Opinion
G031679.
11-19-2003
SCOTT FARRELL et al., Plaintiffs and Respondents, v. MICHAEL C. HEWITT et al., Defendants and Appellants.
Waxler, Carner, Weinreb, and Brodsky, Barry Z. Brodsky and Gretchen S. Carner for Defendants and Appellants. Law Office of Daniel D. Rodarte and Daniel D. Rodarte for Plaintiffs and Respondents.
Plaintiffs Scott Farrell (Farrell) and How-To.Com, Inc. (How-To) sued defendants Michael C. Hewitt (Hewitt) and Bruinsma & Hewitt (B&H) for malicious prosecution. Defendants moved to strike the complaint pursuant to the anti-SLAPP statute, section 425.16 of the Code of Civil Procedure (§ 425.16). The court denied defendants motion and awarded plaintiffs $ 3,500 on a finding that the motion was "frivolous or brought solely to cause unnecessary delay." Because plaintiffs failed to present any admissible evidence in opposition to the motion to strike, we reverse with directions to grant defendants motion to strike and to determine the amount of attorney fees to which they are entitled under section 425.16.
SLAPP is an acronym for "strategic lawsuit against public participation."
FACTUAL AND PROCEDURAL BACKGROUND
Defendants are lawyers who represented their clients, Patrick DeMicco and Millennium Depot, in defending against plaintiffs action for declaratory relief (the underlying action). In addition to defending the complaint in the underlying action, Millennium filed a cross-complaint alleging, inter alia, a cause of action for promissory fraud. Plaintiffs prevailed on their complaint for declaratory relief and on their defense against the cross-complaint.
When this victory became final, plaintiffs filed the instant action alleging causes of action against DeMicco and Millennium for malicious prosecution and intentional interference with prospective economic advantage (first and second causes of action), and against the lawyer defendants for malicious prosecution of the promissory fraud cause of action in the underlying cross-complaint (third cause of action).
The Allegations of the Complaint
Plaintiffs alleged that How-To is an Internet startup company, involved since July 1999 "in the development of an internet website featuring educational broadband content and other services." DeMicco caused Millennium, Hewitt and B&H to file a complaint against How-To and Farrell in the Orange County Superior Court, alleging breach of contract and fraud. Before the Orange County complaint was served, How-To filed the underlying action for declaratory relief against Millennium, DeMicco and other defendants in the Los Angeles County Superior Court. How-To sought a declaration that it owed no obligation to DeMicco or Millennium "arising from a contemplated consulting agreement that was never executed among the parties," and that "uncertainty regarding the contemplated consulting agreement" was "making it more difficult . . . to obtain necessary financing."
Plaintiffs further alleged in the instant action that DeMicco caused Millennium, Hewitt and B&H to cross-complain against How-To and Farrell in the underlying action, including, inter alia, a cause of action for promissory fraud. Plaintiffs prevailed in the underlying action and the judgment is final. As to Hewitt and B&H, plaintiffs alleged on information and belief that the lawyers "acted without probable cause in the commencement and maintenance of the cross-complaint, to include the claim of fraud . . . against How-To and Farrell, in that Hewitt and B&H asserted a fraud claim that any reasonable lawyer would regard as untenable and, further, in failing to investigate the facts and the law upon which the fraud claim was based." Plaintiffs further alleged the cross-complaint was initiated and maintained with malice "in that Hewitt and B&H knew and understood that charging How-To and its Chief Executive Officer with civil fraud would effectively preclude How-To from obtaining start up venture capital financing in a competitive marketplace."
The Anti-SLAPP Motion
Defendants filed a motion to strike the complaint under the anti-SLAPP statute, section 425.16, requesting dismissal of the complaint and an award of attorney fees and costs. The substantive portions of the motion were supported by defendant Michael Hewitts declaration that attached ten exhibits. Plaintiffs did not object to any of defendants evidence.
