Opinion
B233038
02-15-2012
KAZI AHMED et al., Plaintiffs and Appellants, v. PHILIP HO et al., Defendants and Respondents.
Dumont Law Offices and Mary T. Dumont for Plaintiffs and Appellants. Law Offices of Kenneth E. Chyten and Kenneth E. Chyten for Defendants and Respondents.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Los Angeles County Super. Ct. No. BC456144)
APPEAL from a judgment of the Superior Court of Los Angeles County, Michael L. Stern, Judge. Affirmed.
Dumont Law Offices and Mary T. Dumont for Plaintiffs and Appellants.
Law Offices of Kenneth E. Chyten and Kenneth E. Chyten for Defendants and Respondents.
Kazi and Sara Ahmed appeal from the trial court's ruling, which struck their malicious prosecution complaint under California's anti-SLAPP statute. (Code Civ. Proc., § 425.16.) Because the Ahmeds failed to establish that respondents Philip Ho, Good Nite Inn, Inc. and Good Nite Management, Inc. (collectively GNI), lacked probable cause in filing and prosecuting the underlying action, we affirm.
For convenience, we will refer to the Ahmeds individually by their first names. All further section references are to the Code of Civil Procedure.
FACTUAL AND PROCEDURAL BACKGROUND
I. Allegations
This matter is the latest in a series of lawsuits filed between the Ahmeds and GNI regarding disputes over overtime and break time wages. The following is largely taken from the Ahmeds' malicious prosecution complaint against GNI.
The Ahmeds worked together at the Good Nite Inn Redwood City (Hotel), one of 12 hotels owned by GNI. Philip Ho is the president of both Good Nite Inn entities. Kazi worked as the general manager at the Hotel from 1994 until September 29, 2006, when he resigned and sued GNI for unpaid overtime (Wage and Hour Action). He was awarded unpaid wages of $293,999, plus attorney fees and costs in a judgment entered in November 2007. In January 2008, GNI sued Kazi alleging that he had defrauded it by seeking overtime wages. GNI similarly cross-claimed against another GNI employee, Timothy Bell, who had also filed a suit seeking overtime. GNI alleged that if Kazi and Bell were eligible for overtime, they defrauded the company and sought punitive damages.
Sara was a front desk clerk at the Hotel from 1995 until March 2008. She continued to work at the Hotel after Kazi left. When Sara resigned on March 18, 2008, she told GNI that she was owed $22,569.80 in unpaid overtime. GNI sued the Ahmeds for fraud in July 2008 (Underlying Action), alleging that the Ahmeds had conspired to inflate Sara's payroll and that the Ahmeds owed GNI tens of thousands of dollars. In December 2008, Sara counterclaimed for unpaid overtime and meal break wages. The Underlying Action was concluded in the Ahmeds' favor on October 16, 2009. The Ahmeds brought this malicious prosecution action against GNI on February 28, 2011, alleging that GNI filed the Underlying Action as part of a scheme to punish and silence GNI's hourly employees who requested overtime and meal break wages.
II. Anti-SLAPP Motion
On April 4, 2011, GNI filed a special motion to strike the Ahmeds' complaint pursuant to section 425.16 (anti-SLAPP motion), contending that the Ahmeds could not demonstrate a reasonable probability of prevailing and that there was no evidence GNI acted maliciously. It presented declarations from GNI's payroll manager, Frank Chang, and its president, Philip Ho, in support of its motion.
Chang stated that GNI continued to employ Sara after Kazi filed his Wage and Hour Action. GNI also gave Sara a 50 cents per hour raise during that time. Chang explained that GNI employees were required to clock in before starting work and to clock out immediately after finishing. The general managers of each GNI hotel were able to override employee time clock entries to correct mistakes, such as when an employee forgot to clock in or out. Kazi was the only employee at the Hotel who had the authority or ability to change any time clock entries. At the end of each pay period, the daily time entries for all employees at the Hotel were summarized into a period end report, which was verified by the Ahmeds and then sent to Chang, who provided it to ADP for payroll processing. Chang stated that he relied on the Ahmeds to verify the accuracy of the hours shown on the period end reports, which did not show whether any changes had been made to the time clock entries.
