Opinion
G056117 G056511
05-19-2020
NEWPORT HARBOR OFFICES & MARINA, LLC, Plaintiff and Appellant, v. MORRIS CERULLO WORLD EVANGELISM et al., Defendants and Respondents.
Copenbarger & Associates, Paul D. Copenbarger and Elaine B. Alston for Plaintiff and Appellant. G10 Galuppo Law, Louis A. Galuppo and Daniel T. Watts for Defendants and Respondents.
ORDER MODIFYING OPINION AND DENYING PETITION FOR REHEARING; NO CHANGE IN JUDGMENT
It is ordered that the opinion filed on May 19, 2020 be modified as follows:
On page 23, at the end of the first line, insert the following as footnote 4:
4 In a petition for rehearing, NHOM contends Lloyd Copenbarger stated in a declaration dated August 9, 2012 that the repairs and maintenance demanded by MCWE in the March 2012 30-day notice had been completed within the 60-day period. According to NHOM, this declaration was filed and served on MCWE in August 2012 in opposition to a motion for summary adjudication and therefore imparted notice to MCWE before its unlawful detainer action was dismissed. NHOM did not mention or cite to this declaration in either of its appellate briefs. In support of the proposition that the repairs and maintenance demanded in the March 2012 30-day notice had been completed and all defaults cured, NHOM cited only to the Lloyd Copenbarger declaration executed in January 2018 and submitted in opposition to MCWE's anti-SLAPP motion. It is not our responsibility to search through a nearly 5,000-page Appellant's Appendix for citations favorable to an appellant: "It is neither practical nor appropriate for us to comb the record on [the appellant's] behalf." (In re Marriage of Fink (1979) 25 Cal.3d 877, 888.) "'[W]e have no duty to search the record for evidence.'" (Professional Collection Consultants v. Lauron (2017) 8 Cal.App.5th 958, 966.) Failure to mention or cite to the earlier Lloyd Copenbarger declaration deprived MCWE the opportunity to address its significance.
Original footnotes numbered 4 and 5 are renumbered accordingly.
The modification does not change the judgment.
The petition for rehearing is DENIED.
FYBEL, J. WE CONCUR: O'LEARY, P. J. BEDSWORTH, J.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2016-00880121) OPINION Appeals from orders of the Superior Court of Orange County, Deborah C. Servino, Judge. Affirmed. Copenbarger & Associates, Paul D. Copenbarger and Elaine B. Alston for Plaintiff and Appellant. G10 Galuppo Law, Louis A. Galuppo and Daniel T. Watts for Defendants and Respondents.
* * *
INTRODUCTION
Newport Harbor Offices and Marina, LLC (NHOM) sued Morris Cerullo World Evangelism (MCWE), Plaza del Sol Real Estate Trust (Plaza del Sol), Roger Artz, and William Packard for malicious prosecution after MCWE dismissed an unlawful detainer action it had brought against NHOM. The trial court granted special motions to strike pursuant to the anti-SLAPP statute, Code of Civil Procedure section 425.16 (section 425.16) brought by MCWE, Artz (individually and as trustee of Plaza del Sol), and Packard. NHOM appeals from the order granting the special motions to strike and from an order awarding MCWE, Plaza Del Sol, Artz, and Packard attorney fees.
SLAPP is an acronym for "strategic lawsuit against public participation." (Baral v. Schnitt (2016) 1 Cal.5th 376, 381, fn. 1 (Baral).)
All parties agree a malicious prosecution action arises from activity protected by section 425.16: The issue we address is whether NHOM met its burden of establishing a probability of success, the second step of the anti-SLAPP analysis. We conclude NHOM did not meet its burden because it failed to present evidence establishing a probability of success in proving the malice element of malicious prosecution, and therefore affirm the order granting the special motions to strike. We affirm the order awarding attorney fees because MCWE, Artz, and Packard prevailed on their special motions to strike and the amounts awarded were reasonable.
FACTS
In 1963, John J. Jakosky and Katherine F. Jakosky, as lessors, and F. David Young, as lessee, entered into a 55-year ground lease (the Ground Lease) of unimproved real property (the Property) in Newport Beach. The Ground Lease was amended five times from December 1963 through June 1977. Improvements, including a multistory office building, attached parking structure, and marina (the Improvements), were constructed on the Property in 1987 by the lessee at the time. Under the terms of the Ground Lease, the lessee is the owner of any improvements constructed on the Property.
Sometime before December 2003, MCWE became the lessee under the Ground Lease. In January 2004, MCWE entered into a sub-ground lease of the Property (the Sublease) with NHOM for a term expiring in November 2018. Paul Copenbarger was a founder and is a member of NHOM. By quitclaim deed, MCWE conveyed title to the Improvements on the Property to NHOM. Upon termination of the Sublease, the Improvements must be conveyed by quitclaim deed to the ground lessor/owner of the Property.
The Sublease required NHOM to fulfill all obligations of the lessee under the Ground Lease. The Ground Lease did not require the lessee to maintain or repair any improvements but did impose on the lessee, and therefore NHOM as sublessee, the obligation "not to conduct any public or private nuisance" and "not to commit any waste."
