Opinion
NOT TO BE PUBLISHED
Appeal from an order of the Superior Court of Orange County, No. 30-2009-00290434, Charles Margines, Judge.
Greenwald & Hoffman and Paul A. Hoffman for Plaintiff and Appellant.
Law Offices of Murray Robertson, Murray Robertson; Brown White & Newhouse and George B. Newhouse, Jr., for Defendants and Respondents.
OPINION
RYLAARSDAM, ACTING P. J.
Plaintiff Raushan S. Kabykenova appeals from the grant of a special motion to strike her malicious prosecution action (Code Civ. Proc., § 425.16; anti-SLAPP motion; all further statutory references are to this code) filed by defendants Elizabeth A. Gillis and William Warden. She contends she made out a prima facie case of malicious prosecution and the motion should have been denied. Because plaintiff did not meet her burden to show malice we affirm.
FACTS AND PROCEDURAL HISTORY
Plaintiff and defendants entered into a contract for plaintiff to purchase shares of Azteq International Ltd. for $2 million (contract). When plaintiff did not pay for the shares, Azteq and its shareholders, Gert Chalay (Gert) and Natalia D. Chalay (Natalia), all plaintiffs in the underlying action (unless otherwise specified, all three collectively referred to as the Chalays), sued her for breach of contract (underlying action), seeking the purchase price. Plaintiff answered and filed a cross-complaint containing numerous causes of action, including several for securities violations, fraud, and breach of contract. The cross-complaint alleged that, before she executed the contract, plaintiff had paid $505,000 to the Chalays by way of an investment in and loan to Azteq and a related company. It further pleaded the Chalays never intended to and did not transfer any shares in Azteq to plaintiff.
Within three months after the case was filed, in June 2008, the Chalays’ original lawyer was relieved as counsel. Two weeks later, while the Chalays were in pro. per., plaintiff’s lawyer noticed their depositions, requesting production of almost 90 categories of documents that included a variety of financial reports. After the Chalays failed to comply, the court granted plaintiff’s motion to compel and ordered appearance and production. The Chalays were still unrepresented at that time.
In November 2008 Gert appeared for his deposition, represented by defendant Gillis; this was defendants’ first appearance in the case. Gert produced only some of the documents but stated he had mailed hundreds of pages more. He also said he had the documents and would bring them the following day. The next day he produced some additional documents but again none of the financial records or the name of Azteq’s CPA. At her deposition about a week later, Natalia also represented by Gillis, did not know about or bring any financial documents.
Over the next month the lawyer for plaintiffs in the underlying action called and wrote to defendants at least twice attempting to obtain the documents. One letter confirmed defendants had worked out an agreement with the trial judge to deliver financial documents and tax returns. Defendants stated they would deliver those documents at the settlement conference but those produced were incomplete. In January plaintiff obtained the Chalays’ financial records from their bank pursuant to a subpoena. At a continued deposition Natalia appeared without documents.
In February plaintiff filed a motion for terminating sanctions. In April the court denied plaintiff’s motion for terminating sanctions, again ordering production of all of the documents. Very few new documents were produced.
Meanwhile, in mid-March defendants filed documents to withdraw from representing the Chalays. Although originally accepted they were subsequently rejected because incomplete. Corrected documents were filed and defendants were relieved on May 1.
During the period defendants represented the Chalays the primary activities in which they engaged included appearing at Gert’s and Natalia’s depositions, producing some of the documents which had been ordered to be produced prior to the time they became involved in the case, defending against a subpoena duces tecum, setting and taking a third party deposition, and setting and then cancelling a few other depositions.
In May, when the Chalays were again without counsel, the court ordered their complaint stricken and in June it struck their answer to the cross-complaint, both for failure to comply with the discovery order. Subsequently plaintiff proved up her cross-complaint and recovered a total judgment in the sum of almost $1.4 million. During the hearing the court stated the Chalays “outright lied” during their depositions regarding the legitimate business operations of Azteq.