When she resigned, Sara claimed that Chang had records, which would corroborate her claim for $22,569.80 in unpaid overtime and break time wages. In an attempt to verify her claims, Chang requested Sara's daily time logs, which showed all the times clocked in and out as well as any changes made. Upon examination of Sara's daily time records, Chang concluded that her time clock entries had been repeatedly changed throughout the years she worked at the Hotel to add hours to her time. Chang also concluded that at most, Sara was entitled to $1,500 in overtime if the changed daily time logs were accurate. Chang reported his conclusions to Philip Ho who conducted his own review of Sara's time clock entries.
In his declaration, Ho stated that he authorized the filing of the Underlying Action against the Ahmeds and did so for legitimate, not malicious reasons. Ho spent over 100 hours reviewing Sara's daily time logs. Ho stated that Sara was primarily responsible for training employees on using the time card system and the importance of always clocking in and out. Ho's decision to sue the Ahmeds was based in part on his discovery that Sara's time clock entries were changed on 1,795 days or about 69 percent of all days worked during the preceding 10-year period. In addition, the entries were changed 2,485 times, meaning the entries for some days were changed multiple times and were made days or weeks apart. Of the 2,485 changes made, Ho calculated that 2,270 added time and 115 reduced time, totaling 4,000 added hours to the times Sara clocked in and out. As a result of the added time, Sara was paid more than $50,000 in additional wages over a 10-year period of her employment. Ho also checked the time records of a dozen other employees at the Hotel and found that very few changes were made on their time clocks and if there were changes, they were made within a day.
The Ahmeds opposed the anti-SLAPP motion. The Ahmeds relied on the findings made by the trial judge in the Underlying Action, the Honorable Steven Dylina, to argue that Ho's conclusions were not objectively reasonable and that GNI was collaterally estopped from relitigating the question of probable cause. The Ahmeds requested that judicial notice be taken of the following: Judge Dylina's 75-page statement of decision in the Underlying Action; GNI's cross-complaint against Timothy Bell; GNI's complaint against Kazi for fraud; an unpublished appellate opinion affirming the trial court's decision in the Underlying Action; the complaint in the Underlying Action; trial transcript excerpts from the Underlying Action; and an opposition to a motion to transfer and a tentative decision on the motion to transfer in this action.
In particular, the Ahmeds relied on several findings of fact reached by Judge Dylina, which are unfavorable to GNI. Notably, Judge Dylina found that the Underlying Action "was predicated on a desire to make the Ahmeds pay a severe price for the successful Wage and Hour action [filed by Kazi for unpaid overtime wages]." "Mr. Ho testified that [Sara] had worked 2,597 days and that, according to Exhibit 1 [Sara's daily time records], her time had been changed on a total of 1,795 days. On numerous occasions, [Sara] failed to log out until either 24 or more hours in the future. Those entries were later reduced. In all such cases, Mr. Ho gave [Sara] no credit for hours worked. The Court finds this conclusion amazing and indicative of the mechanistic approach that Mr. Ho employed in terms of evaluating what Sara . . . was entitled to, what her claim was predicated on and how this presented an opportunity for GNI to exact some measure of revenge for [Kazi's] success in his litigation."
Judge Dylina further found that "although the court initially observed Mr. Ho to be candid and forthright, it became apparent that his testimony was influenced by the previous litigation. There was no question he believed what he testified—there was simply no independent confirmation of his subjective belief." Because Sara was unable to establish the amount of unpaid overtime owed to her, however, Judge Dylina adopted Chang's calculation that GNI owed her $1,500 in unpaid overtime. Judge Dylina further awarded Sara $16,460.70 for unpaid meal break compensation and $3,240 in penalties, plus costs and attorney fees.
