objections to
Ashkinadze’s declaration and the exhibits attached to Segal’s declaration that addressed
the same issue.
37
We fail to see how this evidence undermines Peachtree and Jensen’s advice of
counsel defense. In order to rely on the defense, the malicious prosecution defendant
must disclose to counsel all material facts within his or her knowledge. (Warner v.
O’Connor, supra, 199 Cal.App.2d at p. 775; Schubkegel v. Gordino (1943) 56
Cal.App.2d 667, 673.) Viewed in a light most favorable to Charon and Segal, the
evidence showed Jensen attempted to conceal that she had received approval of a
condition she alleged Segal represented he would obtain. But Jensen satisfied the
condition in 2008; Peachtree’s cross-complaint alleged that Segal represented he would
and had a duty to undertake to satisfy the requisite conditions for the lot split proposed in
1999 in connection with the formation of P&P. It alleged that Charon and Segal incurred
liability on the basis of making misrepresentations, failing to fulfill their duties and
breaching promises in connection with the lot split that was proposed before 2006 when
Charon withdrew from P&P. The assertedly concealed facts about events that occurred
in 2007 and 2008 were not material, nor did they serve to defeat Peachtree and Jensen’s
causes of action. (See Palmer v. Zaklama, supra, 109 Cal.App.4th at pp. 1383–1384.)
At best, the file showed that Jensen undertook to satisfy a condition as part of a different
project that was commenced after Charon had withdrawn from P&P. Because Charon
and Segal have not shown a probability of success in overcoming Peachtree and Jensen’s
advice of counsel defense, the trial court properly granted the special motion to strike.
(See, e.g., Belair v. Riverside County Flood Control Dist. (1988) 47 Cal.3d 550, 568
[“There is perhaps no rule of review more firmly established than the principle that a
ruling or decision correct in law will not be disturbed on appeal merely because it was
given for the wrong reason. If correct upon any theory of law applicable to the case, the
judgment will be sustained regardless of the considerations that moved the lower court to
its conclusion”].)
38
DISPOSITION
The orders granting in part Charon’s and Segal’s motion to strike, denying in part
the Marcin Lambirth motion for attorney fees and granting Peachtree’s and Jensen’s
motion to strike are affirmed. All parties to bear their own costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS.
_____________________, J. *
FERNS
We concur:
____________________________, P. J.
BOREN
____________________________, J.
CHAVEZ
* Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to
article VI, section 6 of the California Constitution.
39