Although the motion to strike was addressed only to the third cause of action of plaintiffs complaint, this was the only cause of action alleged against Hewitt and B&H. Thus, a judgment of dismissal would be proper upon the motion to strike being granted.
In his declaration, Hewitt set forth his professional qualifications and recounted the procedural background of the subject litigation, as follows: He was retained in December 1999 to assist DeMicco and Millennium in a dispute with How-To and Farrell. He was given documents relating to the dispute and drafted the Orange County complaint for breach of contract and fraud, but before that action was served, his clients were served with the underlying Los Angeles County action. Based on his review of the documents and other investigation, Hewitt concluded his clients had grounds to enforce the oral agreements and the written contract prepared and signed by Farrell in November 1999. As an alternative theory, based on copies of Farrells e-mails that were attached to the declaration, Hewitt believed Farrell had committed fraud by reneging on the oral agreements with DeMicco. The cross-complaint was not filed for an improper purpose, but was based on Hewitts belief that his client, DeMicco, had been deprived of the compensation due him. Hewitt harbored no personal ill will toward Farrell or How-To, and did not file the cross-complaint intentionally to deprive Farrell or his business of financing opportunities.
Plaintiffs filed written opposition to the motion consisting of: (1) a memorandum of points and authorities, to which were attached 21 exhibits; (2) a declaration of plaintiffs counsel stating the number of hours worked on the opposition and his billing rate, a statement purporting to authenticate exhibit No. 21; and (3) a notice of lodging three volumes of the reporters transcript of the underlying trial, together with a "request that the Court take Judicial Notice of the Reporters Transcript on Appeal pursuant to Evidence Code §§ 452(d) and 453."
Defendants filed written objections to plaintiffs evidence. Objection was made to that portion of counsels declaration purporting to authenticate exhibit No. 21 as not "properly authenticated, lacks foundation, and constitutes hearsay." Objection was made to the notice of lodging and request for judicial notice because defense counsel had not been served with copies of the trial transcripts, and because "there is no reference in any of the opposing papers to the reporters transcripts, and there are no citations to any portions thereof. Accordingly, it is impossible to ascertain specifically which portions(s) of the transcripts are the subject of the request or why said request is in any way relevant." Objection was also made to all exhibits attached to plaintiffs points and authorities and statements of fact made in the points and authorities on the grounds the exhibits and statements were not authenticated, were hearsay, and counsel lacked personal knowledge.
The court overruled all of defendants objections and denied their anti-SLAPP motion, finding "plaintiffs have satisfied their burden of showing that the Hewitts initiated their cross-complaint (promissory fraud) in the underlying action without probable cause (too many supporting facts to recite in this confined space) and was initiated with malice." As discussed below, the evidentiary ruling was erroneous. None of plaintiffs evidence was admissible and their burden was not satisfied.
DISCUSSION
The anti-SLAPP statute provides, in pertinent part: "A cause of action against a person arising from any act of that person in furtherance of the persons right of petition or free speech under the United States or California Constitution in connection with a public issue shall be subject to a special motion to strike, unless the court determines that the plaintiff has established that there is a probability that the plaintiff will prevail on the claim." (§ 425.16, subd. (b)(1).) In bringing an anti-SLAPP motion, the defendant bears the initial burden of establishing the action is one arising from activity protected by section 425.16. (Navellier v. Sletten (2002) 29 Cal.4th 82, 88.) He or she need not demonstrate that the targeted action was intended to chill the defendants constitutional right of free speech or petition (Equilon Enterprises v. Consumer Cause, Inc. (2002) 29 Cal.4th 53, 66), or that the action had such an effect. (City of Cotati v. Cashman (2002) 29 Cal.4th 69, 76.) Rather, defendant meets his or her burden "`by demonstrating that the act underlying the plaintiffs cause fits one of the categories spelled out in section 425.16, subdivision (e)." (Navellier v. Sletten, supra, 29 Cal.4th at p. 88.) A cause of action for malicious prosecution fits neatly into the categories described in section 425.16, subdivisions (e)(1), (2), and 4 (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 734), and neither party raises an issue in this regard.