GNI opposed the Ahmeds' reliance on Judge Dylina's factual findings on the grounds that they were not admissible and not entitled to collateral estoppel effect. According to GNI, the Ahmeds had failed to present admissible evidence that established malice and lack of probable cause in filing the Underlying Action. The trial court granted GNI's anti-SLAPP motion and awarded GNI its costs and attorney fees pursuant to section 425.16, subdivision (c). The trial court agreed with GNI that the Ahmeds had "failed to establish the probability of prevailing on their malicious prosecution cause of action as they failed to make a prima facie showing, based on competent, admissible evidence, that the underlying action was prosecuted by [GNI] without probable cause. The Court further finds [the Ahmeds] failed to establish the probability of prevailing on their malicious prosecution cause of action as they failed to establish, with competent, admissible evidence, that the underlying action was initiated by [GNI] with malice." Judgment was entered in favor of GNI on May 6, 2011. The Ahmeds quickly filed their appeal on May 12, 2011.
DISCUSSION
On appeal, the Ahmeds argue that they presented sufficient evidence from which it can be inferred that GNI filed the Underlying Action without probable cause and with malice, the two elements necessary for the Ahmeds to prevail on a malicious prosecution claim. Alternatively, they argue that GNI is also liable for malicious prosecution because it continued the Underlying Action to trial and on appeal even after it discovered it lacked probable cause. As a result, the Ahmeds contend GNI's anti-SLAPP motion was meritless and should have been denied. We find the Ahmeds have failed to meet their burden to present sufficient admissible evidence to show GNI filed and prosecuted its case to completion without probable cause.
The Ahmeds also seek attorney fees on the ground GNI's anti-SLAPP motion was patently frivolous. (§ 425.16, subd. (c).) Because we find the motion was properly granted and thus not frivolous, the motion is denied. GNI also moves to strike the Ahmeds' opening brief for failure to provide a "fair presentation of the facts and failing to cite to the record." That motion is also denied.
I. Anti-SLAPP Statute
The Legislature enacted the anti-SLAPP statute to address the "disturbing increase in lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of speech and petition for the redress of grievances." (§ 425.16, subd. (a).) Under the anti-SLAPP statute, a cause of action may be stricken when the defendant demonstrates that the "challenged cause of action is one arising from protected activity" and the plaintiff demonstrates a "probability of prevailing" on his or her claim. (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 67 (Equilon).) A defendant has the opportunity to have the claim stricken at an early stage of the proceedings "if the plaintiff is unable to demonstrate both that the claim is legally sufficient and that there is sufficient evidence to establish a prima facie case with respect to the claim." (Taus v. Loftus (2007) 40 Cal.4th 683, 714.) The evidence presented to establish a prima facie case must be admissible. (Wilcox v. Superior Court (1994) 27 Cal.App.4th 809, 830 (Wilcox), overruled on other grounds in Equilon, at p. 68, fn. 5.)
Because the Ahmeds concede that the challenged cause of action arose from protected activity, we are only concerned with whether a probability of prevailing has been established. A probability of prevailing means a reasonable probability of prevailing, not prevailing by a preponderance of the evidence. (Wilcox, supra, 27 Cal.App.4th at p. 823.) For this reason, a trial court must accept as true the evidence favorable to the plaintiff and evaluate the defendant's evidence only to determine whether the defendant has defeated the plaintiff's evidence as a matter of law. (Id. at pp. 824-825.) A trial court may not weigh credibility or compare the weight of the evidence. The court's single task is to determine whether the plaintiff has made a prima facie showing of facts supporting his or her cause of action which, if believed by the trier of fact, will result in a judgment for the plaintiff. (ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 1010; Paul for City Council v. Hanyecz (2001) 85 Cal.App.4th 1356, 1365, disapproved on another ground by Equilon, supra, 29 Cal.4th at p. 68, fn. 5.) If the plaintiff meets his burden, the motion must be denied. (M. G. v. Time Warner, Inc. (2001) 89 Cal.App.4th 623, 626-627; Dixon v. Superior Court (1994) 30 Cal.App.4th 733, 745-746.) Our review of the trial court's order is de novo and entails an independent review of the entire record. (Plumley v. Mockett (2008) 164 Cal.App.4th 1031, 1047 (Plumley); see also Daniels v. Robbins (2010) 182 Cal.App.4th 204, 214.)