Plaintiff then filed the instant action for malicious prosecution against the Chalays, their original lawyer, and defendants. Defendants filed the anti-SLAPP motion, arguing there was no favorable termination on the merits because the case was dismissed as part of discovery sanctions and plaintiff could not show the probability of prevailing. They also asserted plaintiff was challenging their defense to her multi-cause of action cross-complaint and that was not subject to a malicious prosecution action.
The court granted the motion, finding plaintiff had not met her burden to show defendants continued to prosecute the action without probable cause or acted with malice.
DISCUSSION
1. Introduction
Section 425.16, subdivision (b)(1) provides that a cause of action against a person arising from an act in furtherance of a constitutionally protected right of free speech may be stricken unless the plaintiff establishes the probability it will prevail on the claim. The court must engage in a two-step analysis under this section. First it must determine whether the defendant has met its burden to show “that the challenged cause of action is one arising from protected activity.” (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 733.) If so, the burden shifts to the plaintiff to show the likelihood of prevailing on the claim. (Ibid.) We review an order granting an anti-SLAPP motion de novo. (Flatley v. Mauro (2006) 39 Cal.4th 299, 325-326.) “‘We consider “the pleadings, and supporting and opposing affidavits... upon which the liability or defense is based.” [Citation.] However, we neither “weigh credibility [nor] compare the weight of the evidence. Rather, [we] accept as true the evidence favorable to the plaintiff [citation] and evaluate the defendant’s evidence only to determine if it has defeated that submitted by the plaintiff as a matter of law.” [Citation.]’ [Citations.]” (Nygard, Inc. v. Uusi-Kerttula (2008) 159 Cal.App.4th 1027, 1036.) The intent of the statute is to prevent “chill[ing] the valid exercise of... freedom of speech and petition... through abuse of the judicial process” and to that “end, th[e] section [is to] be construed broadly.” (§ 425.16, subd. (a).)
Filing and prosecution of a civil action falls within the constitutionally protected action under section 425.16, subdivision (b)(1). And a claim for malicious prosecution is subject to an anti-SLAPP motion. (Jarrow Formulas, Inc. v. LaMarche, supra, 31 Cal.4th at p. 735.) Thus, the only issue for our consideration is whether plaintiff met her burden to establish a prima facie case for malicious prosecution against these defendants. That required her to show defendants continued to prosecute the underlying action without probable cause and with malice and that she prevailed on the merits. (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 871; Zamos v. Stroud (2004) 32 Cal.4th 958, 970.) Because we determine plaintiff did not make out a prima facie case for malice and affirm on that basis, we need not discuss favorable termination or probable cause.
2. Malice
Malice is based on defendants’ subjective intent in maintaining the underlying action. (Sheldon Appel Co. v. Albert & Oliker, supra, 47 Cal.3d at p. 874.) “The motive of... defendant[s] 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, ” i.e., “actual ill will or some improper ulterior motive. [Citation.]” (Downey Venture v. LMI Ins. Co. (1998) 66 Cal.App.4th 478, 494, italics omitted.) Plaintiff claims she made a prima facie showing defendants acted with malice by showing they continued to prosecute the case knowing it had no merit (Daniels v. Robbins (2010) 182 Cal.App.4th 204, 226 [maintaining case after learning probable cause absent allows inference of malice] and did not properly participate in discovery. We disagree.
We recently decided Daniels v. Robbins, supra, 182 Cal.App.4th 204 where we affirmed the grant of an anti-SLAPP motion brought by lawyers named in a malicious prosecution action. (Id. at p. 210.) The plaintiff argued the lawyers acted with malice in suing her in the underlying action because: the lawyers’ client in the underlying action may have been motivated by ill will; there was “an apparent lack of evidentiary support for the factual allegations in the underlying action, ” the defendants could not respond to discovery, which showed a failure to investigate, and the lawyers’ client in the underlying action required a waiver of any claims in exchange for dismissal of the action. (Id. at p. 227.) We held this was not sufficient as a matter of law to show malice on the part of defendant lawyers.