To acquire the Sublease and fund the purchase of the Improvements, in January 2004 NHOM obtained a $1.15 million loan from Plaza del Sol and a $3 million loan from The Hazel I. Maag Trust (the Maag Trust). Lloyd Copenbarger, who is Paul Copenbarger's brother, is the trustee of the Maag Trust. The $3 million loan from the Maag Trust was evidenced by a promissory note (the Maag Note) and secured by a first priority deed of trust on the Sublease and the Improvements (the Maag Deed of Trust). The $1.15 million loan from Plaza del Sol was evidenced by a promissory note (the Plaza del Sol Note) and secured by a second priority deed of trust on the Sublease and the Improvements (the Plaza del Sol Deed of Trust). Artz was the trustee of Plaza del Sol and a vice-president of MCWE.
In September 2009, NHOM defaulted on the Maag Note and the Maag Deed of Trust. In early 2010, Lloyd Copenbarger became concerned that Plaza del Sol would declare a default under the Plaza del Sol Note and the Plaza del Sol Deed of Trust.
In April 2010, MCWE, Plaza del Sol, and the Maag Trust entered into an "Agreement re: Assignment and Transfer of Promissory Note and Deed of Trust and Ground Lease Enforcement" (the Assignment Agreement). Under the terms of the Assignment Agreement, the Maag Trust agreed to make currently-owed and future payments on the Plaza del Sol Note and reimburse Plaza del Sol for real property taxes it paid on the Improvements and the Property. MCWE and Plaza del Sol agreed not to declare a default under the Sublease on account of the then-existing defaults so long as the Maag Trust made the agreed-upon payments.
In late 2010 or early 2011, Dennis D'Alessio, the president of Vertical Media Group (VMG) approached Paul Copenbarger and Lloyd Copenbarger and proposed that MCWE declare a default under the Sublease and thereafter commence an unlawful detainer action against NHOM so that it would lose its interest in the Sublease and the Improvements. Paul Copenbarger and Lloyd Copenbarger refused to agree to this proposal.
In March 2011, MCWE, Plaza del Sol, and Newport Harbor Venture (NHV) entered into an asset management agreement with an option to acquire and assignment of ground lease (the Asset Management Agreement). The Asset Management Agreement granted NHV, which was owned by D'Alessio, the option to acquire the Ground Lease and authorized NHV, as asset manager, to enforce the terms of the Sublease, serve any notices of default, and prosecute any unlawful detainer actions. A modification to the Asset Management Agreement substituted VMG in place of NHV.
On April 22, 2011, VMG, on behalf of MCWE, served NHOM with a 30-day notice (the 30-day notice) to cure certain maintenance and repair defaults under the Ground Lease and the Sublease. This was the first of a series of notices of defaults and notices to cure or quit served on NHOM. The 30-day notice asserted NHOM had breached paragraph 1.2 of the Sublease by failing to maintain and repair both the Improvements and the Property, included a list of maintenance and repair issues, and demanded that NHOM address them within 30 days.
By letter dated May 18, 2011, Paul Copenbarger, on behalf of NHOM, responded to the 30-day notice. He asserted, among other things, the sublessee's duty to maintain and repair under the Sublease did not extend to the Improvements because they were never subject to the Ground Lease and had been conveyed by quitclaim deed to NHOM.
On May 26, 2011, VMG, on behalf of MCWE, served a three-day notice to cure or quit (the three-day notice) on NHOM, based on "[y]our failure to cure the breaches of your Sub-Ground Lease." Five days later, Paul Copenbarger, both individually and derivatively on behalf of NHOM, filed a lawsuit against MCWE, Plaza del Sol, D'Alessio, and VMG. The lawsuit alleged NHOM had no duty to repair the Improvements, the 30-day notice and the three-day notice were premature and did not comply with the Ground Lease, and NHOM was the owner of the Improvements.
In June 2011, MCWE commenced an unlawful detainer action against NHOM predicated on the 30-day notice and the three-day notice. The unlawful detainer complaint alleged NHOM was in breach of a maintenance and repair covenant of the Sublease and attached copies of the 30-day notice and the three-day notice.
In July 2011, MCWE filed a first amended unlawful detainer complaint that changed the legal basis for terminating the lease. Instead of alleging breach of the maintenance and repair covenant, the amended unlawful detainer complaint alleged "[t]he failures of NHOM to effect repairs to and/or maintenance on the [P]roperty have resulted in public and private nuisances and dangerous conditions, caused the [P]roperty to be in violation of building and zoning codes, and constitute waste." (Italics added.)
On August 1, 2011, VMG, on behalf of MCWE, served a second 30-day notice on NHOM. The second 30-day notice was substantially the same as the first one, but asserted NHOM's failure to make the identified repairs and maintain the Improvements created a public and private nuisance, constituted waste, and violated municipal building codes.
NHOM filed a motion for summary judgment on the amended unlawful detainer complaint. On August 25, 2011, the trial court orally denied the motion on the ground there were "multiple issues regarding questions of fact and the validity of bringing the motion as it was stated." Notice was waived, and a formal order was never entered. NHOM did not seek appellate review of the order denying its summary judgment motion.
MCWE filed a supplemental unlawful detainer complaint in October 2011 to add allegations regarding the 30-day notice served in August 2011. The supplemental complaint also alleged NHOM had been served on September 6, 2011 with a second three-day notice to cure or quit (the September 2011 three-day notice).