II. The Ahmeds Have Failed to Make a Prima Facie Case that GNI Brought the Underlying Action Without Probable Cause
To establish a reasonable probability of prevailing on their claim for malicious prosecution, the Ahmeds were required to show that the Underlying Action (1) was commenced by or at the direction of GNI and was terminated in the Ahmeds' favor; (2) was brought without probable cause; and (3) was initiated with malice. (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 871 (Sheldon Appel).) There is no dispute that Ho authorized the Underlying Action or that it was terminated in the Ahmeds' favor. We find, however, that the Ahmeds fail to show GNI brought the Underlying Action without probable cause. As a result, the anti-SLAPP motion was properly granted.
Probable cause is a low threshold designed to protect a litigant's right to assert arguable legal claims even if the claims are extremely unlikely to succeed. " '[T]he standard of probable cause to bring a civil suit [is] equivalent to that for determining the frivolousness of an appeal (In re Marriage of Flaherty (1982) 31 Cal.3d 637), i.e., probable cause exists if "any reasonable attorney would have thought the claim tenable." (Sheldon Appel, supra, [47 Cal.3d] at p. 886.) This rather lenient standard for bringing a civil action reflects "the important public policy of avoiding the chilling of novel or debatable legal claims." (Id. at p. 885.) Attorneys and litigants . . . " 'have a right to present issues that are arguably correct, even if it is extremely unlikely that they will win . . . .' " (Ibid., quoting In re Marriage of Flaherty, at p. 650.)' [Citation.]" (Plumley, supra, 164 Cal.App.4th at pp. 1047-1048.)
A. Judicial Notice of Court Records Is Limited
The Ahmeds rely on various court records, Judge Dylina's findings of fact in particular, to establish the Underlying Action was filed without probable cause. The Ahmeds contend that these court records were evidence of "multiple facts from which a lack of probable cause and malice could be inferred. Including the following, among others: GNI filed multiple fraud lawsuits against its employees who sought overtime; these lawsuits were filed within nine months of Mr. Ahmed's favorable Wage and Hour Action; the employees were hourly workers (or they would not have been eligible for overtime); GNI sought punitive damages in each suit; the claims of fraud in the [Underlying] Action were based on an analysis prepared by Philip Ho; Philip Ho's analysis was shot-through with illogical conclusions; Philip Ho was vigilant about payroll costs; Philip Ho never questioned Sara Ahmed's overtime; Philip Ho concocted the Fraud Action to punish the Ahmeds; Philip Ho lied about his opinion of Sara Ahmed; and GNI filed the [Underlying] Action rather than pay earned wages it knew to be owed."
The Ahmeds assert that these facts establish that Ho did not act objectively reasonably when he filed the Underlying Action and instead, it was part of a scheme to punish GNI employees who requested overtime and increase GNI's profitability.
1. Judge Dylina's Findings
All of the facts related to Ho's analysis and motives are derived from Judge Dylina's findings. Even if Judge Dylina's findings established that GNI lacked probable cause, however, the findings are not admissible evidence. This is because the truth of a finding of fact is not a proper subject for judicial notice. Judicial notice can only be taken of the fact that the findings were made, not that they can be assumed to be indisputably true. (Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1564-1565 (Sosinsky), accord Fowler v. Howell (1996) 42 Cal.App.4th 1746, 1749; see also Ludwig v. Superior Court (1995) 37 Cal.App.4th 8, 14, fn. 6.)