The same is true here. As in Daniels, even if the Chalays acted with malice, it cannot be imputed to defendants. (Daniels v. Robbins, supra, 182 Cal.App.4th at p. 225.) And there is no evidence of actual ill will on defendants’ part. Even circumstantial evidence, which is normally used to show malice (HMS Capital, Inc. v. Lawyers Title Co. (2004) 118 Cal.App.4th 204, 218), is lacking. Defendants’ failure to deny malice does not require a finding of same. It was plaintiff’s burden to make a prima facie case for that element; defendants had no burden to rebut it. In fact, we may rely on defendants’ evidence only if it defeats plaintiff’s evidence as a matter of law. (Kashian v. Harriman (2002) 98 Cal.App.4th 892, 906.) That the lawyers in Daniels denied malice (Daniels v. Robbins, supra, 182 Cal.App.4th at p. 225) is not dispositive. Moreover, this is not a case of defendants’ failure to present an adequate record on appeal.
Second, although lack of probable cause is a factor to be considered, there must be additional facts to show malice. (Downey Venture v. LMI Ins. Co., supra, 66 Cal.App.4th at pp. 498-499, fn. 29.) We do not decide the issue of probable cause but assuming it was absent, it does not, independently, support plaintiff’s argument. Even if defendants did not satisfactorily investigate the facts before substituting into the case, a claim for which there is no evidence in the record, that alone will not suffice to make a prima facie case of malice. (Jarrow Formulas, Inc. v. LaMarche, supra, 31 Cal.4th at p. 743; Daniels v. Robbins, supra, 182 Cal.App.4th at p. 225.)
Plaintiff argues defendants lacked probable cause to continue prosecuting the action primarily based on the Chalays’ deposition testimony elicited at the beginning of defendants’ representation, claiming it showed the absence of conditions precedent to her performance under the contract, thereby defeating the action. But as Daniels instructs defendants’ “sustained inability to provide any support for [the Chalays’] allegations, on its own, does not allow an inference that they knew there was no probable cause for continuing to prosecute the underlying action.” (Daniels v. Robbins, supra, 182 Cal.App.4th at p. 227.) Moreover, much of the information that came out at the depositions on which plaintiff relies related to her cross-complaint. California does not recognize a tort of “malicious defense” arising from the alleged wrongful defense of the cross-complaint. (California Physicians’ Service v. Superior Court (1992) 9 Cal.App.4th 1321, 1325.)
Citing Daniels v. Robbins, supra, 182 Cal.App.4th at p. 225, plaintiff also heavily relies on the fact that because Gert and Natalia were not parties to the contract they had no standing to file the action. She concludes this demonstrated to defendants the claim was invalid and establishes malice. Not so. The mere fact Gert and Natalia were not signatories does not necessarily equate to a lack of standing. They could have been assignees or had other arguable rights to recover and had a right to proceed “‘“even if it [was] extremely unlikely they [would] win....”’ [Citations.]” (Plumley v. Mockett (2008) 164 Cal.App.4th 1031, 1047-1048.) We cannot say no reasonable attorney would proceed with the case where Gert and Natalia were individual parties, especially given the fact that the case could otherwise proceed with only Azteq as the plaintiff.
Third, the claims as to discovery do not persuade. Plaintiff points to defendants’ opposition, including two unsuccessful ex parte applications and a noticed motion for a protective order, and to a subpoena she served on the Chalays’ bank to obtain financial records. While the hearing was pending the parties discussed a protective order and before it was signed defendants took their motion off calendar. Plaintiff concludes this had to have been motivated by malice to prevent her from obtaining bank records or to run up her costs. But this is pure speculation. Moreover, by virtue of withdrawing the motion, defendants did not stand in the way of plaintiff obtaining the documents.