In December 2011, the trial court granted the motion of Lloyd Copenbarger, as trustee of the Maag Trust, to intervene as a defendant in the unlawful detainer action.
On March 6, 2012, VMG, on behalf of MCWE, served on NHOM another 30-day notice to cure (the March 2012 30-day notice). This notice asserted there was "a wholesale failure on the part of NHOM to perform even a modicum of maintenance or repair to any aspect of the building or any part of it" and such failure "has allowed the property to become a public and private nuisance, constitutes waste, and constitutes violations of the building codes of the City of Newport Beach." The March 2012 30-day notice included a list of maintenance and repair items that was substantially the same as those of the prior 30-day notices. The March 2012 30-day notice gave an estimated cost of repairs of $2 million and claimed the maintenance and repair efforts undertaken by NHOM were insufficient to cure the defaults.
In response to the March 2012 30-day notice, Lloyd Copenbarger hired and paid contractors to make the repairs and perform the maintenance on the Property and Improvements that were demanded by that notice. In a declaration filed in opposition to the anti-SLAPP motions, Lloyd Copenbarger declared that all the repair and maintenance items identified in the March 2012 30-day notice were cured within the 60-day period provided by the Ground Lease.
On April 23, 2012, MCWE filed a second amended unlawful detainer complaint adding allegations regarding the Maag Trust's intervention, service on NHOM and the Maag Trust of the March 2012 30-day notice, and the estimated costs of repairs. The second amended complaint alleged "[n]either NHOM nor [the] Maag [Trust] have performed any substantial repairs to the subject property to date" and, "as a subterfuge," they did "a small amount of cosmetic maintenance beginning around the end of 2011."
The point of dispute between MCWE and NHOM has been over NHOM's repair and maintenance obligations under the Ground Lease and the Sublease. NHOM has contended the Ground Lease and the Sublease imposed no obligation on the subtenant to repair or maintain the Improvements, and, therefore, NHOM could not be held in breach for not making the repairs identified in the notices to cure. MCWE has contended the Ground Lease (paragraph 12) and the Sublease prohibited the subtenant from creating a public nuisance or committing waste, and NHOM created a public nuisance and committed waste by failing to maintain the Improvements and keep them in good repair.
In August 2012, MCWE, Plaza del Sol, and the Maag Trust entered into a settlement agreement (the Settlement Agreement). It required the Maag Trust to deliver a $300,000 promissory note and MCWE to "promptly" file a dismissal with prejudice of the unlawful detainer action.
The Maag Trust complied with its obligations under the Settlement Agreement; however, MCWE refused to dismiss the unlawful detainer action. The Maag Trust filed a complaint against MCWE and Plaza del Sol for declaratory relief and breach of the Settlement Agreement. The complaint alleged the Settlement Agreement was "valid, binding and of full force and effect" and the Maag Trust was "entitled to have a dismissal with prejudice of the [unlawful detainer] action filed immediately." MCWE and Artz, as trustee of Plaza del Sol, filed a cross-complaint for rescission of the Settlement Agreement on the ground it was the result of mistake, failure of consideration, fraud, duress, undue influence, and the unethical conduct of Paul Copenbarger and Lloyd Copenbarger.
On our own motion, we take judicial notice of the complaint and the cross-complaint filed in Copenbarger v. Morris Cerullo World Evangelism (Super. Ct. Orange County, 2016, No. 30-2012-00605730). (Evid. Code, §§ 452, subd. (d), 459.) The complaint appears at pages 161 through 357 of the clerk's transcript in Copenbarger v. Morris Cerullo World Evangelism, No. G054731. The cross-complaint appears at pages 361 through 369 of the same transcript.
In October 2015, three years after the Settlement Agreement was made, MCWE dismissed the unlawful detainer action, but without prejudice. (See Copenbarger v. Morris Cerullo World Evangelism, Inc. (2018) 29 Cal.App.5th 1, 6-7.) MCWE and Artz amended their cross-complaint to assert reformation and specific performance and to delete the claim for rescission.
Following a bench trial, the court found the Settlement Agreement was valid and binding and MCWE had materially breached it by not promptly dismissing the unlawful detainer action. The court awarded the Maag Trust $118,000 in damages based on the attorney fees expended in defending the unlawful detainer action after the Settlement Agreement was signed. In Copenbarger v. Morris Cerullo World Evangelism, Inc., supra, 29 Cal.App.5th at pages 4, 15-16, a panel of this court reversed on the ground the Maag Trust had failed to present competent evidence of the amount of its damages.
PROCEDURAL HISTORY
In October 2017, before the trial court reached its decision in the lawsuit for breach of the Settlement Agreement, NHOM filed this malicious prosecution action. In a first amended complaint, NHOM alleged the unlawful detainer action was filed and prosecuted maliciously and for the purpose of wrongfully depriving NHOM of title to the Improvements. NHOM alleged MCWE, Plaza del Sol, Artz, D'Alessio, NHV, VMG, and Packard conspired with each other to file and prosecute the unlawful detainer action.
MCWE, Artz, and Packard each brought a special motion to strike the first amended complaint under the anti-SLAPP statute. All three motions raised the same issues with the exception that Artz and Packard argued in addition they could not be liable for malicious prosecution because they did not file the unlawful detainer complaint. NHOM opposed each motion.