In Sosinsky, supra, 6 Cal.App.4th at page 1552, the buyers of a car dealership sued the sellers for fraud in connection with the sale. After judgment was entered for the sellers in the fraud action, the sellers filed a claim for malicious prosecution against the buyers. (Id. at p. 1553.) In opposition to the buyer's summary judgment motion, the sellers requested the court take judicial notice of findings from the underlying fraud case, which contradicted the declaration presented by the buyer that he relied on the financial statements given to him by the seller to buy the dealership. (Id. at pp. 1560-1561, 1563.) The court on appeal held that judicial notice could not be properly taken of the truth of any factual findings made by the trial judge in the underlying fraud case. (Id. at p. 1563.) In reaching this conclusion, the court entered into an extended analysis of the law and distinguished several cases that held otherwise.
The court explained, "While we have no quarrel with the fact that a judge, after hearing a factual dispute between litigants A and B, may choose to believe A, and make a finding of fact in A's favor, and while we have no quarrel that at some subsequent time it may be proper to take judicial notice that the judge did in fact make that particular finding in favor of A, the taking of judicial notice that the judge made a particular factual finding is a far cry from the taking of judicial notice that the 'facts' found by the judge must necessarily be the true facts, i.e., must necessarily be 'the truth.' To state this a bit more simply, the taking of judicial notice that the judge believed A (i.e., that the judge ruled in favor of A on a particular factual dispute) is different from the taking of judicial notice that A's testimony must necessarily have been true simply because the judge believed A and not B. Indeed, if A's testimony consisted of 'facts . . . that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy' (Evid. Code, § 452, subd. (h)), there would have been no need for a trial on the dispute between A and B in the first place." (Sosinsky, supra, 6 Cal.App.4th at p. 1565.) Moreover, "[t]aking judicial notice of the truth of a judge's factual finding would appear to us to be tantamount to taking judicial notice that the judge's factual finding must necessarily have been correct and that the judge is therefore infallible." (Id. at p. 1568.)
Similarly, in Plumley, supra, 164 Cal.App.4th at page 1045, a patent holder sued his competitor and the competitor's attorney for malicious prosecution in bringing a federal interference claim against him. The competitor and his attorney filed a special motion to strike under the anti-SLAPP statute. (Plumley, at p. 1045.) The patent holder presented the findings made by a trial judge in a related state action to establish lack of probable cause in opposition to the anti-SLAPP motion. The trial court took judicial notice, without objection, of these findings. On appeal, the court relied on Sosinsky to hold that while the trial court was entitled to take judicial notice of the previous findings—namely, that those findings were made—it could not "credit" them—accord them preclusive effect—unless the elements of collateral estoppel were satisfied. (Plumley, at p. 1051; see also Kilroy v. State of California (2004) 119 Cal.App.4th 140, 147; Lockley v. Law Office of Cantrell, Green, Pekich, Cruz & McCort (2001) 91 Cal.App.4th 875, 885; Western Mutual Ins. Co. v. Yamamoto (1994) 29 Cal.App.4th 1474, 1485.)
The Ahmeds contend that three later opinions contradict the holding in Sosinsky and urge us to adopt their conclusion that the findings made in connection with a related case are appropriate subjects for judicial notice. (Mattel, Inc. v. Luce, Forward, Hamilton & Scripps (2002) 99 Cal.App.4th 1179 (Mattel); Franklin Mint v. Manatt, Phelps & Phillips, LLP (2010) 184 Cal.App.4th 313 (Franklin Mint); Slaney v. Ranger Ins. Co. (2004) 115 Cal.App.4th 306 (Slaney).) We decline to do so because those opinions reached that conclusion with little or no analysis.
Mattel addressed the merits of an anti-SLAPP motion brought by attorneys being sued for malicious prosecution. In the underlying action, the attorneys brought a copyright claim against Mattel. Mattel requested and obtained an award of sanctions against the attorney in the underlying action. The award included a finding that the action had been filed "without factual foundation." (Mattel, supra, 99 Cal.App.4th at p. 1184.) In the malicious prosecution action, the court concluded: "The findings made in connection with the rule 11 (Fed. Rules Civ. Proc., rule 11, 28 U.S.C.) sanctions, the appropriate subject of judicial notice requested of the trial court (Evid. Code, § 451, subd. (a)), are evidence that the underlying action was filed without probable cause." (Id. at p. 1191.) Franklin Mint relied on Mattel to note that "that even though the district court rulings are not binding in this case, they nevertheless can be considered as evidence relevant to the issue of probable cause." (Franklin Mint, supra, 184 Cal.App.4th at pp. 332-333.)