"As used in this section, `act in furtherance of a persons right of petition or free speech under the United States or California Constitution in connection with a public issue includes: (1) any written or oral statement or writing made before a . . . judicial proceeding . . . ; (2) any written or oral statement or writing made in connection with an issue under consideration or review by a . . . judicial body . . . ;(4) or any other conduct in furtherance of the exercise of the constitutional right of petition . . . ." (§ 425.16, subd. (e)(1), (2) & (4).)
"[I]f a court ruling on an anti-SLAPP motion concludes the challenged cause of action arises from protected petitioning, it then `determines whether the plaintiff has demonstrated a probability of prevailing on the claim. [Citation.] To satisfy this prong, the plaintiff must `state[] and substantiate[] a legally sufficient claim. [Citation.] `Put another way, 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."" (Jarrow Formulas, Inc. v. LaMarche, supra, 31 Cal.4th at p. 741.)
Plaintiffs Must Support a Prima Facie Case With Admissible Evidence
Although a cause of action arising from activity protected by section 425.16 will be stricken only if it "lacks even minimal merit," (Navellier v. Sletten, supra, at p. 89), the "prima facie showing of facts to sustain a favorable judgment" must nevertheless be made with admissible evidence. In the earliest days of anti-SLAPP litigation, the court in Wilcox v. Superior Court (1994) 27 Cal.App.4th 809, 830, rejected a contention that admissible evidence is not required for the purpose of demonstrating a probability of prevailing. Unless plaintiff resists the motion with admissible evidence "there would be nothing for the trier of fact to credit," and plaintiff would fail to establish a probability of prevailing. (Ibid.) Likewise, in Evans v. Unkow (1995) 38 Cal.App.4th 1490, 1497, the court held declarations made on information and belief could not establish a probability of prevailing because the statements would not have been admissible at trial. "An assessment of the probability of prevailing on the claim looks to trial, and the evidence that will be presented at that time. [Citation.] Such evidence must be admissible." (Id. at p. 1497, italics in original.) In Tuchscher Development Enterprises, Inc. v. San Diego Unified Port Dist. (2003) 106 Cal.App.4th 1219, 1236-1238, Division One of this court reiterated the requirement that plaintiff must present competent admissible evidence to carry his or her burden. Many other cases also make the implicit assumption that evidence must be admissible to be considered by the court in ruling on an anti-SLAPP motion. (Nagel v. Twin Laboratories, Inc. (2003) 109 Cal.App.4th 39, 52 [ruling based on all admissible evidence and reasonable inferences drawn from that evidence]; Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 821 [ruling that denial of an anti-SLAPP motion establishes probable cause to bring the action, thereby precluding a later malicious prosecution action, was based on assumption plaintiff had presented a "facially sufficient evidentiary showing" in successfully opposing the motion].)
Plaintiffs Evidence Was Not Admissible
1. The Court May Not Take Judicial Notice of the Truth of Trial Testimony in the Underlying Case
Plaintiffs requested the court to take judicial notice of three volumes of the reporters transcript of the underlying trial "pursuant to Evidence Code §§ 452(d) and 453." Evidence Code section 452, subdivision (d) permits the court to take judicial notice of "[r]ecords of (1) any court of this state . . . ." Evidence Code section 453 makes mandatory the taking of judicial notice of matters specified in section 452 when requested by a party, provided the requesting party: "(a) Gives each adverse party sufficient notice of the request, through the pleadings or otherwise, to enable such adverse party to prepare to meet the request; and [¶] (b) Furnishes the court with sufficient information to enable it to take judicial notice of the matter." (Evid. Code, § 453, italics added.) Rule 323(c) of the California Rules of Court requires that "[a] party requesting judicial notice of material under Evidence Code sections 452 or 453 must provide the court and each party with a copy of the material."