The trial court granted all three anti-SLAPP motions on the ground NHOM could not establish a probability of success in proving malicious prosecution. The court concluded the order denying NHOM's motion for summary judgment in the unlawful detainer action was an interim adverse ruling that as a matter of law established NHOM could not prove the element of lack of probable cause.
MCWE, Artz (individually and as trustee of Plaza del Sol), and Packard each brought a motion for attorney fees. They sought a total of $448,745 in attorney fees and costs. The trial court granted the motions for attorney fees but awarded amounts far less than were sought: $7,742 to MCWE, $12,554 to Artz and Plaza del Sol, and $13,325 to Packard. The court denied recovery of costs related to the anti-SLAPP motions.
NHOM filed a notice of appeal from the order granting the anti-SLAPP motions and a separate notice of appeal from the order awarding attorney fees. MCWE, Artz, and Packard do not challenge the amount of attorney fees awarded them. We granted NHOM's unopposed motion to consolidate the two appeals for all purposes.
DISCUSSION
I.
Legal Principles and Standard of Review
"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 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." (Code Civ. Proc., § 425.16, subd. (b)(1) (section 425.16(b)(1)).)
"The anti-SLAPP statute does not insulate defendants from any liability for claims arising from the protected rights of petition or speech. It only provides a procedure for weeding out, at an early stage, meritless claims arising from protected activity. Resolution of an anti-SLAPP motion involves two steps. First, the defendant must establish that the challenged claim arises from activity protected by section 425.16. [Citation.] If the defendant makes the required showing, the burden shifts to the plaintiff to demonstrate the merit of the claim by establishing a probability of success." (Baral, supra, 1 Cal.5th at pp. 384-385, fn. omitted.)
We review an order granting or denying an anti-SLAPP motion under the de novo standard and, in so doing, conduct the same two-step process to determine whether as a matter of law the defendant met its burden of showing the challenged claim arose out of protected activity and, if so, whether the plaintiff met its burden of showing probability of success. (Optional Capital, Inc. v. Akin Gump Strauss, Hauer & Feld LLP (2017) 18 Cal.App.5th 95, 113.)
The parties agree the first step of the anti-SLAPP procedure is satisfied in this case. A malicious prosecution action arises from activity protected by section 425.16. (Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 735.) "By definition, a malicious prosecution suit alleged the defendant committed a tort by filing a lawsuit." (Ibid.; see Cole v. Patricia A. Meyer & Associates, APC (2012) 206 Cal.App.4th 1095, 1105 ["[Plaintiff] concedes that a cause of action for malicious prosecution is subject to an anti-SLAPP motion"].)
We only address the issue whether NHOM met its burden of showing a probability of success on its malicious prosecution cause of action. At the second step of the anti-SLAPP analysis, NHOM had the burden of producing evidence establishing a "legally sufficient claim" and making "a prima facie factual showing sufficient to sustain a favorable judgment." (Baral, supra, 1 Cal.5th at pp. 384-385.) To recover for malicious prosecution, a plaintiff must prove the underlying action was (1) initiated or maintain by the defendant or at the defendant's direction and pursued to a legal termination in favor of the malicious prosecution plaintiff; (2) initiated or maintained without probable cause; and (3) initiated or maintained with malice. (Parrish v. Latham & Watkins (2017) 3 Cal.5th 767, 775.) NHOM bore the burden of establishing a probability of succeeding on each of those elements.
In determining whether NHOM met its burden, we consider "the pleadings, and supporting and opposing affidavits stating the facts upon which the liability or defense is based." (§ 425.16, subd. (b)(2).) We do not weigh evidence or resolve conflicting factual claims. We accept NHOM's evidence as true and evaluate MCWE's showing only to determine if it defeats NHOM's malicious prosecution claim as a matter of law. (Baral, supra, 1 Cal.5th at p. 384.) "The plaintiff need only establish that his or her claim has 'minimal merit' [citation] to avoid being stricken as a SLAPP." (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 291.)
II.
Evidence Which May Be Considered
Before addressing the merits, we must decide what evidence we may consider in resolving whether NHOM established a prima facie case of malicious prosecution. In opposition to the anti-SLAPP motions, NHOM submitted a declaration from Lloyd Copenbarger, a declaration from Elaine B. Alston, a request for judicial notice, and 489 pages of documents entitled "Evidence in Opposition." The last item consists of 12 declarations and excerpts from a deposition that were filed in the unlawful detainer action and other related lawsuits from October 4, 2011 through January 29, 2018. Some of the declarations include exhibits.
Relying on Gatton v. A.P. Green Services, Inc. (1998) 64 Cal.App.4th 688, disapproved in Sweetwater Union High School Dist. v. Gilbane Building Co. (2019) 6 Cal.5th 931 (Sweetwater), MCWE argues the materials in the "Evidence in Opposition" were inadmissible hearsay because they constituted former testimony and NHOM did not make a showing pursuant to Evidence Code sections 1291 and 1292 that the witnesses were unavailable. MCWE also argues the declarations were inadmissible because they were not authenticated.
MCWE's argument that the pleadings cannot be considered is defeated by the language of section 425.16, subdivision (b)(2).