In Slaney, an insured sued his insurer for bad faith denial of coverage. (Slaney, supra, 115 Cal.App.4th at p. 310.) The insurer cross-claimed, and alleged the insured had attempted to collect on a fraudulent claim. The judgment in the underlying action stated that the fraud claim was "without any substantive basis in law and/or fact." (Id. at p. 313.) Further, a jury determined that the insurer acted with malice when it denied the claim and awarded over $7 million in punitive damages. (Ibid.) In the subsequent malicious prosecution action against the insurer, the Court of Appeal credited the finding in the judgment, noting that it "is not substantially different from that [finding] in Mattel." (Id. at p. 321.) The court concluded, "Given the further finding of malice, and the award of punitive damages by the jury, it is reasonable to infer that the jury concluded [appellant's claim against respondents in the underlying action] was itself fraudulent and prosecuted in bad faith. This, along with the ultimate grant of summary judgment in favor of respondent is sufficient to offset the first denial of the motion for summary judgment and support inferences of lack of probable cause and malice. The trial court did not err in denying the SLAPP motion." (Ibid.)
With due respect, we decline to follow Mattel, Franklin Mint and Slaney. (Cuccia v. Superior Court (2007) 153 Cal.App.4th 347, 354 ["disagreements at the Court of Appeal level are common"].) For the reasons ably stated in Sosinsky and its progeny, we hold the better reasoned rule to be that findings of fact in a previous action are not proper subjects for judicial notice unless it is merely to take notice that the findings were made. Accordingly, Judge Dylina's findings in the Underlying Action cannot be credited as direct evidence of lack of probable cause. Neither are they admissible to create an inference of lack of probable cause. (Fashion 21 v. Coalition for Humane Immigrant Rights of Los Angeles (2004) 117 Cal.App.4th 1138, 1149 ["an inference is not evidence but rather the result of reasoning from evidence"].)
The Ahmeds state that "none of the findings were offered for the 'truth' of the matter stated, but to establish that [GNI] proceeded without probable cause, and with malice. For example, the finding that Philip Ho lied about his opinion of Sara Ahmed is not offered to show he lied, but to create the inference that he concocted the [Underlying] Action; and, accordingly, filed that action without probable cause and with malice." No such inference can be made, however, unless we accept the truth of the findings. Thus, the Ahmeds' argument that they are not offering the findings for their truth is flawed.
2. Evidence of Previous Lawsuits
Notwithstanding our conclusion regarding the inadmissibility of Judge Dylina's findings in the Underlying Action, there does not appear to be any dispute that judicial notice can properly be taken of the other evidence upon which the Ahmeds rely: (1) GNI's three lawsuits filed against Kazi, the Ahmeds and Timothy Bell; (2) that the lawsuits each sought punitive damages; and (3) Ho's trial testimony in the Underlying Action. This evidence, according to the Ahmeds, establishes that GNI brought multiple lawsuits as part of a scheme to punish employees who sought to recover overtime wages. The Ahmeds contend that these facts create a reasonable inference that the Underlying Action was brought for an improper purpose because "[i]t defies credulity that each employee who sought overtime also defrauded the company, and in connection with that claim." Thus, the Ahmeds contend they presented sufficient, admissible evidence "to support a reasonable inference that the Fraud Action was part of a scheme to file malicious actions; the Ahmeds thus established a probability of prevailing and the motion should be denied." The Ahmeds contend that this is an alternate theory of malicious prosecution, which GNI failed to address in their papers. Thus, they contend they have presented a claim supported by prima facie evidence that is sufficient to defeat GNI's anti-SLAPP motion. We disagree.