Although the court may take judicial notice of the existence of testimony in the underlying action, it may not take judicial notice of its truth. The consequence of judicial notice is to establish a fact as indisputably true, thereby eliminating the need for further proof. For that reason, the truth of former trial testimony cannot be judicially noticed. While prior testimony can sometimes be used as a party admission (Evid. Code, § 1220), or for impeachment as an inconsistent prior statement (Evid. Code, §§ 770, 1235), or affirmatively as substantive evidence where the witness is unavailable and other foundational requirements are met (Evid. Code, § 1292), mere testimony cannot be transformed into indisputable truth by the device of judicial notice.
Even factual findings made by a court are not the proper subject of judicial notice. The concept was explained well in Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1564. "It is the consequence of judicial notice that the `fact noticed is, in effect, treated as true for purposes of proof. `Under the doctrine of judicial notice, certain matters are assumed to be indisputably true, and the introduction of evidence to prove them will not be required. Judicial notice is thus a substitute for formal proof. [Citation.] (1 Witkin, Cal. Evidence (3d ed. 1986) § 80, p. 74.) Therefore, a finding of fact that was judicially noticed would be removed as a subject of dispute and would be accepted for evidentiary purposes as true. The effect would be that without resort to concepts of collateral estoppel or res judicata that would litigate whether the issue was fully addressed and resolved, a finding of fact would be removed from dispute in the other action in which it was judicially noticed." The Sosinsky court concluded "neither a finding of fact made after a contested adversary hearing nor a finding of fact made after any other type of hearing can be indisputably deemed to have been a correct finding. . . . Taking judicial notice of the truth of a judges factual finding would appear to us to be tantamount to taking judicial notice that the judges factual finding must necessarily have been correct and that the judge is therefore infallible. We resist the temptation to do so." (Id. at p. 1568.)
The Sosinsky court resisted the temptation to deem a courts factual findings infallible. With even greater confidence, we resist the temptation to deem true the prior testimony of interested parties. (See also Garcia v. Sterling (1985) 176 Cal.App.3d 17, 22 ["Although the existence of statements contained in a deposition transcript filed as part of the court record can be judicially noticed, their truth is not subject to judicial notice"]; Bach v. McNelis (1989) 207 Cal.App.3d 852, 865 [a court "may not judicially notice the truth of assertions in declarations or affidavits filed in court proceedings"].) Thus, the truth of the testimony contained in the trial transcripts is not subject to judicial notice. And plaintiffs did not explain either here or in the trial court how the mere existence of any of the testimony establishes any element of a malicious prosecution case against Hewitt and B&H, except, of course, that plaintiffs prevailed in the underlying action, an issue not debated. Instead, plaintiffs brief on appeal offers segments of trial testimony (a courtesy not offered to defendants in the trial court) quite obviously for the purpose of establishing the truth of the matters the witness testified about, including the authentication of exhibits. The objection to the request for judicial notice should have been sustained, or, at a minimum, limited to taking judicial notice of the outcome of the underlying trial.
Defendants objection was based on plaintiffs failure to serve a copy of the trial transcripts, and because plaintiffs failed to identify any particular part or portion of the transcripts it wanted noticed. Because of the broad, unfocussed request for judicial notice, we deem defendants equally broad objection sufficient to preserve on appeal the issue of the courts inability to judicially notice the truth of testimony. Because plaintiffs failed to refer to any specific page in a 357-page trial transcript, defendants were not given "sufficient notice . . . to enable [them] to prepare to meet the request" as required by Evidence Code section 453.
2. The Underlying Trial Testimony May Not Otherwise Be Considered as Substantive Evidence
Since the truth of the underlying trial testimony may not be judicially noticed, we must address whether the testimony is otherwise admissible as evidence. We do this because a judgment will be affirmed if correct for any reason. (In re Marriage of Burgess (1996) 13 Cal.4th 25, 32 ["We are required to uphold the ruling if it is correct on any basis, regardless of whether such basis was actually invoked"].)