Sweetwater, supra, 6 Cal.5th 931, expressly disapproved Gatton and forecloses both MCWE's hearsay and lack of authentication objections. (Id. at p. 944, fn. 8 ["We disapprove Gatton"].) The issue in Sweetwater was whether the plaintiff could oppose an anti-SLAPP motion with change of plea forms, each of which had a written factual narrative, and excerpts of grand jury testimony, all of which arose out of a prior criminal bribery investigation. (Id. at pp. 938-939.) The Supreme Court concluded that at the second step of an anti-SLAPP motion, "the court may consider affidavits, declarations, and their equivalents if it is reasonably possible the proffered evidence set out in those statements will be admissible at trial." (Sweetwater, supra, 6 Cal.5th at p. 949.) The court may not consider such evidence if "it is categorically barred" from admission at trial or "undisputed factual circumstances show inadmissibility." (Ibid.) The change of plea forms and the grand jury testimony could be considered by the trial court in ruling on the anti-SLAPP motion, even though they constituted prior testimony, because it was reasonably possible the plaintiff would be able at trial to present the same evidence through live testimony or satisfy the requirements of a hearsay exception. (Ibid.)
The Sweetwater court found it significant that an anti-SLAPP motion is filed early in the case, often before any discovery is conducted, and the motion itself stays discovery. (Sweetwater, supra, 6 Cal.5th at p. 943.) As it might not be practicable under such circumstances for a plaintiff to obtain declarations to oppose an anti-SLAPP motion, the purposes of the anti-SLAPP motion are served by permitting the court to consider prior testimony made under oath. (Id. at pp. 943-944.)
Here, the declarations and deposition excerpts comprising NHOM's "Evidence in Opposition" may be considered because it is reasonably possible NHOM would have been able at trial to present the same evidence through the declarants' live testimony or other competent evidence, or would have been able to satisfy the requirements of a hearsay exception. None of the declarations or deposition excerpts appears to have been categorically inadmissible, and MCWE does not so contend. The anti-SLAPP motions, filed only one month after NHOM filed its amended malicious prosecution complaint, had the effect of staying discovery.
Sweetwater also resolves against MCWE its contention the declarations comprising NHOM's "Evidence in Opposition" are inadmissible because they are not authenticated. The Sweetwater court analyzed and cited with approval Fashion 21 v. Coalition for Humane Immigrant Rights of Los Angeles (2004) 117 Cal.App.4th 1138 (Fashion 21), in which the Court of Appeal concluded an unauthenticated videotape offered by the plaintiff could be considered in determining whether the plaintiff had shown a probability of success on the merits. (Sweetwater, supra, 6 Cal.5th at pp. 947-948.) The Court of Appeal in Fashion 21 concluded the unauthenticated videotape could be considered due to the "high probability" the plaintiff would be able at trial to lay the foundation for the videotape's admission. (Fashion 21, supra, at p. 1148.) In this case, lack of authentication did not make the declarations categorically inadmissible, and it is reasonably possible NHOM would have been able to authenticate the declarations at trial if it sought to admit them into evidence.
MCWE also contends that portions of the declarations of Lloyd Copenbarger and Elaine B. Alston are inadmissible and cannot be considered in determining whether NHOM showed a probability of success on the merits. Rather than go through each of MCWE's objections, we consider them if they become relevant in our analysis of the evidence.
III.
Probable Cause
Our decision to affirm is based on NHOM's inability to meet its burden of establishing a probability of success in proving malice—the third element of a malicious prosecution cause of action. To reach that conclusion, we first must address the issue of probable cause because lack of probable cause, and the knowledge a lawsuit lacks probable cause, are important factors in determining malice. We conclude MCWE did not have probable cause to continue to prosecute the unlawful detainer action once Lloyd Copenbarger, according to his declaration, cured the defaults identified in the March 2012 60-day notice.
An action lacks probable cause if, on the basis of the facts known to the plaintiff, the institution or continuing prosecution of the action was not legally tenable. (Sheldon Appel Co. v. Albert & Oliker (1989) 47 Cal.3d 863, 878.) This is an objective standard. (Ibid.) "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.) A. Interim Adverse Judgment Rule
The trial court found the order denying NHOM's motion for summary judgment was an interim adverse ruling that established probable cause to bring and prosecute the unlawful detainer action. The interim adverse judgment rule concerns the probable cause element of malicious prosecution. (Parrish v. Latham & Watkins (2017) 3 Cal.5th 767, 776 (Parrish).) The rule posits that a judgment in favor of a plaintiff, unless obtained by fraud or perjury, establishes probable cause to bring and prosecute the action, even if the judgment is later reversed on appeal. (Ibid.) Denial of a defendant's motion for summary judgment, if made on the merits, constitutes such an interim adverse judgment establishing probable cause. (Roberts v. Sentry Life Insurance (1999) 76 Cal.App.4th 375, 383-384; see Clark v. Optical Coating Laboratory, Inc. (2008) 165 Cal.App.4th 150, 183-184.) The interim adverse judgment rule does not apply to judgments or rulings made purely on technical or procedural grounds or obtained through fraud or perjury. (Parrish, supra, at p. 778.)