While this evidence may be relevant to GNI's motives—malicious or otherwise— in bringing the Underlying Action, they do not relate to whether GNI's claims lacked probable cause. A vengeful motive does not preclude a finding of probable cause. Because we find the Ahmeds failed to meet their burden to establish lack of probable cause, we need not reach the question whether GNI's evidence was sufficient to rebut a prima facie case for malicious prosecution.
Because we find the Ahmeds failed to establish lack of probable cause, we need not address whether they also failed to establish malice.
B. Collateral Estoppel Does Not Apply
The Ahmeds next contend that GNI is collaterally estopped from relitigating the issues of probable cause and malice because Judge Dylina's findings conclusively established those issues. "Collateral estoppel precludes the relitigation of an issue only if (1) the issue is identical to an issue decided in a prior proceeding; (2) the issue was actually litigated; (3) the issue was necessarily decided; (4) the decision in the prior proceeding is final and on the merits; and (5) the party against whom collateral estoppel is asserted was a party to the prior proceeding or in privity with a party to the prior proceeding. (Lucido v. Superior Court (1990) 51 Cal.3d 335, 341.)" (Zevnik v. Superior Court (2008) 159 Cal.App.4th 76, 82.)
Plumley is also instructive on this issue. In determining whether collateral estoppel applied in a malicious prosecution case stemming from a federal interference claim, the Plumley court found, "The issue in the state court action was whether Plumley misappropriated Mockett's invention; the issue here is whether Mockett had reasonable cause to believe he did so." (Plumley, supra, 164 Cal.App.4th at p. 1049.) Plumley also noted that "litigants and attorneys who bring a legally tenable action are not subject to liability for malicious prosecution simply because a trier of fact disbelieves their version of conflicting evidence and makes findings adverse to them." (Id. at p. 1050.) "Indeed, if the state court's findings were given collateral estoppel effect, Plumley effectively would be relieved of his burden to prove that Mockett lacked probable cause, and Mockett would be deprived the opportunity to prove that, in fact, he did have probable cause." (Ibid.)
The Ahmeds dismiss the reasoning in Plumley as dicta. Even if it were dicta, "it does not follow that the dictum of a court is always and at all times to be discarded. A correct principle of law may be announced in a given case, although it may not be necessary to there apply it, because of other principles upon which the case then under consideration may be disposed of." (San Joaquin & Kings River Canal & Irrigation Co. v. County of Stanislaus (1908) 155 Cal. 21, 28; Smith v. County of Los Angeles (1989) 214 Cal.App.3d 266, 297.)
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Here, the Ahmeds concede the issue tendered in the Underlying Action was: "Were Sara Ahmed's payroll records falsified?" The issue here, as in Plumley, is whether GNI had reasonable cause to believe her payroll records were fraudulent. According to the Ahmeds, "Philip Ho's analysis did not establish Defendants had probable cause; rather, it established the exact opposite: the analysis was fabricated to punish the Ahmeds." This interpretation of Judge Dylina's findings is mistaken.
There was no finding Ho fabricated Sara's payroll numbers; the parties stipulated that the time clock records accurately reflected the times Sara clocked in and out and the changes made. Instead, Judge Dylina found Ho's analysis to be "mechanistic," rigid and motivated by revenge. A mechanistic and rigid method of assessing Sara's time records by Ho does not mean GNI's entire case lacked probable cause. Indeed, the Ahmeds stipulated that neither Sara nor Kazi could explain why any of the changes were made to Sara's time clock entries. Sara was not able to substantiate the amount of overtime owed to her. Ultimately, Judge Dylina adopted Frank Chang's calculation that she was owed $1,500 in unpaid overtime wages, a far cry from the $20,000 she initially claimed was owed. In addition, a vengeful motive does not automatically exclude probable cause. It is common for both to coexist in the same case. None of these findings establish lack of probable cause. Accordingly, the issue decided in the Underlying Action—fraud—is not identical to the issue presented in this action—probable cause—and collateral estoppel does not apply.