Former testimony, of course, is hearsay. It is "evidence of a statement that was made other than by a witness while testifying at the hearing and that is offered to prove the truth of the matter stated." (Evid. Code, § 1200, subd. (a).) Accordingly, the prior trial testimony is inadmissible unless qualifying under an exception to the hearsay rule. No exception applies.
Only three witnesses testified at the underlying trial: Farrell, DeMicco and Peter Wilson. Because Hewitt was not a witness in the underlying trial, there can be no consistent or inconsistent statement in the trial transcript. The testimony of Farrell is not admissible as a party admission under Evidence Code section 1220 because it is not offered against him. And because Farrell did not submit a declaration in opposition to the motion, there is no need to consider whether his trial testimony is either consistent or inconsistent with present testimony. The only other hearsay exception that might be considered is the former testimony exception. (Evid. Code, § 1292.)
But the former testimony exception is not available because no foundation was offered establishing that any of the witnesses in the underlying trial, whether Farrell, DeMicco, or Wilson, were unavailable to provide a declaration in opposition to the motion. Evidence Code section 1292, subdivision (a) provides in relevant part: "Evidence of former testimony is not made inadmissible by the hearsay rule if: [¶] (1) The declarant is unavailable as a witness." Accordingly, with this necessary foundation missing, there is no basis on which the trial testimony can be received as substantive evidence.
3. None of the Exhibits Were Admissible
Plaintiffs made no attempt to authenticate 17 out of 21 exhibits attached to their memorandum of points and authorities, namely, exhibits one through seventeen. On appeal, plaintiffs argue that authentication was provided in the underlying trial testimony. But as we have explained, ante, the truth of the underlying trial testimony may not be judicially noticed, and no hearsay exception applies. Even if the trial testimony were to be erroneously considered, there is no evidence linking the exhibit numbers used in the trial with the exhibits submitted as opposition to the motion. "Authentication of a writing is required before it may be received in evidence." (Evid. Code, § 1401, subd. (a).) Thus, the information in exhibits one through seventeen cannot be considered.
Three of the exhibits would have been the proper subject of judicial notice to establish that plaintiffs prevailed in the underlying trial and the judgment was final: viz., the statement of decision, exhibit No. 18; the judgment, exhibit No. 19; and the remittitur after abandonment of the appeal, exhibit No. 20. But plaintiffs did not request judicial notice of these documents. Even if they had, exhibits Nos. 18, 19, and 20 establish the fact that plaintiffs prevailed and the judgment is final — issues not contested by defendants — and nothing more.
Finally, exhibit No. 21 purports to be authenticated by counsels declaration that Hewitt provided the document during discovery in the underlying case. But defendants objected the document was hearsay — which it is. No exception to the hearsay rule is apparent, even if counsels attempt to authenticate the document is credited. The trial court should not have considered the document.
As a Matter of Law, No Evidence Was Offered Establishing a Probability Plaintiff Would Prevail
As explained, ante, absolutely no admissible evidence or proper judicial notice established any element of a malicious prosecution case against Hewitt and B&H, except the obvious — plaintiffs had prevailed in the underlying action and the judgment was final. The court should not have considered the trial transcript or the exhibits to establish the truth of any facts in support of the malicious prosecution claim. The challenged order denying defendants anti-SLAPP motion to strike must be reversed.
In reaching this conclusion, we are perhaps overly generous to plaintiffs. Ironically, we know the judgment is final only by taking judicial notice of the remittitur that plaintiffs never requested.
DISPOSITION
The order denying defendants section 425.16 motion to strike is reversed. The case is remanded with instructions to the superior court to grant the motion, dismiss the complaint with prejudice as to Hewitt and B&H, and determine the issue of defendants entitlement to attorney fees. Defendants shall recover their costs on appeal.
WE CONCUR: SILLS, P. J., ARONSON, J.