NHOM contends the order denying its motion for summary judgment is invalid and cannot constitute an interim adverse judgment because the order did not comply with Code of Civil Procedure section 437c, subdivision (g). If a motion for summary judgment is denied on the ground there is at least one triable issue of material fact, subdivision (g) of section 437c requires the court to specify the material facts raised by the motion for which a triable controversy exists and to identify the evidence indicating a triable controversy. The order denying NHOM's motion for summary judgment did not satisfy those requirements.
The deficiencies in the order do not mean it cannot serve as an interim adverse judgment. NHOM never objected to the order, submitted a proposed order, or challenged the order by petition for writ of mandamus or otherwise. Even if NHOM had been able to overturn the order, either on the merits or based on its deficiencies, it would remain an interim adverse judgment. (Parrish, supra, 3 Cal.5th at p. 776.) Most importantly, for purposes of the interim adverse judgment rule, the trial court denied NHOM's motion for summary judgment on the merits, and not for purely technical or procedural reasons. (Id. at p. 778.)
NHOM also contends the order denying its motion for summary judgment was procured by fraud or perjury; in particular, NHOM argues the four declarations submitted in opposition to its summary judgment motion contained false testimony. Such purportedly perjured testimony falls into two categories. The first category consists of statements made by the declarants regarding the meaning of the Ground Lease, the Sublease, and the Assignment Agreement; for example, Artz declared the Sublease shifted responsibility for maintenance and repair of the Improvements from MCWE to NHOM. It is hard to see how such statements, even if inaccurate, would have induced the trial court to deny NHOM's summary judgment motion. NHOM knew at the time any statements regarding the meaning of agreements and documents were subject to relevance and other objections. The Ground Lease, the Sublease, and the Assignment Agreement were before the trial court, which could examine them and determine for itself whether the declarants' interpretations were accurate.
The second category consists of declarants' statements that were contested by declarations submitted by NHOM. For example, one declarant (Bower) declared Lloyd Copenbarger had stated he would attend to maintenance items; Copenbarger, in his declaration submitted in opposition to the anti-SLAPP motions, denied making that statement. NHOM could, and did, submit contrary evidence, including the declaration from Lloyd Copenbarger, but producing evidence countering the challenged declaration statements does not mean the declarants committed perjury. B. Intervening Circumstances
Under the interim adverse judgment rule, the order denying NHOM's motion for summary judgment establishes that MCWE had probable cause to bring and prosecute the unlawful detainer action. However, the interim adverse judgment rule does not necessarily mean MCWE had probable cause to prosecute the unlawful detainer action at every step of the litigation. In Parrish, supra, 3 Cal.5th at page 783, the court recognized the tort of malicious prosecution includes "'continuing to prosecute a lawsuit discovered to lack probable cause'" and "[t]hat means that there may be circumstances in which an interim ruling rendered at one point in the litigation will not, due to intervening circumstances, establish the existence of probable cause to continue the litigation."
NHOM argues there were a number of such intervening circumstances. One was MCWE's acceptance of rent after declaring the Sublease terminated. Lloyd Copenbarger stated in his declaration in opposition to the anti-SLAPP motions that "[a]ll rents have been paid through April 2012."
Acceptance of rent by a landlord with full knowledge of a tenant's breach of a covenant or condition may constitute a waiver or a forfeiture. (Kern Sunset Oil Co. v. Good Roads Oil Co. (1931) 214 Cal. 435, 441.) Waiver is a question of intent, and the landlord's reservation of the right to collect rent after a tenant's breach may establish a lack of intent to waive a forfeiture. (EDC Associates Ltd v. Gutierrez (1984) 153 Cal.App.3d 167, 170.) A lease provision may provide that acceptance of rent does not waive a tenant's breach. (Salton Community Services Dist. v. Southard (1967) 256 Cal.App.2d 526, 530.)
Termination of the Sublease did not relieve NHOM of the obligation to pay rent, and MCWE's acceptance of rent did not constitute a waiver of any forfeiture. The Ground Lease has a provision stating that "[a]ny termination of the Lease . . . shall not relieve lessee from the payment of any sum." The Sublease incorporated the covenants, conditions, and restrictions of the Ground Lease and provided, "[t]he terms, conditions and respective obligations of Sublessor and Sublessee to each other under this Sublease shall be the terms and conditions of the Ground Lease."
NHOM contends another intervening circumstance was that the September 2011 three-day notice and the March 2012 30-day notice were inconsistent with prior notices. According to NHOM, a notice of default is inconsistent with a prior notice purporting to have terminated a tenancy; that is, if the tenancy already has been terminated, then the tenant cannot be held in default. NHOM acknowledges no California authority supports this proposition and instead relies on two out-of-state cases, Duran v. Housing Authority of Denver (Colo. 1988) 761 P.2d 180 (Duran) and Andrus v. Dunbar (2005) 178 Vt. 554 (Andrus).
In Duran, a public housing authority served a tenant with a 14-day notice to pay rent or quit after having served two prior notices and initiating an action to regain possession. (Duran, supra, 761 P.2d at pp. 180-181.) The Colorado Supreme Court concluded the second 14-day notice to pay rent or quit constituted a waiver of a previous notice to pay rent or quit due to "the obvious inconsistency between the pending eviction proceeding and the second fourteen-day notice." (Id. at p. 184.)