II. The Continued Prosecution and Appeal of Underlying Action Are Not Evidence of Malicious Prosecution
The Ahmeds also set forth a theory of malicious prosecution based on GNI's continued prosecution and appeal of the Underlying Action once it was found to lack probable cause. In a declaration by the Ahmeds' attorney in support of an opposition to a motion to transfer in this action, the Ahmeds' attorney stated that "[d]uring Mr. Ho's first day of cross-examination [in the Underlying Action], Judge Dylina advised GNI that Mr. Ho's statistical analysis was insufficient to establish fraud. GNI continued to assert that that analysis was evidence of fraud throughout the trial, multiple post-trial proceedings, its appeal to the Court of Appeals and Petition to the Supreme Court." In addition, the Ahmeds again rely on Judge Dylina's statement of decision to support this theory of liability, quoting his finding that "[GNI] relied exclusively on its analysis of [Sara's daily time records] to establish a pattern of fraud in reported payroll" but "[t]here was no corroborative evidence suggesting that Sara Ahmed had not performed the work . . . ." The Ahmeds contend that GNI is liable for malicious prosecution since it was told its case was meritless and yet it continued the matter to trial and appeal. We disagree. Neither piece of evidence is sufficient to establish that GNI discovered its case lacked merit such that it was a malicious prosecution to continue the matter through trial and appeal.
The evidence presented by the Ahmeds that GNI discovered the Underlying Action was meritless is very different from the evidence in Zamos v. Stroud (2004) 32 Cal.4th 958, 972 (Zamos), the case relied on by the Ahmeds. There, the high court held that a malicious prosecution claim may be asserted against a lawyer who continued to prosecute a lawsuit after he discovered it lacked probable cause. The plaintiffs presented evidence that the attorney was given trial transcripts shortly after the underlying fraud lawsuit was filed that directly contradicted his client's claims. As a result, the high court determined that the plaintiffs' attorney should have dismissed the action. The trial court's grant of the anti-SLAPP motion was reversed. (Ibid.)
Neither Judge Dylina's comments from the bench nor his statement of decision are admissible evidence for the reasons discussed above. Even if it were admissible evidence, it came at the end of the trial and cannot serve as notice to GNI that its claim for fraud lacked probable cause. In Zamos, the "smoking gun" evidence was given to the attorney shortly after the lawsuit was filed; here, there is no indication GNI was made aware its case lacked merit until Judge Dylina's statement of decision. The comments made by Judge Dylina during trial provided no warning to GNI that its claim lacked merit. Taken in context, it is apparent the declaration submitted by the Ahmeds' counsel mischaracterizes Judge Dylina's comments. The actual transcript of Judge Dylina's comments from the bench during trial about Ho's analysis shows that he had not "prejudged any aspect of this case." Indeed, he stated, "We are a long way from completion of the plaintiffs' case, and I haven't heard from [Sara] nor have I heard from [Kazi]. My comments, particularly about Exhibit 1 [Ho's analysis of Sara's time records] were really in the abstract and that's what they were meant to be. But this is a case that's a very interesting case, and I'm going to spend a great deal of time I'm sure after the case is completed, digesting the information, the testimony, reviewing all of the documents that are admitted into evidence. And I wanted to assure everyone I haven't formed any opinion about this case . . . . [¶] My comments were meant to be helpful to counsel to essentially show you where I think gaps might be, where we need to complete them. But to the extent that they weren't, I apologize."
To the extent the Ahmeds intend to say that GNI continued to maliciously prosecute the case by filing an appeal to the Court of Appeal and then seeking a writ of certiorari from the California Supreme Court, we reject this argument. "[A] malicious prosecution claim cannot be based on a frivolous appeal." (Merlet v. Rizzo (1998) 64 Cal.App.4th 53, 59; see also Coleman v. Gulf Ins. Group (1986) 41 Cal.3d 782, 794.) If a malicious prosecution action could be asserted against a losing party who appeals his case, this "disfavored" action would be extended beyond what the claim was originally intended to prevent.
DISPOSITION
The judgment is affirmed. GNI is to recover its costs on appeal.
BIGELOW, P. J. We concur:
FLIER, J.
GRIMES, J.