Plaintiff’s assertion defendants “persisted in their improper attempts to squeeze $2[ million] from [the Chalays]..., ” allegedly knowing the Chalays had acted fraudulently and when they had engaged in bad faith tactics to delay discovery, is not borne out by the record reference cited. She directs us to a declaration filed by her nephew in opposition to the anti-SLAPP motion. He states he was present at Gert’s deposition and spoke with defendant Gillis during a break. Defendant Gillis told him it “would cost [plaintiff] a fortune [to] continue[] to defend” the case and suggested she should just pay the $2 million. This deposition occurred at the beginning of defendants’ representation, not after the discovery, or lack thereof, about which plaintiff complains and cannot be characterized as “persist[ing]” in an attempt to collect from plaintiff. It is a typical litigation tactic and does not demonstrate ill will or any improper motive.
Likewise that defendants noticed some depositions and then took them off calendar is not evidence of malice but of plaintiff’s attempt to find facts parallel to those in cases that held malice had been shown. In HMS Capital, Inc. v. Lawyers Title Co., supra, 118 Cal.App.4th 204, for example, one factor on which the court relied was the defendant’s failure to conduct discovery. (Id. at p. 218.) But in that case, despite several warnings from the plaintiff’s counsel that cancellation fees were not provided for in the contract, the defendant insisted on payment of $25,000 to settle the case and when it was not forthcoming took the case to trial without engaging in any discovery. (Id. at pp. 208, 209.)
That is quite different from the present case where defendants did not proceed to trial but acted to withdraw shortly after beginning their representation. They filed substitutions of attorney within four months of their entry into the case. That it took another month or two for an order to be entered is not relevant to our analysis. Obviously defendants could not discontinue representation until there was an order relieving them. Four months is a brief period of time for lawyers to evaluate the facts and applicable law, engage in discovery and other investigation, and test the opposition’s evidence and case in general. At the time defendants made their first appearance in the action, they were not required to have every piece of evidence available or have the case proven but were entitled to rely on information initially provided to them by the Chalays. (Daniels v. Robbins, supra, 182 Cal.App.4th at p. 223.)
And what they really did was defend against discovery, most of which had been ordered before defendants began their representation. As their counsel points out, this was a positive thing. Before defendants’ entry into the case, the Chalays had not complied with discovery requests. A logical inference from this short period of representation is not that defendants acted with malice but rather that they had no improper motive.
Compare the time period here to cases such as Zamos v. Stroud, supra, 32 Cal.4th 958, 962-963 where, after learning the case had no merit soon after it was filed, the lawyers nevertheless refused to dismiss it and instead took it to trial, or Daniels v. Robbins, supra, 182 Cal.App.4th at p. 223 where, when the lawyers learned probable cause was questionable, they maintained the action for over a year. Further, despite those facts in that case the court found no malice.
Plaintiff relies on Sycamore Ridge Apartments, LLC v. Naumann (2007) 157 Cal.App.4th 1385 where the court denied an anti-SLAPP motion filed by defendant lawyers who entered the underlying case as cocounsel. The court found the plaintiff had shown malice because there were several facts alleged in the complaint that were “clearly untenable” (id. at p. 1409) and the defendant lawyers pursued the case for a month before it was dismissed (id. at p. 1410). The court thus inferred malice based on “‘“facts establishing lack of probable cause.” [Citation.]’ [Citation.]” (Id. at p. 1409.) But, as discussed above, we do not have a pleading that “included a large number of claims that were untenable on their face.” (Id. at p. 1407.) Contrary to plaintiff’s claim, there is no evidence in our case that defendants “associate[d] into a clearly unmeritorious case with impunity... [because they were] careful not to become familiar with the claims or the evidence.” (Id. at p. 1411, fn. 13.)
In a similar vein plaintiff points to the withdrawal of prior counsel based, in part, on Rules of Professional Conduct, rule 3-200, which provides a lawyer may not represent a client if the lawyer knows or should know there is no probable cause for the action or the action has no basis in law. But there is no evidence defendants saw that withdrawal. And even if they had, prior counsel could not have spoken to them about the case and there can be legitimate differing opinions about probable cause.
Because plaintiff did not make a prima facie case for malice, she did not show the probability of prevailing on the merits. The court correctly granted the anti-SLAPP motion.
DISPOSITION
The order is affirmed. Respondents are entitled to costs on appeal.
WE CONCUR: FYBEL, J., IKOLA, J.