Similar facts were presented in Andrus: A landlord served the tenant with a notice to vacate after filing an action for eviction premised on a prior notice to vacate. (Andrus, supra, 178 Vt. at pp. 554-555.) The Vermont Supreme Court concluded the trial court erred by not granting the tenant's motion to dismiss the action for eviction because the landlord had accepted rent from the tenant and the second notice to vacate voided the first notice. (Id. at pp. 556-557.) By accepting rent and serving a second notice to quit, the landlord "'unequivocally recognized the tenancy as existing.'" (Id. at p. 556.) The eviction action should have been dismissed because it was brought when the tenancy had not been terminated. (Id. at p. 557.)
Duran and Andrus concern eviction statutes in Colorado and Vermont, respectively, which might or might not be sufficiently similar to California's for those decisions to support NHOM. In addition, an important distinction between Duran and Andrus, on the one hand, and this case, on the other, is that Duran and Andrus concerned residential leases, not a commercial lease. Successive notices might lead a residential tenant to be unsure of his or her rights and obligations. In Duran, the court concluded the second 14-day notice could have misled the tenant into believing the tenant still had time to cure and the eviction would not be carried out until the second notice period had expired. (Duran, supra, 761 P.2d at p. 184.) The Andrus court expressed concern that the second notice created confusion over whether the lease was indeed terminated or whether the tenant could pay rent and avoid eviction. (Andrus, supra, 178 Vt. at p. 157.)
NHOM was not a residential tenant but a sophisticated commercial enterprise whose principal is an attorney. NHOM cites no evidence indicating the September 2011 three-day notice or the March 2012 30-day notice caused it to be confused about MCWE's intentions.
An important consideration in Duran and Andrus was the second notices were served after the landlord had filed the eviction action. Here, it is true, the September 2011 three-day notice and the March 2012 30-day notice were served after the unlawful detainer complaints were filed. But MCWE filed a supplemental unlawful detainer complaint after the September 2011 three-day notice was served and a second amended unlawful detainer complaint that alleged and incorporated the September 2011 three-day notice and the March 2012 30-day notice. Thus, if the later notices somehow constituted a waiver of the earlier ones, MCWE's unlawful detainer action was, nonetheless, based on current, valid notices of default.
One of the intervening circumstances claimed by NHOM has merit and, at least in part, does overcome the interim adverse judgment rule. Lloyd Copenbarger stated in his declaration in opposition to the anti-SLAPP motions that he hired and paid contractors to make the repairs and perform the maintenance demanded by MCWE in March 2012 30-day notice. Copenbarger declared, "prior to the expiration of the sixty (60) day notice provided in the March 2012 letter, all of the items contained in [the] notice to cure had in fact been cured at my direction."
Paragraph 4(d) of a Ground Lease amendment dated February 16, 1967 (the Ground Lease amendment) states, "Lessor agrees that it will not terminate this lease because of any default or breach hereunder on the part of Lessee if the holder of the trust deed, within sixty (60) days after service of written notice from Lessor of its intention to terminate this lease for such default or breach" cures the default. The Sublease incorporated this provision of the Ground Lease. According to Lloyd Copenbarger, the Maag Trust cured the defaults identified in the March 2012 30-day notice within 60 days. Because the Maag Trust (the holder of "the trust deed") timely cured the defaults, then, under the terms of the Ground Lease amendment and Sublease, MCWE was not permitted to terminate the Sublease. Further, the Assignment Agreement stated MCWE and Plaza del Sol agreed not to declare a default under the Sublease on account of then-existing defaults so long as the Maag Trust made the agreed-upon payments.
MCWE contends Lloyd Copenbarger's declaration is false and his statement that all defaults had been cured is "conclusory." But we must accept NHOM's evidence as true (Baral, supra, 1 Cal.5th at pp. 384-385) and we do not weigh NHOM's evidence against MCWE's evidence as though trying the case (Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 821-822).
Any reasonable attorney would agree that continuing to prosecute the unlawful detainer action would be totally and completely without merit once the defaults identified in the March 2012 30-day notice had been cured within the time permitted for the trust holder to do so. NHOM therefore established lack of probable cause for MCWE continuing to prosecute the unlawful detainer action from after the point at which the defaults were cured.
IV.
Malice
The malice element of malicious prosecution refers to the defendant's subjective intent or purpose for initiating or prosecuting the prior lawsuit. (Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1543.) To establish malice, the plaintiff must prove the defendant acted with ill will or an improper ulterior motive. (Ibid.) Malice may be proven with circumstantial evidence because direct evidence is rarely available. (Ibid.) Circumstances showing an improper purpose include: (1) bringing or prosecuting a lawsuit without any belief the claims asserted are valid; (2) bringing or prosecuting a lawsuit primarily due to hostility or ill will; (3) bringing or prosecuting a lawsuit solely for the purpose of depriving the opponent of a beneficial use of property; and (4) bringing or prosecuting a lawsuit to force a settlement having no relationship to the claims asserted. (Ibid.)
Lack of probable cause is a factor in proving malice but alone is insufficient. (Jay v. Mahaffey, supra, 218 Cal.App.4th at p. 1543.) Malice can be inferred from evidence that a party brings a lawsuit knowing it lacks probable cause or continues to prosecute the lawsuit after learning it lacks probable cause. (Daniels v. Robbins (2010) 182 Cal.App.4th 204, 226.)
NHOM identifies two pieces of evidence which, it contends, met its burden of establishing a prima facie case of malice: (1) the Asset Management Agreement and (2) Artz's deposition testimony that Artz knew the Ground Lease and the Sublease imposed no duty on NHOM to repair and maintain the Improvements and that under the Assignment Agreement MCWE could not declare a default. NHOM identifies no other evidence to establish malice.
The Asset Management Agreement does not provide proof of malice. In it, MCWE agreed that NHV (later modified to be VMG) "will perform all duties normally associated with the administration of a sub-lease by the master lessor." Among those responsibilities, naturally enough, was enforcing the terms of the Sublease and serving appropriate notices of default and other statutory notices in the event of a material default by the sublessee, NHOM. Paul Copenbarger declared the Asset Management Agreement evinced an "illegitimate scheme" to bring an unlawful detainer action against NHOM and for NHV to acquire the Improvements. His testimony on this subject was not competent. (Founding Members of the Newport Beach Country Club v. Newport Beach Country Club, Inc. (2003) 109 Cal.App.4th 944, 955-956 [interpretation of a contract is a legal issue].) He also misinterprets the Asset Management Agreement: It did not grant NHV an option to acquire an assignment of the Improvements and NHOM's rights under the Sublease. As compensation, the Asset Management Agreement granted NHV an irrevocable option to acquire an assignment of the Ground Lease from MCWE. Our independent review of the Asset Management Agreement leads us to conclude it does not on its face reflect a preordained intent to terminate the Sublease and allow NHV to acquire the Improvements.
NHOM's description of Artz's deposition testimony is essentially accurate: Artz acknowledged the Ground Lease imposed no obligation on the sublessee to maintain the Improvements and the Assignment Agreement did not permit MCWE to declare a default. But since July 2011, when MCWE filed the first amended unlawful detainer complaint, MCWE's position has been that NHOM created a public nuisance and committed waste, which are prohibited by paragraph 12 of the Ground Lease and the Sublease. In addition, the passages from Artz's deposition transcript were submitted in support of NHOM's motion for summary judgment and presumably considered by the trial court in denying that motion.
Malice can be inferred from lack of probable cause, and, after the defaults were cured by the Maag Trust, lack of probable cause arose because the Ground Lease amendment and the Sublease prohibited MCWE from declaring a default under those circumstances. NHOM has identified no evidence, however, to show MCWE knew the defaults had been cured. While we can infer MCWE knew of the relevant provisions of the Ground Lease amendment, the Sublease, and the Assignment Agreement, we cannot infer MCWE knew or was given notice that the defaults had been cured by the Maag Trust. NHOM does not cite anything in the record to show MCWE knew or was given notice the defaults had been cured. Lloyd Copenbarger did not declare he so notified MCWE. His declaration itself could not impart notice because it was filed in opposition to the anti-SLAPP motions, long after the unlawful detainer action had been dismissed. MCWE and its representatives did not have free access to inspect the Property but were required by section 7.1 of Sublease to give NHOM two days' written notice before entering the Property. NHOM submitted no evidence MCWE gave this notice and inspected the Property after the repairs were made.
NHOM contends section 7.1 of the Sublease was violated when Packard and D'Alessio went on the Property in late 2011 and early 2012 to meet with contractors, but that occurred before the defaults were cured.
V.
Plaza del Sol, Artz, and Packard
NHOM sued Plaza del Sol, Artz, and Packard for malicious prosecution even though none of them was a party to the unlawful detainer action. Liability against Plaza del Sol, Artz, and Packard was based on theories of aiding and abetting and conspiracy. Artz was the vice-president of MCWE and trustee of Plaza del Sol. Packard is alleged to be a real estate agent "associated with the property management company at the Property."
Liability under an aiding and abetting or a civil conspiracy theory depends on the actual commission of a tort. (Richard B. LeVine, Inc. v. Higashi (2005) 131 Cal.App.4th 566, 574.) MCWE could not be liable for malicious prosecution because the trial court granted its special motion to strike NHOM's malicious prosecution complaint. As a consequence, Plaza del Sol, Artz, and Packard cannot be liable under theories they aided and abetted or conspired with MCWE to commit malicious prosecution.
Plaza del Sol is a trust, which is a fiduciary relationship with respect to property. (Portico Management Group, LLC v. Harrison (2011) 202 Cal.App.4th 464, 473.) A trust cannot be sued; it can only be sued through its trustee in his or her representative capacity. (Ibid.) Plaza del Sol was properly dismissed for that reason alone.
VI.
Attorney Fees
Under section 425.16, subdivision (c)(1) a prevailing defendant on an anti-SLAPP motion is entitled to recover attorney fees and costs. The trial court granted the anti-SLAPP motions brought by MCWE, Plaza del Sol, Artz and Packard. We affirm the trial court's ruling. MCWE, Plaza del Sol, Artz, and Packard therefore were entitled to recover their attorney fees pursuant to section 425.16, subdivision (c)(1). No party challenges the amounts awarded by the trial court, which were reasonable.
DISPOSITION
The order granting the special motions to strike under section 425.16 and the order awarding attorney fees are affirmed. Respondents to recover costs on appeal.
FYBEL, J. WE CONCUR: O'LEARY, P. J. BEDSWORTH, J.